/raid1/www/Hosts/bankrupt/TCR_Public/021105.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, November 5, 2002, Vol. 6, No. 219
Headlines
ACOUSTISEAL: Wants to Maintain Exclusivity Until April 5, 2003
ADELPHIA BUSINESS: Court Approves Stipulation with Metromedia
ADELPHIA COMMS: Seeks Court Approval to Hire Five Accountants
ADVANCED GLASSFIBER: Senior Lenders Agree to Forbear Until Dec 6
ALLMERICA: S&P Affirms Low-B Related Synthetic Deal Ratings
ARMSTRONG: Asks Court to OK Tolling Agreements with Defendants
ARMSTRONG HOLDINGS: Court Approves Amendment to DIP Financing
ARMSTRONG HOLDINGS: AWI Files Chapter 11 Reorg. Plan in Delaware
BC RAIL: Seeking Proposals to Purchase Finlay Navigation Unit
BIO-PLEXUS: ICU Medical Completes Purchase of 84% Equity Stake
BROADWING COMMS: S&P Drops 12.5% Preferreds Rating to D from B
BROADWING: Defers Quarterly Dividend Payment on 12.5% Preferreds
BUDGET GROUP: Gets Nod to Hire Fowler White as Special Counsel
CANADIAN IMPERIAL: Settles 17 Creditors' Claims via Equity Swap
CARAUSTAR INDUSTRIES: Sinks into the Red in Third Quarter 2002
CARBIDE/GRAHITE GROUP: Intends to Liquidate Certain Assets
CENTENNIAL COMMS: Fails to Maintain Nasdaq Listing Requirements
CENTRAL EUROPEAN: Will Publish Third Quarter Results Tomorrow
COGENTRIX ENERGY: S&P Places BB+ Rating on Watch Negative
COMBUSTION ENG.: Will File for Ch. 11 to Resolve Asbestos Issues
CONTOUR ENERGY: Signs-Up Jones Walker as Louisiana Tax Attorneys
CYBERCARE INC: Nasdaq Knocks-Off Shares Effective November 1
EGAIN COMMS: Commences Trading on Nasdaq SmallCap Market Today
ENRON CORP: Committee Wins Nod to Hire Houlihan Lokey as Advisor
EOTT ENERGY: Court Okays Logan & Company as Claims Agent
FIRST CHICAGO: Fitch Affirms Low-B/Junk 1997-CHL1 Note Ratings
FOAMEX INT'L: CEO Chorman Assumes Responsibilities as President
FRESH AMERICA: Files Form 15 to Reduce Costs & Enhance Earnings
GENTEK INC: Proposes Uniform Interim Compensation Procedures
GLOBAL CROSSING: Pacific Crossing Wants to Pull Plug on Contract
GRAPHIC PACKAGING: Third Quarter Net Loss Widens to $1.6 Million
HOLLINGER INT'L: Continues to Pursue Financing Initiatives
HORSEHEAD: Taps Ryan & Whaley as Bartlesville Litigation Counsel
IEC ELECTRONICS: Taking Steps to Commence Trading on OTCBB
IMPSAT FIBER: New York Court Approves Disclosure Statement
INTEGRATED HEALTH: Wants to Sell IHS Horizon Durham for $3 Mill.
INTERLIANT: Closes Private-Label Asset Sale to Sprint for $5MM
IPVOICE: Begins Balance Sheet Restructuring with Reverse Split
KAISER ALUMINUM: Wants to Ratify Settlement Pact with Glencore
KSAT SATELLITE: Defaults on Shareholders' Loan Pact with Global
LBP INC: Makes Final Liquidating Distribution to Shareholders
LECTEC CORP: Working Capital Deficit Tops $290K at September 30
LEGACY HOTELS: Completes Equity Offering of 19.5MM Trust Units
LTV CORP: Pushing for Approval of Purchase Pact with Maverick
MAGELLAN HEALTH: Gets Fin'l Covenant Waivers from Bank Lenders
METALS USA: Successfully Emerges from Chapter 11 Proceeding
NATIONSLINK: Fitch Affirms Low-B Ratings on Class F and G Notes
NATIONSRENT INC: Fixes Lease Protocol with Case Credit, et. al.
NEFF CORP: S&P Concerned About Covenant Breach Under Credit Pact
NETIA HOLDINGS: Minority Shareholder Challenges Resolutions
NETWORK COMMERCE: Voluntary Chapter 11 Case Summary
NRG ENERGY: Misses Interest Payment on 8% Senior Unsecured Notes
OMEGA HEALTHCARE: Red Ink Continues to Flow in Third Quarter
OWENS-ILLINOIS: Fitch Rates $300-Mil. Senior Secured Notes at BB
PACIFIC GAS: Asks SEC to Approve Acquisition of New Subsidiaries
PENNEXX FOODS: Smithfield Foods Covenant Waiver Expires Today
PENTON MEDIA: Says Liquidity Sufficient to Meet Operating Needs
PERKINELMER: Gets $445MM Financing Commitment from Merryll Lunch
PINNACLE HOLDINGS: Emerges from Chapter 11 Bankruptcy Proceeding
PTCL RECEIVABLES: S&P Ups Rating on $250M Notes to B+ from CCC+
REVLON INC: Net Capital Deficiency Widens to $1.4BB at Sept. 30
REXNORD CORP: S&P Assigns B+ Rating to $435MM Secured Bank Loan
R.H. DONNELLEY: S&P Affirms BB Rating After Planned Sprint Buy
SLI INC: US Trustee Appoints Unsecured Creditors Committee
SORRENTO NETWORKS: Euro Ops. Get Over $5.5MM in Orders in Q3
SOUTHERN UNION: Reports Improved Results for September Quarter
SUN HEALTHCARE: Has Until January 27, 2003 to Challenge Claims
TRANSCARE CORP: Wants Open-Ended Lease Decision Period Extension
TRICORD SYSTEMS: Inks Definitive Agreement to Sell All Assets
UNION ACCEPTANCE: Case Summary and 25 Largest Unsec. Creditors
UNION ACCEPTANCE: MBIA Reports $1.6 Billion in Net Par Exposure
UNION ACCEPTANCE: Fitch Downgrades Senior Unsecured Ratings to D
UNION ACCEPTANCE: Will Host Conference Call on Thursday
UNIROYAL TECH.: Wants More Time to Make Lease-Related Decisions
UNITED AIRLINES: Pilots' Council Accepts Economic Recovery Plan
UNITED AIRLINES: Reaches Tentative Workout Agreement with Pilots
WINSTAR: Shubert Gets Nod to Hire MCL Associates as Consultants
WORLDCOM INC: Asks Court to Extend Exclusive Period to April 17
W.R. GRACE: Court Extends Lease Decision Period Until April 1
XO COMMS: Court Okays Kelley Drye to Perform Legal Services
*********
ACOUSTISEAL: Wants to Maintain Exclusivity Until April 5, 2003
--------------------------------------------------------------
AcoustiSeal, Inc., asks the U.S. Bankruptcy Court for the
Western District of Missouri to extend the period within which
the Debtor has an exclusive right to propose a Reorganization
Plan and to solicit acceptances of that Plan. The Debtor wants
to keep the exclusivity until April 5, 2003, to file a Plan, and
until June 2, 2003, to solicit acceptances of that Plan from its
creditors.
The Debtor relates to the Court that since the Petition Date, it
has had discussions with various constituencies regarding
potential plan treatment. The Debtor believes that it is in a
unique position to assess its economic condition and is the one
best qualified to propose a plan and develop a comprehensive
disclosure statement.
Currently, the Debtor is in the process of taking bids on the
sale of the assets of the corporation, which auction is set on
December 2, 2002. Much of the business focus of the Debtor has
been involved with the preparation of the Asset Sale.
The Debtor is optimistic that it can reach a consensus with the
Committee and the Lenders to formulate an agreed plan in the
extended exclusive time period that they are requesting.
Acoustiseal, Inc., filed for chapter 11 protection on September
4, 2002. Cynthia Dillard Parres, Esq., and Mark G. Stingley,
Esq., at Bryan, Cave LLP represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed an estimated assets of $10-$50
million and estimated debts of over $50 million.
ADELPHIA BUSINESS: Court Approves Stipulation with Metromedia
-------------------------------------------------------------
Adelphia Business Solutions, Inc., and its debtor-affiliates
sought and obtained Court approval of a stipulation reached with
Metromedia to settle the motion to compel decision on certain
contracts. Terms of the stipulation are:
A. Metromedia will terminate, as soon as it is able to do so,
all fiber and any related services provided to the ABIZ and
ACOM Debtors, except that it will maintain the fibers and
related services provided pursuant to:
-- that component of the Fiber Optic Agreement relating to
fiber ring 4 in Washington D.C.,
-- that component of the Fiber Optic Agreement relating to
fiber ring 2 in Chicago,
-- that component of the Fiber Optic Agreement relating to
long haul fibers,
-- Supplements No. 9 & 10 to Product Order No. 4,
-- the Internet Services Master Services Agreement between
Abovenet Communications and ACOM Operations Inc., and
-- the PAIX Participant License Agreement between PAIX.net,
Inc. and ACOM Operations, Inc.;
B. The termination is without prejudice to any of the parties'
rights and legal arguments including, specifically,
Metromedia's arguments regarding its entitlement to payment
on an administrative basis and severability or non-
severability of the parties' agreement and ACOM's and ABIZ's
rights to assert positions to the contrary; and
C. ACOM and ABIZ acknowledge that any reasonable expense
incurred by Metromedia in connection with the termination
will be payable by ABIZ, ACOM or both of them. Metromedia
specifically reserves its right to assert that it is entitled
to payment on an administrative basis for the costs
associated with the termination, and each of ABIZ and ACOM
reserves the right to assert a position to the contrary.
* * *
To recall, Metromedia Fiber Network and Adelphia Business
Solutions, Inc., together with its debtor-affiliates, entered a
number of contracts under which Metromedia provides leased fiber
"rings," or connections of underground fibers, to the ABIZ
Debtors in exchange for various monthly payments. For months,
Metromedia has provided these fiber rings without receiving any
payment.
Under a Fiber Optic Network Leased Fiber Agreement Leased Fiber
Order dated December 31, 1998, Metromedia leases four fibers in
multiple ring configurations in Chicago, Washington, D.C. and
Long Island to the ABIZ Debtors for a term of 240 months. The
ABIZ Debtors are required to make monthly lease payments
totaling $91,274 for the use of these rings:
-- Long Island Network (Ring 1): $27,900
-- Washington, D.C. Network:
* Ring 1, Ring 2, Ring 3: $3,665
* Ring 4: $32,980
* Ring 5: $15,705
-- Chicago Network: $11,024 (this amount was originally
$7,000, and was later changed to $11,024)
As reflected in the invoices for March, April, May, June,
July, August and September 2002, and in the invoice relating to
charges based on the difference between the contracted fiber
lease charge and actual monthly fiber leases, the total amount
the Debtors owe postpetition is $1,493,551.11. (Adelphia
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ADELPHIA COMMS: Seeks Court Approval to Hire Five Accountants
-------------------------------------------------------------
Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher, in New
York, recounts that over the past few months, the Adelphia
Communications Debtors have faced significant financial and
other challenges, including:
-- the suspension by Deloitte & Touche LLP, the ACOM Debtors'
former auditors, of its auditing work on the ACOM Debtors'
financial statements;
-- the formal investigation being conducted by the SEC;
-- the de-listing of ACOM's stock from the NASDAQ National
Market; and
-- the June 10, 2002 disclosure by the Debtors that certain
material financial information, including revenue estimates,
for the fiscal years ended December 31, 2000 and 2001 was
overstated and would need to be revised.
Additionally, the Debtors have lost 10% of their staff in the
accounting and accounts payable departments. There are
currently 16 open positions in those departments. Coupled with
the usual attrition experienced by a Chapter 11 debtor, the
Debtors' work with PricewaterhouseCoopers LLP on the restatement
of former financial filings, the monthly operating reporting
requirements required of a chapter 11 debtor, and the financial
and other reporting requirements required by the Debtors' DIP
financing facility, a tremendous volume of additional work is
required of the Debtors' remaining accounting and accounts
payable employees to meet the Debtors' needs.
To replace their lost accounting and accounts payable employees
in an expeditious manner and meet their reporting requirements,
the Debtors have called on Tatum CFO Partners, LLP; Insero,
Kasperski, Ciaccia & Co., P.C.; JC Jones & Associates, LLC;
Buffamante Whipple & Buttafaro P.C.; and Walker Business
Services to provide them with the necessary staffing to meet
their current needs. Although the Accountants will be providing
the Debtors with important financial data and support with
respect to the ongoing audits, reformulation of accounting
policies and procedures and processing of vendor invoices, none
of the Accountants have or will have any direct responsibilities
in connection with the Debtors' overall restructuring efforts.
By this motion, the ACOM Debtors seek the Court's authority to
employ these accountants and consultants:
-- Tatum CFO Partners, LLP;
-- Insero, Kasperski, Ciaccia & Co., P.C.;
-- JC Jones & Associates, LLC;
-- Buffamante Whipple & Buttafaro P.C.; and
-- Walker Business Services.
These firms will:
-- process and organize the financial data required for the
Debtors' restatement and re-audit of their financial
statements;
-- formulate new accounting policies and procedures;
-- separate prepetition and postpetition vendor invoices; and
-- other matters requested by the Debtors from time to time.
Tatum
Founded in 1993, Tatum is a partnership of career financial
specialists who provide seasoned financial and business
management experience to its clients. Among its services, Tatum
supplies its clients with individual partners to fill various
financial management positions. Frequently, Tatum would provide
a company with a financial manager to fill a position that has
become vacant due to termination, retirement, death, or illness.
Typically, the financial managers work under the client's
direction. Tatum has provided financial management expertise
and financial managers to numerous companies involved in Chapter
11 cases including MAPA Inc., Breed Technologies, Inc., and
Ameritruck. The Debtors believe Tatum is particularly well
suited to provide the type of financial assistance the Debtors
require.
Tatum is making available to the Debtors the services of these
three consultants who are working with the Debtors in preparing
the necessary data for the pending audits and financial
restatements:
-- Carol Savage;
-- Robert DiBella; and
-- Paul Quinn.
According to Mr. Shalhoub, the Debtors pay $12,500 weekly each
for Ms. Savage's and Mr. DiBella's services and $10,000 for Mr.
Quinn's services. The Debtors also reimburse the Tatum
Consultants for out-of-pocket expenses including expenses
relating to their residence in the Coudersport, Pennsylvania
area during the week and travel reimbursement for traveling
home.
The Debtors also pay Tatum a fixed weekly fee, consisting of:
-- for Ms. Savage, Tatum receives a Weekly Resource Fee of
$2,500, representing 20% of Ms. Savage's gross weekly salary;
-- for Mr. DiBella, Tatum receives a Weekly Resource Fee of
$2,500, representing 20% of Mr. DiBella's gross weekly
salary; and
-- for Mr. Quinn, Tatum receives a Weekly Resource Fee of
$2,000, representing 20% of Mr. Quinn's gross weekly salary.
Through October 16, 2002, the Debtors have paid $100,000 to the
Tatum Consultants in wages and $14,000 in Weekly Resource Fees
for services rendered and have pending invoices for the Weekly
Resource Fees amounting to $36,100. For the expected term of
employment of the Tatum Consultants, the Debtors estimate that
payments will total $1,031,000.
Insero Kasperski
Insero Kasperski provides general accounting, bookkeeping and
technical accounting assistance with respect to various matters.
Founded in 1952, Insero Kasperski is one of the largest business
and financial advisory firms in Western New York, offering
business management, financial, operations, human resources,
payroll and accounting outsourcing services.
Pursuant to the Debtors' agreement with Insero Kasperski, dated
August 12, 2002, the Firm has agreed to provide accountants to
the Debtors to fulfill both accounting and auditing functions.
Pursuant to the agreement, Insero Kasperski is making available
to the Debtors the services of 12 accountants whose primary
service is to "pre-audit" information going to PwC in connection
with the Debtors' pending restatement issues. The Firm also
provides accountants to fill temporary vacancies in both the
Debtors' accounting and accounts payable departments.
Insero Kasperski bills the Debtors at an hourly rate for
services rendered, with rates averaging $100 per hour, depending
on the level of experience required, the seniority of the
accountants utilized, and the complexity of the tasks.
Additionally, the Debtors reimburse the Insero Kasperski
Accountants at per diem rates for meals and incidental expenses,
plus mileage reimbursement.
Through October 16, 2002, the Debtors have paid Insero Kasperski
$336,660 and have no pending invoices. For the entire expected
term of employment of Insero Kasperski, the Debtors estimate
that payments to the Firm will aggregate $1,350,000.
JC Jones
JC Jones typically provides corporations with accounting support
staff to assist corporations in meeting financial reporting
needs by working with internal auditors to prepare financial
data for reporting purposes. Additionally, JC Jones offers
clients merger and acquisition, profit improvement, business
turnaround and contract audit services. Pursuant to the
Debtors' agreement with JC Jones, dated August 8, 2002, JC Jones
is making available to the Debtors the services of 5 to 8
accountants whose primary service is to assist the Debtors in
the preparation of comprehensive accounting policies and
procedures.
Pursuant to the JC Jones Agreement, the Debtors compensate JC
Jones between $1,800 and $2,200 per work day for each accountant
assigned, billed on a day rate basis, plus out-of-pocket
expenses. Under the agreement, JC Jones invoices the Debtors
twice a month, in arrears for services rendered. Through
October 16, 2002, the Debtors have paid JC Jones $117,500 and
have no pending invoices. For the expected term of employment
of JC Jones, the Debtors estimate that payments to JC Jones will
aggregate $941,000.
Buffamante Whipple
Buffamante Whipple serves as accountants and advisors to
businesses in the Eastern United States, and is the 12th largest
CPA firm in Southwestern New York. Pursuant to the Debtors'
agreement with Buffamante Whipple, dated July 19, 2002, the Firm
made available to the Debtors the services of four accountants
whose primary service was to assist the Debtors in analyzing
vendor invoices and allocating them between the prepetition and
postpetition periods.
Pursuant to the Agreement, Buffamante Whipple bills the Debtors
at an hourly rate of $55 per hour for services rendered. The
Debtors are responsible for all travel time and any related
costs. Through October 16, 2002, the Debtors have paid
Buffamante Whipple $53,000 for services rendered and there are
no pending invoices. The Debtors do not anticipate requiring
any further services of Buffamante Whipple and, therefore, do
not anticipate making further payments. However, in the event
the Debtors determined to further utilize Buffamante Whipple's
services, they intend to do so pursuant to the terms of the
Agreement.
Walker Business Services
Founded in 1992, Walker provides temporary staffing and direct
placement services for accounting technical and data entry
needs. Pursuant to the Debtors' agreement with Walker, dated
August 1, 2002, Walker is making available to the Debtors the
services of five accountants whose primary service is to assist
the Debtors in the splitting of vendor invoices between the
prepetition and postpetition periods and to fill temporary
vacancies in the accounting and accounts payable departments.
Pursuant to the Walker Agreement, Walker bills the Debtors at an
hourly rate for services rendered by the Walker Accountants
between $10 and $20 per hour, depending on the level of
experience of each accountant. Through October 16, 2002, the
Debtors have paid Walker $14,000 for services rendered and have
no pending invoices. For the entire expected term of employment
of Walker, the Debtors estimate $40,000 aggregate payments to
Walker.
Although the Debtors believe they have the authority to enter
into the Agreements in the ordinary course, in an abundance of
caution, the Debtors ask the Court to approve the Agreements and
authorize the continued employment of the Accountants. Mr.
Shalhoub explains that the Debtors did not seek prior Court
approval to enter into the Agreements with the Accountants
because, in general, they were retained as non-professional
staff accountants and the estimated fees for their services were
not expected to result in significant cost to these estates.
However, as the number of accountants increased and,
correspondingly, the related fees and expenses, the Debtors now
determined it is appropriate to seek Court approval of their
employment of the Accountants. The services of the Accountants
were and remain necessary to meet the pressing demands imposed
on the Debtors' accounting and accounts payable departments.
(Adelphia Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADVANCED GLASSFIBER: Senior Lenders Agree to Forbear Until Dec 6
----------------------------------------------------------------
Advanced Glassfiber Yarns LLC has reached an agreement on the
terms of an additional amendment and forbearance agreement with
its senior secured lenders under the Company's senior secured
revolving credit and term loan facility.
Previously, the Company had announced that it was in discussions
with its senior lenders regarding a consensual restructuring of
approximately $180 million of indebtedness outstanding under
such facility, and had obtained an agreement from such lenders
to forbear from exercising rights and remedies under such
facility until October 31, 2002.
Under the latest amendment and forbearance agreement, the
Company's senior lenders agreed, among other things, to extend
the forbearance period until December 6, 2002, while the parties
continue restructuring discussions. The Company currently
anticipates that it will have sufficient liquidity to satisfy
its cash obligations in the foreseeable future including day-to-
day trade obligations.
The Company also announced that it is continuing restructuring
discussions with an ad hoc committee of its $150 million of
9-7/8% senior subordinated notes.
The Company noted, however, that there can be no assurance that
it will be successful in achieving a consensual restructuring of
its senior secured or senior subordinated indebtedness, in which
event, the Company will explore all viable alternatives.
Advanced Glassfiber Yarns, headquartered in Aiken, S.C., is one
of the largest global suppliers of glass yarns, which are a
critical material used in a variety of electronic, industrial,
construction and specialty applications.
ALLMERICA: S&P Affirms Low-B Related Synthetic Deal Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on two
synthetic transactions related to AFC Capital Trust I and
removed them from CreditWatch with negative implications.
The CreditWatch removals follow the removal of Allmerica
Financial Corp.'s preferred stock (AFC Capital Trust I) rating
from CreditWatch on October 28, 2002.
The two transactions are swap-independent synthetic transactions
that are weak-linked to the underlying collateral, AFC Capital
Trust I's preferred shares. The CreditWatch removals reflect the
credit quality of the underlying securities issued by AFC
Capital Trust I.
A copy of the Allmerica Financial Corp.-related press release,
dated October 28, 2002, can be found on RatingsDirect, Standard
& Poor's Web based credit analysis system.
Ratings Affirmed and Removed from Creditwatch
PreferredPLUS Trust Series ALL-1
$48 million trust certificates series ALL-1
Rating
Class To From
A B- B-/Watch Neg
B B- B-/Watch Neg
CorTS Trust for AFC Capital Trust I
$36 million Allmerica corporate-backed trust securities
(CorTs) certificates series 2001-19
Rating
Class To From
A B- B-/Watch Neg
ARMSTRONG: Asks Court to OK Tolling Agreements with Defendants
--------------------------------------------------------------
Armstrong Holdings, Inc., and its debtor-affiliates seek Judge
Newsome's permission to sign tolling agreements with potential
avoidance action defendants. At the same time, the Debtors ask
the Court to approve the provisions under which notice of these
tolling agreements will be given to key creditor constituencies.
Under the deadline imposed by statute, the Debtors must commence
avoidance actions by December 6, 2002, in order to preserve
their right to assert such actions on behalf of their respective
estates. However, this deadline can be waived or extended by
agreement of the other party.
Each of the Debtors is conducting a comprehensive review of its
prepetition transactions to determine if they should commence
any avoidance actions before the expiration of the statutory
period. Since the Petition Date, the Debtors have shared with
the Committees and the Committees' financial advisors
information regarding the sale of certain businesses prior to
the Petition Date. In addition, AWI expects to file actions
soon to recover a substantial amount of payments it made prior
to the Petition Date.
Despite these actions, additional analysis of prepetition
transactions and transfers, and discussions with the Committees
about these matters, continues. Although the Debtors anticipate
that the completion of this analysis and any review by the
Committees will occur before the lapse of the statutory
deadline, the Debtors may require additional time to commence
certain actions to complete their analysis, discuss the analysis
with the Committees, and if they conclude that a viable
avoidance action exists, attempt to negotiate a consensual
resolution and avoid potentially unnecessary litigation.
The Terms of The Tolling Agreements
For these reasons, the Debtors propose to enter into Tolling
Agreements. Although the precise terms of the proposed Tolling
Agreements are not known, the principal terms are:
(1) The Tolling Agreement provides for the suspension
and extension of all periods of limitation applicable
to the suspended claims, including, without limitation,
the two-year period for initiation of avoidance actions
under the Bankruptcy Code, through and including a date
agreed to by the parties that is no later than 30 days
after the effective date of a confirmed plan of
reorganization in the applicable Debtor's Chapter 11 case;
(2) Each of the parties to the Tolling Agreement is free to
terminate the suspension of the period of limitations as to
some or all of the suspended claims at any time and in its
sole discretion, the termination of the applicable
limitations period to take effect on the 90th day after
the date of written notice of termination; and
(3) The Tolling Agreement provides that it insures to the
benefit of the parties and their respective heirs,
executors, administrators, assigns and successors.
The Proposed Notice
The Debtors normally would file each Tolling Agreement in the
form of a stipulation to be approved by Judge Newsome. Instead
of burdening the Court with such a procedure, however, the
Debtors ask Judge Newsome to grant them authority now to sign
the Tolling Agreements to have the same effect. The Debtors
intend to file with the Court and serve on the U.S. Trustee and
counsel to each of the Committees a list of the parties with
which the Debtors have entered into Tolling Agreements, and will
furnish a copy of a signed Tolling Agreement to any party on
written request. This way, the Debtors will keep their
principal constituencies apprised without burdening the Court.
(Armstrong Bankruptcy News, Issue No. 30; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ARMSTRONG HOLDINGS: Court Approves Amendment to DIP Financing
-------------------------------------------------------------
The court in the Chapter 11 case of Armstrong World Industries,
Inc., has approved an amendment to the Company's post-petition
credit facility. At the Company's request, the amendment reduces
the amount of the facility to $75 million from $200 million,
eliminates the borrowing feature but retains the letter of
credit issuance facility. The borrowing feature of the facility
was eliminated because the Company, in view of its cash balance
and projected cash requirements, did not anticipate a need for
any such borrowings in the foreseeable future. The letter of
credit facility is used in the ordinary course of business for a
variety of commercial purposes.
Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1),
DebtTraders reports, are trading at 58.5 cents-on-the-dollar.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1
for real-time bond pricing.
ARMSTRONG HOLDINGS: AWI Files Chapter 11 Reorg. Plan in Delaware
----------------------------------------------------------------
Armstrong World Industries, Inc., has filed a Plan of
Reorganization with the U.S. Bankruptcy Court in Delaware in its
Chapter 11 reorganization case. The Plan is supported by the
asbestos personal injury claimants' committee, the
representative for future asbestos personal injury claimants and
the unsecured creditors' committee. The filing represents a
critical step forward in the resolution of the company's
reorganization efforts. The Plan will only become effective
after a vote of various classes of creditors and with the
approval of the Court.
"Armstrong entered into Chapter 11 to use the court-supervised
process to resolve its liability for asbestos personal injury
claims with finality," said Armstrong Chairman and CEO Michael
D. Lockhart. "We believe that the plan we have filed will
accomplish that objective while serving fairly and in proper
balance the interests of all stakeholders."
Key elements of the Plan provide for:
-- Creation of a trust for the benefit of present and
future asbestos personal injury claimants, which will
assume all of the company's obligations to those
claimants;
-- The distribution of new common shares and notes of the
reorganized company and available cash (after reserving
$100 million to fund ongoing operations and making
provisions for amounts required to be paid in connection
with the Plan), referred to as the "Plan Consideration,"
to the trust and to unsecured creditors;
-- The notes to be issued by the reorganized company will
total at least $775 million in principal amount, which
will be increased to the extent that available cash to
be distributed under the Plan is less than $350 million;
-- The assignment to the trust of certain rights to
insurance coverage of the company;
-- A mechanism to resolve asbestos property damage claims
through insurance proceeds;
-- A class of "convenience claims," general unsecured
claims of $10,000 or less (other than debt securities),
which will be paid 75% of their allowed claims in cash;
and
-- Cancellation of the existing common stock of AWI and the
potential distribution to the stockholders of Armstrong
Holdings, Inc. (NYSE: ACK), AWI's parent company, if
they approve a dissolution of AHI, of warrants for 5
percent of the common shares of the reorganized company,
which are expected to have a value of approximately $40
- 50 million. The stockholders of AHI are not entitled
to vote on the proposed Plan. If the Plan is
implemented, the only value that will be retained by
stockholders of AHI is the potential to receive their
ratable share of the warrants if the dissolution of AHI
is approved.
The Plan sets out a process for determining the portion of the
Plan Consideration to be received by the asbestos personal
injury trust and by the holders of unsecured creditor claims
(other than asbestos personal injury and property damage
claims). The class of unsecured creditors would receive
approximately 34.43% of the new common stock of AWI and
approximately 35.5% of the new notes and available cash, which
would be allocated among the unsecured creditors pro rata
according to the amount of their allowed claims. The value of
the distribution which unsecured creditors receive will depend
principally on the value of the shares to be distributed to them
and is not fixed by the Plan as a percentage of their claims.
The asbestos personal injury trust will receive the portion of
the Plan Consideration that is not distributed to the class of
unsecured creditors.
The Plan is available on a new Web site,
http://www.armstrongplan.com where additional information will
also be posted as it becomes available. A proposed Disclosure
Statement regarding the Plan will be filed with the Bankruptcy
Court by AWI. No date has been set for the required Bankruptcy
Court hearing on the Disclosure Statement. Votes on the Plan
may not be solicited until the Court approves the Disclosure
Statement.
Armstrong Holdings, Inc., is the parent company of Armstrong
World Industries, Inc., AHI became the publicly-held holding
company of AWI on May 1, 2000. Stock certificates that formerly
represented shares of AWI were automatically converted into
certificates representing shares of AHI. AHI has no significant
assets or operations apart from its equity interest in AWI. In
connection with the implementation of AWI's Plan, the
dissolution and winding up of AHI will be proposed for approval
by AHI's shareholders. Further information regarding this
matter will be provided to AHI's shareholders at the appropriate
time.
AWI is a global leader in the design and manufacture of floors,
ceilings and cabinets. In 2001, Armstrong's net sales totaled
more than $3 billion. Founded in 1860, Armstrong has
approximately 16,000 employees worldwide. More information
about Armstrong is available on the Internet at
http://www.armstrong.com
BC RAIL: Seeking Proposals to Purchase Finlay Navigation Unit
-------------------------------------------------------------
BC Rail intends to seek a private operator for its inland marine
transportation business and has appointed Forum Capital Partners
as its financial advisor for the sale of Finlay Navigation.
Expressions of interest will be sought for the purchase of some
or all of the assets of Finlay Navigation.
"BC Rail has determined that Finlay Navigation is not a core
operation and does not fit into the Railway's long term plans
for restoring the Company to financial health," said Bob
Phillips, President and Chief Executive Officer of BC Rail.
"Finlay Navigation provides an essential service to the northern
operations of two of B.C.'s largest forestry companies. Given
its current operations and growth prospects we expect that there
will be broad interest from qualified parties to acquire
Finlay," stated John Jennings, Managing Director of Forum
Capital Partners.
Finlay Navigation is based in Mackenzie and provides ferry and
barging services to the forest industry. Its Williston
Transporter carries logs year-round for Slocan Forest Products
on Williston Lake. The Babine Charger carries logging trucks,
primarily for Canfor, across Babine Lake. Two other vessels are
currently idle.
BC Rail is Canada's third largest railway, operating exclusively
in British Columbia with interline connections to all rail-
served points in North America. BC Rail serves industries such
as forest products, coal, sulphur, petroleum products, and
grain. It is a commercial crown corporation, wholly owned by the
Province of British Columbia.
Forum Capital Partners is a Vancouver-based investment banking
firm providing specialized corporate finance services to public
and privately-held businesses including: mergers, acquisitions
and divestitures; capital raising and refinancings; corporate
restructuring; management buyouts; and strategic financial
advice.
BIO-PLEXUS: ICU Medical Completes Purchase of 84% Equity Stake
--------------------------------------------------------------
ICU Medical, Inc., (Nasdaq: ICUI) the San Clemente based maker
of safe medical connectors and custom intravenous systems, has
completed the purchase of 84% of the common stock of Bio-Plexus,
Inc., (OTC Bulletin Board: BPXS) from ComVest Venture Partners,
L.P., and other investors for cash at a price of $0.66 per
share, and that it had also acquired $2.5 million of notes
payable by Bio-Plexus. ICU Medical reiterated its intention to
acquire the remaining minority interest at the same price per
share in the near future. Upon closing, ICU Medical's nominees
were elected to a majority of the seats on Bio-Plexus's Board of
Directors, and Dr. George Lopez, Chairman and CEO of ICU
Medical, was elected Chairman of the Bio-Plexus Board.
Bio-Plexus's principal products are blood collection needles
under the PUNCTUR-GUARD(R) name, which are designed to eliminate
exposure to sharp, contaminated needles.
ComVest Venture Partners, L.P., is a private investment fund
specializing in healthcare and technology ventures.
Dr. George Lopez commented: "Bio-Plexus has been a troubled
company. It has lost over $90 million since inception, recently
emerged from bankruptcy and is losing money at the rate of over
$250,000 per month. It is a small player in a large market.
There are risks that we will not succeed in growing sales and
paring expenses to better align with sales volume. We believe
ICU Medical can correct the problems and do what ICU Medical
does best, make profits. We look forward to the challenge."
Bio-Plexus launched the PUNCTUR-GUARD(R) Winged Set for Blood
Collection in July 2001. Winged sets are steel hollow bore
needles with attached tubing used for blood collection. The
PUNCTUR-GUARD Winged Set incorporates the same internal blunting
technology used in the Company's PUNCTURE-GUARD multi-sample
blood collection needle. Upon activation, an inner hollow blunt
needle extends beyond the sharp point of the outer needle prior
to removal of the device from the patient, thereby eliminating
the exposure to sharp, contaminated needles. Current devices
require removal of the contaminated sharp needle from the
patient before the outer sheath can be moved into place over the
contaminated needle. Bio-Plexus, Inc., designs, develops,
manufactures and holds U.S. and international patents on safety
medical needles and other products under the PUNCTUR-GUARD(R),
DROP-IT(R), and PUNCTUR-GUARD REVOLUTION(R) brand names.
BROADWING COMMS: S&P Drops 12.5% Preferreds Rating to D from B
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Broadwing Inc.'s wholly owned data transport subsidiary
Broadwing Communications Inc.'s 12.5% junior exchangeable
preferred stock due 2009 to 'D' from single-'B'. The downgrade
follows Broadwing Communications' statement that it intends to
defer cash dividends on this issue.
The corporate credit ratings of both Cinncinnati, Ohio-based
Broadwing Inc., and Broadwing Communications are double-'B' and
remain on CreditWatch with negative implications. The ratings
were placed on CreditWatch on August 29, 2002. At the end of the
third quarter of 2002, Broadwing had more than $2.5 billion in
total debt.
"The CreditWatch listing on August 29, 2002 was due to increased
concerns over major bank debt amortization starting in 2003 and
unlikely recovery of Broadwing Communications' weak fundamentals
in the near term," said Standard & Poor's credit analyst Michael
Tsao.
BROADWING: Defers Quarterly Dividend Payment on 12.5% Preferreds
----------------------------------------------------------------
Broadwing Inc., (NYSE:BRW) announced financial results for the
third quarter, reporting $62 million in positive cash flow.
Revenue for the quarter was $563 million and earnings from
continuing operations were $0.01 per share, up $0.19 per share
over the same period last year. As a result of the
reorganization of Teleglobe, the company recognized a $41
million non-recurring, non-cash benefit in revenue and earnings
before interest, taxes, depreciation, and amortization (EBITDA)
for the quarter. The company also recorded a $7 million
restructure charge related to employee severance and a contract
termination during the period.
The company's new management team announced a restructuring of
its Broadwing Communications unit that is intended to reduce
expenses by approximately $200 million annually. The company
believes that this substantial expense reduction is a critical
step in enabling Broadwing Communications to become cash flow
positive. The company also said it plans to soon approach its
banks to amend various provisions of its credit facilities,
including extending 2004 maturities.
"We are committed to building value for our shareholders, and
the steps we [announced Tuesday last week] will allow us to do
just that, as we reposition Broadwing Communications for
positive cash flow which should continue de-leveraging our
company," said Kevin Mooney, who was named Chief Executive
Officer on September 20. "At the same time, we are assessing a
complete range of strategic alternatives, including raising
capital, selling select assets, and discontinuing lines of
business, in order to maximize the value of our company.
"I am pleased to announce that Broadwing Inc., is cash flow
positive on a consolidated basis, one quarter ahead of schedule,
and that we reduced our debt by $43 million in the quarter,"
Mooney said. "We are now focused on maintaining the strength and
stability of our Cincinnati businesses while driving our
broadband unit to positive cash flow."
Restructuring Plan
The company said the restructuring plan it began implementing
Tuesday [last week] for Broadwing Communications will benefit
its large enterprise customers and the overall business. The
plan is intended to reduce current expenses by approximately
$200 million annually and enables the unit to reach its goal of
being cash flow positive. The plan targets line cost reductions
of 25 percent over the next six months through network grooming,
optimization, and rate negotiations; consolidates the unit's
workforce by 500 positions; and also calls for exiting its
wholesale international voice business.
The plan continues to focus the company's sales efforts on large
enterprise accounts, which will continue to be served through
local sales offices along with the highly successful national
accounts program. The company will service its smaller
enterprise accounts through its more cost effective consumer and
small business channel.
Bob Shingler, 45, currently president of voice services, has
been promoted to president of Broadwing Communications to
oversee the plan. Shingler, who will be based in Austin, is an
industry veteran with over 20 years of experience. Prior to
joining Broadwing Communications earlier this year, he held a
variety of positions with BellSouth Corporation both in Europe
and the U.S.
Earnings Results
Broadwing reported revenue of $563 million for the third
quarter, down 3 percent from the same period a year ago. EBITDA
increased 27 percent year over year to $195 million. Operating
income was $61 million, up from $11 million in the third quarter
of 2001. These results are inclusive of the one-time items
previously mentioned.
The company generated a total of $62 million in cash flow in the
quarter, $24 million from operations and $38 million from a
federal tax refund. This cash was used to reduce $43 million of
debt in the quarter. Broadwing's credit facility balance as of
September 30 was $1.66 billion. It is in compliance with all its
debt covenants.
"For the quarter, Broadwing Communications consumed $39 million
of cash flow while the remaining businesses generated a positive
$63 million of cash flow," commented Tom Schilling, Broadwing's
CFO. "Therefore, lowering Broadwing Communications cash
consumption should substantially improve consolidated cash
flow."
Cincinnati-based Operations
Broadwing's Cincinnati-based businesses reported revenue of $289
million, unchanged from a year ago. EBITDA of $138 million
represented an 11 percent improvement and operating income
increased 15 percent to $93 million. Selling, general and
administrative expenses were down 28 percent. Capital spending
for the Cincinnati Bell companies in the third quarter was $27
million, a 34 percent reduction versus the same quarter a year
ago.
Local Communications Services
Cincinnati Bell Telephone revenue declined 1 percent versus the
same quarter in 2001 to $207 million. EBITDA was up 1 percent to
$107 million and the EBITDA margin was 52 percent. Operating
income grew 1 percent to $71 million. Complete Connections,
Cincinnati Bell's bundled services product, added 9,000
subscribers. Cincinnati Bell is one of the industry leaders in
the penetration of value added services, with 39 percent
penetration.
Wireless Services
Cincinnati Bell Wireless posted revenue of $67 million,
representing a 4 percent increase over the same period in 2001.
EBITDA improved 54 percent to $30 million and the EBITDA margin
of 45 percent represented an improvement of 15 points. Operating
income was up 80 percent to $22 million and capital spending was
down $8 million to $4 million for the quarter. Cincinnati Bell
Wireless ended the quarter with 465,000 subscribers, a 1 percent
decline sequentially, but an increase of 6 percent from a year
ago. Churn was under 1.8 percent and postpaid ARPU was $60 per
month.
Other Communications Services
Other Communications Services revenue was flat with the third
quarter of 2001 at $20 million, while EBITDA improved to $1
million from breakeven during the same period last year.
Market share for Cincinnati Bell Any Distance, the company's
long distance offering, improved to 69 percent in the
residential market and 42 percent in the business market.
Broadband Services
Broadwing Communications recorded revenue of $296 million, a
decline of 3 percent from the third quarter 2001. EBITDA was $57
million, up $24 million. The EBITDA and revenue figures include
the non-cash recognition of $41 million related to the Teleglobe
reorganization. In the quarter, operating loss improved $39
million to a loss of $28 million. Broadwing Communications
experienced solid growth in sales to up-market enterprise
customers, while the prolonged erosion in the carrier market
continued to be responsible for the revenue and EBITDA decline.
With the national network complete, capital expense was reduced
from $121 million in the third quarter of 2001 to $13 million
for the quarter this year.
Additionally, Broadwing Communications has deferred cash payment
of the quarterly dividend, due November 15, 2002, on its
Broadwing Communications subsidiary 12-1/2 percent preferred
shares, in accordance with the terms of the security. The
dividend will be accrued and the Company will conserve
approximately $12.4 million of cash in the fourth quarter.
"We have fulfilled our commitment to achieve positive cash flow
for Broadwing Inc. and we are moving with the purpose and
urgency required to make our broadband services business cash
flow positive, address our financing needs, and continue to keep
our Cincinnati Bell franchise strong and healthy," said Mooney.
Broadwing updated its financial guidance for 2002, reaffirming
$2.15 billion in revenue, raising projected EBITDA to $640
million, and lowering the capital expenditures figure for the
second time this year to $190 million from $230 million.
The company also indicated that as a result of the announced
restructuring of Broadwing Communications, it expects to record
a cash charge of up to $10 million for the fourth quarter.
Broadwing Inc., (NYSE: BRW) is an integrated communications
company comprised of Broadwing Communications and Cincinnati
Bell. Broadwing Communications leads the industry as the world's
first intelligent, all-optical, switched network provider and
offers businesses nationwide a competitive advantage by
providing data, voice and Internet solutions that are flexible,
reliable and innovative on its 18,500-mile optical network and
its award-winning IP backbone. Cincinnati Bell is one of the
nation's most respected and best performing local exchange and
wireless providers with a legacy of unparalleled customer
service excellence and financial strength. The company was
recently ranked number one in customer satisfaction, for the
second year in a row, by J.D. Power and Associates for local
residential telephone service and residential long distance
among mainstream users and received the number one ranking in
wireless customer satisfaction in its Cincinnati market.
Cincinnati Bell provides a wide range of telecommunications
products and services to residential and business customers in
Ohio, Kentucky and Indiana. Broadwing Inc., is headquartered in
Cincinnati, Ohio. For more information, visit
http://www.broadwing.com
BUDGET GROUP: Gets Nod to Hire Fowler White as Special Counsel
--------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates obtained the
Court's authority to employ Fowler as its special trademark
litigation counsel in connection with these Chapter 11 cases.
To recall, the Debtors are involved in an ongoing lawsuit
brought by Ryder Systems Inc., involving the Debtors' alleged
unauthorized use of the Ryder TRS trademark.
With the Court's approval, Fowler will provide the legal and
litigation support required by the Debtors in connection with
the numerous issues that are involved with the Ryder Litigation,
including advising and representing the Debtors with respect to
these matters:
A. counseling, providing strategic, advice to, and representing
the Debtors in connection with the Ryder Litigation,
including:
-- providing discovery related support and assistance to the
Debtors in regards to matters arising in Florida and other
strategic areas as necessary, including, but not limited
to defending and taking depositions, pursuing other
investigations in regards to the Ryder Litigation and
drafting various documentation in connection with
discovery requests, and
-- where appropriate, conducting research and drafting of
pleadings and documents relating to the ongoing Ryder
Litigation as required by the Debtors and in coordination
with Pennie & Edmonds LLP;
B. along with its co-counsel Pennie, assisting in the trial
preparation and defense of the Ryder Litigation if the case
proceeds to trial; and
C. rendering any other services as may be in the best interests
of the Debtors in connection with the forgoing, as agreed
upon by Fowler and the Debtors.
Fowler will charge the Debtors its customary hourly rates for
matters of this type. Fowler will seek reimbursement of all
costs and expenses incurred in connection with these cases.
Fowler's hourly billing rates currently range from:
Attorneys $200 to $365
Paraprofessionals $125 to $150
These hourly rates are subject to periodic increases in the
normal course of Fowler's business. (Budget Group Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1),
DebtTraders says, are trading at 19 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for
real-time bond pricing.
CANADIAN IMPERIAL: Settles 17 Creditors' Claims via Equity Swap
---------------------------------------------------------------
Canadian Imperial Venture Corp., has received approval, whereby
certain conditions apply, from The Securities Legislation of
Alberta, New Brunswick and Newfoundland and Labrador for the
issuance of 1,094,918 to 17 creditors in connection with its
shares for debt settlement which it originally announced on July
19, 2002. The 17 creditors have settled debts with the Company
with the aggregate value of $273,728.50. The shares were issued
at a deemed price of $0.25. The shares will have a hold period
expiring February 26, 2003.
Canadian Imperial Venture Corp., (TSX: CQV) is an independent
Newfoundland-based energy company.
CARAUSTAR INDUSTRIES: Sinks into the Red in Third Quarter 2002
--------------------------------------------------------------
Caraustar Industries, Inc. (Nasdaq: CSAR), to which Standard &
Poor's assigns a BB Corporate Credit Rating, announced that
revenues for the third quarter ended September 30, 2002 were
$240.0 million, an increase of 2.2 percent from revenues of
$234.9 million for the same quarter of 2001. Net loss for the
third quarter of 2002 was $4.5 million, compared to third
quarter 2001 net income of $955 thousand. The third quarter 2001
results include a $1.6 million pre-tax reduction in reserves
related to expiring unfavorable supply contracts acquired with
the Sprague paperboard mill. Excluding the Sprague reserve
reduction, net loss for the third quarter of 2001 was $69
thousand.
For the nine-month period ended September 30, 2002, revenues
were $695.4 million compared to revenues of $697.7 million for
2001. The net loss for the first nine months of 2002 was $4.6
million compared to a net loss of $9.5 million in 2001. The net
loss per outstanding share was $0.16 for the first nine months
of 2002 compared with a net loss of $0.34 per outstanding share
for the first nine months of 2001. The net loss for the first
nine months of 2002 includes a $985 thousand pre-tax
restructuring charge related to the permanent closure of our
Camden and Chicago paperboard mills, which were shut down in
2000 and 2001, respectively. The $985 thousand charge represents
a revised estimate of non-cash fixed asset disposals at these
mills. Net loss computed without the impact of the restructuring
charge for the first nine months of 2002 was $4.0 million, or a
$0.14 net loss per outstanding share, compared to a net loss
computed without the impact of restructuring charges,
extraordinary items and the Sprague reserve reversal for the
first nine months of 2001 of $5.8 million, or a $0.21 net loss
per outstanding share.
Thomas V. Brown, president and chief executive officer of
Caraustar, stated, "We are pleased with our continued volume
growth in an otherwise sluggish market. For the third quarter of
2002, compared with the third quarter of 2001, demand for
Caraustar's products grew 4.7 percent in tonnage while the
industry declined 1.7 percent. On a year-to-date basis our
tonnage shipped is 5.5 percent ahead of 2001, while the industry
lags last year by 3.2 percent. The volume growth in clay coated
boxboard was particularly impressive, with a third quarter gain
of 12.8 percent over last year and a year-to-date gain of 11.6
percent over 2001. In both cases the industry had modest losses
in volume of less than 1 percent.
"Despite the volume gains, we could not offset the unusual cost
increases in recovered fiber. The resulting margin compression
drove the earnings shortfall and was exaggerated by the delay in
implementing product price increases both in mill and converted
products. Operating cash flow remained positive for the quarter
at $15 million and, on a year-to-date basis, is $55.9 million,
20 percent ahead of last year.
"The previously announced acquisition of Smurfit-Stone's
industrial packaging businesses was completed on the last day of
the third quarter. The integration is proceeding according to
plan with no material surprises in terms of business retention,
asset capability or the positive response anticipated from
operating personnel. Although it is very early in the process,
we are encouraged that the contribution from these new
businesses will continue to meet our expectations over the
course of the fourth quarter and next year.
"The outlook for the fourth quarter includes modest continued
margin recovery with expected flat fiber costs. We expect
softness in demand at the end of the fourth quarter, as is
generally the case, but ahead of a very soft 2001 fourth
quarter. Given the normally unpredictable nature of the fourth
quarter, we expect positive cash flow but a loss in the range of
$0.02 to $0.07 per share."
Gross paperboard margins at the company's paperboard mills
decreased $12 per ton in the third quarter of 2002 compared to
the second quarter of 2002, as paperboard selling prices
increased $21 per ton and recovered fiber costs increased $33
per ton. Energy costs at the company's paper mills decreased $4
per ton to $45 per ton in the third quarter of 2002 compared to
the second quarter of 2002. Paperboard margins on tubes and
cores decreased $2 per ton, as selling prices increased $20 per
ton and paperboard costs increased $22 per ton in the third
quarter of 2002 compared to the second quarter of 2002.
Net cash provided by operations was $15.2 million in the third
quarter, down from $24.7 million in the second quarter of 2002.
Capital expenditures were $5.4 million in the third quarter and
$16.1 million for the first nine months of 2002. Our cash on
hand was $64.5 million as of September 30, 2002.
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.
CARBIDE/GRAHITE GROUP: Intends to Liquidate Certain Assets
----------------------------------------------------------
The Carbide/Graphite Group, Inc., announces its intent to
liquidate the assets related to C/G's Electrode and Graphite
Specialty Business and Seadrift L.P. These assets comprise
plants located in St. Marys, Pennsylvania; Niagara Falls, New
York; and its headquarters in Pittsburgh, Pennsylvania.
Details of the liquidation will be determined cooperatively
between the Company and its constituencies.
The liquidation is expected to be completed by early-January
2003.
CENTENNIAL COMMS: Fails to Maintain Nasdaq Listing Requirements
---------------------------------------------------------------
Centennial Communications Corp. (NASDAQ: CYCL) -- whose May 31,
2002 balance sheet records a total shareholders' equity deficit
of about $470 million -- has received a Staff Determination
letter from Nasdaq stating that the Company's common stock faces
delisting from the Nasdaq National Market because the Company's
stock had traded below the minimum bid price of $3.00 for 30
consecutive trading days, as set forth in Marketplace Rule
4450(b)(4).
The Company has requested an oral hearing before a Nasdaq
Listing Qualification Panel to appeal the Staff Determination.
Pending the Panel's decision, the Company's common stock will
continue to trade on the Nasdaq National Market. There can be no
assurance that the Panel will grant the Company's request for
continued listing on the Nasdaq National Market. If the
Company's appeal is unsuccessful, the Company intends to apply
to transfer the listing of its common stock to the Nasdaq
SmallCap Market. The Company currently meets the Nasdaq SmallCap
Market's maintenance criteria.
"We remain confident in the prospects for our business and in
our competitive position in the markets in which we operate,"
said Michael Small, chief executive officer.
Centennial is one of the largest independent wireless
telecommunications service providers in the United States and
the Caribbean with approximately 17.1 million Net Pops and
approximately 883,800 wireless subscribers. Centennial's U.S.
operations have approximately 6.0 million Net Pops in small
cities and rural areas. Centennial's Caribbean integrated
communications operation owns and operates wireless licenses for
approximately 11.1 million Net Pops in Puerto Rico, the
Dominican Republic and the U.S. Virgin Islands, and provides
voice, data, video and Internet services on broadband networks
in the region. Welsh, Carson Anderson & Stowe and an affiliate
of the Blackstone Group are controlling shareholders of
Centennial. For more information regarding Centennial, please
visit its Web sites at http://www.centennialcom.comand
http://www.centennialpr.net
CENTRAL EUROPEAN: Will Publish Third Quarter Results Tomorrow
-------------------------------------------------------------
Central European Media Enterprises Ltd., (OTC Bulletin Board:
CETVF.OB) will release third quarter 2002 financial results and
file its 10-Q before markets open on Wednesday, November 6,
2002.
The Company will host a teleconference to discuss its results at
10:00 a.m. (New York Time) on Thursday, November 7, 2002. To
access the teleconference, please dial 212-346-0100 or +44 (0)
8700 013 124 (international callers) ten minutes prior to the
start time. If you cannot listen to the teleconference at its
scheduled time, there will be a replay available through
November 12, 2002 that can be accessed by dialing 800-633-8284
or 402-977-9140, passcode: 20996792.
Central European Media Enterprises Ltd., is a TV broadcasting
company with leading stations located in Romania, Slovenia,
Slovakia and Ukraine. CME is traded on the Over the Counter
Bulletin Board under the ticker symbol "CETVF.OB".
* * *
As reported in Troubled Company Reporter's Sept. 5 edition,
Andersen's reports on the Company's consolidated financial
statements for the year 2001 was modified on a going concern
basis since in its cash flow projections the Company was relying
on cash flows that were outside the Company management's direct
control.
COGENTRIX ENERGY: S&P Places BB+ Rating on Watch Negative
---------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' rating on
Cogentrix Energy Inc., on CreditWatch with negative implications
following the credit downgrade of PG&E National Energy Group
Inc., to 'B-' from 'BB+'. The CreditWatch will be resolved
within the next few weeks upon the review of the company's
strategy and financial projections.
The downgrade of NEG has a significant effect on Cogentrix's
offtaker credit profile. There are two projects that will sell
its generation capacity to NEG; the 810 MW Southaven project in
Mississippi and the 800 MW Caledonia project, also in
Mississippi. Both projects are currently under construction and
have construction loans outstanding. Even though NEG's downgrade
has resulted in a default under the tolling agreements, no
default occurs related to the downgrade under the construction
loans for another six months (starting in September) while
Cogentrix attempts to find a more creditworthy replacement
offtaker. In the event Cogentrix cannot identify a replacement
offtaker and NEG does not cure its default under the tolling
agreement, the banks may withhold funding after the six
months; but by then, the facilities would be near completion.
This negative development comes on top of the downgrade earlier
this year of Dynegy Inc., the offtaker for the Sterlington
project. The Sterlington project has been receiving payments
from Dynegy, but because of the rating downgrade, the dividends
have been withheld at the project level.
On the other hand, the company has a diversified portfolio of
projects and a high level of financial flexibility. Cogentrix
generally generates positive free cash flow and has little need
to access the capital market at the corporate level. Cogentrix
has also indicated to Standard & Poor's that it will maintain
its non-recourse financing strategy to project development and
is significantly decreasing its development expenses, further
reducing its needs for capital. The credit review will take into
consideration the company's financial flexibility as well as its
response to this negative development. In particular, Standard &
Poor's will evaluate Cogentrix's strategy to address the non-
recourse financing debt of the financially troubled projects and
the corresponding financial effect.
COMBUSTION ENG.: Will File for Ch. 11 to Resolve Asbestos Issues
----------------------------------------------------------------
ABB said it was in negotiations with representatives of U.S.
asbestos plaintiffs to resolve the asbestos liability of its
U.S. subsidiary Combustion Engineering by reorganizing CE under
Chapter 11 of the U.S. bankruptcy code.
The negotiations followed CE's and ABB's announcement last week
that the expected asbestos-related costs of CE were likely to
exceed the value of CE's assets, if CE's historical settlement
policies were continued into the future.
ABB said the talks with the plaintiffs' lawyers concerned a so-
called pre-packed Chapter 11, which includes an understanding
among plaintiffs, CE and ABB with regard to the settlement of
all pending and future claims.
ABB believes that Chapter 11 can provide final closure to the
asbestos problem for CE and all ABB affiliates, including ABB
Ltd.
The precise ultimate cost of closure remains uncertain, but ABB
currently expects the cost of final closure will comprise CE's
assets of US$ 812 million (as of September 30, 2002) and an
additional amount in the range of US$ 300 million, payable by
ABB over a period of several years.
From 1990 to the end of 2001, CE settled a total of 204,326
cases, some of them without payment, and paid out US$ 865
million to claimants.
On October 24, 2002, CE reported a 5 percent increase in new
asbestos claims compared to the second quarter of 2002. Settled
claims - excluding settlement in West Virginia that will be
reported at year-end - rose 9 percent over the same period last
year.
Claims outstanding stood at 111,000, up from 102,700 at the end
of the second quarter. Cash payments were down slightly at US$
54 million (second quarter 2002: US$ 55 million).
ABB -- http://www.abb.com-- is a leader in power and automation
technologies that enable utility and industry customers to
improve performance while lowering environmental impacts. The
ABB Group of companies operates in more than 100 countries and
employs about 146,000 people.
CONTOUR ENERGY: Signs-Up Jones Walker as Louisiana Tax Attorneys
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
gave its stamp of approval to Contour Energy Co., and its
debtor-affiliates' application to retain Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, LLP, as their special
counsel to provide legal advice concerning disputes with
Louisiana state and local tax authorities.
Contour first retained Jones Walker in January 2000 and has
rendered legal services since then in connection with, among
other things, disputes with Louisiana state and local tax
authorities. The representation afforded Jones Walker with
intimate familiarity with the Debtors' business affairs and many
of the pertinent legal issues that may arise in the context of
the Debtors' chapter 11 cases.
Jones Walker's current hourly rates are:
Partners $215 to $300 per hour
Associates/Staff Attorneys $135 to $160 per hour
Legal Assistants/Law Clerks $35 to $80 per hour
Contour Energy Co., a company engaged in the exploration,
development acquisition and production of oil and natural gas
primarily in south and north Louisiana, the Gulf of Mexico and
South Texas, filed for chapter 11 protection on July 15, 2002.
John F. Higgins, IV, Esq., at Porter & Hedges, LLP represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $153,634,032
in assets and $272,097,004 in debts.
CYBERCARE INC: Nasdaq Knocks-Off Shares Effective November 1
------------------------------------------------------------
Nasdaq delisted CyberCare, Inc.'s (Nasdaq:CYBR) securities
effective with the opening of trading on November 1, 2002.
The Company's securities will now be listed on the NASD Bulletin
Board and will continue to trade under the current symbol of
CYBR.
The reason stated for the delisting was "the Panel was of the
opinion that the Company failed to present a definitive plan
that will enable it to evidence compliance with all requirements
for continued listing on The Nasdaq SmallCap Market within a
reasonable period of time and to sustain compliance with those
requirements over the long term. In particular, the Panel was of
the view that the company's plan to regain compliance with the
$2,500,000 shareholders' equity requirement is not yet
definitive in nature and will likely require significant
additional time to implement."
The Company disagrees with the Nasdaq decision and has filed an
appeal.
During the October 3, 2002 appeal hearing, the company presented
a plan of action to be taken to regain compliance and asked the
panel for a milestone based extension of 90 days. Prior to the
appeal hearing, the Company had complied with the listing of
additional shares form requirements Nasdaq Marketplace Rule
4310(C)(17). Counsel to the Company is in the process of
providing Nasdaq with supporting documentation for the Company's
compliance with regard to the number of independent directors
and audit committee composition according to Nasdaq Market Rules
4350(C) and 4350(d)(2) respectively.
Additionally, during the October 3, 2002 appeal, the Company
presented board minutes dated August 12, 2002 approving a
reverse of the Company stock to regain compliance with the
minimum bid price requirement per Nasdaq Marketplace Rule
4310(C)(4). The Company also acknowledged the delay in
satisfying Nasdaq fee requirements pursuant to Nasdaq Market
Rule 4310(C)(13). The Company presented a timetable to remedy
the outstanding balance and is fully prepared to honor that
commitment.
Regarding net tangible assets/shareholder's equity/market value
of listed securities/net income per Nasdaq Marketplace Rule
4310(C)(4), the company presented a plan to eliminate a minimum
of $2,000,000 of liabilities including a judgment against the
company. In addition, the Company presented a tentative
agreement to convert approximately $3,750,000 of current debt
obligations. This combined $5,750,000 makes significant progress
in improving the Company's compliance in this area. The Company
has met each of these planned commitments.
Additional discussions regarding a shareholders meeting by year
end 2002 was also held during the October 3rd appeal hearing.
The Company stated that a proxy statement was being prepared and
would be sent out as the Company finalized details on its' path
forward and recapitalization plans and received definitive
documents on the above referenced debt conversion and other
issues related to addressing Nasdaq Marketplace Rule 4310(C)(4).
These issues would be included in the proxy statement as they
require shareholder approval. The Company continues to plan to
have a shareholders meeting prior to the end of the calendar
year 2002.
The Company believes it is performing exactly to the milestone
plan presented to the Nasdaq Panel at the October 3, 2002,
appeal hearing. Based upon this, and the progress made to date,
the Company immediately filed an appeal for reconsideration and
to be relisted on the Nasdaq SmallCap.
CyberCare, Inc., is a holding company, which is primarily
composed of a services business comprising both a physical
therapy and rehabilitation business and a pharmacy business, and
a healthcare technology solutions business. Our overall goal is
to improve the delivery and quality of healthcare for patients
while adding incremental value to our customers' clinical and
business processes. Our physical therapy and rehabilitation
business operates clinics throughout the State of Florida. Its
caring staff of clinicians and therapists compliment traditional
primary care, orthopedic and neurological physician services and
serves a wide range of patients requiring physical and
occupational therapy and other rehabilitation services. Our
pharmacy business supports patients and residents in assisted
living and other long-term care facilities located in Florida.
It also is licensed for mail order distribution across all fifty
states.
The Company's healthcare technology business utilizes its
intellectual property, including patented technology, to deliver
tele-health solutions addressing the entire continuum of care.
It's Electronic HouseCall(C) (EHC(TM)) hardware and software
technology focuses on the chronically ill, wellness management,
compliance and wound care. The EHC(TM) family of products and
services permit enhanced physician supervision and oversight and
enable remote medical and wellness monitoring and real-time
interactive communications between patients and caregivers. This
is made possible through various monitoring devices, hardware
and software applications and our ability to establish an
interactive network across the health care continuum and among a
community of users and providers. In combination with our
customers' clinical and business processes, the Electronic
HouseCall(R) system allows for effective and efficient data
collection, integration and security, while successfully
supporting case management and promoting personal participation
and interaction. CyberCare, Inc., is headquartered in Boynton
Beach, Fla. Visit its Web site at http://www.cybercare.net
Cybercare Inc.'s June 30, 2002 balance sheets show a working
capital deficit of about $10 million. The Company's total
shareholders' equity has shrunk to about $740,000 from about $10
million recorded at December 31, 2001.
EGAIN COMMS: Commences Trading on Nasdaq SmallCap Market Today
--------------------------------------------------------------
eGain Communications Corporation (Nasdaq:EGAN), a leading
provider of knowledge-powered customer service software and
services for the Global 2000, announced financial results for
the first quarter of fiscal year 2003.
Revenue for the quarter was $5.7 million, compared to $6.3
million in the prior quarter. On a pro-forma (non-GAAP) EBDA
basis, which reflects earnings before depreciation,
amortization, and other non-cash and restructuring charges, net
loss for the quarter narrowed to $2.9 million, compared to a net
loss of $5.6 million in the prior quarter. Other non-cash
charges include accreted dividends.
On a GAAP basis, including non-cash and restructuring charges,
net loss for the quarter was $8.1 million compared to a net loss
of $57.5 million in the prior quarter.
"We are pleased to have performed in line with our previously
announced targets in a traditionally slow summer quarter," said
Ashutosh Roy, eGain's chairman and CEO. "We've been able to
reduce costs and expenses on an EBDA basis by $3.3 million over
the prior quarter. Our well-established global operating model
allows us to sustain product innovation and customer
satisfaction in a tough market. We remain committed to achieving
our EBDA breakeven target in the December 2002 quarter,"
continued Mr. Roy.
In addition to announcing quarterly results, eGain also
announced that the Nasdaq Stock Market has approved the transfer
of the listing of eGain's common stock from the Nasdaq National
Market to the Nasdaq SmallCap Market. The transfer to the
SmallCap Market will take effect with the open of business
today, November 5, 2002.
During the quarter eGain expanded its relationships with
existing customers such as Virgin Mobile, Vodafone and Verizon
and added 8 new customers including Replacements, Ltd. and
OnStar Corporation. eGain also signed new relationships or
expanded existing relationships with distribution and systems
integrator partners around the world, most notably Hitachi, NS
Solutions, Cap Gemini, Deloitte Consulting, eLoyalty and
Siemens.
On the product side, the company announced the availability of
eGain Call Center Bridge(TM) 5.0, a unique solution for out-of-
the-box integration of eGain's solutions with leading call
center telephony providers. The product provides unprecedented
flexibility to call center managers in optimizing the use of
blended agents for assisted service across the phone and "live"
web channels. This is key to maximizing contact center
productivity, as end-customers continue to demand unified,
multi-channel customer service from enterprises.
eGain (Nasdaq:EGAN) is a leading provider of software and
services that enable knowledge-powered multi-channel customer
service. Selected by 24 of the 50 largest global companies to
transform their traditional call centers into knowledge-powered
multi-channel contact centers, eGain solutions measurably
improve operational efficiency and customer retention,
delivering a significant ROI. eGain eService Enterprise, the
company's software suite, includes applications for knowledge
management, web self-service, email management and web
collaboration. The suite is certified for integration with
leading existing call center providers and business systems and
is also available as a hosted service. eGain also offers a
comprehensive set of professional services including business
consulting, implementation services, 24x7 support, education and
training.
Headquartered in Sunnyvale, California, eGain has an operating
presence in 18 countries and serves over 800 enterprise
customers worldwide including ABN AMRO, DaimlerChrysler, and
Vodafone. To find out how eGain can help you leverage customer
service for competitive advantage, please visit
http://www.eGain.comor call the company's offices -- United
States: (888) 603-4246; London: +44 (0) 1753 464646; or Sydney:
+612 9492 5400.
At September 30, 2002, eGain's balance sheets show a working
capital deficit of about $2.7 million, while total shareholders'
equity further dwindled to about $9 million from $15 million at
June 30, 2002.
ENRON CORP: Committee Wins Nod to Hire Houlihan Lokey as Advisor
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Enron
Corporation, and its debtor-affiliates obtained permission from
the U.S. Bankruptcy Court for the Southern District of New York
to retain Houlihan Lokey Howard & Zukin Financial Advisors,
Inc., as its financial advisor under a general retainer, nunc
pro tunc to December 17, 2001.
Houlihan Lokey is expected to provide these services to the
Committee:
(a) Evaluating the assets and liabilities of the Debtors and
their subsidiaries;
(b) Analyzing and reviewing the financial and operating
statements of the Debtors and their subsidiaries;
(c) Analyzing the business plans and forecasts of the Debtors
and their subsidiaries;
(d) Evaluating all aspects of DIP financing, cash collateral
usage and adequate protection therefore, and any exit
financing in connection with any plan of reorganization
and any budgets relating thereto;
(e) Helping with the claim resolution process and
distributions relating thereto;
(f) Providing such specific valuation or other financial
analyses or opinions as the Committee may require in
connection with the case;
(g) Assessing the financial issues and options concerning:
-- the sale of any assets of the Debtors, either in whole
or in part, and
-- the Debtors' plan(s) of reorganization or any other
plan(s) of reorganization and assisting the Committee
in negotiating the terms thereof;
(h) Preparation, analysis and explanation of the Plan to
various constituencies;
(i) Providing testimony in court on behalf of the Committee;
and
(j) Providing litigation support to Committee Counsel in any
contested matter before the Court.
Pursuant to the terms of an Engagement Letter, and with the
Court approval, Houlihan will be paid:
-- Monthly Fee:
The Company shall pay Houlihan Lokey a monthly fee of
$350,000 on each monthly anniversary of the Effective Date of
the Engagement Letter. The Monthly Fees shall be considered
fully earned when due and are non-refundable regardless of
whether any Transaction is consummated. In the event that,
during the term of the engagement, it is reasonably expected
by the Committee that there will be a period of sustained
inactivity or significantly low activity, the Committee and
Houlihan Lokey shall agree in "good faith" to a reduced
monthly fee that is commensurate with the work that is
expected to be required of Houlihan Lokey during that period.
-- Transaction Fee:
Houlihan Lokey shall be entitled to an additional fee of
$9,500,000 shall be earned upon the closing or consummation
of a Transaction and shall be paid upon the effective date of
a Chapter 11 plan of reorganization or liquidation. Of the
Transaction Fee, $4,000,000 shall be subject to these credits
of the Monthly Fees earned by Houlihan Lokey:
(a) 25% of the Monthly Fees earned after the first 9 months
of the engagement, and
(b) 50% of the Monthly Fees earned after the first 18 months
of the engagement.
In addition, the Committee reserves the right to object to
the Reserve Amount (net of any credits of the Monthly Fees
applied to such amount) in the event the Committee can
establish that such amount (given the entire compensation to
be received by Houlihan Lokey pursuant to the terms of this
Agreement) was not reasonable based upon the services
actually provided by Houlihan Lokey.
-- Reimbursement of Expenses:
In addition to any other payments and regardless of whether
any Transaction is consummated, Houlihan Lokey shall be
reimbursed for all out-of-pocket expenses that are reasonably
incurred in connection with its services. Such fees and
expenses will include, but not be limited to, travel
expenses, communication charges, database charges, copying
expenses, and delivery and distribution charges.
-- Tail Period:
Notwithstanding any termination of the Engagement Letter,
Houlihan Lokey shall be entitled to full payment, in cash, of
the Transaction Fees so long as a Transaction is consummated
with the consent or approval of the Committee (by majority
vote) during the term of the Engagement Letter, or within 6
months after the date of termination of the Engagement
Letter.
-- Indemnification:
The Debtors shall indemnify Houlihan Lokey to the fullest
extent lawful, from and against any and all losses, claims,
damages or liabilities -- except for any liability resulting
from Houlihan's bad faith, self-dealing, willful misconduct
or gross negligence. (Enron Bankruptcy News, Issue No. 46;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1) are trading at
11.5 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
EOTT ENERGY: Court Okays Logan & Company as Claims Agent
--------------------------------------------------------
EOTT Energy Partners, L.P., and its debtor-affiliates sought and
obtained the Court's authority to appoint Logan & Company, Inc.,
as their claims, noticing and balloting administrator.
Robert D. Albergotti, Esq., at Haynes and Boone LLP, in Dallas,
Texas, relates that as Claims Administrator, Logan will:
(a) serve as the Debtors' claims, noticing, and balloting
agent, and upon request to aid the Debtors in preparing
their schedules and statement of financial affairs,
including, but not limited to, providing balloting and
solicitation services to the Debtors, reconciling claims,
and acting as official claims agent in lieu of the
Clerk's Office in:
-- serving notices to parties-in-interest;
-- maintaining all proofs of claims and proofs of
interests filed in these cases that Logan receives;
-- docketing all claims;
-- maintaining and transmitting to the Clerk's Office
the official claims registers;
-- maintaining current mailing lists of all entities that
have filed claims and notices of appearance Logan
receives;
-- providing the public access for examination to all
claims at Logan's premises during regular business
hours and without charge; and
-- recording all transfers it receives, pursuant to Rule
3001(e) of the Federal Rules of Bankruptcy Procedure;
(b) provide the Debtors with consulting and computer software
support regarding the reporting and management
requirements of the bankruptcy administration process; and
(c) educate and train the Debtors in the use of the support
software and provide Logan's Standard Reports as well as
consulting and programming support for reports the
Debtors request, program modification, database
modification and other features in accordance with the
fee schedule.
Mr. Albergotti assures Judge Schmidt that Logan is qualified to
provide the services since it is a data processing firm that
specializes in noticing, claims processing and other
administrative tasks in Chapter 11 cases. In fact, Logan has
provided substantially similar services in other Chapter 11
cases, including that of:
-- The IT Group Inc.,
-- Exodus Communications, Inc.,
-- Diamond Brands Operating Corp.,
-- Montgomery Ward LLC,
-- ENBC Corp.,
-- ICG Communications, Inc.,
-- Eagle Food Ctrs., Inc.,
-- Philip Servs. (Delaware), Inc., and
-- Favorite Brands Int'l. Holding Corp.
The Court also approved the form of the mailing envelope Logan
will use in mailing the Notice of Expedited Case Under Chapter
11 of the Bankruptcy Code Fixing Meeting of Creditors and other
Dates to creditors and parties-in-interest.
Mr. Albergotti explains that the office of the Clerk of the
Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division is not equipped to efficiently and effectively
docket and maintain the extremely large number of proofs of
claim that likely will be filed in these cases. The Debtors
have identified over 250,000 creditors, potential creditors and
other parties-in-interest to which notices must be sent. "The
sheer magnitude of the Debtors' creditors body makes it
impracticable for the Clerk's Office to undertake that task and
send notices to the creditors and other parties-in-interest,"
Mr. Albergotti says.
Thus, the Debtors believe that the most effective and efficient
manner by which to accomplish the process of receiving,
docketing, maintaining, photocopying and transmitting proofs of
claim in these cases is to engage an independent agent of the
Court. Moreover, Mr. Albergotti contends, Logan will be able to
expedite the Rule 2002 notices, streamline the claims
administration process, and permit the Debtors to focus on their
reorganization efforts.
The Debtors will pay Logan's standard prices for the services,
expenses and supplies at the rates or prices in effect in the
date the services or supplies are provided to the Debtors.
Moreover, the Debtors will pay, by wire transfer of funds, for:
(a) all legal publication costs; and
(b) postage for any mailings to at least 500 creditors before
a publication or mailing occurs and, as the case may be,
the Debtors will pay outside third parties directly for
any costs incurred in mailing notices, ballots or any
pleadings to shareholders, bondholders or any other
parties.
The Debtors will also reimburse Logan for the necessary out-of-
pocket expenses incurred.
Mr. Albergotti reports that the Debtors paid Logan $75,000 as a
retainer for the services provided prepetition. Logan will not
use the retainer for payment of monthly invoices but will hold
the funds in trust. Should there remain any outstanding amounts
due for services provided before the filing of the bankruptcy
cases, Logan will be entitled to apply the retainer to the
outstanding amounts and the Debtors have agreed to replenish the
retainer by wire transfer in the same amount within two business
days of notice of the draw-down of the retainer.
Logan represents, among other things, that:
(a) it will not consider itself employed by the United States
government and will not seek any compensation from the
United States government in its capacity as Claims and
Noticing Agent in these Chapter 11 cases;
(b) it waives any rights to receive compensation from the
United States government;
(c) it will not be an agent of the United States and will not
act on behalf of the United States;
(d) it will not misrepresent any fact to the public; and
(e) will not employ any past or present employees of the
Debtors in connection with its work as Claims and
Noticing Agent in these Chapter 11 cases.
The Debtors have agreed to indemnify and hold Logan harmless as
against any losses, damages, judgments, liabilities and expense
resulting from action taken or permitted by Logan in good faith
and with due care and without negligence in reliance on
instructions or orders received from the Debtors as to anything
arising in connection with Logan's performance under the
Agreement. Furthermore, Logan will be without liability to the
Debtors with respect to anything done or omitted to be done, if
done in good faith and without negligence or willful or wanton
misconduct. (EOTT Energy Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FIRST CHICAGO: Fitch Affirms Low-B/Junk 1997-CHL1 Note Ratings
--------------------------------------------------------------
First Chicago/Lennar Trust I, series 1997-CHL1, $83.6 million
class B commercial mortgage certificates are upgraded to 'A-'
from 'BBB+' by Fitch Ratings. In addition, Fitch affirms the
following classes: $36.7 million class C at 'BBB'; $78 million
class D at 'BB', $119.4 million class E at 'B', $13.8 million
class F at 'B-' and $18.4 million class G at 'CCC'. The class H
certificates are not rated by Fitch. Since Fitch's last review,
the ratings on classes A and IO have been withdrawn as the
certificates have been paid in full. The rating actions follow
Fitch's annual review of the transaction, which closed in April
1997.
The upgrade is primarily due to the increased subordination on
class B which is now the most senior class in the transaction.
Almost 17% of the pledged certificates are now rated 'BBB-' or
better by Fitch compared to 0% at issuance. However, 20.4% of
the pledged certificates are now rated 'CCC' or worse or not
rated compared to only 9.6% at issuance. Furthermore, one
underlying transaction, Nomura Asset Securitization Corp.'s
19994-MD1 (NASC 94-MD1) realized a large loss which translated
into a $12 million loss to the trust's class H certificates.
After taking into account the ratings migrations, the realized
losses, and expected losses, the credit enhancement to class B
warrants the upgrade referenced above and the credit enhancement
to the remaining classes in the trust is sufficient for
affirmation.
The certificates are secured by 42 subordinate commercial
mortgage pass-through certificates (pledged certificates) from
22 separate commercial mortgage securitizations (underlying
transactions). The underlying transactions, backed by a variety
of property types, were securitized from 1992 to 1997 by various
issuers and, as of the October 31, 2002 distribution date, have
a current aggregate certificate balance of approximately $3.7
billion, down from $8.8 billion at closing. The transaction's
certificate balance has decreased by 18.7% to $373.4 million,
from $459.1 million at closing. The decrease in certificate
balance is due to paydowns of $72.3 million on seven of the
pledged certificate classes and realized losses of $13.3 million
on five of the pledged certificate classes.
Fitch formally rates and monitors 21 of the 22 underlying
transactions, approximately 98% of the re-remic by balance. The
remaining transaction is assessed and monitored internally.
Fitch's current ratings or credit assessments on the pledged
certificates compared to origination are as follows:
-- At or above 'BBB-' - 16.9% compared to 0.0%;
-- 'BB' - 34.4% compared to 47.3%;
-- 'B' - 28.2% compared to 43.1%; and
-- At or below 'CCC' or not rated - 20.4% compared to 9.6%.
Since last review, Fitch has upgraded ten of the pledged
certificates (27.1% of the re-remic transaction) and downgraded
four (8%). The upgraded certificates are part of the following
underlying transactions: MSC 1996-WF1 (representing 9% of the
re-remic transaction), SASCO 1996-CFL (7.2%), NLFC 96-1 (3.6%),
CSFB 1995-MF1 (2.7%), KSMC 1995-C1 (2.2%), MLMI 1995-C1 (1.3%),
and MLMI 1994-C1 (1.1%). The downgraded certificates are part of
the following transactions: PRU 95-MCF2 (6.3%) and NASC 1994-MD1
(1.7%). Since the last review, three pledged certificates have
paid in full: CSFB 95-AEW1, class E; RTC 95-C1, class E; and RTC
92-C8, class E.
As of the October 31, 2002 distribution date, total
delinquencies have increased to 3.47% of the outstanding balance
of the underlying transactions from 2.01% at origination and
3.10% last year. Currently, 2.28% of the underlying transaction
balance is 30, 60, or 90 days delinquent compared to 1.75% last
year, and 1.19% is in foreclosure or real estate owned (REO)
compared to 1.35% last year.
Fitch will continue to closely monitor this transaction, as
surveillance is ongoing.
FOAMEX INT'L: CEO Chorman Assumes Responsibilities as President
---------------------------------------------------------------
Foamex International Inc. (NASDAQ: FMXI), the world's leading
manufacturer of flexible polyurethane and advanced polymer foam
products, announced that Thomas E. Chorman, Chief Executive
Officer, will assume additional responsibilities as President of
Foamex, effective immediately.
In addition, the Company announced that it has implemented a new
and streamlined senior management team and that George
Karpinski, Senior Vice President and Treasurer, has been named
Interim Chief Financial Officer.
As part of the new management structure, the following
additional changes have been made to Foamex's executive
management team, effective immediately:
- Paul Haslanger, formerly Senior Vice President of
Automotive Manufacturing, has been named Executive Vice
President of Manufacturing, replacing Pete Wallace, who has left
the Company;
- Steven Drap, formerly Executive Vice President of
Strategic Planning and Development, has been named Executive
Vice President of Carpet Cushion, replacing Terry Kall, who has
announced his retirement effective November 8, 2002;
- Gregory Christian, formerly Vice President and Deputy
General Counsel, has been named Executive Vice President and
General Counsel and will be responsible for both the Legal
Department and Human Resources. James Van Horn, formerly
Executive Vice President, Human Resources, has left the Company;
- Michael Carlini, formerly Senior Vice President and Chief
Purchasing & Logistics Officer, has been named Chief
Administrative Officer in charge of Purchasing, Logistics and
Information Technology; and
- Andrew Thompson, formerly Vice President, Research &
Development has been promoted to Senior Vice President, Research
& Development.
Additionally, the following members of the senior management
team will retain their current responsibilities:
- Donald Crawford, Executive Vice President, Foam Products
- East;
- Darrell Nance, Executive Vice President, Foam Products -
West;
- Arthur Vartanian, Executive Vice President, Automotive
Products;
- Virginia Kamsky, Chairman & CEO of Symphonex; and
- Steve Scibelli, President of Symphonex.
Commenting on the new executive management team, Mr. Chorman
said: "I'm very proud of the strong new executive team we've put
in place. We are unified in our focus and will work together to
creatively drive productivity and efficiency in all our
businesses. I have great confidence in the new management team's
ability to work closely with one another to energize Foamex,
deliver fully on the promise of this Company and create greater
value for our shareholders."
Mr. Chorman continued: "I would like to thank Pete, Terry and
Jim for their contributions to Foamex over the years and I wish
them the best of luck in their next endeavors."
Commenting on the appointment of George Karpinski as Interim
CFO, Mr. Chorman said: "We are pleased to have George in this
critical position while Foamex continues its search for a
permanent CFO. Already a valuable member of Foamex's senior
management team, George has an impressive financial background
and he will be a great asset in this role as we take steps to
increase efficiency and create greater value for shareholders."
Biographies of Executive Management Team:
Gregory J. Christian - Executive Vice President & General
Counsel Gregory J. Christian was most recently Vice President
and Deputy General Counsel of Foamex since February 2002 and was
Director of Labor Relations and Corporate Counsel from October
1996 to February 2002. Prior to joining Foamex, Mr. Christian
held various management positions of increasing responsibility
with Trans Freight Systems, Inc. most recently as Vice President
and Corporate Counsel. Mr. Christian received a B.S. in
Management from Fairfield University, a Masters in Business
Administration from Widener University and a Juris Doctorate
from Widener University.
Michael Carlini - Chief Administrative Officer
Michael Carlini has been with Foamex since June 2001, and was
most recently as Senior Vice President and Chief Purchasing &
Logistics Officer. Prior to that, Mr. Carlini served as Senior
Vice President of Finance & Chief Accounting Officer. Before
joining Foamex he spent eight years with Berg Electronics,
holding various positions such as VP of North American
Operations, Global Vice President & Controller, and Vice
President of Finance. Mr. Carlini also worked for General
Defense Corporation as Vice President & General Manager, and
spent four years with Price Waterhouse & Company in New York and
Philadelphia. Mr. Carlini holds a B.S. in Business
Administration from Susquehanna University and an MBA with a
concentration in Finance from Drexel University; he is also a
CPA.
Steven Drap - Executive Vice President, Carpet Cushion
Steven Drap was most recently Executive Vice President,
Strategic Planning and Development of Foamex since August 2002
and was the Company's Executive Vice President, Technical
Products from March 1998 until August 2002. Mr. Drap served as
Vice President, Manufacturing and Customer Service, Technical
Products of Foamex from July 1997 until March 1998. Prior to
that, Mr. Drap held various management positions since joining
Foamex in 1980. He received a B.S. in Chemistry from Lehman
College.
Paul Haslanger - Executive Vice President, Manufacturing
Paul Haslanger was most recently Senior Vice President of
Automotive Manufacturing and has held various manufacturing
positions throughout all business units of Foamex. In 1993 he
was promoted to Senior Vice President of Manufacturing for
Foamex. In 1984 he was Vice President of Manufacturing with a
predecessor company to Foamex and prior to that he held various
plant level jobs including Technical Manager for the Eddystone
plant. Mr. Haslanger began his career in 1969 as a process
engineer at the Eddystone Plant. He received a B.S. in
Mechanical Engineering from Cornell University.
George Karpinski - Interim Chief Financial Officer
George Karpinski was most recently Senior Vice President and
Treasurer of Foamex and has held various positions throughout
Foamex. Prior to this position, Mr. Karpinski was Vice President
and Treasurer of Foamex from May 1993 until August 1997,
Treasurer of Foamex from March 1989 until May 1993 and Assistant
Treasurer of Foamex from November 1985 until March 1989. Mr.
Karpinski began his career with a predecessor to Foamex in 1969.
He is a graduate of Pennsylvania State University with a B.S. in
Business Administration.
Andrew Thompson - Senior Vice President, Research & Development
Andrew Thompson has been with the Foamex since January of 2000
and was most recently Vice President, Research & Development in
charge of managing the R&D organization, intellectual property
strategy, and product stewardship. Prior to joining Foamex, Mr.
Thompson spent 10 years at Lyondell/ARCO Chemical where he held
various positions in polyurethane-related areas. Mr. Thompson
holds 12 U.S. patents in polyurethane technologies. He holds a
B.S. in Chemistry from the University of Delaware and a Ph.D. in
Polymer Chemistry from the University of Massachusetts.
Foamex, headquartered in Linwood, PA, is the world's leading
producer of comfort cushioning for bedding, furniture, carpet
cushion and automotive markets. The Company also manufactures
high-performance polymers for diverse applications in the
industrial, aerospace, defense, electronics and computer
industries as well as filtration and acoustical applications for
the home. For more information visit the Foamex Web site at
http://www.foamex.com
* * *
As reported in Troubled Company Reporter's October 18, 2002
edition, Foamex International obtained a waiver from its bank
lenders of its financial covenants for the period ended
September 29, 2002. This waiver will be effective until November
30, 2002. The Company is currently in discussions with its bank
lenders to amend its financial covenants. Foamex expects to
receive the necessary covenant amendments by November 30, 2002,
although there can be no assurance that the covenants will be
amended.
At June 30, 2002, Foamex's balance sheet shows a total
shareholders' equity deficit of about $81 million.
FRESH AMERICA: Files Form 15 to Reduce Costs & Enhance Earnings
---------------------------------------------------------------
Fresh America Corp., a food distribution management company, has
taken steps to enhance its future financial operating results.
The Company's Board of Directors has approved and the Company
has filed a Form 15 with the SEC. By filing the Form 15,
effective immediately, Fresh America will no longer be a
reporting company under the Securities Exchange Act of 1934, and
the Company's securities will no longer be eligible to trade on
the Over The Counter Bulletin Board.
Fresh America expects to realize significant cost savings as a
result of being relieved of the burdensome accounting, legal and
administrative costs associated with SEC reporting, which have
been material components of the Company's operating costs. The
projected cost savings will help to bring the Company's expenses
more in line with its revenues and will enable the Company's
management to focus more of its time on other business issues.
"Current market conditions do not warrant the significant annual
costs associated with being a reporting company," said Arthur
Hollingsworth, Chairman of the Board. "We believe it is prudent
to utilize these funds to enhance the financial performance of
the Company. As a private company, Fresh America will have more
flexibility in pursuing strategic opportunities, continuing to
invest in its core business, and in recruiting and retaining the
people it needs to be successful long-term. This move will also
enable management to focus more time on the Company's business."
Fresh America is an integrated food distribution management
company that operates facilities located in Dallas and Houston,
Texas; Scranton and Wilkes-Barre, Pennsylvania; Cincinnati,
Ohio; Atlanta, Georgia; and Chicago, Illinois.
* * *
As previously reported, Fresh America Corp., received an
extension to the maturity date of its senior credit facility to
January 2, 2003, and extensions to the maturity dates of its
unsecured senior term debt to January 3, 2003. The Company's
balance of aggregate senior term debt is $7.3 million, as
compared to $18.7 million at December 2000. The Company is
currently working on refinancing the senior credit facility
which has a current outstanding balance of $4.1 million.
GENTEK INC: Proposes Uniform Interim Compensation Procedures
------------------------------------------------------------
GenTek Inc., and its debtor-affiliates seek to establish
procedures for the interim compensation and reimbursement of
court-approved professionals on a monthly basis.
Jane M. Leamy, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, informs the Court that the Debtors are currently filing
applications to employ a number of professionals whose services
will be central to the Debtors' restructuring efforts. They
also anticipate, as these cases progress, to retain other
professionals or special counsel. In addition, a statutory
committee of unsecured creditors will likely be appointed in
these cases, and that committee will likely seek to retain
counsel and other professionals to assist it in the performance
of its official duties. Therefore, Ms. Leamy contends that
establishing interim compensation procedures is necessary in
order to permit the Court and other parties to:
-- more effectively monitor the professional fees incurred in
these Chapter 11 cases;
-- provide stability and predictability to the Debtors' cash
flows; and
-- avoid imposing a financial burden on the Professionals.
In view of that, the Debtors propose these monthly payment
guidelines:
A. On or before the 25th day of each month following the month
for which compensation is sought, each Professional will file
a monthly fee application with the Court and will serve a
copy of the Fee Application to:
(a) GenTek Inc.
90 East Halsey Road
Parsippany, New Jersey 07054
Attn: Michael Herman;
(b) counsel for the Debtors:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
Attn: Mark S. Chehi, Esq.;
(c) David L. Buchbinder, Esq.,
Office of the United States Trustee
Room 2313
844 North King Street
Wilmington, Delaware 19801;
(d) counsel to the Agent for the Lenders:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Kenneth Ziman, Esq.; and
(e) counsel to the Committee;
B. Each Notice Party will have 20 days after service of a
Monthly Fee Application to object to the Application. Upon
the expiration of the Objection Deadline, each Professional
may file a certificate of no objection or a certificate of
partial objection with the Court, whichever is applicable,
after which the Debtors are authorized to pay each
Professional an actual Interim Payment equal to the lesser
of:
-- 80% of the fees and 100% of the expenses requested in the
Monthly Fee Application, which is the Maximum Payment; or
-- 80% of the fees and 100% of the expenses not subject to an
objection;
C. If any Notice Party objects to a Professional's Monthly Fee
Application, it must file a written objection with the Court
and serve it on the Professional and each of the Notice
Parties so that it is received on or before the objection
Deadline. Thereafter, the objecting party and the
Professional may attempt to resolve the Objection on a
consensual basis. If the parties are unable to reach a
resolution of the objection within 20 days after service of
the Objection, the Professional may either:
-- file a response to the objection with the Court, together
with a request for payment of the difference, if any,
between the Maximum Payment and the Actual Interim Payment
made to the affected Professional; or
-- forego payment of the Incremental Amount until the next
interim or final fee application hearing, at which time
the Court will consider and dispose of the Objection, if
requested by the parties;
D. Beginning with the three-month period ending on December 31,
2002, at three-month intervals or at other intervals as are
convenient for the Court, each of the Professionals will file
with the Court and serve on the Notice Parties an interim fee
application for compensation and reimbursement of expenses
sought in the Monthly Fee Applications filed during that
period:
-- The Interim Fee Application must include a summary of the
Monthly Fee Applications that are the subject of the
request, but need not include the narrative discussion
generally included in monthly fee applications;
-- Each Professional will serve notice of its Interim Fee
Application on all parties that have entered their
appearance pursuant to Bankruptcy Rule 2002;
-- Each Professional must file its Interim Fee Application
within 45 days after the end of the Interim Fee Period for
which the request seeks allowance of fees and
reimbursement of expenses. The Professional must file its
first Interim Fee Application on or before February 15,
2003, and the first Interim Fee Application should cover
the Interim Fee Period from the Petition Date through and
including December 31, 2002; and
-- Any Professional that fails to file an Interim Fee
Application when due will be ineligible to receive further
interim payments of fees or expenses with respect to any
subsequent Interim Fee Period until the Interim Fee
Application is filed and served by the Professional;
E. The Debtors will ask the Court to schedule a hearing on
the Interim Fee Applications at least once every six months,
or at other intervals as the Court deems appropriate. The
Court, in its discretion, may approve an uncontested Interim
Fee Application without the need for a hearing, upon the
Professional's filing of a certificate of no objection. Upon
allowance by the Court of a Professional's Interim Fee
Application, the Debtors will be authorized to promptly pay
that Professional all requested fees, including the 20%
holdback, and costs not previously paid;
F. The pendency of an objection to payment of compensation or
reimbursement of expenses will not disqualify a Professional
from the future payment of compensation or reimbursement of
expenses; and
G. Neither the payment of nor the failure to pay, in whole or in
part, monthly interim compensation and reimbursement of
expenses, nor the filing of or failure to file an objection
will bind any party-in-interest or the Court with respect to
the allowance of interim or final applications for
compensation and reimbursement of expenses of Professionals.
All fees and expenses paid to Professionals under these
compensation procedures are subject to disgorgement until
final allowance by the Court;
The Debtors also ask the Court to permit each member of the
Committees in these cases to submit statements of expenses --
excluding Committee member counsel fees and expenses -- and
supporting vouchers to the Committees' counsel, who will collect
and file the requests for reimbursement in accordance with the
procedure for monthly and interim compensation and reimbursement
of Professionals. (GenTek Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL CROSSING: Pacific Crossing Wants to Pull Plug on Contract
----------------------------------------------------------------
Pacific Crossing, Ltd., asks the Court for relief from the
automatic stay to reject an executory contract with Global
Crossing Network Center Ltd.
On July 19, 2002, Pacific Crossing filed a voluntary petition
for relief under the Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware.
Robert J. Feinstein, Esq., at Pachulski Stang Ziehl Young &
Jones P.C., in Wilmington, Delaware, relates that Pacific
Crossing owns and operates one of only two major trans-Pacific
fiber optic cable systems with available capacity linking Japan
and the United States. This fiber optic cable system named
Pacific Crossing-1 is a 13,076 route-mile fiber optic system
between Japan and the United States. PC-1 consists of four
fiber-pairs constructed into a fully redundant dense wavelength
division multiplexing self-healing ring, and is supported by 424
sub-oceanic repeaters that use state-of-the-art optical
amplifiers utilizing 980 nanometer pump laser technology. PC-1
has been fully operational for over two years.
PC-1 consists of four segments connecting each of its four
landing stations:
-- Ajiguara, Japan to Harbour Pointe, Washington;
-- Shima, Japan to Grover Beach, California;
-- Ajiguara to Shima; and
-- Harbour Pointe to Grover Beach.
Mr. Feinstein explains that the landing stations have standard
cooling, fire suppression, flood protection, and emergency
backup capabilities via batteries and on-site fuel powered
generators that provide continuous uninterrupted service. At
the landing stations in Shima and Ajiguara, Japan, this
equipment is shared with East Asia Crossing, a Pan-Asian subsea
system owned by Asia Global Crossing Ltd. an affiliate of the
Pacific Crossing Debtors. At Grover Beach, this equipment is
shared with Pan-American Crossing, a subsea system owned by
Global Crossing, Ltd., another affiliate of the Pacific Crossing
Debtors. The Pacific Crossing Debtors also own the land and the
buildings for all landing stations, except the land for the
Ajiguara landing station, which is leased.
According to Mr. Feinstein, Pacific Crossing's primary source of
revenue historically has been the sale of Indefeasible Rights of
Use. Pacific Crossing provided PC-1 capacity to Asia Global
Crossing and the Debtors in the form of IRUs that they then
resold on a city-to-city basis to the end customer. Under this
arrangement, the customer purchased the guaranteed long-term use
of a certain amount of capacity of PC-1. The entire purchase
price would generally be paid to Pacific Crossing at the time of
activation. IRU sales also in many cases involve the periodic
payment by customers of ongoing maintenance charges over the
term of the IRU.
In order to maintain and operate PC-1, Mr. Feinstein explains
that Pacific Crossing requires substantial support.
Accordingly, on August 20, 1999, Pacific Crossing, Ltd. and GC
Network Center entered into the Operations, Administration, and
Maintenance Agreement. Pursuant to the Turn Key Agreement,
Pacific Crossing is to receive, among other services:
-- marine repair and maintenance services for all components of
the submarine portion of PT-1;
-- operations and maintenance services at their two U.S. cable
landing stations;
-- maintenance and support services of bandwidth managers at all
four landing stations; and
-- revenue accounting, network faultfinding, and end-to-end
management, data disaster recovery, network validation
testing, engineering support, physical maintenance, fault
resolution, inventory management, and hardware reliability
analysis and repair.
Pursuant to the Turn Key Agreement, the Debtors could provide
the Turn Key Services directly or they could subcontract the
performance of any of its obligations.
Mr. Feinstein relates that GC Network Center subcontracted the
Wet Maintenance Services to Global Marine Systems Limited, the
U.S. O&M Services to Alcatel Submarine Networks, and the
Bandwidth Support Services to Lucent Technologies. Pursuant to
the Turn Key Agreement, Pacific Crossing would pay GC Network
Center for all of the services received under the Turn Key
Agreement from all service providers, including those received
by Global Marine, Alcatel, and Lucent. GC Network Center would
then pay the other service providers.
Since GC Network Center filed its Chapter 11 petition, it has
not provided Pacific Crossing with certain services pursuant to
the Turn Key Agreement. In addition, GC Network Center did not
pay the other service providers on behalf of Pacific Crossing
for services provided to Pacific Crossing.
As a result of GC Network Center's prepetition failure to
perform under the Turn Key Agreement, Mr. Feinstein tells the
Court that Pacific Crossing was forced to pay certain of the
service providers directly in order to obtain critical services.
In addition, Pacific Crossing was forced to spend considerable
time and resources negotiating individual contracts with various
service providers, including Global Marine, Alcatel, and Lucent,
to obtain Wet Maintenance Services, U.S. O&M Services, and
Bandwidth Support Services so as to maintain the level of
support necessary to continue to operate PC-1.
The Postpetition Contracts save Pacific Crossing over
$11,000,000 annually. Further, Pacific Crossing believes that
it would be impossible for GC Network Center to perform under
the Turn Key Agreement, as it has already entered into
settlements with certain service providers and that it no longer
has agreements to provide services to Pacific Crossing.
Absent relief from the automatic stay, Mr. Feinstein says,
Pacific Crossing would be unable to reject the Turn Key
Agreement and pursue the Postpetition Contracts, which provide
Pacific Crossing with the support necessary to operate their PC-
1 network and save them $11,000,000 annually. GC Network Center
cannot argue that it would suffer a hardship if the stay were
lifted to allow Pacific Crossing to reject the Turn Key
Agreement in light of its failure to perform under the Turn Key
Agreement for at least 7 months. The scales weigh heavily in
favor of lifting the stay and allowing Pacific Crossing to
reject the Turn Key Agreement. (Global Crossing Bankruptcy News,
Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Global Crossing Holdings Ltd.'s 9.125% bonds due 2006
(GBLX06USR1) are trading at 1.625 cents-on-the-dollar,
DebtTraders reports. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1
for real-time bond pricing.
GRAPHIC PACKAGING: Third Quarter Net Loss Widens to $1.6 Million
----------------------------------------------------------------
Graphic Packaging International Corporation (NYSE: GPK), whose
corporate credit standing and its $450 million senior secured
credit facility are rated by Standard & Poor's at BB, reported a
net loss attributable to common shareholders of $1.6 million for
the third quarter of 2002, compared to $0.9 million for the same
period of 2001. The net loss attributable to common shareholders
for the first nine months of 2002 was $188.4 million, compared
to net income attributable to common shareholders of $1.5
million during the first nine months of 2001.
Net sales were $270.0 million for the third quarter of 2002,
compared to $263.9 million for the second quarter of 2002 and
$270.8 million for the third quarter of 2001. Net sales for the
first nine months of 2002 were $797.6 million, compared to
$842.5 million for the first nine months of 2001.
Net earnings attributable to common shareholders for the third
quarter and the nine months ended September 30, 2002 include
costs of $2.7 million after tax for the Kalamazoo labor dispute.
In addition, the first nine months of 2002 include a $180.0
million goodwill impairment charge net of tax, when the company
adopted Statement of Financial Accounting Standards No. 142
"Goodwill and Other Intangible Assets". Net earnings
attributable to common shareholders for the third quarter and
the nine months ended September 30, 2001 include goodwill
amortization net of tax of $3.1 million and $9.3 million,
respectively. The first nine months of 2001 also include an
asset impairment and restructuring charge of $1.8 million and a
gain on the sale of assets of $2.2 million, both net of tax.
Excluding non-recurring items, net income attributable to common
shareholders was $1.2 million for the third quarter of 2002,
compared to $2.2 million for the same period of 2001. Similarly,
the net loss attributable to common shareholders for the first
nine months of 2002 was $5.7 million, compared to net income
attributable to common shareholders of $10.4 million during the
first nine months of 2001. A reconciliation schedule is provided
with the accompanying financial statements.
Major impacts to the company's performance during the quarter
included the labor dispute at the Kalamazoo, Michigan paperboard
complex and the market price of fiber.
As expected, sales for the third quarter of 2002 of $270.0
million exceeded those of the previous quarter by $6.1 million,
an increase of 2.3%. New orders from large customers and new
product qualification activity exhibited growing strength during
the period. Sales for the quarter were flat compared to the same
period last year.
Kalamazoo Labor Dispute
Graphic Packaging has been operating its Kalamazoo, Michigan
recycled paperboard mill and folding carton plant with GPC
management and other non-union temporary replacement workers
following a defensive lockout on July 27, 2002. Both facilities
are currently running at normal or higher production rates and
efficiencies compared to levels prior to the labor dispute. The
company has calculated that the lockout had a negative impact on
operating earnings for the third quarter of 2002 of
approximately $4.5 million compared to normal controllable cost
levels. The company believes that it has not lost any customers
due to this dispute and estimates that the labor dispute, if it
continues through the fourth quarter, will have no effect on
future earnings or cash flow.
Fiber Prices
Fiber prices, specifically old corrugated containers, rose
sharply during the second quarter and peaked in July at
approximately $120/ton; an increase of $85/ton from March.
Prices then dropped steadily throughout the third quarter. The
current market price for OCC is approximately $70/ton. The
company estimates that the impact of increased fiber costs to
third quarter 2002 operating earnings was $2.3 million compared
to the second quarter of 2002, and $2.8 million compared to the
third quarter of 2001. The incremental cost of fiber for the
first nine months of the year is estimated to be $2.9 million
compared to the same period of 2001.
Other
Capital expenditures were $5.6 million for the third quarter and
$21.0 million for the first nine months of the year. Capital
expenditures are expected to be approximately $30 million for
the full year. Cash flow from operations during the quarter of
$53.7 million was very strong and allowed the company to reduce
net debt by $46.2 million, from $514.5 million to $468.3
million. Net debt is defined as total debt less cash and cash
equivalents.
Interest expense was $1.1 million less than in the second
quarter of 2002 and the third quarter of 2001. Interest rate
swap agreements that the company entered into when interest
rates were significantly higher have expired as of the end of
the third quarter. Those swaps resulted in net interest expense
to the company of $6.8 million during 2002. The company has
elected not to replace these contracts in light of the
recapitalization that was completed earlier this year. The
absence of these contracts will have a positive impact on
interest expense of $1.5 million for the fourth quarter compared
to the third quarter.
In announcing the results, Jeffrey H. Coors, chairman and chief
executive officer said, "We stated in July that we were
cautiously optimistic that sales activity would improve, and it
has. Our operating margins suffered during the third quarter due
to the incremental cost arising from the labor dispute and fiber
prices. However, excluding the cost of the labor dispute and the
increased cost of fiber, our operating margin increased from
6.5% in the second quarter to 7.3% in the third. The fourth
quarter of the year is not historically strong for us, but we
are hopeful that the positive momentum we experienced during the
third quarter will continue."
More information is available in the company's filings with the
Securities and Exchange Commission. Those filings can be
accessed at the company's Web site
http://www.graphicpackaging.comin the Investor Relations
section.
Graphic Packaging is the leading manufacturer of folding cartons
in North America, supplying packaging for the food, beverage,
and other consumable product markets. The company operates one
large recycled paperboard mill located in Kalamazoo, Michigan,
and has 17 modern converting plants and 3 research and design
centers across the nation. Its customers make some of the most
recognizable brand-name products in their markets.
HOLLINGER INT'L: Continues to Pursue Financing Initiatives
----------------------------------------------------------
Hollinger International Inc., (NYSE: HLR) announces a net loss
for the third quarter 2002 of $31.5 million, compared to a net
loss of $139.6 million in 2001, and a net loss for the nine
months ended September 30, 2002, of $117.1 million, compared to
a net loss of $153.8 million in 2001. The third quarter and year
to date net losses are primarily the result of a number of
infrequent, unusual and non-recurring items.
At September 30, 2002, the Company's balance sheets show a
working capital deficit of about $112 million.
At the operating income level, there has been substantial
improvement in the three and nine month figures over the prior
year. For three months, operating income has improved by $28.6
million to $9.0 million with nine month operating income
improving by $72.4 million. Those improvements are largely
reflective of the shedding of certain unprofitable operations,
improved EBITDA performance through both cost control and the
impact of lower newsprint prices and the impact of SFAS No. 142
which eliminated the amortization of goodwill effective January
1, 2002.
Net earnings from comparable operations for the third quarter
2002 amounted to a net loss of $1.6 million compared with a net
loss of $12.6 million in 2001. Net earnings from comparable
operations for the nine months ended September 30, 2002,
amounted to $5.5 million compared with a net loss of $9.0
million in 2001. The lower net loss from comparable operations
in the third quarter and the increase in net earnings from
comparable operations in the nine months ended September 30,
2002, primarily result from increased EBITDA, lower
amortization, lower interest expense and the change in minority
interest as a result of the sale of the National Post and its
related operating losses, offset by lower interest and dividend
income.
EBITDA
EBITDA from comparable operations was $21.1 million versus an
EBITDA loss of $0.9 million in 2001, an increase of $22.0
million. EBITDA from comparable operations for the nine months
ended September 30, 2002, was $81.8 million versus $33.1 million
in 2001, an increase of $48.7 million. EBITDA for operations
owned in both years increased in total by $15.7 million in the
third quarter primarily resulting from an improvement of $8.2
million at the Chicago Group, $3.1 million at the U.K. Newspaper
Group, $5.5 million at Canadian Newspaper Group partly offset by
a reduction in EBITDA at the Community Group of $1.0 million.
The balance of the increased year over year EBITDA results from
operations sold in 2001, which in total contributed a $6.3
million EBITDA loss in third quarter 2001. This included a $7.9
million EBITDA loss at the National Post.
Operating Revenue
Operating revenue in third quarter 2002 was $244.4 million
compared with $263.5 million in 2001 and for the nine months
ended September 30 was $742.2 million in 2002 compared with
$896.0 million in 2001. The reduction in operating revenue in
the third quarter primarily resulted from sales of Canadian
properties in 2001. The reduction in operating revenue in the
nine months ended September 30, 2002, resulted primarily from
sales of Canadian properties in 2001 and lower advertising
revenue at the U.K. Newspaper Group.
Amortization
Amortization in third quarter 2002 was $2.9 million compared
with $8.8 million in 2001, and for the nine months ended
September 30, 2002, was $8.4 million compared with $27.5 million
in 2001, decreases of $5.9 million and $19.1 million,
respectively. These decreases primarily result from the
adoption, effective January 1, 2002, of SFAS No. 142 "Goodwill
and Other Intangible Assets" as well as the sale of properties
during 2001. The new standard requires that goodwill and
intangible assets with indefinite useful lives no longer be
amortized but instead be tested for impairment, at least
annually. This change in accounting policy cannot be applied
retroactively and the amounts presented for 2001 have not been
restated for the change. The adoption on January 1, 2002, of
SFAS No. 142 has resulted in goodwill not being amortized
subsequent to January 1, 2002. In third quarter 2001,
amortization of goodwill and intangibles approximated $6.2
million and for the nine months ended September 30, 2001,
approximated $19.8 million.
Interest Expense
Interest expense in the third quarter 2002 amounted to $12.4
million compared with $19.7 million in 2001, and for the nine
months ended September 30, 2002, amounted to $42.4 million
compared with $59.5 million in 2001, decreases of $7.3 million
and $17.1 million, respectively. The lower interest expense in
2002 primarily results from the retirement of a portion of long-
term debt in 2001 and in March 2002.
Interest and Dividend Income
Interest and dividend income in third quarter 2002 amounted to
$4.4 million compared with $18.7 million in 2001 and in the nine
months ended September 30, 2002, amounted to $14.1 million
compared with $64.3 million in 2001, decreases of $14.3 million
and $50.2 million, respectively. Interest and dividend income in
the nine months ended September 30, 2001, included interest on
debentures issued by a subsidiary of CanWest Global
Communications Corp., and a dividend on CanWest shares. In
September 2001, CanWest temporarily suspended its semi-annual
dividend. In the latter part of 2001, all of the shares were
sold and participation interests were sold in respect of all but
approximately $60 million of the Can West debentures, resulting
in significantly lower interest and dividend income in 2002.
Most of the proceeds from the disposal of the CanWest
investments were retained as short-term investments at low rates
of interest until the end of the first quarter 2002 when a
portion of the Company's long-term debt was retired.
Minority Interest
Minority interest, in respect of comparable operations, in third
quarter 2002 totaled $0.2 million compared to a recovery of $3.7
million in 2001 and for the nine months ended September 30,
2002, totaled $1.1 million compared to a recovery of $14.5
million in 2001. Minority interest in 2001 included the
minority's share of National Post losses.
Infrequent, Unusual and Non-recurring Items
In third quarter 2002, infrequent, unusual and non-recurring
items, after tax and minority interest, amounted to a loss of
$29.9 million and primarily included a $25.4 million loss before
tax in respect of the Total Return Equity Swap, a $4.3 million
before tax write-down of investments and a foreign exchange loss
before tax of $4.7 million in respect of the Hollinger
Participation Trust. In the nine months ended September 30,
2002, infrequent, unusual and non-recurring items, after tax and
minority interest, amounted to a loss of $122.5 million and
primarily included foreign exchange losses before tax of $83.6
million, an extraordinary loss after tax of $21.3 million
related to the early retirement of debt, a $23.0 million loss
before tax in respect of the Total Return Equity Swap, a $5.7
million before tax write-down of investments and a $5.4 million
gain before tax on asset sales. Included in the $83.6 million
foreign exchange losses is $78.2 million related to the
substantial liquidation of the Company's investment in the
Canadian Newspaper Group. During March 2002 substantial Canadian
dollar cash balances held by the Canadian Newspaper Group were
distributed to Hollinger International Inc., converted to United
States dollars, and used to reduce long-term debt. As a result
of this substantial liquidation of the Company's net investment
in the Canadian Newspaper Group, foreign exchange losses in the
amount of $78.2 million were included in net earnings in the
first quarter 2002. These foreign exchange losses have
accumulated since the Company's original investment in the
Canadian Newspaper Group and, until realized in the first
quarter, had been included in the accumulated other
comprehensive income component of stockholders' equity. Of the
total $83.6 million foreign exchange loss expensed, $72.0
million is not deductible for income tax purposes.
In third quarter 2001, infrequent, unusual and non-recurring
items, after tax and minority interest, amounted to a loss of
$127.0 million and consisted largely of a $77.3 million loss
before tax on the sale of certain Canadian operations, a $13.0
million before tax write-down of investments, a $30.0 million
before tax loss on the sale of investments and a $39.4 million
before tax loss in respect of the Total Return Equity Swap. In
the nine months ended September 30, 2001, infrequent, unusual
and non-recurring items, after tax and minority interest,
amounted to a loss of $144.7 million and primarily consisted of
a $12.6 million loss before tax on the sale of certain Canadian
operations, a $77.0 million before tax loss in respect of the
Total Return Equity Swap, a $28.4 million before tax write-down
of investments, a $30.2 million before tax loss on the sale of
investments, and an $8.3 million before tax equity accounting
loss in Interactive Investor International.
Shares Outstanding
On September 30, 2002, there were 96.5 million Class A and B
common shares outstanding. If at September 30, 2002, all
potentially dilutive instruments excluding stock options are
considered, the total Class A and B common shares outstanding
would increase to 97.1 million as set out below. Stock options
not exercised at September 30, 2002, totaled 10.3 million of
which 4.6 million had vested.
Included in Class A shares are 7 million shares that are subject
to Total Return Equity Swaps pursuant to which the company had
an obligation to pay $95 million (reduced to $40 million after
the end of the quarter). Any gains, losses and dividends on
those shares are for the account of the Company and the Company
pays interest on the obligation amount. The Company hopes to
extinguish the balance of this obligation during the next two
quarters resulting in the cancellation of the 7 million shares.
As a result of changes to Generally Accepted Accounting
Principles since these TRES were first entered into, the
reporting of the effects of these has become very complicated
and has adversely affected reported income. Extinguishing this
obligation would terminate an arrangement that has complicated
our financial reporting and investors' comprehension of the
Company for several years.
Update on Financing Initiative
As previously announced, the Company is continuing to pursue a
comprehensive financing initiative in order to extend debt
maturities and provide more advantageous borrowing terms. This
initiative may include a new amended syndicated credit facility
for which Wachovia Securities Inc., would act as lead-arranger
and bookrunner. Additionally this initiative may include the
sale, in a private placement, of long-term debt securities.
Completion of these transactions will be subject to market
conditions, conclusion of definitive agreements and satisfaction
of conditions in such agreements. The long term debt securities
have not and will not be registered under the Securities Act of
1933 and may not be offered or sold in the United States absent
registration under that Act or an applicable exemption from the
registration requirements.
Hollinger International Inc., owns and operates English-language
newspapers in the United States, the United Kingdom, Canada and
Israel. The Company's principal assets are the Chicago Sun-
Times, which has the second highest circulation and the highest
readership of any newspaper in the Chicago metropolitan area,
more than 100 titles in the greater Chicago metropolitan area,
and The Daily Telegraph, the highest circulation broadsheet
daily newspaper in the United Kingdom and in Europe, and its
related publications in the United Kingdom. The Company also
owns The Jerusalem Post in Israel. In addition, Hollinger has a
number of minority investments in various Internet and media-
related public and private companies.
HORSEHEAD: Taps Ryan & Whaley as Bartlesville Litigation Counsel
----------------------------------------------------------------
Horsehead Industries, Inc., and its debtor-affiliates ask for
authority from the U.S. Bankruptcy Court for the Southern
District of New York, to employ Ryan & Whaley, PC as their
Special Litigation Counsel, nunc pro tunc to August 19, 2002,
with respect to the pending litigation captioned Horsehead
Industries, Inc., d/b/a Zinc Corporation of America vs. Tetra
Tech, Inc., Case No. CJ-99-666, in the Washington County
District Court, in the State of Oklahoma.
Ryan & Whaley has acted as lead trial counsel for the
Bartlesville Litigation prepetition. As trial counsel, Ryan &
Whaley has coordinated all actions necessary to prosecute the
Debtors' claims. Much of the trial preparation to date has been
performed by Ryan & Whaley. The Debtors are contemporaneously
seeking to retain Brewer, Worten, Robinett as local counsel in
the Bartlesville litigation in Washington County.
The Defendants have failed to cooperate in providing timely
discovery. The Defendants' counterclaims have been dismissed
with prejudice as sanctions. The assigned trial judge's term
expires December 31, 2002. The Debtors tell the Court that it
is important that the Bartlesville Litigation be tried on the
October docket.
The Debtors relate that the Bartlesville Litigation concerns
environmental remediation and construction costs at one of
Debtors' closed facilities. The defendant, Tetra Tech Inc., was
a former contractor at the site. The Debtors maintain that
Tetra Tech Inc., failed to perform or was negligent. The
Debtors are hopeful that ultimate award against Tetra Tech,
Inc., could be as much as ten million dollars. Under certain
cost sharing agreements with other non-Debtor entities, Debtors
have an approximately 27% percent interest in any recovery
realized through the Bartlesville Litigation. The Debtors
believe that any recovery would benefit the bankruptcy estates.
Debtors seek employment of the Firm due to its knowledge of the
issues related to the Bartlesville Litigation. Patrick M. Ryan
is the principal attorney at Ryan & Whaley designated to
represent the Debtors in the Bartlesville Litigation. His
current hourly rate is $300 per hour.
The Firm is expected to:
a) appear in Court to protect the interests of the Debtors;
b) negotiate with the other parties to the Bartlesville
Litigation;
c) prepare for trial;
d) draft and respond to pleadings; and
e) perform such other legal services as may be necessary
and appropriate in the Bartlesville Litigation.
Horsehead Industries, Inc., d/b/a Zinc Corporation of America,
the largest zinc producer filed for chapter 11 protection on
August 19, 2002. Laurence May, Esq., at Angel & Frankel, PC
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$215,579,000 in assets and $231,152,000 in debts.
IEC ELECTRONICS: Taking Steps to Commence Trading on OTCBB
----------------------------------------------------------
IEC Electronics Corp., (NASDAQ: IECE) has accepted term sheets
involving a $4,700,000 Senior Secured Credit Facility and a
$2,300,000 Secured Term Loan designed to repay existing revolver
and term debt to HSBC Bank USA and General Electric Capital
Corporation and to provide working capital.
The closing of the two credit facilities is subject to certain
conditions, including, among other things, structuring payment
terms with the Company's unsecured trade creditors which are
acceptable to the new lenders. Since risks remain, no assurances
can be made; however, the Company believes the closing will
occur before the end of the current calendar quarter.
W. Barry Gilbert, Chairman of the Board and Acting CEO, stated,
"Although the road ahead will continue to be extremely
challenging, this is an important milestone in the Company's
planned return to profitable operations. We are profoundly
grateful for the support and loyalty of our customers,
suppliers, employees and shareholders during the difficult
months we have recently experienced."
On October 25, 2002, IEC was notified by NASDAQ that it was not
in compliance with NASDAQ Marketplace Rule 4310(C)(7) regarding
market value of publicly held shares and Marketplace Rule
4310(C)(4) regarding minimum bid price. As previously announced,
IEC was notified on September 13, 2002 by NASDAQ that it was not
in compliance with NASDAQ Marketplace Rule 4310(C)(2)(B)
concerning minimum net tangible assets and minimum stockholders'
equity requirements and with Marketplace Rule 4310(C)(13)
because of its dues delinquency. As a result, IEC's common stock
is subject to delisting from the NASDAQ SmallCap Market. IEC has
decided not to continue to appeal the potential delisting of its
securities by NASDAQ and is taking steps to have its shares
available for trading on the "Over-the-Counter" Bulletin Board
Market when delisting occurs. This is not expected to have any
adverse effect on the refinancing.
IEC is a full service, ISO-9001 registered EMS provider. The
Company offers its customers a wide range of services including
design, prototype and volume printed circuit board assembly,
material procurement and control, manufacturing and test
engineering support, systems build, final packaging and
distribution. Information regarding IEC can be found on its Web
site http://www.iec-electronics.com
At June 28, 2002, IEC's balance sheets show a total
shareholders' equity deficit of about $1 million.
IMPSAT FIBER: New York Court Approves Disclosure Statement
----------------------------------------------------------
Impsat Fiber Networks, Inc. (OTC:IMPT), a leading provider of
integrated telecommunications services in Latin America,
announced that its Disclosure Statement was approved by the
United States Bankruptcy Court for the Southern District of New
York and that Judge Robert Gerber authorized the Company to
solicit votes on its Plan of Reorganization under Chapter 11.
The Confirmation Hearing on the Company's pre-negotiated Plan is
scheduled for December 11, 2002.
Copies of the Plan, Disclosure Statement and accompanying
ballot, and full details of the procedures for voting will be
mailed by November 1, 2002 to the Company's Senior Noteholders,
equipment vendors and suppliers, and other creditors, who will
vote on the Company's proposed Plan. All ballots must be
received by the balloting agent, Arnold & Porter, by December 3,
2002. The Disclosure Statement describes the proposed Plan
originally filed on September 4, 2002, which reflects the terms
announced earlier this year of the agreement in principle with
the Company's largest creditors and subsequently at the time of
filing for Chapter 11. The Official Committee of Unsecured
Creditors, which was elected by the US Trustee, has indicated
its support to the Company's Plan and is urging creditors to
accept it.
This Plan, which involves a restructuring of Impsat Fiber
Networks, Inc.'s indebtedness under its vendor financing
agreements, Guaranteed Senior Notes due 2003, Senior Notes due
2005 and Senior Notes 2008, contemplates the reduction in
Impsat's consolidated debt by approximately $680 million.
Ricardo Verdaguer, Impsat's chief executive officer, stated:
"Our progress through the Chapter 11 process is consistent with
our original timeframe. We continue to believe that with the
continuing support of our creditors we will be able to emerge
from Chapter 11 before year-end."
Impsat Fiber Networks, Inc., is a holding company and its
subsidiaries, which are independent legal entities, will
continue to operate without interruption and serve their
customers normally. After the restructuring is completed,
Impsat's strengthened capital structure will reinforce the
Company's leadership in the Latin American telecommunications
market.
Impsat Fiber Networks, Inc., is a leading provider of fully
integrated broadband data, Internet and voice telecommunications
services in Latin America. Impsat has recently launched an
extensive pan-Latin American high capacity broadband network in
Brazil, Argentina, Chile and Colombia using advanced
technologies, including IP/ATM switching, DWDM, and non-zero
dispersion fiber optics. The Company has also deployed fourteen
facilities to provide hosting services. Impsat currently
provides services to 3,000 national and multinational companies,
government entities and wholesale services to carriers, ISPs and
other service providers throughout the region. The Company has
local operations in Argentina, Colombia, Venezuela, Ecuador,
Mexico, Brazil, the United States, Chile and Peru. Visit
http://www.impsat.comto learn more about the Company.
Impsat Corp.'s 13.75% bonds due 2005 (IMPT05ARR1) are trading at
2 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=IMPT05ARR1
for real-time bond pricing.
INTEGRATED HEALTH: Wants to Sell IHS Horizon Durham for $3 Mill.
----------------------------------------------------------------
Integrated Health Services, Inc., and its debtor-affiliates ask
the Court to approve the sale of IHS Horizon Durham to Durham
Healthcare Investors Inc., subject to higher and better bids and
free from all liens, claims, charges, interests and
encumbrances.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, relates that the Debtors and Durham
Investors have engaged in extensive arm's-length, good faith
negotiations that have resulted in the parties agreeing to enter
into and perform two inextricably intertwined agreements:
-- the Contract of Sale; and
-- the Operations Transfer Agreement.
The transactions contained in the Transaction Documents have
been crafted to accomplish the orderly and synchronized Sale of
the Property and Facility Transfer to Durham Investors.
Notwithstanding, the parties' extensive good faith negotiation
of the Transaction Documents, both the Debtors and Durham
Investors understand that the consummation of the transactions
is subject to higher and better offers for the Sale and Facility
Transfer.
The salient provisions of the Sale Contract are:
-- Purchase Price: $3,000,000
-- Payment: $150,000 of the Purchase Price is to be paid by the
Durham Investors to Jenkens & Gilchrist Parker Chapin LLP,
as escrow agent by Durham Investors' Acceptable Check. The
remaining $2,850,000 is to be paid by Durham Investors to the
Escrow Agent by Acceptable Check or wire transfer of
immediately available funds upon delivery of the Deed.
-- Liens: The Sale of the Property and Facility Transfer will be
free and clear of the Liens, if any, but will be subject to
the Permitted Encumbrances.
-- Closing: The Deed will be delivered by the Debtors to Durham
Investors, or other successful bidder at the Auction,
simultaneously with the closing under the Transfer Agreement
and upon the receipt by the Escrow Agent of the balance of
the Purchase Price. The Closing Date will be the last
business day of the month in which the Sale Order has become
a final non-appealable order, but, time being of the essence,
in no event will the Closing Date occur later than 270 days
from date of execution of the Sale Contract.
-- Break-Up Fee: If Durham Investors is not the successful
bidder at the Auction, the Seller agrees to pay to Durham
Investors a $90,000 Breakup Fee.
On the other hand, the Transfer Agreement:
-- provides for the transfer of all of the Facility's inventory,
resident lists and records, furnishings, fixtures, equipment
and supplies located at the Facility, and the Facility's
Resident Trust Funds, without recourse, representation or
warranty, except as specifically set forth in the Transfer
Agreement, to the extent that each of the foregoing is
transferable under applicable law;
-- provides for the procedures applicable to the hiring of the
Facility's employees;
-- governs the disposition of unpaid accounts receivable,
prorations of utility charges, real and personal property
taxes and any other items of revenue or expense attributable
to the Facility;
-- governs the procedure for the assumption and assignment, if
any, of various unexpired vendor and service contracts
related to the Facility's operations; and
-- governs the procedures for the assumption and assignment, if
any, of the Facility's Medicare and Medicaid reimbursement
provider agreement.
The Debtors believe that the Durham Investors' offer contained
in the Sale Contract is fair and reasonable, and will provide
the estates with the most certain and likely the best financial
return.
Mr. Brady tells the Court that poor financial performance has
rendered the Property and the Operations a significant burden on
the Debtors' estates. Actual EBITDA for the year 2001 was
negative $223,545; and its year to date EBITDA is negative
$7,956. The Facility's unprofitability and its associated
administrative burden on the Debtors' estates are evident in the
financial data. Furthermore, the Debtors are awaiting the
results of an appraisal of the Property and have been advised
that the appraisal will indicate that the Property is worth no
more than, and likely less than, the Purchase Price contained in
the Sale Contract.
Mr. Brady asserts that further retention of the Property and
Operations would be in contravention of the Debtors' overall
reorganization strategy of divesting unprofitable, burdensome
businesses and retaining businesses that are profitable and
estate-enriching. The Sale and Facility Transfer allow the
Debtors to eliminate certain significant administrative
liabilities of, and foreseeable cash drainage on, their Chapter
11 estates. (Integrated Health Bankruptcy News, Issue No. 45;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTERLIANT: Closes Private-Label Asset Sale to Sprint for $5MM
--------------------------------------------------------------
Interliant, Inc. (OTCBB:INIT), a leading provider of managed
infrastructure solutions, announced that on October 30, 2002, it
closed on the sale to Sprint of assets and operations that
Interliant had used to provide private-label shared and high-
volume dedicated Web hosting to Sprint. Also included in the
sale are certain assets that support the private-label custom
hosting services provided to Sprint. Sprint has purchased these
assets and operations for $5 million. Sprint has also assumed
certain liabilities of Interliant associated with the purchased
assets. Interliant will continue to provide private label custom
managed hosting services to Sprint.
Interliant's core managed hosting, messaging, and security
services will not be affected by the transaction. Additionally,
this sale does not affect Interliant UK Limited or its trading
arrangements in the UK.
On August 5, 2002, Interliant and all of its U.S. subsidiaries
filed voluntary petitions for reorganization under Chapter 11 of
the U.S. Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of New York. The court approved this
sale at a confirmation hearing on October 17th.
"This sale is another important step in our reorganization,"
said Francis J. Alfano, Interliant's president and CEO. "By
divesting this business, we are better able to focus on our core
managed infrastructure services. Actions such as this, along
with our recently announced debtor-in-possession financing, will
help us build a strong base for Interliant's ongoing
operations."
Interliant, Inc., is a leading provider of managed
infrastructure solutions, encompassing messaging, security, and
hosting plus an integrated set of professional services that
differentiate and add customer value to these core solutions.
The company makes it easier and more cost-effective for its
customers to acquire, maintain, and manage their IT
infrastructure via selective outsourcing.
Headquartered in Purchase, New York, Interliant has forged
strategic alliances and partnerships with the world's leading
software, networking and hardware manufacturers, including Check
Point Software Technologies Inc., IBM and Lotus Development
Corp., Microsoft, Oracle Corporation, and Sun Microsystems Inc.
For more information about Interliant, visit
http://www.interliant.com
IPVOICE: Begins Balance Sheet Restructuring with Reverse Split
--------------------------------------------------------------
IPVoice Communications, Inc., (OTCBB:IPVC) --
http://www.ipvoice.com-- has converted $1.8 million dollars of
debt into restricted common shares to be issued to VergeTech,
Inc., as part of an ongoing effort to improve the Company
balance sheet.
Immediately following the conversion, stockholders representing
a majority of the common stock consented to the Board of
Directors' action to reverse split the stock of the Company
exchanging 30 old shares for 1 new share. The reverse split is
intended to support a merger and acquisition campaign in
conjunction with the refreshed business strategy effort
initiated on June 19th of this year with the IPVoice acquisition
of VergeTech assets.
VergeTech brings to IPVoice an accomplished systems integration
capability and established marketing relationships to sell the
advanced technologies of companies like Cisco (Nasdaq:CSCO) and
Sun Microsystems (Nasdaq:SUNW). IPVoice has developed
proprietary in-house software solutions that compliment the
advanced technologies VergeTech currently markets. The new
merged company will package IPVoice proprietary in-house
products with recognized brand name products to sell complete
advanced technology solutions that deliver measurable business
benefits. IPVoice intends to expand the in-house product line
through merger and acquisition.
The reverse split was approved on October 25 and will be in
effect within the next 10 days subject to the administrative
requirements of NASDAQ. The estimated issued and outstanding
post reverse is 3.7 million shares with more than half of those
shares closely held and restricted.
To learn more about the Company visit http://www.ipvoice.com
* * *
At June 30, 2002, the Company's balance sheets show a working
capital deficit of about $1 million, and a total shareholders'
equity deficit of about $1.5 million.
Moreover, in its Form 10QSB/A filed with the Securities and
Exchange Commission, on August 26, 2002, the Company reported:
Financial Condition, Liquidity and Capital Resources
"From our inception to June 30, 2002, the Company has
incurred a net loss of $9,216,000. At June 30, 2002, the Company
reflects negative working capital of approximately $1,008,000.
These conditions raise substantial doubt as to the ability of
the Company to continue as a going concern. The ability of the
Company to continue as a going concern is dependent upon
increasing sales and obtaining additional capital and financing.
The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a
going concern. The Company is in negotiations with investment
groups to seek to raise additional capital.
"We do not have cash sufficient to satisfy our cash
requirements over the next 12 months. We will need to secure a
minimum of $250,000 to satisfy such requirements, but we need an
additional minimum of $2,500,000 to finance our planned
expansion in the next 12 months, which funds will be used for
product development, marketing, and customer support. However in
order to become profitable we may still need to secure
additional debt or equity funding. We hope to be able to raise
additional funds from an offering of our stock in the future.
However, this offering may not occur, or if it occurs, may not
raise the required funding."
KAISER ALUMINUM: Wants to Ratify Settlement Pact with Glencore
--------------------------------------------------------------
Before the Petition Date, Kaiser Aluminum & Chemical Corporation
entered into three separate swap agreements with Glencore Ltd.
Under the Swap Agreements, Kaiser and Glencore agreed to buy and
sell alumina or bauxite from and to each other in the same
quantity, and usually at the same price, at varying times and
locations during the years 2001 and 2002:
(1) Pursuant to the first Swap Agreement, dated August 15,
2001, Kaiser shipped to Glencore alumina worth $187,500 on
January 18, 2002;
(2) Under the second Swap Agreement, dated September 21, 2001,
Glencore on January 13, 2002, shipped to Kaiser alumina
worth $4,567,500. On January 26, 2002, Kaiser shipped
$3,737,020 worth of alumina to Glencore; and
(3) Under the third Swap Agreement, dated December 13, 2001,
Kaiser shipped to Glencore alumina worth $2,112,150
between January 18, 2002 and February 9, 2002. Glencore
also shipped to the Debtors alumina worth $3,750,000 on
February 6, 2002.
Neither party has been paid for the alumina it sold the other.
But with respect to the February 6, 2002 shipment under the
third Swap Agreement, Glencore has asserted reclamation rights
for the entire $3,750,000 of alumina. Subsequent to that, on
February 15, 2002, Glencore sent a written reclamation demand to
Kaiser, seeking to reclaim the entire $3,750,000 alumina
shipment.
On the other hand, Debtor Kaiser Aluminum International Inc. and
Glencore also entered into a separate sale agreement on October
19, 2000. Under this deal, Kaiser International shipped alumina
worth $3,802,750 to Glencore on February 6, 2002. Incidentally,
Kaiser International owed to Glencore a $13,228 sale demurrage
charge in connection with a prior shipment.
Because one party stakes a claim against the other and vice
versa, both Debtors and Glencore have agreed to settle their
obligations under the Swap Agreements and the Sale Agreement.
The principal terms of their Settlement Agreement include:
A. Swap Agreements Offsets/Recoupment
Glencore will offset and recoup the amounts owed to it
against amounts it owes -- other than Glencore's reclamation
claim -- under the first, second and third Swap Agreements.
As a result, Glencore has a $1,374,026 net payable to Kaiser.
B. Netting of Net Swap Payable and Reclamation Claim
Kaiser acknowledges that Glencore has a valid reclamation
claim against it. Accordingly, Kaiser agrees that the Net
Swap Payable that Glencore owes will be netted against
Glencore's reclamation claim, leaving a $2,375,974 net
reclamation claim by Glencore.
C. Sale Agreement Offset
Glencore will offset the Sale Demurrage Charge that Kaiser
International owed under the Sale Agreement against the
amount Glencore owes. This results to $3,789,522 net payable
owed by Glencore to Kaiser International.
D. Payments by Glencore and the Debtors
Glencore will withdraw its reclamation claim against Kaiser.
Glencore will pay Kaiser International $1,413,548. Within
five days after Glencore makes the payment, Kaiser will pay
Kaiser International the $2,375,974.
E. Mutual Releases
Kaiser and Kaiser International, on the one hand, and
Glencore, on the other, will release and discharge each other
from any and all claims, debts, liabilities and obligations
arising from the alumina sale and purchase transactions.
F. Other Transactions
The Settlement Agreement will not:
-- affect any other transactions under the Swap Agreements or
Sale Agreement;
-- alter any of the terms of the Swap Agreements or Sale
Agreement;
-- constitute an assumption of the Swap Agreements or Sale
Agreement; and
-- affect the rights of the parties under Section 365 of the
Bankruptcy Code with respect to the Swap Agreements or
Sale Agreement.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
points out that the Settlement Agreement permits the Parties to
resolve claims against each other, without the necessity and
expense of litigating issues relating to their setoff,
recoupment and reclamation rights. The Settlement Agreement
also enables the Debtors to promptly recover the net amount owed
by Glencore. Accordingly, the Debtors ask the Court to approve
the Settlement Agreement because it is fair, reasonable and in
the best interests of these bankrupt estates. (Kaiser Bankruptcy
News, Issue No. 17; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1),
DebtTraders says, are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for
real-time bond pricing.
KSAT SATELLITE: Defaults on Shareholders' Loan Pact with Global
---------------------------------------------------------------
KSAT Satellite Networks Inc., (TSX Venture - KSA) announced that
on October 28, 2002, it received notice from Global Space
Investments Limited of Global's position that the Corporation is
in default of the Shareholders' Loan Agreement among Global, the
Corporation and Gilat Satellite Networks Inc., dated September
29, 2000. As previously disclosed in a press release dated
October 22, 2002, the Corporation is currently attempting to
negotiate repayment of amounts due by the Corporation to each of
Gilat and Global under the Agreement.
Global's notice has been given pursuant to the terms of a
convertible debenture between the Corporation and Global. It
provides the Corporation with 14 days to repay amounts due by
the Corporation to Global under the Agreement. If the
Corporation does not repay the amounts due by it to Global by
November 11, 2002, the principal sum, interest and all other
monies secured under the convertible debenture may, at the
option of Global, become immediately payable and Global may
enforce its security under the terms of the convertible
debenture.
LBP INC: Makes Final Liquidating Distribution to Shareholders
-------------------------------------------------------------
Leigh J. Abrams, President and Chief Executive Officer of LBP,
Inc., has sent the following letter to the stockholders of the
Company:
"Pursuant to the Plan of Complete Liquidation, Dissolution
and Termination of Existence, and consistent with an order of
the Delaware Chancery Court, enclosed is the final liquidating
distribution in the amount of $.8475 per share. Last October,
stockholders received a liquidating distribution of $5.10 per
share. Accordingly, the aggregate liquidating distributions are
$5.9475 per share, or approximately $29.75 million.
"After this distribution, LBP will have approximately
$10,000 in cash, which will be used to pay costs related to this
distribution, and the filing of final tax returns and SEC
termination documents. Thereafter, any remaining cash will be
contributed to a non- denominational charity.
"Stockholders will recognize gain or loss equal to the
difference between (i) the sum of the amount of cash distributed
to them, and (ii) their tax basis for shares of the Company's
Common Stock owned by them. Gain resulting from distributions
pursuant to the Plan should generally be treated as capital gain
rather than ordinary income, provided the shares are held as
capital assets. After the close of its taxable year, December
31, 2002, the Company will provide stockholders and the IRS with
a statement of the amount of cash distributed to stockholders.
"The amount of each distribution should be applied against
and reduce the stockholder's tax basis in the shares of the
Company's Common Stock. Gain will be recognized by reason of the
distributions only to the extent that the aggregate value of the
distributions received by a stockholder with respect to a share
exceeds the stockholder's tax basis for that share. Any loss
will generally be recognized only if the aggregate value of the
distributions with respect to a share is less than the
stockholder's tax basis for that share.
"The foregoing summary of certain federal income tax
consequences is for general information only and does not
constitute legal advice to any stockholder. If the IRS should
determine that the distributions were not liquidating
distributions, the result could be treatment of the
distributions as dividends rather than capital gains, taxable at
ordinary income rates without reduction for tax basis in the
shares. The tax consequences of distributions pursuant to the
plan of liquidation may vary depending upon the particular
circumstances of the stockholder. The Company recommends that
each stockholder consult its own tax advisor regarding the tax
consequences of distributions pursuant to the Plan."
LECTEC CORP: Working Capital Deficit Tops $290K at September 30
---------------------------------------------------------------
LecTec Corporation (Nasdaq:LECT) reported that net sales for the
third quarter of 2002 were $2,014,000, a 16.2% decline from net
sales of $2,403,000 in the third quarter of 2001. The Company
had a net loss for the third quarter of 2002 of $370,000, as
compared to a net loss for the prior year quarter of $1,190,000.
In April 2001 the Company sold its conductive products division,
which represented approximately $667,000 (27.8%) of its net
sales in the third quarter of 2001.
For the nine months ended September 30, 2002, net sales
decreased 46.6% to $5,111,000 from $9,563,000 in the first nine-
months of 2001. The net loss for the first nine months of 2002
was $1,945,000, as compared to net earnings for the first nine
months of 2001 of $1,443,000. Excluding the gain and
restructuring charge related to the sale of the conductive
products division, the Company had a net loss of $2,812,000 for
the first nine months of 2001. Gross margins for the current
nine-month period improved to 30.3% compared to 26.4% for the
same period last year.
Lectec's September 30, 2002 balance sheets show that its total
current liabilities exceeded its total current assets by about
$291,000.
"We are pleased that our base business in contract manufacturing
patches is returning to the levels we experienced prior to the
economic downturn resulting from the events of a year ago. Our
contract manufacturing patch business increased by 11.3%
compared to the prior year quarter," commented Rodney A. Young,
Chairman, CEO and President of LecTec Corporation. "Sales of our
TheraPatch(R) brand products increased 18.7% compared to the
same period a year ago, as a result of the continued popularity
of our TheraPatch Warm patch, which is used for patients
suffering from arthritis and back pain. However, sales from our
combined therapeutic and skincare brand business were flat. We
believe this was due to our financial inability to invest in an
appropriate advertising and promotional campaign needed to gain
true consumer awareness of our recently launched NeoSkin(R)
skincare line. Revenues were impacted by an 81.0% decrease in
sales levels from our recently sold conductive hydrogel
business. We saw a 32.4% sales decrease in our overall contract
business for the first three quarters of 2002 as compared to the
same period last year. However, gross margin percentage improved
3.8% for the third quarter, coming in at 29.5% compared to 25.7%
in the prior year comparable period. Our margin improvement can
be attributed to a shift in our sales mix toward our higher
margin topical drug delivery patch product lines," stated Young.
"Our improved bottom line for the quarter is directly
attributable to operating expense reductions. Operating expense
improvements remain one of our top priorities as we strive to
regain our revenue base. As a result of the implementation of
aggressive cost control and cost reduction programs, sales and
marketing expenses decreased 67.0% in the quarter ended
September 30, 2002 to $311,000 from $942,000 in the prior year
comparable period. General and administrative expenses decreased
21.9% in the quarter ended September 30, 2002 to $510,000 from
$653,000 in the prior year comparable period. Research and
development expenses decreased 50% in the three months ended
September 30, 2002 to $109,000 from $218,000 in the prior year
comparable period," according to Young.
"Liquidity continues to be a major concern. The growth of our
topical analgesic product, TheraPatch Warm, and the entry of new
competitors in the topical analgesic patch arena further
validate an overall consumer acceptance of topical drug delivery
patches. Going forward we will continue to focus on growing our
own brand businesses, controlling our expenses and seeking
additional contract partners, as well as technology-licensing
agreements. As we continue to manage our business, we are
continuing our active pursuit of a strategic partner, investors
or an acquirer," concluded Young.
LecTec is a health care and consumer products company that
develops, manufactures and markets products based on its
advanced skin interface technologies. Primary products include a
full line of over-the-counter therapeutic patches for muscle
aches and pain, insect bites, minor skin rashes, cold sores,
coughs due to colds and minor sore throats, psoriasis, and its
new products NeoSkin Rejuvenation and TheraPatch Sinus &
Allergy.
LEGACY HOTELS: Completes Equity Offering of 19.5MM Trust Units
--------------------------------------------------------------
Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN)
completed the previously announced offering of 19,500,000 trust
units at $7.70 per trust unit for gross proceeds of
$150,150,000. Fairmont Hotels & Resorts Inc., Legacy's largest
unitholder, subscribed for 6.5 million trust units to maintain
its ownership position at the current level of approximately
35%. The remaining 13 million trust units were sold to the
public.
RBC Capital Markets led the syndicate of underwriters, which
included BMO Nesbitt Burns Inc., CIBC World Markets Inc., Scotia
Capital Inc., TD Securities Inc., National Bank Financial Inc.,
Raymond James Ltd. and Salman Partners Inc.
Proceeds of this offering will be used to either fund, directly
or indirectly, a portion of the purchase price of the Monarch
Hotel in Washington, D.C., to fund the repayment of indebtedness
and for general corporate purposes.
Legacy is Canada's premier hotel real estate investment trust
with 22 luxury and first class hotels across Canada with
approximately 10,000 guestrooms. The portfolio includes landmark
properties such as Fairmont Le Chateau Frontenac, The Fairmont
Royal York and The Fairmont Empress. The management companies of
Fairmont Hotels & Resorts Inc. operate all of Legacy's
Properties.
As previously reported, Legacy's September 30, 2002 balance
sheets show a working capital deficit of about CDN$41 million.
LTV CORP: Pushing for Approval of Purchase Pact with Maverick
-------------------------------------------------------------
LTV Steel Company and its debtor-affiliates ask Judge Bodoh to
authorize and approve an Asset Purchase Agreement dated October
15, 2002, among Debtors -- The LTV Corporation, LTV Steel, and
Georgia Tubing Corporation, on one hand, and Buyer -- Maverick
Tube Corporation, on the other hand. Maverick Tube will buy LTV
Tubular Assets for $110,000,000 in cash, including assumption of
certain liabilities, subject to post-closing adjustments.
Maverick has placed $2,200,000 in escrow, which will be applied
to the purchase price at closing.
The sale is subject to higher and better offers. It is also
free and clear of all liens, claims, interests or encumbrances,
other than any liens, claims, interests or encumbrances
expressly permitted or assumed under the APA with Maverick. The
Debtors intend to assume and assign certain executory contracts
and unexpired leases in connection with the sale to Maverick,
effective as of the Closing Date.
The LTV Tubular Plants
After securing Judge Bodoh's approval of the Integrated Steel
Sale, the Debtors began to focus on the sale of the assets
comprising their Metal Fabrication Business, which includes,
among others, the assets of the LTV Tubular division of LTV
Steel. These assets include a manufacturing facility owned by
Georgia Tubing located in Cedar Springs, Georgia, and the
manufacturing facilities owned by LTV Steel located in Elyria
and Youngstown, Ohio; Counce, Tennessee; and Ferndale, Michigan.
The Asset Sale Procedures
Completing a going-concern sale of some or all of the LTV
Tubular Assets would provide the best mechanism to maximize
their value for the benefit of the Debtors' estates and
creditors. In connection with a possible sale, the Debtors
developed asset sale procedures to assist in the sale process
for the LTV Tubular Assets. The Debtors remind Judge Bodoh that
he approved these asset sales procedures earlier this year in
connection with Copperweld and these tubular plants. These
procedures included certain bid protections in connection with
an asset purchase agreement with a "stalking horse" bidder, and
the form and manner of notice of the asset sale.
Marketing Efforts
With the assistance of their investment banker, The Blackstone
Group LP, the Debtors marketed, among other assets, the LTV
Tubular Assets after Judge Bodoh's approval of the Integrated
Steel sale. These efforts included:
(a) distributing to potential purchasers a detailed offering
memorandum describing the primary assets of, among others,
the LTV Tubular business;
(b) organizing and maintaining extensive data rooms with related
due diligence information with respect to these assets, and
providing access to information to potential purchasers; and
(c) engaging in discussions with certain potential purchasers.
Since June 4, 2002, consistent with these procedures, the
Debtors have:
(1) directly solicited interest in, among others, the LTV
Tubular assets from 109 potential purchasers;
(2) published the notice of the sale process in national and
international editions of The Wall Street Journal; national
and international editions of The Financial Times; and the
daily editions of the trade publication American Metal
Market;
(3) delivered a Confidential Memorandum and provided other due
diligence materials to 30 potential purchasers and
conducted numerous facility tours for potential purchasers;
(4) engaged in negotiations and discussions with potential
purchasers with respect to, among others, the LTV Tubular
assets and potential sale terms and structures;
(5) received and analyzed four bids from at least 14 potential
purchasers for, among others, some or all of the LTV Tubular
business, and designated three of these parties to be
Qualified Bidders; and
(6) sought to reach agreement on a purchase agreement for the
sale of the LTV Tubular assets.
After extensive review of the Qualified Bids, the Debtors
determined that Maverick's bid constitutes the highest and best
offer for the LTV Tubular assets and will generate the maximum
aggregate value for the LTV Tubular assets for the benefit of
their estates and creditors.
Assets Purchased
Maverick will purchase the LTV Tubular assets, including all of
the real property; real property leases; machinery and
equipment; vehicles; sales and purchase orders or similar
contracts for the purchase of goods or services; contracts
entered into by LTV Tubular after the Petition Date; prepaid
expenses and deposits; inventory; accounts receivable;
intellectual property; certain computer software or systems;
intangible personal property; permits, authorizations and
licenses; business records; and other property relating to the
LTV Tubular plants.
Assets Excluded
The APA excludes from this sale any right, title or interest of
any person other than LTV in any property or asset, LTV's right,
title and interest to properties and assets not related
exclusively to the tubular business, and:
(1) all of LTV's cash and cash equivalents, including petty
cash exceeding $5,000, and undeposited checks;
(2) all contracts not specifically assumed;
(3) all of LTV's deposits and prepaid insurance premiums;
(4) all rights to claims, refunds or adjustments regarding
matters occurring before the Closing Date (regardless of
when the claim is made), and all rights to insurance
proceeds or other insurance contract recoveries relating
to excluded liabilities;
(5) all losses, loss carryforwards and rights to receive
refunds, credits and loss carryforwards with respect to
any and all taxes of LTV incurred or accrued on or before
the Closing Date, including interest receivable on those
rights;
(6) all rights, claims, credits, allowances, rebates, causes
of action, known or unknown, pending or threatened under
the Bankruptcy Code or similar state laws;
(7) all assets located at or related exclusively to the
facilities owned or leased by LTV Steel at Marion, Ohio,
and all other assets used exclusively in or arising
exclusively from LTV Corporation and its affiliates'
businesses conducted at the Marion Plant;
(8) proprietary computer software or systems;
(9) all shares of LTV capital stock or other equity interests;
(10) all corporate seals, minute books, charter documents,
corporate stock record books, original tax and financial
records, and general books and records to the extent these
relate to any of the excluded assets or to the
organization, existence or capitalization of any seller or
affiliate;
(11) all accounts receivable and other amounts due to LTV from
any affiliate;
(12) all of LTV's rights to recovery of collateral given to
obtain letters of credit and rights to recover amounts
drawn or paid on letters of credit;
(13) all rights to the LTV name, the Copperweld name, or any
variation;
(14) all contracts that are "employee benefit plans"; and
(15) all LTV labor agreements.
Assumed Liabilities
Maverick agrees to assume and pay:
(1) all liabilities and obligations of LTV with respect to
trade accounts payable of the TV Tubular business arising
after the Petition Date, but excluding any trade accounts
payable to any affiliate of LTV;
(2) all liabilities and obligations of LTV under contracts
assumed and assigned to Maverick, but only if the cure
amounts do not exceed an agreed amount;
(3) all liabilities and obligations of LTV with respect to
tooling, equipment and machinery owned by any customer of
the LTV Tubular business and any other third party,
possession of which is conveyed to Maverick by any seller;
(4) all liabilities and obligations of LTV for transaction
taxes payable in connection with these transactions;
(5) all liabilities and obligations of any seller or
affiliates or related persons relating to any
environmental law, irrespective of whether that liability
attaches or accrues to Maverick or any seller in the first
instance and relating to the acquired assets, but not
including:
(i) any liability or obligation resulting from the
transport, disposal, storage or treatment of any
hazardous materials by any seller before closing
to or at any location, other than the real
property being purchased;
(ii) any liability, obligation or claim for personal
injury resulting from exposure to hazardous
materials or otherwise, ,where that exposure or
other event or occurrence occurred prior to the
closing; and
(iii) any fine or other monetary penalty imposed by
any government before the closing date; and
(6) all liabilities and obligations of the sellers and their
affiliates with respect to the sellers' MBP, accrued
vacation, the Cedar Springs plant hourly and salaried
annual profit sharing plan, and the Counce Plant and
Ferndale Plant hourly and salaried quarterly profit
sharing plans, in each case for persons who are employed
by any seller or any of their affiliates on the date
before the Closing Date and who are employed by Maverick
or any affiliates after the Closing.
Severance Pay Program
At or before Closing, Maverick is required to institute a
severance pay plan applying to all persons who are full-time
employees of LTV Tubular, not represented by a labor union, and
who are employed by Maverick immediately after closing. This
plan must be substantially similar to the Copperweld Severance
Pay Plan and must credit all eligible employees for all prior
service with LTV or any affiliate for purposes of determining
the amount of any severance pay due. This plan must remain in
effect without material modification until the first anniversary
of the Closing Date.
Management Bonus Program
At or before Closing, Maverick must include in its existing
Management Bonus Program for the year in which the closing
occurs each person not represented by a labor union who is
employed by LTV of an affiliate on the date of this agreement
and on the day before closing who is a participant in the LTV
Copperweld Management Bonus Program 2002 and is employed by
Maverick or an affiliate after closing. Maverick is to cue each
MBP participant to receive a bonus under its MBP that is not
less than the amount accrued for each MBP participant in LTV.
Profit Sharing Plan
Immediately after closing, Maverick will cause each salaried or
hourly worker participating in (i) the Cedar Springs hourly and
salaried annual profit sharing plan, or (ii) the Counce Plant
and Ferndale Plant hourly and salaried quarterly profit sharing
plans, and who is employed by Maverick or an affiliate, to
receive a bonus under the Cedar Springs PSP or the Counce and
Ferndale PSP that is not less than the amount accrued for that
participant.
Escrow Funds
The $2,200,000 in escrow will be disbursed to LTV at closing,
or, in the event of Maverick's failure to close. The total
purchase price is subject to adjustment based on the
reconciliation of the sellers' net working capital related to
the LTV Tubular assets as of the Closing Date.
Closing Date
The Closing Date will occur on the third business day after the
Court approves this sale and all conditions to closing have been
met.
Environmental Escrow Account
If the results of an environmental report prepared by an
independent environmental consultant engaged by Maverick
identifies a current affirmative obligation to undertake an
environmental cleanup, or other action is required with respect
to the LTV Tubular assets under applicable environmental laws,
and the cost estimate for that action exceeds $2,000,000 at the
Closing Date, Maverick will place into an escrow account a
portion of the purchase price equal to the sum of:
(a) 50% of that portion of the cost estimate that is greater
than $2,000,000, but less than $6,000,000, and
(b) 100% of that portion of the cost estimate that is greater
than $6,000,000.
The amount deposited in the Environmental Escrow Account, if
any, will be released to the Sellers on the earlier to occur of:
(a) substantial completion of the cleanup required, or
(b) the second anniversary of the Closing Date.
Expense Reimbursement and Breakup Fee
The Buyer is entitled to an expense reimbursement for its
reasonable out-of-pocket fees and expenses up to $1,500,000
actually incurred by the Buyer in connection with the APA if the
Buyer or LTV terminate the APA agreement because of the Sellers'
failure to satisfy certain conditions to the Buyer's obligation
to consummate the sale of the LTV Tubular assets. If the
Sellers consummate an alternative transaction with a higher
bidder:
(1) the Sellers will pay the Buyer a $2,200,000 breakup fee;
(2) the deposits, plus interest, will be returned to the Buyer;
and
(3) the APA will be null and void.
The Benefit to the Estates
The Debtors have determined that the sale of the LTV Tubular
assets to Maverick, subject to a higher and better offer, is
appropriate and in the best interests of their estates and
creditors. David G. Heiman, Esq., Heather Lennox, Esq., and
Leah J. Sellers, Esq., at Jones Day Reavis & Pogue, in
Cleveland, Ohio, and Jeffrey B. Ellman, Esq., in Columbus, Ohio,
point out that LTV Steel's estate is liquidating, and the sale
of the LTV Tubular assets is a key component of that
liquidation. By selling the LTV Tubular assets to Maverick, the
Debtors will avoid the ongoing long-term liabilities that are
associated. (LTV Bankruptcy News, Issue No. 39; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
MAGELLAN HEALTH: Gets Fin'l Covenant Waivers from Bank Lenders
--------------------------------------------------------------
Magellan Health Services, Inc., (OCBB:MGLH) has entered into an
amendment to its Credit Agreement that provides for, among other
things, waivers of its financial covenants through December 31,
2002.
The amendment is consistent with the Company's previously stated
intention, which it reiterated, to seek appropriate waivers
under its Credit Agreement as it proceeds with its efforts to
reduce its debt and improve its capital structure.
Magellan also reported that holders of its senior and senior
subordinated notes have formed an ad hoc committee, which the
Company believes will facilitate constructive, effective and
efficient communications and negotiations in connection with the
Company's debt reduction process.
The committee has retained Houlihan Lokey Howard & Zukin Capital
to serve as its financial advisor and Akin Gump Strauss Hauer &
Feld to serve as its legal advisor. Magellan further reported
that the Board of Directors has accepted the resignation of
Daniel S. Messina from the positions of president and chief
executive officer, which he assumed in 2001.
Messina will continue to serve Magellan as a Board member. The
Board has appointed Jay J. Levin, chief operating officer, to
the additional role of president. Levin and Mark S. Demilio,
chief financial officer, will have responsibility for the day-
to-day operations of the Company. The Board will evaluate
whether or not to fill the position of chief executive officer
at this time.
"Jay and Mark have distinguished themselves through their
ongoing commitment to strengthening Magellan's operational,
customer service and financial position" said Henry T. Harbin,
M.D., chairman of the board. "Together, we will work closely as
we move forward with our debt reduction and operational
improvement efforts.
"On behalf of the Board, I want to thank Dan for his hard work
and dedication to Magellan as CEO, and I am pleased that we will
continue to benefit from his industry expertise and
understanding of our Company through his continuing role as a
Board member," Harbin concluded.
Demilio stated, "We are pleased to have secured an interim
waiver from our bank lenders. We will continue to work
expeditiously toward reducing our debt, and we believe that,
with continued progress, we can obtain further waivers, as
appropriate. We also view the formation of an ad hoc committee
of our Noteholders as an important step in the process of
achieving an improved capital structure."
"The formation of the Noteholder Committee is a meaningful step
to ensure that Magellan is restructured quickly and remains the
largest and best behavioral health care company. Magellan is a
market leader saddled with too much debt. Everyone wants a
comprehensive solution implemented expeditiously," said Jeffrey
I. Werbalowsky, a senior managing director of Houlihan Lokey
Howard & Zukin Capital.
As previously reported by Magellan, when the Company completes
and delivers its financial statements for the quarter and fiscal
year ending September 30, 2002 to its banks by the January 7,
2003 deadline, it believes that it will not be in compliance
with one or more of the financial covenants in its Credit
Agreement with bank lenders, in which case its lenders will have
the right to accelerate its debt maturities.
Accordingly, the Company intends to seek appropriate waivers
under its Credit Agreement as it proceeds with its efforts to
reduce its debt and improve its capital structure.
The Company confirmed that its cash flow from operations
continues to be positive and that it remains current on all
payments to its providers, vendors, suppliers and lenders.
Magellan continues to believe that it has the financial
resources to remain current on all operating obligations and to
continue investing in its business while it works to reduce its
debt, absent an acceleration of its debt maturities.
The Company also reported that its operational performance has
continued to improve. "We are pleased that fully 99 percent of
the overall claims paid by Magellan in September 2002 were paid
within 30 days of receipt," Levin stated. "This follows our
better than 98 percent performance for claims paid in August
2002.
Headquartered in Columbia, Md., Magellan Health Services, Inc.
(OCBB:MGLH), is the country's leading behavioral managed care
organization, with approximately 68 million covered lives. Its
customers include health plans, government agencies, unions, and
corporations.
Magellan Health Services' 9.0% bonds due 2008 (MGL08USR1) are
trading at 15.5 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MGL08USR1for
real-time bond pricing.
METALS USA: Successfully Emerges from Chapter 11 Proceeding
-----------------------------------------------------------
Metals USA, Inc. (OTC Bulletin Board: MUINQ), a metals
distributor and processor headquartered in Houston, has
completed its financial restructuring and has emerged from
Chapter 11 proceedings. Its Plan of Reorganization, which was
confirmed by the United States Bankruptcy Court for the Southern
District of Texas on October 18, 2002, became effective on
October 31, 2002.
Under the Company's Plan of Reorganization, existing shares of
Metals USA stock have been cancelled. The Company will issue 20
million new Metals USA shares to unsecured creditors under the
Plan of Reorganization in conversion of approximately $380
million of pre-petition indebtedness into equity. Metals USA
will issue to holders of the old common stock five year warrants
to purchase an aggregate of up to 15% of the new common stock of
the reorganized Company.
The reorganized Company also entered into a $200 million
revolving credit facility agented by Bank of America, N.A. The
new credit facility is for a term of three (3) years and is
secured primarily by the Company's accounts receivable and
inventories.
The Company's new Board of Directors consists of Mr. Daniel W.
Dienst (Chairman of the Board), Mr. Eugene I. Davis, Mr. John T.
DiLacqua, Jr., Mr. Charles Sanida, Mr. Jack G. Leckie, and Mr.
Gerald E. Morris.
Additionally, Metals USA, Inc., announced that J. Michael
Kirksey has resigned as Chairman and Chief Executive Officer,
effective November 1, 2002. "We thank Mike for the contributions
he has made to the Company and we wish him the best," said
Daniel W. Dienst, Chairman of the Board. At the request of the
Board, Dan Dienst and Eugene Davis will form the Office of the
Chairman and perform all of the duties of the chief executive of
the Company until a new chief executive officer is appointed by
the Board.
Additionally, Lester G. Peterson has resigned as Senior Vice
President of the Company effective November 1, 2002. Mr.
Peterson was in charge of the Plates and Shapes Group. Mr.
William R. Bennett, who was originally designated as a director,
has been appointed as Senior Vice President of the Company and
President of the Plates and Shapes Group and has resigned his
position as a director, effective November 1, 2002. Mr. Bennett
was the President of Levinson Steel Company, a subsidiary of the
Company, from 1990 to 1999.
Mr. Craig Doveala and Mr. Edward (Tom) Thompson will continue in
their positions as Senior Vice Presidents of the Company and as
Presidents of the Flat Rolled Group and the Building Products
Group, respectively.
For additional news and information on the restructuring, please
visit the Company's web site at www.metalsusa.com . For a
detailed filing of the "Amended Disclosure Statement and Plan of
Reorganization" please visit:
http://www.metalsusa.com/dynamic/pdf/disclosure_statement.pdf
Metals USA, Inc., is a leading metals processor and distributor
in North America providing a wide range of products and services
in the Carbon Plates and Shapes, Flat-Rolled Products, and
Building Products markets.
NATIONSLINK: Fitch Affirms Low-B Ratings on Class F and G Notes
---------------------------------------------------------------
NationsLink Funding Corporation, commercial mortgage pass-
through certificates, Series 1999-SL, $17.6 million class A-2,
$43.4 million class A-3, $101.2 million class A-4, $71.1 million
class A-5, $76.2 million class A-6, and $126.2 million class A-
1V are affirmed at 'AAA'. Also affirmed by Fitch Ratings: $38.2
million class B at 'AA', $33.4 million class C at 'A', $31.0
million class D at 'BBB', $16.7 million class E at 'BBB-', $38.2
million class F at 'BB', and $14.3 million class G at 'BB-'. The
$635.9 million class X notional amount is not rated. Classes E,
F, G, and X are privately placed pursuant to Rule 144A of the
U.S. Securities Act of 1933. Class A-1 paid off and the rating
was withdrawn. The rating affirmations follow Fitch 's annual
review of the transaction, which closed in May 1999.
The certificates are collateralized by 1,540 loans. The
collateral is currently secured by (20%) adjustable-rate
mortgage loans and (80%) fixed-rate mortgage loans. Significant
property concentrations include, industrial (34%), office (24%),
retail (14%) and multifamily (14%). The properties are located
in 11 states, with significant concentrations in California
(65%), Washington (17%), Nevada (5%), and Oregon (6%). Orix
Capital Markets provided full-year financial performance for 17%
of the pool. Historically, delinquencies have typically been
between 0.04% and 0.02% of pool balance. The reported
delinquencies as of the October 2002 distribution report are at
0.08%. Three loans (0.2% of the pool) are in special servicing.
One loan is 90+ days delinquent and the other two loans are
current. The 90-day delinquent loan is an industrial property
located in Lynnwood, WA, representing 0.08% of the pool, with a
current loan balance of $520,462. The loan was scheduled to be
paid-in-full in September 2002, however the institution
approached for refinancing retracted its offer until additional
underwriting was completed on the property. The borrower is
continuing his efforts to refinance the loan. Eighty-nine loans
(8% of the pool) are currently on the master servicer watchlist
primarily due to maturities within the next six months. Two
loans (0.4% of the pool) reported year-end 2001 DSCR's below
1.0x. Fitch Ratings requested a copy of the document exception
report from LaSalle, the trustee, but it has not been received
yet.
As of the October 2002 distribution date, the pool's collateral
balance has been reduced by 46% since issuance. The certificates
are over-collateralized by 5% of the pool balance. Monthly
distributions follow an OC structure with step-down principal
payments. In this structure, all excess cash is retained to
build OC until it reaches 3% of the original collateral balance.
This OC is available to support the certificates. After the 26th
month, and after the 3% OC percentage has been reached, OC must
be maintained at the greater of 4.5% of the current collateral
balance or 1% of the original collateral balance. Excess cash
flow is then applied to the deal, in the following order: to
cover losses; to reimburse any servicer advances and interest
thereon; and to fast-pay principal on the bonds, subject to
specific credit support tests. The target credit support
percentage for each class is as follows: 31.5% for class A;
25.5% for class B; 20.3% for class C; 15.4% for class D; 12.8%
for class E; 6.8% for class F; and 4.5% for class G. Any
remaining cash flow is released to class X. This structure
includes two trigger events that can cause the structure to
revert to standard sequential-pay structure. The first trigger,
related to the size of the current collateral balance, protects
senior certificate holders against adverse selection. The second
trigger, related to the amount of delinquencies, protects
against credit events that may cause widespread collateral
deterioration.
Overall, the transaction is performing as expected. Although
there continues to be a significant reduction in the pool's
collateral balance since underwriting as well as an improvement
in subordination levels (due to the transaction's
overcollateralization and payment priority structure), the
current subordination levels for each class have reached what
the targeted credit support percentages called for at
underwriting, thus only warranting affirmations of all classes
at this time.
NATIONSRENT INC: Fixes Lease Protocol with Case Credit, et. al.
---------------------------------------------------------------
Case Credit Corporation and New Holland Credit Company LLC
provide NationsRent Inc., and its debtor-affiliates with 450
different items of construction equipment under various
commercial leases. The items of Equipment are set forth on
individual contracts, or in some cases, grouped together on
schedules attached to the Agreements.
Since the Petition Date, the Debtors continued to use certain of
the Equipment in the ordinary course of their businesses. The
Debtors' quarterly obligations under the Agreements equal to
$542,231.
Case Credit and New Holland have raised concerns regarding their
interests on the equipment. To resolve the matter, the
equipment providers and the Debtors decided to establish an
interim protocol to facilitate:
(a) the development, collection and sharing of information,
including payments, maturity dates, payoff amounts,
revenue by item of Equipment and related information;
(b) the appraisal and inventory of the Equipment;
(c) the establishment of a process to evaluate the Equipment
with the objective of assuming, rejecting, renegotiating
or re-characterizing as secured indebtedness each of the
Agreements; and
(d) meeting the Debtors' obligations, on an interim basis.
The salient terms of the parties' stipulation include:
A. Development Collection and Sharing of Information
The Debtors are in the process of compiling and collecting
certain information with respect to the Equipment that will
facilitate discussions between both Providers and the
Debtors. Accordingly, the Debtors agree to provide the
Equipment Information to both Providers by October 31, 2002;
B. Equipment Appraisal and Audit
-- The Debtors have retained Ritchie Brothers International,
Inc., to perform an appraisal of all of the equipment
covered by the Agreements, including a physical
inspection, based on a sample of not less than 15% of all
equipment leased by the Debtors or financed through
purchase money indebtedness;
-- The Inspection Sample will include a cross section of all
of the equipment leased by the Debtors or financed by the
provider of the equipment;
-- The Appraiser will exercise care in the sampling process
to ensure that the Inspection Sample includes equipment
from, without limitation:
* all of the Agreements;
* all brands;
* all makes;
* all models; and
* all regions.
The Appraiser will consult with the Debtors and the
Providers in making these determinations.
-- At the Appraiser's discretion, after consultation with the
Debtors and the Providers, the Appraiser may increase the
Inspection Sample above 15% to achieve a better coverage;
-- In addition to the appraisal, the Debtors have retained
Quiktrak, Inc., as Equipment Auditor to verify the
existence and location of Case Credit's and New Holland's
Equipment associated with each Schedule; and
-- Through October 31, 2002, the audit provided for under the
terms of this Stipulation will be in lieu of any audit
otherwise provided for under the Agreements;
C. Confidentiality
The parties have entered into a separate Confidentiality
Agreement that will be deemed incorporated in this
Stipulation by reference in its entirety;
D. Process for Equipment Evaluation
-- After receiving the Appraiser's results, the Debtors will
review the Equipment Information and determine the
Equipment that is subject to the Agreements to be assumed,
rejected, re-characterized as secured indebtedness or, in
certain cases, restructured with the consent of the
Providers;
-- The Debtors will provide the Providers with their proposal
with respect to each Schedule by October 31, 2002 or other
date as mutually agreed by the Debtors and the Providers;
and
-- The Debtors and the Providers will engage in discussions
to reach a settlement with respect to each Schedule. To
the extent that a settlement is not reached with respect
to a certain Schedule, the Debtors and the Providers
reserve all of their respective rights to exercise all
available remedies under the Bankruptcy Code or applicable
nonbankruptcy law;
E. Payment
-- Administrative Payments
(a) The Debtors will pay to the Providers 33% of one-
quarter of the actual rental revenue -- including a
provision for ancillary revenue -- attributable to the
Equipment for the preceding actual 12 months based on
the most recent full monthly reporting period
available. This will be in full settlement of any
claims accruing as allowed administrative expense
claims pursuant to the Agreements for the period
December 17, 2001 through March 31, 2002 for the
Debtors' use of the Equipment; and
(b) The Providers waive their rights to assert any future
claims arising out of, or related to, the Agreements
from December 17, 2001 through March 31, 2002 for
those claims arising directly out of the ordinary
contractual monetary obligation of the Debtors under
the Agreements. The Providers, however, do not waive
their right to assert future claims as to any
extraordinary damage or injury with respect to the
Equipment, or based on any conversion or unauthorized
disposition of the Equipment;
-- Future Payments
(a) Following the Agreement Effective Date until the
expiration of this Stipulation, the Debtors will pay
to the Providers 38% of one-quarter of the actual
rental revenue -- including a provision for ancillary
revenue -- attributable to the Equipment for the
preceding actual 12 months based on the most recent
full monthly reporting period available on the
Agreement Effective Date. This Quarterly Future
Payments will account for those claims accruing
pursuant to the Agreements for the period April 1,
2002 through June 30, 2002;
(b) The Debtors will also pay Quarterly Future Payment on
account of claims accruing for the period July 1, 2002
through September 30, 2002, and thereafter on the
first day of each subsequent quarter in which this
Stipulation is in effect; and
(c) In the event any Quarterly Future Payment made after
June 30, 2002 is calculated to be less than the
Quarterly Future Payment made for the period April 1,
2002 through June 30, 2002, the Debtors will pay the
same amounts they paid for the period April 1, 2002
through June 30, 2002;
-- the Debtors and the Providers agree that all calculations
will be made on an individual Schedule basis and that a
Payment on account of any Schedule will not exceed 100% of
the existing payment under an Agreement unless that excess
is necessary to offset any shortfall with respect to any
prior Quarterly Future Payments. The Payments with
respect to each Schedule will be applied on a pro rata
basis based on the original cost of the Equipment;
-- The extent, if any, to which any difference between the
Quarterly Future Payments attributable to the Agreements
and the contractual obligations under the Agreements on or
after April 1, 2002 will constitute an allowed
administrative expense obligation in the Debtors' Chapter
11 cases, will be subject to further review and
determination by the Court at a later date. The parties
expressly reserve their respective rights regarding that
future determination;
-- All Payments will be credited against the Debtors'
obligations to the Providers pursuant to the Agreements;
provided, however, that the parties reserve all rights
concerning the ultimate characterization and application
of all Payments based, among other things, on:
(a) whether the Agreements are true leases or secured
indebtedness; and
(b) the valuation of the Equipment serving as the
collateral for any secured indebtedness; and
-- With respect to Quarterly Future Payments, the Providers
reserve any right that they may have to calculate, accrue
or collect interest pursuant to any of the Agreements at
any "default" rate exceeding the applicable "non-default"
rate. The Payments provided for in this Stipulation and
Order will not be subject to reduction during the
administrative phase of the Debtors' Chapter 11 cases
other than by order of the Court on motion or otherwise
after prior written notice to the Providers;
F. No Disgorgement of Payments
-- The Debtors will not seek to recover or otherwise disgorge
any Payments made to the Providers pursuant to this
Stipulation, other than Payments made on account of
Agreements that are later re-characterized as secured
Indebtedness. These Payments will then be treated as
adequate protection only to the extent that those adequate
protection payments do not exceed the value of the
Providers' interest in the Equipment and as to which the
Providers have a perfected prepetition security interest;
and
-- The Debtors may exercise their right to seek the
disgorgement of Payments in accordance with this
Stipulation at any time;
G. Reporting and Maintenance
The Debtors will continue to perform all of their obligations
with respect to the maintenance, upkeep and reporting with
respect to the Equipment as set forth in the Agreements;
H. Cash Collateral
In the event that the Agreements are later re-characterized
as secured indebtedness, the Providers reserve their right to
assert a claim:
-- that the revenues from the Agreements obtained by the
Debtors through the rental of the Equipment constitute
cash collateral in which the Providers hold a first
priority perfected security interest and lien with
priority over any other lien of any other creditor; and
-- that they are entitled to adequate protection of their
interest in these rents, revenues, income, profits and
proceeds pursuant to Sections 361, 362 and 363 of the
Bankruptcy Code; and
I. Term of Stipulation
The Stipulation will remain effective with respect to each
Schedule until the earlier of:
-- the entry of an order providing for the assumption or
rejection of a Schedule and, if that Schedule is rejected,
the actual physical return of the item or items of
Equipment to the Providers;
-- an agreement of the parties providing for a termination of
this Stipulation; or
-- the entry of an order on motion or otherwise terminating
this Stipulation. (NationsRent Bankruptcy News, Issue No.
21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NationsRent Inc.'s 10.375% bonds due 2008 (NRNT08USR1) are
trading at a penny on the dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NRNT08USR1
for real-time bond pricing.
NEFF CORP: S&P Concerned About Covenant Breach Under Credit Pact
----------------------------------------------------------------
Standard & Poor's Ratings Services placed the single-'B'-minus
corporate credit and senior secured debt ratings and the triple-
'C' subordinated rating of Neff Corp., on CreditWatch with
negative implications.
"The action followed the announcement by the company that it was
not in compliance with its leverage covenant on its credit
agreement, because of weakness in the company's financial
performance in the third quarter," said Standard & Poor's credit
analyst John R. Sico.
Miami, Florida-based-Neff, a relatively modest-size rental
equipment company, has about $280 million in debt outstanding.
Operating income in the third quarter of 2002 fell by 27% from
the year-earlier level because of weaker equipment-rental
revenues.
The company has virtually no cash on hand. While Neff is about
to begin negotiating with its lenders to obtain covenant relief,
banks have not yet approved any amendment and may not do so
before an interest payment of about $8 million is due on Neff's
subordinated notes on December 1, 2002.
Standard & Poor's will monitor events and discuss these issues
with management before taking rating action.
NETIA HOLDINGS: Minority Shareholder Challenges Resolutions
-----------------------------------------------------------
Netia Holdings S.A., (WSE: NET) Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), received on October 30, 2002 a
copy of the claim filed by a minority shareholder requesting the
invalidation of a resolution adopted at the Extraordinary
General Meeting of Shareholders held on August 30, 2002.
The minority shareholder claims that the Extraordinary General
Meeting of Shareholders was convened in violation of formal
requirements under section 402 of the Polish Commercial
Companies' Code. Netia's management board believes the claim to
be unsubstantiated and expects to file for its dismissal.
NETWORK COMMERCE: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Network Commerce Inc.
411 1st Avenue S #200 N
Seattle, Washington 98104
dba Nci California II Inc
dba NCI California III Inc
dba Techwave Inc.
dba Shopnow.com Inc.
dba Epackets.Net Inc.
dba Freemerchant.com Inc.
dba Ombra Marketing Corp
dba Speedyclick Corp
dba NCI Marketing Inc.
dba WebCentric Inc.
dba NCI California I Inc.
Bankruptcy Case No.: 02-23396
Type of Business: Technology infrastructure and services
company.
Chapter 11 Petition Date: November 1, 2002
Court: Western District of Washington (Seattle)
Judge: Karen A. Overstreet
Debtor's Counsel: John R. Rizzardi, Esq.
Cairncross & Hampelmann PS
524 2nd Avenue #500
Seattle, WA 98104-2323
Tel: (206) 587-0700
Fax : (206)587-2308
Total Assets: $5,740,000 (as of June 30, 2002)
Total Debts: $7,040,000 (as of June 30, 2002)
NRG ENERGY: Misses Interest Payment on 8% Senior Unsecured Notes
----------------------------------------------------------------
NRG Energy, Inc., a wholly owned subsidiary of Xcel Energy
(NYSE:XEL), did not make a $9.6 million interest payment due
Friday, Nov. 1, 2002, on $240 million in eight percent senior
unsecured notes. NRG has until December 1 to make payment on the
corporate level bond to avoid default.
In addition, on October 1, 2002, NRG did not make payments on
two debt issues, a $13 million interest payment on $350 million
in 7.75 percent senior unsecured notes due 2011 and a $21.6
million interest payment on $500 million in 8.625 percent senior
unsecured notes due in 2031. The 30-day grace period to make
payment ended today and NRG did not make the required payments.
As a result, NRG is in default on these bonds.
As with all NRG debt issues, these are non-recourse to the
parent company, Xcel Energy. NRG plans to address this payment
in a broader restructuring plan and is working with bondholders
to resolve this issue.
NRG Energy, a wholly owned and unregulated subsidiary of Xcel
Energy, develops and operates power generating facilities. NRG's
operations include competitive energy production and
cogeneration facilities, thermal energy production and energy
resource recovery facilities.
Xcel Energy is a major U.S. electricity and natural gas company
with regulated operations in 12 Western and Midwestern states.
The company provides a comprehensive portfolio of energy-related
products and services to 3.2 million electricity customers and
1.7 million natural gas customers through its regulated
operating companies. In terms of customers, it is the fourth-
largest combination natural gas and electricity company in the
U.S. Company headquarters are located in Minneapolis.
NRG Energy Inc.'s 8.625% bonds due 2031 (XEL31USR1), DebtTraders
reports, are trading at 19 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL31USR1for
real-time bond pricing.
OMEGA HEALTHCARE: Red Ink Continues to Flow in Third Quarter
------------------------------------------------------------
Omega Healthcare Investors, Inc. (NYSE:OHI) -- whose corporate
credit rating is affirmed by both Standard & Poor's and Fitch at
single-'B' -- announced its results of operations for the
quarter ending September 30, 2002. The Company reported
normalized Funds from Operations for the three-month period
ending September 30, 2002 of $11.2 million or $0.20 per common
share on a fully diluted basis, as compared to $0.18 per fully
diluted common share for the three-month period ending June 30,
2002 and $0.18 per fully diluted common share for the three-
month period ending September 30, 2001.
Revenues, excluding nursing home revenues of owned and operated
assets and one-time revenue items, for the three-month period
ending September 30, 2002, totaled $22.6 million, an increase of
$0.9 million over the same period in 2001.
Expenses, excluding nursing home expenses, provision for losses
and impairments, and severance and moving related expenses, were
$13.6 million for the three-month period ending September 30,
2002, a decrease of 27% from $18.7 million for the same period
in 2001. This $5.0 million favorable reduction was primarily a
result of $1.2 million favorable general, administrative and
legal costs, $2.7 million of interest savings and $1.1 million
of non-cash adjustments for depreciation, amortization and
derivatives.
Normalized FFO is calculated as reportable FFO less revenues and
expenses related to owned and operated assets, assets held for
sale, provision for impairment and provision for uncollectible
accounts, and one-time revenue and expense items. For the three-
months ended September 30, 2002, the net total of these excluded
amounts was $16.3 million versus $5.0 million in the prior
quarter and $3.6 million for the same period in the prior year.
Reportable FFO for the three-month period ending September 30,
2002 was a deficit of $5.1 million, as compared to a positive
$3.1 million for the three-month period ending September 30,
2001.
The Company reported a net loss available to common shareholders
for the three-month period ending September 30, 2002 of $12.9
million versus a net loss of $6.9 million for the same period in
the prior year. The third quarter 2002 results include a charge
of $5.2 million for provision for uncollectible mortgages and
notes; a $2.4 million provision for impairment; and a $2.2
million gain on assets sold. In addition, nursing home expenses
of owned and operated assets include a $5.0 million provision
for uncollectible accounts receivable and $1.7 million of
expenses associated with the termination of three leasehold
interests. These non-recurring charges are part of the $16.3
million of exclusions from normalized FFO.
In September 2002, we entered into a 61-month, $200.0 million
interest rate cap with a LIBOR strike of 3.50%. The cap allows
the Company to continue to benefit from today's lower interest
rates while fixing the LIBOR component of floating rate debt at
no more than 3.50% for the next 61 months. Under the terms of
the cap agreement, when LIBOR exceeds 3.50%, the counterparty
will pay us $200.0 million multiplied by the difference between
LIBOR and 3.50% times the number of days when LIBOR exceeds
3.50%.
As of October 31, 2002, the Company had availability of $31.6
million under its revolving lines of credit, compared to $22.7
million on September 30, 2002 and $4.5 million on June 30, 2002.
The Company is actively exploring refinancing alternatives in
order to extend current debt maturities and provide greater
financial flexibility. To date, the Company has expended
substantial time and has spent $4.1 million related to
refinancing activities. The Company's goal is to complete a
refinancing transaction in the first quarter of 2003. Note,
however, there can be no assurance that the Company will be able
to reach acceptable agreements with its bank lenders and/or
other capital sources to achieve the proposed refinancing.
During the third quarter, the Company's owned and operated
assets were further reduced from thirteen to eight facilities.
We entered into a Master Lease with Hickory Creek Healthcare
Foundation, Inc., to lease two facilities. The initial term of
the lease is ten years with an option to renew for an additional
ten years and initial annual rent payments of approximately
$415,000. Additionally, three facility leasehold interests were
terminated during the quarter. We incurred $1.7 million in
expenses associated with the lease terminations.
On October 1, 2002, we entered into a Master Lease to lease two
facilities in Indiana to Kendallville Manor Investors, LLC and
Cloverleaf of Knightsville Investors, LLC. The initial term for
the Master Lease is ten years with an initial annual rent
payment of $540,000. Simultaneously, and in a related
transaction, we sub-leased a 68-bed facility in Indiana to
Owensville Manor Investors, LLC. The initial term for the
sublease equals the balance of the term on the Prime Lease, set
to expire on February 28, 2006, with an initial annual rent
payment to Omega of $360,000, as compared to Omega's annual
ground lease rent obligation of $518,000. If Omega is still the
tenant under the Prime Lease after year one, then the annual
rental payment under the Kendallville and Knightsville Master
Lease permanently increases by $40,000 per annum beginning in
the second lease year.
As a result of the re-leasing efforts subsequent to the end of
the third quarter, the total number of Owned and Operated Assets
decreased from eight as of September 30, 2002, to five as of
October 31, 2002.
On October 1, 2002, we entered into a Master Lease to re-lease
two facilities, formerly leased to Alterra Healthcare
Corporation in Indiana to Residential Care VIII LLC. The initial
term for the two properties is five years with an initial annual
rent payment of $105,000, increasing to $345,000 in the second
lease year.
Omega is a Real Estate Investment Trust investing in and
providing financing to the long-term care industry. At September
30, 2002, the Company owned or held mortgages on 225 skilled
nursing and assisted living facilities with approximately 23,500
beds located in 28 states and operated by 34 independent
healthcare operating companies.
OWENS-ILLINOIS: Fitch Rates $300-Mil. Senior Secured Notes at BB
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Owens-Illinois'
(NYSE: OI) proposed $300 million privately placed, Rule 144A
senior secured notes. Proceeds will be used to reduce bank debt
outstanding under the company's secured term loan and revolving
credit facilities. The Rating Outlook remains Negative.
Credit risks incorporated in the rating and the Outlook concern
OI's asbestos exposure, high leverage position and refinancing
requirements. The bankruptcy of several companies with asbestos
exposure has heightened interest in the company's asbestos
exposure, and some uncertainty will likely remain over the near
term. However, OI showed reduced payments through the first nine
months of 2002, and despite a $475 million addition to reserves
in the first quarter, trend lines are positive. OI's exposure is
differentiated from other asbestos exposed firms by a number of
factors including OI's exit in 1958 from asbestos-related
manufacturing (earlier than most other exposed companies), the
aging of potential claimants, and agreements in place with
numerous plaintiff law firms as to the handling of claims. OI
has retained high leverage as a result of a number of meaningful
acquisitions as well as high levels of asbestos payments. OI has
demonstrated continued access to the capital markets, although
heavy refinancing requirements, unsteady capital markets and
exposure to asbestos uncertainties indicate that refinancing
risk, although reduced, could remain.
OI has been able to maintain relatively stable margins and
breakeven, or modestly positive, free cash flow (after asbestos
payments) in spite of the weak economic environment. Recent
results in the glass business have been positive due to steady
unit growth, lower energy costs and a degree of pricing
strength. The plastics operations continue to experience pricing
pressure. Historically, OI has been able to maintain relatively
steady margins in their glass business through a consistent
focus on cost reductions and productivity improvements.
The notes will be issued by Owens-Brockway Glass Container Inc.,
a second-tier subsidiary of Owens-Illinois. The refinancing is
part of the company's effort to reduce outstandings under its $3
billion revolving loan commitment and a $65 million term loan,
both of which mature in March 2004. The bank facilities are
secured by substantially all of the domestic assets and 65% of
stock of first-tier foreign subsidiaries. The new notes will
also be secured by all of the domestic assets, but will exclude
foreign subsidiaries. This will translate into differences in
access to cash flow (roughly 100% for the credit agreement, vs.
approximately 60% for the senior secured notes) and in
collateral (50% of OI's assets plus 65% of stock of foreign
subsidiaries, vs. 50% of assets). Due to overall
collateralization and a similar capital structure at the foreign
subsidiaries, the difference in collateral packages between the
two classes of secured debt is currently not material enough to
differentiate between these classes of secured debt. However, as
OI's capital structure continues to evolve, the difference in
collateral packages between the two classes of secured debt may
warrant a rating differential.
Approximately $1.7 billion in senior unsecured notes is
outstanding at the parent level, $650 million of which will
comes due in April 2004. Fitch expects OI to refinance these
unsecured issues through the issuance of additional secured
notes, thereby impairing remaining unsecured debt and diluting
the claim on assets of other secured lenders. Owens-Illinois is
a leading manufacturer of glass containers and plastics
packaging products. Approximately one of every two glass
containers produced worldwide is made by OI, its affiliates or
its licensees. In the U.S., OI produces glass containers for
alcoholic beverages, tea, and juice as well as for food and
pharmaceuticals.
PACIFIC GAS: Asks SEC to Approve Acquisition of New Subsidiaries
----------------------------------------------------------------
On October 23, 2002, PG&E Corporation; Pacific Gas and Electric
Company, a direct public-utility company subsidiary of PG&E
Corp.; Newco Energy Corporation, a direct non-utility subsidiary
of PG&E; and Electric Generation LLC (Gen), a direct non-utility
subsidiary of Newco, filed an application with the Securities
and Exchange Commission under Sections 9(a)(2) and 10 of the
Public Utility Holding Company Act of 1935, as amended.
The Applicants ask the SEC to authorize:
(1) Gen to acquire directly the GenSub LLCs;
(2) Newco to acquire directly Gen and ETrans, and to acquire
indirectly the GenSub LLCs; and
(3) PG&E Corp., to acquire directly Newco, and acquire
indirectly ETrans, Gen, and the GenSub LLCs indirectly.
If necessary, the Applicants also seek the SEC's authority for
PG&E to acquire Newco, ETrans and Gen on an interim basis,
between the time that utility assets are transferred to ETrans
and Gen and the Reorganization is completed.
PG&E Corp., PG&E, Newco, and Gen request authority to effect
certain transactions as set forth in PG&E's Reorganization Plan.
PG&E Corp., a California corporation, became the holding company
of PG&E on January 1, 1997. Through other subsidiaries, PG&E
Corp. is engaged in a number of non-utility businesses. PG&E
Corp.'s common stock and related preferred stock purchase rights
are publicly traded on the New York Stock Exchange.
Newco was incorporated under the laws of the State of California
on October 19, 2001. It is a wholly owned, direct subsidiary of
PG&E. Newco is the sole member of three limited liability
companies:
* ETrans LLC;
* Gen; and
* GTrans LLC.
Currently, Gen is an inactive non-utility subsidiary that owns
all of the outstanding ownership interests of twenty-seven
limited liability companies. The GenSub LLCs are California
limited liability companies formed on October 30, 2001.
The GenSub LLCs are: Diablo Canyon LLC; Mokelumme River Project
LLC; Rock Creek-Cresta Project LLC; Haas-Kings River Project
LLC; Crane Valley Project LLC; Pit 1 Project LLC; Hat Creek 1
and 2 Project LLC; Poe Project LLC; Pit 3, 4 and 5 Project LLC;
Upper NF Feather River Project LLC; Spring Gap-Stanislaus
Project LLC; Km Canyon Project LLC; Kilare-Cow Creek Project
LLC; Chili Bar Project LLC; Desabla-Centerville Project LLC;
McCloud-Pit Project LLC; Drum-Spaulding Project LLC; Merced
Falls Project LLC; Bucks Creek Project LLC; Potter Valley
Project LLC; Phoenix Project LLC; Kerckhoff 1 and 2 Project LLC;
Narrows Project LLC; Balch 1 and 2 Project LLC; Helms Project
LLC; Battle Creek Project LLC; and Tute River Project LLC.
PG&E, a California corporation, is a public-utility company
engaged principally in the business of providing regulated
electricity and natural gas distribution and transmission
services throughout most of northern and central California.
Currently, all of the outstanding shares of common stock of PG&E
are held directly or indirectly by PG&E Corp. In addition, PG&E
has a number of series of publicly held preferred stock
outstanding. The company's service territory covers 70,000
square miles, and includes all or a portion of 48 of
California's 58 counties. As of December 31, 2001, PG&E
employed 19,000 people. PG&E's generation facilities consist
primarily of hydroelectric and nuclear generating plants, and
have an aggregate net operating capacity of approximately 6,649
megawatts.
As of December 31, 2001, PG&E owned:
-- 18,648 miles of interconnected transmission lines of 60
kilovolts (kV) to 500 kV; and
-- transmission substations having a capacity of 7,091
megavolt-amperes (MVa).
PG&E distributes electricity to its customers through 116,460
circuit miles of distribution system and distribution
substations having a capacity of 24,894 MVa. PG&E relinquished
operational control, but not ownership, of its electric
transmission facilities to the California Independent System
Operator (Cal-ISO).
PG&E also owns and operates a gas transmission, storage and
distribution system in California. As of December 31, 2001,
PG&E's gas system consisted of:
-- 6,254 miles of transmission pipelines;
-- three gas storage facilities; and
-- 38,410 miles of gas distribution lines.
PG&E's peak send-out of gas on its integrated system in
California during the year ended December 31, 2001, was 3,793
million cubic feet (MMcf). The total volume of gas throughput
during 2001 was approximately 916,635 MMcf of which 270,556 MMcf
was sold to direct end-use or resale customers and 646,079 MMcf
was transported as customer-owned gas. As of December 31, 2001,
PG&E served approximately 3.9 million gas customers.
Currently, the Federal Energy Regulatory Commission regulates
PG&E's electric transmission rates and access, interconnections,
operation of the Cal-ISO, and terms and rates of wholesale
electric power sales. In addition, most of PG&E's hydroelectric
facilities operate in accordance with licenses issued by FERC.
The Nuclear Regulatory Commission oversees the licensing,
construction, operation and decommissioning of nuclear
facilities, including PG&E's Diablo Canyon Power Plant and the
retired Humboldt Bay Power Plant Unit 3.
The CPUC has jurisdiction to set retail rates and conditions of
service for PG&E's electric distribution, gas distribution and
gas transmission services in California. The CPUC also has
jurisdiction over PG&E's:
* sales of securities;
* dispositions of utility property;
* energy procurement on behalf of its electric and gas
retail customers; and
* certain aspects of PG&E's siting and operation of its
electric and gas transmission and distribution systems.
Additionally, the California Energy Commission has jurisdiction
over the siting and construction of new thermal electric
generating facilities fifty MW and greater in size.
As of November 30, 2001, the total estimated allowed claims
against PG&E was $13.135 billion. The Plan provides that PG&E:
-- pay its creditors $3.92 billion in cash that it currently
has on hand; and
-- finance the remaining $9.215 billion through asset sales,
issuances of new securities and replacement mortgage
bonds, and continuations of existing debt.
A. Asset Sales
Under the Plan, PG&E's four distinct lines of business:
* electric transmission;
* electric generation;
* gas transmission; and
* gas and electric distribution
would be structurally separated by dividing PG&E's assets and
liabilities.
PG&E would transfer, among other things, its electric
transmission assets to ETrans in exchange for $400 million in
cash and $650 million in long-term notes issued to PG&E for
transfer to its creditors.
In exchange for $850 million in cash and $1,550 million in
Long-term notes issued to PG&E for transfer to its creditors,
PG&E would transfer, among other things, most of its electric
generation assets to the GenSub LLCs.
PG&E would transfer, among other things, certain gas
transmission assets, to GTrans in exchange for $400 million
in cash and $500 million in long-term notes issued to PG&E
for transfer to its creditors.
B. Other Financing
Under the Plan, PG&E would issue approximately $3,706 million
in new long-term notes to the public or to third parties in
private offerings. PG&E would also issue new mortgage bonds
to replace existing mortgage bonds. In addition, certain
existing debts of PG&E would remain in place, for which PG&E
would be responsible.
C. Asset and Debt Allocation
The Plan provides that:
* ETrans acquire 8.9% of PG&E's assets and assume 11.4% of
its debt;
* Gen acquire 29.7% of PG&E's assets and assume 26% of its
debt; and
* GTrans acquire 7.8 % of PG&E's assets and assume 9.8% of
its debt.
Correspondingly, PG&E would retain 53.5% of its assets and be
responsible for 52.8% of its debt.
After its electric generation, electric transmission, and gas
transmission assets are transferred, PG&E would dividend to PG&E
Corp., all of its stock in Newco, and PG&E Corp. would dividend
to its shareholders all of the common stock of PG&E. After the
Reorganization, the Reorganized PG&E would no longer be an
associate company with respect to ETrans, Gen, or GTrans. The
Applicants project, on a pro forma basis, that the common equity
of PG&E Corp., as a percentage of its total capitalization,
would be 21.1% as of December 31, 2007.
In accordance with lease agreements between the GenSub LLCs and
their parent company, Gen would operate its subsidiaries'
facilities. Consequently, upon receipt by the GenSub LLCs of
PG&E's utility assets, Gen would be a public-utility company
within the meaning of the Act by virtue of its operation of
those assets. Under the Plan, Gen and PG&E would enter into a
Master Power Purchase and Sales Agreement. The PSA provides
that, for 12 years, Gen sell and Reorganized PG&E purchase the
capacity, energy and other electrical products from Gen's
facilities and procured by Gen under its certain contracts.
The Applicants state that they are seeking approval from the
FERC for the proposed market-based rates provided for by the
PSA. Under the PSA, the Reorganized PG&E would have the right to
dispatch i.e., direct the timing and level of operation, the
facilities within legal and contractual constraints so that the
output is delivered primarily when the Reorganized PG&E needs it
to serve its customers.
The GenSub LLCs may also be public-utility companies by virtue
of their direct ownership of generating facilities, in which
case Gen would also be a "holding company" as a result of its
ownership of all the outstanding ownership interests in the
GenSub LLCs. The Applicants also state that Gen would claim
exemption by Rule 2 from registration under Section 3(a)(1) of
the Act. The Applicants state that, after the Reorganization:
(a) the FERC would have license and operating jurisdiction
over most of the hydroelectric facilities and rate
jurisdiction over the sale of the output of Gen and its
subsidiaries;, and
(b) the NRC would continue its jurisdiction over the
operations of the Diablo Canyon Power Plant.
The Applicants project, on a pro forma basis, that the common
equity of Gen, as a percentage of its total capitalization,
would be negative 97.2% as of December 31, 2002.
ETrans would be a public-utility company as a result of its
ownership and operation of transmission assets. The Applicants
state that the FERC would continue to have jurisdiction over the
rates, terms and conditions for all transmission and
transmission-related services provided by ETrans. FERC would
also have jurisdiction over Etrans' participation in the Cal-ISO
or any future FERC-approved Western regional transmission
organizations that would have operating control over ETrans'
transmission assets under FERC tariffs. The Applicants project,
on a pro forma basis, that the common equity of ETrans, as a
percentage of its total capitalization, would be 33.8% as of
December 31, 2002.
PG&E Corp. and Newco would also be "holding companies," within
the meaning of the Act, as a result of holding ownership
interests in ETrans, Gen, the GenSub LLCs and, in the case of
PG&E Corp., Newco. The Applicants state that PG&E Corp. would
continue to claim exemption, and Newco would claim exemption,
from registration by Rule 2 under Section 3(a)(1) of the Act.
The Applicants state that, with the exception of GTrans, PG&E
Corp. would continue to own its existing non-utility businesses
through PG&E National Energy Group LLC. The non-utility
subsidiaries of PG&E are presently organized under PG&E's wholly
owned direct subsidiary, PG&E National Energy Group.
The Reorganized PG&E would continue to provide gas and electric
distribution services using assets that it currently owns.
PG&E's preferred stock would remain in place as the preferred
stock of the Reorganized PG&E. The Applicants state that the
CPUC would continue to have jurisdiction over Reorganized PG&E's
retail electric and gas distribution assets, rates, and
services. The Applicants project, on a pro forma basis, that the
common equity of the Reorganized PG&E, as a percentage of its
total capitalization, would be 44.4% as of December 31, 2002.
(Pacific Gas Bankruptcy News, Issue No. 47; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PENNEXX FOODS: Smithfield Foods Covenant Waiver Expires Today
-------------------------------------------------------------
Pennexx Foods, Inc. (OTC Bulletin Board: PNNX), a leading
provider of case-ready meat to retail supermarkets in the
Northeast, reported financial results for the third quarter and
nine months ended September 30, 2002.
Revenue for the third quarter reached $13.1 million, a 10.1 %
increase over the $11.9 million reported for the same quarter
last year.
Loss before interest, taxes, depreciation and amortization
(EBITDA) was $1.8 million for the third quarter of 2002 compared
to a loss of $1.1 million for the same period last year. The
company reported a GAAP net loss for the third quarter of 2002
of $2.2 million as compared to a net loss of $1.3 million for
the same quarter last year.
Revenue for the nine months ended September 30, 2002 was $37.6
million compared to revenue of $30.9 million for the same period
last year. Loss before interest, taxes, depreciation and
amortization (EBITDA) for the first nine months of 2002 was $3.5
million compared to a loss of $2.1 million for the same period
last year. The company reported a GAAP net loss of $4.4 million
for the nine months ended September 30, 2002 as compared to a
net loss of $2.7 million for the same period last year.
"As expected, we posted a net loss for the quarter, having
incurred substantial expenses in connection with the relocation
to our new facility, as well as subsequent integration costs,"
said Mike Queen, president and chief executive officer of
Pennexx.
The Company also announced that Smithfield Foods, Inc., has
agreed to extend through November 5, 2002 its waiver of the net-
worth covenant under the company's credit agreement with
Smithfield.
"The financial obstacles of the quarter did not prevent our
making the newly installed fully automated state-of-the art case
ready beef lines operational. All four beef lines started
production in October, right on schedule. Final conversion to
the same type state-of-the-art equipment for our pork and other
meat lines is nearly complete. Finally, renovations to our new
145,000 square foot facility are more than 95% complete," said
Queen.
Queen added: "With the completion of installation of the most
modern processing equipment in the world in a first-class
physical facility, we now have the capability of increasing our
capacity to more than eight times our current level. In doing so
we will achieve cost efficiencies that will substantially
increase profitability in a marketplace whose demand continues
to escalate."
Established in 1999, Pennexx Foods, Inc., is a leading provider
of case-ready meat to retail supermarkets in the northeastern
U.S. The company currently provides case-ready meat within a
300-mile radius of its plants to customers in the Northeast in
order to assure delivery of product with an extended shelf life.
The company cuts, packages, processes and delivers case-ready
beef, pork, lamb and veal in compliance with the United States
Department of Agriculture regulations. Pennexx customers include
many significant supermarket retailers.
PENTON MEDIA: Says Liquidity Sufficient to Meet Operating Needs
---------------------------------------------------------------
Penton Media, Inc. (NYSE:PME), a leading, global business-to-
business media company, announced revenues for the third quarter
ended September 30, 2002, of $48.6 million and an adjusted
EBITDA loss of $1.5 million, compared with revenues of $61.5
million and an adjusted EBITDA loss of $7.8 million in the third
quarter of 2001.
Penton reported a net loss of $282.9 million in the third
quarter of 2002 compared with a net loss of $29.5 million for
the same period in 2001. The net loss applicable to common
stockholders was $283.5 million for the 2002 quarter, compared
with $29.5 million for the same period in 2001.
Third-quarter results for 2002 included:
-- A non-cash goodwill impairment charge of $39.7 million
related to the adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), as of January 1, 2002. This
impairment charge has been recorded as a cumulative effect of
accounting change on the Consolidated Statements of Operations.
-- A non-cash impairment charge of $203.3 million related
to an additional impairment review required under SFAS 142 as of
September 30, 2002. In addition, Penton recorded a non-cash
impairment charge related to other intangible assets of
approximately $20.0 million after tax.
-- A restructuring charge of $3.4 million, related
primarily to additional staff reductions.
Third-quarter results for 2001 included:
-- A restructuring charge of $9.5 million related to the
discontinuation of certain media properties, staff reductions
and facility closings.
-- A non-cash charge of $9.7 million for goodwill write-
downs and asset impairments.
Excluding non-cash and one-time items for the three months ended
September 30, 2002 and 2001, as well as the amortization of
goodwill in 2001, Penton would have recorded a net loss of $13.9
million for the third quarter of 2002, compared with a net loss
of $12.4 million for the same period in 2001.
"Revenues in the third quarter came in short of our
expectations, reflecting continued difficult business
conditions, particularly for our media properties serving the
global technology and manufacturing sectors," said Thomas L.
Kemp, chairman and CEO. "However, Penton did achieve the first
quarterly year-on-year improvement in adjusted EBITDA since the
first quarter of 2001, as cost reductions we've made in this
economic downturn have more than offset revenue declines."
Trade Shows and Conferences
The third quarter is the Company's lightest quarter for trade
show activity in 2002, with events generating 7.0% of revenues.
Trade Shows and Conferences revenues declined $5.4 million, or
61.4%, to $3.4 million in the third quarter compared with the
same 2001 quarter. Adjusted EBITDA improved $0.2 million, or
3.5%, for the same period, from a loss of $6.1 million to a loss
of $5.9 million.
Year-on-year comparisons were impacted by the cancellation of
several global Internet industry events and small regional
manufacturing events, as well as by the shift in timing of four
events, with three events moving to the fourth quarter and one
taking place in the first quarter.
Online Media
Online Media revenues, which generated 6.3% of Penton's third-
quarter 2002 revenues, grew 4.9% to $3.1 million. Online Media
generated adjusted EBITDA of $0.7 million compared with a loss
of $0.8 million in the third quarter last year. Increases for
this product line were driven primarily by year-on-year growth
of online products and organic product development within the
Technology Media segment.
THIRD-QUARTER SEGMENT RESULTS
Industry Media
The Industry Media segment represented 48.2% of total revenues
in the third quarter and generated $23.4 million in revenues, a
decline of $3.5 million, or 12.9%, compared with the same prior-
year quarter. Adjusted EBITDA for the segment was $3.7 million,
an increase of $1.1 million, or 41.6%, compared with the same
2001 quarter.
Revenue decline for the segment was due largely to cancelled
manufacturing trade shows and advertising declines for certain
manufacturing-related titles, reflecting overall economic
softness in that sector. The revenue decline in the Industry
Media segment was more than offset by cost reductions.
Technology Media
The Technology Media segment, which comprises media portfolios
serving the Internet/broadband, corporate information technology
and electronics OEM markets, represented 33.6% of third-quarter
revenues. Segment revenues of $16.3 million in the quarter
declined $9.2 million, or 36.1%, compared with the third quarter
of 2001. Adjusted EBITDA loss of $3.6 million was an improvement
of $2.3 million, or 39.5%, compared with the same 2001 quarter.
With few technology trade shows taking place in the quarter,
revenue for the Technology Media segment was derived mostly from
publishing operations, which experienced declines across all
markets. Aggressive cost reductions more than offset technology
publishing revenue declines. Online products in the segment saw
both revenue and adjusted EBITDA improvement.
Retail Media
The Retail Media segment, which includes products serving food,
retail and hospitality markets, represented 11.4% of third-
quarter revenues. The segment generated $5.6 million in revenues
and $1.9 million of adjusted EBITDA, compared with $5.2 million
and $1.3 million, respectively, for the same period in 2001.
Publishing, event and online media in the segment experienced
both revenue and adjusted EBITDA gains in the 2002 quarter.
Lifestyle Media
The Lifestyle Media segment represented 6.8% of third-quarter
revenues. The segment produced $3.3 million in revenues in the
quarter compared with $3.9 million in the third quarter last
year. Adjusted EBITDA for the segment was a loss of $0.3
million, flat with year-ago levels. The loss was due primarily
to the accounting of trade show period costs in a quarter during
which no trade shows were held.
Most properties in the segment, which serves the global natural
products industry, continued to perform well, reflecting the
general strength of the natural products sector and effective
cost management.
YEAR-TO-DATE RESULTS
Revenues for the nine-month period ended September 30, 2002,
declined $103.2 million, or 36.7%, to $177.8 million. Adjusted
EBITDA for the same period declined $20.8 million, or 70.7%, to
$8.6 million. Penton's nine-month results were adversely
impacted by continued cutbacks in marketing spending in the
technology and manufacturing sectors. Weak performance of the
Company's global portfolio of Internet/broadband trade shows
represented 54.2% of the revenue decline and 117.0% of the
decrease in adjusted EBITDA, before corporate expense. In
response, these properties have been undergoing significant
restructuring.
Given challenging market conditions, Penton has aggressively
sought to reduce operating costs. Through the first nine months
of 2002, operating costs were reduced by $82.5 million, or
32.6%, compared with the same period in 2001. As of October 31,
Penton has experienced a net reduction in workforce of 405
positions, or 27.6%, primarily through layoffs and attrition.
Outsourcing initiated this year, as well as internal
process/operating improvements, also have contributed
significantly to cost reductions.
Penton reported a net loss of $299.2 million for the nine months
ended September 30, 2002, compared with a net loss of $36.3
million for the same period in 2001. The net loss applicable to
common stockholders was $344.7 million for the year-to-date
period, compared with $36.3 million for the same nine-month
period in 2001.
Year-to-date results for 2002 included:
-- A non-cash goodwill impairment charge of $39.7 million
related to the adoption of SFAS 142 as of January 1, 2002.
-- A non-cash impairment charge of $203.3 million related
to an additional impairment review required under SFAS 142 as of
September 30, 2002. In addition, Penton recorded a non-cash
impairment charge related to other intangibles assets of
approximately $20.0 million after tax.
-- Restructuring charges of $10.9 million related primarily
to staff reductions and facility closings.
-- A one-time, pre-tax gain of $1.5 million, on the sale of
investments.
-- A one-time, non-cash charge to capital in excess of par
and as a reduction of income available to common stockholders of
$42.1 million to recognize the unamortized beneficial
conversation feature of preferred stock.
Year-to-date results for 2001 included:
-- Restructuring charges of $15.0 million, related to the
discontinuation of certain media properties, staff reductions
and facility closings.
-- A non-cash charge of $9.7 million for goodwill write-
downs and asset impairments.
Excluding non-cash and one-time items for the nine months ended
September 30, 2002 and 2001, as well as the amortization of
goodwill in 2001, Penton would have recorded a net loss of $25.2
million for the nine months ended September 30, 2002, compared
with a net loss of $3.3 million for the same period in 2001.
BUSINESS OUTLOOK AND GUIDANCE
Kemp said the Company is experiencing challenging business
conditions in the fourth quarter, particularly in its core
technology and manufacturing sectors.
"Our business in the technology and manufacturing sectors has
continued to be sluggish as customers conserve cash while
recovery in their markets remains elusive. Uncertainty about the
economic recovery and geopolitical events hangs over our
markets," said Kemp.
Penton's global portfolio of Internet/broadband trade shows is
expected to experience significant declines in revenue and
EBITDA from last year's fourth-quarter events as a result of
continuing depressed market conditions. These events are coming
in slightly below reduced expectations, primarily because
cancellations have outpaced new sales. However, two of the
Company's largest fourth-quarter events, Natural Products Expo
East and Leisure Industry Week in the United Kingdom, were very
successful, with very strong exhibit floors and record
attendance levels and re-sign rates for next year.
Penton had expected at least a modest improvement in publishing
results over last year's post-September 11 fourth quarter.
However, fourth-quarter Publishing revenues are forecasted to be
below year-ago levels. The Company expects that the rate of
quarterly year-on-year decline will be less than that
experienced in the first two quarters of 2002. Publishing
revenues in the fourth quarter are expected to remain
sequentially stable against previous 2002 quarters, with
continuing improvement in adjusted EBITDA and margins over 2001.
Sluggish economic conditions are expected to result in a rate of
total-company revenue decline consistent with the third-quarter
year-on-year decline, and adjusted EBITDA will likely perform
modestly below last year's $11.5 million in the fourth quarter.
As a result, the Company will not achieve its adjusted EBITDA
guidance of $25 million to $35 million for 2002, and revenues
will be near the low end of earlier guidance of $245 million to
$270 million.
Kemp said Penton's planning does not forecast any real revenue
recovery in 2003 because of the uncertainty of the global
economy and a lack of visibility in key markets. The Company
anticipates a stabilization of business, consistent with recent
trending in its portfolio, as well as with trends in the
business-to-business advertising industry. However, the Company
is expecting to benefit from the full-year impact of its
aggressive cost reductions executed during 2002, which should
result in improved adjusted EBITDA and margins for 2003 even
without the benefit of any revenue recovery.
Liquidity
Penton anticipates adequate liquidity for operations, and
expects to meet all interest payment obligations on its bonds.
It has no principal repayment requirements until its senior
secured notes mature in October 2007. Penton has no bank debt
and no maintenance covenants on its existing bond debt. In
addition to cash on hand at September 30 of $20.7 million, the
Company has access to an asset-based, maintenance covenant-free
revolver of up to $40.0 million. The revolver is currently
undrawn, and the current borrowing base is approximately $23
million.
Kemp said that, as another possible means of enhancing
liquidity, Penton is considering strategic alternatives for a
few small, non-core assets, which could generate cash through
the combination of sale proceeds and/or tax benefits. The
Company cannot be assured of its ability to execute asset sales
in the existing merger and acquisition environment for business-
to-business media properties.
The Company believes it has the potential capacity available to
carry back its net tax loss for 2002 of up to $153.1 million,
for a total tax refund capacity of approximately $53.5 million.
Penton expects that it will receive a tax refund in excess of
$20.0 million as a result of its updated estimate for its net
operating loss for 2002. The Company cannot, however, guarantee
the amount of any tax benefits it will actually realize. Receipt
of the tax refund is expected in the first quarter of 2003.
Penton Media is a leading, global business-to-business media
company that produces market-focused magazines, trade shows and
conferences, and a broad offering of online media products.
Penton's integrated media portfolio serves 12 industries:
Internet/broadband; information technology; electronics; natural
products; food/retail; manufacturing; design/engineering; supply
chain; aviation; government/compliance; mechanical
systems/construction; and leisure/hospitality.
* * *
As reported in Troubled Company Reporter's May 13, 2002,
edition, Standard & Poor's revised its outlook on business-to-
business media company Penton Media Inc., to negative from
developing due to additional concerns about the company's
profitability in light of continued revenue declines and the
operating difficulties of key end markets. Standard & Poor's
also affirmed its existing ratings on Penton, including its
single-B-minus corporate credit rating.
Outlook
Ratings could be lowered if Penton fails to maintain adequate
liquidity to fund its operations during this difficult operating
environment.
Ratings List: To: From:
Penton Media Inc.
* Corporate credit rating B-/Negative/-- B-/Dev/--
* Senior secured debt rating B-
* Subordinated debt rating CCC
PERKINELMER: Gets $445MM Financing Commitment from Merryll Lunch
----------------------------------------------------------------
PerkinElmer, Inc., (NYSE: PKI) announced third quarter 2002 GAAP
earnings per share from continuing operations of $0.08 on
revenue of $366 million. For the same period last year, GAAP
earnings per share from continuing operations were $0.33 on
revenue of $348 million. Cash earnings per share from continuing
operations (which exclude the amortization of intangibles) for
the third quarter of 2002 were $0.11, including a $0.04 per
share net benefit from the early retirement of debt and the
reclassification of the Fluid Sciences business unit into
continuing operations. This compares to cash earnings per share
of $0.40 for the prior year period (which exclude the
amortization of intangibles, goodwill and non-recurring items).
Net earnings per share from total continued and discontinued
operations for the third quarter of 2002 were $0.06 on a GAAP
basis and $0.09 on a cash basis.
Revenue from continuing operations for the third quarter of 2002
was up 5% over the same period last year. Third quarter organic
revenue, which excludes the effects of acquisitions and
divestitures and the impact of foreign exchange, declined 5%
from the same period last year. PerkinElmer reports organic
revenue to provide investors with a consistent basis for
comparing the performance of its operations over different
periods.
As a result of market conditions, the company decided to retain
its Fluid Sciences business unit, which provides sealing
solutions and advanced fluid containment technologies to the
aerospace, semiconductor and power generation markets. The
company reclassified the results of its Fluid Sciences business
unit into continuing operations. All financial data in this
press release, including data for prior periods, have been
adjusted to give effect to the reclassification of the results
of the Fluid Sciences business unit into continuing operations.
In addition, the company announced the combination of its Life
Sciences and Analytical Instruments business units into a new
integrated business named Life and Analytical Sciences. The new
business will leverage the strengths of the respective sales,
service, and R&D organizations along with the operational scale
to better serve customers. Peter B. Coggins, PhD., formerly
president of PerkinElmer Life Sciences, will serve as president
of the organization.
"An integrated Life and Analytical Sciences organization will
enable PerkinElmer to provide a single, unified face to our
customers in the biopharmaceutical and clinical diagnostics
markets, as well as bring greater resources to our analytical
customers," said Gregory L. Summe, chairman and CEO of
PerkinElmer, Inc.
The company also announced that it has received a commitment
from Merrill Lynch Capital Corporation to provide a senior
secured credit facility of up to $445 million, including a
revolving credit facility of $100 million. The company intends
to use borrowings under these facilities to repay existing debt.
Merrill Lynch's commitment for the new financing is contingent
on completion of confirmatory due diligence, final
documentation, issuance by PerkinElmer of $225 million of new
subordinated debt securities, and other customary conditions.
Free cash flow was $69 million in the third quarter. During the
third quarter the company retired $114 million of debt. At the
end of the quarter, PerkinElmer had outstanding indebtedness of
$592 million and cash and cash equivalents of $98 million.
"Our strong cash flow from operations and working capital
improvement strengthened our balance sheet during the quarter.
We believe that the third quarter debt retirement, together with
the anticipated financing from Merrill Lynch, will relieve some
of the concerns about our near term debt maturities," said
Summe.
Financial overview by segment:
Life Sciences reported revenue of $118 million for the quarter,
up 57% over the third quarter of 2001, due to the inclusion of
Packard BioScience. Organically, revenue declined 7%. Double-
digit growth in genetic screening, and growth in reagents and
service sales was offset by weakness in sales of instrumentation
to large pharmaceutical customers. During the quarter, the
business unit introduced the SmartStation(TM) ultra high
throughput screening integrated platform to provide integrated
assay development, secondary screening, and ADME/Tox solutions
for pharmaceutical and biotech customers. The unit's SNP
detection system, the AcycloPrime(TM)-FP, was voted "Product of
the Year" by readers of Genome Technology magazine. GAAP
operating margin for the quarter of 4% and cash operating margin
of 9% were down year-over-year reflecting the impact of lower
volume and investments in sales and marketing.
Optoelectronics reported revenue of $84 million, down 7% from
the same quarter last year on a reported basis and down 3% on an
organic basis, reflecting weakness in lighting end markets,
somewhat offset by growth in sales of biomedical components. The
unit shipped its first Digital Angiography Detectors for
customers in the biomedical market during the quarter. It also
showcased several new technologies that deliver high-performance
flash systems, and a new family of Cermax Xenon Short Arc Lamps,
which enable high-intensity light for medical applications. GAAP
operating margin for the quarter of 7%, and cash operating
margin of 8%, were down year-over-year due to unabsorbed
overhead resulting from the low revenue base.
Analytical Instruments reported revenue of $115 million for the
quarter, a decline of 12% from the same period in 2001 on a
reported basis and down 5% on an organic basis. The decline was
driven by weak instrument sales. During the quarter, the unit
introduced the Optima(TM)4300V, an ICP-OES spectrometer
featuring a vertically aligned torch, the AAnalyst(TM)200 atomic
absorption spectrometer, and the Clarus(TM)500 gas
chromatograph. Scientific Computing and Instrumentation magazine
readers selected PerkinElmer Instruments' AutoSystem XL(TM)GC as
the Chromatography System 2002 Readers' Choice Award Winner.
PerkinElmer Instruments was also voted as a Readers' Choice
finalist in the areas of chromatography data and spectroscopy
systems for its TotalChrom(TM) Workstation Chromatography Data
System and Spectrum(TM) Spotlight 300 IR Imaging System,
respectively. GAAP operating margin for the quarter of 4%, and
cash operating margin of 5% were down year-over-year due to
lower volume and competitive pricing pressure.
Fluid Sciences reported revenue of $49 million for the quarter,
a 7% decline from the same period in 2001 on a reported basis
and a 4% organic decline, reflecting weakness in the aerospace
market. During the quarter, the unit announced that it had been
selected by Airbus to develop and supply the advanced high-
pressure hydraulic accumulators for the A380 aircraft.
PerkinElmer's high-pressure hydraulic accumulators use welded
metal bellows technology to eliminate elastomeric separators
that limit life on other types of accumulators. GAAP operating
margin for the quarter of 11%, and cash operating margin of 12%
declined year-over-year as a result of lower volumes.
"During the quarter each of our businesses continued to deliver
a steady pipeline of application-focused, new products and
improve their operational processes," said Summe. "While our end
markets remain challenging, we believe the company will continue
to make significant progress in driving growth in earnings and
cash flow."
For the third quarter of 2002, cash operating margins from
continuing operations described above exclude $5.5 million, $0.3
million, $1.1 million and $0.2 million of intangibles
amortization for Life Sciences, Optoelectronics, Analytical
Instruments, and Fluid Sciences, respectively.
In addition to reporting GAAP results, PerkinElmer reports cash
earnings per share (excluding amortization of intangibles and
goodwill) to provide investors with a measure of business
performance comparable to that used by other companies in
similar industries and to eliminate the impact of the
implementation of FASB no. 142 on period-to-period comparisons.
Amortization of intangibles, other than goodwill, was $0.03 per
share for the third quarter of 2002 and $0.02 per share for the
third quarter of 2001. Amortization of goodwill was $0.06 per
share for the third quarter of 2001. In accordance with FASB no.
142, PerkinElmer ceased amortizing goodwill beginning with the
2002 fiscal year.
* * *
Important Additional Information About Perkinelmer's Offer
To Purchase Its Outstanding Zero Coupon Convertible
Debentures Will Be Filed With The Sec
PerkinElmer plans to file with the SEC a Schedule TO in
connection with its intended offer to purchase its outstanding
zero coupon convertible debentures. The Schedule TO will contain
important information about PerkinElmer, the zero coupon
convertible debentures, PerkinElmer's offer to purchase the
debentures and related matters. Investors and security holders
are urged to read the Schedule TO carefully when it becomes
available. Investors and security holders will be able to obtain
free copies of the Schedule TO and other documents filed with
the SEC by PerkinElmer through the Web site maintained by the
SEC at http://www.sec.gov In addition, investors and security
holders will be able to obtain free copies of the Schedule TO
from PerkinElmer by contacting PerkinElmer Investor Relations at
781-431-4306.
PerkinElmer, Inc., is a global technology leader focused in the
following businesses - Life Sciences, Optoelectronics,
Analytical Instruments, and Fluid Sciences. Combining
operational excellence and technology expertise with an intimate
understanding of our customers' needs, PerkinElmer creates
innovative solutions - backed by unparalleled service and
support - for customers in health sciences, semiconductor,
aerospace, and other markets whose applications demand precision
and speed. The company operates in more than 125 countries, and
is a component of the S&P 500 Index. Additional information is
available through http://www.perkinelmer.comor 1-877-PKI-NYSE.
As reported in Troubled Company Reporter's September 23, 2002
edition, PerkinElmer, Inc., entered into amendments to its
two unsecured credit facilities. As noted in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2002, the Company was in compliance with these covenants as
they were in effect as of June 30, 2002, but was not certain if
it would be able to comply with the Interest Coverage covenant
as of the end of the fiscal quarter ending September 30, 2002.
PINNACLE HOLDINGS: Emerges from Chapter 11 Bankruptcy Proceeding
----------------------------------------------------------------
Pinnacle Holdings Inc. (OTC Pink Sheets: BIGTQ), together with
its wholly owned subsidiaries, Pinnacle Towers Inc., Pinnacle
Towers III Inc., and Pinnacle San Antonio LLC, have emerged from
bankruptcy and have consummated their Second Amended Joint Plan
of Reorganization, dated September 23, 2002, as confirmed by
Order of the United States Bankruptcy Court for the Southern
District of New York on October 9, 2002.
Steven R. Day, Pinnacle's Chief Executive Officer, said, "We are
extremely pleased to have completed Pinnacle's financial
restructuring and would like to acknowledge the support and
loyalty of our creditors, customers and employees. The equity
investment of $205.0 million, together with the $93.0 million
paydown of our existing credit facility and a new $30.0 million
revolving credit facility provide the financing necessary to
effectuate Pinnacle's emergence from Chapter 11. We are excited
to be moving reorganized Pinnacle forward. Pinnacle is now
positioned to provide more solutions than ever to our customers'
deployment challenges." Mr. Day went on to add, "We have
significantly deleveraged our balance sheet. We are generating
positive cash flow and we are fortunate to have well-funded
value-oriented investors, Fortress Investment Group and
Greenhill Capital Partners, infusing capital into the company.
Our management team and employees have participated in working
through the restructuring process and are excited by the
opportunity to be part of the new Pinnacle."
Wesley R. Edens, Chairman and Chief Executive Officer of
Fortress Investment Group, will assume the role of Chairman of
the Board of Pinnacle. "The investors are extremely pleased with
their new investment in a restructured Pinnacle and are
intensely focused on improving Pinnacle's core operating
strategy. In addition, the financial flexibility gained will
allow Pinnacle to capitalize on investment opportunities within
its industry," said Mr. Edens. Robert H. Niehaus, Chairman of
Greenhill Capital Partners, who is assuming the role of Vice
Chairman of the new Pinnacle's Board of Directors, said, "We
believe that Pinnacle's financial stability will give it a
competitive advantage in a challenging market place as the
restructured company is committed to addressing the needs of its
valued customer base."
On November 1, 2002, Pinnacle consummated the restructuring
transactions contemplated by the Plan and the Securities
Purchase Agreement by and among Pinnacle Holdings and Pinnacle
Towers Inc., on the one hand, and the Investors named therein,
on the other hand, dated as of April 25, 2002, as amended. In
connection with the restructuring:
* Existing senior credit facility lenders were paid
approximately $93.0 million in cash, with the balance of the
full amount owed to them incorporated into an amended and
restated credit facility consisting of a three year secured term
loan of $275.0 million and a new secured revolving credit
facility of $30.0 million.
* Pinnacle's 10% Senior Discount Notes due 2008 were
cancelled and in exchange therefore, holders of Senior Notes
will receive their pro-rata share of $114.0 million (or $350.77
per $1,000 par value bond) in cash or, at the holder's prior
election, a combination of cash and/or reorganized Pinnacle's
outstanding common stock at $10 per share. Based on a review of
the elections made by the holders of the Senior Notes,
approximately $21.9 million in cash will be paid to holders of
Senior Notes, with the remainder owed to such holders to be paid
in common stock.
* Pinnacle's 5-1/2% Convertible Subordinated Notes due 2007
were cancelled and in exchange therefore, holders of Convertible
Notes will receive their pro-rata share of $500,000 in cash and
five-year warrants to purchase up to 205,000 shares of
reorganized Pinnacle's common stock (representing approximately
1% of reorganized Pinnacle's equity capitalization) at $20 per
share. Those Convertible Note holders who agreed to give certain
releases also will receive their pro-rata share of an additional
$500,000 in cash and five-year warrants to purchase an
additional 205,000 shares at $20 per share.
* Pinnacle's outstanding Equity Securities (as defined in
the Plan) were cancelled and in exchange therefore, holders of
Equity Securities Interests and of Allowed Securities Claims who
opt out of a pending class action settlement and who file proofs
of claim by the applicable bar date will receive their pro-rata
share of five-year warrants to purchase up to 102,500 shares of
reorganized Pinnacle common stock (representing approximately
1/2% of reorganized Pinnacle's equity capitalization) at $20 per
share. Holders of Equity Securities Interests who agreed to give
certain releases also will receive their pro-rata share of five-
year warrants to purchase an additional 102,500 shares at $20
per share.
* Trade and other creditors will be paid in full in the
ordinary course.
Holders of the Senior Notes and the Convertible Notes will
receive their distributions under the Plan shortly.
Distributions to holders of Equity Securities Interests and
Allowed Securities Claims will not be made until after December
13, 2002, the bar date by which holders of Securities Claims who
opt out of the pending class action settlement must file proofs
of claim. Equity Securities Interests holders will need to
tender their securities in order to receive their distribution.
Following the closing of the Purchase Agreement, Pinnacle filed
a Form 15 with the Securities and Exchange Commission. The
filing of the Form 15 will terminate registration of Pinnacle's
existing securities, including its common stock under the
Securities Exchange Act of 1934, as amended. Upon the filing of
the Form 15, Pinnacle will no longer file with the SEC certain
reports and forms, including Forms 10-K, 10-Q and 8-K, as well
as proxy statements. The deregistration is expected to become
effective within 90 days of filing.
Additionally, in contemplation of the closing of the Purchase
Agreement, Pinnacle directed its common stock transfer agent and
The Depository Trust Company to not permit further transfers of
Pinnacle's common stock, the Senior Notes and the Convertible
Notes effective as of the close of business on October 30, 2002.
Resignation of President
Pinnacle announced that PTI's President, Bernard Gaboury,
resigned from PTI effective October 31, 2002 to pursue other
interests. Mr. Day commented, "We thank Ben for all his efforts
over the years. He will be missed but we wish him the best of
luck in his future endeavors".
Pinnacle is a provider of communication site rental space in the
United States and Canada. At September 30, 2002, Pinnacle owned,
managed, leased, or had rights to in excess of 4,000 sites.
Pinnacle is headquartered in Sarasota, Florida. For more
information on Pinnacle visit its Web site at
http://www.pinnacletowers.com
PTCL RECEIVABLES: S&P Ups Rating on $250M Notes to B+ from CCC+
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on PTCL
Receivables Master Trust's $250 million 8.42% receivables trust
certificates series 1997 to single-'B'-plus from triple-'C'-
plus. At the same time, the rating is removed from CreditWatch
with positive implications.
The raised rating is based on: a review of the transaction
fundamentals; stable flow of payments through the trust;
Pakistan's foreign currency rating (single-'B'-minus/Stable);
and somewhat less tension in the region. After the August 14,
2002 payment date, the certificates have an outstanding balance
of approximately $58.66 million. To date, Pakistan
Telecommunication Co. Ltd., has always serviced the transaction
as structured, and has maintained the required coverage of
receivables flowing through the trust. The transaction also
benefits from a fully funded $20.59 million reserve account,
which can be used to make payments in case there are
insufficient collections by the trust.
The trust certificates are backed by international telephone
settlement receivables generated by PTCL from six international
carriers servicing calls between the U.S. and England with
Pakistan, and sold to the PTCL Master Trust. PTCL is state-owned
and is the sole provider of international telephone services in
and out of Pakistan. Since the call volumes originated in the
U.S. and England have historically been higher than the volumes
originated in Pakistan, the six international carriers owe a net
payment to PTCL. The carriers make the payments to the PTCL
Receivables Master Trust located in the U.S. The trust pays the
required amounts due on the certificates, and then forwards the
excess to PTCL. While the settlement rates between PTCL and the
carriers have decreased over time, there has been more than
sufficient call volume to generate the needed receivables.
When the transaction closed in 1997, its rating was four notches
higher than the sovereign rating of Pakistan. The notching
differential between the rating on the transaction and the
sovereign rating of Pakistan has varied over time. Once Pakistan
defaulted on its sovereign obligations following imposition of
economic sanctions due to its nuclear testing, the rating on the
transaction was lowered to triple-'C'-plus. This reflected
the increased risk that Pakistan might be forced to include this
transaction in its Paris and London Club debt restructurings.
Fortunately, the transaction has not been included in any of the
subsequent restructurings.
In reviewing the transaction, Standard & Poor's concluded that a
raised rating on the transaction above the sovereign currency
rating was still warranted. Going forward, it is expected that
the rating on this transaction will remain stable barring the
risk of sovereign default, changes in PTCL's operations, changes
in the fundamentals of the transaction or in regional conflicts.
Rating Raised and Removed from Creditwatch Positive
PTCL Receivables Master Trust
$250 million 8.42% pass-thru certs series 1997 due 2003
Rating
To From
B+ CCC+/Watch Pos
REVLON INC: Net Capital Deficiency Widens to $1.4BB at Sept. 30
---------------------------------------------------------------
Revlon, Inc., (NYSE: REV) announced results for the third
quarter ended September 30, 2002.
For the quarter, net loss per share from ongoing operations was
$0.34 versus a net loss of $0.04 in the same period last year.
At September 30, 2002, Revlon's balance sheets show a total
shareholders' equity deficiency of about $1.4 billion.
Comparison of Ongoing Operations - Third Quarter
Net sales from ongoing operations for the third quarter advanced
1.0% to $323.2 million, compared with $319.9 million in the
year-ago period, due to growth in North America, which more than
offset the unfavorable impact of foreign currency translation in
International. Excluding the impact of foreign currency
translation, net sales grew 3.1%.
In North America, net sales grew 1.5% to $232.0 million, from
$228.5 million in the third quarter 2001, driven by licensing
revenue stemming from the prepayment by a licensee of certain
minimum royalties and sales growth in the hair color and color
cosmetics businesses. Partially offsetting these positive
factors were declines in other areas of the portfolio,
particularly fragrances, anti-perspirants and deodorants and
implements. International net sales of $91.2 million in the
quarter were essentially even with $91.4 million in the third
quarter of 2001, largely reflecting the unfavorable impact of
foreign currency translation, which more than offset growth in
several markets, particularly the Far East. Excluding the impact
of foreign currency translation, International net sales grew
7.3% in the quarter.
Operating income for the quarter was $26.0 million versus
operating income of $37.3 million in the same period last year.
This performance largely reflects the Company's strategic
investment in materially higher brand support and incremental
professional resources, which resulted in third quarter
consumption and market share growth for the Revlon brand.
Partially offsetting the impact on operating income of these
investments were higher licensing income stemming from
prepayment by a licensee of minimum royalties, an insurance
claim for certain losses in Latin America, reduced returns and
lower distribution costs stemming from the Company's facilities
consolidation program last year. EBITDA for the third quarter
was $52.9 million versus $61.0 million in the same quarter last
year. Net loss for the third quarter was $17.9 million versus a
net loss of $2.2 million in the third quarter last year.
In terms of U.S. marketplace performance, the Company made
meaningful progress during the quarter to strengthen its
position in the color cosmetics category. According to
ACNeilsen, Revlon brand color cosmetics registered a 3.0%
increase in dollar consumption for the quarter, marking the
brand's third consecutive quarterly consumption gain versus
year-ago. This solid performance was led by an 11.0% increase
versus last year in Revlon brand dollar consumption in the month
of September. For the quarter, the color cosmetics category was
down 0.9% versus year-ago. Revlon's total color cosmetics dollar
consumption was also down 0.9%, with the strength of the Revlon
brand offset by a 5.2% consumption decline in the quarter for
the Almay brand.
The Company's color cosmetics dollar market share for the third
quarter was even with year-ago at 22.4%, fueled by market share
growth for the Revlon brand and a moderating share decline for
Almay. Specifically, in the third quarter, Revlon brand share
advanced 60 basis points versus year-ago to 16.7%, and Almay
share decline narrowed to 20 basis points versus year-ago to a
share of 5.5%. Importantly, the Revlon brand, responding to
significant marketing initiatives launched in the quarter,
gained momentum as the quarter progressed, with the brand
registering a 140 basis point share increase versus year-ago to
17.1% in the month of September.
In the hair color category, Revlon showed continued strength
during the quarter, with dollar market share advancing 80 basis
points to 6.7%. The Company also registered market share growth
in the anti-perspirant/deodorant category, while market share
declined for skin care and implements.
Commenting on the quarter, Revlon President and Chief Executive
Officer Jack Stahl stated, "Our performance in the quarter again
showed steady progress, as we began to implement our strategic
growth plan and gain traction in the marketplace. We further
strengthened our management team, we rolled out new marketing
and merchandising initiatives that are proving to be effective,
and we introduced a number of exciting new products, all of
which contributed to significantly improved market share trends
during the quarter. While there is uncertainty in the U.S.
retail market due to the economic environment and continued
softness in Latin American economies, we are confident that the
strategies and plans we have developed and the ongoing
improvements we are making in day-to-day execution will greatly
improve our performance over time."
Comparison of Ongoing Operations - Nine Months
For the first nine months of 2002, net sales from ongoing
operations of $906.8 million were down 3.5%, compared with net
sales of $939.5 million in the same period last year. Excluding
the impact of foreign currency translation, net sales for the
first nine months were down 1.0% versus year-ago.
In North America, net sales for the first nine months of $645.4
million were down 1.8% versus $657.2 million in the same period
last year. International net sales of $261.4 million decreased
7.4% versus $282.3 million in the year-ago period. Excluding the
impact of foreign currency translation, International net sales
grew 0.7% for the nine-month period.
Operating income and EBITDA in the first nine months of 2002
were $40.9 million and $122.5 million, respectively, compared
with $69.3 million and $142.8 million, respectively, in the
first nine months of 2001.
Net loss was $87.1 million in the first nine months of 2002,
compared with a net loss of $44.9 million in the first nine
months of 2001.
Results As Reported - Third Quarter
On an as-reported basis, net sales in the third quarter of 2002
were $323.2 million, compared with net sales of $320.2 million
in the same period last year. EBITDA in the quarter was $48.9
million compared with EBITDA of $48.2 million in the third
quarter last year. Operating income in the quarter was $21.8
million, compared with operating income of $24.5 million in the
third quarter last year. Net loss in the third quarter was $22.1
million compared with a net loss of $22.9 million in the third
quarter of 2001.
Results As Reported - Nine Months
On an as-reported basis, net sales for the first nine months of
2002 were $906.8 million versus $955.9 million in the comparable
period last year. Operating income was $21.9 million in the
first nine months of 2002, compared with operating income of
$3.7 million in the year-ago period. EBITDA for the first nine
months was $104.1 million versus EBITDA of $85.9 million in the
same period last year. Net loss for the first nine months was
$107.1 million versus a net loss of $125.4 million in the same
period last year.
Revlon is a worldwide cosmetics, skincare, fragrance, and
personal care products company. The Company's vision is to
become the world's most dynamic leader in global beauty and
skincare. A web site featuring current product and promotional
information can be reached at http://www.Revlon.com and
http://www.Almay.com The company's brands include Revlon(R),
Almay(R), Ultima(R), Charlie(R) and Flex(R) and they are sold
worldwide.
REXNORD CORP: S&P Assigns B+ Rating to $435MM Secured Bank Loan
---------------------------------------------------------------
Standard & Poor's Rating Services assigned its single-'B'-plus
corporate credit rating to Milwaukee, Wisconsin-based Rexnord
Corp., a manufacturer of mechanical power transmission
components.
At the same time, Standard & Poor's assigned its single-'B'-plus
rating to Rexnord's $435 million secured bank credit facility
and its single-'B'-minus rating to Rexnord's $225 million
subordinated note offering. The outlook is positive.
"The ratings on Rexnord reflect its leading positions within
niche industrial markets, its very aggressive financial profile
and policy, and fair financial flexibility," said Standard &
Poor's credit analyst Joel Levington.
Rexnord's products include bearings, engineered and roller
chain, belt conveyor chain and components, couplings, seals, and
clutches and brakes for a broad range of industrial markets.
Markets served are characterized as modest in size, somewhat
consolidated, and requiring a moderate amount of fixed capital
and R&D investments. Although key end markets, including energy,
aerospace, forest products, and construction equipment, are
highly cyclical, most products are consumables with relatively
short life cycles, which help to temper earnings variability.
Barriers to entry--engineering capabilities, distribution
channels, broad product lines, and large installed bases--are
meaningful. However, certain product lines, such as roller chain
and couplings, are considered engineered commodities that are
affected by heavy pricing pressures.
Should operating initiatives lead to sustained cash flow
generation, with proceeds used for debt reduction, the ratings
could be raised in the next one to three years.
R.H. DONNELLEY: S&P Affirms BB Rating After Planned Sprint Buy
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its double-'B'
corporate credit rating on R.H. Donnelley Inc.
In addition, the rating was removed from CreditWatch where it
was placed September 23, 2002. The outlook is stable for this
Purchase, New York-headquartered marketer of yellow pages
advertising. The company had $224 million of debt outstanding at
September 30, 2002.
The affirmation follows Standard & Poor's evaluation of the
planned $2.23 billion purchase of Sprint Publishing &
Advertising, the directory publishing business of Sprint Corp.
(BBB-/Stable/A-3) by R.H. Donnelley Corp., the holding company
of R.H. Donnelley Inc. The transaction will transform Donnelley
from a sales agent and pre-press yellow pages vendor
to a yellow pages directory publisher. SPA's operations consist
of more than 260 directories in 18 states, including 41
directories in four states where Donnelley is the exclusive
sales agent.
"The ratings reflect Donnelley's substantial pro forma debt
levels and an expected meaningful debt amortization schedule
following the acquisition," said Standard & Poor's credit
analyst Donald Wong. He added, "In addition, the company faces
mature industry conditions and revenue concentrations in
the Chicago metropolitan area, Las Vegas, and Florida, which are
currently being affected by competition and soft economic
environment."
"However, these factors are mitigated by the significantly
better business profile resulting from the SPA transaction," Mr.
Wong said. Donnelley will be a much more geographically
diversified company, with greater critical mass. The firm's pro
forma estimated 2002 EBITDA base increases to about $400
million, from about $150 million. In addition, Donnelley's
revenue and EBITDA streams are relatively stable throughout the
advertising revenue cycle. Capital expenditures are modest,
resulting in healthy and fairly predictable free operating cash
flow generation. The company has strong market positions as the
incumbent directory publisher with long-standing relationships
with a large base of small- and medium-size businesses, many of
which rely on the directories as their sole form of advertising.
Customer retention rates are high, and demographics of the
service territory are favorable.
Ratings stability reflects the expectation that Donnelley's
financial position will strengthen to levels more appropriate
for the ratings during the next couple of years as debt is
reduced with the company's free operating cash flow.
SLI INC: US Trustee Appoints Unsecured Creditors Committee
----------------------------------------------------------
Among the largest unsecured creditors of SLI, Inc., and its
debtor-affiliates, the Acting United States Trustee appoints
five creditors to compose the Official Committee of Unsecured
Creditors in connection with these cases. The appointees are:
1. Banca Nazionale del Lavoro, S.P.A.
25 West 51st Street
New York, NY 10019
Attn: Richard A. Bertocci, Esquire
Tel: 212-314-0701, Fax: 212-489-9088;
2. Osram Sylvania Products, Inc.
100 Endicott Street
Danvers, MA01923
Attn: Gerry Comtois
Tel: 978-750-5503, Fax: 978-750-5579;
3. Tek-Tron Enterprises, Inc.
9832 Dungan Road
Philadelphia, PA 19115
Attn: Joseph Engel
Tel: 267-250-4367, Fax: 215-552-9104;
4. Manufacturas Estampadas, S.A. de C.V.
Juan Ruiz De Alarcon # 305
Chihuahua, Chih, Mexico
Attn: Guy Vleugels
Tel: 011-52-614-481-1449, Fax: 011-52-614-481-1964;
and
5. Dong Sung Ind. Co.
612 Kyodae-Ri, Ho-Up
Youngchum, Kun, Kyungbuk, Korea
Attn: Bon Kyoung Koo
Tel: 011-54-334-8233, Fax: 011-54-332-1320.
SLI, Inc., and its affiliates operate in multi-business segments
as a vertically integrated manufacturer and supplier of lighting
systems, which includes lamps, fixtures and ballasts. The
Company filed for chapter 11 protection on September 9, 2002 in
the U.S. Bankruptcy Court for the District of Delaware. Gregg M.
Galardi, Esq., at Skadden, Arps, Slate, Meagher represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $830,684,000 in
total assets and $721,199,000 in total debts.
SORRENTO NETWORKS: Euro Ops. Get Over $5.5MM in Orders in Q3
------------------------------------------------------------
Sorrento Networks Corp. (Nasdaq\NM:FIBR) (Nasdaq\NM:FIBRD), a
leading provider of metro and regional optical networking
solutions, announced that its European operations have received
orders exceeding $5.5 million -- the highest quarterly total in
the company's history -- during its fiscal third quarter ended
Oct. 31, 2002.
A conference call to discuss third quarter revenue and earnings
will be announced at a later date.
"Strong sales activity, in both Europe and North America, over
the past six months is now translating into orders and we expect
to enter the fourth quarter with a healthy backlog," said Phil
Arneson, Sorrento Networks' chairman and CEO.
Manfred Seehagen, Sorrento's vice-president of European
operations said, "We are very pleased with our progress in
Europe and feel that our approach in the region continues to
produce successful results. We see increased activity and order
placement from both existing and new customers." Seehagen added,
"Carriers and enterprise end-users appreciate the proven
reliability and flexibility of our GigaMux(TM) DWDM platform and
especially value the personalized service they receive from
Sorrento."
Sorrento Networks recently introduced a number of product
enhancements to its popular metro DWDM product line,
GigaMux(TM), responding to customer requirements for improved
density and operational savings as well as for support of new
services. These new capabilities, which became available
starting in October 2002, include a highly integrated filter
core, a new optical protection module, as well as new multi-rate
regenerating transponders that support 2.1 Gbit/sec Fibre
Channel in addition to other services such as SONET/SDH, ESCON,
and Gigabit Ethernet.
"Sorrento's product and business strategy remains focused on
mainstream revenue-producing applications," stated Dr. Demetri
Elias, the company's vice president of marketing. "Our GigaMux
product line has been widely adopted by a number of major
carriers and cable operators in Europe and North America for
managed datacenter connectivity services as well as for metro-
core and regional optical networking applications," he added.
Sorrento Networks' GigaMux is a metro and regional dense
wavelength division multiplexing platform that transforms any
fiber plant into a high-performance, multi-protocol transmission
network with up to 64 times the transmission capacity. GigaMux
is a compact, flexible, and cost-effective system based on a
"pay-as-you-grow" architecture. Working in conjunction with
GigaMux is the EPC product family, consisting of sub-rate
aggregation multiplexers that increase bandwidth utilization by
combining a wide variety of traffic for transmission over a
single wavelength, including ESCON, Fibre Channel, Fast
Ethernet, Gigabit Ethernet, and SONET/SDH channels. For entry-
level networks, Sorrento also offers JumpStart-400, a cost-
effective 8-wavelength, coarse wavelength division multiplexing
platform.
Sorrento Networks, with headquarters in San Diego, is a leading
supplier of intelligent optical networking solutions for metro
and regional applications worldwide. Sorrento Networks' products
support a wide range of protocols and network traffic over
linear, ring and mesh topologies. Sorrento Networks' existing
customer base and market focus includes communications carriers
in the telecommunications, cable TV and utilities markets. The
storage area network (SAN) market is addressed though alliances
with SAN system integrators. Recent news releases and additional
information about Sorrento Networks can be found at
http://www.sorrentonet.com
As of Monday, Oct. 28, 2002, the effective date of the 1 for 20
reverse stock split, the company's common stock trades with the
interim ticker symbol "FIBRD". After 20 trading days, the
company expects that its ticker symbol will revert back to
"FIBR".
* * *
As reported in Troubled Company Reporter's October 30, 2002
edition, Sorrento Networks' board of directors approved a 1-for-
20 reverse stock split, effective Monday, Oct. 28, 2002.
The move was aimed at bringing the company's stock price into
compliance with Nasdaq listing requirements.
Consequently, the Nasdaq Staff approved the company's capital
restructuring plan for bringing shareholders' equity into
compliance with listing requirements. The plan calls for the
restructuring of certain financings to equity securities.
SOUTHERN UNION: Reports Improved Results for September Quarter
--------------------------------------------------------------
Southern Union Company (NYSE: SUG) reported a first quarter net
loss of $6,495,000, for the three-month period ended September
30, 2002, compared with a net loss of $30,403,000for the same
period in 2001.
The results for both quarters include certain significant, non-
recurring gains and charges. Excluding those items, the net loss
for the quarter ended September 30, 2002, was $16,085,000
compared with a net loss of $19,249,000 in 2001. Due to the
seasonal nature of the natural gas distribution business,
Southern Union typically records a first quarter loss.
The net loss for the quarter ended September 30, 2002, includes
an after-tax gain of $10,920,000 on the settlement of the
Company's claims against Southwest Gas Corporation for fraud and
breach of contract related to Southern Union's attempts to
purchase Southwest. This gain was partially offset by related
litigation expense totaling $1,330,000, net of tax. The net loss
for the quarter ended September 30, 2001, includes an after-tax
restructuring charge totaling $20,409,000, a goodwill impairment
charge of $3,358,000, and after-tax litigation expense totaling
$1,002,000 related to Southwest. These charges for the quarter
ended September 30, 2001, were partially offset by $10,712,000
in after-tax gains generated from the settlement of interest
rate swaps and a $2,903,000 after-tax gain on the sale of non-
core assets.
Southern Union president and chief operating officer Thomas F.
Karam stated, "We are extremely pleased to be achieving our
intended goals as our quarter over quarter operating results
continue to show improvement. As planned, our restructuring
actions a year ago continue to favorably impact our operating
performance."
On October 16, 2002, Southern Union announced that it had
entered into a definitive agreement with ONEOK, Inc., of Tulsa,
Oklahoma, to sell its Southern Union Gas Company Texas division
and related assets to ONEOK for $420 million in cash. The
transaction, which has been approved by the boards of directors
of both companies, will close following clearance by the Federal
Trade Commission under the Hart-Scott-Rodino Act and approval by
certain Texas municipalities.
Southern Union Company is an international energy distribution
company serving approximately 1.5 million customers in Texas,
Missouri, Pennsylvania, Rhode Island, Massachusetts and Mexico.
For more information, visit http://www.southernunionco.com
As reported in Troubled Company Reporter's October 18, 2002
edition, Southern Union entered into a definitive agreement with
ONEOK, Inc., of Tulsa, Oklahoma, to sell its Southern Union Gas
Company Texas division and related assets to ONEOK for
approximately $420 million in cash.
In its June 30, 2002 balance sheets, Southern Union Company
recorded that its total current liabilities eclipsed its total
current assets by about $186 million.
SUN HEALTHCARE: Has Until January 27, 2003 to Challenge Claims
--------------------------------------------------------------
Judge Walrath grants a second extension to the Reorganized Sun
Healthcare Group, Inc. Debtors' deadline to file objections to
claims asserted against their estates. The deadline is extended
to January 27, 2003. (Sun Healthcare Bankruptcy News, Issue No.
45; Bankruptcy Creditors' Service, Inc., 609/392-0900)
TRANSCARE CORP: Wants Open-Ended Lease Decision Period Extension
----------------------------------------------------------------
TransCare Corporation and its debtor-affiliates ask for
authority from the U.S. Bankruptcy Court for the Southern
District of New York to extend the Assumption/Rejection Deadline
for each of their approximately 16 unexpired non-residential
real property leases, through the effective date of the Plan.
Pursuant to the plan confirmation process, the Debtors are
undertaking evaluation of all of their executory contracts and
unexpired leases to determine which will fit into their post-
confirmation business plan. Given the early stage of these
cases, the decision to assume or reject the Debtors' Unexpired
Leases will play a crucial role in the Debtors' reorganization
process. Hence, the Debtors believe that they should not be
compelled to make a determination in connection tot their
unexpired leases at this time.
Given the importance of the Unexpired Leases to the Debtors'
continued operations, it would be imprudent for the Debtors to
be required to make a reasoned decision whether to assume or
reject all the Unexpired Leases within the initial sixty-day
period specified in the Bankruptcy Code.
TransCare, a privately held corporation, is one of the largest
privately owned providers of ambulance and ambulette services in
the United States, providing both emergency and non-emergency
services, primarily on a fee-for-service basis. The Company
filed for chapter 11 protection on September 9, 2002. Matthew
Allen Feldman, Esq., at Willkie Farr & Gallagher represents the
Debtors in their restructuring efforts. When the Debtors sought
protection from its creditors, it listed an estimated assets of
$10 million to $50 million and debts of over $100 million.
TRICORD SYSTEMS: Inks Definitive Agreement to Sell All Assets
-------------------------------------------------------------
Tricord Systems, Inc., (Nasdaq:TRCDQ) announced the execution of
a definitive Purchase Agreement to sell substantially all of its
assets.
The pending transaction includes the sale of Tricord's
technology, consisting of the Lunar Flare technology, Illumina
clustering software and other related assets. Tricord has been
operating under Chapter 11 of the Federal Bankruptcy Code and
the Purchase Agreement is subject to Bankruptcy Court approval.
Tricord Systems, Inc., designs, develops and markets clustered
server appliances and software for content-hungry applications.
The core of Tricord's revolutionary new technology is its
patented Illumina(TM) software that aggregates multiple
appliances into a cluster, managed as a single resource.
Radically easy to deploy, manage and grow, Tricord's products
allow users to add capacity to a cluster with minimal
administration. Appliances are literally plug-and-play, offering
seamless growth and continuous access to content with no
downtime. The technology is designed for applications including
general file serving, virtual workplace solutions, digital
imaging and security. Tricord is based in Minneapolis,
Minnesota. For more information, visit http://www.tricord.com
UNION ACCEPTANCE: Case Summary and 25 Largest Unsec. Creditors
--------------------------------------------------------------
Debtor: Union Acceptance Corporation
250 N Shadeland Avenue
Indianapolis, Indiana 46219
Bankruptcy Case No.: 02-19231
Type of Business: Specialized finance company engaged in
acquiring retail installment sales contracts
and installment loan agreements.
Chapter 11 Petition Date: October 31, 2002
Court: Southern District of Indiana
Debtor's Counsel: Michael K. McCrory, Esq.
Barnes & Thornburg
11 S Meridian St., Suite 1313
Indianapolis, IN 46204-3506
Tel: 317-236-1313
Total Assets: $243,401,258
Total Debts: $115,394,445
Debtor's 25 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Principal Mutual Life Senior Note Holder $15,000,000
Insurance Co.
711 High Street
Des Moines, IA 50392-0960
New York Life Insurance Senior Note Holder $10,333,333
and Annuity Corp.
c/o New York Life Insurance
Co.
51 Madison Avenue
New York, NY 10010-1603
The Guardian Life Senior Note Holder $10,000,000
Insurance Co. of America
7 Hanover Square
New York, NY 10004
RDV Auto, LLC Senior Note Holder $10,000,000
c/o RDV Corp.
126 Ottawa NW
Suite 500
Grand Rapids, MI 49506
Gerlach & Co. Senior Note Holder $9,300,000
c/o Citibank, N.A./
Custody
3800 Citibank Center
Bldg. B, 1st Floor
Zone 7
Tampa, FL 33610-9122
Tel: (813) 604-1085
New York Life Insurance Senior Note Holder $8,333,333
Company
51 Madison Avenue
Room 206
New York, NY 10010-1603
ABSF II, LLC Senior Note Holder $6,000,000
c/o Manufacturers & Traders
Trust Co.
One M&T Plaza
Buffalo, NY 14203
Tel: 716-842-5547
The Minnesota Mutual Life Senior Note Holder $5,000,000
Insurance Co.
400 Robert Street North
St. Paul, Minnesota 55101
Attn: MIMLIC Asset Mgt.
Company
Tel: (651) 665-3765
National Rural Electric Senior Note Holder $3,000,000
Cooperative Association
One Enterprise Drive
Quincy, MA 02171
Tel: (617) 985-2608
Metropolitan Life Senior Note Holder $3,000,000
Assurance Co.
334 Madison Avenue
Convent Station, NJ 07961
Tel: (973) 254-3032
Republic Western Senior Note Holder $3,000,000
Insurance Co.
2721 North Central Avenue
Phoenix, AZ 85004
Tel: (606) 263-6616
Farm Bureau Life Senior Note Holder $2,666,666
Insurance Co. of
Michigan
400 Robert Street North
St. Paul, MN 55101
Attn: MIMLIC Asset Mgt.
Company
Tel: (615) 665-4922
State Street Bank & Senior Note Holder $2,000,000
Trust Co.
One Enterprise Drive
Quincy, MA 02171
Tel: (617) 985-2608
EMSEG & Co. Senior Note Holder $2,000,000
733 Marquette Avenue
Minneapolis, MN 55479
Tel: (612) 667-7310
Structured Equity LLC Senior Note Holder $1,700,000
c/o Manufacturers and
Traders Trust Co.
One M&T Plaza
Buffalo, NY 14203
Tel: 716-842-5547
Federated Life Insurance Senior Note Holder $1,333,333
Company
c/o MIMLIC Asser Mgt. Co.
400 Robert Street North
St. Paul, MN 55101
Tel: 651-665-4922
Baltimore Life Insurance Senior Note Holder $1,333,333
Co.
c/o MIMLIC Asser Mgt. Co.
400 Robert Street North
St. Paul, MN 55101
Tel: 651-665-4922
Chase Manhattan Bank Senior Note Holder $1,000,000
Chase International Plaza
14201 Dallas Parkway
13th Floor
Dallas, TX 75240
Tel: 469-477-1960
The Peter C. Cook Trust Senior Note Holder $1,000,000
Cook Holdings
618 Kenmoor Avenue SE
Suite 100
Grand Rapids, MI 49546
Federated Mutual Senior Note Holder $666,667
Insurance Company
c/o MIMLIC Asset Mgt. Co.
400 Robert Street North
St. Paul, MI 55101
National Travelers Life Senior Note Holder $666,667
Company
C/o MIMLIC Asset Mgt. Co.
400 Robert Street North
St. Paul, MN 55101
Tel: 651-6651922
The Reliable Life Senior Note Holder $666,667
Insurance Co.
c/o MIMLIC Asset Mgt. Co.
400 Robert Street North
St. Paul, MN 55101
The Catholic Aid Senior Note Holder $666,667
Association
c/o Bankers Trust Company
PO Box 998 Bowling Green
Station
New York, NY 10024
AUER & Co. Senior Note Holder $666,667
c/o Bankers Trust Company
PO Box 998 Bowling Green
Station
New York, NY 10024
Guarantee Reserve Life Senior Note Holder $333,333
Insurance Company
c/o MIMLIC Asset Mgt. Co.
400 Robert Street North
St. Paul, MN 55101
UNION ACCEPTANCE: MBIA Reports $1.6 Billion in Net Par Exposure
---------------------------------------------------------------
MBIA Inc., (NYSE:MBI) does not expect to incur any losses as a
result of yesterday's Chapter 11 bankruptcy protection filing by
Union Acceptance Corporation.
MBIA has guaranteed 18 securitizations of non-prime auto
receivables originated by UAC and currently has $1.6 billion in
net par exposure ($2.4 billion gross par) under its guarantees.
UAC is the servicer of the MBIA insured transactions.
MBIA Inc., through its subsidiaries, is the world's preeminent
financial guarantor and a leading provider of specialized
financial services. MBIA provides innovative and cost-effective
products and services that meet the credit enhancement,
financial and investment needs of its public and private sector
clients, domestically and internationally. MBIA Inc.'s principal
operating subsidiary, MBIA Insurance Corporation, has a
financial strength rating of Triple-A from Moody's Investors
Service, Standard & Poor's Ratings Services, Fitch Ratings, and
Rating and Investment Information, Inc. Please visit MBIA's Web
site at http://www.mbia.com
UNION ACCEPTANCE: Fitch Downgrades Senior Unsecured Ratings to D
----------------------------------------------------------------
Fitch Ratings lowered the senior unsecured ratings of Union
Acceptance Corp., to 'D' from 'B', following the company's
announcement that it has sought Chapter 11 bankruptcy
protection. Approximately $43 million of senior unsecured debt
is affected by this action. The company has indicated that its
current surety provider has not indicated a willingness to
support future term securitizations as an important
consideration in seeking bankruptcy protection.
UNION ACCEPTANCE: Will Host Conference Call on Thursday
-------------------------------------------------------
The senior management of Union Acceptance Corporation
(Nasdaq:UACA) will host a conference call on Thursday, November
7, 2002 at 2:00 p.m. EST to provide an update on its
reorganization plans. The call may be accessed through a toll-
free telephone number at (877) 313-0551. A telephone replay will
be available two hours after the completion of the call through
November 13, 2002 at midnight at (800) 642-1687; conference ID
6520216.
UAC management would like to be as responsive as possible to the
questions and concerns of its various constituencies. Interested
parties may submit queries for which they would like more
information to the following email address:
investorrelations@uaca.com The company will provide as much
information as it can in response to questions received on its
next conference call.
On October 31, 2002, UAC announced it has filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code to
facilitate a financial restructuring. The objective of the
reorganization proceeding is to protect the enterprise and
restructure obligations so that the Company will be able to
continue as a going concern. As part of the ongoing
communication regarding this proceeding, the company said it
intends to hold weekly update calls through the month of
November, then monthly calls through end of the first quarter of
2003. The call on November 7, 2002 is the first of such calls.
UAC is an independent, indirect provider of automobile financing
and servicing. The company's primary business is purchasing and
servicing prime automobile retail installment sales contracts.
These contracts are originated by dealerships affiliated with
major domestic and foreign manufacturers, nationally recognized
rental car outlets and used car superstores. UAC focuses on
acquiring receivables related to late model used and, to a
lesser extent, new automobiles purchased by customers who
exhibit favorable credit profiles. Union Acceptance Corporation
commenced business in 1986 and currently acquires receivables
from more than 5,900 manufacturer-franchised dealerships in 39
states. By using state-of-the-art technology in a highly
centralized underwriting and servicing environment, Union
Acceptance Corporation enjoys one of the lowest cost operating
structures in the independent prime automobile finance industry.
UNIROYAL TECH.: Wants More Time to Make Lease-Related Decisions
---------------------------------------------------------------
Uniroyal Technology Corporation and its debtor-affiliates seek
extension of time within which the Debtors may assume, assume
and assign, or reject unexpired nonresidential real property
leases through January 23, 2003.
The Debtors tell the U.S. Bankruptcy Court for the District of
Delaware that they are diligently evaluating their remaining
Leases, but simply do not have sufficient time to make a final
determination whether to assume or reject such Leases.
Uniroyal Technology Corporation and its subsidiaries are engaged
in the development, manufacture and sale of a broad range of
materials employing compound semiconductor technologies, plastic
vinyl coated fabrics and specialty chemicals used in the
production of consumer, commercial and industrial products. The
Company filed for chapter 11 protection on August 25, 2002 Eric
Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard
Firm represent the Debtors in their restructuring efforts. When
the Debtors filed for protection from its creditors, it listed
$85,842,000 in assets and $68,676,000 in debts.
UNITED AIRLINES: Pilots' Council Accepts Economic Recovery Plan
---------------------------------------------------------------
The union governing body of United Airlines pilots unanimously
approved a tentative agreement to accept United Airlines'
Economic Recovery Program.
The Master Executive Council of United pilots (UAL-MEC) now
presents the agreement to its membership with a unanimous
endorsement and recommendation for ratification.
Details of the agreement have not been released, pending
notification of the pilot membership.
The pilot group, affiliated with the Air Line Pilots
Association, International, is one of the United employee groups
considering the recovery package that would help UAL Corporation
slash $5.8 billion in labor costs, and thereby qualify for a
government loan guarantee.
"While this is a painful decision that will require sacrifices
from all United pilots, it is an agreement that paves the way
for United to maintain its position as a leader in the airline
industry," said Captain Paul Whiteford, chairman of the UAL-MEC.
"The stabilization of United Airlines is in the best interest
not only to our pilots but also the flying public. Our
acceptance of this recovery package demonstrates our commitment
to returning United to profitability."
The pilots' agreement will provide the company with $2.2 billion
in labor savings over five-and-a-half years.
The economic recovery package is necessary to meet requirements
established by the Air Transportation Stabilization Board for a
major loan guarantee to help the nation's second largest carrier
avoid a bankruptcy filing.
UNITED AIRLINES: Reaches Tentative Workout Agreement with Pilots
----------------------------------------------------------------
United Airlines (NYSE:UAL) has reached a tentative agreement
with the Air Line Pilots Association on labor cost savings as a
part of the company's overall financial recovery plan. The
agreement has been approved by ALPA's UAL Master Executive
Council and is consistent with the framework agreed upon by the
United Airlines Union Coalition and the company. The agreement
is subject to approval by the Labor Committee of the UAL board
of directors, as well as the board itself. In addition, it
requires ratification by United's pilots.
"ALPA is the first of our unions to reach an agreement on their
participation in United's financial recovery program," said
Glenn Tilton, United's chairman, president and Chief Executive
Officer. "I want to thank the members of ALPA's and United's
negotiating teams for all of their hard work. This is solid
evidence that we are making significant progress toward cutting
costs in order to avoid a court-supervised restructuring.
"ALPA, along with our other unions, are stepping up to the
challenge by cooperating in an unprecedented way to set the
framework for a stronger, more competitive airline," Tilton
continued. "United's management will continue to negotiate with
its other unions on similar agreements in an effort to fully
implement our financial recovery program."
United operates nearly 1,800 flights a day on a route network
that spans the globe. News releases and other information about
United may be found at the company's Web site at
http://www.united.com
WINSTAR: Shubert Gets Nod to Hire MCL Associates as Consultants
---------------------------------------------------------------
Winstar Communications, Inc.'s Chapter 7 Trustee Christine C.
Shubert obtained the Court's authority to employ MCL Associates
Inc., as special consultants for the recovery of funds from
government entities.
For its retention, MCL will be authorized to do all things
necessary to recover the funds. The services that MCL will
provide include, but not will not be limited to, the search and
discovery of the Debtors' undistributed, unclaimed or
undelivered tenders of funds totaling $336,725 that are held by
any federal, provincial, state or government entity or any
agency or subdivision.
MCL's compensation will be equal to $12.5% of its total
collection. Unless a collection is made, there will not be any
charge to the Chapter 7 Trustee. All costs, fees, disbursements
and out-of-pocket expenses pertaining to the recovery process
will be paid by MCL. (Winstar Bankruptcy News, Issue No. 35;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Winstar Communications' 12.50% bonds due 2008 (WCII08USR1),
DebtTraders says, are trading at less than a penny on the
dollar. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCII08USR1
WORLDCOM INC: Asks Court to Extend Exclusive Period to April 17
---------------------------------------------------------------
Section 1121(b) of the Bankruptcy Code provides for an initial
period of 120 days after the commencement of a Chapter 11 case
during which a debtor has the exclusive right to file a plan of
reorganization. Section 1121(c)(3) of the Bankruptcy Code
provides that if the debtor files a plan within the 120-day
exclusive period, it has a period of 180 days after the Petition
Date to obtain acceptances of the plan. Accordingly, Worldcom
Inc., and its debtor-affiliates' initial exclusive period to
file a plan expire on November 18, 2002 and to solicit
acceptances of that plan on January 17, 2003.
Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New
York, tells the Court that the Debtors comprise a large, multi-
faceted national and international company with numerous
businesses, operations and financial interests throughout the
United States and around the world. The Debtors' Chapter 11
cases are the largest ever filed in the United States with 179
debtor-subsidiaries, 800,000 creditors and hundreds of thousands
of executory contracts and unexpired leases to be reviewed and
analyzed. The size and complexity of the Debtors' numerous
businesses, employee relations, corporate structure, and
financing arrangements place heavy demands on the Debtors'
management and personnel even in an ideal environment. In these
pending Chapter 11 cases, however, the Debtors' complex
contractual relationships with vendors and customers, the
efforts to sell non-core assets, the numerous requests for
setoff and recoupment, the pending search for a permanent chief
executive officer, the ongoing investigations and the concurrent
restatement of financial reports have exacerbated these demands.
By this motion, the Debtors ask the Court to extend their
exclusive filing period to April 17, 2003 and the exclusive
solicitation period until June 16, 2003.
Considering the early stages of their Chapter 11 cases, as well
as the size of the estates and complexity of the issues to be
resolved, Ms. Goldstein points out that neither the Debtors nor
any other party-in-interest could realistically be in a position
to formulate, promulgate and build consensus for a plan in a
shorter period of time. The relief requested will not result in
a delay of the process to formulate a Plan. To the contrary, it
will permit the plan process to move forward in an orderly
fashion. The extension will permit management to develop and
implement a viable long-term business plan.
The Debtors are continuing to address the numerous tasks
necessary to the daily administration of these Chapter 11 cases.
In the next five months, Ms. Goldstein informs the Court that
the Debtors will convene the initial meeting of creditors
pursuant to Section 341 of the Bankruptcy Code, file schedules
of assets and liabilities and statements of financial affairs,
and set a bar date for the filing of claims. Accordingly, at
this juncture, neither the Debtors nor other parties-in-interest
are in a position to begin to evaluate the universe of claims
asserted against the Debtors, valuate the Debtors' assets and
business, determine an appropriate capital structure for the
reorganized company, and prepare a disclosure statement
containing adequate information. The Debtors' development of
their business plan, discussions with various creditor
constituencies regarding the terms of a plan of reorganization,
and the resolution of inter-creditor issues will consume the
majority of the Debtors' time and efforts in the upcoming
months.
During the first three months of these Chapter 11 cases, Ms.
Goldstein reports that the Debtors have made substantial
progress in addressing certain of the major issues facing their
estates, including the need for additional liquidity,
stabilizing their workforce and preserving vital customer,
vendor and service provider relationships. Given their
importance, the Debtors have devoted substantial time and effort
to address these fundamental issues. The Debtors have also
taken these initial steps in connection with their restructuring
efforts:
-- obtained approval of the Debtors' $1,100,000,000 postpetition
credit facility;
-- negotiated with the corporate monitor and Committee the terms
of a key employee retention plan;
-- held frequent meetings and conference calls with the
Committee's professionals;
-- conducted a search for and appointment of new members of the
WorldCom, Inc. board of directors and initiated a search for
a permanent chief executive officer;
-- commenced rebuilding accounting department as part of ongoing
efforts to restate financial reports;
-- addressed numerous issues regarding utility companies and
telecommunications vendors including the continuing analysis
of the Debtors major contractual relationships with these
entities and obtaining an order of the Bankruptcy Court
deeming these entities adequately assured of future payment;
-- retained Hilco Real Estate, Inc. and its joint venture
partners to assist in an extensive review of the Debtors'
real property assets and unexpired leases in furtherance of
the Debtors' efforts to streamline their leasehold interests
and determine which real property assets should be sold;
-- responded to issues in connection with numerous prepetition
lawsuits, including requests to lift the automatic stay;
-- cooperated with numerous on-going investigations;
-- implemented the various forms of relief granted by the Court
on the Petition Date to preserve the Debtors' relationships
with employees, customers, vendors and service providers; and
-- commenced the review and analysis of executory contracts and
unexpired leases to which one or more of the Debtors are
parties, including the implementation of procedures to reject
these agreements.
Affording the Debtors a full opportunity to undertake an
extensive review and analysis of their businesses and
properties, so that they may develop a business plan and a plan
of reorganization that satisfies the requirements of Chapter 11
will not harm creditors. Terminating the Exclusive Periods
before this process is complete and the process of negotiation
has been developed fully, would defeat the very purpose of
Section 1121 of the Bankruptcy Code, which is to give the
Debtors a meaningful and reasonable opportunity to negotiate
with creditors and propose and confirm a consensual plan of
reorganization.
Given these facts, Ms. Goldstein asserts that no party could
file a plan of reorganization in a period shorter than five
months. The Debtors believe that at this time, the filing of a
competing plan or plans, or even the mere threat of filing,
would prove extremely disruptive to the reorganization process.
Premature termination of exclusivity would be harmful to
cooperation among parties-in-interest and detrimental to the
business. Rather, consistent with the objectives of Chapter 11,
WorldCom intends to work cooperatively with the Committee to
formulate a consensual plan. (Worldcom Bankruptcy News, Issue
No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USR4), DebtTraders
reports, are trading at 18 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USR4
for real-time bond pricing.
W.R. GRACE: Court Extends Lease Decision Period Until April 1
-------------------------------------------------------------
For the third time, W. R. Grace & Co., and its debtor-affiliates
Obtained further extension of their deadline to decide whether
to assume, assume and assign, or reject unexpired non-
residential real property leases. Judge Fitzgerald gives the
Debtors until April 1, 2003, to make such lease-related
decision, without prejudice to the Company's right to request a
further extension of the deadline, and without prejudice to any
lessor's right to request to shorten the lease decision period
on a particular lease.
XO COMMS: Court Okays Kelley Drye to Perform Legal Services
-----------------------------------------------------------
Tony K. Ho, Esq., at Willkie Farr & Gallagher, in New York,
recounts that the Court issued an Order, dated June 18, 2002,
authorizing the employment of professionals utilized in the
ordinary course of business and established procedures pursuant
to which the professionals were to be compensated.
The Ordinary Course Professionals Order authorizes XO
Communications, Inc., to pay each professional $25,000 per month
without having to file an interim or final fee application in
connection with fees and expenses. Fees and expenses exceeding
$25,000 may be carried over to the following month, provided
that the total cannot exceed $25,000.
One of the Debtor's ordinary course professionals is Kelley Drye
& Warren, LLP. However, because of the greater role that Kelley
Drye is playing with the Debtor's efforts to emerge from Chapter
11, Mr. Ho tells the Court that it is necessary to retain them
separately and not rely on the Ordinary Course Professionals
Order.
Mr. Ho contends that Section 327(e) of the Bankruptcy Code
authorizes the retention of an attorney who previously
represented a debtor prepetition, provided that:
-- the retention is for a special purpose;
-- the purpose of the retention is not to conduct the case;
-- the retention is in the best interests of the estate; and
-- the attorney does not hold any interest adverse to the
Debtor with respect to its retention.
As special counsel, Kelley Drye:
-- represents the Debtor as telecommunications regulatory
counsel;
-- advises the Debtor regarding rules, regulations and
policies of the Federal Communications Commission, State
Public Utility Commissions nationwide and numerous
municipal financing authorities;
-- assists the Debtor in responding to government
investigations of its compliance with regulatory
requirements related to prepaid calling cards and related
taxation rules; and
-- assists the Debtor in litigation attempting to collect
unpaid charges pursuant to its international service
tariffs.
Specifically, Kelley Drye plays a role in the foreign ownership
issues raised by the Telmex investment, which led to unusual
regulatory scrutiny by the Federal Communications Commission,
the U.S. Department of Justice, the Federal Bureau of
Investigation and the U.S. Department of Defense that needs to
be resolved. Kelley Drye expends significant additional effort
to convince regulators to approve transactions due to public
indications by Forstmann Little's reluctance to consummate the
deal.
The Debtor also engages Kelley Drye's legal assistance in
collection litigation against Caribe International for services
provided pursuant to international service tariffs. Kelley Drye
is also involved in representing the Debtor in a Securities and
Exchange Commission inquiry that relates to the Debtor's
policies for collecting service fees and excise taxes for its
prepaid calling card product.
Mr. Ho adds that Kelley Drye may be required to replicate the
initial governmental approval effort for the Stand-Alone Plan as
it did with the FL/Telmex Plan, which requires all applications
to be prepared anew and re-filed after approvals of the initial
deal were obtained.
Mr. Ho explains that Kelley Drye's proposed retention is for the
limited purpose of representing the Debtor as a special counsel.
The Debtor believes that Kelley Drye is well qualified to act as
a special counsel on their behalf. Furthermore, none of the
matters relate to the Debtor's Chapter 11 case handled by
Willkie Farr & Gallagher, the Debtor's bankruptcy counsel.
The Debtor assures the Court that there will be no duplication
of services by delineating Kelley Drye's role. Kelley Drye will
not be involved in interfacing with the Bankruptcy Court or be
primarily responsible for the Debtor's general restructuring
efforts.
For these reasons, Mr. Ho asserts, Kelley Drye's retention is in
the best interest of the Debtor, its estate, and its creditors
because Kelly Drye:
-- has provided legal services to the Debtor since 1997;
-- has extensive experience and knowledge regarding debtor-
creditor law, regulatory matters, and general corporate
matters, among other fields of expertise; and
-- enjoys a familiarity with the Debtor.
For a new counsel to obtain familiarity with the Debtor would
result in additional and unnecessary expenditure of time and
money, Mr. Ho points out.
Brad E. Mutschelknaus, Esq., a member of Kelley Drye, informs
the Court that Kelley Drye represents no interest adverse to the
Debtor's estate with respect to its retention. "To the best of
my knowledge, the members and associates of Kelley Drye do not
have any connection with the Debtor, its creditors or any other
party-in-interest, or its respective attorneys, except as
disclosed to the Court," Mr. Mutschelknaus says.
Mr. Mutschelknaus continues that Kelley Drye intends to:
-- charge its professional services on an hourly basis in
accordance with its ordinary and customary hourly rates
in effect on the date services are rendered; and
-- seek reimbursement of actual and necessary out-of-pocket
expenses.
Accordingly, the Debtor sought and obtained the Court's
authority to employ Kelley Drye as special counsel to perform
legal services and to compensate Kelley Drye for its services.
Prior to the Petition Date, Kelley Drye received a payment from
the Debtor for $154,210 on May 24, 2002, which was applied to
pay invoices for services rendered prepetition. Kelley Drye has
a remaining prepetition claim for $56,983, which it has agreed
to waive. Mr. Mutschelknaus clarifies that although Kelley Drye
has been operating as an ordinary course professional, it has
not been paid for its services to date since the fees and
expenses have exceeded the $25,000 per month cap. (XO Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
*********
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.
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