/raid1/www/Hosts/bankrupt/TCR_Public/030527.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 27, 2003, Vol. 7, No. 103
Headlines
360NETWORKS: USA Unit Sues Cros-Am Industries to Recoup $3 Mill.
ACTERNA CORP: Court Okays Piper Jaffray's Engagement as Advisor
AIR CANADA: Jazz Reaches New Labor Agreements with Unions
AIR CANADA: Union Leaders Pushing for Workout Pact Ratifications
ALARIS MEDICAL: Commences Tender Offer for All Outstanding Bonds
ALARIS MEDICAL: S&P Keeps Watch on BB- Sr. Secured Debt Rating
ALLEGIANCE TELECOM: Taps Greenhill & Co. for Financial Advice
ALLIANCE TOBACCO: Case Summary & 20 Largest Unsecured Creditors
AMARILLO MESQUITE: Will File for Chapter 11 Reorganization
AMAZON.COM INC: Schedules Annual Shareholders' Meeting for Wed.
AMERICAN COMMERCIAL: Committee Hires Akin Gump as Co-Counsel
AMERICAN STONE: Covenant Violations Raise Going Concern Doubt
ANC RENTAL: Obtains Open-Ended Lease Decision Period Extension
APPLIED DIGITAL: Inks Agreements to Sell 12.5 Million Shares
ARMSTRONG: Wants Blessing to Expand Deloitte's Engagement Scope
ASPEN GROUP: Sues Ex-CEO J. Wheeler for Breach of Fiduciary Duty
BOFA ALTERNATIVE LOAN: Fitch Rates Four Note Classes at BB/B
BURLINGTON: Equity Committee Appointment Pitch Draws Fire
C.C. MING: Chapter 11 Case Summary & Largest Unsecured Creditor
CMS ENERGY: Shareholders Re-Elect Twelve Incumbents to Board
CMS ENERGY: Unit Declares Quarterly Preferred Share Dividend
COEUR D'ALENE: Completes $10-Million Common Stock Financing
COLFAX CORP: S&P Assigns BB- Corp. Credit & Bank Loan Ratings
COMPASS MINERALS: S&P Ratchets Credit Rating Down a Notch to B+
CONSECO INC: Pushing for Approval of Fleet Settlement Agreement
CSK AUTO: S&P Revises Rating Outlook over Improved Performance
DE LOACH VINEYARDS: Voluntary Chapter 11 Case Summary
EDISON SCHOOLS: Denies Loan Covenants Non-Compliance Reports
ENRON: Court Okays Venable Baetjer as Special Litigation Counsel
ESSENTIAL THERAPEUTICS: Wants to Continue DoveBid's Employment
FLEMING COMPANIES: Wins Nod to Pay $3-Mil. Roundy's Break-Up Fee
FLEXXTECH CORP: Closes Merger with Network Installation Corp.
GALEY & LORD: Has Until Aug. 14 to Make Lease-Related Decisions
GARNEAU INC: March 31 Working Capital Deficit Narrows to $1.3MM
GAYLORD ENTERTAINMENT: Facing Suit Filed by Nashville Predators
IMPSAT FIBER: March 31 Working Capital Deficit Tops $300 Million
INTERDENT INC: Delays Form 10-Q Filing for March 2003 Quarter
ISLE OF CAPRI: Reaches Pact to Lease and Operate Bahamas Casino
IT GROUP: Has Until July 14 to Move Actions to Delaware Court
KAISER ALUMINUM: Taps McDermott Will as Special Labor Counsel
KLEINERT'S: Signs-Up Net Worth Solutions as Investment Banker
LEAP WIRELESS: Cash Collateral Hearing Continues on June 3
LODGIAN INC: Successfully Emerges from Chapter 11 Proceedings
LUBY'S: Bank Default Triggers Cross-Default on Subordinated Debt
MASSEY ENERGY: Prices Convertible Senior Notes Private Offering
MASTER FIN'L: Fitch Rates Series 1997-1 Class B-2 Notes at BB
METROPOLITAN ASSET: Fitch Affirms BB Rating to Class B3 Notes
MINCS-ING I: Fitch Downgrades Two Second Priority Notes to BB-
MINC-PILGRIM: Fitch Junks $66-Million Notes at CC
NETWORK PLUS: UST Wants Case Converted to Chapter 7 Liquidation
NEXMED INC: Fails to Comply with Nasdaq Minimum Listing Criteria
NORTHWESTERN CORP: Defers All Preferred Share Distributions
NORTHWESTERN CORP: Fitch Junks Trust Preferred Securities at C
NRG ENERGY: Honoring & Paying Critical Trade Vendor Claims
OWENS CORNING: Metal Systems Assets Sold to ALSCO Metals Corp.
PAC-WEST: Comments on Recent Above Average Equity Trading Volume
PACIFICARE HEALTH: Transferring Stock Listing to NYSE on June 6
PEM ELECTRICAL: Voluntary Chapter 11 Case Summary
PETALS: Factory Outlet of CT Case Summary & 10 Unsec. Creditors
PETALS: Factory Outlet Inc's Case Summary & 20 Unsec. Creditors
PETALS: Factory Outlet of DE Case Summary & Unsecured Creditor
PETALS: Factory Outlet of FL Case Summary & Unsecured Creditor
PETALS: Factory Outlet of PA Case Summary & 7 Unsec. Creditors
POLYONE CORP: Fitch Keeps Watch on B Sr. Unsecured Note Rating
POLYPHALT INC: Defaults on Loan Agreement with Grandwin Holdings
POWER EFFICIENCY: Resources Insufficient to Meet Liquidity Needs
PRESIDENT CASINOS: Seeking Bids for Sale of St. Louis Casino
RELIANCE GROUP: Delays Filing of SEC Form 10-Q for First Quarter
RENT-WAY CORP: Enters Pact to Sell $205MM of Sr. Secured Notes
RSTAR CORP: March 31 Working Capital Deficit Widens to $6 Mill.
RURAL-METRO: Fails to Meet Nasdaq Continued Listing Guidelines
SAFETY-KLEEN CORP: Wants More Time to Preserve Avoidance Actions
SERVICE MERCHANDISE: Judge Paine Confirms First Amended Plan
SIRIUS SATELLITE: Closes $175 Million Convertible Notes Offering
SUTTER CBO: Fitch Affirms Class B Notes Rating at B-
TERRA INDUSTRIES: Fitch Assigns B- Rating to New $200M Sr. Notes
THERMADYNE: Emerges from Chapter 11 with Debt Dramatically Cut
TNP ENTERPRISES: Fitch Further Downgrades Lower-B Debt Ratings
UNITED AIRLINES: Takes Steps to Restructure United Express Plan
UNITED AIRLINES: Wants to Expand Scope of McKinsey's Engagement
UPC POLSKA: S&P Further Hacks Corp. Credit Rating to CC from CCC
USG CORP: Inks Settlement with Asbestos Claims Management Corp.
VERTIS INC: S&P Rates $350-Mil. Sr. Sec. Second Lien Notes at B-
VIEW SYSTEMS: Clarifies Earlier Restructuring Statements
WASHINGTON MUTUAL: Fitch Rates Class B-4 & B-5 Notes at BB/B
WEIRTON STEEL: Final DIP Financing Hearing Slated for June 16
WILLIAMS COS: S&P Affirms B+ Long-Term Corporate Credit Rating
WINSTAR COMMS: Ch. 7 Trustee Sues 144 Vendors to Recover $41MM
WORLD WIRELESS: Fails to Meet SEC Form 10-Q Filing Deadline
WORLDCOM: Watchdog Lauds Congressional Inquiry of MCI Contracts
* Large Companies with Insolvent Balance Sheets
*********
360NETWORKS: USA Unit Sues Cros-Am Industries to Recoup $3 Mill.
----------------------------------------------------------------
Cros-Am Industries, Ltd. received, on or within 90 days prior to
the Petition Date, 10 payments from 360networks (USA) inc. and
360fiber, inc., totaling $3,471,473.
360 demanded Cros-Am return the money in a letter dated March
26, 2003. Cros-Am didn't.
Dana L. Weinstein, Esq., at Sidley Austin Brown & Wood LLP, in
New York, contends that:
(a) each of the Transfers was made to Cros-Am for or on
account of an antecedent debt the Debtors owed before
each Transfer was made;
(b) Cros-Am was a creditor at the time of the Transfers;
(c) the Transfers were made while the Debtors were insolvent;
and
(d) by reason of the Transfers, Cros-Am was able to
receive more than it would otherwise receive if:
-- these Cases were cases under Chapter 7 of the
Bankruptcy Code;
-- the Transfers had not been made; and
-- Cros-Am received payment of the debts in a Chapter 7
proceeding in the manner the Bankruptcy Code
specified.
In addition, Ms. Weinstein argues that $1,200,000 of the
Transfers were fraudulent transfers that were made within one
year prior to the Petition Date to or for the benefit of Cros-Am
because at the time 360 USA made the Fraudulent Transfers, Cros-
Am was not a creditor of 360 USA. As a result of the Fraudulent
Transfers, 360 USA received less than a reasonable equivalent
value in exchange for the Fraudulent Transfers. Cros-Am was the
original transferee of the Fraudulent Transfers pursuant to
Section 550(a)(1) of the Bankruptcy Code.
Accordingly, the Official Committee of Unsecured Creditors, 360
USA and 360fiber ask the Court to:
(a) declare that the Transfers are avoidable pursuant to
Section 547 of the Bankruptcy Code;
(b) declare, pursuant to Sections 547 and 550 of the
Bankruptcy Code, that Cros-Am pays $3,471,473,
representing the amount it owed, plus interest from the
date of the Demand Letter as permitted by law;
(c) in the alternative, declare that the Fraudulent Transfers
are avoidable, pursuant to Section 548 of the Bankruptcy
Code;
(d) in the alternative, declare that Cros-Am pay at
least $1,200,000 for the Fraudulent Transfers,
representing the amount it owed, plus interest, as
permitted by law, from the date of the Demand Letter;
(e) provide that any and all claims against the Debtors,
which Cros-Am filed, will be disallowed until it repays
in full the amount of the Transfers or, in the
alternative, the Fraudulent Transfers, plus all
applicable interest pursuant to Section 502(d) of the
Bankruptcy Code; and
(f) award the Committee and the Debtors all costs, reasonable
attorneys' fees and interest. (360 Bankruptcy News, Issue
No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ACTERNA CORP: Court Okays Piper Jaffray's Engagement as Advisor
---------------------------------------------------------------
Acterna Corp., and its debtor-affiliates sought and obtained the
Court's authority to employ, on an interim basis, U.S. Bancorp
Piper Jaffray Inc. as their financial advisor in connection with
the possible sale of all or substantially all of the assets of
da Vinci Systems, Inc., one of their principal business
segments.
The Debtors need the services of a qualified investment banker
to successfully reorganize their businesses, and Piper is both
well qualified and familiar with the Debtors' businesses, having
been rendering services to them since August 2002.
da Vinci manufactures and sells digital color correction
systems.
Acterna Chief Financial Officer and Senior Vice President John
D. Ratliff relates that Piper Jaffray, during its engagement
under a letter agreement dated August 8, 2002, agreed to devote
substantial time and energy to the potential sale of at least
20% of da Vinci capital stocks or assets. Mr. Ratliff discloses
that Piper Jaffray:
(a) prepared an informational memorandum regarding da Vinci's
business;
(b) conducted a direct search for potential purchasers of da
Vinci;
(c) evaluated inquiries from interested parties; and
(d) obtained bids and assisted the Debtors with the
negotiation of a letter of intent and asset and stock
purchase agreements with a potential acquirer of da
Vinci's assets.
During the pendency of their Chapter 11 cases, the Debtors will
compensate Piper Jaffray through these terms:
(1) A transaction fee equal to 2.5% of the aggregate
transaction value up to $40,000,000, plus 3.5% of the
aggregate transaction value from $40,000,000 to
$50,000,000, plus 5% of the aggregate transaction value
over $50,000,000. The minimum Transaction Fee under the
Agreement is $700,000;
(2) The applicable transaction fee will be paid in
immediately available funds on the consummation of the
transaction; and
(3) Notwithstanding the termination of the Agreement by Piper
Jaffray or the Debtors, Piper Jaffray is entitled to the
applicable transaction fee in the event that, at any time
before the expiration of 12 months after the termination,
an agreement is entered into with respect to a sale of 20%
or more of the da Vinci capital stock or assets which
is thereafter consummated.
The Debtors will also reimburse Piper Jaffray for its reasonable
out-of-pocket expenses, including the fees and disbursements of
its attorneys, plus any sales, use or similar taxes.
The Debtors have paid Piper Jaffray $100,000 as a retention fee.
Piper Jaffray Vice President Robert Frost ascertains that the
firm members and professionals do not have any connections with
the Debtors, creditors or any other and other parties-in-
interest, their attorneys or accountants. It is a
"disinterested person," as the term is defined in Section
101(14) of the Bankruptcy Code.
However, Piper Jaffray is a subsidiary of U.S. Bancorp. The
Debtors have disclosed to Piper that U.S. Bancorp, through State
Street Bank and Trust Company, is the indenture trustee in
connection with the $275,000,000 in principal amount of Senior
Subordinated Notes due 2008 pursuant to that certain Indenture,
dated May 21, 1998. Piper Jaffray has not and will not discuss
matters with U.S. Bancorp related to the Chapter 11 cases while
employed by the Debtors, Mr. Frost assures the Court. (Acterna
Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
AIR CANADA: Jazz Reaches New Labor Agreements with Unions
---------------------------------------------------------
Air Canada Jazz reached agreements with its pilots represented
by the Air Line Pilots Association, International and its flight
dispatchers represented by the Canadian Air Line Dispatchers
Association on new labor agreements as part of the company's
restructuring plan. These agreements are both necessary and very
important in allowing Jazz to successfully restructure under the
CCAA process. The new agreements are subject to ratification.
"The successful conclusion of negotiations with our unions is a
fundamental and critical step in our emergence as a highly
competitive, low cost airline," stated Joseph Randell, President
and Chief Executive Officer of Air Canada Jazz. "I salute the
Jazz unions and our employees in their determined effort to make
Jazz a competitive force in the North American airline industry
going forward. Collectively, we have worked very hard to secure
our future."
Air Canada Jazz wishes to express its thanks to Justice Warren
Winkler, who was appointed by Justice James Farley, to
facilitate labour related restructuring discussions in the Air
Canada CCAA process.
This restructuring is one of the most complex in Canadian
history, especially in light of the troubled airline industry
environment. These two new agreements reduce costs for these
groups by up to 48%, and will allow Jazz to cut the cost of its
existing fleet by approximately $58.5 million annually. As a
result, it is Jazz's intention to introduce between 25 to 30 new
regional jet aircraft in the 70-seat range, subject to the
successful completion of the restructuring and obtaining
competitive proposals from aircraft manufacturers.
"Labor cost realignment is the key cornerstone to a successful
restructuring of Air Canada and Air Canada Jazz, as overall our
costs have to be approximately one-third less for Air Canada to
be competitive", said Calin Rovinescu, Air Canada's Chief
Restructuring Officer. "Today's announcement by the Jazz unions
who have reached tentative agreements is a key milestone. I
congratulate these unions for taking this important step to
preserve the Air Canada Jazz franchise, saving as many jobs as
possible at that carrier. I look forward to our tentative
agreements with our remaining unions as time is of the essence
for all economic stakeholders and employees."
"These agreements also provide the necessary flexibility we
require going forward," added Randell. "This includes no
guarantees related to fleet size or job security, which in
today's competitive environment, is an essential ingredient for
a successful airline."
Air Canada Jazz is Canada's second largest airline operating a
fleet of over 90 aircraft including Dash 8, Bombardier CRJs and
BAe 146 aircraft throughout Canada and the United States.
AIR CANADA: Union Leaders Pushing for Workout Pact Ratifications
----------------------------------------------------------------
A coalition of Jazz unions are announcing agreements with Air
Canada Jazz that will start JAZZs' transformation to Canada's
low-cost airline.
The agreements were entered into as part of JAZZs' restructuring
under the CCAA process. Along with significant cost saving
measures, they provide that between 25 and 30 new jets in the 70
seat size range will be placed into service at JAZZ as part of
the company's fleet restructuring. JAZZ will be unrestricted
from operating jet aircraft with up to 75 seats.
Additionally, ALPA has indicated that they will submit a
proposal to operate larger jet equipment. The Court-appointed
Monitor, Ernst & Young, has agreed to design, implement and
administer a process to allocate the larger regional aircraft
The present allocation is based upon restrictions currently in
place between Air Canada and the Air Canada Pilots Association's
that will expire in April 2004.
All of the unions involved in this process want to express their
satisfaction at reaching the agreements and wish to express
their thanks to Justice Warren Winkler. Justice Winkler was
appointed by Mr. Justice James Farley, who is presiding over the
entire process to facilitate restructuring discussions with the
unions and was invaluable in assisting the parties in reaching
the agreements.
CAW-Canada President Buzz Hargrove stated: "This agreement is a
first step to ensuring the viability of our national airline.
Air Canada Jazz provides vital air service to over 70
communities across the country and employs over 3,000 unionized
workers. For the CAW, our three negotiating committees will
strongly recommend ratification."
Capt. Nick DiCintio, chairman of the Air Canada Jazz unit of the
Air Line Pilots Association, International, issued the following
statement regarding the new pilots' agreement: "Our negotiating
committee and ALPA staff devoted a tremendous amount of time and
energy to make this agreement a reality. The current financially
demanding circumstances at Air Canada and Jazz that surrounded
these negotiations created a make or break situation for our
team - either make a deal or let the chips fall where they may."
The pilot agreement includes pay rates that provide financial
relief, a unique status pay system, and numerous productivity
enhancements. "All of us acknowledge the extraordinary efforts
of the many individuals who were able to come together to make
this agreement a reality," DiCintio said.
CALDA President Bill McCauley stated: "Our deal was painful in
certain areas. Both sides had to work hard to minimize the
individual sacrifice. However, the agreement represents the
necessary steps both sides have to take to ensure a positive
future. Having accomplished this, we can recommend the agreement
for ratification. As always I would like to recognize the
dedication of our negotiating team.
CAW-Canada is Canada's largest private sector union with over
260,000 members, including 12,000 members in the airline
industry. Its Web site is http://www.caw.ca
ALPA, the world's oldest and largest airline pilot union,
represents 66,000 pilots at 42 carriers in Canada and the U.S.
Its Web site is at http://www.alpa.org
CALDA represents the majority of Flight Dispatchers in Canada.
ALARIS MEDICAL: Commences Tender Offer for All Outstanding Bonds
----------------------------------------------------------------
ALARIS Medical Inc. (AMEX:AMI) and its wholly-owned operating
subsidiary, ALARIS Medical Systems Inc., each has commenced a
cash tender offer for any and all of its outstanding bonds.
ALARIS Medical Inc. has commenced a cash tender offer for any
and all of its outstanding 11-1/8% Senior Discount Notes due
2008, and ALARIS Medical Systems Inc. has commenced cash tender
offers for any and all of its outstanding 11-5/8% Senior Secured
Notes due 2006 and 9-3/4% Senior Subordinated Notes due 2006. In
conjunction with these tender offers, ALARIS Medical and ALARIS
Medical Systems are soliciting consents from holders to effect
certain amendments, including the elimination of the restrictive
covenants to the indentures governing the notes and, in the case
of the 11-5/8% Senior Secured Notes, to the security documents
relating to such notes. The tender offers are conditioned, among
other things, on a majority of the bonds tendering and
consenting.
The tender offers and consent solicitations are being made in
connection with a proposed recapitalization of ALARIS Medical
and ALARIS Medical Systems. This recapitalization would take
advantage of ALARIS's improved operating results and the current
interest rate environment, and would involve the following
concurrent transactions:
1. the public offering by ALARIS Medical of 9,100,000 shares of
common stock, plus up to a 15% over allotment option
exercisable by the underwriters comprising 900,000 shares to
be sold by the company and 450,000 shares to be sold by
shareholders as detailed in the company's S-3 registration
with the SEC;
2. the establishment by ALARIS Medical of a new secured credit
facility with a group of banks and other lenders providing
for up to $235 million in aggregate principal amount of term
loans and an approximately $30 million revolving credit
facility;
3. the public offering by ALARIS Medical of approximately $210
million of new senior subordinated notes; and
4. the merger of ALARIS Medical Systems with ALARIS Medical. The
surviving company will be named "ALARIS Medical Systems Inc."
and will continue to trade on the American Stock Exchange
under the symbol "AMI."
The net proceeds of these transactions will be used to fund the
offers and related fees and expenses, to reduce the company's
debt level and annual interest expense, and for general
corporate purposes. If these transactions are successfully
executed, the company estimates that it will record a one-time
after-tax charge of approximately $37 million. Annual interest
expense is expected to be reduced by approximately $26 million
on a pre-tax basis.
The consent solicitations will expire at 5 p.m., New York City
time, on June 5, 2003, unless extended or earlier terminated
(the "consent date"). The tender offers will expire at 5 p.m.,
New York City time, on June 20, 2003, unless extended or earlier
terminated (the "expiration date").
-- Tendering holders of the 11-1/8% Senior Discount Notes who
validly tender and deliver consents by the consent date will
receive the total consideration of $1,053.75 per $1,000
principal amount at maturity of senior discount notes, which
includes a consent payment of $20.00 per $1,000 principal
amount at maturity.
-- Tendering holders of the 11-5/8% Senior Secured Notes who
validly tender and deliver consents by the consent date will
receive the total consideration of $1,210 per $1,000
principal amount of senior secured notes, which includes a
consent payment of $20.00 per $1,000 principal amount, plus
accrued and unpaid interest from the last interest payment
date to (but not including) the payment date.
-- Tendering holders of the 9-3/4% Senior Subordinated Notes who
validly tender and deliver consents by the consent date will
receive the total consideration of $1,037.50 per $1,000
principal amount of senior subordinated notes, which includes
a consent payment of $20.00 per $1,000 principal amount plus
accrued and unpaid interest from the last interest payment
date to (but not including) the payment date.
Holders who validly tender their notes after the applicable
consent date and prior to the applicable expiration date are not
entitled to the applicable consent payment, and will receive, as
payment for their notes, the total consideration minus the
consent payment.
The amendments for which consents are being solicited in each of
the consent solicitations will eliminate or modify substantially
all of the restrictive covenants, most of the event of default
provisions, many of the remedial provisions and other provisions
contained in the indentures applicable to the notes (and in the
case of the senior secured notes, in the applicable security
documents). Holders may not tender their notes without
delivering consents.
ALARIS Medical's and ALARIS Medical Systems' obligations to
accept and pay for notes is subject to the conditions stated in
the tender offers, including the condition that (i) holders of a
majority in aggregate principal amount of each series of notes
shall have tendered their notes and consented to the amendments
to the indentures (and, in the case of the 11-5/8% Senior
Secured Notes, to the applicable security documents), and (ii)
ALARIS Medical shall have received proceeds from equity and debt
financings acceptable to it in its sole discretion (including,
without limitation, as to terms and amounts) necessary to
complete the offers and certain related transactions.
The terms and conditions of the tender offers and consent
solicitations, including the other conditions to ALARIS
Medical's and ALARIS Medical Systems' obligations to accept the
notes tendered and pay the purchase price and consent payments,
are set forth in an Offer to Purchase and Consent Solicitation
Statement dated May 22, 2003 with respect to each series of
notes. ALARIS Medical and ALARIS Medical Systems may amend,
extend or, subject to certain conditions, terminate the tender
offers and consent solicitations at any time.
ALARIS Medical and ALARIS Medical Systems expect to make payment
promptly after the expiration date on notes validly tendered and
accepted for purchase. Holders who validly tender their notes
will also be paid accrued and unpaid interest up to, but not
including, the date of payment for the notes.
ALARIS Medical and ALARIS Medical Systems have engaged Bear,
Stearns & Co. Inc. and Citigroup Global Markets Inc. to act as
the exclusive Dealer Managers and Solicitation Agents in
connection with the tender offers and consent solicitations.
Questions regarding the tender offers and consent solicitations
may be directed to Bear, Stearns & Co. Inc. at 877/696-2327
(toll free) and to Citigroup Global Markets Inc. at 800/558-3745
(toll free). Requests for documentation may be directed to
Mellon Investor Services LLC, the information agent for the
tender offers and consent solicitations, at 866/323-8166 (toll
free) or 917/320-6286.
ALARIS Medical Inc., through its wholly owned operating company,
ALARIS Medical Systems Inc., develops practical solutions for
medication safety. The company designs, manufactures and markets
intravenous medication delivery and infusion therapy devices,
needle-free disposables and related monitoring equipment in the
United States and internationally. ALARIS Medical's proprietary
Guardrails(R) Safety Software, its other "smart" technologies
and its "smart" services help to reduce the risks and costs of
medication errors, help to safeguard patients and clinicians and
also gather and record clinical information for review, analysis
and transcription. The company provides its products,
professional and technical support and training services to over
5,000 hospital and health care systems, as well as alternative
care sites, in more than 120 countries through its direct sales
force and distributors. With headquarters in San Diego, ALARIS
Medical employs approximately 2,900 people worldwide. Additional
information on ALARIS Medical can be found at
http://www.alarismed.com
ALARIS Medical's March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $27 million.
ALARIS MEDICAL: S&P Keeps Watch on BB- Sr. Secured Debt Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its speculative-grade
ratings on medical products maker ALARIS Medical Inc., and its
operating company, ALARIS Medical Systems Inc., on CreditWatch
with positive implications.
At the same time, Standard & Poor's assigned its 'BB-' senior
secured debt rating to ALARIS Medical Systems' proposed $30
million revolving bank credit facility due in June 2008 and its
proposed $235 million bank term loan due in June 2009. Standard
& Poor's also assigned its 'B-' subordinated debt rating to
ALARIS Medical Systems' proposed $210 million subordinated notes
due December 2011. These ratings are also on CreditWatch with
positive implications.
Proceeds from the proposed debt issues, along with those from a
proposed $93 million new common equity offering, will be used to
refinance or repay the company's current debt. After the
completion of the transaction, Standard & Poor's will:
Raise ALARIS Medical Systems Inc.'s corporate credit rating to
'BB-' from 'B+'; Raise ALARIS Medical Systems Inc.'s senior
secured debt and bank loan ratings to 'BB' from 'BB-';
Raise ALARIS Medical Systems Inc.'s subordinated debt rating to
'B' from 'B-'; and Withdraw the corporate credit and all debt
ratings on ALARIS Medical Inc., when ALARIS Medical Systems Inc.
merges into ALARIS Medical Inc. and the collapsed entity assumes
the name ALARIS Medical Systems Inc.
If these transactions are not completed in full, the current
ratings will be removed from CreditWatch and affirmed.
Besides the additional financial improvement afforded by the new
issues, the higher rating on ALARIS would reflect its
revitalized portfolio of advanced medication safety products, a
product line that has strengthened the company's cash flows and
enabled it to repay its debt. During the past few years, ALARIS
has addressed inefficiencies in its manufacturing processes and
cost structure, revived what had been a relatively unprolific
R&D program, and launched a number of well-received new
products.
"ALARIS' speculative-grade ratings continue to reflect the
company's relatively narrow operating focus, an exposure to
competitive innovations in its core technologies, and its still-
aggressive debt leverage," said Standard & Poor's credit analyst
Jill Unferth. "However, these weaknesses are partly offset by
ALARIS' leading positions in certain strong niche medical
businesses; its relatively stable earnings from recurring-sale
consumable products (representing more than 60% of sales); and
contracts with large, domestic group-purchasing organizations."
San Diego, California-based ALARIS Medical Inc. makes and
markets intravenous medication delivery and infusion therapy
devices, needle-free disposables, and related monitoring
equipment to more than 5,000 hospitals in the U.S. and overseas.
The company has been able to take advantage of its large
installed equipment base to market its dedicated disposables,
which must generally be used in tandem with existing equipment.
The company also makes proprietary software and other "smart"
technologies that limit medication errors.
ALLEGIANCE TELECOM: Taps Greenhill & Co. for Financial Advice
-------------------------------------------------------------
Allegiance Telecom, Inc., and its debtor-affiliates asks for
permission from the U.S. Bankruptcy Court for the Southern
District of New York to retain and employ Greenhill & Co., LLC
as their financial advisor and investment banker.
The financial advisory services Greenhill will provide to the
Debtors may include:
(i) review and analyze the business, operations,
properties, financial condition and prospects of the
Debtors;
(ii) evaluate the Debtors' debt capacity in light of their
projected cash flows;
(iii) assist in the determination of an appropriate capital
structure for the Debtors;
(iv) determine a range of values for the Debtors on a going
concern basis and on a liquidation basis; and
(v) advise and attend meetings of the Debtors' Boards of
Directors and their Committees.
Greenhill will also provide Recapitalization Services. This
category of work calls for Greenhill to:
(i) provide financial advice and assistance to the Debtors
in developing and seeking approval of a chapter 11
plan;
(ii) provide financial advice and assistance to the Debtors
in structuring any new securities, other consideration
or other inducements to be offered and/or issued under
the Plan;
(iii) assist the Debtors and/or participate in negotiations
with entities or groups affected by the Plan; and
(iv) assist the Debtors in preparing documentation within
Greenhill's area of expertise required in connection
with the Plan.
The Debtors believe that the services will not duplicate the
services that other professionals will be providing to the
Debtors in these chapter 11 cases. Greenhill has agreed to use
reasonable efforts to avoid duplicating services provided by
other professionals advising the Debtors.
Michael A. Kramer, Managing Director of Greenhill discloses that
the Debtors will pay Greenhill:
i) $175,000 Monthly Advisory Fees; and
ii) a Recapitalization Transaction Fee, contingent upon the
consummation of a Recapitalization, equal to $6,500,000.
Allegiance Telecom, Inc., is a holding company with subsidiaries
operating in 36 major metropolitan areas in the U.S. who provide
a package of telecommunications services, including local, long
distance, international calling, high-speed data transmission
and Internet services and customer premise communications
equipment sales and maintenance services. The Debtors filed for
chapter 11 protection on May 14, 2003 (Bankr. S.D.N.Y. Case No.
03-13057). Jonathan S. Henes, Esq., and Matthew Allen Cantor,
Esq., at Kirkland & Ellis represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $1,441,218,000 in total assets and
$1,397,494,000 in total debts.
ALLIANCE TOBACCO: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Alliance Tobacco Corporation
114 W. Steve Wariner Drive
Russell Springs, Kentucky 42640
Bankruptcy Case No.: 03-11030
Type of Business: Leading seller of cheap cigarettes, the
company sells discount brands such as DTC,
Durant, GT One, and Palace.
Chapter 11 Petition Date: May 13, 2003
Court: Western District of Kentucky (Bowling Green)
Judge: Joan L. Cooper
Debtor's Counsel: Cathy S. Pike, Esq.
Weber & Rose, PSC
2400 Aegon Center
400 West Market Street
Louisville, KY 40202
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Andrew M. Parish, P.A. Legal Services $23,279
Integrated Distrib. Professional Services $11,663
Solutions
Tri Whap Office Lease $7,650
May Advertising Advertising $6,494
American Express Expenses $4,853
Integrated Distribution Software Lease $3,473
Solution
Cox Interior Office Furnishings $3,424
Meyercord Revenue Co. Stamp Machine Lease $2,842
Averitt Express Freight $2,837
United Parcel Service Freight $2,613
Somerset Printing & Sign Printing Services $2,501
Co.,
MCI Communications Service Phone Service $2,345
Roadway Express, Inc. Freight $2,046
Overnite Transportation Freight $1,958
The Letter Shopp Advertising $1,930
Rees Printing Company Printing Services $1,878
Overnite Transportion Freight $1,862
Anderson Office Supply Office Supplies $1,814
SMB Leasing Solutions Computer Lease $1,579
CSP Information Group, Inc. Advertising $1,500
AMARILLO MESQUITE: Will File for Chapter 11 Reorganization
----------------------------------------------------------
Amarillo Mesquite Grill, Inc. (OTC Bulletin Board: MESQE)
announced it will file for Chapter 11 reorganization.
The Company noted several factors that led to the necessity of
restructuring. These include: the increase of national chain
competition in many of the markets in which the Company
operates, the increased cost of public company audit and S.E.C.
related expenses, and the Company's inability to amortize its
current debt. As a result of this restructuring and the
resignation of the Company's auditors earlier in the year, the
Company will not be filing its annual report with the SEC in a
timely manner.
The Company said that the existing locations would remain open
and operating as it formulates a plan of reorganization.
AMAZON.COM INC: Schedules Annual Shareholders' Meeting for Wed.
---------------------------------------------------------------
Amazon.com, Inc. (Nasdaq:AMZN) will Webcast live its 2003 Annual
Meeting of Stockholders to be held in Seattle on May 28, 2003,
at 9:00 a.m. PT/12:00 p.m. ET. The audio of this presentation
will also be available through May 14, 2004, at
http://www.amazon.com/ir.Amazonalso said it will be speaking at
a Deutsche Bank Conference in New York on June 4, 2003, at 6:00
a.m. PT/9:00 a.m. ET. The audio of this presentation will be
Webcast live and be available for three months thereafter, at
www.amazon.com/ir.
Amazon.com, a Fortune 500 company based in Seattle, opened on
the World Wide Web in July 1995 and today offers Earth's Biggest
Selection. Amazon.com seeks to be Earth's most customer-centric
company, where customers can find and discover anything they
might want to buy online, and endeavors to offer its customers
the lowest possible prices. Amazon.com and other sellers list
millions of unique new and used items in categories such as
apparel and accessories, electronics, computers, kitchenware and
housewares, books, music, DVDs, videos, cameras and photo items,
toys, baby items and baby registry, software, computer and video
games, cell phones and service, tools and hardware, magazine
subscriptions and outdoor living items.
Amazon.com, Inc.'s March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $1.3 billion.
DebtTraders says Amazon.com Inc.'s 6.875% bonds due 2010
(AMZN10USN1) are trading at about 66 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=AMZN10USN1
for real-time bond pricing.
AMERICAN COMMERCIAL: Committee Hires Akin Gump as Co-Counsel
------------------------------------------------------------
The Unsecured Creditors' Committee appointed in American
Commercial Lines, LLC and its debtor-affiliates' on-going
chapter 11 cases sought and obtained court approval to hire Akin
Gump Strauss Hauer & Feld LLP as its Co-Counsel.
The Committee reports that they need the services of Akin Gump
to:
a) advise the Committee with respect to its rights, duties
and powers in these Cases;
b) assist and advise the Committee in its consultations
with the Debtors relative to the administration of these
Cases;
c) assist the Committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure
and in negotiating with holders of claims and equity
interests;
d) assist the Committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of
the Debtors and of the operation of the Debtors'
businesses;
e) assist the Committee in its analysis of, and
negotiations with, tile Debtors or any third party
concerning matters related to, among other things, the
assumption or rejection of certain leases of non-
residential real property and executory contracts, asset
dispositions, financing of other transactions and the
terms of a plan(s) of reorganization for the Debtors and
accompanying disclosure statement(s) and related plan
documents;
d) assist and advise the Committee as to its communications
to the general creditor body regarding significant
matters in these Cases;
g) represent the Committee at all hearings and other
proceedings;
h) review and analyze applications, orders, statements of
operations and schedules filed with the Court and advise
the Committee as to their propriety;
i) advise and assist the Committee with respect to any
legislative or governmental activities, including, if
requested by the Committee, to perform lobbying
activities on behalf of the Committee;
j) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the
Committee's interests and objectives; and
k) perform such other legal services as may be required or
are otherwise deemed to be in the interests of the
Committee in accordance with the Committee's powers and
duties as set forth in the Bankruptcy Code, Bankruptcy
Rules or other applicable law.
The Committee believes that Akin Gump possesses extensive
knowledge and expertise in the areas of law relevant to these
cases, and that Akin Gump is well qualified to represent the
Committee in these Cases.
Akin Gump will charge for its legal services on an hourly basis
in accordance with its ordinary and customary hourly rates
Partners $325 - $735
Special Counsel and Counsel $325 - $700
Associates $185 - $450
Paraprofessionals $ 45 - $190
The names, positions and current hourly rates of the Akin Gump
professionals currently expected to have primary responsibility
for providing services to the Committee are:
Ira S. Dizengoff Partner $575 per hour
James R. Savin Counsel $425 per hour
Kerry G. Thompson Associate Pending Admission $275 per hour
American Commercial Lines LLC, an integrated marine
transportation and service company transporting more than 70
million tons of freight annually using 5,000 barges and 200
towboats in North and South American inland waterways, filed for
chapter 11 protection on January 31, 2003 (Bankr. S.D. Ind. Case
No. 03-90305). American Commercial is a wholly owned subsidiary
of Danielson Holding Corporation (Amex: DHC). Suzette E.
Bewley, Esq., at Baker & Daniels represents the Debtors in their
restructuring efforts. As of September 27, 2002, the Debtors
listed total assets of $838,878,000 and total debts of
$770,217,000.
AMERICAN STONE: Covenant Violations Raise Going Concern Doubt
-------------------------------------------------------------
American Stone Industries, Inc., and its subsidiaries operated
predominantly in one industry, the design, quarrying and cutting
of sandstone primarily used in the construction industry.
The Company has experienced significant operating losses over
the previous two years. Additionally, the Company has not been
able to comply with its loan covenants at March 31, 2003 and,
December 31, 2002, although they have obtained waivers from the
bank. These matters raise substantial doubt about the Company's
ability to continue as a going concern.
Net sales for the first quarter of 2003 were $321,535, down 62%
compared with $855,486 for the first quarter of 2002. The
decline was due to harsh winter weather that closed the quarries
from January through mid-March, the discontinuation of
unprofitable contracts, and the slow economy.
Gross profit percentage for the first quarter of 2003 decreased
to negative 110% compared with a positive 16% in the same period
a year ago. The decrease was due to the factors cited above
along with significant maintenance expenses of equipment which
had previously been delayed.
Selling, general and administrative expenses increased as a
percentage of net sales from 32% in the first quarter of 2002 to
69% in the latest quarter due to lower sales this year.
Net other expense for the first quarter of 2003 was $41,564,
compared with $7,951 for the first quarter of 2002 due to higher
interest expense, elimination of rental income, lower royalty
income and a loss on the sale of fixed assets.
Net loss for the first quarter of 2003 increased to $616,229
compared with net loss of $145,343 for the first quarter of 2002
primarily due to lower sales and increased expenses related to
delayed maintenance as described above. Earnings in the stone
quarrying industry are normally weaker in the first quarter when
the cold weather restricts both demand and production.
The Company's primary source of liquidity is the Company's line
of credit under an agreement between the Company and Dollar
Bank. The Credit Agreement provides for maximum borrowings of
$500,000, with interest payable monthly at a rate equivalent to
the prime lending rate. Borrowings under the Credit Agreement
are secured by substantially all real estate, inventory and
equipment of the Company. The outstanding balance at March 31,
2003 and December 31, 2002 was $500,000. At March 31, 2003, the
Company was in violation of certain covenants of the loan
agreement, however, management has obtained waivers from the
bank.
Management believes that the Company's current cash flow
position will improve by mid-year. The current situation is the
result of the cyclical nature of sales and the financing of
increased production for which cash payments have not yet been
received. Management also believes that the Company is not in
default with respect to any note, loan, lease or other
indebtedness or financing agreement. The Company is not subject
to any unsatisfied judgments, liens or settlement obligations.
As stated above, the Company has experienced significant
operating losses over the previous two years. As a result, the
Company currently has cash flow and liquidity problems.
Management has taken steps to cut administrative overhead,
employment levels and other expenses with a goal of reducing
expenses by nearly $1 million in 2003. Management has also
instituted strict controls on credit and sales policies and
procedures. There can be no assurances that these measures will
enable the Company to become profitable or achieve positive cash
flow in the foreseeable future. Management is currently
evaluating alternatives including identifying and obtaining
long-term funding sources, including debt placement, stock
issuance and other alternatives. If Management is unable to
obtain additional capital, there is doubt about the Company's
ability to continue as a going concern.
ANC RENTAL: Obtains Open-Ended Lease Decision Period Extension
--------------------------------------------------------------
To resolve informal objections interposed by the Cardinal
Landlords (Runway Investments, LLC, LAX-Airport Owners, LLC, BL,
Airport Owners-NB, L.P., and WF-Airport Owners, L.P.), to the
Debtors' Emergency Motion, Judge Walrath orders that with
respect to the Los Angeles Lease, the Orange County Lease, and
the Newark Lease the Motion is continued sine die, subject to
the terms of a consensual stipulation maintaining the status
quo. ANC Rental Corporation and its debtor-affiliates have
decided to assume these three leases.
Judge Walrath orders that the time period within which the
Debtors must elect to assume or reject leases is continued to
and including the to-be-scheduled June Omnibus Hearing Date, and
the Debtors will comply with Section 365(d)(3) of the Bankruptcy
Code between now and then. (ANC Rental Bankruptcy News, Issue
No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
APPLIED DIGITAL: Inks Agreements to Sell 12.5 Million Shares
------------------------------------------------------------
Applied Digital Solutions, Inc. (Nasdaq:ADSX), an advanced
technology development company, has signed Securities Purchase
Agreements to sell an additional 12.5 million previously
registered shares to the same investors who agreed to purchase
25 million shares as announced on May 9, 2003.
Placement agent J. P. Carey Securities made the arrangements for
the sale subject to certain closing conditions. J. P. Carey is
a registered broker-dealer and member of the NASD engaged by the
Company to act as its placement agent under the terms of a
placement agency agreement.
The Company will use the proceeds of this sale towards the
satisfaction of its debt obligation to its senior lender, IBM
Credit LLC. Under the Forbearance Agreement with IBM Credit
(announced on March 27, 2003), the Company has the right to
purchase all of its debt of approximately $95 million (including
accrued interest) with a payment of $30 million by June 30,
2003, subject to continued compliance with the terms of the
Forbearance Agreement. If this payment is made on or before June
30, 2003, Applied Digital would satisfy its full obligation to
IBM Credit. As of this date, the Company is in compliance with
all terms of the Forbearance Agreement.
Applied Digital Solutions is an advanced technology development
company that focuses on a range of life-enhancing, personal
safeguard technologies, early warning alert systems,
miniaturized power sources and security monitoring systems
combined with the comprehensive data management services
required to support them. Through its Advanced Technology Group,
the Company specializes in security-related data collection,
value-added data intelligence and complex data delivery systems
for a wide variety of end users including commercial operations,
government agencies and consumers. Applied Digital Solutions is
the beneficial owner of a majority position in Digital Angel
Corporation (AMEX:DOC). For more information, visit the
Company's Web site at http://www.adsx.com
ARMSTRONG: Wants Blessing to Expand Deloitte's Engagement Scope
---------------------------------------------------------------
Nitram Liquidators, Inc., Armstrong World Industries, Inc., and
Desseaux Corporation of North America ask Judge Newsome to
authorize the modification of the scope of Deloitte & Touche
LLP's employment, nunc pro tunc to February 3, 2003. The
Debtors want Deloitte to assist them with:
(1) an internal investigation relating to certain of its
missing equipment and inventory, and
(2) ongoing administration of its employee retirement
income plan and related advisory services.
The Debtors assure Judge Newsome that they have consistently
endeavored to maintain an appropriate delineation of
responsibility between and among its professionals.
The Internal Investigation
The Internal Investigation Services will consist of working in
concert with the Debtors' Law Department to perform an internal
investigation by assisting the Debtors in locating and
recovering certain of the Debtors' missing inventory and
equipment, and by making recommendations to prevent further
inventory and equipment loss. The Internal Investigation
Services will also include conducting interviews and reviewing
financial information and other relevant data in order to assist
the Debtors' Law Department in its evaluation of possible
unauthorized equipment transactions.
The Retirement Plan
The Retirement Plan Services include assisting the Debtors with
the continuing administration of their employee retirement
income plan and will be carried out in three distinct phases:
* Under Phase 1, Deloitte will develop executive
summaries of the current Plan provisions for the
Debtors' use in determining participation and
eligibility, continuous service and vesting,
eligibility for benefits, amount of retirement
income, timing for payment of benefits, and forms
of benefit distribution.
* In Phase 2, Deloitte will prepare checklists based
on the Plan provisions outlined in each executive
summary prepared in Phase 1 to be used as a reference
tool for the Debtors' Shared Service Center staff in
calculating accrued benefit estimates, normal
retirement benefits and early retirement benefits,
disability benefits, death benefits, supplemental
pension benefits, and alternate payee benefits under
qualified domestic relations orders.
* In Phase 3, Deloitte will provide on-site training to
the Debtors' SSC personnel. This training will
include training on the implementation of Phase 1 and
Phase 2. The training materials will include an
extensive manual, including relevant matrixes, as
agreed to by the Debtors and Deloitte.
Because of the Debtors' immediate need, Deloitte began these
services on February 3, 2003. The Debtors therefore ask that
Deloitte's expanded employment be made effective nunc pro tunc
to February 3, 2003, in order for Deloitte to be compensated for
the Supplemental Deloitte Services rendered prior to the Court's
anticipated approval of this Supplemental Application. Deloitte
agreed to begin providing the Supplemental Deloitte Services as
of February 3, 2003, with the anticipation that its employment
would be approved nunc pro tunc to that date.
Compensation
The Debtors and Deloitte have agreed that Deloitte will be
compensated on an hourly basis for its performance of the
Supplemental Deloitte Services, and that the fees for the
Internal Investigation Services and the Retirement Plan Services
will be tentatively capped at $35,000 for each engagement. The
Debtors acknowledge that, due to the complexities of providing
services to bankrupt entities, additional work may be required
in order for Deloitte to complete the Supplemental Deloitte
Services, and that the fee caps may need to be increased.
As a non-testifying consultant providing special assistance to
the Law Department in its evaluation of possible unauthorized
transactions, Deloitte will be compensated $110 to $325 per
hour. Compensation, for preparing a checklist reference tool
for the SSC in making calculations regarding various retirement
income plan benefits, range from $200 to $350 per hour. The
range of standard billing rates reflects differences in
experience levels within classifications, geographic
differentials, and types of services being provided.
Deborah Hassan, a member of Deloitte & Touche LLP in
Philadelphia, maintains that Deloitte remains disinterested
within the meaning of the Bankruptcy Code and neither holds nor
represents interests adverse to the Debtors' estates. (Armstrong
Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ASPEN GROUP: Sues Ex-CEO J. Wheeler for Breach of Fiduciary Duty
----------------------------------------------------------------
Aspen Group Resources Corporation, (TSX: ASR, OTCBB: ASPGF), has
filed suit against Mr. Jack Wheeler, the Company's former
Chairman and Chief Executive Officer, charging that he
misappropriated money and assets from the Company and engaged in
a pattern of conduct to conceal his actions from the Board of
Directors of Aspen. The suit, which seeks to recover all assets
misappropriated from Aspen, is the result of an internal and on-
going review and investigation overseen by a Special Committee
appointed by the Board of Directors. The Special Committee
determined it to be in Aspen's best interest to initiate this
action against Mr. Wheeler for damages suffered at this time. In
conjunction with the suit, Aspen has filed a claim with their
insurer in the amount of US$500 thousand to mitigate losses
suffered by the Company.
Aspen also disclosed that Mr. Wheeler has filed suit against the
Company over issues stemming from his resignation. Aspen intends
to vigorously defend this action. Mr. Wheeler served Aspen in
various capacities as Chairman, President, CEO and director from
September 1999 until his resignation in October 2002.
Aspen Group Resources Corporation is an independent oil and
natural gas producer engaged in the acquisition, exploration,
production and development of oil and natural gas properties in
the Mid Continent Region in the US and Western Canada. Aspen's
shares trade on The Toronto Stock Exchange under the symbol ASR
and on the OTCBB under the symbol ASPGF.
As reported in Troubled Company Reporter's February 13, 2003
edition, Aspen is addressing other areas of its operations in
order to reduce operating expenses, rationalize its portfolio US
and Canadian properties and rejuvenate its drilling and
production programs. To date, the Company has taken several
steps in this process including:
-- Significant staff reductions and the initiation company-
wide cost controls including the relocation of the Company's
Oklahoma City offices to more efficient, cost effective
facilities. The net effect of these reductions will have a small
impact on the fourth quarter results, but should become very
apparent throughout 2003.
-- A thorough review of the Company's operations, assets,
and reserves for the purpose of determining the properties,
which provide Aspen the highest production and growth potential.
The Company has identified several properties that have been
deemed non-core and will be sold in order to raise additional
capital for re-investment into core areas and further reduction
of debt. Through this review, Aspen has also determined that it
will focus solely on natural gas which currently accounts for 85
percent of its current production Therefore, management has
elected to monetize one of its oil producing assets, which is
located in the El Dorado Field in Kansas.
-- The Company is currently in advanced negotiations with
its lender regarding the default in its credit facility and
believes that it can resolve these issues and repair the
relationship with this institution.
BOFA ALTERNATIVE LOAN: Fitch Rates Four Note Classes at BB/B
------------------------------------------------------------
Banc of America Alternative Loan Trust 2003-4 mortgage pass-
through certificates are rated by Fitch Ratings as follows:
Group 1 certificates:
-- $274,992,000 classes 1-A-1 through 1-A-6,
and 1-A-WIO 'AAA';
-- $100 classes 1-A-R and 1-A-LR 'AAA';
-- $6,522,000 class 1-B-1 'AA';
-- $2,898,000 class 1-B-2 'A';
-- $1,449,000 class 1-B-3 'BBB';
-- $1,450,000 class 1-B-4 'BB';
-- $1,014,000 class 1-B-5 'B'.
Group 2 certificates:
-- $270,784,000 classes 2-A-1 and 2-A-WIO 'AAA';
-- $2,635,000 class 2-B-1 'AA';
-- $971,000 class 2-B-2 'A';
-- $970,000 class 2-B-3 'BBB';
-- $555,000 class 2-B-4 'BB';
-- $277,000 class 2-B-5 'B'.
Certificates of both groups:
-- $1,094,946 class A-PO 'AAA'.
The 'AAA' rating on the group 1 senior certificates reflects the
5% subordination provided by the 2.25% class 1-B-1, 1% class 1-
B-2, 0.50% class 1-B-3, 0.50% privately offered class 1-B-4,
0.35% privately offered class 1-B-5, and 0.40% privately offered
class 1-B-6. Classes 1-B-1, 1-B-2, 1-B-3 and the privately
offered classes 1-B-4, 1-B-5 and 1-B-6 are rated 'AA', 'A',
'BBB', 'BB', and 'B', respectively, based on their respective
subordination.
The 'AAA' rating on the group 2 senior certificates reflects the
2.10% subordination provided by the 0.95% class 2-B-1, 0.35%
class 2-B-2, 0.35% class 2-B-3, 0.20% privately offered class 2-
B-4, 0.10% privately offered class 2-B-5 and 0.15% privately
offered class 2-B-6. Classes 2-B-1, 2-B-2, 2-B-3 and the
privately offered classes 2-B-4, 2-B-5 and 2-B-6 are rated 'AA',
'A', 'BBB', 'BB', and 'B', respectively, based on their
respective subordination.
The ratings also reflect the quality of the underlying
collateral, the capabilities of Bank of America Mortgage, Inc.
as servicer (rated 'RPS1' by Fitch), and Fitch's confidence in
the integrity of the legal and financial structure of the
transaction.
The transaction is secured by two pools of mortgage loans. The
two mortgage pools are not cross-collateralized. The class A-PO
consists of two separate components which are not severable.
Approximately 42.19% and 12.11% of the mortgage loans in group 1
and 2, respectively, were underwritten using Bank of America's
'Alternative A' guidelines. These guidelines are less stringent
than Bank of America's general underwriting guidelines and could
include limited documentation or higher maximum loan-to-value
ratios. Mortgage loans underwritten to 'Alternative A'
guidelines could experience higher rates of default and losses
than loans underwritten using Bank of America's general
underwriting guidelines.
The Group 1 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
four-family residential mortgage loans with original terms to
stated maturity ranging from 240 to 360 months. The weighted
average original loan-to-value ratio for the mortgage loans in
the pool is approximately 67.59%. The average balance of the
mortgage loans is $159,083 and the weighted average coupon of
the loans is 6.145%. The weighted average FICO credit score for
the group is 734. The states that represent the largest portion
of mortgage loans are California (54.06%), Florida (9.21%), and
Virginia (3.24%).
The Group 2 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
four-family residential mortgage loans with original terms to
stated maturity ranging from 120 to 180 months. The weighted
average OLTV for the mortgage loans in the pool is approximately
57.12%. The average balance of the mortgage loans is $95,306 and
the weighted average coupon of the loans is 5.754%. The weighted
average FICO credit score for the group is 741. The states that
represent the largest portion of mortgage loans are California
(45.26%), Florida (12.19%), Texas (6.03%) and Virginia (5.57%).
Approximately 1.85% and 1.22% of the mortgage loans in group 1
and 2, respectively, are secured by properties located in the
state of Georgia, none of which are governed under the Georgia
Fair Lending Act, effective as of Oct. 2, 2002 and amended
effective as of March 7, 2003.
Banc of America Mortgage Securities, Inc. deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, elections will be made to treat the trust as two
separate real estate mortgage investment conduits. Wells Fargo
Bank Minnesota, National Association will act as trustee.
BURLINGTON: Equity Committee Appointment Pitch Draws Fire
---------------------------------------------------------
Walker Rucker, as beneficial owner of more than 4,500,000 shares
of common stock in Burlington Industries, Inc. and on behalf of
other similarly situated equity holders of Burlington, wants the
Court to appoint an official committee of Burlington common
stock holders.
Michelle McMahon, Esq., at Connolly, Bove, Lodge & Hutz, LLP, in
Wilmington, Delaware, tells the Court that in a letter faxed on
March 31, 2003, Mr. Rucker requested the U.S. Trustee to appoint
a committee of equity security holders pursuant to Section
1102(a)(1) of the Bankruptcy Code. To date, the U.S. Trustee
has declined to do so, but has not definitively rejected Mr.
Rucker's request.
Courts have cited a number of factors in determining whether to
appoint an equity committee in a particular case. In the
matter of Kalvar Microfilm, Inc., 195 B.R. 599 (Bankr. D. Del.
1996), the Court identified the relevant factors as:
-- whether the shares are widely held and publicly traded;
-- the size and complexity of the Chapter 11 case;
-- the delay and additional cost that would result if the
court grants the motion;
-- the likelihood of whether the debtors are insolvent;
-- the timing of the motion relative to the status of Chapter
11 case; and
-- other factors relevant to the adequate representation
issue.
Ms. McMahon asserts that applying the Kalvar factors to this
case demonstrates the propriety of the need for an equity
committee:
(a) There is no dispute that Burlington's shares are widely
held and publicly traded. As reported in its 10-K filed
on December 24, 2002, Burlington has over 53,000,000
shares of common stock outstanding, owned by more than
2,200 record holders;
(b) This case is both large and complex;
(c) The appointment of an equity committee will neither delay
this case nor impose undue expense on the estate. Mr.
Rucker and the other shareholders have prudently bided
their time until this case reached a stage where the
protection of a shareholder right is critical and
shareholder input is essential. Also, although an equity
committee would be expected to retain its own legal and
financial advisors, their costs would necessarily be
minimal based on the stage of these proceedings;
(d) A number of indicia suggest that the Debtors are not
insolvent. Ms. McMahon assures the Court that Mr. Rucker
will provide evidence in support of his contention:
(1) Applying the Capitalization Approach to Burlington's
histrionic cash flow using standard valuation metrics
suggests that the Debtors have an Enterprise Value of
$775,000,000 to $815,000,000, and positive equity
value of between $90,000,000 and $130,000,000;
(2) Applying the Discounted Cash Flow Approach to
Burlington's projected cash flow also indicates
positive equity value. Using a very conservative
discount rate and very conservative projection over a
five-year period indicates a total Enterprise Value
of $770,000,000, and an implied equity value of
$85,000,000. Moreover, the restructuring efforts
already implemented by Burlington have vastly
improved its current and future cost structure, which
suggests that its equity value may be even higher;
and
(3) Burlington has systematically undervalued its
ownership interest in Nano-Tex, LLC, a company that
has developed, owns and licenses advanced proprietary
technology relating to the performance
characteristics of textile products. Despite press
releases predicting a $2,000,000,000 market for
products using Nano-Tex technology and an IPO in
2003, Burlington has not reflected the true value of
Nano-Tex in its financial statements, nor made any
serious efforts to capture that value for the
existing shareholders of Burlington.
In any event, Ms. McMahon insists, Burlington's
insolvency is subject to good faith dispute. The
interests of thousands of public shareholders should not
be left unrepresented, or simply wiped out without
negotiation;
(e) This request is being made at a time when the Debtors'
reorganization may be heading toward its final stages.
However, until Burlington entered into the ill-fated
"Berkshire Agreement" in mid-February of this year,
shareholders had little reason to suspect that their
interests in the company were targeted for total
elimination. Once that strategy was clearly revealed,
Mr. Rucker acted promptly, making his request to the
U.S. Trustee the following month. Ms. McMahon maintains
that the timing of this request simply shows the patience
and restraint of Mr. Rucker and other shareholders --
they have waited until it became evident that an equity
committee is necessary to prevent value from being lost
to shareholders; and
(f) Burlington's management is not in a tenable position
to protect the rights of public shareholders. As a
group, management holds only a small portion of
Burlington's equity, some of that in the form of options.
But unlike the other shareholders, certain key members of
management also have favorable options to buy membership
units in Nano-Tex. Accordingly, they will not be
motivated by their own "common interest" with other
shareholders. Furthermore, management has, by operation
of law, become fiduciaries for the Debtors' creditors
rather than the shareholders. At best, management will
face divided loyalties and, consciously or not, will
temper their advocacy should they attempt to preserve
value for shareholders contrary to the wishes of the
creditors committee. Without an official committee, Ms.
McMahon argues, the shareholders have no fiduciary that
owes them its undivided loyalty and advocacy.
One final factor favoring the appointment of an equity committee
in Burlington's case is the responsibility of Bankruptcy Courts
to reassure investors that they will get a fair shake in
reorganization proceedings.
Objections
(1) Debtors
The Debtors believe that their estates should not be burdened
with the additional delay and expense that would accompany the
appointment and servicing of an Equity Committee and thus, the
Rucker Motion should be denied.
Rebecca L. Booth, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, tells the Court that the Debtors have been
working diligently to maximize the value of their estates for
the benefit of all stakeholders in these Chapter 11 cases.
Unfortunately, from all objective perspectives, the value of the
Debtors' estates does not support even a nominal return to
equity security holders.
In fact, the Debtors currently are conducting a sale process
under the supervision of the Court and the watchful eyes of the
Creditors' Committee, the Debtors' prepetition secured lenders
and the Office of the U.S. Trustee. All constituents, including
any equity security holder, will receive assurance that the
process will be so conducted. Ms. Booth argues that appointing
an Equity Committee would decrease the productivity of this
process and consume the Debtors' time and the limited resources.
In short, because the sale process itself will determine in the
very near future the ultimate value available to distribute to
the Debtors' stakeholders, there simply is no need or
justification for the appointment of an Equity Committee at this
time.
Under applicable law, Mr. Rucker bears the burden of
establishing the need for an Equity Committee. However, Ms.
Booth points out that Mr. Rucker has completely failed to
satisfy this burden in these cases. Ms. Booth notes that Mr.
Rucker simply cannot establish that an Equity Committee would
positively contribute to the process for value maximization in
these cases. In addition, Mr. Rucker cannot demonstrate that
the interests of equity security holders are inadequately
represented absent the appointment of an Equity Committee.
Moreover, Ms. Booth asserts that each of the exit strategies
being reviewed by the Debtors and their primary constituencies
suggests that there is insufficient value in the Debtors to
provide payment in full to the Debtors' unsecured creditors.
Specifically, under the purchase agreement with Berkshire
Hathaway Inc. and the proposal from WL Ross & Co., unsecured
creditors would have received only a 35% to 45% recovery. In
addition, Burlington's unsecured bonds currently are trading
between $.35 to $.40/dollar, indicating a shortfall of at least
$240,000,000 before any equity recovery.
Also, Ms. Booth relates, the existence of an Equity Committee
will result in substantial, additional Chapter 11 costs, and
impose a significant burden on the Debtors' estates to the
benefit of no party-in-interest. The appointment of an Equity
Committee also will require the Debtors to negotiate with a
third constituency which most likely will create additional
costs, delay, and potential hurdles to the Debtors.
As Mr. Rucker admits, the request to appoint an Equity Committee
comes at the tail end of these cases. The appointment of an
Equity Committee at this time would not enhance or add any value
to the Debtors' estates, as the market will dictate the real
value of the estates and, in turn, the stakeholders' ultimate
recoveries in these Chapter 11 cases.
(2) Prepetition Lenders
JPMorgan Chase Bank, as Administrative Agent for itself and a
syndicate of prepetition secured lenders to Burlington
Industries, object to Mr. Rucker's request for several reasons.
Adam G. Landis, Esq., at Klett, Rooney, Lieber & Schorling, in
Wilmington, Delaware, relates that Mr. Rucker has failed to
demonstrate that the appointment of an Equity Committee is
necessary under the circumstances of these Chapter 11 cases.
For one, the estates should not be required to bear the costs of
a committee of holders of common stock in the Company -- the Old
Equity holders in light of the Debtors' "hopeless insolvency".
Based on current market conditions, the value of the Debtors'
business enterprise is insufficient to pay creditors in full,
much less provide any return to the Old Equity holders. Mr.
Landis asserts that there is simply no cognizable economic
interest to be protected by the appointment of an Equity
Committee. Mr. Landis notes that Mr. Rucker has proposed
several valuation methods that "suggest" that the Debtors may be
solvent. However, the U.S. Trustee has reviewed similar
financial information Mr. Rucker provided and determined that it
was inappropriate to appoint an Equity Committee at this time.
Moreover, the Lenders believe that contrary to Mr. Rucker's
assertions, the Old Equity holders are adequately represented by
the Debtors' management. In fact, the Debtors' management is
now pursuing a sale process heavily negotiated with the Official
Committee of Unsecured Creditors and the Lenders. In addition,
the Creditors' Committee has been active in these cases to
ensure that the Debtors pursue strategies designed to maximize
value of all stakeholders. Mr. Rucker does not describe a
proposed role for an Equity Committee in these Chapter 11 cases,
Mr. Landis observes, but it appears that any role would be
redundant of the Creditors' Committee's duties. "Any formal
involvement by an Equity Committee could cause delay, distract
management and potentially impair value for all stakeholders,"
Mr. Landis contends.
Furthermore, Mr. Landis tells Judge Newsome that Mr. Rucker and
other Old Equity holders have other avenues to participate in
these Chapter 11 cases that do not require the estates to bear
the costs of this requested participation. According to Mr.
Landis, the Old Equity holders can participate individually or
form an unofficial ad hoc committee, in either case having
standing to be heard pursuant to Section 1109(b) of the
Bankruptcy Code. Depending on the ultimate outcome of the
Debtors' cases, the participants may seek an award of expenses
under Section 503(b) of the Bankruptcy Code.
Accordingly, the Lenders ask the Court to deny Mr. Rucker's
request.
(3) Creditors' Committee
Mark Minuti, Esq., at Saul Ewing LLP, in Wilmington, Delaware,
notes that the standard for the appointment of an Equity
Security Holders' Committee is under Section 1102(a)(1) of the
Bankruptcy Code, which gives the U.S. Trustee the discretionary
power to appoint an equity security holders' committee in
addition to a creditors' committee. If the U.S. Trustee denies
a request to appoint an equity security holders' committee, the
Court may order that appointment. In making this decision, the
Court should consider the nature of the case, the composition of
the committee, and the delay and costs attributable to the
duplication of professional services.
The Official Committee of Unsecured Creditors does not deny that
the Debtors are a widely held and publicly traded company and
that the Debtors' Chapter 11 cases are large and highly complex.
However, Mr. Minuti refutes the assertion that the Debtors'
solvency is subject to a good faith dispute. Mr. Minuti
maintains that it is an undisputed fact that the prepetition
equity securities issued by the Debtors have no value. The
likely range of offers that will be received by the Debtors as a
result of their current efforts to market their stock and assets
for sale will result in a return to the holders of allowed
unsecured claims of less than 100%.
In effect, Mr. Minuti says, it is a virtual certainty that no
recovery will be available for the common equity holders under
any conceivable plan of reorganization or in a liquidation
pursuant to Chapter 7 of the Bankruptcy Code. Where there is no
chance equity will share in the recovery as in this case, Mr.
Minuti asserts, an equity security holders' committee is simply
not necessary.
Without doubt, an equity security holders committee's
professional would not be familiar with the Debtors' operations
for at least a month. Because this reorganization is near
completion and because of the time necessary to familiarize a
third party with the subject matter, the appointment of an
equity security holders' committee would both delay these
proceedings and create additional costs. As Mr. Rucker admits,
the request is being brought when the Debtors' reorganization is
heading towards its final stages. At this point, the only real
function of an equity security holders' committee is to object
to a plan of reorganization.
The Committee believes that it has and continues to adequately
represent the interest of all unsecured creditors and equity
security holders through its attempts to maximize the recovery
achievable in these cases. "The motion is nothing more than an
attempt by Mr. Rucker to insert himself into these proceedings
and cause problems," Mr. Minuti tells the Court.
The Committee has been actively involved from the commencement
of these cases and has been diligently and properly discharging
its statutory duties with the help of its attorneys and
advisors. Thus, the Committee adequately represents the equity
security holders.
Accordingly, the Committee asks the Court to deny Mr. Rucker's
request.
(4) U.S. Trustee
Julie Compton, Esq., in Wilmington, Delaware, informs the Court
that the first request to the U.S. Trustee to appoint an equity
committee was received almost 16 months after the Petition Date,
in a letter from Mr. Rucker's counsel dated March 5, 2003.
Subsequently, prior to receiving the U.S. Trustee's response to
his request, Mr. Rucker filed the Equity Motion on May 7, 2003.
After consultation with Mr. Rucker's counsel and advisors, the
Debtors' counsel and financial advisors, counsel for the
Creditors' Committee, and counsel for the secured lenders, the
Acting U.S. Trustee for Region 3, Roberta A. DeAngelis, by
letter dated May 16, 2003, declined to appoint a separate
committee of equity security holders.
The burden of establishing a need for an official committee of
equity security holders is a heavy one. Ms. Compton notes that
Mr. Rucker does not and cannot allege that the U.S. Trustee
abused her discretion in declining to appoint an equity
committee. Indeed, quite the opposite is true.
The U.S. Trustee's decision not to appoint an equity committee
reflects the U.S. Trustee's careful balancing of facts and
application of her congressionally granted discretion.
Specifically, the U.S. Trustee:
(a) examined the capital structure, organizational structure
and financial posture of the debtors-in-possession as
reported by them in their various bankruptcy filings,
including financial data submitted in the Debtors' monthly
operating reports,
(b) reviewed the testimony given at the February 27, 2003
hearing in these cases regarding bidding procedures and
the Berkshire Hathaway proposal,
(c) reviewed the Debtors' SEC Forms 10-Q for the period ending
December 28, 2002,
(d) solicited comments from the Debtors, the Official
Committee of Unsecured Creditors, and the prepetition
secured lenders regarding the appointment of an equity
committee, and
(e) conferred telephonically with Mr. Rucker's counsel and
financial advisor, and considered their oral and written
comments and financial presentation.
Based on the information reviewed by the U.S. Trustee, it
appears that:
(a) Burlington's common stock is widely held and publicly
traded,
(b) these jointly administered cases are large and complex,
(c) relative to the status of these jointly administered
cases, Mr. Rucker's request for the appointment of an
equity committee and his request to the U.S. Trustee were
untimely,
(d) appointment of an equity committee would result in
substantial additional cost to the Debtors' estate and,
ultimately, the creditors, without corresponding benefit,
and
(e) Burlington's common stock currently appears to have no
value, as its liabilities exceed the value of its assets.
The Debtors and the Official Committee of Unsecured Creditors
agree that there is insufficient value in the Debtors to pay
unsecured creditors in full, let alone make distributions to
holders of equity security interests. Both anticipate that
under any foreseeable plan of reorganization, equity security
holders would receive nothing on account of their interests.
Since there is a prima facie evidence that the Debtors'
liabilities exceed their assets by approximately $116,000,000 on
a going concern basis and the Debtors are therefore insolvent,
the degree of representation currently necessary for the
Debtors' common shareholders is quite modest and can be provided
without burdening the estate with another official committee.
If there is no reasonable position for the committee to
advocate, Ms. Compton explains, the establishment of a committee
and the resulting professional expenses serve only to further
dissipate assets of the estate that might otherwise be used to
pay creditors. Absent some reasonable basis for believing that
there is sufficient value in the businesses to result in a
distribution to equity in Burlington's case, appointment of an
official committee of equity security holders would merely serve
to impose additional administrative expenses on the estate
without any corresponding benefit.
Moreover, Mr. Rucker says, the sole shareholder to request an
equity committee, waited almost a year and half from the
inception of the cases to make his request. Mr. Rucker attempts
to brush off this lengthy delay by stating that until the
Berkshire Hathaway proposal, "shareholders had little reason to
suspect that their interests in the company were targeted for
total elimination." Ms. Compton argues that this assertion is
disingenuous. The Debtors' bankruptcy filing should have
alerted shareholders to the threat of loss of value in their
equity interests.
Finally, there is no dispute that Mr. Rucker has an ability to
participate in the case independent of an equity committee under
Section 1109(b) of the Bankruptcy Code.
In the final analysis, the U.S. Trustee decided to refrain from
appointing an equity committee, as there appeared to be no
equity for that committee to protect. Equity security holders
may be displeased at the prospect of receiving nothing on
account of their interests, or of being required to fund their
own expenses while participating in this case.
However, neither the facts nor the law support the appointment
of a committee of equity security holders. To appoint an equity
committee at this time would serve only to transfer additional
financial burdens directly to the Debtors and, indirectly, to
the unsecured creditors of the estate.
Thus, the U.S. Trustee asks the Court to deny the Equity Motion
in its entirety. (Burlington Bankruptcy News, Issue No. 33;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
CALPINE CORP: Working Capital Facilities' Maturity Extended
-----------------------------------------------------------
Calpine Corporation (NYSE: CPN), a leading North American power
company, announced that the bank groups on its two existing
working capital facilities, totaling approximately $950 million,
have agreed to extend the maturity dates to June 16, 2003. The
extension of the maturity dates will provide Calpine and the
banks sufficient time to finalize the terms and conditions for a
new, two-year $1 billion working capital facility.
Calpine Corporation is a leading North American power company
dedicated to providing wholesale and industrial customers with
clean, efficient, natural gas-fired and geothermal power
generation and a full range of energy products and services.
The company generates power at plants it owns or leases in 22
states in the United States, three provinces in Canada and in
the United Kingdom. Calpine is also the world's largest
producer of renewable geothermal energy, and it owns
approximately one trillion cubic feet equivalent of proved
natural gas reserves in Canada and the United States. The
company was founded in 1984 and is publicly traded on the New
York Stock Exchange under the symbol CPN. For more information
about Calpine, visit http://www.calpine.com
* * *
As previously reported in Troubled Company Reporter, Calpine
Corp.'s senior unsecured debt rating was downgraded to 'B+' from
'BB' by Fitch Ratings. In addition, CPN's outstanding
convertible trust preferred securities and High TIDES were
lowered to 'B-' from 'B'. The Rating Outlook was Stable.
Approximately $9.3 billion of securities were affected.
Calpine Corporation's 10.500% bonds due 2006 (CPN06USR2) are
presently trading at 81 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for
real-time bond pricing.
C.C. MING: Chapter 11 Case Summary & Largest Unsecured Creditor
---------------------------------------------------------------
Debtor: C.C. Ming (U.S.A.) Limited Partnership
c/o Alfred Sim
43-23 Colden Street, #26J
Flushing, NY 11355
Bankruptcy Case No.: 03-13369
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Debtor's Counsel: Scott S. Markowitz, Esq.
Todtman, Nachamie, Spizz & Johns, P.C.
425 Park Avenue, 5th Floor
New York, NY 10022
Tel: (212) 754-9400
Fax : 212-754-6262
Total Assets: $4,070,000
Total Debts: $3,064,377
Debtor's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Board Of Managers Of Common Charges $414,377
Amherst Condominium
401 East 74th Street
New York, NY 10021
CMS ENERGY: Shareholders Re-Elect Twelve Incumbents to Board
------------------------------------------------------------
CMS Energy (NYSE: CMS) shareholders reelected 12 incumbents to
the Board of Directors at Friday's annual shareholders meeting.
The directors are:
-- Kenneth Whipple, chairman and chief executive officer of
CMS Energy and its principal subsidiary, Consumers
Energy. Whipple is a retired executive vice president,
Ford Motor Company and president, Ford Financial
Services Group, Dearborn, Mich.
-- James J. Duderstadt, president emeritus and university
professor of science and engineering, University of
Michigan, Ann Arbor, Mich.
-- Kathleen R. Flaherty, former president and chief
operating officer of WinStar International.
-- Earl D. Holton, vice chairman of Meijer, Inc., operator
of food and general merchandise centers, and chairman of
Steelcase, Inc. Both companies are based in Grand
Rapids, Mich.
-- David W. Joos, president and chief operating officer of
CMS Energy and Consumers Energy.
-- Michael T. Monahan, president of Monahan Enterprises,
L.L.C., a Michigan-based consulting firm, former
chairman of Munder Capital Management, and former
president of Comerica, Inc., and Comerica Bank.
-- Joseph F. Paquette Jr., former chairman and chief
executive officer of PECO Energy, formerly the
Philadelphia Electric Company.
-- William U. Parfet, chairman and chief executive officer
of MPI Research, Mattawan, Mich., a research laboratory
conducting risk assessment toxicology studies.
-- Percy A. Pierre, professor of electrical engineering,
Michigan State University, East Lansing, Mich.
-- S. Kinnie Smith Jr., vice chairman and general counsel
of CMS Energy.
-- Kenneth L. Way, former chairman of the board of Lear
Corporation, a Southfield, Mich.-based supplier of
interior systems to the automotive industry.
-- John B. Yasinsky, retired chairman and chief executive
officer, OMNOVA Solutions, Inc., of Fairlawn, Ohio, a
developer, manufacturer, and marketer of emulsion
polymers, specialty chemicals, and building products.
CMS Energy is an integrated energy company, which has as its
primary business operations an electric and natural gas utility,
natural gas pipeline systems, and independent power generation.
For more information on CMS Energy, visit its Web site at:
http://www.cmsenergy.com/
As reported in Troubled Company Reporter's April 25, 2003
edition, Standard & Poor's Ratings Services assigned its 'BB'
rating to CMS Energy Corp.'s $925 million senior secured credit
facilities. The facilities include CMS Enterprises' $516 million
senior secured revolving credit facility due April 30, 2004
(guaranteed by CMS Energy) and a $159 million senior secured
revolving credit facility due April 30, 2004, and a $250 million
senior secured term loan facility due Oct. 30, 2004. The outlook
is negative.
Michigan-based CMS Energy has about $7 billion in debt.
The 'BB' ratings assigned to the facilities, which equates to
CMS Energy's 'BB' corporate credit rating, considers this class
of debt to be at the most senior position in CMS Energy's
capital structure. The uncertain value of the capital stock of
Consumers Energy Co. and CMS Enterprises (which is used as
security for the facilities) in a bankruptcy scenario affect any
potential benefit afforded by the companies' assets that support
the value of their capital stock.
CMS ENERGY: Unit Declares Quarterly Preferred Share Dividend
------------------------------------------------------------
The Board of Directors of Consumers Energy, the principal
subsidiary of CMS Energy (NYSE: CMS), has declared regular
quarterly dividends on both series of the Company's preferred
stock.
The following dividends are payable July 1, 2003, to
shareholders of record on June 9, 2003: $1.04 per share on the
$4.16 stock, and $1.125 per share on the $4.50 stock.
In addition, distributions on the $2.09 Trust Originated
Preferred Security (TOPrS) instruments are payable June 30,
2003, in the amount of $0.5225 per preferred security, to
holders of record on June 27, 2003. Similarly, distributions are
payable June 30, 2003, on the $2.05 TOPrS in the amount of
$0.5125 per preferred security, $0.578125 on the 9-1/4 percent
TOPrS and $0.5625 on the 9 percent Trust Preferred Securities.
These distributions are for holders of record on June 27, 2003.
The Company will pay to the Trustees interest on related
debentures to cover such distributions.
A dividend on the Premium Equity Participating Securities also
is payable on August 18, 2003, in the amount of $0.453125 per
security to holders of record on August 15, 2003. CMS Energy
will pay to the Trustees interest on related debentures to cover
such dividend.
And a $0.96875 dividend on the Quarterly Income Preferred
Securities is payable on July 15, 2003 to holders of record on
July 14, 2003. CMS Energy will pay to the Trustees interest on
related debentures to cover such dividend.
CMS Energy is an integrated energy company, which has as its
primary business operations an electric and natural gas utility,
natural gas pipeline systems, and independent power generation.
For more information on CMS Energy, visit its Web site at
http://www.cmsenergy.com
As reported in Troubled Company Reporter's April 25, 2003
edition, Standard & Poor's Ratings Services assigned its 'BB'
rating to CMS Energy Corp.'s $925 million senior secured credit
facilities. The facilities include CMS Enterprises' $516 million
senior secured revolving credit facility due April 30, 2004
(guaranteed by CMS Energy) and a $159 million senior secured
revolving credit facility due April 30, 2004, and a $250 million
senior secured term loan facility due Oct. 30, 2004. The outlook
is negative.
Michigan-based CMS Energy has about $7 billion in debt.
The 'BB' ratings assigned to the facilities, which equates to
CMS Energy's 'BB' corporate credit rating, considers this class
of debt to be at the most senior position in CMS Energy's
capital structure. The uncertain value of the capital stock of
Consumers Energy Co. and CMS Enterprises (which is used as
security for the facilities) in a bankruptcy scenario affect any
potential benefit afforded by the companies' assets that support
the value of their capital stock.
COEUR D'ALENE: Completes $10-Million Common Stock Financing
-----------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE: CDE) announced that it
issued 8,130,081 shares of its common stock to an institutional
investor for aggregate proceeds of $10 million, or $1.23 per
share. The Company also granted the investor an option,
exercisable within 30 days, to purchase an additional 1,219,512
shares of common stock at $1.23 per share. The Company offered
and issued the shares to the investor under the Company's shelf
registration statement.
The funds will be used for general corporate purposes and
working capital needs, which may include the repayment of debt
such as the Company's 13-3/8% senior convertible notes due
December 2003 or the 6-3/8% convertible subordinated debentures
due January 2004.
Coeur d'Alene Mines Corporation is the world's largest primary
silver producer, as well as a significant, low-cost producer of
gold. The Company has mining interests in Nevada, Idaho,
Alaska, Argentina, Chile and Bolivia.
* * *
Going Concern Uncertainty
In the Company's 2002 Annual Report filed on SEC Form 10-K, the
Company's independent auditors, KPMG LLP, issue the following
statement, dated February 28, 2003:
"We have audited the 2002 financial statements of Coeur d'Alene
Mines Corporation (an Idaho Corporation) and subsidiaries (the
Company) as listed in the accompanying index. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit. The 2001 and 2000 financial
statements of Coeur d'Alene Mines Corporation, as listed in the
accompanying index, were audited by other auditors who have
ceased operations and whose report, dated February 15, 2002,
expressed an unqualified opinion on those financial statements
and included an explanatory paragraph that stated that the
Company had suffered recurring losses from operations, had a
significant portion of its convertible debentures that needed to
be repaid or refinanced in June 2002 and had declining amounts
of cash and cash equivalents and unrestricted short-term
investments, all of which raised substantial doubt about its
ability to continue as a going concern."
COLFAX CORP: S&P Assigns BB- Corp. Credit & Bank Loan Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Colfax Corporation. At the same time, Standard
& Poor's assigned its 'BB-' secured bank loan ratings to
Colfax's proposed $50 million first-lien senior secured
revolving credit facility and $225 million first-lien term
loan due June 2008 and June 2009, respectively.
In addition, the company's proposed $40 million second-lien term
loan facility is rated 'B'. Although the loan is secured by a
second lien on the same assets, it is rated two notches lower
than the corporate credit rating, reflecting its junior position
in the capital structure.
The outlook is stable. Outstanding debt at close is expected to
be $270 million.
The Richmond, Virginia-based, privately held company has niche
market positions in fluid handling and power transmission
businesses, offset by relatively high debt leverage and an
aggressive financial policy.
Broad customer and geographic diversity, with sizable
aftermarket sales, and limited capital intensity, generates
consistent positive cash flow even in a weak economic
environment. The company has grown through a number of
acquisitions.
"We expect Colfax to realize cost savings over the next few
years from its cost-reduction programs and restructuring actions
taken in 2002. Over time, additional borrowings are expected to
supplement internal free cash flows to fund future
acquisitions," said Standard & Poor's credit analyst John Sico.
On April 7, 2003, Colfax entered into a definitive agreement to
acquire all of the equity interests of Erich Netzsch GmbH & Co.
Holding KG and certain U.S. assets (Netzsch) for $113.4 million
in cash. Netzsch is a leading developer, manufacturer, and
marketer of progressing cavity pumps, grinding and dispersing
machinery, filtration systems, and analyzing and testing
equipment. Pro forma for the acquisition, Colfax and Netzsch
will be the leader in progressing cavity and screw pumps, albeit
a small segment of the entire pump industry, and a leading
provider of mechanical transmission products.
COMPASS MINERALS: S&P Ratchets Credit Rating Down a Notch to B+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Compass Minerals Group Inc., and on its parent, Salt
Holdings Corporation, to 'B+' from 'BB-'.
In addition, Standard & Poor's assigned its 'B-' rating to Salt
Holding's $179.6 million senior subordinated discount notes due
2013. Proceeds from the proposed notes will be distributed to
the company's shareholders. Compass' total debt (pro forma for
the new debt and preferred stock at the Salt Holdings) will be
approximately $599 million. The outlook is stable. The Overland
Park, Kan.-based company is the second-largest producer of
salt in North America.
"The downgrade reflects the increased debt leverage and a more
aggressive financial policy by the company than previously
anticipated," said Standard & Poor's credit analyst Paul
Vastola. The proposed subordinated discount notes are the
company's second debt offering in six months, following on the
heels of a $60 million discount notes in December 2002 to redeem
the preferred stock held by its majority shareholder - Apollo
Management V, L.P.
The company had made good progress in the past year, generating
excess cash flows and reducing debt. Indeed, the company reduced
its debt at its operating subsidiary by $70 million over the
past year. However, the company has more than offset such
actions by its recent debt offerings used for its shareholders
instead of reinvestment into the company, which have elevated
the company's debt to its highest level. As a result, its total
debt to EBITDA increased to 4.6x from 4.0x for the last 12
months ended March 31, 2003. This measure is expected to
modestly improve, as any additional debt repayments will be
somewhat offset by the accretion in its discount notes.
The recession-resistant characteristics and nondiscretionary
nature of the company's products underpin ratings stability.
Yet, the company's aggressive financial policies will likely
limit any meaningful improvement in its financial profile.
CONSECO INC: Pushing for Approval of Fleet Settlement Agreement
---------------------------------------------------------------
CIHC, Inc. entered into two separate leases with Fleet National
Bank:
a) on November 26, 1997 for a 1989 Canadair Ltd. Challenger CL-
600-2B16; and
b) on March 29, 1999 for a 1995 Cessna Model 650 Aircraft.
Conseco, Inc. was the subleasee and guarantor on the Leases.
Prior to the Petition Date, the Leases were terminated and the
planes were returned to Fleet. Pursuant to the terms of the
Leases, Fleet must apply the net proceeds of any post-
termination sale or lease of the planes to damages it may claim
for breach of the Leases.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, relates that
despite marketing the planes since October 2002, they have yet
to be sold or re-leased. Fleet has asserted that this is due to
the general softness of the market for corporate aircraft,
general economic conditions and the events of September 11,
2001.
On February 17, 2003, Fleet filed Claim Nos. 49672-006236
against CNC and 49674-000048 against CIHC. The Claims assert
damages amounting to $20,277,575.
By this motion, the Reorganizing Debtors ask the Court to
approve their stipulation with Fleet.
The Settlement Stipulation provides that:
1) Claim No. 49674-000048 will be allowed as an unsecured
claim for $6,000,000 against CIHC;
2) Claim No. 49672-006236 is expunged and disallowed;
3) The Parties will release each other from all other claims;
4) Fleet will be deemed to have voted in favor of the
Reorganizing Debtors' Plan; and
5) Fleet is deemed to have waived any objection to the Plan.
Mr. Sprayregen contends that the Stipulation is in the best
interests of the Debtors' estates as it reduces the Claims by
$14,277,575. Additionally, continuing litigation would be both
costly and uncertain. Final resolution is more desirable.
(Conseco Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CSK AUTO: S&P Revises Rating Outlook over Improved Performance
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on CSK
Auto Inc. to positive from stable.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating on the company and assigned a 'BB-' senior secured
bank loan rating to CSK's planned $325 million bank facility
which would refinance its existing bank facility. Phoenix,
Ariz.-based CSK has about $500 million in debt outstanding.
"The revised outlook reflects CSK's improved operating
performance in 2002 as enhanced liquidity through a
recapitalization in 2001 has allowed the company to better
utilize vendor rebates and implement in-store initiatives to
help improve sales trends," said Standard & Poor's credit
analyst Patrick Jeffrey. Additionally, "a secondary equity
offering and free cash flow generation in 2002 reduced debt
levels by about $145 million."
CSK's planned bank facility is expected to provide sufficient
liquidity to fund operations and allow further flexibility to
reduce debt levels. If CSK can continue to improve operations
and reduce debt levels over the next two years, an upgrade would
be considered provided the company's growth strategy does not
become significantly more aggressive.
CSK is the largest retailer of automotive parts and accessories
in the western U.S. with 1,109 stores in 19 states. The
company's primary focus has been on the $36 billion do-it-
yourself segment, which has been growing at about 5% annually.
However, CSK is expected to continue to grow its do-it-for-me
segment, which is anticipated to have higher growth rates
than the do-it-yourself segment. Although there may be some
deferral of auto parts purchases due to the weakening economy,
the auto parts retail sector has been less affected than some
other sectors because of favorable trends for the increase of
existing vehicles in the future.
The company has been an active participant in the consolidation
of the retail automotive parts industry. In 1999, CSK acquired
194 stores from PACCAR Inc., under the trade names Grand Auto
Supply and Al's Auto Supply, for about $145 million, and
acquired Apsco Products Co., which operated 86 Big Wheel/Rossi
stores, for $65 million. However, integration of these and
other entities was a primary factor for CSK taking charges of
$49.5 million in 2001, $48.5 million in 2000, and $32.7 million
in 1999. Standard & Poor's does not expect CSK to make any
significant acquisitions over the next two years.
Liquidity is provided by a planned $100 million revolving credit
facility maturing in 2008, which would replace the company's
existing $130 million revolving credit facility that matures in
2004 and had $55 million of availability as of Feb. 2, 2003, and
cash balances of $16 million as of Feb. 2, 2003. CSK will also
have a $225 term loan portion of the planned bank facility that
will have minimal amortization until maturity in 2009.
CSK significantly improved operating performance in 2002.
Continued operating improvement, the planned bank loan facility,
and favorable industry demographics could allow the company to
continue to reduce debt levels. An upgrade could be considered
over the next two years if the company is able to improve credit
measures, reduce debt levels, and maintain a moderate and
prudent growth strategy.
DE LOACH VINEYARDS: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: De Loach Vineyards, Inc.
1791 Olivet Road
Santa Rosa, California 95405
dba Abramson Creek Vineyards and Winery
aka Ansome Vineyards and Winery
aka Andretti Wine Group
aka De Loach
aka Greenbriar Vineyards
aka No Kai Oi Vineyards and Winery
aka O.F.S. Imports
aka O.F.S. Selections
aka The Copia Collection of American Wines
aka Hartman Lane Vineyards and Winery
aka Hartman Estates
Bankruptcy Case No.: 03-11242
Type of Business: Family-owned winery.
See http://www.deloachvineyards.com/
Chapter 11 Petition Date: May 20, 2003
Court: Northern District of California (Santa Rosa)
Judge: Alan Jaroslovsky
Debtor's Counsel: Paul M. Jamond, Esq.
Law Offices of Paul M. Jamond
815 5th Street #200
Santa Rosa, California 95404
Tel: (707) 526-4550
EDISON SCHOOLS: Denies Loan Covenants Non-Compliance Reports
------------------------------------------------------------
Edison Schools Inc. (Nasdaq: EDSN) is in full compliance with
all Company loan obligations to Merrill Lynch and School
Services LLC.
"This statement clarifies recent reports by both Bloomberg and
Dow Jones that the Company had defaulted on these loan
agreements. As clearly disclosed in the Company's most recent
10-Q, the Company received written waivers from these lenders
with respect to a particular financial covenant contained in the
agreements; therefore, the Company is not in default," said Chip
Delaney, Edison's Vice-Chairman for Business and Finance.
"Failure to report that the Company had received such waivers
renders the news reports incomplete at best," commented Chris
Cerf, Edison's President and Chief Operating Officer. "The
Bloomberg story implies that the issue remains unresolved and
that the company omitted to disclose it appropriately. Both
inferences are flatly inaccurate," said Cerf.
Peter Lyons, spokesman for School Services LLC stated "We have
no basis to believe that Edison is in default of its obligations
to School Services. Nor do we expect that to change in the
future."
Mr. Delaney confirmed that Merrill Lynch also is satisfied that
Edison is in compliance with its loan obligations.
Founded in 1992, Edison partners with school districts and
charter boards to raise student achievement through its
research-based school design, aligned assessment systems,
interactive professional development, integrated use of
technology, and other proven program features. Edison students
are achieving annual academic gains well above national norms.
Edison Schools now serves more than 110,000 public school
students in more than 20 states through four different business
channels: (1) the management of schools for school districts,
(2) charter schools, (3) summer and after-school programs, and
(4) achievement management solutions for school systems. The
company operates 149 full-year schools and 178 summer schools.
Between 1992 and 1995 and in ongoing efforts, Edison's team of
leading educators and scholars has conducted intensive research
to develop its school design and support systems. Edison opened
its first four schools in August 1995 and has grown rapidly in
every subsequent year. For more information, please visit
http://www.edisonschools.com
ENRON: Court Okays Venable Baetjer as Special Litigation Counsel
----------------------------------------------------------------
Enron Corporation and its debtor-affiliates obtained the Court's
authority to employ Venable Baetjer and Howard, LLP as their
special litigation counsel in connection with various trading
contract matters, including review, analysis, settlement
negotiations and litigation with respect thereto, and other
miscellaneous litigation and potential litigation matters, nunc
pro tunc to February 10, 2003.
The Debtors' general bankruptcy counsel, Weil, Gotshal & Manges
LLP and Venable will work closely together to ensure that they
do not perform duplicate services for the Debtors.
As special counsel, Venable will bill the Debtors with its
customary hourly rates that currently range:
Partners $275 - 500
Counsel 275 350
Associates 185 - 310
Paralegals 120 - 170
In addition, Venable will also seek reimbursement of its out-of-
pocket expenses including secretarial overtime, travel, copying,
outgoing facsimiles, document proceeding, court fees, transcript
fees, long distance phone calls, computerized legal research,
postage, messengers, overtime meals and transportation. (Enron
Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003
(ENRN03USR3) are trading at about 18 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3
for real-time bond pricing.
ESSENTIAL THERAPEUTICS: Wants to Continue DoveBid's Employment
--------------------------------------------------------------
Essential Therapeutics, Inc., and its debtor-affiliates ask for
approval from the U.S. Bankruptcy Court for the District of
Delaware to employ DoveBid, Inc. as Equipment Auctioneer.
The Debtors report that DoveBid provided prepetition services to
the Company. The Debtors desire to continue such retention and
assume the prepetition retention agreement employing DoveBid as
equipment auctioneer.
The Debtors argue that the services of DoveBid as equipment
auctioneer are crucial to their efforts to maximize the value of
their assets for the benefit of the creditors and shareholders.
The Debtors explain that the Equipment is no longer required by
the Debtors because the Debtors have suspended all business
operations at 800, 830 and 840-850 Maude Avenue, Mountain View,
California, at which the Equipment is located. Because the
Equipment is not being used, the Debtors desire to sell the
Equipment in order to maximize its value for the Debtors'
estates and to avoid the accrual of additional administrative
rent expenses. The Debtors are required, by the terms of their
agreement with the lessor of the Premises, to turn over
possession by July 15, 2003.
DoveBid is particularly well suited to provide the type of
auction services required by the Debtors. DoveBid has extensive
experience with auctions of the type of equipment at issue in
this case. The Debtors therefore believe that the services of
DoveBid will enable the Debtors' estates to maximize the value
of the Equipment. Specifically, DoveBid will analyze, value,
market and conduct auctions of the Equipment.
As Compensation, DoveBid will receive a sales commission on the
sales conducted any auction or auctions that are marketed and
conducted as a related event. Specifically, the auction contract
stipulates an expense budget of $45,000, on a "not to exceed"
basis. The expense budget contemplates:
i) $20,000 for Marketing;
ii) $15,000 for Labor; and
iii) $10,000 for Webcast Production
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.
FLEMING COMPANIES: Wins Nod to Pay $3-Mil. Roundy's Break-Up Fee
----------------------------------------------------------------
To compensate Roundy's Inc. for the time, effort, expense, and
risk that it has incurred and will incur in negotiating,
documenting, and seeking to consummate the sale transaction,
Judge Walrath approved Fleming Companies, Inc., and its debtor-
affiliates' request to pay a $3,000,000 break-up fee in the
event Roundy's isn't the successful bidder at the Auction.
The Break-Up Fee is 2.5% of the $120,000,000 aggregate purchase
price Roundy's offered.
The Debtors will also reimburse up to $1,500,000 of Roundy's
expenses if no Break-Up Fee is paid and up to a maximum of
$500,000 if the Break-Up Fee is paid.
The Debtors relate that the Break-Up Fee and Expense
Reimbursement are critical components of any offer made for the
Rainbow Store Assets. The Debtors explain that Roundy's
willingness to commit to the sales transaction, to continue to
perform the activities necessary to consummate the transaction,
and to serve as a "stalking horse" against which other
prospective purchasers will be compared in and of itself
represents a significant contribution to the estate. As a
result, by agreeing to pay the Break-Up Fee, the Debtors ensured
that the estate would have the benefit of Roundy's initial offer
without sacrificing the potential for interested parties to
submit overbids. The Break-Up Fee, the Debtors note, will also
encourage fair and competitive bidding. (Fleming Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
FLEXXTECH CORP: Closes Merger with Network Installation Corp.
-------------------------------------------------------------
Flexxtech Corporation (OTC Bulletin Board: FLXE) has closed on
its merger with Irvine, CA-based Network Installation Corp.
"With many of the major issues involving the corporate
restructuring behind us, we are both anxious and thrilled to
embark on a new path and believe that this merger with Network
Installation will bring tremendous value to our shareholders and
investors", stated Flexxtech Chairman Michael Novielli.
"I am excited about the new direction and promising future ahead
for Flexxtech", added incoming Flexxtech CEO Michael Cummings.
"Our two-pronged approach will be to continue focusing on
Network's core competency of project management in networking
infrastructure design, installation, and support. We also are
currently leveraging our industry proficiency in our pursuit of
an enormous opportunity within the burgeoning Wi-Fi arena."
In conjunction with the merger, Mr. Cummings has also been named
to the Board of Directors. Mr. Novielli has resigned as
Flexxtech CEO but will remain in his capacity as Chairman.
Network Installation Corp., is one of Southern California's
leading independent designers and installers of data, voice, and
video networks. Some of Network's clients include; IBM, Cisco
Systems, The Travelers, UPS, University of Southern California,
UCLA, The Counties of Los Angeles and Orange, among other
Fortune 1000 companies and highly regarded institutions.
Additional information on Network Installation can be viewed at
http://www.networkinstallationcorp.com Flexxtech's public
filings can be viewed at http://www.sec.gov
As reported in Troubled Company Reporter's January 8, 2003
edition, Kabani & Company, Inc., Certified Public Accountants of
Fountain Valley, California said in its audit report:
"[Flexxtech Corp.] has accumulated deficit of $14,235,009
including net losses of $12,392,858 and $1,814,953 for the years
ended December 31, 2001 and 2000, respectively. The Company has
a shareholders deficit of $2,416,423 on December 31, 2001. These
factors as discussed in Note 4 to the consolidated financial
statements, raises substantial doubt about the Company's ability
to continue as a going concern." These statements were dated
March 14, 2002 and November 14, 2002.
GALEY & LORD: Has Until Aug. 14 to Make Lease-Related Decisions
---------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Southern District
of New York, Galey & Lord, Inc., and its debtor-affiliates
obtained an extension of their lease decision period. The Court
gives the Debtors until August 14, 2003, to decide whether to
assume, assume and assign, or reject their unexpired
nonresidential real property leases.
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.
GARNEAU INC: March 31 Working Capital Deficit Narrows to $1.3MM
---------------------------------------------------------------
Garneau Inc., reported its financial results for first quarter
ended March 31, 2003.
Financial Results
March 31, 2003 first quarter Revenue totaled $12.5 million,
62.8% above the $7.7 million recorded for the comparative
quarter ended March 31, 2002.
Manufacturing revenues for the three month period ended
March 31, 2003 totaled $4.1 million, an increase, of $1.6
million from the quarter ended March 31, 2002. The two large
coating equipment orders, totaling approximately $11.9 million,
commenced during the first quarter.
Pipeline revenues for the three month period ended March 31,
2003, totaled $8.5 million, an increase of $3.3 million from the
quarter ended March 31, 2002 as small diameter coating activity
increased during the first quarter.
Margin for the period ended March 31, 2003 of $3.0 million is
20% above the $2.5 million recorded for the comparative period.
The margin increase is directly attributed to increased revenue
during the first quarter. The overall margin percentage was
negatively affected by the lower margin projected and realized
on the large International coating equipment contracts together
with the impact of foreign exchange rate fluctuations recorded
on the revenue generated from these contracts.
Manufacturing margins of $296 (7.3%) thousand for the quarter
ended March 31, 2003 were $621 thousand below the $917 (36.7%)
thousand recorded for the period ended March 31, 2002. The
reduction in margins are directly attributed to competitive
prices required and reduced margins accepted by Garneau on the
large coating equipment contracts which commenced during the
first quarter together with the impact of foreign exchange rate
fluctuations recorded on revenue generated from these contracts.
Pipeline margins of $2.7 million (31.6%) for the quarter ended
March 31, 2003 are $1.1 million above the comparative period and
directly correlates with the increase in pipeline revenue.
The Corporation's selling, general and administrative expenses
totaled $900 thousand for the three month period ended March 31,
2003, an increase of $198 thousand from the $702 thousand
recorded at March 31, 2002. Upward pressure on wages and
insurance expenses together with increased commissions paid on
higher revenue volumes primarily account for the increased
selling, general and administrative expenses. Additional
administrative and engineering support staff were also added to
assist with the coating equipment contracts which commenced
fabrication during the first quarter.
Amortization expense for the period ended March 31, 2003 totaled
$537 thousand, a decrease of $31 thousand over the $568 thousand
recorded for the comparative period ended March 31, 2002.
Operating cash flow, representing net earnings adjusted for
items not involving cash, generated by the Corporation for the
period ended March 31, 2003 totaled $1.8 million, equal to the
$1.8 million generated for the comparative period.
Interest costs of $112 thousand for the period ended March 31,
2003 were above the $70 thousand recorded for the period ended
March 31, 2002. Interest costs are expected to increase further
during the second quarter as increased usage of operating
facilities and project loans occur to finance work in progress
on the International Contracts.
The increase in coating activity and overall increase in revenue
and gross margin resulted in net earnings of $1.3 million for
the three month period ended March 31, 2003, as compared to the
$1.1 million net earnings reflected in the comparative period
ended March 31, 2002.
Net loss before tax for the Manufacturing division for the
period ended March 31, 2003 totaled -$82 thousand as compared to
the $657 thousand net earnings before tax for the comparative
period. The decrease is primarily attributed to the smaller
margin projected and generated from the large coating equipment
contracts compared to the bender orders completed during the
first quarter of 2002 together with foreign exchange rate loss
impacting accrued Revenue on these contracts, based on the
strengthening of the Canadian Dollar in the first quarter.
Net earnings before tax for the pipeline division totalled $1.4
million for the period ended March 31, 2003, a increase of $800
thousand over the $600 thousand generated for the comparative
period. This increase is primarily attributed to the increased
Revenue generated from small diameter coating products during
the first quarter.
Accounts Receivable total $10.5 million at March 31, 2003, a
substantial increase over the $3.7 million recorded at March 31,
2002, and is attributed to receivables carried on increased
domestic coating revenue and work in progress receivables for
the large intentional equipment contracts.
Loans payable increased from the comparative period as the
Corporation drew $2.7 million on a $6.7 million project loan
facility authorized by the Corporation's Bank to fund the large
International coating equipment contracts which commenced
fabrication during the first quarter. The Corporation's bank
working capital covenants have been adjusted to remove principal
payments due after 12 months from the working capital covenant
calculation. Working capital of -$1.3 million is recorded at
March 31, 2003. Adjusted working capital totals $3.1 million,
and is calculated by deducting $4.1 million of loans payable,
scheduled to be repaid after 12 months. The Corporation operated
within all bank covenants at March 31, 2003.
Surplus bank operating credit facilities in excess of $3.1
million were available to the Corporation at March 31, 2003.
Operational Results
Small Diameter coating activity increased significantly in mid
January 2003 and the plant produced at near capacity to the
close of the first quarter. Margins were impacted negatively
from plant inefficiencies caused by stringent pipe delivery
deadlines required by energy companies prior to spring breakup.
Overall flexibility of the Corporation's Camrose plant enabled
the Garneau client base to remain satisfied with delivery
capabilities.
Manufacturing activity on the two large coating equipment orders
commenced in February, 2003 with two fabrication shifts
currently operating in our Nisku facility. Delivery requirements
for both contracts are prior to June 30, 2003 and the
manufacturing facility will remain near full capacity until mid
June 2003. Domestic Manufacturing opportunities remained slow
during the first quarter, however, recent bidding requests for
domestic work is now showing signs of improvement.
Outlook
Garneau coating activity in the first quarter of 2003 increased
significantly from 2002 and based on revised upward drilling
forecasts of 18,300 wells for 2003, small diameter coating
revenue for the remainder of 2003 is projected to exceed 2002
levels.
The Corporation has entered the historically slow second quarter
of operations with domestic coating activity reduced through
this period. This seasonal slowdown will be partially offset by
International work currently in progress.
International projects totaling in excess of $8.4 million United
States dollars are approximately 35% complete at March 31, 2003
with a further 50% projected to be recorded as Revenue at the
end of the second quarter. The International contracts are
subject to foreign exchange fluctuations and the recent
strengthening of the Canadian dollar will impact the
Corporation's margins on these contracts.
International equipment bidding remains active with several
projects being pursued by our marketing department. Further
International recognition and corporate exposure world wide is
expected based on Garneau's receipt of the two large coating
plant orders currently being manufactured, although continuation
of the strengthening Canadian dollar could negatively impact
future International order margins or bidding success.
Garneau's distribution of High Density Polyethylene Pipe is
projected to increase over the next nine months as awareness of
Garneau's production capabilities improves.
The Corporation's relationship with it's bank remains strong
with Garneau operating within all bank covenants during the
first quarter.
Senior management remain focused on improving shareholders
return and based on improved projected domestic drilling
activity forecasted for 2003, improved financial results for the
remainder 2003 versus 2002 are projected.
Garneau Inc.'s primary business is the application of high
performance protective coatings and linings for oil and gas
pipeline protection and additionally designs and fabricates
oilfield equipment for both domestic and international markets.
During more than 30 years of operating experience, Garneau Inc.
has developed significant expertise and innovative technology,
and has maintained a long-term focus on continuously improving
the pipe coating process with cost-effective, quality coatings.
A talented and effective management team provides the vision and
experience for long-term profitable growth and increasing
shareholder value. The company's Web site can be accessed at:
http://www.garneau-inc.com/
GAYLORD ENTERTAINMENT: Facing Suit Filed by Nashville Predators
---------------------------------------------------------------
The National Hockey League's Nashville Predators filed suit
against Gaylord Entertainment Company (NYSE:GET) for failure to
meet its financial obligations regarding the naming rights of
the Gaylord Entertainment Center.
The suit was filed in the Chancery Court for Davidson County,
Tenn. Gaylord Entertainment Company is fewer than four years
into its 20-year naming rights agreement for Nashville's
downtown sports and entertainment arena.
"It's always regrettable to involve the courts in business
issues, but after exhausting all avenues, we are left with no
alternative," said Predators owner Craig Leipold.
Bob Walker and Mark Tipps of Walker, Bryant, Tipps and Malone
have filed the suit for the Predators.
"After repeated attempts to resolve the issue with Gaylord, the
Nashville Predators are forced to take legal action because
Gaylord Entertainment Company has refused to pay its legally
binding financial obligations and to honor its responsibilities
regarding the naming rights of Nashville's arena," said Mark
Tipps.
According to Predators attorney, Gaylord Entertainment did not
make its scheduled semi-annual payment of $1,186,565.50 that was
due in January 2003, despite formal written notification and
verbal contact. As a result, Gaylord is now in default. In
addition, the Predators reserve the right to pursue future
claims (more than $60,000,000) for the entire remaining term of
the naming rights agreement.
"In an attempt to justify their actions, it appears Gaylord
Entertainment Company has tried to combine two separate issues
by attempting to exercise a claimed right to offset its naming
rights obligation against a claim for payment on a put option
that is conditional and is not due," Tipps said. "Gaylord's
obligation to pay for naming rights to the Nashville arena is
wholly unrelated to its minority ownership interest in the
Predators."
In reference to the franchise partnership agreement that was
approved and signed by Gaylord Entertainment Company in 1997,
the Predators have taken all actions required to date in regard
to Gaylord's "put," but there are two conditions beyond its
control which have not been met at this time. The Predators
intend to continue to honor all partnership obligations in
accordance with the terms of the partnership agreement.
IMPSAT FIBER: March 31 Working Capital Deficit Tops $300 Million
----------------------------------------------------------------
IMPSAT Fiber Networks, Inc., a leading provider of integrated
broadband data, Internet and voice telecommunications services
in Latin America, announced its results for the first quarter of
2003, during which the Company successfully emerged from Chapter
11 and finalized the restructuring of the obligations covered by
its Plan of Reorganization. All figures are in U.S. dollars.
FIRST QUARTER 2003 HIGHLIGHTS
-- Total revenues were $56.1 million, an increase of 5.5% from
the fourth quarter of 2002.
-- The Company recorded positive EBITDA of $13.5 million for the
first quarter of 2003, as compared to $8.8 million for the
first quarter of 2002 and $3.4 million for the fourth quarter
of 2002.
-- Available cash, cash equivalents and trading investments at
March 31, 2003 totaled $61.9 million, slightly in excess of
the Company's cash, cash equivalents and trading investments
of $61.0 million at March 31, 2002.
-- Impsat's total debt was reduced by $728 million to $267.5
million at March 31, 2003 in connection with the Company's
Plan of Reorganization.
At March 31, 2003, the Reorganized Company's balance sheet shows
that its total current liabilities outweighed its total current
assets by about $300 million.
FIRST QUARTER 2003 RESULTS
Overview
The Company is pleased to report the results of its operations
for the first quarter of 2003. Despite the challenges imposed on
the telecommunications sector, including the Company, by the
continued difficult macroeconomic environment and conditions in
Latin America, Impsat was able to successfully emerge from
Chapter 11 while implementing an operational restructuring to
improve the efficiency of its operations and its operating
performance.
Total net revenues for the first quarter of 2003 were $56.1
million, compared to total net revenues for the first quarter of
2002 of $ 62.4 million. The decrease in net revenues was
principally due to the macroeconomic downturn affecting
businesses in Latin America, including the devaluation of the
Argentine peso and the Brazilian real against the U.S. dollar,
which adversely affected the U.S. dollar value of our revenues.
Net revenues for the first quarter of 2003 represented a 5.5%
increase over our net revenues for the fourth quarter of 2002 of
$53.1 million.
Direct costs for the first quarter of 2003 totaled $26.3
million, a decrease of 20.9% as compared to the first quarter of
2002. Selling, general and administrative (SG&A) expenses for
the first quarter of 2003 totaled $5.5 million and represented a
reduction of 25.1% as compared to SG&A expenses for the three
months ended March 31, 2002, while salaries and wages expense
for the first three months of 2003 totaled $10.7 million, a
decrease of 17.7% of our salaries and wages expenses for the
first quarter of 2002. These reductions in our operating
expenses, which resulted in part from the devaluation of local
Latin American currencies against the U.S. dollar and from
efforts by management to reduce expenditures in line with the
Company's lower revenues, created the basis for Impsat's
improved operating results and the preservation of its cash
balances.
On March 25, 2003, the Company formally emerged from its Chapter
11 proceeding that was commenced in June 2002 following the
approval of the Company's Plan of Reorganization by its
creditors. The Plan substantially reduced its total
indebtedness, from $1.04 billion at December 31, 2002 to $262.0
million at March 31, 2003. Cash, cash equivalents and trading
investments totaled approximately $61.9 million at March 31,
2003.
Commenting on results, Impsat CEO Ricardo Verdaguer stated: "We
are pleased to report better than expected results for the
quarter. Our improved results reflect better than projected
performance of our data products business in Colombia, Venezuela
and Argentina, and better than expected overall gross margins.
Despite the downturn in the Latin American economy that
continues to adversely affect our business, we have implemented
measures to improve and enhance our operating performance by
completing our financial restructuring and significantly
streamlining operating expenses. We believe that these efforts
will position us to service our clients well and grow our
business once the economy begins to improve. To achieve this
kind of performance, despite facing a negative macroeconomic
environment, is a credit to our employees and represents a
continued commitment by our company to expand our business
throughout the region. Moreover, we are extremely pleased that
our emergence from Chapter 11 and our reorganization were
completed in a timely manner. Our improved financial position
will allow us to continue delivering high-quality services to
our customers and also gives us a competitive advantage in an
industry where many of our competitors in the region still face
the challenge of restructuring their balance sheets. As a result
of our emergence and restructuring, our company is now much
stronger and better capitalized. We look forward to providing
excellent service to our customers and value to our shareholders
in the months and years ahead."
Revenues from Services
Despite the negative macroeconomic environment affecting our
business in Latin America, the Company's total net revenues for
the first quarter 2003 aggregated $ 56.1 million. Net revenues
from services (i.e., excluding revenues related to equipment
sales) for the first quarter of 2003 totaled $56.0 million, a
decrease of 9.9% compared to net revenues from services for the
three months ended March 31, 2002. The decrease was attributable
to continuing adverse macroeconomic conditions in Latin America,
in particular to the devaluation of the Argentine peso and the
Brazilian real, which resulted in lower U.S. dollar values for
our revenues. Compared to net revenues from services for the
three months ended December 31, 2002, net revenues from services
increased 5.5% ($2.9 million) during the first quarter of 2003.
Revenue Breakdown by Business Line
Broadband and satellite data service revenues totaled $41.4
million and accounted for 73.9% of our total consolidated
revenues, compared to $46.3 million, or 74.5% of total revenues,
for the first quarter of 2002.
During the first quarter of 2003, Impsat's revenues from
Internet services totaled $5.7 million, or 10.2% of total
revenues, a decrease of $2.2 million from Internet service
revenues for the first quarter of 2002.
Revenue Breakdown by Country
During the first quarter of 2003, Impsat recorded total revenues
in Argentina of $14.7 million, compared to revenues of $15.8
million in the first quarter of 2002, a 7.3% decrease. The
decrease in revenues in Argentina resulted from the continued
adverse economic conditions in Argentina that has adversely
affected many of the Company's customers and from the
devaluation of the Argentine peso against the U.S. dollar.
In Colombia, total revenues from services for the first quarter
of 2003 were $13.6 million, compared to revenues of $15.1
million in the same quarter of 2002. Total revenues from
services in Brazil, which aggregated $7.3 million during the
first quarter of 2003 as compared to $10.7 million in the first
quarter of 2002, were adversely affected by the devaluation of
the Brazilian real against the U.S. dollar. Total revenues from
services in Venezuela were $9.0 million for the first quarter of
2003 compared to $7.9 million in the first quarter of 2002.
Revenues by country are reported without deduction for
intercompany revenues.
Operating Expenses
Operating expenses for the first quarter of 2003 were $61.8
million compared to operating expenses of $77.6 million in the
first quarter of 2002. The Company's efforts to streamline its
operations, as well as the beneficial effect of local currency
valuations on certain of its expenses, resulted in a $15.8
million decrease in operating expenses (or 20.4% decrease)
during the first quarter of 2003 as compared to same quarter of
2002. Operating expenses for the fourth quarter of 2002 totaled
$68.6 million. The Company recorded lower provisions for
doubtful accounts in the first quarter of 2003, as well as lower
salaries and wages expenses and reduced SG&A expenses, than
compared to the same quarter in 2002.
EBITDA
During the first quarter of 2003, Impsat recorded consolidated
EBITDA of $13.5 million, an increase of 54.5% over EBITDA of
$8.8 million in the first quarter of 2002. Compared to the three
months ended December 31, 2002, EBITDA increased by $10.2
million. The increase in EBITDA for the period resulted from a
combination of higher revenues, lower fixed expenses and lower
provisions for doubtful accounts as compared to those recorded
in the previous period in 2002. As a result, EBITDA margin for
the period was 24.1%, as compared to an EBITDA margin of 14.1%
for the three months ended March 31, 2002 and 6.3% for the three
months ended December 31, 2002.
Emergence from Chapter 11
On March 25, 2003, the Company's Plan of Reorganization under
Chapter 11 of the U.S. Bankruptcy Code became effective, and the
Company emerged from its bankruptcy proceedings. The Plan was
confirmed by order of the U.S. Bankruptcy Court on December 11,
2002, six months after the Company initially filed for
protection under the US Bankruptcy Code.
The Company's Plan of Reorganization, which was approved by
creditors holding 83% of the indebtedness eligible to vote
thereon, included the following main features:
-- The cancellation of all of the shares of the Company's
existing common stock, options and other equity interests;
-- The issuance of 9,800,000 shares of its new common stock to
holders of its 13-3/4 % Senior Notes due 2005 and its 12-3/8%
Senior Notes due 2008, which were cancelled as part of the
Plan, and to other holders of general unsecured claims
against the Company;
-- The issuance of $67.5 of its Convertible 6% Series A Notes
due 2011 to holders of its 12-1/8 % Notes due 2003, which
were cancelled;
-- The restructuring of its obligations to certain holders of
guaranteed indebtedness of its operating subsidiaries, who
agreed to reduce and restructure such indebtedness in
accordance with the terms of the Plan and who received, in
addition to such restructured indebtedness totaling $144.0
million, $23.9 million of its Convertible 6% Series B Notes
due 2011, and warrants to acquire 15.3% of the Company's
common stock on a fully diluted basis; and
-- A new Board of Directors of seven persons, consisting of the
Chief Executive Officer, two persons originally designated by
the holders of the Company's Series A Notes, one person
originally designated by Nortel Networks Ltd., and three
persons originally designated by the holders of the Company's
prior 13-3/4% Senior Notes due 2005 and its 12-3/8% Senior
Notes due 2008, was constituted and took office.
As a result of the effectiveness of the Plan of Reorganization,
the Company has substantially reduced its outstanding debt and
annual interest expense. At December 31, 2002, prior to the
effectiveness of the Plan of Reorganization, Impsat's
consolidated indebtedness totaled approximately $1.04 billion.
Upon effectiveness of the Plan of Reorganization, the Company's
total indebtedness was reduced to approximately $262.0 million.
Net interest expense for 2002, excluding post-petition interest
on the Company's old Senior Notes and interest waived on certain
indebtedness owed by IMPSAT Brazil to one creditor, totaled
$73.9 million. The Company estimates that its net cash interest
expenses will be reduced to approximately $18.7 million during
2003.
The Plan provides, among other matters, that the Company shall
use its reasonable efforts to have the New Common Stock listed
on a nationally recognized market or exchange. The Company is
currently assessing the most convenient timing and manner for
certain liquidity for its common stockholders.
Effect of Foreign Exchange Losses, Taxes, Net Income and
Operating Loss
For the first quarter of 2003, the Company recorded a net gain
on foreign exchange of $10.0 million, compared to a net loss of
$7.4 million for the first quarter of 2002. The gain on foreign
exchange was primarily due to the appreciation of the Argentina
peso and Brazilian real during the first three months of 2003.
For the first quarter of 2003, the Company reported net income
of $729.8 million, compared to a net loss of $58.5 million in
the same period in 2002. The significant increase was due to the
extraordinary gain on the extinguishment of indebtedness as part
of the Company's successful completion of its Reorganization
Plan. For the first quarter of 2003, operating loss totaled $5.7
million, compared to an operating loss of $15.2 million for the
first quarter of 2002.
Impsat Fiber Networks, Inc. is a leading provider of fully
integrated broadband data, Internet and voice telecommunications
services in Latin America. Impsat operates an extensive pan-
Latin American high capacity broadband network in Brazil,
Argentina, Chile and Colombia using advanced technologies,
including IP/ATM switching, DWDM, and non-zero dispersion fiber
optics. The Company has also deployed thirteen facilities to
provide hosting services Impsat currently provides services to
nearly 2,600 national and multinational companies, government
entities and wholesale services to carriers, ISPs and other
service providers throughout the region. The Company has local
operations in Argentina, Colombia, Venezuela, Ecuador, Brazil,
the United States, Chile and Peru. Visit http://www.impsat.com
for more information on the Company.
INTERDENT INC: Delays Form 10-Q Filing for March 2003 Quarter
-------------------------------------------------------------
Recent events at Interdent Inc. resulted in a delay in
completing the Company's financial statements for the quarter
ended March 31, 2003 and its Quarterly Report on Form 10-Q for
that quarter. Completion of its Quarterly Report on Form 10-Q
for the three months ended March 31, 2003 is subject to the
completion of additional required material disclosures in the
financial statements, including disclosures relating to the
Company filing a Prearranged Plan of Reorganization under
Chapter 11 of the United States Bankruptcy Code on May 9, 2003.
It is anticipated that Interdent's total revenue for the quarter
ended March 31, 2003 will be approximately $59.0 million, or
approximately $4.7 million less than total revenues for the
comparable year ended March 31, 2002. The decrease in revenues
is attributed to the effect of a very poor national economy and
high unemployment in the markets which the Company serves.
ISLE OF CAPRI: Reaches Pact to Lease and Operate Bahamas Casino
---------------------------------------------------------------
Isle of Capri Casinos, Inc. (Nasdaq: ISLE) officials announced
has reached an agreement in principle to lease and operate an
Isle of Capri Casino at Our Lucaya Beach and Golf Resort in
Freeport, Grand Bahamas.
The project is subject to various conditions including, without
limitation execution of a definitive agreement and governmental
and regulatory approvals.
Isle of Capri Casinos, Inc. owns and operates 15 riverboat,
dockside and land-based casinos at 14 locations, including
Biloxi, Vicksburg, Lula and Natchez, Mississippi; Bossier City
and Lake Charles (two riverboats), Louisiana; Black Hawk (two
land-based casinos) and Cripple Creek, Colorado; Bettendorf,
Davenport and Marquette, Iowa; and Kansas City and Boonville,
Missouri. The company also operates Pompano Park Harness Racing
Track in Pompano Beach, Florida.
As reported in Troubled Company Reporter's February 3, 2003
edition, Standard & Poor's Ratings Services assigned its 'B+'
rating to Isle of Capri Black Hawk LLC's $210 million senior
secured credit facility.
In addition, Standard & Poor's assigned its 'B+' corporate
credit rating to the Black Hawk, Colo.-based company. The
outlook is stable.
Isle of Capri Black Hawk is 57% owned by Isle of Capri Casinos
Inc., (BB-/Stable/--) and 43% by Nevada Gold & Casinos Inc.
(unrated entity). Upon consummation of the pending acquisition,
the company will own and operate two casino properties in Black
Hawk (Isle Black Hawk and Colorado Central Station; CCS) and one
in Cripple Creek, Colo. The $84 million transaction is expected
to close in the next several months, subject to regulatory
approval and financing.
IT GROUP: Has Until July 14 to Move Actions to Delaware Court
-------------------------------------------------------------
The IT Group, Inc., and its debtor-affiliates obtained the
Court's approval to further extend their removal period with
respect to any actions pending on the Petition Date through the
earlier of:
(a) July 14, 2003; or
(b) 30 days after the entry of an order terminating the
automatic stay with respect to any particular action
sought to be removed. (IT Group Bankruptcy News, Issue
No. 28; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
KAISER ALUMINUM: Taps McDermott Will as Special Labor Counsel
-------------------------------------------------------------
Kaiser Aluminum Corporation and its debtor-affiliates seek the
Court's authority to employ McDermott, Will & Emery as their
special labor counsel.
The Debtors want McDermott to assist in their negotiations with
the United Steelworkers of America and other labor unions as
well as the Pension Benefit Guaranty Corporation regarding the
restructuring of their pension and retiree medical obligations.
The Debtors also need McDermott to appear before the Court and
prepare any necessary reports or other pleadings or documents in
connection with the negotiations.
The Debtors relate that McDermott is well qualified to represent
them in these cases. Established in 1934, McDermott is a
premier international law firm. The head of its labor and
employment practice group, Joseph E. O'Leary, who will be
primarily responsible in representing the Debtors, has over 30
years of legal experience. Mr. O'Leary is a partner at
McDermott.
Mr. O'Leary specializes in labor and employment matters related
to administrative proceedings before governmental agencies like
the National Labor Relations Board, Equal Employment Opportunity
Commission and the Occupational Safety and Health Review
Commissions. Mr. O'Leary has substantial experience
representing Chapter 11 debtors and unsecured creditors'
committees in negotiations related to the restructuring of
obligations with respect to employee benefit plans and
collective bargaining agreements. He is currently involved in
the bankruptcy cases of Bethlehem Steel Corporation, LTV Steel
Company, Inc., National Steel Corporation, Wheeling Pittsburgh
Steel Corporation and Special Metals Corporation, with
particular reference to the various pension, retiree medical and
collective bargaining matters that have arisen in those cases.
At the onset of their Chapter 11 cases, the Debtors have
employed Seyfarth Shaw as their general labor, employment and
employee benefits counsel. Seyfarth has principally been
assisting the Debtors in connection with an unfair labor
practice case pending before the National Labor Relations Board.
The Debtors clarify that Seyfarth has not been, and is not
expected to be, active with respect to the labor negotiations
and proceedings related to McDermott's engagement.
The Debtors propose to compensate McDermott for its services on
an hourly basis in accordance with its ordinary and customary
hourly rates and reimburse the firm's actual and necessary out-
of-pocket expenses. Mr. O'Leary's current hourly rate is $515
while the current hourly rate of Scott A. Faust, another partner
at McDermott who may assist Mr. O'Leary in this engagement, is
$455. The hourly rates of other McDermott professionals that
may be asked to provide services to the Debtors range from $180
to $515.
The Debtors have not made any payments to McDermott during the
year before the Petition Date. But on January 29, 2003, the
Debtors provided McDermott with a $50,000 retainer for services
rendered or to be rendered and for expenses incurred or to be
incurred by the firm in these cases. Other than the Retainer,
the Debtors have not made any other payments to McDermott after
the Petition Date.
Additionally, the Debtors propose that McDermott be deemed
retained nunc pro tunc as of August 26, 2002. The Debtors
estimate that the total amount of McDermott's fees and expenses
dating back to August 26, 2002 is $54,000.
Mr. O'Leary attests that McDermott does not hold any interest
adverse to the Debtors or their estates. Nevertheless, Mr.
O'Leary discloses that, other than himself and Mr. Faust, other
McDermott professionals currently represent:
(a) Raymond Milchovich, a former Kaiser Chief Executive
Officer and director, in certain employee benefit matters
arising from Mr. Milchovich's former employment with the
Debtors; and
(b) Transcontinental Insurance Company in matters concerning
direct insurer liability relative to asbestos litigation
claims against the Debtors, including matters concerning
the litigation between the Debtors and CNA over coverage
for the asbestos claims, and also with respect to claims
between the Debtors and CNA in relation to the Gramercy,
Louisiana plant explosion in July 1999 and the related
litigation.
But Mr. O'Leary informs the Court that Mr. Milchovich and CNA
have waived any potential conflicts that may arise as a result
of McDermott's representation of the Debtors in these bankruptcy
cases. In addition, McDermott will erect information barriers
between the matters in which certain of its professionals will
represent the Debtors and matters in which other professionals
will represent Mr. Milchovich and CNA and bar any person who
performs work for the Debtors from performing any services for
Mr. Milchovich or CNA.
U.S. Trustee Objects
The U.S. Trustee contests the proposed employment terms on the
grounds that the Debtors' application fails to indicate any
basis for approval of McDermott's employment way before it was
filed. At that time, it does not appear that McDermott was
engaging in emergency work of an all-consuming nature such as
would preclude the timely preparation of a retention
application, the U.S. Trustee observes. In addition, McDermott
has been retain as counsel in many cases in the Delaware
district and should be familiar with the requirement to seek
approval of its retention promptly. (Kaiser Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900)
Kaiser Aluminum's 10.875% bonds due 2006 (KLU06USR1) are trading
at about 66 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU06USR1for
real-time bond pricing.
KLEINERT'S: Signs-Up Net Worth Solutions as Investment Banker
-------------------------------------------------------------
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 engage the services of Net Worth
Solutions, Inc., as their investment banker.
The Debtors tell the Court that in order to facilitate the
successful completion of their chapter 11 cases, Kleinert's has
determined that the optimal way to realize value is through the
sale of either or both of the Kleinert's Line and the Buster
Brown Line as separate going concerns.
Against that backdrop, the Debtors require the assistance of an
experienced investment banker with extensive experience in the
apparel industry. In its capacity as the Debtors' investment
banker, Net Worth will:
i) prepare a "positioning memorandum" that describes to
prospective parties the business of the Debtors and the
investment opportunity;
ii) present a suitable candidates to the Debtors that are
interested in entering into a Transaction with the
Debtors; and
iii) assist in negotiating the terms of a Transaction and
managing the process through to closing.
The Debtors and Net Worth agreed to:
a) an engagement fee of $20,000, which was paid to Net
Worth by the Debtors prepetition;
b) a monthly retainer fee of $7,500 per month for the six-
month period which commenced as of April 2, 2003;
c) reimbursement of out-of-pocket expenses;
d) a success fee in the event of the closing of a
Transaction, equal to 4% of the purchase price if such
price is between $8 million and $12 million, or 5% of
the purchase price if such price is exceeds $12 million,
with a minimum Success Fee of $300,000 for each of the
Kleinert's Line and Buster Brown Line;
e) a financing fee, upon successfully arranging for
financing equal to 2% of the greater of the funding
provided or the line of credit established; and
f) in the event that the decision is made after June 1,
2003 to liquidate either the Kleinert's or Buster Brown
Lines, a liquidation fee of $100,000 for each Line to be
liquidated.
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: Cash Collateral Hearing Continues on June 3
----------------------------------------------------------
Timothy W. Moppin, Esq., at Duane Morris LLP, in San Francisco,
California, informs the Court that pursuant to certain
prepetition loan agreements and related documents, Lucent and
certain other lenders provided prepetition credit facilities to
Cricket and certain other Leap Wireless Debtors. The Lucent
Credit Facilities include, inter alia, certain of those credit
facilities referred to in the Interim Order as "Vendor Debt
Facilities", which Cricket admits were outstanding as of the
Petition Date. The Lucent Credit Facilities are secured by,
inter alia, a pool of collateral, which includes:
(i) the equity interest of Cricket Communications Holdings,
Inc. in Cricket;
(ii) all of the equity interests of Cricket in each of its
subsidiaries;
(iii) all of the equity interests of substantially all of the
license subsidiaries;
(iv) all of the assets of Cricket, Holdings, the Cricket
Subsidiaries end the Leap License Subsidiaries; and
(v) related collateral.
Certain of the Lucent Collateral constitute Cash Collateral,
which Cricket has used since the Petition Date and is seeking to
continue to use.
Mr. Moppet tells the Court that Lucent has not consented to the
use of the Lucent Cash Collateral. Although Cricket suggests,
through the use of the word "Stipulated" in the Emergency First
Day Motion Re Stipulated Order Approving Use of Cash Collateral
and throughout the Interim Order, no consent was given by Lucent
with respect to Cricket's use of the Lucent Cash Collateral. As
of May 2, 2003, Cricket has not secured Lucent's consent for the
use of the Lucent Cash Collateral.
Additionally, Lucent objects to Cricket's use of the Lucent Cash
Collateral since there is no indication that the replacement
liens, or other forms of adequate protection being granted in
Lucent's favor, will adequately protect Lucent for the
diminution in the value of the Lucent Collateral, which results
from the use of the Lucent Cash Collateral. Lucent has not been
provided with any information regarding the value of the
replacement liens relative to the reduction in the value of the
Lucent Collateral.
Pursuant to the Interim Order, Lucent is now subject to a
$250,000 carve-out in favor of certain fees and expenses of the
Debtors' case and, more importantly, fees and expenses of
Professional Persons retained by the Debtors. Pursuant to the
Interim Order, this Court granted this Carve-out, and provided
that the terms of the Interim Order "shall not prejudice the
right of any party to seek a larger carve-out."
Mr. Moppet argues that there has been no demonstration by
Cricket that the granting of the Carve-out with respect to the
Cash Collateral was "necessary to avoid immediate and
irreparable harm to the estate." Cricket further appears to
rely on Section 364(d)(1) of the Bankruptcy Code to confer
superpriority lien status for the Carve-out over any and all
other secured claims. This reliance on Section 364(d)(1) is
inappropriate given that the Carve-out relates not to
postpetition financing, but to the use of Cash Collateral to pay
administrative claimants otherwise not entitled to such Cash
Collateral.
Mr. Moppet states that professional fee carve-outs require, as a
matter of law, the consent of the secured parties against whose
collateral the carve-out is to be assessed. Cricket has failed
to obtain Lucent's consent with respect to the Carve-out.
Furthermore, even if Cricket could avail itself of Section
364(d)(1) in the carve-out context, Cricket offers no proof that
it has complied with Section 364(d)(1) with respect to the
Carve-out.
In seeking the Carve-out, Mr. Moppet insists that Cricket has
not demonstrated any facts, which meet the requirements of
Section 364(d)(1). Among other things, there has been no
showing that Lucent is adequately protected or that Cricket was
otherwise unable to obtain professional services in the absence
of the Carve-out.
(2) Nortel Networks
Nortel Networks objects to the provision in paragraph 10 of the
proposed Final Stipulated order, which states that:
"Notwithstanding the Superpriority Claims and Liens afforded
to the Adequate Protection obligations pursuant to this
Final Stipulated order and further notwithstanding any
other provision hereof to the contrary, all holders of
Adequate Protection Liens shall be bound by the agreement
of such holders to the treatment of such administrative
claims and Liens proposed in any plan of reorganization of
the Debtors if the holders of at least half in number of
such holders (representing at least two thirds of the
Vendor Debt voted) who cast ballots on such plan 16 vote to
accept such plan."
Rebecca J. Winthrop, Esq., at Jenkens & Gilchrist LLP, in
Pasadena, California, explains that Nortel Networks objects to
this provision because it appears to impair Nortel Networks'
ability to consent or object to the treatment of any
Superpriority Claim, which it may hold as a result of the
interim cash collateral order or the Final Stipulated Order at
the time of any plan confirmation. If so, then the provision
violates Section 1129(a)(9)(A) of the Bankruptcy Code, which
requires all administrative expense claims to be paid in full on
the effective date of any plan of reorganization unless the
party holding the claim agrees otherwise.
The waiver of full payment of an administrative claim must be
individually and affirmatively given, and cannot be imposed by
one group of claimants on another. In re Digital Impact, Inc.,
233 B.R. 1, 7 (Bankr., N.D.Okla. 1998); see also In re Jankins,
184 B.R. 488, 492 (Bankr. E.D.Va. 1995)(affirmative concurrence
to less favorable treatment under Section 1129(5)(9) required).
The express text of Paragraph 10 appears to eliminate that
protection of Section 1129(a)(9)(A) by stating that "all holders
of Adequate Protection Obligations and Liens shall be bound by
the agreement of such holders to the treatment of such
administrative claims and Liens proposed in any plan . . . if
the holders of at least half in number of such holders
(representing at least two thirds of the Vendor Debt voted). . .
vote to accept such plan." [Final Stipulated Order, 9: 7-10
(emphasis added).]
Accordingly, Nortel Networks objects to the Final Stipulated
Order to the extent that the Debtors intend the Final Stipulated
Order itself to constitute the express agreement required by
Section 1129(a)(9)(A). Ms. Winthrop notes that the treatment
being proposed for administrative claimants in any plan is not
yet disclosed, nor provided for, in a disclosure statement
approved by this Court. To the extent that Paragraph 10 is an
actual attempt to impose on all holders of Superpriority Claims
whatever treatment may be voted on by a class of creditors in
the future, then it violates Section 1129(a)(9)(A). Either way,
Ms. Winthrop asserts, Paragraph 10 should be modified to reserve
the right of all parties holding Superpriority Claims as a
result of the interim cash collateral order or the Final
Stipulated order to consent or object to the treatment of these
claims in any plan of reorganization until the time of plan
confirmation.
* * *
In light of the objections, the Court continues the hearing on
the Debtors' request to use the Cash Collateral to June 3, 2003
at 10:00 a.m. (Leap Wireless Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
LODGIAN INC: Successfully Emerges from Chapter 11 Proceedings
-------------------------------------------------------------
Lodgian, Inc. (AMEX: LGN) has completed an $80 million financing
underwritten by Lehman Brothers Holdings Inc., bringing 18 of
the company's hotels out of bankruptcy.
Concurrently, the company announced that W. Thomas Parrington, a
member of Lodgian's board of directors, has been named interim
chief executive officer.
The proceeds of the Lehman financing were used to settle an
outstanding loan for the hotels, owned by Lodgian subsidiaries,
Impac Hotels II, L.L.C. and Impac Hotels III, L.L.C. (Impac),
which had filed for protection under Chapter 11 in December
2001. The financing is a two-year term loan with an optional
one-year extension at a rate of LIBOR plus 525 basis points but
not less than a floor of 7.25 percent interest.
Tom Parrington replaces David E. Hawthorne, who is leaving the
company following completion of the company's reorganization and
emergence from bankruptcy. Hawthorne has indicated that he will
resign from Lodgian's board of directors and that, if re-elected
at the upcoming annual meeting of shareholders, he would not
serve on the board. The company's board of directors has no
current plan with respect to the board vacancy created by
Hawthorne's resignation.
"With the completion of the financing and loan settlement,
Lodgian has successfully completed its court-approved plan of
reorganization and fully emerged from Chapter 11 proceedings,"
Parrington said. "Management now can turn its full attention to
improving the quality and operations of our portfolio and
returning to profitability." He noted that the company expects
to complete its remaining claims resolution process by the 2003
third quarter.
"My role was to restructure the company's finances and
operations," Hawthorne said. "We have successfully completed
that process, and the company has the plan and people in place
to effectively move forward."
A 30-year veteran of the hospitality industry, Parrington is the
former chief executive officer of Interstate Hotels Company, one
of the industry's largest independent operating companies.
During his 17-year tenure with Interstate, Parrington also
served as chief financial officer and chief operating officer.
Lodgian emerged from Chapter 11 with 78 hotels on November 25,
2002. In January 2003, eight other hotels were returned to a
lender in satisfaction of outstanding debt obligations, and one
hotel was returned to the lessor of a capital lease. The plan of
reorganization for the remaining 18 Impac hotels was approved on
April 24, 2003 by the U.S. Bankruptcy Court for the Southern
District of New York.
Lodgian is one of the largest independent owners and operators
of full-service hotels in the United States. The company
currently owns 96 hotels and has a minority interest in one
other hotel for a total portfolio of 97 hotels with 18,265 rooms
located in 30 states and Canada. Eighty-two hotels in the
company's portfolio are franchised under the InterContinental
Hotels Group (Crowne Plaza, Holiday Inn, Holiday Inn Select and
Holiday Inn Express) and Marriott brands (Courtyard by Marriott,
Fairfield Inn and Residence Inns), and nine are affiliated with
four other nationally recognized hospitality franchises. Six
hotels are independent, unbranded properties. For more
information about Lodgian, visit the company's Web site:
http://www.lodgian.com
LUBY'S: Bank Default Triggers Cross-Default on Subordinated Debt
----------------------------------------------------------------
Luby's (NYSE: LUB) has been notified by its subordinated note
holders, Chris and Harris Pappas, that as a result of the
ongoing default under the Company's senior indebtedness (bank
debt), the Company's subordinated debt held by the Pappases is
also in default. The bank debt default also has triggered an
automatic suspension of interest payments on the subordinated
debt.
"Harris and I are still very much dedicated to the future of
Luby's and the successful implementation of our two-year
business plan," said Chris Pappas, President and CEO.
"Nevertheless, since an arrangement has not been worked out yet
with the senior lenders, we felt it was important for us to
protect our rights under the $10 million loan that we made to
the Company two years ago. This does not reflect any change in
our commitment to Luby's -- and indeed is a reminder that we
have a substantial investment in the Company that reflects our
long-term belief in the Company's future."
In June 2001, Chris and Harris Pappas solidified their
commitment to Luby's by lending the Company $10 million in
subordinated debt. As part of this agreement, the Company agreed
that if the Company found itself in default with its bank group,
that default would trigger an automatic default in the
subordinated Pappas debt and a right to accelerate the maturity
of subordinated debt. Chris and Harris Pappas waived the
defaults through May 19, 2003, although they have not waived the
default after that date and have reserved all rights and
remedies going forward. The subordinated debt was to be due in
2011.
"We are confident that Chris and Harris remain committed to our
two-year business plan and to curing all defaults under our bank
debt as soon as possible," said Robert T. Herres, Chairman of
the Board of Directors. "Chris, Harris, and their team have been
working hard toward that end. Like our bank group, they have
decided it is important to protect their rights under their
notes; however, under the terms of our subordination agreements,
no payments can be made on the Pappas notes so long as we remain
in default under our senior credit arrangements."
Luby's provides its customers with delicious, home-style food,
value pricing, and outstanding customer service at its
restaurants in Dallas, Houston, San Antonio, the Rio Grande
Valley, and other locations throughout Texas and other states.
Luby's stock is traded on the New York Stock Exchange (symbol
LUB).
MASSEY ENERGY: Prices Convertible Senior Notes Private Offering
---------------------------------------------------------------
Massey Energy Company (NYSE: MEE) announced the pricing of its
private offering of convertible senior notes due May 15, 2023,
which was increased from the previously announced $100 million
to $110 million principal amount. The Company granted the
initial purchasers of the notes a 30-day option to purchase up
to an additional $22 million principal amount of the notes. The
notes will bear an interest rate of 4.75% per annum, payable
semi-annually. The Company intends to use the proceeds of the
proposed offering to permanently repay indebtedness under its
revolving credit facilities.
The notes will be offered only to qualified institutional buyers
and non-U.S. persons, pursuant to Rule 144A and Regulation S,
respectively, of the Securities Act of 1933, at a price of
$1,000 per note. The notes are unsecured and unsubordinated
obligations of the Company which are convertible into shares of
the Company's common stock initially at a conversion rate of
51.573 shares of common stock per $1,000 principal amount of
notes (equal to an initial conversion price of $19.39 per
share). Holders of the notes may convert their notes into
shares of the Company's common stock: (i) if the Company's
common stock maintains a certain per share price over a certain
period, (ii) upon the Company's call for redemption, (iii) upon
the occurrence of certain specified corporate transactions and
(iv) upon the occurrence of certain events relating to a decline
in the rating of the notes. The notes will be guaranteed by the
Company's wholly owned subsidiary, A.T. Massey Coal Company,
Inc.
In addition to the holders' right to convert the notes into
shares of common stock of the Company, the holders may require
the Company to purchase all or a portion of their notes on
May 15, 2009, May 15, 2013 and May 15, 2018. Notes purchased on
May 15, 2009 will be paid for in cash. Notes purchased on May
15, 2013 or May 15, 2018 may be paid for, at the option of the
Company, in cash or the Company's common stock, or a combination
thereof.
In addition, upon the occurrence of certain events prior to
May 15, 2009, the holders of the notes may require the Company
to purchase all or a portion of their notes for cash. On or
after May 20, 2009, the Company may redeem for cash all or a
portion of the notes.
In connection with this private offering, the securities have
not been and will not be registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements of the Securities Act and applicable
state securities laws.
Massey Energy Company, headquartered in Richmond, Virginia, is
the fourth largest coal company in the United States based on
produced coal revenues.
As reported in Troubled Company Reporter's Monday Edition,
Standard & Poor's Ratings Services revised its outlook on coal
producer Massey Energy Co. to negative from developing based on
refinancing concerns.
Standard & Poor's also said that it has assigned its 'B+' rating
to Massey's proposed $100 million convertible senior notes due
2023.
Standard & Poor's said that it also affirmed its 'BB' corporate
credit rating on the Richmond, Va.-based company. Total
outstanding debt at March 31, 2003, was $589 million.
MASTER FIN'L: Fitch Rates Series 1997-1 Class B-2 Notes at BB
-------------------------------------------------------------
Fitch Ratings has taken rating actions on the following Master
Financial Asset Securitization Trust transaction:
Master Financial, series 1997-1:
-- Classes A-7 & A-8 'AAA';
-- Class M-1 'AA';
-- Class M-2 'A+';
-- Class B-1 'BBB';
-- Class B-2 'BB'.
The affirmations reflect credit enhancement consistent with
future loss expectations.
METROPOLITAN ASSET: Fitch Affirms BB Rating to Class B3 Notes
-------------------------------------------------------------
Fitch Ratings has taken rating actions on the following
Metropolitan Asset Funding issue:
Series 1997-B
-- Class A1D affirmed at 'AAA';
-- Class A2 upgraded to 'AAA' from 'AA';
-- Class B1 upgraded to 'AA' from 'A';
-- Class B2 affirmed at 'BBB';
-- Class B3 affirmed at 'BB'.
The rating actions are due to the amount of credit enhancement
relative to future loss expectations.
MINCS-ING I: Fitch Downgrades Two Second Priority Notes to BB-
--------------------------------------------------------------
Fitch Ratings downgrades the notes of MINCS-ING I (HBDGM), Ltd.
(MINCS ING) and affirms the notes of SEQUILS-ING I (HBDGM), Ltd.
(SEQUILS ING). The transactions are synthetic and cash flow
collateralized loan obligations, respectively, that enable
investors to gain exposure to a portfolio of high-yield, senior
secured bank loans. The portfolio is managed by ING Capital
Advisors.
The following securities have been downgraded:
-- $48,000,000 MINCS second priority notes to 'BB-'
from 'BB+';
-- EUR10,000,000 MINCS second priority notes to 'BB-'
from 'BB+'.
The following security has been affirmed:
-- $355,000,000 SEQUILS notes 'AA'.
SEQUILS ING and MINCS ING were established to purchase $355
million of high-yield, senior secured bank loans. The
transactions were closed in October 1999 and mature on Oct. 13,
2011. As stated in the April 30, 2003, trustee report, SEQUILS
ING had an aggregate principal balance of portfolio investments
of $353.5 million and a total cash balance of $25.1 million. The
SEQUILS credit swap balance was $12.3 million and the SEQUILS
reserve account had a balance of USD4.7 million. The net
cumulative loss amount is $37.8 million.
As of the April 14, 2003 note valuation report, MINCS ING's
deferred liabilities outstanding, including the MINCS credit
swap spread, variable funding spread, deferred basic interest
balances were $4.4 million, $10.6 million and $1 million,
respectively.
A review of the transaction, including analyses under Fitch's
stressed loan interest spread, market value, and default
scenarios, has led to the conclusion that the original rating of
the SEQUILS ING notes is representative of the current credit
risk to investors. However, the ratings of the MINCS notes were
lowered to reflect the current risk, as described herein.
Fitch's rating of the SEQUILS ING notes addresses the timely
payment of interest and ultimate payment of principal as defined
in the indenture. The rating does not address the likelihood of
receipt of any additional distributions. The ratings of the
MINCS ING notes address the timely payment of basic interest and
ultimate payment of principal as defined in the indenture. With
respect to the Euro notes, Fitch's rating addresses the payment
of principal in U.S. dollars in an aggregate amount equal to the
initial dollar balance of the Euro notes and the payment of
basic interest on the notes in U.S. dollars. Furthermore, the
ratings are dependent upon the credit enhancement provided by
the SEQUILS credit swap and the financial strength of Morgan
Guaranty Trust Co. of New York as the SEQUILS and MINCS Credit
Swap Counterparty.
Fitch will continue to monitor this transaction.
MINC-PILGRIM: Fitch Junks $66-Million Notes at CC
-------------------------------------------------
Fitch Ratings affirms the notes of SEQUILS-PILGRIM I, Ltd.
(SEQUILS Pilgrim) and MINCS-PILGRIM I, Ltd. The transactions
are cash flow and synthetic collateralized loan obligations,
respectively, that enable investors to gain exposure to a
portfolio of high-yield, senior secured bank loans. The
portfolio is managed by ING Investments, LLC.
The following securities have been affirmed:
-- $388,000,000 SEQUILS notes 'AA';
-- $66,000,000 MINCS notes 'CC'.
SEQUILS Pilgrim and MINCS Pilgrim were established to purchase
$388 million of high-yield, senior secured bank loans. The
transactions were closed in June 1999 and mature on July 15,
2011. As stated in the April 25, 2003, trustee report, SEQUILS
Pilgrim had an aggregate principal balance of portfolio
investments of $351.3 million and a total cash balance of $8.7
million. The SEQUILS credit swap balance was $26 million and the
SEQUILS reserve account had a balance of $4.9 million. The net
cumulative loss amount is $48.3 million.
As of the April 15, 2003 note valuation report, MINCS Pilgrim's
deferred liabilities outstanding, including the MINCS credit
swap spread, variable funding spread, deferred basic interest
balances were $5 million, $11.2 million, and $3 million,
respectively.
A review of the transaction, including analyses under Fitch's
stressed loan interest spread, market value, and default
scenarios, has led to the conclusion that the original ratings
of the SEQUILS and MINCS Pilgrim notes are representative of the
current credit risk to investors.
Fitch's rating of the SEQUILS Pilgrim notes addresses the timely
payment of interest and ultimate payment of principal as defined
in the indenture. The rating does not address the likelihood of
receipt of any additional distributions. The ratings of the
MINCS Pilgrim notes address the timely payment of Basic Interest
and ultimate payment of principal as defined in the indenture.
Furthermore, the ratings are dependent upon the credit
enhancement provided by the SEQUILS Credit Swap and the
financial strength of Morgan Guaranty Trust Co. of New York as
the SEQUILS and MINCS Credit Swap Counterparty.
Fitch will continue to monitor this transaction.
NETWORK PLUS: UST Wants Case Converted to Chapter 7 Liquidation
---------------------------------------------------------------
Roberta A. DeAngelis, the Acting United States Trustee for
Region 3 wants the chapter 11 cases of Network Plus Corp., and
its debtor-affiliates converted to chapter 7 liquidation
proceedings under the Bankruptcy Code. Alternatively, the U.S.
Trustee wants the Court to set a deadline for performance of the
Debtors' respective duties under Section 1106(a)(5) of the
Bankruptcy Code.
The UST tells the U.S. Bankruptcy Court for the District of
Delaware that Section 1112(b)(1) provides that a "continuing
loss to or diminution of the estate and absence of a reasonable
likelihood of rehabilitation" constitutes "cause" sufficient to
justify conversion or dismissal.
In this particular case, the Court approved the sale of the
Debtors' assets to Broadview NP Acquisition Corp. for the amount
of $15,750,000. The Debtors, in their end, schedules the
undisputed secured claim of their pre-petition lenders in the
amount of $178,000,000.
Clearly, the Debtors' liquidation process is clearly causing a
continuing loss to or diminution in value of the Debtors'
estates, as there are little to no operating revenues to cover
costs of administration.
The last monthly operating report filed by the Debtors, the
December 2002 report, indicates that the Debtors have had net
cash flow of -$299,000 and -$143,000 for the months of
November 2002 and December 2002, with no receivables collected
during either of those two months. Indeed, while the Debtors are
cash flow positive postpetition, their receipts were driven
largely by the collection of receivables
"In other words, the Debtors' remaining assets are being
employed to feed the liquidation effort," the UST says. Further,
the Debtors have a substantial amount ($3,063,000) of unpaid
post-petition debts Rehabilitation. However, having sold
substantially all of their assets, the Debtors are not in a
position to be rehabilitated.
In this instance, despite whatever hopes the Debtors may harbor
of confirming a chapter 11 plan, such hopes are nothing more
than visionary and impracticable at this point. Hence, the
recovery prospects for unsecured creditors do not justify the
cost of a plan solicitation process.
Additionally, appointment of chapter 7 trustees will prevent the
need for the estates to bear the cost burden associated with two
sets of professionals (those representing the Debtors and the
official committee of unsecured creditors, making any
liquidation which may ensue cost-effective.
Moreover, the UST reports that the Debtors failed to file their
periodic operating reports and summaries as mandated by Section
704(8). Specifically, the Debtors have failed to file monthly
operating reports for the months of January 2003 and February
2003. "The Debtors' failure to file monthly operating reports
alone constitutes cause for relief," the UST adds.
Network Plus Corp., a network-based integrated communications
provider which offers broadband data and telecommunications
services, filed for chapter 11 protection on February 04, 2002
(Bankr. Del. Case No. 02-10341). Edward J. Kosmowski, Esq.,
Joel A. White, Esq., and Maureen D. Like, Esq., at Young
Conaway Stargatt & Taylor represents the Debtors in their
restructuring efforts. As of Sep 30, 2001, the Debtors post
$433,239,000 in total assets and $371,300,000 in total debts.
NEXMED INC: Fails to Comply with Nasdaq Minimum Listing Criteria
----------------------------------------------------------------
NexMed, Inc. (Nasdaq: NEXM), a developer of innovative
transdermal products based on its proprietary NexACT(R) drug
delivery technology, has received a notice from Nasdaq
indicating that it did not comply with the minimum $10,000,000
stockholders' equity requirement for continued listing set forth
in Marketplace Rule 4450(a)(3) and that its common stock will be
delisted from the Nasdaq National Market at the opening of
business on May 29, 2003 unless the Company files a hearing
request with the Nasdaq Listing Qualifications Panel before the
end of business on May 27, 2003. NexMed intends to file the
request for a hearing to appeal the Nasdaq determination. The
Company's stock will continue to be traded on the Nasdaq
National Market pending the final decision by Nasdaq. A hearing
date has not yet been set by Nasdaq.
As of December 31, 2002 and as of March 31, 2003, the Company's
Stockholders' Equity was $3.6 million and $2.8 million,
respectively, which is below the $10 million required by Rule
4450(a)(1). On April 8, 2003, the Company received a
notification from the Nasdaq regarding this matter. On April 22,
2003, the Company completed an $8 million private placement of
its securities, of which $4 million of the proceeds were placed
in escrow to fund any potential redemption by the purchasers to
which they may be entitled if the results from our two pivotal
Phase 3 studies for Alprox-TD(R) are not determined to be
satisfactory by June 16, 2003. The Company responded to the NASD
and requested that it be given an additional period of time to
remedy the situation before facing possible delisting from the
Nasdaq National Market. On May 20, 2003, Nasdaq denied the
Company's request for an additional period of time to remedy the
situation, and notified the Company that its securities will be
delisted from the Nasdaq National Market.
There can be no assurance that the Nasdaq Listing Qualifications
Panel will decide to allow the Company to remain listed or that
Company's actions will prevent the delisting of its common stock
from the Nasdaq National Market. The Company will not be
notified until the Nasdaq Listing Qualifications Panel makes a
formal decision. Until then, the Company's common stock will
remain listed on the Nasdaq National Market.
NexMed, Inc. is an emerging pharmaceutical and medical
technology company, with a product development pipeline of
innovative topical drug treatments based on the NexACT(R)
transdermal delivery technology. Its two lead NexACT(R) products
under development are the Alprox-TD(R) cream treatment for
erectile dysfunction. The Company is also working with various
pharmaceutical companies to explore the incorporation of
NexACT(R) into their existing drugs as a means of developing new
patient-friendly transdermal products and extending patent
lifespans and brand equity.
* * *
Going Concern Uncertainty
In the Company's Form 10-K filed on March 31, 2003, the Company
reported:
"OUR INDEPENDENT ACCOUNTANTS HAVE DOUBT AS TO OUR ABILITY TO
CONTINUE AS A GOING CONCERN FOR A REASONABLE PERIOD OF TIME.
"As a result of our losses to date, working capital deficiency
and accumulated deficit, our independent accountants have
concluded that there is substantial doubt as to our ability to
continue as a going concern for a reasonable period of time, and
have modified their report in the form of an explanatory
paragraph describing the events that have given rise to this
uncertainty. Our continuation is based on our ability to
generate or obtain sufficient cash to meet our obligations on a
timely basis and ultimately to attain profitable operations. Our
independent auditors' going concern qualification may make it
more difficult for us to obtain additional funding to meet our
obligations. We anticipate that we will continue to incur
significant losses until successful commercialization of one or
more of our products, and we may never operate profitably in the
future.
"WE WILL NEED SIGNIFICANT FUNDING TO COMPLETE OUR RESEARCH AND
DEVELOPMENT EFFORTS.
"Our research and development expenses for the years ended
December 31, 2002, 2001, and 2000 were $21,615,787, $12,456,384,
and $6,892,283, respectively. Since January 1, 1994, when we
repositioned ourselves as a medical and pharmaceutical
technology company, we have spent $50,695,348 on research and
development. We anticipate that our expenses for research and
development will not increase in 2003. Given our current lack of
cash reserves, we will not be able to advance the development of
our products unless we raise additional cash reserves through
financing from the sale of our securities and/or through
partnering agreements. If we are successful in entering
partnering agreements for our products under development, we
will receive milestone payments, which will offset some of our
research and development expenses.
"As indicated above, our anticipated cash requirements for
Alprox-TD(R) through the NDA filing in the first half of 2004,
will be approximately $15 million. Completion of the open label
study is not a prerequisite for our NDA filing. We may not be
able to arrange for the financing of that amount, and if
we are not successful in entering enter into a licensing
agreement for Alprox-TD(R), we may be required to discontinue
the development of Alprox-TD(R).
"We will also need significant funding to pursue our product
development plans. In general, our products under development
will require significant time-consuming and costly research and
development, clinical testing, regulatory approval and
significant additional investment prior to their
commercialization. The research and development activities we
conduct may not be successful; our products under development
may not prove to be safe and effective; our clinical development
work may not be completed; and the anticipated products may not
be commercially viable or successfully marketed. Commercial
sales of our products cannot begin until we receive final FDA
approval. The earliest time for such final approval of the first
product which may be approved, Alprox-TD(R), is sometime in
early 2005. We intend to focus our current development efforts
on the Alprox-TD(R) cream treatment, which is in the late
clinical development stage."
NORTHWESTERN CORP: Defers All Preferred Share Distributions
-----------------------------------------------------------
NorthWestern Corporation's (NYSE: NOR) Board of Directors has
elected to defer interest payments on the subordinated
debentures of all series of its trust preferred securities. As a
result, cash distributions on all series of the trust preferred
securities issued by the Company's affiliated trusts will be
deferred.
NorthWestern previously announced that it is implementing a
turnaround plan intended to strengthen the Company's balance
sheet and position it for improved financial performance. A key
element of the plan calls for reducing the Company's debt by
applying net proceeds from the sale of noncore businesses and
assets. The deferral of interest on the subordinated debentures
and, consequently, deferral of cash distributions on the trust
preferred securities, and the previously implemented suspension
of common stock dividends builds upon the Company's actions to
preserve cash and pay down debt. NorthWestern has five wholly
owned special-purpose business trusts which are affected by the
action including NWPS Capital Financing I (NYSE: NOR PrA);
NorthWestern Capital Financing I (NYSE: NOR PrB); NorthWestern
Capital Financing II (NYSE:NOR PrC); NorthWestern Capital
Financing III (NYSE:NOR PrD); and Montana Power Capital I
(NYSE:MTP PrA).
NorthWestern has the right, on one or more occasions, to defer
interest payments on the subordinated debentures for up to 20
consecutive quarters unless a default under the subordinated
debentures has occurred and is continuing. During the period in
which interest payments on the subordinated debentures are
deferred and, consequently, distributions on the trust preferred
securities are deferred, distributions will continue to
accumulate on the trust preferred securities at the applicable
annual rate, to the extent permitted by law. Also, the deferred
distributions will themselves accumulate distributions at the
applicable annual rate, to the extent permitted by law. During
the period in which interest payments on the subordinated
debentures are deferred, holders of the trust preferred
securities will be required to accrue interest income for United
States federal income tax purposes, even through no cash
distributions will be received during such period.
"We are focused on NorthWestern's turnaround and are committed
to taking appropriate actions to restore financial stability to
the Company. Although deferring interest payments on the
subordinated debentures and, consequently, distributions on our
trust preferred securities was a difficult decision by the
Board, it will result in a reduction of cash expenditures of
approximately $30 million annually which is necessary to help
improve the Company's liquidity," said Gary G. Drook,
NorthWestern's Chief Executive Officer. "As our cash position
improves, we expect to pursue strategies to reduce our sizeable
debt. We may use excess cash to selectively prepay indebtedness
or retain proceeds to repay debt as it matures."
NorthWestern Corporation is one of the largest providers of
electricity and natural gas in the Upper Midwest and Northwest,
serving approximately 598,000 customers in Montana, South Dakota
and Nebraska. NorthWestern also has investments in Expanets,
Inc., a nationwide provider of networked communications and data
services to small and mid-sized businesses; and Blue Dot
Services Inc., a provider of heating, ventilation and air
conditioning services to residential and commercial customers.
NORTHWESTERN CORP: Fitch Junks Trust Preferred Securities at C
--------------------------------------------------------------
NorthWestern Corp.'s outstanding trust preferred securities are
downgraded to 'C' from 'B-' by Fitch Ratings. In addition, NOR's
outstanding senior unsecured debt is lowered to 'B-' from 'B+'
and its senior secured debt to 'BB-' from 'BB'. The Rating
Outlook remains Negative. Details of the securities affected are
listed below.
The downgrade of NOR's trust preferred rating follows today's
announcement that NOR has exercised its option to defer payment
of interest on the junior subordinated debentures of all
outstanding trust preferred securities, in which case, preferred
dividends will also be deferred by the trust. In accordance with
Fitch practices, the rating for these securities will remain at
'C' as long as the deferral remains in place. NOR is
contractually permitted to defer underlying interest payments on
its trust preferred securities for up to 20 consecutive
quarters.
The lowering of NOR's outstanding secured and unsecured credit
ratings reflect continued erosion in NOR's overall cash and
liquidity position. Of particular concern is NOR's recent
disclosure of cash flow projections for 2003 that are materially
weaker than prior estimates. Excluding the non-utility
operations of Blue Dot and Expanets, cash from operations after
changes in working capital are now projected by management to be
negative during 2003 versus an estimate of $30 million disclosed
in NOR's year-end 2002 10-K filing. NOR has stated the revisions
have resulted primarily from increased working capital
requirements including reduced vendor credit terms. Although
today's decision to suspend trust preferred dividends should
generate about $30 million of annual cash savings, Fitch
believes that NOR will become increasingly dependent on the
near-term execution of non-core asset sales to reduce
consolidated debt and improve liquidity.
The three notch separation between NOR's secured and unsecured
ratings reflects the enhanced asset protection available to
senior secured bondholders. As of March 31, 2003, NOR's total
utility division assets carried a book value of approximately
$1.85 billion versus total outstanding secured debt of $865
million.
Rating Actions:
NorthWestern Corp
-- $865 million outstanding first mortgage bonds, secured
pollution control obligations, and secured medium term
notes lowered to 'BB-' from 'BB';
-- $865 million outstanding senior unsecured notes and
medium term notes lowered to 'B-' from 'B+'.
NWPS Capital Financing I
NorthWestern Capital Financing I
NorthWestern Capital Financing II
NorthWestern Capital Financing III:
-- $305 million outstanding trust originated preferred
securities lowered to 'C' from 'B-'.
Montana Power Capital I:
-- $65 million outstanding cumulative quarterly income
preferred securities (QUIPS) lowered to 'C' from 'B-'.
NRG ENERGY: Honoring & Paying Critical Trade Vendor Claims
----------------------------------------------------------
James H. M. Sprayregen, Esq., at Kirkland & Ellis, in New York,
relates that NRG Energy, Inc., and its debtor-affiliates utilize
approximately 28 vendors that provide either "single source"
goods or other goods and services that are essential to the
Debtors' operations and that cannot be obtained elsewhere or
cannot be replaced except at exorbitant costs to the estates.
The Debtors' ability to continue their operations in the
aftermath of their bankruptcy filings will largely depend on the
continued provision of goods and services by these Critical
Vendors. The Debtors have implemented a detailed process for
determining which vendors constitute Critical Vendors for the
purpose of avoiding disruption to the Debtors' operations.
Moreover, to ensure that the Debtors' business operations will
be minimally impacted during these bankruptcy cases, only those
Critical Vendors who agree to provide reasonable and customary
payment terms postpetition will be paid all or a portion of
their prepetition claims.
The Debtors' Critical Vendors are comprised of Regulatory
Compliance Vendors, Single Source Vendors and Equipment
Maintenance Vendors. The Debtors seek to pay all or part of the
prepetition claims of these Critical Vendors, in an aggregate
amount not to exceed $20,400,000, to ensure that the Critical
Vendors provide necessary goods and services to the Debtors on a
postpetition basis. The $20,400,000 aggregate cap represents
less than one third of 1% of the total unsecured claims against
the Debtors' estates, which unsecured claims exceed
$6,800,000,000, and approximately 5% of the total unsecured
trade debt, which is approximately $376,000,000.
Regulatory Compliance Vendors are those that assist the Debtors
in complying with governmental laws and regulations. For
example, the Debtors rely on certain disposal companies to
remove a variety of regulated waste from their facilities for
proper disposal and certain vendors who perform emission
testing. Because these vendors are typically employed and/or
licensed by the state or local governments, the Debtors cannot
obtain qualified service from any other source. The Debtors
estimate that, as of Petition Date, there is no, or minimal,
prepetition amounts owing to the Regulatory Compliance Vendors
other than amounts that may have accrued but not yet invoiced.
Single Source Vendors are those entities or companies where the
Debtor purchases power or certain essential raw materials,
specialized replacement parts and supplies, and certain other
goods and services to generate energy, capacity and other
products. Typically, these vendors are available only from the
Debtors' existing suppliers or common carriers that are Critical
Vendors. The Debtors estimate that, as of the Petition Date,
the aggregate amount of the prepetition claims of the Single
Source Vendors is approximately $14,100,000.
Equipment Maintenance Vendors are those that help the company
ensure that energy production and waste processing equipment in
its facilities continue to function at peak efficiency. The
Debtors estimate that, as of the Petition Date, the aggregate
amount of the prepetition claims of the Equipment Maintenance
Vendors is approximately $6,300,000.
The Debtors have carefully considered and have determined which
of their vendors constitute Critical Vendors. The criteria used
to screen which vendor payments would be deemed critical to
avoid business interruption are:
(a) Unique vendors are identified that supply specific goods
or services critical to the Debtors' business operations.
(b) Other known suppliers were identified that may have
similar goods and services, but were historically more
expensive.
(c) The start-up and delayed delivery time was considered in
order to determine the extent of supply chain and service
interruption that would occur.
(d) There was additional consideration for vendors that
provide services or supply products to the Debtors as well
as the NRG companies that are not Debtors in these cases.
Additional negative repercussions could occur to one or
more of the non-filing NRG Companies if vendors decide to
interrupt business at those entities.
(e) Where there was no problem of discontinued service
detected and/or no near term activity with a specific
vendor, those vendors were not considered critical.
Thus, the Debtors, pursuant to Section 105(a) of the Bankruptcy
Code, seek the Court's authority to pay the prepetition claims
of certain critical trade vendors in the aggregate amount not to
exceed $20,400,000. Specifically, the Debtors seek an Order
wherein:
(1) They are authorized, in their sole discretion and in the
exercise of their business judgment, to make payments to
the Critical Vendors on the conditions that:
(a) a claim is paid by check or via wire transfer, or
deducted from any security deposit held by a Critical
Vendor at the Debtors' discretion; and
(b) by accepting payment, the Critical Vendor agrees to
maintain or reinstate customary trade terms during
the pendency of its cases;
(2) A Critical Vendor's acceptance of payment is deemed to be
acceptance of the terms of the Order, and if the Critical
Vendor does not provide with customary trade terms during
the pendency of its cases, then any payments of
prepetition claims made after the Petition Date may be
deemed to be unauthorized postpetition transfers and
therefore recoverable by the Debtors; and
(3) The Debtors are authorized but not directed to obtain
written verification of the trade terms to be supplied by
the Critical Vendors before issuing payments.
Mr. Sprayregen submits that the authority to pay the Critical
Vendor claims will not create an imbalance of the Debtors' cash
flows. Some of the obligations have customary payment terms and
will not be payable immediately. In some instances, the Debtors
have security deposits with the Critical Vendors and will seek
to apply the deposits to any outstanding prepetition amounts.
In addition, the Debtors' cash reserves, with an approximate
aggregate amount of $214,500,000 on the Petition Date, together
with the cash generated in the ordinary course of the Debtors'
business, will provide more than sufficient liquidity for
payment of the Critical Vendor Claims in the ordinary course of
business. Some of the Debtors also are seeking approval of
approximately $250,000,000 DIP credit facility that would
provide for the use of additional cash to satisfy certain of the
Critical Vendor Claims.
Accordingly, Mr. Sprayregen contends that the Debtors' request
is narrowly tailored to facilitate their restructuring efforts.
By contrast, the harm suffered by the estates if essential goods
and services of the Critical Vendors are postponed or terminated
would be irreparable to the Debtors' reorganization efforts and
successful emergence from its Chapter 11 cases.
* * *
Convinced by their arguments, Judge Beatty grants the Debtors'
request. (NRG Energy Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
OWENS CORNING: Metal Systems Assets Sold to ALSCO Metals Corp.
--------------------------------------------------------------
Goldsmith Agio Helms announced the sale of the assets of Owens
Corning Metal Systems, a division of Exterior Systems, Inc., an
Owens Corning subsidiary. The assets of OCMS were sold to ALSCO
Metals Corporation, a portfolio company of Sun Capital Partners
in a 363 court-approved sale. Terms of the transaction were not
disclosed.
Owens Corning decided to sell its metals business after a review
showed that manufacturing a line of residential aluminum
building products was not consistent with the Company's long-
term strategy. David Santoni (dsantoni@agio.com), the Goldsmith
Agio Helms managing director handling the sale, observes, "The
sale process involved a private auction to select a stalking-
horse bidder, followed by the traditional bankruptcy auction.
While there was strong interest in the Owens Corning assets, we
were able to significantly improve the results for Owens Corning
in the process." Jeff Osborn, Director, Corporate Development of
Owens Corning adds, "Goldsmith Agio Helms was a pleasure to work
with and their building products expertise added value to the
transaction."
Goldsmith Agio Helms provides sell-side M&A advisory services,
private placements of debt and equity, distressed company
advisory and restructuring services, special purpose valuations,
and fairness opinions through its offices in Minneapolis, New
York, Chicago, Los Angeles, and Naples, Florida. For more
information on this transaction, visit the Company's Web site
http://www.agio.com
PAC-WEST: Comments on Recent Above Average Equity Trading Volume
----------------------------------------------------------------
Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated
communications services to service providers and business
customers in the western U.S., announced that the Nasdaq Stock
Market has recently reported above average trading volume in the
market for its common shares. The company believes this may have
been caused, in large part, by the negotiated sales of two large
blocks of its common shares by entities affiliated with
Safeguard Scientifics, one of its largest shareholders, and the
subsequent resale of such common shares to multiple purchasers.
Founded in 1980, Pac-West Telecomm, Inc. is one of the largest
competitive local exchange carriers headquartered in California.
Pac-West's network carries over 100 million minutes of voice and
data traffic per day, and an estimated 20% of the dial-up
Internet traffic in California. In addition to California, Pac-
West has operations in Nevada, Washington, Arizona, and Oregon.
For more information, please visit Pac-West's Web site at
http://www.pacwest.com
As reported in Troubled Company Reporter's May 1, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Stockton, Calif.-based competitive local exchange
carrier Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on
the 13.5% senior notes due 2009 has been lowered to 'D' from
'C'. The downgrade is due to the company's completion of a cash
tender offer to exchange its 13.5% senior notes at a significant
discount to par value. Standard & Poor's views such an exchange
as coercive and tantamount to a default on the original terms of
the notes.
Given the company's significant dependence on reciprocal
compensation (the rates of which the company expects to further
decline in 2003) and its limited liquidity, Pac-West will likely
find the implementation of its business plan continue to be
challenging.
PACIFICARE HEALTH: Transferring Stock Listing to NYSE on June 6
---------------------------------------------------------------
PacifiCare Health Systems, Inc. (Nasdaq: PHSY) will transfer its
common stock listing to the New York Stock Exchange on June 6,
2003 under the ticker symbol "PHS." Until that date,
PacifiCare's shares will continue to trade on the NASDAQ
National Market under the ticker symbol "PHSY."
"The move to the New York Stock Exchange is an important
milestone in PacifiCare's transformation into a consumer health
organization," said President and Chief Executive Officer Howard
Phanstiel. "We believe the NYSE's auction market structure will
result in decreased price volatility and improved liquidity in
the company's stock."
In connection with the move, and PacifiCare's annual Investor's
Day in New York on June 5th, representatives from PacifiCare
will be on hand to ring the opening bell of the NYSE on June
6th. Interested parties can obtain more information regarding
Investor's Day from the company's Web site at
http://www.pacificare.comby clicking on Investor Relations and
Calendar of Events.
PacifiCare Health Systems serves more than 3 million health plan
members and approximately 9 million specialty plan members
nationwide, and has annual revenues of about $11 billion.
PacifiCare is celebrating its 25th anniversary as one of the
nation's largest consumer health organizations, offering
individuals, employers and Medicare beneficiaries a variety of
consumer-driven health care and life insurance products.
Specialty operations include behavioral health, dental and
vision, and complete pharmacy and medical management through its
wholly owned subsidiary, Prescription Solutions. More
information on PacifiCare Health Systems is available at
http://www.pacificare.com
* * *
As reported in Troubled Company Reporter's December 4, 2002
edition, Standard & Poor's assigned its 'B' rating to PacifiCare
Health Systems Inc.'s $125 million 3% convertible subordinated
debentures, which are due in 2032 and are being issued under SEC
Rule 144A with registration rights.
Standard & Poor's also said that it revised its outlook on
PacifiCare to stable from negative.
"The rating is based on PacifiCare's good business position as a
regional managed care organization and improved earnings
performance," said Standard & Poor's credit analyst Phillip C.
Tsang. "Offsetting these strengths are PacifiCare's marginal
capitalization and high percentage of goodwill in its capital."
PacifiCare expects to use the net proceeds from the issue to
permanently repay indebtedness under its senior credit facility,
with the remainder for general corporate purposes.
PEM ELECTRICAL: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: PEM Electrical Corp.
36-14 32nd Street
Long Island City, New York 11106
Bankruptcy Case No.: 03-13358
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Debtor's Counsel: Gerard R. Luckman, Esq.
Silverman Perlstein & Acampora, LLP
100 Jericho Quadrangle, Suite 300
Jericho, NY 11753
Tel: (516) 479-6300
Fax : (516) 479-6301
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
PETALS: Factory Outlet of CT Case Summary & 10 Unsec. Creditors
---------------------------------------------------------------
Debtor: Petals Factory Outlet of Connecticut, Inc.
155 White Plains Road
Tarrytown, New York 10591-5534
Tel: 914-723-5400
Bankruptcy Case No.: 03-13373
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Mark Nelson Parry, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 554-7800
Fax : (212) 554-7700
Total Assets: $0
Total Debts: $30,000,000
Debtor's 10 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Southhaven Assoicates Rent $25,044
State of Connecticut Payroll, Sales & Use Tax $11,300
Department of Revenue Services
Northeast Utilities Utilities $1,008
Merchants Association Rent $937
Shepaug Valley Electric Repairs $661
Diversified Waste Disposal Repairs $190
Inc.
Woodbury Telephone Company Utilities $154
AT&T Utilities $51
Crystal Rock Water Company Utilities $43
Heritage Village Water Co. Utilities $27
PETALS: Factory Outlet Inc's Case Summary & 20 Unsec. Creditors
---------------------------------------------------------------
Debtor: Petals Factory Outlet, Inc.
155 White Plains Road
Tarrytown, NY 10591-5534
Tel: 914-723-5400
Bankruptcy Case No.: 03-13374
Type of Business: Petals Factory Outlet, Inc. sells artificial
flowers to customers through its retail
store.
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Mark Nelson Parry, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 554-7800
Fax : (212) 554-7700
Total Assets: $490,000
Total Debts: $30,000,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Cartel III, LLC Rent $97,418
New Jersey Sales and Sales and Use Tax $25,000
Use Tax Division of Taxation
State of New Jersey Payroll Taxes $12,000
John M. Saums & Sons, Inc. Rent $9,902
Custom Air Conditioning Repairs $3,600
PSE&G Utility $3,140
Labor Ready Northeast, Inc. Trade Debt $1,938
Jersey Central Power Utility $1,930
Williams Paper Trade Debt $1,338
Waste Management of NJ Trade Debt $1,161
Tucker Publications Trade Debt $1,203
Rasmussen Electric, Inc. Trade Debt $647
Janine Paper & Box Corp. Trade Debt $505
Verizon Utility $446
Sprint Utility $484
Borough of Flemington Utility $285
Uncle Stevee's Transport Trade Debt $270
American Transaction Trade Debt $151
Supplies
Sterns Rental Corporation Trade Debt $71
Falcon Supply Trade Debt $64
PETALS: Factory Outlet of DE Case Summary & Unsecured Creditor
--------------------------------------------------------------
Debtor: Petals Factory Outlet of Delaware, Inc.
155 White Plains Road
Tarrytown, New York 10591-5534
Tel: 914-723-5400
Bankruptcy Case No.: 03-13372
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Mark Nelson Parry, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 554-7800
Fax : (212) 554-7700
Total Assets: $0
Total Debts: $30,000,000
Debtor's Largest Unsecured Creditor:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
United States Treasury Payroll taxes $150,000
PETALS: Factory Outlet of FL Case Summary & Unsecured Creditor
--------------------------------------------------------------
Debtor: Petals Factory Outlet of Florida, Inc.
155 White Plains Road
Tarrytown, NY 10591-5534
Tel: 914-723-5400
Bankruptcy Case No.: 03-13371
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Mark Nelson Parry, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 554-7800
Fax : (212) 554-7700
Total Assets: $0
Total Debts: $30,000,000
Debtor's Largest Unsecured Creditor:
Entity Claim Amount
------ ------------
Longwood Investors $79,798
PETALS: Factory Outlet of PA Case Summary & 7 Unsec. Creditors
--------------------------------------------------------------
Debtor: Petals Factory Outlet of Pennsylvania, Inc.
155 White Plains Road
Tarrytown, New York 10591-5534
Tel: 914-723-5400
Bankruptcy Case No.: 03-13368
Type of Business: Petals Factory Outlet of Pennsylvania, Inc.
sells artificial flowers and home accessories
through its retail store in York,
Pennsylvania.
Chapter 11 Petition Date: May 23, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Mark Nelson Parry, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 554-7800
Fax : (212) 554-7700
Total Assets: $300,000
Total Debts: $29,900,000
Debtor's 7 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Meadowbrook Village LP Rent $14,759
PA Department of Revenue Payroll taxes $7,757
Met-Ed Utility $716
Quacker City Paper Company Packaging Supplies $344
Verizon North Utility $191
AT&T Utility $123
United Parcel Service Freight Services $96
POLYONE CORP: Fitch Keeps Watch on B Sr. Unsecured Note Rating
--------------------------------------------------------------
Fitch Ratings has affirmed PolyOne Corporation's senior
unsecured debt rating at 'B' and has assigned a 'B' rating to
the new 10.625% senior unsecured notes. The senior secured
rating related to the credit facility has been upgraded to 'BB-'
from 'B'. The Negative Rating Watch has been removed. The Rating
Outlook is Negative.
The Negative Rating Watch has been removed since PolyOne's
refinancing plans are now complete and its liquidity situation
has improved. PolyOne was able to amend its existing credit
facility; terminate its old accounts receivable (A/R) program
and enter into a new $225 million A/R program; and issue $300
million 10.625% senior unsecured notes. The ratings were placed
on Negative Rating Watch in April 2003 pending the resolution of
the company's liquidity situation and refinancing.
The ratings reflect PolyOne's continued weak financial
performance. For the trailing twelve-month period ended Mar. 31,
2003, EBITDA-to-interest incurred was 1.9 times and total debt
(including the A/R program balance)-to-EBITDA was 9.1x. Post-
refinancing, liquidity related to the credit agreement and the
A/R program increased due to the initial change in availability
of these facilities, particularly the A/R program which is a
primary source of liquidity. The new 10.625% senior unsecured
notes are rated 'B' since these new notes rank equally and
ratably with the existing senior unsecured debt. Proceeds from
the new notes were used to repay the outstanding balance on the
credit facility, repay a portion of the outstanding balance on
the old A/R program; and provide funds for the repayment of the
9.375% senior note due Sept. 2003.
The senior secured rating related to the credit facility has
been upgraded to 'BB-' to reflect the likelihood of principal
recovery based on the facility's collateral in substantially all
domestic inventory and intellectual property and some domestic
PPE. The credit agreement was amended as part of the recent
refinancing and now includes a condition precedent to each
borrowing that limits borrowing to 95% of the maximum amount
permitted by the public debt indentures that may be secured
without requiring PolyOne to equally and ratably secure its
public debt. Thus, the pari passu provision included in the
public debt indentures could not be triggered and the credit
facility would not be required to share its collateral equally
and ratably with the senior unsecured notes.
The Negative Rating Outlook reflects the near-term uncertainty
in earnings improvement. The strength and pace of demand
improvement in PolyOne's end-markets remains uncertain and
margins are under pressure from higher raw material and energy
costs. However, price increases could mitigate the pressure on
margins.
PolyOne is the largest compounder of plastics and rubber and one
of the leading distributors of plastic resins in North America.
The company had 2002 sales of $2.5 billion and EBITDA of
approximately $97 million.
POLYPHALT INC: Defaults on Loan Agreement with Grandwin Holdings
----------------------------------------------------------------
Polyphalt Inc., received a letter dated May 22, 2003 from its
majority shareholder and principal secured lender, Grandwin
Holdings Limited, stating that, in their view, Polyphalt is in
default under its loan agreement with Grandwin. The basis of the
alleged default is Grandwin's opinion that the recent licence
termination announced by Polyphalt on May 5 is a material
adverse effect under the terms of the loan agreement and
therefore is an event of default.
In its letter, Grandwin also conditionally offers to negotiate a
transaction to acquire all the shares of Polyphalt it does not
already own for a price to be determined. Grandwin states that,
in its opinion, the shares have no value at present. Grandwin
states that if Polyphalt is unable to meet the conditions in its
offer by Friday May 30, 2003, then Grandwin does not expect that
it will be willing to provide further funding and that Polyphalt
should investigate other financing alternatives. A copy of that
letter is attached as part of this announcement. Polyphalt's
board is reviewing Grandwin's position and will respond shortly.
If suitable arrangements cannot be made with Grandwin or another
financier, Polyphalt currently expects to run out of cash in
early June.
Bruce MacDonald and Anthea Radford, both directors of Polyphalt,
resigned their positions. As a result of these resignations, the
majority of the board is no longer resident in Canada, as
required under applicable law. The board is considering
available alternatives to comply with this requirement.
Given these recent developments, Polyphalt's annual general
meeting scheduled for June 11 will be postponed.
POWER EFFICIENCY: Resources Insufficient to Meet Liquidity Needs
----------------------------------------------------------------
Power Efficiency Corporation generates revenues from a single
business segment: the design, development, marketing and sale of
proprietary solid state electrical components designed to reduce
energy consumption in alternating current induction motors. The
Company began generating revenues from sales of its patented
Power Commander1 line of motor controllers in late 1995. As of
March 31, 2003, Power Efficiency had total stockholders' equity
of $1,543,214 primarily due to its sale of 2,346,233 shares of
Series A-1 Convertible Preferred stock to Summit Energy
Ventures, LLC in June 2002, which resulted in Summit owning a
28% fully diluted stake in the Company. In addition, in August
2000, the Company purchased the assets of Percon, formerly the
largest distributor of Power Efficiency's products. The
transaction was accounted for as a purchase and the Company's
Statements of Operations includes Percon's results of operations
since the date of acquisition. The consolidation of the
operations of both entities allowed Power Efficiency to
integrate the administrative, sales, marketing and manufacturing
operations of Percon. Percon had developed sales contacts with
major OEM's in the elevator/escalator industry and transferred
those agreements to Power Efficiency as part of the Asset
Agreement.
The Company's revenues for the three months ended March 31,
2003, were $160,843 compared to $139,142 for the three months
ended March 31, 2002, an increase of $21,701, or 15.6%.
Cost of revenues, which includes costs related to raw materials
and manufacturing costs, for the three months ended March 31,
2003, increased $4,710 to $129,506 from $124,796 or a 3.8%
increase as compared to the three months ended March 31, 2002.
The increase in cost of revenues was primarily attributed to the
increase in revenues and offset by an overall reduction in the
cost of materials from the Company's suppliers.
Research and development expenses were $98,465 for the three
months ended March 31, 2003, as compared to $83,547,
representing a $14,918 or a 17.9%, increase compared to the same
period ended March 31, 2002. The development of the low cost,
low horsepower Platform A product family, the single-phase
controller, and the fast-reaction integrator board continues to
contribute to the higher costs of research and development
costs.
Since inception, Power Efficiency has financed its operations
primarily through the sale of its equity securities and using
bank borrowings. As of March 31, 2003, the Company had received
a total of approximately $4,831,261 from public and private
offerings of its equity securities and received approximately
$445,386 under a bank line of credit, which was repaid during
2002. As of March 31, 2003, the Company had cash and cash
equivalents of $4,655.
Cash used for operating activities for the three months ended
March 31, 2003 was $325,582, which primarily consisted of: a net
loss of $439,492; less depreciation and amortization of $33,585,
offset by decreases in accounts receivable of $2,723 and
inventory of $32,674; and increases in accounts payable and
accrued expenses of $47,364.
Net cash used for operating activities in for the three months
ended March 31, 2002 was $151,070, which primarily consisted of:
a net loss of $334,068; less depreciation and amortization of
$31,429; increases in accounts receivable of $83,188 and prepaid
expenses of $5,918, offset by a decrease in inventory of
$57,755; and increases in accounts payable and accrued expenses
of $182,920.
Cash used in investing activities for the first quarter of the
current fiscal year was $6,160, compared to $1,504 in the first
quarter of last fiscal year. The amounts for both years
consisted of the purchase of fixed assets.
Net cash provided by financing activities for the first quarter
of fiscal year 2003 was $78,689, which primarily consisted of
proceeds from the exercise of stock warrants from the issuance
of equity securities. During the first quarter of fiscal year
2002, net cash provided from financing activities was $117,822,
which were loans from stockholders and officers.
The Company has indicated that it expects to experience growth
in its operating expenses, particularly in research and
development and selling, general and administrative expenses,
for the foreseeable future in order to execute its business
strategy. As a result, the Company anticipates that operating
expenses will constitute a material use of any cash resources.
Since capital resources are insufficient to satisfy its
liquidity requirements, management intends to sell additional
equity or debt securities or obtain debt financing. The Company
is currently in the process of negotiating a $1,000,000 debt
facility with Summit Energy Ventures, LLC. The Board of
Directors has approved the terms of the proposed financing but
the Company is currently waiting for Summit's investment
committee to approve the financing. According to the terms of
the proposed financing, the outstanding balance would accrue
interest at a rate of 15 percent and would be convertible into
Series A Preferred Stock at a price per share of $0.183 if,
after seven days notice by Summit, the outstanding balance is
not paid off. The outstanding balance will be due on
December 31, 2003 and will be secured by all of Power
Efficiency's assets. The Company is also currently meeting with
many different potential equity investors and believes it can
raise additional funds through private placements of equity.
Power Efficiency management anticipates a substantial need for
cash to fund its working capital requirements. In accordance
with its prepared expansion plan, it is the opinion of
management that approximately $1.3 million will be required to
cover operating expenses, including, but not limited to,
marketing, sales and operations during the next six months.
The Company has suffered recurring losses from operations, and
there is a deficiency in tangible net worth of approximately
$515,000. The Company experienced a $325,000 deficiency from
operations, continues to have negative cash flow from operations
and lacks sufficient liquidity to continue operations. The
Company is currently in negotiations on the $1,000,000 line of
credit but there can be no assurance that it will close this
transaction or secure another line of credit. These factors
raise substantial doubt about the Company's ability to continue
as a going concern. Continuation of the Company as a going
concern is dependent upon achieving profitable operations.
PRESIDENT CASINOS: Seeking Bids for Sale of St. Louis Casino
------------------------------------------------------------
President Casinos, Inc. (OTC:PREZ) announced that, in accordance
with a consensual agreement with a creditors' committee and
certain bondholders, it has begun to seek bids for the sale of
its St. Louis casino known as the Admiral. The Company has
retained Libra Securities, LLC to assist it in the bid process.
While this process is proceeding, the Company has until July 18,
2003 to find refinancing which may forestall such a sale, and
the Company has retained Murphy Noell Capital, LLC to assist it
in the refinancing process.
Mr. Aylsworth said, "We believe that if the Governor calls a
special session of the Missouri legislature and is successful in
obtaining revenue enhancements to this year's budget, which
among other options includes the repeal of the Missouri $500
loss limit, the Company may have the opportunity to refinance
its current debt and continue its St. Louis operations. It is,
of course, dependent upon Missouri legislative activity. If we
are unable to effect a reorganization, we will proceed with the
sale process, in which case our St. Louis casino would continue
to operate, although there may be a change in ownership."
President Casinos, Inc. owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri, north of the Gateway Arch.
As reported in Troubled Company Reporter's April 1, 2003
edition, President Casinos, Inc. filed a joint motion for
approval of an agreement among the Company, the creditors'
committee and certain bondholders to approve a timetable and
process for reorganization proceedings in the United States
Bankruptcy Court for the Eastern District of Missouri.
The motion asks that the Court approve a two-track program to
reorganize the Company. The first track allows the Company to
refinance its debt, satisfy its outstanding obligations, and
continue in business as it currently is operating. This track is
largely dependant upon the Missouri legislature lifting the $500
per gaming session loss limit and imposing, if at all, an
acceptable level of taxation on gaming revenues. As part of
Missouri Governor Holden's proposed budget, the Governor
proposed the elimination of the $500 loss limit as an additional
source of revenue for Missouri. If these events do not occur, or
if they do occur and the Company is unable to obtain necessary
financing, the agreement then envisions an orderly process in
which a buyer would be sought for the St. Louis casino
operation, and it would continue operating under new ownership.
Murphy Noell Capital, LLC, a southern California based
investment banking firm, was hired as a financial advisor by the
Company in January 2003 to assist the Company in negotiations
with its creditors, and to help the Company pursue its
refinancing and strategic alternatives.
RELIANCE GROUP: Delays Filing of SEC Form 10-Q for First Quarter
----------------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Reliance Group Holdings discloses that its Form 10-Q
for the first quarter 2003 will not be filed on time.
RGH explains that due to significant changes in their
operational -- underwriting, claims; corporate -- systems,
actuarial, financial; and organizational structure and staffing,
which occurred within the last half of 2000 and early 2001 as a
result of its decision to discontinue its ongoing insurance
business and commence run-off operations, RGH's accountants --
Deloitte & Touche LLP -- have been unable to complete the work
necessary to complete their audit for fiscal year 2000. Until
such audit is completed, it will not be possible to prepare a
Form 10-Q for the quarter ended March 31, 2003 by May 15, 2003,
the statutory due date and May 20, 2003, the statutory extension
date. (Reliance Bankruptcy News, Issue No. 37; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
RENT-WAY CORP: Enters Pact to Sell $205MM of Sr. Secured Notes
--------------------------------------------------------------
Rent-Way, Inc. (NYSE: RWY) has entered into an agreement to sell
$205 million of senior secured notes at 98.252% of par, subject
to certain closing conditions. The notes will mature on June 15,
2010, bear interest at 11-7/8%, payable semi-annually, and will
be secured by a second priority lien on substantially all of the
company's assets. The closing is conditioned on the company
entering into a new $60.0 million revolving bank credit facility
and the sale of $15.0 million of newly authorized 8% convertible
preferred stock in a private placement. Rent-Way intends to use
the net proceeds of the offering, together with borrowings under
the proposed new revolving credit facility and the net proceeds
of the sale of the convertible preferred stock, to repay all
amounts outstanding under its current bank credit facility. The
new credit facility and the sale of the convertible preferred
stock are expected to close simultaneously with the notes
offering.
The company will have the right to redeem the notes at any time
prior to maturity at make-whole redemption prices and, prior to
June 15, 2006, may redeem up to 25% of the notes at 111.875% of
par, plus accrued interest, with the proceeds of public equity
offerings. The holders of the notes will have the right to
require the company to repurchase the notes following a change
of control. In addition, in each year that the notes are
outstanding, beginning April 1, 2004, the company will be
required, subject to certain conditions, to offer to purchase
notes out of excess cash flow at 104.25% of par plus accrued
interest.
The preferred stock will mature seven and one-half years after
issuance, will be convertible into shares of common stock at an
initial conversion price of $6.00 per share and will be
redeemable by the company at its stated value plus accrued
interest after the fifth anniversary of its issuance. The
holders may require the company to repurchase the preferred
stock at its stated value plus accrued interest at any time six
months following the date when none of the notes and no
indebtedness under the new credit facility is outstanding. The
holders will have the option to acquire an additional $5.0
million of convertible preferred stock, having an initial
conversion price of $6.65 per share, for a one year period
following initial closing.
Neither the notes, the shares of convertible preferred stock nor
the shares of common stock into which the preferred stock is
convertible have been registered under the Securities Act of
1933 and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements. This news release does not constitute an offer to
sell or the solicitation of an offer to buy, nor will there be
any sale of the notes in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
Rent-Way is one of the nation's largest operators of rental-
purchase stores. Rent-Way rents quality name brand merchandise
such as home entertainment equipment, computers, furniture and
appliances from 753 stores in 33 states.
As reported in Troubled Company Reporter's May 15, 2003 edition,
Standard & Poor's Ratings Services placed its 'CCC' corporate
credit and senior secured bank loan ratings of Rent-Way Inc. on
CreditWatch with positive implications.
"The CreditWatch placement is based on the company's
announcement that it plans to offer $215 million of senior
secured notes together with a proposed new revolving bank credit
facility," stated Standard & Poor's credit analyst Robert
Lichtenstein.
The proceeds will be used to refinance the company's existing
bank loan that matures in December 2003, eliminating a
significant near-term concern. Moreover, Rent-Way's settlement
of its accounting lawsuit is subject to the bank loan
refinancing by July 31. The Erie, Pennsylvania-based company had
$213 million of debt outstanding as of March 31, 2003.
Upon completion of the deal, Standard & Poor's will raise the
corporate credit rating to 'B+' from 'CCC'. In addition, Rent-
Way Inc.'s proposed $60 million secured bank loan will be
assigned a 'BB-' rating, and its proposed $215 million senior
secured notes will be assigned a 'B-' rating. The outlook will
be stable. The ratings are based on preliminary information and
are subject to review upon final documentation. A material
adverse outcome of the SEC and the U.S. Attorney investigations
are not factored into the rating.
Rent-Way's senior secured notes rating will be rated 'B-', two
notches lower than the corporate credit rating, reflecting a
material amount of secured debt that is better positioned than
the senior notes. Furthermore, the new notes are only secured by
a second priority lien, and are deemed to be disadvantaged
because they lack sufficient asset protection.
The $60 million revolving credit facility will be rated 'BB-',
one notch higher than the corporate credit rating, based on the
strong likelihood of full recovery of principal in the event of
default or bankruptcy. The facility is guaranteed by Rent-Way
and its wholly owned subsidiaries.
RSTAR CORP: March 31 Working Capital Deficit Widens to $6 Mill.
---------------------------------------------------------------
rStar Corporation (Nasdaq: RSTRC), a leading provider of
satellite based communications technology and services in Latin
America, reported its consolidated results for the first
quarter, March 31, 2003. The Company also announced the
appointment of its new Chairman of the Board of Directors, Mr.
Oren Most who also serves as the Chief Executive Officer of
Gilat Satellite Networks Ltd. (Nasdaq: GILTF).
Revenues for the quarter ended March 31, 2002, were $6.6 million
compared to $10.6 million in the first quarter of 2002. This
decline is the result of a decrease in revenues in equipment and
technology sales of approximately $4.2 million, offset by an
increase in services revenues of approximately $0.2 million. The
equipment and technology revenue decrease is as a result of the
Company shifting from the installation phase to the operational
phase of the Company's projects in Colombia and Peru. The
increase in service revenues is anticipated to continue as the
Company continues to 'turn on' additional sites and expands its
network in conjunction with the Company's projects in Peru and
Brazil, which are in the installation phase.
Net loss, for the first quarter decreased from $4.1 million to
$1.6 million. The reduction in the net loss is primarily a
result in the diminution of costs relating to the implementation
of aggressive cost savings measures and plans, which included
internal restructuring reductions and other cost savings
measures. These reductions were offset by an approximate
decrease of $1.4 million in gross profit. This decrease was a
result of lower equipment and technology sales, which typically
have higher margins. Net loss for the fourth quarter resulted
from a $6.1 million provision for impairment of shareholders
loans, including the discontinuation of certain non-core
businesses. These one-time adjustments also include a $5.7
million reduction of equipment and technology sales in the
fourth quarter offset by a reduction of one time charges in the
third quarter related to the acquisition of Starband Latin
America (Holland) B.V. businesses and entities, including
severance, discontinued operations of the Company's previous
business model and other acquisition costs. The Company
anticipates the negative gross margin from the service business
to narrow over time as more customers use the network in
conjunction with the full implementation of the operation phase
of the Company's projects in Peru and Colombia, as those
networks come on-line and are fully enabled to customers in
those countries.
RStar Corp.'s March 31, 2003 balance sheet shows that its total
current liabilities exceeded its total current assets by about
$6 million, while total shareholders' equity dwindled to about
$12 million.
"Our fiscal year 2002 and first quarter 2003 were challenging
for rStar as well as the entire telecom and satellite
communications industries," said Samer Salameh, President and
Chief Executive Officer of rStar Corporation. "But we are
confident in rStar's ability to show organic revenue growth and
profits under such difficult market conditions. Our near term
objectives entering the new fiscal year are centered around new
contract awards and operating cash flow generation. We have
adjusted our cost structure and expect that this will translate
into improved margins for the year."
The Company also announced that its Board of Directors has
elected a new Chairman, Oren Most. Oren Most joins rStar
Corporation from Cellcom (Israel), the country's largest and
most successful cellular phone company, where he was one of the
company's founders and served as Deputy CEO and Head of the
Customers Division. Oren Most is also the CEO and President of
Gilat Satellite Networks Ltd. (Nasdaq: GILTF).
"With the Company's acquisition of Starband Latin America
(Holland) B.V. businesses and entities now completed, our
management team in place, and the strength of our products and
services, rStar is poised for growth in 2003," added Samer
Salameh.
Founded in 1997, rStar Corporation (Nasdaq: RSTRC) is a leading
provider of satellite-based communications services in Latin
America. Through its Starband Latin America (Holland NV)
subsidiary, operates satellite-based rural telephony networks as
well as high-speed consumer Internet access pilot networks for
the SOHO and select consumer market segments in certain Latin
American countries. Gilat Satellite Networks Ltd. (Nasdaq:
GILTF) owns approximately 85% of rStar Corporation's issued and
outstanding common stock. rStar Corporation headquarters are
located in Sunrise, Florida.
RURAL-METRO: Fails to Meet Nasdaq Continued Listing Guidelines
--------------------------------------------------------------
Rural/Metro Corporation (Nasdaq: RURL), a national leader in
ambulance transportation and fire protection services, has
received notification from Nasdaq that the Company does not
currently comply with the timely regulatory filing requirement
for continued listing on the Nasdaq SmallCap Market.
The company announced on May 20, 2003 that it would file its
Form 10-Q for the third quarter ended March 31, 2003 following
the completion of its analysis related to the restatement
adjustments necessary to increase its allowance for Medicare,
Medicaid and contractual discounts and doubtful accounts in the
range of $35 to $45 million.
Jack Brucker, President and Chief Financial Officer, said, "We
are working diligently to expedite and complete this process. We
believe we have a strong case for continued listing as we move
forward to complete this process and subsequently file our
quarterly report."
The Company will submit a request for a Nasdaq Qualifications
Panel hearing to consider its continued listing. The hearing has
not yet been scheduled. Rural/Metro's common stock will continue
to be traded on the Nasdaq SmallCap Market, however the
character "E" will be appended to its trading symbol.
Accordingly, the trading symbol for the company's securities
will be changed from RURL to RURLE at the opening of trading on
May 27, 2003.
Rural/Metro Corporation, whose December 31, 2002 balance sheet
shows a total shareholders' equity deficit of about $160
million, provides emergency and non-emergency medical
transportation, fire protection, and other safety services in
approximately 400 communities throughout the United States. For
more information, visit the Rural/Metro Web site at
http://www.ruralmetro.com
Rural/Metro Corp.'s 7.875% bonds due 2008 (RURL08USR1) are
trading at about 70 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=RURL08USR1
for real-time bond pricing.
SAFETY-KLEEN CORP: Wants More Time to Preserve Avoidance Actions
----------------------------------------------------------------
Safety-Kleen Services, Inc. and its affiliate debtors are
plaintiffs in 421 adversary proceedings to avoid and recovery
property.
Before initiating the Avoidance Actions, Jeffrey C. Wisler,
Esq., at Connolly Bove Lodge & Hutz LLP, relates that Safety-
Kleen obtained a Procedures Order from this Court. The
Procedures Order decreed that, "[n]otwithstanding Bankruptcy
Rule 7004(e), no Initial Summons or Amended Summons shall be
deemed stale until the expiration of the 120 day period
following the filing of the Complaint."
None of the Complaints filed in the Avoidance Actions have been
served. However, Safety-Kleen has sent a letter to each of the
defendants explaining the status of the Avoidance Actions,
advising them that "until you have been served with a Summons
and Complaint, you are not required to take any action," and
offering to provide each defendant with any additional
information that may be needed. The Debtors' counsel has
responded to dozens of telephone calls from defendants and has
repeated this advice.
As a result of the two-year statute of limitations to commence
certain causes of action, the Debtors were required to commence
avoidance actions by June 9, 2002 or potentially forfeit such
causes of action. The Debtors' Amended Plan proposes that, upon
its confirmation, the Avoidance Actions will be assigned to the
Safety-Kleen Creditor Trust for the benefit of the unsecured
creditors. The Creditor Trust will have full discretion to
pursue and settle the Avoidance Actions. Safety-Kleen recognizes
its need to preserve the goodwill of its vendors and other
parties who are defendants. Safety-Kleen further recognizes
that the Creditor Trust will seek to maximize recoveries from
the Avoidance Actions, notwithstanding any ongoing relationships
that any defendants may have with Safety-Kleen. Therefore, it
is in the best interest of Safety-Kleen and its creditors to
allow the Avoidance Actions to remain "dormant" until a plan of
reorganization is finalized.
Accordingly, Safety-Kleen asks the Court to maintain the current
status quo of the Avoidance Actions pending completion of the
plan process.
The Debtors believe that granting an additional extension of
time to effect service of original process upon the Defendants
to the later of October 1, 2003, or 60 days from the date the
Amended Plan is confirmed is entirely appropriate in this
situation, and will serve the interests of all involved.
The Court has broad discretion to control its schedule and the
power to control its own docket. Moreover, Section 105(a) of
the Bankruptcy Code grants bankruptcy courts broad authority and
discretion to take actions and implement procedures necessary to
enforce the provisions of the Bankruptcy Code. The granting of
additional time to effect service of original process also is
provided for by Rule 9006(b) of the Federal Rules of Bankruptcy
Procedure. Courts should be liberal in granting extensions of
time sought before the period to act has elapsed, as long as the
moving party has not been guilty of negligence or bad faith and
the privilege of extensions has not been abused.
In making the determination of whether to extend the time to
serve a complaint under Federal Rule 4(m), the Third Circuit has
set a two-step inquiry. First, upon the showing of good cause
for the delayed service, the court must extend the time period.
Second, if there is not good cause, the court has the discretion
to dismiss without prejudice or to extend the time period.
Bankruptcy Rule 9006(b) does not define good cause, but courts
have been consistent in their interpretation of what constitutes
good cause. In determining whether good cause exists, a court's
"primary focus is on the plaintiff's reasons for not complying
with the time limit in the first place." Good cause is measured
against the plaintiff's recognizable efforts to effect service
and the prejudice to the defendant from the delay. Further, the
court will consider whether the plaintiff was conscientious
about complying with the Rules, including, but not limited to,
whether plaintiff moved under Federal Rule 6(b) for an extension
of time in which to serve defendant. Since good cause exists in
this matter, the requested extension should be granted. (Safety-
Kleen Bankruptcy News, Issue No. 57; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
SERVICE MERCHANDISE: Judge Paine Confirms First Amended Plan
------------------------------------------------------------
Service Merchandise and its debtor-affiliates step Judge Paine
through the 13 statutory requirements under Section 1129(a) of
the Bankruptcy Code necessary to confirm its First Amended Plan
of Reorganization:
A. Section 1129(a)(1) of the Bankruptcy Code provides that a
Plan of reorganization must comply with the applicable
provisions of Chapter 11 of the Bankruptcy Code. The
legislative history of Section 1129(a)(1) of the Bankruptcy
Code indicates that a principal objective of this provision
is to assure compliance with the sections of the Bankruptcy
Code governing classification of claims and interests and the
contents of a plan of reorganization. Service's Plan
complies with all provisions of the Bankruptcy Code.
B. Section 1129(a)(2) of the Bankruptcy Code requires that the
proponent of a plan of reorganization comply with the
applicable provisions of the Bankruptcy Code. The
legislative history and cases discussing Section 1129(a)(2)
of the Bankruptcy Code indicate that the purpose of the
provision is to ensure that the plan proponent complies with
the disclosure and solicitation requirements of Sections 1125
and 1126 of the Bankruptcy Code. Service has performed all
of its obligations under the Bankruptcy Code.
C. The Plan has been "proposed in good faith and not by any
means forbidden by law," as required by Section 1129(a)(3) of
the Bankruptcy Code.
D. Section 1129(a)(4) of the Bankruptcy Code requires that
payments made by the debtor on account of services or costs
and expenses incurred in connection with the Plan or the
Reorganization Cases either be approved or be subject to
approval by the bankruptcy court as reasonable. Service's
Plan discloses all payments to be made and the Court has
approved or will approve all plan-related expenses
specifically, the Debtors' Noteholder Preference Action
Settlement.
E. Section 1129(a)(5)(A)(i) of the Bankruptcy Code requires the
proponent of a plan to disclose the identity of certain
individuals who will hold positions with the debtor or its
successor after confirmation of the plan. Section
1129(a)(5)(A)(ii) of the Bankruptcy Code requires that the
service of these individuals be "consistent with the
interests of creditors and equity security holders and with
public policy." The Debtors have selected a plan
administrator who will hold title to the sole share of common
stock to be issued by Reorganized Service Merchandise and who
will serve as sole officer and sole director for the
Reorganized Company.
F. Section 1129(a)(6) of the Bankruptcy Code permits
confirmation only if any regulatory commission that will have
jurisdiction over the debtor after confirmation has approved
any rate change provided for in the plan. This requirement
is inapplicable in Service's Chapter 11 cases.
G. Section 1129(a)(7) of the Bankruptcy Code, the "best
interests of creditors test," requires that, with respect to
each impaired class of claims or interests, each holder of a
claim or interests of the class under the Plan on account of
the claim or interests (a) has accepted the plan; or (b) will
receive or retain under the plan on account of the claim or
interests property of a value, as of the effective date of
the plan, that is not less than the amount that the holder
would so receive or retain if the debtor were liquidated
under Chapter 7. Service has provided a detailed liquidation
analysis showing that creditors recover less in a chapter 7
liquidation scenario than they receive under the Plan.
Accordingly, the Plan complies with the "best interests of
creditors test."
H. Section 1129(a)(8) of the Bankruptcy Code requires that
each class of claims or interests must either accept a plan
or be unimpaired under a plan. Pursuant to Section 1126(c)
of the Bankruptcy Code, a class of impaired claims accepts a
plan if holders of at least two-thirds in dollar amount and
more than one-half in number of the claims in that class
actually vote to accept the plan. Pursuant to Section
1126(d) of the Bankruptcy Code, a class of interests accepts
a plan if holders of at least two-thirds in amount of the
allowed interests in that class that actually vote to accept
the plan. A class that is not impaired under a plan, and
each holder of a claim or interests of the class, is
conclusively presumed to have accepted the plan. Tabulation
results disclose that Class 4 and Class 5 voted against the
Plan. Class 5 creditors later changed their minds and
decided to accept the Plan. The Debtors satisfied the
"cramdown" requirements for the classes despite Class 4's
rejection vote because no junior class recovers anything
under the plan.
I. The treatment of Administrative Expense Claims and Priority
Non-Tax Claims satisfies the requirements of Sections
1129(a)(9)(A) and (B) of the Bankruptcy Code, and the
treatment of Priority Tax Claims satisfies the requirements
of Section 1129(a)(9)(C) of the Bankruptcy Code;
J. Section 1129(a)(10) of the Bankruptcy Code provides that at
least one impaired class of claims or interests must accept
the Plan, without including the acceptance of the Plan by any
insider. Class 3 and Class 6 impaired classes of creditors
have overwhelmingly accepted Service's Plan.
K. Section 1129(a)(11) of the Bankruptcy Code requires the
Bankruptcy Court to find that the plan is feasible as a
condition precedent to confirmation. The Debtors' Plan
provides for a liquidation of their remaining assets and
distribution of Cash to creditors in accordance with the
Bankruptcy Code's priority scheme and the terms of the Plan,
thus there is no need for further financial reorganization.
L. All fees payable under Section 1930 of the Judiciary
Procedures Code, as determined by the Bankruptcy Court on the
Confirmation Date, have been paid or will be paid on the
Effective Date, thus satisfying the requirements of Section
1129(a)(12) of the Bankruptcy Code; and
M. Section 1129(a)(13) of the Bankruptcy Code sets forth
certain provisions for continuation of the payment of health,
welfare and retiree benefits post-confirmation. Having
satisfied this provision, Service no longer has obligations
to pay any retiree benefits that has not already been paid.
Accordingly, Judge Paine confirmed Service Merchandise's First
Amended Plan of Reorganization on May 13, 2003.
Michael E. Hogrefe, Service Merchandise's Senior Vice President
and Chief Financial Officer, states that the Plan, a product of
extensive negotiations which eventually received the Creditors'
Committee's full support, holds the legitimate and honest
purposes of maximizing the recovery to Claim holders under the
circumstances of these Chapter 11 cases. (Service Merchandise
Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SIRIUS SATELLITE: Closes $175 Million Convertible Notes Offering
----------------------------------------------------------------
SIRIUS (Nasdaq: SIRI), the premier satellite radio broadcaster
and only service delivering uncompromised coast-to-coast music
and entertainment for your car and home, closed its offering of
3-1/2% Convertible Notes due 2008.
The net proceeds of approximately $168,875,000, before expenses,
are expected to eliminate the company's funding gap, estimated
to be approximately $100 million, and fund SIRIUS to cash-flow
breakeven, which is expected in 2005 with approximately two
million subscribers. The company fully expects to reach 100,000
subscribers this quarter and more than 300,000 by year-end.
SIRIUS intends to use the net proceeds from the sale of the
notes for general corporate purposes.
As previously disclosed, the notes are convertible into Sirius'
common stock at the option of the holder at a conversion rate of
724.6377 shares per $1,000 principal amount, or $1.38 per share.
The notes may not be redeemed at the option of Sirius prior to
maturity.
"Our ability to raise this capital in today's financial markets
environment is indicative of the confidence felt within the
financial community about our business," said Joseph P. Clayton,
President & CEO of SIRIUS. "With our subscriber base more than
doubling during the first quarter of this year, our automotive
partners firmly on board, and the introduction of portable 'Plug
& Play' products this summer, we are feeling a strong wind in
our sails."
On May 22, Standard & Poor's Ratings Services assigned its
'CCC-' rating to the 31/2% Convertible Notes, and also raised
its corporate credit rating on Sirius Satellite Radio Inc. to
'CCC' from 'D', stating, "The rating actions and the stable
outlook reflect the company's improved capital structure and
liquidity following its recent recapitalization," according to
Standard & Poor's.
SIRIUS is the only satellite radio service bringing listeners
more than 100 streams of the best music and entertainment coast-
to-coast. SIRIUS offers 60 music streams with no commercials,
along with over 40 world-class sports, news and entertainment
streams for a monthly subscription fee of only $12.95, with
greater savings for upfront payments of multiple months or a
year or more. Stream Jockeys create and deliver uncompromised
music in virtually every genre to our listeners 24 hours a day.
Satellite radio products bringing SIRIUS to listeners in the
car, truck, home, RV and boat are manufactured by Kenwood,
Panasonic, Clarion and Audiovox, and are available at major
retailers including Circuit City, Best Buy, Car Toys, Good Guys,
Tweeter, Ultimate Electronics, Sears and Crutchfield. SIRIUS is
the leading OEM satellite radio provider, with exclusive
partnerships with DaimlerChrysler, Ford and BMW. Automotive
brands currently offering SIRIUS radios in select new car models
include BMW, MINI, Chrysler, Dodge, Jeep(R), Nissan, Infiniti
and Mazda. Automotive brands that have announced plans to
offer SIRIUS in select models include Ford, Lincoln, Mercury,
Mercedes-Benz, Jaguar, Volvo, Audi, Volkswagen, Land Rover and
Aston Martin.
SUTTER CBO: Fitch Affirms Class B Notes Rating at B-
----------------------------------------------------
Fitch Ratings affirms six classes of notes issued by Sutter CBO
1998-1 Ltd. These affirmations are the result of Fitch's annual
review process. The following rating actions are effective
immediately:
-- $63,296,732 class A-1 floating-rate notes 'AAA';
-- $108,340,642 class A-2A floating-rate notes 'AAA';
-- $19,591,436 class A-2B notes 'AAA';
-- $15,000,000 class A-3 5.45% step-up coupon notes
'BBB';
-- $30,000,000 class A-3L floating-rate notes 'BBB';
-- $20,000,000 class B 7.70% notes 'B-'.
Sutter CBO 1998-1 Ltd. is a collateralized debt obligation (CDO)
managed by Wells Fargo Bank, N.A. (Wells Fargo). Fitch has
reviewed the portfolio performance of Sutter CBO 1998-1 Ltd. and
has discussed the current and future state of the portfolio with
Wells Fargo. Fitch is comfortable that the management team is
well informed on all of the portfolio credits, the industries in
which they operate, as well as the high yield industry overall.
The revolving period for Sutter CBO 1998-1 Ltd. ended on March
2, 2003. It is currently in its amortization period whereby
principal is used to pay down notes instead of being reinvested.
The portfolio has experienced some deterioration since the
previous Fitch rating actions were taken on February 2002. The
class A and class B overcollateralization (O/C) ratios continue
to fail as of the May 2, 2003 trustee report dropping from
110.44% to 108.05% and 102.22% to 98.37%, respectively. The
current portfolio par amount is approximately $286.6 million of
which 16.09% is in defaulted securities and roughly 24% in
securities rated below 'B-' (excluding defaults). A majority of
the assets (93.5%) have a fixed-rate coupon with an overall
weighted average coupon of 9.21%. Because the portfolio has
maintained a relatively high weighted average coupon, there is a
good deal of excess spread that has been used to redeem senior
notes. Despite some of the deterioration in the portfolio,
Sutter CBO 1998-1 Ltd. is performing within Fitch's
expectations.
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates relative to the minimum cumulative default rates
required for the rated liabilities. As a result of this
analysis, Fitch has determined that the current ratings assigned
to all the rated classes of notes still reflect the current risk
to note holders.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
TERRA INDUSTRIES: Fitch Assigns B- Rating to New $200M Sr. Notes
----------------------------------------------------------------
Fitch Ratings assigned a rating of 'B-' to Terra Industries' new
$200 million senior secured second priority notes and has
affirmed ratings at 'BB-' for the existing senior secured credit
facility and senior secured notes. Fitch has also affirmed the
'B-' rating for the senior unsecured notes. The Rating Outlook
is Stable.
The ratings reflect Terra's major market positions in UAN
solutions, ammonia, ammonium nitrate, and methanol; the
company's high leverage; its exposure to natural gas price
volatility; and its overall performance during the current
cyclical downturn. During the current downturn, the company has
continued to reduce total debt, though EBITDA, cash from
operations and net free cash flow have fluctuated with cash from
operations and net free cash flow entering negative territory in
some years. Over the past three years, credit statistics have
been relatively stable for the current rating level.
Terra recently issued $200 million 11.5% senior secured notes.
The rating of 'B-' reflects the potential principal recovery
related to the notes' second priority interest in accounts
receivable and inventory where the senior secured credit
facility has a first priority lien. The rating also considers
that the second priority interest is shared equally and ratably
with the existing $200 million 12.875% senior secured notes. The
proceeds from the new 11.5% note issuance will be used to retire
$200 million 10.5% senior unsecured notes. If all the unsecured
notes are retired at the end of the call period, Fitch will
withdraw the rating on the unsecured notes.
The Stable Rating Outlook indicates the likelihood that the
company's near-term financial performance would not
significantly deteriorate despite expected margin pressure in
2003. Financial performance is expected to be similar to 2002
levels due to higher average product pricing mitigated by higher
average natural gas costs.
Terra Industries is a major North American producer of ammonia,
UAN solutions, and methanol and a leading producer of ammonium
nitrate in the U.K. The company also produces urea. Its nitrogen
products are used as fertilizer in agriculture. Methanol is used
in fuel additives and industrial chemicals. In 2002, Terra had
revenue of $1 billion and EBITDA of approximately $99 million.
THERMADYNE: Emerges from Chapter 11 with Debt Dramatically Cut
--------------------------------------------------------------
Thermadyne Holdings Corporation announced that its
reorganization plan has become effective and it has emerged from
chapter 11 as a unified and financially strong company.
"Thermadyne is now well-positioned to grow our strong businesses
and market-leading brands," said Karl Wyss, Thermadyne's
chairman and chief executive officer. "We are pleased with the
significant progress we have made on several operational fronts,
including streamlining and modernizing our plants, upgrading our
IT infrastructure, and developing new manufacturing facilities
and a customer care center. We emerge a much stronger company,
both financially and operationally. We approach the future with
renewed confidence and optimism."
According to the plan, Thermadyne's long-term debt has been
reduced to approximately $230 million, down from nearly $800
million in debt and $79 million in preferred stock when the
company filed for protection under chapter 11 in November 2001.
The plan calls for the issuance of 13.3 million shares of new
common stock, of which 94.5 percent will be held by Thermadyne's
senior secured lenders and the remaining 5.5 percent held by a
group of bondholders. Preferred and common stock outstanding
before the filing for chapter 11 protection has been cancelled.
Thermadyne's newly issued common stock is registered under the
Securities Exchange Act of 1934.
The plan also provides for cash distributions to the Company's
general unsecured claims, which include trade creditors, equal
to the lessor of (a) a holder's pro rata share of $7.5 million
and (b) 50% of such holder's claim (estimated by the company to
provide a recovery of 30 to 37 percent of the amount of such
claims).
Thermadyne, headquartered in St. Louis, is a leading multi-
national manufacturer of cutting and welding products and
accessories.
TNP ENTERPRISES: Fitch Further Downgrades Lower-B Debt Ratings
--------------------------------------------------------------
Fitch Ratings downgraded the ratings of TNP Enterprises, Inc.
and Texas New Mexico Power Company as noted below. The Rating
Outlook for both issuers is Stable.
TNP Enterprises, Inc.:
-- Senior secured bank facility to 'BB' from 'BB+';
-- Senior subordinated notes to 'BB-' from 'BB';
-- Preferred stock to 'B+' from 'BB-'.
Texas New Mexico Power Company
-- Senior unsecured notes to 'BB+' from 'BBB-'.
The downgrades at TNP reflect the negative impact on
consolidated financial results from expected losses at First
Choice Power and slower than anticipated debt reduction. TNP's
wholly owned subsidiary FCP is a retail electric provider
created under Texas' restructuring legislation to provide
generation service to both price to beat and competitive
customers. Due to a significant disruption in FCP's hedging
program during 4th-quarter 2002 through March of this year, TNP
is likely to experience significant incremental purchased power
costs during 2003, although this exposure is now limited by call
options and contracts. TNMP's debt rating is downgraded based on
the constrained liquidity and reduced profits of TNP and FCP and
the financial links between TNMP and FCP. While there are
numerous challenges facing TNP and FCP, the Stable Outlook
reflects significant improvements in hedging commodity risk and
recent modifications to the parent's bank facility that reduces
the likelihood of covenant defaults.
TNP's newly assigned ratings reflect the utility holding
company's high debt leverage, constrained liquidity, and the
structural subordination of parent level debt and preferred
stock to operating company obligations. Cash flow at TNP is
dependent upon the relatively predictable dividends from TNMP
and a tax sharing arrangement with TNMP and FCP to service
parent level debt and equity distributions. TNP's senior credit
facility, which includes a $71 million term loan and $15 million
revolving credit facility, is secured by a pledge of TNMP and
FCP common stock held by the parent. Longer term parent level
debt reduction would improve TNP's financial profile and could
lead to positive rating action. Negative rating action could be
precipitated by additional liquidity pressure at FCP as a result
of inaccurate forecasting of customer load or switching rates,
inability to execute on the current financing plan, or a
markedly adverse rate case at TNMP beyond expectations. TNMP's
rating incorporates the regulated utility's relatively stable
financial performance and low risk business profile while also
considering the relationship between the utility and its
affiliate FCP. TNMP and FCP share a bank revolving credit
facility under which FCP's borrowings are guaranteed by TNMP.
TNMP is currently subject to a $75 million limitation on
guarantees imposed by the New Mexico Public Regulation
Commission. The rating assumes that the company will achieve the
current financing plan as the renewal of the working capital
facility and implementation of a receivables financing are
needed to shore up liquidity at TNMP and FCP. Going forward,
significant parent level debt reduction or FCP's achievement of
standalone access to external financing could lead to favorable
rating action at TNMP. Conversely, additional liquidity pressure
at FCP as a result of inaccurate forecasting of customer load or
switching rates, inability to execute on the financing plan, or
a markedly adverse rate case beyond expectations, could result
in a negative rating action. TNP is the holding company for
TNMP, an electric utility with about 238,000 customers in Texas
and New Mexico, and FCP. In New Mexico, TNMP operates as a fully
integrated electric utility, although it doesn't own any
generation. With the introduction of competition in the Texas
market beginning January 2002, TNMP formed FCP to be its retail
electric provider. FCP serves customers both in TNMP's service
territory and in other parts of the state and does not own any
generation.
UNITED AIRLINES: Takes Steps to Restructure United Express Plan
---------------------------------------------------------------
Atlantic Coast Airlines, the Dulles, VA-based United Express
regional carrier (Nasdaq: ACAI) announced the following with
regard to its United Express program.
Post-Bankruptcy United Express Agreement
As previously disclosed, United Airlines, Inc. has commenced a
process to benchmark and restructure its United Express program.
United has asked ACA and other regional carriers to submit
proposed costs and other information, with the goal of
negotiating new agreements with regional airline operators for
its United Express operations. ACA and United have had a number
of discussions regarding possible terms for a revised United
Express agreement, and have exchanged proposals concerning a new
contract that would supercede ACA's existing United Express
agreement. ACA cannot predict the timing or outcome of any
decision by United as to its future United Express operations.
Tentative Agreement With ACA Pilots
In an effort to make its costs more competitive in the current
environment, ACA has previously announced a cost reduction
program that includes salary and bonus plan reductions for
management and salaried employees as well as other cost
reduction initiatives. As a major step in further lowering its
costs, Atlantic Coast Airlines has reached a tentative agreement
on a revised contract with the Air Line Pilots Association which
still requires membership ratification. This new agreement would
go into effect only if and when ACA and United enter into a
revised United Express agreement and that agreement is affirmed
by the bankruptcy court as part of the process described above.
The tentative agreement includes concessions in pay rates and
work rule improvements -- all designed to help ACA create an
even more competitive cost structure. If the tentative agreement
is ratified and becomes effective, the cost savings would be
passed on to ACA's partners through its fee-for-service
agreements. ACA's pilots are expected to vote on the agreement
in early-to- mid June.
2003 Cost Recovery Rates
ACA has previously reported that it is seeking a rate adjustment
with United for 2003 consistent with ACA's interpretation of its
existing United Express agreement. The rate adjustments would,
among other things, offset a reduction in the scheduled
utilization of its aircraft and reflect changes in other costs
as provided for in the existing United Express agreement. ACA
provided United with a notice that it believes that United is
not in compliance with the terms of its United Express agreement
as a result of delays in establishing rates for 2003. On May 21,
2003, United filed court motions seeking to prevent ACA from
exercising any right to terminate the contract and to provide
United with a further opportunity to cure should United be found
to have breached the existing United Express agreement.
ACA believes that United's action was unnecessary since the
Company has not sought to terminate its United Express agreement
over this matter at this time. ACA's actions are intended to
preserve and pursue its rights under the existing United Express
agreement as it seeks a rate adjustment for 2003 consistent with
its interpretation of that agreement. ACA intends to pursue this
issue with the bankruptcy court for resolution in the absence of
an agreement with United on 2003 rates. ACA is continuing to
operate its agreed- upon schedule with United and United is
continuing to pay ACA for this service based on 2002 rates.
Fleet Plan
ACA continues discussions with its partners at Bombardier
Aerospace about the future delivery plans for its CRJ regional
jet aircraft. ACA's last jet delivery was completed in early
March. Since that time, the Company has not taken delivery of
any aircraft under its purchase agreement with Bombardier. The
Company and Bombardier have agreed to an interim extension to
delay the delivery of aircraft originally scheduled for March,
April, and May 2003. The current interim agreement will expire
at the end of May.
ACA operates as United Express and Delta Connection in the
Eastern and Midwestern United States as well as Canada. The
company has a fleet of 142 aircraft -- including 112 regional
jets -- and offers over 825 daily departures, serving 84
destinations.
Atlantic Coast Airlines employs over 4,800 aviation
professionals. The common stock of parent company Atlantic Coast
Airlines Holdings, Inc. is traded on the Nasdaq National Market
under the symbol ACAI. For more information about ACA, visit the
Company's Web site at http://www.atlanticcoast.com
UNITED AIRLINES: Wants to Expand Scope of McKinsey's Engagement
---------------------------------------------------------------
UAL Corporation asks the Court for permission to revise the
scope of McKinsey & Company's employment. James H.M.
Sprayregen, Esq., at Kirkland & Ellis, reminds Judge Wedoff that
the Court approved expanding the scope of McKinsey's retention,
subject to approval of the Creditor's Committee. The Debtors
asked the Committee for its consent. The Committee said no.
The Debtors are now returning to Court to get what they wanted
in the first place.
Mr. Sprayregen says that the services contemplated in earlier
Engagement Letters have been completed. Now, the Debtors wish
to expand the scope of McKinsey's services, pursuant to an
Engagement Letter dated April 7, 2003, to include:
-- McKinsey assessing alternatives of strategic sourcing of
the Debtors' fuel purchases, and
-- McKinsey executing strategy to consolidate and centralize
station level expenditures for goods and services.
Pursuant to an Engagement Letter dated and April 29, 2003,
McKinsey agreed to:
-- support the development of the analytical framework, and
-- provide project management and external perspectives to
assist in the reset of the strategic plan.
McKinsey will also provide objective perspectives on key
assumptions in the strategy reset design and develop contingency
actions to cover unexpected shortfalls in the plan.
The Debtors have agreed to pay McKinsey $650,000 for April 2003,
pro rated to $532,000. The Debtors have agreed to pay McKinsey
$295,000 for May 2003. (United Airlines Bankruptcy News, Issue
No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
UPC POLSKA: S&P Further Hacks Corp. Credit Rating to CC from CCC
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered the corporate credit
and senior unsecured debt ratings on Polish cable operator UPC
Polska Inc., to 'CC' and 'C', respectively, from 'CCC' and 'CC'.
The ratings are removed from CreditWatch, where they had been
placed on Oct. 5, 2001.
The outlook is negative.
"The downgrades reflect the expectation that the public debt at
UPC Polska will be restructured under distressed terms," said
Standard & Poor's credit analyst Catherine Cosentino. The
company indicated that it is in discussions to restructure its
debt. In its first quarter 10Q for the three months ended March
31, 2003, UPC Polska stated that it has relied on parent United
Pan European Communications NV to meet its prior payment
obligations. However, because UPC is currently operating under
bankruptcy protection, the ability of UPC Polska to obtain
further financing from the parent is highly uncertain. UPC
Polska also indicated that there was substantial doubt about its
ability to continue as a going concern. Given these factors, any
restructuring would most likely be considered a distressed
exchange. Upon completion of such a restructuring, the corporate
credit rating and senior unsecured debt rating would both be
lowered to 'D' as effective defaults. The ratings would
subsequently be withdrawn.
Standard & Poor's has also withdrawn the 'CCC' corporate credit
rating and 'CC' senior unsecured debt rating on UPC Polska's
operating subsidiary Poland Communications Inc. This follows the
disclosure in UPC Polska's first quarter 2003 10Q that on
March 19, 2003, it had deposited with the PCI indenture trustee
$15 million to be held in trust to pay and discharge the entire
indebtedness of the remaining outstanding PCI senior unsecured
notes plus accrued interest at its Nov. 1, 2003, maturity.
Upon completion of a debt restructuring, the corporate credit
rating and senior unsecured debt rating on UPC Polska would both
be lowered to 'D' as effective defaults. The ratings would
subsequently be withdrawn.
USG CORP: Inks Settlement with Asbestos Claims Management Corp.
---------------------------------------------------------------
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, USG Corporation and its debtor-affiliates ask the
Court to approve their settlement agreement with Asbestos Claims
Management Corporation dated April 21, 2003. The other parties
to the Settlement Agreement are debtor companies, including
Armstrong World Industries, Inc. and Federal-Mogul Corporation,
that were members of the Center for Claims Resolution.
The Settlement Agreement resolves the claims asserted by either
parties against the other. The principal claims in dispute
between ACMC and the Debtors arise from ACMC's obligations to
make unpaid settlement payments under the Producer Agreement
Concerning the Center for Claims Resolution and the Debtors'
alleged obligations to ACMC under a reimbursement agreement.
Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., informs
the Court that in 1998, certain corporations that were
defendants in asbestos personal injury litigation, including the
Debtors and ACMC -- then known as National Gypsum Company,
formed the Center. The Center was designated as the agent of
each member for the purpose of administering, settling, managing
and disbursing settlement payments with respect to all asbestos-
related personal injury claims filed against the Center members.
Through the Producer Agreement, the members:
* authorized the Center to enter into certain settlement
agreements with asbestos claimants on behalf of the
members, and
* agreed to pay a certain share of the settlements based on
a set formula contained in the Producer Agreement.
National Gypsum, which was a member of the Center, filed for
bankruptcy on October 28, 1990. After confirmation of a
reorganization plan in 1993, a new National Gypsum was formed
and a settlement trust -- the ACMC -- was created. With the
Texas Bankruptcy Court's approval, ACMC assumed the obligations
of the old National Gypsum under the Producer Agreement.
Certain members of the Center executed a reimbursement agreement
to encourage ACMC to remain a member of the Center. Under the
Reimbursement Agreement, the Center continued to bill ACMC for
its obligations under the Producer Agreement. In the event that
ACMC did not prevail in the Litigation, the Reimbursement
Agreement would obligate the Center and its current and former
members to reimburse ACMC for 70% of any amounts that ACMC had
paid for the asbestos settlement payments after execution of the
Reimbursement Agreement. On the other hand, although the
Debtors deny liability under the Reimbursement Agreement, if
ACMC were to prevail, the Debtors' allocable share could be
$6,000,000.
However, ACMC terminated its membership in the Center and has
not made payments to the Center or its members for settlement
payments that ACMC owes under the Producer Agreement.
ACMC's Claims Against the Debtors
Prior to the Reimbursement Agreement, ACMC and the new National
Gypsum have become involved in litigation regarding whether the
new National Gypsum had liability to asbestos claimants seeking
to recover from ACMC.
ACMC alleged that this reimbursement obligation was triggered by
a determination in the Litigation that the new National Gypsum
was not obligated to fund certain asbestos claims under the 1993
Plan. Consequently, the Center and ACMC are litigating the
issue of whether the reimbursement obligations under the
Reimbursement Agreement have been triggered. ACMC argued that,
as a result:
(a) it owes nothing to the Center with respect to certain
unpaid bills that the Center has sent to it; and
(b) the Center and its current and former members jointly and
severally owe ACMC over $50,000,000 under the
Reimbursement Agreement to reimburse for payments ACMC
ACMC previously made.
The Debtors filed a claim in ACMC's reorganization based
primarily on ACMC's failure to pay its share of settlement
payments as required by the Producer Agreement. The Debtors
have paid over $3,000,000 of ACMC's share of settlement payments
to asbestos claimants owed under the Producer Agreement. The
Debtors also assert claims for:
(1) ACMC's share of the asbestos settlements where asbestos
plaintiffs have sought and obtained judgments against the
Debtors holding them liable for ACMC's share of these
settlements;
(2) the amounts that constitute ACMC's share of other asbestos
settlements that ACMC has refused to pay in breach of the
Producer Agreement; and
(c) the amounts that the Debtors will have to pay to
plaintiffs as a result of ACMC's refusal to pay, inability
to pay or other deficiency in payment with respect to
ACMC's share of the liability to the asbestos plaintiffs.
ACMC Settlement with the Center & its Current Members
ACMC and current and former Center members, including Debtor
entities USG, Armstrong and Federal-Mogul, have attempted to
resolve their disputes regarding amounts owed under the
Reimbursement Agreement and the Producer Agreement. In
particular, the Non-Debtor Settlement resolves the signatories'
disputes under the Reimbursement Agreement Litigation. Under
the Non-Debtor Settlement, the parties have agreed to provide up
to $10,400,000 to ACMC in full settlement of ACMC's claim
against them under the Reimbursement Agreement. The parties
have also agreed to release their claims against any former
Center members for:
(i) any amounts allegedly due ACMC under the Reimbursement
Agreement; and
(ii) any amounts paid to ACMC by the parties under the Non-
Debtors Settlement.
The Settlement Agreement between the Debtors and ACMC
ACMC and the Debtors Entities have entered into a settlement
agreement wherein the USG Debtors will withdraw with prejudice
the proof of claim they have filed in ACMC's bankruptcy case, as
have the other Debtor Entities. Likewise, ACMC will withdraw
with prejudice the proof of claim filed against the USG Debtors
and the other Debtor Entities.
The principal terms of the Settlement Agreement are:
-- ACMC and the National Gypsum Settlement Trust, on the one
hand, and the Debtors, on the other hand, will withdraw
with prejudice to re-filing the proofs of claim each has
filed in the other's bankruptcy case;
-- The parties acknowledge that any claims that they
may require to pay, after the effective date of the other
party's reorganization plan, that qualify for treatment as
asbestos-related claims under that plan, may be asserted
and allowed or disallowed in accordance with the provisions
governing the allowance or disallowance of asbestos-related
claims under the plan. Each party acknowledges that the
will have no other right to remedy against the asbestos
trusts established in their cases;
-- ACMC and the National Gypsum Settlement Trust, on the one
hand, and the Debtors, on the other hand, will completely
release one another for any claims arising out of the
Producer Agreement, the Reimbursement Agreement or their
membership or participation in the Center; and
-- the provisions of the Settlement Agreement are subject to,
and the Settlement Agreement will only become effective
upon satisfaction of certain conditions precedent,
including:
(i) the occurrence of waiver of each of the conditions
precedent of the Non-Debtor Settlement;
(ii) approval of the Non-Debtor Settlement in ACMC's
bankruptcy case; and
(iii) the approval of the Settlement Agreement in the
bankruptcy cases of ACMC and the Debtor Entities.
"Approval of the Settlement Agreement would result in the
release of ACMC's claim against [the Debtors] . . . in exchange
for the release of the [Debtors'] claims against ACMC," Mr.
Heath explains. Also, it would also facilitate the release of
any claims by the Center and its current members against the
Debtor Entities. This consequently allows the Debtors to avoid
any liability to the Center for any reimbursement or
contribution claims of the Center and its current members for
any part of the $10,400,000 that the parties are obligated to
pay ACMC under the Non-Debtor Settlement.
If the Settlement Agreement is not approved, the Debtors and
ACMC will be forced to resolve their claims in separate claims
allowance proceedings before the Court. This will require the
Debtors to expend significant time, effort and resources to
investigate, propound discovery and prepare motions and other
documents. As a result, it would incur substantial attorneys
fees and expenses. (USG Bankruptcy News, Issue No. 47;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
VERTIS INC: S&P Rates $350-Mil. Sr. Sec. Second Lien Notes at B-
---------------------------------------=------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Vertis Inc.'s $350 million 9.75% senior secured second lien
notes due April 1, 2009. The notes were sold at a discount to
yield 10.375%, and proceeds will be used to repay amounts
outstanding under the company's existing bank facility.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating and other ratings for the company. Upon retirement
of the term A and B loans, Standard & Poor's will raise the
senior secured debt rating of the company to 'BB-' from 'B+'.
The outlook is negative for this Baltimore, Maryland-
headquartered advertising and marketing services company.
Vertis Inc. is a wholly owned subsidiary of Vertis Holdings Inc.
The company had approximately $1.3 billion in debt (including
the company's accounts receivable backed notes and mezzanine
debt at the holding company level) at the end of March 31, 2003.
Pro forma for the $350 million senior secured second lien note
offering, Vertis's bank facility will consist of a $250 million
senior secured revolving credit facility due December 2005. In
addition, the revolving credit facility will have approximately
$140 million outstanding.
"The negative outlook reflects Vertis' weaker-than-anticipated
operating performance and the continued soft advertising
market," said Standard & Poor's credit analyst Michael Scerbo.
The company had previously announced expectations for a softer
first half of the year and a stronger second half of the year.
Seasonally, the fourth quarter is the company's strongest
quarter during which 31%-36% of total annual cash flows are
generated. "Ratings may be lowered if fourth quarter results are
weaker than expected," Mr. Scerbo added.
VIEW SYSTEMS: Clarifies Earlier Restructuring Statements
--------------------------------------------------------
View Systems, Inc. (OTC Bulletin Board: VYST), a leading edge
manufacturer of security technologies, clarifies earlier
statements made by or on behalf of View Systems.
As the company continues to work through its restructuring it
has come to new management's attention that clarification of
previously disclosed information is necessary. In late 2002 the
company reported that its Secure Scan technology was capable of
detecting explosives. The Company's current technology does not
detect explosives. Rather, the company had researched and tested
other explosives detection technologies that could be integrated
into the company's Secure Scan product. This research is
ongoing. The company would ultimately like to see a product or
products that could integrate all of these technologies.
The company previously stated that in the fourth quarter 2002 it
expected sales of $1,500,000. This statement was based upon a
purchase order the company received from Secure Entry of Irvine,
California, totaling $1,500,000. Though at the time the
company's management had great hopes for this relationship, View
Systems at this time does not recognize this to be a valid
purchase order. In fact, the company's new management is
pursuing appropriate legal action to collect on an outstanding
receivable from Secure Entry.
The company has been made aware of a clerical error in paragraph
five of its May 14, 2003 press release titled "View Systems
Launches Strategic Marketing Plan." The reference to dollars was
inadvertently omitted from the first sentence of that paragraph.
The company is concerned that the public could misinterpret this
to mean 40,000 units were sold as opposed to the intended
statement that the company had experienced $40,000 in sales.
Additionally, the company has been made aware of a potential
misunderstanding concerning prior statement that it has secured
long term financing. The company has not secured its long term
financing to date. Rather, the company has secured a bridge loan
to supporting its current business operations. The company is
actively exploring all avenues available for its long term
financing need.
Barry Feldman, President and COO stated, "In the course of View
Systems' restructuring we have received a number of inquiries
prompting further clarification of these issues. We believe it
is important for the company to not only accurately report its
ongoing business activities, but to present a clear picture of
the company's historic business. The company's new management
will strive to create a mechanism to facilitate this policy."
View Systems, Inc. provides products to law enforcement,
government agencies, educational facilities, events and
commercial businesses. View Systems has an extensive network of
distributors, licensees and strategic alliance affiliates.
* * *
Liquidity and Capital Resources
In its most recent SEC Form 10-QSB, the Company reported:
"Historically, we have funded our cash requirements primarily
through equity transactions. We received $13,896,751 since
inception through the issuance of our common stock. We are not
currently generating sufficient cash from our operations to
finance our business and will continue to need to raise capital
from other sources. At March 31, 2003, we had total assets of
$2,918,892 compared to total assets of $3,014,709 at
December 31, 2002. Total current liabilities were $1,229,921 at
March 31, 2003 compared to $1,117,916 at December 31, 2002.
This resulted in stockholders' equity of $1,688,971 compared to
$1,896,793 at December 31, 2002.
"During the three months ended March 31, 2003, our cash
increased from $3,229 at December 31, 2002, to $13,531 at
March 31, 2003. Net cash used in operating activities was
$205,748 for 2003 first quarter, including decreases in accounts
receivable of $27,656, decreases in inventory of $14,278, and
decreases in accounts payable of $15,745.
"Net cash generated from financing activities during the 2003
first quarter was $211,550, consisting of proceeds received from
sales of stock of $86,550 and loans from a shareholder of
$125,000. During the 2002 first quarter net cash generated from
financing was $543,945 and was primarily the result of proceeds
from sales of our common stock.
"As a result of the foregoing, at March 31, 2003 we had negative
working capital of $1,024,287, including $35,055 in net trade
accounts receivable and $157,048 in inventory. We have provided
and may continue to provide payment term extensions to certain
customers from time to time. As of March 31, 2003 we have not
granted material payment term extensions.
Commitments and Contingent Liabilities
"Our commitments include operating leases and accounts payable.
At December 31, 2002, future minimum payments for operating
leases were $183,069 through 2006. Notes payable of $724,450
are outstanding at March 31, 2003. Also, our accounts payable at
March 31, 2003 were $429,878.
Financing
"We operate in a very competitive industry that requires
continued large amounts of capital to develop and promote our
products. We believe that it will be essential to continue to
raise additional capital, both internally and externally, to
compete in this industry. In addition to accessing the public
and private equity markets, we will pursue bank credit lines and
equipment lease lines for certain capital expenditures. We
currently estimate we will need between $1 million and $2
million to fully develop all of our products and launch our
expanded business operations in accordance with our current
business plan.
"Management intends to finance our 2003 operations through
additional equity financing expected to be completed by the
second quarter of 2003. Any proceeds we may receive from these
equity transactions will be used for business operations. We
cannot assure that this financing will be successful and we may
be required to further reduce expenses and scale back our
operations."
WASHINGTON MUTUAL: Fitch Rates Class B-4 & B-5 Notes at BB/B
------------------------------------------------------------
Fitch rates Washington Mutual Mortgage Securities Corp.'s
mortgage pass-through certificates, series 2003-AR6 classes A-1,
A-2, X-1, X-2, R ($1.766 billion) senior certificates 'AAA'. In
addition, Fitch rates the class B-1 certificates ($19,084,500)
'AA', class B-2 certificates ($14,540,600) 'A', class B-3
certificates ($7,270,200) 'BBB', class B-4 certificates
($2,726,400) 'BB' and class B-5 certificates ($2,726,400) 'B'.
Class B-6 certificates are not rated by Fitch. The class B-4, B-
5 and B-6 certificates are being offered privately.
The 'AAA' rating on senior certificates reflects the 2.80%
subordination provided by the 1.05% class B-1 certificates,
0.80% class B-2 certificates, 0.40% class B-3 certificates and
0.55% privately offered class B-4, B-5 and B-6 certificates.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud and
special hazard losses in limited amounts. In addition, the
ratings reflect the quality of the mortgage collateral, strength
of the legal and financial structures, and Washington Mutual
Mortgage Securities Corp.'s servicing capabilities as master
servicer. Fitch currently rates Washington Mutual Bank, FA
'RMS2+' for master servicing.
The trust is comprised of one group of 2,784 conventional, fully
amortizing 30-year adjustable-rate mortgage loans with an
aggregate principal balance of $1,817,570,226. The loans are
secured by first liens on residential properties. The mortgage
loans have a fixed interest rate during the initial five-year
period after the origination date and thereafter, adjust
annually. Approximately 81.5% of the mortgage loans have
interest only payments scheduled during the initial 5-year
period, with principal and interest payments beginning on the
first adjustment date. The average principal balance as of the
cut-off date is $652,862. The weighted average loan-to-value
ratio (LTV) is 62.7% and the weighted average FICO score is 745.
Cash-out refinance loans represent 25.39% of the loan pool. The
states that represent the largest portion of the mortgage loans
are California (66.83%), Illinois (5.10%), Washington (4.40%),
and Colorado (3.73%).
Approximately 0.86% of the mortgage loans are secured by
properties located in the State of Georgia, none of which are
covered under the Georgia Fair Lending Act.
The certificates are issued pursuant to a pooling and servicing
agreement dated May 1, 2003 among Washington Mutual Mortgage
Securities Corp., as depositor and master servicer, and Deutsche
Bank National Trust Company, as trustee. For federal income tax
purposes, an election will be made to treat the trust fund as
three real estate mortgage investment conduits.
WEIRTON STEEL: Final DIP Financing Hearing Slated for June 16
-------------------------------------------------------------
Weirton Steel Corporation asks the Court for an emergency order
to obtain postpetition secured and superpriority financing in
the aggregate principal amount of up to $225,000,000 pursuant to
the terms of a DIP Credit Agreement, in two installments:
$161 million immediately to roll-up and pay-off
the Prepetition Bank Debt; and
$64 million following final approval of the borrowing
arrangement at a Final DIP Financing Hearing.
Weirton's borrowings under this new DIP Financing Agreement will
be secured by superpriority liens on all property of the
bankruptcy estate and accorded administrative expense priority.
In the event of a meltdown, the DIP Lenders get paid first.
Robert G. Sable, Esq., at McGuireWoods LLP, in Pittsburgh,
Pennsylvania, outlines some of the major terms of the DIP Loans:
A. Principal, Interest, Fees: The Debtor is authorized to
borrow money from Fleet Capital Corporation, as agent and
lender, and certain other participating lenders in the form
of a revolving loan facility of which all outstanding
amounts due to the prepetition Lenders as of the Petition
Date, plus $7,500,000 is drawable after entry of the
Emergency Financing Order, by the Court and thereafter
until the earliest of:
1. November 19, 2004;
2. the occurrence of an Event of Default; or
3. the effective date of a plan of reorganization.
The DIP Revolver will have a maximum principal amount of
$200,000,000, subject to borrowing base availability.
In addition to the DIP Revolver, the Debtor is authorized
to borrow, under a single advance, in the form of a term
loan facility, drawable by the Debtor in order to paydown
the DIP revolver upon satisfaction in full of the
Conditions of Release.
The DIP Term Loan will have a maximum principal amount of
$225,000,000.
Interest on the DIP Revolver is payable in cash, monthly in
arrears at a Non-Default Rate equal to either, at the
Debtor's option:
1. 2.25% plus the annual rate of interest announced from
time to time by Fleet Bank at its head office in Boston,
Massachusetts, as its "Base Rate"; or
2. 3.75% plus LIBOR.
The Default Rate of interest will be the Non-Default Rate
plus 2% Interest on the DIP Term Loan is payable monthly in
arrears in cash at a Non-Default Rate equal to 14.5%, and
at a Default Rate after the occurrence of an Event of
Default at the rate of 14.5% plus 3% or 17.5% per annum.
The Debtor will pay in respect of the DIP Revolver:
1. 375 basis points per annum on the face amount of letters
of credit outstanding payable monthly in arrears;
2. 50 basis points per annum of the unutilized Maximum
Revolving Amount, payable monthly in arrears;
3. 2.25% of the Revolving Loan Commitment, payable in full
on the Effective Date, of which 1% will be shared pro
rata by the DIP Revolver Lenders other than Fleet, and
the balance of 1.25% to Fleet on its own account;
4. $300,000 payable annually in advance, to Fleet as Agent
payable on the Effective Date of the DIP Revolver and
$300,000 payable to Fleet on the one-year anniversary of
the Effective Date; and
5. $2,000,000, payable in full on the earliest to occur of:
a. confirmation of a Chapter 11 plan;
b. the sale of all or substantially all of the Debtor's
assets;
c. the repayment in full of the DIP Obligations;
d. the occurrence of an Event of Default in consequence
of which Agent, Majority Lenders or Majority Term
Lenders elect to accelerate the maturity and payment
of the Obligations; or
e. November 19, 2004, provided that each DIP Lender
participating in any exit financing of the Debtor
will apply its pro rata portion of the Deferred Fee
against its pro rata portion of any closing or
facility fee payable in connection with the exit
financing.
The Debtor will pay Manchester Securities Corp. in respect
of the DIP Term Loan:
1. a closing fee of 3% of the DIP Term Loan, or $750,000,
subject to a credit for a portion of the Commitment Fee
in accordance with the terms of the Term Loan Commitment
Letter;
2. 0.25% of the DIP Term Loan on the first business day of
each fiscal quarter; and
3. a prepayment fee of 3% of the DIP Term Loan in the event
any portion of the DIP Term Loan is paid within the
first six months following the Petition Date and 1.5% of
the DIP Term Loan in the event any portion of the DIP
Term Loan is paid prior to the Maturity Date of the DIP
Loans.
B. Conditions Precedent to Initial Credit Extension: The
obligation of the DIP Lenders to make the original
extension of DIP credit to the Debtor is subject to these
conditions precedent:
1. entry of the Emergency Financing Order by the Bankruptcy
Court, on terms and conditions acceptable to Agent and
Lenders, no later than five Business Days after the
Petition Date authorizing and approving the DIP Loan
Facility and containing the requirements set forth in
Section 9.1.1 of the DIP Documents;
2. Bankruptcy Court approval and payment of all costs, fees
and expenses owing to Agent;
3. receipt by Agent of the Final Budget, and other cash
flow and other financial information that Agent may
request;
4. all "first day orders" are entered for which motion is
made on or about the Petition Date in a form and
substance satisfactory to Agent and Lenders; and
5. Agent will have received, in a form and substance
satisfactory to Agent, duly executed copies of the DIP
Documents.
C. Conditions Precedent To Each Credit Extension: The
obligations of the Agent and DIP Lenders to make each DIP
extension of credit are subject to these conditions
precedent:
1. the Debtor will have executed the DIP Loan Documents in
form and substance satisfactory to Agent and all other
documentation with respect thereto;
2. no Default or Event of Default will exist;
3. all representations and warranties will be true and
correct in all material respects as of the date of each
extension of credit, including that there will not have
occurred any material adverse change since the Petition
Date in the financial condition, business, prospects,
operations, properties or performance of the Debtor
taken as a whole;
4. since the Petition Date, other than contemplated by the
Final Budget, there has not been any material adverse
change in the business assets, financial condition,
income or prospects of the Company; and
5. prior to entry of the Final Financing Order, the
Emergency Financing Order will remain in full force and
effect and will not have been stayed, revised, vacated,
or otherwise modified without prior written consent of
Agent and Lenders.
D. Budget: The Debtor will prepare and deliver to Fleet on the
Effective Date a budget, in a form and substance acceptable
to Fleet, that includes balance sheets, income statements,
availability projections and a cash receipts and
disbursement schedule that reflects on a line-item basis
anticipated cash receipts and expenditures for:
1. each week to occur during the first six-month period
following the Petition Date; and
2. each month to occur during the next twelve month period
thereafter.
Furthermore, on or before the second business day of each
month, the Debtor will provide to Fleet:
1. a copy of an updated forecast in form and substance
satisfactory to Fleet, reflecting on a line by line
basis, anticipated cash receipts and disbursements for
the succeeding months, determined on a weekly basis for
the next succeeding six-month period and on a monthly
basis for the then remaining portion of the term of the
DIP Loan Facility;
2. a copy of an updated budget in form and substance
satisfactory to Fleet, reflecting on a line by line
basis, anticipated cash receipts and expenditures,
determined on a weekly basis for the next succeeding
six-month period and on a monthly basis for the then
remaining portion of the term of the DIP Loan Facility;
and
3. a compliance certificate reflecting whether the Debtor
is in compliance with certain performance criteria
derived from and based on the Final Budget, as mutually
agreed by the Debtor and Fleet. In addition, not later
than the 5th business day of each month, the Debtor will
provide to Fleet a copy of the variance report
reflecting, on a line-item basis, the actual cash
receipts and disbursements for the preceding month and
the percentage variance of the actual results from
those reflected in the Final Budget for the preceding
month.
E. Events of Default: Events of Default include, but are not
limited to:
1. the entry of an order converting the case to a case
under Chapter 7 or dismissing the case; or
2. the entry of an order appointing a Chapter 11 trustee in
the case or appointing an examiner having enlarged
powers beyond those set forth in Section 1106 of the
Bankruptcy Code; or
3. the entry of an order granting any other claim
superpriority status or a lien equal or superior to that
granted to the Agent for the ratable benefit of the DIP
Lenders; or
4. the entry of an order staying, reversing, vacating or
otherwise modifying the DIP Loan Facility, the Emergency
DIP Order or the Final Order without Agent's prior
written consent; or
5. the failure of the Debtor to pay:
a. interest or fees when due and the default will
continue for two business days; or
b. principal when due; or
6. the failure of the Debtor to comply with any negative
covenants; or
7. the failure of the Debtor to perform or comply with any
other term or covenant and the default will continue
unremedied for a period of 10 days; or
8. any representation or warranty by the Debtor will be
incorrect or misleading in any material respect when
made; or
9. there will occur a material disruption in the senior
management of the Debtor, or a Change in Control will
occur; or
10. there will occur a change in the financial condition,
business, assets, prospects, financial conditions, or
income which would have a Material Adverse Effect; or
11. the entry of any order granting relief from the
automatic stay so as to allow a third party to proceed
against any material asset or assets of the Debtor; or
12. the filing of any pleading by any party seeking any of
the matters set forth in 1 through 5 or 11 above, which
is not withdrawn, dismissed or denied within 15 days
after filing; or
13. the entry of the Final Financing Order, in a form and
substance satisfactory to Agent, will not have occurred
within thirty days after the Petition Date; or
14. the assertion by the Debtor of claims arising under
Section 506(c) of the Bankruptcy Code against the Agent,
or the commencement of other actions adverse to the
Agent or its rights and remedies under the DIP Loans in
the Interim Emergency Financing Order, Final Financing
Order or any other Bankruptcy Court order; or
15. the failure of the Debtor to file a plan of
reorganization in form and substance acceptable to Agent
and Lenders within 270 days after the Petition Date, or
any Person files a plan of reorganization in form and
substance unacceptable to Agent and Lenders; or
16. a breach of any performance criteria contained in the
DIP Loan Documents.
F. Collateral and Priority: All obligations of the Debtor to
Fleet and the DIP Lenders, including, without limitation,
all principal and accrued interest, costs, fees and
expenses will be:
1. granted superpriority administrative expense status
under Section 364(c)(1) of the Bankruptcy Code, with
priority over all costs and expenses of administration
of the Case that are incurred under any provision of the
Bankruptcy Code, other than the Carve-out. In addition,
the Postpetition Agent is granted, pursuant to Sections
364(c)(2), 364(c)(3) and 364(d) of the Bankruptcy Code,
for the benefit of itself and each Postpetition Lender,
the Postpetition Liens to secure the Postpetition Debt.
The Postpetition Liens:
a. will be First Priority Liens, subject only to
Permitted Liens, but in any event senior to any
Prepetition Liens, Exchange Indenture Liens and PBGC
Liens, without any further action by the Debtor,
Postpetition Agent or Postpetition Lenders and
without the execution, filing or recordation of any
financing statements, security agreements, mortgages
or other documents or instruments;
b. will not be subject to any security interest or lien
which is avoided and preserved under Section 551 of
the Bankruptcy Code; and
c. will remain in full force and effect notwithstanding
any subsequent conversion or dismissal of the Case.
Notwithstanding the foregoing, the Debtor is authorized
and directed to execute and deliver to the Postpetition
Agent the financing statements, mortgages, instruments
and other documents as the Postpetition Agent may deem
necessary or desirable from time to time. Any financing
statements, mortgages, instruments, or other documents
filed by Postpetition Agent will be deemed to have been
filed as of the Petition Date.
2. secured by both the DIP Collateral and the Collateral
granted to Agent pursuant to the Prepetition Credit
Agreement; and
3. accorded administrative priority status under Section
364(c)(1) of the Bankruptcy Code, having superpriority
over any and all administrative expenses of the kind
specified in Sections 503(b) or 507(b) of the Bankruptcy
Code, subject only to the Carve-out.
G. Carve-Out:
1. The Carve-out will be for the benefit of all
professionals of the Debtor and any Committee and will
consist of the sum of the aggregate of all allowed
unpaid but budgeted professional fees and expenses
accrued prior to the Termination Date plus $1,000,000.
2. All prepetition retainers and any other property of the
estate will be used to pay any allowed professional fees
and expenses of Debtor and any Committee before any
payments of the professional fees are made from the
Postpetition Debt or the Collateral.
3. The Postpetition Agent will have the right to establish
a reserve in accordance with Section 1.1.1 of the
Postpetition Documents in an amount equal to the
aggregate of all budgeted professional fees and expenses
for the then-current month or prior months that remain
unpaid plus $1,000,000.
4. After the Termination Date, and with the exception of
the Carve-out, the Postpetition Agent will have no
obligation to fund any fees or expenses accrued prior to
the Termination Date.
5. The Carve-out will not include, and no Postpetition Debt
or Collateral may be used to pay, any fees or expenses
incurred by any entity, including Debtor or the
Committee and professionals retained by the Debtor or
the Committee, in connection with claims, actions or
services adverse to Prepetition Agent, Prepetition
Lenders, Postpetition Agent, Postpetition Lenders, or
any of their interests in any of the Collateral,
including:
a. preventing, hindering or delaying the Postpetition
Agent's enforcement or realization after any of the
Collateral once an Event of Default has occurred;
b. using or seeking to use Cash Proceeds or selling any
other Collateral without the Postpetition Agent's
consent;
c. incurring indebtedness without the Postpetition
Agent's consent, except as expressly permitted by the
Postpetition Documents; or
d. objecting to or contesting in any manner, or in
raising any defenses to, the validity, extent,
amount, perfection, priority or enforceability of the
Prepetition Debt, the Prepetition Liens, the
Postpetition Debt, or the Postpetition Liens or any
other rights or interests of Prepetition Agent,
Prepetition Lenders, Postpetition Agent, or
Postpetition Lenders, or in asserting any claims or
causes of action, including any actions under Chapter
5 of the Bankruptcy Code, against Prepetition Agent,
Prepetition Lenders, Postpetition Agent, or
Postpetition Lenders; provided, however, that up to
$25,000 of the Carve-out may be used by counsel for
the Committee to investigate the validity, extent,
amount, perfection, priority, or enforceability of
the Prepetition Liens. Nothing herein will be
construed as consent to the allowance of any fees,
costs or expenses of the professionals retained by
Debtor or the Committee or will affect the right of
Postpetition Agent to object to the allowance and
payment of the fees, costs or expenses.
H. Interim Advances: After entry of the Emergency DIP Order
and the occurrence of the Closing Date, the Debtor will be
entitled to incur DIP Revolving Loans not to exceed an
interim amount, which will be equal to the lesser of:
1. the then outstanding amount of the Prepetition
Obligations, the Term Loan plus $7,500,000; or
2. the maximum amount available under the DIP Revolver plus
the Term Loan.
I. Waiver of Charting Liens: It will constitute an Event of
Default should there be entered any order in the Debtor's
case or any subsequent case under Chapter 7 of the
Bankruptcy Code, which authorizes under any section of the
Bankruptcy Code, the procurement of credit or the incurring
of indebtedness secured by a lien, or entitled to
superpriority administrative status, which is equal to or
superior to the liens and superpriority administrative
status granted to Agent for the ratable benefit of the DIP
Lenders unless, in each instance:
1. Agent will have given its prior written consent; or
2. the order requires that the DIP Loans and all other DIP
Obligations be indefeasibly and finally paid in full in
Cash.
J. Collateral and Adequate Protection: As adequate protection
to the Prepetition Agent and the Prepetition Lenders, the
Debtor will incur sufficient DIP Loans to pay in full the
claims of the Prepetition Agent and Prepetition Lenders
after entry of the Emergency Financing Order. Both the
Emergency Financing Order and Final Financing Order will
provide that the payment will become final and binding on
all parties-in-interest unless, within 60 days of the entry
of the Emergency Financing Order, any party-in-interest
files an objection to the Prepetition Obligations or liens
of the Prepetition Agent or Prepetition Lenders under the
Prepetition Credit Documents. If the objection is filed,
and the Prepetition Agent or Prepetition Lenders are
required to disgorge any monies received from the Debtor in
satisfaction of the Prepetition Obligations, the monies
will be remitted by the Prepetition Agent or Prepetition
Lenders, as the case may be, directly to the Agent and
will, without further court order, be applied by the Agent
to the DIP Loans.
K. Release: The Emergency Financing Order and Final Financing
Order will provide that the Debtor on behalf of itself and
its successors and assigns, but without prejudice to the
rights of an official committee or other party-in-interest
to assert claims on behalf of the Debtor's estate within
60 days of the date of the Emergency Financing Order, will
forever release and discharge the Prepetition Agent, each
of the Prepetition Lenders and their officers, directors,
agents, attorneys, and predecessors-in-interest of and from
any and all claims, demands, liabilities, responsibilities,
disputes, remedies, causes of action, indebtedness, and
obligations of every type, including lender liability
claims or defenses, which occurred on or prior to the date
of the Emergency DIP Interim Order with respect to the
Debtor, the Prepetition Obligations, Prepetition Credit
Documents, the DIP Loans or the DIP Loan Documents.
Mr. Sable tells the Court that without immediate and ongoing
access to cash, including the additional liquidity made
available to the Debtor through the DIP Loans, the Debtor cannot
pay current and ongoing operating expenses, including, without
limitation, postpetition wages and salaries and necessary vendor
products and services. Consequently, the Debtor will suffer
irreparable harm, thereby jeopardizing any prospects for success
in this Chapter 11 proceeding.
* * *
Judge Friend permits the Debtors to obtain DIP Financing on an
interim basis. The Court will convene the Final Hearing on
June 16, 2003, at 11:00 a.m. (Weirton Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WILLIAMS COS: S&P Affirms B+ Long-Term Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' long-term
corporate credit rating on energy company The Williams Cos. Inc.
Ratings on Williams and its subsidiaries were removed from
CreditWatch with negative implications, where they were placed
July 23, 2002. The outlook is negative.
In addition, Standard & Poor's raised its rating on Williams'
senior unsecured debt to 'B+' from 'B' Standard & Poor's also
assigned its 'B-' rating to $300 million junior subordinated
convertible debentures at Williams. The rating on the junior
debentures is two notches below the corporate credit rating to
reflect structural subordination to the senior debt.
Tulsa, Oklahoma-based Williams has about $13 billion in
outstanding debt.
"The upgrade on Williams' senior unsecured debt is based on the
fact that the senior debt at the Williams companies is no longer
materially subordinate to debt at the operating companies, after
the recent asset sales," said Standard & Poor's credit analyst
Jeffrey Wolinsky. Priority debt to total assets is less than the
15% threshold required for subordination for a speculative-grade
company. As of March 31, 2003, assets net of goodwill was about
$34.4 billion, 15% of which amounts to $5.1 billion. Total
priority debt, which includes secured debt and debt at
consolidated subsidiaries, is about $3.8 billion, leaving a $1.3
billion buffer for subordination. In addition, the pro forma
buffer at June 30, 2003, increases to about 1.9 billion.
Williams has stated that it does not intend to allow priority
debt to exceed 15% of assets in the future.
A significant credit concern is the company's ability to stem
the cash drain from the energy marketing and trading business
unit. For example, EM&T was responsible for a $790 million cash
drain in 2002 and for a $292 million cash drain in the first
quarter of 2002. However, because EM&T performs all commodity
risk management for Williams, less than 60% of the cash usage is
actually for the EM&T trading operations. More than 40% is for
Canadian and domestic midstream fuel and gas shrink requirements
and for margin on hedged E&P gas contracts in the $4 area.
However, Williams must demonstrate that this business unit will
not be a significant user of cash in 2003.
The negative outlook reflects the weak financial ratios for 2002
and continued expected weakness in 2003. For example, funds from
operations interest coverage ratios for 2002 were 1.4x, and FFO
to debt was 5.6%, which is indicative of a rating at the lower
end of the 'B' category. The expectation for 2003 does not show
significant improvement. However, the projected ratios for 2004
are more in line with the current rating. If Williams is able to
stem the cash drain from EM&T and meet or exceed financial ratio
expectations in 2003, the outlook could be revised. However, if
financial ratios fall considerably below expectations, the
rating could be lowered.
WINSTAR COMMS: Ch. 7 Trustee Sues 144 Vendors to Recover $41MM
--------------------------------------------------------------
Winstar Communications, Inc.'s Chapter 7 Trustee Christine C.
Shubert seeks relief pursuant to Sections 547, 548 and 550 of
the Bankruptcy Code to recover preferential transfers made to
144 vendors totaling $41,497,515.26.
Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel
LLP, in Wilmington, Delaware, informs the Court that during the
period on or within 90 days before the Petition Date, the
Debtors issued and authorized payment to certain of their
creditors by check, wire transfer or otherwise. (Winstar
Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WORLD WIRELESS: Fails to Meet SEC Form 10-Q Filing Deadline
-----------------------------------------------------------
World Wireless Communications, Inc. (Amex: XWC), a developer of
wireless and internet based telemetry systems, announced that
the filing of its Form 10-Q for the quarter ended March 31, 2003
will be delayed to approximately June 2, 2003, although such
filing will not have been reviewed by the Company's independent
accountants.
The Company is seeking financing, although the results of such
efforts are not assured, which financing is necessary to
consummate the previously reported conditional restructuring
agreement with the Company's senior secured creditors. The
Company is in the process of determining what impact, if any,
such restructuring would have on the results of operations for
the period ended March 31, 2003.
The Company reports that it estimates that its loss for the
quarter ended March 31, 2003 will be approximately 50% less than
the loss of $2,150,225 reported for the quarter ended March 31,
2002.
The Company filed its Form 10-K on May 6, 2002, although the
filing thereof was incomplete pending engagement, review, and
audit by the independent accountants. It is expected that the
Company will file an amended report on Form 10-K by
approximately June 30, 2003, to include the independent
accountants' opinion. It is further expected that the Company
will file an amended report on Form 10-Q for the quarter ended
March 31, 2003 by approximately July 14, 2003 to reflect the
independent accountants' review. As of this date, the Company
has not engaged its independent accountants for the purpose of
auditing the December 31, 2002 financial statements or for
reviewing the March 31, 2003 financial statement.
The financial information presented in this release has not yet
been independently reviewed.
Greenwood Village-based World Wireless Communications, Inc. was
founded in 1995 and is a developer of wireless and Internet
systems, technology and products. World Wireless focuses on
spectrum radios in the 900MHz band and has developed the X-
traWeb(TM) system -- an Internet-based product designed for
remote monitoring and control devices. X-traWeb's many
applications included utility meters security systems, vending
machines, asset management, and quick service restaurants.
World Wireless' December 31, 2002 balance sheet shows a working
capital deficit of about $9 million, and a total shareholders'
equity deficit of close to $9 million.
WORLDCOM: Watchdog Lauds Congressional Inquiry of MCI Contracts
---------------------------------------------------------------
Citizens Against Government Waste thanked Senator Susan Collins
(R-Maine), Senate Governmental Affairs Committee Chairperson,
for launching an investigation into why MCI has continued to
receive government contracts following its record bankruptcy.
Since MCI was found to have engaged in fraudulent behavior, CAGW
has been an outspoken critic of the government awarding MCI
contracts paid for with taxpayer money. Companies such as Enron
and Arthur Anderson that have been found guilty of similar
behavior have been barred from doing business with the
government. CAGW believes that MCI should not be treated any
differently.
"It's about time that a member of Congress voices concern about
why a corrupt company such as MCI continues to garner expensive
government contracts," CAGW President Tom Schatzsaid. "The
practice of rewarding companies such as MCI with new contracts
has gone on far too long, and we applaud Senator Collins for
shining some light on this important taxpayer issue."
Earlier this year, the General Services Administration renewed
the company's $11 billion contract to provide communications
services for several government agencies, including the
Departments of Defense, Commerce, and Interior. In mid-May, MCI
received another expensive government contract worth a reported
$45 million to set up a cellular network in Iraq, and a seven-
year deal to provide VSAT satellite links for the National
Oceanic & Atmospheric Administration. The most recent contracts
were announced the same week as the company was fined $500
million by the Securities and Exchange Commission for fraudulent
practices.
"Both the law and common sense clearly require that the
government end this unholy alliance with MCI once and for all,"
Schatz concluded. "We look forward to the hearing that Senator
Collins will chair to provide more information on MCI's
government contracts."
Citizens Against Government Waste is the nation's largest
nonpartisan, nonprofit organization dedicated to eliminating
waste, fraud, abuse, and mismanagement in government. For more
information, visit http://www.cagw.org
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($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)
W.R. Grace & Co. GRA (222) 2,687 587
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)
KCS Energy KCS (30) 268 (16)
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.
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
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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
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is provided by DebtTraders in New York. DebtTraders is a
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Real-time pricing available at http://www.debttraders.com/
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of interest to troubled company professionals. All titles are
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For copies of court documents filed in the District of Delaware,
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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.
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