/raid1/www/Hosts/bankrupt/TCR_Public/030505.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, May 5, 2003, Vol. 7, No. 87
Headlines
ACCESS WORLDWIDE: Negotiates Amendment to Existing Bank Pact
ADELPHIA BUSINESS: Judge Gerber Gives Nod to Teleport Settlement
ADELPHIA COMMS: Equity Committee Taps Kagan Media as Analyst
ADVOCAT INC: Judgment in Professional Liability Suit is Reduced
AES CORP: IPL Unit Appeals Indiana Regulatory Commission Order
AIR CANADA: Justice Farley Moves CIBC Aeroplan Hearing to May 14
AIR CANADA: Closes $700 Million Secured Facility with GE Capital
AIRGATE PCS: Will Broadcast Q2 2003 Conference Call on May 15
ALLIANT ENERGY: Sells Australian Assets to Meridian for $365MM
AMAZON.COM: Reports Better Sales for March 2003 Quarter
AMERICAN AIRLINES: April Traffic Decreases by 4.8%
AMERICA WEST: Initiates Additional Flights From Its Phoenix Hub
AMKOR TECHNOLOGY: S&P Rates Proposed $425-Mil. Senior Notes at B
ANTARES PHARMA: Appeals Nasdaq's Delisting Determination
APPLICA INCORPORATED: First Quarter Sales Decrease by 15.3%
ASIA GLOBAL CROSSING: U.S. Trustee Appoints Unsec. Panel Members
AUXER GROUP: Changing Company Name to Viva International Inc.
AUSPEX SYSTEMS: First Creditors' Meeting Scheduled for May 14
BACK BAY: US Trustee to Convene Sec. 341(a) Meeting on May 20
BATTERY TECH: Has Until June 13 to File Restructuring Proposal
BUDGET GROUP: Court Stretches Lease Decision Period Until May 30
BURLINGTON: Court Okays 4th Amendment to $125MM DIP Credit Pact
CALL-NET: Generates Free Cash Flows for 2nd Sequential Quarter
CELLSTAR CORPORATION: Delays Asian IPO Because of SARS Outbreak
CHIQUITA BRANDS: Total Debt Rises to $619 Million at March 31
COLUMBIA LABORATORIES: David Knott Discloses 5% Equity Stake
CONSECO FINANCE: Unsecured Committee Pursuing Mill Creek Claims
CONSECO FINANCE: S&P Lowers 134 Related Transaction Ratings
CONSECO INC: Wants Court to Disallow CFC Intercompany Claims
CONSUMERS ENERGY: Issues $625 Million of First Mortgage Bonds
CUMMINS INC: S&P Places BB+ Synthetic Deal Rating on Watch Neg.
CWMBS INC: Fitch Assigns BB/B Ratings to Classes B-3 & B-4
ENRON: Demands Transaction & Termination Payments from Tribune
ESSENTIAL THERAPEUTICS: Files for Chapter 11 Relief in Delaware
ESSENTIAL THERAPEUTICS: Case Summary & 20 Unsecured Creditors
FEDERAL-MOGUL: Court Gives Go-Ahead to Expand E&Y's Services
FLEMING COS.: Turns to Gleacher Partners for Financial Advice
FORD MOTOR COMPANY: Reports Decreasing April U.S. Sales
GEOWORKS: Board Changes as Newcastle Garners 25% Equity Interest
GLIMCHER REALTY: Pursues Acquisition of Joint Venture Interests
GLOBAL CROSSING: Settles Contract Dispute with Computer Sciences
GRUPO DINA: Extends Exchange Offer for 8% Conv. Notes to May 14
HARD ROCK: Commences Cash Tender Offer for 9-1/4% Senior Notes
HASBRO: Fitch Affirms BB+/BB Ratings of Bank Debt & Senior Notes
HAYES LEMMERZ: S&P Assigns BB- Corp. Credit & Bank Loan Ratings
HOVNANIAN: Improved Profile Prompts S&P to Up Corp. Rating to BB
ICO INC: Second Quarter 2003 Earnings Webcast Set for May 9
INTERLINE BRANDS: S&P Assigns B+ Corp Credit & Bank Loan Ratings
INTERSTATE BAKERIES: S&P Ratchets Corporate Credit Rating to BB+
IT GROUP: Creditors' Panel Gets Go-Ahead to Retain AlixPartners
KAISER ALUMINUM: Exploring Dispositions of Commodity Assets
KAISER: Volta Smelter Unit in Ghana Curtails Remaining Potline
KANSAS CITY SOUTHERN: $175M Preferreds Offering Gets B Rating
KMART CORP: Judge Sonderby Okays Settlement Pact with Fleming
LAND O'LAKES: Closing Research Seeds' Missouri Facility in June
LA PETITE ACADEMY: Wooing Lenders to Amend Defaulted Covenants
LEAP WIRELESS: Will Honor Prepetition Sales & Use Taxes
LIBERTY MEDIA: Annual Investors Meeting to Be Webcast on May 15
MAGELLAN: Obtains Court Nod to Reject 26 Leases & 7 Subleases
MICROCELL: S&P Ups L-T Credit Rating to CCC+ after Restructuring
MICROCELL: March Balance Sheet Upside Down by CDN$1.2 Billion
MICROCELL: Successfully Completes Recapitalization Process
MDC CORP: March Working Capital Deficit Tops CDN$4.6 Million
MOUNT SINAI NYU: $666-Mill. Bonds Rating Lowered to BB from BBB-
NETDRIVEN SOLUTIONS: Consolidating Operations & Closing Units
NEENAH FOUNDRY: Discloses Plan to Strengthen Balance Sheet
NOBLE CHINA: Talking to Lenders to Cure Debt & Amend Pabst Pact
OGLEBAY NORTON: Elects Directors; John Lauer Resigns as Chairman
OLYMPIC PIPE LINE: Taps Danielson Harrigan as Special Counsel
THE PANTRY: Lenders Agree to Amend Terms of Credit Agreements
PEABODY ENERGY: Certain Shareholders Complete Secondary Offering
PIONEER-STANDARD: Arthur Rhein Succeeds James Bayman as Chairman
PRIMUS TELECOMMS: Reduces Debt, Q1 Equity Deficit Now Tops $190M
PRIMUS TELECOMMUNICATIONS: Vendor Debt Down by $15 Million
PROVIDIAN FIN'L: Ratifies Ernst & Young's Employment as Auditor
RELIANCE GROUP: Wants RDG to Make Minimum Pension Contribution
REVLON INC: Offering Subscription Rights for Up to 3.7MM Shares
ROTECH HEALTHCARE: Government Investigates Financial Records
SAFETY-KLEEN: First Amended Joint Reorganization Plan Supplement
SAMSONITE CORP: Forges Recapitalization Pact with 3 Investors
SMTC CORP: Will Webcast First Quarter 2003 Results Today
SONIC FOUNDRY: March 31 Working Capital Deficit Tops $4 Million
STEIN MART: Closing 16 Stores To Improve Store Network Quality
TECHNICOIL CORP: Fails To Comply with Quarterly Loan Covenant
THERMOVIEW: Reports Lower First Quarter 2003 Financial Results
UNITED AIR: S&P Hatchets Bond Ratings to D over Payment Defaults
UNUMPROVIDENT: Prices Offering of Common Stock & Mandatory Units
WACKENHUT CORRECTIONS: S&P Places Low-B Ratings on Watch Neg.
WINSTAR COMMS: Seeks Court Approval of Lucent Stipulation
WORLD AIRWAYS: Inks New $102 Million Passenger Contract
WORLDCOM INC: SDNY Court Okays Embratel Settlement Agreement
WORLDCOM: Stockholders Can Whine & Gripe on Dedicated Web Site
WORLD HEART CORP: Releasing First Quarter Results on Thursday
* BOND PRICING: For the week of May 5 - May 9, 2003
*********
ACCESS WORLDWIDE: Negotiates Amendment to Existing Bank Pact
------------------------------------------------------------
Access Worldwide Communications, Inc. (OTC Bulletin Board: AWWC)
reported that the Company has entered into the Seventh Amendment
to its Credit Facility agreement with the Bank Group, effective
April 29, 2003.
The Amendment allows the Company to continue to use cash
proceeds generated in the ordinary course of business to fund
working capital and operations. In addition, the Amendment
increases the effective rate of interest to Bank of America's
prime rate of interest plus 5% and limits the revolving
commitment line to $6.1 million through May 14, 2003, with
periodic reductions thereafter, including $6.0 million from May
15, 2003 to May 31, 2003, and $5.8 million from June 1, 2003 to
June 30, 2003. The outstanding balance on the Credit Facility
becomes due on July 1, 2003. The total amount outstanding under
the Credit Facility as of April 29, 2003 was $6.1 million.
On April 1, 2003, the Company was unable to make a mandatory
payment to reduce the outstanding balance on the Credit Facility
to $5.7 million as required by the Sixth Amendment to the Credit
Facility. However, on April 3, 2003, the Bank Group issued a
letter waiving any defaults that had previously occurred.
Additionally, the Bank Group allowed the Company to continue to
use cash proceeds generated in the ordinary course of business
to fund working capital and operations.
"I am pleased that we have finalized a new amendment; however,
we continue to work towards renegotiating or refinancing the
Credit Facility under a long- term agreement with the Bank Group
or other lenders," stated Shawkat Raslan, Chairman and Chief
Executive Officer of Access Worldwide.
Founded in 1983, Access Worldwide provides a variety of sales,
marketing and education services. Among other things, we reach
physicians, pharmacists and patients on behalf of pharmaceutical
clients, educating them on new drugs, prescribing indications,
medical procedures and disease management programs. Our services
include product stocking, medical education, database
management, clinical trial recruitment and teleservices. For
clients in the telecommunications, financial services, insurance
and consumer products industries, we reach the growing
multicultural markets with multilingual teleservices. Access
Worldwide is headquartered in Boca Raton, Florida and has over
1,300 employees in offices throughout the United States.
ADELPHIA BUSINESS: Judge Gerber Gives Nod to Teleport Settlement
----------------------------------------------------------------
Adelphia Business Long Haul sought and obtained Judge Gerber's
approval for their settlement agreement with Digital Teleport,
Inc.
According to Judy G.Z. Liu, Esq., at Weil Gotshal & Manges LLP,
in New York, ABIZ Long Haul and Digital Teleport are parties to
a certain Indefeasible Right of Use and Telecommunications
Services Agreement regarding, among other things, the granting
by Digital Teleport to ABIZ Long Haul of an IRU in certain dark
fiber strands in Digital Teleport's fiber optic communication
transmission facilities, together with collocation spaces along
these routes.
Certain disputes have arisen between ABIZ Long Haul and Digital
Teleport in connection with the IRU Agreement. Specifically,
each party contends that the other party has not complied with
the IRU Agreement. As a result, ABIZ Long Haul has filed a
proof of claim for $3,000,000 in Digital Teleport's Chapter 11
case and Digital Teleport has filed a proof of claim for
$4,000,000 in ABIZ Long Haul's Chapter 11 case. Moreover,
Digital Teleport alleges that its $4,000,000 proof of claim
includes a set-off of Long Haul's $3,000,000 proof of claim.
The parties now want to settle all claims between them relating
to the IRU Agreement.
The salient terms of the Settlement Agreement are:
A. Rejection of IRU Agreement: Digital Teleport and ABIZ
Long Haul will both reject the IRU Agreement in their
Chapter 11 cases.
B. Withdrawal of Claims and Dismissal of Actions by ABIZ
Long Haul: After the closing of the Settlement
Agreement, ABIZ Long Haul will dismiss any actions it
may have against Digital Teleport, withdraw its proof of
claim in the Digital Teleport Chapter 11 case and waive
any administrative claim it may have against Digital
Teleport.
C. Withdrawal of Claims and Dismissal of Actions by Digital
Teleport: After the closing of the Settlement Agreement,
Digital Teleport will dismiss any actions it may have
against ABIZ Long Haul, withdraw its proof of claim in
the ABIZ Long Haul Chapter 11 case and waive any
administrative claim it may have against ABIZ Long Haul.
D. Purchase of Lamda Services: ABIZ Long Haul will purchase
Lamda services from Digital Teleport pursuant to the
terms and conditions set forth on the Lamda Service
Order and Lamda Service Order Terms and Conditions. In
connection with the Lamda Service Order, the Debtors
will pay to Digital Teleport a $400,000 initial payment
and $250,000 subsequent payments for each of the two
remaining years for the Lamda Service Order.
E. Disputes: Digital Teleport and ABIZ Long Haul will
settle all disputes between themselves.
F. Release of Claims: Digital Teleport and ABIZ Long Haul
will release all claims between themselves. (Adelphia
Bankruptcy News, Issue No. 33; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADELPHIA COMMS: Equity Committee Taps Kagan Media as Analyst
------------------------------------------------------------
The Official Committee of Equity Security Holders in the Chapter
11 cases of Adelphia Communications and its debtor-affiliates
obtained Court approval to retain Kagan Media Appraisals, a
division of Primedia, to provide expert analysis and testimony
with respect to the valuation of the ACOM Debtors' enterprise,
including its businesses and valuation trends within the cable
television industry. The Equity Committee retains Kagan nunc
pro tunc to February 25, 2003, the date that Kagan commenced
performing services on the Equity Committee'
behalf.
Norman N. Kinel, Esq., at Sidley Austin Brown & Wood LLP, in New
York, informs the Court that Kagan will seek compensation
for providing expert analysis and testimony at its standard rate
of $600 per hour with a minimum of $6,000 per day for days in
which testimony is proffered. In addition, Kagan will seek
compensation for preparation of testimony, including research,
review of documents and preparation of any written reports or
trial exhibits at these hourly rates:
Senior Analyst $600
Analyst 400
Associate Analyst 325
Research Associate 250
Support/Assistants 150
Travel Time 300
In addition, Kagan will seek reimbursement of actual and
necessary expenses incurred. The expenses charged to clients
include telephone and telecopier toll charges, mail and express
mail charges, special or hand delivery charges, document
processing and photocopying charges, special research charges,
report productions, travel expenses, expenses for "working
meals" and computerized research costs. Kagan believes that it
is appropriate to charge these expenses to the clients rather
than to increase its hourly rates. (Adelphia Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ADVOCAT INC: Judgment in Professional Liability Suit is Reduced
---------------------------------------------------------------
Advocat Inc. (OTC Bulletin Board: AVCA) announced that the
Arkansas Supreme Court issued a decision in the case of Advocat
v. Sauer, case number 02-189, on the Company's appeal of a
verdict in the previously announced professional liability
lawsuit against the Company totaling $78.425 million in Mena,
Arkansas. The Arkansas Supreme Court remits $10 million of
compensatory damages and $42 million of punitive damages,
resulting in a total judgment of $26.425 million. The plaintiffs
have 18 days to accept the reduced judgment. Otherwise, the case
will be reversed and remanded for a new trial. The Company has
not yet made any decision regarding whether it will seek to
obtain review of the opinion by the United States Supreme Court
or take other available legal action with respect to this case.
"We are disappointed that the judgment wasn't reversed and
remanded for a new trial," said William R. Council, Chief
Executive Officer. "However, if the reduced judgment is accepted
by the Plaintiffs, we believe that the judgment amount is within
our insurance coverage."
Advocat Inc. provides long-term care services to nursing home
patients and residents of assisted living facilities in 10
states, primarily in the Southeast, and three provinces in
Canada.
At September 30, 2002, Advocat's balance sheet shows a working
capital deficit of about $58 million.
AES CORP: IPL Unit Appeals Indiana Regulatory Commission Order
--------------------------------------------------------------
On February 12, 2003, the Indiana Utility Regulatory Commission
issued an Order in connection with a petition filed by
Indianapolis Power & Light Company, the regulated utility
subsidiary of AES Corporation's utility subsidiary IPALCO
Enterprises, Inc., for approval of its financing program,
including the issuance of additional long-term debt.
The Order approved the requested financing but set forth a
process whereby IPL must file a report with the IURC, prior to
declaring or paying a dividend, that sets forth (1) the amount
of any proposed dividend, (2) the amount of dividends
distributed during the prior twelve months, (3) an income
statement for the same twelve-month period, (4) the most recent
balance sheet, and (5) IPL's capitalization as of the close of
the preceding month, as well as a pro forma capitalization
giving effect to the proposed dividend, with sufficient detail
to indicate the amount of unappropriated retained earnings. If
within twenty (20) calendar days the IURC does not initiate a
proceeding to further explore the implications of the proposed
dividend, the proposed dividend will be deemed approved. The
Order stated that such process should continue in effect during
the term of the financing authority, which expires December 31,
2006.
On February 28, 2003, IPL filed a petition for reconsideration,
or in the alternative, for rehearing with the IURC. This
petition sought clarification of certain provisions of the
Order. In addition, the petition requested that the IURC
establish objective criteria in connection with the reporting
process related to IPL's long term debt capitalization ratio.
On April 16, 2003, the IURC issued its Order in response to
IPL's petition for reconsideration. The IURC declined to provide
objective criteria relating to the dividend reporting process,
and did not set a definitive time frame within which an
investigation of a proposed dividend would be concluded. The
IURC did make certain requested clarifications and corrections
with regard to the Order, including the following: (1) the
dividend reporting process applies only to dividends on IPL's
common stock, not on its preferred stock; (2) a
confidentiality process is established to maintain
confidentiality of information filed under the dividend
reporting process until such information has been publicly
released and is no longer confidential; (3) dividends are not to
be paid until after the twenty calendar days have passed, or the
Commission approves the dividend after initiating a proceeding
to explore the implications of a proposed dividend; and (4)
certain technical corrections.
IPL has filed three reports with the IURC under the dividend
reporting process. The IURC did not initiate any proceeding in
response to the first two reports and they were deemed approved
after twenty days had elapsed. The twenty calendar day reporting
period for the third filing began on April 23, 2003, the day the
third filing was made with the IURC, and thus remains pending.
AES continues to believe that IPL will not be prevented from
paying future dividends in the ordinary course of prudent
business operations.
On March 14, 2003 IPL filed a Notice of Appeal of the IURC
Order, as amended, in the Indiana Court of Appeals.
AIR CANADA: Justice Farley Moves CIBC Aeroplan Hearing to May 14
----------------------------------------------------------------
Air Canada provides the following update on the airline's
restructuring under the Companies' Creditors Arrangement Act:
CIBC Agreement on Aerogold and Additional Financing Commitment
Air Canada received on April 28 an unsolicited and non-binding
expression of interest for a credit card agreement with Aeroplan
from a third party who has requested that its identity not be
disclosed. Following the Monitor's review of the proposal, the
Monitor issued a report in which it recommended that the motion
to approve the CIBC credit card agreement and related financing
facility be adjourned until May 14, 2003 in order to provide the
Monitor with additional time to conduct a process in which
additional expressions of interest from alternative credit card
providers could be obtained.
Air Canada advised the Court and the Monitor that it wished to
complete the CIBC agreements in accordance with their terms upon
receipt of the requisite approval of the Court. In addition, Air
Canada advised that it would co-operate in the bid process
recommended by the Monitor if such a process was ordered by the
Court.
Justice J. Farley of the Superior Court of Justice of Ontario
granted the Monitor's request to adjourn the motion to approve
the CIBC agreements to May 14, 2003 and approved the bid process
recommended by the Monitor.
Air Canada's 10.250% bonds due 2011 (AC11CAR1), DebtTraders
says, are trading at 24 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AC11CAR1for
real-time bond pricing.
AIR CANADA: Closes $700 Million Secured Facility with GE Capital
----------------------------------------------------------------
Air Canada closed its previously announced debtor-in-possession
transaction relating to the USD$700 million secured financing
facility with General Electric Capital Canada Inc., an affiliate
of GE Corporate Financial Services.
As previously reported in the Troubled Company Reporter, the
CCAA Financing Facility provides funds in two stages:
* a Tranche A revolving term credit facility in a principal
amount not to exceed US$300,000,000 (including a Letter of
Credit Sub-Facility in an amount to be determined) and
* a Tranche B non-revolving term loan facility in a
principal amount of up to US$400,000,000.
The CCAA Facility provides Air Canada with working capital
financing until the earliest of October 1, 2004, and the
effective date of a plan of arrangement in the CCAA Proceeding.
GE Capital Canada will work with Air Canada's existing senior
management to convert a minimum of US$200,000,000 and up to
US$300,000,000 of the principal amount of the obligations
outstanding under the CCAA Facility into a senior secured credit
facility upon Air Canada's emergence from its restructuring
proceedings. At GE Capital Canada's option, GE Capital Aviation
will purchase, at par, the obligations under the senior secured
Exit Facility. GE Capital Aviation will assist in the
facilitation of a consensual restructuring of leases to the
Applicants, including those leases GE Capital Aviation managed
or serviced, so that the Applicants may emerge successfully from
their CCAA Proceeding.
AIRGATE PCS: Will Broadcast Q2 2003 Conference Call on May 15
-------------------------------------------------------------
AirGate PCS, Inc. (NASDAQ:PCSA), a PCS Affiliate of Sprint,
announced that its second quarter fiscal 2003 conference call is
scheduled to begin at 9:00 a.m. Eastern time on Thursday, May
15, 2003.
The live broadcast of AirGate PCS' quarterly conference call
will be available on-line at http://www.airgatepcsa.comand
http://www.companyboardroom.com.The on-line replay will follow
shortly after the call and continue through June 15, 2003. To
listen to the live call, please go to the Web site at least 15
minutes early to register, download, and install any necessary
audio software.
During this call AirGate PCS will review the Company's financial
and operating results for the second quarter ended March 31,
2003.
About AirGate PCS
AirGate PCS, Inc., excluding its unrestricted subsidiary iPCS,
is the PCS Affiliate of Sprint with the exclusive right to sell
wireless mobility communications network products and services
under the Sprint brand in territories within three states
located in the Southeastern United States. The territories
include over 7.1 million residents in key markets such as
Charleston, Columbia, and Greenville-Spartanburg, South
Carolina; and Augusta and Savannah, Georgia.
At December 31, 2002, AirGate PCS' balance sheet shows a total
shareholders' equity deficit of about $340 million.
iPCS, Inc., a wholly owned unrestricted subsidiary of AirGate
PCS, Inc., is the PCS Affiliate of Sprint with the exclusive
right to sell wireless mobility communications network products
and services under the Sprint brand in 37 markets in Illinois,
Michigan, Iowa and eastern Nebraska. The territories include
over 7.4 million residents in key markets such as Grand Rapids,
Michigan; Champaign-Urbana and Springfield, Illinois; and the
Quad Cities areas of Illinois and Iowa.
AirGate and iPCS are separate corporate entities that have
discrete and independent financing sources, debt obligations and
sources of revenue. As an unrestricted subsidiary, iPCS's
lenders, noteholders and creditors do not have a lien or
encumbrance on assets of AirGate. Further, AirGate generally
cannot provide capital or other financial support to iPCS. iPCS
has filed a Chapter 11 petition under the federal bankruptcy
laws for the purpose of effecting a court-ordered
reorganization.
DebtTraders reports that Airgate Pcs Inc.'s 13.500% bonds due
2009 (PCSA09USR1) are trading at 24 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=PCSA09USR1
for real-time bond pricing.
ALLIANT ENERGY: Sells Australian Assets to Meridian for $365MM
--------------------------------------------------------------
Alliant Energy Corp. (NYSE: LNT) closed on the sale of its
Australian assets to New Zealand-based Meridian Energy Limited.
The sale price was approximately $365 million. This sale will
provide for the repayment of approximately $150 million in debt
in Australia. On an after-tax basis, the sale resulted in net
cash proceeds to Alliant Energy of approximately $170 million
and provides the company with approximately $320 million to be
applied toward debt reduction.
Alliant Energy's Australian assets were principally made up of
Southern Hydro's ten hydroelectric generating stations in the
state of Victoria in southeast Australia. Southern Hydro's
total generating capacity is 540 megawatts.
"This is the first of our four planned divestitures of non-
regulated businesses to close and we look forward to
successfully closing the other three as the year progresses,"
said Erroll B. Davis, Jr., chairman, president and CEO of
Alliant Energy. "We continue to make progress in successfully
executing the steps we announced last November and are committed
to seeing this comprehensive plan through to completion."
In addition to its Australian investments, Alliant Energy
previously announced its intention to exit its affordable
housing business, primarily consisting of Heartland Properties,
Inc; Whiting Petroleum Corporation, its oil and gas business;
and SmartEnergy, Inc.(TM), an electric and gas retailer
principally operating in New York City.
Alliant Energy is an energy-services provider that serves more
than three million customers worldwide. Providing its regulated
customers in the Midwest with electricity and natural gas
service remains the company's primary focus. Other key business
platforms include the international energy market and non-
regulated domestic generation. Alliant Energy, headquartered in
Madison, Wis., is a Fortune 1000 company traded on the New York
Stock Exchange under the symbol LNT. For more information, visit
the company's web site at http://www.alliantenergy.com
Alliant Energy's September 30, 2002 balance sheet shows that
total current liabilities eclipsed total current assets by about
$400 million.
AMAZON.COM: Reports Better Sales for March 2003 Quarter
-------------------------------------------------------
Net sales at Amazon.com, Inc., were $1.08 billion for the three
months ended March 31, 2003, representing an increase of 28%
from first quarter 2002. Net sales for the North America
segment were $705 million for the three months ended March 31,
2003, respectively, representing an increase of 13% from a year
ago, and net sales for the International segment were $379
million, representing an increase of 68% from a year ago.
Growth in unit sales is greater than growth in net sales due to
lower prices, including the result of free shipping promotions,
and an increasing percentage of units being sold by third
parties, for which the Company earns a net commission. Net
sales benefited $51 million in comparison to the first quarter
of 2002 due to changes in foreign exchange rates, as the U.S.
Dollar weakened in comparison to the Euro and the British Pound.
The future growth of the International segment may fluctuate
significantly with changes in foreign exchange rates.
Shipping revenue, which consists of outbound shipping charges to
customers, was $78 million and $89 million for the three months
ended March 31, 2003 and 2002, respectively. Shipping revenue
does not include any commissions or other amounts earned from
third-party sellers. The Company provides to its customers free
shipping alternatives, which reduce shipping revenue as a
percentage of sales and cause gross margins on retail sales to
decline. The Company views these shipping offers as an effective
marketing tool and intends to continue offering these
alternatives to its customers.
Gross profit was $271 million and $223 million for the three
months ended March 31, 2003 and 2002, respectively, representing
an increase of 21%. Gross margin was 25.0% and 26.3% for these
periods, respectively. Gross profit for the North America
segment was $187 million and $174 million for the three months
ended March 31, 2003 and 2002, respectively, representing an
increase of 8%, and gross profit for the International segment
was $84 million and $50 million, respectively, representing an
increase of 69%. Gross margin was 26.5% and 27.9% for the North
America segment during the three months ended March 31, 2003 and
2002, respectively, and 22.1% and 21.9% for the International
segment, respectively. The increase in gross profit during the
first quarter of 2003 corresponds with increases in unit sales,
including those by third-party sellers, offset by lower prices
for customers. Overall gross margins fluctuate based on several
factors, including the mix of sales during the period, sales
volumes by third-party sellers, competitive pricing decisions
and general efforts to reduce prices for Amazon's customers over
time, as well as the extent to which the Company provides free
and reduced-rate shipping offers. Consolidated gross profit
benefited $11 million in comparison to the first quarter of 2002
due to changes in foreign exchange rates as the U.S. Dollar
weakened in comparison to the Euro and the British Pound.
Shipping loss was $27 million and $1 million for the three
months ended March 31, 2003 and 2002, respectively. The loss
from shipping primarily reflects the free and reduced-rate
shipping offers, offset in part by cost reductions from
efficiencies in outbound shipping. Amazon continues to measure
its shipping results relative to their effect on the overall
financial results, with the viewpoint that free shipping offers
are an effective marketing tool. Amazon intends to continue
offering these alternatives, which will reduce shipping revenue
as a percentage of sales and negatively affect gross margins.
Fulfillment costs represent those costs incurred in operating
and staffing Amazon's fulfillment and customer service centers,
including costs attributable to receiving, inspecting and
warehousing inventories; picking, packaging and preparing
customer orders for shipment; credit card fees and bad debt
costs; and responding to inquiries from customers. Fulfillment
costs also include amounts paid to third-party co-sourcers that
assist Amazon in fulfillment and customer service operations.
Certain of its fulfillment-related costs that are incurred on
behalf of other businesses, such as Toysrus.com and Target
Corporation, are classified as cost of sales rather than
fulfillment. Fulfillment costs were $104 million and $90 million
for the three months ended March 31, 2003 and 2002,
respectively, representing 10% and 11% of net sales,
respectively. The increase in fulfillment costs in comparison
with the prior year generally corresponds with sales volume. The
improvement in fulfillment costs as a percentage of net sales
results from improvements in productivity and accuracy, the
increase in units fulfilled leveraging the fixed-cost portion of
the Company's fulfillment network, efficiencies gained through
utilization of fulfillment services provided by third-party co-
sourcers, and a decline in customer service contacts per order
resulting from improvements in operations and enhancements to
customer self-service features available on Amazon's Web sites.
These improvements were offset, in part, by increases in
employee wages and benefits and credit card interchange fees
associated with third-party seller transactions, which represent
a higher percent relative to amounts earned from retail sales of
the Company's inventory.
Marketing expenses consist of advertising, on-line marketing,
promotional and public relations expenditures, and payroll and
related expenses for personnel engaged in marketing and selling
activities. Marketing expenses, net of co-operative marketing
reimbursements, were $28 million and $32 million for the three
months ended March 31, 2003 and 2002, respectively, representing
3% and 4% of net sales, respectively. To the extent co-operative
marketing reimbursements decline in future periods, Amazon may
incur additional expenses to continue certain promotions or
elect to reduce or discontinue them. Declines in expense for
marketing-related activities reflect management efforts to cut
ineffective marketing programs, as well as reduced rates charged
to the Company for some online marketing activities. These
decreases are partially offset by increased investment in
marketing channels considered most effective in driving
incremental net sales, such as Amazon's Associates program. The
Associates program enables associated Web sites to make Amazon's
products available to their audiences with fulfillment performed
by Amazon. Amazon provides to its customers free shipping
alternatives, and although these shipping offers do not directly
affect marketing expenses, the Company views these offers as an
effective marketing tool and intends to continue offering these
free shipping alternatives indefinitely.
Technology and content expenses consist principally of payroll
and related expenses for development, editorial, systems and
telecommunications operations personnel; systems and
telecommunications infrastructure; and costs of acquired
content, including freelance reviews. Technology and content
expenses were $50 million and $55 million for the three months
ended March 31, 2003 and 2002, respectively, representing 5% and
7% of net sales, respectively. The decline in absolute dollars
spent in comparison with the prior year period primarily
reflects efficiency improvements in Amazon's systems
infrastructure, as well as improved expense management and
general price reductions in some expense categories. The Company
expects to continue to invest in technology and improvements to
its Web sites, which may include, but are not limited to, hiring
additional employees, offering additional Web site features and
product categories to its customers and implementing additional
commercial relationships, as well as potentially continuing the
Company's international expansion.
General and administrative expenses consist of payroll and
related expenses for executive, finance and administrative
personnel, human resources, professional fees and other general
corporate expenses. General and administrative expenses were $21
million for each of the three month periods ended March 31, 2003
and 2002, representing 2% of net sales for each period.
Amazon's results from operations were income of $39 million and
$2 million for the three months ended March 31, 2003 and 2002,
respectively. The improvement in operating results in comparison
with the prior year was attributable to an improvement in
consolidated segment operating income, a decline in
restructuring-related charges, and a decline in amortization of
other intangibles, offset by increases in stock-based
compensation charges primarily associated with variable
accounting treatment of certain stock awards. Income from
operations benefited $4 million in comparison to the first
quarter of 2002 due to changes in foreign exchange rates as the
U.S. Dollar weakened in comparison to the Euro and British
Pound.
Net interest expense was $30 million for each of the periods
ended March 31, 2003 and 2002. Interest income was $7 million
and $6 million for the three months ended March 31, 2003 and
2002, respectively, and interest expense was $37 million and $35
million for these same periods, respectively. Interest income
fluctuates with prevailing interest rates and the average
balance of invested funds. Interest expense is primarily related
to the Company's 6.875% PEACS, 4.75% Convertible Subordinated
Notes and its 10% Senior Discount Notes. Interest expense
increased $1 million in comparison to the first quarter of 2002
due to changes in foreign exchange rates as the U.S. Dollar
weakened in comparison to the Euro.
The Company's net loss was $10 million and $23 million for the
three months ended March 31, 2003 and 2002, respectively. Year
over year improvements during the first quarter of 2003 resulted
from a variety of factors, including improvements in
consolidated segment operating income, partially offset by
stock-based compensation charges primarily associated with
variable accounting treatment of certain stock awards and by
losses arising from the remeasurement of Amazon's 6.875% PEACS'
principal from Euros to U.S. Dollars.
Amazon's cash and cash equivalents balance was $496 million and
$738 million, and its marketable securities balance was $587
million and $563 million at March 31, 2003 and December 31,
2002, respectively. Combined cash, cash equivalents and
marketable securities were $1.08 billion and $1.30 billion at
March 31, 2003 and December 31, 2002, respectively. In the
second quarter of 2003, the Company's cash, cash equivalents and
marketable securities balance will be impacted by the redemption
of all of the remaining 10% Senior Discount Notes for redemption
payments totaling $277 million plus accrued interest.
Amazon has pledged a portion of its marketable securities as
collateral for standby letters of credit that guarantee certain
of the Company's contractual obligations, a majority of which
relates to property leases; the Euro Currency Swap; and some of
the real estate lease agreements. The amount of marketable
securities required to be pledged, pursuant to the Euro Currency
Swap, fluctuates with the fair market value of the obligation.
Amazon.com, a Fortune 500 company based in Seattle, opened on
the World Wide Web in July 1995 and today offers Earth's Biggest
Selection. Amazon.com seeks to be Earth's most customer-centric
company, where customers can find and discover anything they
might want to buy online, and endeavors to offer its customers
the lowest possible prices. Amazon.com and other sellers list
millions of unique new and used items in categories such as
apparel and accessories, electronics, computers, kitchenware and
housewares, books, music, DVDs, videos, cameras and photo items,
toys, baby items and baby registry, software, computer and video
games, cell phones and service, tools and hardware, magazine
subscriptions and outdoor living items.
Amazon.com, Inc.'s March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $1.3 billion.
AMERICAN AIRLINES: April Traffic Decreases by 4.8%
--------------------------------------------------
American Airlines reported its systemwide traffic for April
decreased 4.8 percent from April 2002, on a capacity decrease of
6.5 percent. The system load factor was 70.5 percent, up 1.2
points from a year ago. International traffic in April was down
7.7 percent year over year on a capacity decrease of 1.8
percent.
Domestic traffic was down 3.8 percent year over year for April
on a capacity decrease of 8.2 percent.
American boarded 7.1 million passengers in April, down 8.1
percent from April 2002.
American Airlines Inc.'s 10.380% ETCs due 2006 (AMR06USR18) are
currently trading between 10 and 20 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMR06USR18
for real-time bond pricing.
AMERICA WEST: Initiates Additional Flights From Its Phoenix Hub
---------------------------------------------------------------
America West Airlines (NYSE: AWA), the nation's second largest
low-fare carrier, announced that it initiated a third daily,
nonstop roundtrip flight to Cleveland, Ohio and Pittsburgh from
its Phoenix hub. These additional flights are seasonal due to
high customer demand during the summer months. From Cleveland
and Pittsburgh, customers can connect to 46 destinations in the
western U.S., Canada and Mexico.
America West's business fares are 40 to 70 percent below most
other major carriers and do not require a Saturday night stay.
Additionally, the airline offers flexible ticketing policies
that allow unused tickets to retain their value for a year and
allow customers to fly standby for free on the same day as their
originally scheduled flight.
Flights to and from Pittsburgh and Cleveland will utilize Airbus
A319 aircraft, which feature seating for 12 in first class and
112 in the main cabin.
Founded in 1983 and proudly celebrating its 20-year anniversary
in 2003, America West Airlines is the nation's second largest
low-fare airline and the only carrier formed since deregulation
to achieve major airline status. Today, America West serves 93
destinations in the U.S., Canada and Mexico.
America West Airlines, Inc.'s 8.540% ETCs due 2006 (AWA06USR1),
DebtTraders reports, trade at 27.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AWA06USR1for
real-time bond pricing.
AMKOR TECHNOLOGY: S&P Rates Proposed $425-Mil. Senior Notes at B
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to
Amkor Technology Inc.'s proposed $425 million senior notes issue
due 2013 and affirmed its 'B' corporate credit and its other
ratings on the company. The proposed senior notes are expected
to refinance Amkor's existing $425 million senior notes due
2006.
The West Chester, Pennsylvania-based provider of outsourced
packaging and testing services to semiconductor makers had total
funded debt of about $1.8 billion at March 2003. The outlook is
stable.
Amkor is the largest provider of outsourced packaging and
testing services to semiconductor makers.
"While our view of the long-term outsourcing trend in
semiconductor packaging remains positive, we expect that
sequential improvements in demand will be modest over the near
term," said Standard & Poor's credit analyst Emile Courtney.
Expected modest sequential improvements in operating performance
should improve debt service metrics. Adequate cash balances
provide ratings support during this extended cyclical downturn.
Amkor is expected to accelerate capital spending in the June
2003 quarter to support new customer programs.
ANTARES PHARMA: Appeals Nasdaq's Delisting Determination
--------------------------------------------------------
Antares Pharma, Inc. (Nasdaq: ANTR) has received a notice from
the Nasdaq Listing Qualifications Staff indicating that the
Company fails to comply with the stockholders' equity
requirements for continued listing set forth in Marketplace Rule
4310(c)(2)(B) and indicating Nasdaq's intent to delist the
Company's common stock from the Nasdaq SmallCap Market effective
at the opening of business on May 7, 2003.
The Company has appealed Nasdaq's determination by requesting an
oral hearing before the Nasdaq Listing Qualifications Panel.
This hearing request will stay the delisting of the Company's
common stock pending the Listing Qualifications Panel's
decision.
About Antares Pharma
Antares Pharma develops pharmaceutical delivery systems,
including needle-free and mini-needle injector systems and
transdermal gel technologies. These delivery systems improve
both the efficiency of drug therapies and the patient's quality
of life. The Company's needle-free injection systems are
currently available in more than 20 countries. In addition,
Antares Pharma has several products under development and is
conducting ongoing research to create new products that combine
various elements of the Company's technology portfolio. Antares
Pharma has corporate headquarters in Exton, Pennsylvania, with
research and development facilities in Minneapolis, Minnesota,
and Basel, Switzerland.
For more information, visit Antares Pharma's web site at
http://www.antarespharma.com
* * *
As previously reported, Antares Pharma, Inc., completed the
retirement of its outstanding 10% convertible debentures issued
in July 2002. This has been achieved by the Company issuing
replacement senior secured convertible debentures with warrants
to two of the original holders of the July 2002 debentures to
cover the remaining unconverted portion of those debentures,
accrued interest and a redemption payment to the other two
holders of the original debentures. The replacement debentures
were issued with a fixed conversion price, a longer maturity and
a lower interest rate than the previous debt. As part of the
restructuring, the Company issued warrants, which are callable
by the Company subject to the achievement of certain milestones.
Duncan Capital LLC of New York advised Antares Pharma on the
debt restructuring.
APPLICA INCORPORATED: First Quarter Sales Decrease by 15.3%
-----------------------------------------------------------
Applica Incorporated (NYSE: APN) announced that first-quarter
sales for 2003 were $121.2 million, a decrease of 15.3% from the
first quarter of 2002. The decrease was largely the result of
lower sales to key retailers, planned lower contract
manufacturing sales and the loss of a significant customer to
bankruptcy in January 2003.
Harry D. Schulman, Applica's President and Chief Executive
Officer, commented, "Although I am disappointed with our sales
for the quarter, I am pleased with our continued emphasis on
asset management, as we decreased our debt level in the first
quarter to $176 million from $194 million at December 31, 2002."
Applica reported net earnings for the 2003 first quarter of
$19.6 million, or $0.83 per diluted share, compared with a loss
of $82.0 million, or $3.51 per diluted share, for the 2002 first
quarter. The first-quarter 2003 earnings included $37.5 million
of equity in the net earnings of a joint venture in which
Applica owns a 50% interest. The equity in net earnings resulted
primarily from an unrealized gain in the fair value of an
investment held by the joint venture. The gain was precipitated
by a potential sale of the investment. Applica expects a sale
and the related cash distribution to occur before the end of the
third quarter of 2003.
Applica's gross profit margin was 31.4% in the first quarter as
compared to 28.9% in the first quarter of 2002. The increase is
attributable to an improved product mix.
Mr. Schulman continued, "We are encouraged by the improving
product mix. However, the most recent survey from the
Association of Home Appliance Manufacturers showed sales for our
industry declined 9% in the first quarter. As the result of
anticipated softer sales in the second quarter of 2003, we have
slowed our production. Additionally, we anticipate a negative
impact on gross margins in the second quarter from higher
petroleum prices. Still, we expect that product margins will
continue to improve in the long term as our new product
development initiatives for 2004 continue as planned."
EBITDA was $5.8 million for the 2003 first quarter. EBITDA
represents a non-GAAP (generally accepted accounting principles)
financial measure. The following table reconciles this measure
to the appropriate GAAP measure:
(In thousands)
Gross profit $38,129
Less: Selling, general and
administrative expenses 39,444
Plus: Depreciation and amortization 7,115
EBITDA $5,800
EBITDA is presented in this earnings release because management
believes that it is of interest to the Company's investors and
lenders in relation to the Company's debt covenants, as certain
of the debt covenants include EBITDA as a performance measure.
However, this measure should be considered in addition to, not
as a substitute, or superior to, measures of financial
performance prepared in accordance with GAAP.
At March 31, 2003, total debt as a percentage of total
capitalization was 42.5%, with total debt of $176.4 million and
shareholders' equity of $238.5 million. The Company's book value
per share was $10.15 at March 31, 2003. Capital expenditures for
the quarters ended March 31, 2003 and 2002, were $6.3 million
and $3.4 million, respectively.
Applica Incorporated and its subsidiaries are manufacturers,
marketers and distributors of a broad range of branded and
private-label small electric consumer goods. The Company
manufactures and distributes small household appliances, pest
control products, home environment products, pet care products
and professional personal care products. Applica markets
products under licensed brand names, such as Black & Decker(R),
its own brand names, such as Windmere(R), LitterMaid(R) and
ApplicaT, and other private-label brand names. Applica's
customers include mass merchandisers, specialty retailers and
appliance distributors primarily in North America, Latin America
and the Caribbean. The Company operates manufacturing facilities
in China and Mexico. Applica also manufactures products for
other consumer products companies. Additional information
regarding the Company is available at http://www.applicainc.com.
As previously reported in Troubled Company Reporter, Standard &
Poor's raised its senior secured bank loan rating on Miami
Lakes, Florida-based Applica Inc.'s $205 million revolving
credit facility due December 2005 to double-'B'-minus from
single-'B'-plus.
At the same time, Standard & Poor's affirmed its single-'B'-plus
corporate credit rating on the small appliance manufacturer and
marketer. The outlook is stable.
ASIA GLOBAL CROSSING: U.S. Trustee Appoints Unsec. Panel Members
----------------------------------------------------------------
Pursuant to Sections 1102(a) and (b) of the Bankruptcy Code, the
United States Trustee for Region 2 appoints these creditors,
being among the largest unsecured claimants who are willing to
serve, to the Official Committee of Unsecured Creditors of the
Asia Global Crossing Debtors:
A. 360networks Corporation
2401 4th Ave., Suite 1100, Seattle, WA 98121
Attn: Chris Mueller, Vice President - Corp. Development
Phone: (206) 239-4076
B. Clearwater Capital Partners Fund I, LP
535 Madison Ave., 7th Floor, New York, NY 10022
Attn: Robert Perry
Phone: (212) 878-3584
C. Varde Partners Inc.
3600 West 80th St., Suite 425, Bloomington, MN 55431
Attn: George G. Hicks, Managing Director
Phone: (952) 893-1554
D. Ashmore Asset Holder PCC No. 3 Limited
20 Bedfordbury, London WC2N 4BL
Attn: Tim Davis
Phone: 44 (0)20 7557-4126
E. The Bank of New York, Indenture Trustee
101 Barclay St., Floor 8W, New York, NY 10286
Attn: Gary Bush
Phone: (212) 815-2747 (Global Crossing Bankruptcy News,
Issue No. 38; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
AUXER GROUP: Changing Company Name to Viva International Inc.
-------------------------------------------------------------
On January 15, 2003, The Auxer Group, Inc. completed a stock
exchange agreement and plan of reorganization with Viva
Airlines, Inc. In accordance with such agreement, Auxer issued
246,000,000 of its shares of common stock to the shareholders of
Viva Airlines, Inc. After the transaction was completed, the
aggregate number of Auxer shares held by the following Viva
Airlines shareholders represented more than 50% of Auxer's
issued and outstanding common stock: Old Mission Assessment
Corporation, Robert J. Scott, Joan Jolitz, Enterprises D and D,
Lazaro Canto and Bash, LLC. In addition, all of The Auxer Group
officers and directors resigned and Robert J. Scott became the
sole officer and director. Based on this transaction, Auxer
intends to change its name to Viva International Inc. or a
similar name. To date, this name change has not been undertaken.
The stock exchange agreement and plan of reorganization also
requires that Auxer's only active subsidiary, Harvey Westbury
Corp., shall be spun off to a company controlled by Auxer's
former officer and director, Eugene Chiaramonte, Jr. To date,
this has not been undertaken.
Currently Auxer's other subsidiaries are inactive or in the
process of being dissolved.
The Auxer Group's September 30, 2002 balance sheet shows a
working capital deficit of about $1.5 million, and a total
shareholders' equity deficit of about $2.5 million.
AUSPEX SYSTEMS: First Creditors' Meeting Scheduled for May 14
-------------------------------------------------------------
The United States Trustee will convene a meeting of Auspex
Systems, Inc., and its debtor-affiliates' creditors on May 14,
2003, at 10:00 a.m., in Room 130 of the U.S. Federal Bldg.
located at 280 South First Street in San Jose, California.
This is the first meeting of creditors required under 11 U.S.C.
Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Auspex Systems, Inc., a manufacturer of network storage
equipment, filed for chapter 11 protection on April 22, 2003
(Bankr. N.D. Calif. Case No. 03-52596). J. Michael Kelly, Esq.,
at the Law Offices of Cooley Godward represents the Debtor in
its restructuring efforts. When the Company filed for
protection from its creditors, it listed $30,398,964 in total
assets and $13,987,908 in total debts.
BACK BAY: US Trustee to Convene Sec. 341(a) Meeting on May 20
-------------------------------------------------------------
The United States Trustee will convene a meeting of Back Bay
Brewing Company, Ltd.'s creditors at 12:30 p.m. on May 20, 2003,
at the Office of the U.S. Trustee located at 10 Causeway Street,
Room 1190 in Boston, Massachusetts. This is the first meeting
of creditors required under 11 U.S.C. Sec. 341(a) in all
bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Back Bay Brewing Company, Ltd., a restaurant/bar operating at
755 Boylston Street, Boston, Massachusetts, filed for chapter 11
protection on April 15, 2003 (Bankr. Mass. Case No. 03-13022).
John M. McAuliffe, Esq., at McAuliffe & Associates, P.C.,
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$9,000,000 in assets and $1,202,000 in debts.
BATTERY TECH: Has Until June 13 to File Restructuring Proposal
--------------------------------------------------------------
Battery Technologies Inc., (TSE:"BTI" and OTC-BB:"BTIOF.OB",
BSE:"BTM") received from the Ontario Superior Court of Justice a
six-week extension until June 13, 2003 for the filing of its
restructuring proposal to creditors. The extension follows from
the original "Notice of Intention to Make a Proposal" announced
by the Company on March 31, 2003, and subsequently filed, which
granted the Company protection from creditors for an initial 30
day period while restructuring alternatives were considered.
The extension will enable the Company to review and pursue
expressions of interest received from third parties with respect
to a possible investment or acquisition that could form the
basis of a viable proposal to creditors.
J. Bruce Pope, Chairman, President and CEO said: "We're
appreciative of the additional time granted by the Court, as we
believe all stakeholders' interests are best served by the
opportunity for management and the Board, with the assistance of
our proposal trustee, A. Farber & Partners Inc., to pursue in
more detail the expressions of interest we have received. We
hope to be in a position to make more definitive statements
about BTI's opportunities shortly."
BTI is the inventor, developer and owner of the unique, patented
rechargeable alkaline manganese (RAM(TM)) battery technology on
which it holds 43 patents related to chemistry, product design
and manufacturing processes. BTI is engaged in the worldwide
commercialization of the RAM(TM) technology and other portable
energy products.
BUDGET GROUP: Court Stretches Lease Decision Period Until May 30
----------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates sought and obtained
the Court's approval to extend their deadline to assume or
reject unexpired leases through and including May 30, 2003.
(Budget Group Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
BURLINGTON: Court Okays 4th Amendment to $125MM DIP Credit Pact
---------------------------------------------------------------
Burlington Industries, Inc. and its debtor-affiliates seek the
Court's authority to:
(a) enter into a Fourth Amendment to their Revolving Credit
and Guaranty Agreement, dated November 2001;
(b) provide additional adequate protection to their
prepetition secured lenders under that certain Credit
Agreement, dated September 1988, as amended and restated
as of December 2000; and
(c) provide adequate protection to Bank of America, N.A.,
formerly NationsBank, N.A., in its capacity as the
issuer of certain interest rate protection and foreign
exchange agreements.
Marc T. Foster, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, recounts that prior to the Petition Date,
Bank of America and the Debtors entered into an interest rate
protection agreement and a foreign exchange contract, pursuant
to that certain ISDA Master Agreement, as amended, and certain
additional documentation.
Bank of America terminated the Swap Agreement and the Foreign
Exchange Contract -- the Hedging Agreements -- and liquidated
the amounts owing, on the Petition Date and January 2002. The
Debtors owe:
-- approximately $2,500,000 under the Swap Agreement; and
-- approximately $416,286 under the Foreign Exchange
Contract.
The Debtors' obligations to Bank of America under the Hedging
Agreements are secured under the same Security Agreement and by
the same Prepetition Collateral, on a pari passu basis, as the
Debtors' obligations to the Prepetition Lenders. Consequently,
the Swap Obligations are accorded the same priority, treatment
and protection as the Prepetition Lenders' claims.
Mr. Foster relates that the Final DIP Order does not expressly
recognize Bank of America's entitlement to adequate protection.
Bank of America has thus requested and, by this motion, the
Debtors seek to provide certain adequate protection to Bank of
America in connection with the Hedging Agreements.
The Debtors and the Agent have agreed on the Amendment and the
additional adequate protection provisions, subject to Court
approval and the Required Banks' consent.
(A) Amendment to Credit Agreement
The Agent has agreed to allow the Debtors to make certain
payments, not to exceed $5,000,000, on account of the
settlement of prepetition claims pursuant to Court orders,
without the payments being events of default under Section
7.01(m) of the Credit Agreement.
(B) Additional Adequate Protection to Prepetition Lenders
The Debtors have agreed to provide the Prepetition Lenders
with additional adequate protection, pursuant to Sections
361, 362 and 363 of the Bankruptcy Code. This additional
adequate protection consists of a $50,000,000 cash payment,
to be applied towards the outstanding principal under the
Prepetition Credit Agreement.
(C) Adequate Protection to Bank of America
Because Bank of America has a lien on the Debtors' assets
that has been primed by the lien and other interests
granted to the Agent and the Banks on account of the Credit
Agreement, it is entitled to adequate protection.
Accordingly, the Debtors have agreed to provide the Bank of
America with these adequate protections:
(a) quarterly payment of current postpetition interest on
the Swap Obligations at a rate of three month LIBOR
plus 3.25%, effective as of the termination date of
each of the Hedging Agreements; and
(b) a replacement lien on the Debtors' assets and with
priority and other rights as the lien granted to the
Prepetition Lenders pursuant to the Final DIP Order.
Mr. Foster also notes that the Final DIP Order authorized the
Debtors to grant the Agent and the Banks liens superior to the
existing liens of the Prepetition Lenders and Bank of America
and, in turn, authorized the Debtors to provide certain adequate
protection to the Prepetition Lenders.
Mr. Foster asserts that adequate protection afforded to the
Prepetition Lenders is warranted since:
(a) given its current cash position and available investment
opportunities for this cash, the Debtors believe that
there are economic advantages to providing the
Prepetition Lenders with additional adequate protection
in the form of a cash payment at this time;
(b) the Creditors' Committee has indicated that it has no
objection to the proposed additional adequate protection
payment to the Prepetition Lenders;
(c) the additional adequate protection requested by the
Prepetition Lenders and Bank of America is reasonable
under the circumstances and necessary to protect the
interests of the Prepetition Lenders and Bank of America
in the Debtors' assets given the priming lien of the
Agent and the Banks and the Debtors' ongoing use and,
where appropriate, sale of those assets; and
(d) the Debtors' entry into the Amendment is necessary to
insure that the Debtors have the continued ability to
make Court-approved settlement payments on account of
prepetition claims without being in default of the
Credit Agreement.
* * *
After due deliberation, the Court authorizes the Debtors to
enter into the Fourth Amendment to the DIP Credit Agreement and
to provide additional adequate protection to the Prepetition
Lenders and Bank of America. (Burlington Bankruptcy News, Issue
No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CALL-NET: Generates Free Cash Flows for 2nd Sequential Quarter
--------------------------------------------------------------
Call-Net Enterprises Inc. (TSX: FON, FON.B) reported financial
results for the first quarter ending March 31, 2003.
Consolidated revenue for the first quarter of 2003 was $202.2
million up 0.2 per cent compared to $201.8 million during the
same period last year with an increase in residential revenue
offset by a decline in business revenue. Earnings before
interest, taxes, depreciation and amortization (EBITDA) totaled
$24.9 million representing a $13.0 million improvement over the
corresponding period in the previous year. Net income was $8.1
million (earnings of $0.34 per share) compared to a net loss of
$91.8 million (loss of $20.26 per share) in the first quarter of
2002. The improvement is mainly attributed to a foreign exchange
gain of $36.2 million. For the second sequential quarter, the
Company generated free cash flow from operations in the amount
of $1.3 million ending the quarter with $126.3 million in cash,
cash-equivalents and short-term investments.
"Call-Net met all of its targets delivering solid, on plan
performance for the first quarter of the year," said Bill
Linton, president and chief executive officer of Call Net. "We
grew our local service customer base and won several new
business customers nationally and by leveraging our relationship
with Sprint Communications Corporation L.P. Our operating
results in quarter, combined with the momentum we are gaining on
the regulatory front, have helped solidify our position as a
strong competitive force in both the residential and business
telecom market."
Business
In the first quarter, revenue from business customers was $148.6
million, a $4.5 million decrease from the same quarter in the
previous year. A decline in business long distance and data
revenue of $3.3 million and $6.3 million, respectively, was
partially offset by a $5.1 million increase in local revenue.
The number of local business access lines increased by 161 per
cent from 20,200 in the same period last year to 52,700 at March
31, 2003. Higher long distance volume contributed $14.8 million
of additional revenue partially offsetting a price decline in
the average revenue per minute (ARPM) of $18.1 million year over
year. Business data customers lost to bankruptcy or migration
onto their own networks, as well as pricing pressure, accounted
for most of the $6.3 million decline in data revenue.
Residential
Revenue from residential and SOHO customers was $53.6 million
for the quarter, a $4.9 million improvement compared to the same
quarter last year. Approximately 62,600 local residential lines
were added, increasing residential local revenue by $7.5 million
and bringing the total number of residential lines to 135,800 an
85 per cent increase from the same quarter in 2002. Growth in
local residential revenue continued to offset lower long
distance and data revenue. Long distance revenue declined $1.2
million in the first quarter compared to the same period last
year, due to a decrease in customers as a result of churn driven
by competitive long distance pricing and inappropriate incumbent
local exchange carrier (ILEC) winback activity. The decline was
offset by moderately higher residential ARPM caused by a mix
change in minutes to more international long distance traffic.
Residential data revenue fell $1.4 million versus the same
quarter in 2002, as the number of dial-up customers declined as
customers switched to a high-speed offering.
Added Linton, "While we appreciate the CRTC's recent crackdown
on the anti-competitive behaviour of ILECs we are not convinced
that they are fully complying with the decisions of the
Commission. We continue to encourage the Commission to be
vigilant. On the same front, we view the bundling of local
service and digital subscriber line (DSL) high-speed service as
a further way in which ILECs are limiting the growth of
competition. Call-Net has petitioned the CRTC to unbundle these
two services. A favourable decision will send a strong signal
that the CRTC is actively promoting competition particularly in
the local telephone market."
Operating expenditures and carrier costs
Operating costs for the first quarter of 2003 were $71.1
million, $2.0 million less than the first quarter of 2002, as a
result of lower human resource costs and capital taxes offset by
the new royalty payment to Sprint. Carrier costs for the first
quarter were $106.2 million, 9.1 per cent or $10.6 million less
than the previous year as a result of various favourable CRTC
decisions, network optimization and lower costs for competitive
services.
"The degree to which our carrier costs continue to decline is
largely dependent on the speed with which the CRTC makes
decisions and the ILECs comply," said Linton. "The Commission
must shorten the length of time it takes to render final
decisions. We are still awaiting the final disposition of
rulings initiated by the Commission in May of 2002. These delays
are unacceptable and significantly limit our ability to make the
necessary investments to expand our competitive service."
Outlook
Call-Net intends to continue to conservatively invest in its
'on-net' strategy focusing on sustaining cash flow self-
sufficiency and limiting near-term capital investment while
maximizing gross margin. It plans capital expenditures of $40 to
$50 million, focused primarily on the provisioning and billings
systems.
The Company will continue to focus on expanding its share of the
local residential service market, leveraging its relationship
with Sprint to win multi-national cross-border customers and
cost-effectively deploy specific new products. On the regulatory
front, we will continue to focus on deriving the full benefits
of 2002 CRTC decisions, to press the CRTC to unbundle local
telephone and high-speed access service and suggest further
changes necessary to promote competition in the market place.
About Call-Net Enterprises Inc.
Call-Net Enterprises Inc., whose corporate credit and senior
secured debt ratings are rated at 'B' by Standard & Poor's, is a
leading Canadian integrated communications solutions provider of
local and long distance voice services as well as data,
networking solutions and online services to businesses and
households across Canada. Call-Net, headquartered in Toronto,
owns and operates an extensive national fibre network, has over
134 co-locations in nine Canadian metropolitan markets, and
maintains network facilities in the United States and the United
Kingdom. For more information, visit the Company's Web sites at
http://www.callnet.caand http://www.sprintcanada.ca.
* * *
As previously reported, Standard & Poor's Ratings Services
lowered its corporate credit and senior secured debt ratings on
Call-Net Enterprises Inc., to 'B' from 'B+'. The outlook on the
Toronto, Ontario-based telecommunications operator is now
stable.
"The downgrade reflects continuing competitive pressures in both
the long-distance and data-service markets in general, resulting
in lower gross margins and cash flows from operations as
compared to 2001," said Standard & Poor's credit analyst Joe
Morin. "Current available sources of liquidity are only
sufficient to allow for marginal growth for the company."
The ratings actions also take into account cost savings from the
second-quarter implementation of workforce reductions,
curtailment of the company's network expansion program, and the
debt buyback by the company in September 2002.
CELLSTAR CORPORATION: Delays Asian IPO Because of SARS Outbreak
---------------------------------------------------------------
CellStar Corporation (Nasdaq: CLST), a value-added wireless
logistics services leader, announced that it will delay the
proposed initial public offering of its Greater China Operations
on the Stock Exchange of Hong Kong due to the spread of severe
acute respiratory syndrome (SARS), which has negatively impacted
the business environment and financial markets in Hong Kong and
China, as well as currently limited the Company's ability to
market the IPO.
"The SARS outbreak and associated travel restrictions have made
it impractical to conduct a road show designed to reach
potential investors in Asia, Europe and the U.S.," said Terry S.
Parker, CellStar Chief Executive Officer. "Additionally, the
Hong Kong stock market has become more volatile due to the
uncertainty of the impact of SARS on business in the region. As
a result, our financial advisors do not believe it is advisable
to launch the transaction at this time. Since we will be
seeking stockholder approval for the IPO, we will also be
delaying our annual stockholders' meeting until we have more
clarity on the timing for the offering."
Included in other assets in the Company's consolidated balance
sheet at February 28, 2003, were $3.4 million of capitalized
costs related to the IPO. If the IPO proceeds on a timely basis,
those costs will be accounted for as a reduction of the proceeds
upon the completion of the offering. Due to the delay, however,
a portion of these costs may be expensed during the second
quarter.
There can be no assurance that the IPO will occur. The
securities to be offered will not be registered under the
Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption
from registration requirements.
About CellStar Corporation
CellStar Corporation is a leading global provider of
distribution and value-added logistics services to the wireless
communications industry, with operations in Asia-Pacific, North
America, Latin America and Europe. CellStar facilitates the
effective and efficient distribution of handsets, related
accessories and other wireless products from leading
manufacturers to network operators, agents, resellers, dealers
and retailers. CellStar also provides activation services in
some of its markets that generate new subscribers for its
wireless carrier customers. For the year ended November 30,
2002, CellStar generated revenues of $2.2 billion. Additional
information about CellStar may be found on its Web site at
http://www.cellstar.com
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's lowered its corporate credit rating on CellStar Corp., to
'SD' (selective default) from 'CCC-' and removed its ratings
from CreditWatch, where they had been placed with negative
implications on Sept. 6, 2001.
At the same time, Standard & Poor's lowered its rating on the
subordinated debt to 'D' for the distributor of wireless
communications products. As of Aug. 31, 2001, total outstanding
debt was about $200 million.
CHIQUITA BRANDS: Total Debt Rises to $619 Million at March 31
-------------------------------------------------------------
Chiquita Brands International, Inc. (NYSE: CQB) reported first
quarter net income of $25 million, or $0.62 per share on 40
million new shares, for the three months ended March 31, 2003.
In the year-ago quarter, the company reported a net loss of $398
million, or $5.08 per share on 78 million old shares outstanding
prior to the company's financial restructuring in March 2002.
The year-ago results included charges of $431 million related to
the financial restructuring and the effect of a new accounting
standard for goodwill.
In the first quarter of 2003, the company changed its method of
accounting for certain production and logistics costs, to record
them as they are incurred, instead of deferring a portion to
later in the year. In the first quarter of 2002, $18 million of
costs were deferred.
FINANCIAL HIGHLIGHTS
* Net sales for the quarter were $471 million, up 6 percent
from the first quarter of 2002, as favorable European
exchange rates were partially offset by lower local banana
prices.
* Operating income from continuing operations in the first
quarter of 2003, which benefited from a $10 million
decrease in depreciation, was $38 million, compared to $23
million in pro forma 2002 results adjusted for the change
in cost accounting. (Historical first quarter 2002
operating income, not adjusted for the accounting change,
was $41 million.)
* Earnings from continuing operations before interest, taxes,
depreciation and amortization (EBITDA) in the first quarter
of 2003 were $45 million, up 13 percent from pro forma 2002
results adjusted for the cost accounting change.
(Historical first quarter 2002 EBITDA, not adjusted for the
accounting change, was $58 million.)
"We had a solid first quarter and are on plan," said Cyrus
Freidheim, chairman and chief executive officer. "We are
successfully managing through a tough pricing environment. We
are ahead of all important goals in the strategic plan we
outlined last September. We are divesting non-core assets. Our
cost-reduction programs are being achieved, even though they are
temporarily being offset in 2003 by industry cost increases in
purchased fruit, fuel and paper. Strategically and financially,
we are in a much better place than we were a year ago."
The company provides EBITDA information to help investors better
understand the company's financial results, particularly in
light of the Chapter 11 financial restructuring and its impact
on the company's interest and depreciation expenses.
Operating income for both 2003 and 2002 excludes earnings of the
Castellini Group, a U.S. wholesale distribution business sold in
December 2002, and Progressive Produce Corp., a California
packing and distribution company sold in January 2003, as well
as Chiquita Processed Foods (CPF), the company's vegetable
canning business. Chiquita announced in March 2003 that it had
signed a definitive agreement to sell CPF to Seneca Foods Corp.
ACCOUNTING CHANGE
In the first quarter of 2003, the company changed its method of
accounting for certain tropical production and logistics
expenses during interim periods. Previously, the company used a
standard costing method, which allocates those costs evenly
throughout the year based on volume. The company has now adopted
an actual costing method, which recognizes costs as incurred.
The accounting change has no effect on total-year costs or
results, and it has been approved by our auditors Ernst & Young
as a preferred method.
Under the former accounting policy, $18 million of costs
incurred in the 2002 first quarter were deferred as of March 31,
2002 and fully expensed by year-end. Had the new policy been in
effect last year, the company's net loss for the first quarter
of 2002 would have increased by $18 million to $416 million, or
$5.31 per share, on a pro forma basis.
SEGMENT RESULTS
Fresh Produce
Fresh Produce operating income was $37 million in the first
quarter, compared to $22 million last year on a pro forma basis
after adjusting for the cost accounting change. (Historical
fresh produce operating income for the first quarter of 2002,
before the accounting change, was $40 million.) The improvement
in 2003 operating results was primarily due to:
* $32 million benefit from favorable European exchange rates;
* $7 million from reduced logistics, advertising, and
personnel expenses;
* $3 million benefit from increased banana prices in North
America; and
* $10 million in lower depreciation expense, as a result of
reductions in asset carrying values made upon the company's
emergence from financial restructuring in 2002.
These favorable items were partially offset by:
* $20 million adverse effect from lower local pricing in
Europe;
* $11 million of higher costs associated with purchased
fruit, fuel and paper; and
* $6 million in restructuring costs and severance associated
with Atlanta AG and company cost reduction programs.
Local banana prices in the company's core European markets (EU-
15 countries, Norway and Switzerland) fell 9 percent from strong
prices in the first quarter of 2002. On a U.S. dollar-
denominated basis, core Europe banana prices increased 11
percent. Banana volume sold by the company in core Europe rose 3
percent on increased sales of fruit marketed under Chiquita's
second, non-premium label. The lower local European prices in
2003 resulted from several factors, including the stronger euro,
an increase in volume of second label fruit and a sharp decline
in prices in the United Kingdom that began in the second quarter
of 2002.
North American banana prices rose 3 percent in the first quarter
2003 from a year ago. The volume of bananas the company sold in
North America fell 5 percent from the year-ago quarter, because
of the flood in Costa Rica in December and the company's
decision to sell less fruit on the volatile spot market.
Local banana prices in Asia, where the company currently has a
small presence, fell 18 percent from strong 2002 levels. The
volume of bananas the company sold there rose 7 percent.
On March 27, 2003, Chiquita purchased the remaining equity
interests of Atlanta AG, which had $1.3 billion of net sales in
2002. Atlanta's first quarter 2003 net loss of $4 million,
primarily related to severance costs and asset write-downs, was
included in Chiquita's cost of sales because Atlanta was an
investment accounted for under the equity method prior to the
March 27 acquisition. For the first quarter of 2002, Atlanta's
net income was breakeven. Restructuring at Atlanta continues,
and the company anticipates there may be additional charges
related to the restructuring this year.
Starting with the second quarter 2003, as a wholly owned
subsidiary, Atlanta's results will be fully consolidated in
Chiquita's financial statements, increasing revenue
significantly.
Processed Foods
As noted above, the company has agreed to sell its vegetable
canning business, which comprised more than 90 percent of net
sales in the Processed Foods segment. The vegetable canning
business is reported as a discontinued operation in the
accompanying financial statements. Remaining operations in the
Processed Foods segment consist of processed fruit ingredient
products, which are produced in Latin America and sold in North
America, Europe and the Far East, and other consumer products,
primarily edible oils sold through a joint venture in Honduras.
First quarter 2003 net sales for these remaining operations were
$10 million, up from $8 million in 2002. Operating income was
approximately $1 million in the first quarter of both years.
ARMUELLES DIVISION
As announced earlier this week, the company signed an agreement
to sell the assets of its Puerto Armuelles Fruit Co. (PAFCO) for
approximately $20 million to a worker cooperative led by members
of the Armuelles banana workers' union. PAFCO will use all of
the funds to pay workers' severance and cover certain other
liabilities. The agreement includes a 10-year contract to supply
Chiquita with fruit at market prices. The company expects the
transaction to close in the second quarter.
COST REDUCTIONS
As previously reported, during the fourth quarter of 2002
Chiquita initiated a series of global performance-improvement
programs to reduce costs over three years. The company
anticipated that its gross cost reductions would be partially
offset by implementation expenses and possible cost increases
affecting the industry. The original target to reduce gross
costs by $150 million on an annual basis by the end of 2005
included improvements in Chiquita Processed Foods, the company's
vegetable canning business, which is now being sold. The new
2005 targets, adjusted to exclude the canning business, are $110
million in gross cost reductions and $70 million in net cost
reductions, after potential industry offsets and before
implementation costs. The original and new annual targets are
presented in Exhibit C. For 2003, the company expects to have
gross cost reductions of $40 million. As of March 31, the
company had already taken actions to reduce gross costs by $25
million in 2003. The sale of the Armuelles division will result
in a reduction in cost of approximately $8 million for the
remainder of the year. As previously announced, the company
expects its 2003 gross cost reductions to be offset by
approximately $25 million of increased costs for purchased
fruit, fuel and paper. Most of this increased cost is expected
to occur in the first half of the year. In addition, Chiquita
expects implementation expenses, such as severance, to be
approximately $10 million to $15 million.
ASSET SALES
In September 2002, the company set a goal to divest $100-150
million of non-core assets by the end of 2005. By March 31,
2003, Chiquita had sold assets for proceeds totaling $106
million, including the assumption of $24 million in debt by the
acquirers. The sale of CPF will bring in an additional $110
million of cash and approximately 968,000 shares of Seneca
preferred stock convertible into an equal number of Seneca
series A common stock, worth about $17 million, based on
Seneca's April 30, 2003 closing price. Seneca will also assume
CPF debt, which stood at $88 million at March 31, 2003. CPF's
debt is included in liabilities of discontinued operations on
Chiquita's balance sheet at March 31, 2003. The company expects
to close the transaction during the second quarter.
DEBT
In September 2002, the company set a goal of reducing total debt
to $400 million by the end of 2005. On a quarterly basis, the
company's debt fluctuates because of seasonal capital needs. The
company's total debt, including CPF, rose to $619 million at
March 31, 2003 from $517 million at Dec. 31, 2002.
The increase results primarily from:
* a new $65 million term loan to repay Atlanta's lenders;
* a $14 million purchase in January 2003 of a ship previously
under operating lease; and
* the normal increase in the working capital needs of the
company and its canning operations during the high season.
The completion of the sale of the company's canning business and
expected operating cash flow in 2003 will provide Chiquita with
the ability to reduce total debt to $400 million or less by year
end.
Chiquita Brands International is a leading international
marketer, producer and distributor of high-quality fresh and
processed foods. The company's Chiquita Fresh Group is one of
the largest banana producers in the world and a major supplier
of bananas in North America and Europe. The company also
distributes and markets a variety of other fresh fruits and
vegetables. In addition, Chiquita Processed Foods is the largest
processor of private-label canned vegetables in the United
States. The company has entered into a definitive agreement to
sell CPF to Seneca Foods Corp. For more information, visit
http://www.chiquita.com
As reported in the Troubled Company Reporter's April 22, 2003
edition, Standard & Poor's Ratings Services assigned its 'B-'
rating to Chiquita Brands' $250 million senior unsecured notes
due 2009. Standard & Poor's also assigned its 'B' corporate
credit rating to Chiquita. The outlook is positive.
The senior unsecured notes are rated one notch below the
corporate credit rating, reflecting their junior position to the
large amount of secured debt and priority debt at the operating
subsidiaries.
COLUMBIA LABORATORIES: David Knott Discloses 5% Equity Stake
------------------------------------------------------------
David M. Knott beneficially owns 1,797,728 shares of the common
stock of Columbia Laboratories, Inc., representing 5.0% of the
outstanding common stock of the Company. Mr. Knott holds sole
voting and dispositive powers over 1,196,628 such shares. He
shares voting powers over 571,800 shares, and shares dispositive
powers over 601,100 shares.
The Company's December 31, 2002 balance sheet shows that total
liabilities eclipsed its total assets by over $8 million.
Columbia Laboratories, Inc., is an international pharmaceutical
company dedicated to research and development of women's health
care and endocrinology products, including those intended to
treat infertility, dysmenorrhea, endometriosis and hormonal
deficiencies. Columbia is also developing hormonal products for
men and a buccal delivery system for peptides. Columbia's
products primarily utilize the company's patented Bioadhesive
Delivery System (BDS) technology.
CONSECO FINANCE: Unsecured Committee Pursuing Mill Creek Claims
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of the Conseco
Finance Corp. Debtors seeks the Court's authority to pursue
certain claims on the CFC Debtors' against Conseco, Inc. and
U.S. Bank. Specifically, the CFC Committee wants to void and
terminate the CFC Debtors' pledge of Mill Creek Bank shares to
Shawmut Bank Connecticut, now known as Fleet Boston Financial
Corp., and the Bank of New York Company Inc. and to recover
shares from U.S. Bank.
On February 18, 1993, Conseco, Inc. issued $200,000,000 8-1/8%
Senior Notes pursuant to an Indenture. On December 15, 1994,
Conseco also issued $200,000,000 10-1/2% Senior Notes pursuant
to an Indenture. Currently, the securities outstanding under
the Indentures total $89,000,000 and are called the Public
Parity Debt. The Public Parity Debt is primarily secured by
assets pledged by Conseco including:
-- CIHC Inc. stock;
-- CFC stock;
-- Conseco Capital Management stock; and
-- an intercompany note from CFC to CIHC.
Pursuant to the Indentures, Conseco granted a lien on its
property or on the capital stock of any subsidiary to secure the
Primary Debt. The Senior Notes Holders would be granted a lien
pari passu to the lien securing the lien on the Primary Debt.
That pari passu lien was intended to survive as long as the lien
on the Primary Debt.
Pursuant to a Pledge Agreement dated December 27, 2000, CFC
pledged the Mill Creek shares to U.S. Bank to secure the
swingline and cash management facilities amounting to
$125,000,000.
David D. Cleary, Esq., at Greenberg Traurig, in Chicago,
explains that Conseco allegedly granted the Parity Public Debt
Holders an equal and ratable security interest in the Mill Creek
Shares pursuant to the Indenture Sharing Provision. The Pledge
Agreement also purported to pledge the Shares to secure
Conseco's obligations to the Holders created by the Indentures.
The Pledge Agreement designated U.S. Bank as the Collateral
Agent for U.S. Bank and the Indenture Trustees. Once the Pledge
Agreement was executed, CFC delivered the Mill Creek Shares to
U.S. Bank.
In an April 7, 2003 letter, the CFC Committee demanded that the
CFC Debtors bring a complaint against the Defendants to void and
terminate the pledge of Mill Creek Shares. On April 11, 2003,
the CFC Debtors responded that they would not initiate this
action or consent to the CFC Committee's standing to pursue the
Mill Creek Claims.
Mr. Cleary explains that the CFC Committee has not heard
justification why the CFC Debtors will not pursue the Mill Creek
Claims or consent to the CFC Committee's standing to pursue
them. The CFC Committee believes that the Mill Creek Claims
could return approximately $89,000,000 to the CFC Debtors'
estates. This demonstrates good cause to allow the CFC Committee
to pursue the Mill Creek Claims. (Conseco Bankruptcy News, Issue
No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONSECO FINANCE: S&P Lowers 134 Related Transaction Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on 10
classes from Conseco Finance Corp.-related manufactured housing
transactions and removed them from CreditWatch with negative
implications. At the same time, ratings are affirmed on 72 other
Conseco-related classes and removed from CreditWatch.
Concurrently, the ratings on 134 classes from Conseco-related
manufactured housing transactions are lowered and removed from
CreditWatch.
The ratings on all classes from Conseco-related manufactured
housing transactions issued in 2002 remain on CreditWatch due to
the lack of performance history associated with the underlying
collateral pools. In addition, the ratings on classes M-1, M-2,
and B-1 from Conseco Manufactured Housing Senior/Subordinate
Pass-Through Trust 2000-3 remain on CreditWatch while Standard &
Poor's completes its evaluation regarding the sufficiency of
credit support added to the transaction post closing. All
ratings were originally placed on CreditWatch Oct. 21, 2002.
The raised ratings reflect the increased credit enhancement
levels relative to expected remaining losses. The affirmed
ratings reflect the robust credit support that is available to
support the classes at their original rating levels. Although
projected lifetime cumulative net losses for all transactions
significantly exceed original expectations, credit enhancement
levels in some series issued in earlier vintages continue to
provide adequate protection to investors in order to maintain
ratings at their original levels. In some cases, credit
enhancement levels as a multiple of expected net losses over the
remaining life of the transactions have increased to levels
sufficient to support higher ratings. Despite higher projected
losses, the buildup of credit enhancement in seasoned
transactions was achieved through the sequential pay structure
of the deals in which subordination levels supporting the
senior classes continue to build as the collateral pools and the
senior classes pay down.
The lowered ratings reflect the continued poor performance of
the underlying pools of manufactured housing contracts and the
resulting deterioration of credit enhancement, with series
issued in recent vintages displaying greater signs of stress
relative to series issued in previous vintages.
The performance trends associated with the pools of
manufacturing housing contracts, which support the rated
certificates, have deteriorated during the past two years, with
more pronounced deterioration experienced during the past six
months. Conseco announced in October 2002 that it would
discontinue its conventional chattel paper financing business,
limiting its ability to liquidate repossessed manufactured
housing collateral through retail channels and, consequently,
causing it to be more reliant on wholesale liquidation channels.
Shortly thereafter, Conseco suspended all of its manufactured
home financing and assumption programs in November 2002. The
suspension of its manufactured home lending business, in
conjunction with the depressed repossession resale market,
resulted in the further weakening of recovery rates associated
with these transactions. Recovery rates on all of Conseco's
manufactured housing transactions have dissipated substantially
during the past six months, averaging below 20%. Also, in some
months, liquidation proceeds have been insufficient to cover
liquidation expenses for some transactions.
Conseco also discontinued its loan assumption program in
November 2002. This loss mitigation strategy allowed delinquent
loan balances to be assumed by new obligors, typically lower
quality obligors. The assumed receivables not only remained in
the pool but were also treated as being current. Consequently,
the discontinuation of the loan assumption program resulted in
higher delinquencies and repossessions, adversely affecting
collateral performance for all transactions.
Furthermore, based on an interim order issued by the bankruptcy
court, the servicing fee paid to Conseco was increased to 125
basis points (bps) from 50 bps and raised to a senior position
in the payment priority established for each manufactured
housing deal after Conseco's bankruptcy filing, decreasing the
amount of excess spread available to cover losses.
The cumulative impact on transaction performance of these
events, including the suspension of Conseco's assumption
program, the exit of Conseco from the manufactured housing
originations business, and, lastly, Conseco's bankruptcy filing,
has caused further increases in delinquencies, repossessions,
and loss severities. Conseco's transactions, in particular,
series issued in the 1999 and 2000 vintages, displayed steep
deterioration in terms of losses during the past six months.
Cumulative net losses as a percentage of the respective original
pool balances have increased significantly, rising by an average
of 45% and 125% in the 1999 and 2000 transactions, respectively,
since September 2002. Moreover, monthly yield generated by the
underlying collateral for all transactions has been insufficient
to cover monthly net losses, thereby depleting the credit
enhancement, which is available to cover future losses. As a
result, most of the transactions have experienced principal
carryover shortfalls.
The sale of Conseco was approved by the bankruptcy court on
March 14, 2003 as follows: Conseco's Mill Creek Bank was
acquired by GE Consumer Finance, a unit of the General Electric
Co., and the rest of Conseco's finance unit (including the
manufactured housing servicing platform) was sold to CFN
Investment Holdings LLC, a joint venture between Fortress
Investment Group LLC, J.C. Flowers & Co. LLC, and Cerberus
Capital Management L.P. The sale of Conseco is expected to close
by May 2003. According to the purchase agreement, the servicing
fee on the manufactured housing deals will be 125 bps for the
first 12 months and, thereafter, 115 bps per annum, and will now
be senior in the payment priority waterfall established for each
deal. Since there will be no physical transfer of servicing
(only transfer of ownership of the servicing platform),
uncertainty regarding servicing quality is expected to
dissipate.
On Sept. 26, 2002, Standard & Poor's lowered its ratings on 83
classes of 11 Conseco-related transactions issued in 1999 and
2000 based on the adverse performance trends displayed by the
underlying collateral and dissipating credit support. On Oct.
21, 2002, the ratings on all manufactured housing classes
(except the guaranteed B-2 classes, which were weak-linked to
the rating of Conseco as guarantor) issued between 1995 and 2002
were placed on CreditWatch negative following Conseco's
announcement that it would discontinue its conventional chattel
paper financing business and focus on its land-home business
while continuing to support chattel paper lending exclusively
through the FHA Title I program.
Subsequently, Standard & Poor's lowered its ratings on all of
the corporate guaranteed B-2 classes to 'D' on Dec. 23, 2002 and
March 11, 2003 due to interest shortfalls experienced by these
classes.
RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH
Green Tree Financial Corp. Man Hsg Trust
Rating
Series Class To From
------ ----- -- ----
1995-2 A-6 AAA AAA/Watch Neg
1995-3 A-6 AAA AAA/Watch Neg
1995-4 A-5 AAA AAA/Watch Neg
1995-4 A-6 AAA AAA/Watch Neg
1995-4 B-1 BBB+ BBB+/Watch Neg
1995-5 A-6 AAA AAA/Watch Neg
1995-6 A-5 AAA AAA/Watch Neg
1995-6 A-6 AAA AAA/Watch Neg
1995-6 M-1 AA- AA-/Watch Neg
1995-6 B-1 BBB+ BBB+/Watch Neg
1995-7 A-5 AAA AAA/Watch Neg
1995-7 A-6 AAA AAA/Watch Neg
1995-7 B-1 BBB+ BBB+/Watch Neg
1995-8 A-6 AAA AAA/Watch Neg
1995-8 B-1 BBB+ BBB+/Watch Neg
1995-9 A-5 AAA AAA/Watch Neg
1995-9 A-6 AAA AAA/Watch Neg
1995-9 M-1 AA- AA-/Watch Neg
1995-9 B-1 BBB+ BBB+/Watch Neg
1995-10 A-6 AAA AAA/Watch Neg
1995-10 M-1 AA- AA-/Watch Neg
1995-10 B-1 BBB+ BBB+/Watch Neg
1996-1 A-4 AAA AAA/Watch Neg
1996-1 A-5 AAA AAA/Watch Neg
1996-1 B-1 BBB+ BBB+/Watch Neg
1996-2 A-4 AAA AAA/Watch Neg
1996-2 A-5 AAA AAA/Watch Neg
1996-2 M-1 AA- AA-/Watch Neg
1996-3 A-5 AAA AAA/Watch Neg
1996-3 A-6 AAA AAA/Watch Neg
1996-3 M-1 AA- AA-/Watch Neg
1996-4 A-6 AAA AAA/Watch Neg
1996-4 A-7 AAA AAA/Watch Neg
1996-5 A-6 AAA AAA/Watch Neg
1996-5 A-7 AAA AAA/Watch Neg
1996-6 A-6 AAA AAA/Watch Neg
1996-6 M-1 AA- AA-/Watch Neg
1996-7 A-6 AAA AAA/Watch Neg
1996-7 M-1 AA- AA-/Watch Neg
1996-8 A-6 AAA AAA/Watch Neg
1996-8 A-7 AAA AAA/Watch Neg
1996-9 A-5 AAA AAA/Watch Neg
1996-9 A-6 AAA AAA/Watch Neg
1996-9 M-1 AA- AA-/Watch Neg
1996-10 A-5 AAA AAA/Watch Neg
1996-10 A-6 AAA AAA/Watch Neg
1996-10 M-1 AA- AA-/Watch Neg
1997-4 A-5 AAA AAA/Watch Neg
1997-4 A-6 AAA AAA/Watch Neg
1997-4 A-7 AAA AAA/Watch Neg
1997-4 M-1 AA- AA-/Watch Neg
1997-6 A-6 AAA AAA/Watch Neg
1997-6 A-7 AAA AAA/Watch Neg
1997-6 A-8 AAA AAA/Watch Neg
1997-6 A-9 AAA AAA/Watch Neg
1997-6 A-10 AAA AAA/Watch Neg
1997-7 A-6 AAA AAA/Watch Neg
1997-7 A-7 AAA AAA/Watch Neg
1997-7 A-8 AAA AAA/Watch Neg
1997-7 A-9 AAA AAA/Watch Neg
1997-7 A-10 AAA AAA/Watch Neg
1997-8 A-1 AAA AAA/Watch Neg
1998-2 A-5 AAA AAA/Watch Neg
1998-2 A-6 AAA AAA/Watch Neg
1998-5 A-1 AAA AAA/Watch Neg
Manufactured Housing Senior/Sub Pass-Thru Trust
Rating
Series Class To From
------ ----- -- ----
1999-1 A-3 AA+ AA+/Watch Neg
1999-3 A-4 AA+ AA+/Watch Neg
1999-4 A-4 AA AA/Watch Neg
Manufactured Hsg Contract Sr/Sub Pass-thru Certs
Rating
Series Class To From
------ ----- -- ----
2000-6 A-2 AA AA/Watch Neg
2001-1 A-2 AAA AAA/Watch Neg
2001-3 A-1 AAA AAA/Watch Neg
2001-4 A-1 AAA AAA/Watch Neg
RATINGS RAISED AND REMOVED FROM CREDITWATCH
Green Tree Financial Corp. Man Hsg Trust
Rating
Series Class To From
------ ----- -- ----
1995-2 M-1 AAA AA-/Watch Neg
1995-2 B-1 AA BBB+/Watch Neg
1995-3 M-1 AAA AA-/Watch Neg
1995-3 B-1 AAA BBB+/Watch Neg
1995-4 M-1 AA+ AA/Watch Neg
1995-5 M-1 AAA AA-/Watch Neg
1995-5 B-1 A+ BBB+/Watch Neg
1995-7 M-1 AA AA-/Watch Neg
1995-8 M-1 AAA AA-/Watch Neg
1996-1 M-1 AA AA-/Watch Neg
RATINGS LOWERED AND REMOVED FROM CREDITWATCH
Green Tree Financial Corp. Man Hsg Trust 1996-2
Rating
Class To From
----- -- ----
B-1 BBB- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-3
Rating
Class To From
----- -- ----
B-1 BBB- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-4
Rating
Class To From
----- -- ----
M-1 A AA-/Watch Neg
B-1 B+ BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-5
Rating
Class To From
----- -- ----
M-1 A+ AA-/Watch Neg
B-1 B BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-6
Rating
Class To From
----- -- ----
B-1 B+ BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-7
Rating
Class To From
----- -- ----
B-1 BB+ BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-8
Rating
Class To From
----- -- ----
M-1 A+ AA-/Watch Neg
B-1 B- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-9
Rating
Class To From
----- -- ----
B-1 BB BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1996-10
Rating
Class To From
----- -- ----
B-1 BB- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1997-4
Rating
Class To From
----- -- ----
B-1 BB BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1997-6
Rating
Class To From
----- -- ----
M-1 A+ AA-/Watch Neg
B-1 B+ BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1997-7
Rating
Class To From
----- -- ----
M-1 A+ AA-/Watch Ne
B-1 B+ BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1997-8
Rating
Class To From
----- -- ----
M-1 A+ AA-/Watch Neg
B-1 B+ BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1998-2
Rating
Class To From
----- -- ----
M-1 BBB+ AA/Watch Neg
B-1 B- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1998-3
Rating
Class To From
----- -- ----
A-5 AA+ AAA/Watch Neg
A-6 AA+ AAA/Watch Neg
M-1 BBB+ AA/Watch Neg
B-1 B- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1998-5
Rating
Class To From
----- -- ----
M-1 A- AA-/Watch Neg
B-1 B- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1998-6
Rating
Class To From
----- -- ----
A-5 AA+ AAA/Watch Neg
A-6 AA+ AAA/Watch Neg
A-7 AA+ AAA/Watch Neg
A-8 AA+ AAA/Watch Neg
M-1 BBB+ AA-/Watch Neg
M-2 BB+ A/Watch Neg
B-1 B- BBB+/Watch Neg
Green Tree Financial Corp. Man Hsg Trust 1998-8
Rating
Class To From
----- -- ----
A-1 AA- AAA/Watch Neg
M-1 BBB+ AA/Watch Neg
M-2 BB A-/Watch Neg
B-1 CCC BBB/Watch Neg
Manufactured Housing Senior/Sub Pass-Thru Trust 1999-1
Rating
Class To From
----- -- ----
A-4 A AA+/Watch Neg
A-5 A AA+/Watch Neg
A-6 A AA+/Watch Neg
A-7 A AA+/Watch Neg
M-1 BBB- A-/Watch Neg
M-2 B BBB-/Watch Neg
B-1 CCC BB-/Watch Neg
Manufactured Housing Senior/Sub Pass-Thru Trust 1999-2
Rating
Class To From
----- -- ----
A-3 A AA+/Watch Neg
A-4 A AA+/Watch Neg
A-5 A AA+/Watch Neg
A-6 A AA+/Watch Neg
A-7 A AA+/Watch Neg
M-1 BB+ A-/Watch Neg
M-2 B BBB-/Watch Neg
B-1 CCC BB-/Watch Neg
Manufactured Housing Senior/Sub Pass-Thru Trust 1999-3
Rating
Class To From
----- -- ----
A-5 BBB+ AA+/Watch Neg
A-6 BBB+ AA+/Watch Neg
A-7 BBB+ AA+/Watch Neg
A-8 BBB+ AA+/Watch Neg
A-9 BBB+ AA+/Watch Neg
M-1 BB- A-/Watch Neg
M-2 B- BBB-/Watch Neg
B-1 CCC- BB-/Watch Neg
Manufactured Housing Senior/Sub Pass-Thru Trust 1999-4
Rating
Class To From
----- -- ----
A-5 BBB- AA/Watch Neg
A-6 BBB- AA/Watch Neg
A-7 BBB- AA/Watch Neg
A-8 BBB- AA/Watch Neg
A-9 BBB- AA/Watch Neg
M-1 B- BBB+/Watch Neg
M-2 CCC BB+/Watch Neg
B-1 CCC- B+/Watch Neg
Manufactured Housing Senior/Sub Pass-Thru Trust 1999-5
Rating
Class To From
----- -- ----
A-3 BBB- AA-/Watch Neg
A-4 BBB- AA-/Watch Neg
A-5 BBB- AA-/Watch Neg
A-6 BBB- AA-/Watch Neg
M-1 B- BBB/Watch Neg
M-2 CCC BB/Watch Neg
B-1 CCC- B+/Watch Neg
Manufactured Housing Contract Sr/Sub Pass-Thru Tr 1999-6
Rating
Class To From
----- -- ----
A-1 BBB- A/Watch Neg
M-1 B- BBB/Watch Neg
M-2 CCC BB/Watch Neg
B-1 CCC- B+/Watch Neg
Manufactured Housing Sen/Sub Pass-thru Trust 2000-2
Rating
Class To From
----- -- ----
A-3 BBB- AA/Watch Neg
A-4 BBB- AA/Watch Neg
A-5 BBB- AA/Watch Neg
A-6 BBB- AA/Watch Neg
M-1 B- A-/Watch Neg
M-2 CCC BB+/Watch Neg
B-1 CCC- BB-/Watch Neg
Conseco MH Senior/Subordinate Pass-Through Trust 2000-3
Rating
Class To From
----- -- ----
A BBB- AA+/Watch Neg
Manufactured Hsg contract Sr/Sub Pass-thru Certs Ser 2000-4
Rating
Class To From
----- -- ----
A-3 BBB- AA/Watch Neg
A-4 BBB- AA/Watch Neg
A-5 BBB- AA/Watch Neg
A-6 BBB- AA/Watch Neg
M-1 B- A/Watch Neg
M-2 CCC BBB/Watch Neg
B-1 CCC- BB/Watch Neg
Manufactured Hsg contract Sr/Sub Pass-thru Certs Ser 2000-5
Rating
Class To From
----- -- ----
A-3 BBB- AA/Watch Neg
A-4 BBB- AA/Watch Neg
A-5 BBB- AA/Watch Neg
A-6 BBB- AA/Watch Neg
A-7 BBB- AA/Watch Neg
M-1 B- A/Watch Neg
M-2 CCC BBB/Watch Neg
B-1 CCC- BB/Watch Neg
Manufactured Hsg contract Sr/Sub Pass-thru Certs Ser 2000-6
Rating
Class To From
----- -- ----
A-3 BBB+ AA/Watch Neg
A-4 BBB+ AA/Watch Neg
A-5 BBB+ AA/Watch Neg
M-1 BB+ A/Watch Neg
M-2 B BBB/Watch Neg
B-1 B- BB/Watch Neg
Manufactured Hsg Contract Sr/Sub Pass-Thru Certs Ser 2001-1
Rating
Class To From
----- -- ----
A-3 A AAA/Watch Neg
A-4 A AAA/Watch Neg
A-5 A AAA/Watch Neg
A-IO A AAA/Watch Neg
M-1 BBB+ AA/Watch Neg
M-2 BB A/Watch Neg
B-1 B BBB/Watch Neg
Manufactured Hsg Contract Sr/Sub Pass-Thru Certs Ser 2001-2
Rating
Class To From
----- -- ----
A-IO A AAA/Watch Neg
M-1 BBB+ AA/Watch Neg
M-2 BBB- A+/Watch Neg
B-1 B+ BBB/Watch Neg
Manufactured Housing Contract Sr/Sub Pass-Thru Certificates
Series 2001-3
Rating
Class To From
----- -- ----
A-2 A+ AAA/Watch Neg
A-3 A+ AAA/Watch Neg
A-4 A+ AAA/Watch Neg
A-IO A+ AAA/Watch Neg
M-1 A- AA/Watch Neg
M-2 BBB- A/Watch Neg
B-1 BB- BBB/Watch Neg
Manufactured Housing Contract Sr/Sub Pass-Thru Certificates
Series 2001-4
Rating
Class To From
----- -- ----
A-2 A+ AAA/Watch Neg
A-3 A+ AAA/Watch Neg
A-4 A+ AAA/Watch Neg
A-IO A+ AAA/Watch Neg
M-1 A- AA/Watch Neg
M-2 BBB- A/Watch Neg
B-1 BB- BBB/Watch Neg
RATINGS REMAIN ON CREDITWATCH
Conseco MH Senior/Subordinate Pass-Through Trust 2000-3
Class Rating
----- ------
M-1 A/Watch Neg
M-2 BBB/Watch Neg
B-1 BB/Watch Neg
Manufactured Housing Contract Sr/Sub Pass-Thru Certificates
Series 2002-1
Class Rating
----- ------
A AAA/Watch Neg
M-1-A AA-/Watch Neg
M-1-F AA-/Watch Neg
M-2 A-/Watch Neg
B-1 BBB/Watch Neg
Manufactured Housing Contract Sr/Sub Pass-Through
Certificates Series 2002-2
Class Rating
----- ------
A-2 AAA/Watch Neg
A-IO AAA/Watch Neg
M-1 AA/Watch Neg
M-2 A/Watch Neg
B-1 BBB/Watch Neg
CONSECO INC: Wants Court to Disallow CFC Intercompany Claims
------------------------------------------------------------
Conseco Inc., CIHC Inc., CTIHC Inc., and Partners Health Group
object to 14 Claims. The Holding Company Debtors tell Judge
Doyle that the Claims lack merit and should be disallowed. All
the disputed Claims arise from intercompany transactions. Ten
of the Claims are premised on amounts allocated to the CFC
Debtors' employees' participation in the Holding Company
Debtors' defined benefit pension plans, health care plans and
401(k) plans. The Holding Company Debtors contend that based on
their books and records, the amounts were properly allocated to
the CFC Debtors.
The Claims aggregate $400,000,000 in value:
Creditor Party Amount
-------- ----- ------
Conseco Finance Corp. Conseco Inc. $30,271,727
Conseco Finance Corp. CIHC Inc. 337,630,130
12 Others 32,098,143
-----------
Total $400,000,000
Three of the Claims are not enforceable against the Holding
Company Debtors or their property under applicable law.
One Claim should be disallowed because property is recoverable
from the CFC Debtors and CFC is a transferee of a transfer
avoidable under the Bankruptcy Code. The CFC Debtors have not
paid the amount or turned over property for which it is liable,
rendering the claim invalid. (Conseco Bankruptcy News, Issue
No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONSUMERS ENERGY: Issues $625 Million of First Mortgage Bonds
-------------------------------------------------------------
CMS Energy (NYSE: CMS) announced that its principal subsidiary,
Consumers Energy, has issued $625 million of first mortgage
bonds in a private offering to institutional investors in two
separate series. Net proceeds to Consumers Energy were
approximately $619 million and were used to redeem $250 million
of senior notes due in 2008. The remaining proceeds will be
used for general corporate purposes that may include paying down
additional debt. Series A was $250 million of 4.25 percent
coupon bonds due in April 2008. Series B was $375 million of
5.375 percent coupon bonds due in April 2013. Lead managers
were Banc One Capital Markets, Inc. and Barclays Capital. Co-
managers included JPMorgan, Comerica Securities and Wachovia
Securities.
"We are pleased with the strong response to this bond offering.
The high level of interest indicates that investors are
beginning to recognize the progress we are making with our back-
to-basics strategy," said Thomas J. Webb, CMS Energy's executive
vice president and chief financial officer.
As previously reported, Fitch Ratings has assigned ratings of
'BB+' to Consumers Energy Co.'s $250 million issuance of 4.25%
first mortgage bonds, due April 15, 2008, and $375 million
issuance of 5.375% FMBs, due April 15, 2013. The bonds are being
issued to qualified institutional buyers under Rule 144A of the
Securities Act. Proceeds from the issuance will be used to repay
debt and for general corporate purposes. On April 23, 2003,
Fitch affirmed the outstanding debt ratings of Consumers and
removed them from Rating Watch Negative following a review of
the company's financial and operating performance and business
plans. The Rating Outlook is Stable.
CMS Energy Corporation is an integrated energy company, which
has as its primary business operations an electric and natural
gas utility, natural gas pipeline systems, and independent power
generation. For more information visit http://www.cmsenergy.com/
DebtTraders reports that Consumers Energy Co.'s 6.000% bonds due
2005 (CMS05USR2) are trading at 81.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CMS05USR2for
real-time bond pricing.
CUMMINS INC: S&P Places BB+ Synthetic Deal Rating on Watch Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its rating on
Structured Asset Trust Unit Repackagings Cummins Engine Co.
Debenture-Backed Series 2001-4 (SATURNS 2001-4) on CreditWatch
with negative implications.
The rating on SATURNS 2001-4, a swap-independent synthetic
transaction, is weak-linked to the underlying collateral,
Cummins Inc.'s debt. The CreditWatch placement follows the
placement of Cummins Inc.'s senior unsecured debt ratings on
CreditWatch with negative implications April 15, 2003.
RATING PLACED ON CREDITWATCH NEGATIVE
SATURNS 2001-4
$28 million Cummins Engine Co. debenture-backed series 2001-4
Rating
Class To From
----- -- ----
Units BB+/Watch Neg BB+
CWMBS INC: Fitch Assigns BB/B Ratings to Classes B-3 & B-4
----------------------------------------------------------
CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage
Pass-Through Trust 2003-14 classes A-1 through A-25, PO and A-R
(senior certificates, $486,000,000) are rated 'AAA' by Fitch
Ratings. In addition, Fitch rates class M ($6,500,000) 'AA',
class B-1 ($3,000,000) 'A', class B-2 ($1,750,000) 'BBB', class
B-3 ($1,000,000) 'BB', and class B-4 ($750,000) 'B'.
The 'AAA' rating on the senior certificates reflects the 2.80%
subordination provided by the 1.30% class M, 0.60% class B-1,
0.35% class B-2, 0.20% privately offered class B-3, 0.15%
privately offered class B-4 and 0.20% privately offered class B-
5 (which is not rated by Fitch). Classes M, B-1, B-2, B-3 and B-
4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, based
on their respective subordination.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud and
special hazard losses in limited amounts. In addition, the
ratings also reflect the quality of the underlying mortgage
collateral, strength of the legal and financial structures and
the master servicing capabilities of Countrywide Home Loans
Servicing LP, a direct wholly owned subsidiary of Countrywide
Home Loans, Inc.
The certificates represent an ownership interest in a pool of
conventional, fully amortizing, 30-year fixed-rate mortgage
loans, secured by first liens on one- to four-family residential
properties. The mortgage pool demonstrates an approximate
weighted-average original loan-to-value ratio (OLTV) of 68.73%.
Approximately 63.50% of the loans were originated under a
reduced documentation program. Cash-out refinance loans
represent 14.48% of the mortgage pool and second homes 2.77%.
The average loan balance is $471,236. The three states that
represent the largest portion of mortgage loans are California
(49.97%), New York (4.48%) and New Jersey (3.95%).
None of the mortgage loans originated in the state of Georgia
are high cost or are governed under the Georgia Fair Lending
Act.
Approximately 96.22% and 3.78% of the mortgage loans were
originated under CHL's Standard Underwriting Guidelines and
Expanded Underwriting Guidelines, respectively. Mortgage loans
underwritten pursuant to the Expanded Underwriting Guidelines
may have higher loan-to-value ratios, higher loan amounts,
higher debt-to-income ratios and different documentation
requirements than those associated with the Standard
Underwriting Guidelines. In analyzing the collateral pool, Fitch
adjusted its frequency of foreclosure and loss assumptions to
account for the presence of these attributes.
CWMBS purchased the mortgage loans from CHL and deposited the
loans in the trust, which issued the certificates, representing
undivided beneficial ownership in the trust. For federal income
tax purposes, an election will be made to treat the trust fund
as multiple real estate mortgage investment conduits.
ENRON: Demands Transaction & Termination Payments from Tribune
--------------------------------------------------------------
Enron North America Corp. and Tribune Company are parties to
certain financially settled swap transactions involving the
price of newsprint. The Transactions are governed by the
International Swap Dealers Association, Inc. Master Agreement,
dated as of August 21, 1997. According to Melanie Gray, Esq.,
at Weil, Gotshal & Manges LLP, in New York, included as part of
the ISDA Agreement is a separate Schedule and a Credit Support
Annex executed by the parties setting forth the modifications
and adjustments to certain of the terms contained in the ISDA
Agreement, as well as the credit support terms of the
Transactions.
As contemplated by the ISDA Agreement, the parties entered into
three separate Confirmations evidencing the specific terms and
conditions of the Transactions. The Confirmations set forth,
among other things, the fixed price Tribune was to pay, the
quantity of newsprint that is the reference of each Transaction,
the terms of each Transaction and the schedule of payment dates.
Ms. Gray notes that although ENA was performing under the
Transactions, by letter dated December 11, 2001, Tribune
informed ENA that it was, among other things, terminating the
Transactions as a result of an alleged Event of Default. The
Termination Notice designated December 12, 2001 as the Early
Termination Date.
The ISDA Agreement provides that, upon an Early Termination, the
future obligations due under the Confirmation are to be valued
against prevailing market prices, calculated by the Non-
Defaulting Party and presented to the Defaulting Party.
However, Ms. Gray tells Judge Gonzalez that Tribune failed to
calculate the Termination Payment, either in its Termination
Notice or at any time thereafter.
With Tribune's failure to calculate the Termination Payment, on
June 13, 2002, ENA provided Tribune with its calculation of the
Termination Payment and demanded that it pay the amount owed --
$22,928,365, which included both the payment owed with respect
to the Forward Value of the Transactions and the Transaction
Payment owed with respect to invoice that Tribune should have
paid prior to the Early Termination Date. To date, Tribune
failed to pay any portion of the Termination Payment.
Accordingly, ENA asks the Court to:
(a) direct Tribune to pay ENA $22,928,365 Termination
Payment;
(b) direct Tribune to pay ENA $2,543,060 Transaction
Payment;
(c) direct Tribune to pay ENA $20,385,305, which is the
forward value of the Transactions; and
(d) award ENA its attorney's fees, costs and interest.
(Enron Bankruptcy News, Issue No. 63; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ESSENTIAL THERAPEUTICS: Files for Chapter 11 Relief in Delaware
---------------------------------------------------------------
Essential Therapeutics, Inc. (OTC Bulletin Board: ETRX), along
with its wholly-owned subsidiaries, Maret Corporation and The
Althexis Company, Inc., filed for protection under Chapter 11 of
the U.S. Bankruptcy Code. The filing was made in Wilmington,
Delaware.
Thereafter, the Company filed a Plan of Reorganization providing
for payment in full of obligations owed to certain creditors and
providing for the recapitalization of the Company as a
privately-held entity.
ESSENTIAL THERAPEUTICS: Case Summary & 20 Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Essential Therapeutics, Inc.
78 Fourth Avenue
Waltham, Massachusetts 02451
aka Microcide Pharmaceuticals, Inc.
Bankruptcy Case No.: 03-11317
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
The Althexis Company, Inc. 03-11318
Maret Corporation 03-11319
Type of Business: The Debtors are biopharmaceutical companies
committed to the discovery, development and
commercialization of critical products for
life threatening diseases.
Chapter 11 Petition Date: May 1, 2003
Court: District of Delaware
Judge: Mary F. Walrath
Debtors' Counsel: Christopher S. Sontchi, Esq.
Ashby & Geddes
222 Delaware Avenue
17th Floor
Wilmington, DE 19899
Tel: 302 654-1888
Fax : 302-654-2067
-and-
Guy B. Moss, Esq.
Bingham McCutchen LLP
150 Federal Street
Boston, MA 02110-1726
Tel: 617-951-8000
Total Assets: $46,317,000
Total Debts: $65,073,000
Debtors' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
NEA Ventures 2001, L.P. Redemption of $70,000,000
Pamela J. Clark convertible redeemable
119 St. Paul Street preferred stock
Baltimore, MD 21202
Fax: 410-752-7721
New Enterprise Associates Redemption of $19,930,000
10 Limited Partnership convertible redeemable
NEA Partners 10, L.P. preferred stock
C.W. Newhall
119 St. Paul Street
Baltimore, MD 21202
Fax: 410-752-7721
Prospect Venture Partners Redemption of $15,000,000
II, LP convertible redeemable
David Schnell preferred stock
435 Tasso Street
Palo Alto, CA 94301
Fax: 650-324-8838
International Redemption of $7,500,000
Biotechnology Trust convertible redeemable
Schroder Venture Life preferred stock
Sciences Advisers (UK) Ltd.
Attn: Kate Bingham
31 Gresham Street
London, EC2V 7QA
United Kingdom
Fax: 44-207-421-7077
Prospect Venture Partners Redemption of $5,000,000
David Schnell convertible redeemable
435 Tasso Street preferred stock
Palo Alto, CA 94301
Fax: 650-324-8838
Schroder Ventures Redemption of $4,394,000
Int'l Life Sciences convertible redeemable
Fund II LP1 preferred stock
Schroder Venture Managers,
Inc.
Attn: Peter Everson
22 Church Street
Hamilton, HM 11
Bermuda
Fax: 44-1292-2437
Delta Opportunity Fund, Redemption of $1,240,000
Ltd. convertible redeemable
Diaz & Altschul Advisors, preferred stock
LLC
Christopher S. Mooney, CFO
950 Third Avenue
16th Floor
New York, NY 10022
Fax: 212-751-5757
Schroder Ventures Redemption of $1,872,000
Int'l Life Sciences convertible redeemable
Fund II LP2 preferred stock
Schroder Venture Managers,
Inc.
Attn: Peter Everson
22 Church Street
Hamilton, HM 11
Bermuda
Fax: 44-1292-2437
HFM Charitable Remainder Redemption of $1,000,000
Trust convertible redeemable
The McCamish Group, L.P. preferred stock
Roy Jones
3060 Peachtree Road, NW
19th Floor
Atlanta, GA 30305-2228
Fax: 404-978-1918
Triax Holdings Ltd. Redemption of $1,000,000
Deidre M. McCoy convertible redeemable
PO Box N. 9204 preferred stock
Nassau, Bahamas
Fax: 242-323-7918
Delta Opportunity Fund, Redemption of $760,000
Ltd. convertible redeemable
Diaz & Altschul Advisors, preferred stock
LLC
Christopher S. Mooney, CFO
950 Third Avenue
16th Floor
New York, NY 10022
Fax: 212-751-5757
Acorn Investment Partners, Redemption of convertible $500,000
LP redeemable preferred
James R. Beers stock
245 North Galveston Street
Arlington, MA 22203
Fax: 202-778-0259
SV (Nominees) Limited Redemption of convertible $541,000
Schroder Ventures redeemable preferred stock
Investments Ltd.
John Marren
Barfield House
St. Julian's Avenue
St. Peter's Port, Guernsey
Channel Islands
Fax: 44-1481-714767
Schroder Ventures Redemption of convertible $499,000
Int'l Life Sciences redeemable preferred stock
Fund II LP3
Schroder Venture Managers,
Inc.
Attn: Peter Everson
22 Church HM 11
Bermuda
Fax: 44-1292-2437
Montagu Newhall Global Redemption of convertible $500,000
Partners, LP redeemable preferred stock
Charles Ashton Newhall
4750 Owings Mills Boulevard
Owing Mills, MD 21117
Fax: 410-356-9937
SITCO Nominees Ltd. - Redemption of convertible $126,000
VC 01903 redeemable preferred stock
Fish & Richardson P.C. Legal Fees $15,000
McDonnell Boehnen Legal Fees $80,000
Hulbert & Berghoff
Pacific Gas & Electric Co. Utility Bills $71,000
Schroder Ventures Redemption of convertible $68,000
Int'l Life Sciences redeemable preferred stock
Fund II LP3
FEDERAL-MOGUL: Court Gives Go-Ahead to Expand E&Y's Services
------------------------------------------------------------
Federal-Mogul Corporation and its debtor-affiliates ask the
Court to modify the scope of Ernst & Young's continued
employment to include these additional services:
(a) arm's-length transfer pricing for the Debtors'
intangible intercompany transactions with its
subsidiaries worldwide. The services are a modest
extension of the services already provided by Ernst &
Young to the Debtors with respect to the arm's-length
transfer pricing for the Debtors' tangible company
transactions worldwide. Fees for these services are
expected to approximate $150,000 in the aggregate;
(b) expatriate tax, advisory and compliance services
relating to participants in the Debtors' International
Assignment Program. Two of the three assignments
covered will be billed on an hourly basis, while the
third will be billed on a flat-fee basis per services
provided;
(c) reporting and auditing services concerning the
consolidated financial statements of four of the
Debtors' principal U.S. operating entities -- Federal-
Mogul Products Inc., Federal-Mogul Ignition Company,
Federal-Mogul Powertrain Inc. and Federal-Mogul Piston
Rings Inc. -- for the year ending December 31, 2002.
These services are needed since the entities are
required by the Securities and Exchange Commission to
file audited financial statements as part of Federal-
Mogul Corporation's 10-K. Ernst & Young performed
similar services for these subsidiaries for the period
ending December 31, 2001. Therefore, these services
are strictly a continuation of prior services. The
reporting and auditing services will be on a flat-fee
basis;
(d) individual income tax return preparation and related
income tax projection services to the Debtors'
executives. Ernst & Young's income tax services will be
extended to the Debtors' executives for a $58,000 fee
and for the period from October 2002 through May 2003.
The scope of these services is substantially similar to
those authorized in the original order approving Ernst
& Young's employment. The number of persons to receive
the services will be 17 in 2003, a reduction from 19 in
2002; and
(e) services on certain confidential matters.
With the exception of the confidential services, the Debtors
inform the Court that the additional services are merely
continuations or, at most, modest expansions of the services
Ernst & Young already performs for them pursuant to the
Retention Order. Based on its prior work for the Debtors and
its familiarity with the Debtors and their business, the Debtors
assert that Ernst & Young is well qualified and able to provide
the additional services in a cost-effective, efficient and
timely manner. (Federal-Mogul Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FLEMING COS.: Turns to Gleacher Partners for Financial Advice
-------------------------------------------------------------
Fleming Companies, Inc., and its debtor-affiliates ask the
Bankruptcy Court for permission employ Gleacher Partners LLC as
their financial advisor and investment banker in these Chapter
11 cases, nunc pro tunc to April 1, 2003. Gleacher is an
investment banking firm with a large and diverse financial
advisory practice and a recognized expert in providing financial
advisory services in financially distressed situations.
James H. M. Sprayregen, Esq., at Kirkland & Ellis, relates that
the resources, capabilities and experience of Gleacher are
crucial to the Debtors' restructuring. Gleacher will
concentrate its efforts on formulating strategic alternatives
and assisting the Debtors in their efforts with regard to a
restructuring, financing or sale.
Since Gleacher is intimately familiar with the Debtors'
businesses and financial affairs, the Firm is well qualified to
provide the financial advisory and investment banking services
required by the Debtors. Gleacher's professionals have worked
closely with the Debtors' management, financial staff and other
professionals.
Specifically, Gleacher will be rendering financial advisory and
investment banking services, including:
(a) evaluation of the Debtors' business, operations and
prospects;
(b) assistance in the development of the Debtors' long-term
business plan;
(c) analysis of the Debtors' financial liquidity and
financing requirements;
(d) analysis of various restructuring scenarios and their
impact on the value of the Debtors and the recoveries of
those stakeholders affected by a Chapter 11 filing;
(e) evaluation of the Debtors' debt capacity and alternative
capital structures;
(f) analysis of the theoretical range of values of the
Debtors on a going concern basis;
(g) development of negotiating strategies and assistance in
negotiations with the Debtors' creditors and other
interested parties with respect to the confirmation of a
proposed reorganization plan;
(h) evaluation of securities to be issued by the Debtors in
a restructuring and assistance in effectuating any
securities issuance;
(i) assistance in arranging term loans, revolving credit
facilities, mezzanine debt financing or other similar
financing arrangements, including debtor-in-possession
financing;
(j) assistance in arranging any investment in the equity
securities of the Debtors or any of its subsidiaries or
other similar investment transaction;
(k) advice and assistance on evaluating, structuring,
negotiating and executing any proposed sale transaction
or proposed strategic relationships to be entered into
by the Debtors;
(l) assistance in the preparation of documentation in
connection with a financing amendment or a
restructuring;
(m) presentations to the Debtors' Board of Directors,
creditor groups and other interested parties, as
appropriate;
(n) expert witness testimony, as necessary, in any
proceeding before the Bankruptcy Court; and
(o) other advisory services as are customarily provided in
connection with the analysis and negotiation of
financing, restructuring or similar transaction, as
reasonably requested and mutually agreed.
For professional services, Mr. Sprayregen explains that pursuant
to an Engagement Letter between the Debtors and Gleacher, dated
as of March 18, 2003, Gleacher will receive:
(a) a $200,000 monthly fee;
(b) an additional amendment fee equal to $2,000,000, payable
in cash after the execution of an amendment;
(c) an additional restructuring fee equal to $10,000,000,
payable in cash after the completion of a restructuring,
provided that:
-- if an amendment is executed concurrently with the
consummation of a restructuring then the aggregate
amount of any fees will not exceed $10,000,000, and
-- 50% of any divestiture fees paid by the Company to
Gleacher will be credited against any restructuring
fee;
(d) an additional arrangement fee, payable in cash after the
consummation of any new debt or equity raised by the
Debtor; and
(e) an additional divestiture fee, payable in cash upon the
consummation of any sale or divestiture by the Debtors
including the sale, merger or consolidation of all or
substantially all of the Debtors, the sale or
disposition of all or a portion of the Debtor' assets,
the sale of a controlling interest in the Debtors'
equity securities or any other similar transaction or
series of transactions.
In addition, the Debtors will reimburse Gleacher on a monthly
basis for travel costs and other reasonable out-of pocket
expenses incurred arising out of Gleacher's activities under or
contemplated by Gleacher's engagement. Accordingly, Gleacher
will maintain records in support of any actual and necessary
costs and expenses incurred in connection with the rendering of
its services.
Mr. Sprayregen tells the Court that the Debtors paid Gleacher
$400,000 as a retainer against fees for March 2003 going
forward. In addition, prepetition, the Debtors paid $100,000 to
Gleacher as a retainer for Gleacher's expenses. Gleacher will
not apply any portion of the retainer as payment for its
expenses incurred postpetition, except as authorized pursuant to
a Court order.
Gleacher's Managing Director, William D. Forrest, admits that
the Firm may have in the past represented, may currently
represent, and likely in the future will represent, parties-in-
interest of the Debtors in connection with matters unrelated to
the Debtors and the Chapter 11 cases. However, he asserts that
neither Gleacher nor any attorneys in the firm holds or
represents an interest adverse to the Debtors or the estates
with respect to the matters on which Gleacher is to be retained.
According to Mr. Forrest, neither the Firm nor its members or
employee has any connection with the Debtors, their creditors,
other parties-in-interest, their respective attorneys, or the
U.S. Trustee or any person employed in the Office of the U.S.
Trustee. Mr. Forrest goes on to assure the Court that Gleacher
is a "disinterested person" as defined in Section 101(14) of the
Bankruptcy Code. (Fleming Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
FORD MOTOR COMPANY: Reports Decreasing April U.S. Sales
-------------------------------------------------------
U.S. customers purchased or leased 298,037 cars and trucks from
Ford, Mercury, Lincoln, Jaguar, Volvo, and Land Rover dealers in
April, down 2.9 percent compared with a year ago. Year-to-date,
the company's sales were 1.1 million, down 2.3 percent compared
with the same period a year ago.
The all-new Ford Expedition and Lincoln Navigator, which debuted
in June 2002, paced the company to a new April SUV sales record.
Expedition sales were 17,827 (up 80 percent compared with a year
ago) and Navigator sales were 3,282 (up 79 percent). Two more
new SUVs, Lincoln Aviator and Volvo XC90, helped increase the
company's total SUV sales to 78,221, eclipsing the previous
April record (70,766) set in 2001.
Ford Mustang had its best sales month since October 2001 as
17,412 customers stampeded to Ford dealers and saddled up
America's legendary pony car, enticed by an historic offer on
the eve of Ford's centennial. Mustang sales were 32 percent
higher than a year ago.
"Mustang fever was elevated higher than we expected," said Jim
O'Connor, Ford Group Vice President, North America Marketing,
Sales and Service. "Extending the $5 a day lease offer was one
of the easiest decisions we've ever made." The special
centennial $5 a day lease on Mustang and Ranger, America's best-
selling compact pickup, has been extended to June 16.
Volvo dealers reported record April sales of 10,895, up 21
percent from a year ago. April was the sixth month in a row of
higher sales at Volvo -- a streak that started with the
introduction of the XC90, the award-winning sport utility
vehicle. XC90 sales (2,263) were limited by availability (16
days' supply at the beginning of April).
Land Rover dealers also reported record April sales of 2,916, up
5 percent from a year ago, reflecting higher sales of the all-
new Range Rover, the flagship of Land Rover's fleet. April was
the second month in a row of record Land Rover sales.
Lincoln sales rose 15 percent from a year ago on the strength of
record SUV sales. Aviator and Navigator combined for April
sales of 5,745, nearly tripling last year's sales for Navigator
alone and the highest SUV sales ever delivered by the Lincoln
franchise in a single month.
Ford, America's best-selling brand of cars and trucks, posted
April sales of 251,186, down 2.6 percent from a year ago.
Mercury sales were 16,320, down 21 percent from a year ago.
The company revised its second quarter North American production
plan upward by 10,000 units (5,000 cars and 5,000 trucks) in
response to higher than expected demand for the Mustang
(Dearborn Assembly Plant) and Expedition and Navigator (Michigan
Truck Plant). The company now plans to produce 990,000 vehicles
in the second quarter (320,000 cars and 670,000 trucks).
"We're encouraged by higher consumer confidence readings,"
O'Connor said. "A more confident consumer enhances the prospect
that consumer spending will improve in the second half of the
year."
Credit Default Swap Pricing
As previously related in the Troubled Company Reporter on March
17, 2003, the annual premium to insure $10 million of
receivables owed by Ford Motor Credit Co. against default for a
five-year term spiked at $540,000 that week. Today, data
available via Bloomberg shows, the annual payment for a 5-year
credit credit-default swap runs about $330,000. By comparison,
the cost of identical protection runs $200,000 per year for
General Motors debt and $30,000 per year for BMW obligations.
GEOWORKS: Board Changes as Newcastle Garners 25% Equity Interest
----------------------------------------------------------------
Geoworks Corporation (OTC Bulletin Board: GWRX) announced that
it has sold approximately 7.4 million newly issued shares of its
common stock to Newcastle Partners, L.P. and Mark E. Schwarz, an
affiliate of Newcastle for $325,000. As a result of the
transaction, the purchasers own approximately 25% of the
company's common stock.
In conjunction with the investment, Dave Grannan and Dave
Domeier resigned from the Board and Mr. Schwarz and Steven J.
Pully were appointed to fill their Board seats until the next
annual meeting of stockholders.
In addition, the remaining officers agreed to step down in
connection with the transaction. Mr. Schwarz, currently
Chairman of Newcastle, has been appointed to serve as CEO, and
John Murray, currently CFO of Newcastle, has been appointed to
serve as CFO. John Murray is a C.P.A. and was formerly employed
by Ernst and Young, L.L.P.
"On behalf of Geoworks, I want to thank the two outgoing board
members and the executive team," said Steve Mitchell, outgoing
President and CEO and an ongoing board member. "I am also
pleased to welcome Mark E. Schwarz and Steven J. Pully to the
Board."
Mr. Schwarz, 42, has served as the sole general partner of
Newcastle, directly or through entities, which he controls,
since 1993. Mr. Schwarz serves on the boards of several public
companies. Mr. Pully, 43, is employed by Newcastle Capital
Management, L.P., and is on the board of one other public
company. Mr. Pully is also licensed as an attorney and is a
C.P.A. The newly constituted board will immediately seek an
independent member to replace Mr. Mitchell prior to the
Company's next annual meeting of stockholders.
About Newcastle
Newcastle Partners, L.P. is a Dallas-based investment
partnership that was formed in 1993. Newcastle has ownership
positions in U.S.-based companies engaged in a variety of
different industries.
About Geoworks
Geoworks Corporation was a provider of leading-edge software
design and engineering services to the mobile and handheld
device industry. Based in Emeryville, California, additional
information about Geoworks can be found on the World Wide Web at
http://www.geoworks.com
* * *
As reported in Troubled Company Reporter's January 10, 2003
edition, Geoworks Corporation cancelled its January 8, 2003,
special stockholders meeting due to a lack of a quorum.
"Since the votes cast were overwhelmingly in favor of the
company's proposals to sell its UK professional services
business and to liquidate, we are very disappointed that there
were simply not enough votes cast despite numerous mailings and
phone calls," said Steve Mitchell, president and CEO of the
company. "We thank those shareholders who did return their
ballots and our proxy solicitors for all of their efforts. The
company must now rapidly assess its alternatives, including
seeking bankruptcy protection."
GLIMCHER REALTY: Pursues Acquisition of Joint Venture Interests
---------------------------------------------------------------
Glimcher Realty Trust, (NYSE: GRT), one of the country's premier
retail REITs, announced that it has executed a letter of intent
to acquire the third party joint venture interest in Eastland
Mall, an approximately 1,065,000 square foot regional mall
located in Charlotte, NC. The Company currently holds a 20%
interest in the property and will acquire the remaining 80%. The
transaction is expected to close in approximately 90 days.
The Company also announced that on April 24, 2003, Glimcher
Properties Limited Partnership, its operating partnership,
completed the acquisition of a 50% interest in G&G Blaine LLC,
and a related parcel of land for approximately $2,960,000. The
Company previously held a 50% interest in G&G Blaine. With the
completion of this transaction, the Company gained control of a
vacant 173,000 square foot anchor building at Northtown Mall in
Minneapolis, MN, that had previously been occupied by Montgomery
Ward.
After the closing of these transactions, the Company will have
two remaining joint venture properties. The Company is currently
pursuing the acquisition of the third party interest in these
properties.
Glimcher Realty Trust -- a real estate investment trust whose
corporate credit and preferred stock ratings are rated by
Standard & Poor's at BB and B, respectively -- is a recognized
leader in the ownership, management, acquisition and development
of enclosed regional and super-regional malls, and community
shopping centers.
Glimcher Realty Trust's common shares are listed on the New York
Stock Exchange under the symbol "GRT." Glimcher Realty Trust is
a component of both the Russell 2000(R) Index, representing
small cap stocks, and the Russell 3000(R) Index, representing
the broader market.
GLOBAL CROSSING: Settles Contract Dispute with Computer Sciences
----------------------------------------------------------------
According to Michael F. Walsh, Esq., at Weil Gotshal & Manges
LLP, in New York, Computer Sciences Corporation is the Global
Crossing Ltd. Debtors' single largest retail customer. The GX
Debtors provide CSC with a variety of telecommunications
services, including Global Frame Relay, IP Transit, Private
Line, conferencing and voice services.
Since the Petition Date, the GX Debtors' relationship with CSC
has been strained. In fact, on June 28, 2002, CSC sought to
terminate its contractual relationship with the GX Debtors.
Since that date, the parties have been simultaneously engaged
in:
-- discovery and litigation related to the termination, and
-- settlement negotiations.
In March 2003, the GX Debtors and CSC agreed to the terms of a
settlement to resolve the issues between them, including an
amendment to their existing contract. By this motion, the GX
Debtors ask the Court to approve this settlement.
Mr. Walsh relates that Global Crossing Telecommunications, Inc.,
is the debtor-entity that provides telecommunications services
to CSC pursuant to that certain Amended Master Services
Agreement, dated November 1, 2001. Prior to the execution of
the MSA, the parties entered into that certain Master Services
Agreement, effective as of December 15, 2000. After 10 months
of deployment and operation under the Original Agreement, CSC
and GX Telecommunications mutually agreed to enter into the MSA
to facilitate the provision of additional services to CSC.
According to Mr. Walsh, the MSA required CSC to spend all of its
"Available Spend" on certain telecommunications services
provided by Global Crossing, up to a $645,000,000 maximum over
12 years. The MSA also provided, subject to specific terms and
conditions, for the payment of shortfall charges under certain
circumstances if CSC did not meet certain annual targets. In
addition, the MSA contained a "termination at will" provision
which entitled CSC to terminate the MSA at any time on a no-
fault basis after payment of a $160,000,000 termination charge.
The MSA also facilitated the outsourcing of a portion of CSC's
Global Network to Global Crossing, at CSC's option.
On June 28, 2002, CSC filed a Motion to Modify the Automatic
Stay pursuant to which CSC sought to terminate the MSA. CSC
contended that the Debtors had materially breached the terms of
the MSA by failing to provide:
(i) the requisite amount of Network Availability;
(ii) a network that was "fully redundant"; and
(iii) the amount of network bandwidth required by the MSA.
The Debtors disputed CSC's factual allegations and maintained
that the Debtors had fully performed all of their obligations
under the MSA. Both the Debtors and CSC commenced discovery in
advance of litigation on the CSC Motion. In addition, on
September 30, 2002, CSC filed a proof of claim against GX
Telecommunications' estate for $3,750,000.
Following extensive arm's-length negotiations, the Debtors and
CSC have agreed to the terms of a settlement as well as an
amendment and restatement of the MSA, dated as of March 21,
2003, and to assume the MSA.
Pursuant to the Settlement, the MSA will be amended to:
(i) reduce the initial term;
(ii) revise CSC's minimum purchase commitments;
(iii) acknowledge that CSC does not desire to proceed with
the outsourcing of its Global Network to Global
Crossing by removing the parties' obligations in
relation thereto;
(iv) revise the Termination Provision;
(v) clarify the scope and operation of the provisions in
the MSA regarding service level objectives and
guarantees, making them consistent with industry
standards;
(vi) clarify CSC's rights to terminate the MSA in the event
of a failure to comply with the SLAs; and
(vii) grant mutual releases.
In addition, pursuant to the Settlement, the parties to the MSA
will be able to exercise their rights and remedies under the
MSA, including any contractual termination rights, without
further Court order, provided that all rights and remedies are
taken in accordance with the terms and conditions of the MSA.
The MSA is a complex commercial transaction that involves
various payment and usage requirements on CSC's part. The most
significant terms of which are:
A. "Minimum Required Usage" means the minimum amount of
services that CSC must purchase from the Debtors in each
year of the Initial Term.
B. "Actual Usage " means the amount of services actually
purchased and paid for by CSC.
C. "Minimum Required Cash Payment" means the minimum
payments that the Debtors must receive from CSC each
year. These amounts are higher than the Minimum Required
Usage.
D. "Adjustment Payment" means the amount CSC must pay at the
end of each year to make up any difference between CSC's
Actual Usage and the Minimum Required Cash Payment.
E. "Total Cash Payments" means the total amount of cash that
the Debtors have received from CSC at the expiration of
the Initial Term.
The salient terms of the MSA are:
A. The initial term of the MSA is reduced from 12 years to
seven years.
B. The Debtors will assume the MSA, in accordance with
Section 365 of the Bankruptcy Code. This assumption will
become effective on the first day of the first month
following the Court's entry of a final, non-appealable
order approving the Settlement.
C. CSC's purchase and payment commitments during the Initial
Term are reduced to $151,000,000 which will be payable
based on this schedule:
Minimum
Cash Payment Min. Usage
------------ -----------
Year 1 $15,000,000 $10,000,000
Year 2 19,000,000 12,500,000
Year 3 21,000,000 14,000,000
Year 4 21,000,000 15,000,000
Year 5 21,000,000 16,000,000
Year 6 21,000,000 16,000,000
Year 7 21,000,000 16,000,000
------------ -----------
Totals $139,000,000 $99,500,000
D. Each year, CSC will pay for services as they are
purchased. CSC is required to purchase services in the
amount of the Minimum Required Usage amounts.
E. If the Actual Usage exceeds the Minimum Required Cash
Payment in any given year, then the amount that exceeds
The Minimum Required Cash Payment will reduce the
Following year's Minimum Required Cash Payment.
F. At the end of each year of the Initial Term, CSC will be
required to make an Adjustment Payment to cover any
shortfall between the Actual Usage and the Minimum
Required Cash Payments.
G. The portion of the Adjustment Payment which covers a
shortfall between the Actual Usage and the Minimum
Required Usage will be forfeited by CSC.
H. The portion of the Adjustment Payment which covers a
shortfall between the Minimum Required Usage and the
Minimum Required Cash Payments will be credited towards
services for the following year. CSC will only be able
to utilize the Credit after it has met the Minimum
Required Usage for that year.
I. If the Total Cash Payments are less than $151,000,000,
CSC can elect either to:
1. renew the agreement for an additional four-year term
with a new Extended Term Commitment amounting to
$100,000,000 in services plus the amount of the Total
Shortfall spread equally over the Extended Term; or
2. pay the difference between $151,000,000 and the Total
Cash Payments.
J. The MSA is amended to remove provisions regarding the
proposed outsourcing of CSC's Global Network and to
remove the parties' obligations.
K. The Termination Provision is amended so that CSC may
terminate the MSA:
1. for convenience at any time during the Initial Term
after CSC has paid at least $151,000,000; or
2. for cause pursuant to the terms of the MSA.
L. The SLAs contained in the MSA are amended to be
consistent with industry standards.
M. After Bankruptcy Court approval of the Settlement, CSC
agrees to withdraw:
1. the CSC Motion; and
2. the Proof of Claim.
N. CSC waives its rights relating to the alleged breaches of
the MSA by the Debtors prior to the effective date of the
MSA. The Debtors waive their rights relating to any
claims against CSC, including any failure by CSC to
achieve its minimum purchase obligations prior to the
effective date of the MSA.
Mr. Walsh reports that CSC has agreed that it will waive its
right to assert an administrative claim for damages that result
if the Debtors subsequently reject the MSA. Rejection damage
claims, if any, will be non-priority, general unsecured claims
of the Debtors' Chapter 11 cases. The parties reserve their
rights with respect to any claims that may be asserted by either
the Debtors or CSC pursuant to the MSA that do not arise from
and are not based on the rejection of the MSA and CSC reserves
its right to assert that any claims are entitled to be treated
as administrative claims.
Mr. Walsh insists that the Settlement is fair and equitable and
falls well within the range of reasonableness as it enables the
parties to avoid the costs of further litigation on the CSC
Motion. Given the complexity of the factual issues relating to
the parties' claims under the MSA and the dollar amounts at
stake, the continued litigation of the issues surrounding the
MSA could be lengthy and expensive. These undertakings would
continue to be a drain on the Debtors' monetary resources and
divert the attention of the Debtors' management and legal
personnel from their reorganization efforts.
Pursuant to the Settlement, Mr. Walsh notes that the contractual
provisions of the MSA are restructured so that CSC's commitment
under the MSA is reduced to a $151,000,000 minimum value over 7
years. Although this is less than the $160,000,000 up-front
payment that the Debtors would receive had CSC exercised its
rights under the Termination Provision, the Debtors believe that
the benefits to their estates from the Settlement far exceed the
potential risks associated with continued litigation. Most
notably, by entering into the Settlement, the Debtors avoid the
risk of CSC prevailing on its Motion, which would entitle CSC to
terminate the MSA without making any payments.
Even if the Debtors were to prevail in the litigation, Mr. Walsh
believes that CSC would still be able to exercise the
Termination Provision and terminate the MSA. In that event,
notwithstanding the $160,000,000 termination payment that the
Debtors would receive, they would lose:
(i) long-term revenues that could exceed the minimum
amounts under the MSA; and
(ii) access to CSC's customers.
Moreover, the loss of the Debtors' biggest customer at this time
could affect their ability to attract other customers of CSC's
size. (Global Crossing Bankruptcy News, Issue No. 39; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
GRUPO DINA: Extends Exchange Offer for 8% Conv. Notes to May 14
---------------------------------------------------------------
Consorcio G Grupo Dina, S.A. de C.V. announced that it has
extended its exchange offer for all of its outstanding 8%
Convertible Subordinated Debentures Due August 8, 2004 (CUSIP
No. 210306 AB 2). The Exchange Offer will expire at 5:00 p.m.,
New York City time, on Wednesday, May 14, 2003, unless further
extended by Grupo Dina.
The obligation of Grupo Dina to consummate the Exchange Offer is
conditioned upon, among other things, receipt of tenders
representing at least 95 percent in aggregate outstanding
principal amount of the Debentures. As of April 30, 2003 holders
of approximately $124.2 million, constituting approximately
77.2%, of the outstanding Debentures had tendered their
Debentures pursuant to the Exchange Offer. Grupo Dina may in its
sole discretion consummate the Exchange Offer despite receiving
tenders of less than 95% in aggregate outstanding principal
amount of Debentures.
Upon consummation of the Exchange Offer, Grupo Dina will issue
to tendering Debenture holders Contingent Value Rights with a
maximum aggregate face amount of $45.058 million (assuming the
entire $160.922 million of outstanding Debentures are accepted
for tender). Grupo Dina is offering to exchange one CVR with a
face amount of $280 for each $1,000 aggregate principal amount
of Debentures tendered. The CVRs entitle holders to certain net
cash proceeds received upon the disposition of certain assets
and to certain other net cash proceeds received by or on behalf
of Grupo Dina, consisting of:
(i) a participation in any net cash proceeds from the sale
of Grupo Dina's 11.33% stake in the equity of MCII
Holdings (USA), Inc.;
(ii) a participation in any net cash proceeds received upon
the sale of certain fixed assets of Grupo Dina; and
(iii) a participation in any net cash proceeds received in
respect of certain arbitration proceedings with Western
Star Trucks Holdings Ltd.
Distributions in respect of the CVRs will only be payable upon
the receipt of net cash proceeds upon the disposition of such
assets or receipt of such other cash payments. The amount of
cash which may be distributed in the future with respect to the
CVRs, if any, may be less than or greater than $280 per CVR
depending on future events. The CVRs will not accrue interest
and will expire on April 24, 2007 unless extended. The Exchange
Offer is being made upon the terms and subject to the conditions
set forth in the Statement and Letter of Transmittal and Consent
and Rescission of Acceleration and Waiver related to the
Exchange Offer.
Grupo Dina has defaulted on scheduled interest payments owing in
respect of the Debentures since January 2001 and the maturity of
the Debentures has been accelerated. Concurrently with the
Exchange Offer, Grupo Dina is soliciting the rescission of such
acceleration. In addition, Grupo Dina is seeking the consent of
holders of outstanding Debentures to certain amendments to the
terms of the Debentures (insofar as any Debentures remain
outstanding after the Exchange Offer) and the grant by such
holders of a waiver of (a) all payment defaults as well as all
other covenant defaults under the Debentures and (b) any and all
legal claims any tendering Debenture holder has, may have or
ever will have against any party in connection with holdings of
the Debentures.
A valid tender of Debentures in the Exchange Offer will require
the delivery of the consent to the amendments to the Debentures,
the grant of the rescission of acceleration of the Debentures
and the grant of requested waivers.
The Bank of New York is acting as the Exchange Agent for the
Exchange Offer. D.F. King & Co., Inc. is acting as the
Information Agent for the Exchange Offer.
The Exchange Offer is being made solely pursuant to the
Statement dated April 2, 2003, the related Letter of Transmittal
and Consent and Rescission of Acceleration and Waiver, and any
amendments or supplements thereto.
HARD ROCK: Commences Cash Tender Offer for 9-1/4% Senior Notes
--------------------------------------------------------------
Hard Rock Hotel, Inc., whose corporate credit rating was
recently affirmed at 'B+' by Standard & Poor's, commenced a cash
tender offer and consent solicitation for its $120 million
outstanding principal amount of 9-1/4% Senior Subordinated Notes
due 2005.
The Offer is scheduled to expire at 12:00 midnight, New York
City Time, on May 29, 2003, unless extended or earlier
terminated. Holders of Notes who tender their Notes and deliver
consents on or prior to 12:00 midnight, New York City Time, on
May 14, 2003, will receive 102.563% of the principal amount of
the Notes validly tendered (the "Total Consideration"). Holders
who tender their Notes after the Consent Date but prior to the
Expiration Date will receive 100% of the principal amount of
the Notes validly tendered (the "Tender Offer Consideration").
The Total Consideration is the sum of the Tender Offer
Consideration and 2.563% of the principal amount of the Notes
paid to each holder of Notes that validly tenders their Notes
and delivers consents on or prior to the Consent Date. In
each case, holders that validly tender their Notes shall receive
accrued and unpaid interest up to, but not including, the
payment date.
The Offer is subject to the satisfaction of certain conditions,
including the Company's receipt of valid tenders for a majority
of the outstanding Notes and debt financing sufficient to
consummate the Offer on terms acceptable to the Company.
The complete terms and conditions of the Offer are described in
the Company's Offer to Purchase and Consent Solicitation
Statement dated May 1, 2003, copies of which may be obtained by
contacting the information agent, Georgeson Shareholder
Communications Inc., at (866) 216-0461. Banc of America
Securities LLC is the exclusive dealer manager for the tender
offer. The depository for the tender offer is U.S. Bank Trust
National Association. Additional information concerning the
tender offer may be obtained by contacting Banc of America
Securities LLC, attention High Yield Special Products, at (888)
292-0070 (toll free) or (704) 388-4813 (collect).
HASBRO: Fitch Affirms BB+/BB Ratings of Bank Debt & Senior Notes
----------------------------------------------------------------
Hasbro, Inc.'s $380 million 'BB+' rated secured bank credit
facility and 'BB' rated senior unsecured debt are affirmed by
Fitch Ratings. As of March 30, 2003, Hasbro had total debt
outstanding of approximately $876 million. The Rating Outlook is
revised to Stable from Negative, reflecting the progress Hasbro
has made in reducing debt as well as the apparent stabilization
of revenues following significant declines in 2000 and 2001.
The ratings reflect Hasbro's strong market presence and its
diverse portfolio of brands coupled with its improved financial
profile. The ratings also consider the challenges Hasbro
continues to face in refocusing its strategy on its core brands
and the dynamic nature of the toy industry.
Over the last two years Hasbro has been focused on rebuilding
sales of its core brands to offset lower sales of licensed and
faddish products as well as improving its cost structure. In
2002, the company's revenues declined a modest 1.4%% as the
company de-emphasized its non-core brands. Revenue growth in
2003 will continue to be challenging as 2002 results benefited
from substantial sales of Star Wars related merchandise. In
addition despite significant progress in eliminating costs,
profitability (EBITDA/sales) declined to 14.3% in 2002 from
15.2% in 2001. Weaker results were driven by the low-margin Star
Wars sales and offset cost savings achieved. As a result, though
revenue growth may be modest in 2003, profitability margins
should begin to return to more historical levels. Ongoing
concerns center on the company's ability to demonstrate that it
can build its core brands over a sustainable period.
Despite these ongoing issues, Hasbro's financial profile has
gradually improved, largely through its commitment to direct
cash flow to reduce debt. Since year end 2000 the company has
repaid over $500 million in debt and improved leverage (total
debt/EBITDA) to 2.1x as of March 30, 2003 from 4.0x at Dec. 31,
2000. Over the same period, EBITDA coverage of interest
increased to 5.7x from 3.1x. Fitch expects further improvements
in Hasbro's financial profile will be driven by additional debt
reduction coupled with improvements in profitability.
Hasbro, with 2002 revenues of about $2.8 billion, is the world's
second largest toy and game company. The company maintains a
diversified portfolio of brands including Monopoly, Clue,
Playskool, Play-doh, GI Joe, Mr. Potato Head, and Transformers.
In addition, Hasbro holds some significant licenses, including
Disney and Star Wars. In 2002, its largest brand accounted for
less than 9% of revenues.
HAYES LEMMERZ: S&P Assigns BB- Corp. Credit & Bank Loan Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Hayes Lemmerz International Inc. At the same
time, Standard & Poor's assigned its 'BB-' rating to a new $575
million senior secured bank credit facility of HLI Operating
Co., an indirect subsidiary of Hayes, and its 'B+' rating to
HLI's proposed $225 million senior notes due 2013, to be issued
under rule 144a with registration rights. The outlook is stable.
Northville, Michigan-based Hayes is the world's largest supplier
of wheels to the highly competitive and cyclical automotive
industry. The new financings will support Hayes' pending
emergence from Chapter 11 bankruptcy. Hayes will have pro forma
total debt of about $685 million.
"We expect that the company will be able to weather moderate
economic cycles because of its adequate liquidity, fair
geographic and customer diversity, and ongoing cost-cutting
initiatives," said Standard & Poor's credit analyst Martin King.
The senior secured bank facility is rated the same as the
corporate credit rating, based on Standard & Poor's expectation
that lenders will realize only marginal recovery of principal in
the event of default or bankruptcy. The rating is based on a
review of preliminary terms and conditions. The facility
consists of a five-year $125 million revolving credit facility
and a six-year $450 million term loan. Security will be provided
by all assets of the borrowers and guarantor subsidiaries,
capital stock, and a pledge of intercompany notes, which provide
a measure of protection to the lenders. The bank facility
accounts for most of Hayes' debt and is the most senior
obligation in the capital structure. The rating on the secured
credit facility reflects Standard & Poor's distressed valuation
analysis, based on the application of an EBITDA multiple to
discounted cash flows to determine a distressed enterprise
valuation.
HOVNANIAN: Improved Profile Prompts S&P to Up Corp. Rating to BB
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Hovnanian Enterprises Inc. and its affiliates to 'BB'
from 'BB-'. At the same time, ratings on approximately $400
million senior notes are raised to 'BB' from 'BB-' and ratings
on approximately $150 million subordinate notes are raised to
'B+' from 'B'. The outlook is revised to stable from positive.
"The ratings acknowledge recent improvements to both Hovnanian's
business and financial risk profiles as evidenced by the
successful integration of acquired companies and the resulting
diversification benefits, solid inventory turns, and
significantly improved debt-protection measures. These strengths
are tempered by expectations for ongoing acquisitions activity
and a somewhat more highly leveraged capital structure relative
to like-rated peers," said Standard & Poor's credit analyst
Jeanne Sarda.
Hovnanian has performed well over the past few years, achieving
strengthened margins while improving geographic diversity. The
company's momentum remains strong in 2003, with net contracts up
nearly 50% and backlog up 28% in the first quarter 2003 versus
first quarter 2002. Further, Hovnanian's broad operating
platform (by product type and geographic market) should help
provide some stability to earnings in a less robust housing
environment. Standard & Poor's expects that Hovnanian will
continue to pursue acquisitions that provide a clear strategic
benefit, while preserving its financial risk profile.
ICO INC: Second Quarter 2003 Earnings Webcast Set for May 9
-----------------------------------------------------------
ICO, Inc. (Nasdaq: ICOC) announces the following Webcast:
What: Second Quarter 2003 Earnings Webcast
When: May 9, 2003 @ 10:00 AM CT
Where: http://www.firstcallevents.com/service/ajwz381282870gf12.html
Contact: Jon Biro of ICO, Inc. 713.351.4100
Investors are invited to participate in the conference by
dialing 719-457-2605, passcode 493074. The webcast will be
archived for 30 days. A recording of the conference will be
available until May 16, 2003 by dialing 719-457-0820, passcode:
493074.
With 20 locations in 10 countries, ICO Polymers produces custom,
engineered polymer powders for rotational molding and other
polymer markets, including textiles, metal coatings, and
masterbatch. Through its Bayshore Industrial unit, ICO produces
concentrates, masterbatches and specialty compounds primarily
for the plastic film industry. ICO also remains an industry
leader in size reduction, utilizing ambient, cryogenic and jet-
milling technologies.
As previously reported, Standard & Poor's withdrew its 'B+'
corporate credit and 'B-' senior unsecured debt rating on ICO
Inc., at the company's request.
ICO Inc.'s 10.375% bonds due 2007 (ICOC07USR1) currently trade
around 77 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ICOC07USR1
for real-time bond pricing.
INTERLINE BRANDS: S&P Assigns B+ Corp Credit & Bank Loan Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to building materials distributor Interline Brands
Inc. The outlook is stable.
At the same time, Standard & Poor's assigned its 'B+' bank loan
rating to the company's $205 million senior secured credit
facility and its 'B-' rating to Interline's $200 million senior
subordinated notes due 2011.
Proceeds from the new bank facility and notes offering will be
used to refinance existing bank and subordinated debt, plus pay
fees and expenses.
The Jacksonville, Florida-based company's debt outstanding at
Dec. 31, 2002, including capitalized operating leases, was $360
million.
"The ratings reflect Interline's below-average business position
as a leading U.S. distributor of maintenance, repair, and
operations products, and its very aggressive financial profile,"
said Standard & Poor's credit analyst Pamela Rice. Interline,
with annual revenues of about $640 million, participates in the
highly fragmented maintenance, repair, and operations industry.
The company competes with numerous local and regional
distributors, a handful of national players, some of which are
significantly larger and financially stronger than Interline, as
well as traditional sales channels that include retail outlets
and large warehouse stores.
Standard & Poor's noted that the bank loan rating is based on
preliminary terms and conditions. Standard & Poor's used its
enterprise value method to analyze recovery prospects because
the facility is secured by substantially all assets, and
believes that Interline could be reorganized in the event of
default. Standard & Poor's said that it recognizes the company's
competitive cost position, good customer, product, and
geographic diversity, and limited exposure to highly cyclical
end markets and believes there is a strong possibility of
meaningful recovery of principal in the event of default or
bankruptcy. However, the value of the enterprise under a
distressed scenario may not fully cover the amount of secured
debt, assuming a fully drawn revolving credit facility.
INTERSTATE BAKERIES: S&P Ratchets Corporate Credit Rating to BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and bank loan ratings on fresh baked goods manufacturer
Interstate Bakeries Corp. to 'BB+' from 'BBB-'.
At the same time, the preliminary senior unsecured and
subordinated debt ratings on the company were both lowered to
'BB-' from 'BBB-' and 'BB+', respectively. All the ratings have
been removed from CreditWatch where they were placed on April 9,
2003. The outlook is negative.
The Kansas City, Missouri-based company had about $587 million
of total debt outstanding at March 8, 2003.
"The downgrade reflects the company's weak operating performance
and deteriorating credit measures following intense competitive
pressures in their southeastern division and in their single-
serve snack category," said Standard & Poor's credit analyst
Ronald Neysmith. "Moreover, rising health care costs and
increased volatility in commodity prices have further compressed
margins. Mitigating factors are IBC's strong brand names in
breads and snack cakes and its broad market penetration."
Interstate Bakeries Corporation is the largest U.S. wholesale
baker and distributor of fresh baked bread and sweet goods. The
company operates 61 bakeries throughout the U.S. and employs
more than 35,000 people. The company's sales force delivers
baked goods to more than 200,000 food outlets on approximately
9,500 delivery routes.
In this highly competitive industry, IBC is matched against
several strong rivals (including Flowers Foods Inc., BBB-
/Stable/--; Sara Lee Corp., A+/Stable/--; and George Weston
Ltd., A-/Stable/--). However, the company's very broad
distribution, serving markets that represent more than 90% of
the U.S. population, could mitigate the impact of regional
competition.
IT GROUP: Creditors' Panel Gets Go-Ahead to Retain AlixPartners
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of The IT Group
Debtors sought and obtained the Court's permission to retain
AlixPartners LLC, nunc pro tunc to March 4, 2003, as a
bankruptcy claims specialist to assist in the process of
bankruptcy claims and preference recovery resolution.
The Court further orders that:
(a) within 10 days following a meeting with the Debtors and
their advisors, AlixPartners will prepare and submit to
the Debtors' and Lenders' attorneys, a work plan and
budget by each project category outlining all of the
proposed services to be performed by AlixPartners and
its estimated fees and expenses;
(b) within five business days of receipt of the Budget, the
Debtors and the Prepetition Lenders may file and serve
on the Committee objection to the Budget, whereupon the
Court will conduct a further hearing on the Budget to
consider the Objections;
(c) in the event that no Objections are timely filed, the
Budget will be deemed approved without further Committee
or Court action;
(d) except for claims and preference analysis in connection
with the preparation and submission of the Budget,
AlixPartners will not perform any further work or
services until and unless the Budget is deemed approved
in the event no objections are timely filed, or approved
either by:
-- the Debtors and Prepetition Lenders; or
-- the Court as provided; and
(e) until approval by the Debtors and the Prepetition
Lenders or the Court of the Budget as required,
AlixPartners' compensation for its services rendered,
inclusive of all fees and costs incurred to date, will
not exceed $50,000 plus reasonable out-of-pocket
expenses, subject to prior Court orders. (IT Group
Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KAISER ALUMINUM: Exploring Dispositions of Commodity Assets
-----------------------------------------------------------
Kaiser Aluminum affirmed its strategy of maintaining market
leadership and growth in the aluminum fabricated products
business upon emergence from Chapter 11.
In light of that strategy, and to further the ultimate planned
emergence from Chapter 11 -- which the company's advisors have
indicated could occur in 2004 -- Kaiser has determined that it
is appropriate to explore the possible disposition of one or
more of its assets in the commodity-oriented businesses of
bauxite/alumina and primary aluminum.
In commenting on the strategy, Kaiser's President and Chief
Executive Officer Jack A. Hockema said, "The key word here is
'explore.' We will only consider pursuing transactions that are
on acceptable terms, and any potential sale of assets would be
subject to a number of prior approvals including, but not
limited to, the company's Board of Directors, the Bankruptcy
Court, and the company's Debtor-in-Possession lenders. Clearly,
although we are exploring the alternatives, we have made no
definitive decisions as to whether we will pursue any specific
transactions, no such transactions are imminent, and no
assurances can be given that any acceptable transactions will
ultimately materialize.
"I want to emphasize that during this exploration, Kaiser will
maintain the same unwavering commitment to quality and service
for which we are known in all of our businesses," Hockema said.
"In short: business as usual for customers, suppliers, and
employees."
KAISER: Volta Smelter Unit in Ghana Curtails Remaining Potline
--------------------------------------------------------------
Kaiser Aluminum said its 90%-owned Volta Aluminium Company
Limited primary aluminum smelter in Ghana has elected to curtail
its one operating potline effective May 5, 2003.
Valco elected to initiate an orderly curtailment primarily to
(1) provide the Volta River Authority (VRA) with additional
flexibility in meeting the needs of other power users in Ghana
in light of the low level of Lake Akosombo, where VRA generates
hydroelectricity, and (2) preserve its right to power later in
the year, when the lake level is expected to be replenished by
the annual rainy season. Valco expects this curtailment to
extend through the end of the rainy season, at which time it
expects to resume operations by using the remainder of its 2003
power allocation, including the power that it otherwise would
have consumed in the absence of the present curtailment.
The company is still evaluating the financial impacts of the
curtailment, including potential charges and cash requirements
for affected Valco employees. The net cash impact of such
curtailment is expected to be offset, in part, by a reduction in
working capital. Excluding special items, the impact of the
additional curtailment on ongoing operating income is expected
to be modest.
Valco and the company continue to pursue a dual-track approach
to the power situation. The primary track is through
arbitration under the auspices of the International Chamber of
Commerce in Paris with both the VRA and the Government of Ghana
concerning past curtailments and the volume and price of power
available to Valco under existing long-term contracts among the
parties. The second track is direct negotiation with the VRA
and the Government of Ghana to find a mutually beneficial
solution short of arbitration. The voluntary curtailment
announced today is not expected to have any adverse impact on
either of these tracks.
Valco has five potlines, each with a capacity to produce
approximately 40,000 metric tonnes of primary aluminum annually.
Although Valco has a long-term power contract with the VRA, the
number of operating potlines at the smelter has varied from year
to year depending on the power allocation. Valco had operated
four potlines in 2000, 2001, and into early 2002. In March
2002, in response to VRA allocation cuts, Valco reduced its
operating level to three potlines. In December 2002, and in
January 2003, again in response to power allocation cuts, Valco
made further reductions to two and one potlines, respectively.
KANSAS CITY SOUTHERN: $175M Preferreds Offering Gets B Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to
Kansas City Southern's proposed $175 million redeemable
cumulative convertible perpetual preferred stock (liquidation
preference $500 per share) being offered under Rule 144A. The
stock is redeemable, subject to certain conditions, on or after
May 20, 2008. At the same time, the rating was placed on
CreditWatch with negative implications. Existing ratings on
Kansas City Southern and unit Kansas City Southern Railway Co.,
including the 'BB' corporate credit rating, remain on
CreditWatch with negative implications, where they were placed
on April 1, 2003. The original CreditWatch placement reflected
Standard & Poor's concerns that continuing economic weakness and
potential funding requirements related to the company's
investment in TFM S.A. de C.V. (TFM) could cause deterioration
in its financial profile. The Kansas City, Mo.-based Class 1
railroad currently has about $860 million of debt (adjusted for
operating leases).
Kansas City Southern announced last month a series of agreements
with Grupo TMM S.A. in which Kansas City Southern will gain
control of TFM (the main privatized Mexican railroad) and the
Texas Mexican Railway Co. (Tex-Mex; a short-line railroad
currently owned by TFM that links the TFM system with Kansas
City Southern trackage and the broader U.S. railroad system).
Kansas City Southern will combine the TFM and Tex-Mex operations
with those of its subsidiary, The Kansas City Southern Railway
Co., to form one single transportation company and will change
its name to NAFTA Rail. The deal, which has been approved by the
board of directors at both Kansas City Southern and TMM, has
received bank group consent but remains subject to shareholder
and regulatory approval. Based on 2002 results, the combined
entity would generate about $1.3 billion in revenues and $368
million in EBITDA.
Under the proposed deal, TMM Multimodal (a subsidiary of TMM)
will receive 18 million shares of NAFTA Rail (representing
approximately 22% of the company); $200 million in cash; and a
potential incentive payment of between $100 million and $180
million, based on the resolution of certain future
contingencies, including TFM's long-running value-added-tax
dispute with the Mexican government. The VAT dispute, which
dates back to the privatization of TFM in 1997, could result in
a significant payment to TFM. The matter is still being debated
in the courts, and the timing of a resolution of this matter is
uncertain. Proceeds from the preferred stock issuance will be
used to fund the cash portion of the TFM deal. Kansas City
Southern will also use cash on hand to acquire 51% of Tex-Mex
from TFM for $32.7 million.
Ratings remain on CreditWatch pending a review of the financial
impact of the proposed transaction as well as a review of the
company's future funding requirements and near-to-intermediate
term operating outlook. "While the proposed deal should enhance
the company's business profile, increased financial risk
following the completion of the transaction will make the
company more vulnerable to cyclical pressures," said Standard &
Poor's credit analyst Lisa Jenkins. As of Dec. 31, 2002, the
combined companies had about $1.6 billion in total balance sheet
debt. Adding to financial risk and uncertainty in the near-to-
intermediate term is the Mexican government's right to put its
ownership in TFM in the fall of 2003. Measured as of Dec. 31,
2002, the total purchase price of the government's stake was
about $485 million.
KMART CORP: Judge Sonderby Okays Settlement Pact with Fleming
-------------------------------------------------------------
At Kmart Corp. Debtors' request, Judge Sonderby approved a
settlement agreement to resolve all disputes between Kmart and
Fleming Companies Inc. regarding the various claims Fleming
filed against the Debtors' estates and as a result of the
termination of their supply agreement.
Kmart and Fleming are parties to a long-term agreement, pursuant
to which Fleming supplied Kmart with substantially all food,
consumables and core pantry products sold in Kmart stores.
Fleming's Claims
At the onset of the Debtors' cases, Fleming received a
$76,000,000 critical vendor payment for its prepetition claim.
Fleming asserts that $27,000,000 of its Prepetition Claim
remains outstanding. Of this amount, Fleming alleges that
$16,900,000 of the Prepetition Claim was secured as a result of
its prepetition offset rights against Kmart. Fleming also notes
that $2,600,000 of the Prepetition Claim arose pursuant to the
Perishable Agricultural Commodities Act.
The Debtors rejected the Supply Agreement effective as of
February 3, 2003. Consequently, Fleming filed a $1,470,000,000
claim for rejection damages. Fleming also asserted an
administrative expense claim for $30,344,222 for the goods and
services it provided postpetition.
Debtors' Objection
The Debtors dispute Fleming's Prepetition Claim, including the
PACA Claim, the Rejection Claim and the Administrative Claim as
well as the secured status Fleming alleged. The Debtors believe
that Fleming already benefited from the Critical Vendor Payment
and, therefore, had waived any right to assert its PACA Claim.
The Debtors further contend that most of the items for which the
rejection damages are claimed are not supported by basic
principles of contract law or by the terms of the Supply
Agreement itself, and are, for the most part, duplicative of one
another. The Debtors believe that many of the items conflict
with public statements Fleming made in the days leading to and
following Kmart's rejection of the Agreement.
The Debtors also observe that several items included in the
Administrative Claim should have been more properly classified
as claims associated with the rejection, if at all.
Settlement Agreement
Given the complexity of their business relationship with Fleming
and the dollars at stake, the Debtors believe that litigating
the disputes would be lengthy and costly for both parties. The
Debtors are focused entirely on emerging from Chapter 11.
To avoid the expense, delay and uncertainly of litigating the
parties' positions with respect to the Claims, the Debtors and
Fleming have agreed to resolve the dispute. The Settlement
Agreement provides that:
-- the Rejection Claim and the Prepetition Claim will be
collectively allowed for $385,000,000 or 26% of the
alleged Claims;
-- the Administrative Claim will be reduced and allowed for
$15,000,000. Kmart will pay the Allowed Administrative
Claim in full and complete satisfaction of any and all
claims arising under Section 503(b) of the Bankruptcy
Code related to the Supply Agreement;
-- the Debtors will release and discharge Fleming for any
claims arising out of or related to the Agreement and the
Critical Vendor Order or for any potential preference
claims under Section 547 of the Bankruptcy Code;
-- Fleming will release and discharge the Debtors for any
claims arising out of or related to the Agreement, except
for the Allowed Prepetition Claim; and
-- Both Debtors and Fleming are not released from any claims
that the other party may have in connection with the wind
down transition under the Supply Agreement relating to
the inventory supplied to Kmart after the Agreement was
rejected.
The Official Committee of Unsecured Creditors supports the
Settlement Agreement. (Kmart Bankruptcy News, Issue No. 55;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LAND O'LAKES: Closing Research Seeds' Missouri Facility in June
---------------------------------------------------------------
Land O'Lakes, Inc. announced that it will close its Research
Seeds, Inc. facility in St. Joseph effective June 30, 2003. The
decision follows an extensive analysis of today's competitive
market and the Land O'Lakes seed system, with a focus on
achieving maximum efficiency, while delivering optimal value to
customers. The St. Joseph facility processes, packages and
distributes forages, turfs and alfalfa.
Company officials met with employees during a 9 a.m. meeting
then contacted city officials and the St. Joseph Chamber of
Commerce.
"This was a difficult decision, because we've been in St. Joe
since 1970," said Dave Seehusen, Land O'Lakes vice-president of
seed. "The employees there have contributed greatly over the
years to Land O'Lakes many successes and growth in seed and we
recognize this change will have an impact on them and the
community."
The closing will affect 27 employees who will either be offered
relocation within the Land O'Lakes system, or severance packages
and outplacement assistance.
Customers previously served by the St. Joseph facility will be
served by operations in Madison, Wis., Hastings, Minn., and
Denver, Colo.
Land O'Lakes, Inc. -- http://www.landolakesinc.com-- is a
national, farmer-owned food and agricultural cooperative, with
sales of $6 billion. Land O'Lakes does business in all 50
states and more than 50 countries. It is a leading marketer of
a full line of dairy-based consumer, foodservice and food
ingredient products across the U.S.; serves its international
customers with a variety of food and animal feed ingredients;
and provides farmers, local cooperatives, and customers with an
extensive line of agricultural supplies (feed, seed, crop
nutrient and crop protection products) and services.
As previously reported in Troubled Company Reporter, Moody's
Investors Service downgraded the ratings on Land O'Lakes, Inc.
Outlook is stable.
Rating Action To From
Land O'Lakes, Inc.
* Senior implied rating B1 Ba2
* Senior secured rating B1 Ba2
* Senior unsecured issuer rating B2 Ba3
* $250 million Senior secured bank
facility, due 2004 B1 Ba2
* $291 million Senior secured term
loan A, due 2006 B1 Ba2
* $234 million Senior secured term
loan B, due 2008 B1 Ba2
* $350 million 8.75% Senior unsecured
guaranteed Notes, due 2011 B2 Ba3
Land O'Lakes Capital Trust I
* $191 million 7.45% Trust preferred
securities B3 Ba3
The lowered ratings reflects the company's weaker-than-expected
operating performance, giving rise to a constrained financial
flexibility and the deterioration of credit protection measures.
Land O'Lakes Inc.'s 8.750% bonds due 2011 (LLAK11USR1),
DebtTraders says, are trading at 65 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LLAK11USR1
for real-time bond pricing.
LA PETITE ACADEMY: Wooing Lenders to Amend Defaulted Covenants
--------------------------------------------------------------
La Petite Academy, Inc. and its parent, LPA Holding Corp., are
currently in default under its Credit Agreement. As of
April 8, 2003, the Company failed to comply with certain
informational covenants contained in the Credit Agreement.
Specifically, (a) in the course of preparing and reviewing the
draft Quarterly Reports on Form 10-Q for the fiscal quarters
ended October 19, 2002 and January 11, 2003, the Company
discovered and subsequently notified the lenders under the
Credit Agreement that the financial information previously
furnished to the lenders pursuant to the Credit Agreement for
the thirty-two week fiscal period ended February 8, 2003
overstated income before taxes; (b) the financial information
for the thirty-six week fiscal period ended March 8, 2003 has
not been provided to the lenders pursuant to the Credit
Agreement within the time period required thereby; (c) the
financial information for the quarter ended January 11, 2003 has
not been provided to the lenders pursuant to the Credit
Agreement within the time period required thereby; and (d) a
list of all material assets acquired by the Company and its
subsidiaries during the four-week fiscal period ended March 8,
2003 has not been provided to the lenders pursuant to the Credit
Agreement within the time period required thereby. In addition,
the Company failed to comply with the covenant contained in the
Credit Agreement requiring the Company to file by April 15, 2003
its Quarterly Reports on Form 10-Q for the fiscal quarters ended
October 19, 2002 and January 11, 2003 with the Securities and
Exchange Commission. As the Company has previously disclosed on
Forms 12b-25, the Company has been unable to file its Quarterly
Reports on Form 10-Q for the fiscal quarters ended October 19,
2002 and January 11, 2003 on a timely basis due to the inability
of management to complete the preparation of the required
unaudited financial statements without unreasonable effort or
expense.
The Company received a limited waiver of the defaults from the
lenders under the Credit Agreement on April 22, 2003. The
limited waiver provides that the lenders will not exercise their
rights and remedies under the Credit Agreement with respect to
such defaults during the period through May 31, 2003. The
Company and LPA Holding Corp. expect to continue discussions
with the lenders under the Credit Agreement to obtain a
permanent waiver of the foregoing defaults. There can be no
assurance that the Company will be able to obtain such a
permanent waiver to the Credit Agreement. The failure to do so
would have a material adverse effect on the Company.
LEAP WIRELESS: Will Honor Prepetition Sales & Use Taxes
-------------------------------------------------------
At Leap Wireless International Inc. and its debtor-affiliates'
request, the Court authorizes them to pay Taxes and Fees to
certain taxing authorities and regulatory authorities, without
prejudice to the Debtors' rights to contest the amounts of any
Taxes and Fees on any grounds. In the event that any Taxing or
Regulatory Authority, after the Petition Date, attempts to cash
a check issued by Cricket in satisfaction of any Taxes or Fees,
the Court:
(a) authorizes and directs Wells Fargo Bank to honor any
prepetition checks presented by a Taxing or Regulatory
Authority; and
(b) authorizes Wells Fargo Bank to rely on the Debtors'
representation that a particular payment is authorized
under the Order.
Sales and Use Taxes
Robert A. Klyman, Esq., at Latham & Watkins, in Los Angeles,
California, informs the Court that in the ordinary course of its
business, the Debtors collect sales, use and other similar trust
fund type taxes from their customers and subsequently remit
these taxes to the appropriate taxing authorities. The scope
and rate of the Sales and Use Taxes collected by the Debtors and
paid to taxing authorities vary by the jurisdiction in which the
revenue is generated. Generally, however, the Debtors' sales of
goods and services are subject to state sales tax and,
frequently, to sales taxes from the applicable county and city.
The Debtors have not conducted an exhaustive survey of all
states in which the Sales and Use Taxes are due to determine
whether these Sales and Use Taxes are deemed "trust fund" taxes
or fees in each jurisdiction. Nevertheless, Mr. Klyman believes
that the Sales and Use Taxes likely constitute so-called "trust
fund" taxes or fees that are collected from third parties and
held in trust for payment to the Taxing Authorities.
Additionally, the process by which the Debtors remit the trust
fund taxes varies, depending on the nature of the tax at issue
and the Taxing Authority to which the relevant tax is to be
paid. Sales and Use Taxes accrue and are calculated based on a
statutorily mandated percentage of the price at which
merchandise or services are sold or are consumed in the
operation of the business, or on a "per line" or "per
account" basis. For the most part, Sales and Use Taxes are paid
in arrears.
Mr. Klyman reports that the Debtors prepare and file the Sales
and Use Tax returns for obligations incurred in each of the
states in which they sell goods or provide service to customers.
To the best of the Debtors' knowledge, $4,600,000 in Sales and
Use Taxes accrue on a monthly basis. The Debtors believe that
the accrued Sales and Use Taxes for the current month are
approximately in the same amount as prior months. Because the
Sales and Use Taxes are "trust fund" taxes, the Debtors arguably
have no equitable interest in the proceeds remitted on account
of Sales and Use Taxes. Moreover, the Debtors' failure to pay
the Sales and Use Taxes could cause the Taxing Authorities to
take precipitous action, including initiating state audits,
filing a flurry of liens, and creating significant
administrative problems. Prompt and regular payment of the
Sales and Use Taxes will avoid this unnecessary governmental
action.
Regulatory Fees and Business License Fees
In addition to Sales and Use Taxes, the Debtors also pay
numerous service-related taxes and fees to federal, state and
local taxing authorities, including:
(a) 911 taxes, paid to help finance the cost of the
Regulatory Authorities' provision of emergency response
services;
(b) universal service fees, telecommunications relay systems
taxes, lifeline taxes, deaf tax surcharges, and other
similar taxes and fees paid to the Regulatory
Authorities to help subsidize the cost of providing
telephone service to high cost areas, to low-income
consumers, to consumers with special needs like the
deaf, and to schools, libraries and hospitals;
(c) federal excise taxes, at the rate of 3% levied on all
communication services; and
(d) other miscellaneous regulatory fees and taxes imposed by
various Regulatory Authorities.
According to Mr. Klyman, the Debtors are required by law to
collect most of the Regulatory Fees and Expenses from its
customers and remit them to the appropriate Regulatory Authority
in the same manner as Sales and Use Taxes and other trust-fund
type taxes. Some of these Regulatory Fees and Expenses are
imposed directly on the Debtors, but in accordance with
telecommunications industry practice, are collected from
customers in the form of a surcharge or fee and then remitted to
the appropriate Regulatory Authorities. During the fourth
fiscal quarter of 2002, the Regulatory Fees and Expenses paid by
Cricket averaged $3,200,000 per month.
Mr. Klyman adds that many municipal and county governments
require the Debtors to obtain a business license and pay
corresponding business license fees. The requirements for a
company to obtain a business license, the manner that the
business license fees are computed and the time when the fees
are due and payable vary greatly according to the local tax
laws. During the fourth fiscal quarter of 2002, the Business
License Fees paid by the Debtors averaged $5,407 per month.
Mr. Klyman contends that the payment of the Sales and Use Taxes,
the Regulatory Fees and Expenses and the Business License Fees
are necessary. Prior to the Petition Date, the Debtors paid, on
an estimated basis, some but not all of the prepetition accrued
and unpaid amounts outstanding on account of Taxes and Fees.
Accordingly, Cricket believes that there remain significant
prepetition Taxes and Fees owed. It is in the best interest of
Cricket's estate that the Taxes and Fees be paid on time so as
to avoid the administrative difficulties that certainly will
result from the non-payment of these Taxes and Fees.
Since many states treat the Taxes and Fees as "trust fund"
taxes, Mr. Klyman is concerned that officers and directors of
the collecting entity may be held personally liable for the
payment of such funds to the Taxing and Regulatory Authorities.
To the extent any accrued Taxes and Fees of Cricket were unpaid
in these jurisdictions as of the Petition Date, Cricket's
officers and directors could be subject to lawsuits during the
pendency of these cases. These potential lawsuits would prove
extremely distracting for Cricket, for the named officers and
directors whose attention to the Debtors' reorganization process
is required, and for this Court, which might be asked to
entertain various motions seeking injunctions of potential state
court actions.
Thus, payment of these fees and taxes will eliminate the
possibility of this potential debilitating distraction, Mr.
Klyman asserts. "Failure to make timely payment would result in
great administrative difficulties that would disrupt the
Debtors' business and reorganization efforts -- thereby damaging
the interests of all creditors in these cases." (Leap Wireless
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
LIBERTY MEDIA: Annual Investors Meeting to Be Webcast on May 15
---------------------------------------------------------------
Liberty Media Corporation (NYSE: L, LMC.B) is hosting its annual
Investors Meeting, beginning at 9:00 a.m. EDT in New York, New
York on Thursday, May 15, 2003. Interested persons may view the
web cast of the meeting and related materials by visiting the
Liberty Media Web site at
http://www.libertymedia.com/investor_relations/default.htmand
selecting "conference calls" to register for the web cast.
The company's First Quarter Supplemental Financial Information
release will be discussed at the Investors Meeting and is
scheduled to be released at the close of market on Wednesday,
May 14, 2003. There will not be a separate call to discuss the
release.
Liberty Media Corp.'s 4.000% bonds due 2029 are presently
trading at about 58 cents-on-the-dollar.
MAGELLAN: Obtains Court Nod to Reject 26 Leases & 7 Subleases
-------------------------------------------------------------
Prior to the Petition Date, Magellan Health Services, Inc., and
its debtor-affiliates initiated an internal operational
restructuring program with the goal of decreasing operating
costs without reducing the quality of services rendered to their
customers and decided to close several office locations.
As of March 14, 2003, many of the leases with respect to the
closed locations have either expired by their own terms or have
been terminated pursuant to an agreement with the landlord under
the lease except for 26 leases. Of the 26 remaining leases,
seven of the premises have been sublet to various tenants, at
rental rates provided in the master leases.
Subsequently, the Debtors sought and obtained Court approval to
reject the remaining 26 leases and seven subleases.
Among the 26 Leases include:
Lessor Location Monthly Rent
------ -------- ------------
Carr America Norcross, GA $4,237.58
Parkway Properties Richmond, VA 10,316.29
Fountains of Plantation Plantation, FL 22,950.66
Greenberg Development St. Louis, MO 5,690.83
Prudential Insurance Round Rock, TX 6,219.00
Stein Properties Columbia, MD 9,105.00
MACK-CALI Realty Fishkill, NY 5,606.56
VRS/TA-Cole Dallas, TX 18,548.67
Opus South Corp. Sunrise, FL 66,781.90
Shadowood Atlanta, GA 15,868.23
The seven subleases are:
Monthly Rent Monthly Rent
Location Paid to Lessor Subleasee Paid by Subleasee
-------- -------------- --------- -----------------
Florida $66,781.90 Primus Telecom $ 22,830.49
Georgia 31,531.70 Vital Solutions 23,634.00
New Jersey 74,125.73 Grow Tunneling 25,935.00
New Jersey Carlisle Leasing 27,875.00
New Jersey Innapharma 11,212.00
Georgia 70,811.02 iHealth Tech 11,000.00
Georgia GPA, LLC 9,000.00
Any claim for damages arising as a result of the rejection of
the Leases must be filed by a date fixed by the Court as the
claims bar date in these Chapter 11 cases. (Magellan Bankruptcy
News, Issue No. 6: Bankruptcy Creditors' Service, Inc., 609/392-
0900)
MICROCELL: S&P Ups L-T Credit Rating to CCC+ after Restructuring
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term
corporate credit rating on wireless communications service
provider Microcell Telecommunications Inc. to 'CCC+' from 'D',
following completion of Microcell's corporate and financial
restructuring under the Companies' Creditors Arrangement Act.
The outlook is developing.
At the same time, Standard & Poor's assigned its 'B' rating to
tranche A (C$25 million) of Microcell Solutions Inc.'s senior
secured bank loan, 'CCC+' rating to tranche B (C$300 million),
and 'CCC-' rating to tranche C (C$50 million). In addition, the
'CC' rating was assigned to Microcell Telecommunications' first
and second preferred shares.
"The ratings on Microcell Telecommunications reflect the
successful financial restructuring of the company's debt,
whereby total debt was reduced to C$350 million from C$2.0
billion and is held at Microcell Solutions, which owns
substantially all of the company's operating assets including
the network and license, and is a wholly owned subsidiary of
Microcell Telecommunications," said Standard & Poor's credit
analyst Joe Morin.
Senior secured creditors holding about C$600 million of prior
debt received C$350 million of Microcell Solutions debt, and
equity in the form of preferred shares representing, after
conversion of the preferred shares to common shares, 68% of
Microcell Telecommunications' common equity. Unsecured
bondholders, holding about C$1.4 billion in debt received
preferred and common shares representing, after conversion of
the preferred shares, 31.9% of Microcell Telecommunications'
common equity. Common shareholders of the former Microcell
Telecommunications retained the remaining 0.1% common equity of
the new Microcell Telecommunications. In addition, warrants to
purchase additional common shares were provided to the former
bondholders and common shareholders of Microcell
Telecommunications.
The company had C$117.3 million in cash as at March 30, 2002.
Tranche A of the bank facility provides new liquidity of C$25
million to Microcell Solutions.
The ratings on Montreal, Quebec-based Microcell
Telecommunications also reflect the company's recent operating
performance. Operating results have been affected by
difficulties leading up to and through the restructuring
process.
The ratings assigned to the various tranches of the bank loan
reflect the relative position of each tranche with respect to
security over the company's assets. Tranche A has a first-
priority lien on substantially all of the assets of Microcell
Solutions. Tranches B and C have second- and third-priority
liens, respectively. The ratings on the first and second
preferred shares, which are Microcell Telecommunications
securities, reflect their subordinated position to the bank
facility.
Standard & Poor's believes that Microcell Telecommunications has
a number of operational issues it must address, notably its high
churn rate in 2002 and a recent loss of subscribers despite a
growing industry. Despite low per-subscriber acquisition costs,
the high churn rate has a negative impact on margins as
acquisitions costs are incurred to replace lost customers. The
current liquidity and the lack of significant near-term debt
maturities do provide the company with some flexibility and time
to address its operational issues.
MICROCELL: March Balance Sheet Upside Down by CDN$1.2 Billion
-------------------------------------------------------------
Microcell Telecommunications Inc. (TSX: MT) announced its
consolidated financial and operating results for both the fourth
quarter ended December 31, 2002 and the first quarter ended
March 31, 2003.
"While we diligently worked to advance the recapitalization
process to its final stages over the past two quarters, we
continued to maintain a disciplined financial approach toward
our operations," said Andre Tremblay, President and Chief
Executive Officer of Microcell Telecommunications Inc. "Despite
our conscious decision to constrain growth as a means of
preserving cash during this time, and the operating and
competitive challenges that we faced as a result of the negative
perceptions associated with our recapitalization efforts, we
sustained a high level of operating cash flow primarily through
rigorous cost management. In fact, we grew EBITDA by over $100
million in 2002-the best reported improvement of any Canadian
wireless operator for a second consecutive year. Moreover,
through implementation of the recapitalization plan, the Company
will emerge financially stronger with more liquidity, a
substantially reduced debt load and significantly lower annual
interest obligations, leaving us well positioned to re-establish
our market presence and to pursue profitable growth."
The following operating and financial highlights for the fourth
quarter of 2002 and first quarter of 2003 underscore the
Company's primary operational objectives, during the capital
restructuring period, to maintain its liquidity position,
customer base and revenues, while reducing costs in order to
increase operating cash flow. A detailed discussion and analysis
of the financial results for each quarter is provided at the end
of this news release in the section entitled Management's
Discussion and Analysis.
Combined Fourth Quarter 2002 and First Quarter 2003 Highlights
- The Company increased its revenues for the six-month period
ended March 31, 2003, despite a decrease in the overall number
of retail customers. Total revenues for the fourth quarter of
2002 and first quarter of 2003 combined were $284.3 million,
compared with $281.7 million for the comparable periods in
prior years, while total operating expenses before
depreciation and amortization decreased to $230.1 million from
$254.9 million. This resulted in a 102% improvement in
consolidated earnings before interest, taxes, depreciation,
amortization, and restructuring charges (EBITDA) from $26.8
million to $54.1 million for the six-month periods being
compared.
- The aggregate total retail gross customer activations for the
two most recently completed quarters were 189,374, compared
with 329,420 for the comparable quarters one year earlier. The
lower number of new gross activations reflected the Company's
conscious decision to restrict any significant promotional
offers given its focus on cash preservation, while continuing
to pursue its recapitalization activities.
- The average monthly blended churn rate for the first quarter
of 2003 decreased to 3.3% from 3.8% in the previous quarter.
These results compare with a blended churn rate of 2.8% for
the same quarters in the comparable year-ago periods. Although
higher churn was driven partly by negative perceptions
resulting from the Company's uncertain financial condition in
combination with competitive promotional handset offers, it
was also impacted significantly by the effects of certain
changes made to the Company's prepaid pricing structure in
August 2002, and by a continuing high level of Company-
initiated deactivations for non-payment due to the application
of strict credit policies.
- As of March 31, 2003, Microcell provided wireless service to
1,124,586 retail Personal Communications Services customers,
513,985 of whom were on postpaid and 610,601 on prepaid.
Comparatively, the Company's retail PCS customer base one year
earlier was 1,235,776, consisting of 635,292 postpaid
subscribers and 600,484 prepaid subscribers. The lower number
of net additions year-over-year was due primarily to the
combined effect of substantially higher churn and a lower
number of gross activations.
- The Company maintained postpaid average monthly revenue per
user in the region of $58 to $59 for the two most
recently completed quarters, compared with roughly the same
results for the comparable quarters in 2001 and 2002. The
Company was successful in keeping postpaid ARPU at a
relatively stable level due to higher billable minutes and
increased roaming and value-added service revenue. Prepaid
ARPU for the same six-month periods being compared was
approximately $20 and $17, respectively. The significant
improvement in prepaid ARPU was due primarily to higher
minutes of usage, which can be directly attributed to the
introduction last August of a new prepaid pricing structure
that provides customers greater value by offering a per-minute
rate that is comparable to the Company's monthly postpaid
packages. As a result, blended ARPU averaged around $38 for
the past two quarters, the same amount as for the fourth
quarter of 2001 and first quarter of 2002 combined.
- The average retail cost of acquisition for the fourth
quarter of 2002 and first quarter of 2003 remained virtually
unchanged at around $280, compared with the average for the
six-month period ended March 31, 2002, despite a lower number
of gross activations as a result of the Company's decision to
slow down customer acquisition during its recapitalization
process.
- In line with the Company's cash preservation guideline, the
combined capital expenditures for the previous two quarters
decreased to $9.7 million from $79.2 million for the same
quarters in previous years. Given the already substantial
completion of its network buildout, the focus of capital
spending was to maintain and enhance service quality to meet
the needs of current customers.
- As of March 31, 2003, the Company had higher cash, cash
equivalents, short-term investments and marketable securities
totaling $117.3 million, compared with total cash
availability of $110.3 million as at the end of 2002.
- The Company posted a net loss of $123.7 million, or $0.51 per
share, for the fourth quarter of 2002, compared with a net
loss of $108.4 million, or $0.88 per share, for the fourth
quarter of 2001. For the first three months of 2003, the
Company recorded net income of $35.3 million, or $0.15 per
share, compared with a net loss of $95.3 million, or $0.40,
for the same period in 2002. The first quarter year-over-year
improvement was due primarily to reduced operating costs and
to the effect of the recent strength in the Canadian dollar in
the translation of the Company's long-term U.S.-dollar
denominated debt.
Reorganization
At the time of the release of its second quarter 2002 results on
August 9, 2002, the Company announced that there was significant
uncertainty regarding its ability to continue as a going
concern, such ability being dependent, among other factors, on
the Company's ability to reduce its financing costs and improve
its liquidities and operating performance. The Company also
announced on that date that it had retained the services of a
financial advisor and formed a special committee composed of
independent directors with a view of evaluating various
strategic options in the circumstances. In light of the going
concern uncertainty, the mandate of the special committee was to
review and evaluate the alternatives of the Company with a view
to reducing its financing costs and improving its liquidity. To
that end, the special committee obtained the advice and
recommendations of the financial advisor. The significant
uncertainty resulted from the fact that the Company disclosed
that it believed it would be in default of certain covenants in
its long-term debt agreements within a twelve-month period,
unless it could successfully renegotiate some of these
covenants. With such default, the senior secured lenders could
have chosen not to provide the Company with further access to
funds under the senior secured revolving credit facility and
could also accelerate debt repayment.
On October 31, 2002, the Company entered into a forbearance and
amending agreement with its secured bank lenders in which the
lenders agreed to forbear until December 23, 2002, subject to
certain conditions, the exercise of any rights with respect to
certain possible defaults. The covenants to which the
forbearance agreement applied related to the non-payment of
interest on the Company's Senior Discount Notes due in 2006 (the
"2006 Notes") and the possibility of the non-payment to a vendor
under a material contract. On December 2, 2002, the Company
announced that it would not make its interest payment on its
2006 Notes due on that day. Before the end of the forbearance
period, the Company reached an agreement with the vendor on the
amount due and settled such amount.
On December 23, 2002 the Company announced that its secured
lenders, holding approximately 74% of the outstanding secured
debt, have agreed on the terms of a recapitalization plan. In
this regard, the Company's secured lenders have agreed to
forbear until January 6, 2003 the exercise of any rights with
respect to a default resulting from the non-payment of interest
on the 2006 Notes. In addition, both parties agreed to
terminate the senior secured revolving credit facility. The
Company was subsequently not in compliance with certain
covenants under its long-term debt agreements and as such all
the long-term debt is in default. Microcell also continued to
have constructive discussions regarding the plan with an ad hoc
committee of unsecured noteholders.
On January 3, 2003, the Company announced that it had received
signed commitments from certain of its secured lenders and
noteholders, representing approximately 75% and 55% respectively
of the estimated aggregate voting claims that may be represented
at the secured creditors' meeting and the affected unsecured
creditors' meeting. In view of its then current and anticipated
financial position, the status of its discussions with financial
and strategic investors, the non-payment of U.S.$29.3 million of
interest due on the 2006 Notes in December 2002 and the options
available to the Company under the circumstances, the Company
elected to restructure its operations under the Companies'
Creditors Arrangement Act protection and filed for and
received protection under the CCAA on January 3, 2003 in the
form of an Initial Order. Until the Plan became effective on
May 1, 2003, the Company did not make any further payments of
principal or interest on its secured debt or unsecured notes,
including the interest payment on its 2006 Notes, which was due
December 1, 2002, and quarterly principal repayments on its
secured term loans due December 31, 2002 and March 31, 2003.
On February 19, 2003, the Company filed its Information Circular
and Proxy Statement (the "Circular"), which included a Plan of
Reorganization and of Compromise and Arrangement (the "Plan"),
setting out the terms of the Company's proposed plan.
Subsequently, on March 17, 2003 the Plan was voted upon and
approved by 98% of the secured creditors and 100% of the
affected unsecured creditors, representing 93% and 100%,
respectively, of the total value of the secured claims and
affected unsecured claims that were voted. On March 18, 2003,
the Superior Court of the Province of Quebec issued a Sanction
Order approving the Plan. On May 1, 2003, the Plan became
effective. The Plan reduced the Company's debt obligations by
approximately $1.7 billion.
The Company continues to experience growth-related capital
requirements arising from the need to fund of network capacity
improvements and ongoing maintenance and to fund the cost of
acquiring new PCS customers. Microcell's ability to generate
positive net income and cash flow in the future is dependent
upon various factors, including the level of market acceptance
of its services, the degree of competition encountered by the
Company, the cost of acquiring new customers, technology risks,
general economic conditions and regulatory requirements.
The consolidated financial statements do not reflect any
adjustments arising from the Plan, except that the current
portion of long-term debt is equivalent to the current portion
of the new debt contracted on the implementation date of the
plan. The Company is conducting a revaluation of its assets and
liabilities and will adjust their carrying values to reflect the
value of the Company as an entity established by the capital
reorganization. The revaluation adjustments are expected to be
presented in the 2003 second quarter consolidated interim
financial statements, the period encompassing the expected
implementation date of the Plan, May 1, 2003. The Company's
balance sheet after the implementation date will be presented on
a comprehensive revaluation basis after giving effect to both
the financial reorganization and the revaluation adjustments.
At March 23, 2003, Microcell disclosed a total shareholders'
equity deficit of about CDN$1.2 billion.
MICROCELL: Successfully Completes Recapitalization Process
----------------------------------------------------------
Microcell Telecommunications Inc. (TSX: MT) announced that
it has successfully completed its recapitalization process. The
recapitalization plan has significantly reduced Microcell's debt
obligations by approximately C$1.6 billion and its annual
interest obligations by a range of C$160 million to C$200
million.
"Not only did we emerge from the recapitalization process with a
strengthened balance sheet, but we did so while increasing our
liquidity, protecting our assets, and maintaining our revenues,"
said Andre Tremblay, President and Chief Executive Officer of
Microcell Telecommunications Inc. "After a self-imposed slowdown
over the past few quarters, we can now apply the same energy and
vigour that we used in successfully recapitalizing the Company
to acquire subscribers, serve our customers and build value for
the new equity holders. We feel confident that we can
successfully re-enter the market and re-assume our rightful
place in the industry."
"The recapitalization has placed us in a stronger financial
position," stated Jacques Leduc, Chief Financial Officer and
Treasurer of Microcell. "We believe that we now have the
appropriate capital structure in place to support our operations
for the long term. In addition to leaving Microcell as the
Canadian wireless operator with the lowest debt level in the
industry and some of the best credit ratios, our positive and
growing operating cash flow and solid liquidity position will
enable us to continue offering attractive, innovative solutions
to our customers and to grow as a long-term competitor in the
Canadian wireless marketplace."
The Company has approximately C$125 million in cash
availability, cash equivalents, short-term investments and
marketable securities. In addition, the Company received
commitments from a leading bank for a C$25 million revolving
credit facility. The facility has a three-year term and is
priced at an attractive market rate. Pursuant to the terms of
the new financing arrangements, the Company is entitled to raise
up to an additional C$50 million in revolving bank credit
facilities.
Microcell also announced that its newly issued First Preferred
Voting Shares (MT.PR.A), First Preferred Non-Voting Shares
(MT.PR.B), Second Preferred Voting Shares (MT.PR.C), Second
Preferred Non-Voting Shares (MT.PR.D), Class A Restricted Voting
Shares (MT.A), Class B Non-Voting Shares (MT.B), and its 2005
Warrants (MT.WT.A) and 2008 Warrants (MT.WT.B) will be posted
for trading on the Toronto Stock Exchange today. The old Class B
Non-Voting Shares (MTI.B) will be delisted as soon as trading
begins on the new securities.
Non-voting shares are exchangeable, 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. An electronic version will also be
available on the Company's Web site at
http://www.microcell.ca/investors. The exercise price of the
2005 Warrants will be $19.91, and the exercise price of the 2008
Warrants will be $20.69.
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. Fido is a
registered trademark of Microcell Solutions Inc.
DebtTraders says that Microcell Telecommunications' 14.000%
bonds due 2006 (MICT06CAR1) trade between 5.25 and 6.25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MICT06CAR1
for real-time bond pricing.
MDC CORP: March Working Capital Deficit Tops CDN$4.6 Million
------------------------------------------------------------
MDC Corporation Inc. of Toronto announced its financial results
for the first quarter ended March 31, 2003. Consolidated sales
for the quarter decreased 23% to $209.8 million from the
$271.3 million reported for the same quarter of the previous
year. Operating income before other charges was $13.0 million,
representing a decline of 56% from the $29.9 million achieved in
the quarter ended March 31, 2002. Net income for the first
quarter of 2003 was $1.3 million compared to $12.1 million in
2002. Fully diluted earnings per share for the quarter ended
March 31, 2003 was $0.05 compared to $0.45 last year. Fully
diluted cashflow per share was $0.30, a decrease of 29% over the
$0.42 achieved in 2002.
The financial results for the first quarter of 2002 include the
results of operations that have been disposed. Pro forma 2002
results have been compiled that exclude the results of divested
operations and restructuring and other charges. Comparing first
quarter 2003 to pro forma 2002, sales increased by $4.8 million
or 2% from $204.9 million and operating income before other
charges increased by $1.5 million or 13% from $11.5 million. On
the same basis, net income improved $0.3 million from the $1.0
million generated in the previous year, and fully diluted
earnings per share increased to $0.05 from $0.03.
"We are pleased with the progress we have made in improving all
aspects of our financial performance in our core operations
despite a difficult economic environment. In addition, the
strengthening Canadian dollar negatively impacted operating
income by approximately $0.9 million," said Miles S. Nadal,
Chairman, President and Chief Executive Officer.
The Secure Transactions Division reported sales of $66.2 million
for the first quarter, down 49% from the $131.0 million achieved
in the same quarter of 2002. Operating income before other
charges was $7.9 million, down from $24.3 million in the 2002
first quarter. However, excluding divested operations, sales
increased by $1.6 million or 3% and operating income increased
$1.9 million or 32%, primarily as a result of improvements at
Custom Direct, MDC's U.S. direct-to-consumer cheque operation,
and at Metaca, the Canadian card operation, partially offset by
a reduction in the operating income of the stamp group.
As recently announced, revenues and operating income at Custom
Direct have improved due to an increase in both the number of
orders and the average order revenue with the continued
migration of customers to higher value ordering channels
including the telephone and Internet. During the quarter, sales
increased 9.8% to US$29.0 million and operating income increased
23.9% to US$6.0 million over the same period last year.
Operating income margins improved to 20.6% of sales from 18.2% a
year earlier.
Ashton-Potter, our stamp operation, operated at low production
levels in the first quarter of 2003, but has recently been
awarded a significant long-term contract to produce definitive
and commemorative postage stamp products for the United States
Postal Service. The increased volumes anticipated under this
contract are expected to positively impact revenues and
operating profits in the latter half of the year.
For the first quarter, Maxxcom achieved sales of $143.5 million,
an increase of $3.2 million from the $140.3 million recorded in
the first quarter of 2002. Operating income before other charges
was $5.2 million, a decrease of $0.4 million or 7% from the $5.6
million generated in the first quarter of 2002. The U.S.
operations, which comprised 71% of revenues in the quarter,
experienced moderate growth, which was offset by the stronger
Canadian dollar and reduced revenues in Canada and the United
Kingdom.
"The difficult economic environment continues to impact the
advertising and communications industry, particularly in the
United States," said Mr. Nadal. "However, we remain encouraged
by the recent increase in business activity witnessed by the
Maxxcom subsidiaries, and are confident that profitability will
improve throughout the balance of the year."
"With regards to the balance sheet, we are pleased with the
progress we have made to date and remain committed to improving
our working capital and reducing the Corporation's indebtedness
further," said Peter Lewis, Executive Vice-President and Chief
Financial Officer.
MDC recommenced plans for an initial public offering of its
U.S.-based cheque business, operated by Custom Direct, Inc.,
through Custom Direct Income Fund, with the refiling of the
preliminary prospectus with the securities regulatory
authorities in Canada.
"The revenue growth and improved operating performance achieved
by Custom Direct is expected to continue throughout 2003,"
commented Mr. Nadal. "MDC has grown Custom Direct to become the
second largest direct-to-consumer cheque supplier in the U.S.,
and we are excited by the opportunity provided by the income
fund offering to crystallize the value that has been created."
MDC is a publicly traded international business services
organization with operating units in Canada, the United States,
United Kingdom and Australia. MDC provides marketing
communication services, through Maxxcom, and offers security
sensitive transaction products and services in four primary
areas: personalized transaction products such as personal and
business cheques; electronic transaction products such as
credit, debit, telephone & smart cards; secure ticketing
products, such as airline, transit and event tickets, and
stamps, both postal and excise. MDC shares are traded on the
Toronto Stock Exchange under the symbol MDZ.A and on NASDAQ
National Market under the symbol MDCA.
Maxxcom, a subsidiary of MDC, is a multi-national business
services company with operating units in Canada, the United
States and the United Kingdom. Maxxcom is built around
entrepreneurial partner firms that provide a comprehensive range
of communications services to clients in North America and the
United Kingdom. Services include advertising, direct marketing,
database management, sales promotion, corporate communications,
marketing research, corporate identity and branding, and
interactive marketing. Maxxcom shares are traded on the Toronto
Stock Exchange under the symbol MXX.
MDC, at March 31, 2003, disclosed a working capital deficit of
about CDN$4.6 million.
MOUNT SINAI NYU: $666-Mill. Bonds Rating Lowered to BB from BBB-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the New
York State Dormitory Authority's series 2000 bonds, with $666
million outstanding, issued for the Mount Sinai NYU Health
Obligated Group, to 'BB' from 'BBB-'. The outlook is stable.
The downgrade reflects a projected worsening in obligated group
operations and liquidity as a result of the delay in fully
implementing turnaround plans at Mount Sinai Hospital-which was
in part due to management turnover and weakened volume at Mount
Sinai Hospital. The downgrade also reflects a failure to achieve
expected benefits from the merger, such as improved managed care
contracting and shared services savings, which in part has led
to a partial de-merger that will be completed when the long-term
debt can be refinanced by the original health systems.
The rating is supported by solid market share at both the NYU
Hospitals Center and Mount Sinai Hospital in the vast New York
metropolitan market, although Mount Sinai's volume has suffered
in the short term from negative publicity associated with the
suspension of its live donor liver transplant program for
approximately a year (the program has recently been resumed).
The rating is also supported by financial flexibility in the
form of significantly undervalued real estate assets owned by
Mount Sinai Hospital that will likely be monetized in part in
the coming year, restoring approximately $45 million in
reimbursement for prior years' capital expenditures to the
balance sheet.
The stable outlook is predicated on the completion of the real
estate transaction and the resulting reimbursement, which will
largely offset Mount Sinai Hospital's projected decline of $50
million in unrestricted cash in 2003. Continued solid operations
at the NYU Hospitals Center are also anticipated. Both should
help stabilize liquidity and give Mount Sinai Hospital time to
fully implement its turnaround.
Mount Sinai NYU Health is a subscriber to Standard & Poor's
Disclosure Plus service. This quarterly analysis has been issued
as part of that service.
NETDRIVEN SOLUTIONS: Consolidating Operations & Closing Units
-------------------------------------------------------------
NetDriven Solutions Inc. (TSX:NDS), announced that it is
consolidating all of the operations of its subsidiary companies
(Partners Computer Systems, Totaluptime Inc., 956752 Ontario
Ltd., Ray Williamson Holdings Ltd., and ReadAttachments Inc.)
into NetDriven and will be disposing of all such subsidiaries in
order to simplify the corporate structure and reporting
requirements. The Company has terminated the employment of all
remaining staff within those subsidiaries. The staff of
NetDriven has also been reduced to a minimum to conserve
available capital.
In conjunction with the reorganization, the Company is seeking
potential merger opportunities with organizations positioned to
take advantage of NetDriven's substantial $16M tax loss carry
forward position. NetDriven is considering alternative methods
of dealing with the various creditors of the parent and
subsidiary companies. NetDriven has relocated its corporate
offices to 1370 Don Mills Road, Suite 300, Toronto, Ontario M3B
3N7.
At December 31, 2002, the Company's balance sheet shows a
working capital deficit of about $3 million, and a total
shareholders' equity deficit of close to $1 million.
NEENAH FOUNDRY: Discloses Plan to Strengthen Balance Sheet
----------------------------------------------------------
Neenah Foundry Company announced the terms of a financial
restructuring plan that it expects to implement no later than
September 30, 2003. The Company stated that its financial
restructuring plan, which would eliminate a significant amount
of debt and reduce cash interest payments, would significantly
improve its balance sheet and future prospects. The Company
believes it has sufficient liquidity to operate its business as
usual and to continue to fulfill all of its obligations to
employees, suppliers and customers consistent with its normal
business practices throughout this restructuring process.
"We believe that this plan creates a more appropriate capital
structure for the Company and that all stakeholders will benefit
from the corresponding increase in operating flexibility," said
William Barrett, Chief Executive Officer of Neenah. "We firmly
believe that these proactive measures to realign the Company and
reduce its existing debt will benefit our creditors by allowing
our business to continue moving forward with its core
competencies."
"We appreciate the continued support that we have received from
our lenders and senior subordinated note holders as we move
forward with our plan to put in place an appropriate capital
structure for the Company," said Barrett. Barrett continued, "We
also appreciate the ongoing support shown by our employees,
suppliers, and customers as we continue to operate our business
as usual throughout this restructuring. We believe that our
business, as well as the entire industry, has remained in a
cyclical trough. We remain confident, however, that our strong
market position combined with the successful implementation of
our financial restructuring, will allow for the Company to fully
realize the benefits as our industry, and the economy as a
whole, rebound."
The key components of the Company's restructuring plan include:
-- The Company's senior secured credit facility and PIK note
would be refinanced by a new senior credit facility and the
issuance of new senior second secured notes.
-- Holders of the Company's 11 1/8% senior subordinated notes
due 2007 (the "Existing Notes") would exchange their Existing
Notes for cash or new senior subordinated notes due June, 2010
and 100% of the new common stock of its parent ACP Holding
Company (a private company).
-- Trade claims to the Company's suppliers would be paid in
the ordinary course, consistent with the Company's normal
business practices.
-- The existing common stock of the Company's parent, ACP
Holdings would be cancelled.
The Company has engaged Houlihan Lokey Howard & Zukin Capital as
its financial advisor, and Fleet Capital Corporation and Fleet
Securities, Inc. as administrative agent and lead arranger,
respectively, for the new senior credit facility. Separately,
the Company also has engaged Fleet Securities, Inc. to act as
placement agent for the new second secured notes.
Neenah said that if it receives the requisite consents from
holders of greater than 95% of the Existing Notes, it will seek
to effect its financial restructuring out-of-court, but has not
ruled out pursuing the same restructuring through a
"prepackaged" plan of reorganization under Chapter 11 of the
Bankruptcy Code if the minimum consent threshold is not
achieved.
The complete terms of the exchange offer will be contained in
the Company's offering memorandum. The Company's memorandum
relating to the exchange offer will contain important
information about the Company, the exchange offer and related
matters. Interested parties are encouraged to carefully read the
document for information regarding these matters.
About Neenah Foundry Company
Neenah Foundry Company manufactures and markets a wide range of
metal castings and forgings for the heavy municipal market and
selected segments of the industrial markets. Neenah is one of
the larger independent foundry companies in the country, with
leading market share of the municipal and industrial markets for
gray and ductile iron castings and forged products. Additional
information and press releases about Neenah are available on the
Company's Web site at http://www.nfco.com
NOBLE CHINA: Talking to Lenders to Cure Debt & Amend Pabst Pact
---------------------------------------------------------------
As previously announced, Noble China Inc. continues to face
serious liquidity concerns in ongoing funding of its corporate
operations and interest on its CDN$30,000,000 of 9% Convertible
Subordinated Debentures, and as a result is in default of its
obligations under the Debentures.
The Debentureholders are therefore in a position to enforce
their rights on default. If the Trustee or the Debentureholders
elect to enforce these rights, Pabst Brewing Company may be in a
position to terminate the Pabst master license agreement
previously granted to Noble China, which becomes effective on
November 7, 2003. Accordingly, representatives of the City of
Zhaoqing, an indirect significant shareholder of Noble China,
have been in discussions with the holders of the majority of the
Debentures regarding a reorganization of Noble China. In
addition, representatives of the City of Zhaoqing and Pabst
Brewing Company have been in discussions regarding the
reorganization of Noble China and a restructuring of the master
license agreement.
These discussions have led to a preliminary agreement in
principle with the holders of a majority of the Debentures in
respect of the reorganization of Noble China involving the
settlement in full of the outstanding Debentures. In addition, a
non-binding term sheet has been entered into with Pabst Brewing
Company with respect to certain amendments to the master license
agreement and the continuation thereof after the reorganization.
These preliminary agreements are both conditional on Noble China
being able to implement a formal reorganization of its
Debentures and issued capital. The successful reorganization of
Noble China is subject to the preparation and execution of
definitive agreements and a plan of reorganization, compliance
with all applicable laws and regulations, and the funding,
approval and consummation of a court-approved reorganization
plan of Noble China. Accordingly, as a result of the uncertainty
with respect to these matters, there can be no assurances that
Noble China will be successfully reorganized or that Noble China
will be able to retain the right to produce and distribute Pabst
Blue Ribbon in China subsequent to November 7, 2003.
OGLEBAY NORTON: Elects Directors; John Lauer Resigns as Chairman
----------------------------------------------------------------
Oglebay Norton Company (Nasdaq: OGLE) announced that at its
Annual Meeting shareholders elected eight directors proposed by
the company. In addition to electing directors, shareholders
approved the proposed amendment to the Code of Regulations of
the company.
Elected as directors for the 2003-2004 term were: Malvin E.
Bank, William G. Bares, James T. Bartlett, Albert C. Bersticker,
John N. Lauer, Madeleine W. Ludlow, Michael D. Lundin and
William G. Pryor.
Judith Wolfe, who was a bona fide nominee for director, has
withdrawn her nomination due to a recent illness and her concern
regarding her ability to serve the shareholders at this time.
Ms. Wolfe has indicated that she is still interested in serving
as a director when she regains her health.
The board, on April 30, 2003, prior to the Annual Meeting,
approved a resolution reducing the size of the board from nine
directors to eight as a result of Ms. Wolfe's inability to serve
the current term.
At a scheduled board meeting following the Annual Meeting, John
Lauer resigned as chairman of the board and as a director of the
company. The board elected Albert Bersticker as non-executive
chairman of the board. Bersticker is the retired chairman of the
board of Ferro Corporation. He has served on the Oglebay Norton
board since 1992 and has served as lead director of the board
since 1999.
Lauer joined Oglebay Norton as president, chief executive
officer and a director in December 1997 and was elected chairman
of the board in July 1998. He retired as president in November
2001 and as CEO in December 2002. He was succeeded in both
positions by the current president and CEO, Michael Lundin.
"We thank John for his service, dedication and leadership at
Oglebay Norton, and we wish him well in his future endeavors,"
said Bersticker.
Oglebay Norton Company, a Cleveland, Ohio-based company,
provides essential minerals and aggregates to a broad range of
markets, from building materials and home improvement to the
environmental, energy and metallurgical industries. Building on
a 149-year heritage, our vision is to be the best company in the
industrial minerals industry. The company's Web site is located
at http://www.oglebaynorton.com
At December 31, 2002, the Company's balance sheet shows that its
total current liabilities exceeded its total current assets by
about $14 million.
* * *
As previously reported, Standard & Poor's lowered its corporate
credit and bank loan ratings on Oglebay Norton Co., to single-
'B' from single-'B'-plus due to difficult end-market conditions,
the company's weak financial performance, and its limited free
cash-flow generation, which will continue to result in high debt
levels.
The outlook is negative.
The ratings reflect Oglebay's very high debt leverage, cyclical
end markets, high capital spending requirements relative to
operating cash flow, and refinancing risk. The ratings also
reflect the company's diversified business segments and a focus
on productivity and operational improvements.
Information about Oglebay Norton Company's recent amendments to
two syndicated loan agreements:
(1) an Amended and Restated Credit Agreement dated as of
April 3, 2000 (amended as of June 30, 2001, November 9,
2001, December 24, 2001, and October 23, 2002); and
(2) a Loan Agreement dated as of April 3, 2000 (also
amended as of June 30, 2001, November 9, 2001, December
24, 2001, and October 23, 2002) with a consortium of
lenders comprised of:
* KEYBANK NATIONAL ASSOCIATION
* BANK ONE, NA
* THE BANK OF NOVA SCOTIA
* COMERICA BANK
* BANK OF AMERICA, N.A.
* HARRIS TRUST AND SAVINGS BANK
* THE HUNTINGTON NATIONAL BANK
* GE CAPITAL CFE, INC.
* NATIONAL CITY BANK
* JPMORGAN CHASE BANK
* FIFTH THIRD BANK
* U. S. BANK, NATIONAL ASSOCIATION
* FLEET NATIONAL BANK
* BRANCH BANKING & TRUST CO.
based on information obtained from http://www.LoanDataSource.com
appeared in the Troubled Company Reporter on April 23, 2003.
OLYMPIC PIPE LINE: Taps Danielson Harrigan as Special Counsel
-------------------------------------------------------------
Olympic Pipe Line Company asks for approval from the U.S.
Bankruptcy Court for the Western District of Washington to
employ Danielson Harrigan Leyh & Tollefson LLP as special
counsel.
The Debtor desires to continue the prepetition services of
Danielson Harrigan in this chapter 11 case.
Prior to the Petition Date, the Debtor engaged Danielson
Harrigan to:
-- prosecute Debtor's recent rate case before the Washington
Utilities & Transportation Commission, and appeal from
the WUTC order of September 27, 2002, denying debtor's
request for a tariff increase of 47%;
-- representation of debtor in defense of civil litigation
alleging business interruption claims brought by ARCO and
Tosco, and related prosecution of debtor's claims for
contribution;
-- prosecution and defense of various claims by and between
debtor and Shell Oil based on alleged loans by Shell to
debtor and debtor's claims for business interruption
damages and a declaration that Shell, through its
predecessor Equilon, was the Operator of the pipeline at
the time of a 1999 incident which resulted in 3 deaths
and a prolonged shutdown of a portion of the pipeline;
-- insurance coverage actions against three sets of
insurers; and
-- support in various criminal, general corporate and civil
matters.
The team will be lead by Arthur W. Harrigan. The Firm will bill
the Debtors in a 10% discounted rate of their current hourly
rates:
Mr. Harrigan $369
attorneys $121.50 to $292.50
staff $40.50 to $112.50
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.
THE PANTRY: Lenders Agree to Amend Terms of Credit Agreements
-------------------------------------------------------------
On April 14, 2003, The Pantry, Inc., entered into an Amended and
Restated Credit Agreement between the Company, the financial
institutions listed as "Lenders", Wachovia Bank, National
Association, as administrative agent, and Wells Fargo Bank,
N.A., as syndication agent for the Lenders. The Amended Credit
Facility consists of a (i) $52,000,000 revolving credit
facility; and (ii) two term loan facilities of $253,000,000 and
$51,000,000, respectively. Each of the Revolving Credit
Facility and the Term Loan Facilities are available for
refinancing certain existing indebtedness of the Company,
working capital financing and general corporate purposes. In
addition, the Revolving Credit Facility is available for issuing
commercial and standby letters of credit.
* * *
As reported in the March 17, 2003, issue of the Troubled Company
Reporter, Standard & Poor's Ratings Services affirmed its 'B+'
corporate credit rating on The Pantry Inc., based on the
company's stabilized operating performance over the past year
and planned bank loan refinancing, which is expected to reduce
amortization requirements and enhance liquidity.
At the same time, Standard & Poor's assigned a 'B+' rating to
The Pantry's $310 million bank facility that is secured by a
first priority lien on substantially all of the company's
assets, and assigned a 'B-' rating to The Pantry's $50 million
bank facility that is secured by a second priority lien on
substantially all of the company's assets. Proceeds from the
planned bank loan refinancing will be used to repay the existing
bank loan and for general corporate purposes.
PEABODY ENERGY: Certain Shareholders Complete Secondary Offering
----------------------------------------------------------------
Peabody Energy announced that the public offering of 5 million
shares by certain shareholders, under Peabody's shelf
registration statement, has been priced at $26.50 per share.
Certain selling shareholders have also granted the underwriters
an over- allotment option to purchase an additional 750,000
shares at the offering price of $26.50.
Selling shareholders include Lehman Brothers Merchant Banking
Partners II L.P. and its affiliates. The company did not sell
any shares through the offering. Selling shareholders will
receive all net proceeds. The offering was made through a group
of underwriters led by Lehman Brothers Inc.
Peabody Energy (NYSE: BTU) is the world's largest private-sector
coal company, with 2002 sales of 198 million tons of coal and
$2.7 billion in revenues. Its coal products fuel more than 9
percent of all U.S. electricity generation and more than 2
percent of worldwide electricity generation.
* * *
As previously reported in Troubled Company Reporter, Fitch
Ratings assigned a 'BB+' to Peabody Energy's proposed $600
million revolving credit facility and a new $600 million bank
term loan and a 'BB' to its proposed issuance of $500 million of
senior unsecured notes due 2013. The Rating Outlook remains
Positive. A portion of the proceeds from the new credit facility
and senior unsecured note offering will be used to fund the
repurchase of the company's existing 8-7/8% senior notes and
9-5/8% senior subordinated notes, which the company is seeking
to acquire through a tender offer commenced on Feb. 27, 2003. At
the completion of Peabody's refinancing the rating on its senior
subordinated notes, currently rated 'B+', will be withdrawn.
Since March 31, 1999, Peabody has reduced its total debt by over
$1.5 billion. At the end of FY2002 Peabody has a Debt/EBITDA of
approximately 2.5 times and an EBITDA/Interest of 4.0x.
Internally generated funds will be used for further debt
reduction. The ratings also incorporate the likelihood of tuck-
in acquisitions as the industry continues to consolidate.
However, any large acquisition that would substantially increase
leverage could affect the company's financial flexibility and
negatively impact Peabody's credit quality. Peabody's legacy
postretirement health care and pension liabilities are
significant but Fitch feels that these are manageable.
PIONEER-STANDARD: Arthur Rhein Succeeds James Bayman as Chairman
----------------------------------------------------------------
Pioneer-Standard Electronics, Inc. (Nasdaq: PIOS) announced that
the Company's Board of Directors has elected Arthur Rhein, 57,
as chairman, effective April 30, 2003. He will succeed James L.
Bayman, 66, who is retiring as chairman, but will remain on the
Board as a director.
Under Rhein's leadership since he became chief executive officer
in April 2002, Pioneer-Standard has completed a comprehensive
long-term strategic review that resulted in a new singular focus
on its $1.3 billion computer business, which holds a strong
market position in an industry with significant growth
opportunities. As part of this strategic transformation,
Pioneer- Standard divested its $1.0 billion components
distribution business earlier this year.
"To promote further effectiveness and independence of the Board,
we are establishing a Nominating and Governance Committee, which
will consist of three or more independent Board members," Rhein
said. "This committee will have the responsibility to assist
the Board in the nomination of Board candidates, evaluation of
the Board's effectiveness and oversight of corporate governance
programs and policies. Furthermore, the Board and I have agreed
that independent Board members will participate in executive
sessions without my attendance. These meetings will be in
addition to our regular Board meetings."
As a member of the management team for more than 20 years, Rhein
has played a key role in shaping the Company's direction. He
has held a variety of senior level positions with increasing
responsibilities in business management, operations, marketing
and sales. He was named to the Company's Board of Directors in
1990, while serving as vice president of marketing, added sales
to his responsibilities in 1991, and was elected to president
and chief operating officer in 1997.
"I look forward to working with the Board and our employees to
shape our Company as the leading value-added distributor of
enterprise systems, software, and services," added Rhein. "We
are focused on being the best and biggest at driving the
adoption of information technology to satisfy the strategic
business needs of our customers."
About Pioneer-Standard Electronics, Inc.
Pioneer-Standard Electronics, Inc. is one of the foremost
distributors and premier resellers of leading enterprise
computer technology solutions from HP and IBM as well as other
top manufacturers. The Company has a proven track record of
delivering complex servers, software, storage and services to
resellers and corporate end-user customers across a diverse set
of industries. Headquartered in Cleveland, OH, Pioneer-Standard
has sales offices throughout the U.S. and Canada. For more
information, visit our website at http://www.pioneer-
standard.com .
* * *
As reported in the Troubled Company Reporter's January 17, 2003
edition, Standard & Poor's Ratings Services placed its 'BB-'
corporate credit and its other ratings for Pioneer-Standard
Electronics Inc. on CreditWatch with a negative implication. The
company has announced that it agreed to sell the net assets of
its Industrial Electronics Division to Arrow Electronics
Inc., (BBB-/Negative/A-3) for about $285 million in cash.
The CreditWatch listing reflects uncertainty as to: the final
capital structure of the company; the use of proceeds (which
could potentially include cash dividends, share repurchases,
debt repayment and/or acquisitions); as well as the longer-term
business profile of Pioneer-Standard.
PRIMUS TELECOMMS: Reduces Debt, Q1 Equity Deficit Now Tops $190M
----------------------------------------------------------------
PRIMUS Telecommunications Group, Incorporated (Nasdaq: PRTL), a
global telecommunications services provider offering an
integrated portfolio of voice, data, Internet, and Web hosting
services, announced record results for the first quarter 2003
and raised its revenue and earnings goals for the full year
2003.
"The results in the first quarter were excellent," stated K.
Paul Singh, Chairman and Chief Executive Officer of PRIMUS. "In
an industry where participants are generally reporting declining
revenues and eroding profitability, PRIMUS is able to report
record results. Revenue grew for the fourth consecutive quarter
and did so at an accelerating rate this quarter, aided by
favorable foreign currency exchange rates. Assuming the first
quarter foreign currency exchange rates remain stable, we have
raised our goal for revenue growth in 2003 from the previously
announced 6% to 8% over the prior year to 20% to 25% over the
prior year and have raised our goal to be net income positive
for the full year 2003. Having realized earnings of $0.13 per
diluted share in the first quarter, we are well ahead of our
previously announced goal to be net income positive by year end
2003.
"Our superb operating performance was also accompanied by
further progress in our debt reduction efforts," Mr. Singh
added. "During the first quarter we reduced an additional $39
million of debt and, subsequent to the end of the quarter, we
have eliminated another $25 million of debt. As a consequence of
deleveraging our balance sheet by nearly 60% over the last two
and a half years, together with our strong operating
performance, we believe that PRIMUS will be able, at the
appropriate time in the future, to refinance its debt at more
favorable interest rates and increase our cash flow."
First Quarter Financial Results
PRIMUS's net revenue in the first quarter 2003 was $300 million,
compared with $245 million for the first quarter 2002 and $268
million in the fourth quarter 2002. "Our increase in revenue,
23% year-over-year and 12% sequentially, is attributable to
growth in our retail business, including better than expected
revenues from the acquisition of business customers from Cable &
Wireless, as well as favorable foreign currency exchange rates,"
stated Neil L. Hazard, Executive Vice President and Chief
Operating Officer. Net revenue for the first quarter on a
geographic basis was derived as follows: 39% from North America,
35% from Europe, and 26% from Asia-Pacific. The mix of revenues
by customer type in the first quarter was 80% retail (29%
business and 51% residential) and 20% carrier, compared with
fourth quarter 2002 revenues of 77% retail (25% business and 52%
residential) and carrier revenue of 23%. Data/Internet and
voice-over-Internet protocol (VoIP) revenues, representing 15%
of total revenues, were $45 million in the first quarter.
As a percentage of net revenue, gross margin for the first
quarter 2003 was a record 36.8%, an increase of 280 basis points
over 34.0% in the first quarter 2002, and 50 basis points over
36.3% in the fourth quarter 2002. Gross margin for the first
quarter 2003 was a record $110 million, reflecting the Company's
higher level of revenue, an improved revenue mix, and effective
management of cost of revenue, compared with $83 million in the
first quarter 2002 and $97 million in the fourth quarter 2002.
Selling, general and administrative (SG&A) expenses for the
first quarter 2003 increased to $78 million or 25.8% of net
revenue, as compared to $62 million or 25.3% of net revenue for
the first quarter 2002, and $67 million or 25.1% of net revenue
for the fourth quarter 2002, primarily due to increased sales
and marketing costs.
Income from operations was a record $12 million in the first
quarter 2003, as compared to income of $1 million in the first
quarter 2002 and a loss of ($14) million in the fourth quarter
2002. The loss from operations of ($14) million in the fourth
quarter 2002 included a $22 million non-cash asset impairment
write-down principally related to the Company's
telecommunications network.
PRIMUS's net income in the first quarter 2003 was $11 million,
compared with net income of $10 million in the first quarter
2002 and a loss of ($18) million in the fourth quarter 2002.
Contributing to PRIMUS's net income were gains on early
extinguishment of debt and foreign currency transactions. In the
first quarter 2003, PRIMUS purchased in the open market $43.7
million in principal amount of its high yield notes for $36.2
million (excluding accrued interest payments). This resulted in
a gain of $7 million that has been reported as an item within
continuing operations due to the adoption of the Financial
Accounting Standards Board's (FASB) Statement of Financial
Accounting Standards (SFAS) No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13
Technical Corrections," which was adopted on January 1, 2003.
Also, in accordance with SFAS No. 145, the Company's previously
reported extraordinary gains on early extinguishment of debt
have been reclassified into continuing operations. An unrealized
foreign currency transaction gain of $10 million was recognized
in the first quarter 2003, as a result of a weakening United
States dollar against payables denominated in foreign
currencies.
Earnings per basic and diluted share were $0.13 for the first
quarter 2003, compared to $0.15 per basic and diluted share in
the first quarter 2002. Basic and diluted weighted average
common shares outstanding for the first quarter 2003 were 82.9
million and 83.9 million, respectively. For the first quarter
2002, basic and diluted weighted average common shares
outstanding were 63.9 million.
Liquidity And Capital Resources
PRIMUS generated $20 million of cash from operating activities
in the first quarter 2003, compared to $7 million in the year-
ago quarter and $8 million in the fourth quarter 2002. Cash,
cash equivalents and restricted cash at March 31, 2003 was $87
million as compared to $104 million at December 31, 2002.
Included in the March 31, 2003 cash balance was $9 million from
the sale of the Company's Series C convertible preferred stock.
In addition to the $36 million used to purchase the Company's
high yield notes on the open market, PRIMUS also paid $5 million
to reduce other long-term debt and spent $5 million on capital
expenditures in the first quarter 2003.
At the end of the first quarter 2003, PRIMUS had total long-term
debt of $561 million, $39 million less than at the end of the
prior quarter. This quarter's balance was comprised of $326
million of senior notes, $71 million of convertible debentures,
and $164 million of vendor and other debt. Subsequent to the end
of the first quarter, the Company spent $6 million to purchase
an additional $10 million principal amount of senior notes, and
spent $11 million to eliminate $15 million of vendor debt.
As of March 31, 2003, the company's total shareholders' equity
deficit amounts to $190,039,000.
The Company intends to continue to pursue opportunities to raise
additional debt and equity financing on favorable terms in order
to take advantage of opportunities to further improve its
liquidity, improve its profitability, strengthen its balance
sheet, and accelerate its growth.
The Company and/or its subsidiaries will evaluate and determine
on a continuing basis, depending upon market conditions and the
outcome of events described as "forward-looking statements" in
this release and its SEC filings, and future negotiations the
Company may pursue with the holders of certain of its
outstanding debt securities and instruments, the most efficient
use of the Company's capital, including investment in the
Company's network and systems, lines of business, potential
acquisitions, purchasing, refinancing, exchanging or retiring
certain of the Company's outstanding debt securities in
privately negotiated transactions, open market transactions or
by other means to the extent permitted by its existing
covenants.
PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) is
a global telecommunications services provider offering bundled
voice, data, Internet, digital subscriber line (DSL), Web
hosting, enhanced application, virtual private network (VPN),
voice-over-Internet protocol (VoIP), and other value-added
services. PRIMUS owns and operates an extensive global backbone
network of owned and leased transmission facilities, including
approximately 250 points-of-presence (POPs) throughout the
world, ownership interests in over 23 undersea fiber optic cable
systems, 19 international gateway and domestic switches, a
satellite earth station and a variety of operating relationships
that allow it to deliver traffic worldwide. PRIMUS also has
deployed a global state-of-the-art broadband fiber optic ATM+IP
network and data centers to offer customers Internet, data,
hosting and e-commerce services. Founded in 1994 and based in
McLean, VA, PRIMUS serves corporate, small- and medium-sized
businesses, residential and data, ISP and telecommunication
carrier customers primarily located in North America, Europe and
the Asia-Pacific regions of the world. News and information are
available at PRIMUS's Web site at http://www.primustel.com.
PRIMUS TELECOMMUNICATIONS: Vendor Debt Down by $15 Million
----------------------------------------------------------
PRIMUS Telecommunications Group, Incorporated (NASDAQ:PRTL), a
global telecommunications services provider offering an
integrated portfolio of voice, data, Internet, and Web hosting
services, announced that, as part of its continuing program
further to strengthen its balance sheet, it has reduced an
additional $15 million of debt.
PRIMUS reported that it had paid approximately $11 million in
cash to discharge approximately $15 million of principal
indebtedness previously incurred in connection with the
acquisition of telecommunications equipment. The $19 million of
original cost of the equipment will be owned by PRIMUS free and
clear of liens.
The Company and/or its subsidiaries will evaluate and determine
on a continuing basis, depending upon market conditions and the
outcome of events, and future negotiations the Company may
pursue with the holders of certain of its outstanding debt
securities and instruments, the most efficient use of the
Company's capital, including investment in the Company's network
and systems, lines of business, potential acquisitions,
purchasing, refinancing, exchanging or retiring certain of the
Company's outstanding debt securities and instruments in
privately negotiated transactions, open market transactions or
by other means to the extent permitted by its existing covenant
restrictions.
PRIMUS Telecommunications Group, Incorporated (NASDAQ:PRTL) is a
global telecommunications services provider offering bundled
voice, data, Internet, digital subscriber line (DSL), Web
hosting, enhanced application, virtual private network (VPN),
and other value-added services.
PROVIDIAN FIN'L: Ratifies Ernst & Young's Employment as Auditor
---------------------------------------------------------------
Providian Financial Corporation (NYSE: PVN) held its annual
meeting of shareholders on May 1 at the Museum of Modern Art in
San Francisco.
Providian shareholders re-elected board members, Richard D.
Field, F. Warren McFarlan and Joseph Saunders for terms of three
years each. The shareholders also ratified the appointment of
Ernst & Young, the Company's current auditor, to remain as its
independent auditor for the 2003 calendar year.
Additionally, shareholders passed a non-binding measure to
establish a policy of expensing in the Company's annual income
statement the costs of all future stock options issued by the
Company.
"Management and the Board have already initiated a review of
executive compensation," said Saunders. "Perspectives of our
shareholders on this issue matter greatly to us and we will
certainly consider them carefully."
About Providian
San Francisco-based Providian Financial is a leading provider of
credit cards and deposit products to customers throughout the
U.S. By combining experience, analysis, technology and
outstanding customer service, Providian seeks to build long-
lasting relationships with its customers by providing products
and services that meet their evolving financial needs. One of
America's largest bankcard issuers, Providian has over $7
billion in reported receivables and over $18 billion in managed
receivables and more than 11 million customer relationships.
As previously reported, Moody's Investors Service confirmed the
ratings of Providian Financial Corporation and its unit
Providian National Bank.
Outlook is stable.
Ratings Confirmed:
* Providian Financial Corporation
- senior unsecured debt rating of B2.
* Providian Capital I
- the preferred stock rating of Caa1.
* Providian National Bank
- bank rating for long-term deposits of Ba2
- ratings on senior bank notes and other senior long-term
obligations of Ba3;
- issuer rating of Ba3;
- subordinated bank notes rating of B1, and
- bank financial strength rating of D.
The ratings confirmation reflects the numerous measures the
company has taken just to strengthen its financial position,
including portfolio sales, facility closings, and the
implementation of conservative underwriting and marketing plans.
RELIANCE GROUP: Wants RDG to Make Minimum Pension Contribution
--------------------------------------------------------------
Reliance Group Holdings, Inc., maintains a Pension Plan for the
benefit of its employees and the employees of Reliance
Development Group. The Pension Plan is a defined benefit pension
plan subject to Title IV of the Employee Retirement Income
Security Act of 1974 and a tax qualified plan under Section
401(a) of the Internal Revenue Code of 1986. The Plan provides
each participant with retirement income that is determined by
compensation and years of service.
On July 31, 2001, the Pension Plan was frozen and accrual of all
benefits ceased. Due to weakening stock markets and decreases
in interest rates, the Pension Plan's assets have substantially
declined and its liabilities have increased, widening the
underfunding gap. As a result, the Pension Plan became subject
to Quarterly Required Installments under Section 412(m) of the
IRC and Section 302(e) of ERISA for the 2003 plan year.
The First Required Installment amounting to $208,000 for the
2003 plan year was due on April 15, 2003. The other Required
Installments, for the same amount, are due on July 15, 2003,
October 15, 2003 and January 15, 2004. In addition, the
$794,000 minimum required contribution for the 2002 plan year is
due on September 15, 2003.
Under Section 412 of the IRC and Section 302 of the ERISA, RGH,
RDG, and other entities under common control have joint and
several liability for the contributions.
If the First Required Installment is not made, consequences
include:
(a) The Pension Plan would fail to meet the minimum funding
standard under Section 412 of the IRC. The Pension
Benefit Guaranty Corporation could institute proceedings
to involuntarily terminate the Pension Plan under Section
4042(a)(1) of ERISA, resulting in immediate liability
under Section 4062. The Unfunded Benefit Liabilities of
$10,100,000 would greatly exceed the First Required
Installment. Under Section 4068 of ERISA, on the date of
plan termination, a lien would arise on the Controlled
Group Members in PBGC's favor for the unfunded benefit
liabilities for less than 30% of the collective net worth
of the Controlled Group Members;
(b) Interest would accrue on the First Required Installment
under Section 412(m) of the IRC and Section 302(e) of
ERISA, for the period from April 15, 2003 until the First
Required Installment is paid;
(c) If the cumulative unpaid contributions, including the
Required Installments, exceed $1,000,000, a lien would
arise on the Controlled Group Members under Section
412(n) of the IRC and Section 302(f) of ERISA for the
aggregated unpaid Required Installments and any other
required payments -- including interest. Within 10 days
of the lien, notice to the PBGC would be required;
(d) The unpaid First Required Installment would give rise to
an accumulated funding deficiency under Section 412 of
the IRC and Section 302 of ERISA. If existing at the end
of the plan year, the deficiency would result in an
excise tax -- initially 10% -- on the amount of the
accumulated funding deficiency -- with the excise tax
increasing to 100% if not timely corrected;
(e) Notification to the PBGC of a reportable event would be
required if the First Required Installment is not made by
the 30th day past due; and
(f) A notice to participants under Section 101(d) of ERISA
would be required if the First Required Installment is
not made by the 60th day after its due date.
As a result, the Debtors ask Judge Gonzalez to authorize RDG, a
wholly owned non-debtor subsidiary of RGH, to pay the RGH
Pension Plan $208,000 plus all accrued interest. This amount is
the Required Installment of the minimum funding contribution
that was due April 15, 2003.
Steven R. Gross, Esq., at Debevoise & Plimpton, states that RGH
has not decided whether to continue making payments to the
Pension Plan. The Official Committee of Unsecured Creditors and
the Official Unsecured Bank Committee are analyzing and
comparing the benefits of making the payments and maintaining
the Pension Plan, on the one hand, and the consequences of not
making the payments, on the other.
Failure to pay the First Required Installment could result in an
involuntary termination of the Pension Plan by the PBGC, which
would result in a significant liability to the Controlled Group
Members, including RGH and RDG. In addition, interest,
administrative burden and penalties could be imposed on the
Controlled Group Members, including RGH and RDG.
As of March 30, 2003, RDG was indebted to RGH for $60,634,000.
The collectibility of this inter-company balance depends on
RDG's future operations. While it does not appear that RDG's
future cash flows will be sufficient to repay RGH in full, the
liability to RDG resulting from an involuntary termination of
the Pension Plan would significantly affect RDG's ability to
repay RGH.
Therefore, Mr. Gross believes that it is prudent to seek
authorization for RDG to pay to the Pension Plan, on behalf of
RGH and RDG, the First Required Installment and all accrued
interest. (Reliance Bankruptcy News, Issue No. 36; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
REVLON INC: Offering Subscription Rights for Up to 3.7MM Shares
---------------------------------------------------------------
Revlon, Inc., is distributing, at no charge to the holders of
its Class A and Class B common stock, transferable subscription
rights to purchase up to an aggregate of 21,739,130 shares of
Company Class A common stock at a per share cash subscription
price yet to be determined. This rights offering is comprised of
an offering of subscription rights to purchase up to 3,717,391
shares of Revlon's Class A common stock to all holders of
Revlon's Class A and Class B common stock, other than MacAndrews
& Forbes, one of Revlon's affiliates, and the distribution to
MacAndrews & Forbes of subscription rights to purchase up to
18,021,739 shares of Company Class A common stock. However,
MacAndrews & Forbes has agreed not to exercise or sell the
subscription rights that it receives and has indicated that it
does not intend to purchase any subscription rights on the open
market. Instead, MacAndrews & Forbes has agreed to purchase the
shares of Revlon Class A common stock that it would otherwise
have been entitled to receive pursuant to its basic subscription
privilege in a private placement direct from Revlon, under an
investment agreement described in a prospectus prepared by
Revlon. This rights offering is being made to help fund a
portion of the costs and expenses of the stabilization and
growth phase of Revlon's plan, which is discussed in the
prospectus.
The total purchase price of shares offered in this rights
offering and the offering of shares to MacAndrews & Forbes
described above will be approximately $50,000,000. In order to
receive subscription rights one must be a stockholder of the
Company on a record date which Revlon will declare.
The subscription rights will expire if they are not exercised by
5:00 p.m., New York City time, on a date yet to be determined by
the Company. Revlon, in its sole discretion, may extend the
period for exercising the subscription rights. Revlon will
extend the duration of the rights offering as required by
applicable law, and may choose to extend it if it is decided
that changes in the market price of Revlon's Class A common
stock warrant an extension, or if the Company decides to give
investors more time to exercise their subscription rights in the
rights offering. However, because MacAndrews & Forbes has agreed
to back-stop this rights offering, Revlon will not need to
extend the exercise period because the back-stop arrangement
ensures that Revlon will receive total gross proceeds of $50
million. Subscription rights that are not exercised by the
expiration date of this rights offering will expire and will
have no value.
Shares of Revlon Class A common stock are quoted on the New York
Stock Exchange under the symbol "REV." The last sale price of
the Class A common stock on April 24, 2003 was $2.83 per share.
It is anticipated that the subscription rights will be traded on
the New York Stock Exchange under the symbol "REV.RT."
Revlon Inc.'s March 31, 2003, balance sheet shows a total
shareholders' equity deficit of about $1.7 billion.
ROTECH HEALTHCARE: Government Investigates Financial Records
------------------------------------------------------------
Rotech Healthcare Inc. (Pink Sheets:ROHI) announced that, on
April 30, 2003, federal agents served search warrants at the
Company's corporate headquarters and four other facilities in
three states and were provided access to a number of current and
historical financial records and other materials. The agents
also served a grand jury subpoena on the Company on behalf of
the United States Attorney's Office for the Northern District of
Illinois relating to the same information. The Company is
cooperating fully with the investigation; however, it has not
been informed by the government of the subject matter of the
inquiry.
The Company can give no assurances as to the duration of the
investigation or as to whether or not the government will
institute proceedings against the Company or any of its
employees or as to the violations that may be asserted.
The Company previously received informal requests for
information from the Division of Enforcement of the Securities
and Exchange Commission related to matters that were the subject
of the Company's previously disclosed internal investigation
regarding VA contracts, and has already provided documents in
response.
As a health care provider, Rotech is subject to extensive
government regulation, including numerous laws directed at
preventing fraud and abuse and laws regulating reimbursement
under various government programs. The marketing, billing,
documentation and other practices of health care companies are
all subject to government scrutiny. To ensure compliance with
Medicare and other regulations, regional carriers often conduct
audits and request patient records and other documents to
support claims submitted by the Company for payment of services
rendered to patients. Similarly, government agencies
periodically open investigations and obtain information from
health care providers pursuant to legal process. Violations of
federal and state regulations can result in severe criminal,
civil and administrative penalties and sanctions, including
disqualification from Medicare and other reimbursement programs.
About Rotech Healthcare
Rotech Healthcare Inc. is a leading provider of home respiratory
care and durable medical equipment and services to patients with
breathing disorders such as chronic obstructive pulmonary
diseases (COPD). The Company provides equipment and services in
48 states through over 500 operating centers, located
principally in non-urban markets. Rotech's local operating
centers ensure that patients receive individualized care, while
its nationwide coverage allows the Company to benefit from
significant operating efficiencies.
SAFETY-KLEEN: First Amended Joint Reorganization Plan Supplement
----------------------------------------------------------------
Safety-Kleen Corp. and its debtor-affiliates present Judge Walsh
with a Plan Supplement to their First Amended Joint Plan of
Reorganization. The Supplement contains:
-- Form of Safety-Kleen Creditor Trust Agreement;
-- Form of Certificates of Incorporation for each of
Safety-Kleen HoldCo, Inc. and SK Holding Company,
Inc.;
-- Form of By-Laws for each of Safety-Kleen HoldCo, Inc.
and SK Holding Company, Inc.;
-- Amended Schedule of Assumed Executory Contracts and
Unexpired Leases;
-- Amended Schedule of Settling Insurers;
-- Amended Schedule of Revesting Assets for Dissolving
Debtors;
-- Schedule of Non-Released Persons; and
-- Form of Stockholders' Agreement.
The Safety-Kleen Creditor Trust Agreement
The terms of the Trust are described in the Plan and are not
materially modified by this Trust Agreement but the Agreement
does provide additional detail on some points. The Trust is
organized for the primary purposes of:
(a) liquidating the Trust Assets transferred to it and
distributing the proceeds with no objective to
engage in the conduct of a trade or business, except
to the extent reasonably necessary to, and
consistent with, carry out the liquidating purpose
of the Trust;
(b) effecting the Class 6 and 7 PwC Distributions; and
(c) effecting the Class 4 and 5 Distributions, all as
contemplated by the Plan and the Trust Agreement.
The Debtors still haven't identified the prospective Trustee.
However, provisions are made for the Trustee's service in
addition to those described in the Plan, and other conditions
are fleshed out by this Trust Agreement from the brief
discussion in the Plan.
1) Co-Trustees or Separate Trustees. In order to, and only
to the extent necessary to, meet any legal requirements
of any jurisdiction in which any of the Trust's assets
may from time to time be located, the Trustee will have
the power to appoint one or more individuals or
corporations either to act as co-trustee jointly with
the Trustee of all or any part of the Assets or to act
as separate trustee of all or any part of the Assets,
and to vest in that person or persons appointed in such
a capacity such title to all or any part of the Assets
such rights, powers, duties, trusts or obligations as
may be necessary for the Trustee to perform its duties
under this Trust Agreement.
2) Trustee's Duties. The Trustee, "in an expeditious but
orderly manner", is directed to:
(i) liquidate and convert to cash the Trust Assets;
(ii) make timely distributions to the holders of
Allowed Claims in Classes 4 through 7;
(iii) review, pursue and compromise objections to
Claims in Classes 4 through 7;
(iv) pursue and settle any other Trust Claims; and
(v) "not unduly prolong" the duration of the Trust.
3) Trust Advance. The Trust Advance will be funded by the
Debtors or Reorganized Debtors by delivering to the
Trustee a $1,250,000 loan advance on the Effective Date
of the Plan, "or as soon thereafter as practicable."
The Trustee is to use the Trust Advance consistently
with the purposes of the Trust and subject to the terms
and conditions of the Plan and the Trust Agreement.
The Trust must reimburse the Reorganized Debtors for the
full amount of the Trust Advance, plus interest, from
the first Trust Recoveries, provided that the Trust's
funding doesn't fall below $125,000.
4) Claims Administration Responsibility. The Trustee, on
the Trust's behalf, will be responsible for
administering, disputing, objecting to, compromising or
otherwise resolving and making distributions on account
of the Trust Claims and any Claims in Classes 4 through
7. The Trustee will be deemed substituted as a party to
any claims objections filed by the Debtors concerning any
claims in Classes 4 through 7 that are pending as of the
Effective Date of the Plan, and will be authorized and
empowered after that date to prosecute those objections
and file new objections in the name of and in
substitution for the Debtors with respect to claims in
Classes 4 through 7.
5) Claims Objection Deadline. As soon as practicable, but
no later than the Claims Objection Deadline, the Trustee
will file with the Bankruptcy Court and serve such
objections on the creditors holding the Claims to which
objections are made. Nothing contained in this
Agreement, however, will limit the Trustee's right to
object to Claims, if any, filed or amended after the
Claims Objection Deadline. The Claims Objection Deadline
may be extended by the Bankruptcy Court upon motion by
either the Disbursing Agent or the Trustee without notice
or hearing.
6) Disputed And Contingent Claims Trust Distribution
Reserve. The Trustee will establish the Trust
Distribution Reserve by withholding the Trust
Distribution Reserve from the Trust Assets to be
distributed to holders of Allowed Claims in Classes 6 and
7. The Trustee may request estimation for any Class 6
and 7 Disputed Claim that is contingent or unliquidated
and the Trustee will withhold the Trust Distribution
Reserve based upon the amount of each such Claim as
estimated by the Bankruptcy Court. If the Trustee elects
not to request an estimation from the Bankruptcy Court
with respect to a Disputed Claim that is contingent, the
Trustee will withhold the Trust Distribution Reserve
based upon the Face Amount of such Claim. In addition,
the Trustee will place in the Trust Distribution Reserve
any dividends, payments or other distributions made on
account of, as well as any obligations arising from, the
property withheld as the Trust Distribution Reserve, to
the extent that such property continues to be withheld as
the Trust Distribution Reserve at the time such
distributions are made or such obligations arise. If
practicable, the Trustee will invest any Cash that is
withheld as the Trust Distribution Reserve in a manner
that will yield a reasonable net return, taking into
account the safety of the investment and restrictions
imposed on the Trustee's investment revisions.
7) Retention of Attorneys, Accountants and Other
Professionals. Subject to the retained jurisdiction of
the Bankruptcy Court as provided for in the Plan, the
Trustee may employ professionals, including attorneys,
accountants, disbursing agents, experts, advisors,
consultants, investigators, appraisers or auctioneers as
it may deem necessary, in its sole discretion, to aid in
the performance of its responsibilities under the terms
of this Trust Agreement and the Plan including the
liquidation and/or distribution of Trust Assets. The
retained professionals will continue to prepare monthly
statements and will serve those statements on the
Trustee. In the event that the Trustee objects to the
reasonableness of such fees and expenses, the matter will
be submitted to the Bankruptcy Court for approval of the
reasonableness of such fees and expenses.
8) Standard of Care; Exculpation; Indemnification. The
Trustee, the Trustee's employees and the Trustee's
professionals and representatives will be and are
exculpated by all Persons, including without limitation,
any Claimholder in Class 4 through 7 -- or successors
of such entities -- and other parties-in-interest, from
any and all claims, causes of action and other assertions
of liability arising out of the discharge of the powers
and duties conferred upon such Trustee by the Plan, this
Trust Agreement or any order of the Bankruptcy Court
entered pursuant to or in furtherance of the Plan, or
applicable law or otherwise, except for actions or
omissions to act that are determined by final Bankruptcy
Court order to be due to gross negligence, willful
misconduct or fraud after the Effective Date. No
Claimholder in Class 4 through 7 or other party-in-
interest will have or be permitted to pursue any claim or
cause of action against the Trustee, the Trust or the
employees, professionals or representatives of either the
Trustee or the Trust for making payments in accordance
with the Plan or for implementing the provisions of the
Plan. The Trust, but not any Claimholder in Class 4
through 7, will indemnify, defend and hold harmless the
Trustee, the Trustee's employees and the Trustee's
professionals or representatives from and against any
and all claims, causes of action, liabilities,
obligations, losses, damages or reasonable expenses,
including reasonable attorneys' fees and expenses -
other than and only to the extent determined by a final
Bankruptcy Court order to be due to the Trustee's gross
negligence, willful misconduct or fraud after the
Effective Date -- to the fullest extent permitted by
applicable law. Any action taken or omitted to be taken
with the Bankruptcy Court's express approval will
conclusively be deemed not to constitute gross
negligence, willful misconduct or fraud.
9) Quarterly Reports; Tax Filings and Notices. As soon as
practicable after the end of the first, second and third
quarters of each calendar year, beginning on a yet-to-be
designated date in 2003, and as soon as practicable upon
termination of the Trust, the Trustee will submit to the
Bankruptcy Court and make available to the Beneficiaries
a written report, including:
(i) the Trust's financial statements at the end of the
calendar year or period and the Trustee's receipts
and disbursements for such period; and
(ii) a description of any action taken by the Trustee in
the performance of its duties which materially
affects the Trust and of which notice has not
previously been given to the Beneficiaries.
Within 120 days after the end of each calendar year --
unless the Trust was terminated during that calendar
year, and in such case, within 120 days after such
termination, the Trustee is to submit to the Bankruptcy
Court and the Beneficiaries a written report disclosing
transactions for the prior calendar year, including:
(i) the Trust's financial statements at the end of
such calendar year and the Trustee's receipts and
disbursements for the year;
(ii) a description of any action taken by the Trustee
in the performance of its duties which materially
affects the Trust; and
(iii) a separate statement for each Beneficiary setting
forth the holder's share of items of income, gain,
loss, deduction or credit.
The Trustee is to "promptly" submit additional reports to
the Bankruptcy Court -- and make those reports available
to the Beneficiaries -- whenever "an adverse material
event or change occurs" which affects either the Trust,
or the rights of the Persons receiving distributions.
10) Duty to Cooperate. The Reorganized Debtors and the
Disbursing Agent will cooperate with the Trustee in
pursuing the Trust Claims, and will make available
reasonable access during normal business hours, on
reasonable notice, to personnel and books and records of
the Reorganized Debtors to representatives of the Trust
to enable the Trustee to perform the Trustee's tasks
under the Trust Agreement and the Plan; provided,
however, that the Reorganized Debtors will not be
required to make expenditures in response to the requests
determined by them to be "unreasonable." All costs and
expenses associated with the administration of the Trust,
including those rights, obligations and duties described
in the Plan, will be the responsibility of and paid by
the Trust. Any requests for assistance will not
unreasonably interfere with the Reorganized Debtors'
business operations.
11) Coordination of Efforts. The Reorganized Debtors and the
Trust will be entitled to pursue their claims against
persons allegedly liable in respect of both a Trust Claim
and a claim or cause of action held by the Reorganized
Debtors. The Reorganized Debtors and the Trust may, but
will be under no obligation to, enter into arrangements
for the joint prosecution of their claims, the sharing of
litigation costs and/or recoveries and any other
arrangements that are mutually acceptable to each such
party. Neither the Reorganized Debtors nor the Trust
will have the right to release a common defendant or any
other entity from the claims of the other.
12) Termination. The Trust will continue until the earlier
of:
(i) termination of the Trust as approved by the
Bankruptcy Court after distribution of all of the
Trust Assets, or
(ii) five years after the Effective Date; provided,
however, that the power to appoint co-trustees, and
provision for the Trustee's compensation will
survive the termination.
The New Corporations
The Plan Supplement contains the incorporation and bylaws for
two new entities -- Safety-Kleen HoldCo, Inc. and SK Holding
Company, Inc. Each is to have a Board of Directors composed of
five to nine natural persons, not necessarily residents of
Delaware, whose compensation is to be fixed by the Board's
resolution, but who will automatically receive reimbursement for
expenses incurred in connection with attendance or participation
in board meetings. The corporations' officers are to consist of
a Chairman of the Board, President, Treasurer and Secretary,
with other officers created by Board resolution. Any number of
offices may be held by the same person.
From the standpoint of creditors and shareholders, the most
significant term of the bylaws for these new corporations,
although not unusual in corporate structures, are the provisions
for officer and director indemnification. The new corporations
are to indemnify, and advance expenses to each of their officers
and directors to the fullest extent permitted by applicable law
in effect at the time of incorporation, and to a greater extent
as applicable law may thereafter from time to time permit. The
indemnification obligation is a contract right and includes "the
right to receive payment in advance of any expenses incurred by
the indemnitee" consistent with the provisions of applicable
law.
When an indemnitee is, by reason of that person's corporate
status, a witness in any proceeding, the officer or director is
to be indemnified against all expenses "actually and reasonably
incurred" by the indemnitee or on her or his behalf.
Amended Schedule of Assumed Executory Contracts
and Unexpired Leases
The Debtors estimate $513,432.91 as the total cure amount for
all executory contracts and unexpired leases to be assumed.
This includes numerous customer contracts, and vendor agreements
like:
Assuming Debtor Non-Debtor Agreement Cure
Debtor Assignee Party Description Amount
-------- -------- ---------- ----------- ------
Services Systems 300 Canal St. Assoc. Realty $0
SKC AARum Company Termination 0
Agreement
Services Systems A-BCD Inc. Rail track 0
Systems AHR Trucking/Storage Realty 475.00
Systems Albrecht Properties Realty 2,600.00
Systems Amoco Oil Realty 9,553.78
SKC Systems Amquest Inc. Server 9,806.00
Hosting
Systems B&B Enterprises Realty 4,377.00
Systems BC Stocking Dist. Realty 8,061.13
Services Systems Church & Dwight P'ship 0
Systems Church & Dwight Sales Pact 0
Systems City of Grimes Access 0
SK PR Enviro CMA Architects Services 6,290.96
Systems PR
Systems Dolores Marotta Realty 0
Systems Donald Sourbeck Realty 0
Systems Elgin/Joliet RR Realty 4,243.00
Systems Emmert Develop. Realty 0
Systems Ferrellgas Equipment 0
Rent & Gas
sales
Systems Foxford Bus. Ctr. Realty 0
Services Systems Garfield Western RR Rail track 0
lease
SKC GMC Corporate 0
Purchase
Systems Geoconsult Environment 26,001.00
Testing
Systems Halliburton Services 0
Ecogard Hogan Motor Leasing Truck leases 0
Systems Iowa Northern RW Realty 3,718.90
Systems JD Kinsey Realty 1,629.00
Systems J. Crandall/Lightfoot Realty 3,200.00
Systems Joe F. Jones Realty 1,413.00
Services Systems Koch Gateway Pipeline Intermittent 0
Services
SKC Systems Kleinschmidt Rail report 3,241.00
Systems Lee Shamaley Trust Realty 895.00
Systems Leroy Tipping Realty 1,368.00
Systems Little Rock Port Realty 1,077.16
Authority
Services Systems Manulife Insurance 0
Systems Mark's Engineering Tenant 0
Systems Mason Elevator Co. Tenant 0
Systems Max Value Inc. Fork lift 928.12
SKC Systems Network Associates Software 0
SKC Systems Nichibei Koyu Co. License 0
Oil Recovery Nipsco Elect. 135,226.00
Systems Oil Filter Recycler Disposal 0
Systems Okhui Plummer/Deiny Realty 2,544.00
Laidlaw Systems Page & Kraemer Env. Services 0
Services Systems Penske Rollins Truck leases 0
SKC Systems Peterson Risk Insurance 0
Recovery
Oil Praxair Hydrogen 80,896.00
Recovery
Oil Praxair Hydrogen 17,609.00
Recovery
Systems Rex Cope Family Tr. Realty 0
Systems Rohnert Park Auto Tenant 0
Services Systems Roseboro Lumber Co. Rail track 0
Laidlaw Systems Schering Corp. Transport 0
& disposal
Systems Security Land Realty 0
Rollins Systems Shell Oil Chem. Services 0
Pinewood Systems S.Carolina Waterfowl Tenant 0
Systems Tex/Mex RR Track lease 15,672.00
Systems Thomas Anthony Realty 0
SKC Systems United Behavioral E'ee Assist. 326.44
Systems Universale Lab Analysis 0
SKC Unum Insurance 0
SKC Systems US Trust HR Services 0
SKC Vision Service Plan Vision Adm. 82,321.35
Systems Waste Management Trash Rem. 0
Systems Western Indus. Devl. Realty 0
Systems Wm Leonard Dupont Realty 0
SKC Systems Zevnick Gutbord Tort rep. 0
Amended Schedule of Revesting of Assets
Despite being called a "revesting" Schedule, the Debtors
disclose that, post-confirmation, the bulk of the assets in
these cases are to be transferred from other Debtors to Systems
or to Systems and its subsidiaries. This includes accounts
receivable from entities like Safety-Kleen Services, GAX
Services, LEMC, Safety-Kleen Encotec, Safety-Kleen (California),
Safety-Kleen (Altair), Safety-Kleen Corporation, Safety-Kleen
(San Jose), and Safety-Kleen (Plaquemire):
Original
Debtor Non-Debtor Asset
-------- ---------- -----
LEMC Inc. Computer equipment rent
Services Construction re SAP
Services Office equipment
SK San Jose A Stripping Account receivable
Services A.J. Mehta Employee assistance
GSX Serv. A-1 Pumping Non-compete agreement
SKC American Home Insurance
Services Bank of America Bank accounts
Services Banc One Escrow re Laidlaw
SKC C&C Pest Con. Pest services
SKC Calif. Union Insurance
SKC CEM Service Maintenance
Services Clean Harbors Acquisition Agreement
Services Davis Malm Letter agreement
SKC Deloitte Touche Auditing services
Services Dun & Bradstreet Services
SK Altair Durrett Demol. Account receivable
SK E. Carbon E. Carbon Dev. Asset Purchase Pact
SK PPM Environmental Waste Account receivable
GSX Tank Enviropact Non-competition Pact
SK Pinewood Federal Insurance Insurance
SKC Gerling Insurance
SKC Hartford Insurance
SK LA Illinois Union Insurance
SKC IRS Appeal settlement
SKC John Bomhoff Nondisclosure Pact
SKC JPMorgan Chase Escrowed funds
SK Pectonica Kleepie Tank Account receivable
SK California Landamerica Title insurance
SKC Lexington Insurance
SKC Liberty Mutual Insurance
SKC London Guarantee Insurance
SK Encotec La. Dept. of Rev. Refund
SKC Lexington Ins. Insurance
Services LIN Longshore Moving services
SKC Micro-Focus IT support
Services MSLL GP Software license
SK Pinewood National Union Insurance
Services Nextel Wireless
SKC N. Amer. Ins. Insurance excess
SK Buttonwillow N. Amer. Dirt Account receivable
SK Encotec Ohio Dept. Rev. Tax Refund
SKC Onebeacon Insurance
SKC Owned real estate
Services Parkway Prop. Realty
SKC Perkins Elmer Maintenance
SK Pinewood Puritan Ins. Insurance
SK (NE) Resource Cont. Account receivable
SKC Resun Leasing Office trailer
SK Lone & Grassy Mtn Rich Land Title Title insurance
SK Altair Royal Insurance Insurance
SK San Jose Safe-Way Chem. Account receivable
Services SAP America Software
Services Schneider Logistic Nondisclosure agreement
SK Lone & Grassy Mtn Security Title Title insurance
SKC Thomas Group HR services
Services Ticor Title Title insurance
Services Time Warner Tele. Exchange services
SKC Towers Perrin Actuarial services
Services TXU Energy Gas sales agreement
SKC Twin City Fire Insurance
GSX Services US Title Title insurance
SK Chemical Serv. Unico Inc. Account receivable
Services Wachovia Bank Lockbox
Services Warren Teeple Consulting
Services Wells Fargo Confidentiality Pact
SKC Wellspring Cap. Confidentiality Pact
Services Winzip Computing Software license
SKC XL Specialty Insurance
Stockholders' Agreement
Parties to this agreement will the new Holdco corporation when
formed, its new parent, and each of the future stockholders who
receive equity securities and preferred stock under the Plan.
The stockholders are deemed to become parties to this agreement
by voting to accept the Plan.
Under the terms of this Agreement, no stockholder will sell,
assign, pledge, hypothecate, make gifts of or in any manner
whatsoever dispose of or encumber any equity securities or
preferred stock now owned or thereafter acquired by the
stockholder. However, a stockholder may make a transfer of the
securities of a given class until such time as the company or
its agents will, taking account of any then-currently pending
transfers of equity securities of such class known to the
company or its agents by any stockholder, notify the
stockholders that, giving effect to all then-currently pending
transfers known to the company or its agents, there are or could
reasonably be expected to be over 450 holders of record of the
class of securities.
If the company notifies the stockholders with respect to any
class of securities that the 450-holder threshold has been, or
could reasonably be expected to be, reached or exceeded, the
stockholders are prohibited from transferring any securities of
such class to any person other than a holder of record of
securities of the same class or in a transfer in which all
securities held by such stockholders are transferred to a single
person. (Safety-Kleen Bankruptcy News, Issue No. 56; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
SAMSONITE CORP: Forges Recapitalization Pact with 3 Investors
-------------------------------------------------------------
Samsonite Corporation (OTC Bulletin Board: SAMC) announced that
it has entered into a recapitalization agreement with Ares
Corporate Opportunities Fund, L.P., Bain Capital (Europe) LLC
and Teachers' Merchant Bank, the private equity arm of Ontario
Teachers' Pension Plan, regarding a comprehensive
recapitalization and financial restructuring plan. The Company
also announced that it will delay the filing of its Annual
Report on Form 10-K for up to 15 days past the May 1, 2003 due
date.
Recapitalization Plan
Under the terms of the recapitalization agreement, the new
investors will purchase 106,000 shares of a new series of the
Company's convertible preferred stock with an initial dividend
rate of 8% for $106 million. The Company intends to use the
proceeds from the sale of the new preferred stock to repay bank
debt, to pay fees and expenses incurred in connection with the
recapitalization and for working capital. In addition, upon
closing of the recapitalization, the Company's existing senior
credit facility will be replaced with a new $60 million
revolving credit facility.
As part of the recapitalization, the Company will also retire
all of its 281,131 outstanding shares of 13-7/8% senior
redeemable exchangeable preferred stock (which had an aggregate
liquidation preference of approximately $333.4 million at March
15, 2003) in exchange for a combination of up to 54,000 shares
of new preferred stock (with an aggregate liquidation preference
of $54 million) and (assuming the full amount of new preferred
stock is elected to be received by existing preferred
stockholders) approximately 205 million shares of common stock.
The holders of the existing preferred stock will be given a
choice to exchange their 13-7/8% preferred stock for either a
combination of new convertible preferred stock and common stock
or common stock and warrants to purchase shares of common stock
at an exercise price of $0.75 per share. The holders of the
existing preferred stock choosing common stock and warrants will
receive warrants to purchase 276 shares of common stock for each
share of existing preferred stock. The detailed terms of the
recapitalization, including the terms of the exchange feature
and the terms of the new preferred stock, are set forth in the
recapitalization documents which will be filed shortly with the
Securities and Exchange Commission as exhibits to a Current
Report on Form 8-K.
The 160,000 shares of new preferred stock will be initially
convertible into an aggregate of 381 million shares of common
stock and will vote with the common stock on an as-converted
basis on all matters submitted to a vote of common stockholders.
The shares of new preferred stock issued to the new investors
will represent approximately 42% of the Company's voting stock
immediately following the recapitalization. The shares of new
preferred stock and common stock issued in the exchange will
represent approximately 55% of the Company's outstanding voting
stock immediately following the recapitalization. As a result of
the recapitalization, the existing common stockholders will be
diluted to approximately 3% of the Company's outstanding voting
stock. The new investors and their affiliates will control
approximately 56% of the outstanding voting stock immediately
following the recapitalization.
Concurrently with the closing of the recapitalization, the
Company's board of directors will be reconstituted to consist of
nine nominees selected by the new investors. Initially, six of
the nine directors selected by the new investors will be
independent directors.
The closing of the recapitalization is subject to numerous
conditions, including the receipt of approval from the holders
of a majority of each of the Company's outstanding common stock
and outstanding preferred stock, governmental and other third-
party approvals, a maximum net debt level, entering into the new
credit facility and the absence of a material adverse change.
Holders of 50.9% of the outstanding common stock and 63.4% of
the outstanding preferred stock have agreed to vote in favor of
the recapitalization. The closing of the recapitalization is
also subject to the condition that the Company and the Pension
Benefit Guaranty Corporation (the "PBGC") reach an agreement
satisfactory to the new investors with respect to, among other
things, the Company's ability to refinance the new credit
facility in the future (the "PBGC Condition"). Subject to the
satisfaction of these conditions, the Company expects the
closing of the recapitalization to occur in the third calendar
quarter of 2003. However, no assurance can be given that the
conditions to closing will be satisfied or that the
recapitalization will ultimately be consummated.
Jefferies & Company, Inc. is acting as financial advisor to the
Company in connection with the recapitalization and has rendered
an opinion to the Company's Board of Directors to the effect
that the recapitalization is fair to the Company, its common
stockholders and its preferred stockholders, from a financial
point of view.
The Company plans to file a proxy statement with the Securities
and Exchange Commission with respect to the proposed
transaction, and the common stockholder vote is expected to be
completed at the next annual meeting which will be postponed
from the normal meeting date in June 2003 until some time later
in 2003. Stockholders are advised to read the Company's proxy
statement when it is available because it will contain important
information about the transaction. Stockholders may obtain a
free copy of the Company's proxy statement and any other
relevant documents after they are filed with the Securities and
Exchange Commission at http://www.sec.gov
The securities that may be offered in connection with the
recapitalization have not been and may not be registered under
the Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption
from such registration requirements. This press release does not
constitute an offer to sell or the solicitation of an offer to
buy any of those securities.
Delay in Filing of Annual Report;
Extension of Credit Facility
The Company also announced that it will delay, for up to 15 days
past the May 1, 2003 due date, the filing of its Annual Report
on Form 10-K for the fiscal year ended January 31, 2003. The
Company has entered into an amendment to its existing senior
credit facility that extends the maturity date of the revolving
credit and European term loans thereunder from June 24, 2003 to
June 24, 2004 subject to, among other things, the resolution of
the PBGC Condition in a manner satisfactory to the new
investors. Had the Company filed its Annual Report on Form 10-K
on the May 1 due date, absent satisfaction of the PBGC
Condition, the Company believes that the report of the Company's
independent auditors on the Company's financial statements as of
and for the fiscal year ended January 31, 2003 would have
contained a qualification regarding the Company's ability to
continue as a going concern. The Company is in the process of
negotiating satisfactory arrangements with the PBGC in an effort
to satisfy the PBGC Condition prior to May 16, 2003, the
extended due date for the filing of its Annual Report on Form
10-K. If a satisfactory agreement with the PBGC is not reached
by that date, the Company will file its Annual Report on Form
10-K with the SEC with a report from its independent auditors
that the Company believes will contain a "going concern"
qualification.
The Company believes that having an extended maturity date for
its credit facilities is necessary for the Company to have non-
current debt and to receive an unqualified report on its 2003
financial statements from its auditors. There can be no
assurances that such a report will be received. In addition, if
the PBGC Condition is not satisfied, it is uncertain whether a
recapitalization will be consummated, in which case the Company
will need to consider other possible alternatives available to
it.
Samsonite Corporation will hold a conference call with
securities analysts to discuss this press release at 10:00 a.m.
Eastern Daylight Time on Monday, May 5, 2003. Investors and
interested members of the public are invited to listen to the
discussion. The dial-in phone number is (877) 809-7599 in the
U.S. and (706) 679-6135 for international calls, the conference
name is Samsonite and the conference ID # is 242464. The leader
of the call is Luc Van Nevel. If you cannot attend this call, it
will be played back through Friday, May 23, 2003. The playback
number is (800) 642-1687 in the U.S. and (706) 645-9291 for
international calls, and the conference ID # is 242464.
Samsonite is one of the world's largest manufacturers and
distributors of luggage and markets luggage, casual bags,
backpacks, business cases and travel-related products under
brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R),
HEDGREN(R) and SAMSONITE(R) black label.
The Ares Corporate Opportunities Fund, L.P. (ACOF), an affiliate
of Ares Management, is a private equity fund that makes
negotiated investments in leading middle market companies.
ACOF's primary focus is the de-leveraging and recapitalization
of highly leveraged companies. The limited partners of ACOF
include pension funds, banks, insurance companies and
endowments. Ares Management today consists of 35 investment
professionals managing ACOF and more than $3.5 billion of
capital primarily invested in leveraged bank loans and high
yield bonds.
Bain Capital is a global private investment firm with over $14
billion in assets under management. Since its inception in 1984,
the firm has made private equity investments and add-on
acquisitions in over 225 companies around the world, in a
variety of sectors, including consumer and retail companies with
operations in Europe. Headquartered in Boston, Bain Capital has
offices in London, Munich, New York, and San Francisco.
Teachers' Merchant Bank is the private equity arm of the C$66-
billion Ontario Teachers' Pension Plan. With a portfolio of
C$4.5 billion, Teachers' Merchant Bank is one of Canada's
largest private equity investors working with more than 100
companies around the world to create value by providing long-
term flexible capital.
SMTC CORP: Will Webcast First Quarter 2003 Results Today
--------------------------------------------------------
Notification of First Quarter Results Webcast:
SMTC Corporation (TSX: SMX) (Nasdaq: SMTX)
First Quarter Results Webcast
May 5, 2003, 5:00 PM ET
To listen to this event, enter
http://www.newswire.ca/webcast/viewEventCNW.html?eventID=545600
in your web browser.
SMTC Corporation, whose corporate credit and senior secured bank
loan are rated by Standard & Poor's at B, is a global provider
of advanced electronics manufacturing services to the technology
industry. The Company's electronics manufacturing and technology
centers are located in Appleton-Wisconsin, Austin-Texas, Boston-
Massachusetts, Charlotte-North Carolina, San Jose-California,
Toronto-Canada, Ireland and Mexico. SMTC offers technology
companies and electronics OEMs a full range of value-added
services including product design, procurement, prototyping,
printed circuit assembly, advanced cable and harness
interconnect, high precision enclosures, system integration and
test, comprehensive supply chain management, packaging, global
distribution and after-sales support. SMTC supports the needs of
a growing, diversified OEM customer base primarily within the
industrial, networking and communications markets. SMTC is a
public company incorporated in Delaware with its shares traded
on the Nasdaq National Market System under the symbol SMTX and
on The Toronto Stock Exchange under the symbol SMX. Visit SMTC's
Web site, http://www.smtc.com for more information about the
Company
SONIC FOUNDRY: March 31 Working Capital Deficit Tops $4 Million
---------------------------------------------------------------
Sonic Foundry (R), Inc. (Nasdaq:SOFO), a leading digital media
software solutions company, announced results for its second
quarter and first six months of fiscal 2003.
Sonic Foundry reported consistent sales; slight improvements in
gross margins; and, continued reductions in operating expenses
for both the second quarter and six-month periods.
"Sonic Foundry is getting ready to begin its next chapter," said
Rimas Buinevicius, chairman and CEO of Sonic Foundry. "As we
have previously stated, we are focusing our efforts on new high-
growth markets where we believe there is enormous opportunity
where rich media applications are being embraced. We are well
along in our process of selling certain business assets that
meet those business goals and expect to announce the outcome of
these efforts in the days ahead."
Highlights for the second quarter and first six months of 2003
include:
-- Second quarter revenues were $6.4 million, relatively
unchanged from $6.5 million reported for the second quarter
of fiscal 2002; but, up slightly from first quarter revenues
of $6.0 million. For the six-month period, revenues were
$12.4 million compared to $12.5 million reported one year
earlier.
-- Gross margins improved slightly quarter-to-quarter and year-
to-year. For the second quarter, Sonic Foundry reported gross
margins of $3.8 million compared to $3.7 million for second
quarter of 2002. Year-to-date, gross margins increased to
$7.4 million for fiscal 2003, compared to $6.9 million for
the first six months of fiscal 2002.
-- Operating expenses continued to be reduced -- both for the
quarter (down approximately 12 percent) and six-month period
(down approximately 8 percent) -- and, together with the
company's reduced cost of sales, helped lead to a sharp
improvement in reported loss from operations to $908,000, an
improvement of nearly 50 percent compared to the loss from
operations of $1.7 million reported for the second quarter of
2002. For the six-month period, the company reduced its loss
from operations by more than 30 percent to $3.0 million
compared to the loss of $4.3 million it reported for the same
period one year ago.
-- The company's net loss for the second quarter was $2.1
million, or 8 cents per share, compared to a net loss of $2.9
million, or 11 cents per share for the second quarter of
2002.
As of March 31, 2003, Sonic Foundry records a working capital
deficit of $4,030,000.
The company will host a conference call on Tuesday, May 6 at 9
a.m. ET to discuss its second quarter 2003 fiscal results and
go-forward strategy. A live Webcast and replay of the conference
call can be accessed at http://www.vcall.com.
About Sonic Foundry, Inc.
Founded in 1991, Sonic Foundry (Nasdaq:SOFO) is a leading
provider of desktop and enterprise digital media software
solutions. Its complete offering of media tools, systems and
services provides a single source for creating, managing,
analyzing and enhancing media for government, business,
education and entertainment.
Sonic Foundry is based in Madison, Wis., with offices in Santa
Monica, Toronto and Pittsburgh. For more information about Sonic
Foundry, visit http://www.sonicfoundry.com
STEIN MART: Closing 16 Stores To Improve Store Network Quality
--------------------------------------------------------------
Stein Mart, Inc. (Nasdaq: SMRT), a 270-store nationwide retail
chain, announced that it will close 16 under-performing stores
in 2003.
"This is part of our initiative to improve not only individual
store productivity, but the overall quality of the stores in our
chain," noted Michael D. Fisher, president and chief executive
officer of Stein Mart, Inc. "While this process is difficult for
our associates and our customers, we believe this action
complements the progress we've made in improving our new store
selection process, and provides us with a higher quality
platform from which to move forward."
Management cited a lack of profitability despite intensive
efforts to improve their operations as the reason for the 16
closures. As a group, the 16 stores accounted for $5.2 million
in operating losses in 2002 and averaged forty percent less
revenue per selling square foot than the chain as a whole.
Location issues and psychographic (e.g. fashion awareness in the
marketplace) factors contributed to the stores' poor
performances.
Three of the closings are underway or have been completed:
Richardson, TX, a suburb of Dallas, and Fayetteville, Arkansas
have closed; Greenfield, Wisconsin, a suburb of Milwaukee, will
close this month. The other thirteen stores have not been
publicly identified, but it is anticipated that a majority of
them will be announced and placed into a going-out-of-business
mode in the next several weeks.
In accordance with Statement of Financial Accounting Standards
("SFAS") No. 146, the estimated pretax charges that will be
recorded in 2003 are approximately $19 million or $0.28 per
share to recognize the present value of store closing costs. In
addition, approximately $10 million or $0.15 per share in
additional markdowns will be required to liquidate inventory in
those stores.
Beginning with locations opened in 2002, the Company revised its
approach to new store openings to include more detailed
analysis, including psychographics, and intensive local market
research provided by a third party consulting firm. This revised
approach, combined with a more intensive store opening marketing
strategy, produced the best sales-to-operating plan performance
in recent Company history for the 16 stores opened in 2002.
Using this approach, the Company will open 14 new stores in
2003. Seven new stores are already open and one more opens next
week. Six additional stores will open later this year.
About Stein Mart
Stein Mart's 270 stores offer the merchandise, service and
presentation of a traditional, better department/ specialty
store, at prices competitive with off-price retail chains.
Currently with locations from California to New York, Stein
Mart's focused assortment of merchandise features moderate to
designer brand-name apparel for women, men and children, as well
as accessories, gifts, linens and shoes.
TECHNICOIL CORP: Fails To Comply with Quarterly Loan Covenant
-------------------------------------------------------------
Technicoil Corporation's results in the first quarter of 2003
reflect the successful implementation of a number of actions
planned in 2002 to return the company to consistent
profitability.
Despite modest utilization rates at 39 percent for the quarter,
the company delivered a solid operating profit witnessing the
benefits of cost reduction actions taken late in 2002. The
operating profit enabled Technicoil to overcome charges
amounting to $0.4 million in the first quarter for asset
impairment and foreign exchange losses on the sale of rigs and
still produce a small profit.
First quarter 2003 revenues of $5.9 million were 30 percent
below the first quarter of 2002 when the majority of
Technicoil's fleet was contracted on a "take or pay" basis to a
major customer resulting in first quarter 2002 utilization rates
of 79 percent. Technicoil recorded net income of $139,110 or
$0.00 per share in the first quarter of 2003 after the above
noted charges compared to net income of $1.8 million or $0.05
per share in the first quarter of 2002. Cash flow from
operations was $0.6 million or $0.02 per share for the first
quarter of 2003 compared to $2.5 million or $0.06 per share for
the same period in 2002.
By the end of March, 2003 Technicoil had closed the sale of four
of the five coil tubing rigs it held for sale at the end of 2002
with the fifth rig having sold on April 21, 2003. The
combination of the rig sales, positive cash flow and modest
capital spending has enabled the company to significantly
enhance its financial position. Equipment loans have declined 53
percent since December 31, 2002 and equipment loans debt to
equity has declined to 27 percent at March 31, 2003 from 57
percent at December 31, 2002. Working capital balances were also
stronger at the end of March 2003 compared to December 31, 2002.
Operations
Technicoil operated an average of 13 rigs throughout the first
quarter of 2003 conducting both fracturing and drilling
operations for our customers. This compares to an average of 12
rigs for the first quarter of 2002. Four of the five rigs
planned for sale had been inspected and delivered to the buyer
by the end of March. Overall fleet utilization was 39 percent
for the quarter, which was the same as rates in the final
quarter of 2002 but below the utilization rate in the first
quarter of 2002 when a major customer "take or pay" contract
helped deliver 79 percent utilization rates. The year started
out on a stronger note with an average of 45 percent utilization
in January and February declining to 25 percent in March as
severely cold weather in early March was followed by above
normal temperatures and an early spring break up causing a
higher number of weather related down days than expected.
Fracturing utilization in the first quarter of 2003 was also
negatively impacted as rigs were taken out of service to prepare
them for sale. Drilling delivered 30 percent of revenue in the
first quarter of 2003 compared to 19 percent in the first
quarter of 2002.
All but two rigs were located in Canada by the end of March. The
two remaining rigs in the US, that will be released in the near
future and returned to Canada, are contracted on a retainer plus
day rate basis for coil fracturing. The US rigs averaged only 16
percent utilization in the first quarter. In Canada seven rigs
were delivering fracturing services in the first quarter at an
average utilization rate of 45 percent with a peak of 60 percent
for January. Technicoil continues to be the dominant supplier to
the most active pressure pumping companies conducting coil
fracturing operations. The equipment is ideally suited for this
activity and Technicoil staff is highly experienced at
conducting fracturing operations using coil.
Drilling operations were confined to the Canadian market and
focused primarily on shallow natural gas drilling in the Western
Canadian Basin. Technicoil drilled for seven different customers
in the first quarter as it continued its efforts to establish a
strong track record in coil tubing drilling. Drilling margins,
well below expectations, were at break even during the quarter
due to equipment problems, rig design deficiencies, the improper
rig application on one contract and difficulties experienced in
hiring qualified drilling personnel during a period of high rig
utilization in the industry. Technicoil's utilization was low
during the quarter at 39% due to the late start-up of both
drilling programs and the early termination of one. The drilling
activities conducted in the last quarter of 2002 and the first
quarter of 2003 have identified a number of enhancements to the
second generation rigs to improve their drilling performance.
These enhancements will be completed during the second and third
quarters.
Management Discussion and Analysis
Revenue and Net Income
A combination of lower utilization rates and fewer rigs in the
fleet resulted in a decline in revenue of 30 percent for the
three-month period ended March 31, 2003 compared to the quarter
ended March 31, 2002. Operating margins in the first quarter of
2003 were 26 percent compared to 50 percent for the same period
in 2002. Lower utilization rates and a higher proportion of
lower margin drilling work resulted in lower operating margins
in 2003 while margins in 2002 were above expectation due to high
utilization rates delivered by the take or pay contract that was
in place. Technicoil recorded net income of $139,110 ($0.00 per
share) in the first quarter of 2003 compared to $1.8 million
($0.05 per share) in the first quarter of 2002.
First quarter 2003 earnings were negatively impacted by one time
items related to the sale of coil tubing rigs in the quarter. At
December 31, 2002 Technicoil recorded impairment for five coil
tubing rigs it held for sale based on the sale price in US
dollars converted to Canadian dollars at the December 31, 2002
exchange rate. Between December 31, 2002 and the actual sale
dates for the rigs, the Canadian dollar strengthened
significantly, reducing the Canadian dollar proceeds and causing
further losses on the sale of the first four rigs of $370,310.
This loss was partially offset by gains resulting from
differences between the estimated and actual net book values of
assets sold. An additional impairment charge of $94,310 was
recorded in the first quarter of 2003 against the fifth rig to
be sold. Most of this adjustment reflects the impact of foreign
exchange on expected proceeds as at March 31, 2003.
Overall company utilization rates were 39 percent in the first
quarter of 2003 compared to 79 percent for the first quarter of
2002. Canadian utilization rates were higher than in the United
States at 39 percent for the two drilling rigs and 45 percent
for the seven fracturing rigs while the two US fracturing rigs
only delivered 16 percent utilization in the first quarter.
General and administrative expenses as a percent of revenue were
6 percent for the three month period ended March 31, 2003
compared to 8 percent for the first quarter of 2002 despite
lower revenues in the 2003 period. Action taken in late 2002 to
reduce management size and overhead has had a positive impact on
the general and administrative expenses in both total dollars
and as a percent of revenue. Technicoil's current administrative
infrastructure is expected to be able to support the current rig
fleet as it focuses on the Canadian market. No significant
increases to administrative costs are expected in 2003.
Amortization expense decreased four percent for the three month
period ended March 31, 2003 compared to the same period in 2002
as five coil tubing rigs and associated equipment was
reclassified to assets held for sale at December 31, 2002
resulting in a smaller capital asset base in the first quarter
of 2003 compared to the first quarter of 2002. Interest expense
increased 16 percent comparing the three-month period ended
March 31, 2003 to the quarter ended March 31, 2002 due to higher
debt balances in the 2003 period. The rig sales and resulting
debt reduction did not take until place late in the first
quarter of 2003.
Assets and Liabilities
Accounts receivable and accounts payable were both down 10
percent at March 31, 2002 compared to December 31, 2002 as first
quarter 2003 activity and revenue were slightly lower than in
the fourth quarter of 2002. Income taxes recoverable of $1.3
million reflect mainly losses for 2002 in the United States that
are creditable to taxes paid in 2001.
Working capital at March 31, 2003 and December 31, 2002 include
significant amounts for demand debt and assets held for sale.
Technicoil's equipment loan facility, repayable over 26 months,
is legally demand in nature and so is classified as a current
liability. As at March 31, 2003 Technicoil was not in compliance
with a quarterly loan covenant as it relates to debt service
coverage. The Corporation has discussed this with the lender and
does not expect the lender to exercise its demand privileges
within the next year.
Adjusting for the removal of the equipment loans and assets held
for sale at March 31, 2003 and December 31, 2002 working capital
was a positive $2.0 million or a ratio of 1.5:1 at March 31,
2003, an improvement over the December 31, 2002 balance of $1.9
million or a ratio of 1.4:1.
Equipment loan balances were 53 percent lower at March 31, 2003
compared to December 31, 2002 as proceeds from rig sales were
applied to the equipment loans in the first quarter of 2003,
positive cash flow was delivered and minor capital spending took
place. Technicoil's equipment loans to equity ratio decreased to
27 percent at March 31, 2003 from 57 percent at December 31,
2002. The final of five coil tubing rigs was sold on April 21,
2003 with a portion of the proceeds of $1.4 million also
targeted at further debt reduction.
Outlook
Activity levels have rebounded in the Canadian oil and gas
sector with improved utilization rates for drilling and
servicing industry wide. Weather negatively impacted the month
of March and normal spring break-up in April will reduce
activity for the beginning of the second quarter. Exiting break-
up, coil fracturing business is expected to stay strong
following the high drilling utilization rates in western Canada
in the last six months. The main driver of coil fracturing
activity is the drilling of new shallow gas wells.
Technicoil continues to develop and broaden its base of
customers for coil fracturing. This will help the Corporation
maintain high rates of utilization for the rest of the year
while being less susceptible to individual customer influences.
Technicoil is now a consistent participant in the drilling
market in Canada and has work lined up for its drilling
equipment after break-up and through the summer of 2003.
Technicoil expects coal bed methane production in western Canada
to move beyond the test phase and become established as a
valuable resource to our customers. Technicoil's equipment is
ideally suited for both drilling and fracturing coal bed methane
wells and the Company expects increased business from coal bed
methane producers. The Company will take advantage of the spring
break-up period to undertake the enhancements identified for the
drilling equipment to ensure maximum reliability and
performance. The 2003 capital program is budgeted at $1.6
million with the majority of it targeted at the drilling
systems.
Technicoil has taken action in Canada and the United States to
reduce costs in recognition of our reduced fleet size. These
cost reductions were apparent in the first quarter as reasonable
operating margins were delivered on modest utilization and
general and administrative costs are well below last year's
level. The balance sheet is stronger, significantly reducing
financial risk in Technicoil. The lower cost structure and
improved financial condition provide a solid base for the
Company as it enters a period of higher expected activity.
THERMOVIEW: Reports Lower First Quarter 2003 Financial Results
--------------------------------------------------------------
ThermoView Industries, Inc. (Amex: THV), one of the nation's
largest full-service home improvement remodeling companies,
reported financial results for the first quarter ending
March 31, 2003.
ThermoView, headquartered in Louisville, sells and installs
replacement windows, doors and other home improvements to
residential consumers in 17 states under well-known regional
home center brands that include Thomas, Primax, Rolox, Leingang
and ThermoView. All of these brands are consolidating under a
national brand, "THV, America's Home Improvement Company."
First quarter 2003 revenues were $16.2 million, or 21.6 percent
below year-ago quarterly revenues of $20.7 million. The net
loss attributable to common stockholders was $1.8 million, or 19
cents per basic and diluted share. That compares with a net loss
attributable to common stockholders of $30.9 million, or $3.53
per share, including a non-cash charge for writing off impaired
goodwill. Without the $30 million ($3.42 per share) accounting
charge, the first quarter 2002 net loss attributable to common
stockholders was $940,000, or 11 cents per share.
"The first quarter is typically our slowest quarter of the
year," said Charles L. Smith, President and CEO of ThermoView.
"Sales during the first quarter of 2003 were hit hard by the
severe winter weather. Many of our Midwest markets were snowed
under or iced over during a good portion of January and
February. As a result, sales appointments and orders dropped
significantly in comparison to our recent first quarters," Smith
said.
Even sales and appointments in Southern California markets --
one of ThermoView's prime winter sales markets -- were
negatively affected by the amount of rain that area received
during the winter, Smith said. Additionally, he said, consumer
confidence levels remained lower as the overall economy
continued to struggle. ThermoView management noticed a
reduction in sales in the two weeks after American troops began
fighting in Iraq. But sales returned to increasing levels after
the most intensive combat ended.
From mid-March and into April, sales levels have increased and
installation backlogs have grown as the company heads into its
traditionally stronger selling season.
In early April, the company implemented a modest price increase
of between two and three percent in order to improve operating
margins. Smith said the company has continued to emphasize
internal cost efficiencies and best operational practices.
One of the company's key priorities has been to refinance and/or
restructure its long-term debt and preferred stock in order to
achieve better rates and terms and greater flexibility.
Management has had discussions with a financial institution
regarding refinancing a portion of its debt and is working on
restructuring existing debt and preferred stock obligations.
A large portion of ThermoView's debt comes due in 2004, as does
a requirement to redeem at least 20 percent of the preferred
stock. Lenders and preferred stockholders agreed in principle
this week to delay maturities by six months, providing
additional time for the refinancing and helping ensure that
long-term debt due in 2004 does not become a current liability,
due within one year.
Annual meeting highlights and priorities for 2003
At the annual meeting, stockholders re-elected directors Ron
Carmicle, Ray Dauenhauer and Bruce Merrick to terms that expire
in 2006.
In his address to stockholders, Smith said that the company had
accomplished much in the past two years. He said there were
many important priorities for 2003, including:
* Stabilizing and growing revenues.
* Refinancing a portion of long-term debt and renegotiating
the terms of existing debt and preferred stock agreements.
* Completing the "best practices" model that will serve as a
template for day-to-day and future operations.
* Expanding into one additional market, rather than the
previously announced two markets, while preparing for
expansion into other markets.
* Continuing to find ways to operate the company more
efficiently.
* Introducing the new high-strength Compozit line of windows
throughout ThermoView's markets and standardizing product
lines
Smith said the sales launch for the new Compozit window line
would most likely be in mid-summer. "Compozit is the
centerpiece of our replacement window strategy. We believe that
this superior window will provide our sales force a competitive
advantage over other companies and their offerings, and should
provide added value to our bottom line," he said.
ThermoView's online financing option is expected to speed
financing decisions for customers, and convert more preliminary
sales into final sales.
"Our goal is to make ThermoView into a company that is
streamlined and unified," said Smith. "We will continue working
toward our long-term goal of becoming America's largest full-
service home improvement company."
About ThermoView Industries, Inc.
ThermoView is a national company that designs, manufactures,
markets and installs high-quality replacement windows and doors
as part of a full-service array of home improvements for
residential homeowners. ThermoView's common stock is listed on
the American Stock Exchange under the ticker symbol "THV."
Additional information on ThermoView Industries is available at
http://www.thv.com.
* * *
In its latest Form 10-Q delivered to the Securities and Exchange
Commission, the company states:
Under our financing arrangements, substantially all of
our assets are pledged as collateral. We are required
to maintain certain financial ratios and to comply with
various other covenants and restrictions under the terms
of the financing agreements, including restrictions as to
additional financings, the payment of dividends and
the incurrence of additional indebtedness. In
connection with waiving defaults at June 30, 2000, PNC
Bank required us to repay $5 million of our $15 million
credit facility with them by December 27, 2000. We were
unable to make the required December 27, 2000 payment,
violated various other covenants, and were declared in
default by PNC Bank in early January 2001. The declaration
of default by PNC Bank also served as a condition of
default under the senior subordinated promissory note
to GE Equity. GE Equity and a group of our officers and
directors in March 2001 purchased the PNC note, and
all defaults relating to the GE Equity note and the
purchased PNC Bank note were waived.
If we default in the future under our debt arrangements,
the lenders can, among other items, accelerate all
amounts owed and increase interest rates on our debt. An
event of default could result in the loss of our
subsidiaries because of the pledge of our ownership
in all of our subsidiaries to the lenders. As of
September 30, 2002, we are not in default under any of
our debt arrangements.
We believe that our cash flow from operations will
allow us to meet our anticipated needs during at least the
next 12 months for:
* debt service requirements;
* working capital requirements;
* planned property and equipment capital
expenditures.
* expanding our retail segment
* offering new technologically improved products
to our customers
* integrating more thoroughly the advertising and
marketing programs of our regional subsidiaries
into a national home-remodeling business
We also believe in the longer term that cash will be
sufficient to meet our needs. However, we do not expect
to continue our acquisition program soon. In October
2002, we opened a new retail sales office in Phoenix,
Arizona, and are working to open two new retail offices
in Nebraska or Iowa and in a southern state in 2003.
UNITED AIR: S&P Hatchets Bond Ratings to D over Payment Defaults
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on all
United Air Lines Inc. (rated 'D') special facility revenue bonds
that had not previously defaulted except the Series 1992
(Regional Airports Improvement Corp.), Series 1995A
(Indianapolis Airport Authority), and U.S. government-guaranteed
Series 1974A (San Francisco Airport) bonds. Ratings were also
removed from CreditWatch, where they were placed on Nov. 29,
2002.
"The downgrades reflect recent payment defaults by the airline
on these issues," said Standard & Poor's credit analyst Philip
Baggaley. United is the major operating subsidiary of UAL Inc.
(also rated 'D').
The following bonds were lowered to 'D' from 'CCC-', and removed
from CreditWatch: California Statewide Community Development
Authority Series 1997A, Denver City & County Series 1992A,
Massachusetts Port Authority Series 1999A, New York City
Industrial Development Agency Series 1997, O'Hare International
Airport Series 1999A and 1999B, and Regional Airports
Improvement Corp. (Los Angeles International Airport) Series
1984. Ratings on the Regional Airports' Series 1992 were lowered
to 'CC' from 'CCC' and remain on CreditWatch negative. In
addition, the CreditWatch implications on the 'CC' ratings on
Indianapolis Airport Authority Series 1995A were revised to
negative from developing.
In UAL's 2002 10-K report, the company stated that future
payments for special facility revenue bonds will not be made.
Ratings on the Series 1992 (Regional Airports Improvement Corp.)
and Series 1995A (Indianapolis Airport Authority) bonds are
expected to be lowered to 'D' on May 15, 2003, the date of the
next required interest payment.
UNUMPROVIDENT: Prices Offering of Common Stock & Mandatory Units
----------------------------------------------------------------
UnumProvident Corporation (NYSE: UNM), whose debt ratings have
been recently cut to low-b levels by A.M. Best Co., announced
that it has priced its offering of $500 million of common stock
and $500 million of Mandatory Units. The offering included
45,980,000 common shares priced at $10.875 per share, and
20 million Units ($25 per Unit).
The Units offer a coupon of 8.25 percent and offer an
approximate conversion price of $13.27 (a 22 percent premium to
the sale price of the common stock). The delivery of the shares
and the Units is expected to take place on May 7, 2003.
The net proceeds of the offering will be used to reduce inter-
company loans and increase the capitalization of the Company's
insurance subsidiaries.
Goldman, Sachs & Co., Banc of America Securities LLC, and Morgan
Stanley were the joint lead managers of the offering. Goldman,
Sachs & Co. acted as book runner for both offerings. Deutsche
Bank Securities, Merrill Lynch & Co. and SunTrust Robinson
Humphrey acted as co-managers in each offering.
"This combined offering was the principal component of our
restructuring plan to re-establish a strong financial platform,"
said Tom Watjen, President and Chief Executive Officer. "We are
pleased that both offerings were oversubscribed, and that the
process was completed well within our expected time frame. Our
focus now is on executing our business plan with greater
precision and consistency, and working to restore investor
confidence."
The subsidiaries of UnumProvident Corporation offer a
comprehensive, integrated portfolio of products and services
backed by industry-leading return-to-work resources and
disability expertise. UnumProvident is the world leader in
protecting income and lifestyles through its comprehensive
offering of group, individual, and voluntary benefits products
and services. UnumProvident's primary operations are in the
United States, Canada and the U.K.
WACKENHUT CORRECTIONS: S&P Places Low-B Ratings on Watch Neg.
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and 'BB' senior secured debt ratings on Wackenhut
Corrections Corp. on CreditWatch with negative implications.
Negative implications mean that the ratings could be lowered or
affirmed, following Standard & Poor's review.
Boca Raton, Florida-based WCC, a provider of a comprehensive
range of prison and correctional services, had about $125
million of debt outstanding at Dec. 29, 2002.
"The CreditWatch placement follows WCC's announcement that it
has entered into an agreement to repurchase all 12 million
shares of WCC common stock held by Group 4 Falck A/S for about
$132 million," said Standard & Poor's credit analyst David Kang.
"The transaction is expected to involve a restructuring of WCC's
existing senior secured credit facilities and the issuance of
new debt."
Standard & Poor's will continue to monitor developments and will
meet with management to discuss the company's future capital
structure and financial policy before resolving the CreditWatch
listing.
WINSTAR COMMS: Seeks Court Approval of Lucent Stipulation
---------------------------------------------------------
Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel
LLP, in Wilmington, Delaware, recounts that on June 14, 2001,
Lucent Technologies, Inc., a secured creditor and party-in-
interest in the Chapter 7 cases of Winstar Communications, Inc.,
and its debtor-affiliates filed a motion for relief from the
automatic stay or, alternatively, adequate protection with
respect to certain investment and disbursement accounts. The
Accounts were established pursuant to certain Lucent Cash
Collateral Agreements and were intended to secure the Debtors'
obligations under the Lucent Credit Agreement. In particular,
pursuant to the Lucent Cash Collateral Agreements, the Debtors
granted The Bank of New York, as Collateral Agent, a security
interest in the Account and the Cash Proceeds for Lucent's
benefit.
The Accounts include:
1. certain investment accounts with Fleet;
2. certain investment accounts with State Street; and
3. certain disbursement accounts with Fleet.
The parties believe that the aggregate balance in the Accounts
is $14,781,130.
On July 18, 2001, Mr. Rennie relates that the Debtors and Lucent
agreed to adjourn the hearing on the Stay Motion indefinitely,
provided that either party could ask the Court to schedule the
Stay Motion for hearing upon notice to the other party. They
also agreed that Fleet and State Street would continue to hold
the Accounts pending adjudication of the Stay Motion, by and
further Court order or the resolution of the Stay Motion by the
parties. On October 4, 2001, Lucent and the Debtors agreed that
the Accounts were to be immediately liquidated and the majority
of the proceeds were to be distributed to Lucent.
On October 11, 2002, Mr. Rennie reports that Bank of New York,
as Administrative Agent and Collateral Agent; Citicorp North
America, Inc. as Syndication Agent; and CIBC World Markets
Corp., and Credit Suisse First Boston, as Documentation Agents,
all of which are prepetition lenders to the Debtors, filed their
objection to the parties' agreements. As a result of the
Agents' objection, the parties agreed to adjourn the hearing on
the Debtors' Stipulation. To date, the Court has not entered an
order resolving the Stay Motion or the Debtors' Stipulation.
Lucent and the Trustee have agreed to resolve the Stay Motion on
these Court-approved terms:
A. The Trustee acknowledges and agrees that Lucent holds a
valid, properly perfected, first priority secured lien in
the Accounts and the proceeds thereof, including, without
limitation:
1. Fleet Account No. 9427772529, amounting to $17,491;
and
2. Fleet Account No. 9428385707, amounting to
$14,763,639.
Notwithstanding these acknowledgements, the Trustee does
not agree that Lucent has any right to enforce the Lucent
Lien, except as set forth in the other provisions of the
Stipulation;
B. Lucent agreed that it will not seek to enforce the Lucent
Lien, and thereby, liquidate and apply the proceeds of
the Accounts and the Escrow Account to its claims under
the Lucent Credit Agreement;
C. Lucent may seek relief from the Court to enforce the
Lucent Lien and, thereby, liquidate and apply the
proceeds of the Accounts and the Escrow Account to its
claims under the Lucent Credit Agreement after the
earlier to occur of:
1. a resolution by the Court or the parties' written
agreement of the Equitable Subordination Claim in the
manner that some or all of Lucent's claims under the
Lucent Credit Agreement are not subject to equitable
subordination; or
2. a written agreement by the parties that Lucent may
take the action;
D. Nothing in the Stipulation will affect or impair:
1. Lucent's right to assert any and all arguments in
support of enforcement of the Lucent Lien and the
liquidation and application of the Accounts and the
Escrow Account to its claims under the Lucent Credit
Agreement;
2. the Trustee's right to assert any and all defenses to
any attempt to enforce the Lucent Lien;
3. the parties' rights, arguments, defenses and remedies
in the Adversary Proceeding;
4. Lucent's other rights and remedies under the Lucent
Credit Agreement and related documents, including its
rights to seek relief from the automatic stay imposed
by Section 362(a) of the Bankruptcy Code with respect
to, and adequate protection of, Lucent's interest in
the Collateral under Sections 361, 362(d) and 363(c)
of the Bankruptcy Code; and
5. the Trustee's right to oppose the assertion by Lucent
of any of these rights;
E. The parties agree that, as soon as reasonably
practicable, the Trustee and Lucent will take any and all
actions necessary or appropriate to transfer the funds
currently located in the Fleet Accounts to be established
at a financial institution selected and agreed upon by
the Trustee and Lucent. The Escrow Agreement and the
Investment Procedures for this Escrow Account must be in
a form and substance reasonably satisfactory to both the
Trustee and Lucent. The Escrow Bank, as agent of the
Escrow Account, will not release the funds in the Escrow
Account to any party, except pursuant to a further Court
order or the parties' written agreement. Fleet is
directed and authorized to comply with any written
instructions signed by both the Trustee and Lucent to
transfer the proceeds of the Fleet Accounts to the Escrow
Account; and
F. The Lucent Lien will:
1. continue to attach to the same extent and with the
same validity, perfection and priority to the
Transferred Funds to the Escrow Accounts; and
2. constitute a valid, properly perfected, first priority
secured lien in the Escrow Account and its proceeds.
Lucent will not be required to take any further action to
perfect or otherwise assert the Lucent Lien in the Escrow
Account. (Winstar Bankruptcy News, Issue No. 42;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WORLD AIRWAYS: Inks New $102 Million Passenger Contract
-------------------------------------------------------
World Airways, Inc. (Nasdaq: WLDAC) announced that it signed a
new contract with a group of U.S. and Swiss investors to provide
passenger service between Washington/Dulles and Kabul,
Afghanistan, via Geneva, Switzerland, as part of a consortium to
reconstruct Afghanistan. The flight program, scheduled to
commence operations in July 2003 and contracted to operate
through December 2005, is valued at $102 million. The estimated
contract value for calendar year 2003 is expected to be $19
million. This service will operate twice per week utilizing an
MD-11 wide-body aircraft featuring an enhanced international
business class of service.
Hollis Harris, chairman and chief executive officer of World
Airways, said, "This multi-national partnership combines the
logistical expertise of the organizing consortium and World
Airways' 55 years of international operating experience. We feel
particularly privileged to have been selected by our partners,
recognized leaders in international market development programs,
to participate in the reconstruction of a new Afghanistan."
Kevin P. Mitchell, chairman of the Business Travel Coalition
stated, "This innovative offering will provide more efficient,
safer choices and alternatives for government and private sector
travelers involved with infrastructure reconstruction and
humanitarian missions in Afghanistan. Travel procurement
officials will surely welcome such a development at a time when
international travel options are on the decline."
Harris added, "The consummation of this contract provides two
very important components to World Airways' long-term strategy:
the broadening of our international commercial customer base and
the operational and financial planning benefits of a long-term
program."
Utilizing a well-maintained fleet of international range, wide-
body aircraft, World Airways has an enviable record of safety,
reliability and customer service spanning more than 55 years.
The Company is a U.S. certificated air carrier providing
customized transportation services for major international
passenger and cargo carriers, the United States military and
international leisure tour operators. Recognized for its modern
aircraft, flexibility and ability to provide superior service,
World Airways meets the needs of businesses and governments
around the globe. For more information, visit
http://www.worldair.com.
World Airways' September 30, 2002 balance sheet shows a total
shareholders' equity deficit of about $22 million.
WORLDCOM INC: SDNY Court Okays Embratel Settlement Agreement
------------------------------------------------------------
Alfredo R. Perez, Esq., at Weil Gotshal & Manges LLP, in New
York, recounts that in 1998, MCI WorldCom purchased a 19%
economic interest and a 51% voting interest in Empresa
Brasileira De Telecomunicacoes S.A., a company organized under
the laws of Brazil. Thereafter, WorldCom decided that UUNET
Brazil Ltda. would establish Internet services in Brazil.
WorldCom later withdrew UUNET Brazil as it would be in direct
competition with Embratel. At that time, Embratel entered into
a contract to purchase UUNET Brazil's assets and continue to
provide services in Brazil.
According to Mr. Perez, there are three ongoing disputes among
the Parties, which will be resolved in a single negotiated
transaction pursuant to a memorandum of understanding. The
first issue relates to a dispute over management fees, which
Embratel owes to MCI WorldCom pursuant to a management agreement
between the parties. The second dispute involves the
unconsummated sale of the UUNET Brazil Assets to Embratel, and
the final dispute involves payment of outstanding accounts
receivable related to the Global Voice Private Network Service
Supply Agreement between MCI Global and Embratel.
On August 4, 1998, Mr. Perez states that the parties entered
into an agreement whereby Embratel would pay a percentage of its
revenues from various communications services to MCI WorldCom.
Subsequently, the parties disagreed about unrelated matters and
Embratel withheld payment of the management fees. Embratel now
claims that MCI WorldCom failed to present proper invoices for
payment of the management fees, but MCI WorldCom asserts that it
was not required to present invoices as a condition precedent to
Embratel's payment of the fees. The current dispute between MCI
WorldCom and Embratel arises over the proper exchange rates to
be applied to the management fees for the four quarters of 2001
and for the first three quarters of 2002. MCI WorldCom claims
that Embratel owes it $23,564,105 because the Management
Agreement provides for payment of the management fees at the
exchange rates, which are in effect at the beginning of each
quarter. Embratel, on the other hand, claims that it owes MCI
WorldCom $15,000,000 because payment of the management fees is
governed by the exchange rates, which were in effect in late
2002. As a result of the negotiations, the Debtors and Embratel
have agreed to settle this dispute for $23,564,105. After
applicable Brazilian taxes are withheld from such amounts, the
Debtors will receive $20,029,489 as settlement of this dispute.
In December 2000, Mr. Perez reports that UUNET Brazil and
Embratel entered into a purchase and sale agreement, whereby
Embratel would purchase the UUNT Brazil Assets, which were
valued at $10,400,000. Pursuant to the proposed purchase and
sale agreement, Embratel took custody of the UUNET Brazil
Assets, which primarily consisted of certain equipment used in
its business operations. However, the proposed purchase and
sale of the UUNET Brazil Assets was never consummated. As time
passed, the value of the UUNET Brazil Assets depreciated and, as
of the Petition Date, the Debtors estimate that the maximum
value of the UUNET Brazil Assets was $6,000,000. The Debtors
submit that as of March 28, 2003, the UUNET Brazil Assets have
decreased significantly in value. As the Debtors are unable to
use the UUNET Brazil Assets in Brazil and cannot import the
assets to the United States in any practical manner, the Debtors
propose to sell the UUNET Brazil Assets to Embratel for
Brazilian Reias 10,000,00, or $2,700,000. Accordingly, UUNET
Brazil and Embratel will execute an Asset Purchase Agreement,
which further details the terms of the purchase and sale in
order to complete the asset purchase transaction. As a result
of the proposed sale, the Debtors will receive $2,700,000 plus
interest for the sale of the UUNET Brazil Assets.
On June 21, 2000, Mr. Perez tells the Court that MCI Global and
Embratel entered into the Global Voice Private Network Service
Supply Agreement, which provides that Embratel would provide a
communications service called Global Virtual Voice in Brazil on
MCI Global's behalf. Prior to June 21, 2000, MCI Global and
Embratel had a verbal agreement providing for that. Pursuant to
the GV Service Agreement, Embratel paid taxes and incurred other
expenses for equipment needed to provide the GV Service;
however, MCI Global never implemented the services. Embratel
submitted invoices to MCI Global for payment of its costs, but
MCI Global did not pay the invoices. Embratel now asserts that
MCI Global owes it $10,000,000 in outstanding accounts
receivable for the period between 1998 and 1999. The Debtors do
not dispute that some amount is owed to Embratel.
On February 25, 2003, Embratel and MCI WorldCom, UUNET Brazil
and MCI Global Access Corp. entered into a Memorandum of
Understanding for Settlement of Certain Payments. In summary,
the MOU provides that, in consideration for the agreement and as
compromise of certain claims, Embratel will pay WorldCom
$26,264,105 and WorldCom will pay Embratel $7,272,983. These
payments will be made in immediately available funds, by means
of wire transfer to the bank account designated by the party
receiving the funds in this manner:
A. Embratel will pay WorldCom $23,564,105;
B. Embratel will purchase the UUNET Brazil Assets for
Brazilian Reias 10,000,000 or about $2,7000,000; and
C. WorldCom will pay Embratel $7,272,983.
On March 14, 2003, Mr. Perez relates that the Parties entered
into an Amendment to the Memorandum of Understanding for
Settlement of certain payments. In summary, the Amended MOU
provides Embratel a 14-day extension until March 28, 2003 to
make its payments to WorldCom. The Amended MOU provides that
Embratel will pay 4.7925% interest, calculated on a daily basis
during the period from March 14, 2003 to March 28, 2003, on the
amounts owing to WorldCom.
The Debtors submit that the settlement is fair and reasonable
under the circumstances, represents the exchange of reasonably
equivalent value among the Parties, and in no way unjustly
enriches any of the Parties. Further and perhaps most
importantly, the MOU and the Amended MOU resolve certain issues
between the Parties and represent substantial cost recovery to
the Debtors and these estates without the need for protracted
litigation.
Accordingly, the Debtors sought and obtained Court approval of
the settlement and compromise of issues between MCI Global
Access Corporation and Empresa Brasileira De Telecomunicacoes
S.A. (Worldcom Bankruptcy News, Issue No. 26; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Worldcom Inc.'s 7.875% bonds due 2003 (WCOE03USR1) are currently
trading around 28.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE03USR1
for real-time bond pricing.
WORLDCOM: Stockholders Can Whine & Gripe on Dedicated Web Site
--------------------------------------------------------------
An independent group of WorldCom, Inc. (OTC Pink Sheets: WCOEQ,
MCWEQ) stockholders has created a web site where both
stockholders and non-stockholders can "vote" on the company's
recently announced reorganization plan.
"The bankruptcy judge is not going to let the stockholders vote
on this plan. Since the stockholders lose everything under the
plan the judge assumes that the stockholders would disapprove,"
said Neal Nelson, the WorldCom stockholder and Chicago area
computer consultant that created the web site. "We have created
a web site where both stockholders and non-stockholders can
record their approval or disapproval of the plan, the judge, the
SEC, the congress and the company management."
Initial results indicate over 90% dissatisfaction with the SEC,
congress, management, the bankruptcy judge and the plan.
The web site is located at http://www.wcom-iso.comwhere
individuals can vote in the straw poll and view the results of
the poll. The vote counts are updated once each minute.
The web site is sponsored by an independent committee of
WorldCom stockholders. The committee was formed to promote the
interests of the stockholders during the company's current
reorganization.
Stockholders that are interested in the committee, but do not
have access to the World Wide Web, may contact the committee
spokesperson directly at:
Neal Nelson, Spokesperson
302 East Main Street
East Dundee, IL 60118-1324
Email: neal@nna.com
Phone: 847 - 851 - 8900
Fax: 847 - 851 - 8901
This stockholder committee is totally independent and is not
sponsored by, associated with or endorsed by WorldCom, Inc., any
of its officers or affiliated companies.
WORLD HEART CORP: Releasing First Quarter Results on Thursday
-------------------------------------------------------------
World Heart Corporation (OTCBB: WHRTF, TSE: WHT) will hold a
telephone conference call for shareholders, media and
interested members of the financial community following the
release of first-quarter results for the period ended
March 31, 2003.
The results will be released via Canada NewsWire and PR Newswire
at approximately 2 p.m. on May 8th, and will be followed by the
conference call at 4:00 p.m. (EST). Rod Bryden, President and
Chief Executive Officer will host the call. Dr. Tofy Mussivand,
Chairman and Chief Scientific Officer and Ian W. Malone, Vice-
President, Finance and Chief Financial Officer, will accompany
him.
To participate, please call 1-800-440-1782 ten minutes before
the call begins. A recording of the presentation and question
period will be available for review starting at 6:00 p.m. on
May 8, 2003. The recording can be accessed by dialing 1-800-558-
5253 and entering reservation number 21139592. It will be
available until midnight on June 8, 2003.
World Heart Corporation is an Ottawa and Oakland-based, global
medical technology company focused on the development and
commercialization of fully-implantable, pulsatile Ventricular
Assist Devices.
World Heart Corporation's Dec. 31, 2003, balance sheet shows a
working capital deficit of about C$8 million and a total
shareholders equity deficit of C$47 million.
* BOND PRICING: For the week of May 5 - May 9, 2003
---------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
Abgenix Inc. 3.500% 03/15/07 74
Adelphia Communications 3.250% 05/01/21 8
Adelphia Communications 6.000% 02/15/06 8
Adelphia Communications 10.875% 10/01/10 46
Advanced Micro Devices Inc. 4.750% 02/01/22 73
Alamosa Delaware 12.500% 02/01/11 49
Alamosa Delaware 13.625% 08/15/11 51
Alexion Pharmaceuticals 5.750% 03/15/07 71
American & Foreign Power 5.000% 03/01/30 67
Amkor Technology Inc. 5.000% 03/15/07 68
AMR Corp. 9.000% 09/15/16 32
AnnTaylor Stores 0.550% 06/18/19 64
Aquila Inc. 6.625% 07/01/11 70
Axcelis Technologies 4.250% 01/15/07 75
BE Aerospace Inc. 8.000% 03/01/08 66
Best Buy Co. Inc. 0.684% 06/27/21 72
Burlington Northern 3.200% 01/01/45 53
Burlington Northern 3.800% 01/01/20 74
Calpine Corp. 4.000% 12/26/06 75
Calpine Corp. 8.500% 02/15/11 65
Calpine Corp. 8.625% 08/15/10 63
Capstar Hotel 8.750% 08/15/07 70
Charter Communications, Inc. 4.750% 06/01/06 32
Charter Communications Holdings 8.250% 04/01/07 59
Charter Communications Holdings 8.625% 04/01/09 60
Charter Communications Holdings 9.625% 11/15/09 62
Charter Communications Holdings 10.000% 04/01/09 62
Charter Communications Holdings 10.000% 05/15/11 57
Charter Communications Holdings 10.250% 01/15/10 57
Charter Communications Holdings 10.750% 10/01/09 61
Charter Communications Holdings 11.125% 01/15/11 60
Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 73
Comcast Corp. 2.000% 10/15/29 25
Conexant Systems 4.000% 02/01/07 60
Conexant Systems 4.250% 05/01/06 67
Conseco Inc. 8.750% 02/09/04 17
Continental Airlines 4.500% 02/01/07 45
Cox Communications Inc. 0.348% 02/23/21 72
Cox Communications Inc. 2.000% 11/15/29 32
Cox Communications Inc. 3.000% 03/14/30 47
Crown Cork & Seal 7.375% 12/15/26 72
Crown Cork & Seal 8.000% 04/15/23 71
Cummins Engine 5.650% 03/01/98 65
Delta Air Lines 7.700% 12/15/05 62
Delta Air Lines 9.250% 03/15/22 46
Delta Air Lines 10.375% 02/01/11 52
Dynegy Holdings Inc. 6.875% 04/01/11 74
Dynex Capital 9.500% 02/28/05 2
Elwood Energy 8.159% 07/05/26 66
Finova Group 7.500% 11/15/09 37
Fleming Companies Inc. 10.125% 04/01/08 14
Ford Motor Co. 6.625% 02/15/28 72
Gulf Mobile Ohio 5.000% 12/01/56 66
Health Management Associates Inc. 0.250% 08/16/20 64
HealthSouth Corp. 3.250% 04/01/49 22
HealthSouth Corp. 7.375% 10/01/06 59
HealthSouth Corp. 8.375% 10/01/11 56
HealthSouth Corp. 8.500% 02/01/08 57
I2 Technologies 5.250% 12/15/06 54
Incyte Genomics 5.500% 02/01/07 67
Inhale Therapeutic Systems Inc. 3.500% 10/17/07 57
Inhale Therapeutic Systems Inc. 5.000% 02/08/07 62
Inland Steel Co. 7.900% 01/15/07 68
Internet Capital 5.500% 12/21/04 36
Isis Pharmaceutical 5.500% 05/01/09 65
Kmart Corporation 9.375% 02/01/06 14
Kulicke & Soffa Industries Inc. 4.750% 12/15/06 66
Kulicke & Soffa Industries Inc. 5.250% 08/15/06 70
Lehman Brothers Holding 8.000% 11/13/03 62
Level 3 Communications 6.000% 09/15/09 60
Level 3 Communications 6.000% 03/15/10 59
Liberty Media 3.500% 01/15/31 65
Liberty Media 3.750% 02/15/30 55
Liberty Media 4.000% 11/15/29 58
LTX Corp. 4.250% 08/15/06 74
Lucent Technologies 6.450% 03/15/29 66
Lucent Technologies 6.500% 01/15/28 66
Magellan Health 9.000% 02/15/08 25
Manugistics Group Inc. 5.000% 11/01/07 55
Mirant Corp. 5.750% 07/15/07 55
Missouri Pacific Railroad 4.750% 01/01/20 74
Missouri Pacific Railroad 4.750% 01/01/30 72
Missouri Pacific Railroad 5.000% 01/01/45 62
NTL Communications Corp. 7.000% 12/15/08 19
Natural Microsystems 5.000% 10/15/05 64
NGC Corp. 7.625% 10/15/26 65
Northern Pacific Railway 3.000% 01/01/47 50
Northwest Airlines 7.625% 03/15/05 56
Northwest Airlines 7.875% 03/15/08 47
Northwest Airlines 8.875% 06/01/06 52
Northwest Airlines 9.875% 03/15/07 50
Quanta Services 4.000% 07/01/07 71
Regeneron Pharmaceuticals 5.500% 10/17/08 68
Ryder System Inc. 5.000% 02/25/21 72
SBA Communications 10.250% 02/01/09 74
SCG Holding Corp. 12.000% 08/01/09 69
Tenneco Inc. 10.000% 03/15/08 70
Tenneco Inc. 10.200% 03/15/08 70
Transwitch Corp. 4.500% 09/12/05 59
United Airlines 10.670% 05/01/04 5
Universal Health Services 0.426% 06/23/20 57
US Timberlands 9.625% 11/15/07 73
Weirton Steel 10.750% 06/01/05 46
Weirton Steel 11.375% 07/01/04 58
Westpoint Stevens 7.875% 06/15/08 26
Xerox Corp. 0.570% 04/21/18 65
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
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firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***