/raid1/www/Hosts/bankrupt/TCR_Public/021203.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, December 3, 2002, Vol. 6, No. 239
Headlines
21ST CENTURY TECH.: Ability to Continue Operations Uncertain
AGRIFOS: Wants OK to Use Wachovia's Cash Collateral Until Dec. 9
AIR PACKAGING: Needs New Financing to Continue Business Plan
ALGO GROUP: Seeks Waiver of Covenant Defaults Under Credit Pact
AMES DEPARTMENT: Proposes Uniform Wind Down Auction Procedures
ANC RENTAL: Court Resets Tampa Asset Sale Auction Date to Dec. 9
ASIA GLOBAL CROSSING: Intends to Continue Insurance Programs
AVANI INT'L: Independent Auditors Express Going Concern Doubt
BCE INC: Closes Sale of Directories Business for C$3 Billion
BIGSTAR ENTERTAINMENT: Funds Insufficient to Continue Operations
BRITISH ENERGY: UK Removes Fin'l Guarantee Obligation on Unit
CABLETEL COMMS: Covenant Violations Under Credit Pact Remedied
CALIFORNIA POWER: Axes George Sladoje from Chief Executive Post
CELL-LOC INC: Sept. 30 Working Capital Deficit Tops $2.5 Million
COVERAGECONNECT INC: Holding Public Foreclosure Sale Today
CRYSTALLEX INT'L: Working Capital Deficit Tops C$3MM at Sept. 30
ENCOMPASS SERVICES: Wants to Honor $3.9M of Customer Obligations
ENRON: Asks Bankruptcy Court to Hold NYISO in Civil Contempt
EOTT ENERGY: Committee Signs-Up Fulbright & Jaworski as Counsel
EXODUS COMMS: Court Fixes AT&T Solutions' $2.3-Mil. Admin. Claim
FEDERAL-MOGUL: Court Approves Settlement Agreement with IRS
FOAMEX INTERNATIONAL: Net Capital Deficit Narrows to $157 Mill.
GENTEK INC: Brings-In Deloitte & Touche for Auditing Services
GENUITY: Wants to Honor & Pay Prepetition Employee Obligations
GLOBAL CROSSING: Asks Court to Fix Jan. 15 Admin Claims Bar Date
HASBRO INC: UK Regulator Fines Company for Price Fixing
HAYES LEMMERZ: Wants to Assume McKechnie Wheel Cover Agreement
INFOCORP COMPUTER: Balance Sheet Insolvency Narrows to $3.7 Mil.
INTERNET CABLE: Pursuing New Sources of Capital to Continue Ops.
INVENTRONICS LTD: Receives $7 Million in Refinancing Proceeds
KMART CORP: 208 Trade Creditors Sell Claims Totaling $185 Mill.
LAIDLAW INC: Plan Confirmation Hearing to Continue Next Month
MAGNUM HUNTER: Completes Sale of South Texas Assets for $33 Mil.
MED DIVERSIFIED: Bankruptcy Won't Affect Chartwell Home Unit
MEDINEX SYSTEMS: Files for Chapter 11 Protection in Idaho
MITEC TELECOM: Working Capital Deficit Tops C$7MM at October 31
NATIONAL CENTURY: Look for Schedules & Statements by January 2
NATIONAL STEEL: Proposes Uniform Claims Resolution Procedures
NATIONSRENT: Court Approves Stipulation with Case Credit, et al.
NATURAL HEALTH: Auditors Doubt Ability to Continue Operations
NAVISTAR INT'L: Zacks Gives 'Sell Now' Recommendations on Shares
NETIA HOLDINGS: Pulls Plug on Agreement with Fitch Ratings
NEW DRAGON ASIA: Says Funds Sufficient to Satisfy Current Needs
NEXTCARD INC: Wants to Hire Gibson Dunn as Bankruptcy Counsel
NORTEL NETWORKS: Wins $65MM in China Unicom Expansion Contracts
OAKWOOD HOMES: Wants to Hire Bankruptcy Services as Claims Agent
OCEAN POWER: Case Summary & 20 Largest Unsecured Creditors
ONTRO INC: Fails to Meet Additional Nasdaq Listing Requirements
OWENS CORNING: Wins Court Nod to Expand Ernst & Young Engagement
PAYSTAR CORP: Seeks Additional Financing to Continue Operations
PERKINELMER: Commences Tender Offer for Zero Coupon Debentures
PERKINELMER: Plans to Issue Sr. Sub. Notes via Private Offering
PSC INC: Seeks Court Authority to Obtain $20 Million DIP Credit
ROHN INDUSTRIES: Inks Pact to Sell All Assets to Platinum Equity
SIERRA PACIFIC: Signs Contracts for Renewable Energy Supplies
SPECTRASITE HOLDINGS: Hires Paul Weiss as Bankruptcy Counsel
TELEGLOBE INC: All Proofs of Claim Due by December 10, 2002
TEMBEC INC: S&P Revises Outlook on BB+ Credit Rating to Negative
THINKPATH INC: Lacks Sufficient Capital to Continue Operations
TOKHEIM: Firms-Up Pact to Sell All Assets to First Reserve Unit
TOKHEIM CORP: Court Appoints Logan & Company as Claims Agent
TRANSITION AUTO: External Auditors Express Going Concern Doubt
TRENWICK GROUP: Suspends Preferred Share Dividends Indefinitely
UNITED AIRLINES: Flight Attendants Ratify 5-Year Recovery Plan
US DATAWORKS: Independent Auditors Express Going Concern Doubts
USG CORPORATION: Philadelphia Stock Exchange Delists Options
WORLDCOM INC: KeyCorp Leasing Wants Prompt Decision on Contract
* Large Companies with Insolvent Balance Sheets
*********
21ST CENTURY TECH.: Ability to Continue Operations Uncertain
------------------------------------------------------------
21st Century Technologies, Inc., was incorporated under the laws
of the State of Delaware on May 15, 1967, as Satcom Corporation.
On November 6, 1991, the Company changed its name to Hughes
Pharmaceutical Corporation. Subsequent to 1991, the Company
changed its name from Hughes Pharmaceutical Corporation to First
National Holding Corporation Delaware. The Company became public
in 1985 through a merger with International Fluidics Control,
Inc. (formerly Sensory Systems, Inc., Training With The Pros,
Inc., and/or M-H Studios, Inc.). International Fluidics
Control, Inc., successfully completed a public offering of its
securities in 1969 under Regulation A of the Securities Act of
1933.
During the third quarter of 1994, in conjunction with the
execution of a letter of intent to acquire Innovative Weaponry,
Inc. (a New Mexico corporation), the Company consummated a plan
of merger between FNHC Nevada and FNHC Deleware whereby the
Nevada Corporation was the survivor and changed its corporate
name to Innovative Weaponry, Inc. to better reflect its future
actions and pending relationship with the acquisition target. On
September 15, 1997, the Board of Directors approved a name
change to 21st Century Technologies, Inc.
Innovative Weaponry, Inc.- New Mexico was incorporated on
June 22, 1988 under the laws of the State of New Mexico. The
Company was formed for the development and sale of specialized
firearms, firearm systems and related equipment. On
September 14, 1992, Innovative Weaponry, Inc., filed a petition
for relief under Chapter 11 of the Federal Bankruptcy Laws in
the United States Bankruptcy Court of the District of New
Mexico. Under Chapter 11, certain claims are stayed while the
Debtor continues business operations as Debtor-in-Possession.
On August 19, 1994, IWI-NV (now 21st Century Technologies,
Inc.) and IWI-NM entered into a letter of intent whereby IWI-NV
would use its unregistered, restricted common stock and cash to
satisfy certain obligations of IWI-NM in settlement of IWI-NM's
bankruptcy action. On February 1, 1995, the U. S. Bankruptcy
Court of the District of New Mexico confirmed the IWI-NM's plan
of reorganization. The plan became effective 30 days after its
confirmation. IWI-NM became a wholly owned subsidiary of
Innovative Weaponry, Inc. (formerly First National Holding
Corporation) (now known as 21st Century Technologies, Inc.), a
publicly owned company.
A report issued subsequent to the end of the quarter on
October 23, 2002 announced that the Fredericks Partners
exercised its option to convert $200,000 in debt to stock. The
Company has determined that a recapitalization is necessary to
continue as a going concern. Accordingly, the Board of
Directors has voted to merge 21st Century Technologies-Nevada
into the Company's yet to be formed 21st Century Technologies-
Delaware. The merger will take place in the fourth quarter of
2002. All stockholders of record as of the merger date will
exchange shares of 21st Century Technologies-Nevada for shares
of 21st Century Technologies-Delaware.
21ST Century Technologies, Inc., incurred an operating loss of
$97,442 for the 3 months ending September 30, 2002.
Recapitalization expense of $130,995 increased the loss for the
period to $228,309. For the nine months ended September 30,
2002, the Company has net income of $33,682 compared to a net
loss of $1,917,536 loss for the same period during the previous
year. General and administrative expenses of $378,066 have been
sharply reduced for the 9 months ending September 30, 2002
compared with $869,038 for the 9 months ending September 30,
2001. Due to the reduction of mid level and upper management,
compensation costs are likewise reduced from $1,151,338 in 2001
to $314,761 in 2002.
Management continues to concentrate on reducing costs
particularly overhead. General and administrative costs were
reduced to 24% of sales during the nine months ended September
30, 2002 compared to 59% of sales during the same period in the
previous year. Compensation costs during the same period were
reduced to 20% of sales in 2002 compared with 79% of sales in
2001.
21st Century Technologies, Inc., continues to streamline
operations. Receivables have decreased from $692,621 in 2001
to $347,686 in 2002 by increasing collection efforts, which has
reduced days outstanding from 174 days in 2001 to 83 days in
2002. Inventory has decreased from $1,001,514 in 2001 to
$537,547 in 2002. Management efforts to reduce inventory levels
have resulted in a decrease in the turn of inventory from 608
days in 2001 to 287 days in 2002.
The Company is dependent upon cash on hand and revenues from the
sales of its products. At present the Company needs cash for
monthly operating expenses in excess of its historic sales
revenues, and will continue to need additional capital funding
until sales of products increases. The Company will finance
further growth through both public and private financing,
including equity resources in the event of recapitalization.
Shareholders' interests may be diluted. If the Company is
unable to raise sufficient funds to satisfy either short term or
long term needs, there would be substantial doubt as to whether
the Company could continue as a going concern on either a
consolidated basis or through continued operation of any
subsidiary. It might be required to significantly curtail its
operations, significantly alter its business strategy or forego
market opportunities.
AGRIFOS: Wants OK to Use Wachovia's Cash Collateral Until Dec. 9
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Agrifos Fertilizer L.P., and its debtor-affiliates filed an
expedited motion asking the U.S. Bankruptcy Court for the
Southern District of Texas for permission to continue using
their Lenders' Cash Collateral.
When the Debtors filed their Chapter 11 Petition, Wachovia Bank,
National Association allowed the Debtors to use Cash Collateral
to fund postpetition operating expenses. Wachovia consented to
the Debtors' continuing request to use cash collateral through
December 9, 2002.
The Debtors tell the Court that this Motion was not filed
earlier because only recently have the Debtors and Wachovia
reached an agreement.
The Debtors are producers of phosphate fertilizers that operate
a 600,000 thousand ton per year phosphate fertilizer processing
plant in Pasadena, Texas and a 1.2 million ton per year
phosphate rock mine located in Nichols, Florida. They filed for
chapter 11 protection on May 8, 2001. Christopher Adams, Esq.,
and H. Rey Stroube, III, Esq., at Akin, Gump, Strauss, Hauer &
Feld, LLP represent the Debtors in their restructuring efforts.
AIR PACKAGING: Needs New Financing to Continue Business Plan
------------------------------------------------------------
Air Packaging Technologies, Inc., manufactures and markets a
line of industrial packaging products under the name "Air
Box"(R) and two private label brands pursuant to two separate
agreements with Minnesota Mining and Manufacturing Company
under the names 3M Inflata-Pak(TM) Air Cushion Packaging and
3M(TM) Air Cushion Packaging.
The Air Box(R) provides reusable protective packaging during
shipping and storage for a wide range of higher value items. It
provides vastly superior protection from ESD (electro static
discharge) damage and moisture. It also provides see-through
transparency for visual inspection of the product during
shipment and storage.
The Company has two agreements with Minnesota Mining and
Manufacturing Company (3M) pursuant to which the Company will be
manufacturing products to be sold under 3M's name. It is
anticipated these agreements will account for the majority of
the Company's sales in 2002 with the percentage increasing in
future years.
However, there is substantial doubt about Air Packaging
Technologies' ability to continue as a going concern because of
the magnitude of the Company's losses during the past three
years of $3,368,448, $3,489,220 and $1,853,012 in 2001, 2000 and
1999, respectively and net losses of $739,000 and $2,352,676 for
the three and nine months ended September 30, 2002 and an
accumulated deficit of $29,020,336 at September 30, 2002. The
Company's continued existence is dependent upon its ability to
raise additional capital, to increase sales, to significantly
improve operations, and ultimately become profitable.
The Company believes that future investments and certain sales-
related efforts will provide sufficient cash flow for it to
continue as a going concern in its present form. However, the
Company requires additional capital in the short term to
continue its business plan. There is no assurance that the
Company will raise the necessary capital or that it will achieve
such results. Consequently there is substantial doubt about the
Company's ability to continue as a going concern.
Net sales for the three and nine months ended September 30, 2002
were $187,314 and $525,761 compared to net sales of $323,655 and
$1,446,088 for the comparable periods of the preceding year.
This represents a decrease of $136,341, or 42%, and a decrease
of $920,327, or 64%, during the three and nine months ended
September 30, 2002. The net decrease is primarily due to a
delay in the launch of the industrial division of 3M during the
first nine months of fiscal 2002. The retail division placed
its initial stocking order during the first quarter of fiscal
2001.
Net loss for the three and nine months ended September 30, 2002
increased by $1,231 to $739,000 from $737,769 and by $117,671
to $2,352,676 from $2,235,005.
During the Company's operating history, it has yet to show a net
profit for any given fiscal year. The Company sustained net
losses of approximately $3,368,448, $3,489,000 and $1,853,000
for the fiscal years ended December 31, 2001, 2000 and 1999,
respectively that have caused the Company's Independent
Certified Public Accountants to issue an explanatory paragraph
in their opinions which expresses substantial doubt about the
Company's ability to continue as a going concern. The Company
also sustained net losses of approximately $739,000 and
$2,353,000 for the three and nine month periods ended September
30, 2002. The Company has required periodic infusions of
capital to survive and remain solvent. There can be no
assurance that the Company will continue to be able to attract
additional capital and there can be no assurance that the
Company will become profitable in the foreseeable future.
ALGO GROUP: Seeks Waiver of Covenant Defaults Under Credit Pact
---------------------------------------------------------------
Algo Group Inc., (TSX: AO) announced third quarter and nine
month results for the period ended September 30, 2002. Sales for
the third quarter and the nine months were $32.3 million and
$78.5 million respectively compared with $37.1 million and $81.1
million a year ago.
Net earnings for the third quarter were $0.3 million or $0.00
per share compared with net earnings of $0.8 million or $0.01
per share for the previous year. This reduced the loss for the
nine months to $1.4 million from a net loss of $3.0 million.
The weighted average number of shares outstanding for the third
quarter and nine months of 2002 were 93,730,132 and 93,633,523
respectively compared with 93,151,326 and 93,120,252 for the
same periods in 2001.
Algo Group President, Dan Elituv, said the $4.7 million third
quarter decrease in sales is a result of the elimination of
unprofitable lines. "The change is entirely attributable to the
divisions which we closed at the end of 2001 including Bugle Boy
and En Fran‡ais. The sales in the continuing business units were
similar to the previous year on an overall basis with outerwear
suffering a decrease compensated by increases in the other
business units."
Under the terms and conditions of the credit arrangements, the
Company is required to comply with certain covenants. As at
September 30, 2002, the Company was in breach of these
covenants. Management has commenced discussions with the lender
in order to obtain a waiver of the breach of these covenants.
The Company has obtained a waiver of covenant defaults for the
year ended December 31, 2001 and the quarter ended March 31,
2002.
Algo Group is a leading Canadian manufacturer and importer of
ladies', men's and children's fashion apparel marketed
throughout North America. As well, Algo Group designs and
imports fashion fabric marketed through North-American apparel
manufacturers and retail outlets.
AMES DEPARTMENT: Proposes Uniform Wind Down Auction Procedures
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Ames Department Stores, Inc., and its debtor-affiliates want to
set up notice and bidding procedures in connection with the
series of auctions that they may conduct with respect to the
sale of their remaining fee-owned properties, the unexpired
leases, and the Designation Rights of one or more of the
unexpired leases or fee-owned property.
Deryck A. Palmer, Esq., at Weil, Gotshal & Manges LLP, relates
that the Debtors intend to set auction dates from time to time.
The Debtors will just be providing adequate notice of an
auction.
The Auction Notice will set forth detailed bidding procedures
for a particular Auction. The Notice will be provided at least
12 days before each auction to parties who:
(i) expressed interest in the property subject to the
Auction;
(ii) in the discretion of the Debtors -- after consulting
Kimco and the statutory creditors' committee -- may be
Interested in acquiring the property to be auctioned; and
(iii) may be affected by the disposition of the property,
including lessors, lienholders, holders of reciprocal
easement agreements, and mortgages.
The Auction Notice may be advertised in appropriate publications
designed to provide adequate notice of a particular Auction.
Each Auction Notice will also be filed electronically with the
Court at least 12 days before that particular Auction.
Mr. Palmer tells the Court that all Auctions will be held at the
offices of Weil, Gotshal & Manges LLP at 767 Fifth Avenue in New
York -- or other location as may be identified by the Debtors
before the Auction -- with date and time as specified in the
Notice. Auctions may be adjourned from time to time, without
further notice.
Auctions Will Follow One Bidding Protocol
Mr. Palmer advises that all Auctions will be in accordance with
these bidding procedures:
-- A written bid on any Asset must be submitted by any bidder
so as to be actually received no later than two days before
the Auction by the Debtors' attorneys:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Martin J. Bienenstock, Esq. and
Deryck A. Palmer, Esq.
Tel. No.: (212) 310-8000; Fax: (212) 310-8007
With copies to:
(a) Ames Realty II, Inc.
2418 Main Street
Rocky Hill, Connecticut 06067-2598
Attn: Rolando de Aguiar
Tel. No. (860) 257-2072
Fax: (860) 563-8560); and
David H. Lissy
Tel. No.: (860) 257-2578
Fax: (860) 257-5160;
(b) Kimco Funding LLC
3333 New Hyde Park Road
Suite 100
New Hyde Park, New York, 11042
Attn: Raymond Edwards
Tel. No. 516-869-2586; Fax: 516-869-7117; and
(c) Otterbourg, Steindler, Houston & Rosen P.C.
230 Park Avenue
New York, New York 10169-0075
Attn: Scott Hazan, Esq.
Tel. No. (212) 661-9100; Fax: (212) 628-6104.
-- All Bids must include these documents:
(1) a written offer for the purchase of one or more Assets
that must include and separately allocate the amount
being offered for each Asset. The offer must expressly
state that the Bidder's offer is irrevocable until the
earlier to occur of:
(i) the Closing; or
(ii) 30 days after the last date of the Auction;
(2) a certified check for the Deposit;
(3) an executed and fully completed copy, per Asset or
package of Assets, of the Asset Purchase Agreements.
In the case of a landlord bidding on its own Unexpired
Lease or package of Unexpired Leases and wishing to
have the Unexpired Leases terminated, an executed and
fully completed copy, per Unexpired Lease or package
of Unexpired Leases, of the Lease Termination
Agreement, including the provision for cash payment in
excess of the landlord's Credit Bid for cure amounts;
(4) with the exception of a landlord bidding on its own
Unexpired Lease, written evidence of available cash or
other evidence of the bidders' ability to consummate
the transaction and evidence of adequate assurance of
future performance;
(5) a completed bidder registration statement; and
(6) any other information related to the proposed business
to be conducted at the premises that the Debtors may
reasonably request in advance, including, without
limitation, the proposed use of each premises covered
by an Unexpired Lease in the Bidder's offer.
-- ONLY BIDDERS WHO ARE EXPRESSLY INVITED TO PARTICIPATE IN
THE AUCTION AND THAT HAVE SUBMITTED A QUALIFIED BID WILL BE
ELIGIBLE TO PARTICIPATE IN THE AUCTION, unless the Debtors
waive this requirement.
To be a "Qualified Bid," a Bid will:
(i) include each of the Required Bid Documents;
(ii) be a good faith, bona fide offer to purchase one or
more Assets for cash only. The purchase price for
each Asset must be separately stated. However, those
Bids that do not separately allocate a price for each
respective Asset will not be considered a Qualified
Bid, unless the Debtors agree to waive this
Requirement;
(iii) not include any due diligence or financing
contingency; and
(iv) be actually received by the Bid Deadline.
Each Bidder for an Unexpired Lease, other than a landlord
bidding for its own Unexpired Lease, must be prepared to
demonstrate to the Debtors its ability to consummate
promptly and fulfill its obligations under any Unexpired
Lease, including, without limitation, an ability to provide
adequate assurance of future performance.
-- Each Bidder will tender a deposit equal to 10% of the Bid
amount for each Asset it is bidding. However, a landlord
will only be required to tender a deposit to the extent the
Bid amount for a particular Unexpired Lease exceeds the
landlord's Credit Bid.
The Deposit will be by certified check payable to Weil,
Gotshal & Manges LLP, attorneys for the Debtors. Weil,
Gotshal will hold in escrow the Deposit of both the first
and second highest and best Bidder at the Auction until the
earlier to occur of:
(a) the Closing; or
(b) 45 days after the last date of the Auction.
Weil, Gotshal will return the Deposits of all other Bidders
within 10 business days of the conclusion of the Auction.
-- The Assets will be transferred on an "as is" and "where is"
basis, without any representation or warranty of any kind
by the Debtors. In addition, the Assets will be sold free
and clear of any liens, claims, or encumbrances, with the
liens, claims, or encumbrances, if any, attaching to the
proceeds of the sale.
-- The Acceptance of each bid is subject to the Court's
approval of the assumption and assignment of the applicable
Unexpired Lease.
-- Any of the Assets may be withdrawn from the sale before or
during the Auction for any reason whatsoever.
-- The Debtors reserve the right to enter into a "Stalking
Horse Agreement for one or more Assets at any time before
the date of the Auction, provided that none of the Assets
covered by a Stalking Horse Agreement will simultaneously
be covered by another Stalking Horse Agreement. If a
Stalking Horse Agreement is entered into before the date of
the Auction Notice, the Auction Notice will indicate the
existence of the Stalking Horse Agreement. If a Stalking
Horse Agreement is entered into subsequent to the date of
the Auction Notice, the Debtors will announce the terms of
the Stalking Horse Agreement to other interested parties
before or at the Auction.
-- For each Stalking Horse Agreement, certain bidding
protections will apply in the event the Bidder submitting
the Stalking Horse Agreement is not a Successful Bidder,
including:
(i) a break-up fee of up to 2% of the Bid price for each
Asset set forth in the Stalking Horse Agreement; and
(ii) the requirement of an initial minimum topping Bid of
up to 105% of the original Bid price for each Asset
set forth in the Stalking Horse Agreement.
-- Break-Up Fees and expense reimbursement aggregating $25,000
or less will not require further notice or Court approval,
provided, the Asset Purchase Agreement is signed and
includes no financing contingency and is approved by the
statutory creditors' committee and Kimco.
-- Before designating an agreement to purchase one or more
Assets as a Stalking Horse Agreement, the Debtors will
consult with Kimco and the statutory creditors' committee
to determine whether:
(a) the bidder is a Qualified Bidder; and
(b) the terms of each agreement to be designated are fair
and reasonable and are in the best interests of the
Debtors, their estates, and creditors.
-- Other than with respect to the first topping bid, if any,
all subsequent bidding increments will be determined by the
Debtors, in consultation with Kimco and the statutory
creditors' committee. The bidding increments will be
announced at the start of the Auction. The bidding
increments may be modified by the Debtors during the
Auction.
-- A Successful Bidder for one or more Assets will supplement
its Deposit within one business day of the Auction so that,
to the extent necessary, the Deposit is equal to 10% of its
Bid for each Asset accepted by the Debtors at the Auction.
-- The closing of the sale of an Asset under an Asset Purchase
Agreement, or under a Lease Termination Agreement with a
landlord, will take place at the offices of Weil, Gotshal &
Manges LLP promptly after the entry of a Court order
approving:
(a) the assumption and assignment of an Unexpired Lease;
(b) the sale of the Fee-Owned Property or Designation
Rights; or
(c) the Lease Termination Agreement.
The Debtors reserve the right to change the location of the
Closing.
-- The balance of the purchase price will be paid by the
Successful Bidder -- including a landlord that acquired its
own Unexpired Lease -- by wire transfer or endorsed bank or
certified check at the Closing.
-- On the Closing for a particular Unexpired Lease, the
Successful Bidder will also pay to the Debtors the amount
set forth in the "Security Deposit" column of the Lease
Schedule.
-- The Debtors, after consultation with Kimco and the
statutory creditors' committee, may vary the bidding
procedures as necessary or desirable for their estates.
Lease Termination Procedures
In addition to the Bidding Procedures, the Debtors also ask the
Court to approve these Lease Termination Procedures with respect
to the landlords bidding for their own Unexpired Leases.
The Lease Termination Procedures include:
-- A landlord will only be permitted to credit bid:
(i) the amount set forth in the "Prepetition Cure
Amounts" column of a lease schedule they can
obtain from the Debtors; less
(ii) the amount set forth in the "Prepetition Amounts Due
to Debtors" column of the lease schedule.
Alternatively, the Debtors may elect to agree to a Credit
Bid for each Unexpired Lease that is an amount mutually
acceptable to the Debtors and the landlord with respect to
the Unexpired Lease. The landlord will receive a dollar-
for-dollar credit equal to the Credit Bid when the landlord
bids for its Unexpired Lease.
-- The Lease Termination Agreement will provide for cash
consideration or the waiver of any allowed lease claims.
-- An Order approving a Lease Termination Agreement will be
submitted to the Court, without the necessity of a hearing,
10 days after a notice of the agreement is sent to the
affected parties, unless an objection is filed with the
Court.
-- If an objection to a Lease Termination Agreement is filed,
the Debtors may schedule a hearing to consider the
objection. (AMES Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ANC RENTAL: Court Resets Tampa Asset Sale Auction Date to Dec. 9
----------------------------------------------------------------
Judge Walrath re-schedules the Auction Date of ANC Rental
Corporation and its debtor-affiliates' Tampa Property to
December 19, 2002 and the Sale Hearing to December 23, 2002.
The Court approves these bidding procedures:
A. To participate in the bidding process, a potential bidder
must deliver to the Debtors:
-- an executed confidentiality agreement in forth and
substance satisfactory to the Debtors; and
-- current financial statements of the Potential Bidder or,
if the Potential Bidder is an entity founded for the
purpose of acquiring the Property, current audited
financial statements of the equity holders of the
Potential Bidder or any other form of financial disclosure
acceptable for the Debtors and their professionals
demonstrating the potential bidder's ability to close the
proposed transaction;
B. A Qualified Bidder is a Potential Bidder that:
-- delivers the required documents,
-- demonstrates the financial capability to consummate the
purchase of the property, and
-- in the reasonable judgment of the Debtors, is reasonably
likely to be able to consummate the purchase of the
Property;
C. The Debtors will afford each Qualified Bidder reasonable due
diligence access to the Property and the Debtors' information
on the Property;
D. All bids must be submitted to counsel for the Debtors not
later than 4:00 p.m. on December 17, 2002. A Qualified
Bid will be accompanied by a $100,000 good faith deposit.
The Good Faith Deposit will be delivered to Chicago Title
Insurance Company. The Good Faith Deposit, together with any
interest earned, will be returned to any bidder whose Bid is
not accepted by the Debtors within three business days after
the Bid Termination Date. The Good Faith Deposit of the
successful bidder, together with any interest earned, will be
applied to the purchase price;
E. The Debtors will consider a Bid only if the Bid:
-- provides for consideration of not less than $13 per gross
square foot for the Property,
-- provides the Debtors with 100 parking spaces at the
Property,
-- is not conditioned on obtaining financing or subject to
any due diligence contingency by the Qualified Bidder, and
-- does not request or entitle the Qualified Bidder to any
break-up or topping fee, termination fee, expense
reimbursement or similar type of payment; and
F. If the Debtors receive more than one Qualified Bid, the
Debtors will conduct an auction at the offices of Blank Rome
Comisky & McCauley LLP, 1201 North Market Street, Suite 800,
Wilmington, Delaware 19801, beginning at 10:00 a.m. on
December 19, 2002. The opening bid at the Auction will not
be less than ten cents per gross square foot higher than the
highest Qualified Bid. (ANC Rental Bankruptcy News, Issue No.
22; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ASIA GLOBAL CROSSING: Intends to Continue Insurance Programs
------------------------------------------------------------
Asia Global Crossing Ltd., and its debtor-affiliates sought and
obtained authorization to continue their Liability and Property
Programs and the D&O Policies on an uninterrupted basis,
consistent with prepetition practices, and pay when due and in
the ordinary course, all prepetition premiums, administrative
fees and other prepetition obligations to either the Insurance
Brokers or the issuers of the Insurance Policies to the extent
due and payable postpetition.
In connection with the operation of its business, the AGX
Debtors maintain various insurance policies, and related
programs through several different insurance carriers. The
Insurance Programs include coverage for claims involving
workers' compensation, automobile, fiduciary liability, crime,
directors' and officers' liability, general liability, excess
liability, transit, and various property-related liabilities.
David M. Friedman, Esq., at Kasowitz Benson Torres & Friedman
LLP, in New York, admits that nearly all of the Insurance
Policies are maintained by their parent company, Global Crossing
Ltd., for the benefit of Global Crossing's subsidiaries,
including the AGX Debtors. On January 28, 2002, Global Crossing
and certain of its subsidiaries filed for chapter 11 bankruptcy
protection. Thereafter, pursuant to an order dated on or about
January 28, 2002, the Court authorized Global Crossing to
continue its workers' compensation programs, insurance policies
and agreements thereto, including the majority of the Global
Crossing Insurance Policies.
To date, Mr. Friedman states that the GX Debtors have not billed
the AGX Debtors for the cost of any premiums, deductibles or
other charges arising in connection with the Global Crossing
Insurance Policies. Accordingly, the AGX Debtors do not request
Court authorization at this time to make any payments in
connection with the Global Crossing Insurance Policies. The AGX
Debtors, however, reserve the right to seek Court relief in the
event that the GX Debtors do seek payment from the AGX Debtors
in connection with the Global Crossing Insurance Policies.
General Liability and Property Insurance
According to Mr. Friedman, the GX Debtors maintains, for the
benefit of the AGX Debtors, various general liability and
property insurance policies, which provide the AGX Debtors with
insurance coverage for claims relating to commercial general,
excess liability, commercial umbrella liability, automobile
liability, directors' and officers' liability, fiduciary
liability, commercial crime, transit, boiler and machinery, and
property. These policies are essential to the ongoing operation
of the AGX Debtors' businesses.
The GX Debtors are required to pay premiums under the Liability
and Property Programs based on a fixed rate established and
billed by each Insurance Carrier. For example, the GX Debtors'
general liability policies' premiums are based on estimated
revenues. The premiums for most of the Insurance Policies are
determined and paid annually to either Marsh USA, Inc., its
subsidiaries or affiliates, as broker for the liability
insurance policies or AON Corporation, its subsidiaries or
affiliates, as broker for the property insurance policies. Both
Marsh and AON remit payments for the GX Debtors' Insurance
Policies to the Insurance Carriers.
Mr. Friedman avers that the annual premium for the Liability and
Property Programs for GX and all of its subsidiaries, including
the AGX Debtors, is $9 million. The Debtors believe that all of
the premiums for the Liability and Property Programs have been
paid to the Insurance Brokers as of the Petition Date.
Pursuant to the Liability and Property Programs, the GX Debtors
are required to pay a $150,000 deductible for each claim, which
reduces the amount that the Insurance Companies are required to
pay for the claim. Every month, the Insurance Companies provide
the GX Debtors with a list of the liability claims that were
settled during the prior month and, for each claim, request
reimbursement of the settlement amount, up to the maximum
deductible applicable to the particular claim. On average, the
GX Debtors reimburse $12,000 each month to the Insurance
Companies for these deductibles. The cost in connection with
these payments attributable to the Debtors, if any, is not
known.
D&O Policies
Mr. Friedman adds that the AGX Debtors also maintain, separately
from their insurance as GX subsidiaries, one additional
directors' and officers' liability policy with Executive
Liability Underwriters and Greenwich Insurance Company/XL
Specialty Insurance Company with $25,000,000 coverage. The AGX
D&O Policy was purchased at the insistence of the AGX Debtors'
board of directors to insure that coverage would be available to
them if the available coverage under the GX D&O Policies was
depleted by claims against other participants. Under the AGX
D&O Policy, there is no deductible for losses against directors
and officers where AGX was not permitted to indemnify these
directors and officers, a $250,000 deductible for losses where
AGX indemnified officers and directors, and a $500,000
deductible for losses related to securities claims. The premium
for the AGX D&O Policy are paid annually, and is $3,750,000 for
March 2002 through March 2003 and $2,690,000 for March 2003
through March 2004.
Mr. Friedman deems it essential to the continued operation of
the AGX Debtors' businesses and its efforts to reorganize that
the Insurance Programs be maintained on an ongoing and
uninterrupted basis. Failure to pay premiums when due may
affect the AGX Debtors' ability to renew their Insurance
Policies, Mr. Friedman warns. If the Insurance Policies are
allowed to lapse, the AGX Debtors could be exposed to
substantial liability for damages resulting to persons and
property of the AGX Debtors and others. Continued effectiveness
of the directors' and officers' liability policies is necessary
to the retention of qualified and dedicated senior management.
Furthermore, pursuant to the terms of many of their leases, as
well as the guidelines established by the United States Trustee,
the AGX Debtors are obligated to remain current with respect to
certain of their primary insurance policies.
Mr. Friedman points out that the amounts the AGX Debtors propose
to pay in respect of the Insurance Programs are minimal in light
of the size of the AGX Debtors' estate and the potential
exposure of the AGX Debtors absent insurance coverage. (Global
Crossing Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USN1) are
trading at about 9 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1
for real-time bond pricing.
AVANI INT'L: Independent Auditors Express Going Concern Doubt
-------------------------------------------------------------
Revenues for the nine months ended September 30, 2002, for Avani
International Group Inc., were $292,390, representing a decrease
of 16.2% from revenues of $348,687 for the same period in 2001.
The decrease reflects overall reductions in water sales, both
domestic and international, cooler equipment rentals, and cooler
sales. The decrease in domestic water sales, and local cooler
sales and rentals reflects the lack of commissioned sales
representatives which use was suspended during 2001, and a
reduction in the unit charge for the five gallon bottles sold
locally. The decrease internationally reflects a reduction of
sales to a Malaysian distributor and a Japanese distributor. The
Malaysian distributor has entered into an Agreement of Sale with
the Company.
Revenues for the nine month period in 2002 consisted of $277,709
in water sales (a decrease of 14% from $322,838 for the prior
period), $467 in cooler and equipment sales (a decrease of 93.3%
from $7,002 for the prior period) and $14,214 in cooler rentals
(a decrease of 24.6% from $18,847 for the prior period). Of the
total revenue for the nine month period in 2002, $53,063 (or
18.1% of total sales) represented sales to the Malaysian
distributor referenced above. During the 2001 period, the
Company had sales to the same distributor in the amount of
$215,715.
Since its inception, the Company has financed its operations
through loans and the private placement of its common stock.
During 1999, the Company raised approximately $1,450,000 net of
offering costs from the private placement of its common stock.
During 2000, the Company issued 17,000 shares of common stock in
exchange for services valued at $16,550. On May 13, 2002, the
Company issued to two investors 1,575,017 and 950,000 shares of
common stock of the Company, respectively, for a total
consideration of $75,750. In addition each investor received
stock purchase warrants to acquire three shares of common stock
of the Company for each share of common stock purchased.
Accordingly, the two investors received stock purchase warrants
to acquire 4,725,051 and 2,850,000 shares of common stock of the
Company, respectively. The stock purchase warrants are
exercisable at $0.03 per share on or before May 13, 2004, $0.05
per share on or before May 13, 2006, and $0.07 per share on or
before May 13, 2007. In connection with the transactions, the
Company paid Chin Yen Ong, the Company's majority shareholder, a
finder's fee equal to 10% of the stock and stock purchase
warrants received by the investors as described above. Mr. Ong
received 252,502 shares of common stock and stock purchase
warrants to acquire 757,506 shares of common stock of the
Company. The stock purchase warrants are exercisable under the
same terms as the investor warrants described above.
In June 2001, the Company received working capital loans from
five private lenders in the amount of $500,771. During the 2002
period, $25,000 of a loan payable in favor of one lender was
converted to 500,000 shares of common stock and 500,000 common
stock purchase warrants. As reported on the Company's Form 8-K
filed on April 29, 2002, the Company and the lenders agreed to
cancel the remaining amount of the indebtedness in exchange for
the assignment of an account receivable in the amount of
$200,944, and the assignment of a net profits interest that it
received under an agreement with Avani O2 Water Sdn. Bhd., a
Malaysian company. Pursuant to the agreement with Avani O2, the
Company contributed certain bottling equipment and granted Avani
O2 the exclusive right and license to construct manufacturing
facilities in Malaysia, and to produce and sell the Company's
proprietary water product worldwide. In exchange, the Company
received a net profits interest equal to 30% of the after tax
profits of the bottling operation. The net profits interest
assigned to the lenders will revert back to the Company when the
lenders have received from the net profits interest an amount
equal to the satisfied loans.
As reported, the Company and Mr. Chin Yen Ong settled an
outstanding obligation in the amount of $124,800 (US) in
exchange for issuing to Mr. Ong 4,160,000 shares of common stock
of the Company and stock purchase warrants to acquire 12,480,000
shares of common stock of the Company.
As of September 30, 2002, the Company had a working capital
deficiency in the amount of $504,306. Working capital deficiency
as of December 31, 2001 was $888,601. The decrease in working
capital deficiency is a result of the reduction of loans payable
and recovery of an account receivable, partially offset by the
loss experienced during period.
Property, plant and equipment, net of accumulated depreciation,
totaled $1,472,613 on September 30, 2002. Property, plant and
equipment, net of accumulated depreciation, totaled $1,572,417
on December 31, 2001. The reduction is due to amortization that
occurred during the period.
The Company continues to experience significant losses from
operations and is uncertain as to when it will achieve
profitable operations. The Company has an immediate need for
capital, as it will not be able to fund its ongoing operations
with its existing capital. The Company presently is seeking to
raise additional capital or seek to acquire all or part of other
business opportunities by merger or share exchange, however, as
of this date, it has been unsuccessful. If the Company is not
successful in these endeavors, it will have a material adverse
impact on the Company and its ability to conduct its business in
the future. Consequently, the Company's financial statements
contain note disclosures describing the circumstances that lead
to doubt over the ability of the Company to continue as a going
concern. In their report on the consolidated financial
statements for the year ended December 31, 2001, the Company's
independent auditors included an explanatory paragraph regarding
the Company's ability to continue as going concern. In addition,
any future financings will result in significant dilution to
existing shareholders.
During the period ended September 30, 2002, the Company has
initiated the search for business opportunities to acquire
through a merger or share exchange. In this regard, management
of the Company has conducted discussions and engaged in meetings
with principals of a company located in mainland China. As of
this date, a formal agreement has not been entered into by the
parties, and the Company can not predict whether a formal
agreement will be entered into by the parties.
The Company has incurred accumulated losses to September 30,
2002 of $6,333,164. The continuation of the Company is dependent
upon the continuing financial support of creditors and
stockholders, obtaining additional long-term financing, as well
as achieving and maintaining a profitable level of operations.
The Company has subsequently agreed to sell its Canadian
building and related lands and production equipment and plans
to raise $500,000 in additional equity and debt capital as
necessary to finance the operating and capital requirements of
the Company. Amounts raised will be used to provide financing
for the marketing and promotion of the Company's export
business, capital expansion and for other working capital
purposes. While the Company is expending its best efforts to
achieve the above plans, there is no assurance that any such
activity will generate sufficient funds for operations.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
BCE INC: Closes Sale of Directories Business for C$3 Billion
------------------------------------------------------------
BCE Inc., announced the closing of the sale of its Bell Canada
directories business for C$3 billion in cash to Kohlberg Kravis
Roberts & Co., and the Teachers' Merchant Bank, the private
equity arm of the Ontario Teachers' Pension Plan.
Approximately C$1.1 billion of cash from the sale of the
directories business will flow to BCE for value including the
transfer to Bell Canada, subject to regulatory approval, of a
controlling interest in Bell ExpressVu. These cash proceeds will
be used by BCE to pay for part of the acquisition price of SBC
Communications' minority interest in Bell Canada. The remainder
of the net proceeds of sale will be used by Bell Canada to
further strengthen its balance sheet.
With the completion of this transaction, KKR now owns
approximately 60 per cent of the new company holding the
directories business, Teachers' Merchant Bank owns approximately
30 per cent, and Bell Canada owns the remaining approximately 10
per cent.
BCE is Canada's largest communications company. It has 24
million customer connections through the wireline, wireless,
data/Internet and satellite services it provides, largely under
the Bell brand. BCE leverages those connections with extensive
content creation capabilities through Bell Globemedia which
features some of the strongest brands in the industry - CTV,
Canada's leading private broadcaster, The Globe and Mail, the
leading Canadian daily national newspaper and Sympatico.ca, a
leading Canadian Internet portal. As well, BCE has extensive e-
commerce capabilities provided under the BCE Emergis brand. BCE
shares are listed in Canada, the United States and Europe.
BIGSTAR ENTERTAINMENT: Funds Insufficient to Continue Operations
----------------------------------------------------------------
Bigstar Entertainment, Inc., had been an online retailer of
filmed entertainment products and a provider of entertainment
industry information. Through its website, Bigstar.com, Bigstar
had been selling videos and digital video discs or DVDs,
including feature films, children's movies, and educational,
health and fitness, and instructional videos, and provided
information on these products. In addition to selling filmed
entertainment, Bigstar.com featured biographies, movie stills
and star interviews. Bigstar.com also hosted Bigstar Broadband
Theater which offered visitors to its website the ability to
stream and view on their computer movie trailers and feature
films. As of December 31, 2001, the Company has ceased operating
its website.
Bigstar is continuing to pursue other opportunities. Currently,
the Company is pursuing acquisitions of other entertainment
related companies. The Company is in negotiations with various
funding sources interested in collaborating in this effort. The
Company is also developing television and film properties for
distribution worldwide. The Company plans to use funds from
various September 11th related funding organizations, outside
capital, and sales of the television and film properties in
various worldwide media markets prior to completion of principal
photography in order to fund these ventures. Locating and
producing in lower Manhattan is vital for qualifying for funding
from governmental agencies seeking to rebuild this area. The
Company's management will also consider recommending to the
Board of Directors alternative plans which may include, but not
be limited to, redeployment of the remaining cash assets into a
new business venture, liquidation of all corporate assets and
distribution of remaining proceeds to its stockholders or some
other alternative to be determined. There can be no assurance
that Bigstar will be successful in any of these activities or be
able to continue in existence.
Since Bigstar discontinued its website effective December 31,
2001, there were no revenues in the nine months of 2002.
Bigstar's net loss was $241,000 and $866,000, respectively for
the three and nine month periods ended September 30, 2002 as
compared to $1,124,000 and $3,184,000, respectively for the
three and nine month periods ending September 30, 2001. Due to
the uncertainty regarding future profitability, the future tax
benefits of Bigstar's losses have been fully reserved for and
therefore, no benefit for the net operating loss has been
recorded. Under Section 382 of the Internal Revenue Code, this
operating loss may be limited due to ownership changes.
Bigstar has an accumulated deficit of approximately $47,989,000
as of September 30, 2002. Web site operations ceased
December 31, 2001 and the Company has no operating business. The
Company has incurred a loss from operations in all periods since
inception. The Company has funded operations to date primarily
through the sale of common stock, however, the Company has been
unsuccessful in raising additional funding. The Company may seek
additional funding through public or private financing or other
arrangements to pursue new business opportunities. Adequate
funds may not be available when needed or may not be available
on terms acceptable to the Company. If additional funds are
raised by issuing equity securities, dilution to existing
stockholders will result. If funding is insufficient at any time
in the future, the Company may be unable to take advantage of
business opportunities which could have a material adverse
effect on its business and financial condition. These matters
raise substantial doubt about the Company's ability to continue
as a going concern.
BRITISH ENERGY: UK Removes Fin'l Guarantee Obligation on Unit
-------------------------------------------------------------
Cameco Corporation (NYSE:CCJ) (TSX:CCO) confirms that the UK
government has agreed to remove the financial guarantee
obligation previously placed on Bruce Power which was a
condition of the government's interim funding for British Energy
plc.
Under its original 2001 investment agreement, Cameco had
accepted to provide financial guarantees up to a maximum of $102
million as part of its 15% ownership obligations under the Bruce
Power partnership. These included Cameco's share of assurances
required by the Canadian Nuclear Safety Commission, and the
guarantees needed for the power purchase agreements and the
lease agreement with Ontario Power Generation.
To facilitate the removal of the UK government-imposed guarantee
on Bruce Power and to resolve its dispute concerning the
validity of the guarantee, Cameco has committed to temporarily
increase its financial guarantee exposure related to Bruce Power
from the previous maximum of $102 million to approximately $125
million.
Under separate agreement with the UK government, Cameco's
commitment to temporarily increase its financial guarantee
exposure will lapse upon the successful negotiation of changes
to Bruce Power's ownership. These changes may include an
increase in Cameco's interest in Bruce Power. If negotiations
are unsuccessful, the commitment will lapse December 16, 2002,
at which time the total maximum guarantee exposure would revert
to the previous level of $102 million.
British Energy plc, is the majority owner in Bruce Power with
82.4%. Cameco owns 15% of Bruce Power and the two unions
representing employees hold the remainder.
Cameco, with its head office in Saskatoon, Saskatchewan, is the
world's largest uranium supplier. The company's uranium products
are used to generate electricity in nuclear energy plants around
the world, providing one of the cleanest sources of energy
available today. Cameco's shares trade on the Toronto and New
York stock exchanges.
CABLETEL COMMS: Covenant Violations Under Credit Pact Remedied
--------------------------------------------------------------
Cabletel Communications Corp., (AMEX: TTV; TSX: TTV) the leading
distributor of broadband equipment to the Canadian television
and telecommunications industries, has entered into an amendment
to its credit agreement with its senior bank lender to remedy
certain previously announced technical violations of the debt
service ratio covenant contained in its senior credit facility.
As the company had previously announced, in May, 2002, the
Company entered into a new revolving credit facility with its
main bank lender. The new C$15 million facility, which replaced
Cabletel's previous working capital line, has a three-year term
and provides for up to a $3 million increase over the maximum
availability under Cabletel's prior facility. The new facility
contains certain customary covenants, including, among others,
certain debt servicing ratios. Also as previously announced, the
Company estimated that as of September 30, 2002, as a result of
a minor variation from the required debt service ratio, the
Company had a technical violation of an applicable covenant. The
amendment entered into by the Company resolved those violations
with respect to the quarter ended September 30th, 2002.
Cabletel Communications offers a wide variety of products to the
Canadian television and telecommunications industries required
to construct, build, maintain and upgrade systems. The Company's
engineering division offers technical advice and integration
support to customers. Stirling Connectors, Cabletel's
manufacturing division supplies national and international
clients with proprietary products for deployment in cable, DBS
and other wireless distribution systems. More information about
Cabletel can be found at http://www.cabletelgroup.com
CALIFORNIA POWER: Axes George Sladoje from Chief Executive Post
---------------------------------------------------------------
The California Power Exchange (CalPX) board of governors
terminated the employment of its chief executive, George
Sladoje, saying his services were no longer needed, Dow Jones
reports. Creditors recently charged Mr. Sladoje and the
exchange's CFO, Lynn Miller, with using estate funds as their
personal piggy bank for two years.
The CalPX is a nonprofit public-benefit corporation chartered by
the state legislature in 1997 to run California's official day-
ahead electricity market. But the CalPX market stopped
functioning in January 2001, when the state's two largest
utilities could no longer pay for the power they were buying.
Federal energy regulators announced they would take away the
CalPX's license to operate, and the exchange filed for
bankruptcy in March 2001. Mr. Sladoje's total compensation in
the three months before the bankruptcy filing was $1.9 million,
almost double what he made in all of 2000. (ABI World, Nov. 29,
2002)
CELL-LOC INC: Sept. 30 Working Capital Deficit Tops $2.5 Million
----------------------------------------------------------------
Cell-Loc Inc., (TSX: CLQ) reported its financial results for the
first quarter of fiscal year 2003 ended September 30, 2002. The
net loss for the first quarter was $15.97 million compared to
$3.27 million for the same period last year.
"In this reporting period, Cell-Loc has taken significant
initiatives which will fundamentally change its financial
statements," said Sheldon Reid, President & CEO, Cell-Loc Inc.
"Cell-Loc wrote down $11.9 million in network assets and
inventory which reflects its departure from the cellular
location business model. And, in the same vein, the Company's
U.S. affiliate, TimesThree Inc., is considering its alternatives
for liquidation or dissolution. We are motivated to confirm the
complete business separation of Cell-Loc from TimesThree Inc.,
in part because the evolution of our technology has surpassed
the assumptions implicit in the TimesThree business model. De-
consolidation of TimesThree Inc., from Cell-Loc's financial
statements would reduce current liabilities by approximately
$3.2 million and future contingent liabilities by approximately
$9.0 million."
Corporate Highlights
$40 Million US Equity Line of Credit
On May 16, 2002, the Company announced that it had received
final receipts from the Alberta and Ontario securities
commissions and closed its prospectus offering of subscription
shares and commitment warrants under an equity line of credit
for proceeds of up to US$40 million. As of September 30, 2002
the Company has not yet drawn on this equity line of credit.
TimesThree Inc.
During fiscal year 2001 TimesThree Inc., a subsidiary of Cell-
Loc Inc., signed leases for 115 tower sites in Dallas, Austin
and Atlanta, all of which were for a term of five years. As of
September 30, 2002, TimesThree had lease rental payments of
approximately US$1.6 million due and payable under these
contractual arrangements. The lease commitments for tower sites
were predicated on the deployment of the Company's cellular
location networks. Accordingly, other costs associated with the
corporate activities of TimesThree were incurred and remain
outstanding.
The Company has terminated any further network development in
Dallas and Austin and has ceased financial and operations
support for TimesThree. TimesThree is in default of its tower
lease agreements and has advised the respective tower companies
of its inability to make payment on those lease agreements.
TimesThree's only assets at September 30, 2002, were its
interests in the tower leases, which the Company values at $nil.
TimesThree's debts totaled US$5.4 million at September 30, 2002,
including US$3.3 million, which was due to Cell-Loc. With
respect to the obligations of TimesThree to third parties, the
Company has not provided corporate guarantees, letters of credit
or any other financial assurances for the obligations of
TimesThree.
The Board of Directors of TimesThree is considering its
alternatives for liquidation or dissolution.
Asset Impairment
Concurrent with the Company's decision to terminate the
deployment of its cellular technology in Austin and Dallas and
to cease further support of TimesThree, the Company determined
that certain assets being held for network deployment will no
longer be required and therefore have been offered for sale. In
connection with these decisions, the Company has, at September
30, 2002, re-assessed the carrying value of the assets deployed
in the Dallas and Austin network developments, and has re-valued
the assets offered for sale at their estimated net realizable
value. As a result, the Company has recorded an asset impairment
charge of $11.9 million at September 30, 2002.
Interim Management Discussion And Analysis
During the quarter ended September 30, 2002 the Company
recognized a loss of $15.9 million. The loss is primarily
attributed to a write down of $11.9 million taken on inventory
and network assets. The Company used $1.16 million for
operations this quarter, which is a nine percent increase from
the $1.06 million used for the quarter ended June 2002 and a 55
percent decrease from the same quarter last year. Network and
capital expenditures for the quarter decreased to $31,000 from
$213,000 last quarter and $42,000 for the quarter ended
September 2001.
Deferred Revenue
In March 2002, the Company received $800,000, which has been
recorded as deferred revenue from the license agreement with IQ2
Communications Corp., for exercising their option to acquire
from Cell-Loc the sole rights to Cell-Loc's intellectual
property for use in the Austin, Texas geographic market, subject
to an agreement between the parties dated October 5, 2001. As of
September 30, 2002 this amount is still recorded as deferred
revenue pending certain performance obligations by the Company.
Operations
Operating expenses were $2.4 million for the quarter relative to
$1.18 million from the previous quarter and $1.35 million for
the same quarter last year. The increased operating expenses of
$1.28 million over the previous quarter reflects TimesThree's
default under the tower lease agreements, causing an additional
$1.24 million to become due and payable by TimesThree. Cost
savings continue to be realized through consolidation of the
number of inventory storage facilities.
Marketing and Business Development:
Expenses for marketing and business development for the quarter
ended September 30, 2002 were $79,000. This number has increased
marginally from $57,000 for last quarter and decreased 57
percent from the same period last year. The lower costs were
realized as a result of the restructuring program undertaken in
September 2001 and a continued focus on reducing travel and
related expenses.
General and Administration
General and administration expenses for the quarter ended
September 2002 were $324,000. The reduction of staff levels and
the focus on ensuring expenditures are limited to core projects
and essential items have resulted in a consistent level of
general and administrative expenditures. The current quarter
shows a 55 percent reduction from the $713,000 spent during the
same period last year.
Research and Development
As the Company continues to upgrade and develop its technology,
research and development expenses will be required. The
expenditures are and will continue to be specifically related to
the ongoing technical development required to refine the
Company's commercial products. The $402,000 of expenses this
quarter reflects a 28 percent decrease from the $555,000 last
quarter, and reflects a 35 percent decrease from the $620,000
for the quarter ended September 2001.
Liquidity and Capital Resources
The September 30, 2002 total cash balance of $1.5 million
represents a $1.2 million, or 44 percent, decrease from the
previous quarter cash balance of $2.7 million. The working
capital deficit has deteriorated 88 percent to $2.47 million
from $1.31 million for the quarter ended June 30, 2002. The
increase in working capital deficit for the period ended
September 30, 2002, is a direct result of recognizing the
additional lease liabilities in TimesThree arising due to
TimesThree's default under the various lease agreements. The
Company has entered into contracts to sell a portion of the
assets formerly classified as available for deployment, the
proceeds from which will be a source of near term cash. The
Company has the ability to draw on its equity line of credit.
The Company's monthly use of cash continues to be scrutinized to
ensure optimal use of the Company's cash resources.
As of November 28, 2002, in the absence of the Company selling
the network equipment contracted for sale or the Company
generating cash by licensing its technology to third parties,
the Company will deplete its cash reserves prior to the end of
December 2002.
At September 30, 2002, Cell-Loc's balance sheet shows a working
capital deficit of about $2.5 million.
Business Risks and Prospects
The Company is actively negotiating commercial contracts. The
joint venture agreements currently being negotiated are examples
of the focused business strategy that Cell-Loc has now
undertaken. Joint venture arrangements, such as those negotiated
with IQ2 and Cell-Loc Chongqing will enable the Company to
introduce Cell-Loc's technology to the global market.
The ability to source products and continue research and
development is contingent on the Company's ability to be able to
continue the working relationships that have been established
with the vendors and creditors who supply goods and services to
Cell-Loc.
The Company's ability to continue to generate revenue and
achieve positive cash flow in the future is dependent upon
various factors, including the level of market acceptance of its
services, the degree of competition encountered by the Company,
the cost of acquiring new customers, technology risks, the
ability to fund continued network deployment and operations,
general economic conditions and regulatory requirements.
Cell-Loc Inc. -- http://www.cell-loc.com-- a leader in the
wireless location industry, is the developer of Cellocate(TM), a
family of network-based wireless location products that enable
location-based services. Located in Calgary, Alberta, Cell-Loc
currently develops, markets and supports its patented wireless
location technology in Asia as well as North and South America,
with a view to expanding globally. Cell-Loc equipment will be
manufactured under licenses in Brazil and China. Commercial
deployment has been successfully tested in Canadian markets and
will now proceed under agreements in major U.S. markets as well.
Cell-Loc is listed on the Toronto Stock Exchange (TSX) under the
trading symbol: "CLQ."
COVERAGECONNECT INC: Holding Public Foreclosure Sale Today
----------------------------------------------------------
NOTICE OF PUBLIC SALE OF PERSONAL PROPERTY OF
COVERAGECONNECT, INC.
UNDER THE NEW YORK UNIFORM COMMERCIAL CODE
PLEASE TAKE NOTICE THAT, on December 3, 2002, at the hour of
1:00 p.m. (New York, New York time), at the offices of Jenkens &
Gilchrist Parker Chapin, LLP, at 405 Lexington Avenue, New York,
New York, E-Financial Ventures I Unit Trust and E-Financial
Ventures I L.P., will hold a public foreclosure sale under the
New York Uniform Commercial Code of all the right, title, and
interest of CoverageConnect, Inc., in and to all the equipment,
inventory, accounts, general intangibles, and other tangible and
intangible personal property owned by the Borrower in which
Secured Party has been granted liens and security interests by
the Borrower.
The Collateral will be sold by Auction. THE SALE WILL BE HELD ON
A "WHEREIS AND AS IS" BASIS, WITHOUT ANY REPRESENTATIONS AND
WARRANTIES, EXPRESS & IMPLIED. Secured Party reserves the right
to offer the Collateral in bulk or in lots. Secured Party
reserves the right to establish other reasonable bidding
procedures and to have potential bidders demonstrate their
ability to perform and close to the reasonable satisfaction of
Secured Party. Secured Party also reserves the right to adjourn,
continue or cancel the auction. Secured Party also reserves the
reject any or all bids.
Any parties interested in further information about the tangible
and intangible personal property to be sold should contact
Gregory J. Schmitt, Jenkens & Gilchrist, P.C., counsel to the
Secured Party, at (214) 855-4305, or appear at the foreclosure
sale at the time and place set forth above.
CRYSTALLEX INT'L: Working Capital Deficit Tops C$3MM at Sept. 30
----------------------------------------------------------------
Crystallex International Corporation (Amex: KRY; Toronto)
released its third quarter 2002 results.
Highlights
* On September 17, 2002 Crystallex and the Corporacion
Venezolana de Guayana, signed a definitive Mining
Operation Agreement for the development of Las Cristinas
4, 5, 6, and 7. This followed an announcement on
September 6 of CVG's selection of Crystallex to develop
Las Cristinas.
* Crystallex paid US$15 million to the CVG for the use of
Las Cristinas drill data, drill core, studies and
infrastructure, including a camp and access to an electric
substation.
* Production of gold from La Victoria was below plan as a
result of lower tonnes mined and continued low recoveries
from the refractory sulphide ore that has been mined since
April this year. Mining rates were impacted by poor
equipment availability, whilst recoveries remained low,
at 73% for the quarter, as the Revemin mill expansion was
delayed. In part, the mining and mill expansion fell
behind schedule as a consequence of making the US$15
million payment during the quarter to the CVG.
Metallurgical testwork indicates that the ore from La
Victoria requires flotation and regrinding to improve
recovery of gold to 90%. The mill expansion incorporates
flotation and regrind circuits and is currently planned to
be operational by the end of the second quarter 2003.
* Gold production for the quarter was 23,007 ounces at total
cash costs of US$252 per ounce.
* San Gregorio continued to produce according to plan and
demonstrate cost improvements, lowering total cash costs
to US$226 per ounce for the third quarter, 5% lower than
the comparable period last year.
* Development of the Tomi underground mine continued and the
first high grade ore is expected to be mined in January
2003.
For the third quarter ended September 30, 2002, Crystallex
reported a net loss of C$2.93 million as compared with net
income of C$11,045 in the third quarter of 2001. Net Operating
Cashflow (after changes in working capital) for the third
quarter was C$96,210, as compared with C$1.62 million during the
similar period in 2001.
Gold production for the third quarter 2002 was 23,007 ounces at
a total cash cost of US$252 per ounce, as compared with 28,110
ounces at a total cash cost of US$222 per ounce for the year
earlier period. Production was lower and costs higher due to
fewer tonnes processed and low recovery of gold from the La
Victoria sulphide ore in Venezuela. Gold sales revenue was
C$10.36 million for the third quarter, a decline from C$13.63
million for the comparable period in 2001. The average price
realized during the third quarter was US$288 per ounce, lower
than the average realized price of US$314 during the third
quarter 2001. The Company's average realized price per ounce
of gold was below the average spot price for the third quarter
as a result of delivering against forward sales positions with
exercise prices below the prevailing spot gold price and
accounting for the impact of buying back positions during the
quarter.
For the first nine months of 2002, Crystallex reported a net
loss of C$7.34 million, as compared with net income of C$900,824
for the same period in 2001. Net Operating Cashflow (after
changes in working capital) was a utilization of C$8.44 million,
as compared with positive net operating cashflow of C$4.49
million during the similar period in 2001.
Gold production for the first nine months of 2002 was 70,405
ounces at a total cash cost of US$266 per ounce, as compared
with 81,316 ounces at a total cash cost of US$235 per ounce for
the year earlier period. Despite nine months of production from
La Victoria in 2002, (La Victoria commenced mining in April
2001) gold production was lower than the nine month period in
2001 due principally to the transition from saprolite ore to
harder, sulphide ore which has reduced recovery of gold from La
Victoria ore to 76% for the nine month period in 2002, as
compared to 91% for the same period in 2001. Gold sales revenue
was C$33.68 million for the first nine months of the year, a
decline from C$42.23 million for the comparable period in 2001.
The average price realized during the nine month period was
US$305 per ounce, as compared to an average spot price of US$306
per ounce for the same period.
San Gregorio
Production at San Gregorio continued at budgeted levels during
the third quarter. Gold production for the quarter was 15,840
ounces, comparable to the level for the similar period in 2001.
Production for the first nine months of 2002 was 49,126 ounces,
again similar to the 48,976 ounces produced during the same
period last year. Total cash costs were US$226 per ounce for
the third quarter 2002, an improvement of over 5% for the
comparable period in 2001. Year to date total cash costs were
US$234 per ounce, down from US$245 per ounce for the same period
in 2001. The improvement in costs was principally attributable
to productivity gains in the mill. Milling costs were US$5.60
per tonne of ore processed for the first nine months of 2002, a
reduction of almost 7% from the full year 2001 cost of US$6.00
per tonne.
For 2002, San Gregorio is forecast to produce 66,000 ounces at
total cash costs of US$234 per ounce. Present reserve estimates
are sufficient to support production through the end of 2003.
La Victoria and Revemin Mill
During the third quarter, ore from La Victoria accounted for
almost 98% of the ore processed by the Revemin mill. Small
quantities of ore from the Tomi open pit mine and from material
purchased from nearby concessions were processed through
Revemin, principally during the first quarter of the year.
Production from the La Victoria open pit mine was 6,770 ounces
for the third quarter, down from 7,633 for the similar period in
2001. For the nine month period, La Victoria produced 16,568
ounces as compared to 18,052 ounces in 2001, (mining operations
commenced in April 2001 at La Victoria). Lower than planned
tonnes mined and processed, combined with both lower grades and
recoveries, materially reduced gold production from La Victoria
in the second and third quarters of this year.
Lower than planned mining of waste and ore is reflected in the
stripping ratio, which, at 2.9:1 for the nine months through
September is below plan of 3.8:1. The strip ratio for the third
quarter was 1.8:1. The total tones mined (waste and ore) was
just over 1.0 million tonnes for the nine month period, as
compared to a plan of 1.8 million tonnes. Waste stripping is
behind schedule due to low equipment availability.
Ore grades have averaged 2.75 grams per tonne for the first nine
months of 2002, as compared to 3.31 grams per tonne for the
similar period last year. During the third quarter, however, La
Victoria grades improved to 3.17 grams per tonne as mining
progressed into higher grade zones.
Recovery of gold from La Victoria ore at Revemin averaged only
73% for the quarter and 77% for the first nine months of the
year, down from last year's level of about 90%. Gold recovery
has been negatively impacted since the transition into sulphide
ore at La Victoria early in the second quarter of this year.
Metallurgical testwork indicates that the refractory sulphide
ore at La Victoria requires flotation and regrinding prior to
leaching. Test results indicate that regrinding the flotation
concentrates and then leaching should increase gold recovery to
90%. As described below, the Phase I Revemin expansion to 1,800
tonnes per day has budgeted for a flotation and regrind circuit.
The expansion was initially expected to be completed by this
year, but is now expected to be operational by the end of the
second quarter 2003.
Lower production significantly increased total cash costs for
Venezuelan production to US$309 per ounce for the third quarter
of 2002, up from US$201 per ounce for the comparable period in
2001. Similarly, total cash costs for the nine month period
have increased 54%, from US$220 per ounce in 2001 to US$339 per
ounce in 2002.
Development Projects
Las Cristinas
On September 17, 2002, Crystallex and the CVG signed a
definitive Mining Operation Agreement for the development of Las
Cristinas 4, 5, 6, and 7. The Agreement provides Crystallex
with the exclusive right to explore, design and construct
facilities, exploit, process and sell gold from Las Cristinas.
An official translated version of the Mining Operation Agreement
is available on the Company's website.
During the third quarter, Crystallex paid the CVG US$15 million
for the Las Cristinas data studies and infrastructure.
Crystallex has engaged an independent engineering consulting
firm to undertake mineral resource modelling and geological
verification work. The verification work will include a
physical review of drill core, re-surveying drill holes and
plotting a new database of drill hole locations, re-analyzing
drill core to check against original assay data and performing
twinned core drilling to confirm original drill hole results.
The resource modeling should be completed early in the first
quarter of 2003.
Crystallex has also started the process of holding discussions
with a number of engineering firms regarding a Feasibility Study
for Las Cristinas. The Company plans to select a firm by the end
of the year.
Revemin Mill Expansion to 1,800 Tonnes Per Day
A large new crusher was installed at the La Victoria pit as part
of the mill expansion to 1,800 tpd and ultimately to 3,000 tpd.
The crusher was commissioned in late September and reached a
steady operating rate by mid October. The crusher is designed
for the second phase mill expansion to 3,000 tonnes per day.
Until that time it will be operated twelve hours per day at a
rate of 1,500 tonnes per day.
The new crusher will immediately improve operations by
eliminating both the bottlenecks that were experienced with the
existing installed crushing equipment at the mill, and the need
to transport boulders to the mill, thereby significantly
reducing the maintenance cost on the highway haul trucks.
The US$2.4 million expansion budget includes flotation and a
regrind mill which are expected to improve gold recoveries from
La Victoria ore. These components will be ordered during the
fourth quarter, with installation late in the first quarter of
2003. The expansion should be operational by the end of the
second quarter 2003.
Tomi Underground Mine
Development of the Tomi underground mine continued during the
third quarter. A total of 153 meters were advanced, bringing
the total to 352 meters thus far, (297 meters of ramp and 55
meters of level development). It is expected that stope 1-A
will be reached in early January and high grade underground ore
should be mined and processed during the first quarter of 2003.
Ore from the Tomi underground mine will be trucked about
seventeen kilometres to the Revemin mill for processing. The
Tomi ore does not have the same sulphide metallurgical
characteristics as the La Victoria ore and recoveries of gold
from Tomi are expected to exceed 90%.
Albino Underground Mine
All permits have been received to commence the development of
the Albino underground mine. A dewatering pump was received and
installed on a newly constructed barge. The barge and pump will
be transported from the Revemin mill to Albino. Dewatering will
start early in the first quarter of 2003 and will take about two
months.
Financial Review
Liquidity and Capital Resources
Net Operating Cashflow (after working capital changes) was a
utilization of C$8.44 million for the nine month period ended
September 30, 2002, as compared with operating cashflow of
C$4.49 million for the nine months in 2001. The decrease in
cashflow was principally attributed to lower gold production and
higher operating costs.
Cash and cash equivalents were C$1.56 million at the end of the
third quarter 2002, down from C$7.90 million at the end of the
preceding quarter. The reduction in cash was largely due to
making the US$15 million payment to the CVG for the acquisition
of the Las Cristinas data and infrastructure.
At September 30, 2002, the Company's balance sheet shows that
total current liabilities exceeded total current assets by about
C$3 million.
Financing Activities
In September, the Company completed private placements of 3-year
convertible debentures for an aggregate amount of US$12.09
million. The debentures carried interest rates ranging from
4.5% to 5.5%. In addition, the Company closed a short term,
convertible US$2.2 million loan. A total of 2,023,590 warrants
were issued as part of the private placement and loan
financings. Each warrant entitles the holder to acquire one
common share of the Company. The debentures were issued to
partly finance the US$15 million payment made to the CVG. As a
result of the convertible debenture issue, long term debt
increased to C$33.09 million at September 30, 2002, up from
C$18.71 million at June 30, 2002.
In addition, a total of 2,111,412 shares were issued during the
quarter for C$3,505,728.
Outlook
The Company expects to produce 92,000 ounces of gold at US$257
in 2002 at a total cash cost of $265 per ounce.
A significant waste stripping program will be undertaken at the
La Victoria mine over the first three quarters of 2003. This
should allow for a continuous supply of ore to the Revemin mill.
Furthermore, upon completion of the mill expansion by the end of
the second quarter of 2003, recovery of gold from La Victoria
ore is expected to increase to approximately 90%.
The work on Las Cristinas resource modelling and geological
verification is progressing on schedule and the Company expects
to be in a position by early in 2003 to announce a mineral
resource estimate. Completion of a full Feasibility Study is
targeted for late in the second quarter or early in the third
quarter of 2003. Under the terms of the Mining Operation
Agreement, Crystallex has agreed to present a Feasibility Study
to the CVG for approval by September 17, 2003 and to start
production from the Las Cristinas deposits by May, 2004.
Crystallex closed two private placements during the week of
November 25, 2002. The financings included a convertible note
issue for gross proceeds of US$1.4 million and an issue of 2.2
million special warrants at a price of C$2.15 per special
warrant, which raised gross proceeds of C$4.73 million. Proceeds
from these financings will be used to continue the resource
modeling for Las Cristinas, and advance developments at Revemin,
La Victoria and the Tomi underground mine.
Crystallex International Corporation is a Canadian based gold
producer with operations and exploration properties in Uruguay
and Venezuela. Crystallex shares are traded on the TSX and AMEX
Exchanges and Crystallex is part of the S&P/TSX Composite Index,
the most widely followed benchmark index in Canada. Crystallex
has been focused on strategic growth in South America and
recently signed a definitive agreement with respect to the Las
Cristinas mining properties in Venezuela and has taken
possession of those properties. Crystallex is currently
reviewing drill data and studies previously completed in
preparation for the completion of a feasibility study to support
its development plans for the properties.
Visit Crystallex on the Internet http://www.crystallex.comfor
more information on the Company.
ENCOMPASS SERVICES: Wants to Honor $3.9M of Customer Obligations
----------------------------------------------------------------
In the ordinary course of business, Encompass Services
Corporation and its debtor-affiliates maintain various warranty
programs designed to ensure customer and vendor satisfaction,
Lydia T. Protopapas, Esq., at Weil Gotshal & Manges LLP, in
Houston, Texas, relates. The Debtors provide certain express
warranties, and are subject to implied warranties, concerning
the quality of their workmanship with respect to 10,000 projects
performed on behalf of their customers.
In the event of a failure of the quality of their workmanship,
whether due to the failure of the goods installed or the quality
of the services provided, the Debtors are often contractually or
otherwise obligated to remedy the failures. In case of product
failure, Ms. Protopapas explains that the Debtors return the
product to the relevant manufacturer, who is then required to
either repair or replace the defective product. But in case of
a failure of the quality of their services, the Debtors are
required to:
-- send one or more skilled employees to the relevant
project location, and
-- provide follow-up services that are necessary to remedy
the pertinent service failure.
The Debtors estimate that there are $3,800,000 in unpaid
prepetition claims under the Warranty Programs.
Aside from the Warranty Programs, the Debtors also provide
maintenance and repair services for HVAC, plumbing, security,
and related residential systems. To the extent that an item
covered by a Residential Customer Contract fails to perform
satisfactorily, the Debtors are obligated to either provide the
customer with the necessary repair services or to replace the
faulty equipment. As of the Petition Date, the Debtors estimate
that there are $4,000,000 in accrued and unsatisfied performance
and payment obligations under the Residential Customer
Contracts.
By this motion, the Debtors seek the Court's authority to honor
prepetition obligations under their customer programs and to
maintain the programs without interruption.
Ms. Protopapas asserts that the uninterrupted maintenance of the
customer programs is essential to maintain customer satisfaction
and loyalty. Ms. Protopapas explains that any disruption and
adverse publicity or otherwise that would necessarily result
from the Debtors' failure to meet their obligations under, or
from discontinuing, the customer programs would necessarily
threaten their customer base and, ultimately, their ability to
successfully reorganize. (Encompass Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON: Asks Bankruptcy Court to Hold NYISO in Civil Contempt
------------------------------------------------------------
Pursuant to Section 105 of the Bankruptcy Code, Enron Power
Marketing, Inc. asks the Court to find New York Independent
System Operator, Inc., in civil contempt of the Court's May 16,
2002 Order. EPMI also asks Judge Gonzalez to award it with
interest, costs, expenses and attorneys' fees for each day that
the Court finds NYISO in contempt of the Sale Order.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that pursuant to the sale of EPMI's 772 Transmission
Congestion Contracts to Select Energy New York, Inc., NYISO
agreed to the TCC Sale under the terms and conditions of a
Letter Agreement, which provides that:
-- NYISO agreed to pay to EPMI the Retained Proceeds
Collateral, less a Holdback, within two business days
after the later of:
(a) February 1, 2002; and
(b) the Court approval of the Sale and Select's full
payment for the TCC to EPMI;
-- NYISO's authority to retain $1,000,000 of the Retained
Proceeds Collateral for future adjustments to billing
invoices of EPMI with respect to the TCC; and
-- NYISO agreed to issue the first round of True-Ups on
March 7, 2002, April 7, 2002 and May 7, 2002. If none of
these True-Ups required an adjustment of more than
$187,500, NYISO was required to return to EPMI any of the
Holdback exceeding $250,000.
Ms. Gray notes that the TCC Sale Order specifically directed
NYISO to deliver the Retained Proceeds Collateral to EPMI in
accordance with the terms of the Letter Agreement when the TCC
Sale is consummated. Ms. Gray reports that EPMI and Select
consummated the TCC Sale on May 24, 2002 when Select made the
TCC Payment to EPMI, thus triggering NYISO's obligations under
the Letter Agreement.
However, Ms. Gray tells Judge Gonzalez, despite the fact that
the Sale Order directed NYISO to perform its obligations months
ago, NYISO has refused to do so. NYISO has neither released the
Immediate Payment to EPMI nor issued the first round of True-
Ups.
When EPMI demanded from NYISO compliance of the Sale Order,
NYISO refused on the basis that, when it entered into the Letter
Agreement, it had allegedly forgotten about the $8,500,000 in
prepetition claims that EPMI allegedly owes it pursuant to TCC.
Ms. Gray points out that the Letter Agreement constituted a
settlement of all claims between EPMI and NYISO with respect to
the TCCs. "NYISO may not ignore the Sale Order in an attempt to
renegotiate the Letter Agreement," Ms. Gray emphasizes.
Holding NYISO in civil contempt is warranted, Ms. Gray insists,
because:
(a) the order NYISO failed to comply is clear and
unambiguous;
(b) the proof of non-compliance is clear and convincing; and
(c) NYISO has not diligently attempted in a reasonable
manner to comply with the Order.
Moreover, the request for expense reimbursement should be
granted since NYISO's willful failure to timely satisfy its
obligations pursuant to the Sale Order has deprived EPMI of the
value of the Immediate Payment and all of the Holdback to which
it is entitled to months ago. "EPMI can only be made whole by
an award of interest," Ms. Gray explains. (Enron Bankruptcy
News, Issue No. 49; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3), DebtTraders
reports, are trading at about 14 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
EOTT ENERGY: Committee Signs-Up Fulbright & Jaworski as Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
chapter 11 cases involving EOTT Energy Partners, L.P., sought
and obtained the Court's authority to retain Fulbright &
Jaworski LLP as counsel, nunc pro tunc to October 8, 2002.
J. Robert Chambers, Chairperson of the Official Committee of
Unsecured Creditors, tells the Court that the Committee selected
Fulbright due to its extensive experience in bankruptcy and
reorganization matters. The Committee believes Fulbright is
well qualified to represent it as counsel in these cases.
Mr. Chambers informs Judge Schmidt that Fulbright will render
these services to the Committee:
(a) to advise the Committee as to its powers and duties;
(b) to assist the Committee in its investigation of the EOTT
Debtors' affairs as provided by Section 1103(c)(2) of
the Bankruptcy Code;
(c) to assist the Committee in analyzing all applications,
motions, responses, orders, statements, schedules,
reports and other pleadings and legal documents filed
with the Court by the EOTT Debtors or third parties;
(d) to appear and represent the Committee at all hearings;
(e) to assist and to advise the Committee with regard to its
communications to the general creditor body regarding
the Committee's recommendations on any proposed plan of
reorganization; and
(f) to perform other legal services as may be required and
in the interest of unsecured creditors.
Evelyn H. Biery, Esq., a partner at Fulbright & Jaworski LLP,
says that Fulbright intends to apply to the Court for allowance
of compensation and reimbursement of expenses in these hourly
rates:
Evelyn Biery $450
Richard R. Coston 410
Harva R. Dockery 390
Patricia L. Barsalou 300
Kevin Mann 240
Sharon Beausoliel-Mayer 180
If other lawyers, legal assistants and other personnel are
assigned, the firm's current hourly rates will be charged.
Moreover, Fulbright will also request reimbursement of all
expenses actually incurred in connection with its representation
of the Committee, including all long-distance telephone charges,
mail and express mail charges, facsimile charges, delivery
charges, travel expenses, computerized legal research,
transcription costs, document processing, photocopying and
printing charges and any extraordinary personnel expenses like
secretarial overtime.
Ms. Biery assures the Court that Fulbright:
(a) is disinterested and does not represent or hold any
interest adverse to the interest of the estate with
respect to the matter on which Fulbright will be
employed; and
(b) has no connection with the EOTT Debtors, their
creditors, any other party-in-interest, their respective
attorneys and accountants, the U.S. Trustee, or any
other person employed in the office of the U.S. Trustee,
except as:
-- some members of the Debtors' prepetition Ad Hoc
Bondholders Committee were represented by Fulbright
in connection with the possible restructuring of the
Notes, a possible bankruptcy filing by the Debtors
and other pre-bankruptcy negotiations with the
Debtors. The Debtors agreed to pay the fees and
expenses of $450,000 in this matter. Thus, Fulbright
does not hold a prepetition claim against any of the
Debtors. (EOTT Energy Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
EOTT Energy Partners/Fin.'s 11% bonds due 2009 (EOT09USR1) are
trading at 57 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for
real-time bond pricing.
EXODUS COMMS: Court Fixes AT&T Solutions' $2.3-Mil. Admin. Claim
----------------------------------------------------------------
Judge Walsh fixes AT&T Solutions' administrative expense claims
at $2,345,808 against Exodus Communications, Inc. Debtors, and
orders the payment, by check or money, of this amount on these
payment dates:
Date Amount
----------------- -----------
November 8, 2002 $600,000
January 20, 2003 1,745,808
The Debtors are directed to deliver the payments to:
AT&T Solutions
P.O. Box 277761
Atlanta, Georgia
(Exodus Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
FEDERAL-MOGUL: Court Approves Settlement Agreement with IRS
-----------------------------------------------------------
At Federal-Mogul Corporation and its debtor-affiliates' behest,
the Court:
-- authorized Federal-Mogul Corporation to enter into a
settlement agreement compromising and settling certain
claims with respect to the Internal Revenue Services; and
-- approved the terms of an IRS Settlement Agreement on
behalf of Federal-Mogul Corporation and its non-debtor
subsidiary, Federal-Mogul World Trade LTD.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones
P.C., relates that the IRS Settlement is the product of a number
of years of examination, auditing, and negotiating over the tax
liability of Federal-Mogul Corporation and FM World Trade. The
Settlement Agreement resolves Federal-Mogul Corporation's and FM
World Trade's tax liability and credits for the years 1985
through 1996.
In the process of the IRS' routine audit of their corporate tax
returns, Federal-Mogul Corporation determined that changes in
applicable tax regulations made it eligible for certain
additional tax credits and tax deductions dating back to 1985.
Hence, Federal-Mogul Corporation filed both formal and informal
claims for numerous tax refunds. The majority of the tax
credits and deductions for which Federal-Mogul Corporation
determined that it was eligible consisted of research and
development credits for the years 1985 through 1996. It also
included deductions:
* resulting from revisions to computations of inventory;
* for commissions on foreign sales;
* for the cost of increasing its customer base; and
* for other smaller credits.
Federal-Mogul Corporation's claims span the course of four years
beginning in late 1997.
However, the IRS challenged many of Federal-Mogul Corporation's
claims for research and development where the project had taken
place at its manufacturing plants rather than in a laboratory or
a more typical research facility. It was only when Federal-
Mogul Corporation provided additional evidence of the nature of
the research that the IRS agreed to many of the claims.
Pursuant to the Settlement Agreement, Ms. Jones reports that the
IRS and FM World Trade have agreed to grant Federal-Mogul
Corporation an $11,580,033 total net tax refund based on the
total over-assessments of $11,584,205 and a deficiency of
$4,172.
Federal-Mogul Corporation's refund mainly constitutes the claims
for research and development credits. The rest of the Refund
falls within a variety of categories. Ms. Jones maintains that
Federal-Mogul Corporation originally had claimed about $400,000
in research and development credits on its initial tax returns.
It later filed an additional $17,600,000 in research and
development credits.
The IRS investigated and negotiated Federal-Mogul Corporation's
research and development credits and eventually agreed that it
was entitled to $11,500,000 in total research and development
credits for the 12 tax years or 64% of the total additional
amount claimed.
"Federal-Mogul Corporation will carry approximately $5,500,000
of the $11,500,000 forward to future tax years," according to
Ms. Jones. This is largely because Federal-Mogul Corporation
does not have sufficient taxable income in some of the years for
which it is entitled to additional research and development
credits. Ms. Jones notes that the IRS will refund the remaining
$6,000,000 to Federal-Mogul Corporation pursuant to the IRS
Settlement Agreement.
The rest of the refund arises from the IRS' allowance of three
major categories of tax deductions as well as numerous assorted
deductions in smaller amounts. The most significant category
includes $8,600,000 in allowed deductions arising out of
revisions to computations related to Federal-Mogul Corporation's
use of the last-in, first-out method of accounting for
inventory. The second largest category consists of $7,100,000 in
allowed deductions related to the cost of attracting additional
customers to its products.
Ms. Jones further relates that the IRS has also agreed to
entitle Federal-Mogul Corporation to an additional $6,100,000 in
deductions arising from increased foreign sales commissions.
The remaining $7,200,000 in deductions fall within roughly a
dozen different categories including the expenses like
consulting fees, software costs, dividend distributions, and
deductions related to payment of foreign taxes.
Ms. Jones explains that, according to the applicable statutory
tax rate, the Debtors would be entitled to $10,200,000 as result
of these deductions. Because of the effect of unutilized
foreign tax credits and alternative minimum tax implications,
however, Federal-Mogul Corporation will receive a $5,600,000
cash refund from these deductions.
The Debtors underpaid their tax obligations in 1992.
Accordingly, the $4,172 that the Debtors owe for the 1992 tax
year will be subtracted from the remaining refund that the IRS
will pay in cash. Thus, the Debtors will be entitled to a total
net refund of $11,580,033. (Federal-Mogul Bankruptcy News, Issue
No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FOAMEX INTERNATIONAL: Net Capital Deficit Narrows to $157 Mill.
---------------------------------------------------------------
Net sales of Foamex International, Inc., for the quarter ended
September 29, 2002 increased 4.5% to $340.8 million from $326.2
million in the quarter ended September 30, 2001. The increase
was primarily attributable to improved sales in the Automotive
Products segment, partially offset by lower sales in the Foam
Products segment.
The gross profit margin was $30.1 million, or 8.8%, in the
quarter ended September 29, 2002 compared to $47.4 million, or
14.5%, in the comparable 2001 period. Higher raw material costs
primarily as a result of 20.0% to 25.0% increases in the price
of chemicals from major suppliers effective in June 2002 reduced
the gross profit margin by approximately $10.0 million compared
to the quarter ended September 30, 2001. The gross profit margin
was further reduced by higher manufacturing costs primarily
related to unfavorable yields and production mix in the Foam
Products segment.
Income from operations for the quarter ended September 29, 2002,
was $4.0 million, which represented an 84.3% decrease from the
$25.5 million reported during the comparable 2001 period.
Income from operations was 1.2% of net sales in 2002 compared to
7.8% of net sales in 2001.
In December 2001, the Company announced its Operational
Reorganization Plan to reduce operating costs and accelerate
revenue growth. The Plan included plant rationalizations,
salaried work force reductions, purchasing and logistics cost
reductions, sales and marketing management and customer service
centralization. The Company recorded restructuring, impairment
and other charges in accordance with the Plan of $35.4 million
in the fourth quarter of 2001 and estimated that the Plan would
result in incremental income from operations of approximately
$20.0 million in 2002 and approximately $30.0 million in 2003. A
total of 746 employees were expected to be terminated as a
result of the Plan.
During the first quarter of 2002, the Company recorded a
restructuring, impairment and other credit of $2.1 million for
the collection of deferred rent receivable that was not included
in the Plan. In addition, the Company recorded a restructuring,
impairment and other charge of $0.6 million for certain
additional expenses related to the Plan. During the three
quarters ended September 29, 2002, the Company attempted a sale
of its Carpet Cushion Products segment and management put
certain Carpet Cushion Products segment facility closures
included in the Plan on hold until the completion of sale
negotiations. On October 4, 2002, the Company announced that
negotiations to sell the Carpet Cushion Products segment had
been terminated. Management has reevaluated the Plan and
determined that certain previously recorded amounts were no
longer required. The net impact of such reevaluation was a
reversal of $3.7 million of previously recorded liabilities in
the quarter ended September 29, 2002.
The Company expects to substantially complete the implementation
of the Plan by December 29, 2002, and to spend approximately
$8.4 million during the 52 weeks ending September 28, 2003. The
Company currently estimates that the Plan will result in
savings of approximately $15.0 million in 2002 and approximately
$27.0 million in 2003. As of September 29, 2002, the Company
had closed five facilities and terminated approximately 335
employees under the Plan.
Additionally, in response to the recent significant
deterioration in profitability the Company has and continues to
reorganize its executive management and is in the process of
reorganizing other areas of its business and corporate
management. These activities are expected to result in the
termination of additional employees, the closure of additional
facilities and other actions that will result in the recording
of exit costs, restructuring and other charges in the fourth
quarter of 2002 in the range of approximately $5.0 million to
$9.0 million including noncash charges of approximately $1.0
million to $2.0 million, once plans are finalized. If the
Company is successful in implementing these initiatives, the
Company anticipates additional savings from lower employee costs
and operating efficiencies in the range of approximately $6.0
million to $8.0 million on an annualized basis.
At September 29, 2002, Foamex's balance sheet shows a total
shareholders' equity deficit of about $157 million, as compared
to a deficit of about $181 million at December 31, 2001.
Foamex L.P.'s 13.50% bonds due 2005 (FMXI05USR1), DebtTraders
reports, are trading at about 26 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FMXI05USR1
for real-time bond pricing.
GENTEK INC: Brings-In Deloitte & Touche for Auditing Services
-------------------------------------------------------------
GenTek Inc., and its debtor-affiliates want to employ Deloitte &
Touche LLP to provide auditing, accounting, and tax and
bankruptcy reorganization services to the Debtors in these
Chapter 11 cases.
In particular, the Debtors anticipate Deloitte to render these
services:
(1) Auditing and reporting of the Debtors' annual financial
statements for the year ending December 31, 2002;
(2) Advising and assisting on various federal, foreign,
state and local tax matters as requested by the Debtors;
(3) Providing various reorganization advisory services and
assistance as may be requested by the Debtors;
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, tells Judge Walrath that the Debtors have selected Deloitte
because of its extensive experience with and knowledge of the
Debtors' business and financial affairs. Before the Petition
Date, Deloitte had been engaged for 12 years to provide audit,
accounting, tax, and other professional services to the Debtors
and to their affiliates. As a consequence, the Debtors believe
that Deloitte is both well qualified and uniquely able to
provide the services in a most efficient and timely manner.
The Debtors propose to compensate Deloitte for its services in
accordance with the firm's regular hourly rates. The Debtors
will also reimburse Deloitte for any reasonable expenses.
Deloitte's range of regular hourly rates by classification are:
Staff Classification Hourly Rate
-------------------- -----------
Partner/ Director $500 - 700
Sr. Manager & Manager 300 - 575
Senior/ Staff 200 - 420
Mr. Chehi discloses that, within the 90-day period before the
Petition Date, Deloitte received payments totaling $266,355 for
prepetition services it rendered to the Debtors. In addition,
Deloitte currently has $46,000 claim against the Debtors for
unpaid prepetition tax services. However, Mr. Chehi says
Deloitte is prepared to waive that prepetition claim as well as
any other prepetition claims it may have against the Debtors,
subject to and contingent on the Court's final approval of its
retention to provide postpetition services to the Debtors.
Mr. Chehi also reports that, from August 1, 2002 through October
1, 2002, Deloitte invoiced $95,000 to GenTek for its services in
connection with the audits of the Debtors' pension plans.
Although the engagement letter pertaining to the Pension Plan
Services was entered into between Deloitte and GenTek, the
Pension Plan Services were in reality performed for the benefit
of the pension plans and not the Debtors. Mr. Chehi explains
that the fees for the provision of those services were paid out
of the non-filing trust established to administer the pension
plans and not by the Debtors. Consequently, provided the terms
of trust agreements supports its ability to do so, Deloitte
intends to seek compensation for the unpaid fees incurred in
connection with the provision of the Pension Plan Services from
the non-filing pension plan trust rather than from the Debtors'
legal entity. At this time, Deloitte will not waive its right
to collect the $95,000.
Sheila T. Smith, a member of the firm, assures Judge Walrath
that Deloitte does not hold any interest adverse to the Debtors
and their estates and is a disinterested person within the
meaning of Section 101(14) of the Bankruptcy Code. Ms. Smith,
however, reveals that Deloitte has relationships with certain
interested parties in matters unrelated to these cases:
-- Deloitte has lending relationships with the Bank of
Montreal, Citibank, First Union National Bank, Fleet
National Bank, ING Capital, J.P. Morgan Chase, Keybank,
and PNC Bank;
-- Sheila T. Smith, currently has a partner capital loan
with Fleet with an outstanding principal balance of
$261,000.
-- Michael Titta, a Deloitte Partner/Principal, has
partner capital loans with Citibank and PNC with an
outstanding aggregate principal balance of $400,000;
-- Bear Sterns & Co., Inc., General Motors Corporation, and
Metropolitan Life Insurance Co. or their respective
affiliates are significant clients of Deloitte. Deloitte
provides a variety of services to them, including audit
services, in matters unrelated to these Chapter 11 cases;
-- Chevron Corporation, Deutsche Bank, GM, J.P. Morgan,
Lucent Technologies, Inc., and State Farm Mutual
Automobile Insurance, or their respective affiliates, are
significant clients of Deloitte's affiliate Deloitte
Consulting L.P.; and
-- Deloitte provides services to Skadden, Arps, Slate,
Meagher & Flom LLP, the Debtors' bankruptcy counsel to
the Debtors, and to Stroock & Stroock & Lavan LLP, the
counsel to the Official Committee of Unsecured Creditors.
Ms. Smith further indicates that certain foreign member firms of
Deloitte Touche Tohmatsu have provided or continue to provide
professional services to some of the Debtors' filing and non-
filing affiliates. Deloitte Touche Tohmatsu is a Swiss Verein,
and each of its national practices is a separate and independent
legal entity. Deloitte & Touche USA LLP, an affiliate of
Deloitte, is the US member firm of Deloitte Touche Tohmatsu.
(GenTek Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GENUITY: Wants to Honor & Pay Prepetition Employee Obligations
--------------------------------------------------------------
Genuity's worldwide workforce consists of:
2,400 full-time employees;
8 part-time employees,
6 independent contractors and
64 agency contractors that perform functions that would
otherwise be performed by employees.
Genuity owes prepetition employee-related obligations consisting
of:
(a) accrued but unpaid prepetition wages, salaries,
commissions, stipends, bonuses, other compensation and
withholding taxes,
(b) accrued vacation,
(c) expense reimbursements; and
(d) other Employee Benefits generally offered by billion-
dollar companies.
The Debtors' domestic salaried and hourly Employees are paid
bi-weekly. The Debtors' non-domestic salaried and hourly
employees generally are paid monthly. In addition, certain of
the Employees (primarily sales staff and licensed agents) are
paid advances on expected but unearned commissions in arrears
based upon sales made for the prior period. Commission payments
are paid as an advance six weeks in arrears to domestic
Employees and four weeks in arrears to non-domestic employees.
In addition, certain of the Employees (primarily those
performing technical services) are paid an on-call stipend based
upon the time they are required to be available to work outside
their regularly-scheduled work hours.
In the next 30-day period, Chief Financial Officer and Executive
Vice President Daniel Patrick O'Brien tells Judge Beatty,
Genuity expects to pay:
$18,800,000 to non-officer and director Employees; and
$400,000 to Officers and Directors
The Debtors estimate that, as of the Petition Date, accrued but
unpaid wages, salaries, commissions, stipends, bonuses, other
compensation and withholding taxes aggregate to approximately
$2,000,000 and that accrued vacation pay aggregates to
approximately $9,300,000.
[James Crowe, Level 3's Chief Executive Officer, and Genuity
spokesman John Vicenzo told Bloomberg News reporters in an
interview Wednesday that jobs cuts are likely, but declined to
say how many of the company's employees may be terminated.]
The Debtors fear that if prepetition benefit, compensation and
reimbursement amounts aren't honored in the ordinary course,
Employees will suffer extreme personal hardship and may be
unable to pay their basic living expenses. Clearly, J. Gregory
Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP says,
this would destroy Employee morale and result in unmanageable
Employee turnover during the critical early stages of the
Debtors' chapter 11 cases. The Debtors submit that any
significant deterioration in morale at this time will
substantially and adversely impact the Debtors and their ability
to reorganize, thereby resulting in immediate and irreparable
harm to the Debtors and their estates.
Thus, to retain the Employees and maintain their morale under
the difficult circumstances imposed by chapter 11, the Debtors
seek authority to satisfy the Prepetition Employee Obligations
and to continue to provide postpetition Employee Benefits. The
Debtors submit that the amounts to be paid to the Employees
pursuant to this Motion are reasonable compared with the
importance and necessity of preserving Employee loyalty and
morale and with the difficulties and losses the Debtors likely
will suffer if those amounts are not paid. Accordingly, the
Debtors seek authorization to pay the Prepetition Employee
Obligations (or to maintain accrued levels of benefits and
continue such accrual where payment is not yet due) all in
accordance with the policies, plans and programs that were in
place prior to the Petition Date.
Relying on the well-settled doctrine of necessity, Sally
McDonald Henry, Esq., at Skadden Arps reminds Judge Beatty,
courts have repeatedly recognized "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 operations of the debtor." In re Ionosphere Clubs,
Inc., 98 B.R. 174, 176 Bankr. (S.D.N.Y. 1989); In re Chateaugay
Corp., 80 B.R. 279 (S.D.N.Y. 1987). Id. at 826; see also 2
Collier, Bankruptcy par. 105.01, at 105-3 (15th ed. 1996) (the
purpose of section 105(a) is to "assure the Bankruptcy Court's
power to take whatever action is appropriate or necessary in aid
of the exercise of its jurisdiction."). The United States
Supreme Court first articulated the doctrine of necessity over a
century ago, in Miltenberger v. Logansport, C. & S.W. Ry. Co.,
106 U.S. 286 (1882). In Miltenberger, a railroad receivership,
the Supreme Court approved the lower court's use of receivership
funds to pay pre-receivership debts owed to employees, vendors
and suppliers, among others, where such payments were necessary
to preserve the receivership property and the integrity of the
business in receivership. The modern test under the doctrine of
necessity is largely unchanged from the Supreme Court's
observations in Miltenberger. See, e.g., In re Lehigh & New
England Ry. Co., 657 F.2d at 581-82 ("[I]n order to justify
payment under the "necessity of payment" rule, a real and
immediate threat must exist that failure to pay will place the
[debtor's] continued operation . . . in serious jeopardy."); In
re Ionosphere Clubs, 98 B.R. at 176 ("this rule recognizes the
existence of the judicial power to authorize a debtor in a
reorganization case to pay pre-petition claims where such
payment is essential to the continued operation of the
debtor."); In re Just For Feet, Inc., 242 B.R. 821, 826 (D. Del.
1999) (test is whether payment of prepetition claim is
"essential to the survival of the debtor during the chapter 11
reorganization"); In re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D.
Va. 1992) ("the court can permit the pre-plan payment of a pre-
petition obligation when essential to the continued operation of
the debtor."); In re Eagle-Picher Ind., Inc., 124 B.R. 1021,
1023 (Bankr. S.D. Ohio 1991) ("to justify payment of a
prepetition unsecured creditor, a debtor must show that the
payment is necessary to avert a serious threat to the Chapter 11
process.").
"The doctrine of necessity is a widely accepted component of
modern bankruptcy jurisprudence," Ms. Henry says. "The
continued service and dedication of the Employees is critical to
the Debtors and the prospects for a successful reorganization."
Ms. Henry directs Judge Beatty's attention to other chapter 11
cases in the Southern District of New York where the Court has
drawn on its broad equitable powers under 11 U.S.C. Sec. 105(a)
to authorize payment of prepetition employee claims when, as in
this case, nonpayment or delay would damage a debtor's business
or its ability to reorganize: In re PhyCor, Inc., Case No. 02-
40278 (PCB) (Bankr. S.D.N.Y. Jan. 31, 2002); In re Global
Crossing Ltd., Case No. 02-40188 (REG) (Bankr. S.D.N.Y. Jan. 28,
2002); In re Enron Corp., Case No. 01-16033 (AJG) (Bankr.
S.D.N.Y. Dec. 3, 2001); In re Bethlehem Steel Corporation, et
al., Case No. 01-15288 (BRL) (Bankr. S.D.N.Y. Oct. 15, 2001); In
re CWT Specialty Stores, Inc., Case No. 00-10758 (JHG) (Bankr.
S.D.N.Y. Feb. 29, 2000). (Genuity Bankruptcy News, Issue No. 1;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GLOBAL CROSSING: Asks Court to Fix Jan. 15 Admin Claims Bar Date
----------------------------------------------------------------
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, tells the Court that the circumstances of the Global
Crossing Ltd., Debtors' Chapter 11 cases justify the setting of
the Administrative Expense Bar Date at this time. Assuming the
Plan is confirmed on December 4, 2002, the GX Debtors expect the
Plan to become effective and consummation of the transactions
contemplated under the Purchase Agreement to occur in early
2003. To achieve consummation of the Plan and to effectuate the
transactions under the Purchase Agreement, it is essential that
the GX Debtors be able to ascertain the amount of claims prior
to the effective date under the Plan. In fact, the fixing of an
administrative bar date in these Chapter 11 cases at this time
is a condition to the obligation of each Investor to consummate
the transaction. In other words, establishment of the
Administrative Expense Bar Date is required for the GX Debtors
to effectuate the transactions contemplated by the Plan.
Pursuant to Section 503(a) of the Bankruptcy Code and Rule
3003(c) of the Federal Rules of Bankruptcy Procedures, the GX
Debtors ask the Court to fix January 15, 2003 at 4:00 p.m.
prevailing Eastern Time as the Administrative Expense Bar Date.
By this date, all parties who hold administrative expense claims
incurred between the Petition Date and December 31, 2002 must
file a request for payment of these expenses or be forever
barred from asserting these claims. The GX Debtors contend that
this will give creditors sufficient time to prepare and file
requests for payment of administrative expense claims.
Mr. Walsh continues that any person or entity asserting an
administrative expense claim that was incurred against the
Debtors during the Administrative Expense Period will be
required to file an original written proof of claim on or before
the Administrative Expense Bar Date. Original proofs of claim
must be either:
-- sent via United States mail to Global Crossing Claims
Processing, c/o United States Bankruptcy Court for the
Southern District of New York, P.O. Box 5014, Bowling
Green Station, New York, New York 10274-5014; or
-- delivered by messenger or overnight courier to Global
Crossing Claims Processing, c/o United States Bankruptcy
Court for the Southern District of New York, One Bowling
Green, New York, New York 10004-1408.
Proofs of claim sent by facsimile or telecopy will not be
accepted. The Debtors ask the Court to deem all proofs of claim
timely filed only if actually received by either of the Global
Crossing Claims Processing Center on or before the
Administrative Expense Bar Date. All proofs of claim for
administrative expense claims must also conform substantially to
the Administrative Proof of Claim Form.
These persons or entities are not required to file a proof of
claim on or before the Administrative Bar Date:
A. Any person or entity asserting an administrative expense
claim that arises and is due and payable in the ordinary
course of the Debtors' businesses. This exception does
not apply to those administrative expenses that remain
outstanding and unpaid by the Debtors beyond ordinary
business terms or prior course of business dealings;
B. Any person or entity who has already properly filed an
Administrative Proof of Claim with the Global Crossing
Processing Center;
C. Any person or entity whose administrative expense claim
has been previously allowed by an order or orders of the
Bankruptcy Court;
D. Any person or entity who is one of the Debtors or an
affiliate of any of the Debtors and holds an
administrative expense claim against any of the other
Debtors or any of their affiliates;
E. Any person or entity who is a professional retained by
any of the Debtors or the statutory committee of
unsecured creditors appointed in these Chapter 11 cases
pursuant to Section 327; and
F. Any person or entity who is one of the Investors or their
professionals and holds an administrative expense claim.
Persons or entities asserting these types of administrative
expense claims will be required to file requests for payment of
these claims on or before the Administrative Expense Bar Date:
-- any administrative expense claim representing personal
injury or other tort claim against any of the Debtors;
-- any administrative expense claim for breach of an
obligation, contractual, statutory or otherwise, by any
of the Debtors;
-- any administrative expense claim pursuant to Section
503(b)(3)(A)-(D) or Section 503(b)(4);
-- any administrative expense claim incurred by any of the
Debtors outside the ordinary course of their business;
-- any administrative expense claim incurred by any of the
Debtors on other than ordinary business terms; and
-- any administrative expense claim representing an employee
claim against any of the Debtors, other than a claim for
wages, benefits, pension or retirement benefits or
expense reimbursement by an employee who is employed by
any of the Debtors as of the Administrative Expense Bar
Date.
Mr. Walsh relates that any holder of an administrative expense
claim that is required to file a proof of claim, but fails to do
so on or before the Administrative Expense Bar Date, will be
forever barred and enjoined from asserting the claim against the
Debtors and their property, and the Debtors and their property
will be discharged from all indebtedness or liability with
respect to any claim.
Pursuant to Bankruptcy Rule 2002(a)(7), the Debtors propose to
mail a notice of the Administrative Bar Date, and the
Administrative Proof of Claim Form no later than five days after
entry of the proposed order to:
A. the Office of the United States Trustee for the Southern
District of New York;
B. each member of the official committee of unsecured
creditors appointed in these Chapter 11 cases and the
attorneys for the Committee;
C. all potential creditors listed on the Debtors' schedules
of assets and liabilities at the stated addresses;
D. the District Director of Internal Revenue for the
Southern District of New York;
E. the Securities and Exchange Commission;
F. all persons and entities requesting notice pursuant to
Bankruptcy Rule 2002;
G. all parties who have filed notices of appearance in the
Debtors' Chapter 11 cases; and
H. all holders of administrative expense claims known to the
Debtors.
The Debtors will also publish the Administrative Bar Date Notice
in The New York Times (National Edition), The Wall Street
Journal (International Edition), Financial Times of London, The
Times of London, Cyprus Weekly, Bermuda Sun, Het Financielle
Dagblad-Netherlands, LuxemburgerWort, and El Comercio.
Bankruptcy Services LLC is the authorized claims agent for the
Court with respect to the Debtors' chapter 11 cases. Based on
past notices sent to creditors in these cases, BSI has created a
database of the persons and entities asserting administrative
expense claims against the Debtors. Therefore, BSI will be
uniquely able to provide notice to these persons and entities.
BSI will mail an Administrative Proof of Claim Form together
with the Administrative Bar Date Notice, to the listed parties.
This will ensure that potential administrative expense claimants
receive adequate notice of the Administrative Expense Bar Date,
and will assist the Debtors with ascertaining the amount of
these claims in a timely fashion prior to the confirmation
hearing.
"By the establishment of January 15, 2003 as the Administrative
Expense Bar Date, potential claimants will have one and a half
months' notice to file administrative expense claims," Mr. Walsh
notes. "This period provides ample time within which to file an
administrative expense claim." (Global Crossing Bankruptcy News,
Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Global Crossing Holdings Ltd.'s 9.625% bonds due 2008
(GBLX08USR1) are trading at about 3 cents-on-the-dollar,
DebtTraders reports. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX08USR1
GROUP TELECOM: Ontario Regulator Orders Temporary Trading Halt
--------------------------------------------------------------
GT Group Telecom Inc., confirmed that the Ontario Securities
Commission has issued a Temporary Cease Trading Order as a
result of the fact that, as previously disclosed, GT has failed
to file its third quarter financial statements, as it has been
operating, and continues to operate, under the protection of the
Companies' Creditors Arrangement Act (CCAA).
The hearing will take place on December 11, 2002.
Group Telecom is a Canadian independent, facilities-based
telecommunications provider, with a national fibre-optic network
linked by 454,125 strand kilometres of fibre-optics, at
March 31, 2002. Group Telecom's unique backbone architecture is
built with technologies such as Gigabit Ethernet for delivery of
enhanced network performance and Synchronous Optical Network for
the highest level of network reliability. Group Telecom offers
next-generation high-speed data, Internet, application and voice
services, delivering enhanced communication solutions to
Canadian businesses. Group Telecom operates with local offices
in 17 markets across nine provinces in Canada. Group Telecom's
national office is in Toronto. For more information, please
visit http://www.gt.ca
HASBRO INC: UK Regulator Fines Company for Price Fixing
-------------------------------------------------------
Hasbro, Inc., (NYSE:HAS) reported that the Office of Fair
Trading in the United Kingdom issued a decision in its case
concerning pricing practices by the Company's United Kingdom
subsidiary with certain of its wholesale distributors. The OFT
found that Hasbro U.K. had entered into agreements with certain
distributors to fix prices in violation of U.K. competition laws
and assessed a fine of approximately GBP4.95 million
(approximately $7.7 million at current exchange rates).
"We are surprised and disappointed at the level of the fine
imposed by the OFT, which we believe to be disproportionate,
said Alan G. Hassenfeld, Chairman and CEO of Hasbro, Inc. The
activities cited by the OFT occurred over a very short period of
time and through a limited number of wholesale distributors.
Hasbro believes that such activities had no significant effect
on competitiveness within its small network of distributors or
on consumers. We are therefore planning to appeal."
As previously disclosed, the OFT is conducting a second inquiry
into Hasbro U.K.'s trading arrangements with certain of its
direct retail accounts. The OFT has yet to issue a final
decision in the retailer case, although it had issued a
preliminary decision in May of 2002 proposing to find that
Hasbro U.K. had entered into unlawful pricing agreements with
two of its retail accounts. The Company expects the OFT to
announce a final decision in the retailer case within the next
several months.
In the case of appeal by the Company, no payment of any fine in
either the wholesaler or retailer case will be required until
such appeals are finalized.
The Company is in the process of analyzing the OFT's decision
and whether that decision affects the previously disclosed range
of loss for the two cases of approximately GBP160,000 to
GBP26,000,000. In light of the OFT decision in the wholesaler
case, the Company now believes that once it completes its
analysis of the OFT's decision, it will accrue a charge to
earnings above and beyond the GBP160,000 charge originally taken
in 2001. The Company is working with counsel to complete its
analysis of the OFT's decision and the status of the cases, and
anticipates taking this charge in the fourth quarter of 2002.
Currently, the Company does not expect the amount of the charge
to exceed approximately GBP13.5 million or approximately $20.9
million at current exchange rates.
* * *
As previously reported, Fitch Ratings affirmed Hasbro, Inc.'s
'BB' senior unsecured debt rating. In addition, the company's
new $380 million secured bank credit facility was rated 'BB+'.
The new facility, which replaced its previous 'BB+' rated
$650 million facility, continues to be secured by receivables,
inventories and intellectual property.
The ratings reflect the company's strong market presence and its
diverse portfolio of brands balanced against the cyclical and
shifting nature of the toy industry. The ratings also consider
the challenges the company continues to face in refocusing its
strategy on its core brands and its weak financial profile. The
Negative Outlook reflects uncertainty as to the company's
ability to successfully execute its strategy and its ability to
achieve revenue targets for its core brands as well as Star Wars
in 2002.
HAYES LEMMERZ: Wants to Assume McKechnie Wheel Cover Agreement
--------------------------------------------------------------
Hayes Lemmerz International, Inc., and its debtor-affiliates
seek the Court's authority to assume and amend a Wheel Cover
Supply Agreement dated April 18, 1994 with McKechnie Vehicle
Components USA Inc.
Anthony W. Clark, Esq., at Skadden Arps Slate Meagher & Flom
LLP, in Wilmington, Delaware, tells the Court that the pricing
terms for the products provided by McKechnie, as well as other
terms of the Current Agreement and Assumption Agreement, are
highly confidential but fall within the range of customary
industry terms. However, the Debtors will share the Current
Agreement and the Assumption Agreement with the counsel and the
financial advisors for the Committee and the Secured lenders.
The Current Wheel Supply Agreement
Under the Current Wheel Supply Agreement, Mr. Clark explains
that McKechnie supplies to the Debtors permanently attached clad
covers for wheels manufactured by the Debtors and sold to
original equipment vehicle manufacturers in North America. The
Current Agreement also provides for McKechnie's and the Debtors'
ownership of certain intellectual property related to the clad
wheel coverings. The term of the Current Agreement technically
expired on May 31, 2002 pursuant to its terms. However, the
agreement further provides that it will "remain in effect to the
extent necessary to permit [the Debtors] to fulfill [sic]
outstanding contracts for the sale of Clad Wheels [as defined
therein] to an OEM notwithstanding its expiration."
Accordingly, the Current Agreement remains in force and
executory. McKechnie is currently supplying, and the Debtors
are currently purchasing, clad wheel covers to fulfill the
Debtors' outstanding contracts with OEM customers.
The Debtors owe certain prepetition amounts to McKechnie under
the Current Agreement. The Debtors scheduled $2,000,000 in
prepetition claims for McKechnie. McKechnie filed two proofs of
claim in these cases, asserting $2,285,978 and $506,218 against
HLI and HLI Ohio for alleged prepetition defaults and
reclamation claims. Included in McKechnie's proofs of claim are
$358,597 and $114,307 in reclamation claims against HLI and HLI
Ohio.
The Debtors believe they have set-offs and counterclaims against
McKechnie with respect to certain of the claims. The Debtors
believe that:
-- McKechnie has a valid reclamation against HLI, but only
amounting to $185,601; and
-- McKechnie does not have a valid reclamation claim in any
amount against HLI-Ohio.
McKechnie previously asked the Court for judicial determination
of the issues with respect to its Reclamation Claims.
To stabilize the important supply relationship between the
Debtors and McKechnie and to resolve certain outstanding claims,
Mr. Clark relates that the parties engaged in good faith, arm's-
length negotiations with respect to the various issues between
the parties under the Current Agreement. As a result of these
negotiations, the parties have reached a settlement involving
the resolution of the various claims, certain modifications to
the Current Agreement, and the assumption of the Current
Agreement, as amended.
The Assumption Agreement
The Assumption Agreement provides that McKechnie will continue
to supply clad wheel covers to the Debtors. The Current
Agreement will be modified to:
-- specify the go-forward vendor-customer business
relationship between the parties and other issues
relating to the fulfillment of certain existing contracts
with OEM customers;
-- clarify the ownership interests the Debtors and McKechnie
have in certain intellectual property related to the clad
wheel covers; and
-- provide for the resolution or release of substantially
all of the claims between the parties.
The Assumption Agreement addresses the Debtors' obligations
pursuant to Section 365(b)(1) of the Bankruptcy Code to cure
defaults under the Current Agreement in connection with its
assumption. The Debtors will pay McKechnie $1,700,000 in full
settlement of:
-- all prepetition defaults, amounts and claims McKechnie
may have against the Debtors under the Current Agreement,
including the claims asserted in McKechnie's Proofs of
Claim, including the Reclamation Claims, and McKechnie's
Hearing Request; and
-- all claims, set-offs and counterclaims the Debtors may
have against McKechnie.
Mr. Clark points out that the Cure Amount is a material discount
from the prepetition amounts asserted by McKechnie against the
Debtors, and reflects significant negotiation between the
parties regarding their claims and counterclaims. Moreover,
when considered in connection with a $500,000 payment the
Debtors are to receive from McKechnie pursuant to the Assumption
Agreement, the Debtors' effective net economic cost to cure
defaults under the Current Agreement is $1,200,000. After
payment of the Cure Amount, all prepetition defaults by the
Debtors under the Current Agreement will be deemed fully cured
pursuant to Section 365(b)(1).
Mr. Clark adds that the Assumption Agreement also sets forth the
terms of the option McKechnie has granted to the Debtors, which,
under certain circumstances, would allow the Debtors to purchase
certain tooling and equipment currently owned and used by
McKechnie in the manufacture of the clad wheel covers. The
Debtors and McKechnie have also clarified their ownership rights
with respect to certain patents and inventions, the ownership of
which previously was shared by both parties pursuant to the
Current Agreement. The Assumption Agreement also contains
mutual releases, which provide that the Debtors and McKechnie
will release each other from certain claims, including any
outstanding technical fees payable by McKechnie to the Debtors
under the Current Agreement, and certain liens and claims
McKechnie may have against the Debtors in connection with
certain machinery.
Due to the nature of the Debtors' businesses, Mr. Clark deems it
essential that the Debtors should be able to continue to procure
from McKechnie the clad wheel covers needed to sustain existing
contracts with vehicle manufacturers. Obtaining replacement
clad wheel covers would be difficult, and may result in the
Debtors' inability to supply products to its major OEM
customers. (Hayes Lemmerz Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INFOCORP COMPUTER: Balance Sheet Insolvency Narrows to $3.7 Mil.
----------------------------------------------------------------
Infocorp Computer Solutions Ltd. is a provider of cashiering,
revenue management, and retail management systems worldwide.
Infocorp's solutions enable product and service delivery,
workflow automation, and payment transaction processing through
multiple delivery channels, including over-the-counter,
Internet, IVR and kiosks. Infocorp is a publicly traded Canadian
company (TSX: INP).
During the third quarter, the Company focused on the
installation phases of the major e-government contracts that
were closed in the first and second quarters of this year. For
the nine months ended September 30, 2002, the Company's revenues
have increased by more than 100% and expenses have decreased by
more than 15%.
Revenue
Third quarter revenue totaled $1.01 million (2001: $407,285) an
increase of 147%. During the quarter, revenue from license fees
in the government segment was $113,452 as compared to $11,686 in
the same quarter last year. Retail software license revenue
increased by 40%, to $257,423 (2001: $183,923). Post contract
support was maintained at $212,714 (2001: $211,676). Revenue
from Installation and Other Services increased to $424,468
(2001: $0) reflecting the increased client site activity that is
associated with increased product sales.
Margin
After deducting the direct costs of installation which includes
hardware, third-party software, travel, consultants, and other
related products and services of $36,154, the Company's margin
in the first quarter of 2002 was $971,902 million, as compared
to $366,719 in the same period in 2001. Similarly, the Company
successfully increased its margin from 90% for the third quarter
in 2001 to 96% for the same period in 2002.
General and Administrative Expenses
General and administrative expenses were $245,094 for the third
quarter of 2002 as compared to $226,308 for the same period in
2001. For the nine months period ended September 30, 2002,
general and administrative expenses reduced from $951,750 to
$825,887, a 13% decrease. This reduction is a result of
restructuring of operations in fourth quarter of 2001 and a
continuing effort of expense rationalization on day-to-day
basis.
Product Research and Development Expenses
Research and development expenses were higher in the third
quarter of 2002, at $223,706, as compared to $167,451 in the
same quarter last year because of the increased R&D activities
due to increased sales. For the nine months period ended
September 30, 2002, Research and development expenses reduced
from $955,515 to $816,051, a 15% decrease. This reflects our
strategy to develop a team in India to carry out the development
of our JAVA Access2Gov product components, and undertake
development of the Access2Retail product.
Sales and Marketing Expenses
Selling and marketing expenses were $310,712 (2001: $237,373),
which reflects increased sales activities. The Company remains
focused on building a strong, qualified pipeline from which to
generate future revenue.
Post-Contract Services
Post-contract services expenses decreased to $43,008 in the
third quarter of 2002 (2001: $108,915). This reflects the
results of our operations restructuring during the fourth
quarter of 2001, and the closing of the Florida operation in the
first quarter of 2002. Expenses are expected to continue at
these levels.
EBITDA
EBITDA was $149,381, or 15% of revenue, compared to a loss of
($373,328) over the same quarter last year.
Interest
Interest expense for the third quarter of 2002 was $105,086 as
compared to $65,255 in 2001, a 61% increase. The increase
represents the interest accrued on the $1.3 million loan from a
major shareholder, and accrued interest on the Western Economic
Development Canada loan.
Amortization
Amortization expense for the third quarter of 2002 was $22,257
as compared to $34,168 in 2001. This reduction is the result of
the amortized software development costs having been fully
written off during 2001.
Net Income
Net income for the second quarter of 2002 was $22,038 as
compared to a loss of $472,751 during the third quarter of 2001.
Liquidity and Capital Resources
During the third quarter of 2002, operating activities generated
$44,296 compared to using $435,751 of cash over the same period
in 2001. The Company has been able to successfully renegotiate
the payment terms of its term debt and, based on contracts
obtained, expects to be able to operate with positive cash flow
in 2002 and obtain financing as required.
Outlook
During the quarter, Infocorp announced a contract with Covansys
Corp. to supply its Access2Gov product for the State of
Tennessee's motor vehicle titling and registration system. In
addition, the Company announced a contract with Service New
Brunswick to install the Access2Gov(TM) solution on over 200
cashier stations at more than 30 Service Centers, Outlets and
Registry Mapping offices across the province of New Brunswick.
Infocorp Computer's September 30, 2002 balance sheet shows a
working capital deficit of about $600,000 and a total
shareholders' equity deficit of about $3.7 million.
INTERNET CABLE: Pursuing New Sources of Capital to Continue Ops.
----------------------------------------------------------------
Internet Cable Corporation has incurred significant losses from
operations since inception. The operating environment
confronting the Company raises substantial doubt about the
Company's ability to continue as a going concern. The principal
conditions giving rise to this include the following:
-- From inception until the first quarter of 2002 the
Company experienced recurring losses from operations. Although
the Company has achieved profit in the second and third quarters
of 2002 and year to date in 2002, it has an accumulated deficit
of $16,861,762 and a working capital ratio of 0.70.
-- The Company has experienced downward pressure on its
revenue since 2001 primarily due to a continued reduction in
capital expenditures by broadband clients. This has resulted in
a work shortage for the Company.
As at September 30, 2002 the consolidated group had negative
working capital in the amount of $605,289. The Company's
inactive subsidiary, CAD Consultants Inc., had a working capital
deficiency of approximately $293,000. The CAD working capital
deficiency includes unsecured trade payables. Although CAD's
creditors have no recourse against other companies in the group,
it is management's intention to settle the trade payables with
shares of the Company.
The Company's operating subsidiary, Cable Systems Technical
Services Inc., had positive working capital of approximately
$342,000. The remainder of the working capital deficit is
attributable to the group's parent company, Internet Cable
Corporation.
Although the Company expects to be able to internally generate
working capital to meet its anticipated business requirements
for the next 12 months, the Company is seeking additional
funding in the near term. Management is actively pursuing new
sources of financing which may include additional sales of the
Company's securities to provide additional working capital, fund
future potential acquisitions and satisfy any unfavorable
judgments. However, despite the fact that historically the
Company has successfully obtained sufficient financing to meet
its obligations, no assurances can be provided as to the
likelihood of its continued success. If management is unable to
secure funding, it may be compelled to consider other
alternatives, including the liquidation of the Company.
Sales for the third quarter and year to date 2002 were
$1,066,798 and $4,635,459, respectively. This represents a
decrease of $276,167, or 20.6%, from the third quarter of 2001
and an increase of $18,678, or 0.4%, year to date from the
results of 2001. The Company experienced a substantial reduction
in its revenue in 2001 primarily as a result of the reduction in
capital expenditures by its existing customers. In late 2001 the
Company entered into a contract to provide ongoing monthly
maintenance services for WideOpenWest, a multiple system
operator operating in the Columbus, OH, Cleveland, OH, Detroit,
MI and Chicago, IL markets. The revenues from this contract
contributed to the increase in sales in the first half of 2002
over the first half of 2001. In June 2002 WOW terminated the
contract with the Company in order to provide maintenance
services using in house staff. The revenues from this contract
accounted for approximately $300,000 per month from January 2002
to mid June 2002.
During the last two years, the telecommunications industry
suffered a severe downturn. The downturn adversely affected
capital expenditures for infrastructure projects in general,
including with respect to users that had not been experiencing
financial difficulties. Capital expenditures by
telecommunications clients in 2002 are expected to remain at low
levels in comparison with prior years. Although Internet Cable
has refocused its business on providing services generating
recurring revenue from its customers operating budgets and
decreasing its services that require capital spending, there can
be no assurance that its clients will continue to outsource
these operating functions or fund capital expenditures for
infrastructure projects at current levels, or that the Company
will be able to increase its market share. Further decreases in
the client's capital expenditures could reduce Company cash
flows and adversely impact its liquidity.
INVENTRONICS LTD: Receives $7 Million in Refinancing Proceeds
-------------------------------------------------------------
Inventronics Limited (TSX:IVT), a designer and manufacturer of
custom enclosures for the communications, electronics and other
industries, has received $3.5 million of cash plus an additional
$3.5 million of available credit lines, following the completion
of a previously announced refinancing of IVT's balance sheet.
Inventronics received the $3.5 million of cash from investment
funds managed by Mercantile Bancorp Limited. In return,
Inventronics issued to the Mercantile funds five-year
subordinated promissory notes, and 1,715,000 warrants that are
exercisable over five years, with each warrant entitling the
Mercantile funds to buy one Inventronics common share for $0.40.
Inventronics received the $3.5-million of credit - composed of a
$1-million operating line and a $2.5-million long-term line - by
way of new banking facilities with its long time banker.
"Our new cash and credit facilities, when combined with
approximately $2 million received from the reduction of certain
inventories and a Nov. 26 auction of surplus manufacturing
equipment, have significantly improved Inventronics' working
capital and cash position, said Dan Stearne, Inventronics'
President and CEO. "They represent the culmination of a
comprehensive restructuring program to return the Corporation to
profitability.
"With our highly efficient Brandon plant now producing all of
Inventronics' products, and a new experienced financial partner
that specializes in providing support to industrial companies
such as Inventronics, we are well-positioned to return to
profitability and recommence our growth strategy," Mr. Stearne
added.
Inventronics' balance sheet now includes more than $2 million of
working capital, of which more than $1 million is cash. The
Corporation's debt consists of the $3.5 million of subordinated
promissory notes and approximately $2.2 million in capital lease
obligations with access to $3.5-million of additional borrowing
capability.
Inventronics designs and manufactures custom metal enclosures
and related products for the telecommunications, electronics,
cable television, utilities, industrial OEM, computer server and
energy resources industries. Inventronics' common shares are
listed on the Toronto Stock Exchange under the symbol "IVT."
Visit www.inventronics.com for additional details.
As reported in Troubled Company Reporter's November 22, 2002
edition, Inventronics has a working capital deficit of about $2
million at September 30, 2002.
KMART CORP: 208 Trade Creditors Sell Claims Totaling $185 Mill.
---------------------------------------------------------------
From June 24, 2002 to August 1, 2002, the Clerk of Court
recorded $185,200,678 in claim transfers. Of this amount,
National Union Fire Insurance Co. of Pittsburgh PA, care of
American International Underwriters, acquired claims against
Kmart Corporation's estates, totaling $74,340,310. Third Avenue
Trust, on behalf of Third Avenue Value Fund Series, bought two
claims amounting to $39,999,999. Euler American Credit
Indemnity Co., purchased claims equal to $21,687,104.
Goldman Sachs Credit Partners LP acquired Sara Lee Corporation's
$10,286,457 claim. Amroc Investments LLC obtained $7,366,838 in
claims. Greenlight Capital Inc. took home Kentucky Derby
Hosiery Co.'s claim for $3,421,242. PW Willow Fund LLC acquired
$3,162,838 in claims. SPCP Group LLC obtained $2,953,384.
Contrarian Capital Trade Claims LP bought four claims for
$2,633,572.
In addition, Salomon Brothers Holding Company Inc. walked away
with Gemini Industries Inc.'s claim for $1,614,662. Fidelity
and Deposit Company of Maryland purchased $1,106,809 in claims.
Sierra Asset Management LLC bought $6,661 while Debt Acquisition
Company of America V, LLC took the claim of Akitas Landscape and
Maintenance for $531.
Newstart Factors, Inc., Next Factors, Inc. and Trade Debt, Net,
Inc., went on a shopping spree for small claims. Newstart
Factors snared 104 claims for $15,920,202. Next Factors
acquired 17 claims for $642,195 while Trade Debt took home 39
claims for $57,874. (Kmart Bankruptcy News, Issue No. 38;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6) are trading at
about 17 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
LAIDLAW INC: Plan Confirmation Hearing to Continue Next Month
-------------------------------------------------------------
According to Garry M. Graber, Esq., at Hodgson Russ LLP, in
Buffalo, New York, at the request of the core parties-in-
interest, Judge Kaplan adjourned the Confirmation Hearing on
Laidlaw Inc.'s proposed Plan of Reorganization, sine die. Mr.
Graber relates that the Debtors plan to ask the Court to convene
the Confirmation Hearing sometime in January 2003. (Laidlaw
Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MAGNUM HUNTER: Completes Sale of South Texas Assets for $33 Mil.
----------------------------------------------------------------
Magnum Hunter Resources, Inc., (NYSE: MHR) has completed the
sale of a $33.0 million package of South Texas oil and gas
properties to Peoples Energy Production, a subsidiary of Peoples
Energy (NYSE: PGL). The package consisted of approximately 175
wells in five separate fields located in Webb, Zapata, Colorado
and Duval Counties, Texas.
This divestiture brings the total sales of non-core properties
completed to-date in 2002 to approximately $93 million.
Predominately all of the properties sold this year had been
acquired earlier by Magnum Hunter in its merger with Prize
Energy Co., which closed in March 2002. With additional minor
value property sales currently being negotiated, Magnum Hunter
is on target to close on approximately $100 million in property
sales this year. All of the net proceeds received from the
various divestitures have been used to reduce Magnum Hunter's
indebtedness.
Commenting on the completion of this most recent sale of non-
core assets, Mr. Richard R. Frazier, Chief Operating Officer of
Magnum Hunter stated, "We have been very pleased with the prices
received for all of the non-core property sales completed by
Magnum Hunter during 2002. This sale of the 'South Texas
Package' represented less than 5% of the company's total reserve
base, and less than 30% of our onshore Gulf Coast division oil
and gas assets. We continue toward our goal of streamlining our
property base by selling non-core properties during a commodity
price period that remains strong, in order that we may refocus
our professional staff on our core assets and further reduce our
Company's overall indebtedness. With the recent new wells
drilled, completed, and placed on production in Southeast New
Mexico, Magnum Hunter has more than replaced the loss of
production stemming from this 'South Texas Package' sale."
Magnum Hunter Resources, Inc., is one of the nation's fastest
growing independent exploration and development companies
engaged in three principal activities: (1) the exploration,
development and production of crude oil, condensate and natural
gas; (2) the gathering, transmission and marketing of natural
gas; and (3) the managing and operating of producing oil and
natural gas properties for interest owners.
* * *
As previously reported, Standard & Poor's raised the corporate
credit ratings of Magnum Hunter Resources Inc., to BB- and its
senior unsecured debt rating to B+.
MED DIVERSIFIED: Bankruptcy Won't Affect Chartwell Home Unit
------------------------------------------------------------
Chartwell Home Therapies, L.P., a provider of home health care
services, stated to its partners, payers, creditors, employees
and patients that it expects to be unaffected by the Chapter 11
bankruptcy filing of its parent company, Med Diversified, Inc.,
and will continue operations as normal. Each of the Company's
businesses, co-owned in partnership with leading academic
medical systems, will continue to operate with the highest level
of credit worthiness as required under their Limited Liability
Corporation Operating Agreements.
Based in Pittsburgh, Pennsylvania, Chartwell Home Therapies
provides home health care services--including home infusion,
clinical respiratory services, specialty pharmacy services and
home medical equipment--in partnership with leading academic
health systems across the nation. The Company's eight joint
venture businesses, known as National Centers of Excellence,
receive management services from Chartwell Management Company,
Inc.
MEDINEX SYSTEMS: Files for Chapter 11 Protection in Idaho
---------------------------------------------------------
Medinex Systems Inc. on November 27, 2002, Wednesday, filed for
chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in
Boise, Idaho, reported Dow Jones. In a Form 8-K filed with the
Securities and Exchange Commission, the health care technology
solutions provider said it would continue to operate its
business as a debtor-in-possession, according to the newswire.
The company dismissed President, Chairman, Chief Executive and
Chief Financial Officer Anthony J. Paquin and appointed Colin
Christie president and CEO earlier this month. Maureen Cantley
was appointed interim chief financial officer and corporate
secretary and R. Scot Haug was appointed nonexecutive chairman,
reported Dow Jones. The company also dismissed Executive Vice
President Kelly McCarthy Paquin and accepted the resignation of
director Robert Gober, the newswire reported. According to its
third-quarter report, the company had $335,000 in assets and
$1.99 million in liabilities. (ABI World, Nov. 29, 2002)
MITEC TELECOM: Working Capital Deficit Tops C$7MM at October 31
---------------------------------------------------------------
Mitec Telecom Inc., (TSX: MTM) a leading designer and provider
of wireless network products for the telecommunications
industry, reported its results for the second quarter ended
October 31, 2002. Sales for the period exceeded the Company's
forecast provided in its first quarter earnings release,
reaching $28 million, compared to the $31.2 million for the same
period last year. Compared to the first quarter of the current
fiscal year sales were up by $4 million, or 17%. For the six-
month period, sales reached $52 million, compared to $68 million
in the corresponding period a year ago. The year-over-year
decline in sales comes as a result of the reduced capital
spending by original equipment manufacturers and service
providers in the face of the telecommunications industry's
protracted slowdown.
Gross profit for the second quarter totaled $4.2 million, a
38.6% decline compared to the $7 million in the same period last
year. Gross profit grew an impressive 155% over the $1.7 million
reported in the first quarter of fiscal 2003.
Net loss for the second quarter reached $5.2 million after
goodwill amortization, compared to a net loss of $515 thousand
for the same period last year. Losses were significantly reduced
compared to the first quarter of 2003. The Q2 loss is due in
large part to a one-time inventory write-down totaling $500,000
and $1.8 million in restructuring charges incurred as a result
of the downsizing of the Company's headcount.
"Quarter over quarter, we have made significant headway in
growing our revenue while reducing our costs. This is a clear
indication that the restructuring plan that we've implemented is
already bringing results and is strengthening the Company's
competitive positioning. In fact, our second quarter performance
has been better than originally estimated," said Rajiv Pancholy,
Mitec's President and CEO. "The ship is turning, and while the
industry will still take some time to recover, I am confident
that we can build on this progress and realize our goal of
making Mitec a vibrant global player in the telecom sector."
Thomas Kaneb Appointed as Chairman
In its continuing effort to improve its corporate governance,
Mitec announced that Myer Bentob has relinquished his role as
Chairman of the Company. The role of Non-Executive Chairman
shall immediately be assumed by Thomas Kaneb.
"The more time I had to analyze good corporate governance, the
more I became convinced that Mitec would be best served by an
independent outside Chairman rather than the former CEO," said
Mr. Bentob. "We are very pleased that we have an experienced
individual in Tom Kaneb who has agreed to take on this
responsibility."
Mr. Kaneb, who joined the Company's Board in September, is
currently the Chairman of SigmaPoint Technologies, an EMS
company focused on the full turnkey assembly of complex
electronic products for the communications, Internet access,
medical and other industry sectors. Mr. Kaneb has successfully
built and operated several companies across a broad range of
industries.
Jobs Saved
While Mitec has reduced its global workforce by 82 positions in
recent weeks, Mr. Pancholy explained that recent company
initiatives have greatly trimmed the original plan to cut 150
positions. "I am extremely pleased to report that we've been
able to preserve approximately 70 positions by implementing a
workshare program, which has been approved by the various levels
of government. We greatly appreciate this important support and
view it as yet another vote of confidence in Mitec. This
innovative arrangement allows us to retain our knowledge base,
preserving one of the Company's great strengths. When the
telecom industry does begin to recover, we will be in an
excellent position to take advantage of the renewed demand for
our 3G and 4G infrastructure technologies."
New Contract Wins
Mr. Pancholy also reported that the Company has secured three
new contracts. The first is from a new European customer in the
Microwave sector. The three-year supply agreement calls for
Mitec's Swedish facility to manufacture Radio Frequency Units,
and is valued at approximately $21 million. Deliveries are
scheduled to commence immediately.
The second contract is also from a major European customer in
the Microwave sector. This annual supply agreement for the
provisioning of millimeter wave flexible waveguides is valued at
approximately $4.5 million. The product will be manufactured in
Montreal and assembled and packaged in Sweden. Shipments are
scheduled to commence in February 2003.
The third new contract win is from a dominant European network
equipment provider and is valued at approximately $2.4 million.
The contract calls for Mitec to manufacture and supply 800 MHz
diplexers/low-noise amplifiers to be used in wireless base
stations. Deliveries are scheduled to commence immediately and
will be completed by the end of calendar 2002.
Mitec also announced during the second quarter that it has been
selected by Flarion Technologies, the architect of the flash-
OFDM(TM) mobile broadband system for licensed mobile operators,
to join Flarion's Alliance Program. As a Flarion Alliance
member, Mitec will provide state-of-the-art, high-power
amplifier products and technology for Flarion's RadioRouter(TM)
base stations.
Financing Update
Although the conditions imposed by the Company's bankers in
their tolerance of the breach by the Company of its banking
covenants have not been met, the bank has continued to work with
the Company. One of these conditions was to raise additional
funding of at least $5 million and, to-date, these funds have
not yet been raised.
Keith Findlay, Mitec's Chief Financial Officer, stated that
discussions with the Company's bankers and other financial
institutions are continuing.
"At the moment we are pleased with the progress of these
discussions. Additionally, we are currently in the process of
exploring a range of fundraising activities," Mr. Findlay said.
"While it is too soon to make any definitive announcements, we
will provide updates at the appropriate time."
At October 31, 2002, Mitec's balance sheet shows that total
current liabilities exceeded total current assets by about $7
million.
Outlook: A Cautious View Of The Second Half
Mr. Pancholy said that the Company is continuing to take a
cautious view of the second half of fiscal 2003. "We anticipate
that revenue growth will remain essentially flat over the next
two quarters. We have achieved clear top-line improvement in Q2
and for the remainder of the year we will be devoting our
energies to bottom-line improvement. Going forward, the cost
cutting and restructuring measures we have put in place will be
generating significant savings and will help to improve our
margins. In addition, we have been very active in business
development and recent meetings leave us feeling quite
optimistic. Indeed, we expect Mitec will be EBITDA positive by
the end of the current fiscal year."
Mitec Telecom is a leading designer and provider of products for
the telecommunications industry. The Company sells its products
worldwide to network equipment providers for incorporation into
high-performing wireless networks used in voice and
data/Internet communications. Additionally, the Company provides
value-added services from design to final assembly and maintains
test facilities covering a range from DC to 60 GHz.
Headquartered in Montreal, Canada, the Company also operates
facilities in the United States, Sweden, United Kingdom, China
and Thailand.
Mitec Telecom Inc., is listed on the Toronto Stock Exchange
under the symbol MTM. On-line information about Mitec is
available at http://www.mitectelecom.com
NATIONAL CENTURY: Look for Schedules & Statements by January 2
--------------------------------------------------------------
Pursuant to Rule 1007(a)(1) of the Federal Rules of Bankruptcy
Procedure, unless the Court orders otherwise, a Chapter 11
Debtor must file with its voluntary petition a list of each
creditor, unless the petition is accompanied by a Schedule of
Liabilities.
Charles M. Oellermann, Esq., at Jones, Day, Reavis & Pogue, in
Columbus, Ohio, relates that National Century Financial
Enterprises, Inc., and its debtor-affiliates filed the
Consolidated Creditor List on the Petition Date. Bankruptcy
Rule 1007(c) requires the Debtors to file their Schedule and
Statements within 15 days after the Petition Date or by December
3, 2002.
In addition, Local Rule 1007-1(b)(2) requires the Debtors to
file a schedule listing separately those creditors whose claims
are contingent, unliquidated or disputed, within 15 days after
the Petition Date. According to Mr. Oellermann, these creditors
are already listed in the Consolidated Creditors List and will
be included in the Debtors' schedules when filed. Thus, the
Debtors ask the Court to waive this requirement.
Mr. Oellermann explains that the Debtors are large and complex
enterprises with consolidated liabilities at $3,600,000,000.
Due to the size and scope of their businesses, the complexity of
their financial affairs, the limited staffing available to
perform the required internal review of their accounts and
affairs, and the press of business incident to the commencement
of these bankruptcy cases, the Debtors will not be able to
assemble all information necessary to complete and file the
Schedules and Statements on the deadline. Moreover, the Debtors
have thousands of creditors and have to ascertain the pertinent
information of these parties to complete the Schedules and
Statements.
Mr. Oellermann reminds the Court that the Federal Bureau of
Investigation, pursuant to a search warrant, seized many of the
Debtors' paper and electronic books and record. The Debtors
intend to negotiate arrangements with the FBI to regain full
access to their books and records.
Thus, the Debtors ask that the Court extend the deadline to file
Schedules and Statements by an additional 90 days or until
March 3, 2003.
In lieu of matrices, the Debtors also seek the Court's authority
to file a Consolidated List of Creditors. Mr. Oellermann argues
that converting the Debtors' computerized information to a
format compatible with the Clerk's matrix requirements would be
a highly burdensome and expensive administrative task; and would
substantially increase the risk and recurrence of error with
respect to information that already exists on computer systems
maintained by the Debtors or their agents.
Mr. Oellermann notes that the Debtors have complex enterprises
with thousands of potential unsecured creditors. Thus,
requiring the Debtors to file a separate top 20 list of
creditors holding the largest unsecured claims pursuant to Rule
1007(d) would impose unnecessary burden on the U.S. Trustee's
review of creditors' claims or its appointment of a creditors'
committee in these cases. The U.S. Trustee would have to sort
through and eliminate the vast majority of names on the various
Top 20 Lists to develop a smaller consolidated list of the
largest unsecured creditors to choose the creditors' committee.
For this reason, the Debtors ask Judge Calhoun's permission to
file a single consolidated list of the 40 largest unsecured
creditors in these cases. Mr. Oellermann contends that the
Debtors' request is appropriate under the circumstances for the
efficient and orderly administration of these cases.
* * *
Accordingly, the Court grants the Debtors' motion. But Judge
Calhoun limits the extension of the deadline for filing
Schedules and Statements to 30 days or until January 2, 2003.
(National Century Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
NATIONAL STEEL: Proposes Uniform Claims Resolution Procedures
-------------------------------------------------------------
National Steel Corporation and its debtor-affiliates propose to
establish liquidation and settlement procedures for the
efficient and prompt resolution of 500 personal injury claims
filed against their estates. The Claims Resolution Procedures
may take the form of direct negotiations or Alternative Dispute
Resolution.
While the Debtors have attempted to -- and continue to attempt
to -- resolve the personal injury claims informally, they
believe that the procedures are necessary to liquidate the
claims and are reasonable and fair to the claimants.
Mark P. Naughton, Esq., at Piper Marbury Rudnick & Wolfe,
explains that the Debtors need to determine the actual extent of
the personal injury claims as efficiently as possible to reduce
costs and, in turn, maximize the value of their estates. The
Debtors believe that they are not liable in most of the claims.
In other instances, the Debtors believe that the asserted claim
amount is disputable.
Mr. Naughton relates that several of the personal injury
claimants have commenced lawsuits to collect or recover their
claims. These actions, however, have been stayed by virtue of
the Debtors' Chapter 11 filing. Most of the claims assert
relatively small amounts.
Mr. Naughton contends that it would be time-consuming, unduly
burdensome and expensive for the Debtors to defend against and
liquidate hundreds of relatively small personal injury claims.
The legal fees and expenses of litigating hundreds of these
claims in multiple courts would be substantial for the Debtors
and their estates. Mr. Naughton also notes that litigation
expenses may prohibit many claimants from fully proceeding with
their claims in light of the uncertainty of the percentage
recovery that will be available on allowed unsecured claims in
these Chapter 11 cases.
The principal features of the Claims Resolution Procedure are:
A. Offer-Exchange Process
(1) Questionnaire
Each Claimant will serve on or before January 15, 2003 to
the Debtors and their counsel a completed Questionnaire.
The Claimants may participate in the Claims Resolution
Procedure only after the Questionnaire is submitted.
(2) Response Statement
On or before February 15, 2003, the Debtors will send
each Claimant and its counsel a Response Statement. The
Response Statement will state whether the amount demanded
in the Questionnaire is accepted, and whether the
Personal Injury Claim is disputed. If the Personal
Injury Claim is disputed, the Debtors will include a
description of any key defenses and third-party claims.
The Response Statement will often include a proposed
settlement to the disputed Personal Injury Claims.
(3) Claimant's Reply
By March 15, 2003, the Claimant must serve a Reply to the
Debtors' Response Statement. If the Debtors' Response
Statement included a settlement proposal, the Claimant's
Reply must accept or reject the settlement proposal. If
the Claimant rejects the Debtors' settlement proposal, he
must indicate whether he elects Mediation or Arbitration.
B. Mediation Procedure
(1) Referral to Mediation
For Personal Injury Claims that may be referred to
Mediation, the Debtors must submit a Referral Notice
within 15 days after receipt of an appropriate request by
an Eligible Claimant participating in the Offer-Exchange
Process. The Debtors will pay the cost of mediation as a
postpetition administrative expense.
(2) Appointment of Mediator
The Mediation/Arbitration Organization will, within 30
days after the receipt of the Referral Notice:
(i) appoint a mediator who is familiar with the laws
that govern the Personal Injury Claim; and
(ii) provide written notice to the Debtors and the
Eligible Claimant of the appointment.
The Mediation/Arbitration Organization includes all
mediation and arbitration organizations that the Debtors
may employ.
(3) Conduct of Mediation
The mediator will handle all Personal Injury Claims in
the order he received or as directed by mutual agreement
of the parties. In all cases, the procedures used by the
mediators will be reasonable and practical under the
existing circumstances. Any party may be represented by
legal counsel, although the participation of legal
counsel will be required for the conduct of the
mediation.
The mediator will meet with the parties or their
representatives, individually and jointly, for a
conference or series of conferences as determined by the
mediator. The Claimant and the Debtors or their
representatives must be present at the conference, unless
the disputed portion of the Personal Injury Claim is
$100,000 or less, in which case the parties may appear by
telephone.
A settlement reached pursuant to mediation will be
treated as an allowed claim.
C. Arbitration Procedure
(1) Referral to Arbitration
Either party may request that the other party consent to
binding arbitration proceedings. The non-requesting
party must send notice to the requesting party within 15
days of the mailing date of the request for arbitration
that it consents to binding arbitration. Then, the
Personal Injury Claim will be submitted for arbitration
within 60 days of the mailing date of the request for
arbitration.
(2) Appointment of Arbitrator
The Mediation/Arbitration Organization will, within 30
days after receipt of the referral to binding
arbitration:
(i) appoint an arbitrator to conduct the arbitration
proceedings; and
(ii) provide notice to the Debtors and the Claimant of
the appointment.
The proceedings will be begin, to the extent practicable,
not later than 30 days after the date the arbitrator
provides written acknowledgment to all parties.
(3) Conduct of Arbitration
The same Mediation/Arbitration Organization may be used
for both the mediation procedure and the binding
arbitration proceedings. The arbitration will be
conducted in accordance with applicable law and will be
governed by the Federal Arbitration Act, Title 9, United
States Code. The arbitration will be conducted pursuant
to the dispute resolution procedures for commercial or
insurance claims of the American Arbitration Association,
as currently in effect and appropriate unless otherwise
agreed by the parties.
(4) Cost of Arbitration
The Cost of Arbitration will be shared equally by the
Debtors and the Claimant, provided however, that the
arbitrator may in his or her sole discretion assess the
entire Cost of Arbitration against any party delaying or
abusing the arbitration proceedings.
(5) Arbitration Award
The amount of the award set by the arbitrator will be
binding and will be within the discretion of the
arbitrator. The amount of the award, however, will not:
(i) exceed the lower of the claimed amount:
* as shown on the Claimant's Questionnaire; or
* as shown on the Claimant's Proof of Claim; or
(ii) be less than the undisputed portion of the Claim.
Mr. Naughton informs the Court that a claimant may seek to
settle, compromise or otherwise resolve his personal injury
claim at any time in accordance with the Claims Resolution
Procedure.
Insurers & Third-Party Indemnitors Are Invited
To the extent the Debtors are or may be entitled to indemnity
for a particular personal injury claim from a Third Party
Indemnitor, the Debtors ask the Court's permission to invite
that Third Party Indemnitor to participate in the liquidation of
the personal injury claim. The Debtors, however, clarify that
they have no obligation vis a vis the claimants to take this
action.
Mr. Naughton relates that, before the Petition Date, the Debtors
were parties to several general liability insurance policies
that may cover, among other things, portions of the personal
injury claims in excess of $500,000. The Debtors are self-
insured for an initial $500,000 per occurrence. (National Steel
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
National Steel Corp.'s 9.875% bonds due 2009 (NSTL09USR1),
DebtTraders says, are trading at 38 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NSTL09USR1
for real-time bond pricing.
NATIONSRENT: Court Approves Stipulation with Case Credit, et al.
----------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates obtained Court
approval of its stipulation with Case Credit Corporation and New
Holland Credit Company LLC, establishing an interim protocol to
facilitate:
(a) the development, collection and sharing of information,
including payments, maturity dates, payoff amounts,
revenue by item of Equipment and related information;
(b) the appraisal and inventory of the Equipment;
(c) the establishment of a process to evaluate the Equipment
with the objective of assuming, rejecting, renegotiating
or re-characterizing as secured indebtedness each of the
Agreements; and
(d) meeting the Debtors' obligations, on an interim basis.
To recall, Case Credit Corporation and New Holland Credit
Company LLC provide the Debtors with 450 different items of
construction equipment under various commercial leases. The
items of Equipment are set forth on individual contracts, or in
some cases, grouped together on schedules attached to the
Agreements.
Since the Petition Date, the Debtors continued to use certain of
the Equipment in the ordinary course of their businesses. The
Debtors' quarterly obligations under the Agreements equal to
$542,231.
Case Credit and New Holland have raised concerns regarding their
interests on the equipment.
The salient terms of the parties' stipulation include:
A. Development Collection and Sharing of Information
The Debtors are in the process of compiling and collecting
certain information with respect to the Equipment that will
facilitate discussions between both Providers and the
Debtors. Accordingly, the Debtors agree to provide the
Equipment Information to both Providers by October 31, 2002;
B. Equipment Appraisal and Audit
-- The Debtors have retained Ritchie Brothers International,
Inc., to perform an appraisal of all of the equipment
covered by the Agreements, including a physical
inspection, based on a sample of not less than 15% of all
equipment leased by the Debtors or financed through
purchase money indebtedness;
-- The Inspection Sample will include a cross section of all
of the equipment leased by the Debtors or financed by the
provider of the equipment;
-- The Appraiser will exercise care in the sampling process
to ensure that the Inspection Sample includes equipment
from, without limitation:
* all of the Agreements;
* all brands;
* all makes;
* all models; and
* all regions.
The Appraiser will consult with the Debtors and the
Providers in making these determinations.
-- At the Appraiser's discretion, after consultation with the
Debtors and the Providers, the Appraiser may increase the
Inspection Sample above 15% to achieve a better coverage;
-- In addition to the appraisal, the Debtors have retained
Quiktrak, Inc., as Equipment Auditor to verify the
existence and location of Case Credit's and New Holland's
Equipment associated with each Schedule; and
-- Through October 31, 2002, the audit provided for under the
terms of this Stipulation will be in lieu of any audit
otherwise provided for under the Agreements;
C. Confidentiality
The parties have entered into a separate Confidentiality
Agreement that will be deemed incorporated in this
Stipulation by reference in its entirety;
D. Process for Equipment Evaluation
-- After receiving the Appraiser's results, the Debtors will
review the Equipment Information and determine the
Equipment that is subject to the Agreements to be assumed,
rejected, re-characterized as secured indebtedness or, in
certain cases, restructured with the consent of the
Providers;
-- The Debtors will provide the Providers with their proposal
with respect to each Schedule by October 31, 2002 or other
date as mutually agreed by the Debtors and the Providers;
and
-- The Debtors and the Providers will engage in discussions
to reach a settlement with respect to each Schedule. To
the extent that a settlement is not reached with respect
to a certain Schedule, the Debtors and the Providers
reserve all of their respective rights to exercise all
available remedies under the Bankruptcy Code or applicable
nonbankruptcy law;
E. Payment
-- Administrative Payments
(a) The Debtors will pay to the Providers 33% of one-
quarter of the actual rental revenue -- including a
provision for ancillary revenue -- attributable to the
Equipment for the preceding actual 12 months based on
the most recent full monthly reporting period
available. This will be in full settlement of any
claims accruing as allowed administrative expense
claims pursuant to the Agreements for the period
December 17, 2001 through March 31, 2002 for the
Debtors' use of the Equipment; and
(b) The Providers waive their rights to assert any future
claims arising out of, or related to, the Agreements
from December 17, 2001 through March 31, 2002 for
those claims arising directly out of the ordinary
contractual monetary obligation of the Debtors under
the Agreements. The Providers, however, do not waive
their right to assert future claims as to any
extraordinary damage or injury with respect to the
Equipment, or based on any conversion or unauthorized
disposition of the Equipment;
-- Future Payments
(a) Following the Agreement Effective Date until the
expiration of this Stipulation, the Debtors will pay
to the Providers 38% of one-quarter of the actual
rental revenue -- including a provision for ancillary
revenue -- attributable to the Equipment for the
preceding actual 12 months based on the most recent
full monthly reporting period available on the
Agreement Effective Date. This Quarterly Future
Payments will account for those claims accruing
pursuant to the Agreements for the period April 1,
2002 through June 30, 2002;
(b) The Debtors will also pay Quarterly Future Payment on
account of claims accruing for the period July 1, 2002
through September 30, 2002, and thereafter on the
first day of each subsequent quarter in which this
Stipulation is in effect; and
(c) In the event any Quarterly Future Payment made after
June 30, 2002 is calculated to be less than the
Quarterly Future Payment made for the period April 1,
2002 through June 30, 2002, the Debtors will pay the
same amounts they paid for the period April 1, 2002
through June 30, 2002;
-- the Debtors and the Providers agree that all calculations
will be made on an individual Schedule basis and that a
Payment on account of any Schedule will not exceed 100% of
the existing payment under an Agreement unless that excess
is necessary to offset any shortfall with respect to any
prior Quarterly Future Payments. The Payments with
respect to each Schedule will be applied on a pro rata
basis based on the original cost of the Equipment;
-- The extent, if any, to which any difference between the
Quarterly Future Payments attributable to the Agreements
and the contractual obligations under the Agreements on or
after April 1, 2002 will constitute an allowed
administrative expense obligation in the Debtors' Chapter
11 cases, will be subject to further review and
determination by the Court at a later date. The parties
expressly reserve their respective rights regarding that
future determination;
-- All Payments will be credited against the Debtors'
obligations to the Providers pursuant to the Agreements;
provided, however, that the parties reserve all rights
concerning the ultimate characterization and application
of all Payments based, among other things, on:
(a) whether the Agreements are true leases or secured
indebtedness; and
(b) the valuation of the Equipment serving as the
collateral for any secured indebtedness; and
-- With respect to Quarterly Future Payments, the Providers
reserve any right that they may have to calculate, accrue
or collect interest pursuant to any of the Agreements at
any "default" rate exceeding the applicable "non-default"
rate. The Payments provided for in this Stipulation and
Order will not be subject to reduction during the
administrative phase of the Debtors' Chapter 11 cases
other than by order of the Court on motion or otherwise
after prior written notice to the Providers;
F. No Disgorgement of Payments
-- The Debtors will not seek to recover or otherwise disgorge
any Payments made to the Providers pursuant to this
Stipulation, other than Payments made on account of
Agreements that are later re-characterized as secured
Indebtedness. These Payments will then be treated as
adequate protection only to the extent that those adequate
protection payments do not exceed the value of the
Providers' interest in the Equipment and as to which the
Providers have a perfected prepetition security interest;
and
-- The Debtors may exercise their right to seek the
disgorgement of Payments in accordance with this
Stipulation at any time;
G. Reporting and Maintenance
The Debtors will continue to perform all of their obligations
with respect to the maintenance, upkeep and reporting with
respect to the Equipment as set forth in the Agreements;
H. Cash Collateral
In the event that the Agreements are later re-characterized
as secured indebtedness, the Providers reserve their right to
assert a claim:
-- that the revenues from the Agreements obtained by the
Debtors through the rental of the Equipment constitute
cash collateral in which the Providers hold a first
priority perfected security interest and lien with
priority over any other lien of any other creditor; and
-- that they are entitled to adequate protection of their
interest in these rents, revenues, income, profits and
proceeds pursuant to Sections 361, 362 and 363 of the
Bankruptcy Code; and
I. Term of Stipulation
The Stipulation will remain effective with respect to each
Schedule until the earlier of:
-- the entry of an order providing for the assumption or
rejection of a Schedule and, if that Schedule is rejected,
the actual physical return of the item or items of
Equipment to the Providers;
-- an agreement of the parties providing for a termination of
this Stipulation; or
-- the entry of an order on motion or otherwise terminating
this Stipulation. (NationsRent Bankruptcy News, Issue No.
22; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATURAL HEALTH: Auditors Doubt Ability to Continue Operations
-------------------------------------------------------------
Natural Health Trends Corporation had a working capital
deficiency of approximately $1,155,000 at September 30, 2002 and
$3,522,000 at December 31, 2001. This raises substantial doubt
about the Company's ability to continue as a going concern. The
Company's continued existence is dependent on its ability to
generate profits from operations. While management is unable to
predict profitability and can make no assurances, management
believes the Company will generate sufficient profits to ease
its dependency on debt and equity financing in the foreseeable
future.
Natural Health Trends Corp., is a Florida corporation. NHTC was
incorporated on December 1, 1988, as "Florida Institute of
Massage Therapy, Inc." and changed its name to "Natural Health
Trends Corp." on June 4, 1993. NHTC's common stock, par value
$0.001 per share is listed on the Over-the-Counter Bulletin
Board under the symbol "NHTC". NHTC is a holding company that
operates two businesses, both of which distribute products that
promote health, wellness and sexual vitality through the multi-
level marketing channel.
NHTC's largest operation is Lexxus International, Inc., a
Delaware corporation and a majority-owned subsidiary of NHTC.
Lexxus sells products that heighten mental and sexual arousal,
particularly in women. NHTC's other business, eKaire.com, Inc.,
distributes nutritional supplements aimed at general health and
wellness through the Internet and other channels. eKaire
consists of companies operating in the U.S., in Canada as Kaire
International Canada Ltd., in Australia as Kaire Nutraceuticals
Australia Pty. Ltd., in New Zealand as Kaire Nutraceuticals New
Zealand Limited, and in Trinidad as Kaire Trinidad, Ltd.
Net sales were approximately $26,355,000 and $20,559,000 for the
nine months ended September 30, 2002 and September 30, 2001,
respectively; an increase of approximately $5,796,000 or 28%.
The increased sales were primarily from the sales of Lexxus
products at varying prices in different markets and the
expansion of Lexxus into international markets offset by a
slight decrease in the sales of eKaire products.
Cost of goods sold for the nine months ended September 30, 2002
was approximately $4,792,00, or 18% of net sales. Cost of goods
sold for the nine months ended September 30, 2001 was
approximately $4,871,000, or 24% of net sales. Cost of goods
sold decreased as a percentage of net sales due to increased
sales volume of higher margin inventory, the lower costs
associated with the packaging of the Lexxus product line, and
increased efficiencies gained from global distribution channels.
Gross profit increased from approximately $15,688,000 for the
nine months ended September 30, 2001 to approximately
$21,562,000 for the nine months ended September 30, 2002. The
increase of approximately $5,874,000 or 37% is attributable to
higher sales volumes by Lexxus and the international expansion
of Lexxus.
Net income was approximately $2,288,000 in the nine months ended
September 30, 2002 as compared to approximately $2,109,000 in
the nine months ended September 30, 2001.
At September 30, 2002, the ratio of current assets to current
liabilities was 0.85 to 1.0 and the Company had a working
capital deficit of approximately $1,155,000.
The Company's independent auditors' report on the consolidated
financial statements stated, as of December 31, 2001, that due
to a working capital deficit, there is substantial doubt about
the Company's ability to continue as a going concern. While
there can be no assurances, management believes that the
profitability achieved during the nine months ended September
30, 2002 will continue for the foreseeable future.
NAVISTAR INT'L: Zacks Gives 'Sell Now' Recommendations on Shares
----------------------------------------------------------------
Zacks.com issues 'Sell Now' recommendations on the stocks of
Navistar International Corporation (NYSE:NAV), which are
currently rated as a Zacks Rank #5 (Strong Sell). Note that
since the Zacks Ranks inception in 1980, the list of #5 ranked
stocks have under-performed the S&P 500 by 89.8%.
"While the rest of Wall Street continued to tout stocks during
the market declines of the last few years, we were telling our
customers which stocks to sell in order to save themselves the
misery of unrelenting losses," Zacks relates.
Here is a synopsis of why these stocks have a Zacks Rank of 5
(Strong Sell) and should most likely be sold or avoided for the
next 1 to 3 months. Note that a #5/Strong Sell rating is applied
to 5% of all the stocks we rank:
Navistar International Corporation (NYSE:NAV) is a holding
company and its principal operating subsidiary is Navistar Int'l
Transportation Corp. Navistar operates in three industry
segments: truck; engine; and financial services. NAV will
announce its fourth quarter results in early December, but in
late October the company said that it would take a restructuring
charge of up to $456 million after tax in the period. NAV said
that the charge is driven by changes in the business' long-term
cost structure that will lower the company's breakeven point,
reduce fixed and variable costs and improve profit opportunities
at any point in the business cycle. The move will likely help
the company in the future, but analysts have kept estimates at
reduced levels for the present. Expectations for this year have
eroded by approximately 35% in the past three months. Meanwhile,
estimates for next year have risen slightly in the past 7
trading days, but remain far below levels from 3 months ago.
Nevertheless, analysts do see a profit next year, which bodes
well for the company in the long-term. But the short-term will
likely remain challenging and investors may want to consider
waiting a bit longer to make an addition with NAV in order for
its estimates to gain buoyancy.
For over 20 years the Zacks Rank has proven that "Earnings
estimate revisions are the most powerful force impacting stock
prices." This exclusive system clearly shows investors which
stocks have the best potential to outperform the market...or
underperform. Since inception in 1980 #1 Ranked stocks (Strong
Buys) have generated an average annual return of +34.0% compared
to the (a)S&P 500 return of only +14.7%. Plus this exclusive
stock list gained +18.7 in 2001 and +16.2% in 2000; a
substantial return compared to the large losses suffered by most
investors during that time frame. Just as powerful to knowing
what to buy is what to sell. And since 1980 the Zacks #5 Ranked
Strong Sells have under performed the S&P 500 by 89.8% annually.
This is a healthy change from traditional Wall Street Brokerage
firms who only give stocks Sell ratings less than 1% of the
time. Thus, the Zacks Rank system can truly be used to
effectively manage the trading in your portfolio.
Zacks.com is a property of Zacks Investment Research, Inc.,
which was formed in 1981 to compile, analyze, and distribute
investment research to both institutional and individual
investors. The guiding principle behind their work is the belief
that investment experts, such as brokerage analysts and
investment newsletter writers, have superior knowledge about how
to invest successfully. Their goal is to unlock their profitable
insights for our customers.
Zacks Investment Research is under common control with
affiliated entities (including a broker-dealer and an investment
adviser), which may engage in transactions involving the
foregoing securities for the clients of such affiliates.
* * *
As reported in Troubled Company Reporter's November 4, 2002
edition, Standard & Poor's Ratings Services placed its
double-'B' corporate credit ratings on Navistar International
Corp., and its subsidiary Navistar Financial Corp., a leading
North American producer of heavy- and medium-duty trucks, on
CreditWatch with negative implications.
The CreditWatch listing is the result of Standard & Poor's
concerns that the loss or postponement of the Ford Motor Co. V6
diesel engine business, combined with heavy cash outlays
associated with the recently announced $456 million
restructuring charge and continued challenging end market
conditions, could pressure the credit profile and cash flow.
Additionally, the company has approximately $200 million in
manufacturing debt maturities it needs to refinance in the next
12 months, which heightens financial risk.
NETIA HOLDINGS: Pulls Plug on Agreement with Fitch Ratings
----------------------------------------------------------
Netia Holdings S.A. (WSE: NET), Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), announced that the agreement with
Fitch Ratings was terminated at the request of Netia.
Therefore, starting on 27 November 2002, Fitch Ratings will no
longer issue ratings for the notes issued by Netia Holdings
B.V., Netia's Dutch financial subsidiary.
DebtTraders reports Netia Holdings SA's 13.125% bonds due 2009
(NETH09NLN1) are trading at 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09NLN1
for real-time bond pricing.
NEW DRAGON ASIA: Says Funds Sufficient to Satisfy Current Needs
---------------------------------------------------------------
New Dragon Asia Corp., formerly Bio-Aqua Systems, Inc., a
Florida corporation, was incorporated in March 1999. On
December 13, 2001, the Company entered into a Share Exchange
Agreement with Max Rutman, Flagship Import Export LLC and New
Dragon Asia Food Limited, a company organized under the laws of
the British Virgin Islands. Pursuant to the Agreement, on
December 13, 2001, the Company acquired from Asia all of its
equity interests in four companies organized under the laws of
the British Virgin Islands each of which in turn hold interests
in separate sino-foreign joint ventures, which equity interests
constituted all of the issued and outstanding equity interests
of the Subsidiaries in exchange for 37,963,263 shares of common
stock of the Company. At the closing, the Company transferred
all of the assets to Rutman and Rutman assumed all of the
liabilities associated with the transfer assets.
Total revenue for the nine months ended September 25, 2002 were
$22.8 million as compared to $21.0 million, an increase of 9%
for the comparable period last year. The increase in revenues
is mainly due to increased capacity in the Company's flour mills
as a result of the addition of three sub-contracting flour
millers.
Net income for the first nine months of 2002 increased 7% to
$2.1 million compared to $2.0 million for the corresponding
period last year. This increase is attributable to an increase
in sales.
Cash and cash equivalents were $1.6 million as of September 25,
2002. This represents an increase of $138 thousand from
September 25, 2001. The increase was primarily due to a positive
cash flow from operating activities. Net cash provided by
operating activities for the nine months ended September 25,
2002 was approximately $4.2 million as compared to net cash
generated from operating activities of approximately $2.4
million for the corresponding period in 2001. Net cash flows
from the Company's operating activities are attributable to the
Company's income and changes in operating assets and
liabilities.
Accounts receivable and accounts payable increased by 32% and
18% respectively, from December 25, 2001 to September 25, 2002.
There was a slight increase in accounts receivable due to the
Company's expansion of the distribution networks in new market
outlets such as supermarkets. The increase in accounts payable
was mainly due to an increase of purchase of raw materials. The
Company evaluates the allowance level from time to time by
applying the Company's provision policy. Apart from the above,
there has been no other significant change in financial
condition and liquidity since the fiscal period ended September
25, 2002. The Company believes that internally generated funds
together with available bank credit will be sufficient to
satisfy its anticipated working capital needs for at least the
next twelve months.
The Company does not foresee any adverse effects on its earnings
as a result of inflation or changing prices.
NEXTCARD INC: Wants to Hire Gibson Dunn as Bankruptcy Counsel
-------------------------------------------------------------
NextCard, Inc., asks the U.S. Bankruptcy Court for the District
of Delaware to approve the employment of Gibson, Dunn & Crutcher
LLP as its attorneys to prosecute its chapter 11 case.
As a result of the services rendered on behalf of the Debtor
prior to the commencement of this chapter 11 case, Gibson Dunn
has become familiar with the Debtor's business operations,
financial affairs and corporate structure. Additionally, Gibson
Dunn has assisted the Debtor in exploring several strategies for
proceeding through and exiting from its chapter 11 case. Such
experience with the Debtor's affairs will enable Gibson Dunn to
provide efficient and cost effective services during this case.
NextCard expects Gibson Dunn to:
(a) provide legal advice to the Debtor in respect of its powers
and duties as a debtor in possession;
(b) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on
the Debtor's behalf; the defense of any actions commenced
against the Debtor and the negotiation of settlements,
concerning all litigation in which the Debtor is involved,
and the objection to claims filed against the estate;
(c) prepare, on behalf of the Debtor, all necessary motions,
applications, answers, orders, reports and papers in
connection with the administration of the estate;
(d) negotiate and prepare, on behalf of the Debtor, a chapter
11 plan and all related documents, and to prosecute the
plan through the confirmation process; and
(e) perform all other necessary or appropriate legal services
in connection with this chapter 11 case and in connection
with any other matter as requested by the Debtor.
The Debtor will pay Gibson Dunn its customary hourly rates which
range from:
partners and of counsel $400 to $710 per hour
associates $205 to $460 per hour
legal assistants $ 50 to $270 per hour
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.
NORTEL NETWORKS: Wins $65MM in China Unicom Expansion Contracts
---------------------------------------------------------------
China Unicom, the China's leading alternate wireless operator,
has awarded contracts to Nortel Networks (NYSE:NT)(TSX:NT.) and
its flagship manufacturing joint venture company in the People's
Republic of China, Guangdong Nortel Telecommunications Equipment
Ltd., - collectively estimated at approximately US$65 million -
for expansion of its CDMA and GSM networks.
Under an estimated US$25 million contract with Guangdong Nortel,
China Unicom plans to expand its CDMA network capacity in Hunan
Province using Nortel Networks Univity CDMA2000 1X equipment.
This builds on the estimated US$280 million in CDMA2000 1X
contracts Nortel Networks announced with China Unicom in October
2002 for Zhejiang, Shandong, Heilongjiang, Henan and Jiangxi
provinces and Chongqing municipality.
Under the contract, the deployment is to include Nortel Networks
Univity radio, core switching and intelligent networking
equipment that will help position China Unicom to drive improved
spectrum efficiency and reduced costs. Univity will also
position China Unicom to migrate to an all-IP (Internet
Protocol) packetized network.
China Unicom has also awarded new contracts estimated at
approximately US$40 million to Nortel Networks for expansion of
its GSM networks in Heilongjiang, Hunan, Henan, Zhejiang and
Shandong. These expansions - including GSM switching, radio base
stations and transmission equipment - are expected to increase
China Unicom's GSM network capacity by more than 1.25 million
subscribers.
"Nortel Networks is very proud to have been chosen by China
Unicom to implement these major CDMA and GSM network expansion
projects," said Yuan-Hao Lin, acting president, Nortel Networks
China. "We have already deployed CDMA networks for China Unicom
in eight provinces and GSM networks in nine, and look forward to
sharing in China Unicom's continued success in China's growing
wireless market."
"We continue to work closely with China Unicom and other global
service providers to deploy Wireless Data Networks that can help
position them to drive reduced operating costs, protect capital
investments, and drive profits from the growing demand for
advanced communication services," Lin said.
Nortel Networks recently outlined its new Wireless Data Networks
strategy and a new wireless brand - Univity. Based on packetized
voice, all-IP networking, and more spectrally efficient access
technologies, this strategy aims to address the industry's
changing business needs for migration to next generation
technologies, and to reduce the cost of transmitting network
traffic by as much as ten-fold.
Nortel Networks has deployed wireless networks in 17 of China's
31 provinces. Globally, Nortel Networks has designed and
deployed CDMA networks for more than 60 operators in 15
countries. Nortel Networks has also won contracts to deploy 80
GSM/GPRS networks in 41 countries.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
DebtTraders reports that Northern Telecom Capital's 7.875% bonds
due 2026 (NT26CAR1) are trading at 50 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT26CAR1for
real-time bond pricing.
OAKWOOD HOMES: Wants to Hire Bankruptcy Services as Claims Agent
----------------------------------------------------------------
Oakwood Homes Corporation and its debtor-affiliates want the
U.S. Bankruptcy Court for the District of Delaware to appoint
Bankruptcy Services LLC as the official claims, noticing and
balloting agent in the Company's chapter 11 cases.
The number of creditors and other parties in interest in the
Debtors' Chapter 11 cases may impose administrative and other
burdens upon the Court and the Clerk's Office. To relieve the
Court and the Clerk's Office of these burdens, the Debtors seek
to engage BSI as Claims, Noticing and Balloting Agent in these
Chapter 11 cases.
As Claims, Noticing and Balloting Agent, BSI is expected to:
a. Prepare and serve required notices in these Chapter 11
cases, including:
(1) The Section 341(a) Notice;
(2) The bar date notice;
(3) Notice of hearings on a disclosure statement and
confirmation of a plan of reorganization; and
(4) Other miscellaneous notices to any entities, as the
Debtors or the Court may deem necessary or appropriate
for an orderly administration of these Chapter 11
cases.
b. Within five business days after the mailing of a particular
notice, file with the Clerk's Office a declaration of
service that includes a copy of the notice involved, an
alphabetical list of persons to whom the notice was served
and the date and manner of service;
c. Comply with applicable federal, state, municipal and local
statutes, ordinances, rules, regulations, orders and other
requirements;
d. Promptly comply with such further conditions and
requirements as the Clerk's Office or Court may at any time
prescribe;
e. Provide claims recordation services and maintain the
official claims register;
f. Provide balloting and solicitation services, including
preparing ballots, producing personalized ballots and
tabulating creditor ballots on a daily basis; and
g. Provide such other noticing, and related administrative
services as may be required from time to time by the
Debtors.
h. Provide assistance with, among other things, certain data
processing and ministerial administrative functions,
including:
(a) the preparation of their schedules, statements of
financial affairs and master creditor lists, and any
amendments thereto; and
(b) if necessary, the reconciliation and resolution of
claims.
Any additional professional services will be charged at BSI
hourly rates:
Kathy Gerber $ 195 per hour
Senior consultants 175 per hour
Programmer 125 - 150 per hour
Associate 125 per hour
Data Entry/Clerical $ 40 - 60 hour
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.
OCEAN POWER: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Ocean Power Corporation
aka PTC Group
aka PTC Holdings, Inc.
5000 Robert J. Matthews Parkway
El Dorado Hills, CA 95762
Bankruptcy Case No.: 02-15989
Type of Business: Debtor was formed to develop and manufacture
modular seawater desalination and power
plants.
Chapter 11 Petition Date: December 1, 2002
Court: Southern District of New York (Manhattan)
Debtors' Counsel: Alan David Halperin, Esq.
Halperin & Associates
1775 Broadway
Suite 515
New York, NY 10019
Tel: (212) 765-9100
Fax : (212) 765-0964
Total Assets: $1,465,024
Total Debts: $24,012,243
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Aquamax International $3,600,000
Locatellikade 1,
Parnassustoren 1076 Amsterdam,
P.O. Box 75215
The Netherlands
STM Corporation $2,000,000
Attn: Lennart Johannson, Pres.
275 Metty Drive
Ann Arbor, MI 48103
Ricardo, Inc. $1,458,248
Detroit Technical Center
9059 Samuel Barton Drive
Belleville, MI 48111-1647
Venture Investment Group Convertible debentures $1,363,457
5295 Gulf Place
West Vancouver, B.C.
Canada V7W 2V9
Freedom Funding Inc. Convertible debentures $724,104
East Bay Centre
Suite B66
P.O. Box N 1836
Nassau, Bahamas
Latham & Watkins Demand promissory note $567,548
885 Third Avenue
New York, NY 10022
Cornell Capital Partners Convertible debenture $436,881
10 Exchange Place
Suite 1404
Jersey City, NJ 07302
Vesta Liv Promissory Note $416,983
C/O Sundal Collier & Co.
P.O. Box 1444 Vika
N-0115 Olso, Norway
Robert Bylin Rent $370,545
4800 Golden Foothill Pkwy
El Dorado Hills, CA 95762
Darby & Darby Legal services $290,375
805 Third Avenue
New York, NY 10022
Vesta Forsikring Promissory note $277,988
c/o Sundal Collier & Co.
P.O. Box 1444 Vika
N-0115 Olso, Norway
Melaroba Corporation Promissory note $273,683
122 Yukon Drive
Woodbury, NY 11791
David Moard Salary $242,939
Bylin Heating Systems, Promissory Note $226,161
Inc.
Barry G. Bampton Loans to Debtor $217,694
Kevin Tyson Salary $170,813
Cheng-Guan Michael Quah Salary $168,545
Summit Petroleum Corp. Promissory note $168,510
Waselius & Wist Legal fees $152,768
Qingjun (Robert) Zhao Promissory note $144,504
ONTRO INC: Fails to Meet Additional Nasdaq Listing Requirements
---------------------------------------------------------------
Ontro, Inc., (Nasdaq: ONTR) a California developer of patented
technology for producing fully contained, self-heating
containers, announced that on November 22, 2002 it was notified
by the Nasdaq Listing Qualifications Department of an additional
Nasdaq SmallCap Market listing deficiency. Specifically, the
Staff alleged that the Company did not meet the stockholders'
equity/market value of listed securities/net income continued
listing requirement in accordance with the NASD Marketplace Rule
4310(c)(2)(B) ("NASD Rule"). The Company is required to submit,
on or before December 2, 2002, a plan of compliance with the
alleged listing deficiency.
Under the NASD Rule, a Nasdaq issuer is required to have a
minimum of $2.5 million in stockholders' equity or $35 million
in market value of listed securities or $500,000 of net income
from continuing operations for the most recently completed
fiscal year or two of the three most recently completed fiscal
years.
The Company is currently in the process of addressing this and
other Nasdaq listing deficiencies. At its September 2002 oral
hearing before the Nasdaq Listing Qualifications Panel, the
Company proposed a plan of compliance to these listing
deficiencies and in furtherance of that plan filed a preliminary
proxy statement with the Securities and Exchange Commission for
the stockholders to approve a reorganization of the Company
through a number of proposals including a private placement to
provide substantial additional funds to the Company.
Ontro is a developer of proprietary, patented technology to
produce self-heating beverage containers. Ontro's container is
similar in size and shape to an ordinary-sized 16-oz. beverage
can. It is designed to self-heat beverages and foods, anytime,
anywhere; and will contain products like coffee, tea, hot
chocolate and soups for nationwide sale in supermarkets,
convenience stores and specialty retailers. Ontro has also
begun development of chafing dishes and other technologies to
provide heating sources to consumers and the food service
industry in order to eliminate the need for a flammable heat
source.
For more information visit Ontro's Web site at
http://www.ontro.com
* * *
Liquidity and Going Concern Uncertainty
At September 30, 2002, Ontro's balance sheet shows a working
capital deficit of about $71,000.
In its SEC Form 10-Q filed on November 19, 2002, the Company
stated:
"We have financed our operations since inception primarily
through public and private sales of equity securities. As of
September 30, 2002, the Company's cash and cash equivalents
totaled $297,200.
"Primary uses of cash and cash equivalents for the nine months
ended September 30, 2002 included $1,472,200 for our operations
and working capital requirements, patent costs of $42,000, and
purchase of property and equipment of $6,700. We plan to
continue our policy of investing excess funds in short- and
long-term investment-grade, interest-bearing instruments.
"Our future cash requirements will depend upon numerous factors,
including the amount of revenues generated from operations (if
any), the cost of our sales and marketing activities and our
progress in research and development activities, none of which
can be predicted with certainty. We anticipate existing capital
resources will only be sufficient to meet our cash requirements
for the next several weeks at our current level of operations.
"The independent auditors' report dated February 20, 2002
included in our December 31, 2001 annual report on Form 10-KSB
contained the following explanatory paragraph:
'The accompanying financial statements have been prepared
assuming that the company will continue as a going
concern. As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses
from development stage activities and has an accumulated
deficit that raises substantial doubt about it's ability
to continue as a going concern... The financial
statements do not include any adjustments that might
result from the outcome of this uncertainty.'
"We are seeking additional funding. During the nine months ended
September 30, 2002 we sold 925,072 shares of common stock to
Aura (Pvt.) Ltd., Ontro's largest shareholder, at $0.80 per
share for total proceeds of $740,000 and 425,000 shares of
common stock at $1.20 per share for total proceeds of
$510,000. On September 7, 2002, Ontro and Aura executed a
written buyout proposal which, as of the date of this Quarterly
Report on Form 10-QSB, has not been reduced to a binding
agreement. Under the terms of the buyout proposal, Aura stated
it would agree to cancel and surrender all interest in the
existing underwriter's representatives' options assigned to
Aura following Ontro's initial public offering as well as
warrants issued pursuant to two Exclusive Finder's Fee
Agreements, by and between Aura and Ontro. In the event that the
buyout proposal is reduced to a binding agreement and executed
by both Aura and Ontro, an investor group authorized by the
Ontro board of directors to--along with Ontro's executive
management--negotiate a purchase of all Ontro shares held by
Aura would be responsible for payment of the first installation
of the purchase price in the amount of approximately $1,550,000,
or $0.50 per share. Ontro would be responsible for the remaining
payments of the purchase price up to $2,500,000 under an agreed
upon payment schedule and would disburse such payments in the
event Ontro meets certain performance milestones as provided in
the buyout proposal. As of the date of this Quarterly Report,
the composition of the investor group has not been finalized and
the investor group has not identified a person or persons who
would contribute the remaining $1,050,000 of the first purchase
price installment to Aura. In the event the investor group
raises the required initial amount and consummates the Aura
buyout transaction as outlined in the buyout proposal, each
individual member of the investor group will become a beneficial
owner of Ontro's securities (as the term is defined under the
Securities Exchange Act of 1934, as amended held by Aura in
proportion to such person's respective participation in the
investor group. The investor group members do not intend the
funding proceeds to be deemed a loan to Ontro and do not
contemplate any repayment of those proceeds by Ontro at any
point in the future. For a detailed description of the Aura
buyout proposal and related agreements including but not limited
to certain Standstill Agreements, please refer to Ontro's
Current Report on Form 8-K dated September 19, 2002 and
incorporated herein by reference.
"We are continuing our efforts to sell common stock in private
placement transactions in order to fund our current operations.
There can be no assurance any additional funding will be
available to Ontro on acceptable terms, if any terms at all.
Moreover, if additional financing is not available, we may be
required to reduce or suspend our operations, seek an
acquisition partner, sell even greater amounts of our securities
on terms that would likely be highly dilutive to the existing
stockholders, or go out of business. We have experienced in the
past, and may experience in the future, operational difficulties
and delays in product development due to working capital
constraints. Any such difficulties or delays could have a
material adverse effect on our business, financial condition and
results of operations."
OWENS CORNING: Wins Court Nod to Expand Ernst & Young Engagement
----------------------------------------------------------------
Owens Corning and its debtor-affiliates obtained permission from
the Court to further expand the retention and employment of
Ernst & Young LLP as their financial advisors to include the
services previously performed by Arthur Andersen. The Debtors
anticipate Ernst & Young to:
A. render accounting assistance in connection with reports
required by the Court;
B. assist the Debtors' legal counsel with the analysis and
revise the Debtors' plan or plans of reorganization;
C. consult with the Debtors' management and legal counsel in
connection with other business matters relating to the
activities of the Debtors;
D. review the Debtors' liquidation analysis;
E. provide expert testimony as required in non-asbestos matters;
F. work with accountants and other financial consultants for
committees and other creditor groups;
G. assist with analysis of sale or sales of various assets of
the Debtors, if any; and
H. assist with any other matters as Debtors' management or
legal counsel and E&Y may agree to from time-to-time,
including, analysis of executory contracts, claims and claims
reconciliation, and preferential payments on Asbestos
matters.
The Debtors will pay Ernst & Young based on the prevailing
hourly rates of the firm's professionals. The Firm's current
hourly rates range from:
Billing Category Range
----------------- ----------
Partner $525 - 650
Principal 525 - 650
Senior Manager 425 - 525
Manager 325 - 425
Senior 225 - 325
Staff 100 - 225
(Owens Corning Bankruptcy News, Issue No. 41; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PAYSTAR CORP: Seeks Additional Financing to Continue Operations
---------------------------------------------------------------
PayStar Corporation was incorporated under the laws of the state
of Nevada on June 16, 1977. Since that date, there have been
three changes in the name and in the capitalization resulting in
authorized common capital stock of 100,000,000 shares at $.001
par value. On October 12, 1998, the name was changed to PayStar
Communications Corporation resulting from the acquisition of all
of the outstanding stock of PayStar Communications, Inc. On
December 21, 1999, the capitalization was increased to include
10,000,000 shares of preferred stock at $.001 par value. On
July 31, 2001, the name was changed to PayStar Corporation.
The Company incurred a net loss for the nine months ended
September 30, 2002 of $7,026,752. Losses incurred in prior
years have contributed to a stockholders' deficit of $7,829,147.
Further, current liabilities exceed current assets by
$9,356,395. Accordingly, there is substantial doubt concerning
the Company's ability to continue as a going concern. Management
is currently in the process of (1) seeking additional funding,
(2) changing its business model, (3) reducing expenses and (4)
decreasing human resources. However, there can be no assurances
that management's efforts to restore the Company to profitable
operations will be successful.
The third quarter 2002 was a continuation of PayStar's paradigm
shift from legacy products such as payphones and cashless ATMs,
to a Virtual Global Network of enabling devices. Its VGN is
divided into three business units:
* Cashless Teller Machines
* Wholesale carrier services, switch equipment and
software application; and
* Prepaid ATM/debit card services
The major shifts occurred in its management of both pay
telephones and cashless teller machines.
The pay telephone industry revenues continued to deteriorate.
Management believes the downslide was due to the rapid increase
in individuals using cellular phones and, more specifically, the
refusal of major long distance companies to pay private payphone
owners the mandated compensation ordered by FTC regulators. This
caused nearly a 50% decline in PayStar's payphone revenues in
just two short years. As a prudent business decision, management
was compelled to re-evaluate its current business practices
relating to pay telephone operations and concluded that it could
not sustain a viable business and continue to service the
payphone owners at the current levels. Management believed that
if the owners dealt directly with a smaller company capable of
servicing their units, there might be an opportunity for them to
earn profits by eliminating PayStar's large overhead. This
transition to another service company was commenced in November
2001 and concluded as of May 1, 2002. PayStar is no longer in
the pay telephone management business.
A similar situation arose in PayStar's CTM management business
unit. The market place experienced an increase in cash
dispensing ATMs, which affected its business model. This lead to
a situation in which approximately a third of all CTMs under
management were located at non-performing or under- performing
locations.
In an effort to remedy this downturn, the Company surveyed the
CTM business unit owners with three options and/or alternative
choices which it intends to disclose in a registered offering
filed with the Securities and Exchange Commission and various
state securities regulators:
* Purchase Opportunity. The Company would exercise its
contractual right to purchase the machine from the owner.
The Company would execute a promissory note for the
purchase of the equipment which would be payable over a
five or ten year period.
* New Management Company. The owner could exercise their
right to transfer the management of their business to
another service provider.
* Stock Option. PayStar Corporation would purchase the CTM
unit from the owner for shares of PayStar Corporation
common, 144 Regulation D stock through a registered
offering.
These options were initially disclosed to the CTM owners in
January 2002 and the process will not be completed until a
registration statement filed with the Securities and Exchange
Commission and state securities agencies is declared effective.
PayStar anticipates filing a registration statement in January
2003.
As a result of the decreased revenues from the CTM operations,
the Company was unable to pay the required service agreement
fees to the CTM owners since approximately September 2001. A
number of CTM owners have filed complaints against PayStar,
either in court or with regulators. The Company estimates that
the unpaid amount is approximately $725,000.
The shift from legacy products to VGN has been aided by:
Wholesale Carrier Services, Switching Equipment and Software
Applications. With the acquisition of SHS Communication, Inc
and Position Industries, Inc. PayStar has been able to make an
entry into the switch marketplace. SHS is a premier hardware and
applications software provider, specifically targeting the
prepaid calling card retail market; public and private telephone
companies; cellular service providers, both domestic and
international; and the wholesale carrier resale market. The
current revenue stream comes from sales of prepaid calling card
switching platforms, carrier resale of domestic and long
distance, service and maintenance support of existing systems,
and a unique new switch co-location product called "shared
hosting services."
Prepaid ATM/Debit Card Services. This product began its
creation in November 2001 and on February 27, 2002, PayStar
incorporated GLOBALCash, Inc. GLOBALCash, in conjunction with
outside vendors, has developed a prepaid ATM debit and debit
MasterCard program. The program enables any person, regardless
of credit history, banking status or age, the ability to
purchase an ATM card or MasterCard for use anywhere in the
world. The GLOBALCash consumer does not need a bank account,
identification, social security number, credit card, United
States citizenship, or a credit record. The consumer simply buys
a GLOBALCash ATM card at a participating merchant's store. The
consumer determines the cash amount of the ATM card they wish to
purchase. After they purchase the card from the merchant they
may replenish the card.
The Company will need to increase its revenue to become
profitable. If revenues do not increase as much as expected or
if expenses increase at a greater pace than revenues, PayStar
may not achieve profitability. The Company expects to incur
additional costs and expenses in 2002 related to:
* the development and improvement of current products;
* the development of new products;
* marketing and advertising;
* improvement to the data base management
infrastructure;
* purchases of equipment for operations and network
infrastructure; and
* the payment of commissions and fees for the marketing
of its products.
PayStar has a limited operating history on which to base an
evaluation of its business and prospects. The investor must also
consider its prospects in light of the risks, expenses and
difficulties frequently encountered by companies in their early
stage of development, particularly companies in new and rapidly
evolving markets such as prepaid ATM/Debit card services and
Internet kiosks. Such risks for the Company include, but are not
limited to, an evolving and unpredictable business model and
human resource growth. To address these risks, the Company must,
among other things, maintain and expand its customer base,
implement and successfully execute its business and marketing
strategy, continue to develop and upgrade its technology and
systems, provide superior customer service, respond to
competitive developments and attract, retain and motivate
qualified personnel. PayStar indicates that it cannot assure
stockholders that it will be successful in addressing such
risks, and the failure to do so could have a material adverse
effect on its business, prospects, financial condition and
results of operations.
PERKINELMER: Commences Tender Offer for Zero Coupon Debentures
--------------------------------------------------------------
PerkinElmer, Inc., (NYSE: PKI) announced a cash tender offer for
its outstanding Zero Coupon Convertible Debentures due August 7,
2020. The tender offer is being made in connection with
PerkinElmer's recently announced plans to refinance its existing
debt.
PerkinElmer is offering to purchase the debentures at a
repurchase price equal to their accreted value to, but
excluding, the date the debentures are paid for pursuant to the
offer. Assuming the payment date is December 30, 2002, the
repurchase price for each $1,000 principal amount of debentures
at maturity would be $542.88, representing the original issue
price of $499.60 plus accrued original issue discount of $43.28.
PerkinElmer's obligation to complete the tender offer is subject
to a number of conditions, including PerkinElmer's receipt of
funding under its recently announced refinancing plan.
Completion of the tender offer is not a condition to completion
of the refinancing transactions.
The offer and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time, on Friday, December 27, 2002,
unless extended.
PerkinElmer, Inc., is a global technology leader focused in the
following businesses - Life and Analytical Sciences,
Optoelectronics, and Fluid Sciences. Combining operational
excellence and technology expertise with an intimate
understanding of its customers' needs, PerkinElmer creates
innovative solutions - backed by unparalleled service and
support - for customers in health sciences, semiconductor,
aerospace, and other markets whose applications demand absolute
precision and speed. The company markets in more than 125
countries, and is a component of the S&P 500 Index. Additional
information is available through http://www.perkinelmer.com
PERKINELMER: Plans to Issue Sr. Sub. Notes via Private Offering
---------------------------------------------------------------
PerkinElmer, Inc., (NYSE: PKI) plans to raise up to $225 million
in gross proceeds from an institutional private placement of
unsecured senior subordinated notes. The notes will be
guaranteed on a senior subordinated basis by certain of
PerkinElmer's domestic subsidiaries. Completion of the offering
is expected to take place in late December 2002, subject to
market conditions.
The private placement is a component of PerkinElmer's previously
announced plans to refinance its existing debt.
PerkinElmer, Inc., is a global technology leader focused in the
following businesses - Life and Analytical Sciences,
Optoelectronics, and Fluid Sciences. Combining operational
excellence and technology expertise with an intimate
understanding of its customers' needs, PerkinElmer creates
innovative solutions - backed by unparalleled service and
support - for customers in health sciences, semiconductor,
aerospace, and other markets whose applications demand absolute
precision and speed. The company markets in more than 125
countries, and is a component of the S&P 500 Index. Additional
information is available through http://www.perkinelmer.com
PSC INC: Seeks Court Authority to Obtain $20 Million DIP Credit
---------------------------------------------------------------
PSC Inc., and PSC Scanning, Inc., ask the U.S. Bankruptcy Court
for the Southern District of New York for authority to obtain
secured postpetition financing up to an aggregate principal
amount of $20 million from LJ Dipscan, LLC, and using their
Lender's Cash Collateral to fund on-going operating expenses.
The Debtors tell the Court they are unable to obtain unsecured
credit or debt allowable as an administrative expense under the
Bankruptcy Code in an amount sufficient to permit them to
maintain ongoing operations. Moreover, the Debtors are unable
to obtain more favorable financing than the one offered by the
Lender. Without emergency approval of the borrowings under the
DIP Facility on the terms and conditions described in this
Motion, the Debtors will be unable to continue their businesses
as going concerns or to preserve the value of their assets.
The Debtors assert that in order to fulfill their business plan
and maintain the integrity of their operations and preserve
enterprise value during these prenegotiated Chapter 11 Cases,
they require a $20 million DIP facility.
The Debtors relate that the proceeds of the DIP Facility will be
used to:
(i) fund payroll and other ongoing costs and expenses of
operations;
(ii) to make adequate protection payments to the extent
required under the DIP Facility Agreement; and
(iii) pay fees, costs, expenses and disbursements of
professionals retained by the Debtors or any statutory
committees.
The Commitment under the DIP Facility shall be available during
the period commencing on the Petition Date and ending on the
earliest of:
(i) March 31, 2003,
(ii) the date of the "substantial consummation" of the
Debtors' plan of reorganization confirmed by the
Bankruptcy Court, or
(iii) an earlier termination of the Commitment in accordance
with the terms therein.
The Debtors believe, in their business judgment, that the terms
and conditions of the DIP Facility are fair and reasonable and
were negotiated by the parties in good faith and at arm's length
Additionally, LJ Scanner Holdings, Inc., the existing Senior
Prepetition Lender consents to the granting of a priming lien
under Section 364(d) to the DIP Lender under the DIP Facility
and to the use of its Cash Collateral by the Debtors.
The Debtors further add that they are dependent on the proceeds
of the DIP Facility in order to continue their operations and
minimize disruption to their businesses pending the final
hearing and effectiveness of the "Exit Facility" contemplated
under the Debtors' Plan.
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.
ROHN INDUSTRIES: Inks Pact to Sell All Assets to Platinum Equity
----------------------------------------------------------------
ROHN Industries (Nasdaq: ROHN), a provider of infrastructure
equipment for the telecommunications industry, has agreed to
sell substantially all its assets to an affiliate of Platinum
Equity LLC, a Los Angeles-based private equity firm, for
approximately $8.75 million, plus the assumption of certain
liabilities.
Platinum Equity has agreed to purchase the assets relating to
ROHN's towers division, enclosures division, accessories
division and construction services division as well as the
Company's operations in Mexico. This includes the Company's
facilities located in Peoria, Illinois; Frankfort, Indiana and
Bessemer, Alabama.
The transaction has been approved by the Company's Board of
Directors. The transaction is subject to the approval of ROHN's
stockholders. ROHN's majority stockholder, the UNR Asbestos-
Disease Claims Trust, has indicated it will not support the
transaction based on its current terms. The transaction also
requires the approval of the lenders under ROHN's credit
facility, who have indicated they will support the transaction.
The Company, the Trust and the Company's bank lenders are
currently in negotiations regarding the transaction. The
transaction is also subject to a number of other conditions,
including Platinum Equity's satisfaction with the results of its
ongoing due diligence investigation of the purchased assets and
the Company's ability to comply with applicable federal
securities laws.
If the Trust does not approve the transaction promptly, it
cannot be consummated by year-end in compliance with the federal
securities laws. If ROHN does not consummate a sale of
substantially all its assets by year-end, it will lose a
significant tax benefit. Accordingly, if the Trust does not
approve the transaction promptly, ROHN intends to terminate its
agreement with Platinum Equity and pursue alternative
transactions.
The proceeds from the sale will be used to repay the lenders
under ROHN's credit facility. The transaction is not expected to
result in any dividend or other distribution to the Company's
stockholders.
ROHN Industries, Inc., is a manufacturer and installer of
telecommunications infrastructure equipment for the wireless
industry. Its products are used in cellular, PCS, radio and
television broadcast markets. The Company's products and
services include towers, design and construction, poles and
antennae mounts. ROHN has ongoing manufacturing locations in
Peoria, Illinois and Frankfort, Indiana along with a sales
office in Mexico City, Mexico.
* * *
As reported in Troubled Company Reporter's November 13, 2002
edition, the Company is experiencing significant liquidity
and cash flow issues which have made it difficult for the
Company to meet its obligations to its trade creditors in a
timely fashion. The Company expects to continue to experience
difficulty in meeting its future financial obligations.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $1 million.
On November 7, 2002, the Company entered into an amendment to
its credit and forbearance agreements with its bank lenders.
The amendment to the credit agreement, among other things,
further limits the Company's borrowing capacity by modifying the
definition of the borrowing base to decrease the amount of
inventory included in the borrowing base. Additionally, the
amendment modifies the definition of the borrowing base to
provide additional borrowing capacity of varying amounts during
this period. The amendments also provide for a series of
reductions in the Company's revolving credit facility that
reduce the availability under that facility from $23 million
currently to $16 million on and after December 31, 2002. In
addition, the amendment also provides for additional term loan
payments through January 1, 2003. Furthermore, the amendment
provides for additional bank fees, some of which will be waived
if the Company achieves a significant reduction in the aggregate
loan balance at December 31, 2002. Finally, the current
amendment also includes covenants measuring revenues, cash
collections and cash disbursements. Under the amendment to the
forbearance agreement, the bank lenders have agreed to extend
until January 31, 2003 the period during which they will forbear
from enforcing any remedies under the credit agreement arising
from ROHN's breach of financial covenants contained in the
credit agreement except for the covenants added to the credit
agreement as a result of this new amendment. If these financial
covenants and related provisions of the credit agreement are not
amended by January 31, 2003, and the bank lenders do not waive
any defaults by that date, the bank lenders will be able to
exercise any and all remedies they may have in the event of a
default.
The Company continues to experience difficulty in obtaining
bonds required to secure a portion of anticipated new contracts.
These difficulties are attributable to the Company's continued
financial problems and an overall tightening of requirements in
the bonding marketplace. The Company intends to continue to
work with its current bonding company to resolve its concerns
and to explore other opportunities for bonding.
SIERRA PACIFIC: Signs Contracts for Renewable Energy Supplies
-------------------------------------------------------------
Sierra Pacific Resources (NYSE: SRP) said that its utility
subsidiary, Nevada Power Company, has signed six contracts with
renewable energy suppliers that could furnish up to 227
megawatts* of electricity to its utility subsidiaries, Nevada
Power Company and Sierra Pacific Power Co. More than half of
the 227 megawatts consists of wind generation, and the remaining
amount is from electricity generated by geothermal resources.
The company said it is negotiating to meet its solar
requirements. The company will now make a filing with the Public
Utilities Commission of Nevada, which will review the contracts
and apply the pertinent law and regulations before determining
whether they should be approved.
The contracts are a first step in bringing the utilities into
compliance with legislation that requires the use of a certain
percentage of renewable energy sources -- solar, wind,
geothermal and biomass -- to generate electricity for customers
within the state. The legislation contains an escalation
provision that requires providers of electric service to
increase the use of renewable energy, by two percent every third
year, until the provider's portfolio accounts for 15 percent of
its total energy sales. These contracts are expected to satisfy
the utilities' forecasted requirements for the years 2005 and
2006. Additional contracts will be necessary to satisfy
requirements for 2007 and beyond.
"We're very pleased to be able to reach agreements with these
leaders in renewable energy," said Walt Higgins, chairman,
president and CEO for Sierra Pacific Resources. "Electricity
generated by renewable energy resources is a welcome addition to
our power portfolios and will help us as a state meet the needs
of the growing energy demands of Nevada's communities."
As a result of these contracts new generating plants will be
built at a variety of locations around the state. The plants
will employ a variety of new and tested technologies to produce
electricity.
Higgins emphasized that the electricity produced by the projects
will benefit customers from throughout the state and at the same
time will help Nevada Power meet its renewable energy
requirements.
Following are the suppliers with whom Nevada Power has
contracted for renewable power supplies.
-- Desert Queen Wind Limited Partnership, a wind
generation plant under development in Clark County, by
Cielo Wind Power, an affiliate of Desert Queen LP. GP,
to build wind generation plant in Clark County.
-- Advanced Thermal Systems, to build a Kalina cycle
binary geothermal plant in Washoe County.
-- Earth Power Resources, Inc., to build a binary
geothermal plant in Elko County.
-- Subsidiaries of Ormat Nevada, Inc., to build flash-
steam and binary geothermal plants in Churchill County.
-- Ely Wind Company LLC, to build a wind generation plant
in White Pine County.
* One megawatt will serve approximately 750-1,000 homes and/or
businesses.
* * *
As reported in Troubled Company Reporter's October 14, 2002
edition, Standard & Poor's Ratings Services reaffirmed its
single-'B'-plus corporate credit ratings on Sierra Pacific
Resources and its utility subsidiaries Nevada Power Co., and
Sierra Pacific Power Co. Standard & Poor's also affirmed the
double-'B' ratings on the senior secured debt at the two
utilities. All ratings remain on CreditWatch with negative
implications.
SPECTRASITE HOLDINGS: Hires Paul Weiss as Bankruptcy Counsel
------------------------------------------------------------
Spectrasite Holdings, Inc., asks for permission from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to
employ Paul, Weiss, Rifkind, Wharton & Garrison as counsel.
The Debtors expects Paul Weiss to:
a) advise the Debtor with respect to its rights and
obligations under the Bankruptcy Code;
b) prepare petitions, schedules, applications, motions, and
other papers in connection with the administration of
the Debtor's case;
c) take all actions necessary to obtain confirmation of the
Debtor's plan of reorganization, including preparing any
necessary motions;
d) prosecute and defend all actions and adversary or under
proceedings by or against the Debtor, and where
appropriate, object to claims filed against the Debtor's
estate;
e) represent the Debtor at hearings and proceedings; and
f) perform all other legal services required by the Debtor
in connection with its chapter 11 case.
Paul Weiss will be compensated in accordance to its customary
hourly rates which range from:
Partner $525 to $725 per hour
Counsel $495 to $525 per hour
Associate $260 to $485 per hour
Legal Assistants $140 to $195 per hour
Legal Assistants Clerks $75 per hour
The attorneys who will be responsible in representing the Debtor
are:
Andrew N. Rosenberg $575 per hour
James H. Millar $460 per hour
Claudia R. Tobler $390 per hour
Alexander V. Rohan $365 per hour
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.
TELEGLOBE INC: All Proofs of Claim Due by December 10, 2002
-----------------------------------------------------------
NOTICE TO CREDITORS OF TELEGLOBE INC
AND OTHER CANADIAN APPLICANTS LISTED HEREIN
RE: NOTICE OF CLAIMS PROCEDURE FOR THE APPLICANTS PURSUANT TO
THE COMPANIES CREDITORS ARRANGEMENT ACT
PLEASE TAKE NOTICE that this notice is being published pursuant
to an Order of the Superior Court of Justice of Ontario made
November 13, 2002. The Court has ordered that the Monitor send
Proof of Claim forms to the known creditors of the Canadian
Applicants. Any person who has not received a Proof of Claim and
who believes that they have a claim against any of the Canadian
Applicants which claim arose prior to May 15, 2002 or has claim
which arose after May 15, 2002 to and including November 13,
2002, as a result of the termination of any lease, contract
employment agreement or other agreement, whether liquidated or
unliquidated, contingent or otherwise, should send a Proof of
Claim to the Monitor to be received by 5:00 p.m. (Eastern
Standard Time) on December 10, 2002.
CLAIMS WHICH ARE NOT RECEIVED BY THE CLAIMS BAR DATE WILL BE
BARRED AND EXTINGUISHED FOREVER.
Creditors who have not received a Proof of Claim from the
Canadian Applicants or the Monitor should contact the Monitor,
c/o Ernst & Young & Young Inc., Court-appointed Monitor of the
Canadian Applicants (Telephone (514) 879-6882 and Fax (514) 871-
8713) to obtain a Proof of Claim package.
Canadian Applicants
Teleglobe Inc.
Teleglobe Financial Holdings Ltd.
Teleglobe Canada Limited Partnership
Teleglobe Management Services Inc.
Teleglobe Marine, Inc.
Teleglobe Canada Management Services Inc.
3692795 Canada Inc.
Teleglobe Vision Call Center Services, General Partnership
TEMBEC INC: S&P Revises Outlook on BB+ Credit Rating to Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
diversified paper and forest products producer Tembec Inc., to
negative from stable. At the same time, the ratings outstanding
on the Temsicaming, Quebec-based company, including the double-
'B'-plus long-term corporate credit rating, were affirmed.
The outlook revision stems from protracted weakness in Tembec's
credit measures that is unlikely to subside in the near term due
to weakened market conditions across all paper and forest
products grades.
"Although prices for wood products historically have moved
countercyclically to pulp prices, Tembec is presently suffering
from unfavorable pricing across all primary products, further
compounded by U.S. export duties on softwood lumber," said
Standard & Poor's credit analyst Clement Ma. "The company will
continue to have difficulty reducing debt and improving its
financial profile to a level commensurate with the ratings."
The ratings on Tembec reflect its competitive cost structure
within the cyclical, commodity-oriented forest products
industry; its aggressive, yet measured, growth strategy; and its
good revenue diversity. These strengths are offset by the
company's currently high debt levels.
Tembec's diversified revenue base somewhat mitigates the
cyclical effects of prices on profitability. A combination of
cost-cutting initiatives and improved productivity has led to a
material improvement in the company's profitability, as
illustrated by healthy operating margins leading up to 2002.
Nevertheless, performance has fluctuated because of exposure to
pulp, the most price-sensitive forest product.
In the past several years, Tembec has grown aggressively through
acquisitions, which maintained the company's high debt levels.
Tembec has shown that it is not averse to increasing debt
leverage to more than 50% to complete a transaction, which is
high in this cyclical industry. Both acquisitions and capital
expenditures are, however, subject to strict financial criteria,
which ensures they quickly generates a satisfactory return on
capital.
Financial performance will remain weak in the near term, as very
unstable pricing for pulp and lumber exacerbate the effect of
high debt levels. For the fourth quarter ended Sept. 30, 2002,
the company's operating margin was 9.7% while rolling four-
quarter funds from operations to total debt was 0.2%. Total debt
to capitalization was 61.2% at September 30, 2002, and
significant debt reduction in 2003 is unlikely due to limited
free cash generation.
Although Tembec has the financial flexibility to manage through
the current downturn, further weakening of market conditions and
failure to make progress towards strengthening credit measures
in the medium term will result in a downgrade.
THINKPATH INC: Lacks Sufficient Capital to Continue Operations
--------------------------------------------------------------
Thinkpath Inc., is an information technology and engineering
services company which, along with its subsidiaries Thinkpath US
Inc. (formerly Cad Cam Inc.), Thinkpath Michigan Inc. (formerly
Cad Cam of Michigan Inc.), Thinkpath Technical Services Inc.
(formerly Cad Cam Technical Services Inc.), Thinkpath Training
US Inc.(formerly ObjectArts US Inc.), MicroTech Professionals
Inc., and TidalBeach Development Inc., provides engineering,
staffing, training and technology services to enhance the
resource performance of clients.
Certain principal conditions and events are prevalent within the
Company which indicate that there could be substantial doubt
about the Company's ability to continue as a going concern for a
reasonable period of time. These conditions and events include
significant operating losses, working capital deficiencies, and
violation of certain loan covenants. At September 30, 2002, the
Company had a working capital deficiency of $4,489,017, a
deficit of $25,924,786 and has suffered recurring losses from
operations.
With insufficient working capital from operations, the Company's
primary sources of cash have been a revolving line of credit
with Bank One and proceeds from the sale of equity securities.
At September 30, 2002, the revolving line of credit was
$4,980,000 including an overdraft of approximately $650,000.
Eligible receivables allowed for a maximum borrowing of
$4,330,000. The revolving line of credit agreement requires the
Company to meet various restrictive covenants, including a
senior debt to EBITDA ratio, debt service coverage ratio, debt
to tangible net worth ratio and certain other covenants. At
September 30, 2002 and thereafter, the Company did not comply
with the covenants contained in the revolving line of credit
agreement.
On July 1, 2002 and as amended on August 1, 2002, August 15,
2002, September 1, 2002, September 16, 2002, September 30, 2002,
and October 15, 2002, the Company entered into a Forbearance and
Modification Agreement with its senior lender, Bank One, whereby
the Bank agreed to forebear from exercising its rights and
remedies against the Company as a result of its violation of
certain loan covenants, until the period ending November 30,
2002. In the event that the Company defaults under the agreement
including the failure to make payment when due, the Bank is
entitled to exercise any and all of its security rights
including foreclosing on collateral.
On August 13, 2002, the Company received a commitment from
Morrison Financial Services Limited for a syndicated financing
arrangement that will provide the funding necessary to purchase
Bank One's debt and security. The partners in the syndicate are
Maple Partners America Inc., Morrison Financial Services
Limited and MFI Export Finance Inc. Bank One has agreed to
extend the expiration of the Forbearance and Modification
Agreement until November 30, 2002 to allow the syndicate to
complete the financing arrangement. In addition, Bank One has
agreed to accept a $700,000 discount on the payoff of its
indebtedness. The Business Development Bank of Canada has also
agreed to sell its debt and security to the syndicated group
with a discount on the payoff of $300,000.
On October 15, 2002, the Company signed a term sheet with
Bristol Investment Fund, Ltd. and a syndicate of other investors
to issue Senior Secured Convertible Debentures of up to
$3,000,000 in multiple tranches. The first tranche of $800,000
will be issued upon signing of a definitive investment agreement
and concurrently with the closing of the financing arrangement
with Morrison Financial. The funds will be directed to Bank One
and certain of the company's other creditors.
As of November 19, 2002, management's plans to mitigate and
alleviate these adverse conditions and events include:
A. Commitment from a new lender to purchase Bank One and
the Business Development Bank of Canada's debt and
security.
B. Commitment from investors for a convertible debenture of
up to $3,000,000.
C. Ongoing restructuring of debt obligations and settlement
of outstanding claims.
D. Ongoing restructuring of operations relating to the
closure of non-profitable offices, termination of
redundant staff and the institution of other cost
cutting measures. Although there can be no assurances,
it is anticipated that continued cash flow improvements
will be sufficient to cover current operating costs and
will permit partial payments to vendors and interest
payments on all debt.
E. Settlement of an outstanding insurance claim related to
the loss of assets and business for two offices impacted
by the terrorist events of September 11, 2001.
F. Focus on growth in the engineering division, including
design services, technical publications and e-learning.
Despite its negative working capital and deficit, Thinkpath
believes that its management has developed a business plan that
if successfully implemented could substantially improve its
operational results and financial condition. However, the
Company can give no assurances that its current cash flows from
operations, if any, borrowings available under its revolving
line of credit, and proceeds from the sale of securities, will
be adequate to fund its expected operating and capital needs for
the next twelve months. The adequacy of cash resources over the
next twelve months is primarily dependent on its operating
results, the bank's continued forbearance, the closing of new
financing, and settlement of its insurance claim, all of which
are subject to substantial uncertainties. Cash flows from
operations for the next twelve months will be dependent, among
other things, upon the effect of the current economic slowdown
on sales, the impact of the restructuring plan and management's
ability to implement its business plan. The failure to return to
profitability and optimize operating cash flows in the short
term, and to successfully procure forbearance from the bank and
close alternate financing, could have a material adverse effect
on the company's liquidity position and capital resources.
TOKHEIM: Firms-Up Pact to Sell All Assets to First Reserve Unit
---------------------------------------------------------------
Tokheim Corporation (OTCBB:THMC) Tokheim Corporation has
executed a definitive agreement with an affiliate of First
Reserve Corporation for the purchase of its North American
operations and a letter of intent with a European firm, AXA
Private Equity (a leading private equity firm), for the purchase
of its International operations. First Reserve Corporation is a
Greenwich, Connecticut-based private equity investor
specializing in the energy industry. First Reserve is the
largest shareholder of Pride International, Dresser Inc.,
Chicago Bridge & Iron, and Superior Energy Services. The
transactions are subject to, among other things, approval by the
U.S. Bankruptcy Court for the District of Delaware.
John Hamilton, CEO and President, said: "First Reserve and AXA
Private Equity represent excellent candidates to provide a
smooth transition for our customers and the majority of our
worldwide employees."
Tokheim Corporation and its U.S. subsidiaries filed voluntary
petitions for relief under Chapter 11 in the U.S. Bankruptcy
Court for the District of Delaware on November 21, 2002. The
Company's operations outside the United States are not included
in the Chapter 11 reorganization cases and continue normal
business operations. The filing will allow Tokheim to provide
for an orderly sale of its assets, which will be subject to
higher or otherwise better bids in a bankruptcy court auction
process. Tokheim also announced that it had filed a motion
seeking approval of bidding procedures to conduct a sale auction
of its North American operations. The terms of Tokheim's debtor-
in-possession credit agreement provides for a determination of
the successful bidders on or before March 14, 2003, and the
closing of the transactions on or before March 24, 2003.
Hamilton said: "We are working through the bankruptcy process
with our various constituencies to complete this sales process
as quickly as possible. Our goal is to smoothly transition our
businesses into the hands of new owners."
Tokheim Corporation manufactures and services electronic and
mechanical petroleum dispensing systems. These systems include
petroleum dispensers and pumps, retail automation systems (such
as point-of-sale systems), dispenser payment or "pay-at-the-
pump" terminals, replacement parts, and upgrade kits.
TOKHEIM CORP: Court Appoints Logan & Company as Claims Agent
------------------------------------------------------------
Tokheim Corporation and its debtor-affiliates got permission to
hire and appoint Logan & Company, Inc. as the official claims,
noticing and balloting agent in its chapter 11 cases. The U.S.
Bankruptcy Court for the District of Delaware agrees that the
Debtors need Logan to:
(i) serve as the Court's noticing agent to mail notices to
the estates' creditors and parties-in-interest,
(ii) provide computerized claims, objection and balloting
database services, and
(iii) provide expertise and consultation and assistance in
connection with claim processing, ballot processing and
other administrative matters with respect to the
Debtors' bankruptcy cases.
As Claims, Noticing and Ballot Agent, Logan will:
(a) Prepare and serve required notices in these chapter 11
cases, including:
(1) A notice of commencement of these chapter 11 cases
and the initial meeting of creditors under section
341 (a) of the Bankruptcy Code;
(2) A notice of the claims bar date;
(3) Notices of objections to claims;
(4) Notices of any hearings on a disclosure statement
and confirmation of a plan of reorganization; and
(5) Such other miscellaneous notices as the Debtors or
the Court may deem necessary or appropriate for an
orderly administration of these chapter 11 cases;
(b) Within five business days after the service of a
particular notice, file with the Clerk's Office an
affidavit of service that includes:
(i) a copy of the notice served,
(ii) an alphabetical list of per-sons on whom the notice
was served, along with their addresses, and
(iii) the date and manner of service;
(c) Maintain copies of all proofs of claim and proofs of
interest filed in these cases;
(d) Maintain official claims registers in these cases by
docketing all proofs of claim and proofs of interest in
a claims database that includes the following in-
formation for each such claim or interest asserted:
(1) The name and address of the claimant or interest
holder and any agent thereof, if the proof of claim
or proof of interest was filed by an agent;
(2) The date the proof of claim or proof of interest
was received by Logan and/or the Court;
(3) The claim number assigned to the proof of claim or
proof of interest; and
(4) The asserted amount and classification of the
claim;
(e) Implement necessary security measures to ensure the
completeness and integrity of the claims registers;
(f) Transmit to the Clerk's office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
(g) Maintain a current mailing list for all entities that
have filed proofs of claim or proofs of interest and
make such list available upon request to the Clerk's
Office or any party in interest;
(h) Provide access to the public for examination of copies
of the proofs of claim or proofs of interest filed in
these cases without charge during regular business
hours;
(i) Record all transfers of claims pursuant to Bankruptcy
Rule 3001(e) and provide notice of such transfers as
required by Bankruptcy Rule 3001(e);
(j) Comply with applicable federal, state, municipal and
local statutes, ordinances, rules, regulations, orders
and other requirements;
(k) Provide temporary employees to process claims, as
necessary;
(1) Promptly comply with such further conditions and
requirements as the Clerk's Office or the Court may at
any time prescribe;
(m) Provide balloting and solicitation services, including
preparing ballots, producing personalized ballots and
tabulating creditor ballots on a daily basis; and
(n) Provide such other claims processing, noticing,
balloting and related administrative services as may be
requested from time to time by the Debtors.
Logan & Company's list of services with an associated cost
estimate are:
Database Creation and Claims Docketing
-- One time Set-Up Fee $2,500
-- Load Names and Addresses $300
from disk/tape 3,000 x .10
-- Manual Input and verification
25 hours x $55 per hour $1,375
-- Claims Docketing
1000 claims
35 claims per our x $55 $1925
-- Scheduled claims creation
10 hours x $100 per hour $1,000
-- Miscellaneous address changes,
transfers, etc 10 hours x $55
Noticing
-- Notice of Case Commencement,
341 Meeting of Creditors $900
Postage $1,020
-- Bar Date Notice $900
Postage $1,020
-- Proof of claim form $1440
Schedules and Statement Preparation $25,000
Tokheim Corporation, manufacturer of electronic and mechanical
petroleum dispensing systems, field for chapter 11 protection on
November 21, 2002. Gregg M. Galardi, Esq., and Mark L.
Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP represent the Debtors in their restructuring efforts. When
the Company filed for protection from its creditors, it listed
$249.5 million in total assets and $457.8 million in total
debts.
TRANSITION AUTO: External Auditors Express Going Concern Doubt
--------------------------------------------------------------
Transition Auto Finance II, Inc., was established to purchase
motor vehicles and automobile lease contracts, collect and
service automobile lease contracts and remarket motor vehicles
upon termination of their leases. Transition Leasing Management,
Inc., owns 100% of the Company's common stock.
The Company has sustained recurring losses from operations,
negative working capital, a negative equity position and TAF II
has substantial investor notes payable in 2002. Management of
TAF II intends to attempt to continue leasing vehicles, raise
additional capital and or secure additional financing in order
to continue repayment of the investor notes payable. Management
recognizes that full repayment may take several years to
complete and that full repayment may not occur. This situation
raises substantial doubt about TAF II's ability to continue as a
going concern. TLMI and its other subsidiaries in the
consolidated group are not responsible or obligated to repay any
investor notes payable that TAF II cannot repay.
For the three months ended September 30, 2002 the Company had
received monthly contract lease payments of $156,439 and
amortization of down payments of $33,797. For the same period in
2001, the Company had contract lease income of $364,005 and
amortization of down payments of $150,623. The drop in monthly
contract lease payments of $207,566 for the three month period
ended September, 30, 2002, compared to the same period in 2001,
was the result of a decline in the number of active leases due
to increased repossessions, early terminations and matured
leases. Until the economy improves, the Company believes that
increased levels of repossessions will continue.
The net loss for the third quarter ended September 30, 2002 was
$1,032 compared to a loss of $208,343 for the same period in
2001. The nominal loss in 2002 is primarily the result of fewer
active leases than for the same period in 2001.
Total revenue for the nine months ended September 30, 2002 was
$788,095 compared to $1,876,679 for the same period in 2001. The
decrease in revenue for the 2002 period was the result of fewer
leases on the books resulting in lower monthly payments and
amortization of down payments.
The Company had a loss of $384,644 for the nine months ended
September 30, 2002 compared to a loss of $334,183 for the same
period in 2001. The increased loss of $50,461 in the 2002 period
was due to a decline in revenue because of fewer active leases.
On June 30, 2002, TAF II, Inc., defaulted on its $10,000,000 11%
Redeemable Secured Notes. At the time of the default the company
had paid to investors a total of $7,058,413. This figure is
comprised of $3,338,413 in interest and $3,720,000 of principal.
The Company estimates that its remaining lease portfolio will
generate approximately $1,150,000 in additional funds. The exact
amount of additional funds is indeterminable since the number of
leases that will go to term is unknown at this time. The
trustee, for the benefit of note-holders, currently holds
$594,335 in cash.
The adverse economic effects of the current recession and events
of September 11, resulted in an unusually high number of early
lease payoffs and automobile repossessions. The major reasons
for the excessive early payoffs and repossessions appear to have
been (1) the weak economy, and (2) low-cost incentive financing
offered by new car manufacturers. The weak economy hurt the
personal finances of many customers causing an increased number
of repossessions, while low-cost incentive financing enticed
many other customers to purchase new cars, which resulted in
these customers paying off their leases early. Additionally,
low-cost financing negatively impacted used car prices by
flooding the market with late model cars.
The early payoffs and repossessions were not, by themselves,
extraordinary. What was extraordinary - and unprecedented - was
the pace and rate at which these early payoffs and repossessions
occurred. Most damaging, however, was the timing of the
excessive early payoffs and repossessions, which began to
accelerate in September 2000. Under the terms of the indenture
that governs the notes, all payments after August 2000, from
early payoffs and repossessions had to be returned to the note-
holders rather than retained by the Company for further
investment. This "sinking fund" provision in the indenture
had a devastating effect on the Company's capital, and stripped
the Company of its ability to generate sufficient cash flow to
repay the notes.
The Company has worked on a plan that would extend the maturity
of the notes and the reinvestment period, and lower the interest
rate. The effect of these changes should have increased the
ultimate amount of funds available for note repayment but since
these modifications would require 100% approval of the note-
holders, it is unlikely that the plan will be submitted.
TRENWICK GROUP: Suspends Preferred Share Dividends Indefinitely
---------------------------------------------------------------
Trenwick Group Ltd., announced that, in accordance with the
terms of Trenwick's current credit facility and forbearance
agreement with its letter of credit providers, Trenwick has
elected to suspend, with immediate effect and for an indefinite
period, dividends or distributions payable on the outstanding
Trenwick Group Ltd., Series B Cumulative Convertible Perpetual
Preferred Shares, LaSalle Re Holdings Limited's Series A
Preferred Shares and Trenwick Capital Trust I 8.82% Exchange
Subordinated Capital Income Securities.
The suspension on the payment of dividends on LaSalle Re
Holdings Limited's includes a suspension of the dividend payable
on December 2, 2002 to holders of record on October 31, 2002.
Trenwick is a Bermuda-based specialty insurance and reinsurance
underwriting organization with two principal businesses
operating through its subsidiaries located in the United States,
the United Kingdom and Bermuda. Trenwick's reinsurance business
provides treaty reinsurance to insurers of property and casualty
risks from offices in the United States and Bermuda. Trenwick's
international operations underwrite specialty insurance as well
as treaty and facultative reinsurance on a worldwide basis
through its London-based operations.
UNITED AIRLINES: Flight Attendants Ratify 5-Year Recovery Plan
--------------------------------------------------------------
The United flight attendants, represented by the Association of
Flight Attendants, AFL-CIO, ratified a contract with management
that will provide the airline with $412 million in cost savings
over the next five and a half years.
Eighty-seven percent of eligible flight attendants who cast
their ballots voted for the contract. Over sixty-seven percent
of eligible flight attendants voted.
Approval of the agreement with the flight attendants is a key
step in securing unprecedented labor cost savings as part of
United's Recovery Plan. The agreement also puts United a step
closer to finalizing its application to obtain a much needed
$1.8 billion loan guarantee that United is seeking from the Air
Transportation Stabilization Board to keep the carrier out of
bankruptcy.
"The flight attendants have made the difficult but necessary
decision to contribute our part in the financial restructuring
of United Airlines," said AFA United Master Executive Council
President Greg Davidowitch. "This deal leaves just one more
labor group to participate before the Recovery Plan can go
forward. Once that final piece of the Plan is in place, it will
be up to the ATSB to do its part to stabilize the industry by
rightfully approving United's application for a loan guarantee.
This will ensure that United's Recovery Plan has a chance to
work to improve our airline and protect the lives of United's
84,000 employees."
More than 50,000 flight attendants, including the 24,000 flight
attendants at United, join together to form AFA, the world's
largest flight attendant union. Visit its Web site
http://www.unitedafa.org
US DATAWORKS: Independent Auditors Express Going Concern Doubts
---------------------------------------------------------------
US Dataworks, Inc., a Nevada corporation, develops, markets, and
supports transaction processing software for Windows NT computer
systems. Its customer base includes many of the largest
financial institutions as well as credit card companies,
government institutions, and high-volume merchants in the United
States. It also has a strategic alliance with CheckFree
Corporation (NASDAQ: CKFR) to license the Company's software for
its banking customers and Thomson Financial Publishing, a unit
of Thomson Corporation (TSE: TOC), to incorporate its EPICWare
database into the Company's products. Prior to acquiring US
Dataworks, Inc., a Delaware corporation, the Company was a
financial services company specializing in the integration of
proprietary software applications with Applications Service
Provider ("ASP") services and an internet service provider
("ISP"). During July and December 2001, the Company started
shutting down its ISP and ASP operations, respectively, and at
March 31, 2002 all ISP and ASP activities had ceased. Effective
May 9, 2002, the Company merged with US Dataworks, Inc., a
Delaware corporation, and dissolved the Delaware corporation.
The Company has received a report from its independent auditors
that includes an explanatory paragraph describing the
uncertainty as to the Company's ability to continue as a going
concern.
The Company's revenue decreased by $122,751, or 28%, to $317,647
for the three months ended September 30, 2002 from $440,398 for
the three months ended September 30, 2001. The decrease in
revenue was primarily attributable to a decrease in the number
of license agreements entered into in the three months ended
June 30, 2002. Revenue increased by $376,603, or 53%, to
$1,090,778 for the six months ended September 30, 2002 from
$714,175 for the six months ended September 30, 2001. This
increase is due to the Company's focus on its continuing
operations in 2002 resulting in an increased number of license
agreements being sold. Subsequent to September 30, 2002, the
Company signed various contracts with major retailers and banks
resulting in a backlog of $1.1 million in license and systems
integration fees, the majority of software under such contracts
will be installed by December 31, 2002.
Net loss increased by $180,557, or 30%, to a net loss of
$790,245 for the three months ended September 30, 2002 from
$609,688 for the three months ended September 30, 2001. Net loss
decreased by $2,191,724, or 62%, to a net loss of $1,316,347 for
the six months ended September 30, 2002 from $3,508,071 for the
six months ended September 30, 2001.
US Dataworks has incurred losses for the last two fiscal years
and expects that its net losses and negative cash flow will
continue for the foreseeable future. Its auditors have included
an explanatory paragraph in their Independent Auditor's Report
included in the Company6's audited financial statements for the
years ended March 31, 2002 and 2001, to the effect that US
Dataworks' loss from operations for the year ended March 31,
2002, and the accumulated deficit at March 31, 2002 raise
substantial doubt about its ability to continue as a going
concern. The Company has incurred significant losses in the last
two years. As of September 30, 2002, its accumulated deficit was
$28,797,618. Management believes that Company planned growth and
profitability will depend in large part on the ability to
continue to promote its brand name and gain and expand clients
for whom it would provide licensing agreements and system
integration. Accordingly, US Dataworks intends to invest heavily
in marketing, strategic partnerships, development of its client
base, and development of its marketing technology and operating
infrastructure.
USG CORPORATION: Philadelphia Stock Exchange Delists Options
------------------------------------------------------------
The Philadelphia Stock Exchange sought and obtained permission
from the Securities and Exchange Commission, pursuant to Section
12(d) of the Securities Exchange Act of 1934 and Rule 12d2-2(c),
to strike from listing and registration on the Philadelphia
Stock Exchange the call and put option contracts issued by the
Options Clearing Corporation with respect to USG Corp.,
securities.
Philadelphia Exchange Rule 1010 provides generally that,
whenever the Exchange determines that an underlying security
previously approved for option transactions on the Exchange
should no longer be approved, whether because it does not meet
the standards for continued approval or for any other reason,
the Exchange will not open any additional options series of that
class for trading, and may take steps thereafter to prohibit
opening purchase transactions in options series of that class
previously opened to the extent it deems these actions
appropriate. When an underlying security becomes no longer
approved for option transactions, the Exchange may apply to
strike the related option contracts from listing and trading
once all option contracts have expired. Under this provision,
the Philadelphia Exchange has determined to strike from listing
and trading the call and put options issued by the Options
Clearing Corp., relating to the common stock of USG Corp. (USG
Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WORLDCOM INC: KeyCorp Leasing Wants Prompt Decision on Contract
---------------------------------------------------------------
Key Corporate Capital Inc. asks the Court to compel Worldcom
Inc., and its debtor-affiliates to assume or reject, pursuant to
Section 365(d) of the Bankruptcy Code, certain leases entered
into between the Debtors and KeyCorp Leasing, Ltd., a division
of Key Capital.
Jennifer L. Dumas, Esq., at Davis Wright Tremaine LLP, in New
York, relates that the Debtors and KeyCorp entered into these
equipment leases prior to the Petition Date:
A. Lease Number 14172: On December 26, 1997, Key Leasing and
the Debtors entered into a Master Equipment Lease
Agreement, which provided for the rental of certain
personal property. On December 26, 1997, the parties
entered into Equipment Schedule No. 01, pursuant to which,
the Debtors leased from Key Leasing $744,482.98 in office
furniture. The Debtors' current monthly base rent payment
under Lease No. 14172 is $12,154.40.
B. Lease No. 10839: On May 20, 1996, Key Leasing and the
Debtors entered into an Equipment Leasing Agreement, which
provided for the rental of various fiber optic transports
manufactured by Northern Telecom and associated equipment
valued at $11,481,456.90. The Debtors' current monthly
base rent payment under Lease No. 10839 is $179,099.25.
C. Lease No. 13836: On September 1, 1997, BancBoston Leasing
Inc. and the Debtors entered into a Master Lease Agreement,
which provided for the rental of certain computer equipment
identified in the equipment schedules. On November 27,
1997, BancBoston assigned to Key Leasing Schedule Nos. 162
through 210 under the Master Lease Agreement. The
value of the schedules assigned to Key Leasing and
contained in Lease No. 13836 is $10,922,121.03. As of
November 1, 2002, the Debtors' monthly base rent payment
under Lease No. 13836 is $189,280.36.
D. Lease No. 14264: On February 3, 1998, BancBoston assigned
to Key Leasing Schedule Nos. 228 through 231 under the 1997
Master Lease Agreement. The value of the schedules
assigned to Key Leasing and contained in Lease No. 14264 is
$8,261,395.15. The Debtors' current monthly base rent
payment under Lease No. 14264 is $142,674.29.
The equipment leases impose a current aggregate monthly base
rental obligation on the Debtors amounting to $523,208.30.
On August 2, 2002, Ms. Dumas relates that the Debtors gave
notice of their intent to renew Lease No. 13836 for a minimum of
12 months. On October 1, 2002, the Debtors gave notice of their
intent to renew Lease No. 12464 for a minimum of 12 months.
However, the Renewal Notices advise that the Debtors do not
waive their rights to accept or reject the Key Leases as allowed
under Chapter 11 of the Bankruptcy Code.
Key Equipment understands that the size and complexity of the
Debtors' cases would appear to support the postponement of a
decision to assume or reject its executory contracts and
unexpired leases, including the Key Leases. However, Key
Equipment believes that the first Theatre Holding/Teligent
factor, which focuses on prejudice to the non-debtor party,
weighs heavily in favor of Key Equipment.
Ms. Dumas informs the Court that most of the Leased Equipment is
comprised of high-tech computer components, which depreciate
very rapidly. The Bankruptcy Code compels Key Equipment to
continue performing under the Leases until the Debtors are
prepared to assess the value of the Key Leases to their
reorganization efforts. Due to the nature of the Leased
Equipment, this effectively allows the Debtors to utilize
rapidly depreciating equipment until a better deal for the
Debtors comes along, and then to discard the Leased Equipment at
will. Section 365 of the Bankruptcy Code should not be read so
broadly as to allow the Debtors to modify the terms of the Key
Leases to this extent.
Moreover, Ms. Dumas points out that the Renewal Notices
demonstrate that the Debtors have already assessed and
recognized the importance of the Key Leases to their
reorganization efforts. In effect, the Debtors have chosen to
provisionally assume the Renewed Leases while at the same time
avoiding their duty to cure defaults by delaying a formal
assumption or rejection of the Key Leases. This is akin to the
situation described in the Theatre Holding case of a state of
affairs that allowed the debtor to "have its cake and eat it
too."
Although debtors in Chapter 11 cases are typically afforded
breathing room to make an informed decision regarding assumption
or rejection, given the unique value of the Leased Equipment to
the Debtors' ongoing operations, Key Equipment believes that the
Debtors have had ample time to assess the value of the Key
Leases and the merits of assuming or rejecting the Key Leases.
If the Debtors are permitted to delay their decision to assume
or reject the Key Leases, Ms. Dumas asserts that the Debtors
will be allowed to enjoy all of the benefits of the Key Leases
at significant cost, expense and risk to Key Equipment.
(Worldcom Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USR4) are trading
at about 49 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USR4
for real-time bond pricing.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Advisory Board ABCO (16) 48 (20)
Air Canada AC (938) 8,901 (634)
Alliance Imaging AIQ (79) 658 25
Alaris Medical AMI (47) 573 129
Amylin Pharm Inc. AMLN (3) 63 47
Amazon.com AMZN (1,440) 1,637 286
Anteon Int'l. Corp. ANT (3) 307 27
Arbitron Inc. ARB (169) 127 17
Alliance Resource ARLP (47) 291 (2)
American Standard ASD (90) 4,831 208
Actuant Corp ATU (44) 294 18
Avon Products AVP (46) 3,193 428
Saul Centers Inc. BFS (24) 346 N.A.
Choice Hotels CHH (64) 321 (28)
Chippac Inc. CHPC (23) 431 (18)
Caremark Rx, Inc. CMX (772) 874 (31)
Campbell Soup Co. CPB (114) 5,721 (1,479)
Echostar Comm DISH (778) 6,520 2,024
Dun & Brad DNB (20) 1,431 (82)
Gamestop Corp. GME (4) 607 31
Hollywood Entertainment HLYW (113) 718 (271)
Hollywood Casino HWD (92) 553 89
Imclone Systems IMCL (5) 474 295
Inveresk Research Group IRGI (7) 302 (115)
Gartner Inc IT (34) 839 (79)
Journal Register JRC (36) 711 (26)
Kos Pharmaceuticals KOSP (58) 83 27
Ligand Pharm LGND (58) 117 22
Level 3 Comm Inc. LVLT (65) 9,316 642
Mega Blocks Inc. MB (37) 106 56
Moody's Corp. MCO (304) 505 12
Medical Staffing MRN (33) 162 55
Petco Animal PETC (86) 473 68
Proquest
Co. PQE (45) 628 (140)
Playtex Products PYX (44) 1,105 108
RH Donnelley RHD (111) 296 0
Sepracor Inc. SEPR (314) 1,093 727
United Globalcom UCOMA (3,284) 9,039 (8,279)
United Defense I UDI (166) 912 (55)
Valassis Comm. VCI (66) 363 10
Ventas Inc. VTR (91) 942 N.A.
Weight Watchers WTW (87) 483 (24)
Western Wireless WWCA (274) 2,370 (105)
Expressjet Holdings XJT (214) 430 52
*********
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.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
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contained herein is obtained from sources believed to be
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The TCR subscription rate is $625 for 6 months delivered via e-
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