/raid1/www/Hosts/bankrupt/TCR_Public/030115.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, January 15, 2003, Vol. 7, No. 10
Headlines
ADELPHIA COMMS: Wins Approval to Hire CIT as Telecom Consultants
ADVANCED ENERGY: Hosting Q4 & Year-End Conference Call on Feb 13
ADVANCED GLASSFIBER: Seeks Access to $15 Million DIP Financing
AIR CANADA: December Revenue Passenger Miles Climb by 0.6%
AMERICAN PAD: Hires Blackhill Partners for Financial Advice
AMERIPOL SYNPOL: Bringing-In Young Conaway as Bankruptcy Counsel
AMES DEPARTMENT: Urges Court to Okay GE Capital Settlement Pact
ANC RENTAL: Consolidating Operations at Charlotte Airport
ARMSTRONG: EPA & FNRT Claims Bar Date Extended to March 31, 2003
AT&T LATIN AMERICA: Nasdaq Knocking-Off Shares Effective Friday
ATSI COMMS: Evaluating Merger Proposals from Various Parties
BEVSYSTEMS INT'L: Completes 200-to-1 Reverse Stock Split
BGF INDUSTRIES: Fails to Make Interest Payment on 10-1/4% Notes
BROADWING INC: Secures $350 Million Financing Commitment
BULL RUN CORP: First Fiscal Quarter Results Show Improvement
CENARGO INT'L: Case Summary & 20 Largest Unsecured Creditors
CENTENNIAL HEALTHCARE: Trumbull Appointed as Claims Agent
CHOICE ONE COMMS: Narrows Cash Utilization by 35% in 4th Quarter
CONDOR TECHNOLOGY: Filing Cert. of Dissolution in Delaware Soon
COEUR D'ALENE: Reappoints James Sabala as Chief Fin'l Officer
CONGOLEUM CORP: Plans to File Asbestos-Driven Chapter 11 Prepack
CONSECO INC: Court Okays Bankruptcy Management as Claims Agent
CONSECO INC: Kamakura Releases Predictability Study on Conseco
CORRECTIONS CORP: Determines Preferred Shares' Fair Market Value
EDISON MISSION: PwC Requires Re-Audit of 2001 & 2000 Financials
EDISON MISSION: NZ Subsidiary Acquiring Taranaki Power Station
ELDERTRUST: Further Extends Two Loans Totaling $19MM to Feb. 10
ENRON CORP: Court Okays Sale of Neumin Gas Contracts at Auction
EOTT: Court OKs Stipulation Continuing All American Relationship
EXIDE TECHNOLOGIES: Obtains Second Exclusive Period Extension
FASTNET CORP: Applies for Listing on Nasdaq SmallCap Market
FEDERAL-MOGUL: Court Okays AlixPartners' Engagement as Advisors
FEI CO: S&P Affirms Low-B Ratings After Veeco Merger Termination
FOCAL COMMS: Brings-In Swidler Berlin as US Regulatory Counsel
FOSTER WHEELER: Unit Will Supply 460 MWe Power Plant in Poland
FOUNTAIN PHARMACEUTICALS: QuestCapital Reports 8.5% Equity Stake
FREDERICK'S OF HOLLYWOOD: Secures New $8-Million Credit Facility
FREESTAR TECHNOLOGIES: Chapter 7 Involuntary Case Summary
FREESTAR TECHNOLOGIES: Completes Rahaxi Processing Acquisition
FREESTAR: Hires Matther Marcus as Investor Relations Counsel
FUELNATION INC: Implements 150-to-1 Reverse Stock Split
GENTEK INC: Noma Obtains Final Approval to Use Cash Collateral
GENUITY INC: Auctioning Off All Assets on Friday
GREAT ATLANTIC: Deteriorating Performance Spurs S&P's Downgrade
HAYES LEMMERZ: Plan Filing Exclusivity Stretched to April 15
IMMUNE RESPONSE: Dr. Ronald B. Moss Resigns as Company President
INFINITE GROUP: Clifford Brockmyre Steps Down as President & CEO
INNOVEX INC: December 31 Working Capital Deficit Widens to $3MM
IT GROUP: Urges Court to Make Determination of Tax Liability
KAISER ALUMINUM: Nine More Units File for Chapter 11 Protection
KAISER ALUMINUM: Wins Nod to Pay $2.25-Mill. Summit Break-Up Fee
KAISER ALUMINUM: Shuts Down Mead Aluminum Smelter Indefinitely
KEY3MEDIA GROUP: Michael B. Solomon Leaves Company's Board
KMART CORP: Outlines Chapter 11 Exit Strategy
KMART CORP: Closing 326 Stores & One Distribution Center
KMART: December Net Sales Slide-Down 5.7% on Same-Store Basis
KMART CORP: Martha Stewart Yawns about Store Closings
KMART CORP: Fleming Talks About Impact of Store Closings
LEVI STRAUSS: Nov. 24 Net Capital Deficit Balloons to $995 Mill.
LEVI STRAUSS: Selling $50MM of 12-1/4% Sr. Notes to AIG Global
MARINE BIOPRODUCTS: Initiates Comprehensive Restructuring Steps
MIDLAND STEEL: Case Summary & 20 Largest Unsecured Creditors
NANOPIERCE TECHNOLOGIES: Taps Gerard Klauer as Investment Banker
NATIONAL CENTURY: Gets Approval of Alvarez & Marsal's Engagement
NATIONAL STEEL: Court Approves Claims Resolution Procedures
NETWORK ACCESS: Completes Asset Sale Transaction with DSL.net
NATUROL HOLDINGS: Terminates License Agreement with MGA Holdings
NIAGARA FRONTIER: Buffalo Sabres File for Chapter 11 Protection
NORCAL MUTUAL: S&P Drops Unit's Fin'l Strength Rating to BBpi
NORTEL NETWORKS: Builds Converged Network for Reliance Infocomm
OGLEBAY NORTON: Completes Acquisition of Erie Sand & Gravel Co.
ON SEMICONDUCTOR: Will Publish Fourth Quarter Results on Feb. 6
ORIUS CORP: Ill. Court Confirms Prepackaged Reorganization Plan
OWENS CORNING: Court Approves Amended CSFB Standstill Agreement
PACIFIC GAS: Gains Approval of Trauner Fire Settlement Agreement
PACIFICARE HEALTH: Will Publish Fourth Quarter Results on Feb 12
POLYMER RESEARCH: Fails to Comply with Nasdaq Listing Guidelines
SATX INC: Successfully Emerges from Chapter 11 Proceeding
SIMSBURY: Fitch Cuts 4 Note Class Ratings to Low-B & Junk Levels
SOFAME TECHNOLOGIES: Will Commence Workout Under BIA in Canada
TELESYSTEM INT'L: Refinancing Risk Prompts S&P to Junk Rating
TYCO INT'L: Fitch Rates $4.5-Billion Conv. Debentures at BB
UNITED AIRLINES: Consents to Limited Sales of Stock by ESOP
UNITED AIRLINES: Intends to Assume Glen Tilton Employment Pact
UNITED STATIONERS: S&P Affirms BB Corporate Credit Rating
US AIRWAYS: Dispatchers Vote Yes on Cost-Savings Agreement
WESTAR ENERGY: Exploring Strategic Options for Protection One
WHEELING-PITTSBURGH: New Term Loan & Other Agreements Under Plan
WORLDCOM INC: Wants to Pull Plug on BellSouth Services Agreement
W.R. GRACE: Has Until Feb. 24 to Move Lawsuits to Delaware Court
XO COMMS: Extends Hosting Provider Pact with Microsoft Business
* Adelman Lavine Relocates Wilmington Offices
* Fitch Says Investors Lose $80 Bill. Par Value On 2002 Defaults
* Fitch Study Shows Airline Pension Gap to Exceed $18 Billion
* FTI Brings-In Dianne R. Sagner as In-House General Counsel
* Gardner Carton & Douglas Relocates Chicago Offices
* Kimberly A. Newman & James R. Young Join O'Melveny & Myers LLP
* Meetings, Conferences and Seminars
*********
ADELPHIA COMMS: Wins Approval to Hire CIT as Telecom Consultants
----------------------------------------------------------------
Adelphia Communications, and its debtor-affiliates obtained
Court's authority to employ Collective Infrastructure Technology
Inc., as telecommunications consultants to assist them with
allocating costs incurred for certain telecommunications
services.
C.I.T. is a telecommunications consulting firm comprised of
professionals who collectively have years of experience in the
design, engineering and implementation of landline and wireless
voice, high speed data, terrestrial video, satellite video and
surveillance systems. In addition, C.I.T., through its
consultants, has experience in negotiating interconnection
agreements and billing arrangements, including but not limited
to analyzing ILEC and CLEC tariffs, for major telecommunications
companies.
The services that C.I.T. will render in these cases will
principally involve assisting the Debtors in analyzing certain
of their telecommunications and charges and contracts. More
particularly, these include:
A. Telecommunication Charges: The Debtors obtain many of
their telecommunications services pursuant to contracts
between third party telecommunications service providers
and ABIZ. As a result, several TSPs currently are seeking
payment from ABIZ for services which were provided in part
for the benefit of the Debtors' estates. Rather than
paying the Obligations to the TSPs and seeking partial
reimbursement from the Debtors, ABIZ has asked the Debtors
to pay their portion of the Obligations to the TSPs
directly. To facilitate this approach, ABIZ has prepared
a report allocating the Obligations between the Debtors
and ABIZ. Since the nature of the telecommunications
services provided to the Debtors' estates and the
allocations prepared by ABIZ are technical in nature and
require expertise beyond the Debtors' current
capabilities, the Debtors have requested C.I.T.'s services
to verify the ABIZ allocation.
Since November 4, 2002, C.I.T. has begun to review and
analyze the detailed invoices from TSPs. In addition,
C.I.T. has begun to review the detailed allocations
prepared by ABIZ which are the basis for the ABIZ request
that the Debtors pay certain TSPs directly. The ultimate
objective of this review is to determine the extent and
value of services provided to the Debtors' estates,
pursuant to agreements between the TSPs and ABIZ.
Utilizing information provided by ABIZ and the TSPs,
including the contracts, invoices, and any detailed
calculations or analyses of the Obligations, when
necessary and appropriate, C.I.T. will challenge the
charges by and credits from the TSPs and the allocation of
the Obligations prepared by ABIZ; and
B. Telecommunications Contracts: In addition to analyzing
the charges and invoices, at the Debtors' request, C.I.T.
will also review the terms of existing telecommunications
contracts that benefit the Debtors' estates, including the
contracts between ABIZ and TSPs. C.I.T.'s review will
include an analysis as to whether or not the terms and
conditions of the contracts are market and a
recommendation whether or not to assume or reject the
contract. In addition, if it is determined that a
contract is not market and is a possible candidate for
rejection, then C.I.T. will assist the Debtors in
negotiating the terms and conditions of a new contract
with a TSP for the required services related to the
contract. The types of contracts to be reviewed may
include collocation agreements, SS7 arrangements, billing,
facilities, interconnection, customer, and carrier
agreements.
Subject to the Court's approval, C.I.T. will seek compensation
for its services at its regular hourly rates. Additionally,
C.I.T. will seek reimbursement of out-of-pocket expenses
incurred in performing services for the Debtors. The
professionals who primarily will be rendering services in these
cases are:
-- Dennis M. McClure, Senior and Lead Consultant;
-- Stephen C. Jacobsen, Senior Consultant;
-- Thomas Schroeder, Chief Operation Officer; and
-- Christopher Marino, President & CEO.
The current hourly rate for each of these professionals is $235.
These rates are subject to periodic adjustment based on economic
and other conditions. (Adelphia Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Adelphia Communications' 8.125% bonds due 2003 (ADEL03USR1) are
trading at about 45 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL03USR1
for real-time bond pricing.
ADVANCED ENERGY: Hosting Q4 & Year-End Conference Call on Feb 13
----------------------------------------------------------------
In conjunction with Advanced Energy's (Nasdaq: AEIS) fourth
quarter and year end 2002 financial results, you are invited to
listen to its conference call that will be broadcast live over
the Internet on Thursday, February 13 at 5:00 pm ET with
management of Advanced Energy.
What: Advanced Energy Fourth Quarter and Year End 2002
Financial Results
When: Thursday, February 13, 2003, 5:00 pm ET/3:00 pm
MT/2:00 pm PT
Where: http://www.advanced-energy.com
How: Live and rebroadcast over the Internet: Simply log on
to the web at the address above.
Live call via telephone: 888-713-4717
International callers may dial 706-679-7220
Replay via telephone: 706-645-9291, code 7129173
(available for one week)
Contact: Cathy Kawakami
Telephone 970-407-6732
cathy.kawakami@aei.com
Advanced Energy is a global leader in the development, marketing
and support of components and sub-systems critical to plasma-
based manufacturing processes used in the production of
semiconductors, flat panel displays, data storage products,
compact discs, digital video discs, architectural glass, and
other applications that require precise thin-film processes.
AE offers a comprehensive line of technology solutions in power,
flow and thermal management, plasma and ion beam sources, and
integrated process monitoring and control to original equipment
manufacturers and end-users around the world.
AE operates in regional centers in North America, Asia and
Europe, and offers global sales and support through direct
offices, representatives and distributors. Founded in 1981, AE
is a publicly-held company traded on Nasdaq National Market
under the symbol AEIS. For more information, please visit its
corporate Web site at http://www.advanced-energy.com
* * *
As reported in Troubled Company Reporter's December 20, 2002
edition, Standard & Poor's assigned its 'B+' corporate credit
and 'B-' subordinated debt ratings to Advanced Energy Industries
Inc. The outlook is negative.
The company had total debt outstanding at September 30, 2002, of
$251 million, including capitalized operating leases.
ADVANCED GLASSFIBER: Seeks Access to $15 Million DIP Financing
--------------------------------------------------------------
Advanced Glassfiber Yarns LLC and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for approval
to obtain Postpetition Financing and use their Lenders' Cash
Collateral to finance post-bankruptcy operations. Those loans
will be accorded superpriority status over all other
administrative expenses and secured by senior liens on all of
the Debtors assets.
The Debtors tell the Court that absent immediate access to an
adequate financing and credit facility (and concomitant use of
the Lenders' cash collateral), liquidity will be insufficient to
sustain business functions or optimize their operational and
financial performance -- resulting in immediate and irreparable
harm to the estates.
The Debtors tell the Court that they require sufficient levels
of working capital to fund and support ordinary business
expenditures, including payroll, the purchase of raw materials
and other overhead expenditures. Consequently, the Debtors seek
permission to obtain postpetition financing in the form of a
$15,000,000 revolving credit facility (including a $5,000,000
letter of credit subfacility) from Wachovia Bank National
Association, formerly known as First Union National Bank, as
administrative agent, and ask for further permission to use
Wachovia's Cash Collateral. Pending a final hearing, the
Debtors ask for interim authority to repay approximately $3.1
million owed under the pre-petition revolving credit facility
and borrow up to $8 million under the DIP Facility in accordance
with these 2003 Monthly Budget projections:
31-Jan 28-Feb 31-Mar 30-Apr
------ ------ ------ ------
Beginning Cash $ 2,770 $ 2,170 $ 2,674 $ 2,612
Receipts 11,910 10,910 11,710 11,910
Disbursements (13,260) (9,100) (12,730) (10,130)
Operating (1,350) 1,810 (1,020) 1,780
Non-Operating (1,750) (1,606) (2,642) (1,935)
Ending Cash 2,170 2,674 2,612 2,057
Revolver Need $37,474 $37,774 $ 41,374 $ 40,974
30-May 30-Jun 1-Jul 29-Aug
------ ------ ----- ------
Beginning Cash $ 2,057 $ 2,217 $ 2,977 $ 2,937
Receipts 12,910 13,710 14,960 13,010
Disbursements (10,190) (10,630) (11,090) (9,430)
Operating 2,720 3,080 3,870 3,580
Non-Operating (2,260) (1,920) (1,910) (1,575)
Ending Cash 2,217 2,977 2,937 2,942
Revolver Need $40,674 $40,274 $38,274 $36,274
30-Sep 31-Oct 28-Nov 31-Dec
------ ------ ------ ------
Beginning Cash $ 2,942 $ 2,977 $ 2,943 $ 3,034
Receipts 13,460 14,610 12,310 12,710
Disbursements (10,030) (10,690) (9,430) (11,030)
Operating 3,430 3,920 2,880 1,680
Non-Operating (2,095) (1,654) (1,489) (1,976)
Ending Cash 2,977 2,943 3,034 3,038
Revolver Need $34,974 $32,674 $31,374 $31,674
Without a post-petition financing facility in place, the Debtors
believe that they will be unable to operate in a competitive
manner or stimulate necessary trade support from suppliers,
thereby crippling their reorganization efforts from the outset.
Absent the financing arrangements, the Debtors would be required
to immediately cease operations and terminate employees,
resulting in irreparable harm to their estates and creditors.
The Debtors disclose that their pre-petition operations were
primarily financed by a secured revolving credit and term loan
facility with Wachovia Bank, National Association (f/k/a First
Union National Bank), as Agent and as a lender, and the other
Prepetition Lenders. At the Petition Date, the aggregate
outstanding amount owed by the Debtors under the Prepetition
Facility was approximately $182.6 million.
Additionally, pursuant to the indenture dated as of January 21,
1999, the Debtors issued $150 million of senior subordinated
notes. As of the Petition Date, the aggregate amount owed under
the Notes (including accrued and unpaid interest) was
approximately $163.4 million.
A stable source of credit and funding is also critical to assure
suppliers that they will be paid on a continuous and timely
basis. Absent immediate access to credit pursuant to the
proposed DIP Facility, the Debtors anticipate that they will
encounter a severe disruption in their supply of raw materials,
resulting in a corresponding decline in the Debtors' production
capabilities. Any loss of production attributable to the
unavailability of necessary financing would be irreplaceable and
would cause a substantial and perhaps irreparable adverse impact
on the Debtors' value and ability to operate as a going concern.
The Debtors, in the exercise of their considered business
judgment and in consultation with their retained professionals,
have determined that they require access to a $15 million post-
petition credit and financing facility. The Debtors believe that
a financing facility at this level will enable them to meet
necessary cash and credit obligations and provide them with
sufficient liquidity to attain projected sales and revenue
targets and will enable the Debtors to stabilize and strengthen
operations, and to implement their restructuring plan.
Prior to entering into the DIP Facility, the Debtors explored
alternative post-petition financing sources and were unable to
locate unsecured credit allowable under Section 503(b)(1) of the
Bankruptcy Code as an administrative expense, or secured solely
by junior liens and security interests. The Debtors were also
unable to locate any alternative post-petition financing source
that could provide similar financing to the Debtors on terms and
conditions more favorable under the circumstances than those
provided under the DIP Facility. Thus, upon due consideration of
all viable alternatives, the Debtors concluded that the DIP
Facility with the DIP Lenders was the best available alternative
to the Debtors under the circumstances.
The DIP Financing provides a total commitment of $15,000,000,
with a sub-limit of $5,000,000 for standby letters of credit.
The DIP Facility shall be available, among other things:
(a) to pay transactional fees and expenses incurred in
connection with the DIP Facility,
(b) for working capital, capital expenditures and other
general corporate purposes of the Debtors,
(c) to pay the adequate protection payments to the extent
approved by the Bankruptcy Court and
(d) for other expenses set forth in the Budget.
The DIP Financing will mature on August 29, 2003. The Maturity
Date may be extended automatically for an additional 90 days
without the payment of an extension or other similar fee by the
Debtors if a plan and disclosure statement are filed by that
time.
The Debtors will pay certain non-refundable fees and expenses in
connection with the DIP Facility:
(i) a 1.0% Commitment Fee per annum on the unused amount
of the lending commitment;
(ii) a 1.0% Underwriting Fee to the DIP Agent for its
benefit;
(iii) a 2.5% Closing Fee; and
(iv) customary Letter of Credit Fees.
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.
AIR CANADA: December Revenue Passenger Miles Climb by 0.6%
----------------------------------------------------------
Air Canada flew 0.6 per cent fewer revenue passenger miles in
December 2002 than in December 2001, according to preliminary
traffic figures. Capacity increased by 2.5 per cent, resulting
in a load factor of 70.0 per cent, compared to 72.1 per cent in
December 2001; a decrease of 2.1 percentage points.
In comparison to December 2000, revenue passenger miles declined
3.0 per cent while capacity was reduced by 7.9 per cent. Load
factor improved 3.5 percentage points.
"Our December traffic results were negatively impacted by an
increase in competitive capacity in the domestic market
resulting in intensified low fare competition, particularly on
the transcon routes," said Rob Peterson, Executive Vice
President and Chief Financial Officer. "This had a dampening
effect on domestic unit revenues."
"While U.S. transborder traffic and load factors were up due to
stronger demand to the eastern U.S. and California, and the fact
that a portion of the Thanksgiving travel period fell within
December this year, we nevertheless experienced significant
yield pressures within the North American market. In Asia, the
solid performance of our Japan and China routes continued while
the suspension of our service to Taiwan partially offset this
growth in our total Pacific figures."
At the outset of 2002, Air Canada anticipated a return to
profitability in the seasonably stronger second and third
quarters. While this was achieved, the difficult global airline
environment has resulted in a fourth quarter and full year
operating loss. It is anticipated, however, that this fourth
quarter operating loss will be less than the quarterly operating
loss for the same period in each of the past two years.
* * *
As previously reported, Standard & Poor's lowered its senior
unsecured debt ratings for Air Canada (B+/Negative), and for AMR
Corp., (BB-/Negative) and unit American Airlines Inc.,
(BB-/Negative), but affirmed other ratings for those entities.
Senior unsecured debt ratings of AMR and American Airlines were
lowered to 'B' from 'B+'; a preliminary senior unsecured shelf
registration was lowered to 'B' from 'B+'. In addition, senior
unsecured debt ratings of Air Canada were lowered to 'B-' from
'B'.
"The rating actions reflect reduced asset protection for
unsecured creditors as secured debt and leases increase as a
proportion of the capital structure and heavy losses erode
equity," said Standard & Poor's credit analyst Philip Baggaley.
"The rating changes do not indicate a changed estimate of
default risk, but rather poorer prospects for recovery on senior
unsecured obligations if the affected airlines were to become
insolvent," Mr. Baggaley continued. Accordingly, no corporate
credit ratings or other types of debt are affected; airport
revenue bonds, though often senior unsecured debt in a legal
sense, are related to a specific airport facility that has value
in a bankruptcy reorganization and usually has a somewhat better
prospect of continued payment or better recovery, and ratings of
such bonds are not affected.
AMERICAN PAD: Hires Blackhill Partners for Financial Advice
-----------------------------------------------------------
American Pad & Paper LLC wants permission from the U.S.
Bankruptcy Court for the Eastern District of Texas to hire
Blackhill Partners as its Financial Advisor.
The Debtor relates that it hired Blackhill in July 2002 to
provide financial advisory and investment banking services.
Blackhill began rendering services to the Debtor at that time
because the Debtor believed that Blackhill's immediate
assistance was crucial to its ongoing attempts to restructure
its affairs outside of bankruptcy. The Debtor points-out that
Blackhill has demonstrated an in-depth understanding of the
Debtor's industry and financial affairs.
American Pad will look to Blackhill for:
a) advice and assistance during the course of the Debtor's
development, negotiation, and implementation of a
disclosure statement and plan of reorganization, and
direct participation in the negotiations with the
creditor and equity constituencies as requested by the
Debtor;
b) Consultation with the Creditor's Committee regarding
Blackhill's services and progress in locating parties
interested in investing in the Debtor, and the
development of a corresponding plan of reorganization;
c) participation in hearings held by this Court, as
appropriate, including hearings regarding confirmation
of a plan of reorganization, and provision of expert
witness testimony in connection with any hearings before
this Court;
d) advice and assistance in considering the desirability of
affecting a transaction and, if the Debtor believes a
particular transaction to be desirable, development of a
general strategy for accomplishing that transaction;
e) advice and assistance in identifying potential partners
and/or buyers and the contacting of potential partners
and/or buyers as the Debtor may designate;
f) advice and assistance in the course of the negotiation
of any transactions with potential partners and/or
buyers and/or financing sources, and direct
participation in such negotiation as directed by the
Debtor; and
g) rendering other financial advisory as may be agreed.
Blackhill will charge the Debtor for their professional
services:
(A) A prepetition retainer of $100,000 to be replenished to
a credit balance of $100,000 on a monthly basis;
(B) Charges for the services of Managing Directors of
Blackhill, currently Daniel M. Gillet, H. Grogory Moore
III, Anthony F. Wolf and James R. Latimer III are
billed at $350 per hour;
(C) In the event that the Company completes a Sale
transaction, a Success Fee of 1.0% of the First
$55,000,000 in Aggregate Consideration and 2.5% of the
amount of Aggregates Consideration in excess of
$55,000,000.
American Pad & Paper, LLC, manufacturer and distributor of
writing pads, filing supplies, retail envelopes and specialty
papers, filed for chapter 11 petition on December 20, 2002 in
the U.S. Bankruptcy Court for the Eastern District of Texas.
Deirdre B. Ruckman, Esq., at Gardere & Wynne, L.L.P., represents
the Debtor in its restructuring efforts. When the Company filed
for protection from its creditors, it listed an estimated assets
of over $10 million and estimated debts of over $50 million.
AMERIPOL SYNPOL: Bringing-In Young Conaway as Bankruptcy Counsel
----------------------------------------------------------------
Ameripol Synpol Corporation seeks authority from the U.S.
Bankruptcy Court for the District of Delaware to retain the firm
of Young Conaway Stargatt & Taylor, LLP, as its attorneys under
a general retainer to perform the legal services necessary
during its chapter 11 proceeding.
The Debtor wants to retain Young Conaway as its attorneys
because of the Firm's extensive experience and knowledge in the
field of debtor's and creditors' rights and business
reorganizations under chapter 11 of the Bankruptcy Code.
Additionally, the Debtor submits that Young Conaway's expertise,
experience and knowledge practicing will be efficient and cost
effective for the Debtor's estate. In preparing for this case,
Young Conaway has become familiar with the Debtor's business and
affairs and many of the potential legal issues that may arise in
this case.
The principal attorneys and paralegals presently designated to
represent the Debtor and their current standard hourly rates
are:
Robert S. Brady $400 per hour
Joseph A. Malfitano $240 per hour
Joseph M. Barry $220 per hour
Michael Girello (paralegal) $125 per hour
Young Conaway will:
a. provide legal advice with respect to its powers and
duties as debtor in possession in the continued
operation of its business and management of its
properties;
b. prepare and pursue confirmation of a plan and approval
of a disclosure statement;
c. prepare on behalf of the Debtor necessary applications,
motions, answers, orders, reports and other legal
papers;
d. appear in Court and to protect the interests of the
Debtor before the Court; and
e. perform all other legal services for the Debtor which
may be necessary and proper in these proceedings.
The Debtor discloses that Young Conaway received $20,000 in
connection with planning, preparation of initial documents and
its proposed postpetition representation of the Debtor.
Ameripol Synpol Corporation filed for chapter 11 protection on
December 16, 2002. Joseph A. Malfitano, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed an estimated assets of
more than $100 million and estimated debts of over $50 million.
AMES DEPARTMENT: Urges Court to Okay GE Capital Settlement Pact
---------------------------------------------------------------
Ames Department Stores, Inc., and its debtor-affiliates ask the
Court to approve their settlement agreement with the Official
Committee of Unsecured Creditors, General Electric Capital
Corporation, as a lender and as agent under the GECC DIP
Agreement dated August 20, 2001, and a Prepetition Credit
Agreement dated March 2, 2001, and certain lenders.
The Settlement Agreement resolves a dispute in connection with:
-- the DIP Lenders' demand for payment of a $14,000,000
prepayment fee in connection with the Debtors' payment of
all principal and interest under the GE Capital DIP
Agreement; and
-- the DIP Lenders' request for indemnification for the
potential exposure in connection with the action initiated
by LFD Operating Inc. against them. The DIP Lenders have
estimated that the LFD Action could give rise to
$11,500,000 in potential liability, plus fees and costs
incurred in connection with defending the Action.
The Settlement Agreement is in furtherance of a Stipulation
among the parties, pursuant to which the Debtors agreed to
escrow $25,500,000 until the parties reached a consensual
resolution of the dispute or the Court made a determination as
to whether the Debtors were obligated to pay the Prepayment Fee
or indemnify the DIP Lenders for the LFD Exposure.
On September 6, 2001, LFD commenced an adversary proceeding
against the Debtors before the Bankruptcy Court seeking
declaratory and other relief based on their failure to pay
$8,900,000 allegedly due LFD that were instead paid over to the
Prepetition Lenders. LFD operated footwear departments in the
Debtors' retail stores. On the same day, LFD also filed an
identical complaint against GECC in the New York Supreme Court
alleging that the Debtors improperly placed the funds that were
allegedly property of LFD into a lockbox that was swept daily
pursuant to the Prepetition Credit Agreement. The GECC
complaint was later moved to the Bankruptcy Court before Judge
Gonzalez.
On March 8, 2002, and after a trial on the merits, Judge
Gonzalez issued a Memorandum Decision dismissing all of LFD's
claims against the Debtors in the Adversary Proceeding. LFD
appealed the Order and the Appeal is currently pending in the
U.S. District Court for the Southern District of New York.
GE Capital filed a motion for summary judgment in its own
Adversary Proceeding, seeking dismissal of the causes of action
asserted by LFD. GE Capital based the Motion on the collateral
estoppel effect of the Court's ruling in the Ames/LFD Adversary
Proceeding. The Summary Judgment Motion was stayed by Court
Order dated July 1, 2002, pending the outcome of the Appeal.
Pursuant to the Settlement Agreement, Frank A. Oswald, Esq., at
Togut, Segal & Segal LLP, tells the Court that the DIP Lenders
have agreed to reduce their claims to the Prepayment Fee from
$14,000,000 to $7,000,000 in full and complete satisfaction of
their claims to the Prepayment Fee. The Debtors will receive
the remaining $7,000,000, plus interest earned on the
$14,000,000 escrowed in connection with the Prepayment Fee. The
Settlement Agreement also resolves the parties' disputes,
without further litigation, regarding the Debtors' obligations
to indemnify the DIP Lenders for the LFD Exposure.
The parties further release and discharge each other from any
and all causes of action, obligations and demands in connection
with the GE Capital DIP Agreement, the Prepetition Credit
Agreement or the Debtors' Chapter 11 cases, except with respect
to any remaining escrowed property, the other obligations
expressly set forth in the Settlement Agreement, the remaining
letter of credit obligations and the cash collateral which is
being held by GE Capital, on behalf of itself and DIP Lenders,
in accordance with the terms of the DIP Agreement.
Mr. Oswald asserts that the Settlement Agreement must be
approved because, in addition to saving the estates considerable
expense, it provides an immediate monetary benefit to the
Debtors' estates.
Due to the sensitive nature and potential prejudicial effect of
the terms of the Settlement Agreement, the Debtors further ask
the Court for permission to file the Settlement Agreement under
seal.
"It is essential to keep the Settlement Agreement confidential
to avoid the potential detrimental consequences that would ensue
from disclosure of the information contained therein," Mr.
Oswald explains.
Mr. Oswald maintains that the Settlement Agreement reflects the
extent and amount by which the Debtors have agreed to escrow
funds to indemnify the DIP Lenders for the LFD Exposure
including fees and costs and, therefore, should be kept
confidential. If LFD is provided with the terms of the
Settlement Agreement, the Debtors could envision a scenario
wherein LFD could attempt to extract a settlement offer from the
Debtors to avoid continued litigation, Mr. Oswald says. (AMES
Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ANC RENTAL: Consolidating Operations at Charlotte Airport
---------------------------------------------------------
Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP
tells the Court that ANC Rental Corporation and its debtor-
affiliates want to consolidate their operations at the
Charlotte/Douglas International Airport. The City of Charlotte
balked at the Debtors' proposal, claiming, among other things,
that any assumption and assignment of their National Concession
Agreement and the National Lease is an impermissible, unilateral
modification of the agreements. The Debtors and the City have
now reached a compromise and bring that agreement to the
Bankruptcy Court for its stamp of approval.
Specifically, the City agrees to allow the Debtors:
A. to reject the Automobile Rental Concession Agreement,
dated September 25, 2000, between Alamo and the City,
whereby the City granted to Alamo a non-exclusive right to
operate a car rental concession at the Charlotte Airport
-- the Alamo Concession Agreement;
B. to reject the Service and Storage Facility Lease-
Automobile Rental Concession-Ground Lease Agreement, dated
August 23, 1993, between Alamo and the City, for the lease
of certain premises to Alamo at the Charlotte Airport --
the Alamo Lease;
C. to assume the Automobile Rental Concession Agreement,
dated November 1, 2000, as amended previously and pursuant
to the settlement herein described, between National and
the City, whereby the City granted to National a
non-exclusive right to operate a car rental concession and
leased certain premises to National at the Charlotte
Airport -- the National Concession Agreement; and
C. to assume the Ground Lease Agreement, dated July 13, 1981,
as amended, between National and the City, for the lease of
certain premises to National at the Charlotte Airport, and
assign them to ANC, with ANC operating both the National
and Alamo tradenames from the current National facilities
-- the National Lease.
Ms. Fatell notes that the assignment will allow ANC to operate
as a single operator under the National and Alamo tradenames at
the existing National facilities. The Debtors calculate that
these actions will result in significant cost savings for them
over both the short and the long term in two ways:
(a) an immediate savings to the Debtors of over
$1,155,000 per year in fixed facility costs and other
operational cost savings; and
(b) by allowing the Debtors to take advantage of the
efficiencies resulting from the operation of two brands
out of a single location while maintaining their current
level of customer service for both brands.
Ms. Fatell reports that as part of their compromise with the
City, in exchange for the City's agreement to permit ANC to dual
brand, the Debtors have agreed to amend the National Concession
Agreement to increase the MAG Payment from $98,583 per month to
$127,875.33 per month or $1,534,504 annually, effective the
first full month after the entry of an Order approving this
Motion. The increased monthly MAG payment will be in effect
through October 31, 2003, and thereafter will revert to an
annual MAG payment based upon 100% of the original MAG set forth
in the National Concession Agreement plus 50% of the original
MAG payment set forth in the Alamo Concession Agreement. As a
result, the annual MAG payment beginning November 1, 2003 will
be the greater of $1,534,504 or 85% of the gross receipts from
the previous Contract Year. A Contract Year is defined in the
National Concession Agreement as running from November 1 to
October 31. The annual MAG payment will be determined according
to the terms of the National Concession Agreement.
The Debtors agree to pay rent under the Alamo Lease through
January 31, 2003.
"Alamo will leave the facility broom-clean and free of trash and
debris and in the same condition as when it occupied the
property, reasonable wear and tear excepted," Ms. Fatell assures
Judge Walrath.
Ms. Fatell informs the Court that pursuant to Section 365(b)(1)
of the Bankruptcy Code, the Debtors will cure or provide
adequate assurance that they will promptly cure all defaults
existing under the National Concession Agreement and the
National Lease, if any, in connection with the assumption of
these contracts. Currently, $166,283 is outstanding under the
National Concession Agreement and $29,268 is outstanding under
the National Lease. The Debtors have agreed to pay the City the
amounts within five days of entry an Order approving this
Motion. In addition, the Debtors have agreed to pay to the City
$82,020 outstanding pursuant to the Alamo Concession Agreement.
The Debtors will pay the amounts within five days of the entry
of this Order. The Debtors have also agreed to pay any
additional amounts that become due and owing under either the
National Concession Agreement or the National Lease prior to the
entry of an Order.
Ms. Fatell reports that in return for payment of the amounts set
forth above, the City has agreed to waive any rejection claims
under the Alamo Concession Agreement and the Alamo Lease. The
Debtors have also agreed to waive any and all claims against the
City under the Alamo Lease, including Alamo's claim for
unamortized capital costs.
Ms. Fatell notes that within five business days after the
occurrence of these actions:
-- the City's receipt of all payments agreed, and
-- the Order approving the relief requested by the Motion
becoming a final, non-appealable order,
the City agrees to return to Alamo marked "cancelled" Liberty
Mutual bond #150-122-17, which secures the Alamo Concession
Agreement, and agrees to return to National marked "cancelled"
Liberty Mutual bond #15-001-050 in the amount of $217,098, which
secured a prior National concession agreement.
Simultaneously, National agrees cause Liberty Mutual bond
#15-012-210, which secures the National Concession Agreement, to
be amended to (i) change the name of the bonded party to ANC;
(ii) increase the amount to $760,000; and (iii) extend the
maturity until September 21, 2003. (ANC Rental Bankruptcy News,
Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ARMSTRONG: EPA & FNRT Claims Bar Date Extended to March 31, 2003
----------------------------------------------------------------
In a stipulation, Armstrong World Industries, the United States
Environmental Protection Agency, the Federal Natural Resource
Trustee, represented by Ellen Slights, Esq., Assistant United
States Attorney in Wilmington, and David E. Street, Esq., at the
Environmental Enforcement Section of the US Department of
Justice in Washington, agree to extend the deadline by which EPA
and FNRT must file proofs of claim to and including March 31,
2003. (Armstrong Bankruptcy News, Issue No. 34; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
AT&T LATIN AMERICA: Nasdaq Knocking-Off Shares Effective Friday
---------------------------------------------------------------
AT&T Latin America Corp., (Nasdaq: ATTL) received a Nasdaq Staff
determination that the company's shares of Class A common stock
will be delisted from the Nasdaq Small Cap Market as of the
opening of business on Friday, January 17, 2003. The
determination to delist was a result of the company's failure to
maintain a minimum bid price of $1.00 per share and failure to
maintain either $2,500,000 stockholders' equity, $35,000,000
market value of listed securities or $500,000 net income from
continuing operations. The Company anticipates that upon
delisting its securities will trade on the Over-the-Counter
Bulletin Board (OTCBB). Information regarding the OTCBB can be
found at http://www.otcbb.com
As reported in Troubled Company Reporter's January 8, 2003
edition, AT&T Latin America successfully implemented actions
designed to maximize its cash flow, materially strengthen its
continuing liquidity, and upgrade customer support and
profitability, as part of its restructuring efforts.
Notwithstanding the improved liquidity outlook, however, the
Company also mentioned that it could still decide to file
petitions for reorganization in the U.S. and/or in one or more
of the countries in which it operates, to obtain relief from
creditors or to facilitate an orderly transfer or restructuring
of its business. The Company has held productive discussions
with major creditors in recent weeks and such discussions are
ongoing. "Our efforts are focused on maximizing value and
providing real choices for our constituents, while continuing to
serve our customers and build on the strong base we enjoy
today," stated Northland.
ATSI COMMS: Evaluating Merger Proposals from Various Parties
------------------------------------------------------------
ATSI Communications Inc., (AMEX:AI) is reviewing expressions of
interest received from various parties for a strategic
combination.
John R. Fleming, Chairman of the Board, stated, "The candidates
all have synergistic business interests to ours and we can see
the opportunity to create a combination that will be a very
viable corporation going forward."
ATSI has been working to reduce expenses and as recently as last
week reduced their workforce by an additional 5%. The employee
reductions did not affect Mexico or international operations.
The Company has also reduced network expenditures by idling the
network while restructuring the cost elements associated with
this low margin wholesale business. That business segment has
also experienced a higher percentage of uncollectible accounts.
ATSI expects to keep these wholesale customers connected to the
system in the interim.
ATSI Communications, Inc., is an emerging international carrier
serving the rapidly expanding niche markets in and between Latin
America and the United States, primarily Mexico. The Company's
borderless strategy includes the deployment of a "next
generation" network for more efficient and cost effective
service offerings of domestic and international voice, data and
Internet. ATSI has clear advantages over the competition through
its corporate framework consisting of unique licenses,
interconnection and service agreements, network footprint, and
extensive retail distribution.
ATSI Communications' April 30, 2002 balance sheet shows a
working capital deficit of about $9 million, and a total
shareholders' equity deficit of about $818,000, which is down
from $6.2 million at July 31, 2001.
BEVSYSTEMS INT'L: Completes 200-to-1 Reverse Stock Split
--------------------------------------------------------
BEVsystems International Inc., (OTCBB:BEVI) completed a reverse
stock split of 200 to 1. This is the first step towards re-
structuring of its balance sheet and capitalization of the
Company. Future steps include a distribution of additional
securities to shareholders, conversion of debt to equity, and a
private placement of securities with accredited investors. These
steps are being conducted with the direction and guidance of
BEVsystems' investment advisors. As a result of the stock split
the Company has a new stock symbol, OTCBB: BEVI.
The re-structuring of the balance sheet and capitalization are
required steps towards a targeted acquisition in the beverage
industry.
"Since BEVsystems' inception, we have remained focused on
building our brands, strengthening the licensing and
distribution capabilities for our brands, and identifying
opportunities in the marketplace that are consistent with our
strategic plan for growth," said Bob Tatum, chairman and chief
executive officer of BEVsystems International.
Miami, Florida-based BEVsystems International Inc., (OTCBB:BEVS)
is a fast-growing leader in the premium beverage industry. With
sales in 22 countries, the success of its flagship Life02
SuperOxygenated Water brand, infused with up to 1,500 percent
more oxygen via patented process and technology innovations,
underscores BEVsystems' commitment to sales, marketing, and
innovation to deliver superior quality beverage products. A
recently published peer review study in The European Journal of
Medical Research details the medical benefits of oxygen-enriched
water. For more information, visit http://www.bevsystems.com
BGF INDUSTRIES: Fails to Make Interest Payment on 10-1/4% Notes
---------------------------------------------------------------
BGF Industries, Inc., said it does not have sufficient cash
available to make the required interest payment on its 10-1/4%
Series B Senior Subordinated Notes due 2009 on January 15, 2003.
Under the terms of the indenture governing the notes, failure to
make required interest payments constitutes an event of default
if not cured within 30 days.
BGF is currently working on some alternatives that would allow
for this payment to occur on or before Feb. 14, 2003. However
the outcome of such efforts cannot be guaranteed.
BGF is still working with Realization Services Inc. as its
financial adviser to explore strategic alternatives including,
but not limited to the capital restructuring of the Company.
BGF, headquartered in Greensboro, NC, manufactures specialty
woven and non-woven fabrics made from glass, carbon and aramid
yarns for use in a variety of electronic, filtration, composite,
insulation, construction, and commercial products.
BROADWING INC: Secures $350 Million Financing Commitment
--------------------------------------------------------
Broadwing Inc., (NYSE:BRW) announced progress against its
previously announced restructuring plan. Developments include
securing commitments for a total of $350 million in financing,
an increase over the $200 million commitment announced last
month; initiating discussions, with its agent banks, on a
comprehensive amendment to the terms of its credit facility; and
further exploring strategic options, including the possible sale
of its broadband unit. The company also confirmed its 2002
guidance for revenue, EBITDA, and capital investment.
In October 2002, Broadwing began executing a five-point
restructuring plan. The plan involves strengthening the
company's financial position, maintaining the strength and
stability of its Cincinnati Bell businesses, lowering the cash
burn at its Broadwing Communications unit, continuing to review
strategic alternatives, and reducing the company's debt balances
over time.
"While there is still a lot of work ahead of us, we are actively
executing our five-point restructuring plan," said Kevin Mooney,
Broadwing's chief executive officer. "Many of our initiatives
are at important stages of development and I expect the next
several months to be a period of heavy activity as we work
aggressively to increase the value of this company for our
shareholders."
Financing Update
The company announced that it has secured a financing
commitment, arranged by Goldman, Sachs & Co., of $350 million.
This represents an increase of $150 million over the $200
million in financing committed to Broadwing last month. The
notes will pay cash interest of 12 percent, accrete at 4
percent, and include warrants for up to 17.5 million shares of
the company's common stock. The proceeds will be primarily used
to pay down bank debt.
"This $350 million of junior capital is an important component
in our efforts to restructure our bank debt," said Tom
Schilling, Broadwing's chief financial officer. "This financing
commitment is contingent upon the successful amendment of our
bank credit facility."
Possible Broadband Unit Sale
The company also announced that it has directed its financial
advisors, Lehman Brothers and Banc of America Securities, to
consider strategic alternatives for the company, including the
possible sale of the operating assets of its broadband unit,
Broadwing Communications. In accordance with SFAS 144, the
company expects to record a non-cash, pre-tax asset impairment
charge of approximately $2 billion for the fourth quarter 2002.
"Management is committed to creating shareholder value. We have
received inquiries regarding our broadband unit and are giving
them our full attention," said Mooney. "Meanwhile, our efforts
to reduce Broadwing Communications cash burn are starting to
produce results."
Bank Amendment Proposal
The company said it is negotiating, with its agent banks, for a
comprehensive amendment to its credit facility that would, among
other things, amend the 2004 maturity schedule. Once the details
of the amendment are finalized, Broadwing will present a formal
proposal to the bank syndicate and work toward having the
amendment closed by the end of the first quarter of 2003. Bank
syndicate approval of an amendment is necessary to enable the
company to meet its 2003 liquidity requirements.
2002 Operational Performance
Departing from its normal year-end results release schedule,
Broadwing will announce its fourth quarter and 2002 year-end
results after it completes negotiations with its banks and has
better visibility into the possible broadband unit asset sale.
The company also reiterated its previously provided guidance
consisting of revenue of approximately $2.15 billion, EBITDA of
approximately $640 million, and capital expenditures of
approximately $190 million. Additionally the company has reduced
the cash burn in its broadband business and expects to report
for the fourth quarter that, on a consolidated basis, it was
cash flow positive for the second consecutive quarter.
"The developments we announced [Mon]day represent progress
against our restructuring plan," said Mooney. "More remains to
be done and we are focused on continuing to execute the steps
necessary to unlock the value that we believe is inherent in
this company."
Broadwing Inc., (NYSE:BRW) is an integrated communications
company comprised of Broadwing Communications and Cincinnati
Bell. Broadwing Communications is an industry leader as the
world's first intelligent, all-optical, switched network
provider and offers businesses nationwide a competitive
advantage by providing data, voice and Internet solutions that
are flexible, reliable and innovative on its 18,500-mile optical
network and its award-winning IP backbone. Cincinnati Bell is
one of the nation's most respected and best performing local
exchange and wireless providers with a legacy of unparalleled
customer service excellence. For the second year in a row,
Cincinnati Bell was ranked number one in customer satisfaction
by J.D. Power and Associates for local residential telephone
service and residential long distance among mainstream users. It
also received the number one ranking in wireless customer
satisfaction in its Cincinnati market. Cincinnati Bell provides
a wide range of telecommunications products and services to
residential and business customers in Ohio, Kentucky and
Indiana.
Broadwing Inc., is headquartered in Cincinnati, Ohio. For more
information, visit http://www.broadwing.com
* * *
As reported in Troubled Company Reporter's December 10, 2002
edition, Standard & Poor's lowered its corporate credit and bank
loan ratings of integrated telecommunications services provider
Broadwing Inc., to 'B-' from 'BB'. The downgrade reflects a
potential liquidity shortfall starting in the second half of
2003 and the increased risk of bank covenant violation if the
company's long-haul data subsidiary, Broadwing Communications
Inc., continues to perform below expectations in the absence of
an amendment to Broadwing's bank credit agreement.
The ratings on Broadwing and its subsidiaries remain on
CreditWatch with negative implications. At the end of September
2002, the Cincinnati, Ohio-based company's total debt was about
$2.5 billion.
BULL RUN CORP: First Fiscal Quarter Results Show Improvement
------------------------------------------------------------
Bull Run Corporation (Nasdaq: BULL) announced significantly
improved operating results from its wholly owned operating
subsidiary, Host Communications, Inc., for the first fiscal
quarter ended November 30, 2002, compared to the same period
last year. Bull Run, through Host Communications, provides
affinity, multimedia, promotional and event management services
to universities, athletic conferences, corporations and
associations.
For three months ended November 30, 2002, Bull Run reported
income from operations of $6,308,000 compared to a loss from
operations of $102,000 for the same period last year. Current
year results included nonrecurring consulting income of
$5,267,000. Income generated from the Company's Host
Communications operating unit was nearly $1.7 million, doubling
the operating results achieved in the same period last year. The
improvement in Host's operating results was achieved through the
restructuring and elimination of certain contractual obligations
and relationships, as well as other cost reduction initiatives
taken during the prior fiscal year. The Company anticipates that
these actions and initiatives will continue to produce improved
operating results over the remainder of the current fiscal year.
Total revenue was $31,109,000 for the three months ended
November 30, 2002, compared to $35,718,000 for the same period
in the prior year. The decline in total revenue resulted
primarily from the restructuring and elimination of certain
contracts, which produced unfavorable operating results in the
prior year.
The Company is subject to certain non-operating, non-cash
charges and adjustments. During the three months ended
November 30, 2002, Gray issued shares of its common stock at a
per share price that was less than the Company's carrying value
per share of Gray common stock owned by the Company. As a
result, the Company incurred a non-cash loss on its investment
in Gray of $2,339,000. The issuance of shares by Gray
facilitated Gray's acquisition of sixteen additional television
stations, increasing the total number of television stations
owned by Gray to 29 stations serving 25 markets. Of Gray's 29
stations, 23 rank #1 in local news audience and 22 rank #1 in
overall audience in their respective markets. The Company
currently owns 4% of the outstanding common stock of Gray,
representing 18% of the voting power.
Other non-operating non-cash losses, net of gains, reported by
the Company totaled $3,022,000 for the three months ended
November 30, 2002, compared to $2,542,000 for the same period in
the prior year. As a result of the non-cash, non-operating
charges reported by the Company of $5,361,000 for the three
months ended November 30, 2002, the Company reported a net loss
of $1,244,000 compared to a net loss of $1,365,000 for the same
period in the prior year.
In December 2002, the Company sold its investment in Rawlings
Sporting Goods Company, Inc. for approximately $6.8 million,
applying the proceeds to its outstanding long-term debt.
Robert S. Prather, Jr., Bull Run's President and CEO, commented,
"We are very encouraged about our improved operating results.
The Company had to make some very tough decisions this past year
in connection with contracts, relationships and personnel, and
it appears that we are now benefiting from the results of those
decisions."
At August 31, 2002, Bull Run's balance sheet shows a working
capital deficit of about $32 million.
CENARGO INT'L: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Cenargo International plc
Puttenham Priory
Puttenham
Surrey, GU3 IAR
England
Bankruptcy Case No.: 03-10196-rdd
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
Cenargo Leasing Ltd. 03-10197
Cenargo E-Logistics Ltd. 03-10198
Norse Irish Ferries Ltd. 03-10199
Cenargo Navigation (Hong Kong) Ltd. 03-10200
Belfast Freight Ferries Ltd. 03-10201
Cenargo Fast Ferries (No.2) PLC 03-10202
Merchant Ferries PLC 03-10203
Merchant Ferries (Holdings) Ltd. 03-10204
Freightwatch Limited 03-10205
Proofband Limited 03-10206
Duncan International Trading Ltd. 03-10207
Cenargo Services Ltd. 03-10208
Cenargo World Ltd. 03-10209
Cenargo Property Ltd. 03-10210
Cenargo Navigation Ltd. 03-10211
Cenargo Rail Ltd. 03-10212
Conexus Europe Ltd. 03-10213
Chapter 11 Petition Date: January 14, 2003
Court: Southern District of New York
Judge: Judge Robert D. Drain
Debtors' Counsel: Gregory M. Petrick
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
(212) 504-6373
Fax : (212) 504-6666
Email: gpetrick@cwt.com
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
List of Debtors' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Levantina Transporti Ship Lease Payments $1,875,000
70121 BARI Corso
Cavour n.60
45014 Porto Viro (Ro)
Via Romea, 44
Contact: Enrico Scolaro
Shipbrokers S.r.l.
Via Oberdan 109-3
16167
Genoa, Italy
Tel: 00 39 010 3725 133
Fax: 00 39 010 3725 150
Mitsui Oski Lines Freight forwarding 1,395,000
MOL Europe Ltd. charges
Enterprise House
Ocean Way
Ocean Village
South Hampton
England
SO14 3BX
Tel: 011 44 23 8071 4720
Fax: 011 44 23 8071 4739
Mersey Docks & Harbour Co. Port usage fees 1,248,486
Maritime Centre
Port of Liverpool
L21 1LA
United Kingdom
Tel: 011 44 15 1949 6232
Fax: 011 44 15 1949 6199
Contact: Sue Cray
Marine Shipping Insurance 1, 137,056
Mutual Insurance Co. Ltd.
The Quayside
NE1 3DU
United Kingdom
Tel: 011 44 19 1232 1346
Fax: 011 44 19 1261 0540
HM Customs & Excise Customs duties 1,079,264
100 Russell St.
Middlesbrough
TS12LP
United Kingdom
Tel: 011 44 16 4220 3463
Fax: 011 44 16 4220 3504
Heysham Port Ltd. Port usage fees 993,796
Port of Heysham
Lancashire, LA3 2XF
United Kingdom
Tel: 011 44 15 1949 6232
Fax: 011 44 15 1949 6199
Contact: Sue Cray
Henty Oil Fuel expense 899,998
Huskisson Doc. No. 1
Liverpool Docks
Liverpool, L3 0AT
United Kingdom
Tel: 011 44 15 1922 0622
Fax: 011 44 15 1922 0626
Contact: Diane Henty
Dublin Port Port usage fees 856,599
Port Ducs Office
Port Centre
Alexandra Road
Dublin 1, Eire
Tel: 003 521 887 6812
Fax: 003 531 836 5142
Contact: Helen Duffy
Belfast Harbour Commissioners Port usage fees 750,240
Harbour Office
Corporation Square
Belfast, BT1 3AL
Northern Ireland
Tel: 003 289 055 4415
Fax: 003 289 055 4411
Contact: Linda Fulford
Capitol Security Services Ship security 540,924
8-9 Bourne Court
Southend road
Woodford
Essex, IG8 8HD
United Kingdom
Tel: 011 44 20 8498 8872
Fax: 011 44 20 8498 8864
Contact: Russell
Nynas UK Fuel expense 354,819
North Road
Ellesmere Port
CH69 1AJ
United kingdom
Tel: 011 44 15 1327 3171
Fax: 011 44 15 1327 6195
Contact: Jane Gilbert
Esso Ireland Fuel expense 321,961
Esso House
Stillorgan
Dublin
Eire
Tel: 003 531 207 3285
Fax: 003 531 288 7303
Contact: Michael Burke
North of England P&I Insurance 294,639
Association Ltd.
The Quayside
NE1 3DU
United Kingdom
Tel: 011 44 19 1232 5221
Fax: 011 44 19 1261 0540
Drake Ports Dock labor expense 279,537
Drake International Group
20 Regent Street
London, SWIY 4PH
United Kingdom
Tel: 011 44 20 7484 0884
Fax: 011 44 20 7484 0805
Contact: John Webb
Carrylift Materials Handling Ship labor and 265,752
Head Office unit 3 repairs
Peel Road
West Pimbo Industrial
Estate
Kelmersdale
Lancshire, WN8 9PT
United Kingdom
Tel: 011 44 16 9545 5000
Fax: 011 44 16 9545 5099
Contact: Caroline
Heath Lambert Group Insurance 249,785
Rex International Logistics Freight forwarding 155,532
charges
Alpok Adria Freight haulage & 102,417
warehousing
TT Club Insurance 94,500
Adsteam Towage Freight haulage 67,875
CENTENNIAL HEALTHCARE: Trumbull Appointed as Claims Agent
---------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
gave its nod of approval to Centennial HealthCare Corporation
and its debtor-affiliates to retain Trumbull Services, LLC as
the official Claims, Noticing, and Balloting Agent in the
company's chapter 11 cases.
Trumbull will:
(a) Prepare and serve required notices in these Chapter 11
cases, including:
(i) a notice of the commencement of these Chapter 11
cases and the initial meeting of creditors under
section 341(a) of the Bankruptcy Code;
(ii) a notice of the claims bar date;
(iii) notices of objections to claims;
(iv) notices of any hearings on a disclosure
statement and confirmation of a plan or plans of
reorganization; and
(v) such other miscellaneous notices as the Debtors
or Court may deem necessary or appropriate for
an orderly administration of these Chapter 11
cases.
(b) Within five business days after the service of a
particular notice, file with the Clerk's Office a
certificate or affidavit of service that includes:
(i) a copy of the notice served,
(ii) an alphabetical list of persons on whom the
notice was served, along with their address, and
(iii) the date and manner of service;
(c) Maintain copies of all proofs of claim and proofs of
interest filed in these cases;
(d) Maintain official claims registers in this case by
docketing all proofs of claim and proofs of interest in
a claims database that includes the following
information for each such claim or interest asserted:
(i) the name and address of the claimant or interest
holder and any agent thereof, if the proof of
claim or proof of interest was filed by an
agent;
(ii) the date the proof of claim or proof of interest
was received by Trumbull and/or the Court;
(iii) the claim number assigned to the proof of claim
or proof of interest; and
(iv) the asserted amount and classification of the
claim.
(e) Implement necessary security measures to ensure the
completeness and integrity of the claims registers;
(f) Transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
(g) Maintain an up-to-date mailing list for all entities
that have filed proofs of claim or proofs of interest
and make such list available upon request to the
Clerk's Office or any party in interest;
(h) Provide access to the public for examination of the
proofs of claim or proofs of interest filed in this
case without charge during regular business hours;
(i) Record all transfers of claims pursuant to Fed. R.
Bankr. P. 3001(e) and provide notice of such transfers
as required by Rule 3001(e), if directed to do so by
the Court;
(j) Comply with applicable federal, state, municipal and
local statues, ordinances, rules, regulations, orders
and other requirements;
(k) Provide temporary employees to process claims, as
necessary;
(l) Promptly comply with such further conditions and
requirements as the Clerk's Office or the Court may at
any time prescribe; and
(m) Provide such other claims processing, noticing,
balloting, and related administrative services as may
be requested from time to time by the Debtor.
Trumbull Services will bill the Debtors for services at its
customary hourly rates:
Creditor Set-Up
Via electronic file $190 per hour
Manually created creditors $50 per hour
Schedule of Liability Preparation
Via electronic file $190 per hour
Manually created creditors $50 per hour
Claims Docketing $65 per hour
Consulting
Clerical $50 per hour
Bankruptcy Analyst $65 to $80 per hour
Bankruptcy Administration Manager $100 per hour
Automation Consultant $100 to $140 per hour
Bankruptcy Consultant $175 to $195 per hour
Sr. Bankruptcy Consultant $200 to $265 per hour
Centennial HealthCare Corporation, which operates and manages 86
nursing homes in 19 states, filed for Chapter 11 petition on
December 20, 2002. Brian C. Walsh, Esq., and Sarah Robinson
Borders, Esq., at King & Spalding, represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated debts and
assets of over $100 million each.
CHOICE ONE COMMS: Narrows Cash Utilization by 35% in 4th Quarter
----------------------------------------------------------------
Choice One Communications Inc. (OTC Bulletin Board: CWON), an
Integrated Communications Provider offering facilities-based
voice and data telecommunications services, web hosting, design
and development to small and medium-sized businesses, announced
that the company's fourth quarter 2002 cash utilization
demonstrates tremendous progress toward positive free cash flow,
which the company expects to achieve sometime during second
quarter 2003.
"We reduced our cash utilization by 35% during the fourth
quarter," commented Steve Dubnik, Chairman and Chief Executive
Officer. "This demonstrates the momentum we have gained since
turning EBITDA positive last August, combined with continued
tight control over our operating expenses and capital
expenditures, and considerable improvements in our retail
accounts receivable collections."
"Our goal of achieving positive free cash flow is now well
within reach. We expect our EBITDA to exceed capital
expenditures in first quarter 2003 for the first time in our
history. Importantly, we expect to achieve positive free cash
flow, including interest expense, sometime during the second
quarter. With $33 million in cash and liquidity available, we
clearly have the financial resources necessary to achieve
positive free cash flow and be successful in this business."
"When we went public three years ago, there were more than 40
public CLECs. Today, Choice One is one of a handful of public
CLECs that has not filed bankruptcy or undergone a major
financial restructuring. Our smart-build approach to
constructing our network allowed us to conserve vital cash
resources while building our base of more than 100,000 clients.
Our high-quality service has enabled us to consistently report
one of the highest client retention rates in the industry. And
our bundled voice and data services offers substantial savings
to small and medium- sized businesses and provides our company
with sufficient returns to ensure our long-term viability. We
continue to execute and make the right decisions to avoid many
of the pitfalls that have led to substantial turmoil in our
industry."
The company expects to report fourth quarter and full year 2002
results in mid-February.
Headquartered in Rochester, New York, Choice One Communications
Inc., (OTC Bulletin Board: CWON) is a leading integrated
communications services provider offering voice and data
services including Internet and DSL solutions, and web hosting
and design, primarily to small and medium-sized businesses in
second and third-tier markets.
Choice One, which has a total shareholders' equity deficit of
about $452 million (as at September 30, 2002), currently offers
services in 29 markets across 12 Northeast and Midwest states.
At September 30, 2002, the company had nearly 500,000 lines in
service and more than 100,000 accounts. The company's annualized
revenue run rate is approximately $300 million, based on third
quarter 2002.
For further information about Choice One, visit its Web site at
http://www.choiceonecom.com
CONDOR TECHNOLOGY: Filing Cert. of Dissolution in Delaware Soon
---------------------------------------------------------------
Effective December 31, 2002, Condor Technology Solutions, Inc.,
sold all of the assets and going business of the Company,
consisting of the Infrastructure Services Division of the
Company, to International Shared Services, Inc., a Pennsylvania
corporation, and a subsidiary of Geisinger Health System, for a
cash purchase price of $2,475,000, plus the assumption of
certain debt by International Shared Services. The assets sold
to the purchasing company, located primarily in Langhorne,
Pennsylvania, comprised substantially all of the assets of
Condor Technology Solutions, Inc., and its subsidiaries and
approximately 100% of the consolidated revenue of Condor
Technology Solutions, Inc., and its subsidiaries for the month
ended December 31, 2002.
Under a Plan of Liquidation adopted by Condor Technology
Solutions, Inc., on October 30, 2002, that Company has sold its
remaining businesses as part of an orderly disposition of its
remaining assets. As a result of the size of its debt
obligations (even after repayment of certain debts with the
proceeds of the foregoing transaction), no funds generated by
the liquidation of its remaining assets will be available for
distribution to stockholders. Pursuant to the Plan of
Liquidation, Condor Technology Solutions plans to file a
Certificate of Dissolution with the Secretary of State of the
State of Delaware as soon as practicable.
COEUR D'ALENE: Reappoints James Sabala as Chief Fin'l Officer
-------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE:CDE) announced that James
A. Sabala has been named to serve as Coeur's Executive Vice
President and Chief Financial Officer.
Mr. Sabala returns to Coeur after serving as Chief Financial
Officer of Stillwater Mining Company (NYSE:SWC), a palladium and
platinum mining company, since April 1998. In his previous
employment with Coeur, Mr. Sabala served in several capacities
including Senior Vice President and Chief Financial Officer from
1988 to 1998. He succeeds Geoffrey A. Burns.
Dennis E. Wheeler, Coeur's Chairman and Chief Executive Officer,
commented, "We are delighted that Jim is rejoining Coeur. His
significant experience in the mining industry, together with his
deep knowledge of Coeur, its people, and its operations will
provide Coeur with excellent financial leadership going
forward."
Coeur d'Alene Mines Corporation is the world's largest primary
silver producer, as well as a significant, low-cost producer of
gold. Coeur has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.
* * *
As previously reported, Coeur d'Alene Mines Corporation
dismissed Arthur Andersen LLP as the Company's independent
accounting firm. Arthur Andersen LLP had served in that
capacity since October 1999. The Company's determination
reflected the fact that on June 15, 2002, the Securities and
Exchange Commission announced that Arthur Andersen LLP had
informed the Commission that it will cease practicing before the
Commission by August 31, 2002.
Arthur Andersen's report dated February 15, 2002, stated that
the financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001, had been
prepared assuming that the Company will continue as a going
concern.
CONGOLEUM CORP: Plans to File Asbestos-Driven Chapter 11 Prepack
----------------------------------------------------------------
American Biltrite Inc., (AMEX: ABL) said its majority-owned
subsidiary Congoleum Corporation (AMEX: CGM) reported its
strategy for resolving current and future asbestos claims
liability. The strategy involves negotiating a global settlement
with current asbestos plaintiffs. In furtherance of this
strategy, Congoleum has begun preliminary settlement
negotiations with attorneys representing the majority of
plaintiffs with asbestos claims pending against Congoleum.
Upon successful completion of these negotiations, Congoleum
intends to file a prepackaged plan of reorganization under
Chapter 11 of the United States Bankruptcy Code. Congoleum
intends to propose a plan under which its trade creditors would
not be adversely affected.
Roger S. Marcus, Chairman of the Board, commented "We believe
this step is a very positive move for Congoleum's future. Over
the past several years, there have been great improvements in
Congoleum's product offering, distribution, and manufacturing
capability. Unfortunately, these achievements have been
overshadowed by the cloud of asbestos litigation hanging over
the company."
Where They'll File
Based on Mercerville, New Jersey, Congoleum may opt to file in
Trenton. Alternatively, because Congoleum is incorporated in
Delaware, it may file in Wilmington.
What the Plan Will Look Like
Congoleum expects that the plan of reorganization would provide
for an assignment of applicable Congoleum insurance to a trust
that would fund both the settlement of pending asbestos claims
as well as future asbestos claims, and that the plan would leave
Congoleum's trade creditors unimpaired and protect the company
from any future asbestos-related litigation.
Congoleum is one of many defendants in roughly 13,000 pending
claims (including workers' compensation cases) involving nearly
40,000 individuals as of September 30, 2002, alleging personal
injury or death from exposure to asbestos or asbestos-containing
products. That compares to approximately 6,563 claims at
December 31, 2001 involving 23,139 individuals. Congoleum
reports a $42 million asbestos-related insurance asset on its
Sept. 30, 2002, balance sheet, and records $45.5 million of
quantifiable asbestos-related liability. At the end of 2001,
Congoleum estimated its range of probable and estimable
undiscounted losses for asbestos-related claims through the year
2049 at $53.3 million to $195.6 million before considering the
effects of insurance recoveries. During the period that
Congoleum produced asbestos-containing products, the Company
purchased primary and excess insurance policies providing in
excess of $1 billion coverage for bodily injury asbestos claims.
The Primary Insurance has been or is nearly exhausted.
Unlike a conventional bankruptcy proceeding, a prepackaged
bankruptcy can significantly reduce the time and cost of the
Chapter 11 process, resulting in a more predictable outcome for
all constituents. Much of the time consumed in a non-prepackaged
bankruptcy proceeding is spent on negotiations among various
classes of creditors competing over how their respective claims
will be treated under a plan. By reaching an agreement in
advance of filing with the plaintiffs that leaves other classes
of creditors unimpaired, Congoleum expects that the post-filing
process would result in a swifter and less costly reorganization
than would be the case with a non-prepackaged bankruptcy.
When They'll File
Congoleum expects it would take from four to six months to
negotiate a prepackaged plan of reorganization, at which time it
would file for bankruptcy and request court approval of the
plan. Congoleum expects it would take another two to six months
to have the plan confirmed and emerge from the process. Upon
filing, Congoleum intends to seek immediate court approval to
continue to pay all its pre-petition trade creditors in the
ordinary course of its business, and consistent with past
practices.
Asbestos Isn't the Only Problem
Eighteen months ago, Standard and Poor's lowered its ratings on
Congoleum Corp to B+, reflecting the rating agency's
expectations that earnings and cash flow levels would contract
and saying that the company's cost reduction efforts and new
product introductions are unlikely to outweigh continued
weakness in the manufactured housing industry, disappointing
sales performance in a significant territory following
transition to a new distributor, and the effects of the sluggish
economy. S&P also focused on Congoleum's narrow product focus
and aggressive financial risk profile.
A Big Step in a Productive Direction
Roger S. Marcus, Chairman of the Board, commented, "Because this
process now involves discussions with a wider circle, we felt it
best to communicate our strategy to assure our non-asbestos
creditors, customers, employees and other constituencies who
might have concerns about the asbestos issue and how it could
affect them. We have worked hard to craft a strategy that would
resolve the asbestos problem without harm to our trade
creditors, customers, and employees, and we look forward to
receiving their full support throughout this process. We expect
to operate on a 'business as usual' basis throughout this
process. The net cash provided by operating activities and the
funds available under the existing credit facility should be
more than adequate to fund anticipated working capital
requirements, debt service and planned capital expenditures
through this process. We believe this settlement strategy of
resolving our current and future asbestos liabilities through a
prepackaged bankruptcy is in the best interests of the company,
the claimants and the company's other constituencies, and for
that reason we are optimistic that it will succeed. However, if
a fair resolution cannot be reached, we are fully prepared to
utilize our insurance and other resources to return to the
strategy of vigorous defense that we have employed in the past."
"We have seen tremendous momentum with the sales success of
Ultima, Prelude, and Durastone, all of which contributed to our
top line growth in 2002. We expect to receive a second patent
shortly that covers Ultima and Durastone, further solidifying
our proprietary advantage. We have a new introduction package
coming out this month, including the Durastone Classic line and
a major addition to the Ultima design and color offering, which
we are excited about. From a financial perspective, we expect
improvement from a recent price increase, continued progress in
cost reductions, and modest capital requirements as we look
ahead. While we are not expecting much improvement in the
overall economy or the manufactured housing business, we expect
all the above should benefit our operating results.
Mr. Marcus continued, "Successfully resolving the asbestos
problem would eliminate a financial and management drain,
permitting us to return our focus exclusively to the business.
It would also clean up our balance sheet and eliminate the
asbestos concerns the financial community has had regarding
Congoleum. Over the past several years, we've invested
significant capital to improve efficiencies. We also rearranged
our distribution network for the future, which required another
major investment. Finally, we've spent a great deal on new
product development, introduction, and merchandising. At the
same time, we've weathered the worst decline in manufactured
housing in over a decade. With the asbestos matter behind us, we
would be positioned for greater success. I look forward to our
future opportunities."
Congoleum Corporation is a leading manufacturer of resilient
flooring, serving both residential and commercial markets. Its
sheet, tile and plank products are available in a wide variety
of designs and colors, and are used in remodeling, manufactured
housing, new construction and commercial applications. The
Congoleum brand name is recognized and trusted by consumers as
representing a company that has been supplying attractive and
durable flooring products for over a century.
CONSECO INC: Court Okays Bankruptcy Management as Claims Agent
--------------------------------------------------------------
Conseco Inc., and its debtor-affiliates sought and obtained
permission to employ Bankruptcy Management Company as the
official noticing, claims and balloting agent in these chapter
11 cases.
The Debtors paid BMC a $25,000 retainer, which will be applied
to the final billing. In order to reduce administrative
expenses, the Debtors seek authorization to pay BMC's fees and
expenses without the necessity of a fee application. In other
Chapter 11 cases, BMC has not been required to file fee
applications. Invoices will be submitted to the Debtors'
accounts payable department on a monthly basis.
As the Debtors' notice and claims agent, BMC will:
1) Prepare and serve required notices in these Chapter 11
Cases, including:
i. Notice of the commencement of these Chapter 11 Cases
and the initial meeting of creditors under Section
341(a) of the Bankruptcy Code;
ii. Notice of the claims bar date;
iii. Notice of objections to claims;
iv. Notice of any hearings on a disclosure statement and
confirmation of a plan of reorganization; and
v. Other miscellaneous notices to any entities, as the
Debtors or the Court may deem necessary or
appropriate for an orderly administration of these
Chapter 11 Cases;
2) After the mailing of a particular notice, file with the
Clerk's Office a certificate or affidavit of service that
includes a copy of the notice involved, an alphabetical
list of persons to whom the notice was mailed and the date
and manner of mailing;
3) Maintain copies of all proofs of claim and proofs of
interest filed;
4) Maintain official claims registers, including, among other
things, this information for each proof of claim or proof
of interest:
i. the applicable Debtor;
ii. the name and address of the claimant and any agent
thereof, if the proof of claim or proof of interest
was filed by an agent;
iii. the date received;
iv. the claim number assigned; and
v. the asserted amount and classification of the claim;
5) Implement necessary security measures to ensure the
completeness and integrity of the claims registers;
6) Transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
7) Maintain an up-to-date mailing list for all entities that
have filed a proof of claim or proof of interest, which
list will be available upon request of a party in interest
or the Clerk's Office;
8) Provide access to the public for examination of copies of
the proofs of claim or interest without charge during
regular business hours;
9) Record all transfers of claims pursuant to Rule 3001(e) of
the Federal Rules of Bankruptcy Procedure and provide
notice of such transfers as required;
10) Comply with applicable federal, state, municipal, and
local statutes, ordinances, rules, regulations, orders and
other requirements;
11) Provide temporary employees to process claims, as
necessary; and
12) Promptly comply with other conditions and requirements as
the Clerk's Office or the Court may at any time prescribe.
Tinamarie Feil, Vice President of BMC, assures the Court that no
employee of BMC represents an interest adverse to the Debtors.
(Conseco Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Conseco Inc.'s 10.50% bonds due 2004
(CNC04USR2) are trading at about 37 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for
real-time bond pricing.
CONSECO INC: Kamakura Releases Predictability Study on Conseco
--------------------------------------------------------------
Kamakura Corporation released a new credit risk research report
showing strong predictive performance for its default
probability model KDP-jc, a state of the art "reduced form"
credit model based on equity price data and accounting
variables. The Kamakura study shows the KDP-jc default
probabilities have strong predictability in a study that
includes 1.4 million monthly observations on 17,460 U.S.
companies over the 1963-1998 time period. The report also
includes a predictability study on Conseco, which declared
bankruptcy on December 18. The research report "Measuring
Predictive Capability of Credit Models Under the Basel Capital
Accords: Conseco and Results from the United States, 1963-1998"
is available after a free registration from the Kamakura Web
site http://www.kamakuraco.comor its research page
http://www.kamakuraco.com/research/ori_research_signup.asp
Kamakura is the world's first provider of multiple default
probability models derived on a common platform and distributed
in a fully compatible and comparable way. Kamakura offers the
KDP-jc "Jarrow Chava" default probabilities as well as the KDP-
ms "Merton Structural" model default probabilities and a hybrid
Jarrow-Merton default probability series KDP-jm. All models have
been delivered on a daily basis since last November 1.
"The New Basel Capital Accords require that financial
institutions have a common platform and established scientific
methodology for measuring credit model performance," said Dr.
Donald R. van Deventer, CEO of Kamakura and a co-author of the
study with colleague Ms. Xiaoming Wang. "This new report shows
the power of the state of the art reduced form models and
illustrates exactly how Kamakura provides Basel II-compliant
performance measures to our default probability clients." Under
the Kamakura Risk Information Services KRIS-cr ("credit risk")
default probability service, Kamakura clients have a full set of
test results on each of the KDP models on a fully comparable
basis. Until the Kamakura service was launched, commercial
vendors had offered only one default model and generally did not
disclose quantitative measures of model performance, so it was
not possible for users to meet Basel II standards without
replicating the vendor's entire research effort.
"We think transparency is critical from both a shareholder and
regulatory point of view," said Dr. van Deventer. "That is why
we have pioneered the disclosure of quantitative performance
measures for our models, although performance of our most
advanced models is limited to client-only distribution. We have
been gratified by the market response to our prior publications
on credit model testing, and we believe these results are the
most important released so far."
Kamakura's research director Dr. Robert Jarrow has been deeply
involved in the model development and testing process at
Kamakura. Both Dr. Jarrow and Dr. van Deventer were named to the
50-member Risk Magazine Hall of Fame in December. All of the
KRIS-cr default probability data series are fully compatible
with the Kamakura Risk Manager enterprise-wide credit risk,
market risk, and asset and liability management system.
Kamakura Corporation is a leading provider of risk management
information, processing and software. Kamakura has been a
provider of daily default probabilities for listed companies
since November, 2002. Kamakura is also the first company in the
world to develop and install a fully integrated credit risk,
market risk, asset and liability management, and transfer
pricing system. Kamakura has more than 40 clients ranging in
size from $3 billion in assets to $1 trillion in assets.
Kamakura's risk management software is currently used in the
United States, Germany, Canada, Mexico, Japan, Australia, Korea,
and Hong Kong.
Kamakura's research effort is led by Professor Robert Jarrow,
who was named Financial Engineer of the Year in 1997 by the
International Association of Financial Engineers. Kamakura
management has published twenty-one books and more than 100
publications on credit risk, market risk, and asset and
liability management. Kamakura has world-wide distribution
alliances with IPS-Sendero and Unisys, making Kamakura products
available in almost every major city around the globe.
CORRECTIONS CORP: Determines Preferred Shares' Fair Market Value
----------------------------------------------------------------
Corrections Corporation of America (NYSE: CXW) determined the
fair market value of the shares of its Series B Preferred Stock
distributed on January 2, 2003, as a paid-in-kind dividend on
previously issued shares of it Series B Preferred Stock to be
$24.73 per share. Accordingly, the Company's stockholders who
received shares of the Series B Preferred Stock as the fourth
quarter 2002 paid-in-kind dividend generally will be required to
include as ordinary income on their 2003 tax returns $24.73 for
each share of Series B Preferred Stock they received in the
January 2, 2003, distribution to the extent of the Company's
current or accumulated earnings and profits (as determined at
the end of 2003). Such amount will also constitute the
stockholders' basis in the shares received on January 2, 2003.
To the extent distributions by the Company during 2003 exceed
its current or accumulated earnings and profits as of the end of
2003, the amount in excess will be treated first as a return of
capital and thereafter as gain from the sale of stock.
Under the terms of the Series B Preferred Stock, the Company is
required to pay quarterly dividends in arrears, when and as
declared by the Company's board of directors, in additional
shares of Series B Preferred Stock at a rate of 12% per year
until September 2003. Cash dividends are payable thereafter
at a rate of 12% per year. Future paid-in-kind dividends on the
shares of the Company's Series B Preferred Stock will also
generally be taxable as ordinary income (based on the fair
market value of the shares distributed on each respective
dividend date) to the extent of the Company's current or
accumulated earnings and profits as of the end of the year in
which such shares are distributed.
CCA is the nation's largest owner and operator of privatized
correctional and detention facilities and one of the largest
prison operators in the United States, behind only the federal
government and four states. CCA currently operates 60
facilities, including 37 company-owned facilities, with a total
design capacity of approximately 59,000 beds in 21 states and
the District of Columbia. CCA specializes in owning, operating
and managing prisons and other correctional facilities and
providing inmate residential and prisoner transportation
services for governmental agencies. In addition to providing
the fundamental residential services relating to inmates, CCA
facilities offer a variety of rehabilitation and educational
programs, including basic education, religious services, life
skills and employment training and substance abuse treatment.
These services are intended to reduce recidivism and to prepare
inmates for their successful re-entry into society upon their
release. CCA also provides health care (including medical,
dental and psychiatric services), food services and work and
recreational programs.
* * *
As reported in Troubled Company Reporter's November 25, 2002
edition, Standard & Poor's affirmed its 'B+' corporate credit
rating on private corrections company Corrections Corp., of
America and revised the outlook to positive from stable. The
outlook revision reflects faster than expected progress made by
management to improve CCA's operating performance.
Nashville, Tennessee-based CCA had about $1.1 billion of debt
(including preferred stock) outstanding at September 30, 2002.
"If CCA is able to continue to improve its financial performance
and achieve and maintain stronger credit protection measures,
specifically total debt (adjusted for preferred stock) to EBITDA
of about 4 times and EBITDA interest coverage in the range of
2.5x to 3.0x, the ratings could be raised during the outlook
period," said Standard & Poor's credit analyst Jean C. Stout.
EDISON MISSION: PwC Requires Re-Audit of 2001 & 2000 Financials
---------------------------------------------------------------
Edison Mission Energy is a wholly-owned, indirect subsidiary of
Edison International. Edison Mission Energy's Lakeland project
operated a 220 MW combined cycle, natural gas-fired power plant
located in the United Kingdom. Ownership of the project is held
through Edison Mission Energy's indirect subsidiary, Lakeland
Power Ltd., which sold power generated from the plant pursuant
to a power sales agreement with Norweb Energi Ltd, which is a
direct subsidiary of TXU (UK) Holdings Limited (TXU UK) and an
indirect subsidiary of TXU Europe Group plc (TXU Europe).
As previously reported, TXU UK and TXU Europe, together with a
related entity, TXU Europe Energy Trading Limited (TXU Energy),
entered into formal administration proceedings in the United
Kingdom (similar to bankruptcy proceedings in the United States)
on November 19, 2002. As a result of these actions and their
effect on Norweb Energi Ltd., and Edison Mission Energy's
contractual arrangements with other parties, the Lakeland power
plant currently is not operating. In December 2002, the
directors of Norweb Energi Ltd., appointed a liquidator to wind
up its contractual rights and obligations.
On December 4, 2002, Norweb Energi Ltd., provided a notice of
disclaimer of the Power Sales Agreement dated October 20, 1989
(as amended from time to time) between Lakeland Power Ltd., and
Norweb Energi Ltd., (as successor to North Western Electricity
Board) under Section 178 of the Insolvency Act. The disclaimer
is effectively a termination of the power sales agreement.
On December 19, 2002, the lenders to the Lakeland project
accelerated the debt owing under the bank agreement that governs
the project's indebtedness primarily as a result of the notice
of disclaimer of the power sales agreement by Norweb Energi Ltd.
The bank loans of Lakeland Power Ltd., are non-recourse to
Edison Mission Energy. Furthermore, the defaults on these loans
do not cross-default to any other indebtedness of Edison Mission
Energy or its affiliates.
On December 20, 2002, the project's lenders exercised their
right to appoint Michael Thomas Seery and Michael Vincent
McLoughlin, partners with KPMG LLP, as administrative receiver
over the assets of Lakeland Power Ltd. This followed
discussions over the past several weeks regarding future
operations of the power plant. The administrative receiver is
appointed to take control of the affairs of Lakeland Power Ltd.
and has a wide range of powers (specified in the Insolvency Act
1986), including authorizing the sale of the power plant. The
appointment of the administrative receiver results in the
treatment of Lakeland power plant as an asset held for sale
under Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets"
(SFAS No. 144).
The events related to the Lakeland project will result in an
impairment charge and a provision for bad debts of approximately
$100 million ($70 million after tax) in the fourth quarter ended
December 31, 2002, arising from the write-down by Edison Mission
Energy of the Lakeland power plant and related claims under the
power sales agreement (an asset group under SFAS No. 144) to
their fair market value. Edison Mission Energy will account for
the Lakeland project as a discontinued operation in its Annual
Report on Form 10-K for the year ended December 31, 2002, and
will no longer consolidate the activities of Lakeland Power
Ltd., due to the loss of control arising from the appointment of
the administrative receiver.
The Edison Mission Energy consolidated financial statements for
the years ended 2001 and 2000 were subject to an audit by Arthur
Andersen LLP which was presented in Edison Mission Energy's 2001
Annual Report on Form 10-K. Edison Mission Energy has appointed
PricewaterhouseCoopers LLP as the auditor for its 2002
consolidated financial statements. Under Statement of Auditing
Standards No. 58, Reports on Audited Financial Statements, a re-
audit ordinarily is necessary for discontinued operations which
require reclassification of prior years consolidated financial
statements to conform to the separate presentation of
discontinued operations in such financial statements in
accordance with SFAS No. 144. Edison Mission Energy has been
advised by PricewaterhouseCoopers LLP that a re-audit of its
2001 and 2000 consolidated financial statements is required as a
result of the classification of the Lakeland project as a
discontinued operation.
Edison Mission's 10% bonds due 2008 are currently trading at
about 36 cents-on-the-dollar.
EDISON MISSION: NZ Subsidiary Acquiring Taranaki Power Station
--------------------------------------------------------------
On December 23, 2002, Contact Energy Ltd., a New Zealand
publicly traded energy company 51% owned by Edison Mission
Energy, (a wholly-owned, indirect subsidiary of Edison
International) announced that it has entered into a conditional
agreement with NGC Holdings Ltd., to acquire the Taranaki
Combined Cycle power station and related interests for NZ$500
million. The Taranaki station is a 357 MW combined cycle,
natural gas-fired plant located near Stratford, New Zealand.
The acquisition is conditioned on, among other things, Contact
Energy gaining a clearance from the New Zealand Commerce
Commission, approval by the shareholders of NGC, and the
termination of a cross border leveraged lease currently in
existence. Subject to satisfaction of the closing conditions, a
closing is expected in February 2003.
As a result of the proposed acquisition and the financing to be
obtained by Contact Energy to finance such acquisition, Standard
and Poor's lowered the long-term credit rating of Contact Energy
from BBB+ to BBB.
ELDERTRUST: Further Extends Two Loans Totaling $19MM to Feb. 10
---------------------------------------------------------------
ElderTrust (NYSE:ETT), an equity healthcare REIT, announced
guidance with respect to maturing loans.
As previously announced, two loans totaling $19.5 million had
been extended to January 10, 2003. Monday, the Company announced
that these two loans have been further extended to February 10,
2003 to allow for further negotiation with the lender as to
their resolution.
Based upon discussions held to date, the Company currently
expects that one loan, totaling $4.6 million that is secured by
the Wayne property, will be paid down to $3.5 million and that
the maturity date will be extended to December 1, 2004. No
agreement has yet been reached as to the second loan, totaling
$14.9 million and secured by the Harston and Pennsburg
properties.
Resolution of this loan is still under discussion and may
include, among other alternatives, a further extension as a cash
flow mortgage, sale or a title transfer via a "deed in lieu of
foreclosure" transaction.
ElderTrust is a real estate investment trust that invests in
real estate properties used in the healthcare services industry,
principally along the East Coast of the United States. Since
commencing operations in January 1998, the Company has acquired
32 properties. At September 30, 2002, ElderTrust's balance sheet
shows a working capital deficit of about $30 million.
For more information on ElderTrust, visit ElderTrust's Web site
at http://www.eldertrust.com
ENRON CORP: Court Okays Sale of Neumin Gas Contracts at Auction
---------------------------------------------------------------
With the Auction concluded, Judge Gonzalez approves the sale of
The Neumin Natural Gas Contracts by Enron Corporation and its
debtor-affiliates to National Bank of Canada for the Initial
Purchase Price of $26,500,000, subject to adjustment pursuant to
the Purchase Agreement.
The Contracts consist of:
(i) a Master Agreement executed on November 18, 1999, to be
effective as of February 4, 1999, as amended on August
24, 2000, with Neumin Production Co.;
(ii) a Confirmation dated September 27, 2000, to Neumin by
ENA regarding swap NZ85622, which expires December
31, 2006; and
(iii) a Confirmation dated January 6, 2000 to Neumin from
ENA regarding a call option on ENA Contact No.
N52632.3, which expires December 31, 2002.
At Closing, National Bank of Canada will wire transfer an amount
equal to the Purchase Price less the Deposit. National Bank of
Canada had deposited $1,978,000 with Weil Gotshal & Manges LLP,
which was placed into an escrow account. (Enron Bankruptcy News,
Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003
(ENRN03USR3) are trading at about 14 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
EOTT: Court OKs Stipulation Continuing All American Relationship
----------------------------------------------------------------
Prior to the Petition Date, EOTT Energy Operating LP routinely
shipped oil in pipelines operated by All American Pipeline LP.
In August 2002, there was a negative imbalance in All American's
West Texas Gathering System for which EOTT owed it several
thousand barrels of oil due to EOTT's overdraw. The parties
agreed to correct the imbalance by EOTT's delivery of specified
numbers of barrels per day until corrected -- the Imbalance
Correction Agreement. EOTT provided All American with a letter
of credit to secure its performance of the Imbalance Correction
Agreement, which letter of credit expired on November 11, 2002.
It is important to EOTT's operations that it be able to continue
to ship oil through All American's pipelines. Furthermore, EOTT
and All American stipulate that All American has indicated its
intent to draw under the letter of credit if EOTT defaults.
EOTT desires to continue to meet its 500 barrels of oil delivery
per day to All American to cure the imbalance to avoid All
American's draw on the letter of credit. EOTT also desires to
extend the expiration of the letter of credit as necessary to
complete this process.
In the same manner, there was also a negative imbalance in the
Permian Basin Gathering System due to EOTT's barrel overdrafts.
As of the Petition Date, there were sufficient barrels of oils
belonging to EOTT in All American's Permian Basin Gathering
System to cover the imbalance, such that All American had and
does now have a right of recoupment. Though All American has
not effected that right of recoupment, it has imposed an
administrative freeze and holds those barrels subject the
Court's approval of the recoupment.
EOTT desires to continue to ship its oil on All American's
Permian Basin Gathering System. To do so, EOTT has agreed to:
(a) cure its imbalance by:
-- All American's recoupment of barrels of oil;
-- payment of funds to All American;
-- providing or continuing to provide to All American a
letter of credit; or
-- some combination of the three possibilities, whichever
works best for EOTT according to its business judgment;
(b) pay all unpaid prepetition tariffs owed to All American
for the shipment of oil through All American's pipeline
systems; and
(c) pay All American the cost of cover it incurred consistent
with an on the same basis (not prohibited by statute) as
cost of cover paid by other shippers for their similar
inventory imbalances.
Accordingly, Judge Schmidt authorizes:
(a) EOTT to continue to perform under its West Texas
Gathering System Imbalance Correction Agreement and to
extend its letter of credit as necessary to do so; and
(b) All American to recoup the Permian Basin Gathering System
imbalance as agreed to by EOTT, and EOTT is authorized to
make payments to cure that imbalance as it deems
appropriate, and EOTT is further authorized to maintain
positive balances and provide letters of credit as
reasonably necessary and appropriate to cure any
imbalances and maintain its opportunity to ship product
on All American's pipeline systems currently and in the
future. (EOTT Energy Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
EXIDE TECHNOLOGIES: Obtains Second Exclusive Period Extension
-------------------------------------------------------------
Judge Carey extends Exide Technologies and its debtor-
affiliates' exclusive periods to file a plan of reorganization
to April 9, 2003 and to solicit acceptances of that plan to
June 9, 2003. (Exide Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FASTNET CORP: Applies for Listing on Nasdaq SmallCap Market
-----------------------------------------------------------
FASTNET Corporation (NASDAQ:FSST) has applied to list its
securities on the Nasdaq SmallCap stockmarket. Through
communications with the NASDAQ, FASTNET believes it's eligible
for the transfer and believe its application for transfer will
be approved.
Stephen Hurly, Chief Executive Officer of FASTNET stated, "We
believe it's in the best interest of our shareholders to
transfer to the NASDAQ SmallCap Market at this time. This move
stays the delisting process from the NASDAQ National Market, and
allows us to continue to focus on business execution. The
transition should not change how our stock is traded."
FASTNET (NASDAQ:FSST) provides high-performance, dedicated and
reliable broadband services to businesses that need to drive
productivity, profitability and customer service via the
Internet. Through private, redundant peering arrangements with
the national IP backbone carriers, FASTNET delivers customer
data through the fastest, least congested route to enhance
reliability, improve performance, and eliminate downtime.
Founded in 1994, FASTNET provides a complete suite of solutions
for dedicated and broadband access, Internet security and data
backup as well as wireless Internet connectivity, VPN design and
implementation, managed hosting, Web site and e-commerce
development and co-location.
Based in Bethlehem, PA, FASTNET serves the greater Mid-Atlantic
region from Northern Virginia to New England.
The Company's common shares are listed on the NASDAQ National
Market under the symbol "FSST." For more information on FASTNET,
visit the Company's Web site at http://www.fast.net
* * *
Liquidity and Going Concern
FASTNET's September 30, 2002 balance sheet shows that total
current liabilities exceeded total current assets by about $14
million.
The Company's business plan has required substantial capital to
fund operations, capital expenditures, and acquisitions. The
Company modified its business strategy in October 2000.
Simultaneous with the modification of its strategic plan, the
Company recorded a charge primarily related to network and
telecommunication optimization and cost reduction, facility exit
costs, realigned marketing strategy, and involuntary employee
terminations. These actions reduced the Company's cash
consumption. In December 2001, the Company recorded an
additional charge related to excess data center facilities and
office space that are non-cancelable commitments of the Company.
The Company periodically re-evaluates the adequacy of this
reserve and may adjust the reserve as required.
The Company has incurred losses since inception and expects to
continue to incur losses in 2002. As of September 30, 2002, the
Company's accumulated deficit was $55,009,447. As of September
30, 2002, cash and cash equivalents and marketable securities
were $4,734,968. The Company's working capital deficit is
$13,613,423 as of September 30, 2002. In October 2002, the
Company liquidated restricted certificates of deposit of
$4,800,000 in order to repay a bank note. The Company believes
that its existing cash and cash equivalents, marketable
securities, cash flows from operations, anticipated debt and
lease financing will be sufficient to meet its working capital
and capital expenditure requirements to the end of 2003 assuming
satisfactory negotiation of capital lease obligations which are
included in current liabilities and repayment of the receivables
collected on behalf of the Company due to the estate of
AppliedTheory. In order to finance the Company's strategic
acquisition plan and other operating strategies, the Company is
actively seeking additional debt and equity financing. If
additional funds are raised through the issuance of equity
securities, existing shareholders may experience significant
dilution. Furthermore, additional financing may not be available
when needed or, if available, such financing may not be on terms
favorable to the Company. If such sources of financing are
insufficient or unavailable, or if the Company experiences
shortfalls in anticipated revenue or increases in anticipated
expenses, the Company may need to make operational changes to
decrease cash consumption. These changes may include closing
certain markets and making further reductions in head count,
among other things. Any of these events could harm the Company's
business, financial condition, cash flows or results of
operations.
FEDERAL-MOGUL: Court Okays AlixPartners' Engagement as Advisors
---------------------------------------------------------------
The Official Committee of Unsecured Creditors argues that the
services Federal-Mogul Corporation and its debtor-affiliates
propose to be provided by AlixPartners, LLC can be performed
more cost effectively if they were done by either the
professionals the Debtors previously retained, or the Debtors'
in-house staff. According to Charlene D. Davis, Esq., at The
Bayard Firm, in Wilmington, Delaware, the Debtors already have a
sufficient number of professionals with the requisite expertise
to provide them with the services they require. An additional
layer of professional expenses at this stage of the case is
neither necessary nor appropriate.
The Committee reminds the Court that the Debtors have already
engaged Ernst & Young to provide Independent Auditing and
Accounting, Tax, Valuation and Actuarial services and
Rothschild, Inc., as their financial advisors and investment
banker. Between the two professionals and the Debtors in-house
staff, Ms. Davis says, the Debtors have sufficient resources to
obtain whatever assistance is required. AlixPartners' retention
will only result in duplication of services by the Debtors'
professionals.
The Committee also does not believe that AlixPartners the
appropriate professional to provide the requested services. Ms.
Davis explains that many of the services the Debtors need are in
the nature of information gathering and processing, not
necessarily an area of expertise for AlixPartners. In addition,
many of the services requested by the Debtors are duplicative of
the services that were to be provided by Rothschild in
accordance with its retention and do not require the additional
costs of another professional.
For example, the Debtors' application states that, among other
things, the Debtors' propose that AlixPartners will perform debt
capacity analysis, will attend meetings and negotiations, and
provide services relating to DIP financing support.
"Not only is Rothschild is qualified to perform all of these
services, but its engagement letter provided that it would
provide those services," Ms. Davis says. "Even if Rothschild is
unwilling to perform these services -- notwithstanding the fact
that it is paid a flat fee of $200,000 per month -- the Debtors
also have an in-house staff capable of performing many of these
tasks."
Ernst & Young can also provide many of the services proposed to
be performed by AlixPartners, Ms. Davis further states. Ernst &
Young has been providing services to the Debtors for over fifty
years and is familiar with the Debtors and their business. The
firm has the staff and the expertise to perform, at a minimum,
the ministerial type tasks proposed to be performed by
AlixPartners, like information gathering and processing.
"Since it is already thoroughly familiar with the Debtors'
businesses, E&Y should be able to assist the Debtors much more
efficiently and effectively," Ms. Davis insists.
* * *
Notwithstanding the Creditors' Committee's objection, Judge
Newsome approves the Debtors' employment of AlixPartners, as
their financial advisors nunc pro tunc to November 18, 2002, in
lieu of the former Business Recovery Services unit of
PricewaterhouseCoopers LLP.
The Debtors anticipate AlixPartners to assist:
(a) in developing one or more financial models that will
enable the Debtors to better predict their future cash
flows as well as to model the impact of a number of
restructuring alternatives under consideration, including
the operational changes to their businesses;
(b) in managing the administrative details of their
reorganization process and in the progress of their
Chapter 11 cases, including working and coordinating with
the efforts of other professionals representing various
stakeholders of the Debtors;
(c) in obtaining and presenting the information required by
parties-in-interest including, but not limited to,
official committees, the Legal Representative for Future
Claimants, the secured lenders and the U.S. Bankruptcy
Court for the District of Delaware itself;
(d) in the evaluation and preparation of a matrix of
intercompany claims, the performance of cost/benefit
analyses with respect to the Debtors' executory contracts
and unexpired leases, and in obtaining and evaluating
information with respect to unreconciled reclamation
demands against the Debtors;
(e) in evaluating potential preference and other avoidance
actions;
(f) Rothschild, Inc., in their capacity as the Debtors'
financial advisors and investment bankers, in obtaining
and compiling information that is needed to enable
Rothschild to perform its duties in formulating,
analyzing, and implementing various options for
restructuring and reorganizing the Debtors' businesses;
and
(g) in matters as may be requested.
The Debtors will compensate AlixPartners for its services in
accordance with the firm's discounted hourly rates plus
reimbursement of actual necessary expenses. The firm's
discounted hourly rates are:
Principals $500 - 590
Senior Associates 400
Associates 350
Accountants & Consultants 240
Analysts 170
(Federal-Mogul Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FEI CO: S&P Affirms Low-B Ratings After Veeco Merger Termination
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating and 'B-' subordinated debt rating on Hillsboro
Oregon-based FEI Co. At the same time, Standard & Poor's
removed the ratings from CreditWatch, where they had been placed
on July 12, 2002. The actions followed the announcement on
January 9, 2003, that FEI's merger agreement with Veeco
Instruments Inc., (not rated) had been terminated. The companies
cited difficult overall market and economic conditions and the
uncertain timing of an industry recovery for the decision not to
proceed with the merger.
FEI is a niche provider of high-end metrology and process
equipment to the semiconductor, data storage, industrial, and
research end markets. As of September 29, 2002, FEI had $175
million of debt outstanding. The outlook is stable.
The proposed merger between FEI and Veeco, a competing
manufacturer of metrology equipment, was originally announced on
July 11, 2002. It would have resulted in a company with
potentially broader end-market exposure and greater operational
efficiency.
"As a stand-alone business, FEI has relatively heightened
exposure to the volatile semiconductor and data storage end-
markets," said Standard & Poor's credit analyst Joshua Davis.
Those markets accounted for more than 40% of FEI's revenues for
the three quarters ended September 29, 2002.
"The rating is constrained by risks associated with technology
capital spending, FEI's small operating scale, and substantial
industry competition," Mr. Davis said.
FOCAL COMMS: Brings-In Swidler Berlin as US Regulatory Counsel
--------------------------------------------------------------
Focal Communications Corporation and its debtor-affiliates want
to retain the services of Swidler Berlin Shereff Friedmans, LLP
as Special United States Regulatory Counsel.
The Debtors tell the U.S. Bankruptcy Court for the District of
Delaware that they need Swidler Berlin to:
a) advise them as to telecommunications regulatory
requirements arising from a filing under the Bankruptcy
Code;
b) represent Debtors as needed before telecommunications
regulatory agencies and other federal regulatory
agencies;
c) advise the Debtors on telecommunications regulatory
issues involved with sales of assets or transfer of
control by the Debtors; if required, and Debtors'
chapter 11 plan, including making any required
regulatory filings, seeking required regulatory
approvals, ensuring continued ability of Debtors and, if
applicable purchasers, to obtain telecommunications
vendors, and any other activities required to implement
the asset sales and/or chapter 11 plan or to consummate
any transactions contemplated thereby;
d) assist in adversary actions against other
telecommunications providers arising out of, or related
to, agreements or arrangements approved by state or
federal telecommunications regulatory agencies; and
e) provide any other necessary legal services and advice on
related matters.
The Debtors submit that Swidler is well qualified and uniquely
able to provide the specialized advice sought by the Debtors on
a going forward basis. Swidler's telecommunications practice
group is widely recognized for its telecommunications regulatory
expertise. Swidler handles matters in virtually every aspect of
telecommunications law, including local, long distance and
international telephone common carriage, Internet services and
technologies; conventional and emerging wireless services;
satellite services; broadcasting; competitive video services;
and telecommunications equipment manufacturing and other high
technology.
The hourly rates charged by Swidler's attorneys that are
currently expected to work on this matter are:
Partners $350 to $500 per hour
Other Attorneys $180 to $355 per hour
Legal Assistants $110 to $150 per hour
Focal Communications Corporation other related Debtors are
national communicational providers of voice and data services to
communications-intensive users in major cities and metropolitan
areas in the United States. The Debtors filed for chapter 11
petition on December 19, 2002. Laura Davis Jones, Esq., and
Christopher James Lhulier, Esq., at Pachulski Stang Ziehl Young
& Jones PC, represent the Debtors in their restructuring
efforts. When the Company filed for protection form its
creditors it listed $561,044,000 in total assets and
$609,353,000 in total debts.
FOSTER WHEELER: Unit Will Supply 460 MWe Power Plant in Poland
--------------------------------------------------------------
Foster Wheeler Ltd., (NYSE:FWC) said that Foster Wheeler Energia
Oy, and its Polish subsidiary, Foster Wheeler Energia Polska Sp.
z o.o., signed a contract with Poland's Poludniowy Koncern
Energetyczny on December 30 to supply a boiler island to a 460
MWe power plant at Lagisza in southern Poland. The contract is
valued at approximately $145.8 million.
The new unit will be built alongside PKE's existing 840 MWe
power station at Lagisza, northeast of Katowice in Upper
Silesia, and is part of an ongoing program by PKE to replace
outdated capacity with modern, high-efficiency, environmentally
friendly technologies. Operating seven other power stations in
southern and western Poland, PKE is the country's largest
electricity utility, with 5,056 MW of installed generating
capacity.
Incorporating the latest once-through unit technology and
offering world-leading levels of efficiency, together with very
low emissions, the new plant will strengthen Foster Wheeler's
position as a supplier to large-scale utility customers on the
European market.
Foster Wheeler Energia Polska and Foster Wheeler Energia Oy will
execute the Lagisza contract jointly, in cooperation with other
Foster Wheeler companies and local manufacturers and
subcontractors. Pre-engineering work is expected to start at the
end of February. Given a notice to proceed in the summer, plant
start-up is scheduled for the end of 2005.
Foster Wheeler's extensive experience in delivering new power-
generating capacity to Polish customers, together with its world
leadership in combustion technologies, were instrumental in
winning the contract. Since 1995, Foster Wheeler has been
contracted to supply more than 2,000 MWe of new capacity in
Poland, including two new plants to PKE. A 140 MWe boiler plant
at Jaworzno was commissioned successfully on waste coal in 1999,
while a 120 MWe plant at Katowice, fired on bituminous coal and
coal slurry, was handed over in January 2000.
Foster Wheeler's largest project in Poland, at Turow
(approximately 1,500 MWe), is more than halfway to completion,
with four units now in operation and two more under
construction. A combined heat and power plant at Elcho (224 MWe
plus 500 MW of district heat), a turnkey power-plant delivery,
is scheduled to begin commercial generation in spring 2003.
Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research, plant operation and environmental services. The
corporation is based in Hamilton, Bermuda, and its operational
headquarters are in Clinton, N.J. For more information about
Foster Wheeler, visit its Web site at http://www.fwc.com
* * *
As reported in Troubled Company Reporter's September 2, 2002
edition, Standard & Poor's Ratings Services lowered its
corporate credit rating on Foster Wheeler Ltd., to single-'B'
from single-'B'-plus and removed the rating from CreditWatch
following the company's announcement that it has reached
agreement with its senior bank lenders, leasing, and account
receivable securitization lenders on amended or new financing
arrangements.
At the same time, Standard & Poor's withdrew its rating on the
company's $270 million revolving credit facility, which was
terminated. Additionally, Standard & Poor's assigned its double-
'B'-minus senior secured rating to Foster Wheeler's $71 million
term loan A, its single-'B'-plus senior secured rating to its
$149.9 million letter of credit facility, and its single-'B'
senior secured rating to its $68 million revolving credit
facility. The outlook is now negative.
At the same time, Standard & Poor's has heightened concerns that
the protracted lender negotiations (which had been in progress
since January 2002) may have eroded customer confidence, which
could affect backlog and new awards for the next several
quarters until clients are comfortable that the firm has
stabilized its operations and financial position. New awards may
be particularly challenging in the firm's energy equipment
group, given its exposure to the rapidly declining North
American power construction sector; the large cost overruns the
group experienced over the recent past; and its focus on fixed-
priced contracts, which typically include advanced payments from
customers.
Foster Wheeler Corp.'s 6.75% bonds due 2005 (FWC05USR1) are
trading at about 60 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FWC05USR1for
real-time bond pricing.
FOUNTAIN PHARMACEUTICALS: QuestCapital Reports 8.5% Equity Stake
----------------------------------------------------------------
QuestCapital Alliance, L.L.C., beneficially owns 1,054,000
shares of the common stock of Fountain Pharmaceuticals, Inc.,
which represents 8.5% of the outstanding common stock of the
Company. Quest has sole voting and dispositive powers over the
shares held.
On November 21, 2002, the Company completed the acquisition of
all of the issued and outstanding shares of SiriCOMM, Inc., a
Missouri corporation. Quest Capital Alliance L.L.C. loaned
SiriCOMM, Inc. (Missouri) an aggregate of $500,000 in two
installments of $250,000 each on November 16, 2001 and April 5,
2002 respectively. In connection with these loans, Quest Capital
Alliance L.L.C. was issued two convertible notes each in the
principal amount of $250,000. Upon conversion, these notes are
convertible into an aggregate of 8.5% of the combined entity's
common stock. Accordingly, on January 7, 2003 Quest Capital
Alliance L.L.C. converted their notes into 1,054,000 shares of
the Company's common stock which represents 8.5% of the
Company's issued and outstanding shares of common stock. Quest
Capital Alliance L.L.C. made the initial loans out of its
personal funds.
The shares of common stock deemed to be beneficially owned by
QuestCapital Alliance, L.L.C. were acquired for, and are being
held for, investment purposes. The shares were acquired in
connection with Fountain Pharmaceuticals' acquisition of
SiriCOMM.
QuestCapital Alliance indicates that it may in the future
directly acquire shares of common stock in open market or
private transactions, block purchases or otherwise. QuestCapital
Alliance may continue to hold or dispose of all or some of the
securities reported here from time to time, in each case in open
market or private transactions, block sales or purchases or
otherwise, subject to compliance with applicable law.
Fountain Pharmaceuticals, which had relied largely on loans from
chairman James Schuchert, Jr., ran out of time and money. Before
suspending operations and transferring its assets instead of
facing foreclosure, it primarily developed "cosmeceuticals"
based on its proprietary drug-delivery technology -- man-made
microscopic spheres carry pharmaceuticals that are released when
applied to the skin. The technology was used in sunscreens,
lotions, and moisturizers under the Celazome and LyphaZone
brands.
Since Fountain Pharmaceuticals no longer has assets except the
Company's public shell, it no longer has the ability to generate
revenue; therefore, the Company is not in the position to
continue as a going concern.
The Company's Board of Directors is currently pursuing
candidates with potential business interest with which to
merge. The Company has reached an agreement to acquire all of
the issued and outstanding shares of SiriCOMM, Inc.
FREDERICK'S OF HOLLYWOOD: Secures New $8-Million Credit Facility
----------------------------------------------------------------
Wells Fargo Retail Finance, LLC, a subsidiary of Wells Fargo &
Company (NYSE: WFC), provided an $8 Million credit facility for
Frederick's of Hollywood, Inc. The credit facility will be used
for working capital and general business purposes. Frederick's
of Hollywood has been in bankruptcy since July 10, 2000. On
December 18, 2002, the court approved the company's plan of
reorganization, which became effective on January 7, 2003 with
the closing of the Wells Fargo Retail Finance emergence
financing facility.
"Frederick's has enjoyed a very positive working relationship
with Wells Fargo Retail Finance throughout the bankruptcy
period," stated Craig Boucher, Crossroads LLC and interim CFO
for Frederick's of Hollywood. "As the company moves forward,
post Chapter 11, we look forward to continuing this
partnership."
"Frederick's of Hollywood is a leading multi-channel specialty
retailer. We established our lending relationship with the
Company in March of 2001 and are happy to support their exit
from Chapter 11 proceedings," said William J. Mayer, President
of Wells Fargo Retail Finance, LLC. "Their business objectives
represent achievable growth and success and we're happy to
provide them with a new revolving credit facility to assist in
meeting those objectives, both short- and long-term."
Founded in 1946 by Frederick Mellinger as a New York-based mail
order operation. The business was relocated in 1947 to
Hollywood, California and in 1952 the first "Frederick's of
Hollywood" retail store was opened on Hollywood Boulevard. Since
its inception, Frederick's has operated as a leading retailer of
innovative intimate apparel garments for women. Frederick's of
Hollywood currently operates 166 retail stores, located across
37 states and also offers their full product line through their
mail-order catalog and online at http://www.fredericks.com The
Company's headquarters and flagship retail store are located in
Hollywood, California.
Wells Fargo Retail Finance, LLC, headquartered in Boston, is a
leading specialty finance company focused on providing capital
and related financial services solutions to retailers throughout
North America. Comprised of former retailers and financial
executives, Wells Fargo Retail Finance brings relevant industry
expertise to its retail lending services.
Wells Fargo Retail Finance is a subsidiary of Wells Fargo &
Company (NYSE: WFC), a diversified financial services company
with $334 billion in assets, providing banking, insurance,
investments, mortgage and consumer finance from more than 5,400
stores and the Internet -- http://www.wellsfargo.com-- across
North America and elsewhere internationally.
FREESTAR TECHNOLOGIES: Chapter 7 Involuntary Case Summary
---------------------------------------------------------
Alleged Debtor: FreeStar Technologies, Inc.
1140 Avenue of the Americas
10th Floor
New York, New York 10036
Involuntary Petition Date: January 9, 2003
Case Number: 03-10096 Chapter: 7
Court: Southern District of Judge: Arthur J. Gonzalez
New York (Manhattan)
Petitioners' Counsel: Larry Ivan Glick, Esq.
Larry I. Glick, P.C.
1305 Franklin Avenue
Suite 180
Garden City, NY 11530
Tel: (516) 739-1111
Fax: (516) 739-0896
Petitioners: vFinance, Inc.
Leonard Sokolow, CEO-Pres.
830 Third Avenue
New York, NY 10022
David Stefansky
1070 Forest Avenue
Lakewood, NJ 08701
Richard Rosenblum
19 Horizon Drive
Wayne, NJ 07470
Marc Siegel
19461 Saturnia Lakes Drive
Boca Raton, FL 33498
Boat Basin Investors LLC
Abi Beck, Manager
Main Street
Hunkins Plaza, P.O. Box 556
Charlestown, Nevis, West Indies
Papell Holdings, Ltd.
C.B. Williams - Director/Secty
Duke Street, P.O. Box 556
Grand Turks
Turks & Caicos Islands, British West Indies
Amount of Claims: $637,000
FREESTAR TECHNOLOGIES: Completes Rahaxi Processing Acquisition
--------------------------------------------------------------
FreeStar Technologies, Inc., (OTCBB: FSTI) successfully
completed its acquisition of Rahaxi Processing Oy, a leading
Northern European Processor, located in Helsinki, Finland.
FreeStar Technologies' Agreement to acquire Rahaxi Processing,
first announced in September 2002, provided for FreeStar to make
incremental cash payments of $4.3 million to the Seller over the
course of 13 months. In addition, the Agreement stipulated that
Seller was entitled to receive 10% of the net profits generated
by Rahaxi for the first four quarters immediately following the
Closing Date, subsequently amended to December 16, 2002.
Pursuant to an Amendment executed between FreeStar Technologies
and the Seller, Heroya Investments Limited, on December 16,
2002, and the Company's Form 8-K/A filing of December 24, 2002,
FreeStar has issued 22 million restricted common shares in
consideration for 53.3% of Rahaxi Processing. The remainder of
the purchase price ($2,008,100) will be settled through
incremental cash payments commencing February 2003 and ending
December 2003, to be drawn on a $7.5 million credit line.
Paul Egan, President and Chief Executive Officer of FreeStar,
stated, "We are delighted to have secured this key component to
FreeStar's business model on such commercially advantageous
terms. The implementation of Rahaxi's Internet Payment Gateway
and acquiring bank negotiations are on schedule and we expect
the company's high-margin processing agreement will ultimately
contribute approximately $20 million to our gross revenues per
annum, $1.6 million per month, with no significant increase in
Rahaxi's existing infrastructure costs."
Hans Turitz, representative of Heroya Investments Limited,
stated, "The successful completion of this transaction, now
comprising FreeStar stock in lieu of a substantial portion of
the cash consideration, reflects our conviction that FreeStar
Technologies is grossly undervalued at current levels. Our
decision to trade hard cash for paper clearly enhances long-term
shareholder value and provides Heroya with superior leverage."
With Corporate headquarters in Santo Domingo, Dominican
Republic, and offices in Dublin, Ireland, and Helsinki, Finland,
FreeStar Technologies is focused on exploiting a first-to-market
advantage for enabling ATM and debit card transactions on the
Internet. FreeStar Technologies' Enhanced Transactional Secure
Software is a proprietary software package that empowers
consumers to consummate e-commerce transactions on the Internet
with a high level of security using credit, debit, ATM (with
PIN) or smart cards. It sends an authorization number to the e-
commerce merchant, rather than the consumer's credit card
information, to provide a high level of security. FreeStar
entered into an agreement to acquire leading Northern European
processing, Rahaxi Processing Oy, in September 2002. For more
information, please visit the Company's Web sites at
http://www.freestartech.com http://www.rahaxi.comand
http://www.epaylatina.com
Rahaxi Processing Oy, acquired by FreeStar Technologies from
Heroya Investments under cover of an agreement from September
2002, is a payment service provider based in Helsinki, Finland,
offering full, card present, payment processing; transaction
authorization, data capture and settlement facilities for Visa,
MasterCard, American Express, Diners Club and all bank-issued
domestic debit cards. Rahaxi also provides specialist value-
added processing applications for fleet, fuel and loyalty card
schemes. Approximately US$10 million has been invested in the
development of Rahaxi's hardware, software and brand name, to
date. Rahaxi provides a wide range of robust payment solutions
that support sophisticated, integrated point-of-sale systems to
meet the ever changing, complex needs of a wide array of
industry sectors. The Company currently processes approximately
one million transactions per month, but is capable of handling
an additional seven million transactions per month without
significant upgrades or technical enhancements. For more
information, please visit the company's Web site at
http://www.rahaxi.com
FREESTAR: Hires Matther Marcus as Investor Relations Counsel
------------------------------------------------------------
FreeStar Technologies, Inc. (OTCBB:FSTI), appointed Mr. Matthew
Marcus, Integrity Securities, as its Investor Relations Counsel.
Specializing in financial relations strategies for growth
companies since 1995, Mr. Marcus is accredited with a number
successful campaigns on behalf of public companies to add
shareholder value, enhance market liquidity and stave off
illicit short selling.
Paul Egan, President and Chief Executive Officer of FreeStar,
stated, "A proactive campaign to increase FreeStar Technologies'
visibility in the investment community is now underway. We see
the appointment of Integrity Securities as an integral part of
our overall program to enhance liquidity and distribute
information concerning FreeStar's position in the global
Internet transaction industry."
Mr. Marcus of Integrity Securities, stated, "I am looking
forward to working with the Company's management to increase
awareness in the global financial community concerning FreeStar
Technologies' tremendous potential. FreeStar is a sleeping giant
with great products/services and management in a progressive,
billion-dollar market. We are convinced that FreeStar is well
positioned to break through to the next level in spectacular
fashion. "
Integrity Securities is a NASD licensed Registered Investment
Advisor and member of Synergy Investments clearing through
Pershing, a division of the Bank of New York. Integrity
specializes in providing institutional investor relations
services designed to enhance the liquidity and growth of its
publicly traded clients. Mr. Marcus currently serves as Chairman
of, and was recently presented with the Magellan award for
excellence in Financial Communications by, the Los Angeles
Communications professionals -- http://www.lacp.com Mr. Marcus
specializes in OTC market analysis and curbing short selling
activity. He has enjoys long-standing relationships with
financial institutions such as Dean Witter, Citigroup subsidiary
Salomon Smith Barney, Prudential Securities, Barron's, Investors
Daily, Motley Fool, CBS Marketwatch, TheStreet.com, Smart Money,
Fortune, CBS radio, and CNBC television.
With Corporate headquarters in Santo Domingo, Dominican
Republic, and offices in Dublin, Ireland, and Helsinki, Finland,
FreeStar Technologies is focused on exploiting a first-to-market
advantage for enabling ATM and debit card transactions on the
Internet. FreeStar Technologies' Enhanced Transactional Secure
Software is a proprietary software package that empowers
consumers to consummate e-commerce transactions on the Internet
with a high level of security using credit, debit, ATM (with
PIN) or smart cards. It sends an authorization number to the e-
commerce merchant, rather than the consumer's credit card
information, to provide a high level of security. FreeStar
entered into an agreement to acquire leading Northern European
processing, Rahaxi Processing Oy, in September 2002. For more
information, please visit the Company's Web sites at
http://www.freestartech.com http://www.rahaxi.com and
http://www.epaylatina.com
FUELNATION INC: Implements 150-to-1 Reverse Stock Split
-------------------------------------------------------
An Information Statement was being mailed around January 6,
2003, to all holders of record at the close of business on
December 2, 2002, of the common stock of FuelNation Inc., a
Florida corporation, in connection with resolutions of the Board
of Directors and the written consent of the holders of greater
than 50% of FuelNation's common stock providing for an amendment
to the Articles of Incorporation to change the authorized
capital stock of the Company, to effect a 150-to-1 reverse stock
split of the outstanding common stock and to approve the 2002
Stock Option Plan.
The amendment to the Articles of Incorporation will be effective
on or about January 26, 2003. Because the proposed amendment
changing the authorized capital has already been approved by a
majority of the shares entitled to vote, stockholders are not
required to take any action. The information statement is simply
stockholder notice that the reverse split and amendment has been
approved, and they will receive no further notice when the
change becomes effective.
Following the reverse stock split, the stock certificates now
held will continue to be valid. In the future, new stock
certificates will also reflect the reverse stock split and the
reduction in outstanding shares. However, if after the effective
date of the reverse stock split stockholders should wish to
receive new stock certificates, they may do so by contacting
FuelNation's registrar and transfer agent, Continental Stock
Transfer & Trust Company, 17 Battery Place, New York, New York
10004, Telephone (212) 509-4000.
* * *
Liquidity and Capital Resources
In its SEC Form 10-Q filed for the period ended September 30,
2002, the Company reported:
"At September 30, 2002, we had $404 in cash and working capital
deficit of $1,741,957. For the nine month period ended
September 30, 2002, net cash used by operating activities was
$249,364. This was primarily attributable to a net loss
for the period of $3,051,258 and offset by increase of payables
and liabilities of $ 471,126, expenses paid on behalf of the
Company by an affiliated Company of $173,745,write-down of
capitalized software development costs of $891,747, non-cash
consulting expense of $714,000 and non-cash employee
compensation of $458,066 arising from stock options granted to
an officer of the company.
"Our ability to meet our future obligations in relation to the
orderly payment of our recurring obligations on a current basis
is totally dependent on our ability to commence generating
revenues and attain a profitable level of operations, receive
required working capital advances from our shareholders or
obtain capital from outside sources.
"During the nine months ended September 30, 2002 cash provided
by financing activities was $330,239 which comprised of the sale
of common stock for $110,000 and $232,766 borrowed from Fuel
America LLC, an entity controlled by our Chairman of the
Board/Chief Executive Officer, Christopher R. Salmonson. In
February 2002, Mr. Salmonson exercised options to purchase
1,252,761 shares of our common stock at an exercise price of
$.01 per share. The proceeds of $12,527 were used to reduce the
amount due to Fuel America. At September 30, 2002,the balance
owed Fuel America was $427,199.Currently, there are no interest
repayment terms for the debt and it is treated as if due on
demand.
"In October 2001, we borrowed approximately $36,000 from
four(4)individuals and issued 9% convertible subordinated
promissory notes, which were due September 30, 2002 and are
convertible into 258,654 shares of our common stock, at a rate
of one share of common stock for each $0.139 principal amount of
notes. Additionally, we issued stock purchase warrants to the
noteholders, which entitled these noteholders to purchase
517,309 shares of our common stock at an exercise price of
approximately $.15 per share. The warrants were issued at
twice the conversion rate of our common stock (two warrants for
each $0.139 principal amount of notes).The notes are shown net
of a discount of approximately $30,000 which represents the fair
value assigned to the warrants that were issued. The discount is
being amortized over the life of the debt. Amortization amounted
to approximately $22,893 for the nine months ended
September 30,2002 and is charged to interest expense. Currently
three of the four note holders are discussing the conversion of
their notes to common stock at a reduced conversion rate. As of
the date of this filing these Notes are in default."
GENTEK INC: Noma Obtains Final Approval to Use Cash Collateral
--------------------------------------------------------------
After reviewing the merits of the case, Judge Walrath issues a
Final Order authorizing Noma Company to use GenTek's Cash
Collateral to minimize the disruption of its business and
operations and to permit it to make payroll and other operating
expenses. However, Noma will not advance any of the GenTek Cash
Collateral to any other Debtor in these Chapter 11 cases or any
non-Debtor subsidiary or affiliates of the Debtors -- exclusive
of ordinary course intercompany payments among Debtors and non-
Debtors for the postpetition provision of goods and services --
except as authorized by other orders of the Court, including,
without limitation, critical vendor and foreign vendor payment
orders.
"[The] use of GenTek Cash Collateral is of the utmost
significance and importance to the preservation and maintenance
of the going concern value of Noma and its estate, and will
enhance the prospects for a successful reorganization of Noma
and the other Debtors," Judge Walrath notes.
Judge Walrath also permits Noma to provide adequate protection
for, and to the extent of, any diminution in value of GenTek's
interest in the Collateral. Noma may grant GenTek a replacement
lien which will have priority over any replacement liens on Noma
Company assets granted to the Lenders under an April 30, 1999
credit agreement with JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank), as the administrative agent, The Bank of
Nova Scotia, as Syndication Agent for the Lenders, and Deutsche
Bank (formerly known as Bankers Trust Company), as Documentation
Agent for the lenders, subject only to the professionals' fees
carve-out. GenTek is also granted a superpriority
administrative expense claim pursuant to Section 507(b) of the
Bankruptcy Code in respect of the Noma Adequate Protection
Obligations -- the Canadian 507(b) Claims. Like the replacement
lien, the Canadian 507(b) Claims will be prior and senior to all
claims, liens and encumbrances Noma granted pursuant to any
other cash collateral order entered in these Chapter 11 cases.
(GenTek Bankruptcy News, Issue No. 7; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GENUITY INC: Auctioning Off All Assets on Friday
------------------------------------------------
Genuity Inc., and its debtor-affiliates obtained the Court's
approval certain bidding procedures, in connection with the
proposed sale of substantially all its assets.
The Auction, if required, will commence at 9:00 a.m. (Eastern
Time) on January 17, 2003, at the offices of Ropes & Gray, 885
Third Avenue, New York, New York 10022, or at any later time or
other place as determined by the Sellers, after consultation
with the Committee, and to which the Sellers will notify the
proposed Purchaser and all Qualified Bidders who have submitted
Qualified Bids. The sale hearing will be held on January 21,
2003. (Genuity Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GREAT ATLANTIC: Deteriorating Performance Spurs S&P's Downgrade
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on The Great Atlantic & Pacific Tea Co., Inc., to 'B+'
from 'BB-'. The downgrade is based on the company's
deteriorating operating performance and diminished cash flow
protection.
The outlook is negative. Montvale, New Jersey-based A&P had $928
million in debt at November 30, 2002.
"The weak earnings are only partially mitigated by A&P's
satisfactory market shares in its major operating areas. Most of
A&P's markets are experiencing increased promotional activity
from both traditional supermarkets and nontraditional channels
of distribution, as operators fight for market share in a soft
consumer spending climate," said Standard & Poor's credit
analyst Mary Lou Burde. "Trading down to lower-margin products
by consumers and deflation in certain product categories are
compounding the challenges in the sector. Moreover, A&P has had
difficulties in executing its store format effectively, and is
burdened by a high cost structure."
Standard & Poor's also said that soft consumer spending and
heightened promotional activity by stronger competitors could
continue to pressure A&P's sales and operating margins. If
current trends do not reverse, cash flow protection measures
could weaken further, and the rating could be lowered.
A&P's operating profitability has declined significantly over
the past two quarters, following two years of very inconsistent
results. Although same-store sales rose 0.1% in the third
quarter ended November 30, 2002, EBITDA fell to $41 million from
$92 million in the prior year. This followed a 20% drop in
EBITDA in the second quarter. Third quarter gross margins fell
as A&P struggled to hold onto market share.
Management is considering several steps to improve performance
and reduce debt, including reducing costs companywide, better
managing working capital, and potential asset sales.
HAYES LEMMERZ: Plan Filing Exclusivity Stretched to April 15
------------------------------------------------------------
Canadian Imperial Bank of Commerce, as administrative agent for
Hayes Lemmerz International, Inc., and its debtor-affiliates'
secured lenders, informs the Court that it does not object to a
further extension of the Debtors' Exclusive Plan Filing Period
to April 15, 2003 and the Exclusive Solicitation Period to
June 16, 2003. CIBC, however, deems it premature and improper
for any order granting the Debtors' request to contain
provisions addressing the Exclusive Periods in the event the
Court does not confirm the Plan. CIBC points out that the
Debtors did not cite any authority to support the entry of an
order that controls exclusivity if a debtor's plan is not
confirmed. If an order is entered denying confirmation of the
Plan, CIBC suggests that the Court should, at that time, re-
evaluate the Debtors' Exclusive Periods and determine whether a
continuance of their Exclusive Periods is necessary and
appropriate.
* * *
After reviewing the merits of the case, Judge Walrath extends
the Debtors' Exclusive Plan Filing Period, through and including
April 15, 2003, and their Exclusive Solicitation Period, through
and including June 16, 2003. (Hayes Lemmerz Bankruptcy News,
Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900)
IMMUNE RESPONSE: Dr. Ronald B. Moss Resigns as Company President
----------------------------------------------------------------
The Immune Response Corporation (Nasdaq: IMNR) announced the
departure of Dr. Ronald B. Moss, president since September of
2002, who is leaving the Company for a position with Merck
(NYSE: MRK) in Pennsylvania.
"We are saddened to see Ron leave the Company. He has put so
much of his time, talent and energy into REMUNE(R) and its
therapeutic applications for the treatment of HIV. His insights
and hard work on combating the HIV/AIDS epidemic throughout his
entire career have been an inspiration to many people here and
we wish him and his family the very best in their new endeavor,"
said John N. Bonfiglio PhD., chief executive officer of The
Immune Response Corporation.
Named vice president, medical and scientific affairs of The
Immune Response Corporation in January of 2000, Dr. Moss joined
the Company as medical director in 1994. He served two years as
senior director of medical and scientific affairs at the Company
before being named executive director of medical and scientific
affairs in 1998.
Bonfiglio added that plans to fill the position or to consider
alternatives would be included as part of the overall strategic
planning process currently underway at the Company. He is
continuing his review of Company operations and clinical trial
activities begun last week after assuming his new duties as
chief executive officer.
"We retain the core scientific and developmental proprietary
know-how for REMUNE(R) with our current professional staff and
scientific advisors. We will continue our efforts to develop
REMUNE(R) as we believe it could play a significant role in the
fight against the worldwide HIV epidemic," Bonfiglio said.
Co-founded by medical pioneer Dr. Jonas Salk and based in
Carlsbad, Calif., The Immune Response Corporation is a
biopharmaceutical company developing immune-based therapies
designed to treat HIV, autoimmune diseases and cancer. Company
information is available at http://www.imnr.com
* * *
In its SEC Form 10-Q for the period ended September 30, 2002,
the Company reported: "The consolidated financial statements
have been prepared assuming that the Company will continue as a
going concern. The Company has operating and liquidity concerns
due to continuing and significant net losses and negative cash
flows from operations. As of September 30, 2002, the Company
had an accumulated deficit of $245.9 million and current
liabilities exceeded current assets by approximately $4.8
million.
"As of the date of filing of its quarterly report, the Company
had limited cash resources available to fund operations. If the
Company is unable to obtain funding in the next few days, the
Company will consider ceasing its ongoing business operations
and seeking protection under the United States Bankruptcy Code."
INFINITE GROUP: Clifford Brockmyre Steps Down as President & CEO
----------------------------------------------------------------
Infinite Group, Inc., (NASDAQ: IMCI) announced that Mr. Clifford
G. Brockmyre has resigned as President and Chief Executive
Officer of the Company. Mr. Brockmyre will remain as Chairman
of the Board of Directors and will focus on the management of
Laser Fare, Inc., the Company's wholly-owned subsidiary.
Mr. Brockmyre's decision to return to Laser Fare on a full-time
basis has been discussed with the Board over the last several
months and is consistent with his long-term plan to scale back
his duties and responsibilities to focus more attention on the
operations of Laser Fare.
Mr. Michael S. Smith has been appointed interim President and
Chief Executive Officer. Mr. Smith has served as a member of
Infinite's Board of Directors since 1995, and was Chairman of
the Audit and Compensation Committees. Several new directors
will be appointed shortly.
In addition, Infinite announced today that it will be moving its
corporate headquarters from Rhode Island to Rochester, New York.
The new address and phone number will be announced as soon as
they are available. Laser Fare, Inc.'s offices and operations
will remain in Smithfield, Rhode Island.
Mr. Brockmyre remarked that "with additional restructuring under
new management, I believe Infinite will be better positioned to
reach its potential."
Infinite Group, Inc., is an industry leader in the areas of
laser material processing, advanced manufacturing methods, and
laser and photonic technology.
Infinite Group's September 30, 2002 balance sheet shows that
total current liabilities eclipsed total current assets by about
$2 million.
INNOVEX INC: December 31 Working Capital Deficit Widens to $3MM
---------------------------------------------------------------
Innovex, Inc., (Nasdaq: INVX) reported revenue of $34.5 million
for the fiscal 2003 first quarter ending December 31, 2002,
compared to $30.1 million in the fourth quarter of fiscal 2002
and $37.8 million for the prior year first quarter. The
company's net loss was $2.3 million in the first quarter of
fiscal 2003 including the impact of pretax restructuring charges
of $750,000 and one time severance costs of $400,000. This
compares to a net loss of $2.6 million in the fourth quarter of
fiscal 2002 and a net loss of $297,000 in the prior year first
quarter. Net cash provided by operating activities was $2.1
million for the fiscal 2003 first quarter.
Innovex's fiscal 2003 first quarter revenue benefited from the
introduction of a mobile phone liquid crystal display
application as well as increases in revenue generated by Flex
Suspension Assembly, integrated circuit packaging and tape
storage applications as compared to the fiscal 2002 fourth
quarter.
FSA related revenue increased over the 2002 fiscal fourth
quarter as several new FSA programs continued to ramp during the
quarter. Revenue from integrated circuit packaging applications
showed an increase as demand for stacked memory improved. Tape
storage application revenue also rebounded as customers
completed their inventory adjustments.
At December 31, 2002, the Company's balance sheet shows that
total current liabilities exceeded total current assets by about
$3 million.
"We are encouraged by the strong revenue growth experienced
during the quarter," commented William P. Murnane, Innovex's
President and Chief Executive Officer. "Our core FSA product
continued to increase market share during the quarter and our
new product development efforts are beginning to pay off as new
programs ramp to volume. We expect additional new product
qualifications in fiscal 2003 that should allow us to continue a
positive growth trend," stated Murnane.
"The $2.1 million cash flow from operations for the fiscal 2003
first quarter marks our sixth consecutive quarter of positive
cash flow from operations," stated Tom Paulson, Innovex's Chief
Financial Officer. "The increased revenue also drove an improved
bottom line as compared to the prior quarter even after
including a $750,000 restructuring charge and severance costs of
$400,000." The incremental restructuring charge relates to a
change in the estimated cost to dispose of the company's
Chandler Arizona facility. The severance costs are a result of
organizational changes primarily due to efforts to increase
operational efficiency by consolidating from four to three
divisions.
Innovex, Inc., is a leading manufacturer of high-density
flexible circuit-based electronic interconnect solutions.
Innovex's products enable the miniaturization and increasing
functionality of high technology electronic devices.
Applications for Innovex's products include data storage
devices, networking equipment, computer printers, home consumer
products, mobile telecommunication devices, computers and
personal communications systems. Innovex is known worldwide for
its advanced technology and world class manufacturing.
IT GROUP: Urges Court to Make Determination of Tax Liability
------------------------------------------------------------
The IT Group, Inc., and its debtor-affiliates ask the Court to
determine that the characterization of IT Group's Executive
Stock Ownership Program, Executive Bonus Plan, certain loan
agreements, promissory notes, and a bonus agreement all
participated and entered into by their executives in the late
1990s does not give rise to any withholding tax liability to the
Internal Revenue Services or any state, local or other taxing
authority.
The Debtors have determined that the proper characterization of
the Stock Plan, Bonus Plan, Loan Agreements, Promissory Notes
and Bonus Agreements is that the shares their executives
previously owned, outstanding as of March 25, 2002 and
attributable to the Promissory Notes, should be treated as
restricted shares awarded under a restricted stock plan. The
Debtors' executives have acknowledged the characterization of
the Restricted Stock Plan pursuant to an Acknowledgement of
Characterization they entered with The Shaw Group, Inc.
"In general, an employer must deduct and withhold income tax on
wages paid to an employee. To the extent any amounts nominally
loaned to the Executives under the Loan Agreements and
Promissory Notes are deemed forgiven as a result of [the
Acknowledgement of Characterization], the Executives would have
discharge of indebtedness income treated as taxable compensation
paid by IT, and IT accordingly would have withholding tax
liability for this income," Gregg M. Galardi, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, explains. "Therefore, a
determination of whether any such taxable income items arise
from the [Acknowledgement of Characterization] is required in
order to determine IT's withholding liability."
Mr. Galardi relates that the Acknowledgement provides in part
that the Debtors are treating the Bonus Plan and the Bonus
Agreements as if they never occurred. Any payments made under
the Bonus Plan and the Bonus Agreements before March 25, 2002
are not affected by this Motion. "For tax purposes, therefore,
the Bonus Plan and Bonus Agreements have no current tax
consequences," Mr. Galardi says.
Additionally, the Debtors are treating:
-- the terms and provisions of the Stock Plan as having no
force and effect;
-- the Loan Agreements and Promissory Notes as if they never
occurred; and
-- the Stock Plan and Bonus Plan as the newly created
Restricted Stock Plan.
Mr. Galardi points out that the inclusion of discharge of
indebtedness income in the definition of "gross income" for tax
purposes under 26 U.S.C. Section 61(a)(12) is inapplicable to
the compromise embodied in the Acknowledgement since it treats
the Executives' rights under the Stock Plan, and Bonus
Agreements, and the obligations under the Loan Agreements and
Promissory Notes, as rights under the Restricted Stock Plan.
"This recognizes the overall plan for what it essentially was --
a restricted stock plan," Mr. Galardi tells Judge Walrath.
Accordingly, Mr. Galardi continues, the Acknowledgment does not
entail a discharge of indebtedness but an agreed upon
characterization of the underlying facts as a compromise in the
context of a corporate bankruptcy. Under the Restricted Stock
Plan, Mr. Galardi notes that the employees may eventually
recognize taxable income as the restricted stock vests in them
at the fair market value of that stock at that time. This
vesting and tax effect is consistent with the facts and the
parties' intentions.
Mr. Galardi advises that the Court should examine the
transaction at issue as a whole when making the determination of
tax liability. An evaluation of the entire transaction embodied
in the Acknowledgment indicates that it should be treated as a
non-taxable event. The Court should find that the executives
incur no discharge of indebtedness income under the
Acknowledgment, and the Debtors have no corresponding
withholding tax liability, Mr. Galardi concludes.
U.S. Government Responds
The Court should abstain from ruling on the Debtors' tax
liability and set a discovery schedule so full disclosure is
made and the Internal Revenue Service is given the opportunity
to examine the transactions, Michael J. Martineau, Esq., Trial
Attorney for the Tax Division of the U.S. Department of Justice,
in Washington, D.C., suggests. Mr. Martineau tells Judge
Walrath that, if a forgiven debt is treated as gross income paid
from IT Group to its executives, the Debtors would also have a
tax liability for employment taxes, contrary to the Debtors'
assertion.
The basis for the Debtors' assertion, Mr. Martineau notes, is
that they entered into a series of complex transactions with
their executives by which the executives' prior compensation
plans were re-characterized into a new restricted stock plan.
However, the Debtors did not provide any single agreement or
transactional document to the Court in support of its motion.
The Debtors' request for a substantive tax determination is not
based on disclosed evidence -- but wholly on unsupported
assertions. The Debtors also did not disclose what the
executives used the loan proceeds for, whether the executives
paid back any of the loans, or how much money is involved. All
of these unknowns may effect the Court's determination, but are
unaddressed in the Debtors' pleading.
Besides the loan issue the Debtors raised, Mr. Martineau
contends that there may be other tax implications associated
with the reclassification of the securities and compensation
plans. Unless the Debtors disclose all of the transactions'
relevant facts and the IRS is given the opportunity to examine
it, nothing will ever be certain.
"Put simply, the United States cannot make a determination --
either agreeing or disagreeing with the Debtors' position --
because all of the underlying agreements and documents have not
been provided and the IRS has not been given a meaningful
opportunity to examine the transactions," Mr. Martineau says.
(IT Group Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KAISER ALUMINUM: Nine More Units File for Chapter 11 Protection
---------------------------------------------------------------
In a move that is expected to have no impact on day-to-day
operations, nine additional wholly owned subsidiaries of Kaiser
Aluminum & Chemical Corporation filed voluntary petitions with
the U.S. Bankruptcy Court for the District of Delaware under
Chapter 11 of the Federal Bankruptcy Code.
"From an operating perspective, the filings are a non-event,"
said Jack A. Hockema, president and chief executive officer of
Kaiser Aluminum. "Financial liquidity remains strong and is
further protected by the actions taken [Tues]day."
The voluntary filings were initiated to, among other things,
protect the assets held by these subsidiaries against possible
statutory liens that may arise from the Pension Benefit Guaranty
Corporation if Kaiser does not make a $15 million contribution
to its salaried pension plan by January 15. (The company had
previously disclosed that it did not intend to seek Bankruptcy
Court approval to make that payment.) Such possible statutory
liens would, among other things, violate the provisions of
Kaiser's Debtor-in-Possession credit agreement.
The filings include the U.S. legal entities through which Kaiser
owns interests in its Jamaican operations; however, the legal
entities that own the operating facilities themselves -- the
Alpart alumina refinery and the KJBC bauxite mining operation in
Jamaica -- are not included in the filings and thus are not
subject to any bankruptcy-related impacts. The filings also
include the legal entities through which Kaiser owns its
interest in an aluminum extrusion plant in London, Ontario, but
Kaiser expects court approvals (through the U.S. Court and
through an ancillary application to the Ontario Superior Court
of Justice in Toronto, Canada of measures that will eliminate
any impact on operations at that facility.
Hockema said, "We want to be absolutely certain that customers,
employees, and suppliers understand that these filings will have
no impact on the day-to-day operations of Alpart, KJBC, and
London. In particular, the filings were not prompted by cash
flow concerns, business conditions, or balance sheet issues at
any of the affected subsidiaries. We expect the Bankruptcy Court
to approve our request to permit the filed entities to continue
to make payments in the normal course of business (including
payments of pre-petition amounts) to creditors and others for
items such as materials and supplies, freight, taxes and, of
course, salaries, wages, and benefits for employees."
Kaiser expects approval of such payments primarily because the
amounts are not material and are essential to ongoing
operations. The company also expects approval of a continuation
of routine intercompany transactions involving, for example, the
transfer of materials and supplies among affiliates.
"In short, the filings simply represent yet another step on the
path toward the company's restructuring and eventual emergence
from Chapter 11," said Hockema.
The company also has received a waiver from the DIP lenders to
assure that the availability under the DIP credit agreement will
not be affected by the failure to make the pension payment, the
additional Chapter 11 filings, or the imposition of any
statutory PBGC liens. In addition, the company and its DIP
lenders expect to seek approval of a further amendment to the
DIP credit agreement to formally incorporate the waiver
provisions.
The filings include the following subsidiaries, all of which are
U.S. entities, except where noted. Several of the subsidiaries
are special-purpose or dormant entities.
Alpart Jamaica Inc. (not the Alpart alumina refinery)
KAE Trading, Inc.
Kaiser Aluminum & Chemical Canada Investment Limited (Canada)
Kaiser Aluminum & Chemical of Canada Limited (Canada)
Kaiser Bauxite Company (not the KJBC bauxite mining operation)
Kaiser Center Properties
Kaiser Export Company
Kaiser Jamaica Corporation
Texada Mines Ltd. (Canada)
At the time of its original Chapter 11 filings in 2002, it did
not appear to be necessary to include these nine subsidiaries in
the bankruptcy proceedings. However, in light of the accelerated
funding requirement for the salaried retirement plan -- and in
light of the steps taken to ensure that the filings have no
impact on operations -- it was determined that Tuesday's filings
constituted an appropriate and prudent protective measure.
Certain other majority-owned subsidiaries, such as the legal
entity that owns the Valco aluminum smelter, have not been
included in the filings to date for a variety of legal,
technical, or jurisdictional reasons. Instead, and where
pertinent, measures intended to provide similar protection are
being pursued.
Kaiser and 16 of its subsidiaries originally filed Chapter 11
petitions in February and March of 2002. In connection with
those cases, Kaiser had previously obtained U.S. Bankruptcy
Court approval to set January 31, 2003 as a general claims bar
date. In respect of the subsidiaries included in Tuesday's
Chapter 11 filings, the company anticipates that the debtors
will ask the Court to set a separate (and later) claims bar
date.
Kaiser Aluminum & Chemical Corporation, the operating subsidiary
of Kaiser Aluminum Corporation (OTCBB:KLUCQ), is a leading
producer of alumina, primary aluminum and fabricated aluminum
products.
KAISER ALUMINUM: Wins Nod to Pay $2.25-Mill. Summit Break-Up Fee
----------------------------------------------------------------
The Official Committee of Unsecured Creditors, appointed in the
chapter 11 cases involving Kaiser Aluminum Corporation and its
debtor-affiliates, explains that it does not refute the proposed
bidding procedures. However, the Creditors' Committee does not
like certain aspects of the proposed Break-up Fee:
1. The Fee Is Too High And May "Chill" The Bidding On The Kaiser
Center Assets
Although the Creditors' Committee does not fundamentally
oppose the payment of a break-up fee, it is concerned that
the proposed fee is too high. The Debtors propose a
$2,400,000 Break-up Fee, which is 3.6% of the $65,600,000
purchase price Summit offered. Rafael X. Zahralddin-Aravena,
Esq., at Ashby & Geddes, in Wilmington, Delaware, relates
that an analysis made by the Committee's financial advisors
shows that the Summit Breakup Fee is significantly higher
than the typical 2% to 3% fee in other similarly valued
assets in other bankruptcy cases. The Creditors' Committee
believes that a smaller Break-up Fee is more plausible.
2. Summit Should Only Be Entitled To The Break-up Fee If There
Is A Willful Breach Of The Agreement By The Debtors And Not
Due To Some Unforeseen Circumstances Outside The Debtors'
Control
The Creditors' Committee argues that Summit's entitlement to
a break-up fee under the Purchase Agreement is unfair to the
Debtors, the creditors and the estates. The Committee also
notes that pursuant to the standard for payment of break-up
fees set forth by the Third Circuit in Calpine Corp. v.
O'Brien Envtl. Energy, Inc. (In re O'Brien Envtl. Energy,
Inc.), 1881 F.3d 527, 535 (3d Cir. 1999), if the Kaiser
Center Assets could not be sold due to a default caused by an
unforeseen circumstance outside the Debtors' control or due
to a default caused by a third party, then the Break-up Fee
cannot be deemed to have been "necessary to preserve the
value of the estates."
3. Summit Should Not Be Entitled To The Break-up Fee If The
Debtors Simply Decide Not To Sell The Kaiser Center Assets
The Committee believes that the Debtors should have the
flexibility to examine all of the offers received for the
Kaiser Center Assets; assess any intervening increase in the
value of those Assets; and determine that the sale of the
Assets at this time is not in the best interests of the
estate, without the financial repercussions of having to pay
the Break-up Fee.
"The rationale behind granting bid protections is to encourage
an initial offer, often referred to as a 'stalking horse'
offer," Mr. Zahralddin-Aravena reminds Judge Fitzgerald.
"Courts permit bid protections because they create an incentive
for increased bidding in sales from bankruptcy assets."
Kalan Asserts Right of First Refusal
Newkirk Kalan L.P. asserts that it has a right of first refusal
with respect to Kaiser Center Inc.'s fee interests in the land
on which the Kaiser Center and the mall sit. Specifically,
Jeffrey C. Wisler, Esq., at Connolly Bove Lodge & Hutz LLP, in
Wilmington, Delaware, explains that upon the Debtors' receipt of
an offer to purchase the interests, Kaiser Center Inc. is
obligated to transmit a written offer to sell to Kalan on the
same terms and Kalan has 30 days to accept the offer. However,
Mr. Wisler points out that the effectiveness of Kalan's right of
first refusal may depend on if the Kaiser Center receives an
offer to purchase all or substantially all of its assets. But
it is unclear if this is the case. Moreover, Mr. Wisler says,
the Debtors have not transmitted a written offer to sell to
Kalan, as required by the Ground Lease. Hence, Kalan reserves
all of its rights relating to its right of first refusal and to
confirm that it may exercise its first refusal right in a manner
to be determined by the Court.
If Kalan exercises its right of first refusal or otherwise seeks
to participate in the auction, Mr. Wisler suggests that Kalan
should not be required to:
(a) bid at least $2,900,000 higher than the existing
initial bid;
(b) include more than a $3,100,000 deposit (i.e., which
does not include the $2,400,000 Break-up Fee);
(c) "qualify" by submitting financial information; and
(d) provide the Claims Indemnity, where the Debtors are
held harmless with respect to rejection of the Principal
Leases and the claims by tenants under the Sub-Tenant
Leases.
Debtors Respond
The Debtors contend that the Creditors' Committee was mistaken
to conclude that the Break-up Fee is 3.6% of the transaction
value. The Debtors point out that Creditors' Committee failed to
consider that Summit is purchasing the Kaiser Center Assets
subject to certain deeds of trust securing about $8,169,655 of
debt. Patrick M. Leathem, Esq., at Richards, Layton & Finger,
explains that the total cash to be paid plus the debt is
$73,769,655. Accordingly, the $2,400,000 Break-up Fee
constitutes, at most, 3.25% and not 3.6% of the transaction
value once the property debt is considered.
Mr. Leathem asserts that 3.25% is well within the typical range
of break-up fees for transactions of this size. "The Debtors'
financial advisors have compiled their own schedule of similar-
sized transactions within the last year, and it reflects an
average break-up fee of 3.3% and a median breakup fee of 3.5%,"
Mr. Leathem says. The Debtors believe that the Break-up Fee is
reasonable given the complex structure of the sale and the
necessity of dealing with Newkirk Kalan.
Mr. Leathem tells the Court that the Break-up Fee is buttressed
by Summit's estimation of the expenses it has incurred and will
continue to incur for its due diligence, legal fees and other
costs associated with the transaction. Summit estimates that it
will incur $3,700,000 up to the bid date and an aggregate of
$4,700,000 through the Closing. The expenses far exceed the
amount of the Break-up Fee, Mr. Leathem points out. Summit has
also arranged to purchase Kalan's interests in the Kaiser Center
Assets for $28,000,000. From Summit's point of view, the Break-
up Fee represents only 2.35% of the amount it will pay in
connection with the acquisition. Therefore, instead of chilling
out competition, Mr. Leathem insists that the Break-up Fee is
necessary to secure a commitment from Summit.
The Debtors also assert that the Break-up Fee provisions, as
drafted, are typical. Summit also required that the Break-up
Fee be payable under these circumstances before it would proceed
with the transaction. "It would be highly unusual for a
stalking horse bidder to agree to incur the significant expenses
necessary to pursue a transaction of this size and complexity if
the agreed-upon break-up fee did not have to be paid because the
debtor later decided not to sell the assets or if the debtor
subsequently breached the sale agreement, whether willfully or
otherwise, and was unable to consummate the sale," Mr. Leathem
says.
For these reasons, the Debtors insist that the Break-up Fee
should be approved as proposed.
Furthermore, the Debtors do not believe that -- in the
circumstances of the proposed transaction -- Newkirk Kalan has a
right of first refusal. Mr. Leathem points out that Kalan has
acknowledged that its right of first refusal does not apply if
the contemplated transaction involves the sale of substantially
all of Kaiser Center Inc. assets, which is, indeed, the case.
As reflected in the Schedules of Assets and Liabilities filed on
May 13, 2002, Kaiser Center's assets consist of:
(a) real property comprised of the Kaiser Center Inc.
Interests with a $2,750,000 book value as of March 15,
2002; and
(b) personal property with a $3,330,000 book value. The
personal property includes:
* cash aggregating $74,000;
* Kaiser Center's partnership interest in Kaiser Center
Properties Inc., which has a $2,500,000 book value;
* $397,000 in trade receivables, which will increase to
$1,200,000 once the Schedules are amended; and
* office equipment, machinery, furnishings and the like
with an aggregate book value of about $400,000.
All of these assets other than the cash and receivables are
being sold as part of the proposed transaction.
Moreover, based on its agreements with Summit and SRM, Kalan
appears to have waived or renounced any right of first refusal.
Pursuant to its agreements with Summit and SRM, Kalan is
contractually obligated to sell its interests to either of them,
if either is declared the winning bidder in the Bid Process.
Mr. Leathem contends that any exercise by Kalan of a right of
first refusal would be fundamentally inconsistent with its
obligation to sell its interests in respect of the Kaiser Center
Assets to either of two parties determined to be the successful
bidder.
But even if Kalan has a right of first refusal, Mr. Leathem
tells Judge Fitzgerald that it simply would make no sense that,
on the one hand, Kalan could contract to sell its interest to
other parties, if they succeed in acquiring the Debtors' related
interest, but at the same time reserve the right to exercise a
right of first refusal that would prevent those parties from
acquiring the Debtors' interests. "Kalan should not be
permitted to have it both ways," Mr. Leathem says.
Nevertheless, should the Court determine that Kalan has a right
of first refusal, which right can somehow be exercised despite
its contractual commitment to Summit or SRM, the Debtors suggest
that Kalan's rights would be fully protected by simply allowing
Kalan to bid in accordance with the Bid Procedures as proposed.
If the Bid Procedures are modified to permit Kalan simply to
match Summit's offer without meeting the Initial Overbid
Increment requirement, Mr. Leathem notes that Summit would have
the right to terminate the Agreement. If Summit decides not to
terminate its Agreement and Kalan thereafter becomes the
successful bidder, Mr. Leathem says, the Debtors could receive a
net price lower than that offered by Summit if the Debtors are
required to pay the Break-up Fee to Summit.
Settlement with Newkirk Kalan
During the hearing on the Bidding and Auction Procedures, the
Debtors and Newkirk Kalan, L.P. decided to resolve the dispute
over the sale of Kaiser Center Assets on these terms:
-- Kalan agrees that it will not exercise its right of first
refusal (ROFR) if either Summit or SRM Associates is the
successful bidder;
-- If either Summit or SRM is the successful bidder,
simultaneous with the Closing of the purchase, it will pay
Kalan $28,000,000 subject to Kalan assigning its leasehold
and fee interests -- and generally subject to the terms of
the letter agreement between Kalan and Summit or SRM.
However, the failure by Summit or SRM to purchase the Kalan
interests will not affect its obligation to the Debtors
under the Summit Agreement, the Sale Order or otherwise;
-- All parties reserve all rights with respect to the ROFR,
including with respect to whether or not Kalan has the ROFR
and the specific terms and conditions of how the ROFR would
be exercised, up until the time of the Sale Hearing;
-- Alwis Leasing agrees that it will not exercise its right of
first refusal pursuant to Section 13(b) of the Master Lease
if either Summit or SRM is the successful bidder.
Otherwise, the parties reserve all rights with respect to
Alwis' ROFR, up until the time of the Sale Hearing; and
-- Otherwise, Kalan and the Debtors reserve any and all
rights, claims and defenses.
* * *
After reviewing the legal and factual bases set forth in the
Sale Motion in respect of the Break-up Fee and the Bidding
Procedures, Judge Fitzgerald finds that that the Break-up Fee is
reasonable and necessary to preserve the value of the Kaiser
Center Assets and that the Debtors have satisfied the standards
for approving break-up fees. Accordingly, Judge Fitzgerald
overrules the Creditors' Committee's objection and approves the
payment of a Break-up Fee in the reduced amount of $2,250,000.
Moreover, Judge Fitzgerald rules that Summit Commercial
Properties will be entitled to recover any deposits it
previously made plus any interest; and the payment of the
$2,250,000 Break-up Fee, if:
(a) Summit is not in default under the terms of the Purchase
Agreement, but the Debtors fail to seek and diligently
pursue the entry of a Sale Order authorizing the Agreement
at hearing on or before March 24, 2003;
(b) the Debtors breach the Agreement after the entry of the
Sale Order approving the sale of the Kaiser Center Assets
to Summit, and fail or refuse to transfer the Kaiser
Center Assets to Summit unless the Debtors assert that the
breach was not within their control, in which case the
Court will determine whether the Break-up Fee should be
paid; or
(c) due to no fault of Summit, the Kaiser Center Assets are
sold to another Successful Bidder.
The Break-up Fee will not be payable to Summit in the event that
the Court declines to enter the Sale Order solely as a result of
an objection to the sale of the Kaiser Center Assets by Newkirk
Kalan. Any deposit to be returned and the Break-up Fee will be
paid within two business days of the occurrence of an event
giving rise to the obligation to pay the Fee. In the event the
Agreement is terminated by Summit for any reason, the buyer
under any applicable Back-up Agreement will be entitled to the
contemplated Fee benefits.
Judge Fitzgerald also approves the Bidding and Auction
Procedures and directs the Debtors to enter into and perform
their obligations under the Procedures, subject to these
modifications:
1. The potential bidders are directed to submit copies of their
offer to Kalan and its counsel, aside from the regular notice
parties, on or before the February 17, 2003 Bid Date;
2. The Initial Overbid Increment is reduced from $2,900,000 to
$2,450,000;
3. The Minimum Incremental Bids are reduced from $500,000 to
$250,000; and
4. Kalan and its counsel, in its discretion, may participate in
the Auction on February 20, 2003.
If a Successful Bid is received, Judge Fitzgerald will convene a
hearing to approve the sale to the Successful Bidder on
February 24, 2003. If no Qualified Bid is received for the
Kaiser Center Assets, the Debtors may consummate the sale
transaction under an approved purchase and sale agreement
authorized by the Sale Order, without conducting the Auction.
Judge Fitzgerald will rule on the remaining issues regarding the
Sale Motion, including the Debtors' request for authority to
sell their interests in the Kaiser Center Assets during the
omnibus hearing scheduled on February 24, 2003. (Kaiser
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
KAISER ALUMINUM: Shuts Down Mead Aluminum Smelter Indefinitely
--------------------------------------------------------------
Kaiser Aluminum announced the indefinite curtailment of its
Mead, Wash., aluminum smelter.
In conjunction with the decision, Kaiser expects to record in
its results for the fourth quarter of 2002 significant non-cash
pre-tax charges to write down the carrying value of its
Northwest smelter assets and to recognize the impact of pension
and post-retirement obligations for hourly employees who had
been on layoff status and will become eligible to elect early
retirement beginning in the first quarter of 2003.
"The indefinite curtailment at Mead is due to continuing
unfavorable market dynamics, specifically unattractive long-term
power prices and weak aluminum prices -- both of which are
significant impediments for an older smelter with a higher-than-
average operating cost," said Jack A. Hockema, president and
chief executive officer of Kaiser Aluminum. "We had previously
hoped that conditions would be right for at least a partial
restart of Mead in the first quarter of 2003, but that does not
appear to be likely. If and when circumstances change, it is
feasible that Mead could be restarted and ultimately generate
positive cash flow. However, we are no longer in a position to
maintain the Mead smelter in a state of readiness for potential
restart, as we have done since January 2001," said Hockema.
"Those readiness costs have been running more than $4 million
per year -- and that's even before considering the actual
restart costs, which typically amount to about $2 million for
each of the facility's eight potlines."
Because the Mead smelter has been curtailed since January 2001,
this announcement affects only a minimal number of active
employees (approximately 25). Approximately 250 hourly employees
who have been on layoff status are eligible for early retirement
benefits, in accordance with their collective bargaining
agreement, as a result of the indefinite curtailment.
Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer
of alumina, primary aluminum and fabricated aluminum products.
Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KLU03USR1)
are trading at about 7 cents-on-the-dollar, DebtTraders says.
See http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1
for real-time bond pricing.
KEY3MEDIA GROUP: Michael B. Solomon Leaves Company's Board
----------------------------------------------------------
By letter dated January 6, 2003, Michael B. Solomon resigned as
a director of Key3Media Group, Inc. Mr. Solomon did not give
any reasons for his resignation.
Key3Media owns and produces about 60 trade shows and conferences
for the information technology industry, including the annual
COMDEX show held in Las Vegas. In addition to the popular US
event, Key3Media puts on nearly 20 other COMDEX shows in 16
countries. (COMDEX shows account for almost 35% of sales.) Other
events include Networld+Interop, Seybold Seminars, SOFTBANK
Forums, and JavaOne. Key3Media's events draw about 1.5 million
participants each year. The company was spun off from publisher
Ziff-Davis (now part of CNET Networks) in 2000.
As reported in Troubled Company Reporter's December 19, 2002
edition, Standard & Poor's lowered its corporate credit and
subordinated debt ratings on technology trade show organizer
Key3Media Group Inc., to 'D' following the company's failure to
make the scheduled interest payment on its $300 million 11.25%
senior subordinated notes due 2011.
Los Angeles, California-based Key3Media had $370 million in
total debt on September 30, 2002.
Key3Media's senior secured debt rating remains on CreditWatch
with negative implications.
KMART CORP: Outlines Chapter 11 Exit Strategy
---------------------------------------------
Kmart Corporation (Pink Sheets: KMRTQ) received a commitment for
up to $2 billion in exit financing from GE Commercial Finance,
Fleet Retail Finance Inc. and Bank of America, N.A. This credit
facility, which will be secured by inventory, would replace the
Company's current $2 billion debtor-in-possession (DIP) facility
on the effective date of a Plan of Reorganization. The financing
is subject to the satisfaction of customary conditions to
closing and would be available to Kmart to help meet its ongoing
working capital needs, including borrowings for seasonal
increases in inventory.
Kmart's Board of Directors approved in principle the Company's
five-year business plan and the framework for an all-equity Plan
of Reorganization. The Board directed the Company's management
and advisors to complete negotiations with the statutory
committees representing the Company's stakeholders as to the
final terms of the Plan. The Company expects to finalize and
file its proposed Plan of Reorganization and related Disclosure
Statement with the United States Bankruptcy Court for the
Northern District of Illinois on or about January 24, 2003. The
Disclosure Statement is expected to include detailed information
about the Company's five-year business plan, the proposed Plan
of Reorganization, financial estimates regarding the Company's
reorganized business enterprise value and supporting the
compliance of the Plan of Reorganization with the "best
interests" requirements of the Bankruptcy Code, and events
leading up to and during Kmart's Chapter 11 cases. Kmart said
that the Disclosure Statement would also include information
regarding the Company's stewardship review, which has been
substantially completed. Approval of the Disclosure Statement
and related voting solicitation procedures, which Kmart will
seek at its February 25, 2003 omnibus hearing in the Bankruptcy
Court, would permit the Company to solicit acceptances for the
proposed Plan of Reorganization commencing in March and to seek
confirmation of the proposed Plan of Reorganization by the
Bankruptcy Court in mid-April 2003. Assuming that these
milestones can be achieved, Kmart would emerge from Chapter 11
reorganization on or about April 30, 2003.
As part of its efforts to enhance the Company's operating and
financial performance, Kmart announced the completion of its
strategic review of its store base and distribution centers
which will result in the closing of 326 stores, as well as a
distribution center. Kmart will continue to operate more than
1,500 stores in convenient locations across the United States,
the Caribbean and Guam.
In conjunction with the proposed store closings, Kmart has
entered into an amendment to its DIP credit facility that
permits the additional store closings and adjusts the covenant
pertaining to the Company's cumulative EBITDA (earnings before
interest, taxes, depreciation and amortization) over specified
periods to provide the Company with additional flexibility going
forward.
Kmart filed motions Tuesday with the Bankruptcy Court for a
hearing on January 28, 2003, to obtain authority to make certain
payments to the exit lenders in connection with its $2 billion
exit facility, to approve the amendment to its $2 billion DIP
loan facility, and to seek approval of the store-closing program
announced Tuesday.
James B. Adamson, Chairman and Chief Executive Officer of Kmart
Corporation, said, "The developments we are announcing [Tuesday]
mark an important milestone in Kmart's reorganization. When we
filed our Chapter 11 cases last January, the Company anticipated
that it would complete the actions required to be taken during
its reorganization and emerge from Chapter 11 protection by the
second quarter of 2003. Now that the Company has largely
completed its Chapter 11 agenda, successfully obtained a
commitment for exit financing and is in final negotiations with
our stakeholders regarding the terms of what we believe should
be a consensual Plan of Reorganization, we expect to meet -- or
even surpass -- our original goal."
Adamson continued, "I am extremely proud of the progress that
Kmart has made over the past year with the support of our
associates, vendors, creditors and customers. The Company will
emerge from its reorganization cases with a much stronger
balance sheet, liquidity position and cost structure. Now that
we have accomplished all that we can through the Chapter 11
process, we look forward to putting the considerable costs and
distractions of bankruptcy behind us and focusing our full time
and attention on revitalizing Kmart."
Details of Proposed Plan and Reorganization Timeline
Under the terms being discussed with the Company's statutory
committees, substantially all of the remaining prepetition
liabilities of the Company would be discharged in exchange for
distribution of substantially all of the common equity of the
reorganized enterprise to holders of prepetition liabilities,
taking into account their relative rights and amounts of their
claims, but also resolving the prepetition subsidiary guaranties
given on account of the prepetition bank debt. Trade vendors
meeting appropriate qualifications would have the benefit for up
to two years of a first lien on substantially all owned real
estate that is developed and unencumbered, as well as a
subordination provision to be included in the Plan of
Reorganization regarding future proceeds of leasehold interests
(excluding the current store closing program and new
financings).
The Plan of Reorganization would also provide for the creation
of a creditors' trust for the benefit of the Company's creditors
and, possibly, holders of trust preferred securities and/or
common stock, to pursue all causes of action arising out of the
Company's stewardship review. Except possibly for a minor
interest in the proceeds, if any, of the creditors' trust, it is
presently expected that current equity holders would not receive
any distributions following emergence and their equity interests
would be cancelled.
Kmart is working closely with its key constituencies to finalize
and subsequently file its proposed Plan of Reorganization and
Disclosure Statement with the Bankruptcy Court on or about
January 24, 2003. Subject to approval by the Court as to the
adequacy of the Disclosure Statement, Kmart plans to begin
soliciting acceptances of the Plan of Reorganization from its
creditors in March 2003 and for the Bankruptcy Court to conduct
a confirmation hearing for the Plan in mid-April 2003. Kmart's
case is being presided over by the Honorable Susan Pierson
Sonderby.
Reorganization Progress
Kmart Corporation and 37 of its U.S. subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the
U.S. Bankruptcy Code on January 22, 2002. In the past year,
Kmart has taken a number of actions intended to strengthen its
business operations and enhance its financial performance. These
steps include the closing of 283 underperforming stores in the
second quarter of 2002, rejecting leases for previously closed
stores, selling three corporate aircraft, streamlining the
Company's management structure, reducing staffing levels at the
Company's headquarters, and introducing more efficient business
practices throughout the organization.
Adamson said, "We have made considerable progress over the past
year in attacking many of the systemic problems that have
plagued Kmart's performance for a long time. Clearly, we
continue to face many challenges -- both within our organization
and in a difficult economic environment that has not been kind
to many retailers. We are encouraged by our successes, such as
the JOE BOXER brand introduction, the favorable reaction to our
new store prototype, and our new brand licensing agreement with
Thalia. We are confident that we will continue to build momentum
and make demonstrable gains in the years ahead."
Kmart Corporation is a mass merchandising company that serves
America through its Kmart and Kmart SuperCenter retail outlets.
The Company's common stock is currently quoted on the Pink
Sheets Electronic Quotation Service -- http://www.pinksheets.com
-- under the symbol KMRTQ.
DebtTraders reports that Kmart Corp.'s 9.00% bonds due 2003
(KM03USR6) are trading at about 13 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for
real-time bond pricing.
KMART CORP: Closing 326 Stores & One Distribution Center
--------------------------------------------------------
Kmart Corporation intends to close 266 Kmart and Big Kmart
stores and 60 Kmart SuperCenters in 44 states and Puerto Rico,
as well as one of its 18 distribution centers.
This action is intended to enhance the Company's financial and
operating performance by allowing it to further reduce costs,
improve cash flow, streamline distribution and focus its
resources more efficiently. This store closure announcement
completes the strategic review of the Company's store base and
distribution centers, which Kmart had previously said it would
undertake prior to emergence from Chapter 11.
The factors considered in evaluating the store portfolio were
both financial and strategic. Key financial metrics for each
location, on both an historical and projected basis, included
comparable store sales, gross margin, four-wall EBITDA, store
cash flow and lease terms. Strategic considerations included an
analysis of the competitive environment in local and regional
markets, distance from distribution centers, and the location
and number of other Kmart stores in the market.
Julian Day, President and Chief Operating Officer of Kmart,
said, "These closings reflect an emphasis on protecting and
strengthening our competitive position in key strategic markets.
To this end, we are planning an aggressive marketing campaign to
remind our current and prospective customers about the
outstanding products, service and value that will continue to be
available at more than 1,500 Kmart stores in convenient
locations across the nation, the Caribbean and Guam."
All stores will remain open pending Bankruptcy Court approval of
the Company's store-closing plan and completion of inventory
clearance sales at these locations. The store-closing plan is
expected to be reviewed by the Bankruptcy Court at the January
28, 2003 omnibus hearing and, if approval is granted, the
inventory clearance sales would begin shortly thereafter. The
distribution center is slated to close in March.
The store closing announcement follows Kmart's notification to
the approximately 37,000 associates who work at the impacted
stores and distribution center.
For the complete list of stores and the location of the
distribution center that will be closed, go to:
http://www.kmartcorp.com/corp/story/pressrelease/news/pr030114a.stm
To help ease the transition for affected associates, Kmart will
provide a range of benefits including supplemental separation
pay, extended benefits, and job placement assistance.
"We deeply regret the impact these closings will have on our
associates, customers and the communities where the stores are
located," Adamson said. "This was a difficult and painful
decision, particularly in light of its impact on thousands of
dedicated associates who have worked so hard to help the
Company. But this is a necessary and important step for Kmart as
we prepare for our imminent emergence from Chapter 11
protection."
Kmart anticipates that the sale proceeds generated from store
closings, net of expenses, will enhance its cash flow by
approximately $500 million in 2003. As a result of the store and
distribution center closings, the Company currently estimates
that it will incur aggregate restructuring charges of
approximately $1.7 billion, a major portion of which will be
recorded in the fourth quarter of fiscal 2002 and the remainder
to be recorded in fiscal 2003.
Kmart Corporation is a mass merchandising company that serves
America with its Kmart and Kmart SuperCenter retail outlets. The
Company's common stock is currently quoted on the Pink Sheets
Electronic Quotation Service under the symbol KMRTQ.
KMART: December Net Sales Slide-Down 5.7% on Same-Store Basis
-------------------------------------------------------------
Kmart Corporation and its debtor-affiliates filed its monthly
operating report for December 2002. For the five weeks ended
January 1, 2003, the Company reported net income of $349 million
on net sales of $4.71 billion. Net sales decreased 5.7 percent
on a same-store basis as compared to the same period a year ago,
reflecting the favorable impact of the inclusion of Thanksgiving
Day and weekend sales, which were not included in the same
period a year ago.
Financial Results For December 2002
Kmart today filed its monthly operating report for December 2002
with the Bankruptcy Court and its report on Form 8-K with the
Securities and Exchange Commission.
As noted above, for the five weeks ended January 1, 2003, Kmart
reported net income of $349 million on net sales of $4.71
billion. Net sales decreased 5.7 percent on a same-store basis
as compared to the same period a year ago, reflecting the
favorable impact of the inclusion of Thanksgiving Day and
weekend sales, which were not included in the same period a year
ago.
The Company reported Gross Margin of $924 million, or 19.6
percent of sales, and Selling, General and Administrative
Expenses of $566 million, or 12.0 percent of sales.
Day said, "We were encouraged by the Company's performance in
December, particularly in light of the extremely challenging
economic environment nationwide. While sales were softer than we
had planned, the Company clearly benefited from our ongoing
efforts to reduce our cost base, increase inventory turns and
improve gross margin. In fact, despite significant clearance
markdowns associated with our coupon and sale promotions, which
were designed to drive store traffic, gross margin as a percent
of sales for December 2002 was essentially flat with the same
period a year ago."
As of January 1, 2003, Kmart had no borrowings outstanding and
had utilized $345 million of its DIP credit facility for letters
of credit. Its total DIP availability as of that date was $1.56
billion.
Amended Historical Filings
Kmart also filed with the SEC an amended Annual Report on Form
10-K/A for the 2001 fiscal year and amended Quarterly Reports on
Form 10-Q/A for the first two quarters of the 2002 fiscal year.
As previously reported, these restatements reflect certain
adjustments identified as a result of the Company's ongoing
review of its accounting practices and procedures.
The net impact of the restatement on prior fiscal years, as
previously reported, was to reduce reported operating results by
$28 million in fiscal 2001, $24 million in fiscal 2000, and $39
million in fiscal 1999. The restatement also had the effect of
reducing the retained earnings on the Company's balance sheet at
January 30, 1999 by $138 million.
Kmart Corporation is a mass merchandising company that serves
America with its Kmart and Kmart SuperCenter retail outlets. The
Company's common stock is currently quoted on the Pink Sheets
Electronic Quotation Service under the symbol KMRTQ.
KMART CORP: Martha Stewart Yawns about Store Closings
-----------------------------------------------------
Pointing to the terms of the License Agreement dated January 28,
1997, between MARTHA STEWART LIVING OMNIMEDIA LLC, and KMART
CORPORATION, a full-text copy of which is available for a fee
at:
http://www.ResearchArchives.com/bin/download?id=020123014712
Martha Stewart Living Omnimedia says the 326 store closings
announced yesterday "should not have a financial impact on
Martha Stewart Living Omnimedia, Inc. due to minimum royalty
payments guaranteed under our agreement with Kmart, which runs
through 2008."
"We are supportive of the ongoing restructuring plans announced
today by Kmart management as it continues to take the
necessary steps to strengthen its business and emerge from
bankruptcy," MSO continued.
"Our mass-market brand label at Kmart, Martha Stewart Everyday,
continues to sell well and our Martha Stewart Everyday holiday
line of decorations and ornaments was a big holiday hit. We
look forward to continuing our collaborative relationship with
Kmart and to providing consumers high-quality, affordable
products, such as our next line of Martha Stewart Everyday
garden and patio furniture that will be available in Kmart
stores later this month."
KMART CORP: Fleming Talks About Impact of Store Closings
--------------------------------------------------------
Based on published reports, Fleming Companies, Inc., (NYSE: FLM)
expects that Kmart Corporation, a significant Fleming
distribution customer, will soon announce widely anticipated
closings of a number of its retail locations. In October 2002,
Fleming presented to investors three scenarios, which ranged
from reducing the number of Kmart stores supplied by 300 or more
locations, to the complete elimination of any continuing supply
arrangement.
Through the current analysis of Kmart's expected store closure
announcement, Fleming will determine the appropriate adjustments
required to optimize its distribution network and will make
necessary refinements to the resources applied to support this
customer. Despite any necessary actions on Fleming's part in
response to Kmart's store closures, the company is confident
that Fleming's national distribution footprint will continue to
provide opportunities to serve and grow the company's customer
base throughout the country.
With its national, multi-tier supply chain network, Fleming
is the #1 supplier of consumer package goods to retailers of all
sizes and formats in the United States. Fleming serves nearly
50,000 retail locations, including supermarkets, convenience
stores, supercenters, discount stores, concessions, limited
assortment, drug, specialty, casinos, gift shops, military
commissaries and exchanges and more. Fleming serves more than
600 North American stores of global supermarketer IGA. To learn
more about Fleming, visit http://www.fleming.com
* * *
Fleming Companies, Inc., supplies all of Kmart's "Big K" and
"Super K" stores with their pantry merchandise under a Five-Year
Agreement dated February 2, 2001.
A full-text copy of Kmart's Agreement dated as of February 2,
2001 with Fleming is available at:
http://www.ResearchArchives.com/bin/download?id=020122220613
The Agreement explicitly states its purpose and objectives: to
create a strategic alliance between Fleming and Kmart to
merchandise, procure and distribute pantry and supermarket
products in the most cost efficient manner [and] to provide for
the joint exploration, evaluation, and implementation of
practices and procedures to reduce total supply chain costs and
allow each party to equitably share the benefits of such
practices and procedures. Termination of the Fleming Agreement
requires 12-months' notice from either side, except (i) if
Kmart's purchases decline by 30% or Kmart closes 30% of its
stores, in either of which event, Fleming can walk or (ii) in
the event of a change in control of the other party. At the
time the Agreement was signed, Kmart had 2,100 stores. The
number of closings last year plus the number of closings
announced today are insufficient to trigger that less-than-12-
month termination provision -- by a 21-store margin.
Kmart estimated, when it filed for chapter 11 protection that it
owed Fleming $75,820,923. That amount was paid in full pursuant
to Kmart's First Day Motion to pay Critical Vendors and
Fleming's continued to supply Kmart post-bankruptcy.
LEVI STRAUSS: Nov. 24 Net Capital Deficit Balloons to $995 Mill.
----------------------------------------------------------------
Levi Strauss & Co., announced financial results for the fourth
quarter and fiscal year ended November 24, 2002. The company
ended the year on a positive note, with continued improvement in
sales trends during the fourth quarter. For the full year,
results were in line with the company's expectations across its
key financial measures. In fiscal 2002, the company:
-- Stabilized second-half net sales, turning in fourth-
quarter revenues of $1,260 million (up 2 percent on a reported
basis and 1 percent on a constant-currency basis) and full-year
sales of $4,137 million (down 3 percent on both a reported and
constant-currency basis);
-- Achieved strong gross margins of 41.9 percent excluding
net restructuring charges and related expenses (or 40.7 percent
including such charges and expenses); and
-- Lowered debt by $111 million.
"We ended 2002 right where we planned," said Phil Marineau, Levi
Strauss & Co. chief executive officer. "We stabilized sales in
the second half of the year, with revenue growth in the third
and fourth quarters. Our business turnaround strategies are
succeeding worldwide. Market-leading product innovation, strong
retail and marketing programs, and improved execution are
driving better performance. We are ready to grow again in 2003.
"We have revitalized our product lines, from the technological
enhancements of Dockers(R) Go Khaki(TM) with Stain Defender(TM)
to the popular vintage finishes and low-rise styles of the
Levi's(R) brand," said Marineau. "I believe we have the best
fits, finishes and fabrics in the market worldwide, anchored by
innovation that flows from our premium products all the way
through to our core offerings.
"Throughout the year, we expect to continue expanding our reach
to a broad range of consumers, including the fast growing
women's market, by offering relevant products at a wide range of
price points," continued Marineau. "Our big news as we enter
spring 2003 is the global rollout of Levi's Type 1(TM) jeans, a
modern interpretation of the quintessential Levi's jeans.
They'll be featured in this month's Super Bowl ad. And, in mid-
summer, we launch our new Levi Strauss Signature(TM) brand in
Wal-Mart stores in the United States."
Fourth-quarter results
Fourth-quarter net sales grew 2 percent to $1,260 million from
$1,235 million in the fourth quarter of 2001. Had currency rates
remained constant at 2001 levels, net sales would have increased
approximately 1 percent for the period.
Fourth-quarter gross profit was $502 million, or 39.9 percent of
sales, which compares to $506 million, or 41.0 percent of sales,
in the fourth quarter of 2001. Impacting 2002 fourth-quarter
gross profit was $15.7 million of restructuring-related expenses
associated with the closure of manufacturing plants in the
United States and Scotland. Excluding restructuring-related
expenses, gross profit for the fourth quarter of 2002 was $518
million, or 41.1 percent of sales.
Operating income for the quarter was $141 million, or 11.2
percent of net sales, compared to $141 million, or 11.5 percent
of net sales, in the fourth quarter of 2001. Operating income in
2001 included a net reversal of $4.3 million of restructuring
charges. Fourth-quarter operating income excluding net
restructuring charges and related expenses increased 15 percent
to $157 million in 2002 versus $137 million in 2001.
EBITDA before net restructuring charges and related expenses
increased 11 percent to $174 million this quarter versus $157
million in the fourth quarter of 2001, and as a percentage of
net sales improved to 13.8 percent from 12.7 percent. Please see
"Explanatory Notes" at the end of this news release for more
information relating to EBITDA before net restructuring charges
and related expenses.
Net income in the fourth quarter decreased 29 percent to $45
million compared to $63 million in 2001. Excluding net
restructuring charges and related expenses, fourth-quarter net
income decreased 13 percent to $52 million in 2002 versus $60
million in the 2001 quarter. The decline is primarily
attributable to a higher effective tax rate and the impact of
currency volatility on the company's foreign currency management
activities.
Fiscal-Year 2002 Results
Full-year net sales were $4,137 million compared to $4,259
million in fiscal 2001, representing a decline of 3 percent on
both a reported and constant-currency basis.
Gross profit in 2002 was $1,685 million, or 40.7 percent of
sales, versus $1,797 million, or 42.2 percent of sales, last
year. Impacting 2002 gross profit was $49.5 million of
restructuring-related expenses associated with the closure of
manufacturing plants in the United States and Scotland.
Excluding restructuring-related expenses, 2002 gross profit was
$1,734 million, or 41.9 percent of sales, at the high end of the
company's 40-42 percent target range.
Full-year operating income was $262 million, or 6.3 percent of
net sales, compared to $479 million, or 11.3 percent of net
sales, in 2001. In 2002, the company incurred a restructuring
charge of $152 million primarily related to the closure of
manufacturing plants in the United States and Scotland. This was
partially offset by a $27 million reversal of restructuring
charges taken in earlier periods. Operating income in 2001
included a net reversal of $4.3 million of restructuring
charges. Operating income excluding net restructuring charges
and related expenses declined 8 percent to $436 million in 2002
versus $475 million in 2001.
EBITDA before net restructuring charges and related expenses was
$507 million compared to $556 million, and as a percentage of
net sales was 12.3 percent in 2002 and 13.0 percent in 2001.
Net income in 2002 decreased 84 percent to $25 million compared
to $151 million in 2001. Excluding net restructuring charges and
related expenses, net income decreased 24 percent to $112
million in 2002 versus $148 million last year. Lower interest
expense was not enough to offset lower gross profit, a higher
effective tax rate and the impact of currency volatility on the
company's foreign currency management activities.
As of November 24, 2002, total debt was reduced by $111 million
to $1.85 billion from $1.96 billion at November 25, 2001. Also
at the same date, the Company's balance sheet shows a total
shareholders' equity deficit of about $995 million.
"We delivered on all of our financial goals in 2002," said Bill
Chiasson, chief financial officer. "We stabilized the top line
in the second half of the year, held costs in check and
maintained industry-leading gross margins. We also cut debt by
more than $100 million this year, while at the same time
deploying over $100 million in cash toward plant closures and
other restructuring initiatives. Since 1999, we've paid down
more than $800 million in debt.
"We're entering 2003 in good financial condition," added
Chiasson. "We expect full-year margins to remain strong, with
gross margins in the range of 40-42 percent and adjusted EBITDA
margins between 10.5-12.5 percent. Importantly, the recent
completion of a $425 million senior notes offering provides us
with added financial flexibility as we pursue our growth plans
in the new year. Additionally, we expect to close on an $800
million senior secured credit facility later this month."
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, Dockers and Levi Strauss Signature brands.
LEVI STRAUSS: Selling $50MM of 12-1/4% Sr. Notes to AIG Global
--------------------------------------------------------------
Levi Strauss & Co., entered into a binding commitment letter to
sell $50 million of 12-1/4% Senior Notes due 2012 to AIG Global
Investment Corp., or its affiliate, which will be sold in
accordance with a private placement under the Securities Act of
1933. The Senior Notes will rank equally with all of the
company's other unsecured unsubordinated indebtedness and will
have the same terms as, and constitute part of the same issue
of, the 12-1/4% Senior Notes previously issued by the Company in
November 2002.
The Company anticipates that the net proceeds from the offering
will be used to refinance (whether through payment at maturity,
repurchase or otherwise) a portion of the $277 million aggregate
principal amount of the company's 6.80% notes due November 1,
2003, or other outstanding indebtedness.
The securities offered will not be registered under the
Securities Act of 1933, as amended, or any state securities
laws, and unless so registered, may not be offered or sold in
the United States, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws.
MARINE BIOPRODUCTS: Initiates Comprehensive Restructuring Steps
---------------------------------------------------------------
David Dadon, Chairman of the Board of Directors of Marine
BioProducts International Corporation (TSX symbol: MBP) makes
the following announcements:
Major Restructuring
The Company is undertaking a number of very significant, inter-
related steps to restructure itself financially, managerially
and operationally, to position the Company as a financially
strong and technically sound manufacturer and distributor of
dehydrated culture media and agar for the medical, scientific
and industrial communities.
Resignations and Appointments To The Board
Further to the Company's news release of January 6, 2003
announcing the appointment to the board of financier and movie
producer David Dadon and securities lawyer and businessman John
Cumming, the Company has received and accepted the resignations
of Richard Babbitt, Doug Broadfoot, Mike Delesalle, Ken Hallat,
and Steve Jillings. The Board thanks the departing directors for
their contributions.
Stock Options
Concurrent with their resignations the departing directors
surrendered 2,175,000 incentive stock options. The Company has
granted to Ron Foreman, David Dadon and John Cumming 3,200,000
incentive stock options at $0.10 per share expiring January 13,
2008.
Advisory Committee
The board of directors intends to restructure its Advisory
Committee to be more streamlined and focused on the current
objectives of the Company.
Executive and Operational Changes
Doug Broadfoot has resigned as President. He will be retained by
Company as an independent contractor developing and implementing
new marketing and sales initiatives.
Ron Foreman, the founder of the Company, was appointed President
and CEO. He will continue to seek out and develop patenting,
joint venture, partnership or licensing opportunities for the
Company's clarified hydrocolloid and other technologies.
Mary Nichols, Executive Vice-President of the Company, assumes
new responsibilities for managing the Company's staff and all of
the day-to-day operations of the Company's dehydrated culture
media and agar businesses.
Relocation of Facilities
The Company is downsizing its physical plant retaining only that
space required for current operations. The Company is
considering purchasing or leasing a building.
Share Exchange
The Company executed a share exchange agreement with Yaletown
Entertainment Corp. (TSX symbol: ECY) The Company will exchange
15,000,000 of its shares at a price of $0.10 per share for
3,000,000 shares of Yaletown Entertainment Corp., at $0.50 per
share.
An essential component of the major restructuring of Marine
BioProducts International Corporation, this transaction will
assist each of the companies to secure required bank operating
lines of credit.
The Company and Yaletown Entertainment Corp. are related by way
of two common directors. Both of the companies have independent
directors. The share exchange agreement is subject to the
approval of TSX Venture Exchange and the shareholders in general
meeting.
Finances; Private Placement
Further to the Company's news release of January 6, 2003 the
Company has agreed to modify and increase the private placement
from 4,000,000 shares to 4,500,000 Units at $0.10 per Unit, each
Unit comprised of one share and one two-year share purchase
warrant exercisable at $0.10 per share. The Company received
from Giants Entertainment, a company controlled by new Chairman
David Dadon, the first $100,000 advance against the placement
proceeds. These funds will allow the company to continue
operations for the next 2 months. The new board will advance a
further $50,000. This placement is subject to regulatory
approvals.
Corporate Communications
Sam Jay joins the Company as Vice President, Corporate
Communications and, subject to TSX approval, will be granted
300,000 incentive stock options at $0.10 per share.
Private Purchase Of Shares
As further evidence of his commitment to the Company, Chairman
David Dadon acquired 2,250,000 shares of the company in a
private purchase from Ron Foreman.
Marine BioProducts International Corporation is an
internationally recognized manufacturing and distribution
company providing the life sciences, pharmaceutical, food and
beverage, and other industrial sectors with high performance,
consistent quality dehydrated culture media and agar products.
The Company's research and development activities include
clarified hydrocolloid processes, custom dehydrated culture
media formulations, and continued expansion of its media lines
and services. The Company's dehydrated culture media products
are used in all aspects of diagnostic testing and quality
control, and its agar products are used in microbiology and
molecular biology laboratories throughout the world.
Marine BioProducts' September 30, 2002 balance sheet shows a
working capital deficit of about C$1 million, and a total
shareholders' equity deficit of about C$423,000.
MIDLAND STEEL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Midland Steel Products Holding Company
10615 Madison Avenue
Cleveland, Ohio 44102
aka Iochpe-Maxion of Ohio, Inc.
Bankruptcy Case No.: 03-10136
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Midland Steel Products Company 03-10137
Midland Steel Products Solon Company LLC 03-10138
Type of Business: Midland Steel provides frames for the medium
duty line at General Motors.
Chapter 11 Petition Date: January 13, 2003
Court: District of Delaware
Judge: Lloyd King
Debtors' Counsel: Laura Davis Jones, Esq.
Rachel Lowy Werkheiser, Esq.
Paula A. Galbraith, Esq.
Pachulski Stang Ziehl Young & Jones
919 N. Market Street
16th Floor
Wilmington, DE 19899-8705
Tel: 302-652-4100
Fax : 302-652-4400
-and-
Shawn M. Riley, Esq.
Susanne E. Dickerson, Esq.
McDonald, Hopkins, Burke & Haber Co., LPA
2100 Bank One Center
600 Superior Avenue, East
Cleveland, OH 44114-2653
Tel: 216-348-5400
Estimated Assets: Estimated Debts:
----------------- ----------------
Midland Steel Products $100K to $500K $0 to $50K
Holding Company
Midland Steel Products $10 to $50 Mill. $10 to $50 Mill.
Company
Midland Steel Products $10 to $50 Mill. $1 to $10 Mill.
Solon Company LLC
Debtors' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Rouge Steel Company Trade Debt $860,213
3001 Miller Road
Dearborn, MI 48121
Tel: 313-317-8900
Fax: 313-845-0199
LTV Steel Company Inc. Trade Debt $722,887
5800 Lombardo Center
Suite 200
Seven Hills, OH 44131
Tel: 216-642-7100
Fax: 216-642-4595
Industrial Powder Trade Debt $559,521
Coatings Inc.
202 Republic Street
Norwalk, OH 44857-0837
Tel: 918-599-9344
Fax: 918-582-5844
Treasurer Cuyahoga County Personal Property Taxes $508,508
County Administration Bldg.
1219 Ontario Street
Norwalk, OH 44113
Tel: 216-443-7400
Fax: 216-443-2139
WCI Steel Sales LP Trade Debt $429,684
1040 Pine Street
Warren, OH 44483
Tel: 330-841-8302
Fax: 330-841-8256
EDS Corporation Trade Debt $286,645
800 Tower Drive, 2nd Floor
Troy, MI 48007
Tel: 248-874-2702
Fax: 248-696-4984
Weldall Mfg. Inc. Trade Debt $175,898
Daturn Industries LLC Trade Debt $136,300
Commercial Traffic Co. Trade Debt $130,049
Nissho Iwai American Corp. Trade Debt $114,008
American Tank & Fab Trade Debt $104,610
Talent Tool & Die Inc. Trade Debt $95,000
Rouge Steel Company Trade Debt $87,918
Cleveland Steel Tool Co. Trade Debt $77,103
National Metal Abrasive Trade Debt $72,090
Inc.
Isatec Tool & Trade Debt $63,075
Engineering Co.
Cleveland Public Power Utility $62,056
Air Caster Corp. Trade Debt $59,910
Cole Tool & Die Trade Debt $54,100
Standard Machine, Inc. Trade Debt $49,076
NANOPIERCE TECHNOLOGIES: Taps Gerard Klauer as Investment Banker
----------------------------------------------------------------
NanoPierce Technologies, Inc., (OTCBB:NPCT) engaged Gerard
Klauer Mattison as its investment banker and placement agent.
Gerard Klauer Mattison is one of Wall Street's most prestigious
investment banking firms and widely recognized for its very high
level of institutional investment expertise in the semiconductor
industry.
Under the one-year exclusive engagement, Gerard Klauer Mattison
will provide a wide range of financial advisory services to
NanoPierce and, in addition, act as placement agent in obtaining
financing for the Company.
Paul H. Metzinger, President and Chief Executive Officer of
NanoPierce Technologies, Inc., stated: "We're excited to be
working with an investment banking firm of the caliber of Gerard
Klauer Mattison. With GKM's prominent stature and its stringent
client selection criteria, we consider it a major achievement
for NanoPierce and for our future prospects."
Gerard Klauer Mattison is an equity research and investment
banking firm, serving the institutional marketplace. With over
20 senior, published analysts, the GKM research department
covers more than 230 public companies, with a principal focus on
the growth sectors of the economy, including the
technology/telecommunications, media/entertainment, healthcare,
business/professional services, energy and consumer industries.
GKM offers its investment banking clients the benefits of its
award-winning research coverage as well as valuable industry
knowledge and extensive investor contacts to provide innovative
financing solutions, expert mergers and acquisitions advice and
a wide range of strategic advisory services.
Gerard Klauer Mattison Asset Management comprises GKM Advisers,
Inc., GKM Funds, GKM Generation Funds, GKM Ventures, and Pattern
Recognition Funds, offering traditional money management
services, hedge fund investing, and mutual fund and fund of
funds products.
Founded in 1989, GKM remains privately held. The firm is
headquartered in New York City, with offices in Boston, Chicago,
Los Angeles and San Francisco.
Gerard Klauer Mattison & Co., Inc., is a member of the New York
Stock Exchange, the NASD, and SIPC. For more information on
Gerard Klauer Mattison, please visit http://www.gkm.com
NanoPierce Technologies, Inc., of Denver, Colorado, USA, is
traded on the NASDAQ stock market (OTCBB:NPCT) as well as on the
Frankfurt and Hamburg exchanges (OTC:NPI). In addition to the 12
patents it owns, NanoPierce has numerous applications pending,
others in preparation, and various other intellectual properties
related to NanoPierce's proprietary NCS(TM) (NanoPierce
Connection System). This advanced system is designed to provide
significant improvement over conventional electrical and
mechanical interconnection methods for high-density circuit
boards, components, sockets, connectors, semiconductor packaging
and electronic systems. For more information on NanoPierce
Technologies, Inc., please visit this Web site at
http://www.nanopierce.com
* * *
Going Concern Uncertainties
The Company's financial statements for the three months ended
September 30, 2002 have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business.
The Company reported a net loss of $1,018,725 for the three
months ended September 30, 2002, and an accumulated deficit of
$18,074,560 as of September 30, 2002. The Company has not
recognized any significant revenues from its PI technology and
expects to incur continued cash outflows. The Company has also
experienced difficulty and uncertainty in meeting its liquidity
needs. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability
and classification of assets or the amounts and classification
of liabilities that might be necessary should the Company be
unable to continue as a going concern.
To address its current cash flow concerns, the Company is in
discussions with investment bankers and financial institutions
attempting to raise funds to support current and future
operations. This includes attempting to raise additional working
capital through the sale of additional capital stock or through
the issuance of debt. Currently, the Company does not have a
revolving loan agreement with any financial institution, nor can
the Company provide any assurance it will be able to enter into
any such agreement in the future, or be able to raise funds
through a further issuance of debt or equity in the Company. The
Company also believes sales of its products and technology
license rights may provide additional funds to meet the
Company's capital requirements.
NATIONAL CENTURY: Gets Approval of Alvarez & Marsal's Engagement
----------------------------------------------------------------
In response to the U.S. Trustee's Objection, National Century
Financial Enterprises, Inc., and Alvarez & Marsal Inc., engaged
in discussions regarding a consensual resolution of the issues
that the U.S. Trustee raised with respect to the Debtors'
engagement of A&M to perform crisis management services. The
Debtors and A&M have prepared a revised and restated engagement
letter, effective as of the Petition Date, governing the
postpetition relationship between both parties.
According to Charles M. Oellermann, Esq., at Jones, Day, Reavis
& Pogue, in Columbus, Ohio, the principal changes to the
original proposed terms of the engagement of A&M are:
A. Effective Date
The Revised Engagement becomes effective on November 18,
2002.
B. Service of Officers
A&M will make available certain persons to serve as the
Debtors' officers, including:
-- David Coles, as Chief Executive Officer of the Debtors;
-- Peter Briggs, as Chief Operating Officer of the Debtors;
-- Ira Genser;
-- Jim Dubrow;
-- Mark Russell; and
-- Luke Lonergan
The Officers will act under the direction of the Debtors'
boards of directors. Mr. Cole will also serve as one of the
three directors of NCFE and as sole director of the other
Debtors.
C. Additional Personnel
Upon mutual agreement, A&M may provide additional personnel
in addition to the Officers as may be required to assist the
Debtors in their restructuring efforts; provided, however,
that compensation of the additional personnel will be on the
hourly terms set forth in the Revised Engagement Letter.
D. Incentive Compensation
Both parties may enter into an agreement for incentive
compensation in addition to the compensation otherwise
contemplated by the Revised Engagement Letter. Any
incentive compensation will be subject to prior approval by
the Court, on proper notice to parties-in-interest,
including the U.S. Trustee and the Creditors' Committee.
E. Attorney's Fees and Expenses
The provision for reimbursement of A&M's reasonable
attorney's fees and expenses has been removed from the
Revised Engagement Letter.
F. Indemnification
The Debtors will indemnify the Officers to the same extent
as the most favorable indemnification that the Debtors
extend to their officers and directors, whether under the
Debtors' by-laws or certificates of incorporation, by
contract or otherwise, and no reduction or termination of
any of any of the benefits provided under any indemnities
will affect the benefits provided to the Officers.
G. Director and Officer Insurance
Each of the Officers will be covered as an officer under the
Debtors' existing director and officer liability insurance
policy.
In the event that any of the Officers has the right to
assert a claim for indemnification for which they are also
direct insured parties under the Debtors' director and
officer liability insurance policy, then so long as the
Debtors are debtors-in-possession in their Chapter 11 cases,
and provided that a final, non-appealable Court order has
been entered permitting payment from the insurance provider
to the Officers, the Officers will not make a demand for
payment from the Debtors if and to the extent they are able
to obtain payment in cash in full from the insurance provider
promptly upon making a request for payment; provided, that
the foregoing is intended solely as an agreement as to the
sequence by which the Officers make demand for payment of
their indemnification claims and will not limit or affect any
of the Debtors' indemnity obligations to the Officers or
require the Officers to collect payment by legal or equitable
process from the insurance provider or be construed to affect
the Officers' rights or the Debtors' obligations in any
manner that may adversely affect either the Debtors' rights
or the Officers' rights under the insurance policy, nor will
it affect the Officers' rights to assert an administrative
expense claim for indemnity obligations.
To the extent available, the Debtors will maintain
any insurance coverage for each of the Officers for a period
of not less than two years after the date of the termination
of the Officer's services under the Revised Engagement
Letter, through the purchase of a "tail" policy or otherwise.
H. Governing Law
The Revised Engagement Letter will be governed by Ohio Law.
The Debtors believe that A&M's engagement under the terms set in
the Revised Engagement Letter is fair and reasonable. A&M's
services are crucial to the Debtors' restructuring efforts.
Moreover, Mr. Oellermann points out, the structure of the
arrangement contemplated by the Revised Engagement Letter is
substantially similar to that utilized for the provision of
crisis management services.
Accordingly, the Debtors seek the Court's authority to employ
A&M in accordance with the revised terms of engagement.
* * *
In light of the revised Engagement Letter, Judge Calhoun permits
the Debtors to employ A&M as their Crisis Managers effective
November 18, 2002.
Pursuant to the terms of a letter agreement, A&M will:
(a) assist in developing short-term cash flow forecasts,
liquidity plans and analysis of funding obligations and
collateral coverage;
(b) assist the Debtors in developing and executing a strategy
for maximizing the realization of value of asset
recoveries held directly or indirectly by the Debtors as
directed by the Board of Directors;
(c) assist the Debtors in minimizing liabilities and claims;
(d) assist in developing the Debtors' operating and
restructuring plans, and assist with the presentation and
communication of the plans to the Board of Directors, the
creditor and other constituents;
(e) provide the principal contact with the Debtors' creditors
and other constituents and assist in preparation of
reports, liaison and negotiations with creditors, their
advisors and other constituents and their advisors in
developing a restructuring or orderly wind down plan;
(f) assist in preparation of materials required to accompany
the filing of a petition for relief under Chapter 11 of
the Bankruptcy Code; and
(g) provide other services as may be required or directed by
the Board of Directors and agreed to by A&M, including
serving as an officer or director of any of the Debtors.
(National Century Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
NATIONAL STEEL: Court Approves Claims Resolution Procedures
-----------------------------------------------------------
Mark A. Berkoff, Esq., at Piper Rudnick, in Chicago, Illinois,
reminds the Court that National Steel Corporation and its
debtor-affiliates have made clear that the claimants are not
required to mediate or arbitrate. There is no requirement that
a claimant settle its personal injury claim pursuant to the
proposed Claims Resolution Procedure. Hence, the objections are
misplaced.
Rather, Mr. Berkoff says, the Debtors suggest only that a
claimant be required to comply, in good faith, with the Claims
Resolution Procedures before attempting to seek relief from
automatic stay to fully litigate his personal injury claim. All
claimants are compelled to participate in the process -- which
includes filling out the Claims Information Questionnaire -- as
a prerequisite before requesting for individual lift stay
relief.
"Such a process is fair and efficient and will likely resolve
the majority of the hundreds of personal injury claims, as the
process is intended and as employed by other courts in similar
circumstances," Mr. Berkoff notes.
The Debtors, however, admit that a procedure meant to
efficiently address 500 plus potential claims cannot likely
address all claims. The Debtors are open to the idea that
certain of the claims may not be resolved through the proposed
procedures and might eventually need to be liquidated in a
different forum. But those instances would be an exception
rather than the rule and should not be used to defeat a process
that will likely address the vast majority of the personal
injury claims, Mr. Berkoff tells Judge Squires.
Travelers Is Not Convinced
The Travelers Indemnity Company and the Travelers Insurance
Company complain that the proposed procedures do not address
their concerns over their contractual rights in the Debtors'
insurance policies. Under the Travelers Policy issued to the
Debtor Granite City Steel Company, Travelers has the contractual
right to defend and settle all covered personal injury claims
asserted against Granite City. "But the Claims Resolution
Procedures the Debtors proposed abrogates Travelers' contractual
rights by taking away from it the right to defend and settle the
covered claims and giving that right to Granite City," Robert C.
Johnson, Esq., at Sonnenschein Nath & Rosenthal, in Chicago,
Illinois, points out. Hence, as a non-party to the personal
injury claims asserted against the Debtors, Travelers should not
be legally compelled to attend the proposed mediations or
arbitrations of the claims.
Mr. Johnson informs Judge Squires that Travelers does not object
to the adoption of the Procedures as to any claims, which it
does not insure. Travelers only covers, or potentially covers,
about 40 to 50 personal injury claims under the Travelers
Policy. Travelers also does not object to the proposed mediation
if it provided that, for those claims under the Travelers
Policy, it controls the decision as to the selection of the
mediator and whether to settle.
"Each insurer itself is in the best position to evaluate whether
it should attend any mediation or arbitration which may impact
its coverage," Mr. Johnson argues. Mr. Johnson further asserts
that the cost of attending the mediation or arbitration sessions
could well be inordinately expensive, given the small size of
many of the claims. "If, despite these arguments, the Court
decides to compel the insurer's attendance, the insurers should
be given the option of attending by telephone, not in person,"
Mr. Johnson suggests.
* * *
The Debtors are authorized to utilize the Claims Resolution
Procedures to liquidate and settle personal injury claims
through direct negotiation or alternative dispute resolution,
Judge Squires rules. However, the proposed mediation and
arbitration are voluntary and should not be construed to compel
the Debtors, any claimant, or Third Party Indemnitor to
participate in the mediation or arbitration.
The Debtors are not permitted to liquidate or settle any claims
that involves a Third Party Indemnitor, without providing that
Third Party Indemnitor:
(i) 30 days' notice;
(ii) an opportunity to be involved in the settlement
discussions or alternative dispute resolution procedure;
and
(iii) an opportunity to approve the settlement or to consent to
the settlement.
Judge Squires directs the Debtors to serve, on or before
January 21, 2003, a copy of the Claims Resolution Procedure,
this Order and the Questionnaire to all claimants whom they
reasonably are able to identify and locate. Judge Squires also
schedules a status conference regarding the implementation of
the Claims Resolution Procedure on March 18, 2003 at 8:30 a.m.
The conference will include a determination of the feasibility
of establishing a deadline for completing mediations of Personal
Injury Claims. (National Steel Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NETWORK ACCESS: Completes Asset Sale Transaction with DSL.net
-------------------------------------------------------------
DSL.net, Inc. (NASDAQ: DSLN), a leading nationwide provider of
broadband communications services to businesses, completed its
acquisition of network assets and associated subscriber lines of
Herndon, Va.-based Network Access Solutions Corporation
(OTC: NASC.OB).
"This acquisition represents a major milestone for DSL.net by
further improving our already strong position as a national
broadband service provider with a significant concentration of
network assets in the densest region for data communications
traffic in the United States," said David F. Struwas, chairman
and chief executive officer of DSL.net. "As a result of this
transaction, we expect that both our monthly revenue and current
subscriber lines will increase by approximately 50 percent. In
addition, we have more than doubled our network points of
presence and increased our ability to drive new sales onto our
network."
The acquired network extends from Virginia to Massachusetts and
includes more than 300 central offices in major metropolitan
areas. Struwas said the acquired network assets complement
DSL.net's existing network, which is primarily located in
second-tier cities. He reiterated that the thousands of
customers currently serviced by the acquired network assets
should experience a seamless transition since no new
installations or equipment changes are required.
The DSL.net bid of $14 million - consisting of $9 million in
cash and a $5 million note - was recently approved by the U.S.
Bankruptcy Court for the District of Delaware following an
auction of the NAS network assets and associated subscriber
lines. NAS had filed for Chapter 11 reorganization in June 2002.
Based in New Haven, Conn., DSL.net, Inc. combines its own DSL
facilities, nationwide network infrastructure, and Tier I
Internet Service Provider (ISP) capabilities to provide high-
speed Internet access and value-added services directly to
small- and medium-sized businesses throughout the United States.
A certified CLEC in all 50 states, plus Washington, D.C. and
Puerto Rico, DSL.net sells to businesses, primarily through its
own direct sales channel. DSL.net augments its direct sales
strategy through select system integrators, application service
providers and marketing partners. In addition to a number of
high-performance, high-speed Internet connectivity solutions
specifically designed for businesses, DSL.net product offerings
include Web hosting, DNS management, enhanced e-mail, online
data backup and recovery services, firewalls, virtual private
networks and nationwide dial-up services. For more information
on DSL.net, visit http://www.dsl.net
NATUROL HOLDINGS: Terminates License Agreement with MGA Holdings
----------------------------------------------------------------
Naturol, Inc., (OTC:BB-NTUH) a wholly owned subsidiary of
Naturol Holdings Ltd, entered into a License Agreement with MGA
Holdings on the 20th day of August, 2001, granting Naturol the
exclusive North American rights under certain patents held by
MGA in a process for the extraction of oils from natural plants
and other materials. Under the terms of the Agreement, Naturol
was obligated to fund and advance the commercial development of
the technology, which included the annual payment of a $360,000
license fee payable quarterly. Additional consideration was
issued by Naturol for the grant of the license, the terms of
which are disclosed in Naturol's press releases and public
filings with the Securities and Exchange Commission.
On August 28, 2002, MGA notified Naturol that as a result of the
inability of Naturol to make any substantial payment on the
license fee or to fund and advance the commercial development of
the technology, MGA considered Naturol in default in its
obligations under the terms of the Agreement. In an effort to
avoid a dispute over the potential termination of the Agreement,
Naturol's board of directors approved a proposal by MGA whereby
the exclusive License Agreement, was modified to a non-exclusive
License Agreement under certain terms and conditions as
disclosed in Naturol's news release of 26th September 2002 and
its public filings with the SEC.
In December 2002 MGA advised that as a result of Naturol's
inability to fund and advance the commercial development of the
technology, Naturol will be considered in default of its
obligations under the terms of the Agreement unless Naturol
could demonstrate that it had sufficient working capital to fund
its obligations. Owing to the continued deterioration in the
junior capital markets, Naturol has not been successful in
securing equity capital to advance the commercial development of
the technology and is unable to meet its obligations under the
terms of the Agreement. Naturol has advised MGA accordingly and
as a consequence:
1) The Agreement is terminated and neither Naturol nor its
subsidiaries will retain any further rights or title
thereunder.
2) All contracts between Naturol and any third parties
which relate to the licensed technology will immediately
become the property of MGA including but not limited to
the National Research Council of Canada Industrial
Research Assistance Program Contribution to Firms
Agreement.
3) In exchange for MGA agreeing to waive the repayment of
funds due to the Prince Edward Island Food Technology
Center, Naturol will agree to execute upon demand any
assignment agreements necessary to enable MGA or its
assignee, to assume the rights and liabilities of any
agreements for which Naturol or its subsidiaries may
have been a party involving research, development or
commercialization of the technology.
NIAGARA FRONTIER: Buffalo Sabres File for Chapter 11 Protection
---------------------------------------------------------------
The Buffalo Sabres filed for Chapter 11 protection in the U.S.
Bankruptcy Court for the Western District of New York.
According to a report appearing in the Buffalo News, the
National Hockey League-operated hockey club lists $68 million in
assets and $238 million in debts in its chapter 11 petition.
William S. Thomas, Esq., and Gregory J. Mascitti, Esq., at Nixon
Peabody, LLP, represent the hockey team in its bankruptcy case.
Adelphia Communications Corporation, owed $130 million,
Bloomberg News reports, leads the list of unsecured creditors.
That list also includes:
City of Buffalo $750,000
Empire State Development Corp. $705,126
Vancouver Canucks $442,199
Erie County $140,000
Curtis Brown $133,333
Jay McKee $133,333
Brad May $104,128
NHL Pension Society $ 29,937
The team has obtained about $20 million in debtor-in-possession
financing, Bloomberg adds, citing NHL Commissioner Gary Bettman.
Separate chapter 11 petitions were delivered to the Clerk by
Niagara Frontier Hockey, L.P., Buffalo Sabres Concession LLC,
Buffalo Lacrosse LLC, Arena, Inc., Crossroads Arena LLC, The Aud
Club, Inc., Buffalo Sabres, Inc., Niagara Frontier Broadcasting
Partnership, Sabreland Partnership, and Western New York Hockey
Club Partnership. These 10 separate cases will be jointly
administered as In re Niagara Frontier Hockey, L.P., Bankruptcy
Case No. 03-10210K. At a first day hearing Monday, Judge Kaplan
granted the Debtors authority to honor prepetition customer
obligations, pay and honor prepetition employee-related
obligations, and continue using prepetition bank accounts, cash
management procedures, and business forms.
NORCAL MUTUAL: S&P Drops Unit's Fin'l Strength Rating to BBpi
-------------------------------------------------------------
Standard & Poor's Ratings Services that it affirmed its 'BBBpi'
counterparty credit and financial strength ratings on Norcal
Mutual Insurance Co., based on the company's strong earnings and
extremely strong capital, partially offset by the company's
concentration risk and high common stock leverage.
At the same time, Standard & Poor's said it lowered its
counterparty credit and financial strength ratings on Norcal's
subsidiary, Pennsylvania Medical Society Liability Insurance
Co., to 'BBpi' from 'BBBpi' based on the company's poor
operating performance and high concentration risk.
"The affirmation of the ratings on Norcal reflects the company's
consistent, strong earnings, as measured by the five-year
weighted average ROR of 9.84%," said Standard & Poor's credit
analyst Tom Taillon. Although 2001 income was slightly lower due
to decreased investment income and higher underwriting expenses;
the 2001 ROR was still a strong 8.39%.
The affirmation also reflects the company's extremely strong
capitalization, as measured by Standard & Poor's capital
adequacy ratio of 232% at year-end 2001. Offsetting these
positive factors, however, is the company's greater regulatory
and economic risks as a monoline company operating predominantly
in one state and its high common stock leverage, as Norcal's
common stocks constitutes 85% of surplus as of
December 31, 2001.
"The downgrade on PMSLIC reflects the company's volatile
operating performance, which was particularly poor in 2001, with
an ROR of negative 13.4%," Tom Taillon added. Results in 2002
have not improved, as the company had a net loss of $7.9 million
through June 30, 2002, compared with a net loss of $1 million
for the same period 2002. PMSLIC also has significant geographic
and product concentrations. In 2001, Pennsylvania accounted for
94.4% of the company's direct premium written, with New Jersey
accounting for the other 5.6%. The company writes only Medical
Malpractice insurance. Partially offsetting these negative
factors is the company's extremely strong capital, as measured
by a Standard & Poor's capital adequacy ratio of 220.6 % at
year-end 2001.
Norcal is a medical malpractice insurer, operating primarily in
California, with $268 million in surplus at year-end 2001. The
San Francisco-based company commenced operations in 1975.
Norcal's subsidiary, PMSLIC, also a medical malpractice insurer
and writing most of its business in Pennsylvania, had $112.3
million in surplus at year-end 2001. Based in Harrisburg, PA, it
was established in 1978.
Norcal also owns an insurance holding company, Medical Group
Holdings; however, the ratings do not include credit for implied
group support.
Ratings with a 'pi' subscript are insurer financial strength
ratings based on an analysis of an insurer's published financial
information and additional information in the public domain.
They do not reflect in-depth meetings with an insurer's
management and are therefore based on less comprehensive
information than ratings without a 'pi' subscript. Ratings
with a 'pi' subscript are reviewed annually based on a new
year's financial statements, but may be reviewed on an interim
basis if a major event that may affect the insurer's financial
security occurs. Ratings with a 'pi' subscript are not subject
to potential CreditWatch listings.
Ratings with a 'pi' subscript generally are not modified with
"plus" or "minus" designations. However, such designations may
be assigned when the insurer's financial strength rating is
constrained by sovereign risk or the credit quality of a parent
company or affiliated group.
NORTEL NETWORKS: Builds Converged Network for Reliance Infocomm
---------------------------------------------------------------
Nortel Networks (NYSE/TSX: NT) is a key supplier of the Reliance
Infocomm Limited nationwide converged network.
The network features India's most extensive optical and
broadband data network. The network, which covers more sites
than any other network in Asia, provides Reliance customers with
national and international long distance, wireless access for
both voice and data applications, and high-speed Internet
access.
"Nortel Networks has been a strategic relationship for Reliance
Infocomm in our quest to usher a digital revolution in India and
herald a new way of life," said Mukesh Ambani, chairman and
managing director, Reliance Industries Limited. "To help us
realize our vision of affordable, high-quality communication for
the Indian population, we needed a partner with proven expertise
and experience in wireless, optical, voice and data networks."
"Nortel Networks provided not only proven expertise, but also
brought vast experience in the rapid deployment of large,
complex, carrier-grade networks around the world and its long-
term commitment to this country," Ambani said. "Today, we are
witnessing this global expertise translate into reality in the
Indian landscape."
One of India's newest carriers, Reliance was awarded 18 telecom
licenses, with approval to operate national and international
long distance services. Its network, which will provide India's
business community with an unprecedented level of communications
reliability, has an optical backbone that is over 60,000
kilometers long, connecting cities, towns and villages across
India. It is the country's first high-capacity, 10-gigabit DWDM
network with the capability to scale to terabits of bandwidth.
It is based on Nortel Networks leading SDH (synchronous digital
hierarchy) and DWDM (dense wavelength division multiplexing)
optical technologies.
In addition, Reliance chose Nortel Networks Local Area Network
solutions for its Webworld retail channel as part of its
innovative plan to enable broadband services such as video
conferencing to the citizenry. Reliance also chose a range of
Nortel Networks enterprise products, including a call center
suite of solutions for back-office use.
"Reliance's vision, drive and proven project execution
capabilities, combined with Nortel Networks technology and
implementation expertise, have allowed us to deliver in six
months a world-class network which normally takes 18-24 months
to build," said Frank Dunn, president and chief executive
officer, Nortel Networks. "We are very pleased to have worked
with Reliance for this seminal event in telecommunications for
India. This network will create new opportunities for the people
of India, and we look forward to continuing our relationship
with Reliance to expand and enhance the services that will be
offered."
Nortel Networks end-to-end optical solution for Reliance
includes Nortel Networks OPTera Long Haul 1600 optical line
system, OPTera Connect DX optical switch, OPTera Metro 4000
multiservice platform, and Nortel Networks Preside network and
service management solutions. The enterprise solutions include
low-end Layer 2 to high-end Layer 3-7 switches; Nortel Networks
Passport 8600, Passport 1424T switch; and Passport 7480
multiservice switch; Nortel Networks Alteon Web switches and
Alteon Switched Firewall; Nortel Networks Symposium Call Center;
and Nortel Networks Meridian 1 voice systems.
Reliance Infocomm Limited is part of the Reliance Group. The
Reliance Group founded by Shri Dhirubhai H. Ambani (1932-2002)
is India's largest business house with total revenues of Rs
65,000 crores (US$ 13.3 billion), cash profit of over Rs 7,500
crores (US$ 1.5 billion), net profit of over Rs 3,600 crores
(US$ 740 million) and exports of Rs 11,400 crores (US$ 2.3
billion). The Group has total assets of Rs 69,000 crores (US$
14.1 billion). The group's activities span petrochemicals,
synthetic fibres, fibre intermediates, textiles, oil & gas,
financial services, refining & marketing, power, insurance,
telecom and infocom initiatives. Reliance emerged as India's
Most Admired Business House, for the second successive year in a
Taylor Nelson Sofres - Mode (TNS-Mode) survey for 2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com
Nortel Networks Corp.'s 7.40% bonds due 2006 (NT06CAR2) are
trading at about 66 cents-on-the-dollar, DebtTraders says. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for
real-time bond pricing.
OGLEBAY NORTON: Completes Acquisition of Erie Sand & Gravel Co.
---------------------------------------------------------------
Oglebay Norton Company (Nasdaq: OGLE) completed the previously
announced acquisition of Erie Sand & Gravel Co., located in
Erie, PA. Terms of the deal were not disclosed.
Erie Sand & Gravel Company operates a dock, a Great Lakes Flag
vessel, a readymix concrete facility and a trucking company that
distributes construction sand and aggregates in the northwest
Pennsylvania/western New York region. Erie Sand & Gravel Company
will be accounted for as part of Oglebay Norton's Great Lakes
Minerals segment.
Michael D. Lundin, Oglebay Norton Company president and chief
executive officer said, "We are excited to add Erie Sand &
Gravel to our Great Lakes Minerals segment's portfolio of docks
and distribution centers. We now have a foothold in northwestern
Pennsylvania from which we can expand our Great Lakes strategy
and strengthen our leadership position on the Lakes."
Sidney E. (Sandy) Smith, III, Oglebay Norton Company vice
president and general manager of Erie Sand & Gravel Company,
added, "We are looking forward to contributing to the continued
success of Oglebay Norton Company. As part of the Oglebay Norton
family, we can now make available an expanded range of products
and service customers more efficiently."
Oglebay Norton Company, a Cleveland, Ohio-based company,
provides essential minerals and aggregates to a broad range of
markets, from building materials and home improvement to the
environmental, energy and metallurgical industries. Building on
a 149-year heritage, our vision is to become the best company in
the industrial minerals industry. The company's Web site is
located at http://www.oglebaynorton.com
* * *
As previously reported, Standard & Poor's lowered its corporate
credit and bank loan ratings on Oglebay Norton Co., to single-
'B' from single-'B'-plus due to difficult end-market conditions,
the company's weak financial performance, and its limited free
cash-flow generation, which will continue to result in high debt
levels.
The outlook is negative.
The ratings reflect Oglebay's very high debt leverage, cyclical
end markets, high capital spending requirements relative to
operating cash flow, and refinancing risk. The ratings also
reflect the company's diversified business segments and a focus
on productivity and operational improvements.
ON SEMICONDUCTOR: Will Publish Fourth Quarter Results on Feb. 6
---------------------------------------------------------------
ON Semiconductor Corporation (Nasdaq:ONNN) plans to announce its
earnings for the fourth quarter ended Dec. 31, 2002 after the
market closes on Thursday, Feb. 6.
The company will host a conference call at 5 p.m. Eastern time
(EST) following the release of its earnings announcement.
Investors and interested parties can access the conference call
in the following manner:
-- Through a Web cast of the earnings call via the
investor-relations section of the company's Web site at
http://www.onsemi.com The re-broadcast of the call will be
available at this site approximately one hour following the live
broadcast and will continue through February 28.
-- Through a telephone call by dialing 712/257-2272. To
access the conference, callers must use the pass code "ON
Semiconductor" when prompted by the call-in service. The company
will provide a dial-in replay approximately one hour following
the live broadcast that will continue through February 13. The
dial-in replay number is 402/220-9772.
ON Semiconductor (Nasdaq:ONNN), which has a total shareholders'
equity deficit of about $620 million (at September 27, 2002),
offers an extensive portfolio of power and data management
semiconductors and standard semiconductor components that
address the design needs of today's sophisticated electronic
products, appliances and automobiles. For more information visit
ON Semiconductor's Web site at http://www.onsemi.com
ORIUS CORP: Ill. Court Confirms Prepackaged Reorganization Plan
---------------------------------------------------------------
Orius Corp., a leading nationwide provider of technical
expertise and comprehensive network and infrastructure services
to the telecommunications and broadband industries, utilities,
businesses and government agencies, gained full approval from
the bankruptcy court on its prepackaged plan of reorganization,
allowing the company to exit Chapter 11 this month. The plan's
approval comes 59 days after Orius filed its petition on
Nov. 15, 2002. Orius' plan of reorganization, which includes a
new bank credit facility, was confirmed today by the United
States Bankruptcy Court for the Northern District of Illinois.
"With strong support from our bank lenders and bondholders, we
gained approval of our financial restructuring in rapid time and
can focus now on building a profitable future," said Ron Blake,
Orius Chairman, President and CEO. "The combination of our
technical expertise, commitment to quality and customer service,
a significantly reduced debt load, and far more efficient
operations position Orius well for future growth.
"Throughout our financial restructuring, we have enjoyed
considerable support from our customers, vendors and employees,"
Blake continued. "We look forward to building our relationships
further with these important constituencies to increase sales,
as well as to maintain quality service to our customers and
financial discipline within our organization. I especially want
to acknowledge the men and women of Orius, whose dedication and
hard work have been a vital part of our success in enduring the
challenges faced by the telecommunications industry throughout
this difficult economic environment."
As previously announced, Orius filed its prepackaged plan of
reorganization on Nov. 15, 2002, with the overwhelming support
of its creditors. Under the plan of reorganization, Orius' bank
lenders -- led by Deutsche Bank -- and holders of its Senior
Subordinated Notes receive 95% of new equity in Orius in
exchange for an 80% reduction in the company's debt.
Following the Chapter 11 filing, Orius' operations continued as
business as usual. Employee salaries and benefits were paid;
customers were fully served; and current vendors continued to be
paid in full for their goods and services under the established
credit terms.
Orius Corp. -- http://www.oriuscorp.com-- is a full-service
provider of technical expertise and comprehensive network and
infrastructure solutions to the telecommunications and broadband
industries, utilities, businesses and government agencies.
Orius' nearly 2,500 employees design, engineer, deploy and
maintain networks nationwide and internationally that support
services ranging from internal and external voice, data and
video networks to municipal water, electricity and gas. Orius'
customers include Regional Bell Operating Companies, broadband
cable companies, equipment vendors, defense contractors,
government agencies, leading businesses, major municipalities
and non-profit organizations.
OWENS CORNING: Court Approves Amended CSFB Standstill Agreement
---------------------------------------------------------------
Owens Corning and its debtor-affiliates sought and obtained
Court approval of Amendment No. 1 to the Standstill Agreement
with the Bank Lenders and Credit Suisse First Boston, as Agent.
The amendments to the Standstill and Waiver Agreement are:
A. Revision of the Standstill Period: The definition of
"Standstill Period" in the pervious Agreement is deleted in
its entirety and replaced with this definition:
"The term 'Standstill Period' means the period from the
date on which the conditions set forth in Section 5 have
been satisfied until the earliest to occur of (i) a
termination due to an Event of Default, or (ii) the date
which is forty-five (45) days after written notice of
intention to terminate the Agreement have been given to
the Debtors or Agent";
B. Agent's Approval of Proposed Amendments to the DIP Loan
Agreement: Pursuant to Section 6(1) of the Agreement, the
Agent approves the amendments proposed by the Debtors:
-- of any provision of the Article 7 of the DIP Loan
Agreement, or
-- to the definition of the terms "Debt", "Lien",
"Permitted Lien" or "Distribution" under the DIP Loan
Agreement;
C. Events of Default: These will not constitute an event of
default under Section 7 of the Agreement:
-- the adversary proceeding commenced on October 3, 2002
captioned "Owens Corning, et.al. v Credit Suisse Boston
et.al., or any other amendment, or
-- the appointment of a limited purpose trustee or examiner
relating to the investigation or prosecution of
avoidance or fraudulent conveyance actions in the Cases;
D. Agreement Continues: Except as expressly modified by the
Amendment, the Agreement will remain in full force and
Effect;
E. Limited Consent to Representation: In order to avoid
unnecessary expense for the Debtors' estates, Lenders agree
that the Debtors' and Non-Debtors' interests regarding this
Amendment may be represented by Debtors' counsel, and
Lenders waive any rights to object to the representation
solely for the purpose;
F. Authority: Each individual executing the Amendment on
behalf of any Lender, Debtor or Non-Debtor, warrants and
represents that he or she is fully authorized by the
Lender, Debtor, or Non-Debtor, to execute the Amendment.
Additionally, the Agent warrants and represents that the
Agent, the Majority Banks, and, if to the extent
applicable, the Belgian Lending Bank, the Swing Line Bank
and any Issuing Bank have executed the Amendment;
G. Successor and Assigns: The Amendment will inure to the
benefit of, and be binding on, the parties and their
successors, assigns and any other party participating in
any Lender's interest pursuant to Section 13.09 of the
Credit Agreement;
H. Execution in Counterparts: The Amendment may be
executed in any number of counterparts and by different
parties in separate counterparts, each of which when so
executed will be deemed to be an original and all of which
taken together will constitute but one and the same
agreement. Delivery of an executed counterpart of a
signature page to the Amendment by telecopier will be
effective as delivery of a manually executed counterpart of
the Amendment;
I. Governing Law: The Amendment will be governed by, and
construed in accordance with, the laws of the State of New
York; and
J. Entire Agreement: The Agreement, as amended by the
Amendment, is the entire Agreement among the Debtors, the
Non-Debtors, the Lenders and Credit Suisse of First Boston,
as Agent, with respect to the subject matter and supercedes
all prior agreements, representations and understandings,
in any, relating to the subject matter discussed. (Owens
Corning Bankruptcy News, Issue No. 43; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Gains Approval of Trauner Fire Settlement Agreement
----------------------------------------------------------------
Pacific Gas and Electric Company sought and obtained Court
approval of a settlement agreement of its claims against
Travelers Insurance Company, American Motorist Insurance
Company, TIG Insurance Company, and its independent tree-
trimming contractor -- Utility Tree Service Inc. The dispute
arose over a fire that occurred on August 7, 1994 in the area of
Rough and Ready, California, which destroyed more than 700
acres, including several houses, barns and buildings.
Amy L. Bomse, Esq., at Howard, Rice, Nemerovski, Canady, Falk &
Rabkin, PC, contends that the Settlement Agreement represents a
reasonable compromise in the light of the uncertainty to the
outcome of legal disputes and PG&E's exposure of certain
counterclaims by the Insurers and UTS. Pursuant to the
Settlement Agreement, the Insurers and UTS agree to pay PG&E
$1,500,000 in full and complete satisfaction of its claims.
Upon payment, the parties completely release and discharge all
claims arising from, or in any way connected with, the Trauner
Fire.
PG&E originally asserted $3,173,166 in claims against the
Insurers and UTS. Insurers and UTS, in turn, filed $6,254,318
in restitution claims against PG&E, plus interest at the rate of
10% per annum.
Ms. Bomse lays-out the events leading to the litigation and the
terms of the Settlement Agreement:
(1) Several fire victims have asserted claims against PG&E as
a result of the fire. At that time, UTS was PG&E's
independent tree trimming contractor in the area. The
parties' Service Contract required UTS to defend and
indemnify PG&E for damages resulting from the work of the
tree trimming contractor, other than the damages resulting
from PG&E's sole negligence or willful misconduct. Hence,
PG&E tendered its defense of the actions filed against it
to UTS. However, UTS refused PG&E's tender. UTS asserted
that the fire was a result of PG&E's negligence and
willful misconduct;
(2) On November 7, 1994, PG&E filed an action against UTS as
well as the three Insurers with the Nevada County Superior
Court seeking for indemnity, defense and insurance
coverage for its damages as a result of the Trauner Fire;
(3) On May 18, 1995, the parties agreed to submit the issue
to binding arbitration. A three-judge arbitration panel
later issued an award in PG&E's favor on April 2, 1996.
The arbitrators determined that the Trauner Fire was not
caused by PG&E's negligence or willful misconduct, and
therefore, it was entitled to full coverage, defense and
indemnity for the claims arising out of the Fire. The
arbitrators, however, did not determine the amount of the
Award;
(4) On May 20, 1996, PG&E filed a Petition to Confirm
Arbitration Award with the Nevada County Superior Court
but the Petition to Confirm was taken off the calendar
without prejudice while the parties still engage in
extensive litigation with the fire victims;
(5) Meanwhile, the Nevada County District Attorney filed
misdemeanor charges against PG&E before the Nevada County
Municipal Court for violation of certain Public Resource
Code Sections. The District Attorney alleged that, based
on the California Department of Forestry's investigation,
the Trauner Fire was caused by contact between a tree and
an overhead PG&E distribution line. On July 30, 1997, the
Nevada County Municipal Court found PG&E liable and
ordered it to pay full direct restitution to all fire
victims;
(6) On November 6, 1997, the Insurers filed a claim in the
criminal action against PG&E for restitution on account of
damages they allegedly sustained as a result of the
Trauner Fire;
(7) PG&E re-filed its Petition to Confirm on May 17, 2000 and,
subsequently, the Nevada Superior Court confirmed the
Award and scheduled an evidentiary hearing to enable PG&E
to establish the actual damages to which it was entitled.
That hearing was continued pending settlement negotiations
between the parties;
(8) On August 30, 2000, the Insurers and UTS filed a complaint
for declaratory relief against PG&E, contending that the
California Insurance Code Section 533.5 precluded it from
being awarded at least some of its damages pursuant to the
Arbitration Award due to the Restitution Order. But a
month later, the Insurers and UTS offered to settle all
the claims with PG&E. PG&E responded by requesting that
the parties proceed to mediation; and
(9) The parties conducted a Mediation Hearing on March 29,
2001, and August 30, 2001, before Joseph Ramsey.
In its Mediation Brief, PG&E requested payment for these
damages:
Claims paid to the fire victims $1,711,210
before the arbitration
Expenses paid to independent 26,454
investigators, appraisers, etc.
Adjusting expenses 63,672
Cost to repair damages to PG&E facilities 83,504
Payments for fire clean-up costs, 117,070
tree removal, etc.
Attorneys' fees and costs 113,533
----------
Total $2,115,444
PG&E also proposed to add a 10% interest per annum on the
amounts from and after April 2, 1996, the date of the award,
through March 29, 2001, the date of the first mediation.
Accordingly, the total damages PG&E requested is:
Principal $2,115,444
Interest 1,057,722
------------
Total $3,173,166
The Insurers and UTS asserted these defenses regarding their
liability to PG&E:
-- PG&E's claim for reimbursement of the amounts paid to the
fire victims should be dismissed because it violates:
(i) the California Insurance Code Section 533.5, which
provides that the insurance policies may not cover
payment of any restitution ordered in a criminal
action; and
(ii) the California Civil Code Section 1668, which
provides that contracts with the object of avoiding
responsibility for violations of law are against
public policy.
In the alternative, the Insurers and UTS argued that even
if the entire reimbursement claim was not eliminated, the
claim should be reduced because the claims that PG&E
settled that are included in its Petition to Confirm
include the liability for punitive damages, which are not
subject to reimbursement;
-- PG&E's claim for damage to its property constitutes a
contract claim, which is barred by the applicable statute
of limitations; and
-- PG&E was not entitled to interest on three grounds:
(i) pre-judgment interest statutes do not apply to
contractual arbitration;
(ii) damages were not certain from the date on which the
right to receive them vested because the
arbitrators did not award a certain sum; and
(iii) PG&E failed to diligently prosecute its Petition to
Confirm and should not benefit from its lack of
diligence.
The Insurers and UTS did not dispute PG&E's right to
reimbursement of its costs for fire clean-up and tree removal,
attorneys' fees and independent investigating, and adjusting
expenses. The parties entered into a preliminary mediation
settlement on August 30, 2001. They later formalized the
agreement on April 22, 2002. (Pacific Gas Bankruptcy News, Issue
No. 51; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFICARE HEALTH: Will Publish Fourth Quarter Results on Feb 12
----------------------------------------------------------------
PacifiCare Health Systems Inc., (Nasdaq:PHSY) will host a
conference call and webcast on Thursday, Feb. 13, 2003, at 1
p.m. Eastern time to discuss the company's earnings for the
fourth quarter of 2002, which will be released after the close
of the market on Wednesday, Feb. 12.
Investors, analysts and other interested parties will be able to
access the live conference by calling 888/456-0364 (630/395-0252
for international calls), password "PacifiCare." A replay of the
call will be available through March 6, 2003, at 800/294-4406.
Additionally, a live webcast of the call will be available on
PacifiCare's Web site at http://www.pacificare.com Click on
Investor Relations and then Conference Calls, to access the
link.
Dedicated to making people's lives better, PacifiCare Health
Systems is one of the nation's largest consumer health
organizations. Primary operations include health insurance
products for employer groups and Medicare beneficiaries in eight
western states and Guam.
Other specialty products and operations include pharmacy benefit
management, behavioral health services, life and health
insurance, and dental and vision services. More information on
PacifiCare Health Systems can be obtained at
http://www.pacificare.com
* * *
As reported in Troubled Company Reporter's December 4, 2002
edition, Standard & Poor's assigned its 'B' rating to PacifiCare
Health Systems Inc.'s $125 million 3% convertible subordinated
debentures, which are due in 2032 and are being issued under SEC
Rule 144A with registration rights.
Standard & Poor's also said that it revised its outlook on
PacifiCare to stable from negative.
"The rating is based on PacifiCare's good business position as a
regional managed care organization and improved earnings
performance," said Standard & Poor's credit analyst Phillip C.
Tsang. "Offsetting these strengths are PacifiCare's marginal
capitalization and high percentage of goodwill in its capital."
PacifiCare expects to use the net proceeds from the issue to
permanently repay indebtedness under its senior credit facility,
with the remainder for general corporate purposes.
POLYMER RESEARCH: Fails to Comply with Nasdaq Listing Guidelines
----------------------------------------------------------------
Polymer Research Corp. of America (NASDAQ - PROA) received a
letter from the NASDAQ staff that it was not in compliance with
NASDAQ Market Place Rules which require the Company to have
stockholders equity of $2,500,000, a market capitalization of at
least $35,000,000 or net income of at least $500,000 in the last
fiscal year or two of the last three years.
The Company has requested a hearing to appeal the de-listing
notification, which has been set for February 13, 2003. If it is
not successful at such hearing, its shares will be de-listed
from NASDAQ.
Polymer Research Corp. of America is engaged primarily in
research in the area of chemical grafting on a contract basis
for a wide range of manufacturing and other companies and in the
manufacture and sale of products arising from research
activities and of textile printing inks.
* * *
Capital Resources and Liquidity
Cash and cash equivalents have decreased collectively by
$315,955 at September 30, 2002 since December 31, 2001. The
decrease resulted principally from net losses, offset by the
sale of Units from which the Company received net proceeds
of $225,000.
The ratio of current assets to current liabilities increased to
1.8 to 1.0 at September 30, 2002 as compared to 1.71 to 1.0 at
December 31, 2001 as a result of the repayment of current debt
and the replacement of such with long-term debt combined with
continuing losses which use cash. On May 24, 2002, the Company
entered into a mortgage arrangement with a bank whereby the bank
agreed to extend a mortgage loan and the Company received
proceeds of $1,400,000 with the Company headquarters building as
collateral. The Company utilized the proceeds to pay off
existing term loan debt of $301,122 and a line of credit of
$150,000. The fifteen-year mortgage loan will be repayable in
monthly installments of $15,044 which includes interest at an
initial rate of 10% per annum that is adjustable after 2 years.
The Company experienced a dramatic decline in revenues during
the third quarter. Management believes that, unless revenues
increase significantly, the Company's cash position at September
30, 2002 may be insufficient to meet its financial needs in the
short term. At current operating levels, the Company may be out
of cash within three to four months from the date of this filing
unless revenues increase or expenses are reduced. During October
2002, the Company's chief executive officer loaned the Company
$200,000. In addition, the Company expects to receive net
proceeds of approximately $200,000 from the exercise of
outstanding warrants within 90 days and management is taking
steps to reduce expenses. The Company also expects to receive a
tax refund of approximately $270,000 in 2003. Over both the long
and short term, liquidity will be a direct result of sales and
related net earnings.
No significant capital expenditures are anticipated or, in the
opinion of management, needed.
SATX INC: Successfully Emerges from Chapter 11 Proceeding
---------------------------------------------------------
On March 22, 2002, SATX, Inc., filed a voluntary petition for
relief under chapter 11, title 11, United States Code, in the
U.S. Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division, Case No. 02-20829-C-11.
A First Amended Plan of Reorganization was filed on
September 30, 2002. On November 25, 2002 the Debtor's First
Amended Plan of Reorganization was confirmed by the Bankruptcy
Court. The effective date of the Bankruptcy Plan was December 6,
2002.
As part of the Company's First Amended Plan of Reorganization
the Company changed its name to Peninsula Holdings Group, Ltd.
("Peninsula"), Garry McHenry resigned as President and accepted
the position of Vice President, and Mrs. Lilly Beter accepted
the position as President of the Company.
The trading symbol for Peninsula's Class A common stock is
PHGTA. The symbol is effective January 13, 2003. Trading symbols
for the other three classes will be acquired soon.
The following is a summary of Peninsula's First Amended Plan of
Reorganization.
-- Each Allowed Administration Expense Claim shall be paid
in full in cash.
-- Each Allowed Class 1 Priority Non-Tax Claim shall be
paid in full with shares of new Class B stock on a one
share per dollar owed.
-- Each Priority Tax Claimant shall be paid 100% of its
Allowed Priority Tax Claim in cash and in full.
-- Each Class 3 Allowed Unsecured Claim shall be paid in
full with shares of new Class B stock on a one share per
dollar owed or upon such other terms as may be agreed
upon by and between any Unsecured Claimant and the
Debtor.
-- Each Class 4 Allowed Litigation Claim shall be paid in
full with shares of new Class B stock on a one share per
dollar owed or upon such other terms as may be agreed
upon by and between any Unsecured Claimant and the
Debtor.
-- Peninsula Holdings Group, Ltd., proposes to purchase
100% of all the outstanding and issued capital stock of
Intelligent Medicine, Inc. IMED, a Delaware
Corporation, is a Houston, Texas based company
originally founded in 1993. IMED operates within the
healthcare technology industry specifically referred to
as "telemedicine." IMED is dedicated to becoming the
world's leading provider of Medical Informatics
Services. Since their original principals founded the
Company in 1993, they have firmly believed that
Telemedicine is dependent upon systems integration of
hardware, software, devices, and communications
networking.
IMED's solution is a Telemedicine Service offering combining
hardware, software, communications, and management. They deliver
turn-key systems and networks combined with their clients'
ability to offer clinical diagnosis and treatment through their
existing professional service networks. Their systems are an
efficiently integrated healthcare suite of robust, proprietary,
open architecture, networked systems combined with a complete
line of video teleconferencing, still image, voice, data, and
digitized medical peripheral devices. This enables their clients
to leverage their service facilities to deliver live and/or
virtual caregiver to patient, or caregiver-to-caregiver, medical
consultations and/or treatment at the point-of-need or in a
store and forward environment.
IMED is managed by an experienced group of professionals. Their
senior management team brings many years of complementary
medical practice, software, technology, and project experience
to bear in designing and implementing telemedicine client
solutions. They consistently bring together software engineering
staff with internal and external medical professionals and high-
quality systems integrators to continue to develop and produce
systems and further product integration enhancements for their
clients' applications.
IMED services encompass designing, implementing, and managing
telemedicine and healthcare technology networked solutions. They
assess their clients' particular tele-healthcare system needs,
design and install the required telemedical information systems
and network solution, provide systems training, and manage the
clients' system-wide solution. Their implementation team,
complete with medical specialists, telemedically experienced
clinical personnel information systems analysts, software and
hardware engineers, and telecommunications experts, work
together with the client to completely provide a turn-key
telemedicine service to the client's satisfaction.
IMED has designed and produced the first mobile telemedicine
clinic. This mobile telemedicine unit comes in an array of sizes
and capabilities suited to their clients' particular mobile
needs.
-- Peninsula formed a wholly owned Delaware subsidiary,
Iceberg Oil and Gas, Inc. The Company will purchase
certain oil and natural gas platforms with existing
proved reserves. The Company will target acquisitions
from owners that are currently in a distressed
situation. The Company where possible will acquire
developed properties, aggressively manage and exploit
all properties, and use technological expertise to
develop reserves. Lilly Beter is the President and Garry
McHenry is the Vice President.
-- Peninsula formed a wholly owned Delaware subsidiary,
High Yield Financial, Inc. The Company will be in the
business of purchasing high yield, low grade defunct
credit risks of mortgages, more commonly known as "non
performing bond pools." The Company will buy the bond
pools at an average approximate price of between 33 to
65 cents on the dollar, but at times may pay from prices
lower than 33 cents and/or higher than 65 cents,
depending on the pool that is purchased. The Company
intends to buy the pools, repackage the performing bonds
and sell them. The Company will take the non-performing
bonds and sell the assets that were used to securitize
each bond. Lilly Beter is the President and Garry
McHenry is the Vice President.
-- The Bankruptcy Plan authorized Peninsula to have four
classes of stock. They are:
1. Eight Hundred Fifty Million (850,000,000) Preferred
Shares. No voting rights.
2. Eight Hundred Fifty Million (850,000,000) Class A
common shares for current and future shareholders.
These shares are accorded all voting rights
generally available for corporate governance.
3. Eight Hundred Fifty Million (850,000,000) Class B
common shares for current creditors. These shares
are accorded all voting rights generally available
for corporate governance.
4. Eight Hundred Fifty Million (850,000,000) Class C
common shares. These shares are accorded all voting
rights generally available for corporate
governance. They will be authorized and not be
issued at this time pursuant to any provision of
the First Amended Plan of Reorganization.
All shares of stock received by creditors will be tradable.
Stockholders do not have preemptive rights or other rights to
subscribe for additional shares, and the Common Stock of
reorganized Peninsula are not subject to conversion or
redemption. Each share of Common Stock of reorganized Peninsula
is entitled to one vote. Holders of Common Stock of reorganized
Peninsula do not have cumulative voting rights in the election
of directors. The Common Stock of reorganized Peninsula when
issued as described herein will be duly issued, fully paid and
nonassessable.
SIMSBURY: Fitch Cuts 4 Note Class Ratings to Low-B & Junk Levels
----------------------------------------------------------------
Fitch Ratings affirms three classes of notes and downgrades four
classes of notes issued by Simsbury CLO, Ltd. The following
rating actions are effective immediately:
--$395,877,654 class I senior notes affirmed at 'AAA';
--$23,000,000 class II senior notes affirmed at 'AA+';
--$41,000,000 class III mezzanine notes affirmed at 'BBB+';
--$56,000,000 class IV mezzanine notes downgraded to 'BB'
from 'BBB';
--$11,040,844 class V mezzanine notes downgraded to 'B+'
from 'BBB-';
--$17,750,000 class VI mezzanine notes downgraded to 'CC'
from 'BB+';
--$42,650,000 subordinated notes downgraded to 'C'
from 'B-'.
Simsbury is a collateralized loan obligation managed by David L.
Babson & Company, established Sept. 15, 1999. Due to the
increased levels of defaults and deteriorating credit quality of
a portion of portfolio assets, Fitch has reviewed in detail the
portfolio performance of Simsbury. In conjunction with this
review, Fitch discussed the current state of the portfolio with
the asset manager and their portfolio management strategy going
forward. At this time, the portfolio is failing its weighted
average coupon test and weighted average rating test which
limits Babson's trading flexibility as far as the reinvestment
of proceeds.
Since Aug. 15, 2002, Simsbury has continued to fail its class
III/IV overcollateralization test and, as of June 2, 2002, began
to fail its class V/VI OC test, as per the trustee reports. On
the Sept. 24, 2002 payment date, a portion of the class I senior
notes were redeemed due to the failure of the class III/IV OC
test and a portion of the class V mezzanine notes were redeemed
due to the failure of the class V/VI OC test. This principal
paydown was sufficient to cure the OC test failures. At this
time, Fitch does not expect that Simsbury will be able to cure
the class III/IV OC test on the next payment date with the use
of interest proceeds. If the test is not cured with interest
proceeds, a majority of the cash in the principal account, $74
million as of the Dec. 13, 2002 trustee report, will be used to
redeem class I senior notes. Although this action is beneficial
to the senior noteholders, the loss of excess spread over the
remaining life of the deal, as a result of the deleveraging of
the structure, negatively impacts the mezzanine and subordinated
noteholders.
As of Dec. 13, 2002, defaulted assets represented 9% of the
total collateral, and assets rated 'CCC+' or below (excluding
defaulted assets) represented 9% of total collateral. In
addition, Fitch conducted cash flow modeling utilizing various
default timing and interest rate scenarios to measure the
breakeven default rates the structure can withstand going
forward relative to the minimum cumulative default rates for the
rated liabilities. As a result of this analysis, Fitch has
determined that the original ratings assigned to the class IV,
V, VI and subordinated notes no longer reflect the current risk
to noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
SOFAME TECHNOLOGIES: Will Commence Workout Under BIA in Canada
--------------------------------------------------------------
Sofame Technologies Inc., announces that, in order to
restructure its financial situation and operations, it will
file, in accordance with the "Bankruptcy and Insolvency Act", a
notice of intention to make a proposal to its creditors.
The Corporation will have, subject to any extension which may be
granted by the court, thirty days following the filing of the
notice of intention to lodge a proposal. During such period, the
Corporation will cease its operations, but shall maintain its
administrative services and will concentrate on obtaining
financing in order to ensure the long-term continuation of its
business.
Sofame Technologies Inc., is a Montreal-based corporation doing
business in the direct contact water heating industry.
Sofame Technologies Inc., is listed on the TSX Venture Exchange
under the SDW symbol and the financial statements are filed on
SEDAR's Web site at http://www.sedar.com
TELESYSTEM INT'L: Refinancing Risk Prompts S&P to Junk Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on telecommunications company Telesystem
International Wireless Inc., to 'CCC+' from 'B-'. The outlook is
negative. At the same time, the rating on TIW's US$220 million
14% senior secured notes was lowered to 'CCC+' from 'B-'.
The ratings actions on the Montreal, Quebec-based company
reflect the refinancing risk of the US$220 million notes, which
mature in December 2003, and the structural subordination of the
debt at the corporate level.
TIW has taken recent actions to reduce debt at the corporate
level, and the performance at its Mobifon subsidiary has been
solid. Still, the most significant challenge facing the company
is the refinancing of its US$220 million (US$230 million pro
forma) notes.
"Even if TIW is successful in selling its Brazilian and Indian
assets, the expected proceeds, coupled with estimated
distributions from Mobifon, would not be sufficient to repay the
notes in December," said Standard & Poor's credit analyst Joe
Morin.
The prospects for refinancing the notes should improve following
repayment of TIW's US$47.5 million corporate credit facility.
Despite the downgrade and negative outlook, Standard & Poor's
believes that the noteholders will benefit from sufficient
coverage based on the value of TIW's assets. The 5.68% equity
sale by Clearwave N.V. in Mobifon S.A. values the operator at
about US$748 million. TIW's proportionate value for just the
Mobifon asset is estimated at about US$370 million-US$380
million.
TIW's corporate credit facility was reduced to US$47.5 million
in December 2002, with an additional repayment of US$5 million
due in March and final maturity in June 2003. With the proceeds
of the Mobifon 5.68% equity sale, which is expected to close in
the first quarter, and TIW's portion of the share buyback
announced by Mobifon in October 2002, TIW should have sufficient
funds to prepay the bank facility and cover corporate overhead
in the first quarter of 2003. Thereafter, the company is
dependent on additional distributions from Mobifon, in the form
of dividends or additional share repurchases, to meet corporate
overhead requirements as well as a US$15 million interest
payment due in June on its US$220 million 14% notes. Assuming a
successful refinancing of the US$220 million notes, TIW will
continue to be reliant on distributions from Mobifon in order to
service debt at the corporate level.
The principal value of the US$220 million notes will increase to
US$230 million if TIW is not successful in repaying at least
US$72.5 million of the notes in June 2003. Standard & Poor's
would expect the company to make an announcement with respect to
any refinancing before midyear, with the ratings potentially
being lowered further if no such announcement is forthcoming.
TYCO INT'L: Fitch Rates $4.5-Billion Conv. Debentures at BB
-----------------------------------------------------------
Fitch rates the $4.5 billion of new Series A and Series B
convertible senior debentures at 'BB' and affirmed, also at
'BB', the senior unsecured debt of Tyco International Ltd., and
the unconditionally guaranteed debt of its wholly owned direct
subsidiary Tyco International Group S. A. The rating on the
company's commercial paper has been affirmed at 'B'. Fitch has
removed the rating from Rating Watch Negative. The Rating
Outlook is Negative.
The move to a Negative Rating Outlook reflects positive actions
at Tyco that have removed the immediate risk of further
deterioration in the company's liquidity and other concerns such
as corporate governance that were expressed earlier by Fitch.
These actions include the installment of a new executive
management team since July, 2002, the completion of Tyco's
internal investigation that found no significant fraud affecting
the company's financial statements, and the completion of new
financing including $4.5 billion of convertible debt and a $1.5
billion bank facility anticipated near the end of January or
early February. In addition, Tyco's liquidity would benefit from
the cash proceeds of any asset sales although such sales are not
anticipated to involve the company's core operations or to
exceed 10% of total revenue.
Despite significant progress addressing short-term maturities,
$3.6 billion of convertible debt that may be put to Tyco next
November, together with cash requirements related to reserves
for purchase accounting and restructuring, could potentially
leave the company with nominally sufficient cash balances by
calendar year-end. In addition, concerns have yet to be fully
addressed by the new management team about Tyco's overall
capital structure, the degree to which Tyco allocates free cash
flow to debt repayment or other uses, its operating performance
and ability to meet internal cash generation forecasts, its long
term strategic direction, and the reestablishment of full access
to capital markets.
Weak market conditions, particularly in the Electronics segment,
and the turmoil surrounding Tyco have contributed to lower
margins and free cash flow. Combined with a heavy debt burden,
this declining operating performance makes debt reduction from
operating cash flow a requirement for any improvement in the
rating. EBITDA/interest incurred fell to 5.5x in 2002, compared
to 9.0x in 2001, and debt/EBITDA has deteriorated as well.
Tyco's higher leverage restricts its flexibility with respect to
acquisitions, capital expenditures and share repurchases and
reinforces the importance of effective and reasonably prompt
action by the new management team to rebuild the company's
financial performance. As further steps are taken in this
direction, Fitch will continue to review the appropriateness of
its ratings.
UNITED AIRLINES: Consents to Limited Sales of Stock by ESOP
-----------------------------------------------------------
UAL Corp. (NYSE: UAL), the parent company of United Airlines, is
permitting State Street Bank & Trust, the independent trustee of
the UAL ESOP, to sell up to 12,857,600 additional shares of UAL
stock held by the ESOP. The company delivered a letter to State
Street Bank & Trust on Friday pursuant to an order from the U.S.
Bankruptcy Court overseeing the company's bankruptcy case
requiring that the company inform the ESOP trustee of the number
of shares that it could dispose of without jeopardizing the
company's use of its net operating losses. Preserving the NOL is
expected to generate substantial tax benefits following United's
emergence from Chapter 11 protection.
If the ESOP trustee had sold, as of December 31, 2002, all
12,857,600 shares permitted by the company's letter, the ESOP,
together with the other company-sponsored benefit plans holding
shares of UAL equity, would have held more than 20% of UAL
common stock. Accordingly, "Sunset" (as described in the
company's most recent Form 10-Q) would not have occurred had
such sales been made as of such date.
Other information about United Airlines can be found at the
company's Web site at http://www.united.com
United Airlines' 9.00% bonds due 2003 (UAL03USR1), are trading
at about 8 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL03USR1for
real-time bond pricing.
UNITED AIRLINES: Intends to Assume Glen Tilton Employment Pact
--------------------------------------------------------------
Glenn F. Tilton was elected Chairman of the Board, President and
Chief Executive Officer of UAL Corporation in September 2002, by
a unanimous vote of the board of directors. Prior to this
election, Mr. Tilton served as Chairman of the Board and Chief
Executive Officer of Texaco Inc., beginning in February 2001.
Mr. Tilton also served as Vice Chairman of the Board of
Directors of ChevronTexaco after the merger of the two companies
in October 2001. Mr. Tilton assumed the additional position of
interim Chairman of Dynergy Inc. in May 2002.
Since joining the Debtors, Mr. Tilton has played a pivotal role
in aligning the interests of the Debtors and their unionized and
non-unionized employees and has fostered a critical degree of
cooperation with this key constituency. Mr. Tilton has also
played a significant role in the Debtors' efforts to implement
cost reduction strategies that are needed to return the Debtors'
operations to profitability.
Accordingly, United Airlines seeks Judge Wedoff's permission to
assume an employment agreement with Glenn Tilton.
The Employment Agreement has a term of five years and provides
that Mr. Tilton will be given with, among other things, annual
compensation at an initial Base Salary of $950,000 per year plus
bonus compensation, vacation, reimbursement of various expenses,
stock options, long-term disability and various other benefits
commensurate with his experience and position. Mr. Tilton has
voluntarily agreed to amend his Employment Agreement to reduce
his Base Pay by 11%. The reduction is effective on or shortly
following the Petition Date.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, explains that
the assumption of the Agreement would provide a significant
benefit to the Debtors and their estates. It does not subject
the Debtors to a substantial risk of postpetition liability
because United does not intend to terminate Mr. Tilton's
employment and the Company will comply with the Agreement's
terms so Mr. Tilton will not have reason to resign.
United will not incur any costs associated with the assumption
of the Employment Agreement related to curing defaults in
accordance with Section 365 of the Bankruptcy Code. Mr.
Sprayregen tells the Court that the Employment Agreement
contains a clause whereby United's failure to seek assumption of
the Employment Agreement within 30 days after the Petition Date
could allow Mr. Tilton to terminate the Agreement for Good
Cause.
Mr. Sprayregen emphasizes that Mr. Tilton is a highly valued
officer and employee of the Debtors and possesses expertise and
knowledge that is necessary for a successful reorganization. If
Mr. Tilton ceased to be employed by the Debtors, his departure
could be viewed as a signal that United's future is bleak, which
could significantly hinder the Debtors' efforts to reorganize.
The assumption of the Employment Agreement will provide the
security necessary to retain Mr. Tilton's employment with the
Debtors.
The salient terms of the Tilton Employment Agreement are:
1) Mr. Tilton is entitled to a $3,000,000 signing bonus upon
execution of the Agreement;
2) In addition to a Base Salary of $845,500 (assuming the
11% reduction), Mr. Tilton may be entitled to two additional
bonuses. The Board will determine if Mr. Tilton has earned
his Target Bonus, which is 100% of Base Salary. If the
Board determines that Mr. Tilton has displayed "Superior
Performance," it may award him an "Extraordinary Bonus,"
equal to an additional 100% of Base Salary. At the Board's
discretion, Mr. Tilton may earn $2,536,500 in a given year;
3) United will pay for all Mr. Tilton's relocation expenses;
4) UAL will fund three Trusts for Mr. Tilton. Each will hold
$1,500,000, for a total of $4,500,000. As long as Mr.
Tilton does not leave for "other than Good Reason," he is
entitled to the entire amount. This will be paid either on
the first business day in January 2004, or upon his
termination of employment;
5) Upon execution, Mr. Tilton will receive, through a
Restricted Stock Agreement, 100,000 shares of UAL common
stock;
6) Under the UAL 2000 Incentive Stock Plan, Mr. Tilton will
receive Options on 500,000 shares of UAL common stock;
7) Under the UAL 2002 Incentive Stock Plan, Mr. Tilton will
receive Options on 650,000 shares of UAL common stock; and
8) The Options expire on September 1, 2012. They are
exercisable in equal annual installments on the first four
anniversaries of the Employment Date. The exercise price is
calculated by the average high and low stock price of UAL
common between August 30, 2002 and September 3, 2002.
(United Airlines Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
UNITED STATIONERS: S&P Affirms BB Corporate Credit Rating
---------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating on United Stationers Supply Co., and revised its
outlook on the company to negative from positive.
Approximately $248 million of the Des Plains, Illinois-based
company's debt is affected by this action.
The outlook change is based on United Stationers' revised
earnings guidance for the fourth quarter of 2002 and Standard &
Poor's expectations that the company's performance for the full
year will be well below 2001.
"Weakness in the office products industry has resulted in a
shift to lower margin consumable product sales and has
negatively impacted the company's ability to take advantage of
vendor allowances. As a result, we expect United Stationers'
EBITDA for 2002 will be well below 2001 levels," said Standard &
Poor's credit analyst Patrick Jeffrey. "Although the company's
expected 2002 credit measures and liquidity are well in line
with the existing ratings, continued weakness in the office
products sector could further pressure these measures and
eventually result in a ratings downgrade."
The company's 2002 and 2001 performance has been negatively
impacted by the weakened U.S. economy. Sales have been affected
by lower demand for office products as companies have downsized
workforces and taken initiatives to reduce costs. In addition,
lost sales to its largest customer, U.S. Office Products, which
was acquired by Buhrmann N.V. in May 2001, resulted in lower
sales levels. Furthermore, the continued shift to lower margin
consumable products from more discretionary, higher margin
products, such as office furniture, negatively impacted earnings
in 2002.
Both reduced demand for office products and the shift to lower
margin products impacted the company's ability to utilize vendor
allowances in 2002. While United Stationers has taken
initiatives to help enhance vendor allowances in 2003, Standard
& Poor's believes the company will be challenged to
significantly improve operations if weakness persists in the
office products industry.
US AIRWAYS: Dispatchers Vote Yes on Cost-Savings Agreement
----------------------------------------------------------
Dispatchers at US Airways, represented by the Transport Workers
Union, ratified a cost-savings agreement in support of the
company's restructuring plan. The dispatchers join US Airways'
other two TWU groups -- simulator engineers and flight crew
training instructors -- in ratifying restructuring agreements.
"We are grateful to these hard-working employees who have made
hard sacrifices during extremely difficult times," said David
Siegel, US Airways president and chief executive officer.
All of US Airways' labor unions now have ratified agreements on
the company's restructuring.
US Airways Inc.'s 9.625% bonds due 2003 (U03USR1) are trading at
about 10 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=U03USR1for
real-time bond pricing.
WESTAR ENERGY: Exploring Strategic Options for Protection One
-------------------------------------------------------------
Westar Energy, Inc.'s (NYSE:WR) board of directors has
authorized management to explore strategic alternatives for
divesting its investment in Protection One, Inc., (NYSE: POI)
with a view to maximizing the value received by Westar Energy.
Westar Energy expects to work closely with Protection One, Inc.,
management to identify alternatives that are in the best
interest of all of Protection One, Inc.'s shareholders.
Westar Energy, Inc., (NYSE: WR) is a consumer services company
with interests in monitored services and energy. The company has
total assets of approximately $7 billion, including security
company holdings through ownership of Protection One, Inc.
(NYSE: POI) and Protection One Europe, which have approximately
1.2 million security customers. Westar Energy is the largest
electric utility in Kansas providing service to about 647,000
customers in the state. Westar Energy has nearly 6,000 megawatts
of electric generation capacity and operates and coordinates
more than 34,700 miles of electric distribution and transmission
lines. Through its ownership in ONEOK, Inc. (NYSE: OKE), a
Tulsa, Okla.- based natural gas company, Westar Energy has a
44.7 percent interest in one of the largest natural gas
distribution companies in the nation, serving more than 1.4
million customers. Westar Energy's March 31, 2002, balance sheet
shows a working capital deficit topping $1 billion.
For more information about Westar Energy, visit
http://www.wr.com
WHEELING-PITTSBURGH: New Term Loan & Other Agreements Under Plan
----------------------------------------------------------------
The New Term Loan Agreement, which is the linchpin of Wheeling-
Pittsburgh Steel's Plan, will be $250,000,000 under the
Emergency Steel Loan Guarantee Program, and will include
$7,500,000 in fees and expenses paid in connection with the
financing. The Term Loan will be accompanied by a New Revolving
Loan Agreement with advance rates and reserves similar to the
DIP Facility.
On August 17, 1999, President Clinton signed into law the
Emergency Steel Loan Guarantee Act of 1999 in response to
widespread economic hardship in the domestic steel industry
created by the flood of imports beginning in 1998. The purpose
of this program is to provide loan guarantees to qualified steel
companies.
On May 1, 2002, WPSC engaged RBC Dain Rauscher Inc., to arrange
a new senior secured credit agreement in an aggregate amount of
up to $250,000,000 to be guaranteed under the Steel Loan
Guarantee Program. On September 24, 2002, Royal Bank of Canada
submitted an application to the Emergency Steel Loan Guarantee
Board for a federal guarantee of a portion of the principal
amount of the term loans to be extended under the New Term Loan
Agreement. The Debtors report that "the ESLGB is actively
considering such application".
The New Term Loans
The New Term Loan Agreement will become effective on the
Effective Date of the Plan. Advances under the New Term Loan
Agreement, along with cash from operations and advances under
the New Revolving Loan Agreement, will be used to pay the
Debtors' outstanding obligations under the DIP Facility, to fund
the cash distributions to be made on the Effective Date under
the provisions of the Plan, and to finance the capital
expenditures called for under the New Business Plan.
The salient terms of the New Term Loan Agreement are:
Borrower: Wheeling-Pittsburgh Steel Corporation
Guarantors: Each of WPSC's direct and indirect
subsidiaries
Federal Guarantor: ESLGB
State Guarantor: State of West Virginia
Administrative Agent: Royal Bank of Canada
Tranche A Lender: Royal Bank of Canada
Tranche B Lenders: A syndicate of banks, financial
institutions and other entities, which
are "eligible lenders" as defined in the
guarantee agreement governing the Steel
Loan Guarantee Program Guarantee, and
their permitted assignees
Tranche C Lenders: Suppliers of WPSC (namely Techint
Technologies Inc. and Danieli
Corporation) and the State of Ohio
Term Facilities: Term facilities in an aggregate amount of
$250,000,000:
(a) Tranche A term facility in an
aggregate amount of $25,000,000.
About 85% of this loan will be
guaranteed by ESLGB. Payments and
prepayments of principal will be
allocated ratably between the
guaranteed and non-guaranteed
portions;
(b) Tranche B term facility in an
aggregate amount equal to
$209,210,526. About 95% of the
principal will be guaranteed by the
ESLGB, and 5% of the principal plus,
if agreeable to the State Guarantor,
up to 90 days of interest on the
Tranche B Term Loans will be
guaranteed by the State Guarantor.
Payments and prepayments of principal
will be allocated ratably between the
portions guaranteed by the ESLGB and
the State Guarantor.
The $209,210,526 has been calculated
by:
(i) taking the sum of 85% of
$125,000,000 (representing
$150,000,000 less the amount
of the Tranche A Facility),
90% of $50,000,000, and 95%
of $50,000,000, and
(ii) dividing the resulting amount
of $198,750,000 by 95%; and
(c) Tranche C term facility in an
aggregate amount equal to
$15,789,474. None of the principal
will be guaranteed.
Maturity Date: The fifth anniversary of the closing
date.
Availability: The Term Loans will be made in a single
drawing on the closing date in the amount
of $250,000,000; provided that
approximately $110,000,000 of the Term
Loans will be placed in a cash collateral
account in the United States subject to
the control of the Administrative Agent,
invested in certain permissible
investments as directed by and for the
benefit of the Borrower, and released to
the Borrower on satisfaction of certain
conditions for the purpose of paying
expenses relating to the construction of
the electric arc furnace for the EAF
Project.
Amortization: The Term Loans are payable in
quarterly installments in an aggregate
amount for each calendar year:
Year Amount
---- ------
2003 0
2004 $25,000,000
2005 $25,000,000
2006 $25,000,000
Q1, Q2, Q3 of 2007 $18,750,000
Maturity Date $156,250,000
Collateral: (1) A perfected first-priority
security interest in all of each loan
party's tangible and intangible
assets other than accounts receivable
and inventory, but including
intellectual property, real property,
and all Capital Stock in all direct
and indirect domestic Subsidiaries;
and
(2) A perfected second-priority security
interest (junior only to the security
interests created under the New
Revolving Loan Agreement) in all
accounts receivable and inventory.
Covenants: Customary financial and operating
covenants
Events of Default: Customary
The New Revolving Loans
RBC Dain has also arranged a new senior, secured, revolving
credit agreement in the aggregate amount of up to $225,000,000
principally secured by a first-priority lien on the accounts
receivable and inventory of the Debtors, and a second-priority
lien on all other assets of the Debtors, except for the Debtors'
equity interests in Wheeling-Nisshin and Ohio Coatings Company,
which will be the subject of a third-priority lien.
With the same effective date as the Term Loans, advances under
the New Revolving Loan Agreement, along with cash from
operations, will be used to fund the cash distributions to be
made on the Effective Date under the Plan, and to provide the
Reorganized Debtors with working capital for the operation of
their businesses.
The salient terms of the New Revolving Loan Agreement are:
Borrower: Wheeling-Pittsburgh Steel Corporation
Guarantors: Each of WPSC's direct and indirect
subsidiaries
Administrative Agent: Royal Bank of Canada
Lenders: A syndicate of banks, financial
institutions and other entities,
including Royal Bank of Canada.
The Facilities are:
Revolving Credit
Facility: 3-year revolving credit facility in the
principal amount of $225,000,000.
Letter of Credit: A portion of the Revolving Credit
Facility not exceeding $25,000,000 will
be available for issuance of letters of
credit by Royal Bank of Canada or any
other Lender approved by WPSC and the
Administrative Agent. No Letter of
Credit will have an expiration date
after the earlier of: (i) one year after
the date of issuance, or (ii) five
business days before the Revolving
Termination Date.
Swingline Facility: A portion of the Revolving Credit
Facility not exceeding $25,000,000 will
be available for Swingline loans from
Royal Bank of Canada on same-day notice.
Maturity Date: The third anniversary of the closing date
Availability: The Revolving Credit Facility will,
subject to the then-current Borrowing
Base, be available on a revolving basis
during the period commencing on the
Closing Date and ending on the Revolving
Termination Date.
Collateral: (1) A first-priority perfected security
interest in all accounts receivable
and inventory;
(2) A second-priority perfected security
interest (junior only to the
security interests created under the
New Term Loan Agreement) in all
tangible and intangible assets
including intellectual property, real
property, and all Capital Stock owned
by WPSC in its direct and indirect
Subsidiaries other than Wheeling-
Nisshin and Ohio Coatings; and
(3) A third-priority perfected security
interest (junior only to the security
interests created under the New Term
Loan Agreement and the New Secured
Notes) in the capital stock owned by
WPSC in Wheeling-Nisshin and Ohio
Coatings Company).
Covenants: Customary financial and operating
covenants.
Events of Default: Customary
The Danieli Modification & Assumption Agreement
On the Effective Date, Reorganized WPSC and Danieli Corporation
will sign the Danieli Modification and Assumption Agreement.
Years ago, WPSC agreed to buy from Danieli certain roll-changing
equipment. WPSC currently owes $7,361,511.50 to Danieli.
Under the Modification and Assumption Agreement, Reorganized
WPSC will assume the agreement to purchase the equipment, and
Danieli will remove its mechanic's lien on the WPSC's assets and
withdraw its proof of claim. Furthermore, Reorganized WPSC
will, within 30 days of the Effective Date, pay to Danieli
$2,361,511.50. The balance of the amount owed to Danieli will
be converted into secured term loans under the New Term Loan
Agreement. These loans will participate in that portion of the
New Term Loans, which are not guaranteed by the United States
under the Steel Loan Guarantee Program.
In addition, WPSC will pay Danieli $2,838,039 to complete the
roll-changing project and an amount not to exceed $300,000 for
rehabilitation, storage and other costs.
The USWA Pension Plan
WHX sponsors a defined benefit plan insured by the Pension
Benefit Guaranty Corporation, which covers substantially all of
WHX and the Debtors' employees and is denominated by WHX as a
"multi-employer pension plan".
In conjunction with implementation of the Plan, the Reorganized
Debtors will separate from the WHX Pension Plan and will be the
sponsor of a successor defined benefit plan with assets and
liabilities attributable to the Reorganized Debtors' employees.
Under an agreement between WHX and the USWA, WHX is to provide a
$25,000,000 contribution to the WPC Pension Plan. In addition,
unless total cash funding, determined on a level basis, is less
than $50,000,000 through 2007, WHX will contribute a further
$12,000,000 to the WPC Pension Plan. The WPC Pension Plan will
be subject to the minimum funding requirements of ERISA and the
Internal Revenue Code. (Wheeling-Pittsburgh Bankruptcy News,
Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WORLDCOM INC: Wants to Pull Plug on BellSouth Services Agreement
----------------------------------------------------------------
On August 1, 2000, UUNET Technologies, Inc., one of the Worldcom
Debtors, and BellSouth MNS Inc., entered into a Master Services
Agreement for Support Services, pursuant to which UUNET agreed
to purchase and BellSouth agreed to provide end user support
services as may be requested from time to time and documented in
separate, written authorization letters. According to Marcia L.
Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, the
total annual cost for the services ordered pursuant to the
Agreement is $1,170,000. The term of the Agreement will expire
on August 1, 2005.
By this motion, the Debtors seek the Court's authority to reject
the Agreement and each of the Letters issued pursuant to the
Agreement.
Ms. Goldstein relates that the Debtors have reviewed the
Agreement and the services provided pursuant to the Letters and
have determined that they are no longer of any value or utility
to them. The current terms of the Agreement are not favorable
to the Debtors and the services could be performed in-house or
by a different supplier with comparable skills, quality and
performance at 60% savings. By rejecting the Agreement, the
Debtors save the estates $702,000 in administrative expenses per
annum by obtaining services of comparable quality at a much
lower rate. The Agreement and Letters issued are now a cash
drain on the Debtors' estates and should be rejected. (Worldcom
Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Worldcom Inc.'s 8.00% bonds due 2006 (WCOE06USR2), DebtTraders
reports, are trading at about 26 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE06USR2
for real-time bond pricing.
W.R. GRACE: Has Until Feb. 24 to Move Lawsuits to Delaware Court
----------------------------------------------------------------
David W. Carickhoff, Esq., at Pachulski Stang Ziehl Young &
Jones, in Wilmington, Delaware, tells Judge Fitzgerald that W.R.
Grace & Co., and its debtor-affiliates are named defendants in
65,000 asbestos-related lawsuits in various state and federal
courts involving 232,000 different individual claims. The
Debtors are also defendants in eight asbestos-related fraudulent
conveyance actions in various state and federal courts that
involve large numbers of individual claims. There are numerous
other lawsuits, including, but not limited to environmental
actions, in which one or more of the Debtors and/or the Non-
Debtor Affiliates are named defendants in various state and
federal courts. Many of these Asbestos Actions, Fraudulent
Conveyance Actions and Miscellaneous Actions were filed prior to
the Petition Date.
The Debtors ask for a further extension -- to and including
June 30, 2003 -- of the time in which they can elect to remove a
prepetition lawsuit to the District of Delaware for continued
litigation and resolution.
Since the Petition Date, a number of additional Asbestos
Actions, Fraudulent Conveyance Actions and Miscellaneous Actions
have been filed and continue to be filed. The Debtors and its
Non-Debtor Affiliates believe that these Postpetition Actions
are void because they were filed in violation of the automatic
stay.
The Debtors therefore ask that the order on this Motion be
without prejudice to:
(i) any position the Debtors or their non-debtor
Affiliates may take regarding whether the
automatic stay provisions of the Bankruptcy Code
applies to stay any asbestos-related action; and
(ii) the right of the Debtors and their non-debtor
Affiliates to seek further extensions of time to
remove any and all Actions.
In the months since the Petition Date, Mr. Carickhoff reminds
the Court that the Debtors have attempted to address the central
task in these Chapter 11 cases, which is to determine the true
scope of the Debtors' liability to asbestos claimants and then
to provide for the payment of valid claims on a basis that
preserves the Debtors' still-strong core business operations.
At a hearing on May 3, 2001, Judge Farnan directed the Debtors
to develop a specific proposal for adjudicating asbestos-related
litigation in these Chapter 11 cases.
The Debtors assert that the litigation protocol will streamline
the claims adjudication process by providing a means of
resolving the common legal issues through a fair and orderly
process in a single forum while preserving legitimate personal
injury claimants' rights to trial. While this litigation
protocol will not completely eliminate the Debtors' need to
preserve the option to remove actions to this Court, it should
minimize the need to do so. Nonetheless, until the claims
arising from the Actions have been resolved, whether through
this litigation protocol or otherwise, the Debtors must preserve
the option of removing Actions to this Court.
The extension of the removal period will give the Debtors and
the Non-Debtor Affiliates an opportunity to make fully informed
decisions and will assure that they do not forfeit valuable
rights of removal. Mr. Carickhoff assures the Court that the
rights of the Debtors' adversaries will not be prejudiced by the
extension because, in the event that a matter is removed, the
other parties to the Actions to be removed may seek to have the
action remanded to the state court pursuant to 28 U.S.C. Sec.
1452(b).
* * *
By local rule in Delaware, this deadline is automatically
extended to and including the date of the hearing on
February 24, 2003; and, if no objections are filed, to and
including the date of entry of an order granting this motion.
(W.R. Grace Bankruptcy News, Issue No. 35; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
XO COMMS: Extends Hosting Provider Pact with Microsoft Business
---------------------------------------------------------------
XO Communications, Inc., (OTCBB:XOXOQ) extended existing
strategic relationship with Microsoft Business Solutions through
which XO will continue as the private label hosting provider for
its growing base of Microsoft bCentral subscribers.
Microsoft bCentral is the leading Internet resource for web-
based business tools and applications and offers an easy-to-use
suite of services, specifically designed to help small companies
better manage their everyday business processes.
bCentral is available on the Web at http://www.bcentral.com As
its private label web hosting partner, XO will continue to
provide hosting services to bCentral, ensuring small businesses
have the advantage of state-of-the-art hosting services with
superior performance.
XO designed its hosting platform specifically for private
labeling capability, enabling bCentral customers to leverage
superior flexibility and customer control over available disk
space, data transfers, email boxes and web site performance
reporting. These capabilities also scale to allow small
businesses to continually expand their website requirements as
they grow their own businesses.
"Our ongoing relationship with Microsoft bCentral is a
tremendous validation of our hosting strength and customer care
experience, " said John Jacquay, President of National Sales at
XO. "We've developed an extremely capable hosting platform and
view this relationship as a confirmation of the success of our
efforts. We continue to work with Microsoft on a number of
levels and have also benefited from our integration of key
bCentral services into our XOption packages, allowing XO to
deliver even more value within our cost effective, flat-rate
telecommunication bundles."
"Our relationship with XO has proven to be a win-win-win - for
XO, for bCentral and most importantly, for small businesses,"
said Jeff Riley, general manager of small business marketing for
Microsoft Business Solutions. "Our bCentral customers have
benefited from XO's solid track record for superior performance
and scalability. Moreover, XO has designed a dedicated customer
care team that has provided excellent support to our valued
bCentral users."
The XO shared hosting platform being offered to Microsoft
bCentral's customers is comprised of fault tolerant, load
sharing server clusters that provide enhanced and reliable
service by sharing user request loads across multiple servers.
This sharing capability allows for top performance, even amid
large network traffic spikes or individual hardware failures.
XO Communications is a leading broadband communications service
provider offering a complete set of communications services,
including: local and long distance voice, Internet access,
Virtual Private Networking, Ethernet, Wavelength, Web Hosting
and Integrated voice and data services.
XO has assembled an unrivaled set of facilities-based broadband
networks and Tier One Internet peering relationships in the
United States. XO currently offers facilities-based broadband
communications services in more than 60 markets throughout the
United States.
* Adelman Lavine Relocates Wilmington Offices
---------------------------------------------
Adelman Lavine Gold and Levin, P.C., has relocated its office
for the general practice of law in Wilmington, Delaware, to:
919 North Market Street
Suite 710
Wilmington, DE 19801
Telephone (302) 654-8200
Facsimile (302) 654-8217
E-mail: lawyers@adelmanlaw.com
The Firm continues to maintain its Philadelphia Office at:
1900 Two Penn Center Plaza
Philadelphia, PA 19102-1799
Telephone (215) 568-7515
Facsimile (215) 557-7922
Adelman Lavine Gold & Levin is a boutique law firm specializing
in bankruptcy and commercial litigation, with 35 lawyers in
their Philadelphia Office and five in Wilmington, Delaware.
* Fitch Says Investors Lose $80 Bill. Par Value On 2002 Defaults
----------------------------------------------------------------
Marking an unprecedented decline in corporate credit quality,
2002 produced $109.8 billion in high yield defaults and a new
par based record default rate of 16.4%, exceeding 2001's $78.2
billion default volume and 12.9% default rate. The number of
defaulted issuers actually decreased in 2002 to 163 from 2001's
173, but the average size of 2002 defaults, at $674 million per
issuer was up 49% from 2001's $452mm per issuer. The biggest
factor contributing to the volume growth was by far the long
list of supersized telecommunication defaults. The likes of
Global Crossing, McLeod, Telewest and foremost, WorldCom,
contributed $59.6 billion in defaults, a full 54% of the year's
volume tally. The average default balance for telecom issuers
was $1.3 billion in 2002. The default rate for the sector, was
an astonishing 43.5% for the year and followed a 23.9% default
rate in 2001. The impact of the sector's crisis on default
statistics in the past several years cannot be overstated. In
2001 and 2002, telecommunication defaults totaled $87.8 billion,
nearly half the total default toll for the two years of $188
billion. Another remarkable statistic - the combined volume of
defaults in 2001 and 2002 exceeded the total volume of bond
defaults in the U.S. from 1980-2000.
Fallen angels (companies rated investment grade one year prior
to default), including WorldCom, represented $35.7 billion of
2002 defaults, or 33% of the year's total. The default rate
excluding fallen angels was 12.4%. This rate compared to a 2001
default rate excluding fallen angels of 9.7%.
The top industry default rates in 2002 included:
telecommunication at 43.5% on default volume of $59.6 billion,
insurance 35.2% on default volume of $3 billion, cable 34.4% on
default volume of $16.5 billion, metals and mining 20.2% on
default volume of $3 billion, and utilities 14% on default
volume of $6.5 billion.
The year's top ten defaults represented 57% of 2002 default
volume with WorldCom making up nearly a quarter of the year's
volume.
Excluding fallen angel defaults, 20.9% of the year's defaulted
issues consisted of bonds sold in 1999, 21.3% bonds sold in 1998
and 14.7% bonds sold in 1997. The three issuance years continued
to produce the bulk of defaults.
Excluding fallen angels, the default rate for the remaining
universe of high yield bonds was down substantially in the
second half of the year. The default rate was 9.3% through June
but just 3% for the six months ending December. While defaults
are still running at above average annual levels, for the
traditional high yield market they have slowed considerably from
the frenzied pace of the first half of 2002 when large telecom
and cable defaults caused default volumes to soar.
The weighted average recovery rate for all defaults in 2002 was
22% of par. In a reversal of last year's trend, fallen angel
defaults depressed the average recovery statistics. The weighted
average recovery rate excluding fallen angels was 26% of par, a
material improvement over the 15% of par recorded in 2001. In
total, investors lost 78% of par value on the year's defaults,
grossing more than $80billion.
Perhaps the biggest sign of the high yield market's continued
vulnerability at year end was the persistently large
concentration of bonds rated 'CCC/C'. The 'CCC/C' pool started
the year at $117 billion and ended the year at $116 billion.
Despite the year's long list of defaults, downgrades continued
to replenish the 'CCC/C' bucket. In each quarter of 2002, the
dollar volume of downgrades towered over nearly negligible
upgrades.
Fitch's complete analysis of 2002 results with a full listing of
all defaults, an analysis of default and recovery rates by
industry and seniority, and a review of credit quality measures
for the U.S. high yield market will be available on the Fitch
Ratings Web site at http://www.fitchratings.comin early
February.
Overview of the Fitch U.S. High Yield Default Index:
Fitch's default index is based on the U.S., dollar denominated,
non-convertible, speculative grade bond market (the rating
equivalent of 'BB+' and below, rated by Fitch or one of the two
other major rating agencies). Fitch includes rated and non-
rated, public bonds and private placements with 144A
registration rights. Defaults include missed coupon or principal
payments, bankruptcy, or distressed exchanges. Default rates are
calculated by dividing the volume of defaulted debt by the
average market size for the period under consideration. Fitch's
high yield default studies are available in the 'Credit Market
Research' section at http://www.fitchratings.com
* Fitch Study Shows Airline Pension Gap to Exceed $18 Billion
-------------------------------------------------------------
The US airline industry is likely to assume a new and prominent
place as the industry is at risk for financial fallout resulting
from the growing magnitude of its pension funding problem. In a
new report to be released this morning, Fitch Ratings estimates
that the aggregate level of pension plan underfunding in the
industry will exceed $18 billion as of Dec. 31, 2002.
"Increased pension funding burdens will ultimately affect the
credit quality of major network carriers currently operating
outside of bankruptcy, and will complicate the task of
reorganization under Chapter 11 for both US Airways and United,"
said analyst William Warlick. 'These growing obligations will
inevitably lead to large increases in required cash
contributions to pension plans, compounding the financial stress
and cash flow concerns that already exist in the industry.'
However, this is a situation that is affecting only the major US
network carriers. "The absence of defined benefit plans among
the low-cost carriers, such as Southwest, AirTran, ATA, JetBlue
and Frontier, represents yet another source of competitive
advantage for these airlines in relation to their high-cost
network carrier rivals," Warlick added.
According to Fitch estimates, Delta has the largest underfunded
pension obligation at $4.4BN and United follows with $4.1BN.
American, Northwest and US Airways each have a gap of $3.0BN or
more.
The Fitch Report 'Rapid Descent: Pensions in the US Airline
Industry' is available on the internet at
http://www.fitchratings.com
* FTI Brings-In Dianne R. Sagner as In-House General Counsel
------------------------------------------------------------
FTI Consulting, Inc. (NYSE: FCN), the premier national provider
of turnaround, bankruptcy and litigation-related consulting
services, announced that Dianne R. Sagner, Esq., has joined FTI
in the newly created position of Vice President, Secretary and
General Counsel.
Ms. Sagner has more than 25 years of experience in the general
counsel's suite, including work for major universities and
hospitals as well as public corporations in the service
industry. Most recently, she has handled a full range of
business practice issues as General Counsel and Secretary for
OAO Technology Solutions, a global provider of information
technology services. For the past eight years she has been an
active member of the American Corporate Counsel Association, and
recently has participated in various committees for the local
ACCA chapter, WMACCA. In addition, she has served as a panelist
and speaker for the "Legal Times" of Washington, the American
Conference Institute and the Practicing Law Institute on various
topics.
Ms. Sagner will handle FTI's legal matters and serve as
Secretary to the Board of Directors. She is well-versed in
Sarbanes-Oxley compliance, having lectured on the subject, and
will serve as FTI's Ethics Officer, as required under that
legislation.
Ms. Sagner began her career with the law firm of Bryan Cave in
St. Louis, where she was one of the first female associates. She
earned her bachelor's degree from American University,
Washington, D.C., her Juris Doctor with honors from the
University of Maryland Law School, and a Master of Laws degree
from Washington University School of Law in St. Louis, while on
a Ford Foundation Fellowship.
In commenting on the hiring of Ms. Sagner, Jack Dunn, FTI's
chairman and chief executive officer, said, "Having Dianne join
us represents another milestone in our evolution as a public
company. At a time when companies are seeking to reassure
investors as to the transparency of their operations and the
dependability of their reported results, Dianne's experience
will be a major benefit to FTI and its stockholders as we
continue our commitment to the timely and complete flow of
financial information to the public in conformity with the
guidelines of Regulation Fair Disclosure and the requirements of
Sarbanes-Oxley."
FTI Consulting is a multi-disciplined consulting firm with
leading practices in the areas of turnaround, bankruptcy and
litigation-related consulting services. Modern corporations, as
well as those who advise and invest in them, face growing
challenges on every front. From a proliferation of "bet-the-
company" litigation to increasingly complicated relationships
with lenders and investors in an ever-changing global economy,
U.S. companies are turning more and more to outside experts and
consultants to meet these complex issues. FTI is dedicated to
helping corporations, their advisors, lawyers, lenders and
investors meet these challenges by providing a broad array of
the highest quality professional practices from a single source.
FTI is on the Internet at http://www.fticonsulting.com
* Gardner Carton & Douglas Relocates Chicago Offices
----------------------------------------------------
Gardner Carton & Douglas LLC, has relocated its Chicago office
to:
191 North Wacker Drive
Suite 3700
Chicago, IL 60606-1698
Telephone (312) 569-1000
Facsimile (312) 569-3000
Harold L. Kaplan, Esq., can be reached at:
Telephone (312) 569-1204
Facsimile (312) 569-3204
Jeffrey M. Schwartz, Esq., can be reached at:
Telephone (312) 569-1208
Facsimile (312) 569-3208
Among other engagements, the Firm frequently serves as counsel
to Bank One, Cole Taylor Bank and other indenture trustees in
large-scale, complex restructurings, insolvencies, workouts and
bankruptcy matters, domestically and abroad.
* Kimberly A. Newman & James R. Young Join O'Melveny & Myers LLP
----------------------------------------------------------------
Two new partners specializing in telecommunications have joined
O'Melveny & Myers LLP in its Washington, D.C. office.
"We are pleased to have Kimberly A. Newman and James R. Young
join us as the newest lateral partners at O'Melveny & Myers,"
said John Beisner, head of the firm's Washington office. "The
telecommunications industry is undergoing seismic change. Adding
Kimberly and Jim's depth of telecommunications experience will
help the firm to take advantage of that change, an important
step in our continuing effort to provide the best client service
available and earn the loyalty of premier clients.
"The firm's extensive deal and corporate experience in the
telecommunications industry, and Kimberly and Jim's state and
federal regulatory, antitrust, litigation, and government
affairs experience offer a combination of skills that few, if
any, firms can match."
James R. Young was Executive Vice President and General Counsel
of Bell Atlantic (now Verizon Communications) from 1992 until
2000, where he directed a legal department of more than 140
attorneys. Experienced in a broad range of regulatory,
antitrust, and government affairs issues, Young's practice deals
with all aspects of the telecommunications industry. At Bell
Atlantic, Young was the architect of the company's regulatory
reform plans, led the team that made Bell Atlantic the first
Bell company to be allowed into the long distance business under
the 1996 Telecom Act, and participated in the negotiation of two
of the largest mergers in the history of the telecommunications
industry -- the Bell Atlantic/NYNEX merger and the Bell
Atlantic/GTE merger. Young was also one of the lead negotiators
in the Bell Atlantic/Vodaphone deal that made Bell Atlantic the
largest wireless carrier in the United States. In addition, he
has successfully argued a major antitrust case in the United
States Supreme Court. Young earned his J.D. and his B.A. from
the University of Michigan.
Kimberly A. Newman has extensive experience representing a
premier telecommunications carrier in litigation before the
Federal Communications Commission and state utility commissions
across the country, as well as significant experience
representing Fortune 500 companies in general commercial,
antitrust, and intellectual property litigation. Newman has also
served on special assignment as in-house counsel for two Fortune
100 companies, including one of the nation's largest phone
companies. Newman earned her J.D. from the University of
Virginia, her M.A. from the University of California at Los
Angeles, and her B.A. from the University of Virginia.
O'Melveny & Myers LLP is one of the world's most successful and
enterprising law firms. Established in 1885, the firm maintains
14 offices around the world, with more than 900 attorneys
globally. As one of the world's largest law firms, O'Melveny &
Myers' capabilities span virtually every area of legal practice,
including Mergers and Acquisitions/Private Equity; Capital
Markets; Finance and Restructuring; Entertainment and Media;
Intellectual Property and Technology; Trade and International
Law; Labor and Employment; Litigation; White Collar and
Regulatory Defense; Project Development and Real Estate;
Securities; Tax; Transactions; and Bankruptcy.
* Meetings, Conferences and Seminars
------------------------------------
February 20-21, 2003
AMERICAN CONFERENCE INSTITUTE
Commercial Loans Workouts
Marriott East Side, New York
Contact: 1-888-224-2480 or 1-877-927-1563
http://www.americanconference.com
February 22-25, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Litigation Institute I
Marriott Hotel, Park City, Utah
Contact: 1-770-535-7722 or
http://www.nortoninstitutes.org
March 6-7, 2003
ALI-ABA
Corporate Mergers and Acquisitions
San Francisco
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
March 27-30, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Litigation Institute II
Flamingo Hilton, Las Vegas, Nevada
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
March 31 - April 01, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Healthcare Transactions: Successful Strategies for
Mergers, Acquisitions, Divestitures and Restructurings
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168
or ram@ballistic.com
April 10-13, 2003
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Grand Hyatt, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
May 1-3, 2003
ALI-ABA
Chapter 11 Business Organizations
New Orleans
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
May 8-10, 2003
ALI-ABA
Fundamentals of Bankruptcy Law
Seattle
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
June 19-20, 2003
RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP
Corporate Reorganizations: Successful Strategies for
Restructuring Troubled Companies
The Fairmont Hotel Chicago
Contact: 1-800-726-2524 or fax 903-592-5168
or ram@ballistic.com
June 26-29, 2003
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains, Advanced Bankruptcy Law
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 1-770-535-7722
or http://www.nortoninstitutes.org
July 10-12, 2003
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities, and Bankruptcy
Eldorado Hotel, Santa Fe, New Mexico
Contact: 1-800-CLE-NEWS or http://www.ali-aba.org
December 3-7, 2003
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
La Quinta, La Quinta, California
Contact: 1-703-739-0800 or http://www.abiworld.org
April 15-18, 2004
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriott, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***