/raid1/www/Hosts/bankrupt/TCR_Public/030520.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, May 20, 2003, Vol. 7, No. 98
Headlines
A NOVO BROADBAND: Gets Nod to Hire Ordinary Course Professionals
ACTERNA CORP: Wants Blessing to Continue AP Services' Engagement
ADELPHIA BUSINESS: Wants Nod for New Cananwill Premium Financing
ADELPHIA COMMS: Judge Gerber Approves Employment Agreement Form
AEROSTRUCTURES: S&P Keeps Watch on BB- Corporate Credit Rating
ALTERRA HEALTHCARE: Cohen & Steers Serving as Strategic Advisor
AMERICAN HOMEPATIENT: Tenn. Court Confirms Reorganization Plan
AMR CORP: Will Save Over $175MM a Year from Cost-Reduction Pacts
ANALYTICAL SURVEYS: Red Ink Flows in Second Fiscal Quarter
AQUILA: Q1 Net Loss Reflects Costs of Energy Merchant Wind-Down
ASIA GLOBAL: Files Joint Liquidating Plan & Disclosure Statement
ATCHISON CASTING: Red Ink Continues to Flow in March Quarter
BAYOU STEEL: Committee Gets OK to Hire CIBC as Financial Advisor
BRIDGE INFO: Plan Administrator Challenges Commodex's $4MM Claim
BUDGET GROUP: Taps Miller Ellin as Tax Accountants and Advisors
CASTLE DENTAL: Completes Debt Workout & Recapitalization Deals
CBR BREWING: Independent Auditors Express Going Concern Doubt
COLLINS & AIKMAN: Poor Performance Prompts S&P to Maintain Watch
COMDISCO INC: Completes Quarterly Distribution to Creditors
COMMSCOPE INC: Expects Charges from Interest in OFS BrightWave
CONSECO INC: Selling CNCE's Fort Mojave Golf Course for $5 Mill.
COVANTA ENERGY: External Auditors Express Going Concern Doubt
DAISYTEK INT'L: Administrators Appointed for UK and Aussie Units
DAISYTEK INC: Looks to FTI Consulting for Financial Advice
DELIA*S INC: Fails to Maintain Min. Nasdaq Listing Requirements
DIVINE INC: Completes Asset Sale Transaction with Little Bear
EL PASO PRODUCTION: S&P Assigns B+ Corp. Credit & Note Ratings
ELDER-BEERMAN: Taps RBC Capital to Aid in Asset Sale Transaction
ENCOMPASS SERVICES: Signs-Up Herman Mousel as Tax Professionals
ENRON CORP: EPMI Sues AES Corp., et. al. for $44 Mil. in Damages
EQUIFIN INC: Converts about $1 Million of Debt into Equity
ESSENTIAL THERAPEUTICS: Taps Bingham McCutchen LLP as Attorneys
EUROTECH: Closes Deal to Eliminate All Outstanding Preferreds
GALEY & LORD: US Trustee Amends Official Creditors' Committee
GEMSTAR-TV GUIDE: Narrows First Quarter Net Loss to $45 Million
GLOBAL CROSSING: Exclusivity Extension Hearing Slated for June 9
GLOBAL IMAGING: Closes on First Phase of Debt Refinancing Plan
GRAPHON CORP: First-Quarter 2003 Results Reflect Strong Growth
HAWAIIAN AIRLINES: Says Chapter 11 Trustee Won't Impair Business
IMC GLOBAL: CEO Airs Commitment to Enhance Shareholder Value
INSIGNIA SOLUTIONS: March 31 Balance Sheet Upside-Down by $500K
INTEGRATED INFO.: March 31 Net Capital Deficit Tops $940,000
ITEX CORP: Fiscal 3rtd Quarter Results Remain in Positive Zone
KATONAH V: S&P Assigns Preliminary BB Rating to Class D Notes
KELLSTROM: Court to Consider First Amended Joint Plan on July 22
KLEINERT'S: Gets Court Nod to Hire Ordinary Course Professionals
LEAP WIRELESS: Plan's Classification and Treatment of Claims
LTV CORP: Judge Bodoh Okays New Sr. Executives' Employment Pacts
MISSISSIPPI CHEMICAL: Fitch Drops Sr. Unsecured Debt Rating to D
NESTOR INC: Significant Losses Raise Going Concern Doubt
NORTHWEST AIRLINES: S&P Rates New $150-Mill. Senior Notes at B-
NRG ENERGY: Unit Intends to Pull Plug on Connecticut Light Pact
NSI GLOBAL: December 31 Balance Sheet Upside-Down by $4 Million
OPTICARE HEALTH: Reports Improved First Quarter Fin'l Results
OSE USA: March 30 Net Capital Deficit Widens Close to $40 Mill.
OUTSOURCING SOLUTIONS: Case Summary & Largest Unsec. Creditors
OWENS CORNING: Wants Nod to Sell OC Metals Systems for $50 Mill.
PACIFIC GAS: Court OKs Claims Settlement with Calif. Water Board
P-COM INC: Reports Revised Results for First Quarter 2003
PEREGRINE SYSTEMS: Files 3rd Amended Plan & Disclosure Statement
SEDONA CORP: First Quarter 2003 Results Show Marked Improvement
SEITEL INC: Noteholders Extend Standstill Agreement Until May 30
SERVICEWARE TECHNOLOGIES: Working Capital Deficit Topping $1.1MM
SLATER STEEL: Delays Filing of 2002 and Q1 2003 Fin'l Statements
SPECTRUM PHARMACEUTICALS: Red Ink Continues to Flow in Q1 2003
STERLING FIN'L: Fitch Withdraws BB- Trust Rating upon Redemption
STEWART ENTERPRISES: Fitch Recalls BB+ Rating on Redeemed ROARS
TELENETICS CORP: First Quarter 2003 Net Loss Balloons to $830K
TIMCO AVIATION: 2002 Financial Results Enter Positive Territory
TOUCH AMERICA: Delays Filing of Form 10-Q for March Quarter
TROLL COMMS: Case Summary & 20 Largest Unsecured Creditors
TWINLAB CORP: March 31 Net Capital Deficit Widens to $15 Million
UNIFORET INC: Canadian Superior Court Clears Plan of Arrangement
UNITED AIRLINES: Committee Hires Saybrook as Workout Advisors
US AIRWAYS: Enters Long-Term Strategic Alliance with Lufthansa
VALENTIS INC: Completes Preferreds Conversion and Reverse Split
VENTAS INC: Declares Regular Quarterly Dividend of $0.2675/Share
VICWEST CORP: Delays Filing of Financial Statements for FY 2002
WEIRTON STEEL: Files for Chapter 11 Protection in West Virginia
WEIRTON STEEL: Case Summary & 20 Largest Unsecured Creditors
WESTAR ENERGY: Inks Definitive Pact to Sell Protection One Unit
WESTAR ENERGY: Reports Improved First-Quarter 2003 Results
WESTFORT ENERGY: Files for Chapter 11 Protection in S.D. Miss.
WESTFORT ENERGY LTD.: Voluntary Chapter 11 Case Summary
WHEELING: Outlines Performance Key Points of Second Amended Plan
WILLIAMS PRODUCTION: S&P Assigns Lower-B Credit & Debt Ratings
WILLIAMS PRODUCTION: Fitch Expects to Rate Sr. Sec. Loan at BB+
WOMEN FIRST: Esclim(TM) Now Added to Medco's Preferred Drug List
* Gross to Head Huron Consulting's Corporate Finance Practice
* Large Companies with Insolvent Balance Sheets
*********
A NOVO BROADBAND: Gets Nod to Hire Ordinary Course Professionals
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The U.S. Bankruptcy Court for the District of Delaware gave its
stamp of approval to A Novo Broadband, Inc.'s request to
continue employing and paying professionals in the ordinary
course of their businesses, without the submission of separate
employment applications and the issuance of separate orders for
each individual professional.
The Debtor obtained court approval to pay the Ordinary Course
Professionals, 100% of their fees and disbursements, subject to
a $25,000-per professional cap, for post-petition services.
The Debtor submits that it is essential to employ the Ordinary
Course Professionals to avoid any disruption in the day-to-day
operation of its businesses. The Court's authorization will
save the estate the substantial expense of applying separately
for the employment of each Professional.
A Novo Broadband, Inc., a business engaged primarily in the
repair and servicing of broadband equipment for equipment
manufacturers and operators of cable and other broadband systems
in North America, filed for chapter 11 petition on December 18,
2002 (Bankr. Del. Case No. 02-13708). Brendan Linehan Shannon,
Esq., M. Blake Cleary, Esq., at Young, Conaway, Stargatt &
Taylor represent the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
$12,356,533 in total assets and $10,577,977 in total debts.
ACTERNA CORP: Wants Blessing to Continue AP Services' Engagement
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Pursuant to Section 363 of the Bankruptcy Code, Acterna Corp.,
and its debtor-affiliates seek the Court's authority to continue
the employment of AP Services LLC as crisis managers and
designate Shyam Gidumal, a principal of AP Services, as their
interim Chief Restructuring Officer.
John D. Ratliff, Acterna's Chief Financial Officer, informs the
Court that AP Services has agreed to provide temporary staff to
assist the Debtors in their restructuring efforts.
AP Services' affiliate, AlixPartners, LLC and its principals
have a wealth of experience in providing crisis management
services to financially troubled organizations. For more than
20 years, AlixPartners has provided interim management and
advisory services to companies experiencing financial
difficulties. AlixPartners and AP Services have recently
provided interim management services in a number of large and
mid-size bankruptcy restructurings, including, In re WorldCom,
In re Forstmann & Company, Inc., In re Maidenform Worldwide,
Inc., In re Kmart Corporation, and In re Exide Technologies.
Therefore, AP Services is very much qualified for the task.
As the Debtors' Chief Restructuring Officer, Mr. Gidumal will
report to the Debtors' Board of Directors and assist the Debtors
in its evaluation and implementation of strategic and tactical
options through the restructuring process.
As CRO, Mr. Gidumal brings a unique blend of operating,
strategic and financial expertise to his turnaround and crisis
management engagements. Over the past 20 years, Mr. Gidumal has
been involved in a number of restructurings, serving in roles
like president, a member of the board of directors, strategic
consultant, owner through institutional private equity
partnerships, and investment banker. Mr. Gidumal has worked in
more than 25 industries, including computer hardware, computer
software, telecommunications, consumer electronics, office
equipment, financial services, protective wear, toys,
distribution, furniture, plastics, pet products, business forms,
building products, environmental and process controls, and
aerospace. Before joining AlixPartners, Mr. Gidumal was a
partner at Stonington Partners, a firm focused on equity capital
investment in corporate acquisitions, which managed
$1,000,000,000 of institutional capital on behalf of public and
corporate pension funds, private endowments and other financial
institutions. Earlier in his career, Mr. Gidumal was a partner
at the Boston Consulting Group, where he was a practice group
leader for High Technology and Corporate Development.
Another staff from AP Services, Bettina Whyte will assist Mr.
Gidumal, on an as-needed basis. Ms. Whyte is a principal with
AlixPartners and is a leading professional in the area of
corporate turnarounds and restructuring. Ms. Whyte is the
President-elect of the American Bankruptcy Institute, the first
non-attorney to assume that position. Her background includes
acting as interim crisis manager of a billion dollar NYSE
diversified health care corporation providing physician
management, hospital billing, managed care and the management of
clinics and HMOs, advising the management of a national computer
retailer on a successful turnaround and sale of the business,
and development of a comprehensive business plan and loan
renegotiation strategy that allowed a $300,000,000 waste
management company to restructure its obligations out of court.
Ms. Whyte has served as operating trustee to lead
reorganizations in a range of domestic and international
companies in a variety of industries, including manufacturing,
transportation, high tech, oil and gas, and distribution
companies. Before joining AlixPartners, Ms. Whyte was the
National Director of Business Turnaround Services for Price
Waterhouse. Previously, she was a Partner with Peterson & Co.
Consulting and the owner of KRW Associates.
The Debtors will compensate AP Services at its customary hourly
rates:
Principals $540 - 670
Senior Associates 430 - 495
Associates 300 - 390
Accountants & Consultants 225 - 280
Analysts 150 - 180
Mr. Gidumal will be receiving $620 an hour and will work full
time. Ms. Whyte will receive $640 per hour.
AP Services will also lend part-time personnel to provide
specialized services at these hourly rates:
Name Services Rate
---- -------- ----
Montgomery Cornell Business Planning $440
Adam Marr Cash Forecasting and Mgmt $390
Erik Post Chapter 11 Schedules & Process $540
AP Services will also receive a $1,000,000 success fee on the
occurrence of:
-- the confirmation of a Chapter 11 reorganization plan;
-- the closing of a sale of substantially all of the
Debtors' assets; or
-- a material refinancing of the Debtors in the context of
an out-of-court restructuring.
The Debtors also propose to pay AP Services another $200,000 if
any one of the triggering events occurs before June 30, 2003.
But the Success Fee is not payable if AP Services is terminated
for cause or if the Debtors' cases is converted to a
Chapter 7 liquidation.
On January 28, 2003, Mr. Ratliff discloses that the Debtors paid
AP Services a $350,000 retainer to secure its performance under
the engagement.
Mr. Gidumal attests that neither AP Services nor AlixPartners,
nor any of their principals, employees, agents or affiliates,
have any connection with the Debtors, their creditors, the
United States Trustee, or any other party with an actual or
potential interest in these Chapter 11 cases. AP Services is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code. (Acterna Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
ADELPHIA BUSINESS: Wants Nod for New Cananwill Premium Financing
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Judy G.Z. Liu, Esq., at Weil Gotshal & Manges LLP, in New York,
relates that the Adelphia Business Solutions Debtors' current
insurance coverage was procured and maintained by Adelphia
Communications Corporation, the ABIZ Debtors' former parent
corporation. Specifically, the ABIZ Debtors are "named
insureds" under certain workers' compensation, general
liability, auto, and property insurance policies and other
insurance policies issued by several different insurance
carriers. Notably, the ABIZ Debtors' current insurance coverage
under these policies will expire on May 15, 2003.
Given the impending expiration of the estates' coverage under
the ACOM insurance policies, Ms. Liu informs the Court that the
ABIZ Debtors have arranged new insurance coverage, to become
effective on May 16, 2003, to replace the expiring policies.
This coverage includes workers' compensation, general liability,
automotive liability, umbrella liability, excess liability, and
property liability/business interruption. The Policies are
anticipated to bear aggregate yearly premiums not anticipated to
exceed $2,800,000, and each Policy will have a term of 12
months, commencing May 16, 2003.
In light of the magnitude of the Premiums, the ABIZ Debtors
determined that it would be prudent to conserve their cash
liquidity and finance the payment of the Premiums over a short
period of time. Accordingly, the ABIZ Debtors intend to enter
into a certain Commercial Insurance Premium Financing and
Security Agreement with Cananwill, Inc., subject to this Court's
approval.
By this Motion, the ABIZ Debtors request authorization pursuant
to Sections 364(c)(2) of the Bankruptcy Code and Rule 4001(c) of
the Federal Rules of Bankruptcy Procedure to obtain secured
postpetition financing of insurance premiums for the procurement
of certain insurance policies necessary to maintain their
operations.
Ms. Liu admits that the Debtors have been unsuccessful in their
attempt to obtain unsecured credit, as prescribed in Section
364(a) of the Bankruptcy Code, for purposes of financing the
Premiums. Accordingly, the Debtors have engaged in discussions
with Cananwill and Aon Risk Services, Inc., which have advised
them of the likely range of terms available for a financing of
the Premiums. The Financing Agreement, which has not yet been
finalized, will provide for terms substantially similar to, but
not anticipated to be in excess of:
(i) a cash down payment of 25% of the Premiums, not
anticipated to exceed $700,000;
(ii) an aggregate financed amount not anticipated to exceed
$2,100,000, payable in eight consecutive equal monthly
installment payments, each in the amount not
anticipated to exceed $262,500, commencing 30 days
after the initial down payment; and
(iii) a rate per annum not anticipated to exceed 5%, for
total payments not anticipated to exceed $2,800,000,
plus interest.
The Debtors are prudently moving for this relief,
notwithstanding that the final terms are not yet known, because
the point in time at which the terms will be finalized will
likely be too close to the May 15 hearing date to provide proper
notice to obtain the relief before the existing policies expire.
Pursuant to the proposed Financing Agreement, Ms. Liu explains
that Cananwill is entitled to cancel the Policies financed
pursuant to the Financing Agreement in the event of a default
under the Financing Agreement by the Debtors. To secure payment
of the amounts due Cananwill pursuant to the Financing
Agreement, the Debtors have agreed to grant Cananwill a security
interest in unearned or returned premiums and other amounts due
to the Debtors under the Policies that result from the
cancellation of the Policies.
Cananwill's willingness to finance the Premiums is expressly
conditioned on entry of an order of the Court that:
(i) approves the Financing Agreement and authorizes the
Debtors to grant the requested security interest to
Cananwill;
(ii) provides for the immediate lifting of the automatic stay
in the event that the Debtors default on a payment due
under the Financing Agreement;
(iii) permits Cananwill under certain circumstances to cancel
the Policies and apply any unearned or returned premiums
due under the Policies to any amount owing by Debtors to
Cananwill, without further application to the Court; and
(iv) grants to Cananwill an administrative expense claim, in
the event that the unearned or returned premiums are
insufficient to pay Cananwill the total amount owed by
the Debtors under the Financing Agreement.
Section 364(c)(2) of the Bankruptcy Code provides that if a
debtor is unable to obtain unsecured credit allowable as an
administrative expense under Section 503(b)(1) of the Bankruptcy
Code, the court, after notice and a hearing, may authorize the
debtor to obtain secured credit or incur secured debt.
Despite their good faith efforts, Ms. Liu contends that the
Debtors have been unable to procure an unsecured premium
financing agreement. The Debtors need to obtain new, separate
insurance coverage, effective May 16, 2003, for the operation of
their businesses. The Debtors desire, in their sound business
judgment, to preserve their cash resources and finance the
Premiums for the new insurance coverage for a reasonably short
period of time. Accordingly, it is in the best interests of the
Debtors and their estates and creditors to allow them to enter
into the secured premium Financing Agreement with Cananwill.
(Adelphia Bankruptcy News, Issue No. 34; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ADELPHIA COMMS: Judge Gerber Approves Employment Agreement Form
---------------------------------------------------------------
To implement the ongoing initiative to attract and retain highly
qualified and motivated employees to assist them through the
reorganization process and beyond, the Adelphia Communications
Debtors obtained Judge Gerber's approval of the form of certain
employment agreements, the authority to implement a performance
retention plan, and approval of the form of indemnification
agreement for the future directors.
Backgrounder
The Employment Agreements
The Debtors, in consultation with their advisors, have
determined to use two forms of employment agreements. The first
form of agreement will be used by the Debtors for senior
executive positions, including executive vice presidents, senior
vice presidents, heads of business divisions, general counsel,
and similar positions. The other form of agreement will be used
for non-senior executive positions, including mid-level managers
and directors.
The Employment Agreements generally provide for:
A. the term of the employment;
B. a Base Salary;
C. an Annual Bonus;
D. participation in the PRP;
E. the reasons and procedures by which employment may be
terminated;
F. participation in applicable employee benefit plans;
G. non-solicitation and confidentiality provisions;
H. non-competition provisions; and
I. a provision requiring this Court to hear and decide any
dispute relating to the Employment Agreements, prior to
the consummation of a plan of reorganization in the
Debtors' cases.
The forms of Employment Agreements do not contain specific
compensation amounts for the Base Salary, Annual Bonus, PRP
participation or weeks of vacation to be provided to each
prospective employee. These amounts will be negotiated on an
individual basis with each prospective employee and will be
comparable to the terms offered by the Debtors' competitors.
The Performance Retention Plan
The Performance Retention Plan covers up to 125 management
employees, including Executive Vice Presidents, Senior Vice
Presidents, Vice Presidents, and Directors. Employees holding
these positions will be notified by the Debtors in writing of
their eligibility to participate in the PRP and their level of
participation. The compensation to be provided under the PRP
will include cash awards and, after emergence from bankruptcy
protection, restricted stock.
Each Performance Retention Plan participant will be eligible for
an annual target Award, based on the Participant's Base Salary,
job title and responsibilities. Target awards range from 25% to
200% of a Participant's Base Salary. The amount of the Award
that a Participant actually receives for each PRP year will be
dependent on the percentage of the EBITDAR Target achieved by
the Debtors for that year. The amount of the Award is
calculated by multiplying the Participant's target Award by the
percentage of the EBITDAR Target for each Performance Retention
Plan year. The EBITDAR Target percentages range from 10% -- for
a PRP year where the Debtors achieve 91% of the EBITDAR Target,
to 200% -- for a PRP year where the Debtors achieve 110% of the
EBITDAR Target. No Awards will be payable in respect of a PRP
year where the Debtors achieve less than 91% of the EBITDAR
Target.
The Award granted to a Participant for the PRP year during which
the Participant first commences participation in the PRP will
vest on a monthly basis in 36 equal monthly installments
commencing one year after the Participant begins participation
in the PRP. Thereafter, Awards will vest in 36 equal monthly
installments as of January 31 of the year immediately following
the PRP year with respect to which the Award was granted.
Generally, after the Consummation of Restructuring, the portion
of each Award that is vested will be paid in cash, in a lump
sum, on the date of the Consummation of Restructuring, except
that Awards that are less than 25% vested as of the Consummation
of Restructuring will become 25% vested and paid in cash. The
aggregate value of the unvested portion of Awards granted to a
Participant will be payable in the form of restricted stock of
the reorganized Debtors and will vest in two equal annual
installments on each of the first and second anniversaries of
the date of Consummation of the Restructuring. In the event that
the Consummation of the Restructuring does not occur on or
before the second anniversary of the date on which a
Participant's Award is granted, 50% of the portion of the Award
which is vested will be paid in cash on this date, and the
balance of the vested portion of the Award will be paid in cash
on the date of Consummation of the Restructuring. The unvested
portion of the Award will be paid in the form of restricted
stock of the reorganized Debtors.
Although the Debtors estimate that the aggregate cost of all
Awards for the maximum number of plan participants would be
about $17,000,000 per PRP year, the Debtors estimate that the
PRP for 2003 will be $3,000,000 and $6,500,000 for 2004.
The Director Indemnification Agreement
The Debtors obtained advance approval of the form of
Indemnification Agreement in order to:
(i) attract qualified directors that otherwise may be
concerned about the exposure attendant to the position;
and
(ii) expedite the nomination and approval of qualified
candidates.
Pursuant to the Indemnification Agreement, the Debtors will
agree to indemnify future directors to the fullest extent
permitted by law against all expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred in
connection with any action to which the new directors are a
party. Moreover, the Indemnification Agreement provides that
the Debtors will advance all expenses incurred by future
directors in connection with the investigation, defense,
settlement or appeal of any a civil or criminal action or
proceeding. Notably, on October 22, 2002 and February 19, 2003,
this Court approved the exact language of the Indemnification
Agreement in connection with the Debtors' motions to approve
indemnification agreements with three of the Debtors' current
directors, namely Messrs. Anthony Kronman, Rodney Cornelius and
William Schleyer. The business judgment that supported the
indemnification agreements in those three instances is equally
sound in the present context. Accordingly, this Court should
prospectively authorize the Debtors to enter into an agreement
substantially in the form of the Indemnification Agreement with
each future director who is selected to serve on the Debtors'
board of directors. (Adelphia Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AEROSTRUCTURES: S&P Keeps Watch on BB- Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
Aerostructures Corp., including the 'BB-' corporate credit
rating, on CreditWatch with developing implications.
"The CreditWatch placement follows the announcement that
Aerostructures will be acquired by privately held Vought
Aircraft Industries Inc. (not rated)," said Standard & Poor's
credit analyst Christopher DeNicolo. Financial terms were not
disclosed, but the transaction is scheduled to close by July 1,
2003, subject to regulatory approval. Both Vought and
Aerostructures are owned by the Carlyle Group, a private equity
firm, and are in the business of producing aerostructures such
as aircraft wings and fuselage assemblies. Vought had $1.2
billion in revenues in 2002. The ratings on Aerostructures could
be lowered or raised depending on the details of the transaction
and the credit quality of the combined entity. Ratings could be
withdrawn if the company's outstanding rated debt is repaid as
part of the deal.
Nashville, Tennessee-based Aerostructures is a leading designer
and manufacturer of large, high-value airframe structures, such
as aircraft wings, tail sections, and other structural
components. In the aftermath of the events of Sept. 11, 2001,
aerospace intermediate-term business prospects deteriorated
significantly. Weaker air traffic, losses at airlines, grounded
aircraft, passenger security concerns, and a slower global
economy will constrain orders for new planes. The war in Iraq
and the outbreak of severe acute respiratory syndrome (SARS) in
Asia have exacerbated these conditions, likely resulting in an
extension of the downturn. The largest portion of revenues is
derived from Airbus SAS, with a relatively moderate amount of
work for Boeing Co. Aerostructures revenues should be aided
somewhat by growing military work.
ALTERRA HEALTHCARE: Cohen & Steers Serving as Strategic Advisor
---------------------------------------------------------------
Alterra Healthcare Corporation sought and obtained approval from
the U.S. Bankruptcy Court for the District of Delaware to
authorize and employ Cohen & Steers Capital Advisors, LLC as
Corporate Finance and Strategic Advisor.
Cohen & Steers will provide the Debtor an ongoing corporate
finance and strategic advice and assistance as the Debtor may
request. Among other things, the Debtor expects Cohen & Steers
to:
(i) provide ongoing corporate finance, restructuring and
strategic advice to the Debtor;
(ii) assist and advise the Debtor in connection with
reviewing restructuring alternatives with respect to,
and conducting restructuring negotiations with, the
Debtor's creditors, lessors and other capital structure
constituents, including joint venture partners;
(iii) assist the Debtor in managing its asset disposition
program, including assisting third parties with their
due diligence and negotiating on the Debtor's behalf
the terms of purchase agreements and arrangements;
(iv) assist the Debtor in preparing financial analyses and
projections in connection with its restructuring,
including developing and maintaining financial models
reflecting various restructuring scenarios;
(v) serve as an expert in connection with any litigation,
bankruptcy or other legal proceedings as may arise in
connection with the Debtor's restructuring, and in that
regard provide testimony and opinions as to matters
falling within the competence of CSCA;
(vi) assist and advise the Debtor in connection with seeking
new debt, equity and equity-linked financing, including
managing any required market check or auction process;
and
(vii) make all reasonably requested presentations to the
Debtor's Board of Directors or committees thereof.
Bradley G. Razook, Managing Director and President of Cohen &
Steers discloses that Cohen & Steers will bill the Debtor with:
a. A monthly Consulting Fee of $100,000;
b. A contingent Transaction Fees of:
i. Investment Transaction Fee equal to 3.50% of the
aggregate value of all cash received by the Company
from Investment Transaction. "Investment
Transaction" means any sale of debt, equity linked
or equity securities of the Debtor in exchange for
a new investment of cash or cash equivalents
ii. Opinion Fees subject to a mutually satisfactory
further written agreement between Alterra and Cohen
& Steers with regard to the nature and use of the
Opinion requested
iii. Restructuring Success Fee equal to $1,000,000
Alterra Healthcare Corporation, one of the nation's largest and
most experienced healthcare providers operating assisted living
residences, filed for chapter 11 protection on January 22, 2003,
(Bankr. Del. Case No. 03-10254). James L. Patton, Esq., Edmon L.
Morton, Esq.. Joseph A. Malfitano, Esq., and Robert S. Brady,
Esq., at Young, Conaway, Stargatt & Taylor LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $735,788,000 in
assets and $1,173,346,000 in total debts.
AMERICAN HOMEPATIENT: Tenn. Court Confirms Reorganization Plan
--------------------------------------------------------------
American HomePatient, Inc. (Pink Sheets: AHOM) announced that
the U.S. Bankruptcy Court for the Middle District of Tennessee
has confirmed the Company's plan of reorganization under Chapter
11 of the United States Bankruptcy Code on May 15, 2003.
The confirmed plan allows the Company to continue its business
operations uninterrupted, led by its current management team,
and accomplishes the Company's primary goal of restructuring its
long term debt obligations to its secured lenders. In addition,
the confirmed plan provides that the Company's shareholders
retain their equity interest in the Company, and all of the
Company's creditors and vendors will be paid 100% of all amounts
they are owed, either immediately or over time with interest.
The confirmed plan was proposed jointly by the Company and the
Unsecured Creditors Committee but was objected to by the
Company's secured lenders. In the decision, the Court overruled
all of the secured lenders' objections to confirmation of the
plan. The secured lenders may appeal the Court's decision.
"[Fri]day is an especially rewarding day for the Company and its
employees," says Joseph F. Furlong III, the Company's CEO. "The
past nine months have been challenging, but the Company is
pleased with the Court's decision to confirm the plan and will
emerge from the bankruptcy case with renewed strength. Because
of the dedication of the Company's employees and the unyielding
support of our patients, referral sources and vendors, the
Company is well-positioned to remain a premier provider of home
health care services."
A copy of the Court's opinion will be filed by the Company with
the Securities and Exchange Commission as an exhibit to a Form
8-K, to be available via the Edgar database at
http://www.sec.gov
Founded in 1983, American HomePatient, Inc. is one of the
nation's largest home health care providers with 287 centers in
35 states. Its product and service offerings include respiratory
services, infusion therapy, parenteral and enteral nutrition,
and medical equipment for patients in their home. American
HomePatient, Inc.'s common stock is currently traded in the pink
sheets under the symbol AHOM. Additional information about the
Company is available at http://www.ahom.com
AMR CORP: Will Save Over $175MM a Year from Cost-Reduction Pacts
----------------------------------------------------------------
AMR Corp. (NYSE: AMR) reached another major milestone in its
long-term cost restructuring efforts with the announcement that
it has completed agreements on concessions with more than 100
suppliers, aircraft lessors, and other key creditors that will
save AMR in excess of $175 million a year. These agreements will
generate cumulative savings for the company of more than $1
billion.
During the past two years, AMR has identified approximately $2
billion a year in cost savings through a wide range of
initiatives, and last month AMR's three major labor unions
ratified new agreements which, when coupled with changes in pay
plans for management and non-union employees, will reduce AMR's
costs by an additional $1.8 billion a year.
The final piece of AMR's overall $4 billion-a-year cost-
reduction effort was to reach agreement on meaningful
concessions with AMR's suppliers, lessors, and other creditors.
"We are grateful to each supplier, lessor, and creditor who
tangibly expressed support for our company by granting these
significant concessions," said AMR Chief Executive Officer and
President Gerard J. Arpey. "We continue to move through the most
challenging period in our history, and our success is still far
from assured, but reaching these cost-reduction agreements with
our suppliers, lessors, and creditors is another step forward
and further strengthens AMR as we seek to put the company on a
solid financial footing."
AMR will issue up to three million shares of common stock to
suppliers, lessors, and other creditors to enable them to share
in the upside of the company's future in return for their
support of AMR's cost reduction efforts.
As related in yesterday's edition of the Troubled Company
Reporter, even with previously announced Modified Labor
Agreements, the savings from Management Reductions and the
Vendor Agreements, the Company warns that it may nonetheless
need to initiate a filing under Chapter 11 of the U.S.
Bankruptcy Code because its financial condition will remain weak
and its prospects uncertain. Among other things, the Company
faces further risks from the continued weakness of the U. S.
economy; the residual effects of the war in Iraq; the fear of
another terrorist attack; the SARS (Severe Acute Respiratory
Syndrome) outbreak; the inability of the Company to satisfy the
liquidity requirements or other covenants in certain of its
credit arrangements; or the inability of the Company to access
the capital markets for additional financing.
ANALYTICAL SURVEYS: Red Ink Flows in Second Fiscal Quarter
----------------------------------------------------------
Analytical Surveys, Inc. (Nasdaq: ANLT), a provider of
customized data conversion and digital mapping services for the
geographic information systems and related spatial data markets,
announced financial results for its second fiscal quarter and
six months ended March 31, 2003.
Second quarter revenues totaled $3.6 million compared with $5.0
million for the second quarter of 2002. The Company reported a
second quarter net loss available to common shareholders of
$851,000 versus net earnings of $156,000 for the comparable
three-month period in 2002. The results of the prior year's
quarter included a tax benefit totaling $1.2 million.
Revenue for the six months ended March 31, 2003, totaled $8.0
million compared with $10.6 million for the comparable period in
2002. Net loss available to common shareholders totaled $1.7
million, as compared with net earnings of $4.2 million for the
same period in 2002. The 2002 results included a gain from the
extinguishment of debt totaling $9.6 million and a write-off of
goodwill of $3.6 million, as well as the $1.2 million income tax
benefit.
The results for this year's second quarter and six month period
include non-cash charges of $174,000 and $394,000, respectively,
for the accretion of discount and dividends on preferred stock,
plus severance charges of $54,000 and $307,000, respectively.
The results for the same periods in 2002 included non-cash
charges of $100,000 for the accretion of discount and dividends
on preferred stock.
The Company reported a loss from operations of $632,000 compared
with a loss from operations of $929,000 for the quarter ended
March 31, 2002. Loss from operations for the six-month period
totaled $1.2 million as compared with $2.8 million for the six-
month period in 2002.
Management attributed the decline in second quarter revenues to
decreased demand in the GIS market and continued weakness in the
overall technology sector. The Company ended the quarter with an
order backlog of $14.1 million versus a backlog of $15.1 million
at the end of the comparable period last year.
Norman Rokosh, president and CEO, said, "Weak economic
conditions and limited spending on new technologies continue to
impact the GIS industry and have resulted in significantly fewer
new contracts this quarter. Nevertheless, we are keeping our
costs in line and have maintained our focus on our core utility
market. We believe we are well positioned to capitalize on a
rebound in technology spending. During the first quarter, we
announced a new suite of GIS outsourcing services designed to
augment our traditional data management platforms. These
services will help clients maximize the value of their utility
information systems and provide more cost-effective management
of GIS processes, technology and data."
Subsequent to the end of the first quarter, ASI also announced
it had regained compliance with certain Nasdaq listing
requirements and had entered into settlement discussions with
the Securities and Exchange Commission over the Company's
restatement of its fiscal 1999 financial results. The settlement
discussions do not contemplate the SEC imposing a fine or
injunction against the Company. "Our management team and Board
of Directors have both been completely rebuilt since the
Company's fiscal 1999 difficulties," added Rokosh. "New
management and directors have been carefully selected to support
ASI's focus on the utility marketplace and on developing new,
high-value services for our customer sector."
Analytical Surveys Inc., provides technology-enabled solutions
and expert services for geospatial data management, including
data capture and conversion, planning, implementation,
distribution strategies and maintenance services. Through its
affiliates, ASI has played a leading role in the geospatial
industry for more than 40 years. The Company is dedicated to
providing utilities and governmental agencies with responsive,
proactive solutions that maximize the value of information and
technology assets. As of January 1, 2003, ASI is headquartered
in San Antonio, Texas and maintains facilities in Indianapolis,
Indiana and Waukesha, Wisconsin. For more information, visit
http://www.anlt.com
Liquidity and Going Concern Uncertainty
In its most recent Form 10-Q filing, the Company reported:
"The accompanying [sic] financial statements have been prepared
on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. During the fiscal years of 2000 through 2002, we
experienced significant operating losses with corresponding
reductions in working capital and net worth, excluding the
impact of debt forgiveness, and we do not currently have a line
of credit in place to support operating cash flow requirements.
Our revenues and backlog have also decreased substantially
during the same period. Our senior secured convertible note also
has certain immediate call provisions that are outside of our
control, which if triggered and exercised, would make it
difficult for us to meet accelerated debt payments. These
factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern.
"To address the going concern issue, management has implemented
financial and operational restructuring plans designed to
improve operating efficiencies, reduce and eliminate cash losses
and position ASI for profitable operations. In 2002, we improved
our working capital position by reducing our bank debt through
the issuance of preferred stock and convertible debt and with
the collection of a $1.2 million federal income tax refund. The
consolidation of our production operations to two solution
centers has resulted in lower general and administrative costs
and improved operating efficiencies. Additionally, the
relocation of our corporate headquarters has resulted in
additional savings realized with a smaller corporate staff and
efficiencies in occupancy and travel related expenses. Our sales
and marketing team is pursuing market opportunities in both our
traditional digital mapping and newly launched data management
initiatives. We continue to focus on cost control as we develop
the data management initiative.
"The financial statements do not include any adjustments
relating to the recoverability of assets and the classifications
of liabilities that might be necessary should we be unable to
continue as a going concern. However, management believes that
its continued turnaround efforts, if successful, will improve
operations and generate sufficient cash to meet its obligations
in a timely manner."
AQUILA: Q1 Net Loss Reflects Costs of Energy Merchant Wind-Down
---------------------------------------------------------------
Aquila, Inc. (NYSE:ILA) reported first quarter results that
reflect, as anticipated, the costs of winding down its wholesale
energy trading business, while also seeing significantly
improved results from its domestic utility networks.
Aquila had a fully diluted loss of $.27 per share for the first
quarter of 2003, or a net loss of $51.9 million on sales of
$579.3 million. For the 2002 first quarter, the company had net
income of $.32 per share, or $44.4 million on sales of $767.4
million, including earnings of $4.4 million from discontinued
operations, net of tax.
The loss in 2003 is primarily due to trading and contract losses
related to last year's decision to exit the energy trading
business, an increase in fixed capacity payments for merchant
generation capacity, mark-to-market losses on certain long-dated
forward contracts, and higher interest cost reflecting
additional borrowings and higher interest rates due to the
company's non-investment grade credit rating. The company also
recorded $6.3 million in restructuring charges primarily
connected with unfavorable interest rate swaps.
Earnings before interest and taxes (EBIT) from Domestic Networks
increased 53 percent, reflecting cost control measures and rate
adjustments that took effect in two states after the first
quarter of 2002. Lower results from International Networks
reflect the October 2002 sale of all Aquila's interests in New
Zealand and an unfavorable regulatory decision regarding
depreciation of its network assets in Alberta, Canada.
"As planned, in 2003 we are continuing our transition from being
a major participant in the energy trading sector to
concentrating on our core utility operations in the United
States," said Richard C. Green, Jr., Aquila's chairman and chief
executive officer. "We will continue following our restructuring
plan throughout 2003 and 2004."
Restructuring Charges
Aquila recorded restructuring charges of $6.3 million in the
first quarter of 2003. These included a $5.3 million
restructuring charge to exit portions of interest rate swaps
related to construction financing arrangements for two merchant
power plants. In conjunction with the company's recent
refinancing, debt related to these facilities was paid down and
the interest rate swaps were no longer necessary. The company
reduced its position and realized the loss associated with the
cancelled portion of the unfavorable swaps. In April 2003,
Aquila repaid the outstanding balances on the debt and incurred
an additional $17.5 million of expense to exit the remaining
swap positions, which will be recognized in the second quarter
results.
During the 2003 first quarter, the company also recorded $1.0
million of severance costs following the elimination of
approximately 128 positions at Aquila's telecommunications
business, Everest Connections. As a result of the recent
restructuring at Everest, Aquila expects to incur approximately
$1.3 million in additional restructuring charges for severance
and other related costs in the second quarter of 2003.
Financing Update
In April 2003, the company reached a new financing agreement to
replace its maturing credit facilities and other obligations, as
previously announced. This two-part financing package consisted
of two secured loan facilities -- a 364-day $200 million loan to
Aquila's Australian operations and a $430 million three-year
term loan to Aquila. Upon closing of the Australian asset sale,
the $200 million, 364-day loan will be repaid.
Domestic Networks
Domestic Networks reported first quarter EBIT of $70.6 million
in 2003, compared to $46.1 million a year earlier. Results
reflect $6.4 million of additional EBIT from interim rate
increases in Michigan and Iowa. Operating expense decreased
$24.5 million year to year, primarily due to labor and benefit
savings and lower administrative expenses as a result of
Aquila's 2002 restructuring. In addition, Everest Connections'
EBIT was $2.8 million higher in the 2003 quarter due primarily
to an increase in customers. The business recently has become
self-funded and cash-flow positive, following a decision in the
fourth quarter of 2002 to halt network expansion activities and
focus solely on customer retention and new customer acquisition
to the existing Everest network. Everest will meet its own cash
flow needs going forward.
Results in the 2002 period included EBIT of $8.1 million from
Aquila's ownership interest in Quanta Services, Inc. However,
due to Aquila's reduced ownership position in 2003, it could no
longer record equity earnings from Quanta Services for
accounting purposes. During the first quarter of 2003, Aquila
sold its remaining interest in Quanta.
International Networks
International Networks reported EBIT of $10.6 million for the
first quarter of 2003 compared to $33.6 million in the 2002
quarter. The drop reflects a $31.1 million decrease in sales due
to a reduction in electric rates for 2002 and 2003, offset by a
decrease of $16.8 million in depreciation and amortization
related to the Alberta network assets due to a change in
regulatory treatment. Equity in earnings of investments
decreased $7.2 million in 2003 compared to the 2002 first
quarter, primarily due to the October 2002 sale of the company's
interest in UnitedNetworks Limited in New Zealand. Aquila's
investment in UnitedNetworks contributed equity earnings of $8.4
million in the first quarter of 2002.
Capacity Services
Capacity Services reported a loss before interest and taxes of
$48.7 million for the first quarter of 2003 compared to EBIT of
$2.2 million in the 2002 quarter. The loss resulted primarily
from a $21.4 million decrease in mark-to-market gains that
occurred in 2002 but did not recur due to lower spark spreads in
the forward market. In addition, there were $16.0 million of
non-cash mark-to-market losses on long-dated forward contracts
in the 2003 quarter.
In connection with its merchant power plants, Aquila makes fixed
capacity payments evenly throughout the year. For the first
quarter of 2003, capacity payments increased by $11.5 million
compared to a year earlier as new plants became operational late
in 2002. This additional capacity was utilized on a limited
basis at prices that were not sufficient to cover the fixed
capacity payments.
Wholesale Services
Wholesale Services reported a loss before interest and taxes of
$52.6 million in the 2003 first quarter compared to EBIT of
$21.5 million a year earlier. Aquila announced its intention to
exit from the wholesale energy trading business in last year's
second quarter and did not add to its trading portfolio in the
first quarter of 2003.
The $52.6 million loss before interest and taxes included a non-
cash loss of approximately $27.0 million related to the sale of
all of the capacity under certain long-term gas transportation
contracts at substantially less than Aquila's future
commitments. The loss was recognized for accounting purposes,
however, the cash associated with the loss will be paid out over
the life of the contract. In addition, there were $5.9 million
of losses related to terminating additional trading contracts in
the 2003 first quarter. The remaining first quarter 2003 margin
losses stem from mark-to-market losses and unfavorable
settlements related to Aquila's trading portfolio, including
highly structured rainfall, streamflow and load base fixed price
sale transactions.
Wholesale Services' operating expense decreased $35.8 million
compared to a year earlier, primarily due to labor and benefit
savings and related reductions in operating costs resulting from
the exit from Aquila's wholesale energy trading operations.
Asset Sales
Continuing its program of asset sales that was begun in 2002,
Aquila announced on April 22 that it had reached an agreement to
sell its interests in all of its Australian investments --
Multinet Gas, United Energy and AlintaGas -- for approximately
US$589 million, which after fees, expenses and taxes is
projected to yield net cash proceeds of approximately US$445
million at closing targeted for third quarter of 2003.
With the closing of the Australia sale, Aquila will have
generated $1.7 billion in proceeds from its asset sale program.
Proceeds from asset sales will continue to be used to reduce
liabilities and fund working capital needs.
Corporate and Other
Corporate and Other reported a loss before interest and taxes of
$1.1 million for the first quarter of 2003, compared to a loss
before interest and taxes of $16.7 million in 2002. The improved
results are primarily due to $16.5 million of foreign currency
gains in 2003, reflecting favorable movements in the Australian
and New Zealand dollar exchange rates.
Interest expense increased $16.5 million in the first quarter of
2003 compared to the prior year's quarter. The increase resulted
primarily from higher interest costs related to the $500.0
million of senior notes that Aquila issued in July 2002 and
$287.5 million of senior notes it issued in February 2002. These
increases were offset in part by the retirement of debt
outstanding in Australia and New Zealand in late 2002 and early
2003 and the conversion of the premium equity participating
securities to common equity in November 2002.
Income tax benefits increased $32.5 million in 2003 compared to
the first quarter of 2002, primarily due to Aquila's loss before
income taxes in 2003 compared to earnings and certain regulatory
adjustments that were made in the first quarter of 2002.
Discontinued Operations
In 2002 and early 2003, Aquila sold its Texas natural gas
storage facility, its Texas and Mid-Continent natural gas
pipeline systems, including its natural gas and natural gas
liquids processing assets and its ownership interest in the
Oasis Pipe Line Company, its coal terminal and handling facility
and its Merchant loan portfolio. The results of operations of
those assets are now reported as discontinued operations. They
earned $4.4 million in the first quarter of 2002.
Based in Kansas City, Mo., Aquila operates electricity and
natural gas distribution networks serving customers in seven
states and in Canada, the United Kingdom and Australia. The
company also owns and operates power generation assets. At
March 31, 2003, Aquila had total assets of $8.7 billion. More
information is available at http://www.aquila.com
As reported in Troubled Company Reporter's April 15, 2003
edition, Fitch Ratings assigned a 'B+' rating to the new $430
million senior secured 3-year credit facility of Aquila, Inc.
Concurrently, Fitch has downgraded the senior unsecured rating
of ILA to 'B-' from 'B+'. Approximately $3 billion of debt has
been affected. The senior unsecured rating of ILA is removed
from Rating Watch Negative. The Rating Outlook for ILA's secured
and unsecured ratings is Negative.
The Facility rating was based on the structural protections of
the Facility as well as the senior secured lenders' enhanced
recovery prospects relative to unsecured creditors. Secured and
structurally senior debt together account for approximately 25%
of total debt excluding pre-payment obligations. Facility
collateral includes first mortgage bonds registered in the name
of the collateral agent (Credit Suisse First Boston) on the
regulated gas distribution utilities in MI and NE, a pledge of
stock of the holding company of the Canadian regulated
electricity distribution businesses and a second lien on certain
independent power plant investments.
Standard & Poor's Rating Services lowered its corporate credit
and senior unsecured rating on electricity and natural gas
distributor Aquila Inc., to 'B' from 'B+'. The ratings have also
been removed from CreditWatch where they were placed with
negative implications on Feb. 25, 2003. The outlook is negative.
The rating actions reflect concerns resulting from the company's
reliance on asset sales to reduce debt levels and projected weak
cash flows from operations. At the same time, Standard & Poor's
Rating Services assigned a 'B+' rating to Aquila's proposed $430
million senior secured credit facility. The issuer rating of
Aquila Merchant Services Inc. was withdrawn.
"The ratings on Aquila reflect Standard & Poor's analysis of the
company's restructuring plan, financial condition, and available
liquidity to meet near-term obligations," noted Standard &
Poor's credit analyst Rajeev Sharma. Aquila's restructuring plan
is dependent on continued asset sales. Standard & Poor's is
concerned with the heavy execution risks involved with Aquila's
asset sales strategy. Weak market conditions may lead to
increased execution risks for future asset sales, as evidenced
by the delay in the sale of Avon Energy Partners Holdings. Due
to weak cash flow generation from operations, asset sales will
be necessary for Aquila to reduce its debt levels and shore up
the company's balance sheet. However, cash flow generation
relative to total debt is likely to remain weak and not exceed
15% in the near term.
Cash flows from Aquila's regulated utilities are projected to be
stable, however, depressed power prices and negative spark
spreads will continue to be a drag on Aquila's cash flow from
operations on the nonregulated side of the business. Overall
cash flow will be strained, as the company faces restructuring
charges in 2003 and debt maturities in 2004. Expected cash flow
from the company's reconstituted business plan is insufficient
to fully offset Aquila's massive amount of debt leverage.
Aquila's liquidity will be highly dependent on continued asset
sales as the company faces $400 million in debt maturities in
2004 ($250 million in senior notes due in July and $150 million
in senior notes due in October). Aquila's liquidity will be
further strained by the cash outflows associated with its
prepaid gas delivery contracts and tolling agreements. The
aggregate cash flows for these commitments are estimated to be
$245 million in 2003 and $263 million in 2004. In addition,
substantial projected capital expenditures of $316 million in
2003 and $210 million in 2004 and working capital needs will
continue to be a drain on cash flows.
ASIA GLOBAL: Files Joint Liquidating Plan & Disclosure Statement
----------------------------------------------------------------
Asia Global Crossing Ltd., and its debtor-affiliates present to
the Court their Disclosure Statement for the solicitation of
votes on the Joint Liquidating Chapter 11 Plan of Reorganization
of Asia Global Crossing Ltd. and Asia Global Crossing
Development Co.
The Plan provides for the liquidation of the AGX Debtors'
remaining assets and for the distribution of the proceeds of
their assets -- including $89,800,000 of cash retained by Asia
Global Crossing Ltd. after the closing of the Asia Netcom
Transaction -- to their creditors in the order of their relative
priority of distribution under the Bankruptcy Code. As a
consequence of the Asia Netcom Transaction, the AGX Debtors no
longer are conducting business operations other than fulfilling
their fiduciary duties as debtors-in-possession and safeguarding
their Estates pending confirmation and consummation of the Plan.
The AGX Debtors are not reorganizing their businesses but are
rather liquidating. Following confirmation and consummation of
the Plan, the AGX Debtors will not be conducting any business
operations other than disposing of assets, distributing the
proceeds of their assets to their creditors, resolving Disputed
Claims not dealt with previously, and, ultimately, dissolving as
corporate entities under applicable local law.
The Plan provides for:
(i) the distribution to AGX Ltd.'s Creditors of $86,700,000
in Cash that remains in the Estate as a result of the
Asia Netcom Transaction and any proceeds from the orderly
liquidation of AGX Ltd.'s assets that were not
transferred to Asia Netcom; and
(ii) the distribution to AGX Development's Creditors of
$500,000 in Cash held by the Estate in accordance with
the priorities set forth in the Bankruptcy Code.
The Plan does not contemplate the continuation of business
operations by the Debtors following confirmation and
consummation of the Plan other than for purposes of winding up
and distributing Cash to Creditors.
The Plan contemplates that, after consummation, the assets of
AGX Ltd. and Asia Global Crossing Development Corp. will be
transferred on the Effective Date to a liquidating trust. A
Liquidating Trustee will be responsible for administering the
Liquidating Trust in accordance with the provisions of the Plan;
a Liquidating Trust Agreement will govern the Liquidating Trust.
The terms and provisions of the Plan, including those provisions
governing Distributions to holders of Allowed Claims, reflect
the result of discussions between the Debtors, the Committee and
the JPLs.
The estimation of recoveries makes these assumptions, among
others:
-- The Cash that is expected to be available for distribution
to holders of AGX Ltd. Class 3 General Unsecured Claims,
after satisfaction of all Allowed Administrative Claims,
Allowed Priority Tax Claims and Allowed Other Priority
Claims, is projected to be $79,148,000.
-- The Cash that is expected to be available for distribution
to holders of AGX Development Class 3 General Unsecured
Claims, after satisfaction of all Allowed Administrative
Claims, Allowed Priority Tax Claims and Allowed Other
Priority Claims, is projected to be $500,000.
-- The claims asserted against AGX Ltd. by Pacific Crossing
Ltd. and Pacific Crossing Ltd.'s bank group are the subject
of contested proceedings pending in the Bankruptcy Court
and are not included in the claims pool for purposes of the
following estimation of recovery for AGX Ltd. Class 3.
Likewise, the Legere Claims, which are expected to be
contested by AGX Development and the Liquidating Trustee,
are not included in the claims pool for purposes of the
following estimation of recovery for AGX Development Class
3. In addition, the claims of entities that filed proofs
of claim alleging contingent or unliquidated claims are not
included in the claims pool for purposes of the following
estimation of recovery for AGX Ltd. Class 3 and AGX
Development Class 3.
A free copy of the Debtors' Liquidating Plan is available at:
http://bankrupt.com/misc/272_ReorganizationPlan.pdf
A free copy of the Debtors' Disclosure Statement is available
at:
http://bankrupt.com/misc/273_DisclosureStatement.pdf
(Global Crossing Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ATCHISON CASTING: Red Ink Continues to Flow in March Quarter
------------------------------------------------------------
Atchison Casting Corporation (OTC Bulletin Board: AHNC)
announced results for the third quarter and first nine months
ended March 31, 2003.
Third quarter net sales from continuing operations decreased
14.1% to $80.7 million from $93.9 million in the comparable
period last year. Excluding operations that were sold, closed or
placed into liquidation in fiscal 2002, net sales for the third
quarter were $80.1 million, representing a decrease of 7.6% from
net sales of $86.7 million in the third quarter of fiscal 2002.
The net loss for the quarter was $2.1 million, compared to net
income in the third quarter of fiscal 2002 of $708,000. Included
in fiscal 2003 third quarter results is a non-recurring gain of
$4.0 million, consisting of insurance proceeds relating to the
industrial accident in February 1999 at the Company's
subsidiary, Jahn Foundry Corp., and a loss from discontinued
operations of $893,000. Included in fiscal 2002 third quarter
results was an income tax benefit of approximately $7.1 million,
resulting from a stimulus bill passed by the Senate, and signed
into law by the President, enabling the Company to carry its
operating losses back an additional three years and a loss from
discontinued operations of $733,000. The loss from discontinued
operations in both periods consists of the results of Kramer
International, Inc., which was sold in January 2003, and La
Grange Foundry Inc., which was closed in November 2002.
Excluding these items, the loss from adjusted continuing
operations for the third quarter of fiscal 2003 was $5.2
million, compared to a loss of $5.7 million in the comparable
period last year.
For the first nine months of fiscal 2003, net sales from
continuing operations decreased 16.5% to $234.1 million from
$280.4 million in the comparable period last year. Excluding
operations that were sold, closed or placed into liquidation in
fiscal 2002, net sales for the first nine months of fiscal 2003
were $232.9 million, representing a decrease of 8.5% from net
sales of $254.4 million in the first nine of fiscal 2002. The
net loss for the first nine of fiscal 2003 was $38.8 million,
compared to a net loss in the first nine months of fiscal 2002
of $9.5 million. Included in the results for the first nine
months of fiscal 2003 is (i) a loss from discontinued operations
of $4.4 million, (ii) a fixed asset impairment charge relating
to the Company's G&C Foundry Company and Canada Alloy Castings,
Ltd. subsidiaries, of $4.4 million, (iii) a restructuring charge
of $1.5 million, relating to the liquidation of New England
Iron, LLC, the buyer of substantially all of the net assets of
Jahn Foundry Corp. in December 2001, (iv) a goodwill impairment
charge of $17.4 million due to the adoption of a new accounting
standard, and (v) the $4.0 million, non-recurring insurance gain
discussed above. Included in the results for the first nine
months of fiscal 2002 is the income tax benefit of $7.1 million,
discussed above and a loss from discontinued operations of $1.4
million. Excluding these items, the loss from adjusted
continuing operations for the first nine of fiscal 2003 was
$15.0 million, compared to a loss of $15.2 million in the
comparable period last year.
In connection with the adoption of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible
Assets", the Company recorded the non-cash goodwill impairment
charge of $17.4 million mentioned above, as of the beginning of
fiscal 2003. The goodwill impairment charge relates to four of
the Company's operations, and was recorded as a Cumulative
Effect of Accounting Change. The charge has no effect on
operating income or cash flows from operations.
"The foundry industry as a whole continues to fight through one
of the most challenging market conditions in history," said Mr.
Armstrong. "Fortunately, ACC has experienced good support from
our customers, suppliers, employees and lenders," continued Mr.
Armstrong. "Our lenders have continued to work with us, as we
have had to take some difficult actions in an effort to position
the Company for improved results when the markets do return. As
previously announced, these actions have included both selling
and closing subsidiary operations," said Mr. Armstrong.
"We've continued to focus on things we do have some control
over, including cost reductions and reducing our debt levels.
Since the beginning of fiscal 2002, we have reduced our debt
levels in North America by approximately $25.0 million,
primarily through asset sales, plant sales, tax refunds and
insurance proceeds," continued Mr. Armstrong.
"The Company continues in discussions to sell G&C Foundry,
Canada Alloy and Inverness Castings," said Mr. Armstrong. "In
addition, we are also marketing Canadian Steel Foundries, Ltd.
for possible sale," continued Mr. Armstrong. "Proceeds from
these sales, should they be completed, will be used to further
reduce our debt levels," concluded Mr. Armstrong.
ACC produces iron, steel and non-ferrous castings for a wide
variety of equipment, capital goods and consumer markets.
As reported in Troubled Company Reporter's May 15, 2003
editiojn, Atchison Casting Corp., reported that between
April 14, 2003, and May 3, 2003, the Company entered into the
Third, Fourth, Fifth and Sixth Reinstatements and Modifications
of the Fourteenth Amendment and Forbearance Agreement to the
Credit Agreement and the Third, Fourth, Fifth and Sixth
Reinstatements and Modifications of the Eleventh Amendment to
the Note Purchase Agreement. These amendments collectively,
among other things, modify the termination date of the
forbearance from April 11, 2003, to May 31, 2003.
At December 31, 2002, ACC's balance sheet shows that its total
current liabilities outweighed its total current assets by about
$77 million.
BAYOU STEEL: Committee Gets OK to Hire CIBC as Financial Advisor
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
gave its nod of approval to the request of the Official
Committee of Unsecured Creditors appointed in Bayou Steel
Corporation's chapter 11 cases, to employ CIBC World Markets
Corp., as its Financial Advisors.
CIBC's professionals have assisted, advised, and provided
valuation services to debtors, creditors, bondholders, investors
and other entities of similar size to the Debtors' cases. In
this retention, CIBC will:
a. assist the Committee in analyzing and reviewing the
acts, conduct, assets, liabilities and financial
condition of the Debtors;
b. familiarize itself to the extent appropriate with the
operation of the Debtors' businesses;
c. advise the Committee with respect to the Chapter 11
Cases including analyzing, negotiating and effecting a
plan of reorganization or recapitalization for the
Debtors to the extent necessary;
d. perform valuation analyses on the Debtors and their
assets;
e. participate in hearings before the Bankruptcy Court, if
required, with respect to any matter as to which CIBC
has provided advice to the Committee; and
f. render such other financial advisory services as may be
reasonably requested by the Committee or its counsel and
agreed to by CIBC.
The engagement team will be lead by Daniel W. Dienst, Managing
Director of CIBC World. Mr. Dienst reports that CIBC will
charge the Debtors:
a. A Monthly Fee of $100,000 per month for the first 4 months
of employment and reduced to $85,000 commencing on the
fifth month until the consummation of a financial
restructuring or recapitalization of the Debtor.
b. a Success Fee upon the closing of a Transaction, in an
amount agreed upon, by the Committee and CIBC.
In addition, CIBC will be reimbursed all reasonable out-of-
pocket expenses incurred in connection with its services.
Bayou Steel Corp., a producer of light structural shapes and
merchant bar steel products, filed for chapter 11 protection on
January 22, 2003 (Bankr. N.D. Tex. 03-30816). Patrick J.
Neligan, Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$176,113,143 in total assets and $163,402,260 in total debts.
BRIDGE INFO: Plan Administrator Challenges Commodex's $4MM Claim
----------------------------------------------------------------
Commodex filed Claim Number 1895 for $4,151,131. Plan
Administrator (appointed in Bridge Information Systems, Inc.'s
bankruptcy proceedings) Scott Peltz objects and seeks to
disallow the claim except as to the scheduled amount for $500,
pursuant to Section 502 of the Bankruptcy Code and the Plan
Administrator Agreement.
Amy M. Leytem, Esq., at the Foley & Lardner, in Chicago,
Illinois, points out that the objection should be sustained
because:
(i) the Claim exceeds the amount that the Debtors' records
indicate is owed to Commodex;
(ii) there is insufficient documentation to support the Claim
and the Claim is improperly quantified;
(iii) the Claim was filed after the Bar Date; and
(iv) the Claim is contingent upon a finding of fraud that has
yet to be proven.
The Plan Administrator reserves the right to object to in the
future to the Claim on any ground, and to amend, modify or
supplement this Objection, including, without limitation, to
object to the Claim if it is not disallowed by the Court.
(Bridge Bankruptcy News, Issue No. 44; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
BUDGET GROUP: Taps Miller Ellin as Tax Accountants and Advisors
---------------------------------------------------------------
Budget Group Inc., and its debtor-affiliates ask the Court for
permission to employ and retain the accounting firm of Miller,
Ellin & Company, LLP and its consultant Jeffrey E. Olsberg as
their tax accountants and tax claims and reconciliation
advisors, nunc pro tunc to April 1, 2003.
Miller and Mr. Olsberg have served as Budget's tax advisors,
preparing local, state and federal tax returns, for the past six
months. The Debtors want the engagement to continue with the
Court's formal blessing. Miller will be preparing tax returns
as well as analyzing tax issues facing the estates and providing
support with respect to the priority and non-priority tax claims
asserted by claimants against the Debtors' estates.
Budget Group Executive Vice-President Robert L. Aprati informs
the Court that due to the number and size of anticipated tax
claims, the Debtors have selected Miller, subject to the Court's
approval, to serve as their tax accountants and tax claims and
reconciliation advisors in these Bankruptcy proceedings. In
addition to the local, state and federal tax return preparation
services currently provided to the Debtors by the Retained
Professionals, the Debtors anticipate that they will require the
experience of qualified and experienced professionals to analyze
issues and provide support with respect to the priority and non-
priority tax claims asserted by various claimants against their
estates and reconciling those asserted claims against their
books and records.
Mr. Aprati relates that through their representation of the
Debtors both prepetition Date and postpetition Date as ordinary
course professionals, the members of Miller Ellin have become
uniquely and thoroughly familiar with the Debtors and their
business affairs, especially tax issues affecting the Debtors.
The members of Miller Ellin who will represent the Debtors in
connection with the matters on which the Firm is retained have
extensive knowledge and expertise in all aspects of taxation,
including preparation of state, local and federal tax returns,
the analysis and reconciliation of tax claims and the treatment
of these issues in the context of a Chapter 11 bankruptcy and,
in particular, are intimately familiar with the tax issues of
the Debtors.
Mr. Aprati contends that Mr. Olsberg possesses significant
institutional knowledge and experience with respect to the
Debtors' tax issues by virtue of his employment with the Debtors
for 25 years, and his most recent position as Vice President of
taxation. In many cases, the information possessed by Mr.
Olsberg cannot be duplicated by any other individual without
spending vast amounts of time and resources.
The Debtors believe that the Retained Professionals' continued
representation in connection with their tax returns and tax
claims is essential to a successful Chapter 11 process and will
provide a substantial benefit to the Debtors and their estates.
Thus, the Debtors believe that the Retained Professionals are
uniquely qualified to represent them as their tax accountants
and tax claims and reconciliation advisors.
The Debtors anticipate that the Retained Professionals will
render tax accounting and claims reconciliation services as
needed throughout the course of these Chapter 11 cases. The
Retained Professionals will provide the Services as the Retained
Professionals and the Debtors will deem appropriate and
necessary in the course of these Chapter 11 cases, including,
but not limited to:
1. assistance in the preparation of local, state and federal
tax returns required by the jurisdictions in which the
Debtors operate;
2. assistance in the analysis and reconciliation of the
claims made by local, state and federal tax authorities
on the Debtors' estates;
3. assistance with the diligence activities required in
connection with the various tax claims made on the
Debtors' estates;
4. providing testimony, if needed, in the defense and
reconciliation of the various tax claims made on the
Debtors' estates;
5. managing and providing advisory services regarding
franchise, income, sales, personal property, real
property, payroll, excise and other miscellaneous tax
examinations; and
6. providing other taxation advisory services as required by
the Debtors and their legal counsel.
Subject to the Court's approval, the Retained Professionals will
charge the Debtors for their services on an hourly basis in
accordance with its ordinary and customary rates for matters of
this type in effect on the date the services are rendered, and
for reimbursement of all costs and expenses incurred in
connection with these cases. The Retained Professionals'
billing rates currently range from:
Staff Hourly Rate
----- -----------
Partners $250 - 400
Accounting Manager $250 - 400
Tax managers $250 - 400
Tax and accounting staff $55 - 190
Clerical staff $55 - 190
These hourly rates are subject to periodic increases in the
normal course of Retained Professionals business.
With respect to the tax accounting and tax claims and
reconciliation services to be provided by the Retained
Professionals, pursuant to Sections 105(a) and 327(a) of the
Bankruptcy Code, the Debtors are seeking approval of the
Retained Professionals' retention as tax accountants and tax
claims and reconciliation advisors without the Retained
Professionals being required, in its invoices and applications
submitted pursuant to Sections 330 and 331 of the Bankruptcy
Code, to:
1. submit detailed billing statements; and
2. report the time incurred by the Retained Professionals in
tenths of an hour increments.
Rather, the Retained Professionals' time summary will provide
these information:
1. the aggregate number of hours worked by each professional
over the applicable time period in quarter of an hour
increments;
2. the hourly rate charged by professional;
3. the total fees due to the Retained Professionals with
respect to tax accounting and tax claims and
reconciliation services; and
4. a brief description of the tax accounting and tax claims
and reconciliation services performed by the Retained
Professionals over the applicable time period.
The Debtors submit that given the nature of the audit and
accounting services to be provided by the Retained
Professionals, the time detail will be sufficient for the
Debtors and other parties-in-interest to make an informed
judgment regarding the nature and appropriateness of the
Retained Professionals' fees.
Moreover, Mr. Aprati believes that requiring the Retained
Professionals to submit detailed time records for tax return
preparation, reconciliation of tax claims, and similar services
would unduly burden the estates and the Retained Professionals.
Professionals that provide similar services in the ordinary
course of the Debtors' business do not generally file fee
applications and record their time in tenths of an hour.
Furthermore, the Retained Professionals, when providing tax
accounting services to clients outside of Chapter 11, do not
record their time and services in tenths of an hour, but rather
in the summary format proposed.
The Debtors believe that the fees of the Retained Professionals
are fair and reasonable in light of industry practice, market
rates both in and out of Chapter 11 cases, the Retained
Professionals' experience, the scope of work to be performed
pursuant to the Retained Professionals' retention and Retained
Professionals' importance to these cases
Miller Ellin Principal Mark Peltz assures the Court that the
Firm and its employees do not represent or hold any adverse
interest to the Debtors or their estates with respect to the
matters on which the Firm is to be employed. In addition,
Miller Ellin is disinterested for purposes of Sections 1107(b)
and 327(a) of the Bankruptcy Code with respect to the Debtors,
their officers, affiliates, creditors or any other party-in-
interest or their respective attorneys and accountants or the
United States Trustee. However, he admits that Miller Ellin
currently provides or in the past has provided services in
unrelated matters to these parties:
A. Institutional Lenders: PB Capital Corporation and BHF Bank,
both owned by Deutsche Postbank, AG; GE Capital Commercial
Corp. - part of General Electric Capital Corporation;
Century Business Credit Corp. -acquired by Wells Fargo
Bank.; Bank of America, NA; and BNP Paribas.
B. Unsecured Creditors: Century Business Credit Corp. -
acquired by Wells Fargo Bank.
Finally, Mr. Olsberg is not a prepetition Date creditor of the
Debtors, does not hold or represent an interest adverse to the
Debtors or their estates with respect to the matters for which
the Retained Professionals are to be employed and is a
"disinterested person". Mr. Olsberg was previously employed by
the Debtors as their Vice President of taxation within two years
of the Petition Date. However, as set forth in Section 1107(b)
of the Bankruptcy Code, Mr. Olsberg and Miller Ellin are not
disqualified from employment solely because of his employment by
the Debtors prior to the commencement of these cases.
Mr. Aprati tells the Court that the Retained Professionals will
conduct an ongoing review of their files to ensure that no
conflicts or other disqualifying circumstances exist or arise.
If any new relevant facts or relationships are discovered, the
Retained Professionals will supplement its Application in a
disclosure to the Court. (Budget Group Bankruptcy News, Issue
No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Budget Group Inc.'s 9.125% bonds due 2006 (BDGP06USR1) are
trading at about 24 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BDGP06USR1
for real-time bond pricing.
CASTLE DENTAL: Completes Debt Workout & Recapitalization Deals
--------------------------------------------------------------
Castle Dental Centers, Inc. (OTC Bulletin Board: CASL) had net
income of $462,000, $0.01 per share, for the three months ended
March 31, 2003, its first quarterly profit in three years. This
compares to a loss of $1.4 million for the same period last
year, before a charge of $37.0 million recognized in the first
quarter 2002 to reflect the cumulative effect of a change in
accounting principle. Revenues were $24.5 million for the first
quarter 2003, $1.0 million less than revenues of $25.5 million
last year. Revenues from dental centers open for more than one
year improved by 1.6%, offset by reduced revenues from dental
centers closed or sold in the past twelve months. During the
first quarter 2003, the Company managed 77 dental centers
compared to 85 dental centers in the first quarter 2002.
The Company also announced that it completed its previously
announced recapitalization plan, which included the sale of
$13.0 million in subordinated notes and preferred stock to a
group of investors led by Sentinel Capital Partners II, L.P.,
and the restructuring of its senior credit facility, resulting
in a $27 million reduction in the Company's outstanding debt.
Sentinel Capital Partners is a New York-based institutional
private equity investment firm that specializes in buying and
building smaller middle market companies in the United States
and Canada in partnership with management.
The new senior credit facility consists of a $16.0 million term
loan and revolving credit facility provided by GE Healthcare
Financial Services, with a final maturity date of November 2007.
Sentinel and certain other investors, including members of
Castle Dental's management, purchased $6.0 million in Series B
preferred stock and $7.0 million in subordinated notes due in
five years. Sentinel will own a majority of the voting stock of
the Company and will be entitled to elect a majority of the
board of directors of Castle Dental.
James M. Usdan, president and chief executive officer, had the
following comments, "We are extremely pleased to announce the
completion of our debt restructuring and recapitalization
efforts, which have been ongoing for more than two years. The
infusion of new equity into the Company by Sentinel Capital
Partners and the replacement of our senior credit facility with
the new line of credit provided by GE Healthcare Financial
Services substantially reduces our debt and provides Castle
Dental a stable capital structure for the first time in several
years. We have been able to achieve this result through the hard
work of our employees and affiliated dentists, as evidenced by
the improved operating results that we are also pleased to
announce today. The net income of $462,000 reported for the
first quarter is Castle Dental's first profitable quarter since
the first quarter of 2000. This has been achieved by focusing on
improving the quality of services provided to our patients,
stringent cost controls, improving provider relations with our
affiliated dental professionals, and selling or closing poorly
performing dental centers. With our strengthened balance sheet
and new financial partners, we will be able to continue our
efforts to become the leading dental healthcare provider in the
markets that we serve."
"This investment is consistent with Sentinel's plan to
selectively invest in quality niche service businesses," said
David Lobel, Sentinel's Founder and Managing Partner. "Castle
Dental is a highly respected and recognizable brand in the
dental services industry and has established a leadership
position in its markets," Lobel noted. "We are also delighted to
partner in this deal with Castle Dental's senior management, and
look forward to working closely with them and assisting in the
company's growth plan," Lobel added.
"Castle Dental is well positioned to expand the range of
specialty services it offers its patients and thereby to take
advantage of the company's strong dental office system," said
Paul Murphy, a Principal at Sentinel. "Our objective is to
substantially increase Castle Dental's profitability over the
next several years. The Company has the management and
infrastructure in place to accomplish this goal."
Castle Dental Centers, Inc. develops, manages and operates
integrated dental networks through contractual affiliations with
general, orthodontic and multi-specialty dental practices in the
U.S. Castle manages 77 dental centers with approximately 170
affiliated dentists in Texas, Florida, Tennessee and California
with annual patient revenues of approximately $100 million.
CBR BREWING: Independent Auditors Express Going Concern Doubt
-------------------------------------------------------------
Effective February 28, 2003, CBR Brewing Company, Inc.,
reincorporated from the State of Florida in the United States to
the British Virgin Islands by merging into its wholly-owned BVI
subsidiary, High Worth Holdings Ltd. This off-shore
reincorporation was accomplished for tax planning purposes,
since all of the Company's assets and operations are currently
located in China and are expected to continue to be located
outside the United States in the future. The reincorporation
had no effect on the Company's current business operations in
China. On March 3, 2003, Holdings changed its name to CBR
Brewing Company Inc. and members of the Board of Directors were
replaced by the Board members of the Florida corporation.
The Agreement and Plan of Merger dated January 24, 2003 was
approved by a majority of shareholders of each class of common
stock outstanding as of December 31, 2002. Holdings was the
surviving corporation subsequent to the merger and possesses all
of the rights, privileges, powers and franchises and is subject
to all the restrictions, disabilities and duties of the
dissolved Florida corporation. Each Class A share of the
Florida corporation was converted into one fully paid and non-
assessable (with no par value) Class A share of capital stock of
the BVI corporation and each Class B share of the Florida
corporation was converted into one fully paid and non-assessable
(with no par value) Class B share of capital stock of the BVI
corporation. The surviving BVI corporation assumed and
continued the public reporting obligations of the dissolved
Florida corporation under a new OTC Bulletin Board trading
symbol ("CBRAF"), and the consolidated operating results of the
Company continued without interruption.
The Company is engaged in the business of brewing, distributing
and marketing Pabst Blue Ribbon beer and other local beer in
China. As of December 31, 2002, the Company owned effective
interests of 60%, 24% and 33% in three brewing facilities mainly
producing Pabst Blue Ribbon beer in China, all of which are
managed by the Company. The Company is also presently
responsible for the marketing and sale in China of Pabst Blue
Ribbon beer produced by the three brewing facilities. In 2000,
the Company owned an effective interest of 9% in a fourth
brewing facility. However during April 2001, as a result of
continuing operating losses and adverse market conditions, the
Company conducted discussions with its partner, resulting in an
agreement to withdraw from the fourth brewing facility. In
2000, the Company, through Holdings, also owned a 51% effective
interest in a fifth brewing facility producing local brand beer,
but the production and operation of this brewery was formally
terminated in December 2000. The Company wrote off its
investment in this brewery during 2001.
China is currently ranked as the second largest beer producer
and consumer in the world behind the United States. The Company
produces Pabst Blue Ribbon beer in China under a sub-license
expiring on November 7, 2003. The majority of the beer
production is concentrated in two breweries located in the City
of Zhaoqing, which is approximately 100 miles from Hong Kong in
the Guangdong Province of China. Pabst US provides quality
control assistance to the Company on a regular basis. The
Company markets Pabst Blue Ribbon beer in all major provinces in
China. The Company currently maintains offices in Beverly
Hills, California, Hong Kong and the City of Zhaoqing.
High Worth JV holds certain licensing rights for Pabst Blue
Ribbon beer and also directly owns 100% of a Pabst Blue Ribbon
brewing complex, and, through a subsidiary, a 40% interest in
Zhaoqing Blue Ribbon Brewery Noble Ltd., a Sino-foreign joint
venture. Noble Brewery owns a second Pabst Blue Ribbon brewing
complex that is also managed by Zhaoqing Brewery. A subsidiary
of Noble China, Inc., a Canadian public company, owns the other
60% interest in Noble Brewery.
Noble China Inc. has publicly reported that in May 1999 it
entered into a license agreement with Pabst US granting it the
right to utilize the Pabst Blue Ribbon trademarks in connection
with the production, promotion, distribution and sale of beer in
China for 30 years commencing in November 2003. In consideration
for the license agreement, Noble China Inc. reported that it had
paid Pabst US US$5,000,000 for the right to use the Pabst Blue
Ribbon trademarks and agreed to pay royalties based on gross
sales. Noble China Inc. has also recently publicly reported
that it was experiencing severe financial difficulties, was
unable to meet its financial commitments and was insolvent, and
was considering various courses of action.
As of December 31, 2002, the Company has not yet obtained a
renewal of the Pabst Blue Ribbon sub-license agreement. The
inability of the Company to obtain a sub-license from Noble
China Inc. or to renew the Company's sub-license or enter into
some other form of strategic relationship under acceptable terms
and conditions to allow the Company to continue to produce and
distribute Pabst Blue Ribbon beer in China would have a material
adverse effect on the Company's future results of operations,
financial position and cash flows.
The Company has suffered recurring operating losses, had a
working capital deficit at December 31, 2002, and
certain bank borrowing agreements as of December 31, 2002 had
expired. The Company's Pabst Blue Ribbon sub-license agreement
will expire on November 7, 2003 and the severe financial
difficulties and management and other uncertainties of Noble
China Inc. may impact the Company's associated company, Noble
Brewery, and the ability of Noble China Inc. to renew or grant
sub-licenses to the Company and Noble Brewery to continue to
produce and distribute Pabst Blue Ribbon beer in China after
November 7, 2003. As a result of these factors the Company's
independent auditors have expressed substantial doubt about the
Company's ability to continue as a going concern.
COLLINS & AIKMAN: Poor Performance Prompts S&P to Maintain Watch
----------------------------------------------------------------
Standard & Poor's Rating Services placed its 'BB-' corporate
credit rating on Collins & Aikman Corp. on CreditWatch with
negative implications, reflecting the company's poor operating
performance and reduced earnings and cash flow expectations.
Troy, Michigan-based Collins & Aikman manufactures components
for the automotive industry and has total debt of about $1.3
billion.
Collins & Aikman has taken steps to improve its operating
performance, with the benefits expected to accrue throughout the
year. Nevertheless, the company expects its full-year EBITDA to
be 30% below its previous expectations.
Collins & Aikman received amendments to its bank financial
covenants. Future covenant requirements are restrictive, and
improved operating performance is necessary to remain in
compliance. The company is pursuing various cash-generation
initiatives to reduce bank borrowing and improve liquidity.
"We will meet with management to assess the company's plans for
improvement and the timeframe for increasing earnings and cash
flow," said Standard & Poor's credit analyst Martin King.
The very weak operating results during the first quarter of 2003
were caused by the poor performance of 12 of the company's 85
manufacturing plants. Collins & Aikman attributes its poor
results to a broad range of operating failures, such as
excessive scrap, premium freight, and labor inefficiencies;
failure to achieve material cost savings and commercial
recoveries; launch inefficiencies and start-up costs; price
declines; and higher material costs.
COMDISCO INC: Completes Quarterly Distribution to Creditors
-----------------------------------------------------------
Comdisco Holding Company, Inc. (OTC:CDCO) completed its
quarterly distribution from the disputed claim reserve
established pursuant to its Plan of Reorganization.
Approximately $18 million in previously disputed claims have
been allowed since the last quarterly distribution and a
distribution from the disputed claims reserve was made to these
newly-allowed claimholders. Also, approximately $23 million in
disputed claims have been disallowed since the last quarterly
distribution. As required by the Plan of Reorganization, a
supplemental distribution from the disputed claims reserve was
made to all class C-4 claimholders as a result of such
disallowance. Claims remaining in the disputed claim reserve
following these distributions have been reserved at a face
amount of approximately $334 million pursuant to bankruptcy
court authority.
After emergence from Chapter 11 on August 12, 2002 and pursuant
to its Plan of Reorganization, the company established the
disputed claim reserve at a face amount of $450 million. The
disputed claim reserve was established to fund a claim once the
claim is deemed an allowed claim in accordance with the terms of
the Plan of Reorganization. The process of resolving disputed
claims is ongoing. The company cannot predict with accuracy when
the claims resolution process will be completed or what the
total amount of allowed claims will be upon completion.
The purpose of reorganized Comdisco is to sell, collect or
otherwise reduce to money in an orderly manner the remaining
assets of the corporation. Rosemont, IL-based Comdisco --
http://www.comdisco.com-- provided equipment leasing and
technology services to help its customers maximize technology
functionality and predictability, while freeing them from the
complexity of managing their technology. Through its former
Ventures division, Comdisco provided equipment leasing and other
financing and services to venture capital backed companies.
COMMSCOPE INC: Expects Charges from Interest in OFS BrightWave
--------------------------------------------------------------
CommScope, Inc. (NYSE: CTV) expects to incur charges from its
minority ownership interest in OFS BrightWave, LLC, an optical
fiber and fiber cable venture with The Furukawa Electric Co.,
Ltd. of Japan. Earlier Furukawa announced a major review of its
global optical fiber and fiber optic cable operations, which may
include some OFS BrightWave facilities where CommScope has a
minority ownership interest. Furukawa indicated that additional
restructuring, charges and job cuts may be necessary at certain
fiber facilities in order to reduce its cost structure.
"We believe that Furukawa is continuing to respond to the
unprecedented downturn in global business conditions for optical
fiber and fiber optic cable," said Frank M. Drendel, CommScope
Chairman and Chief Executive Officer. "As we stated in our
recent earnings release, CommScope expects ongoing pricing
pressures and weak global demand for optical fiber products at
least through 2003. Furukawa stated today that it intends to
take additional actions in response to current market
conditions.
"CommScope expects to provide estimates of non-cash charges
related to OFS BrightWave once plans are finalized in the coming
months," noted Drendel.
CommScope acquired an 18.4% ownership interest in OFS
BrightWave, an optical fiber and fiber cable venture between
CommScope and Furukawa, during the fourth quarter of 2001 and
CommScope is reporting results using the equity method of
accounting for this investment.
CommScope is the world's largest manufacturer of broadband
coaxial cable for Hybrid Fiber Coaxial applications and a
leading supplier of high- performance fiber optic and twisted
pair cables for LAN, wireless and other communications
applications. Through its relationship with OFS, CommScope has
an ownership interest in one of the world's largest producers of
optical fiber and cable and has access to a broad array of
connectivity components as well as technologically advanced
optical fibers, including the zero water peak optical fibers
used in the production of the LightScope ZWP(M) family of
products.
As reported in Troubled Company Reporter's May 1, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on CommScope Inc., to 'BB' from 'BB+' and its
subordinated debt rating to 'B+' from 'BB-'. At the same time,
the ratings were removed from CreditWatch, where they had been
placed on March 14, 2003.
The downgrade reflected the expectation that profitability would
remain at depressed levels over the midterm because of lower
forecasts of cable television industry capital expenditures,
among other factors. The outlook is stable.
CONSECO INC: Selling CNCE's Fort Mojave Golf Course for $5 Mill.
----------------------------------------------------------------
Conseco Inc., and its debtor-affiliates sought and obtained the
Court's authority for CIHC to sell property of its non-debtor
subsidiary, CNC Entertainment Nevada, Inc. CNC Entertainment is
a non-debtor entity wholly owned by CIHC. CNC Entertainment
owns all the rights, title and interests in real property
located at the Fort Mojave Indian Reservation in Nevada, on
which a 170.9-acre golf course has been built. Managing golf
courses in not a core business of the Debtors and the Golf
Course is merely an investment vehicle.
CNC Entertainment negotiated to sell the Golf Course to the Fort
Mojave Tribal Corporation. On April 15, 2003, the parties
reached mutually acceptable terms, where the Tribe will pay
$5,000,000 for the Golf Course. (Conseco Bankruptcy News, Issue
No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
COVANTA ENERGY: External Auditors Express Going Concern Doubt
-------------------------------------------------------------
Because of the Chapter 11 Cases and the circumstances leading to
the filing thereof, Covanta Energy Corporation's ability to
continue as a "going concern" is subject to substantial doubt
and is dependent upon, among other things, confirmation of a
plan of reorganization, the Company's ability to comply with the
terms of, and if necessary renew at its expiry in October 2003,
the Debtor in Possession Credit Facility, and the Company's
ability to generate sufficient cash flows from operations, asset
sales and financing arrangements to meet its obligations. There
can be no assurances that this can be accomplished and if it
were not, the Company's ability to realize the carrying value of
its assets and discharge its liabilities would be subject to
substantial uncertainty. Therefore, if the "going concern" basis
were not used for the Company's Financial Statements, then
significant adjustments could be necessary to the carrying value
of assets and liabilities, the revenues and expenses reported,
and the balance sheet classifications used.
The Bankruptcy Code provides that Covanta has an exclusive
period during which it may file a plan of reorganization.
Covanta, however, has requested and obtained an extension of the
exclusivity period and may further request that the Bankruptcy
Court extend such exclusivity period. The exclusive period to
file a plan currently expires on July 31, 2003.
Service revenues for the first quarter of 2003 were $125.7
million, a decrease of $4.1 million compared to $129.8 million
in the first quarter of 2002. The decrease was primarily due to
a $7.1 million decrease in Other segment service revenues
related to the wind-down and sale of non-energy businesses
offset by a $3.6 million increase in Domestic energy and water
segment service revenue primarily related to increased waste
tonnage processed, operating escalations and higher energy
prices at several energy facilities.
Electricity and steam sales revenues for the first quarter of
2003 were $88.5 million, an increase of $9.2 million compared to
$79.3 million in the first quarter of 2002. The increase was
primarily due to a $7.5 million increase in electric and steam
sales primarily related to higher electric generation at two
California energy facilities and higher electric and steam rates
at two other plants. In addition, there was a $2.5 million
increase in electric sales at the two plants in India as a
result of the pass through of higher fuel oil costs offset by a
reduction in electric sales of $1.2 million at two of the
Company's energy facilities in The Philippines as a result of
rate reductions.
Construction revenues for the first quarter of 2003 were $6.0
million, a decrease of $6.4 million compared to $12.4 million in
the first quarter of 2002 primarily due to a $5.5 million
decrease in revenue attributable to the Company's wind-down in
construction of the desalination project in Tampa, Florida
combined with a $0.9 million decrease in revenue due to the
substantial completion and termination of various projects.
Other revenues-net for the first quarter of 2003 were comparable
to the first quarter of 2002.
Income from operations for the first quarter of 2003 for the
Domestic energy and water segment was $32.6 million, an increase
of $0.2 million compared to $32.4 for the first quarter of 2002
primarily due to the $6.1 million increase in revenue discussed
above combined with an increase in equity in income from
unconsolidated investments of $0.3 million offset by an increase
in total costs and expenses of $6.2 million.
Income from operations for the first quarter of 2003 for the
International energy segment was $10.4 million, an increase of
$7.2 million compared to $3.2 million in the first quarter of
2002 primarily due to an increase in revenue of $1.2 million,
(as discussed above) combined with cost savings of $1.5 million
related to the closure of several offices. The increase in
income from operations in the first quarter of 2003 was also due
to a loss on the sale of an equity investment in an energy
project in Thailand of $6.5 million in the first quarter of
2002. The increase in income from operations for the first
quarter of 2003 was offset by an increase in plant operating
costs of $4.7 million primarily related to higher fuel oil
prices at the Company's two energy facilities in India and two
in The Philippines.
Loss from operations for the first quarter of 2003 for the Other
segment was $0.6 million, a decrease of $22.2 million compared
to $22.8 million in the first quarter of 2002 primarily due to a
$30.8 million decrease in total costs and expenses. The decrease
of $22.2 million is primarily the result of a $9.7
million reduction in bank fees related to the Master Credit
Facility and a reduction of $18.0 million related to the wind-
down and sale of non-energy businesses offset by a $8.6 million
decrease in revenue.
The Company believes that the DIP Credit Facility, when taken
together with the Company's own funds, and assuming its
extension as required, provide it sufficient liquidity to
continue to operate its core businesses during the Chapter 11
proceedings. Moreover, the legal provisions relating to Chapter
11 proceedings are expected to provide a legal basis for
maintaining the Company's business intact while it is being
reorganized. However, the outcome of the Chapter 11 proceedings
is not within the Company's control and no assurances can be
made with respect thereto.
DAISYTEK INT'L: Administrators Appointed for UK and Aussie Units
----------------------------------------------------------------
Daisytek International Corporation (Nasdaq: DZTK) announced that
the boards of directors for U.K.-based ISA International plc and
Daisytek Australia have each appointed a Voluntary Administrator
to assume day-to-day management of the respective operations.
The appointments follow the significant tightening of credit
terms by vendors and funding sources in Australia and the United
Kingdom that have occurred since Daisytek's restructuring
announcement in the U.S. The mounting restrictions have resulted
in both subsidiaries' inability to meet current obligations.
In both the United Kingdom and Australia, a Voluntary
Administrator is a third party appointed to assume day-to-day
direction of a company. Upon appointment of a Voluntary
Administrator, creditors' claims are temporarily suspended while
assets are managed for the benefit of the creditors and
shareholders. The boards of directors for both companies
independently named PricewaterhouseCoopers as Voluntary
Administrator.
"The directors of Daisytek Australia and ISA International have
taken this action to preserve the going concern value of each
and provide equitable return to their respective creditors,"
stated Dale Booth, president and CEO of Daisytek International
Corp.
The Voluntary Administrators will work with the boards of
directors and their management teams to develop plans for
consideration by the creditors of each company. The plans are
expected to include provisions that will allow Daisytek
Australia and ISA International plc to restructure their balance
sheets and continue operations.
Daisytek International Corp., has received a pounds 4 million
demand from GMAC Commercial Finance plc to satisfy certain
obligations arising under a guarantee executed by the company in
favor of GMAC. To date, GMAC has not initiated proceedings to
collect the guarantee.
Daisytek is a global distributor of computer supplies, office
products and accessories and professional tape media. Daisytek
sells its products and services in North America, South America,
Europe and Australia. Daisytek is a registered trademark of
Daisytek, Incorporated.
DAISYTEK INC: Looks to FTI Consulting for Financial Advice
----------------------------------------------------------
Daisytek Incorporated and its debtor-affiliates ask for approval
from the U.S. Bankruptcy Court for the Northern District of
Texas to retain and employ FTI Consulting, Inc., as their
financial advisors in their on-going chapter 11 cases.
The Debtors assure the Court that they are familiar with the
professional standing and reputation of FTI. The Debtors assert
that FTI has a wealth of experience in providing financial
advisory services in restructurings and reorganizations and
enjoys an excellent reputation for services it has rendered in
large and complex chapter 11 cases.
In this engagement, the Debtors expect FTI to provide:
a) assistance to the Debtors in the preparation of
financial related disclosures required by the Court,
including the Schedules of Assets and Liabilities, the
Statement of Financial Affairs and Monthly Operating
Reports;
b) assistance to the Debtors with information and analyses
required pursuant to the Debtors' Debtor-In-Possession
financing including, but not limited to, preparation for
hearings regarding the use of cash collateral and DIP
financing;
c) assistance with the identification and implementation of
short-term cash management procedures;
d) advisory assistance in connection with the development
and implementation of key employee retention and other
critical employee benefit programs;
e) assistance and advice to the Debtors with respect to the
identification of core business assets and the
disposition of assets or liquidation of unprofitable
operations;
f) assistance with the identification of executory
contracts and leases and performance of cost/benefit
evaluations with respect to the affirmation or rejection
of each;
g) assistance regarding the valuation of the present level
of operations and identification of areas of potential
cost savings, including overhead and operating expense
reductions and efficiency improvements;
h) assistance in the preparation of financial information
for distribution to creditors and others, including, but
not limited to, cash flow projections and budgets, cash
receipts and disbursement analysis, analysis of various
asset and liability accounts, and analysis of proposed
transactions for which Court approval is sought;
i) attendance at meetings and assistance in discussions
with potential investors, banks and other secured
lenders, the Creditors' Committee appointed in this
chapter 11 case, the U.S. Trustee, other parties in
interest and professionals hired by the same, as
requested;
j) analysis of creditor claims by type, entity and
individual claim, including assistance with development
of a database to track such claims;
k) assistance in the preparation of information and
analysis necessary for the confirmation of a Plan of
Reorganization in this chapter 11 case;
l) assistance in the evaluation and analysis of avoidance
actions, including fraudulent conveyances and
preferential transfers;
m) litigation advisory services with respect to accounting
and tax matters, along with expert witness testimony on
case related issues as required by the Debtors; and
n) render such other general business consulting or such
other assistance as Debtors" management or counsel may
deem necessary that are consistent with the role of a
financial advisor and not duplicative of services
provided by other professionals in this proceeding.
Len B. Blackwell, Senior Managing Director with FTI Consulting
discloses that FTI will charge its customary hourly rates, which
range from:
Senior Managing Director $525 to $595 per hour
Directors/Managing Directors $370 to $525 per hour
Associates/Senior Associates $185 to $365 per hour
Administration/Paraprofessionals $ 85 to $150 per hour
Daisytek, Incorporated and its affiliates are leading global
distributors of computer and office supplies and professional
products. The Company filed for chapter 11 protection on May 7,
2003 (Bankr. N.D. Tex. Case No. 03-34762). Daniel C. Stewart,
Esq., Paul E. Heath, Esq., and Richard H. London, Esq., at
Vinson & Elkins LLP represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $622,888,416 in total assets and
$450,489,417 in total debts.
DELIA*S INC: Fails to Maintain Min. Nasdaq Listing Requirements
---------------------------------------------------------------
dELiA*s Corp. (Nasdaq:DLIA), a leading multichannel retailer to
teenage girls and young women, received a Nasdaq Staff
Determination on May 13, 2003 indicating that the Company fails
to comply with the minimum bid price requirement for continued
listing set forth in Marketplace Rule 4450(e)(2), and its
securities are, therefore, subject to delisting from The Nasdaq
National Market.
The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination.
Delisting of the Company's securities is stayed pending the
Panel's decision. There can be no assurance the Panel will grant
the Company's request for continued listing on the Nasdaq
National Market.
dELiA*s Corp. is a multichannel retailer that markets apparel,
accessories and home furnishings to teenage girls and young
women. The company reaches its customers through the dELiA*s
catalog, www.dELiAs.com and 65 dELiA*s retail stores. Forward-
looking statements in this press release are made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.
* * *
Liquidity and Capital Resources
In its SEC Form 10-Q filed for the period ended November 2,
2002, the Company stated:
"Cash used in operations in the first three quarters of fiscal
2001 and 2002 was $24.6 million and $24.7 million, respectively.
The increase in cash used in operations primarily relates to
higher operating losses offset by changes in working capital
levels.
"Investing activities provided $7.4 million in the first three
quarters of fiscal 2001 primarily relating to net investment
proceeds offset by capital expenditures and to the cash proceeds
and payments relating to our non-core businesses. In the first
three quarters of fiscal 2002, investing activities used $9.7
million relating to capital expenditures. During the fourth
quarter of fiscal 2002, we expect to make additional capital
expenditures of $300,000 to $500,000 resulting in total capital
expenditures for fiscal 2002 of approximately $10.0 million.
"Financing activities provided $35.5 million in the first three
quarters of fiscal 2001, primarily as a result of the June 2001
sale of 5.74 million shares of our Class A common stock as well
as borrowings under our new credit agreement and stock option
exercises, and $15.3 million in the first three quarters of
fiscal 2002, primarily relating to net activity under our credit
facility.
"We are subject to certain covenants under the mortgage loan
agreement relating to the 1999 purchase of our distribution
facility in Hanover, Pennsylvania, including a covenant to
maintain a fixed charge coverage ratio. Effective May 1, 2001,
the bank agreed to waive the fixed charge coverage ratio
covenant through August 6, 2003 in exchange for an adjustment in
our payment schedule.
"Our credit agreement, as amended, with Wells Fargo Retail
Finance LLC, a subsidiary of Wells Fargo & Company, consists of
a revolving line of credit that permits us to borrow up to $25
million, limited to specified percentages of the value of our
eligible inventory as determined under the credit agreement, and
provides for the issuance of documentary and standby letters of
credit up to $10 million. Under this Wells Fargo facility, as
amended, our obligations are secured by a lien on substantially
all of our assets, except certain real property and other
specified assets. The agreement contains certain covenants and
default provisions customary for credit facilities of this
nature, including limitations on our payment of dividends. The
agreement also contains controls on our cash management and
certain limits on our ability to distribute assets. At our
option, borrowings under this facility bear interest at Wells
Fargo Bank's prime rate plus 50 basis points or at the
Eurodollar Rate plus 275 basis points. A fee of 0.375% per year
is assessed monthly on the unused portion of the line of credit
as defined in the agreement. The facility matures September 30,
2004 and can extend for successive twelve-month periods at our
option under certain terms and conditions. As of November 2,
2002, the outstanding balance was $19.3 million, outstanding
letters of credit were $2.7 million and unused available credit
was $20,000.
"In November 2002, a cash concentration trigger event occurred
under the terms of our Wells Fargo credit facility that permits
Wells Fargo, among other things, to establish additional
reserves which impact our availability under the line. As a
result of that event, we are currently in discussions with Wells
Fargo to amend the loan agreement , which will likely result in
an adjustment downward of the effective advance rate under the
line as well as introduce a number of financial covenants
relating to sales performance, inventory levels and cash flow
metrics. We anticipate that we will finalize the amendment on
satisfactory terms by the end of December 2002.
"Separately, in October 2002, we engaged Peter J. Solomon
Company to assist in the evaluation of strategic alternatives.
This process continues and will likely result in either a sale
of the company or the infusion of additional capital in the form
of equity or debt. We are currently evaluating a variety of
alternatives and anticipate being able to announce a decision in
this regard by the end of the fiscal year.
"If our discussions with Wells Fargo are concluded on
satisfactory terms and a capital infusion is received, we
believe that our cash on hand and cash expected to be generated
from operations, together with the funds available under our
credit agreement, will be sufficient to meet our capital and
operating requirements at least through the next twelve months.
There can be no assurance that we will conclude our discussion
with Wells Fargo on favorable terms or that we will be able to
obtain a capital infusion. If we are not successful we may not
be able to meet our operating and capital requirements for the
next twelve months. The accompanying financial statements have
been prepared on a going concern basis, which contemplates
continuity of operations, realization of assets and liquidation
of liabilities in the ordinary course of business."
DIVINE INC: Completes Asset Sale Transaction with Little Bear
-------------------------------------------------------------
Little Bear Investments LLC has completed the purchase of
substantially all of divine, inc.'s (DVINQ.PK) portfolio of
venture investments.
Pursuant to a bankruptcy court order issued in the Eastern
District of Massachusetts dated May 12th, 2003, Little Bear
purchased the assets under section 363 of the Federal Bankruptcy
Code, which transfers the assets to the buyer "free and clear of
all liens, claims and encumbrances".
As part of the transaction, Little Bear also acquired from
divine the Viant Ventures (a/k/a Viant Securities Corp.)
portfolio, as well as the remaining holdings of Emicom, a former
Israeli-based venture capital firm.
The purchased assets include equity interests in over 18
companies including: Mercantec, which owns the "Softcart"
e-commerce package, Mindwrap, a software company creating
enterprise solutions for document management and workflow
systems, Expand Networks, inventors of "Accelerator", a device
which optimizes WAN performance by increasing capacity up to
400%, FuelQuest, which develops and hosts web-based supply chain
management and tax automation technologies, and ComScore, owners
of MediaMetrix, the web's premier traffic measurement service.
Zachary Prensky, managing member of the Firm, commented that :
"We are pleased to have purchased assets from a portfolio in
which over $100,000,000 has been invested to date. Even with the
steep decline in valuations for technology-based companies, we
feel there remains significant value in the equity we purchased,
and we hope to work closely in the coming months with management
of the various portfolio companies to bring that value out."
Little Bear is a merchant bank specializing in deploying capital
into undervalued and/or distressed situations. To date, Little
Bear has made investments in companies large and small with an
eye towards maximizing value through active shareholder
participation. The Firm also provides financial advisory
services to businesses seeking to increase shareholder value,
either through operational improvement, acquisition or re-
capitalization.
Little Bear remains an active buyer of distressed asset
portfolios. If you have any questions regarding this press
release, please contact Mr. Prensky at Zach@Prensky.com.
EL PASO PRODUCTION: S&P Assigns B+ Corp. Credit & Note Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to El Paso Production Holding Co. and its 'B+'
rating to the company's proposed $1.2 billion senior unsecured
note issuance.
The outlook is negative.
Houston, Texas-based EPPH will have about $1.2 billion in debt
upon close of its proposed debt issuance. EPPH is a wholly
owned, exploration and production subsidiary of El Paso Corp.
(B+/Negative/--).
"Standard & Poor's considers EPPH as integral to El Paso's
business strategy. Also, there are no structural barriers that
sufficiently restrict access by El Paso to the assets and cash
flow of EPPH. As such, we view the default risk of EPPH as being
the same as that of El Paso," said Standard & Poor's credit
analyst William Ferara. "Furthermore, we currently view the
EPPH's stand-alone credit quality as better than that of its
parent, although still noninvestment grade."
Standard & Poor's also said that the negative outlook on the
company reflects significant hurdles parent El Paso faces in
completing its planned asset sales, halting the continued
decline in cash flow, and receiving final approval of its
Western states settlement. Successful execution in these matters
could ultimately lead to ratings stability and upward credit
momentum.
EPPH is a large independent oil and gas exploration and
production company, with 2.4 trillion cubic feet equivalent (91%
natural gas; 63% proved developed) and production heavily skewed
toward the Gulf of Mexico (about 60%).
Highly competitive production costs of about $0.42 per thousand
cubic feet and attractive finding and development costs (three-
year average of about $1.00 per mcf) help offset the company's
aggressive operating strategy that is dependent upon continued
exploration success in the Gulf of Mexico to replace its rapidly
producing reserves in that province. The company has
consistently hedged commodity prices to reduce the volatility of
its cash flow, although the degree of hedging will reduce
significantly going forward.
Parent company El Paso ultimately determines EPPH's financial
profile due to its EPPH ownership interest. The actual level of
spending at EPPH could be determined by El Paso and its
currently weak financial position, with EPPH's spending focused
primarily in the Gulf of Mexico. Based on Standard & Poor's
pricing assumptions, EBITDA interest coverage should average
about 7.0x, and projected funds from operations to total debt
should average about 50%.
ELDER-BEERMAN: Taps RBC Capital to Aid in Asset Sale Transaction
----------------------------------------------------------------
The Elder-Beerman Stores Corp. (Nasdaq:EBSC) has recently
received unsolicited expressions of interest relating to the
possible acquisition of the Company. After considering these
expressions of interest, the Company entered into a letter
agreement with one of the interested parties. Under this letter
agreement, the Company and the [management-led] interested party
will discuss, on an exclusive basis for a limited period of
time, the possible sale of the Company. The Company has retained
RBC Capital Markets to advise it in this process. There can be
no assurance that these discussions will result in any
transaction involving the Company.
The nation's ninth largest independent department store chain,
The Elder-Beerman Stores Corp. is headquartered in Dayton, Ohio
and operates 68 stores in Ohio, West Virginia, Indiana,
Michigan, Illinois, Kentucky, Wisconsin and Pennsylvania. In
November 2003, Elder-Beerman will expand operations to a ninth
state with the opening of its Muscatine, Iowa store. For more
information about the company see Elder-Beerman's Web site at
http://www.elder-beerman.com
ENCOMPASS SERVICES: Signs-Up Herman Mousel as Tax Professionals
---------------------------------------------------------------
Encompass Services Corporation and its debtor-affiliates employ
the accounting firm of Herman Mousel Sexton, P.C. as an ordinary
course professional. HMS serves as the Debtors' income tax
compliance and tax return preparation professionals in
connection with the Debtors' 2002 federal and state income and
franchise tax returns.
Because a new employment agreement has been executed between HMS
and the Debtors, pursuant to which HMS' monthly fees will
ultimately exceed the ordinary course professional fee
limitations averaged over six months, the Debtors sought and
obtained the Court's authority to employ HMS pursuant to
Sections 327(a) and 328(a) of the Bankruptcy Code, so that HMS
can continue to provide services related to federal and state
income and franchise tax return preparation and other compliance
related services.
According to Lydia T. Protopapas, Esq., at Weil, Gotshal &
Manges LLP, in Houston, Texas, the Debtors are in the process of
seeking extensive tax refunds based on the 2002 anticipated
operating losses and the divestiture of certain of their non-
core assets in 2002. Given HMS' background, expertise, and past
representation of the Debtors with respect to tax return
preparation and compliance, the Debtors believe that HMS is both
well qualified and uniquely able to provide services in their
Chapter 11 cases in a most efficient and timely manner.
Pursuant to its agreement with the Debtors, HMS will:
(a) prepare the 2002 consolidated federal income tax return
(Form 1120), including any amended return(s), if
necessary;
(b) prepare Corporation Application(s) for Tentative Refund
(Form(s) 1139), including any amendments if necessary;
(c) prepare all appropriate state extensions of time to file
returns;
(d) prepare all separate state income/franchise tax returns;
(e) prepare all consolidated or combined state
income/franchise tax returns;
(f) prepare state-estimated tax payments as required;
(g) prepare monthly reports of federal and state income tax
payments and refunds including assistance in determining
the monthly provision or benefit for income taxes;
(h) provide detailed analysis of temporary differences by
legal entity for purposes of accounting for deferred
taxes; and
(i) assist in determining the appropriate tax reporting of
gains/losses on the dispositions of assets of entities,
lines of businesses, and discontinued operations.
Ms. Protopapas assures the Court that the services provided by
HMS are not duplicative in any manner with the services provided
by the Debtors' other professionals, including Deloitte & Touche
LLP and KPMG LLP. In particular, HMS will be providing tax
return preparation services and ensuring compliance with
applicable tax reporting laws versus the tax benefit and
exposure analysis and advisory services to be provided by
Deloitte & Touche and the general, non-tax accounting to be
provided by KPMG. HMS will undertake every reasonable effort to
avoid any duplication of services.
In return for their services, the Debtors have agreed to pay HMS
a $693,000 fee billed in nine equal installments of $77,000
commencing January 2003. As HMS does not bill on an hourly
basis or maintain a system to record detailed time entries, HMS
will not be required to submit detailed time records in support
of interim or final fee applications filed with the Court.
Instead, HMS will describe those services provided on the
Debtors' behalf during the applicable period, and those
professionals -- and their qualifications -- who provided the
services.
Donald J. Herman, a shareholder of Herman Mousel Sexton PC,
assures the Court that HMS has no connection with, and holds no
interest adverse to, the Debtors, their estates, their
creditors, or any other party-in-interest, and is
"disinterested," as defined in Section 101(14) of the Bankruptcy
Code and as required under Section 327(a) of the Bankruptcy
Code.
For the 2001 tax reporting year, the Debtors paid HMS $47,000 in
fees per month on a 12-month billing basis for general income
tax compliance and tax return preparation services in the
ordinary course of business. HMS does not hold a prepetition
unsecured claim against the Debtors' estates. (Encompass
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ENRON CORP: EPMI Sues AES Corp., et. al. for $44 Mil. in Damages
----------------------------------------------------------------
Enron Power Marketing, Inc. seeks declaratory relief and no less
than $43,809,863 in damages from Constellation New Energy, Inc.,
formerly known as AES New Energy Inc., and its affiliate Central
Illinois Light Company resulting from their failure to pay
receivables and the early termination of two separate agreements
between the parties.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that EPMI and New Energy Ventures, Inc., a predecessor-
in-interest to AESNE, entered into an "AESNE Master Agreement"
on July 19, 1999. On the other hand, EMPI and CILCO entered
into a "CILCO Master Agreement" on May 11, 2001. Each of these
Agreements provides terms and conditions governing the purchase
and sale of electricity between each of the parties.
The AESNE Master Agreement
According to Ms. Gray, the AESNE Master Agreement contemplated
that the parties would enter into various transactions from time
to time for the purchase or sale of power. Accordingly,
throughout the term of the AESNE Master Agreement, the parties
entered into numerous Transactions for the purchase and sale of
electric energy. However, on November 30, 2001, AESNE notified
EPMI of an alleged event of default and declared December 20,
2001 as the early termination date for the AESNE Master
Agreement and all Transactions pending thereunder.
AESNE's November 30 letter identified several purported events
of default, all of which were directly related to EPMI's
anticipated bankruptcy, the financial condition of EPMI's parent
-- Enron Corp., as well as vague allegations that EPMI has
"breached the representations and warranties set forth in the
Master Agreement."
On December 19, 2001, AESNE sent EPMI a letter attempting to
retract and invalidate its November 30 early termination notice.
By attempting to retract its early termination notice, AESNE
sought to avoid its contractual obligations under the AESNE
Master Agreement that requires it to calculate and pay EPMI a
final settlement amount resulting from the early termination.
On August 20, 2002, EPMI reiterated its prior written rejections
of AESNE's attempt to retract its early termination notice,
demanded that AESNE calculate the Termination Payment due under
the AESNE Master Agreement, and demanded payment of accounts
receivable. Ms. Gray informs the Court that AESNE failed to
provide the required calculation of an early Termination Payment
owed to EPMI. Hence, on November 19, 2002, EPMI sent AESNE a
calculation of the Termination Payment and demanded that AESNE
pay $11,364,977. In addition to the Termination Payment, AESNE
also owes EPMI $995,138 for prepetition accounts receivable,
plus allowable interest and $282,000 for postpetition accounts
receivables, plus allowable interest, for delivered, invoiced
and unpaid energy transactions.
AESNE never paid a single amount of what it owes EPMI. Instead,
AESNE will undoubtedly attempt to improperly invoke the AESNE
Master Agreement's setoff provision, which purports to allow it
to net amounts owed to EPMI under the agreement against amounts
EPMI allegedly owes to AESNE's purported affiliates -- the
Triangular Setoff Provision.
Ms. Gray asserts that, to the extent AESNE attempts to set off
the non-mutual debts of its affiliates, the Triangular Setoff
Provision is invalid and unenforceable.
The AES Corporation Guarantee Agreement
On July 16, 1999, AES Corp. executed the Guarantee Agreement on
behalf of its subsidiary, New Energy Ventures, Inc. The
Guarantee Agreement "irrevocably and unconditionally" guaranteed
timely payment due from New Energy Ventures under the terms of
the AESNE Master Agreement.
By this complaint, EPMI demands AES Corp. to satisfy AESNE's
obligations under the terms of the AESNE Master Agreement, which
are:
(i) $11,364,977 Termination Payment, and
(ii) $1,277,168 in accounts receivables.
The CILCO Master Agreement
Throughout the term of the CILCO Master Agreement, the parties
entered into numerous Transactions for the purchase and sale of
electric energy. Similarly, on the same allegations with the
AESNE Master Agreement, on November 30, 2001, CILCO notified
EPMI of its alleged events of default and declared December 20,
2001 as the early termination date for the CILCO Master
Agreement and all pending Transactions. CILCO accordingly
suspended all performance under the CILCO Master Agreement.
By letter dated December 20, 2001, CILCO provided EPMI with a
Termination Payment calculation amounting to $24,396,696, due
and owing by CILCO to EPMI. On August 20, 2002, EPMI disputed
in writing CILCO's Termination Payment calculation and provided
its own Termination Payment calculation totaling $32,012,629.
The amount consisted of a net settlement amount payable to EPMI
-- $28,185,053, plus prepetition accounts receivable to EPMI --
$4,262,620, less prepetition accounts payable to CILCO --
$435,043.
According to Ms. Gray, CILCO failed to make any payments to
EPMI. Moreover, CILCO asserted that any amount it owes is
subject to set-off by the amounts EPMI or its affiliates owes to
CILCO's affiliates. However, Ms. Gray notes that CILCO's set-
off position is invalid because it is an attempt to set-off
against the Termination Payment, a non-mutual debt. In
addition, neither CILCO's affiliates nor EPMI's affiliates
executed the CILCO Master Agreement. Notwithstanding, AESNE and
its affiliates did not give EPMI consideration for the purported
set-off rights under the CILCO Master Agreement.
On September 13, 2002, CILCO defended its position of non-
payment. CILCO contends that it is entitled to invalidate or
rescind the CILCO Master Agreement based on the alleged
fraudulent misrepresentations EPMI made and its parent company,
Enron Corp., prior to the parties' execution of the CILCO Master
Agreement.
Ms. Gray points out that should CILCO raise the "fraudulent
inducement" as a defense or an affirmative claim for relief,
CILCO will create a core proceeding. The CILCO Master Agreement
is a property of EPMI's property that CILCO is attempting to
remove for the estate.
On several occasions, CILCO affiliates filed proofs of claims
against EPMI affiliates. Each claim seeks to set off amounts
allegedly owing by any EPMI affiliate to any CILCO affiliate
under the terms of the CILCO Master Agreement. However, any
set-off amount is premised on the validity and enforceability of
the Square Setoff Provision of the CILCO Master Agreement. On
October 15, 2002:
(a) AES Corporation filed proofs of claims against Enron
Corp. and Enron North America Corp. for $5,460,586;
(b) AES Barry Ltd. filed a proof of claim against Enron
Capital & Trade Resources International Corp. for
$2,885,948;
(c) AES Deepwater, Inc. filed proofs of claim against Enron,
ENA and ECTRIC for a total of $229,750;
(d) AES Delano, Inc., formerly known as Delano Energy Co.,
Inc., filed proofs of claim against Enron and EPMI for a
total amount of $2,434,086;
(e) AES Drax Power, Ltd., filed proofs of claim against
Enron and ECTRIC for $5,498,902;
(f) AES Eastern Energy, LP filed a proof of claim against
ENA for $713,231;
(g) AES EFoots Point, Ltd. filed a proof of claim against
ECTRIC for $1,916,858;
(h) AES Indian Queens Power, Ltd. filed a proof of claim
against ECTRIC for $37,384; and
(i) AES Ironwood LLC field proofs of claim against ENA and
ECTRIC for $225,000.
Accordingly, EPMI seeks a Court judgment in its favor that:
A. compels AESNE to turn over $12,642,115, which is property of
the estate pursuant to Section 542 of the Bankruptcy Code;
B. declares AESNE's violation of the automatic stay provided
for by Section 362 of the Bankruptcy Code when it suspended
performance and withheld property due under the AESNE Master
Agreement;
C. declares that AESNE's purported set-offs of amounts owed
to its affiliates are invalid and unenforceable pursuant
to Section 553(a) of the Bankruptcy Code;
D. declares that the arbitration provisions in the AESNE Master
Agreement should not be enforced because the dispute over the
set-off provisions in the AESNE master Agreement implicates
numerous substantive core Bankruptcy Code issues;
E. declares breach of contracts resulting from AESNE's failure
to calculate and pay the Final Termination Amounts owed to
EPMI under the terms of the AESNE Master Agreement;
F. declares breach of contracts resulting from AESNE's failure
to pay accounts receivable invoiced for transactions due and
owing under the AESNE Master Agreement. EPMI has been
damaged and is entitled to judgment against AESNE for
$1,277,138, plus allowable interest and attorney's fees;
G. declares AESNE'S unjust enrichment by withholding
$12,642,115, which belongs exclusively to the estate. EPMI
has suffered substantial damages proximately caused by AESNE
in an amount to be proven at trial;
H. compels CILCO to turn over the property of the estate
pursuant to Section 542 of the Bankruptcy Code;
I. declares that CILCO violated the automatic stay provided for
by Section 362 of the Bankruptcy Code;
J. declares that CILCO's purported set-offs of amounts owed to
its affiliates are invalid and unenforceable pursuant to
Section 553(a) of the Bankruptcy Code;
K. declares that any claims by CILCO based on allegations of
fraud in the inducement and rescission of the CILCO Master
Agreement is a core issue involving property of the estate as
provided for by Section 541 of the Bankruptcy Code;
L. declares that the arbitration provisions in the CILCO Master
Agreement should not be enforced because the dispute over the
set-off provisions in the AESNE Master Agreement implicates
numerous substantive core Bankruptcy Code issues;
M. declares breach of contracts resulting from CILCO's failure
to calculate and pay the Final Termination Amounts owed to
EPMI under the terms of the CILCO Master Agreement;
N. declares breach of contracts resulting from CILCO's failure
to pay accounts receivable invoiced for transactions due and
owing under the CILCO Master Agreement. EPMI is entitled to
damages in an amount to be determined at trial;
O. declares CILCO'S unjust enrichment by withholding
$31,463,258, which belongs exclusively to the estate;
P. declares breach of the Guarantee Agreement resulting from
AES Corp.'s failure to pay the Termination Payment and the
accounts receivable invoiced for Transactions due and owing
by AESNE under the AESNE Master Agreement. EPMI is entitled
to damages in an amount to be determined at trial; and
Q. awards interests. (Enron Bankruptcy News, Issue No. 65;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003
(ENRN03USR3) are trading at about 17 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
EQUIFIN INC: Converts about $1 Million of Debt into Equity
----------------------------------------------------------
EquiFin, Inc., (AMEX:II and II,WS) reported results for its
first fiscal quarter ended March 31, 2003.
Revenues for the first quarter which ended on March 31, 2003
were $408,000 compared to revenues of $234,000 for the same
period a year ago. For the quarter ended March 31, 2003, the
Company had a net loss from its operations of $396,000 compared
to a loss of $436,000 from operations for the same quarter in
2002. Income from discontinued operations was $65,000 for the
quarter ended March 31, 2003 compared to $84,000 for the three
months ended March 31, 2002. The net loss was $331,000 compared
to $352,000 the three months ended March 31, 2003 and 2002,
respectively.
For the quarter ended March 31, 2003, the Company's principal
business activity exhibited an increase in its asset-based loan
portfolio with committed, closed lines of credit increasing from
$5,600,000 at December 31, 2002, to$10,350,000 at March 31,
2003. "The growth in our asset-based loan portfolio is
indicative of the opportunities available to us. Although the
percentage growth in our portfolio was significant, we did not,
given the closing dates of the loans we initiated in the first
quarter, realize the benefit of significant revenues from these
new loans during the first quarter. Other than interest costs.
which increase as our portfolio grows, our operating expenses
remained constant in the first quarter of 2003 as compared to
the first quarter a year ago. With costs remaining constant, the
growth in our portfolio translates directly into progress
towards profitability," said Walter Craig, EquiFin's Chief
Executive Officer.
Mr. Craig also reported that the proposed acquisition of Celtic
Capital Corporation was progressing favorably and that both
Celtic and EquiFin had agreed to extend the period by which the
definitive acquisition agreement would be consummated to
June 15, 2003. Mr. Craig said that this extension does not
suggest any perceived obstacles in completion of the proposed
agreement, but reflects the amount of time needed for this type
of acquisition. "Steps towards effectuating this proposed
acquisition are proceeding favorably. The ultimate completion of
this proposed transaction is largely dependent on our capital
formation efforts, which are in motion, but require that we
raise $2,500,000 to close the acquisition of Celtic," he said.
Also, during the first quarter of 2003, the Company reported
that $925,000 of indebtedness was converted to preferred equity.
This extinguishment of debt supports the Company's objective of
increasing the Company's equity in furtherance of its plan for
continued listing on the American Stock Exchange.
* * *
Going Concern Uncertainty
In its most recent Form 10-KSB filing, the Company reported:
"Equinox Business Credit Corp. (81% owned subsidiary) did not
meet the tangible net worth requirement of $3,000,000 under its
credit facility at December 31, 2002. The lender has waived the
defaults and amended the credit facility to provide for a
tangible net worth requirement of $2,600,000 through May 31,
2003 and $3,900,000 effective June 30, 2003. The operating
results for Equinox will not be adequate to establish this net
worth requirement during the last half of 2003 and, accordingly,
further capital contributions by EquiFin to cover such
deficiency will be required. In addition to the agreement to
have a specific net worth which has required capital
contributions from EquiFin, Equinox has, through March 31, 2003,
operated as a negative cash flow business. EquiFin has provided
operating cash to Equinox to cover such cash shortfalls.
EquiFin is continuing its capital formation efforts so that it
will be in a position to continue to provide Equinox with
capital for its operating needs and net worth coverage, however
there can be no assurances that such efforts will be successful.
"If EquiFin is unable to raise capital on a timely basis, or
liquidate any of its other assets on a timely basis to meet
Equinox' net worth and/or cash flow needs, Equinox would be
required to attempt to negotiate a waiver with the lender on the
net worth requirement of its Credit Facility. There can be no
assurance the lender would consent to this request. If
sufficient cash is not timely available for Equinox' operating
needs, a reduction in operating expenses or a liquidation of
certain assets would be required to continue Equinox'
operations. Equinox also does not expect to meet the interest
coverage requirement in April 2003. Accordingly, these matters
raise substantial doubt about the Company's ability to continue
as a going concern."
ESSENTIAL THERAPEUTICS: Taps Bingham McCutchen LLP as Attorneys
---------------------------------------------------------------
Essential Therapeutics, Inc., and its debtor-affiliates ask for
approval from the U.S. Bankruptcy Court for the District of
Delaware to employ Bingham McCutchen LLP as Counsel.
The Debtors report that Bingham's Financial Restructuring Group
is comprised of more that 85 attorneys practicing nationally and
internationally. The attorneys who will have primary
responsibility for representation of the Debtors in these cases
have substantial experience in representation of chapter 11
debtors and have represented debtors, committees and secured and
unsecured creditors in numerous cases throughout the United
States.
In this engagement, the Debtors expect Bingham McCutchen to:
a) provide legal advice with respect to the Debtors' powers and
duties as debtors-in-possession in the continued operation of
their businesses and management of their properties;
b) prepare, on behalf of the Debtors, any necessary or
appropriate applications, motions, draft orders, other
pleadings, notices, objections, responses, schedules and
other documents, and review all financial and other reports
to be filed in these chapter 11 cases;
c) assist in the sale of certain of the Debtors' assets as
necessary and appropriate;
d) counsel the Debtors and take such actions as are required to
obtain approval of the Disclosure Statement and confirmation
and consummation of the Plan;
e) prosecute or defend any adversary proceedings commenced in
these chapter 11 cases;
f) appear in court and to protect the interests of the Debtors
before the Court in connection with the foregoing duties; and
g) perform all other legal services for the Debtors which may be
necessary and proper in furtherance of the foregoing duties.
The Debtors will compensate Bingham McCutchen on an hourly basis
in its ordinary and customary hourly rates. The professionals
who will be responsible in this case and their current hourly
rates are:
Professional Position Billing Rate
------------ -------- ------------
Guy B. Moss Partner $500 per hour
Julio Vega Partner $595 per hour
Bernard Rose Counsel $370 per hour
Mary DeNevi Of Counsel $450 per hour
William S. Perkins Associate $370 per hour
Andrew J. Gallo Associate $345 per hour
Craig T. Miskovich Associate $220 per hour
Patricia Wright Paralegal $190 per hour
Essential Therapeutics, Inc., and its debtor-affiliates are
biopharmaceutical companies committed to the discovery,
development and commercialization of critical products for life
threatening diseases. The Company filed for chapter 11
protection on May 1, 2003 (Bankr. Del. Case No. 03-11317).
Christopher S. Sontchi, Esq., at Ashby & Geddes and Guy B. Moss,
Esq., at Bingham McCutchen LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $46,317,000 in total assets and
$65,073,000 in total debts.
EUROTECH: Closes Deal to Eliminate All Outstanding Preferreds
-------------------------------------------------------------
Eurotech, Ltd. (OTC Pink Sheets:EUOT) announced that as part of
the technology licensing transaction it has entered into with
HomeCom Communications, Inc. (OTCBB:HCOM), Eurotech has closed a
transaction with its preferred stockholder pursuant to which
such stockholder has (i) retired all shares of Eurotech's
outstanding Series A 3% Convertible Preferred Stock held by such
investor and the rights of such investor to receive shares of
Eurotech's Series B 5% Convertible Preferred Stock and (ii)
cancelled an obligation of Eurotech to issue to such investor 10
million shares common stock in exchange for, respectively, $16
million worth of shares of Series D Convertible Preferred Stock
of Markland Technologies, Inc. (OTCBB:MKLD) and $1.069 million
worth of HomeCom Series G Preferred Stock.
Eurotech announced that it obtained the Markland Series D
Preferred shares from Markland at the closing today of an
exchange by Eurotech and Markland of 100 million shares of
Markland common stock held by Eurotech for such Series D
Preferred Stock.
Eurotech received the HomeCom Series G Preferred at the closing
today of its technology licensing transaction with HomeCom.
Eurotech's President, Don Hahnfeldt, said, "As a result of these
transactions, Eurotech retains a common equity position of 140
million shares in Markland and Eurotech eliminated a preferred
stock position with an aggregate liquidation value of $17.5
million while retaining equity and preferred stock positions in
two separate public companies."
Eurotech is a corporate asset manager seeking to acquire,
integrate and optimize a diversified portfolio of manufacturing
and service companies in various markets. Our mission is to
build value in our emerging technologies and in the companies we
acquire and own, providing each with the resources it needs to
realize its strategic business potential.
The Company's portfolio of technologically advanced products
includes (i) proprietary materials created to specifically solve
the serious problems of how nuclear and other hazardous wastes
are cost effectively contained, and (ii) advanced performance
materials for use in industrial products such as coatings and
paints.
For additional information about Eurotech and its technologies
please visit the Company Web site at http://www.eurotechltd.com
At September 30, 2002, Eurotech's balance sheet shows that total
current liabilities exceeded total current assets by about $2
million.
The Company's unaudited condensed consolidated financial
statements for the period ended September 30, 2002, have been
prepared in conformity with accounting principles generally
accepted in the United States of America, which contemplate
continuation of the Company as a going concern. However, for the
nine months ended September 30, 2002, the Company incurred a net
loss of $7,182,138 and had a working capital deficiency of
$2,079,064. The Company has limited finances and requires
additional funding in order to market and license its products.
There is no assurance that the Company can reverse its operating
losses, or that it can raise additional capital to allow it to
continue its planned operations. These factors raise substantial
doubt about the Company's ability to continue as a going
concern.
GALEY & LORD: US Trustee Amends Official Creditors' Committee
-------------------------------------------------------------
The United States Trustee for Region 2 amended, for the second
time, the membership of the Official Committee of Unsecured
Creditors in Galey & Lord, Inc.'s Chapter 11 case:
1. Weil Brothers - Cotton, Inc.
P.O. Box 20100
Montgomery, AL 36120
Attn: Robert Weil, II
Tel. No. (334) 244-1800
2. Clariant Corporation
400 Monroe Road
Charlotte, NC 28205
Attn: Walter B. Fowlkes, Treasurer
Tel. No. (704) 331-7057
3. Ciba Specialty Chemicals Corp
540 White Plains Road
Tarrytown, NY 10591
Attn: John M. Sullivan, Group Credit Manager
Tel. No. (914) 785-2000
4. Merrill Lynch Investment Managers
800 Scudder Mill Road
Plainsboro, NJ 08536
Attn: Philip Brendel
Tel. No. (609) 282-0143
5. Wells Fargo Bank Minnesota, N.A.,
As Successor Indenture Trustee
Sixth & Marquette; N9303-120
Minneapolis, MN 55479
Attn: Nick Tally
Tel. No. (612) 667-3961
or
Weil Gotshal & Manges, LLP
767 Fifth Avenue
New York, NY 10153
Attn: Richard Krasnow, Esq.
Tel. No. (212) 310-8000
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they
represent. Those committees will also attempt to negotiate the
terms of a consensual chapter 11 plan -- almost always subject
to the terms of strict confidentiality agreements with the
Debtors and other core parties-in-interest. If negotiations
break down, the Committee may ask the Bankruptcy Court to
replace management with an independent trustee. If the Committee
concludes reorganization of the Debtors is impossible, the
Committee will urge the Bankruptcy Court to convert the Chapter
11 cases to a liquidation proceeding.
Galey & Lord, a leading global manufacturer of textiles for
sportswear, including cotton casuals, denim, and corduroy, and
is a major international manufacturer of workwear fabrics, filed
for chapter 11 protection on February 19, 2002 together with its
affiliates (Bankr. S.D.N.Y. Case No. 02-40445). When the
Company filed for protection from its creditors, it listed
$694,362,000 in total assets and $715,093,000 in total debts.
Joel H. Levitin, Esq., Esq., at Dechert represents the Debtors
and Michael J. Sage, Esq., at Stroock & Stroock & Lavan LLP,
represents the Official Committee of Unsecured Creditors.
Galey & Lord Inc.'s 9.125% bonds due 2008 (GYLD08USR1) are
trading at about a penny on the dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GYLD08USR1
for real-time bond pricing.
GEMSTAR-TV GUIDE: Narrows First Quarter Net Loss to $45 Million
---------------------------------------------------------------
Gemstar-TV Guide International, Inc. (NASDAQ: GMST) reported
financial results for the first quarter ended March 31, 2003.
Revenues decreased 12.5% to $227.9 million, down from $260.5
million in the first quarter of 2002. The Company reported a net
loss of $45.4 million. This compares to a reported net loss of
$270.9 million for the same quarter in the prior year. The loss
in the first quarter of 2002 includes a $223.2 million charge
that represents a cumulative effect of an accounting change. The
loss before the cumulative effect of an accounting change in the
first quarter of 2002 was $47.6 million.
Net income before interest, taxes, depreciation and amortization
("EBITDA") for the first quarter ended March 31, 2003 was a loff
of $8.4 million, which included a non-cash stock compensation
charge of $39.6 million, versus EBITDA for the first quarter
ended March 31, 2002 of $36.2 million, which included a non-cash
stock compensation charge of $17.1 million.
Key Quarterly Performance Drivers and Developments
-- Lower EBITDA was driven by continued declines in TV Guide
magazine circulation and Superstar/Netlink Group subscriber
and conversion revenues, a decline in licensing revenue from
Thomson multimedia, Ltd., and significantly higher legal and
other corporate costs;
-- Partially offsetting these negative impacts were increased
advertising revenue at TV Guide magazine, reduced costs at
the magazine and SNG, increased revenues at TVG Network,
increased VCR Plus+ licensing revenue resulting from larger
shipping volume and payments from licensees that did not pay
in the first quarter of 2002, and licensing revenue from a
new digital satellite service agreement;
-- Beginning this quarter, the Company has organized its
business reporting into four new segments to reflect the
management of our businesses and to simplify and enhance the
presentation of our financial results;
-- The Company generated $16.2 million in cash from operations
and $9.7 million of Free Cash Flow (FCF) during the quarter.
"Free Cash Flow" is defined as net cash provided by operating
activities, less capital expenditures, less cash
distributions to minority interests. For a reconciliation of
Free Cash Flow to Cash from Operations, See "Reconciliation
to Free Cash Flow". At March 31, 2003, our cash, cash
equivalents and current marketable securities in excess of
debt and capital lease obligations was $116.7 million,
excluding $37.2 million in restricted cash;
-- Subsequent to the quarter end, the Company substantially
completed the assembly of a new management team and announced
two important senior management hires: Brian Urban will join
the Company as its Chief Financial Officer on July 1, 2003,
and Ian Aaron will join the Company as President of the TV
Guide Television Group on May 19, 2003.
Gemstar-TV Guide CEO Jeff Shell said, "While we are clearly not
satisfied with our financial results this quarter, the results
are reflective of the challenging state of each of our
businesses. We firmly believe, however, that we have begun to
lay the foundation for improved future financial performance.
During the quarter we completed our internal review and re-audit
and bolstered our internal controls, which while requiring
significant corporate human resources and financial expense,
were essential to restoring our financial credibility. We have
added new management, re-evaluated our operating strategies for
each of our businesses, and put in place plans to execute these
strategies. These plans will take some time to execute and
cannot be expected to immediately result in improved financial
performance, but we are confident that we have the right team
and the right plans in place to maximize the long-term value of
our wonderful portfolio of assets."
Segment Performance
Effective January 1, 2003, the Company restructured its
businesses into four groups, which also represent its reportable
business segments. Segments are now organized along three
industry lines in addition to a segment comprising certain
corporate functions:
-- The Publishing Segment consists of the Company's print and
electronic publishing units and websites including TV Guide
Magazine(R) and Gemstar eBook brands, as well as TV Guide
OnlineSM, SkyMall catalog sales and SkyMall.com. The
Publishing Segment also includes TV Guide Data Solutions, a
newly formed data collection and distribution business that
gathers program listings and channel lineups.
-- The Cable and Satellite Segment offers products and services
to consumers and service providers in the cable and satellite
industry. Among the business units included in the segment
are TV Guide ChannelSM, TV Guide InteractiveSM, TVG, SNG,
UVTV, SpaceCom and several other smaller related businesses.
-- The Consumer Electronics Licensing (CE Licensing) Segment is
responsible for licensing of the Company's proprietary
technologies and intellectual property to the consumer
electronic manufacturing industry and interactive television
software providers, and for the sale of advertising carried
on the interactive program guide deployed in CE devices. The
CE Licensing Segment licenses video recording technology
currently marketed under the VCR Plus+ system brand in North
America and under other brands in Europe and Asia, as well as
interactive program guides marketed under the GUIDE Plus+ and
the new TV Guide On Screenr brands in North America and under
the G-GUIDE brand in Asia. This segment also licenses
intellectual property to interactive television software
providers and manufacturers of set-top boxes for the digital
satellite system industry and to program listings
providers in the online, PC and other non-television
businesses. In addition, the CE Licensing Segment also incurs
costs associated with applying for certain patent grants and
certain litigation related to the Company's electronic
program guide technologies.
-- The Corporate Segment includes functions such as corporate
management, corporate legal and corporate finance and related
costs such as certain litigation and insurance costs.
Corporate Segment
During the three months ended March 31, 2003, segment expenses
were $25.4 million as compared with $17.9 million for the same
quarter of 2002, an increase of $7.6 million, or 42.3%,
primarily attributable to increases in audit and other
professional fees, insurance premiums, legal expenses related to
corporate governance and litigation.
Stock Compensation Expense
During the first quarter of 2003, the total stock compensation
expense was $39.6 million as compared with $17.1 million in the
first three months of 2002. Included in stock compensation
expense is $33.7 million related to stock options held by the
Company's former chief executive officer and former chief
financial officer. The Company terminated the former executives'
employment for cause on April 18, 2003. In 1998, the executives
entered into employment agreements that provided for accelerated
vesting of the outstanding options granted in the period 1995 to
1998, as well as an extended post-employment exercise period on
the remaining term of the options. Prior to the 1998 agreements,
such options were only exercisable during the employment period
with a limited post-employment exercise period. Due to the
extension of the post-employment exercise period, a new
measurement date occurred, at which time the intrinsic value of
the modification was determined to be $33.7 million. The
intrinsic value was computed as the difference between the
exercise price per share and the stock price per share on the
measurement date multiplied by the number of options.
Compensation expense is recognized only when the Company
determines that these executives will benefit from the extension
of the post-employment exercise period. As a result of the
termination, the Company recognized a pre-tax stock compensation
charge of $33.7 million during the three months ended March 31,
2003.
Stock compensation expense also includes the amortization of the
portion of the purchase price of acquired businesses assigned to
unearned compensation for unvested stock options assumed by the
Company. The unearned compensation is being amortized over the
remaining vesting period of the options using an accelerated
method. During the three months ended March 31, 2003, stock
compensation expense included the amortization of unearned
compensation arising from the proposed issuance of restricted
stock in connection with the 2002 management restructuring.
During the first quarter of 2003, excluding the $33.7 million
charge described above, stock compensation expense was $5.9
million as compared with $17.1 million in the first three months
of 2002. Stock compensation expense for the quarter ended March
31, 2003 includes $4.8 million relating to restricted stock
issued to two former executives in connection with the
management restructuring in the fourth quarter of 2002. This
amount, along with $2.9 million recognized in 2002, will be
reversed in the second quarter of 2003, since these executives
were terminated in April 2003. During the first quarter of 2002,
stock compensation expense included $12.9 million of accelerated
unearned compensation resulting from an executive who separated
from the Company in 2002.
Discussion of Cash and Liquidity Position
As of March 31, 2003, the Company's cash, cash equivalents and
current marketable securities were $349.9 million, excluding
restricted cash of $37.2 million. Outstanding debt and capital
lease obligations--both short-term and long-term--were in
aggregate $233.2 million at the end of the quarter, resulting in
cash and cash equivalents and current marketable securities in
excess of debt of $116.7 million, excluding the $37.2 million of
restricted cash. During the first quarter, the Company repaid
$23.0 million in debt and capital lease obligations.
During the three months ended March 31, 2003, the Company
generated cash flow from operating activities of $16.2 million.
Free Cash Flow (FCF), as defined by the Company in footnote (b)
of the schedule below, was $9.7 million for the quarter ended
March 31, 2003. Cash provided by operations decreased $64.9
million from the $81.1 million the Company generated during the
first quarter of 2002, due to the decrease in earnings, combined
with the current year comparative impact from exiting the
distribution business in 2002 and a reduction in payables and
accrued expenses.
Gemstar-TV Guide International, Inc., is a leading media and
technology company that develops, licenses, markets and
distributes technologies, products and services targeted at the
television guidance and home entertainment needs of consumers
worldwide. The Company's businesses include: television media
and publishing properties; interactive program guide services
and products; and technology and intellectual property
licensing. Additional information about the Company can be found
at http://www.gemstartvguide.com
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's lowered its corporate credit and bank loan ratings on
Gemstar-TV Guide International Inc., to double-'B' from double-
'B'-plus.
Standard & Poor's said that all of the ratings remain on
CreditWatch with negative implications, where they were placed
on August 15, 2002.
GLOBAL CROSSING: Exclusivity Extension Hearing Slated for June 9
----------------------------------------------------------------
Global Crossing Ltd., and its debtor-affiliates ask the Court to
extend the Exclusive Filing Period to allow them sufficient time
to obtain approval from certain regulatory authorities, based on
their new circumstances.
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, tells the Court that because the GX Debtors will be
required to re-submit the Transaction to a number of federal,
state, and local regulatory authorities, the GX Debtors require
additional time to protect their estates and consummate the
Plan. These extensions will provide the Debtors with sufficient
time to obtain the necessary approvals or, in the alternative,
if necessary, to formulate and file a new plan of reorganization
without having the destabilizing effects of competing plans.
Earlier in these cases, Mr. Walsh reminds the Court that the
Debtors timely sought extensions of the Exclusivity Periods
because the Debtors required additional time to resolve certain
critical business issues and formulate and negotiate the Plan.
When the Debtors filed their Fourth Exclusivity Motion, the
Court had already confirmed the Plan and the Debtors were
continuing their efforts to obtain the requisite regulatory
approvals and to finalize their financial reporting for the end
of 2002 in order to satisfy the closing conditions under the
Purchase Agreement.
Since that time, Mr. Walsh contends that the Debtors have
satisfied most of the closing conditions to the Purchase
Agreement including the requisite financial covenants and exit
cost requirements. The Debtors have entered into several
settlement agreements with parties to executory contracts and
unexpired leases, whereby the Debtors have successfully
negotiated reduced cure costs to be paid in connection with
assumption of these agreements pursuant to Section 365 of the
Bankruptcy Code. The Debtors have also resolved numerous claims
with respect to amounts owed to network access providers,
vendors, and certain taxing authorities, as well as amounts in
respect of pending litigation.
According to Mr. Walsh, the Debtors are in the process of
arranging a working capital facility in connection with the
effective date of the Plan. Currently, the Debtors are
negotiating a facility with two prospective lenders, General
Electric Capital Corporation and Merrill Lynch Capital. On
March 24, 2003, the Court approved the Debtors' request to enter
into a work fee letter in connection with proposed exit
financing with GE Capital. Pursuant to the Work Fee Letter, the
Debtors have agreed to:
(i) reimburse the reasonable out-of-pocket costs and
expenses of the prospective lenders,
(ii) deliver $500,000 as deposit against these expenses,
and
(iii) indemnify the prospective lenders in connection with
the proposed working capital facility.
On April 14, 2003, the Court approved the Debtors' request to
enter into a Commitment Letter in connection with proposed Exit
Financing. Although neither prospective lender has provided a
commitment letter to the Debtors, negotiations are ongoing, with
the hope that a working capital facility will be in place after
the effective date of the Plan so as to facilitate the mechanics
of obtaining this facility and enhance the business prospects of
New GX.
Mr. Walsh informs the Court that the Debtors now need to
continue the regulatory approval process with ST Telemedia as
the sole Investor, which will include submitting amended and new
applications for approval from certain regulatory authorities.
While the Debtors are confident that they will obtain these
approvals, the regulatory process will require several months to
complete. The failure to extend the Exclusivity Periods during
this time would cause the Debtors to be confronted with the
challenges of continuing to operate their business and working
diligently to obtain the requisite regulatory approvals under
these new circumstances, while simultaneously assessing
competing plans that may be filed and contending with the
destabilizing effects that these events would have on their
business, employees, vendors, and customers. This situation
would have a destructive effect on the Debtors, their estates,
their creditors, and all parties-in-interest.
In the event that any of the regulatory authorities do not
approve the Purchase Agreement and the Debtors are forced to
abandon the Plan, the Debtors seek an opportunity to propose and
solicit a new plan of reorganization without competing plans.
Mr. Walsh points out that the Exclusivity Periods have permitted
the Debtors to negotiate and reach reasonable agreement with the
Creditors' Committee and their prepetition lenders. If the
Debtors do not maintain the exclusive right to present and file
a plan of reorganization and solicit acceptances, the Debtors
will lose the benefit derived from these negotiations that have
permitted the parties-in-interest to amicably work together in
the absence of competing plans to form reasonable terms of
reorganization.
* * *
In a bridge order, Judge Gerber extends the GX Debtors'
exclusive filing period through the conclusion of the hearing on
the Debtors' request on June 9, 2003. (Global Crossing
Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
Global Crossing Ltd.'s 9.125% bonds due 2006 (GBLX06USR1) are
trading at about 5 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1
for real-time bond pricing.
GLOBAL IMAGING: Closes on First Phase of Debt Refinancing Plan
--------------------------------------------------------------
Global Imaging Systems, Inc. (Nasdaq: GISX) has closed on the
first phase of its comprehensive debt refinancing plan. The
company also acknowledged receipt of debt rating upgrades and a
commitment letter covering the balance of its debt refinancing.
Tom Johnson, president and CEO of Global Imaging Systems, said,
"We've had a very busy week, successfully completing a number of
steps in our debt refinancing plan:
1.) "We have now completed the first phase of the plan on what
we believe are very favorable terms. We closed on our
previously announced offering of $50 million principal
amount of Convertible Senior Subordinated Notes Due 2008. In
addition, the initial purchasers of the notes have exercised
in full their $7.5 million over-allotment option. Completion
of the offering and the exercise if this option bring the
total value of the offering to $57.5 million. Each note has
a 4% yield, if held to maturity, and is convertible into
Global common stock at a per-share price of $23.89, a 32%
premium over the closing price of $18.10 on May 12, 2003.
Both the interest coupon and the conversion premium were
well within our target range.
2.) "Moody's Investor Service upgraded Global's senior debt to
Ba3 from B1 and our issuer rating to B1 from B2 'reflecting
the company's strong revenue growth, successful acquisition
strategy, better than expected performance in the middle
market, and Global's history of deleveraging, cost cutting
and efficiency gains.'
3.) "Standard & Poor's Rating Services first reiterated its
January 2003 upgraded ratings of BB- to Global's senior debt
and B to our subordinated debt. Then S&P assigned its B
rating to our new convertible notes and its BB- rating to
our planned new senior debt facility. S&P said the ratings
reflect Global's improved cash flow and debt protection
measures, and the proposed refinancing is expected to lower
total interest costs and improve EBITDA interest coverage.
4.) "We also received a commitment from Wachovia Securities to
arrange and underwrite a new senior secured credit facility
to replace our existing facility. The new facility is
expected to be comprised of a $100 million five-year
revolving credit line and a $150 million six-year term loan.
We intend to use a portion of the proceeds to redeem our
currently outstanding 10-3/4% notes."
Mr. Johnson said, "With these steps behind us, we are now on a
timetable to complete our debt refinancing by the end of our
first fiscal quarter on June 30. Assuming our debt refinancing
continues to go as planned, we will have significantly reduced
Global's average interest rate going forward."
GRAPHON CORP: First-Quarter 2003 Results Reflect Strong Growth
--------------------------------------------------------------
GraphOn(R) Corporation, (OTCBB:GOJO) -- http://www.graphon.com
-- a leading developer of business software for remote
computing, will host an investor conference call at 1:30 pm
Pacific Coast Time (4:30 pm East Coast Time) on Wednesday, May
21, 2003, moderated by GraphOn CEO and Chairman, Robert Dilworth
and Chief Financial Officer, William Swain. Discussions will
include a review of financial results of the first quarter,
which ended March 31, 2003. The GraphOn management team will
discuss the company's business and will take questions for a
limited time following the presentation.
U.S. and Canada participants may access the call by phone by
dialing 877/591-1124 ten minutes prior to the call;
international participants may dial 706/643-0488 and state
GraphOn Conference Call.
GraphOn Corporation also reported results for the first quarter,
which ended March 31, 2003.
Financial Highlights
Revenues were approximately $1.0 million for the three-month
period ended March 31, 2003, as compared to approximately $586
thousand recorded in the same period of 2002. The net loss for
the three-month period ended March 31, 2003 was approximately
$380 thousand, as compared to the approximate $3.6 million net
loss for the same period of 2002. The loss per common share on a
basic and diluted basis for the current quarter was $0.02 per
share as compared with a loss of $0.21 per share for the first
quarter of 2002.
"We are pleased with the increase in revenue and the greatly
reduced operating loss that we achieved this quarter as compared
to the first quarter of last year," Robert Dilworth, CEO, said.
"We continue to successfully increase revenue while at the same
time decrease operating expenses, and are gratified by the
increased acceptance by our customer base of the enhancements in
our Windows(R) and UNIX(R) product offerings."
For over a decade, GraphOn Corporation has been an innovator and
developer of business connectivity software. GraphOn's high
performance software provides fast remote access, cross platform
capability, and a centralized architecture that delivers a
dramatically lower cost of ownership to the user. Using GO-
Global, any application can be simply and easily Web enabled
without any software modification required, allowing
applications to be run from browsers or portals. GraphOn, which
markets its solutions through OEM licenses, independent software
vendors, application service providers, value-added resellers
and systems integrators, is headquartered in Morgan Hill, CA and
is quoted on the Over the Counter Bulletin Board under the
ticker GOJO (OTCBB:GOJO). For more information, please visit the
company's Web site at http://www.graphon.com
* * *
Liquidity and Capital Resources
In its 2002 Annual Report on Form 10-K, the Company stated:
"We have suffered recurring losses and have absorbed significant
cash in our operating activities. Further, we have limited
alternative sources of financing available to fund any
additional cash required for our operations or otherwise. These
matters raise substantial doubt about our ability to continue as
a going concern. Our plan in regard to these matters is
described below. The consolidated financial statements included
in this report do not include any adjustments that might result
from the outcome of this uncertainty.
"We are continuing to operate the business on a cash basis while
looking at ways to reduce cash expenses. We are simultaneously
looking at ways to improve or maintain our revenue stream.
Additionally, we continue to review potential merger
opportunities as they present themselves to us and at such time
as a merger might make financial sense and add value for our
shareholders, we will pursue that merger opportunity.
"In June 2001, we issued 2,500,000 shares of our common stock to
Menta Software in connection with the acquisition of software
technology, which was assigned a historical cost of $6,500,000
based on the then fair market value of our common stock. In an
extemporaneous transaction in June of 2001, we licensed our
patented technology to Menta Software in a transaction valued at
$2,000,000, of which they paid us $600,000 in cash. In December
2002, we accepted 933,333 shares of our common stock from Menta
Software in full settlement of the outstanding $1,400,000 due us
from them under the terms of the June 2001 patented technology
licensing agreement.
"During 2002 we used $4,606,000 of cash from our operating
activities that related primarily to our net loss of $8,792,500,
offset by non-cash items including depreciation and amortization
totaling $2,085,800, the non-cash portion of the restructuring
charge of $657,800, and the asset impairment loss of $914,000.
Operating cash inflow was generated by an aggregate increase in
cash flow from operating assets and liabilities of $828,200,
which was partially offset by a $299,700 decrease in our
provision for doubtful accounts.
"Depreciation and amortization primarily relates to our
purchased technology, as outlined above in Costs of Revenues.
Also included in depreciation and amortization is the
amortization of deferred compensation expense related to non-
cash compensation paid to various third parties, primarily
consultants, who provide us services. This amortization is
recorded as sales and marketing expense or general and
administrative expense, depending on the nature of the
underlying services provided.
"The cash inflow generated from aggregated operating assets and
liabilities was primarily due to the collection of a significant
portion of our year end 2001 accounts receivable balance during
2002, including accounts that had previously been deemed
uncollectible.
"We are exploring all options available to aggressively reduce
costs, to increase revenues and to find alternative sources of
financing our operations. Such options will likely include
further work force reductions, exiting of facilities, or the
disposition of certain operations. If we were unsuccessful in
obtaining any of these strategic goals, we would face a severe
constraint on our ability to sustain operations in a manner that
would create future growth and viability, and we may need to
cease operations entirely.
"During 2002 we generated $2,628,200 of cash from our investing
activities that included $3,776,300 from the sale of
investments, partially offset by the purchase of investments,
totaling $768,300, the capitalization of software development
costs, totaling $298,500 and other capital expenditures totaling
$82,900.
"Throughout the year, we buy various high-grade securities for
investment purposes with our excess cash. The securities are
usually held until maturity, at which time any excess cash is
used to reinvest in new securities. We treat the investment as
cash used in investing activities and the maturity as cash
provided by investing activities. The capitalized software
development costs were incurred in the development of GoGlobal
for Windows, our latest Windows-based product upgrade. Other
capital expenditures incurred during 2002 consisted primarily of
computer equipment for our research and development team.
"During 2002, we used $20,200 of cash in our financing
activities that were primarily related to the repayment of the
note payable that was outstanding as of year end 2001, partially
offset by the proceeds from the issuance of stock through our
employee stock purchase program.
"As of December 31, 2002, cash and cash equivalents were
approximately $1,958,200. We anticipate that our cash and cash
equivalents as of December 31, 2002, together with anticipated
revenue from operations, cost savings from the 2002
restructuring and asset impairment charges, and future potential
cost reduction measures, will be sufficient to meet our working
capital and capital expenditure needs through the next twelve
months. We have no material capital expenditure commitments for
the next twelve months. However, due to the inherent
uncertainties associated with predicting future operations,
there can be no assurances that such anticipated revenue and
cumulative operational savings will ultimately be realized
during the next twelve months.
"During 2002 we implemented several strategic initiatives
intended to control operating expenses and capital expenditures.
These initiatives have been successful in reducing our operating
expenses. As explained above, our 2002 operating expenses are
significantly lower in every category, as compared with 2001."
HAWAIIAN AIRLINES: Says Chapter 11 Trustee Won't Impair Business
----------------------------------------------------------------
Hawaiian Airlines' operations rival the best in the business and
will continue unaffected by the ruling. The employees and
management of the company remain committed to providing the
highest level of service to our customers and will work closely
with a trustee to complete the company's restructuring and
emerge a stronger carrier as soon as possible.
IMC GLOBAL: CEO Airs Commitment to Enhance Shareholder Value
------------------------------------------------------------
The continuing, long-term recovery of the global phosphate
industry, coupled with a relentless focus on strengthening the
balance sheet and reducing costs, are the catalysts for
generating future higher earnings and increased shareholder
value for IMC Global Inc. (NYSE: IGL), Chairman and Chief
Executive Officer Douglas A. Pertz told shareholders in
attendance and those listening by Webcast at the Company's 2003
Annual Meeting Friday last week.
Phosphate Cycle Recovery
Noting that 2002 marked the beginning of "what we believe is a
multi-year recovery of the global phosphate market," Pertz
voiced encouragement over the significant increases in export
and domestic diammonium phosphate (DAP) prices since the start
of 2003 due to a tighter supply-and-demand situation over the
long-term. Even with near-term easement in pricing under way,
Pertz said phosphate selling prices this year should nonetheless
increase more year-over-year than in 2002 versus 2001.
"However, the improving margin potential from higher DAP prices
is being greatly eroded to date by higher raw material inputs,
including sharply increased ammonia costs from natural gas cost
strength, as our first quarter results indicated," said Pertz,
who noted some ammonia cost moderation is now occurring.
"We concur with industry consultants that ammonia and sulphur
costs have likely peaked in the second quarter and should begin
to moderate in the second half of the year and more so over the
longer-term," Pertz said. He pointed to historical patterns that
suggest improving phosphate fundamentals are more tied to
tightening supply-and-demand rather than the relative level of
raw material input costs.
The IMC Chairman added that the Company's potash business
continues to deliver a relatively steady and consistent
performance and is poised for improving results in 2003 and
beyond against the backdrop of favorable global market
fundamentals. Pertz said IMC Potash enjoys low-cost production,
market share and product line leadership and, through a recent
capacity expansion in Saskatchewan, "now has about two million
tons of excess capacity that can be tapped as worldwide demand
grows at a forecasted three percent annual rate."
Balance Sheet Improvement
A critical priority for IMC Global is to reduce balance sheet
leverage and enhance financial flexibility, said Pertz, who
reviewed steps taken in 2002 and 2003 to date to improve
liquidity and retire debt. He said an acceleration of debt
reduction is targeted through aggressive management of working
capital, unlocking other free cash flow, increasing operating
earnings, and selling certain non-core assets.
Noting that the Company has no scheduled debt maturity until
2005, Pertz pointed to last week's closing on a new, low-cost
financing facility that "provides additional borrowing capacity
and liquidity."
Low-Cost Leadership and Operational Excellence
Pertz told shareholders that IMC Global is relentless in its
drive to ensure its industry-leading, low-cost producer
position, as evidenced in recent years by "a series of major
cost reduction and continuous improvement programs that form the
foundation to achieve our objective of assuring a sustainable,
long-term competitive advantage through a low-cost structure.
"Past and present actions demonstrate we aggressively manage
what we can control and that we will continue to take sweeping
actions that should support and enhance future earnings
leverage," said Pertz. He explained that the implementation of a
Six Sigma program three years ago is the foundation for IMC's
continuous improvement program, a unique initiative in the
industry that delivered cost savings in 2002 in excess of $8
million to help offset inflationary and competitive pressures.
Pertz detailed new cost reduction actions undertaken in early
2003, including an organizational restructuring program
implemented in March that is targeted to generate pre-minority
interest, pre-tax savings of more than $10 million per year
through the elimination of 100 positions. A second and more
comprehensive initiative is a broad-based, multi-year
Operational Excellence program expected to deliver pre-minority
interest, pre-tax savings of at least $70 million by 2005, with
as much as $15 million by year-end 2003. Led by President and
Chief Operating Officer John Ferguson, this re- engineering
effort should result in increased efficiency, reduced costs and
revenue enhancements through core business process redesign and
maximization.
Corporate Governance
In concluding remarks, Pertz said, "IMC Global's Board of
Directors and management have maintained high standards of
corporate governance for many years and we remain fully
committed to making integrity and transparency the foundation
for how we operate the Company. Starting from what we believe
was a solid platform for Board organization and governance, as
well as management procedures, we have adopted revised committee
Charters and Corporate Governance Guidelines to ensure that IMC
meets it goals and complies with recent regulatory and
legislative changes, including the Sarbanes-Oxley Act of 2002."
Pertz said a new corporate governance section recently was added
to the IMC Global Web site at http://www.imcglobal.comand will
be updated to reflect further enhancements to governance
policies and practices.
During the meeting's formal business, shareholders approved two
proposals recommended by IMC Global's Board. The first proposal
included the reelection of Richard L. Thomas to a term expiring
in 2004 and Raymond F. Bentele, Harold H. MacKay and Pamela B.
Strobel to terms expiring in 2006, as well as the election of a
new director, Bernard M. Michel, retired Chairman and Chief
Executive Officer of Cameco Corporation, to a term expiring in
2005 (see separate press release on Mr. Michel). The second
proposal was the ratification of Ernst & Young LLP as
independent auditors.
With 2002 revenues of $2.1 billion, IMC Global is the world's
largest producer and marketer of concentrated phosphates and
potash crop nutrients for the agricultural industry and a
leading global provider of feed ingredients for the animal
nutrition industry. For more information, visit IMC Global's Web
site at http://www.imcglobal.com
As previously reported, Fitch Ratings assigned a 'BB' rating to
IMC Global Inc.'s new 11.25% senior unsecured notes due June 1,
2011. Fitch has affirmed the 'BB+' rating on the senior secured
credit facility, the 'BB' rating on the existing senior
unsecured notes with subsidiary guarantees and the 'B+' rating
on the senior unsecured notes with no subsidiary guarantees. The
Rating Outlook has been changed to Negative from Stable.
INSIGNIA SOLUTIONS: March 31 Balance Sheet Upside-Down by $500K
---------------------------------------------------------------
Insignia Solutions(R) (Nasdaq:INSG) reported financial results
for the first quarter ended March 31, 2003.
Revenues for the quarter were $379,000, which compares to $3.5
million reported for the first quarter of the previous year. Net
loss for the first quarter of 2003 was $3.2 million, which
compares to a net loss of $972,000 in the first quarter of 2002.
During the first quarter of 2003, Insignia Solutions began the
transfer of its Java Virtual Machine (JVM) business, including
the transfer of employees. Thus, as previously discussed, first
quarter 2003 results reflect JVM-related revenues and expenses
for January and February only. Sale of the Company's JVM assets
was completed on April 24, 2003. As of March 31, 2003, the
Company had cash, cash equivalents and restricted cash of
$214,000.
At March 31, 2003, the Company's balance sheet shows a working
capital deficit of about $600,000 and a total shareholders'
equity deficit of about $525,000.
Mark McMillan, Chief Executive Officer of Insignia Solutions,
commented, "With the sale of our JVM business in April, we
accomplished our goal of refocusing Insignia to take advantage
of the market opportunity associated with further developing our
Secure System Provisioning (SSP)(TM) as a scalable and efficient
system to accomplish Over-The-Air Repair(TM) for wireless
operators and handset vendors. During the first quarter and as a
result of the aforementioned transaction, we initiated steps to
reduce our overhead and raise needed working capital. Our first
quarter results reflect the business we have transitioned away
from, while our immediate focus going forward will be to
continue to develop channel partnerships for our SSP product and
conduct ongoing carrier lab trials. As we progress, we look
forward to signing new customers in the second half of the year
and establishing a revenue stream associated with our new
products next year."
Recent Highlights:
-- Insignia Solutions completed the sale of its Jeode business
to esmertec A.G. whereby esmertec acquired all of Insignia's
Java Virtual Machine related assets with the exception of
Jeode intellectual property that will be transferred in June
2004. As a result, esmertec has become the exclusive master
distributor of Jeode. Insignia will continue to receive a
portion of Jeode revenues on a periodic basis for three
years.
-- At CTIA Wireless 2003, Insignia demonstrated its SSP product
on several phones utilizing GPRS and CDMA networks, on March
17-19 in New Orleans, LA. Appearing in the Intel PCA
Developer Booth, Insignia demonstrated the capability for
Over-The-Air Repair of mobile terminals.
Insignia provides an essential ingredient to mobile operators
and terminal manufacturers by enabling Over-The-Air Repair of a
growing complex and diverse community of devices on the network.
Insignia's products and services radically reduce customer care
and recall costs, maintain device integrity, and enable a wide
range of new mobile services. Founded in 1986, Insignia has a
long history of innovation, stewardship of major industry
standards, and the trust of dozens of manufacturers around the
world. The company is headquartered in Fremont, California with
R&D and European operations based in the United Kingdom. For
additional information about Insignia or its products please
visit http://www.insignia.com
INTEGRATED INFO.: March 31 Net Capital Deficit Tops $940,000
------------------------------------------------------------
Integrated Information Systems Inc. (OTCBB: IISX), a leading
provider of secure integrated information solutions, announced
results for its first quarter ended March 31, 2003.
For the first quarter of 2003, IIS reported a net loss of $1.7
million, compared to net income of $427,000 for the fourth
quarter ended Dec. 31, 2002. Revenue for the first quarter was
$2.9 million, compared to revenue of $3.4 million for the fourth
quarter of 2002. The net loss of $1.7 million in the first
quarter of 2003 included a gain on the settlement of obligations
of $783,000, primarily related to the company's successful
renegotiations of restructuring settlements. During the first
quarter of 2003, we continued to aggressively pursue our
Turnaround Plan. Accordingly, the first quarter loss also
included a loss on the disposition of assets of $525,000 related
to the termination of two office leases; and, we initiated
additional actions to reduce our expenses and have subsequently
eliminated approximately $1.0 million of expenses, which are
included in the $1.7 million loss, that will not be part of our
continuing cost structure. Noncash expenses included
depreciation of $583,000.
At March 31, 2003, the Company's balance sheet shows a working
capital deficit of about $4 million, and a total shareholders'
equity deficit of about $940,000.
"The first quarter of 2003 was an especially challenging quarter
where several client projects were delayed with uncertainty
surrounding geopolitical issues," said Jim Garvey, chairman,
chief executive officer and president of IIS. "We believe that
much of that uncertainty has past and we are slowly starting to
see improvements. We responded aggressively to the weakness in
the market by redoubling our efforts to reduce our cost
structure and improve our go-to-market planning and execution.
We streamlined our organization, further simplifying management
of the business and reducing general and administrative expenses
significantly while maximizing the client facing efforts in our
company.
"Having completed the last large adjustments related to the
financial restructuring part of our plan and obtaining the
necessary financing to execute it, we are now focusing our
efforts on re-igniting revenue growth. We have assembled a
Services Portfolio that includes productized offerings that help
organizations 'do more with less' using today's newest
technologies. We are aggressively pursuing the marketplace in
targeted campaigns around these offerings which further assist
our clients in saving money in today's environment. An example
of one of these campaigns is a recent Microsoft Access to
Microsoft SQL Server campaign in which we are partnering with
Microsoft. The Service Portfolio offering, called 'Access to
SQL,' helps clients who have developed Microsoft Access
applications that have become mission critical to migrate to a
more enterprise level production environment. In many cases,
this increases application uptime while significantly reducing
the maintenance costs of the applications. Another added benefit
of moving applications to Microsoft SQL Server is increased
Business Intelligence capabilities through the analysis services
that are built into the product.
"Our demand generation efforts centered on service offerings
that help organizations reduce costs have been paying off. We
have started hiring consulting professionals again and we have
recently begun to see lower turnover in our client-facing
professional staff," continued Garvey. "Although we see 2003 as
another tough year in the IT services business, we are starting
to see positive signs that technology has advanced enough for
organizations to start investing again, even if the main purpose
of the investment is to reduce costs by replacing older more
expensive technology. We expect that Q2 of 2003 will be another
rough quarter, and we hope to see market stabilization and
growth in Q3 and Q4 based on our more aggressive customer-facing
profile. We will carefully continue our consolidation efforts
around the Microsoft and Novell Partner Channel and expect to
close additional acquisitions during the year, open new markets,
and expand upon our Services Portfolio. We are confident we have
a solid platform to grow upon and now look to the future with
optimism."
In addition to the Access to SQL Service Portfolio offering, IIS
has offerings in the following categories that help our
customers "do more with less": server consolidation, messaging
migration, desktop and server operating system migration,
application integration, application development, security
assessment and implementation, directory services design and
implementation, secure remote access, single sign-on
integration, and data warehouse design and implementation.
Detailed information on the IIS Service Portfolio can be found
at http://www.iis.com/serviceportfolio
Integrated Information Systems(TM) is a leading provider of
secure integrated information solutions. IIS specializes in
securely optimizing, enhancing and extending information
applications and networks to serve employees, partners,
customers and suppliers. IIS new technology solutions help
organizations "do more with less." Founded in 1988, IIS has
operations in Denver; Madison, Wis.; Milwaukee; Phoenix;
Portland, Ore. and Bangalore, India.
For more information on Integrated Information Systems, please
visit its Web site: http://www.iis.com
ITEX CORP: Fiscal 3rtd Quarter Results Remain in Positive Zone
--------------------------------------------------------------
ITEX Corporation (OTC Bulletin Board: ITEX), a leading business
services and trading company, announced the operating results
for its third fiscal quarter ending April 30, 2003.
Fifth Consecutive Quarter of Profitability
This fiscal quarter marks the fifth consecutive quarter of
profitability for ITEX Corporation following the successful
implementation of the corporate restructuring initiated in
November, 2001.
Third Quarter Results
For the quarter ending April 30, 2003, the Company generated net
income of $102,000 compared to a net income of $185,000 for the
same period last year.
ITEX Corporation Operational Highlights:
-- Revenues reported from ITEX franchising efforts were $15,000
during this fiscal quarter.
-- During the quarter, we invested $25,000 in expenses related
to legal, professional and licensing fees for franchising. In
addition, we invested $49,000 in expenses related to
marketing, sales and other costs to support the growing
franchise portion of our business.
-- During the past nine months, we have made significant strides
toward strengthening our balance sheet. As of July 31, 2002
our accounts payable balance totaled $435,000 compared to
$211,000 as of April 30, 2003, a decrease of $224,000. In
addition, we've decreased our accrued audit and legal fees by
$289,000 and other current liabilities by $165,000 during the
past three quarters.
-- Cash collections have improved significantly through the
implementation of initiatives such as internal and external
collections efforts and improved customer service. In the US
and Canada, our collection rates have increased from the
first nine months of fiscal 2002 to the same period in 2003.
The improvement in collections has allowed us to fund current
operations, invest heavily in our franchise model and pay off
significant amounts of current debt during the past nine
months.
ITEX Corporation's April 30, 2003 balance sheet shows a working
capital deficit of about $700,000, while its total shareholders'
equity deficit of about $365,000, up from about $40,000 as
reported at July 31, 2002.
"Our third quarter reflects the continuing improvement in the
overall performance of ITEX Corporation," said Lewis "Spike"
Humer, ITEX President and Chief Executive Officer. "We have
invested significant efforts in the areas of franchising,
technology, customer service, and broker support, anticipating a
return on investment in future quarters as we work to increase
top-line revenues. Throughout the first three quarters of fiscal
2003, we have allocated time and resources toward personnel and
infrastructure enhancements to ensure our progress is immediate
and sustainable. Now we intend to place our focus and our
primary efforts upon growth, economies of scale, and absorbing
our fixed costs over larger revenues."
"Next week, we are hosting our twenty-first annual ITEX Broker
Convention in Florida. We're excited about the event and will be
unveiling a variety of initiatives aimed at increasing our
revenues and expanding our trade exchange."
Humer outlined the following as part of those initiatives:
-- Launch of the ITEX Trade Exchange Online Auction
-- Implementation of a referral program for new ITEX Franchise
Brokers
-- Rollout of web-based training and support programs for ITEX
Brokers
-- Placement of an online learning center and library for the
ITEX Broker Success System (ITEX B.O.S.S.)
-- Incorporation of an ITEX Member Rewards program designed to
increase new member enrollment
-- Formation of a centralized ITEX Trade Exchange telesales
operation
-- Expanded utilization of various customer relationship and
contact management programs
-- Execution of a co-op advertising program for ITEX Broker
offices
Humer went on to say, "Our restructuring model implemented in
2002 was designed in part to make an immediate and necessary
impact to ensure our short-term viability. Concurrently, during
the turnaround, we worked to design an organization built for
controlled and scalable growth. ITEX Corporation is now in an
improved position to support more brokers, members, and
transactions within our trade exchange and to do it more
efficiently and effectively."
"While we are pleased with another quarterly profit, I believe
our performance in the upcoming fiscal year will best be judged
by our ability to expand top-line revenues, supported by
consistent bottom-line profits. In the last eighteen months, the
vast majority of our efforts have been directed toward stability
and our initiatives funded by operations. While I believe we
have invested wisely in order to balance short-term needs with
mid-term opportunities, we now seek to generate growth in
revenues and in our trade exchange- whether organic or by
acquisition."
KATONAH V: S&P Assigns Preliminary BB Rating to Class D Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Katonah V Ltd./Katonah V Inc.'s $231.25 million
floating- and fixed-rate notes due 2015.
The preliminary ratings are based on information as of May 16,
2003. Subsequent information may result in the assignment of
final ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
-- The expected commensurate level of credit support in the form
of subordination to be provided by the notes junior to the
respective classes and by the equity and
overcollateralization;
-- The cash flow structure, which is subject to various stresses
by Standard & Poor's;
-- The experience of the collateral manager;
-- The coverage of interest rate risks through hedge agreements;
and
-- The legal structure of the transaction, which includes the
bankruptcy-remoteness of the issuer.
Katonah V Ltd./Katonah V Inc. is the fifth cash flow arbitrage
CLO brought to market by Katonah Capital LLC.
PRELIMINARY RATINGS ASSIGNED
Katonah V Ltd./Katonah V Inc.
Class Rating Amount ($000s)
A-1 AAA 184,500
A-2 AA 10,000
B-1 A- 14,000
B-2 A- 4,000
C BBB 9,500
D BB 9,250
Equity N.R. 18,750
N.R-Not rated.
KELLSTROM: Court to Consider First Amended Joint Plan on July 22
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
Kellstrom Industries, Inc., and its debtor-affiliates'
Disclosure Statement to the First Amended Joint Chapter 11 Plan.
The Court rules that the Debtors' Disclosure Statement contains
"adequate information" for all of the Debtors' creditors to
arrive at an informed decision whether to accept or reject the
Plan. The Debtors' Disclosure Statement satisfies the
requirement Section 1125(a)(1) of the Bankruptcy Code.
The Court schedules a June 30, 2003 Voting Deadline by which
original ballots must be received by mail or overnight delivery
by Robert L Berger & Associates, LLP in order to be considered
as acceptances of rejections of the Plan.
To consider confirmation of the Debtors' Plan, a confirmation
hearing is fixed on July 22, 2003 at 3:00 p.m. before the
Honorable Judge Mary F. Walrath. All creditors wishing to
object to the confirmation of the Debtors' Plan have until 4:00
p.m. of July 11, 2003 to file their written objections with the
Bankruptcy Court.
KI-1, Inc., formerly known as Kellstrom Industries, Inc., a
leader in the aviation inventory management industry filed for
chapter 11 protection on February 20, 2002 (Bankr. Del. Case No.
02-10536). Domenic E. Pacitti, Esq., at Saul Ewing LLP
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$371,249,106 in total assets and $402,400,477 in total debts.
KLEINERT'S: Gets Court Nod to Hire Ordinary Course Professionals
----------------------------------------------------------------
Kleinert's, Inc., and its debtor-affiliates sought and obtained
approval from the U.S. Bankruptcy Court for the Southern
District of New York to continue the employment of professionals
they utilize in the ordinary course of their businesses.
The Debtors maintain substantial operations in various locations
within the United States. As a result the Debtors require the
services of various professionals on a day-to-day basis.
The Debtors submit that, in light of the costs associated with
the preparation of employment applications for professionals who
will receive relatively modest fees, and/or who will provide
services to the Debtors not related, for the most part, to these
cases, it would be impractical, inefficient, and unnecessarily
costly for the Debtors to submit individual applications and
proposed retention orders for each professional.
The Debtors maintain that relieving the Ordinary Course
Professionals of the requirement of preparing and prosecuting
fee applications will save the estates the additional
professional fees and expenses that would be incurred thereby
and will alleviate the burden on the United States Trustee and
this Court of having to review numerous fee applications
requesting relatively modest amounts of fees and expenses.
The Debtors will pay the Ordinary Course Professionals, 100% of
the fees and expenses incurred upon the submission of an
appropriate invoice setting forth the nature of the services
rendered and expenses actually incurred; provided, however, that
it does not exceed to a total of $10,000 for any month.
Kleinert's Inc., filed for chapter 11 protection on May 7, 2003
(Bank. S.D. N.Y. Case No. 03-41140). Wendy S. Walker, Esq., at
Morgan, Lewis & Bockius, LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed its estimated debts and assets of
over $50 million each.
LEAP WIRELESS: Plan's Classification and Treatment of Claims
------------------------------------------------------------
This table summarizes the classification and treatment of the
principal prepetition Claims and Interests under Leap Wireless
International Inc., and its debtor-affiliates' proposed Plan and
in each case reflects the amount and form of consideration that
will be distributed in exchange for these Claims and Interests
and in full satisfaction, settlement, release and discharge of
these Claims and Interests:
Class Description Treatment
----- ---------------------- ---------------------------------
Administrative Claims Paid in full in Cash held by Leap
on the Effective Date or as soon
as practicable thereafter, or in
accordance with the terms and
conditions of transactions or
agreements relating to obligations
incurred in the ordinary course of
business during the pendency of
the Chapter 11 Cases.
Priority Tax Claims Paid in full in Cash held by Leap
on the Effective Date or as soon
as practicable thereafter.
Claims and Interests in Leap:
1A GLH Claim On the Effective Date, in full
satisfaction, settlement, release
and discharge of and in exchange
for the Secured Claim, either:
a) Leap will sell the collateral
securing the GLH Claim and
transfer the proceeds to GLH;
or
b) Leap will transfer the
collateral securing the GLH
Claim to GLH.
1B 12-1/2% Senior Notes Each Holder will receive, on a Pro
Secured Claim Rata basis, the Cash in the
Pledged Account equal to the
amount of interest owing as of
April 15, 2003.
1C Old Vendor Debt Claims Each Holder will receive, on a Pro
Rata basis, the Old Vendor Debt
Distribution.
2A Other Secured Claims Each Holder will be treated as:
a) Leap will sell the collateral
securing the Allowed Class 2
Claim and transfer the
proceeds to the Holder of the
Class 2 Claim; or
b) Leap will transfer the
collateral securing the Class 2
Claim to the Holder of the
Class 2 Claim.
3 Priority Claims Each Holder will be paid the
Allowed Amount of the Claim in
full in Cash by Leap on or before
the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between Leap
and the Holder of the Claim.
4 General Unsecured On the Initial Distribution Date,
Claims each Holder will receive a Pro
Rata share of the beneficial
interests in the Leap Creditor
Trust. If the Effective Date has
not occurred at the time of the
Initial Distribution Date, Leap
will transfer to the Creditor
Trust only the Leap General
Unsecured Claim Cash Distribution.
On the Effective Date, Reorganized
Leap will transfer to the Leap
Creditor Trust the remainder of
the Leap General Unsecured Claim
Distribution.
5 Intercompany Claims Each Holder will receive the
Intercompany Release on account of
the Claim.
6 Old Common Stock of No distribution.
Leap & Securities
Claims
7 Interests of Holders No distribution.
of Old Stock Rights
Claims and Interests Against CCH:
1A Old Vendor Debt Claims Each Holder of an Allowed Class 1A
Claim will receive a Pro Rata
share of the Old Vendor Debt
Distribution.
2A Other Secured Claims Each Allowed Secured Claim in
Class 2 will be treated as:
a) the Plan will leave unaltered
the legal, equitable and
contractual rights to which the
Claim entitles the Holder;
b) Cricket will cure any default
with respect to the Claim that
occurred before or after the
Petition Date; the maturity of
the Claim will be reinstated as
the maturity existed before any
default; the Holder of the
Claim will be compensated for
any damages incurred as a
result of any reasonable
reliance by the Holder on any
right to accelerate its Claim;
and the legal, equitable, and
contractual rights of the
Holder will not otherwise be
altered; or
c) the Claim will receive any
other treatment to which the
Holder will consent.
3 Priority Claims Each Holder of an Allowed Claim in
Class 3 will be paid the Allowed
Amount of the Claim in full in
Cash by Reorganized Cricket on or
before the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between
Cricket and the Holder of the
Claim.
4 General Unsecured No distribution.
Claims
5 Intercompany Claims Each Holder will receive the
Intercompany Release on account of
the Claim.
6 Old Common Stock of No distribution.
CCH
7 Interests of Holders No distribution.
of Old Stock Rights
Claims and Interests Against Cricket:
1A Old Vendor Debt Claims Each Holder of an Allowed Class 1A
Claim will receive a Pro Rata
share of the Old Vendor Debt
Distribution.
2A Other Secured Claims Each Allowed Secured Claim in
Class 2 will be treated as:
a) the Plan will leave unaltered
the legal, equitable and
contractual rights to which the
Claim entitles the Holder;
b) Cricket will cure any default
with respect to the Claim that
occurred before or after the
Petition Date; the maturity of
the Claim will be reinstated as
the maturity existed before any
default; the Holder of the
Claim will be compensated for
any damages incurred as a
result of any reasonable
reliance by the Holder on any
right to accelerate its Claim;
and the legal, equitable, and
contractual rights of the
Holder will not otherwise be
altered; or
c) the Claim will receive any
other treatment to which the
Holder will consent.
3 Priority Claims Each Holder of an Allowed Claim in
Class 3 will be paid the Allowed
Amount of the Claim in full in
Cash by Reorganized Cricket on or
before the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between
Cricket and the Holder of the
Claim.
4 General Unsecured Holders will receive, on a Pro
Claims Rata basis, the Cricket General
Unsecured Creditor Distribution on
account of these Claims.
5 Intercompany Claims Each Holder will receive the
Intercompany Release on account of
the Claim.
6 Old Common Stock of No distribution.
Cricket & Securities
Claims
7 Interests of Holders No distribution.
of Old Stock Rights
Claims and Interests in License Holding Companies:
1A Old Vendor Debt Claims Each Holder of an Allowed Class 1A
Claim will receive a Pro Rata
share of the Old Vendor Debt
Distribution.
1B FCC Claims Holders of the FCC Claims will
either:
a) remain fully secured, but the
payment terms of the FCC Claims
will be extended for a two-year
grace period for principal and
interest and a four-year
amortization schedule
thereafter; or
b) be Reinstated.
2A Other Secured Claims Each Allowed Secured Claim in
Class 2 will be treated as:
a) the Plan will leave unaltered
the legal, equitable and
contractual rights to which the
Claim entitles the Holder;
b) Cricket will cure any default
with respect to the Claim that
occurred before or after the
Petition Date; the maturity of
the Claim will be reinstated as
the maturity existed before any
default; the Holder of the
Claim will be compensated for
any damages incurred as a
result of any reasonable
reliance by the Holder on any
right to accelerate its Claim;
and the legal, equitable, and
contractual rights of the
Holder will not otherwise be
altered; or
c) the Claim will receive any
other treatment to which the
Holder will consent.
3 Priority Claims Each Holder of an Allowed Claim in
Class 3 will be paid the Allowed
Amount of the Claim in full in
Cash by Reorganized Cricket on or
before the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between
Cricket and the Holder of the
Claim.
4 General Unsecured No distribution.
Claims
5 Intercompany Claims Each Holder will receive the
Intercompany Release on account of
the Claim.
6 Old Common Stock of No distribution.
Cricket & Securities
Claims
7 Interests of Holders No distribution.
of Old Stock Rights
Claims and Interests in Retained Property Holding Companies:
1A Old Vendor Debt Claims Each Holder of an Allowed Class 1A
Claim will receive a Pro Rata
share of the Old Vendor Debt
Distribution.
2A Other Secured Claims Each Allowed Secured Claim in
Class 2 will be treated as:
a) the Plan will leave unaltered
the legal, equitable and
contractual rights to which the
Claim entitles the Holder;
b) Cricket will cure any default
with respect to the Claim that
occurred before or after the
Petition Date; the maturity of
the Claim will be reinstated as
the maturity existed before any
default; the Holder of the
Claim will be compensated for
any damages incurred as a
result of any reasonable
reliance by the Holder on any
right to accelerate its Claim;
and the legal, equitable, and
contractual rights of the
Holder will not otherwise be
altered; or
c) the Claim will receive any
other treatment to which the
Holder will consent.
3 Priority Claims Each Holder of an Allowed Claim in
Class 3 will be paid the Allowed
Amount of the Claim in full in
Cash by Reorganized Cricket on or
before the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between
Cricket and the Holder of the
Claim.
4 General Unsecured No distribution.
Claims
5 Intercompany Claims Each Holder will receive the
Intercompany Release on account of
the Claim.
6 Old Common Stock of No distribution.
Retained Property
Holding Company
7 Interests of Holders No distribution.
of Old Stock Rights
Claims and Interests in Liquidating Property Holding Companies:
1A Old Vendor Debt Claims Each Holder of an Allowed Class 1A
Claim will receive a Pro Rata
share of the Old Vendor Debt
Distribution.
2A Other Secured Claims Each Allowed Secured Claim in
Class 2 will be treated as:
a) the Plan will leave unaltered
the legal, equitable and
contractual rights to which the
Claim entitles the Holder;
b) Cricket will cure any default
with respect to the Claim that
occurred before or after the
Petition Date; the maturity of
the Claim will be reinstated as
the maturity existed before any
default; the Holder of the
Claim will be compensated for
any damages incurred as a
result of any reasonable
reliance by the Holder on any
right to accelerate its Claim;
and the legal, equitable, and
contractual rights of the
Holder will not otherwise be
altered; or
c) the Claim will receive any
other treatment to which the
Holder will consent.
3 Priority Claims Each Holder of an Allowed Claim in
Class 3 will be paid the Allowed
Amount of the Claim in full in
Cash by Reorganized Cricket on or
before the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between
Cricket and the Holder of the
Claim.
4 General Unsecured No distribution.
Claims
5 Intercompany Claims Each Holder will receive the
Intercompany Release on account of
the Claim.
6 Old Common Stock of No distribution.
Liquidating Property
Holding Company
7 Interests of Holders No distribution.
of Old Stock Rights
Claims and Interests in Other Subsidiaries:
1A Other Secured Claims Each Allowed Secured Claim will be
treated as:
a) the Plan will leave unaltered
the legal, equitable and
contractual rights to which the
Claim entitles the Holder;
b) Cricket will cure any default
with respect to the Claim that
occurred before or after the
Petition Date; the maturity of
the Claim will be reinstated as
the maturity existed before any
default; the Holder of the
Claim will be compensated for
any damages incurred as a
result of any reasonable
reliance by the Holder on any
right to accelerate its Claim;
and the legal, equitable, and
contractual rights of the
Holder will not otherwise be
altered; or
c) the Claim will receive any
other treatment to which the
Holder will consent.
2 Priority Claims Each Holder of an Allowed Claim in
Class 2 will be paid the Allowed
Claim Amount in full in Cash by
Reorganized Cricket on or before
the later of:
a) the Effective Date or as soon
as practicable thereafter,
b) the date the Claim becomes an
Allowed Claim, and
c) the date that the Claim would
be paid in accordance with any
terms and conditions of any
agreements or understandings
relating thereto between
Cricket and the Holder of the
Claim.
3 General Unsecured No distribution.
4 Intercompany Claims No distribution.
5 Old Common Stock of No distribution.
Other Subsidiary and
Securities Claims
6 Interests of Holders No distribution.
of Old Stock Rights
(Leap Wireless Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LTV CORP: Judge Bodoh Okays New Sr. Executives' Employment Pacts
----------------------------------------------------------------
Copperweld Corporation asks Judge Bodoh for authority to sign
agreements modifying the terms of employment of:
(1) Dennis McGlone as Chief Operating Officer nunc pro
tunc to April 1, 2003;
(2) James Loveland as Chief Restructuring Officer nunc
pro tunc to April 10, 2003; and
(3) James Smith as Interim Chief Financial Officer nunc
pro tunc to April 7, 2003.
Nicholas M. Miller, Esq., at Jones Day Reavis & Pogue, in
Cleveland, Ohio, explains to Judge Bodoh that, as part of the
Copperweld reorganization process, and in connection with the
formulation of its upcoming business plan, certain Copperweld
senior management determined to resign from the company.
Specifically, John Turner, the former President and Chief
Executive Officer, and Douglas Young, the former Chief Financial
Officer, announced their resignations effective as of March 31,
2003. Messrs. Turner and Young also resigned as directors of
Copperweld and its affiliates.
Employment of Dennis McGlone as COO
Dennis McGlone, acting solely as Chief Operating Officer for
Copperweld, has remained at Copperweld to direct and oversee its
operations. In consultation with the Postpetition Lenders, Mr.
McGlone immediately commenced a search to identify a new
executive management team, and Copperweld's postpetition lenders
interviewed potential candidates. As a result of that search,
and with the Postpetition Lenders' support, Mr. McGlone accepted
the position of Copperweld President and Chief Operating
Officer.
Furthermore, Copperweld determined that the engagement of Mr.
Loveland as CRO and the employment of Mr. Smith as Interim CFO,
both of whom will share the Office of President with Mr.
McGlone, currently are the most prudent and cost effective
options available to fill these positions. Accordingly,
Copperweld seeks to enter into an agreement to modify the terms
of Mr. McGlone's employment to reflect his augmented
responsibilities, and to employ Messrs. Loveland and Smith.
As President and COO, Mr. McGlone will be responsible for
Copperweld's overall operations, including its day-to-day
operations and the progress of its bankruptcy case.
Significantly, in connection with Copperweld's reorganization,
Mr. McGlone will be responsible for, among other things,
developing and implementing the business plan and a plan of
reorganization for the Copperweld Debtors. The terms of Mr.
McGlone's employment as President and COO are set forth in a
term sheet. Copperweld requests that the terms reflected in the
McGlone Term Sheet be effective nunc pro tunc as of April 1,
2003, inasmuch as Copperweld believes that it was absolutely
necessary for Mr. McGlone to assume the role of President and
COO on that date to preserve vendor, customer and employee
confidence in Copperweld's operations and to focus on the tasks
that lie ahead.
Terms of McGlone Employment
The primary terms of the McGlone Term Sheet are conditioned on
the execution of a reasonable release and include:
(a) Base Salary and Benefits: Mr. McGlone's current
annual base salary will be increased from $300,000
to $375,000.
(b) Mr. McGlone will be eligible for the same benefits
offered to all Copperweld executives generally, like
continued participation in the Management Bonus
Program and any long-term incentive plan that may be
established for Copperweld executives.
(c) Severance: In the event that:
(i) Copperweld terminates Mr. McGlone's employment
other than for cause;
(ii) Mr. McGlone terminates his employment on the
earlier to occur of:
(x) the failure to be appointed to the
position of Chief Executive Officer
of Copperweld within one year of the
effective date of the company's
emergence from Chapter 11, or
(y) 60 days after the notification of the
appointment of any other person as the
CEO of Copperweld; or
(iii) if Copperweld is unable either to roll over a
portion of the D&O Policy or obtain an
adequate replacement policy for the D&O
Policy,
Mr. McGlone will receive, among other things, as
severance:
(1) the Base Salary -- paid monthly -- for two
years; and
(2) full benefit coverage for two years or until
such earlier date as he obtains benefit
eligibility with another employer.
The New Executives
When Messrs. Turner and Young announced their resignations,
Copperweld initiated a search to identify a CRO and interim CFO.
After interviewing certain potential candidates, Copperweld
determined that the New Executives were the most qualified,
cost-effective candidates available to fill the positions.
Loveland Qualifications
Mr. Loveland has substantial business experience in executive
management, international operations, strategic planning and
sales and manufacturing of specialty steel products. His
experience includes a record of successful business
restructurings. Recently, Mr. Loveland has been a consultant to
GE Capital Corporation, an agent for and one of the Postpetition
Lenders, on several matters, including the Copperweld Debtors'
chapter 11 cases.
As a consultant for GECC in these cases, Mr. Loveland has had
the opportunity to meet most of the Copperweld Debtors' senior
management and to visit many of the manufacturing plants
throughout the United States and Canada. Copperweld believes
that Mr. Loveland's experience with the Copperweld Debtors'
businesses will give Mr. Loveland the quick start necessary to
assist with the development and implementation of a plan of
reorganization for the Copperweld Debtors.
From 1991 until 1999, Mr. Loveland was President and CEO of
Worldsource Coil Coating Inc., a flat steel coil processor.
Prior to Worldsource, Mr. Loveland was President and COO of
Continental Copper & Steel, Inc., and prior to Continental
Copper, he held various executive and management positions at
other steel and metals-related manufacturing and sales
businesses. Mr. Loveland formerly was a Director of Continental
Copper & Steel, Inc., Aceros Anglo, a Mexican stainless steel
producer, and Worldsource. He earned an MBA and a BS in
Economics from University of California, Berkeley.
Smith Qualifications
Mr. Smith is an experienced CFO with recent emphasis on business
restructurings. Mr. Smith has over 25 years experience as a
senior financial officer in the chemicals, building products and
steel processing industries. Recently, Mr. Smith has been a
consultant for GECC, although not in connection with the
Copperweld Debtors' Chapter 11 cases.
From 1991 until 1998, Mr. Smith was an executive at AmeriMark
Building Products, where he was a Senior Vice President
responsible for financial and administrative functions, as well
as a member of the board of directors. From 1971 until 1991,
Mr. Smith was with W.R. Grace and Co. where he held several
management and executive positions, including Corporate Vice
President and Chief Financial Officer of Grace Specialty
Chemicals.
Prior to joining W.R. Grace, Mr. Smith held various analyst and
engineering positions. Mr. Smith earned a BS in Chemical
Engineering from the University of Illinois, and an MBA in
Finance from New York University.
The Management Services Agreement
Mr. Loveland's appointment and Mr. Smith's employment are
described in a Management Services Agreement that sets forth the
basic terms of the agreement between the parties. The MSA
contemplates that the New Executives will provide a wide variety
of services, including:
(a) serving as Copperweld directors and officers in
the positions of CRO -- Loveland, and Interim CFO
-- Smith;
(b) analyzing Copperweld's business, operations,
finances and debt and developing a business plan;
(c) assisting with identification and hiring of a new
CFO;
(d) working with Mr. McGlone to develop and propose the
Plan for the Copperweld Debtors;
(e) negotiating the terms of the Plan with creditors
and other parties in interest; and
(f) seeking confirmation of the Plan with the Court.
Term of Engagement and Employment for New Executives
Mr. Smith's employment will commence effective nunc pro tunc as
of April 7, 2003, and will extend through the earlier of:
(i) the date that is six months after the date that
this Court approves the MSA, or
(ii) the effective date of the Plan.
Mr. Loveland's engagement will be effective nunc pro tunc as of
April 10, 2003, and will extend through the End Date, subject to
the terms of the MSA. The MSA may be terminated upon the
occurrence of certain events specified in the MSA. However,
upon termination, the New Executives will receive their pro rata
share of the aggregate compensation they earned prior to such
termination, without acceleration:
(a) Copperweld may terminate the MSA in the event that
either of the New Executives materially breaches the
MSA; and
(b) the New Executives may terminate the MSA:
(i) if this motion has not been approved by the
Court, or
(ii) if Copperweld materially breaches the MSA,
including failure to pay the New Executives
their compensation under the MSA or maintain
or replace Copperweld's existing director and
officer liability insurance policy.
Pre-Approval Date Services
Messrs. Loveland and Smith have been spending, and will continue
to spend, substantial time analyzing the Copperweld Debtors'
business operations, reviewing relevant financial data and
meeting with members of Copperweld's management and
representatives of other constituencies like vendors and
customers. Under the terms of the MSA, the New Executives are
to be compensated on a per diem basis for these pre-Approval
Date services. Copperweld believes that immediate exposure to
its day-to-day business operations will enable the New
Executives to accelerate the long-term business plan analysis
that is an essential prerequisite to Copperweld's
reorganization. During the pre-Approval Date period, the New
Executives will not hold any titles or bear any associated
director or officer responsibilities.
Compensation and Benefits
The MSA provides that the New Executives will be compensated:
(a) prior to the Approval Date, and for any days of
consulting or employment subsequent to the End Date
for each of the New Executives, Mr. Loveland will
receive $3,000 per day and Mr. Smith will receive
$2,100 per day;
(b) from the Approval Date through the End Date, Mr.
Loveland will receive $500,000 -- payable at
$83,333.33 per month, and Mr. Smith will receive
$350,000 -- payable at $58,333.33 per month.
The New Executives also will be reimbursed for all reasonable
out-of-pocket expenses incurred in connection with their
engagement and employment. As an employee of Copperweld, Mr.
Smith will be entitled participate -- at his own option and
expense -- in Copperweld's health care plan, including the right
to purchase COBRA coverage after the End Date.
Success Fee
The New Executives also will receive a success fee if this Court
confirms the Plan. Subject to court approval of the Success Fee
and as part of the Plan, the New Executives will participate in
the pool of shares or options of the reorganized corporation or
corporations made available to the entire management team of
Reorganized Copperweld. The Equity Interest, in the aggregate,
will be no less than the Equity Interest allocated to any single
senior officer of Reorganized Copperweld who reports directly to
the CEO of Reorganized Copperweld, up to and not to exceed a cap
of 10% of the total Equity Interest made available under the
Plan to the entire management team of Reorganized Copperweld.
The New Executives also will be entitled to receive the Success
Fee or mutually agreed upon bonus in the event that Copperweld
is acquired by or consolidated with another entity in a merger,
sale of capital stock, or sale of all or substantially all of
Copperweld's assets.
Indemnification and D&O Coverage
Copperweld will indemnify the New Executives to the same extent
as the most favorable indemnification that Copperweld extends to
its officers and directors, whether under Delaware law or
Copperweld's bylaws or articles of incorporation. The New
Executives each will be covered by the D&O Policy.
Copperweld represents in the MSA that, on or before June 28,
2003, it either will roll over a portion of the D&O Policy or
obtain an adequate replacement policy. In addition, the New
Executives may terminate the MSA if, on or before the Approval
Date, the Postpetition Lenders have not provided a carve-out on
terms reasonably satisfactory to the New Executives in the
amount of Copperweld's indemnity obligations in respect of the
deductible under the D&O Policy.
Smith and Loveland's Disclosure of Prior Relationships
Mr. Loveland has been a consultant for GECC and, before his
engagement by Copperweld, consulted for GECC with respect to the
Copperweld Debtors' Chapter 11 cases. He resigned from the GECC
engagement in these cases prior to being engaged by Copperweld.
Mr. Smith also has been a consultant for GECC but has performed
no services for GECC in connection with the Copperweld Debtors'
cases. Although neither Mr. Smith nor Mr. Loveland have any
current relationships with GECC, Mr. Smith does continue to
receive periodic payments pursuant to the contractual terms of a
prior, completed engagement with GECC.
Sound Exercise of Copperweld's Business Judgment
Copperweld believes that Messrs. McGlone, Loveland and Smith are
highly qualified, experienced executives and will be able to
make significant contributions to the development and
implementation of the Plan. Moreover, the Agreements were
negotiated at arm's length and are comparable to the
compensation packages of other similarly-situated executives at
other companies in the steel industry and in other industries.
For these reasons, Copperweld's entry into the Agreements
represents an appropriate exercise of Copperweld's sound
business judgment and is in the best interests of its estate and
creditors.
* * *
Wanting to avoid any loss of momentum in these cases, Judge
Bodoh promptly permits the Debtors to enter into the employment
agreements. (LTV Bankruptcy News, Issue No. 48; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
MISSISSIPPI CHEMICAL: Fitch Drops Sr. Unsecured Debt Rating to D
----------------------------------------------------------------
Fitch Ratings has downgraded Mississippi Chemical Corporation's
senior secured credit facility to 'DD' from 'CCC+' and the
senior unsecured notes to 'D' from 'CCC-'.
The ratings downgrade reflects Miss Chem's recent Chapter 11
bankruptcy filing, missed interest payment for the 7.25% senior
notes, weak operating performance and the uncertainty of cash
flows available for debt obligation repayment. The senior
secured rating is notched above the senior unsecured rating to
reflect the credit facility's collateral and potential recovery
position. Miss Chem has been struggling over several years
through the trough of the domestic fertilizer cycle. For the
trailing twelve-month period ended Dec. 31, 2002, Miss Chem's
EBITDA-to-interest incurred was 0.2 times and total debt-to-
EBITDA was 65.2x.
Miss Chem is a domestic fertilizer producer with operating
segments in nitrogen, phosphorus, and potash. In fiscal year
2002 (ended June 30, 2002), Miss Chem had $451 million in
revenue and $13 million in EBITDA.
NESTOR INC: Significant Losses Raise Going Concern Doubt
--------------------------------------------------------
Nestor, Inc. was organized on March 21, 1983 in Delaware to
develop and succeed to certain patent rights and know-how which
the Company acquired from its predecessor, Nestor Associates, a
limited partnership. Two wholly-owned subsidiaries, Nestor
Traffic Systems, Inc., and Nestor Interactive, Inc., were formed
effective January 1, 1997. Effective November 7, 1998, the
Company ceased further investment in the Interactive subsidiary.
The Company's principal office is located in East Providence,
RI.
The Company's current focus is to offer customers products to be
utilized in intelligent traffic management systems. Its leading
product is its CrossingGuard video-based red light enforcement
system and services, sold and distributed exclusively by NTS.
Effective July 1, 2002, the Nestor, Inc. assigned its royalty
rights in the field of financial services, substantially
eliminating ongoing product royalty revenue.
Nestor has incurred significant losses to date and at March 31,
2003 had a significant accumulated deficit. These conditions
raise substantial doubt about the Company's ability to continue
as a going concern without additional financing to carry out
product delivery efforts under current contracts, to underwrite
the delivery costs of future systems delivered under turnkey
agreements with municipalities, for continued development and
upgrading of its products, for customer support, and for other
operating uses. If the Company does not realize additional
equity and/or debt capital or revenues sufficient to maintain
its operations at the current level, management of the Company
would be required to modify certain initiatives, including the
cessation of some or all of its operating activities until
additional funds become available through investment or
revenues.
The Company is actively pursuing the raising of additional
equity and debt financing. There can be no assurance, however,
that the Company's operations will be sustained or be profitable
in the future, that adequate sources of financing will be
available at all, when needed or on commercially acceptable
terms or that the Company's product development and marketing
efforts will be successful.
For the quarter ended March 31, 2003, the Company realized
consolidated revenues totaling $347,000 and expenses of
$1,364,000, which resulted in a consolidated operating loss for
the quarter of $1,017,000. The Company reported a consolidated
net loss of $1,045,000 for the current quarter after recording
$28,000 of other expenses. In the corresponding quarter of the
prior year, consolidated revenues and expenses totaled $838,000
and $2,765,000, respectively, producing a loss from operations
of $1,927,000; and after other expenses of $82,000, the Company
reported net loss of $2,009,000.
NORTHWEST AIRLINES: S&P Rates New $150-Mill. Senior Notes at B-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Northwest Airlines Corp.'s $150 million convertible senior
unsecured notes due 2023, issued under Rule 144A and guaranteed
by Northwest Airlines Inc. The rating was also placed on
CreditWatch with negative implications. The rating is two
notches below the 'B+' corporate credit rating because secured
debt and leases represent a substantial portion of owned and
leased assets. "This is the first unsecured debt offering by any
large hub-and-spoke airline since the end of the war with Iraq,
indicating renewed access to capital markets for these
carriers," said Standard & Poor's credit analyst Philip
Baggaley. Ratings on Northwest Airlines Corp. and subsidiary
Northwest Airlines Inc. were lowered to current levels on
March 28, 2003, and ratings on both entities, including the 'B+'
corporate credit ratings, remain on CreditWatch with negative
implications.
The rating on Northwest Airlines Corp. reflects its satisfactory
competitive position, substantial liquidity, and relatively good
operating performance, but is constrained by industrywide risks,
an increasing debt and lease burden, substantial unfunded
postretirement liabilities, still significant capital
expenditure requirements, and few unencumbered aircraft that
could support further secured borrowing. Northwest, the
fourth-largest U.S. airline, has a domestic route system focused
on hubs in Minneapolis, Minnesota, and Detroit, Michigan The
company also offers extensive Pacific routes (mostly to Japan)
and transatlantic service through a successful joint venture
with KLM Royal Dutch Airlines. Northwest reported a substantial
first-quarter 2003 pretax loss of $426 million (including $78
million of special charges), reflecting industry problems noted
above. Northwest, like other large airlines, has announced
capacity reductions and cost-cutting measures in response to the
adverse revenue outlook, and is in discussions with several
unions regarding revisions to labor contracts to reduce
compensation. The labor negotiations are not expected to lead to
immediate results, but should gain momentum with the example of
concessions being accepted by labor groups at other large
airlines. Northwest's debt and lease burden, while not as
substantial as that of some other large U.S. airlines, is
growing as the company continues to take deliveries of new
planes, and is supplemented by $4.6 billion of unfunded pension
and postretirement medical liabilities.
Ratings could be lowered if the severe acute respiratory
Syndrome (SARS) outbreak or further substantial terrorist
attacks significantly affect revenues and weaken the company's
financial profile further.
NRG ENERGY: Unit Intends to Pull Plug on Connecticut Light Pact
---------------------------------------------------------------
NRG Power Marketing, Inc. notified The Connecticut Light & Power
Company that it would terminate a contract under which
NRG-PM is obligated to supply 45% of CL&P's standard offer
service load requirement through the end of 2003 at an average
cost of approximately $0.045 per kilowatt hour (kWh).
CL&P has been involved in several disputes with NRG-PM over the
terms of this contract, CL&P Treasurer Randy A. Shoop recalls,
including the parties' respective liabilities for congestion
costs and station service charges. NRG-PM alleges that CL&P is
in breach of contract due to steps CL&P took pursuant a
Connecticut Department of Public Utility Control decision
regarding liability for locational marginal pricing costs.
CL&P says that it intends to vigorously oppose NRG-PM's action
and will seek enforcement of the contract in the appropriate
forum. It will work closely with the DPUC and the Connecticut
Attorney General in these efforts. Should the contract be
terminated either because of the suit or due to NRG-PM's
bankruptcy, CL&P would obtain alternate sources of supply
through the ISO-New England market or, if appropriate, through a
new competitive supplier at costs which are likely to reflect
today's higher energy prices. If CL&P is required to seek
alternative sources of supply, it will pursue recovery from NRG-
PM of any additional costs.
CL&P would seek permission from the DPUC to flow through any
additional energy charges to its customers pending recovery of
such costs from NRG-PM. CP&L management believes that recovery
of these costs from its customers would be consistent with the
provisions of Connecticut's electric utility restructuring
legislation and the DPUC's prior decisions. (NRG Energy
Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NSI GLOBAL: December 31 Balance Sheet Upside-Down by $4 Million
---------------------------------------------------------------
NSI Global Inc. (TSX: NGL), a global supplier of satellite-based
communication systems, announced its financial results for the
three months ended March 31, 2003 and the year ended
December 31, 2002.
"During the last four months, we have reorganized NSI and
positioned ourselves to concentrate all our efforts on the
GlobalWave operations, and turn NSI into a profitable business,"
said David Ben-David, President and Chief Executive Officer.
"GlobalWave, which we believe is the most-advanced and cost-
effective asset-tracking and management product in the satellite
sector, has been our fastest-growing business and has
demonstrated the best opportunity to create value for
shareholders. We intend to concentrate all management efforts
towards further building and developing this business, which
generates growing and recurring profitable revenues for NSI."
"Our first quarter results are right on track with our plan to
generate operating profits for fiscal 2003. We have reduced our
net loss from $5.4 million, in the first quarter of 2002, to
$2.2 million in this year's quarter. We are confident that we
will be profitable, with revenues of between $7 and $8 million,
in the second quarter, " Mr. Ben-David added.
"While our main target is operating profitability for 2003, we
are continuing to invest in R&D and sales and marketing, to
increase our revenues and profitability in future years. The
potential for our products and services continues to grow and we
will participate in this market on a global scale," he stated.
"The actions we recently took have put the company on firmer
financial footing and include withdrawing from the Broadband
business last December, negotiating the licensing of our
technology related to Aether's MobileMax, re- negotiating our
arrangements with lenders, and cost-saving measures in the
GlobalWave operations including the transfer of the North
American GlobalWave network operations from the United States to
our facilities in Ottawa.
First-Quarter 2003 Results
Revenues from continuing operations in the three months ended
March 31, 2003 were $4.2 million, down from $13.8 million in the
corresponding period of 2002. Most of the decline was due to the
winding down of MobileMax shipments while negotiations were
taking place to license the technology to Aether Systems.
Gross profit for the first quarter was $457,000, down from $2.57
million a year earlier as a result of significantly lower
revenues. The cost saving measures announced in December 2002,
will start having impact in the second quarter and increase
gross margins.
Selling, general and administrative (SG&A) expenses in the first
quarter were $1.72 million, down slightly from $1.79 million a
year earlier.
Gross research and development (R&D) expenses in the three
months ended March 31, 2003 were $1.3 million, the same as a
year earlier. However, due to assistance in the amount of $1.2
million in the first quarter from the federal Government under
its Technology Partnership Canada (TPC) program, net research
and development expense was only $0.1 million in the first
quarter of 2003.
The loss from continuing operations was $2.2 million or $0.02
per share in the first quarter, compared with $1.2 million or
$0.01 per share a year earlier. In the year-earlier period,
there was an additional net loss from discontinued (Broadband)
operations of $4.2 million or $0.03 per share. The weighted
average number of common shares outstanding was 131,340,086 in
the 2003 period, compared with 127,569,147 a year earlier.
At December 31, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $4 million.
Outlook
NSI expects that it will grow its revenues and profitability by
increasing the GlobalWave customer base and recurring airtime
revenues in North America, and through international sales to
its GlobalWave regional operators in Europe, Africa, Middle
East, Australia, Mexico, and Central and South America.
The company has taken additional steps to reduce costs and give
itself the financial flexibility to pursue further growth for
the GlobalWave business. Measures taken in the GlobalWave
operations, announced in December 2002, will result in an annual
reduction of operating expenses, including cost of sales, of
approximately $3 million. These measures will begin to have an
impact in the second quarter but the full impact will be
realized only in the third quarter. In addition, the investment
contribution of $5.25 million over three years from Canada's
Technology Partnership Program will mean a reduction in net R&D
expenditures while at the same time allowing the company to
continue to develop its terminal and systems technology and
improve its technological lead.
The company's licensing of its terminal technology relating to
Aether's MobileMax, sale at cost of the remaining related
inventory and the revision of NSI's loan agreements with
lenders, announced in April 2003, generated significant cash and
reduced NSI's working capital requirements. Although this
licensing transaction will result in a substantial reduction in
revenues for the company, the bottom-line impact will be
positive.
As part of its revised agreements with lenders, the company
needs to raise $1.5 million in capital by September 15, 2003.
Although the company cannot give absolute assurance, NSI is
confident that it will be able to raise sufficient capital to
meet this obligation, improve its balance sheet, and have
sufficient financial resources to successfully execute its
business plan.
Results for 2002
Revenues from continuing operations (excluding Broadband) in
2002 totaled $37.7 million, a decline of 32.7 percent from $56.0
million in 2001. The decline in revenues was caused by
significantly lower GlobalWave system and terminal sales outside
of North America, although this was partially offset by an
increase in GlobalWave terminal sales in North America and a
significant increase in recurring airtime revenues. Also, there
was a reduction in MobileMax terminal shipments due to a design
change during the year.
Gross profit for 2002 decreased to $9.1 million from $20.8
million in 2001, and the gross margin declined to 24 percent
from 37.1 percent, mainly due to the decline in high-margin
system sales.
SG&A expenses, at $12.3 million for 2002, were slightly lower
than expenses of $12.7 million in 2001. The company recorded a
restructuring charge of $0.7 million in 2002 mainly for employee
severance costs and costs related to outstanding lease
commitments for unused premises. Gross R&D expenses increased to
$4.1 million from $3.9 million.
The company's net loss from discontinued and continuing
operations was $34.4 million or $0.27 per share in 2002,
compared with a loss of $19 million or $0.19 per share in 2001.
The net loss in 2002 included a loss from the discontinued
operations of $21.5 million, of which $13.3 million was related
to the operations of the Broadband business unit and $8.2
million to the write- off of the net assets of the unit on
December 20, 2002. The per-share figures were calculated on a
weighted average number of shares outstanding of 129,431,189 in
2002, up from 98,527,982 in 2001.
Further details are available in the company's 2002 annual
report, which will be mailed to shareholders and will be posted
on NSI's Web site.
NSI Global's wholly owned Vistar subsidiary sells satellite-
based wireless systems and equipment that permit customers to
remotely monitor and manage assets, such as trucks, trailers,
boats, oil and gas well head and pipeline facilities, chemical
storage tanks, and intermodal containers. Vistar sells
GlobalWave MT2000 data terminals directly to customers and
through value- added resellers and collects airtime revenues
from operating the GlobalWave satellite-based wireless network
in North and Central America. Vistar also has licensed the
GlobalWave technology to service providers outside of North
America.
Headquartered in Montreal, NSI's common shares are traded on the
Toronto Stock Exchange under the symbol NGL. Additional
information about NSI is available on the company's Web site at
http://www.nsiglobal.com
OPTICARE HEALTH: Reports Improved First Quarter Fin'l Results
-------------------------------------------------------------
OptiCare Health Systems, Inc. (Amex: OPT) announced that total
revenue for the three months ended March 31, 2003 rose 37% over
2002, growing from $23.3 million to $32.0 million. The increase
of $8.7 million was primarily attributable to revenue generated
by Wise Optical, the Yonkers, New York-based optical products
distributor, which OptiCare acquired in February.
Net income for the three months ended March 31, 2003 was
approximately $0.2 million compared to $5.1 million for the
three months ended March 31, 2002, a decrease of $4.9 million.
This decrease is primarily due to a $5.3 million gain on the
early extinguishment of debt, net of tax, recorded in the first
quarter of 2002. There was no such gain in 2003.
Commenting on the results, William A. Blaskiewicz, OptiCare's
Chief Financial Officer, said, "The important news is that the
Company reported top-line growth and also significantly improved
its balance sheet since the start of the year."
OptiCare's debt, which was $19.4 million at December 31, 2002,
and which increased to $26.6 million as of March 31, 2003 due to
borrowings to finance the acquisition of Wise Optical, has been
reduced by the recently-announced conversion of approximately
$16.2 million of senior subordinated debt to preferred stock.
OptiCare Health Systems, Inc. is an integrated eye care services
company focused on vision benefits management (managed vision),
the distribution of products and software services to eye care
professionals, and consumer vision services, including medical,
surgical and optometric services and optical retail.
OSE USA: March 30 Net Capital Deficit Widens Close to $40 Mill.
---------------------------------------------------------------
OSE, USA, Inc. (OTCBB:OSEE), reported its results for the first
quarter ended March 30, 2003.
Revenues for the three-month period ended March 30, 2003 were
$2,025,000, compared with revenues of $2,488,000 for the same
period one year ago. The Company reported a net loss applicable
to common stockholders of $2,181,000 for the first quarter of
2003, compared with a net loss applicable to common stockholders
of $3,482,000 for the first quarter of 2002.
Revenues for the Company's manufacturing segment for the three-
month period ended March 30, 2003 were $1.2 million, compared
with $1.5 million for the comparable period in fiscal 2002, and
revenue for the distribution segment were $770,000, compared
with $1.0 million for the comparable period in fiscal 2002.
OSE USA, Inc.'s March 30, 2003 balance sheet shows a working
capital deficit of about $33 million, and a total shareholders'
equity deficit of about $39 million.
On April 21, 2003, the Company announced the planned shut down
of its US manufacturing segment on or before June 30, 2003. The
Company plans to sell the entire manufacturing segment to a
third party or liquidate the assets through an auction house and
use the net proceeds to pay down or reduce the liabilities of
the segment. Any excess proceeds or remaining liabilities will
remain with the distribution segment.
Founded in 1992 and formerly known as Integrated Packaging
Assembly Corporation, OSE USA, Inc. has been the nation's
leading onshore advanced technology IC packaging foundry. In May
1999 Orient Semiconductor Electronics Limited, one of Taiwan's
top IC assembly and packaging services companies, acquired
controlling interest in IPAC, boosting its US expansion efforts.
The Company entered the distribution segment of the market in
October 1999 with the acquisition of OSE, Inc. In May 2001 IPAC
changed its name to OSE USA, Inc. to reflect the company's
strategic reorganization.
Through its offshore manufacturing affiliates, San Jose-based
OSE USA will continue to deliver competitive cost and quality in
moderate volumes with fast cycle times relative to its offshore
competitors. The company's close proximity to its customers
allows OSE USA to provide dynamic, quick-response, application-
specific packaging solutions to customers worldwide. The
company's latest services include Micro Lead frame, Flip Chip,
and Chip-Scale package assembly and manufacturing.
OSE USA offers these services to support its customers'
engineering, pre-production, low volume production and hot lot
requirements. The company will continue to develop and lead in
the areas of microelectronic packaging technology in the design,
packaging, and electrical testing industry. OSE USA's customers
include IC design houses, OEMs, and manufacturers. For more
information, visit OSE USA's Web site at http://www.ose-usa.com
OUTSOURCING SOLUTIONS: Case Summary & Largest Unsec. Creditors
--------------------------------------------------------------
Lead Debtor: Outsourcing Solutions, Inc.
390 South Woods Mill Road
Suite 350
Chesterfield, Missouri 63017
dba OSI Holdings Corp.
Bankruptcy Case No.: 03-46349
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Union Financial Services Group, Inc. 03-45870
Asset Recovery and Management Corp. 03-46323
The Union Corporation 03-46324
Jennifer Loomis and Associates, Inc. 03-46325
OSI Outsourcing Services, Inc. 03-46326
OSI Collection Services, Inc. 03-46327
Transworld System Inc. 03-46329
OSI Support Services, Inc. 03-46330
American Recovery Company, Inc. 03-46331
Gulf States Credit, L.L.C. 03-46332
C.S.N. Corp. 03-46333
PAE Leasing, LLC 03-46334
General Connector Corporation 03-46335
Coast to Coast Consulting, LLC 03-46336
Greystone Business Group, LLC 03-46337
U.C.O. M.B.A. Corporation 03-46338
Perimeter Credit, LLC 03-46339
UCO Properties, Incorporated 03-46340
Union-Specialty Steel Casting Corporation 03-46341
OSI Portfolio Services, Inc. 03-46342
North Shore Agency, Inc. 03-46343
OSI Outsourcing Services International, Ltd 03-46344
Payco American International Corp. 03-46345
University Accounting Services, LLC 03-46346
Pacific Software Consulting, LLC 03-46347
Professional Recoveries, Inc. 03-46348
Qualink, Inc. 03-46350
RWC Consulting Group, L.L.C. 03-46352
Indiana Mutual Credit Association, Inc. 03-46353
Grable, Greiner & Wolff, Inc. 03-46354
Type of Business: The Debtor and its subsidiaries are
collectively one of the largest providers of
business process outsourcing, or BPO,
receivables services in the U.S.
Chapter 11 Petition Date: May 12, 2003
Court: Eastern District of Missouri (St. Louis)
Judge: Barry S. Schermer
Debtors' Counsel: Gregory D. Willard, Esq.
Bryan Cave LLP
One Metropolitan Square
211 N. Broadway,
Ste. 3600
St. Louis, MO 63102
Tel: (314) 259-2000
Total Assets: $626,659,000
Total Debts: $699,289,000
1. Outsourcing Solutions, Inc.'s 20 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
RWC Consul Sub. Promissory Note $7,589,000
EXPERIAN $335,405
Dept. 1971
Los Angeles, CA 90088-1971
Ervin Marketing Creative Marketing $120,199
Communications, Inc.
Falk Harrison Creative Vendor $46,369
Benefit Services Group Benefits $33,288
Ceridian Benefits $27,463
Humana Healthcare Plans Benefits $18,884
Ria Group Computer $13,476
Heritage Communications Marketing $12,502
Madison Dearborn Partners, Consulting $9,434
LLC
Direct Impact Vendor $6,269
American Express Co., Inc. Travel $5,707
Wellbridge Vendor $5,576
CAN Trust Benefits $5,253
Phoenix Business Vendor $2,800
Technologies Group, Inc.
J Damico Marketing Vendor $2,700
Federal Express Corp. Express Mail $2,330
Equity Corporate Housing Vendor $1,953
Henson & Efron Attorney $1,769
2. Union Financial Services Group's 2 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
FleetBoston Financial, as Bank Loan $461,100,000
Administrative Agent
Attn: Andrew J. Maidman
777 Main Street
Hartford, CT 06115
Tel: 212-506-2500
Wilmington Trust Company Bond Indebtedness $110,164,000
Rodney Square N
1100 N. Market Street
Wilmington, DE 19890
Tel: 302-652-2378
Fax: 800-523-2378
3. Asset Recovery and Management Corp's 5 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
Gallas & Schultz Attorney $112
AT&T Communication Usage $33
Hemar & Rousso LLP Vendor $25
Ameritech Communication Usage $5
4. The Union Corporation's 9 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
Sciences Int'l, Inc. Union $12,661
Blasland, Bouck & Lee Attorney $4,733
Conant Corp. Attorney $4,489
Enviro-Sciences, Inc. Union $1,773
Water Revenue Bureau Vendor $56
Verizon Communication Usage $28
Environmental Protection Unliquidated
Agency
5. Jennifer Loomis and Associates, Inc.'s 20 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
TMP Worldwide Recruitment $3,094
Corporate Express Office Supplies $2,077
Presort Direct Postage/Shipping $1,608
NDC Health EDI Services Vendor $1,544
Xerox Corporation Equipment Leases $1,309
Medifax Edi Search Investigation $1,180
Facs Records Centre Vendor $961
Boyle Fredrickson Newholm Attorney $711
Stein & Gratz
APS Utilities $653
CDW Computer Centers Inc. Computer $537
Relizon Printed Materials $509
Federal Express Corp. Express Mail $407
Ingenix Publishing Group Express Mail $400
Vilar Arts Inc. Office Supplies $379
U.S. Postmaster Postage/Shipping $375
Building Services Inc. Facilities Cost $311
MPC Fuelmarc Office Supplies $292
G&R Janitorial Services Facilities Cost $280
Unisource Worldwide Inc. Office Supplies $254
6. OSI Outsourcing Services' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
Randstad Contract Labor $167,787
CDW Computer Centers Inc. Computer $48,482
Management on Call Contract Labor $45,862
Avaya Inc. Communications Non-Usage $22,178
Sherion Corp. Contract Labor $15,244
Corporate Express Office Supplies $12,530
Area Communications Company Facilities Cost $11,527
AT&T Communication Usage $9,758
Presido Investments T/A Space Rent $9,207
Pointe Corridor Centre IV
Banksville Express Vendor $8,781
Printing & Quick Copy
Center IN
Verizon Communication Usage $7,810
Pacific Interpreters Consulting $7,650
Bear Construction Co. Vendor $7,610
Federal Express Corp. Express Mail $7,324
Building Service Inc. Facilities Cost $7,322
Choice Point Public Search & Investigation $7,309
Records Inc.
American Express Company, Travel $7,171
Inc.
Substance Abuse Management Recruitment $6,832
Inc.
Ajilon Office Contract Labor $5,646
7. OSI Collection Services' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
PAR3 Communications Inc. Search & Investigation $125,010
Sprint Communication Usage $85,740
American Express Company, Travel $67,688
Inc.
FirstLogic, Inc. Computer $59,116
Avaya Inc. Communications Non-Usage $42,398
Corporate Express Office Supplies $39,827
Lowther Johnson Joyner Attorney $38,031
Lowther Cully & Housely LLC
TMP Worldwide Recruitment $33,357
Federal Express Corp. Express Mail $33,305
Decision One Corp. Computer $32,923
Sungard Recovery Services Computer $25,595
Inc.
Drake Beam Morin Inc. Consulting $24,200
United Mailing Service Inc. Postage/Shipping $24,001
Experian Search & Investigation $21,708
Mail Movers Postage/Shipping $21,332
BHC Company Vendor $19,370
EMC 2 Computer $18,883
Vilar Arts Inc. Office Supplies $18,869
Worldcom Communication Usage $18,491
8. Transworld System Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
TMP Worldwide Recruitment $14,000
Unisys Corporation Computer $7,417
Stephens Lynn Klein Lacava Attorney $4,346
Hoffman & Puya P.A.
Stewart, Terry TSI Reps $4,276
PSI Group Postage/Shipping $3,894
Bellsouth Communication Usage $3,701
Verizon Communication Usage $3,312
Powerware Global Services Facilities Cost $3,144
Promoco Vendor $2,691
Baker Miller Markoff & Attorney $2,636
Krasny LLC
Machol & Hohannes PC Attorney $2,508
SBC Vendor $2,342
Dell Marketing LP Computer $2,030
Esrtad & Remer Attorney $1,626
Xerox Corp. Equipment Leases $1,547
Harger Howe & Assoc., Ltd. Recruitment $1,373
GIE Marketing $1,295
Dallas Morning News Recruitment $1,206
Midtown Executives, Inc. Postage/Shipping $1,201
9. OSI Support Services, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
AT&T Communication Usage $38,696
Seyfarth Shaw Attorney $11,462
Drake Beam Morin Inc. Consulting $3,000
Exp@nets Inc. Vendor $1,845
Substance Abuse Mgt Inc. Recruitment $1,652
American Express Company, Travel $776
Inc.
Vilar Arts Inc. Office Supplies $690
Puerto Rico Telephone Co. Communication Usage $674
E-Z Mailing Center Postage/Shipping $602
American Building Facilities Cost $568
Maintenance
United Mailing Service Inc. Postage/Shipping $304
United Parcel Service Express Mail $234
Accurint Search & Investigation $217
Xerox Corporation Equipment Leases $120
Masterfiles, Inc. Vendor $120
Federal Express Corp. Express Mail $112
Beltmann Group, Inc. Facilities Cost $108
Acxiom/Infobase Corp. Search & Investigation $50
Compuserve Inc. Computer $25
10. American Recovery Company's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
11. Gulf States Credit's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
Hayt, Hayt & Landau Attorney - Cap One $34,688
Stillman Law Office Attorney - Cap One $32,773
Kemp, Schaeffer, Rowe & Attorney - Cap One $28,495
Lardier
Forster & Garbus PC Vendor $24,457
Hosto & Buchanan PLC Attorney - Cap One $18,838
Daniels Law Offices, PC Attorney - Cap One $16,118
Bleier & Cox Attorney - Cap One $13,064
Hudson & Felzer, P.C. Attorney - Cap One $12,491
Mann Bracken Layng & Krezo Attorney - Cap One $12,367
Zarzaur & Schwartz Vendor $12,298
Rubin & Rothman Attorney - Cap One $12,015
David A. Bauer, P.C. Attorney - Cap One $10,022
Aron & Associates PC Attorney - Cap One $9,425
Weltman Weinberg & Reis Attorney - Cap One $8,717
Beliveau & Fradette et al Attorney - Cap One $7,346
Reminger & Reminger Attorney $6,833
Floyd W. Bybee PLLC Attorney $5,000
American Int'l. Specialty Insurance $4,079
Lines Insurance C
Acxiom/Infobase Corp. Search & Investigation $3,840
12. C.S.N. Corp.'s Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
13. PAE Leasing, LLC's 3 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
American Express $2,738
Gary Frasier $13
14. General Connector Corp.'s Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
15. Coast to Coast Consulting's 10 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
American Express/Hotel $162,210
FedEx $975
Horizon One Communications $612
De Lage Landen $601
Staybridge Suites-TX $426
World Wide Source $400
Office Depot - BSD $236
Public Storage $45
Tena Info Bureau Services $32
16. Greystone Business Group's 2 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
TMP Worldwide Recruitment $462
17. U.C.O. M.B.A. Corporation's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
18. Perimeter Credit's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
Financial Credit Corp. Buyback/Pay on Sold $29,941
Acct.
North American Van Lines Facilities Cost $6,013
Asset Acceptance Corp. Buyback/Pay on Sold $5,989
Acct.
Avaya, Inc. Communications Non-Usage $1,760
The Doctors Center PA Vendor $1,110
JEA Utilities $930
American Building Facilities Cost $887
Maintenance
Sprint Communication Usage $688
SHL USA Inc. Recruitment $656
AT&T Communication Usage $647
TMP Worldwide Recruitment $577
Lexis-Nexis Search & Investigation $564
Ten Bits Caf, Vendor $423
Choice Point Public Records Search & Investigation $310
Inc.
Neoposit Leasing Equipment Leases $303
ADT Security Services Inc. Facilities Cost $267
Anything with Plants and Facilities Cost $242
Flowers
Meridian Park of Facilities Cost $149
Jacksonville Inc.
Weinberg & Jacobs LLP Vendor $148
19. UCO Properties, Inc.'s Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
20. Union-Specialty Steel Casting's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
21. OSI Portfolio Services' 12 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
American Express Co., Inc. Travel $95,168
Smith Curries & Hancock LLP Attorney $27,769
Dolan Information Search & Investigation $17,612
Citicorp Credit Services Buyback/Pay on Sold Acct. $14,820
Oracle Corporation Computer $13,190
LBSS, Inc. Computer $11,350
Worldcom Communication Usage $10,673
AT&T Communication Usage $10,359
Aron & Associates Attorney - Cap One $9,470
Vann Janitorial Services Facilities Cost $7,424
The Partners Group, LLC Vendor $6,672
22. North Shore Agency's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
Mercury Envelope Co., Inc. Printed Materials $268,455
100 Merrick Road
Rockville Center, NY
Tension Envelope Corp. Printed Materials $214,225
Interstate Envelope Mfg., Printed Materials $145,873
LLC
Relizon Printed Materials $111,861
Wallace Computer Services Printed Materials $63,859
IBM Corporation Computer $58,893
PSI Group Inc. Postage/Shipping $23,638
Corporate Express Office Supplies $23,486
SFI Printed Materials $20,174
Worldcom Communication Usage $15,683
Enterprise Group Printed Materials $16,311
Bradford Exchange, Ltd. Vendor $16,252
Parcel Logistics Int'l Postage/Shipping $11,541
East Bay Mechanical Facilities Cost $11,514
Row Resources Office Supplies $9,082
United Parcel Service Express Mail $7,385
Nortel Networks Communications Non-Usage $6,341
Innovative Mailing & Printed Materials $5,669
Shipping
Hasler Inc. Equipment Leases $5,340
23. OSI Outsourcing Services Int'l's Largest Unsecured
Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
24. Payco American International's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
25. University Accounting Service's 20 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
c/o Wilmington Trust Co. 11% Series B Senior $110,164,000
Rodney Square N Subordinated Note
1100 N Market Street
Wilmington, DE 19890
United Mailing Service Postage/Shipping $75,707
Inc.
Vestcom Wisconsin Inc. Postage/Shipping $33,039
Scholarchip Vendor $28,635
MTM Incorporated Office Supplies $15,052
Barnard College Vendor $12,067
National Student Loan Vendor $8,983
Clearinghouse
Vilar Arts Inc. Office Supplies $8,176
Kelly Temporary Services Contract Labor $6,324
United Parcel Service Express Mail $4,918
American Express Co., Inc. Travel $4,642
CDW Computer Centers Inc. Computer $3,465
Dell Marketing L.P. Computer $2,971
AT&T Communication-Usage $2,408
TMP Worldwide Recruitment $2,361
Milwaukee Envelope Inc. Printed Materials $2,009
Lasernet Vendor $1,658
Xerox Corporation Equipment Leases $1,493
Avaya Inc. Communications- Non Usage $1,450
NACUBO Marketing $1,304
26. Pacific Software Consulting's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
c/o Wilmington Trust Co. 11% Series B Senior $110,164,000
Rodney Square N Subordinated Note
1100 N Market Street
Wilmington, DE 19890
27. Professional Recoveries, Inc.'s 8 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
c/o Wilmington Trust Co. 11% Series B Senior $110,164,000
Rodney Square N Subordinated Note
1100 N Market Street
Wilmington, DE 19890
Zaragoza & Alvarado LLP Attorney $660
American Express Co., Inc. Travel $467
Envision Technologies Communications- Non-Usage $411
Federal Express Corp. Express Mail $211
Vilar Arts Inc. Office Supplies $69
Compuserve Inc. Computer $25
Experian Search & Investigation $1
28. Qualink, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
c/o Wilmington Trust Co. 11% Series B Senior $110,164,000
Rodney Square N Subordinated Note
1100 N Market Street
Wilmington, DE 19890
PAR3 Communications Inc. Search & Investigation $33,910
OFFICETEAM Contract Labor $17,952
CBS Personnel Services Contract Labor $7,911
American Express Co., Inc. Travel $6,719
Healthcare Staffing Contract Labor $6,204
Resources
Avaya, Inc. Communications Non-Usage $5,869
Federal Express Corp. Express Mail $5,622
SHL USA, Inc. Recruitment $4,741
Columbus Dispatch Recruitment $3,954
Corporate Express Office Supplies $3,763
Manpower Inc. Contract Labor $3,492
Vestcom Wisconsin Inc. Postage/Shipping $2,924
Pro Temps Staffing Contract Labor $2,869
Solutions
Nationwide Advertising Recruitment $2,660
Service
Glassman Consulting Consulting $2,400
Services
Xerox Corporation Equipment Leases $2,254
American Building Facilities Cost $2,213
Maintenance
Sprint Communication- Usage $2,208
Tena Infobureau Services Search & Investigation $2,095
29. RWC Consulting Group's 11 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
General Services $12,271
Administration
Boerne Gateway I, LLP $3,939
Summitech Consulting Services $2,924
Washington Management Group, Inc. $1,800
Paychex $745
Corporate Express $645
Verizon Southwest $627
AT&T Wireless Services $187
Decoty $47
Fed Ex $19
30. Indiana Mutual Credit Association's Largest Unsecured
Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
31. Grable, Greiner & Wolff's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Wilmington Trust Company 11% Series B Senior $110,164,000
Rodney Square N Sub. Note
1100 N. Market Street
Wilmington, DE 19890
OWENS CORNING: Wants Nod to Sell OC Metals Systems for $50 Mill.
----------------------------------------------------------------
J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, informs the Court that Debtors Exterior Systems, OC
Fiberglas Technology, Inc. and, for limited purposes, Owens
Corning, have entered into an Asset Purchase Agreement with
ALSCO Acquisition Corp., as the Purchaser, for, inter alia:
-- the sale of certain of Exterior Systems' assets and certain
of OC Fiberglas Technology's trademarks,
-- the assumption by the Purchaser of certain liabilities,
-- the execution and entry of a supply agreement and
transition services agreement, and
-- the Debtors' assumption and assignment to the Purchaser of
certain executory contracts and unexpired leases.
Thus, the Debtors seek the Court's approval pursuant to Section
363 of the Bankruptcy Code to:
-- sell, transfer, convey, assign and deliver the Purchased
Assets to ALSCO Acquisition Corp. or to a Successful Bidder
free and clear of liens, claims and encumbrances; and
-- execute and enter into a supply agreement and a transition
services agreement with the Purchaser.
Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, relates that the Debtors, in the exercise of their
considered business judgment, have determined to sell the assets
utilized in the business of Owens Corning Metal Systems, a
division of Exterior Systems, and that the best way to maximize
value for the benefit of the estates and creditors is to expose
the Assets for competitive bidding through an Auction pursuant
to the Sale Procedures. Exterior Systems, OC Fiberglas
Technology, Inc. and, for limited purposes, Owens Corning,
entered into the Asset Purchase Agreement with ALSCO on
March 19, 2003.
Mr. Pernick explains that Owens Corning Metal Systems is a
division of Exterior Systems, which is an indirect, wholly owned
subsidiary of Owens Corning. OC Metal Systems' fabricated
products essentially consist of residential aluminum building
products, which support both the traditional aluminum and vinyl
siding markets, i.e. as trim coil, soffits, sidings,
accessories, roof moldings and rainware used in the installation
of gutter systems. OC Metal Systems also manufactures specialty
coil and unpainted aluminum sheets. OC Metal Systems conducts
its business operations from these facilities:
1. a plant in Ashville, Ohio (owned);
2. a plant in Richmond, Virginia (owned);
3. a plant in Beloit, Wisconsin (leased);
4. a fabrication facility (leased) and a coil coating
facility (owned) in Roxboro, North Carolina; and
5. administrative offices in Raleigh, North Carolina
(leased).
Mr. Pernick reports that in connection with a strategic review
process of their business units, the Debtors have determined
that OC Metal Systems is a non-core and non-strategic business.
The Assets to be sold to the Purchaser, as provided in the
Agreement, include:
A. all of Exterior Systems' right, title, and interest in and
to certain parcels of real property, leases of real
property, machinery and equipment and other tangible
property, inventory, transferable business licenses,
transferable business contracts, marketing and advertising
materials, customer lists, supplier lists and books and
records, plant "know-how" exclusively related to the
business of OC Metal Systems, accounts and notes
receivable, prepaid expenses and charges, petty cash and
goodwill associated with the business of OC Metal Systems
or the Assets; and
B. all of OC Fiberglas Technology's right, title and interest
in certain trademarks.
Notwithstanding the Agreement, the Assets will be offered for
sale to bidders at the Auction, provided that the bidders must
offer to purchase all of the Assets in a single sale.
In connection with a strategic review process of the Debtors'
business units, Mr. Pernick relates that Owens Corning engaged
Goldsmith Agio Helms Securities, Inc., which engagement was
approved by this Court pursuant to an order dated November 25,
2002. Goldsmith was engaged to act as the Debtors' investment
banker to assist the Debtors in connection with the sale of
certain portions of the Debtors' operations, which the Debtors
have determined to be non-core and non-strategic. With respect
to the Purchased Assets, Goldsmith developed a list of 70
potential buyers and financial sponsors whom Goldsmith believed
in good faith to be financially qualified and potentially
interested in participating in a transaction for the sale of the
Purchased Assets, contacted prospects on the Debtors' behalf and
presented proposals and recommendations.
During the time that Owens Corning and Goldsmith were involved
in discussions leading to the execution of the engagement letter
with Goldsmith, Mr. Pernick states that the business unit leader
of OC Metal Systems advised the Debtors that he was interested
in proposing, with a financial backer, a buy-out of the assets
utilized in the business of OC Metal Systems. The Debtors
advised that they would consider a proposal, provided that the
management-led buy-out would not delay or interfere with the
Debtors' intended sale process and further provided that any
proposal, if executed, would be used by the Debtors as a
"stalking-horse" offer during the intended auction process.
Park Avenue Equity Partners, L.P. made a proposal in the form of
a letter of intent and term sheet, which the parties signed on
November 13, 2002. On November 26, 2002, Park Avenue advised
the Debtors that it was no longer interested in purchasing the
Purchased Assets and would not enter into an asset purchase
agreement.
Notwithstanding the letter of intent with Park Avenue, Mr.
Pernick adds that the Debtors also continued their solicitation
and marketing efforts through Goldsmith. Over 50 potential
buyers and financial sponsors contacted by Goldsmith executed
confidentiality agreements and were asked to submit proposals
based upon a confidential memorandum prepared by Goldsmith and
distributed in early December 2002. In early January 2003,
eight interested bidders submitted proposals to the Debtors.
After consideration of the proposals and determination that
three of the proposals were not acceptable, the Debtors made
management presentations and conducted plant tours with five of
the interested bidders.
Following on-going discussions with the remaining five
interested bidders, the Debtors determined that the offer
proposed by ALSCO was the highest and best offer and,
accordingly, entered into the Agreement for the sale of the
Purchased Assets.
The Debtors propose to sell the Assets to ALSCO pursuant to the
Agreement or in whole to the highest and best successful bidder
at the Auction, as determined by the Debtors in accordance with
the terms of the Sale Procedures Order and the Sale Procedure
and as ultimately approved by the Bankruptcy Court. The
purchase price for the Purchased Assets is $50,000,000 in cash
plus Assumed Liabilities, subject to certain adjustments that
may be applied. (Owens Corning Bankruptcy News, Issue No. 51;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Court OKs Claims Settlement with Calif. Water Board
----------------------------------------------------------------
Pacific Gas and Electric Company sought and obtained the Court's
authority to enter into, and perform its obligations under, a
Consent Judgment resolving ongoing claims by the People of the
State of California, ex. rel., California Regional Water Quality
Control Board, Central Coast Region.
The Court also lifted the automatic stay to the extent
applicable to enable the Regional Water Quality Control Board to
file a civil action against PG&E before the California Superior
Court for the County of San Luis Obispo with respect to the
claims referenced in the Consent Judgment.
The Regional Water Quality Control Board asserted certain claims
against PG&E arising from the intake and discharge of seawater
associated with its Diablo Canyon Power Plant operation. The
Consent Judgment will settle the Claims and require PG&E to
implement and fund various actions designed to enhance and
preserve a coastal marine habitat, including the dedication of a
conservation easement that restricts the future development of
land PG&E owns and the funding of over $6,250,000 for projects
and monitoring to protect the beneficial uses of coastal marine
waters in the Diablo Canyon Plant's vicinity.
The Diablo Canyon Plant consists of two existing electrical
power generation units using up to 2,540,000 gallons per day of
seawater for the primary purpose of main condenser cooling. The
Plant is located 12 miles southwest of San Luis Obispo.
In connection with its Plant operation, PG&E holds a National
Pollution Discharge Elimination System and related California
Waste Discharge Requirements. Pursuant to the Permits, PG&E
discharges heated seawater from the Plant back into the ocean.
The Permit contains numerous conditions and limitations relating
to the discharge of heated seawater, including:
-- the temperature of the discharged water;
-- the existence of objectionable aquatic growth or the
degradation of indigenous biota or marine communities
that may result from the discharges;
-- the adverse effects on the beneficial uses of the
receiving water that may result from the discharges; and
-- the creation of a nuisance or pollution.
The Regional Water Quality Control Board complained that the
discharges of heated seawater from the Plant, which have
occurred over the course of many years, have violated some of
these limitations and conditions due to the alleged degradation
of marine habitat beneficial uses. Based on these violations,
the Regional Water Quality Control Board asserted causes of
action against PG&E pursuant to the California Porter-Cologne
Water Quality Control Act, the federal Clean Water Act and
Section 12600 of the California Government Code. PG&E disputes
these allegations.
PG&E carefully considered the risks, complexity and expense
associated with further litigation of the disputes. After
lengthy negotiations, PG&E and the Regional Water Quality
Control Board have agreed to settle the Claims.
The basic terms of the settlement are:
1. Conservation Easement
PG&E would grant a conservation easement on its 2,013-acre
unimproved land located at the Plant's vicinity to the San Luis
Obispo Land Conservancy, a non-profit third party. The
Conservation Easement will restrict the development, use and
other activities on the Encumbered Land so as to preserve,
protect and enhance the "conservation values" of the property in
perpetuity. PG&E will also make a $200,000 one-time payment to
be used by the easement holder for easement oversight costs,
including monitoring, documentation and annual reporting,
participation in meetings, protective measures and emergency
measures to protect the conservation values. If for any reason,
any federal or state governmental entity or court requires PG&E
to comply with more stringent standards with respect to the
intake and outtake of seawater than exist under the Plant's
Permit, or requires PG&E to use cooling water system technology
that is more costly or burdensome than the system which existed
at the Plant as of August 2000, PG&E could rescind the
Conservation Easement, in which event the Regional Water Quality
Control Board may re-assert any claims it may have had against
PG&E existing before the date of the Consent Judgment.
2. Project Funding
PG&E will fund over $6,050,000 for other projects and monitoring
to protect beneficial uses of coastal marine waters in the
vicinity of Diablo Cove and to otherwise protect the environment
from harm. These costs are described as:
(a) Marine Resource Preservation and Enhancement Dedicated
Fund
PG&E would establish a $4,050,000 dedicated fund for the
purpose of preserving and enhancing marine resources. The
fund would be used on projects that would directly improve
permanent preservation, restoration, enhancement,
monitoring, and research of marine life, habitat and water
quality in coastal waters of San Luis Obispo County. The
fund would be administered by an entity selected and
agreed upon by PG&E and the Regional Water Quality Control
Board. The fund could be used for monitoring, reporting
on and evaluating the Conservation Easement, including
uses and activities on the Encumbered Land, erosion and
sediment discharge from or onto the Encumbered Land and
the conservation values of the Encumbered Land, including
terrestrial and near-shore marine inter-tidal and sub-
tidal resources.
(b) Abalone Restoration Project
PG&E would contribute $350,000 to the Abalone Restoration
Project administered by the California Department of Fish
and Game.
(c) Central Coast Ambient Monitoring Program
PG&E would contribute $150,000 per year for 10 years to
the Central Coast Ambient Monitoring Program, which was
established to monitor water quality in the California
Central Coast Region.
(d) Research Facility
PG&E would make its marine biology laboratory research
facility available to local educational and scientific
groups for a period of 10 years and would provide a
$100,000 start-up grant for such usage and up to $5,000
per year for water and electricity costs.
Of the Project funds, $4,855,000 was deposited into an escrow
account.
3. Receiving Water Monitoring-Program
PG&E would no longer be required to perform certain ecological
studies and water monitoring as it is currently required to do
pursuant to Monitoring and Reporting Program No. 90-09, as
PG&E's responsibilities with respect to such matters would be
replaced by its participation in Central Coast Ambient
Monitoring Program. (Pacific Gas Bankruptcy News, Issue No. 57;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
P-COM INC: Reports Revised Results for First Quarter 2003
---------------------------------------------------------
P-Com, Inc. (OTC Bulletin Board: PCOM.OB), a worldwide provider
of wireless telecom products and services, reported revised
results for first quarter 2003 to account for certain
adjustments related to discontinued operations and the
impairment of a portion of property, plant and equipment related
to its point-to-multipoint product line.
As a result of these adjustments, net loss before discontinued
operations for the quarter was $8.5 million, or $.23 per share,
compared to $10.3 million, or $.32 per share for the fourth
quarter of 2002, and $8.1 million, or $.48 per share, for the
same period in 2002. The Company recorded a loss on discontinued
operations of $1.9 million, or $0.05 per share, in the quarter
arising from discontinuing its services business.
Net product sales previously reported were unchanged. Net
product sales from continuing operations were $4.6 million (not
including $946,000 of service sales) for the quarter ended March
31, 2003, compared to $7.4 million in the fourth quarter of 2002
and $7.8 million for the corresponding quarter in 2002.
Operating expenses for the quarter were $4.5 million, compared
to $6.0 million for the fourth quarter of 2002 and $9.0 million
for the corresponding period in 2002.
P-Com's complete financial statements for the quarter ended
March 31, 2003 are contained in the company's quarterly report
on Form 10-Q filed with the Securities and Exchange Commission
on May 15, 2003.
P-Com, Inc., whose December 2002 balance sheet shows a total
shareholders' equity deficit of about $15 million, develops,
manufactures, and markets point-to-point, spread spectrum and
point-to-multipoint, wireless access systems to the worldwide
telecommunications market. P-Com broadband wireless access
systems are designed to satisfy the high-speed, integrated
network requirements of Internet access associated with Business
to Business and E-Commerce business processes. Cellular and
personal communications service (PCS) providers utilize P-Com
point-to-point systems to provide backhaul between base stations
and mobile switching centers. Government, utility, and business
entities use P-Com systems in public and private network
applications. For more information visit http://www.p-com.com
PEREGRINE SYSTEMS: Files 3rd Amended Plan & Disclosure Statement
----------------------------------------------------------------
Peregrine Systems, Inc. (OTC: PRGNQ), a global provider of
consolidated asset and service management software, filed its
Third Amended Plan of Reorganization and Disclosure Statement
with the U.S. Bankruptcy Court for the District of Delaware in
Wilmington.
Peregrine filed the amended Plan and Disclosure Statement in
preparation for and in connection with the May 20 hearing for
considering approval of the Disclosure Statement. Peregrine
filed the original plan on March 31, and submitted a second
amended plan on April 29.
On June 9 and 10, the Bankruptcy Court plans to hear evidence on
and determine the company's enterprise value for purposes of the
Plan's confirmation, and the court is scheduled to consider
confirmation of Peregrine's Plan on July 8 and 9.
Peregrine filed a voluntary Chapter 11 petition on Sept. 22,
2002 after accounting irregularities came to light, requiring a
restatement of 11 quarters.
Founded in 1981, Peregrine Systems develops and sells
application software to help large global organizations manage
and protect their technology resources. With a heritage of
innovation and market leadership in Consolidated Asset and
Service Management software, the company's flagship offerings
include ServiceCenter(R) and AssetCenter(R), complemented by
employee self service, automation and integration capabilities.
Headquartered in San Diego, Calif., Peregrine's solutions
facilitate the automation of business processes, resulting in
increased productivity, reduced costs and accelerated return on
investment for its more than 3,500 customers worldwide.
SEDONA CORP: First Quarter 2003 Results Show Marked Improvement
---------------------------------------------------------------
SEDONA(R) Corporation (OTCBB:SDNA) -- http://www.sedonacorp.com
-- the leading provider of Customer Relationship Management
solutions for small and mid-sized financial services
organizations, announced financial results for the first quarter
ended March 31, 2003. Revenues for the first quarter of $568,000
were 14% higher than the fourth quarter of 2002 and 21% lower
than the same quarter a year earlier.
The Company reported a net loss for the first quarter of 2003 of
$648,000, a 58% decrease from the net loss of $1,539,000 for the
fourth quarter of 2002 and a 62% decrease from the net loss of
$1,727,000 for the first quarter of 2002. Gross profit reported
for the quarter was $352,000 versus $218,000 in the year ago
quarter, and $32,000 in the fourth quarter of 2002.
Additionally, accounts payable and accrued expenses were reduced
in total by $1,028,000 during the first quarter of 2003.
The Company's March 31, 2003 balance sheet shows a working
capital deficit of about $2 million, and a total shareholders'
equity deficit of about $920,000.
"93% of first quarter revenues were generated from our
distribution partners which positions us well to build our
indirect sales strategy and highlights the outstanding quality
and commitment of our partners," said Marco Emrich, SEDONA's
President and CEO. Mr. Emrich commented further that, "The
operational improvements were a direct result of the
restructuring of our business and places SEDONA with an improved
balance sheet, lower costs, and higher gross profits. It is also
important to note that included in our income statement for the
first quarter of 2003 were charges of $438,000 for amortization,
depreciation and interest accretion, which did not require
current quarter cash outflow."
Recent Company Highlights:
-- The Company completed a $1.2 million financing package in
mid-January that allows SEDONA to meet its current working
capital requirements and continue to execute its indirect
business strategy.
-- SEDONA's Board of Directors appointed two new members, David
R. Vey and Victoria V. Looney.
-- AIG Technologies signed a reseller agreement with SEDONA to
offer the Intarsia CRM solution to AIGT's customers and
prospects. AIG Technologies is a member company of American
International Group, Inc. (NYSE: AIG) and a leading provider
of insurance software and solutions.
-- A new core processing partner, COCC -- http://www.cocc.com--
of Avon, Connecticut, licensed SEDONA's IntarsiaT software
solution. Under the agreement, COCC will integrate Intarsia
with INSIGHT, their next generation enterprise banking
system.
-- Intarsia V4.0 was released which is fully internationalized
that now opens up markets outside of North America for new
and existing SEDONA partners to sell Intarsia.
-- The Company achieved a 62% decrease in losses in 1st quarter
vs. a year ago.
-- The Securities and Exchange Commission announced on
February 27th that they had filed a settled civil action in
the Southern District of New York.
-- http://www.sec.gov/news/press/2003-26.htm-- regarding SEC
alleged manipulation of SEDONA common stock. The defendants
named in the SEC complaint have settled the civil action with
the SEC, and while not admitting or denying the allegations,
have agreed to pay, on a joint and several basis, a $1
million civil penalty.
As a subsequent event to Q1, the Company announced that it has
filed a civil action lawsuit against numerous defendants in the
United States District Court, Southern District of New York
relating to the alleged manipulation of its stock. The Company
is represented in this action by the law firms of O'Quinn,
Laminack, & Pirtle and Christian, Smith, & Jewell both of
Houston, Texas.
SEDONA(R) Corporation (OTCBB: SDNA) is the leading technology
and services provider that delivers Customer Relationship
Management solutions specifically tailored for small and mid-
sized financial services businesses such as community banks,
credit unions, insurance companies, and brokerage firms.
Utilizing SEDONA's CRM solutions, financial services companies
can effectively identify, acquire, foster, and retain loyal,
profitable customers.
Leading financial services solution providers such as Fiserv,
Inc., Open Solutions Inc., COCC, Sanchez Computer Associates,
Inc., Financial Services, Inc., and AIG Technologies leverage
SEDONA's CRM technology to offer best-in-market CRM to their own
clients and prospects. SEDONA Corporation is an Advanced Level
Business Partner of IBM(R) Corporation.
For additional information, visit the SEDONA Web site at
http://www.sedonacorp.com
SEITEL INC: Noteholders Extend Standstill Agreement Until May 30
----------------------------------------------------------------
Seitel, Inc. (OTC Bulletin Board: SEIE; Toronto: OSL) reported
revenues for the quarter ended March 31, 2003 of $30.3 million.
This represents a 35% increase compared with revenues for the
quarter ended March 31, 2002 of $22.5 million. Income from
operations for the 2003 first quarter was $3.1 million compared
to a loss from operations of $5.8 million in the 2002 first
quarter.
For the quarter ended March 31, 2003, the Company reported a net
loss of $2.1 million compared to a net loss of $18.3 million in
the same quarter a year ago. Results for the first quarter of
2003 include certain costs and charges totaling $4.0 million
composed of (i) $3.8 million of costs and expenses related to
the Company's restructuring efforts, various litigation and
costs related to certain former employees; and (ii) $0.2 million
of charges related to the Company's discontinued oil and gas
operations. Partially offsetting these costs and charges was a
gain of $1.4 million relating to a strengthening of the Canadian
dollar. This gain is included in and reduces reported SG&A
expenses for the first quarter of 2003. Results for the first
quarter of 2002 included certain charges totaling $12.1 million
composed of (i) $11.2 million in charges for the cumulative
effect of a change in accounting policy for amortizing its
seismic data library; and (ii) $0.9 million of charges related
to the Company's discontinued oil and gas operations.
Larry Lenig, President and Chief Executive Officer of Seitel
said, "First quarter results reinforce the momentum Seitel has
established during the past year. The rebound in cash licensing
sales coupled with solid performance in our data acquisition
activities continues to underscore the fundamental soundness of
our business model. Since the beginning of the year, we have
undertaken a total of eight new data acquisition projects in the
U.S. and Canada. Field work on the Canadian programs has been
completed and the U.S. projects are progressing on schedule.
These projects, coupled with library additions and enhancements
from our other activities add about 900 square miles to our data
library and further broaden and enhance the value of the data
library for our customers. We remain appreciative of the
dedication, hard work, enthusiasm and skill of Seitel's people
and heartened by the commitments and reactions of our customers,
vendors and our other business partners."
The increase in total revenue was primarily due to an increase
in cash licensing sales, net of deferrals, and an increase in
selections between periods. Cash licensing sales in the first
quarter of 2003 generally were in line with the Company's
results in the most recently completed three prior quarters and
increased more than fourfold compared with the first quarter of
2002 when cash licensing sales were lower than any quarterly
period since 1993. First quarter 2002 cash licensing sales were
negatively impacted by lower than expected energy commodity
prices, which led to an overall slowdown in spending on certain
oil and gas activities, including seismic data. Uncertainty in
the energy industry in the aftermath of the publicity regarding
Enron's collapse exacerbated the general market sluggishness in
the first quarter of 2002. Deferrals in the first quarter of
2003 increased substantially compared to the same period a year
ago, and the increase is related directly to the higher level of
cash licensing sales during the quarter. Selections increased by
$2.2 million, or 23%, in the first quarter of 2003 compared with
the corresponding period in 2002. This increase is in line with
generally higher levels of activity during the first quarter of
2003. Solutions and other revenue increased by more than
$800,000 in the first quarter 2003 compared with the same
quarter of 2002 and reflects deliveries of data associated with
higher levels of cash licensing and selections in the most
recent period as well as the capture of activity previously
outsourced to third parties.
In connection with its restructuring efforts, the Company and
its Noteholders have amended their existing standstill agreement
to require that the documents necessary for a restructuring be
completed by May 30, 2003. Previously, these documents were
required to be completed by May 15, 2003.
Seitel markets its proprietary seismic information/technology to
more than 400 petroleum companies, licensing data from its
library and creating new seismic surveys under multi-client
projects.
SERVICEWARE TECHNOLOGIES: Working Capital Deficit Topping $1.1MM
----------------------------------------------------------------
ServiceWare Technologies, Inc. (OTCBB:SVCW) announced financial
results for the first quarter ending March 31, 2003 and provided
an updated forecast for the second quarter of 2003.
First Quarter 2003 Financial Results
The Company reported first quarter revenues totaling $2.1
million. Total operating expenses for the first quarter of 2003
were $2.7 million, a decrease of 12 percent compared with $3.1
million for the fourth quarter of 2002. The net loss for the
first quarter was $1.9 million, compared with a net loss of $2.2
million for the fourth quarter of 2002.
First Quarter 2003 Highlights
During the quarter, the Company added several new customers,
including GE Medical Systems and Aurora Public Schools. The
Company also secured repeat business from existing customers,
including Texas Instruments, SchlumbergerSema, Fifth Third
Bancorp, IBM Consulting Services (BTO), and C3i.
The Company released a new version of its knowledge management
solution for customer service and support, ServiceWare
Enterprise(TM) 5.0, during the first quarter of 2003. Highlights
of this release include the 100% J2EE compliant architecture,
easy-to-use Graphical User Interfaces, robust quality assurance
and workflow tools, system-wide knowledge personalization tools
and knowledge segmentation functionality.
ServiceWare Technologies's March 31, 2003 balance sheet shows a
working capital deficit of about $1.1 million, while its total
shareholders' equity further dwindled to about $730,000 from
about $2 million three months ago.
Second Quarter 2003 Financial Forecast
The Company forecasts that it will report positive EBITDA
(earnings before interest, taxes, depreciation and amortization)
for the second quarter of 2003.
"We are optimistic that we will improve our financial
performance and achieve EBITDA positive results during the
current quarter," states Kent Heyman, president and CEO of
ServiceWare Technologies, Inc."
ServiceWare is a leading provider of Web-based knowledge
management solutions for customer service and support.
ServiceWare software empowers organizations to deliver superior
service while reducing support costs. Powered by ServiceWare's
Cognitive Processor(R), a patented self-learning search
technology, ServiceWare Enterprise(TM) and ServiceWare
Express(TM) enable businesses to develop and manage a repository
of knowledge to effectively answer inquiries over the Web and in
the call center. Leading organizations have implemented
ServiceWare software including EDS, H&R Block, AT&T Wireless,
Cingular Wireless, Fifth Third Bancorp, Green Mountain Energy,
Reuters, and QUALCOMM. Visit http://www.serviceware.comto learn
more about the company.
SLATER STEEL: Delays Filing of 2002 and Q1 2003 Fin'l Statements
----------------------------------------------------------------
Slater Steel Inc. (TSX: SSI ) announced that there will be a
delay in the filing of its audited comparative financial
statements (including the Management's Discussion and Analysis
related thereto) for the fiscal year ended December 31, 2002
and a delay in the filing of its interim unaudited financial
statements (including the MD & A) for the period ended March 31,
2003, beyond the date such statements are required to be filed
under applicable securities laws. The 2002 Financial Statements
are required to be filed on or prior to May 20, 2003, which is
140 days after the end of Slater's fiscal year, and the 2003
First Quarter Statements are required to be filed on or prior to
May 30, 2003, which is 60 days after the end of the quarter.
Slater is issuing this news release under the requirements of
Policy 57-603 of the Ontario Securities Commission.
On March 31, 2003, Slater announced that it had obtained a
commitment for a multi-year asset based revolving credit
facility of up to $200 million together with a commitment for a
multi-year $50 million term facility. The proceeds of the new
credit facilities will be used to repay amounts due under
Slater's existing credit facilities and to execute Slater's
business plan. The completion of the new credit facility is
subject to usual conditions (including the settlement of an
inter-creditor agreement between the asset based lender and
Slater's existing lenders) and therefore there can be no
guarantee that the facilities will close. The Company is
actively engaged in seeking to close the facilities by May 30,
2003. However, the facilities are not expected to be in place in
time to permit the filing of the 2002 Financial Statements by
the May 20, 2003 filing deadline or in time to permit the filing
of the 2003 First Quarter Statements by the May 30, 2003 filing
deadline, with such statements giving effect to the new credit
facilities.
Slater believes that it is in the interests of its stakeholders
and appropriate to delay the release of the 2002 Financial
Statements and the 2003 First Quarter Statements until the new
credit facilities have been put in place, due to the significant
impact under Canadian generally accepted accounting principles
the closing would have on the financial statements and the MD &
A with respect to debt classification and related note
disclosure.
Slater proposes to issue the 2002 Financial Statements and 2003
First Quarter Statements by June 20, 2003, and in any event by
July 20, 2003. Unaudited financial results for the year ended
December 31, 2002 were released on March 6, 2003.
The Ontario Securities Commission has indicated that, in
accordance with its Policy 57-603, should Slater fail to file
the 2002 Financial Statements by July 20, 2003 or the 2003 First
Quarter Statements by July 30, 2003, a cease trade order may be
imposed by the applicable securities commissions requiring that
all trading of securities of Slater cease for such period
specified in the order. During the period of time that the 2002
Financial Statements and 2003 First Quarter Statements remain
unfiled, the directors, senior officers and insiders of Slater
will not trade in securities of Slater.
Slater intends to satisfy the provisions of the alternate
information guidelines of Policy 57-603 for as long as it
remains in default of the financial statements filing
requirements of applicable securities laws.
As a result of the delay in the release of the 2002 Financial
Statements, Slater will postpone for up to 60 days its annual
meeting originally scheduled for June 20, 2003. Slater will also
delay the filing of its Annual Information Form for the year
ended December 31, 2002 until such time as its 2002 Financial
Statements are filed.
Slater Steel is a mini mill producer of specialty steel
products. The Company manufacturers and markets bar and flat
rolled stainless steels, carbon and low alloy steel bar
products, vacuum arc and electro slag remelted steels, mold,
tool and die steels and hollow drill and solid mining steels.
The Company's mini mills are located in Fort Wayne, Indiana;
Lemont, Illinois; Hamilton and Welland, Ontario; and Sorel-
Tracy, Quebec.
* * *
As previously reported, Slater Steel Inc., obtained a waiver of
any default of its financial covenants up to March 31, 2003, and
was required to secure binding commitments by January 31, 2003,
to enable the Company to repay a significant portion of its
credit facilities.
Slater Steel's bankers waived the requirement that the Company
secure binding commitments for new credit facilities by
January 31, 2003 to allow it time to complete negotiations with
lenders. In waiving this condition, the bankers require that
Slater Steel deliver a binding commitment letter providing for a
refinancing of the Company's credit facilities by March 31,
2003.
The Company stated that it continues in advanced negotiations
with lenders regarding the refinancing of its debt and that it
intends to, and believes that it will, satisfy this requirement
by securing new facilities to repay outstanding debt, or by
restructuring its current credit agreement with its existing
bankers.
SPECTRUM PHARMACEUTICALS: Red Ink Continues to Flow in Q1 2003
--------------------------------------------------------------
Spectrum Pharmaceuticals, Inc. (Nasdaq: SPPI) reported a net
loss for the first quarter ended March 31, 2003 of $1.7 million,
compared to a net loss of $6.3 million for the first quarter
ended March 31, 2002. The decrease in net loss during the first
quarter principally reflects the reduction in expenses caused by
the completion of a large clinical trial in April of 2002 as
well as cost reduction efforts implemented upon change in
management at the Company during August 2002.
For the first quarter, research and development expenses
decreased from $4.9 million in 2002 to $0.9 million in 2003. The
decrease in research and development expense reflects lower
expenses related to the completion of a large clinical trial in
April of 2002 and three smaller clinical trials in the second
and third quarter of 2002, and cost reduction efforts including
a major restructuring of the Company in August of 2002. General
and administrative expenses decreased from $1.5 million during
the first quarter of 2002 to $0.8 million during the first
quarter of 2003. The decline principally reflects a decrease in
salary and related expenses due to reductions in workforce
implemented at the Company during 2002.
Spectrum had cash and equivalents of $0.6 million on March 31,
2003, and during May 2003, the Company raised approximately $6.0
million through the sale of convertible preferred securities
(before offering costs and commissions estimated to be
$700,000). Shares of common stock outstanding on March 31, 2003
were 2,948,241.
At March 31, 2003, the Company's balance sheet shows a working
capital deficit of about $1.1 million, and a total shareholders'
equity deficit of about $550,000.
Spectrum Pharmaceuticals' primary focus is to develop in-
licensed drugs for the treatment and supportive care of cancer
patients. The Company's lead drug, satraplatin, is a phase 3
oral, anti-cancer drug being co-developed with GPC Biotech AG.
Elsamitrucin, a phase 2 drug, will initially target non-
Hodgkin's lymphoma. Eoquin(TM) is being studied in the treatment
of superficial bladder cancer, and may have applications as a
radiation sensitizer. The Company is actively working to
develop, seek approval for and oversee the marketing of generic
drugs in the U.S. Spectrum also has a pipeline of pre-clinical
neurological drug candidates for disorders such as attention-
deficit hyperactivity disorder, schizophrenia, mild cognitive
impairment and pain, which it is actively seeking to out-license
or co-develop. For additional information, visit the Company's
Web site at http://www.spectrumpharm.com
STERLING FIN'L: Fitch Withdraws BB- Trust Rating upon Redemption
----------------------------------------------------------------
Fitch Ratings withdraws its rating on Sterling Financial
Corporation's trust preferred securities, Sterling Capital Trust
I, due to redemption. These 9.5% trust preferred securities had
totaled $40 million.
Ratings Withdrawn:
Sterling Capital Trust I
-- Trust preferred stock 'BB-'
STEWART ENTERPRISES: Fitch Recalls BB+ Rating on Redeemed ROARS
---------------------------------------------------------------
Fitch Ratings has withdrawn the 'BB+' rating assigned to Stewart
Enterprises, Inc.'s 6.40% remarketable or redeemable securities
due May 1, 2013 due to the redemption of this issue. On May 1,
2003 Stewart announced that it exercised its right to redeemed
the $99.9 million outstanding ROARS rather than allow them to be
remarketed. Stewart's senior secured debt rating is 'BB+' and
senior subordinated notes rating is 'BB-'. The Rating Outlook is
Stable.
The redemption of the ROARS increases availability under
Stewart's $175 million revolver for which funds were reserved by
formula for amounts due under the ROARS. In connection with the
redemption, Stewart increased its secured term loan B under its
bank facility by $50 million rather than draw on the revolver.
Stewart's revolver was expected to have approximately $70
million of available funds after the redemption and payment of
the $12.7 million fee to the remarketing dealer for exercising
the remarketing right.
TELENETICS CORP: First Quarter 2003 Net Loss Balloons to $830K
--------------------------------------------------------------
Telenetics Corp. (OTCBB:TLNT), a provider of wired and wireless
data communications products for customers worldwide, reported
financial results for the quarter ended March 31, 2003.
Comparison of Results for Quarters
Ended March 31, 2003 and 2002
Net sales for the quarter ended March 31, 2003 were
approximately $2.4 million, a decrease of 44% as compared with
the $4.2 million in net sales for the quarter ended March 31,
2002, and a decrease of $1.1 million as compared with the
quarter ended Dec. 31, 2002.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") was a loss of $297,000 for the quarter ended
March 31, 2003, as compared with an EBITDA of $826,000 for the
quarter ended March 31, 2002.
Gross profit for the quarter ended March 31, 2003 was
approximately $673,000, a decrease of $706,000 or 51% as
compared with the $1,379,000 of gross profit for the quarter
ended March 31, 2002. Gross margin for the quarter ended March
31, 2003 was 28.5% of net sales, a decrease of 4.0% as compared
with the gross margin of 32.5% for the quarter ended March 31,
2002.
Net loss for the quarter ended March 31, 2003 increased by
$835,000 to $862,000 as compared with a net loss of $27,000 for
the quarter ended March 31, 2002. Net loss and EBITDA for the
quarter ended March 31, 2002 includes a gain on extinguishment
of debt of $713,000 relating to negotiated discounts on certain
litigation obligations and accounts payable.
Excluding the effect of the $713,000 gain on extinguishment in
the quarter ended March 31, 2002, net loss increased by $122,000
for the quarter ended March 31, 2003 as compared with the
quarter ended March 31, 2002.
Commenting on the quarter and the company's prospects, David
Stone, president of Telenetics stated: "The first quarter of
this year was a particularly difficult and challenging period
for us. We experienced an unexpected sharp decline in bookings
during the final two months of 2002 and the first two months of
2003, especially in the international portion of our business.
"This order shortfall caused revenue and income for the quarter
ended March 31, 2003 to fall well short of our expectations.
Also during this quarter, after two years of very substantial
difficulties and disputes, we reached an impasse with our
largest contract manufacturer, Corlund Electronics that resulted
in us filing a lawsuit against Corlund and completely suspending
any further business activity with them.
"This situation caused us to have to commit significant time and
resources to transitioning on an accelerated schedule the
manufacture of the majority of our products away from Corlund
Electronics to a combination of in-house manufacturing and
multiple new contract manufacturers.
"Additionally, due to our stock price triggering certain
unfavorable clauses in $4.4 million of our 2002 notes, which
originally bore interest at 6%, including the acceleration of
the due date from 2005 to current and the applicability of a 16%
default rate of interest, we concluded that a restructuring of
the terms of this indebtedness was a necessity. Therefore, we
committed substantial resources during the quarter to this non-
recurring project as well.
"Although these factors resulted in disappointing financial
performance for the quarter, we are encouraged by several
factors. First, beginning in March 2003, we have been
experiencing both improved new order bookings and increased
market activity. Despite the very slow start to the first
quarter, total bookings during the quarter ended March 31, 2003
were $3.1 million, which resulted in a backlog increase of more
than $700,000.
"We believe this is an indication that the negative pressures on
the overall business environment for Telenetics products are
beginning to ease. Although it remains very difficult to
forecast accurately, I am confident that our revenue and income
will improve during the current quarter.
"I am very pleased about our improvements in asset management.
Due to better inventory management and improved accounts
receivable turns, and despite an unexpectedly weak first quarter
in both revenue and income, we still achieved a positive cash
flow from operations of $173,000. This represents an improvement
of $1.7 million as compared to a negative cash flow from
operations of ($1.5 million) during the same quarter last year.
"We believe we have been successful in managing the transition
of manufacturing away from Corlund Electronics in time to
satisfy demand from our customers.
"We have also been successful in our efforts to restructure our
term debt. The due date of the 2002 notes has been amended to
March 1, 2006, and all defaults have either been renegotiated or
waived.
"Overall, I am optimistic that Telenetics is positioned to
improve liquidity and EBITDA in the coming quarters."
Based in Lake Forest, Telenetics designs, manufactures and
distributes wired and wireless data communications products for
customers worldwide. Telenetics offers a wide range of
industrial grade modems and wireless products, systems and
services for connecting its customers to end-point devices such
as meters, remote terminal units, traffic and industrial
controllers and remote sensors.
Telenetics also provides high-speed communications products for
complex data networks used by financial institutions, air
traffic control systems and public and private wireless network
operators. Additional information is available at
http://www.telenetics.com
As reported in Troubled Company Reporter's April 23, 2003
edition, the Company's auditors Haskell & White LLP stated in
its report for the period December 31, 2002: "The [Company's]
consolidated financial statements have been prepared assuming
that the Company will continue as a going concern...[T]he
Company has suffered recurring losses from operations, has used
cash in operations on a recurring basis, has an accumulated
deficit, and is involved in a dispute with a significant
contract manufacturer that, among other things, raise
substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty."
TIMCO AVIATION: 2002 Financial Results Enter Positive Territory
---------------------------------------------------------------
TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS)
announced its results of operations for the 2002 fiscal year.
Revenue for the year was $182.0 million, compared to revenue of
$264.1 million for 2001. Revenue includes $3.9 million in 2002
and $51.3 million in 2001 derived from operations that have been
closed or sold. Net income for 2002 was $7.0 million, compared
to a net loss of $141.2 million for 2001. Net income for fiscal
2002 includes an extraordinary gain of $27.3 million resulting
from the Company's capital and equity restructuring which
occurred in February 2002.
The Company also announced that it has entered into an agreement
with its principal stockholder to loan the Company $6.0 million
under a three-year promissory note. The funding will be received
over the next two months. These additional funds will be used
primarily for working capital. In connection with the new loan,
the Company has issued to the principal stockholder a warrant to
acquire, for nominal consideration, 30% of its outstanding
common stock (on a fully diluted basis) as of the day the
warrant is exercised.
Roy T. Rimmer, Jr., the Company's Chairman and Chief Executive
Officer, stated: "Although 2002 was a challenging year for the
aviation industry and for our company, we made very significant
strides over the course of the year. In 2002 we completed a
major capital and equity restructuring (which strengthened our
balance sheet and greatly reduced our future cash interest
requirements), refinanced all of our senior debt, resolved our
outstanding issues with Kellstrom Industries, settled our class
action litigation and sold Aerocell Structures. At the same
time, we have continued to expand our capability to provide
airframe heavy maintenance and related services while developing
a larger and more diverse customer base. We have also recently
secured a loan from our principal stockholder that we believe
will provide the working capital required to ride out this
period of turmoil in the airline industry."
Gil West, the Company's President and Chief Operating Officer
stated: "Our ability to provide a seamless, turnkey and cost
effective outsource solution for airframe heavy maintenance and
related services continues to pay off as airlines and air cargo
carriers look to reduce their operating costs. We remain
committed to advancing our leadership position in the airframe
heavy maintenance market by meeting and exceeding the
expectations of our customers, marketing our services to our
current and future customers, and operating our business as
efficiently and cost effectively as possible."
TIMCO Aviation Services, Inc. is among the largest providers of
fully integrated aviation maintenance, repair and overhaul
services for major commercial airlines, regional air carriers,
and air cargo carriers in the world. The Company currently
operates four MR&O businesses: TIMCO, which, with its four
active locations (Greensboro, N.C., Macon, Ga., Lake City, Fl.
and Goodyear, Az.), is one of the largest independent providers
of heavy aircraft maintenance services in North America;
Aircraft Interior Design and Brice Manufacturing, which
specialize in the refurbishment of aircraft interior components
and the manufacture and sale of PMA parts and new aircraft
seats; TIMCO Engineered Systems, which provides engineering
services to both our MR&O operations and our customers; and
TIMCO Engine Center, which refurbishes JT8D engines.
As reported in Troubled Company Reporter's April 9, 2003
edition, TIMCO Aviation Services, Inc., completed a significant
restructuring of its capital and equity, settled an outstanding
securities class action lawsuit, completed a refinance of all of
its senior debt obligations, sold one operating business and
acquired a second operating business, and completed an extensive
settlement agreement related to the sale of its redistribution
operations in 2000. All of these activities are accounted for in
the Company's results of operations for the year ended December
31, 2002.
TIMCO Aviation Services' September 30, 2002 balance sheet shows
a total shareholders' equity deficit of about $81 million.
TOUCH AMERICA: Delays Filing of Form 10-Q for March Quarter
-----------------------------------------------------------
Touch America Holdings, Inc. (OTC Bulletin Board: TCAHE) has
filed with the Securities and Exchange Commission a Notification
of Late Filing, Form 12b-25, on its Quarterly Report on Form
10-Q for the period ended March 31, 2003.
On March 31, 2003, Touch America announced a delay in filing its
2002 Annual Report on Form 10-K pending analysis of the
March 24, 2003 Interim Opinion and Award from the arbitrator
finding that Touch America owes Qwest Communications Corporation
$59.6 million (plus interest) in the arbitration proceedings
between Qwest and Touch America. There are other issues yet to
be decided by the arbitrator before a final decision is
rendered. The arbitration relates primarily to amounts owed by
the Company to Qwest for the Company's purchase of services
(expense items) and amounts owed by Qwest to the Company for our
sale of services (revenue items) that have arisen subsequent to
Touch America's June 30, 2000 acquisition from Qwest of the
wholesale, private line, long-distance and other
telecommunications services business in the former U S West 14-
state region.
The Company has not yet filed its 2002 Annual Report on Form
10-K. We are working to determine the impact this decision will
have on our 2002 consolidated financial statements. We believe
that restatement of financial statements for prior years will be
necessary. Our independent accountants, PricewaterhouseCoopers,
LLP, will audit the resulting financial statements.
This analysis has not been completed because of the complexity
of the issues and the determinations in the Interim Opinion and
Award. Until our analysis is completed and
PricewaterhouseCoopers can conclude its work on the financial
statements, the Company cannot file its 2002 Annual Report on
Form 10-K or its Quarterly Report on Form 10-Q for the period
ended March 31, 2003, nor can we predict when the reports will
be filed.
The SEC has reviewed our 2001 Annual Report on Form 10-K and our
Quarterly Report on Form 10-Q for the period ended September 30,
2002 and provided us with comments. Touch America is in the
process of responding to the comments. The purpose of the SEC
review process is to assist Touch America in compliance with the
applicable disclosure requirements and to enhance the overall
disclosure in future filings.
Touch America's common stock is currently trading on the Over-
the-Counter Bulletin Board; however, in accordance with OTC
Bulletin Board rules, the Company must be current with its SEC
filings. Accordingly, our stock will be delisted on May 22, 2003
if we are not current in our SEC reporting. If we are delisted
from the OTC Bulletin Board, our stock will continue to trade on
the "Pink Sheets."
As previously disclosed, Touch America faces a loss of liquidity
because of the need to fund capital expenditures and operations.
Our ongoing financial viability depends on our ability to
increase cash flow or secure outside financing. If we are unable
to timely achieve positive cash flow or obtain adequate
financing, we may be required to seek bankruptcy protection.
Touch America, Inc. is a broadband fiber-optic network and
product and services telecommunications company, providing
customized voice, data and video transport, as well as Internet
services, to wholesale and business customers. The company
provides the latest in IP, ATM and Frame Relay protocols and
private line services for transporting information with speed,
privacy and convenience. Touch America has approximately 400
employees in 14 states and the District of Columbia. Touch
America, Inc. is the telecommunications operating subsidiary of
Touch America Holdings, Inc. (OTC Bulletin Board: TCAHE). More
information can be found at http://www.tamerica.com
As previously disclosed, Touch America faces a loss of liquidity
because of the need to fund capital expenditures and losses from
operations. "If we are required to pay Qwest the amount in the
Interim Opinion and Award, we would experience a further
negative impact on our liquidity. Based on our cash available,
which is $20.5 million as of March 26, 2003, our ongoing
financial viability will depend on an ability to increase cash
flow or secure outside financing in amounts required to fund our
cash needs. We cannot predict whether we will be able to
generate sufficient cash to meet our needs. If we are unable to
timely achieve positive cash flow or obtain adequate financing,
we may be required to seek bankruptcy protection."
TROLL COMMS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Troll Communications L.L.C.
100 Corporate Drive
Mahwah, New Jersey 07430
Bankruptcy Case No.: 03-11508
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Troll Holdings, Inc. 03-11509
Troll Associates L.L.C. 03-11510
Troll Book Clubs L.L.C. 03-11511
Troll Home Clubs L.L.C. 03-11512
Troll Book Fairs L.L.C. 03-11513
Troll School & Library L.L.C. 03-11514
Troll Realty L.L.C. 03-11515
Troll Publishing L.L.C. 03-11516
Type of Business: Publishes and distributes books and other
educational materials primarily aimed at the
pre-K through 9th grade market.
Chapter 11 Petition Date: May 16, 2003
Court: District of Delaware
Judge: Peter J. Walsh
Debtors' Counsel: Raymond Howard Lemisch, Esq.
Adelman Lavine Gold and Levin, PC
919 N. Market Street, Suite 710
Wilmington, DE 19801
Tel: 302-654-8200
Fax : 302-654-8217
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtors' 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Quebecor $3,061,187
340 Pemberwick Road
Greenwich, CT 06831
Willis Stein & Partners II, LP $939,875
North Wacker
Suite 4800
Chicago, IL 60606
Delta Education $780,174
PO Box 915
Nashua, NH 03051
Aegis Communications $461,756
PO Box 200655
Dallas, TX 75320
Time, Inc. $362,271
N. Dale Mabry Highway
Tampa, FL 33609
Tucker Capital Corporation $212,000
Banta Publications $191,475
Airborne Express $191,075
Computer Associates $188,458
North Shore Agency $172,065
Health Communications $160,559
The Wiz Business to Business $155,920
Bob Patterson $151,185
Becker & Mayer $150,027
Simon & Schuster $146,563
Treasurer City of Memphis $109,736
Harper Collins $109,085
New York Life Insurance $107,521
PriceWaterhouse Cooper $105,941
Aptegrity $87,756
TWINLAB CORP: March 31 Net Capital Deficit Widens to $15 Million
----------------------------------------------------------------
Twinlab Corporation (OTCBB: TWLB) announced its results for the
quarter ended March 31, 2003.
The Company incurred a net loss of $3.7 million for the first
quarter of 2003, versus net income of $3.7 million for the first
quarter of last year. The net loss for the quarter ended
March 31, 2003 includes restructuring charges of $1.0 million
relating to the facilities consolidation and a gain on the sale
of the assets of Bronson Laboratories, Inc. of $0.8 million. Net
income for the first quarter of last year included a Federal
income tax benefit of $6.9 million. First quarter net sales were
$37.7 million compared to $45.5 million in the comparable
quarter last year.
Twinlab's March 31, 2003 balance sheet shows a working capital
deficit of about $9 million, and a total shareholders' equity
deficit of about $15 million.
Ross Blechman, Twinlab's Chairman, President and Chief Executive
Officer stated, "Year over year net sales reflect the negative
impact of our previously announced decision to discontinue the
sale of products containing ephedra, the sale of Health Factors
International, Inc. and the effect of product rationalizations
initiated during 2002. Our operating results reflect our
continued investment in marketing and advertising programs with
spending up $1.0 million versus last year's comparable quarter
and over $2.0 million versus the fourth quarter of 2002. With
the facilities consolidation and related charges essentially
behind us, we are now focused on reorganizing our sales
organization which, in conjunction with increased marketing and
advertising expenditures, reflect our investments to increase
sales."
Borrowings under the Revolving Credit Facility are due within 12
months. In addition, the Company does not currently anticipate
being in compliance with certain financial covenants contained
in the mortgage agreement relating to the Utah facility.
Accordingly, the Company has classified these borrowings as
current liabilities. The Company is currently in negotiations to
amend the mortgage agreement and plans to initiate negotiations
to extend the term of the Revolving Credit Facility or to enter
into an alternative borrowing arrangement.
The Company's ability to meet its borrowing obligations, fund
required capital expenditures and pursue its business strategy
is dependent upon (i) the ability to successfully amend the
mortgage agreement, (ii) the ability to extend the term of the
Revolving Credit Facility or enter into an alternative borrowing
arrangement, (iii) the absence of any material judgments against
the Company in connection with litigation matters that are not
covered by insurance and (iv) the successful implementation of
its business plan. However, there can be no assurance that these
activities will be successful, in which case, the Company will
be required to initiate additional cost reductions or take other
actions to enable the Company to continue its operations.
Twinlab Corporation, headquartered in Hauppauge, N.Y., is a
leading manufacturer and marketer of high quality, science-
based, nutritional supplements, including a complete line of
vitamins, minerals, nutraceuticals, herbs and sports nutrition
products.
Additional Twinlab information is available on the World Wide
Web at: http://www.twinlab.com
UNIFORET INC: Canadian Superior Court Clears Plan of Arrangement
----------------------------------------------------------------
UNIFORET INC. and its subsidiaries, Uniforet Scierie-Pate Inc.
and Foresterie Port-Cartier Inc., announced that the Superior
Court of Montreal has, on May 16, 2003, sanctioned and approved
their plan of arrangement under the Companies' Creditors
Arrangement Act, thereby dismissing the contestation proceedings
instituted by a group of US Noteholders.
The Company intends to proceed as soon as possible with the
implementation of its plan of arrangement and will have a new
press release issued once the details of the implementation will
have been finalized.
Uniforet Inc. manufactures softwood lumber. It carries on its
business through mills located in Port-Cartier and in the
Peribonka area. Uniforet Inc.'s securities are listed on the
Toronto Stock Exchange under the trading symbol UNF.A for the
Class A Subordinate Voting Shares, and under the trading symbol
UNF.DB for the Convertible Debentures.
UNITED AIRLINES: Committee Hires Saybrook as Workout Advisors
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of UAL
Corporation/United Airlines Inc., seeks the Court's authority to
retain Saybrook Restructuring Advisors as its financial
advisors, nunc pro tunc to December 27, 2002. The Committee
selected Saybrook based on the Firm's investment banking
experience and familiarity with the Debtors' business.
Dana Lockhart, Chief Financial Officer of Airbus North America,
says that Saybrook is a respected financial advisory firm with
extensive experience working with troubled entities in complex
financial reorganizations. The Creditors' Committee submits
that it needs a financial advisor to assist in evaluating the
Debtors' business during these Chapter 11 cases. The Committee
expects Saybrook to:
a) evaluate the Debtors' business plans;
b) assess airline operational strategies;
c) evaluate managerial issues and effectiveness;
d) monitor and report on capital markets for the airline
industry;
e) evaluate the Debtors' debt capacity and measure projected
cash flow;
f) review third party enterprise valuations of the Debtors
and provide an independent enterprise valuation;
g) evaluate potential refinancing, restructuring or
modification of securities placement of the Debtors;
h) review proposed material expenditures;
i) review and provide a strategic assessment of all proposed
Chapter 11 plans;
j) review, analyze and value any new securities proposed
under the Plan;
l) assist the Committee in negotiations with other parties;
k) assist the Committee in analyses of airline operations,
regulatory environment and administrative agencies;
l) prepare documentation to support or oppose a Plan;
m) review any proposed disposition of material assets;
n) provide specific valuations and a liquidation analysis of
the Debtors;
o) participate in hearings before the Court;
p) identify and pursue potential buyers for the Debtors or
segments of the Company;
q) prepare for and attend meetings of the Committee; and
r) provide other financial advisory services as the Committee
requests from time to time.
Saybrook will receive $250,000 per month from January through
June 2003, and will receive $200,000 per month thereafter. If a
Plan is confirmed or there is a sale transaction, Saybrook will
be entitled to an incentive fee based on the percent by which
the value of consideration to Bondholders increases over the
median value of the Bonds on December 30, 2002, based on a
trading price of $.0983. Saybrook will be entitled to an
incentive fee of $7,500,000 for a 50% increase, and a pro rata
fee if the increase is between 0% and 50%, calculated in $10,000
increments.
Cary Stanford, Managing Director at Saybrook Restructuring
Advisors, assures the Court that Saybrook is well qualified and
is familiar with the Debtors' business and financial condition.
Saybrook researched its client records and determined that it
does not hold or represent any interest adverse to the
Committee. Neither Saybrook nor its professionals have any
connection with the Debtors or other parties-in-interest.
(United Airlines Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
United Airlines' 10.670% bonds due 2004 (UAL04USR1) are trading
at about 8 cents-on-the-dollar, DebtTraders reports. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for
real-time bond pricing.
US AIRWAYS: Enters Long-Term Strategic Alliance with Lufthansa
--------------------------------------------------------------
US Airways has signed a Memorandum of Understanding with
Lufthansa Airlines, covering the establishment of a long-term
strategic alliance.
US Airways President and CEO David Siegel said, "This new
alliance with Lufthansa comes at a very exciting time for US
Airways, as we begin implementing the business goals we set
forth during our restructuring. We are the biggest carrier on
the East Coast, and bring to Lufthansa our base of four million
active frequent flyers and feed traffic. Our customers will see
new destinations and additional customer service benefits --
enhancements we plan to multiply as we move towards membership
in the Star Alliance."
"We are looking forward to working with US Airways to improve
the travel options of our customers by enhancing access to both
parties' extensive networks, code-sharing, joint promotions, and
customer services such as through-check-in, lounge access and
mileage accrual," said Juergen Weber, Chairman and CEO of
Lufthansa German Airlines, adding "US Airways has indicated its
interest in also joining the Star Alliance and we strongly
support their participation in Star as well. This is a newly
invigorated company, one with a clear focus on providing world-
class service to its customers in a way that ensures the success
of the business -- priorities which we share."
US Airways is the nation's seventh-largest airline, serving
nearly 200 communities in the U.S., Canada, Mexico, the
Caribbean and Europe. Its transatlantic service operates
primarily from its new international terminal in Philadelphia,
the fifth-largest metropolitan area in the U.S. US Airways, US
Airways Shuttle and the US Airways Express partner carriers
operate over 3,300 flights per day.
From its Frankfurt and Munich hubs, Lufthansa provides one of
the most extensive global networks of any major airline, flying
to 340 destinations in nearly 90 countries worldwide, including
18 cities throughout North America.
VALENTIS INC: Completes Preferreds Conversion and Reverse Split
---------------------------------------------------------------
Valentis, Inc. (Nasdaq: VLTSC) provided a business update and
announced financial results for its third quarter ended March
31, 2003. During the quarter, in connection with its ongoing
efforts to achieve and maintain its listing on The Nasdaq
SmallCap Market, Valentis successfully completed the conversion
of all outstanding shares of its Series A Convertible Redeemable
Preferred Stock into common stock and, immediately thereafter,
effected a reverse stock split of its common stock at a ratio of
one-for-thirty. Also, the Company continued to advance its lead
product, Del-1, through clinical development. Del-1 is a novel
gene therapy for the growth of new blood vessels in patients
with vascular diseases. In April 2003, the Company achieved a
corporate milestone by completing the scheduled dosing in its
Phase I trial. There were no observed drug-related severe
adverse events. The Company plans to present results from the
Phase I trial at the American Society of Gene Therapy meeting in
June 2003 and is on schedule to begin its Phase II clinical
trial in peripheral arterial disease mid-2003.
Financial results
The conversion of Series A preferred stock into common stock had
the effect of increasing stockholders' equity by $27.3 million
and decreasing convertible redeemable preferred stock by the
same amount. This conversion also resulted in a non-cash charge
of $22.3 million, representing the excess of the fair value of
the common stock issued to the Series A preferred stockholders
over the fair value of the common stock issuable pursuant to the
original conversion terms of the convertible redeemable
preferred stock. The $22.3 million adjustment was recorded in
the quarter ended March 31, 2003, and was used in the
calculation of net loss applicable to common stockholders and
net loss per share.
For the three months ended March 31, 2003, the Company reported
revenues of $1.1 million, with net loss applicable to common
stockholders of $29.1 million, or $6.61 per basic and diluted
share compared to a net loss applicable to common stockholders
of $11.0 million, or $9.11 per basic and diluted share on
revenue of approximately $800,000 for the corresponding period
of the prior year.
For the nine months ended March 31, 2003, the Company reported
revenues of $2.7 million, with net loss applicable to common
stockholders of $41.0 million, or $17.92 per basic and diluted
share compared to a net loss applicable to common stockholders
of $29.6 million, or $27.65 per basic and diluted share on
revenue of $3.8 million for the corresponding period of the
prior year.
For the three months ended March 31, 2003, research and
development expenses decreased to $2.3 million from $5.6 million
for the corresponding period in the prior year. The decrease was
attributable primarily to savings resulting from the
implementation of corporate restructurings in January and
October 2002, which reduced preclinical product development
efforts and suspended clinical programs in oncology.
For the nine months ended March 31, 2003, research and
development expenses decreased to $7.8 million from $18.8
million for the corresponding period in the prior year. The
decrease was attributable to staff reductions resulting from our
restructuring actions, savings resulting from the reduction of
preclinical product development efforts and suspension of
clinical programs in oncology.
For the three months ended March 31, 2003, general and
administrative expenses decreased to $1.8 million compared to
$1.9 million for the corresponding period in the prior year. The
decrease was attributable primarily to savings resulting from
the reduction of general and administrative staff associated
with our restructuring actions, savings from reduce costs
incurred in supporting research, development and clinical
activities due to the reductions in preclinical product
development and suspension of clinical programs in oncology. The
decrease in expense was partially offset by increased
professional fees related to our capital restructuring.
For the nine months ended March 31, 2003, general and
administrative expenses increased to $7.3 million compared to
$6.1 million for the corresponding period in 2002. The increase
was attributable primarily to increased professional fees
related to our capital restructuring. The increase in expense
was partially offset by savings resulting from the closure of
our London operations in the quarter ended June 30, 2002 and the
reduction of general and administrative staff associated with
our reductions in preclinical product development and our
suspended clinical programs in oncology.
For the three months ended March 31, 2003, Valentis recorded no
amortization for goodwill and other acquired intangible assets,
which was associated with the acquisitions of GeneMedicine in
fiscal 1999 and PolyMASC in fiscal 2000. For the corresponding
period of the prior year, Valentis recorded $1.4 million for
same acquisitions. As of June 30, 2002, we had approximately
$409,000 of goodwill, which is no longer being amortized but is
subject to an impairment analysis on at least an annual basis.
We completed the initial required impairment analyses as of July
1, 2002 and additionally as of December 31, 2002, and determined
goodwill was not impaired at those dates.
For the nine months ended March 31, 2003, Valentis recorded a
restructuring charge of $832,000 associated with staff
reductions in October 2002. For the comparable period of the
prior year, Valentis recoded a restructuring charge of $1.7
million associated with staff reductions in January 2002.
Upon conversion of the Series A preferred stock to common stock
in January 2003, the remaining $3.5 million of unaccreted deemed
dividend representing the balance of amounts attributed to
common stock purchase warrants, beneficial conversion feature
and issuance costs related to the Series A preferred stock was
fully accreted and recorded as a deemed dividend, and, along
with a deemed dividend of $200,000 accreted during January 2003,
was included in the calculation of net loss applicable to common
stockholders for the three months ended March 31, 2003.
Additionally, as a result of the simultaneous conversion of the
Series A preferred stock to common stock and the reduction in
the Series A preferred stock conversion price, the excess of the
fair value of the common stock issued to the Series A preferred
stockholders over the fair value of the common stock issuable
pursuant to the original conversion terms of the preferred stock
was approximately $22.3 million. This amount also was included
in the calculation of net loss applicable to common stockholders
for the quarter ended March 31, 2003.
In January 2003, Valentis made a required dividend payment to
holders of the Company's Series A preferred stock. The dividend
obligation was met through the issuance of 83,526 shares of
common stock.
On March 31, 2003, Valentis had $6.0 million in cash, cash
equivalents and investments, compared to $19.1 million on June
30, 2002. The decrease of $13.1 million in cash, cash
equivalents and investments as compared to June 30, 2002 was
attributed primarily to funding the Company's operations and
restructuring charges.
Additional information is available by reference to our
Quarterly Report on Form 10-Q for the period ended March 31,
2003, as filed with the Securities and Exchange Commission.
Valentis is converting biologic discoveries into innovative
products. The Company's lead product is based on the Del-1
angiogenesis gene, formulated with one of the Company's PINC
proprietary polymer delivery systems. The Company is developing
its other technologies, the GeneSwitch(R) and DNA vaccine
delivery technologies, through partnerships with pharmaceutical
and biotechnology companies. Additional information is available
at http://www.valentis.com
VENTAS INC: Declares Regular Quarterly Dividend of $0.2675/Share
----------------------------------------------------------------
Ventas, Inc.'s (NYSE:VTR) Board of Directors declared a regular
quarterly dividend of $0.2675 per share, payable in cash on
June 24, 2003 to stockholders of record on June 2, 2003. The
dividend is the second quarterly installment of the Company's
2003 annual dividend, expected to be $1.07 per share. The
Company has approximately 79 million shares of common stock
outstanding.
DIRECTORS ELECTED; E&Y RATIFIED AT ANNUAL MEETING
At Ventas's annual meeting on May 15, 2003, stockholders voted
to elect the following board members to new, one-year terms. The
board members are Debra A. Cafaro, Douglas Crocker II, Ronald G.
Geary, Jay M. Gellert and Sheli Z. Rosenberg. As previously
announced, Gary W. Loveman did not stand for reelection.
Ventas stockholders also ratified Ernst & Young LLP as the
Company's independent auditors for 2003.
Ventas, Inc., whose March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $43 million, is a
healthcare real estate investment trust that owns 44 hospitals,
220 nursing facilities and nine other healthcare and senior
housing facilities in 37 states. The Company also has
investments in 25 additional healthcare and senior housing
facilities. More information about Ventas can be found on its
Web site at http://www.ventasreit.com
VICWEST CORP: Delays Filing of Financial Statements for FY 2002
---------------------------------------------------------------
As previously announced, Vicwest Corporation and its Canadian
subsidiaries obtained an order on May 12, 2003 to begin
Vicwest's restructuring under the Companies' Creditors
Arrangement Act. The restructuring will improve Vicwest's
balance sheet by converting certain Vicwest debt, including
Vicwest's publicly traded notes, to new Vicwest equity, while
maintaining business as usual.
Vicwest announced that it will be unable to file its
consolidated financial statements for the fiscal year ended
December 31, 2002 and related documentation such as management
discussion and analysis and the annual information form by
today, being 140 days following the end of Vicwest's last fiscal
year, as required by the securities legislation applicable in
the provinces and territories in which Vicwest is a reporting
issuer.
Vicwest also anticipates that it will be unable to file its
interim financial statements for the three month period ended
March 31, 2003 and related documentationby May 30, 2003, being
60 days following the end of Vicwest's first fiscal quarter of
2003, as required by the securities legislation applicable in
the provinces and territories in which Vicwest is a reporting
issuer.
The preparation and filing of the Annual Financial Statements
and the First Quarter Financial Statements have been delayed as
the result of Vicwest's restructuring activities under the CCAA,
including the resignation of the officers and directors of
Vicwest.
It is anticipated that Vicwest will be able to file the Annual
Financial Statements and the First Quarter Financial Statements
after the completion of its restructuring process. At this time
it is expected that Vicwest will emerge from its restructuring
process in the summer of 2003.
In accordance with Ontario Securities Commission Policy 57-603,
Vicwest intends to satisfy the provisions of the alternate
information guidelines, including the disclosure of any material
change to information disseminated to the marketplace to date,
until such time as it has complied with its financial statement
filing requirements. Vicwest also intends to disclose the same
information that it provides to its creditors in the same manner
in which it would report a material change.
If Vicwest has not filed the Annual Financial Statements and the
First Quarter Financial Statements by July 20, 2003 and July 30,
2003, respectively, Vicwest shall have been in default of its
financial statement filing requirements for a period of two
months. The Ontario Securities Commission may impose a cease
trade order against Vicwest if such defaults are not remedied
prior to such dates.
Vicwest has been advised by the TSX Venture Exchange that it is
reviewing the trading status of the senior subordinated notes of
Vicwest (MGT.DB) and the completion of such review may result in
a trading interruption.
WEIRTON STEEL: Files for Chapter 11 Protection in West Virginia
---------------------------------------------------------------
Weirton Steel Corp. (OTCC BB: WRTL) announced it has filed a
voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the
Northern District of West Virginia in Wheeling.
Weirton Steel emphasized that normal operations and customer
service will continue without disruption, including sales,
production, order processing and shipments. The company has
secured a $225 million debtor-in-possession (DIP) financing
facility to furnish sufficient working capital for its
operations.
"Weirton Steel is at a crossroads in its history. We must
become as competitive as possible and return to profitability so
that we can invest in our facilities and pursue strategic
growth. Reorganization will stabilize our financial outlook,
achieve vital cost savings and help us become a stronger, more
competitive company," said John H. Walker, Weirton Steel
resident and chief executive officer.
The reorganization is necessary for three major reasons:
1. Despite the positive impact of a comprehensive
restructuring of the company in 2002 and additional cost-saving
efforts this year which improved efficiency, reduced employment
costs and addressed expenses and maturities at long-term debt,
Weirton Steel still faces financial challenges. These challenges
include declining market conditions and overwhelming post-
retirement obligations, which include pension funding, retiree
healthcare benefits and life insurance, known as legacy costs.
Reorganization through the court will enable Weirton Steel to
address legacy costs as well as burdensome contracts which
cannot be accomplished on an out-of-court basis.
2. Reorganization also will enable Weirton Steel to improve
its liquidity while continuing normal operations as an
independent company. Now financing facilities available only in
the context of a bankruptcy filing will provide additional
needed liquidity to support operations.
3. Weirton Steel's goal is to use the reorganization
process to become as competitive as possible in the rapidly
consolidating steel industry. The new industry model' - fewer
and larger steel companies that have consolidated production and
significantly reduced costs- has changed the domestic industry.
Consolidated companies have gained significant competitive
advantages by substantially reducing their operating expenses,
primarily by buying assets in bankruptcy sales resulting in
minimal or no legacy costs. By contrast, since it has been
maintaining a traditional pension plan, the company's pension
liabilities have dramatically grown in the past several years
largely due to the prolonged stock market downturn which has
eroded pension assets, reduced returns and increased the
calculation of obligations. Outside of reorganization, the
company can spread out some of its legacy obligation payments,
but not reduce them to competitive levels.
American Steel Industry
In "State of Siege and Transformation"
"The American Steel industry is in a state of siege and
transformation. The challenges facing Weirton Steel are the same
as those affecting our entire industry. In the past five years,
36 domestic steel companies have filed for bankruptcy
protection. As this trend continues, large well-capitalized
companies are creating a 'new industry model' by acquiring
assets, consolidating production, slashing costs and cutting
jobs," Walker said.
Working Capital for Continuing Operations
Weirton Steel will maintain control and possession of its
assets while undergoing Chapter 11 reorganization, instead of
having a court-appointed trustee operate the company. The new
[$225 million] DIP financing secured by the company was provided
by Fleet Capital Corp., Chicago, as agent, the rest of Weirton
Steel's current bank lending group, and a new term lender,
Manchester Securities, New York City.
"This financing is an expression of confidence in our company.
Weirton Steel is now focused on utilizing the reorganization
process to achieve additional costs savings that could not be
attained through out-of-court restructuring efforts," Walker
said.
"In the past year, we did everything we could do outside the
bankruptcy venue before taking this necessary step. Our previous
initiatives strengthened the company, but it became increasingly
evident in the current industry climate that Chapter 11
reorganization is the only remaining solution to address our
liability issues. With the support of our employees, customers,
vendors and other stakeholders, our goal is to preserve the
value of our business and emerge from this voluntary process as
a stronger and more competitive producer.
Walker emphasized the reorganization will not disrupt the
company's operations or alter its historic commitment to its
employees, customers and the region.
Preserving Jobs and Our Future
"Weirton Steel remains a viable business that is deeply
committed to our employees, the city of Weirton and the state of
West Virginia. We are taking this step to preserve our company
and jobs that benefit residents of West Virginia, Ohio and
Pennsylvania. In reorganization, we will be working to develop a
plan to keep our core operations and facilities intact," Walker
commented.
"We expect the court to approve our request to continue to
pay all salaries and wages." Weirton Steel also is seeking court
approval to form a retiree committee to assist the company in
addressing the legacy cost issue.
Prior to the court filing, the company took aggressive
action in the past two years to reduce costs, which management
believes better positions the company to develop a
reorganization plan.
Weirton Steel's 2001-2002 out-of-court restructuring included: a
$50 million cost-reduction through job eliminations; a $40
million improvement in liquidity through vendor investment
programs; an additional $35 million liquidity boost by securing
a new senior credit facility; and a $115 million reduction in
its public debt through two exchange offers.
This year, the company lowered its employment costs by $38
million on an annual basis by negotiating labor agreements with
the Independent Steelworkers Union and the Independent Guard
Union. The contracts included elimination of a planned wage
increase, a 5 percent wage reduction and a freeze on pensions.
Non-represented employees incurred similar concessions.
Shares of the company's common stock (WRTL) continue to
trade on the OTC Bulletin Board. The company has not set a
target date for emergence from Chapter 11, but Walker stressed
the company's strategy is to move quickly.
"Our goal is to emerge from this process, as soon as we can,
as a stronger, more competitive company," Walker said. 'There is
much work ahead. Time and time again, our employees have proven
their ability to overcome challenges and handle change. By
working together, we can succeed and preserve Weirton Steel and
its future."
Weirton Steel is the sixth largest integrated U.S. steel
company and produces hot rolled, cold rolled, galvanized and tin
mill products (TMP). It is the nation's second largest TMP
producer.
Founded in 1909 by Ernest T. Weir and operated in its
current form as an independent business since 1984 and as a
public company since 1989, the company employs 3,500 workers at
its facilities in Weirton, W.Va. For more information on the
company, visit its Web site at http://www.weirton.comor call
its toll-free reorganization hotline at 1-866-253-4668.
WEIRTON STEEL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Weirton Steel Corporation
400 Three Springs Drive
Weirton, West Virginia 26062
Bankruptcy Case No.: 03-01802
Type of Business: Integrated producer of flat-rolled carbon
steel
Chapter 11 Petition Date: May 19, 2003
Court: Northern District of West Virginia (Wheeling)
Judge: L. Edward Friend, II
Debtor's Counsel: Robert G. Sable, Esq.
Mark E. Freedlander, Esq.
David I. Swan, Esq.
James H. Joseph, Esq.
McGuireWoods LLP
625 Liberty Avenue
Dominion Tower, 23rd Floor
Pittsburgh, PA 15222
Telephone (412) 667-6000
Fax (412) 667-6050
Total Assets: $696,115,000
Total Debts: $1,361,002,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Deutsche Bank Trust Co. Indenture trustee to $16,336,000
280 Park Avenue 10 3/4% Series 2005
Mail Stop NYC 030914 Notes
New York, NY 10018
Attn: Irene Golavashchuk
ph-212-454-4219
fax-212-454-0302
Deutsche Bank Trust Co. Indenture Trustee to $12,658,000
280 Park Avenue 11 3/8% Series 2004
Mail Stop NYC 030914 Notes
New York, NY 10018
Attn: Irene Golovashchuk
ph-212-454-4219;
fax-212-454-0302
USX Corporation Trade debt $11,072,625
600 Grant Street
Pittsburgh, PA 15219-4776
Attn: David W. Hutchison
Carol Anestis
ph-412-443-4705
fax-412-433-3624
J.P. Morgan Trust Company Indenture trustee to $10,720,000
One Oxford Center Pollution Control Bonds
301 Grant Street Series 1989 8 5/8%
Suite 1100 Due 11-1-14
Pittsburgh, PA 15219 de minimis
ph-216-694-5939; collateral value
fax-216-694-5385
Henkel Chemical Mgmt. Trade debt $4,868,572
P.O. Box 101795
Atlanta, GA 30392-1795
Attn: Trudy Hill
ph-1-800-831-3130
fax-304-797-4351
ALLEGHENY POWER TRADE DEBT $2,857,189
800 CABIN HILL DRIVE
GREENSBURG, PA 15601-1689
Attn: JOHN RUTKOWSKI
FAX-412-837-3000
KOPPERS MONESSEN TRADE DEBT $2,508,066
PARTNERS L.P.
436 SEVENTH AVENUE
PITTSBURGH, PA 15219-1800
Attn: DOUG PFEIFFER
PH-412-227-2001
FAX-412-227-2202
COMPREHENSIVE LOGISTICS TRADE DEBT $1,800,000
127 PUBLIC SQUARE (ESTIMATED)
15TH FLOOR
CLEVELAND, OH 44114
Attn: HEATHER
PH-330-793-1345
FAX-330-793-3404
ALLIANCE ENERGY TRADE DEBT $1,587,095
9300 SHELBYVILLE ROAD
SUITE 810
LOUISVILLE, KY 40222-5145
Attn: BRYAN ROBINSON
PH-502-214-6353;
FAX-502-426-8800
VESUVIUS USA TRADE DEBT $1,339,828
5645 COLLECTIONS
CENTER DRIVE
CHICAGO, IL 60693
FAX-412-276-7313
MILLCRAFT PRODUCTS, INC. TRADE DEBT $1,333,263
MANIFOLD ROAD
P.O. BOX 587
WASHINGTON, PA 15301
Attn: JACK B. PIATT, II
PH-724-222-5000
FAX-724-222-6541
MPW INDUSTRIAL TRADE DEBT $1,118,648
SERVICES, INC.
9711 LANCASTER ROAD SE
HEBRON, OH 43025
Attn: PATTY MASON
PH-1-800-827-8790
FAX-614-929-3309
MCCARIS TRADE DEBT $1,089,633
P.O. BOX 360375
PITTSBURGH, PA 15251
Attn: CREDIT DEPARTMENT
PH-412-843-5660
FAX-724-843-3100
SOLID WASTE TRADE DEBT $1,074,692
SERVICES, INC.
320 GODSHALL DRIVE
HARLEYSVILLE, PA 19430
Attn: ANGIE
PH-215-256-1900
FAX-215-256-4504
MOTION INDUSTRIES, INC. TRADE DEBT $1,050,470
P.O. BOX 358
WIERTON, WV 26062
Attn: GERRI GIVENS
PH-304-797-7094
FAX-304-797-8256
INTERNATIONAL MILL TRADE DEBT $979,569
SERV, INC.
1155 BUSINESS CENTER
DRIVE SUITE 200
HORSHAM, PA 19044
Attn: BILL MILLER
PH-215-956-5508
FAX-215-956-5598
SHEFFIELD FORGEMASTERS TRADE DEBT $861,274
ROLLS, LTD.
4 SWALLOW HILL ROAD
CARNEGIE, PA 15106
Attn: PAT MCCAFFREY
PH-412-276-0916
FAX-412-276-7069
BOC GASES TRADE DEBT $844,788
9800 MCKNIGHT ROAD,
SUITE 300A
PITTSBURGH, PA 15237-6006
Attn: DAVE READ
PH-412-366-8733
FAX-412-366-8700
MINTEQ INTERNATIONAL, INC. TRADE DEBT $675,709
P.O. BOX 204
BORDENTOWN AVENUE
OLD BRIDGE, NJ 08857
Attn: MARY FIORENTINO
PH-1-800-390-9393
FAX-219-922-3482
XTEK, INC. TRADE DEBT $661,323
C/O MECHANICAL MAINTENANCE
GRANT AVENUE & B&O RAILROAD
P.O. BOX 95052
PITTSBURGH, PA 15223
Attn: BILL OMERA
PH-412-782-2014
FAX-513-733-7939
WESTAR ENERGY: Inks Definitive Pact to Sell Protection One Unit
---------------------------------------------------------------
Westar Energy, Inc. announced its wholly owned subsidiary,
Westar Industries, Inc., has signed a definitive agreement to
divest its interest in Protection One Europe to two investment
funds managed by ABN Amro Capital France. The closing of the
transaction, subject notably to French and German antitrust
authorities approval, is expected by early summer. UBS Warburg
acted as advisor to Westar Energy on the transaction. The sale
of Protection One Europe is part of Westar Energy's plan to pay
down debt and focus exclusively on its electric utility
business.
"This transaction is yet another step toward our goal of
returning Westar Energy to a pure Kansas electric utility," said
James Haines, Westar Energy president and chief executive
officer. "I am pleased to announce that we are proceeding on
schedule according to our restructuring plan launched in
February."
The sale will reduce Westar Energy's consolidated debt levels by
about $114 million, net of transaction costs. The gross
transaction value is comprised of cash proceeds, the buyer's
assumption of consolidated debt and Westar Energy's ability to
offset taxes otherwise payable out of the gain on the sale in
February of its holdings in ONEOK.
Westar Energy, Inc. (NYSE: WR) is the largest electric utility
in Kansas and owns interests in monitored security and other
investments. Westar Energy provides electric service to about
653,000 customers in the state. Westar Energy has nearly 6,000
megawatts of electric generation capacity and operates and
coordinates more than 36,600 miles of electric distribution and
transmission lines. The company has total assets of
approximately $6.6 billion, including security company holdings
through ownership of Protection One, Inc. (NYSE: POI) and
Protection One Europe, which have approximately 1.1 million
security customers. Through its ownership in ONEOK, Inc. (NYSE:
OKE), a Tulsa, Okla.- based natural gas company, Westar Energy
has a 27.5 percent interest in one of the largest natural gas
distribution companies in the nation, serving more than 1.9
million customers.
For more information about Westar Energy, visit
http://www.wr.com
* * *
As reported in Troubled Company Reporter's April 2, 2003
edition, Standard & Poor's Ratings Services said that its
ratings on Westar Energy Inc. (BB+/Developing/--) and subsidiary
Kansas Gas & Electric Co. (BB+/Developing/--) would not be
affected by the company's announcement of an annual loss of
$793.4 million in 2002. The bulk of this charge had already been
recorded in the first quarter of 2002 and relates to valuation
adjustments for the impairment of goodwill and other intangible
assets associated with 88%-owned Protection One Alarm Monitoring
Inc., Westar Energy's monitored security business.
The credit outlook is developing, indicating that ratings may be
raised, lowered, or affirmed. Upward ratings potential is solely
related to the Kansas Corporation Commission's approval of
Westar Energy's plan to reduce its onerous debt burden and
become a pure-play utility, as well as successful implementation
of Westar Energy's proposed transactions. Downside ratings
momentum recognizes the company's frail financial condition
coupled with execution risk of the plan, including possible KCC
rejection of the plan.
WESTAR ENERGY: Reports Improved First-Quarter 2003 Results
----------------------------------------------------------
Westar Energy (NYSE:WR) announced earnings of $123.7 million for
first quarter 2003, compared to a loss of $746.3 million for
first quarter 2002.
First-quarter 2003 earnings include income of $103.8 million,
related to the effect of classifying the company's monitored
security businesses as discontinued operations. The prior-year
first-quarter results included a net charge of $749.3 million,
related to valuation adjustments for impairment of goodwill and
other intangible assets associated with the company's monitored
security businesses.
From continuing operations, Westar Energy realized earnings of
$20.1 million, compared to earnings of $5.8 million for first
quarter 2002.
Utility Operations
Westar Energy's utility operations reported revenues of $345.4
million for the first quarter of 2003, compared to revenues of
$317.0 million for the same period in the prior year, an
increase of 9 percent. Retail revenues from our residential,
commercial and industrial customers increased $7.9 million, or 3
percent. Wholesale energy and power marketing revenues increased
$17.4 million, or 26 percent.
Utility operations contributed earnings of approximately $20.7
million, or $0.29 per share, for first quarter 2003, compared to
a loss of $14.9 million, or $0.21 per share, for the prior
year's first quarter. The change in earnings was attributable to
more favorable market and weather conditions and reduced
selling, general and administrative expenses from the previous
year. Selling, general and administrative expenses in the prior
year included a charge of approximately $36 million related to
employee severance. Interest income from an affiliated company
also contributed $13.9 million to utility earnings for the first
quarter 2003. This interest is eliminated in the company's
consolidated results.
Non-Utility Operations
ONEOK contributed $15.0 million for first quarter 2003, compared
to $11.1 million for the same period in the prior year. The
increase in 2003 is due primarily to an after-tax gain of $9.2
million from the sale of a portion of the ONEOK Series A
Convertible preferred stock we owned.
Effective this quarter, our monitored security businesses are
being classified as discontinued operations. Discontinued
operations contributed earnings of $103.8 million for first
quarter 2003. The results include recognition of $166.5 million
in prior-period tax benefits related to the impairment of
goodwill.
Westar Energy, Inc. (NYSE:WR) is the largest electric utility in
Kansas and owns interests in monitored security and other
investments. Westar Energy provides electric service to about
653,000 customers in the state. Westar Energy has nearly 6,000
megawatts of electric generation capacity and operates and
coordinates more than 36,600 miles of electric distribution and
transmission lines. The company has total assets of
approximately $6.6 billion, including security company holdings
through ownership of Protection One, Inc. (NYSE:POI) and
Protection One Europe. Through its ownership in ONEOK, Inc.
(NYSE:OKE), a Tulsa, Okla.-based natural gas company, Westar
Energy has a 27.5 percent interest in one of the largest natural
gas distribution companies in the nation, serving more than 1.9
million customers.
For more information about Westar Energy, visit at
http://www.wr.com
* * *
As reported in Troubled Company Reporter's April 2, 2003
edition, Standard & Poor's Ratings Services said that its
ratings on Westar Energy Inc. (BB+/Developing/--) and subsidiary
Kansas Gas & Electric Co. (BB+/Developing/--) would not be
affected by the company's announcement of an annual loss of
$793.4 million in 2002. The bulk of this charge had already been
recorded in the first quarter of 2002 and relates to valuation
adjustments for the impairment of goodwill and other intangible
assets associated with 88%-owned Protection One Alarm Monitoring
Inc., Westar Energy's monitored security business.
The credit outlook is developing, indicating that ratings may be
raised, lowered, or affirmed. Upward ratings potential is solely
related to the Kansas Corporation Commission's approval of
Westar Energy's plan to reduce its onerous debt burden and
become a pure-play utility, as well as successful implementation
of Westar Energy's proposed transactions. Downside ratings
momentum recognizes the company's frail financial condition
coupled with execution risk of the plan, including possible KCC
rejection of the plan.
WESTFORT ENERGY: Files for Chapter 11 Protection in S.D. Miss.
--------------------------------------------------------------
Mr. Norris R. Harris, President and CEO of Westfort Energy Ltd.,
(symbol WT on the Toronto Stock Exchange) announced that the
Board of Directors has rejected the proposal for settlement of
the litigation between Patterson Petroleum LP, Patterson
Drilling Company LP (and their related and associated companies)
and Westfort Energy Ltd. and Westfort Energy (US) Ltd.
The decision by the Board of Directors was based on the refusal
by Patterson to further negotiate Westfort's objections to
certain of the provisions contained in the last Patterson
proposal, and for other reasons expressed in the minutes of the
Board's meeting, which includes the opinion of counsel.
Mr. Harris further announces that the Board authorized the
filing by Westfort Energy Ltd. and Westfort Energy (US) Ltd. for
protection under the provisions of Chapter 11 of the Bankruptcy
Act. This action was taken by the Board after it became apparent
that Patterson was intransigent and refused further
consideration of Westfort's suggestions and requirements in the
proposed settlement. Other factors considered by the Board for
taking this action were the judgments presently enrolled against
Westfort, the other lawsuits and unsatisfied claims pending
against Westfort that Westfort is financially unable to defend
and also to protect Westfort and its assets until a plan for the
refinancing and reorganization of the Company can be prepared
and accepted by the Bankruptcy Court. The Petitions were filed
on May 15 and 16, 2003 in the Bankruptcy Court for the Southern
District of Mississippi, Biloxi Division.
WESTFORT ENERGY LTD.: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Lead Debtor: Westfort Energy Ltd.
2301 14th Street, Suite 900
Gulfport, Mississippi 39501
Bankruptcy Case No.: 03-52540
Debtor affiliate filing separate chapter 11 petition:
Entity Case No.
------ --------
Westfort Energy (US) Ltd. 03-52560
Type of Business: Oil and gas company
Chapter 11 Petition Date: May 15, 2003
Court: Southern District of Mississippi (Biloxi)
Judge: Edward R. Gaines
WHEELING: Outlines Performance Key Points of Second Amended Plan
----------------------------------------------------------------
The key points of the Wheeling-Pittsburgh Steel Debtors' Second
Amended Plan, and the basis for their projections of plan
performance and feasibility are:
* The New Term Loan Agreement in the amount of $250 million
is obtained pursuant to the Emergency Steel Loan Guarantee
Program and $7.5 million in fees and expenses is paid in
connection with the financing;
* The New Revolving Loan Agreement with advance rates and
reserves similar to the DIP Facility is obtained;
* $20 million in cash is paid to prepetition creditors;
* The New Notes in the principal amount of $60 million will
be issued to prepetition creditors;
* $2 million in post-petition financing from the States of
Ohio and West Virginia is repaid;
* The Debtors' DIP revolver and Citibank portion of the DIP
term loan are repaid;
* The WHX portion of the DIP term loan and subsequent
advances are forgiven and WHX will contribute $20 million
to the Debtors on or before the Pre-Effective Date;
* The Debtors will issue a $10 million note to WHX;
* The Debtors will assume $42 million of prepetition
liabilities relating to capital leases, taxes and
employee benefits;
* $15.25 million is assumed to be paid in reorganization
expenses to cover professional fees, financing fees,
mechanics liens and other liabilities of the Debtors'
estates;
* Administrative liabilities to trade vendors and employees
are liquidated in the ordinary course of business.
(Wheeling-Pittsburgh Bankruptcy News, Issue No. 39; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WILLIAMS PRODUCTION: S&P Assigns Lower-B Credit & Debt Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Williams Production RMT Co. Standard & Poor's
also assigned its 'BB' senior secured bank loan rating to RMT's
proposed $500 million term loan B offering due May 2007.
At the same time, Standard & Poor's placed the ratings on RMT on
CreditWatch with negative implications.
"The RMT term loan has strong recovery prospects in the
event of default because of the amount and quality of the
collateral and thus is rated two notches higher than the
corporate credit rating," said Standard & Poor's credit analyst
Bruce Scwhartz.
Standard & Poor's also said that using a $2.75 average realized
natural gas price over the life of the transaction, it estimates
that the term loan is overcollateralized by about 2.0x on the
value of total reserves and about 1.5x based on the value of
proved developed producing reserves. Based on year-end 2002
prices, the term loan was covered 5.0x on the value of total
proved reserves.
Standard & Poor's expects that future outlook and rating changes
on RMT and the RMT term loan will be linked to changes to the
outlook or rating on The Williams Cos. Inc. In addition,
Standard & Poor's will be closely monitoring the productivity of
RMT's investments and could raise or lower the rating on RMT if
the recovery prospects for the term loan were to change.
The CreditWatch listing on RMT reflects Standard & Poor's
CreditWatch listing on Williams. However, upon funding of the
term loan, completion of a high-yield bond offering by Williams,
and repayment of a $1.167 billion secured term loan (including
principal, accrued interest, and deferred fees) at RMT, the
ratings on both RMT and Williams will be removed from
CreditWatch, and the outlook will be assigned in accordance with
Williams' ability to refinance or repay $1.4 billion of
unsecured debt maturing in March 2004.
WILLIAMS PRODUCTION: Fitch Expects to Rate Sr. Sec. Loan at BB+
---------------------------------------------------------------
Fitch Ratings expects to assign a 'BB+' rating to Williams
Production RMT Co.'s proposed $400 million senior secured term
loan facility due May 2007. The Rating Outlook for RMT is
Stable. RMT is an indirect wholly-owned subsidiary of The
Williams Companies, Inc. (WMB; senior unsecured debt rated 'B+'
by Fitch, Rating Outlook Stable). Proceeds from the term loan
along with funds provided by WMB will be utilized by RMT to
refinance an existing $1.167 billion secured credit facility,
which includes principal, accrued interest and a deferred set up
fee. The rating reflects the underlying collateral package that
will secure RMT's term loan, the quality of its reserves, its
stable stand alone credit profile and low production and finding
& development costs. Factors limiting RMT's rating are its large
inventory of proven undeveloped reserves and WMB's ongoing
reliance on RMT cash flows to support parent company level debt.
The term loan facility is expected to be secured by a perfected
first priority security interest in all of RMT's existing and
future oil and gas properties, except those currently under
sales agreements or being offered for sale. Pro forma recently
announced and contemplated asset sales, RMT had total proved
reserves of 1,675 Bcfe at Dec. 31, 2002, which are located in
the Piceance basin of Colorado and in the Powder River basin of
Wyoming. Based on year-end 2002 gas prices, the value of these
reserves provide a 5.0 times total collateral to secured debt
coverage ratio. Further growth in RMT's reserve base could occur
in 2003 as a result of the reduction in well spacing in the
Piceance Basin and the Bureau of Land Management's recent
decision to allow additional development in the Powder River
Basin. Nevertheless, given the size of the proposed term loan
along with the scope of the collateral package, Fitch believes
that total collateral to secured debt would approximate 2.0x
even in a stressed commodity price scenario.
The Piceance and Powder River are high quality reserve basins
due to their predictable production profiles, long-lived nature,
minimal development risk and limited exploration requirements.
RMT, through its 2001 acquisition of Barrett Resources, has
gained expertise in the development of tight-sands and coal bed
methane reserves. Over time, RMT's strategy has enabled it to
achieve a combined historic production growth rate of 27% per
year in the Piceance and Powder River basins for the last five
years. Despite this significant growth, RMT has maintained a
high R/P ratio of over 15 years. Additionally, because of RMT's
familiarity with the geology in these regions, its drilling
success rates have recently been in the high 90% range with very
low finding and drilling cost. Offsetting some of these
strengths is RMT's relatively high percentage of proved
undeveloped reserves (approximately 60% of 2002 pro forma proved
reserves).
RMT should continue to benefit from its access to firm pipeline
transportation out of the Rocky Mountain region. All of RMT's
production comes from the Rocky Mountain region where natural
gas wellhead prices have traded at substantial discounts to
other producing basins. However, through firm capacity contracts
with the Trailblazer and TransColorado pipelines, RMT is able to
sell nearly two-thirds of its gas production in the Mid
Continent and San Juan markets instead of the Rockies, largely
avoiding the basis risk that negatively impacts other gas
producers in the region. Fitch also notes that the recently
completed expansion of Kern River Gas Transmission should
further improve regional gas price dynamics.
Pro forma to reflect the benefits of receiving gains from
hedges, its recent asset sales and the proposed refinancing,
2002 EBITDA interest coverage would exceed 7.0x and debt/EBITDA
would be near 2.0x, both well within the rating category. RMT's
pro forma debt-to-total capital would be in the low 20% range
and its debt per mcfe would be below $0.40. Given the fact that
RMT is 80% hedged through June 2004, the company should achieve
comparable ratios in the next 18 months. Furthermore, with
additional reserves likely to be added in 2003 through the drill
bit, RMT's debt per mcfe ratio should improve. In a mid cycle
pricing environment of $2.50 per mcf, RMT expects EBITDA
interest coverage in excess of 5.0x and debt to EBITDA of less
than 3.5x. However, RMT's stable standalone financial profile is
offset by the indirect financial pressure resulting from the
substantial debt burden at WMB.
WOMEN FIRST: Esclim(TM) Now Added to Medco's Preferred Drug List
----------------------------------------------------------------
Women First HealthCare, Inc. (NASDAQ: WFHC) announced that its
transdermal estrogen patch, Esclim (estradiol transdermal
system), was added by Medco Health Solutions to its Preferred
Drug List effective April 1, 2003. The drug list, which is a
guide to excellent values within specific therapeutic categories
for clients and their members, helps physicians identify
products that maximize clinical results and economic value. With
the listing, Esclim will now have preferred formulary status on
the four largest Pharmacy Benefit Managers in the nation.
Saundra L. Childs, Women First Vice President of the
Pharmaceutical Division stated, "Women First HealthCare is
thrilled to have Medco Health Solutions as its partner in making
Esclim available to patients in need of menopausal hormone
therapy. Medco has a proven track record of providing the best
pharmaceutical products available to its membership at
reasonable prices. We will work together to bring sound clinical
solutions to health care challenges, especially those of
menopausal women." Edward F. Calesa, chairman, president and
CEO, added, "This partnership supports one of the key strategies
we outlined earlier in the year to refocus and redirect the
women's health franchise and we look forward to a mutually
advantageous relationship with Medco."
Women First HealthCare markets Esclim to target physicians
across the United States, primarily OB-GYN's who prescribe
hormone therapy for women in menopause. The company has achieved
success in making Esclim available on health plans via coverage
by Pharmacy Benefit Managers, which manage prescription benefits
for health plans and employee groups. Medco Health Solutions,
the largest such group, provides benefits for over 65 million
members via 12 home delivery pharmacies and a nationwide network
of more than 58,000 retail pharmacies.
Women First HealthCare markets Esclim exclusively in the U.S.
under a distribution and licensing agreement with Laboratories
Fournier SA of France. Esclim is approved by the U.S. Food and
Drug Administration for the treatment of vasomotor menopausal
symptoms such as hot flashes and night sweats. The Esclim
transdermal patch system offers maximum dosing flexibility with
five dosage options (0.025, 0.0375, 0.05, 0.075, and 0.1 mg/day)
and is applied to the skin twice weekly. Esclim provides a
unique ethylene vinyl acetate matrix system with flexible foam
backing to assure suppleness that follows the movement of a
woman's skin.
Women First HealthCare, Inc. (NASDAQ: WFHC) is a San Diego-based
specialty pharmaceutical company. Founded in 1996, its mission
is to help midlife women make informed choices regarding their
health care and to provide pharmaceutical products -- the
Company's primary emphasis -- and lifestyle products to meet
their needs. Women First HealthCare is specifically targeted to
women age 40+ and their clinicians. Further information about
Women First HealthCare can be found online at
http://www.womenfirst.com
Esclim is indicated for the relief of moderate to severe
vasomotor symptoms associated with menopause.
The most commonly reported side effects of Esclim are those
typical of estrogen therapy: breast tenderness, headache,
nausea, and abdominal pain. Estrogens have been reported to
increase the risk of endometrial carcinoma in postmenopausal
women. Estrogens are contraindicated in patients with known or
suspected pregnancy, undiagnosed abnormal genital bleeding,
known or suspected breast cancer, known or suspected estrogen-
dependent neoplasia, or active thrombophlebitis or
thromboembolic disorders. For more information about this
product and to see the package insert, please visit
http://www.womenfirst.com
As reported in Troubled Company Reporter's May 15, 2003 edition,
Women First HealthCare Inc. received $2.5 million of new capital
through a private placement of its common stock and has
completed agreements to obtain waivers of past defaults and
restructure the terms of both its $28.0 million principal amount
of senior secured notes and convertible redeemable preferred
stock issued to finance the company's acquisition of Vaniqa(R)
Cream.
* Gross to Head Huron Consulting's Corporate Finance Practice
-------------------------------------------------------------
Huron Consulting Group announced that Richard Gross, former head
of Global Investment at Bank of America, has joined the company
to lead its Corporate Finance group. Gross will be based in
Huron's Charlotte office.
"I am pleased to welcome Richard to Huron," said Gary Holdren,
president, Huron Consulting Group. "His leadership and expertise
in finance, capital markets and investment banking both
nationally and internationally will be a significant resource
for our clients."
Gross and the Corporate Finance group will be advising clients
in the area of mergers and acquisitions, recapitalization,
liability management and structured finance transactions.
"Huron is a growing firm with seasoned professionals," said
Gross. "I am looking forward to heading the Corporate Finance
group and serving the needs our clients."
Prior to joining Huron, Gross was the head of Global Investment
Banking at Bank of America. He has worked for Bank of America
and its predecessor banks for over 25 years. In addition to his
in-depth experience in corporate finance, he has extensive
industry experience in energy, utilities, telecommunications and
financial institutions. Gross received his MBA in Finance from
Stanford University.
Huron Consulting Group is a 400-person business consulting
organization created on the belief that our people are our
greatest asset and that our clients deserve the very best in
terms of effort, care, and intellectual capacity - delivered
objectively.
Huron Consulting Group provides valuation, corporate finance,
restructuring, and turnaround services to companies and lenders.
It performs financial investigations, litigation analysis,
expert testimony and forensic accounting for attorneys. Huron
provides strategic planning, operational consulting, strategic
sourcing, and organizational and technology assessments in a
variety of industries including manufacturing, healthcare and
higher education, law firm and corporate law departments,
transportation, consumer products, and energy.
Huron Consulting Group operates nationwide with offices in
Boston, Charlotte, Chicago, Houston, Miami, New York, San
Francisco and Washington, D.C.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Advisory Board ABCO (16) 48 (20)
Alliance Imaging AIQ (39) 683 43
Akamai Technologies AKAM (168) 230 60
Alaris Medical AMI (32) 586 173
Amazon.com AMZN (1,353) 1,990 550
Arbitron Inc. ARB (100) 156 (2)
Alliance Resource ARLP (46) 288 (16)
Atari Inc. ATAR (115) 242 52
Actuant Corp ATU (44) 295 18
Acetex Corp ATX (11) 373 126
Avon Products AVP (91) 3,327 73
Saul Centers Inc. BFS (13) 389 N.A.
Blount International BLT (369) 428 91
Broadwing Inc. BRW (2,104) 1,468 327
Cubist Pharmaceuticals CBST (7) 221 131
Choice Hotels CHH (114) 314 (37)
Columbia Laboratories COB (8) 13 5
Campbell Soup Co. CPB (114) 5,721 (1,479)
Echostar Comm DISH (1,206) 6,260 1,674
D&B Corp DNB (19) 1,528 (104)
Graftech International GTI (351) 859 108
Hollywood Casino HWD (92) 553 89
Imax Corporation IMAX (104) 243 31
Imclone Systems IMCL (5) 474 295
Gartner Inc. IT (5) 825 18
Jostens JOSEA (512) 327 (71)
Journal Register JRC (4) 702 (20)
Kos Pharmaceuticals KOSP (75) 69 (55)
Level 3 Comm Inc. LVLT (240) 8,963 581
Memberworks Inc. MBRS (21) 281 (100)
Moody's Corp. MCO (327) 630 (190)
McDermott International MDR (417) 1,278 154
McMoRan Exploration MMR (31) 72 5
MicroStrategy MSTR (34) 80 7
Northwest Airlines NWAC (1,483) 13,289 (762)
Petco Animal PETC (11) 555 113
Penthouse International PHSL (53) 15 (58)
Primedia Inc. PRM (559) 1,835 (248)
Primus Telecomm PRTL (168) 724 65
Per-Se Tech Inc. PSTI (39) 209 32
Qwest Communications Q (1,094) 31,228 (1,167)
Rite Aid Corp. RAD (93) 6,133 1,676
Revlon Inc. REV (1,641) 939 (44)
Ribapharm Inc. RNA (363) 199 92
Sepracor Inc. SEPR (392) 727 413
St. John Knits Int'l SJKI (76) 236 86
I-Stat Corporation STAT 0 64 33
Town and Country Trust TCT (2) 504 N.A.
Tenneco Automotive TEN (75) 2,504 (50)
TiVo Inc. TIVO (25) 82 1
UnitedGlobalCom UCOMA (3,040) 5,931 (6,287)
United Defense I UDI (30) 1,454 (27)
UST Inc. UST (47) 2,765 829
Valassis Comm. VCI (33) 386 80
Valence Technology VLNC (16) 30 3
Ventas Inc. VTR (54) 895 N.A.
Western Wireless WWCA (464) 2,399 (120)
Xoma Ltd. XOMA (11) 72 30
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***