/raid1/www/Hosts/bankrupt/TCR_Public/021129.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 29, 2002, Vol. 6, No. 237
Headlines
AAMES FIN'L: Amends and Extends Exchange Offer for 5.5% Bonds
ACRODYNE COMMS: Agrees to Recapitalization Pact with Sinclair
AES: Nears Completion of Exchange Offer for Sr. Notes and ROARS
ALLEGHENY ENERGY: Receive Waiver Extensions from Bank Lenders
ALLEGIANCE TELECOM: Sr. Lenders Waive All Financial Covenants
AMERCO: Secures Standstill to Carry Out Balance Sheet Workout
AMERICAN SKIING: Fleet Agrees to Forbear Until Dec. 30
AMSCAN HOLDINGS: Inks Pact to Refinance Senior Debt Facilities
ANC RENTAL: Court Okays Dickstein Shapiro as Special Counsel
ARIS CANADA: Auditors Doubt Ability to Continue Operations
ASIA GLOBAL CROSSING: Honoring Prepetition Employee Obligations
AT&T CANADA: Appoints John A. MacDonald as President and COO
BILLSERV INC: Fails to Regain Compliance with Nasdaq Guidelines
BRIAZZ: Nasdaq Grants Hearing to Appeal Delisting Determination
BRIDGE: Peltz Gets Court Order to Close 15 Bankruptcy Cases
BUDGET GROUP: Wins Nod to Purchase Liability Insurance Program
CATALYST INT'L: Fails to Satisfy Nasdaq Listing Requirements
CITICORP MORTGAGE: Fitch Assigns Low-B Ratings on 2 Note Classes
CLICKACTION INC: Fails to Regain Compliance with Nasdaq Criteria
CONSECO INC: Senior Lenders Extend Forbearance Pact to Jan. 11
CWMBS INC: Fitch Assigns BB/B Ratings to Class B-3 & B-4 Notes
DION ENTERTAINMENT: Defaults on Loan Agreement with D.A.W.
EB2B COMMERCE: Working Capital Deficit Tops $3.2MM at Sept. 30
ELDERTRUST: $15MM Loan Maturity Date Extended Until January 10
ENCOMPASS: Obtains DIP Financing and Additional Bonding Capacity
ENCOMPASS SERVICES: Final Cash Collateral Hearing on Wednesday
ENRON: Employee Committee Reports First-Year Accomplishments
ENRON CORP: Wants to Pay $1MM+ Prepetition Harris County Taxes
EQUUS CAPITAL: S&P Keeping Watch on BB+ & CCC- Note Ratings
EXODUS COMMS: Court Approves Stipulation with Network LLC
FARMLAND INDUSTRIES: Files Plan of Reorganization in Missouri
GENESIS HEALTH: Proposes Revision to Financing Plan
GENTEK INC: Honoring Up to $6 Million of Foreign Vendor Claims
GENUITY INC: Verizon Comms. Applauds Transaction with Level 3
GLOBAL PAYMENTS: Elects Gerald Wilkins to Board of Directors
HAYES LEMMERZ: Seeks Court's Nod to Amend DIP Credit Agreement
HIGH SPEED ACCESS: Shareholders Approve Plan of Dissolution
IFCO SYSTEMS: Reports Improved Performance for Third Quarter
IMP INC: Independent Auditors Express Going Concern Doubt
INPRIMIS INC: Working Capital Deficit Reaches $14MM at Sept. 30
INTEGRATED HEALTH: Auctioning-Off Durham Property on December 6
ITC DELTACOM: Court Fixes Dec. 31 Administrative Claims Bar Date
KAISER ALUMINUM: Wins Nod to Join Insurance Coverage Settlements
KINGSWAY FINANCIAL: A.M. Best Places Ratings Under Review
KMART CORP: Urges Court to Approve Compromise Agreement with IRS
LECTEC CORP: Commences Trading on OTCBB Effective November 26
LEVEL 3 COMM: Enters Pact to Acquire Genuity Assets & Operations
LUBY'S INC: Bank Lenders Consent to Amend Credit Facility
LYONDELL CHEMICAL: Fitch Assigns BB- Rating to New 9.5% Notes
MARV I & II: Fitch Junks Class C Secured Fixed-Rate Notes
MASSEY ENERGY: Reaches Agreement to Extend Bank Credit Facility
METROMEDIA INT'L: Closes on Sale of Snapper Assets to Simplicity
MONARCH DENTAL: Enters into Merger Pact with Bright Now! Dental
MORTGAGE ASSET: Fitch Takes Rating Actions on Ser. 2002-8 Notes
MOSAIC GROUP: Working Capital Insufficient to Meet Cash Needs
NASH FINCH: Fails to Comply with Nasdaq Listing Requirements
NATIONAL CENTURY: Signing-Up Alvarez & Marsal as Crisis Managers
NATIONSRENT: Judge Walsh Appoints Erwin Katz as Mediator
NETWORK ACCESS: DSL.net Pitches Highest Bid for Network Assets
NEXTCARD INC: Seeks Okay to Hire Ordinary Course Professionals
OAKWOOD HOMES: Seeks Approval to Pay Critical Vendor Claims
OAKWOOD HOMES: Fitch Places 2 Related Transactions on Watch Neg.
OMNISKY CORP: Court Fixes December 11 Admin. Claims Bar Date
OWENS CORNING: Tinkers with GE Capital Fleet Lease Agreement
PACIFIC GAS: Gets Okay to Pay SEC Registration & Printing Fees
PACIFICARE HEALTH: Fitch Assigns B+ Convertible Sub. Debt Rating
PACIFICARE HEALTH: S&P Revises B Note Rating Outlook to Stable
PETROLEUM GEO-SERVICES: Third Quarter Net Loss Tops $1 Billion
PLANETRX.COM INC: Commences Trading on OTC Bulletin Board
POLAROID CORP: Court Approves Proposed Settlement Procedures
PROLAB TECH.: Working Capital Deficit Tops $288,000 at Sept. 30
PSC INC: Taps FTI Consulting as Financial Advisor
RELIANT RESOURCES: Fitch Drops Senior Unsecured Debt Rating to B
R.F. ALTS: Fitch Downgrades Ratings on Classes A, B & C Notes
SALOMON BROS.: Fitch Affirms Low-B Ratings on 5 Classes of Notes
SECURITY ASSOCIATES: AMEX Intends to Strike Shares from Exchange
SPECTRASITE: Unit Divests Wireless Network Services Division
SPECTRASITE HOLDINGS: Court Fixes December 26 as Claims Bar Date
TANGER FACTORY: Sells Bourne Property to Inland for $3.4 Million
TRANSTEXAS GAS: Court Okays Stroock & Stroock as Special Counsel
UNIFAB INT'L: Fails to Comply with Nasdaq Listing Requirements
UNITED AIRLINES: Wants to Achieve $5B Labor-Related Cost Savings
WARRIOR RESOURCES: Consummates Principal Bank Debt Restructuring
WORLDCOM INC: Intends to Reject COMSAT "Ghost Circuit" Leases
WORLDCOM INC: CAGW Lambastes Gov't for Leniency & Inconsistency
ZIFF DAVIS: Completes Comprehensive Financial Restructuring Plan
* BOOK REVIEW: Land Use Policy in the United States
*********
AAMES FIN'L: Amends and Extends Exchange Offer for 5.5% Bonds
-------------------------------------------------------------
Aames Financial Corporation (OTCBB:AMSF) amended the terms of
its offer to exchange its 4.0% Convertible Subordinated
Debentures due 2012 for any and all of its outstanding 5.5%
Convertible Subordinated Debentures due 2006 [rated Ca by
Moody's].
The Exchange Offer has been amended as follows:
-- For each $1,000 principal amount of Existing Debentures
tendered prior to the expiration date, holders will receive
$1,000 principal amount of New Debentures. The Company
originally offered to exchange $800 principal amount of New
Debentures for each $1,000 principal amount of Existing
Debentures tendered in the Exchange Offer.
-- The New Debentures will bear interest at 5.5% per annum
from the date of issuance, rather than 4.0% as originally
offered.
-- On December 23, 2002, the Company will redeem through a
scheduled mandatory sinking fund payment 40% of the New
Debentures then outstanding on a pro rata basis at a redemption
price equal to 100% of principal amount, plus accrued and unpaid
interest to the date of redemption. Accordingly, for each $1,000
principal amount of New Debentures held by a holder on December
23, 2002, the Company will redeem $400 principal amount of such
debentures by paying the holder $400 in cash, plus accrued and
unpaid interest on the New Debentures to the date of redemption.
The original payment date of the scheduled mandatory sinking
fund was December 15, 2002 and the original redemption amount
was 30% of the New Debentures then outstanding.
-- The Exchange Offer has further been amended to provide
that the Company may not optionally redeem the New Debentures
prior to making the scheduled mandatory sinking fund payment.
In addition, the Company announced that the expiration date of
the Exchange Offer has been extended to 5:00 p.m., New York City
time, on Friday, December 13, 2002. The Exchange Offer had been
scheduled to expire, Tuesday, December 3, 2002, at 5:00 p.m.,
New York City time. The Company reserves the right to further
extend the Exchange Offer or to terminate the Exchange Offer, in
its discretion, in accordance with the terms of the Exchange
Offer.
Except as so modified, the terms and conditions of the Exchange
Offer and all other terms of the New Debentures set forth in the
offering memorandum have not changed and remain applicable in
all respects.
To date, the Company has received tenders of Existing Debentures
from holders of approximately $42.9 million principal amount, or
approximately 37.6%, of the outstanding Existing Debentures.
The Company is a consumer finance company primarily engaged in
the business of originating, selling and servicing home equity
mortgage loans. Its principal market is borrowers whose
financing needs are not being met by traditional mortgage
lenders for a variety of reasons, including the need for
specialized loan products or credit histories that may limit the
borrowers' access to credit. The residential mortgage loans that
the Company originates, which include fixed and adjustable rate
loans, are generally used by borrowers to consolidate
indebtedness or to finance other consumer needs and, to a lesser
extent, to purchase homes. The Company originates loans through
its retail and broker production channels. Its retail channel
produces loans through its traditional retail branch network and
through the Company's National Loan Centers, which produces
loans primarily through affiliations with sites on the Internet.
Its broker channel produces loans through its traditional
regional broker office networks, and by sourcing loans through
telemarketing and the Internet. At September 30, 2002, the
Company operated 97 retail branches, 4 regional wholesale loan
offices and 2 National Loan Centers throughout the United
States.
ACRODYNE COMMS: Agrees to Recapitalization Pact with Sinclair
-------------------------------------------------------------
Acrodyne Communications, Inc., has reached a preliminary
agreement on a Plan of Recapitalization with its largest
shareholder, Sinclair Broadcast Group, Inc., providing that, in
exchange for the issuance of 20,350,000 shares of Acrodyne
voting common stock, Sinclair will forgive certain indebtedness,
assign certain intellectual property rights to Acrodyne,
terminate its rights to acquire additional shares of Acrodyne
common stock, amend certain guarantees made by Sinclair on
Acrodyne's behalf, and invest an additional $1,000,000.00 in
cash in Acrodyne.
The Plan has been approved by Sinclair's Board of Directors and
is being recommended for shareholder approval by a disinterested
and independent committee of Acrodyne's Board of Directors. The
Plan is subject to, and contingent upon, the approval of the
shareholders of Acrodyne. Acrodyne shareholder approval will be
sought at Acrodyne's next Annual Meeting scheduled for
December 13, 2002.
In the event the Plan is approved by Acrodyne's shareholders and
is completed, Sinclair's ownership interest in Acrodyne will
increase from approximately 38% to approximately 82% of the
issued and outstanding capital stock.
Acrodyne's September 30, 2002 balance sheet shows a working
capital deficit of about $12 million, and a total shareholders'
equity deficit of about $12.5 million.
AES: Nears Completion of Exchange Offer for Sr. Notes and ROARS
---------------------------------------------------------------
The AES Corporation (NYSE: AES) has been informed by its
exchange agent that, as of 5:00 p.m., New York City time, on
November 26, 2002, approximately $219,193,000 in aggregate
principal amount of its outstanding 8.75% Senior Notes due 2002
and approximately $157,851,000 in aggregate principal amount of
its 7.375% Remarketable and Redeemable Securities due 2013,
which are puttable in 2003 had been tendered in the exchange
offer.
These amounts represent approximately 73% and 79% of outstanding
2002 Notes and ROARs, respectively.
Consummation of the exchange offer is subject to a number of
conditions, including the condition that 80% in aggregate
principal amount of the ROARSs and 80% in aggregate principal
amount of the 2002 Notes are validly tendered. At this time,
neither 80% of the ROARs nor 80% of the 2002 Notes have been
tendered. The exchange offer expires on December 3, 2002.
The offering of the new senior secured notes in the exchange
offer is being made only to "qualified institutional buyers" and
"persons other than a U.S. person" located outside the United
States, as such terms are defined in accordance with Rule 144A
and Regulation S of the Securities Act of 1933, as amended.
The new senior secured notes will not be registered under the
Securities Act of 1933, or any state securities laws. Therefore,
the new senior secured notes may not be offered or sold in the
United States absent an exemption from the registration
requirements of the Securities Act of 1933 and any applicable
state securities laws. This announcement is neither an offer to
sell nor a solicitation of an offer to buy the new notes.
* * *
As reported in Troubled Company Reporter's November 13, 2002
edition, Standard & Poor's will not change the corporate
credit rating of AES Corp., (B+/Watch Neg/--) following AES'
announcement of the extension until December 3, 2002, of the
tender offer for its December 2002 notes and June 2003 ROARS,
with changes in the terms of the offer. Standard & Poor's
believes that the extension reflects the difficulty in reaching
an agreement given the multitude of parties involved, the
circumstances of the exchange offer, and the time until the Dec.
15 maturity date is reached.
AES Corporation's 10.25% bonds due 2006 (AES06USR1) are trading
at about 24 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for
real-time bond pricing.
ALLEGHENY ENERGY: Receive Waiver Extensions from Bank Lenders
-------------------------------------------------------------
Allegheny Energy, Inc., (NYSE: AYE) announced that its
subsidiaries, Allegheny Energy Supply Company, LLC, and
Allegheny Generating Company, have received extensions on
waivers from bank lenders under their syndicated credit
agreements.
The waivers have been extended through December 31, 2002.
Allegheny Energy and its subsidiaries are continuing discussions
with their bank lenders under these and other facilities and are
optimistic that they will reach an agreement that provides the
necessary liquidity and funding for both near- and long-term
financial flexibility.
On November 4, 2002, the Company announced that Allegheny Energy
Supply and Allegheny Generating Company had received waivers,
which extended through November 29, 2002, from their bank
lenders with regard to certain covenants contained in their
syndicated credit agreements.
With headquarters in Hagerstown, Md., Allegheny Energy is an
integrated Fortune 500 energy company with a balanced portfolio
of businesses, including Allegheny Energy Supply, which owns and
operates electric generating facilities and supplies energy and
energy-related commodities in selected domestic retail and
wholesale markets; Allegheny Power, which delivers low-cost,
reliable electric and natural gas service to about three million
people in Maryland, Ohio, Pennsylvania, Virginia, and West
Virginia; and a business offering fiber-optic and data services,
energy procurement and management, and energy services. More
information about the Company is available at
http://www.alleghenyenergy.com
As reported in Troubled Company Reporter's November 11, 2002
edition, Moody's Investors Service lowered the ratings of
Allegheny Energy, Inc., together with its subsidiaries --
Allegheny Energy Supply, Monongahela Power, Potomac Edison, West
Penn Power, Allegheny Generating Company, and the rating of
Allegheny Energy Supply Statutory Trust 2001.
Ratings are under review for likely downgrade.
Rating Actions
To From
---- ----
Allegheny
* senior unsecured; B1 Ba1
Allegheny Energy Supply
* senior unsecured and issuer rating; B1 Ba2
Allegheny Generating Company
* senior unsecured; B1 Ba2
Allegheny Energy Supply Statutory Trust 2001
* senior secured; B1 Ba2
Monongahela Power Company
* senior secured; Baa3 A3
* senior unsecured debt & issuer rating; Ba1 Baa1
* preferred stock; Ba3 Baa3
* commercial paper Not Prime Prime-2
Potomac Edison Company
* senior secured Baa3 A3
* senior unsecured debt & issuer rating Ba1 Baa1
* commercial paper Not Prime Prime-2
West Penn Power Company
* senior unsecured and issuer rating; Baa1 A1
* commercial paper; Prime-2 Prime-1
Mountaineer Gas Company
* commercial paper Not Prime Prime-2
The rating actions reflect the company's weak financial
flexibility and low cash flow, which need the infusion of
proceeds from asset sales in order to bolster liquidity.
Allegheny is also in danger of defaulting certain of its credit
pacts and needs to extend its $70 million bilateral line of
credit expiring on November 30, 2002.
ALLEGIANCE TELECOM: Sr. Lenders Waive All Financial Covenants
-------------------------------------------------------------
Allegiance Telecom, Inc., (Nasdaq: ALGX) a leading integrated
communications provider, has reached agreement with its senior
bank creditors regarding modifications to its $500 million
senior secured credit facility. Under this agreement,
Allegiance obtained a waiver of all existing financial covenants
through April 30, 2003, and replaced those covenants during this
period with a free cash flow from operations covenant (earnings
before interest, taxes, depreciation and amortization less
capital expenditures)(1) and a total leverage covenant.
Allegiance retains full use of its credit facility other than an
initial paydown of $15 million (which may be increased to $25
million under certain circumstances), which will be applied to
the initial amortization of the facility scheduled to begin in
2004.
Allegiance Telecom and its senior bank creditors are working on
a permanent amendment to the credit facilities which must be in
place prior to the April 30, 2003, waiver expiration. In
concert with the negotiation of this permanent amendment,
Allegiance will be pursuing numerous financial and strategic
alternatives to reduce its total indebtedness, which under the
terms of the amendment must be reduced from the current $1.2
billion level to $660 million by April 30, 2003. This debt
reduction may include the issuance of new equity or equity
derivative securities for cash to retire outstanding debt, the
use of cash to retire outstanding debt or the issuance of equity
or equity derivative securities in exchange for outstanding
debt.
"We are very pleased with this new arrangement," said Royce J.
Holland, chairman and chief executive officer of Allegiance
Telecom. "For the past year, Allegiance has labored under
financial covenants that were no longer appropriate given the
shift in the telecom industry from focusing on rapid growth to
an emphasis on profitability and cash generation. We will have
grown Allegiance's revenue over 45 percent in 2002 while most
other carriers are seeing no growth or declining revenues.
Allegiance Telecom plans to continue taking market share because
our business opportunity is greater than ever, but we and our
senior creditors agree that focusing on free cash flow is a more
appropriate measure of success in the current environment.
Under our revised plan, Allegiance is targeting positive free
cash flow from operations during the second quarter of 2003
while continuing to produce a double digit annual growth rate."
"As we re-orient our business to focus on free cash flow, we
plan to bring our balance sheet in line with the investment
community's current desire for companies with much lower debt
levels," said Tom Lord, Allegiance Telecom executive vice
president of corporate development and chief financial officer.
"Our debt securities, like debt securities of other telecom
companies, are trading at extremely depressed valuations. We
believe that now is the time to de-leverage the company with the
goal of maintaining our position as having one of the most
conservatively financed balance sheets in the industry. While
the new covenant package allows Allegiance to immediately focus
on free cash flow from operations, we are also working on a
permanent comprehensive covenant package and a re-engineering of
our balance sheet."
Allegiance reported that, after giving effect to the potential
$25 million paydown under the amended senior credit facility, it
would have approximately $305 million of cash on hand as of
November 27, 2002.
Allegiance Telecom -- http://www.algx.com-- is a facilities-
based integrated communications provider headquartered in
Dallas, Texas. As the leader in competitive local service for
medium and small businesses, Allegiance offers "One source for
business telecom(TM)" -- a complete package of
telecommunications services, including local, long distance,
international calling, high-speed data transmission and Internet
services. Allegiance serves 36 major metropolitan areas in the
U.S. with its single source provider approach. Allegiance's
common stock is traded on the Nasdaq National Market under the
symbol ALGX.
AMERCO: Secures Standstill to Carry Out Balance Sheet Workout
-------------------------------------------------------------
AMERCO (Nasdaq: UHAL) has reached a 'Standstill' Agreement with
its banks, KBC Bank NV, Lasalle Bank National Association,
Washington Mutual Bank, U.S. Bank National Association, Fleet
National Bank, Wells Fargo Bank, NA, Citicorp USA, Inc., Bank
One, NA, Bank Of America, NA, and JP Morgan Chase Bank.
This agreement grants AMERCO the time necessary to carry out
plans to restructure its balance sheet in order to pay its banks
$205 million under its 3-Year Credit Agreement. During the
standstill period, banks will continue to receive interest on
the outstanding balance and information concerning the progress
of the restructuring.
Commenting on the agreement Joe Shoen, president and CEO of
AMERCO stated, "Receiving support from our lenders is a
significant step forward in our efforts to restructure our
balance sheet. The next step in this process is to conclude a
similar agreement with our bondholders so that we can continue
serious negotiations with prospective lenders."
AMERCO recently reported a 13.7 percent increase in net income
and earnings of $40.6 million on revenue of $562.6 million for
the second quarter of its fiscal year 2003, which ended
September 30, 2002. This compares to a profit of $35.7 million
on revenue of $571.2 million during the second quarter of fiscal
year 2002. Expenses dropped $15 million for the quarter.
AMERCO is the parent company to U-Haul International, Inc.,
Oxford Life Insurance Company, Republic Western Insurance
Company and Amerco Real Estate Company. U-Haul has served the
do-it-yourself household-moving customer for 57 years, U-Haul(R)
trucks and trailers can be rented from more than 15,000
independent dealers and 1,350 company operated moving centers.
U-Haul, the undisputed leader in the truck and trailer rental
industry, is one of the industry's largest operators of self-
storage facilities, the world's largest installer of permanent
trailer hitches and the world's largest Yellow Pages advertiser.
AMERICAN SKIING: Fleet Agrees to Forbear Until Dec. 30
------------------------------------------------------
American Skiing Company (OTC: AESK) said its primary real estate
development subsidiary, American Skiing Company Resort
Properties, Inc., has entered into an agreement with Fleet
National Bank and the other lenders under its $63 million senior
secured credit facility for a 30 day forbearance from the
exercise of lenders' remedies. As previously reported, ASCRP
has been in payment default under its senior secured credit
facility since May 2002. Under the agreement, Fleet and the
other lenders have agreed not to pursue any additional
foreclosure remedies, and to cease publication of foreclosure
notices, during a 30 day forbearance period commencing on
November 22, 2002.
"We are encouraged by this favorable development which provides
additional time to resolve ASCRP's real estate loan defaults,"
said CEO B.J. Fair. "Recent negotiations have been very
productive and we believe that additional progress will be made
during the forbearance period on an agreement to resolve the
pending payment default in a manner that is beneficial to both
parties."
Management stated that the restructuring efforts with Fleet and
the other lenders are aimed toward a restructuring of the senior
credit facility at ASCRP which will establish a new special
purpose entity to hold ASCRP's real estate development assets.
The equity in the new special purpose entity is expected to be
held by a combination of Fleet, the other lenders under the
facility, and the Company. On October 2, 2002, the Company
reported that its hotel development subsidiary, Grand Summit
Resort Properties, Inc., had signed an agreement with Textron
Financial Corporation to resolve loan defaults under its
construction loan facility. GSRP is a wholly-owned subsidiary
of ASCRP.
The ASCRP senior credit facility remains in default pending
completion of negotiations. No assurance can be made that
negotiations will be successfully completed, or the terms under
which the payment defaults pending under the ASCRP senior
facility may be resolved, if at all. In addition, regardless of
the outcome of the proposed restructuring, the Company may lose
control of assets pledged as collateral under the ASCRP senior
secured credit facility. Until the Company makes a public
announcement regarding resolution of the defaults we refer
investors to disclosures made in the Company's 10-Q filing dated
June 12, 2002, on file with the Securities and Exchange
Commission.
Headquartered in Park City, Utah, American Skiing Company is one
of the largest operators of alpine ski, snowboard and golf
resorts in the United States. Its resorts include Killington
and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in
Maine; Attitash Bear Peak in New Hampshire; Steamboat in
Colorado; and The Canyons in Utah. More information is
available on the Company's Web site, http://www.peaks.com
AMSCAN HOLDINGS: Inks Pact to Refinance Senior Debt Facilities
--------------------------------------------------------------
Amscan Holdings, Inc. -- whose corporate credit rating is
maintained by Standard & Poor's at B+ -- has signed commitment
letters with Goldman Sachs Credit Partners L.P., which will
enable it to refinance and significantly extend the maturity of
its senior debt facilities.
Amscan had filed a registration statement with the Securities
and Exchange Commission on June 13, 2002, relating to a proposed
primary and secondary offering of shares of its common stock.
The Company has decided not to pursue a public offering of
shares of common stock at this time given valuations currently
available in the equity markets.
Commenting upon the decision, Michael A. Correale, the Company's
Chief Financial Officer stated, "This refinancing will improve
the maturity profile of our current capital structure while
preserving our flexibility to pursue a public equity offering in
due course."
Amscan designs, manufactures and distributes decorative party
goods, including paper and plastic tableware, accessories and
novelties. Amscan also designs and distributes home, baby,
wedding and other gift items.
ANC RENTAL: Court Okays Dickstein Shapiro as Special Counsel
------------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates obtained
permission from the Court to employ the law firm of Dickstein
Shapiro Morin & Oshinsky LLP as their special counsel for
insurance coverage matters, nunc pro tunc to June 17, 2002.
The Debtors expect Dickstein to:
A. Investigate and analyze the Debtors' potentially available
insurance assets,
B. Render advice to the Debtors concerning their pursuit of
potentially available insurance assets,
C. Review and analyze insurance-related applications,
orders, operating reports, schedules and other materials
filed and to be filed by the Debtors or other interested
parties,
D. Represent the Debtors at hearings to be held before this
Court on insurance coverage matters,
E. Assist in litigation concerning insurance coverage,
F. Assist generally with respect to insurance coverage matters
during this proceeding and in the formulation of the
Reorganization Plan by providing services that are in the
Debtors' best interests, and
G. Perform all other appropriate legal services related to
its representation of the Debtors.
Dickstein is to be paid based upon the hourly rates of its
professionals assigned to the Debtors' cases. The current rates
of Dickstein's professionals are:
Partners $345 - 550
Associates 180 - 295
Para-professionals 90 - 150
In addition, Dickstein will be reimbursed for out-of-pocket
expenses including long distance telephone calls, facsimiles,
photocopies, postage and package delivery charges, messengers,
court fees, transcript fees, mileage and travel expenses and
computer-assisted legal research. (ANC Rental Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ARIS CANADA: Auditors Doubt Ability to Continue Operations
----------------------------------------------------------
During the third quarter of 2002, refractive procedure volumes
for Aris Canada Ltd., totaled 1,892, a 33% decrease over the
comparable period in 2001. Third quarter volumes from North
American operations amounted to 1,892, a 24% decrease from the
prior year. Other non-North American operations generated
volumes of nil due to the disposal of substantially all of the
Corporation's interest in its Bangkok, Thailand center on March
26, 2002. In the prior year third quarter, procedure volumes
from non-North American operations were 330.
Procedure volumes for the nine month period ended September 30,
2002 were 7,079 compared to 10,218 from the same period in 2001.
North American procedure volumes were 6,781 for the period ended
September 30, 2002 compared to 9,242 from the same period in
2001. Procedure volumes from centers outside North America were
298 and 976 for the respective nine month periods ended
September 30, 2002 and 2001.
Consolidated Financial Results
Consolidated revenues for the third quarter of 2002 were $1.4
million. Consolidated revenues for the third quarter of 2002
were $2.5 million. Revenues from Canadian operations were $1.4
million as compared to $1.7 million for the prior year third
quarter. Operations based in the United States generated
revenues of $69,000 in the third quarter, versus $751,000 in the
third quarter of 2001.
For the nine month period ended September 30, 2002, consolidated
revenues were $5.3 million, including $4.8 million from Canadian
operations and $512,000 from United States operations.
Comparative figures for the same period in 2001 were
consolidated revenues of $9.1 million, Canadian revenues of $5.3
million and United States revenues of $3.8 million.
The net loss of $804,000 for the three month period ended
September 30, 2002 was comparable to the $763,000 net loss for
the prior year's third quarter.
The net loss of $1.9 million for the nine month period ended
September 30, 2002 was an improvement over the $2.3 million net
loss for the prior year's same period. Excluding the
restructuring charge of $785,600 recorded in the first quarter
of 2001, the loss for the period ended September 30, 2001 was
$1.5 million.
The loss before interest, taxes and depreciation and
amortization was $39,000 for the third quarter of 2002 as
compared to a loss of $168,000 for the third quarter of 2001.
Depreciation of $751,000 in the third quarter of 2002 included
additional depreciation required to record the Corporation's
capital assets at estimated net realizable values.
Consolidated cash as at September 30, 2002, was $75,000 as
compared to $18,000 at June 30, 2002, and $229,000 as at
December 31, 2001. During the third quarter of 2002, major
sources of cash included proceeds on disposal of capital assets
of $120,000 and loans from the Corporation's majority
shareholder, Aris Vision Inc., of $106,000.
Financial Restructuring
During the second quarter, the Corporation became in arrears in
payments in respect of certain of its obligations under capital
leases. Given the existence of cross-violation debt covenants,
the Corporation's obligations under capital leases and long-term
debt have been classified as current liabilities.
The Corporation is working with its creditors to resolve these
arrears, and the future success of the Corporation depends on
the continued support of these and other creditors. Certain of
the Corporation's creditors are seeking to collect their debts.
The Corporation is pursuing all available alternatives in order
to meet the demands of its secured and unsecured creditors,
including the sale of its remaining refractive surgery clinics
in Canada. In addition, the Corporation is exploring possible
business combination, recapitalization or similar transactions
in order to maximize shareholder value. The Corporation's
ability to continue as a going concern is subject to the
continued cooperation of the Corporation's secured creditor, the
ability to meet the demands of its unsecured creditors and the
securing of acceptable long term financing, or, alternatively,
the entering into of a recapitilization, business combination or
similar transaction. There is no guarantee that the Corporation
can address all of these risks and uncertainties. If the
Corporation is unable to address any or all of these risks, it
may be forced to restructure or liquidate its operations
pursuant to applicable creditor protection legislation.
Effective September 1, 2002, the Corporation sold its Winnipeg,
Manitoba center. This sale removed approximately $478,000 of
obligations under capital leases from the Corporation's balance
sheet.
On July 30, 2002, the shareholders of the Corporation approved
the sale of the assets of the Corporation's Alberta centers to I
Care Services Ltd. This transaction was finalized October 15,
2002. The proceeds to be received are approximately equal to the
net book value of the assets being sold. It is anticipated that
the net proceeds will be paid to the Corporation's secured
creditors in partial satisfaction of the Corporation's
outstanding indebtedness.
In conjunction with the completion of this transaction, the
Corporation changed its name to Aris Canada Ltd., effective
October 16, 2002.
The complete financial results for the third quarter ending
September 30, 2002 are available at http://www.sedar.com
ASIA GLOBAL CROSSING: Honoring Prepetition Employee Obligations
---------------------------------------------------------------
Asia Global Crossing Ltd., and its debtor-affiliates sought and
obtained Court authorization to pay, in their sole discretion,
payroll obligations, commissions obligations, the 401(k) plan
contributions, benefit obligations, PTO obligations, relocation
obligations, reimbursement obligations, payroll administration
obligations and independent contractor obligations. The AGX
Debtors are also authorized by the Court to continue to honor
its practices, programs and policies with respect to its
Employees, including former employees entitled to benefits,
including payment of Expatriate Tax Expenses.
David M. Friedman, Esq., at Kasowitz Benson Torres & Friedman
LLP, in New York, relates that in the ordinary course of its
business, the AGX Debtors incur payroll obligations to its
employees in the United States and Asia for the performance of
services. As of the Petition Date, the AGX Debtors employ 24
full-time employees, 85% of which are salaried employees, while
the rest are paid an hourly basis. The AGX Debtors have
incurred certain costs and obligations with respect to the
Employees that remain unpaid as of the Petition Date because
they accrued prior to the Petition Date. Even though they arose
prior to the Petition Date, these obligations will only become
due and payable in the ordinary course of the AGX Debtors'
business on and after the Petition Date.
The AGX Debtors' employee obligations include:
A. Wages, Salaries and Compensation Expenses: Prior to the
Petition Date, the Debtors paid Employees on either an
hourly wage or salaried basis. The Debtors' average
monthly gross payroll for its Employees is $390,000. The
Debtors expect that little will be owed for payroll
obligations for services rendered by the Employees
prepetition.
Employees in the Debtors' sales support and sales
engineering divisions, are entitled to receive commissions.
The Debtors estimate that as of the Petition Date, $15,000
in commissions will be owed for services rendered by the
Employees prepetition. The Debtors also estimate that they
will continue to incur $30,000 of Commission Obligations
per quarter after the Petition Date.
The Debtors also are required by law to withhold from an
Employee's wages amounts related to federal, state and
local income taxes, and Social Security and Medicare taxes
and remit these to the appropriate tax authorities. The
Debtors estimate that Trust Fund Taxes will be no greater
than $90,000 per payroll period in the year following the
Petition Date.
The Debtors also are required to match from its own funds
the Social Security and Medicare taxes, and pay additional
amounts for state and federal unemployment insurance and to
remit the Payroll Taxes to the Taxing Authorities. On
November 13, the Debtors withheld $464,000 in Trust Fund
Taxes and owed $24,000 in Employer Payroll Taxes, which
represents the Debtors' total estimated Payroll Taxes for
the period November 1, 2002 through November 15, 2002. The
Debtors estimate that as of the Petition Date, little, if
any, additional amounts will be owed with respect to
Payroll Taxes for the prepetition period.
Under the 2002 Incentive Program, 60% of the bonuses to be
paid to employees is to be based on the performance of the
Debtors during the second half of 2002. The maximum
payment which could be made under the 2002 Incentive
Program is $1,200,000;
B. 401(k) Plan Obligations: The Debtors withhold from the
wages of participating Employees contributions toward
401(k) savings plans. The Debtors estimate that $5,200 of
accrued and unremitted 401(k) Plan contributions have been
collected from participating Employees but remain
unremitted as of the Petition Date. The Debtors also match
Employee contributions to the 401(k) Plans dollar for
dollar. Accordingly, the Debtors estimate that, as of the
Petition Date, its obligations for the immediately
preceding payroll periods with respect to accrued and
unremitted contributions for the 401(k) Plans is $11,000;
C. Health Benefits: The Debtors sponsor several benefit and
insurance plans for the Employees, including medical,
dental, vision care, long-term disability and accidental
death and dismemberment plans. The Debtors estimate that
its annual expenditures under the Benefit Plans for
Employees total $250,000. The Debtors estimate that, as of
the Petition Date, the obligations that have accrued but
have not been paid under the Benefit Plans is $5,000;
D. Paid Time Off: Under the Debtors' paid time-off policy,
eligible Employees accrue paid time off, including
vacation, personal or sick time, on a monthly basis, based
on the Employee's status as a full or part-time Employee,
years of service with the Debtors, and level within the
organization. As of the Petition Date, there is $210,000
of accrued but unpaid PTO Time outstanding;
E. Relocation Benefits: As an international enterprise, the
Debtors often request Employees to relocate on a temporary
or permanent basis to other offices in accordance with the
requirements of the Debtors' businesses. Employees,
including new hires, who relocate at the Debtors' request
are reimbursed for various expenses, including, rental
lease payments, moving and transportation costs, dependent
education assistance and annual visit privileges. Prior to
the Petition Date, the Debtors paid $500 per month with
respect to the Relocation Expenses. The Debtors estimate
that as of the Petition Date, there will be no amounts
outstanding with respect to prepetition Relocation
Expenses.
With respect to Employees who work abroad for longer than a
year, the Debtors have a tax equalization policy pursuant
to which the Debtors pay the tax liability for these
Employees to the extent that the tax liability of these
Employees exceed the federal, state and Social Security
taxes that would have been paid by these Employees if they
were employed only in the United States. The Debtors
estimate that on the Petition Date, there will be $500,000
outstanding with respect to the Expatriate Tax Expenses for
2002 with respect to five former employees. The Debtors
further estimate that Expatriate Tax Expenses for the 2003
calendar year is also $500,000;
F. Business Expense Reimbursement: The Debtors customarily
reimburse Employees who incur business expenses in the
ordinary course of performing their duties on behalf of the
Debtors. The Debtors estimate that as of the Petition Date
the Reimbursement Obligations to be paid to employees is
$60,000;
G. Administration of Payroll: As is customary in the case of
most large companies, in the ordinary course of their
businesses the Debtors utilize the services of Automatic
Data Processing, Inc. to facilitate the administration of
their payroll. These services average $1,200 per month,
which should be current as of the Petition Date;
H. Independent Contractor: The Debtors also utilize the
services of ten independent contractors who provide
necessary services relating to the operation of the
Debtors' businesses. Payment to each of the Independent
Contractors varies according to the terms of each
Independent Contractor's contract with the Debtors, but
average $125,000 per month. The Debtors estimate that its
total accrued and unpaid prepetition obligations to the
Independent Contractors will be zero on the Petition Date;
I. Fees and Expenses Payable to Members of the Board of
Directors: The Debtors currently has nine members on its
Board of Directors. The Debtors pay $2,500 in fees to each
director for each meeting the Board and $1,500 for a
special committee of the Board, attended by these
directors. As of the Petition Date, no amounts are due to
members of the Board of Directors for attendance at recent
board meetings;
J. Employee Retention Bonus Plan: In connection with their
restructuring, the Debtors also determined that it was
necessary to adopt a retention incentive plan in order to
retain talented Employees whose services and experience
are vital to sustaining the Debtors' businesses,
formulating their restructuring, and consummating the plan
of reorganization when filed. Accordingly, on May 1, 2002,
the Debtors established an irrevocable trust holding
$7,100,000 of incentive compensation, which became payable
in two installments on August 31, 2002 and November 12,
2002 based on the triggering events contained within the
Retention Plan. On August 31, 2002, 73 eligible employees
were paid $3,400,000 under the Retention Plan and on
November 12, 2002, 57 eligible employees were paid
$2,800,000 under the Retention Plan. These employees are
legally bound to remain with the Debtors through
February 15, 2003. Advance payments totaling $500,000 were
made to 12 employees who received payments on August 31,
2002 but were terminated prior to the November 12, 2002
payment date; and
K. Severance Program: Under the Debtors' current severance
plan, employees of the Debtors who are not participants in
the Retention Program who are terminated involuntarily
under certain circumstances are entitled to severance pay
and benefits based on the eligible employee's grade level
and length of service with the Debtors, plus payment of
outstanding paid time off accrued and unused by the
employee. Employees of the Debtors who are participants in
the Retention Program who are terminated involuntarily are
entitled to severance pay equal to the employee's base
salary for three months plus payment of outstanding paid
time off accrued and unused by the employee. Additionally,
if the Debtors request that a Participating Employee
provide special transition assistance after their date of
termination, these Participating Employee will be entitled
to enhanced severance benefits. The Debtors anticipate
that the total cost of the Severance Program is $600,000.
The Debtors believe that all of its Prepetition Employee
Obligations constitute priority claims and that payment of these
amounts at this time is necessary and appropriate. The Debtors
submit that to the extent any Employee is owed in excess of
$4,650 on account of Prepetition Employee Obligations, payment
of this amount is necessary and appropriate and is authorized
under Section 105(a) of the Bankruptcy Code pursuant to the
"necessity of payment" doctrine, which "recognizes the existence
of the judicial power to authorize a debtor in a reorganization
case to pay prepetition claims where such payment is essential
to the continued operation of the debtor."
Mr. Friedman contends that any delay in paying Prepetition
Employee Obligations will adversely impact the Debtors'
relationships with their Employees and will irreparably impair
the Employees' morale, dedication, confidence, and cooperation.
The Employees' support for the Debtors' reorganization efforts
is critical to the success of those efforts. At this early
stage, the Debtors simply cannot risk the substantial damage to
their businesses that would inevitably attend any decline in its
Employees' morale attributable to the Debtors' failure to pay
wages, salaries, benefits and other similar items.
Mr. Friedman is also concerned that the Employees will suffer
undue hardship and, in many instances, serious financial
difficulties, as the amounts are needed to enable certain of the
Employees to meet their own personal financial obligations.
Without the requested relief, the stability of the Debtors will
be undermined, perhaps irreparably, by the possibility that
otherwise loyal Employees will seek other employment
alternatives.
Mr. Friedman assures the Court that the Debtors do not seek to
alter their compensation, vacation or other benefit policies at
this time. This relief is intended only to permit the Debtors,
in their discretion, to make payments consistent with those
policies to the extent that payment would be inconsistent with
the Bankruptcy Code, and to permit the Debtors, in their
discretion, to continue to honor their practices, programs and
policies with respect to their Employees, as these practices,
programs and policies were in effect as of the Petition Date.
The Court also authorized and directs banks and other financial
institutions to receive process and any and all checks drawn on
the Debtors' payroll and general disbursement accounts and
automatic payroll transfers to the extent that these checks or
transfer relate to any of the Debtors' employee obligations.
As a result of the filing of the Debtors' chapter 11 cases, and
in the absence of an order of the Court providing otherwise the
Debtors' checks, wire transfers and direct deposit transfers in
respect of the Prepetition Employee Obligations maybe dishonored
or rejected by the Disbursement Banks. Mr. Friedman tells the
Court that each of the checks or transfers that will be drawn on
the Debtors' payroll and general disbursement accounts and can
be readily identified by the Disbursement Banks as relating
directly to payment of the Prepetition Employee Obligations.
Accordingly, the Debtors believe that the Disbursement Banks
will not inadvertently honor prepetition checks and transfers,
but will honor only those for Prepetition Employee Obligations.
(Global Crossing Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
AT&T CANADA: Appoints John A. MacDonald as President and COO
------------------------------------------------------------
AT&T Canada, Canada's largest competitor to the incumbent
telecom companies, announced that John A. MacDonald is joining
the company as its new President and Chief Operating Officer,
effective today. Mr. MacDonald's appointment is consistent with
AT&T Canada's commitment to a strong and competitive future as a
fully independent Canadian telecom company and reunites him with
AT&T Canada CEO John McLennan. Together, the two executives led
a highly successful strategic repositioning of Bell Canada in
the mid-1990s.
Mr. MacDonald succeeds Harry Truderung in his role as company
President and COO. Mr. Truderung played an important role in
helping AT&T Canada significantly improve its performance over
the past year despite the challenging business environment.
"John MacDonald's appointment is a clear statement to our
employees, our customers and our competitors that we are gearing
up to emerge as a strong, independent and highly competitive
force in the Canadian telecom marketplace," said Mr. McLennan.
"John is a charismatic leader and a talented manager who is
passionate about customer service and brings unmatched
technology expertise and knowledge of the Canadian telecom
industry. He has a proven track record in terms of innovation
and the ability to drive profitable business growth. With John
joining our already highly experienced team, we will be moving
forward with our plan to emerge as a financially stronger, more
competitive company with a proven and highly committed
management team."
Mr. McLennan added, "On behalf of the board and the senior
management team, I want to thank Harry for his valuable
contributions to the company over the past two and a half years.
We wish him the best in his future endeavors."
Mr. MacDonald said, "I believe this is the right time to get re-
engaged in telecom, and I believe AT&T Canada has a fabulous
opportunity to do great things as a fully independent Canadian
company. With an A-list of Canadian business customers, an
outstanding national sales force, a talented management team, no
long-term debt following the contemplated restructuring, a sound
technology platform and enhanced strategic flexibility, AT&T
Canada has a strong foundation on which to grow this business,
create value for all concerned, and cement our position as a
leading telecom services provider to Canada's leading
businesses."
Mr. MacDonald added, "I am excited to partner again with John
McLennan and the entire management team, and I am eager to
engage our customers and begin establishing new supplier
relationships that further strengthen our competitive position
and the value we can bring to our customers."
Mr. Truderung said, "I am very proud of what we've achieved at
AT&T Canada, especially over the past year as we have worked
through a strategic refocusing of our business. Having helped
secure a clear path to the future, I have every confidence in
the future of the company and I have decided that now is the
right time for me to move on to other pursuits. I can't think of
a better person to help capitalize on the many opportunities
ahead than John MacDonald. I wish him and the entire team the
best."
Mr. MacDonald began his career in 1977 at NBTel, the major
supplier of telecommunications services in New Brunswick, rising
to the post of President and Chief Executive Officer in 1994.
Mr. MacDonald joined Bell Canada as Executive Vice President,
Business Development, and Chief Technology Officer and later
became President and COO of Bell Canada in 1998. Prior to
joining AT&T Canada, Mr. MacDonald served as President and Chief
Executive Officer of Leitch Technology Corp., a leading provider
of high technology products and solutions to the global
broadcasting industry.
Mr. MacDonald is presently a member of the Board of Directors of
Leitch Technology Corp., Rogers Cable, UBS (Unique Broadband
Systems) and Versatel Networks. He is also a member of the Cape
Breton Development Growth Fund, on the advisory board of Galazar
Networks and a member of the Federal Government's Advisory
Council on Science and Technology. Previously, Mr. MacDonald
chaired the National Selection Committee for the Federal
Government's Smart Communities Program and served on the Federal
Government's Information Highway Advisory Council.
AT&T Canada is the country's largest national competitive
broadband business services provider and competitive local
exchange carrier, and a leader in Internet and E-Business
Solutions. With over 18,700 route kilometers of local and long
haul broadband fiber optic network, world class data, Internet,
web hosting and e-business enabling capabilities, AT&T Canada
provides a full range of integrated communications products and
services to help Canadian businesses communicate locally,
nationally and globally. Visit AT&T Canada's Web site,
http://www.attcanada.comfor more information about the company.
AT&T Canada Inc.'s 12% bonds due 2007 (ATTC07CAR2), DebtTraders
reports, are trading at about 15 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ATTC07CAR2
for real-time bond pricing.
BILLSERV INC: Fails to Regain Compliance with Nasdaq Guidelines
---------------------------------------------------------------
Billserv, Inc., (Nasdaq: BLLS) has received a Nasdaq Staff
Determination letter on November 20, 2002, indicating that the
Company has not regained compliance with the minimum bid price
per share requirement under Marketplace Rule 4450(e)(2), and
that the Company does not meet the minimum stockholders' equity
requirement under Marketplace Rule 4450(a)(3) for continued
listing on The Nasdaq National Market.
The Company has requested a hearing before the Nasdaq Listing
Qualifications Panel to review the Nasdaq Staff's Determination
to delist the Company's common stock. Under Nasdaq Marketplace
Rules, the hearing request will stay the delisting of the
Company's common stock pending the Panel's decision. The
hearing is expected to be scheduled within 45 days of the filing
of the hearing request. The Company will be presenting a plan
to Nasdaq for achieving the requirements for continued listing,
but there can be no assurance the Panel will grant the Company's
request for continued listing.
Billserv, Inc., the leading electronic bill presentment and
payment Outsourced Solution Provider, delivers comprehensive,
cost effective solutions for presenting and servicing consumer
bills for secure and reliable payment via the Internet. As part
of an integrated EBPP solution, the Company also provides
market-leading Internet customer care and direct marketing
applications. Billserv consolidates customer-billing
information and then securely delivers it to the client's own
Billserv-hosted payment site, consumers' e-mail Inbox and over
450 distribution end-points. The Company has relationships with
all major EBPP aggregators, giving companies and customers the
widest array of Web sites from which to deliver, view, pay and
manage bills. For additional information, visit
http://www.billserv.com
* * *
Going Concern Uncertainty
In its Form 10-Q filed on November 14, 2002, the Company
reported:
"Due to a material shortfall from anticipated revenues and the
inability to access its funds held as collateral to guarantee
certain executive margin loans, the Company believes that its
current available cash and cash equivalents and investment
balances along with anticipated revenues may be insufficient to
meet its anticipated cash needs for the foreseeable future.
Accordingly, the Company reduced its workforce by 36 employees
in November 2002 and is currently aggressively pursuing
strategic alternatives, including investment in or sale of the
Company. The sale of additional equity or convertible debt
securities would result in additional dilution to the Company's
stockholders, and debt financing, if available, may involve
restrictive covenants which could restrict operations or
finances. There can be no assurance that financing will be
available in amounts or on terms acceptable to the Company, if
at all. If the Company cannot raise funds, on acceptable terms,
or achieve positive cash flow, it may not be able to continue to
exist, conduct operations, grow market share, take advantage of
future opportunities or respond to competitive pressures or
unanticipated requirements, any of which would negatively impact
its business, operating results and financial condition."
BRIAZZ: Nasdaq Grants Hearing to Appeal Delisting Determination
---------------------------------------------------------------
Briazz, Inc., (Nasdaq:BRZZ) has been granted a written hearing
regarding the Company's Nasdaq National Market listing.
Nasdaq has notified the Company that a written hearing has been
scheduled for Dec. 19, 2002, to review the Staff Determination
that the Company fails to comply with Marketplace Rule
4450(a)(2), which requires that an issuer maintain a minimum
market value of publicly held shares of $5,000,000 to continue
listing on the Nasdaq National Market. Nasdaq also notified the
Company on November 21, 2002 that it fails to comply with
Marketplace Rules 4450(a)(3) and 4450(b)(1), which require an
issuer to maintain a minimum stockholders' equity of $10,000,000
or a market capitalization of $50 million or total assets and
total revenue of $50 million each for the most recently
completed fiscal year or two of the last three most recently
completed fiscal years, and Marketplace Rule 4450(a)(5), which
requires an issuer to maintain a minimum bid price of $1.00 per
share. Nasdaq has recommended that the Company address these
issues at the hearing. The Company will continue to trade on the
Nasdaq National Market under the symbol BRZZ pending the outcome
of these proceedings. There can be no assurance that the Company
will be able to regain compliance with Nasdaq's continued
listing requirements or that Nasdaq will grant the Company's
request for continued listing on the National Market.
Founded in Seattle, Wash. in 1995, Briazz, Inc., prepares and
sells high quality, branded lunch and breakfast foods for the
"on-the-go" consumer. Briazz began operations in Seattle, and
opened new markets in San Francisco in 1996, Chicago in 1997 and
Los Angeles in 1998. The company currently operates 46 cafes
across these metropolitan regions and sells its products
primarily through its company-operated cafes, through delivery
of box lunches and catered platters directly to corporate
customers and through selected wholesale accounts.
At September 29, 2002, the Company's balance sheet shows a
working capital deficiency of about $2 million.
BRIDGE: Peltz Gets Court Order to Close 15 Bankruptcy Cases
-----------------------------------------------------------
Scott P. Peltz, as Bridge Information Systems, Inc.'s Chapter 11
Plan Administrator, sought and obtained a Court order closing
these 15 cases:
-- Bridge Commodity Research Bureau, Inc., now known as BCRB
Administration, Inc.;
-- Bridge Data Company, now known as BDC Administration, Inc.;
-- Bridge Financial AEA, Inc., now known as BFAEA
Administration, Inc.;
-- Bridge Holdings (U.K.), Inc., now known as BHUK
Administration, Inc.;
-- Bridge Information Systems International, Inc., now known
as BIS International Administration, Inc.;
-- Bridge International Holdings, Inc., now known as BIH
Administration, Inc.;
-- Bridge Investments, Ltd., now known as BI Administration,
Inc.;
-- Bridge News International, Inc., now known as BNI
Administration, Inc.;
-- Bridge Trading Technologies, Inc., now known as BTT
Administration, Inc.;
-- Bridge Transaction Services, Inc., now known as BTS
Administration, Inc.;
-- Bridge Ventures, Inc., now known as BV Administration,
Inc.;
-- BTS Securities, Inc., now known as BTSS Administration,
Inc.;
-- BTT Investments, Inc., now known as BTTI Administration,
Inc.;
-- EJV Brokerage, Inc.; and
-- Wall Street on Demand, Inc., now known as WSOD
Administration, Inc.
Gregory D. Willard, Esq., at Bryan Cave LLP, in St. Louis,
Missouri, notes that with the substantial consummation of the
Plan, it is only proper to close the subsidiary cases that have
been consolidated with other debtor entities.
Pursuant to the Plan, the Consolidated Bridge Subsidiary Debtors
have been consolidated into Bridge Information Systems America,
Inc.
These Chapter 11 cases will remain open:
-- Bridge Information Systems, Inc., now known as BIS
Administration, Inc.;
-- Bridge Information Systems America, now known as BIS
America Administration, Inc.;
-- Telerate Financial Information Services, Inc., now known
as TFIS Administration, Inc.;
-- Telerate Holdings, Inc., now known as TLR Holdings
Administration, Inc.;
-- Telerate, Inc., now known as TLR Administration, Inc.;
-- Telerate International, Inc., now known as TI
Administration, Inc.; and
-- Telerate Puerto Rico, Inc., now known as TPR
Administration, Inc.
(Bridge Bankruptcy News, Issue No. 37; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BUDGET GROUP: Wins Nod to Purchase Liability Insurance Program
--------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates obtained permission
from the Court to purchase of an insurance program covering
certain workers' compensation and employer's liability, stop gap
liability, automobile liability, garage liability and garage-
keepers legal liability, from Continental Casualty Company.
The basic terms of the Insurance Program are:
A. The primary automobile liability and garage policies will be
issued with a policy period of October 1, 2002 to March 1,
2003. All other policies will be issued with a policy period
of October 1, 2002 to December 31, 2002. Additional
agreements relating to the Policies and the Insurance Program
may be executed by the Debtors and Continental Casualty;
B. The Debtors have agreed that the coverage under the Insurance
Program will terminate effective December 31, 2002 12:01 a.m.
EST. In no event will any coverage under any of the Policies
extend beyond the Termination Date. However, the Debtors and
Continental Casualty may mutually agree on an earlier
termination date for the Policies;
C. Pursuant to the Finance Agreement between the Debtors and
Continental Casualty effective October 1, 2002, losses
incurred under the Policies are subject either to a
retrospective/participating rating plan, a
garage-keepers/garage liability deductible or automobile
liability deductible or a workers' compensation deductible.
The Debtors are obligated to pay Continental Casualty
premiums and reimburse Continental Casualty for all losses
and all paid Allocated Loss Adjustment Expenses as defined in
the Policies, according to the terms and conditions of the
Policies. The Debtors are also obligated to pay Continental
Casualty a $1,423,000 premium; and
D. The Finance Agreement further provides that, as of the
inception date of the Policies, the Debtors will establish a
$12,000,000 trust in order to secure the Debtors' obligations
to Continental Casualty with respect to the Insurance
Program. In that regard, the Debtors, Continental Casualty
and Wells Fargo Bank NA, as the Trustee, have entered into
the Collateral Trust Agreement, dated October 1, 2002,
pursuant to which the Debtors deposited or will deposit the
Collateral with the Trustee. Under the Collateral Trust
Agreement, Continental Casualty has the right to withdraw the
Collateral from the trust account, after notifying the
Trustee in writing, on default in the Debtors' performance
under the Collateral Trust Agreement or the Debtors' other
obligations under the Insurance Program.
The premium paid by the Debtors for Insurance Program is
approximately $1,420,000. (Budget Group Bankruptcy News, Issue
No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CATALYST INT'L: Fails to Satisfy Nasdaq Listing Requirements
------------------------------------------------------------
Catalyst International, Inc. (Nasdaq: CLYS), a global provider
of supply chain execution solutions, has received notice of a
NASDAQ Staff Determination dated November 22, 2002, indicating
that the common stock of the company is subject to delisting
from The NASDAQ National Market because the company does not
meet the minimum stockholders' equity requirement for continued
listing, as set forth in NASDAQ Marketplace Rule 4450(a)(3).
Effective November 1, 2002, NASDAQ Marketplace Rule 4450(a)(3)
was amended to require a minimum $10.0 million stockholders'
equity. The company intends to file a request for a hearing
before a NASDAQ Listing Qualifications Panel to review the
NASDAQ Staff Determination. Under NASDAQ rules, pending a
decision by the Panel, the common stock of the company 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. If the Panel does not grant the company's
request, the company's common stock will be delisted from The
NASDAQ National Market.
Catalyst International, Inc., helps companies integrate their
supply chains to optimize their business performance. For more
than 20 years, the company has enabled global Fortune 500
customers to greatly minimize the risks of installing,
integrating and operating WMS software in complex, high-volume
warehouse facilities. Catalyst software offers the broadest
functionality in the industry and is easy to install, modify,
upgrade and maintain. Its broad array of services includes
distribution strategy consulting, pre- and post-implementation
audits, a 24/7 customer services center and facilities
management.
Catalyst has provided successful SCE solutions in 10 countries
for more than 100 customers, including Panasonic, Reebok
International, The Home Depot and Subaru. It is headquartered
in Milwaukee, WI and has offices or representatives in the UK,
Italy, Mexico and South America. For more information, visit
http://www.catalystwms.com
Catalyst International's September 30, 2002 balance sheet shows
that total current liabilities exceed total current assets by
about $1.7 million.
CITICORP MORTGAGE: Fitch Assigns Low-B Ratings on 2 Note Classes
----------------------------------------------------------------
Citicorp Mortgage Securities, Inc.'s REMIC Pass-Through
Certificates, Series 2002-11 class IA-1 through IA-46, IIA-1,
IIIA-1 and A-PO ($514.2 million) are rated 'AAA' by Fitch
Ratings. In addition, class B-1 ($5.3 million) is rated 'AA',
class B-2 ($2.4 million) is rated 'A', class B-3 ($1.3 million)
is rated 'BBB', class B-4 ($1.1 million) is rated 'BB' and class
B-5 ($0.5 million) is rated 'B'.
The 'AAA' rating on the senior certificates reflects the 2.15%
subordination provided by the 1.00% Class B-1, the 0.45% Class
B-2, the 0.25% Class B-3, the 0.20% privately offered Class B-4,
the 0.10% privately offered Class B-5, and the 0.15% privately
offered Class B-6 (which is not rated by Fitch). Classes B-1, B-
2, B-3, B-4 and B-5 are rated 'AA', 'A', 'BBB', 'BB' and 'B'
based on their respective subordination.
In addition, the ratings reflect the quality of the mortgage
collateral, strength of the legal and financial structures, and
CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1-' by
Fitch) as primary servicer.
The mortgage loans have been divided into three pools of
mortgage loans. Pool I, with an unpaid aggregate principal
balance of $300,104,022 consists of 669 recently originated, 20-
30 year fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (31.77%)
and New York (18.31%). The weighted average original loan to
value ratio of the mortgage loans is 64.74%. Condo properties
account for 3.43% of the total pool and co-ops account for
5.06%. Cash-out refinance loans represent 12.48% of the pool
while investor properties represent 0.31%. The average balance
of the mortgage loans in the pool is approximately $448,586. The
weighted average coupon of the loans is 6.659% and the weighted
average remaining term is 355 months.
Pool II, with an unpaid aggregate principal balance of
$102,025,752 consists of 276 recently originated, 10-15 year
fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (33.63%)
and New York (12.19%). The weighted average original loan to
value ratio of the mortgage loans is approximately 56.51%. Condo
properties account for 4.43% of the total pool, co-ops account
for 3.09%, while cash-out refinance loans represent 13.24% of
the pool. The average balance of the mortgage loans is
approximately $452,992. The weighted average coupon of the loans
is 6.219% and the weighted average remaining term is 176 months.
Pool III, with an unpaid aggregate principal balance of
$100,346,192 consists of 230 recently originated, 20-30 year
fixed-rate relocation mortgage loans secured by one- to four-
family residential properties located primarily in California
(16.57%) and New Jersey (13.53%). The weighted average original
loan to value ratio of the mortgage loans is approximately
73.78%. Condo properties account for 4.93% of the total pool and
co-ops account for 1.58%. The average balance of the mortgage
loans is approximately $436,288. The weighted average coupon of
the loans is 6.269% and the weighted average remaining term is
354 months.
The mortgage loans were originated or acquired by CMI and in
turn sold to CMSI. A special purpose corporation, CMSI,
deposited the loans into the trust, which then issued the
certificates. The Bank of New York will serve as trustee. For
federal income tax purposes, a real estate mortgage investment
conduit election will be made with respect to the trust fund.
CLICKACTION INC: Fails to Regain Compliance with Nasdaq Criteria
----------------------------------------------------------------
ClickAction Inc. (Nasdaq: CLAC), a leading provider of email
marketing solutions, received a letter from The Nasdaq Stock
Market on November 21, 2002, indicating that ClickAction has not
regained compliance with the $1.00 minimum bid price per share
requirement for continued listing set forth in Marketplace Rule
4310(C)(8)(D). Nasdaq further indicated that ClickAction does
not meet the initial or continued listing requirements of The
Nasdaq SmallCap Market under Marketplace Rules 4310(C)(2)(A) and
(B).
Nasdaq stated in its letter that ClickAction's common stock is,
therefore, subject to delisting from The Nasdaq SmallCap Market
at the opening of business on November 29, 2002. As ClickAction
believes that its acquisition by infoUSA Inc., will close on or
about December 3, 2002, ClickAction does not intend to appeal
the delisting decision. To date, ClickAction has received
stockholder proxies sufficient to approve the merger with a
subsidiary of infoUSA, although the closing of the merger is
subject to several closing conditions in addition to stockholder
approval.
ClickAction, Inc., is a leading provider of email marketing
automation products and promotional marketing services.
ClickAction Email Marketing Automation helps marketers design,
test, analyze and refine personalized email campaigns that
maximize customer value. The ClickAction EMA platform provides
customer profile management, powerful rule-based segmentation,
campaign analysis, powerful data exchange capabilities, and
highly scalable outbound messaging with bounce-back management,
all in a Web-based solution. In addition to ClickAction EMA, the
company offers a wealth of services for acquiring new opt-in
customers. ClickAction is a leader in permission marketing and
privacy standards, and is a current member of TRUSTe, an
independent, non-profit organization whose mission is to build
users' trust and confidence in the Internet. For more
information on ClickAction products and services, visit
http://www.clickaction.com
* * *
In its SEC Form 10-Q filed on November 14, 2002, the Company
stated:
"We continuously monitor our operations and the use of our cash.
We have compiled cash projections for the year ending December
31, 2002 and for the six months ending June 30, 2003 using
various estimates of revenue, operating expenses and other non-
operating cash expenditures. These cash projections indicate
sufficient cash resources will be available to fund our
operations through June 30, 2003. However, the estimates of
revenue, operating expenses and other non-operating cash
expenditures used to develop our cash projections are based on
estimates and judgments and our actual cash needs could differ
significantly from the projections if:
* demand for our services or our cash flow from operations
varies from projections;
* we are unable to collect our accounts receivable in the
ordinary course of business;
* we are unable to execute in accordance with our operating
plan; or
* the level of our operating expenses necessary to fund our
operations varies from projections.
"In addition, our cash projections do not reflect certain
events, which if they occur, may substantially impact our
liquidity or our ability to continue operations. For example,
if all or substantially all of our outstanding accounts
receivable as of September 30, 2002 are not paid, we believe
that our existing cash and cash equivalents and cash that
may be generated from operations may not be sufficient to fund
our operations at currently anticipated levels beyond June 30,
2003.
"In connection with our proposed merger with infoUSA Inc., Tail
Wind, the holder of all our outstanding Series A Preferred
Stock, has waived, until such merger closes, all of its rights
as a holder of our Series A Preferred Stock other than the right
to vote on the merger pursuant to the terms of a settlement
agreement entered into on October 8, 2002 by us, infoUSA and
Tail Wind.
"If current cash, cash equivalents and cash that may be
generated from operations are insufficient to satisfy our
liquidity requirements, we will likely seek to sell additional
equity or debt instruments. However, because of the low trading
price of our common stock, we believe it is unlikely that we
would be able to raise significant amounts of additional capital
through the issuance of equity or debt securities. If this
additional financing becomes necessary and is not available or
we are not able to raise additional funds through the sale of
assets, we may need to merge with another company, sell our
business or discontinue operations.
"Failure to complete the proposed merger with infoUSA could
negatively impact our future business and operations and the
market price of our common stock.
"If the proposed merger with infoUSA is not completed for any
reason, we may be subject to a number of material risks,
including the following:
* we may be required to pay infoUSA a termination fee of
$400,000, plus reimburse up to $500,000 of infoUSA's
expenses;
* the price of our common stock may decline to the extent that
the current market price of our common stock reflects a
market assumption that the merger will be completed;
* our costs related to the merger, such as legal, accounting
and financial advisor fees, must be paid even if the merger
is not completed, which could have an adverse effect on the
price of our common stock; and
* the diversion of our management's, attention from our day-
to-day business and the unavoidable disruption to our
employees and their relationships with customers during the
period before consummation of the merger may make it
difficult for us to regain our market position if the merger
does not occur.
"In addition, our customers and suppliers may, in response to
the announcement of the merger, delay or defer decisions
concerning their business with us. Any delay or deferral in
those decisions by our customers or suppliers could have a
material adverse effect on us. Similarly, our current and
prospective employees may experience uncertainty about their
future roles with infoUSA until infoUSA's strategies with regard
to our employees are announced or executed. This may adversely
affect our ability to retain key management, sales, marketing
and technical personnel.
"Further, if the merger is terminated and our board of directors
determines to seek another merger or business combination, there
can be no assurance that it will be able to find a partner
willing to acquire our company or to pay an equivalent or more
attractive price than the price to be paid in the merger. In
addition, while the merger agreement is in effect, subject to
compliance with applicable securities laws and fulfillment of
its fiduciary duties, we are prohibited from soliciting,
initiating, encouraging or entering into extraordinary
transactions, such as a merger, sale of assets or other business
combination, with any party other than infoUSA.
"We may need to raise additional capital and our prospects for
obtaining additional financing, if required, are uncertain and
failure to obtain additional capital would force us to
discontinue operations at current levels.
"We believe that our existing cash and cash equivalents and cash
that may be generated from operations will not be sufficient to
fund our operations at currently anticipated levels beyond June
30, 2003 or an even earlier date if:
* demand for our services or our cash flow from operations
varies from projections;
* we are unable to collect our accounts receivable in the
ordinary course of business;
* we are unable to execute in accordance with our operating
plan; or
* the level of our operating expenses necessary to fund our
operations varies from projections.
"In such event, additional capital from equity or credit
financings may be necessary in order to fund our operations at
currently anticipated levels beyond June 30, 2003. It is
unlikely that we will be able to raise additional capital on
terms acceptable to us, or at all. In particular, unless the
market price of our common stock increases dramatically, it is
unlikely that we will be able to raise funds through a public
offering of our common stock. If adequate funds are not
available or are not available on acceptable terms, we would
have to scale back our operations, which could significantly
impair our ability to develop or enhance products or services
and respond to competitive pressures, or we may be forced to
cease our operations entirely. In addition, if we raise
additional funds through the issuance of equity or convertible
debt securities, the percentage of ownership of our stockholders
would be reduced and these securities might have rights,
preferences and privileges senior to those of our current
stockholders."
CONSECO INC: Senior Lenders Extend Forbearance Pact to Jan. 11
--------------------------------------------------------------
Conseco, Inc., (OTCBB:CNCE) and its senior lenders have extended
the existing Forbearance Agreement with respect to the company's
$1.5 billion credit facility. The Forbearance Agreement was
initially executed on October 16, and has now been extended to
January 11, 2003, provided that other customary terms of the
agreement are met. Similar agreements were also extended on the
various loans guaranteed by the company under the 1997, 1998 and
1999 Directors and Officers Loan Programs.
The agreements provide that the participating lenders will
forbear from exercising remedies arising from various breaches,
including those previously subject to the waivers originally
granted on September 8, 2002.
Conseco, Inc., entered into financial restructuring discussions
with its debt holders in late August. Those discussions are
continuing.
Balance Sheet Insolvency Tops $800 Million
Last week, Conseco reported a consolidated net loss for the
third quarter ended September 30, 2002 totaling $1.7 billion
attributable to (1) an impairment charge of $700 million related
to retained interests in securitization transactions held by
Conseco Finance; (2) a goodwill impairment charge of $500
million; (3) realized investment losses of $280 million; (4) an
adjustment to reserves for long-term care insurance of $110
million; and (5) a loss on discontinued operations totaling
$140 million related to the sale of the Company's variable
annuity business. Conseco's net loss for the nine months ended
September 30, 2002 tops $6 billion. At September 30, 2002,
liabilities reported on Conseco's balance sheet exceed assets by
$800 million.
Management Changes
William J. Shea is now serving as Chief Executive Officer and
Eugene M. Bullis is filling the Chief Financial Officer slot.
An Ad Hoc Noteholders' Committee is credited with forcing
Gary Wendt to step down as Conseco's CEO. Earlier this month,
The Wall Street Journal said that "a representative of the
bondholders told the restructuring committee of Conseco's board
that Mr. Wendt's 'usefulness had come and passed and we want him
gone,' according to one person at [an early October] meeting."
Journal reporters Mitchell Pacelle and Joe Hallinan relate that
bondholders have presented the company with a written proposal
demanding full ownership of the restructured company . . . but
might be willing to give a nominal amount of warrants to
existing equity holders.
"Discussions between Conseco, Inc. and its constituents continue
toward what Conseco hopes to be a consensual restructuring," the
Company has said publicly. At the negotiating table:
The ad-hoc committee has engaged:
* Fried, Frank, Harris, Shriver & Jacobson as legal advisor,
and
* Houlihan Lokey Howard & Zukin as financial advisor.
Conseco has hired:
* Kirkland & Ellis as its legal advisors; and
* Lazard Freres & Co. as its financial advisors.
Conseco Inc.'s 10.75% bonds due 2008 (CNC08USR1) are trading at
about 20 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for
real-time bond pricing.
CWMBS INC: Fitch Assigns BB/B Ratings to Class B-3 & B-4 Notes
--------------------------------------------------------------
CWMBS, Inc.'s Mortgage Pass-Through Certificates, CHL Mortgage
Pass-Through Trust 2002-36 Classes A-1 through A-24, PO and A-R
(senior certificates, $387,999,128) are rated 'AAA' by Fitch
Ratings. In addition, Class M ($5,600,000) is rated 'AA', Class
B-1 ($2,400,000) is rated 'A', Class B-2 ($1,800,000) is rated
'BBB', Class B-3 ($800,000) is rated 'BB', and Class B-4
($600,000) is rated 'B'.
The 'AAA' rating on the senior certificates reflects the 3.00%
subordination provided by the 1.40% Class M, the 0.60% Class B-
1, the 0.45% Class B-2, the 0.20% privately offered Class B-3,
the 0.15% privately offered Class B-4, and the 0.20% privately
offered Class B-5 (which is not rated by Fitch). Classes M, B-1,
B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based
on their respective subordination.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud and
special hazard losses in limited amounts. In addition, the
ratings also reflect the quality of the underlying mortgage
collateral, strength of the legal and financial structures and
the master servicing capabilities of Countrywide Home Loans
Servicing LP (Countrywide Servicing), a direct wholly owned
subsidiary of Countrywide Home Loans, Inc.
The certificates represent an ownership interest in a pool of
conventional, fully amortizing, 30-year fixed-rate mortgage
loans, secured by first liens on one-to four- family residential
properties. As of the closing date (November 27, 2002), the
mortgage pool demonstrates an approximate weighted-average
original loan-to-value ratio of 68.91%. Approximately 21.16% of
the loans were originated under a reduced documentation program.
Cash-out refinance loans represent 22.43% of the mortgage pool
and second homes 3.05%. The average loan balance is $465,909.
The three states that represent the largest portion of mortgage
loans are California (57.05%), Massachusetts (4.23%) and
Virginia (3.24%).
Approximately 99.45% and 0.55% of the mortgage loans as of the
closing date were originated under CHL's Standard Underwriting
Guidelines and Expanded Underwriting Guidelines, respectively.
Mortgage loans underwritten pursuant to the Expanded
Underwriting Guidelines may have higher loan-to-value ratios,
higher loan amounts, higher debt-to-income ratios and different
documentation requirements than those associated with the
Standard Underwriting Guidelines. In analyzing the collateral
pool, FITCH adjusted its frequency of foreclosure and loss
assumptions to account for the presence of these attributes.
The collateral characteristics provided are based off the
mortgage loans as of the closing date. Fitch ensures that the
deposits of subsequent loans conform to representations made by
Countrywide Home Loans, Inc.
CWMBS purchased the mortgage loans from CHL and deposited the
loans in the trust, which issued the certificates, representing
undivided beneficial ownership in the trust. For federal income
tax purposes, an election will be made to treat the trust fund
as multiple real estate mortgage investment conduits (REMICS).
DION ENTERTAINMENT: Defaults on Loan Agreement with D.A.W.
----------------------------------------------------------
Dion Entertainment Corp., (TSX:DIO) announces that its
relationship with the Venetian as it pertains to the 2003 Bingo
Magic game to be held in June 2003 is currently in jeopardy as
funding of approximately US$228,000 is required to complete the
immediate commitments under the agreement. If the Company is
unable to fund this amount and the agreement is terminated a
cancellation fee of US$775,000 would be payable.
The Company wishes to announce that Mr. Frank Bingham has
resigned from the Board of Directors of the Company.
Mr. Bingham has been a long time director, officer and
consultant to the Company, having served in these roles at
various times over the past 10 years and the Company would like
to thank him for his service.
The Board of Directors of the Company now consists of Leo Dion,
Lyle Rowland and Steen Hansen.
The Company also announces that D.A.W. Investments Limited, a
company controlled by David Wallace, the largest shareholder of
the Company, has noted the Company in default under a loan
agreement dated June 17, 1999 and a pledge agreement dated
January 31, 1996. Consequently, DAW has taken steps to appoint
David Wallace as the sole director of Great Canadian Bingo
Corp., a subsidiary of the Company. The Company is reviewing its
alternatives in respect of the action by DAW. DAW has also
demanded repayment of an aggregate of $561,426.61 under a loan
agreement dated October 12, 2000 between DAW and the Company. In
connection with this demand DAW has delivered to the Company a
Notice of Intention to Enforce a Security given pursuant to
section 244 of the Bankruptcy and Insolvency Act. The security
to be enforced is in the form of Security Agreements, Amended
and Restated Security Agreements General Security Agreements and
Security Pledge Agreements between the parties. The total amount
of the secured indebtedness to DAW is approximately $6,000,000.
The secured creditor will not have the right to enforce the
security until after the expiry of a 10-day period. The Company
is reviewing its alternatives and will continue to attempt to
work with the secured creditor to remedy the situation.
EB2B COMMERCE: Working Capital Deficit Tops $3.2MM at Sept. 30
--------------------------------------------------------------
eB2B Commerce, Inc. (BB: EBTB.OB), a leader in business-to-
business transaction management services, announced the results
of its third quarter and nine-months of operations for 2002.
Excluding its Training and Client Educational Services business,
which is being reported as a discontinued operation, the Company
recorded revenues of $828,000 for the third quarter of 2002, a
decrease of $122,000, or 13%, compared to revenues of $950,000
for the third quarter of 2001. The Company also reported
revenues of $2,745,000 for the nine-month period ended
September 30, 2002, a decrease of $448,000, or 14%, from the
$3,193,000 reported during the same period in 2001.
The decline in revenue resulted primarily from non-core business
lines, including professional services and a legacy outsourced
EDI function within the Transaction Services reportable segment,
as well as previously eliminated business lines. Professional
services consulting revenue declined primarily due to cost
containment measures undertaken by a major customer. The Company
expects quarterly revenue from this customer to stabilize at or
near current levels. Excluding the impact of these non-core
business lines, the Company's core transaction services revenues
increased by 4 percent, to $2,203,000 for the nine months ended
September 30,2002 compared to $2,117,000 for the same period in
2001. This increase is attributable to the revenues from an
acquisition completed in January 2002; whereas these results are
not included in 2001 amounts.
The company defines Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) as net income (loss)
adjusted to exclude: (i) provision (benefit) for income taxes,
(ii) interest and income expense, (iii) depreciation,
amortization and write-down of assets, and (iv) stock related
compensation. While EBITDA is discussed because it is a widely
accepted indicator of the operation of the business based in
part on the significant level of non-cash expenses recorded by
the Company to date, EBITDA should not be considered an
alternative to operating or net income as an indicator of the
performance of the Company, or as an alternative to cash flows
from operating activities as a measure of liquidity.
The Company reported an EBITDA loss for the three months ended
September 30, 2002 of $365,000, a $1,154,000, or 76%,
improvement over the EBITDA loss of $1,519,000 reported for the
same period in 2001, and a $604,000, or 62% improvement over the
EBITDA loss of $969,000 reported for the three months ending
June 30, 2002, excluding the second quarter pick-up to EDITDA as
a result of a reversal of excess restructuring costs in the
amount of $655,000.
The company reported that its net loss for the third quarter of
2002, was $2,158,000, compared with a net loss of $50,970,000 in
the same period in 2001, and a net loss of $8,567,000 excluding
charges for impairment of goodwill taken in the third quarter of
2001, an improvement of 97% and 83% respectively, over the loss
per share amounts reported in 2001.
As a result of continuing operating losses, negative cash flows,
and the inability to sell the business on favorable terms, the
Company discontinued its Training and Client Educational
Services business. The financial results from all current
periods have been restated to reflect this business as a
discontinued operation.
At September 30, 2002, the Company's balance sheet shows that
total current liabilities eclipsed total current assets by about
$3.2 million.
eB2B Commerce is a leading provider of business-to-business
transaction management services that simplify trading partner
integration, automation, and collaboration across the order
management life cycle. The eB2B Trade Gateway(TM) and
Transaction Lifecycle Management(TM) solutions provide large and
small enterprises with a total solution for improving trading
partner relationships that enhance productivity and bottom line
profitability.
ELDERTRUST: $15MM Loan Maturity Date Extended Until January 10
--------------------------------------------------------------
dElderTrust (NYSE:ETT), an equity healthcare REIT, issued
guidance with respect to its maturing loans.
The Company has three loans totaling $30 million that mature on
December 1, 2002. Under the loan terms, the maturity date can,
at the borrower's request and subject to certain other
conditions, be extended for one two-year period. The Company had
previously announced that it had requested extensions for all
three loans.
In Wednesday's announcement the Company stated that one loan
with an outstanding balance of approximately $10.5 million has
been extended to December 1, 2004. This loan is secured by the
Lopatcong property.
In addition, the Company stated that it has reached an agreement
with the loan administrator to extend to January 10, 2003 the
maturity date of one loan totaling approximately $14.9 million,
which is secured by the Harston and Pennsburg properties, and
one loan totaling approximately $4.6 million, which is secured
by the Wayne property.
The Company noted that the longer term extensions had not been
granted for these two loans as operating levels have declined
since the loans were originated. The Company is currently
negotiating a resolution to this situation.
In that process the Company hopes to resolve the Wayne loan by
paying down the balance outstanding to an acceptable level and
extending that loan for an additional two-year period.
Resolution of the Harston/Pennsburg loan is still under
discussion.
A resolution of this loan may include, among other alternatives,
a further extension as a cash flow mortgage, sale or a title
transfer via a "deed in lieu of foreclosure" transaction.
Finally, the Company noted that the Harston and Pennsburg
properties contributed approximately $0.3 million in Funds From
Operations for the quarter ended September 30, 2002 or
approximately $0.035 per fully diluted share. This represents
$0.5 million in rental income less $0.2 million of interest
expense on $14.9 million of related debt.
The Wayne property contributed approximately $0.1 million in FFO
for the quarter ended September 30, 2002 or approximately $0.015
per fully diluted share. This represents $0.2 million in rental
income less $0.1 million of interest expense on $4.6 million of
related debt.
"Unfortunately, the properties securing the two loans under the
short-term extension are not performing as well as when the
loans were first initiated", said D. Lee McCreary, Jr.,
ElderTrust President and Chief Executive Officer. "Based upon
our review we currently believe the Wayne property may be worth
retaining. However, the Harston/Pennsburg package has declined
dramatically and requires further review. We hope to reach a
satisfactory conclusion to these issues within this shortened
extension period."
ElderTrust is a real estate investment trust that invests in
real estate properties used in the healthcare services industry,
principally along the East Coast of the United States. Since
commencing operations in January 1998, the Company has acquired
32 properties.
For more information on ElderTrust visit ElderTrust's Web site
at http://www.eldertrust.com
At September 30, 2002, ElderTrust's balance sheet shows a
working capital deficit of about $30 million.
ENCOMPASS: Obtains DIP Financing and Additional Bonding Capacity
----------------------------------------------------------------
Encompass Services Corporation (Pink Sheets: ESVN) has secured
Debtor-in-Possession financing and additional bonding capacity
for the Company to utilize during its reorganization process.
Encompass stated that it has reached an agreement with a
syndicate of financial institutions including Bank of America,
N.A., JPMorgan Chase Bank and General Electric Capital
Corporation for a $60 million DIP financing commitment to
provide the Company with adequate liquidity during its Chapter
11 process. The DIP facility will be used for, among other
things, employee salaries and benefits, vendor payments and
other ongoing working capital needs.
The Company also stated that it has reached agreements with its
two primary surety bond providers, Chubb & Son, a division of
Federated Insurance Company, and Liberty Bond Services,
regarding access to additional bonding capacity. These
agreements will provide $60 million in bonding capacity, of
which $20 million has already been drawn and $40 million is
immediately available to the Company. An additional $150 million
is available subject to the Company meeting certain collateral
requirements and contingent on the approval of the bank group.
"We appreciate the ongoing support shown by both our DIP lenders
and surety providers," said Joe Ivey, President and Chief
Executive Officer of Encompass. "These financing commitments
represent clear votes of confidence in our future. We look
forward to moving rapidly through the Chapter 11 process."
"We are pleased with the level of cooperation among all of the
parties involved in this process," said Michael F. Gries,
Chairman and Chief Restructuring Officer of Encompass. "We now
have the liquidity and bonding capacity to begin rebuilding our
business."
The Company also stated that it received approval of its first
day motions, including the authorization of ongoing payment of
employee wages and benefits, payment of its vendors for goods
and services provided under normal credit terms, as well as
other customary first day orders.
Encompass Services Corporation is one of the nation's largest
providers of facilities systems and services. Encompass provides
electrical technologies, mechanical services and cleaning
systems to commercial, industrial and residential customers
nationwide. Additional information and press releases about
Encompass are available on the Company's Web site at
http://www.encompass.com
ENCOMPASS SERVICES: Final Cash Collateral Hearing on Wednesday
--------------------------------------------------------------
Encompass Services Corporation and its debtor-affiliates seek
the Court's authority to use the cash and the proceeds of their
existing accounts receivable and other collateral to maintain
the operation of their businesses and preserve their value as
going concerns.
In particular, the Debtors will use the Cash Collateral to pay
overhead, operating expenses and ordinary course obligations
necessary to maintain and preserve the going-concern value of
their assets and business, and to administer their estates,
including using the Cash Collateral to pay:
(a) any prepetition operating and other expenses approved by
the Court;
(b) the postpetition operations of their businesses; and
(c) all costs and expenses arising in connection with the
administration of their estates.
The Debtors have prepared a four-week budget wherein they will
apply the Cash Collateral.
Alfredo R. Perez, Esq., at Weil Gotshal & Manges LLP, in
Houston, Texas, contends that even after the DIP Facility is in
place, the use of Cash Collateral, including the cash generated
from the collection of accounts receivable, will be a
significant source of working capital for the operation of the
Debtors' businesses and in preserving and enhancing the value of
their estates.
Mr. Perez informs the Court that a significant source of cash
for the Debtors' operations is the cash that they deposit into
their local operating accounts. As of the Petition Date, the
cash proceeds generated in the Debtors' daily operations are
deposited at local banks utilized by each of its operating
units. Those deposits made to Bank of America or JP Morgan
Chase accounts are transferred to a corporate concentration
account on a daily basis. Those deposits made to accounts at
other institutions are transferred to a corporate concentration
account via an inter-bank system. The funds in the
concentration accounts are used to fund the Debtors' controlled
disbursement accounts, and any excess cash is invested overnight
in a money market fund.
In exchange for their use of the Cash Collateral, the Debtors
propose that, to the extent their Senior Lenders have valid and
perfected security interests in and liens on the Prepetition
Collateral and its proceeds, they will grant additional adequate
protection to the Senior Lenders in the form of a replacement
security interest in and, to the extent that Cash Collateral is
actually used, a lien on, any collateral acquired after the
Petition Date.
Encompass Services Corp.
DIP Forecast For The Four-Week Period
Ending Nov. 22, 2002 Through Dec. 13, 2002
($ in thousands)
For the week ending:
4-Week
11/22 11/29 12/06 12/13 Total
----- ----- ----- ----- ------
BEGINNING CASH $0 ($16,461)($18,313)($22,743) $0
CASH RECEIPTS 27,681 48,759 51,250 42,855 170,544
CASH DISBURSEMENTS
Payroll, Benefits
& Fringe 0 21,265 20,761 23,298 65,323
Operating Expenses
Lien Vendors 28,645 20,741 22,565 17,062 89,013
Subcontractors 4,930 3,672 4,515 3,255 16,372
Utilities 695 209 371 173 1,448
Other 4,394 3,369 5,368 5,189 18,320
Corp. Expenses 1,000 1,300 1,200 800 4,300
------- ------- ------- ------- --------
Total Operating
Disbursements 39,664 50,556 54,780 49,777 194,777
------- ------- ------- ------- --------
NET CASH FLOWS
FROM OPERATIONS (11,983) (1,798) (3,530) (6,922) (24,233)
Interest expense 0 55 0 0 55
Professional &
Restructuring Fees 911 0 900 0 1,811
DIP/Surety Fees 3,567 0 0 0 3,567
DIVESTITURES
Net Proceeds
from Divestitures 0 0 0 0 0
------- ------- ------- ------- --------
NET CASH FLOW (16,461) (1,852) (4,430) (6,922) (29,666)
------- ------- ------- ------- --------
Cash Collateral
for Bonding 0 0 0 0 0
------- ------- ------- ------- --------
ENDING CASH/ (DIP
BORROWINGS) ($16,461)($18,313)($22,743)($29,666) ($29,666)
======= ======= ======= ======= ========
* * *
At the First Day Hearing, Judge Greendyke allowed the Debtors to
utilize their Cash Collateral on an interim basis. However, the
Debtors may only use the Cash Collateral in accordance with the
proposed budget. The Debtors are prohibited from transferring
any Cash Collateral to any of their insiders, as the term is
defined in Section 101(31) of the Bankruptcy Code.
A Final Hearing on the Debtors' request is scheduled on
December 4, 2002 at 11:00 a.m. to consider any developments,
concerns or objections that may be raised by parties-in-
interest. Responses and objections are due by December 2, 2002.
(Encompass Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ENRON: Employee Committee Reports First-Year Accomplishments
------------------------------------------------------------
The Enron Employment Related Issues Committee (Employee
Committee) released a list of accomplishments and gains made on
behalf of thousands of former, current and retired Enron
employees in the year since Enron's bankruptcy filing. At the
time, Enron's bankruptcy was the largest ever filed in U.S.
history.
"Enron Employees responded to an historic corporate collapse by
making history themselves," said Richard D. Rathvon, a former
Enron employee and Co-Chair of the Court Appointed Enron
Employee Committee. "In the past year, we have secured an
unprecedented place at the table for current and former
employees and retirees, alongside Enron's large, commercial
creditors. We won a historic settlement that put real money
back into the hands of severed employees, and set the stage for
the recovery of additional money. Although nothing can change
the level of disruption in people's lives caused by the
bankruptcy, current and former Enron employees have made
significant strides back from the brink. There are real success
stories to tell."
Rathvon cited a list of accomplishments achieved by the Employee
Committee:
* Historic formation (February 2002) -- 30 severed
employees hire legal counsel and, along with others, persuade
the U.S. Bankruptcy Trustee to appoint an official employee
committee. This historical agreement gives severed employees
representation in the bankruptcy proceeding equal to that of
large, corporate creditors.
* Hardship funds (March 2002) -- Members of the Employee
Committee support the AFL-CIO and the Rainbow/PUSH Coalition in
asking the court to grant $1,100 in hardship funds for severed
employees. The court grants the request. The Committee,
Rainbow/PUSH and the AFL-CIO begin working on a severance
settlement agreement with Enron to provide additional severance
pay to severed employees.
* Communication Plan and Web site (April/May 2002) -- The
Employee Committee develops a communication plan and establishes
a Web site -- http://www.employeecommittee.com-- to inform
current, former and retired employees about the bankruptcy.
Unique visits to the Site total 40,732 since the Site went live
through November 20. The Site has an average of 225 hits every
day. The Committee also communicates to interested parties
through broadcast e-mails and through the news media, and
responds directly to individual questions through e-mail. These
hundreds of questions run the gamut of issues from retiree
benefits to deferred compensation and often require
comprehensive legal research and review, so the Committee can
respond accurately.
* Historic Severance Settlement Agreement (August 2002) --
The court approves an historic settlement agreement reached
between Enron and the Employee Committee, AFL-CIO and the
Rainbow/PUSH Coalition. The agreement provides additional
severance up to $13,500 for eligible former employees,
effectively putting former employees' claims ahead of the claims
of other creditors. It is an historic settlement that provided
real and immediate relief for severed employees who otherwise
may have received nothing. The Committee educates severed
employees about the agreement and provides guidelines enabling
them to make decisions about participating in the Settlement.
* Non-Debtor Company Severance (October 2002) -- The
Employee Committee successfully assists in negotiating
additional severance pay to former employees of two non-debtor
companies.
* Proof of Claim Process (August - October 2002) -- As part
of the bankruptcy process, Enron must send proof of claim forms
to anyone who may have a claim against the company or any of its
affiliated debtor companies. The Employee Committee assists
current and former employees as well as retirees in
understanding the multiple issues surrounding the complex claims
process and how it relates to stock options, 401(K) plans,
deferred compensation, pensions, commissions and many other
issues.
* Pursuit of Illicit 11th Hour Bonuses (November, 2002 -
ongoing) -- Under the terms of the Severance Settlement
Agreement, the Employee Committee won the right to investigate
illicit, 11th hour bonuses taken by favored Enron employees
immediately prior to the bankruptcy filing. The Committee hires
the law firms of McClain & Leppert and Wynne & Maney to pursue
and recover the millions of dollars taken. Any money recovered
will be re-distributed to severed employees who chose to
participate in the Severance Settlement Agreement.
* Protection of Health Benefits (November, 2002 - ongoing)
-- The Employee Committee is reviewing significantly higher
health care premiums being implemented by Enron that would
affect retirees, current employees and severed employees covered
through COBRA. Recognizing that the increases create a
financial hardship for many, the Committee is actively
investigating the facts and exploring options to protect the
current level of health benefits. The Committee is
investigating other issues such as deferred compensation and the
cash balance plan.
Said Rathvon, "A year ago a goliath fell. Many were hurt in the
fall, but we were not crushed. Enron employees proved their
mettle by securing historic gains in a major bankruptcy and
creating the structure to ensure their interests were
represented and advocated."
Today, the Employee Committee continues its work. "We are
pursuing the recovery of the illicit 11th hour bonus money. We
are seeking options to protect health care benefits. Above all,
we will keep building on the historic progress we have made as
an advocate and resource for current, former and retired Enron
employees," said Rathvon.
The Employee Committee is an official committee appointed by the
United States Trustee charged with representing the collective
interests of all current, former and retired Enron employees in
Enron's bankruptcy case. The Employee Committee serves as a
strong advocate for the interests of former and current Enron
employees during the bankruptcy process. Members of the
committee were selected by the trustee and the make-up of the
committee was designed to reflect the broad diversity of Enron's
current and former workforce. The Committee is working to
provide employees with timely, accurate information on the
status of the bankruptcy case.
ENRON CORP: Wants to Pay $1MM+ Prepetition Harris County Taxes
--------------------------------------------------------------
Enron Broadband Services, Inc., seeks the Court's authority to
pay certain personal property taxes.
Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that on February 25, 2002, a Harris County Grand
Jury issued subpoenas for documents pertaining to personal
property owned or controlled by Enron and related entities,
including EBS. The scope of the investigation focused on EBS'
facilities at 701-747 North Shepherd in Houston, Texas and other
EBS properties in Harris County. The purpose of the
Investigation was to determine whether EBS violated Section
37.10 of the Texas Penal Code.
On March 8, 2002, Mr. Rosen informs the Court, EBS delivered to
Harris County District Attorney's Office schedules of inventory,
furniture and fixtures for the Shepherd Warehouse. The
Schedules reflected:
-- $356,320 total book value of the fixed assets;
-- $2,854,767 total cost value of inventory for 2000; and
-- $14,205,053 total cost value of inventory for 2001.
Based on these valuations now agreed by EBS and the appraisal
district, the total ad valorem taxes owing would be $921,309
plus $101,579 interest -- Property Taxes. The Grand Jury is
expected to indict EBS in the event the Property Taxes are not
paid.
Thus, Mr. Rosen contends, the payment of prepetition tax
obligations should be authorized because:
(a) Harris County maintains a lien on the Property and holds
a secured claim on account of the unpaid Property Taxes;
(b) the immediate payment of the Property Taxes will save
EBS' estate the interest that might otherwise accrue
until the taxes are paid under a plan of reorganization;
(c) by paying now, EBS will minimize the chance that the
Investigation will lead to the felony indictment of EBS;
(d) the 2000 tax year constitutes priority claim under
Section 507 of the Bankruptcy Code; and
(e) the payment is in the best interest of the EBS' estate
and creditors. (Enron Bankruptcy News, Issue No. 49;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders says that Enron Corp.'s 9.125% bonds due 2003
(ENRN03USR1) are trading at about 13 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
EQUUS CAPITAL: S&P Keeping Watch on BB+ & CCC- Note Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the
class A-2 and B notes issued by Equus Capital Funding Ltd., an
arbitrage CBO transaction, on CreditWatch with negative
implications.
At the same time, the rating on the class C notes is affirmed.
Concurrently, the rating on the class A-1 notes is affirmed
based on a financial guarantee insurance policy issued by MBIA
Insurance Corp. The ratings on the class A-2, B, and C notes
were previously lowered on July 16, 2002 and on Feb. 20, 2002.
The CreditWatch placements on the ratings assigned to the class
A-2 and B notes reflect factors that have negatively affected
the credit enhancement available to support the rated notes
since the previous rating action in July 2002. These factors
include par erosion of the collateral pool securing the rated
notes, deterioration in the credit quality of the performing
assets within the pool, and a decline in the weighted average
coupon generated by the performing assets.
Standard & Poor's notes that $46 million (or approximately 21%)
of the assets currently in the collateral pool come from
obligors rated 'D' or 'SD' by Standard & Poor's. As a result of
asset defaults and credit risk sales at distressed prices, the
overcollateralization ratios for the transaction have
deteriorated since the transaction was originated. As of the
Nov. 1, 2002 monthly report, all three of the transaction's
overcollateralization ratio tests are failing: the class A
overcollateralization ratio test is failing with a current ratio
of 106.51%, versus the minimum required 128% and an effective
date ratio of approximately 135%; the class B
overcollateralization ratio test is failing with a current ratio
of 96.46%, versus the minimum required 118.75% and an effective
date ratio of approximately 123%; and the class C
overcollateralization ratio test is failing with a current ratio
of 93.31%, versus the minimum required 102% and an effective
date ratio of approximately 119%.
The credit quality of the collateral pool has also deteriorated
since the transaction was originated. Currently, $14.75 million
(or approximately 8.75%) of the performing assets in the
collateral pool come from obligors with ratings on CreditWatch
with negative implications, and $13.4 million (or approximately
8%) of the performing assets come from obligors with ratings in
the 'CCC' range.
Standard & Poor's will be reviewing the results of current cash
flow runs generated for Equus Capital Funding Ltd. to determine
the level of future defaults the rated tranches can withstand
under various stressed default timing and interest rate
scenarios while still paying all of the interest and principal
due on the notes. The results of these cash flow runs will be
compared with the projected default performance of the
performing assets in the collateral pool to determine whether
the ratings assigned to the class A-2 and B notes remain
consistent with the credit enhancement available.
Ratings Placed on Creditwatch Negative
Equus Capital Funding Ltd.
Rating
Class To From Balance (Mil. $)
A-2 BB+/Watch Neg BB+ 85.69
B CCC-/Watch Neg CCC- 17.85
Ratings Affirmed
Equus Capital Funding Ltd.
Class Rating Balance (Mil. $)
A-1 AAA 85.69
C CC 6.405
EXODUS COMMS: Court Approves Stipulation with Network LLC
---------------------------------------------------------
Network (UT) LLC and EXDS are parties to a lease agreement and
related documents executed on December 27, 2000, related to the
lease of real property in Lindon, Utah. Pursuant to the terms
of the lease, EXDS paid a $2,844,810 security deposit to
Network.
EXDS rejected the lease effective October 22, 2001, to which
Network filed a lease rejection claim for $37,940,000 on
April 12, 2002.
Consequently, EXDS and Network sought and obtained Court
approval of a stipulation resolving their disputes. The
pertinent terms of the stipulation are:
A. Amount of Allowed Claim: Network's lease rejection claim
will be allowed in the amount of $4,423,445;
B. Amount of Security offset: The Allowed claim will be
offset by the $2,844,810 security deposit and Network will
retain the security deposit as Network's own funds and for
Network's exclusive use.
The allowed $2,844,810 claim will be characterized as an
allowed secured claim in Class 2. The parties acknowledge
that this secured claim has been satisfied in full by
virtue of the offset and retention by Network of the
security deposit. Network will have as an allowed general
unsecured claim in Class 5 -- a net allowed claim of
$1,578,635. Distributions on the net allowed claim will
be made in accordance with the Procedures set forth in the
Plan. Network will not be entitled to any claims or
amounts beyond the net allowed claim;
C. Release to EXDS: Network releases, waives, disclaims and
discharges EXDS from any and all claims, counterclaims,
actions, causes of action, lawsuits, proceedings,
adjustments, offsets, contracts, obligations, liabilities,
controversies, costs, expenses, attorneys' fees and losses;
D. Release to Network: EXDS releases, waives, disclaims and
discharges Network from any and all claims, counterclaims,
actions, causes of action, lawsuits, proceedings,
adjustments, offsets, contracts, obligations, liabilities,
controversies, costs, expenses, attorney's fees and losses;
and
E. Waiver of California Civil Code 1542: Network and EXDS
acknowledge that states may have laws that generally
provide and specifically waive the benefit of these laws,
including, without limitation, California Civil Code
Section 1542, which provides that:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
Network and EXDS mutually agree to release each other from
the claims, in each case, which are unknown or unsuspected.
(Exodus Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FARMLAND INDUSTRIES: Files Plan of Reorganization in Missouri
-------------------------------------------------------------
Farmland Industries Inc., reported financial results for its
fiscal year 2002, which ended Aug. 31. Reflecting the
difficulties that led the company to file for protection under
Chapter 11 of the U.S. Bankruptcy Code on May 31, Farmland
reported a loss of $182.6 million, before taxes, one-time
restructuring and reorganization expenses and losses from
discontinued operations. Including these charges and taxes, the
loss for the fiscal year was $346.7 million.
Earnings from the company's Refrigerated Foods businesses
increased 72 percent, to $59.7 million in fiscal 2002, despite
challenging market conditions. Sales in that segment rose 3
percent, with a 9 percent rise in unit sales. Increased plant
efficiencies enabled the company to process more animals, while
its focus on further processed meat products, including
CaseReady(R) meats, strengthened margins.
Farmland announced earlier this year that it would focus on its
meat business. The growth in both sales and earnings from the
Refrigerated Foods segment validates that strategy. "We're
pleased with the sales and earnings gains in our meat
businesses. These results strengthen our belief that our focus
on these businesses will maximize the company's value for the
benefit of all stakeholders," said Farmland President and CEO
Bob Terry.
The prolonged downturn in the fertilizer manufacturing industry
continued to plague Farmland throughout fiscal 2002, as its Crop
Production segment reported an operating loss before
restructuring charges of $121.8 million. Farmland has announced
it will sell or reposition its fertilizer manufacturing assets
as part of its reorganization. The Petroleum segment, where
assets are also for sale, reported a loss of $48.8 million for
the year, primarily due to decreased margins caused by higher
crude oil costs, a decrease in demand caused in part by the
terrorist attacks of Sept. 11, and required maintenance over a
six-week period during which the refinery was non-operational.
Farmland reported restructuring, reorganization and discontinued
operations charges of $155.2 million. These primarily non-cash
items largely result from a reduction from carrying value to
estimated net realizable value of certain fertilizer assets the
company has closed or expects to sell, the write-off of goodwill
associated with certain assets the company has closed, sold or
expects to sell, and the write-off of deferred fees related to
our pre-bankruptcy financing.
While sales in the Refrigerated Foods segment increased 3
percent, Farmland Industries reported fiscal 2002 net sales of
$6.6 billion, compared to $9.2 billion the year prior. This
decline is primarily due to the formation of ADM-Farmland, a
grain marketing company wholly owned by ADM that was formed late
in third quarter 2001. World Grain sales in fiscal 2001 were
$1.7 billion. The sale of Farmland's interest in petroleum
marketing venture Country Energy also contributed to the decline
in revenues.
"We are especially encouraged by the performance of our
Refrigerated Foods segment. Our focus on further processed
meats, including our leadership position in CaseReady pork and
beef, strengthened margins considerably. Despite the uncertainty
caused by our reorganization, sales of our meat products have
grown and the Farmland(R) brand continues to gain strength. This
strong customer loyalty bodes well for our future," Terry said.
Also, Farmland filed a Plan of Reorganization to satisfy the
requirements of its Debtor In Possession credit facility. The
credit facility provides for approval of the plan, not to be
unreasonably withheld, by Farmland's banking group. Because the
plan provides for payment in full to the banking group, Farmland
believes that the banking group cannot reasonably take a
position that the provisions of the credit facility have not
been satisfied. Since its filing, Farmland has consistently
exceeded each covenant in its Debtor In Possession lending
agreement and reduced its borrowings by $71 million as of Nov.
22.
The Plan of Reorganization is a legal document that describes
the legal steps and changes that will occur upon completion of
the company's reorganization. Farmland's strategic direction
remains focused on divesting or repositioning its fertilizer
manufacturing and petroleum refining assets along with non-core
assets, and focusing on its successful meat business.
Henry Kaim of Akin Gump Strauss Hauer and Feld LLP, lead
attorney representing the Farmland Unsecured Creditors'
Committee, said, "The Creditors Committee appreciates the hard
work of the company in filing a Plan of Reorganization at this
early stage of the proceedings. This is a very large and complex
case and it took extraordinary effort on the part of Farmland,
its management, employees and professionals to get a plan on
file this early in the case. The company has addressed many
factors in the Plan, including compliance with its credit
facilities. The filing of a plan at this time is a good first
step toward a reorganization. While much negotiation and work
remains to be done before the plan is acceptable to the
Committee, the Creditors Committee applauds this timely filing,
as it initiates the reorganization process."
Michael Small of Foley & Lardner, lead attorney for the
Bondholders' Committee, said, "The Bondholders' Committee
believes that the Debtors have filed a plan which is on time,
meets the requirements of its credit agreements and
appropriately sets the stage for the next phase of these large
and complex cases. Although additional negotiations will
certainly be necessary to address the bondholders' issues, that
is the norm in bankruptcy. This is a good start. The
Bondholders' Committee will work with the Debtors and their
professionals to continue moving the cases to a result that
maximizes returns. The thousands of hard-working people and
retirees who own bonds deserve and expect the Debtors' and other
constituencies' continued efforts to that end."
Terry said, "The plan filed [Wednes]day demonstrates Farmland's
commitment to progressing through its reorganization promptly
yet thoroughly. We have been working closely with the committees
representing unsecured creditors and bondholders and will
continue to work with them and our banking group to ensure our
reorganization continues to move toward a successful
resolution."
Farmland Industries, Inc., Kansas City, Mo. --
http://www.farmland.com-- is a diversified agricultural
cooperative with interests in food, fertilizer, petroleum, grain
and animal feed businesses.
Post-Filing Accomplishments
Since Farmland Industries filed for Chapter 11 protection on May
31, the diversified cooperative reports significant progress in
stabilizing its business. Among the highlights contributing to
its operational improvement:
-- Reduced borrowings by $71 million as of November 22 due
to business improvement and cost control measures.
-- Exceeded all covenants in its Debtor in Possession
financing agreement that provides reorganization
financing through November 2003.
-- Performing ahead of all cash flow targets outlined in
its court-supervised reorganization.
-- Achieved stability in its Refrigerated Foods businesses
* employee turnover at Farmland Foods plants is the
lowest in a decade, * Farmland Foods plants are
processing 6-1/2 percent more animals per week than
a year ago,
* sales and margins on further processed meats are
offsetting the industry's weaker commodity prices,
* market share continues to grow in hams, bacon, and
branded fresh pork.
-- Fertilizer industry margins have strengthened
considerably and the industry outlook is positive.
GENESIS HEALTH: Proposes Revision to Financing Plan
---------------------------------------------------
Genesis Health Ventures Inc., (B+/Watch Dev/--) has proposed a
revision to its original plan to finance the possible
acquisition of institutional pharmacy company, the unrated NCS
Healthcare. On Oct. 3, 2002, Standard & Poor's Ratings Services
affirmed its corporate credit rating and assigned its 'B+'
rating to a proposed $200 million senior unsecured term loan B,
due 2007. (Genesis/Multicare Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GENTEK INC: Honoring Up to $6 Million of Foreign Vendor Claims
--------------------------------------------------------------
Judge Walrath gives GenTek Inc., and its debtor-affiliates the
go-signal to satisfy their payment obligations to foreign
vendors. However, the payments of foreign vendor claims must
not exceed $6,000,000 in the aggregate. (GenTek Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GENUITY INC: Verizon Comms. Applauds Transaction with Level 3
-------------------------------------------------------------
Earlier Wednesday Genuity Inc., filed for Chapter 11 bankruptcy
protection. Immediately prior to the filing, Level 3
Communications Inc., agreed to purchase, subject to regulatory
and bankruptcy court approval, certain of Genuity's assets and
operations, including certain of Genuity's commercial contracts
with Verizon. The following response should be attributed to
Lawrence T. Babbio Jr., Verizon vice chairman and president.
"As a significant creditor and customer of Genuity, we fully
support this transaction. We are delighted that we've been able
to resolve many complex issues in a way that benefits both the
customers of Verizon and Genuity, and Genuity's creditors.
"We are also pleased that Verizon's willingness to continue
existing commercial arrangements with Level 3 enabled Genuity to
agree to this transaction.
"We look forward to using the services of an existing network
provider like Level 3 to supplement and extend our product
offerings to our customers."
GLOBAL PAYMENTS: Elects Gerald Wilkins to Board of Directors
------------------------------------------------------------
Global Payments Inc. (NYSE: GPN), a leading provider of payment
processing solutions, announced the election of Gerald J.
Wilkins to its Board of Directors.
Mr. Wilkins is Executive Vice President and Chief Financial
Officer of AFC Enterprises, Inc. AFC owns, operates, and
franchises nearly 4,000 restaurants, bakeries, and cafes in over
30 countries worldwide. AFC's brands include Popeyes Chicken &
Biscuits, Church's Chicken, Cinnabon, Seattle's Best Coffee, and
Torrefazione Italian Coffee. Mr. Wilkins also serves on the
Board of Directors of AFC Enterprises.
Prior to joining AFC Enterprises in 1995, Mr. Wilkins was Vice
President of International Business Planning at KFC
International. From 1985 to 1993, he served in various
financial management positions with General Electric.
He was also employed by Peat, Marwick, Mitchell as a Certified
Public Accountant following his graduation, magna cum laude,
from San Francisco State University in 1979. Mr. Wilkins
subsequently earned an MBA from Stanford University in 1984. He
and his family reside in Atlanta, where he is involved in a
variety of community activities.
Commenting on the announcement, Robert A. Yellowlees, Chairman
of the Governance and Nominating Committee stated, "All of us on
the board look forward to working with Gerald in the years
ahead. He brings a diverse business background and very strong
experience in financial management and controls to an already
experienced board."
"I'm pleased to be joining Global's Board," said Wilkins. "I
have been impressed with the strength and consistency of the
company's business model, management team and financial
performance. The Board has real breadth in the company's
markets and has a well thought out governance process."
Chairman of the Board and Chief Executive Officer, Paul R.
Garcia, noted, "Gerald's experience in the retail segment of the
business will be of particular value. In addition, we look
forward to benefiting from his international perspective as we
continue to evaluate opportunities outside of North America."
Global Payments Inc., (NYSE: GPN) is a leading provider of
electronic transaction processing services to merchants,
Independent Sales Organizations, financial institutions,
government agencies and multi-national corporations located
throughout the United States, Canada, the United Kingdom, and
Europe. Global Payments offers a comprehensive line of payment
processing solutions for credit and debit cards, business-to-
business purchasing cards, gift cards, Electronic Benefits
Transfer cards, check guarantee, check verification and
recovery, terminal management and funds transfer services.
As of August 31, 2002, Global Payments' balance sheet shows a
working capital deficit of about $1.4 million.
HAYES LEMMERZ: Seeks Court's Nod to Amend DIP Credit Agreement
--------------------------------------------------------------
Anthony W. Clark, Esq., at Skadden Arps Slate Meagher & Flom
LLP, in Wilmington, Delaware, relates that while preparing
calculations for the October 1, 2002 Quarterly Adequate
Protection Payment, Hayes Lemmerz International, Inc., its
debtor-affiliates and the DIP Lenders discovered their mutual
failure to revise the Measurement Period definition in the
Revised DIP Credit Agreement. As a result, the calculation
required by the Revised DIP Credit Agreement, as currently
drafted, showed that no adequate protection payment was payable
pursuant to the October 1st earnings test, despite the fact that
an adequate protection payment would have been payable under the
minimum liquidity test. Accordingly, the Debtors want to
correct this error and reconcile the definition of Measurement
Period to correspond to the related earnings covenant periods in
the Revised Credit Agreement.
By this Motion, the Debtors ask the Court for an order
authorizing:
-- them and the DIP Lenders to reconcile the unintended
drafting error in the Revised DIP Credit Agreement by
changing the definition of Measurement Period to provide
that this period begins on January 1, 2002, as the parties
mutually intended, rather than December 1, 2001, as
currently provided; and
-- them to pay to the Prepetition Secured Lenders the
Quarterly Adequate Protection Payment that otherwise would
have been payable on October 1, 2002 but for the erroneous
provision.
Pursuant to the Final DIP Order, the Court authorized the
Debtors to provide adequate protection to the Prepetition
Secured Lenders with respect to any diminution in the value of
their interests in their prepetition collateral resulting from
the priming liens and security interests granted in the Final
DIP Order to secure the loans under the Revised DIP Credit
Agreement.
Mr. Clark explains that one of the types of adequate protection
payments approved in the Final DIP Order is the Quarterly
Adequate Protection Payments that may be made beginning on
October 1, 2002, if the Debtors satisfy both an earnings test
and a minimum liquidity test as set forth in the Revised Credit
Agreement. The Earnings Test is based on cumulative domestic
EBITDA less cumulative domestic capital expenditures during the
Measurement Period. The Minimum Liquidity Test ensures that the
Debtors will have sufficient operating liquidity by effectively
reserving $50,000,000 of availability to fund ongoing operations
before allowing the payment of Quarterly Adequate Protection
Payments.
Because the Debtors and DIP Lenders inadvertently neglected to
revise the Measurement Period to begin on January 1, 2002, as
they had mutually intended, the month of December 2001 currently
is included in the Measurement Period for the Earnings Test.
Accordingly, the Measurement Period definition should be revised
to correct the inadvertent mistake and to reflect the intentions
of the Debtors and the DIP Lenders when they entered into the
Revised DIP Credit Agreement.
According to Mr. Clark, December 2001 was a highly unusual month
for the Debtors in that they expended significant amounts in
preparation for the commencement of their Chapter 11 cases,
experienced certain interruptions and reactions to the filing of
their Chapter 11 cases, and revised certain estimates and
assumptions in connection with the Debtors' then ongoing
examination of the Debtors' financial reporting process. These
factors, when taken together, had a significant negative effect
on the Debtors' earnings for this month. In fact, domestic
EBITDA for the Debtors during December 2001 was negative
$25,000,000. By comparison, the Debtors have had positive
domestic EBITDA during every other month since December 2001.
The Debtors and the DIP Lenders predicted poor December results
when they prepared the Revised DIP Credit Agreement and, thus,
they revised the earnings covenants, and intended to revise the
Measurement Period definition, to eliminate any period prior to
January 1, 2002. By eliminating December 2001 earnings results,
the Debtors and DIP Lenders attempted to normalize the earnings
covenants and tests under the Revised DIP Credit Agreement to
prevent either party from suffering undue prejudice from the
aberrant earnings results that were expected and ultimately
reported.
However, by failing to revise the Measurement Period definition,
that is exactly what happened. Mr. Clark relates that inclusion
of the December earnings figures in the Measurement Period
resulted in insufficient earnings available under the October 1,
2002 Earnings Test despite satisfying the Minimum Liquidity
Test. As a result, no Quarterly Adequate Protection Payment was
payable to the Prepetition Secured Lenders for the period.
Removing December 2001 from the Measurement Period results in
the satisfaction of, and sufficient earnings availability under,
the October Earnings Test. Thus, a $13,000,000 October 1, 2002
Quarterly Adequate Protection Payment is payable to the
Prepetition Secured Lenders.
Mr. Clark contends that the Debtors have performed well against
their operating plan during these Chapter 11 cases and are
capable of paying the Quarterly Adequate Protection Payments
that will likely result if the Measurement Period is revised.
In fact, as of October 30, 2002, the Debtors reported that they
were $42,000,000 ahead of their consolidated EBITDA covenant for
the nine months ended September 30, 2002 and $21,000,000 ahead
of their domestic EBITDA covenant for the same period. The
Debtors also reported that as of November 12, 2002, they had
borrowed $31,000,000 on their DIP Credit Facility and that they
had an estimated $87,000,000 in excess availability.
Furthermore, the Debtors easily satisfy the October 1, 2002
Minimum Liquidity Test, ensuring that they have sufficient
operating liquidity notwithstanding the payment of the October
1, 2002 Quarterly Adequate Protection Payment.
The Debtors and the Lenders are aware that the Committee
believes it has identified various actions that, if successful,
might result in a portion of the Prepetition Secured Lender's
claims being deemed to be unsecured. Moreover, the Debtors are
aware that the Committee is taking steps to attempt to re-vest
the Debtors and the Committee with authority to pursue these
causes of action through the Committee's recent motion under
Rule 60(b) of the Federal Rules of Civil Procedure. Although
the Debtors believe that these are important issues in the
overall context of their cases, they do not believe that they
have any bearing on the current issues regarding adequate
protection. Mr. Clark notes that the Final DIP Order clearly
protects the Committee's rights to seek to re-characterize any
or all of the adequate protection paid to the Prepetition
Secured Lenders during these cases in the event the Committee,
Debtors or any other party successfully demonstrates that the
Prepetition Secured Lenders are undersecured. (Hayes Lemmerz
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Hayes Lemmerz Int'l Inc.'s 11.875% bonds due 2006 (HLMM06USS1),
DebtTraders says, are trading at 45 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1
for real-time bond pricing.
HIGH SPEED ACCESS: Shareholders Approve Plan of Dissolution
-----------------------------------------------------------
High Speed Access Corp., (OTC Bulletin Board: HSAC) announced
that its stockholders approved the dissolution and liquidation
of the Company at its Annual Stockholders Meeting. HSA will
proceed to file its Certificate of Dissolution with the Delaware
Secretary of State as soon as practicable.
IFCO SYSTEMS: Reports Improved Performance for Third Quarter
------------------------------------------------------------
IFCO Systems N.V. (Frankfurt:IFE) reported that the trading
environment in Q3 continued to be challenging. While the
European economies remained largely unchanged, Germany,
specifically the retail market, sustained a continued downturn.
The economic environment in the US also failed to show a
substantial recovery. Despite these unfavorable conditions and
the ongoing debt restructuring process, the Company achieved
3.7% growth in revenues and 91.5% growth in EBITDA in Q3 2002;
and 1.4% revenue growth and 24.2% EBITDA growth year to date
2002, compared with the previous year. The restructuring of the
EURO 200m 10-5/8% Senior Subordinated Notes is due to be
completed by the end of 2002 and the timing is in line with
management expectations. As a result the Company's debt will be
reduced by EURO 200m plus the accrued interest of EURO 22.1m,
for a total of EURO 222.1m, as the notes and the interest are
exchanged in a debt for equity swap.
Revenues: Total Revenues in Q3 2002 totaled US$93.9m compared to
revenues of US$ 90.5m in Q3 2001, an increase of 3.7%. Year to
date 2002 total revenues, increased by 1.4% to US$ 283.3m from
US$ 279.4m in the same period in 2001.
RPC revenues grew by 4.1% to US$38.3m compared to Q3 2001. Year
to date 2002 revenues in this division amounted to US$108.3m and
were unchanged compared to the same period in the previous year.
RPC trips in Q3 2002 were 11.8% lower than in the same period of
the prior year. Once again, the US RPC business performed
strongly and Europe, excluding Germany, also developed in line
with expectations. The shortfall in trips was mainly due to the
German business, where the continuing unfavorable retail trading
environment, as well as the uncertainty created by the debt
restructuring process, negatively affected the business with
German retailers.
Pallet Services achieved revenues of US$52.3m in the third
quarter 2002, an increase of 6.9% from Q3 2001. Year to date
revenues in this division increased by 3.5% to US$162.7m from
US$157.2m compared to the same period in 2001.
As the Pallet Recycling business tracked GDP growth in the US,
the crating business continued to contribute strongly. As a
result of the national sales program, new contracts have
provided an increase in used pallet supply as well as sales.
Pallet Pooling Services (Canadian pallet rental pool) revenues
declined from US$4.9m in Q3 2001 to US$3.4m in 2002 or 30.4%.
Year to date revenues declined by 11.2%, from US$13.9 in 2001 to
US$12.4m in the current year. Revenues in Q3 2003 were lower as
a result of the elimination of the FLEX program in Q4 2001. This
quarter is also a seasonally slow period for the continuing
recycling business.
EBITDA: Total EBITDA increased by 91.5% from US$6.8m in Q3 2001
to US$12.9m in Q3 2002. For the first nine months of 2002, the
Company achieved EBITDA of US$33.3m compared to US$26.8m in the
same prior year period, an increase of 24.2%. The EBITDA
performance reflects the strong upward trend in profitability
since the beginning of 2002 from US$9.2m in Q1 2002, to US$11.1m
in Q2 2002 to US$12.9m in Q3. Margins also improved
significantly by 6.3 percentage points in Q3 2002 as well as 2.2
percentage points in YTD against the prior year period. The
continuing strong EBITDA and respective margin performance is
the result of the cost and efficiency measures that have been
implemented by the management team over the last six quarters.
The RPC division achieved EBITDA of US$8.9m in Q3 2002 compared
to US$6.3m in Q3 2001, an increase of 41.0%. Year to date EBITDA
increased 21.9% from US$18.3m in 2001 to US$22.2m in 2002. The
strong improvement in the margin by 6.1 percentage points
allowed a 4.1% revenue increase to be turned into a 41.0% EBITDA
increase. This was achieved by increased revenue per trip and a
reduced cost per trip as a result of better managed washing,
transport and collection processes.
EBITDA for the Pallet Services division amounted to US$4.7m in
Q3 2002 compared with US$2.3m in Q3 2001, an increase of 107.6%.
The company achieved EBITDA of US$13.6m in the first nine months
2002 compared with US$12.7 in the same period the previous year,
an increase of 7.2%. The margin increased by 4.4 percentage
points in Q3 2002 to 9.1% and 0.3 percentage points to 8.4% YTD
2002, compared with the prior year period. Comparisons with Q3
2001 are somewhat distorted due to the negative effects on the
business following the events of September 11, 2001 in the
United States. The YTD EBITDA growth reflects the continued
strong focus on costs and process efficiencies, as well as
improved controls.
Pallet Pooling Services in Canada, achieved EBITDA of US$0.2m in
Q3 2002 compared with US$0.4m in Q3 2001. Year to date 2002
EBITDA of US$0.2m compares to US$0.8m for the same period in
2001. The EBITDA was consistent and slightly above management's
target as this division implements the restructuring measures
following the problems it experienced in 2001.
SG & A: Once again, significant savings have been made as the
Company has continued its aggressive review and control of all
expenses. The company reduced SG&A expenses, as a percentage of
sales, to 11.3% in Q3 2002 compared to 14.5% for the same period
in the previous year; and from 14.1% to 11.5% for the nine
months ended September 2001 and 2002, respectively. This was
mainly achieved by overall headcount reduction, reducing legal
and consulting expenses as well as a decrease in audit fees.
Debt: Total interest-bearing debt, including capital lease
obligations and the 10-5/8% Senior Subordinated Notes amounted
to US$319.7m, as of the end of September 2002 compared to
US$323.5m at end of June 2002. Senior debt decreased by US$3.7m
against Q2 2002.
As a result of the anticipated restructuring of the EURO 200m
10-5/8% Senior Subordinated Notes, the total interest-bearing
debt will be reduced by EURO 200m or the respective amount in
US$.
Working capital: The working capital position has been reduced
in Q3 2002 by US$25.2m to US$79.7m versus Q2 2002. This is
primarily due to a decrease in accounts payable and other
accrued expenses.
Net income/loss: The company reports a net income of US$3.6m for
the three months ended September 30, 2002. This compares to a
net loss of US$98.8m in Q3 2001. For the nine months ended
September 2002, the Company recorded a net loss of US$37.9m,
compared to a net loss of US$84.3m in the same period the
previous year. For the first nine months of 2002, US$25.5m of
the total net loss was primarily due to currency translation
losses on the euro-denominated notes and, as such, represent a
book loss. An additional amount of US$14.9m reflects the
continuing accrual of interest expenses on the senior
subordinated notes which will be exchanged for equity in the
debt restructuring, which is planned to be completed at the end
of this year. Excluding this currency translation book loss and
the interest accrual for the senior subordinated notes, the
recorded net loss would be a net gain of US$2.5m for the nine
months 2002.
The numbers in the text refer to the Company's continuing
businesses only, from which Argentina (deconsolidated at end
2001) and ISL (terminated at end 2001) have been excluded.
Furthermore, following a new supply agreement with SWS effective
January 2002, granulate sales have also now been excluded from
the Company's revenue and EBITDA numbers.
As reported in Troubled Company Reporter's October 30, 2002
edition, Standard & Poor's withdrew its double-'C' bank
loan rating on IFCO Systems N.V.'s $178 million secured bank
credit facility, as the company is currently in the process of
restructuring the facility, which will likely result in
impairment to current holders of the facility.
At the same time Standard & Poor's withdrew its corporate credit
and subordinated debt ratings on the company, which had been
lowered to 'D' on March 15, 2002, after IFCO failed to make its
interest payment on its 10.625% senior subordinated notes due
2010.
IMP INC: Independent Auditors Express Going Concern Doubt
---------------------------------------------------------
IMP, Inc., a Delaware corporation founded in 1981, develops and
manufactures analog CMOS integrated circuit solutions for
communications, computer and control applications.
In September 2001, Subba Mok LLC, a limited liability company
headquartered in the United States of America, acquired
approximately 72% of the common stock of the Company. As a
result of the shares issued in connection with this transaction,
the ownership of Teamasia Semiconductors (India) Ltd., a private
corporation headquartered in India, was reduced from
approximately 51% to 14% of the Company.
In 2001, the Company changed its year end to March 31 of each
year. Prior to the year ended March 31, 2001, the Company's
fiscal year ended on the Sunday nearest to March 31.
During the month of August, 2002, the Company signed a contract
with Minghua Microelectronic Investment Company LTD, a company
based in Ningbo, Republic of China to form a joint venture
company. All activities of the joint venture shall be governed
by the laws and pertinent rules of the Peoples Republic of
China. The amount of investment of the joint venture is
anticipated to be $31.0 million. The joint venture company is
owned 50% by IMP and 50 % by Minghua Microelectronics. Minghua
Microelectronic is responsible for providing the land, building
and clean room facility and IMP is providing equipment for wafer
fabrication from its present facility in San Jose, technology
and business to the Joint Venture. The joint venture shall have
10 board of directors, five will be appointed by Minghua
Microelectronics and five by IMP. IMP will manage the joint
venture for the first three years. Upon achieving certain goals
and in addition to all of the above IMP will receive $4.0
million in cash from Minghua Microelectronic.
The joint venture facility with clean room is expected to be
completed by the middle of December 2002 and 50 % of the
fabrication equipment from the San Jose facility shall be moved
to the facility in Ningbo, China by the first week of January,
2003. IMP will continue its manufacturing operations with the
remaining 50% of the equipment in San Jose, until the facility
is operational in Ningbo, China.
The scope of the joint venture company is to design, develop,
manufacture and sell semiconductor integrated circuits. The
joint venture company will focus in the area of power management
integrated circuits. IMP with its increased presence in China,
a fast growing market for semiconductor chips, expects to
improve sales of its standard products.
During the quarter ended September 30, 2002, the Company
generated net revenues of $3.8 million compared to $6.7 million
for the same period of the prior year. The decrease in net
revenues was due to decreased demand for the Company's foundry
products. Foundry product sales accounted for 20% of net
revenues in the quarter ended September 30, 2002 and standard
product sales accounted for 80% of net revenues in the quarter
ended September 30, 2002. Among standard products, supervisor
series of products accounted for approximately 34%, UART 19% and
discrete power devices accounted for 15% of the net revenue for
the quarter ended September 30, 2002. For the six months ended
September 30, 2002, the Company generated net revenue of $7.5
million compared to $14.1 million for the same period of the
prior year. The decrease in the net revenue was due the
decreased demand for the foundry products. For the period ended
September 30, 2002 the foundry sales were 20% and standard
products sales 80%.
The Company had a net income $87,000 for the three months ended
September 30, 2002, compared to a net income of $6,000 in the
quarter ended September 30, 2001. The Company has taken a number
of actions designed to enable it to show profitable results at
much lower revenue level compared to historical levels. Scaled
down operations, cost control and improvements in the Company's
manufacturing efficiency are the major drivers of the Company's
return to profitability.
The Company had a net income of $124,000 for the six months
ended September 30, 2002, compared to a net income of $432,000
in the six months ended September 30, 2001. The decrease in net
profits is due to the net decrease in sales.
Cash and cash equivalents decreased to $16,000 at September 30,
2002 from $31,000 at March 31, 2002.
Net cash provided by operating activities in the six months
ended September 30, 2002 was $1.6 million as compared to net
cash used in operating activities in the six months ended
September 30, 2001 of $2.4 million. The improvement is
primarily attributable to cash flow changes in accounts
receivables, which used $3.2 million cash flow for the six
months ended September 30, 2001 and provided $0.5 million of
cash flow for the six months ended September 30, 2002. During
the six months ended September 30, 2002, the Company's cash
flows were favorably effected by approximately $1.0 million in
receivables that were sold without recourse by the Company to an
affiliated entity.
Net cash used for investing activities was $112,000 in the six
months ended September 30, 2002 as compared to net cash used for
investing activities of $295,000 in the six months ended
September 30, 2001.
Net cash used in financing activities was $1.5 million in the
six months ended September 30, 2002 as compared to net cash
provided by financing activities of approximately $2.7 million
in six months ended September 30, 2001. During the six months
ended September 30, 2001 the Company received proceeds from the
issuance of common stock of approximately $5.9 million,
approximately $2.7 million was used to repay the Company's
revolving credit facility.
The Company continues to experience severe liquidity problems
and absorb capital infusion in its operating activities. As of
September 30, 2002, the Company had a working capital
deficiency, but improved from the year ended March 31, 2002 by
approximately $580,000. The Company is in default under the
terms of certain financing agreements, is delinquent in the
payment of its federal unemployment taxes, and has limited
financial resources available to meet its immediate cash
requirements. These matters raise substantial doubt about the
Company's ability to continue as a going concern.
INPRIMIS INC: Working Capital Deficit Reaches $14MM at Sept. 30
---------------------------------------------------------------
Inprimis, Inc., acquired, effective September 6, 2002, 100% of
the outstanding capital stock of Ener1 Battery Company from the
Company's parent, Ener1 Group, Inc. The battery subsidiary is in
the business of developing, marketing and producing lithium ion
and other lithium technology batteries for use in military,
industrial and consumer applications. Ener1 Battery Company has
five patent applications on file with the U.S. Patent and
Trademark Office relating to its advance battery technologies
and designs, and is in the process of developing additional
technologies that are expected to be the subject of further
patent applications.
The Company's original business is now called the Digital Media
Technologies Division and is focused on delivering interactive
information and entertainment systems and services to markets in
vertical industries such as hospitality and healthcare. The
Company as previously announced owns 51% of Enerlook Healthcare
Solutions, Inc., which provides turn-key video-on-demand and
interactive TV solutions to hospitals. On June 13, 2002 the
Company formed Ener1 Technologies, Inc. to develop and market
products for neutralizing the harmful effects of electromagnetic
radiation in electric power transmission lines and equipment.
On October 23, 2002 the Company amended its Articles of
Incorporation to change its name from Inprimis, Inc. to Ener1,
Inc. On October 28, 2002 the Company's ticker symbol changed to
ENEI to reflect the new name. The Company's parent company Ener1
Holdings, Inc. has changed its name to Ener1 Group, Inc.
The Company's net sales decreased 13.9% to $0.8 million for the
three months ended September 30, 2002 from $0.9 million for the
three months ended September 30, 2001. For the nine months ended
September 30, 2002 net sales decreased 9.7% to $2.6 million from
$2.9 million for the nine months ended September 30, 2001. Sales
for the three months ended September 30, 2002 consisted of $0.6
million from contract engineering and $0.2 million from
prototype and products sales. Sales for the three months ended
September 30, 2001 consisted of $0.7 million for contract
engineering and $0.2 million from prototype and product sales
arising from engineering contracts. Sales for the nine months
ended September 30, 2002 consisted of $1.7 million for contract
engineering and $0.9 million for product sales. This compares to
the nine months ended September 30, 2001 where sales consisted
of $2.3 million in contract engineering and $0.6 million in
product sales. In 2002, the Company has embarked on an effort to
de-emphasize contract engineering services and focus on
developing products associated with its set-top box designs. The
Company's set-top box, interactive iTV devices are currently
being targeted at the hospital and lodging markets.
The Company recorded a small gross profit of $12,000 for the
three months ended September 30, 2002 as compared to a gross
profit of $0.1 million for the three months ended September 30,
2001. For the nine months ended September 30, 2002, the Company
reported a negative gross profit of $0.7 million compared to a
negative gross profit of $0.9 million for the nine months
September 30, 2001. The Company's insignificant or negative
gross profit for the three and nine months ended September 30,
2002 was the result of engineering costs being charged to
projects that exceeded recognized revenue for the project. This
situation can be caused by a number of factors such as under
pricing of the project, inefficiency of the engineers, and
difficulties encountered in the project.
Net loss for the three months ended September 30, 2002 was
$2,008, as compared to $494, the net loss in the same three
month period of 2001. For the nine months ended September 30,
2002 the Company suffered a net loss of $6,505, as compared to
the net loss of $3,375 for the nine months ended September 30,
2001.
The Company's working capital as of December 31, 2001 was a
deficit of $0.9 million and as September 30, 2002, the Company's
working capital was a deficit of $13.9 million. However, $12.3
million of current liabilities were to related parties or to the
Company's major stockholder. Excluding these liabilities the
Company's working capital was a negative $1.6 million.
Therefore, excluding these liabilities, during the period from
December 31, 2001 through September 30, 2002, the Company's
working capital decreased by $0.7 million. This decrease in
working capital was primarily a result of an increase
in accounts payable and accrued expenses of $1.4 million, an
increase in deferred revenue of $0.4
million, offset by an increase in other current assets,
excluding cash, of $0.1 million and an increase in cash of $1.0
million. The Company's cash position as of September 30, 2002
was $1.5 million compared to a cash position of $0.4 million as
of December 31, 2001. The Company's cash position of $1.5
million as of September 30, 2002 includes $0.5 million of cash
that is held by the Company's 51% owned subsidiary, EnerLook
Healthcare Solutions, Inc. and $0.9 million held by the
Company's wholly owned subsidiary Ener1 Battery Company. The
cash in these subsidiaries are to be used for the operations of
these subsidiaries. EnerLook Healthcare Solutions Inc's
operation used cash of $1.1 million for the nine months ended
September 30, 2002 and this subsidiary's operations will
continue to use cash for the foreseeable future. The Battery
Company subsidiary had cash of $0.9 million and $0.1 in the
Digital Media division.
INTEGRATED HEALTH: Auctioning-Off Durham Property on December 6
---------------------------------------------------------------
Integrated Health Services, Inc., and its debtor-affiliates
obtained Court approval of their proposed Durham Asset Sale
Bidding Procedures.
The auction for the property will be conducted on December 6,
2002 at 12:00 Noon (EST).
Any person or entity that desires to purchase the Property and
acquire the Facility Operations must be present at the Auction
and bid in accordance with the Bidding Procedures. The Auction
for the sale of the Property and associated transition of the
Facility Operations will be held in the law offices of Young
Conaway Stargatt & Taylor, LLP, The Brandywine Building at 1000
West Street, 17th Floor in Wilmington, Delaware on December 6,
2002 at 12:00 Noon (EST).
To be considered a Qualifying Bid, single bids for the Property
and Facility Operations must be submitted pursuant to these
procedures:
-- bids may be submitted only by Durham Investors and any person
or entity that has, by no later than December 2, 2002 at 4:00
P.M. (EST):
* delivered to the Debtors, in the manner provided in the
Sale Contract for the giving of notices, a written bid for
the purchase of the Property and accompanying acquisition
of the Operations, which bid must be in the form of the
Agreement and the Transfer Agreement, will set forth as the
Purchase Price in the Sale Contract the bidder's initial
bid in accordance with these Bidding Procedures; and
* deposited in escrow with the Escrow Agent at or prior to
the time of submitting its initial bid, 10% of the amount
of its initial bid in the form of Acceptable Checks or by
wire transfer of immediately available federal funds, which
deposit will be held pursuant to Article "15" of the Sale
Contract;
-- if a competing bidder is not the successful bidder at the
Auction, its downpayment will be returned to it within the
earlier of 5 business days after the closing of the Sale of
the Property and accompanying Transfer of the Facility
Operations to the successful bidder or 90 days after the date
of the Auction;
-- if a competing bidder is the successful bidder at the
Auction, its deposit will become the Downpayment and will be
governed by the provisions of the Sale Contract;
-- in the event that a bidder other than the Proposed Purchaser
is the successful bidder for the Property and the Operations,
the successful bidder will be deemed to assume all the terns
of the Sale Contract as "Purchaser" and all the terms of the
Transfer Agreement as New Operator;
-- any competing bidder must provide evidence reasonably
satisfactory to the Debtors at least 3 business days prior to
the Auction, that the person or entity has the financial
ability to close the transaction;
-- any bid for the Property will be deemed to inseparably
include the Operations and the acquisition and transfer
pursuant to the Transfer Agreement, and must be for "all
cash;"
-- the initial minimum bid at the Auction will not be less than
$3,125,000;
-- bids subsequent to the Minimum Initial Bid will be in
increments of not less than $100,000;
-- in the event that a bid to purchase the Property and acquire
the Operations is made by a party other than Durham Investors
is the winning bid at the Auction, and is accepted by the
Debtors and approved by the Court, Durham Investors'
downpayment will be returned to Durham Investors within the
earlier of:
* 5 business days after the Debtors' closing of the Sale of
the Property and Facility Transfer to the successful
bidder; or
* 90 days after the date of the Auction;
-- the Debtors are required to accept the higher or better bid
made at the Auction by a bidder who has qualified in
accordance with the provisions of this Motion, with the
understanding that in determining which offer is higher or
better, the Debtors reserve the right to:
* determine in its reasonable discretion which Qualifying
Bid, if any, is the highest or best offer and
* reject at any time prior to entry of an order of the
Court approving any Qualifying Bid which the Debtors, in
its reasonable discretion and without liability, deems to
be:
a. inadequate or insufficient,
b. not in conformity with the requirements of the
Bankruptcy Code, the Bankruptcy Rules, the Local
Bankruptcy Rules or the terms and conditions of the
Sale Contract and Transfer Agreement, or the bidding
procedures, or
c. contrary to the best interests of the Debtors, their
creditors and their estates.
Economic considerations will not be the sole criteria on
which the Debtors may base its decision;
-- if no bid, together with the requisite 10% deposit, is
received from a qualified bidder, the Auction will not be
conducted and the Debtors will ask the Court to enter an
order approving the Sale of the Property and Facility
Transfer to Durham Investors pursuant to the Sale Contract
and Transfer Agreement; and
-- if a bidder other than Durham Investors will be the
successful bidder at the Auction, and the sale to the other
bidder will fail to close for any reason, the Debtors will
first notify the next highest bidder at the Auction, whose
bid was otherwise acceptable to the Debtors, of the failure
and the next highest bidder will have the right to purchase
the Property and acquire the Operations in accordance with
the Sale Contract and the Transfer Agreement at the Purchase
Price submitted with its last bid, exercisable within 3
business days of the bidder's receipt of notice, and if there
are no bidders who will have elected to purchase the Property
and acquire the Operations as provided, then the Debtors will
notify Durham Investors of the failure and Durham Investors
will have the right, exercisable within 3 business days of
the receipt of notice, to elect to purchase the Property and
acquire the Operations pursuant to the terms of the Sale
Contract and the Transfer Agreement for the amount of the
Purchase Price set forth in the Sale Contract; and if Durham
Investors elects to purchase the Property and acquire the
Operations after receiving notice, the Sale of the Property
and Facility Transfer will close in accordance with
the terms of the Sale Contract and the Transfer Agreement,
except that the Closing Date will occur within 60 days of the
date of election.
Court also scheduled the Sale Hearing for December 9, 2002 at
10:30 a.m. (EST). (Integrated Health Bankruptcy News, Issue No.
46; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ITC DELTACOM: Court Fixes Dec. 31 Administrative Claims Bar Date
----------------------------------------------------------------
Pursuant to a Confirmation Order by the U.S. Bankruptcy Court
for the District of Delaware, administrative claim holders of
ITC Deltacom, Inc., are directed to file requests for payment no
later than December 31, 2002, or be forever barred from
asserting those claims.
Requests need not be filed if they are on account of:
i. Non-tax liabilities incurred in the ordinary course of
business by the Debtor;
ii. Post-Petition tax claims.
ITC Delatacom, Inc., an exempt telecommunications company and a
holding company, filed for chapter 11 protection on June 25,
2002. Rebecca L. Booth, Esq., Mark D. Collins, Esq., at
Richards, Layton & Finger, P.A. and Martin N. Flics, Esq.,
Roland Young, Esq., at Latham & Watkins represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed $444,891,574 in total
assets and $532,381,977 in total debts.
KAISER ALUMINUM: Wins Nod to Join Insurance Coverage Settlements
----------------------------------------------------------------
Kaiser Aluminum Corporation and its debtor-affiliates sought and
obtained the Court's permission to participate in two
interrelated agreements with certain of their product liability
insurers:
(1) an agreement regarding certain issues associated with
asbestos product action, and
(2) a compromise agreement.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
explains that the interrelated agreements will:
(a) resolve issues currently being litigated in relation to
the exhaustion of the Debtors' asbestos insurance
coverage; and
(b) set a method of determining what constitutes an asbestos
exposure "occurrence" under the insurance coverage.
In May 2000, the Debtors sought declaratory judgment against
their products liability insurers. The Products Coverage Action
includes claims for breach of contract and breach of the
covenant of good faith and fair dealing against the insurers.
The Debtors complained that the insurers failed to pay insurance
claims they filed under various policies that were issued for
their benefit.
On the other hand, the insurers argued that they do not have to
pay out under a policy unless the self-insured retention and
underlying coverage is exhausted. The insurers allege that:
-- in some years, the SIRs and underlying coverage were
written on a per-occurrence as well as an annual
aggregate basis;
-- the Debtors may not have adequately exhausted the SIRs or
underlying coverage for those years that are disputed,
even though the Debtors spent vastly more than required
to exhaust the underlying coverage; and
-- the underlying SIR does not and the Debtors could not
have exhausted the SIR or underlying coverage for those
other years, where the SIRs do not specifically state
that they are written on an aggregate basis, even though
the overlying coverage has aggregate limits.
The SIRs range from $25,000 to potentially as much as $1,000,000
per occurrence. According to Mr. DeFranceschi, the insurers
take the position that the Debtors must pay the SIR amount for
each occurrence before an insurer is required to make any
payment under the overlying policy. This means that for a first
layer policy issued in conjunction with a $100,000 SIR, the
Debtors would be unable to obtain any payment from an overlying
insurer unless the costs associated with one occurrence of
asbestos exposure exceeded $100,000.
The Products Coverage Action is currently pending before the
Superior Court of California in San Francisco. If successful,
the Action would establish the Debtors' rights and the insurers'
obligations with respect to certain asbestos claims. This would
enable the Debtors to recover present and future costs incurred
in connection with the defense and settlement of asbestos-
related bodily injury products liability claims.
Mr. DeFranceschi summarizes the Debtors' product coverage:
* From the 1940's to 1960, the Debtors obtained primary
coverage from Fireman's Fund and excess coverage from
London Market Insurers;
* From 1960 to 1985 -- the coverage period that is being
disputed in the lawsuit -- the Debtors' first layer
coverage was typically written as excess of a self-insured
retention -- SIR -- with one other policy written as a
deductible policy; and
* From 1978 to 1985, the Debtors' first layer coverage was
"fronting" coverage, where the policy was written with a
retrospective premium that required the Debtors to
reimburse payments made by the applicable insurer under
the products liability policy.
Certain Issues Agreement
In October 2001, Judge Kramer of the San Francisco Superior
Court resolved a number of disputes through summary judgment,
and significantly reduced the scope of the remaining issues.
The remaining issues include:
(i) whether the Debtors have met the burden of demonstrating
that the first layer coverage and associated SIRs have
been exhausted; and
(ii) whether the excess carriers have a current obligation to
pay under the policies they have issued.
To date, the litigation continues. However, Judge Kramer
encouraged the parties to promptly reach agreement on as many of
the remaining issues as possible.
So far, Mr. DeFranceschi reports that London Market Insurers,
AIG affiliated companies, NY Marine Managers and ACE affiliated
entities have signed one or the other of the Agreements. These
insurers represent more than 50% of the total solvent coverage.
The principal terms of the Certain Issues Agreement include:
A. Number of Occurrences
The parties agree that the term "occurrence" when applied to
Asbestos Product Claims refers to the exposure or a
continuous or repeated exposure of one person to asbestos
containing products manufactured, sold, handled or
distributed by Kaiser.
B. Exhaustion of Policies Directly Underlying Excess Policies
-- The parties agree that the product aggregate limits, and
the underlying SIRs and Deductibles, if any, of these
policies have been exhausted through the payment of claims
falling within the products hazard category, including but
not limited to, Asbestos Product Claims:
Policy No. Insurer Policy Period
---------- ------- -------------
78158 London Insurers 08/21/1958 - 11/01/1960
GAC 104129 Fireman's Fund 01/01/1959 - 01/01/1960
CL712111 Fireman's Fund 01/01/1960 - 07/01/1960
XBC 67901 INA 01/01/1967 - 01/01/1970
WE1332 London Insurers 02/01/1970 - 03/01/1973
XBC 24315 INA 01/01/1970 - 02/01/1973
71399 Affiliated FM 02/01/1973 - 04/01/1976
UH32657 London Insurers 02/01/1973 - 04/01/1976
UH32658 London Insurers 02/01/1973 - 04/01/1976
902504 First State 04/01/1976 - 04/01/1977
CE 5503360 Lexington 04/01/1976 - 04/01/1977
IL 809-5919 Indust. Indemnity 04/01/1981 - 04/01/1982
IL 809-5942 Indust. Indemnity 04/01/1982 - 04/01/1985
-- The parties agree that the product aggregate limits and
the underlying SIRs and Deductibles of these policies have
been exhausted through the allocation of specific high-
dollar settlements:
Policy No. Insurer Policy Period
---------- ------- -------------
78158 London Insurers 08/21/1958 - 11/01/1960
XCP 915 INA 01/01/1963 - 01/01/1964
XBC 369 INA 01/01/1963 - 01/01/1964
XBC 4354 INA 01/01/1964 - 01/01/1965
XBC 4354 INA 01/01/1965 - 01/01/1966
CNU 126404 Central National 04/01/1977 - 04/01/1978
IL 796-2143 Indus. Indemnity 04/01/1978 - 04/01/1979
IL 796-2143 Indus. Indemnity 04/01/1979 - 04/01/1980
IL 796-2143 Indus. Indemnity 04/01/1980 - 04/01/1981
C. Exhaustion Methodology
The agreement establishes an exhaustion methodology with
respect to the remaining years of first layer coverage not
exhausted under the terms of the Agreement. The method
includes:
-- All claims arising out of exposure or continuous or
repeated exposure of one person to asbestos-containing
products manufactured, sold, handled or distributed by
Kaiser will be deemed to be a separate occurrence;
-- The entire indemnity payment and all associated defense
costs for each claim are allocated to a single policy
year only;
-- With respect to the First Layer Umbrella Policies, for
each claim that is allocated to a single policy year, the
applicable SIRs or Deductible is satisfied through
Kaiser's payment. The First Layer Umbrella Policies are:
SIRs/Deductible
Policy No. Insurer Policy Period in Dispute
---------- ------- ------------- ---------------
XCP 602 INA 04/01/1960 - Per Occurrence SIR
01/01/1963
XCP 915 INA 01/01/1963 - Per Occurrence SIR
01/01/1964
XBC 4354 INA 01/01/1964 - Per Occurrence SIR
01/01/1967
XBC 24315 INA 01/01/1967 - Common Causative
01/01/1970 Agency SIR
XBC 67901 INA 01/01/1970 - Common Causative
02/01/1973 Agency SIR
CNU 126404 Central 04/01/1977 - Per Occurrence
National 04/01/1978 Deductible
Ins. Co.
of Omaha
IL 796-2143 Industrial 04/01/1978 - Per Occurrence SIR
Indemnity
-- The defense and indemnity costs for a single policy year
claim that is in excess of the applicable SIRs or
Deductible erode the products aggregate of the First Layer
Umbrella Policy for that policy year; and
-- Upon the exhaustion of the products aggregate limit of a
particular year of a First Layer Umbrella Policy, Kaiser
has no further obligation to satisfy any SIR or Deductible
for this policy year.
D. Other Policy Periods Subject to Exhaustion Methodology
The exhaustion method will also apply to these policies for
the periods indicated:
Policy No. Insurer Policy Period
---------- ------- -------------
78158 London Insurers 08/21/1958 - 11/01/1960
XCP 602 INA 04/01/1960 - 01/01/1963
XBC 369 INA 11/11/1960 - 01/01/1963
XBC 4354 INA 01/01/1966 - 01/01/1967
However, nothing in the agreement establishes that these
policies or SIRs must be exhausted through Kaiser's or its
Assignee's payment, in light of Kaiser's bankruptcy.
The Certain Issues Agreement further provides that:
(a) The parties confirm that Kaiser and INA and Central
National have resolved their dispute regarding the
insurers' obligation to pay Asbestos Products Claims under
the first layer coverage;
(b) The parties agree that that the provisions under the INA
Policies which otherwise might require INA to defend
against multiple claims aggregated to form a single
occurrence, no longer give rise to any obligation to
defend;
(e) The parties agree on the amounts necessary to exhaust
particular aggregate SIRs underlying two INA policies.
Accordingly, Kaiser will pay $1,800,000 to SIRs for the
policy period January 1, 1967 to January 1, 1973;
(d) The insurers will withdraw their claims asserting that
any SIR or Deductible in the First Layer Umbrella Policy
survives and must be exhausted for each excess layer,
where an SIR is not written on an aggregate basis, but the
excess coverage is written on an aggregate basis; and
(e) The parties will dedicate at least a period of 60 days
after execution of the Certain Issues Agreement to conduct
negotiations or mediations regarding the settlement of the
Asbestos Products Action and the Premises Action.
The Compromise Agreement
The parties agree to a compromise of certain disputed legal and
factual issues, solely to avoid further litigation of those
issues. Pursuant to the Compromise Agreement, each signing
insurer:
A. agrees to abide by the terms and conditions of the Certain
Issues Agreement and to accept the exhaustion agreements and
exhaustion methodology;
B. agrees that it will no longer take any action or assert any
position in the Asbestos Product Action that is contrary to
the terms of the Certain Issues Agreement;
C. is not deemed either to adopt or disavow the provisions
concerning the number of occurrences set forth in the Certain
Issues Agreement, but agrees to abide by these provisions as
a compromise of the Asbestos Product Action.
Although not all outstanding issues are settled in the insurance
coverage litigation, Mr. DeFranceschi contends that both the
Certain Issues Agreement and the Compromise Agreement represent
a very significant step forward in settling the overall products
coverage dispute between the parties. Likewise, the Agreements
will reduce the Debtors' expenses connected with the Products
Coverage Action and assist in their emergence from bankruptcy.
(Kaiser Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KINGSWAY FINANCIAL: A.M. Best Places Ratings Under Review
---------------------------------------------------------
A.M. Best Co., has placed the financial strength ratings of the
insurance subsidiaries of Kingsway Financial Services Inc
(Ontario, Canada) and the senior unsecured debt rating of "bbb"
on its 1999 syndicated bank facility, under review with negative
implications.
These rating actions reflect A.M. Best's concerns about the
group's elevated underwriting leverage position due to
significant growth in written premiums. Kingsway is in the
process of raising capital to support the expected growth of its
business and for general corporate purposes including repayment
of all or a portion of its revolving credit facility. Completion
of these efforts will be looked upon favorably by A.M. Best.
The group's premium growth has far exceeded A.M. Best's
expectations for 2002, and Kingsway's management has indicated
its U.S. operations are projected to continue showing strong
increases through 2003. Given Kingsway's rapid growth in new
markets, A.M. Best has concerns regarding Kingsway's level of
profitability and its ability to effectively manage and
administer the underwriting and claims functions. A.M. Best
notes that although the underlying operating performance of the
group has improved, some key operational areas are still
underperforming.
A.M. Best plans to meet with senior management to discuss
Kingsway's plan for effectively managing and supporting its
growth with adequate levels of capital and resources.
The following financial strength ratings have been placed under
review with negative implications for the insurance subsidiaries
of Kingsway Financial Services Inc:
-- Kingsway General Insurance Company A (Excellent)
-- JEVCO Insurance Company A (Excellent)
-- York Fire and Casualty Company A (Excellent)
-- Kingsway Reinsurance (Bermuda) Ltd. A (Excellent)
-- Lincoln General Insurance Company A- (Excellent)
-- Universal Casualty Company A- (Excellent)
-- American Service Insurance Company B++ (Very Good)
-- American Country Insurance Company B+ (Very Good)
-- Southern United Fire Insurance Company B+ (Very Good)
-- US Security Insurance Company B (Fair)
The following debt rating has been placed under review with
negative implications:
Kingsway Financial Services Inc--
- "bbb" senior unsecured debt rating on its 1999 syndicated
bank facility
A.M. Best Co., established in 1899, is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit A.M. Best's Web site at
http://www.ambest.com
KMART CORP: Urges Court to Approve Compromise Agreement with IRS
----------------------------------------------------------------
Kmart Corporation and its debtor-affiliates ask the Court to
approve a Compromise Agreement with the Internal Revenue
Services.
Pursuant to the Compromise Agreement, the IRS:
(i) agrees to pay to the Debtors $6,500,000 for tax refund plus
applicable interest and reconciling amounts;
(ii) is entitled to offset certain corporate income tax
deficiencies owed by the Kmart Group for the taxable years
ending January 1986, January 1988, January 1992, and
January 1999 against corporate income tax refunds owed to
the Kmart Group for the taxable years ending January 1993
through January 1995 and January 1997 in the implementation
of the Net Tax Refund; and
(iii) is further entitled to offset certain excise tax
deficiencies or underpayment interest for the taxable
periods ending December 31, 1997, December 31, 1998, and
December 31, 2001 against excise tax refunds or overpayment
interest owed to the Kmart Group for the taxable periods
ending March 31, 1997, June 30, 1997, September 30, 1997,
March 31, 1998, June 30, 1998 and September 30, 1998 and,
to the extent of the excess deficiency of $98,841 against
the corporate income tax refunds owed to Kmart.
The IRS will pay the Net Tax Refund before November 27, 2002.
John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom,
relates that the parties are still trying to reach an agreement:
-- on the interest computations for each of the income tax
overpayments and underpayments at issue for taxable years
ending January 1986 through January 1999; and
-- to resolve any related outstanding issues, including the
proper application of the interest netting provisions of
Section 6621(d) of the Internal Revenue Code of 1986, as
amended.
Nonetheless, the parties agree that the Net Tax Refund due to
Kmart is at least $6,500,000 and may be increased up to an
additional $1,500,000 pursuant to the interest computation as
finally agreed to by the parties.
Mr. Butler explains that Kmart is the common parent of an
affiliated group of corporations -- the Kmart Group -- within
the meaning of IRC Section 1504 that files a consolidated
federal income tax return. The IRS has audited the Kmart
Group's consolidated federal income tax returns for the taxable
years ending January 1986 through January 1999. Consequently,
the IRS determined that for certain taxable years the Kmart
Group made underpayments or overpayments of corporate income
tax, resulting in a net refund of $14,476,701 plus applicable
interest owing to Kmart as of January 22, 2002:
Taxable Year Tax Underpayment
Ending (or Overpayment)
------------ ----------------
1/1986 $2,985
1/1987 0
1/1988 109,293
1/1989 0
1/1990 0
1/1991 0
1/1992 (1,419,047)
1/1993 (5,776,784)
1/1994 (6,081,564)
1/1995 (1,142,697)
1/1996 0
1/1997 (671,226)
1/1998 0
1/1999 502,339
----------------
Net Overpayment ($14,476,701)
The IRS also determined that for certain taxable periods, the
Kmart Group made underpayments or overpayments of excise tax or
interest, resulting in a net tax deficiency plus interest equal
to $98,841 owed by the Kmart Group as of January 22, 2002:
Taxable Year Tax Underpayment
Ending (or Overpayment)
------------ ----------------
3/31/1997 ($176,607)
6/30/1997 (86,790)
9/30/1997 (121)
12/31/1997 166,983
3/31/1998 (26,616)
6/30/1998 (28,071)
9/30/1998 (9,569)
12/31/1998 61,917
12/31/2001 197,715
----------------
Net Underpayment $98,841
On September 29, 2000, Kmart received $7,581,163 -- interest
included -- from the IRS as payment against any taxes and
interest due to Kmart as of that date.
Mr. Butler contends that Compromise Agreement should be approved
since all the prerequisites for set-off under applicable non-
bankruptcy law are present:
(1) the IRS has claims against Kmart for certain prepetition
income tax deficiencies;
(2) the IRS owes Kmart debts for prepetition income tax
overpayments that Kmart made;
(3) mutuality exists where the IRS is attempting to set off
its liability to the taxpayer by the amount the taxpayer
owes the IRS; and
(4) both debts are prepetition. (Kmart Bankruptcy News,
Issue No. 38; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6), DebtTraders
reports, are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
LECTEC CORP: Commences Trading on OTCBB Effective November 26
-------------------------------------------------------------
Nasdaq Listing Qualifications Panel has denied LecTec
Corporation's request for continued listing on The Nasdaq
SmallCap Market due to its failure to satisfy the minimum bid
price and stockholder's equity standards for continued listing.
Accordingly, Nasdaq determined to remove the Company's
securities from The Nasdaq SmallCap Market effective with the
open of business Tuesday, November 26, 2002. The Company's
securities are eligible for immediate quotation in the OTC
Bulletin Board for those market makers quoting the Company's
securities during the last 30 days.
"Our move to the OTC Bulletin Board places us in the company of
many other companies who do not meet the Nasdaq listing
criteria," commented Rodney A. Young, Chairman, CEO and
President of LecTec Corporation. "Although this new status ends
the trading of our stock on the Nasdaq SmallCap Market, we
remain a publicly held company, with daily stock price quotes
published electronically via the Internet, along with public
company reporting requirements. On behalf of our current
shareholders, our goal remains to find a strategic investor,
partner or an acquirer which will enable us to once again
satisfy the Nasdaq SmallCap listing requirements," Young
concluded.
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.
At September 30, 2002, LecTec's balance sheet shows a working
capital deficit of about $290,000.
LEVEL 3 COMM: Enters Pact to Acquire Genuity Assets & Operations
----------------------------------------------------------------
Level 3 Communications, Inc., (Nasdaq: LVLT) and Genuity Inc.
(Nasdaq: GENU) have signed a definitive agreement under which
Level 3 will acquire substantially all of the assets of the
Massachusetts-based communications company.
Level 3 will pay up to $242 million in cash and assume a
significant portion of existing long-term operating agreements
to acquire Genuity's assets and operations. To facilitate the
transaction, Genuity filed Wednesday voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code. Level
3's cash consideration at closing could be reduced subject to
certain material adjustments.
Closing expected first quarter 2003
Closing is expected to occur during the first quarter of 2003.
The transaction is subject to approval by the bankruptcy court
and certain government regulatory agencies.
"This transaction represents the best outcome for the key
constituencies of both Genuity and Level 3," said Paul R.
Gudonis, chairman and chief executive officer of Genuity. "Both
companies, as well as Genuity's largest customers and creditors,
have signed agreements supporting the transaction.
"We're particularly pleased that all of the key parties have
come together in support of this acquisition. For Genuity's
customers, the transaction will result in a stronger,
financially sound, operationally reliable provider of
communications services. For Genuity's business partners, the
agreement will help ensure business relationships continue with
the least possible disruption. And for employees, this
transaction offers the maximum possible opportunity for the
greatest number of people.
"Genuity has a long and proud history, and we know that Level 3
shares our vision of the future of fiber optics and IP
communications. We look forward to continuing our work with the
leadership team at Level 3 in the weeks ahead."
"There is a unique and compelling fit between Genuity and
Level 3," said James Q. Crowe, Level 3's chief executive
officer. "The transaction combines the assets and operations of
Genuity, the company that helped invent the Internet, with Level
3, the company that built the first network fully optimized for
Internet Protocol-based communications. Both companies are
experienced providers of optical and IP-based services, and both
are Tier 1 Internet backbone providers with industry-leading
quality of service. Genuity's transport and dedicated and
dial-up Internet access business -- more than 80 percent of
revenue -- is complementary to Level 3's transport, managed
modem and IP services business.
"Level 3 and Genuity share cultures of technological excellence
and innovation," said Crowe. "Genuity literally helped conceive
the key technologies that underpin the Internet, while Level 3
has pioneered developments in softswitch technology and MPLS
services, and revolutionized bandwidth provisioning with its
ONTAP process. We believe that, together, we can build on that
strong combined legacy."
Based in Woburn, Mass., Genuity operates an international IP
network. The company provides dial-up and dedicated Internet
access, transport, managed security and VPN, hosting and other
services to communications companies, enterprises and government
agencies. Its largest customers are Verizon Communications and
America Online, which accounted for greater than 60 percent of
its $223 million in revenue for the third quarter of 2002.
Key Customers and Banks Sign Agreements
All but one of Genuity's banks have signed an agreement in
support of the transaction.
Verizon has executed a new multi-year contract to purchase
wholesale dial-up, IP, transport and other services from
Level 3, to take effect when the transaction closes.
"Verizon is very pleased to be entering into this partnership,
under which Level 3 will become Verizon's primary supplier of
backbone services," said Lawrence T. Babbio, vice chairman and
president of Verizon. "We have been very pleased with the
creativity and service brought to us by Level 3 in the past, and
we look forward to this expanded relationship."
"This agreement will significantly expand our relationship with
Verizon, one of the world's premier telecommunications
carriers," said Charles C. Miller, vice chairman of Level 3.
"Verizon is extremely sophisticated in building and operating
advanced communications networks, and we are very pleased that
they have chosen to incorporate Level 3's backbone services into
those networks. After the transaction with Genuity, Level 3 will
be a clear leader in supplying backbone services to carriers
such as Verizon."
America Online has signed an agreement consenting to the
transaction that contemplates Level 3 acquiring America Online's
network services agreement with Genuity.
"America Online already has an important, longstanding
relationship with Level 3," said Geraldine MacDonald, senior
vice president for global access networks at America Online. "We
are in support of this transaction, which provides us with the
assurance of stability and a seamless continuation of service.
We've been very pleased with the service Level 3 has provided in
the past, and we look forward to a continuing positive
relationship."
In addition, Allegiance Telecom Inc., Genuity's largest network
supplier, supports the transaction.
"We have a longstanding and mutually beneficial relationship
with Level 3," said Royce Holland, chairman and CEO of
Allegiance Telecom, Inc. "We support this transaction and look
forward to continuing our relationship with Level 3 as the
transaction moves forward."
New Operating Company to be Formed
As part of this transaction, Level 3 is also acquiring Genuity's
managed services business and its associated enterprise
customers and product set. "We recognize the importance of these
customers and are committed to ensuring they receive the highest
quality service without disruption," said Kevin O'Hara,
president and chief operating officer of Level 3. "As a result,
we plan to combine these operations with those of our
(i)Structure subsidiary in order to focus on the needs of those
customers. That new managed services operating company will do
business under the name 'Genuity,' a recognized leader in that
market."
Transaction terms
Under the terms of the Level 3-Genuity agreement:
-- Level 3 will pay up to $242 million in cash and assume a
significant portion of existing long-term operating
agreements for Genuity's U.S. assets and operations;
-- Level 3's cash consideration at closing could be reduced
subject to certain material adjustments;
-- The cash on Genuity's balance sheet, together with
Level 3's cash consideration, will be distributed to
creditors of Genuity;
-- Closing is subject to, among other customary conditions,
receipt of Hart-Scott-Rodino approval and other relevant
regulatory approvals, as well as bankruptcy court
approval.
"Given the substantial similarities between the companies'
strategic approach, service offerings and geographical reach,
this transaction creates opportunities to increase sales while
achieving significant cost efficiencies that the parties believe
are unique," said Sureel Choksi, chief financial officer of
Level 3. "It preserves Level 3's fully funded status, while
accelerating the point in time when Level 3 expects to become
free cash flow positive. The combined organization will be an
industry leader with strength in growing markets, including IP
access and backbone services."
Level 3's Acquisition Strategy
Crowe noted that the agreement with Genuity is consistent with
Level 3's overall acquisition strategy. "As we have said in the
past, we evaluate every potential acquisition according to its
ability to generate positive cash flow from high credit quality
customers," Crowe said. "We look for opportunities to acquire
recurring revenues that come predominantly from services we
already provide in geographic areas that we already serve, with
customers consistent with our existing customer base. Above all,
we are committed to remaining fully funded to free cash flow
breakeven and improving our financial position. Our agreement
with Genuity meets all of these key criteria.
"We look forward to working together to close this transaction
and have the support of the key parties involved. At the same
time, as with any acquisition, there is a risk that the Genuity
transaction may not be completed, and we continue to analyze and
consider other opportunities."
Level 3 will hold a conference call to discuss today's
announcement on Monday, December 2, at 11 a.m. eastern time. To
join the call, please dial 612-326-1003. A live broadcast of the
call can also be heard on Level 3's Web site at
http://www.level3.com An audio replay of the call will also be
accessible through the web site or by dialing 320-365-3844 --
Access Code 662298.
Level 3 (Nasdaq: LVLT) is an international communications and
information services company. The company offers a wide range of
communications services over its 20,000 mile broadband fiber
optic network including Internet Protocol services, broadband
transport, colocation services, and patented Softswitch-based
managed modem and voice services. Its Web address is
http://www.Level3.com
The company offers information services through its wholly-owned
subsidiaries, (i)Structure and Software Spectrum. (i)Structure
provides managed IT infrastructure services and enables
businesses to outsource costly IT operations. Its Web address is
http://www.i-structure.com Software Spectrum is a global
business-to-business software services provider specializing in
enterprise software management, licensing and support.
Level 3 Communications' September 30, 2002 balance sheet shows a
total shareholders' equity deficit of about $254 million, as
compared to a deficit of about $65 million, recorded at
December 31, 2001.
LUBY'S INC: Bank Lenders Consent to Amend Credit Facility
---------------------------------------------------------
Luby's, Inc., (NYSE: LUB) has entered into an agreement with its
bank lenders amending the company's credit facility. Further,
the company stated that it had accepted a commitment letter from
another lender, which would provide $80 million to refinance a
major portion of its existing debt. This 15-year financing more
closely matches the economic life and long-term basis of the
assets securing the debt. A discussion of the terms of the
amendment to the credit facility and the commitment letter for
long-term financing is included in the Form 10-K filed by the
company today.
The principal provisions of the amendment to the credit facility
waive the previously announced violation of a quarterly EBITDA
covenant, change the financial covenants from quarterly and
annual EBITDA measurements to measurements of liquidity and
future debt service, increase the applicable interest rate, and
extend the maturity date of the debt to October 31, 2004. The
amendment also requires the company to use the entire $80
million long- term financing described in the commitment letter
to reduce the existing debt on January 31, 2003.
The consummation of the financing covered by the commitment
letter is subject to satisfaction of certain conditions, such as
the completion of appraisals of properties serving as collateral
for the financing, title work, and the lender's satisfaction
with the financial condition of the company. Notwithstanding
management's confidence in its ability to satisfy these
conditions, the company's independent auditors were required by
applicable auditing standards to include an explanatory
paragraph addressing the company's debt situation. Their report
and the company's audited financial statements were filed as
part of the company's Form 10-K today. The inclusion of the
explanatory paragraph was triggered by the fact that the
transaction contemplated by the commitment letter is not yet
closed and the amendment to the credit facility requires payment
of the $80 million on or before January 31, 2003.
"We are very pleased to have this commitment for long-term
financing which will help us further strengthen our financial
position," said Christopher J. Pappas, CEO of Luby's.
"Converting the majority of our debt to long-term debt allows us
to sustain our focus on our current operational priorities at
the individual restaurant level without the distraction of
dealing with short-term debt maturities."
LYONDELL CHEMICAL: Fitch Assigns BB- Rating to New 9.5% Notes
-------------------------------------------------------------
Fitch Ratings has assigned a senior secured rating of 'BB-' to
Lyondell Chemical Company's new $337 million 9.5% notes due
2008. The proceeds from these notes will be used for the partial
repayment of the company's outstanding Term Loan E. The terms of
the new notes are the same as Lyondell's previous issue of 9.5%
notes due 2008. At the same time Fitch has affirmed a rating of
'BB-' to Lyondell's senior secured credit facilities, 'BB-' to
Lyondell's senior secured notes, and 'B' to Lyondell's senior
subordinated notes. The Rating Outlook for Lyondell is Negative.
Lyondell is a leading global producer of intermediate and
performance chemicals. Lyondell also owns significant stakes in
both Equistar Chemicals L.P., a leading producer of commodity
chemicals and Lyondell-Citgo Refining L.P., a highly complex
petroleum refinery.
Lyondell Chemical Co.'s 10.875% bonds due 2009 (LYO09USR1) are
trading at about 89 cents-on-the-dollar, DebtTraders reports.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=LYO09USR1
for real-time bond pricing.
MARV I & II: Fitch Junks Class C Secured Fixed-Rate Notes
---------------------------------------------------------
Fitch Ratings has downgraded the following securities and
removed them from Rating Watch Negative:
MARV I Ltd.
-- $102,000,000 class A-2 senior secured fixed-rate notes to
'BBB-' from 'AAA';
-- $6,000,000 class B senior secured fixed-rate notes to 'B'
from 'AA';
-- $15,000,000 class C secured fixed-rate notes to 'CC' from
'BBB'.
MARV II Ltd.
-- $135,000,000 class A-2 senior secured fixed-rate notes to
'BBB' from 'AAA';
-- $6,000,000 class B senior secured fixed-rate notes to 'B+'
from 'AA';
-- $12,000,000 class C secured fixed-rate notes to 'CC' from
'BBB'.
The downgrades reflect the highly levered nature of the
transactions and can be directly attributed to the deterioration
in the credit quality of their respective portfolios. Though
having experienced defaults that represent less than 5% of each
pool, both transactions have exposure to distressed credits that
were material in Fitch's analysis. These distressed credits
include, but are not limited to, subordinate classes of Corvus
Investments Ltd. as well as mezzanine and subordinate classes of
R.F. Alts Finance I Ltd., Series I and 2 (see the Nov. 25, 2002
press release, 'Fitch Downgrades R.F. Alts Finance I Ltd. Series
1 and 2'). As of the August 15, 2002 payment date, MARV I Ltd.'s
A/B OC test was failing at 106.86% versus a trigger of 107.7%
and its C OC test was failing at 101.29% versus a trigger of
102.1%. As of the same date, MARV II Ltd.'s A/B OC test was
failing at 105.36% versus a trigger of 105.4% and its C OC test
was failing at 100.96% versus a trigger of 102.1%.
Both MARV I Ltd. and MARV II Ltd. are static pool cash flow CDOs
that are backed by corporate debt, asset-backed securities,
emerging market corporate debt, and credit-linked notes.
Additionally, MARV I Ltd.'s portfolio includes emerging market
sovereign debt.
MASSEY ENERGY: Reaches Agreement to Extend Bank Credit Facility
---------------------------------------------------------------
Massey Energy Company (NYSE: MEE) reached an agreement with its
banks to extend for an additional year the 364-day, $150 million
portion of its existing credit facility, which came due on
November 26, 2002. The 3-year, $250 million portion of the
credit facility which has been in place for two years is
scheduled to expire in November 2003. The full $400 million
facility will now expire on November 25, 2003.
In connection with the extension, the Company agreed to certain
modifications affecting its entire $400 million facility. These
amendments provide the lenders with selected assets as
collateral. The extension agreement also provides the
opportunity for an asset-backed financing which the Company is
negotiating with a member of its bank group. The asset-backed
financing and certain equipment sale and leaseback transactions
are expected to increase the Company's liquidity by $70 to $100
million. The Company continues to review other transactions
that will generate cash to reduce debt and increase liquidity.
Other terms of the amendment include a debt-to-EBITDA covenant
ratio of 3.5 to 1 and a LIBOR-based floating interest rate that
will result in an initial interest rate of approximately 4.0% on
the outstanding balance, an increase of 1.5% over the rate in
place prior to the extension. The new interest rates apply to
the outstanding balance on the credit facility, which was $301
million as of November 26, as compared to $275 million at
September 30. The increase in the outstanding balance resulted
from several factors. Approximately $31 million was utilized to
secure the Company's self-insurance programs, including workers
compensation, in what continues to be a difficult insurance and
surety bonding environment. Additional uses of funds included
approximately $7 million for payment of the Virginia Harman
lawsuit award and $10.7 million for the Company's purchase of
$14 million of its 6.95% Senior Notes. Cash flow from
operations of approximately $23 million reduced the impact of
these uses of funds. The Company's cash flow from operations
continues to be positive.
Massey Energy Company, headquartered in Richmond, Virginia, is
the fifth largest coal producer by revenue in the United States.
At September 30, 2002, the Company's balance sheets show a
working capital deficit of about $61 million.
METROMEDIA INT'L: Closes on Sale of Snapper Assets to Simplicity
----------------------------------------------------------------
Metromedia International Group, Inc., (AMEX:MMG) the owner of
various interests in communications and media businesses in
Eastern Europe, the Commonwealth of Independent States and other
emerging markets, has completed the sale of substantially all of
the assets and certain liabilities of the Company's wholly-owned
subsidiary, Snapper, Inc., to Simplicity Manufacturing, Inc.
Snapper, Inc., manufactures premium-priced power lawnmowers,
garden tillers, snow throwers, utility vehicles and related
parts and accessories.
The sale, which called for a gross purchase price of $73.3
million, is subject to a dollar for dollar adjustment based on
the post closing balance sheet amount by which the net purchased
assets at closing is greater or less than the net purchased
assets of $76.2 million at December 31, 2001. Using the audited
September 30, 2002 balance sheet of Snapper, the adjusted
purchase price is estimated to be $55.8 million.
The Company has received net cash proceeds of approximately
$15.8 million, after the repayment of the Snapper bank debt
facility, which has increased since the Company's previous press
release, and the satisfaction of various employee severance
obligations.
The transaction is subject to a post-closing audit process and
therefore the financial terms of this transaction are subject to
adjustment.
In making the announcement, Carl Brazell, Chairman, President
and Chief Executive Officer of MMG, commented, "We are pleased
to have consummated the sale of Snapper as it has been an
initiative that the Company has been aggressively pursuing. The
transaction provides the Company with reasonable and adequate
value for the Snapper business assets and is consistent with our
program of pursuing assets sales that result in improvements to
the capital structure of the Company."
Metromedia International Group, Inc., is a global communications
and media company. Through its wholly owned subsidiaries and its
business ventures, the Company owns and operates communications
and media businesses in Eastern Europe, the Commonwealth of
Independent States and other emerging markets. These include a
variety of telephony businesses including cellular operators,
providers of local, long distance and international services
over fiber-optic and satellite-based networks, international
toll calling, fixed wireless local loop, wireless and wired
cable television networks and broadband networks and FM radio
stations.
* * *
As previously reported, the Company continues to hold
negotiations with representatives of holders of its Senior
Discount Notes in an attempt to reach an agreement on a
restructuring of its indebtedness in conjunction with proposed
asset sales and restructuring alternatives.
To date, the Company and representatives of note holders have
not reached an agreement on terms of a restructuring. The
Company cannot make any assurance that it will be successful in
raising additional cash through asset sales or through cash
repatriations from its business ventures, nor can it make any
assurance regarding the successful restructuring of its
indebtedness.
MONARCH DENTAL: Enters into Merger Pact with Bright Now! Dental
---------------------------------------------------------------
Monarch Dental Corporation (Nasdaq:MDDS) has entered into a
definitive merger agreement with Bright Now! Dental, Inc.
The merger agreement provides for the merger of an affiliate of
Bright Now! Dental with and into the Company. Following the
merger, the Company will be a wholly-owned subsidiary of Bright
Now! Dental. Stockholders of the Company will receive $5.00 per
share in cash upon completion of the merger. In connection with
the execution of the merger agreement, Bright Now! Dental
provided the Company with financing commitments from investors
and lenders sufficient to fund the proposed transaction.
Completion of the merger is subject to certain closing
conditions, including the approval of the Company's stockholders
and the receipt by Bright Now! Dental of the proceeds of the
financing commitments. Bright Now! Dental's receipt of the
financing commitment proceeds is subject to certain conditions,
including the negotiation of financing agreements satisfactory
to Bright Now! Dental and the financing sources. The parties
currently anticipate that the merger will be completed in the
first quarter of 2003.
In connection with the execution of the merger agreement, Bright
Now! Dental entered into an agreement with the Company's lenders
which provides, among other things, that the lenders will not
file suit against the Company, foreclose on any collateral,
exercise self-help remedies with respect to any collateral, or
set-off any of the Company's cash accounts. The agreement with
the Company's lenders will terminate upon the earlier of the
closing of the merger, the termination of the merger agreement,
a default by Bright Now! Dental under the agreement with the
Company's lenders, and April 1, 2003. The agreement will also
terminate upon the failure to meet certain milestones in
connection with the preparation, filing and mailing of a proxy
statement to the Company's stockholders, the holding of a
special meeting of stockholders to vote on the merger agreement,
and the closing of the merger. By its terms, the agreement does
not constitute a waiver by the lenders of any rights that they
may have with respect to the Company. The Company is not a party
to this agreement and may not enforce its terms.
Commenting on the proposed transaction, W. Barger Tygart,
Chairman and Chief Executive Officer of the Company, stated, "We
are pleased to have reached a definitive agreement with Bright
Now! Dental and its investor group after working together with
them over the past few months to resolve all of the outstanding
issues necessary to enter into this agreement. We continue to
believe that the proposed transaction is in the best interests
of the Company and all of its various constituencies. In the
transaction, the outstanding principal amount under the
Company's credit facility will be paid in full, and our
stockholders will be getting a premium price for their shares of
common stock. By joining forces with Bright Now! Dental, we hope
to eliminate the financial uncertainty that the Company has
faced due to the defaults under its credit facility, while
returning the Company's focus to providing exceptional
management and administrative services to its affiliated dental
group practices."
"Our confidence that Monarch Dental is an excellent strategic
fit for our company has been reinforced throughout the diligence
process of the last several months," said Steven C. Bilt,
President and Chief Executive Officer of Bright Now! Dental.
"Our enthusiasm for the opportunities ahead has increased as we
have come to know Monarch Dental's talented and dedicated
operations team. They are an ideal complement to Bright Now!
Dental's proven operating model, which focuses on the success of
each dental office as a local business unit. Together, we will
further refine the administrative and marketing expertise that
makes Bright Now! Dental successful in order to leverage the
operational capabilities of the combined company. Our extensive
national presence, without the distractions of the public
marketplace, will serve to further our mission of helping
dentists to operate their practices with a heightened focus on
patient care and to deliver quality dentistry, exceptional value
and superior service."
Monarch Dental Corporation (Nasdaq:MDDS) --
http://www.monarchdental.com-- provides business support
services to 152 dental offices serving 17 markets in 13 states.
Monarch Dental offices offer a wide range of general dental
services, including preventive care, restorative services, and
cosmetic services. In addition, many practices offer specialty
services such as orthodontics, periodontics, oral surgery,
endodontics and pediatric dentistry. Based in Dallas, Texas,
Monarch Dental and its affiliated dentists have annual revenues
of approximately $185 million and employ approximately 2,200
people.
Bright Now! Dental, Inc. -- http://www.brightnow.com-- is a
leading dental practice management company that provides
business support services to 52 dental offices in California,
Oregon and Washington. Bright Now! Dental's mission is to assist
dentists in delivering quality dental care, exceptional value
and superior service at convenient locations, utilizing a unique
marketing and real estate approach. Bright Now! Dental's
affiliated and staff dentists deliver general, preventive,
specialty and cosmetic dental care to more than 250,000 patients
each year. Based in Santa Ana, California, Bright Now! Dental
and its affiliated dentists employ approximately 950 people.
Bright Now! Dental's majority shareholder is Gryphon Investors,
a leading middle market private equity firm with approximately
$500 million of capital under management.
* * *
As previously announced, the Company is in default under its
credit facility and, as a result, the Company's bank group has
exercised its right of set-off and applied approximately $1.18
million from the Company's cash accounts to offset a portion of
the unpaid interest under the credit facility and certain
professional fees. The $1.18 million aggregate amount
represented unpaid interest at the lead lender's prime rate,
plus the then outstanding professional fees of the bank group.
The set-off of this amount by the bank group may have a
significant adverse impact on the liquidity of the Company. In
connection with the Company's negotiations with its bank group,
the Company has requested a forbearance with respect to the
exercise by the bank group of any other remedies under the
credit agreement.
MORTGAGE ASSET: Fitch Takes Rating Actions on Ser. 2002-8 Notes
---------------------------------------------------------------
Mortgage Asset Securitization Transactions, Inc.'s $838.1
million mortgage pass-through certificates series 2002-8,
classes 1-A-1 through 1-A-11, 1-PO, 1-A-X, 2-A-1 through 2-A-6,
2-PO, 2-A-X and A-R (senior certificates) are rated 'AAA' by
Fitch Ratings. In addition, Fitch rates the $10.3 million class
B-1 certificates 'AA', $4.3 million class B-2 certificates 'A',
$3 million class B-3 certificates 'BBB', $1.3 million class B-4
certificates 'BB' and $1.3 million class B-5 certificates 'B'.
The 'AAA' rating on the senior certificates reflects the 2.50%
subordination provided by the 1.20% class B-1, the 0.50% class
B-2, the 0.35% class B-3, the 0.15% privately offered class B-4,
the 0.15% privately offered class B-5, and the 0.15% privately
offered class B-6 (which is not rated by Fitch). Classes B-1, B-
2, B-3, B-4, and B-5 are rated 'AA', 'A', 'BBB', 'BB' and 'B'
based on their respective subordination.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud and
special hazard losses in limited amounts. In addition, the
ratings also reflect the quality of the underlying mortgage
collateral, strength of the legal and financial structures and
the master servicing capabilities of Wells Fargo Bank Minnesota,
N.A., rated 'RMS1' by Fitch.
The certificates represent ownership in a trust fund, which
consists primarily of 2 separate groups of mortgage loans. The
senior certificates in each certificate group are generally
related to the corresponding loan group and will receive
interest and/or principal from its respective mortgage loan
group. The particular certificate group to which a class of
senior certificates belongs is designated by the first number of
the name of that class. If on any distribution date, the
available funds from one loan group is insufficient to make
distributions of interest and/or principal on that related
senior certificate group, available funds from the other loan
group, after first making the interest and/or principal
distribution on its related senior certificates, will be
available to cover shortfalls of interest and/or principal
distributions on the loan group's senior certificates, before
any distributions of interest and/or principal are made to the
subordinate certificates. The subordinate certificates will be
cross-collateralized and will receive interest and/or principal
from available funds collected in the aggregate from both
mortgage pools.
The mortgage loans in the aggregate consist of 15- and 30-year
fixed-rate mortgages secured by first liens on residential one-
to four-family properties with an aggregate unpaid principal
balance of $859,540,156. As of the cut-off date (Nov. 1, 2002),
the mortgage pool demonstrates a weighted average original loan-
to-value ratio of 64.87%. Approximately 22.69% of the loans were
originated under some form of reduced documentation program.
Cash-out and rate/term refinance loans represent 20.58% and
56.05% of the mortgage pool, respectively. Second homes account
for 2.06% of the pool. The average loan balance is $445,588. The
weighted average FICO score is 743. The three states that
represent the largest portion of mortgage loans are California
(42.19%), Maryland (7.94%), and Virginia (6.84%).
MASTR, a special purpose corporation, deposited the loans into
the trust, which issued the certificates. JPMorgan Chase Bank
will act as trustee. For federal income tax purposes, an
election will be made to treat the trust fund as multiple
separate real estate mortgage investment conduits.
MOSAIC GROUP: Working Capital Insufficient to Meet Cash Needs
-------------------------------------------------------------
Mosaic Group Inc., (TSX:MGX) announced that due to slower than
expected decisions on potential, major new business wins,
continued challenges in regenerating earnings in its Performance
Solutions division, and ongoing challenges in its UK division,
the company's operating earnings are unacceptable. The Company
also determined that a further impairment of goodwill existed as
of September 30, 2002, resulting in a third quarter impairment
charge of $347.6 million. During the third quarter of 2002 the
Company generated $137.1 million in revenues, $2.6 million of
EBITDA and posted a quarterly loss of $395 million.
Credit Facilities
The Company on filing of its third quarter compliance
certificates will be in violation of certain financial covenants
under the terms of its three principal credit facilities. The
debt holders have currently indicated that they will not amend
the credit facilities nor waive the covenant violations for the
third quarter of 2002, although the lenders have not exercised
their right to demand payment. Further, the lenders under the
bank facility have capped the Company's drawings to
approximately $93 million. The Company is, however, in
discussions with its debt holders to allow for a demand credit
to be created, with this facility to be used to finance ongoing
business operations over the short term while longer-term
solutions are developed by the Company and its debt holders.
Discontinuing UK Operations
Mosaic Group also announced the Company's decision to
discontinue its United Kingdom division after conducting a
review of the ongoing viability, future prospects, cash needs
and local debt situation of this division.
Mosaic's UK business has recently experienced a significant
decline in profitability and the Company anticipates that future
losses in the UK will continue. Management is currently
reviewing the precise method of discontinuing the business and
is putting in place a plan to ensure such discontinuance is
completed in a timely manner and with a view to minimizing any
cash cost.
"Although we are experiencing a series of challenges right now,
Mosaic remains a viable business, integral to the operations of
dozens of Fortune 100 companies, which depend on us to deliver
critical functions day in and day out for them. In closing the
UK, we have decided to focus all our efforts in the large and
growing North American marketplace," said Marc Byron, Vice Chair
and CEO Mosaic Group Inc. "Of the three remaining divisions,
Sales Solutions has experienced 25% year to date revenue and 58%
EBITDA growth. It's stable, growing, in high demand and twice
the size of our next largest competitor in North America. Our
Marketing & Technology Solutions division has stabilized since
the beginning of the year, improved its operating metrics and
has recently won a series of small but highly competitive
assignments from major brands, validating to us that our
approach in the market is slowly but surely taking hold. Our
Performance Solutions division is still rebounding from the
unfortunate and material impact of our previous relationships
with two troubled Fortune 100 companies, and its current attempt
to make Cingular successful. We anticipate that division
returning to respectable profitability as we turn to 2003. I
want our key supplier partners, Brand Partners and employee
Associates to know that we are in business and that we will
continue everyday to deliver exceptional results, as we have
done throughout our history, while we respect the importance of
those key partner relationships. Simultaneously, we are in
discussions with our lenders to address our short term liquidity
needs, as well as exploring options to address our long-term
capital structure."
Director Resignation
Effective Wednesday, Gregory F. Kiernan has resigned from
Mosaic's Board of Directors.
Credit Facilities, Liquidity and Going Concern
The Company on filing of its third quarter compliance
certificates will be in violation of certain financial covenants
(debt to EBITDA, senior debt to EBITDA, interest coverage and
net worth), under the terms of the lending agreements for the
senior secured revolving term credit facility, senior secured
term debt notes and senior subordinated term debt notes. The
debt holders have advised that they will not amend the Credit
Facilities nor waive the covenant violations for the third
quarter of 2002, although the lenders have not exercised their
right to demand payment. Further, the lenders under the Bank
Facility have capped the Company's drawings to approximately $93
million. In addition, the agent under the Bank Facility has
advised that as outstanding banker's acceptances and LIBOR
borrowings become due, they will be renewed as prime and base
rate loans, as the case may be and will carry interest at
Canadian prime plus 5% or US base rate plus 5%, respectively.
Additionally, on November 22, 2002, the Company's UK-based
lender issued a demand notice to repay its debt in respect of
its sterling demand facility. The amount drawn under this
facility was GBP 2.1 million (C$5.1 million) and is secured by
certain UK accounts receivable.
As at November 22, 2002, the Company had approximately $10
million in available cash and undrawn credit lines to finance
its ongoing operations. Based on current estimates this level of
available capital is sufficient to meet the immediate operating
needs of the business, however, will be insufficient to sustain
the business beyond the short term and will be insufficient to
fund ongoing interest commitments. The Company anticipates that
it will have a payment default on its December 13th and 15th
interest payments on the Term Notes and COPrS respectively,
aggregating $5.4 million. As a result the Company has entered
into discussions with its debt holders to allow for a new super-
priority demand credit to be created, with this facility to be
used to finance ongoing business operations over the short term
while longer-term solutions are developed by the Company and its
debt holders. There can be no assurance that additional
financing will be available to the Company or, if available, it
will be obtained on a timely basis and on acceptable terms to
enable the Company to continue to finance its operations and
capital needs.
The Company's continuation as a going concern is dependent upon
continued support of its debt holders and creditors, its ability
to obtain suitable financing, its ability to achieve and to
maintain positive cash flow and earnings from operations, and
the development of a plan acceptable to the Company's various
stakeholders. The Company is seeking longer-term solutions,
which include debt restructuring, alternate long-term financing,
divestment of assets, discontinuance of its UK operations as
discussed further in the Mosaic Group United Kingdom section,
opportunities to improve profitability through restructuring of
some of its businesses and the possible sale of the Company. The
outcome of these matters is uncertain and cannot be predicted at
this time. Should these efforts not be successful, the Company
may not be able to realize its assets and settle its liabilities
through ongoing normal operations and its business and financial
condition may be materially and adversely affected, which may
ultimately result in the Company filing for creditor protection
by the courts in both Canada and the United States.
At this time, the Company believes it remains appropriate to use
the going concern basis of accounting and presentation. However,
should circumstances change then the going concern basis of
accounting and presentation may no longer be appropriate and
accordingly further adjustments may be required to the recorded
amounts of assets, liabilities, revenues and expenses as well as
the overall financial statement presentation.
Mosaic Group United Kingdom
On November 25, 2002, the Company decided to discontinue its
United Kingdom division after conducting a review of the ongoing
viability, future prospects, cash needs and local debt situation
of this division.
Mosaic's UK business has recently experienced a very significant
decline and the Company anticipates that future losses in the UK
will continue. Management is currently putting in place a plan
to liquidate the UK business in a timely manner and with a view
to minimizing any cash cost. The precise amount of this cost is
not determinable at this time. As a result of the foregoing, the
Company will report in the quarter ending December 31, 2002 the
United Kingdom division as a discontinued operation along with
the financial impact of such discontinuance, apart from asset
impairment charges taken in the third quarter ended September
30, 2002.
The Company has two parent company performance guarantees in
respect of material contracts currently being executed by the
United Kingdom division. At this time, the Company is unable to
determine whether any material liability may arise as a result
of the discontinuance to the parent company stemming from the
termination of the underlying contracts.
As disclosed in notes 4 and 8 to the consolidated financial
statements, the Company recorded an asset impairment charge of
$17.5 million and a goodwill impairment charge of $114.6
million, related to the UK business in the third quarter ended
September 30, 2002.
AT&T Wireless settlement
During September 2002 the Company signed an agreement to resolve
all outstanding matters with AT&T Wireless, following the
termination of its customer acquisition agreement in January
2002. The settlement agreement addresses the following issues:
- A closure in relation to all monies in dispute between
Mosaic and AT&T Wireless and its group of companies.
- Discontinuance by Mosaic of all activities under its AT&T
Wireless license as a New York City Master Dealer, where
the Company was involved in the management of sales and
related commissions for AT&T sub-dealers in this market.
- The settlement expands and extends the provision of
Mosaic's in-store sales services to AT&T Wireless. The
contract expands Mosaic's current in-store sales
activities in Best Buy stores across the US by
contracting additional sales services in Circuit City
stores commencing in November 2002. Annual incremental
revenue is expected to approximate US$6 to US$10 million.
The term of the agreement has been extended for five
years, with a one-year no cancellation provision.
The result of the settlement is a third quarter charge of US$6.5
million (C$10.2 million) (including non-cash write-offs
amounting to US$2.6 million (C$4.1 million)) in excess of
provisions previously recorded for all associated payments,
closure costs and related charges. Subsequent to quarter end the
Company made a US$2.5 million payment to AT&T in respect of the
settlement, with an additional US$1 million payment due in
December 2002.
Restructuring
Mosaic has substantially completed the implementation of its
restructuring plan announced in January 2002. Key restructuring
actions include the consolidation of a number of physical
locations, the exit from various unprofitable customer accounts,
divestiture of certain non-core businesses and a reduction in
the workforce.
For the nine months ended September 30, 2002, the Company
recorded a pre-tax restructuring charge of $13.8 million.
Mosaic Group Inc., with operations in the United States, Canada,
and the United Kingdom, is a leading provider of results-driven,
measurable marketing solutions for global brands. Mosaic
specializes in three functional solutions: Direct Marketing
Customer Acquisition and Retention Solutions; Marketing &
Technology Solutions; and Sales Solutions & Research, offered as
integrated end-to-end solutions. Mosaic differentiates itself by
offering solutions steeped in technology, driven by efficiency
and providing measurable and sustainable results for our Brand
Partners. Mosaic trades on the TSX under the symbol MGX. Further
information on Mosaic can be found on its Web site at
http://www.mosaic.com
NASH FINCH: Fails to Comply with Nasdaq Listing Requirements
------------------------------------------------------------
Nash Finch Company (Nasdaq:NAFC) received a Nasdaq Staff
Determination on November 26, 2002, indicating that the
Company's failure to comply with the Form 10-Q filing
requirement for the quarter ended October 5, 2002, violates
Nasdaq Marketplace Rule 4310(C)(14), and that the Company's
securities are subject to delisting from the Nasdaq National
Market. The Company will respond by requesting a hearing before
the Nasdaq Listing Qualifications Panel to review the Staff
Determination. The request for a hearing will stay the delisting
pending the outcome of the hearing. There can be no assurance
the Panel will grant the Company's request for continued
listing.
Ron Marshall, Chief Executive Officer of the Company, stated,
"The receipt of this notice is part of normal Nasdaq operating
procedures when a delay in filing periodic reports occurs. The
Company is working diligently to file its Form 10-Q as soon as
possible."
On November 21, 2002, the Company announced a delay in the
filing of its report on Form 10-Q for the quarter ended
October 5, 2002. This delay is attributable to an internal
review concerning the Company's practices and procedures
relating to certain promotional allowances. The review is
focused on how the Company assesses count-recount charges, which
is also the subject of a previously announced informal inquiry
being conducted by the Securities and Exchange Commission. As a
result of such internal review and informal inquiry, the Company
has been unable to finalize its financial statements and
accordingly, the Company's independent public accountants have
not completed their review of the Company's interim financial
statements.
Effective November 29, 2002, the Nasdaq Stock Market will add
the letter "E" to the Company's stock symbol because of the
delay in filing the Form 10-Q for the period ended October 5,
2002.
Nash Finch Company is a Fortune 500 company and one of the
leading food retail and distribution companies in the United
States with over $4.1 billion in annual revenues. Nash Finch
owns and operates 112 stores in the Upper Midwest, principally
supermarkets under the AVANZA(TM), Buy n Save(R), Econofoods(R),
Sun Mart(R) and Family Thrift Center(TM) trade names. In
addition to its retail operations, Nash Finch's food
distribution business serves independent retailers and military
commissaries in 28 states, the District of Columbia and Europe.
Further information is available on the company's Web site at
http://www.nashfinch.com
As reported in Troubled Company Reporter's November 14, 2002
edition, Fitch placed the ratings of Nash Finch on Rating
Watch Negative. The ratings include the bank credit facility
rating of 'BB' and its senior subordinated debt rating of 'B+'.
Approximately $380 million of debt is affected.
The Rating Watch Negative follows the company's announcement
that it is under an informal inquiry by the SEC and its recent
postponement of its third quarter earnings (to now be announced
Nov. 18th). The SEC is investigating NAFC's practices and
procedures relating to certain promotional allowances provided
to the company by its vendors that reduce the cost of good sold.
Fitch expects to resolve the Rating Watch Negative once clarity
is provided by company management and the magnitude of any
potential earnings implication is determined. Events that could
result in a downgrade include, but are not limited to, a
restatement of prior year financial statements and a negative
outcome from the SEC inquiry. Furthermore, the company continues
to operate in a highly competitive environment with supercenters
continuing to add new units in NAFC's core markets.
NATIONAL CENTURY: Signing-Up Alvarez & Marsal as Crisis Managers
----------------------------------------------------------------
National Century and its debtor-affiliates seek the Court's
authority to continue to employ Alvarez & Marsal, Inc. as crisis
managers in these Chapter 11 cases, pursuant to Sections 105 and
363 of the Bankruptcy Code.
Charles M. Oellermann, Esq., at Jones, Day, Reavis & Pogue, in
Columbus, Ohio, relates that most of the Debtors' previous
management team resigned from their positions prior to the
Petition Date. Due to severe financial difficulties they are
confronting, as well as allegations of serious mismanagement by
the prior management team, the Debtors needed the resources of
experienced crisis managers to stabilize and manage their
operations.
Mr. Oellermann contends that A&M is well suited to provide the
Debtors with crisis management services in these Chapter 11
cases since A&M is a well-regarded global corporate turnaround
specialist with expertise in all key areas of financial
restructuring and operational turnarounds.
Mr. Oellermann relates that the Debtors engaged A&M as crisis
managers on November 8, 2002. Since then, the firm has already
been actively involved in the Debtors' restructuring efforts and
provided crucial services in the week prior to the Debtors'
bankruptcy filing. The Debtors and A&M have negotiated the
terms of a letter agreement pursuant to which A&M will:
(a) assist in developing short-term cash flow forecasts,
liquidity plans and analysis of funding obligations and
collateral coverage;
(b) assist the Debtors in developing and executing a strategy
for maximizing the realization of value of asset
recoveries held directly or indirectly by the Debtors as
directed by the Board of Directors;
(c) assist the Debtors in minimizing liabilities and claims;
(d) assist in developing the Debtors' operating and
restructuring plans, and assist with the presentation and
communication of the plans to the Board of Directors, the
creditor and other constituents;
(e) provide the principal contact with the Debtors' creditors
and other constituents and assist in preparation of
reports, liaison and negotiations with creditors, their
advisors and other constituents and their advisors in
developing a restructuring or orderly wind down plan;
(f) assist in preparation of materials required to accompany
the filing of a petition for relief under Chapter 11 of
the Bankruptcy Code; and
(g) provide other services as may be required or directed by
the Board of Directors and agreed to by A&M, including
serving as an officer or director of any of the Debtors.
In addition, A&M Managing Director David Coles will function as
the interim Chief Executive Officer of each of the Debtors as of
and after the Petition Date.
The A&M Agreement further provides that A&M will be compensated
in two distinct ways:
-- at A&M's standard hourly rates, as they may be adjusted
from time to time under A&M's standard practices:
Managing Director $550
Director 425 - 475
Associate 300 - 350
Analyst 225
-- through an Incentive Compensation Plan to be negotiated
between the parties within 30 days of entry into the
Agreement.
Moreover, Mr. Oellermann points out that A&M will receive
reimbursement for reasonable out-of-pocket expenses like travel,
lodging, duplicating, computer research, messenger and telephone
charges. A&M will also be reimbursed for the reasonable fees
and expenses of its counsel in connection with the preparation,
negotiation, performance, approval and enforcement of the A&M
Agreement. The fees and expenses will be billed and payable on
a monthly basis or at A&M's discretion on a more frequent basis.
Mr. Oellermann informs Judge Calhoun that the Debtors paid A&M a
$250,000 retainer on November 12, 2002 and made another payment
on November 15, 2002 for $950,000. Of that payment, $274,748
was applied to A&M's estimated invoice for services rendered
prepetition, and the remaining $675,252 has been added to the
Initial Retainer for an aggregate of $925,252. The Retainer
will be credited against any amount due at the termination of
A&M's employment by the Debtors and returned on the satisfaction
of all outstanding obligations under the Agreement.
Furthermore, the A&M Agreement may be terminated by either party
on 30 days' prior written notice.
A&M is currently not aware of any relationship that would create
a conflict of interest with the Debtors or those parties-in-
interest, but note that it has made available to Integrated
Health Services, Inc. certain of its personnel to act as
officers of that company. Although, there are some A&M
employees with relationship to parties-in-interest in the
Debtors cases, A&M concedes that this is due to its nature of
business as a consulting firm, serving clients on a national
basis in numerous cases. It is possible that A&M may have
rendered services or business associations with people or
entities, which may have relationships with the Debtors.
However, A&M assures the Court that it is a "disinterested
person" and will not represent the interests of any entity or
person in conflict of interests with the Debtors.
Mr. Oellermann insists that A&M's employment as crisis managers
is proper under Section 363 of the Bankruptcy Code and should be
authorized by the Court. (National Century Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONSRENT: Judge Walsh Appoints Erwin Katz as Mediator
--------------------------------------------------------
Judge Walsh appoints former Judge Erwin I. Katz as mediator for
any and all mediation proceedings, except the mediation
proceeding involving Key Corporate Capital, Inc., in NationsRent
Inc., and its debtor-affiliates' on-going chapter 11 cases.
Judge Walsh designates James R. Miller, Jr. as the mediator for
the Key Corporate proceedings.
The Debtors are authorized to compensate and reimburse the
Mediators for the Debtors' portion of their services and
expenses in connection with the Mediation Procedures.
(NationsRent Bankruptcy News, Issue No. 22; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
NETWORK ACCESS: DSL.net Pitches Highest Bid for Network Assets
--------------------------------------------------------------
DSL.net, Inc. (NASDAQ: DSLN), a leading nationwide provider of
broadband communications services to businesses, announced that
its bid for network assets and associated subscriber lines of
Network Access Solutions Corporation (OTC: NASC.OB) was selected
by NAS and its creditors' committee as the best and highest bid
during an auction held this week.
The purchase price under DSL.net's final bid is $14 million,
consisting of $9 million in cash and a $5 million note. Herndon,
Virginia-based broadband solutions provider NAS filed a
voluntary petition for Chapter 11 reorganization in June 2002.
"We are pleased that the debtors and the creditors' committee
involved in the auction proceedings agreed that the DSL.net bid
was the highest and best," said David F. Struwas, chairman and
chief executive officer of DSL.net. "We firmly believe this
acquisition will benefit NAS and its customers. In fact, NAS
customers served by these network assets will not require any
new installations or equipment changes, allowing for a seamless
transition process."
If the transaction is approved by the bankruptcy court at a
scheduled December 30, 2002, hearing and the other closing
conditions are satisfied, DSL.net expects to close this
transaction promptly after receiving such court approval. Until
such time, the related customers will continue to receive
service and billing from NAS.
Based in New Haven, Conn., DSL.net, Inc. combines its own DSL
facilities, nationwide network infrastructure, and Tier I
Internet Service Provider) capabilities to provide high-speed
Internet access and value-added services directly to small- and
medium-sized businesses throughout the United States. A
certified CLEC throughout the continental United States --
including Washington, D.C. -- and Puerto Rico, DSL.net sells to
businesses, primarily through its own direct sales channel.
DSL.net augments its direct sales strategy through select system
integrators, application service providers and marketing
partners. In addition to a number of high-performance, high-
speed Internet connectivity solutions specifically designed for
business, DSL.net product offerings include Web hosting, DNS
management, enhanced e-mail, online data backup and recovery
services, firewalls, virtual private networks and nationwide
dial-up services. For more information on DSL.net, visit
http://www.dsl.net
NEXTCARD INC: Seeks Okay to Hire Ordinary Course Professionals
--------------------------------------------------------------
NextCard, Inc., wants to continue employing outside
professionals in the ordinary course of its business. The
Debtor tells the U.S. Bankruptcy Court for the District of
Delaware that it is impractical to prepare individual formal
retention applications for each Ordinary Course Professional the
company will turn to during the course of its chapter 11 case.
The services provided by Ordinary Course Professionals include
legal services with regard to routine litigation and
intellectual property matters.
The Debtors propose that if any Ordinary Course Professional has
monthly average fees and expenses that exceed $10,000 per month
on a rolling 4-month basis, then such Ordinary Course
Professional shall submit a fee application with the Court.
Although certain Ordinary Course Professionals may hold
unsecured claims against the Debtor for professional services
rendered to the Debtor, the Debtor does not believe that any
Ordinary Course Professionals has an interest materially adverse
to the Debtor, its creditors, or other parties in interest.
NextCard, Inc., was founded to operate an internet credit card
business. The Debtor's business was to use the Internet as a
distribution channel for credit card marketing and to issue
credit cards and extend customer credit through NextBank, a bank
that was a wholly-owned subsidiary. The Company filed for
chapter 11 petition on November 14, 2002. Brendan Linehan
Shannon, Esq., at Young, Conaway, Stargatt & Taylor and Kathryn
A. Coleman, Esq., at Gibson, Dunn & Cruther LLP represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $18,000,000 in total
assets and $5,000,000 in total debts.
OAKWOOD HOMES: Seeks Approval to Pay Critical Vendor Claims
-----------------------------------------------------------
Oakwood Homes Corporation and its debtor-affiliates want to
maintain the critical relationship they had with their
Transportation and Installation Vendors. Consequently, the
Debtors ask for permission from the U.S. Bankruptcy Court
District of Delaware to pay the prepetition claims of these
Critical Vendors in the ordinary course of their businesses.
Shipping and Warehousing Charges
In the normal course of business, the Debtors rely on particular
common carriers to ship, transport, and deliver goods between
their various manufacturing facilities, sales centers,
independent dealers and customer sites. The Debtors depend on
Shippers for timely, consistent deliveries, and the Shippers
services are key to the Debtors' operations. The Debtors
estimate that they rely on approximately 862 Shippers and
Warehousemen in the Ordinary Course of their businesses. As of
Petition Date, the Debtors accrued Shipping and Warehousing
Charged to and from manufacturing facilities are approximately
$3.2 million
The Debtors are seeking relief on an emergency basis, because
any delays in delivery or receipts of the Goods or access to the
services of the Shippers and Warehousemen will greatly disrupt
their operations.
Delivery and Setup Charges
Additionally, the Debtors use certain vendors to complete the
final installation and assembly at the costumer's site. In the
ordinary course of their businesses, the Debtors use
approximately 1,300 vendors across the country to facilitate the
timely delivery of the Debtors' product to their customers. The
Delivery and Setup Vendors are often only providers of services
in a particular region. On the average, the Debtors incur
approximately $10 million in Delivery and Setup Charged per
month. As of the Petition Date, the Debtors' accrued and unpaid
Delivery and Setup Charges are approximately $11.5 million.
Part Shippers
As part of their customary business practices, the Debtors
provide their customers with product warranties. Prior to the
Petition Date, the Debtors used certain delivery services
dedicated to the delivery of warranty parts to their customers
in satisfaction of their warranty obligations. The Debtors
estimate that their accrued Parts Shipper obligations totaled
approximately $70,000.
Oakwood Homes Corporation and its subsidiaries are engaged in
the production, sale, financing and insuring of manufactured
housing throughout the U.S. The Debtors filed for chapter 11
protection on November 15, 2002. Michael G. Busenkell, Esq., at
Morris, Nichols, Arsht & Tunnell represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $842,085,000 in total assets and
$705,441,000 in total debts.
OAKWOOD HOMES: Fitch Places 2 Related Transactions on Watch Neg.
----------------------------------------------------------------
Fitch Ratings places all classes of the following 2 Oakwood
Manufactured Housing Securitizations on Rating Watch Negative.
- Series 2000-D;
- Series 2001-B.
The rating action follows the press release discussing concerns
related to Oakwood Homes Chapter 11 bankruptcy filing.
OMNISKY CORP: Court Fixes December 11 Admin. Claims Bar Date
------------------------------------------------------------
Pursuant to a Confirmation Order entered by the U.S. Bankruptcy
Court for the Northern District of California, San Francisco
Division, any person asserting a claim for payment of costs or
expenses of administration must file an Administrative Claim
Request on or before December 11, 2002.
Requests must be submitted before 4:00 p.m. Pacific Daylight
Time on Dec. 11, and addressed to:
The Omninsky Plan Administrator
c/o Poorman-Douglas
10300 SW Allen Blvd.
Beaverton, Oregon 97005
Claim Requests need not be filed if they are on account of:
a. Fee Claims;
b. Claims for government taxes;
c. Other Excluded Administrative Expense Claims:
i. Request for payment by the Debtors' Officers,
ii. Claims by members of the creditors committee for
reimbursement of expenses under Sec. 503(b)(F) of
the Bankruptcy Code,
iii. Operating expenses for the Debtors' ordinary course
of business, and
iv. Obligations for assumption of leases or executory
contracts.
Omnisky Corporation filed for Chapter 11 protection on December
10, 2001. Adam C. Harris, Esq., at O'Melveny and Myers represent
the Debtors in their restructuring efforts.
OWENS CORNING: Tinkers with GE Capital Fleet Lease Agreement
------------------------------------------------------------
Owens Corning and its debtor-affiliates sought and obtained the
Court's authority and approval to modify a master lease
agreement and certain related agreements with Gelco Corporation,
doing business as GE Capital Fleet Services. The amendment
would enable the Debtors to lease additional vehicles from
Gelco.
The Court had previously approved a Master Vehicle Lease
Agreement and Related Agreements that authorized the Debtors to
execute agreements with GE Capital Fleet for the leasing of a
fleet of cars, trucks, tractors, trailers, forklifts and other
vehicles, which were necessary for the ongoing operation of the
Debtors' businesses. In conjunction with the execution of the
Master Vehicle Lease Agreement, the Debtors entered into
additional related agreements including a supplemental
agreement, which GE Capital Fleet required the Debtors. At the
time the parties executed the Master Vehicle Lease Agreement,
the Debtors contemplated leasing 300 vehicles from GE Capital
Fleet over a 12-month period.
According to Norman L. Pernick, Esq., at Saul Ewing LLP, in
Wilmington, Delaware, since the execution of the Master Vehicle
Lease Agreement, the Debtors' transportation equipment needs
have changed. Hence, the Debtors have decided to lease a
greater number of vehicles from GE Capital Fleet than initially
contemplated, necessitating a modification of the Master Vehicle
Lease Agreement. The increase in the number of vehicles that
must be leased is necessitated by the Debtors' rejection of a
prepetition master vehicle lease agreement with another lessor
-- Lease Plan USA Inc. On the heels of the rejection, the
Debtors will have an urgent need for 140 additional trucks and
180 additional automobiles over the next 12 months to carry out
their business operations. The new automobiles will be provided
to field sales representatives so they can conduct the Debtors'
distributions and sales operations. GE Capital Fleet has
agreed, subject to final underwriting approval, to lease the
additional vehicles to the Debtors.
In connection with the leasing of the Additional Vehicles under
the Master Vehicle Lease Agreement and the Related Agreements,
and similar to when the parties initially entered into the
Agreements, GE Capital has required the Debtors to provide a
modified supplemental agreement to give GE Capital the comfort
necessary with respect to the Debtors' ability to perform under
the Agreements. The Debtors will file this agreement under seal
pursuant to Section 107(b) of the Bankruptcy Code and Rule 9018
of the Federal Rules of Bankruptcy Procedure.
With the exception of increasing the number of vehicles being
leased to include the Additional Vehicles, and the provision of
the Modified GECFS Supplemental Agreement, Mr. Pernick assures
the Court that the terms of the Master Vehicle Lease Agreement,
and the Related Agreements remain substantially identical.
Mr. Pernick points out that the leasing of the Additional
Vehicles is necessary to the ongoing operation of the Debtors'
business. Without the provision of new trucks, the Debtors will
have difficulty transporting their products to and from their
numerous facilities. Thus, the Debtors have determined that it
is essential to their business operations, and financially
prudent, to modify the Master Vehicle Lease Agreement and the GE
Capital Supplemental Agreement. Moreover, the Debtors
anticipate that they may need additional vehicles and desire the
flexibility of using the Master Vehicle Lease Agreement to
procure these vehicles.
Mr. Pernick adds that modifying the Master Vehicle Lease
Agreement to include the Additional Vehicles will enable the
Debtors to continue to lease vehicles from GE Capital from time
to time, on an as-needed basis. Moreover, the ability to lease
the Additional Vehicles from GE Capital will create cost savings
for the Debtors by enabling them to replace certain vehicles
currently being leased under a separate lease agreement, at a
more favorable rate. The Debtors further believe that the
provisions of the Master Vehicle Lease Agreement, and the
Related Agreements, as modified, are generally consistent with
the normal master lease provisions that GE Capital offers to
other potential lessees of similar Vehicles at this time.
The Debtors anticipate that the total capitalized cost for the
Additional Vehicles to be leased over the next twelve months
will be $11,000,000, and that, after adding the Additional
Vehicles, the total fleet of vehicles leased under the Master
Vehicle Lease Agreement will be $32,000,000 and could increase
in the future. The Debtors believe that they have negotiated, at
a minimum, a fair and reasonable price for the lease of the
Additional Vehicles. (Owens Corning Bankruptcy News, Issue No.
41; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Gets Okay to Pay SEC Registration & Printing Fees
--------------------------------------------------------------
Pacific Gas and Electric Company obtained Court approval to pay
for the SEC filing fees and printer fees.
PG&E estimates that the total filing fees will be $500,000,
based on a total principal amount of $5,360,000,000 in debt to
be offered. The current SEC filing fee is $92 for each
$1,000,000 of debt offered.
The Debtor anticipates it will need a professional printer to
prepare and file the registration statements in the electronic
filing format. The printer's costs for these services depend
on:
* the size of the filings;
* the number of amendments required by the SEC staff; and
* the number of individual revisions made in preparing the
filings and amendments.
As a result, the printer fees are difficult to estimate in
advance. PG&E, however, calculates that the printer's costs for
these services will not exceed $800,000 before the confirmation
of the Plan. After confirmation, additional amendments may also
be expected. (Pacific Gas Bankruptcy News, Issue No. 48;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFICARE HEALTH: Fitch Assigns B+ Convertible Sub. Debt Rating
----------------------------------------------------------------
Fitch Ratings has assigned a 'B+' rating to PacifiCare Health
Systems Inc.'s $125 million convertible subordinated debentures
due 2032 for sale in a private placement. Concurrently, Fitch
has affirmed PacifiCare's existing bank and senior debt ratings
at 'BB', and senior unsecured debt rating at 'BB-'. The Rating
Outlook is Stable.
Fitch expects PacifiCare to use approximately one-half of the
proceeds to pay down existing bank debt and use the remainder
for general corporate purposes. PacifiCare's debt leverage of
approximately 37% remains firmly within the range appropriate
for its rating category. Fitch views the financing as positive,
and that it will provide the company with a more permanent and
favorable capital structure.
PacifiCare's ratings and stable outlook reflect the well
established competitive position in several major markets, the
positive steps taken over the past two years to improve
profitability and capitalization, and the elimination of the
company's short term refinance risk by extending the maturity of
its bank debt. The ratings also consider the company's large
exposure to the troubled Medicare+Choice market. The Company's
short-term strategy has focused on corrective actions designed
to stop the financial losses that resulted from the platform
transition and return PacifiCare to past levels of
profitability. PacifiCare has stabilized its medical loss ratio
through a combination of pricing actions, benefit design and
tightened provider contracting language. Pacificare's operating
performance has been improving over the last two years after
facing challenges starting in the 3rd quarter of 2000 related to
capitation vs. shared-risk reimbursement. PacifiCare earned pre-
tax income of $162.9 million through the third quarter 2002,
compared with $56.5 million for the year ended 2001. Pretax
operating return on revenues has strengthened to 2.1% through
September 30, 2002 compared to almost break-even at year-end
2001. Fitch anticipates improved operating performance in 2003
driven by commercial pricing discipline and operational
improvements made over the past year. In the Medicare risk
market, the company's exit from high cost markets/providers
coupled with enrollment freezes in these areas has reduced
membership, but greatly increased profitability.
Rating Action Outlook
------------- -------
-- 3.0% Convertible Subordinated
debentures Assigned 'B+' Stable;
-- 10.75% Senior Unsecured Notes due 2009
Affirmed at 'BB-' Stable;
-- 7.0% Senior Notes due 2003 Affirmed at 'BB' Stable;
-- Bank Loan Rating Affirmed at 'BB' Stable;
-- Long-term rating Affirmed at 'BB' Stable.
PACIFICARE HEALTH: S&P Revises B Note Rating Outlook to Stable
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to
PacifiCare Health Systems Inc.'s $125 million 3% convertible
subordinated debentures, which are due in 2032 and are being
issued under SEC Rule 144A with registration rights.
Standard & Poor's also said that it revised its outlook on
PacifiCare to stable from negative.
"The rating is based on PacifiCare's good business position as a
regional managed care organization and improved earnings
performance," said Standard & Poor's credit analyst Phillip C.
Tsang. "Offsetting these strengths are PacifiCare's marginal
capitalization and high percentage of goodwill in its capital."
PacifiCare expects to use the net proceeds from the issue to
permanently repay indebtedness under its senior credit facility,
with the remainder for general corporate purposes.
Standard & Poor's expects that PacifiCare's earnings performance
will continue to improve in 2002 and 2003, with pretax operating
income of about $260 million for 2002. With the proposed new
debt issue, Standard & Poor's expects the company's debt-to-
capital ratio to remain close to the current level of less than
40%. Total membership is expected to decrease by about 5% in
2003.
PacifiCare holds a good business position as a regional managed
care organization. With 3.2 million members as of Sept. 30,
2002, PacifiCare operates HMOs in eight states and Guam, with
key market shares in California, Colorado, Oklahoma, Arizona,
and Texas. However, total membership declined by 11.7% from a
year ago. The reduction of membership primarily reflects
management's decision to improve the company's profitability by
significantly increasing premium rates and exiting unprofitable
Medicare+Choice markets.
PETROLEUM GEO-SERVICES: Third Quarter Net Loss Tops $1 Billion
--------------------------------------------------------------
Petroleum Geo-Services ASA (NYSE:PGO)(OSE:PGS) reported third
quarter earnings before non-operating items of $14.6 million.
Net loss for the 2002 third quarter, which included several non-
operating items, was $1,060.7 million. The non-operating gains
and losses for the 2002 third quarter included the following
pre-tax items: a $425.2 million impairment charge against the
Ramform Banff; $268.4 million in impairment charges against our
multi-client library; a $140.1 million impairment charge against
our Atlantis held-for-sale operations; and $4.5 million in
operating income from held-for-sale operations; $56.2 million in
impairment charges against seismic equipment and other
geophysical assets; $21.2 million in forced amortization
charges; $14.7 million in impairment charges against certain
seismic and oil and gas investments (excluding the held-for-sale
Atlantis operations); a $11.2 million non-cash provision for
income taxes related to the significant exchange rate
fluctuation between the Norwegian kroner and US dollar during
the 2002 third quarter (and the resultant taxable gain
associated with our dollar-denominated liabilities); $4.0
million in foreign exchange losses and $3.1 million, net in
other unusual items. Additionally, on a year-to-date basis, we
recognized a $185.9 million transitional impairment charge
against goodwill as part of the cumulative effect of accounting
change of our January 1, 2002 adoption of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible
Assets."
The cash flow provided by operating activities for the quarter
was $73.3 million compared to $31.8 million during third quarter
2001. Cash flow provided by operating activities for the nine
months ended September 30, 2002 was $238.2 million compared to
$90.5 million for the comparable period last year.
Results of Operations for Quarter and Nine Months
Ended September 30, 2002, Compared to 2001
Revenue
Third quarter revenue of $256.7 million was 6% greater than 2001
third quarter revenue. The revenue mix between Geophysical
Operations and Production Operations for the 2002 third quarter
was 67% and 33%, respectively, compared to 70% and 30%,
respectively, for the 2001 third quarter. The increase in the
mix of Production Operations revenue between the third quarters
of 2002 and 2001 resulted primarily from our acquisition of a
majority of the PL038 license in the North Sea Varg field. For
the nine months ended September 30, 2002, revenue of $732.0
million was 16% greater than revenue for the prior year period.
Excluding data management revenue from the prior year period,
revenue for the nine months ended September 30, 2002 was 17%
greater than revenue for the 2001 period. The revenue mix
between Geophysical Operations and Production Operations for the
nine months ended September 30, 2002 was 67% and 33%,
respectively, compared to 68% and 32%, respectively, for the
prior year period.
Operating profit before forced amortization and unusual items
for the quarter ended September 30, 2001 excluded the following:
1) $25.8 million in tax equalization swap gains and 2) ($0.2)
million in net reorganization costs. Operating profit before
forced amortization and unusual items for the nine months ended
September 30, 2001 excluded the following: A) a $138.6 million
gain related to the sale of our Petrobank data management
business and related software to Halliburton; B) $16.1 million
in reorganization and litigation costs and C) $9.5 million in
net tax equalization swap charges.
Third quarter operating profit (before forced amortization and
unusual items) of $36.9 million was 14% less than comparable
operating profit of $42.7 million for the 2001 third quarter.
The associated 2002 third quarter operating profit margin was
14%, compared to 18% for the 2001 third quarter.
Operating profit (before forced amortization and unusual items)
for the nine months ended September 30, 2002 of $116.1 million
was 11% greater than comparable operating profit of $104.9
million for the prior year period, due to an increase in
Production Operations operating profit. The associated operating
profit margin for the nine months ended September 30, 2002 was
16%, compared to 17% for the prior year period. Approximately
$1.5 million and $4.5 million of the increase in operating
profit (before forced amortization and unusual items) for the
quarter and nine months ended September 30, 2002, respectively,
was due to the cessation of goodwill amortization in accordance
with SFAS No. 142. Excluding goodwill amortization from the 2001
comparative figures, operating profit (before forced
amortization and unusual items) (decreased)/increased by (16%)
and 6% for the quarter and nine months ended September 30, 2002,
respectively. The comparable operating profit margins for the
quarter and nine months ended September 30, 2001 were 18% and
17%, respectively.
Net Income/Loss
Third Quarter. Third quarter net loss was $1,060.7 million.
Comparing net income before non-operating items, the 2002 third
quarter improved by $5.3 million, or 57%, from the 2001 third
quarter, with comparable fully diluted earnings of $0.14 per
share and $0.09 per share for the 2002 and 2001 third quarters,
respectively. This change included the effects of the $0.8
million pre-tax deterioration in ordinary operating profit (the
2% decrease discussed above), a $3.9 million, or 11%, pre-tax
increase in financial expense, net (primarily reflecting a 68%
lower level of interest capitalized during the 2002 third
quarter) and a $0.5 million pre-tax decrease in ordinary equity
investment income, offset by various changes in tax items.
Nine Months Period. Net loss for the nine months ended
September 30, 2002 was $1,269.6 million.
Comparing net income before non-operating items, the nine months
ended September 30, 2002 improved by $4.0 million, or 18%, over
the prior year period, with comparable diluted earnings of $0.26
per share and $0.22 per share for the nine months ended
September 30, 2002 and 2001, respectively. The 10% ($9.9
million) pre-tax increase in operating profit (discussed
earlier) for the nine months ended September 30, 2002 was offset
in part by a $3.9 million, or 4%, pre-tax increase in financial
expense, net (primarily reflecting a 72% lower level of interest
capitalized during the 2002 third quarter) and a $2.2 million
pre-tax deterioration in ordinary equity investment income.
Third quarter Geophysical Operations revenue of $171.0 million
was 1% greater than the $169.1 million of 2001 third quarter
revenue.
Total seismic revenue (including multi-client seismic revenue)
for our marine seismic operations increased by 4% ($5.5 million)
between the 2002 and 2001 third quarters, while total seismic
revenue for our land seismic operations decreased by 27% ($6.6
million) over this period.
Within our marine seismic operations, seismic revenue from our
seafloor operations increased by 125% ($13.5 million) between
the 2002 and 2001 third quarters, due primarily to an increase
in multi-component contract work performed in the North Sea
(compared to low pre-funded multi-client work for these
operations in the 2001 third quarter). A 60% ($16.5 million)
increase in traditional towed marine seismic revenue from the
Asia Pacific region between the 2002 and 2001 third quarters was
offset by a 31% ($20.4 million) decrease in such revenue from
the European/African/Middle Eastern regions and a 14% ($4.1
million) decrease in such revenue from the North/South American
regions. This recent shift was due to a change in the deployment
of the towed streamer fleet in response to changing market
conditions. The decrease in land seismic revenue between the
2002 and 2001 third quarters was attributable to a reduction in
US operations and late sales and a delayed start on contract
work in Mexico. North/South American land seismic revenue for
the 2002 third quarter was 49% ($10.4 million) lower than such
revenue for the 2001 third quarter.
Third quarter contract seismic revenue (both marine and land
seismic) was $109.0 million, which was 5% greater than the
$103.9 million of 2001 third quarter contract seismic revenue.
As previously discussed, during the 2002 third quarter we
recognized $268.4 million in impairment charges (classified as
an unusual item) against our multi-client library, primarily
related to investments made in 1998, 1999 and 2000; $56.2
million in impairment charges against seismic equipment and
other geophysical assets and $10.2 million in impairment charges
against seismic investments. We also recognized an additional
$2.6 million in other unusual charge from our Geophysical
Operations.
Third quarter Geophysical Operations operating profit (before
forced amortization and unusual items) was $14.3 million,
compared to operating profit of $19.7 million for the 2001 third
quarter. Operating profit for the 2001 third quarter included
approximately $0.3 million in goodwill amortization, while no
goodwill amortization was recorded in the 2002 third quarter.
Excluding goodwill amortization from the 2001 comparative
figures, operating profit for the 2002 third quarter was 29%
less than operating profit for the 2001 third quarter. The
associated 2002 third quarter operating profit margin decreased
to 8% from 12% (excluding goodwill amortization) for the 2001
third quarter. These operating profit statistics reflected the
significant pricing pressure in the land seismic market, our
increase in seafloor work (which historically carries lower
margins than our traditional towed marine seismic work) and the
lower level of late sales (which historically carry our highest
margins).
Geophysical Operations revenue for the nine months ended
September 30, 2002 totaled $489.3 million, which was 14% greater
than the $427.7 million of revenue for the prior year period.
Geophysical Operations revenue was 15% greater for the nine
months ended September 30, 2002. This increase resulted
primarily from the strength of the international contract market
for our marine seismic operations. Total seismic revenue
(including multi-client seismic revenue) for our marine and land
seismic operations increased by 16% and 17%, respectively,
between the 2002 and 2001 periods.
Contract seismic revenue (both marine and land seismic) for the
nine months ended September 30, 2002 was $269.2 million, which
was 21% greater than the $221.8 million of revenue for the prior
year period.
Multi-client seismic revenue (both marine and land seismic) for
the nine months ended September 30, 2002 was $186.2 million,
which was 9% greater than the $171.4 million of revenue for the
prior year period. Multi-client pre-funding revenue of $86.7
million for the nine months ended September 30, 2002 was 48%
higher than the $58.4 million of revenue for the prior year
period. Multi-client late sales decreased 12% to $99.5 million
for the nine months ended September 30, 2002 from $113.0 million
of late sales for the prior year period. For the nine months
ended September 30, we invested $155.9 million in our multi-
client library, compared to $170.8 million for the prior year
period.
Multi-client amortization for the nine months ended September
30, 2002 was $142.0 million, which included $32.0 million of
forced amortization. Excluding the effects of forced
amortization, amortization for the nine months ended September
30, 2002 of $110.0 was 1% less than the $111.3 million of
amortization for the prior year period. The average ordinary
multi-client amortization rate for the nine months ended
September 30, 2002 was 59%, compared to 65% for the prior year
period.
Geophysical Operations operating profit (before forced
amortization and unusual items) for the nine months ended
September 30, 2002 was $39.8 million, compared to operating
profit of $40.1 million for the prior year period. Operating
profit for the nine months ended September 30, 2001 included
approximately $0.9 million in goodwill amortization, while no
goodwill amortization was recorded for the nine months ended
September 30, 2002. Excluding goodwill amortization from the
2001 comparative figures, operating profit for the nine months
ended September 30, 2002 was 3% less than operating profit for
the prior year period. The associated operating profit margins
(excluding goodwill amortization) for the nine months ended
September 30, 2002 and 2001 were 8% and 10%, respectively. These
operating profit statistics reflected the same market and
operating conditions (discussed above) that impacted our third
quarter operations.
Financial Condition
Capital Resources and Liquidity
"As a result of our current financial situation, we are highly
dependent on our current cash and cash equivalent ($86.8 million
at September 30, 2002), improved cash flow and proceeds from
assets sales to meet our financial obligations.
"As previously disclosed, we have engaged financial advisors to
assist us with evaluating our financial condition and making
recommendations to our Board of Directors regarding alternatives
for enhancing or preserving value to our stakeholders. These
financial advisors are also expected to assist us with the
possible extension of our upcoming debt maturities and/or other
restructuring alternatives. We have approximately $1.1 billion
of debt and other contractual obligations maturing in 2003. In
connection with the one-time impairment charges described above,
we are currently in violation of certain financial covenants in
various bank credit and leasing agreements and have commenced
discussions with various creditors to obtain waivers of such
financial covenant defaults. There can be no assurance that any
such extension of debt maturities or required waivers will be
obtained. The Company notes that the breaches that have been
triggered are restricted to certain financial creditors only and
these breaches of themselves will not cross default contracts
with other financial creditors. The Company is current on all
payment obligations under its indebtedness.
"During November 2002, Standard & Poor's Ratings Services, a
division of the McGraw-Hill Companies, Inc., downgraded our
corporate credit rating, as well as our rated obligations, to
CCC. The ratings have been removed from credit watch with
developing implications (where they were placed during September
2002) and the outlook is negative.
"During November 2002, Moody's Investor Service, Inc.,
downgraded our issuer rating to Caa1 and our senior unsecured
debt rating to Caa3, stating that the credit rating outlook was
negative.
"Also during November 2002, Fitch IBCA, Duff & Phelps downgraded
our senior unsecured debt rating to CCC.
"If one or more of these rating agencies continue to rate our
debt or trust preferred securities below investment grade, we
may have difficulty obtaining, and we may not be able to obtain,
financing and our cost of obtaining any additional financing or
refinancing existing debt will likely be increased
significantly. Additionally, since our credit ratings are below
investment grade, we are obligated to provide up to 35.7 million
pounds (approximately $56.0 million) in collateral/credit
support to the lessors under existing UK leasing arrangements.
Based on recent discussions with these UK lessors, we currently
do not believe that cash collateral will be required.
"During March 2002, we entered into a $250.0 million short-term
credit facility, which was amended and restated in May 2002. The
net proceeds from this credit facility were used to repay $225.0
million of senior unsecured notes (which matured in March 2002)
and for general corporate purposes. The facility matures in June
2003. The facility provides for a pre-payment of $175.0 million
from the proceeds of any Atlantis sale. The credit facility
carries a current interest rate equal to LIBOR plus a 4.5%
margin. . Additionally, we are obligated to use our best efforts
to arrange financing and repay such amounts prior to the
maturity date.
"At September 30, 2002, our $430.0 million committed revolving
credit facility was fully drawn. This unsecured revolving credit
facility bears interest at a LIBOR-based rate plus a margin of
either 0.35% per year or 0.40% per year, depending on our level
of indebtedness. The facility matures in September 2003.
As of September 30, 2002 all the company's credit facilities
were fully drawn.
Capital Requirements
General. Our capital requirements are affected primarily by our
results of operations, capital expenditures, investment in
multi-client library, debt service requirements (including
roughly $1.1 billion in 2003 maturities), lease obligations,
payments on preferred securities and working capital needs. The
majority of our capital requirements, other than debt service,
lease obligations and payments on preferred securities, consist
of capital expenditures related to:
-- seismic vessels and equipment
-- FPSO vessels and equipment
-- investments in our multi-client library
-- computer processing and reservoir monitoring equipment
-- drilling and development costs associated with Atlantis
-- drilling and development cost associated with PL038
A substantial amount of our capital expenditures and investment
in multi-client library is discretionary. During 2002, we expect
to spend approximately $45.0 million on upgrades of our
Geophysical Operations assets and $15.0 million on our
Production Operations assets (approximately $11.3 million of
which represented the final payment on the Petrojarl I upgrade).
The cash flow provided by operating activities for the quarter
and nine months ended September 30, 2002 represented increases
of $41.5 million and $147.7 million, respectively, over the
comparable cash flows for the prior year periods.
Atlantis. For the quarter and the nine months ended September
30, 2002, we invested $23.5 million and $62.9 million,
respectively, in the continued development of Atlantis' oil and
gas fields in the United Arab Emirates, Oman and Tunisia. Our
investments in the Atlantis' oil and gas fields during the 2002
fourth quarter will be kept to a minimum and limited to the
current investment projects. The company expects to solve the
Atlantis situation during the coming months.
Capital Expenditures. Capital expenditures of $13.4 million for
the 2002 third quarter consisted of $10.9 million related to our
Geophysical Operations and $2.5 million related to our
Production Operations. The capital expenditures of $29.1 million
for the 2001 third quarter included $20.5 million related to
FPSO upgrade projects. Capital expenditures of $53.7 million for
the nine months ended September 30, 2002 consisted of $38.7
million related to our Geophysical Operations and $15.0 million
related to our Production Operations (including $11.3 million
from the Petrojarl I upgrade, as discussed above). The capital
expenditures of $154.3 million for the prior year period
included $140.0 million related to FPSO upgrade projects.
Multi-Client Library. Our cash investment in multi-client
library for the 2002 third quarter was $35.8 million, compared
to $46.0 million for the 2001 third quarter. For the nine months
ended September 30, 2002, we invested $155.9 million in our
multi-client library, compared to $170.8 million for the prior
year period. We still expect that we will invest less than
$200.0 million in our multi-client library during 2002.
Multi-Client Library Securitization. During the third quarter,
we repaid $22.5 million in redeemable preferred securities
related to our multi-client library securitization (with total
redemptions of $77.2 million for the nine months ended September
30, 2002). The securitization agreement requires us to increase
the quarterly redemption of these preferred securities by 30% in
the event that Standard & Poor's or Moody's downgrades our
credit ratings to below BB+ or Ba1, respectively. If those
credit ratings remain for a certain period of time, or
deteriorate to below BB- by Standard & Poor's or Ba3 by Moody's,
the securitization agreement requires us to increase the
quarterly redemption of the preferred securities to an amount
equal to 100% of the actual revenue recognized from the
licensing of the securitized data. Additionally, if Standard &
Poor's or Moody's downgrades our credit ratings to below BB or
Ba2, respectively, we may be required to repurchase certain of
the securitized data. As discussed above, the credit ratings for
our senior unsecured debt with Standard & Poor's and Moody's are
currently CCC and Caa3, respectively. As a result of our credit
ratings, we redeemed the preferred securities at a rate of 100%
of actual revenue recognized on the securitized data for the
2002 third quarter.
PLANETRX.COM INC: Commences Trading on OTC Bulletin Board
---------------------------------------------------------
PlanetRx.com, Inc, (OTC: PLRX) a development stage company which
plans to enter the financial services market through a series of
acquisitions, announced that its common stock is trading on the
OTC Bulletin Board.
Separately, the Company also announced today that it will
commence doing business under the name Paragon Financial
Corporation.
PlanetRx.com, Inc., formerly a leading Internet healthcare
destination that recently merged with Paragon Homefunding, Inc.,
a development stage company, plans to enter the financial
services market through a series of acquisitions.
* * *
As previously disclosed, PlanetRx closed its online health care
store in March 2001 and shortly thereafter began preparing a
plan of liquidation and dissolution. In an effort to realize as
much value as possible for its stockholders, PlanetRx has
explored and evaluated various strategic options, including a
possible merger or sale, while taking steps to monetize its
assets and settle its liabilities in a manner that is consistent
with the consummation of either a merger or sale or its
liquidation and dissolution. These steps have included the sale
of assets such as equipment, inventory, facilities, domain names
and other intellectual property; the assignment or negotiated
cancellation of leases, secured obligations and other contracts;
the payment or settlement of other liabilities and obligations;
and the reduction of personnel to only three key managers. This
process is substantially complete.
As of December 31, 2001, PlanetRx's total assets and total
liabilities had been reduced to $477,000 and $224,000,
respectively. Pending the merger with Paragon, PlanetRx intends
to continue to monetize its assets and, to the extent possible,
use the proceeds from such sales and available cash to pay its
remaining liabilities and obligations. The few assets remaining
to be sold consist primarily of internet domain names that are
listed for sale on the http://www.AllNetCommerce.comWeb site.
POLAROID CORP: Court Approves Proposed Settlement Procedures
------------------------------------------------------------
The Official Committee of Unsecured Creditors, appointed in the
chapter 11 cases involving Polaroid Corporation and its debtor-
affiliates, obtained permission from the Court to establish
uniform procedures relating to:
-- objections to claims and interests; and
-- settlement authority.
Claims Objection Procedures
The Court allows the estates to object to, in each Substantive
Objection, up to 400 Claims and Interests. Furthermore, Judge
Walsh allows the Estates to file more than two Substantive
Objections in any given calendar month provided, however, that
the Estates, subject to this Court's availability, will schedule
no more than two omnibus hearings in any month during which the
Substantive Objections may be heard.
Settlement Authority Procedures
In addition, the Court authorizes the Estates to settle or
compromise any disputed Claims, provided that they consult, in
good faith, with OEP Imaging Corp., now known as Polaroid
Holding Corporation, and the Agent for the Prepetition Secured
Lenders with respect to the settlement or compromise, and
provided further that no payment is excess of $50,000 will be
made on account of an administrative or priority claim without
the written consent of Holdings and the Agent, which consent
will not be unreasonably withheld, unless otherwise ordered by
the Court.
The Court approves these proposed procedures:
1. If the proposed settlement amount of a disputed Claim is less
than $50,000, the Estates will be authorized and empowered to
settle the disputed Claim and execute necessary documents,
including a stipulation of settlement or release, without
notice to any party, or a further Court order;
2. If the proposed settlement amount of a disputed Claim is
equal to or more than $50,000 but less than $1,000,000, the
Estates will be authorized and empowered to settle the
disputed Claim and execute necessary documents, including a
stipulation of settlement or release, on five business
days' written notice to the Committee or the Plan Committee
and if no objection is received, without further Court order;
3. If the proposed settlement amount of a disputed Claim is
equal or greater than $1,000,000, the Estates will be
authorized and empowered to settle the disputed Claim and
execute necessary documents, including a stipulation of
settlement or release, only after five days' written notice
to the Committee or the Plan Committee and on receipt of
Court approval of the settlement; and
4. If the Committee or the Plan Committee objects to the
proposed settlement of a disputed Claim within the prescribed
time deadlines, then:
(a) if the Committee or the Plan Committee withdraws for any
reason its objection to the settlement, the Estates may
enter into the proposed settlement without further notice
and a hearing or entry of a Court order; or
(b) if the Committee or the Plan Committee does not withdraw
its objection, the Estates will have the option of:
-- foregoing entry into the settlement agreement that is
the subject of the Committee or the Plan Committee's
objection;
-- modifying the terms of the settlement agreement in a
way that results in the Committee or the Plan
Committee withdrawing its objection; or
-- after five days' written notice to the Committee or
the Plan Committee, as applicable, seeking an order of
this Court authorizing the Estates to enter into the
settlement agreement over the Committee's or the Plan
Committee's objection. (Polaroid Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PROLAB TECH.: Working Capital Deficit Tops $288,000 at Sept. 30
---------------------------------------------------------------
In the quarter ended September 30, 2002, Prolab recorded sales
of $1,243,000 up from $1,088,000 for the same period of the
previous year, representing a 14.2% increase. Cumulatively
after 9 months, sales are up 5.1% over last year. Good
performances in most sectors and export sales account for these
results. "These results represent the biggest increase
registered in the last four years and we are confident that the
changes put in place since 2001 will allow the organization to
expand" mentions Mr. Jean-Guy Grenier, President and CEO of
Prolab Technologies inc.
Gross margin for the third quarter increased sharply by 32.7% at
$823,000 compared to $620,000 for last year. This excellent
performance is the result of fewer sales of rustproofing and
snowmobile products and stronger sales in our flagship higher
margin products.
Sales expenses are 15.7% below last year for the same period.
The reengineering of our distribution and sales methods continue
to yield the improvement targeted. In October, Prolab signed an
agreement with a sales agency to help support our sales efforts
in the Maritimes and Ontario and specifically through the
Rona/Revy, Sodisco Howden and NAPA network where Prolab products
have Canada wide listings but most of their sales are currently
in Quebec.
Administrative expenses are down 12% compared to the same
quarter last year and 5.1% for the nine months period. This is
a worthwhile reduction considering that accruing of
administrative expenses into Prolaik have been stopped since
June 2002.
The operating earnings for the quarter registered a loss of
$29,000 compared to a loss of $350,000 for the same quarter last
year. This significant improvement is a combination of
increased sales, better margin and lower expenses.
Regarding consolidated cash flows, the company improved its
position with a net increase in cash and cash equivalents of
$107,000 for the quarter and $114,000 after nine months compared
to a decrease of $297,000 for the same quarter in 2001 and a
decrease of $142,000 for the nine months period.
Prolaik Project:
During the last quarter, Prolab's management in collaboration
with the "Societe Generale de Financement" have been busy
seeking a strategic partner in the oleochemical field to
finalize the financing of Prolaik. Negotiations with interested
parties did not result in a satisfactory outcome for Prolab. The
recession in the US has decreased demand and price on certain
fatty acid like oleic acid. "We recognize that the current
economic situation is not favourable for Prolaik, but
nevertheless we are resolute to seek avenue to close in a short
delay the financing of this project" commented Mr. Yvan
Beaudoin, Vice President and Chief Operation Officer.
Prolab Technologies Inc. develops, manufactures and markets
environmentally friendly high-performance lubricants and
treatments. To increase the market penetration of its
biolubricants and seize its share of a growing market, the
Company should start to build a plant where oleic acid will be
produced using an innovative process. Prolab has about 30
employees and its shares are listed on the TSX Venture Exchange
under the ticker symbol PLT.
Prolab Technologies' September 30, 2002 balance sheet posts a
working capital deficit of about CDN$288K.
PSC INC: Taps FTI Consulting as Financial Advisor
-------------------------------------------------
PSC Inc., and PSC Scanning, Inc., seek permission from the U.S.
Bankruptcy Court for the Southern District of New York to employ
and retain FTI Consulting, Inc., as their Financial Consultants.
Although the Debtors have not formally solicited votes for the
acceptance of its proposed plan of reorganization filed
contemporaneously on the Petition Date, they believe that they
have garnered sufficient support, subject to compliance with all
proper solicitation procedures, to confirm the Plan in a timely
and efficient manner. The Debtors hope their bankruptcy case
will proceed towards confirmation of the Debtors' Plan in a
relatively short period of time.
The Debtors expect FTI to:
a) advise management in organizing resources and activities to
insure effective management of the chapter 11 process
including but not limited to the assistance with
implementation of accounting procedures as required by the
Bankruptcy Code;
b) assist in preparing reports and filings as required by the
Bankruptcy Court, or the Office of the United States
Trustee including but not limited to monthly operating
reports, schedules of assets and liabilities, and statement
of financial affairs;
c) assist in preparing financial information for distribution
to creditors and other parties- in-interest including but
not limited to cash receipts and disbursements, financial
statements, and proposed transactions for which Bankruptcy
Court approval is sought;
d) assist in identifying and implementing cost containment
opportunities and asset redeployment opportunities;
e) assist in preparing business plans, budgets and analyzing
the business and financial condition of the Debtors;
f) analysis of assumption and rejection issues regarding
executory contracts and leases;
g) assist in evaluating reorganization strategies and
alternatives available to the Debtors including the sale or
sales of substantially all of the Debtors' assets;
h) assist in developing the Debtors' projections and
assumptions;
i) prepare asset and liquidation valuations;
j) assist in preparing documents necessary for confirmation of
a plan of reorganization, including financial and other
information contained in the plan of reorganization and
disclosure statement;
k) advice and assist the Debtors in negotiations and meetings
with the various creditor constituencies;
l) advise and assist management regarding the claims
resolution procedures, including analysis of creditors'
claims by type and entity, and maintenance of the claims
database;
m) render testimony regarding feasibility of a plan of
reorganization, avoidance actions and other matters, as
required;
n) assist in matters concerning employee retention programs
and severance, as appropriate; and
o) other financial and restructuring advisory services
provided at the request of the Debtors or Debtors' counsel
to assist the Debtors in their business and reorganization.
The Debtors assert that FTI is well qualified and able to
represent the Debtors in a cost-effective, efficient, and timely
manner. FTI has already provided certain financial consulting
services. FTI has earned and received $2,224,640 in monthly
fees covering through the Petition Date.
FTI's current hourly rates are:
Senior Managing Directors $525-$595 per hour
Directors / Managing Directors $360-$525 per hour
Associates / Consultants $185-$345 per hour
Administration / Paraprofessionals $ 75-$140 per hour
PSC, manufacturer of bar code scanning equipment and portable
data terminals for retail market and supply chain market, filed
for chapter 11 protection on November 22, 2002. James M. Peck,
Esq., at Schulte Roth & Zabel LLP represents the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed $130,051,000 in total
assets and $159,722,000 in total debts. The Debtors' Chapter 11
Plan and the accompanying Disclosure Statement are due on March
22, 2003.
RELIANT RESOURCES: Fitch Drops Senior Unsecured Debt Rating to B
----------------------------------------------------------------
Reliant Resources, Inc.'s senior unsecured debt rating has been
downgraded to 'B' from 'BB' by Fitch Ratings. The rating remains
on Rating Watch Negative pending the successful completion of
debt refinancing as discussed below.
The downgrade reflects RRI's need to restructure or refinance
approximately $5.7 billion of outstanding corporate level bank
debt and synthetic lease obligations, including a $2.9 billion
bridge loan due February 2003 used to acquire the assets of
Orion Power Holdings. While the recent refinancing of
approximately $1.33 billion of ORN subsidiary level debt
completed an important first step in RRI's overall debt
restructuring plan, revised terms substantially restrict RRI's
ability to use cash from ORN to service RRI corporate level
debt. Moreover, the tightening bank credit environment for
energy merchants in general could frustrate RRI's efforts to
complete its planned global bank refinancing. RRI has publicly
acknowledged that a Chapter 11 reorganization is an alternative
if it is unable to extend its current bank exposure. Fitch notes
that RRI is able to offer its lenders a relatively extensive
collateral package, a factor that could ultimately enhance RRI's
ability to extend its bank maturities. Unencumbered assets
currently available to support a secured financing include RRI's
California and Florida based generation and its Midwest peaking
facilities. In addition, equity interests in both RRI's Texas
retail business and ORN could potentially be offered as
collateral.
The rating remains on Rating Watch Negative with further
downgrades likely by Fitch if RRI is unable to receive an
extension on its near-term maturing bank debt, specifically the
ORN bridge loan due February 2003. Alternatively, Fitch will
consider changing its Rating Watch status and/or raising RRI's
rating if the company is successful in reaching a revised bank
agreement which provides RRI with sufficient flexibility to
access the debt capital markets over time and ultimately reduce
its reliance on commercial bank borrowings. Contact: Hugh Welton
1-212-908-0746 or Ellen Lapson, CFA 1-212-908-0504, New York.
R.F. ALTS: Fitch Downgrades Ratings on Classes A, B & C Notes
-------------------------------------------------------------
Fitch Ratings downgraded the following classes of notes issued
by R.F. Alts Finance I Ltd., Series 1 and 2:
R.F Alts Finance I Ltd. Series 1:
-- GBP7,125,000 class A floating-rate notes due 2010 to 'BB-'
from 'AA-';
-- GBP4,500,000 class B floating-rate notes due 2010 to 'B-'
from 'BBB';
-- GBP3,000,000 class C floating-rate notes due 2010 to 'C' from
'BB'.
R.F Alts Finance I Ltd. Series 2:
-- EUR23,750,000 class A floating-rate notes due 2010 to 'BB-'
from 'AA-';
-- EUR15,000,000 class B floating-rate notes due 2010 to 'B-'
from 'BBB';
-- EUR10,000,000 class C floating-rate notes due 2010 to 'C'
from 'BB'.
Both transactions are collateralized debt obligations. The
portfolios for both transactions contain credit-linked notes
referencing emerging market sovereign debt, emerging market
corporate debt, and U.S. corporate debt.
Deterioration in the credit quality of their portfolios combined
with obligations that have become subjects of credit events has
increased the credit risk to these classes. Losses on the
credit-linked notes for both deals will be realized on the later
of the March 2005 payment date or the valuation date. This
feature will allow all classes to remain current on interest
payments until March 2005.
SALOMON BROS.: Fitch Affirms Low-B Ratings on 5 Classes of Notes
----------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc.'s commercial
mortgage pass-through certificates, series 1999-C1, $130.8
million class A-1, $355.7 million class A-2, and interest-only
class X are affirmed at 'AAA' by Fitch Ratings. In addition, the
following certificates are affirmed by Fitch: $38.6 million
class B at 'AA', $38.6 million class C at 'A', $11 million class
D at 'A-', $27.6 million class E at 'BBB', $11 million class F
at 'BBB-', $14.7 million class G at 'BB+', $20.2 million class H
at 'BB', $9.2 million class J at 'BB-', $16.5 million class K at
'B' and $7.3 million class L at 'B-'. Fitch does not rate the
$16.5 million class M certificates. The rating affirmations
follow Fitch's annual review of the transaction, which closed in
August 1999.
The rating affirmations reflect the consistent loan performance
and limited amortization since issuance. As of the November 2002
distribution date, the pool's aggregate principal balance has
been reduced by approximately 5% to $697.7 million from $734.9
million at issuance. The certificates are collateralized by 213
fixed-rate mortgage loans, consisting of multifamily (32% by
balance), retail (27%), office (19%), and industrial (10%)
properties, with significant concentrations in California (17%),
Texas (13%), and Massachusetts (12%).
Two loans (1.6%) are currently being specially serviced. The
largest specially serviced loan (0.92%) secured by a hotel in
Florida is currently 90+ days delinquent. A receiver is now in
place and the property is being prepared to be marketed for
sale. Losses are expected on this loan as the total exposure is
$7.2 million and the property was appraised at $4 million in
April 2002.
The second specially serviced loan (0.64%) is secured by an
anchored retail center in Ohio. The property is now 25% occupied
as the major tenant vacated earlier this year. The special
servicer is in the process of getting a new appraisal. The loan
has been current on debt service payments so far; however,
foreclosure on this property is likely due to the cash flow
issues.
GMAC Commercial Mortgage Corp., the master servicer, collected
year-end 2001 financials for 94% of the pool's outstanding
principal balance. The YE 2001 weighted average debt service
coverage ratio for the pool increased to 1.61 times from 1.36x
at issuance. Eight loans (3%) reported YE 2001 DSCR below 1.00x.
Various hypothetical stress scenarios were applied whereby
specially serviced and other potentially problematic loans were
assumed to default. Even under these stress scenarios,
subordination levels remain sufficient to affirm the ratings.
Fitch will continue to monitor this transaction, as surveillance
is ongoing.
SECURITY ASSOCIATES: AMEX Intends to Strike Shares from Exchange
----------------------------------------------------------------
Security Associates International, Inc. (Amex: SAI), a national
provider of alarm monitoring services, received a notice from
the American Stock Exchange indicating that AMEX intends to file
an application with the Securities and Exchange Commission to
strike the Company's common stock from listing and registration
on AMEX. AMEX indicated that the Company has fallen below the
AMEX listing guidelines as a result of the net losses sustained
by the Company in its three most recent fiscal years and the
continued low trading price of the Company's common stock. The
Company does not intend to appeal the delisting of its
securities.
The public trading market for the Company's common stock may be
adversely affected when it is delisted from AMEX. Following a
delisting, the Company may seek to have its common stock quoted
on the OTC Bulletin Board. Historically, the OTC Bulletin Board
has been a less developed market providing lower trading volume
than the national securities exchanges and NASDAQ. However,
there is no guarantee that the Company will succeed in having
its common stock quoted on the OTC Bulletin Board.
Security Associates provides security alarm monitoring services
to residences and businesses, including more than 300,000
subscribers, through the largest independent network of
independent security alarm installing and servicing dealers in
the country.
Security Associates' September 30, 2002 balance sheet shows a
working capital deficit of about $28 million, and a total
shareholders' equity deficit of about $3 million.
SPECTRASITE: Unit Divests Wireless Network Services Division
------------------------------------------------------------
SpectraSite Communications, Inc., a wholly owned subsidiary of
SpectraSite Holdings, Inc., announced its WesTower Corporation
subsidiary has entered into a definitive agreement for the sale
of its wireless network services division to WesTower, LLC, an
investment vehicle owned by certain members of the division's
existing management team, including its President, Calvin J.
Payne.
The sale is expected to close on December 31, 2002, and is
subject to customary closing conditions, including certain
financing contingencies.
Other terms of the transaction were not disclosed.
Stephen H. Clark, President and CEO of SpectraSite stated, "The
sale of our network services division is a natural step for
SpectraSite as the company continues to focus on its core tower
leasing business. SpectraSite acquired its network services
division in 1999 to enable it to perform under various build-to-
suit contracts with certain wireless carriers. Now that those
build-to-suit contracts have been completed, it is no longer
strategically imperative for SpectraSite to offer network
services as a complementary product offering to its tower
leasing business."
SpectraSite Communications, Inc. -- http://www.spectrasite.com
-- based in Cary, North Carolina, is one of the largest wireless
tower operators in the United States. At September 30, 2002,
SpectraSite owned or managed approximately 20,000 sites,
including 7,999 towers primarily in the top 100 markets in the
United States. SpectraSite's customers are leading wireless
communications providers and broadcasters, including AT&T
Wireless, ABC Television, Cingular, Nextel, Paxson
Communications, Sprint PCS, Verizon Wireless and Voicestream.
SPECTRASITE HOLDINGS: Court Fixes December 26 as Claims Bar Date
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina schedules the deadline by which creditors of
SpectraSite Holdings, Inc., who wish to assert a claim against
the Debtor's estate, must file a proof of claim or be forever
barred from asserting that claim.
The proofs of claim should be accompanied by supporting
documentation and sent to:
Office of the Clerk
United States Bankruptcy Court
Eastern District of North Carolina
Post Office Box 1441
Raleigh, North Carolina 27602
on or before 4:00 p.m., of December 26, 2002.
Creditors asserting:
(1) claims listed in the Schedules as a contingent, disputed,
or unliquidated claim, or
(2) the creditor does not agree with the amount or classified
of its claim as listed in the Schedules.
do not need to file a proof of claim.
Additionally, holders of claims and Equity Interests do not need
to file proofs of claim if they assert:
a) claims which has already been properly filed with the
Court;
b) claims allowable under the Bankruptcy Code as expense of
administration of the Debtors' chapter 11 case;
c) claims allowed by an order of the Court;
d) claims by any subsidiary or affiliate of the Debtor on
account of an intercompany claim against the Debtor;
e) claims by individual holders of the Senior Notes on
account of amounts owing under such Senior Notes;
f) claims by the indenture trustee under the indentures
pursuant to which the Senior Noted were issued for
amounts owing under such indentures; and
g) interests of holders of shares of common stock of the
Debtor and any warrants or options to purchase any common
stock of the Debtor.
Spectrasite Holdings, Inc., is a holding company incorporated in
Delaware whose principal asset is 100% of the common stock of
SpectraSite Communications, Inc., a telecommunication company.
The Company filed for chapter 11 protection on November 15,
2002. Terri L. Gardner, Esq., at Poyner & Spruill, LLP
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$742,176,818 in total assets and $1,739,522,826 in total debts.
TANGER FACTORY: Sells Bourne Property to Inland for $3.4 Million
----------------------------------------------------------------
Tanger Factory Outlet Centers, Inc., (NYSE: SKT) has completed
the sale of its 23,417 square foot property located in Bourne,
Massachusetts. The property was sold to Inland Real Estate
Acquisitions, Inc., for $3.4 million, or over $145 per square
foot, representing a capitalization rate of approximately 9.6%
based on an expected annual net operating income of $327,000.
Tanger will continue to manage the day-to-day operations of the
center. After the deduction of all closing costs, the company
anticipates recognizing a net gain on the sale of the property
of approximately $1.4 million. Tanger originally developed the
property in 1989.
Stanley K. Tanger, Chairman of the Board and Chief Executive
Officer stated, "While the Bourne center remains a very
productive asset, we felt it was an opportune time to divest
ourselves of this property, as its relatively small size does
not fit into our long-range planning. The proceeds from the
sale of our Bourne center will generate capital we plan to
invest in new development opportunities, the acquisition of
existing outlet centers, or to reduce outstanding debt."
Tanger Factory Outlet Centers, Inc., a fully integrated, self-
administered and self-managed publicly-traded REIT, presently
has ownership interests in or management responsibilities for 34
shopping centers in 21 states coast-to- coast, totaling
approximately 6.2 million square feet, leased to over 1,500
stores that are operated by over 250 different brand name
companies.
* * *
As reported in Troubled Company Reporter's Sept. 20, 2002
edition, Standard & Poor's affirmed its double-'B'-plus
corporate credit rating on Tanger Factory Outlet Centers Inc.,
and its operating partnership, Tanger Properties L.P. At the
same time, the double-'B'-plus senior unsecured rating and the
double-'B'-minus preferred stock rating were affirmed. The
outlook is stable.
The ratings acknowledge Tanger's success to date in
repositioning its portfolio toward a more upscale tenancy base,
and reflect the company's established business position, solid
operating profitability, and improving same-space sales
performance. These strengths are offset by the company's lower
debt coverage measures, moderate encumbrance levels, and
relatively small (and highly concentrated) portfolio.
TRANSTEXAS GAS: Court Okays Stroock & Stroock as Special Counsel
----------------------------------------------------------------
TransTexas Gas Corporation and its debtor-affiliates sought and
obtained approval from the U.S. Bankruptcy Court for the
Southern District of Texas to employ and retain the firm of
Stroock & Stroock & Lavan LLP as special counsel.
The Debtors expect Stroock to:
a) continue to advise the Debtors in their negotiations with
their creditors and other parties in an effort to formulate
and implement asset sales and/or a final restructuring
plan;
b) assist and advise the Debtors in connection with the
preparation, implementation, confirmation and consummation
of a plan of reorganization and related disclosure
statement;
c) assist and advise the Debtors in general corporate matters,
including, without limitation, tax, ERISA, securities,
corporate finance and other commercial matters as they
relate to the Debtors' plan of reorganization;
d) advise the Debtors on matters related to securities law
compliance, including without limitation the filing of all
reports required under section 13 of the Securities
Exchange Act of 1934, as amended;
e) assist the Debtors' bankruptcy counsel as may be requested
by the Debtors or such counsel; and
f) provide such other services consistent herewith as the
Debtors may require.
Stroock will charge the Debtors in accordance with its regular
hourly rates, which range from:
members $450 to $750 per hour
counsel and associates $185 to $550 per hour
paraprofessionals $ 65 to $210 per hour
The attorneys who will primarily work on these matters and their
billing rates are:
Michael J. Sage $675 per hour
David H. Spencer $600 per hour
Gerald C. Bender $585 per hour
Mark E. Palmer $585 per hour
Eric M. Kay $415 per hour
James O. Nygard $340 per hour
Doug S. Mintz $310 per hour
Jonathan E. Gross $185 per hour
TransTexas Gas Corporation, a company involved in the
exploration for, production and sale of natural gas and oil,
filed for chapter 11 protection on November 14, 2002. Stephen
A. Roberts, Esq., at Strasburger & Price LLP represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from its creditors it listed assets of over a
hundred million and debts of over $300 million.
UNIFAB INT'L: Fails to Comply with Nasdaq Listing Requirements
--------------------------------------------------------------
UNIFAB International, Inc., (NASDAQSC: UFABE) was unable to file
its report on Form 10-Q for the quarter ended September 30, 2002
by the extended deadline of November 19, 2002. The chain of
events and circumstances that led to our being unable to file
this report are described below.
On Monday, October 28, 2002, the Company filed with the
Securities and Exchange Commission a preliminary proxy
statement, and on Friday, November 1, 2002, the SEC informed the
Company of its intention to review the preliminary proxy
statement, including the financial statements included therein.
On Wednesday, November 13, 2002, the Company received comments
from the SEC related to its review of the preliminary proxy.
On Wednesday, November 6, 2002, the board of directors approved
the selection of Deloitte & Touche LLP to serve as the Company's
independent auditors for the fiscal year ended December 31,
2002, replacing Ernst & Young LLP, who resigned as such
effective August 15, 2002. Deloitte & Touche LLP immediately
began procedures related to its engagement as our independent
auditor.
On Friday, November 15, 2002, the Company filed for an extension
of time until November 19, 2002, to file its September Form 10-
Q. Due to the delays encountered responding to the SEC's
comments and the review of those responses by the Company's
current and prior auditors, the Company was unable to file its
September Form 10-Q within the extended timeframe.
Because the Company had not yet filed its September Form 10-Q,
on November 20, 2002, the Company received a Nasdaq Staff
Determination indicating that the Company failed to comply with
the filing requirement for continued listing set forth in
Marketplace Rule 4310(C)(14), and that its securities were,
therefore, subject to delisting from the Nasdaq SmallCap Market
on November 29, 2002. On November 22, 2002, the trading symbol
for the Company's securities was changed from UFAB to UFABE as a
result of this filing delinquency.
On November 26, 2002, the Company requested a hearing with a
Nasdaq Listing Qualifications Panel to stay the delisting of the
Company's securities. The Panel has 45 days from November 26,
2002, to set the hearing date. There can be no assurance that
the Panel will grant the Company's request for continued listing
in the event the September Form 10-Q is not filed prior to the
hearing date.
"We are continuing to assist our independent auditors in
completing their review of the September Form 10-Q, responding
to the SEC's comments and incorporating those responses, to the
extent necessary, into the September Form 10-Q. When we file the
September Form 10-Q, we will no longer be in violation of the
Nasdaq filing requirements, and the need for a hearing with
respect to that issue, if one has not yet been held, will be
eliminated. At the time that we file the September Form 10-Q,
the trading symbol will be changed back to UFAB.
"We are also currently preparing a response to the SEC's comment
letter with respect to our preliminary proxy materials. Once we
have responded to the SEC's comments, we will issue a definitive
notice of meeting and proxy statement. We expect do so in time
to hold the annual shareholders meeting at the end of December
2002."
UNIFAB International, Inc., is a custom fabricator of topside
facilities, equipment modules and other structures used in the
development and production of oil and gas reserves. In addition,
the Company designs and manufactures specialized process
systems, refurbishes and retrofits existing jackets and decks,
provides design, repair, refurbishment and conversion services
for oil and gas drilling rigs and performs offshore piping hook-
up and platform maintenance services.
* * *
As previously reported, Ernst & Young LLP, the accounting firm
that has been the independent auditor of UNIFAB International,
Inc., since its initial public offering in 1997, resigned from
its engagement with the Company, effective August 15, 2002. E&Y
notified the Company of its resignation on August 13, 2002.
In its report on the Company's audited financial statements for
the year ended December 31, 2001, E&Y modified its audit opinion
by noting that there was substantial doubt about the Company's
ability to continue as a going concern through the 2002 fiscal
year. This modification was the only qualification or
modification expressed by E&Y in their audit opinions during its
five-year engagement as the Company's independent auditor.
UNITED AIRLINES: Wants to Achieve $5B Labor-Related Cost Savings
----------------------------------------------------------------
United Airlines (NYSE:UAL) released the following statement:
"United Airlines and the United Airlines Union Coalition remain
committed to achieving $5.2 billion in labor-related cost
savings as part of our overall financial recovery program. While
we are disappointed that United's mechanics have failed to
ratify their tentative agreement, it's important to recognize
that every other employee group - including two of the three
represented by the International Association of Machinists - has
either agreed to or ratified their contribution to the labor
cost-savings component of United's business plan currently being
reviewed by the Air Transportation Stabilization Board.
"We intend to achieve the full labor cost savings included in
our business plan. To that end, we are initiating immediate
discussions with the leadership of the International Association
of Machinists District 141M to develop contract modifications
that will achieve the same savings level called for in the
agreement that was not ratified this morning. Reaching our $5.2
billion target is essential if we are to secure federally backed
loans and avoid a Chapter 11 filing."
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
WARRIOR RESOURCES: Consummates Principal Bank Debt Restructuring
----------------------------------------------------------------
Warrior Resources, Inc., formerly Comanche Energy, Inc., (OTC
Pink Sheets:CMCY) completed a restructuring of its principal
bank debt. The new facility will increase the present bank debt
from $3.1 million to $3.8 million and allow the Company to begin
a work program on certain of its oil and gas wells designed to
increase cash flow.
"In completing the restructuring with the bank, we have resolved
the prior compliance issues with the bank and borrowed
additional funds against our oil and natural gas properties in
order to enhance the cash flow of the Company," said Jeffrey T.
Wilson, President of Warrior. "Since acquiring control of the
Company, we have also made important progress in settling the
Company's accounts and notes payable obligations and in
dismissing the remaining litigation against the Company,
including all litigation involving former officers and directors
of the Company. With the assistance of our affiliate and largest
shareholder, Imperial Petroleum, Inc., (OTCBB: IPTM) we have
eliminated approximately $65,000 per month of overhead from the
Company, settled some $1.2 million in obligations and begun a
work program. We believe that we can now focus the Company's
efforts on developing the oil and natural gas that exists in the
Company's wells instead of its prior problems."
Warrior Resources, Inc., is an oil and natural gas producer with
properties located in Texas and Mississippi. The Company's
common stock is traded in the pink sheets market under the
symbol CMCY.
WORLDCOM INC: Intends to Reject COMSAT "Ghost Circuit" Leases
-------------------------------------------------------------
Worldcom Inc., and its debtor-affiliates have decided to reject
certain leases of Circuits leased from COMSAT Corp. pursuant
Section 365(a) of the Bankruptcy Code and Rule 6006 of the
Federal Rules of Bankruptcy Procedure. The Circuits are not
currently being utilized by the Debtors and therefore, provide
no benefit to the Debtors' estates.
Lori R. Fife, Esq., at Weil Gotshal & Manges LLP, in New York,
informs the Court that prior to the Petition Date, the Debtors
and COMSAT Corporation entered into an inter-carrier agreement
dated January 24, 1994 pursuant to which COMSAT has agreed to
provide and the Debtors agreed to lease a number of circuits for
use of COMSAT's INTELSAT space segment capacity for
telecommunications services. The Agreement sets forth rates and
terms for the leases entered.
On June 1, 2000, COMSAT and WorldCom entered into a supplemental
agreement that established a "baseline amount" of digital bearer
circuits that WorldCom was required to lease from COMSAT. The
term of the 2000 Agreement expired on April 30, 2002; however,
the leases entered into pursuant to the 2000 Agreement remain
effective until their individual expiration dates.
Although the term of the 1994 Agreement runs through
December 31, 2003, Ms. Fife explains that "the rates, terms and
conditions for each circuit leased pursuant to the provisions"
of the 1994 Agreement survive until the end of their own terms.
Additionally, although the term of the 2000 Agreement expired on
April 30, 2002, the prices for circuits under lease at the
expiration of its term remain at the rates then in effect. The
Debtors commence the circuit leases themselves by means of
written service orders sent to COMSAT. To enter into a
particular lease, the Debtors submit a written service order
specifying the kind of circuit and the discrete lease term
desired.
The Debtors currently maintain leases for circuits not in
service, the last of which expires on July 31, 2006. The
monthly cost of maintaining the Ghost Circuit leases totals
$464,735.50 while the aggregate cost of carrying them to their
terms is $4,798,535.07.
Ms. Fife relates that the Debtors derive no benefit from the
leases of the Ghost Circuits because they are not using them,
and the Debtors have determined that they are unnecessary in
their ongoing business. Based on overcapacity in the market,
the Debtors do not believe they will be able to sell or assign
these leases. The leases for the out-of-service circuits serve
no useful reorganization purpose, and the Debtors' estates and
creditors will benefit by eliminating the associated payment
obligations. (Worldcom Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Worldcom Inc.'s 11.25% bonds due 2007
(WCOM07USR4) are trading at about 49 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USR4
for real-time bond pricing.
WORLDCOM INC: CAGW Lambastes Gov't for Leniency & Inconsistency
---------------------------------------------------------------
As expected, the Securities and Exchange Commission reached a
partial settlement Tuesday with telecom giant WorldCom in which
the company may not be fined for its fraudulent practices.
Citizens Against Government Waste blasted the decision for its
leniency and contradiction of government policy. In addition to
filing for bankruptcy, WorldCom has admitted to committing at
least a $9 billion accounting fraud, and two of its top
executives have already been arrested while more investigations
continue.
"Through the criminal actions of WorldCom executives, thousands
of investors lost millions of dollars and thousands of employees
were laid off. Now it appears as if the SEC will only provide
the company with a slap on the wrist," said CAGW President Tom
Schatz said. "The role of the SEC is to protect investors and
enforce rules. Although it has yet to pass the Senate, the
Senate Appropriations Committee approved the SEC's request for
more money and doubled their operating budget to a FY 2003 level
of $750.5 million. If the SEC is going to investigate, but not
punish companies who commit fraud, then why do they need the
extra money?"
According to the partial settlement, WorldCom agreed to not
violate any SEC laws in the future, hire a consultant to oversee
the company's accounting structure and policies, train senior
operational and financial officers to reduce the risk of future
SEC violations, and allow the court to continue to monitor its
corporate governance and ethics policies. The SEC reserves the
right to later request the court to impose a fine.
"Arthur Andersen was fined $500,000 for obstruction of justice,
yet WorldCom, which has by its own admission committed billions
of dollars in fraud, warrants only a few months of investigation
and possibly not even a fine," Schatz continued. "WorldCom was
the largest bankruptcy in history. At a time of low investor
confidence, failure to act in a consistent manner could be a
blow to an already weak economy."
Another contradiction of federal policy exists that pertains to
WorldCom. Just two weeks ago, the General Services
Administration extended a contract to the company worth an
estimated $11 billion over its lifetime. The deal is for
telephone long-distance and data service for the Departments of
Defense, Commerce, and Interior, along with the Federal Aviation
Administration, the Social Security Administration, and the
Nuclear Regulatory Commission.
"As the law requires, WorldCom should be suspended from doing
business with the government, just as Enron and Arthur Andersen
have been for their own fraudulent practices," concluded Schatz.
"The federal government needs to be consistent and fair, and in
the case of WorldCom, it was neither."
Citizens Against Government Waste is a nonpartisan, nonprofit
organization dedicated to eliminating waste, fraud,
mismanagement and abuse in government.
ZIFF DAVIS: Completes Comprehensive Financial Restructuring Plan
----------------------------------------------------------------
Ziff Davis Holdings Inc., the ultimate parent company of Ziff
Davis Media Inc., has completed its exchange offer to provide
newly issued Series E-1 Preferred Stock (par value $0.01) and
new Senior Subordinated Compounding Notes due 2009 (Series B),
both registered under the Securities Act of 1933, to holders of
its identical but unregistered securities. Final documentation
for the exchange offer, which ended on November 15, 2002, has
been executed, with 100% of the holders of both the Series E
Preferred Stock and the Senior Subordinated Compounding Notes
due 2009 participating in the exchange and receiving the new
securities. The successful conclusion of the exchange offer
marks the final administrative step and completion of the
Company's comprehensive financial restructuring plan under which
its outstanding debt was reduced by over $147 million and its
annual cash debt service was reduced by over $30 million for the
next 4 years.
Ziff Davis Holdings Inc., through its wholly-owned subsidiary
Ziff Davis Media Inc., is a special interest media company
focused on the technology and game markets. In the United
States, the company publishes 9 industry leading business and
consumer publications: PC Magazine, eWEEK, Baseline, CIO
Insight, Electronic Gaming Monthly, Xbox Nation, Official U.S.
PlayStation Magazine, Computer Gaming World and GameNow. There
are 45 foreign editions of Ziff Davis Media's publications
distributed in 76 countries worldwide. In addition to producing
companion sites for all of its magazines, the company offers
tech enthusiast sites such as ExtremeTech.com. Ziff Davis Media
provides custom publishing and end-to-end marketing solutions
through its Integrated Media Group, industry analyses through
Ziff Davis Market Experts and produces conferences and
eSeminars. For more information, visit http://www.ziffdavis.com
* BOOK REVIEW: Land Use Policy in the United States
---------------------------------------------------
Author: Howard W. Ottoson
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at
http://amazon.com/exec/obidos/ASIN/1893122832/internetbankrupt
In 1962, marking the 100th anniversary of the signing of the
Homestead Act by President Lincoln, 20 nationally recognized
economists, historians, a political scientist, and a geographer
presented papers at the Homestead Centennial Symposium at the
University of Nebraska. Their task was to appraise the course
that United States land policy had taken since independence. The
resulting papers are presented in this book, grouped into five
major areas: historical background; social factors influencing
U.S. land policy; past, present and future demands for lands in
the U.S.; control of land resources; and implications for future
land policy.
This book begins with a summary of the Homestead Act, its
antecedents, the arguments of its supporters and detractors, and
its intent versus implementation. The Act offered a quarter
section (160 acres) of public land in the West to citizens and
intended citizens for a $14 filing fee and an agreement to live
on the land for five years. The program ended in 1935.
Advocates claimed that frontier lad had no value to the
government until it was developed and began generating tax
revenue. Opponents feared the Act would lower land valued in the
East and pushed for government sale of the land. In practice,
states, territories, railroads and investors were able to set
aside more land than was eventually handed over to the
homesteaders.
One paper deals with land policy before 1862. From the start,
the U.S. required that "all grants of land by the federal
government should embody a description of the land not merely in
quality, but in place as defined by relation to an actual
survey." This policy avoided countless boundary disputes so
vexing to other countries.
Perhaps most interesting are the social history chapters:
Czechoslovakians pushing wheelbarrows across Nebraska,
"Daughters and Sons of the Revolution.(living) next
to.Mennonites," and "an illiterate.neighborly with a Greek and a
Hebrew scholar from a colony of Russian Jews." Mail-order
brides, "defectors from civilization," the importance of the
Mason jar, the Jeffersonian dream of a nation of agrarian
freeholders, and Santayana's observation that the typical
American skitters between visionary idealism and crass
materialism, all make for fascinating reading.
The land-use policy problems discussed certainly haven't been
solved today. And, although land use conflicts in the U.S.
haven't always been resolved equitably, "the big step forward
taken by the United States during the last one hundred and fifty
years in the age-long struggle of man towards the ideals of
mutuality and equity has been the working out of a system
wherein the sovereign superior who prescribes the working-rules
for land use and decision making have become, himself, a
collective of the citizenry."
A chapter is devoted to the arguments between the family farm ad
the "sentiment against concentration of wealth in the hands of a
few." The discussion of the Land Grant college system and its
contribution to international development closes with a quote
from Chester Bowles:
"Can we, now the richest people on earth, become creative
participants in the unprecedented revolutionary changes of our
era, changes that the most privileged people will oppose tooth
and nail, but which for the bulk of mankind offer the hopeful
prospect of a little more food, a little more opportunity, a
doctor for their sick child, and sense of personal dignity?"
*********
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.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
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