/raid1/www/Hosts/bankrupt/TCR_Public/021218.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, December 18, 2002, Vol. 6, No. 250
Headlines
ACTRADE FINANCIAL: Nasdaq Knocks-Off Shares Effective Dec. 17
ACTUANT CORP: Improved Fin'l Profile Spurs S&P to Revise Outlook
ADELPHIA COMMS: Seeks 3rd Extension of Schedules Filing Deadline
AES CORPORATION: S&P Affirms B+ Corporate Credit Rating
AES ENERGY: S&P Rates $550M P-T Certs. & Credit Facility at BB+
AMERIGAS PARTNERS: Propane Partner Converts Subordinated Units
ANC RENTAL CORP: Court Okays Lincoln Property as Georgia Broker
APPLIED MICROSYSTEMS: Board Recommends Liquidation of Business
ASIA GLOBAL CROSSING: Wants to Deem Utilities Adequately Assured
ASPEN GROUP: Working Capital Deficit Tops $5 Million at Sept. 30
BETHLEHEM STEEL: PBGC Will Terminate Pension Plan Today
BETHLEHEM STEEL: USWA Questions PBGC Seizure of Pension Plan
BOYD GAMING: Tender Offer for 9.5% Notes to Expire on January 14
BOYD GAMING: S&P Assigns B+ Rating to Proposed $300MM Sr. Notes
BUDGET GROUP: Court Okays $1MM Contribution to French Subsidiary
CANADIAN SATELLITE: S&P Affirms B+ L-T Corporate Credit Ratings
CLARITI TELECOMMS: Agrees to Debt-for-Equity Swap with Lenders
COMMUNICATION DYNAMICS: Hires CONSOR as Amherst Liquidators
CONSECO STRATEGIC: Will Make Dividend Payment on January 10
CORAM HEALTHCARE: Crowley's Engagement Extended Until Month-End
COVANTA ENERGY: Asks Court to Approve Team Financing Transaction
CTC COMMS: Wants to Stretch Lease Decision Period Until March 3
DEL MONTE: S&P Ups Credit Rating to BB- on Likely Heinz Merger
DENNY'S CORP: Closes Arrangement for New $125MM Credit Facility
DYNCORP: S&P Puts BB- Rating on Watch Pos. on Acquisition by CSC
EFA SOFTWARE: Selling Assets to Computershare for C$6.25 Million
ENCOMPASS SERVICES: Proposes Interim Compensation Procedures
ENRON CORP: FdG Associates Acquires Limbach Facility Services
ENRON CORP: Asks Court to Further Extend Lease Decision Deadline
FAIRFAX FINANCIAL: S&P Affirms BB+ Counterparty Credit Rating
FAIRFAX FINANCIAL: Completes TIG Insurance Unit Restructuring
FEI INC: Can't Complete Proposed Merger with Veeco by Dec. 31
FOUR SEASONS HOTELS: Appoints Two Members to Board of Directors
GENAISSANCE PHARMACEUTICALS: Defaults on Equipment Lease Pact
GENUITY INC: U.S. Trustee Appoints Official Creditors' Committee
GLOBAL CROSSING: S.D.N.Y. Court Confirms Reorganization Plan
GLOBAL CROSSING: Continues to Meet Key Performance Objectives
GLOBAL CROSSING: Inks 2-Year Multimillion-Dollar Deal with TMC
GREATER SOUTHEAST: Fitch Drops Hospital Revenue Bonds to D
H&E EQUIPMENT: S&P Keeps Watch on BB- Rating over Weaker Results
HARVEST NATURAL: S&P Junks Corporate Credit Rating at CCC+
HAYES LEMMERZ: Files Plan of Reorganization in Delaware
HAYES LEMMERZ: Committee Brings-In Sonnenschein to Sue Banks
HEALTH INSURANCE PLAN: S&P Places B+ Ratings on Watch Positive
ILLINOIS POWER: Fitch Expects to Assign BB- $500MM Bonds Rating
IPALCO ENTERPRISES: S&P Affirms & Removes BB+ Rating from Watch
ITEX: Working Capital Deficit Narrows to $1.1 Mill. at Oct. 31
JORDAN INDUSTRIES: Liquidity Concerns Prompt S&P to Keep Watch
KAISER ALUMINUM: Hires Deloitte & Touche to Replace Andersen
KEY3MEDIA GROUP: Fails to Make Interest Payment on 11.25% Notes
KMART CORP: Will Delay Filing of Form 10-Q for Third Quarter
KMART CORP: NYSE Will Suspend Securities Trading Tomorrow
KMART: Court Okays Pact with Andersen Resolving Claims Dispute
LERNOUT: L&H NA Sues Former Professionals, Suppliers, et. al.
LTV CORP: Oil States Sues Debtor to Recover $14-Million Payment
MAREX INC: Chairman and CEO David Schwedel Leaves Company
MARK NUTRITIONALS: Committee Gets OK to Hire Kingman as Counsel
MTS INC: Fiscal 1st Quarter Net Loss Widens to $8.2 Million
NATIONSRENT: Exclusivity Extension Hearing to Continue on Feb 18
NAVISITE INC: Oct. 31, 2002 Balance Sheet Upside-Down by $744K
OCTAGON INVESTMENT: S&P Assigns BB Prelim. Class D Note Rating
ORGANOGENESIS: Brings-In Paul Hastings for California Litigation
OWENS CORNING: EPA Claims Bar Date Extended Until March 17, 2003
PACKETPORT.COM: Needs Fresh Capital to Continue Operations
PAXSON COMMS: Jeff Sagansky Takes Board's Vice-Chairman Post
PLANET HOLLYWOOD: Florida Court Confirms Plan of Reorganization
PRESIDENT CASINOS: Terrence Wirginis Reports 24.3% Equity Stake
PURCHASEPRO.COM: Bringing-In Sklar Warren as Special Counsel
RESOLUTION PERFORMANCE: Subpar Financial Profile Concerns S&P
R.H. DONNELLEY: Obtains Consents with Respect to 9-1/8% Notes
SEVEN SEAS PETROLEUM: Defaults on 12-1/2% $110-Mill. Sr. Notes
SHELBOURNE PROPERTIES: Inks Pact to Sell Sutton Square for $16MM
SIMTROL INC: Independent Auditors Express Going Concern Doubt
STANFIELD CARRERA: S&P Assigns Low-B Ratings to Classes D-1 & -2
TECH DATA: Company's Ability to Continue Operations Uncertain
TRANSTEXAS GAS: Third Quarter Revenues Fall to $15.1 Million
UNIROYAL TECHNOLOGY: Taps GMH Capital as Warren Property Broker
UNITED AIRLINES: Honoring Up to $35MM of Foreign Vendor Claims
US AIRWAYS: Court Responds to Employee-Shareholder Letters
VANGUARD: Asks Court to Approve Rescino Employment Arrangement
VENTAS INC: Caps 16 Million-Share Joint Offering Price
VERTICAL COMPUTER: Needs Additional Cash to Fund Business Plan
WARREN ELECTRIC: Wants Open-Ended Lease Decision Time Extension
WHEELING-PITTSBURGH: Settles Ohio Property Tax Obligations
WICKES INC: Completes Sale of Certain Assets to Lanoga for $55M+
WILLIAMS: California Settlement Agreement Passes State Milestone
WORLDCOM INC: Wants to Pull Plug on America West FlightFund Deal
* S&P Says Global Defaults Hit $157.3 Billion in 2002 -- So Far
* Cadwalader Appoints Keith Miller & Beth Taylor as Counsel
* Stroock & Stroock Elects Three New Partners Effective Jan. 1
* Meetings, Conferences and Seminars
*********
ACTRADE FINANCIAL: Nasdaq Knocks-Off Shares Effective Dec. 17
-------------------------------------------------------------
Actrade Financial Technologies Ltd., said that a Nasdaq Listing
Qualifications Panel has denied Actrade's appeal of an
October 17, 2002 Nasdaq Staff Determination that Actrade's
common stock, par value $.0001 per share, no longer qualifies
for inclusion in The Nasdaq Stock Market. Accordingly, the
Common Stock has been de-listed from The Nasdaq National Market
effective with the opening of business on Tuesday, December 17,
2002. The Common Stock is not eligible to trade on the OTC
Bulletin Board.
In addition, on December 12, 2002 the Company and one of its
subsidiaries had filed voluntary petitions for Chapter 11
bankruptcy relief and disclosing other recent developments. The
December 12 Release discussed, among other developments, that a
Taiwanese corporation had defaulted on $354,000 of bills of
exchange it had issued and that Actrade had accelerated the
remaining bills of exchange that had been issued by the
Taiwanese corporation, such that the principal amount due to
Actrade under the defaulted and accelerated bills of exchange
was $1,322,800.
Actrade also announced in the December 12 Release that the
Taiwanese corporation had guaranteed the obligations of one of
its U.S. subsidiaries to Actrade and that such U.S. subsidiary
and another U.S. subsidiary of the Taiwanese corporation had
defaulted on their obligations to Actrade and had filed for
Chapter 11 bankruptcy relief. On December 10, 2002, Actrade made
a demand for payment by the Taiwanese corporation under the
guarantee.
On December 13, 2002, Actrade received notice that the Taipei
Chamber of Commerce had approved the Taiwanese corporation's
"application of business reconciliation" which has the effect of
precluding Actrade from starting or continuing any civil
proceeding against the Taiwanese corporation. Actrade was
further notified that the deadline for submitting a claim
against the Taiwanese corporation was December 31, 2002.
Although Actrade intends to submit a claim, it cannot estimate
at the present time the amount, if any, it may recover in
respect of the amounts owed to it by the Taiwanese corporation
directly or pursuant to the guarantee described above.
ACTUANT CORP: Improved Fin'l Profile Spurs S&P to Revise Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Actuant Corp., to positive from stable. At the same time,
Standard & Poor's affirmed its ratings, including the 'BB-'
corporate credit rating, on Actuant. The outlook revision
reflects Actuant's improved financial profile, which is the
result of management's continued focus on cash flow generation
and debt reduction. "Over time, a disciplined approach to
acquisitions and further improvement in the financial profile
could lead to an upgrade," said Standard & Poor's credit analyst
Nancy Messer.
The ratings on Milwaukee, Wis.-based Actuant Corp., reflect its
below-average business risk profile combined with a substantial
debt burden and fair cash flow protection. The company sells to
small, cyclical industrial markets albeit with leading niche
positions.
Actuant designs, manufactures, and distributes a variety of
standard and customized products to retail and industrial
customers, and original equipment manufacturers. The company's
tools and supplies segment (60% of 2002 sales) is the world's
leading provider of high-force hydraulic industrial tools to
various end markets, and North America's largest supplier of
electrical tools and consumables through the do-it-yourself
retail distribution channel. The engineered solutions segment
(40%) is North America's largest supplier of recreational
vehicle (RV) slide-outs and leveling systems and the world's
leading supplier of hydraulic cab-tilt systems for heavy-duty
trucks and electrohydraulic automotive convertible top actuation
systems.
The company's fundamental strengths include leading shares in
five separate markets, with 70% of sales generated by products
holding number-one positions, and strong operating
profitability, with EBITDA margins of about 18%-19%. Challenges
come from competitive market conditions and cyclical demand in
certain end markets (including heavy-duty truck, RV, automotive,
and construction), which, in aggregate, account for about one-
half of Actuant's revenues. Nevertheless, Actuant's good
geographic, customer, product, and end-market diversity should
mitigate earnings and cash flow volatility.
High financial risk arises from an aggressively leveraged
capital structure and fair cash flow protection. Operating
results during fiscal 2001 were affected by the sharp decline in
production of RVs and the slowing U.S. economy. Despite a rise
in RV orders, challenging end-market conditions continued during
fiscal 2002. Nevertheless, Actuant's solid operating margins,
low working capital intensity, and modest capital expenditure
requirements should allow the company to generate modest free
cash flow in the next few years.
Modest ratings upside movement is possible in the next few years
should Actuant achieve and maintain stronger business and credit
profiles as a result of operating initiatives and improving
market fundamentals. Ratings improvement is also dependent upon
the company maintaining a disciplined approach to acquisitions.
ADELPHIA COMMS: Seeks 3rd Extension of Schedules Filing Deadline
----------------------------------------------------------------
According to Shelley C. Chapman, Esq., at Willkie Farr &
Gallagher, in New York, the Adelphia Communications Debtors have
expended substantial efforts responding to the many exigencies
and other matters that are incident to any Chapter 11 case but
which are compounded in a case of this size and complexity.
During the last several months, the Debtors have been called on
to:
-- stabilize their operations; and
-- respond to utility demands, stay violations and vendor
inquiries.
While the ACOM Debtors have taken initial steps towards
compiling their Schedules and Lists, Ms. Chapman admits that
much work remains to be done. Moreover, the issues surrounding
the ACOM Debtors' relationships and interactions with ABIZ have
complicated the ACOM Debtors' ability to identify and properly
record relevant information to be included in the Schedules and
Lists.
Ms. Chapman reminds the Court that the Debtors have assembled a
team of employees to perform a complete internal review of the
Debtors' books and records. This assignment is extremely time-
consuming, not only due to the sheer size of the Debtors'
operations, but also because of the unique circumstance that led
to the filing of these cases. While the Debtors continue in
their efforts to compile the information required by the
Schedules and Lists, much of the information simply will not be
available until this review process is completed. Accordingly,
while the Debtors have started the process of preparing the
Schedules and Lists, because of the many competing demands
presented to the Debtors since the Petition Date, as well as the
unique circumstances of these cases, the review process will
take at least several months to complete. The Debtors submit
that they have "cause" to further extend the time to file the
Schedules and the Lists in view of the facts and circumstances
of these cases.
At this juncture, the Debtors estimate that a further extension
of 180 days is necessary for them to continue the process of
preparing the Schedules and the Lists. Accordingly, the ACOM
Debtors ask the Court to extend their deadline to file Schedules
and Lists through June 23, 2003, without prejudice to their
right to seek any further extensions from this Court. (Adelphia
Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1) are
trading at 38 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1
for real-time bond pricing.
AES CORPORATION: S&P Affirms B+ Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on The AES Corp. At the same time Standard &
Poor's lowered its ratings on all of AES' senior unsecured debt
to 'B-' from 'B+'; affirmed the 'BB' rating on AES' $1.62
billion senior secured bank facility and $350 million senior
secured exchange notes; affirmed the 'B-' rating on AES'
subordinated notes; and affirmed the 'CCC+' rating on AES' trust
preferred securities. All ratings have been removed from
CreditWatch where they were placed with negative implications
on Oct. 3, 2002. The outlook is negative.
The affirmation comes as AES has announced the closing of its
senior secured bank facility and senior secured exchange notes
maturing December 2005.
"The closing lifts the immediate threat of insolvency, and
provides AES with the ability to focus on its goal of improving
credit by selling assets and paying down parent-level debt to a
more manageable level, and by improving operations at its
operating businesses," said credit analyst Scott Taylor. As
Standard & Poor's has stated previously, the lower rating on the
unsecured notes reflects their disadvantaged position relative
to the newly secured senior notes. The negative outlook reflects
the need for AES to execute on this plan over the course of the
next two to three years, as well as the uncertainty surrounding
the outcome of negotiations with BNDES regarding approximately
$900 million of debt maturities at AES Elpa and AES Transgas,
the holding companies of Eletropaulo (SD/--/--), in 2003, and
indenture provisions that may allow unsecured holders at AES
Corp. to accelerate under certain bankruptcy events at material
subsidiaries. Such subsidiaries currently include AES Drax
(CC/Watch Neg/--) and C.A. Electricidade de Caracas, and will
likely soon include Eletropaulo according to AES Corp.
Standard & Poor's estimates that AES' liquidity will stand at
about $150 million given the close of the transaction and the
payoff of the December 2002 notes that were not tendered.
Standard & Poor's further estimates FFO/interest coverage in
2003 of between 1.5x and 1.7x and FFO/Debt of 14% - 15% given a
range of projected distributions from subsidiaries from $900
million to $1.0 billion. Assuming capital expenditures of $200
million, Standard & Poor's further estimates free cash flow,
excluding any proceeds from asset sales, of $50 million to $150
million. If asset sales and debt paydowns are executed, these
metrics would change depending on the amount of debt paid down
and the cash flows forgone by asset sales. Standard & Poor's
will continue to evaluate AES' evolving financial profile as AES
moves forward with its asset sale program.
Standard & Poor's has emphasized that the magnitude of
refinancing over the next several years is the largest hurdle
currently facing the independent power producers, and AES'
management has made substantial strides in restoring the
company's credit by closing this transaction and relieving
refinancing pressure. By pushing out all significant debt
maturities until November 2004, AES has put itself ahead of the
curve in this regard, but still faces substantial hurdles that
are reflected in the negative outlook.
AES ENERGY: S&P Rates $550M P-T Certs. & Credit Facility at BB+
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' rating on
AES Eastern Energy L.P.'s $550 million pass through certificates
and $35 million working capital facility and removed the rating
from CreditWatch, where it was placed on Oct. 3, 2002.
This rating action was solely in reaction to a similar rating
action taken on The AES Corp. earlier. The rating action
reflects AES Eastern's rating linkage to AES. The outlook is now
negative and reflects the outlook on AES. The rating action is
directly attributable to a similar rating action taken on AES'
ratings. There have been no other events that in and of
themselves would have caused a rating action on this subsidiary.
In most circumstances Standard & Poor's will not rate the debt
of a wholly owned subsidiary higher than the rating of the
parent. Exceptions can be made, and were in this case, on the
basis of the cumulative value provided by enhancements such as
structural protections, covenants, a security interest in
certain assets, an independent director, in conjunction with the
stand-alone credit quality of the entity, which supports such
elevation. These provisions serve to make AES Eastern Energy
L.P. bankruptcy remote from AES, its 100% owner, which has
weaker credit quality. While Standard & Poor's views these
provisions as supportive in that they reduce the risk of a
subsidiary being filed into bankruptcy in the event of a parent
bankruptcy, the provisions are not viewed by Standard & Poor's
as 100% preventative of such a scenario. Therefore, Standard &
Poor's limits the rating differential provided by such
structural enhancements to three notches. On that basis, AES'
100% owned subsidiaries' corporate credit ratings cannot be
higher than 'BB+'.
AES Eastern Energy L.P., has adequate liquidity in the form of a
$35 million working capital facility. This facility has been
adequate to fund working capital requirements since AES Eastern
Energy's inception and should be adequate going forward.
The negative outlook reflects the negative outlook on AES. The
units themselves continue to operate adequately and service
debt. AES Eastern Energy has an adequate financial position,
low technology risk, and a sound marketing strategy.
Nonetheless, AES Eastern Energy is exposed to 100% merchant risk
and significant environmental risk at all of the coal-fired
plants. Any penalties that may be levied by the New York State
Department of Environmental Conservation relating to either AES
Somerset or AES Cayuga could negatively affect the ratings.
Ratings changes in the future will depend on the development of
electricity markets in New York.
AMERIGAS PARTNERS: Propane Partner Converts Subordinated Units
--------------------------------------------------------------
AmeriGas Propane, Inc., general partner of AmeriGas Partners,
L.P. (NYSE:APU), reported that, pursuant to the Amended and
Restated Agreement of Limited Partnership of AmeriGas Partners,
the Partnership has satisfied the cash-based performance and
distribution requirements necessary to convert the remaining
9,891,072 Subordinated Units, all of which were held by AmeriGas
Propane, Inc., to Common Units effective November 18, 2002. The
conversion does not increase the total number of limited partner
units outstanding.
AmeriGas Partners is the nation's largest retail propane
marketer, serving 1.2 million customers from approximately 650
locations in 46 states. UGI Corporation (NYSE:UGI), through
subsidiaries, owns 51% of the Partnership and individual
unitholders own the remaining 49%.
Comprehensive information about AmeriGas is available on the
Internet at http://www.amerigas.com
* * *
As reported in Troubled Company Reporter's November 28, 2002
edition, AmeriGas Partners, L.P.'s $88 million senior notes due
May 2011, issued jointly and severally with its special purpose
financing subsidiary AP Eagle Finance Corp., are rated 'BB+' by
Fitch Ratings.
The Rating Outlook is Stable.
AmeriGas' rating reflects the subordination of its debt
obligations to $569.5 million secured debt of the OLP including
the OLPs $559.4 million privately placed 'BBB' rated first
mortgage notes. In addition, Fitch's assessment incorporates the
underlying strength of AmeriGas' retail propane distribution
network.
ANC RENTAL CORP: Court Okays Lincoln Property as Georgia Broker
---------------------------------------------------------------
ANC Rental Corporation and its debtor-affiliates obtained
permission from the Court to employ Lincoln Property Company
Commercial Inc., as their real estate broker to market and sell
their unprofitable property at Bobby Brown Parkway in East
Point, Georgia.
The Debtors will pay Lincoln a 6% commission based on the sale
price. If there's a cooperating broker, the Lincoln will have
to share the 6% commission on a 50/50 basis. (ANC Rental
Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
APPLIED MICROSYSTEMS: Board Recommends Liquidation of Business
--------------------------------------------------------------
Applied Microsystems Corporation (Nasdaq:APMC) said that its
board of directors has unanimously decided to recommend to
shareholders that the Company be liquidated.
In early September of 2002, the Company agreed to sell its
embedded systems development tools business to a third party in
an asset sale transaction that was subsequently approved by
shareholders. In mid-October of 2002, the Company announced that
it had negotiated a buyout of its remaining obligations under a
multi-year facilities lease, which enabled it to accelerate its
search for development-stage funding for its Libra Networks
business. Libra Networks represents an expansion into
development of hardware and software products aimed at end-user
markets -- specifically, corporate data centers.
"Though we have made solid progress on Libra development
efforts, the overall funding environment, coupled with our
corporate structure, pose significant challenges to our ability
to fund Libra Networks at this time," stated Stephen J. Verleye,
President and CEO of Applied. "We previously advised our
shareholders that our board would consider liquidation if it
appeared to be the course of action most likely to optimize
shareholder value. The feedback we have received from a variety
of potential funding sources now leads us to conclude that
liquidation is in fact the better alternative."
The Company's board of directors has appointed an independent
committee, consisting of directors Elwood D. Howse, Jr., and
Charles H. House, to oversee the process of selling the Libra
Networks assets. This committee has been empowered to engage a
financial advisor to assist it in this process.
Liquidation of a corporation is a complex process, and requires
shareholder approval. Applied plans to prepare a proxy statement
as soon as practicable that will provide additional information
and will submit a plan of liquidation and dissolution to its
shareholders for approval. Even after shareholder approval of
the plan of liquidation and dissolution, liquidation
distributions to shareholders, if any, may be delayed for a
lengthy period of time to allow the Company to sell any
remaining assets (such as the Libra Networks intellectual
property), and to discharge or make provision for satisfaction
of the claims of known and contingent creditors (including
indemnification obligations arising from the sale of the
Company's embedded systems development tools business). The
Company is currently unable to predict the amount of any
potential distribution to shareholders or the timing of any such
distribution.
Applied also announced that one of its directors, Lary L. Evans,
has resigned from its board of directors. Mr. Evans was the
majority owner of Reba Technologies, Inc., from which the
Company purchased a portion of its Libra Networks intellectual
property in May of 2002.
The company can be reached at P.O. Box 97002, Redmond, Wash.
98073-9702; by phone at 800-426-3925; or by e-mail at
info@amc.com. Visit Applied on the Web at http://www.amc.com
ASIA GLOBAL CROSSING: Wants to Deem Utilities Adequately Assured
----------------------------------------------------------------
David M. Friedman, Esq., at Kasowitz Benson Torres & Friedman
LLP, in New York, relates that in connection with the global
operation of their businesses and management of their
properties, Asia Global Crossing Ltd., and its debtor-affiliates
obtain telephone and similar services from at least six
different utility companies. Pursuant to Section 366 of the
Bankruptcy Code, within 20 days after the commencement of a
bankruptcy case, a utility may not discontinue service to a
debtor solely on the basis of the commencement of the case or
the failure of the debtor to pay a prepetition debt. Following
the 20-day period, however, utilities arguably may discontinue
service to the debtor if the debtor does not provide adequate
assurance of future performance of its postpetition obligations.
If the Utility Companies are permitted to terminate Utility
Services on the 21st day after the Petition Date, Mr. Friedman
is concerned that the AGX Debtors will be forced to cease
operation of their affected facilities, potentially resulting in
a loss of sales and profits, and the AGX Debtors' businesses
will be irreparably harmed. The impact on the AGX Debtors'
business operations, revenues and restructuring efforts would be
extremely harmful and would jeopardize the AGX Debtors'
restructuring efforts. It is therefore critical that Utility
Services continue uninterrupted.
Accordingly, the Debtors seek issuance of an order:
A. prohibiting the Utility Companies from altering, refusing
or discontinuing any Utility Services; and
B. determining that the Utility Companies have "adequate
assurance of payment " within the meaning of Section 366 of
the Bankruptcy Code, without the need for payment of
additional deposits or security.
The Debtors propose to provide adequate assurance of payment in
the form of payment as an administrative expense of their
chapter 11 estates pursuant to Sections 503(b) and 507(a)(1) of
the Bankruptcy Code of all valid charges for Utility Services
rendered to the Debtors by the Utility Companies on or after the
Petition Date.
Mr. Friedman notes that the Debtors have an excellent
prepetition payment history with the Utility Companies. In
addition, the Debtors represent that they will continue to pay
all postpetition obligations, including utility bills, as billed
and when due. The Debtors have $198,000,000 in unrestricted cash
as of the Petition Date, which should adequately assure the
Utility Companies of timely future payment.
Mr. Friedman believes that the proposed adequate assurance,
which includes explicitly granting administrative expense
priority to any postpetition utility obligations, will provide
more than sufficient protection to the Utility Companies.
Further, the relief requested ensures that the Debtors' business
operations will not be disrupted but also provides the Utility
Companies with a fair and orderly procedure for determining
requests for additional adequate assurance.
Mr. Friedman asserts that the Debtors' proposed method of
furnishing adequate assurance of payment for postpetition
Utility Services is:
-- in keeping with the spirit and intention of Section 366 of
the Bankruptcy Code;
-- not prejudicial to the rights of any Utility Company; and
-- is in the best interest of the Debtors' estates. (Global
Crossing Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Asia Global Crossing's 13.375% bonds due 2010 (AGCXUS10R1) are
trading at about 11 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCXUS10R1
for real-time bond pricing.
ASPEN GROUP: Working Capital Deficit Tops $5 Million at Sept. 30
----------------------------------------------------------------
Aspen Group Resources Corporation, (TSX: ASR, OTC Bulletin
Board: ASPGF) reported its financial results for the three and
nine month period ended September 30, 2002. Aspen reports its
results in US dollars.
For the three-month period ended September 30, 2002, Aspen
reported a net loss of $6.81 million on revenue of $1.54
million. The net loss is due primarily to a write-down of $4.55
million in the valuation of the Company's producing oil and gas
properties. This valuation adjustment is attributable to an 11
percent decline in the market price of natural gas during the
past twelve months. Aspen's revenue in the quarter was impaired
due to a one-time revenue accrual adjustment of $760 thousand
from prior interim periods and $310 thousand in legal judgments
against the Company expensed in the quarter. Also affecting the
Company's financial results was a $437 thousand write-down
pertaining to an investment which its wholly owned Canadian
subsidiary Aspen Endeavour Resources Inc., had made in prior
years.
For the nine-month period, the Company reported a loss of $8.3
million on revenue of $6.26 million. In addition to the third
quarter items mentioned above, revenues decreased due to a
decline in commodity prices and production and a one-time charge
for certain un-accrued and unpaid royalties, and increased
general and administrative expenses because of an expansion in
staff related to acquisitions in 2001 and 2002.
At September 30, 2002, the Company's balance sheet shows that
total current liabilities exceeded total current assets by about
$5 million.
"This is my first opportunity to report to the Shareholders of
Aspen since accepting the position of Interim CEO in October",
stated Robert Calentine. "Since taking on that position I have
initiated action on four fronts. First, we significantly reduced
G&A expense through staff reductions and enhanced internal cost
controls. Second, we initiated discussions with our US bank to
remediate the default in our lending covenants covering the US
properties. We are currently in advanced negotiations with our
US lender to address the default. Third, the board has engaged a
firm of financial consultants to review Aspen's financial
reporting and a special committee comprised of Robert Cudney and
myself, to assist them in their review. Finally, we are
accessing the ongoing operations of Aspen in order to identify
the best opportunities to improve the sustainability, growth,
and profitability of the enterprise. I anticipate having the
opportunity to report our progress on each of these fronts
shortly."
Average prices received for the nine months ended September 30,
2002 were $21.87 per bbl for oil and $2.18 per mcf for gas. Net
production in the nine-month period averaged 1458 boe/d (barrel
of oil equivalent/day, 6:1 conversion) compared to 986 BOE for
the nine-month period ended September 30, 2001. Assuming
Endeavour had been accrued January 1, 2001, the comparative
proforma net production for 2001 would have been 1,446 BOE per
day.
Aspen also reported that it is currently involved in three legal
proceedings where it has been named as a defendant. The net
potential liability of these claims could total approximately
$3.0 million if the Company is unsuccessful in its defense.
As previously announced, Aspen's third quarter results were
delayed due to a board mandated review of the Company's
financials. Because the review has not yet concluded and could
affect the financial statements of the Company, the newly-
appointed Chief Executive Officer of the Company has not
executed the CEO certifications of the financial statement of
the Company as mandated by SEC rules
Aspen Group Resources Corporation is an independent oil and
natural gas producer engaged in the acquisition, exploration,
production and development of oil and natural gas properties in
the Mid Continent Region in the US and the Western Canadian
Basin. Aspen's shares trade on The Toronto Stock Exchange under
the symbol ASR and on the OTCBB under the symbol ASPGF.
BETHLEHEM STEEL: PBGC Will Terminate Pension Plan Today
-------------------------------------------------------
Bethlehem Steel Corporation has been notified by the Pension
Benefit Guaranty Corporation that the agency intends to announce
today, December 18, the termination of Bethlehem Steel's pension
plan, confirmed Robert S. Miller, Bethlehem's chairman and chief
executive officer.
"Given the significant underfunding of our pension plan, this
action by the PBGC is not unexpected. However, we are very
disappointed that the PBGC is taking this action when Bethlehem
has clearly not missed any scheduled contributions to the fund
or payments from it to eligible recipients. An immediate
termination is unfortunate and will adversely affect our ability
to restructure our workforce in an orderly manner," he said.
Mr. Miller continued that "this premature termination deals a
serious blow to the potential recovery by the creditors of
Bethlehem Steel Corp., one of the most important of which is the
PBGC. We have made steady progress to either consolidate or
emerge from bankruptcy as a stand-alone company, and have been
negotiating a new agreement with the United Steelworkers of
America to significantly reduce the represented workforce while
eliminating salaried jobs.
"Bethlehem is continuing its discussions with International
Steel Group concerning the potential merger of the two
companies. These discussions are consistent with President
Bush's vision to promote steel industry consolidation when he
courageously implemented tariffs early this year.
"The federal program of safety nets for workers who have been
devastated by unfair imports was meant to protect the very
workers who will be adversely affected by this early termination
of our pension plan. Not only will many now be ineligible for
special early pensions, they will also be ineligible to obtain
health care insurance tax credits available under the Trade
Adjustment Assistance Program, which was part of the Trade Act
of 2002.
"We have shared extensive information with the PBGC and, while
we knew the termination of our pension plan was inevitable, we
had hoped we could proceed with our restructuring in an orderly
fashion. We are very surprised at the timing of the PBGC's
action as we are not yet in arrears on our funding obligation,
as others whose plans have recently been terminated."
"We will continue to work with the PBGC to try and amend the
timing of our plan termination in order to complete the
restructuring of our company in a manner that will treat our
employees and creditors fairly. I anticipate meeting with the
PBGC in the very near future to discuss what recourse is
available to Bethlehem to halt this premature termination of a
plan that is not in violation of any of its funding or
payments," Mr. Miller concluded.
Bethlehem Steel Corp.'s 10.375% bonds due 2003 (BS03USR1),
DebtTraders says, are trading at about 5 cents-on-the-dollar.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1
for real-time bond pricing.
BETHLEHEM STEEL: USWA Questions PBGC Seizure of Pension Plan
------------------------------------------------------------
The United Steelworkers of America expressed disappointment over
the timing of the termination of Bethlehem Steel's pension by
the Pension Benefit Guaranty Corporation, coming right before
Christmas, and dashing the hopes and dreams of tens of thousands
of workers, retirees and their families.
"Once again, we are disappointed, but not surprised, that the
PBGC has acted to limit its own liability rather than fulfill
its mandate to protect the pension benefits of workers and
retirees like those at Bethlehem Steel," said Leo W. Gerard,
USWA international president.
"Since Bethlehem declared Chapter 11, we have been working
diligently with management to restructure the company," said Tom
Conway, Basic Steel Industry Conference secretary and USWA chief
negotiator. "The PBGC's action denied us the opportunity of
granting shutdown pensions to workers who are reduced from the
workforce as a result of the restructuring necessary for the
survival of the industry."
"It is another shameful example of the government's failure to
protect the interests of workers," Gerard said. "The Bush
Administration has made this even more distasteful by waiting
until after the elections to pull the plug on families who have
been living with the fear of losing jobs, health care and
pensions.
"When the Administration imposed tariffs on the industry last
March, we were led to believe that the government would assist
in restructuring the steel industry," Conway said. "The enormous
legacy costs of the industry is clearly the result of years of
unfair trade. Just when we begin to see light at the end of the
tunnel, the PBGC extinguishes it."
"Just as the Grinch dressed up like Santa and stole Christmas,
the Administration masqueraded as a friend to workers and then
snatched our pensions," Gerard concluded.
BOYD GAMING: Tender Offer for 9.5% Notes to Expire on January 14
----------------------------------------------------------------
Boyd Gaming Corporation (NYSE: BYD) has commenced a cash tender
offer to purchase all of its outstanding $250 million aggregate
principal amount of 9.50% senior subordinated notes due 2007.
Under the terms of the offer, the total consideration to be paid
for each note validly tendered prior to 5:00 p.m. New York City
time, on December 30, 2002 and accepted for payment will be
$1,047.50 per $1,000.00 of principal amount, plus accrued and
unpaid interest. The total consideration for each note tendered
includes an early tender premium of $10.00 per $1,000.00 of
principal amount of notes tendered prior to 5:00 p.m., New York
City time, on December 30, 2002. Holders that tender their
notes after that time but prior to the expiration of the tender
offer will receive $1,037.50 per $1,000.00 of principal amount
of notes validly tendered and accepted for payment, plus accrued
and unpaid interest.
The tender offer is scheduled to expire at 5:00 p.m., New York
City time, on January 14, 2003, unless extended or earlier
terminated. Tenders of notes made prior to 5:00 p.m., New York
City time, on December 30, 2002, may not be validly withdrawn or
revoked, unless the Company reduces the tender offer
consideration or the principal amount of notes subject to the
tender offer or is otherwise required by law to permit
withdrawal. Tenders of notes made after 5:00 p.m., New York
City time, on December 30, 2002, may be validly withdrawn at any
time until 5:00 p.m., New York City time, on the expiration
date.
The tender offer is subject to certain conditions, including the
consummation of the Company's issuance of its 7.75% senior
subordinated notes due 2012. As soon as practicable upon
consummation of the Company's issuance of its 7.75% senior
subordinated notes due 2012, the Company intends to call for
redemption, in accordance with the indenture governing the 9.50%
senior subordinated notes due 2007, all such notes that remain
outstanding. The redemption price will be $1,047.50 per
$1,000.00 of principal amount thereof, plus interest accrued and
unpaid to the redemption date. This statement of intent shall
not constitute a notice of redemption under the indenture
governing the 9.50% senior subordinated notes due 2007.
Lehman Brothers and Deutsche Bank Securities will serve as the
Dealer Managers for the tender offer. Questions regarding the
tender offer may be directed to Lehman Brothers, Attention: Rad
Antonov, at (212) 528-7581 or (800) 438-3242 (toll free).
Requests for documents may be directed to D.F. King & Co., Inc.,
the Information Agent for the tender offer, at (800) 628-8510.
As reported in Troubled Company Reporter's Tuesday Edition,
Fitch Ratings assigned a rating of 'B+' to the $300 million
senior subordinated notes due 2012 being issued by Boyd Gaming
Corporation. Proceeds are to be used to tender for the company's
existing $250 million in senior subordinated notes due 2007 and
to repay outstandings under the its revolving credit agreement.
Ratings for Boyd reflect the company's diversified property
portfolio, strong operating performance and successful history
of absorbing acquisitions. The company's leverage remains
consistent with the rating category, although further debt
reduction is anticipated in the short term. Over the
intermediate term risk factors include the potential for debt-
financed acquisitions and projected moderate levels of share
repurchases. The Rating Outlook is Stable.
BOYD GAMING: S&P Assigns B+ Rating to Proposed $300MM Sr. Notes
---------------------------------------------------------------
Standard & Poor's Rating Services assigned its 'B+' rating to
Boyd Gaming Corp.'s proposed $300 million senior subordinated
notes offering.
The proceeds of the offering will be used to repay the company's
existing $250 million 9.5% senior subordinated notes, with the
excess after transaction expenses used to repay bank debt. These
notes are expected to be sold in a private offering pursuant to
Rule 144A of the Securities Act of 1933.
Concurrently, Standard & Poor's affirmed it 'BB' corporate
credit rating on Boyd. The outlook is stable. The company had
$1.1 billion total debt outstanding as of September 30, 2002.
"We expect that Boyd will continue to experience positive
operating momentum in 2003. Credit measures should improve
further and this will provide a cushion for future growth
opportunities," said Standard & Poor's credit analyst Michael
Scerbo.
For the nine months ended September 30, 2002, Boyd reported
EBITDA of $209 million, an approximately 25% increase over the
same period last year. Same-store EBITDA (excluding Delta Downs)
grew by 16% during this period. Delta Downs, a racetrack in
Louisiana, opened its slot machine operations in February 2002.
Excluding Delta Downs, Boyd experienced broad EBITDA growth
across its portfolio. In particular, Indiana-based Blue Chip
continued its momentum, and Boyd's two Sam's Town properties
(Las Vegas and Tunica) have performed well. Due to improved cash
flow from operations and a $54 million reduction in debt since
March 31, 2002, the company has been able to improve credit
measures significantly.
BUDGET GROUP: Court Okays $1MM Contribution to French Subsidiary
----------------------------------------------------------------
Judge Walrath authorizes Budget Group Inc., and its debtor-
affiliates to make a $1,000,000 equity contribution to Budget
France. The Debtors are to make an immediate contribution of
$500,000, with the remaining $500,000 conditioned on the
Official Committee of Unsecured Creditors' consent.
Budget France is a wholly owned direct subsidiary of Societe
Financiere et de Participation, a dormant holding company and a
wholly owned subsidiary of Budget Rent A Car International.
On July 25, 2002, Budget France was forced into receivership
under French insolvency law, and Maitre Gilles Baronnie was
appointed as its Receiver.
The Debtors and the Creditors' Committee have been working with
the Receiver to find a solution to Budget France's financial
problems. The cash generated by Budget France's operations is
currently insufficient to cover the costs being incurred by the
Receiver and without an immediate cash infusion, Mr. Morton is
concerned that the Receiver may be required to liquidate Budget
France. (Budget Group Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CANADIAN SATELLITE: S&P Affirms B+ L-T Corporate Credit Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Service said that the ratings on
Canadian Satellite Communications Inc., and its wholly owned
subsidiary, Star Choice Communications Inc., are removed from
CreditWatch with positive implications. At the same time, the
ratings on both companies, including the 'B+' long-term
corporate credit rating on Cancom, are affirmed. The outlook is
positive.
The revision on the company's CreditWatch status, along with the
ratings affirmations and positive outlook, reflect Standard &
Poor's recent review of the parent-subsidiary relationship
between Shaw Communications Inc., and Cancom, above all the
expectation that Shaw will provide financial support to Cancom
in the medium term if Cancom cannot secure stand-alone
financing. Present and future ratings on Cancom and its
subsidiaries will incorporate this stated intention.
At the moment, Cancom's business plan is not fully funded, and
availability under the company's credit facility is not
sufficient to support cash requirements until it turns cash flow
positive, which is expected, on a run-rate basis, in 2004. In
addition, Cancom's C$250 million structured note is due in
December 2003.
"The current ratings assume that refinancing risk is greatly
reduced due to Shaw's indicated willingness and ability to
support its subsidiary if it needs to," said Standard & Poor's
credit analyst, Barbara Komjathy. "The ratings were not fully
equalized to reflect Standard & poor's assessment of the
differences in default risks and the lack of guarantees of
Cancom's debt from Shaw."
In addition to the anticipated financial support from Shaw,
ratings on Cancom also take into account the growing customer
base and strong market position of its satellite direct-to-home
television subsidiary, Star Choice, and the business diversity
provided by its satellite services operations. The ratings also
consider Cancom's continued negative discretionary cash flows
and limited financial flexibility, mitigated by anticipated
financing support from Shaw in the medium term.
Through its satellite services arm, Cancom offers wholesale
distribution of both audio and video signal, satellite tracking
and messaging services, and interactive distance-learning
services. Through Star Choice it offers residential DTH
services.
The company generated C$536.8 million in revenues in 2002 and
C$78.5 million of lease-adjusted EBITDA. Star Choice's operating
income losses of C$15.2 million were more than offset by its
satellite services' C$52.6 million contribution. Cancom C$1.2
billion total debt outstanding at August 31, 2002, reflects the
impact of significant commitments to lease transponder capacity
since it does not own or operate its own satellites. The company
expects to generate negative free cash flow of C$114 million
in 2003, reflecting material improvement from 2002, due to
increased profit generation and lower capital expenditures.
CLARITI TELECOMMS: Agrees to Debt-for-Equity Swap with Lenders
--------------------------------------------------------------
Integrated Data Corp., (formerly Clariti Telecommunications
International Ltd.) has agreed with its lenders to convert
$650,000.00 of debt into shares of the Company's common stock at
a conversion price $2.00 per share. The resulting 325,000
shares will be newly issued and subject to the one-year
restriction on trading imposed by Rule 144 under the Securities
Act of 1933. Shares of the Company are currently trading at
approximately $1.00 per share on the OTCBB under the symbol
"ITDD".
Integrated Data Corp's Board of Directors and a majority of its
shareholders have also agreed to buy C4 Services Ltd., a Bermuda
registered company limited by shares and owning (a) the
worldwide license (other than the Americas) for all DataWave
Systems Inc., (a Canadian public company trading on the OTCBB
under the symbol of "DWVSF") technologies and intellectual
property, and (b) a UK registered telecommunications company
operating a London-based Nokia DX 220 2,000xE1 port public
switch (60,000 lines), with metropolitan infrastructure
connected to national and international telecom carriers. The
consideration payable for C4 Services is $4,200,000, to be paid
in shares of Integrated Data Corp's common stock at a valuation
of $1.00 per share. The sellers are the existing shareholders
of C4 Services comprised of about 20 individuals and companies.
The 4,200,000 million shares will be newly issued shares of
Integrated Data Corp's common stock, issued subject to certain
restrictions on trading for a period of two years, the first
year as imposed by Rule 144 under the Securities Act 1933 and
the second year as directed by the Board of Directors of
Integrated Data Corp.
The Company is planning further acquisitions which if successful
will be announced in the immediate future.
On April 18, 2002, Clariti Telecommunications International,
Ltd., filed a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Eastern District of
Pennsylvania.
COMMUNICATION DYNAMICS: Hires CONSOR as Amherst Liquidators
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave its
nod of approval to Communication Dynamics, Inc., and its debtor-
affiliates' application to employ CONSOR as Intellectual
Property Consultants and Liquidators for Amherst FiberOptics,
Inc., and Amherst Holding Company, nunc pro tunc to October 16,
2002.
Amherst is in the principal business of selling "fusion
splicers" for use in the fiber optic cable manufacturing
environment. The Debtors have determined that Amherst has no
going concern value and that the only value which can be derived
is through the sale of the Assets of Amherst other than the
Amherst Goodwill.
Specifically, CONSOR will:
a) identify and evaluate the Debtors' rights to sell the Assets;
b) identify potential inquirers of the Assets and solicit their
interests on behalf of the Debtors;
c) organize the Assets and related supporting materials into
marketing packages;
d) identify and engage, upon written approval of the Debtors,
facilitators, agents, and consultants on behalf of the
Debtors to dispose of the Assets at the sole expense of
CONSOR to cover any third party fees and commissions;
e) recommend potential structured for the sale or auction
process to be used to dispose of the Assets in the immediate
near terms;
f) negotiate and structure potential "stalking horse" contracts
with appropriate inquiries of the Assets; and
g) act as the Debtors' exclusive disposition agent for the
Assets, and recommend transactions to dispose of the Assets
in the market, in order to maximize value for parties in
interest and the Debtors' estate.
The Debtors will pay CONSOR a flat fee of $35,000 per month for
four months in return for the consulting services rendered by
its various consultants in connection with these cases.
Additionally, the Debtors will pay CONSOR a success fee equal to
15% of any cash or other consideration paid for the benefit of
the Debtors' estates as a result of the sale disposition or
long-term license of the Assets exceeding $70,000.
Communication Dynamics, Inc., together with its Debtor and non-
Debtor affiliates, is one of the largest multinational suppliers
of infrastructure equipment to the broadband communications
industry. The Debtors filed for chapter 11 protection on
September 23, 2002. Jeffrey M. Schlerf, Esq., at The Bayard
Firm represents the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed more than $100 million both in estimated assets and
debts.
CONSECO STRATEGIC: Will Make Dividend Payment on January 10
-----------------------------------------------------------
Conseco Strategic Income Fund (NYSE:CFD) declared a dividend of
$0.0417 per share, payable Jan. 10, 2003 to holders of record at
the close of business on Dec. 31, 2002.
Conseco Strategic Income Fund is a closed-end investment
management company. The Fund's primary investment objective is
to seek high current income. As discussed in the Fund's
prospectus, the Fund intends to distribute substantially all of
its net investment income monthly. All net realized capital
gains, if any, generally will be distributed to the Fund's
shareholders at least annually, although net capital gains
(i.e., the excess of net long-term capital gains over net short-
term capital losses) may be retained by the Fund.
The Fund is managed by Conseco Capital Management, Inc., a
wholly owned subsidiary of Conseco, Inc. (OTCBB:CNCE).
Headquartered in Indianapolis, Ind., Conseco is one of middle
America's leading sources for insurance, investment and lending
products. Through its subsidiaries and a nationwide network of
distributors, Conseco helps 13 million customers step up to a
better, more secure future.
CORAM HEALTHCARE: Crowley's Engagement Extended Until Month-End
---------------------------------------------------------------
Arlin M. Adams, Esquire, the Chapter 11 trustee for the
bankruptcy estates of Coram Healthcare Corporation and Coram,
Inc., and Daniel D. Crowley, who served as Coram's Chairman of
the Board of Directors, Chief Executive Officer and President
through November 29, 2002, have further extended Mr. Crowley's
employment through December 31, 2002, in order to continue their
discussions and negotiations regarding what Mr. Crowley's role
with Coram, if any, will be following December 31, 2002.
Coram Healthcare, a provider of home infusion-therapy services,
could use a big infusion of cash itself. Coram (from the Latin
for "face-to-face") is in Chapter 11 bankruptcy protection from
its creditors. Under the terms of its bankruptcy it still
operates its more than 70 branches in 40 states and Canada while
it restructures its debt. Services include tube feeding and
treatments for transplant patients and people with infectious
diseases and hemophilia. Coram also rents and sells medical and
respiratory therapy equipment and -- through subsidiary CTI
Network -- offers support services for clinical research
studies.
Coram filed for bankruptcy protection on August 8, 2000, in the
U.S. Bankruptcy for the District of Delaware.
COVANTA ENERGY: Asks Court to Approve Team Financing Transaction
----------------------------------------------------------------
In 1994, Ogden Palladium Services (Canada) Inc., a non-debtor
subsidiary of Covanta Energy Corporation, entered into a 30-year
contract with Palladium Corporation, the owner of a 19,000 seat
multipurpose indoor arena in Ottawa, Ontario, Canada to provide
complete facility management and concession services at the
Arena.
As part of the project, Palladium entered into a 30-year license
agreement with the Ottawa Senators Hockey Club Corporation, the
owner of the Ottawa Senators hockey team and the Manager, to
which the Team would play all of its home games at the Arena.
Under the terms of the Management Agreement, the Manager agreed
among other things:
(a) that the Arena, under its management, would generate a
certain minimum amount of revenues;
(b) to advance funds, if necessary, to Palladium to assist in
refinancing senior secured debt incurred in connection
with the construction of the Arena; and
(c) to make certain contributions to the working capital
needs of OSHC.
Covanta has guaranteed the Manager's obligations, as well as
portions of the principal and interest of OSHC's senior term
bank debt. Moreover, in 1997, Covanta, in compliance with the
guarantees, engaged in various transactions to refinance
Palladium's senior secured debt, as well as other debt of
Palladium resulting from, among other things, interest accrued
on previous loans and advances to fund increased construction
costs. In January 1999, Covanta also made certain subordinated
loans to OSHC as part of a refinancing of the Team.
In the recent years, the Team has experienced financial
difficulties as a result of, among other things, low attendance
rates, weak sales of season tickets, devaluation of the Canadian
dollar and a downturn in the private sector of the local
economy. The Team has sought financing from various sources,
including the National Hockey League, certain banking
institutions and Covanta in order to fund its operations and
obligations to the Arena under the Licensing Agreement and other
related agreements.
Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton,
in New York, tells Judge Blackshear that Covanta has made these
loans to OSHC:
(a) CND$7,000,000 under a revolving facility pursuant to the
Senior Lenders Credit Agreement executed in January 1999;
(b) CND$30,000,000 pursuant to a Subordinated Loan Agreement
executed in January 1999; and
(c) CND$12,300,000 pursuant to an Additional Loan Agreement
executed in September 1999.
Ms. Buell notes that the Covanta Loans are secured by
substantially all the Team's assets, including the NHL
Franchise, but are junior to:
(a) a CND$14,300,000 loan by the NHL;
(b) CND$60,000,000 senior bank term loans by the Canadian
Imperial Bank of Commerce and Fleet Bank; and
(c) CND$5,000,000 of a revolving facility, by Aramark
Entertainment Services (Canada) Inc. This loan
substituted a prior revolving facility by Fleet Bank.
To date, Ms. Buell notes, the Team continues to experience
financing difficulties, including shortfalls on its cash flow
and operational funds. To address these financial difficulties,
and the Team's need for new capital, OSHC's majority
shareholder, Roderick M. Bryden, Norforl Capital Partners and
other related interested parties propose to arrange a financing
transaction, which, when completed with the consent of OSCH's
secured lenders, including Covanta, would generate proceeds to
the Team of approximately CND$42,000,000.
According to Ms. Buell, the proposed Team Financing Transaction
is structured pursuant to a tax ruling by the Canadian Customs
and Revenue Agency, which contemplates an indirect investment in
the Team by certain Canadian investors. In particular, the Team
Financing Transaction calls for the creation of a new limited
partnership -- Offering Partnership -- which will issue certain
Class A Units in exchange for CND$234,600,000 from the
investors. In addition, the Offering Partnership would also
grant to a Bryden-controlled subsidiary an option to purchase
certain Class B Units after the closing.
It is anticipated that CND$192,600 of the investment in the
Class A Units would be indirectly financed by a "daylight" loan
from a Canadian financial institution. Investors would pay all
remaining amounts from their own funds.
Ms. Buell informs the Court that the Offering Partnership would
then use the proceeds from the Class A Units to purchase all of
the units of another limited partnership. The Operating
Partnership would use the proceeds it receives from the issuance
of limited partnership units to the Offering Partnership to
satisfy its obligations under a prior promissory note payable to
OSHC and to consummate the purchase of the Team and all its
related assets, subject to the consent of OSHC's stakeholders.
The Team Financing Transaction would generate proceeds of
approximately $42,000,000 to the Team.
Further, as part of the Team Financing Transaction, a Bryden
holding company, Bryden Finance Corporation, would assume OSHC's
obligations under the Covanta Loans, the Aramark Loan and other
junior debt. Part of the NHL Loan and the Senior Bank Term Loan
would be guaranteed by the Operating Partnership, which would
become the new owner of the Team at closing. These loans would
be secured by the Team and its related assets. Thus, at
closing, the Covanta Loans would no longer be secured by the
Team and its related assets.
Instead, Ms. Buell explains, at closing, the Covanta Loans would
be secured by all of BFC's assets, including its 100% ownership
interest in Senators Sports and Entertainment II. The Offering
Partnership would grant to SSE an option to purchase original-
issue Class B Units after the closing. The holders of Class B
Units would be entitled to certain income and losses of the
Offering Partnership and to certain distributions upon a future
sale and refinancing of the Team.
As secured creditor of BFC, Covanta would have the contractual
right to cause SSE to exercise the option to purchase the Class
B Units. When this happens, the Covanta Loans would remain
secured by BFC's assets, including any interest in the Class B
Units of the Offering Partnership. Moreover, upon SSE's
exercise of the Class B option, the Operating Partnership would
guarantee a portion of the principal amount of the Covanta Loans
equal to CND$100,000,000 minus the combined principal amount
outstanding from time to time of the NHL Loan, the Senior Bank
Term Loan and the Aramark Loan. The Operating Partnership's
guarantee to Covanta would, to the same extend as so limited, be
secured by the Team and its related assets. Thereafter,
Covanta's security interest in the Team would increase to the
extent that the senior debt is paid down with the Transaction
Proceeds.
Furthermore, Ms. Buell continues, as part of the Team Financing
Transaction, an amendment of the Licensing Agreement between the
owner of Arena, Palladium and the Team would be made. Pursuant
to the amendment, the amount of revenues that Palladium is
required to share with the Team under the Licensing Agreement
will be increased. Also, Palladium will waive its right under
the Licensing Agreement to seek certain liquidated damages in
the event the Team relocates to another venue, and to seek
enforcement of the liquidated damages through a junior lien in
the Team and its assets.
Based on the foregoing transactions, in addition to the consent
of the other interested parties, in order for the Team Financing
Transaction to occur, Covanta must give consent to:
(a) allow BFC to assume OSHC's debt obligations under the
Covanta Loans, and release the Team and its related
assets as collateral for the Covanta Loans. After the
Class B option is exercised, a portion of the Covanta
Loans would again be secured by the Team, while the rest
would be secured by BFC's assets, including any interest
in the Class B Units of the Offering Partnership;
(b) Relinquish any claim to the Daylight Loan as it passes
through the various entities, including OSHC, and any
inter-company payables related to the structuring of the
Team Financing Transaction;
(c) Agree to the amendment of the Licensing Agreement;
(d) Agree not to compel the "sale" of the Team before Jan. 1,
2004. In the interim, Covanta may nonetheless engage
in marketing efforts and negotiations, and enter into
agreements, to sell the Team as long as there is no
consummation of the sale within the meaning of Canadian
tax law. There would not, however, be any restrictions
on Covanta's ability to sell the Arena.
Ms. Buell contends that the Covanta's consent and agreement to
the contemplated transaction is in the best interest of the
estates and their creditors because:
-- when completed, the Team Financing Transaction would
provide the Team with needed capital to enhance its
overall value and marketability;
-- Covanta would place itself in a better position to
ultimately dispose its interests in the Team and the
Arena;
-- the Team would be less likely to require additional
funding from other lenders that would rank senior to the
Covanta Loans; and
-- indirectly with the Arena's derived benefit from its main
user's enhanced financial stability.
Accordingly, the Debtors seek the Court's order authorizing
Covanta to approve the Team Financing Transaction pursuant to
Section 363 of the Bankruptcy Code. (Covanta Bankruptcy News,
Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CTC COMMS: Wants to Stretch Lease Decision Period Until March 3
---------------------------------------------------------------
CTC Communications Group, Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware to extend
the time period within which they must decide to assume, assume
and assign, or reject unexpired nonresidential real property
leases. The Debtors tell the Court that they need until
March 3, 2003, to make these lease disposition decisions.
The Debtors relate that the Unexpired Leases constitute valuable
assets of the their estates, which includes leases for their
corporate headquarters and their advanced technology center in
Waltham, Massachusetts. Additionally, the Debtors lease
nonresidential real property for their central office locations
which house much of the equipment necessary to provide
telecommunication services to their customers, as well as their
branch sales offices located throughout the northeastern portion
of the United States.
The Debtors point out that their decision whether to decide or
reject the Unexpired leases is a fundamental component of their
attempt to stabilize their businesses and to either consummate a
sale of their assets and formulate a plan of reorganization.
If the Debtors were compelled to decide now whether decide on
their unexpired leases, they would be faced with a choice of
either rejecting a potentially profitable lease location or
assuming a lease together with the long-term liabilities
associated with it. The Debtors further submit that the lessors
under the Unexpired Leases will not suffer harm as a result of
an extension of the lease decision deadline.
CTC Communications Group, Inc., a source provider of voice,
data, and Internet Communications services to medium and larger
sized business customers, filed for chapter 11 protection on
October 3, 2002. Pauline K. Morgan, Esq., at Young, Conaway,
Stargatt & Taylor represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $306,857,985 in total assets and
$394,059,938 in total debts.
DEL MONTE: S&P Ups Credit Rating to BB- on Likely Heinz Merger
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
ratings on Del Monte Corp., and its parent Del Monte Foods Co.,
to 'BB-' from 'B+' and removed them from CreditWatch where it
was placed on June 13, 2002. The action was based on the
impending closing, assuming current terms and conditions, of its
merger with Heinz Co.'s U.S. seafood, private label soup, and
infant feeding operations.
At the same time, Standard & Poor's assigned a 'BB-' rating to
the $1.25 billion senior secured credit facility and a 'B'
rating to the $450 million senior subordinated notes due 2012.
The outlook is stable on the San Francisco, California-based Del
Monte, which is a processed vegetable and fruit producer. Pro
forma for the transaction total debt is expected to be about
$1.8 billion as of December 31, 2002.
"The business combination would result in an enhanced business
profile for Del Monte, creating a company with a larger
portfolio of stronger, higher margin consumer food brands," said
Standard & Poor's credit analyst Ronald B. Neysmith.
The rating on the secured credit facility is the same as the
corporate credit rating. The credit facilities will include a
$300 million revolving credit facility maturing in 2008, $195
million term loan A maturing in 2008, and a $750 million term
loan B maturing in 2010. The collateral package includes
substantially all of the company's domestic assets, 100% of the
capital stock of domestic subsidiaries, and 66% of the capital
stock of foreign subsidiaries.
In evaluating the underlying collateral, Standard & Poor's has
used an enterprise value approach, given the likelihood that the
Del Monte business would retain more value as an operating
entity in the event of a bankruptcy. In a simulated default
scenario, Standard & Poor's assumes that the revolving credit
facility would be fully drawn and that the company's operating
results would be significantly depressed. Based on this
analysis, Standard & Poor's believes that bank lenders are
unlikely to realize full recovery in the event of a bankruptcy.
However, meaningful recovery of more than 80% of principal is
likely.
The merger is expected to close by the end of calendar 2002. The
transaction will result in about $1.1 billion of debt being
added to Del Monte, and Heinz shareholders will own 74.5% of the
new Del Monte company.
The merged operations will represent about $1.8 billion in sales
and create a company with slightly more than $3 billion in total
sales.
DENNY'S CORP: Closes Arrangement for New $125MM Credit Facility
---------------------------------------------------------------
Denny's Corporation (OTCBB: DNYY) announced that its operating
subsidiaries, Denny's Inc., and Denny's Realty, Inc., have
entered into a new $125.0 million credit agreement to refinance
the previous agreement which was scheduled to expire in January
2003.
The new facility will mature on December 20, 2004, and is
structured as a senior secured revolving credit facility of
which up to $60.0 million is available for the issuance of
letters of credit. The new facility will be used for working
capital needs, capital expenditures and other general corporate
purposes. The new facility is guaranteed by Denny's Corporation
and its subsidiaries and is generally secured by liens on the
same collateral that secured the previous facility. In addition,
the new facility is secured by first-priority mortgages on 246
owned restaurant properties.
J.P. Morgan Securities Inc., acted as lead arranger and Foothill
Capital Corporation acted as syndication agent for the new
facility. JPMorgan Chase Bank will serve as administrative agent
and collateral agent.
Denny's is America's largest full-service family restaurant
chain, operating directly and through franchisees approximately
1,700 Denny's restaurants in the United States, Canada, Costa
Rica, Guam, Mexico, New Zealand and Puerto Rico. For further
information on the Company, including news releases, links to
SEC filings and other financial information, please visit the
Denny's Web site at http://www.dennys.com
Denny's Corp.'s September 25, 2002 balance sheet shows a total
shareholders' equity deficit of about $272 million.
DYNCORP: S&P Puts BB- Rating on Watch Pos. on Acquisition by CSC
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'A' corporate
credit and senior unsecured and 'A-1' commercial paper ratings
on Computer Sciences Corp., following the company's announced
acquisition of DynCorp. At the same time, Standard & Poor's
placed 'BB-'-rated DynCorp on CreditWatch with positive
implications. The transaction is valued at approximately
$950 million, including the assumption of DynCorp's debt, which
was $273 million on September 26, 2002.
El Segundo, California-based CSC, a broad-base technology
services company, had $2.17 billion of total debt outstanding as
of September 27, 2002. The outlook is stable.
Reston, Virginia-based DynCorp provides technical and management
support services for U.S. government agencies.
Upon consummation of the merger, each DynCorp share will be
converted into $15 in cash and $43 in market value of CSC
shares. At the close of the transaction (expected by March
2003), following stockholders approval and appropriate
regulatory reviews, Standard & Poor's will raise DynCorp's
ratings to reflect the ratings of its new parent.
"Recent major long-term contracts, coupled with a healthy order
pipeline, provide a basis for steady earnings at CSC," said
Standard & Poor's credit analyst Philip Schrank. "The
acquisition of DynCorp broadens CSC's offerings into the federal
sector and provides additional scale."
CSC expects the acquisition to add to its earnings for the
fiscal year ending March 31, 2004 earnings, excluding a charge
related to the transaction.
EFA SOFTWARE: Selling Assets to Computershare for C$6.25 Million
----------------------------------------------------------------
Basis100 (TSX:BAS), a technology provider to the financial
services industry, has agreed to sell certain assets of EFA
Software Services Ltd., and EFA Cyprus Ltd., (part of the EFA
Group) to Computershare Ltd., a global technology solutions
provider to the securities industry. The assets that are being
purchased include the software rights to EFA's trading systems
and settlement and clearance systems.
The acquisition is expected to close by the end of January 2003.
The purchase price is CDN$6.25 million payable in cash and is
subject to completion of due diligence and bankruptcy court
approval. This divestiture follows the October 30 announcement
by Basis100 that it intended to restructure the EFA Group.
Basis100 Inc., is a technology solutions provider, which enables
businesses to build, distribute, buy and sell products and
services in more efficient and innovative ways. Basis100's lines
of business include: Lending Solutions for consumer credit,
mortgage origination and processing; Data Warehousing and
Analytics Solutions for automated property valuations, property
data-warehousing, data products and analytics support; and
Capital Markets Solutions for fixed income trading. For more
information about Basis100 visit http://www.Basis100.com
Computershare Limited is a leading financial services and
technology provider for the global securities industry,
providing services and solutions to listed companies, investors,
employees, exchanges and other financial institutions. It is the
largest and only global share registry, managing more than 68
million shareholder accounts for over 7,500 corporations in ten
countries on five continents, and it provides sophisticated
trading and surveillance technology to financial markets in
fourteen countries across each major time zone. Founded in
Australia in 1978 and headquartered in Melbourne, Computershare
employs more than 5,000 people worldwide. For more information
visit the company Web site http://www.Computershare.com
ENCOMPASS SERVICES: Proposes Interim Compensation Procedures
------------------------------------------------------------
Encompass Services Corporation and its debtor-affiliates propose
uniform procedures for compensating and reimbursing Court-
approved professionals on a monthly basis. Alfredo R. Perez,
Esq., at Weil Gotshal & Manges LLP, in Houston, Texas, explains
that the interim compensation procedures are devised to closely
monitor the costs of administration, maintain a level cash flow,
and implement efficient cash management procedures.
The Debtors want the monthly compensation and reimbursement of
expenses of the professionals be structured as:
(a) On or before the 25th day of each month following the
month for which compensation is sought, each
professional will submit a monthly statement to:
* the Debtors and their counsel;
* the Office of the U.S. Trustee;
* the counsel for the Debtors' lenders; and
* the chairperson of and counsel to the Creditors'
Committee.
Each recipient will have until the 10th day of the next
calendar month after the filing of the Monthly Statement
to review it. If none of these recipients objects, the
Debtors will promptly pay 80% of the fees and 90% of the
disbursements requested in that particular Monthly
Statement;
(b) In the event any of the Notice Parties determines that:
-- the compensation or reimbursement sought in a
particular Monthly Statement is inappropriate or
unreasonable; or
-- the numbers and calculations are incorrect;
that party must, on or before the 10th day of the next
calendar month after the filing of the Monthly Statement,
serve to the professional requesting for compensation as
well as to the other Notice Parties, a "Notice of
Objection to Fee Statement," with an affidavit setting
forth the precise nature of the objection and the amount
at issue.
After that, the objecting party and the professional must
meet or confer to attempt to reach an agreement regarding
the correct payment to be made. If an agreement cannot be
reached or if no meeting or conference takes place, the
professional will have the option of:
(i) filing the Objection together with a request for
payment with the Court; or
(ii) forgoing the disputed amount until the next interim
fee application hearing, at which time the Court
will consider and dispose of the Objection if
payment of the disputed amount is requested.
The Debtors will be required to pay promptly that
percentage set forth any portion of the fees and
disbursements requested that are not the subject of an
Objection;
(c) The first statement will cover the period from the
Petition Date through December 31, 2002;
(d) Every four months, each of the professionals will file
with the Court and serve to the Notice Parties, on or
before the 45th day following the last day of the
compensation period for which compensation is sought, an
application for interim Court approval and allowance --
pursuant to Section 331 of the Bankruptcy Code -- of the
compensation and reimbursement of expenses requested for
the past four months. The first application will be filed
on or before April 14, 2003 and will cover the period from
the commencement of these cases through February 28, 2003.
Any professional who fails to file an application when due
will not be eligible to receive further payment of any
fees or expenses until the application is submitted;
(e) The pendency of an application or a Court order that
payment of compensation or reimbursement of expenses was
improper as to a particular statement will not disqualify
a professional from the future payment of compensation or
reimbursement of expenses as set forth; and
(f) Neither the payment of, nor the failure to pay, in whole
or in part, monthly interim compensation and reimbursement
will bind any party-in-interest or the Court with respect
to the allowance of applications for compensation and
reimbursement of professionals. (Encompass Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
ENRON CORP: FdG Associates Acquires Limbach Facility Services
-------------------------------------------------------------
FdG Associates, a middle market private equity firm, announced
has acquired the business and assets of Limbach Facility
Services, Inc., and its subsidiaries in partnership with
Limbach's current management team. Limbach is a leading national
provider of comprehensive mechanical and other construction
services with annual sales of over $500 million. With the
transaction, Limbach and its executive management team regain
independence after 16 years of operation as a subsidiary of two
different corporations, Vivendi and, most recently, Enron.
The new company, Limbach Facility Services LLC, will be co-owned
by FdG Associates and 50 members of Limbach management. Debt
financing for the transaction was provided by LaSalle Bank
National Association, Harris Nesbitt and Canterbury Capital
Partners, and surety bonding will be provided by St. Paul and
Kemper.
"We are pleased to be partnering with the management of Limbach
as the company regains its independence. Together, we intend to
further the growth of the company, which today already ranks as
one of the ten largest mechanical contractors in the nation,"
said Mark S. Hauser, Managing Director, FdG Associates. "As with
our other portfolio companies, we intend to provide resources,
insight and strategic direction to assist the company in
realizing its potential."
Limbach will continue to be guided by its existing executive
management team who have operated the company over the past 20
years. The team is led by Stephen B. Wurzel, Chief Executive
Officer; Charles L. Boyd, President, Central Region; Joseph F.
Doody, President, Eastern Region; and Martin A. Keyser,
Executive Vice President and General Counsel, and includes
numerous other executives with considerable experience in the
construction industry.
"The management team is enthusiastic to be moving forward with
FdG as owners of a 100-year old company which can now enter its
second century stronger than ever," said Stephen B. Wurzel, CEO,
Limbach Facility Services LLC. "We are confident that our team,
coupled with FdG's proven leadership in growing businesses, will
increase profitability and exceed customer expectations by
delivering quality construction and related services."
Affiliates of Enron Corp., acquired Limbach from Vivendi in
1998. The company became a wholly-owned subsidiary of Enron
Energy Services Operations, Inc., through its subsidiary, Enron
Facility Services, Inc. The company has remained outside the
Enron bankruptcy, one of the largest in U.S. history, and
continues to provide services uninterrupted to its customers.
FdG Associates is a private investment firm providing equity
capital to North American-based middle market growth companies
with sound businesses and unrealized potential. By building a
partnership with management and offering creative problem
solving and strategic, long-term planning focused around key
corporate initiatives, FdG empowers companies to achieve their
full growth potential and increase their equity value.
FdG typically commits $15 million to $30 million in equity to
sponsor management buyouts, recapitalizations and growth-
oriented capital investments in private and public companies.
The deep and diverse experience of the firm's executive team
enables FdG to pursue opportunities in the business and consumer
services, distribution, light manufacturing, retail and consumer
products sectors.
FdG's first committed fund, FdG Capital Partners, totaled $205
million. Since its founding in 1995, the firm has made over 10
investments, principally in distribution, business services,
retail and consumer products. The firm's current portfolio
includes several private company recapitalizations (Implus
Footcare, LLC, Industrial Controls Distributors LLC and Vintage
Nurseries LLC), as well as growth equity investments in Golf
Galaxy, Inc., and DentaQuest Ventures, Inc. The firm recently
sold Vitamin Shoppe Industries Inc. to affiliates of Bear
Stearns Merchant Banking.
FdG is headquartered in New York, NY. For additional
information, please visit http://www.fdgassociates.com
Founded in 1901, Pittsburgh, PA-based Limbach Facility Services
LLC is a leading provider of comprehensive construction
services, including mechanical and electrical construction, pipe
fitting, sheet metal fabrication, plumbing, HVAC service and
maintenance, and engineering and mechanical construction
management services. The company also provides facility
maintenance and other services.
The company offers customers a full complement of value-added
design and engineering services across many sectors. With
headquarters in Pittsburgh, Limbach maintains established branch
offices in 10 locations across the country, some of which
operate under distinct, regional trade names including Williard
(Philadelphia and Trenton, NJ), Western Air and Refrigeration
(Los Angeles), PBM Mechanical and Marlin Electric (Washington,
D.C.), Performance Mechanical (Atlanta) and Harper Mechanical
(Orlando). Other locations include Boston, MA, Columbus, OH and
Detroit, MI.
Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3), DebtTraders
reports, are trading at about 13 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
ENRON CORP: Asks Court to Further Extend Lease Decision Deadline
----------------------------------------------------------------
Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York,
relates when the first extension of lease decision deadline was
granted, 35 Enron Debtors had sought Chapter 11 relief. These
Debtors had identified more than 125 office and warehouse leases
and more than 900 other unexpired agreements for the use of non-
residential real property. Since then, 41 other Enron Debtors
have sought Chapter 11 relief in these cases and the number of
unexpired Leases that the Debtors must review and analyze has
increased.
Since January 31, 2002, the Debtors have already assumed,
assigned or rejected at least 60 unexpired office and warehouse
leases and 41 collocation agreements. However, the additional
leases that are required to be reviewed and analyzed and the
Debtors' ongoing efforts to formulate a plan in these cases
prevent the Debtors from making final determinations regarding
the assumption or rejection of all of the remaining Leases.
Mr. Berger points out that in light of the unprecedented size,
complexity and demands of these cases, it would not be
reasonable or realistic to compel the Debtors to make those
final determination regarding the remaining Leases on or before
December 31, 2002.
Accordingly, the Debtors ask the Court to extend the deadline by
which they must assume or reject their unexpired non-residential
real property leases through and including December 31, 2003
pursuant to Section 365(d)(4) of the Bankruptcy Code.
Mr. Berger contends that the extension should be granted
because:
(a) the Leases pertain to increasingly wide-ranging segments
of the Debtors' business operations, which requires the
Debtors to devote considerable time and effort to
carefully evaluate each Lease;
(b) the Debtors need time to make reasoned, informed and
final decisions of the Leases on their potential
importance to the Debtors' continued operations; and
(c) not granting the motion might be detrimental to the
estates when the Debtors would be forced to prematurely
assume a Lease that will be ultimately terminated, or
reject a valuable Lease.
Mr. Berger assures the Court that the Debtors have sufficient
liquidity to enable them to continue to satisfy their
obligations under the Leases until plan confirmation in these
cases. (Enron Bankruptcy News, Issue No. 51; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FAIRFAX FINANCIAL: S&P Affirms BB+ Counterparty Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+'
counterparty credit rating on Fairfax Financial Holdings Ltd.,
and its 'BBB' counterparty credit and financial strength ratings
on Fairfax's affiliates. The outlook has been revised to
negative from stable.
Standard & Poor's also said it lowered its counterparty credit
and financial strength ratings on TIG Insurance Co., and its
affiliates to 'BB' from 'BBB'. The outlook is negative.
At the same time, Standard & Poor's said that it affirmed its
'BB' counterparty credit and financial strength ratings on TIG
Holdings Inc. The outlook has been revised to negative from
stable.
"These ratings actions follow Fairfax's earlier announcement
that the company will be placing TIC into runoff as part of a
broad restructuring plan," explained Standard & Poor's credit
analyst Matthew Coyle. "As part of the restructuring, Fairfax
will purchase the remaining 72% share of International Insurance
Co. that it does not already own. It will also merge the
operations of IIC into TIG."
Fairfax is acquiring IIC, a runoff subsidiary, for about $200
million on a present-value basis. The terms of the transaction
require Fairfax to make payments over the next 15 years," Coyle
added.
In conjunction with the merger, TIC will record a $235 million
restructuring charge, primarily to strengthen loss reserves in
its discontinued operations. As part of the restructuring plan,
TIC intends to purchase stop-loss reinsurance to protect its
balance sheet against additional adverse development. Standard &
Poor's considers the reemergence of reserve issues at TIC
(especially after 2001's gross charge of $210 million) to be
disappointing and may be an indication that Fairfax management
has not fully identified the extent of reserve issues elsewhere
(e.g., Crum & Forster, Ranger Insurance Co., etc.) in the
organization. Although the actual effect to Fairfax's fourth-
quarter GAAP earnings is expected to be modest because of the
offsetting effects of taxes and negative goodwill associated
with the IIC transaction, Monday's announcement is a setback for
Fairfax and the progress it has made in other areas of the
organization in the first nine months of 2002. Underwriting
results as measured by the combined ratio was 103% in the
first nine months of 2002, constituting a significant
improvement over 2001. Similarly, asset quality remains strong,
as demonstrated by the significant amount of realized capital
gains earned during this period.
Another important aspect of this restructuring plan is that
Ranger Insurance Co., Commonwealth Insurance Co., and a
significant portion of Odyssey Re Holdings Corp. common stock
will be removed from under TIC. The aforementioned realignment
does potentially improve Fairfax's ability to access capital
through the extraction of dividends and the sale of subsidiary
common stock even though no such actions are expected in the
near term. This potential untapped source of capital may be put
to the test in 2003 as Fairfax attempts to maintain adequate
liquidity at the holding company, retire or refinance close to
CN$400 million of maturing debt and balance other holding and
operating company needs. In the interim, Standard & Poor's
believes the company may have to rely on internal resources to
address each of these issues until investor confidence is
restored. As of Sept. 30, the company had access to $561 million
of cash on its balance sheet and $778 million of unused bank
facilities.
The senior unsecured rating on TIG is one notch below the senior
unsecured ratings on Fairfax because of TIG's subordination
within the organization. Fairfax has not assumed or guaranteed
those obligations. Fairfax, however, intends to make good on
those obligations, therefore the ratings and outlook on TIG will
continue to track the ratings on Fairfax.
Separately, but related, the outlook on Odyssey Re remains
stable. Odyssey Re's standalone earnings and capitalization
continue to be in line with Standard & Poor's expectations.
Historically, Standard & Poor's has viewed Fairfax's majority
ownership and control of Odyssey Re stock to be a limiting
factor to the ratings on Odyssey Re. As Odyssey Re was
considered to be strategically important to Fairfax, the rating
could not be more than two notches higher than its parent under
Standard & Poor's group methodology. Today's decision to keep
the outlook stable signifies a slight but important departure
from Standard & Poor's traditional view of the linkage between
the two ratings.
Standard & Poor's will continue to monitor the company's
progress in underwriting, reserving, and liquidity management.
To the extent management can demonstrate a sustainable track
record of improvement in these areas, Standard & Poor's will
maintain its current ratings and possibly reconsider its
negative outlook on the organization. Conversely, a material
deterioration in any of these areas would likely result in a
downgrade.
FAIRFAX FINANCIAL: Completes TIG Insurance Unit Restructuring
-------------------------------------------------------------
Fairfax Financial Holdings Limited (TSX:FFH) has restructured
its subsidiary TIG Insurance Company. The major elements of this
restructuring and related transactions are:
-- TIG is discontinuing the remainder of its program
business in Dallas and is separating its discontinued program
business from its ongoing business. TIG's discontinued program
business represented approximately 56% (including approximately
33% discontinued earlier in 2002) of TIG's US$722 million of net
premiums written during the nine months to September 30, 2002.
-- TIG's discontinued business will be managed by the
highly skilled TRG/RiverStone team led by Michael A. Coutu and
Dennis C. Gibbs.
-- TIG will distribute to Fairfax approximately Cdn$1.25
billion of assets, including 33.2 million of TIG's 47.8 million
shares of NYSE-listed Odyssey Re Holdings Corp. The distributed
securities will initially be held in trust for TIG's benefit,
principally pending TIG's satisfaction of certain financial
tests at the end of 2003.
-- In achieving the foregoing, TIG has merged with
Fairfax's International Insurance Company subsidiary, which had
unaudited GAAP equity of US$547 million at September 30, 2002.
Messrs. Coutu and Gibbs, the Chairman and CEO respectively of
TRG/RiverStone, will continue in those positions with the merged
company, while Scott Donovan will continue as President and COO.
-- Over the next 15 years, Fairfax will purchase additional
shares of TRG, International Insurance's holding company, for
US$425 million (US$204 million at current value, using a
discount rate of 9% per annum), payable approximately US$5
million a quarter from 2003 to 2017 and approximately US$128
million at the end of 2017, thereby becoming the sole
shareholder of TRG.
-- Fairfax will recognize a charge of approximately Cdn$28
million after tax as a result of strengthening TIG's reserves by
US$200 million, incurring a restructuring charge and related
charges aggregating approximately US$65 million, and offsetting
the approximately US$204 million of negative goodwill arising
from the International Insurance transactions. By merging TIG
with International Insurance, a run-off company with an industry
recognized and respected record and management team, and by
taking the other steps described in this announcement, Fairfax
is confident that TIG's run-off business will be well managed
and will no longer be a factor in TIG's or Fairfax's ongoing
operations.
TIG's special risk operations unit based in Napa, California,
under the continuing leadership of Steve Brett, will operate
going forward predominantly as a managing general underwriter,
focusing on excess property and excess casualty insurance. The
special risk operations represented approximately 20% of TIG's
US$722 million of net premiums written during the nine months to
September 30, 2002.
Separately, pursuant to an agreement in principle, Odyssey Re
Holdings will acquire the healthcare division of the special
risk operations unit, together with an excess and surplus lines
subsidiary of TIG through which the majority of this business
will be written. Odyssey Re Holdings will not be assuming
liability associated with business written prior to this
acquisition. The agreement in principle is subject to formal
documentation, applicable regulatory approvals and usual closing
conditions.
An evaluation of TIG's other ongoing operations, comprised of
its accident and health, Hawaii and Ranger units, is being
carried out under the direction of Wayne Ashenberg, the former
President of John Deere Insurance Group. These operations
represented approximately 24% of TIG's US$722 million of net
premiums written during the nine months to September 30, 2002.
The operations which are performing within Fairfax's objective
of achieving a 100% combined ratio or better will be carried on
in a separate insurance subsidiary which will not be a
subsidiary of TIG.
Fairfax has guaranteed that TIG will maintain US$500 million of
statutory surplus at the end of 2003, a risk-based capital of at
least 200% at each year-end, and a continuing net reserves to
surplus ratio not exceeding 3 to 1. Immediately after TIG's
distribution of securities to Fairfax described in this
announcement, TIG will have more than US$500 million of
statutory surplus and a net reserves to surplus ratio less than
3 to 1.
The approximately Cdn$1.25 billion of assets being distributed
by TIG to Fairfax consists of 33.2 million of the outstanding
shares of Odyssey Re Holdings (market value of approximately
Cdn$940 million), all of the shares of Commonwealth Insurance
Company (GAAP equity of approximately Cdn$195 million) and all
of the shares of Ranger Insurance Company (GAAP equity of
approximately Cdn$125 million). If Fairfax determines to replace
the US$300 million of additional adverse development reinsurance
which will be provided to TIG by a Fairfax subsidiary with a
third party adverse development cover, US$300 million of these
securities will be released from the trust. Substantially all of
the remainder will be released upon TIG's meeting the financial
tests described above at the end of 2003.
Fairfax is also pleased to confirm that its subordinate voting
shares will be listed on the New York Stock Exchange on
Wednesday, December 18, 2002.
Fairfax Financial Holdings Limited is a financial services
holding company which, through its subsidiaries, is engaged in
property, casualty and life insurance and reinsurance,
investment management and insurance claims management.
FEI INC: Can't Complete Proposed Merger with Veeco by Dec. 31
-------------------------------------------------------------
Veeco Instruments Inc., (Nasdaq: VECO) and FEI Company (Nasdaq:
FEIC) jointly announced that they will not be able to complete
their previously announced merger by December 31, 2002.
Under the terms of the Merger Agreement, if the merger is not
consummated by December 31, 2002, either party has the right to
terminate the Merger Agreement. The parties are currently
discussing modifications to the Merger Agreement, including
whether to amend the Merger Agreement to extend the December 31,
2002 date referred to above. The merger also remains subject to
the parties obtaining the necessary antitrust and other
regulatory approvals. There can be no assurance that the parties
will reach agreement on any modifications to the Merger
Agreement, that they will extend the date for completing the
merger, that the closing conditions to the merger will be met,
including obtaining the necessary regulatory approvals, or that
the merger will be consummated at all.
For more information on the terms of the Merger Agreement,
please refer to the registration statement on Form S-4 filed by
Veeco with the Securities and Exchange Commission, which is
available free of charge from the SEC's Web site at
http://www.sec.gov
Veeco Instruments Inc., is a worldwide leader in metrology tools
and process equipment for the semiconductor, data storage,
telecommunications/wireless, and scientific research markets.
Veeco's manufacturing and engineering facilities are located in
New York, California, Colorado, Arizona and Minnesota. Global
sales and service offices are located throughout the United
States, Europe, Japan and Asia Pacific. Additional information
on Veeco can be found at http://www.veeco.com/
FEI is the 3D innovator and leading supplier of Structural
Process Management(TM) solutions to semiconductor, data storage,
structural biology and industrial companies. FEI's industry
leading Dual-Beam(TM) and single column focused ion and electron
beam products allow advanced three-dimensional metrology, device
editing, trimming, and structural analysis for management of
sub-micron structures. Headquartered in Hillsboro, Oregon, FEI
has additional development and manufacturing operations located
in Peabody, Massachusetts; Sunnyvale, California; Eindhoven, The
Netherlands; and Brno, Czech Republic. Additional information on
FEI can be found at http://www.feicompany.com
* * *
As previously reported, Standard & Poor's placed its single-'B'-
plus corporate credit rating on FEI Co., on CreditWatch with
positive implications. The action followed the announcement that
Hillsboro, Oregon-based FEI will be acquired by Woodbury, New
York-based Veeco Instruments Inc., (not rated) for a reported
$989 million in Veeco stock.
The CreditWatch affects FEI's $175 million of debt outstanding.
FOUR SEASONS HOTELS: Appoints Two Members to Board of Directors
---------------------------------------------------------------
Isadore Sharp, Chairman and Chief Executive Officer of Four
Seasons Hotels and Resorts announced the following appointments
to the Board of Directors of the Corporation, effective
immediately:
* Heather Munroe-Blum, Ph.D. has held the position of Vice-
President, Research & International Relations at the University
of Toronto from 1994 to 2002. In January 2003, she will become
the 16th Principal and Vice Chancellor and a professor in the
Faculty of Medicine of McGill University. An accomplished
epidemiologist and academic leader, Dr. Munroe-Blum is often
consulted by governments and organizations around the world in
the development of public policy in support of science, research
and higher education. She is an active member of numerous boards
and public organizations.
* Brent Belzberg has more than 20 years of executive
management experience in finance, acquisitions, corporate
restructuring and operations. In February 2002, he founded
Torquest Partners following the success of Harrowston Inc.,
which he founded in 1993. Prior to that, he served as President
of First City Financial Corporation. An active community leader,
Mr. Belzberg served as co-chair of the Toronto United Jewish
Appeal in 1999. He is also a director of Mount Sinai Hospital,
Baycrest Hospital Foundation and serves as an advisor to several
faculties at the University of Toronto.
"Heather Munroe-Blum and Brent Belzberg bring a wealth of
experience and knowledge to the Board," said Sharp. "I'm pleased
to welcome them both to Four Seasons."
With a history spanning four decades and a portfolio that now
extends around the world, Four Seasons Hotels and Resorts is the
world's leading operator of luxury hotels, currently managing 56
properties in 25 countries. In 2002, the company opened its
second property in Tokyo, in the heart of Marunouchi district,
as well as properties in Shanghai and Sharm el Sheikh, Egypt.
Four Seasons Hotels and Resorts continues to expand, with more
than 20 projects in development stages in choice locations
around the world. Four Seasons has claimed first position on
many prestigious lists. Recent honours include top ranking in
the J.D. Powers Guest Satisfaction Survey and AAA Five Diamond
awards (receiving more than other any hotel company for the 21st
consecutive year). Information on the company and its 41 years
of achievement in the hospitality industry can be accessed
through the Four Seasons Web site at http://www.fourseasons.com
* * *
As reported in Troubled Company Reporter's November 8, 2002
edition, Standard & Poor's said that it's Emerging Growth Equity
Analyst Massimo Santicchia has initiated coverage on the stock
of Four Seasons Hotels with a "Sell" ranking noting the
industry's ongoing weakness in global travel, as well as Four
Seasons high valuation level. Based on the initiation in
coverage, Four Seasons Hotels is now ranked a one-STAR stock
under the proprietary Standard & Poor's Stock Appreciation
Ranking (STARS) System. A leader in global financial research
and independent investment analysis, Standard & Poor's announced
the upgrade through Standard & Poor's MarketScope, its real-time
market intelligence service.
"Amid ongoing weakness in global travel, Four Seasons Hotels
announced that it cut its third quarter forecast to a loss of
C$0.35 from Earnings Per Share (EPS) of C$0.24 - C$0.28 in
addition to taking a $C0.50 charge for asset impairment,"
reports Standard & Poor's Santicchia. "Standard & Poor's
expects more adverse surprise announcements from Four Seasons
Hotels as recent hotel closings and increased geo-political and
economic uncertainty continue to exist."
GENAISSANCE PHARMACEUTICALS: Defaults on Equipment Lease Pact
-------------------------------------------------------------
Genaissance Pharmaceuticals, Inc., (Nasdaq: GNSC) has received a
notice from General Electric Capital Corporation, claiming an
event of default has occurred under Genaissance's lease
agreement as a result of an alleged material adverse change in
the business of Genaissance. The GE Capital lease was entered
into on April 10, 1999, prior to the completion of the Company's
Series B and C pre-IPO rounds of financing. Because of the
alleged default, GE Capital has declared that all principal,
interest and certain fees, which GE Capital claims to be $3.9
million, are due and payable immediately. GE Capital has also
filed a complaint in the Superior Court of the State of
Connecticut, demanding payment of all amounts due under the
lease agreement.
Genaissance does not believe that there has been a material
adverse change in the Company's business and intends to defend
itself vigorously against the GE Capital claims.
Genaissance has also received a notice from Finova Capital
Corporation, stating that as a result of the default claim,
there has been a cross-default under Genaissance's agreement
with Finova. The Company is currently in negotiations with
Finova, which has agreed to suspend their default claim until
late January 2003 or the resolution of the default claim by GE
Capital, whichever occurs earlier.
Genaissance has and will continue to pay all of the Company's
debt obligations. Genaissance currently owes its lease creditors
a total of about $10.4 million of principal and interest, most
of which is scheduled for payment in fiscal 2003. If Genaissance
does not resolve the GE Capital claim, the Company may be
required to pay its lease creditors sooner than was originally
scheduled. Payment in 2003 of all outstanding principal and
interest with its lease creditors would have the effect of
increasing the Company's cash burn by approximately $3 million
in fiscal 2003, with an offsetting reduction in cash payments in
fiscal 2004. As of September 30, 2002, Genaissance had cash,
cash equivalents and marketable securities totaling $36.3
million.
Genaissance Pharmaceuticals, Inc., is a world leader in the
discovery and use of human gene variation for the development of
personalized medicines. The Company markets its technology and
clinical development skills to the pharmaceutical industry as a
complete solution for improving the development, marketing and
prescribing of drugs. Genaissance currently has agreements with
three of the top five pharmaceutical companies as well as one of
the premier biopharmaceutical companies: AstraZeneca, Biogen,
Johnson & Johnson and Pfizer. Genaissance is located in Science
Park in New Haven, Connecticut.
GENUITY INC: U.S. Trustee Appoints Official Creditors' Committee
----------------------------------------------------------------
Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code,
the U.S. Trustee appoints these Genuity Inc. creditors to serve
on the Official Committee of Unsecured Creditors, effective
December 9, 2002:
A. JP Morgan Chase Bank
270 Park Avenue, New York, New York 10017
Attention: Ms. Mary Ellen Egbert
Phone: (212) 270-0327
B. Mizuho Corporate Bank, Ltd.
1251 Avenue of the Americas, New York, New York 10020
Attention: Mr. Noel Purcell, Senior Vice President
Phone: (212) 282-3486
C. BNP Paribas
787 Seventh Ave., New York, New York 10019
Attention: Ms. Barbara Eppolito
Phone: (212) 841-3607
D. Nortel Networks, Inc.
8200 Dixie Road, Brampton, Ontario, L67 5PC, Canada
Attention: Mr. Trevor Jones
Representative: Gary S. Lee, Esq.,
Lovells
900 Third Ave., New York 10022
Phone: (212) 909-0600
E. Allegiance Telecom
9101 North Central Expressway, Dallas, Texas 75231
Attention: Mr. John Dumbleton
Phone: (214) 261-8625
(Genuity Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GLOBAL CROSSING: S.D.N.Y. Court Confirms Reorganization Plan
------------------------------------------------------------
Global Crossing announced that the U.S. Bankruptcy Court for the
Southern District of New York has confirmed its Chapter 11 plan
of reorganization. The confirmation is subject to the entry of a
formal confirmation order and documentation of the resolution of
the last objection.
Tuesday's decision represents another major milestone in the
restructuring process that Global Crossing started on
January 28, 2002. Having reached an agreement with its
creditors, Global Crossing now stands poised to emerge from the
Chapter 11 process a significantly stronger enterprise.
On August 9, 2002, Global Crossing announced that Hutchison
Telecommunications Limited and Singapore Technologies Telemedia
Pte. Ltd., had agreed to invest $250 million, for 61.5%
ownership position in a newly constituted Global Crossing upon
its emergence from Chapter 11. The balance of the equity will be
issued to Global Crossing's prepetition creditors. Subject to
obtaining the approval of the Supreme Court of Bermuda and to
satisfying various contractual closing conditions and the
receipt of regulatory approvals, Global Crossing expects to
emerge from bankruptcy in the first half of 2003.
"[Tues]day, Global Crossing's customers, employees and
leadership team received a clear vote of confidence in our
future," said John Legere, CEO of Global Crossing. "During the
past twelve months, we've focused acutely on streamlining Global
Crossing's cost structure while delivering outstanding customer
service and leading-edge products and services. As we work to
secure the remaining regulatory approvals, we'll build on these
successes to emerge a strong competitor with an unmatched global
IP-based network."
Between January and October 2002, Global Crossing signed 1,663
new and renewal customer contracts, representing an estimated
$783 million of revenue over the life of the contracts. Global
Crossing's cash position remains secure, with total cash in bank
accounts at $683 million as of October 31, 2002. Furthermore,
the availability of Global Crossing's global, IP-based network
increased to 99.999%, enhancing reliability and resiliency for
customers throughout the restructuring.
Global Crossing's plan of reorganization does not include a
capital structure in which existing common or preferred equity
would retain any value.
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, Global Crossing Ltd. and certain of its
subsidiaries (excluding Asia Global Crossing and its
subsidiaries) commenced Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York
(Bankruptcy Court) and coordinated proceedings in the Supreme
Court of Bermuda (Bermuda Court). On the same date, the Bermuda
Court granted an order appointing joint provisional liquidators
with the power to oversee the continuation and reorganization of
the Bermuda-incorporated companies' businesses under the control
of their boards of directors and under the supervision of the
Bankruptcy Court and the Bermuda Court. Additional Global
Crossing subsidiaries commenced Chapter 11 cases on April 23,
August 4 and August 30, 2002, with the Bermuda incorporated
subsidiaries filing coordinated insolvency proceedings in the
Bermuda Court. The administration of all the cases filed
subsequent to Global Crossing's initial filing on January 28,
2002 has been consolidated with that of the cases commenced on
January 28, 2002.
On November 18, 2002, Asia Global Crossing Ltd., and its
subsidiary, Asia Global Crossing Development Co., commenced
Chapter 11 cases in the United States Bankruptcy Court for the
Southern District of New York and coordinated proceedings in the
Supreme Court of Bermuda. Asia Global Crossing's bankruptcy
proceedings are being administered separately and are not being
consolidated with Global Crossing's proceedings. Asia Global
Crossing Ltd. is a majority-owned subsidiary of Global Crossing.
However, Asia Global Crossing has announced that no recovery is
expected for Asia Global Crossing's shareholders.
Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.
GLOBAL CROSSING: Continues to Meet Key Performance Objectives
-------------------------------------------------------------
Global Crossing said it continued to meet key performance
targets during October 2002. The performance targets were
established for Global Crossing (excluding Asia Global Crossing)
in the operating plan presented to its creditors in March 2002.
The Operating Results that compare to that plan are described in
the following section of this press release.
Consolidated results for the month of October that include Asia
Global Crossing and that are reported in the Monthly Operating
Report filed with the U.S. Bankruptcy Court in the Southern
District of New York are summarized later in this press release.
Operating Results
(excluding Asia Global Crossing)
"Our entire organization is committed to meeting our performance
objectives and restoring the financial health of Global
Crossing," said John Legere, CEO of Global Crossing. "Our
business continues to show signs of increasing stability, which
will prove advantageous as we emerge from Chapter 11 in early
2003."
For the past three months, Global Crossing's Service Revenue has
shown month-over-month gains. In October 2002, Global Crossing
reported Service Revenue of $242 million, $26 million above the
Service Revenue target set forth in the operating plan. This
compares to Service Revenue of $237 million in September and
$236 million in August.
In October, Service EBITDA was reported at a loss of $6 million,
beating the operating plan by $1 million.
"For the third month in a row, our Service Revenues have shown
month-over-month gains, showing that customers are starting to
expand their business with Global Crossing," said Dan Cohrs,
Global Crossing's CFO. "We were able to achieve this growth
while stabilizing our operating expenses and other costs
throughout the organization."
Total cash in bank accounts exceeded targets set forth in the
operating plan, with $683 million as of October 31, 2002,
compared to a plan of $583 million. Operating expenses were $64
million in October, $4 million higher than the target in the
operating plan. However, third-party maintenance costs were
reported at $9 million in October, lower than plan by $6
million.
MOR Results For October 2002
Global Crossing filed a Monthly Operating Report for the month
of October with the U.S. Bankruptcy Court for the Southern
District of New York, as required by its Chapter 11
reorganization process. The consolidated results in the MOR
include Asia Global Crossing and report revenue according to
Generally Accepted Accounting Principles. GAAP revenue includes
revenue from sales of capacity in the form of indefeasible
rights of use that occurred in prior periods, recognized ratably
over the lives of the relevant contracts. Beginning on
October 1, 2002, Global Crossing no longer recognizes revenue
from exchanges of leases of capacity.
Results reported in the October MOR include the following:
For continuing operations in October 2002, Global Crossing
reported consolidated revenue of approximately $256 million.
Consolidated operating expenses were $79 million, while access
and maintenance costs were reported at $193 million in October
2002.
In addition, Global Crossing reported a consolidated GAAP cash
balance of approximately $895 million as of October 31, 2002,
including $229 million of cash held by Asia Global Crossing.
Global Crossing's $666 million GAAP cash balance (excluding
Asia) is comprised of $272 million unrestricted cash, $332
million in restricted cash and $62 million of cash held by
Global Marine.
Global Crossing reported a consolidated net loss of $150 million
for October 2002. Consolidated EBITDA was reported at a loss of
$16 million.
The results for Global Crossing (excluding Asia Global Crossing)
discussed in the "Operating Results (excluding Asia Global
Crossing)" section of this release have been prepared on a basis
consistent with targets presented to the creditors of Global
Crossing in March 2002. These operating results exclude Global
Marine (which is a discontinued operation), exclude any revenue
contribution of sales of capacity in the form of IRUs, and
reflect certain eliminations and adjustments not detailed in the
MORs. Cash balances reported in this section are bank balances,
not reflecting the estimated impact of outstanding checks and
other adjustments as required by GAAP.
The information contained in this press release is qualified in
its entirety by reference to the MORs for the months of February
through October, including the footnotes to the financial
statements contained therein, copies of which are available
through the U.S. Bankruptcy Court for the Southern District of
New York and on Global Crossing's Web site. The October MOR is
available at
http://www.globalcrossing.com/pdf/investors/inv_mor_oct.pdf
These MORs have been prepared pursuant to the requirements of
the Bankruptcy Code and the unaudited consolidated financial
statements contained in these MORs do not include all footnotes
and certain financial presentations normally required under
GAAP. In addition, any revenues, expenses, realized gains and
losses, and provisions resulting from the reorganization and
restructuring of Global Crossing are reported separately as
reorganization items in these MORs.
As discussed more fully in the footnotes to the financial
statements contained in the MORs, Global Crossing has not yet
filed its Annual Report on Form 10-K for the year ended
December 31, 2001. By order dated November 20, 2002, the
Bankruptcy Court directed the appointment of an examiner. On
November 25, 2002, the United States Trustee appointed Martin E.
Cooperman, a partner of Grant Thornton LLP, as the Examiner. Mr.
Cooperman and the Audit Committee of the Board of Directors of
Global Crossing Ltd. are seeking to retain Grant Thornton LLP to
assist the Examiner. In general, the Examiner's role will be
limited to reviewing the financial statements of the Debtors for
the fiscal years ended December 31, 2001 and December 31, 2002
and earlier periods if any restatement of those periods is
necessary. As part of his role, the Examiner, with the
assistance of Grant Thornton LLP, will audit any revised
financial statements and issue a report as to such financial
statements. Separately, the Audit Committee and the Board of
Directors of the Company have authorized the appointment of
Grant Thornton LLP as the independent public accountant of the
Company, effective as of the date indicated in an engagement
letter to be executed on behalf of the Audit Committee by its
Chairman.
In addition, certain matters relating to Global Crossing's
accounting for, and disclosure of, concurrent transactions for
the purchase and sale of telecommunications capacity between
Global Crossing and its carrier customers are being investigated
by the Securities and Exchange Commission, the U.S. Attorney's
Office for the Central District of California, the House of
Representatives Financial Services Committee and the House of
Representatives Energy & Commerce Committee. Global Crossing is
also cooperating with a similar inquiry being conducted by the
Denver office of the SEC regarding Qwest Communications
International, Inc., and has provided documents in response to
subpoenas it received from the New York Attorney General's
office relating to an investigation of Salomon Smith Barney. The
U.S. Department of Labor is conducting an investigation into the
administration of Global Crossing's benefit plans. All of these
investigations are described more fully in footnote one to the
financial statements contained in the October MOR.
Any changes to the financial statements resulting from any of
these investigations and the completion of the 2001 financial
statement audit could materially affect the unaudited
consolidated financial statements contained in the MORs and the
information presented in this press release.
On October 21, 2002, Global Crossing announced that it will
restate certain financial statements contained filings
previously made with the SEC. These restatements, which are more
fully described in footnote one to the financial statements
contained in the October MOR, will record exchanges between
carriers of leases of telecommunications capacity at historical
carryover basis, resulting in no recognition of revenue for such
exchanges. Reflecting this accounting treatment, the October MOR
excludes from revenue amounts previously recognized as revenue
over the lives of the lease contracts governing these capacity
exchanges. However, since the detailed application of this
accounting treatment for exchanges of capacity and services is
not complete, the October MOR does not reflect the reduction to
depreciation expense that will result when such transactions are
recorded at carrying value rather than fair value. As reflected
in greater detail in the financial statements contained in the
October MOR, Global Crossing estimates that the reduction in
depreciation expense for the month of October would be
approximately $2 million. The restatements have no impact on
cash flow for the month of October.
As previously announced, Global Crossing's net loss for the
three months ended December 31, 2001, which has not yet been
reported, pending the completion of the audit of financial
statements for 2001, is expected to reflect the write-off of the
remaining goodwill and other intangible assets, which total
approximately $8 billion. Furthermore, as previously disclosed,
Global Crossing has determined that it will write down its
tangible assets by at least $10 billion in light of the terms
contained in the previously announced agreement with Hutchison
Telecommunications and Singapore Technologies Telemedia, the
bankruptcy filings of Asia Global Crossing and its subsidiary,
Pacific Crossing Ltd., and the reduction in the carrying value
of assets acquired in exchange transactions by approximately
$1.2 billion expected to result from the restatement referred to
in the immediately preceding paragraph. The financial
information included within this press release and the MORs
reflects the write-off of all of the goodwill and other
identifiable intangible assets of $8 billion, but does not
reflect any write-down of tangible asset value. Global Crossing
is currently in the process of evaluating its financial
forecasts to determine the impairment of its long-lived assets.
Accordingly, the net loss of $150 million for the month of
October 2002 (reported above under MOR Results section) includes
$111 million of depreciation and amortization expense recorded
in October 2002. This October 2002 net loss would have been
reduced substantially if the financial statements in the October
MOR had reflected the tangible asset write down.
The write-off of the intangible assets, and the write-downs of
tangible assets are described more fully in the October MOR.
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, Global Crossing Ltd., and certain of its
subsidiaries (excluding Asia Global Crossing and its
subsidiaries) commenced Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York
(Bankruptcy Court) and coordinated proceedings in the Supreme
Court of Bermuda (Bermuda Court). On the same date, the Bermuda
Court granted an order appointing joint provisional liquidators
with the power to oversee the continuation and reorganization of
the Bermuda-incorporated companies' businesses under the control
of their boards of directors and under the supervision of the
Bankruptcy Court and the Bermuda Court. Additional Global
Crossing subsidiaries commenced Chapter 11 cases on April 23,
August 4 and August 30, 2002, with the Bermuda incorporated
subsidiaries filing coordinated insolvency proceedings in the
Bermuda Court. The administration of all the cases filed
subsequent to Global Crossing's initial filing on January 28,
2002 has been consolidated with that of the cases commenced on
January 28, 2002. Global Crossing's Plan of Reorganization,
which it filed with the Bankruptcy Court on September 16, 2002,
does not include a capital structure in which existing common or
preferred equity would retain any value.
On November 18, 2002, Asia Global Crossing Ltd., and its
subsidiary, Asia Global Crossing Development Co., commenced
Chapter 11 cases in the United States Bankruptcy Court for the
Southern District of New York and coordinated proceedings in the
Supreme Court of Bermuda. Asia Global Crossing's bankruptcy
proceedings are being administered separately from and are not
being consolidated with Global Crossing's proceedings. Asia
Global Crossing Ltd. is a majority-owned subsidiary of Global
Crossing. However, Asia Global Crossing has announced that no
recovery is expected for Asia Global Crossing's shareholders. As
a result, Global Crossing is currently evaluating its ongoing
requirement to consolidate the operating results and financial
positions of AGC and its subsidiaries.
Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.
Global Crossing Holdings' 9.625% bonds due 2008 (GBLX08USR1) are
trading at about 3 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX08USR1
for real-time bond pricing.
GLOBAL CROSSING: Inks 2-Year Multimillion-Dollar Deal with TMC
--------------------------------------------------------------
Global Crossing has signed a two-year, multimillion-dollar
agreement to supply TMC Communications, a nationwide
telecommunications service provider based in California, with a
portfolio of wholesale data and voice services including Private
Line, ATM, Frame, IP Transit, Integrated T1, and Access Direct
Switched and Dedicated long-distance, Toll-free and Pseudo-CIC.
TMC Communications is currently running its customers' traffic
over the Global Crossing network.
"As one of the first alternative long-distance service providers
in California, we've evaluated numerous resale offerings," said
John Gibbons, TMC Communications' CEO. "We were attracted to
Global Crossing because it offered us a targeted suite of
products coupled with flexible pricing, which supports our
competitive positioning in the marketplace. We're equally
impressed by the excellent customer service we've received both
pre- and post-sale and look forward to a long-term
relationship."
"It's particularly validating to have a customer sign on for
such a broad portfolio of services, as it demonstrates that our
offerings are truly designed to support customers' requirements
across the board," said Ted Higase, Global Crossing's executive
vice-president of carrier sales. "TMC Communications is a valued
partner for us and we're pleased to be running their data and
voice traffic over our global, IP-based network."
Global Crossing's Private Line service is a point-to-point,
leased line data service offering connectivity over Global
Crossing's 101,000-route mile network linking over 200 major
cities in 27 countries.
IP Transit leverages Global Crossing's worldwide network and
extensive private peering relationships to provide high
performance, always-on, direct high-speed connectivity to the
Internet at speeds ranging from T1/E1 to OC48/STM16 and 10Base
GigE on a global basis.
The Integrated T1 Service provides the capability to support
multiple Global Crossing services over a dedicated access
facility connecting the customer's premise to the Global
Crossing network.
Both Global Crossing's Asynchronous Transfer mode, a multi-
protocol technology, and Frame Relay, a Wide Area Network
technology, are designed to transport multiple applications via
a single infrastructure.
Global Crossing's Access Direct offer allows North America-based
wholesale customers to increase profits by managing their
terminating costs more effectively.
Global Crossing's portfolio of advanced voice services includes
both switched and dedicated, inbound and outbound National
Origination Service, and toll-free transport, providing
customers with dedicated access from 197 Local Access and
Transport Areas nationwide, 22 countries globally and call
termination to over 450 international destinations in 240
countries.
The Pseudo Carrier Identification Code service offers customers
nationwide origination and enables service providers to deliver
flexible transport options, such as routing different call types
to specific terminating destinations.
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services. Global Crossing operates throughout the Americas and
Europe, and provides services in Asia through its subsidiary,
Asia Global Crossing.
On January 28, 2002, Global Crossing Ltd., and certain of its
subsidiaries (excluding Asia Global Crossing and its
subsidiaries) commenced Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York
(Bankruptcy Court) and coordinated proceedings in the Supreme
Court of Bermuda (Bermuda Court). On the same date, the Bermuda
Court granted an order appointing joint provisional liquidators
with the power to oversee the continuation and reorganization of
the Bermuda-incorporated companies' businesses under the control
of their boards of directors and under the supervision of the
Bankruptcy Court and the Bermuda Court. Additional Global
Crossing subsidiaries commenced Chapter 11 cases on April 23,
August 4 and August 30, 2002, with the Bermuda incorporated
subsidiaries filing coordinated insolvency proceedings in the
Bermuda Court. The administration of all the cases filed
subsequent to Global Crossing's initial filing on January 28,
2002 has been consolidated with that of the cases commenced on
January 28, 2002. Global Crossing's Plan of Reorganization,
which it filed with the Bankruptcy Court on September 16, 2002,
does not include a capital structure in which existing common or
preferred equity would retain any value.
On November 18, 2002, Asia Global Crossing Ltd., and its
subsidiary, Asia Global Crossing Development Co., commenced
Chapter 11 cases in the United States Bankruptcy Court for the
Southern District of New York and coordinated proceedings in the
Supreme Court of Bermuda. Asia Global Crossing's bankruptcy
proceedings are being administered separately and are not being
consolidated with Global Crossing's proceedings. Asia Global
Crossing Ltd. is a majority-owned subsidiary of Global Crossing.
However, Asia Global Crossing has announced that no recovery is
expected for Asia Global Crossing's shareholders.
Please visit http://www.globalcrossing.comor
http://www.asiaglobalcrossing.comfor more information about
Global Crossing and Asia Global Crossing.
GREATER SOUTHEAST: Fitch Drops Hospital Revenue Bonds to D
----------------------------------------------------------
Fitch Ratings downgrades the $40.7 million outstanding Prince
George's County, MD hospital revenue bonds, (Greater Southeast
Healthcare System), series 1993 to 'D' from 'C'. Obligors with a
'D' rating are in default and have a poor prospect of repaying
all obligations with the lowest ultimate recovery potential for
creditors, i.e., below 50%.
Greater Southeast Community Hospital Corporation and three of
its affiliates filed for Chapter 11-bankruptcy reorganization on
May 27, 1999. In November 2001, Greater Southeast's bankruptcy
plan was confirmed. Total bondholders' claims were $40.7 million
(the outstanding par amount of the series 1993 bonds), and total
recipient non-bondholder's claims ranged between $24.5 million
and $32 million. Fitch notes that the confirmed bankruptcy plan
provides for the distribution of 83.5% of any remaining funds to
bondholders and the remaining 16.5% to the other general
creditors.
According to Greater Southeast's debtors' second amended
disclosure statement (dated July 28, 2001), which provides
holders of claims with information about the liquidation plan,
total assets available to bondholders and recipient non-
bondholders, at the time, ranged between $10.3 million and $17.4
million. With anticipated distribution to bondholders of 83.5%,
the expected ultimate recovery of outstanding bonds, therefore,
ranged between $8.6 million and $14.5 million or 21.2% and
35.7%, respectively of total outstanding debt. However, Fitch
notes this document is over one year old and numerous attempts
to reach the plan agent for more updated information were
unsuccessful. These projected recovery values are highly
speculative and unable to be estimated with precision.
Nonetheless, Fitch expects that ultimate recovery of these bonds
will be extremely poor. Additionally, Fitch is uncertain when
bondholders might receive payment.
H&E EQUIPMENT: S&P Keeps Watch on BB- Rating over Weaker Results
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on H&E
Equipment Services LLC, including the 'BB-' corporate credit
rating, on CreditWatch with negative implications. "The
CreditWatch placement reflects the company's weaker-than-
expected performance, stemming from weak operating conditions in
construction markets in the U.S.," said Standard & Poor's credit
analyst John Sico.
The Baton Rouge, Louisiana-based company has about $350 million
in rated debt.
H&E Equipment was formed in June 2002 by the combination of two
equipment rental companies, Head & Engquist Equipment LLC and
ICM Equipment Co. LLC, both of which operate in contiguous
geographical markets with a similarly integrated rental
operating model. The combined company offers primarily four
categories of construction and industrial equipment through a
network of 45 locations in the Intermountain and Gulf Coast
regions of the U.S.
Demand for rental equipment slowed beginning in fiscal 2001 and
through 2002 due to declines in construction spending. The
equipment rental industry will remain challenging through 2003,
with near-term rental revenue expected to remain relatively
flat. Longer term, growth is expected from the continued
outsourcing trends and efforts by customers to reduce fixed-
capital investments.
Sales for H&E were off by 16% through the first nine months of
2002, on a comparable basis with prior year, mainly due to
declines in new and used equipment sales, as revenues for
equipment rentals were off by 5%. In addition, H&E Equipment's
balance sheet is highly leveraged, with total debt to EBITDA at
more than 4x on a pro forma combined basis. Standard & Poor's
expected total debt to EBITDA to average about 3x over the
intermediate term.
Standard & Poor's will meet with management to discuss industry
business conditions, and review the firm's operating and
financial forecast before taking further rating action.
HARVEST NATURAL: S&P Junks Corporate Credit Rating at CCC+
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on small, independent petroleum company Harvest Natural
Resources Inc., to 'CCC+' from 'B-'. The rating action follows
Standard & Poor's downgrade of the long-term foreign currency
rating of the Bolivarian Republic of Venezuela to 'CCC+'. The
outlook remains negative.
Houston, Texas-based Harvest has about $90 million in
outstanding debt.
"The rating action is driven by Standard & Poor's downgrade of
the Republic of Venezuela (CCC+/Negative/--) and its national
oil company, Petroleos de Venezuela S.A. (PDVSA; CCC+/
Negative/--)," noted Standard & Poor's credit analyst Daniel
Volpi. "Harvest relies on its operations in Venezuela and its
service agreement with PDVSA for essentially all of its
operating cash flow," he continued. The company's ratings are
constrained by the political risk attendant to its operations in
Venezuela.
Despite the general strike in Venezuela, production from the
South Monagas Unit has not been interrupted and is currently
producing about 27,000 barrels per day (bpd). However, as of
Dec. 9, 2002, PDVSA has reduced purchases to 18,000 bpd, the
balance of production being placed in storage. Harvest indicated
that it has about nine days of storage capacity available before
production would be affected.
The ratings on Harvest reflect its participation in the
cyclical, capital-intensive exploration and production segment
of the petroleum industry and moderate financial leverage. The
ratings on Harvest are constrained by Standard & Poor's ratings
on Venezuela and PDVSA.
The outlook on Harvest reflects Standard & Poor's negative
outlook for Venezuela, which also has affected PDVSA's ratings.
Harvest's ratings could be lowered if difficulties in Venezuela
reduce the company's ability to generate adequate cash flow. The
ratings on Harvest could also be lowered if Standard & Poor's
assessment of Venezuela's and PDVSA's credit quality further
deteriorates.
HAYES LEMMERZ: Files Plan of Reorganization in Delaware
-------------------------------------------------------
Hayes Lemmerz International, Inc., (OTC: HLMMQ) has filed a Plan
of Reorganization with the U.S. Bankruptcy Court for the
District of Delaware. Filing of the Plan is a key step forward
for the Company in its efforts to emerge successfully from
Chapter 11 proceedings under the U.S. Bankruptcy Code.
"Throughout our Chapter 11 process, we have retained
substantially all of our existing business and have won new
business. We have fulfilled all of our production obligations to
customers, and continued to deliver quality products, on
schedule, around the globe," said Curt Clawson, Chairman and
Chief Executive Officer. "We believe the future business
prospects of Hayes Lemmerz are good. Moreover, we believe that
our proposed Plan of Reorganization represents the best recovery
available to maximize value for our stakeholders."
"We remain focused on our goal of operating as a premier
supplier to the automotive industry," Mr. Clawson said. "The
combination of our new management team, new business plan,
excellent global network of efficient production facilities, and
a strong balance sheet upon emergence from Chapter 11 will allow
us to fulfill that vision."
The Plan requires approval by creditors and final approval by
the Court before it can be implemented. The Company noted that
the Plan of Reorganization could be modified before it is
submitted to its creditors for approval. Hayes Lemmerz said it
presently expects to emerge from bankruptcy sometime during the
first half of 2003.
Major corporate initiatives, many of which have already been
implemented, include rationalizing manufacturing capacity,
thereby reducing fixed costs; rationalizing marketing, general
and administrative expenses; implementing operational
improvements at the plant level focusing on lean manufacturing,
thereby reducing variable costs; enhancing the leadership team
and restructuring the role of the corporate center; increasing
oversight over the corporate, business unit and plant level
finance function, thereby improving reliability of reported
financial results; divesting certain non-core assets; and since
the Petition Date, rejecting and/or renegotiating unfavorable
contracts and leases.
Hayes Lemmerz said it would seek to obtain listing of the new
common shares on a national stock exchange, but that it could
provide no assurance it would be able to obtain such listing.
Hayes Lemmerz International, Inc., is one of the world's leading
global suppliers of automotive and commercial highway wheels,
brakes, powertrain, suspension, structural and other lightweight
components. The Company has 44 plants, 2 joint ventures and
11,400 employees worldwide.
HAYES LEMMERZ: Committee Brings-In Sonnenschein to Sue Banks
------------------------------------------------------------
The Official Committee of Unsecured Creditors of Hayes Lemmerz
International, Inc., and debtor-affiliates sought and obtained
permission to retain Sonnenschein Nath & Rosenthal as their
Special Counsel.
Teresa K.D. Currier, Esq., at Klett Rooney Lieber & Schorling,
in Wilmington, Delaware, relates that after an extensive
investigation, the Committee has uncovered compelling evidence
establishing that the Prepetition Lenders bear considerable risk
in the allowance of their claims and liens against the Debtors
estates. Estate claims against the Prepetition Lenders for
preference payments and fraudulent conveyance will result in the
avoidance of very valuable transfers by the Debtors before their
Chapter 11 filings.
According to Ms. Currier, Sonnenschein's role as a Special
Counsel is to further analyze, investigate and prosecute the
Avoidance Litigation and for other services as the Committee may
request from time to time.
The Committee believes that Sonnenschein possesses extensive
knowledge and expertise in the areas of law relevant to the
Avoidance Litigation, and that the Firm is well qualified to
represent the Committee. In selecting attorneys to pursue the
Avoidance Litigation, the Committee sought counsel with
considerable experience in representing unsecured creditors'
committees in complex Chapter 11 reorganization cases and
bankruptcy litigation.
The Court also orders that all legal fees and related costs and
expenses incurred by the Committee on account of services
rendered by Sonnenschein in connection with the Avoidance
Litigation be paid as administrative expenses of the estates.
Sonnenschein and the Committee have agreed on this fee
arrangement with respect to the services to be rendered:
A. Sonnenschein will bill the estates for its legal services
on an hourly basis in accordance with its ordinary and
customary hourly rates in effect on the date these
services are rendered and for out-of-pocket expenses that
it regularly charges to its other clients, plus a 5%
interest rate on expenses if expenses are carried over
time;
B. If a successful result is achieved, Sonnenschein will
be entitled to be paid 125% of its normal hourly rates; and
C. If a successful result is not achieved, Sonnenschein will
be entitled to be paid 80% of its normal hourly rates.
The current hourly rates charged by Sonnenschein are:
Partners $225-775
Associates $125-400
Paraprofessionals $70-230
These hourly rates are subject to annual adjustments to reflect
economic and other conditions. Sonnenschein will maintain
detailed records of actual and necessary costs and expenses
incurred in connection with these legal services.
Sonnenschein Member Peter D. Wolfson, Esq., assures the Court
that the Firm does not represent and does not hold any interest
adverse to the Debtors' estates or their creditors in the
matters on which the Firm is to be engaged. However, he admits
that currently represents or in the past has represented in
unrelated matters these companies: Canadian Imperial Bank of
Commerce; Bank of America NA; Bank of Nova Scotia; CIBC
Oppenheimer Corp.; Credit Lyonnais; Deutsche Bank AG; Dresdner
Bank AG; Erste Bank Der Oesterr, Sparkassen; and General
Electric Capital Corporation. (Hayes Lemmerz Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Hayes Lemmerz's 11.875% bonds due 2006
(HLMM06USS1) are trading at about 52 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1
for real-time bond pricing.
HEALTH INSURANCE PLAN: S&P Places B+ Ratings on Watch Positive
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' counterparty
credit and financial strength ratings on Health Insurance Plan
of Greater New York on CreditWatch with positive implications.
"HIP's consolidated pretax income was $148 million through Sept.
30, 2002, and is expected to range from $165 million-$175
million by year-end 2002," explained Standard & Poor's credit
analyst Joseph Marinucci. "Pursuant to Standard & Poor's
quarterly surveillance, year-end 2002 profitability is now
expected to significantly exceed initial expectations and serves
to dramatically improve HIP's level of capitalization,"
Marinucci added. HIP's statutory surplus improved by more than
70% to $333 million as of Sept. 30, 2002, from $193 million at
year-end 2001.
Standard & Poor's will be conducting a more in depth review of
HIP's operational performance to determine the full extent and
sustainability of its improved financial condition and expects
to resolve the CreditWatch in the first quarter of 2003.
ILLINOIS POWER: Fitch Expects to Assign BB- $500MM Bonds Rating
---------------------------------------------------------------
Fitch Ratings expects to assign a 'BB-' rating to Illinois Power
Company's proposed $500 million issuance of 144A mortgage bonds,
due December 2010. The rating is currently on Rating Watch
Negative, as are the 'B' senior unsecured and 'CCC' preferred
stock ratings of IP. IP is an indirect subsidiary of Dynegy
Inc., senior unsecured rated 'B', Rating Watch Negative.
Proceeds from the proposed mortgage bond issuance will be used
to refinance and repay debt. Any proceeds over existing Illinois
Commerce Commission authorized levels will be placed in escrow
pending ICC approval.
The ratings for IP reflect the structural and functional ties
between IP and its affiliate companies, DYN and Dynegy Holdings
Inc., senior unsecured rated 'B', Rating Watch Negative. DYN is
currently in the process of renegotiating $1.6 billion of bank
credit facilities that mature in the second quarter of 2003. If
DYN is successful in renewing its bank facilities on a secured
basis, unsecured creditors will become structurally
subordinated. As a result, Fitch would lower the senior
unsecured ratings of DYN and DHI by one or more notches. Due to
the relationship between DYN and IP, the ratings of IP,
including the new mortgage bonds, would also likely be reduced.
IP relies on payments under a $2.3 billion note receivable from
Illinova Corp., senior unsecured rated 'B' Rating Watch
Negative, for a large portion of its operating cash flows.
Through another intercompany note with similar terms, DYN
provides the funds to ILN to support its obligations to the
utility. In the event that IP would not receive payments on the
note, its financial condition would be materially adversely
impacted. In October 2002, the ICC issued an order establishing
a netting arrangement in which IP will not be obligated to make
payments to DYN for general and administrative costs and income
taxes should ILN fail to make interest payments to IP on the
intercompany note. The netting agreement also permits DYN to
withhold interest payments if IP fails to make payments for G&A
or income taxes. However, in the event of a bankruptcy or
insolvency of DYN, it is uncertain as to whether or not the
netting agreement would be enforceable. The ICC also agreed to
restrict IP from distributing dividends to DYN as long as the
utility remains below investment grade.
IP recently announced it had agreed to sell its electric
transmission assets to Trans-Elect, an independent transmission
company, for $239 million. The transaction, which is subject to
SEC, FERC and ICC approval, is expected to close in the first
half of 2003. The sale is conditioned on Trans-Elect receiving
FERC approval for its levelized rates application for a 13%
return on equity.
IP, a wholly owned subsidiary of ILN, is a transmission and
distribution utility serving more than 588,000 electric and
412,000 natural gas customers. Illinova is a wholly owned
subsidiary of DYN.
IPALCO ENTERPRISES: S&P Affirms & Removes BB+ Rating from Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on The
AES Corp.'s (B+/Neg/--) Indianapolis, Ind.-based subsidiary
IPALCO Enterprises Inc., (IPALCO, BB+/Neg/--) and its vertically
integrated electric utility Indianapolis Power & Light Co.,
(IPL, BB+/Neg/--) and removed them from CreditWatch where they
were placed on October 3, 2002. The outlook is negative.
The actions are solely due to the companies' rating linkage to
AES, whose corporate credit rating was also affirmed and removed
from CreditWatch.
The rating action is related to AES' closing of its senior
secured bank facility and senior secured exchange notes maturing
December 2005. The closing lifts the immediate threat of
insolvency, and provides AES with the ability to focus on its
goal of improving credit by selling assets and paying down
parent-level debt to a more manageable level, and by improving
operations at its operating businesses.
The ratings for CILCORP Inc. (BBB-/Watch Pos/--), the direct
parent of Central Illinois Light Co. (BBB-/Watch-Pos/--), remain
on CreditWatch with positive implications pending CILCORP's and
Central Illinois Light's sale by AES to higher rated Ameren
Corp.
In most circumstances Standard & Poor's will not rate the debt
of a wholly owned subsidiary higher than the rating of the
parent. Exceptions can be made, and were in this case, on the
basis of the cumulative value provided by enhancements such as
structural protections, covenants, a pledge of stock, and an
independent director, assuming the stand-alone credit quality of
the entity supports such elevation. These provisions serve to
make the subsidiaries bankruptcy remote from a sponsor with
weaker credit quality.
Standard & Poor's views these provisions as supportive in that
they reduce the risk of a subsidiary being filed into bankruptcy
in the event of a parent bankruptcy, but does not view them as
100% preventative of such a scenario. Therefore, Standard &
Poor's limits the rating differential provided by such
structural enhancements to three notches. On that basis, AES
subsidiaries' corporate credit ratings cannot be higher than
'BB+'.
ITEX: Working Capital Deficit Narrows to $1.1 Mill. at Oct. 31
--------------------------------------------------------------
ITEX Corporation, (OTC Bulletin Board: ITEX) a leading business
services and trading company, announced the operating results
for its first quarter ending October 31, 2002.
First Quarter Results
For the quarter ending October 31, 2002, the Company generated
net income of $122,000 compared to a net loss of $725,000 for
the same period last year. This marks the third consecutive
quarter the Company has shown profitability. Earnings before
interest, taxes, depreciation and amortization (EBITDA) for the
quarter were $266,000 compared to a loss of $441,000 for the
same period last year. Revenue from the trade exchange increased
$158,000, or 6.3% from the same period last year.
The significant improvement in the financial performance for the
first quarter is primarily the result of the comprehensive
corporate restructuring program initiated in November 2001. The
Company embarked on a targeted program of cost reduction,
trimmed the number of management, indirect, and non-essential
support staff in both the corporate and regional offices, and
eliminated the Corporate Trade Department. The Company also sold
several regional offices to ITEX Independent Licensed Brokers,
further reducing expenses, while maintaining a substantial
interest in the revenue stream generated from those offices
through trade transaction and association fees.
ITEX Corporation First Quarter Operational Highlights:
-- Corporate SG&A expenses decreased $681,000 as compared
to the first quarter fiscal 2002. This decrease of 44.2%
includes the reduction in wages, salaries, and benefits
of $540,000 from the first fiscal quarter 2002.
-- The Company completed the applications for franchise
registration in 50 States within the U.S.
-- The first U.S. ITEX Franchise was sold and placed in
Florida.
-- TEAM (Trade Exchange Account Management program), an
industry-leading proprietary software platform, was
launched and implemented.
-- The Company was accepted as a member of the
International Franchising Association (IFA).
-- The Company was the Gold Sponsor of the International
Reciprocal Trade Association (IRTA) International
Convention, in St. Petersburg, Florida.
Lewis "Spike" Humer, ITEX President and Chief Executive Officer
stated, "ITEX Corporation is a 'new' corporation --
restructured, refocused, and revitalized. In the last nine-
months where we completed the majority of the restructuring, we
have shown a profit of $409,000 compared to the loss of
$2,512,000 for the nine-months preceding the initiation of the
restructuring program. This is a bottom-line improvement of
almost three million dollars in an incredibly short period of
time."
He continued, "During the first quarter of fiscal year 2003, we
continued to invest in our franchise initiatives and our
training and support systems. In addition, we launched an
industry-leading proprietary software platform for our 20,000-
member trade exchange. We implemented numerous customer service
and member retention programs, and continued to reduce short-
term debt and other cash drains, such as miscellaneous legal
fees related to matters of the Company's past. It is our hope
and expectation to continue to build upon the performance of our
recent quarters. In the second quarter FY2003, we are planning
to embark upon an aggressive path of future revenue growth
through the placement of new franchises, the enrollment of
additional members into the ITEX Trade Exchange, and the
increased trading volumes within our extensive business
network."
Humer concluded by stating, "The turnaround of the last year was
balanced between the need to rebuild our infrastructure and the
necessity to immediately stabilize the financial position of the
corporation through prudent cost reductions. In the forthcoming
quarters, we will be aggressively marketing to add new members,
sell and place additional franchises, and increase the ITEX
brand awareness. While our growth will be tempered by our
projected cash flows, we are working diligently to increase our
revenues throughout fiscal year 2003. Overall, the next twenty-
four months will be focused on profitable and effective growth
in the business services market and the expansion of the ITEX
Trade Exchange through organic growth and systematic
acquisitions."
At October 31, 2002, ITEX's balance sheet shows that total
current liabilities exceeded total current assets by about $1.1
million.
Founded in 1982, ITEX Corporation -- http://www.itex.com-- is a
business services and trading company with domestic and
international operations. ITEX has established itself as the
leader among the roughly 450 trade exchanges in North America by
facilitating barter transactions between member businesses of
its Retail Trade Exchange. At the retail, corporate and
international levels, modern barter business enjoys expanding
sophistication, credibility, and acceptance. ITEX helps its
member businesses improve sales and liquidity, reduce cash
expenses, open new markets and utilize the full business
capacity of their enterprises by providing an alternative
channel of distribution through a network of five company
offices and more than ninety licensees worldwide.
JORDAN INDUSTRIES: Liquidity Concerns Prompt S&P to Keep Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Jordan
Industries Inc., including the 'B-' corporate credit rating, on
CreditWatch with negative implications. "The CreditWatch
placement reflects heightened concerns regarding limited
liquidity at the company's restricted group and on its ability
to meet near-term interest payments on its debt," said Standard
& Poor's credit analyst John Sico. The ratings on Jordan's
nonrestricted subsidiary--Kinetek Inc.-are not affected by this
action. Total rated debt affected by this action is about $500
million.
Deerfield, Illinois-based Jordan is a closely held company with
a portfolio of business units serving consumer, industrial,
specialty printing and labeling, specialty plastic, automotive,
and information technology markets.
Operating performance has been weak through 2002 and EBITDA
generation was insufficient to cover interest expense, at about
0.7x (excluding Jordan's ownership of unrestricted subsidiary
Kinetek). Prospects for significant improvement are limited in
the near term. Jordan's restricted group is highly leveraged and
liquidity is limited. At September 30, 2002, Jordan's restricted
group had about $24 million available under Jordan's revolving
credit facility and about $6 million in cash at its restricted
subsidiaries. Jordan has about $14 million in cash interest
payments due February 2003 on its $275 million 10.375% senior
notes that mature in 2007 and an initial cash interest payment
of about $5 million due April 1, 2003, on about $95 million
11.75% subordinated debt that matures in 2009.
Standard & Poor's will monitor these events and meet with
management to discuss their operating and financial plans before
taking further rating action.
DebtTraders says that Jordan Industries' 10.375% bonds due 2007
(JORD07USR1) are trading at about 64 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=JORD07USR1
for real-time bond pricing.
KAISER ALUMINUM: Hires Deloitte & Touche to Replace Andersen
------------------------------------------------------------
On April 30, 2002, Kaiser Aluminum Corporation and debtor-
affiliates terminated Arthur Andersen, LLP as their independent
auditors. Subsequently, Anderson was also booted out as the
Debtors' restructuring and tax advisors in July 2002. With
Andersen's exit, the Debtors want to employ Deloitte & Touche
LLP as their independent auditors, accountants and tax advisors
in these cases, nunc pro tunc to May 8, 2002.
Patrick M. Leathem, Esq., at Richards, Layton & Finger, asserts
that Deloitte's entry will figure importantly with the Debtors'
restructuring efforts. Deloitte is one of the nation's leading
professional services firms and has provided auditing,
accounting and tax advisory services to numerous Fortune 500 and
other major corporate entities. Deloitte's professionals have
also provided auditing, accounting, tax advisory and other
services to debtors in numerous Chapter 11 cases. Mr. Leathem
also notes that certain of Andersen's former employees who were
working in these cases are now with Deloitte.
The Debtors anticipate that Deloitte will render these services:
A. Accounting and Auditing Services
(1) Perform audits of Kaiser's annual financial statements
and perform other related auditing, accounting, and
similar related services, including, without limitation,
quarterly reviews; and
(2) Perform other accounting services as may be requested by
the Debtors and mutually agreed to by Deloitte.
B. Tax Services
(1) Provide general tax planning and consulting services not
associated with restructuring related matters;
(2) Provide consultation with respect to a variety of tax
compliance issues;
(3) Provide general tax planning and consulting services
relative to restructuring related matters;
(4) Prepare certain federal, foreign, state, and local tax
returns and related schedules as agreed upon by the
Debtors and Deloitte;
(5) Review certain federal, foreign, state, and local tax
returns and related schedules as agreed upon by the
Debtors and Deloitte; and
(6) Provide other tax services as may be requested by the
Debtors and agreed to by Deloitte,
C. Actuarial Services
(1) Provide post-retirement medical plan actuarial services.
D. Other Agreed Upon Services
(1) Provide other services as may be requested by the Debtors
and agreed to by Deloitte.
The Debtors disclose that Deloitte has been providing actuarial
services to them in connection with their post-retirement
medical plans since 1993. In the light of their Chapter 11
filing, the Debtors have asked Deloitte to continue providing
the Actuarial Services postpetition pursuant to a separate
Actuarial Engagement Letter. Deloitte may also provide other
actuarial and other professional services as the Debtors may
request from time to time.
The Debtors propose to compensate Deloitte for its services in
accordance with the firm's customary hourly rates. The Debtors
will also reimburse Deloitte for its actual out-of-pocket
expenses. Deloitte's current hourly rates are:
Professional Rate
------------ ----
Partners/Directors $330 - 700
Senior Managers 275 - 550
Managers 230 - 460
Seniors 165 - 325
Staff 140 - 280
Administrative 40 - 65
Pursuant to its prepetition Actuarial Services, Deloitte's
recurring annual fees have been $100,000 to $125,000. In the
12th-month period before the Petition Date, Deloitte was paid
$80,000 for the Actuarial Services. Mr. Leathem reports that
Deloitte is currently owed $46,000 in prepetition Actuarial
Services fees rendered. However, Deloitte is prepared to waive
these unpaid fees, subject to and contingent on its retention.
Daniel Durand, a partner of Deloitte, assures Judge Fitzgerald
that the firm 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.
U.S. Trustee Objects
Donald F. Walton, Acting U.S. Trustee for Region 3, asks the
Court to deny the Debtors' application:
-- because the scope of Deloitte's services is extremely
broad, encompassing a panoply of accounting, tax reporting,
consulting and actuarial services. The services to be
provided are nearly limitless given the nature of the
catchall clauses included in the Application. The U.S.
Trustee observes that the only services Deloitte excludes
are internal audit and "accounting system implementation";
-- to the extent the proposed scope of services is defined in
a manner that would permit the provision of services in
violation of the Sarbanes-Oxley Act or any other applicable
law, rule, regulation or code of conduct.
"It is common knowledge that the performance of consulting
services and other non-attest services by auditing firms,
including but not limited to Deloitte, is currently a
matter of great public concern. Furthermore, the provision
of non-audit services in conjunction with an audit
engagement is now regulated by the Sarbanes-Oxley Act of
2002," Mr. Walton notes; and
-- since the application fails to set forth an adequate basis
for the approval of Deloitte's proposed retention nunc pro
tunc to May 8, 2002, over six months before the Application
was filed. (Kaiser Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KEY3MEDIA GROUP: Fails to Make Interest Payment on 11.25% Notes
---------------------------------------------------------------
Key3Media Group, Inc. (OTCBB: KMED), the world's leading
producer of information technology tradeshows and conferences,
confirmed that it did not pay the semi-annual interest payment
due today on its 11.25% senior subordinated notes due 2011.
The Company has a 30-day cure period before this non-payment can
be declared an event of default under the notes; however, there
is a substantial risk that the Company will be unable to make
the payment during this period. If the non-payment is not cured
within this 30-day period it would also constitute an event of
default under the Company's senior bank revolving credit
facility. The Company is in discussions with certain of its
creditors regarding these matters.
KMART CORP: Will Delay Filing of Form 10-Q for Third Quarter
------------------------------------------------------------
Kmart Corporation (NYSE: KM) filed with the Securities and
Exchange Commission pursuant to Rule 12b-25 to extend the filing
date of its Form 10-Q quarterly report for the 13- and 39-week
periods which ended October 30, 2002.
The filing of the third quarter 10-Q report is being delayed to
provide additional time for the Company to complete its
financial statements and management's discussion and analysis of
the Company's financial condition and operation results for that
period reflecting its previously announced restatement of
financial statements for prior fiscal years and for the first
and second quarters of the 2002 fiscal year.
As Kmart previously noted in its December 9 announcement, none
of the adjustments to be reflected in the restatement should
impact the Company's liquidity or increase obligations requiring
a future use of cash. As of December 13, 2002, Kmart had $244
million of borrowings outstanding and had utilized $327 million
of its Debtor in Possession credit facility for letters of
credit. Its total DIP availability as of that date was $1.33
billion. The Company has now passed the peak borrowing period
for its seasonal inventory build, has begun to repay its
outstanding DIP borrowings and anticipates that all such
borrowings will have been repaid before the end of the month.
The Company does not expect the restatement to affect the future
availability of funds under its DIP credit facility.
Kmart currently expects to file its third quarter 10-Q report
and its Monthly Operating Reports for October and November 2002
no later than Monday, December 23, 2002. The Company expects to
file an amended Annual Report on Form 10-K/A for the 2001 fiscal
year and Quarterly Reports on Form 10-Q/A for the first two
quarters of the 2002 fiscal year as soon thereafter as
practicable.
Kmart Corporation is a mass merchandising company that serves
America with more than 1,800 Kmart and Kmart SuperCenter retail
outlets and through its e-commerce shopping site at
http://www.kmart.com Kmart in 2001 had sales of $36 billion.
KMART CORP: NYSE Will Suspend Securities Trading Tomorrow
---------------------------------------------------------
Kmart Corporation (NYSE: KM) has been informed by the New York
Stock Exchange, Inc. (NYSE), that, prior to the market opening
on December 19, 2002, the NYSE will suspend trading of Kmart's
common stock and the trust convertible preferred securities
previously issued by Kmart Financing I. The NYSE indicated that
it will thereafter commence proceedings with the Securities and
Exchange Commission to delist these securities.
As previously announced, the NYSE in July 2002 notified Kmart
that it was not in compliance with the NYSE's continued listing
requirements and that Kmart's common stock could be subject to
delisting. Kmart expects that the Chicago Exchange and the
Pacific Exchange, on which its common stock is also listed, will
also suspend trading and commence delisting proceedings.
James B. Adamson, Chairman and Chief Executive Officer of Kmart,
said, "We are working with the NYSE to facilitate a smooth
transition to the OTCBB and do not expect the change in trading
venue to affect our current operations or financial performance.
In the meantime, we are continuing to work toward our goal of
filing a proposed plan of reorganization with the bankruptcy
court and emerging from Chapter 11 court protection as soon as
practicable."
Kmart expects that its common stock and, subject to the interest
of market makers, the trust preferred securities will be quoted
on the OTC (over-the-counter) Bulletin Board beginning on
December 19, 2002 under new ticker symbols. The OTCBB is a
regulated quotation service that displays real-time quotes,
last-sale prices and volume information in OTC equity
securities. Additional information about the OTCBB may be found
at http://www.otcbb.com Kmart intends to issue a press release
when its new ticker symbols have been assigned. Investors should
be aware that trading in Kmart's common stock and the trust
preferred securities through market makers and quotation on the
OTCBB and the "pink sheets" may involve risk, such as trades not
being executed as quickly as when the issues were listed on the
NYSE.
Kmart Corporation is a mass merchandising company that serves
America with more than 1,800 Kmart and Kmart SuperCenter retail
outlets. Kmart in 2001 had sales of $36 billion.
Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6) 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.
KMART: Court Okays Pact with Andersen Resolving Claims Dispute
--------------------------------------------------------------
Kmart Corporation and its debtor-affiliates obtained the Court's
approval of its Settlement Agreement with Anderson News LLC.
Under the Settlement Agreement:
(a) Anderson and the Debtors acknowledge that the Goods and
Services Agreement is a valid and enforceable prepetition
contract effective as of March 5, 2001. Both parties
agree to perform pursuant to the terms of the Goods and
Services Agreement, provided, however, that the
Settlement Agreement does not constitute an assumption of
the Goods and Services Agreement;
(b) Anderson will pay the Debtors $6,515,267 in full and
complete satisfaction and reconciliation of the various
amounts that the parties claim are due to or from one
another. To the extent necessary, Anderson will be
granted relief from the automatic stay to effectuate any
and all set-offs and recoupment necessary to facilitate
this transaction;
(c) the Debtors will completely release and discharge
Anderson from any and all liabilities and claims. This
includes the $3,100,000 transferred to Anderson during
the 90 days prior to the Petition Date. The release,
however, does not extend to any amounts due and owing to
the Debtors on account of the obligations established
under the Goods and Services Agreement arising after
September 30, 2002, or the facts arising after September
30, 2002; and
(d) Anderson will also fully, forever and completely release
and discharge the Debtors from any and all liabilities
and claims. However, the release does not extend to any
amounts the Debtors owed to Anderson on account of the
obligations established under the Goods and Services
Agreement arising after November 4, 2002 or facts arising
after November 4, 2002. These obligations will
constitute administrative expense claims against the
Debtors' estates.
To recall, in the first quarter of 2001, Kmart Corporation,
together and Anderson News LLC drafted a Goods and Services
Agreement to govern their business relationship. Anderson
supplies the Debtors with magazines and related merchandise.
Anderson also provides related services, like:
(i) assisting the Debtors in determining the assortment and
quantity of the Merchandise;
(ii) delivering the Merchandise to Kmart stores;
(iii) placing the Merchandise in Kmart's magazine fixtures; and
(iv) removing and returning off-sale Merchandise.
Among other things, the Goods and Services Agreement sets forth:
* what Merchandise and services Anderson will provide on
Kmart's request;
* the mechanism for determining Kmart's purchase price for
Merchandise; and
* the algorithm for calculating the incentive allowances
Kmart will receive. (Kmart Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LERNOUT: L&H NA Sues Former Professionals, Suppliers, et. al.
-------------------------------------------------------------
Lernout & Hauspie Speech Products N.A. seeks to recover
preferential transfers made to various former suppliers,
professionals, and insiders.
William H. Sudell, Jr., Esq., Donna L. Culver, Esq., and Donna
L. Harris, Esq., at Morris Nichols Arsht & Tunnell, in
Wilmington, Delaware, provides the Court with a list of the
defendants.
A. Professionals
KPMG Bedrufsrevisoren $1,719,036.22
KPMG Dallas 163,445.00
KPMG Duitsland 38,862.22
KPMG Holding N.V. 79,092.50
KPMG London 30,225.28
KPMG Consultants, Inc. 83,729.43
KPMG Tax Advisors of Belgium 128,834.66
Goldman Sachs of New York 5,068,700.78
Morgan Stanley Dean Witter of New York 16,421.111.11
Arthur Andersen of Belgium 540,000.00
PricewaterhouseCoopers LLP 88,241.00
Bryan Cave LLP of Columbia 1,120,874.34
CB Richard Ellis of Belgium 57,080.66
Brown Rudnick Freed & Gesmer of Massachusetts 1,373,532.72
Bromberg & Sunstein LLP of Massachusetts 505,651.87
B. Service Providers
JeyStar Ltd., a Ukrainian entity $567,906.97
Lease Plan Management of Belgium 260,095.43
Loeff Claeys Verbeke C.V. of Belgium 922,659.70
VISA International of Belgium 101,200.14
MC2 of Luxemburg 33,428.21
Mentofacturing BVBA of Belgium 44,994.32
Chase Mellon of Pennsylvania 42,258.94
Mass. Institute of Technology 50,000.00
Hale & Dorr of Massachusetts 744,217.83
Nick Spencer of the United Kingdom 81,137.38
Ovum Ltd. of the United Kingdom 35,000.00
Parigon Communications, Inc. of Arizona 525,200.00
Oxford Publishing Ltd. of the UK 58,864.46
Amgro of Massachusetts 47,571.70
RR Donnelley UK Ltd. 142,143.40
Global Com Sarl of France 34,000.08
First Travel Management of Belgium 25,057.73
GRI Nordisk Sprakteknologi 2,649,352.97
Brussels Translation Group N.V. 594,734.87
Elan Informatique Sarl of France 269,707.54
Sail Labs Holding N.V. 11,432,044.96
Night Storm Media Co., Ltd. 3,000,000.00
Sarabo N.V. of Belgium 875,868.03
Information Technology of Luxembourg 200,000.00
Interwand of Belgium 41,896.59
ISS Abilis of Belgium 32,059.39
IMC - Hightech Partners of Belgium 205,668.56
Eg Helisesrvice N.V. of Belgium 51,171.85
Electrabel of Belgium 27,777.59
Duo Reklame of the Netherlands 355,125.08
Dekimo N.V. of Belgium 92,445.29
Icesoft AS of Belgium 49,000.00
Dedeyne Construct N.V. of Belgium 392,130.37
Himpe Eric of Belgium 49,031.47
EMG Leasing of Belgium 497,417.11
De Facto Image Building of Belgium 42,805.29
Eres N.V. of Belgium 25,897.21
Bouygues Telecom of France 52,078.22
Belgacom of Belgium 68,468.42
Adecco Personnel Services N.V. of Belgium 101,927.50
Advanstar of the United Kingdom 33,905.56
W. H. Operations Ltd. of the UK 225,000.00
U.S. Trust Co. of New York 134,640.00
Universitat Politecnica de Catalunya of Spain 49,450.49
TNT Express (XP) of Belgium 31,101.66
The Capital Markets Co. of Belgium 31,504.28
Text 100 GmbH of Germany 47,538.30
Studio Tognini B.V. of the Netherlands 44,845.45
Spence Associates of Connecticut 112,365.68
Altran Europe of Belgium 123,842.03
Sonofon of Denmark 51,238.91
American Express (Alpha Card CVBA) of Belgium 495,949.44
Siemens Mobile Phones A/S of Denmark 59,202.13
Rational Software Benelux BV of Belgium 88,721.62
RR Donnelly Receivables Inc. of North Carolina 29,629.53
Apptek of Virginia 87,148.40
Proximus Belgacom Mobile of Belgium 42,743.36
Artesia Services CV of Belgium 1,502,158.41
Arval NV of Belgium 55,123.42
Avanti International B.V. of the Netherlands 31,100.73
C. Insiders
Former shareholder and CEO Jo Lernout $358,148.95
Nico Willaert, a former officer and shareholder 322,778.19
Lernout & Hauspie Ltd., subsidiary 436,689.53
Dictaphone Consortium, N.V. 5,477,243.38
(L&H/Dictaphone Bankruptcy News, Issue No. 33; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LTV CORP: Oil States Sues Debtor to Recover $14-Million Payment
---------------------------------------------------------------
Oil States International, Inc., and Oil States Industries, Inc.,
formerly known as Continental Emsco Company, brings a complaint
against The LTV Corporation to recover its $14,614,991
postpetition payment.
Daniel J. Sponseller, Esq., George M. Cheever, Esq., David R.
Cohen, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart
LLP, in Pittsburgh, Pennsylvania, relate that prior to the
Petition Date, The LTV Corporation signed an agreement dated
July 18, 1995, with OSI, then known as CE Holdings, Inc. Under
this Agreement, LTV agreed to sell to OSI certain assets,
including all of the outstanding capital stock of Continental
Emsco Company and Continental Supply Company. These two
entities have since been merged and are now known as Oil States
Industries, Inc. LTV also agreed to provide a comprehensive and
united indemnification to OSI against substantially all
liabilities, which might arise in the future from any pre-
acquisition activities of these Acquired Companies in exchange
for a $74,300,000 payment.
The purchase price consisted of a cash component paid at closing
in the amount of $60,000,000, and a preferred payment obligation
of approximately $14,300,000 represented by 143,000 shares of
preferred stock in Continental Emsco redeemable at a price of
$100 per share (plus accrued interest) at any time after
September 15, 2000.
The indemnification obligations of LTV under the Agreement were
critical components of the consideration received by OSI. The
indemnification obligations are unlimited in amount and
duration, and cover pending claims as well as virtually all
claims that might arise in the future from any pre-1995
activities of the Acquired Companies. These important
obligations make up 14 pages of the Agreement and obligate LTV
to provide indemnification for any liabilities of the Acquired
Companies arising from:
(1) any products sold by the Acquired Companies
before 1995;
(2) any environmental liabilities arising from
any pre-1995 activities of the Acquired
Companies;
(3) workers' compensation claims relating to the
Acquired Companies; and
(4) any tortious conduct whatsoever of the
Acquired Companies occurring before the
Acquisition.
These indemnification provisions were, and are, particularly
important to OSI because the Acquired Companies have corporate
histories going back almost 100 years and were involved in broad
and varied industrial and commercial activities. Moreover, the
Acquired Companies are the legal successors-in-interest to many
corporate predecessors for whose liabilities the Acquired
Companies may be responsible.
Furthermore, these indemnification obligations provide
protection for massive or catastrophic so-called "long-tailed"
liabilities, like liabilities for personal injuries from
exposure to asbestos products and liabilities for latent
environmental contamination. The "scourge of asbestos
liabilities" resulting from operations occurring decades
ago has rendered some of the largest and most prominent
industrial corporations in the United States, some with prior
market capitalizations of billions of dollars, now essentially
worthless and struggling through massive bankruptcy
reorganizations proceedings. OSI doesn't want to join them.
On February 20, 2001, LTV demanded, and OSI paid, the remaining
$14,300,000 due under the Agreement, plus accrued interest for a
total payment of $14,614,991. Subsequently, OSI learned and
promptly informed LTV that an action had been filed alleging
asbestos bodily injury or death arising from the pre-acquisition
activities of the Acquired Companies. Moreover, additional
claims alleging bodily injury and/or death from exposure to
asbestos made, sold or used by the Acquired Companies began to
be filed. All of the asbestos claims were alleged to arise from
the pre-1995 commercial and industrial activities of the
Acquired Companies
In essence, The LTV Corporation demanded and accepted
substantially all of the benefit of Oil States' postpetition
performance of its executory obligations under an agreement,
then rejected all of LTV's own postpetition executory
obligations under that same Agreement -- primarily performance
of a critical, ongoing comprehensive indemnification obligation
-- without returning any of the postpetition payment it received
from OSI.
OSI, having performed its own postpetition obligation under the
Agreement, demands and expects LTV to perform its own
obligations to indemnify and defend OSI against these claims.
But LTV allegedly refuses to honor its indemnification
obligations. (LTV Bankruptcy News, Issue No. 41; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
LTV Corporation's 11.75% bonds due 2009 (LTVC09USR1),
DebtTraders says, are trading at less than a penny on the
dollar. For real-time bond pricing, see
http://www.debttraders.com/price.cfm?dt_sec_ticker=LTVC09USR1
for real-time bond pricing.
MAREX INC: Chairman and CEO David Schwedel Leaves Company
---------------------------------------------------------
After a decade, Chairman and Chief Executive Officer of Marex,
Inc., (OTC Bulletin Board: MARX) David A. Schwedel announced his
resignation, effective December 24th.
"For more than ten years, it has been a pleasure working for
Marex," Chief Executive Officer David A. Schwedel stated. "It
has been one of the highlights of my life to be able to serve
the company."
David A. Schwedel, founded Marex in September of 1992, and
served in various positions including Chief Executive Officer,
Chief Strategy Officer, and President. Mr. Schwedel founded
Marex after working more than five years for a Miami, Florida-
based venture capital firm. Marex was originally incorporated
with the simple concept of bringing marine businesses together
to conduct online electronic commerce vs. the use of other
means. During the next seven years, Mr. Schwedel managed to
secure more than $52 million in equity financing for the
company, and was an integral part of the decision to bring on a
more experienced technology management team between 1999 - 2001,
at which point he relinquished day-to-day responsibilities for
the business to Marex's newly appointed President, Chief
Operating Officer, and Chief Information Officer along with
their very capable staff of more than 100 employees.
In 2001, Mr. Schwedel was asked to take back the day-to-day
operations of the Company in order to commence a restructuring,
and began the institution of a Shareholder Value Plan. This plan
included the maximizing of company assets, as well as the
divestiture of any non-core Marex businesses, along with the
break-up of Marex into three separate and distinct companies --
one public and two private operating companies with shares to be
issued to shareholder's of record on a pro-rata basis. As such,
Mr. Schwedel reached an understanding with lead institutional
investor Brown Simpson Asset Management, whereby Marex was to be
merged with a new company, and all remaining Marex assets were
to be "carved-out" and privatized with terms benefiting all
shareholders. Preferred shareholders control the assets of Marex
with Brown Simpson owning more than 75% of the vote.
In recent weeks, Brown Simpson retained the Trippoak Group to
assist in closing out the transaction. Subsequently, Trippoak
changed the terms of the deal, which became onerous to
shareholders and Mr. Schwedel, who remains Marex's single
largest shareholder.
"At this juncture, I would rather work for the shareholders
under different circumstances than from the negative position
that the Trippoak Group has proposed to all of us," stated Mr.
Schwedel. "We had the opportunity to merge Marex with several
companies, two of which have revenue in excess of $100 million
with substantial net income as well. I have been working on
these various deals for nearly nine months, and it is
unfortunate that we have been unable to finalize our
arrangement." Mr. Schwedel will continue to assist on the
transition of Marex until December 24, 2002.
Before founding Marex in 1992, Mr. Schwedel was part of a three-
member executive team for a Miami-based venture capital firm for
more than five years. He is an active board member or advocate
of several South Florida Non- Profit organizations including
Alonzo Mourning Charities, the Miami Museum of Science, and the
Miami Children's Hospital.
Marex, Inc., headquartered in Miami, Florida, is a global
technology services company that develops telematics and
software solutions for various industries enabling remote
tracking of assets, streamlined integration solutions, and
critical business software applications.
The Trippoak Group is a New York-based consultancy.
* * *
Going Concern Considerations
In its SEC Form 10-Q for the nine-month period ended
September 30, 2002, the Company reported:
"The [Company's] unaudited condensed consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. We have sustained
net operating losses, which include approximately $23.5 million
of non-cash charges related to fair value of warrants and
approximately $1.4 million of non-cash charges related to stock-
based compensation, and negative cash flows from operations
since inception and have an accumulated deficit of $74,118,388.
Such conditions, among others, give rise to substantial doubt
about our ability to continue as a going concern for a
reasonable period of time. The accompanying unaudited condensed
consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded
asset amounts or the amounts and classifications of liabilities
that might be necessary should we be unable to continue as a
going concern.
"We currently anticipate that our available funds will be
sufficient to meet our projected working capital and operating
resource requirements into the first quarter of 2003 since we
significantly decreased our staff and, during April 2002,
shifted our focus from our electronic commerce solutions to our
telemetry solution. However, any projections of future cash
needs and cash flows are subject to substantial uncertainty. If
current cash and cash equivalents, and cash that may be
generated from operations are not sufficient to satisfy our
liquidity requirements, we will likely seek to sell additional
equity or debt securities. If we raise additional funds through
the issuance of equity or convertible securities, such
securities may have rights, preferences or privileges senior to
those of the rights of our Common Stock. Furthermore, in the
event that we issue or sell Common Stock or securities
convertible for Common Stock, at a price per share less than the
conversion price of the outstanding Series A1 Preferred Stock,
the holders of the Series A1 Preferred Stock have the right to
amend the conversion price of the price per share of the
issuance. As a result, our stockholders may experience
significant additional dilution. We cannot be certain that
additional capital will be available to us on acceptable terms
or at all."
MARK NUTRITIONALS: Committee Gets OK to Hire Kingman as Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Mark
Nutritionals, Inc., sought and obtained approval from the U.S.
Bankruptcy Court for the Western District of Texas to employ
Kingman, P.C., as its counsel. William B. Kingman, Esq., is the
attorney at Kingman, P.C., who will be responsible for handling
matters in this case for the Creditors' Committee.
Specifically, Kingman, P.C. will be:
a) investigating the acts, conduct, assets, liabilities and
financial condition of the Debtor, the operation of the
Debtor's business and the desirability of the continuance
of such business, and any other matter relevant to the case
or to the formulation of a Plan of Reorganization;
b) participating in preparation of the Plan;
c) requesting the appointment of a trustee or examiner, if
necessary;
d) counseling the Creditors' Committee in matters relating to
the administration of this Bankruptcy Estate;
e) representing the Creditors' Committee in negotiations with
the Debtor, Debtor's Counsel, secured and priority
creditors and their respective counsel;
f) preparing and filing pleadings relating to the
administration of the Bankruptcy Estate and the potential
reorganization of the Debtor and related disclosures;
g) making court appearances on behalf of the Creditors'
Committee;
h) analyzing schedules and pleadings filed by the Debtor and
other parties in interest;
i) analyzing, negotiating and litigating claims brought in the
forms of objections or as adversary proceedings; and
j) representing the Creditors' Committee in all other relevant
matters relating to the administration of this case in
order to maximize the interests of the creditors in this
case.
Kingman, P.C.'s hourly fee is $215 per hour and paralegals and
employees charge at $60 per hour
Mark Nutritionals, Inc., filed for chapter 11 protection on
September 17, 2002. William H. Oliver, Esq., at Pipkin, Oliver
& Bradley, LLP represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors it listed estimated debts of over $10 million.
MTS INC: Fiscal 1st Quarter Net Loss Widens to $8.2 Million
-----------------------------------------------------------
MTS, Incorporated, dba Tower Records, the leading independent
specialty retailer of packaged entertainment software, announced
earnings for the first fiscal quarter ended October 31, 2002,
and reinforced the company's commitment to the implementation of
its new business plan.
Net revenues for the quarter ended October 31, 2002 were $130.1
million compared with $140.1 million in the same period last
year. "This reduction in sales reflects the closure of under-
performing stores as part of our Restructuring Plan, as well as
an industry-wide decrease in CD sales in the United States,"
commented Jim Bain, Tower Records' Chief Financial Officer.
Gross profits for the quarter ended October 31, 2002 decreased
by $3.4 million to $40.3 million compared with $43.7 million in
the same period last year. This reduction was also a result of
decreased sales. Gross profit as a percentage of sales decreased
by 1.1 % to 31.0%. This was primarily due to a decrease in
wholesale distribution. However, the decrease in gross profit as
a percentage of sales was offset by a 1.9% Internet sales margin
improvement.
Excluding professional fees related to the company's
Restructuring Plan, selling, general and administrative costs
for the quarter ended October 31, 2002 were reduced to $42.5
million compared with $42.8 million in the same period last
year. The $300,000 reduction resulted from decreases in
personnel and occupancy, as well as other cost containment
initiatives realized through the implementation of the company's
Restructuring Plan. As a percentage of net revenues, selling
general and administrative costs, excluding associated
professional fees, increased to 32.6% for the quarter ended
October 31, 2002 compared with 30.5% in the same period last
year, reflecting a decline in revenues during the period.
Net loss from operations for the quarter ended October 31, 2002
was $8.2 million compared with a net loss of $5.7 million in the
same period last year. The increased loss was primarily
attributable to decreased sales. The company recorded in the
current quarter a one-time gain of $36 million on the sale of
its Japanese operations included in net income. Net income for
the quarter ended October 31, 2002 was $23.0 million compared
with a net loss of $11 million in the same period last year."
"We are currently developing a new company turnaround plan which
will focus on further cost containment, enhanced marketing
strategies and more efficient inventory management," said
Michael Solomon, Tower Records' President. "We have already
embarked on reviewing procedures in the field to effectuate
change. We have also significantly stepped up our focus on
customer service to improve the shopping experience at Tower."
Since 1960 Tower Records has been recognized and respected
throughout the world for its unique band of retailing. Founded
in Sacramento CA, by current Chairman Emeritus Russ Solomon, the
company's growth over four decades has made Tower Records a
household name.
Tower Records owns and operates 112 stores worldwide with 56
franchise operations. The company opened one of the first
Internet music stores on America Online in June 1995 and
followed a year later with the launch of TowerRecords.com. The
site was named among the top 50 retail websites by Internet
Retailer magazine.
Tower Records' commitment to providing its customers with a
superior and specialized shopping experience is key to the
organization's retail philosophy. Tower forges ahead with the
development of exciting entertainment shopping environments,
presenting diverse product ranges, artist performance stages,
personal electronics departments, and digital centers. Tower
Records maintains its commitment to providing the deepest
selection of packaged entertainment in the world merchandised in
stores that celebrate the unique interests and needs of the
local community.
As reported in Troubled Company Reporter's October 22, 2002
edition, Standard & Poor's revised its CreditWatch implications
on its triple-'C' corporate credit rating on MTS Inc., to
positive from developing. The revision is due to the company's
completion of the sale of its Japanese operations and
simultaneous refinancing of its credit facility.
Sacramento, California-based MTS, the primary operating
subsidiary of Tower Records Inc., with 172 stores specializing
in the sale of recorded music and related items, had $299
million of funded debt outstanding as of April 30, 2002, before
the asset sale.
NATIONSRENT: Exclusivity Extension Hearing to Continue on Feb 18
----------------------------------------------------------------
NationsRent Inc., and its debtor-affiliates intend to file a
motion to further extend the Exclusive Plan-filing period
through and including April 16, 2003, and the Exclusive
Solicitation Period through June 16, 2003. They propose to bring
the Extension Motion to the omnibus hearing on February 18,
2002.
Consequently, the Debtors presented this proposal to the
Official Committee of Unsecured Creditors and Fleet National
Bank, in its capacity as Administrative Agent for itself and the
lenders. In a Fourth Stipulation signed by Judge Walsh, the
Debtors, the Creditors' Committee and Fleet National Bank agree
that:
A. The hearing with respect to the Termination Motion and the
Second Extension Motion is adjourned until February 18, 2003;
B. The deadline for the Debtors and Fleet and any other party-
in-interest to respond to the Termination Motion is extended
through and including February 11, 2003;
C. The deadline for the Creditors' Committee and any other
party-in-interest to respond to the Second Extension Motion
is extended through and including February 11, 2003;
D. The Exclusive Filing Period and Exclusive Solicitation Period
are extended through and including the date on which the
Bankruptcy Court enters an order resolving the Termination
Motion and the Second Extension Motion; and
E. All written and oral discovery with respect to the
Termination Motion, the Second Extension Motion and the
Creditors' Committee Investigation is temporarily stayed
through and including January 28, 2003. (NationsRent
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NAVISITE INC: Oct. 31, 2002 Balance Sheet Upside-Down by $744K
--------------------------------------------------------------
NaviSite, Inc., (Nasdaq: NAVI) a provider of Always On Managed
Hosting(SM) services, announced its fiscal year 2003 first
quarter results for the period ending October 31, 2002.
First Quarter Financial Results
For the first quarter fiscal 2003, revenues were $8.2 million.
This compares to revenues of $9.8 million for the fourth quarter
fiscal 2002. In the first quarter, NaviSite signed 16 new
managed hosting customers and lost 9 customers, the majority of
whom shut down operations. A net add of 7 customers compares
with a net loss of 17, 17, 29 and 71 respectively for the
previous four quarters.
In the first quarter, NaviSite posted a net loss of $9.6
million. This compares with a net loss of $48.5 million for the
fourth quarter ended July 31, 2002. For the first quarter,
EBITDA loss was $4.1 million compared with an EBITDA loss of
$40.2 million in the fourth quarter fiscal 2002. Included in the
first quarter fiscal year 2003 EBITDA were non-run-rate expenses
of $1.0 million related to restructuring efforts. Included in
the fourth quarter fiscal 2002 EBITDA was an asset impairment
charge of $38.2 million. Net of these non-reoccurring events in
the first quarter of fiscal year 2003 and in the fourth quarter
of fiscal year 2002, EBITDA loss for the first quarter fiscal
year 2003 would have been $3.0 million and EBITDA loss for the
fourth quarter fiscal year 2002 would have been $2.0 million.
As of October 31, 2002, NaviSite had $13.1 million in available
cash as compared with $21.8 million on July 31, 2002. For the
first quarter, run-rate cash burn was approximately $846,000 per
month as compared with $1.4 million per month in the fourth
quarter fiscal 2002. Of the $8.7 million use of cash in the
first quarter of fiscal year 2003, $6.2 million was related to a
net non-recurring disbursement and $2.5 million was used to fund
NaviSite's run- rate operations. The approximately $6.2 million
in net one-time cash payments were related to a settlement with
CMGI, a settlement with Level3, one-time General &
Administrative expenses related to the change in control of
NaviSite, the acquisition of a senior debt position in
Interliant and NaviSite's restructuring efforts.
At October 31, 2002, the Company's balance sheet shows a total
shareholders' equity deficit of about $744,000.
NaviSite Senior Management -
Strategic and Financial Overview
Corporate Overview - Andy Ruhan, Chairman of NaviSite, Inc. "In
a difficult market where many of the largest players are
struggling to survive, NaviSite has taken the right steps to run
their operations in a way that is financially sound while
improving the quality of its services.
"We are committed to building on these capabilities by growing
revenue organically, through partnerships, and through
acquisitions and business combinations. Relative to ClearBlue,
we have made significant progress toward the integration of
ClearBlue Technologies and NaviSite."
Strategic Overview -
Tricia Gilligan, President and CEO of NaviSite, Inc.
"As expected, our revenue for the quarter was down from the
previous quarter. This was attributed to a planned rightsizing
of one of our largest customer's sites, and the loss of one
large customer due to the shutdown of their business operations.
"On a very positive note, we signed 16 new customers this
quarter. This is the largest number of new customers added over
the past four quarters, and is attributed to our strong
reputation for high quality service delivery. Additionally, this
quarter we achieved net new customer growth, due to the
favorable trend in our customer churn.
"In Q4 2002, in partnership with Progress Software, we announced
a bundled applications management solution targeting ISVs
looking to deliver their software applications as services. As a
part of these bundles, NaviSite provides the ISVs with
application level support, end-user SLAs and utility based
pricing. This quarter, 25% of the new customers purchased this
bundled solution. The pipeline of new opportunities for this
offering remains very strong and we will actively pursue other
channel opportunities in the Application Service Provider
space."
Financial Overview -
Kevin Lo, CFO and Senior Vice President Finance
and Strategy of NaviSite, Inc.
"Consistent with our actions over the past few quarters, we have
continued to make significant progress on both our cost
structure and capital structure. Run rate cash burn in the
quarter was $846,000 per month, our revenue requirement for
EBITDA break-even was $11 million, and we expect these trends to
continue. Of note, subsequent to the end of Q1 2003, we executed
a debt restructuring with CBT that improved our balance sheet
and our capital structure. In addition, interest payments for
CY2003 were waived, improving our pro-forma cash flow.
"In this past quarter, our focus has shifted to strengthening
our existing customer base and profitably acquiring new
customers. Our customer renewal rate improved significantly over
the last quarter. Going forward, we expect to lower the cost of
acquiring new customers by building deeper selling relationships
with our technology partners and network of agents, and through
merger and acquisition activities."
Key Q1 FY 2003 Highlights:
* On September 11, 2002, ClearBlue Technologies acquired a
majority equity position in NaviSite.
* In Q1 2003, new customers added in the quarter include:
W3Health Solutions, Progress Software, Socious, Distribution
Management Systems Inc., JSI, Cutsey Business Systems, LOR
Management Systems, nCommon Partners, Computers For Tracts, and
VMC Satellite.
* Key add-ons and renewals included: Cabelas, Mitsubishi
Motors, and BetaSphere.
* NaviSite acquired a senior debt position in Interliant
with the intention of participating in the Company's
reorganization.
* Subsequent to the end of Q1 fiscal 2003, on December 12,
2002, ClearBlue Technologies converted $20 million of
debt into 77 million shares of NaviSite common stock. As
a part of the transaction, NaviSite also received a
waiver on interest payments in calendar year 2003 for the
remaining debt.
NaviSite defines "Always On Managed Hosting(SM)" as a
combination of high availability infrastructure, high
performance monitoring systems and proactive problem resolution
management processes designed to recognize patterns and identify
and address potentially crippling problems before they cause
downtime in customers' Web operations.
In conjunction with this release, NaviSite will host a
conference call and simultaneous Web cast today at 5:30 pm EST.
The call can be accessed via the investor section of NaviSite's
corporate Web site at http://www.navisite.com
For additional information, please refer to the filings made by
NaviSite with the Securities and Exchange Commission.
NaviSite, Inc., a leader in "Always On Managed Hosting(SM)" for
companies conducting mission-critical business on the Internet,
including enterprises and other businesses deploying Internet
applications. The Company's goal is to help customers focus on
their core competencies by outsourcing the management and
hosting of their Web operations and applications, allowing
customers to fundamentally improve the ROI of their web
operations. NaviSite's solutions provide secure, reliable, co-
location and high-performance hosting services, including high-
performance Internet access, and high-availability server
management solutions through load balancing, clustering,
mirroring and storage services. In addition, NaviSite's enhanced
management services, beyond basic co-location and hosting, are
designed to meet the expanding needs of businesses as their Web
sites and Internet applications become more complex and as their
needs for outsourcing all aspects of their online businesses
intensify. The Company's application services, which include
application hosting and management, provide cost- effective
access to, as well as rapid deployment and reliable operation
of, business- critical applications. For more information about
NaviSite, please visit http://www.navisite.com
OCTAGON INVESTMENT: S&P Assigns BB Prelim. Class D Note Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Octagon Investment Partners V Ltd./Octagon Investment
Partners V Corp.'s $276.75 million floating-rate notes due 2015.
The preliminary ratings are based on information as of Dec. 16,
2002. Subsequent information may result in the assignment of
final ratings that differ from the preliminary ratings.
The preliminary ratings reflect the following:
-- The expected commensurate level of credit support in the
form of subordination to be provided by the notes junior
to the respective classes;
-- The cash flow structure, which is subject to various
stresses requested by Standard & Poor's;
-- The experience of the collateral manager;
-- The coverage of interest rate and foreign currency risks
through hedge agreements; and
-- The legal structure of the transaction, which includes
the bankruptcy-remote structure of the issuer.
Preliminary Ratings Assigned
Octagon Investment Partners V Ltd./Octagon Investment
Partners V Corp.
Class Rating Amount (mil. $)
A AAA 236.25
B A 21.00
C BBB 15.00
D BB 4.50
Preferred shares N.R. 23.25
N.R. -- Not rated.
ORGANOGENESIS: Brings-In Paul Hastings for California Litigation
----------------------------------------------------------------
Organogenesis Inc., wants permission from the U.S. Bankruptcy
Court for the District of Massachusetts to hire the firm of
Paul, Hastings, Janofsky & Walker LLP, as Special Litigation
Counsel in connection with litigation pending in California
against the Debtor and certain of its former and current
directors and officers.
Bicoleur Capital Management commenced a Civil Action before the
Superior Court of State California for the County of San Diego
against the Debtor and its directors and officers, and against
co-defendants Needham & Company, Inc., Charles Drakos, Warren
Foss and Michael Marshall.
Bicoleur Capital asserts claims for violations of California
securities laws, fraud, and breach of contract in connection
with the Debtor's private placement of Series D preferred stock.
Particularly, Bicoleur Capital alleges that
PricewaterhouseCoopers LLP, the Debtor's independent auditor,
did not raise any issue about the Debtor's ability to continue
as a "going concern" at the time of the private placement.
Bicoleur Capital alleges that it was induced to purchase the
Debtor's stock based on these alleged representations by
defendants.
Before the Petition Date, Paul Hastings was retained to
represent the Debtors and Individual Organogenesis Defendants in
the California Action. The Debtors' directors and officers
insurance policy with National Union Fire Insurance Company may
cover some or all of the fees payable to Paul Hastings in their
capacity as counsel for the Debtor.
The Debtor hopes to remove the case from California and transfer
it to this Court. The Debtor needs California counsel to effect
the removal and transfer of the California Action. The Debtor
has determined that, in its judgment, removal and transfer was
the best litigation strategy in light of the pending Chapter 11
proceeding in Massachusetts.
The individuals at Paul Hastings who will primarily work on this
matter include Donald Morrow, Jay Gandhi and Meghan Atwood, a
litigation associate. However, the Debtor did not disclose the
hourly rates of Paul Hastings professionals.
Organogenesis Inc., development and manufacturer of skin
substitutes and related items, filed for chapter 11 protection
on September 25, 2002. Andrew Z. Schwartz, Esq., at Foley Hoag
LLP represents the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
$24,536,000 in total assets and $32,346,000 in total debts.
OWENS CORNING: EPA Claims Bar Date Extended Until March 17, 2003
----------------------------------------------------------------
Owens Corning and its debtor-affiliates sought and obtained
Court approval of a stipulation with the Environmental
Protection Agency, which effectively extends to March 17, 2003
the Bar Date for the EPA to file a proof of claim in the
Debtors' cases.
The EPA and the Debtors have been engaged in extensive
discussions concerning potential environmental claims under the
Comprehensive Environmental Response, Compensation and Liability
Act. The discussions have resulted in the narrowing of the
claims. The extension of EPA's Bar Date is needed to give the
parties the opportunity to reach further agreements on the
treatment of the claims. (Owens Corning Bankruptcy News, Issue
No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACKETPORT.COM: Needs Fresh Capital to Continue Operations
----------------------------------------------------------
PacketPort.com recorded a net loss of $634,987, on revenues of
$2,986, for the three months ended October 31, 2002, as compared
to a net loss of $415,073 on revenues of $29,232 for the
comparable period ended October 31, 2001.
The Company recorded a net loss of $1,318,485, on revenues of
$63,096, for the nine months ended October 31, 2002, as compared
to a net loss of $2,328,581 on revenues of $42,482 for the
comparable period ended October 31, 2001.
PacketPort.com provides IP Telephony solutions and services for
a wide range of telephony applications for the Internet,
telecommunications and other data networking industries, based
on the flexible packet gateway architecture. PacketPort.com has
launched a complete line of Voice-Over-Broadband products. These
products extend the capabilities of DSL, cable, wireless, T1, E1
and SS7/C7, enabling a variety of bundled services, including
multiple lines of Voice and Fax-over IP, in addition to high-
speed Internet access. The Company's products have been
developed using the best of class components from Sun
Microsystems, NMS Communications and Oracle Corporation.
At October 31, 2002, the Company had a working capital deficit
of $1,112,762 as compared to a working capital deficit of
$693,521 at January 31, 2002. At October 31, 2002, the Company
had cash and cash equivalents of approximately $7,111. Cash
used in operating activities of $446,409 for the nine months
ended October 31, 2002 primarily consisted of the net loss,
offset by non-cash charges for depreciation, amortization,
common stock issued for services, amortization of deferred
compensation, disposal of equipment, reserve for bad debts and
inventory write-downs. The Company also invested $160,218 in
software and licenses. Cash used in operating and in investing
activities was financed by Microphase Corporation, which
advanced the Company an additional $621,639 during the nine
month period ended October 31, 2002.
The Company's ability to continue as a going concern and its
future success is dependent upon its ability to raise capital in
the near term to: (1) satisfy its current obligations, (2)
continue its development of products, and (3) successfully
implement its plans to market the products through co-venturers
and commissioned sales representatives.
Management expects that, in connection with the anticipated
growth of the Company's products, the Company will be able to
generate some increase in revenue and raise additional funds
through the public or private offering of its common stock or
otherwise obtain financing. However, there can be no assurance
that the Company's efforts to attain profitability will be
successful, that the Company will generate sufficient revenue to
provide positive cash flows from operations or that sufficient
capital will be available, when required, to permit the Company
to realize its plans.
PacketPort.com requires substantial working capital to fund its
business and will need more in the future. It will likely
experience negative cash flow from operations for the
foreseeable future. The issuance of equity, equity-related or
debt securities, may subordinate common stockholder rights to
other investors and stockholder stock ownership percentage may
be diluted.
As stated above, the Company incurred a net loss of $1,318,485
during the nine months ended October 31, 2002. In addition, cash
available at October 31, 2002 is unable to support the Company's
operations at present levels through the completion of fiscal
year 2003 without the Company raising more capital through
public or private financing or extending certain terms with
certain vendors. The Company does not know if additional
financing will be available or, if available, whether it will be
available on attractive terms. If the Company does raise more
capital in the future, it is probable that it will result in
substantial dilution to its stockholders. These factors
create substantial doubt as to the Company's ability to continue
as a going concern. Management plans on obtaining sufficient
working capital from planned Private Placements in the near
term, setting up strategic partners to reduce future development
costs and the expansion of revenue earnings for customers
utilizing its existing products. The ability of the Company to
continue as a going concern is dependent upon the success of the
capital offering or alternative financing arrangements.
PAXSON COMMS: Jeff Sagansky Takes Board's Vice-Chairman Post
------------------------------------------------------------
Lowell W. Paxson, Chairman of Paxson Communications Corporation
(AMEX:PAX), announced that the company's President, Jeff
Sagansky, has accepted the role of Vice-Chairman of the
company's Board of Directors. In addition to his role on the
Board, Mr. Sagansky will remain as a consultant to the company
while relinquishing his title of President and CEO.
Mr. Paxson said, "I look forward to Jeff's continuing
contributions to PAX programming. In four short years Jeff has
helped establish PAX TV as the pre-eminent family television
broadcast network, developing such hit shows as "Doc," "Sue
Thomas: F.B.Eye," "It's a Miracle" and "Just Cause." He has been
invaluable in bringing the nation's largest advertisers to PAX,
as well as creating an economic model for program acquisition
that is unique in our business." Mr. Sagansky commented, "I'm
tremendously proud of what we've accomplished and feel we have
the organization in place to grow and prosper in the year
ahead."
Paxson said he will take on the responsibilities of CEO of the
company while Dean Goodman, President of the PAX TV Network,
will become President and COO of the Company. Additionally, Bill
Scott, currently President of Programming, will step into the
Presidency of the network with responsibility for all
programming. Doug Barker moves to President of the Paxson TV
Station Group and Stephen Appel has been chosen as President of
Sales and Marketing with responsibility for network, national
and local sales.
Paxson Communications Corporation owns and operates the nation's
largest broadcast television distribution system and PAX TV,
family television. PAX TV reaches 87% of U.S. television
households via nationwide broadcast television, cable and
satellite distribution systems. PAX TV's original series
include, "Sue Thomas: F.B.Eye," starring Deanne Bray, "Doc,"
starring recording artist Billy Ray Cyrus and "Just Cause"
starring Richard Thomas and Elizabeth Lackey. Other original PAX
series include "It's A Miracle" and "Candid Camera." For more
information, visit PAX TV's Web site at http://www.pax.tv
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's placed its single-'B'-plus corporate credit and other
ratings, on TV station and network owner Paxson Communications
Corp., on CreditWatch with negative implications. The action
follows the West Palm Beach, Florida-based company's lowered
guidance for its 2002 second quarter, which includes relatively
flat revenue and reduced earnings. Paxson has about $858 million
in debt outstanding.
PLANET HOLLYWOOD: Florida Court Confirms Plan of Reorganization
---------------------------------------------------------------
Planet Hollywood has successfully confirmed its Plan of
Reorganization and expects to emerge in the first quarter of
2003.
The Company is especially gratified that it will emerge with all
of its main stores intact. These core restaurants are located in
some of the world's busiest tourist destinations including:
Orlando, New York, London, Honolulu, Paris, Disneyland Paris,
the Mall of America, Myrtle Beach, Las Vegas and Atlantic City.
The Company-owned units have historically been the backbone of
the Company, generating the strongest profits. These locations
continue to generate significant cash flow and are showing
dramatic improvement over the prior year.
Going forward, the Company plans to focus on its core restaurant
business and is intent on strengthening the Planet Hollywood
brand. "I am delighted that our plan has met with approval from
all parties. I have been, and will continue to be, very involved
with our Company-owned units as well as the franchise network.
Despite the sluggish tourist economy, I'm expecting continued
positive growth," said Chairman and CEO Robert Earl.
One outcome of the restructuring is that Planet Hollywood will
emerge as a private company with its shares no longer traded on
the open market. This change will allow the Company to save
significant expenses associated with SEC reporting and will
allow the Company's senior management to focus all of their
efforts on revitalizing the Planet Hollywood brand.
PRESIDENT CASINOS: Terrence Wirginis Reports 24.3% Equity Stake
---------------------------------------------------------------
Terrence L. Wirginis beneficially owns 1,250,603 shares of the
common stock of President Casinos, Inc., with sole voting and
dispositive rights. The amount held represents 24.3% of the
outstanding common stock of the Company based upon 5,033,161
shares of President Casinos, Inc., common stock, $0.06 par
value, issued and outstanding as of December 12, 2002.
Mr. Wirginis currently serves as the Vice Chairman and Vice
President - Marine and Development of President Casinos, Inc.,
with its principal place of business located at 802 North First
Street, St. Louis, Missouri 63102. Mr. Wirginis purchased the
shares of common stock reported by using personal funds.
On December 2, 2002, Mr. Wirginis purchased 1,040,878 shares of
common stock from John E. Connelly for a purchase price of $0.10
per share pursuant to the terms of an Agreement to Terminate
Stock Option and Effectuate Stock Purchase dated July 29, 2002.
Subject to availability at prices deemed favorable, Mr. Wirginis
may continue to acquire additional shares of common stock from
time to time in the open market, in privately negotiated
transactions or otherwise. Mr. Wirginis also may dispose of
shares of common stock from time to time in the open market, in
privately negotiated transactions or otherwise.
President Casinos, Inc., owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri, north of the Gateway Arch.
At August 31, 2002, the Company's balance sheets show a working
capital deficit of about $30 million, and a total shareholders'
equity deficit of about $45 million.
PURCHASEPRO.COM: Bringing-In Sklar Warren as Special Counsel
------------------------------------------------------------
PurchasePro.com, Inc., asks the the U.S. Bankruptcy Court for
the District of Nevada for permission to continue its retention
of Sklar, Warren, Conway & Williams, LLP as Special Counsel.
The Debtor relates that before the Petition Date, it retained
Sklar Warren in connection with securities, litigation and
transactional matters. As of the Petition Date, the Firm was
owed approximately $33,922 in fees and expenses.
Given the Firm's prepetition familiarity with Debtor's business
affairs, and representation in pending litigation, the Debtor
wished to continue its employment of the Firm, postpetition, as
special counsel for advice and representation. Since the Debtor
is a publicly traded company, it needs to prepare public filings
with the Securities and Exchange Commission. Additionally, it
is necessary to comply with a recent informational request made
by the SEC. Finally, it is necessary for the Debtor to comply
with pending third party subpoenas and discovery requests.
Given the Firm's familiarity with this proceeding, the Debtor
believes that it is in the best interest of the estate to employ
the Firm postpetition.
On a postpetition basis, prior to the filing of this
Application, the Firm has incurred legal fees and costs
approximately $8,359 for which it is seeking nunc pro tunc
approval.
The Debtor relates that that compensation of the Firm's
attorneys will range from $275 to $350 per hour. As a condition
to continued representation, the Debtor must provide the Firm
with a postpetition retainer in the amount of $25,000.
The Debtor argues that the Firm's immediate employment is
necessary because there are securities and litigation matters
pending that require an immediate response from the Debtor.
PurchasePro.com which offers strategic sourcing and procurement
software solutions, filed for chapter 11 protection on
September 12, 2002. Gregory E. Garman, Esq., at Gordon & Silver,
Ltd., represents the Debtors in their restructuring efforts. The
Debtor's Chapter 11 Plan and Disclosure Statement is due on
January 9, 2003. When the Company filed for protection from its
creditors, it listed $41,943,000 in total assets and $20,058,000
in total debts.
RESOLUTION PERFORMANCE: Subpar Financial Profile Concerns S&P
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Resolution Performance Products LLC to negative from stable,
citing the company's subpar financial profile.
At the same time, Standard & Poor's affirmed its ratings,
including its 'BB-' corporate credit rating, on the company.
Standard & Poor's said that it also assigned its 'B' rating to
the company's proposed $50 million senior subordinated notes due
2010, which is an add-on the company's existing subordinated
debt.
Houston, Texas-based Resolution is a leading producer of epoxy
resins and has more than $700 million of debt outstanding,
including payment-in-kind notes at the parent level. Proceeds of
the notes will be used to prepay a portion of the company's
secured term debt.
"The outlook revision reflects concerns that weaker-than-
expected operating performance could make it more difficult for
the company to reduce debt and strengthen credit protection
measures in the near term," said Standard & Poor's credit
analyst Peter Kelly. Profitability and cash flow have been
negatively affected by the continuation of difficult industry
conditions. Consequently, Resolution's financial profile will
likely remain subpar longer than had been anticipated. The
ratings affirmation reflects the company's efforts to reduce
costs and pay down debt during a difficult operating
environment, as well as good liquidity aided by the proposed
transaction.
R.H. DONNELLEY: Obtains Consents with Respect to 9-1/8% Notes
-------------------------------------------------------------
R.H. Donnelley Inc., -- whose senior secured $1.5 billion
facility has been rated by Standard & Poor's at BB -- has
successfully completed its consent solicitation with respect to
$150 million aggregate principal amount of its 9-1/8% senior
subordinated notes due 2008.
The early consent payment deadline expired pursuant to the terms
of the offer to purchase and consent solicitation statement at
5:00 p.m., New York City time, on Monday, December 16, 2002, at
which time the Company had received tenders of, and consents
related to, $128.7 million aggregate principal amount of the
2008 Notes, representing approximately 85.8% of the aggregate
principal amount of the 2008 Notes outstanding.
In accordance with the terms of the offer to purchase and
consent solicitation statement, holders who validly tendered
their notes before 5:00 p.m., New York City time, on Monday,
December 16, 2002, will receive the total consideration, which
is the early consent premium, equal to 1.5% of the principal
amount of the 2008 Notes validly tendered, plus the tender offer
consideration, equal to 98.5% of the principal amount of the
2008 Notes validly tendered. In accordance with the terms of the
offer to purchase and consent solicitation statement, holders
who validly tender their notes after 5:00 p.m., New York City
time, on Monday, December 16, 2002 and before 5:00 p.m., New
York City time, on Thursday, January 2, 2003 (unless extended or
earlier terminated) are entitled to receive only the tender
offer consideration, equal to 98.5% of the principal amount of
the 2008 Notes validly tendered, but no early consent premium.
Accrued and unpaid interest will be paid on all 2008 Notes
validly tendered and accepted for payment.
The tender offer and consent solicitation will expire at 5:00
p.m., New York City time, on Thursday, January 2, 2003, unless
extended or earlier terminated by the Company.
R.H. Donnelley is a leading marketer of yellow pages
advertising. The company's businesses include relationships with
SBC and Sprint, as well as its pre-press publishing facility in
Raleigh, N.C. For more information, please visit Donnelley at
http://www.rhd.com
SEVEN SEAS PETROLEUM: Defaults on 12-1/2% $110-Mill. Sr. Notes
--------------------------------------------------------------
Seven Seas Petroleum Inc., (Amex: SEV) announced that the
Company is in default under its 12-1/2% $110 Million Senior
Subordinated Notes due to a failure to make the $6,875,000
semiannual interest payment on November 15, 2002. The full
principal plus accrued and unpaid interest will be due and
payable immediately upon notice by the Trustee or holders of 25%
of the Senior Notes.
As previously announced, the Company is currently in default
under its 12% Senior Secured $45 Million Notes as a result of
cross-default provisions in the governing documents relating to
the Company's failure to meet the obligations owed to the Senior
Notes. On December 13, 2002, Chesapeake Energy accelerated all
amounts owing to Chesapeake Energy, including principal, accrued
interest, fees, costs, and expenses, and as a result, such
amounts are immediately due and payable. Additionally, under the
terms of the $22.5 million CHK Note (one-half of the $45 Million
Notes) the rate of interest has been increased from 12% to a
default rate of 13%.
Chesapeake, as collateral agent for the $45 Million Notes, has
exercised its rights to exclusive control over Seven Seas' bank
accounts, pursuant to deposit control agreements related to the
Note Purchase and Loan Agreement dated July 9, 2001. Seven Seas
cannot access its US bank accounts without prior approval from
the collateral agent. Most of Seven Seas' operating cash is held
in these accounts. Seven Seas has been advised by the collateral
agent that the collateral agent currently intends to approve
disbursements by the Company and its subsidiaries from these
accounts as necessary to prudently operate the Guaduas Oil Field
in the ordinary course of business.
Seven Seas Petroleum Inc., is an independent oil and gas
exploration and production company operating in Colombia, South
America.
Seven Seas Petroleum's 12.50% bonds due 2005 (SEV05USR1) are
trading at about 42 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=SEV05USR1for
real-time bond pricing.
SHELBOURNE PROPERTIES: Inks Pact to Sell Sutton Square for $16MM
----------------------------------------------------------------
Shelbourne Properties II, Inc., (Amex: HXE) has entered into a
contract to sell its property located in Raleigh, North Carolina
commonly referred to as Sutton Square for a purchase price of
approximately $16,500,000 after adjustments. The closing of the
sale of this property is currently scheduled for December 19,
2002.
The Board of Directors and Shareholders of Shelbourne Properties
II, Inc., have previously approved a plan of liquidation for
Shelbourne Properties II, Inc. For additional information
concerning the proposed liquidation including information
relating to the properties being sold please contact Andy
Feinberg at (617) 570-4620 or John Driscoll at (617) 570-4609.
SIMTROL INC: Independent Auditors Express Going Concern Doubt
-------------------------------------------------------------
During the nine months ended September 30, 2002, Simtrol, Inc.'s
total assets decreased approximately 36.8% to $1,081,941 from
$1,711,236 at December 31, 2001. This was primarily the result
of a decrease in capitalized software development costs of
$208,219 due to amortization of this amount and a decrease of
$321,665 in accounts receivable due to lower revenues and
improved collections.
Current liabilities increased $306,482, or 12.5%, due primarily
to an increase in convertible debt of $787,740, partially offset
by decreased deferred revenue of $385,359.
Revenues were $370,920 and $368,740 for the three months ended
September 30, 2002 and 2001, respectively. Revenues for the
Company's newer Ongoer software product increased to $105,607 in
the three months ended September 30, 2002 from $43,481 in the
same period last year. Revenues for its older Omega product line
were $265,313 for the three months ended September 30, 2002
compared to $325,259 for the three months ended September 30,
2001. Simtrol discontinued selling its older Omega platform in
the second half of 2001 in order to concentrate resources on
development and sale of its new Ongoer product line, which began
shipping in April 2001. All Omega revenues in the current year
were from maintenance contracts.
Net loss for the three months ended September 30, 2002 was
$406,247 compared to a net loss of $787,252 for the three months
ended September 30, 2001. The decrease in net loss for the
period was due primarily to the reduction in operating expenses
that resulted from reductions in personnel during the last year
and consolidation of facilities.
Revenues were $1,130,968 and $1,353,091 for the nine months
ended September 30, 2002 and 2001, respectively. The 16.4%
decrease for the nine months ended September 30, 2002 was
primarily due to a reduction in revenues associated with
Simtrol's older Omega product line. Revenues for Omega were
$783,641 for the nine months ended September 30, 2002 compared
to $1,206,878 for the nine months ended September 30, 2001.
Net loss for the nine months ended September 30, 2002 was
$1,604,474 compared to a net loss of $2,375,039 for the nine
months ended September 30, 2001. Again the decrease in net loss
for the period was due primarily to the reduction in operating
expenses that resulted from reductions in personnel during the
last year.
As of September 30, 2002, the Company had cash and cash
equivalents of $54,477. Simtrol does not currently have
sufficient funds for the next 12 months. During the current year
it has issued $750,000 of convertible notes and 255,400 of
equity, net of costs, in order to fund operations and for the
payment of certain past due obligations. All its convertible
notes are due on December 31, 2002, and Simtrol is currently
negotiating the extension and/or conversion of the notes to
common stock. Due to declining revenues and recurring losses
from operations, an accumulated deficit, negative working
capital and Simtrol's inability to date to obtain sufficient
financing to support current and anticipated levels of
operations, its independent public accountant's audit opinion at
December 31, 2001, stated that these matters raise substantial
doubt about the Company's ability to continue as a going
concern. In June 2002, Simtrol reduced its headcount by
approximately 50% in order to conserve resources and focus sales
and development efforts with select audiovisual integrators and
on software licensing opportunities. The Company has sustained
substantial losses from operations in recent years, and such
losses have continued through September 30, 2002. The Company
has also used, rather than provided, cash in its operations for
the nine months ended September 30, 2002.
The Company may require additional funding during the remainder
of fiscal 2002 and thereafter may require additional funding to
fund their development and operating activities. This additional
funding could be in the form of the sale of assets, debt,
equity, or a combination of these financing methods. The amount
of such funding that may be required will depend primarily on
how quickly sales of the Company's new Ongoer product take place
and to what extent the Company is able to work out their overdue
accounts payables with various vendors. There can be no
assurance that the Company will be able to obtain such financing
if and when needed, or that if obtained, such financing will be
sufficient or on terms and conditions acceptable to us. If the
Company is unable to obtain this additional funding, their
business, financial condition and results of operations would be
adversely affected. The accompanying financial statements
contemplate continuation of the Company as a going concern.
STANFIELD CARRERA: S&P Assigns Low-B Ratings to Classes D-1 & -2
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to
Stanfield Carrera CLO Ltd./Stanfield Carrera CLO Corp.'s $276
million notes.
Stanfield Carrera CLO is a CLO backed primarily by loans and
structured as a cash flow transaction.
The transaction is actively managed by Stanfield Capital
Partners LLC and has a six-month ramp-up period followed by an
approximately five-year reinvestment period.
The ratings are based on the following:
-- Adequate credit support provided by subordination and
excess spread;
-- Characteristics of the underlying collateral pool,
consisting primarily of loans;
-- Scenario default rate of 31.8% for class A, 25.5% for
class B, 20.8% for class C, and 15.8% for class D; and a
break-even loss rate of 42.9% for class A, 31.1% for
class B, 23.0% for class C, and 21.1% for class D;
-- Weighted average maturity of 5 years for the portfolio;
-- Expected portfolio default rate of 13.642;
-- Standard deviation of portfolio default rate of 4.221%;
-- Weighted average correlation of 0.533% for the
portfolio; and
-- Under Standard & Poor's stresses, interest on the class
B, C, and D notes is deferred for some periods; thus,
the rating on the these notes addresses the ultimate
payment of interest and principal.
Ratings Assigned
Stanfield Carrera CLO Ltd./Stanfield Carrera CLO Corp.
Class Rating Amount (mil. $)
A AAA 228.00
B-1 A+ 16.00
B-2 A+ 5.00
C-1 BBB 6.75
C-2 BBB 12.00
D-1 BB 4.00
D-2 BB 4.25
TECH DATA: Company's Ability to Continue Operations Uncertain
-------------------------------------------------------------
Tech Data operates predominantly in a single industry segment as
a wholesale provider of information technology products, related
logistics management, and other value-added services. While the
Company operates primarily in one industry, because of its
global presence, the Company is managed by its geographic
segments. These geographic segments are 1) the United States, 2)
Europe (including the Middle East) and 3) Other International
(Canada, South America, and export sales to Latin America and
the Caribbean from the U.S.). The Company assesses performance
of and makes decisions on how to allocate resources to its
operating segments based on operating income.
Tech Data Corporation's consolidated net sales were $3.8 billion
in the third quarter of fiscal 2003 compared to $4.2 billion in
the comparable quarter last year, a decline of 9.6% year over
year, primarily due to continued lower demand for technology-
related products and services throughout the world and the
decision of certain vendors to further pursue a direct model. On
a regional basis, the Company's third quarter U.S. sales fell
17.6%. On a local currency basis, European sales were down 5.2%
from the comparable quarter in the prior year; however, due to a
strengthening of the euro, sales were actually 2.5% higher than
last year in terms of U.S. dollars. Other International sales
fell 17.0% compared to the third quarter of last year, due to
significant economic problems in South America, most notably in
Argentina and Brazil. Due to total international sales falling
at a slower rate than those in the U.S., the Company's
percentage of international sales increased to 53% in the third
quarter of fiscal 2003 from approximately 48% in the third
quarter of the prior year.
The Company generated approximately 32% of its net sales in the
third quarter of fiscal 2003 from products purchased from
Hewlett-Packard Company and Compaq Computer Corporation, which
HP recently acquired. HP has communicated that it intends to
continue to increase the level of business it transacts directly
with end-users and/or resellers in certain product categories,
customer segments and/or geographies. The Company's net sales
have been adversely affected by this trend, which has been
primarily focused on HP's computer systems business (HP's
printer business has not been affected). In addition, HP is in
the process of modifying its general business terms and
conditions on a worldwide basis. At this time, it is too early
to determine the impact, positive or negative, these changes may
have on the results of operations of the Company.
Net income increased 15.2% to $32.8 million, compared to $28.5
million in the third quarter of the prior year. On a pro forma
basis, without the special charges incurred in the third quarter
of fiscal 2002, net income decreased $.3 million, or 0.9%, from
last year's balance of $33.1 million. Pro forma net income, as a
percentage of sales, increased from 0.79% in the third
quarter of fiscal 2002 to .86% in the corresponding period for
fiscal 2003. As the Company was able to maintain stable
operating margins on lower sales levels, the 7 basis point
increase can be attributed to the reduction in interest expense
offset by the foreign currency exchange loss.
Consolidated net sales were $11.7 billion in the first nine
months of fiscal 2003 compared to $13.0 billion in the
comparable period of last year, a decline of 10.0% year over
year, primarily due to continued lower demand for technology-
related products and services throughout the world and the
decision of certain vendors to further pursue a direct model,
offset slightly by a surge in Tech Data's Microsoft licensing
business related to Microsoft's Upgrade Advantage and Software
Assurance programs during the second quarter of fiscal 2003. On
a regional basis, the Company's U.S. sales fell 17.0%. On a
local currency basis European sales were down from the
comparable period in the prior year by 4.1%, however, due to a
strengthening of the euro, were essentially flat in terms of
U.S. dollars. Other International sales fell 15.9% compared to
the first nine months of last year due to economic turmoil in
South America, most notably in Argentina and Brazil. Due to
total international sales falling at a slower rate than those in
the U.S., the Company's percentage of international sales
increased to 52% in the nine month period of fiscal 2003 from
approximately 47% in the same period of the prior year.
Net income increased 38.9% to $103.2 million, compared to $74.3
million in the first nine months of the prior year. On a pro
forma basis, without the special charges incurred in the first
nine months of fiscal 2002, net income increased $11.1 million
or 12.1% from last year's balance of $92.1 million. Pro forma
net income, as a percentage of sales, increased from .71% in the
first nine months of fiscal 2002 to .88% in the corresponding
period for fiscal 2003. The 17 basis point increase was due
primarily to the reduction in interest expense and the gain on
foreign currency exchange, offset in part by the reduction in
operating margin.
Tech Data has decided to exit its operations in Argentina and
has negotiated the sale of this subsidiary to local management.
As a result of this exit, the Company expects to incur operating
losses or other charges in the fourth quarter of approximately
$2 to $4 million, in addition to the realization of
approximately $12 million in foreign currency exchange losses
previously recorded in shareholders' equity as accumulated other
comprehensive income (loss). The Company's accumulated other
comprehensive income (loss) is comprised of foreign currency
translation adjustments relating to the net assets of the
Company's international subsidiaries.
In addition, the Company is repatriating approximately $70
million of capital through the liquidation of one of its
European financing companies, which will result in the
realization of foreign currency exchange gains of approximately
$10 million in the fourth quarter, previously recorded in
shareholders' equity as accumulated other comprehensive income
(loss).
The Company continues to evaluate its risk exposure (e.g., risks
surrounding currency rates, regulatory environments, political
instability, etc.) around the world and consider actions
necessary to reduce the its overall risk. To the extent the
Company decides to close additional operations, the Company may
incur charges and operating losses related to such closures, as
well as recognize a portion of its accumulated other
comprehensive income (loss) as a non-operating foreign currency
exchange gain or loss. Of the Company's total accumulated other
comprehensive loss of $56.6 million at October 31, 2002, $25.7
million relates to Latin America, with the remainder relating to
its European and Canadian operations.
The Company operates in a highly competitive environment, both
in the United States and internationally. The computer wholesale
logistics industry is characterized by intense competition,
based primarily on product availability, credit availability,
price, speed of delivery, ability to tailor specific solutions
to customer needs, quality and depth of product lines and pre-
sale and post-sale training, service and support. The Company
competes with a variety of regional, national and international
wholesale distributors, some of which have greater financial
resources than the Company. In addition, the Company faces
competition from direct sales by vendors that may be able to
offer resellers lower prices than the Company. Products
purchased from Hewlett-Packard Company and Compaq Computer
Corporation, which HP recently acquired, represent in excess of
30% of sales by the Company. As stated above, HP has elected to
sell certain of the product lines direct. HP's perception of the
results of its direct sale policy with certain product lines may
impact its decision on other product lines that the Company also
carries. The Company also faces competition from companies
entering or expanding into the logistics and product fulfillment
and e-commerce supply chain services market.
As a result of intense price competition in the industry, the
Company has narrow gross profit and operating profit margins.
These narrow margins magnify the impact on operating results of
variations in sales and operating costs. Future gross profit and
operating margins may be adversely affected by changes in
product mix, vendor pricing actions and competitive and economic
pressures.
Tech Data is subject to the risk that the value of its inventory
will decline as a result of price reductions by vendors or
technological obsolescence. It is the policy of most vendors of
microcomputer products to protect distributors, such as the
Company, that purchase directly from such vendors, from the loss
in value of inventory due to technological change or the
vendors' price reductions. Some vendors, however, may be
unwilling or unable to pay the Company for products returned to
them under purchase agreements. Moreover, industry practices are
sometimes not embodied in written agreements and do not protect
the Company in all cases from declines in inventory value. No
assurance can be given that such practices to protect
distributors will continue, that unforeseen new product
developments will not adversely affect the Company, or that the
Company will be able to successfully manage its existing and
future inventories.
The Company sells its products to a large customer base of
value-added resellers, corporate resellers, retailers and direct
marketers. The Company finances a significant portion of such
sales. As a result, the Company's business could be adversely
affected in the event of the deterioration of the financial
condition of its customers, resulting in the customers'
inability to repay the Company. This risk increases because of
the general economic downturn affecting a large number of the
Company's customers and in the event the Company's customers do
not adequately manage their business or disclose properly their
financial condition.
TRANSTEXAS GAS: Third Quarter Revenues Fall to $15.1 Million
------------------------------------------------------------
TransTexas Gas Corporation (OTCBB:TTXG) reported operating
results for its third fiscal quarter ended Oct. 31, 2002. Total
revenues were $15.1 million, with a net loss of $7.4 million.
The Company recorded a net loss to common stockholders of $16.7
million, after giving effect to the accretion of preferred
stock. On Sept. 15, 2002, all of the Company's Junior Preferred
Stock and one-half of the Senior Preferred Stock converted into
common equity, resulting in 63,448,830 shares of total common
equity outstanding. This quarter's results compare to revenues
of $32.4 million and a net loss of $64.7 million to common
stockholders in the previous year quarter. The Company noted
that the previous year loss included the impact of a non-cash
asset writedown charge of $38.9 million (pre-tax), recorded
under the full cost method of accounting, reflecting lower oil
and gas prices prevailing at quarter-end.
On Nov. 14, 2002, TransTexas filed a voluntary petition under
Chapter 11 of the U.S. Bankruptcy Code, in order to preserve
cash and give the Company the opportunity to restructure its
debt. The Company believes that the Chapter 11 process will
allow it to more efficiently implement a program for the joint
development of its oil and gas properties and reduce operating
costs. In addition, the Company anticipates this would allow it
to enter into Joint Operating Agreements and continue operations
in the ordinary course of business, prior to completing the
restructuring of the Company's balance sheet.
Earnings before interest, income taxes, litigation accruals,
depreciation, depletion and amortization (EBITDA) for the
quarter was $7.9 million, as compared to $22.8 million in the
prior year quarter. Cash flow from operations was $7.5 million
for the quarter versus a deficit of $13.0 million in the
previous year quarter. Total capital expenditures were $2.0
million, versus $26.1 million in the prior year.
Sales of gas, condensate and natural gas liquids for the quarter
were $15.0 million, down 53% from the previous year's $32.1
million, due primarily to a decrease in natural gas sales
volumes. Total production for the quarter was 4.4 billion cubic
feet of natural gas equivalent (Bcfe) compared to 10.2 Bcfe in
the prior year quarter. Approximately 3.6 billion cubic feet
(Bcf) of the decrease in natural gas volumes for the three-month
period was attributable to reduced production rates from wells
in the Southwest Bonus field and approximately 0.6 Bcf of the
decrease was attributable to the sale of the Company's Bob West
Field in October 2001. Average natural gas pricing was $3.41 per
thousand cubic feet (Mcf) during the three-month period, up 24%
from the previous year's $2.75 per Mcf. Average crude oil and
condensate pricing was $26.77 per barrel (Bbl), versus $24.53
per Bbl in the year-earlier quarter, while NGL prices rose 6% to
$0.35 per gallon for the quarter.
Depreciation, depletion and amortization decreased by $22.0
million due to lower natural gas sales volumes and a $1.55 per
Mcfe decrease in the depletion rate. The decrease in the
depletion rate is due primarily to the prior impairments of gas
and oil properties recorded during fiscal 2002.
Lifting costs averaged $0.61 per thousand cubic feet equivalent
(Mcfe), versus $0.33 per Mcfe in the prior year quarter. General
and administrative expenses for the quarter decreased $0.6
million primarily as a result of lower personnel and related
costs, partially offset by higher legal and consulting fees
incurred due to the Company's bankruptcy filing.
Nine Month Results
For the nine months ended Oct. 31, 2002, TransTexas reported a
net loss to common stockholders of $56.3 million on revenues of
$56.9 million. This compares to a net loss of $137.3 million to
common stockholders on revenues of $109.8 million in the first
nine months of fiscal 2002.
Gas, condensate and NGL revenues for the nine months decreased
by $53.0 million from the prior period, primarily due to
decreased natural gas sales volumes and lower prices for all
products. Total production volumes for the nine months were 17.2
Bcfe, versus 27.2 Bcfe in the prior year. Average natural gas
pricing during the nine-month period was $3.19 per Mcf versus
$4.18 in the prior period. Crude oil and condensate prices
decreased to $24.91 per Bbl, versus $26.06 in the prior year
period. Operating expenses for the nine months decreased 40% to
$9.3 million from $15.5 million due primarily to a decrease in
workover expenses and a fewer number of productive wells due to
the sale of the Bob West field.
TransTexas is engaged in the exploration, production and
transmission of natural gas and oil, primarily in the upper
Texas Gulf Coast, including the Eagle Bay field in Galveston
Bay. Copies of the Company's filings with the Securities and
Exchange Commission may be found on the Internet at
http://www.sec.gov/cgi-bin/srch-edgar?transtexas+adj+gas
UNIROYAL TECHNOLOGY: Taps GMH Capital as Warren Property Broker
---------------------------------------------------------------
Uniroyal Technology Corporation and its debtor-affiliates ask
for approval from the U.S. Bankruptcy Court for the District of
Delaware to retain GMH Capital Partners Commercial Realty
Service, LP, as their exclusive real estate broker to market and
sell a facility situated in the township of Warren, County of
Somerset, State of New Jersey.
The Debtors have previously asked for permission to retain GMH
to market and sell their Warren Property. Because of GMH's
experience and knowledge in the field of commercial real estate,
and particularly with respect to the Property, the Debtors
believe that GMH is well qualified to perform the brokerage
service required.
The Debtors relate that the sale of the Property has been a
difficult undertaking. The condition and location of the
Property attracted very little interest. Nevertheless, GMH was
able to find an interested purchaser for the property.
Consequently, the Debtors believe that GMH is highly qualified
to serve the Debtors in this respect.
Joseph M. Macchione, the Assistant Secretary of GH CP Commercial
Realty Services, LLC, the general partner of GMH, discloses that
GMH is a "disinterested person" as that phrase is defined in the
Bankruptcy Code. GMH shall be compensated with a commission
equal to 6% of the gross sales price of the Property.
Uniroyal Technology Corporation and its subsidiaries are engaged
in the development, manufacture and sale of a broad range of
materials employing compound semiconductor technologies, plastic
vinyl coated fabrics and specialty chemicals used in the
production of consumer, commercial and industrial products. The
Company filed for chapter 11 protection on August 25, 2002 Eric
Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard
Firm represent the Debtors in their restructuring efforts. When
the Debtors filed for protection from its creditors, it listed
$85,842,000 in assets and $68,676,000 in debts.
UNITED AIRLINES: Honoring Up to $35MM of Foreign Vendor Claims
--------------------------------------------------------------
United Airlines sought and obtained authority to pay or honor
all prepetition obligations to owed foreign vendors, service
providers and governments in the ordinary course of business.
This includes foreign vendors, service providers, regulatory
agencies and governments. The Foreign Entities include, among
other groups, foreign airports, professionals, vendors, service
providers, and utilities. The Debtors estimate the Foreign
Vendors' claims total about $35,000,000.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, reminds Judge
Wedoff that the Debtors provide international flight service to
Canada, Mexico, Central America, South America, the Caribbean
(Aruba), Europe, and the Pacific. During 2001, the Debtors'
international revenues were in excess of $5.4 billion, or almost
33.6% of the Debtors' combined revenues. The Debtors'
international service is critical to their future and is
conducted under route authority granted by the Department of
Transportation. The DOT has the authority to suspend and
reallocate routes of air carriers whose operations have been
discontinued. Because the Debtors' foreign routes are extremely
valuable assets, they must be protected.
The Debtors make payments to Foreign Entities in the ordinary
course of their business. Monthly, disbursements to Foreign
Entities total about $35 million. The Debtors think there's a
month's worth of payables to Foreign Entities on their books.
If the outstanding prepetition obligations to Foreign Entities
are not satisfied, the Foreign Entities could take action that
could severely disrupt the Debtors' foreign operations. For
instance, the Foreign Entities may argue that they are not
subject to the jurisdiction of this Court and thus not subject
to the automatic stay of 11 U.S.C. Section 362(a). The Foreign
Entities could sue in foreign courts, obtain judgments against
the Debtors, and then seek to enforce those judgments against
the Debtors' foreign assets or aircraft landing overseas.
Moreover, foreign suppliers could refuse to continue to conduct
business with the Debtors, thereby impairing the Debtors'
foreign operations. Additionally, foreign governments could
attempt to revoke the Debtors' landing rights or bring civil
and/or criminal actions against the Debtors' officers and
directors for failure to pay certain government fees and other
charges.
The Debtors fear this would likely create operational chaos and
strand the Debtors' customers overseas, and could also possibly
lead to the DOT's suspension of the Debtors' route authority.
This would severely undermine the Debtors' efforts to reassure
its foreign - as well as domestic - customers that Chapter 11 is
not tantamount to liquidation, damage the Debtors' goodwill
among the flying public, and jeopardize the Debtors'
reorganization prospects. Moreover, it would be cumbersome and
expensive, and in some cases impossible, for the Debtors to
prevent or remedy such actions.
Amounts Owed to Foreign Entities
A. On-Board Services and Supplies
The Debtors regularly make payments to foreign vendors to
provide food and other supplies to passengers in the foreign
jurisdictions to which they fly. The Debtors' ongoing business
is dependent on their ability to continue paying these foreign
vendors and service providers. While the Debtors utilize the
goods and services of domestic vendors where possible, the
services of foreign vendors and suppliers are necessary where
either the items being provided by vendors are perishable, or
the services being provided must be performed when the Debtors'
airplanes and crew are in the foreign jurisdictions. Because the
goods and services are necessary, and are in many instances not
easily or quickly replaced, the Debtors must be able to continue
paying foreign vendors and service providers in the ordinary
course of business. Even if the Debtors have contracts with
foreign vendors and service providers, the Debtors' inability to
enforce the automatic stay in many jurisdictions may damage the
Debtors' reorganization efforts. The average amount paid in cash
per month to these vendors and service providers over the last
nine months is approximately $10 million.
B. Goods and Services for Foreign Jurisdictions
The Debtors also regularly make payments to foreign service
providers for airplane maintenance, ground and cargo handling
and security. The Debtors have professionals providing services
and place advertisements and obtain other promotional services
in overseas locations.
The payment of these services are necessary to the Debtors'
foreign operations because nonpayment would likely lead to
interruption of services in foreign jurisdictions. The spend
items in this category are generally services that the Debtors
need to maintain their ability to service foreign jurisdictions
and which must be provided by foreign vendors by their very
definition. Because the goods and services are necessary, and
are in many instances not easily or quickly replaced, the
Debtors must be able to continue paying foreign vendors and
service providers in the ordinary course of business. Even if
the Debtors have contracts with such foreign vendors and service
providers, the Debtors' inability to enforce the automatic stay
in many jurisdictions may severely damage the Debtors'
reorganization efforts. With respect to promotion, the Debtors
are in a highly competitive market with other international
servers and with servers in local jurisdictions. The average
amount paid in cash per month to these vendors and service
providers over the last nine months is approximately $16
million.
C. Crew Hotel & Transportation Services
The Debtors also make payments to foreign hotels to provide
overnight crew lodging in overseas locations and for
transportation. These Debtors' business would be significantly
disrupted if they were unable to pay the hotels and for the
transportation of their airline crews. It is necessary to the
continuing ability of the Debtors to fly to be able to provide
their crews with adequate lodging and other necessities while
they overseas not only because of the impact that it has on the
morale of the Debtors' employees, but also due to the nature of
the Debtors' business that requires well rested and alert staff.
Because such services are necessary, and are in many instances
not easily or quickly replaced, it is imperative that the
Debtors be able to pay these foreign vendors in the ordinary
course of business. The average amount paid in cash per month to
these vendors and service providers over the last nine months is
approximately $2 million.
D. Utilities
The Debtors obtain electricity, natural gas, water, telephone,
and/or similar services through numerous accounts with
various foreign Utility Companies. Uninterrupted utility
services are essential to the Debtors' ongoing operations, and
to the success of the Debtors' reorganization. The Debtors are
engaged in the business of providing transportation services in
the United States and throughout the world. As such, the Debtors
cannot continue to perform these services without utility
services. Should the Utility Companies refuse or discontinue
service, even for a brief period, the Debtors' business
operations would be severely disrupted. Unlike in domestic
markets, where the Debtors can enforce the terms of Section 366
of the Bankruptcy Code and the automatic stay, enforcement of
these statutory protections and orders will be difficult, if not
impossible, in foreign jurisdictions. The Debtors must be able
to pay such utilities in the ordinary course of business or risk
severe harm to their foreign operations. The average amount paid
in cash per month in relation to these vendors and service
providers over the last nine months is approximately $1 million.
The Debtors make it clear that they want authority -- but not
direction -- to pay or honor prepetition obligations to Foreign
Entities. (United Airlines Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
United Airlines' 9.0% bonds due 2003 (UAL03USR1) are trading at
about 12.5 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL03USR1for
real-time bond pricing.
US AIRWAYS: Court Responds to Employee-Shareholder Letters
----------------------------------------------------------
Judge Stephen S. Mitchell, in a Memorandum Opinion, responds to
scores of unsolicited letters from US Airways Group Inc.,
employee-shareholders received in his chambers. Judge Mitchell
addresses four topics:
1. Legal Communications Must be Public
"The court -- apparently as the result of an organized
campaign -- has received approximately a hundred largely
identical letters from employee-shareholders of the debtor
airline. The common theme of these letters is a request that the
court not allow the debtor's common stock to be cancelled as
part of any reorganization that might be approved. A few of the
writers have amplified on the otherwise uniform language by
detailing the personal financial hardship they would suffer if
the company's existing stock were cancelled.
The court can readily appreciate the [shareholders']
anxiety. In deciding controversies, however, bankruptcy judges,
like other judges, are prohibited from considering ex parte
communications from litigants or their attorneys. Fed.R.Bankr.P.
9003; Canon 3(A)(4), Code of Conduct for United States Judges.
The reason is obvious. Public confidence in the integrity
of judicial proceedings would be severely undermined if judges
were to decide cases based on arguments and information
communicated in secret. The requirement that communications
intended to influence a court's decision be served on the other
parties to the case, and those parties be given an opportunity
to respond, is basic to the fairness of judicial proceedings."
2. The Plan Will Decide the Fate of Equity
"With respect to the present letters, however, it would be
premature to set a hearing. Any cancellation of existing
shareholder interests can occur only as a result of a confirmed
plan, and the debtor has not yet filed a plan. The debtor has
announced that it intends to file a plan shortly, and the court
would certainly not be surprised if the plan envisioned the
cancellation of existing stock. The cancellation of existing
equity interests in a chapter 11 reorganization, while not
universal, is by no means uncommon.
The reason lies in what is referred to as the "absolute
priority rule." The rule, which grew out of early railroad
reorganization cases, is codified today at Section
1129(b)(2)(B), Bankruptcy Code. Stripped to its essentials, the
rule states that if a senior class of claims or interests will
be paid less than the full amount of its claims, a junior class
cannot retain or receive any interest in the reorganized debtors
unless the senior class consents. Since shareholders are junior
to unsecured creditors, this means that shareholders cannot
retain their interest in the reorganized debtor unless the
unsecured creditors either consent or are paid in full."
3. Retirement Savings Will Be Considered In The Plan
"The court is aware that the absolute priority rule was
formulated in an age well before the phenomenon of employee
retirement savings plans funded with company stock. The letters
to the court state that cancellation of the company's stock
would wipe out a substantial portion of many employees'
retirement savings. If that were to occur, the resulting
baleful effect on employee morale is something that should be of
concern not only to the company's management but also to
creditors whose likelihood of repayment depends strongly on the
debtor's post-confirmation economic success. That success, in
turn, will certainly hinge upon the efforts of a dedicated
workforce.
In any event, there will be no cancellation of shareholder
interests unless and until a plan is proposed and confirmed that
provides for such cancellation. Shareholders will be given ample
notice of the hearing on confirmation of any plan that would
impair their interests and will have an opportunity to file
formal objections and to appear and be heard."
4. Use Proper Legal Channels
"Whether a given plan should be confirmed requires the
court to consider a host of factors. For the court to express a
view at this point, before a plan has been filed, or its
proponents heard from, with respect to the treatment of
particular claims or interests would plainly be improper.
However, the court will certainly, in connection with any
hearing on confirmation, consider objections properly raised in
papers filed with the clerk and served on opposing parties and
the United States Trustee." (US Airways Bankruptcy News, Issue
No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900)
US Airways Inc.'s 10.375% bonds due 2013 (U13USR2), DebtTraders
reports, are trading at about 10 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for
real-time bond pricing.
VANGUARD: Asks Court to Approve Rescino Employment Arrangement
--------------------------------------------------------------
Vanguard Airlines, Inc., asks the U.S. Bankruptcy Court for the
Western District of Missouri's to approve its Employment
Arrangement with David Rescino.
Mr. Rescino is the former Vice-President - Finance and Chief
Financial Officer of Vanguard and currently is the President of
Vanguard. Mr. Rescino's monthly compensation, as of November 1,
2002, was $12,458.33 per calendar month.
Mr. Rescino has taken a temporary position with AuraSystems.
AuraSystems is not a creditor of Vanguard and is not in any
other way connected with Vanguard in to create a conflict of
interest.
Mr. Rescino will continue his duties with Vanguard on a reduced
basis, and at reduced rate. However, Mr. Rescino will still
head the liquidation effort in Vanguard's case and be
substantially involved in Vanguard's operations.
Mr. Rescino's part time compensation agreement provides that he
will be paid $150 per hour for his services to Vanguard, up to a
maximum of $12,458.33 per calendar month.
Vanguard Airlines, currently shutting down its business, used to
provide all-jet service to 14 cities nationwide: Atlanta,
Austin, Buffalo/Niagara Falls, Chicago-Midway, Dallas/Ft. Worth,
Denver, Fort Lauderdale, Kansas City, Las Vegas, Los Angeles,
New Orleans, New York-LaGuardia, Pittsburgh and San Francisco.
The Company filed for Chapter 11 protection on July 30, 2002.
Daniel J. Flanigan, Esq., at Polsinelli Shalton & Welte, P.C.,
represents the Debtor in its restructuring efforts. When the
company filed for protection from its creditors, it listed total
assets of $39.7 million and total debts of $95.9 million.
VENTAS INC: Caps 16 Million-Share Joint Offering Price
------------------------------------------------------
Ventas, Inc., (NYSE:VTR) has priced its previously announced
joint underwritten offering of 16,477,207 shares of its common
stock at a price to the public of $11.00 per share. The offering
consists of nine million newly issued shares of common stock to
be sold by Ventas and 7,477,207 shares of Ventas common stock
owned by two subsidiaries of Tenet Healthcare Corporation
(NYSE:THC), one of Ventas's largest shareholders.
Tenet has granted to the underwriters an option, which is
exercisable for a 30-day period, to purchase up to 823,860
additional shares solely to cover over-allotments. Ventas has
also granted to the underwriters a 30-day option to purchase up
to 823,861 additional newly issued shares solely to cover over-
allotments. The underwriters have agreed to exercise the option
granted by Tenet first. The Company expects that the offering
will be completed on December 20, 2002, subject to customary
closing conditions.
The offering is being made by a group of underwriters led by
Merrill Lynch & Co., as sole book-running manager, Banc of
America Securities LLC, as joint lead manager, and UBS Warburg
LLC, Legg Mason Wood Walker, Incorporated, CIBC World Markets
and SunTrust Robinson Humphrey, as co-managers.
Ventas intends to use the proceeds from the offering of its new
common shares to repay certain of its outstanding indebtedness.
Ventas will not receive any proceeds from the sale of its common
stock sold by Tenet.
Investors may obtain a copy of the prospectus relating to the
offering from Merrill Lynch & Co., 4 World Financial Center, 250
Vesey Street, Ground Floor, New York, NY 10080, Attention: Max
Tabuzo.
Ventas, Inc., is a healthcare real estate investment trust that
owns 44 hospitals, 220 nursing facilities and nine other
healthcare and senior housing facilities in 37 states. The
Company also has investments in 25 healthcare and senior housing
assets located in Ohio and Maryland. More information about
Ventas can be found on its Web site at http://www.ventasreit.com
At September 30, 2002, Ventas' total shareholders' equity
deficit widened to about $126 million.
VERTICAL COMPUTER: Needs Additional Cash to Fund Business Plan
--------------------------------------------------------------
Vertical Computer Systems, Inc., has suffered significant
recurring operating losses, used substantial funds in its
operations, and needs to raise additional funds to accomplish
its objectives. Additionally, at September 30, 2002, the
Company had negative working capital of $5,498,667. These
factors raise substantial doubt about the Company's ability to
continue as a going concern. The report of the Company's
Independent Certified Public Accountants for the year ended
December 31, 2001 financial statements included an explanatory
paragraph expressing substantial doubt about the Company's
ability to continue as a going concern.
In October 2002, the Company entered into an agreement with the
lender of NOW Solutions, a 60% owned subsidiary of Vertical
whereby $383,333 has been released from the deposit account, and
$91,667 will be released per month commencing October 31, 2002,
provided that NOW Solutions makes the preceding monthly payment
on the principal and NOW Solutions is not in default of or has
cured certain covenants under the Loan Agreement. The Company
believes, that in conjunction with the removal of NOW's
technical default and the expectation of continued profitability
from NOW Solutions (NOW has a net profit of $ 566,866 for the
nine months ended September 30, 2002), that it can launch a
number of products, services and other revenue generating
programs. The Company is focusing its efforts on launching a
number of products in the United States based upon its
proprietary technology. Furthermore, the Company is exploring
certain opportunities with a number of companies to participate
in the marketing of its products. The exact results of these
opportunities are unknown at this time.
Additionally, the Company has a $10,000,000 equity line
commitment, which is subject to the Company's ability to
register the shares to be issued under the equity line with the
Securities and Exchange Commission. The Company's ability to
register with the Securities and Exchange Commission will not
occur until the Company determines that it is in compliance with
all other previous SEC filings. The Company is continuing its
efforts to secure working capital for operations, expansion and
possible acquisitions, mergers, joint ventures, and/or other
business combinations. However, there can be no assurance that
the Company will be able to secure additional capital, or that
if such capital is available, whether the terms or conditions
would be acceptable to the Company.
The Company had total revenues of $2,276,000 in the three months
ended September 30, 2002. This is an increase of $1,286,000
primarily due to a $1,600,000 increase in software sales in
conjunction with NOW Solutions' emPath version 6, full
allocation of maintenance revenue compared to the previous year,
a $354,000 increase in consulting services, offset by a $661,000
decline in other. Total revenues primarily consist of software
license and consulting and maintenance fees. All but $13,000 of
these revenues relate to the business operations of NOW
Solutions, a subsidiary in which the Company acquired a 60%
interest in February 2001.
Total revenues for the nine months ended September 30, 2002
increased $3,536,000 from $2,364,000 to $5,900,000. The
increase was primarily due to the inclusion of NOW Solutions or
a full 3 quarters for the nine months ended September 30, 2002
as compared to 2001, plus the increase in NOW Solutions total
revenues as described above.
The Company had a net loss of $620,095 and $4,105,000 in the
three months ended September 30, 2002 and 2001 respectively.
The $3,485,000 decrease in net loss was primarily due to the
profitability of NOW and the reduction of selling, general and
administrative expense.
The $5,684,000 reduction in net loss for the nine months ended
September 30, 2002 when compared to the same period in the prior
year was also primarily due to the profitability of NOW and the
reduction of selling, general and administrative expenses.
Presently, the Company is dependent on external cash to fund its
operations. The Company's primary need for cash during the next
twelve months consists of working capital needs, as well as cash
to pay deferred compensation, to repay loans coming due. In
order to meet its obligations, the Company will need to raise
cash from the sale of securities or from borrowings. Any cash
generated from NOW Solutions' business operations is not
available to finance the Company's business operations. Other
than an Equity Line of Credit, the Company does not currently
have any commitments for such capital, and no assurances can be
given that such capital will be available when needed or on
favorable terms, if at all. As of September 30, 2002, the
Company had unrestricted cash of $848,000, substantially all of
which is held by NOW Solutions, the 60% subsidiary of the
Company. This cash is not available for use by the Company.
During October 2002, the lender released the restriction on the
$1,500,000 of cash held as collateral against the NOW note
payable. To date, $565,667 funds have been released and the
remaining will be released in monthly draw downs of $91,167.
The Company needs to raise cash in order to continue operations.
The Company's primary need for cash is to fund operations until
its operations generate sufficient capital to meet these
obligations. In addition, the Company needs cash to satisfy its
current liabilities of $2.5 million (excluding NOW Solutions,
which believes it has sufficient working capital to meet its the
current liabilities).
WARREN ELECTRIC: Wants Open-Ended Lease Decision Time Extension
---------------------------------------------------------------
Warren Electric Group, Ltd., asks the U.S. Bankruptcy Court for
the Southern District of Texas to extend the deadline by which
the Company must decide if it wants to assume, assume and
assign, or reject its unexpired nonresidential real property
leases.
The Debtor relates that it is in the middle of reorganizing and
it will not be known which leases will have to be assumed and
which will have to be rejected until the reorganization is
complete. The Debtors further add that it would cause undue
administrative expenses to decide now rather than at Plan
Confirmation.
All leases in question are current so there is no reason for the
Debtor to be forced to decide whether to assume or reject the
leases, at this time, the Debtor explains. Consequently, the
Debtor wants the Court to extend its lease decision period
through and until the Plan Confirmation Date.
Warren Electric Group, Ltd., filed for chapter 11 protection on
September 27, 2002. Harlin C. Womble, Jr., Esq., at Jordan Hyden
Womble and Culbreth represent the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated debts and assets of over $50
million each.
WHEELING-PITTSBURGH: Settles Ohio Property Tax Obligations
----------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation wants to settle its
personal property tax liabilities for the tax years 1994 through
2002 owed to the State of Ohio.
Scott N. Opincar, Esq., at Calfee Halter & Griswold, explains
that the personal property taxes that WPSC pays to the State of
Ohio are calculated according to the assessed values of WPSC's
personal property. The Tax Commissioner issued Amended
Preliminary Assessment Certificates for the tax years 1994
through 1998 challenging the reported values of WPSC's assets in
its tax returns. These same valuation issues affected the
Debtors' returns for the tax years 1999 through 2001, and will
affect 2002 and 2003 as well.
To avoid litigating these issues, the Debtors, Tax Commissioner
Thomas M. Zaino, and Jefferson County Auditor Patrick J.
Marshall agree to settle the dispute and fix WPSC's liability
for personal property taxes for those years. Under this
settlement, the Tax Commissioner agrees to:
-- accept the property values as stated by the Debtors on
their tax returns for the tax years 1994 through 2001, and
-- revise the previously issued Assessment Certificates to the
extent necessary to reflect that agreement.
The list values for the three taxing districts, as stated by
WPSC, are:
-- $4,418,390;
-- $23,607,820; and
-- $8,367,010.
WPSC and the Tax Commissioner have also agreed on the values to
be used in the calculation of personal property taxes for the
year 2002, and on the methodology for the calculation of the
personal property taxes for the year 2003. For this year,
conditioned on WPSC's emergence from bankruptcy on or before
June 30, 2003, the parties agree to use the reorganization
values used as a basis for WPSC's opening balance sheet as
included in its Plan. If WPSC does not emerge from bankruptcy
by June 30, 2003, WPSC will file its 2003 Personal Property Tax
Return using the same valuation method as used for 2002, except
for new assets first placed in service in 2003. Those assets
will be valued using the Tax Commissioner's Class-Life
Schedules. Nothing in this agreement prohibits the Tax
Commissioner from auditing the Debtors' returns for 2003,
including issues of valuation, or the Debtors from contesting
any tax issues for that year.
In return, WPSC agrees not to challenge these tax
determinations, or to seek refunds for the tax years 1994
through 2002, and to pay the remaining 2002 personal property
taxes within 30 days of issuance of a tax bill.
WPSC contends that this settlement is fair and reasonable. In
absence of the settlement, WPSC would be required to litigate
the reasonableness of the values reported in its prior tax
returns. If WPSC lost that case, it would owe additional taxes,
plus interest and fines. Therefore, this settlement should be
approved. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WICKES INC: Completes Sale of Certain Assets to Lanoga for $55M+
----------------------------------------------------------------
Wickes Inc., (NASDAQ:WIKS) a leading distributor of building
materials and manufacturer of value-added building components,
completed the transaction previously announced on October 30,
2002, to sell substantially all of the assets of Wickes'
operations in Wisconsin and Northern Michigan to Lanoga
Corporation, through its United Building Centers division.
The sale price is $55,253,000, plus an additional net amount of
approximately $20 million for the value of the inventory and
accounts receivable of the business operations sold less certain
liabilities assumed by Lanoga, subject to closing adjustments,
plus $5 million held in escrow to secure post-closing
obligations of Wickes. Proceeds will be used to reduce the
balance outstanding of Wickes' working asset line of credit and
real estate term loan extended by its lenders, a group of
financial institutions of which Fleet Retail Finance, Inc., acts
as agent, which will result in an increase in Wickes'
availability under its line of credit.
Wickes will disclose proforma financial information in a current
report on Form 8-K to be filed on or before December 31, 2002.
Wickes Inc., is a leading distributor of building materials and
manufacturer of value-added building components in the United
States, serving primarily building and remodeling professionals.
The company distributes materials nationally and
internationally, operating building centers in the Midwest,
Northeast and South. The company's building component
manufacturing facilities produce value-added products such as
roof trusses, floor systems, framed wall panels, pre-hung door
units and window assemblies. Wickes Inc.'s Web site at
http://www.wickes.comoffers a full range of valuable services
about the building materials and construction industry.
Lanoga and United Building Centers have deep roots in the lumber
business in that predecessor companies were founded in 1855 with
a sawmill in Winona, Minnesota. UBC, with headquarters still in
Winona, currently has 177 facilities in a 15 state area, ranging
from the upper Midwest to the Rocky Mountain region. In addition
to UBC, Lanoga has three other divisions including Spenard in
Alaska, Lumbermen's on the West Coast and Home Lumber in
Colorado. Sales in 2001 at Lanoga were $1.34 billion. More
information is available at http://www.lanoga.com
* * *
As reported in Troubled Company Reporter's November 6, 2002
edition, Standard & Poor's lowered its corporate credit
rating on Wickes Inc., to triple-'C' from triple-'C'-plus. The
downgrade was based on the company's weak liquidity and Standard
& Poor's concern that Wickes will be challenged to improve
operations and liquidity significantly after it completes the
sale of its Wisconsin and Northern Michigan operations.
WILLIAMS: California Settlement Agreement Passes State Milestone
----------------------------------------------------------------
Williams (NYSE: WMB) said that its settlement with the state of
California to resolve outstanding litigation and civil claims
and restructure energy contracts passed a significant milestone
toward an expected Dec. 31 closing.
Williams on Friday received notice that the California attorney
general's period to review the company's activities in western
energy markets would conclude Dec. 15 with no action on the part
of the state to exercise their option to terminate the
agreement.
A provision of the settlement dealing with the Federal Energy
Regulatory Commission's refund proceeding requires its approval,
which is still outstanding.
Besides restructuring the company's energy contracts in a way
that preserves their substantial value, the agreement resolves
most of Williams' outstanding litigation related to natural gas
and power markets in the West.
The company agreed to set aside one issue -- related to
reporting inaccurate gas-trading information to an industry
publication -- from the comprehensive settlement. Williams is
conducting an internal investigation in cooperation with the
Commodity Futures Trading Commission regarding the few instances
of inaccurate reporting to an industry publication the company
discovered and disclosed in October.
"Our ability to finalize the agreement removes significant
uncertainty from our energy marketing and risk management
business and improves our opportunity to sell or joint-venture
that part of our business," said Steve Malcolm, Williams'
chairman, president and chief executive officer. "We're pleased
with the substantial progress we're making to resolve these
issues while providing more flexibility to California to meet
its energy needs."
Williams moves, manages and markets a variety of energy
products, including natural gas, liquid hydrocarbons, petroleum
and electricity. Based in Tulsa, Okla., Williams' operations
span the energy value chain from wellhead to burner tip. Company
information is available at http://www.williams.com
WORLDCOM INC: Wants to Pull Plug on America West FlightFund Deal
----------------------------------------------------------------
Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New
York, relates that America West Airlines, Inc., hosts a program
pursuant to which participants are issued frequent flyer miles
for traveling on America West and for purchasing certain goods
and services offered by participating companies in association
with the FlightFund Program. Worldcom Inc., and its debtor-
affiliates joined with America West in forming a special option
for FlightFund Members who are or become the Debtors' customers.
FlightFund Members enrolled in the joint program are awarded
Frequent Flyer Miles for each dollar spent on those services.
In connection with the FlightFund Program, on May 15, 2000, the
Debtors entered into a Frequent Flyer Mile purchase agreement
with America West. The initial term of the FlightFund Agreement
expires on August 31, 2003.
In accordance with the terms of the FlightFund Agreement, Ms.
Goldstein explains that the Debtors are required to purchase a
minimum amount of Frequent Flyer Miles. Specifically, during
the first year of the FlightFund Agreement, the Debtors were
required to purchase at least $4,000,000 worth of Frequent Flyer
Miles. During the second and third years of the FlightFund
Agreement, September 1, 2001 through August 31, 2002 and
September 1, 2002 through August 31, 2003, the Debtors are
required to purchase at least $5,000,000 worth of Frequent Flyer
Miles per year. The Debtors, however, purchased only $2,500,000
worth of Frequent Flyer Miles in the second year of the
FlightFund Agreement and anticipates a similar shortfall in the
third year as well.
In accordance with the terms of the FlightFund Agreement, Ms.
Goldstein reports that the Debtors are obligated to spend at
least $12,000,000 during the term of the Agreement on marketing
activities associated with the FlightFund Program. To date, the
Debtors have spent $7,300,000 of the Marketing Commitment.
Finally, the FlightFund Agreement provides that the Debtors will
be the exclusive telecommunications provider associated with the
FlightFund Program.
By this motion, the Debtors seek the Court's authority, pursuant
to Section 365(a) of the Bankruptcy Code and Rule 6006 of the
Federal Rules of Bankruptcy Procedure, to reject the FlightFund
Agreement, effective as of April 30, 2003.
Because the Debtors did not meet the Minimum Commitment in year
2 and anticipate it will not meet the Minimum Commitment in year
3, the Debtors have concluded that continued marketing of the
FlightFund Program to its customers is not warranted.
Notwithstanding the rejection, the Debtors would like to
provide, as an accommodation, sufficient notice to its customers
regarding the termination of the FlightFund Program. The
Debtors believe that a six-month wind-down period is
appropriate. America West has agreed to this shortened wind-
down period, which has commenced on November 1, 2002.
In exchange for America West's agreement to shorten the wind-
down period, Ms. Goldstein tells the Court that the Debtors will
release America West from the Exclusivity Provision in the
FlightFund Agreement as of November 1, 2002. Additionally,
America West may not use or disclose to any other entity at any
time any information that identifies the Debtors' FlightFund
Members, and the Debtors may not use or disclose to any other
entity at any time any information that identifies FlightFund
Members. America West will not uniquely target or uniquely
market any program to Debtors' FlightFund Members, and the
Debtors will not uniquely target or uniquely market any program
to FlightFund Members.
Furthermore, Ms. Goldstein continues that America West will not
use or consent to the use of the Debtors' logos, trademarks,
trade names, or service marks to market the FlightFund Program.
Additionally, as of November 1, 2002, the Debtors will
discontinue enrollment of customers into the FlightFund Program.
During the period of March 1, 2003 to April 30, 2003, the
Debtors will pay a discounted rate for Frequent Flyer Miles
purchased under the FlightFund Agreement. Specifically, during
the months of March and April 2003, the Debtors will pay $0.0135
per usage mile in lieu of the contract rate of $0.0145 per usage
mile. (Worldcom Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
* S&P Says Global Defaults Hit $157.3 Billion in 2002 -- So Far
---------------------------------------------------------------
Standard & Poor's Risk Solutions today released preliminary
year-end default statistics for calendar year 2002 indicating
that the dollar amount of debt defaulting will vault to a record
$157.3 billion this year. However, the firm said, default rates
are declining globally after peeking at midyear. Telecoms and
European companies have been hit hardest during 2002, but
prospects look better for 2003 as default rates are expected to
decline gradually throughout next year.
"Although the 2002 annual default rates are almost identical to
those of 2001 on a global basis, there are significant
differences when one takes a closer look at different industries
and geographic regions," said Brooks Brady, Associate Director
for Standard & Poor's Risk Solutions. "The U.S. and
EU switched places this year compared with 2001. During 2001,
6.92% of speculatively rated companies defaulted in the EU
compared with 9.72% in the U.S. This year, a whopping 12.77%
defaulted in the EU compared with only 7.09% in the U.S. The
telecommunications industry was a major force driving default
rates globally. In the EU, 62.5% of speculatively rated telecoms
have defaulted in 2002 compared with 24.7% in the U.S."
"Standard & Poor's expect default rates to slowly decline across
all geographic regions during 2003 but default rates will remain
high in the telecommunication and media and entertainment
sectors," said Diane Vazza, Managing Director of Standard &
Poor's Global Fixed Income Research. "The high technology,
capital goods, and retail/restaurants sectors also contain many
companies with a high risk of default. The decline in default
rates will not be as swift as the decline of the early 1990's
because credit quality remains very poor and economic conditions
continue to be weak."
During 2002, 3.49% of all rated companies have defaulted
compared with the previous high of 3.48% for 2001. The
percentage of speculatively rated companies that have defaulted
globally was 8.94% in both 2001 and 2002. This is below the
record high of 1991, when 10.87% of speculatively rated
companies defaulted.
Investment-grade companies have defaulted in record amounts
during 2002 with 0.44% defaulting compared with the previous
record of 0.24% during 2001. "The number of investment-grade
companies defaulting during 2002 is unprecedented," noted Brady,
"and it is the result of parent companies removing support from
subsidiaries, difficult economic conditions, and fraud." The
investment-grade companies that defaulted during 2002 are
AMERCO, AT&T Canada Inc., Covanta Energy Corp., Genuity Inc.,
MCI WorldCom Inc. and its subsidiary SkyTel Communications Inc.,
Mutual Risk Management Ltd. and its subsidiary Legion Insurance
Co., NRG Energy Inc. and its subsidiary NRG South Central
Generating LLC, PG&E National Energy Group Inc., Teleglobe
Inc., and TXU Europe Ltd. and its subsidiaries The Energy Group
Ltd. and TXU Europe Group PLC.
Of the $157.3 billion of debt that has defaulted during 2002,
$123.6 billion is from the U.S. and $14.6 billion is from the
EU. This compares with the previous record amount of $117.4
billion that defaulted globally during 2001, with $100.6 billion
coming from the U.S. and $2.7 billion coming from the EU. Much
of the dollar volume of defaults in 2002 resulted from only a
few very large defaulters. WorldCom Inc. and its subsidiaries
defaulted on $31.9 billion; Adelphia Communications Corp. and
its subsidiaries defaulted on $14.3 billion; NTL Inc. and its
subsidiaries defaulted on $10.8 billion; United Globalcom Inc.
and its subsidiaries defaulted on $6.7 billion; Global Crossing
Ltd. and its subsidiaries defaulted on $5.6 billion; McLeodUSA
Inc. defaulted on $4.6 billion; and Williams Communications
Group Inc. defaulted on $4.1 billion.
Of the 222 defaults this year, 120 were in the U.S. followed by
42 in Argentina, 12 in the United Kingdom, 8 in Bermuda, 7 in
Canada, 6 each in Brazil and the Netherlands, 5 each in Germany
and Mexico, 2 each in Indonesia and Switzerland, and one each in
Australia, Chile, China, Italy, Russia, Spain, and Uruguay.
Standard & Poor's will publish more extensive default and rating
transition statistics early next year.
Standard & Poor's Risk Solutions --
http://www.risksolutions.standardandpoors.com-- provides custom
credit risk services, models, and data to assist financial
institutions in measuring and managing risk. For more
information about Risk Solutions, or to be added to our mailing
list, please write to us at risksolutions@standardandpoors.com
and include full contact information.
* Cadwalader Appoints Keith Miller & Beth Taylor as Counsel
-----------------------------------------------------------
Cadwalader, Wickersham & Taft, one of the world's leading
international law firms, has elected Keith Miller and Beth
Taylor as Counsel of the firm.
"We are pleased to recognize the valuable contributions made by
Keith and Beth by electing them Counsel of the firm. Both
demonstrate the expertise and skills that contribute to the
success of our firm," said Robert O. Link, Jr., Cadwalader's
Chairman. "It is a great pleasure to congratulate them [Mon]day
and we look forward to their continued success in years to
come."
The following attorneys were elected Counsel:
-- Keith Miller, an attorney in the New York Litigation
Department, focuses his practice on large, complex securities
cases handled through every phase of litigation, from discovery
and motion practice to trial and appeal, before federal and
state courts, arbitration panels and government administrative
agencies. Prior to joining Cadwalader in 1994, he was a Branch
Chief in the Securities and Exchange Commission's Northeast
Regional Office. Mr. Miller received his law degree from the New
England School of Law and his undergraduate degree from the
State University of New York at Albany. He is admitted to
practice in New York and New Jersey as well as before the United
States District Courts for the Southern District of New York and
the District of New Jersey.
-- Beth Taylor, an attorney in the New York Litigation
Department, practices primarily in securities and complex
commercial litigation and litigated bankruptcy matters with a
special focus in libel and defamation law. Ms. Taylor started
her legal career at Cadwalader in 1991. She has an LLM from New
York University, a law degree from Boston College Law School and
a B.A., magna cum laude, from the University of Notre Dame. She
is admitted to practice in New York and New Jersey as well as
before the United States District Court for the Southern
District of New York, the United States Courts of Appeals for
the Fourth Circuit and the Eleventh Circuit and the United
States Supreme Court.
Cadwalader, Wickersham & Taft, established in 1792, is one of
the world's leading international law firms, with offices in New
York, Charlotte, Washington and London. Cadwalader serves a
diverse client base, including many of the world's top financial
institutions, undertaking business in more than 50 countries in
six continents. The firm offers legal expertise in
securitization, structured finance, mergers and acquisitions,
corporate finance, real estate, environmental, insolvency,
litigation, health care, global public affairs, banking, project
finance, insurance and reinsurance, tax, and private client
matters. More information about Cadwalader can be found at
http://www.cadwalader.com
* Stroock & Stroock Elects Three New Partners Effective Jan. 1
--------------------------------------------------------------
Stroock & Stroock & Lavan LLP has named three new partners,
effective January 1, 2003.
In New York, Richard G. Madris has been named partner in the
Corporate practice. In Los Angeles, Scott M. Pearson and Alan Z.
Yudkowsky have been named partners in Litigation.
Richard G. Madris, 33, (New York, Corporate) concentrates in
corporate and securities matters. He has particular experience
representing buyers and sellers of private companies, as well as
representing hedge funds, buyout funds and other private
investment funds in both their formation and investment stages.
Mr. Madris received his J.D., cum laude, from the University of
Chicago Law School in 1994, where he was a member of the
University of Chicago Law Review, and his B.S., cum laude, from
Cornell University in 1991.
Scott M. Pearson, 34, (Los Angeles, Litigation) concentrates in
complex commercial litigation, with particular emphasis on class
actions and quasi-class actions brought under California
Business and Professions Code Section 17200. In addition to
representing banks, thrifts, credit card issuers and other
financial services companies in consumer class actions and other
litigation, he also has substantial experience in securities
cases, major contract disputes, director and officer liability
claims, large-scale fraud actions, intellectual property
litigation and real estate controversies.
Mr. Pearson received his J.D. from the University of Southern
California Law Center in 1994, where he was Editor-in-Chief of
both the Southern California Interdisciplinary Law Journal and
Major Tax Planning, and his B.A., cum laude, from Claremont
McKenna College in 1990.
Alan Z. Yudkowsky, 49, (Los Angeles, Litigation/Energy)
concentrates in general and complex commercial litigation, with
particular emphasis on energy, securities and commodities, and
insolvency matters. Mr. Yudkowsky, who heads Stroock's Los
Angeles Energy practice, regularly counsels energy trading
companies. He has acted as counsel to a major power marketer in
connection with several state and federal court actions,
bankruptcy and regulatory proceedings, and governmental
investigations arising out of California's energy crisis. He has
also represented clients with varied backgrounds, including
major real estate developers, construction companies, insurance
companies, product manufacturers, talent and management in the
entertainment industry, hospitals, medical groups, trustees,
accountants, lawyers and banks.
Mr. Yudkowsky received his J.D., cum laude, from New York Law
School in 1990, where he was a member of the New York Law School
Review, and his B.A. from Thomas A. Edison State College in
1986.
Stroock & Stroock & Lavan LLP is a law firm with market
leadership in financial services, providing transactional and
litigation expertise to leading investment banks, venture
capital firms, multinational corporations and entrepreneurial
businesses in the U.S. and abroad. Stroock's practice areas
concentrate in corporate finance, legal service to financial
institutions, energy, financial restructuring, intellectual
property and real estate.
* Meetings, Conferences and Seminars
------------------------------------
February 20-21, 2003
AMERICAN CONFERENCE INSTITUTE
Commercial Loans Workouts
Marriott East Side, New York
Contact: 1-888-224-2480 or 1-877-927-1563
http://www.americanconference.com
February 22-25, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Litigation Institute I
Marriott Hotel, Park City, Utah
Contact: 1-770-535-7722 or
http://www.nortoninstitutes.org
March 6-7, 2003
ALI-ABA
Corporate Mergers and Acquisitions
San Francisco
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
March 27-30, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
March 31 - April 01, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Healthcare Transactions: Successful Strategies for Mergers,
Acquisitions, Divestitures and Restructurings
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168 or
ram@ballistic.com
April 10-13, 2003
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 1-3, 2003
ALI-ABA
Chapter 11 Business Organizations
New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 8-10, 2003
ALI-ABA
Fundamentals of Bankruptcy Law
Seattle
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
June 19-20, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Corporate Reorganizations: Successful Strategies for
Restructuring Troubled Companies
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168
or ram@ballistic.com
June 26-29, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
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
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***