/raid1/www/Hosts/bankrupt/TCR_Public/030106.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, January 6, 2003, Vol. 7, No. 3
Headlines
ACTRADE FIN'L: Terminates CFO & Begins Search for Replacement
ADVANCED GLASSFIBER: Taps Haynsworth Baldwin as Labor Counsel
AES CORP: S&P Affirms BB Bank Facility/Exchange Note Rating
AGERE: Sells Optoelectronics Business to TriQuint for $40 Mill.
AIRTRAN AIRWAYS: December Revenue Passenger Miles Up by 44.3%
AMERICAN COMMERCIAL: S&P Drops Corporate Credit Rating to D
AMERICAN SKIING: Triple Peaks Suit Dismissed on Summary Judgment
ARCH WIRELESS: Redeems $35 Million of 10% Senior Notes
BANYAN STRATEGIC: Completes Termination and Dissolution Process
BOYD GAMING: Will Redeem All Outstanding 9.50% Senior Notes
BUDGET GROUP: Wants to Stretch Lease Decision Time Until Mar. 31
CENTIS: California Court Fixes February 7, 2003 Claims Bar Date
CIRTRAN CORP: Converts $1.5 Million in Senior Debt into Equity
CLEVELAND-CLIFFS: Amends Senior Unsecured Note Agreement
COMDISCO INC: Demands $2.68 Million Lease Payment from Bowstreet
CONSECO INC: Lazard's Stephen Campbell Values CIHC at $3.8 Bill.
COVANTA ENERGY: Wants to Enter Into Letter Agreement with Prima
CRESCENT REAL ESTATE: Settles Lawsuit over Compaq Center
CTC COMMUNICATIONS: Hires Goldberg as Special Regulatory Counsel
DANKA BUSINESS: Enters into Senior Credit Facility Amendment
DION: Challenges Dave Wallace's Move to Appoint a Receiver
ECHOSTAR COMMS: Appoints Steven Goodbarn to Board of Directors
ECKERD COLLEGE: Fitch Ratchets 3 Note Series' Ratings Up to BB
ELAN: Completes Sale of Remaining Equity in Athena Diagnostics
ELEC COMMUNICATIONS: Closes Asset Sale to Essex Communications
ENCOMPASS SERVICES: Court Approves Weil Gotshal's Engagement
ELK CREEK: Mo. Court Confirms 20-Year Chapter 12 Repayment Plan
ENRON CORP: Obtains Release of Liens on Advance Mobile's Assets
ENRON: JPMorgan Settles Dispute with CNA Surety re Surety Bonds
ENRON CORP: SAFECO Expects No Material Impact from Settlement
ENRON CORP: Chubb Settles JPMorgan Related Surety Bond Claim
ENRON: Hartford Participates in Surety Settlement with JPMorgan
EQUITEX INC: Shareholders Approve Proposed 1-For-6 Reverse Split
GENTEK: Taps ThorntonGroutFinnigan as Special Canadian Counsel
GLIATECH: Inks Definitive Pact to Sell Assets to Wright Medical
GOLF TRUST OF AMERICA: Bank Lenders Extend Credit Agreement
GOODYEAR TIRE: S&P Lowers Rating on Class A-1 Notes Down to BB-
HOLT WILLIAMSON: One Day in the 4th Cir. Makes a Huge Difference
IMPSAT FIBER: Offering Series A & B Senior Guaranteed Notes
INSILCO TECH: Turning to Gleacher Partners for Financial Advice
INT'L TOTAL SERVICES: Court to Consider Plan on January 28, 2002
INTERNET CAPITAL: Sells Logistics.com Assets to Manhattan Assoc.
KEMPER INSURANCE: President & COO William D. Smith Retires
KINETIC CONCEPTS: Suit Settlement Prompts S&P's Rating Upgrades
LANDMARK HOLDING: A Very Binding Real Estate Contract Story
LEVI STRAUSS: Will Host Q4 & FY 2002 Conference Call Next Monday
LIBERTY MEDIA: Sells 21% Interest in Cable Holdings to Bresnan
MAGNUM HUNTER: Board OKs $100MM 2003 Capital Expenditure Budget
MCLAREN PERFORMANCE: September Working Capital Deficit Tops $5MM
MILLENNIUM STUDIOS: Suit vs. MAN Roland to be Heard by Dist. Ct.
MIRANT CORP: Sells Interest in Chinese Power Plant for $300 Mil.
NATIONSRENT: Seeking Third Exclusivity Extension Until Apr. 16
NAVISITE INC: Acquires ClearBlue Technologies Management, Inc.
NEWCOR: Former Accountants PwC Expresses Going Concern Doubt
OAKWOOD HOMES: Wins Court's Approval of $215MM DIP Facility
ORGANOGENESIS INC: AMEX Nixes Appeal to Delisting Determination
PARK CITY GROUP: Consummates $2 Million Debt Refinancing Deal
PENNSYLVANIA DENTAL: A.M. Best Cuts Fin'l Strength Rating to B+
PHARMACEUTICALS FORMULATIONS: Adopts 52/53 Week Fiscal Year
RFS ECUSTA: Bringing-In Ramsey Hill as Special Local Counsel
ROHN INDUSTRIES: Platinum Equity Bolts from Asset Purchase Deal
ROHN INDUSTRIES: Completes Asset Transfer to Bank Lenders
ROMACORP: Enters New $25-Million Credit Facility with GE Capital
ROYAL HAVEN: Hires L.S. Associates to Assist Robert Leasure
SAFETY-KLEEN: Wants Approval of Settlement Pact with 3 Insurers
SL INDUSTRIES: Delivers Prospectus re Subscription Rights
TRACE INTERNATIONAL: Dow Chemical Faces $3.5MM Fraud Suit
TESORO PETROLEUM: Meets $200 Million Asset Sale Goal Set in June
UNITED AIRLINES: Wants Nod to Pledge Collateral for Derivatives
UNITED AIRLINES: Employee Stock Plan Will Sell Remaining Stake
UNITED AIRLINES: Extends Slashed Fares for U.S. & Int'l Travel
UNITED AIRLINES: Akin Gump Represents Ad Hoc EETC & ETC Groups
US LEC CORP: Restructures Debt Agreement and Raises New Funding
WESTAR ENERGY: KCC Modifies November 8, 2002 Order re Fin'l Plan
WHEELING-PITTSBURGH: Wins Okay to Settle Ohio Property Taxes
WISER OIL: Releases Operational & Financial Guidance for 2003
WORLD AIRWAYS: Flight Attendants Reject Labor Contract Proposal
WORLDCOM: Brings-In American Appraisal as Valuation Consultant
WORLDCOM INC: Pulls Plug on Tampa Intermedia Lease
WORLD HEART: Completes Private Placement of 1.6 Million Equity
WORLDPORT COMMS: Reviewing W.C.I. Acquisition's Tender Offer
* Olshan Grundman Restructuring Department Moves to Arent Fox
* BOND PRICING: For the week of January 6 - 10, 2003
*********
ACTRADE FIN'L: Terminates CFO & Begins Search for Replacement
-------------------------------------------------------------
Actrade Financial Technologies Ltd., terminated the employment
of Joseph P. D'Alessandris, the Company's Chief Financial
Officer, and had commenced a search for his successor.
Separately, on December 12, 2002, the Company issued a press
release announcing certain developments, including with respect
to a former significant customer of Actrade -- American Pad &
Paper, LLC -- that had defaulted on $8,844,805 in Trade
Acceptance Drafts. As of December 12, 2002, the outstanding
principal balance of the defaulted TADs was $8,544,538.10, of
which $8.5 million was insured by surety bonds. As disclosed in
the December 12 Release, Actrade had been informed that American
Pad & Paper was considering a bankruptcy filing if it could not
restructure its debts. Actrade also disclosed that the agent
acting on behalf of the issuers of the surety bonds had reserved
the rights of such issuers to contest the validity of the bonds.
On December 20, 2002, American Pad & Paper filed for Chapter 11
bankruptcy protection in the Eastern District of Texas, Sherman
Division. On December 20, 2002, the Company made a claim for
payment against the surety bonds insuring performance by such
customer under the defaulted TADs. Actrade has been appointed
to the creditors' committee in the bankruptcy proceeding and
intends to file a claim for the full amount of the defaulted
TADs. However, Actrade is not presently able to estimate the
amount, if any, it will recover from its former customer or the
issuers of the $8.5 million of surety bonds.
Actrade Financial filed for Chapter 11 reorganization on
December 12, 2002, in the U.S. Bankruptcy Court for the Southern
District of New York (Manhattan). The Debtor is a publicly
traded holding company incorporated in the State of Delaware.
Its business operations are conducted through its subsidiaries
that provide payment technology solutions that automate
financial processes and enhance business-to-business commerce
relationships.
ADVANCED GLASSFIBER: Taps Haynsworth Baldwin as Labor Counsel
-------------------------------------------------------------
Advanced Glassfiber Yarns LLC, and its debtor-affiliates ask for
the U.S. Bankruptcy Court for the District of Delaware's nod of
approval to employ Haynsworth Baldwin Johnson & Greaves LLC as
their Special Labor Counsel. The Debtors tell the Court that
they need to retain Haynsworth Baldwin to render necessary labor
counsel and advice and other related services in connection with
the Debtors' Chapter 11 cases, nunc pro tunc to December 10,
2002.
The Debtors retain Haynsworth Baldwin because of its extensive
experience and knowledge in the labor and employment field, its
expertise, experience and knowledge in labor arbitrations,
employment trials, appeals and other proceedings, its experience
in representing the Debtors before the Petition Date, and its
ability to quickly respond to all issues that may arise in these
cases. In representing the Debtors, Haynsworth Baldwin has
acquired familiarity with the Debtors' businesses and affairs
and many of the potential labor and employment issues that may
arise in the context of these Chapter 11 cases.
The professional services that Haynsworth Baldwin will render to
the Debtors include:
a. Legal advice on labor issues, including representation in
contract negotiations and arbitrations with labor unions;
b. Legal advice on employment issues, including advice
relating to the employment, discipline, and termination of
employees and handling employment-related legal claims; and
c. Legal advice on employee benefits issues.
The Firm will charge the Debtors at its current regular hourly
rates:
Partners $325-$195 per hour
Associates $195-$115 per hour
Legal Assistants $ 95-$ 50 per hour
Advanced Glassfiber Yarns, LLC and its debtor-affiliate, AGY
Capital Corp., are affiliates of Owens Corning. They are one of
the largest manufacturers and global suppliers of glass yarns.
The Company field for chapter 11 protection on December 10,
2002. Mark E. Felger, Esq., at Cozen O'Connor and Alan B.
Hyman, Esq., at Scott K. Rutsky, Esq., represent the Debtors in
their restructuring efforts. When the Company filed for chapter
11 protection, it listed $194.1 million in total assets and $409
million in total debts.
AES CORP: S&P Affirms BB Bank Facility/Exchange Note Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' ratings on
The AES Corp.'s $1.62 billion senior secured bank facility and
$350 million senior secured exchange notes. Approximately $258
million of exchange notes were issued. The ratings have been
changed to final from preliminary.
"Standard & Poor's views the default risk of the bank facility
and exchange notes as equal to the 'B+' corporate credit rating
of AES, but the two-notch elevation of the ratings on these
instruments reflects Standard & Poor's high degree of confidence
that the collateral package provides enough value for secured
lenders to realize 100% recovery in a default or stress
scenario," said credit analyst Scott Taylor.
The affirmation comes as Standard & Poor's has completed its
review of the documents related to AES' recent refinancing:
specifically, the indenture related to the senior secured
exchange notes; the credit, reimbursement, and exchange
agreement related to the senior secured bank facility; and the
security agreement. Based on its review, Standard & Poor's has
found no material deviations from its assumptions in assigning
the preliminary rating, and has concluded that the security
package includes sufficient representations and warranties from
AES that lenders' interest in the collateral is a first-
perfected interest and that it is enforceable. Standard & Poor's
has also concluded that the representations and warranties
contained in the security agreement meet its criteria for
collateral pledged that is subject to Article 9 of the Uniform
Commercial Code.
AES Corporation's 10.250% bonds due 2006 (AES06USR1),
DebtTraders says, are trading between 46 and 50. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for
real-time bond pricing.
AGERE: Sells Optoelectronics Business to TriQuint for $40 Mill.
---------------------------------------------------------------
TriQuint Semiconductor, Inc., (Nasdaq: TQNT) completed the
acquisition of a substantial portion of the Agere Systems
optoelectronics business for $40 million in cash. The
transaction includes the products, technology and some
facilities related to Agere's optoelectronics business, which
includes active and passive components, amplifiers,
transceivers, transponders and MEMS. The transaction does not
include Agere's business providing optoelectronics components
for CATV systems based in California.
For Agere's fiscal year ended September 30, 2002, the business
TriQuint acquired had revenue of approximately $198 million.
Agere announced in August 2002 it was seeking a buyer for all or
parts of this business, and exiting the optoelectronics business
as part of its corporate restructuring. TriQuint estimates this
business will have revenue somewhere between $50 million and $75
million for calendar year 2003 and is projecting that it will be
accretive to earnings by the fourth quarter of 2003.
As part of the transaction, approximately 340 Agere employees
will join TriQuint including approximately 215 in Pennsylvania
and approximately 125 in Matamoros, Mexico.
Commenting on the transaction, Ralph G. Quinsey, President and
CEO of TriQuint stated, "I am extremely excited about the
acquisition of this business. TriQuint has been involved in the
design and production of integrated circuits for optical
networks for many years. Combining TriQuint with the Agere
optoelectronics business makes us one of the world's leading
suppliers of optical modules and components. The consolidation
of the operations and the restructured workforce will greatly
reduce our costs compared to Agere's previous experience and
puts us in a position for growth and profitability as the market
recovers."
Through a transitional manufacturing agreement, Agere will
supply components for TriQuint for a short period following the
transaction closing to ensure seamless service to customers. The
majority of these components will be manufactured in Agere's
Breinigsville, Pa., facility which TriQuint will acquire
following the transition period. TriQuint will also operate the
back-end assembly and test operations at a leased facility in
Matamoros, Mexico.
TriQuint Semiconductor, Inc., (Nasdaq: TQNT) is a leading
supplier of high performance components for communications
applications. The company strives for diversity in its markets,
applications, products, technology and customer base. Markets
include wireless phones, base stations, optical networks,
broadband and microwave equipment, and aerospace and defense
with a specific focus on RF, analog and mixed signal
applications. TriQuint provides customers with standard and
custom product solutions as well as foundry services. Products
are based on advanced process technologies including gallium
arsenide, indium phosphide, silicon germanium, and surface
acoustic wave (SAW). TriQuint customers include major
communications companies worldwide. TriQuint has manufacturing
facilities in Oregon, Texas, and Florida, a production plant in
Costa Rica, and design centers in New England, Germany and
Taiwan. All manufacturing and production facilities are
certified to the ISO9001 international quality standard. Visit
the TriQuint Web site at http://www.tqs.comfor more
information.
Agere, formerly Lucent's Microelectronics Group, whose $220
million Convertible Notes are rated by Standard & Poor's at 'B',
offers integrated circuits (75% of sales) and optoelectronics
devices used in computer, wireless, and optical networks. Agere
has partnered with Motorola to develop digital signal processor
products, and with chip foundry Chartered Semiconductor to
develop new manufacturing techniques. Lucent (20% of sales)
remains its top customer; other major clients include Apple and
Cisco.
AIRTRAN AIRWAYS: December Revenue Passenger Miles Up by 44.3%
-------------------------------------------------------------
AirTran Airways, a subsidiary of AirTran Holdings, Inc.,
(NYSE:AAI) reported traffic results for December 2002, the
fourth quarter and for the full year 2002.
AirTran Airways' traffic, measured by revenue passenger miles,
increased by 44.3 percent for the month of December 2002 versus
the prior year on 33.4 more capacity, measured by available seat
miles, resulting in a load factor of 71.2 percent, compared to
65.9 percent for December 2001. In addition, AirTran Airways'
traffic grew by 44.6 percent in the fourth quarter of 2002,
compared to the same period in 2001 on 39.3 capacity growth.
For the year, AirTran Airways flew 5.58 billion RPMs in 2002, an
increase of 23.9 percent over 2001, on a 26.3 percent increase
in ASMs to 8.26 billion in 2002.
"AirTran Airways' continued expansion in 2002, including the
addition of five new markets, many new routes, the addition of
AirTran JetConnect and the increasing popularity of our product
in all of our markets, was best represented by the 9.65 million
customers we boarded this year," said Robert L. Fornaro, AirTran
Airways' president and chief operating officer.
"At a time when the airline industry is struggling, it is
encouraging that we were able to improve December load factor by
5.3 points while growing available seat miles by more than one
third. We are pleased that many customers who may have first
turned to AirTran Airways for low fares are coming back as a
result of our Caring Customer Service and our innovative
programs such as Online Flight Check-In at airtran.com, the
fastest free ticket with A-Plus Rewards and the AirTran A-Plus
Visa card, and a Business Class any business can afford," stated
Joe Leonard, AirTran Airways' chairman and chief executive
officer.
AirTran Airways is America's second-largest low-fare airline -
employing 5,000 professional Crew Members and serving 404
flights a day to 40 destinations. The airline never requires a
roundtrip purchase or Saturday night stay, and offers an
affordable Business Class, assigned seating, easy online booking
and check-in, the A-Plus Rewards frequent flier program, and the
A2B corporate travel program. AirTran Airways also is a
subsidiary of AirTran Holdings, Inc., (NYSE:AAI), and the
world's largest operator of the Boeing 717, the most modern,
environmentally friendly aircraft in its class. For more
information and reservations, visit http://www.airtran.com
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its single-'B'-minus corporate credit ratings on
AirTran Holdings Inc., and subsidiary AirTran Airways Inc., and
removed all ratings from CreditWatch, citing the airline's
relatively good operating performance amid difficult industry
conditions. The ratings were placed on CreditWatch on
September 13, 2001. Approximately $166 million of rated debt is
affected. The outlook is negative.
"Ratings have been affirmed and removed from CreditWatch due to
AirTran's relatively good operating performance, within an
industry that continues to incur massive losses," said Standard
& Poor's credit analyst Betsy Snyder.
AMERICAN COMMERCIAL: S&P Drops Corporate Credit Rating to D
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
American Commercial Lines LLC. The corporate credit rating was
lowered to 'SD' (selective default) from 'CCC+'; the senior
secured bank facility rating was lowered to 'CCC+' from 'B-';
the senior unsecured debt rating was lowered to 'D' from 'CCC-';
and the subordinated debt rating was lowered to 'CC' from
'CCC-'. The corporate credit rating and senior unsecured debt
rating have been removed from CreditWatch, where they were
placed on Nov. 14, 2002. The bank loan rating and subordinated
debt rating remain on CreditWatch with negative implications.
The rating actions follow ACL's failure to make the Dec. 31,
2002, interest payment due on its senior notes and an
identifiable risk of default on other debt obligations over the
near term as the company considers financial restructuring
alternatives. The Jeffersonville, Indiana-based barge company
has about $810 million of lease-adjusted debt.
"The rating actions reflect the default on the senior notes,
ACL's severely constrained liquidity position, and a heightened
risk of default on other debt obligations over the near term,"
said Standard & Poor's credit analyst Lisa Jenkins. ACL recently
submitted a financial restructuring plan to its senior lenders
and has hired several firms to assist it in evaluating financial
restructuring alternatives.
ACL transports grain (32% of 2001 revenues), bulk/steel (26%),
liquids (18%), coal (11%), and other commodities (13%) by barge
on the Mississippi, Illinois, Ohio, Tennessee, and Missouri
Rivers as well as the Gulf Intracoastal Waterway. It has the
largest dry bulk barge fleet and the second-largest tank barge
fleet in the U.S. ACL's boat subsidiary designs and manufactures
barges and tugboats.
Poor weather conditions and the economic downturn have
negatively affected ACL's earnings over the past few years. ACL
was recapitalized in 1998, leaving it with an onerous debt
burden. Although ACL was acquired by New York, New York-based
Danielson Holding Corp. in 2002 and recapitalized again in
conjunction with the acquisition, it is still highly levered.
Debt/EBITDA is currently estimated to be over 8x. The company's
heavy debt burden is making it especially vulnerable to current
industry pressures. ACL recently reported that its EBITDA for
the first nine months of 2002 was $39.5 million, a decline of
$38.8 million from the comparable period of 2001. (The $78.3
million in reported EBITDA for the first nine months of 2001
included $18.8 million of gains on property dispositions.)
Standard & Poor's will monitor the status of restructuring
initiatives. If it appears that existing creditors will be
impaired (a scenario which Standard & Poor's would view as
tantamount to a default) or if the company actually defaults
under its bank credit agreements, ratings that remain on
CreditWatch will be lowered.
AMERICAN SKIING: Triple Peaks Suit Dismissed on Summary Judgment
----------------------------------------------------------------
Routt County Judge Richard Doucette, on December 31, 2002,
issued a summary judgment order in favor of American Skiing
Company (OTC Bulletin Board: AESK) in the matter of Triple
Peaks, LLC vs. American Skiing Company. The litigation arose
out of American Skiing Company's decision not to sell Steamboat
in March 2002.
"We are gratified by the Court's ruling on this matter in the
company's favor," said BJ Fair, CEO of American Skiing Company.
"It has been our position throughout that the Agreement provided
clear direction on the issue of liquidated damages. We are also
pleased that this is behind us and we continue to focus on the
success of Steamboat."
"This is great news in that we are now able to move forward
without any uncertainty regarding ownership of the resort," said
Chris Diamond, president of the Steamboat Ski & Resort
Corporation. "I am particularly proud of how the resort staff
has remained focused on their job, providing legendary Steamboat
guest service throughout the past year, despite many
distractions."
Judge Doucette's summary judgement ruling found that the
language of the Agreement between Triple Peaks LLC and American
Skiing Company "is clear and unambiguous, was bargained for by
the parties, and was agreed upon by sophisticated negotiators."
He wrote, "This Court finds that the provisions of Section
12.03(b)(iii) limits the remedies which the Purchaser's have to
the $500,000 in liquidated damages referred to in Section
12.03(b). The language is crystal clear that the sole and
exclusive remedy for a breach of the Agreement is the liquidated
damages."
Headquartered in Park City, Utah, American Skiing Company is one
of the largest operators of alpine ski, snowboard and golf
resorts in the United States. Its resorts include Killington
and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in
Maine; Attitash Bear Peak in New Hampshire; Steamboat in
Colorado; and The Canyons in Utah. More information is
available on the Company's Web site, http://www.peaks.com
* * *
As reported in Troubled Company Reporter's November 29, 2002
edition, American Skiing Company's primary real estate
development subsidiary, American Skiing Company Resort
Properties, Inc., entered into an agreement with Fleet
National Bank and the other lenders under its $63 million senior
secured credit facility for a 30 day forbearance from the
exercise of lenders' remedies. As previously reported, ASCRP
has been in payment default under its senior secured credit
facility since May 2002. Under the agreement, Fleet and the
other lenders have agreed not to pursue any additional
foreclosure remedies, and to cease publication of foreclosure
notices, during a 30 day forbearance period commencing on
November 22, 2002.
ARCH WIRELESS: Redeems $35 Million of 10% Senior Notes
------------------------------------------------------
Arch Wireless, Inc. (OTC Bulletin Board: AWIN), a leading
wireless messaging and mobile information company, said its
wholly owned subsidiary, Arch Wireless Holdings, Inc., has
completed the redemption, at par value, of principal amount
totaling $35 million plus accrued interest of 10% Senior
Subordinated Secured Notes due 2007. Arch announced its
intention to redeem the 10% Senior Subordinated Secured Notes on
November 27, 2002.
AWHI issued $200 million of 10% Senior Subordinated Secured
Notes on May 29, 2002. Including earlier optional redemption
payments on July 31, August 30 and September 30, 2002 totaling
$40 million, combined with a mandatory redemption payment of $15
million on November 15, 2002, AWHI has now redeemed, at par
value, a total of $90 million principal amount plus accrued
interest of the 10% Senior Subordinated Secured Notes. The
company currently has $110 million principal amount outstanding.
Under terms of the 10% Senior Notes Indenture, holders of record
as of December 16, 2002 received cash distributions in
connection with the December 31 redemption. The Bank of New
York is the indenture trustee for the 10% Senior Subordinated
Secured Notes, which trade in the over-the-counter market with
the CUSIP number 039392-AA-3.
Arch Wireless, Inc., headquartered in Westborough, Mass., is a
leading wireless messaging and mobile information company with
operations throughout the United States. The company offers a
full range of wireless messaging services to business and
consumers nationwide, including paging, wireless e-mail and
messaging and mobile data solutions for the enterprise. Arch
provides wireless services to customers in all 50 states, the
District of Columbia, Puerto Rico, Canada, Mexico and in the
Caribbean principally through its nationwide sales force, as
well as through resellers, retailers and other strategic
partners. Additional information on Arch Wireless is available
on the Internet at http://www.arch.com
Arch Wireless, Inc.'s September 30, 2002 balance sheet shows
that total current liabilities exceeded total current assets by
about $12.5 million.
BANYAN STRATEGIC: Completes Termination and Dissolution Process
---------------------------------------------------------------
Banyan Strategic Realty Trust (OTC Bulletin Board: BSRTS)
completed its termination and dissolution at the close of
trading on January 2, 2003, by the transfer of all of Banyan's
remaining assets and liabilities into the newly- formed BSRT
Liquidating Trust. Banyan's shareholders will automatically
receive an uncertificated interest in the BSRT Liquidating
Trust, equal to their prior interest in Banyan. The Liquidating
Trust interests will not be listed on any stock exchange and
will not be exchangeable or transferable, except by operation of
law. The Liquidating Trust will be administered by Banyan's
current First Vice President and General Counsel, Robert G.
Higgins, as the Primary Liquidating Trustee, and current Interim
President and CEO, L. G. Schafran, as the Secondary Liquidating
Trustee.
Banyan adopted a Plan of Termination and Liquidation on
January 5, 2001. The Plan called for the liquidation of all of
Banyan's assets as soon as practical but provided that a
liquidating trust could be established if, in the judgment of
Banyan's Board of Trustees, all liabilities could not be
discharged or adequately provided for within a two-year period.
Banyan sold its entire real estate portfolio, realizing more
than $250 million in gross proceeds, and has, to date, made a
total of $5.45 per share in liquidating distributions to its
shareholders. However, Banyan remains involved in a lawsuit with
its suspended President Leonard G. Levine that has been pending
since October of 2000. Banyan announced in October of 2002 that
no further distributions would be made to its shareholders until
the litigation with Mr. Levine was completed. The Liquidating
Trust will take over the management of that litigation.
The transfer into the Liquidating Trust constitutes a
distribution, in kind, to Banyan's shareholders, the effect of
which must be reported by Banyan's shareholders on their
individual income tax returns for the year 2003 (filed in the
spring of 2004). With Banyan now out of existence, the BSRT
Liquidating Trust will fulfill Banyan's obligation to cause Form
1099's to be issued to Banyan's shareholders for the calendar
year 2002 and for the distribution into the Liquidating Trust in
January of 2003. The 2002 Form 1099 will reflect each
shareholder's allocated portion of the liquidating distributions
made in 2002. The 2003 1099 will reflect each shareholder's
allocated portion of the distribution into the Liquidating
Trust.
In other news, Banyan announced that the Liquidating Trust will
continue to maintain Banyan's Web site at
http://www.banyanreit.comand will establish offices, effective
January 6, 2003, at the following address:
BSRT Liquidating Trust
Robert G. Higgins, Trustee
55 East Monroe Street, Suite 3850
Chicago, IL 60603
Banyan Strategic Realty Trust was an equity Real Estate
Investment Trust that adopted a Plan of Termination and
Liquidation on January 5, 2001. On May 17, 2001, the Trust sold
approximately 85% of its portfolio in a single transaction. The
remaining properties were sold on April 1, 2002, May 1, 2002 and
October 16, 2002. Since adopting the Plan of Termination and
Liquidation, Banyan has made liquidating distributions totaling
$5.45 per share. On January 2, 2003, Banyan will be dissolved
and terminated. As of its termination, the Trust had 15,496,806
shares of beneficial interest outstanding.
BOYD GAMING: Will Redeem All Outstanding 9.50% Senior Notes
-----------------------------------------------------------
Boyd Gaming Corporation (NYSE: BYD) notified the trustee for its
9.50% senior subordinated notes due 2007 that on January 29,
2003 it will redeem, in full, all outstanding 9.50% senior
subordinated notes due 2007. The redemption price will be
$1,047.50 per $1,000.00 principal amount of notes plus interest
accrued and unpaid to the redemption date. The redemption of
the 9.50% senior subordinated notes due 2007 will be funded from
the net proceeds from the Company's recently completed private
placement of $300 million aggregate principal amount of 7.75%
senior subordinated notes due 2012.
The paying agent for the redemption is:
State Street Bank and Trust Company
2 Avenue de Lafayette - 5th Floor
Boston, Massachusetts 02111
Attn: Corporate Trust Window
A notice of redemption containing information required by the
terms of the indenture governing the 9.50% senior subordinated
notes due 2007 will be mailed to noteholders.
* * *
As reported in Troubled Company Reporter's December 18, 2002
edition, Standard & Poor's 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.
BUDGET GROUP: Wants to Stretch Lease Decision Time Until Mar. 31
----------------------------------------------------------------
Joseph A. Malfitano, Esq., at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Delaware, relates that during the first
extension period, Budget Group Inc., and its debtor-affiliates
expended considerable time and resources on consummating the
sale to Cherokee, which included the assumption and assignment
of the vast majority of their unexpired leases to Cherokee. In
addition, the Debtors have reviewed and rejected at least 27
real property leases in an effort to eliminate unnecessary and
economically improvident burdens on the estates. However, the
Debtors still have a small number of unexpired leases, primarily
relating to the retained business, which are currently being
utilized by the Debtors and may provide value to the Debtors'
estates in the future. Given that they have focused primarily
on consummating the sale to Cherokee, the Debtors have not had
adequate time to fully evaluate the remaining Unexpired Leases
to determine whether they have value.
Mr. Malfitano is concerned that if the Debtors were compelled to
decide whether to assume or reject the Unexpired Leases at this
time, they would be faced with a choice of either rejecting the
Unexpired Leases, and thereby losing profitable lease locations
or assuming the Unexpired Leases and the long-term liabilities
associated with them, even though the particular lease may not
be necessary for their operations.
Thus, the Debtors ask the Court to extend the time within which
they must assume or reject all of their unexpired leases of non-
residential real property through and including March 31, 2003.
The Debtors assure the Court that the lessors under the
unexpired leases will not suffer any harm as a result of an
extension of the assumption and rejection deadline, since the
Debtors are substantially complying with all of their
postpetition obligations under the unexpired leases in
accordance with Section 365(d)(3) of the Bankruptcy Code.
The Court will convene a hearing on January 21, 2003 to consider
the Debtors' request. By application of the Local Bankruptcy
Rules applicable in the District of Delaware, the lease decision
deadline is automatically extended through the conclusion of
that hearing. (Budget Group Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
CENTIS: California Court Fixes February 7, 2003 Claims Bar Date
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of
California, Santa Ana Division, directs all creditors of Centis
Inc., and its debtor-affiliates, to file their Proofs of Claim
against the Debtors on or before February 7, 2003, or be forever
barred from asserting their claims.
An original proof of claim must be filed with the Bankruptcy
Court. A copy must also be served on the Debtors' Counsel:
Kirkland & Ellis
777 S. Figueroa Street
Suite 2030
Santa Ana, California 90017
Attn: Erin N. Brady, Esq.
Centis, Inc., filed for chapter 11 protection on July 31, 2002.
Erin N. Brady, Esq., at Kirkland & Ellis represents the Debtors
in their restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated assets of
over $50 million and estimated debts of more than $100 million.
CIRTRAN CORP: Converts $1.5 Million in Senior Debt into Equity
--------------------------------------------------------------
CirTran Corp. (OTC: CIRT), a full-service contract electronics
manufacturer of printed circuit board assemblies, cables and
harnesses, reached an agreement with four investors to exchange
$1.5 million of CirTran's senior debt for common shares. In
aggregate, this transaction will reduce the company's interest
expense by approximately $150,000 annually.
Iehab Hawatmeh, President and CEO of CirTran Corporation,
commented, "The deal further strengthens CirTran's financial
position as it will eliminate a substantial portion of the
company's annual interest expense, further enabling us to take
advantage of opportunities as market conditions improve.
Clearly, our financial partners share management's high level of
confidence in CirTran's future growth prospects and ability to
execute on the numerous initiatives we have underway designed to
improve our revenues and profitability."
Founded in 1993, CirTran Corporation (OTC: CIRT) has established
itself as a premier full-service contract electronics
manufacturer by building printed circuit board assemblies,
cables, and harnesses to the most exacting specifications.
CirTran is headquartered in Salt Lake City, Utah with a state-
of-the-art 40,000 sq. ft. facility. CirTran also provides
"just-in-time" inventory management techniques that minimize the
OEM's investment in component inventories, personnel and,
related facilities, thereby reducing costs and ensuring speedy
time-to-market. For further information about CirTran, please
visit the Company's Web site located at http://www.cirtran.com
Cirtran's September 30, 2002 balance sheet shows a working
capital deficit of about $5 million and a total shareholders'
equity deficit of about $4.6 million.
CLEVELAND-CLIFFS: Amends Senior Unsecured Note Agreement
--------------------------------------------------------
Cleveland-Cliffs Inc., (NYSE: CLF) reached an agreement with its
lenders in December 2002, amending its existing senior unsecured
note agreement. As previously disclosed, the Company had
expected that it would violate certain financial covenants in
the note agreement due to the recording of a non-cash charge to
shareholders' equity for minimum pension liabilities at year-
end. Under the amended note agreement, there was no covenant
violation.
John S. Brinzo, Cliffs' Chairman and Chief Executive Officer,
said, "We are pleased with resolution of this matter, which
allows our management team to keep its focus on being the
preeminent supplier of iron ore pellets to the North American
steel industry. We continue to take the actions necessary to
improve the competitive position of our mines," Brinzo
concluded, "The prospects for our iron ore pellet business in
2003 appear strong."
Cynthia B. Bezik, Senior Vice President - Finance and Chief
Financial Officer, said, "We appreciate the support we received
from the ten insurance company lenders that constitute our
noteholders. We now have the financial flexibility to continue
to improve our operating performance and pay down debt. We will
explore other financing alternatives in the future when
conditions are more favorable."
As part of the amended agreement, the Company made a principal
payment of $15 million on December 31, 2002, to reduce the
amount outstanding under the unsecured note agreement to $55
million at the end of 2002. In addition, the Company has agreed
to additional scheduled principal payments, including $20
million in December 2003. The Company expects to have adequate
liquidity to meet its normal seasonal requirements in 2003. The
interest rate remains at 7 percent through December 15, 2003,
increases to 9.5 percent from December 15, 2003 through
December 14, 2004, and to 10.5 percent from December 15, 2004 to
maturity of the agreement on December 15, 2005.
Cleveland-Cliffs is the largest producer and merchant of iron
ore pellets in North America. The Company operates five iron ore
mines located in Michigan, Minnesota and Eastern Canada.
COMDISCO INC: Demands $2.68 Million Lease Payment from Bowstreet
----------------------------------------------------------------
Comdisco, Inc., and its debtor-affiliates, seek a judgment
against Bowstreet, Inc., to pay all sums due to the Debtors
under a Master Lease Agreement dated October 30, 1998, along
with certain associated amendments and equipment schedules. The
Debtors further seek to obtain possession or have Bowstreet
turnover possession of all of the Equipment the Debtors owned
and leased to it.
Bowstreet provides services to allow companies to build
collaborative e-commerce solutions. It is a Delaware
corporation, with its principal place of business located in
Portsmouth, New Hampshire.
William J. Raleigh, Esq., at Raleigh & Cahill, PC, in Chicago,
Illinois, relates that pursuant to the Master Lease, the Debtors
leased certain computer equipment and other personal property to
Bowstreet. However, Mr. Raleigh reports that Bowstreet has
failed to make each of the payments due to the Debtors as
required by the Master Lease.
As a result of the default, Bowstreet is obliged to pay Late
Charges and Default Costs in connection with the obligations due
under the Master Lease including all reasonable attorneys' fees
and costs. In addition, interest and late charges continue to
accrue on all sums due under the Master Lease.
The Debtors have made both oral and written demands to Bowstreet
of their intent to terminate the Master Lease and for the
payment of all amounts due. Despite these demands, Mr. Raleigh
tells Judge Black, Bowstreet has failed and has refused to pay
to Comdisco the full amount due under the terms of the Lease
Agreement. In response to these demands, Bowstreet has begun to
return certain items of the Leased Equipment, but not all. On
the other hand, the Debtors have fully performed all the
obligations and conditions that are contained in the Lease
Agreement.
Mr. Raleigh informs the Court that as of December 23, 2002,
Bowstreet owes the Debtors $2,683,547 -- calculated as:
(a) Amount owed under the Lease Agreement
for the present value of the remaining
rentals: $2,405,984
(b) Amount owed under the Lease Agreement
for past due invoices: 167,569
(c) Amount owed under the Lease Agreement
for late charges: 8,378
(d) Amount owed for contractual end of term
lease payments: 101,615
------------
Total Sum Owed to the Debtors: $2,683,547
Under the terms of the Master Lease, Bowstreet has agreed to pay
the Debtors a Late Charge of 5% of the amount of each rent
payment that is not paid when due. In addition, under Illinois
law, the amount owed the Debtors under the Master Lease is
accruing pre-judgment interest at the rate of 5% per annum from
the date that Bowstreet breached the terms of the Lease
Agreement.
Breach of Contract
Because Bowstreet breached its contractual obligations to
Comdisco under the Master Lease, the Debtors ask the Court enter
a judgment in their favor and against Bowstreet:
-- in the sum of $2,683,547.81;
-- for the sum of all costs of collection, including all
reasonable attorneys' fees, expenses and costs; and
-- requiring Bowstreet to immediately turnover to Comdisco
the remainder of the Leased Equipment, which has not
already been returned to Comdisco as agreed to by
Bowstreet in the Master Lease.
Turnover of Property to the Estate
Bowstreet's failure to pay rent as provided is a default and as
a result of the default, Bowstreet agreed to deliver and return
all of the Leased Equipment to Comdisco at Bowstreet's expense.
The Debtors have terminated Bowstreet's right to use the Leased
Equipment and demanded the surrender of the Leased Equipment and
Bowstreet has failed to surrender not less than all of the
Leased Equipment to Comdisco. Mr. Raleigh asserts that
Bowstreet is unlawfully detaining the Leased Equipment that has
not been returned to Comdisco.
"The Leased Equipment has not been taken for any tax, assessment
or claim levied by virtue of any law of the State of Illinois or
California against the leased property, nor seized under any
lawful process against the goods and chattels of Comdisco
subject to any lawful process or held by virtue of any Order of
Replevin against Comdisco," Mr. Raleigh notes.
The original cost of the all the Leased Equipment was $710,452.
Mr. Raleigh asserts that the Leased Equipment is property of
Comdisco and, thus, is property of the Estate and Comdisco is
entitled to have all of the remaining Leased Equipment
immediately turned over to it without delay and without the
requirement that Comdisco post any bond.
Accordingly, the Debtors ask the Court to enter a judgment in
their favor and against Bowstreet for:
-- immediate possession of the Leased Equipment to Comdisco;
-- the value of the property not delivered;
-- all damages for the unlawful detention of this property;
and
-- immediate turnover of the remaining Leased Equipment by
Bowstreet to Comdisco. (Comdisco Bankruptcy News, Issue
No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONSECO INC: Lazard's Stephen Campbell Values CIHC at $3.8 Bill.
----------------------------------------------------------------
In connection with Conseco Finance's presentation of evidence
supporting its request to borrow new money under the
$125,000,000 DIP Financing Facility, Conseco Inc., together with
its debtor-affiliates, talked about the value of CIHC,
Incorporated, and the value of that entity's guarantee of CFC's
DIP Facility borrowings.
Stephen Campbell, Co-Head of Lazard Freres & Co., LLC's Global
Financial Institutions Group tells Judge Doyle that he's
provided financial advisory services on over $30 billion of
transactions involving life and health insurers in businesses
like CIHC's. He has been personally involved in Conseco's
restructuring since June 2002. He's read and analyzed
everything, he's probed and he's quizzed Conseco's management.
Subject to customary disclaimers and limitations, Mr. Campbell
tells Judge Doyle that the enterprise value of CIHC,
Incorporated falls between $3.7 billion and $3.9 billion, using
Selected Comparable Companies Analysis (based on market
multiples) and Actuarial Analysis (deriving value from adjusted
net worth and projected future cash flow techniques).
This valuation is important to show the Court that other secured
creditors' liens are adequately protected when CIHC's
superpriority guarantee slides ahead of their claims. Andrew
Yearley at Lazard explains that, net of existing claims, there's
a $282 million equity at CIHC cushion protecting other secured
creditors:
Estimated Value of CIHC $3,800,000,000
Less: Known Claims
Bank Debt 1,500,000,000
D&O Loans 481,000,000
New Notes Exchanged 1,290,000,000
CIHC Guarantee of CFC Debt 185,000,000
Litigation Claims 14,000,000
Trade Claims 33,000,000
Tax Claims 15,000,000
--------------
Implied Equity Value of CIHC $282,000,000
==============
(Conseco Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Conseco Inc.'s 10.500% bonds due 2004
(CNC04USR2) are trading at 37 ents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for
real-time bond pricing.
COVANTA ENERGY: Wants to Enter Into Letter Agreement with Prima
---------------------------------------------------------------
According to James L. Bromley, Esq., at Cleary, Gottlieb, Steen
& Hamilton, in New York, the Trezzo Project is owned by Prima
S.r.l., an Italian company in which Covanta Waste To Energy,
Inc. holds a 13% equity interest. TTR Tecno Trattamento Rifiuti
S.r.l holds the remainder of the equity in the Project. The
Project, which involves the construction and operation of an 18-
megawatt, mass-burn, waste-to-energy facility near the city of
Trezzo sulll'Adda in the Lombardy region of Italy, will be
operated by Ambiente 2000 S.r.l., an Italian special purpose
limited liability company that is 40% owned by Debtor Covanta
Waste to Energy of Italy, Inc. The solid waste supply for the
Project will come from municipalities under long-term contracts.
The electrical output from the Project will be sold at
governmentally established preferential rates under a long-term
purchase contract to Italy's state-owned utility company,
Gestore della Rete di Trasmissione Nazionale S.p.A.
On February 9, 2001, Prima entered into a credit agreement with
financing banks in connection with the financing of the Project.
The Trezzo Credit Agreement provides for a limited recourse loan
with a principal amount of $87,000,000.
On the same date, Prima entered into another agreement with
CWTE, Covanta Energy Group (a non-debtor affiliate), Inc. and
San Paolo IMI, S.p.A., for itself and as agent on behalf of the
Financing Banks, requiring CWTE to make certain equity
contributions on receipt of a Contribution Notice from Prima.
To date, CWTE has made contributions totaling $5,000,000, with
$800,000 remaining to be contributed, together with other
amounts as may be agreed in accordance with the DIP Agreement
dated April 1, 2002. Italian law governs both the Trezzo Credit
Agreement and the Equity Contribution Agreement.
Under the terms of the Trezzo Credit Agreement, Mr. Bromley
informs the Court, an Event of Insolvency by a Relevant Person
constitutes an Event of Default. Relevant Person includes CWTE
as a Sponsor of the Project and CEG as guarantor of Ambiente's
obligations under the Service Agreement between Prima and
Ambiente. Shortly after CWTE filed for Chapter 11 protection,
the Agent issued a Notice of Default, citing the Chapter 11
filing as the basis of the alleged Event of Default under the
Trezzo Credit Agreement.
Immediately, the Debtors and the Agent engaged in extensive
discussions to resolve the alleged Event of Default, resulting
in a letter agreement. Without admitting to any wrongdoing or
liability, the Letter Agreement provides in pertinent part that
the Parties will amend the Equity Contribution Agreement as:
(a) CWTE's option to convert Subordinated Debt held by it
into Quota Capital pursuant to the terms of the Equity
Contribution Agreement will now be subject to the prior
written consent of the Agent until:
-- the confirmation of a plan of reorganization and the
emergence from bankruptcy of CWTE and its affiliates;
and
-- the confirmation by the Agent's legal counsel of the
termination of the Chapter 11 of OWTE and its
affiliates, with no negative outcome. The Banks
sought this concession out of concern that the Project
could fall under the control of a bankrupt entity; and
(b) In consideration of the concession, the Banks agree to
waive the current Event of Default under the Trezzo
Credit Agreement that occurred on CWTE's filing for
Chapter 11 protection, as well as any Event of Default
arising under the Trezzo Credit Agreement in the event
that CEG files for Chapter 11 protection.
Pursuant to Section 363(b)(1) of the Bankruptcy Code and Rule
9019 of the Federal Rules of Bankruptcy Procedure, the Debtors
ask the Court to authorize, but not require, CWTE to enter into
the Letter Agreement.
Mr. Bromley reports that the Debtors have explored various ways
to resolve the dispute with the Financing Banks to ensure that
the financing of the Project continues without disruption and
that payment of the remaining $800,000 by CWTE is made on terms
acceptable to the Debtors. After reviewing the costs and
benefits of the available options, the Debtors determine that
the Letter Agreement achieves these goals, while avoiding the
high costs of litigation. Moreover, Mr. Bromley contends,
CWTE's entry into the Letter Agreement is warranted because:
(a) The Trezzo Credit Agreement is governed by Italian law,
litigation over the interpretation of the default
provisions of the agreement, and the applicability of the
automatic stay to the dispute, would be complex,
expensive and time-consuming;
(b) While the Debtors believe that any attempt to enforce the
default provisions of the Trezzo Credit Agreement is
barred by operation of Section 362(a), they recognize
that, because of the law governing the agreement, their
probability of success on the merits is uncertain. The
Debtors' concession under the Letter Agreement does not
increase the risk of liability to CWTE or CEG under the
Trezzo Credit Agreement, nor does it create further
financial obligations on their part. The Debtors believe
that the concession constitutes a favorable compromise,
especially considering the potentially serious
consequences of a default under the Trezzo Credit
Agreement, including termination of further financing of
the Project and acceleration of payment of all disbursed
amounts due;
(c) The Letter Agreement provides for resolution of any
dispute involving CWTE and CEG relating to any Event of
Default under the Trezzo Credit Agreement or the Equity
Contribution Agreement arising from CWTE's Chapter 11
filing or any subsequent Chapter 11 filing by CEG; and
(d) The Letter Agreement is the product of vigorous arm's-
length bargaining that has been ongoing for seven months.
Each of the Parties was represented by knowledgeable
counsel during the course of the negotiations. The terms
of the Letter Agreement are well within the range of
reasonableness. (Covanta Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
CRESCENT REAL ESTATE: Settles Lawsuit over Compaq Center
--------------------------------------------------------
Crescent Real Estate Equities Company (NYSE:CEI) entered into an
agreement with the City of Houston to settle a lawsuit related
to the intended use of Compaq Center, located within Crescent's
Greenway Plaza, a mixed-use office complex in Houston. As part
of the settlement, Crescent has also sold to the City, at the
City's request, land located in front of Houston's downtown
convention center.
On July 5, 2001, Crescent filed a lawsuit in federal court to
require the City of Houston to adhere to longstanding deed
restrictions in place at Compaq Center. This suit was in
response to the Houston City Council's July 3, 2001 approval of
a proposal for Lakewood Church to lease Compaq Center for up to
60 years beginning in November of 2003 for use as a church -- a
use not specified in the deed restrictions of the property.
Thursday last week, Crescent settled the lawsuit with the City,
agreeing to allow Lakewood Church to occupy Compaq Center,
provided that the new Lakewood Center is operated in much the
same manner that Compaq Center has been operated. Agreements
have been reached with Lakewood Church that will ensure the
coordination of traffic patterns and exterior architectural and
signage elements so that the Lakewood Center will remain
compatible with the existing Greenway Plaza development. Event
parking will also be limited to evenings and weekends under this
agreement.
Denny Alberts, President and Chief Operating Officer, commented,
"We are pleased to have reached an agreement that benefits
Crescent, the City of Houston and Lakewood Church. Our focus
throughout this process has been on holding firm our commitment
to our customers at Greenway Plaza and ensuring that they
continue to enjoy a first-class business environment. Our
agreement with Lakewood, whereby we will exercise control over
key operating functions, furthers that commitment."
Additionally, as part of the overall litigation settlement with
the City, Crescent agreed to the City's request that Crescent
sell to the City land in front of Houston's downtown George R.
Brown Convention Center. The two parcels total 5.5 acres,
leaving Crescent approximately 18 acres of undeveloped land
adjacent to its Houston Center complex. Crescent received
approximately $33 million in proceeds from the sale, resulting
in a net gain of approximately $13 million which was included in
Crescent's previous earnings guidance for the year ended
Dec. 31, 2002.
"As a major business owner in the CBD, Crescent shares the
City's vision of creating a world-class convention and
destination city. We are pleased to assist the City in realizing
its longtime goal of creating synergy between George R. Brown
Convention Center, the new convention center hotel, the new
basketball arena and the Minute Maid baseball park by selling it
the land that sits in the middle of these sites," Alberts added.
Crescent Real Estate Equities Company (NYSE:CEI) is one of the
largest publicly held real estate investment trusts in the
nation. Through its subsidiaries and joint ventures, Crescent
owns and manages a portfolio of 74 premier office properties
totaling over 29 million square feet located primarily in the
Southwestern United States, with major concentrations in Dallas,
Houston, Austin and Denver. In addition, the company has
investments in world-class resorts and spas and upscale
residential developments.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its ratings on Crescent Real Estate Equities
Co., and Crescent Real Estate Equities L.P., and removed them
from CreditWatch, where they were placed on Jan. 23, 2002. The
outlook remains negative.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
CTC COMMUNICATIONS: Hires Goldberg as Special Regulatory Counsel
----------------------------------------------------------------
CTC Communications Group, Inc., and its debtor-affiliates seek
permission from the U.S. Bankruptcy Court for the District of
Delaware to employ Goldberg, Godles, Wiener & Wright, as their
Special Regulatory Counsel in their chapter 11 cases, nunc pro
tunc to October 3, 2002.
Goldberg will coordinate with other professionals retained or
engaged by the Debtors to reduce or eliminate any duplication of
efforts. The professional services that Goldberg will render to
the Debtors include:
(a) advising concerning federal and state regulatory
requirements;
(b) filing with the Federal Communications Commission;
(c) filing with State Public Utility Commissions; and
(d) other regulatory matters.
The principal attorneys and paralegals designated to represent
the Debtors and their current standard hourly rates are:
Henry Goldberg $425 per hour (Attorney)
Joseph A. Godles $330 per hour (Attorney)
Jonathan L. Wiener $340 per hour (Attorney)
Brita D. Strandberg $205 per hour (Attorney)
Julie S. Read $110 per hour (Paralegal)
Rvan N. Terrv $150 per hour (Paralegal)
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, represents 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.
DANKA BUSINESS: Enters into Senior Credit Facility Amendment
------------------------------------------------------------
Danka Business Systems PLC (Nasdaq:DANKY) entered into an
amendment to its senior credit facility that gives Danka an
earlier opportunity to further reduce its outstanding debt
obligations, and which should enhance the company's
opportunities to seek a replacement credit facility on more
favorable terms, including a reduction in interest costs and
overall cost of capital.
The amendment provides, among other things, that:
-- Danka may, at its option and using available cash and
borrowing capacity, repurchase up to $20 million in
principal amount of its $47.6 million of senior
subordinated notes due April 1, 2004 earlier than their
stated maturity, subject to certain purchase price
discount requirements.
-- In the event Danka, at its option, were to make an
equity offering, it may apply up to 75% of the proceeds
to the early repurchase of its senior subordinated
notes, instead of applying those proceeds to the
repayment of its senior indebtedness.
"This amendment gives the Company greater financial flexibility
and, we believe, will pave the way to a more efficient, long-
term, lower cost financial structure," said Lang Lowrey, Danka's
chairman and chief executive officer. "Because our financial
health is so much stronger than it was a couple of years ago -
and our debt load is dramatically smaller - we will now be
actively working to reduce the cost of our remaining debt. This
amendment will put the company in a much better position to seek
more attractive financing alternatives for our debt."
"Our focus for the upcoming calendar year is to substantially
reduce our cost of capital, which we believe is higher than it
should be," explained Mark Wolfinger, Danka's chief financial
officer. "Given the improvements in our financial performance
and improved debt ratios, we believe we have earned - and can
get - a much lower cost of capital over the longer-term. The
changes to our senior credit facility are a step in that
direction, and we also plan to engage a financial advisor to
help us develop and seek new financing alternatives."
The amendment also relaxes the minimum consolidated EBITDA
(earnings before interest, tax, depreciation and amortization)
covenant in the facility for the remainder of its term,
maintains the current borrowing base for the revolver portion of
the senior credit facility, decreases a portion of the
availability under the capital expenditure covenant that the
company has not and did not anticipate utilizing and permits the
Company to repurchase its shares under certain, limited
circumstances.
Danka has paid a fee to its senior lenders in connection with
the amendment to the senior credit facility equal to 1% of the
current total commitments under the facility, and has
accelerated half of the fee payable by Danka on June 30, 2003,
which will thus be reduced from 2% to 1% of the total
commitments on that date.
Danka may use funds available as a result of the amendment to
repurchase its senior subordinated notes from time to time at
varying prices in open market purchases and/or in privately
negotiated transactions. The amounts involved may be material.
However, such repurchases, if any, will depend on many factors,
including, but not limited to, prevailing market conditions, the
price at which the notes are available for purchase, Danka's
liquidity requirements, prospects for future access to capital
and contractual restrictions. Danka can give no assurances as to
its ability to consummate any such purchase or the terms of any
such purchase.
The full amendment is available with the Form 8-K filed with the
Securities and Exchange Commission Thursday.
Danka delivers value to clients worldwide by using its expert
technical and professional services to implement effective
document information solutions. As one of the largest
independent providers of enterprise imaging systems and
services, the company enables choice, convenience, and
continuity. Danka's vision is to empower customers to benefit
fully from the convergence of image and document technologies in
a connected environment. This approach will strengthen the
company's client relationships and expand its strategic value.
For more information, visit Danka's Web site at
http://www.danka.com
DION: Challenges Dave Wallace's Move to Appoint a Receiver
----------------------------------------------------------
The Board of Directors of Dion Entertainment Corp., (TSX:DIO)
provides this update to investors.
The Company has received notice of Dave Wallace's intention to
appoint a receiver and in response has taken action contesting
Mr. Wallace's standing to appoint a receiver.
In a separate proceeding Mr. Louis Dion, a director of the
Company, commenced further action against Mr. Wallace and his
related companies on December 23, 2002, and an interim
injunction was granted by the B.C. Supreme Court (S.C.B.C.
VANCOUVER REGISTRY ACTION NO. S027073) restraining Mr. Wallace
from dealing with all assets of the Company and its
subsidiaries.
The Directors of the Company will provide a further report in
due course.
ECHOSTAR COMMS: Appoints Steven Goodbarn to Board of Directors
--------------------------------------------------------------
Effective December 30, 2002, Steven R. Goodbarn was appointed to
serve on the EchoStar Communications Corporation Board of
Directors, and to serve as a member of the Audit Committee of
the Board of Directors. Mr. Goodbarn was Chief Financial
Officer of Janus Capital Corporation from 1992 until late 2000.
During that time, he was a member of the Executive Committee and
served on the board of directors of many Janus corporate and
investment entities. Mr. Goodbarn is a CPA and spent 13 years
at Price Waterhouse prior to joining Janus. Mr. Goodbarn will
fill a new seat on the EchoStar Board of Directors, and will
serve until the next Annual Meeting of Shareholders. The Board
of Directors expanded the maximum size of the Board during
December 2002 from nine members to ten.
At September 30, 2002, Echostar's balance sheet shows a total
shareholders' equity deficit of close to $1 billion.
ECKERD COLLEGE: Fitch Ratchets 3 Note Series' Ratings Up to BB
--------------------------------------------------------------
Fitch Ratings has upgraded to 'BB' from 'BB-' the $5,825,000
Pinellas County Educational Facilities Authority bonds, series
1997B issued on behalf of Senior Living Centers. Fitch also has
upgraded to 'BB' from 'BB-' the Pinellas County Educational
Facilities Authority bonds, issued on behalf of Eckerd College,
in the outstanding amounts of $3,955,000 of series 1993,
$2,310,000 of series 1991 and $1,945,000 of series 1989. The
Rating Outlook is Stable.
On Sept. 8, 2000, Fitch downgraded to 'BB-' from 'BBB-'
approximately $14,930,000 Pinellas County Educational Facilities
Authority bonds, series 1997B, 1993, 1991 and 1989 related to
Eckerd College and Senior Living Centers. The downgrade was the
result of inadequate reporting of college financial activities
to the board of trustees, declining operating performance, an
erosion of liquidity, and the college's exposure to the
financially weak continuing care retirement center industry.
Since September 2000, Eckerd College has hired a new president,
implemented an automated accounting report system, reduced the
number of members on the board of trustees and established
committees of the board with specific focus on areas such as
audit and finance. In addition, two non-academic related
projects of Eckerd College, College Landings, a residential
living community, and College Harbor, a CCRC, now reflect
improved financial performance.
Fitch recently met with the President and other senior officers
on the campus to discuss changes that have occurred since the
downgrade in 2000. The cooperation between the board and the
management team is favorable which is critical as the college
develops a campus master plan, strategic plan and capital
campaign. The physical master plan has been completed and was
approved by the college's board of trustees in October 2002. A
strategic plan is being developed and will be followed by the
development of a capital campaign.
One of the strengths of Eckerd College is its growth in
enrollment. Enrollment has increased by 9.7% since fall 1996.
For the same period, Eckerd experienced a 23% increase in
student applications from 1,580 in fall 1996 to 1,943 in fall
2002. The college primarily attributes the increase to expanded
marketing efforts and the creation of the college's web page.
Fitch considers student demand to be one of the primary
determinants of a school's long-term financial viability.
Tuition, fees and revenues generated by auxiliary functions that
serve students represented approximately 65% of fiscal 2002
unrestricted revenues.
Eckerd College is a private, coeducational, liberal arts college
in St. Petersburg, Florida. The college was founded in 1958 as
Florida Presbyterian College and changed its name to Eckerd
College in 1972. Today, the college has an enrollment of over
1,600 full time residential students with roughly 25% of its
student body coming from Florida. In addition, there are over
1,000 students in the college's adult education program, which
is known as the PEL program (Program for Experienced Learners).
ELAN: Completes Sale of Remaining Equity in Athena Diagnostics
--------------------------------------------------------------
Elan Corporation, plc (NYSE: ELN), together with the other
stockholders of Elan's subsidiary, Athena Diagnostics, Inc.,
have completed the sale of all of the outstanding stock of
Athena Diagnostics to Behrman Capital and certain of its
affiliated investment funds.
As per the terms of the transaction that was previously
announced on November 22, 2002, Elan has realised net cash
proceeds of approximately $82 million.
"The sale of Athena Diagnostics brings cash raised and to be
received pursuant to previously announced transactions through
our asset divestiture program to approximately $680 million. In
the five months since the announcement of our recovery plan, we
have accomplished nearly 45% of the stated target of $1.5
billion to be achieved by the end of 2003," said Dr Garo Armen,
chairman of Elan. "Based on the execution of our recovery plan
to date, I am confident that we will reach our divestiture
targets ahead of schedule. Discussions on other asset
divestitures and business rationalizations are ongoing."
Elan is focused on the discovery, development, manufacturing,
selling and marketing of novel therapeutic products in
neurology, pain management and autoimmune diseases. Elan shares
trade on the New York, London and Dublin Stock Exchanges.
* * *
As reported in Troubled Company Reporter's December 11, 2002
edition, Elan's cash position will in future periods be
dependent on a number of factors, including its asset
divestiture program, its balance sheet restructuring, its debt
service requirements and its future operating cash flow. In
addition to the actions and objectives previously outlined with
respect to Elan's recovery plan, Elan may in the future seek to
raise additional capital, restructure or refinance its
outstanding indebtedness, repurchase its equity securities or
its outstanding debt, including its Liquid Yield Option Notes,
in the open market or pursuant to privately negotiated
transactions, or take a combination of such steps or other steps
to increase or manage its liquidity and capital resources. Any
such refinancings or repurchases may be material.
Meanwhile, Standard & Poor's lowered its corporate credit rating
on Elan Corp., PLC to single-'B'-minus from double-'B'-minus,
and all of its other ratings on the specialty pharmaceutical
company and its affiliates. The ratings are removed from
CreditWatch, where they were placed on July 2, 2002, with
negative implications. The actions are due to Standard & Poor's
increased concern over Elan's ability to meet obligations as
they come due.
The low speculative-grade rating on Dublin, Ireland-based Elan
reflects the company's declining pharmaceutical sales prospects,
significant upcoming debt maturities and other funding needs,
and the uncertain value of its investment portfolio, mitigated
somewhat by its still substantial cash position. The outlook is
negative.
ELEC COMMUNICATIONS: Closes Asset Sale to Essex Communications
--------------------------------------------------------------
eLEC Communications Corp., (OTCBB:ELEC) completed the sale of
certain assets of its wholly owned subsidiaries, Essex
Communications, Inc., to Essex Acquisition Corp., a wholly owned
subsidiary of BiznessOnline.com, Inc. In connection with such
sale, EAC assumed approximately $9.8 million of liabilities of
Essex. All of Essex's customers, which constituted substantially
all of eLEC's customers when the related sale agreement was
executed, and the associated accounts receivable and
interconnection agreements with the local incumbent carriers in
seven states were transferred to EAC.
eLEC's CEO, Paul Riss stated, "With the closing of this
transaction we were able to significantly reduce our liabilities
and avoid the potential bankruptcy of Essex, which was our
principal operating subsidiary. We are now able to focus on
rebuilding our business of providing low cost local and long
distance telephone service. We are looking to channel eLEC's
remaining resources into the growth of our operating
subsidiaries, New Rochelle Telephone and Telecarrier Services.
Since October 2002, we have been marketing local and long
distance services only in New York, where UNE-P margins are high
and the addressable market is substantial. We expect to slowly
enter other states as we identify opportunities to earn
significant profit margins under UNE-P. While working on the
disposition of the assets and liabilities of Essex, we have been
able to sell approximately 4,000 new lines through our New
Rochelle Telephone subsidiary. Of such lines, approximately
2,800 lines have been provisioned and 1,200 lines are in our
provisioning system and moving toward completion. To help
finance our operations, we continue to seek a new working
capital facility, which is essential to our ongoing viability."
eLEC Communications Corp., is a competitive local exchange
carrier that is taking advantage of the convergence of the
current and future competitive technological and regulatory
developments in the telecommunications industry. eLEC offers
small businesses and residential customers an integrated set of
telecommunications products and services, including local
exchange, local access, domestic and international long distance
telephone, and a full suite of features, including items such as
three-way calling, call waiting and voice mail.
eLEC Communications' August 31, 2002 balance sheet shows a
working capital deficit of about $10 million, and a total
shareholders' equity deficit of about $9 million.
ENCOMPASS SERVICES: Court Approves Weil Gotshal's Engagement
------------------------------------------------------------
Encompass Services Corporation, and its debtor-affiliates,
sought and obtained approval from the U.S. Bankruptcy Court for
the Southern District of Texas' Judge Greendyke to employ Weil,
Gotshal & Manges LLP as their attorneys in connection with the
commencement and prosecution of their Chapter 11 cases.
The Debtors will compensate Weil Gotshal for its services in
accordance with the firm's customary hourly rates plus
reimbursement of actual necessary expenses. The firm's
customary hourly rates are:
Rate Professional
---- ------------
$390 - 750 members & counsel
220 - 475 associates
120 - 215 paraprofessionals
Weil Gotshal will render the following services:
(a) Take all necessary action to protect and preserve the
Debtors' estates, including:
-- the prosecution of actions on the Debtors' behalf;
-- the defense of any actions commenced against the
Debtors;
-- the negotiation of disputes in which the Debtors are
involved; and
-- the preparation of objections to claims filed against
the Debtors' estates;
(b) Prepare on behalf of the Debtors, all necessary motions,
applications, answers, orders, reports, and other papers
in connection with the administration of their estates;
(c) Negotiate and prepare on behalf of the Debtors a plan of
reorganization and all related documents; and
(d) Perform all other necessary legal services in connection
with the prosecution of these Chapter 11 cases.
(Encompass Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ELK CREEK: Mo. Court Confirms 20-Year Chapter 12 Repayment Plan
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
confirmed a chapter 12 plan proposed by Elk Creek Salers, Ltd.
in Bankruptcy Case No. 02-30469-JWV. Creditors balked at the
Plan's provision to repay secured claims over a 20-year period,
argued that 7.5% and 6.22% interest rates were inadequate,
complained the plan suffered from unfair discrimination
infirmities, charged that the plan wasn't feasible, and said
confirmation should be denied as a matter of law because the
Rooker-Feldman doctrine prevents a chapter 12 debtor from
modifying a state court judgment creditor's rights. Bankruptcy
Judge Jerry W. Venters listened to the creditors gripes and
ruled that the Debtor's Chapter 12 Plan for Adjustment of Debts
of a Family Farmer passes muster and may be confirmed over the
creditors' objections.
Elk Creek Salers, Ltd., has a multi-faceted operation:
* it operates a cow-calf business;
* it owns (apparently) two farms in Lawrence County,
Missouri, for the operation of the cow-calf
business;
* it owns a dry cleaners and beauty salon in Mt.
Vernon, Missouri; and
* it owns a steakhouse and bar in Miller, Missouri.
The Debtor states that it owns four tracts of real property
valued at $920,000 and miscellaneous personal property worth
$332,480. Against these assets with a total value of
$1,252,480, the Debtor discloses debts totaling $818,679. This
leaves $433,801 of equity. The Plan proposes to pay all
creditors 100% of their claims over time.
Judge Venters considers and overrules each objection to the
Debtor's Chapter 12 Plan:
1. Objections to payment provisions
longer than 5 years.
Several of the secured creditors have objected to confirmation
of the Plan on the basis that the Plan impermissibly provides
for payments that extend beyond five years for the secured
claims. These objections are without merit. The Bankruptcy Code
clearly authorizes a Chapter 12 debtor to include such
provisions in a plan. Section 1222(b)(9)expressly states that a
Chapter 12 plan may provide for the payment of allowed secured
claims over a period exceeding the otherwise-applicable five-
year limitation of Sec. 1222(c) if those payments are consistent
with Sec. 1225(a)(5). One method of satisfying secured claims
under Sec. 1225(a)(5) is to provide for the secured creditor to
retain the lien securing its claim and to pay the creditor to
the present value of its collateral.
In its very brief discussion of Sec. 1222(b)(9), Collier on
Bankruptcy has this to say:
The most significant provision affecting the
rights of secured claimants, however, is the
authority granted [by Sec. 1222(b)(9)] to the
debtor to pay secured claims beyond the period of
time over which the debtor is making payments
on unsecured claims. This authority is not
limited to particular types of claims or
particular types of property. It applies not only
to long-term installment obligations but to short-
term obligations that have matured prior to
commencement of the case. This authority is also
not limited as to the length of time over which
payments may be made. The only limitation of the
debtor's ability to stretch payments on secured
debt will be those implied by the court as part
of the confirmation requirements of section 1225.
8 Collier on Bankruptcy par. 1222.04, p. 1222-9-10.
Very clearly, Judge Venters says, there is no per se prohibition
on a plan's providing for payments extending more than five
years beyond confirmation; in fact, as Collier makes abundantly
clear, the latitude to do so is one of the Code's "most
significant provisions" affecting secured creditors in Chapter
12. The objecting creditors have not produced any evidence to
show that the Debtor's Plan -- or the specific provisions
extending the term of repayment for their loans -- has not been
proposed in good faith, as required by 11 U.S.C. Sec.
1225(a)(3). Accordingly, these objections will be denied.
2. Objections to the restructuring
of fully matured notes.
First National Bank of Mt. Vernon has objected that all six of
its notes -- on which the bank is admittedly oversecured -- have
matured and that the Debtor may not extend the repayment of
those notes past the five-year period established generally for
Chapter 12 plans in Sec. 1222(c). The Court disagrees. This
issue is quickly resolved by Sec. 1222(b)(9), which specifically
provides that a plan may "provide for payment of allowed secured
claims consistent with section 1225(a)(5) of this title,
over a period exceeding the period permitted under section
1222(c). . . ." Sec. 1222(b)(9). See also the quoted statement,
supra, from Collier.) Section 1225(a)(5) provides, among other
things, that a plan shall be confirmed if it provides that the
secured creditors will retain the liens securing their claims
and if they are paid the present value of their allowed secured
claims.
"The only time limits on payment of secured debt are those which
are implied by the present value language of 1225(a)(5), and the
feasibility test of 1225(a)(6). Under 1225(a)(5), the rights of
the nonconsenting secured creditor can be modified only if,
among other things, the creditor retains its lien on the
security and receives collateral with a present value not less
than the amount of the secured claim." In re Janssen Charolais
Ranch, Inc., 73 B.R. 125, 127 (Bankr. Mont. 1987); see also In
re Dunning, 77 B.R. 789, 793 (Bankr. Mont. 1987); In re Bluridg
Farms, Inc., 93 B.R. 648, 654 (Bankr. S.D. Iowa 1988); In re
Billman, 93 B.R. 657, 660 (Bankr. S.D. Iowa 1988); In re Koch,
131 B.R. 128, 130 (Bankr. N.D. Iowa 1991). Certainly, if debtors
could not extend the repayment of fully secured claims beyond
five years, many Chapter 12 plans would be dead on arrival.
For these reasons, First National Bank's objection to the
extension of the time period for repayment of its fully matured
notes beyond the five-year period established in Sec. 1222(c)
will be denied.
3. Objections to the interest rates
proposed for secured creditors.
Union Planters Bank, N.A. and First National both object to the
rate of interest proposed to be paid on their oversecured
claims. Union Planters also asserts that it is entitled to be
paid according to the terms of its note -- both as to interest
and repayment terms -- because it is an oversecured creditor.
Union Planters has two claims secured by two tracts of real
estate that have an agreed-upon total value of $195,000. The
debts on the two properties total $100,051. The Plan proposes
to pay the two claims on a combined basis in monthly payments
over 20 years with an interest rate of 7.40%. First National is
owed $562,606 on a claim that is secured by real property with a
value of $449,000 and cattle and equipment with a value of
$211,750 (both values are based on the bank's appraisals). The
Plan proposes to pay the real estate claim in the amount of
$449,000 in semi-annual payments over 20 years, with an interest
rate of 7.40%, the same rate proposed for the real estate loan
of Union Planters. The Plan proposes to pay the $113,606 balance
of First National's claim, which is secured by the cattle and
equipment, in semi-annual installments over seven years with an
interest rate of 6.22%. In both instances, the Debtor based the
interest rate on the Treasury bond rate for similar time periods
(either 20 years or seven years, as appropriate), plus a 2% risk
factor, relying on United States v. Doud (In re Doud), 869 F.2d
1144 (8th Cir. 1989).
As this Court has previously observed in In re Lockard, 234 B.R.
484, 494 (Bankr. W.D. Mo. 1999), it is clear in the Eighth
Circuit that the appropriate rate of interest to be paid on a
secured creditor's claim in Chapter 12 is the prevailing market
rate, which must be determined on a case- by-case basis,
following Doud and In re Fisher, 930 F.2d 1361 (8th Cir. 1991).
In Doud, the Court of Appeals affirmed the District Court's
finding that an appropriate market rate of interest for a
secured claim in Chapter 12 was the yield on United States
Treasury bonds for the comparable repayment period (this being
termed the "risk-free" or "riskless" rate) plus an additional 2
percent to account for the risks inherent in the loan, as
affected by the Debtor's plan. As this Court stated in Lockard,
applying the Doud formula should, in most cases, result in a
fair rate of return for the secured creditor, although it
probably will not, as a general rule, give the secured creditor
the full interest rate for which it had originally bargained. At
that time, the Court expressed the hope that applying the Doud
formula would provide a degree of uniformity and predictability
on which both creditors and debtors could rely as they
negotiated the terms of reorganization plans. Lockard, 234 B.R.
at 495.
Unfortunately, applying the Doud formula in this case did not
satisfy Union Planters and First National. Both creditors argue
that they should receive their contractual rates of interest
(which, interestingly, are not set out in their objections) and
be paid on their contractual terms.
This Court sees no reason to depart from the Doud formula or to
abandon its previous holding in Lockard. And, in the instant
case, the interest rates arrived at by applying the Doud formula
appear to be appropriate under the circumstances. Union Planters
is to receive a risk-free interest rate of 7.40 percent on two
loans that are secured by real estate with a value almost twice
that of the debts owed. That is certainly an appropriate rate of
interest considering Union Planters' strongly collateralized
position. As for First National, the Debtor has, for Plan
purposes, allocated its total debt between the real estate
collateral, on the one hand, and the cattle and equipment
security, on the other hand, but the bank's claims are cross-
collateralized. The Debtor notes that the total amount of
indebtedness to First National is $562,606 and the value of its
collateral is $660,750, affording the bank an equity cushion of
almost $100,000. Under these circumstances, First National has
an ample equity cushion with very little risk, and therefore the
Doud formula was properly applied by the Debtor in providing for
payment of the debts owed to First National.
Counsel for First National argued that the bank was entitled to
its contractual rate of interest on the authority of the Eighth
Circuit's decision in Prudential Insurance Company of America v.
Monnier Brothers (In re Monnier Brothers), 755 F.2d 1336 (8th
Cir. 1985). Monnier Brothers was a Chapter 11 case, so it is not
directly on point with this case, but more importantly, the
Court in that case did not require that the creditor be paid its
contract rate of interest. Rather, the Court found that the
contract rate of interest was appropriate under the
circumstances in that case. The Court extended a broad grant of
discretion to the bankruptcy courts in determining the
appropriate interest rate when it quoted the following passage
from Collier on Bankruptcy:
The appropriate discount rate must be determined
on the basis of the rate of interest which is
reasonable in light of the risks involved. Thus,
in determining the discount rate, the court must
consider the prevailing market rate for a loan of
a term equal to the payout period, with due
consideration for the quality of the security and
the risk of subsequent default.
Monnier Brothers, 755 F.2d at 1339, quoting 5 Collier on
Bankruptcy par. 1129.03, at 1129-65.
In the instant case, First National (and Union Planters) have
substantial and adequate security for their loans and very
little, if any, risk of loss even upon default by the Debtor.
The Debtor has determined the interest rate by relying on the
prevailing Treasury bond rate for terms equal to the payout
periods. The creditors have not adduced any evidence of other
prevailing interest rates for loans of these types; in fact,
they did not even put into evidence their contractual interest
rates or repayment terms. Thus, the interest rates proposed in
the Plan for the debts owed to Union Planters and First National
are appropriate, and the banks' objections will be overruled.
Finally, counsel for Union Planters has not directed the Court
to any authority requiring that an oversecured creditor must be
paid on its contractual terms, as Union Planters insists is the
law. The Court is unaware of any such authority. This argument
seems to be in direct conflict with the provisions of Secs.
1222(b)(9) and 1225(a)(5)(B). Moreover, the argument is not
supported by this Court's reading of the Eighth Circuit's Doud
and Monnier Brothers cases. See also U.S. v. Arnold (In re
Arnold), 878 F.2d 925, 929-30 (6th Cir. 1989) (the appropriate
interest rate to ensure payment of the present value of the
creditor's secured claim is the current market rate, not the
contract rate); see also 8 Collier on Bankruptcy par.
1325.06[3][b][iii][B], at 1325-36 (15th ed. rev. 1999)(noting
that during the legislative process leading to the Bankruptcy
Amendments and Federal Judgeship Act of 1984, Congress
specifically considered and rejected an amendment requiring
payment of a contract rate of interest under Sec.
1325(a)(5)(B)(ii)). Accordingly, this objection will likewise
be denied.
However, the Court observes that the banks are entitled, as
oversecured creditors, to receive their contract rates of
interest through the date of confirmation, pursuant to the
provisions of 11 U.S.C. Sec. 506(b); thereafter, they should be
paid the rates set out in the confirmed Plan. Rake v. Wade, 508
U.S. 464, 468, 113 S.Ct. 2187, 2190, 124 L.Ed.2d 424 (1993);In
re Wilmsmeyer, 171 B.R. 61, 63 (Bankr. E.D.Mo. 1994).
4. Objections that the Plan improperly
discriminates between classes of
secured creditors.
Deere & Company and First National complain that the Plan
improperly and unfairly discriminates between and among the
secured creditors, who have been placed indifferent classes by
the Debtor.
* In Class III, the Debtor proposes to pay Deere
$15,598 over a period of seven years at an
interest rate of 6.22%. The claim is secured by
a 1999 4250 John Deere tractor with a value of
$25,000 (Debtor) or $22,500 (creditor);
whichever value is used, the claim is fully
secured.
* In Class VI, the Debtor proposes to pay First
National $113,606 on that part of its claim that
is secured by the Debtor's cattle and equipment,
which are valued at $211,750 (bank's appraisal).
This claim is, like the Deere claim, to be paid
over seven years at an interest rate of 6.22%.
* In Class VII, the Debtor proposes to pay the
fully secured claim of Union Planters over a
period of less than five years, with interest of
6.22%, in monthly payments of $673.68. Union
Planters' claim is $33,126 and is secured by a
truck and trailer with a combined value
of $48,000. (At the confirmation hearing, Union
Planters withdrew its objection to this provision
of the Plan.)
* With respect to the claims that are secured by
real estate, the Debtor has proposed to pay those
fully secured claims over 20 years with an
interest rate of 7.40% (Class IV--Union
Planters; Class V-- Personal Representative of
The Estate of Stella Maye Riddle; Class VI--
First National Bank).
Section 1222(a)(3) of the Code requires that, if a plan
classifies claims and interests, it shall "provide the same
treatment for each claim or interest within a particular class
unless the holder of a particular claim or interest agrees to
less favorable treatment." With specific reference to unsecured
claims, Sec. 1222(b)(1) states that a Chapter 12 plan may
designate a class or classes of unsecured claims, "but may not
discriminate unfairly against any class so designated. . . ."
These provisions have been construed to prohibit unfair
discrimination between all classes in a plan. "The Code does not
prohibit unequal treatment of claims that are properly
classified in different classes so long as the discrimination is
not unfair." In re Harper, 157 B.R. 858, 864 (Bankr. E.D. Ark.
1993), citing 5 Lawrence A. King, et al., Collier on Bankruptcy
par. 1222.03 (15th ed. 1989). Thus, the Code does not prohibit
discrimination between classes of creditors and their treatment,
but it does prohibit unfair discrimination.
A full reading of the Debtor's Plan does not reveal any unfair
discrimination. In fact, the only actual discriminatory
treatment among the secured creditors is the provision for the
payment of the Union Planters claim (Class VII) that is secured
by the truck and trailer. In that instance, the Debtor predicts
that the debt will be paid off in less than five years, as
against a seven-year payout for the other claims (Deere and
First National) that are secured by personal property. First of
all, the discrimination between these provisions is minimal
(five years versus seven years) and should not be cause for
great concern. Secondly, the Debtor has extended the life of the
loan at Union Planters by several months (from a 36-month payout
to a 60-month payout), which is similar to the extensions that
are made on the other claims secured by personal property.
Finally, the Union Planters loan is secured by a 1992
International road tractor, which is an older piece of equipment
subject to more rapid depreciation than the collateral securing
the other loans. For these reasons, the Court finds that the
discriminatory treatment that is accorded the Union Planters
claim is not unfair, but rather is justified under the
circumstances.
As for the real estate loans, there is no discrimination among
them, actual or unfair. All of those loans are to be paid over
20 years at 7.40% interest.
In all instances -- both for the real estate loans and the
personal property loans -- the Debtor has based the interest
rate on the Doud formula, which the Court has expressly
approved. At the hearing, counsel for Union Planters said that
the bank did not object to a 20-year amortization but would
prefer that the Plan provide for 10 years of payments and then a
balloon of the balance. Granted, such a provision might be
preferable for the bank, but granting that request would
unfairly discriminate in favor of Union Planters. A 20-year
amortization and payout is fair for all of the real estate
creditors.
Therefore, the objections based on allegedly unfair
discrimination between the classes will be denied.
5. Objections as to feasibility,
commitment of disposable income,
and retention of liens.
Several of the creditors have objected that the Plan is not
feasible and therefore cannot be confirmed, because the Debtor
would not be able to make all payments under the Plan, as
required by 11 U.S.C. Sec. 1225(a)(6). Alternatively, some of
the creditors contend that the Plan does not contain sufficient
information to enable them to determine whether the Plan is
feasible or not. The creditors also complain that it is unclear
whether the Debtor has committed all of its disposable income to
performance of the Plan over the next three years, as required
by 11 U.S.C. Sec. 1222(a)(1). Finally, the creditors assert
that the Plan does not provide that the secured creditors will
retain their liens until they are paid in full, as required by
11 U.S.C. Sec. 1225(a)(5)(B)(i).
Before it can confirm a Chapter 12 plan, the Court must find,
among other things, that "the debtor will be able to make all
payments under the plan and to comply with the plan." 11 U.S.C.
Sec. 1225(a)(6). In other words, the Court must find that the
plan is feasible. "The feasibility test requires the court to
analyze the debtor's proposed plan payments in light of the
debtor's projected income and expenses and to determine that the
debtor is likely to be able to make all payments required by the
plan." 8 Collier on Bankruptcy par. 1225.02[5], p. 1225-10
(15th ed. rev. 1999). The plan must establish a reasonable
probability of success. Lockard, 234 B.R. at 492. "The test is
whether the things which are to be done after confirmation can
be done as a practical matter under the facts." Clarkson v.
Cooke Sales and Service Co. (In re Clarkson), 767 F.2d 417, 420
(8th Cir. 1985).
The Debtor states that it has assets with a value of $1,252,480
and total liabilities of $818,679, and therefore it has proposed
a 100% payment plan. The Plan does not set out the amount of the
Debtor's unsecured debt, but the schedules filed earlier in the
case reflect general unsecured debts of just $14,204.
In Article VIII of the Plan, the Debtor sets out its grounds for
finding that the Plan is feasible. The Debtor states that its
average annual gross income for the last three years has been
$231,454 and that its net operating expenses have been $81,929
annually, resulting in a net profit of $149,525 on an annual
average. However, in the last paragraph of Article VIII, the
Debtor projects that it should have $118,727 of income available
in each of the next three years to make the required Plan
payments. No explanation is given for this apparent decrease in
net income from $149,525 a year to $118,727. One could surmise
that the decrease would come about because, in Article IX, the
Debtor indicates that it intends to sell what it calls the
"South Farm," the property on which First National has a deed of
trust, and if that farm is sold the Debtor will "significantly
reduce" its cow-calf operations. In fact, it states that, when
the South Farm is sold, the Debtor will sell approximately one-
half of its cattle operation and pay the proceeds to the bank.
If a significant amount of the real estate is sold and the
cattle operation is reduced by half, then it certainly seems
reasonable to anticipate that revenues would be significantly
reduced.
In any event, whether the annual income is $149,525 or $118,727,
the Debtor projects Plan payments of only about $105,000 in the
first year and less than$103,000 in the second and third years,
at which time the rather minimal unsecured debt would be paid in
full. And, if the South Farm is sold and the cattle operations
are reduced by half, as the Debtor anticipates, the amounts
required for debt service under the Plan should be substantially
reduced, perhaps by as much as one-half.
Therefore, on its face, the Plan is feasible. That is, the
projected income would exceed the projected Plan payments by
approximately $15,000 a year, or almost 15%. The objecting
creditors have offered no evidence to demonstrate why they think
the Plan is not feasible, and the burden is on them to come
forward with at least a modicum of evidence if they truly
believe the Plan will not work.
As it presently stands, the Court can only guess at the reasons
the creditors consider the Plan to not be feasible.
The objections as to feasibility, the commitment of disposable
income to the Plan, and the provisions for retention of liens
are denied.
6. The objections of the Riddle Estate.
The Riddle Estate objects to confirmation of the Debtor's Plan
on grounds that the Plan violates the provisions of a state
court judgment and is, in effect, an impermissible "appeal" of
the state court judgment in violation of the Rooker-Feldman
doctrine.
On June 5, 2000, the Lawrence County Circuit Court entered a
judgment determining that Elk Creek had validly exercised its
contractual option to purchase a 237-acre farm that was property
of the probate estate of decedent Stella Maye Riddle, and
finding that Richard Riddle, the Personal Representative of the
Stella Maye Riddle Estate, had wrongfully refused to perform his
part of the option agreement. Accordingly, the Circuit Court
ordered Richard Riddle to deliver a deed to the property to Elk
Creek, and in turn ordered Elk Creek to make a payment of
$10,000 and execute a note and deed of trust for the balance of
the contractual purchase price. Richard Riddle appealed to the
Missouri Court of Appeals, contending in his sole point on
appeal that the Circuit Court had improperly allowed Elk Creek
a$20,000 credit on the purchase price. The Court of Appeals
agreed, and on remand the Circuit Court entered an amended
judgment finding that the total purchase price under the option
should be $116,758.
Subsequent to the entry of the amended judgment, and in
compliance with the original judgment, Elk Creek on March 1,
2001, executed a promissory note in favor of the Riddle Estate
in the amount of $106,758, having paid the $10,000 downpayment.
The note provided for annual payments of $4,000.00 each,
commencing June 30, 2002, and continuing through June 30, 2010.
The remaining balance of the note would balloon and be due and
payable, with interest, on March 1, 2011. The note provided for
interest of six (6) percent a year. On January 31, 2002, Elk
Creek executed a deed of trust to secure the note; the reason
for the delay in executing the deed of trust has not been
explained but is not critical in any event to these proceedings.
The deed of trust has been recorded.
The Debtor failed to make the June 30, 2002, annual payment, and
the Riddle Estate filed a proof of claim in these Chapter 12
proceedings in the amount of $114,812. The Debtor does not
contest that amount, and proposes in the Plan to pay that amount
over 20 years, with interest at the rate of 7.40% per annum
(1.40% more than provided in the promissory note), in semi-
annual payments of $5,444.31, with the first payment due six
months after confirmation. Therefore, the Plan proposes to pay
the full amount of the debt, with an increased interest rate,
but over 20 years instead of the 10 years provided in the
promissory note. There is no dispute that the real property
securing the note has a value well in excess of the amount owed,
and that the Riddle Estate is, therefore, oversecured.
The Riddle Estate asserts that the Plan seeks to modify the
final judgment of the Circuit Court and in doing so violates the
Rooker-Feldman doctrine. The Debtor responds that the Plan does
not modify the state court judgment because the parties have
performed the terms of the judgment by exchanging the warranty
deed and the required promissory note and deed of trust.
Additionally, the Debtor asserts that the parties have
themselves already modified the judgment by entering into a new
note that compromised the amount of interest owed by the Debtor.
For these reasons, the Debtor asserts that the Rooker-Feldman
doctrine has no application. The Court agrees with the Debtor.
The Rooker-Feldman doctrine is named for two United States
Supreme Court cases which dealt with the authority of lower
federal courts to review state court decisions: District of
Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct.
1303, 75 L.Ed.2d 206 (1983) (holding that lower federal courts
possess no power whatsoever to sit in direct review of state
court decisions), and Rooker v. Fidelity Trust Co., 263 U.S.
413, 44 S.Ct. 149, 68 L.Ed. 362 (1923) (holding that no court of
the United States, other than the Supreme Court, could entertain
a proceeding to reverse or modify the judgment of a state
court). See Miller & Miller Auctioneers, Incorporated v.
Ritchie Brothers Auctioneers International, L.P. (In re Missouri
Properties, Ltd.), 211 B.R. 914, 928 (Bankr. W.D. Mo. 1996).
The Eighth Circuit Court of Appeals has made it clear that the
Rooker-Feldman doctrine "forecloses not only straightforward
appeals but also more indirect attempts by federal plaintiffs to
undermine state court decisions." Lemonds v. St. Louis County,
222 F.3d 488, 492 (8th Cir. 2000); see Car Color & Supply, Inc.
v. Raffel (In re Raffel), 283 B.R. 746, 748-49 (8th Cir. BAP
2002).
The Rooker-Feldman doctrine does not apply in this case for the
simple reason that the Debtor's Plan in no way seeks to have
this Court review or modify the state court judgment. The Debtor
and the Riddle Estate have already performed the terms of the
state court judgment by executing and delivering to each other
the deed, the promissory note, and the deed of trust as required
by the Circuit Court. Counsel for the Riddle Estate admitted in
argument that the note and deed of trust were incompliance with
the judgment. There is nothing left for the parties to do under
the state court judgment. The Debtor's Plan does not challenge
or seek to modify the state court judgment; it seeks to modify
the promissory note executed by the Debtor in compliance with
the state court judgment. Such a modification is clearly
permissible under Sec. 1225(a)(5)(B) of the Code. Therefore,
the Riddle Estate's objection to the Plan on the basis of the
Rooker-Feldman doctrine will be denied.
ENRON CORP: Obtains Release of Liens on Advance Mobile's Assets
---------------------------------------------------------------
According to Melanie Gray, Esq., at Weil, Gotshal & Manges LLP,
in New York, Advance Mobile Power Systems LLC is a non-debtor
affiliate of Enron North America Corp., that was formed in
January 2001 by ECT Merchant Investments Corp., a non-debtor
wholly owned subsidiary of ENA. In partnership with Dispersed
Power LLC, a non-debtor third party, Advance Mobile engaged in
the research and development of a mobile power generation unit.
A prototype was successfully refurbished and tested in May 2001.
In June 2001, ENA loaned to Advance Mobile $2,975,000 for the
Project, secured by a lien on Advance Mobile's assets.
Ms. Gray reports that ENA subsequently determined that the
Project was no longer of strategic value to the Debtors and,
consistent with its desire to divest itself of assets unrelated
to its core operations, ENA, in consultation with Advance
Mobile's interest holders, declined to provide additional funds
to Advance Mobile for the Project and began exploring a possible
sale of Advance Mobile's assets. Having exhausted its
operational cash, Advance Mobile's Board of Managers voted on
August 27, 2001 to liquidate Advance Mobile's assets and appoint
ECTMI as liquidator. In September 2001, the First Generator was
sold for $2,000,000.
Ms. Gray notes that Advance Mobile has four primary groups of
assets remaining:
(i) a beta state mobile power unit and related assets;
(ii) a newly manufactured, uninstalled Peebles 18mw 50/60 AC
cycle generator, together with five generator forgings --
the Second Generator;
(iii) technology and intellectual property owned by or licensed
to Advance and relating to the Beta Unit or the Second
Generator; and
(iv) miscellaneous assets used in connection with the Beta
Unit and the Second Generator.
Beginning in the summer of 2001, Advance Mobile began actively
marketing the Beta Unit and other assets. Since then, Advance
Mobile has identified and contacted over 60 potential buyers
worldwide. From these contacts, a number of parties expressed
interest but only one serious bidder -- Vulcan Power Group, LLC
-- gave an offer, which Advance Mobile, in consultation with
ENA, believed reflected the value of the assets.
On September 12, 2002, Advance Mobile and Vulcan executed the
Purchase Agreement for the sale of the Assets. The Purchase
Agreement contains these principal terms:
1. Consideration. $4,000,000;
2. Assets Acquired. The Assets to be purchased include all of
Advance Mobile's right, title and interests to:
(a) the Beta Unit and all assets Advance Mobile owned related
to the Beta Unit;
(b) the Second Generator;
(c) to the extent owned by Advance Mobile and transferable to
Vulcan, all technology and intellectual property owned by
or licensed to Advance Mobile and relating to the Beta
Unit or the Second Generator, whether now in existence or
in the development state;
(d) subject to obtaining necessary third party consents,
all contracts, agreements, licenses, permits, warranties,
etc. with respect to the Assets;
(e) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, if any,
arising out of the Assets;
(f) all existing business and marketing records relating to
the Assets;
(g) all shop equipment, including tools, phone systems,
personal computers, mainframe computer, excess material
and all other physical assets owned by Advance Mobile and
related to the Assets; and
(h) rights granted by governmental authorities and all
certificates of necessity, immunities, privileges, grants
and other rights, that relate to the Assets or the
ownership or operation thereof;
3. Representation and Warranties. Advance Mobile represents and
warrants, inter alia, that:
(a) except as set forth in the Purchase Agreement, the Assets
are free of all Encumbrances and, at the Closing, Advance
Mobile will deliver good and indefeasible title to the
Assets;
(b) except as set forth in the Purchase Agreement, no
intellectual property right or other claims have been
asserted by any person or entity to the use of any Asset
and Advance Mobile is not aware of any valid basis of any
claim;
(c) Advance Mobile has not granted, transferred or assigned
any right, title or interest in or to the Assets to any
person or entity;
(d) all Taxes, to the extent they are due and payable, have
been or will be timely paid in full at or before the
Closing and the Apportioned Obligations will be
apportioned between Advance Mobile and Vulcan as of the
Closing Date;
(e) the Purchase Agreement sets forth a complete list of each
Material Contract and these contracts are in full force
and effect and the parties to these contracts have
performed in all material respects and are not in default
thereunder; and
(f) other customary representations regarding organization,
due authorization, execution, conflicts, etc.;
4. Closing Conditions. Closing will be subject to:
(a) Bankruptcy Court approval of the Sale;
(b) Advance Mobile has delivered to Vulcan a certification
of ECTMI as liquidator and authorized agent for Advance
Mobile, dated the Closing Date attaching Advance Mobile's
board of managers resolution authorizing and approving
the dissolution and winding up of Advance Mobile and the
appointment of the liquidator and the Amended and
Restated Limited Liability Company Agreement of Advance
Mobile;
(c) ENA has released all liens to the Assets effective as of
the Closing; and
(d) other customary conditions;
5. Disclaimer of Warranties. Vulcan accepts the Assets as is,
where is, with all faults. Except as specified in the
Purchase Agreement, neither Advance Mobile nor ECTMI, nor
any of their agents, makes any representations or warranties
either express or implied including without limitation,
warranties of title, condition, design or marketability of
the assets, any warranty under the Uniform Commercial Code of
any of Texas, Florida, Delaware or any other jurisdiction of
the United States, etc.;
6. Termination. The Purchase Agreement may be terminated and
the transactions contemplated therein abandoned at any time
prior to Closing:
(a) by the mutual written consent of the Parties;
(b) by either Party if the Bankruptcy Court does not approve
of the sale;
(c) by written notice of Vulcan to Advance Mobile if:
-- Advance Mobile have materially breached its
representations, warranties or agreements under the
Purchase Agreement; provided the breach is not curable
or not cured within 10 days from breach notice date;
or
-- Advance Mobile fails to fulfill its conditions
precedent in Section 8 of the Purchase Agreement;
(d) by written notice of Advance Mobile to Vulcan if:
-- Vulcan have materially breached its representations,
warranties or agreements contained in the Purchase
agreement, provided the breach is none-curable or is
not cured after 10 days of breach notice; or
-- Vulcan fails to fulfill its conditions precedent in
Section 9 of the Purchase Agreement; and
7. Assumption of Obligations. At Closing, Vulcan will assume
all liabilities that arise under the Assets or that otherwise
relate to the Assets or Advance Mobile's interest in the
Assets and, in each case, arise from or relate to events
occurring after the Closing Date. Notwithstanding the
foregoing, Vulcan will not assume any obligation or liability
of Advance Mobile relating to litigation that relates to
Assets or Advance Mobile's interest in the Assets and is
attributable to events occurring on or prior to the Closing
Date.
To effectuate the Purchase Agreement, ENA sought and obtained a
Court order authorizing and approving:
(a) the release of its liens with respect to the Assets;
(b) its consent to the sale of the Assets to Vulcan pursuant
to the terms of the Purchase Agreement; and
(c) the consummation of the transactions contemplated
therein.
Ms. Gray contends that ENA's release of the liens and its
consent to the sale of the assets is warranted because:
(a) the Sale Transaction will result in ENA being paid in
full on account of its secured loans to Advance Mobile;
(b) although the sale of the Assets does not directly involve
property of the estate, the Sale Transaction affects
ENA's Chapter 11 estate in that ENA holds an indirect
interest in Advance Mobile through ECTMI;
(c) the Purchase Agreement requires the Court approval of the
Sale Transaction as a precondition to closing;
(d) the Project no longer had any strategic value to the
Enron Companies;
(e) after a year marketing the Assets, Vulcan's offer
represents the highest and best offer for the Assets; and
(f) the Purchase Agreement was negotiated at arm's length and
represents fair market value for the Assets.
Since the only lien on the Assets is ENA's loan, Judge Gonzalez
declares the Sale to be free from all claims, liens and
encumbrances. Moreover, the Court grants to Vulcan the
protection of a good faith purchaser pursuant to Section 363(m)
of the Bankruptcy Code. Given that the Assets have been
extensively marketed, the Court considers the sale of the Assets
to be a private sale under the Rule 6004(f)(1) of the Federal
Rules of Bankruptcy Procedure. (Enron Bankruptcy News, Issue No.
52; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ENRON: JPMorgan Settles Dispute with CNA Surety re Surety Bonds
---------------------------------------------------------------
CNA Surety Corporation (NYSE: SUR) reached a settlement
agreement with J.P. Morgan Chase & Co., in litigation relating
to surety bonds furnished on behalf of Enron Corp., and its
subsidiaries. CNA Surety has agreed to pay $40.7 million,
including assignment of its rights to any recoveries in the
Enron bankruptcy, for a full release of its obligations under
the surety bonds. CNA Surety's net loss related to this
settlement, after anticipated recoveries under excess of loss
reinsurance treaties, was previously fully reserved.
CNA Surety Corporation is the largest publicly traded surety
company in the country. Through its principal subsidiaries,
Western Surety Company and Universal Surety of America, CNA
Surety provides surety and fidelity bonds in all 50 states
through a combined network of approximately 35,000 independent
agencies. Visit the Company at http://www.cnasurety.comon the
World Wide Web.
ENRON CORP: SAFECO Expects No Material Impact from Settlement
-------------------------------------------------------------
SAFECO (Nasdaq: SAFC) announced that Thursday's settlement of a
case involving J.P. Morgan Chase and 11 insurance companies
isn't expected to have a material impact on SAFECO's financial
results.
In the fourth quarter of 2001, SAFECO reported a pretax $18
million Surety loss-net of reinsurance-due to the Enron
bankruptcy. SAFECO is fully reserved for that loss.
SAFECO, as reported in Friday's edition of the Troubled Company
Reporter, will pay $33,200,000 to settle its Surety Bond
Obligations.
SAFECO, in business since 1923, is a Fortune 500 company based
in Seattle that sells insurance and related financial products
through more than 17,000 independent agents and financial
advisors.
ENRON CORP: Chubb Settles JPMorgan Related Surety Bond Claim
------------------------------------------------------------
The Chubb Corporation (NYSE: CB) settled JPMorgan Chase's Enron-
related surety bond claim against Chubb for $95.8 million. This
includes 60% of the surety bonds' face amount, partially offset
by JPMorgan Chase's agreement to purchase Chubb's claims against
the Enron bankruptcy estate for 13 cents on the dollar. The
effective amount of the settlement is approximately 52% of the
claim.
"Although we are convinced that our case was very strong, we
decided to settle the suit for approximately half the amount of
the claim in order to avoid the uncertainty of a jury verdict
and the expense of the inevitable appeals that would follow,"
said John D. Finnegan, President and CEO of Chubb.
Because Chubb had reserved the entire amount of JPMorgan Chase's
claim in the fourth quarter of 2001, Thursday's settlement will
result in a credit to Chubb's 2002 fourth quarter earnings of
approximately $88 million pre-tax, or $57 million after-tax.
Chubb said that it is in the process of completing its year-end
financial review and that it plans to announce fourth quarter
earnings in early February 2003.
ENRON: Hartford Participates in Surety Settlement with JPMorgan
---------------------------------------------------------------
The Hartford Financial Services Group, Inc., (NYSE: HIG)
participated, along with several other insurance carriers, in a
settlement with J.P. Morgan Chase & Co., regarding litigation
relating to the Enron bankruptcy.
Under the settlement, The Hartford will pay $21 million and
convey related bankruptcy rights to J.P. Morgan Chase. The
settlement payment will be drawn entirely from the company's
existing reserves.
The Hartford (NYSE: HIG) is one of the nation's largest
investment and insurance companies, with 2001 revenues of $15.1
billion. As of Sept. 30, 2002, The Hartford had assets of $175.5
billion and shareholders' equity of $10.9 billion. The company
is a leading provider of investment products, life insurance and
group benefits; automobile and homeowners products; business
property and casualty insurance; and reinsurance. The Hartford's
Internet address is http://www.thehartford.com
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders
reports, are trading at 12 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1
for real-time bond pricing.
EQUITEX INC: Shareholders Approve Proposed 1-For-6 Reverse Split
----------------------------------------------------------------
Equitex, Inc., (Nasdaq:EQTX) said its stockholders elected five
directors and approved two proposals at its annual meeting of
stockholders held on December 27, 2002, in Denver, Colorado.
At the meeting, Messrs. Henry Fong, Russell Casement, Aaron
Grunfeld, Joseph Hovorka and James Welbourn were re-elected to
serve on the Company's board of directors. The stockholders also
approved a proposal to authorize a one share for six shares
reverse split of the Company's $0.02 par value common stock as
well as the appointment of Gelfond Hochstadt Pangburn, P.C., to
serve as the Company's auditors for the year ended December 31,
2002.
While a proposal to effect a one share for six shares reverse
stock split was approved by the Company's stockholders at the
meeting, the Company has not set a record date and has placed
the proposed split on hold until further notice.
Equitex, Inc., is a holding company operating through its wholly
owned subsidiaries Nova Financial Systems and Key Financial
Systems of Clearwater, Florida and Chex Services of Minnetonka,
Minnesota as well as its majority owned subsidiary Denaris
Corporation. Nova and Key design, market and service credit card
products. Chex Services provides comprehensive cash access
services to casinos and other gaming facilities. Denaris
Corporation was recently formed to provide stored value card
services.
At September 30, 2002, Equitex Inc.'s balance sheet shows that
total current liabilities exceeded total current assets by about
$4 million.
GENTEK: Taps ThorntonGroutFinnigan as Special Canadian Counsel
--------------------------------------------------------------
GenTek Inc., and its debtor-affiliates, sought and obtained the
Court's authority to employ ThorntonGroutFinnigan LLP as special
counsel to perform necessary services and provide legal advice
in Canada in connection with these cases, nunc pro tunc to
October 31, 2002.
"Given the ownership and complex corporate structure of the
Debtors, and the interconnectedness of the Debtors' interrelated
multi-company business enterprises, centralized cash management
systems and shared financing arrangements with third parties,
GenTek holds inter-company claims against and or equity
interests in other Debtors," Matthew R. Friel, GenTek's Vice
President, Chief Financial Officer and Treasurer, relates. In
addition, as a result of an assignment by Bank of Nova Scotia to
GenTek of certain secured claims and related security rights
against Noma Company, there is a potential for conflicts of
interest between GenTek and the other debtors including Noma
Company, according to Mr. Friel.
GenTek selected TGF as its counsel because of the firm's
extensive general experience and knowledge, Mr. Friel explains.
In particular, TGF is an expert in the field of debtors' and
creditors' rights and business reorganizations under the
Bankruptcy and Insolvency Act (Canada) and the Companies'
Creditors Arrangement Act (Canada). The firm is also
proficient, experienced and knowledgeable in practicing before
the Ontario Superior Court of Justice (Commercial List). The
firm is also located near the Ontario Court, enabling it to
respond quickly to emergency hearings and other emergency
matters in that Court.
Aside from services and advice with respect to Canadian legal
issues, TGF is also expected to:
(a) represent GenTek in connection with status, treatment and
disposition of inter-Debtor claims asserted by or against
it in Canada;
(b) represent GenTek in connection with situations,
transactions, litigation and other circumstances posing
any apparent, potential or actual conflict of its
interest with any other Debtor, including without
limitation, any inter-Debtor, intercompany or third party
funding, financing and adequate protection arrangements
and facilities in Canada;
(c) represent GenTek, and as appropriate assist the General
Bankruptcy Counsel and other Special Counsel representing
GenTek without the unnecessary duplication of services in
connection with the drafting of a disclosure statement to
accompany a plan of reorganization. TGF will also take
part in formulating, negotiating, confirming and
consummating a plan or plans of reorganization in
connection with any contemplated sales or acquisitions of
assets and business combinations, including negotiating
asset, stock purchase, merger or joint venture
agreements, evaluating competing offers, drafting and
negotiating appropriate corporate documents with respect
to those proposed transactions. TGF will consult GenTek
in connection with closing of those transactions;
(d) attend meetings and participate in negotiations with
respect to those transactions;
(e) appear before Canadian Courts, as well as in the Delaware
Court, and any district, appellate, state or foreign
courts and the U.S. Trustee with respect to matters
relating to the transactions and the Chapter 11 cases;
and
(f) perform all other necessary legal services and provide
all other necessary legal advice with respect to Canadian
legal issues in connection with the proceedings.
GenTek will compensate TGF for its services on an hourly basis
and reimburse the actual and necessary expenses that TGF incurs.
TGF's customary hourly rates are:
Professional Rate (in CDN$)
------------ --------------
Partner $450 - 525
Associates 190 - 330
Articling students 115
Law clerks 137.50
In Ontario, law school graduates must work as an intern, or
"articling student", for a ten-month period in order to be
eligible to be called to the Bar.
Robert I. Thornton, a partner at TGF, assures the Court that the
firm does not have any connection with or any interest adverse
to GenTek, the other Debtors, their creditors, or any other
party-in-interest, or their attorneys or accountants. (GenTek
Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
GLIATECH: Inks Definitive Pact to Sell Assets to Wright Medical
---------------------------------------------------------------
Wright Medical Group, Inc., entered into a definitive agreement
to purchase all of the assets associated with Gliatech Inc.'s,
ADCON(R) Gel technology, subject to final approval under
Gliatech's Bankruptcy Court proceedings.
If ultimately approved and finalized, it is anticipated that
this transaction would be completed sometime during the first
quarter of 2003, although there are no assurances this will
occur. Upon a final approval of the pending transaction by the
Court, the Company would expect to provide a detailed
announcement discussing this technology and its benefits to the
Company's current and future biomaterials strategies. If
completed, excluding any non-recurring items, this transaction
is not expected to result in a significant impact to the
Company's 2003 operating results or financial position.
Wright Medical Group, Inc., is a global orthopaedic device
company specializing in the design, manufacture and marketing of
reconstructive joint devices and bio-orthopaedic materials. The
Company has been in business for over fifty years and markets
its products in over 40 countries worldwide. For more
information about Wright Medical, visit its Web site at
http://www.wmt.com
Gliatech Inc., is engaged in the discovery and development of
biosurgery and pharmaceutical products. The Company filed for
Chapter 11 Reorganization on May 9, 2002, in the U.S. Bankruptcy
Court for the Northern District of Ohio (Cleveland).
GOLF TRUST OF AMERICA: Bank Lenders Extend Credit Agreement
-----------------------------------------------------------
Golf Trust of America, Inc., (AMEX:GTA) entered into a Second
Amendment to its Second Amended and Restated Credit Agreement
with its senior bank lenders.
The amendment extends the repayment date for all loans
outstanding under the Credit Agreement from December 31, 2002
until June 30, 2003. The current principal balance outstanding
under the Credit Agreement is $69.0 million.
Golf Trust of America, Inc., is a real estate investment trust
involved in the ownership of high-quality golf courses in the
United States. The Company currently owns an interest in 16
(eighteen-hole equivalent) golf courses.
* * *
In its SEC Form 10-Q filed on November 14, 2002, the Company
reported:
"On February 25, 2001 our board of directors adopted, and on May
22, 2001 our common and preferred stockholders approved, a plan
of liquidation for our Company. The events and considerations
leading our board to adopt the plan of liquidation are
summarized in our Proxy Statement dated April 6, 2001, and in
our most recent Annual Report on Form 10-K. The plan of
liquidation contemplates the sale of all of our assets and the
payment of (or provision for) our liabilities and expenses, and
authorizes us to establish a reserve to fund our contingent
liabilities. The plan of liquidation gives our board of
directors the power to sell any and all of our assets without
further approval by our stockholders. However, the plan of
liquidation constrains our ability to enter into sale agreements
that provide for gross proceeds below the low end of the range
of gross proceeds that our management estimated would be
received from the sale of such assets absent a fairness opinion,
an appraisal or other evidence satisfactory to our board of
directors that the proposed sale is in the best interest of our
Company and our stockholders.
"At the time we prepared our Proxy Statement soliciting
stockholder approval for the plan of liquidation, we expected
that our liquidation would be completed within 12 to 24 months
from the date of stockholder approval on May 22, 2001. While we
have made significant progress, our ability to complete the plan
of liquidation within this time-frame and within the range of
liquidating distributions per share set forth in our Proxy
Statement is now far less likely, particularly insofar as the
disposition of our lender's interest in the Innisbrook Resort is
concerned. With respect to our dispositions, as of November 8,
2002, we have sold 25 of our 34 properties (stated in 18-hole
equivalents, 31.0 of our 47.0 golf courses). In the aggregate,
the gross sales proceeds of $229.5 million are within the range
originally contemplated by management for those golf courses
during the preparation of our Proxy Statement dated April 6,
2001, which we refer to as the Original Range; however, two of
our properties (2.5 golf courses) that were sold in 2001 were
sold for a combined 1%, or $193,000, less than the low end of
their combined Original Range. The sales prices of the assets
sold in 2002 have been evaluated against Houlihan Lokey Howard &
Zukin Financial Advisors, Inc., or Houlihan Lokey's March 15,
2002, updated range (discussed in further detail below), which
we refer to as the Updated Range. Of the three properties (5.0
golf courses) sold in 2002, one (1.5 golf courses) was below the
low end of the Updated Range by 4%, or $150,000. Nonetheless,
considering the environment in which we and the nation were
operating in at that time, our board determined that the three
transactions closed at prices below the Original Range
(including the one transaction that closed below the Updated
Range) were fair to, and in the best interest of, our Company
and our stockholders.
"The golf industry continues to face declining performance and
increased competition. Two of the economic sectors most affected
by the recession have been the leisure and travel sectors of the
economy. Golf courses, and particularly destination-resort golf
courses, are at the intersection of these sectors. Accordingly,
we believe our business continues to be significantly impacted
by the economic recession. As reported in our most recently
filed Form 10-K, on February 13, 2002, we retained Houlihan
Lokey to advise us on strategic alternatives available to seek
to enhance stockholder value under our plan of liquidation. In
connection with this engagement Houlihan Lokey, reviewed (i) our
corporate strategy; (ii) various possible strategic alternatives
available to us with a view towards determining the best
approach of maximizing stockholder value in the context of our
existing plan of liquidation, and (iii) other strategic
alternatives independent of the plan of liquidation. Houlihan
Lokey's evaluation of Innisbrook valued this asset under two
different scenarios, both of which assumed that we would obtain
a fee simple interest in the asset as a result of successfully
completing a negotiated settlement or foreclosing on our
mortgage interest. Under the first scenario, Houlihan Lokey
analyzed immediate liquidation of the asset, and under the
second scenario, Houlihan Lokey analyzed holding the asset for a
period of approximately 36-months ending not later than December
31, 2005 to seek to regain the financial performance levels
achieved prior to 2001. In a report dated March 15, 2002,
subject to various assumptions, Houlihan Lokey's analysis
concluded that we may realize between $45 million and $50
million for the Innisbrook asset under the first scenario, and
between $60 million and $70 million under the second scenario.
"Following receipt of Houlihan Lokey's letter on March 15, 2002,
and after consideration of other relevant facts and
circumstances then available to us, our board of directors
unanimously voted to proceed with our plan of liquidation
without modification. We currently expect that liquidating
distributions to our common stockholders will not begin until we
sell our interest in the Innisbrook Resort, which might not
occur until late 2005. All of our other assets were valued and
are recorded on our books at their estimated immediate
liquidation value and are being marketed for immediate sale.
"As of November 8, 2002, we owed approximately $70.7 million
under our credit agreement, which matures on December 31, 2002.
We are currently seeking to obtain our lenders' consent to
further extend the term of our credit agreement before it
matures. If our lenders do not consent to our request for a
further extension and we are not able to secure refinancing
through another source, we might be compelled to sell assets at
further reduced prices in order to repay our debt in a timely
manner. We recently obtained a preliminary indication of the
lenders' willingness to extend the term of our credit facility
until June 30, 2003."
GOODYEAR TIRE: S&P Lowers Rating on Class A-1 Notes Down to BB-
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on
Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-
Backed Series 2001-34 Trust's class A-1 certificates and removed
it from CreditWatch with negative implications, where it was
placed on November 4, 2002.
The rating action follows the lowering and removal from
CreditWatch of Goodyear Tire & Rubber Co.'s long-term corporate
credit and senior unsecured debt ratings on December 24, 2002.
Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-
Backed Series 2001-34 Trust is a swap-independent synthetic
transaction that is weak-linked to the underlying collateral,
Goodyear Tire & Rubber Co.'s debt. The rating action reflects
the credit quality of the underlying securities issued by
Goodyear Tire & Rubber Co.
Rating Lowered And Removed From Creditwatch Negative
Corporate Backed Trust Certificates
Goodyear Tire & Rubber Note-Backed Series 2001-34 Trust
$43.628 million corporate bond-backed certs
Rating
Class To From
A-1 BB- BB+/Watch Neg
HOLT WILLIAMSON: One Day in the 4th Cir. Makes a Huge Difference
----------------------------------------------------------------
The United States Court of Appeals for the Fourth Circuit issued
a decision rejecting an appeal arising out of Holt Williamson
Manufacturing Company's bankruptcy proceeding (Bankr. E.D.N.C.,
Case No. BK- 91-4878-8-ATS) because the appellant filed a notice
of appeal one day late. The Appellant wanted the Fourth Circuit
to review attempts by Cumberland County and The City of
Fayetteville to collect delinquent taxes.
The Fourth Circuit says that parties are accorded thirty days
after the entry of the district court's final judgment or order
to note an appeal, Fed. R. App. P. 4(a)(1)(A), unless the
district court extends the appeal period under Fed. R. App.
P. 4(a)(5) or reopens the appeal period under Fed. R. App.
P. 4(a)(6). This appeal period is "mandatory and
jurisdictional." Browder v. Director, Dep't of Corr., 434 U.S.
257, 264 (1978) (quoting United States v. Robinson, 361 U.S.
220, 229 (1960)). The district court's order was entered on the
docket on July 23, 2002. The notice of appeal was filed on
August 23, 2002. One day too late and the Fourth Circuit says
the appeal's dismissed.
IMPSAT FIBER: Offering Series A & B Senior Guaranteed Notes
-----------------------------------------------------------
IMPSAT Fiber Networks, Inc., intends to offer, under the terms
and subject to the conditions set forth in its Disclosure
Statement Pursuant to Section 1125 of the Bankruptcy Code,
dated October 23, 2002, and an accompanying Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code,
dated October 23, 2002, Series A 6% Senior Guaranteed
Convertible Notes due 2011 in an aggregate principal amount of
$67,531,000, and Series B 6% Senior Guaranteed Convertible Notes
due 2011 in an aggregate principal amount of $ $23,906,000. The
Plan was confirmed on December 16, 2002 pursuant to an Order of
the United States Bankruptcy Court for the Southern District Of
New. The Securities will be issued pursuant to substantially
identical indentures to be qualified under Form T-3.
The Securities are being offered by the Company in reliance on
an exemption from the registration requirements of the
Securities Act of 1933, as amended, afforded by Section 1145 of
Title 11 of the United States Code, as amended. The Plan
contemplates, among other things, the restructuring of the
outstanding debt of IMPSAT in part through the issuance by the
Company of the Securities.
Each Series of Securities (i) matures as to principal and
interest on the eighth anniversary of the date the Securities
are issued; (ii) bears interest, payable semiannually, at an
interest rate of six percent (6.0%) per annum beginning on the
second anniversary of the Issue Date until payment of the
principal amount shall have been made or duly provided for;
(iii) will be guaranteed as to payment of principal and
interest by IMPSAT S.A., the Company's wholly-owned Argentine
subsidiary (iv) will be redeemable in part up to 35% of the
principal amount of such Series of Securities at the Company's
option at any time prior to the third anniversary of the Issue
Date for a redemption price equal to 100% of the Claimed
Amount of the Securities (provided that at least 65% of the
principal amount of the Series of Securities remain outstanding
after such redemption); (v) will be mandatorily redeemable by
each holder thereof in the event of a change of control of the
Company at a redemption price of 101% of the Claimed Amount of
such Series of Securities (unless such right is waived by 66-
2/3% of the then outstanding aggregate principal amount of such
Series of Securities); and (vi) is convertible, into shares of
the Company's New common stock (as defined in the Plan) based on
the Conversion Price.
DebtTraders says that Impsat Corp.'s 13.750% bonds due 2005
(IMPT05ARR1) are trading between 2 and 6. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=IMPT05ARR1
for real-time bond pricing.
INSILCO TECH: Turning to Gleacher Partners for Financial Advice
---------------------------------------------------------------
Insilco Technologies, Inc., and its debtor-affiliates ask for
permission from the U.S. Bankruptcy Court for the District of
Delaware to employ and retain Gleacher Partners LLC as Financial
Advisors for the duration of their chapter 11 cases.
Gleacher Partners is a world-class investment advisory firm that
provides strategic advice and transaction execution services to
corporations, principally related to mergers and acquisitions
and restructurings.
Specifically, Gleacher Partners will:
i) evaluate the Debtors' business, operations and
prospects;
ii) assist the Debtors in the developments of the business
plan;
iii) analyze the Debtors' financial liquidity and financing
requirements;
iv) analyze various restructuring scenarios and the impact
of such scenarios on the value of the Debtors' and the
recoveries of those stakeholders affected by the
Restructuring;
v) evaluate the Debtors' debt capacity and alternative
capital structures;
vi) analyze a theoretical range of values of the Debtors on
a going concern basis;
vii) develop negotiating strategies and assist in negotiating
with the Debtors' creditors and other interested parties
with respect to a potential restructuring;
viii) evaluate any securities to be issued by the Debtors in a
restructuring;
ix) assist in the preparation of documentation in connection
with a restructuring;
x) present to the Debtors' Board of Directors, creditor
groups or other interested parties, as appropriate;
xi) expert witness testimony, as necessary, in any
proceeding before the Court; and
xii) other advisory services as are customarily provided in
connection with the analysis and negotiation of a
restructuring, as reasonably requested and mutually
agreed.
The Debtors agree to pay Gleacher Partners:
i) A $125,000 Monthly Advisory Fee; and
ii) A $3,000,000 Restructuring Fee.
Insilco Technologies, Inc., a leading global manufacturer and
developer of highly specialized electronic interconnection
components and systems, serving the telecommunications, computer
networking, electronics, automotive and medical markets, filed
for chapter 11 petition on December 16, 2002. Pauline K. Morgan,
Esq., Sharon M. Zieg, Esq., Maureen D. Luke, Esq., at Young,
Conaway, Stargatt & Taylor and Constance A. Fratianni, Esq.,
Scott C. Shelley, Esq., at Shearman & Sterling, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from its creditors, it listed $144,263,000 in
total assets and $611,329,000 in total debts.
INT'L TOTAL SERVICES: Court to Consider Plan on January 28, 2002
----------------------------------------------------------------
On December 10, 2002, the U.S. Bankruptcy Court for the Eastern
District of New York ruled on the adequacy of International
Total Services and its debtor-affiliates' Disclosure Statement.
The Court found that the disclosure document contains sufficient
information to explain the Debtors' Plan as creditors are asked
to vote to accept or reject the Plan.
A hearing to consider the confirmation of the Debtors' Plan and
any objections, proposed amendments or modification thereto, is
scheduled for January 28, 2003, at 10:00 a.m., before the
Honorable Conrad B. Duberstein.
Any objections to confirmation of the Plan must be filed and
received by the Court on or before January 10, 2003, and served
upon:
i. Counsel for the Debtors
King and Spalding
1185 Avenue of the Americas
New York, New York 10036-4003
Attn: Scott Eckas, Esq.
ii. Office of the United States Trustee
33 Whitehall Street
21st Floor
New York, NY 10004
Attn: Diana Adams, Esq.
iii. Counsel for the Committee
Thelen, Reid & Priest LLP
875 Third Avenue
New York, NY 10022
Attn: Craig E. Freeman, Esq.
International Total Services Inc., filed for Chapter 11
protection on September 13, 2001. Because the Company did not
believe that it could reduce administrative costs enough to
offset the elimination of pre-board screening revenues and
margin due to the Federal Takeover Legislation, in early 2002,
the Company, through the Bankruptcy Court, marketed and sold the
Aviation Services business, the Commercial Security business and
the United Kingdom operations.
INTERNET CAPITAL: Sells Logistics.com Assets to Manhattan Assoc.
----------------------------------------------------------------
Internet Capital Group, Inc. (Nasdaq: ICGE), a leading business-
to-business e-commerce company, said that Manhattan Associates
(Nasdaq: MANH) has completed the purchase of substantially all
of the assets of Logistics.com, an Internet Capital Group
partner company. Based on the purchase price of approximately
$20 million, ICG expects to receive net proceeds of
approximately $12 million after repayment of certain outstanding
debt and other costs and liabilities. Approximately $1.5
million of the net proceeds will remain in escrow for one year.
"The compelling synergies between Logistics.com's Transportation
Management System and Manhattan's extended supply chain
execution solutions not only expand Manhattan's suite of
products, but position Logistics.com's technology within a
comprehensive and market-leading offering," said Walter Buckley,
chairman and CEO of Internet Capital Group. "We believe that
given today's environment, we received an attractive valuation
for the Company and will reallocate capital derived from
proceeds of the sale to continue to support our Core partner
companies and our primary goal of driving those companies to
profitability and success."
Internet Capital Group, Inc. -- http://www.internetcapital.com
-- is an Internet company actively engaged in business-to-
business e-commerce through a network of partner companies. The
Company's primary goal is to build companies that can obtain
number-one or number-two positions in their respective markets
by delivering software and services to help businesses increase
efficiency and reduce costs. It provides operational assistance,
capital support, industry expertise, and a strategic network of
business relationships intended to maximize the long-term market
potential of its partner companies. Internet Capital Group is
headquartered in Wayne, Pa.
Internet Capital's September 30, 2002 balance sheet shows a
total shareholders' equity deficit of about $21 million.
KEMPER INSURANCE: President & COO William D. Smith Retires
----------------------------------------------------------
The Kemper Insurance Companies said its president and chief
operating officer, William D. Smith, has decided to retire
effective year-end. An Office of the Chairman has been created
to help lead the company.
"We thank Bill for the contributions he has made to the company
during his six years with us," said Kemper Chairman and CEO
David B. Mathis. "We wish him well in his future endeavors."
Kemper Chairman and CEO David B. Mathis.
Mathis will postpone his own retirement to continue as Kemper's
chairman and CEO for the foreseeable future. The chief operating
officer position will remain vacant for the time being. Mathis
has formed an Office of the Chairman to focus on strategic
direction and ongoing operations issues, effective immediately.
Joining Mathis in the Office of the Chairman are: Dennis R.
Brand, senior vice president and chief risk officer, Patricia A.
Drago, executive vice president and leader of Kemper's Client
Services Group, William A. Hickey, executive vice president and
chief financial officer, Robert A. Lindemann, senior vice
president and president of American Manufacturers' Mutual
Insurance Company and Gary J. Tully, senior vice president and
president of Kemper Financial Protection and Kemper
International.
"This is an outstanding team of strategic thinkers with strong
leadership skills, broad industry experience and a focus on
profitability and customer service," said Mathis. "I have
confidence in them and their ability to assist me in running the
company."
The Kemper Insurance Companies is a leading provider of
commercial property/casualty insurance headquartered in Long
Grove, Ill. For more information about Kemper, visit
http://www.kemperinsurance.com
As reported in Troubled Company Reporter's Friday Edition, Fitch
Ratings said it is maintaining its Rating Watch Negative status
for the ratings of the Kemper Insurance Companies. Current
ratings assigned include a 'BBB' insurer financial strength
rating for the three primary insurance companies, and a 'BB-'
rating for the surplus notes issued by Lumbermens Mutual
Casualty Company, the lead property-casualty insurance
underwriter of the group.
The rating actions reflected Fitch's view that there was a
material deterioration in the financial profile of the
organization, relating primarily to a decline in KIC's capital
as reflected by a 30% decline in policyholders' surplus at
Lumbermens in 2001 due in large part to reserve increases
recorded in the fourth quarter.
KINETIC CONCEPTS: Suit Settlement Prompts S&P's Rating Upgrades
---------------------------------------------------------------
Standard & Poor's Ratings Services removed its corporate credit
and senior secured ratings of hospital supplier Kinetic Concepts
Inc. from CreditWatch where they were placed on October 1, 2002.
At the same time Standard & Poor's raised the ratings to 'B+'
from 'B' and raised its subordinated debt rating for KCI
to 'B-' from 'CCC+'. The outlook is stable.
The action followed the announcement that KCI had reached a
settlement of its antitrust lawsuit against Hillenbrand
Industries Inc. and its Hillenbrand's Hill-Rom Co. Inc. unit.
The suit was then dismissed in federal court in San Antonio,
Texas. Under terms of the settlement, Hillenbrand paid KCI $175
million initially, to be followed by an additional payment of
$75 million in a year. The settlement promises to improve KCI's
liquidity and address near-term debt maturities.
KCI had total debt as of Sept. 30, 2002, of approximately $520
million.
The suit charged Hillenbrand with attempting to monopolize the
specialty hospital bed market.
"Kinetic Concepts' uncertain ability to deploy its new-found
financial capacity will remain the dominant factor in the rating
over the next few years," said Standard & Poor's credit analyst
Jordan Grant.
KCI is a leading manufacturer of specialty hospital surfaces and
noninvasive medical devices, many of which are proprietary. The
company's business is bolstered by established relationships
with several group-purchasing organizations and by the growth of
VAC, a device used to improve the healing of chronic wounds.
LANDMARK HOLDING: A Very Binding Real Estate Contract Story
-----------------------------------------------------------
Landmark Holding Company, Ltd., a Chapter 11 debtor in
Bankruptcy Case No. 02-42087 pending before the U.S. Bankruptcy
Court for the District of Minnesota, brought an adversary
proceeding (Adv. Pro. No. 02-4170) against WLW Real Estate,
L.L.P. to compel specific performance of a prepetition real
estate purchase agreement notwithstanding a long list of
misdeeds WLW says should allow it to walk away from the
contract. Judge Robert J. Kressel, following a December 2,
2002, trial, rules that (1) Landmark's alleged fraud, in leading
WLW to believe that it had made a deposit required under the
purchase agreement and in allegedly concealing its poor
financial status and leading WLW to believe that any delay in
closing was due to circumstances associated with the September
11th terrorist attack, was not a fraud in inducement and does
relieve WLW of its obligations to perform under the contract;
(2) WLW failed to establish impossibility as a defense; (3)
Landmark is entitled to specific performance; and (4) WLW waived
any unclean hands defense.
Joseph W. Dicker, Esq., in Minneapolis represents Landmark and
Steven E. Ness, Esq., at Henretta, Cross, Ness & Dolan, in
Minnetonka, represents WLW in this dispute.
Background
In February of 2001, Landmark entered into a purchase agreement
with WLW to purchase approximately 178 acres of undeveloped
farmland located near Montrose, Minnesota for the purpose of
developing single and multi-family residential dwellings. The
original purchase price was $970,000. WLW was to retain
approximately twenty acres as farmland and an additional fifteen
acres as commercial property.
The purchase agreement required Landmark to escrow $20,000 with
the Dakota County Abstract. Landmark never made the deposit.
Landmark maintains that the $20,000 was not paid into escrow
because the development possibility of the property was lessened
due to the discovery that the land was not contiguous to the
City of Montrose. The purchase agreement scheduled a closing
date on or before September 20, 2001. The agreement, which
allowed Landmark full access to the subject property to conduct
survey work required to submit plans to the City of Montrose for
residential development, was contingent upon annexation by the
City of Montrose and upon Landmark gaining final plat approval
from the City of Montrose, Marysville Township, and Wright
County.
From February through September 2001, Landmark worked on the
annexation process, engineering and hydrology studies, surveys,
and plat designs. Meanwhile, on May 7, 2001, Landmark filed for
Chapter 11 relief. It did not list the purchase agreement or
the subject property as an asset, and did not notify WLW of its
bankruptcy filing. Michael Crosby, the President of Landmark,
testified that he did not include the purchase agreement in his
schedule of assets because he did not know it was an asset, and
there was a question about whether the purchase agreement would
ever be performed and thus viable. He now admits that the
failure to list the debtor's interest in the property was a
mistake. The case was dismissed on August 22, 2001.
Because the necessary development work was not complete, the
September 30, 2001 closing did not occur, the annexation process
took substantially longer than originally contemplated, and the
initial term of the purchase agreement expired. During November
and December of 2001, Landmark negotiated the terms of a joint
venture for development of the commercial portion of the
property with Bridgeland Development Company. Under this
agreement, Landmark agreed to sell the subject property to
Bridgeland. Landmark thereafter undertook negotiations with WLW
to amend the purchase agreement. In February of 2002, the
purchase agreement was amended by increasing the purchase price
to $1,015,000 and extending the closing date until March 31,
2002. The $20,000 Landmark was required to escrow was not
mentioned in the amended purchase agreement. However, the
parties negotiated a "side deal" in consideration for the
amended purchase agreement, in which Landmark would pay $20,000
to WLW. WLW wanted the $20,000 excluded from the amended
purchase agreement so that the bank holding the mortgage on the
WLW property would not know about the payment of this sum.
Landmark's attorney and WLW assumed that the $20,000 deposit had
been made and the side deal discussed in their correspondence
called for the deposit to be released to WLW. Landmark, however,
intended to simply pay the $20,000. Because payment was
contingent on certain events which did not occur, the payment
was never made. From October through March 2002, Landmark
continued to work on the annexation, platting and related
issues.
The March 31, 2002 closing did not occur. WLW was notified that
a closing was scheduled by Landmark for April 12, 2002. However,
Landmark failed to appear at that closing, and the sale was not
completed. From February through June of 2002, WLW was unable
to pay its mortgage payments on the property, and it executed an
agency agreement with Shingobee Realtors for the sale of the
Montrose property. On June 12, 2002, WLW signed a purchase
agreement with Lyman Development, Inc., for substantially the
same property for approximately $1,700,000. This purchase
agreement contemplated a closing in February or March of 2003.
Determined to cancel the land contract with Landmark, WLW
commenced statutory cancellation proceedings. In May of 2002,
it served on Landmark by publication a Notice of Cancellation of
the purchase agreement. This Notice required Landmark to close
on or before June 15, 2002.
On June 14, 2002, Landmark filed a second petition under Chapter
11. On July 1, 2002, Landmark filed a motion to assume the
purchase agreement and the Bridgeland sale agreement. On July 8,
2002, WLW filed a motion to dismiss Landmark's case because
Landmark did not notify WLW of its first bankruptcy, and because
the $20,000 escrow money had never been paid. On this same date,
WLW and Lyman Development Co. amended their purchase agreement
by extending the closing deadline until WLW successfully
completed statutory cancellation proceedings with Landmark. On
July 15, 2002, WLW's and Landmark's motions were settled by a
stipulation, which raised the purchase price again to $1,085,000
and established a closing date on or before August 10, 2002.
Landmark scheduled a closing for August 2, 2002. Before closing,
Landmark discovered that three mechanic's liens were filed
against the property in May through June of 2002. The liens
were for work ordered by WLW on the property it would retain and
such liens, as of August 2, 2002, totaled approximately $47,696.
During this time, Landmark negotiated with the bank that held
the mortgage for a release of its mortgage. Although no final
agreement was reached with the bank, the bank agreed in
principle to release its mortgage if it received all of the net
proceeds of the sale. Landmark also negotiated with the
mechanic's lien claimants in an attempt to facilitate closing.
WLW made only perfunctory attempts to resolve these issues and
did not appear at closing.
Subsequently, additional mechanic's liens were filed. Recent
litigation between WLW and the mechanic's lien holders has
settled the liens for $107,000, although it is unclear whether
they remain unpaid. Litigation between WLW and the bank holding
the mortgage on the WLW property has been settled to agree on a
debt to the bank for $122,700.
The Issues
Landmark argues that it is entitled to specific performance
directing WLW to perform under the purchase agreement. WLW
asserts bad faith (in the form of fraud), inequity, unclean
hands, and impossibility to argue why Landmark is not entitled
to specific performance. WLW seems to confuse the issue of
whether the contract is enforceable with the issue of whether
specific performance is the appropriate remedy. Specific
performance is an equitable remedy but in order for a court to
decide whether that remedy is appropriate, the first issue that
must be addressed is whether the underlying contract is
enforceable. Fraud and impossibility are defenses to the
enforcement of the purchase agreement between Landmark and WLW.
Inequity and the defense of unclean hands are factors that
relate to the issue of whether the remedy of specific
performance should be granted.
Judge Kressel finds that Landmark is entitled to enforcement of
its contract and is also entitled to the equitable remedy of
specific performance.
Judge Kressel's Discussion
There Was No Fraud
WLW alleges that Landmark committed fraud in a variety of ways.
First, WLW argues that Landmark knew for a period of over one
and one-half years that it had not deposited the $20,000
required by the purchase agreement, yet WLW states it was
led to believe that Landmark had deposited the $20,000. WLW
argues that it relied on this misrepresentation by Landmark to
believe there was a binding agreement between the parties when
in fact there was not a binding agreement. WLW further argues
that in an effort to disguise its poor financial status,
Landmark did not include the purchase agreement with WLW as an
asset in its May 2001 Chapter 11 bankruptcy proceeding and did
not notify WLW of the filing WLW argues that the failure of
Landmark to notify it of the bankruptcy filing led WLW to
believe that the September 11 terrorist attack, rather than the
bankruptcy, was the reason why Landmark could not close by
September 30, 2001.
First, Judge Kressel notes that WLW must prove fraudulent
inducement in the formation of the contract in order to
discharge its obligation to perform that contract. To establish
fraudulent inducement, there must be (1) a representation; (2)
the representation must be false; (3) the representation must
have to do with a present or past fact; (4) that fact must be
material; (5) it must be susceptible of knowledge; (6) the
representer must know it to be false or in the alternative, must
assert it as of his own knowledge without knowing whether it is
true or false; (7) the representer must intend to have the other
person induced to act, or justified in acting upon it; (8) that
person must be so induced to act or so justified in acting; (9)
that person's action must be in reliance upon the
representation; (10) that person must suffer damage; (11) that
damage must be attributable to the misrepresentation, that is,
the statement must be a proximate cause of the injury. M.H. v.
Caritas Family Services, 488 N.W.2d 282, 289 (Minn. 1992)
(citing Florenzano v. Olson, 387 N.W.2d 168, 174 n. 4 (Minn.
1986)); Digital Resource, L.L.C. v. Abacor, Inc. (In re Digital
Resource, L.L.C.), 246 B.R. 357, 367 (8th Cir. BAP 2000).
WLW has not proven the elements of fraudulent inducement.
First, Landmark did not make a false representation of present
or past fact with the intent to induce WLW to enter into the
purchase agreement. All of the acts WLW alleges are fraudulent
occurred after the purchase agreement was entered into. In any
event, Landmark did not commit fraud.
First, while Landmark's failure to deposit the $20,000 may have
been a breach of the purchase agreement, it was not fraud.
Additionally, WLW waived that breach and any others committed by
Landmark when it entered into the court-approved stipulation on
July 15, 2002. "A party's continued recognition of a contract as
binding after the other party's alleged breach acts as a waiver
of that breach." Creative Communications Consultants, Inc. v.
Gaylord, 403 N.W.2d 654, 657 (Minn. App. 1987) (citing Wolff v.
McCrossan, 296 Minn. 141, 210 N.W.2d 41, 43 (1973)).
Landmark's failure to list the purchase agreement with WLW as an
asset on its bankruptcy schedules was not done with fraudulent
intent designed to induce WLW to act or forebear from acting.
Even if this omission was fraudulent, WLW did not suffer any
damage from it, due to the relatively quick dismissal of
Landmark's first bankruptcy case. Finally, even if fraudulent
misrepresentations were made by Landmark, there was no
justifiable reliance by WLW. Landmark's conduct was certainly
well known by WLW when it agreed to the court-approved
stipulation. "Claimed reliance that is without right, that is
unreasonable, or that is unjustified is in reality not reliance
at all since those elements are inherent to the concept of
reliance itself." Facility Planning, Inc. v. King (In re King),
68 B.R. 569, 572 n. 7 (Bankr. D.Minn. 1986). A party who may
avoid a contract for fraud ratifies it by accepting and
retaining the benefits of it. Proulx v. Hirsch Brothers, Inc.,
279 Minn. 157, 155 N.W.2d 907, 912 (1968).
WLW's Impossibility Argument Fails
WLW argues that the contract should not be enforced because of
the impossibility of performing it. The purchase agreement
requires WLW to transfer the property to Landmark free and clear
of all encumbrances, and requires Landmark to pay WLW $1,080,000
for the property. WLW's current obligation to its mortgagee is
$1,222,700 and mechanic's liens totaling $107,000 have been
filed on the property, and perhaps remain unpaid. WLW argues
that in order for it to transfer title to Landmark free and
clear of all encumbrances, it must pay an amount in excess of
$250,000 more than it is receiving from Landmark. Thus, WLW
argues, it cannot comply with the terms and conditions of the
stipulation.
In order for WLW's impossibility argument to succeed WLW must
prove that (1) performance of the contract is impracticable; (2)
without WLW's fault; and (3) by the occurrence of an event, the
nonconcurrence of which was a basic assumption on which the
contract was made. U.S. v. Winstar Corp., 518 U.S. 839, 904-905,
116 S.Ct. 2432, 135 L.Ed.2d 964 (1996) (quoting Restatement
(Second) of Contracts Sec. 261); Seaboard Lumber Co. v. U.S.,
308 F.3d 1283, 1295 (Fed.Cir.2002); City of Savage v. Formanek,
459 N.W.2d 173, 176 (Minn. App. 1990). "If the risk was
foreseeable, there should have been a provision for it in the
contract, and the absence of such a provision gives rise to the
inference that the risk was assumed." Winstar Corp., 518 U.S. at
905, 116 S.Ct. 2432 (quoting Lloyd v. Murphy, 25 Cal.2d 48, 54,
153 P.2d 47, 50 (1944)); see also Restatement (Second) of
Contracts Sec. 261. Increased cost of performance does not
ordinarily constitute impossibility. W.R. Grace and Co. v. Local
Union 759, Intern. Union of United Rubber, Cork, Linoleum and
Plastic Workers of America, 461 U.S. 757, 769, n. 12, 103 S.Ct.
2177, 76 L.Ed.2d 298 (1983); Megan v. Updike Grain Corp., 94
F.2d 551, 554 (8th Cir. 1938) (stating that the doctrine of
frustration or impossibility does not apply to a situation so as
to excuse performance where performance is not practically cut
off, but only rendered more difficult or costly); Oliver-
Electrical Mfg. Co. v. I.O. Teigen Const., 177 F.Supp. 572, 576
(D.C. Minn. 1959) (stating that even under the liberal view
tending to recognize great hardship as the equivalent of legal
impossibility, the impossibility must arise from facts the
promisor had no reason to anticipate) (emphasis added). The
defense of impossibility is traditionally unavailable where the
barrier to performance arises from the act of the party seeking
discharge. Winstar Corp., 518 U.S. at 895, 116 S.Ct. 2432.
The events which led to the alleged increased costs of
performing the contract were not only fully anticipated and
known by WLW, but such events were also occasioned by WLW.
Although the three mechanic's liens were filed on the WLW
property after the stipulation was entered into by WLW and
Landmark, WLW knew or should have known that such liens, as well
as additional subsequent liens, would be filed for work it
commissioned on the acres it sought to retain after the closing
with Landmark. WLW knew about the mortgage and its approximate
amount. In fact, from the very beginning the purchase price was
never enough to satisfy the mortgage. Clearly WLW contemplated
negotiations with the bank to release its mortgage on the
transferred acreage, while keeping its mortgage on the remaining
land, a resolution which the bank has entertained already. It is
also possible for WLW to use other assets or borrow money to
make up the shortfall. While complying with its
obligation may be unpleasant or expensive, it is not impossible.
The Debtor is Entitled to Specific Performance
Having held that the agreement is enforceable, Judge Kressel
turns to the issue of whether the remedy of specific performance
should be granted. Specific performance is an equitable remedy
which compels performance of a contract. 3 Dan B. Dobbs, Law of
Remedies 189-190 (2d ed. 1993). A request to compel the
specific performance of a contract is an application of the
sound discretion of the court. Pope Mfg. Co. v. Gormully, 144
U.S. 224, 237, 12 S.Ct. 632, 36 L.Ed. 414 (1892); Fred O. Watson
Co. v. United States Life Ins. Co. in City of New York, 258
N.W.2d 776, 778 (Minn. 1977). Courts consider five factors in
determining whether to grant specific performance of a real
estate purchase agreement: (a) the contract must be established
by clear, positive, and convincing evidence; (b) it must have
been made for adequate consideration and upon terms which are
otherwise fair and reasonable; (c) it must have been induced
without sharp practice, misrepresentation, or mistake; (d) its
enforcement must not cause unreasonable or disproportionate
hardship or loss to the defendants or to third persons; and (e)
it must have been performed in such a manner and by the
rendering of services of such a nature or under such
circumstances that the beneficiary cannot be properly
compensated in damages. Johnson v. Johnson, 272 Minn. 284, 137
N.W.2d 840, 847 (1965); Saliterman v. Bigos, 352 N.W.2d 494, 496
(Minn. App. 1984). Lack of mutuality of remedy alone does not
render specific performance inequitable. Hilton v. Nelsen, 283
N.W.2d 877, 881 (Minn. 1979).
Specific performance will not be decreed when it would be
inequitable. Buckley v. Patterson, 39 Minn. 250, 39 N.W. 490
(1888). A party does not have an automatic right to specific
performance as a remedy for breach of a contract, the court must
balance the equities of the case and determine whether the
equitable remedy of specific performance is appropriate. Pope
Mfg. Co., 144 U.S. at 237, 12 S.Ct. 632; Dakota County HRA v.
Blackwell, 602 N.W.2d 243, 244 (Minn.1999) (citing Boulevard
Plaza Corp. v. Campbell, 254 Minn. 123, 94 N.W.2d 273, 284
(1959)). It is a well-established rule that "unless he who
seeks the aid of equity in enforcing a contract for the
conveyance of land shall have been prompt, ready and eager to
perform upon his part and have exercised good faith and been
diligent, the relief demanded should be denied him." Boulevard
Plaza Corp., 94 N.W.2d at 283.
All of the factors used to determine whether specific
performance should be granted have been met by Landmark.
Landmark has demonstrated good faith and was ready and eager to
perform the contract according to the dictates of the court-
approved stipulation. Moreover, because the real estate at issue
is unique, damages will not provide Landmark with an adequate
remedy. As the Minnesota Supreme Court stated: Equitable relief
has usually been denied where the court in its discretion has
found the common law remedy to be adequate. Where, however, an
interest in land is involved, we have an exception to this rule
that is significant in illustrating the special status accorded
to land as distinguished from other forms of property. . . .
"Damages for the breach of a contract for the sale and purchase
of any interest in land is always considered inadequate, without
regard to the size, value or location of the land or the
possibility of getting other land substantially equivalent. The
crystallization of this rule is probably due historically to the
peculiar respect and consideration which has been accorded to
land in English law; its modern justification is that because
there is no open market for land either for the seller or buyer,
the number of instances where the buyer could get land
substantially as satisfactory or where the vendor could make a
ready sale to another purchaser is so small as to be
negligible." In short, inadequacy of damages is presumed and
proof thereof is not required. Shaughnessy v. Eidsmo, 222 Minn.
141, 23 N.W.2d 362, 368 (1946) (quoting Clark, Principles of
Equity, Sec. 42); see also Wilhite v. Skelton, 149 F. 67, 72
(8th Cir. 1906) (stating that an action for damages does not
afford an adequate remedy for breach of a contract to sell or
convey real estate because it will not place the parties in the
same situation in which they were before the agreement was made,
and it is not as prompt, complete, and efficient as in a suit in
equity for specific performance). Furthermore, Landmark has a
reciprocal obligation to sell the subject property to
Bridgeland. Money damages simply will not enable Landmark
to meet its obligations under its purchase agreement with
Bridgeland. Finally, there is insufficient evidence to show
that requiring WLW to perform under the contract would cause it
inequity, or disproportionate hardship.
WLW Waived Any Unclean Hands Defense
WLW argues that Landmark's unclean hands also must preclude my
granting Landmark specific performance. The equitable defense of
unclean hands, encapsulated in the maxim "one who comes into
equity must come with clean hands," is premised on withholding
judicial assistance from a party guilty of unconscionable
conduct. Fred O. Watson Co., 258 N.W.2d at 778. Under Minnesota
law, the plaintiff may be denied relief to or from conduct that
is fraudulent, illegal or unconscionable by reason of bad
motive, or where the result induced by his conduct will be
unconscionable either in the benefit to himself or the injury of
others. Johnson v. Freberg, 178 Minn. 594, 228 N.W. 159, 160
(1929); Foy v. Klapmeier, 992 F.2d 774, 779 (8th Cir.1993). The
misconduct need not be of such a nature as to be actually
fraudulent or constitute a basis for legal action. Johnson, 228
N.W. at 160. The maxim he who comes into equity must come with
clean hands is not applied by way of punishment for an unclean
litigant but upon considerations that make for the advancement
of right and justice. Keystone Driller Co. v. General Excavator
Co., 290 U.S. 240, 245, 54 S.Ct. 146, 78 L.Ed. 293 (1933). It
is not a rigid formula which trammels the free and just exercise
of discretion. Id.
Landmark's acts have not been fraudulent, illegal or so
unconscionable as to warrant denial of specific performance.
Moreover, Landmark's conduct was well known to WLW when it
entered into the bankruptcy stipulation on July 15, 2002. As a
result, any claim of unclean hands was waived.
Accordingly, Judge Kressel directs, WLW must perform its
obligations under the purchase agreement with Landmark.
LEVI STRAUSS: Will Host Q4 & FY 2002 Conference Call Next Monday
----------------------------------------------------------------
Levi Strauss & Co., will broadcast over the Internet its
conference call to discuss fourth-quarter and fiscal year 2002
financial results for the period ended November 24, 2002. The
call will be held on Monday, January 13, 2003 at 10 a.m. Eastern
Standard Time, and will be hosted by Phil Marineau, chief
executive officer, Bill Chiasson, chief financial officer and
Joe Maurer, treasurer. To access the Webcast, please visit
http://www.levistrauss.com A replay of the Webcast will be
available at approximately 1 p.m. Eastern Standard Time and will
be archived for two weeks.
Levi Strauss & Co., is one of the world's leading branded
apparel companies, marketing its products in more than 100
countries worldwide. The company designs and markets jeans and
jeans-related pants, casual and dress pants, shirts, jackets and
related accessories for men, women and children under the
Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands.
As previously reported in Troubled Company Reporter, Standard &
Poor's assigned its 'BB-' rating to jeans wear manufacturer Levi
Strauss & Co.'s $300 million senior notes due 2012.
In addition, Standard & Poor's affirmed its 'BB-' corporate
credit rating and its 'BB' bank loan rating on the company. Levi
Strauss, based in San Francisco, California, had about $1.96
billion of total debt outstanding as of August 25, 2002. The
outlook is stable.
LIBERTY MEDIA: Sells 21% Interest in Cable Holdings to Bresnan
--------------------------------------------------------------
Liberty Media Corporation (NYSE: L, LMC.B) sold a 21% indirect
ownership interest in certain of its international cable
holdings to an entity controlled by Bill Bresnan.
Liberty Media has signed an agreement with Bresnan-controlled
BCI International Investments, LLC to sell a 21% ownership
interest each in certain of its subsidiaries that own all or a
portion of Liberty Media's interests in Telewest Communications
plc, Chorus Communications plc and UnitedGlobalCom, Inc. As a
result of this transaction, Liberty Media's indirect ownership
interests in Telewest, Chorus and UGC will decline from 25% to
20%, from 50% to 39.5%, and from 76% to 75%, respectively.
"Bill Bresnan has been a pioneer in the cable television
business in the US and abroad," said Robert Bennett, President
and CEO of Liberty Media. Mr. Bennett went on to say, "Liberty
Media and its predecessor companies have had a number of
successful ventures over the years with Bill and his team and we
look forward to working with them again. Their hands-on
operating experience will be a significant benefit to our
international cable activities."
Liberty Media Corporation (NYSE: L, LMC.B) owns interests in a
broad range of video programming, broadband distribution,
interactive technology services and communications businesses.
Liberty Media and its affiliated companies operate in the United
States, Europe, South America and Asia with some of the world's
most recognized and respected brands, including Encore, STARZ!,
Discovery, QVC and Court TV.
Liberty Media's 4.00% bonds due 2029 are currently trading at
about 55 cents-on-the-dollar.
MAGNUM HUNTER: Board OKs $100MM 2003 Capital Expenditure Budget
---------------------------------------------------------------
Magnum Hunter Resources, Inc.'s (NYSE: MHR) Board of Directors
approved an increase in the Company's existing capital
expenditure plan for fiscal year 2002 of $10 million, from $115
million to $125 million. Approximately $5 million of the
increase is associated with hurricane and tropical storm damage
and repairs to offshore facilities that occurred in late
September and early October. The Company also spent several
million dollars on properties in preparation for their ultimate
sale during 2002 for purposes of achieving maximum sales price
value. Additionally, management of the Company also wanted to
take full advantage of certain opportunities provided by reduced
field service costs caused by lower than anticipated activity
throughout the industry. The increase in capital spending has
been funded from Magnum Hunter's discretionary cash flow and
higher than anticipated proceeds received from non-core asset
sales closed during the year.
For calendar 2003, Magnum Hunter's Board of Directors has
approved a $100 million capital expenditure budget that has been
front-end loaded with over one-third of the capital expenditures
planned during the first quarter. This new budget is broken
down by region as follows:
2003 CapEx Budget
Gulf of Mexico $ 60 Million
Permian Basin 20 Million
Mid-Continent 15 Million
Gulf Coast (Onshore) 5 Million
------------
Total $100 Million
The Company has budgeted to participate in the drilling of
approximately 110 new wells during 2003, including 17 wells to
be drilled offshore in the shallow waters of the Gulf of Mexico
and 93 wells to be drilled onshore, primarily in Southeastern
New Mexico, West Texas, and Western Oklahoma. In the Gulf of
Mexico, 26% of the anticipated capital expenditures are to be
spent on drilling, 27% on completion operations, and 47% on new
leases and facilities. Of the planned 17 Gulf of Mexico wells,
12 are deemed exploratory and five are developmental. Onshore,
84 of the planned wells for 2003 are deemed developmental.
The Company filed with the Securities and Exchange Commission a
Form 8-K providing financial guidance for the first quarter and
fiscal year of 2003. "In providing this financial forecast, we
have utilized an approximate average within the realm of
assumptions. We currently assume that total daily production
will average around 195 to 205 MMcfe per day in the first
quarter and around 195 to 210 MMcfe per day for calendar 2003.
Oil production is expected to average approximately 10,600 to
10,900 barrels per day in the first quarter and 10,500 to 10,900
barrels per day for the full year 2003. We estimate gas
production will average about 131 to 140 MMcf per day in the
first quarter and 132 to 145 MMcf per day for the year. The
selection of these numbers does not imply any further accuracy
than any other number within the realm of assumptions, but is an
arbitrary number within this realm of assumptions."
Based upon this approach, the following is a summary of certain
financial data derived from these assumptions for the first
quarter and full year 2003:
First Qtr. Fiscal Year
2003 2003
---------- -----------
NYMEX Crude Oil Price (i) $25.00 $25.00
NYMEX Natural Gas Price (i) $ 4.00 $ 4.00
EBITDA (millions) $ 36 $ 160
EBITDA Per Share - Diluted $ 0.50 $ 2.20
Operating Cash Flow (millions) (ii) $ 23 $ 100
Operating Cash Flow Per Share
- Diluted $ 0.35 $ 1.45
Net Income Per Share - Diluted $ 0.02 $ 0.12
(i) Assumed NYMEX price before giving effect to existing
hedges and normal differentials for the physical
location of our production
(ii) Cash flow from operations before changes in operating
assets and liabilities
Commenting on the 2003 capital expenditure budget, Mr. Gary C.
Evans, Chairman, President and CEO of Magnum Hunter stated,
"Management has completed an extensive review of projects in all
regions in which we operate. We have high graded those
properties that offer the highest rates of return on capital
deployed within our existing portfolio. Management has
intentionally front-end loaded the 2003 capital budget in an
effort to take advantage of current commodity prices and low
service costs. Over 50% of our 2003 capital budget will go to
exploration projects that are both on land and offshore. The
Company remains on target to exit 2002 with daily production in
the 195 to 200 MMcfe per day range, after the impact of recent
property divestitures. We have one remaining property
divestiture planned for the first quarter of 2003, which
includes most of the Company's Southern Louisiana onshore
production. The Board of Directors of the Company intends to
review the Company's capital budget plan again by mid-year and
may revise the budget based upon results achieved year-to-date,
commodity prices at that time, proceeds received from non-core
asset sales, and field service costs. Magnum Hunter has
continued to maintain a very high drilling success rate of 96%
in 2002 with a total of 125 wells completed successfully out of
129 wells drilled through mid-December."
Magnum Hunter Resources, Inc., is one of the nation's fastest
growing independent exploration and development companies
engaged in three principal activities: (1) the exploration,
development and production of crude oil, condensate and natural
gas; (2) the gathering, transmission and marketing of natural
gas; and (3) the managing and operating of producing oil and
natural gas properties for interest owners.
* * *
As previously reported, Standard & Poor's raised the corporate
credit ratings of Magnum Hunter Resources Inc., to BB- and its
senior unsecured debt rating to B+.
MCLAREN PERFORMANCE: September Working Capital Deficit Tops $5MM
----------------------------------------------------------------
McLaren Performance Technologies, Inc., was incorporated as a
Delaware corporation on January 28, 1986, as "Capital Equity
Resources, Inc." On September 19, 1986, the name of the Company
was changed to "ASHA Corporation." On January 7, 1999, ASHA
Corporation acquired McLaren Engines, Inc., a privately held
Delaware corporation incorporated in 1969. On April 28, 1999,
the name of the Company was changed to "McLaren Automotive
Group, Inc." The business was subsequently reorganized in
September 1999, into two operating divisions, McLaren Traction
Technologies (the former ASHA activities) and McLaren Engines.
On April 18, 2000, the name of the Company was changed to
"McLaren Performance Technologies, Inc."
McLaren Engines, Inc., which was established to provide a North
American base for Bruce McLaren Motor Racing, had gradually
shifted its focus through the years from purely racing related
work to providing powertrain design, testing and development for
vehicle Original Equipment Manufacturers (OEMs) and suppliers.
Today, the McLaren Engines Division supplies a variety of
products and services including:
* Power Development
* Endurance and Reliability Testing
* Steady State Emissions Testing
* Software Calibration and Development
* Custom Electronic Systems Development
* Engine Build/Teardown/Evaluation
* Powertrain Engineering and Design
* Noise/Vibration Studies
* Fabrication and Vehicle Build
* Rapid Prototyping
* EPA and CARB Certification
* Manufacturing and Field Support
* Warranty Failure Analysis
* Production Engine Audit
* Catalyst Aging and Development
* Accelerated Aging and Alternative to Extending Testing
McLaren Engines further expanded its capabilities in October
2000 by creating a dedicated Vehicle Development Center to
better serve its Ford Racing and Advanced Powertrain customers.
The Center includes design, development, fabrication and vehicle
assembly capabilities to build complete prototypes and concept
vehicles.
In 2002, business with General Motors Corporation accounted for
approximately 54% of all Company revenue and business with Ford
Motor Company accounted for approximately 17% of all Company
revenue. All of this business was generated by the McLaren
Engines Division. No other customer exceeded 10% of all Company
revenue.
During the fiscal year ended September 30, 2002, the Company had
revenue of $15,689,148 as compared to $14,444,540 for the year
ended September 30, 2001, which represents an increase of
$1,244,608. The revenue by segment was as follows: McLaren
Engines 74%, McLaren Performance Products 22%, and McLaren
Traction 4%.
The Company incurred a net loss of $439,117 in the fiscal year
ended September 30, 2002, compared to the prior year's net loss
of $681,399. Minimal revenue from McLaren Traction, coupled with
the expenses associated with its ongoing operations, were
significant factors in the Company's loss, as were the costs
associated with a car development program and the return into
the Indy racing program.
As of September 30, 2002, the Company had a working capital
deficit of approximately $5,108,631 compared to $994,120 on
September 30, 2001. The decrease in working capital is due to
the fact the Company is in default on a loan covenant to a bank.
Because of this default, the Company is required to reclassify
all of its long term debt with this bank as current. If the
Company had no covenant defaults to the bank, the Company would
show a working capital deficit of $1,566,414.
The Company's independent accountants have issued a going
concern opinion. That means that the accountants believe there
is substantial doubt about the Company's ability to remain in
business for the next 12 months unless additional capitalization
is raised. The Company has suffered recurring losses from
operations, has a deficit in working capital and is in default
under its loan agreement with its primary lender. These matters
raise substantial doubt about the Company's ability to continue
as a going concern. The ability to continue in business is
dependent on obtaining adequate capital funding to produce
products and create significant market demand for these
products.
MILLENNIUM STUDIOS: Suit vs. MAN Roland to be Heard by Dist. Ct.
----------------------------------------------------------------
Millennium Studios, Inc., bought a used printing press from MAN
Roland, Inc., in 2000. The purchase price was $1.1 million.
Millennium made a $20,000 down payment and financed the balance
by executing three promissory notes. The installation process
was a disaster. The printing press was missing critical parts.
The installation process took much longer than expected.
Millennium had to shut down its commercial printing operations
for 23 days and said it was MAN's fault.
While the press was being installed, MAN assigned its rights
under the promissory notes to its parent corporation, MAN
Capital Corp. On July 31, 2001, MAN Capital declared Plaintiff
in default and accelerated the balance due under the notes. On
September 20, 2001, MAN Capital filed a replevin action against
Plaintiff in Prince George's County, Maryland. Millennium filed
a petition under Chapter 11 of the Bankruptcy Code on October
13, 2001, in the U.S. Bankruptcy Court for the Northern District
of Illinois. On February 4, 2002, the bankruptcy court denied
MAN Capital's motion to lift the stay of the Prince George's
County lawsuit and MAN Capital is now a creditor in Millennium's
Chapter 11 case.
On February 5, 2002, Millennium filed an adversary proceeding
against MAN, asserting state law-based breach of contract,
negligence, breach of express warranty, breach of implied
warranty, intentional misrepresentation, and negligent
misrepresentation claims based on a myriad of installation and
mechanical problems with the printing press. Millennium seeks
not less than $500,000 in damages under each count in its
complaint. MAN, in turn, filed a motion with the U.S. District
Court to withdraw reference to bankruptcy court and filed a
motion with the bankruptcy court to dismiss Millennium's claims
against it. Millennium, responded by filing oppositions to both
motions with the district court.
Charles Kevin Kobbe, Esq., at Piper Rudnick LLP, in Baltimore,
representing MAN Roland, argues that the adversary proceeding is
not core to Millennium's bankruptcy case. As such, the
bankruptcy court would not be able to enter final judgment in
the proceeding and its proposed findings of fact and conclusions
of law would have to be reviewed de novo by the district court
under 28 U.S.C. Sec. 157(c)(1). MAN says this dual review
process would be "expensive, time-consuming and wasteful" and
would not serve the interests of judicial efficiency.
Judge Chasanow in the U.S. District Court for the Northern
District of Illinois agrees that the Debtors' claims are not
within the "core" jurisdiction of the bankruptcy court. While
the claims made in the lawsuit have a close and significant
relationship with the bankruptcy case, Judge Chasanow finds
that, with regard to the substantive law on which Millennium's
claims are based, this adversary proceeding is not related
enough to the field of bankruptcy law to be appropriately
subject to the jurisdiction of and final determination by a
bankruptcy court. The District Court, accordingly, grants the
permissive withdrawal of reference of Millennium's state
contract and tort law-based adversary proceeding to the
bankruptcy court.
Lynn A. Kohen, Esq., and James J. O'Neill, III, Esq., at Tydings
and Rosenberg LLP in Baltimore, Maryland, represent Millennium
in its chapter 11 proceeding.
MIRANT CORP: Sells Interest in Chinese Power Plant for $300 Mil.
----------------------------------------------------------------
Mirant (NYSE: MIR) completed the sale of its 33% economic
interest in the Shajiao C power plant in China to China
Resources Power Holding Co., Ltd., for $300 million.
Proceeds from this sale increased Mirant's liquidity to $1.4
billion and allowed Mirant to eliminate a $254 million loan at
its Asian holding company. As Mirant announced on December 20,
the elimination of this loan removes a previously disclosed
dividend block from Mirant's Asian business.
"The sale of Shajiao C allows Mirant to maintain a solid level
of liquidity as we end the year," said Rick Kuester, senior vice
president, Mirant. "Eliminating the debt of our Asian holding
company allows Mirant to remove the Asian dividend block, a
significant development considering the size and profitability
of our operations in the Philippines."
Shajiao C is a 1,960-megawatt power plant located near Hong Kong
and is the largest coal-fired power plant in the Guangdong
Province. Mirant originally purchased its 32 percent economic
interest in Shajiao C as part of the company's acquisition of
Consolidated Electric Power Asia in 1997. Mirant purchased an
additional 1 percent interest in 2001 when it acquired Laito
Company Limited, a minority shareholder in the project.
Following the sale of Mirant's interest in Shajiao C, the
company's remaining Asian assets are its seven power plants in
the Philippines and one power plant on Guam.
ING Bank N.V. advised Mirant on the transaction.
Visit http://www.mirant.comfor more information on the Company.
* * *
As reported in Troubled Company Reporter's October 23, 2002
edition, Standard & Poor's lowered its corporate credit
and senior unsecured ratings on energy merchant Mirant Corp.,
and its subsidiaries to 'BB' from 'BBB-', and its preferred
stock rating to 'B' from 'BB'. The outlook is negative.
Standard & Poor's assigned the same ratings to Mirant, Mirant
Americas Generation Inc., Mirant Americas Energy Marketing L.P.,
and Mirant Mid-Atlantic LLC, given the lack of bankruptcy-remote
structures between the entities and the intermingled cash flow
operations.
DebtTraders reports that Mirant Corp.'s 7.900% bonds due 2009
(MIR09USA1) are trading between 47 and 50. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MIR09USA1for
real-time bond pricing.
NATIONSRENT: Seeking Third Exclusivity Extension Until Apr. 16
--------------------------------------------------------------
Since the filing of the Second Extension Motion, NationsRent
Inc., and its debtor-affiliates have focused their attention on
continuing to reorganize their business, and on refining and
implementing their new business plan. In addition, the Debtors
have spent considerable time negotiating a consensual
reorganization plan with their major creditor constituencies to
facilitate their emergence from bankruptcy. As part of their
reorganization efforts during this period, the Debtors achieved
notable successes in a variety of matters relating to their
Chapter 11 cases, including:
1. Equipment Lease Review Program
Shortly after the Petition Date, the Debtors implemented a
program to review their equipment agreements in order to
determine which of their equipment agreements they intend to
assume, reject, recharacterize or renegotiate. Since August,
the Debtors reviewed the reports of Ritchie Brothers, their
equipment appraisers, and Quiktrak, their equipment auditors,
and have engaged in negotiations with the equipment providers
regarding the possible renegotiation of their equipment
agreements. As a result, the Debtors are beginning to reach
possible settlements with certain equipment providers. The
Debtors have successfully negotiated a settlement with Banc
One Leasing Corporation and are very close to finalizing a
settlement with Textron Financial Corporation and Deere
Credit, Inc. In certain other cases, the Debtors have
determined to reject the equipment agreements and have begun
filing motions to effectuate these decisions;
2. Equipment Lease Re-characterization Litigation
The Debtors commenced adversary proceedings against certain
lessors seeking to recharacterize as financing agreements
certain of their equipment agreements that are denominated as
leases. To help expedite a resolution of these adversary
proceedings, which the Debtors believe is essential to the
negotiations concerning the Plan, the Debtors obtained the
Court's permission to appoint a mediator in many of the
equipment re-characterization proceedings. The Debtors
intend to begin mediating certain of these actions in the
near future;
3. Claims Process
After the Court established August 5, 2002 as the bar date
for filing proofs of claim, the Debtors began the arduous
process of reconciling the proofs of claim with their
business records;
4. Plan of Reorganization
The Debtors, along with their major creditor constituencies,
have been negotiating the terms of the Plan and the
accompanying disclosure statement;
5. Unexpired Nonresidential Real Property Leases
The Debtors have continued to review and evaluate their
unexpired nonresidential real property leases to determine,
in conjunction with their business plan, which leases they
should assume, assume and assign or reject. The Debtors have
filed motions to reject certain leases at locations where
they have closed stores and, in general, with respect to
leases that they determined were burdensome to their estates;
6. Selection of a New Chief Executive Officer
The Debtors' new CEO, D. Clark Ogle, began his tenure shortly
before the Second Extension Motion was filed. Since then,
Mr. Ogle has been actively involved in reviewing and refining
the Debtors' business plan, in addition to working with the
Debtors' senior management to implement that plan; and
7. DIP Financing Facility
The Debtors and Fleet negotiated an amendment to the
postpetition financing facility that modified certain of the
covenants under the facility and extended the term of the
facility through December 31, 2002. But because the
financing facility was set to expire on December 31, 2002,
the Debtors recently sought alternative financing
arrangements and ultimately entered into a commitment letter
with GE Capital to amend and restate the current facility
with increased availability. The DIP extension facility will
ensure that the Debtors have sufficient operating capital
through the earlier of the effective date of the Plan or June
30, 2003.
In the light of these developments, the Debtors ask the Court
for a third extension of their Exclusive Plan Filing Period
through and including April 16, 2003, and their Exclusive
Solicitation Period through and including June 17, 2003.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger,
asserts that the termination of the Exclusive Periods would only
distract the parties and delay the productive negotiations among
the Debtors and their key creditor constituencies. Mr.
DeFranceschi contends that the Debtors must be permitted to
complete the process that they have already begun to be able to
seek the confirmation of a reorganization plan, as modified
through negotiation.
Given the size and complexity of these cases, Mr. DeFranceschi
argues that it simply is unrealistic to expect that any
interested party would be in a position to build consensus for
any plan at this time. Presently, the Debtors operate 230
rental centers in 26 states and have 3,200 employees. The
Debtors also have $700,000,000 in assets and $1,200,000,000 in
liabilities. (NationsRent Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NAVISITE INC: Acquires ClearBlue Technologies Management, Inc.
--------------------------------------------------------------
NaviSite, Inc. (Nasdaq: NAVI), a provider of Always On Managed
Hosting(SM) services, completed the acquisition of ClearBlue
Technologies Management, Inc., a provider of managed services
and professional services.
Under the terms of the transaction, NaviSite has acquired the
entire equity stake of CBTM, a wholly-owned subsidiary of
ClearBlue Technologies, Inc., in exchange for 8,519,676 shares
of NaviSite common stock, approximately 4.5% of NaviSite's
outstanding shares. CBTM is a leading provider of applications
management and integration services to mid-sized to large
enterprises and government agencies throughout the US. Customers
include: US Department of State, America's Job Bank, Denver
Broncos, Johns Hopkins University, Ingersol-Rand Company and
others.
In a separate transaction, NaviSite has executed an agreement
with CBT to operate and manage 10 strategic data centers. Under
the terms of the agreement, NaviSite will have the exclusive
right to provide managed infrastructure and application services
across the expanded data center footprint. The data centers are
located in: Chicago, Oakbrook (IL), Dallas, Milwaukee, Los
Angeles, San Francisco, Emeryville (CA), Vienna (VA), Las Vegas
and New York City.
"This acquisition is strategically important and brings a
significant amount of applications expertise to NaviSite,
accelerating our strategy of being the full service provider of
applications management to mid-sized enterprises, government,
and business units of Global 2000 companies," said Tricia
Gilligan, CEO of NaviSite. "Not to mention, our expanded
footprint of 13 data centers, including CBTM's Syracuse
facility, extends our presence in key cities."
"We are committed to a being a leader in the eBusiness services
industry," stated Andrew Ruhan, Chairman of NaviSite's Board of
Directors. "This acquisition is a critical step in our overall
strategy of leveraging our platform to profitably drive
consolidation within this marketplace."
"From a financial and operating standpoint, we are focused on
creating synergies across the cost, revenue and customer
spectrums. The additional revenues on our current operating
platform gives us scale, and we expect EBITDA profitability post
integration," said Kevin Lo, CFO.
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, visit http://www.navisite.com
NaviSite is headquartered at 400 Minuteman Road, Andover, MA
01810 and is majority-owned by ClearBlue Atlantic, LLC, an
affiliate of ClearBlue Technologies Inc.
As previously reported, Navisite's October 31, 2002 balance
sheet shows a total shareholders' equity deficit of about
$744,000.
NEWCOR: Former Accountants PwC Expresses Going Concern Doubt
------------------------------------------------------------
On December 20, 2002, Newcor, Inc., received and accepted the
resignation of PricewaterhouseCoopers LLP as its independent
accountants. The Company intends to appoint a new independent
accountant as soon as is practicable. It will also authorize PWC
to fully respond to any inquires of the Company's successor
independent accountants concerning its prior audits.
The report of PWC on the consolidated financial statements of
Newcor as of December 31, 2001 and for the year then ended noted
that the Company had filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy
Code, thereby raising substantial doubt about its ability to
continue as a going concern, and noted that the accompanying
consolidated financial statements did not include any
adjustments that might result from the outcome of the Company's
petition for reorganization.
OAKWOOD HOMES: Wins Court's Approval of $215MM DIP Facility
-----------------------------------------------------------
Oakwood Homes Corporation (NYSE: OH) received court approval to
close its proposed $215 million debtor-in-possession financing
previously announced.
Myles E. Standish, President and Chief Executive Officer,
stated: "We are pleased to announce that we have received
approval from the U.S. Bankruptcy Court to finalize our DIP
credit facility with Berkshire Hathaway Inc., Greenwich Capital
Financial Products, Inc., and Ranch Capital LLC. We expect to
close the $140 revolving line of credit next week and to
finalize the remaining $75 million loan servicing advance line
in mid-January.
"The primary purposes of the $140 million revolving line of
credit are to support outstanding letters of credit of $38
million, to repay amounts outstanding under our previous $65
million revolving credit facility and to provide additional cash
borrowing capacity while we complete our reorganization. The new
line is collateralized by substantially all assets excluding
loans held for sale.
"Our liquidity was further enhanced in late December when, as
anticipated, we received our federal income tax refund of
approximately $26 million relating to the 2002 tax year.
"The anticipated closing of this facility and the receipt of our
income tax refund should provide us with adequate funds to
continue operations in the normal course as we proceed through
our reorganization. With our DIP facility substantially
completed, we can now work with our constituencies to finalize
our plan of reorganization, which we expect to file in late
January or early February."
Oakwood Homes Corporation and its subsidiaries are engaged in
the production, sale, financing and insuring of manufactured
housing throughout the United States. The Company's products are
sold through Company-owned stores and an extensive network of
independent retailers.
ORGANOGENESIS INC: AMEX Nixes Appeal to Delisting Determination
---------------------------------------------------------------
Organogenesis Inc., (AMEX: ORG) said the American Stock
Exchange, by a letter dated December 19, 2002, notified the
Company that Amex's Listing Qualifications Panel has denied the
Company's appeal of the October determination by the Amex Staff
to prohibit the continued listing of the Company's common stock
on Amex and initiate delisting proceedings. The Panel determined
that the Company, which filed for protection under the
Bankruptcy Code on September 25, 2002, does not satisfy
applicable listing standards and has not shown progress
consistent with a plan to regain compliance with the continued
listing standards. Trading in the Company's common stock on Amex
has been suspended since August 20, 2002.
In accordance with Sections 1009 of the Amex Company Guide, the
Exchange has stated that it will file an application with the
Securities and Exchange Commission to delist and deregister the
Company's common stock from Amex. The Company has determined not
to appeal the Panel's decision but rather to devote its full
resources to the preparation of its reorganization plan. If and
when appropriate, the Company may seek one or more market makers
to quote its common stock on the OTC Bulletin Board. There can
be no assurance, however, that the Company's common stock will
be quoted.
Organogenesis was the first company to develop and gain FDA
approval for a mass-produced product containing living human
cells. The Company's principal product, Apligraf(R), a living,
bi-layered skin substitute, has received FDA approval for the
treatment of diabetic foot ulcers and venous leg ulcers. The
Company filed its Chapter 11 petition on September 25, 2002, in
the U.S. Bankruptcy Court for the District of Massachusetts
(Boston).
PARK CITY GROUP: Consummates $2 Million Debt Refinancing Deal
-------------------------------------------------------------
Park City Group Inc., (OTC:PKCY) completed the restructuring of
a portion of its long-term debt.
The company has structured a $2.25 million loan package that
retired its debt to Cooper Capital Inc., and to Bank One Corp.,
The loan package was structured with Whale Investments, LTD.
The new note with Whale Investments is an interest-only note
eliminating debt amortization for a two-year period. The
interest on the note is 18 percent and will be paid monthly.
Additional information pertaining to the loan structure is
outlined in Park City Group's Form 8K, which was filed with the
Securities and Exchange Commission on Dec. 31, 2002.
"To continually strengthen our balance sheet remains a high
priority," commented Park City Group CEO and President Randall
K. Fields.
"During fiscal 2002 ended June 2002 we significantly reduced our
long-term debt by roughly $1.8 million. Our new agreement with
Whale Investments continues to improve the overall appearance of
our balance sheet as it eliminates the need, over the short
term, for debt amortization. We will see an increase in our cash
flow as a result this refinancing."
"Our marketing focus remains the same -- successful penetration
with our Fresh Market Manager product line within our target
markets," continued Fields. "The increase in our working capital
coupled with the recent successes within our customer base
positions Park City Group to meet its objectives for the new
year."
Park City Group is a leading provider of software and services
for business productivity.
The company uniquely leverages its expertise in retail
operations management and state-of-the-art, patented
technologies to simplify the planning and execution of complex
processes; deliver timely, relevant and "action-able"
information; and improve its customers' profitability by putting
the "best manager" in every store.
The software was developed initially for the Mrs. Fields Cookies
business, co-founded by Randall K. Fields. To date, the company
has sold to or installed its software solutions in more than
52,000 customer locations.
For additional information, visit the corporate Web site at
http://www.parkcity.com
The Company's March 31, 2002 balance sheet shows a working
capital deficit of about $2 million, and a total shareholders'
equity deficit of about $3.5 million.
PENNSYLVANIA DENTAL: A.M. Best Cuts Fin'l Strength Rating to B+
---------------------------------------------------------------
A.M. Best Co., has lowered the financial strength ratings to A-
(Excellent) from A (Excellent) of Delta Dental Plan of
California, Private Medical-Care Inc (both of San Francisco) and
Delta Dental Insurance Company (Delaware).
In addition, A.M. Best has downgraded the financial strength
ratings to B+ (Very Good) from A- (Excellent) of Pennsylvania
Dental Service Corporation (Mechanicsburg, PA), Delta Dental of
Delaware, Delta Dental of District of Columbia (Washington, DC),
Delta Dental of New York and Delta Dental of West Virginia. All
companies are members of Dentegra Group Inc; all the ratings
have been assigned stable outlooks.
The ratings of the members reflect the dental plan's common
control by Dentegra, its weakened operating performance, limited
penetration in the small group market in California and premium
growth compared to a decline in capital and surplus creating a
greater leveraged position.
Overall capital and surplus has declined due to weakened
performance in risk business coupled with the strain on earnings
of its largest segment, Administrative Service Only (ASO).
Historically, DDPC's earnings have supported the operations
throughout Dentegra; recently however, its earnings have
significantly weakened and placed additional strain on capital.
A.M. Best believes the majority of the members within Dentegra
are still growing and will continue to be reliant on the capital
support from DDPC. This is compounded by the continued growth of
premium revenue, which is outpacing growth in capital and
surplus and creating a strain on DDPC's overall capital
position. In A.M. Best's opinion, the growth in premium revenue
has strained DDPC's underwriting leverage, and it will be
challenged to improve in the near term.
The company's financial limitations as a non-profit organization
limit its access to capital markets and thereby offers little
alternative to capital growth outside of earnings. DDPC can
still continue to grow in the large group segment; however, the
small- and mid-size groups should achieve the largest percentage
of growth in the near future. In the past, the small- and mid-
size group market has remained under-penetrated by the company
due to the price sensitive nature of the business. Although
significant growth has not yet been achieved in the small- to
mid-size market segment (5-250), A.M. Best anticipates that DDPC
has the right initiatives in place to capitalize on the
expansion of growth in this market. Understanding that the small
group market segment prefers medical and dental benefits to be
bundled under one bill, A.M. Best expects DDPC will seek to
partner with other non-dental providers to accommodate the
expectations of the small group market.
DDPC is the dominant provider of dental benefits in California
and one of the largest nationwide. DDPC and the other members
insure approximately 16 million subscribers in its 16-state
trading area with almost 13 million in California alone. DDPC is
a member of Delta Dental Association, which has a strong brand
name recognition and a national network through its DeltaUSA
product. Its market presence provides substantial competitive
advantages in providing access to dental providers and gives
DDPC the ability to negotiate favorably with providers.
DDPC's core network, DeltaPremier, is still California's largest
network provider.
PHARMACEUTICALS FORMULATIONS: Adopts 52/53 Week Fiscal Year
-----------------------------------------------------------
Effective in December 2002, Pharmaceuticals Formulations, Inc.,
will change its fiscal year-end from the 52 or 53-week period
which ends on the Saturday closest to June 30 to the 52 or 53-
week period which ends on the Saturday closest to December 31.
Pharmaceutical Formulations' September 28, 2002 balance sheet
shows a total shareholders' equity deficit of about $17.8
million.
RFS ECUSTA: Bringing-In Ramsey Hill as Special Local Counsel
------------------------------------------------------------
RFS Ecusta Inc., and RFS US Inc., want to employ Ramsey, Hill,
Smart, Ramsey, and Pratt, P.A., as Special Local Counsel, nunc
pro tunc to October 23, 2002.
The Debtors currently face a prepetition labor relations suit
brought by the Union and others and a prepetition environmental
suit brought by the State of North Carolina Department of
Environment and Natural Resources. The Debtors have requested
authority to retain special environmental counsel to represent
them in the Environmental Suit and special labor counsel to
assist them with labor and employment issues.
The Debtors ask the U.S. Bankruptcy Court for the District of
Delaware to retain Ramsey to provide local counsel assistance to
their special environmental counsel and their special labor
counsel as necessary. The Debtors submit that the proposed
special environmental counsel, special labor counsel, and Ramsey
have agreed to coordinate their efforts and will endeavor not to
duplicate their efforts in their representation of the Debtors.
The Debtors believe this local representation is vital to their
ability to successfully defend these suits and thereby preserve
and maintain the value of their assets. The professional
services Ramsey would render in these cases include the
handling, or assisting in the handling of, local litigation to
which the Debtors are or may be parties (i.e., the Environmental
Suit and the Labor Suit), including attending hearings,
reviewing pleadings for proper form, and filing and serving
papers.
Ramsey will charge the Debtors for its services on an hourly
basis at the rate of:
Partners $200 per hour
Associates $100 per hour
Additionally, Ramsey will also bill the Debtors an initial flat
fee of $300 for any initial consultation or document review of a
new matter, if any.
RFS Ecusta Inc., and RFS US Inc., were leading manufacturers of
high quality premium paper products for the tobacco and
specialty and printing paper products. The Company filed for
chapter 11 protection on October 23, 2002. Christopher A. Ward,
Esq., at The Bayard Firm and Joel H. Levitin, Esq., at Dechert
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
estimated debts and assets of more than $10 million each.
ROHN INDUSTRIES: Platinum Equity Bolts from Asset Purchase Deal
---------------------------------------------------------------
ROHN Industries, Inc. (Nasdaq: ROHN), a provider of
infrastructure equipment to the telecommunications industry,
received a letter on December 27, 2002 from Platinum Equity LLC,
a Los Angeles-based private equity firm, purporting to terminate
the previously announced asset purchase agreement pursuant to
which Platinum was to purchase substantially all of ROHN's
assets.
ROHN believes that Platinum had no basis to terminate the asset
purchase agreement and that the purported termination
constitutes a material breach of the agreement. ROHN intends to
pursue all of its legal rights and remedies against Platinum.
In light of Platinum's purported termination of its agreement
with ROHN, ROHN intends to pursue a transfer of assets to the
lenders under its bank credit facility in exchange for the
extinguishment of an amount of debt under that facility to be
agreed upon between the lenders and ROHN. The assets to be
transferred were described in more detail in ROHN's Information
Statement filed with the Securities and Exchange Commission on
December 11, 2002. Following the consummation of this
transaction, ROHN intends to consolidate its manufacturing
operations currently conducted in Peoria, Illinois and
Frankfort, Indiana into its facilities at Frankfort and continue
operations.
ROHN is in discussions with its majority stockholder, the UNR
Asbestos-Disease Claims Trust, and the lenders under its bank
credit facility regarding the terms of this alternative
transaction, and certain issues remain to be resolved among the
parties. ROHN anticipates the negotiations with its bank
lenders to result in an amendment to its bank credit facility
that provides liquidity for continuing operations and extends
the availability of the revolving portion of that facility until
December 30, 2003. ROHN expects to substantially reduce the
outstanding indebtedness under the bank credit facility as a
result of the alternative transaction and the tax benefits ROHN
expects to receive in 2003 as a result of the alternative
transaction.
ROHN Industries, Inc., is a manufacturer and installer of
telecommunications infrastructure equipment for the wireless
industry. Its products are used in cellular, PCS, radio and
television broadcast markets. The company's products and
services include towers, design and construction, poles and
antennae mounts. ROHN has ongoing manufacturing locations in
Peoria, Illinois and Frankfort, Indiana along with a sales
office in Mexico City, Mexico.
ROHN INDUSTRIES: Completes Asset Transfer to Bank Lenders
---------------------------------------------------------
ROHN Industries, Inc. (Nasdaq: ROHN), a provider of
infrastructure equipment to the telecommunications industry,
completed its previously announced transfer of assets to the
lenders under its bank credit facility in exchange for the
extinguishment of approximately $7.4 million in debt under that
facility. The assets sold in the transaction included ROHN's
facilities located in Bessemer, Alabama, a portion of ROHN's
facilities located in Peoria, Illinois, and certain inventory,
accounts receivable and equipment. The assets transferred are
described in more detail in ROHN's Information Statement filed
with the Securities and Exchange Commission on December 11,
2002. As previously announced, ROHN intends to consolidate its
manufacturing operations currently conducted in Peoria, Illinois
and Frankfort, Indiana into its facilities at Frankfort and
continue operations.
ROHN's majority stockholder, the UNR Asbestos-Disease Claims
Trust, approved the transfer of assets.
In connection with the transfer of assets, ROHN and its bank
lenders entered into an amended bank credit facility. The
amended credit facility provides for a one-year revolving credit
facility for ROHN's continuing operations, the repayment of the
term loans under the credit facility on June 30, 2003, and more
flexible financial covenants that do not take effect until
April 1, 2003.
ROHN also announced it closed the previously announced sale of
its facilities located in Casa Grande, Arizona. This transaction
resulted in net proceeds to ROHN of approximately $2.6 million.
Horace Ward, ROHN's Chief Executive Officer, said, "These
transactions allow the Company to put a difficult period behind
it. The asset transfer and sale of the facilities located in
Casa Grande, Arizona resulted in a $10 million reduction in the
Company's debt and tax benefits that the Company expects to
realize as a result of the transaction should allow the Company
to repay a substantial amount of its obligations to its
creditors. The Company looks forward to consolidating its
operations at its facilities in Frankfort, Indiana and
continuing to service its customers."
ROHN Industries, Inc., is a manufacturer and installer of
telecommunications infrastructure equipment for the wireless
industry. Its products are used in cellular, PCS, radio and
television broadcast markets. The company's products and
services include towers, design and construction, poles and
antennae mounts. ROHN has ongoing manufacturing locations in
Peoria, Illinois and Frankfort, Indiana along with a sales
office in Mexico City, Mexico.
* * *
As reported in Troubled Company Reporter's November 13, 2002
edition, the Company is experiencing significant liquidity
and cash flow issues which have made it difficult for the
Company to meet its obligations to its trade creditors in a
timely fashion. The Company expects to continue to experience
difficulty in meeting its future financial obligations.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $1 million.
On November 7, 2002, the Company entered into an amendment to
its credit and forbearance agreements with its bank lenders.
The amendment to the credit agreement, among other things,
further limits the Company's borrowing capacity by modifying the
definition of the borrowing base to decrease the amount of
inventory included in the borrowing base. Additionally, the
amendment modifies the definition of the borrowing base to
provide additional borrowing capacity of varying amounts during
this period. The amendments also provide for a series of
reductions in the Company's revolving credit facility that
reduce the availability under that facility from $23 million
currently to $16 million on and after December 31, 2002. In
addition, the amendment also provides for additional term loan
payments through January 1, 2003. Furthermore, the amendment
provides for additional bank fees, some of which will be waived
if the Company achieves a significant reduction in the aggregate
loan balance at December 31, 2002. Finally, the current
amendment also includes covenants measuring revenues, cash
collections and cash disbursements. Under the amendment to the
forbearance agreement, the bank lenders have agreed to extend
until January 31, 2003 the period during which they will forbear
from enforcing any remedies under the credit agreement arising
from ROHN's breach of financial covenants contained in the
credit agreement except for the covenants added to the credit
agreement as a result of this new amendment. If these financial
covenants and related provisions of the credit agreement are not
amended by January 31, 2003, and the bank lenders do not waive
any defaults by that date, the bank lenders will be able to
exercise any and all remedies they may have in the event of a
default.
The Company continues to experience difficulty in obtaining
bonds required to secure a portion of anticipated new contracts.
These difficulties are attributable to the Company's continued
financial problems and an overall tightening of requirements in
the bonding marketplace. The Company intends to continue to
work with its current bonding company to resolve its concerns
and to explore other opportunities for bonding.
ROMACORP: Enters New $25-Million Credit Facility with GE Capital
----------------------------------------------------------------
Romacorp, Inc., entered into a new $25 million credit agreement
with GE Capital Franchise Finance to replace the previous
agreement with another lender. The new credit facility will
expire in December 2012 and includes annual reductions in the
maximum borrowing capacity ranging from $1.75 million in the
first year up to $3.25 million in later years. The new facility
is secured by substantially all of the assets of Romacorp, Inc.,
and its subsidiaries.
Romacorp, Inc., operates and franchises Tony Roma's restaurants,
the world's largest casual dining restaurant chain specializing
in ribs. The Company currently operates 55 restaurants and
franchises 204 restaurants in 29 states and 26 foreign countries
and territories.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's Ratings Services raised its corporate credit rating on
casual dining restaurant operator Romacorp Inc., and parent Roma
Restaurant Holdings Inc., to triple-'C'-minus from 'D' following
the company's delayed payment of interest to holders of its $57
million 12% senior unsecured notes due in 2006.
ROYAL HAVEN: Hires L.S. Associates to Assist Robert Leasure
-----------------------------------------------------------
Royal Haven Builders, Inc., seeks authority from the U.S.
Bankruptcy Court for the Southern District of Indiana to employ
the management firm of L.S. Associates, LLC to assist the Court-
appointed chapter 11 Trustee, Robert W. Leasure.
LSA is expected to:
(a) manage and liquidate the Debtor's business assets and
assist the Trustee in exercising his powers and duties;
(b) take necessary action to preserve and protect the assets of
the estate;
(c) prepare on behalf of the Trustee necessary reports and
other documents; and
(d) perform all other needed services for the Trustee which may
be necessary herein, inclusive of the preparation of
documents respecting the sale or liquidation of assets not
found to be necessary in the management of bankruptcy
estate property, to assist the Trustee with any management,
coordination, documentation, communication and reporting
which become necessary for the Trustee to employ for such
professional services.
To the best of the Debtor's knowledge, the firm has no
connection with Debtor, the creditors, or any other party in
interest, or their respective attorneys, and is disinterested as
required by 11 U.S.C. Sec. 327(a).
The Firm's professionals will bill for services at their
customary hourly rates:
$250 -- Robert W. Leasure -- which will include his
services as Trustee;
$150 -- Julie Spencer, and
$75 -- other professionals.
Royal Haven Builders, Inc., a general construction contractor,
builder and developer, filed for chapter 11 protection on
December 3, 2002 in the U.S. Bankruptcy Court for the Southern
District of Indiana. John W. Graub II, Esq., at Rubin & Levin,
P.C., represents the Debtor in its restructuring efforts.
SAFETY-KLEEN: Wants Approval of Settlement Pact with 3 Insurers
---------------------------------------------------------------
Safety-Kleen Corporation and its debtor-affiliates seek Judge
Walsh's approval and authority to implement several settlement
agreements reached with three insurers:
(1) A November 6, 2002 Settlement Agreement and Release
between:
(a) Solvents Recovery Service of New Jersey, Inc.,
Safety-Kleen, and certain of their affiliates,
and
(b) Royal Indemnity Company and certain of its
Affiliates;
(2) A July 18, 2002 Settlement Agreement and Release
between:
(a) SRSNJ, Safety-Kleen, and certain of their
affiliates, and
(b) North Star Reinsurance Corporation and certain
of its affiliates; and
(3) A November 12, 2002 Settlement Agreement and Release
between:
(a) Safety-Kleen and certain of its affiliates, and
(b) Fireman's Fund Insurance Company, the American
Insurance Company, National Surety Corporation,
And certain of their affiliates.
Various insurers dispute whether or to what extent the
comprehensive general liability insurance policies issued to the
Debtors or their predecessors provide coverage for third-party
claims arising from solvent recovery and product liability
claims.
As a result of the ongoing disputes with the insurers, the
Debtors initiated three actions:
(1) "The Solvents Recovery Service of New Jersey, Inc.,
et al v. American Reinsurance Company et al" action
pending in the Superior Court of New Jersey, Hudson
County, Law Division;
(2) "Safety-Kleen Corporation v. Unigard Security
Insurance Company et al", pending in the Superior
Court of Washington, King County; and
(3) "Safety-Kleen v. Continental", pending in the Superior
Court of California, County of Los Angeles.
D. J. Baker, Esq., and J. Gregory St. Clair, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, in New York, explain that in
the course of the Debtors' operations from the 1960s to the
present, third parties have, from time to time, brought actions
and asserted claims against the Debtors claiming personal injury
and property damage arising out of environmental and other
damage allegedly caused by the Debtors' business operations. To
protect against liability for these claims, the Debtors
maintained comprehensive general liability coverage with various
insurers.
In the New Jersey Coverage Action and the Washington Coverage
Action, the Debtors seek coverage for certain environmental
liabilities under various comprehensive general liability
insurance policies. Specifically, the Debtors contend that their
general liability carriers are obligated to pay the costs,
expenses, and liabilities arising out of claims, demands and
suits brought against the Debtors for property damage, bodily
injury and personal injury arising out of environmental and
related damage allegedly caused by the Debtors or arising out of
the Debtors' business operations.
In the California Coverage Action, the Debtors seek coverage
under certain other historical comprehensive general liability
policies for bodily injury and other claims arising out of
product liability toxic tort suits and claims and similar or
related claims, losses and liabilities asserted against the
Debtors arising out of the Debtors' manufacture, distribution,
sale or use of solvent products.
The Debtors believe that entry into the Settlement Agreements
with the Settling Insurers should be approved because:
(a) the legal and factual issues involved in the Coverage
Actions are complex;
(b) the majority of the insurance policies being resolved
are excess policies;
(c) the likelihood that claims will be brought against the
Debtors under certain of the policies is minimal; and
(d) the myriad of defenses asserted by the Settling
Insurers could preclude any recovery.
For these reasons, the Debtors have determined that, rather than
litigate with the Settling Insurers, they would enter into the
Settlement Agreements to resolve the various disputes and
controversies with the Settling Insurers.
The settlement terms are simple. The Settling Insurers agree to
make settlement payments either to Safety-Kleen, or to be
deposited and maintained in the Qualified Settlement Trust, in
exchange for a release of the Settling Insurers by Safety-Kleen
and some of its subsidiaries from the Insurers' obligations
under the policies.
The Debtors assure Judge Walsh that these settlements are
beneficial to their estates because the QST can be used to pay
for costs and legal fees in connection with the bodily injury,
personal injury and property damage claims asserted against the
Debtors.
The Settlement Agreement
Before signing these Settlement Agreements, the Debtors
evaluated:
(1) the relative strength of the parties' legal positions;
(2) the likelihood that the Insurance Policies would be
implicated to cover third-party claims;
(3) the extent that the Insurance Policies covered
asserted and potential claims; and
(4) the costs and risks associated with continued
litigation of the coverage claims.
As a result of negotiations and this evaluation, the Debtors
concluded that a consensual resolution of the coverage claims
was the best option. The aggregate payments under the
Settlement Agreements will be $1,625,000.
The most significant terms and conditions of these Settlement
Agreements are:
(1) The Royal Settlement:
(a) Settlement Amount. Royal will pay Safety-Kleen
$850,000 by check or draft made payable to
the QST;
(b) Effective Date. The date of the final order
approving the Royal Settlement;
(c) Dismissal from New Jersey Coverage Action. Upon
receipt of the Settlement Amount, Safety-Kleen
will seek dismissal with prejudice of its
complaint against Royal in this action;
(d) Mutual Releases. The parties will sign mutual
releases;
(e) Indemnification. The QST will indemnify Royal
up to the Settlement Amount with respect to any
claim made against Royal under the Royal
policies; and
(f) QST Termination. In the event that the QST is
terminated in accordance with its terms or the
indemnification fails in its essential purpose,
then Safety-Kleen and its insured affiliates will
assume QST's obligations to Royal.
(2) The North Star Agreement
(a) Settlement Amount. North Star will pay Safety-
Kleen $75,000 by check or draft made payable to
"Zevnik Horton LLP as attorney in trust for
Safety-Kleen Corp.";
(b) Effective Date. The date of the final order
approving the North Star Settlement;
(c) Dismissal from New Jersey Coverage Action. Upon
receipt of the Settlement Amount, Safety-Kleen
will seek dismissal with prejudice of its
complaint against North Star in this action;
(d) Mutual Releases. The parties will sign mutual
releases; and
(e) Indemnification. Safety-Kleen and its insured
affiliates will indemnify North Star for any
action made against North Star under the North
Star policies up to the settlement amount.
(3) The Fireman's Fund Agreement
(a) Settlement Amount. Fireman's Fund will pay
Safety-Kleen $700,000 by check or draft made
payable to the QST;
(b) Effective Date. The date of the final order
approving the Fireman's Fund Settlement;
(c) Dismissal from New Jersey and Washington Coverage
Action. Upon receipt of the Settlement Amount,
Safety-Kleen will seek dismissal with prejudice
of its complaint against Fireman's Fund in each of
the New Jersey Coverage Action and the Washington
Coverage Action;
(d) Mutual Releases. The parties will sign mutual
releases;
(e) Indemnification. The QST will indemnify Fireman's
Fund up to the Settlement Amount, less any amounts
paid under clause (g), with respect to the policies
and environmental claims at issue in the New Jersey
Coverage Action and the Washington Coverage Action;
(f) QST Termination. In the event that the QST is
terminated in accordance with its terms or the
indemnification fails in its essential purpose,
then Safety-Kleen and its insured affiliates will
assume QST's obligations to Fireman's Fund; and
(g) California Coverage Action Indemnification. Safety-
Kleen will indemnify Fireman's Fund up to the
settlement amount, less any amounts paid under
clause (e) in connection with the policies and
solvent suit claims at issue in the California
Coverage Action.
The Debtors contend that approval of these settlement agreements
will eliminate the need for further coverage-related litigation
with Settling Insurers within the scope of the Agreements.
National Union Reserves Rights
National Union Fire Insurance Company of Pittsburgh, PA., does
not object to the Debtors' request. Frederick B. Rosner, Esq.,
at Jaspan Schlesinger Hoffman LLP, in Wilmington, Delaware, and
Michael S. Davis, Esq., at Zeichner, Ellman & Krause, L.L.P,
explain that National Union reserves all rights in the event the
proposed form of order is modified in any way prior to its
submission to the Court for consideration. If there would be
any change to the proposed order, National Union asks the Court
for an opportunity to be heard in that event. (Safety-Kleen
Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SL INDUSTRIES: Delivers Prospectus re Subscription Rights
---------------------------------------------------------
SL Industries, Inc., is sending notice and a prospectus to its
stockholders concerning Subscription Rights in its Shares of
Common Stock. Although pertinent information has not been
indicated in its current SEC filing, that information will be
supplied to the stockholders. The notice reads:
"We are distributing to holders of our common stock, at no
charge, nontransferable subscription rights to purchase up to
an aggregate of _______ shares of our common stock at a cash
subscription price of $___________ per share. If you exercise
your rights in full, you may over-subscribe for the purchase of
additional shares that remain unsubscribed at the expiration of
the rights offering, subject to availability and allocation of
shares among persons exercising this over-subscription
privilege. You will not be entitled to receive any rights unless
you hold of record shares of our common stock as of the close of
business on ________________, 2003."
"This rights offering is being made in connection with the
refinancing of our bank credit facility, which is currently
being negotiated. The proceeds of this rights offering will be
used for working capital purposes."
"Steel Partners has agreed with us to exercise all of its
rights, including over-subscription rights, and further purchase
any unsubscribed shares remaining after the expiration of the
over-subscription privilege in the rights offering up to ____
shares. Warren Lichtenstein, our Chief Executive Officer and the
Chairman of the Board, is also the Managing Member of the
General Partner of Steel Partners."
"The rights will expire if they are not exercised by 5:00
p.m., New York City time, on ______________, 2002, the
expected expiration date of this rights offering. We may extend
the period for exercising the rights. Rights that are not
exercised by the expiration date of the rights offering will
expire and will have no value. The rights may not be sold or
transferred except under the very limited circumstances
described later in this prospectus. You should carefully
consider whether to exercise your rights before the expiration
date. Our board of directors is making no recommendation
regarding your exercise of rights."
"Shares of our common stock are traded on the New York
Stock Exchange under the symbol "SL." On December 25, 2002, the
last reported sales price for our common stock was $5.20 per
share."
* * *
As reported in Troubled Company Reporter's Nov. 8, 2002,
Edition, SL Industries said that "despite [their] best efforts,
[the Company was] unable to complete the refinancing of the
Company's line of credit by October 31, 2002. As a result, the
Company paid its lenders a facility fee of $780,000, as provided
in its credit agreement, which will impact fourth quarter
financial results. [The Company is] continuing to work towards
refinancing the credit line prior to the maturity date of
December 31, 2002."
On May 23, 2002, the Company and its lenders reached an
agreement, pursuant to which the lenders granted a waiver of
default and amended certain financial covenants of the Company's
revolving credit facility, so that the Company is in full
compliance with the revolving credit facility after giving
effect to the Amendment.
SL Industries, Inc., has retained Imperial Capital, LLC to act
as its financial advisor.
TRACE INTERNATIONAL: Dow Chemical Faces $3.5MM Fraud Suit
---------------------------------------------------------
Chief Bankruptcy Judge Stuart M. Bernstein rules that a $3.5
million constructive fraud claim levied against Dow Chemical
Company by the Chapter 7 Trustee overseeing the liquidation of
Trace International Holdings, Inc., et al., won't be dismissed
on summary judgment and the Chapter 7 Trustee may pursue that
claim in a lawsuit against Dow Chemical to recover those funds.
John S. Pereira, the Chapter 7 Trustee, filed suit against Dow
Chemical in 2001 to recover $3,575,150 paid out from Trace
International's estate prior to its 1999 bankruptcy filing. Dow
moved to dismiss the Trustee's lawsuit. Judge Bernstein says
some of the Trustee's claims fail, but his constructive fraud
claim can go to trial.
The Facts
Dow Chemical loaned money to BSI Acquisitions Corp., and BSI
used the loan proceeds to purchase preferred stock from Trace.
In or about 1992, Trace had a controlling ownership interest in
Foamex International, Inc. Foamex, in turn, was a major
customer of Dow's polyurethane business.
A. The 1992 Transaction
In the spring of 1992, Dow agreed to fund the purchase of Trace
stock for the purpose of enhancing its commercial relationship
with Foamex. The consummation of the transaction involved
several steps. To begin with, on March 5, 1992, Dow's Board of
Directors resolved to lend Donaldson, Lufkin & Jenrette, Inc.
$20 million. Dow actually made the loan to BSI(a special purpose
entity created by DLJ for the purpose of the transaction) on or
about May 1, 1992. The loan bore interest at the annual rate of
7%, or $1.4 million, payable quarterly, and the balance was due
five years later.
As part of the same transaction, Trace sold 1000 shares of Trace
Series A Preferred Stock to BSI for $20 million, which BSI
promptly pledged to Dow as security for its $20 million debt.
The Preferred Stock accrued dividends, which were payable
quarterly "out of any funds legally available," at the annual
rate of $1,400 per share, or $1.4 million. Thus, the dividends
precisely matched the amounts and payment dates of the interest
due under the Dow/BSI Loan Agreement.
The annual dividend rate remained in effect for five years,
until the Dow/BSI Loan matured. Thereafter, the annual per share
dividend rate increased to$20,000, multiplied by the three month
United States Treasury Bill rate plus 6%. If Trace exercised
its right to redeem the Preferred Stock, the per shareprice
would be $20,000 (or an aggregate of $20 million) plus the
accrued but unpaid dividends.
As part of the same transaction, Trace loaned $10 million to Dow
(i.e., "purchased" a $10 million Dow Note). Absent a specified
decline in Dow's credit rating, the Dow Note was also due in
five years. The Dow Note accrued interest at a rate keyed to the
rate of 3-month commercial paper.
Trace, in turn, guaranteed up to $10 million of BSI's debt to
Dow, and pledged the Dow Note as collateral for its guarantee.
Finally, the parties established an escrow arrangement to hold
the pledged documents and to receive and disburse payments.
Pursuant to an Escrow and Collateral Trust Agreement between
Dow, Trace and BSI, dated as of May 1, 1992, BSI delivered the
pledged shares and Trace delivered the pledged Dow Note to
Citibank, N.A., as escrow agent, to hold in trust for the
benefit of Dow. The Escrow Agreement required Trace to pay the
Preferred Stock dividends to the escrow agent for the benefit of
BSI, and "[p]romptly upon receipt," the escrow agent was
required to deliver the dividend payments to Dow in satisfaction
of BSI's obligations under the Dow/BSI Loan Agreement. In
addition, Dow made all of the Dow Note payments to the escrow
agent for the benefit of Trace.
The net effect of all of these transactions on the parties is
much simpler to state. Dow loaned $10 million at an annual
return of $1.4 million, and Trace received $10 million at an
annual cost of $1.4 million. In addition, Trace earned interest
on the Dow Note.
B. The 1995 Recapitalization
On or about May 19, 1995, Dow, Trace and BSI entered into a
Master Recapitalization Agreement, for the purpose of modifying
their respective rights and obligations. Pursuant to the Master
Recapitalization Agreement, inter alia:
1. Dow paid Trace the $10 million balance on the
Dow Note;
2. Trace, in turn, paid BSI $10 million in
consideration for BSI's consent, inter alia, to
halve the per share annual dividend from $1,400
to $700 from the date of the modification
through May 1, 1997. After May 1, 1997, the
annual dividend rate was to be "equal to (i) the
amount of $10,000 per share per annum [rather
than $20,000, as provided in the original
Certificate of Designations] multiplied by [the
then-current interest rate on three-month
Treasury Bills] plus six percent per annum";
3. BSI used the $10 million to repay part of the
outstanding balance of the Dow/BSI Loan; and
4. The Trace guarantee terminated and the pledge
of the Dow Note was also terminated, but would
be worthless in any event because the Dow Note
had been satisfied.
The changes under the 1995 recapitalization were consistent with
the repayment of 50% of the Dow/BSI Loan. The repayment reduced
BSI's interest obligation and outstanding balance owed to Dow by
50%, and also reduced Trace's corresponding Preferred Stock
annual dividend obligation and redemption price by 50%. The one
fact that did not change was the number of outstanding shares of
Preferred Stock. Thus, the redemption price and dividend rate
for the Preferred Stock had nothing to do with the value of the
Preferred Stock and everything to do with the outstanding
balance of the Dow/BSI Loan.
C. The Transfers
The trustee's Amended Complaint, dated February 25, 2002,
alleged that Trace transferred $367,325 to Dow within one year
of the July 21, 1999 petition date. It further alleged that
Trace transferred $3,575,150 to Dow between January 1, 1995 and
the petition date. Although a schedule obtained in discovery
identified Dow as the "Payee," certain wire transfer records
indicated that the payments were actually made to the escrow
agent, presumably in accordance with the parties' Escrow
Agreement. BSI, in this regard, was always the record owner of
the Preferred Stock. In addition, the trustee conceded that the
payments were made to BSI although he maintained that BSI was
acting as Dow's agent.
Judge Bernstein notes that if Trace was in dire financial
straits at the time it made the dividend payments, Dow was
unaware of it. Dow monitored and had access to information
regarding Foamex's financial condition as a result of its
commercial relationship with Foamex and Foamex's status as a
publicly held company. Trace, however, was privately held, and
did not have a commercial relationship with Dow.
The Trustee's Constructive
Fraudulent Transfer Claims
The trustee alleges claims sounding in constructive fraudulent
transfer. A constructive fraudulent transfer does not involve
actual fraud. Instead, it focuses on the adequacy of the
consideration received in exchange for the transfer and the
effect of the transfer on the transferor's financial condition.
See Nisselson v. Drew Indus., Inc. (In re White Metal Rolling &
Stamping Corp.), 222 B.R. 417, 428-29 (Bankr.S.D.N.Y.1998).
Under 11 U.S.C. Sec. 548, the trustee must demonstrate that
within one year of the petition date, (1) the debtor transferred
an interest in property; (2) the debtor was insolvent at the
time of the transfer or became insolvent as a result of the
transfer, and (3) the debtor received "less than a reasonably
equivalent value in exchange for such transfer." BFP v.
Resolution Trust Corp., 511 U.S. 531, 535 (1994)(quoting Sec.
548(a)((1)(B)).
New York law is based on the older Uniform Fraudulent Conveyance
Act, and uses different terminology. Under NYDCL Sec. 273,
"[e]very conveyance made and every obligation incurred by a
person who is or will be thereby rendered insolvent is
fraudulent as to creditors without regard to his actual intent
if the consideration is made or the obligation is incurred
without a fair consideration." To satisfy the New York test, the
transferee must convey property or discharge an antecedent debt
of equivalent value. In addition, the transferee must make the
exchange in good faith. Lawson v. Barden (In re Skalski), 257
B.R. 707, 711 (Bankr. W.D.N.Y. 2001).
"Good faith" is not a requirement for "reasonably equivalent
value" under the Bankruptcy Code and the Uniform Fraudulent
Transfer Act. See UNIF. FRAUDULENTTRANSFER ACT, 7A U.L.A. 269-
70 (1999)(Prefatory Note).
Here, the parties do not dispute that Trace transferred an
interest in property when it paid the dividends to the escrow
agent. Trace's solvency, on the other hand, is hotly disputed,
and cannot be resolved as a matter of law. Dow nevertheless
argues that it is entitled to summary judgment because the
debtor received "reasonably equivalent value" for the payments
at issue, to wit, the satisfaction of antecedent debts. Hence,
the trustee cannot prove the third element of his claim.
The strength of Dow's contention appears to turn on whether
Trace's payments are considered to be dividends or interest.
Trace is a Delaware corporation, and the proper characterization
of the payments requires the consideration of Delaware law.
Under section 170(a) of Delaware's General Corporation Law
("DGCL"), DEL. CODE ANN., tit. 8, Sec. 170(a)(2002 Supp.), a
corporation may pay dividends out of "surplus," or if there is
no "surplus," "out of the net profits for the fiscal year in
which the dividend is declared and/or the preceding fiscal
year." "Surplus" is the amount that the net assets exceed the
capital, and "net assets" means the amount that total assets
exceed total liabilities. DGCL Sec. 154.
Generally, an insolvent Delaware corporation cannot pay
dividends. ESB Litig. LLC v. Barclays Global Investors, N.A.,
304 F.3d 302, 305 (3rd Cir.2002). The unlawful dividend is
voidable, ESB Litig. LLC, 304 F.3d at 305, and may be recovered
by the trustee as a fraudulent transfer. See Official Comm. Of
Unsecured Creditors of Color Tile, Inc. v. Blackstone Family
Inv. P'ship (In re Color Tile, Inc.), No.96-76, 2000 WL 152129,
at *3 (D. Del. Feb. 9, 2000); accord Mancuso v. Champion (In re
Dondi Fin. Corp.), 119 B.R. 106, 113 (Bankr. N.D.Tex.
1990)(decided under the Texas Uniform Fraudulent Conveyance
Act). Thus, if Trace was insolvent, as Judge Bernstein says he
must assume it was in deciding a motion for summary judgment, it
could not pay a dividend to Dow. If, however, Dow was a lender
rather than a shareholder and the payments are considered
interest, they would qualify as antecedent debts and escape
avoidance.
The correct characterization of interest held by Dow and the
payments made by Trace is not a straightforward task, Judge
Bernstein opines. The Dow/BSI portion of the transaction
resembled a loan, and the BSI/Trace part looked like a preferred
stock transaction. While the labels that the parties give to
their deal may offer some direction, the nature of the
transaction is determined by its economic substance. See 11
WILLIAM MEADEFLETCHER, FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE
CORPORATIONS Sec. 5291, at 566-67 (1995 rev. vol.)("FLETCHER").
Color Tile, a Delaware case with analogous facts, demonstrates
this principle.
There, the debtor issued preferred stock, and subsequently
declared and paid in excess of $10 million in dividends to the
preferred stockholders. Following bankruptcy, the Official
Committee of Unsecured Creditors commenced an adversary
proceeding to recover the dividends under Delaware and
bankruptcy fraudulent transfer law. 2000 WL 152129, at *1. The
transferees responded that their purchase of the preferred stock
was tantamount to a loan, and accordingly, the dividends were
payments in satisfaction of an antecedent debt. Id. at *4.
The district court began its analysis with a recitation of the
factors relevant to a determination of the inquiry:
Whether a security constitutes equity or debt depends
on the interpretation of the contract between the
corporation and the security holders. See Wolfensohn
v. Madison Fund, Inc., 253 A.2d 72, 75 (Del.1969);
accord Drexler, supra, at 17-5 n. 8. In interpreting
the contract, courts consider numerous factors,
including: (1)the name given to the instrument; (2)
the intent of the parties; (3) the presence or absence
of a fixed maturity date; (4) the right to enforce
payment of principal and interest; (5) the presence or
absence of voting rights; (6) the status of
the contribution in relation to regular corporate
contributors; and (7) certainty of payment in the
event of the corporation's insolvency or liquidation.
Id.; accord Moore v. American Fin. & Sec. Co., 73 A.2d 47, 47-48
(Del. Ch.1950);see generally 11 FLETCHER Sec. 5291, at 567-68.
Applying these factors, the Color Tile court had "little doubt"
that the parties had intended an equity interest. The
transaction documents referred to the defendant's interests as
preferred stock. Although dividend and redemption dates were
projected, the debtor's ability to pay dividends was limited to
"funds legally available therefor," and the ability to redeem
the stock was restricted based upon the debtor's substantially
leveraged financial condition. Finally, in the event of a
liquidation, the payment of accrued dividends and the redemption
price were subordinated to creditors in a liquidation. Id. at
*4-5. "Where such certainty of payment is missing, the security
is equity, not debt." Id. at *5.
The application of the factors in this case, Judge Bernstein
says, is more difficult because of the bifurcated nature of the
transaction. Nevertheless, the economic substance of the
transaction suggests that Dow owned an equity interest rather
than a debt obligation. It is true, Judge Bernstein continues,
that Dow had an absolute right to the payment of interest and
principal from BSI under the Dow/BSI Loan. The submissions
implied, however, that BSI lacked the means to pay Dow except
with the funds it received from Trace.
As a practical matter, therefore, Dow's actual rights against
BSI were no greater than BSI's legal rights against Trace as
owner of the Preferred Stock. Because, Judge Bernstein says,
Trace could not pay dividends to the escrow agent on BSI's
behalf unless it was solvent, Delaware law prevented Trace from
redeeming the Preferred Stock if its capital was impaired or
would be become impaired by the redemption. DGCL Sec. 160(1).
Finally, in the event of a liquidation, the Preferred Stock was
entitled to payment "out of the assets of the Corporation
available for distribution to its stockholders." In short, Dow
expected to receive no more than BSI.
In addition, although BSI was obligated to satisfy the
outstanding balance of the Dow/BSI Loan by May 1, 1997, Trace
was not required to redeem the Preferred Stock by any outside
date. While the evidence indicated that it made business sense
to redeem the Preferred Stock by May 1, 1997, Trace's ability to
redeem still depended on solvency, and the solvency requirement
indicates that Dow held a shareholder's interest. See Color
Tile, 2000 WL 152129, at *4; In re Revco D.S., Inc., 118 B.R.
468, 474 (Bankr. N.D.Ill. 1990)(mandatory preferred stock
redemption provision dependent on issuer's solvency did not make
preferred shareholder a "creditor").
Eugene P. Cimini, Esq., at Jaspan Schlesinger Hoffman LLP, in
Garden City, New York, represents the Chapter 7 Trustee and
James L. Stengel, Esq., and Steven J. Fink, Esq., at Orrick,
Herrington & Sutcliffe LLP, represent Dow Chemical in Adv. Pro.
No. 01-2949 pending before the U.S. Bankruptcy Court for the
Southern District of New York.
TESORO PETROLEUM: Meets $200 Million Asset Sale Goal Set in June
----------------------------------------------------------------
Tesoro Petroleum Corporation (NYSE:TSO) -- whose Corporate
Credit Rating has been downgraded by Standard & Poor's to
'double-B-minus' -- announced that the company has closed an
agreement with Skyline-FRI 7, TSO, L.P. to sell and lease-back
30 of the company's retail outlets located in Alaska, Hawaii,
Idaho and Utah.
Skyline-FRI 7, TSO, L.P. is a joint venture between Skyline
Pacific Properties located in San Francisco, Calif., and
Franchise Realty Investments located in Dallas, Texas. Tesoro
will receive gross proceeds of almost $41 million. Fifty percent
of the net proceeds will be used to pay down term debt.
"This transaction fulfills the goal I set in June to sell $200
million in assets by the end of this year," said Bruce A. Smith,
Chairman, President and CEO of Tesoro. "Since the acquisition of
Golden Eagle we have repaid nearly $140 million of term debt and
further debt reduction remains our top priority as we work
towards our overall goal of eliminating $500 million in debt by
the end of 2003."
Tesoro Petroleum Corporation, a Fortune 500 Company, is an
independent refiner and marketer of petroleum products and
provider of marine logistics services. Tesoro operates six
refineries in the western United States with a combined capacity
of nearly 560,000 barrels per day. Tesoro's retail-marketing
system includes approximately 600 branded retail stations; of
which over 200 are company operated under the Tesoro(R) and
Mirastar(R) brands.
Tesoro Petroleum Corp.'s 9.625% bonds due 2008 (TSO08USN1) are
trading between 59 and 61. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=TSO08USN1for
DebtTraders' real-time bond pricing.
UNITED AIRLINES: Wants Nod to Pledge Collateral for Derivatives
---------------------------------------------------------------
James H.M. Sprayregen, Esq., at Kirkland & Ellis, explains that
the UAL Corporation and its debtor-affiliates' businesses are
sensitive to fluctuations in jet fuel prices, interest rates,
and foreign currency exchange rates. The Debtors enter into
derivative contracts to reduce the risks associated with the
fluctuations.
Derivative contracts can take a number of different forms,
including forward contracts, futures contracts, swap contracts,
option contracts or combinations. A forward contract obligates
the purchaser of such contract to acquire a security or asset on
a specified date in the future at a specified price. A futures
contract is similar to a forward contract in that a futures
contract also obligates the purchaser of such contract to
acquire a security or asset at a specified price on a specified
date in the future. A futures contract differs from a forward
contract in that it is generally available for purchase only on
an organized commodity exchange or similar marketplace which
serves as the contract counterparty to all participants and
generally requires the posting of margin by contract
participants. A swap contract obligates each party to the
contract to exchange or swap cash flows at specified intervals.
For example, an interest rate swap contract might obligate one
party to pay a cash flow calculated based on the application of
a fixed rate of interest on a hypothetical principal amount,
known as a notional amount, while the other party might be
obligated to pay a cash flow calculated based on the application
of a floating rate of interest on the same notional amount. An
option contract provides the purchaser the right, but not the
obligation, to purchase a security or asset at a specified price
on a specified date.
Each of these contracts may be used for purposes of hedging or
reducing risk or for purposes of speculating on the prices of
underlying securities, assets or indices.
The Debtors seek the Court's authority to
continue entering into, rolling over, adjusting, modifying and
settling Derivative Contracts to hedge their risk to
fluctuations in jet fuel prices and changes in interest rates
and foreign currency exchange rates. In addition, the Debtors
ask Judge Wedoff's permission to post letters of credit, enter
into escrow agreements, open and fund escrow accounts, post
collateral or margin, prepayment and delivery of settlement on
account of Derivative Contracts.
Fluctuations in the price of jet fuel significantly affect the
Debtors' operations. The Debtors historically have entered into
derivative contracts with respect to 50% to 90% of their annual
jet fuel consumption requirements. Without the benefit of
derivative contracts, the Debtors estimate that every $.01
increase in the average annual price-per-gallon of jet fuel
would add approximately $25,000,000 to the Debtors' annual jet
fuel costs. To hedge the risks associated with the fluctuations
in jet fuel prices, the Debtors have entered into forward
contracts, futures contracts, swap contracts, option contracts
and combinations of option contracts known as "collars" for jet
fuel, "West Texas Intermediate Crude Oil" and "No. 2 Heating
Oil."
Although it is possible to enter into Derivative Contracts for
jet fuel, the market for these contracts historically has been
relatively illiquid and more expensive than the market for
contracts for "West Texas Intermediate Crude Oil" and "No. 2
Heating Oil," which correlate with jet fuel prices.
The Debtors have entered into Derivative Contracts with BP
Exploration & Oil, Inc., J. Aron & Company, Koch Supply and
Trading, L.P., Morgan Stanley Capital Group Inc. and others for
periods that typically extend for 6 to 12 months.
The amount of jet fuel that is hedged is dependent on the price
of jet fuel and the relative cost of entering into Derivative
Contracts. In recent years, the Debtors have hedged as much as
90% of the 60,000,000 to 70,000,000 barrels of jet fuel that
they consume annually.
In addition, because of the international scope of the Debtors'
businesses, fluctuations in foreign currency exchange rates may
significantly affect their operations. To manage or reduce the
risks associated with fluctuations in foreign currency exchange
rates, the Debtors have entered into forward contracts and
option contracts related to the value of the U.S. dollar
relative to the Japanese yen, the Hong Kong dollar, the British
pound, the Canadian dollar, the Australian dollar and the Euro.
The Debtors have entered into such contracts with Credit
Agricole Indosuez, Westdeutsche Landesbank Girozentrale and
others for periods that typically extend 30 days to 1 year.
The Debtors have entered into Derivative Contracts to hedge over
$1,000,000,000 of their foreign currency exposure. Entering
into these Derivative Contracts enables the Debtors to
substantially limit their exposure to fluctuations to the
foreign currency exchange rates around the world.
Although the Debtors have historically entered into Derivative
Contracts to minimize the effects of changes in interest rate on
their businesses, the Debtors do not have outstanding Derivative
Contracts related to interest rates.
The Counterparties have required that the Debtors' performance
obligations under the Derivative Contracts be secured by a
pledge of assets to the Counterparty where the Debtors'
obligations under outstanding Derivative Contracts exceed a
predetermined threshold. Where the Counterparties require that
the Debtors post collateral or margin, the Debtors are required
to enter into a contract that secures their obligations to pay
under the Derivatives Contracts with their assets.
Recognizing the unique status of forward contracts, futures
contracts, swap contracts, option contracts in the financial and
commodity markets, Congress has added to the Bankruptcy Code
certain so-called "safe-harbor" provisions regarding Derivative
Contracts to which a debtor in possession is a party. These
provisions generally permit non-debtor Counterparties to
exercise certain rights and remedies under derivative contracts
not generally available to other contract counterparties in a
bankruptcy case.
Among the safe-harbor rights and protections under the
Bankruptcy Code:
a) allow the non-debtor party to terminate, liquidate and
apply collateral held under a Derivative Contract upon a
bankruptcy filing, notwithstanding Section 365(e)(1);
b) protect prepetition payments made under a Derivative
Contract by a debtor to a non-debtor party from the
avoidance powers of a trustee or debtor-in-possession
(except in particular cases of actual intent to defraud
other creditors); and
c) permit a non-debtor party to setoff mutual debts and claims
against a debtor under a Derivative Contract without the
need to obtain relief from the automatic stay. See 11
U.S.C. Sections 362(b)(6) and (17), 546(e), 548(d)(2)(B)
and (D), 553(b)(1), 556 and 560.
A. Master Agreements
Where a master agreement is used, a number of standard forms
exist for the types of transactions entered into by the
Debtors and the Counterparties. The parties to a master
agreement then enter into individual transactions under the
master agreements. These individual transactions are
customarily documented in the form of confirmations, which
set forth specified quantities and delivery dates for
physical transactions, and specified methods for calculation
of payment amounts and specified payment dates for financial
transactions.
B. Transaction Agreements
Under Transaction Agreements, proper termination upon an
early termination event -- whether the transactions under the
Transaction Agreements are forward contracts, swap
agreements, repurchase agreements, or otherwise -- is
typically accomplished by:
(a) both parties ceasing all further performance under the
transactions,
(b) the non-defaulting party determining the amounts payable
by each party to the other party at the time of
termination, and
(c) the "netting" of the amounts due to and from each party,
thereby reaching a net settlement amount payable by one
party.
Under many Transaction Agreements, a Termination Payment
would be payable by either the defaulting party or the non-
defaulting party. Thus, termination could, and often will,
result in a net payment to the Debtors. These "in the money"
agreements, where an embedded net amount due to the Debtors
is present, constitute significant assets of the Debtors'
estates.
C. The Master Netting, Setoff and Security Agreements
Many Transaction Agreements expressly address the rights of
setoff and netting. Some agreements may restrict common law
setoff rights. Other agreements may expand setoff and
netting rights to include multiple Transaction Agreements and
multiple affiliates of the contracting parties. The Debtors
and Counterparties have entered into master netting, setoff
and security agreements pursuant to which the Debtors and
Counterparties agree to aggregate their exposures under two
or more Transaction Agreements (physical and/or financial)
for purposes of determining exposure thresholds and
collateral requirements, as well as to exercise termination,
liquidation, netting and setoff rights across different
Transaction Agreements and different affiliated parties that
have signed the Master Netting Agreement. As a rule, the
Counterparties under a Master Netting Agreement are
affiliated entities, usually under the ownership of a common
parent company.
Mr. Sprayregen explains that termination of the Debtors'
Derivative Contracts would:
(a) cause disruption to the Debtors' operations,
(b) require the immediate attention of the Debtors'
management at a time when their resources are extremely
stressed, and
(c) expose the Debtors' ability to successfully reorganize to
fluctuations in jet fuel prices, interest rates and
foreign currency exchange rates.
Additionally, the Counterparties will realize on their
collateral if the Debtors owe them money. The Debtors will owe
money to Counterparties on account of the Derivative Contracts,
and the collateral posted will be at risk, when the prices of
jet fuel, interest rates and foreign currency exchange rates
become favorable. In this situation, although the Debtors may
owe money on account of the Derivative Contracts, the Debtors'
businesses will have benefited from the favorable prices of the
jet fuel, interest rates and foreign currency exchange rates.
Consequently, the losses from the Derivative Contracts will be
offset by gains in the Debtors' operations. Thus, the benefits
of the Debtors' derivative strategy can only be realized by
continuing the prepetition practices.
For example, the Debtors enter into Derivative Contracts to
hedge fluctuations in jet fuel prices. When the price of jet
fuel increases, the Debtors are obligated to pay more money for
the jet fuel they consume. However, the additional expense of
jet fuel is offset by a corresponding benefit from the profits
the Debtors receive on account of the Derivative Contract they
entered into to hedge the price of jet fuel. Alternatively,
when the price of jet fuel decreases, the Debtors lose money on
account of the Derivative Contract they entered into to hedge
the price jet fuel. If the Debtors do not pay the Derivative
Contract counterparty on account of such loss, the party would
be entitled to realize on any pledged collateral,
notwithstanding Section 362. However, the loss associated with
the Derivative Contract that the collateral is realized would be
offset by a corresponding benefit from the decreased expense of
jet fuel for the Debtors to fly their aircraft. (United Airlines
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
UNITED AIRLINES: Employee Stock Plan Will Sell Remaining Stake
--------------------------------------------------------------
The employee stock ownership plan for UAL Corp., the parent of
United Airlines, filed to sell the remaining 32.4 million shares
it holds in the company, according to a filing released by the
Securities and Exchange Commission, Dow Jones reported. The
newswire reported that the judge handling UAL's bankruptcy
proceedings delayed until at least January 15 a final ruling on
whether the plan's trustee, State Street Bank & Trust Co., can
sell the stock, the newswire reported. State Street has been
barred from selling the plan's UAL stock since December 9, when
an injunction was issued prohibiting the transactions.
The 32.4 million UAL shares covered by the SEC registration on
Tuesday, which allows for sales but doesn't require them, have a
total market value of $44.7 million, based on Monday's closing
price, Dow Jones reported. State Street anticipates the sales
will occur "over the next three months," the filing said,
according to the newswire. Judge Eugene R. Wedoff said UAL must
be able to give a "fuller" analysis on the potential impact of
the stock sales on its reorganization. (ABI World, Jan. 2)
DebtTraders reports that United Airlines' 10.670% bonds due 2004
(UAL04USR1) are trading between 9 and 11. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for
real-time bond pricing.
UNITED AIRLINES: Extends Slashed Fares for U.S. & Int'l Travel
--------------------------------------------------------------
United Airlines (NYSE: UAL) announced it is extending the
purchase date through January 10, 2003 for its exceptionally
attractive leisure fares that are valid for domestic U.S. travel
through May 18, 2003. International sale fares, which are valid
for travel beginning January 13, 2003, may now be purchased
through January 20, 2003.
"This extension allows extra time to book an exciting winter or
spring break vacation on United," said Chris Bowers, senior vice
president-sales and reservations. "Customers booking United can
look forward to excellent service on the ground and in the air
in addition to our low fares."
Customers who book on-line at www.ual.com by April 30, 2003 will
receive 1,000 bonus Mileage Plus miles upon completion of
travel.
Domestic U.S. sale fares require a 14-day advance purchase and
Saturday night stay and are valid for travel through May 18,
2003. Higher sale fares will apply for travel March 6, 2003
through April 21, 2003.
Here are sample domestic markets with the each way (based on
required round-trip purchase) sale fare level United is
offering:
* Chicago-Boston, $99
* Chicago-Los Angeles, $124
* Chicago-New York City, $99
* Chicago-Orlando, $102
* Denver-Chicago, $104
* Denver-Phoenix, $127
* Denver-San Francisco, $99
* Los Angeles-Atlanta, $173
* Los Angeles-San Francisco, $56
* San Francisco-Seattle, $73
* San Francisco-Washington, D.C., $181
* Washington, D.C.-New Orleans, $110
* Washington, D.C.-Miami, $103
International sale fares for Latin and Pacific destinations are
valid for travel between Jan. 13 and March 31, 2003. Sale fares
for European destinations are valid for travel commencing
between Jan. 13 and March 8, 2003 and completed by March 14,
2003.
International sale fares must be purchased by Jan. 20, 2003.
These fares require a 7-day advance purchase and Saturday night
stay. (Exceptions are for Latin destinations a 3-day minimum
stay is required. For Pacific destinations a 6-day minimum stay
is required.)
Some sample international destinations with the each way sale
fare (based on required roundtrip travel) are as follows:
* Chicago-Frankfurt, $249 (with Lufthansa)
* Chicago-Hong Kong, $429
* Los Angeles-Mexico City, $159
* Miami-Rio De Janeiro/Sao Paulo, $199
* New York City-London, $149
* San Francisco-Beijing, $289
* San Francisco-Tokyo, $299
* Washington, D.C.-Amsterdam, $219 (with Lufthansa)
United Airlines offers nearly 1,800 flights a day on a route
network that spans the globe. United's frequent flier program
Mileage Plus, with more than 40 million enrolled members, has
been named the best frequent flyer program by Business Traveler
International magazine in 1996, 1997, 1998, 1999, 2000, 2001 and
2002. In addition to earning miles through flights on United,
Mileage Plus members can earn miles with over 100 partners,
including through credit cards, long distance telephone calls,
grocery purchases, online stock trading, dining at partner
restaurants and shopping at partner stores, as just a few
examples. Program guidelines are available to customers on
United's Web site, http://www.united.com
UNITED AIRLINES: Akin Gump Represents Ad Hoc EETC & ETC Groups
--------------------------------------------------------------
A group of creditors, who together hold more than $3 billion in
Enhanced Equipment Trust Certificates and Equipment Trust
Certificates issued by United Air Lines, Inc., or its
affiliates, have formed an ad hoc committee to respond to
various restructuring proposals being circulated by United. The
ad hoc committee believes that United has a total of $6.7
billion currently outstanding of such EETCs and ETCs, which are
secured by a significant portion of United's fleet of aircraft.
The ad hoc committee currently includes approximately 25
institutions and is encouraging other holders of these
securities to join. Committee members are concerned with the
terms of the restructuring proposals and the manner in which
United has circulated these proposals, particularly because the
proposals provide little or no information about United's
intentions or its overall restructuring plans. As a result, the
proposals leave the holders with little information upon which
to make a decision. The committee is in the process of
formulating appropriate responses to these proposals, and in the
interim, strongly recommends that other holders not accept these
proposals.
The ad hoc committee is represented by the law firm of Akin Gump
Strauss Hauer & Feld LLP. Akin Gump attorney David Botter, a
financial restructuring partner, says that the committee
believes that United is attempting to contact individual holders
to renegotiate the terms of these securities to the detriment of
other holders. Since filing for bankruptcy, United has targeted
specific securities to negotiate individual deals.
The ad hoc committee is examining its options to respond to
United's recent proposals. It is also in contact with the
trustees for each of the ETCs and EETCs, and anticipates working
with the trustees on any coordinated response to the proposals.
The committee believes that the most appropriate way for United
to negotiate restructuring proposals is through discussions with
the substantial group of EETC and ETC holders represented on the
ad hoc committee rather than with individual holders. Indeed,
the committee is concerned that individual negotiations are
counterproductive for individual holders as well as the ETC and
EETC holders as a group.
To ensure that all holders have adequate representation, the ad
hoc committee recommends that other EETC and ETC holders join
the committee. Interested holders should contact the ad hoc
committee through its counsel, Mr. Botter or Mary Masella of
Akin Gump at 212/872-1000 or via email at dbotter@akingump.com
or mmasella@akingump.com.
US LEC CORP: Restructures Debt Agreement and Raises New Funding
---------------------------------------------------------------
US LEC Corp. (Nasdaq: CLEC), a super-regional telecommunications
carrier providing integrated voice, data and Internet
telecommunications services to businesses, announced a complete
restructuring of the Company's debt agreement with lenders while
simultaneously raising new funding through a subordinated debt
arrangement. With these in place, US LEC is fully funded to free
cash flow and is well positioned to continue its steady growth
while executing on a proven business plan.
Key terms of the restructuring activities include:
* Deferral of $30 million of term loan principal payments
from 2003-04 to 2005-06;
* Deferral of the Company's $25 million principal payment
on its revolving credit facility from 2005 to 2006;
* An $8 million principal payment to senior lenders at
closing, reducing total outstanding senior debt to $128
million;
* A $5 million investment led by the Company's Chairman of
subordinated notes at 11% interest and maturing in 2007,
including warrants to purchase 2.6 million shares of
common stock at $1.90 per share (representing
approximately 10% of the Company's current outstanding
common stock);
* Revised financial covenants consistent with the Company's
business plan.
"With our announcement [Thurs]day, US LEC is now fully funded to
free cash flow. This new agreement is a tremendous vote of
confidence in US LEC from our new and existing financial
partners who recognized our consistently strong operating
results," said Aaron Cowell, president and CEO of US LEC. "We
are especially pleased that we have been able to close our
funding gap in a way that is positive to all of our stakeholders
-- customers, lenders, shareholders and employees. US LEC
continues to deliver strong bottom line performance focused on
customer growth, superior customer care and controlled
spending."
"The movement of scheduled principal payments from 2003-04 to
2005-06 and the one-year deferral of the maturity of our $25
million revolver allows US LEC sufficient time to grow our
revenue base to service 100% of our debt," said Michael K.
Robinson, executive vice president & CFO of US LEC. "We are also
very pleased to have raised an additional $5 million
subordinated debt investment during very challenging times for
our industry. As a result, we were able to work with our senior
lenders to schedule payments in line with our business plan,
keep our strong capital structure in place with relatively
modest dilution to current equity and maintain a strong cash
position."
Based in Charlotte, North Carolina, US LEC is an integrated
telecommunications carrier providing voice, data and Internet
services to over 10,000 mid-to-large-sized business customers
throughout the southeastern and mid-Atlantic United States. US
LEC's network of 26 digital switching centers consists of Lucent
5ESS(R) AnyMedia(TM) digital switches, Lucent CBX500 ATM data
switches, Juniper M20(TM) Internet Gateway routers and an
Alcatel MegaHub(R) 600ES. The US LEC local service area includes
Alabama, Florida, Georgia, Kentucky, Louisiana, Maryland,
Mississippi, New Jersey, North Carolina, Pennsylvania, South
Carolina, Tennessee, Virginia and the District of Columbia. In
addition to the states listed above, US LEC also offers selected
voice and data services in Arizona, California, Connecticut,
Indiana, Massachusetts, Montana, Nevada, New York, Ohio, Texas
and Wisconsin. For more information about US LEC, visit
http://www.uslec.com
US LEC Corp.'s September 30, 2002 balance sheet shows a total
shareholders' equity deficit of about $148 million.
WESTAR ENERGY: KCC Modifies November 8, 2002 Order re Fin'l Plan
----------------------------------------------------------------
On December 23, 2002, the Kansas Corporation Commission issued
an order modifying an order issued November 8, 2002 addressing
the financial plan of Westar Energy, Inc., the 88% owner of
Protection One. Among other things, the new order requires that
no later than August 1, 2003, Westar Energy transfer certain of
its utility operations to a utility only subsidiary and that the
consolidated debt of all of Westar Enegy's utility businesses
not exceed $1.67 billion.
Westar Energy's March 31, 2002, balance sheet shows a working
capital deficit topping $1 billion.
WHEELING-PITTSBURGH: Wins Okay to Settle Ohio Property Taxes
------------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation and its debtor-affiliates
sought and obtained authority from the Court 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. 31;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WISER OIL: Releases Operational & Financial Guidance for 2003
-------------------------------------------------------------
The Wiser Oil Company (NYSE:WZR), which previously reported a
working capital deficit of about $11 million at September 30,
2002, announced certain operational and financial guidance for
2003.
Capital Expenditure Program
The Board of Directors of the Company approved an exploration
and development budget of $32 million for 2003. Of the total,
approximately $16.5 million, or 53%, is allocated to activities
in the U.S. with the balance, $15.5 million, earmarked for
Canada. The 2003 budget allocates approximately $14.4 million
towards development activities, including the anticipated
drilling of 30 development wells, $11.5 million towards the
drilling of 19 exploratory wells and $6.1 million in land and
seismic expenditures. Major focus areas for spending in 2003
include projects in onshore South Texas, the Gulf of Mexico, the
Wild River area and the Hayter oil field in southeast Alberta.
Approximately 45.6 billion cubic feet equivalent (BCFE) of net
unrisked reserves are targeted with the exploratory drilling
program.
Anticipated Production
Assuming risked success from its 2003 capital expenditure
program, the Company projects that its net 2003 production will
average approximately 69,000 thousand cubic feet equivalent per
day (MCFEPD), 57% natural gas, consisting of approximately
39,000 MCF of natural gas and 5,000 barrels of oil and natural
gas liquids (NGL's) per day for a total production of 25.2 BCFE.
The anticipated entry production rate for 2003 is 62,000 MCFEPD
and the forecasted exit production rate for 2003 is 73,600
MCFEPD (26.9 BCFE annualized). The 2003 production forecast
represents an approximate 7% increase over estimated 2002
average production of 64,300 MCFEPD, or a total production of
23.5 BCFE.
Estimated Production and Expenses
The following table presents management's estimates of
production and unit expenses for the full year of 2003.
Year 2003
Production:
Natural Gas - Mcf per day 39,000
Oil - Barrels per day 4,765
NGL's - Barrels per day 235
NYMEX Differential:
Oil $ (3.20)
Natural Gas (0.62)
NGL (6.50)
Expenses per MCFE:
Lease Operating Expenses $0.80 - 0.90
Production Taxes 0.12 - 0.15
General and Administrative 0.35 - 0.40
Interest 0.56 - 0.58
Depletion, Depreciation & Amortization 1.15 - 1.25
Hedging Update
The Company currently has 3,190,000 million British Thermal
Units (MMBTU) of 2003 gas production hedged at an average swap
price of $4.07 per MMBTU, representing approximately 23% of
anticipated 2003 gas production. In addition, the Company has a
$3.25/$4.25 collar for 3,650,000 MMBTU of 2003 gas production,
representing approximately 26% of anticipated 2003 gas
production. The Company also has 454,000 barrels of oil hedged
for the first half of 2003 at an average swap price of $25.97,
representing approximately 25% of anticipated 2003 oil
production. The Company has a $27.00 / $29.00 collar for 90,000
barrels of oil production, representing approximately 5% of
anticipated 2003 oil production. Collars provide the Company
with an ensured floor price and a maximum ceiling price, with no
payments made between the Company and its counterparties if the
settlement price falls within the band set by the floor and
ceiling prices. The Company's current hedge position for 2003 is
maintained on the Company's Web site at http://www.wiseroil.com
George K. Hickox, Jr., Wiser Chairman and Chief Executive
Officer, said: "Our 2003 capital budget is very targeted and was
set after a rigorous internal review and allocation process
designed to balance our exposure to exploration versus
development and U.S. versus Canadian activities. We have an
inventory of prospects in South Texas, the Gulf of Mexico and
Canada that we believe will add considerable economic reserves
and production to Wiser's core operating base. We are encouraged
by our success at Wild River and look to this area to make a
significant impact on our gas production in this and future
years. The budget has the flexibility to reallocate capital to
areas like Wild River in Alberta, should the Company see the
right opportunities. We exit the year no longer burdened by
natural gas commodity hedges that materially curtailed our
financial results in 2002. We are hopeful that natural gas
prices will continue to stay strong through 2003 and reward our
strategy of aggressively spending in 2002 and increasing Wiser's
percentage of gas production from 46% in 2000 to approximately
55% in 2003."
Dallas-based Wiser Oil Company (NYSE:WZR) is an independent oil
and gas exploration and production company with reserves and
production in and along the Texas Gulf of Mexico, Permian Basin
of Texas and New Mexico, and Alberta, Canada. The Company's
total proved reserves at December 31, 2001 were 212.4 billion
cubic feet equivalent, with natural gas comprising 46% of total
reserves. Wiser's proved reserves at December 31, 2001 were 81%
developed, with approximately 63% located in the United States
and 37% located in Canada.
WORLD AIRWAYS: Flight Attendants Reject Labor Contract Proposal
---------------------------------------------------------------
World Airways (Nasdaq: WLDAC) was notified in the late afternoon
on Friday, December 27, 2002, that its flight attendants,
represented by the International Brotherhood of Teamsters (Local
210), had rejected the contract proposal that was put out for a
vote on November 27, 2002. This vote came after 2-1/2 years of
negotiations with the flight attendants and had included nine
months of mediation. The collective bargaining agreement with
the flight attendants became amendable on July 1, 2000. The
Company expects no impact on its daily operations as it
continues to work through the National Mediation Board.
Hollis Harris, chairman and chief executive officer of World
Airways, said, "We are disappointed in the outcome of this vote.
We had worked very hard to find work rule changes that would
make this a cost neutral contract and provide our flight
attendants many of the things they wanted. We will now work
with the National Mediation Board to ensure that our operation
is not impacted during this very critical time as our nation
deals with the situation in Iraq."
Utilizing a well-maintained fleet of international range,
widebody aircraft, World Airways has an enviable record of
safety, reliability and customer service spanning more than 54
years. The Company is a U.S. certificated air carrier providing
customized transportation services for major international
passenger and cargo carriers, the United States military and
international leisure tour operators. Recognized for its modern
aircraft, flexibility and ability to provide superior service,
World Airways meets the needs of businesses and governments
around the globe. For more information, visit the Company's Web
site at http://www.worldair.com
World Airways' September 30, 2002 balance sheet shows a total
shareholders' equity deficit of about $22 million.
WORLDCOM: Brings-In American Appraisal as Valuation Consultant
--------------------------------------------------------------
Worldcom Inc., and its debtor-affiliates sought and obtained
authorization to retain and employ American Appraisal Associates
as their valuation consultants, nunc pro tunc to October 23,
2002, to help achieve compliance with certain regulations issued
by the Financial Accounting Standards Board.
WorldCom Chief Financial Officer John S. Dubel informs the Court
that American Appraisal will provide valuation services on
Debtors' real and personal property, as well as identifying and
valuing intangible assets. The FASB has issued Statements of
Financial Accounting Standards, which require companies to test
long-lived assets and goodwill for impairment. In order do so,
it is necessary to know the fair market value of the assets as
well as to identify and value qualifying intangible assets. In
performing these services, American Appraisal will, among other
things, conduct a review and analysis of these factors:
-- management forecasts of expected future cash flows;
-- discount rates commensurate with the risks of the subject
operations; and
-- quoted market prices which seem indicative of value
relative to the subject operations.
American Appraisal will produce a report comprised of a
narrative covering the nature and scope of its investigation,
the methodologies employed and its conclusion of value.
American Appraisal will also provide Summary Appraisal Reports,
which will set forth a summary of the data used in the appraisal
process.
Mr. Dubel explains that the Debtors have selected American
Appraisal as their valuation experts because of the firm's
diverse experience and extensive knowledge. American Appraisal
is one of the world's largest and oldest independent
international valuation consulting firms. American Appraisal
prepares valuation studies on assets and businesses having net
worth greater than $200,000,000,000 per year. Mr. Dubel adds
that American Appraisal has been retained as an independent
valuation expert to debtors, creditors' committees, investors
and other parties-in-interest in numerous bankruptcy cases.
Moreover, American Appraisal has a strong telecommunications
industry practice, with industry leading experience in the
valuation of tangible and intangible telecommunications assets.
The Debtors believe that American Appraisal is well qualified to
assist the Debtors on the matters for which it is to be engaged.
Dale Egan, a Member of American Appraisal Associates, assures
the Court that American Appraisal is a "disinterested person" as
that term is defined in Section 101(14) of the Bankruptcy Code,
as modified by section 1107(b) of the Bankruptcy Code. In
addition, American Appraisal does not hold or represent an
interest adverse to the Debtors' estates that would impair
American Appraisal's ability to objectively perform professional
services for the Debtors. However, he admits that American
Appraisal currently provides services for these parties in
unrelated matters: Verizon, SBC, EDS Corp., AT&T, CPT
International, Cingular, CenturyTel Solutions LLC, American
Airlines, United Airlines, and Nextel.
American Appraisal will be compensated for the professional
services rendered to the Debtors based on the time actually
expended by each assigned staff member at each staff member's
customary daily billing rate. The applicable customary daily
rates for services to be rendered are:
Managing Principal $4,625
Principal $3,350
Engagement Director $2,450
Senior Valuation Consultant $1,713
Associate Appraiser $1,137
American Appraisal will also seek reimbursement for necessary
expenses incurred, which will include travel, mileage,
photocopying, delivery service, postage, vendor charges and
other out-of-pocket expenses incurred in providing professional
services. (Worldcom Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
DebtTraders says that Worldcom Inc.'s 7.375% bonds due 2006
(WCOE06USA1) are trading at 26 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE06USA1
for real-time bond pricing.
WORLDCOM INC: Pulls Plug on Tampa Intermedia Lease
--------------------------------------------------
Highwoods Properties (NYSE: HIW), a real estate investment
trust, has received notification that WorldCom has rejected its
lease at Highwoods Preserve in Tampa, Florida effective
December 31, 2002. This lease encompassed approximately 800,000
square feet and accounted for approximately $14.3 million in
annualized rental revenue. WorldCom was current on its rent
payments through December 31, 2002.
Ron Gibson, president and chief executive officer of Highwoods
said, "We had been assuming that WorldCom would reject a
significant percentage of their leased space with Highwoods and
our previously-disclosed guidance for 2003 assumed no revenue
from the Tampa property, which was significantly underutilized.
In addition, as a result of WorldCom's bankruptcy filing, we
have been accounting for all rent from WorldCom on a cash basis
since the beginning of the third quarter."
Highwoods developed the campus for Intermedia Communications,
which was acquired by WorldCom, beginning in 1999 and it
includes four office buildings, ranging in size from
approximately 178,000 square feet to 208,000 square feet as well
as a small amenities building. The campus houses state-of-the-
art internal systems, including raised computer flooring in all
four buildings and a parking ratio of five spaces per 1,000
rentable square feet. One of the buildings is specifically
designed as a data center, with laminated exterior glass and a
special roofing system to withstand 130 mph winds.
"This facility was built in the heart of 'New Tampa,' the
fastest growing suburban market in the area. It is an ideal
location for companies considering relocating all or part of
their operations to the Tampa market. While we will initially
focus on identifying single tenant users with large space
requirements, each office building can be converted to a multi-
tenant facility, giving us flexibility as we locate companies
seeking to expand or upgrade their facilities in Tampa," Mr.
Gibson added.
Highwoods Properties, Inc., is a fully integrated, self-
administered real estate investment trust that provides leasing,
management, development, construction and other customer-related
services for its properties and for third parties. The Company
currently owns or has an interest in 589 office, industrial,
retail and service center properties encompassing approximately
46.9 million square feet, including 9 development projects
encompassing approximately 1.1 million square feet. Highwoods
also owns approximately 1,250 acres of development land.
Highwoods is based in Raleigh, North Carolina, and its
properties and development land are located in Florida, Georgia,
Iowa, Kansas, Missouri, North Carolina, South Carolina,
Tennessee and Virginia. For more information about Highwoods
Properties, visit its Web site at http://www.highwoods.com
WORLD HEART: Completes Private Placement of 1.6 Million Equity
--------------------------------------------------------------
World Heart Corporation (TSX: WHT, OTCBB: WHRTF) completed the
first closing of its previously announced private placement,
through Northern Securities Inc., of 1,631,525 units at a price
of CDN$1.28 per Unit, for gross proceeds of $2,088,352. Each
Unit comprises one common share, and one warrant to purchase a
common share. Each warrant will be exercisable into one common
share at an exercise price of CDN$1.60 per share for a period of
five years. The balance of the $3,000,000 private placement is
expected to close on or before January 10, 2003.
With respect to the additional $8,000,000 in debt financing,
which the Corporation previously indicated that it was raising
in separate transactions, $2,000,000 of gross proceeds has
already been received, and final approvals have been received
with respect to the balance, which has now been increased by
$2,000,000 for a total of $13,000,000 in funding including the
above private placement of equity. These additional transactions
are expected to close early in 2003.
Following Jan. 2's first closing, WorldHeart now has 19,601,652
common shares issued and outstanding.
WorldHeart intends to use the proceeds from these private
placements towards marketing expenses related to its Novacor(R)
LVAS, continued funding of the development of its optimized
HeartSaverVAD(TM) and for general corporate purposes.
The common shares, including those underlying the warrants, have
not been registered under the U.S. Securities Act of 1933 and
may not be offered or sold in the United States or to U.S.
persons unless an exemption from such registration is available.
WorldHeart's Novacor(R) LVAS is an electromagnetically driven
pump that provides circulatory support by taking over part or
all of the workload of the left ventricle. Novacor(R) LVAS is
already approved in Europe without restrictions for use by heart
failure patients; and in the United States and Canada as a
bridge to heart transplantation. It is approved for use in Japan
by cardiac patients at risk of imminent death from non-
reversible left ventricular failure for which there is no
alternative but a heart transplant.
World Heart Corporation, a global medical device company based
in Ottawa, Ontario and Oakland, California, is currently focused
on the development and commercialization of pulsatile
ventricular assist devices. Its Novacor(R) LVAS (Left
Ventricular Assist System) is well established in the
marketplace and its next-generation technology,
HeartSaverVAD(TM), is a fully implantable assist device intended
for long-term support of patients with end-stage heart failure.
World Heart's September 30, 2002 balance sheet reported a total
shareholders equity deficit of about C$35.4 million.
WORLDPORT COMMS: Reviewing W.C.I. Acquisition's Tender Offer
------------------------------------------------------------
Worldport Communications, Inc., (OTC BB:WRDP) is reviewing the
tender offer announced by W.C.I. Acquisition Corp., on
December 23, 2002 for all of the outstanding common stock of
Worldport at a price of $0.50 per share.
Worldport will advise its stockholders of its position with
respect to the W.C.I. Acquisition Corp., tender offer on or
before January 7, 2003.
* * *
As reported in Troubled Company Reporter's November 14, 2002
edition, the Company said it was "currently operating with a
minimal headquarters staff while we complete the activities
related to exiting our prior businesses and determine how to use
our cash resources. We will have broad discretion in determining
how and when to use these cash resources. Alternatives being
considered include potential acquisitions, a recapitalization
which might provide liquidity to some or all shareholders, and a
full or partial liquidation. Upon any liquidation, dissolution
or winding up of the Company, the holders of our outstanding
preferred stock would be entitled to receive approximately $68
million prior to any distribution to the holders of our common
stock."
* Olshan Grundman Restructuring Department Moves to Arent Fox
-------------------------------------------------------------
Schuyler G. Carroll, Esq., Robert Grossman, Esq., and Andrew
Silfen, Esq., joined Arent Fox Kintner Plotkin & Kahn, PLLC,
effective January 1, 2003. The lawyers packed-up the
bankruptcy and financial restructuring practice at Olshan
Grundman Frome Rosenzweig & Wolosky LLP and work from Arent
Fox's New York offices. The lawyers represent official
committees appointed in:
* In re Planet Hollywood International, Inc. et al.
* In re AppliedTheory Corporation et al.
* In re Cygnifi Derivatives Services, LLC
* In re FutureLink Madison Corporation
* In re FutureLink Async Corporation et al.
* In re Plan B Communications, Inc.
* In re CSI Incorporated
* In re Choice Seat (Canada) Inc.
* In re CNB Orlando Hotel LLC
* In re Empire One Telecommunications, Inc.
* In re Sonus Communications, Inc. et al.
* In re Metiom, Inc.
* In re Astoria Jewelry Mfg. Co. Inc.
* In re River Center LLC et al.
* In re Men's Suits on Fifth Avenue, Ltd. et al.
* In re Scient, Inc.
* In re iXL, Inc. et al.
* In re Apple Capitol Group, LLC
* In re Europadisk, LLC
* In re Blackwood, Inc.
* In re Blackwood Trading LLC
and will continue to represent the Committees following their
move to Arent Fox.
* BOND PRICING: For the week of January 6 - 10, 2003
----------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
Adelphia Communications 3.250% 05/01/21 7
Adelphia Communications 6.000% 02/15/06 7
Adelphia Communications 10.875% 10/01/10 38
Advanced Micro Devices Inc. 4.750% 02/01/22 63
AES Corporation 4.500% 08/15/05 45
AES Corporation 8.000% 12/31/08 59
AES Corporation 9.375% 09/15/10 62
AES Corporation 9.500% 06/01/09 58
Agro-Tech Corp. 8.625% 10/01/07 73
Akamai Technologies 5.500% 07/01/07 40
Alaska Communications 9.375% 05/15/09 72
Alexion Pharmaceuticals 5.750% 03/15/07 68
Allegheny Generating Company 6.875% 09/01/23 73
Alkermes Inc. 3.750% 02/15/07 62
Alpharma Inc. 3.000% 06/01/06 74
Amazon.com Inc. 4.750% 02/01/09 73
American Tower Corp. 2.250% 10/15/09 70
American Tower Corp. 5.000% 02/15/10 65
American Tower Corp. 6.250% 10/15/09 67
American & Foreign Power 5.000% 03/01/30 60
Amkor Technology Inc. 5.000% 03/15/07 49
AMR Corp. 9.000% 09/15/16 48
AMR Corp. 9.750% 08/15/21 42
AMR Corp. 9.800% 10/01/21 42
AMR Corp. 10.000% 04/15/21 43
AMR Corp. 10.200% 03/15/20 44
AnnTaylor Stores 0.550% 06/18/19 62
Argo-Tech Corp. 8.625% 10/01/07 72
Applied Extrusion 10.750% 07/01/11 63
BE Aerospace Inc. 8.875% 05/01/11 69
Best Buy Co. Inc. 0.684% 06?27/21 68
Borden Inc. 7.875% 02/15/23 56
Borden Inc. 8.375% 04/15/16 60
Borden Inc. 9.250% 06/15/19 57
Borden Inc. 9.200% 03/15/21 60
Boston Celtics 6.000% 06/30/38 65
Brocade Communication Systems 2.000% 01/01/07 70
Brooks-PRI Automation Inc. 4.750% 06/01/08 74
Building Materials Corp. 8.000% 10/15/07 74
Building Materials Corp. 8.000% 12/01/08 75
Burlington Northern 3.200% 01/01/45 56
Burlington Northern 3.800% 01/01/20 72
Calair LLC/Capital 8.125% 04/01/08 45
Calpine Corp. 4.000% 12/26/06 49
Calpine Corp. 8.500% 02/15/11 42
Case Corp. 7.250% 01/15/16 71
Cell Therapeutic 5.750% 06/15/08 60
Centennial Cellular 10.750% 12/15/08 53
Champion Enterprises 7.625% 05/15/09 41
Charter Communications, Inc. 4.750% 06/01/06 18
Charter Communications, Inc. 5.750% 10/15/05 23
Charter Communications Holdings 8.625% 04/01/09 45
Charter Communications Holdings 10.250% 01/15/10 45
Charter Communications Holdings 10.750% 10/01/09 45
Ciena Corporation 3.750% 02/01/08 70
Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 68
Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 69
CNET Inc. 5.000% 03/01/06 65
Comcast Corp. 2.000% 10/15/29 24
Comforce Operating 12.000% 12/01/07 56
Commscope Inc. 4.000% 12/15/06 74
Conexant Systems 4.000% 02/01/07 46
Conexant Systems 4.250% 05/01/06 51
Conseco Inc. 8.750% 02/09/04 10
Continental Airlines 4.500% 02/01/07 44
Continental Airlines 7.560% 12/01/06 46
Corning Inc. 3.500% 11/01/08 71
Corning Inc. 6.300% 03/01/09 75
Corning Inc. 6.750% 09/15/13 74
Corning Inc. 6.850% 03/01/29 61
Corning Inc. 8.875% 08/15/21 70
Corning Glass 8.875% 03/15/16 75
Cox Communications Inc. 3.000% 03/14/30 33
Cox Communications Inc. 0.348% 02/23/21 71
Cox Communications Inc. 0.426% 04/19/20 45
Cox Communications Inc. 7.750% 11/15/29 30
Crown Cork & Seal 7.375% 12/15/26 68
Cubist Pharmacy 5.500% 11/01/08 49
Cummins Engine 5.650% 03/01/98 63
Dana Corp. 7.000% 03/01/29 70
Dana Corp. 7.000% 03/15/28 71
DDI Corp. 5.250% 03/01/08 19
DDI Corp. 6.250% 04/01/07 16
Delta Air Lines 7.900% 12/15/09 69
Delta Air Lines 8.300% 12/15/29 53
Delta Air Lines 9.000% 05/15/16 62
Delta Air Lines 9.250% 03/15/22 60
Delta Air Lines 9.750% 05/15/21 63
Delta Air Lines 10.375% 12/15/22 66
EOTT Energy Partner 11.000% 10/01/09 67
Echostar Communications 4.875% 01/01/07 74
Echostar Communications 5.750% 05/15/08 73
Edison Mission 9.875% 04/15/11 29
Edison Mission 10.000% 08/15/08 36
El Paso Corp. 7.000% 05/15/11 68
El Paso Corp. 7.750% 01/15/32 59
El Paso Energy 6.750% 05/15/09 73
El Paso Energy 8.050% 10/15/30 64
El Paso Natural Gas 7.500% 11/15/26 57
El Paso Natural Gas 8.625% 01/15/22 66
Emulex Corp. 1.750% 02/01/07 72
Enron Corp. 9.875% 06/15/03 16
Enzon Inc. 4.500% 07/01/08 74
Equistar Chemicals 7.550% 02/15/26 69
E*Trade Group 6.000% 02/01/07 74
Finova Group 7.500% 11/15/09 37
Fleming Companies Inc. 5.250% 03/15/09 51
Ford Motor Co. 6.625% 02/15/28 75
Fort James Corp. 7.750% 11/15/23 74
General Physics 6.000% 06/30/04 51
Geo Specialty 10.125% 08/01/08 58
Georgia-Pacific 7.375% 12/01/25 74
Great Atlantic 9.125% 12/15/11 68
Gulf Mobile Ohio 5.000% 12/01/56 62
Health Management Associates Inc. 0.250% 08/16/20 66
Human Genome 3.750% 03/15/07 65
Human Genome 5.000% 02/01/07 72
I2 Technologies 5.250% 12/15/06 58
Ikon Office 6.750% 12/01/25 66
Ikon Office 7.300% 11/01/27 70
Imcera Group 7.000% 12/15/13 75
Imclone Systems 5.500% 03/01/05 70
Inhale Therapeutic Systems Inc. 3.500% 10/17/07 55
Inhale Therapeutic Systems Inc. 5.000% 02/08/07 61
Inland Steel Co. 7.900% 01/15/07 55
Internet Capital 5.500% 12/21/04 37
Isis Pharmaceutical 5.500% 05/01/09 72
Juniper Networks 4.750% 03/15/07 73
Kmart Corporation 9.375% 02/01/06 10
Kulicke & Soffa Industries Inc. 4.750% 12/15/06 55
Kulicke & Soffa Industries Inc. 5.250% 08/15/06 59
LTX Corporation 4.250% 08/15/06 65
Lehman Brothers Holding 8.000% 11/13/03 64
Level 3 Communications 6.000% 09/15/09 42
Level 3 Communications 6.000% 03/15/10 41
Level 3 Communications 9.125% 05/01/08 62
Liberty Media 3.500% 01/15/31 63
Liberty Media 3.750% 02/15/30 51
Liberty Media 4.000% 11/15/29 55
LTX Corp. 4.250% 08/15/06 63
Lucent Technologies 5.500% 11/15/08 48
Lucent Technologies 6.450% 03/15/29 42
Lucent Technologies 6.500% 01/15/28 43
Lucent Technologies 7.250% 07/15/06 56
Magellan Health 9.000% 02/15/08 26
Mail-Well I Corp. 8.750% 12/15/08 65
Mapco Inc. 7.700% 03/01/27 59
Medarex Inc. 4.500% 07/01/06 65
Mikohn Gaming 11.875% 08/15/08 74
Mirant Corp. 5.750% 07/15/07 43
Mirant Americas 7.200% 10/01/08 49
Mirant Americas 7.625% 05/01/06 65
Mirant Americas 8.300% 05/01/11 43
Mirant Americas 8.500% 10/01/21 35
Missouri Pacific Railroad 4.750% 01/01/20 74
Missouri Pacific Railroad 4.750% 01/01/30 72
Missouri Pacific Railroad 5.000% 01/01/45 60
Motorola Inc. 5.220% 10/01/21 65
MSX International 11.375% 01/15/08 67
NTL Communications Corp. 7.000% 12/15/08 19
National Vision 12.000% 03/30/09 50
Natural Microsystems 5.000% 10/15/05 58
Nextel Communications 5.250% 01/15/10 72
Nextel Partners 11.000% 03/15/10 67
NGC Corp. 7.625% 10/15/26 56
Noram Energy 6.000% 03/15/12 72
Northern Pacific Railway 3.000% 01/01/47 54
Northern Telephone Capital 7.875% 06/15/26 61
NorthWestern Corporation 6.950% 11/15/28 72
ON Semiconductor 12.000% 05/15/08 73
ONI Systems Corporation 5.000% 10/15/05 74
OSI Pharmaceuticals 4.000% 02/01/09 70
Owens-Illinois Inc. 7.800% 05/15/18 68
PG&E Gas Transmission 7.800% 06/01/25 60
Providian Financial 3.250% 08/15/05 74
PSEG Energy Holdings 8.500% 06/15/11 75
Quanta Services 4.000% 07/01/07 56
RF Micro Devices 3.750% 08/15/05 74
RF Micro Devices 3.750% 08/15/05 74
Redback Networks 5.000% 04/01/07 26
Ryder System Inc. 5.000% 02/25/21 74
SBA Communications 10.250% 02/01/09 56
SC International Services 9.250% 09/01/07 65
Schuff Steel Co. 10.500% 06/01/08 73
SCI Systems Inc. 3.000% 03/15/07 71
Sepracor Inc. 5.000% 02/15/07 62
Sepracor Inc. 5.750% 11/15/06 66
Silicon Graphics 5.250% 09/01/04 54
Sotheby's Holdings 6.875% 02/01/09 75
TCI Communications Inc. 7.125% 02/15/28 74
TECO Energy Inc. 7.000% 05/01/12 73
Tenneco Inc. 11.625% 10/15/09 68
Teradyne Inc. 3.750% 10/15/06 72
Tesoro Pete Corp. 9.000% 07/01/08 66
Transwitch Corp. 4.500% 09/12/05 60
Tribune Company 2.000% 05/15/29 74
US Airways Passenger 6.820% 01/30/14 73
Universal Health Services 0.426% 06/23/20 63
US Timberlands 9.625% 11/15/07 61
Vector Group Ltd. 6.250% 07/15/08 64
Veeco Instrument 4.125% 12/21/08 72
Vertex Pharmaceuticals 5.000% 09/19/07 73
Weirton Steel 10.750% 06/01/05 70
Westpoint Stevens 7.875% 06/15/08 26
Williams Companies 6.625% 11/15/04 65
Williams Companies 6.750% 01/15/06 65
Williams Companies 7.125% 09/01/11 73
Williams Companies 7.625% 07/15/19 63
Williams Companies 7.750% 06/15/31 59
Williams Companies 7.875% 09/01/21 63
Williams Companies 9.375% 11/15/21 73
Witco Corp. 6.875% 02/01/26 70
Xerox Corp. 0.570% 04/21/18 63
*********
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
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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
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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 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***