/raid1/www/Hosts/bankrupt/TCR_Public/030429.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, April 29, 2003, Vol. 7, No. 83
Headlines
360NETWORKS: Has Until June 11, 2003 to File Claims Objections
A NOVO BROADBAND: Inks Definitive Pact to Sell Assets for $1.8MM
A.B. WATLEY: Capital Resources Insufficient to Fund Operations
A-BEST PRODS.: Wants Plan Filing Exclusivity Extended to June 17
AIR CANADA: Judge Farley Amends Initial CCAA Order in Canada
AIR CANADA: Adjourns Annual Shareholders' Meeting Sine Die
ALLOU DISTRIBUTORS: Court Okays Jenkens & Gilchrist as Counsel
AMERCO: Republic Western to Exit Non-U-Haul Lines of Business
AMERICAN AIRLINES: Consensual Cost-Restructuring Back on Track
AMERIGAS PARTNERS: Posts Increased Retail Propane Revenues in Q4
ANC RENTAL: Wins Nod to Amend Brown Bros.' Terms of Engagement
ARI NETWORK: Completes $4-Million Debt Restructuring Transaction
ATSI COMMS: AMEX Delists Shares Effective April 24, 2003
AUSPEX SYSTEMS: Nasdaq Intends to Delist Shares Effective Friday
AUSPEX SYSTEMS: Case Summary & 20 Largest Unsecured Creditors
BEARD COMPANY: Cole & Reed PC Expresses Going Concern Doubt
BLACK BAY BREWING: Case Summary & 20 Largest Unsec. Creditors
BLUE MOON GROUP: James C. Marshall Expresses Going Concern Doubt
COMPACT DISC: Honoring Up to $4MM of Prepetition Vendor Claims
CONSECO FINANCE: Claims Estimation Hearing to Convene on May 9
CONSECO INC: Committee Gets Go-Signal to Hire Financial Advisors
COVANTA: Asks Court to Fix June 14 Bar Date for Debenture Claims
DAN RIVER: Reports Improved Earnings Results for First Quarter
DELTA AIR LINES: CEO Mullin Bullish about Company's Viability
DIRECTV: Court OKs Bankruptcy Services as Claims & Notice Agent
DIVERSIFIED CORPORATE: Annual Shareholders' Meeting on May 30
DOMAN INDUSTRIES: Canadian Court Extends CCAA Stay Until July 23
DOW CORNING: Reports Growth in Sales and Profits for Q1 2003
ENCOMPASS SERV.: Lease Decision Time Extension Hearing Tomorrow
ENRON CORP: Selling Interests in CGAS Inc. to Enervest for $30MM
FISHER COMMS: Board Elects Phelps K. Fisher as New Chairman
FLEMING COMPANIES: AlixPartners' Rebecca Roof Serving as New CFO
FLEMING COS.: Asks Court to Deem Utilities Adequately Assured
FRUIT OF THE LOOM: Unsec. Trust Wants Time to Challenge Claims
GLOBAL CROSSING: Simplifies Leadership Structure as Part of Plan
GOLDSTATE: Initiates Restructuring via 1-For-15 Reverse Split
GRAPHON CORP: Shares Delisted from Nasdaq SmallCap Market
GREAT ATLANTIC & PACIFIC TEA: Red Ink Flows in 4th Quarter 2002
GREAT LAKES AVIATION: Ability to Continue Operations Uncertain
HARD ROCK HOTEL: S&P Affirms B+ Rating Over Steady Ops. Results
HAWAIIAN AIRLINES: Receives Extension from Two Aircraft Lessors
HAWAIIAN AIRLINES: Says Boeing Request for Trustee Lacks Merit
HAYES LEMMERZ: Exclusivity Extension Hearing Slated for May 7
HMP EQUITY: S&P Assigns B+/B- Credit & Sr Discount Note Ratings
HORIZON NATURAL: Court Sets June 30, 2003 as Claims Bar Date
ITIS HOLDINGS: Working Capital Deficit Tops $1MM at December 31
JUNIPER CBO: S&P Keeps Watch on Junk Class A-4L & A-4 Ratings
LASERSIGHT INC: Asks Nasdaq to Extend Listing Status
LEAP WIRELESS: First Meeting of Creditors to Convene on May 20
LODGIAN: S.D.N.Y. Court Confirms Impac Plan of Reorganization
LTV CORP: U.S. Trustee Disbands Unsecured Creditors' Committee
MAGELLAN HEALTH: Wants Open-Ended Lease Decision Period
MATLACK: Chapter 7 Trustee Taps PPM as Environmental Consultants
MICROCELL: Expects Reorganization Plan to Become Effective May 1
MWAM CBO: Fitch Keeping Watch on BB- Preferred Shares Rating
NATIONAL CENTURY: US Trustee Balks at Kaye Scholer's Engagement
NATIONWIDE COMPUTERS: Ch. 11 Liquidator Brings-In Togut Segal
OLYMPIC PIPE LINE: Gets Court Nod to Hire PricewaterhouseCoopers
OWENS-BROCKWAY: Commences Tender Offer for Parent's 7.85% Notes
OWENS CORNING: First Quarter 2003 Results Show Improvement
OWENS CORNING: Brings-In Innisfree M&A as Balloting Agent
PACIFIC GAS: ORA Recommends $170-Mill. Hike in Electric Revenues
PHAR-MOR: Ohio Court Confirms 1st Amended Joint Liquidating Plan
PHILIP MORRIS: Plaintiffs Seek to Halt Div. Payments to Altria
POLAROID CORP: Judge Walsh Directs KPMG LLC to Produce Documents
RELIANT RESOURCES: Gen. Counsel Hugh Rice Kelly to Retire May 1
SIEBEL: Outlook Changed to Negative over Lower License Revenues
SIGNATURE EYEWEAR: Completes Recapitalization Transactions
SMARTSERV ONLINE: Red Ink Continues to Flow in Fourth Quarter
SMITHWAY MOTOR: Narrows First Quarter Net Loss to $1.6 Million
SOLUTIA INC: Weakening Performance Spurs S&P Rating Cut to BB-
SONICBLUE INC: D&M Completes $36MM Acquisition of Certain Assets
SOUTH STREET CBO: S&P Keeps Watch on Three Junk Note Ratings
SPIEGEL GROUP: Court Approves BSI's Appointment as Claims Agent
TECO ENERGY: Fitch Downgrades Low-B Ratings over High Leverage
TRITON PCS: S&P Places Lower-B Ratings on CreditWatch Negative
UNITED AIRLINES: State Street Discloses Equity Stake in UAL Corp
ULTRA CHEMICAL: Case Summary & 20 Largest Unsecured Creditors
UNOVA INC: First Quarter 2003 Net Loss Slides-Down to $15 Mill.
US AIRWAYS: Settles Claims Dispute with NY & NY Port Authorities
USA BIOMASS: Enters Letter of Intent to Acquire MDF Transport
WICKES INC: Jim O'Grady Returns as New Company President
WORLDCOM INC: Wants Nod to Sell Missouri Property for $15 Mill.
* Large Companies with Insolvent Balance Sheets
*********
360NETWORKS: Has Until June 11, 2003 to File Claims Objections
--------------------------------------------------------------
At the Reorganized 360networks Debtors' behest, the U.S.
Bankruptcy Court for the Southern District of New York granted
an extension of time within which the Reorganized Debtors' or
the Creditors' Committee may object to claims filed in the
Debtors' cases to June 11, 2003. (360 Bankruptcy News, Issue No.
46; Bankruptcy Creditors' Service, Inc., 609/392-0900)
A NOVO BROADBAND: Inks Definitive Pact to Sell Assets for $1.8MM
----------------------------------------------------------------
A Novo Broadband, Inc., (Pink:ANVB) has entered into a
definitive agreement to sell substantially all of the assets
used in its ongoing business for $1.8 million in a transaction
pursuant to Secs. 363 of the Bankruptcy Code.
The proposed sale to Teleplan Holdings USA, Inc. is subject to
higher and better offers and to certain conditions, including
the approval of the transaction by the court in A Novo
Broadband's pending Chapter 11 case. The agreement supersedes a
previously reported non-binding letter of intent with another
potential buyer.
William Kelly, A Novo Broadband's President, said the Company
did not expect to be able to complete a reorganization in the
Chapter 11 case or to make any distribution to shareholders
following the proposed sale or any other asset dispositions.
He said the Company plans to continue operations and actively
seek business pending the sale and that it was Teleplan's
intention to maintain customer and supplier relationships
following the sale.
The proposed sale does not include certain inventory and other
assets. The Company is continuing efforts to sell all of its
remaining assets.
A Novo Broadband provides equipment repair and related services
to manufacturers of digital modems and set-top boxes and to
cable system operators who utilize the equipment.
A.B. WATLEY: Capital Resources Insufficient to Fund Operations
--------------------------------------------------------------
A.B. Watley Group Inc. is a U.S. public corporation. The
Company conducts business primarily through its principal
subsidiaries, A.B. Watley, Inc. and Integrated Clearing
Solutions, Inc.
A.B. Watley and Integrated are registered broker-dealers with
the Securities and Exchange Commission, and are members of the
National Association of Securities Dealers, Inc. A.B. Watley is
an introducing broker-dealer, conducting business in electronic
trading, information and brokerage services, as well as
institutional block trading. Integrated is an introducing
broker-dealer conducting sales of mutual funds to institutional
clients. A.B. Watley and Integrated clear all transactions
through clearing brokers on a fully disclosed basis.
Accordingly, A.B. Watley and Integrated are exempt from Rule
15c3-3 of the Securities Exchange Act of 1934.
The Company has significant deficits in both working capital and
stockholders' equity. These factors raise substantial doubt
about the Company`s ability to continue as a going concern.
Total revenues for the quarter ended December 31, 2002 were
$4,179,700 - a decrease of 50%, as compared to revenues of
$8,288,701 for the quarter ended December 31, 2001.
Loss before Income Taxes and Extraordinary Item decreased from
$6,154,989 for the three-month period ending December 31, 2001
to $1,674,827 for the three-month period ending December 31,
2002.
Trading volume has significantly decreased and the Company has
lost customers in its direct access business. To respond to its
liquidity and capital resource needs management has implemented
various cost cutting initiatives including renegotiating its
clearing agreements at more favorable rates, the restructuring
of its software license with E*Trade Group, Inc. and the sale of
its software programs known as Ultimate Trader II and Watley
Trader. The Company is also looking into more traditional lines
of business such as fixed income and equity capital markets, as
well as, the feasibility of expanding its existing business to
attract active traders and hedge funds. As a further fund
raising alternative the management of ABWG may seek to raise
additional capital from time to time to fund operations through
private placements of equity or debt instruments. There can be
no assurance that any of these alternatives will be successful.
A-BEST PRODS.: Wants Plan Filing Exclusivity Extended to June 17
----------------------------------------------------------------
A-Best Products Company, Inc., asks the U.S. Bankruptcy Court
for the District of Delaware to extend the time period within
which it has the exclusive right to file its chapter 11 plan and
solicit acceptances of that plan from creditors. The Debtor
tells the Court that it needs until June 17, 2003, to file its
plan and until August 18, 2003, to solicit acceptances.
The Debtor reports that it has been active and diligent in
resolving important issues in this Chapter 11 case. Most
important, the Debtor has successfully negotiated the terms of a
consensual plan of reorganization with its Creditors' Committee,
the Legal Representative for Future Claimants and other parties-
in-interest.
The 90-day extension of the Exclusive Periods will not harm the
Debtor's creditors. Indeed, the Debtors warn, a termination of
the Exclusive Periods would force the Debtor to file its
proposed plan before other parties in interest have had a full
opportunity to review and comment on the Debtor's proposed plan
of reorganization. If the Exclusive Periods are terminated and
any competing plan is filed, the inevitable litigation would
consume what little resources the Debtor have -- to the clear
detriment of its creditors.
A-Best Products Company, Inc., a former manufacturer and seller
of industrial safety clothing, field for chapter 11 protection
on September 20, 2002 (Bankr. Del. Case No. 02-12734). Henry
Jon DeWerth-Jaffe, Esq., at Pepper Hamilton LLP represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $14,434,315 in
total assets and $575,398 in total debts.
AIR CANADA: Judge Farley Amends Initial CCAA Order in Canada
------------------------------------------------------------
Air Canada announced that Justice Farley of the Superior Court
of Justice of Ontario amended his initial order dated
April 1, 2003, as follows, thereby furthering the airline's
restructuring under the Companies' Creditors Arrangement Act.
DIP Financing
Justice Farley confirmed a Debtor-In-Possession financing
facility of USD $700 million with General Electric Capital
Canada Inc. Closing and funding under this facility is subject
to completion of the definitive loan and security documentation
expected to take place April 30, 2003.
A motion requesting approval of an agreement between Air Canada
and CIBC on a new Aerogold Agreement and on an additional
financing commitment for CAD $350 million is scheduled to be
heard on April 29, 2003.
Extension of the Stay Order
Justice Farley also approved an extension of the original stay
period order granted to Air Canada on April 1, 2003 to
June 30, 2003. The purpose of the extension is to provide Air
Canada sufficient time to develop a revised Business Plan, to
continue negotiations with creditors and labor unions and to
renegotiate aircraft leases, all of which must be completed
before developing a final Plan of Arrangement. The target date
for the Plan of Arrangement is July 31, 2003.
Postponement of Air Canada Annual General Meeting
Justice Farley approved Air Canada's request to extend the time
to call the airline's Annual General Meeting pending further
order of the court.
AIR CANADA: Adjourns Annual Shareholders' Meeting Sine Die
----------------------------------------------------------
On April 9, 2003, Air Canada advised the United States
Securities and Exchange Commission that the Annual General
Meeting of shareholders slated for May 13, 2003 has been
postponed on a yet-to-be-determined date. Air Canada also
notified the Canadian Securities Administration and The Toronto
Stock Exchange. (Air Canada Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ALLOU DISTRIBUTORS: Court Okays Jenkens & Gilchrist as Counsel
--------------------------------------------------------------
Allou Distributors, Inc., and its debtor-affiliates obtained a
favorable nod from the U.S. Bankruptcy Court for the Eastern
District of New York to employ Jenkens & Gilchrist Parker Chapin
LLP as their chapter 11 counsel.
The Debtors have selected Jenkens & Gilchrist because the Firm's
professionals have considerable experience in, among other
things, chapter 11 reorganization cases and general corporate,
litigation, real estate, tax, environmental, and other matters.
The Debtors expect Jenkens & Gilchrist to:
a. give advice to the Debtors with respect to their powers
and duties as debtors-in-possession in the continued
management and operation of their business and
properties;
b. negotiate with creditors of the Debtors and other
parties in interest in formulating a plan of
reorganization, and to take legal steps necessary to
confirm such plan, including, if need be, negotiations
for financing such plan;
c. prepare on behalf of the Debtors, as debtors-in-
possession, necessary applications, motions, complaints,
answers, orders, reports and other pleadings and
documents;
d. appear before this Court and the United States Trustee
and to represent the interests of the Debtors before
this Court and the United States Trustee; and
e. provide general corporate, real estate, litigation, tax,
environmental, and other services for the Debtors as
debtors-in-possession, as they may request and as may be
necessary, required or appropriate.
The attorneys and paraprofessionals presently designated to
represent the Debtors and their current standard hourly rates
are:
Partners
--------
Mitchel H. Perkiel $585 per hour
Lee W. Stremba $540 per hour
Henry I. Rothman $495 per hour
Counsel and Associates
----------------------
Paul H. Deutch $370 per hour
John J. Leonard $240 per hour
Paralegals
----------
Beth Friedman $160 per hour
Sonia Shah $150 per hour
Allou Distributors, Inc., is in the business of distributing
consumer personal care products and prescription pharmaceuticals
on a national basis. Three of the Debtors' creditors filed an
involuntary chapter 11 petitions against all Debtors on April 9,
2003, which, shortly thereafter, the Debtors consented (Bankr.
E.D.N.Y. Case No. 03-82321). Eric G. Waxman, III, Esq., and
John Joseph Leonard, Esq., at Jenkens & Gilchrist Parker Chapin
LLP represents the Debtors in their restructuring efforts.
AMERCO: Republic Western to Exit Non-U-Haul Lines of Business
-------------------------------------------------------------
AMERCO, (Nasdaq: UHAL) parent company of Republic Western
Insurance Company (RepWest), announced that in connection with
the Company's overall restructuring efforts, it is redirecting
the operating focus of RepWest.
In order to reduce costs and build upon the Company's core
strengths, RepWest is exiting non-U-Haul-related lines of
business. This exit may result in near term losses as these
lines are eliminated. RepWest is already engaged in talks to
cede some lines. "The decision to exit these lines of business
is part of our restructuring initiatives, and we believe that it
will be viewed as positive by the capital markets and rating
agencies," said Joe Shoen, Chairman of AMERCO. "Insuring non-U-
Haul risks is not a strategic fit with U-Haul. RepWest has
previously disclosed losses of over $100 million writing non-U-
Haul risks in recent years. It is time to focus on those lines
of business that enhance our core do-it-yourself moving and
storage business."
"The following actions will allow us to take advantage of our
core strengths and to build upon our established leadership
position in the self-moving and self storage industries," said
Shoen. "We believe that these changes are in the best long-term
interests of RepWest policyholders and our shareholders."
-- The Company expects staffing and other general expense
reductions at RepWest to reflect the reduced scope of its
operating activities. Size and timing of these reductions are
being determined.
-- RepWest will continue to source reinsurance for U-Haul's
risks above a certain dollar amount.
-- RepWest will continue to perform claims handling for U-Haul
from eight offices across the United States and Canada.
-- RepWest will continue to underwrite the Safe programs offered
in connection with U-Haul self move and self store rentals.
-- RepWest will continue to write lines of business that
strategically fit with U-Haul, such as insurance for self-
storage operators.
The change in the RepWest's business focus should result in
strengthening of capital ratios at RepWest and a renewed focus
on U-Haul risk. RepWest and U-Haul renegotiated their insurance
contracts for fiscal year 2003. The renegotiated contracts
relieve RepWest's reserves, and create non-cash charges and
reserve increases on U-Haul's financial statements. The
reduction in non-U-Haul risks written at RepWest will have the
effect of improving the transparency of AMERCO's financial
reporting.
As previously announced in August 2002, AMERCO engaged BDO
Seidman as its public accountant. At the request of the AMERCO
Audit Committee, BDO Seidman is in the process of a re-audit of
AMERCO and its insurance subsidiaries for fiscal years 2001 and
2002. SAC Holding Corporation (SACH) will continue to be a
consolidated entity. The reduction in non-U-Haul risks written
at RepWest will have the effect of improving the transparency of
AMERCO's financial reporting.
AMERCO is the parent company of U-Haul International, Inc.,
Republic Western Insurance Company, Oxford Life Insurance
Company and Amerco Real Estate Company. For more information
about AMERCO, visit http://www.uhaul.com
AMERICAN AIRLINES: Consensual Cost-Restructuring Back on Track
--------------------------------------------------------------
American Airlines said its consensual cost-restructuring process
is "back on track" as the company and its union leaders agreed
to allow the immediate implementation of new labor contracts.
Late last week, the AMR (NYSE: AMR) Board of Directors accepted
the resignation of Chairman and CEO Don Carty and named Edward
A. Brennan as Executive Chairman, and President and COO Gerard
J. Arpey as the new Chief Executive Officer. Arpey continues as
President.
In a statement addressing the latest developments at the
company, President and CEO Arpey said, "We enter a new era here
at AMR. I appreciate the Board's confidence, and I very much
appreciate the leadership the unions are showing and their
dedication to helping save our great company."
The ratified agreements permit the company to go forward with
plans to reduce labor costs by $1.8 billion a year as part of a
$4 billion restructuring plan crafted in cooperation with the
leaders of the Allied Pilots Association, the Association of
Professional Flight Attendants and the Transport Workers Union.
The modified agreements make improvements to the restructured
labor contracts and enhance the ability of employees to see
benefits sooner if the company returns to profitability.
These changes will shorten the duration of the labor contracts
to five years and replace the variable wage adjustment with a
mechanism that more closely links management performance
incentives with opportunities for employees to share in any
future success of the Company.
Arpey stressed that while the ratified agreements were a vital
component of the Company's restructuring process, the road ahead
would be perilous. The Company faces a hostile business and
financial environment that features higher fuel prices than
anticipated, continuing conflict in the Middle East, the SARS
outbreak and an economy that continues to struggle.
"In the short term," Arpey said, "We confront external factors
that pose a real threat to the success of the Company's
consensual restructuring. By any measure, we have our work cut
out for us. We are clearly not out of the woods yet." Among
other things, the company must also still secure meaningful
accommodations from vendors, lessors and suppliers.
"Everyone has worked incredibly hard through some extremely
difficult times to ratify the tentative agreements," Arpey said,
reserving special praise for employees and thanking them for
taking "this important step to move our company forward." He
also stressed that the Company must "implement these agreements
rapidly and without disruption."
Arpey also recognized the North Texas Congressional delegation,
characterizing their efforts as "one of the absolutely critical
components to this success."
In noting U.S. Senators Kay Bailey Hutchison's and John Cornyn's
involvement, Arpey said, "They have been involved for weeks in
doing everything possible to keep this process moving forward."
U.S. Representatives Martin Frost, Joe Barton, Pete Sessions and
Michael Burgess were singled out for their help in convening the
successful "last ditch effort" meetings that brought the various
parties together again.
"Without that push, and further assistance from U.S. Reps. Jim
Oberstar and Peter DeFazio, we simply wouldn't be standing
here," said Arpey during his press conference announcing the
agreements.
At the press conference, held Friday at American Airlines
headquarters in Fort Worth announced the latest developments,
Arpey was flanked by American's new Chairman, Ed Brennan; AMR
Board Member Roger Staubach; the company's two union leaders --
John Darrah, president of the APA and John Ward, president of
the APFA; and Congressman Martin Frost and Congressman Michael
Burgess.
In his introductory remarks, Roger Staubach thanked former
Chairman and CEO Don Carty for his "many contributions to the
company," and emphasized that with the new leadership
appointments of Arpey and Brennan, "AMR and American now will
have two outstanding individuals with extensive management
experience."
He also observed that Brennan "brings a depth of experience in
running a large corporation that AMR is fortunate to tap."
Brennan, 69, is the retired chairman, president and CEO of
Sears, Roebuck and Co., and has served on the AMR Board of
Directors for over 16 years.
"I am honored to accept the position of executive chairman of
AMR Corporation. I love this company and know that we have the
key ingredients necessary for success: the best service and the
best employees in the business," Brennan stated.
"The Board of Directors has complete confidence in Gerard and
his ability to bring together the employees of AMR to serve our
customers so that we may continue a legacy of aviation greatness
that started back in the days of Charles Lindbergh," Brennan
added.
"I will continue to lead by example," Arpey said. "Actions, of
course, speak louder than words. And you can expect me to ensure
my actions are consistent with the high standards we set for all
employees of American Airlines and American Eagle."
Arpey, 44, has devoted his entire professional career to
American Airlines, where he began as a financial analyst in 1982
and became a corporate officer in 1989. He holds a FAA multi-
engine instrument rating and is an avid private pilot.
AMERIGAS PARTNERS: Posts Increased Retail Propane Revenues in Q4
----------------------------------------------------------------
AmeriGas Partners, L. P.'s retail propane revenues were $361.8
million in the 2002 three-month period ended December 31st, an
increase of $63.0 million over the same period of 2001,
reflecting a $46.1 million increase as a result of the greater
retail volumes sold and a $16.9 million increase as a result of
higher average selling prices. Wholesale propane revenues
increased $8.4 million reflecting higher average wholesale
selling prices and the increase in wholesale volumes sold. The
higher average retail and wholesale selling prices in the 2002
three-month period reflect higher propane commodity prices.
Total cost of sales increased $44.2 million reflecting the
effects of the greater retail and wholesale volumes sold and the
increase in the commodity price of propane.
Total margin increased $29.5 million principally as a result of
the weather-related increase in retail gallons sold during the
2002 three-month period and, to a lesser extent, a $4.4 million
increase in margin from PPX(R). The increase in PPX(R) margin
reflects higher volumes, and greater unit margins to fund the
purchase of grill cylinder overfill protection devices in order
to meet National Fire Protection Association guidelines. These
guidelines require that propane grill cylinders refilled after
April 1, 2002, be fitted with OPDs. The extent to which this
greater level of PPX(R) margin is sustainable will depend upon a
number of factors including the continuing rate of OPD valve
replacement and competitive market conditions.
The $23.8 million increase in EBITDA (earnings before interest
expense, income taxes, depreciation and amortization, minority
interests and income from equity investees) in the 2002 three-
month period principally reflects higher total margin and a $2.1
million increase in other income partially offset by a $7.8
million increase in the Partnership's operating and
administrative expenses. Although EBITDA is not a measure of
performance or financial condition under accounting principles
generally accepted in the United States, it is included in this
analysis to provide additional information for evaluating the
Partnership's ability to pay and declare the Minimum Quarterly
Distribution of $0.55 and for evaluating the Partnership's
performance. The Partnership's definition of EBITDA may be
different from the definition of EBITDA used by other companies.
Notwithstanding the significant increase in retail volumes sold
in the 2002 three-month period, payroll and benefits expense
increased only $2.0 million principally reflecting the full-
period benefit of the consolidation of 90 Columbia Propane and
AmeriGas Propane districts. In addition, 2002 three-month period
operating and administrative expenses reflect higher provisions
for doubtful accounts due in large part to the increased sales;
greater general insurance and litigation expense; and an
increase in delivery vehicle expenses due in large part to the
greater retail volumes delivered during the 2002 three-month
period. Other income in the prior-year three-month period was
reduced by a $2.1 million loss from declines in the value of
propane commodity option contracts. Operating income increased
less than the increase in EBITDA principally as a result of
higher depreciation expense associated with OPDs.
FINANCIAL CONDITION AND LIQUIDITY
The Partnership's long-term debt outstanding at December 31,
2002 totaled $1,035.7 million (including current maturities of
$145.6 million) compared to $945.8 million of long-term debt
(including current maturities of $60.4 million) at September 30,
2002. On December 3, 2002, AmeriGas Partners issued $88 million
face amount of 8.875% Senior Notes due 2011 at an effective
interest rate of 8.30%. The net proceeds of approximately $89.1
million, which are included in cash and cash equivalents at
December 31, 2002, were used on January 6, 2003, subsequent to
the end of the quarter, to redeem prior to maturity AmeriGas
Partners' $85 million face amount of 10.125% Senior Notes due
2007 at a redemption price of 102.25%, plus accrued interest.
The Partnership will recognize a loss of approximately $3.0
million in the quarter ending March 31, 2003 relating to the
redemption premium and other associated costs and expenses.
As reported in Troubled Company Reporter's April 15, 2003
edition, AmeriGas Partners, L.P.'s $32 million 8.875% senior
notes due 2011, issued jointly and severally with its special
purpose financing subsidiary AP Eagle Finance Corp., are rated
'BB+' by Fitch Ratings. The Rating Outlook is Stable. An
indirect subsidiary of UGI Corp., is the general partner and a
51% limited partner for AmeriGas. AmeriGas in turn is a master
limited partnership for AmeriGas Propane, L.P., an operating
limited partnership. Proceeds from the new senior notes will be
utilized to make a capital contribution to the OLP which in turn
will use the funds as well as existing cash on hand to repay
approximately $53.8 million of maturing debt.
AmeriGas' rating reflects the subordination of its debt
obligations to $577 million secured debt of the OLP including
the OLP's $540 million privately placed 'BBB' rated first
mortgage notes. In addition, Fitch's assessment incorporates the
underlying strength of AmeriGas' retail propane distribution
network. AmeriGas is viewed as one of the premier retail propane
distributors evidenced by its efficient operations, favorable
acquisition track record, and proven ability to sustain gross
profit margins under various operating conditions.
ANC RENTAL: Wins Nod to Amend Brown Bros.' Terms of Engagement
--------------------------------------------------------------
ANC Rental Corporation and Brown Brothers obtained permission
from the Court to amend the Engagement Letter pursuant to these
terms:
A. Paragraph 3 of the Engagement Letter is modified as:
"Notwithstanding any other provision of the Engagement
Letter commencing March 1, 2003, the Advisory Fee will
terminate. After this date, to the extent ANC
requests that Brown Brothers professionals attend
outside or on-site meetings in connection with a
transaction for ANC's European operations, ANC will
compensate Brown Brothers at its standard per diem
rate of $4,000 per professional."
B. Subsections (a) and (b) of Paragraph 3 of the Engagement
Letter will be amended and replaced in their entirety:
1. after the first to occur of a Sale or a restructuring
of ANC Rental Corporation and Restructuring of
substantially all of the Company's liabilities, Brown
Brothers will be paid a Transaction Fee equal to
$250,000; and
2. in the event of a Sale of the European operations of
ANC, Brown Brothers will be entitled to a Transaction
Fee equal to $500,000.
Backgrounder
On March 27, 2002, the Court entered an Order pursuant to
Sections 327 and 330 of the Bankruptcy Code and Rule 2014 of the
Federal Rules of Bankruptcy Procedure authorizing ANC Rental
Corporation and its debtor-affiliates to employ Brown Brothers
as their investment banker, nunc pro tunc, to December 27, 2001.
On February 26, 2002, the Court entered an Order approving the
employment of Lazard Freres & Co, LLC as the Debtors' Investment
Banker.
In light of Lazard's engagement, Brown Brothers agreed to modify
terms of its engagement by foregoing all fees to which it would
otherwise be entitled in connection with a transaction involving
the Debtors' United States operations in exchange for a payment
of the Brown Brothers' monthly fee for January and February
2003, and a $250,000 fee in the event that all of the Debtors'
operations are sold, or a $500,000 fee if the Debtors sell ANC
International. Lazard's engagement letter also provides for an
additional fee of $150,000 if Lazard provides testimony in
Court.
Lazard agreed to work solely on a contingency basis, with
payment to be made only in the event of a sale or other similar
transaction. Although Lazard agreed that they will market the
Debtors' businesses as a whole, they will not receive a fee from
a transaction involving solely the Debtors' International or
Canadian operations. (ANC Rental Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ARI NETWORK: Completes $4-Million Debt Restructuring Transaction
----------------------------------------------------------------
ARI (OTCBB:ARIS), a leading provider of electronic catalog-
enabled business solutions that connect equipment manufacturers
with their service and distribution networks, has successfully
completed a restructuring of its $4.0 million convertible
subordinated debenture, which was due April 27, 2003.
"This is a good result," said Brian E. Dearing, ARI's chairman
and chief executive officer. "By restructuring the debt with the
new holders, we have strengthened the Company for the future and
can now refocus our attention on the business. As we have said
all along, ARI is a good company with blue chip customers,
industry-leading products, and superb employees. We have proven
ourselves capable of generating sufficient cash flow to satisfy
our obligations, including this new one."
In exchange for the debt, which had approximately $0.9 million
in accrued and unpaid interest, and a warrant to purchase
600,000 shares of ARI common stock at $4.00 per share, ARI has
given the new holders (in aggregate) $500,000 in cash, new
unsecured notes for $3.9 million, and new warrants for 250,000
common shares at $1.00 per share. The interest rate on the new
notes is prime plus two, with the first payment due March 31,
2004. The payment schedule provides for regular quarterly
payments until the principal is paid in full on December 31,
2007. In connection with this restructuring, ARI has received a
thirty-day extension on its receivables financing facility with
Textron Growth Capital Division, which would have expired on
April 24. The Company anticipates that a long-term arrangement
will be negotiated before this most recent extension expires.
"In addition to restructuring the debt, it is also significant
that the new holders have assigned all their rights and claims
against RGC International Investors (Rose Glen), and its
affiliates to ARI," added Dearing. "Last fall, we negotiated a
Stand-Still and Buy-Back Agreement with Rose Glen, the original
holder of the debenture and warrants, which allowed us to
satisfy our obligations for an initial payment of $500,000 and
an additional payment of $1 million eight months later. After we
accepted their offer, Rose Glen sold the Debenture to an
investment consortium represented by Taglich Brothers, Inc. The
assignment to us of their rights against Rose Glen further
strengthens our position in seeking to obtain the benefit of the
$1.5 million deal," Dearing concluded.
ARI Network Services, Inc. is a leading provider of electronic
catalog-enabled business solutions for sales, service and life-
cycle product support in the manufactured equipment market. ARI
currently provides approximately 80 parts catalogs (many of
which contain multiple lines of equipment) for approximately 60
equipment manufacturers in the U.S. and Europe. More than 75,000
catalog subscriptions are provided through ARI to over 23,000
dealers and distributors in more than 100 countries. ARI serves
a dozen segments of the worldwide manufactured equipment market
including outdoor power, recreation vehicle, floor maintenance,
auto and truck parts aftermarket, power sports, marine and
construction. The Company builds and supports a full suite of
multi-media electronic catalog publishing and viewing software
for the Web or CD and provides expert catalog publishing and
consulting services. ARI communications systems provide a global
electronic pathway for parts orders, warranty claims and other
transactions between manufacturers and their networks of sales
and service points. In addition, ARI also provides a template-
based dealer website service that makes it quick and easy for an
equipment dealer to have a professional and attractive website.
ARI currently operates three offices in the United States and
one in Europe and has sales and service agents in Australia,
England and France providing marketing and support of its
products and services.
ARI Network Services' January 31, 2003 balance sheet shows a
working capital deficit of about $9 million, and a total
shareholders' equity deficit of about $6 million.
ATSI COMMS: AMEX Delists Shares Effective April 24, 2003
--------------------------------------------------------
ATSI Communications, Inc.'s (Amex: AI) stock was delisted from
the American Stock Exchange effective April 24, 2003.
The Exchange cited ATSI's failure to comply with certain
standards and procedures adopted by the Exchange that are
necessary for continued listing eligibility. The letter cited
the following:
The Company had failed to file its October 31, 2002 and
January 31, 2003 form 10-Q with the SEC and therefore is not in
compliance with Sections 132(C), 1002(d)(e), 1003(d), and 1101
of the AMEX Company Guide.
The Company's July 31, 2002 Form 10-K reflected that the Company
was out of compliance with Section 1003(a)(i) with shareholder
equity less than $2 million and losses from continuing
operations and/or net losses in two of its three most recent
fiscal years; Section 1003(a)(ii) with shareholder equity less
than $4 million and losses from continuing operations and/or net
losses in three out of its four most recent fiscal years; and
Section 1003(a)(iii) with shareholder equity of less than $6
million and losses from continuing operations and/or net losses
in its five most recent fiscal years.
The Exchange questioned whether the Company was in compliance
with Section 1003(a)(iv) regarding its financial condition for
continued operations.
The Exchange's review of the Company's July 31, 2002 10K
reflected a failure on the Company's part to show progress with
the plan submitted to the Exchange on May 1, 2002 for continued
listing.
The Exchange felt that the Company was not in compliance with
Section 121B(b)(i) of the AMEX Company Guide regarding its Audit
Committee's composition.
The Exchange felt the Company was not in compliance with Section
301 of the AMEX Company Guide, which states that a listed
company is not permitted to issue or to authorize its Transfer
Agent or Registrar to issue or register additional securities of
a listed class until it has filed an application for listing of
such additional securities and received notification from the
Exchange that the securities have been approved for listing.
The Exchange felt that the Company failed to notify the Exchange
in a timely manner of Directors resignations announced in a
press release issued by the Company of February 7, 2003, which
is required by Section 921 of the AMEX Company Guide.
The Exchange also cited the Company's failure to distribute its
annual report to shareholders for fiscal year 2002 as required
by Section 611 of the AMEX Company Guide.
The Company has also failed to pay listing fees established by
the Exchange in Section 1003(f)(iv) and failed to maintain the
Exchange's listing requirements for common stock share price.
ATSI Communications, Inc., filed for chapter 11 protection on
February 4, 2003 (Bankr. W.D. Tex. Case No. 03-50753). When the
Company filed for protection from its creditors, it listed over
$10 million in assets and less than $10 million in debts.
AUSPEX SYSTEMS: Nasdaq Intends to Delist Shares Effective Friday
----------------------------------------------------------------
Auspex Systems Inc. (Nasdaq: ASPX) received a Nasdaq Staff
Determination on April 23, 2003, indicating that the company's
securities will be delisted from the Nasdaq Stock Market at the
opening of business on Friday May 2, 2003. The determination was
based upon the Company filing for protection under Chapter 11 of
the US Bankruptcy Code (Nasdaq Marketplace Rule 4330(a)(1)),
concerns regarding the residual equity interest of the existing
listed securities holders, (Nasdaq Marketplace Rule 4300) and
concerns about the Company's ability to sustain compliance with
all requirements for continued listing on The Nasdaq Stock
Market. Additionally, the Company has not paid its 2003 SmallCap
Market Annual Fee in the amount of $16,000, which was due as of
January 30, 2003, which is an additional basis for delisting,
(Nasdaq Marketplace Rule 4310(C)(13)).
The Company has no basis for requesting a hearing in accordance
with the Marketplace Rule 4800, and expects the delisting to
take place as scheduled.
Auspex introduced the world's first Network Attached Storage
server shortly after its founding in 1987, creating a new breed
of storage appliance offering significant performance and
administrative benefits over general-purpose file servers.
Auspex's enterprise-class network servers are used worldwide for
consolidated information storage and delivery. Auspex also is
leading the convergence of NAS with Storage Area Networks with
the NSc3000 Network Storage Controller, the first multivendor
SAN-to-NAS gateway. The company is headquartered in Santa Clara,
California. Its shares are traded on the NASDAQ under the symbol
ASPX. For more information, visit http://www.auspex.com
AUSPEX SYSTEMS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Auspex Systems, Inc.
2800 Scott Blvd.
Santa Clara, California 95050
Bankruptcy Case No.: 03-52596
Type of Business: Auspex is a manufacturer of network storage
equipment.
Chapter 11 Petition Date: April 22, 2003
Court: Northern District of California (San Jose)
Judge: Marilyn Morgan
Debtor's Counsel: J. Michael Kelly, Esq.
Law Offices of Cooley Godward
1 Maritime Plaza
20th Floor
San Francisco, CA 94111-3580
Tel: (415) 693-2000
Total Assets: $30,398,964
Total Debts: $13,987,908
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wal-Mart Stores Inc. Prepaid Service $936,232
1108 SE 10th Street Contracts
Betonville, AR 72716-0845
Intel Corp. Prepaid Service $164,562
Contracts
Lockheed Martin Prepaid Service $111,647
Contracts
Net Brains Inc. Prepaid Service $63,247
Contracts
Hitachi Data Systems Prepaid Service $56,625
Bell Microproducts Supplier $54,885
S&S Public Relations Service $47,261
Net Brains Inc. Prepaid Service $41,113
Contracts
Tyco Packaging Supplier $39,791
AGI Mexicana Products; Prepaid Service $38,375
Contracts
Electronic Data Systems Prepaid Service $35,058
Contracts
Avaya Inc. Prepaid Service $34,809
Contracts
Gennum Corp. Prepaid Service $32,293
Contracts
Carrigan, Micha Accrued & unused vacation $31,971
& Holiday & Other
Raytheon Systems Company Prepaid Service $31,175
Contracts
Ludden, Thomas Accrued & unused vacation $30,641
& holiday & other
Hoffman, Douglas Unpaid Commissions $29,783
Aprisma Management Prepaid Service $29,212
Contracts
Legerity Inc. Prepaid Service $28,999
Contracts
LSI Logic Corp. Prepaid Service $28,953
Contracts
BEARD COMPANY: Cole & Reed PC Expresses Going Concern Doubt
-----------------------------------------------------------
In 2002 Beard Company operated within the following operating
segments: (1) the coal reclamation Segment, which is in the
business of operating coal fines reclamation facilities in the
U.S. and provides slurry pond core drilling services, fine coal
laboratory analytical services and consulting services; (2) the
carbon dioxide Segment, comprised of the production of CO2 gas;
(3) the China Segment, which is pursuing environmental
opportunities in China, focusing on the installation and
construction of facilities which will utilize the proprietary
composting technology of Real Earth United States Enterprises,
Inc.; and (4) the e-Commerce Segment, whose current strategy is
to develop licensing agreements and other fee based arrangements
with companies implementing technology in conflict with Beard's
intellectual property.
The termination of the MCN Projects in January 1999 has had a
material detrimental effect upon the Company's profitability
since that date. Primarily as a result of the loss of its major
revenue stream, coupled with the use of funds required to
support the activities of its various startup activities, the
Company's working capital decreased from $981,000 at year-end
1999 to a deficit of $284,000 at year-end 2002.
The Company continues to take steps to mitigate future funding
requirements by its poorly performing subsidiaries. Several
projects are in various stages of development which, subject to
arranging necessary financing, are ultimately expected to
mature into operating projects. In the Coal Segment, Beard
Technologies has entered into a memorandum of understanding and
expects to finalize a definitive agreement on a project in the
second quarter of 2003. The discontinued ITF Segment, which
consumed $482,000 of cash from 1999 to 2001, generated cash of
$96,000 in 2002 and is expected to generate approximately
$140,000 of cash in 2003 as its remaining assets are sold. The
discontinued BE/IM Segment is expected to contribute $110,000
or more of cash to Beard in 2003 as its remaining assets are
liquidated. The WS Segment, which consumed $2,046,000 of cash
from 1999 to 2000, generated $104,000 of cash from 2001 to 2002
and is expected to contribute $150,000 or more of cash to the
Company in 2003 as its remaining assets are liquidated.
Meanwhile, two private placements of notes and warrants totaling
$1,800,000 were completed in May of 2002 and February of 2003.
Such funds are expected to "bridge the gap" until (i) the
anticipated McElmo Dome settlement has been distributed, and
(ii) the contemplated new coal project and projects under
development in China are underway.
Nonetheless, the Auditors Report of Cole & Reed, P.C., of
Oklahoma City, Oklahoma, dated April 8, 2003, states, in part:
"[T]he Company's recurring losses and negative cash flows from
operations raise substantial doubt about its ability to continue
as a going concern."
At December 31, 2002, the Company was in a negative working
capital position with a deficit in working capital of $284,000,
and a current ratio of 0.67 to 1.
The Company incurred losses from continuing operations totaling
$8,896,000 during the past five years. The Company generated
net losses totaling $17,220,000 during that period. The
discontinued interstate travel facilities and natural gas well
servicing businesses accounted for $3,650,000 and $2,397,000,
respectively, of the losses, but those problems are now behind
Beard Company and management expects to dispose of their
remaining assets in 2003. The discontinued iodine business
impacted earnings in the amount of $642,000 during the last five
years, including $199,000 the last two years, but again, those
problems are behind the Company, and management expects to
dispose of its remaining assets in 2003.
BLACK BAY BREWING: Case Summary & 20 Largest Unsec. Creditors
-------------------------------------------------------------
Debtor: Back Bay Brewing Company, Ltd.
755 Boylston St
Boston, Massachusetts 02116
dba Vox Populi
Bankruptcy Case No.: 03-13022
Type of Business: Located across from the Prudential Center,
the former brew pub is now and American
cuisine restaurant with first floor bar an
fireplace lounge, a second-floor bar
overlooking Boylston Street, and an elegant
second-floor dining area.
Chapter 11 Petition Date: April 15, 2003
Court: District of Massachusetts (Boston)
Judge: Joan N. Feeney
Debtor's Counsel: John M. McAuliffe
McAuliffe & Associates, P.C.
430 Lexington Street
Newton, MA 02466
Tel: (617) 558-6889
Total Assets: $9,000,000
Total Debts: $1,202,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Boston Magazine Trade Debt $10,077
Churchill Linen Services Trade Debt $8,289
Clever Ideas Trade Debt $22,625
Colonial LLC d/b/a Friel Trade Debt $9,987
Construction
F&B Fruit & Produce Trade Debt $9,480
First Insurance Funding Trade Debt $6,870
Guest Informant Trade Debt $7,341
Hallsmith-Sysco Food Trade Debt $21,789
Service
Horizon Beverage Trade Debt $28,078
Idine Restaurant Trade Debt $136,000
Key Equipment Financing Trade Debt $13,056
Levine, Katz, Nannis & Trade Debt $12,000
Soloman
Looney & Grossman Trade Debt $19,560
M.S. Walker Trade Debt $7,657
Mill Pond Realty Trust Trade Debt $80,000
Nstar Electric Trade Debt $13,456
Paramount Insurance Co. Trade Debt $16,905
The Improper Bostonian Trade Debt $18,500
US Food Service Trade Debt $8,060
United Liquors Trade Debt $30,173
BLUE MOON GROUP: James C. Marshall Expresses Going Concern Doubt
----------------------------------------------------------------
"[T]he Company has suffered recurring losing (sic) from
operations and has depleted working capital that raises
substantial doubt about its ability to continue as a going
concern." So states, in part, the Auditors Report of James C.
Marshall, CPA, P.C., of Scottsdale, Arizona, under date of April
14, 2003, regarding the financial condition at December 31,
2002, of Blue Moon Group Inc. (formerly Open Door Online, Inc.).
Blue Moon Group, Inc. is an entity that will provide traditional
sales of recordings of artists under distribution contracts and
other prerecorded music and recording operations. The Board of
Directors has embarked on a search for the acquisition of
various businesses in the entertainment industry. The Company
is searching for active, profitable, positive cash flow
opportunities with seasoned management in place. The Company
wishes to broaden its base of business to include recording
studios, artist development and marketing, concert promotion,
entertainment video production and distribution and marketing of
various entertainment-associated products.
The following represents the results of operations of Blue Moon
Group, Inc. for December 31, 2002 and Open Door Online, Inc. for
December 31, 2001.
December 31, December 31,
2002 2001
---- ----
Summary of Operations
Net Revenues $ 0 $ (32,243)
Forgiveness of Debt 61,821 0
Cost of Sales 9,391 0
Gross Profit 52,430 (32,243)
Operating Expenses 3,810,965 579,924
Net Profit (Loss) (4,059,577) (612,167)
Summary Balance Sheet Data
Total Assets $ 8,069,435 $ 10,501,696
Total Liabilities 945,007 1,917,604
Shareholder's Equity 7,124,428 8,584,092
As of December 31, 2002 Blue Moon Group had $0. Bills were
being paid on as needed basis with funds borrowed by the Company
up to the required amount for payment. Historically the Company
has financed its operations with short-term convertible debt or
through the issuance of equity in the form of its common stock.
During the year ended December 31, 2002 it borrowed $16,955.
During the period ended December 31, 2001 it raised $163,023
through issuance of notes. New capitalization will be required
in the event a merger, sale or acquisition of a subsidiary with
cash reserves is completed. There is no assurance that Blue Moon
Group will be successful in raising the required capital or
completing any other transaction.
COMPACT DISC: Honoring Up to $4MM of Prepetition Vendor Claims
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey gave
its nod of approval to Compact Disc World, Inc.'s application to
pay $4,184,152 of prepetition claims owed to its critical
vendors.
The Debtor tells the Court that its primary sources of revenue
are sales of music recorded on compact discs and movies recorded
on digital video discs. CD sales account for approximately 70%
of the Debtor's business and DVD sales account for approximately
20% of the Debtor's business. The Debtor purchases its CD and
DVD inventory from, among others, WEA, BMG Distributions,
Caroline Distributions, EMD/EMI Music Distributions, Sony Music
(RED), Sony Music, Universal Music Video Distributions, Warner
Home Video, Wax Works, and Galaxy Music Distributions.
All Critical Vendors, other than Galaxy and Wax Works, have
liens on all inventory which they sell to the Debtor, junior in
priority to the liens securing the Debtor's obligations to
Wachovia Bank.
According to the Debtor's books and records, the Debtor owes the
Critical Vendors $4,184,152 for product delivered prior to the
Petition Date. To ensure that the Critical Vendors continue to
do business with the Debtor and to ensure that the Debtor
receives product to operate its business, the Debtor reached an
agreement with each of the Critical Vendors to cap each of the
Critical Vendors' credit exposure -- the Nine Month Program.
Under the Nine Month Program, the Debtor agreed to consolidate
any past due payables with February and March 2003 payables with
respect to each Critical Vendor. The Debtor has agreed to pay
1/9 of the Consolidated Payables on the 15th day of every month
over a nine month period starting in February 2003.
The Debtor submits that the ratification of the Nine Month
Program and payment of the Prepetition Claims of the Critical
Vendors is necessary to enable the Debtor to continue its
operations in the ordinary course of business and to facilitate
a successful reorganization.
Since the Debtor's CD and DVD sales comprise approximately 90%
of the Debtor's business, if the Prepetition Claims of the
Critical Vendors are not paid pursuant to the Nine Month
Program, the Critical Vendors will likely cease doing business
with the Debtor. Given that the Critical Vendors comprise
approximately 80% of the CD and DVD market, the Debtor will be
unable to find alternative suppliers whose product it can sell
profitably. Thus, payment of the Pre-Petition Claims is
essential for the Debtor's ability to continue as a going
concern.
Compact Disc World, Inc., is a retail music chain. The Company
filed for chapter 11 protection on April 16, 2003 (Bankr. N.J.
Case No. 03-22638). Boris I. Mankovetskiy, Esq., and Jack M.
Zackin, Esq., at Sills Cummis Radin Tischman Epstein & Gross,
P.A., represent the Debtor in their chapter 11 case. When the
Company filed for protection from its creditors, it estimates it
debts and assets of over $10 Million each.
CONSECO FINANCE: Claims Estimation Hearing to Convene on May 9
--------------------------------------------------------------
Lehman Brothers and affiliates ask the Court to compel the
Official Committee of Unsecured Creditors of the Conseco Finance
Debtors to participate in the estimation procedures of the
Lehman Claims. Lehman also wants to compel the CFC Committee to
present any issues it may have on the Lehman Claims in the
estimation proceeding.
Robert J. Rosenberg, Esq., at Latham & Watkins, in New York
City, argues that the CFC Committee's participation is:
-- necessary for the proper estimation of the Lehman Claims;
-- necessary to avoid fundamental unfairness to Lehman; and
-- consistent with the parties' and Court's interests in
judicial economy and efficiency.
Mr. Rosenberg relates that Lehman is a secured creditor to the
Special Purpose Entities of Green Tree Residential Finance Corp.
I and Green Tree Finance Corp. Five, pursuant to secured and
cross-collateralized financing facilities. Lehman has a claim
against the SPEs for indemnification of expenses incurred in
enforcing the Lehman Facilities. The obligations are guaranteed
by CFC and CIHC. For example, CIHC has guaranteed up to a
maximum of $125,000,000.
It has been CFC's intention to sell the SPEs, along with its
other assets. During negotiations to secure the $25,000,000
Lehman Warehouse Facility Financing, the Debtors waived their
rights to challenge the Lehman Liens securing its Facilities.
However, the related Orders preserved the CFC Committee's right
to consolidate the assets and liabilities of the SPEs with CFC,
or challenge the transfer of assets to the SPEs as not having
been "true sales."
According to Mr. Rosenberg, the CFC Committee intends to
challenge the validity of the Liens and claims that Lehman has
against the SPEs.
The Asset Sale Order contemplates the purchase of the SPEs and
payment to Lehman of proceeds to repay the Lehman Facilities in
full. However, Lehman is sure the Committee plans to challenge
this right to retain the proceeds.
Regardless of the success or failure of the CFC Committee on
this matter, Lehman will have a valid claim under the CIHC
Guarantee. This is important to the Plan because it contemplates
a full recovery to creditors with CIHC claims.
The CFC Committee must participate in the claims estimation
process because it surely intends to challenge Lehman's right to
receive and retain proceeds from the SPE sale. Otherwise, the
Court will listen to parties whose position on the estimation is
predicated on satisfaction of the Lehman Facilities through the
distribution of the proceeds from the CFC Asset sale, but not
before the party that takes a contrary position.
It would be inconsistent with the purpose of the estimation
procedures for it to go forward under the specter of a
subsequent challenge by the CFC Committee to the issues the
Court will rule on in the estimation procedures, i.e. the CIHC
guarantee and Lehman's right to a distribution of the proceeds
from the Court-approved CFC Asset Sale. If the CFC Committee
successfully challenges Lehman's rights to those proceeds, then
the Lehman Facility not have been extinguished and Lehman will
have a valid claim against CIHC under its guarantee. If the CFC
Committee's challenge is unsuccessful, it would still give rise
to a valid claim under the CIHC guarantee, because Lehman's
right to indemnification costs incurred in defending this
challenge are covered under the guarantee. If this
indemnification right is triggered after Lehman receives the
proceeds, it will pursue a claim under the CIHC guarantee.
If the CFC Committee does not participate in the estimation
proceedings, the Court may be asked to enter inconsistent
rulings. For example, if the Court estimates the Lehman Claims
at zero without the CFC Committee's involvement, the Court would
face the prospect of a completely inconsistent ruling in
connection with a CFC Committee challenge to Lehman's right
under the Lehman Facilities.
Mr. Rosenberg says that if the estimation procedures go forward
without the CFC Committee, fundamental unfairness would result.
The Lehman Claims cannot be subject to estimation in a procedure
where the Debtors advocate estimation at zero, premised on the
satisfaction of the Lehman Facilities, when another party not
before the Court takes the position that it is likely to
challenge that very premise.
An Estimation Hearing is scheduled for May 9, 2003. (Conseco
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
CONSECO INC: Committee Gets Go-Signal to Hire Financial Advisors
----------------------------------------------------------------
After overruling the U.S. Trustee's objection, the Court gave
the Official Committee of Unsecured Creditors of Conseco Holding
Company Debtors the authority to retain Greenhill & Co., and
Houlihan, Lokey, Howard & Zukin as financial advisors.
As financial advisors, Greenhill and Houlihan will:
a) advise and assist the Committee in evaluating the Debtors'
assets and liabilities;
b) advise and assist the Committee's analysis and review of
the Debtors' financial and operating statements;
c) advise and assist the Committee in its analysis of the
Debtors' forecasts and business plans;
d) advise and assist the Committee in its assessment of the
issues and options on the Debtors' asset sales and the
Plan;
e) advise and assist the Committee in assessing a proposed
transaction;
f) advise and assist the Committee in its claims resolution
process and distributions;
g) prepare and analyze transactions with various
constituencies;
h) evaluate the Debtors' debt capacity based on projected
cash flows;
j) analyze a proposed capital structure for the Debtors;
k) assist the Committee in negotiations with the Debtors or
any groups affected by the restructuring;
l) monitor the Debtors' ongoing performance;
m) provide testimony on the foregoing when requested; and
n) provide specific valuation or other financial analyses as
requested.
Both firms have already provided considerable services in these
cases and have become familiar with many aspects of the Debtors.
Greenhill's and Houlihan's knowledge of the Debtors, their
businesses and capital structure will not be easily replaced
without the expenditure of money and time.
Greenhill will be paid a $150,000 monthly cash advisory fee. If
a Restructuring is consummated, Greenhill will be paid a
$3,500,000 cash fee. Greenhill received $550,000 for advisory
fees prepetition. Greenhill is holding a $15,462 deposit made
by the Debtors prepetition, which will be applied to the firm's
out-of-pocket expenses. In a postpetition Engagement Letter,
Restructuring is defined as any recapitalization of Conseco's
equity or debt securities, pursuant to any financial transaction
or Plan, as long as Conseco is independent of government
control.
On the other hand, Houlihan will be paid a $175,000 monthly
advisory fee in advance. If a Transaction is completed,
Houlihan will be paid a fee in cash equal to 0.50% of the
consideration received by all Bondholders. In their engagement
letter, a Transaction is defined as a purchase of the Company in
any form, any transfer of all assets or the confirmation of a
Plan. (Conseco Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Conseco Inc.'s 10.500% bonds due 2004 (CNC04USR2) are trading at
about 37 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for
real-time bond pricing.
COVANTA: Asks Court to Fix June 14 Bar Date for Debenture Claims
----------------------------------------------------------------
Pursuant to Section 501 of the Bankruptcy Code and Rules 2002
and 3003(c)(3) of the Federal Rules of Bankruptcy Procedure,
Covanta Energy Corporation, and its debtor-affiliates ask the
Court to:
(a) establish June 14, 2003 as the Bar Date in respect of the
5-3/4% Convertible Subordinated Debentures Due 2002 and
the 6% Convertible Subordinated Debentures Due 2002;
(b) establish June 14, 2003 as the Bar Date for any and all
proofs of claims against Covanta Concerts Holdings, Inc.;
(c) provide that for any claim related to the rejection of an
executory contract or unexpired lease by Covanta Concerts
pursuant to a Court order granting the motion but not
before plan confirmation, the applicable bar date will be
the later of:
-- the Covanta Concerts Bar Date, and
-- 30 days after the entry of the order authorizing the
rejection;
(d) establish the Bar Date in respect of any amended
schedules Covanta Concerts filed as 30 days after the
Debtors send notice of an amended schedule identifying
the claimant as the holder of a disputed, contingent or
unliquidated claim against Covanta Concerts; and
(e) approve the form, timing and manner of the Bar Date
notice, the Covanta Concerts Rejection Bar Date and the
Covanta Concerts Amended Schedules Bar Date.
Convertible Debentures Bar Date
James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton,
in New York, relates that prior to the Petition Date, Covanta
issued the Convertible Debentures as both registered and bearer
debentures. With respect to the bearer debentures, the Debtors
do not have access to the name or addresses of the holders.
Moreover, the Convertible Debentures were initially issued into
the Eurodollar market and it is likely that a significant number
of holders of the bearer debentures and the related Subordinated
Debenture Claims are located in foreign jurisdictions.
As the Debtors amended the Schedules, the actual holders of the
Convertible Debentures are not identified because they are not
all known to the Debtors. The Amended Schedules, like the
Original Schedules, state that claims in respect of Convertible
Debentures are "disputed and unliquidated". Thus, the Debtors
seek Court approval of the Convertible Debentures Bar Date so
that claim holders in respect of the Convertible Debentures
would have additional time to file a proof of claim.
Mr. Bromley explains that this motion is filed out of abundance
of caution to provide additional time for claim holders to file
a claim and for the Court to approve the form, manner and timing
of notice of the Convertible Debentures Bar Date, including the
publication notice.
The Debtors propose to send notice of the Convertible Debentures
Bar Date to all registered holders of the Convertible Debentures
and holder of bearer bonds who have contacted the Debtors'
counsel since the Petition Date and to publish notice of the
Convertible Debentures Bar Date in the "Luxemburger Wort" and
the "Financial Times of London" as contemplated by the related
Fiscal Agency Agreements.
Covanta Concerts Holdings Bar Date
According to Mr. Bromley, Covanta, through its subsidiaries,
owns 76% of Covanta Concerts' outstanding stock. All of Covanta
Concerts' businesses have been sold, with the sole exception of
its investment in Rent, LLC, which continues to generate some
revenue for Covanta Concerts. Covanta Concerts is in the
process of winding down its business operations.
The Debtors propose that all Entities that have or seek to
assert potential Convertible Debentures Claims or potential
claims against Covanta Concerts be required to file a proof of
claim by the applicable Bar Date in order to receive
distributions on account of the claims. These Entities would
not be required to file proofs of claim:
(a) any Entity that has already properly filed with the Court
a proof of claim in respect of Convertible Debentures
Claims or Covanta Concerts Claims;
(b) any Entity whose claim is listed on the schedule of
creditors filed by Covanta Concerts Schedules and not
identified as "disputed, contingent or unliquidated" and
that agrees with the nature, classification and amount of
the claim set forth in the Covanta Concerts Schedules;
(c) any Entity holding a Convertible Debentures Claim or a
Covanta Concerts Claim that previously has been allowed
by, or paid pursuant to, a Court order, including the
prepetition claims of the Debtors' postpetition employees
and certain of their critical trade creditors; and
(d) any Entity whose claim is allowable under Sections 502(b)
and 507(a) of the Bankruptcy Code as an administrative
expense.
Mr. Bromley notes that it is possible that creditors may assert
claims in connection with any Covanta Concerts rejection of
executory contracts or unexpired leases pursuant to Section 365
of the Bankruptcy Code. The Debtors propose that for any claim
related to a rejection that is approved by a Court order after
entry of an order approving this request but before plan
confirmation, the Covanta Concerts Rejection Bar Date will be
the later of:
-- the Covanta Concerts Bar Date, and
-- 30 days after the Debtors send via first class U.S. mail a
notice or copy of the order authorizing the rejection to
the affected counterparty or lessor, as the case may be,
which service will be made on or before the 11th day after
the entry of the rejection order.
In addition, the Debtors propose that the bar date for filing of
proofs of claim against Covanta Concerts in respect of any
disputed, contingent or unliquidated claim listed on any amended
schedule Covanta Concerts files will be 30 days after the
Debtors send via first class U.S. mail a notice of the relevant
Amended Schedule identifying the claim.
Mr. Bromley states that any Entity that wishes to assert a
Convertible Debentures Claim or a Covanta Concerts Claim that is
not listed or that is improperly classified in the Debtors'
schedules of creditors, is listed in the Schedules in an amount
disputed by the Entity, or is listed in the Schedules as
disputed, contingent or unliquidated and that desires to
participate in the Chapter 11 cases or share in any distribution
in the Chapter 11 cases must file a proof of claim on or before
the applicable Bar Date. Any Entity that relies on the
Schedules will bear responsibility for determining that its
claim is accurately listed therein.
The Debtors will retain the right to:
(i) dispute, or assert offsets or defenses against, any filed
claim or any claim listed or reflected on the Schedules
as to the amount, liability, classification or otherwise;
or
(ii) subsequently designate any claim as disputed, contingent
or unliquidated.
Pursuant to Bankruptcy Rule 3003(c)(2), any Entity that is
required to file a proof of claim in these cases but fails to do
so in a timely manner, should forever be barred, estopped and
enjoined from:
(a) asserting any claim against the Debtors or the Debtors'
estate that the Entity has a claim in excess of the
scheduled amount or is for a different amount, nature or
classification; and
(b) voting upon, or receiving distributions under, any plan
of reorganization in these cases in respect of an
Unscheduled Claim.
The Debtors propose to serve by mail on all Entities identified
on the Covanta Concerts Schedules as holding potential Claims:
(i) a notice of the Covanta Concerts Bar Date, which
includes instructions explaining the procedures for
filing proofs of claims; and
(ii) a proof of claim form substantially in the form of
Official Form No. 10.
In addition, the Debtors propose to serve a notice of the
Convertible Debentures Bar Date and a proof of claim form to
these Entities:
(a) all registered holders of the Convertible Debentures and
holders of bearer bonds who have contacted the Debtors'
counsel since the Petition Date;
(b) Euroclear Bank, N.V.; and
(c) Clearstream Banking.
Mr. Bromley explains that the Debtors cannot provide direct
notice to all holders because many of the Convertible Debentures
are bearer bonds. Both Euroclear and Clearstream agreed to
provide notice of the Convertible Debentures Bar Date to their
clients that are holders of the Convertible Debentures.
Mr. Bromley assures the Court that the Debtors will provide the
notice as soon as practicable, but in no event made no later
than May 9, 2003. This is consistent with Bankruptcy Rule
2002(a)97) and the SDNY Guidelines, that notice will be provided
to creditors no less than 35 days prior to the applicable Bar
Date.
Since most of the Convertible Debentures are bearer bonds, the
Debtors believe that it is necessary to provide publication
notice of the Convertible Debenture Bar Date. Hence, the
Debtors wish to publish the notice to the Financial Times of
London and the Luxemburger Wort on or prior to May 19, 2003.
The Debtors do not propose to provide publication notice of the
Covanta Concerts Bar Date.
Each Entity holding a claim and is required to file a claim
should deliver the Proof of Claim Form, together with supporting
documents, if any, by first class U.S. mail, postage paid, to:
Ogden New York Services, Inc. Claims Processing/BSI
Bowling Green Station
P.O. Box 5044
New York, NY 10274-5044
or, if sent by hand delivery or recognized overnight courier
other than first class U.S. mail, to:
Office of the Clerk of the Court
U.S. Bankruptcy Court for the Southern District of New York
Re: In re Ogden New York Services, Inc., et al.
One Bowling Green
Room 534
New Yo9r, NY 10004-1402
The proof of claim must be completed and signed, so as to be
received on or before 4:00 p.m. on the Bar Date. Proof of claim
forms sent vial facsimile or telecopy will not be accepted. All
proofs of claim must be in the English language and be
denominated in U.S. currency. Proofs of claim will be deemed
filed only when actually received by the Court.
All proofs of claim should attempt to specifically identify, to
the extent possible, on the first page of the Proof of Claim
Form the particular Debtor against which the person or entity
holding the Claim is asserting the claim. All persons and
entities asserting claims against more than one Debtor should
attempt to clearly indicate the Debtor against which they are
filing the claim. (Covanta Bankruptcy News, Issue No. 27;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DAN RIVER: Reports Improved Earnings Results for First Quarter
--------------------------------------------------------------
Dan River Inc. (NYSE: DRF) reported results for the first fiscal
quarter ended March 29, 2003. Net sales for the quarter were
$147.4 million, down $11.0 million or 7% from $158.4 million for
the first quarter of fiscal 2002. Net income for the first
quarter of fiscal 2003 was $2.8 million, or $0.12 per diluted
share. Included in these results is a $0.4 million pre-tax gain
related to the sale of surplus equipment. These results compare
to a net loss of $5.1 million, or $0.24 per diluted share for
the first quarter of fiscal 2002 before the effect of an
accounting change related to the writedown of goodwill under
SFAS No. 142, "Impairment of Goodwill and Intangible Assets".
The results for the first quarter of fiscal 2002 include a one-
time increase in income tax expense of $2.8 million, or $0.13
per diluted share attributable to the tax law changes associated
with the Job Creation and Worker Assistance Act of 2002, and a
$1.4 million pre-tax charge ($0.8 million after tax or $0.04 per
diluted share) for bad debt expense related to the January 2002
Chapter 11 filing of Kmart Corporation. After the effect of the
accounting change, the net loss for the first quarter of fiscal
2002 was $25.8 million, or $1.19 per diluted share.
"The weak retail environment was apparent in our home fashions
division for the first quarter," said Joseph L. Lanier, Chairman
and Chief Executive Officer, "as sales for the division were
$108.4 million, down $7.6 million or 6.5% from the first quarter
of 2002. Despite this decrease in sales, operating income for
the division was $11.5 million, up significantly from $5.3
million reported for the first quarter of fiscal 2002. The
better operating results were due to the sales of a better
product mix, lower raw material prices, and the benefits of the
plant consolidation efforts that were put into place last year.
"The overall economic weakness was also evident in our apparel
fabrics division," Mr. Lanier continued. "For the first quarter
of 2003, sales were $29.1 million, down $2.9 million or 9.0%
from the first quarter of fiscal 2002. However, operating
performance improved compared to the same quarter a year ago,
from a loss of $1.6 million to a loss of $0.6 million,
reflecting lower raw material prices and better manufacturing
performance due to the plant consolidation. This was offset
somewhat by consulting expenses related to an initiative to
increase manufacturing efficiencies and to reduce manufacturing
lead times.
"Our engineered products division is also experiencing the
impact of the slowing economy," Mr. Lanier stated, "as sales of
$9.9 million for the first quarter of fiscal 2003 were down $0.6
million, or 5.5%, from the first quarter of 2002. The
combination of lower sales volume, a less profitable sales mix
and poor manufacturing performance led to a $0.9 million
operating loss for the quarter, compared to a $0.3 million loss
in the same period last year. Manufacturing performance was
hampered during the quarter by start up issues related to the
installation of a new shop floor, cost and inventory control
system."
In the second quarter of fiscal 2003, the Company completed the
refinancing of its $120 million senior subordinated notes and
its credit facility, which were both due in 2003. This
refinancing included the sale of $157 million aggregate
principal amount of 12-3/4% senior notes due 2009, at 95.035% of
par, in a private offering pursuant to Rule 144A and Regulation
S under the Securities Act of 1933. The Company also entered
into a new senior secured credit facility, which consists of a
five-year $160 million revolving credit facility and a five-year
$40 million term loan. Availability under the revolving credit
facility is based upon a borrowing base determined by reference
to the Company's eligible accounts receivable and inventory.
Amounts outstanding under the senior credit facility will bear
interest at either prime rate or LIBOR plus, in each case, a
spread based on the Company's leverage ratio.
The net proceeds from the notes offering, together with
borrowings under the new senior credit facility, were used (i)
to repay all borrowings outstanding under the existing credit
agreement; (ii) to provide for the redemption, on May 15, 2003,
of all of the outstanding 10-1/8% senior subordinated notes due
2003 for an aggregate redemption price of $120 million (100% of
the principal amount thereof) plus accrued interest of
approximately $5.1 million; and (iii) to pay related fees and
expenses.
"While the Company's earnings for the first quarter came in
better than expected," Mr. Lanier stated, "the immediate outlook
is very hazy. The uncertainties imposed by the soft economy,
high unemployment, and the war in Iraq have depressed consumer
spending. This is reflected in the negative same stores sales
comparisons reported by most retailers. In reaction, our
customers are very skittish about placing new business and are
very conservative in their order quantities. We expect this
difficult retail environment to have a negative impact on our
second quarter operating results. Also, due to our recent
refinancing, the second quarter will be burdened with the write
off of deferred financing fees associated with our 1993
subordinated notes and our 1997 bank credit facility ($1.3
million pre-tax). There will also be a one month period in the
second quarter during which our recently issued 12-3/4% senior
notes and our 10-1/8% subordinated notes will both be
outstanding, resulting in increased interest expense for the
overlapping period ($1.0 million pre-tax). The combination of
these items along with higher interest expense under the
refinancing will cause us to report a loss in the range of $0.05
per share in the second quarter.
"Looking beyond the second quarter," Mr. Lanier concluded, "due
to many uncertainties we are not comfortable with our ability to
predict our operating results for the back half of the year.
Accordingly, we are not giving guidance for our full year
results. Hopefully the recent victory in Iraq will bring an end
to the current economic malaise. Under any circumstances, we
believe we are maintaining our market share in our key product
areas, and we remain well-positioned in those areas to take
advantage of the upturn when it occurs."
As reported in Troubled Company Reporter's Monday Edition,
Standard & Poor's Ratings Services raised its long-term
corporate credit rating on home furnishings manufacturer Dan
River Inc. to 'B+' from 'B-'. The ratings are removed from
CreditWatch, where they were placed on March 17, 2003. At the
same time, Standard & Poor's assigned its 'B-' senior unsecured
debt rating to the Danville, Virginia-based company's new 12.75%
senior notes due 2009. The notes are rated two notches below the
corporate credit rating, reflecting their junior position
relative to the significant amount of secured bank debt.
Standard & Poor's also withdrew its existing rating on the $120
million subordinated notes due 2003.
The outlook is stable.
The above facilities replaced the company's existing $125
million revolving credit facility due September 2003 and its
$120 million 10.125% notes due December 2003.
Dan River's total debt outstanding at Dec. 28, 2002, was about
$252 million.
DELTA AIR LINES: CEO Mullin Bullish about Company's Viability
-------------------------------------------------------------
Delta Air Lines (NYSE: DAL) CEO Leo F. Mullin reported at the
company's annual shareowners meeting that, referencing the
current turmoil embracing the airline industry, he believes
"Delta can survive and can remain solvent throughout this
incredibly challenging period."
In remarks Friday in New York City, Mullin declared that Delta
is faced with "a task that would have seemed unimaginable just
two years ago, which is to restructure our company, remain
solvent, and form the basis for sustained success for the
future" in the midst of significant macro-economic and
competitive challenges.
In recalling the business challenges faced in the past year,
Mullin expects many of these to remain constant. This includes
the need to significantly realign Delta's cost structure to meet
the competitive pressures in the industry, which are driven by
low-cost competition and the restructuring of the hub-and-spoke
carriers within or outside of bankruptcy. "The unfortunate
reality is that we do not yet have an appropriate revenue-to-
cost relationship, despite the sacrifice and hard work that have
occurred already," said Mullin. He also pointed to the current
geo-political environment, a bleak revenue outlook, continuing
decreases in demand, and the volatility of the airline industry
in general.
Mullin said that, going forward, he believes "despite the
current difficult circumstances, Delta can emerge from this
crisis capable of achieving the long-term sustainable success
which will benefit us all."
Delta is, he said, "putting the underpinnings for this success
in place -- but success is anything but assured. Huge challenges
must be met if we are to achieve safe passage to, first,
sustained solvency and then sustained profitability." Mullin
pointed to Delta's profit improvement initiatives, which are
intended to transform the company and provide cash savings of
$1.5 to 2.0 billion by 2005, as a cornerstone of the company's
strategic plan.
"Our commitment to customer service remains strong and is being
further revitalized," Mullin said. The recent approval of
Delta's codeshare alliance with Northwest Airlines and
Continental Airlines is just one of many initiatives designed to
provide customers with a full range of benefits. Mullin noted
that Delta will "continue to invest in improving the customer
experience, despite current financial difficulties."
Mullin stressed that Delta not only survived its most difficult
year to date, but also posted a considerable number of
achievements. While workforce reductions became an unfortunate
necessity, Delta was able to minimize the number of involuntary
employee furloughs in part due to its relatively strong
financial position. Mullin pointed to the company's strong
balance sheet and success in reaching its 2002 liquidity and
cash burn targets. He noted Delta's performance was consistently
referred to as the best of the network carriers by independent
measures, including some Wall Street analysts. Additionally
Delta launched its new low-cost operation, Song; gained
antitrust immunity with transatlantic and transpacific SkyTeam
alliance members; added $2.0 billion to its annual revenue base
by expanding its role as the world leader in use of regional
jets; and took steps to strengthen its presence in the Southeast
and Northeast with the start of construction projects for a
fifth runway in Atlanta and a new terminal in Boston.
"The Delta team is, at every level, experienced, committed, and
focused," said Mullin. "At this point, the battle is ours to
lose -- or to win." Mullin remains confident that the outcome
will be "a battle won."
Delta Air Lines, the world's second largest airline in terms of
passengers carried and the leading U.S. carrier across the
Atlantic, offers 5,382 flights each day to 423 destinations in
77 countries on Delta, Song, Delta Express, Delta Shuttle, Delta
Connection and Delta's worldwide partners. Delta is a founding
member of SkyTeam, a global airline alliance that provides
customers with extensive worldwide destinations, flights and
services. For more information, go to http://www.delta.com
DIRECTV: Court OKs Bankruptcy Services as Claims & Notice Agent
---------------------------------------------------------------
DirecTV Latin America, LLC obtained the Court's authority to
employ Bankruptcy Services LLC as its notice, claims and
balloting agent, pursuant to Section 156(c) of the Judiciary
Procedures Code.
At the request of DirecTV or the Clerk's Office, Bankruptcy
Services will provide computerized bankruptcy support services
and bankruptcy administrative services. Specifically,
Bankruptcy Services will:
(a) maintain copies of all proofs of claim and proofs of
interest filed;
(b) maintain official claims registers;
(c) implement necessary security measures to ensure the
completeness and integrity of claims registers;
(d) 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;
(e) provide access to the public for examination of copies of
the proofs of claims or interest without charge during
regular business hours;
(f) record all transfers of claims pursuant to Rule 3001(e)
of the Federal Rules of Bankruptcy Procedure and provide
notice of the transfers as required by Bankruptcy Rule
3001(e);
(g) comply with applicable federal, state, municipal and
local statutes, ordinances, rules, regulations, order and
other requirements;
(h) promptly comply with further conditions and requirements
as the Clerk's Office or the Court may at any time
prescribe;
(i) provide advice to DirecTV and its professionals regarding
all aspects of the plan solicitation process, including,
timing issues, voting and tabulation procedures and
documents needed for voting;
(j) mail voting documents to creditors and equity security
holders, if necessary;
(k) receive and examine all ballots cast by creditors and
equity security holders; and
(l) tabulate all ballots received prior to the voting
deadline in accordance with established procedures and
prepare a vote certificate for filing with the Court.
In return, Bankruptcy Services will be compensated in this
manner:
A. Mailing/Noticing
Print & Mail (first page) $0.20 each
Additional Pages 0.10 each
Single Page (duplex) 0.24 each
Change of Address 0.46 each
B. Printing and Reproduction
Reports 0.10 per page
Photocopies 0.15 per page
Labels 0.05 per page
Fax 0.50 per page
Document Imaging 0.40 per image
C. Newspaper and legal notice publication quoted as required
D. Professional Fees
Kathy Gerber $210 per hour
Senior Consultants 185 per hour
Programmer 130 to 160 per hour
Associates 135 per hour
Data Entry/Clerical 40 to 60 per hour
Schedule Preparation 225 per hour
In addition, DirecTV further obtained the Court's permission to
pay Bankruptcy Services a $15,000 retainer to be applied against
the final invoice. (DirecTV Latin America Bankruptcy News, Issue
No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DIVERSIFIED CORPORATE: Annual Shareholders' Meeting on May 30
-------------------------------------------------------------
The Annual Meeting of Shareholders of Diversified Corporate
Resources, Inc., a Texas corporation, will be held at 9:30 local
time on Friday, May 30, 2003, at Hyatt Regency Scottsdale at
Gainey Ranch, 7500 E. Doubletree Ranch Road, Scottsdale, Arizona
85258 for the following purposes:
To elect five members of the Board of Directors to hold office
until the next annual meeting of shareholders or until their
respective successors are duly elected and qualified.
To approve, pursuant to the rules of the American Stock
Exchange, the issuance of warrants to purchase 2,700,000 shares
of common stock of the Company to the Chairman, J. Michael
Moore.
To transact such other business as may properly come before the
meeting and any postponement or adjournment thereof.
Holders of record of Company common stock at the close of
business on April 17, 2003 will be entitled to vote at the
Annual Meeting.
* * *
Going Concern Uncertainty
In its SEC Form 10-Q dated November 14, 2002, the Company
reported:
"As of September 30, 2002, we were not in compliance with the
amended financial covenant under our three-year revolving line
of credit agreement with General Electric Capital Corporation.
"The Company failed to make the required acquisition agreement
payments of approximately $1,178,000 and $884,000 (to the former
owners of Mountain, LTD., which were due on October 1, 2001 and
October 1, 2002, respectively, and we failed to make the payment
of approximately $867,000 to the former owners of Texcel, Inc.
which was due on October 8, 2001. Effective as of October, 2001,
we entered into forbearance agreements with the former owners of
both Mountain and Texcel that involved (among other things) the
extension of the debt payment dates under both obligations, and
our commitment to pay interest on the amount owed to the holders
of both the Mountain and Texcel debt. We were able to make
partial debt payments to the former owners of Texcel, but in
September, 2002, we failed to pay the installment payments then
owed to the former owners of both Mountain and Texcel, and the
entire amount payable to these individuals is now due and
payable. As of September 30, 2002, we owed approximately
$2,062,000 to the former owners of Mountain, and approximately
$747,000, to the former owners of Texcel. We are unable to pay
any of such amounts at this time, and our ability to cure such
defaults in connection with these debt obligations is contingent
upon the outcome of our efforts to refinance the GE facility. We
are currently in negotiations with respect to these debt
obligations.
"These factors, among others, indicate that the Company may be
unable to continue as a going concern.
"We are continuing to evaluate various financing and
restructuring strategies to maximize shareholder value and to
provide assistance to us in pursuing alternative financing
options in connection with our capital requirements and
acquisition debt obligations. We can provide no assurance that
we will be successful in implementing the changes necessary to
accomplish these objectives, or if we are successful, that the
changes will improve our cash flow and liquidity."
DOMAN INDUSTRIES: Canadian Court Extends CCAA Stay Until July 23
----------------------------------------------------------------
Doman Industries Limited said the Supreme Court of British
Columbia issued an order Friday, in connection with proceedings
under the Companies Creditors Arrangement Act, extending the
stay of proceedings to July 23, 2003. A copy of the order may be
obtained by accessing the Company's Web site at
http://www.domans.com
The Company sought the extension on the basis that further
negotiations with representatives of its principal unsecured
creditors, the holders of unsecured Notes, are necessary before
a revised plan of arrangement can be presented to the Court. In
the circumstances, the Company does not expect to be in a
position to file a revised plan of arrangement before June.
Implementation of a revised plan is, in any event, dependent on
the new forest reform package, recently introduced by the
Government of British Columbia, becoming effective. The timing
of this is uncertain but the Government has indicated that
passage of the new legislation is planned for the current
session of the Legislature scheduled to end on May 29, 2003.
Doman is an integrated Canadian forest products company and the
second largest coastal woodland operator in British Columbia.
Principal activities include timber harvesting, reforestation,
sawmilling logs into lumber and wood chips, value-added
remanufacturing and producing dissolving sulphite pulp and NBSK
pulp. All the Company's operations, employees and corporate
facilities are located in the coastal region of British Columbia
and its products are sold in 30 countries worldwide.
DOW CORNING: Reports Growth in Sales and Profits for Q1 2003
------------------------------------------------------------
Dow Corning Corp., reported consolidated net income of $35.9
million for the first quarter of 2003, a 57 percent increase
from net income of $22.9 million reported in same quarter of
2002, excluding $31.4 million of after tax restructuring
expenses in the 2002 period.
First quarter 2003 sales were $658.7 million, 13 percent higher
than sales in last year's first quarter.
"First-quarter sales compared favorably to weak sales reported
in the same period last year," said Dow Corning's vice president
and chief financial officer J. Donald Sheets. "Dow Corning
continued to grow revenues by offering customers innovative
solutions to meet their exact needs," said Mr. Sheets.
Dow Corning -- http://www.dowcorning.com-- develops,
manufactures and markets diverse silicon-based products and
services, and currently offers more than 7,000 products to
customers around the world. Dow Corning is a global leader in
silicon-based materials with shares equally owned by The Dow
Chemical Company (NYSE: DOW) and Corning Incorporated (NYSE:
GLW). More than half of Dow Corning's sales are outside the
United States.
ENCOMPASS SERV.: Lease Decision Time Extension Hearing Tomorrow
---------------------------------------------------------------
Lydia T. Protopapas, Esq., at Weil, Gotshal & Manges LLP, in
Houston, Texas, reports that despite diligent efforts to reduce
the number of Leases, Encompass Services Corporation and debtor-
affiliates are still lessees to many Leases and are continuing
to review and analyze the remaining Leases regarding
determinations as to their value and use to the Debtors and
their estates going forward.
In light of the extensive number of Debtor companies, the
variety of locations of businesses, and the remaining number of
Leases to review and analyze, the Debtors ask the Court to
extend their lease decision period until plan confirmation.
The Confirmation Hearing is scheduled for May 21, 2003.
Ms. Protopapas maintains that the Leases may constitute valuable
assets of the Debtors' estates. The Debtors have reviewed many
but not all their Leases and thus have not determined
conclusively which of the remaining Leases they will assume and
which they will reject.
The Debtors are also in the process of reducing their staff as
they prepare to sell their residential business unit and wind
down any other remaining operations pursuant to the Plan. Thus,
Ms. Protopapas contends, cause exists to extend the time for the
Debtors to assume or reject unexpired leases of non-residential
real property under which the Debtors are lessees.
The Debtors assure the Court that consistent with Section
365(d)(3) of the Bankruptcy Code, they will timely perform all
of their undisputed postpetition obligations under the Leases in
the same manner as they have performed the obligations before
the Petition Date. Hence, the lessors will suffer no harm if
the extension is granted.
* * *
The Court will convene a hearing on April 30, 2003 to consider
the Debtors' request. Accordingly, Judge Greendyke extends the
Debtors' lease decision period until the conclusion of that
hearing. (Encompass Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ENRON CORP: Selling Interests in CGAS Inc. to Enervest for $30MM
----------------------------------------------------------------
Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code,
Enron Corp. asks the Court to authorize and approve its consent
to sell all of the outstanding shares of CGAS, Inc.'s common
stock to EnerVest Acquisitions, LLC. The Sale will be in
accordance with the terms and conditions of the Purchase and
Sale Agreement dated as of March 13, 2003 by and between
McGarret XI, LLC and EnerVest.
Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that CGAS, a non-debtor, is a privately held Ohio
corporation principally engaged in the business of oil and
natural gas acquisitions, exploration, development and
production in the Appalachian Basin. CGAS operates through four
primary subsidiaries, CGAS Exploration, Inc., CGAS Services
Corporation, CGAS Investment Corporation and The Stocker &
Sitler Oil Co.
CGAS' equity is held by McGarret, a Delaware limited liability
company. The equity interests in McGarret are held by its two
members: Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership and Hawaii II 125-0
Trust, a Delaware business trust. JEDI, as the holder of the
Class A membership interest, is entitled to 0.01% of
distributions made by McGarret and holds 100% of the voting
rights. The Hawaii Trust, as the holder of the Class B
membership interest, is entitled to 99.99% of distributions and,
except in connection with the disposition of McGarret assets,
generally has no voting rights.
JEDI, a non-debtor, has three partners:
(i) Enron, to the extent of a 50% limited partnership
interest,
(ii) Enron Capital Management LP, to the extent of a 50%
general partnership interest, and
(iii) Enron Capital Management LLC, to the extent of a special
limited partnership interest.
Mr. Sosland notes that Enron Capital Management LP and Enron
Capital Management LLC are indirect, wholly owned subsidiaries
of Enron and Enron North America Corp.
On the other hand, Mr. Sosland informs the Court that CIBC, Inc.
is the sole beneficial owner of the Hawaii Trust. The Hawaii
Trust is also a party, as the borrower, to a credit facility
with a syndicate of lenders for which Canadian Imperial Bank of
Commerce acts as the administrative agent. McGarret, JEDI,
CIBC, Canadian Imperial Bank of Commerce and Enron are parties
to a Sales Agency Agreement pursuant to which CIBC has been
appointed the sales agent for the purpose of selling CGAS.
In accordance with the terms of the Project Hawaii documents,
certain events of default under the Hawaii Trust credit facility
entitled CIBC, as sales agent, to undertake a sale of CGAS.
Beginning in June 2002, CIBC and Enron began selecting an
investment bank to assist in the CGAS sale. Waterous & Co.
Limited was engaged as financial adviser to represent CGAS in
connection with the contemplated sale transaction. Waterous
subsequently commenced a comprehensive marketing process
designed to maximize the value of the Shares. In that regard,
Waterous contacted over 200 potential bidders, which were
provided a non-confidential information memorandum on CGAS.
Waterous also listed the proposed transaction on IndigoPool.com,
a Web site which disseminates data room information to potential
bidders and set up data rooms in Columbus, Ohio, where
prospective bidders could conduct due diligence after executing
a confidentiality agreement.
From these contacts, 21 potential bidders executed
confidentiality agreements and 15 potential bidders visited the
data rooms. On November 5, 2002, ten parties submitted non-
binding indicative bids -- the Initial Bids. The top four
bidders reviewed additional information and submitted revised
bids on November 12, 2002 -- the Revised Bids. All four bids
were competitive and each of the bidders submitted purchase and
sale agreements over the following weeks. The Revised Bids
ranged in value from $28,000,000 to $30,000,000. Ultimately,
Enron determined that EnerVest's bid, as reflected in the
Agreement, represented the highest and best offer for the
Shares.
According to Mr. Sosland, the EnerVest Agreement contains these
terms and conditions:
A. Consideration. The purchase price for the sale and
conveyance of the Shares to EnerVest is $30,537,397;
B. Purchase Price Adjustment. The Purchase Price will be
adjusted for any discrepancies in the working capital from
that disclosed as of September 30, 2002, title defects,
environmental liabilities and certain transaction expenses
incurred in connection with the sale. Adjustments for title
defects and environmental liabilities are subject to
separate $500,000 deductibles. Neither EnerVest nor the
Seller is required to consummate the purchase and sale of
CGAS in the event that the Purchase Price Adjustment exceeds
$5,000,000 in the aggregate;
C. Shares Acquired. All of the outstanding shares of CGAS'
common stock;
C. Representations and Indemnification. Customary
representations regarding organization, due authorization,
enforceability, consents, title, inspection, etc.
Representations will not survive the closing and the Seller
is not incurring any obligations to indemnify EnerVest;
D. Closing Conditions. Closing conditioned upon execution of
closing documents, bankruptcy court approvals, government
approvals and satisfaction of other customary conditions;
E. Transfer Taxes. EnerVest will be responsible for the payment
on a timely basis of all Transfer Taxes resulting from the
transactions contemplated by the Agreement; and
F. Break-up Fee. Under certain circumstances, EnerVest is
entitled to the payment of a $900,000 break-up fee upon
the closing of an Alternative Transaction, which is defined
as the sale, transfer or other disposition of the Shares or
the Assets to a third party.
Mr. Sosland asserts that Enron's consent to the sale of the
shares is supported by Section 363 since:
(a) Enron's Board of Directors has voted to approve the
transaction;
(b) Enron has concluded that its interests in CGAS are not
integral to nor contemplated to be part of the Debtors'
reorganization;
(c) the Sale underwent a competitive auction process;
(d) the Agreement was negotiated at arm's length and
represents fair market value for the Shares; and
(e) Enron is not aware of any liens or other interests
encumbering the Shares. In any case, the parties have
agreed to hold the net proceeds received from the sale
in escrow for one year, which can be extended as
required to resolved claims or actions relating to the
CGAS ownership and entitlement to the proceeds resulting
from the sale or the structured finance vehicle known as
Project Hawaii. (Enron Bankruptcy News, Issue No. 63;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003
(ENRN03USR3) are trading at about 18 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
FISHER COMMS: Board Elects Phelps K. Fisher as New Chairman
-----------------------------------------------------------
Fisher Communications (Nasdaq:FSCI) announced that James W.
Cannon, Phelps K. Fisher, Jacklyn F. Meurk, and Jerry A. St.
Dennis were elected to three-year terms as directors at Fisher's
annual meeting held Thursday last week.
In accordance with the wishes of Donald G. Graham, Jr. as he
reaches the age of 80, the Board has accepted Mr. Graham's
request that he not stand for reelection as Chairman of the
Board of Directors. The Board of Directors has elected Phelps K.
Fisher to serve as Chairman of the Board in Mr. Graham's place.
Mr. Graham has consented to chair the newly established Planning
Committee of the Board of Directors. Mr. Fisher said, "We are
grateful for Mr. Graham's leadership as Chairman of the Board
and are very pleased that he has agreed to continue as a
director and serve as Chairman of the Planning Committee."
In addition, the company announced that as part of its ongoing
restructuring program it is eliminating several executive
positions, among them the Chief Operating and Chief
Communications Officers. Warren Spector, Fisher's Chief
Operating Officer, and Christopher Wheeler, Fisher's Chief
Communications Officer, are expected to remain with the company
for a suitable transition period. Commenting upon the
elimination of the positions, Fisher President and CEO William
W. Krippaehne Jr. said, "The ongoing restructuring reduces the
scale and complexity of the organization and therefore the need
for such positions. The elimination of the positions is not a
reflection on their performance or contribution to the past
welfare of the company." He added, "They will be missed by the
Fisher team."
Fisher Communications, Inc. is a Seattle-based communications
and media company focused on creating, aggregating, and
distributing information and entertainment to a broad range of
audiences. Its 12 network-affiliated television stations are
located primarily in the Northwest, and its 28 radio stations
broadcast in Washington, Oregon, and Montana. Other media
operations include Fisher Entertainment, a program production
business, as well as Fisher Pathways, a satellite and fiber
transmission provider, and Fisher Plaza, a digital
communications hub located in Seattle.
As reported in Troubled Company Reporter's November 12, 2002
edition, Fisher Communications retained Goldman, Sachs & Co., as
financial advisor to assist in reviewing its strategic
alternatives.
In announcing its decision to review strategic alternatives, the
company issued this statement: "Our Board of Directors is fully
committed to acting in the best interests of the company and its
shareholders. Accordingly, and in light of industry conditions,
we have determined that it is appropriate at this time to review
a range of strategic alternatives for the company."
FLEMING COMPANIES: AlixPartners' Rebecca Roof Serving as New CFO
----------------------------------------------------------------
Fleming Companies, Inc., has engaged two highly experienced
restructuring experts to help lead its chapter 11 reorganization
process forward in key financial management positions. Becky
Roof will serve as Interim Chief Financial Officer and Mike
Scott will become Interim Treasurer, effective immediately.
Roof and Scott are Principals of AlixPartners, LLC, an
international leader in corporate restructuring and turnaround
services. Fleming has retained AP Services, LLC, an affiliate of
AlixPartners, LLC, to assist in the company's current
reorganization. As is customary for AlixPartners, Roof and Scott
will remain as Principals at the firm while they focus on their
duties at Fleming, and will be able to draw upon the resources
of AlixPartners as necessary. In their new interim roles at
Fleming, Roof and Scott will report directly to Peter Willmott,
Fleming's Interim President and Chief Executive Officer.
Willmott said, "We have been reviewing Fleming's business and
reorganization requirements, with attention to improved customer
and vendor services, operational efficiency and greater
financial flexibility. The Company has determined that Fleming's
reorganization process requires experienced business turnaround
professionals in Fleming's top financial management positions to
carry the process forward to successful completion.
"Becky and Mike have substantial experience in reorganizations
and turnarounds and will therefore play an integral role in
Fleming's restructuring. We are excited to have them join the
leadership team as we take the necessary actions to position the
company to be a strong, long-term competitor."
Roof has over 23 years of corporate and consulting experience
dealing primarily with turnaround engagements. Her prior
experience includes serving as CFO for United Companies
Financial Corporation and for APS Holding Corporation, a
distribution company. Prior to joining AlixPartners, Roof was a
director for PricewaterhouseCoopers and previously served with
Ernst & Young LLP.
Scott has worked extensively with companies and lending groups
to recapitalize companies through the bankruptcy process.
Formerly a partner in the Business Recovery Group of
PricewaterhouseCoopers, Scott gained experience at AlixPartners
working on a wide variety of clients both in and out of
bankruptcy. Scott has recently been involved in restructurings
including Pillowtex, Inc., Sun Healthcare Group, and LJM2.
Fleming Companies, Inc. and its operating subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the
U.S. Bankruptcy Code on April 1, 2003. The filings were made in
the U.S. Bankruptcy Court in Wilmington, Delaware. The case has
been assigned to the Honorable Judge Mary F. Walrath under case
number 03-10945 (MFW) (Jointly Administered). Fleming's court
filings are available via the court's Web site at
http://www.deb.uscourts.gov
AlixPartners, LLC, a Delaware limited liability company is the
industry standard in solving complex challenges, creating value
and restoring corporate performance. It provides services in
performance improvement, turnaround and restructuring, financial
advisory and information technology. To learn more about
AlixPartners, visit http://www.alixpartners.com
Fleming (OTC Pink Sheets: FLMIQ) is a leading supplier of
consumer package goods to independent supermarkets, convenience-
oriented retailers and other retail formats around the country.
To learn more about Fleming, visit http://www.fleming.com
FLEMING COS.: Asks Court to Deem Utilities Adequately Assured
-------------------------------------------------------------
Scotta E. McFarland, Esq., at Pachulski Stang Ziehl Young Jones
& Weintraub, P.C., in Wilmington, Delaware, relates that in
connection with the operation of their businesses and management
of their properties, Fleming Companies, Inc., and debtor-
affiliates obtain electricity, natural gas, water,
telecommunication services and similar services from
numerous utility suppliers throughout the United States.
By this Motion, the Debtors seek entry of an order:
A. prohibiting the Utility Companies from altering, refusing
or discontinuing utility services to, or discriminating
against the Debtors based solely on the filing of these
cases, or because any prepetition debts to the utility
companies were not paid when due;
B. deeming the Utility Companies to be adequately assured of
payment for utility services rendered after the Petition
Date by their entitlement to an administrative expense
claim under Sections 503(6) and 507(a)(1) of the Bankruptcy
Code;
C. providing that if a Utility Company believes it is not
adequately assured of payment for postpetition services, it
may request additional assurances of payment in the form of
deposits or other security provided that any request:
(i) must be made in writing,
(ii) must include a summary of the Debtors' payment
history relevant to the affected accounts, and
(iii) must be made within 30 days of the date of entry of
the order; and
D. authorizing the Debtors to supplement the list of Utility
Companies to include those utilities not listed but
subsequently identified by the Debtors.
Ms. McFarland insists that uninterrupted utility services are
essential to the Debtors' operations. The Debtors presently
rely on these utility services to maintain operations at each of
their locations. The Debtors cannot maintain their facilities
and related operations if utility services are disrupted. Nor
is it realistic to expect the Debtors to be able to work out
individual adequate assurance arrangements with the many
different Utility Companies serving those locations. If the
Utility Companies are permitted to terminate utility services
after the 20-day standstill period provided by Section 366 of
the Bankruptcy Code, the Debtors' businesses will be irreparably
harmed and their efforts to reorganize imperiled.
In the past, Ms. McFarland contends that the Debtors have
enjoyed healthy relationships with their Utility Companies
paying for utility services in accordance with the parties'
custom and practice. The Debtors have generally paid their
prepetition utility bills in full and on time. To the best of
the Debtors' knowledge, as of the Petition Date, there are no
defaults with respect to any utility bills. In addition, there
are no arrearages of any significance, other than amounts not
yet due or invoiced or amounts that have not yet been paid on
invoices received immediately prior to the Petition Date.
Ms. McFarland assures the Court that the Debtors have sufficient
cash reserves and access to cash collateral to pay promptly all
of their respective obligations for utility services on an
ongoing basis and in the ordinary course of their business. The
Debtors believe that the Utility Companies are further protected
by Section 503(b)(1)(A) of the Bankruptcy Code, which provides
that actual and necessary expenses of preserving a debtors'
estates are entitled to administrative expense status, and by
Section 507(a)(1) of the Bankruptcy Code, which gives first
priority to administrative expenses. The Debtors believe that
utility charges constitute necessary expenses of preserving the
Debtors' estates.
The relief proposed by the Debtors will fully protect the
interests of the Utility Companies without disrupting their
ongoing operations. Thus, the Debtors' proposal is fair to the
Utility Companies and is fully consistent with the purpose and
structure of the Bankruptcy Code.
According to Ms. McFarland, the estimated monthly costs incurred
by the Debtors for utility services is, on average, $65,300,000.
The Debtors do not anticipate any material variation in the
level of utility services required postpetition as a component
of overall operating expenses, however, and expect that
commitments for the use of cash collateral and debtor-in-
possession financing will provide sufficient funds to pay for
aggregate postpetition operating expenses. If, however, the
Debtors experience any disruption in making these payments as
they come due, the grant of administrative expense priority as
proposed will provide adequate assurance of payment to the
Utility Companies that any past-due obligations will ultimately
be satisfied in full. Accordingly, additional security is
unwarranted and excessive.
The proposed Order provides that it is without prejudice to the
rights of any Utility Company to move this Court for additional
adequate assurance within 30 days of the date of the entry of
the Order. If the Debtors believe that the additional assurance
request is unreasonable, the Debtors will promptly schedule a
hearing to determine whether the additional assurances are
necessary and will give the Utility Company notice of hearing.
Any burden of proof necessary to be shown at the hearing will
remain unaffected by approval of the methods proposed. In the
unlikely event that the ability of the Debtors to pay for
postpetition utility services comes into question, the Utility
Companies would be free to seek additional deposits at that
time.
Ms. McFarland asserts that uninterrupted provision of utility
services at all of Debtors' locations is vital to the continued
operation of their businesses and, consequently, the success of
these cases. (Fleming Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FRUIT OF THE LOOM: Unsec. Trust Wants Time to Challenge Claims
--------------------------------------------------------------
The Unsecured Creditors' Trust of Fruit of the Loom seeks to
extend the time by which it has to object to Class 4A Claims.
The current deadline expires tomorrow.
By this motion, the Unsecured Creditors' Trust asks Judge Walsh
to extend the claims objection deadline to April 30, 2004. This
extension will provide the Unsecured Creditors' Trust with the
necessary time to effectively evaluate the unreconciled Claims,
prepare and file additional objections to Claims and, where
possible, resolve claims.
The Unsecured Creditors' Trust is charged with receiving
distributions intended for holders of Allowed Class 4A Claims
and distributing the funds when their claims are deemed allowed.
The Unsecured Creditors' Trust is also responsible for
prosecuting, settling or otherwise resolving objections to Class
4A Claims.
The Court will convene a hearing on May 1, 2003 to consider the
Unsecured Creditors' Trust's request. By application of
Del.Bankr.LR 9006-2, the deadline is automatically extended
through the conclusion of that hearing. (Fruit of the Loom
Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
GLOBAL CROSSING: Simplifies Leadership Structure as Part of Plan
----------------------------------------------------------------
Global Crossing will simplify its organizational structure as
part of the final stages of its restructuring. John Legere,
Global Crossing's CEO, will add to his role direct supervision
of all operational functions, eliminating the necessity for a
separate operational leader. The new organization will enable
Global Crossing's senior leadership team to achieve performance
objectives in a more efficient manner, as focus shifts from
Chapter 11 activities toward the long-term goal of becoming a
global leader in telecommunications.
"As we've done with other aspects of the business during the
past eighteen months of my tenure at Global Crossing, it's time
to realign our leadership team to fit the lean and nimble
business we've become," commented Legere. "Our streamlined
executive leadership structure will further complement the other
initiatives we have enacted to ensure that our business model is
one of the most efficient and effective in the industry."
Operations, sales and product management functions will now
report directly to Legere. Additionally, Carl Grivner will leave
the company to pursue other opportunities.
"To meet the challenges of 2003 and stand out from our
competition, we must continue to seize the initiative and to
adapt quickly to the changing environment," said Legere.
"Simplifying our organizational structure is but one example of
our commitment to delivering the best overall experience in
telecom to our customers."
Global Crossing provides telecommunications solutions over the
world's first integrated global IP-based network, which reaches
27 countries and more than 200 major cities around the globe.
Global Crossing serves many of the world's largest corporations,
providing a full range of managed data and voice products and
services.
On January 28, 2002, Global Crossing Ltd. and certain of its
subsidiaries (excluding Asia Global Crossing and its
subsidiaries) commenced Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York
(Bankruptcy Court) and coordinated proceedings in the Supreme
Court of Bermuda (Bermuda Court). On the same date, the Bermuda
Court granted an order appointing joint provisional liquidators
with the power to oversee the continuation and reorganization of
the Bermuda-incorporated companies' businesses under the control
of their boards of directors and under the supervision of the
Bankruptcy Court and the Bermuda Court. Additional Global
Crossing subsidiaries commenced Chapter 11 cases on April 23,
August 4 and August 30, 2002, with the Bermuda incorporated
subsidiaries filing coordinated insolvency proceedings in the
Bermuda Court. The administration of all the cases filed
subsequent to Global Crossing's initial filing on January 28,
2002 has been consolidated with that of the cases commenced on
January 28, 2002. Global Crossing's Plan of Reorganization,
which was confirmed by the Bankruptcy Court on December 26,
2002, does not include a capital structure in which existing
common or preferred equity will retain any value. Global
Crossing expects to emerge from bankruptcy in the first half of
2003.
On November 18, 2002, Asia Global Crossing Ltd., a majority-
owned subsidiary of Global Crossing, and its subsidiary, Asia
Global Crossing Development Co., commenced Chapter 11 cases in
the United States Bankruptcy Court for the Southern District of
New York and coordinated proceedings in the Supreme Court of
Bermuda, both of which are separate from the cases of Global
Crossing. Asia Global Crossing has announced that no recovery is
expected for Asia Global Crossing's shareholders. Asia Netcom, a
company organized by China Netcom Corporation (Hong Kong) on
behalf of a consortium of investors, has acquired substantially
all of Asia Global Crossing's operating subsidiaries except
Pacific Crossing Ltd., a majority-owned subsidiary of Asia
Global Crossing that filed separate bankruptcy proceedings on
July 19, 2002. Global Crossing no longer has control of or
effective ownership in any of the assets formerly operated by
Asia Global Crossing.
Please visit http://www.globalcrossing.comfor more information
about Global Crossing.
GOLDSTATE: Initiates Restructuring via 1-For-15 Reverse Split
-------------------------------------------------------------
Goldstate Corporation (Pink Sheets: GDTT) announced a
restructuring of the Company. The Company declared a 1 for 15
reverse split effective April 24, 2003. This will reduce the
Company's issued and outstanding shares from 12,276,933 to
818,515. The Company has also changed its trading symbol to GDTT
from GDSS.
Goldstate Corporation also appointed a new President and
Director, Samuel Farrell. Mr. Farrell is in the process of
updating the Company's filings with the SEC and eventually
intends to reapply for trading on the OTCBB market. The Company
is now looking to identify an acquisition for the Company in the
United States.
Goldstate Corp.'s March 31, 2002 balance sheet shows a total
shareholders' equity deficit of close to $200,000.
GRAPHON CORP: Shares Delisted from Nasdaq SmallCap Market
---------------------------------------------------------
GraphOn(R) Corporation -- http://www.graphon.com-- a leading
developer of business software for remote computing, announced
that its common stock has been delisted from The Nasdaq SmallCap
Market due to its failure to comply with the minimum bid price
requirement for continued listing set forth in Marketplace Rule
4310(C)(4). GraphOn's common stock is now being quoted on the
OTC Bulletin Board under the symbol GOJO commencing with the
opening of trading on April 28, 2003.
GraphOn's award-winning software allows any display device to
run any application over any type of connection, including low-
bandwidth, dial-up, and wireless. GraphOn's products instantly
web enable UNIX, Windows, and Linux applications without any
software modification, offering organizations of all types high
performance remote access and a cost effective way to bring
their applications to the Web world -- TODAY. GraphOn, which
markets its solutions through OEM licenses, independent software
vendors (ISVs), the enterprise, application service providers
(ASPs), value-added resellers (VARs) and systems integrators, is
headquartered in Morgan Hill, California. For more information,
please visit the company's Web site at http://www.GraphOn.com
* * *
Liquidity and Capital Resources
In its 2002 Annual Report on Form 10-K, the Company stated:
"We have suffered recurring losses and have absorbed significant
cash in our operating activities. Further, we have limited
alternative sources of financing available to fund any
additional cash required for our operations or otherwise. These
matters raise substantial doubt about our ability to continue as
a going concern. Our plan in regard to these matters is
described below. The consolidated financial statements included
in this report do not include any adjustments that might result
from the outcome of this uncertainty.
"We are continuing to operate the business on a cash basis while
looking at ways to reduce cash expenses. We are simultaneously
looking at ways to improve or maintain our revenue stream.
Additionally, we continue to review potential merger
opportunities as they present themselves to us and at such time
as a merger might make financial sense and add value for our
shareholders, we will pursue that merger opportunity.
"In June 2001, we issued 2,500,000 shares of our common stock to
Menta Software in connection with the acquisition of software
technology, which was assigned a historical cost of $6,500,000
based on the then fair market value of our common stock. In an
extemporaneous transaction in June of 2001, we licensed our
patented technology to Menta Software in a transaction valued at
$2,000,000, of which they paid us $600,000 in cash. In December
2002, we accepted 933,333 shares of our common stock from Menta
Software in full settlement of the outstanding $1,400,000 due us
from them under the terms of the June 2001 patented technology
licensing agreement.
"During 2002 we used $4,606,000 of cash from our operating
activities that related primarily to our net loss of $8,792,500,
offset by non-cash items including depreciation and amortization
totaling $2,085,800, the non-cash portion of the restructuring
charge of $657,800, and the asset impairment loss of $914,000.
Operating cash inflow was generated by an aggregate increase in
cash flow from operating assets and liabilities of $828,200,
which was partially offset by a $299,700 decrease in our
provision for doubtful accounts.
"Depreciation and amortization primarily relates to our
purchased technology, as outlined above in Costs of Revenues.
Also included in depreciation and amortization is the
amortization of deferred compensation expense related to non-
cash compensation paid to various third parties, primarily
consultants, who provide us services. This amortization is
recorded as sales and marketing expense or general and
administrative expense, depending on the nature of the
underlying services provided.
"The cash inflow generated from aggregated operating assets and
liabilities was primarily due to the collection of a significant
portion of our year end 2001 accounts receivable balance during
2002, including accounts that had previously been deemed
uncollectible.
"We are exploring all options available to aggressively reduce
costs, to increase revenues and to find alternative sources of
financing our operations. Such options will likely include
further work force reductions, exiting of facilities, or the
disposition of certain operations. If we were unsuccessful in
obtaining any of these strategic goals, we would face a severe
constraint on our ability to sustain operations in a manner that
would create future growth and viability, and we may need to
cease operations entirely.
"During 2002 we generated $2,628,200 of cash from our investing
activities that included $3,776,300 from the sale of
investments, partially offset by the purchase of investments,
totaling $768,300, the capitalization of software development
costs, totaling $298,500 and other capital expenditures totaling
$82,900.
"Throughout the year, we buy various high-grade securities for
investment purposes with our excess cash. The securities are
usually held until maturity, at which time any excess cash is
used to reinvest in new securities. We treat the investment as
cash used in investing activities and the maturity as cash
provided by investing activities. The capitalized software
development costs were incurred in the development of GoGlobal
for Windows, our latest Windows-based product upgrade. Other
capital expenditures incurred during 2002 consisted primarily of
computer equipment for our research and development team.
"During 2002, we used $20,200 of cash in our financing
activities that were primarily related to the repayment of the
note payable that was outstanding as of year end 2001, partially
offset by the proceeds from the issuance of stock through our
employee stock purchase program.
"As of December 31, 2002, cash and cash equivalents were
approximately $1,958,200. We anticipate that our cash and cash
equivalents as of December 31, 2002, together with anticipated
revenue from operations, cost savings from the 2002
restructuring and asset impairment charges, and future potential
cost reduction measures, will be sufficient to meet our working
capital and capital expenditure needs through the next twelve
months. We have no material capital expenditure commitments for
the next twelve months. However, due to the inherent
uncertainties associated with predicting future operations,
there can be no assurances that such anticipated revenue and
cumulative operational savings will ultimately be realized
during the next twelve months.
"During 2002 we implemented several strategic initiatives
intended to control operating expenses and capital expenditures.
These initiatives have been successful in reducing our operating
expenses. As explained above, our 2002 operating expenses are
significantly lower in every category, as compared with 2001."
GREAT ATLANTIC & PACIFIC TEA: Red Ink Flows in 4th Quarter 2002
---------------------------------------------------------------
The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE
Symbol:GAP) announced unaudited fiscal 2002 fourth quarter and
annual results for the 12 and 52 weeks ended February 22, 2003.
Sales for the fourth quarter were $2.52 billion, compared with
$2.51 billion in the fourth quarter of fiscal 2001. Comparable
store sales increased .5%. Earnings per share were a loss of
$.54 for the quarter, compared with a profit of $.52 in the
prior year.
During the fourth quarter of fiscal 2002, the Company recorded
an extraordinary gain of $12.9 million or $.34 per share for the
repurchase of $57.5 million of its Notes. The Company also
recorded an adjustment to its restructuring reserves, improving
earnings by $3.3 million after-tax or $.09 per share. Excluding
these adjustments, ongoing operating loss per share in the
quarter was $.97 compared with ongoing operating earnings of
$.23 per share for fourth quarter last year. Ongoing operating
earnings for the fourth quarters of fiscal years 2002 and 2001
are reconciled to reported earnings on Schedules 2 and 4 of this
release.
For the full year, sales were $10.79 billion, compared with
$10.97 billion in fiscal 2001. Comparable store sales increased
0.4%. Earnings per share were a loss of $5.03 for fiscal year
2002, compared with a loss of $1.88 in the prior year.
Excluding certain non-operating items, ongoing operating loss
for the 52 weeks of fiscal 2002 was $2.15 per share compared
with ongoing operating earnings of $.32 per share for fiscal
2001. Ongoing operating earnings for fiscal years 2002 and 2001
are reconciled to reported earnings on Schedules 3 and 5 of this
release.
EBITDA for the fourth quarter of fiscal 2002, based on ongoing
operating earnings as shown on Schedule 4 of this release, was
$50 million compared to $91 million in the prior year's fourth
quarter. EBITDA for fiscal year 2002, based on ongoing operating
earnings as shown on Schedule 5 of this release, was $263
million compared to $372 million for fiscal year 2001.
Christian Haub, Chairman of the Board, President & Chief
Executive Officer, said, "We have taken decisive action to halt
the decline of our overall results, and to ensure the Company's
on-going financial health. We restructured our organization,
reduced costs, commenced the sale of non-strategic assets to
lower our debt, and secured financing necessary to meet our
needs going forward. We believe that our management changes and
these actions have begun to stabilize our business in the U.S. I
remain confident that we will improve our U.S. operations while
continuing to drive success in Canada."
Founded in 1859, A&P -- http://www.aptea.com-- was one of the
nation's first supermarket chains, and is today among North
America's largest. In the fourth quarter, the Company opened 5
new stores and remodeled or expanded 7 stores. The Company
operates 695 stores in 15 states, the District of Columbia and
Ontario, Canada under the following trade names: A&P,
Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh,
Farmer Jack, Kohl's, Sav-A-Center, Dominion, The Barn Markets
and Food Basics and Ultra Food & Drug. The Company also
manufactures and distributes the Eight O'Clock line of whole
bean coffees.
As reported in Troubled Company Reporter's January 15, 2003
edition, Standard & Poor's 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."
GREAT LAKES AVIATION: Ability to Continue Operations Uncertain
--------------------------------------------------------------
The Company's Independent Auditors reported to the Board of
Directors of Great Lakes Aviation, Ltd.:
"We have audited the accompanying balance sheets of Great Lakes
Aviation, Ltd. (an Iowa Corporation) as of December 31, 2002 and
2001, and the related statements of operations, stockholders'
equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 2002. In connection with
our audits of the financial statements we have also audited the
financial statement schedule."
"[T]he Company has suffered significant losses in the years
ended December 31, 2002 and 2001, and has liabilities in excess
of assets at December 31, 2002. These matters raise substantial
doubt about the Company's ability to continue as a going
concern. "
Great Lakes is a regional airline that began providing scheduled
passenger service under its own marketing identity on October
12, 1981. On April 26, 1992 the Company began operating a large
portion of its route network as a United Express carrier. The
United Express marketing program included painting of aircraft
with a United Express paint scheme, branding of station
facilities and outfitting Great Lakes customer service employees
with United designated uniforms. On May 1, 2001, the program
with United was terminated and the Company implemented a new
three-year code share agreement with United that included
returning aircraft, station signage and customer service
personnel to the Great Lakes market identity. Subsequently, the
Company negotiated a code share agreement with Frontier
Airlines, Inc. which was implemented in phases beginning
on July 7, 2001. Under the terms of the Company's code share
agreements, schedules are published to enable customers of Great
Lakes and its code sharing partners to conveniently book well
timed connecting flights. Customers that only travel to and from
the hubs (Denver, Minneapolis and Phoenix) purchase tickets
directly from Great Lakes or travel agents.
As of March 31, 2003, the Company served 32 destinations in nine
states to and from Denver as code sharing partners with both
United and Frontier. It also served four destinations in two
states to and from Minneapolis and two destinations in two
states to and from Phoenix. On February 28, 2003, the Company
discontinued its service to the Chicago hub after the United
States Department of Transportation elected to reduce its
subsidy funding for service from Chicago.
Passenger revenues and revenue passenger miles decreased 34.8%
and 33.1% respectively, from 2001. Although the Company
discontinued service to four cities during the year the decrease
was largely due to the continued industry wide decline in
passenger traffic following the September 11 terrorist attacks.
Public service revenues collected through the Essential Air
Service program increased 58.8% in 2002 compared to 2001. As a
result of the September 11 terrorist attacks, the Department of
Transportation, in Order number 2002-2-13, entitled "Order
Authorizing Emergency Essential Air Service Payments," provided
for an immediate increase in all subsidized rates effective
retroactively to October 1, 2001. This order also began the
process of renegotiating all of the Company's subsidy contracts
as of October 1, 2001 to recognize the effects of the September
11 attacks on airline operations, specifically higher insurance
costs and lower passenger revenues.
Other revenues declined 23.0% to $3.4 million in 2002. Freight
revenue decreased as a result of reduced capacity and increased
security requirements governing the acceptance of air freight
following the September 11 terrorist acts. Charter revenues were
down as a result of the non-renewal of various university
charter contracts.
Total operating expenses decreased 19.3%, or $21.7 million, in
2002 compared to 2001. Cost per ASM decreased 3.5% from 2001 to
25.2 cents per ASM. The suspension of service following the
September 11 terrorist attacks and the ensuing reduced schedule
had a significant impact upon direct operating costs.
Salaries, wages, and benefits decreased 16.9% to $25.9 million
from 2001 as a result of reductions in staffing levels, pay
rates, hours worked and the closing of service to and from some
cities.
Aircraft fuel expense was down 28.0% in 2002. The decrease is
attributed to the continued flight schedule reductions following
the September 11 terrorist attacks. The Company benefited from
flat average fuel costs through the first three quarters. Rising
fuel costs in the fourth quarter were offset by the usual
seasonal reduction in scheduled operations. The average per
gallon rate decreased 11.2% to $1.11 for the year.
Aircraft maintenance, materials and component repair expense was
3.6 cents per ASM for both 2002 and 2001. The reduction in
expense to $12.7 million corresponds with the reduction of ASMs.
Commissions decreased 65.3% to $0.9 million in 2002 from $2.5
million in 2001 as a result of lower travel agency commission
rates, decreased gross revenues and increasing direct sales.
Following a majority of the airline industry, the Company
discontinued paying commissions to travel agents on tickets sold
after June 12, 2002.
Depreciation expenses were largely flat due to the Company's
owned aircraft fleet remaining substantially unchanged during
the year from 2001.
Aircraft lease expense decreased 14.1% in 2002 to $7.5 million
from $8.7 million in 2001 as a result of the termination of a
lease of one EMB-120 and two Beech 1900D aircraft. As of March
31, 2002, one of two EMB-120 aircraft leased from Finova
Corporation was returned to the lessor, and the lease was
terminated. At January 1, 2002, the Company was leasing one
aircraft, a Beech 1900D, from an affiliated company. Effective
March 31, 2002, the aircraft was returned to the lessor. On May
14, 2002, a leased Beech 1900D was one of two aircraft destroyed
in a hangar fire, and lease rentals ceased May 31, 2002. The
second aircraft destroyed in the fire was a Company-owned Beech
1900D aircraft.
Other rentals and landing fees decreased 9.2% in 2002. Landing
fees were reduced in conjunction with a corresponding decrease
in total landings.
Other operating expenses decreased 23.6% in 2002 to $18.1
million from $23.7 million in 2001, representing a 0.5 cent per
ASM reduction in cost. The decrease is primarily due to the
elimination of certain fees associated with the former United
Express agreement, lower levels of operations and other actions
that were taken to reduce costs.
The decrease in interest expense from $9.9 million in 2001 to
$6.6 million in 2002 was primarily due to reduced interest rates
as the majority of the Company's fleet is financed at variable
interest rates. Also, one Company-owned Beech 1900D with debt of
$3.2 million was destroyed in a hangar fire. In addition, on
April 30, 2002 the Company fully paid and terminated its line of
credit with Coast Business Credit.
The realization of any income tax benefits remains substantially
in doubt as the Company continues in its loss carry forward
position.
The Company recorded a gain of $1.4 million in connection with
receipt of insurance proceeds for the two aircraft destroyed in
the hangar fire.
The Company recognized an impairment loss of $5.5 million and
recognized a gain on extinguishment of debt of $5.6 million in
connection with the recording of the Restructuring Agreement
with Raytheon.
Great Lakes Aviation Ltd.'s losses for the years ended
December 31, 2002, 2001, and 2000 were $10,811,137, $18,633,884,
and $8,238,833, respectively.
HARD ROCK HOTEL: S&P Affirms B+ Rating Over Steady Ops. Results
---------------------------------------------------------------
Standard & Poor's Rating Services revised its outlook for the
Hard Rock Hotel Inc. to stable from negative.
In addition, Standard & Poor's affirmed its 'B+' corporate
credit rating. Las Vegas, Nevada-based Hard Rock Hotel is an
owner and operator of the Hard Rock casino and hotel. The
company had total debt outstanding of approximately $139 million
at March 31, 2003.
"The outlook revision reflects the property's steady operating
results in the past few years, a modest improvement to credit
measures, and the expectation that stable performance will
continue," said Standard & Poor's credit analyst Peggy Hwan.
Despite a 44% decrease in EBITDA for the fourth quarter ended
Dec. 31, 2002, driven by a 4.2% decline in the table games hold
percentage, EBITDA for fiscal 2002 declined only 3% over the
prior fiscal year. Casino revenues recovered in the quarter
ended March 31, 2003, resulting from positive trends in gaming
volume and a somewhat better hold percentage than the fourth
quarter. The higher casino revenues and increases in other
hotel revenues raised the total EBITDA for the quarter 10% over
the comparable prior year period. Standard & Poor's expects
that 2003 performance will reflect modest cash flow growth due
to its loyal customer following, its ability to attract high
profile entertainment, and announced capital improvements to the
property.
Standard & Poor's expects a stable operating environment in Las
Vegas for the remainder of 2003 and further upside potential in
the following year as the economy begins to recover. Because of
the Hard Rock's niche position in Las Vegas, it is anticipated
that the company will continue to experience stable or modest
growth in visitation. As a result, steady performance is
expected to continue and credit measures are likely to remain in
line with the rating.
HAWAIIAN AIRLINES: Receives Extension from Two Aircraft Lessors
---------------------------------------------------------------
Hawaiian Airlines, Inc., subsidiary of Hawaiian Holdings, Inc.
(Amex: HA; PCX), has reached agreement with two of its aircraft
lessors to extend by at least 30 days the 60-day period under
Section 1110 of the U.S. Bankruptcy Code during which aircraft
rents are deferred and no action may be taken on the part of the
aircraft owner while the parties negotiate new lease terms.
The Company also announced that it received Court approval to
reject the leases for two new Boeing 767-300ER aircraft yet to
be delivered, during a court hearing yesterday. The Company was
also granted Court permission to enter into term sheets on wet
lease or dry lease arrangements to replace aircraft under lease
with existing aircraft lessors in the event that ongoing lease
negotiations ultimately prove unsuccessful.
"We are pleased that we will be able to continue working with
Boeing on a restructuring of our leases until June 27 and with
International Lease Finance until June 21," said John W. Adams,
chairman and chief executive officer of Hawaiian Airlines.
"We are hopeful that we can achieve a mutually satisfactory
conclusion in the time allotted. However, should this not come
to pass, we now have court approval to pursue alternative fleet
arrangements in order to prevent any interruption in our
operations."
On March 21, 2003 Hawaiian Airlines filed a voluntary petition
for reorganization under Chapter 11 of the U.S. Bankruptcy Code
in the U.S. Bankruptcy Court for the District of Hawaii in
Honolulu.
Founded in Honolulu 73 years ago, Hawaiian Airlines is Hawaii's
longest- serving and largest airline. The nation's 12th largest
airline, it is also the second-largest provider of passenger
service between the West Coast and Hawaii.
Hawaiian Airlines currently provides up to 30 nonstop daily
flights between nine cities on the U.S. mainland and Hawaii,
along with weekly service between Honolulu and American Samoa
and Tahiti. The airline also provides charter service between
Honolulu and Anchorage, Alaska.
Hawaiian Airlines takes great pride in its innovative onboard
service programs that highlight and promote the people and
culture of Hawaii. The airline has earned numerous international
awards for service in recent years, including the 2001 Zagat
Survey's award for Best Overall U.S. Airline in the Premier
category, and the 2001 Diamond Award for In-Flight Service from
Onboard Services magazine. Hawaiian Airlines was rated third
highest in Travel & Leisure magazine's most recent ranking of
the Top 10 U.S. Airlines.
Additional information on Hawaiian Airlines, including
previously issued company news releases, is available on the
airline's Web site at http://www.HawaiianAir.com
HAWAIIAN AIRLINES: Says Boeing Request for Trustee Lacks Merit
--------------------------------------------------------------
Hawaiian Airlines, Inc., subsidiary of Hawaiian Holdings, Inc.
(Amex: HA; PCX), said that its major creditor, BCC Equipment
Leasing Corp., has failed to demonstrate that a trustee should
be appointed to oversee the operations of the airline in its
Chapter 11 case. Hawaiian also said that facts raise serious
questions about the motives that prompted BCC to file its motion
and pursue it with wholesale disregard for its effect on the
company.
In a brief filed with the Bankruptcy Court in Honolulu, Hawaiian
Airlines states that the only party whose interest would be
served in appointing a trustee would be BCC itself:
"BCC threatens that unless a trustee is appointed it will
exercise its ... rights and take possession of its aircraft. BCC
goes even further, stating that it is prepared to offer the
Court suggestions concerning a possible trustee...seeking, in
effect, to sit across the negotiating table from a trustee who
would owe its appointment to the Motion. Any such result clearly
would be in no one's interest other than that of BCC."
In its 32-page response to the BCC motion, Hawaiian said that
BCC's arguments had not met the standard under which appointment
of a trustee is permitted, despite BCC having "resorted to a
number of makeshift arguments" in support of its request.
"Hawaiian's current management has engaged in no fraud, no
dishonesty, no incompetence and no gross mismanagement of the
company's affairs -- the specific criteria enunciated ... for
appointment of a trustee."
"Quite to the contrary, Hawaiian had over $100 million in cash
at the time of the tender offer, and projected having between
$80-$100 million at the close of 2002...It was only late in
2002, as conditions in the airline industry deteriorated
rapidly, that a Chapter 11 filing started to loom unless
Hawaiian renegotiated its union contracts and aircraft lease,"
the filing said.
Further, the filing states, "In late 2002 and early 2003, BCC
delivered three new Boeing 767s to Hawaiian and received several
million dollars in lease payments from Hawaiian, even though BCC
has a right under the terms of leases to withhold delivery of
the aircraft in the event of a material adverse change in
Hawaiian's financial condition."
Hawaiian's filing states, "Hawaiian's current management team
has in-depth knowledge of the airline's operations as well as an
awareness of the particular dynamics of servicing the Hawaiian
Islands ... It is doubtful that an appointed trustee would
possess these qualifications."
"Even before Hawaiian's Chapter 11 filing and continuing to this
day, Hawaiian's management has pursued and is pursuing a well-
conceived strategy to right the company. This strategy should
result in the successful reorganization of Hawaiian's business
affairs, including its aircraft leases, and its emergence from
this Chapter 11 proceeding as an effective competitor in an
industry that is being severely tested by economic conditions
and world affairs. Management's adroit handling of these matters
provides a telling counterpoint to BCC's assertions and raises
questions about the motives that prompted BCC to file the Motion
and pursue it with wholesale disregard for the countless other
matters pressing upon Hawaiian and its management."
The Company's filing in its entirety is available at
http://www.HALclaims.com
HAYES LEMMERZ: Exclusivity Extension Hearing Slated for May 7
-------------------------------------------------------------
Hayes Lemmerz International, Inc., and its debtor-affiliates ask
the Court to further extend their exclusive period to file a
plan through and including the earlier of:
-- June 16, 2003, or
-- 30 days after an order is entered by the Court denying
confirmation of the Debtors' plan.
Likewise, the Debtors want Judge Walrath to extend their
exclusive period to solicit and obtain plan acceptances through
and including the earlier of:
-- August 15, 2003, or
-- 90 days after an order is entered by the Court denying
confirmation of the Debtors' plan.
Anthony W. Clark, Esq., at Skadden Arps Slate Meagher & Flom
LLP, in Wilmington, Delaware, assures the Court that the
requested extension is not intended to delay the plan process.
On the contrary, the Debtors have already filed their Plan and
Disclosure Statement and commenced the process of soliciting
votes on the Plan.
Mr. Clark tells the Court that the Debtors engaged in
significant discussions with their various creditor
constituencies. On April 1, 2003, the Debtors, the Prepetition
Agent, the Committee, and Apollo Management V, L.P., which
manages funds owning over 40% of the Company's Senior Notes,
participated in meetings with five of the Debtors' Prepetition
Lenders -- namely Foothill Capital Corporation, General Electric
Capital Corporation, Citadel Limited Partnership, R2 Top Hat
Ltd., and Sankaty Advisors LLC, who are the lead members the
Dissident Group -- regarding the settlement between secured and
unsecured creditors embodied in the Plan and the distributions
to be made under the Plan as a result of this settlement.
During these meetings, the parties collectively determined that
the only way to preserve and effectuate a settlement on which a
consensual plan could be premised was to negotiate and agree on
potential modifications to the Plan that would resolve the
Dissident Group's concerns, while still preserving sufficient
value for the Debtors' unsecured creditors. Accordingly,
beginning on April 1, 2003 and continuing for several days
thereafter, the parties, principal among them the Debtors,
Apollo and the Lead Members of the Dissident Group, engaged in
arm's-length negotiations regarding the distributions to be made
under the Plan and potential modifications thereto.
These successful negotiations resulted in a consensual agreement
regarding certain modifications to the Plan that affect
creditors in Class 2 -- Prepetition Credit Facility Secured
Claims, by affording treatment somewhat more favorable than that
afforded by the Plan, and Class 5 -- Senior Note Claims, by
affording treatment somewhat less favorable than that afforded
by the Plan. Separate negotiations between the Debtors and the
Synthetic Lessors also resulted in additional modifications to
the Plan that resulted in more beneficial treatment for Class 3
-- Synthetic Lessor Secured Claims, in manners beneficial to
each of the Synthetic Lessors.
To incorporate these Plan modifications, the Debtors prepared
and filed a Disclosure Supplement, which the Court approved on
April 10, 2003. The Disclosure Supplement provides information
regarding the modifications to the Plan.
According to Mr. Clark, the Debtors have undertaken significant
efforts to resolve the Dissident Group's issues, negotiate a
consensual plan with Apollo, and receive the Court's approval as
to the adequacy of the Disclosure Supplement. As a result of
these efforts, the Debtors have negotiated a plan that addresses
the parties' concerns, and at the April 9, 2003 hearing, Apollo
and certain Class 2 parties in the Dissident Group, through
their authorized representatives indicated their intention to
vote to accept the Modified Plan upon approval of the Disclosure
Supplement. The Debtors are currently soliciting votes from
creditors affected by the modifications, including certain
creditors in Classes 2, 3 and 5. The Debtors believe that the
Court will confirm the Modified Plan on May 7, 2003. However,
as a result of the continuance of the Confirmation Hearing until
May 7, 2003, and out of an abundance of caution, the Debtors
seek an extension of their exclusive periods to provide that:
A. no party, other than the Debtors, would be permitted to
file a competing plan and solicit acceptances of any
competing plan, which would hinder the Debtors' ability to
emerge from Chapter 11 in the first half of 2003; and
B. because the treatment of claims in Classes 2, 3 and 5 have
been altered, certain creditors in these Classes should
have the opportunity to vote on the Modified Plan.
The Debtors believe that it is prudent to afford certain
creditors the opportunity to change their previously cast votes
on the Plan.
Moreover, Debtors remain committed to emerge from Chapter 11 in
the first half of 2003.
Mr. Clark believes that extension of the exclusive periods is
warranted as this is a large and complex case. The complexity
is manifested in certain issues that the Debtors, Prepetition
Lenders, the Committee, Apollo, and the Dissident Group have
continued to negotiate and have resolved in connection with the
Modified Plan. Resolution of these issues was necessary prior
to plan confirmation.
A hearing on the Debtors' request is scheduled on May 7, 2003.
By application of Del.Bankr.LR 9006-2, the exclusive filing
period is automatically extended through the conclusion of that
hearing. (Hayes Lemmerz Bankruptcy News, Issue No. 30;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
Hayes Lemmerz Intl's 11.875% bonds due 2006 (HLMM06USS1) are
trading at about 50 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1
for real-time bond pricing.
HMP EQUITY: S&P Assigns B+/B- Credit & Sr Discount Note Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to HMP Equity Holdings Corp. and its 'B-' rating
to the company's proposed senior secured discount notes due
2008. The rating on the notes is two notches below the corporate
credit rating to reflect their disadvantaged position in the
event of a bankruptcy, relative to the priority claims of
secured creditors at Huntsman International LLC and Huntsman
LLC.
At the same time, the existing ratings on HMP's affiliates,
including the 'B+' corporate credit ratings on Huntsman
International Holdings LLC and Huntsman LLC were affirmed. The
outlook on HMP is stable. The outlook for Huntsman LLC is
revised to stable from positive, while the outlook for Huntsman
International is revised to stable from developing.
HMP is a wholly owned subsidiary of Huntsman Holdings, LLC, a
newly established holding company with chemical operations
conducted through two primary subsidiaries, Huntsman LLC
(formerly Huntsman Corp.) and Huntsman International Holdings
LLC. On a consolidated basis, Huntsman Holdings will generate
annual sales of about $8 billion, ranking the company among
the larger chemical companies based in North America.
"Today's rating actions follow Huntsman's indication that the
proceeds of approximately $320 million from the sale of the
proposed notes and related warrants will be used to complete the
purchase of Imperial Chemical Industries PLC's 30% interest in
Huntsman International Holdings and its outstanding senior
subordinated discount notes", said Standard & Poor's credit
analyst Kyle Loughlin. These actions complete a series of
transactions announced last year and will effectively
consolidate the ownership of the two primary entities under
common ownership, controlled by Jon Huntsman and family,
MatlinPatterson Global Opportunities Partners, L.P., and other
investors and management. "From a credit perspective, these
actions are significant and will more closely align the default
risk of the primary entities, HMP Holdings, Huntsman
International Holdings and Huntsman LLC, due to the shared
control and common interests of the owners," added the analyst.
Standard & Poor's also noted that the risk of a change of
control event stemming from a previous pledge of Huntsman LLC's
shares in Huntsman International, is now expected to be
eliminated, as the completion of the GOP and ICI transaction
will release ICI's lien on the pledged shares.
Pro forma for the completion of the proposed financing plan,
credit statistics reflect a very aggressive financial position.
It should improve somewhat as management follows through on
plans to gradually deleverage its businesses. Accordingly, the
current ratings incorporate expectations that key credit ratios
will exhibit gradual improvement.
In addition, the disclosure in a recent SEC filing that GOP may
acquire and contribute an equity stake in Vantico Group S.A. to
HMP raises another credit consideration, although Standard &
Poor's anticipates that this transaction, if completed, will be
structured in a manner that does not elevate credit risk at HMP,
Huntsman International, or Huntsman LLC.
The ratings are based on the assumption that business conditions
will support the restoration of credit protection measures at
HMP, Huntsman International, and Huntsman LLC, and that
management will prioritize the preservation of liquidity over
growth-oriented expenditures until a sustained trend of
improvement to underlying business results is achieved. More
aggressive spending to expand capabilities in higher-growth or
differentiated products, or to achieve greater integration in
petrochemicals, could be a concern in the absence of a broad
economic recovery to support stronger results.
HORIZON NATURAL: Court Sets June 30, 2003 as Claims Bar Date
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Kentucky
(Ashland Division) directs that all creditors of Horizon Natural
Resources Company f/k/a AEI Resources Holding, Inc. and its
debtor-affiliates, have until June 30, 2003, to file their
proofs of claim against the Debtors or be forever barred from
asserting their claims.
Proofs of claim must be must be received by the Court-approved
Claims Agent, Donlin, Recano & Company, Inc., before 5:00 p.m.
on June 30. If sent by U.S. Mail, claims must be addressed to:
Donlin, Recano & Company, Inc.
As Agent for the United States Bankruptcy Court
Re: Horizon Natural Resources Company, et al.
P.O. Box 100
Murray Hill Station,
New York, NY 10156
If sent by overnight courier, or hand delivery, to:
Donlin, Recano & Company, Inc.
As Agent for the United States Bankruptcy Court
Re: Horizon Natural Resources Company, et al.
419 Park Avenue South
Suite 1206
New York, NY 10156
Claims need not be filed at this time on account of:
1. Claims already properly filed;
2. Claims not listed as contingent, unliquidated or
disputed;
3. Administrative expense claims pursuant to Sec. 503(b)
and 507(a) of the Bankruptcy Court;
4. Claims of one Debtor against another Debtor.
Horizon Natural Resources (formerly AEI Resources), one of the
US's largest producers of steam (bituminous) coal filed for
chapter 11 protection on November 13, 2002. This the Debtors'
second chapter 11 filing. Ronald E. Gold, Esq., at Frost Brown
Todd LLC represents that Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed estimated debts and assets of over $100 million.
ITIS HOLDINGS: Working Capital Deficit Tops $1MM at December 31
---------------------------------------------------------------
ITIS Holdings Inc. owns computer-related subsidiaries that
provide automated litigation support and document management,
that operate pharmacies, and that provide technical support for
operations.
The Company provides automated litigation support through its
subsidiary, ITIS, Inc., a Texas corporation, which conducts
business as Litidex. Litidex currently focuses its attention on
litigation support services related to lawsuits involving stock
manipulation of publicly held companies. PharmHouse Inc.
represents a new business segment and newly formed subsidiary of
ITIS. PharmHouse concentrates its efforts in the business of
pharmacy operations. PharmHouse, originally formed as a
subsidiary of Litidex, became a wholly owned subsidiary of ITIS
in May 2002. In September 2002 PharmHouse began operation of two
pharmacies that focus primarily on electronic prescription
services. Another new subsidiary, OnPoint Solutions Inc.,
provides technical support for PharmHouse and Litidex, in the
development and operation of the pharmacies of PharmHouse, and
in software and hardware services for both PharmHouse and
Litidex. OnPoint also provides the RightScript(TM) software used
by PharmHouse.
The Company's revenue decreased by $1,693,892 from $2,691,855
for the year ended December 31, 2001 to $997,963 for the year
ended December 31, 2002.
Revenues from the automated litigation support services of
subsidiary Litidex(R) decreased by $1,884,051 from $2,691,855
for the year ended December 31, 2001 to $807,804 for the year
ended December 31, 2002. While four contracts for litigation
support services were recorded during the year ended December
31, 2001, only one was recorded in the year ended December 31,
2002. While additional contracts to provide these services are
pending and ITIS has begun due diligence services in regard to
these cases, revenues and cash flow from automated litigation
support services may not be sustained if no additional contracts
are obtained.
Revenues generated by the Company's database management segment
during the year ended December 31, 2002 amounted to $170,400.
These revenues include payments received totaling $82,519
related to the sale of a copy of the National Law Library data.
The balance of the revenues, $87,881, represents fees for
database management services.
Revenues of new subsidiary PharmHouse, which began operations in
September 2002, amounted to $19,759 for the year ended
December 31, 2002.
Revenues from discontinued operations amounted to $797,633 for
2002 and $1,856,531 for 2001. On the Company's consolidated
statement of operations and comprehensive loss for 2002 and 2001
the sales and expenses have been netted together and reflected
as a loss from discontinued operations in the amount of $340,198
for 2002 and $2,335,021 for 2001.
During the year ended December 31, 2002, ITIS's cash and cash
equivalents increased in total by $255,370 from the December 31,
2001 balance of $34,165 in available cash and a $40,813 bank
overdraft to $248,722 in available cash at December 31, 2002.
The Company has working capital of $3,549,431 at December 31,
2002, including $4,700,000 in assets held for sale. Exclusive of
the assets held for sale, the Company has a working capital
deficit of $1,150,569. Cash used in operating activities was
$2,985,183, cash provided by investment activities was $524,929
and cash provided by financing activities was $2,674,811.
ITIS may be required to obtain additional financing or equity
capital to remain in business, and that capital, if available,
may have provisions that could further suppress current and
future stock prices and cause significant dilution to current
shareholders. Its internally generated cash flows from
operations have historically been insufficient for its cash
needs and will continue to be for the foreseeable future. While
management projects that the internal source of liquidity may
improve, this objective may not be achieved in the near term, if
ever. As of April 15, 2003, sources of external and internal
financing are very limited. It is not expected that the internal
source of liquidity will improve until significant net cash is
provided by operating activities (which may not be achieved),
and until such time, ITIS will rely upon external sources for
liquidity. ITIS may not ever become profitable and could fail as
a going concern.
JUNIPER CBO: S&P Keeps Watch on Junk Class A-4L & A-4 Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the
class A-4L and A-4 notes issued by Juniper CBO 2000-1 Ltd., an
arbitrage CBO transaction originated in 2000, on CreditWatch
with negative implications. At the same time, the ratings on the
class A-1L, A-2L, A-3L, and A-3 notes are affirmed due to
the level of credit enhancement available to support the notes.
The CreditWatch placements reflect factors that have negatively
affected the credit enhancement available to support the notes
during recent months. These factors include par erosion of the
collateral pool securing the rated notes and a downward
migration in the credit quality of the assets within the pool.
As of the April 2, 2003 monthly trustee report, the class A
overcollateralization ratio was 101.3%, versus the minimum
required ratio of 110%.
The credit quality of the collateral pool has also deteriorated
since the April 2002 rating action. Currently, $18.21 million
(or approximately 7% of the collateral pool) is held as
defaulted. In addition, approximately 6% of the performing
assets in the collateral pool come from obligors with ratings
currently in the 'CCC' range, and approximately 11% of the
performing assets within the collateral pool come from obligors
with ratings on CreditWatch negative.
Standard & Poor's will be in close contact with Wellington
Management Co. LLP, the collateral manager, and will be
reviewing the results of the current cash flow runs generated
for Juniper CBO 2000-1 Ltd. to determine the level of future
defaults the rated tranches can withstand under various stressed
default timing and interest rate scenarios, while still paying
all of the rated interest and principal due on the notes. The
results of these cash flow runs will be compared with the
projected default performance of the transaction's current
collateral pool to determine whether the ratings assigned to the
above mentioned notes are commensurate with the level of credit
enhancement currently available.
RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS
Juniper CBO 2000-1 Ltd.
Class Rating Balance (mil. $)
To From Original Current
A-4L CCC/Watch Neg CCC 15.00 15.00
A-4 CCC/Watch Neg CCC 20.00 20.00
RATINGS AFFIRMED
Juniper CBO 2000-1 Ltd.
Class Rating Balance (mil. $)
A-1L AAA 51.648
A-2L AAA 90.00
A-3L BBB 20.00
A-3 BBB 30.00
LASERSIGHT INC: Asks Nasdaq to Extend Listing Status
----------------------------------------------------
LaserSight Incorporated (Nasdaq: LASEC) has requested that
Nasdaq grant a further extension of the period during which its
common stock will continue to be listed on the Nasdaq SmallCap
Market. The request seeks an extension of the time for filing of
the Company's definitive proxy statement with the Securities and
Exchange Commission to May 21, 2003, both to permit the Company
to complete its response to SEC comments on its preliminary
proxy material and permit it to attempt to negotiate and
finalize a capital infusion to restore the Company's shareholder
equity to the $2.5 million level required by Nasdaq for
continued listing. The Company's shareholder equity is now below
that level.
On April 15, 2003, the Nasdaq Listing Qualifications Panel
granted the Company a second extension of its continued listing.
In accordance with that decision, on or before May 1, 2003, the
Company was required to file a definitive proxy statement with
the Securities and Exchange Commission and Nasdaq evidencing its
intent to seek shareholder approval for the implementation of a
reverse stock split. Thereafter, on or before June 6, 2003 the
company was required to demonstrate a closing bid price of at
least $1.00 per share and, immediately thereafter, a closing bid
of at least $1.00 per share for a minimum of ten consecutive
trading days. In addition, the Company was required to be able
to demonstrate compliance with all requirements for continued
listing on the Nasdaq SmallCap Market, which includes the
requirement for minimum stockholder's equity of $2.5 million. In
the event the Company fails to comply with the terms of the
exception, its securities will be delisted from the Nasdaq Stock
Market.
LaserSight has also been advised by its SEC counsel that
additional time is required for response to SEC Staff comments
and filing of its definitive proxy materials.
In addition, in accordance with the terms of the extension,
LaserSight has advised the Nasdaq Hearing Qualifications Panel
that it will not be able to meet the requirement to have
stockholders equity of at least $2.5 million. The Company is in
the process of pursuing alternatives in an attempt to promptly
meet that requirement.
LaserSight(R) is a leading supplier of quality technology
solutions for laser vision correction and has pioneered its
patented precision microspot scanning technology since it was
introduced in 1992. Its products include the LaserScan LSXr
precision microspot scanning system, its international research
and development activities related to the Astra family of
products used to perform custom ablation procedures known as
CustomEyes and its MicroShape(R) family of keratome products.
The Astra family of products includes the AstraMax(R) diagnostic
workstation designed to provide precise diagnostic measurements
of the eye and CustomEyes AstraPro(R) software, surgical
planning tools that utilize advanced levels of diagnostic
measurements for the planning of custom ablation treatments. In
the United States, the Company's LaserScan LSX excimer laser
system operating at 300 Hz is approved for the LASIK treatment
of myopia and myopic astigmatism. The MicroShape family of
keratome products includes the UltraShaper(R) durable keratome
and UltraEdge(R) keratome blades.
* * *
In the Company's Form 10-Q for the period ended September 30,
2002, LaserSight's independent auditors, KPMG, in its report,
stated:
"We have reviewed the condensed consolidated balance sheet of
LaserSight Incorporated and subsidiaries as of September 30,
2002, and the related condensed consolidated statements of
operations for the three and nine-month periods ended September
30, 2002 and 2001 and the condensed consolidated statements of
cash flows for the nine-month periods ended September 30, 2002
and 2001. These condensed consolidated financial statements are
the responsibility of the Company's management.
"We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with auditing standards generally
accepted in the United States of America, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
"Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the
United States of America.
"We have previously audited, in accordance with auditing
standards generally accepted in the United States of America,
the consolidated balance sheet of LaserSight Incorporated and
subsidiaries as of December 31, 2001, and the related
consolidated statements of operations, stockholders' equity, and
cash flows for the year then ended (not presented herein); and
in our report dated March 22, 2002, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2001, is fairly
stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
"Our report dated March 22, 2002, on the consolidated financial
statements of LaserSight Incorporated and subsidiaries as of and
for the year ended December 31, 2001, contains an explanatory
paragraph that states that the Company's recurring losses from
operations and significant accumulated deficit raise substantial
doubt about the entity's ability to continue as a going concern.
The consolidated balance sheet as of December 31, 2001, does not
include any adjustments that might result from the outcome of
that uncertainty."
The Company's management, in the same filing, said: "We have
significant liquidity and capital resource issues relative to
the timing of our accounts receivable collection and the
successful completion of new sales compared to our ongoing
payment obligations and our recurring losses from operations and
net capital deficiency raises substantial doubt about our
ability to continue as a going concern. We have experienced
significant losses and operating cash flow deficits, and we
expect that operating cash flow deficits will continue without
improvement in our operating results. In August 2002, we
executed definitive agreements relating to our China
Transaction. As a result, the Company's short-term liquidity has
improved and its operations are improving. Further improvements
in revenues will be needed to achieve profitability and positive
cash flow."
LEAP WIRELESS: First Meeting of Creditors to Convene on May 20
--------------------------------------------------------------
The United States Trustee for Region 15 has called for a meeting
of the Leap Wireless Debtors' Creditors pursuant to 11 U.S.C.
Sec. 341(a) to be held on May 20, 2003 at 10:00 p.m., in Suite
630 at the Emerald Plaza Building in San Diego, California. All
creditors are invited, but not required, to attend. This
Official Meeting of Creditors offers the one opportunity in a
bankruptcy proceeding for creditors to question a responsible
office of the Debtors under oath. (Leap Wireless Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
LODGIAN: S.D.N.Y. Court Confirms Impac Plan of Reorganization
-------------------------------------------------------------
Lodgian, Inc. (AMEX: LGN), one of the nation's largest owners
and operators of mid-scale and upscale hotels, announced that
the U.S. Bankruptcy Court for the Southern District of New York
has confirmed the Plan of Reorganization for 18 hotels owned by
Lodgian subsidiaries Impac Hotels II, L.L.C. and Impac Hotels
III, L.L.C., ruling that the Impac Debtors have met all
necessary requirements to implement the Impac Plan.
The 18 hotels covered by the Impac Plan are secured by a
financing obtained prior to the bankruptcy filing from a single
lender, which has a $109.0 million claim against the Impac
Debtors. The confirmed Impac Plan calls for the lender to
release the hotel collateral in exchange for the payment of an
agreed-upon amount on the effective date of the Impac Plan,
which is to occur before May 31, 2003. If the agreed-upon
payment is not made by that date, the 18 Impac hotels will be
returned to the lender in satisfaction of outstanding mortgage
obligations.
Under the terms of the Impac Plan, the Impac Debtors would form
18 new subsidiaries through which they would obtain financing
from Lehman Brothers Holdings Inc. to pay the agreed-upon amount
to the current lender. Lodgian currently is in negotiations with
Lehman Brothers regarding the financing. Although there can be
no assurance, Lodgian is hopeful that the Lehman Brothers
financing will be successfully completed and, accordingly, that
the company will retain ownership of the 18 hotels.
Lodgian and entities owning 78 hotels, other than the Impac
hotels, emerged from Chapter 11 on November 25, 2002.
"The confirmation of the Impac Plan is a major step in bringing
to closure the remaining Chapter 11 issues of Lodgian and its
subsidiaries," said David Hawthorne, Lodgian's President and
CEO. "We already have made significant progress in improving the
operations of our hotels and will work toward closing the Lehman
Brothers financing by the end of May.
"We have a viable plan in place, an experienced management team
and a dedicated workforce. These hotels are quality properties
in good locations, and we believe we can enhance their returns,
especially as the economy begins to rebound from its current
difficulties."
Lodgian is one of the nation's largest owners and operators of
hotels. The company owns and/or operates 97 hotels with 18,265
rooms located primarily in urban and secondary metropolitan
markets in 30 states and Canada. Substantially all of Lodgian
properties are full-service hotels operated under franchise
affiliations with the major brands of InterContinental Hotels
Group, Marriott, Hilton and Sheraton. For more information about
Lodgian, visit the company's Web site: http://www.lodgian.com
LTV CORP: U.S. Trustee Disbands Unsecured Creditors' Committee
--------------------------------------------------------------
Saul Eisen, United States Trustee for Region 9, represented by
Daniel M. McDermott, Esq., Assistant U.S. Trustee, notifies all
parties that the Official Committee of Unsecured Creditors,
which represents creditors having prepetition unsecured claims
against The LTV Corporation and debtor-affiliates, is disbanded.
This is a consequence of the Debtors' announcement in open court
that there will be no distribution to any prepetition unsecured
creditors. (LTV Bankruptcy News, Issue No. 47; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
MAGELLAN HEALTH: Wants Open-Ended Lease Decision Period
-------------------------------------------------------
Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells the Court that as of the Petition Date, Magellan
Health Services, Inc., and debtor-affiliates were parties to 72
unexpired nonresidential real property leases. The Debtors
expect that their analysis of the Unexpired Leases will take a
considerable amount of time. Given the importance of the
Unexpired Leases to the Debtors' continued operations, it would
be virtually impossible for the Debtors to make a reasonable and
informed decision as to whether to assume or reject the
Unexpired Leases within the statutory 60-day period under
Section 365(d)(4) of the Bankruptcy Code.
Accordingly, pursuant to Section 365(d)(4) of the Bankruptcy
Code, the Debtors ask the Court for an extension of the time
within which they must decide whether to assume, assume and
assign, or reject the Unexpired Leases. The Debtors ask for an
open-ended extension to and including the date on which a plan
of reorganization is confirmed. This Extension, Mr. Karotkin
argues, will give the Debtors sufficient opportunity to make
reasoned and informed decisions regarding lease treatment and
disposition.
If the deadline is not extended, Mr. Karotkin is concerned that
the Unexpired Leases may be deemed rejected by operation of
Section 365(d)(4) of the Bankruptcy Code. At this stage of
these complex Chapter 11 cases, rejection would harm the estates
by resulting in the loss of one or more leases of real property
that may be essential to the Debtors' reorganization. Likewise,
assumption of leases of real property outside the context of a
plan of reorganization would harm the estates by resulting in
the Debtors being required to cure significant prepetition
claims and the elevation of landlord claims to administrative
expense status prior to the time when an informed decision can
be made and a reorganization assured.
Mr. Karotkin assures the Court that lessors will not be
prejudiced by the Extension. During the Extension, the Debtors
propose that any lessor may request that the Court fix an
earlier date by which the Debtors must assume or reject its
Unexpired Lease in accordance with Section 365(d)(4) of the
Bankruptcy Code. The Debtors submit that, if a landlord
requests this relief from the Court, the Debtors will maintain
the burden of persuasion. Moreover, the Debtors are committed
to remaining current on their postpetition obligations pursuant
to the Unexpired Leases and intend to cure any instances in
which they have failed to meet the obligations. (Magellan
Bankruptcy News, Issue No. 6: Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Magellan Health Services' 9.375% bonds due 2007 (MGL07USA1) are
trading at about 83 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MGL07USA1for
real-time bond pricing.
MATLACK: Chapter 7 Trustee Taps PPM as Environmental Consultants
----------------------------------------------------------------
Gary F. Seitz, the Chapter 7 Trustee overseeing the liquidation
of Matlack Systems, Inc., and its debtor-affiliates, seeks
permission from the U.S. Bankruptcy Court for the District of
Delaware to retain PPM Consultants, Inc., as his Environmental
Consultants, nunc pro tunc to February 27, 2003.
The Chapter 7 Trustee assures the Court that PPM is a
"disinterested person" as that phrase is defined in the
Bankruptcy Code. PPM has considerable environmental consulting
services required by the Chapter 7 Trustee, thus, the Chapter 7
Trustee believes that PPM is highly qualified to perform the
services.
In exchange for PPM's hourly rates of $60 to $120 per hour, PPM
will conduct an initial site assessment of the Sterlington,
Louisiana facility. PPM will determine the security and the
status of the environmental conditions at the Sterling Facility,
and additional site assessments and environmental consulting
services at the Sterlington Facility.
Before filing for chapter 11 protection, Matlack Systems, Inc.,
North America's No. 3 tank truck company, provides liquid and
dry bulk transportation, primarily for the chemicals industry.
The Debtors converted their chapter 11 cases to cases under
Chapter 7 of the Bankruptcy Court on October 18, 2002 (Bankr.
Del. Case No. 01-1114). Gary F, Seitz serves as the Chapter 7
Trustee. Richard Scott Cobb, Esq., at Klett Rooney Lieber &
Schorling represents the Debtors as they wind up their affairs.
MICROCELL: Expects Reorganization Plan to Become Effective May 1
----------------------------------------------------------------
Microcell Telecommunications Inc. (TSX: MTI.B) announced that
its previously announced Plan of Reorganization and of
Compromise and Arrangement is expected to become effective on or
about May 1, 2003.
Under the terms of the Plan, secured creditors, affected
unsecured creditors and shareholders at the close of business on
the day prior to the Effective Date will be entitled to receive
their respective distribution of new securities in the
recapitalized Company.
The new securities to be issued by the recapitalized Company
will consist of First Preferred Shares (voting and non-voting
series), Second Preferred Shares (voting and non-voting series),
common equity consisting of Class A Restricted Voting Shares and
Class B Non-Voting Shares, and two series of Warrants. The issue
price of all the new shares will be $15 per share.
Secured creditors will receive their pro rata distribution
(based on the value of the secured creditors' claims as of the
end of the day prior to the Effective Date) of First Preferred
Shares, in an aggregate amount of $176.5 million, and Second
Preferred Shares, in an aggregate amount of $54.0 million,
subject to certain conditions.
Affected unsecured creditors will receive their pro rata
distribution (based on the principal or accreted amount of the
outstanding unsecured notes plus any accrued interest as of the
end of the day prior to the Effective Date) of Second Preferred
Shares, in an aggregate amount of $54.0 million, and common
equity, in an aggregate amount of $54.1 million, as well as
their pro rata distribution of 1,329,312 two-year Warrants and
2,215,521 five-year Warrants, subject to certain conditions.
Current shareholders will receive one Class B Non-Voting Share
in exchange for every 10,630 shares, one two-year Warrant in
exchange for every 90 shares, and one five-year Warrant in
exchange for every 54 shares. No fractional new securities will
be issued nor any compensation paid for any such fraction. Where
the exchange results in less than one new security being
otherwise issuable, no new security will be issued.
Non-voting shares will be exchangeable after the Effective Date,
at the option of the holder, at any time, into voting shares of
the same class upon provision by the holder of a residency
declaration in prescribed form to the Company's transfer agent
(Computershare Trust Company of Canada) certifying that the
holder is Canadian. The residency declaration form can be
obtained directly from Computershare Trust Company of Canada
after the Effective Date. An electronic version will also be
available on the Company's Web site at
http://www.microcell.ca/investorsafter the Effective Date.
The Toronto Stock Exchange (TSX) has conditionally approved the
listing of the new securities for the opening of the exchange on
the Effective Date under the stock symbol MT. The currently
listed Class B Non-Voting Shares (MTI.B) will be delisted, at
the close of business on the day prior to the Effective Date.
Microcell Telecommunications Inc. is a provider of
telecommunications services in Canada dedicated solely to
wireless. The Company offers a wide range of voice and high-
speed data communications products and services to over 1
million customers. Microcell operates a GSM network across
Canada and markets Personal Communications Services and General
Packet Radio Service under the Fido(R) brand name. Microcell
Telecommunications has been a public company since October 15,
1997, and is listed on the Toronto Stock Exchange.
MWAM CBO: Fitch Keeping Watch on BB- Preferred Shares Rating
------------------------------------------------------------
Fitch Ratings has placed the following classes of MWAM CBO
Series 2001-1 Ltd. on Rating Watch Negative:
MWAM CBO Series 2001-1 Ltd.:
-- Class A Notes 'AAA'
-- Class B Notes 'AA';
-- Class C-1 Notes 'BBB';
-- Class C-2 Notes 'BBB';
-- Preference Shares 'BB-'.
MWAM CBO Series 2001-1 Ltd. is a collateralized debt obligation
managed by Metropolitan West Asset Management, LLC. The CDO was
established in January 2001 to issue $250.5 million in debt and
equity securities. The rating actions are based on the recent
deterioration of the credit fundamentals of the portfolio to the
point where the risk may no longer be consistent with the
current ratings. In addition, the current interest rate
environment has placed increased pressure on excess spread.
Fitch is reviewing the impact of these factors and the adequacy
of available credit enhancement.
The transaction is currently failing its Fitch weighted-average
rating factor test with an actual WARF of 28.14 compared to a
WARF trigger of 17.0. In addition to the $12.35 million of
defaulted collateral, the portfolio contains a number of
securities whereby default is probable. In particular, the
portfolio contains exposure to a number of distressed assets
including aircraft leasing securitizations (4.95%), a
collateralized debt obligation (0.26%) that has been written-
down, and a GreenTree manufactured housing limited guarantee
bond (1.46%).
Given the current low interest rate environment, the terms of
the interest rate swap, which were negotiated at closing, have
created a cash drain on the transaction. To counteract this,
MetWest has utilized a strategy that includes purchasing short
duration US agency mortgage derivatives, such as inverse
floaters and two-tiered index bonds. These bonds currently
represent 12.31% of the portfolio. The inclusion of these 'AAA'
bonds has the effect of improving the WARF and increasing the
weighted average spread.
Fitch is currently reviewing the performance of the transaction
in detail, and will evaluate the impact of the credit migration
in due course pending completion of the valuation process. Fitch
will also examine the effect of the interest rate swap, inverse
floaters and TTIBs on cashflows in a rising interest rate
scenario. Further action will be taken when the analysis has
been completed.
NATIONAL CENTURY: US Trustee Balks at Kaye Scholer's Engagement
---------------------------------------------------------------
Dean Wyman, Senior Trial Attorney at the Office of the U.S.
Trustee, in Cleveland, Ohio, argues that:
(1) Kaye Scholer is not independent by reason of its past
representation of the Debtor National Century Financial
Enterprises, Inc.;
(2) it is not necessary for two separate law firms to serve as
counsel for the subcommittee, and
(3) the scope of services may overlap with the services
rendered by counsel for the committee of unsecured
creditors.
To enable the Court to make an informed decision, Kaye Scholer
disclosed its connections as required by Rule 2014 of Federal
Rules of Bankruptcy Procedure. In its declaration, Kaye Scholer
discloses that it "formerly represented NCFE from approximately
March 1999 through approximately May 2000 in connection with the
preparation of a Form S-1 Registration Statement and related
documents" in connection with a proposed offering of the
Debtor's stock.
Mr. Wyman asserts that this past representation of NCFE is
sufficient to disqualify Kaye Scholer. As past counsel for the
Debtor NCFE, Kaye Scholer may have received information from
NCFE that is protected by the attorney-client privilege. Kaye
Scholer may have gained access to NCFE's secrets and
confidences. Kaye Scholer may have acquired a detailed
knowledge of NCFE's financial affairs. At the very least, Kaye
Scholer owes a duty of loyalty to NCFE by reason of its past
representation.
Because of this past representation, it may be difficult for
Kaye Scholer to offer independent legal advice to the
Subcommittee, advice untainted by its past representation of
NCFE. Accordingly, Kaye Scholer cannot be independent and
therefore should not be retained.
Mr. Wyman also emphasizes that having two separate law firms to
represent the Subcommittee has the potential to result in
unnecessary additional charges for services rendered.
Moreover, each firm has a different perspective on legal actions
to be taken. As a prerequisite to any retention of counsel for
the Subcommittee, there should be a clearly defined and
identified mechanism in place to prevent any possible
duplication of services. In this regard, Mr. Wyman notes that
the description of the services is very broad.
Thus, the U.S. Trustee for Region 9, asks the Court to deny the
Subcommittee's application.
As previously reported, the Official NPF VI Noteholders'
Subcommittee sought the Court's authority to retain the law
firms of Kaye Scholer, LLP and Clifford Chance, LLP as its co-
counsels in the Chapter 11 cases of National Century Financial
Enterprises, Inc., and its debtor-affiliates, nunc pro tunc as
of January 13, 2003. (National Century Bankruptcy News, Issue
No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONWIDE COMPUTERS: Ch. 11 Liquidator Brings-In Togut Segal
-------------------------------------------------------------
Andrew W. Plotzker, the chapter 11 liquidator of Nationwide
Computers & Electronics, Inc., asks the U.S. Bankruptcy Court
for the Southern District of New York for permission to retain
Togut, Segal & Segal LLP as Special Counsel, effective March 24,
2003.
The Liquidator wants to retain Togut Segal in the Debtor's case
to investigate and, if appropriate, prosecute an adversary
proceeding against Thomson Multimedia, Inc. and Thomson Consumer
Electronics to avoid certain prepetition transfers or set aside
a lien. The Liquidator seeks to retain Togut Segal in this
particular matter because Fulbright & Jaworski, his primary
counse, has a potential conflict that prevents it from
performing these services. The Liquidator believes that Togut
Segal is extremely well qualified to perform the necessary and
required services professionally, skillfully and efficiently.
Togut Segal will charge for services at on an hourly basis:
partners $560 to $650 per hour
paralegals and associates $115 to $470 per hour
Nationwide Computers & Electronics, Inc., a retailer of home
computer, electronics & entertainment inventory, filed for
chapter 11 protection on June 14, 2001 (Bankr. S.D.N.Y. Case No.
01-21241). When the Debtor filed for protection from its
creditors, it listed $8,316,574 in assets and $15,441,401 in
debts. The Debtor ceased all operations post-petition, and the
Liquidator began the process of liquidating all of the Debtor's
inventory and assets.
OLYMPIC PIPE LINE: Gets Court Nod to Hire PricewaterhouseCoopers
----------------------------------------------------------------
Olympic Pipe Line Company, sought and obtained approval from the
U.S. Bankruptcy Court for the Western District of Washington to
engage the accounting and financial services firm of
PricewaterhouseCoopers LLP as its accountants.
The Debtor understands that PricewaterhouseCoopers has a wealth
of experience in providing accounting, auditing, tax and
advisory services in restructurings and reorganizations and
enjoys an excellent reputation for services it has rendered in
large and complex chapter 11 cases on behalf of debtors and
creditors.
Prior to the Petition Date, the Debtor hired PwC. PwC's
experience and knowledge will be valuable to the Debtor in its
efforts to reorganize. Accordingly, the Debtor wishes to retain
PricewaterhouseCoopers to provide assistance during this case.
The Debtor points out that PwC's services are clearly necessary
to enable it to maximize the value of its estate and to
reorganize successfully.
In this engagement, PricewaterhouseCoopers will:
a. assist in the evaluation and preparation of the debtor's
financial projections and/or business plans and
management's underlying assumptions;
b. assist in obtaining and preparing debtor-in-possession
financing agreements;
c. assist the debtor in financial reporting in the chapter
11 proceeding;
d. assist and participate in meetings with stakeholders and
management regarding reorganization issues;
e. assist in the preparation and presentation of a plan of
reorganization and disclosure statement, liquidation
analysis, claims administration, litigation and other
post confirmation matters; and
f. perform other reasonable accounting, tax and consulting
services necessary in these proceedings, as requested by
the debtor, its attorneys or other financial advisors.
The customary hourly rates charged by PricewaterhouseCoopers'
personnel anticipated to be assigned to this case are:
Partner $325-395
Manager/Director $275-325
Associate/Senior Associate $160-240
Olympic Pipe Line Company, owns and operates a pipeline system
transporting finished Petroleum products. The Company filed for
chapter 11 protection on March 27, 2003 (Bankr. W.D. Wash. Case
No. 03-14059). Edwin K. Sato, Esq., and Thomas N. Bucknell,
Esq., at Bucknell Stehlik Sato & Stubner, LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $105,961,773 in
total assets and $401,856,113 in total debts.
OWENS-BROCKWAY: Commences Tender Offer for Parent's 7.85% Notes
---------------------------------------------------------------
Owens-Brockway Glass Container Inc., an indirect wholly-owned
subsidiary of Owens-Illinois, Inc. (NYSE: OI), intends to offer
to purchase for cash all $300,000,000 aggregate principal amount
of 7.85% Senior Notes due 2004 issued by Owens-Illinois, Inc. In
connection with the offer, Owens-Brockway Glass Container Inc.,
will solicit consents for proposed amendments to the indenture
governing the senior notes, which will eliminate certain
covenants and events of default.
The purchase price for each $1,000 of senior notes is expected
to be $1,045 and will be payable to note holders who both tender
their notes and deliver consents to the proposed amendments to
the indenture. In addition, such holders will be paid accrued
and unpaid interest up to, but not including, the date of
payment for the notes.
The offer will be conditioned on Owens-Brockway Glass Container
Inc.'s receipt of sufficient net proceeds from its proposed
offering of senior notes due 2013 to pay the aggregate
consideration to be paid in the tender offer. Additional terms
and conditions of the tender offer and consent solicitation,
including Owens-Brockway Glass Container Inc.'s obligation to
accept the notes tendered and pay the purchase price, will be
set forth in an offer to purchase and consent solicitation
statement.
Deutsche Bank Securities Inc. will act as the exclusive Dealer
Manager and Solicitation Agent in connection with the tender
offer and consent solicitation.
This press release shall not constitute an offer to purchase, a
solicitation of an offer to purchase, or a solicitation of
consents with respect to any securities. Any such offer or
solicitation will be made only by means of an offer to purchase
and consent solicitation.
Copies of this press release as well as other Owens-Illinois
news releases are available at the Owens-Illinois Web site at
http://www.o-i.comor at http://www.prnewswire.com
As reported in Troubled Company Reporter yesterday, Standard &
Poor's Ratings Services assigned its 'BB' rating to Owens-
Brockway Glass Container Inc.'s $450 million senior secured
notes due 2011. At the same time, Standard & Poor's assigned its
'B+' rating to Owens-Brockway Glass Container Inc.'s $350
million senior unsecured notes due 2013.
Owens-Brockway is wholly owned subsidiary of Toledo, Ohio-based
Owens-Illinois Inc. Standard & Poor's said that it has affirmed
its ratings, including its 'BB' corporate credit rating, on
Owens-Illinois Inc. and its related entities. The outlook
remains negative. Proceeds of the proposed notes offerings will
be used to permanently reduce the company's revolving credit
facility and repurchase Owens-Illinois Inc.'s $300 million
senior notes due March 2004. Total debt outstanding was about
$5.4 billion as at Dec. 31, 2002.
"The ratings on Owens-Illinois Inc. and its related entities
reflect the company's aggressive financial profile and
meaningful concerns regarding its asbestos liability, offset by
an above-average business position and strong EBITDA
generation," said Standard & Poor's credit analyst Paul Vastola.
Owens-Illinois' above-average business risk profile incorporates
the company's preeminent market positions, which are bolstered
by superior production technology, operating efficiency, and the
relatively recession-resistant nature of many of its packaging
products.
OWENS CORNING: First Quarter 2003 Results Show Improvement
----------------------------------------------------------
Owens Corning (OTC: OWENQ) reported financial results for the
quarter ended March 31, 2003.
For the quarter, the company had net sales of $1.133 billion,
compared to net sales of $1.107 billion for the same period in
the prior year. Owens Corning reported income from operations of
$8 million for the quarter, including charges of $30 million for
restructuring and other charges and $32 million of Chapter 11-
related charges. For the first quarter of 2002, the company
reported $3 million in income from operations, including charges
of $12 million for restructuring and other charges and $25
million of Chapter 11- related charges.
For the quarter, the company had a net loss of $1 million. This
first quarter net loss compares to a net loss of $447 million
for the first quarter of 2002, which included a $491 million
($441 million net of tax) charge for goodwill impairment
recorded as a change in accounting principle in connection with
the adoption of Statement of Financial Accounting Standards No.
142.
Owens Corning ended the quarter with a cash balance of $701
million.
"We are very pleased with the financial results of our ongoing
business operations for the first quarter 2003," said Dave
Brown, Owens Corning's chief executive officer. "However, our
reported results continue to be adversely impacted by charges
related to our Chapter 11 process and other restructuring costs.
Once we emerge from bankruptcy, our reported results should once
again more clearly reflect the operational results of our
business," continued Brown.
Owens Corning is a world leader in building materials systems
and composite systems. Founded in 1938, the company had sales of
$4.9 billion in 2002. Additional information is available on
Owens Corning's Web site at http://www.owenscorning.com
On October 5, 2000, Owens Corning and 17 United States
subsidiaries filed voluntary petitions for relief under Chapter
11 of the U. S. Bankruptcy Code in the U. S. Bankruptcy Court
for the District of Delaware. The Debtors are currently
operating their businesses as debtors-in-possession in
accordance with provisions of the Bankruptcy Code. The Chapter
11 cases of the Debtors are being jointly administered under
Case No. 00-3837 (JKF). The Chapter 11 cases do not include
other U. S. subsidiaries of Owens Corning or any of its foreign
subsidiaries. The Debtors filed for relief under Chapter 11 to
address the growing demands on Owens Corning's cash flow
resulting from the substantial costs of asbestos personal injury
liability.
On March 28, 2003, the Debtors, together with the Official
Committee of Asbestos Claimants and the Legal Representative for
future asbestos personal injury claimants, filed a proposed
Amended Joint Plan of Reorganization in the U. S. Bankruptcy
Court for the District of Delaware. The Plan is subject to
confirmation by the Bankruptcy Court. Under the Plan, as filed,
it is expected that all classes of creditors will be impaired.
Therefore, the Plan also provides that the existing common stock
of Owens Corning will be cancelled, and that current
shareholders will receive no distribution or other consideration
in exchange for their shares. It is impossible to predict at
this time the terms and provisions of any plan of reorganization
that may ultimately be confirmed, when a plan will be confirmed,
or the treatment of creditors thereunder.
OWENS CORNING: Brings-In Innisfree M&A as Balloting Agent
---------------------------------------------------------
Owens Corning and its debtor-affiliates seek the Court's
authority to employ, compensate, and reimburse Innisfree M&A
Incorporated as their special noticing, balloting and tabulation
agent.
J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, relates that in connection with the distribution and
solicitation of votes on the Plan with respect to the holders of
the Debtors' publicly traded debt and equity securities, the
Debtors are in need of a well-qualified noticing, balloting and
tabulation agent. In Chapter 11 cases, publicly issued
securities present certain limitations in the context of
soliciting acceptances for a plan of reorganization because the
securities often are held in a "Street name" with a bank or
brokerage firm, rather than the name of the beneficial owner or
discretionary manager. Accordingly, the Debtors submit that
employing a noticing, balloting, and tabulation agent with
specialized knowledge of the plan solicitation procedures,
particularly with respect to security holders, is necessary to
ensure that the Debtors satisfy the voting and mailing
requirements under the Bankruptcy Code in a cost-effective and
efficient manner.
Ms. Stickles asserts that Innisfree is well qualified to act as
the Debtors' special noticing, balloting and tabulation agent
and consultant. Innisfree has broad experience in all types of
bankruptcy solicitations. In addition, Innisfree maintains a
state-of-the-art mailing facility and tabulation system, which
is integral in ensuring an orderly and proper bankruptcy
solicitation.
Jane Sullivan, the Practice Director of Innisfree's Bankruptcy
Specialty Practice, will have primary responsibility for
ensuring that the Debtors satisfy their solicitation
requirements in these cases. Ms. Sullivan has over 15 years of
experience in public securities solicitations and other
transactions and has specialized in bankruptcy solicitations
since 1991. Ms. Sullivan has worked on over 70 pre-packaged and
traditional bankruptcy solicitations, including Armstrong World
Industries, Inc., America West Airlines, Barney's, Eagle-Picher
Industries, Federated Department Stores, First RepublicBank,
I.C.H. Corporation, MCorp, Resorts International, Zale
Corporation and Fruit of the Loom, Inc., et al. Ms. Sullivan
will also work closely with the other members of Innisfree's
staff, each of whom is experienced in public securities
solicitations and working with banks and brokerage firms to
conduct bankruptcy solicitations.
Ms. Stickles informs the Court that Innisfree will be
responsible for the noticing, balloting and tabulation with
respect to the Debtors' public securities only. Robert L.
Berger & Associates LLC, the Claims Agent, will remain
responsible for all other noticing, balloting and tabulation for
the Debtors. Innisfree will, however, coordinate its efforts
with the Claims Agent to make use of any information database
that already exists and to minimize or avoid the duplication of
efforts and costs to the estates.
In addition to managing the mailing of voting Plan documents to
security holders, Innisfree will respond to inquiries from any
security holder or creditor who may have questions about the
Plan, and conduct the tabulation of votes for holders of
securities.
Innisfree will also:
A. provide advice to the Debtors and their counsel regarding
all aspects of the Plan vote relating to securities,
including timing issues, voting and tabulation procedures,
and documents needed for the vote;
B. review the voting portions of the Disclosure Statement and
ballots, particularly as they may relate to beneficial
owners in "Street name;"
C. work with the Debtors to request appropriate information
from the indenture trustees of the Debtors' bonds, the
transfer agent of Owens Corning's common stock, The
Depository Trust Company, and the Claims Agent;
D. mail voting documents to registered record holders of bonds
and common stock;
E. coordinate the distribution of voting documents to "Street
name" holders of bonds and common stock by forwarding the
appropriate documents to the banks and brokerage firms
holding the securities, who in turn will forward it to
beneficial owners for voting;
F. distribute copies of the master ballots to the appropriate
banks and brokerage firms so that firms may cast votes on
behalf of beneficial owners;
G. prepare a certificate of service for filing with the Court;
H. respond to requests for voting documents from any party who
requests them, including brokerage firms and bank back-
offices, institutional holders, and any other party who may
have an interest in the matter;
I. to the extent requested by the Debtors, respond to
telephone inquiries from creditors and the holders of bonds
and common stock regarding the Disclosure Statement and the
voting procedures, although Innisfree will restrict its
answers to the information contained in the Plan documents
and seek assistance from the Debtors or their counsel with
respect to any inquiries that are outside of the voting
documents;
J. if requested to do so, make telephone calls to a defined
group of security holders to confirm that they have
received the Plan documents and respond to any questions
about the voting procedures in accordance with any
guidelines set by Debtors' counsel;
K. if requested to do so, assist with an effort to identify
beneficial owners of the Debtors' publicly issued bonds;
L. receive and examine all ballots and master ballots cast by
holders of bonds and common stock as well as date- and
time-stamping the originals of all the ballots and master
ballots upon receipt;
M. tabulate all ballots and master ballots received prior to
the voting deadline in accordance with established
procedures, and prepare a vote certification for filing
with the Bankruptcy Court; and
N. undertake other related activities as may be mutually
agreed upon by Innisfree and the Debtors from time to time.
For balloting services, Innisfree will charge a $15,000 project
fee, plus $2,000 for each separate issue of securities. The
balloting fee encompasses Innisfree's coordination with all
brokerage firms, banks, institutions and other interested
parties, including the distribution of voting materials as set
forth in the Agreement and assumes one distribution of materials
and no extensions of the voting deadline.
For the mailing to creditors and record holders of securities,
Innisfree estimates that its labor charges will be $1.75 to
$2.25 per solicitation package, with a $500 minimum. This
estimate assumes that the package would include the Disclosure
Statement, a ballot, a return envelope, and one other document,
and that a window envelope will be used for the mailing, and
will therefore not require a matched mailing. If a matched
mailing is necessary, the mailing charge would increase.
Innisfree will charge $4,000 to respond to up to 500 telephone
calls from creditors and security holders within a 30-day
solicitation period. If more than 500 calls are received within
the solicitation period, Innisfree will charge the Debtors $8
per call over 500. In addition, Innisfree will charge $8 per
call for any calls made to creditors or security holders.
Innisfree will charge $100 per hour for the tabulation of
ballots and master ballots, plus set-up charges at $1,000 for
each tabulation element. Innisfree will also charge its
customary hourly rates for any time spent by senior executives
reviewing and certifying the tabulation and dealing with special
issues that may develop.
Innisfree will charge the Debtors for consulting services at
Innisfree's standard hourly rates. Consulting services include,
without limitation:
A. the review and development of voting materials;
B. participation in telephone conferences;
C. strategy meetings or the development of strategy relative
to the solicitation project;
D. efforts related to special balloting procedures, including
issues that may arise during the balloting or tabulation
process;
E. computer programming or other project-related data
processing services;
F. travel to cities outside New York City for client
meetings or legal or other matters; and
G. efforts related to the preparation of testimony and
attendance at court hearings and the preparation of
affidavits, certifications, fee applications, invoices and
reports.
Innisfree's current hourly rates, which are subject to
adjustment based on the firm's ordinary billing practices, are:
Position Rate
-------- ----
Co-Chairman $400
Managing Director 375
Practice Director 325
Director 275
Account Executive 250
Staff Assistant 175
With respect to mailings to any registered record holders of
debt or equity securities, Innisfree will charge $0.50 to $0.65
per holder for up to two paper notices included in the same
envelope with a $250 minimum. This rate assumes that labels and
electronic data for these holders would be provided by the
Claims Agent. With respect to mailings to holders of public
debt or equity security holders in "Street name," Innisfree will
charge a $7,500 fee to conduct the mailing.
Innisfree will also seek reimbursement from the Debtors for all
out-of-pocket expenses relating to the provision of services to
the Debtors including, without limitation, travel costs,
postage, messenger and courier charges, expenses incurred by
Innisfree to obtain or convert depository participant, creditor,
shareholder and Non-Objecting Beneficial Owner listings, and
costs for supplies, in-house photocopying, telephone usage and
the like.
Ms. Sullivan assures the Court that Innisfree does not hold or
represent any interest adverse to the Debtors or their estates,
and is a "disinterested person" under the Bankruptcy Code.
However, Innisfree may provide services to or represent, or may
have provided services to or represented, certain of the
Debtors' creditors or equity holders, or other parties-in-
interest, in matters unrelated to these cases. In any case,
Innisfree will not advise or represent persons in connection
with the Debtors' Chapter 11 cases.
Ms. Sullivan discloses that:
A. Innisfree maintains bank accounts with The Chase Manhattan
Bank, a creditor of the Debtors and a member of the
Creditors' Committee;
B. Innisfree has rendered services to First Tennessee Bank in
matters unrelated to the Debtors;
C. Innisfree has rendered services to Sun Trust, an indenture
trustee, in matters unrelated to the Debtors;
D. Innisfree maintains bank accounts with HSBC Bank, an
indenture trustee;
E. Innisfree may have rendered services to certain other
creditors or equity interest holders of the Debtors or may
have been involved in matters in which these creditors or
equity interest holders were also involved, in matters
unrelated to the Debtors; and
F. Innisfree's employees may have had business associations
with certain creditors or parties-in-interest which have no
connection to the Debtors' employment of Innisfree.
(Owens Corning Bankruptcy News, Issue No. 50; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: ORA Recommends $170-Mill. Hike in Electric Revenues
----------------------------------------------------------------
On April 11, 2003, the California Public Utilities Commission's
Office of Ratepayer Advocates provided to Pacific Gas and
Electric Company and other parties a report on PG&E's Test Year
2003 General Rate Case application pending before the CPUC. In
its report, the ORA recommends an increase of $170,000,000 in
electric base revenues compared to PG&E's request for a
$447,000,000 increase, and an increase in gas base revenues of
$3,700,000 compared to PG&E's request for a $105,000,000
increase over the current authorized amounts. The ORA also
recommends a $2,000,000 decrease in revenue requirements for
utility retained generation compared to PG&E's proposed
$149,000,000 increase.
Although PG&E and its parent, PG&E Corporation, are still in the
process of reviewing the ORA's report, from an initial review,
according to Christopher P. Johns, PG&E's Senior Vice President
and Controller, it appears that the two largest components of
the difference are administrative and general expenses, which
comprise 35% of the total difference, and depreciation expenses,
which comprise 23% of the total difference. In a regulatory
filing with the Securities and Exchange Commission on April 21,
2003, Mr. Johns explains that, with respect to A&G expenses, the
ORA recommends rejection of PG&E's request for pension fund
contributions, reduction of certain employee incentive payments,
and disallowance of certain allocated holding company costs,
resulting in an A&G forecast of $188,000,000 less in A&G
expenses than PG&E's estimate. With respect to the $123,000,000
difference between PG&E's and the ORA's estimates for
depreciation expenses, the primary difference is due to the
ORA's rejection of PG&E's proposal for higher electric
depreciation rates. PG&E proposed the higher depreciation rates
to reflect the increased costs to remove and dispose of aging
utility distribution infrastructure.
Mr. Johns notes that the remainder of the difference between the
ORA's and PG&E's 2003 forecasts is composed primarily of lower
estimates of various operating and maintenance expenses.
According to Mr. Johns, the ORA supports PG&E's request for an
attrition revenue adjustment for 2004 and 2005 as well as PG&E's
proposed methodology for calculating the amount of the attrition
revenue adjustment in those years. This attrition methodology
provides for an increase in revenues based on forecast inflation
increasing PG&E's expenses, and forecast capital expenditures
increasing its rate base. Although PG&E and the ORA agree on
methodology, Mr. Johns says, the proposed attrition amounts
differ because the ORA uses its lower estimates of 2003 expense
and capital expenditures in its calculation. For electric
distribution, PG&E's illustrative calculations showed that the
attrition methodology would result in increases in its base
revenues of $64,000,000 and $85,000,000 in 2004 and 2005. The
ORA's illustrative calculations showed increases of $58,000,000
and $83,000,000. For gas distribution, PG&E's illustrative
calculations showed that the attrition methodology would result
in increases in its base revenues of $26,000,000 and $32,000,000
in 2004 and 2005. But the ORA's illustrative calculations
showed increases of $23,000,000 and $29,000,000. The
illustrative calculations are based on current forecasts of
inflation; the actual attrition revenue adjustment is based on
updated forecasts of inflation prior to the year in which the
adjustment becomes effective.
The ORA also has recommended that PG&E's next test year general
rate case be delayed until 2007, rather than 2006, and that PG&E
file an attrition revenue adjustment request for 2006 in
addition to 2004 and 2005. The ORA states that its suggested
schedule will enable the CPUC to stagger PG&E's and Southern
California Edison's general rate case proceedings to facilitate
the processing of each utility's general rate case. The ORA
points out that a decision in PG&E's 2003 GRC is not expected
until early 2004, only six months before PG&E would be expected
to file its Notice of Intent for a 2006 test year.
The GRC schedule calls for evidentiary hearings to take place
before an administrative law judge during the summer of 2003. A
proposed decision by the administrative law judge is scheduled
to be issued in December 2003. Although a final decision is not
scheduled to be issued by the full CPUC until February 2004, the
CPUC previously has ruled that any revenue requirement change
will be effective January 1, 2003.
The CPUC may accept all, part, or none of the ORA's
recommendations, Mr. Johns notes. PG&E cannot predict the
amount of base revenue increase or decrease the CPUC will
ultimately approve. In the event of an adverse decision by the
CPUC, and if PG&E is unable to lower expenses to conform to the
base revenue amounts adopted by the CPUC while maintaining
safety and system reliability standards, Mr. Johns relates that
PG&E's ability to earn its authorized rate of return for the
years 2003 through 2006 would be adversely affected. (Pacific
Gas Bankruptcy News, Issue No. 56; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PHAR-MOR: Ohio Court Confirms 1st Amended Joint Liquidating Plan
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Ohio
confirmed Phar-Mor, Inc., and its debtor-affiliates' First
Amended Joint Liquidating Chapter 11 Plan after finding that the
Plan complies with each of the 13 standards articulated in
Section 1129 of the Bankruptcy Code:
(1) the Plan complies with the Bankruptcy Code;
(2) the Debtors have complied with the Bankruptcy Code;
(3) the Plan was proposed in good faith;
(4) all plan-related cost and expense payments are
reasonable;
(5) the Plan identifies the individuals who will serve as
officers and directors post-emergence;
(6) no governmental regulatory commission approval or rate
change is required as part of the Plan;
(7) creditors receive more under the plan than they would
in a chapter 7 liquidation;
(8) all impaired creditors have voted to accept the Plan,
or, if they voted to reject, then the plan complies
with the absolute priority rule;
(9) the Plan provides for full payment of Priority Claims;
(10) at least one non-insider impaired class voted to
accept the Plan;
(11) the Plan is feasible and confirmation is unlikely to
be followed by a liquidation or need for further
financial reorganization;
(12) all amounts owed to the Clerk and the U.S. Trustee
will be paid; and
(13) the Plan provides for the continuation of all retiree
benefits in compliance with 11 U.S.C. Sec. 1114.
Any executory contracts or unexpired leases, which have not
expired by their own terms, are deemed rejected by the Debtors
on the Effective Date.
At the Debtors' option, any timely-filed unliquidated Tort Claim
shall be determined and liquidated on the administrative or
judicial tribunal before which it is pending on the Effective
Date.
The Debtors have authority to conduct their business and affairs
without further supervision of this Court and will no longer be
required to file monthly operating reports.
On the Effective Date:
i) all assets and liabilities of the Debtor shall be deemed
merged so that all of the assets of the Debtors shall be
available to pay all liabilities as if it were one
company;
ii) no distribution shall be made under the Plan on account
of intercomcany claims among the Debtors;
iii) all guarantees of the Debtors of the obligations of any
other Debtor shall be deemed eliminated and shall be
deemed to be one obligation of the consolidated Debtors;
and
iv) each and every claim filed against any one Debtor shall
be deemed filed against the consolidated Debtors, and
shall be deemed one Claim against an obligation of the
consolidated Debtors.
Phar-Mor, Inc., a retail drug store chain, filed for Chapter 11
protection on September 24, 2001, (Bankr. N.D.OH. Case No. 01-
44007). In July 2002, The Ozer Group and Hilco Merchant
Resources launched GOB sales at the Company's 73 store
locations. Michael Gallo, Esq., at Nadler, Nadler and
Burdman represents the Debtors.
PHILIP MORRIS: Plaintiffs Seek to Halt Div. Payments to Altria
--------------------------------------------------------------
In a court proceeding Thursday last week, the nation's leading
bankruptcy expert, Harvard law professor Elizabeth Warren,
testified that Philip Morris USA violates the law when it pays
dividends to Altria if, as the company claims, its liabilities
exceed its assets.
"If Philip Morris is insolvent, as it claims, it must cease all
dividend payments to the parent company. That's the law," said
Harvard law professor Elizabeth Warren. "If Philip Morris cannot
pay its creditors, it cannot pay its parent company. The law is
clear, there is no gray area here," Warren added.
Philip Morris did not dispute Professor Warren's testimony in
court.
The plaintiffs in Price v. Philip Morris filed a motion with
Judge Nicholas Byron requesting Philip Morris suspend dividend
payments to Altria. "Our number one concern is protecting the
class by securing the full judgment ordered by Judge Byron,"
said lead plaintiffs' attorney Stephen Tillery of Korein and
Tillery. "Until the appeal process is completed, Philip Morris
is legally responsible for the full $10.1 billion judgment. We
will not tolerate Philip Morris's cries of poverty while they
continually funnel billions to their parent," Tillery added.
According to sealed financial documents filed with the court,
which were reviewed by Harvard professor Elizabeth Warren,
Philip Morris has consistently up streamed significant amounts
of money to Altria. Judge Byron continues to take under
advisement the plaintiffs' request to unseal those documents.
Also in court Thursday, the judge granted the plaintiffs' motion
to bequest the $3 billion punitive award to the class if a Cook
County judge finds the state of Illinois is ineligible to
receive it. Judge Nichols Byron also denied Philip Morris's
motion to reduce or overturn the judgment.
Last month Judge Byron found Philip Morris deceived Illinois
smokers for 30 years by claiming its Marlboro Lights and
Cambridge Lights cigarettes are lower in tar and nicotine than
regular cigarettes. Following the judgment Philip Morris
announced it is removing the words "lowered tar and nicotine"
from the packages of its Marlboro Lights cigarettes. The hearing
on the bond issue will resume May 8th.
POLAROID CORP: Judge Walsh Directs KPMG LLC to Produce Documents
----------------------------------------------------------------
Examiner Perry M. Mandarino, CPA, asks the Court overseeing
Polaroid Corporation's chapter 11 cases to compel KPMG LLP to
produce or permit inspection or copying of documents requested
in a subpoena for Rule 2004 Examination issued on March 18,
2003.
Rachel Lowy Werkheiser, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub P.C., in Wilmington, Delaware, recounts that
Mr. Mandarino served the Subpoena to obtain:
(i) all workpapers, analysis or documents prepared or relied
upon by KPMG in connection with KPMG's preparation of the
Independent Auditors' Report to the Board of Directors
and Stockholders of Polaroid Corporation, which
Independent Auditors' Report accompanied the Securities
and Exchange Commission Form 10-K, of Polaroid Corporation
and its consolidated subsidiaries, for the fiscal years
ending December 31, 1999, December 31, 2000 and any
subsequent years;
(ii) all workpapers, analysis or documents KPMG prepared or
relied upon in connection with its preparation of all
federal, state and foreign tax returns for Polaroid
Corporation and its affiliates and subsidiaries for the
fiscal years ending December 31, 1999, December 31, 2000
and any subsequent years;
(iii) all workpapers, analysis or documents KPMG prepared or
relied upon in its preparation of the Independent
Accountant's Review Report to the Board of Directors of
Polaroid Corporation, which Independent Accountant's
Review Report accompanied the Securities and Exchange
Commission Form 10-Q, of Polaroid Corporation and its
consolidated subsidiaries and affiliates for the fiscal
quarterly period ending April 1, 2001;
(iv) all workpapers, analysis or documents KPMG prepared or
relied upon in connection with its preparation of the
Independent Accountants' Review Report to the Board of
Directors of Polaroid Corporation, which Independent
Accountants' Review Report accompanied the Securities and
Exchange Commission Form 10-Q of Polaroid Corporation and
its consolidated subsidiaries, for the quarterly period
ending July 1, 2001; and
(v) all workpapers, analysis or documents KPMG prepared or
relied upon in connection with its preparation and
performance of services and tasks for and on behalf of
the Polaroid Corporation and its consolidated subsidiaries
for the years 1999, 2000, 2001 and 2002, which are not
otherwise covered by demands (i) through (iv).
On March 24, 2003, KPMG served its objections to the Subpoena.
Subsequently, on April 4, 2003, counsel for the Examiner and
KPMG conferred in an attempt to resolve the Objections.
However, Ms. Werkheiser notes that all but a few of the
objections have been resolved. The remaining Objections fall
into three categories:
(a) KPMG is only willing to produce documents, which it deems
to be "non-proprietary" at this time, reserving its rights
to object to producing documents, which it deems to be
"proprietary;"
(b) KPMG is only willing to produce documents going back to
2000, reserving workpapers going back to 1999 as
requested by the Subpoena; and
(c) KPMG has advised that it "does not believe, that pursuant
to the Internal Revenue Code and regulations, it can
fully respond to Request No. 2 absent either a Court
order or permission from each entity. We will not oppose
your motion for a court order."
Ms. Werkheiser contends that KPMG must be directed immediately
to turn over all of its responsive documents because:
(a) in light of the confidentiality protections afforded by
the document protocol, KPMG's interests in the
"proprietary" material are fully protected. Other than
concerns of confidentiality, KPMG has articulated no
reason why the "proprietary" documents should not be
produced immediately;
(b) other than its complaint that going as far back to 1999
is somehow unduly burdensome, KPMG has articulated no
reason why the documents should not be produced
immediately; and
(c) as KPMG indicated that it will not oppose this motion on
its objection to produce the Request No. 2 documents,
KPMG must be directed to produce all responsive documents
to this request immediately.
Stephen Morgan Joins In
Stephen J. Morgan fully supports the Examiner's subpoena as
necessary to uncover Polaroid's value and the accounting of
shareholder assets. Accordingly, Mr. Morgan joins the
Examiner's request to compel KPMG to produce the documents. In
addition, Mr. Morgan also asks the Court to allow him to access
the documents produced under the Examiner's subpoena, which he
deems necessary to shareholder efforts to value Polaroid.
KPMG Responds
Richard G. Placey, Esq., at Montgomery McCracken Walker & Rhoads
LLP, in Wilmington, Delaware, informs the Court that KPMG would
deliver to the Examiner all substantive audit and review
workpapers for the years 2000 and 2001. KPMG also agreed to
produce all tax workpapers for those years, subject only to
resolving the issues created by Section 7216 of the Internal
Revenue Code.
However, Mr. Placey notes that KPMG and the Examiner did not
reach an agreement at this time on these matters:
A. Proprietary Workpapers
During the parties' discussion, KPMG explained that the
documents requested extended beyond KPMG's substantive
workpapers concerning the company and its accounting. The
material, like the audit plan and several "memory refresher"
checklists, are highly confidential and proprietary to KPMG,
and in general are not producible in a bankruptcy context
because they are both proprietary and do not contain
substantive information about the Debtors.
Given the broad number of persons and entities who already
have expressed an interest in this examination, production of
these materials raise obvious concerns. On the other hand,
nothing in this limited category of items appears to have any
bearing on the Examiner's investigation.
To ally any concerns that the Examiner might have about the
scope of these materials, KPMG agreed to limit them to those
from the "general binder" and to provide the Examiner with a
list of items withheld. Furthermore, KPMG emphasized that if
the Examiner's review of the substantive workpapers revealed
that proprietary information was necessary to his
investigation, KPMG was willing to revisit the issue.
Accordingly, KPMG contends that a demand for all proprietary
workpapers of all kinds in unnecessary and overly burdensome,
even with the Protocol the Examiner proposed.
B. 1999 Materials
The Court Order directs an examination "with respect to the
period between one year Prepetition" -- a period that begins
in October 2000. To explain why the Subpoena reaches back
another year into 1999, the Examiner has stated that the
Court's order expressly notes that the Examiner may "take
into consideration matters bearing on the Debtors' business
and financial affairs, which predate or postdate the two-year
period." However, that is not what the Subpoena has done.
The Examiner has not identified any "matters" that might
reach back into 1999. Rather, the Subpoena simply seeks a
blanket production of all materials for the entire year, as
if the Order encompasses that period.
To the extent that the investigation identifies matters
reaching back in 1999, KPMG expressed its willingness to
produce the documents. However, Mr. Placey points out that
the Examiner has failed to identify anything from 1999 that
was a subject of his investigation. Significantly, the
Examiner's request does not identify anything from 1999 that
is being investigated. Mr. Placey asserts that a blanket
demand for 1999 materials is at best premature and is
inappropriate at this time.
C. Other Documents
The final request in the Subpoena is a demand for all
documents that might relate to other "services and tasks" for
Polaroid over a several-year period. Mr. Placey states that
this kind of anything-and-everything request is overly
broad, and the Examiner seemed to agree that this issue would
be reserved while everyone focused on the audit and tax
workpapers. The Examiner does not mention this item in his
request and KPMG is uncertain as to its status. Thus, KPMG
asks the Court to reserve this matter.
Accordingly, KPMG asks the Court to deny the Examiner's motion
without prejudice.
* * *
After due deliberation, Judge Walsh directs KPMG to produce the
tax documents the Examiner sought notwithstanding any protection
or privilege. The remainder of the Examiner's request is
withdrawn without prejudice. (Polaroid Bankruptcy News, Issue
No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900)
RELIANT RESOURCES: Gen. Counsel Hugh Rice Kelly to Retire May 1
---------------------------------------------------------------
Reliant Resources, Inc. (NYSE: RRI) announced that Hugh Rice
Kelly, senior vice president, general counsel and corporate
secretary, will retire as of May 1, 2003. Michael L. Jines,
deputy general counsel, has assumed the responsibilities of
general counsel pending the board of directors' appointment of
Kelly's successor.
Kelly, 60, joined Houston Lighting & Power Company, formerly a
Reliant Resources affiliate, as senior vice president, general
counsel and corporate secretary in 1984 after representing the
company for ten years as a partner at the law firm of Baker
Botts. He became vice president, general counsel and corporate
secretary of the parent company (then Houston Industries
Incorporated and later Reliant Energy, Incorporated) in 1985,
while continuing to hold his position with HL&P. He was promoted
to senior vice president of the parent company in 1994 and to
executive vice president in 1996. He has held his present
position at Reliant Resources since the company was formed from
the unregulated businesses of Reliant Energy, Incorporated in
January 2001, and he held similar positions at the parent
company until Reliant Resources was spun off in 2002.
"Hugh Rice Kelly has served Reliant Resources and its
predecessors with diligence, skill and high professionalism for
almost 30 years," said Joel V. Staff, chairman of the board of
directors and chief executive officer. "We are grateful for his
contributions to the company, especially through the challenges
of deregulation and the creation of Reliant Resources as a free-
standing company. We all wish him and his family well in his
retirement."
"Having recently turned 60, and having seen the legally
intensive milestones of Reliant Resources' spin-off and the
restructuring of our debt now successfully completed, I feel
that this is an especially good time for both the company and me
to make this transition," Kelly said. "I have spent over half my
life as a lawyer, most of it representing this company -- first
as an outside lawyer and later as its general counsel. Working
in this profession, and with the dedicated people of Reliant and
HL&P, has been truly rewarding."
Prior to joining Reliant, Kelly was associated with the Houston
law firm of Baker Botts. He joined Baker Botts in 1972 as an
associate and was elected partner in 1978.
Kelly earned a bachelor's degree at Rice University. Following
service as an officer in the U.S. Army, he attended law school
at the University of Texas, where he served as editor-in-chief
of the Texas Law Review and graduated with high honors.
Kelly is a member of the Houston, Texas and American Bar
Associations and is a fellow of the Houston and Texas Bar
Foundations.
Jines, 44, has been with Reliant and its predecessor companies
since 1982. He is a member of the Pro Bono College of the State
Bar of Texas and a sustaining life fellow in the Houston Bar
Foundation. He attended law school at the University of Houston,
where he graduated with honors and served as an editor of the
Houston Law Review.
Reliant Resources, Inc., based in Houston, Texas, provides
electricity and energy services to retail and wholesale
customers in the U.S. and Europe, marketing those services under
the Reliant Energy brand name. The company provides a complete
suite of energy products and services to approximately 1.7
million electricity customers in Texas ranging from residences
and small businesses to large commercial, industrial and
institutional customers. Its wholesale business includes
approximately 22,000 megawatts of power generation capacity in
operation, under construction or under contract in the U.S. The
company also has nearly 3,500 megawatts of power generation in
operation in Western Europe. For more information, visit the
Company's Web site at http://www.reliantresources.com
As reported in Troubled Company Reporter's April 4, 2003
edition, Standard & Poor's Ratings Services raised its corporate
credit ratings on electricity provider Reliant Resources Inc.,
and three of its subsidiaries, Reliant Energy Mid-Atlantic Power
Holdings LLC, Orion Power Holdings Inc, and Reliant Energy
Capital (Europe) Inc., to 'B' from 'CCC'. The ratings on each of
these companies were placed on CreditWatch with developing
implications. In addition, Orion Power's senior unsecured rating
was raised to 'CCC+' from 'CC'.
The CreditWatch listing for Reliant Energy Power Generation
Benelux B.V., was revised to positive from developing.
SIEBEL: Outlook Changed to Negative over Lower License Revenues
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit and 'B+' subordinated ratings on Siebel Systems Inc. At
the same time, Standard & Poor's revised the company's outlook
to negative from stable, reflecting a large decline in license
revenues amid a still-challenging software spending environment.
San Mateo, California-based Siebel is a leading supplier of E-
business applications software used to manage customer
relationships. It had an estimated $1 billion in total lease-
adjusted debt outstanding at March 31, 2003.
License revenues in the March 2003 quarter fell 54%, to $112
million, from $246 million in the year-earlier period. Total
sales fell 30%, to $333 million, in the March 2003 quarter, from
$478 million in the year-earlier period. Recurring consulting
and maintenance revenues buffered the decline in total revenues.
Operating margins in the March 2003 quarter fell to 12% from
more than 25% on average over the past two years.
"We expect that lower overall enterprise software spending
levels are likely to limit improvements in operating margins
over the near term, despite headcount reductions and facilities
consolidations," said Standard & Poor's credit analyst Emile
Courtney.
Although Siebel has developed a leadership position in its
market, the company faces technology risks and competitive
threats from entrenched and larger competitors. However, product
introductions, further penetration of its installed customer
base, and strategic alliances with system integrators and key
software and hardware providers may restore some measure of
growth, albeit at more moderate rates than in the past.
SIGNATURE EYEWEAR: Completes Recapitalization Transactions
----------------------------------------------------------
Signature Eyewear, Inc. (OTCBB:SEYE) has completed its
recapitalization which included significant changes to the
management and Board of Directors.
Michael Prince, newly appointed Chief Executive Officer of
Signature Eyewear, made the announcement. "The new credit
facilities and equity capital infusion have enabled us to retire
our former bank credit facility and pay-off our larger creditors
at significant discounts and have provided the additional
working capital."
The principal elements of the recapitalization include the
following:
-- The Company obtained from Home Loan and Investment Company
a five-year, $3.0 million term loan bearing interest at the
rate of 10% per annum, interest payable only for the first
two years with principal and interest payable thereafter
based on a 10-year amortization. HLIC will also provide a
$500,000 revolving credit facility bearing interest at 1% per
month, with advances subject to approval of HLIC. These
credit facilities are secured by the assets of the Company
and a $1.25 million letter of credit. As additional
consideration, the Company issued to HLIC five-year warrants
to purchase 100,000 shares of the Common Stock for $0.67 per
share.
-- The Company sold to Bluebird Finance Limited 1.2 million
shares of Series A 2% Convertible Preferred Stock, a newly
created series of preferred stock, for $800,000, or $0.66 2/3
per share. The Series A Preferred bears cumulative dividends
at a rate of 2% per annum payable in cash or additional
shares of Series A Preferred, and is convertible on a share-
for-share basis into Common Stock commencing May 2005. The
Company has the right to redeem the Series A Preferred at any
time after April 2005, and must redeem the Series A Preferred
upon certain changes of control, in each case for the
original purchase price plus a premium. The Series A
Preferred does not have any voting rights unless the Company
defaults in two or more dividend payments.
-- Bluebird has also provided a 10-year $2.9 million revolving
line of credit secured by the assets of the Company and
subordinated to the HLIC credit facility. This loan bears
interest at a rate of 5% per annum, payable annually for the
first two years, with principal and interest payable
thereafter based on a 10-year amortization. The loan
commitment amount reduces by $72,000 in July 2005 and by
$72,000 every three months thereafter.
-- The Company retired its credit facility with City National
Bank, which had been in default since September 30, 2000.
-- The Company retired its obligations to a frame vendor
aggregating approximately $5,813,000 for a payment of
$2,470,000.
-- The Company retired $775,000 of trade payables for
approximately $372,000. The Company also purchased its leased
computer system for a five-year $750,000 note bearing
interest at 4% per annum payable $13,000 per month with a
balloon payment upon maturity, thereby terminating the lease
with aggregate future obligations of approximately $1.7
million.
In connection with the recapitalization, the Weiss Family Trust,
the principal shareholder of the Company, sold all of its shares
of Common Stock for $0.012 per share ($25,000). Dartmouth
Commerce of Manhattan, Inc., a corporation wholly owned by
Richard M. Torre, purchased 1,600,000 of these shares, and
Michael Prince purchased 475,337 of these shares. Dartmouth
Commerce is now the largest shareholder of the Company, holding
approximately 28.7% of the outstanding Common Stock.
In connection with this sale, Bernard L. Weiss, founder of the
Company and Chairman of the Board and Chief Executive Officer
since 1983, retired. He was replaced as Chairman by Mr. Torre
and as Chief Executive Officer by Mr. Prince. In addition, Ted
Pasternack was appointed as a Director. Other key management,
including Robert Fried, Senior Vice President-Marketing, and
Robert Zeichick, Senior Vice President-Advertising, will remain
in their current positions. The Company also added a seasoned
sales executive, Karl Marrott as Vice President-Sales, to direct
the sales team. Until a new Chief Financial Officer is hired,
Mr. Prince will continue in that position.
Mr. Prince continued: "The recapitalization significantly
improved our balance sheet through a reduction in liabilities
and stockholders' deficit and restructuring of short-term debt
to long-term debt. We are now able to focus on what we do best -
- namely marketing our array of highly recognizable brand name
eyewear. The additional funding will allow Signature to return
to its marketing roots."
Signature Eyewear is a leading designer and marketer of
prescription eyeglass frames and sunglasses under
internationally recognized brand names such as Laura Ashley
Eyewear, the premier feminine collection; Eddie Bauer Eyewear,
the everyday casual lifestyle collection for men and women; bebe
eyes, sexy provocative eyewear for the contemporary woman; Hart
Schaffner & Marx, the distinctively masculine collection; Nicole
Miller Eyewear, a fun, whimsical collection for the style-
conscious modern woman; and Dakota Smith Eyewear "Capturing the
American Spirit." Signature Eyewear's proprietary brand is The
Signature Eyewear Collections. Signature Eyewear's products are
sold in the United States and internationally to opticians,
optometrists and ophthalmologists and to major national and
international retail chains. For more information about
Signature Eyewear, visit the company's Web site at
http://www.signatureeyewear.com
SMARTSERV ONLINE: Red Ink Continues to Flow in Fourth Quarter
-------------------------------------------------------------
SmartServ Online, Inc. (Nasdaq: SSOLE) announced results for the
twelve months ended December 31, 2002.
The Company reported revenues for the fourth quarter ended
December 31, 2002 of $49,334 compared to $24,979 for the quarter
ended December 31, 2001. The net loss for the fourth quarter was
$3,203,740, or $0.29 per basic and diluted share, compared to
net loss of $4,465,782, or $0.73 per basic and diluted share for
the quarter ended December 31, 2001.
Revenues for the year ended December 31, 2002 were $195,817
compared to revenues of $3,297,806 for the year ended
December 31, 2001. The net loss for the year ended December 31,
2002 was $8,037,173, or $1.00 per basic and diluted share,
compared to a net loss of $14,819,860, or $2.52 per basic and
diluted share for the year ended December 31, 2001.
During the year ended December 31, 2002, substantially all of
the Company's revenues resulted from its relationship with
Citigroup Inc. During the year ended December 31, 2001,
substantially all of the Company's revenues resulted from its
relationship with Data Transmission Network Corp, which was
terminated effective August 31, 2001. The Company's 2002 results
reflect a one-time gain of approximately $5.7 million from the
restructuring of a $7 million obligation to the Hewlett-Packard
Company.
"The previously announced execution of the first of an expected
series of licensing and development agreements with one of the
world's largest wireless handset manufacturers was an important
milestone in our growth strategy," said Sam Cassetta, Chairman
and CEO of SmartServ. "We believe this event, coupled with the
continuing increase in the adoption of our consumer applications
offered by major carriers such as Verizon Wireless, AT&T
Wireless, Alltel and others, will drive revenues for our company
in 2003. With high-speed wireless networks now in place, and
with data capable handsets finally in mass distribution, the
wireless data industry has evolved. We are pleased to continue
to be an important contributor to this evolution."
SmartServ (Nasdaq: SSOLE) is a wireless applications service
provider offering applications, development and hosting
services. Today, SmartServ's customer and distribution
relationships exist across a network of wireless carriers,
strategic partners, and a major financial institution, including
Verizon Wireless, AT&T Wireless, Nextel, Motorola, QUALCOMM,
Alltel, US Cellular and Citigroup. We offer content branded by
Forbes.com, BusinessWeek Online, Dow Jones, The Wall Street
Journal Online and S&P Comstock.
For more information, visit http://www.SmartServ.com
SmartServ's December 31, 2002 balance sheet shows a total
shareholders' equity deficit of about $173,000.
In its 2002 Annual Report on Form 10-KSB, the Company reported:
"Due to the substantial expenses and negative cash flows from
operations that we have incurred, our auditors, in their report
contained in our December 31, 2002 financial statements, have
indicated that there is substantial doubt about our ability to
continue as a going concern. The Company has earned limited
revenues and has incurred net losses of $8,037,173 and
$14,819,860 for the years ended December 31, 2002 and 2001,
respectively, and net losses of $30,993,559 and $7,124,126 for
the years ended June 30, 2000 and 1999, respectively.
Additionally, the Company had an accumulated deficit of
$72,859,006 at December 31, 2002. Although the Company's
financial statements 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, unless we are able to increase revenue and raise
additional capital from investors, we will not be able to
support our operations."
SMITHWAY MOTOR: Narrows First Quarter Net Loss to $1.6 Million
--------------------------------------------------------------
Smithway Motor Xpress Corp. (Nasdaq: SMXC) announced financial
and operating results for the first quarter ended March 31,
2003. For the quarter, operating revenue decreased approximately
3.2% to $39.9 million from $41.2 million for the corresponding
quarter in 2002. Smithway's net loss was $1.6 million compared
with net loss of $2.0 million for the same quarter in 2002.
These results were consistent with the Company's previously
announced expectations. The Company finished the first quarter
in compliance with the revised financial covenants under its
financing arrangements.
Smithway is a truckload carrier that hauls diversified freight
nationwide, concentrating primarily on the flatbed segment of
the truckload market. Its Class A Common Stock is traded on the
Nasdaq National Market under the symbol "SMXC."
Smithway Motor Xpress' March 31, 2003 balance sheet shows that
total current liabilities exceeded its total current assets by
about $3 million.
As reported in Troubled Company Reporter's April 22, 2003
edition, the Company negotiated, between late March and mid
April, amendments to its financing arrangement with LaSalle Bank
as well as its equipment financing arrangement with a
manufacturer. The Company had been in violation of certain
financial covenants under the LaSalle facility at December 31
and expected to be in violation under both the LaSalle Agreement
and the equipment financing with the manufacturer at March 31.
The Company obtained waivers of all violations and negotiated
amendments to the financial covenants under both arrangements
going forward. Under the LaSalle amendments the interest rate
was raised by 200 basis points and the facility's maturity is
now April 1, 2004.
SOLUTIA INC: Weakening Performance Spurs S&P Rating Cut to BB-
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Solutia Inc. to 'BB-' from 'BB'.
In addition, Standard & Poor's placed the rating on CreditWatch
with negative implications. St. Louis, Mo.-based Solutia is a
manufacturer and marketer of specialty and industrial chemical
products, including nylon fibers and polymers, and has $856
million of debt (excluding the capitalization of operating
leases).
"The downgrade and CreditWatch placement reflect weakness in the
company's operating results and concerns that challenging
business conditions and contingent obligations will further
delay the expected improvement in the company's financial
profile," said Standard & Poor's credit analyst Peter Kelly. "In
addition, the rating actions recognize that Solutia's credit
quality has come under additional pressure due to growing
unfunded pension obligations," the analyst said.
Profitability and cash flow have been constrained by high raw
material and energy costs, and generally sluggish global
economic conditions. Operating margins (before depreciation and
amortization) have averaged about 11% in the past three years
(compared with 19% for the previous three-year period), and
declined to less than 5% in the first quarter of 2003.
A series of debt-financed acquisitions in 1999 and 2000
stretched the balance sheet during a downturn in the chemicals
sector. In addition, the company has significant postretirement
benefit liabilities, which increased in 2002. Liabilities and
expenditures related to the company's PCB exposure remain a draw
on cash flow. Although the company is confident of its legal
positions, credit risks remain, including the possibility of
a settlement. Standard & Poor's recognizes the financial benefit
of the sale of the resins, additives, and adhesives businesses
to UCB SA, but notes that credit protection measures remain
subpar. In addition, the company purchased a cogeneration
facility for $32 million and expects to pay about $30 million in
2003 to satisfy certain tax liabilities related to the
businesses sold. Cash flow could also be pressured by a possible
$50 million contribution related to the Astaris joint venture
and a possible voluntary contribution to the pension trust.
Standard & Poor's will continue to monitor the company's
operating performance and developments in its key markets.
Standard & Poor's will also discuss with management the updated
credit risks associated with legal and environmental matters,
the likely impact of the unfunded postretirement liabilities on
its cash flow, and the Astaris joint venture. The company's
liquidity and refinancing intentions will be addressed. If the
risks to credit quality appear unlikely to mitigate in the short
term, another downgrade is likely.
SONICBLUE INC: D&M Completes $36MM Acquisition of Certain Assets
----------------------------------------------------------------
D&M Holdings Inc. (TSE II: 6735), parent company of Denon, Ltd.
and Marantz Japan, Inc., has completed the acquisition of the
digital video recorder and MP3 business units of SONICblue
Incorporated, a U.S. company. D&M Holdings purchased those
assets, which include the ReplayTV(R) and Rio(R) brands, for
$36.2 million.
The acquisitions were approved Friday by a U.S. Bankruptcy court
judge in San Jose, California.
D&M Holdings purchased inventory, receivables, intellectual
property and capital equipment. The company also assumed
selected contractual relationships and liabilities.
The business units acquired from SONICblue will be part of D&M
Holdings' new digital group known as Digital Networks North
America, Inc. DNNA will drive the strategy and develop the core
technologies that will enable the brands within D&M Holdings to
become the leaders in the emerging entertainment-based home
networking market.
D&M Holdings Inc. (TSE II: 6735) is based in Tokyo and is the
parent company of wholly owned subsidiaries Denon Ltd. and
Marantz Japan, Inc. Denon and Marantz are global industry
leaders in the specialist home theater, audio/video consumer
electronics and professional audio markets, with a strong and
long-standing heritage of manufacturing and marketing high-
performance audio and video components. Additional information
is available at http://www.dm-holdings.com
SOUTH STREET CBO: S&P Keeps Watch on Three Junk Note Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the
class A-4L, A-4A, and A-4C notes issued by South Street CBO
2000-1 Ltd., a high-yield arbitrage CBO transaction managed by
Colonial Advisory Services Inc., on CreditWatch with negative
implications. At the same time, the ratings on class A-1L, A-2L,
A-3, and A-3L are affirmed, based sufficient levels of credit
enhancement available to support these classes.
The CreditWatch placements reflect factors that have negatively
affected the credit enhancement available to support the notes
since the previous rating action on Jan. 31 2003. These factors
include continuing par erosion of the collateral pool securing
the rated notes and a negative migration in the credit quality
of the performing assets in the pool.
As of the most recently available monthly trustee report
(March 17, 2003), the transaction holds $17.0 million worth of
securities that are in default, $2.5 million of which was
experienced in the last one month.
Standard & Poor's noted that its Trading Model test, a measure
of the ability of the credit quality in the portfolio to support
the rating on a given tranche, is out of compliance, according
to the March trustee report. Furthermore, $35.8 million of the
securities currently in the portfolio come from obligors with
ratings currently on CreditWatch with negative implications.
Standard & Poor's will be reviewing the results of current cash
flow runs generated for South Street CBO 2000-1 Ltd. to
determine the level of future defaults the rated classes can
withstand under various stressed default timing and interest
rate scenarios, while still paying all of the interest and
principal due on the notes. The results of these cash flow
runs will be compared with the projected default performance of
the performing assets in the collateral pool to determine
whether the ratings currently assigned to the notes remain
consistent with the credit enhancement available.
RATINGS PLACED ON CREDITWATCH NEGATIVE
South Street CBO 2000-1 Ltd.
Rating
Class To From Balance (mil. $)
A-4L CCC/Watch Neg CCC 20.0
A-4A CCC/Watch Neg CCC 8.0
A-4C CCC/Watch Neg CCC 10.0
South Street CBO 2000-1 Ltd.
RATINGS AFFIRMED
Class Rating Balance (mil. $)
A-1L AAA 65.38
A-2L AAA 95.0
A-3L BBB+ 15.0
A-3 BBB+ 30.0
SPIEGEL GROUP: Court Approves BSI's Appointment as Claims Agent
---------------------------------------------------------------
The Spiegel Inc. and its debtor-affiliates obtained the Court's
authority to employ Bankruptcy Services LLC as the claims and
noticing agent in connection with their chapter 11 cases on the
terms and subject to the conditions of the Bankruptcy Services
Agreement, dated March 7, 2003.
At the Debtors' request, BSI will:
a. notify all potential creditors of the filing of the
bankruptcy petitions and of the setting of the first
meeting of creditors pursuant to Section 341 (a) of the
Bankruptcy Code, under the proper provisions of the
Bankruptcy Code and the Bankruptcy Rules;
b. maintain an official copy of the Debtors' schedules of
assets and liabilities and statements of financial affairs,
listing the Debtors' known creditors and the amounts owed
thereto;
c. notify all potential creditors of the existence and amount
of their claims as evidenced by the Debtors' books and
records and as set forth in the Schedules;
d. furnish a form for the filing of a proof of claim, after
notice and form are approved by this Court;
e. file with the Clerk a copy of any notice served by BSI, a
list of persons to whom it was mailed -- in alphabetical
order -- and the date the notice was mailed, within ten
days of service;
f. docket all claims received, maintaining the official claims
registers for each Debtor on behalf of the Clerk, and
provide the Clerk with certified duplicate unofficial
Claims Registers on a monthly basis, unless otherwise
directed;
g. specify in the applicable Claims Register, this information
for each claim docketed:
(i) the claim number assigned,
(ii) the date received,
(iii) the name and address of the claimant and agent, if
applicable, who filed the claim, and
(iv) the classification of the claim -- e.g., secured,
unsecured, priority, etc.;
h. relocate, by messenger, all of the actual proofs of claim
filed to BSI, not less than weekly;
i. record all transfers of claims and providing any notices of
the transfers required by Rule 3001 of the Federal Rules of
Bankruptcy Procedure;
j. make changes in the Claims Registers pursuant to a Court
order;
k. upon completion of the docketing process for all claims
received to date by the Clerk's office, turn over to the
Clerk copies of the Claims Registers for the Clerk's
review;
l. maintain the official mailing list for each Debtor of all
entities that have filed a proof of claim, which list will
be available upon request by a party-in-interest or the
Clerk;
m. assist with, among other things, the solicitation and the
tabulation of votes, the distribution as required in
furtherance of confirmation of plan(s) of reorganization
and the reconciliation and resolution of claims;
n. 30 days prior to the close of these cases, submit an Order
dismissing BSI and terminating the services of BSI upon
completion of its duties and responsibilities and upon the
closing of these cases; and
o. at the close of the case, box and transport all original
documents in proper format, as provided by the Clerk's
office, to the Federal Records Center.
The Debtors will compensate and reimburse BSI in accordance with
the payment terms of the BSI Agreement for all services rendered
and expenses incurred in connection with these Chapter 11 cases.
The Debtors believe that the compensation rates are reasonable
and appropriate for services of this nature and comparable to
those charged by BSI in other Chapter 11 cases in which it has
served as claims and noticing agent, and by other providers of
similar services. (Spiegel Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
TECO ENERGY: Fitch Downgrades Low-B Ratings over High Leverage
--------------------------------------------------------------
Fitch Ratings downgraded the outstanding ratings of TECO Energy,
Inc. and Tampa Electric Company as shown below. The Rating
Outlook for both issuers has been revised to Negative from
Stable.
TECO Energy, Inc.:
-- Senior unsecured debt lowered to 'BB+' from 'BBB';
-- Preferred stock lowered to 'BB' from 'BBB-'.
TECO Finance (guaranteed by TECO)
-- Medium term notes lowered to 'BB+' from 'BBB';
-- Commercial paper withdrawn.
Tampa Electric Company:
-- First mortgage bonds lowered to 'A-' from 'A';
-- Senior unsecured debt lowered to 'BBB+' from 'A-';
-- Unsecured pollution control revenue bonds
(Hillsborough County, Florida IDA for Tampa Electric)
lowered to 'BBB+' from 'A-';
-- Commercial paper unchanged at 'F2';
-- Variable rate mode unsecured pollution control
revenue bonds (Hillsborough County, Florida IDA for
Tampa Electric) unchanged at 'F2'.
The downgrade of TECO Energy's ratings reflect the higher-than-
expected debt leverage on a cash flow basis (gross debt measured
against earnings before interest taxes depreciation and
amortization), and the negative impact on earnings and cash flow
measures from increased interest expense, weaker projected
earnings and higher-than-anticipated capital expenditures. While
the recently announced dividend cut and other liquidity
enhancing measures are positive and provide adequate liquidity
for the near term, the updated financial profile is more
reflective of the revised ratings. Prospects for recovery in the
wholesale power markets in which TECO has made significant
investments in the development of natural gas-fired mid-merit
generating plants (funded in part through increased leverage at
the structurally-subordinated parent company) remain remote for
the foreseeable future. The Negative Outlook at TECO reflects
the continuing merchant energy exposure and uncertainty
surrounding future capital market access.
The downgrades and Negative Outlook for Tampa Electric reflect
Fitch's policy that restricts the rating differential between a
parent and its utility subsidiary. The regulated utility
continues to provide an offset to the risks associated with the
independent power business. Tampa Electric, which contributed
66% of consolidated EBITDA for the TECO group in 2002, has
financial metrics which would be consistent with the 'A'
category, despite significant investment in new plant over the
last several years to meet customer and sales growth. The recent
issuance of $250 million of senior unsecured notes at Tampa
Electric and the recent return of capital to the parent is
expected to have a moderately negative impact on financial
measures, although the ratings will continue to be constrained
by that of the parent.
Fitch had already incorporated the impact of recent rating
downgrades at TECO that require the company to provide letters
of credit to support remaining obligations related to the Union
and Gila River projects, including the $375 million outstanding
under an equity bridge facility due in three installments this
year. The consolidation of the debt associated with these
projects does not change Fitch's view of the obligations as non-
recourse to TECO, and does not impact financial covenants.
Certain recently-announced actions that will have a favorable
impact on near-term liquidity include a 46% dividend cut that
will save $120 million annually and $90 million in 2003;
arrangement of a $350 million 364-day unsecured credit facility
that addresses the maturity in November 2003 of the termed out
bank loan; sale of 49.5% interest in synthetic fuel facilities
that will provide $50 million in cash flow annually; and, a $250
million private placement at Tampa Electric in lieu of the sale
of a coal gasification facility. These additional sources of
liquidity along with cash balances will fund TECO's remaining
commitments to merchant generation projects and regulated
capital expenditures. These include obligations, related to the
Union and Gila River projects, which are gradually winding down
as construction is completed. Other assets also identified as
potential sources of liquidity through disposal include the
Hardee Power Station (a gas-fired facility in Florida supported
by long term contracts), the San Jose and Alborada Power
Stations (coal- and oil-fired facilities in Guatemala supported
by long term contracts) and the TECO Transport business. Fitch
typically measures the liquidity benefit of possible disposals
against the execution risk associated with the disposal process,
and notes that execution on all three asset sales, while
allowing some deleveraging of the parent, would also reduce the
proportion of unregulated generation with long term contracts.
Management also announced that an accounting charge of up to
$350 million is likely during the first half of the year. The
charge is related to the consolidation of the Union and Gila
projects and write-downs related to turbine orders and the TIE
project. While the continued weakness in wholesale power markets
may very well lead to additional write-downs in the merchant
generation portfolio, this is not expected to cause the company
to breach its debt to capital requirement under the multi-year
credit facility given the headroom under the 65% limitation (at
least for the near term). This ratio stood at 56.2% at March 31,
2003 and the charge is expected to add about 2.5% to that
number.
TECO Energy is a holding company headquartered in Tampa,
Florida. Its principal businesses are a regulated electric and
natural gas local distribution company subsidiary, unregulated
generation, marine transport, and coal production and synthetic
fuel facilities. Tampa Electric provides retail electric service
to over 600,000 customers in west central Florida and through
its Peoples Gas division distributes and markets natural gas to
approximately 281,000 customers throughout the state.
TRITON PCS: S&P Places Lower-B Ratings on CreditWatch Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services placed Triton PCS Inc.'s 'B+'
corporate credit, 'BB-' secured bank loan, and 'B-' subordinated
debt ratings on CreditWatch with negative implications.
"The CreditWatch placement is due to the decline in Triton's
fourth quarter 2002 revenues resulting from a new pricing plan
and lower roaming yield," said credit analyst Rosemarie
Kalinowski. "Standard & Poor's also expects industry pricing
pressures to increase with the required implementation of number
portability in November 2003."
Berwyn, Pennsylvania-based Triton PCS is an AT&T Wireless
Services Inc. affiliate providing wireless services to an area
covering 13.6 million population equivalents in a contiguous
geographic area encompassing portions of Virginia, North
Carolina, South Carolina, Tennessee, Georgia, and Kentucky. AT&T
Wireless has a 15.49% interest in the company. As part of this
relationship, Triton PCS co-brands its services with AT&T
Wireless.
As of Dec. 31, 2002, total debt outstanding was about $1.4
billion.
In the fourth quarter of 2002, Triton PCS' total revenues
declined 6% from the third quarter, primarily because of the
higher than anticipated number of existing high average revenue
per user (ARPU) subscribers that switched to the new SunCom
UnPlan and lower roaming revenues. Consequently, ARPU declined
to $52.55 from $58.02. The UnPlan provides unlimited calling
from a subscriber's local calling area for $49.99 per month. One
of the purposes of this plan is to improve customer retention.
Due to the conversion to a new billing system, churn rate
increased to 2.45% in the fourth quarter of 2002.
The higher take rate for the UnPlan exemplifies subscriber
attraction to lower pricing. Standard & Poor's expects increased
competition in Triton PCS' geographically attractive service
area, especially with the FCC required implementation of number
portability in November 2003. In the fourth quarter of 2002,
roaming revenue declined 12% from the third quarter primarily
due to seasonality. Roaming revenues, which represent about 24%
of total revenues, are expected to grow minimally in 2003 due to
lower roaming yield.
Net subscriber additions grew 2% in the fourth quarter of 2002
from the third quarter of 2002 reflecting the company's focus on
high-end profitable subscribers and the wireless industry's
higher penetration rate. Cost per gross addition has remained
high in the $400 area due to the lower number of gross additions
and increased marketing expenses. Although debt leverage has
been declining with the increase in cash flow, total debt to
EBITDA was still high in the 8.5x area in 2002.
Resolution of the CreditWatch listing will depend on Standard &
Poor's assessment of the company's ability to materially grow
cash flow in light of increasing competitive pressures and its
ability to reduce debt leverage.
UNITED AIRLINES: State Street Discloses Equity Stake in UAL Corp
----------------------------------------------------------------
In a regulatory filing dated April 10, 2003, State Street Bank &
Trust Company discloses to the Securities and Exchange
Commission that it is the beneficial owner of these UAL
Corporation securities:
1) 3,127,800 Class-I Non-Voting ESOP Convertible Preferred
Stock shares;
2) 962,245 Class-II Non-Voting ESOP Convertible Preferred
Stock shares;
3) 1,862,255 Class P ESOP Voting Junior Preferred shares;
4) 1,637,880 Class M ESOP Voting Junior Preferred shares;
5) 658,255 Class S ESOP Voting Junior Preferred shares; and
6) 17,214,001 Common shares. (United Airlines Bankruptcy
News, Issue No. 16; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
ULTRA CHEMICAL: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Ultra Chemical, Inc.
2 Bridge Avenue
Red Bank, New Jersey 07701
Bankruptcy Case No.: 03-23011
Type of Business: The Debtor is a manufacturer and
distributor of chemical raw materials to the
cosmetic and personal care industries.
Chapter 11 Petition Date: April 21, 2003
Court: District of New Jersey (Trenton)
Judge: Kathryn C. Ferguson
Debtor's Counsel: Brian L. Baker, Esq.
Stephen Ravin, Esq.
Ravin Greenberg, PC
101 Eisenhower Parkway
Roseland, New Jersey 07068
Tel: (973) 226-1500
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Global Colorants $524,000
Thomas Melody
29 Rizzolo Road
Kearney, NJ 07032
Jim Coyle Associates $400,000
19508 Bob-O-Link Drive
Hialeah, FL 33015
Penreco $222,000
Citgo Petroleum Corporation $153,000
Chemron Corporation $141,000
Crystal $136,000
Arizona Chemical $112,000
Exxon Chemical $95,000
Specialty Minerals $94,000
Luzenac America Inc. $75,000
Coast Chemicals Inc. $56,000
Clariant $54,000
Lipo Chemical, Inc. $50,000
Ciba Specialty Chemicals $45,000
Crompton Corporation $36,000
Skinvisible $29,000
Alcochem, Inc. $15,000
Goldschmidt Chemical Inc. $13,300
Organics & Nature $13,000
UPS Customhouse Brokerage $12,000
UNOVA INC: First Quarter 2003 Net Loss Slides-Down to $15 Mill.
---------------------------------------------------------------
UNOVA, Inc. (NYSE:UNA) -- http://www.unova.com-- announced
financial results for the first quarter 2003.
UNOVA reported 2003 first quarter revenues of $273.7 million and
a net loss of $14.9 million, compared to revenues of $292.4
million and a net loss of $18.2 million for the first quarter
2002.
2003 first quarter results include $1.0 million of special
charges related to the IAS restructuring and the relocation of
UNOVA headquarters. 2002 first quarter results included $4.7
million in special charges related to a loss on the sale of a
non-core industrial business.
UNOVA's net debt (defined as total debt less cash) decreased
$25.5 million to $20.9 million during the first quarter 2003,
primarily due to positive cash generation from operations.
"We are pleased with Intermec's growth and its ability to
translate growth to superior bottom-line performance," said
Larry Brady, Chairman and CEO. "Both our business segments are
producing results beyond what we might expect in this weak
economy and we continue to use those results to drive cash
flows."
Automated Data Systems
Intermec Technologies reported revenues of $162.9 million and a
segment operating profit of $9.0 million for the quarter,
compared to $140.3 million and a segment operating loss of $0.7
million for the 2002 first quarter.
The majority of product revenue improvement came from the core
'Systems and Solutions' business, which grew 27 percent.
Geographically, the strongest performance was in international
markets, where Europe grew at 31 percent and the rest of the
world grew at 71 percent. Approximately $7.0 million of the
revenue increase on a comparable quarter basis is due to changes
in foreign currency exchange rates.
Profit improvement was the result of the volume increase and
continuing productivity improvement. Gross margin improved by
more than two points and selling, general and administrative
costs decreased four points versus the comparable first quarter
2002.
First-quarter ADS product and service operating margins were 5.5
percent, the highest in more than three years. Coupled with
annualized capital utilization turns of 5.5 times during the
quarter, pre-tax return on capital utilized at ADS for the
quarter exceeded 30 percent.
The quarter was marked by several important wireless product
developments. One of the nation's largest convention centers,
the new 1.8-million square foot Mandalay Bay Convention Center
in Las Vegas, selected Intermec's 802.11b wireless access points
for wireless connectivity to exhibitors and visitors. Intermec
also introduced the industry's first wireless access point with
an embedded RADIUS authentication server for enhanced security
and network administration.
Intermec also launched its new rugged Tablet PC, the CT60,
powered by Microsoft Windows XP Tablet PC Edition.
Industrial Automation Systems
The Company will now report the results of the former Integrated
Production Systems and Advanced Manufacturing Equipment segments
as the Industrial Automation Systems segment due to the
previously announced merger of AME with the Company's Lamb
operations.
Accordingly, the IAS segment, comprising Lamb Machining Systems,
Lamb Body & Assembly, Cincinnati Machine and Landis, reported
revenues of $110.8 million and an operating loss of $10.4
million for the first quarter 2003, compared to revenues of
$152.1 million and a loss of $0.1 million for the 2002 first
quarter.
Backlog was $239.1 million at March 31, 2003, approximately $4
million greater than at December 31, 2002, representing the
first sequentially positive improvement in three and one-half
years.
Corporate Developments
During the quarter, the Company announced that Allen J. Lauer,
CEO of Varian, Inc., joined its board of directors.
UNOVA is a leading supplier of mobile computing and wireless
network products for non-office applications and of
manufacturing systems technologies primarily for the automotive
and aerospace industries.
For more information on the Company, visit http://www.unova.com
* * *
As previously reported in Troubled Company Reporter, Fitch
Ratings affirmed the rating on UNOVA Inc.'s senior notes at
'CCC', and changed the Rating Outlook to Stable from Negative.
The change in the rating outlook reflects UNA's success in
bringing down debt levels through one-time events and
intellectual property settlements, and in reducing costs. UNA's
covenants have been amended to provide more room and its free
cash flows have improved. It also considers the company's
uncertainty in generating cash flows through its core
businesses.
US AIRWAYS: Settles Claims Dispute with NY & NY Port Authorities
----------------------------------------------------------------
On October 25, 2002, the Port Authority of New York and New
Jersey filed a proof of claim against US Airways, Claim No.
1828, for $11,724,878. A portion of this claim, $8,500,000,
related to environmental and building conditions on properties
leased by US Airways at LaGuardia International Airport.
After negotiations, the parties have agreed to resolve this
portion of the Port Authority's Claim No. 1828. The Port
Authority will withdraw the $8,500,000 portion of Claim No.
1828. The Port Authority will not receive any distribution for
the $8,500,000 portion of the claim in this case.
The Settlement provides that any liability US Airways may have
to the Port Authority related to environmental contamination or
other physical deficiencies on the Leased Properties will remain
US Airways' post-bankruptcy and post-Plan confirmation
obligation.
Thus, the Debtors ask Judge Mitchell to approve their settlement
with the Port Authority.
John Wm. Butler, Jr., Esq., at Skadden, Arps, notes that the
Settlement allows the parties to avoid protracted litigation and
contentious fights over the portions of Claim No. 1828 relating
to environmental contamination and building deficiencies at
LaGuardia International Airport. The cost of litigation,
including discovery, motion practice and trial, could be
excessive to both the Reorganized Debtors and the Port
Authority.
Therefore, it is unlikely that the Reorganized Debtors would
receive greater benefit by objecting to and litigating the
portion of the Port Authority Claim relating to environmental
contamination rather than accepting the Settlement. (US Airways
Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
USA BIOMASS: Enters Letter of Intent to Acquire MDF Transport
-------------------------------------------------------------
USA Biomass Corporation (OTC: USBCQ) has entered into a Letter
of Intent to acquire MDF Transport, Inc., a Whittier, California
based company engaged in the transport of agricultural biomass.
Under the terms of the non-binding Letter of Intent, USA Biomass
is to acquire MDF for about $600,000 in cash, notes and common
stock. The acquisition price represents approximately three
times EBITDA (Earnings Before Interest Taxes Depreciation and
Amortization).
MDF had revenues of about $870,000 in 2002, and, due to the
synergies that exist between USA Biomass and MDF, is expected to
increase its revenues (as a wholly owned subsidiary of USA
Biomass) to an annualized rate of approximately $2,000,000 by
December 2003. USA Biomass and MDF have been working together on
a number of projects for the past two months, and have concluded
that both companies could realize substantial costs savings and
economies of scale by formally merging the two companies'
operations.
April 2003 revenues are expected to reach $250,000 -- up 30%
from March 2003 revenues of $193,000 -- and are projected to
increase to $325,000 in May 2003 -- up 68% from March levels --
based on current work volumes. These expected revenue increases
are largely due to an infusion of equity capital that was used
to fund equipment purchases and expansion activities. In
addition, the company expects to reduce monthly costs by more
than $25,000 ($300,000 annually) as a result of its planned
relocation to the City of Orange (near Anaheim) by the end of
May 2003.
USA Biomass anticipates that annualized December 2003 revenues
will be approximate $6,500,000. This increase in revenues
assumes that the acquisition of MDF Transport will close by
May 31, 2003.
Despite a lengthy and costly six-month delay in attaining a
formal exit from bankruptcy proceedings on February 11, 2003,
the company has made significant progress over the past nine
weeks and believes that it will be able to report profitable
operations in the near future. The progress made to date is owed
largely to a $1,000,000 private equity offering under which
$800,000 has been raised.
USA Biomass expects to raise the remaining $200,000 of this
equity raise by offering its shareholders USA Biomass common
stock at $0.125 per share for the next thirty days. A successful
completion of the offering will allow the company to
successfully execute its current business plan and build a solid
platform for future growth.
WICKES INC: Jim O'Grady Returns as New Company President
--------------------------------------------------------
Wickes Inc., (Nasdaq SC:WIKS), a leading distributor of building
materials and manufacturer of value-added building components,
under the direction of the company's Chairman of the Board,
Robert E. Mulcahy III, announced the selection of Jim O'Grady as
the new President and Chief Executive Officer of Wickes Lumber.
Most recently Mr. O'Grady was Vice President of Operations at
Hope Lumber and Supply Company.
Mr. Mulcahy stated, "I am very pleased that Jim has accepted
this offer to return to Wickes. Mr. O'Grady is a highly
respected and well-known veteran in the industry who brings to
Wickes 25 years of solid operational and sound management
experience. Wickes is pleased to have Jim return in this
capacity as part of the company's strategic restructuring plan.
I look forward to working in partnership with him."
Reporting to the President and CEO will be Jim Hopwood, Senior
Vice President of Finance, Jim Frank, Senior Vice President of
Sales, Merchandising and Marketing, and Jim Detmer, Senior Vice
President of Distribution and Manufacturing.
Jim O'Grady earned a Bachelor of Science degree in Business
Administration from Elmhurst College. Having followed in the
footsteps of his father, Jim joined Wickes in 1977 as an hourly
sales associate in Saginaw, MI. Through the years he held many
positions in management, specifically including Center Manager,
Zone Manager, District Manager, District Vice President, and
most recently as Senior Vice President of Operations for Wickes,
prior to leaving the company in May 2002.
Wickes Inc. is a leading distributor of building materials and
manufacturer of value-added building components in the United
States, serving primarily building and remodeling professionals.
The company distributes materials nationally and
internationally, operating building centers in the Midwest,
Northeast and South. The company continues to expand its
building component manufacturing facilities, which produce
value-added products such as roof trusses, floor systems, framed
wall panels, pre-hung door units and window assemblies. Wickes
Inc.'s Web site, http://www.wickes.com, offers a full range of
valuable services about the building materials and construction
industry. The company is traded on the Nasdaq Small Cap stock
market under the stock symbol "WIKS".
* * *
As reported in Troubled Company Reporter's March 3, 2003
edition, Standard & Poor's lowered its corporate credit rating
on building materials distributor Wickes Inc., to 'SD' from 'CC'
and removed the rating from CreditWatch with negative
implications.
Vernon Hills, Illinois-based Wickes has about $64 million of
rated debt.
The rating action is based on the company's announcement that it
has completed its offer to exchange its new senior secured notes
due 2005 for its outstanding senior subordinated notes due
Dec. 15, 2003. Approximately 67% of the $64 million of senior
subordinated notes were tendered in this transaction. The
company also completed the refinancing of its senior credit
facility with a new $125 million facility.
WORLDCOM INC: Wants Nod to Sell Missouri Property for $15 Mill.
---------------------------------------------------------------
Worldcom Inc., and its debtor-affiliates seek the Court's
authority to sell, free and clear of all liens, claims and
encumbrances, a parcel of real property and related personal
property, including HVAC units, generators and fuel storage
tanks pursuant to a Real Estate Purchase Contract, dated March
19, 2003, all subject to higher and better offers.
Marcia L. Goldstein, Esq., at Weil Gotshal & Manges, LLP, in New
York, informs the Court that MCI WorldCom Network Services, Inc.
currently owns a 22.4-acre lot located at 183 Northwest
Industrial Court in Bridgeton, Missouri. The Property was
acquired in late 1999 and contains a 108,336-square foot
facility, which has served as a data center for WorldCom's web
hosting co-location services since November 2000. During these
Chapter 11 cases, the Debtors determined that the Property is no
longer needed and that other existing facilities can support
forecasted services previously dedicated to the Property.
Accordingly, commencing September 2002, WorldCom marketed the
Property for sale to potential purchasers.
During the marketing period, Ms. Goldstein relates that
WorldCom, with the assistance of its real estate advisor, Hilco
Real Estate, LLC, provided information on the Property to
numerous parties. Five parties expressed interest in the
Property and WorldCom received bids from two parties. As the
marketing period approached its conclusion, WorldCom evaluated
the offers and determined that DST Systems, Inc.'s bid
represented the highest and best offer for the Property. After
several weeks of negotiations, on March 19, 2003, MCI and DST
entered into a contract for the sale of the Assets.
The Agreement provides for the sale of the Property, including
all legal rights related thereto, and the furniture, fixtures
and equipment located at the Property. The principal terms of
the Agreement are:
A. Purchase Price: DST will purchase from MCI the Assets for
$15,190,000.
B. Deposit: DST has provided a $1,519,000 deposit with the
Escrow Agent to be applied toward the Purchase Price at
closing.
C. Closing Date: The closing will occur within three business
days after entry of the Sale Order.
D. Assets To Be Sold:
1. Real Property consisting of the Property, all mineral,
oil and gas rights, water rights, sewer right, and other
utility rights associated therewith, all leases of any
portion of the Real Property, all appurtenances,
easements, licenses, privileges and other property
interests belonging or appurtenant therewith, and all
right, title and interest in any roads, streets and ways
serving the Property; and
2. Personal Property, consisting of the furniture,
furnishings, fixtures, equipment, inventory and other
tangible personal property located at the Property and
owned by MCI.
E. Condition of Property: The Assets are being sold "as is"
without any representations and warranties whatsoever other
than as specified in the Agreement.
F. Bankruptcy Court Approval: The Agreement and the
transactions are subject to higher and better offers
obtained pursuant to certain auction procedures. The
Sale Order must be entered no later than June 12, 2003. If
MCI does not obtain the Sale Order prior to the stated
deadline, either MCI or DST may terminate the Agreement
pursuant to its terms.
The telecommunications services previously routed through the
Property have been migrated to other existing network
facilities. By selling the Assets, the Debtors will generate
cash to devote to their reorganization and the operation of
their core telecommunications business.
The Debtors believe the Purchase Price represents fair market
value for the Assets and that the Agreement is the culmination
of good faith, arm's-length negotiations. Therefore, the sale
of the Assets is well within the Debtors' sound business
judgment and should be approved. (Worldcom Bankruptcy News,
Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Worldcom Inc.'s 8.000% bonds due 2006 (WCOE06USR2) are trading
at about 29 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE06USR2
for real-time bond pricing.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Advisory Board ABCO (16) 48 (20)
Alaris Medical AMI (32) 586 173
Amazon.com AMZN (1,353) 1,990 550
Arbitron Inc. ARB (100) 156 (2)
Alliance Resource ARLP (46) 288 (16)
Actuant Corp ATU (44) 295 18
Acetex Corp ATX (11) 373 126
Avon Products AVP (91) 3,327 73
Saul Centers Inc. BFS (13) 389 N.A.
Blount International BLT (369) 428 91
Broadwing Inc. BRW (2,104) 1,468 327
Cubist Pharmaceuticals CBST (7) 221 131
Choice Hotels CHH (114) 314 (37)
Campbell Soup Co. CPB (114) 5,721 (1,479)
Echostar Comm DISH (1,206) 6,260 1,674
Dun & Brad DNB (19) 1,528 (104)
Epix Medical EPIX (3) 27 8
Graftech International GTI (307) 797 112
Hollywood Casino HWD (92) 553 89
Infogrames Inc. IFGM (115) 242 52
Imax Corporation IMAX (104) 243 40
Imclone Systems IMCL (5) 474 295
Gartner Inc IT (5) 825 18
Jostens JOSEA (540) 375 (40)
Journal Register JRC (4) 702 (20)
Kos Pharmaceuticals KOSP (75) 70 (55)
Level 3 Comm Inc. LVLT (240) 8,963 581
Memberworks Inc. MBRS (21) 281 (100)
Moody's Corp. MCO (327) 630 (190)
McDermott International MDR (11) 555 113
McMoRan Exploration MMR (31) 72 5
MicroStrategy MSTR (34) 80 7
Northwest Airlines NWAC (1,483) 13,289 (762)
Petco Animal PETC (11) 555 113
Primus Telecomm PRTL (168) 724 65
Per-Se Tech Inc. PSTI (50) 203 24
Qwest Communications Q (1,094) 31,228 (1,167)
Rite Aid Corp. RAD (93) 6,133 1,676
Ribapharm Inc. RNA (363) 199 92
Sepracor Inc. SEPR (392) 727 413
St. John Knits Int'l SJKI (76) 236 86
Town and Country Trust TCT (2) 504 N.A.
Triton PCS TPC (36) 1,617 172
UnitedGlobalCom UCOMA (3,040) 5,931 (6,287)
United Defense I UDI (30) 1,454 (27)
UST Inc. UST (47) 2,765 829
Valassis Comm. VCI (33) 386 80
Ventas Inc. VTR (54) 895 N.A.
MEMC Electronic WFR (25) 238 13
Western Wireless WWCA (463) 2,398 (119)
Xoma Ltd. XOMA (11) 72 30
*********
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
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*** End of Transmission ***