/raid1/www/Hosts/bankrupt/TCR_Public/030602.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, June 2, 2003, Vol. 7, No. 107
Headlines
8X8 INC: Red Ink Continues to Flow in 4th Quarter of Fiscal 2003
ABN AMRO: Fitch Rates Series 2003-6 Classes B-3 & B-4 at BB/B
ADMIRAL CBO: Ratings on Class A-1 & A-2 Notes on Watch Negative
AES CLESA: Fitch Revises Outlook on BB+ Foreign Currency Rating
AKORN INC: Still Delinquent in Filing Form 10-Q Reports
AIR CANADA: Unsecured Creditors Panel Form Ad Hoc Committee
AIR CANADA: Reaches Tentative Pact with CUPE Flight Attendants
ALKERMES INC: March 31 Balance Sheet Upside-Down by $5 Million
AMERALIA INC: Needs More Time to Complete Financial Reports
AMERISTAR CASINOS: Names Cottingim & Azuse as New HR Executives
ANNUITY & LIFE: AM Best Junks Financial Strength Ratings at C+
APARTMENT INVESTMENT: S&P Equity Analyst Cuts Opinion to "Sell"
ARCH COAL: Ratings on Watch Neg. over Planned Vulcan Acquisition
ARMSTRONG: Judge Newsome Approves AWI's Disclosure Statement
AUDIOVOX: Will Restate Financials for 2000, 2001 & Part of 2002
BASIS100 INC: Michael Johnston Assumes Post as Company Chairman
CALL-NET: Promoting Competition in the Residential Tel. Market
CHARTER COMMS: Selling Port Orchard, WA System to WaveDivision
CHOICE ONE: Abramson & Massaro Re-Elected to Board of Directors
CMS ENERGY: FTC Clears Way for So. Union to Acquire Panhandle
CONTINENTAL AIRLINES: Inks Codeshare Pact with TAP Air Portugal
CORNICHE GROUP: Ability to Continue as Going Concern in Doubt
CYBERGENICS CORP.: Third Circuit Allows Committees to Sue
CYPRESS SEMICONDUCTOR: $500-Mil. Convertible Sub. Notes Rated B-
DIRECTV LATIN AMERICA: Asks Court to Fix Aug. 30 Claims Bar Date
DOMINO'S INC: Refinancing Announcement Triggers S&P's Watch Neg.
EB2B COMMERCE: Controller's Departure Stalls Form 10-QSB Filing
ENRON CORP: Seeks Nod to Consummate ServiceCo Stock Redemption
FINET.COM INC: Files for Chapter 11 Reorganization in California
FISHER: Selling Portland Radio Stations to Entercom for $44 Mil.
FLEMING COS: Gains Go-Ahead to File Schedules on July 1, 2003
FREMONT GENERAL: Declares Special Common Stock Cash Dividend
FRONTIER OIL: Banks Amend and Restate Revolving Credit Agreement
HAYES LEMMERZ: Settling Claim Dispute with Douglas Switzer
HUDSON'S BAY: S&P Puts Outlook to Negative on Weak Profitability
INT'L WIRE: Prices $82 Million Senior Secured Debt Offering
J. CREW GROUP: May 3 Net Capital Deficit Balloons to $421 Mil.
JORDAN IND: S&P Junks & Removes Corp. Credit Rating from Watch
KINETEK: S&P Cuts Rating Citing Weak Operating Performance
LUCENT TECHNOLOGIES: Raises $1.5B in Conv. Senior Debt Offering
LUCENT TECH: S&P Rates Planned Sale of Senior Debentures at B-
MAGELLAN HEALTH: Wants to Honor Missouri Bond and Fee Payments
MASSEY ENERGY: Closes 4.75% Conv. Senior Debt Private Offering
MDC CORP: Intends to Redeem All Outstanding 10.5% Sr. Sub. Notes
META GROUP: Appoints John Flynn to Lead Insurance Service
NAT'L CENTURY: Bayer Moves to Modify November 19 Injunction
NAT'L EQUIPMENT: Will Miss Interest Payment, May File For Ch. 11
NETROM INC: Eliminates Close to 85% of Outstanding Obligations
NETROM INC: Intends to File Form 10-SB Registration Statement
NOBEL LEARNING: Enters Pact for Up to $7MM of Equity Investment
NORTEL: Will Pay Preferred Share Dividends on July 14, 2003
NRG ENERGY: Court Fixes Disclosure Statement Hearing for June 30
ONEIDA: Shareholders Okay Stock Plan for Non-Employee Directors
OWENS CORNING: Second Amendments to Plan & Disclosure Statement
PACER INT'L: S&P Assigns BB- Rating to New Sr Secured Facilities
PENN TRAFFIC: Files for Chapter 11 Reorganization in S.D.N.Y.
PENN TRAFFIC: Ch. 11 Case Summary & Largest Unsecured Creditors
PENN TRAFFIC: Court Okays Interim $70MM of $270MM DIP Financing
PEREGRINE SYSTEMS: Delaware Court Approves Disclosure Statement
PHARMCHEM: Nasdaq Set to Delist Securities from SmallCap Market
POLYPHALT INC: Grandwin Halts Flow of Debt or Equity Financing
POLYTECHNIC UNIV.: S&P Cuts Revenue Bond Rating to BB+ from BBB-
PRESIDENT CASINOS: Broadwater Hotel Emerges from Reorganization
PRESIDENT CASINOS: Feb. 28 Net Capital Deficit Widens to $50MM
PROMAX ENERGY: March 2003 Working Capital Deficit Tops $86 Mill.
PRUDENTIAL STRUCTURED: S&P Junks Ratings on Classes B-2L & B-2
QWEST COMMS: 1st Quarter Results Show Core Business Improvement
RELIANT: Fitch Ups Sr. Unsec. Rating B After Debt Restructuring
ROBOTEL ELECTRONIQUE: Bank Loan Restructuring Talks Collapse
ROGERS COMMS: Board of Directors Declares Semi-Annual Dividend
ROHN INDUSTRIES: Fails to Comply with Nasdaq Listing Guidelines
SAMSONITE: Credit Facility Maturity Extended to June 24, 2004
SINCLAIR BROADCAST: Completes $100MM Debt Financing Transaction
SMITHFIELD FOODS: Fourth Quarter Conference Call Set for June 4
SORRENTO NETWORKS: Shareholders Approve Restructuring Plan
SSP SOLUTIONS: Fails to Maintain Nasdaq Listing Requirements
STARWOOD HOTELS: Sells Additional $60MM of High Premium Notes
SUN HEALTHCARE: Term Loan Lenders Cancel Foreclosure Sale
SYNBIOTICS: Working Capital Problems Spur Going Concern Doubts
TELESYSTEM INT'L: Fails to Meet Nasdaq Min. Listing Requirements
THERMOVIEW INDUSTRIES: Director Rodney Thomas Leaves Board
TIMCO AVIATION: Inks $6 Million Loan Agreement with Shareholders
UNIGENE LABS: Recurring Losses Prompts Going Concern Uncertainty
UNITED AIRLINES: Names Jane Allen SVP for Onboard Services
UNITED AIRLINES: BofA Demands Payment for 1995-A Admin. Expense
UNITED COMPONENTS: S&P's Low-B Ratings Reflect High Debt Load
USI HOLDINGS: Reports Results from Annual Shareholders' Meeting
US UNWIRED: Noteholders Reject Company's Proposed Exchange Offer
TRITON PCS: S&P Affirms & Removes B+ Credit Rating Off Watch
VERTEL CORP: March 31 Balance Sheet Upside-Down by $2 Million
WARNACO GROUP: Corp. Credit & Senior Notes Given Lower-B Ratings
WESTPOINT STEVENS: Case Summary & 20 Largest Unsec. Creditors
WEIRTON STEEL: Will Honor $4 Million Prepetition Shipping Liens
WILLIAMS: Mulls $500 Million Senior Unsecured Notes Offering
WORLD AIRWAYS: Provides Update on Ritetime Aviation Contract
WORLDCOM INC: Wants Court Nod on Settlement with Allegiance
WORLDCOM INC: Six Groups Call on GSA to Debar MCI/WorldCom
W.R. GRACE: Court Okays Oct. 1 Lease Decision Period Extension
XCEL ENERGY: Receives Waiver Re Payment of Common Stock Dividend
ZIFF DAVIS: Debt Reduction Prompts S&P to Up Junk Rating to CCC
* BOND PRICING: For the week of June 2 - 6, 2003
*********
8X8 INC: Red Ink Continues to Flow in 4th Quarter of Fiscal 2003
----------------------------------------------------------------
8x8, Inc. (Nasdaq: EGHT) announced financial results for its
fourth quarter and fiscal year ended March 31, 2003.
Total revenues for the fourth quarter of fiscal 2003 were $2.9
million, compared with $2.2 million for the same period of the
prior year. The net loss for the quarter, including
restructuring charges and other non-cash items, was $3.8
million, compared with a net loss of $3.1 million for the same
period last year.
Total revenues for the year ended March 31, 2003 were $11
million, compared with $14.7 million for fiscal 2002. The net
loss for fiscal 2003, including restructuring charges and other
non-cash items, was $11.4 million, compared with a net loss of
$9.1 million for fiscal 2002.
For detailed financial results and other disclosures, see 8x8's
Annual Report on Form 10-K for the year ended March 31, 2003 as
filed with the Securities and Exchange Commission on May 29,
2003.
8x8, Inc. offers the Packet8 broadband telephone service --
http://www.packet8.net-- consumer videophones, hosted iPBX
solutions (through its subsidiary Centile, Inc.), and voice and
video semiconductors and related software (through its
subsidiary Netergy Microelectronics, Inc.). For more
information, visit 8x8's Web site at http://www.8x8.com
* * *
Liquidity and Capital Resources
In its Form 10-Q for the period ended December 31, 2002, the
Company reported:
"As of December 31, 2002, we had cash and cash equivalents and
short-term investments approximating $6.3 million, representing
a decrease of approximately $2.2 million from September 30,
2002. We currently have no bank borrowing arrangements.
"Cash used in operations of approximately $6.1 million for the
first nine months of fiscal 2003 was primarily attributable to
the net loss of $7.6 million, adjusted for $1.0 million of non-
cash restructuring and other charges and $1.4 million of
depreciation and amortization and net cash used for changes in
operating assets and liabilities of $1.0 million. Cash used in
operations of approximately $6.5 million for the first nine
months of fiscal 2002 was primarily attributable to the net loss
of $6.0 million, adjusted for the non-cash extraordinary gain of
$779,000 and $3.2 million of depreciation and amortization and
net cash used for changes in operating assets and liabilities of
$2.8 million. Our negative operating cash flows primarily
reflect our net losses resulting from the same factors affecting
our revenues and expenses as described above.
"Cash used in investing activities in the nine months ended
December 31, 2002 was attributable to net purchases of
marketable equity securities of $178,000 and capital
expenditures of $130,000, partially offset by proceeds from the
sale of equipment of $40,000. Cash provided by investing
activities in the nine months ended December 31, 2001 is
attributable to proceeds from the sale of an investment in
marketable equity securities of $543,000 and proceeds from the
sale of equipment of $116,000, partially offset by capital
expenditures of $158,000.
"Cash provided by financing activities during the first nine
months of fiscal 2003 consisted primarily of proceeds resulting
from the sale of common stock to employees through our employee
stock purchase and stock option plans. Cash used in financing
activities during the first three quarters of fiscal 2002
consisted of the $4.5 million payment associated with the
redemption of the convertible subordinated debentures and
certain costs incurred in connection with the redemption, offset
partially by proceeds resulting from the sale of our common
stock to employees through our employee stock purchase and stock
option plans
"As of December 31, 2002, our principal commitments consisted of
obligations outstanding under noncancelable operating leases.
"As noted previously, we redeemed our convertible subordinated
debentures in December 2001. The consideration included the
issuance of 1,000,000 shares of our common stock to the lenders.
We have committed to maintaining the effectiveness of the
registration statement filed with the Securities and Exchange
Commission covering the resale of these shares. Should we fail
to maintain the effectiveness of the registration statement, we
may be required to pay cash penalties and redeem all or a
portion of the shares at the higher of $0.898 or the market
price of our common stock at the time of the redemption which
could have a material adverse effect on our cash flows and
results of operations. The value of the shares still held by the
lenders of $678,000 at December 31, 2002, based upon the $0.898
per share minimum potential redemption price, is reflected as
contingently redeemable common stock in the condensed
consolidated balance sheet.
"Based upon our current expectations, we believe that our
current cash and cash equivalents and short-term investments,
together with cash generated from operations, will satisfy our
expected working capital and capital expenditure requirements
through at least June 30, 2003. However, we believe we will need
additional working capital to fund operations shortly
thereafter. The possibility that we will not be able to meet our
obligations as and when they become due over the next twelve
months raises substantial doubt about our ability to continue as
a going concern. Accordingly, we have been pursuing, and will
continue to pursue, the implementation of certain cost reduction
strategies. Additionally, we plan to seek additional financing
and evaluate financing alternatives during the next twelve
months in order to meet our cash requirements for fiscal 2004.
We may also seek to explore business opportunities, including
acquiring or investing in complementary businesses or products
that will require additional capital from equity or debt
sources. Additionally, the development and marketing of new
products could require a significant commitment of resources,
which could in turn require us to obtain additional financing
earlier than otherwise expected. We may not be able to obtain
additional financing as needed on acceptable terms, or at all,
which may require us to reduce our operating costs and other
expenditures, including reductions of personnel and suspension
of salary increases and capital expenditures. Alternatively, or
in addition to such potential measures, we may elect to
implement other cost reduction actions as we may determine are
necessary and in our best interests, including the possible sale
or cessation of certain of our business segments. Any such
actions undertaken might limit our opportunities to realize
plans for revenue growth and we might not be able to reduce our
costs in amounts sufficient to achieve break-even or profitable
operations. If we issue additional equity or convertible debt
securities to raise funds, the ownership percentage of our
existing stockholders would be reduced and they may experience
significant dilution. New investors may demand rights,
preferences or privileges senior to those of existing holders of
our common stock. If we are not successful in these actions, we
may be forced to cease operations."
ABN AMRO: Fitch Rates Series 2003-6 Classes B-3 & B-4 at BB/B
-------------------------------------------------------------
ABN AMRO Mortgage Corporation's multi-class mortgage pass-
through certificates, series 2003-6, classes IA-1 through IA-30,
IA-X, IA-P, IIA-1 through IIA-8, IIA-X, IIA-P and R ($683.2
million) are rated 'AAA' by Fitch Ratings. In addition, Fitch
rates class M ($7.3 million) 'AA', class B-1 ($3.5 million) 'A',
class B-2 ($2.2 million) 'BBB-', class B-3 ($978,507) 'BB' and
class B-4 ($698,934) 'B'.
The 'AAA' rating on the class A senior certificates reflects the
2.25% subordination provided by the 1.05% class M certificates,
0.50% class B-1 certificates, 0.31% class B-2 certificates,
0.14% privately offered class B-3 certificates, 0.10% privately
offered class B-4 certificates and 0.15% privately offered class
B-5 certificates (which is not rated by Fitch). Classes M, B-1,
B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB-', 'BB' and 'B',
respectively, based on their respective subordination.
Fitch believes the amount of credit enhancement will be
sufficient to cover credit losses, including limited bankruptcy,
fraud and special hazard losses. The ratings also reflect the
high quality of the underlying collateral originated by ABN AMRO
Mortgage Group, Inc. (AAMG), the integrity of the legal and
financial structures and the servicing capabilities of AAMG
(rated 'RPS2+' by Fitch).
The mortgage pool consists of recently originated, 30-year and
15-year fixed-rate mortgage loans that are segregated into two
groups. The two mortgage pools will be cross-collateralized.
The 30-year mortgages in Group I, with an aggregate principal
balance of $500,669,016, are secured by one- to four-family
residential properties located primarily in California (49.98%),
Illinois (6.66%), and Virginia (5.75%). The weighted average
original loan to value ratio (OLTV) of the pool is approximately
68.30%. Approximately 1.42% of the mortgage loans have an OLTV
greater than 80%. The weighted average coupon of the 30-year
loans is 5.926%. The weighted average remaining term is 359
months. The weighted average FICO score is 740.
The 15-year mortgages in Group II, with an aggregate principal
balance of $198,264,572, are secured by one- to four- family
residential properties located primarily in California (36.05%),
Illinois (5.80%), and Texas (4.63%). The weighted average OLTV
of the pool is approximately 60.14%. Approximately 0.37% of the
mortgage loans have an OLTV greater than 80%. The weighted
average coupon of the 15-year loans is 5.256%. The weighted
average remaining term is 179 months. The weighted average FICO
score is 746.
None of the mortgage loans are 'high cost' loans as defined
under any local, state or federal laws.
AAMG originated all of the loans. JP Morgan Chase Bank will
serve as trustee. AMAC, a special purpose corporation, deposited
the loans into the trust, which then issued the certificates.
For federal income tax purposes, the offered certificates will
be treated as ownership of debt.
ADMIRAL CBO: Ratings on Class A-1 & A-2 Notes on Watch Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the
class A-1 and A-2 notes issued by Admiral CBO (Cayman) Ltd., an
arbitrage CBO transaction originated in August 1999, on
CreditWatch with negative implications.
The rating on the class A-1 notes was previously lowered
Feb. 14, 2003. The rating on the class A-2 notes was previously
lowered Sept. 5, 2002 and Feb. 14, 2003. The ratings on the
class B-1 and B-2 notes were previously lowered April 5, 2002,
Sept. 5, 2002, and Feb. 14, 2003. The rating on the class C
notes was previously lowered Aug. 20, 2001, April 15, 2002, and
Sept. 5, 2002.
The current rating actions reflect factors that have negatively
affected the credit enhancement available to support the notes
since the prior rating action in February 2003. These factors
include continuing par erosion of the collateral pool securing
the rated notes and a negative migration in the credit quality
of the performing assets in the pool.
Standard & Poor's noted that as a result of asset defaults and
defaulted sales during recent months, the transaction's
overcollateralization ratios have deteriorated since the
February 2003 rating action was undertaken. According to the May
1, 2003 monthly report, the class A overcollateralization ratio
was at 103.81%, versus the minimum required ratio of 127%
(compared to a ratio of 104.96% the time of the February 2003
rating action); the class B overcollateralization ratio was at
86.56%, versus its required minimum ratio of 111.0% (compared to
a ratio of 87.89% at the time of the February 2003 rating
action); and the class C overcollateralization ratio was at
81.04%, versus its required minimum ratio of 100.0% (compared to
a ratio of 82.40% at the time of the February 2003 rating
action).
Standard & Poor's will be reviewing the results of current cash
flow runs generated for Admiral CBO (Cayman) Ltd. to determine
the level of future defaults the rated tranches can withstand
under various stressed default timing and interest rate
scenarios, while still paying all of the rated interest and
principal due on the notes. The results of these cash flow
runs will be compared with the projected default performance of
the performing assets in the collateral pool to determine
whether the ratings currently assigned to the rated notes remain
consistent with the amount of credit enhancement available.
Standard & Poor's will remain in contact with Delaware
Investment Advisors, the collateral manager for the transaction.
RATINGS PLACED ON CREDITWATCH NEGATIVE
Admiral CBO (Cayman) Ltd.
Rating Balance
Class To From (mil. $)
A-1 AA/Watch Neg AA 148.267
A-2 BB+/Watch Neg BB+ 47.500
OTHER OUTSTANDING RATINGS
Admiral CBO (Cayman) Ltd.
Class Rating Balance (mil. $)
B-1 CC 14.0
B-2 CC 25.0
C CC 16.0
AES CLESA: Fitch Revises Outlook on BB+ Foreign Currency Rating
---------------------------------------------------------------
Fitch Ratings revised the Rating Outlook on the 'BB+' foreign
currency rating, the 'BBB-' local currency and Zurich Political
Risk Insured Notes ratings of AES Clesa to Negative from Stable.
The rating action reflects AES Clesa's low contracted position
of energy supply, the recent distribution tariff reduction,
higher energy market price volatility, the changing regulatory
environment, lower than expected coverage ratios, concerns
regarding the impact of the new electricity law and El
Salvador's uncertain economic growth prospects. The sovereign
rating of El Salvador is 'BB+' with a Negative Rating Outlook.
Through 2002, consolidated EBITDA-to-interest coverage ratios
showed improvement over 2001, which had been affected by
earthquakes early in the year. Consumption continues to grow,
which, when coupled with lower energy losses and operating
costs, increased EBITDA by 26% in 2002, resulting in an EBITDA-
to-interest ratio of 2.4 times. Going forward, coverage ratios
are expected to be pressured by the distribution tariff
reduction, which should lower annual revenues by approximately
US$1.8 million. In addition, a less conservative power purchase
contracted position of only 40% exposes the company to a highly
volatile spot market price. Debt-to-capital remains stable at
approximately 54%, reflecting the US$65 million senior notes. Of
the total debt, US$40 million is structured with political risk
insurance provided by Zurich.
AES Clesa's operating fundamentals are sound. The company
operates as a natural monopoly in El Salvador, which provides
stability to cash flow and lowers operating risk. Although the
concession is not exclusive, competition from other distributors
has been, and is expected to be, limited. The majority of AES
Clesa's operating cash flow is derived from the distribution of
electricity. Management continues to focus on improving customer
service, lowering costs and enhancing revenues, which should
support the company's competitive and business positions.
AES Clesa is an electricity-distribution company based in Santa
Ana, El Salvador. It serves approximately 237,000 customers in
the western region of El Salvador, including Santa Ana, the
country's second-largest city, as well as other surrounding
areas. AES Clesa is 79.66% owned by AES El Salvador, an indirect
subsidiary of AES and Energia Global International. Energy
losses from both technical and non-technical factors were 13% in
2002, reasonable for a non-urban electricity distributor in
Latin America.
AKORN INC: Still Delinquent in Filing Form 10-Q Reports
-------------------------------------------------------
Akorn, Inc. has been unable to complete its report for the SEC
on Form 10-Q for the quarter ended March 31, 2003 due to the
fact that it is currently delinquent in the filing of its
reports on Form 10-Q for the quarter ended September 30, 2002
and on Form 10-K for the year ended December 31, 2002. Akorn
has been working to complete the 2002 Reports to file prior to
or simultaneous with its 2003 Form 10-Q, but not all parties
with responsibility for the 2002 Reports and the 2003 Form 10-Q
have completed their review of those reports.
The Company anticipates reporting in its 2003 Form 10-Q revenues
of approximately $12.8 million for the three months ended March
31, 2003 compared to $13.4 million for the comparable period in
2002. The Company anticipates net income of approximately $0.01
per basic share for the three months ended March 31, 2003
compared to $0.01 per basic share for the comparable period in
2002.
On April 24, 2003, Deloitte & Touche, LLP notified Akorn that it
would decline to stand for re-election as its independent
accountants after completion of the audit of the Company's
consolidated financial statements as of and for the year ended
December 31, 2002. Akorn has begun the process of selecting a
new independent accountant, but has not completed.
Akorn, Inc. (AKRN), manufactures and markets sterile specialty
pharmaceuticals, and markets and distributes an extensive line
of pharmaceuticals and ophthalmic surgical supplies and related
products. Additional information is available on the Company's
Web site at http://www.akorn.com
AIR CANADA: Unsecured Creditors Panel Form Ad Hoc Committee
-----------------------------------------------------------
Certain unsecured creditors of Air Canada have formed an ad hoc
committee comprising of holders of over $2,700,000,000 of Air
Canada's unsecured debt.
The Committee will have input into the CCAA restructuring
process for the purposes of formulating and discussing options
to maximize recoveries available to the unsecured creditors as a
result of Air Canada's restructuring. The Committee and its
advisors will be part of discussions and negotiations with
respect to matters pertaining to Air Canada's restructuring plan
and any other material transactions proposed during the course
of the airline's restructuring. Meetings between the Committee
and Air Canada have commenced.
The Committee is comprised of 12 major industrial and financial
corporations from North America and Europe, including
representatives of certain bondholders, banks, lessors and trade
creditors of Air Canada. A representative of Airbus has been
elected Chairman of the Committee.
"Air Canada believes that the Ad Hoc Unsecured Creditors'
Committee provides an opportunity for its members and indirectly
for Air Canada's other unsecured creditors to have a single,
well represented voice in the restructuring process, while at
the same time allowing management to focus its efforts on the
critical restructuring initiatives at hand," according to Calin
Rovinescu, Chief Restructuring Officer of Air Canada in a May 8,
2003 press release. "The Committee is appropriate to conduct
this role as it is composed of creditor constituencies that are
of sufficient size and diversity to provide the perspective of
unsecured creditors in Air Canada's restructuring proceedings."
The Committee is an informal committee and does not have the
authority to represent Air Canada's unsecured creditors
generally or to take actions that are legally binding on any of
Air Canada's creditors. The Committee and its members have
agreed to assist in the restructuring process but will not
assume legal responsibilities to other creditors.
The Committee has engaged KPMG Inc. as its financial advisor to
provide it with, among other things, business analysis,
restructuring and valuation advice. (Air Canada Bankruptcy News,
Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AIR CANADA: Reaches Tentative Pact with CUPE Flight Attendants
--------------------------------------------------------------
CUPE's Air Canada Component, representing 8,300 flight
attendants, has reached a six-year tentative agreement with the
national carrier. The agreement was reached following marathon
bargaining involving the union and the company under the
supervision of Justice Warren Winkler and the Monitor in the
CCAA process.
The agreement allows 1,750 job cuts, including the closure of
the flight attendants base in Edmonton. The first cuts occurred
April 4, 2003. The company has agreed with the union to make
these reductions as humanely as possible with Voluntary
Separation Packages, including early retirement incentives, for
up to 2,500 flight attendants.
"Such VSPs, combined with the maintenance of our current pension
plan benefits, could significantly avoid involuntary job loss
for many junior flight attendants," said Air Canada Component
president Pamela Sachs.
"This has been an extremely difficult process for everyone
involved," said Sachs, "but we feel we have done the best job
possible with the company facing possible liquidation."
Other significant changes include a wage cut of 3.6 per cent for
the first three years of the agreement, a wage re-opener in
2006, profit sharing and a reduction in paid vacation by one
week. Monthly hours of work will also increase.
Membership information meetings will be held across the country
as soon as possible.
ALKERMES INC: March 31 Balance Sheet Upside-Down by $5 Million
--------------------------------------------------------------
Alkermes, Inc. (NASDAQ:ALKS) reported its financial results for
the fiscal year ended March 31, 2003. The net loss on a GAAP
basis for the fiscal year ended March 31, 2003 was $106.9
million as compared to a net loss of $61.4 million in the prior
year. Included in the net loss for fiscal 2003 is a $94.6
million noncash charge related to the equity investment Alkermes
made in Reliant Pharmaceuticals, LLC in December 2001, as well
as an $80.8 million noncash gain on the exchange of our
convertible notes in December 2002.
Pro Forma Results
Pro forma net loss for fiscal 2003 was $82.4 million compared to
a pro forma net loss of $56.0 million for fiscal 2002. The pro
forma net loss for fiscal 2003 excludes (i) the $80.8 million
noncash gain related to the convertible note exchange referenced
above; (ii) the $94.6 million noncash charge related to our
investment in Reliant, a specialty pharmaceutical company in
which Alkermes holds a 19% equity stake; (iii) $6.5 million in
restructuring charges; and (iv) a $4.3 million noncash
derivative charge associated with the provisional call structure
of our 6.52% convertible senior subordinated notes issued in
December 2002. Pro forma net loss for the year ended March 31,
2002 excludes a $5.4 million noncash charge related to our
investment in Reliant. The increase in the pro forma net loss
for the current year as compared to the prior year was primarily
because of a reduction in total revenues related to the way we
are now funded by Eli Lilly for our pulmonary insulin and hGH
programs, and changes in revenues received under several
collaborative agreements, including termination of the
GlaxoSmithKline collaboration.
Alkermes is providing pro forma net loss as a complement to
results provided in accordance with accounting principles
generally accepted in the U.S. The pro forma net loss excludes
both non-recurring items (the noncash gain related to the
convertible note exchange referred to above, restructuring
charges and noncash charges related to our investment in
Reliant) and a noncash derivative loss on our 6.52% Senior Notes
which is likely to recur either as a gain or a loss depending on
a number of factors, including our common stock price at the end
of each quarter. Management believes this pro forma measure
helps indicate underlying trends in our ongoing operations by
excluding the non-recurring items as well as the potentially
volatile, noncash derivative item that is unrelated to our
ongoing operations.
"During the year, we bolstered our financial position, expanded
our manufacturing capabilities and directed our resources to the
downstream development of our most promising proprietary
candidates and productive collaborations, all with a view
towards preparing Alkermes for its next stage of growth,"
commented Richard Pops, Chief Executive Officer. "The highlight
of 2003 was the successful launch of our second commercial
product, Risperdal Consta(TM), by our partner Johnson & Johnson
in markets outside the U.S. In fiscal 2004, we are looking
forward to several important milestones, particularly the
potential U.S. approval for Risperdal Consta, the completion of
our Phase III trial of our first proprietary product candidate,
Vivitrex(R), and several clinical and regulatory milestones in
our other later stage product development programs."
Revenues
Total revenues were $47.3 million for the year ended March 31,
2003 compared with $54.1 million for the prior year. Due to the
amount of revenues earned as a result of the commercial launch
of Risperdal Consta in certain countries outside of the U.S.,
the Company has, for the first time, separately reported its
manufacturing and royalty revenues. Total manufacturing and
royalty revenues were $15.5 million for the year ended March 31,
2003, including $13.4 million of manufacturing and royalty
revenues for Risperdal Consta. The majority of the manufacturing
and royalty revenues were earned from manufacturing fee revenues
for Risperdal Consta as our partner, Janssen Pharmaceutica (a
wholly owned subsidiary of Johnson & Johnson), purchased product
to build inventory and support the commercial launch of the
product. Alkermes developed the delivery technology for
Risperdal Consta, which is an injectable, long-acting
formulation of Risperdal(R) Janssen Pharmaceutica drug. Johnson
& Johnson has filed for approval of Risperdal Consta around the
world. To date the product has been approved for sale in 24
countries. Janssen-Cilag, a wholly owned subsidiary of Johnson &
Johnson, is currently marketing Risperdal Consta in Austria,
Denmark, Germany, Ireland, Mexico, Switzerland and the United
Kingdom. The product is approved, but has not yet been launched,
in Argentina, Australia, Colombia, the Czech Republic, Estonia,
Finland, Hong Kong, Hungary, Iceland, Israel, Korea, Latvia,
Lithuania, The Netherlands, New Zealand, Norway, and Spain.
Research and development revenue under collaborative
arrangements for the year ended March 31, 2003 was $31.8 million
as compared to $54.1 million for the prior year. The decrease
was primarily a result of the change in the Risperdal Consta
program from a development stage program to a commercial
product, the restructuring of our AIR(R) insulin and AIR hGH
programs with Lilly and changes in the Company's partners, as
well as changes in the stage of several other collaborative
programs. Beginning January 1, 2003, Alkermes no longer records
research and development revenue for work performed on the Lilly
programs, but instead will use the proceeds from Lilly's
purchase of $30 million of the Company's preferred stock in
December 2002 to pay for development costs into calendar year
2004.
Cost of Goods Manufactured
Due to the amount of revenues earned as a result of the
commercial launch of Risperdal Consta in certain countries
outside the U.S., the Company is reporting costs of goods
manufactured separately from research and development expenses
for the first time. For fiscal 2003, the cost of goods
manufactured was $10.9 million, consisting of approximately $5.5
million for Risperdal Consta and approximately $5.4 million for
Nutropin Depot(R).
Research and Development/
General and Administrative Expenses
There were $85.4 million in research and development expenses
and $26.7 million in general and administrative expenses for the
year ended March 31, 2003. This compares with $92.1 million in
research and development expenses and $24.4 million in general
and administrative expenses for the prior year. Research and
development expenses were lower in the year ended March 31, 2003
primarily because the Company is now separately reporting the
cost of goods manufactured for its commercial products as
Risperdal Consta moved from a development stage program to a
commercial product. This decrease was partially offset by an
increase in external research expenses as we advanced our
proprietary product candidates and our collaborators' product
candidates through development and clinical trials. The Company
currently has two products in Phase III clinical trials: its
proprietary product candidate, Vivitrex for alcohol dependence
and Nutropin Depot for adult growth hormone deficiency in
collaboration with Genentech, Inc. General and administrative
expenses for the year ended March 31, 2003 were higher primarily
as a result of $2.6 million of merger costs that were expensed
as a result of the mutual termination of the merger agreement
with Reliant in August 2002. General and administrative expenses
also increased as a result of an increase in professional fees,
insurance costs and consulting costs, partially offset by a
decrease in personnel and related costs as a result of our
restructuring in August 2002. Overall, there was also an
increase in occupancy costs and depreciation expense related to
the expansion of our facilities in both Massachusetts and Ohio.
Interest Income/Expense
Interest income for the year ended March 31, 2003 was $3.8
million as compared with $15.3 million for the prior year. The
decrease in interest income was primarily the result of lower
average cash and investment balances as compared to the prior
year, as well as a decline in interest rates. Interest expense
was $10.4 million for the fiscal year ended March 31, 2003 as
compared to $8.9 million for the prior year. The increase for
fiscal 2003 as compared to fiscal 2002 was primarily the result
of interest charges related to the 6.52% Senior Notes.
Cash and Investments
At March 31, 2003, Alkermes had total cash and investments of
$145.0 million, as compared to $161.5 million at March 31, 2002.
At March 31, 2003, Alkermes' balance sheet shows a total
shareholders' equity deficit of about $5 million.
Investment in Reliant
Equity in losses of Reliant Pharmaceuticals, LLC for the year
ended March 31, 2003 was $94.6 million as compared to $5.4
million for the prior year. In December 2001, Alkermes announced
a strategic alliance with Reliant, in connection with which
Alkermes purchased approximately 63% of an offering by Reliant
of its Series C Convertible Preferred Units, representing
approximately 19% of the equity interest in Reliant, for a
purchase price of $100 million. Reliant is organized as a
limited liability company which is treated in a manner similar
to a partnership. Because Reliant had an accumulated deficit
from operations and a deficit in members' capital, our share of
Reliant's losses from the date of our investment is recognized
in proportion to our percentage participation in the Series C
financing and not in proportion to our 19% ownership in Reliant.
We have been recording our equity in the losses of Reliant three
months in arrears. As required under the equity method of
accounting, our $100 million investment was reduced to zero
during the year ended March 31, 2003, as Reliant continued to
have net losses during the calendar year ended December 31,
2002. Since Alkermes has no further funding commitments to
Reliant, we will not record any further losses of Reliant in our
statements of operations. To the extent that Reliant has net
income in the future, Alkermes would record its proportional
share of Reliant's net income on its books to its investment
account and to revenue. There can be no assurance that Reliant
will have net income in the near future, if ever.
Financial Guidance for Fiscal 2004
The following is the financial guidance for Alkermes for the
year ending March 31, 2004.
Certain statements set forth below constitute forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. For information with respect to
factors that could cause actual results to differ from our
expectations, please see risk factors at the end of this press
release and reports filed by us with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as
amended.
Revenues. Our total revenue projections for Alkermes for the
upcoming fiscal year range from $70 to $85 million. We expect
manufacturing and royalty revenues to range from $30 to $35
million. The projected increase in manufacturing and royalty
revenues is mainly the result of an expected increase in
manufacturing shipments and royalty revenues related to
Risperdal Consta. These targets assume approval for Risperdal
Consta is received in the U.S. at the end of calendar year 2003
and also assume that further approvals and launches of Risperdal
Consta continue as predicted in the rest of the world. The
revenues for Risperdal Consta are based on estimates from our
partner, who has the right to change the timing and amount of
their purchases.
We project that research and development revenues will range
from $40 to $50 million. This estimate assumes that certain
milestones and other assumptions related to partnering will be
achieved. Research and development revenues, which are received
from our corporate partners, can fluctuate as our partners can
change the scope or timing of, or terminate, the programs at any
time.
Cost of Goods Manufactured. Our projections for cost of goods
manufactured for fiscal 2004 range from $15 to $20 million.
These costs are estimated based on projected orders from our
partners for Risperdal Consta and Nutropin Depot. Orders from
our partners are subject to change.
Research and Development Expenses. Our projections for research
and development expenses for fiscal 2004 range from $95 to $105
million. This increase is primarily a result of our continuing
efforts to advance our proprietary products towards
commercialization, specifically our Phase III Vivitrex program,
and increases in spending related to our collaboration with
Lilly for pulmonary insulin and hGH. As mentioned above,
Alkermes no longer records research and development revenue for
work performed on the Lilly programs, but uses the proceeds from
Lilly's purchase of $30 million of the Company's preferred stock
in December 2002 to pay for development costs. In addition, we
expect an increase in occupancy and depreciation costs as our
new or expanded manufacturing facilities in Ohio and
Massachusetts are completed in fiscal 2004.
General and Administrative Expenses. Our projections for general
and administrative expenses for fiscal 2004 range from $24 to
$26 million. The decrease is mainly a result of $2.6 million of
nonrecurring merger costs included in the prior year numbers,
partially offset by an expected increase in personnel and
associated costs, insurance costs, depreciation and consulting
costs in fiscal 2004.
Projected Net Loss. We anticipate recording a net loss of $70 to
$80 million for the fiscal year ended March 31, 2004 or
approximately $1.07 to $1.22 per share. The net loss per share
calculation is based on an estimated 65.5 million shares of our
common stock outstanding on a weighted average basis, which
excludes the potential conversion of the 6.52% Senior Notes. If
the price of Alkermes' common stock closes at or above $11.53
for any 20 trading days out of a 30 trading day period, Alkermes
has the right to automatically convert the outstanding $174.5
million of the 6.52% Senior Notes into our common stock. With
roughly $15 million in noncash expenses included in the
projected net loss, this translates to an expected operating
cash burn between $55 to $65 million in fiscal 2004. The
projected net loss excludes any noncash gain or loss relating to
the derivative associated with our 6.52% Senior Notes which
cannot be estimated as it will fluctuate based on a number of
factors, including our common stock price at the end of each
quarter.
Capital. We anticipate that our capital expenditures for fiscal
2004 will be approximately $14 million, a substantial reduction
from the $46 million we spent during fiscal 2003. Capital
expenditures will be significantly reduced in fiscal 2004 as we
complete the expansion of our facilities in Massachusetts and
Ohio.
Finally, as our pipeline continues to expand and mature and with
the anticipated demand for Risperdal Consta, we continue to aim
for our goal of breaking into profitability in calendar year
2005.
Alkermes, Inc. is an emerging pharmaceutical company developing
products based on our sophisticated drug delivery technologies
to enhance therapeutic outcomes. Our areas of focus include:
controlled, extended-release of injectable drugs utilizing our
ProLease(R) and Medisorb(R) delivery systems and the development
of inhaled pharmaceutical products based on our proprietary
Advanced Inhalation Research, Inc. ("AIR(R)") pulmonary delivery
system. Our business strategy is twofold. We partner our
proprietary technology systems and drug delivery expertise with
many of the world's finest pharmaceutical companies and also
develop novel, proprietary drug candidates for our own account.
In addition to our Cambridge, Massachusetts headquarters,
research and manufacturing facilities, we operate research and
manufacturing facilities in Ohio.
AMERALIA INC: Needs More Time to Complete Financial Reports
-----------------------------------------------------------
AmerAlia, Inc. needs additional time to prepare its financial
statements and complete its audit committee review in accordance
with Securities & Exchange Commission requirements prior to
filing its current financial information. The financial
statements for the nine months include the operations of the
Company's recently acquired business, effective
February 20, 2003. The operating loss of $3,477,447 is much
greater than for comparable periods because it includes contract
termination costs and other significant expenditures incurred in
finalizing the acquisition.
AmerAlia, through subsidiary Natural Soda, Inc., is developing a
sodium bicarbonate deposit on 1,320 acres of federal land in
Colorado's Piceance Creek Basin. The land, leased through 2011,
is estimated to contain about 300 million tons of the mineral
per square mile. AmerAlia has made a bid to acquire White River
Nahcolite Minerals, which holds an adjoining lease covering more
than 8,000 acres. Sodium bicarbonate (baking soda) is used in
animal feed, food, and pharmaceuticals. Its production
byproducts (soda ash and caustic soda) are used to make glass,
detergents, and chemicals.
At December 31, 2002, the Company's balance sheet shows a
working capital deficit of about $15.6 million.
AMERISTAR CASINOS: Names Cottingim & Azuse as New HR Executives
---------------------------------------------------------------
Ameristar Casinos, Inc. (Nasdaq: ASCA) has hired Kevin Cottingim
as Vice President of Organization Development and Training and
Larry Azuse as Director of Compensation. In this role,
Cottingim will provide leadership for the company's organization
development strategies, including leadership development,
succession planning and training programs in support of
Ameristar's enhanced guest service initiatives and long term
growth strategies. Azuse will oversee wage, salary, incentive
and benefits programs aligned with the company's total
compensation strategy. Both positions reinforce Ameristar's
ongoing commitment to Team Members and the company's intense
focus on courteous, efficient guest service.
Cottingim joins Ameristar from Darden Restaurants -- operator of
Red Lobster, Olive Garden, Bahama Breeze and other leading
restaurant concepts -- where he was Vice President of Leadership
Development. At Darden, his responsibilities included
overseeing all assessment and selection processes, as well as
managing executive talent review, development and succession
planning for the top positions in the company. Among his
accomplishments at Darden, he designed and implemented an
assessment, training and development center for restaurant
general manager candidates that resulted in improved performance
and retention. He also implemented a mentoring program for
high-potential leaders. Prior to that, he was Director of
Selection Services for Batrus Hollweg International, and worked
at Harcourt Brace Publishers in measurement consulting,
marketing and editorial. He holds a bachelor of arts degree
from Sophia University in Tokyo, Japan; as well as a master's of
science from the University of Southern Mississippi and a
master's of business administration from the University of
Central Florida. He is a member of the Human Resources Planning
Society, American Psychological Association, Society of
Industrial and Organizational Psychologists and Society of
Psychologists in Management.
Azuse comes to Ameristar from Park Place Entertainment, where he
served in a number of key human resource management capacities,
including Director of Corporate Human Resources and Assistant
Vice President of Compensation, Benefits and HRIS. He began his
career in academics as Assistant Dean for Administration in the
College of Business Administration at the University of
Illinois, then led the compensation, benefits and HRIS function
for Evanston Hospital Corporation. He earned a bachelor's
degree from the University of Illinois at Chicago and a master's
of business administration from DePaul University. He is a
member of International Foundation of Employee Benefit Plans,
Society for Human Resource Management and Southern Nevada Human
Resource Association.
Ameristar Casinos, Inc. (Nasdaq: ASCA) -- whose 10-3/4% Notes
due Feb. 2009 are rated 'B3' by Moody's and 'B' by Standard &
Poor's -- is an innovative, Las Vegas-based gaming and
entertainment company known for its distinctive, quality
conscious hotel-casinos and value orientation. Led by President
and Chief Executive Officer Craig H. Neilsen, the organization's
roots go back nearly five decades to a tiny roadside casino in
the high plateau country that borders Idaho and Nevada. Publicly
held since November 1993, the corporation owns and operates six
properties in Nevada, Missouri, Iowa and Mississippi, two of
which carry the prestigious American Automobile Association's
Four Diamond designation. Ameristar's Common Stock is traded on
the NASDAQ National Market System under the symbol: ASCA.
Visit Ameristar Casinos' Web site at
http://www.ameristarcasinos.comfor more information.
ANNUITY & LIFE: AM Best Junks Financial Strength Ratings at C+
--------------------------------------------------------------
A.M. Best Co. downgraded the financial strength ratings to C+
(Marginal) from B- (Fair) of Annuity and Life Re Holdings'
(NYSE:ANR) life insurance subsidiaries, Annuity and Life
Reassurance, Ltd. (both of Bermuda) and Annuity & Life
Reassurance America, Inc (Connecticut), and removed them from
under review. The outlook for the ratings is stable.
These rating actions reflect the continuing deterioration of the
company's capital base, and the ongoing concern about the
company's ability to meet its collateral obligations, as plans
to raise additional capital have not succeeded.
The ratings also incorporate ANR's expectations for additional
losses in the second quarter of 2003 from the company's efforts
to restructure its balance sheet through the recapture,
retrocession, novation or sale of its in-force business to meet
or reduce collateral obligations. Furthermore, ANR does not
currently anticipate acquiring or accepting any new business.
During the first quarter of 2003, ANR's attempts to improve its
operations and liquidity position resulted in net losses
totaling $52.5 million. Owing to the continuing poor financial
results, A.M. Best believes ANR may not meet its current
obligations to policyholders and is vulnerable to adverse
changes in market conditions.
Concurrently, A.M. Best has withdrawn ANR's financial strength
ratings of C+ (Marginal) and assigned a NR-4 (Not Rated -
Company Request) to the two insurance subsidiaries. This is in
response to management's request to withdraw from the rating
process.
A.M. Best Co., established in 1899, is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit A.M. Best's Web site at
http://www.ambest.com
APARTMENT INVESTMENT: S&P Equity Analyst Cuts Opinion to "Sell"
---------------------------------------------------------------
Standard & Poor's lowered its equity STARS ranking on Apartment
Investment and Management Company (NYSE: AIV) from
a two-STARS "Avoid" to a one-STARS "Sell" at $35.11 per share.
A leading provider of independent research, indices and ratings,
Standard & Poor's made this announcement through Standard &
Poor's MarketScope, its real-time market intelligence service.
"Fundamentals for multifamily real estate investment trusts
remain soft, in our view," says Raymond Mathis, REITs Equity
Analyst, Standard & Poor's. "April existing single-family home
sales rose 5.6%, and first-time jobless claims remain above the
400,000 threshold we think will spur apartment demand. Also, a
glut of new development continues to be delivered. We do not
see signs of supply and demand reaching equilibrium, and think
declining rents and lower occupancy will continue to pressure
dividends until 2004. Of the multifamily REITs we cover, we
view Apartment Investment and Management Company as having the
least dividend security. We estimate its net asset value could
dip to $30, and would sell the shares," concludes Mathis.
Standard & Poor's Stock Appreciation Ranking System (STARS),
which was first introduced on December 31, 1986, reflects the
opinions of Standard & Poor's equity analysts on the price
appreciation potential of 1,200 U.S. stocks for the next 6-12
month period. Rankings range from five-STARS (strong
buy) to one-STARS (sell).
Standard & Poor's analytic services are performed as entirely
separate activities in order to preserve the independence of
each analytic process. In this regard, STARS, which are
published by Standard & Poor's Equity Research Department,
operates independently from, and has no access to information
obtained by Standard & Poor's Credit Market Services, which may
in the course of its operations obtain access to confidential
information.
Standard & Poor's has the largest U.S. equity coverage count
among equity research firms that are not affiliated with a Wall
Street investment bank, analyzing 1,200 U.S. stocks. Standard &
Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is
a leader in providing widely recognized financial data,
analytical research and investment and credit opinions to the
global capital markets. With 5,000 employees located in 19
countries, Standard & Poor's is an integral part of the world's
financial architecture. Additional information is available at
http://www.standardandpoors.com
As reported in Troubled Company Reporter's October 23, 2002
edition, Standard & Poor's Ratings Services affirmed its double-
'B'-plus corporate credit rating and its single-'B'-plus
preferred stock rating on Apartment Investment and Management
Co. The outlook is stable.
The ratings on Denver-based AIMCO, a nationally focused
apartment REIT, reflect the company's seasoned and deep
management team, solid geographic diversification, and
relatively stable operating performance. These strengths are
tempered by the inherent risks associated with the company's
transaction-oriented growth strategy, an aggressive financial
profile, and the uncertain depth and duration of the currently
weak multifamily leasing environment and the impact it might
have on AIMCO's portfolio performance.
ARCH COAL: Ratings on Watch Neg. over Planned Vulcan Acquisition
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit ratings on Arch Coal Inc. and its 99%-owned subsidiary,
Arch Western Resources LLC, on CreditWatch with negative
implications following the company's announcement that it has
reached a definitive agreement to acquire Vulcan Coal Holdings
LLC, the equity owner of Triton Coal Co., for $346 million.
St. Louis, Missouri-based Arch Coal had $705 million in debt at
March 31, 2003.
"The acquisition would improve the company's position in the key
Powder River basin and provide synergies, particularly with
respect to Vulcan's North Rochelle mine, which is adjacent to
Arch Coal's Black Thunder mine," said Standard & Poor's credit
analyst Thomas Watters. "However, Standard & Poor's is concerned
about the uncertain nature of the deal's financing and the
ultimate impact of the acquisition on Arch Coal's financial
profile."
In resolving the CreditWatch, Mr. Watters said that Standard &
Poor's will focus on Arch Coal's plans for dealing with the
present difficult operating environment and assess the impact of
the Vulcan acquisition on Arch's business and financial profile
as well as the potential for alternative financing.
ARMSTRONG: Judge Newsome Approves AWI's Disclosure Statement
------------------------------------------------------------
Armstrong World Industries, Inc. (OTC Bulletin Board: ACKHQ)
received approval of its Disclosure Statement in its Chapter 11
reorganization case from the U.S. Bankruptcy Court in
Wilmington, Delaware. Judge Randall J. Newsome determined the
Disclosure Statement contains adequate information to enable
holders of claims against Armstrong to make an informed judgment
to accept or reject its Plan of Reorganization.
Judge Newsome also approved Armstrong's solicitation (voting)
procedures and will set a date by which the Plan, Disclosure
Statement and ballots for voting will be distributed and the
deadline for ballots to be returned. The Plan is supported by
the asbestos personal injury claimants' committee, the
representative for future asbestos personal injury claimants and
the unsecured creditors' committee.
Following the solicitation of votes, the Court will hold a
hearing to consider confirmation of Armstrong's Plan. It is
anticipated that such hearing will be in mid-November 2003. If
the Plan is confirmed, Armstrong expects that the Plan will be
implemented shortly thereafter. Armstrong's Disclosure
Statement, Plan of Reorganization, Solicitation Procedures and
related press releases are available at
http://www.armstrongplan.com
Armstrong World Industries, Inc., a subsidiary of Armstrong
Holdings, Inc., is a global leader in the design and manufacture
of floors, ceilings and cabinets. In 2002, Armstrong's net sales
totaled more than $3 billion. Founded in 1860 and based in
Lancaster, PA, Armstrong has 59 plants in 14 countries and
approximately 16,500 employees worldwide. More information about
Armstrong is available on the Internet at
http://www.armstrong.com
AUDIOVOX: Will Restate Financials for 2000, 2001 & Part of 2002
---------------------------------------------------------------
Audiovox Corporation (Nasdaq: VOXXE) announced that in
connection with the previously announced Securities and Exchange
Commission comment letter and the current audit, the Company
expects to restate results for fiscal years 2000, 2001, and the
first three quarters of fiscal 2002. The net effect of the
adjustments is expected to have no impact on the Company's cash
balances for any period.
The Company expects to file its Form 10-K for 2002 reflecting
restatements for 2000, and 2001 and the first three quarters of
fiscal 2002 as soon as the remaining SEC comments are resolved
and the Company's audit is completed. As a result, until the
audit is complete and the statements are filed, previously
issued financial statements should no longer be relied upon
until this process is completed.
Although adjustments vary by period, the cumulative effect of
all of these changes, which include changes previously announced
on March 14, 2003, is an unaudited $1.0 million increase in
income over the periods.
This adjustment reflects the impact of the restatement
adjustments on the calculation of the gain on the issuance of
subsidiary shares that was originally recorded by the Company in
the quarter ended May 31, 2002.
This adjustment reflects the impact of the restatement
adjustments on minority interest.
This adjustment represents a reclassification of warehousing and
technical support and general and administrative costs (which
are a component of operating expenses) to cost of sales. This
reclassification did not have any effect on previously reported
net income or (loss) for any fiscal year or period presented
herein.
As a result of outstanding SEC comments, and the completion of
the current audit the Company has not yet filed with the SEC its
annual report on Form 10-K for the fiscal year ended November
30, 2002 and its quarterly report on Form 10-Q for the fiscal
quarter ended February 28, 2003. As previously announced, the
Company continues to trade on The Nasdaq Stock Market with an
"E" on the VOXX trading symbol.
Audiovox Corporation is an international leader in the marketing
of cellular telephones, mobile security and entertainment
systems, and consumer electronics products. The Company conducts
its business through two subsidiaries and markets its products
both domestically and internationally under its own brands. It
also functions as an OEM (Original Equipment Manufacturer)
supplier to several customers. For additional information,
please visit Audiovox on the Web at http://www.audiovox.com
As reported in Troubled Company Reporter's March 18, 2003, the
Company announced that for the first fiscal quarter 2003 ended
February 28, 2003, the Company's guidance is for revenues in the
range of $290 - $305 million as a result of improved performance
in both operating subsidiaries, which represents an increase of
56% - 61% over fiscal first quarter 2002.
The Company's invested cash position as of February 28, 2003 was
$42 million. In addition as of February 28, 2003, the Company
had no direct borrowings under its main bank facility. During
March 2003, the Company requested its banking group to reduce
the Company's committed bank lines from $250 million to $200
million, based on the Company's improved cash flow position and
turnover. This reduction will reduce fees paid on unused
portions of the Company's bank lines. The Company has also
received waivers from its bank group on covenant violations
related to income tests for all of fiscal 2002.
BASIS100 INC: Michael Johnston Assumes Post as Company Chairman
---------------------------------------------------------------
Basis100 Inc. (TSX: BAS), a business service provider for the
mortgage lending marketplace, announced that Michael Johnston
has assumed the role of Chairman and confirmed that Stuart A.
McFarland has joined the company's board of directors. Johnston
succeeds Gary Bartholomew, co-founder of Basis100, who has
resigned the positions of Chairman and director to pursue other
interests.
Johnston joined the Basis100 board of directors in 2001 and
brings more than 32 years of significant experience in the U.S.
financial services industry. Most recently, Johnston served as
Chairman, President, and Chief Executive Officer with Merrill
Lynch Credit Corporation (MLCC), which serves the mortgage and
investment markets. He is a recognized financial services
visionary and trailblazer who dynamically changed Merrill
Lynch's business model into a non-traditional credit business
category.
"Michael has been a catalyst in key Board decisions and is
uniquely qualified to lead Basis100's U.S. expansion strategy"
says John Albright, member of the Basis100 board of directors.
Additionally, Stuart A. McFarland was elected to the Board by
the company's shareholders at the Annual General and Special
Meeting held on May 15.
"With more than 30 years experience in executive leadership,
business development, operations, and corporate finance, Stuart
McFarland brings a wealth of knowledge and wisdom to the post,"
said Michael Johnston, Basis100's Chairman of the Board. "I'm
honored that he's agreed to join our Board."
McFarland is a Managing Partner at Federal City Capital
Advisors, a strategic advisory and corporate financial services
firm located in Washington, D.C., and has held executive
positions with many leading companies within the mortgage
lending industry, including President and Chief Executive of
Pedestal Inc. (an internet secondary mortgage market trading
exchange), Chief Financial Officer of Fannie Mae, and officer of
G.E. Capital. He has testified before several committees of the
U.S. Senate and House of Representatives on mortgage and real
estate finance and securitization, as well as related financial
issues. McFarland serves on the boards of directors of New
Castle Investment Corporation (NYSE: NCT), The Brandywine Funds,
Sterling Eagle Mortgage Investment Corporation, and the Center
for Housing Policy. Additionally, he is a trustee of the
National Building Museum and a member of the board of trustees
of The Brookings Institution, Greater Washington Research
Program.
"Stuart's insight and industry experience will add another
diverse perspective as we focus on expanding our presence in the
U.S. marketplace," added Joseph J. Murin, President and CEO of
Basis100 Inc. "He is a valuable addition to our board."
The number of directors on the Basis100 board is now eight. The
other members include:
- John Albright - Principal, J.L. Albright Venture Partners
Inc.
- Victor Hum - Partner, Fraser Milner Casgrain LLP
- Joseph Murin - President and CEO, Basis100 Inc.
- Burt Napier - President and CEO of Napier & Associates
Consulting
- Kenneth Rotman - Co-C.E.O. and a Managing Director of
Clairvest Group Inc.
- Jason Smith - co-founder of Basis100 (formerly e-Net
Canada)
Basis100 (TSX: BAS) is a business solutions provider that fuses
mortgage processing knowledge and experience with proprietary
technology to deliver exceptional services. The company's
delivery platform defines industry-class best execution
strategies that streamline processes and create new value in
the mortgage lending markets.
For more information about Basis100, visit www.Basis100.com
At March 31, 2003, the Company's balance sheet shows a
working capital deficit of about CDN$5 million.
CALL-NET: Promoting Competition in the Residential Tel. Market
--------------------------------------------------------------
Call-Net Enterprises Inc., (TSX: FON, FON.B), a national
provider of residential and business telecommunications services
through its subsidiary Sprint Canada Inc., filed an application
with the CRTC to promote greater competition in the local
residential telecommunications market. The proposals outlined in
the application will enable competitive telecommunication
providers to achieve the size and scale necessary to compete
effectively to the benefit of all Canadian consumers.
"Consumers want choice. Healthy competition is essential to
offering consumers what they want and deserve, including value
for money and innovative bundles," said Bill Linton, president
and chief executive officer, Call-Net Enterprises. "While the
CRTC has taken many steps to improve the regulatory framework
since the price cap decision a year ago, unless the Commission
intervenes in a more substantive way to jumpstart local
competition, they will not be able to implement the government's
policy of healthy competition in all markets of the
telecommunications sector."
In Canada, competition is almost non-existent in the local
residential market and is declining in the long distance market.
Almost six years after the Commission's landmark decision
permitting local competition, less than one per cent of
residential telephone subscribers obtain their local service
from competitive suppliers like Sprint Canada, far below the
level necessary for the consumer to reap the benefits of
competition.
"The telecommunications industry is characterized by economies
of scale, particularly the local residential market. "The former
monopolies enjoy the benefit of economies of scale that derive
from starting with 100% of the market", added Linton.
"Competition in the residential local marketplace will
be sustainable once competitors gain sufficient scale to compete
on a more equal footing".
Call-Net's filing identifies several proposals necessary to
remove the remaining barriers to entry to the local service
market that will allow competitors to achieve the scale
necessary to compete.
Improve customer education and access to information:
- Initiate a public education program to explain to
residential customers how local competition works and to
address the public's concerns about such issues as local
number portability, directory listings and 9-1-1
services.
Allow consumer friendly transfer of customers to the competitive
telecommunication companies:
- Order the former monopolies to stop discriminating
against the new entrants and their residential customers
by providing them with inferior service on cutover and
restoration of local loops.
- Reform the cutover processes for local residential
customers by streamlining the procedure and making it
consumer-friendly.
Extend the "no contact" period for the former monopolies
customer winback activity:
- Extend the no-contact period with respect to customers
who have switched to a new entrant's local exchange
service, from a period of three months to a period of one
year after they have left the former monopoly telephone
company.
Reduce cost for unbundled local loops for a period of two years:
- Order the former monopolies to bill new entrants for 50
per cent of the incumbent local exchange carrier's (ILEC)
approved rate for unbundled local loops used to provide
local exchange service to residential subscribers and
direct the ILECs to recover the other 50 per cent of
these charges from their deferral accounts.
Call-Net's application was developed, in part, in response to
Industry Minister Allan Rock's comment in March 2003 that local
competition is virtually non-existent in all but Canada's
largest cities. He called upon the CRTC to consider additional
measures to promote competition beyond major urban centers so
that all Canadians can enjoy the benefits of healthy
competition.
Similarly in November 2002, Charles Dalfen, chairman of the CRTC
in an address to the International Institute of Communications
(Canadian Chapter) commented that the existing state of
competition in Canada is far below the level necessary for the
public to reap the benefits of competition and too low to
alleviate a growing concern about the re-emergence of
monopolization.
"The former monopolies stranglehold on market share will not
improve under the existing regulatory framework," added Linton.
"Additional reform is necessary or it will take competitors
another 60 years to gain even a 10 per cent market share.
Evolutionary changes are simply not enough."
Call-Net entered the local service market in 1999. It remains
the only national provider of local residential service,
offering local service to residential consumers in nine of
Canada's most populous metropolitan markets, in addition to its
long distance and Internet access service.
To date, the Company has invested over $500 million in
establishing a competitive local service offer in Canada.
A copy of Call-Net's application to the CRTC is available on
the Company's web site at http://www.callnet.ca.
Call-Net Enterprises Inc. is a leading Canadian integrated
communications solutions provider of local and long distance
voice services as well as data, networking solutions and online
services. The Company provides services to residential consumers
and businesses primarily through its wholly owned subsidiary,
Sprint Canada Inc. Call-Net Enterprises is headquartered in
Toronto, owns and operates an extensive national fibre network
and has over 134 co-locations in nine Canadian metropolitan
markets. For more information, visit the Company's web sites at
http://www.callnet.caand http://www.sprint.ca.
BACKGROUNDER
Call-Net's Application to the CRTC to Jumpstart Local
Residential Competition Filed May 29, 2003
Call-Net's application is important because it acknowledges that
local residential competition is not evolving as planned and
offers some practical suggestions for removing the remaining
barriers to local residential competition.
Almost six years after the Canadian Radio-television and
Telecommunication Commission's (CRTC's) landmark decision
permitting local competition, only a scant 0.6 per cent of
residential telephone subscribers obtain their local service
from competitive suppliers. Call-Net estimates that since the
date of the Commission's survey, competitors' market share has
grown slightly to approximately one per cent. This means that
the incumbent local exchange carriers (ILECs) still enjoy a 99
per cent market share - down only slightly from the 100 per cent
share that they enjoyed as monopolies.
The Government of Canada has indicated that Canadian consumers
would benefit from increased competition in the residential
market, and that the status quo is inconsistent with public
policy objectives. However, the situation is not likely to
improve significantly under the existing regulatory framework.
Most new entrants have now left the market and, with one limited
exception in parts of Nova Scotia and Prince Edward Island, all
of the cable television companies who were viewed as likely
entrants, have either sold their telecommunications businesses
or indicated an unwillingness to enter the local telephony
market. Similarly, wireless technology does not appear to
provide a short-term answer to increased competition in the
residential telephone market. There is no new technology waiting
in the wings to provide a low cost alternative to the ILECs.
The CRTC is well aware of these problems. In fact, over the past
year the Commission has taken several positive decisions that
will directly impact the present state of competition. However,
the changes are incremental, and will only have an incremental
impact on the development of local residential competition.
Absent significant modifications to the current framework as it
applies to the residential market, there is little or no reason
to expect the situation to improve markedly in the next two to
three years.
This means that residential telephone subscribers currently are
not enjoying, and have no prospect of enjoying in the immediate
future, the benefits of competition envisaged by the CRTC in
1997 when it opened the market to competition.
Both new entrants and the Commission have underestimated the
barriers to entry that exist in the residential market and the
ability of the ILECs to thwart the efforts of new entrants to
grow their businesses to a level where they can be sustainable.
Call-Net's application explores those barriers and proposes
meaningful actions that can be taken by the regulator to more
actively promote residential local competition.
The reforms proposed are both important and urgent. They require
the Commission to step beyond the fine-tuning of certain aspects
of its original local competition decision in 1997 (Decision 97-
8) and its current laudable emphasis on the enforcement of its
decision. While the Commission's approach to date may be
justified in the business market, it will not succeed in the
residential market where average annual growth of competitors'
market share over the past six years is only 0.17 per cent. This
rate of growth is simply too small for competitors to sustain
their businesses on a long-term basis. No competitor can sustain
start-up losses for the 60 years required, to gain a 10 per cent
share of the national market.
The telecommunications industry is characterized by the presence
of economies of scale particularly in the local residential
market. The incumbent ILECs enjoy these economies as a result of
their inherited customer base comprised of 100% of all
residential customers. It is of critical importance to
sustainable competition that new entrants achieve sufficient
size to also take advantage of these inherent economies of
scale. Costs per customer of providing residential local service
for a new entrant are currently running at several multiples of
the comparable ILEC costs, $42.00 versus $13.00 respectively.
Competition in the residential local market place will be
sustainable once competitors gain sufficient scale to compete on
a more equal footing.
Summary of Call-Net's Proposals
What is needed at this critical stage are bolder regulatory
reforms, designed to effectively address the remaining barriers
to entry and enable new entrants to grow their businesses and
bring their operations up to a scale that will enable them to
compete head to head with the incumbent local exchange carriers
(ILECs), Call-Net has proposed the following to the CRTC:
- Initiate a public education program to explain to
residential customers how local competition works and to
address the public's concerns about such issues as local
number portability, directory listings and 9-1-1
services.
- Initiate a public process to reform the cutover processes
for local residential customers by streamlining the
process and making it consumer-friendly.
- Extend the no-contact period with respect to customers
who have switched to a new entrant's local exchange
service from a period of three months to a period of one
year after they have left the ILEC.
- Order the ILECs to cease discriminating against
competitive local exchange carriers (CLECs) and their
residential customers by providing them with inferior
service on cutover and restoration of local loops.
- Order the ILECs to bill CLECs for 50 per cent of the
ILEC's approved rate for unbundled local loops used to
provide local exchange service to residential subscribers
and direct the ILECs to recover the other 50 per cent of
these charges from their deferral accounts.
- Order the ILECs to file tariffs reducing their loop-
related service charges by 50 per cent until such time as
CLEC customers receive the same level of service in a
comparable timeframe to ILEC residential customers.
Call-Net believes that these regulatory reforms will address the
remaining barriers to entry in the residential customer market
in a proactive and effective manner. The proposed reforms will
have significant impact on the Company's ability to:
- Provision service more efficiently, thereby reducing
costs and improving customer satisfaction.
- Rapidly expand its customer base and offer local
residential competition to a greater number of consumers
in new markets across Canada.
- Reduce churn by establishing greater consumer confidence
and attracting a more representative mix of customers.
- Generate improved margins and thus the financial
resources to expand our network coverage by creating
economies of scale necessary to reduce the payback period
on new customers.
As demonstrated by its success in the long distance business,
Call-Net is confident of its ability to compete with the ILECs
on a sustainable basis once it achieves a sufficient market
share to generate economies of scale. In the absence of bold
reforms, competition will not expand to any appreciable extent
in the local residential market.
* * *
As previously reported, Standard & Poor's Ratings Services
lowered its corporate credit and senior secured debt ratings on
Call-Net Enterprises Inc., to 'B' from 'B+'. The outlook on the
Toronto, Ontario-based telecommunications operator is now
stable.
"The downgrade reflects continuing competitive pressures in both
the long-distance and data-service markets in general, resulting
in lower gross margins and cash flows from operations as
compared to 2001," said Standard & Poor's credit analyst Joe
Morin. "Current available sources of liquidity are only
sufficient to allow for marginal growth for the company."
The ratings actions also take into account cost savings from the
second-quarter implementation of workforce reductions,
curtailment of the company's network expansion program, and the
debt buyback by the company in September 2002.
CHARTER COMMS: Selling Port Orchard, WA System to WaveDivision
--------------------------------------------------------------
Charter Communications, Inc. (Nasdaq:CHTR) signed a definitive
agreement with WaveDivision Holdings, LLC for the sale of its
Port Orchard, Washington system in a transaction valued at $91
million. The Company said Charter serves approximately 25,500
analog video customers, 12,900 digital video customers and
11,000 cable modem customers in its Port Orchard system. Terms
of the transaction were not disclosed.
The Company said its Port Orchard system is one of several
previously undisclosed properties deemed geographically non-
strategic. The transaction, which is expected to close by year-
end, is subject to certain closing conditions, price adjustments
and regulatory review. Daniels & Associates represented Charter
in this transaction.
Charter Communications, A Wired World Company(TM), is the
nation's third-largest broadband communications company. Charter
provides a full range of advanced broadband services to the
home, including cable television on an advanced digital video
programming platform via Charter Digital Cable(R) brand and
high-speed Internet access marketed under the Charter
Pipeline(R) brand. Commercial high-speed data, video and
Internet solutions are provided under the Charter Business
Networks(R) brand. Advertising sales and production services are
sold under the Charter Media(R) brand. More information about
Charter can be found at http://www.charter.com
WaveDivision Holdings, LLC, a Kirkland Washington-based company,
serves approximately 27,000 cable TV, digital cable and high
speed Internet customers in Western Washington. WaveDivision was
formed in 2002 for the purpose of acquiring cable systems near
major metropolitan markets in Washington and Oregon. Steven
Weed, founder and CEO, is a 22-year industry leader. The
company's mission is to provide high-quality broadband services
including the latest in digital cable and high speed data. For
more information, contact Angela Higham, Director of Marketing
at 425-576-8200.
* * *
In early January, Moody's Investors Services warned that Charter
Communications, Inc., may breach a bank debt covenant this
quarter, and reacted negatively to talk that a restructuring is
"increasingly likely" in the near to medium term and there's a
"growing probability of expected credit losses."
Restructuring Advisers Hired
Charter has reportedly chosen Lazard as its restructuring
adviser, according to TheDeal.com (edging-out Goldman Sachs
Capital Partners, Carlyle Group, Thomas H. Lee Partners, UBS
Warburg and Morgan Stanley) to explore strategic alternatives.
The New York Post, citing unidentified people familiar with the
situation, says those alternatives may involve selling assets or
bringing in private equity partners.
Charter co-founder Paul Allen has brought Miller Buckfire Lewis
& Co. onto the scene to protect his 54% stake that cost him $7-
plus billion. Alvin G. Segel, Esq., at Irell & Manella LLP in
Los Angeles has served as long-time legal counsel to Mr. Allen
and his investment firm, Vulcan Ventures.
CHOICE ONE: Abramson & Massaro Re-Elected to Board of Directors
---------------------------------------------------------------
Choice One Communications (OTC Bulletin Board: CWON), an
Integrated Communications Provider offering facilities-based
voice and data telecommunications services, including Internet
and DSL solutions, to businesses in 29 Northeast and Midwest
markets, conducted its 2003 Annual Meeting of Stockholders in
Rochester, New York on May 29, 2003.
During the business portion of the meeting, stockholders voted
on two proposals, both of which were approved by a majority of
the votes cast by stockholders present in person or by proxy.
The results of the stockholders votes are outlined below:
Proposal 1 - Election of Directors
Stockholders re-elected two Directors for three-year terms
expiring in 2006:
* Leigh J. Abramson, Managing Director of Morgan Stanley &
Co. Incorporated
* Louis L. Massaro, Retired Executive Vice President and
Chief Financial Officer, Frontier Corporation
Proposal 2 - Ratification of the Appointment of Independent
Accountants
Stockholders ratified the appointment of PricewaterhouseCoopers
LLP as independent accountants for the year ending December 31,
2003.
Headquartered in Rochester, New York, Choice One Communications
Inc. (OTC Bulletin Board: CWON) is a leading integrated
communications services provider offering voice and data
services including Internet and DSL solutions, to businesses in
29 metropolitan areas (markets) across 12 Northeast and Midwest
states. Choice One reported $290 million of revenue in 2002,
has more than 100,000 clients and employs approximately 1,400
colleagues.
Choice One's markets include: Hartford and New Haven,
Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort
Wayne, Indianapolis, South Bend/Elkhart, Indiana; Springfield
and Worcester, Massachusetts; Portland/Augusta, Maine; Grand
Rapids and Kalamazoo, Michigan; Manchester/Portsmouth, New
Hampshire; Albany (including Kingston, Newburgh, Plattsburgh and
Poughkeepsie), Buffalo, Rochester and Syracuse (including
Binghamton, Elmira and Watertown), New York; Akron (including
Youngstown), Columbus and Dayton, Ohio; Allentown, Erie,
Harrisburg, Pittsburgh and Wilkes-Barre/Scranton, Pennsylvania;
Providence, Rhode Island; Green Bay (including Appleton and
Oshkosh), Madison and Milwaukee, Wisconsin.
The company, whose March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $540 million, has intra-
city fiber networks in the following markets: Hartford,
Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort
Wayne, Indianapolis, South Bend/Elkhart, Indiana; Springfield,
Massachusetts; Grand Rapids and Kalamazoo, Michigan; Albany,
Buffalo, Rochester and Syracuse, New York; Columbus, Ohio;
Pittsburgh, Pennsylvania; Providence, Rhode Island; Green Bay,
Madison and Milwaukee, Wisconsin.
For further information about Choice One, visit its Web site at
http://www.choiceonecom.com
CMS ENERGY: FTC Clears Way for So. Union to Acquire Panhandle
-------------------------------------------------------------
The Federal Trade Commission announced termination of the Hart-
Scott-Rodino Act waiting period for consummation of Southern
Union Company's (NYSE:SUG) acquisition of Panhandle Eastern Pipe
Line Company and its subsidiaries from CMS Energy Corporation.
The FTC's action removes the last regulatory obstacle to
consummation of the proposed acquisition.
The FTC also announced its issuance of a consent order with
respect to Southern Union and CMS Energy requiring a complete
separation of ownership and management between the Panhandle
Pipeline (owned by Panhandle Eastern Pipe Line Company) and the
Southern Star Central Pipeline.
That separation has already been accomplished. Between
November 20, 2002 and May 16, 2003, the Southern Star Central
Pipeline had been managed by Energy Worx, a wholly-owned
subsidiary of Southern Union Company.
Under FTC regulations, the consent order will be subject to a
30-day comment period, after which the Commission may propose
modifications before the Order is made final. However, Southern
Union and CMS Energy are not required to delay consummation of
the transaction until after the end of the comment period.
In the proposed transaction, Southern Union will pay CMS Energy
$584.3 million in cash plus 3 million shares of Southern Union
common stock and will assume approximately $1.166 billion of
debt as consideration for receiving all of the stock of
Panhandle. The parties anticipate closing in June 2003.
Southern Union is a natural gas distribution company serving
approximately 1 million customers through its operating
divisions in Missouri, Pennsylvania, Rhode Island and
Massachusetts. The Company also owns and operates electric
generating facilities in Pennsylvania. For further information,
visit http://www.southernunionco.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.
CONTINENTAL AIRLINES: Inks Codeshare Pact with TAP Air Portugal
---------------------------------------------------------------
Continental Airlines (NYSE: CAL) and TAP Air Portugal signed a
cooperative marketing agreement that includes codesharing on
selected flights, reciprocal frequent flyer program
participation and reciprocal airport lounge access.
Subject to government approval, TAP and Continental will start
codesharing in September 2003. Continental will codeshare on
TAP-operated flights between Lisbon and up to 18 cities in
Europe and Africa, including the Portuguese destinations of
Faro, Funchal and Oporto and African destinations such as
Maputo, Mozambique and Sal, Cape Verde Islands. TAP will
codeshare on Continental-operated flights between Continental's
New York hub at Newark Liberty International Airport and 51
cities in the U.S. and Canada. These flights will display the
designator codes of both Continental (CO) and TAP (TP) and will
be marketed by both carriers.
Effective with the commencement of codesharing, members of
Continental's frequent flyer program, OnePass, will be able to
earn and redeem miles on TAP's European, African and Central and
South American flights and members of TAP's frequent flyer
program, Navigator, will be able to earn and redeem rewards on
Continental's U.S., Canadian, Latin American and Asian flights.
Continental and TAP have also agreed to provide their passengers
with access to each other's airport lounges. Continental's
BusinessFirst customers and Presidents Club members will have
access to TAP's Navigator Lounge at Lisbon, while TAP's
Navigator Class customers and Navigator FFP members will have
access to Continental's Presidents Club lounges at New
York/Newark.
"This new partnership is straight in line with TAP Air
Portugal's principle of consistently providing additional
benefits to our customers," said Manoel Torres, TAP Air
Portugal's Senior Vice President - Airlines. "Through
Continental's recognized superior service we will be able to
offer a broad scope of destinations within North America. We
are very proud to have Continental as our partner."
"We are tremendously enthusiastic about signing this agreement
with TAP Air Portugal," said David Grizzle, Continental's Senior
Vice President of Corporate Development. "We continuously look
for alliance partners who have unique route networks that
provide new benefits to Continental customers, and we look
forward to working with TAP to deliver these benefits to our
respective customers."
TAP Air Portugal is the leading Portuguese airline, in operation
worldwide for over 58 years. The company currently flies to
over 60 destinations in Europe, Africa and North, Central and
South America, where it stands as the best European carrier
serving Brazil. With its hub in Lisbon and equipped with a
modern and recently renewed fleet of all-Airbus aircraft, TAP
carried 5.6 million passengers last year in its systemwide
network, which represents a 3.3% increase over the year 2001,
and posted a 69% seat load factor. For further information on
the company, visit http://www.tap-airportugal.pt
TAP currently operates a daily non-stop service with Airbus A310
or A340 aircraft between Lisbon and New York/Newark, increasing
the operation to nine frequencies a week (two daily flights on
Thursdays and Fridays) during the peak Summer period (from July
to September).
Continental Airlines is the world's seventh-largest airline and
has more than 2,200 daily departures. With 130 domestic and 95
international destinations, Continental has the broadest global
route network of any U.S. airline, including extensive service
throughout the Americas, Europe and Asia. Continental has hubs
serving New York, Houston, Cleveland and Guam, and carries
approximately 41 million passengers per year on the newest jet
fleet among major U.S. airlines. With 48,000 employees,
Continental is one of the 100 Best Companies to Work For in
America. In 2003, Fortune ranked Continental highest among
major U.S. carriers in the quality of its service and products,
and No. 2 on its list of Most Admired Global Airlines. For more
company information, visit http://www.continental.com
In Europe and the Middle East, Continental serves 17 cities in
11 countries, operating up to 168 departures weekly to its U.S.
gateway hubs at New York/Newark, Houston and Cleveland, with
onward connections to cities throughout North America, Latin
America and the Caribbean. Continental's BusinessFirst won the
Best Executive/Business Class award at the OAG Airline of the
Year Awards 2003. Continental's alliance carriers in Europe
include Air Europa, FlyBE (British European), KLM Royal Dutch
Airlines and Virgin Atlantic Airways.
Continental, which started operations in Portugal in 1997,
operates a daily Boeing 757 non-stop service between Lisbon and
New York/Newark.
CORNICHE GROUP: Ability to Continue as Going Concern in Doubt
-------------------------------------------------------------
Corniche Group Incorporated was a provider of extended
warranties and service contracts via the Internet at
warrantysuperstore.com through June 30, 2002. In June 2002,
management determined, in light of continuing operating losses,
to discontinue its warranty and service contract business and to
seek new business opportunities for the Company.
On February 6, 2003, the Company appointed Mark Weinreb as a
member of the Board of Directors and as its President and Chief
Executive Officer. The Company and Mr. Weinreb have been
exploring business plans for the Company that may involve, under
the name "Phase III Medical, Inc.", entering the medical sector
by acquiring or participating in one or more biotech and/or
medical companies or technologies, owning one or more drugs or
medical devices that may or may not yet be available to the
public, or acquiring rights to one or more of such drugs or
medical devices or the royalty streams therefrom. Mr. Weinreb
was appointed to finalize and execute the Company's new business
plan.
The Company will need to recruit management, business
development and technical personnel, and develop its business
model. Accordingly, it will be necessary for the Company to
raise new capital. There can be no assurance that any such
business plan developed by the Company will be successful, that
the Company will be able to acquire such new business or rights
or raise new capital, or that the terms of any transaction will
be favorable to the Company.
The business of the Company today comprises the "run off" of its
sale of extended warranties and service contracts via the
Internet and the new business opportunity it is pursuing in the
medical/bio-tech sector.
The Company's consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
The Company sold its insurance subsidiary in July 2001.
Additionally, the Company discontinued sales of its extended
warranty service contracts through its web site in Dec. 2001.
Accordingly, the Company has no operations nor available means
to finance its current expenses and with which to pay its
current liabilities. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
The Company generated recognized revenues from the sale of
extended warranties and service contracts via the Internet of
$18,000 for the three months ended March 31, 2003 (three months
ended March 31, 2002: $25,000). The revenues generated in the
quarter were derived entirely from revenues deferred over the
life of contracts sold in prior periods. Similarly, direct costs
incurred in the period relate to costs previously deferred over
the life of such contracts.
General and administration expenses decreased 65.4% to $129,000
for the three months ended March 31, 2003 as compared to
$371,000 for the three months ended March 31, 2002. The three
months ended March 31, 2003 is not strictly comparable to the
same period in the prior year because in the corresponding
period in fiscal 2002 the Company was operating its warranty
service contracts business from its office in Texas whereas in
fiscal 2003 it has been endeavoring to establish new business
operations in the medical sector as described above.
Notwithstanding the foregoing, the decrease in general and
administrative expenses of $242,000 is primarily due to a
decrease in legal and professional fees $108,000, payroll
$35,000, travel and subsistence $27,000, property costs $19,000
and information technology expenses $30,000 incurred in
connection with the Company's extended warranties and service
contracts business.
Interest income decreased by $41,000 in the three months ended
March 31, 2003 as compared to the corresponding period in 2002
when interest income was generated from the StrandTek loans and
from investment in marketable securities. Interest expense
increased by $18,000 for the three months ended March 31, 2003
compared to 2002 primarily as a result of short-term loans
secured in September 2002.
For the reasons cited above, net loss for the three months ended
March 31, 2003 decreased by 56.7% to $143,000 from the
comparable loss of $330,000 for the three months ended March
2002.
The Company's actual net loss was $142,980 for the three months
ended March 31, 2003. Such losses adjusted for non-cash items
such as deferred revenues (net of deferred acquisition costs)
$5,081 and other non cash credits totaling $16,255 resulted in
cash used in operations totaling $59,075 for the three months
ended March 31, 2003, net of working capital movements of
$72,731.
To meet its cash requirement during the three months ended
March 31, 2003, the Company relied on the net proceeds of sale
of Promissory Notes, $60,000. The Company's liquidity position
continues to be hurt by StrandTek's failure to repay loans
advanced to them in the first quarter of fiscal 2002.
The Company has no contracted capital expenditure commitments in
place. As of March 31, 2003, the Company had cash balances
totaling $14,877. The Company will rely on its cash reserves and
short-term loans to meet its cash needs pending an equity
private placement to fund its new business operations until they
become cash generative. Additionally, on February 6, 2003, the
Company entered into a deferment agreement with three major
creditors pursuant to which liabilities of approximately
$524,000 in aggregate, were deferred, subject to the success of
the Company's debt and equity financing efforts, until January
15, 2005, against a pledge of the loans advanced to StrandTek in
the first quarter of fiscal 2002 in the sum of $1,250,000 plus
accrued interest. While the Company was recently awarded
summary judgment on its claims against StrandTek, there can be
no assurance that the Company will be able to collect on any
judgment obtained.
CYBERGENICS CORP.: Third Circuit Allows Committees to Sue
---------------------------------------------------------
Gary D. Sesser, Esq., at Carter, Ledyard & Milburn in New York
represents a very happy Creditors' Committee after the United
States Court of Appeals for the Third Circuit handed down its
opinion in Official Committee of the Unsecured Creditors of
Cybergenics Corporation, on behalf of Cybergenics Corporation,
Debtor in Possession v. Kathleen Chinery, No. 01-3805 (3d Cir.
May 29, 2003), saying that a Creditors' Committee can, in fact,
obtain derivative standing to prosecute a Debtor's causes of
action for the benefit of the estate. A full-text copy of the
Third Circuit's 63-page slip opinion is available at no charge
at:
http://www.ca3.uscourts.gov/opinarch/0138052.pdf
Nearly every other creditors' committee in the Third Circuit is
delighted too. The May 29 decision reverses the Court's prior
decision that denied a Committee the ability to prosecute a
Debtor's causes of action to recover money for the benefit of
the estate and suggested only a trustee or debtor-in-possession
could pursue those kinds of lawsuits.
Cybergenics History
In the Cybergenics Chapter 11 case, the Cybergenics creditors'
committee -- Mr. Sesser's client -- sought to reverse certain
transactions as fraudulent transfers under Section 544(b) of the
Bankruptcy Code. The Committee accused lenders and company
insiders of engaging in fraudulent transfers when the companies'
assets were sold in a leveraged buyout. The Cybergenics
creditors' committee initially asked Cybergenics to prosecute
the fraudulent transfer claims but the Cybergenics Debtors
refused. Subsequently, the Cybergenics committee obtained
Bankruptcy Court approval to initiate the fraudulent transfer
suit.
The Target Defendants brought the case to the New Jersey
District Court, which eventually held that the Cybergenics
Committee did not have the capacity to assert a Section 544(b)
claim. The Cybergenics Committee appealed to the Third Circuit
Court of Appeals.
The Initial Ruling
The Third Circuit upheld the District Court decision, relying
strictly on the reading that only a trustee -- which in a
chapter 11 case is the debtor-in-possession -- could prosecute
fraudulent transfer claims. The Third Circuit decreed that the
bankruptcy court had no authority to authorize a creditor or
creditors' committee to bring suit under Section 544
derivatively.
The original Cybergenics decision, published on Sept. 20, 2002,
interjected uncertainly into nearly every big-name chapter 11
case. Virtually every DIP Financing Orders gives the Creditors'
Committee the right to challenge the validity, extent and
priority of the secured lenders' liens. The Third Circuit
suggested that right disappeared. Many Chapter 11 Plans
transfer a Reorganized or Liquidating Debtor's causes of action
to a litigation trust. Trust beneficiaries questioned whether
the decision invalidated those litigation trusts.
Target Defendants Loved It
Some clever lawyers latched onto the decision favoring their
target-defendant clients without delay:
* Michael L. Cook, Esq., at Schulte Roth & Zabel LLP,
immediately moved to dismiss a lawsuit filed by W.R.
Grace's Asbestos Committees against Sealed Air Corp.
* In the Stanwich Financial Services Corp. cases, Lawrence
S. Grossman, Esq., and James Berman, Esq., at Zeisler &
Zeisler in Bridgeport, representing the Pardee target
defendants; John F. Carberry, Esq., at Cummings and
Lockwood in Stamford, representing the Sutro target
defendants; Scott D. Rosen, Esq., at Cohn Brinbaum &
Shea in Hartford, representing Bear, Stears; and David
B. Zabel, Esq. in Bridgeport, representing Hinkley,
Allen, urged Chief Judge Shiff in the U.S. Bankruptcy
Court for the District of Connecticut to follow the
Third Circuit's lead in the Cybergenics case and
dissolve an April 16, 2002 court approved stipulation
between Stanwich Financial and the Creditors' Committee
that allowed the Committee to file an adversary
proceeding to recover, on behalf of the bankruptcy
estate, certain transfers to the defendants arising out
of a prepetition transfer of stock.
The Opposite Conclusion
On November 18, 2002, the U.S. Court of Appeals for the Third
Circuit ordered an en banc rehearing of the three-judge panel's
September 20th opinion in the Cybergenics case and vacated the
September ruling. This week's ruling reaches the opposite
conclusion. Bankruptcy Courts may grant creditors' committees
derivative standing to step into the debtors shoes and prosecute
causes of action for the benefit of the estate that the debtor
can't or won't prosecute.
"We believe that Sections 1109(b), 1103(c)(5), and 503(b)(3)(B)
of the Bankruptcy Code evince Congress's approval of derivative
avoidance actions by creditors' committees," the Third Circuit
says in last week's decision, "and that bankruptcy courts'
equitable powers enable them to authorize such suits as a remedy
in cases where a debtor-in-possession unreasonably refuses to
pursue an avoidance claim. Our conclusion is consistent with the
received wisdom that '[n]early all courts considering the issue
have permitted creditors' committees to bring actions in the
name of the debtor in possession if the committee is able to
establish' that a debtor is neglecting its fiduciary duty. 7
Collier on Bankruptcy par. 1103.05[6][a] (15th rev. ed. 2002)."
No Surprise to Mr. Sesser
"We were not surprised by the ruling itself because we believe
it is the correct result and is amply supported by a century of
precedent and practice," Mr. Sesser says. "We were very
impressed by the Court's opinion, however, which addressed and
analyzed all the relevant arguments made by both sides,
including those made in the various amicus briefs. While there
are other Circuit decisions recognizing the practice of
derivative standing, this opinion is the first to set forth in
depth the legal basis for granting a creditors committee a
derivative right to sue on behalf of a bankruptcy estate."
Amici Support Both Sides
Brian J. Molloy, Esq., at Wilentz, Goldman & Spitzer, and
Bruce E. Fader, Esq., at Proskauer Rose LLP represent target
defendants Chinery, L&S Research and Lincolnshire Management.
Amici submitting briefs to the Third Circuit in support of the
Cybergenics Committee were Profs. Jonathan C. Lipson, Ralph
Brubaker, Daniel J. Brussel, Kenneth N. Klee, Stephen J. Lubben,
Walter J. Taggart, Elizabeth Warren, and William J. Woodward; G.
Eric Brunstad, Jr., Esq., at Bingham McCutchen LLP; Teresa K.D.
Currier, Esq., at Klett Rooney Lieber & Schorling; Daniel H.
Golden, Esq., from Akin Gump Strauss Hauer & Feld LLP, argued
for committees' having the right to pursue a debtor's causes of
action on behalf of the Committee of Unsecured Creditors of
Hayes Lemmerz International, Inc., he represents. Luc A.
Despins, Esq., and Susheel Kirpalani, Esq., representing the
Official Committee of unsecured Creditors of Safety-Kleen Corp.
supported that view too.
George R. Hirsch, Esq., at Bressler, Amery & Ross, P.C., argued
that under Sec. 506, a trustee means a trustee and not a
committee on behalf of Smurfit-Stone Corp. -- who'd like
litigation against it in another bankruptcy case or two to go
away. Prof. Keith Sharfman from Rutgers University School of
Law joined the plain language argument and says the Congress
should amend the Code if it really meant what the Third Circuit
now says.
Dissenting Judges
Last week's decision is not unanimous. Four of the Third
Circuit judges, in a dissenting opinion, say reliance on a
Bankruptcy Court's broad equitable powers aren't sufficient to
rewrite the plain language in Sec. 506 that only dives
derivative standing to a trustee. The minority says
the majority's not following the U.S. Supreme Court's teaching
in Hartford Underwriters Ins. Co. v. Union Planters Bank, 530
U.S. 1 (2000). "The Bankruptcy Code does not authorize
bankruptcy courts to grant derivative standing to creditors'
committees and the Supreme Court has rejected the notion that
the federal courts have any policy-making role in construing
clear statutory language. If it is a good idea for creditors'
committees to have standing, that is a matter for Congress, not
the courts, to decide," the minority says.
CYPRESS SEMICONDUCTOR: $500-Mil. Convertible Sub. Notes Rated B-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Cypress Semiconductor Corp.'s $500 million convertible
subordinated notes, sold under rule 144a. At the same time,
Standard & Poor's affirmed the company's 'B+' corporate credit
rating and its other ratings. The outlook remains negative.
Proceeds of the new issue will be used to redeem at least $400
million of Cypress' existing convertible subordinated notes, to
repurchase shares of its common stock, and to purchase call
spread options with respect to its common stock. San Jose,
California-based Cypress had about $542 million in
debt and capitalized operating leases outstanding at March 31,
2003.
Cypress manufactures specialty memory, timing, and logic
semiconductors for the networking, wireless, and computing
markets.
"Cypress faces substantial price pressures and soft market
conditions," said Standard & Poor's credit analyst Bruce Hyman.
"If the company's profitability does not improve, or if other
financial measures continue to erode, ratings could be lowered."
Cypress has strengthened its product portfolio through internal
development and acquisitions. Still, prices have declined about
30% year-on-year, while demand has been volatile.
DIRECTV LATIN AMERICA: Asks Court to Fix Aug. 30 Claims Bar Date
----------------------------------------------------------------
Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure
provides that the Court will fix the time within which proofs of
claim must be filed in a Chapter 11 case, pursuant to Section
501 of the Bankruptcy Code. Moreover, Bankruptcy Rule
3003(c)(2) provides that a creditor whose claim is not scheduled
or is scheduled as disputed, contingent or unliquidated must
file a proof of claim.
Accordingly, DirecTV Latin America, LLC asks the Court to
establish:
(a) August 30, 2003 at 4:00 p.m. EDT as the last date and
time by which proofs of claim based on prepetition
liability against DirecTV must be filed by creditors
other than governmental units; and
(b) September 18, 2003 at 4:00 p.m. EDT as the last date and
time by which proofs of claim based on prepetition
liabilities against DirecTV must be filed by governmental
units.
Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor LLP, in
Wilmington, Delaware, contends that fixing the Bar Dates will
enable DirecTV to begin the analysis of prepetition claims in a
timely and efficient manner. Accordingly, based on these
proposed procedures, the Bar Dates will give all creditors ample
opportunity to file proofs of claims:
A. Each person or entity that asserts a "claim" against DirecTV
that arose prepetition must file an original, written proof
of claim on or before the applicable Bar Dates and in
accordance with the Bar Date Order;
B. All Proofs of Claims must be filed with Bankruptcy Services,
LLC, which has been authorized by the Court to serve as
DirecTV's official Claims Agent;
C. These persons or entities are not required to file a proof of
claim on or before the applicable Bar Dates:
-- any person or entity that already has properly filed, with
the Clerk of the U.S. Bankruptcy Court for the District of
Delaware a proof of claim against Delaware utilizing a
claim form, which substantially conforms to Official Form
No. 10;
-- any person or entity having a claim under Sections 503(b)
or 507(a) of the Bankruptcy Code as an administrative
expense of DirecTV's case;
-- any person or entity whose claim has been paid by DirecTV
in full;
-- any person or entity whose claim is listed on the
Schedules, whose claim is not described as disputed,
contingent or unliquidated, and whose claim does not
dispute the amount or nature of the claim, as set forth
in the Schedules;
-- any person or entity holding a claim that has been allowed
by an order of the Court entered on or before the General
Bar Date or the Governmental Bar Date, as applicable;
-- any DirecTV employee whose claim arises under DirecTV's
workers' compensation policies and programs; or
-- any person or entity that is a party to an executory
contract or unexpired lease with DirecTV that is not
rejected pursuant to a Court Order dated on or before the
Court enters the Bar Date Order;
D. Any person or entity that holds a claim arising from the
rejection of an executory contract or unexpired lease as to
which the order authorizing the rejection is dated after the
Bar Date Order must file a proof of claim on or before the
date the Court may fix in the applicable order authorizing
the rejection of that contract or lease;
E. Persons holding claims against any of DirecTV's Local
Operating Companies should not file a proof of claim in this
Case on account of that claim;
F. Each proof of claim must:
-- be written in English;
-- be denominated in lawful U.S. currency;
-- conform substantially with Official Form No. 10; and
-- be signed by the claimant or its authorized agent;
G. Any holder of a claim against DirecTV who is required but
failed to file a proof of claim in accordance with the Bar
Date Order will be forever barred, estopped and enjoined from
asserting a claim against DirecTV and DirecTV and its
property will be forever discharged from any and all
indebtedness or liability with respect to the claim;
H. Any claimant who failed to file a proof of claim is
prohibited from voting with respect to any plan of
reorganization or from participating in any distribution in
this Chapter 11 case on account of that claim;
I. DirecTV will mail a notice of the Bar Date Order to:
-- the U.S. Trustee,
-- the Committee's counsel,
-- all known claim holders listed on the Schedules at the
addresses stated therein;
-- all known holders of equity interests in DirecTV listed on
the Schedules;
-- all DirecTV employees;
-- all Counterparties to DirecTV's executory contracts and
unexpired leases;
-- all persons or entities with whom DirecTV has transacted
business in the last 18 months;
-- the District Director for Internal Revenue for the
District of Delaware;
-- counsel for DirecTV's postpetition lender;
-- the U.S. Attorney for the District of Delaware; and
-- all parties who have filed notices of appearances pursuant
to Rule 2002 of the Federal Rules of Bankruptcy Procedure;
J. The Bar Date Notice will be published at least 20 days prior
to the General Bar Date once in each of:
-- The Wall Street Journal,
-- The New York Times,
-- The Miami Herald, and
-- American Economica.
Mr. Waite asserts that the Notice Procedure is reasonable and
adequate since:
(a) each creditor whose claim is listed in the Schedules and
those identified by this motion will receive in the mail
the Bar Date Order, a proof of claim form and
instructions for filing a proof of claim; and
(b) by establishing the proposed General Bar Date, all
creditors will have approximately 88 days notice of the
Bar Date for filing proofs so claim; (DirecTV Latin
America Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
DOMINO'S INC: Refinancing Announcement Triggers S&P's Watch Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and senior secured bank loan ratings, and its 'B'
subordinated debt rating of pizza delivery company Domino's Inc.
on CreditWatch with negative implications.
"The CreditWatch placement is based on the company's
announcement of a refinancing comprised of a $685 million bank
loan and $450 million senior subordinated notes offering. The
proceeds will be used to refinance the company's existing debt,
redeem $199.5 million of its preferred shares, and pay a $200
million common dividend, which will add about $400 million of
incremental debt," said Standard & Poor's credit analyst Robert
Lichtenstein.
As a result of the refinancing, pro forma lease-adjusted total
debt to EBITDA will increase to about 6x, compared with 3.7x
under the previous capital structure. Moreover, financial
flexibility will be reduced as interest payments and
amortizations will have substantially increased. Ann Arbor,
Michigan-based Domino's had $582 million total debt outstanding
as of March 23, 2003.
Upon completion of the deal, Standard & Poor's will lower the
corporate credit rating to 'B+' from 'BB-'. In addition,
Domino's proposed $685 million senior secured bank loan
comprised of a $560 million term loan and $125 million revolving
credit facility will be assigned a 'B+' rating, and its proposed
$450 million senior secured notes will be assigned a 'B-'
rating. The outlook will be stable.
The ratings reflect the company's participation in the highly
competitive pizza industry, a narrow product focus, and a
significant debt burden. These factors are partially mitigated
by the company's established brand identity, simple and cost-
efficient operating system, and improved profitability.
Domino's operates in a cost-efficient manner with a limited menu
and in small, lower-rent locations. Capital commitments for
expansion are small and maintenance costs minimal relative to
traditional fast-food restaurants. Moreover, expansion of
franchised units is funded by franchisees. However, costs can
fluctuate unpredictably, and, because of perceived value and
industry competition, these costs cannot be easily passed on to
consumers.
The refinancing reduces the company's financial flexibility
because interest payments and amortizations have substantially
increased. However, maturities are extended as the revolving
credit facility matures in 2009, the term loan in 2010, and the
senior subordinated notes in 2011.
Liquidity is adequate with a $125 million revolving credit
facility, which is expected to be undrawn at closing.
EB2B COMMERCE: Controller's Departure Stalls Form 10-QSB Filing
---------------------------------------------------------------
EB2B Commerce needs additional time to file Form 10-QSB with the
SEC due to the recent departure of the controller of the
Company, who had the primary responsibility for filing of the
Form 10-QSB.
The Company's operating results for the first quarter of 2003
are in the process of being finalized. Preliminary calculations
indicate that revenues, net of discontinued operations, in the
first quarter of 2003 were slightly less than in the first
quarter of 2002. Net loss in the 2003 period was significantly
less than in 2002 period.
eB2B Commerce, which reported a working capital deficit of about
$3.2 million at Sept. 30, 2002, is a leading provider of
electronic business-to-business services that simplify trading
partner integration and collaboration for order management and
supply chain execution. The eB2B Trade Gateway and Outsourcing
Services solutions provide enterprises large and small with low
cost, high return methods for allowing trading partner
relationships to be more productive and profitable.
eB2B Commerce's December 31, 2002 balance sheet shows a working
capital deficit of about $3 million, and a total shareholders'
equity deficit of about $4 million.
ENRON CORP: Seeks Nod to Consummate ServiceCo Stock Redemption
--------------------------------------------------------------
Pursuant to Section 363 of the Bankruptcy Code, Rules 9019 and
6004 of the Federal Rules of Bankruptcy Procedures, Enron Corp.,
EES Service Holdings, Inc., Enron Energy Services Operations,
Inc., Enron Property & Services Corp. and Enron Broadband
Services, Inc., seek the Court's authority to:
(i) consummate the redemption of certain outstanding shares
of ServiceCo Holdings, Inc.;
(ii) provide an indemnification and certain releases to
certain redeeming shareholders and directors of
ServiceCo designated by them; and
(iii) compromise and settle certain third-party litigation.
Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that ServiceCo provides national on-site
facilities management service, vendor management services and
heating, ventilation, air conditioning, electrical and other
general maintenance and repair services on a national scale. On
September 28, 2001, EESH and certain third-party inventors
created ServiceCo through the contribution of stock and cash --
the Original Transaction -- structured as:
(a) a group of accredited investors -- the FX Holders --
contributed 98.7% of the shares of FieldCentrix, Inc. to
the formation of ServiceCo and received 8.9% of the
shares of ServiceCo in exchange for the contribution;
(b) the Ontario Teachers' Pension Plan Board contributed
$30,000,000 and received 5.3% of the ServiceCo shares
in exchange of the contribution; and
(c) EESH contributed facilities-service businesses and
$15,000,000 for the remaining 85.8% of the ServiceCo
shares.
Subsequently, EESH monetized approximately 4.35% of the
ServiceCo ownership through a sale to Pyramid I Assets LLC, a
non-debtor special purpose entity, leaving EESH with an 81.45%
ownership interest in ServiceCo.
According to Mr. Rosen, ServiceCo attempted to market and sell
all or substantially all of its assets to third party but has
been unable to consummate a Purchase Transaction. In addition,
OTPPB and a number of the FX Holders have instituted minority
shareholder arbitration proceedings and lawsuits against
ServiceCo. Though, the arbitration proceedings with certain FX
Holders have been dismissed without prejudice on procedural
grounds. Nonetheless, ServiceCo and the Debtors believe that
the arbitration proceedings has hindered ServiceCo's ability to
consummate a Purchase Transaction. Moreover, ServiceCo and the
Debtors believe that a Purchase Agreement will yield substantial
returns for the Debtors and are, therefore, eager to settle the
Third-Party Investor Proceedings with OTPPB and the
participating FX Holders with prejudice in order to make
ServiceCo an attractive target.
In order to facilitate a Purchase Transaction and to finally
resolve the Third-Party Investor Proceeding, Mr. Rosen tells the
Court that ServiceCo decided to unwind the Original Transaction
through a two-stage redemption of:
(a) all of the outstanding shares of ServiceCo's capital
stock held by the FX Holders who participate in the
Redemption, OTPPB and Pyramid; and
(b) a portion of the outstanding shares of ServiceCo's
capital stock EESH held.
Pursuant to the first stage of the Redemption, the Participating
FX Holders' shares of ServiceCo capital stock will be fully
redeemed through the receipt of:
(i) approximately 80% of the capital stock of FX; and
(ii) a release from ServiceCo and the other Redeeming
Shareholders.
Concurrent with the closing of the first state of the
Redemption, ServiceCo will make a cash payment to FX equal to
$6,067,593, subject to adjustment and will issue 136,450,215
shares of its capital stock to OTPPB. The second stage of the
Redemption will occur upon the consummation of a Purchase
Transaction, at which time OTPPB and Pyramid will be fully
redeemed. Mr. Rosen continues that the Redemption provides for
the full and final release and settlement of the Adversary
Proceedings by OTPPB and the participating FX Holders.
Accordingly, on April 25, 2003, Enron and EESH entered into the
Redemption Agreement with ServiceCo, Pyramid, OTPPB, FX and the
Participating FX Holders. Subject to this Court's approval,
ServiceCo will make distributions pursuant to the Redemption
Agreement as:
A. FX Holders
The Participating FX Holders will be fully redeemed at the
Closing. The Participating FX Holders will receive:
(a) a Release from each of ServiceCo and the other Redeeming
Shareholders,
(b) in respect of the director designated by the FX Holders,
a Director Release from each of ServiceCo and the other
Redeeming Shareholders, and
(c) approximately 80% of the capital stock of FX from
ServiceCo -- the FX Exchange Shares.
At the Closing, FX will receive a cash payment of $6,067,593
from ServiceCo -- the FX Payment-- subject to:
(a) reduction by:
-- the amount of funding to FX by ServiceCo from January
21, 2003 until Closing (currently $2,350,000 and
increasing by approximately $400,000 every two
weeks),
-- $75,000 for expenses prepaid by ServiceCo in
connection with the redemption transaction,
-- the amount of any tail insurance premiums paid by
ServiceCo for FX; and
(b) increase by the amount of certain employment expenses
incurred prior to Closing equal to $199,506 plus $1,184
per day after March 1, 2003.
ServiceCo will also escrow up to $780,0005 to fund the
repurchase of ServiceCo shares of capital stock FX Holders
held who do not participate in the Redemption -- the Non-
Participating FX Holders. The escrow will be released to FX
when ServiceCo repurchase all of the Non-Participating FX
Holders' shares and each Non-Participating FX Holder
delivers a Release to ServiceCo. In the event the escrow
has not been released to FX within five years from the date
of the Redemption Agreement, the escrow will be released to
ServiceCo. ServiceCo will retain preferred and common stock
representing an approximate 20% interest in FX, on a fully-
diluted basis.
B. OTPPB
At the Closing, 136,450,2156 additional shares of ServiceCo
capital stock will be issued to OTPPB in exchange for a
Release from OTPPB. Also at the Closing, OTPPB will receive
a Release from each of ServiceCo and the other Redeeming
Shareholders and, in respect of the director designated by
OTPPB, a Director Release from each of ServiceCo and the
other Redeeming Shareholders. Upon consummation of a
Purchase Transaction, OTPPB's shares will be redeemed for a
payment by ServiceCo equal to 29.79% of the net worth of
ServiceCo.
C. Pyramid
At the Closing, 2,687,5107 shares of ServiceCo capital stock
Pyramid held will be redeemed in exchange for a Release from
each of ServiceCo, FX, the Participating FX Holders and
OTPPB and, upon consummation of a Purchase Transaction,
Pyramid's shares will be redeemed for a payment by ServiceCo
equal to 3.85% of the net worth of ServiceCo.
D. EESH
At the Closing, 84,961,2368 shares of the ServiceCo capital
Stock EESH held will be redeemed in exchange for a Release
from each of ServiceCo, FX, the Participating FX Holders and
OTPPB. In respect of each director designated by EESH, a
Director Release from each of ServiceCo, FX, the
Participating FX Holders and OTPPB. Upon consummation of
a Purchase Transaction and OTPPB's and Pyramid's redemption,
EESH will receive a distribution on its remaining ServiceCo
shares equal to 65.88% of the net worth of ServiceCo.
ServiceCo also agreed to make a $1,000,000 payment to FX at the
Closing to pay for a perpetual license and maintenance of
certain FX software.
According to Mr. Rosen, in connection with the Redemption, Enron
has agreed to indemnify OTPPB, Pyramid and the Participating FX
Holders, pro rata, for damages that they suffer within the first
four years after the Redemption for:
(i) tax liabilities of ServiceCo and its subsidiaries
resulting from their being jointly or severally liable
for any taxes of Enron or any affiliate of Enron as a
result of having been included in Enron's consolidated
tax group; and
(ii) any claims for liability asserted by the Pension Benefit
Guaranty Corporation against ServiceCo or its
subsidiaries as a result of their being jointly or
severally liable for obligations of Enron or any
affiliate of Enron due to their status as members of
Enron's "controlled group" of corporations, within the
meaning of Section 4001(a)(14) of the Employee
Retirement Income Security Act of 1974, as amended.
Enron's Indemnification is capped at an aggregate of
$15,000,000, subject to upward adjustment for the benefit of
OTPPB only, that could increase Enron's maximum indemnification
obligation to $24,000,000 in consideration of OTPPB's remaining
a stockholder of ServiceCo from the Closing until the
consummation of a Purchase Agreement.
Pursuant to the Redemption Agreement, from and after the
Closing, FX will indemnify ServiceCo, EESH, Pyramid and OTPPB,
and their affiliates, directors, officers and representatives,
for any damages resulting from any claims of any Participating
FX Holder arising out of:
(i) the disproportionate treatment in terms of the number of
FX Exchange Shares received by such Participating FX
Holder as a result of a preferential allocation to
certain Participating FX Holders party to the Third-
Party Investor Proceedings rather than a pro-rata
allocation of the FX Exchange Shares among the
Participating FX Holders based solely on the number of
shares of ServiceCo capital stock owned by each
Participating FX Holder immediately prior to the
Closing,
(ii) any claim of violation of securities laws arising out of
or related to a misstatement, misrepresentation or
omission with respect to the description of FX or its
business, assets, liabilities, financial information,
prospects or risks in the Confidential Information
Memorandum circulated in connection with the Consent
Solicitation, or
(iii) any statements or other communications made by any
Participating FX Holder to any other Participating FX
Holder with respect to FX or its business, assets,
liabilities, financial information, prospects or risks
or the transactions contemplated by the Redemption
Agreement, any other agreement entered into in
connection therewith, or a Purchase Transaction.
With these information, Mr. Rosen contends that this motion
should be granted because:
(a) the transfers will eliminate pending litigation, satisfy
the claims of the Participating FX Holders and OTPPB,
and facilitate a Purchase Transaction;
(b) other than the DIP financing liens, EESH does not have
any liens existing with respect to the EESH Redeemed
Shares;
(c) ServiceCo is a good faith purchaser of the EESH Redeemed
Shares;
(d) without the Redemption Agreement, future litigation in
connection with ServiceCo and the Third-Party Investor
Proceedings, including extensive discovery, will result
in additional, unnecessary expense for the Debtors;
(e) it will be difficult, if not impossible to consummate a
Purchase Transaction until the Third-Party Investor
Proceedings are resolved an any prospective purchaser
may discount the price offered for ServiceCo as a result
of this contingency;
(f) as an operational company, any further uncertainty or
delay in resolving the issues related to the Third-Party
Investor Proceedings may have a significant impact on
operations of ServiceCo and will distract ServiceCo's
management from the operation of the company to the
detriment of its shareholders and, ultimately, the
Debtors' estates; and
(g) an adverse ruling in the Third-Party Investor Proceeding
could result in the ServiceCo's liquidation and a
cessation of operations. (Enron Bankruptcy News, Issue
No. 66; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1) trade at 17
cents-on-the-dollar, according to DebtTraders' pricing data. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1for
real-time bond pricing.
FINET.COM INC: Files for Chapter 11 Reorganization in California
----------------------------------------------------------------
FiNet.com, Inc. (OTC Bulletin Board: FNMCE) and its wholly owned
subsidiary Monument Mortgage, Inc., filed voluntary petitions on
May 28, 2003 for reorganization under Chapter 11 of the U. S.
Bankruptcy Code with the U. S. Bankruptcy Court in San
Francisco, California. The protection of Chapter 11 allows the
Companies to reorganize their business operations and finances.
The Companies plan to use existing cash, revenue generated from
certain business activities, the sale of certain assets, and
post-petition financing to finance operations and seek business
relationships that will enable the Companies to benefit from
their mortgage assets, the Companies' $112 million Net Operating
Losses and FiNet's status as a public company.
FiNet.com, Inc. also announced the appointment of Harry R.
Kraatz as Chief Executive Officer and Chairman of the Board of
Directors. Mr. Kraatz, who has assisted the Companies for the
past few weeks as their Chief Restructuring Officer replaces L.
Daniel Rawitch as Chairman and Chief Executive Officer.
Mr. Kraatz stated, "The filing is a proactive step for the
Companies. We believe that the filing is in the best interests
of all the creditors and stakeholders of the Companies. It
provides an opportunity to restructure the Companies' balance
sheets, reduce costs, implement a revised strategic plan and
position the entities for new business opportunities."
Mr. Kraatz also announced that the law firm of Manasian &
Rougeau LLP has been retained as the Companies' reorganization
counsel.
The Chapter 11 case number assigned by the United States
Bankruptcy Court for the Northern District of California for
FiNet's reorganization proceeding is 03-31578; the case number
assigned for Monument Mortgage, Inc.'s reorganization proceeding
is 03-31579. The Companies, through their counsel, expect the
cases to be jointly administered.
More information about the Companies' reorganization case may be
obtained from the Clerk of the United States Bankruptcy Court
for the Northern District of California, whose office is located
at 235 Pine Street, 19th Floor, San Francisco, California 94104.
The telephone number for the Clerk's office is 415-268-2300.
Information regarding the reorganization may also be obtained
from Gregory A. Rougeau, Esq., the Companies' counsel of record,
at the following number: 415-291-8425.
FiNet.com, Inc., is a financial services holding company.
Monument Mortgage, Inc., a wholly owned subsidiary, conducts
diversified mortgage banking and brokering operations and is a
provider of both traditional and online mortgage services to a
diversified customer base consisting of mortgage lenders,
mortgage brokers, real estate agents and consumers.
FISHER: Selling Portland Radio Stations to Entercom for $44 Mil.
----------------------------------------------------------------
Fisher Communications (Nasdaq:FSCI) signed a definitive
agreement to sell its two Portland, Oregon, radio stations to
Entercom Communications Corp. for $44 million. KWJJ-FM features
a Country format and KOTK-AM Talk radio. Entercom will, subject
to the ultimate control and authority of Fisher, provide
programming and assume responsibility for advertising sales for
the two stations effective June 1, 2003, as part of a time
brokerage agreement. Kalil & Co., Inc. served as exclusive media
broker for Fisher in this transaction.
This sale, which is subject to FCC approval and satisfaction or
waiver of closing conditions, is expected to close by end of
third quarter 2003. Earlier this year the company announced an
agreement to sell its two Georgia television stations: WFXG in
Augusta and WXTX in Columbus. This latter transaction is
currently under FCC review. Upon closing of the sale of the
Georgia stations, all of Fisher's broadcasting stations will be
located in Washington, Oregon, Idaho, and Montana.
Commenting on the transaction as part of its continuing
restructuring process, Fisher Communications President and CEO
William W. Krippaehne Jr. said, "Taken together, these sales
should help us achieve a considerable portion of our goal to
reduce long-term debt by approximately one-half during 2003."
Fisher Communications, Inc. is a Seattle-based communications
and media company focused on creating, aggregating, and
distributing information and entertainment to a broad range of
audiences. Its 12 network-affiliated television stations are
located primarily in the Northwest, and its 28 radio stations
broadcast in Washington, Oregon, and Montana. Other media
operations currently include Fisher Entertainment, a program
production business, as well as Fisher Pathways, a satellite and
fiber transmission provider, and Fisher Plaza, a digital
communications hub located in Seattle.
As previously reported in Troubled Company Reporter, Fisher
Communications retained Goldman, Sachs & Co., as financial
advisor to assist in reviewing its strategic alternatives.
In announcing its decision to review strategic alternatives, the
company issued this statement: "Our Board of Directors is fully
committed to acting in the best interests of the company and its
shareholders. Accordingly, and in light of industry conditions,
we have determined that it is appropriate at this time to review
a range of strategic alternatives for the company."
FLEMING COS: Gains Go-Ahead to File Schedules on July 1, 2003
-------------------------------------------------------------
Fleming Companies, Inc., and its debtor-affiliates sought and
obtained Court approval to extend their deadline to file
Schedules and Statements to July 1, 2003.
At present, the Debtors are still in the process of assembling
the information necessary to complete the Schedules and
Statements. The extension will provide sufficient time to
prepare and file the Schedules and Statements.
The Debtors agreed that they will not seek further extensions.
(Fleming Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
Fleming Companies Inc.'s 10.125% bonds due 2008 (FLM08USR1) are
presently trading between 16 and 18 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FLM08USR1for
real-time bond pricing.
FREMONT GENERAL: Declares Special Common Stock Cash Dividend
------------------------------------------------------------
The Board of Directors of Fremont General Corporation (NYSE:
FMT) declared a special cash dividend of $0.02 cents per share
on its common stock, payable June 30, 2003 to shareholders of
record on June 6, 2003. The Board of Directors also declared a
quarterly dividend of $0.03 cents per share on its common stock,
payable July 31, 2003 to shareholders of record on June 30,
2003. The declaration of the quarterly dividend represents the
106th consecutive quarterly cash dividend to be paid by the
Company.
Fremont General Corporation is a financial services holding
company and its common stock is traded on the New York Stock
Exchange under the symbol "FMT".
As reported in Troubled Company Reporter's May 29, 2003 edition,
Fitch Ratings upgraded the senior debt ratings of Fremont
General Corporation to 'CCC+' from 'CCC-'. The trust preferred
securities issued by Fremont's affiliate Fremont General
Financing I remain at 'CC'. The Rating Outlook is revised to
Stable from Evolving.
Fremont has used excess cash flows generated by its remaining
subsidiary, Fremont Investment and Loan, a California-chartered
industrial bank, to repurchase its senior debt in the open
market. The amount of senior debt outstanding has declined
considerably, to $213 million currently from $260 million at
year-end 2002 and $425 million when originated in 1999. Trust
preferred securities outstanding remain at $100 million.
FRONTIER OIL: Banks Amend and Restate Revolving Credit Agreement
----------------------------------------------------------------
Frontier Oil Corporation (NYSE: FTO) entered into an amended and
restated $175 million revolving credit agreement -- according to
data obtained from http://www.LoanDataSource.com-- with:
-- UNION BANK OF CALIFORNIA, N.A. as Administrative Agent,
Documentation Agent, Lead Arranger
-- BNP PARIBAS as Syndication Agent
-- TORONTO DOMINION (TEXAS), INC.
-- BANK OF SCOTLAND
-- WELLS FARGO BANK, N.A.
-- U.S. BANK NATIONAL ASSOCIATION
-- FROST NATIONAL BANK
-- HIBERNIA NATIONAL BANK
Commitments under the new working capital facility are $175
million and will increase to $250 million upon closing of the
recently announced merger with Holly Corporation, which is
expected in August. Cash advances under the revolving facility
are currently limited to a maximum of $125 million, increasing
to $200 million upon closing of the merger. The facility is
secured by accounts receivable and inventory and is scheduled to
mature on June 15, 2006.
The facility includes reduced interest rate spreads and letter
of credit fees. In addition to a new financial covenant package
reflective of the revised capital structure, important changes
in the new agreement are the facilitation of intra-company funds
flows and the provision for upstream and downstream guarantees.
Julie Edwards, Frontier's Chief Financial Officer, commented,
"We are pleased to have closed the new revolving credit facility
in such a timely manner. The addition of several new lenders for
the planned expansion of the facility will augment the capacity
of our existing bank group. Coupled with our healthy cash
position, the new facility should provide the merged company
with more than adequate liquidity going forward. The
facilitation of the intra-company funds flows will add
additional strength to our senior note issues."
Frontier operates a 110,000 barrel-per-day refinery located in
El Dorado, Kansas, and a 46,000 barrel-per-day refinery located
in Cheyenne, Wyoming, and markets its refined products
principally along the eastern slope of the Rocky Mountains and
in other neighboring plains states.
As reported in Troubled Company Reporter's April 2, 2003
edition, Fitch Ratings placed the debt ratings of Frontier Oil
Corporation on Rating Watch Positive following the company's
announcement that it had agreed to merge with Holly Corporation.
Fitch rated Frontier's senior unsecured debt 'B+' and secured
credit facility 'BB-'.
Frontier and Holly announced that they have agreed to merge in a
transaction valued at approximately $462 million. To finance the
transaction, Frontier will issue approximately 15.5 million
shares of Frontier common stock to Holly shareholders plus a
total cash payment of $172.5 million ($11.11 per share of Holly
stock). The purchase price represents a premium of approximately
31%. Closing is targeted for early July 2003.
The Positive Rating Watch reflects the conservative acquisition
financing planned for the transaction, the low debt at Holly,
the niche markets served by both Frontier and Holly and the
continued benefits of being a small refiner. Although Frontier
could pay the cash portion of the transaction through cash on
hand and borrowings under the company's credit facilities, Fitch
expects Frontier to issue new senior unsecured notes to help
finance the transaction. At year-end 2002, Frontier had long-
term debt totaling $208 million and $112 million in cash. At
January 31, 2003, Holly had approximately $26 million of debt
and $18 million of cash on its balance sheet. Frontier will
continue to maintain its small refiner's advantage with respect
to the low sulfur gasoline and diesel regulations allowing the
company to delay a significant portion of the capital
requirements.
HAYES LEMMERZ: Settling Claim Dispute with Douglas Switzer
----------------------------------------------------------
Anthony W. Clark, Esq., at Skadden Arps Slate Meagher & Flom
LLP, in Wilmington, Delaware, informs the Court that Douglas
Switzer filed proof of claim number 3121 for $1,061,949.72
representing deferred compensation obligations under a Motor
Wheel Corporation supplemental executive retirement plan that
was enacted prior to the Petition Date. Hayes Lemmerz
International, Inc., and its debtor-affiliates objected to the
Proof of Claim as overstated and misclassified in the Debtors'
Sixteenth Omnibus Objection to Claims. The present value of the
future obligation shown as owing to Mr. Switzer under the SERP
pursuant to the Debtors' books and records is $674,894. The
Claim Objection is pending.
On September 13, 2002, Mr. Clark reminds the Court that Mr.
Switzer filed a Complaint of Plaintiff, Douglas v. Switzer, for
Declaratory Relief and Turn-Over of Non-Estate Assets, Adv.
Proc. No. 02-5570, pursuant to which Switzer claimed a
constructive trust on:
(i) certain life insurance policies purchased by the
Debtors to fund their obligations under the SERP; and
(ii) any assets of the Debtors that were or should have been
dedicated to the purchase of an annuity for Mr.
Switzer's benefit on account of his tenure as president
of Alumitech, a joint venture in which Motor Wheel had
an interest.
Mr. Switzer claimed an ownership interest in a certain annuity
contract that Motor Wheel had purchased to fund its obligations
under the SERP. The Debtors cashed in the Annuity in 1999 and
rolled the proceeds into two corporate owned life insurance
policies. It is these policies on which Mr. Switzer sought to
impose a constructive trust as he contended that the Debtors had
no authority to cash in the SERP Annuity. Mr. Switzer also filed
an objection to confirmation of the Debtors' plan of
reorganization, wherein he disputed the termination of the SERP
and the proposed treatment of his claims.
Mr. Clark relates that the Debtors denied the material
allegations and raised certain affirmative defenses. In the
absence of a settlement, significant discovery remains to be
completed, including an estimated seven to eight depositions.
The parties were able to reach a stipulation settling the
Adversary Proceeding, Claims Objection and Plan Objection by:
A. requiring the Debtors to pay Mr. Switzer $70,000 in cash;
B. granting Mr. Switzer an allowed general unsecured claim
for $614,894;
C. resolving the pending Claim Objection;
D. resolving the pending Plan Objection; and
E. affording a mutual and general release for any claims or
causes of action known or which reasonably could have
been known.
Mr. Switzer will withdraw his Plan Objection and will file with
the Court a dismissal with prejudice with respect to the
Adversary Proceeding.
The Debtors believe that under the current circumstances, the
Stipulation represents a fair and reasonable compromise of the
Claim Objection and the Adversary Proceeding and provides a
result that is beneficial to their estates. Accordingly, the
Debtors ask Judge Walrath to approve the compromise and
settlement under Section 105(a) of the Bankruptcy Code and Rule
9019 of the Federal Rules of Bankruptcy Procedure. (Hayes
Lemmerz Bankruptcy News, Issue No. 33; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
HUDSON'S BAY: S&P Puts Outlook to Negative on Weak Profitability
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
department-store retailer Hudson's Bay Co. to negative from
stable. At the same time, the ratings outstanding on the
Toronto, Ont.-based company, including the 'BB+' long-term
corporate credit and senior unsecured debt ratings, were
affirmed.
"HBC has experienced continued weak profitability, exacerbated
by poor first-quarter results; continued market share declines;
debt protection measures that remain slightly weak for the
ratings category; and material upcoming debt maturities," said
Standard & Poor's credit analyst Don Povilaitis.
These factors are partially offset by a commitment to
competitive merchandising strategies at both The Bay and Zellers
stores, continued efforts to contain costs, and a strengthened
capital structure given a reduction in long-term debt.
HBC's first-quarter (ended April 30, 2003) results were
negatively affected by a number of factors, including
unseasonably cold weather in Ontario and Alberta that affected
softlines, lower traffic in some urban stores due to the
outbreak of severe acute respiratory syndrome, and weaker
results at the company's financial services division.
Same-store sales declined 4% at The Bay, after having declined
3.3% in fiscal 2003, while comparable-store sales rose 0.2% at
Zellers, after having declined by 0.5% in 2003.
The company has invested heavily to improve efficiencies at
Zellers, which is now 100% EDLP (everyday low pricing). The
banner does not attempt to compete with its rivals in the mass
channel directly on a price basis, although it has made great
strides in that area, but rather, by enhancing its already
significant private- and captive-label offerings, which now
account for more than 25% of Zellers' total sales. The piloting
of food offerings through the "Neighbourhood Market" program,
now in about a dozen stores, if properly executed, has the
potential to generate the incremental traffic the banner would
require to enhance store productivity to levels more comparable
with its U.S. peers.
At The Bay, the elimination of deep discounting; a focus on
product exclusivity, especially in apparel; agreements with
designer labels to guarantee a certain gross margin to leverage
the company's market position; and a continued emphasis on big-
ticket items through various channels are all sound strategies,
but will require time for consumers to recognize. The return of
heightened consumer confidence also will take time.
The current ratings take into consideration the expectation of a
strengthening of profitability to at least historical levels, as
well as the successful refinancing of HBC's various banking
agreements and maturities in the next year--all in the context
of a stable capital structure. Failure in either case could
result in a lowering of the ratings.
INT'L WIRE: Prices $82 Million Senior Secured Debt Offering
-----------------------------------------------------------
International Wire Group, Inc., has priced an offering of $82
million principal amount of 10.375% Senior Secured Notes Due
February 28, 2005. The initial offering price is approximately
96% of the aggregate principal amount, which will result in
gross proceeds of approximately $78.8 million and an effective
yield to maturity of 13%.
Proceeds will be used to repay in full the company's existing
credit facility, cash collateralize certain letters of credit,
pay interest on existing subordinated indebtedness, and for
general corporate purposes, including working capital.
The offering will be effected through a private placement to the
initial purchaser and may be reoffered by the initial purchaser
pursuant to Rule 144A and Regulation S of the Securities Act of
1933, as amended. The Notes have not been registered under the
Securities Act and, accordingly, may not be offered or sold in
the United States absent registration under the Securities Act
or an applicable exemption from such registration requirements.
International Wire Group is a leading manufacturer and marketer
of wire products, including bare and tin-plated copper wire and
insulated wire products, for other wire suppliers and original
equipment manufacturers.
As reported in Troubled Company Reporter's April 7, 2003
edition, Standard & Poor's Ratings Services lowered its
corporate credit rating on International Wire Group Inc., to
'CCC+' from 'B' based on ongoing weakness in the company's end
markets and the company's declining liquidity position. The
current outlook is negative.
International Wire is located in St. Louis, Missouri. Total debt
outstanding is $335.5 million.
"The company is seeing a continuing decline in its automotive
end market, which Standard & Poor's expects to continue," said
Standard & Poor's credit analyst Dominick D'Ascoli. "Also, the
company's liquidity position has declined substantially year-
over-year to $22.9 million as of Dec. 31, 2002, compared with
$38.1 million for the same period in the previous year."
Standard & Poor's said that the downgrade also reflects concerns
about possible covenant violations under International Wire's
bank loan agreement, which could restrict borrowing
availability. Financial covenants were recently amended, but
remain tight in light of expected end market weakness.
International Wire Group's 11.750% bonds due 2005 (WIRE05USR1)
are trading at 91.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WIRE05USR1
for real-time bond pricing.
J. CREW GROUP: May 3 Net Capital Deficit Balloons to $421 Mil.
--------------------------------------------------------------
J.Crew Group, Inc. announced financial results for the thirteen
weeks ended May 3, 2003. Revenues for the first quarter of
fiscal 2003 decreased 3% to $161.5 million compared to $167.1
million last year. Comparable store sales decreased 11% in the
thirteen-week period, while net sales in J.Crew's Direct
business decreased 2%. Net loss was $19.6 million compared to a
net loss of $12.1 million last year. The 2003 results do not
include a tax benefit whereas the 2002 results include a tax
benefit of $6.5 million. Earnings before interest, taxes,
depreciation and amortization (EBITDA) (a) were a loss of $2.0
million in the 2003 first quarter compared to a loss of $.5
million last year.
The results of operations in the 2003 first quarter reflect a
decrease in merchandise margins of $11 million from 40.1% in
2002 to 34.6% in 2003, offset by a decrease of $10 million in
selling, general and administrative expenses including a
decrease in severance of $4 million. The decrease in
merchandise margin resulted from higher sales of prior season's
merchandise (at discounted prices) in the first quarter of 2003
compared to the first quarter of 2002 and higher markdowns
related to the sale of Spring 2003 merchandise. These results
reflect management's new strategy of disposing of slow moving
merchandise in season and reducing the amount of merchandise
held by its Factory division for disposition in future seasons.
Inventories at May 3, 2003 were down 30% versus May 4, 2002,
despite an additional 11 stores. Comparable store inventories
were down 10%. Management expects that this current trend in
merchandise margins will continue through the second quarter.
Selling, general and administrative expenses in the first
quarter of 2003, excluding severance costs, were down $6 million
from last year. This decrease included $2 million in selling
expense attributable to a decrease in the number of catalog
pages circulated and $4 million from the cost reduction
initiatives adopted in the first quarter of 2002. Severance
costs were $.9 million in the 2003 first quarter compared to a
pretax charge of $5 million last year for severance costs
related to headcount reductions and the departure of a former
Chief Executive Officer.
On May 6, 2003, the Company completed an offer to exchange 16%
Senior Discount Contingent Principal Notes due 2008 for its
outstanding 13-1/8% Senior Discount Debentures due 2008.
Approximately 85% of the aggregate principal amount of
outstanding debentures were tendered for exchange. Interest on
the new notes will be added to the principal amount of the notes
through November 15, 2005. The effect of the Exchange Offer on
interest expense in fiscal 2003 will be to increase total
interest expense by $3 million but decrease cash interest by $16
million.
At May 3, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $421 million.
J.Crew Group, Inc. is a leading retailer of men's and women's
apparel, shoes and accessories. As of May 3, 2003, the Company
operated 154 retail stores, the J.Crew catalog business,
jcrew.com, and 42 factory outlet stores.
JORDAN IND: S&P Junks & Removes Corp. Credit Rating from Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Jordan Industries Inc. to 'CCC+' from 'B-'. The
senior unsecured rating on Jordan Industries was lowered three
notches, to 'CCC-' from 'B-' because of the downgrade of the
corporate credit rating and the substantial amount of priority
liabilities in the company's capital structure, including
off-balance-sheet items and the liabilities of subsidiaries.
All ratings are removed from CreditWatch, on which they were
placed with negative implications on Dec. 13, 2002. The outlook
is negative. At March 31, 2003, Jordan Industries Restricted
Group (i.e., all of the operating subsidiaries of Jordan
Industries excluding Kinetek Inc.) had about $450 million in
debt outstanding.
"The downgrade reflects the poor operating performance caused by
the long period of economic weakness and pricing pressures in
several of its very competitive businesses, and limited
financial flexibility," said credit analyst John Sico.
The ratings on Jordan Industries reflect weak demand and intense
competitive pressures of its restricted subsidiaries, and
extremely aggressive financial policy, and very weak financial
profile.
Deerfield, Illinois-based Jordan Industries is a privately held
company with a portfolio of business units serving consumer,
industrial, specialty printing and labeling, specialty plastic,
automotive, and information technology markets. The company's
business units generally have good positions in niche, modestly
cyclical, and highly fragmented markets.
Failure to stabilize operations and financial flexibility could
lead to lower ratings in the near term.
KINETEK: S&P Cuts Rating Citing Weak Operating Performance
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Kinetek Inc. and subsidiary Kinetek Industries Inc.
to 'B' from 'B+'. The downgrade reflects the continued weak
operating performance and deterioration in credit measures that
are not expected to improve to levels commensurate with the
previous ratings.
The company has about $300 million in debt outstanding.
The ratings on Kinetek Inc. reflect its below average business
position, subpar financial performance, and limited financial
flexibility. The outlook is stable.
"The ratings on Kinetek are independent of its parent Jordan
Industries Inc. because of its separate financial structure,
including separate public debt and bank agreements that place
extremely tight restrictions on the company's ability to incur
additional indebtedness, create liens, make restricted payments,
engage in affiliate transactions or mergers and consolidations,
and make asset sales," said credit analyst John Sico. In
addition, Kinetek is a non-restricted subsidiary of Jordan
Industries Inc. and there are no cross-defaults, nor any cross-
guarantees with the parent's debt obligations. It is Standard &
Poor's view that Kinetek is sufficiently cordoned-off from
Jordan in the event of a potential bankruptcy filing of its
parent.
Deerfield, Illinois-based Kinetek is a leading manufacturer of
specialty purpose electric motors for the consumer, commercial,
and industrial markets. End markets are cyclical, but have some
product line and customer diversity, along with a competitive
cost structure and modest capital intensity. Many of Kinetek's
key end-markets (including the subfractional refrigeration and
appliance motor market, and the drink vending machine motor
market) have been weak, experiencing a 5% sales decline in 2002
and flat sales in 2003. Industry fundamentals are not expected
to improve materially in the near term.
Kinetek has been affected by the weak economic climate and the
stable outlook assumes gradual improvement in operating
conditions. Still, challenges exist in maintaining a credit
profile that is adequate for the rating. A number of new product
developments could stem the declining profitability from weak
end markets and ongoing working capital, and other cost saving
initiatives could help the company continue to generate a
modest amount of free cash flow.
LUCENT TECHNOLOGIES: Raises $1.5B in Conv. Senior Debt Offering
---------------------------------------------------------------
Lucent Technologies (NYSE: LU) has raised $1.525 billion through
a public offering of convertible senior debt, which was priced
at $1,000 per security. The company expects to apply the net
proceeds toward the repayment or possible repurchase of certain
short- and medium-term obligations over time, as well as for
general corporate purposes.
The offering, which was made off of the company's existing
universal shelf registration statement, consists of two series
of debt.
The first series has a maturity date of 2023. These securities
have an interest rate of 2.75 percent and are convertible into
Lucent common stock at a conversion price of $3.34 per share,
which represents a 48 percent conversion premium over today's
closing price. Investors will have the option to redeem the
securities in 2010, 2015 and 2020.
The second series has a maturity date of 2025. These securities
have an interest rate of 2.75 percent and are convertible into
Lucent common stock at a conversion price of $3.12 per share,
which represents a 38 percent conversion premium over today's
closing price. Investors will have the option to redeem these
securities in 2013 and 2019.
A prospectus related to this offering may be obtained from
Citigroup Global Markets, Equity Syndicate Desk, 388 Greenwich
Street, New York, N.Y., or J.P. Morgan Securities, 277 Park
Avenue, New York, N.Y.
Lucent Technologies, headquartered in Murray Hill, N.J., USA,
designs and delivers networks for the world's largest
communications service providers. Backed by Bell Labs research
and development, Lucent relies on its strengths in mobility,
optical, data and voice networking technologies as well as
software and services to develop next-generation networks. The
company's systems, services and software are designed to help
customers quickly deploy and better manage their networks and
create new, revenue-generating services that help businesses and
consumers. For more information on Lucent Technologies, visit
its Web site at http://www.lucent.com
Lucent Technologies' 7.700% bonds due 2010 (LU10USR1) are
presently trading at 75.5 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LU10USR1for
real-time bond pricing.
LUCENT TECH: S&P Rates Planned Sale of Senior Debentures at B-
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Lucent Technologies Inc.'s proposed sale of Series A convertible
senior debentures due 2023 and to the company's proposed sale of
Series B convertible senior debentures due 2025. The combined
proceeds of the two debenture issues are expected to be
approximately $1.3 billion. Proceeds will be used to repay or
potentially repurchase certain of Lucent's short-and medium-term
obligations over time, as well as for other corporate purposes.
At the same time, Standard & Poor's affirmed its 'B-' corporate
credit rating and its other ratings on the company. The outlook
is negative.
Murray Hill, New Jersey-based Lucent Technologies, a major
supplier of communications equipment for service providers, had
$6.5 billion of debt and capitalized operating leases
outstanding at March 31, 2003.
The company's operating losses have abated as it cut its costs,
responding to continued weak business conditions. "While Lucent
has made progress in cutting its costs, industry conditions
remain highly challenging," said Standard & Poor's credit
analyst Bruce Hyman. "Spending plans of communications carriers
are expected to remain depressed well into 2004, as the carriers
seek to offer acceptable levels of customer service while
preserving capital."
Carriers are able to select among multiple competing vendors for
most products, which places substantial profitability pressures
on equipment manufacturers. Lucent's longer-term profitability
will depend on its product and service mix, overall volumes,
competitive pricing actions, and the sustained effectiveness of
its several cost-reduction actions.
MAGELLAN HEALTH: Wants to Honor Missouri Bond and Fee Payments
--------------------------------------------------------------
In November of 2002, Magellan Behavioral Health, Inc., a debtor-
affiliate of Magellan Health Services, Inc., issued $6,296,700
of Missouri Development Finance Board BUILD Missouri Revenue
Bonds Series 2002. The Bonds were issued under a Trust
Undenture, dated November 1, 2002, between the Missouri
Development Finance Board and UMB Bank, N.A., as trustee.
Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New
York, informs the Court that the Bonds were issued in connection
with the construction of a new office building in St. Louis,
Missouri, which has been leased by Magellan Behavioral from
Riverport Commons II, L.L.C. for a term of ten years. Magellan
Behavioral is the purchaser and the issuer of the Bonds, which
provide that Magellan Behavioral make semi-annual principal and
interest payments of $398,000, on May 1, and November 1 of each
year. The first payment is due on May 1, 2003. On the day the
payments are to be made, Magellan Behavioral, as issuer of
Bonds, is to wire the payment to the Trustee, and the Trustee
will then wire the payment back to Magellan Behavioral, as
purchaser of the Bonds, on the same day. The Bonds have a
maturity date of November 1, 2012.
In addition to the principal and interest payments due under the
Bonds, the Debtors are also required to make payments of $750
per year to the Trustee. The first payment of Trustee Fees is
due on November 1, 2003. The Debtors are also required to make
annual payments to the Board amounting to 0.5% of the remaining
unpaid principal under the Bonds. The first payment is due on
November 1, 2003, amounting to $28,871.50.
As a result of this transaction, Mr. Karotkin states that
Magellan Behavioral receives tax credits from the state of
Missouri for the amount of the principal and interest payments
made each year for the life of the Bonds. The Tax Credits are
applied directly against Magellan Behavioral's tax liability to
the State of Missouri in any given year and to the extent the
Tax
Credit in any year exceeds the tax liability for the year, the
excess Tax Credit is paid in cash. In the event that Magellan
Behavioral has no tax liability to the State of Missouri for any
given year, it also will receive the entire Tax Credit for that
year in cash. Missouri also allows for the sale of the Tax
Credits. Therefore, if the Debtors were to determine that
selling the entire Tax Credit is in the best interests of the
Debtors and their estates, the Debtors would be able to effect a
sale.
As a condition to receiving the Tax Credits, Magellan Behavioral
has agreed to reach an employment base of 1,907 employees in
Missouri by the end of 2005. Currently, Magellan Behavioral has
1,800 employees and anticipates that it will reach the goal of
1,907 by 2005. The Debtors estimate that the Tax Credits amount
to $800,000 per year or $8,000,000 over the life of the Bonds.
Accordingly, the Debtors sought and obtained entry of an order,
pursuant to Section 363(b)(1) of the Bankruptcy Code,
authorizing them to make all payments with respect to the Bonds,
the Trustee Fees and the Board Fees on an ongoing basis in
accordance with the contractual terms.
Mr. Karotkin tells the Court that the continued payment of
principal and interest on the Bonds poses no real costs to the
Debtors, while providing them with substantial tax benefits.
Further, the Trustee Fees and the Board Fees are de minimis and
are far outweighed by the significant cash advantages that will
be realized by continuing all payments as requested. (Magellan
Bankruptcy News, Issue No. 8: Bankruptcy Creditors' Service,
Inc., 609/392-0900)
MASSEY ENERGY: Closes 4.75% Conv. Senior Debt Private Offering
--------------------------------------------------------------
Massey Energy Company (NYSE: MEE) has closed its private
offering of $132 million principal amount of 4.75% convertible
senior notes due May 15, 2023. The aggregate $132 million of
notes includes the previously announced offer of $110 million
plus a full exercise by the initial purchasers of their option
to purchase an additional $22 million of notes. The Company used
the proceeds of the offering to permanently repay indebtedness
under its existing revolving credit facility.
The Company reported that the convertible senior notes are part
of its overall refinancing program, currently being negotiated
with financial institutions, which when completed would replace
the Company's existing credit facility, scheduled to expire on
November 25, 2003.
The notes were 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 or
(iv) upon the occurrence of certain events relating to a decline
in the rating of the notes. The notes are 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 revenue.
As previously reported in Troubled Company Reporter, 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 assigned its 'B+' rating to Massey's
proposed $100 million convertible senior notes due 2023.
Standard & Poor's also affirmed its 'BB' corporate credit rating
on the Richmond, Va.-based company. Total outstanding debt at
March 31, 2003, was $589 million.
DebtTaders says that Massey Energy Co.'s 6.950% bonds due 2007
(MEE07USR1) are trading at 85 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=MEE07USR1for
real-time bond pricing.
MDC CORP: Intends to Redeem All Outstanding 10.5% Sr. Sub. Notes
----------------------------------------------------------------
MDC Corporation Inc. announced that it will redeem all of its
US$86.4 million ($119.8 million) outstanding 10-1/2% Senior
Subordinated Notes due December 1, 2006. The aggregate
redemption price for each US$1,000 principal amount of Notes
shall be US$1,035, for an aggregate redemption price of US$89.5
million ($124.1 million), plus accrued and unpaid interest to
but excluding the date of redemption. The redemption will take
place on June 30, 2003.
MDC announced that it closed the Custom Direct Income Fund
for total gross proceeds of $162 million, which have been paid
to MDC (net of commissions, fees and expenses). MDC intends to
use US$89.5 million ($124.1 million) of such net proceeds to
consummate the redemption of its Notes.
The Trustee under the Indenture governing the Notes, The Bank of
Nova Scotia Trust Company of New York, will act as the Paying
Agent.
"This is the culmination of the restructuring effort that we
commenced 18 months ago. We are thrilled with the results of our
efforts and our current liquidity and financial strength," said
Miles S. Nadal, Chairman, President and Chief Executive Officer
of MDC.
MDC is a publicly traded international business services
organization with operating units in Canada, the United States,
United Kingdom and Australia. MDC provides marketing
communication services, through Maxxcom Inc., and offers
security sensitive transaction products and services in four
primary areas: personalized transaction products such as
personal and business cheques; electronic transaction products
such as credit, debit, telephone & smart cards; secure ticketing
products, such as airline, transit and event tickets; and
stamps, both postal and excise.
Maxxcom, a subsidiary of MDC, is a multi-national business
services company with operating units in Canada, the United
States and the United Kingdom. Maxxcom is built around
entrepreneurial partner firms that provide a comprehensive range
of communications services to clients in North America and the
United Kingdom. Services include advertising, direct marketing,
database management, sales promotion, corporate communications,
marketing research, corporate identity and branding, and
interactive marketing. Maxxcom Shares are traded on the Toronto
Stock Exchange under the symbol MXX.
MDC, at March 31, 2003, disclosed a working capital deficit of
about CDN$4.6 million.
META GROUP: Appoints John Flynn to Lead Insurance Service
---------------------------------------------------------
META Group, Inc. (Nasdaq: METG), a leading information
technology research and consulting firm, announced the
appointment of John Flynn, 39, to senior vice president and
service director of its Insurance Information Strategies
service. Flynn replaces Don Himes, who moves to senior vice
president and practice leader of Industry Markets for META Group
Consulting.
Flynn has more than 17 years of experience in the insurance and
financial services industry, and most recently led the insurance
practice for Sapient, an IT and business consultancy.
Previously, he was principal and head of insurance at
BusinessEdge Solutions, a private software integration firm.
Flynn spent 13 years with American International Group as a
senior executive.
Flynn's leadership experience ranges from business strategy,
business development, and business-unit management, to
enterprise program and project management, operations, and
technology. Flynn graduated from the Executive Development
Program at the Wharton School of the University of Pennsylvania.
"META Group has an outstanding reputation in the industry, and I
am pleased to be joining such a talented group," said Flynn.
"Like many organizations, insurance companies are striving to
become more competitive in the marketplace while under constant
pressure to justify their IT spending and deliver greater
measurable business results. META Group is uniquely qualified to
help CIOs meet this challenge with our collaborative model, IT
thought leadership, and deep industry understanding."
"John brings a wealth of experience to our insurance service,
and we're very excited to have him on board," said Karen
Rubenstrunk, executive vice president and director of META
Group's Executive & Industry Services. "I look forward to
working with John to expand our executive industry capabilities
as well as to further complement our strong insurance consulting
practice."
META Group's Insurance Information Strategies (IIS) focuses on
the key issues and trends revolutionizing the insurance and
financial services industries, targeting the new business models
and technology frameworks critical to sustaining competitive
advantage in a constantly evolving market. IIS coverage includes
healthcare, life, annuity, property/casualty, and reinsurance --
with a perceptive understanding of the financial services
industry impact. IIS is a member of META Group's renowned family
of executive advisory services, offering high-value guidance and
actionable industry-leading research and analysis to executive
decision makers around the world.
META Group is a leading provider of information technology
research, advisory services, and strategic consulting.
Delivering objective and actionable guidance, META Group's
experienced analysts and consultants are trusted advisors to IT
and business executives around the world. Our unique
collaborative models and dedicated customer service help clients
be more efficient, effective, and timely in their use of IT to
achieve their business goals. Visit http://www.metagroup.comfor
more details on our high-value approach.
At March 31, 2003, the Company's balance sheet shows that its
total current liabilities exceeded its total current assets by
about $9 million.
NAT'L CENTURY: Bayer Moves to Modify November 19 Injunction
-----------------------------------------------------------
Thomas W. Coffey, Esq., at Cors & Bassett, in Cincinnati, Ohio,
recounts that in July 2002, National Century Financial
Enterprises, Inc.'s subsidiaries NPF-LL, Inc. and NPF XII, Inc.,
conducted a secured party sale. The subject of the secured
party sale was all of the accounts receivable and certain
equipment of Bayer Restorative Care, Inc. and Miami Valley
Respiratory Care, Inc. The secured party sale was duly noticed
and was conducted as a public sale under Article 9 of the
Uniform Commercial Code.
Omnicare Respiratory Services, LLC bought and paid $1,200,000 at
the public sale for all of the right, title and interest in the
accounts receivable and equipment sold. The Bill of Sale
identifies the accounts receivable being sold, and provides that
the receivables are conveyed to Omnicare free and clear of any
and all liens, security interests and encumbrances.
The Bill of Sale also provides that Sellers NPF-LL and NPF XII
will pay or deliver to Omnicare all payments or payment
instructions received at any time by them in respect of the
property, and will deliver to Omnicare all documents,
communications and records in their possession or control and
will make arrangements to allow Omnicare access to the property
for purposes of taking possession and removing the same after
the consummation of the sale. Also, Bayer Restorative, Miami
Valley Respiratory, Omnicare and NPFS, Inc. executed Account
Instructions providing for proceeds of accounts receivable
generated by Bayer Restorative or Miami Valley Respiratory to be
remitted to and controlled by Omnicare.
In the light of this transaction, Mr. Coffey points out that the
injunctive relief order the Court entered on November 19, 2002
could result in accounts receivable which are properly payable
to Omnicare being diverted into lockboxes controlled by the
Debtors. This result is contrary to the Bill of Sale and to
Article 9 of the Uniform Commercial Code. It is also contrary
to the Account Instructions.
Mr. Coffey asserts that the accounts receivable Omnicare
Respiratory Services, LLC purchased at the public sale were
never part of this bankruptcy estate, and the Debtors and their
subsidiaries sold all rights thereto at the public sale on
July 22, 2002, pursuant to the provisions of Article 9 of the
Uniform Commercial Code. Any diversion of the proceeds of the
accounts receivable from Omnicare pursuant to the November 19,
2002 Court Order would be devastating and could cause
irreparable harm to Omnicare because it would effectively stop
cash flow to the company. Moreover, Omnicare is likely to
prevail on the merits of its case at any final hearing, and the
Debtors, who would otherwise recap a windfall from the diversion
of the accounts receivable, will suffer no legally cognizable
harm if the Court modifies the November 19, 2002 Order.
Thus, Bayer Restorative Care, Miami Valley Respiratory Care and
Omnicare Respiratory Services ask the Court to:
(a) modify the terms of the November 19, 2002 Order to
exclude accounts receivable formerly owned by Bayer
Restorative Care and Miami Valley Respiratory Care and
now owned by Omnicare Respiratory Services;
(b) direct the Lockbox Custodians to pay all proceeds of the
accounts receivable directly to Omnicare Respiratory
Services; and
(c) direct the Debtors to pay to Omnicare Respiratory
Services the proceeds of all accounts receivable
generated by Bayer Restorative Care or Miami Valley
Restorative Care received by the Lockbox Custodian or
any of the Debtors or their subsidiaries pursuant to the
terms of the November 19, 2002 Order. (National Century
Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
NAT'L EQUIPMENT: Will Miss Interest Payment, May File For Ch. 11
----------------------------------------------------------------
National Equipment Services Inc., one of the largest U.S.
construction equipment rental companies, said its lenders have
blocked interest payments on $275 million of bonds and the
company may file for bankruptcy, Bloomberg News reported.
Banks led by Wachovia Bank NA, which agreed not to enforce terms
of more than $495 million in loans to National Equipment,
exercised their right to block interest payments on two series
of senior subordinated notes, the company said in a regulatory
filing.
Failure to pay within 30 days would be a default, giving holders
the right to demand immediate payment of their principal, the
company said. "In light of the company's current condition, the
company may seek protection from its creditors under chapter
11," Evanston, Illinois-based National Equipment said in the
filing with the Securities and Exchange Commission, Bloomberg
reported.
An industry slowdown and increased competition have hurt
equipment rental company earnings. Fort Lauderdale, Florida-
based NationsRent Inc. sought chapter 11 protection in December
2001, after it couldn't cope with more than $1.19 billion in
debt. National Equipment has reported a $29.6 million loss for
the quarter ended March 31, the ninth straight quarterly loss,
reported the newswire. (ABI World, May 29)
NETROM INC: Eliminates Close to 85% of Outstanding Obligations
--------------------------------------------------------------
Netrom, Inc. (OTC: NRRM) announced that its goal for
restructuring outstanding obligations has been exceeded. The
Company, through negotiations and conversions of liability to
equity, has eliminated close to 85% of its liabilities that were
incurred since the Company's inception in 1996. The majority of
this highly significant liability reduction came from the
conversion of debt into common stock of the Company. Further,
the Company said it does not foresee an impairment of its stock
price or any significant dilution due to the fact that all of
the negotiated settlements resulted in the issuance of
restricted stock on very favorable terms to the Company.
John Castiglione, President of Netrom, Inc. stated, "Eliminating
over 75% of the liabilities, incurred by the Company over the
past seven years, has been a top priority for the new management
team, which was brought in during 2002 to rebuild the Company.
Our growth over the next one to two years will be fueled by
expanding and developing the Company's newly acquired
subsidiary, Tempest Asset Management, Inc." He further said,
"Foreign currency exchange trading, which is 100% of what
Tempest does, is a very timely business to be in because of the
massive changes that have occurred over the past three years in
the more traditional investment avenues that have been available
to investors for the past fifty years. The recent huge losses in
wealth by Investors in these more traditional investments has
them looking for new, alternative ways to invest their money
with less risk and a more predictable upside potential. Tempest
offers such an alternative to smaller investors, as well as to
the larger institutional investors. This is why we feel very
confident about the exceptional timing for Tempest's products
and services, as well as highly optimistic regarding the near
term and long term growth prospects for Tempest."
Netrom, Inc. (OTC: NRRM), headquartered in San Diego, was
founded in 1996. Since its inception, Netrom has been involved
in the development of technologies that are related to the
Internet, as well as developing new eBusiness models. In the
first quarter of 2000 Netrom became insolvent and was forced
into a major reorganization. The Company has been in the process
of a turnaround of its business with the primary objective being
to restore trading of its stock to the OTC BB and grow the
Company through strategic acquisitions. In the first quarter of
2003, the Company completed its first step toward this goal with
the acquisition of Tempest Asset Management, Inc.
Tempest Asset Management, Inc. is a development stage California
Corporation headquartered in Irvine, California. The company
provides institutional grade, Forex trading products and
services to individual investors. "Forex" is a term that refers
to the Foreign Currency Exchange Market where a trader
simultaneously buys one currency and sells another for profit,
which is not dependent on the market conditions of stocks, bonds
or commodities. The Company was founded in 2001 by Chris
Melendez, its CEO and internationally renowned Forex trader. He
gained his expertise as a "market maker and proprietary currency
trader" at major financial institutions around the world. For
additional information visit http://www.tempestasset.com
NETROM INC: Intends to File Form 10-SB Registration Statement
-------------------------------------------------------------
Netrom Inc. (OTCBB:NRRM) plans to file a Form 10-SB Registration
Statement to the U.S. Securities and Exchange Commission through
the Electronic Data Gathering Analysis and Retrieval (EDGAR)
System.
The Form 10-SB is the General Form for Registration of
Securities Under Section 12(g) of the Securities Exchange Act of
1934. Pursuant to the Exchange Act, the company would become
fully-reporting. Upon effectiveness of this registration
statement, the company plans to make application for a listing
on the OTC Bulletin Board, accomplishing another one of the new
management team's major goals since taking over in 2002. The
company further stated that this is an important step in our
rebuilding plans for Netrom during the remainder of 2003.
Netrom Inc., with headquarters in San Diego, was founded in
1996. Since its inception, Netrom has been involved in the
development of technologies that are related to the Internet, as
well as developing new eBusiness models. In the first quarter of
2000 Netrom became insolvent and was forced into a major
reorganization. The company has been in the process of a
turnaround of its business with the primary objective being to
restore trading of its stock to the OTCBB and grow the company
through strategic acquisitions. In the first quarter of 2003,
the company completed its first step toward this goal with the
acquisition of Tempest Asset Management Inc.
Tempest Asset Management Inc. is a development stage California
corporation with headquarters in Irvine, Calif. The company
provides institutional grade, Forex trading products and
services to individual investors. "Forex" is a term that refers
to the Foreign Currency Exchange Market where a trader
simultaneously buys one currency and sells another for profit,
which is not dependent on the market conditions of stocks, bonds
or commodities. The company was founded in 2001 by Chris
Melendez, its CEO and internationally renowned Forex trader. He
gained his expertise as a "market maker and proprietary currency
trader" at major financial institutions around the world. For
additional information visit http://www.tempestasset.com
NOBEL LEARNING: Enters Pact for Up to $7MM of Equity Investment
---------------------------------------------------------------
Nobel Learning Communities, Inc. (Nasdaq: NLCI), a for-profit
provider of education and school management services for the
pre-elementary through 12th grade market, announced that the
Company and an investment group have executed a term sheet under
which the investment group will infuse $6,000,000 to $7,000,000
of equity capital into NLCI. The equity infusion will be in the
form of preferred stock at $4.50/share with a 5% dividend paid
in kind for the first three years. The dividend rate is subject
to performance after the first three years, but can thereafter
be paid in cash or PIK at the Company's sole discretion.
Closing is scheduled on or before June 15, 2003, subject to
normal closing conditions.
Jack Clegg, Chairman/CEO, noted that the investment group is a
nationally known firm, which has an impressive portfolio of
investments in education companies. He also noted that the
founding partner of the firm would join NLCI's Board of
Directors upon closing of the transaction.
The Company stated that a special committee of non-conflicted
directors was formed to evaluate alternative proposals. The
Committee selected the above proposal, which they determined was
in the best interests of the stockholders, by enabling the
Company to meet its obligations under the re-negotiated bank
terms. The combination of the equity infusion and the
re-negotiated bank terms would put NLCI on a much firmer footing
to have the financial strength to take advantage of the
opportunities before the Company.
The Company stated that the capital infusion and the experience
this investment group would bring to the Company would make
Nobel Learning Communities a stronger, independent company. The
Company further stated that its current strong cash flow; the
current annual EBITDA run-rate above $12 million; and the
outstanding network of high-quality schools provides a positive
outlook for the future.
Nobel Learning Communities, Inc. operates 178 schools in 15
states consisting of private schools and charter schools; pre-
elementary, elementary, middle, specialty high schools and
schools for learning challenged children clustered within
established regional learning communities.
As reported in Troubled Company Reporter's Thursday Edition,
Nobel Learning Communities said that Fleet Bank (in its capacity
as Agent for the Company's senior lenders) and the Company have
agreed to terms under which all prior defaults with the
Company's senior lenders will be waived and all financial
covenants will be reset to the Company's current projections
(which take into account the effects of the current economic
slow-down). The loan amendment is subject to final
documentation.
NORTEL: Will Pay Preferred Share Dividends on July 14, 2003
-----------------------------------------------------------
The board of directors of Nortel Networks Limited (NYSE:NT)
(TSX:NT) declared a dividend on each of the outstanding
Cumulative Redeemable Class A Preferred Shares Series 5
(TSX:NTL.PR.F) and the outstanding Non-cumulative Redeemable
Class A Preferred Shares Series 7 (TSX:NTL.PR.G), the amount of
which for each series will be calculated by multiplying (a) the
average prime rate of Royal Bank of Canada and Toronto-Dominion
Bank during June 2003 by (b) the applicable percentage for the
dividend payable for such series for May 2003 as adjusted up or
down by a maximum of 4 percentage points (subject to a maximum
applicable percentage of 100 percent) based on the weighted
average trading price of the shares of such series during June
2003, in each case as determined in accordance with the terms
and conditions of such series. The dividend on each series is
payable on July 14, 2003 to shareholders of record of such
series at the close of business on June 30, 2003.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com.
* * *
As previously reported, Moody's Investors Service lowered the
senior secured and senior implied ratings on the securities of
Nortel Networks Corp., and its subsidiaries to B3 and Caa3 from
Ba3 and B3 respectively.
Outlook is negative.
The rating action reflects the lack of Nortel's financial
flexibility and the decline of its revenue base. The downgrade
also takes into account the company's planned lapse of its $1.5
billion in credit facilities due on December. However the rating
action is offset by its substantial cash, modest near-term debt
maturities, and the progress the company has made in
streamlining its expenses.
Nortel Networks Ltd.'s 6.125% bonds due 2006 (NT06CAN1) are
trading at about 95 cents-on-the-dollar, says DebtTraders. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAN1for
real-time bond pricing.
NRG ENERGY: Court Fixes Disclosure Statement Hearing for June 30
----------------------------------------------------------------
NRG Energy, Inc., and its debtor-affiliates ask the Court to:
(a) schedule a hearing on the adequacy of the Debtors'
disclosure statement,
(b) approve procedures and materials employed to provide
notice of the hearing on the Disclosure Statement,
(c) approve solicitation procedures, and
(d) schedule a hearing on the confirmation of the Debtors'
joint plan of reorganization.
The Debtors ask the Court to set June 30, 2003 at 9:00 a.m.,
Eastern Time, as the date and time for the Disclosure Statement
Hearing. Matthew A. Cantor, Esq., at Kirkland & Ellis, in New
York, asserts that this proposed date is an appropriate time for
the Disclosure Statement Hearing in light of the circumstances
surrounding these Chapter 11 cases and the thorough notice
procedures.
The Debtors believe that publication of the notice of the
Disclosure Statement hearing, in conjunction with the additional
notice the Debtors propose will provide sufficient notice of the
Disclosure Statement Hearing. Accordingly, the Debtors:
(a) will make the Disclosure Statement available on the
World Wide Web by June 2, 2003;
(b) will publish, at least 20 days prior to the Disclosure
Statement Hearing, the Disclosure Statement Hearing
Notice in the national edition of The Wall Street
Journal, the Star Tribune (Minneapolis-St. Paul) and the
St. Paul Pioneer Press in order to provide notification
to persons who may not otherwise receive notice by mail.
Also, at least 20 calendar days prior to the Disclosure
Statement Hearing, the Debtors:
(a) will serve a copy of the Disclosure Statement and the
Disclosure Statement Hearing Notice by overnight mail
upon:
-- the U.S. Trustee,
-- the Securities and Exchange Commission
-- the office of the U.S. Attorney for the Southern
District of New York,
-- the District Director for the IRS
-- counsel to the administrative agents for certain of
the Debtors' prepetition senior lenders;
-- counsel to any official or ad hoc committees for the
Debtors' prepetition noteholders, bondholders, bank
lenders and unsecured creditors;
-- the indenture trustees pursuant to the Debtors'
secured indentures; and
-- all parties who have requested notice pursuant to
Rule 2002 of the Federal Rules of Bankruptcy
Procedures; and
(b) will serve a copy of the Disclosure Statement Hearing
Notice by first class mail to:
-- all persons or entities that filed proofs of claim on
or before the date of the Disclosure Statement
Hearing Notice,
-- all persons or entities listed on in the Debtors'
schedules of assets and liabilities anticipated to be
filed with the Court on or before June 16, 2003, as
holding liquidated, noncontingent or undisputed
claims,
-- all equity security holders of the Debtors of record,
and
-- any other known holders of claims against or equity
interests in the Debtors.
Mr. Cantor maintains that the mailing and publishing of the
Disclosure Statement Hearing Notice described satisfies the
requirements of Rules 2002(b) and (d) of the Federal Rules of
Bankruptcy Procedures.
Pursuant to Bankruptcy Rule 3017(a), the Debtors ask the Court
establish a deadline of June 20, 2003, a date that is 10
calendar days after the service of the Disclosure Statement, for
parties to file and serve objections to the adequacy of the
Disclosure Statement. The Debtors further seek that the Court
require that all objections to the adequacy of the Disclosure
Statement be filed with the Court and served in a manner so that
they are received at or before 4:00 p.m., prevailing Eastern
time, on the date of the Disclosure Statement Objection Deadline
on the Counsels to the Debtors, to Xcel Energy, Inc., to the
U.S. Trustee, and to the Creditors' Committee.
Proposed Solicitation Procedures for Plan Confirmation
Rule 3017(d) of the Federal Rules of Bankruptcy Procedures sets
forth the requirements for the materials that must be provided
to holders of claims for purposes of soliciting their votes and
providing adequate notice of the hearing on confirmation of a
plan of reorganization. Accordingly, the Debtors propose that,
after entry of the Court's order approving the Disclosure
Statement, these materials be distributed to those parties
entitled to vote under the Plan:
-- the Disclosure Statement;
-- the Plan;
-- the class-specific Ballot; and
-- the Confirmation Hearing Notices.
-- the Court Order approving the Disclosure Statement;
-- a pre-addressed return envelope; and
-- other materials as the Court may direct.
Record Date for Voting and Voting Deadline
The Debtors request that the date on which the Court enters its
order approving the Disclosure Statement be fixed as the record
date for purposes of determining which creditors are entitled to
receive a Solicitation Package and vote on the Plan. As set
forth in the Disclosure Statement, holders of claims in classes
3, 5, 6, and 7 under the Plan will be instructed to return
ballots to the Notice and Claims Agent.
The Debtors ask the Court to set 4:00 p.m., prevailing Pacific
Time, on the date that is at least 10 calendar days prior to the
Confirmation Hearing as the deadline by which all Ballots must
be received by the Notice and Claims Agent in order for the
Ballots to be counted in favor of, or against, the Plan.
Voting Procedures
The Debtors also propose these general voting procedures and
standard assumptions be used in tabulating the Ballots:
(a) All Ballots received after the Voting Deadline will not
be accepted or counted by the Debtors in connection with
the Debtors' request for confirmation of the Plan;
(b) Creditors will not split their vote within a claim;
thus, each creditor will be deemed to have voted the
full amount of its claim either to accept or reject the
Plan;
(c) Any Ballots that partially reject and partially accept
the Plan will not be counted;
(d) The method of delivery of the Ballots to be sent to the
Notice and Claims Agent is at the election and risk of
each holder of a claim or interest, but, except as
otherwise provided in the Disclosure Statement, the
delivery will be deemed made only when the original
executed Ballot is actually received by the Notice and
Claims Agent;
(e) Delivery of a Ballot by facsimile, e-mail or any other
electronic means will not be accepted;
(f) No Ballot should be sent to the Debtors, any indenture
trustee or agent, or the Debtors' financial or legal
advisors;
(g) The Debtors expressly reserve the right to amend at any
time and from time to time the terms of the Plan,
subject to compliance with Section 1127 of the
Bankruptcy Code.
(h) If multiple Ballots are received from or on behalf of an
individual holder of a claim with respect to the same
claims prior to the Voting Deadline, the last Ballot
timely received will be deemed to reflect the voter's
intent and to supercede and revoke any prior Ballot;
(i) If a Ballot is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or
representative capacity, the person will be required to
indicate the capacity when signing and, unless otherwise
determined by the Debtors, must submit proper evidence
satisfactory to the Debtors to do act on behalf of a
beneficial interest holder;
(j) The Debtors, in their sole discretion, subject to
contrary order of the Court, may waive any defect in any
Ballot at any time, whether before or after the Voting
Deadline, and without notice;
(k) In the event a designation is requested under Section
1126(e) of the Bankruptcy Code, any vote to accept or
reject the Plan cast with respect to the claim will not
be counted for purposes of determining whether the Plan
has been accepted or rejected, unless the Court orders
otherwise;
(l) Any holder of impaired claims who has delivered a valid
Ballot voting on the Plan may withdraw the vote solely
in accordance with Bankruptcy Rule 3018(a);
(m) Subject to any contrary order of the Court, the Debtors
reserve the absolute right to reject any and all Ballots
not in proper form, the acceptance of which would in the
opinion of the Debtors or their counsel not be in
accordance with the provisions of the Bankruptcy Code;
(n) Unless waived or as ordered by the Court, any defects or
irregularities in connection with the deliveries of the
Ballots must be cured within the time as the Debtors
determine, and, unless otherwise ordered by the Court,
delivery of the Ballots will not be deemed to have been
made until the irregularities have been cured or waived;
and
(o) Neither the Debtors, nor any other person or entity,
will be under any duty to provide notification of
defects or irregularities with respect to deliveries of
Ballots, nor will any of them incur liabilities for
failure to provide the notification.
Scheduling of the Plan Confirmation Hearing
Pursuant to Section 1128 of the Bankruptcy Code and Rule 3020 of
the Federal Rules of Bankruptcy Procedures, the Debtors propose
that the Plan Confirmation Hearing be set on or before the 45th
calendar day after the entry of an order approving the
Disclosure Statement.
The Debtors will publish the Continuation Hearing Notice in the
national edition of The Wall Street Journal, the Star Tribune
(Mimreapolis-St. Paul) and the St. Paul Pioneer Press, which
will contain the Plan Objection Deadline and the date of the
Plan Confirmation Hearing, in order to provide notification to
persons who may not otherwise receive notice by mail.
Pursuant to Rule 3017(a) of the Federal Rules of Bankruptcy
Procedures, the Debtors further ask the Court to establish a
deadline for parties to file and serve objections to the
confirmation of the Plan that is on or before 10 calendar days
prior to the Plan Confirmation Hearing. In addition, the
Debtors request that replies, if any, to any timely filed
objections to confirmation of the Plan may be filed on or about
two business days prior the Plan Confirmation Hearing.
* * *
Judge Beatty grants the Debtors' Motion setting the date of the
Disclosure Statement Hearing on June 30, 2003 at 2:30 p.m.,
prevailing Eastern Time and scheduling a further hearing on
August 6, 2003 at 2:30 p.m., prevailing Eastern Time to confirm
the Plan.
The Court further orders:
(a) The Disclosure Statement and Confirmation Hearings may
be continued from time to time by announcing the
continuance in open court or otherwise, all without
further notice to parties-in-interest;
(b) Objections, if any, to the adequacy of the Disclosure
Statement will be filed with the Bankruptcy Court as to
be received by the Clerk of the Court on 4:00 p.m.,
prevailing Eastern Time, June 20, 2003;
(c) The Court will consider only written objections filed
and served by the Disclosure Statement Objection
Deadline and the Plan Objection Deadline;
(d) The Notice Procedures set forth in the Motion are
approved and that the Debtors will serve the Notice on
or before June 4, 2003;
(e) The notice of the Disclosure Statement Hearing and Plan
Confirmation constitutes good and sufficient notice of
the hearings and no further notice need be given;
(f) The Debtors must file their proposed Ballots for
approval by this Court by June 4, 2003;
(g) The Solicitation Procedures are approved;
(h) The date on which the Court enters its order of approval
of the Debtors' Disclosure Statement will be the record
date for purposes of determining which creditors are
entitled to vote on the Plan;
(i) The Ballots of holders of claims and interests in
classes 3,5,6,7 and 9 must be received by the Notice and
Claims Agent at NRG Balloting, c/o Kurtzman Carson
Consultants LLC, 5301 Beethoven Street, Suite 102, Los
Angeles, California 90066-7066, by 4:00 p.m., prevailing
Pacific Time, at least 10 calendar days prior to the
Confirmation Hearing; and
(j) The proposed general voting procedures and standard
assumptions be used in tabulating Ballots. (NRG Energy
Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
NRG Energy Inc.'s 8.700% bonds due 2005 (XEL05USA1), DebtTraders
says, are trading between 44 and 46 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=XEL05USA1for
real-time bond pricing.
ONEIDA: Shareholders Okay Stock Plan for Non-Employee Directors
---------------------------------------------------------------
Stockholders at Oneida Ltd.'s (NYSE:OCQ) 122nd Annual Meeting
approved the 2003 Non-Employee Directors Stock Option Plan;
ratified the reappointment of PricewaterhouseCoopers LLP as
independent auditors for the fiscal year ending January 31,
2004; and re-elected three members of the Board of Directors. In
addition, Oneida Chairman and Chief Executive Officer Peter J.
Kallet outlined the company's strategic actions aimed at
overcoming exceptionally difficult conditions in 2002 and the
first half of 2003.
During the meeting at the Oneida Community Mansion House,
stockholders approved the reservation of 100,000 shares of
common stock for issuance under the 2003 Non-Employee Directors
Stock Option Plan, which encompasses members of the Board of
Directors who are not employees of Oneida Ltd. Stockholders also
elected the following members of the Board of Directors to new
three-year terms: Mr. Kallet; Georgia S. Derrico, Chairman of
the Board and Chief Executive Officer, Southern Financial
Bancorp, Inc.; and Peter J. Marshall, Vice President and Chief
Finance Officer, Dover Technologies International, Inc.
MARKETPLACE UNCERTAINTIES FOR 2003
Addressing shareholders, Mr. Kallet said the soft economic
conditions that existed for much of 2002 appeared to be
improving when Oneida concluded its fiscal year in January 2003.
But he said conditions declined sharply during Oneida's first
quarter that concluded in April 2003, noting "a continual
slowing in the economy that has affected consumer spending,
travel and leisure and business entertainment activity, coupled
with the effects of the war (in Iraq), resulted in a difficult
environment.." In addition, the outbreak of the SARS virus
affected Oneida's international operations and will continue to
do so for the foreseeable future, he said.
Due to the extent of these uncertainties, Mr. Kallet said, the
company believes it is prudent to forego providing guidance on
its sales and profits for the remainder of 2003. Oneida will
again provide financial guidance "once the volatility subsides
and economic stability resumes," he added.
RESPONDING WITH POSITIVE ACTIONS
Mr. Kallet detailed a series of actions the company is taking to
offset the conditions. The conversion of Oneida's main flatware
factory in Sherrill, N.Y. to a lean manufacturing system is "the
most significant and dramatic change to our manufacturing
facility in its 125-year history," he said. Once fully
implemented by late 2004, he added, the system will "increase
our productivity, reduce our costs and enhance our
competitiveness" by substantially reducing lead times and
inventory expenses.
Oneida's three divisions are responding to economic challenges
with positive steps for improvement. "As the economy rebounds,"
Mr. Kallet said, each division is "well positioned to capitalize
on increased sales, backed by sound business strategies to
enhance our corporate growth":
-- The consumer products division introduced and placed in
stores "more exciting new patterns and products in late 2002 and
early 2003 than we have seen in the past three years," Mr.
Kallet said. He explained that "many retailers are returning to
trusted brands such as Oneida to restore consumer confidence in
the housewares arena."
-- The foodservice division during 2002 gained significant
market share in its accounts with hotels, chain restaurants, and
independent dealers. Mr. Kallet said the division continues to
"strengthen and realign their field sales force ... finalized
new national contracts with hotel chains, with national chain
restaurants and introduced an array of new products throughout
the industry."
-- The international division increased market share and
operating efficiencies in 2002 with gains in hotel placements,
retail venues and ongoing internal improvements including
significant inventory reductions. While SARS has deterred
business and leisure travel in Asia and Canada, Mr. Kallet said,
the division is optimistic that opportunities in other parts of
the world can partially offset that impact.
EMPLOYEES' EFFORTS ARE APPRECIATED
Mr. Kallet noted that all of Oneida's employees have felt the
impact of the recent economic challenges and the difficult
decisions the company has had to make. Yet despite any
hardships, he said, "our employees have been steadfast in their
work ethic, professionalism, teamwork and devotion .... For
that, we in management say thank you to all of our employees."
Oneida Ltd. is a leading manufacturer and marketer of flatware
and dinnerware for both the consumer and foodservice industries
worldwide. Oneida also is a leading marketer of a variety of
crystal, glassware and metal serveware for those industries.
* * *
As reported in the Mar. 14, 2003, edition of the Troubled
Company Reporter, Oneida announced that it has secured from its
lenders a waiver of non-compliance with the net worth covenant
in its credit agreements. As discussed in the company's
February 26 news release, Oneida recorded a charge to equity in
the amount of $4.0 million after tax in the fourth quarter of
the fiscal year ended January 25, 2003, in order to record a
minimum pension liability under Financial Accounting Standard
No. 87. This charge resulted in the company not being in
compliance with the covenant.
OWENS CORNING: Second Amendments to Plan & Disclosure Statement
--------------------------------------------------------------
Owens Corning presents Judge Fitzgerald its Second Amended Plan
of Reorganization and Disclosure Statement dated May 23, 2003.
A free copy of the Second Amended Disclosure Statement is
available at:
http://bankrupt.com/misc/8460_2ndAmendedDisclosureStatement.pdf
The material modifications to the Plan include:
A. Class 10 Intercompany Claims: An "Intercompany Claim" is
any Claim, including, without limitation, any
Administrative Claim, by a Debtor against another Debtor
or a non-Debtor Subsidiary against a Debtor, but
excluding the Claims set forth on SCHEDULE XIV to the
Plan, as it may be filed or amended at least 10 Business
Days prior to the Objection Deadline.
On the Effective Date, all Intercompany Claims other than
Claims set forth in SCHEDULE XIV, to be filed or amended
at least 10 Business Days prior to the Objection
Deadline, will be deemed cancelled and extinguished but
solely for purposes of the Plan. Except as specified in
SCHEDULE XIV, no holder will be entitled to, or will
receive or retain any property or interest in property on
account of, the Intercompany Claim pursuant to the Plan.
B. The calculation of estimated recoveries for Classes 4, 5,
6, 7 and 8 is dependent on the determination of the
Allowed Claim amounts for Class 7 OC Asbestos Personal
Injury Claims and Class 8 FB Asbestos Personal Injury
Claims. There are also two recovery alternatives, one in
which Class 4 accepts the Plan and receives the Guarantee
Settlement Payment and then Classes 4, 5, 6 and 7 share
in the Combined Net Distribution Package, and a second in
which Class 4 rejects the Plan, does not receive the
Guarantee Settlement Payment and then Classes 4, 5, 6 and
7 share in the Combined Distribution Package.
The chart details five scenarios assuming varying
asbestos claim amounts, ranging from the Company's
current asbestos reserve of $5,800,000,000 to
$24,000,000,000.
ESTIMATED AGGREGATE CLAIM AMOUNT (In Millions)
----------------------------------------------
CLASS A B C D E
----- ------- ------- ------- ------- -------
7 3,564 6,688 10,700 13,375 16,050
8 2,310 3,312 5,300 6,625 7,950
------- ------- ------- ------- -------
TOTAL $5,874 $10,000 $16,000 $20,000 $24,000
The estimated recovery of each of the Classes assuming
Class 4 ACCEPTS the Plan, for each of the various
asbestos claim assumptions, is:
ESTIMATED RECOVERY
-------------------------------------
CLASS CLAIM A B C D E
----- ------ ----- ----- ----- ----- -----
4 $1,480 60.2% 49.1% 42.4% 39.8% 38.0%
5 $1,335 45.4% 30.2% 21.1% 17.6% 15.1%
6 $375 45.4% 30.2% 21.1% 17.6% 15.1%
7 See Above 47.9% 31.9% 22.3% 18.6% 15.9%
8 See Above 66.3% 46.2% 28.9% 23.1% 19.3%
9 $2 100.0% 100.0% 100.0% 100.0% 100.0%
10 $0 0.0% 0.0% 0.0% 0.0% 0.0%
11 N/A 0.0% 0.0% 0.0% 0.0% 0.0%
The estimated recovery of each of the Classes assuming
Class 4 DOES NOT ACCEPT the Plan, for each of the various
asbestos claim assumptions, is:
ESTIMATED RECOVERY
-------------------------------------
CLASS CLAIM A B C D E
----- ------ ----- ----- ----- ----- -----
4 $1,480 48.7% 33.1% 23.4% 19.6% 16.8%
5 $1,335 48.7% 33.1% 23.4% 19.6% 16.8%
6 $375 48.7% 33.1% 23.4% 19.6% 16.8%
7 See Above 51.1% 34.7% 24.6% 20.6% 17.7%
8 See Above 66.3% 46.2% 28.9% 23.1% 19.3%
9 $2 100.0% 100.0% 100.0% 100.0% 100.0%
10 $0 0.0% 0.0% 0.0% 0.0% 0.0%
11 N/A 0.0% 0.0% 0.0% 0.0% 0.0%
(Owens Corning Bankruptcy News, Issue No. 52; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PACER INT'L: S&P Assigns BB- Rating to New Sr Secured Facilities
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Pacer International Inc.'s proposed $330 million senior secured
credit facilities, consisting of a $75 million revolving credit
facility maturing in 2008 and a $255 million term loan facility
maturing in 2010. The 'BB-' corporate credit rating and existing
'BB-' bank loan and 'B' subordinated debt ratings are affirmed.
The new credit facilities will be used to refinance existing
bank debt and redeem outstanding subordinated notes. The
existing bank loan rating and subordinated debt rating will be
withdrawn following the completion of refinancing activities.
Concord, Calif.-based Pacer, which provides intermodal and
logistics services, has about $490 million of debt (including
off-balance-sheet leases).
"The ratings reflect Pacer's high (albeit declining) debt
leverage and exposure to cyclical pressures (especially in its
logistics business), offset by a solid niche position in the
freight transportation and logistics industry and a somewhat
variable cost structure," said Standard & Poor's credit analyst
Lisa Jenkins. Pacer's operations are centered around two key
business areas: the wholesale intermodal business (61% of
2002 net revenues; 28.0% EBITDA margin) and the retail logistics
business (39% of 2002 net revenues; 22.7% EBITDA margin).
Pacer's intermodal business transports cargo containers stacked
two high on specially designed railcars. Its logistics services
include intermodal marketing, truck transportation brokerage,
freight forwarding, freight consolidation and handling, and
supply chain management services. Pacer's intermodal operations
benefit from contractual arrangements that result in a fair
amount of stability in operating results. The company's
increased emphasis on logistics services over the past few
years, however, has increased its exposure to competitive and
cyclical pressures. To mitigate cyclical pressures, Pacer relies
on contracts and operating arrangements with railroads,
independent trucking operators, and leasing companies. A
significant portion of its equipment leases allow for
cancellation within three months or less. While its reliance on
leased equipment and contracts for the use of others' facilities
reduces Pacer's capital spending requirements, it also makes
Pacer more vulnerable to equipment shortages and service
disruptions by its partners.
Pacer has built its current business profile through a series of
acquisitions that have left the company highly leveraged.
Although Pacer used the proceeds (about $127 million) from a
stock offering last year to pay down debt, its debt to capital
(adjusted for operating leases) remains aggressive and is
currently in the low-70% area. About half of Pacer's debt burden
is represented by off-balance-sheet operating leases. Pacer is
expected to continue to pursue acquisitions and investment
opportunities in the highly fragmented logistics industry, but
acquisitions should be modest in size and funded mostly out of
internally generated cash flow.
Acquisitions, investments, and cyclical pressures will likely
limit upside rating potential. The company's somewhat variable
cost structure, its emphasis on cost cutting, and the stability
provided by contractual arrangements in the intermodal
operations should limit downside risk.
PENN TRAFFIC: Files for Chapter 11 Reorganization in S.D.N.Y.
-------------------------------------------------------------
The Penn Traffic Company (OTC: PNFT) and its U.S. subsidiaries
filed voluntary petitions for reorganization under chapter 11 of
the U.S. Bankruptcy Code.
In its filings in the U.S. Bankruptcy Court for the Southern
District of New York in White Plains, the Company indicated that
it intends to reorganize and emerge from chapter 11 as quickly
as possible.
Penn Traffic also announced that it has secured a commitment of
a $270 million senior secured debtor-in-possession (DIP)
financing facility from Fleet Capital Corporation and a
syndicate of lenders that were lenders to the Company prior to
the filing of the petitions. Penn Traffic expects that the $270
million DIP financing will provide the Company with sufficient
financing to operate and pay all vendors during the
reorganization process. The Company also expects to be able to
access $70 million of the DIP facility upon court approval today
of an interim financing order; the full facility is subject to
final court approval at a later date.
"The chapter 11 filing will give us the flexibility we need to
address the financial and operational challenges that have
hampered our performance," said Joseph V. Fisher, Penn Traffic's
President and Chief Executive Officer. "We are gratified by the
strong support of our lenders, which we view as an important
vote of confidence in our Company, our people and our
potential."
The Company said its decision to reorganize under chapter 11 was
based in part on a decline in its liquidity resulting from Penn
Traffic's declining operating performance during the fourth
quarter of Fiscal 2003 and the first quarter of Fiscal 2004.
"The operating environment in the supermarket industry has
become more challenging because of a weak economy, a decrease in
consumer confidence, a lack of food inflation and the increased
penetration of the retail food industry by alternative channels
of trade, such as super centers and limited assortment stores,"
said Mr. Fisher.
"We are determined to complete our reorganization as quickly and
as smoothly as possible, while taking full advantage of this
chance to make a fresh start and reposition Penn Traffic for the
future," said Fisher. "We deeply regret any adverse effect
today's action may have on our employees, vendors, other
business partners and investors. After considering a wide range
of alternatives, however, it became clear to our Board of
Directors that this course of action was the only way to address
the Company's most challenging problems.
"I am confident that our significant resources, modern store
base, lender support, dedicated vendors and hard-working
employees will enable Penn Traffic to emerge from this process
as a stronger, more dynamic, more profitable enterprise with a
well-defined position in the supermarket industry," said Mr.
Fisher.
During the restructuring process, vendors, suppliers and other
business partners will be paid under normal terms for goods and
services provided during the reorganization.
Penn Traffic reported that all 212 Penn Traffic stores are open
and serving customers. The move does not affect the Company's
gift certificates, store credits or Wild Card loyalty card
programs. Penn Traffic's employees are being paid in the usual
manner and their medical, dental, life and disability insurance
and other benefits are expected to continue without disruption.
The Company's pension plan and savings plans are maintained
independently of the Company and are protected under federal
law. The Company will continue to administer the plans.
Penn Traffic also announced that Steven G. Panagos has been
named Chief Restructuring Officer, a new position, effective
immediately. Mr. Panagos will be actively engaged in advising
Penn Traffic on reorganization matters and working with the
senior management team to rebuild and reposition the Company.
Mr. Panagos has vast retail experience. As interim CEO of Crown
Books, he led that company out of chapter 11, and has also
helped numerous other companies with financial restructuring
counsel, including Federated Department Stores, Maidenform,
Metromedia Fiber Network and Montgomery Ward. Mr. Panagos is a
Managing Director of Kroll Zolfo Cooper, a prominent New York-
based financial consulting firm with extensive experience in
financial restructurings.
Penn Traffic also announced that Martin A. Fox, Penn Traffic's
Executive Vice President and Chief Financial Officer and a
Director of the Company, has resigned as an officer and director
of the Company. Mr. Fox resigned for personal reasons and not
as the result of the chapter 11 filing or any other Company
issue.
"Marty Fox has worked tirelessly for years for Penn Traffic and
I will personally miss his keen business insight and broad
financial experience," said Mr. Fisher.
Mr. Fisher outlined the strategic, operational and financial
initiatives that the Company intends to continue or implement
during the reorganization process:
-- Enhance the Company's merchandising through the continued
implementation of programs designed to:
Refine the assortment and enhance the quality and
presentation of products in Penn Traffic stores
Improve the efficiency and effectiveness of promotional
spending
Introduce products and services to address the evolving
lifestyles of customers.
-- Improve store operations through a continued focus on the
consistent delivery of high-quality products and excellent
customer service in a pleasant shopping environment.
-- Strengthen its management development programs.
-- Reduce and contain costs throughout the Company's operations,
while maintaining the Company's quality and service goals
through reengineering the organization and reducing shrink.
-- Evaluate the performance of every store and the terms of
every lease in the Penn Traffic portfolio with the objective
of refining its store base this year to increase cash flow
and return on invested capital.
Penn Traffic also filed a number of first day motions in the
bankruptcy court in White Plains, including requests to obtain
interim financing authority, to pay employees in the ordinary
course of business and for other relief to minimize the
disruption of the chapter 11 process on the Company.
In its filing documents, Penn Traffic and its U.S. subsidiaries
listed total assets of $742 million of assets at book value and
total liabilities of $678 million as of the fiscal year ended
February 1, 2003.
More information about Penn Traffic's reorganization case is
available at the following numbers: Employees: 1-877-807-7097
(toll-free); Customers: 800-724-0205 (toll-free); Vendors and
Suppliers: 315-461-2341.
The Penn Traffic Company operates 212 supermarkets in Ohio, West
Virginia, Pennsylvania, upstate New York, Vermont and New
Hampshire under the "Big Bear," "Big Bear Plus," "BiLo," "P&C"
and "Quality" trade names. Penn Traffic also operates a
wholesale food distribution business serving 80 licensed
franchises and 66 independent operators.
PENN TRAFFIC: Ch. 11 Case Summary & Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: The Penn Traffic Company
411 Theodore Fremd Avenue
Rye, New York 10580
Bankruptcy Case No.: 03-22945
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Penny Curtiss Baking Company, Inc. 03-13491
Big M Supermarkets, Inc. 03-22946
Dairy Dell, Inc. 03-22947
Pennway Express, Inc. 03-22948
Sunrise Properties, Inc. 03-22949
Big Bear Distribution Company 03-22950
Commander Foods, Inc. 03-22951
Abbott Realty Corporation 03-22952
P&C Food Markets, Inc. 03-22954
Bradford Supermarkets, Inc. 03-22955
PT Development, LLC 03-22956
PT Fayetteville/Utica, LLC 03-22957
Type of Business: The Debtor is one of the leading food
retailers in the Eastern United States.
Chapter 11 Petition Date: May 30, 2003
Court: Southern District of New York (White Plains)
Judge: Adlai S. Hardin Jr.
Debtors' Counsel: Kelley Ann Cornish, Esq.
Paul Weiss Rifkind Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Tel: (212) 373-3493
Fax : (212) 492-0493
Total Assets: $736,532,614
Total Debts: $736,532,610
A. Penn Traffic's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
IBJ Whitehall Bank & Notes $100,000,000
Trust Co.
Attn: Corp. Trust Div.
One State Street
New York, NY 10004
Tel: 212-858-2000
Fax: 212-852-2952
Topco Associates, Inc. Trade Debt $2,834,852
Steve Leibfritz
PO Box 96002
Chicago, IL 60693
Tel: 847-329-3359
Fax: 847-676-0315
Kraft General Foods Trade Debt $1,889,222
Todd Wagaman
PO Box 8500-8185
Philadelphia, PA 19178-1833
Tel: 800-898-1833
Fax: 800-418-7264
CH Robinson Co. Trade Debt $1,889,222
Brad Hansen
PO Box 9121
Minneapolis, MN 55480-9121
Tel: 952-937-7835
Fax: 315-471-7452
Procter & Gamble Trade Debt $1,474,119
Jay Jones
PO Box 640503
Pittsburgh, PA 15264-0503
Tel: 800-342-5764
Fax: 800-693-0199
Ron Foth Advertising Trade Debt $1,290,459
Laura O'Mery
PO Box 180239 Dept. 21
Columbus, OH 43218
Tel: 614-888-7771
Fax: 614-888-5933
Frito-Lay, Inc. Trade Debt $901,704
Barabra Bailey
PO Box 643104
Pittsburgh, PA 15264-3104
Tel: 800-776-2257
Fax: 972-376-7471
Hormel Financial Services Trade Debt $892,515
Ford Symonds
PO Box 13095
Newark, NJ 07188-0095
Tel: 800-358-8558
Fax: 716-675-5615
Good Humor-Bryers LC Trade Debt $882,061
William F. Probst
PO Box 75604
Wachovia Bank
Charlotte, NC 28275-5604
Tel: 414-499-5151
Fax: 920-497-6583
General Mills Finance, Trade Debt $858,542
Inc.
James A. Lawrence
c/o EFT Wells Fargo
255 2nd Avenue S
Minneapolis, MN 55479-0004
Pepsi-Cola Bottling- Trade Debt $813,646
Columbus
Kim Gamble
PO Box 710866
Columbus, OH 43271-8771
Tel: 614-253-8771
Fax: 614-253-3306
Pepsi-Cola Allied Bev. Co. Trade Debt $788,459
Mike Bevilacqua
PO Box 75948
Chicago, IL 60675-5948
Tel: 315-463-8581
Fax: 315-463-1660
Coca-Cola Bottling Co. Trade Debt $763,306
of EGL
Milt Barnes
PO Box 631277
Cincinnati, OH 45263-1277
Tel: 513-979-3001
Fax: 513-373-3015
Pepsi-Cola Co. Trade Debt $703,516
Mike Bevilacqua
Lockbox 75960
Chicago, IL 60675-5960
Tel: 336-896-4000
Fax: 336-896-6287
Unilever Best Foods Trade Debt $559,331
Barbara Jacobwitz
PO Box 75141
Charlottem NC 28275
Tel: 630-955-5236
Fax: 630-955-5472
Heil-Brice Retail Trade Debt $542,653
Advertising
Vicky Scruggs
4 Corporate Plaza
Newport Beach, CA 92660
Tel: 949-644-7477
Fax: 949-644-1828
Kimberly-Clark Corp. Trade Debt $471,198
Kevin Jacobik
Church Street Station
PO Box 6759
New York, 10249-6759
Tel: 865-741-7071
Fax: 920-969-3334
Johnson & Johnson Sales Trade Debt $462,999
& Logistic
Rita Moyano
Bank of America
5769 Collections
Center Drive
Tel: 800-541-6430
Fax: 800-635-5574
Veg King Trade Debt $459,136
Vern Smith
PO Box 248
Wauchuala, FL 33873
Tel: 800-611-5464
The News Group Trade Debt $456,279
Kim Cornish
PO Box 908
Jackson, MI 49204
Tel: 517-784-7163
Fax: 517-784-2385
B. Penny Curtiss Baking's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Niagara Mohawk Power Corp. Trade Debt $83,638
International Multifoods Trade Debt $27,456
Bender-Goodman Co., Inc. Trade Debt $23,760
Flowers Snack, LLC Trade Debt $22,645
Lesaffre Yeast Corp. Trade Debt $19,059
Kaufman's Bakery Inc. Trade Debt $14,427
JTM Foods Inc. Trade Debt $13,724
Automatic Rolls of NE Trade Debt $13,542
Buds Best Cookies Inc. Trade Debt $12,416
A.W. Sisk & Son Inc. Trade Debt $12,104
Syracuse Piping Co. Inc. Trade Debt $11,556
Norseman Plastics Trade Debt $7,812
Maryland Wire Belts, Inc. Trade Debt $7,033
Russell T. Bundy Assoc. Trade Debt $6,355
Inc.
Bakemark Trade Debt $6,020
Sweetner's Plus Inc. Trade Debt $5,285
Monk's Bread Trade Debt $4,835
Usherwood & Associates Trade Debt $4,356
H&S Bakery Inc. Trade Debt $4,347
Interstate Brands Corp. Trade Debt $4,021
C. Big M Supermarkets' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Pepsi-Cola Company Trade Debt $489,876
Mike Bevilacqua
Lockbox 75960
Chicago, IL 60675-5960
Tel: 336-896-4000
Fax: 336-898-6214
Frito-Lay Inc. Trade Debt $132,572
George Weston Bakeries, Trade Debt $116,149
Inc.
McAneny Bros. Inc. Trade Debt $105,569
W A DeHart Inc. Trade Debt $95,319
Upstate Farms Cooperatives Trade Debt $77,493
Coca-Cola Bottling Co.-EGL Trade Debt $63,261
Byrne-Diary Trade Debt $56,901
American Color Graphics Trade Debt $54,246
PJ Green Advertising Trade Debt $52,714
Nabisco Brand-DSD Only Trade Debt $47,023
Crowley Foods Inc. Trade Debt $46,114
Meadow Brook Dairy Trade Debt $43,358
Stroehmann Bakeries Trade Debt $39,326
Wise Foods Inc. Trade Debt $32,803
Galliker Dairy Co. Trade Debt $31,178
Pepsi-Cola Bottling Co. Trade Debt $30,940
Gray's Wholesale Inc. Trade Debt $30,929
McKee Baking Co. Trade Debt $29,908
Kraft Pizza Company Trade Debt $28,902
D. Pennway Express' 14 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Sapp Bros. Truck Stops, Trade Debt $1,351
Inc.
Point Spring & Driveshaft Trade Debt $1,077
Co.
Shaw Mack Sales Trade Debt $1,045
Valley Tire Co., Inc. Trade Debt $737
Shortway Service Inc. Trade Debt $353
B&T Fleet Supply Trade Debt $199
RAK Computer Associates Trade Debt $195
Hunter's Truck Sales & Trade Debt $192
Service
Miller Electro Trade Debt $186
DuBois Regional Med. Center Trade Debt $180
E & G Auto Parts, Inc. Trade Debt $174
Valley National Gases Trade Debt $68
Booth Tax & Notary Services Trade Debt $44
Akpharma Inc. Trade Debt $20
E. Sunrise Properties' 4 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Indiana Mowing & Trade Debt $87
Maintenance
Waste Management Trade Debt $68
ONYX Waste Services, Inc. Trade Debt $46
Borough of Indiana Trade Debt $13
Utilities
F. Big Bear Distribution's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Mr. Tire of Columbus Trade Debt $9,750
Center City Int'l Trucks, Trade Debt $5,870
Inc.
Rim & Wheel Serv Trade Debt $3,208
Napa Auto Parts Trade Debt $2,323
Great Dane Trailers Inc. Trade Debt $1,856
Taliafero Enterprises Inc. Trade Debt $1,558
Frame & Spring Inc. Trade Debt $921
Harrs Auto Glass Inc. Trade Debt $746
AV Lubricants Inc. Trade Debt $744
Unifirst Corporation Trade Debt $692
Goodale Auto Parts Inc. Trade Debt $487
Fyda Freight Liner Trade Debt $422
Global Cleaning Services Trade Debt $315
Crystal Clean Trade Debt $289
Excelsior Printing Co. Inc. Trade Debt $228
Pameco-Columbus/Williams Trade Debt $174
Dynalite Corp. Inc. Trade Debt $168
Prepass Trade Debt $149
Principal Truck Supply Inc. Trade Debt $140
Delille Oxygen Co. Trade Debt $133
PENN TRAFFIC: Court Okays Interim $70MM of $270MM DIP Financing
---------------------------------------------------------------
The Penn Traffic Company (OTC: PNFT) announced that the U.S.
Bankruptcy Court for the Southern District of New York in White
Plains today approved $70 million of debtor-in-possession
financing for The Penn Traffic Company and its subsidiaries,
which earlier filed voluntary petitions for reorganization under
chapter 11 of the U.S. Bankruptcy Code.
In its filings the Company indicated that it intends to
reorganize and emerge from chapter 11 as quickly as possible.
The $70 million in interim DIP financing is part of a commitment
to Penn Traffic of a $270 million senior secured debtor-in-
possession financing facility from Fleet Capital Corporation and
a syndicate of lenders that were lenders to the Company prior to
the filing of the petitions. Penn Traffic expects that the $270
million DIP financing will provide the Company with sufficient
financing to operate and pay all vendors during the
reorganization process.
The Company expects approval of the permanent DIP within 45
days.
"The interim DIP financing gives us sufficient liquidity to
operate the Company and pay employees and vendors until the
court approves permanent DIP financing," said Joseph V. Fisher,
Penn Traffic's President and Chief Executive Officer. "We are
gratified by the strong support of our lenders, which we view as
an important vote of confidence in our Company, our people and
our potential."
The approval of interim DIP financing was one of a number of
first day motions approved by the bankruptcy court in White
Plains, including requests to obtain interim financing
authority, to pay employees in the ordinary course of business
and for other relief to minimize the disruption of the
chapter 11 process on the Company.
More information about Penn Traffic's reorganization case is
available at the following numbers: Employees: 1-877-807-7097
(toll-free); Customers: 800-724-0205 (toll-free); Vendors and
Suppliers: 315-461-2341.
The Penn Traffic Company operates 212 supermarkets in Ohio, West
Virginia, Pennsylvania, upstate New York, Vermont and New
Hampshire under the "Big Bear," "Big Bear Plus," "BiLo," "P&C"
and "Quality" trade names. Penn Traffic also operates a
wholesale food distribution business serving 80 licensed
franchises and 66 independent operators.
PEREGRINE SYSTEMS: Delaware Court Approves Disclosure Statement
---------------------------------------------------------------
Peregrine Systems, Inc. (OTC: PRGNQ), a leading provider of
consolidated asset and service management software, announced
that the U.S. Bankruptcy Court for the District of Delaware in
Wilmington has approved its Disclosure Statement, paving the way
for the company to commence solicitation of votes for the
confirmation of its Fourth Amended Plan of Reorganization.
With this approval, Peregrine will distribute its Fourth Amended
Plan of Reorganization and Disclosure Statement, which was filed
on May 27, with voting instructions to creditors to the extent
that their claims or interests are impaired under the amended
Plan and holders of the company's common stock. These groups
will be asked to vote on the Plan in the upcoming weeks.
On June 9 and 10, the Bankruptcy Court plans to hear evidence on
and determine the company's enterprise value for purposes of the
Plan's confirmation. The court has scheduled a confirmation
hearing for Peregrine's Plan on July 8 and 9.
Peregrine filed a voluntary Chapter 11 petition on Sept. 22,
2002 after accounting irregularities came to light, requiring a
restatement of 11 quarters.
Founded in 1981, Peregrine Systems develops and sells
application software to help large global organizations manage
and protect their technology resources. With a heritage of
innovation and market leadership in Consolidated Asset and
Service Management software, the company's flagship offerings
include ServiceCenter(R) and AssetCenter(R), complemented by
employee self service, automation and integration capabilities.
Headquartered in San Diego, Calif., Peregrine's solutions
facilitate the automation of business processes, resulting in
increased productivity, reduced costs and accelerated return on
investment for its more than 3,500 customers worldwide.
PHARMCHEM: Nasdaq Set to Delist Securities from SmallCap Market
---------------------------------------------------------------
PharmChem Inc. (Nasdaq:PCHM) announced that on May 22, 2003, the
Company received a Nasdaq Staff Determination Letter stating
that it had not maintained the $1 million minimum market value
requirement for its publicly held shares as required by
Marketplace Rule 4310(c)(7) for continued listing on the Nasdaq
SmallCap Market. Since the Company had not maintained compliance
with this rule, its securities are subject to delisting from the
Nasdaq SmallCap Market on June 2, 2003.
The Company has requested a hearing before a Nasdaq Listing
Qualification Panel, to review the Staff Determination. The
request for a hearing stays the delisting of the Company's
securities, pending a hearing by the Panel staff. However, there
can be no assurance the Panel will grant the Company's request
for continued listing on the Nasdaq SmallCap Market.
In addition to presenting its position on non-compliance with
the MVPHS rule, the Company, at this hearing, must also address
its failure to comply with the $1 minimum bid price requirement
as set forth in Marketplace Rule 4310(c)(4). The Company has
previously been provided until July 7, 2003 to regain compliance
with the $1 minimum bid price rule.
PharmChem is a leading independent laboratory, providing
integrated drug testing services to corporate and governmental
clients seeking to detect and deter the use of illegal drugs.
PharmChem operates a certified forensic drug testing laboratory
in Haltom City, Texas.
Pharmchem, at March 31, 2003, disclosed a working capital
deficit of about $2 Million.
POLYPHALT INC: Grandwin Halts Flow of Debt or Equity Financing
--------------------------------------------------------------
Polyphalt Inc., has been informed by Grandwin Holdings Limited
that "having received and considered advice from our financial
advisor, and given the cost and complexity of any proposed
transaction and the recent or impending resignations of all of
the independent directors of Polyphalt, we have concluded that
we will not after all be willing to expend any additional funds
either to acquire the shares of Polyphalt or to provide it with
additional debt financing".
Grandwin owns about 63.5% of Polyphalt's common shares.
On March 5, 2003, Polyphalt disclosed that it had negotiated a
loan from Grandwin in an amount of $4 million. Pursuant to the
terms of the loan, Grandwin has advanced to Polyphalt $1 million
and this amount remains outstanding.
On May 23, 2003, Polyphalt disclosed that Grandwin has informed
Polyphalt that an event of default has occurred under the loan
arrangement. Grandwin has not yet called the loan though it has
reserved its rights as a secured lender.
As previously announced, Polyphalt expects to run out of cash by
early June.
To comply with applicable law, three Grandwin nominee directors
and one management director have resigned from the Polyphalt
Board. The remaining Board members are Don Johnston, Ralph Haas
and Douglas Kong.
POLYTECHNIC UNIV.: S&P Cuts Revenue Bond Rating to BB+ from BBB-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating to non-
investment grade level, to 'BB+' from 'BBB-', on revenue bonds
issued for Polytechnic University by the New York City
Industrial Development Agency due to the university's high
amount of outstanding debt and expected poor near-term financial
performance.
"While the university received one of the largest single gifts
to a higher education institution in recent history, the school
is burdened by the restricted nature of that endowment along
with its high level of debt," said Mary Peloquin-Dodd, credit
analyst. She added, "Enrollment declines have exacerbated the
problem."
At the close of fiscal 2003, unrestricted net assets were a
negative $9.0 million, even through temporarily and permanently
restricted net assets were more sizable--at $56.9 million and
$125.8 million, respectively. The university's fiscal 2003
efforts to stabilize finances saw it recruit a new interim CFO
with a prior record of financial turnarounds.
Polytechnic University has campuses located in the boroughs of
Brooklyn, Long Island, and Manhattan and in Westchester County,
New York. A Long Island campus was sold as part of a plan to
consolidate undergraduate programs at the Brooklyn campus. The
university competes with a select group of colleges and
universities that primarily offer courses in technical fields,
such as Rensselaer Polytechnic Institute and Stevens Institute
of Technology.
PRESIDENT CASINOS: Broadwater Hotel Emerges from Reorganization
---------------------------------------------------------------
President Casinos, Inc. (OTC:PREZ) announced that its indirectly
owned subsidiary, President Broadwater Hotel, LLC, which had
filed for reorganization under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court for the Southern
District of Mississippi in April 2001, closed on a new note with
its main creditor and successfully emerged from reorganization.
President Broadwater Hotel, LLC owns the Broadwater Hotel
property in Biloxi, Mississippi, together with an adjoining golf
course, on a total of approximately 260 acres. In addition,
President Broadwater Hotel, LLC is the landlord with respect to
the President Casinos' Mississippi gaming subsidiary, leasing to
it the use of the marina adjoining the Broadwater Hotel.
The new note includes reduced interest rates and a maturity date
of June 2005. The plan also allows the Company to pay 100% of
its unsecured claims.
John S. Aylsworth, President and Chief Operating Officer said,
"We are looking toward the future with new energy and
enthusiasm. We value the support we have received throughout
this process from everyone concerned, especially our guests,
employees and vendors."
President Casinos, Inc. owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri north of the Gateway Arch.
PRESIDENT CASINOS: Feb. 28 Net Capital Deficit Widens to $50MM
--------------------------------------------------------------
President Casinos, Inc. (OTC:PREZ) announced results of
operations for the fourth quarter and the fiscal year ended
February 28, 2003. For the fourth quarter ended February 28,
2003, the Company reported a net loss of $2.9 million, compared
to a net loss of $11.3 million for the fourth quarter ended
February 28, 2002. Revenues for the fourth quarter ended
February 28, 2003 were $29.3 million, compared to revenues of
$32.5 million for the fourth quarter ended February 28, 2002.
Results for the fourth quarter ended February 28, 2003, included
a decrease of approximately $1.2 million in operating income at
St. Louis and an increase of approximately $0.9 million at
Biloxi. The fourth quarter ended February 28, 2003 and
February 28, 2002, included impairments of long-lived assets of
$1.2 million and $7.1 million, respectively, related to assets
held for sale.
For the year ended February 28, 2003, President Casinos reported
a net loss of $9.1 million, compared to a net loss of $20.7
million for the year ended February 28, 2002. Revenues for the
year ended February 28, 2003 were $123.7 million, compared to
revenues of $129.2 million for 2002.
President Casinos' February 28, 2003 balance sheet shows a
working capital deficit of about $31 million and a total
shareholders' equity deficit of about $49.6 million.
President Casinos, Inc., owns and operates dockside gaming
facilities in Biloxi, Mississippi and downtown St. Louis,
Missouri, north of the Gateway Arch.
PROMAX ENERGY: March 2003 Working Capital Deficit Tops $86 Mill.
----------------------------------------------------------------
Promax Energy Inc. (TSE:PMY), which is operating under creditor
protection as of May 7, 2003, announces its financial and
operating results for the three months ended March 31, 2003. The
following is a excerpt from the first quarter report for the
three months ended March 31, 2003 and should be read in
conjunction with the complete financial statements and
Management's Discussion and Analysis available from Promax
Energy Inc. or viewed on SEDAR or its Web site at
http://www.promaxenergy.com
Promax Energy's March 31, 2003 balance sheet shows that its
total current liabilities exceeded its total current assets by
about $86 million.
MESSAGE TO SHAREHOLDERS
CREDITOR PROTECTION
On May 7, 2003, the Company was granted an order by the Court of
Queen's Bench of Alberta providing creditor protection under the
Companies' Creditors Arrangement Act. The initial order was
amended by the Court on May 27, 2003 and may be further amended
by the Court throughout the CCAA proceedings based on motions
from the Company, its creditors and other interested parties.
Although the order triggered defaults on substantially all of
the Company's debt and lease obligations, the order provides for
a general stay period that expires on June 27, 2003, subject to
further extension, as the Court may deem appropriate. This stay
generally precludes parties from taking any action against the
Company for breach of contractual or other obligations, or,
subject to certain limitations, terminating their arrangements
with the Company. The purpose of the stay period order is to
provide the Company with relief designed to stabilize operations
and business relationships with customers, vendors, employees
and creditors. During the stay period, the Company, in
conjunction with its financial advisors, will be conducting a
marketing process to identify potential investors or merger
candidates. At the end of this process, or earlier if a suitable
candidate is identified, the Company anticipates filing a plan
of arrangement for consideration by all of the Company's
creditors. Under the plan of arrangement, claims against the
Company will be divided into classes according to their
seniority or similarity of interests and each class of creditors
will vote on the plan of arrangement as it pertains to that
class. No rulings have yet been made on the classification of
affected creditors. In the event that it becomes apparent that a
financial restructuring cannot be accomplished, or that a plan
of arrangement is not feasible, the Company will likely be
placed in receivership or bankruptcy.
OPERATIONAL
The Company's production averaged 1,834 BOEPD (using an energy
conversion factor of 6:1) in March 2003, an increase of 37.9%
over the December 2002 average of 1330 BOEPD, from established
reserves of 283 BCF. The Company's production averaged 1,550 BOE
(using an energy conversion factor of 6:1) during the period
ended March 31, 2003, representing a 20% decrease as compared to
the 2002 period daily average of 1,950 BOEPD. Operational
highlights from the first quarter include:
- Drilling five Mississippian test wells.
- Completions in 4 shallow wells and 4 deep wells.
- Workovers in 14 shallow wells and 22 deep wells.
- Pipelining 16.5 kms to tie-in 3 shallow wells and 13 deep
wells.
- Receiving approval for holdings and special well spacing
allowing the Company to further down space approximately 40
sections to 8 wells per section (80 acre spacing) or 16 wells
per section (40 acre spacing).
- Further receiving approval for an additional 30+ sections of
land to be drilled for Medicine Hat/Milk River with 4 wells
per section (160 acre spacing).
FINANCIAL
Although the Company's production increased during the period
ended March 31, 2003, the higher commodity prices and the
Company's shortfall of natural gas deliveries under its forward
fixed price contracts in the first quarter of 2003 resulted in a
hedging loss of C$3.28MM. The Company generated gas revenues of
C$2.6 MM for the quarter, with cash outflow being C$1.49 MM. As
a result of the bulk of the Company's debt being US dollar
denominated, foreign exchange gains resulted in the Company
generating net earnings of C$2.6 MM during the period ended
March 31, 2003. Under the provisions of the Court order, the
Company is prohibited from paying most unsecured obligations
which arose prior to the date of the order. In addition, the
Company suspended the making of interest payments to its
principal lender, with the payments due on May 5, 2003 not being
made.
OUTLOOK
Under the current circumstances, the Company's outlook will be
determined by the outcome of its re-organization under CCAA. In
the event that it becomes apparent that a financial
restructuring cannot be accomplished, or that a plan of
arrangement is not feasible in the Company's CCAA proceedings,
the Company will likely be placed in receivership or bankruptcy.
Promax Energy Inc. is a junior oil and gas company listed and
trading on the Toronto Stock Exchange under the symbol "PMY". It
has a high working interest in over 285,000 acres in a gas prone
area of southeastern Alberta with multiple producing horizons
including long life Medicine Hat/Milk River and Coal Bed
Methane.
PRUDENTIAL STRUCTURED: S&P Junks Ratings on Classes B-2L & B-2
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A-1L, A-1, A-2L, B-1L, B-1, B-2L, and B-2 notes issued by
Prudential Structured Finance CBO I, an arbitrage CDO of ABS
transaction, and removed them from CreditWatch where they was
placed April 24, 2003.
The lowered ratings reflect factors that have negatively
affected the credit enhancement available to support the rated
notes since the previous rating action, primarily the recent
negative credit migration of manufactured housing ABS
transactions currently held in the portfolio.
According to the most recent trustee report (May 2, 2003), the
Standard & Poor's rating percentage for assets in the rating
category of 'BB-' and above was 80.44%, versus the minimum of
90%, and compared to a percentage of 84.62% at the time of the
April 2003 rating action.
As part of its analysis, Standard & Poor's reviewed the results
of the current cash flow runs generated for Prudential
Structured Finance CBO I to determine the level of future
defaults the rated tranches can withstand under various stressed
default timing and interest rate scenarios, while still paying
all of the interest and principal due on the notes. When the
results of these cash flow runs were compared with the projected
default performance of the performing assets in the collateral
pool, it was determined that the ratings assigned to the rated
notes were no longer consistent with the amount of credit
enhancement available, resulting in the lowered ratings.
Standard & Poor's will remain in contact with Prudential
Investment Management, the collateral manager for the
transaction.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH
Prudential Structured Finance CBO I
Rating Balance
Class To From (mil. $)
----- ---- ---- --------
A-1L A- A+/Watch Neg 175.0
A-1 A- A+/Watch Neg 70.0
A-2L BB+ BBB-/Watch Neg 20.0
B-1L B- BB-/Watch Neg 8.0
B-1 B- BB-/Watch Neg 4.2
B-2L CCC- B-/Watch Neg 5.0
B-2 CCC- B-/Watch Neg 2.5
QWEST COMMS: 1st Quarter Results Show Core Business Improvement
---------------------------------------------------------------
Qwest Communications International Inc. (NYSE: Q) announced its
earnings and operational highlights for the first quarter of
2003. The company announced first quarter net income of $150
million.
"We continue to see signs of improvement in our core
businesses," said Richard C. Notebaert, Qwest chairman and CEO.
"Our focus on improving the service we provide to customers and
the great value we offer is paying off not only in retaining our
local customers, but also in growth opportunities such as long-
distance service."
"Qwest took additional steps to improve its financial
positioning in the first quarter," said Oren G. Shaffer, Qwest
vice chairman and CFO. "We continued to strengthen the balance
sheet through strategic financing transactions, and made
significant progress in our financial restatement process. These
actions, combined with improving operational trends, are helping
position Qwest for long-term financial success."
Operating Results
Revenue for the first quarter was $3.63 billion, a 9.4 percent
decrease from the same period last year. First quarter revenues
declined year-over- year due to competitive pressures in local
voice and wireless services, as well as strategic de-emphasis of
certain lines of business, including customer premise equipment
resale and out-of-region consumer and wholesale long- distance.
For the first quarter, operating income increased to $179
million from a loss of $47 million a year ago.
Cost of sales and SG&A expenses for the first quarter decreased
$233 million, or 8.1 percent year-over-year. Operating expense
declines were driven by cost reduction initiatives, reductions
in depreciation and amortization, as well as reductions in
demand for certain products. These expense reductions were
partially offset by year-over-year increases to pension and
other employee benefits.
First quarter net income was $150 million or $0.09 per diluted
share, including a $206 million gain, net of related income tax,
for the cumulative effect of adopting SFAS 143, "Accounting for
Asset Retirement Obligations." This compares to a net loss in
the first quarter of 2002 of $23.9 billion. This loss included a
$23.1 billion charge net of tax, related to the adoption of SFAS
No. 142, "Goodwill and Other Intangible Assets."
Operational and Financial Highlights
Some of the key operational and financial highlights achieved
since the announcement of fourth quarter results include:
-- The company's Qwest Corporation subsidiary obtained a
commitment for a $1 billion senior term loan due in 2007.
This loan is being arranged by Merrill Lynch & Co., Credit
Suisse First Boston and Deutsche Bank. The proceeds will be
used to refinance QC bonds due in 2003. With completion of
this refinancing transaction, as well as the close of the
second phase of the QwestDex sale, Qwest expects its
business plan to be fully funded, based upon its ability to
generate operating cash flow and continued access to the
capital markets.
-- By the end of the first quarter, Qwest had signed up 530,000
access lines within its local service area for long-distance
service. These long-distance sales were within the nine
states approved by the Federal Communications Commission
in late December 2002 -- Colorado, Idaho, Iowa, Montana,
Nebraska, North Dakota, Utah, Washington and Wyoming. These
nine states represent approximately 55 percent of Qwest's
total local access line base.
-- On April 15, 2003, Qwest received unanimous approval from the
FCC to re-enter the long-distance business in three
additional states: New Mexico, Oregon and South Dakota. These
three states represent approximately 15 percent of Qwest's
total local access line base. With this action, Qwest now has
FCC approval to offer long-distance service everywhere in its
local service territory except for Minnesota and Arizona. An
FCC decision on Qwest's Minnesota application is due by
June 26, 2003. Qwest plans to file a similar application for
long-distance authority in its final state, Arizona, this
summer.
-- Qwest continued to experience positive stabilizing trends in
its core business. In the first quarter, Qwest lost
approximately 130,000 retail consumer access lines, 27,000
fewer lines than in the fourth quarter. This represents the
third consecutive quarter of sequential improvement. The
company believes this improvement was due to ongoing
retention and customer service initiatives, partially
offsetting the effects of competition and technology
substitution. Combined consumer and business access lines
declined 4.1 percent year-over-year in the first quarter.
Qwest continues to face competition in its retail access line
business from UNE-P service providers and technology
substitution.
-- As part of an ongoing, disciplined approach to capital
investment, first quarter capital expenditures were
approximately $450 million, or approximately 12 percent of
revenue. Qwest is committed to upholding quality customer
service through a disciplined capital investment strategy.
-- Qwest reported strong and measurable service improvements in
the first quarter. Since the launch of the Spirit of
Service(TM) campaign last year, Qwest has improved its
customer service based upon direct customer feedback. In the
American Customer Satisfaction Index published by the
University of Michigan Business School, Qwest's score
moved up 10.7 percent over last year's survey, the largest
improvement of any telecom company and the second-highest
improvement of all the companies surveyed. Qwest's own
customer survey also reports significant improvements in
service: the percentage of consumers reporting their customer
care experience was excellent or very good increased five
percentage points in the first quarter, and 13 percentage
points since the third quarter of 2002.
-- Qwest continued to secure major contracts with large
enterprise and government customers for voice and data
services, entering into new service agreements with: the
states of Minnesota and Utah, Grubb and Ellis, the Department
of Energy, Crate and Barrel, and Recreational Equipment, Inc.
-- Qwest reached a settlement agreement with the Utah Public
Utilities Division for approval of the QwestDex sale. This
settlement agreement has been adopted by the Utah Public
Services Commission. Regulatory reviews of the QwestDex
transaction remain pending in two states. Qwest has reached a
settlement agreement with the staff of the Arizona
Corporation Commission. Hearings in Arizona began May 27. In
addition, Qwest has reached an agreement with the Washington
Attorney General and certain other groups in advance of
Washington hearings that began on May 19. The second phase of
the QwestDex sale is expected to close in 2003 subject to
customary closing conditions with gross proceeds of $4.3
billion.
Debt Update
During the first quarter, Qwest reduced the principal amount of
short- and long-term borrowings by $333 million, from $22.7
billion at December 31, 2002 to $22.3 billion at March 31, 2003.
This reduction was achieved through debt maturity payments of
approximately $160 million, as well as approximately $173
million of principal debt reduction through private exchange
transactions. An unamortized premium of $87 million was recorded
related to these exchanges and is not recognized on the
statement of operations as a gain. As a result, total debt was
reduced by $258 million, net of normal debt extinguishments and
amortization. The private exchange transactions included
exchanges of $392 million principal amount of Qwest Capital
Funding bonds (guaranteed by Qwest Communications International
Inc.) for $218 million of new Qwest Services Corporation notes
and approximately 18 million shares of common stock.
Year-to-date (through 5/29/03), the company has reduced the
principal amount of short- and long-term borrowings by
approximately $500 million, through debt maturity payments of
about $210 million, as well as approximately $290 million of
principal debt reduction through private exchange transactions.
An unamortized premium of $154 million was recorded related to
these exchanges and is not recognized on the statement of
operations as a gain. As a result, total estimated debt
reduction is $360 million, net of estimated debt extinguishments
and amortization. The private exchange transactions included
exchanges of $697 million principal amount of QCF bonds for $406
million of new QSC notes and approximately 30 million shares of
common stock.
Outlook
Based upon the economic and competitive trends experienced in
the first quarter, Qwest's outlook for 2003 financial results is
as follows:
-- The rate of annual revenue decline is expected to be in the
mid-single digit range.
-- Cost of sales and SG&A expenses, in total, are expected to
decline from 2002 levels.
-- Free cash flow from continuing operations (cash provided by
operating activities less capital expenditures) is expected
to be approximately breakeven.
-- Free cash flow expectations are based upon capital
expenditures of approximately $2.5 billion, net interest
expense of $1.7 billion, and a modest contribution from net
working capital (changes in current liabilities, excluding
short-term borrowings, less changes in current assets).
-- Qwest will continue to monitor market conditions for
opportunities to reduce total outstanding debt through
strategic financing transactions.
Investigations Update
As previously announced, the U.S. Securities and Exchange
Commission has been conducting a formal investigation relating
to the company for over a year. The investigation includes,
without limitation, inquiry into several specifically identified
accounting practices and transactions and related disclosures
that were the subject of the initial restatement adjustments
announced by the company. In addition, the investigation has
been expanded to include inquiry into further adjustments and
restatements the company has made as well as additional
transactions. The U.S. Attorney's office for the District of
Colorado has been conducting an investigation relating to the
company and Qwest believes this investigation covers matters
that include the subjects of the SEC investigation. Qwest
continues in its efforts to cooperate with the government in
connection with the investigations.
Qwest Communications International Inc. (NYSE: Q) -- whose
December 31, 2002 balance sheet shows a total shareholders'
equity deficit of about $1 billion -- is a leading provider of
voice, video and data services to more than 25 million
customers. The company's 50,000 employees are committed to the
"Spirit of Service" and providing world-class services that
exceed customers' expectations for quality, value and
reliability. For more information, please visit the Qwest Web
site at http://www.qwest.com
RELIANT: Fitch Ups Sr. Unsec. Rating B After Debt Restructuring
---------------------------------------------------------------
Reliant Resources, Inc.'s indicative senior unsecured debt
rating has been upgraded to 'B' from 'CCC+' by Fitch Ratings.
The rating is removed from Rating Watch Positive where it was
placed on April 1, 2003. In addition, Fitch has assigned a 'B+'
senior secured rating to RRI. The Rating Outlook is Stable.
The rating action follows RRI's successful restructuring of $5.9
billion of bank credit facilities in March 2003 and incorporates
Fitch's review of the company's current and prospective credit
profile. Revised bank terms have eliminated much of the
uncertainty surrounding RRI's near-term liquidity position and
should provide the company with the flexibility to access the
debt capital markets over time. Importantly, terms and
conditions do not place any immediate pressure on RRI to sell
assets and/or tap alternative sources of capital as RRI will not
be required to make any mandatory principal payments prior to
May 15, 2006.
The single-notch differentiating RRI's secured rating above that
of the unsecured indicative rating reflects the enhanced
structural position of secured creditors and Fitch's evaluation
of the underlying collateral package. Banks participating in
RRI's secured credit facility have been pledged virtually all
previously unencumbered assets including a lien on approximately
9,400 megawatts of electric generating capacity and the pledge
of all available subsidiary stock including RRI's Texas retail
business and Orion Power Holdings. In Fitch's view, the secured
creditors have reasonable asset protection, but the margin of
protection is slimmer than in other comparable transactions due
to the extremely high proportion of secured debt relative to
total corporate debt and obligations.
RRI's ratings recognize the weak performance of the company's
wholesale merchant power segment and the high debt leverage
stemming from the 2002 acquisition of Orion Power. Wholesale
segment performance is expected to remain depressed through
2003-2004 due to weak supply/demand fundamentals and losses in
2003 associated with the wind down of speculative trading
activities. Because the vast majority of RRI's generating
portfolio is unhedged beyond 2004 a recovery in wholesale
performance is dependent on a recovery in spark spreads and/or
RRI's ability to secure a higher percentage of long-term power
sales agreements at favorable prices. Fitch notes that the
potential exercise of the Texas Genco purchase option in 2004,
while providing a physical hedge for RRI's retail business,
would further expose RRI to cyclical wholesale power markets
particularly in the over-supplied ERCOT region.
A positive consideration is the ongoing profitability and strong
cash flow contributed by RRI's Texas based retail electric
operations. Since the implementation of Texas electric
deregulation in January 2002, retail operations have performed
as designed, providing a partial hedge against wholesale
earnings volatility. In particular, retail margins have
benefited from RRI's ability to lock in favorable wholesale gas
and power prices. In addition, customer loss has been lower than
originally anticipated. Although retail should be a significant
source of free cash flow for RRI in the near-term, the earnings
sustainability of this business could be impaired over time by
increased competition and less favorable wholesale power pricing
dynamics.
RRI's current financial profile is overly leveraged, especially
given cyclical commodity market conditions which have
significantly reduced realized returns on the company's
generating portfolio. Consolidated debt to EBITDA, adjusted to
include off-balance sheet debt and certain non-recourse project
financings, currently approximates 6.0 times (x). In addition,
RRI's consolidated capital structure includes more than $2
billion of secured subsidiary debt and lease obligations with
terms that limit RRI's ability to upstream cash dividends for
debt service at the corporate level.
The March 2003 show cause order issued by the Federal Energy
Regulatory Commission (FERC) related to RRI's energy trading
activities in the West currently remains unresolved. Under the
order, RRI has to effectively 'show cause' why FERC should not
revoke their market-based rate authority due to RRI's alleged
participation in energy price manipulation at the Palo Verde
power trading hub. Although the mechanics of revocation of
market-based rate authority are unclear, it would not
necessarily preclude RRI from participating in the wholesale
power markets nor from entering into bilateral power contracts,
company returns could ultimately be capped at cost-of-service
tariffs. The current Stable Outlook reflects Fitch's expectation
that this and other regulatory investigations will ultimately be
settled in a manner which will not have a substantially adverse
near-term impact on RRI's liquidity position. Any unexpected
severe penalties would be a negative credit event and would
likely result in a change in RRI's rating and/or outlook.
ROBOTEL ELECTRONIQUE: Bank Loan Restructuring Talks Collapse
------------------------------------------------------------
Electrohome Limited expects that it will write off its entire
investment in Robotel Electronique Inc., of Laval, Quebec.
Robotel has received notice from its bank imposing additional
conditions on renewal of its credit facilities, which Robotel is
incapable of meeting. Robotel's board has authorized Robotel's
bank to proceed with realizing on its loans of approximately
$1.3 million. All members of Robotel's board, including
Electrohome's nominees, have resigned.
Mr. John A. Pollock, Chairman, President and Chief Executive
Officer of Electrohome, stated that: "It is with deep regret
that these actions had to be taken. Under certain circumstances
Electrohome was prepared to inject additional funds to see
Robotel through to the introduction of new products.
Electrohome's offer was deemed to be insufficient by Robotel's
bank." Electrohome and Robotel are not aware of other possible
sources of funds for Robotel.
As a result, Electrohome will incur an accounting loss in the
third quarter of this year in the amount of approximately $6.0
million. Mr. Pollock will also incur a significant loss
personally.
Electrohome will continue to operate with a 26% interest in the
newly merged Fakespace Systems Inc., which is the largest
international company exclusively in the advanced visualization
marketplace, and a small minority interest in Immersion Studios
Inc., which produces specialty digital interactive cinema.
Electrohome also owns its 300,000 sq. ft. facility in Kitchener,
Ontario, most of which is leased to external tenants.
Electrohome's shares are traded on the TSX under the symbols
ELL.X (voting) and ELL.Y (non-voting).
ROGERS COMMS: Board of Directors Declares Semi-Annual Dividend
--------------------------------------------------------------
Rogers Communications Inc. (TSX: RCI.A and RCI.B, NYSE: RG)
announced that its Board of Directors has declared a
semi-annual dividend of C$0.05 per share on each of its
outstanding Class B Non-Voting shares, Class A Voting shares,
and Series E Preferred shares. The dividend will be paid on
July 2, 2003 to shareholders of record on June 16, 2003. This
follows the Company's announcement of yesterday, May 28, 2003,
of the adoption of a dividend policy of $0.10 per share
annually, through two semi-annual dividend payments of $0.05 per
share.
Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RG) is
Canada's national communications company, which is engaged in
cable television, Internet access and video retailing through
Rogers Cable Inc.; digital PCS, cellular, and wireless data
communications through Rogers Wireless Communications Inc.; and
radio, television broadcasting, televised shopping, and
publishing businesses through Rogers Media Inc.
* * *
Standard & Poor's Ratings Services revised the outlook to
negative from stable on Rogers Communications Inc., and its
subsidiary, Rogers Cable Inc. At the same time, the ratings on
Rogers Communications, including its 'BB+' long-term corporate
credit rating, as well as the ratings on its subsidiaries, were
affirmed.
The outlook reflects Standard & Poor's concerns about Rogers
Communications' financial profile, particularly its leverage,
which is high for the rating. Lease-adjusted total debt to
EBITDA has increased to 5.9x in 2002 from 5.3x in 2001, largely
due to negative free cash flows as the company completes its
cable system upgrades.
ROHN INDUSTRIES: Fails to Comply with Nasdaq Listing Guidelines
---------------------------------------------------------------
ROHN Industries, Inc., (Nasdaq: ROHNE), a provider of
infrastructure equipment to the telecommunications industry,
received a Nasdaq Staff Determination dated May 23, 2003
advising the Company that Nasdaq has not received the Company's
Form 10-Q for the period ended March 31, 2003, as required by
Marketplace Rule 4310(C)(14), and that the Company has not yet
paid its 2003 SmallCap annual fee in the amount of $8,000, which
was due as of January 30, 2003, in accordance with Marketplace
Rule 4500 Series and as required by Marketplace Rule
4310(C)(13). Nasdaq notified the Company that, accordingly, the
Company's securities will be delisted from The Nasdaq SmallCap
Market at the opening of business on June 3, 2003. Nasdaq
further notified the Company that it may appeal the delisting to
a Nasdaq Listing Qualifications Panel by no later than May 30,
2003, which will stay the delisting of the Company's securities
pending the Panel's decision.
The Company indicated that it has paid the 2003 Small Cap Annual
Fee and requested a hearing before the Panel. There can be no
assurance the Panel will grant the Company's request for
continued listing.
In its May 23, 2003 letter, Nasdaq further stated "On June 13,
2002, Staff also notified the Company that the bid price of its
common stock had closed below $1 per share for 30 consecutive
trading days, and accordingly, that it did not comply with
Marketplace Rule 4450(a)(5). On October 14, 2002, the Company
transferred to The Nasdaq Small Cap Market and it was afforded
the remainder of this market's 180 calendar day grace period. On
December 17, 2002, Staff notified the Company that in accordance
with Marketplace Rule 4310(C)(8)(D), the Company would be
provided an additional 180 calendar days, or until June 9, 2003,
to regain compliance. If the Company appeals, it needs to
address this issue at its hearing." (Footnote 7 to the May 23,
2003 Nasdaq letter.) There is no assurance that the Company will
regain compliance on this issue and remain listed.
The Company is a manufacturer and installer of
telecommunications infrastructure equipment for the wireless
industry. Its products are used in cellular, PCS, radio and
television broadcast markets. The Company's products include
towers, poles, related accessories and antennae mounts. The
Company also provides design and construction services. ROHN has
a manufacturing location in Frankfort, IN along with offices in
Peoria, IL and Mexico City, Mexico.
* * *
As reported in Troubled Company Reporter's November 13, 2002
edition, the Company is experiencing significant liquidity
and cash flow issues which have made it difficult for the
Company to meet its obligations to its trade creditors in a
timely fashion. The Company expects to continue to experience
difficulty in meeting its future financial obligations.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $1 million.
On November 7, 2002, the Company entered into an amendment to
its credit and forbearance agreements with its bank lenders.
The amendment to the credit agreement, among other things,
further limits the Company's borrowing capacity by modifying the
definition of the borrowing base to decrease the amount of
inventory included in the borrowing base. Additionally, the
amendment modifies the definition of the borrowing base to
provide additional borrowing capacity of varying amounts during
this period. The amendments also provide for a series of
reductions in the Company's revolving credit facility that
reduce the availability under that facility from $23 million
currently to $16 million on and after December 31, 2002. In
addition, the amendment also provides for additional term loan
payments through January 1, 2003. Furthermore, the amendment
provides for additional bank fees, some of which will be waived
if the Company achieves a significant reduction in the aggregate
loan balance at December 31, 2002. Finally, the current
amendment also includes covenants measuring revenues, cash
collections and cash disbursements. Under the amendment to the
forbearance agreement, the bank lenders have agreed to extend
until January 31, 2003 the period during which they will forbear
from enforcing any remedies under the credit agreement arising
from ROHN's breach of financial covenants contained in the
credit agreement except for the covenants added to the credit
agreement as a result of this new amendment. If these financial
covenants and related provisions of the credit agreement are not
amended by January 31, 2003, and the bank lenders do not waive
any defaults by that date, the bank lenders will be able to
exercise any and all remedies they may have in the event of a
default.
The Company continues to experience difficulty in obtaining
bonds required to secure a portion of anticipated new contracts.
These difficulties are attributable to the Company's continued
financial problems and an overall tightening of requirements in
the bonding marketplace. The Company intends to continue to
work with its current bonding company to resolve its concerns
and to explore other opportunities for bonding.
SAMSONITE: Credit Facility Maturity Extended to June 24, 2004
-------------------------------------------------------------
Samsonite (OTC Bulletin Board: SAMC) announced that the
previously announced amendment to its existing senior credit
facility, which extends the maturity date of the facility's
revolving credit and European term loans from June 24, 2003 to
June 24, 2004, became effective on May 29, 2003. The Company
believes that the amendment will enable it to meet its short-
term working capital requirements and effectively eliminates
uncertainty about its ability to continue as a going concern
discussed in the Company's January 31, 2003 financial
statements. The amendment became effective as a result of the
Company's reaching agreement in principle on certain issues with
the Pension Benefit Guarantee Corporation.
Definitive documentation of the resolution of the PBGC matter is
a condition to consummation of the Company's recapitalization
transaction. The Company believes that the effectiveness of the
amendment to the senior credit facility and the agreement in
principle with the PBGC represent significant milestones in
consummating the recapitalization, which is expected to occur in
the third calendar quarter of 2003. The recapitalization
transaction remains subject to numerous other customary
conditions and no assurance can be given that these conditions
will be satisfied or that the recapitalization will ultimately
be consummated.
Samsonite is one of the world's largest manufacturers and
distributors of luggage and markets luggage, casual bags,
backpacks, business cases and travel-related products under
brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R),
HEDGREN(R) AND SAMSONITE(R) black label.
* * *
As reported in the May 8, 2003, issue of the Troubled Company
Reporter, the ratings of Samsonite Corporation were affirmed by
Moody's Investors Service. Outlook for the ratings was changed
to developing from negative due to the company's planned
recapitalization pact that could sizably reduce the company's
debts and refinance its current debt facility.
Affirmed Ratings
* B3 - Senior implied rating;
* B2 - $70.0 million senior secured revolving credit facility
due in June 2004;
* B2 - $35.2 million senior secured European term loan
facility due June 2004;
* B2 - $46.2 million senior secured U.S. term loan facility
due June 2005;
* Caa2 - $322.8 million 10-3/4% senior subordinated notes due
June 2008;
* C - $309.1 million 13-7/8% senior redeemable preferred
stock due June 2010;
* Caa1 - Senior unsecured issuer rating.
SINCLAIR BROADCAST: Completes $100MM Debt Financing Transaction
---------------------------------------------------------------
Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) completed its
private placement of $100.0 million aggregate principal amount
of Senior Subordinated Notes, which was an add-on issuance under
the indenture relating to Sinclair's 8% Senior Subordinated
Notes due 2012. The Notes were issued at a price of $105.3359
plus accrued interest from March 15, 2003 to May 28, 2003,
yielding a rate of 7.00%.
The Company intends to use the net proceeds, along with the net
proceeds received in connection with our issuance of $150
million of Senior Subordinated Convertible Notes due 2018, to
finance the repurchase or redemption of the 11.625% High Yield
Trust Offering Preferred Securities due 2009 and for general
corporate purposes, which may include the repayment of bank
debt.
The Senior Subordinated Notes and the Convertible Notes offered
by Sinclair have not been registered under the Securities Act of
1933, as amended, or any state securities or blue sky laws and
may not be offered or sold in the United States or in any state
thereof absent registration or an applicable exemption from the
registration requirements of such laws.
As reported in Troubled Company Reporter's May 16, 2003 edition,
Standard & Poor's Ratings Services assigned its 'B' rating to
Sinclair Broadcast Group Inc.'s offering of $100 million senior
subordinated notes.
At the same time, Standard & Poor's assigned its 'B' rating to
the company's proposed $100 million convertible senior
subordinated notes due 2018. Proceeds are expected to be used to
refinance existing debt. Standard & Poor's also affirmed its
'BB-' long-term corporate credit rating on the television
station owner. The outlook is negative. Hunt Valley, Maryland-
based Sinclair had total debt outstanding of approximately $1.5
billion on March 31, 2003.
SMITHFIELD FOODS: Fourth Quarter Conference Call Set for June 4
---------------------------------------------------------------
Smithfield Foods, Inc. (NYSE: SFD) will announce its fiscal 2003
Fourth quarter earnings on Wednesday, June 4 before the market
opens.
The company will host a conference call at 9:00 a.m., Eastern
Daylight Time, Wednesday, June 4. The call can be accessed live
on the Internet at Vcall:
http://www.vcall.com/ClientPage.asp?ID=83990
The webcast will be archived on the Smithfield Foods Web site:
http://www.smithfieldfoods.com/investor/calls
* * *
As previously reported, Standard & Poor's Ratings Services
lowered its corporate credit, bank loan, and senior secured debt
ratings on leading hog producer and processor Smithfield Foods
Inc. to 'BB+' from 'BBB-'.
At the same time, the senior unsecured debt ratings on the
company were lowered to 'BB' from BB+' and the subordinated debt
ratings were lowered to 'BB-' from 'BB+'. All the ratings have
been removed from CreditWatch where they were placed on Jan. 22,
2003. The outlook is negative.
Standard & Poor's also assigned its 'BB' senior unsecured rating
to Smithfield's $250 million senior unsecured notes due 2013.
SORRENTO NETWORKS: Shareholders Approve Restructuring Plan
----------------------------------------------------------
Sorrento Networks Corp. (Nasdaq:FIBR), a leading supplier of
intelligent optical networking solutions for metro and regional
applications, announced that its shareholders overwhelmingly
voted in favor of the capital and corporate restructuring plan.
The company's shareholders ratified the restructuring plan at a
special shareholder meeting held on May 29, 2003, in San Diego.
The company received proxies representing greater than 50% of
the shares eligible to vote, constituting a quorum. The proposed
capital restructuring was favorably received by a substantial
majority of those who cast ballots and all of the propositions
passed with votes in favor ranging from 71% to 95%.
"We are very pleased that our shareholders have approved the
restructuring plan," stated Phil Arneson, chairman and chief
executive officer of Sorrento Networks. "This is truly a
landmark achievement and demonstrates the strong confidence that
our investors have in Sorrento's future success. I cannot
overemphasize how important this is for the company."
Arneson continued, "When completed, this comprehensive
restructuring will give us a new beginning, with the following
benefits:
-- Eliminates significant debt from the company's balance sheet
-- Provides financial flexibility for raising additional capital
-- Opens up new sales opportunities with major customers by
removing financial uncertainty, and
-- Simplifies our corporate structure and streamlines operations
for greater efficiencies."
Arneson then added, "Sorrento is emerging stronger than ever and
is poised for growth. Our technology is excellent and our
product strategy is sound. Our customer base is intact and
loyal, and we have the right people to execute. This would not
have been accomplished without the perseverance of Sorrento's
loyal employees, to whom I am grateful. On behalf of Sorrento's
board and management, I also wish to thank the debenture holders
and the Series A preferred shareholders for their cooperation
with and confidence in Sorrento.
"With the restructuring nearing completion, we can now focus all
of our energies on raising additional capital and executing our
business initiatives of growing revenues, expanding our customer
base and developing next-generation products.
"Huge nonrecurring expenses are behind us. Enormous management
distractions are behind us. We know what we have control over.
We know what we can accomplish. The market will come back,"
concluded Arneson.
Restructuring Plan Summary
Details of the restructuring plan were presented in a proxy
statement sent to shareholders on April 15, 2003. Briefly, the
agreement provides that $81 million in debt obligations
currently on the company's balance sheet (consisting of the
company's $32.2 million in convertible bonds and all Series A
Preferred shares) will be converted into common shares of the
company and into $12.5 million in secured convertible debentures
maturing in August 2007. The outstanding Series A "put" of $48.8
million against Sorrento Networks Inc. will be withdrawn. The
Senior Convertible Debenture Holders and Series A Preferred
Shareholders will receive common shares and new convertible
debentures, which, in the aggregate, will represent
approximately 87.5% of the company's common stock on a diluted
basis. Existing shareholders will retain 7.5% of the common
stock of the company on the same diluted basis and will receive
non-transferable warrants to purchase approximately 5% of the
company's common stock.
The company will reincorporate in Delaware and, post-closing,
will simplify its corporate structure by merging its operating
and non-operating subsidiaries into a new Delaware corporation.
The formal transfer of preferred shares and convertible
debentures for common shares is expected to close in early June
2003. An amendment to the Exchange Agreement extending the
closing deadline from May 30 to June 6, 2003, has been approved
by the requisite percentages of debenture holders and Series A
preferred shareholders.
Nasdaq Listing
Completion of the restructuring plan will satisfy the remaining
requirements for continued listing on the Nasdaq National Market
and the company will possess shareholder equity of at least $10
million. A formal request to the Nasdaq Listing Qualifications
Panel to extend the deadline for compliance from May 30 to
June 6, 2003, will be submitted this week.
First Quarter Financial Results
The company also announced that it expects to release its
financial results for the fiscal first quarter ended April 30,
2003, today, and that it will hold a conference call to discuss
these results next week, following the anticipated closing of
the restructuring transaction, on Monday, June 9, 2003, at 2:00
p.m. PT (5:00 p.m. ET). Details regarding the conference call
will be forthcoming this week.
Sorrento Networks, headquartered in San Diego, is a leading
supplier of intelligent optical networking solutions for metro
and regional applications worldwide. Sorrento Networks' products
support a wide range of protocols and network traffic over
linear, ring and mesh topologies. Sorrento Networks' existing
customer base and market focus includes communications carriers
and service providers in the telecommunications, cable TV and
utilities markets. Recent news releases and additional
information about Sorrento Networks can be found at
http://www.sorrentonet.com
SSP SOLUTIONS: Fails to Maintain Nasdaq Listing Requirements
------------------------------------------------------------
SSP Solutions Inc. (Nasdaq:SSPX) a leading provider of identity
and information assurance products and services, announced that
the company received a Nasdaq Staff Determination on May 22,
2003 indicating that the company failed to comply with the
minimum bid price requirement of $1.00 per share for continued
listing set forth in MarketPlace Rule 4450(a)(5) and that its
securities are, therefore, subject to delisting from the Nasdaq
National Market.
The company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff Determination. There
can be no assurance the Panel will grant the company's request
for continued listing.
SSP Solutions and SSP-Litronic design and develop innovative
data and communication security solutions for both corporate and
government institutions. The company's solutions meet the
performance and security requirements of today's demanding PKI-
based Information Assurance based environments.
The company provides network security, desktop protection, and
high assurance messaging systems for many organizations of the
U.S. Government. For more information, visit
http://www.sspsolutions.com/
SSP Solutions Inc.'s March 31, 2003 balance sheet shows that its
total current liabilities outweighed its total current assets by
about $7 million.
As reported in its recent Form 10-Q filing, the Company said:
"In the opinion of the management of SSP Solutions, Inc., the
[Company's] unaudited condensed consolidated financial
statements contain all adjustments (which are normal recurring
accruals) necessary to present fairly the financial position as
of March 31, 2003; the results of operations for the three
months ended March 31, 2002 and 2003; and the statements of cash
flows for the three months ended March 31, 2002 and 2003.
Interim results for the three months ended March 31, 2003, are
not necessarily indicative of the results that may be expected
for the year ending December 31, 2003. The interim financial
statements should be read in conjunction with the Company's
consolidated financial statements for the year ended
December 31, 2002, included in the Company's Form 10-K/A, filed
in April 2003.
"[The Company's] condensed consolidated financial statements
have been prepared assuming that the Company will continue as a
going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business.
The Company has incurred significant operating losses, has used
cash in operating activities, has an accumulated deficit, and
deficit working capital. The Company currently anticipates that
existing resources will not be sufficient to satisfy
contemplated working capital requirements for the next twelve
months."
STARWOOD HOTELS: Sells Additional $60MM of High Premium Notes
-------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) announced
that the initial purchasers have exercised their option to
acquire an additional $60 million principal amount of high
premium convertible notes due 2023.
The notes are convertible into shares of Starwood's stock at a
conversion price of $50.00 per share and bear interest at 3.50 %
per annum. $300 million principal amount of notes were sold
earlier this month. Starwood expects to use the net proceeds to
repay indebtedness and for general corporate purposes.
The offering is being made only to qualified institutional
buyers. The notes and the shares of common stock issuable upon
conversion have not been registered under the United States or
state securities laws and may not be offered or sold in the
United States absent registration or an applicable exemption
from registration requirements.
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading
hotel and leisure companies in the world with more than 750
properties in more than 80 countries and 105,000 employees at
its owned and managed properties. With internationally renowned
brands, Starwood is a fully integrated owner, operator and
franchisor of hotels and resorts including: St. Regis(R), The
Luxury Collection(R), Sheraton(R), Westin(R), Four Points(R) by
Sheraton, W(R) brands, as well as Starwood Vacation Ownership,
Inc., one of the premier developers and operators of high
quality vacation interval ownership resorts. For more
information, please visit http://www.starwood.com
As reported in Troubled Company Reporter's May 16, 2003 edition,
Fitch Ratings assigned a rating of 'BB+' to the $300 million
in 3.5% convertible senior notes (potentially as much as $360
million including an overallotment option) due 2023 issued by
Starwood Hotels & Resorts Worldwide, Inc.
Proceeds are to be used to repay a portion of outstanding
balances under the revolving credit facility and for general
corporate purposes. The notes will rank pari-passu with all
other senior debt including bank facilities. The notes are not
redeemable prior to May 23, 2006, but may be put to the company
on May 16 of 2006, 2008, 2013 and 2018. The Rating Outlook is
Negative.
The 'BB+' rating reflects the company's standing as one of the
premier global lodging companies, with substantial product and
geographic diversification, strong cash flow generating ability,
and continued access to capital markets. Nonetheless, like its
peers, Starwood has faced persistent industry weakness in
revenue per available room, with little visibility for
improvement in the near term. While debt has been reduced since
year-end 2001, leverage is high for the ratings category, and
continues to climb as EBITDA deterioration has outpaced debt
reduction. However, potential asset sales, forecast by the
company at $1.1 billion in 2003, could accelerate debt reduction
in 2003 and keep credit measures stable.
The Rating Outlook remains Negative due to the weak lodging
fundamentals.
SUN HEALTHCARE: Term Loan Lenders Cancel Foreclosure Sale
---------------------------------------------------------
Sun Healthcare Group, Inc., (OTC BB: SUHG) announced the
cancellation of the scheduled foreclosure on the stock of
certain of the Company's indirect subsidiaries that provide
pharmaceutical services. The cancellation of the foreclosure was
part of a forbearance agreement the Company entered into with
its term lenders and Dallas Lease & Finance, L.P., an affiliate
of Highland Capital and the administrative agent of the
Company's Term Loan and Note Purchase Agreement. As part of the
forbearance agreement, the administrative agent also agreed to
withdraw the previously announced acceleration of the Term Loan.
The Company previously reported that it is engaged in the
process of restructuring its business, that it will need
additional liquidity during the next few months and that it may
sell assets to provide liquidity needed to complete the
restructuring. The forbearance agreement will permit the Company
sufficient time to complete this process in an orderly manner to
maximize value for all stakeholders.
Richard K. Matros, chairman and chief executive officer of the
Company, stated, "We are pleased that we were able to reach a
satisfactory agreement with the term lenders. I want to express
my appreciation for the support that our senior lenders have
given the Company as we work through our ongoing restructuring
process."
Headquartered in Irvine, California, Sun Healthcare Group, Inc.
owns many of the country's leading healthcare providers. Through
its wholly-owned SunBridge Healthcare Corporation subsidiary and
its affiliated companies, Sun's affiliates together operate more
than 200 long-term and postacute care facilities in 25 states.
In addition, the Sun Healthcare Group family of companies
provides high-quality therapy, pharmacy, home care and other
ancillary services for the healthcare industry.
For further information regarding the Company and the matters
reported herein, see the Company's Report on Form 10-K for the
year ended December 31, 2002, a copy of which is available at
the Company's Web site at http://www.sunh.com
SYNBIOTICS: Working Capital Problems Spur Going Concern Doubts
--------------------------------------------------------------
Synbiotics Corporation incurred a net loss of $14,401,000 during
the year ended December 31, 2002, and had an accumulated deficit
of $44,980,000 as of March 31, 2003. As of March 31, 2003, the
Company had an outstanding principal balance under its bank debt
totaling $5,610,000, of which $1,250,000 will be paid in monthly
installments through January 1, 2004 and the remaining
$4,360,000 is due and payable on January 25, 2004.
The Company believes that its cash flow from operations will be
insufficient to meet its January 25, 2004 obligation; and that
the Company will have to restructure or refinance the bank debt,
or obtain additional capital. These factors raise substantial
doubt about the Company's ability to continue as a going concern
for a reasonable period of time. The Company believes it will
be able to restructure or refinance the bank debt, and is
planning on beginning the restructuring process in the second
half of 2003. However, no assurance can be given that the
Company will be successful in this effort.
On April 9, 2003, the Company was notified by Agen Biomedical,
Ltd. that Agen was terminating its supply agreement with the
Company due to the Company's alleged breach of contract. Agen
manufactured certain of the Company's Witness' in-clinic
diagnostic products including canine heartworm, feline leukemia,
feline heartworm and canine parvovirus. These Witness' products
represented $2,281,000 and $2,620,000 of the Company's net sales
during the three months ended March 31, 2003 and 2002,
respectively, and $8,069,000 of the Company's net sales during
the year ended December 31, 2002. The Company has notified Agen
that Agen does not have the right to terminate the Agreement.
On April 23, 2003, Agen filed a lawsuit against the Company in
San Diego County Superior Court claiming $779,000 in damages for
breach of contract, and seeking certain forms of provisional
relief. On April 29, 2003 the San Diego County Superior Court
granted a temporary protective order in Agen's favor that
requires the Company to reserve $235,000 of its cash, except for
certain specified uses of funds, for this temporary protective
order. The Company believes that its underlying disputes with
Agen, if not previously settled, will ultimately be decided by
arbitration.
Synbiotics' profits increased in the first quarter of 2003 over
the first quarter of 2002, even if one excludes the 2002 charges
of $3,682,000 for retention bonuses and $7,649,000 for goodwill
impairment. Expense reductions outweighed a 5% decrease in
sales. A 2003 litigation settlement further improved the 2003
results. Net sales for the first quarter 2003 decreased by
$308,000, or 5%, from the first quarter of 2002. The decrease
reflects a decrease in Company diagnostic product sales of
$380,000, offset by an increase in its instrument product sales
of $72,000. Sales of its diagnostic products decreased due to
continued increased competition in the canine heartworm
diagnostic market, and decreases in sales of its poultry
diagnostic products, particularly in Europe and the Middle East
resulting from uncertainties surrounding the war in Iraq.
Instrument product sales increased primarily due to increased
placements of the Company's SCA 2000 blood coagulation timing
instrument, and the resulting sales of the related consumables.
Management believes that the Company's present capital resources
are insufficient to meet its working capital needs and meet its
contractual obligations for at least the next twelve months,
given that its bank loan has a $4,360,000 balloon payment which
is due on January 25, 2004, which is within that twelve-month
period. Aside from the bank loan balloon payment, management
believes present working capital resources would be sufficient
for operations for at least the next twelve months. The Company
currently expects that it will be able to extend or refinance
the bank loan.
If Synbiotics' commercial relationship with Agen is not
repaired, it is believed that Synbiotics' sales will be
materially adversely affected for at least the second and third
quarters of 2003; and Company results of operations and
financial condition could be materially adversely affected
beyond that period if it is unable to successfully reintroduce
alternate-source products into the market in the anticipated
timeframe.
TELESYSTEM INT'L: Fails to Meet Nasdaq Min. Listing Requirements
----------------------------------------------------------------
Telesystem International Wireless Inc., has received a delisting
determination notice from NASDAQ, indicating that TIW failed to
comply with the US$ 1.00 minimum bid price requirement for
continued listing and that its common shares are, therefore,
subject to delisting from the NASDAQ SmallCap Market. TIW has
the intention to request a hearing before a NASDAQ listing
qualifications panel to review the staff determination. The
hearing request will stay the delisting of TIW's common shares
pending the panel's decision. There can be no assurance that the
panel will grant TIW's request for continued listing. The
listing of TIW's common shares on the Toronto Stock Exchange is
unaffected.
TIW also announces that its Board of Directors has decided to
proceed with a one for five (1:5) consolidation of its common
shares as a result of the delisting determination notice
received from NASDAQ. On May 2, 2003, the shareholders of TIW
adopted a resolution to enable the Board of Directors to proceed
with a share consolidation at a ratio ranging between 1:5 and
1:25.
The effective date of the consolidation is expected to be
approximately three business days after the mailing of letters
of transmittal to shareholders, which will take place within the
next month. On the effective date of the consolidation, every
five shares of TIW's common shares will automatically be
converted into one common share. New share certificates will be
issued upon return of pre-consolidation share certificates. No
fractional shares will be issued. Shareholders who would
otherwise be entitled to receive a fractional share will receive
cash instead in a proportional amount to the average closing
price of the common shares for the twenty trading days prior to
the effective date of the consolidation. Following the
consolidation, the number of issued and outstanding common
shares will be reduced from 467,171,780 to approximately
93,434,360 while the number of issued and outstanding preferred
shares will remain unchanged at 35,000,000 but their conversion
ratio will be changed from 1 common share for each preferred
share to 1 common share for 5 preferred shares.
TIW is a leading cellular operator in Central and Eastern Europe
with almost 4.1 million managed subscribers. TIW is the market
leader in Romania through MobiFon S.A. and is active in the
Czech Republic through Cesky Mobil a.s. The Company's shares are
listed on the Toronto Stock Exchange ("TIW") and NASDAQ
("TIWI").
* * *
As reported in the Jan. 15, 2003, issue of the Troubled Company
Reporter, Standard & Poor's lowered its long-term corporate
credit rating on telecommunications company Telesystem
International Wireless Inc., to 'CCC+' from 'B-'. The outlook is
negative. At the same time, the rating on TIW's US$220 million
14% senior secured notes was lowered to 'CCC+' from 'B-'.
The ratings actions on the Montreal, Quebec-based company
reflect the refinancing risk of the US$220 million notes, which
mature in December 2003, and the structural subordination of the
debt at the corporate level.
THERMOVIEW INDUSTRIES: Director Rodney Thomas Leaves Board
----------------------------------------------------------
ThermoView Industries, Inc. (Amex: THV), one of the country's
largest full-service home improvement companies, filed a current
report on Form 8-K reporting the resignation of Rodney H. Thomas
from the company's board of directors.
Thomas cited personal reasons for his resignation. ThermoView
received his May 22 notification letter on May 27.
"Rod Thomas's contributions to this company have been notable,"
said Charles L. Smith, ThermoView's president and CEO. "We wish
him well in his endeavors."
Thomas, 50, has served as director since 2000. He was Chief
Executive Officer from July 2000 to January 2001, and also
served as vice president of subsidiary Thomas Construction since
its 1999 acquisition by ThermoView until May 2002. Thomas
founded Thomas Construction in 1981. His board term was due
to expire in 2004.
ThermoView is a national company that designs, manufactures,
markets and installs high-quality replacement windows and doors
as part of a full-service array of home improvements for
residential homeowners. ThermoView's common stock is listed on
the American Stock Exchange under the ticker symbol "THV."
Additional information on ThermoView Industries is available at
http://www.thv.com
* * *
In its latest Form 10-Q delivered to the Securities and Exchange
Commission, the company states:
Under our financing arrangements, substantially all of
our assets are pledged as collateral. We are required
to maintain certain financial ratios and to comply with
various other covenants and restrictions under the terms
of the financing agreements, including restrictions as to
additional financings, the payment of dividends and
the incurrence of additional indebtedness. In
connection with waiving defaults at June 30, 2000, PNC
Bank required us to repay $5 million of our $15 million
credit facility with them by December 27, 2000. We were
unable to make the required December 27, 2000 payment,
violated various other covenants, and were declared in
default by PNC Bank in early January 2001. The declaration
of default by PNC Bank also served as a condition of
default under the senior subordinated promissory note
to GE Equity. GE Equity and a group of our officers and
directors in March 2001 purchased the PNC note, and
all defaults relating to the GE Equity note and the
purchased PNC Bank note were waived.
If we default in the future under our debt arrangements,
the lenders can, among other items, accelerate all
amounts owed and increase interest rates on our debt. An
event of default could result in the loss of our
subsidiaries because of the pledge of our ownership
in all of our subsidiaries to the lenders. As of
September 30, 2002, we are not in default under any of
our debt arrangements.
We believe that our cash flow from operations will
allow us to meet our anticipated needs during at least the
next 12 months for:
* debt service requirements;
* working capital requirements;
* planned property and equipment capital
expenditures.
* expanding our retail segment
* offering new technologically improved products
to our customers
* integrating more thoroughly the advertising and
marketing programs of our regional subsidiaries
into a national home-remodeling business
We also believe in the longer term that cash will be
sufficient to meet our needs. However, we do not expect
to continue our acquisition program soon. In October
2002, we opened a new retail sales office in Phoenix,
Arizona, and are working to open two new retail offices
in Nebraska or Iowa and in a southern state in 2003.
TIMCO AVIATION: Inks $6 Million Loan Agreement with Shareholders
----------------------------------------------------------------
In May 2003, Timco Aviation Services Inc. entered into an
agreement with its principal stockholder pursuant to which the
stockholder agreed to loan the Company $6.0 million.
Simultaneously with this loan, Timco entered into an amendment
to its revolving credit facility which modified its borrowing
base. Additionally, in May 2003 the Company obtained a waiver
for non-compliance with financial covenants under its Amended
Credit Facility and its Tax Retention Operating Lease financing
agreement and has entered into agreements that reset financial
covenant requirements under the Amended Credit Facility and TROL
financing agreement. All of these activities will be disclosed
as subsequent events within the Company's filing of financial
statements for the quarter ended March 31, 2003. As a result,
completion of its Form 10-Q for the quarter ending March 31,
2003 has been delayed. The Company expects to file its
March 31, 2003 Form 10-Q shortly.
Timco Aviation Services expects to report a small net loss for
the quarter ending March 31, 2003 on revenues of $51.3 million,
compared to net income of $20.9 million (including a $27.3
million gain arising as a result of a capital and equity
restructuring) on revenues of $57.5 million for the quarter
ended March 31, 2002.
TIMCO Aviation Services, Inc. is among the largest providers of
fully integrated aviation maintenance, repair and overhaul
services for major commercial airlines, regional air carriers,
and air cargo carriers in the world. The Company currently
operates four MR&O businesses: TIMCO, which, with its four
active locations (Greensboro, North Carolina, Macon, Georgia,
Lake City, Florida and Goodyear, Arizona), is one of the largest
independent providers of heavy aircraft maintenance services in
North America; Aircraft Interior Design and Brice Manufacturing,
which specialize in the refurbishment of aircraft interior
components and the manufacture and sale of PMA parts and new
aircraft seats; TIMCO Engineered Systems, which provides
engineering services to both our MR&O operations and our
customers; and TIMCO Engine Center, which refurbishes JT8D
engines.
As reported in Troubled Company Reporter's April 9, 2003
edition, TIMCO Aviation Services, Inc., completed a significant
restructuring of its capital and equity, settled an outstanding
securities class action lawsuit, completed a refinance of all of
its senior debt obligations, sold one operating business and
acquired a second operating business, and completed an extensive
settlement agreement related to the sale of its redistribution
operations in 2000. All of these activities are accounted for in
the Company's results of operations for the year ended
December 31, 2002.
TIMCO Aviations' Dec. 31, 2002, balance sheet disclosed a total
shareholders equity deficit of about $96.7 million and a working
capital deficit topping $10 million.
UNIGENE LABS: Recurring Losses Prompts Going Concern Uncertainty
----------------------------------------------------------------
Unigene Laboratories Inc.'s belief is that it will generate
financial resources to apply toward funding its operations
through the achievement of milestones in the GlaxoSmithKline or
Upsher-Smith Laboratories agreements and through the sale of
parathyroid hormone to GlaxoSmithKline. However, if unable to
achieve these milestones, or unable to achieve the milestones on
a timely basis, the Company would need additional funds to
continue operations. Inigene has incurred annual operating
losses since its inception and, as a result, at March 31, 2003,
had an accumulated deficit of approximately $96,000,000 and a
working capital deficiency of approximately $17,000,000. Its
cash requirements to operate its research and peptide
manufacturing facilities and develop its products are
approximately $10 to 11 million per year. In addition, the
Company has principal and interest obligations under the Tail
Wind note, outstanding notes payable to the Levys, its executive
officers, and obligations relating to its current and former
joint ventures in China. The Company also has stockholder demand
notes in default at March 31, 2003. These factors, among others,
raise substantial doubt about Unigene's ability to continue as a
going concern.
Revenue for the three months ended March 31, 2003 increased
2,074% to $1,739,000 from $80,000 in the comparable period in
2002. Revenue for 2003 consisted primarily of a $1,000,000
milestone payment from GSK as well as bulk PTH sales to GSK in
the amount of $521,000. In 2002, Unigene received a $2,000,000
up-front payment under an agreement for an oral PTH product
licensed to GSK. It also received a $1,000,000 licensing-related
milestone payment from GSK. These $3,000,000 in payments are
being deferred in accordance with SEC Staff Accounting Bulletin
No. 101 (SAB 101) and recognized as revenue over a 15-year
period which is the estimated performance period of the license
agreement. Therefore, $50,000 of the initially deferred up-front
and milestone payments from GSK was recognized as revenue during
the three month period ended March 31, 2003. Also in 2002, the
Company received a $3,000,000 up-front payment under an
agreement for a nasal calcitonin product licensed to USL. This
$3,000,000 is being deferred in accordance with SAB 101 and
recognized as revenue over a 19-year period which is the
estimated performance period of the license agreement.
Therefore, $39,000 of the up-front payment from USL was
recognized as revenue during the three month period ended March
31, 2003. Revenue for 2002 consisted primarily of calcitonin
sales.
Research and development, the Company's largest expense,
increased 19% to $2,166,000 from $1,822,000 for the three months
ended March 31, 2003, as compared to the same period in 2002.
The increase was primarily attributable to costs incurred
relating to its NDA filing for its nasal calcitonin product as
well as to increased personnel costs. General and administrative
expenses increased 26% to $693,000 from $548,000 for the three
months ended March 31, 2003, as compared to the same period in
2002. The increase was primarily due to increased public
relations expenses, personnel costs and professional fees.
Interest income increased $3,000, or 306%, for the three months
ended March 31, 2003, as compared to the same period in 2002,
due to additional funds from GSK and USL available for
investment in 2003. Interest expense decreased $199,000, or 36%,
in the first quarter of 2003 to $349,000 from $548,000 in the
first quarter of 2002. Interest expense for 2003 was reduced by
the settlement with Tail Wind in April 2002. Unigene issued a
$1,000,000 note accruing interest at 6% per annum in connection
with the Tail Wind settlement. Previously, it was accruing
interest on its 5% convertible debentures at an annual interest
rate of 20% due to its defaults on the debentures. In addition,
it had been accruing additional interest expense monthly in an
amount equal to 2% of the outstanding principal amount of the 5%
debentures as a penalty for the removal of its common stock from
trading on the Nasdaq Stock Market. Officers' loans to Unigene
decreased $100,000 during the first quarter of 2003. Both years
were affected by the fact that in 2001 the Company did not make
principal and interest payments on certain officers' loans when
due. Therefore, the interest rate on certain prior loans
increased an additional 5% per year and applied to both past due
principal and interest. This additional interest was
approximately $152,000 for the first quarter of 2003 and
$131,000 for the first quarter of 2002.
The income tax benefit in 2002 of $272,000 consisted of proceeds
received for the sale of a portion of the Company's state tax
net operating loss carryforwards and research credits under a
New Jersey Economic Development Authority program, which allows
certain New Jersey taxpayers to sell their state tax benefits to
third parties. The purpose of the New Jersey program is to
provide financial assistance to technology and biotechnology
companies in order to facilitate future growth and job creation.
Due to the increase in revenue from GSK, partially offset by
increased operating expenses and the decrease in income tax
benefit, net loss for the three months ended March 31, 2003
decreased 43% or approximately $1,100,000 to $1,465,000 from
$2,564,000 for the corresponding period in 2002.
At March 31, 2003, Unigene had cash and cash equivalents of
$684,000, a decrease of $1,540,000 from December 31, 2002.
UNITED AIRLINES: Names Jane Allen SVP for Onboard Services
----------------------------------------------------------
United Airlines (OTC Bulletin Board: UALAQ) announced that Jane
Allen has been named senior vice president -- Onboard Services,
with responsibility for United's flight attendant, food and
beverage and duty-free operations worldwide. Allen will assume
her responsibilities at United on June 19, 2003, reporting to
Pete McDonald, executive vice president - Operations.
Allen has served since 1997 as the head of Flight Service at
American Airlines, where she was responsible for that company's
24,000 flight attendants, including all management and
operations at 22 bases in the U.S. and Latin America, as well as
the company's food/beverage/duty free operations worldwide.
From 1992 to 1997, she served as American's chief labor
negotiator, leading collective bargaining agreement negotiations
with unions representing flight attendants, pilots, mechanics
and ground employees.
"It is not only the scale of Jane Allen's responsibilities that
is impressive, it is the way in which she combines the ability
to administer that operation while still maintaining a high
level of quality contact with flight attendants," said McDonald.
"Jane has focused intently on extensive communications with
flight attendants, and has earned a reputation for being honest,
accessible and candid. Her experience has provided her with the
ability both to view management's priorities through the eyes of
flight attendants, and to view flight attendants' priorities
through the eyes of management, giving her a critical
perspective. With this skill, Jane will make a substantial
contribution in helping United and its flight attendants
continue to work together to build a stronger future."
"I'm very pleased to be joining United at a moment when enormous
opportunities are opening up for the company and its employees,"
said Allen. "United's flight attendants are delivering company
records in customer service, and have made clear their
commitment to the company, so I am looking forward to helping
this company and its people become a sustainable and successful
enterprise for the long term."
Allen joined American as an attorney in 1986, and became
managing director of compensation and benefits in 1992, where
she was responsible for the design, management and
administration of American's compensation and benefit programs
company-wide. She was an attorney with the Dallas-based law
firm of Haynes and Boone from 1981 through 1986. Allen, 51, is
married and has one child.
United operates more than 1,550 flights a day on a route network
that spans the globe. News releases and other information about
United Airlines can be found at the company's Web site at
http://www.united.com
UNITED AIRLINES: BofA Demands Payment for 1995-A Admin. Expense
---------------------------------------------------------------
The Bank of New York and U.S. Bank wants United Airlines Inc. to
pay $12,000,000 in administrative expenses on account of their
obligations under the Jet Equipment Trust Series 1995-A Class A,
Class B and Class C Notes Indentures and the Collateral Agency
Agreement.
The 1995-A Jets Transaction financed five aircraft in United's
fleet. A Trust was established on April 19, 1995 that issued
Notes that were purchased by investors. The Trust's assets
consisted of loan certificates issued by United Obligation
Trusts and U.S. Bank as Trustee. United entered into separate
lease agreements with owner trusts. The leases and rights to
payment were assigned to the U.O. Trusts, which were further
assigned to the JETS Trustee to provide funds to pay principal
and interest due on the Notes.
Edward Zujkowski, Esq., at Emmet, Marvin & Martin, reports that
United has breached the obligations under the 1995-A JETS
Transaction that they elected to perform under Section 1110(a).
The Debtors were required by the Aircraft Financing Documents to
make scheduled payments to the JETS Trustee by March 14, 2003,
or be in default. The Debtors did not make this payment but
continue to use the Aircraft.
"This abuse of the 1110(a) Election is unprecedented under the
law," Mr. Zujkowski says.
Mr. Zujkowski contends that the Debtors entered into a Section
1110 Agreement with the Aircraft Financiers without any
intention of making the attendant payments. The Debtors have
been doing their best to prevent the Financiers from exercising
remedies and now, to make matters worse, default that payments
are due.
The affected Aircraft and the amounts due are:
Tail Number Amount Due
----------- ----------
N190UA $4,085,545
N657UA 1,978,648
N658UA 3,299,808
N659UA 3,328,569
N660UA 0
(United Airlines Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
UNITED COMPONENTS: S&P's Low-B Ratings Reflect High Debt Load
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to privately held United Components Inc. Standard
& Poor's also assigned its 'BB-' senior secured bank loan rating
to UCI's $390 million credit facility, which will consist of a
$65 million revolver due 2009, a $50 million term loan A due
2009, and a $275 million term loan due 2010.
Standard & Poor's also assigned its 'B' rating to the company's
proposed $255 million senior subordinated notes due 2013.
Proceeds from the subordinated notes issue and bank term loan A
and B will be used to fund the purchase of UCI by The Carlyle
Group from UIS Inc. The total transaction price of about $800
million consists of $260 million in equity from The Carlyle
Group, equivalent to about 31% of total capital. The outlook is
stable.
"The ratings reflect UCI's high debt load, weak credit
protection measures, and challenges associated with its highly
competitive end markets," said Standard & Poor's credit analyst
Linli Chee. "The ratings also take into account the company's
sizeable market penetration in each of its businesses, good
product diversity, and long-standing customer relationships with
large retailers."
UCI's financial profile is below average but satisfactory for
the rating. While revenue and EBITDA are expected to be flat to
marginally higher in the near-term, profitability is good as
reflected in operating margins of around 15%.
Standard & Poor's expects that profitability will continue to be
challenged over the intermediate term due ongoing inventory
reduction efforts by large auto parts retailers and pricing
pressures in the industry.
USI HOLDINGS: Reports Results from Annual Shareholders' Meeting
---------------------------------------------------------------
David L. Eslick, Chairman, President and Chief Executive Officer
of U.S.I. Holdings Corporation (Nasdaq: USIH) presented a review
of the company's significant accomplishments in 2002, milestones
for 2003 and goals for the next three to five years at the
company's Annual Shareholders Meeting which was held on May 22,
2003 in New York City.
"USI Takes Flight is a statement that epitomizes 2002 and
reflects on the new heights that the company achieved in
financial, operational, and sales performance," said Mr. Eslick.
"These results are a tribute to the commitment of our 2,100
associates and their focus on exceeding our clients'
expectations. We are focused on continuing our momentum with
critical milestones for 2003 results and a three to five year
plan that builds on our mission to be a leading provider of
fully-integrated insurance and financial services, primarily
serving the middle market."
At the meeting, the shareholders elected all Directors until the
close of the next Annual Shareholder's Meeting. To access the
webcast of the meeting, please visit USI's Web site at
http://www.usi.bizand follow the link. The webcast will be
available until June 20, 2003.
Founded in 1994, USI is a leading distributor of insurance and
financial products and services to small and mid-sized
businesses throughout the United States. USI is headquartered in
San Francisco and operates out of 61 offices in 20 states.
As previously reported, Standard & Poor's Ratings Services
removed from CreditWatch and affirmed its single-'B'-plus
ratings on USI Holdings Corp., after the company successfully
completed its IPO, selling 9 million shares for total gross
proceeds of $90 million.
Standard & Poor's also said that the outlook on USI is positive.
At September 30, 2002, the Company's balance sheet shows a
working capital deficit of about $12 million.
US UNWIRED: Noteholders Reject Company's Proposed Exchange Offer
----------------------------------------------------------------
Noteholders representing in excess of 50% of the aggregate
principal amount of the 13.375% senior subordinated discount
notes of US Unwired, Inc. (OTC Bulletin Board: UNWR) announced
that they have organized an ad hoc committee and have signed a
lock-up agreement to reject the company's current exchange offer
expiring on June 16, 2003. In addition, they announced that
they have retained Chanin Capital Partners as financial advisors
and Orrick, Herrington & Sutcliffe as legal advisors. Any
questions related to the activities of the Ad Hoc Committee can
be directed to the following individuals:
Ernie Sibal - Chanin Capital Partners - 310-445-4010
Tom Kent - Orrick, Herrington & Sutcliffe - 212-506-5072
US Unwired and IWO, which are analyzed on a consolidated basis,
are Sprint PCS Group affiliates and provide wireless services to
about 539,000 subscribers as of June 30, 2002. Total debt at the
Lake Charles, Louisiana-based company at June 30, 2002 was
$723.8 million.
At March 31, 2003, US Unwired's balance sheet shows a total
shareholders' equity deficit of about $126 million.
TRITON PCS: S&P Affirms & Removes B+ Credit Rating Off Watch
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Triton PCS Inc.
At the same time, Standard & Poor's removed the rating from
CreditWatch where it was placed on April 25, 2003. In addition,
Standard & Poor's assigned its 'B+' rating to Triton's $500
million senior notes due 2013 and its 'BB-' rating to the new
$100 million senior secured revolving credit facility due 2008.
The outlook is negative. Berwyn, Pennsylvania-based Triton is a
wireless services provider with a pro forma debt outstanding of
about $1.4 billion.
Proceeds of the $500 million senior note issue will be applied
to paying down the company's existing bank indebtedness and
refinancing a portion of its 11% subordinated notes due May 1,
2008. The rating on the revolving credit facility is based on
preliminary documentation and will be reviewed upon receipt of
the final documentation. The revolving credit facility is
anticipated to close simultaneously with the new senior notes.
"The rating actions are primarily due to the improved liquidity
position resulting from the refinancing and extension of debt
maturities," said Standard & Poor's credit analyst Rosemarie
Kalinowski. In addition, service revenues increased in the first
quarter of 2003 due to higher-than-anticipated net customer
additions, and lower churn and stabilization of the migration to
the UnPlan.
Greater competitive pressures due to higher industry penetration
and regulatory requirements, such as number portability to be
implemented in November 2003, could impact financial results in
the near term. Continued improvement in cash flow measures and
reduction of debt leverage will be essential to maintaining the
current rating.
VERTEL CORP: March 31 Balance Sheet Upside-Down by $2 Million
-------------------------------------------------------------
Vertel Corporation (OTCBB:VRTL), a leading provider of
convergent network mediation and management solutions, reported
revenues of $911,000 for the first quarter ended March 31, 2003,
a 54% decrease from the $2 million reported for the same period
in 2002. Compared to the previous quarter, revenues in the first
quarter were also down 54%, from $2.0 million. The net loss for
the quarter was $1.9 million, an improvement over the $2.4
million loss, experienced during the same period a year ago.
Gross profits as a percentage of sales declined to 60% for the
first quarter of 2003, compared to 86% for the previous quarter
and 46% for the same period a year ago. "Clearly, we are
disappointed with our first quarter results," said Marc Maassen,
President and CEO of Vertel. "We experienced a continuing weak
economy in the U.S. and unexpected project delays with several
of our large clients."
In addition, Maassen said the Company's sales cycle is typically
lengthy, which can result in significant fluctuations from one
quarter to the next and even between geographic markets. "We
also are now focusing more on the carrier market with our
M*Ware(TM) software mediation and management solutions, which
has resulted in a short-term lag in sales, especially in the
U.S.," he said.
Maassen said general and administrative costs for the first
quarter decreased 17%, to $660,000, from $791,000 a year ago. As
a percent of revenues, general and administrative expenses were
72% and 40% in the first quarter of 2003 and 2002, respectively.
The Company expects general and administrative expenses will
continue to decrease in 2003, reflecting a number of additional
cost savings initiatives.
Maassen said sales and marketing expenses fell 30% in the first
quarter of 2003 to $896,000, from $1,273,000, compared to the
same period a year earlier. The decrease of $377,000 reflected
lower expenses for commissions, travel, rent and payroll.
Nevertheless, the decline in expenses did not keep pace with the
revenue shortfall and sales and marketing expenses as a
percentage of revenues increased in the first quarter of 2003 to
98%, from 64% in 2002. "The Company expects sales and marketing
costs to be slightly lower for the balance of the year and
should improve as a percent of sales as revenues increase,"
Maassen added.
In 2002, the Company consolidated all business units and product
lines around M*Ware(TM), or Mediation Ware, the company's
trademarked software mediation and management solutions. M*Ware
enables the integration of existing networks and applications,
as well as the development of new network and service management
applications.
"Our key strategies for 2003 continue to include providing
innovative solutions to Vertel's long-term global customers,
continuing penetration into major service providers and
partnering with other solution providers and integrators,"
Maassen said.
"During the first quarter, the Company had a negative cash flow
from operations of $956,000 and at the end of the quarter had
negative working capital of $2.5 million and an accumulated
deficit of $99.5 million," said T. James Ranney, Interim Chief
Financial Officer. "Cash and cash equivalents totaled $472,000
on March 31, 2003, a decline of $409,000 from the balance of
$881,000 on December 31, 2002. The decrease in cash reflected
the use of cash in operations being partially offset by net cash
proceeds of $500,000 from the issuance of non-convertible
promissory notes to an institutional investor. The Company did
not record any goodwill impairment for the quarter.
"In addition, since the beginning of the year, we have reduced
the total number of employees from 61 to 44 and have implemented
a number of expense saving initiatives. We will continue to look
for additional cost reduction opportunities as the year
progresses," Ranney said.
At March 31, 2003, Vertel Corp.'s balance sheet shows a working
capital deficit of about $4 million, and a total shareholders'
equity deficit of about $2 million.
Vertel is a leading provider of convergent network and mediation
management solutions. Vertel's high-performance solutions enable
customers to quickly and cost-effectively introduce new
services, networks and OSSs while leveraging existing
investments. Using the M*Ware(TM)-driven Development
Environment, Vertel has created a suite of mediation-based
applications that address protocol translation, data
transformation, element and network management, OSS application
integration, and OSS exchange services.
Vertel's product offerings allow seamless management in multi-
technology and multi-vendor environments. Vertel also develops
communications software solutions that fit individual customer
requirements through its Professional Services organization.
For more information on Vertel or its products, visit
http://www.vertel.com
WARNACO GROUP: Corp. Credit & Senior Notes Given Lower-B Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' long-term
corporate credit rating to The Warnaco Group Inc. At the same
time, Standard & Poor's assigned its 'B' unsecured debt rating
to the proposed $210 million senior notes due 2013 to be issued
by Warnaco Inc., a wholly owned subsidiary of Warnaco Group
Inc., which will guarantee the notes. The notes are being
offered pursuant to Rule 144A under the Securities Act of 1933,
with registration rights. The above rating is subject to
Standard & Poor's review of the final documentation.
Standard & Poor's also assigned its 'BB-' bank loan rating to
the Warnaco Inc.'s $275 million secured revolving bank facility.
The ratings outlook on New York, New York-based apparel
manufacturer Warnaco is positive.
The senior secured facilities consist of a $275 million, four-
year revolving credit facility with a $150 million sublimit for
letters-of-credit.
The rating actions are a result of Warnaco's May 27, 2003,
announcement that it is refinancing its current $201 million
second lien notes that were issued to the former secured
creditors as a condition to the company's emergence from Chapter
11 bankruptcy protection on Feb. 4 2003. The proceeds from the
proposed $210 million unsecured notes issue will be used to
repay the current holders of the $201 million notes. This
transaction will also serve to improve the company's liquidity
profile, as it will eliminate required amortization and floating
interest rates.
"The ratings reflect Warnaco's participation in a highly
competitive and promotional retail environment, its significant
concentration in the slower growing department store channel,
exposure to fashion risk in some of its business segments, and
the potential lingering impact of its bankruptcy filing on its
relationships with customers and suppliers," said Standard &
Poor's credit analyst Susan Ding.
The rating also incorporates the operating risk associated with
re-invigorating the company's various product offerings,
especially intimate apparel, which is highly concentrated in the
intensely promotional, sluggish department store channel.
Although experienced in the industry, the new senior management
team still faces a significant challenge in light of the current
economic and operating environment. These factors are somewhat
offset by Warnaco's portfolio of strong brand names with leading
market shares (such as Warners and Olga's, in women's intimate
apparel) and its core products, which are characterized by
relatively stable demand.
Warnaco Group Inc. and substantially all of its domestic
subsidiaries filed for Chapter 11 bankruptcy protection in June
2001. Factors contributing to the filing were the company's
aggressive acquisition strategy and a share repurchase program
that resulted in a highly leveraged capital structure,
deteriorating operating results stemming from the highly
promotional retail atmosphere, and a highly publicized lawsuit
with Calvin Klein Inc. The company emerged from bankruptcy
protection in February 2003 after it closed substantially all of
its domestic retail outlets, restructured operations, and
replaced key members of senior management.
Warnaco manufactures and markets men's and women's intimate
apparel, underwear, and sportswear (including jeans, khakis, and
swimwear). Products are sold under owned-names including Olga,
Warner's, Authentic Fitness, Speedo, Calvin Klein (for underwear
only). Major licensed brand names include CK (jeans wear) and
Chaps by RL, among others.
WEIRTON STEEL: Will Honor $4 Million Prepetition Shipping Liens
---------------------------------------------------------------
Weirton Steel Corporation and its debtor-affiliates sought and
obtained the Court's authority to make certain payments for
prepetition obligations to holders of possessory and artisans'
liens relating to the shipment, warehousing and processing of
goods and supplies in an amount not to exceed $4,000,000.
Arch W. Riley, Jr., Esq., at Bailey, Riley, Buch & Harman, L.C.,
in Wheeling, West Virginia, tells the Court that Weirton has a
reputation for reliability and dependability among its
customers. A major aspect of Weirton's marketing strategies and
related pricing policies revolves around this reputation.
Weirton's reputation depends in substantial part on the timely
delivery of raw materials to its steel making operations, and
the timely processing and delivery of Weirton's finished
products to its customers.
Weirton relies on a number of reputable domestic and
international common carriers, freighters and truckers to
transport raw materials used by Weirton and goods produced by
Weirton. Weirton additionally stores certain finished products
as well as the raw materials, work in process and supplies used
in Weirton's manufacturing operations. This system involves,
inter alia, the use of dock space and "in-transit" warehouses
located near certain customers of Weirton where finished
products are stored pending their release by the customers.
Weirton also uses outside processors that receive work in
process from Weirton, finish the products and ship the finished
products to Weirton's customers. The Processors have possession
of certain of Weirton's products in the ordinary course of
business.
Mr. Riley deems it essential for Weirton's continuing business
viability and the success of its reorganization efforts that it
maintain the reliable and efficient flow of raw materials and
goods through its distribution, warehousing and processing
systems. Unless Weirton continues to receive raw materials, and
transport and deliver work in process, supplies and finished
products on a timely and ordinary course basis, its
manufacturing operations will shut down within a matter of
weeks, thereby causing irreparable damage to Weirton's business
and its reorganization efforts.
With respect to the business operations, Carriers, Warehouse
Creditors and Processors of Weirton are impacted by the laws of
no less than 10 different states, including West Virginia.
Under the laws of these states, a Carrier, Warehouse Creditor or
Processor may have a lien on the goods in its possession which
lien secures charges or expenses incurred in connection with
transportation or warehousing of the goods and the work
performed in the processing of the goods. Weirton believes that
most, if not all, of the Carriers, Warehouse Creditors and
Processors may be entitled to possessory or artisans' liens with
respect to the raw materials, work in process, supplies and
finished products in their possession as of the Petition Date
and will refuse to deliver the raw materials, work in process,
supplies and finished products unless and until their claims for
the carriage, warehousing or processing of the materials have
been satisfied by Weirton and their liens redeemed.
Mr. Riley believes that the delays that might be associated with
the determination of the validity of lien claims and the
determination of adequate protection of the claims, and the
delays that would be associated with turnover actions to compel
delivery of goods and supplies in disputed cases, would unduly
interfere with the movement of supplies and goods through
manufacturing and distribution systems utilized by Weirton.
Weirton further submits that the value of the raw materials,
work in process, supplies and finished products in the
possession of the Carriers, Warehouse Creditors and Processors,
and the potential injury to Weirton if the goods are not
released, is likely to be far in excess of the value of any
charges relating to the transportation, warehousing or
processing of the materials. Weirton estimates that claims of
Carriers, Warehouse Creditors and Processors will not exceed
$3,500,000.
For these reasons, Weirton deems it necessary and essential to
its continued business operations and the success of its
reorganization efforts, with the resultant maximization of value
to its bankruptcy estate and creditors thereof, to make payments
to the Carriers, Warehouse Creditors and Processors on account
of certain prepetition claims.
Weirton will only pay prepetition claims to Carriers, Warehouse
Creditors and Processors where Weirton understands that the
benefit to the bankruptcy estate and creditors from making the
payments would exceed:
1. the costs that it would incur by bringing an action to
compel the turnover of the raw materials, work in
process, supplies and finished products; and
2. the delays associated with not making the payments.
The payments are without prejudice to the rights of Weirton, any
committee or any other party-in-interest to recover the payments
in the event this Court should eventually determine that the
relevant Carrier, Warehouse Creditor or Processor:
1. did not hold a valid possessory lien in property with a
value equal to or greater than the amount of any payment
of prepetition obligations that is made; or
2. executed a valid and enforceable "bailee letter."
Judge Friend further authorizes all applicable banks and other
financial institutions to receive, process, honor and pay any
and all checks drawn on Weirton's accounts in respect of
Carriers, Warehouse Creditors and Processors, whether the checks
are presented prior to or after the Petition Date, provided that
sufficient funds are available in the applicable accounts to
make the payments. Based on its financial control systems,
Weirton submits that each of these checks can be readily
identified as relating directly to the authorized payments of
Carriers, Warehouse Creditors and Processors. Accordingly,
Weirton believes that checks other than those relating to
authorized payments of Carriers, Warehouse Creditors and
Processors and other payments authorized by any related order
will not be honored inadvertently. (Weirton Bankruptcy News,
Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Weirton Steel Corporation's 11.375%
bonds due 2004 (WRTL04USR1) are trading between 34.5 and 36.5
cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WRTL04USR1
for real-time bond pricing.
WESTPOINT STEVENS: Case Summary & 20 Largest Unsec. Creditors
-------------------------------------------------------------
Lead Debtor: WestPoint Stevens Inc.
507 West Tenth Street
West Point, Georgia 31833
Bankruptcy Case No.: 03-13532
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
WestPoint Stevens Inc. I 03-13533
J.P. Stevens & Co., Inc. 03-13534
J.P. Stevens Enterprises, Inc. 03-13535
WestPoint Stevens Stores Inc. 03-13536
Type of Business: The Company is a leading manufacturer,
marketer and distributor of an extensive
range of bed and bath home fashions and
domestic accessory products.
Chapter 11 Petition Date: June 1, 2003
Court: Southern District of New York (Manhattan)
Debtors' Counsel: John J. Rapisardi, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Tel: (212) 310-8000
Fax : (212) 310-8007
Total Assets: $1,334,934,000
Total Debts: $2,156,534,000
Debtors' 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Bank of New York Bond $525,000,000
as Indenture Trustee4
101 Barclay Street, Floor 21
New York, NY 10286
The Bank of New York Bond $475,000,000
as Indenture Trustee5
101 Barclay Street, Floor 21
New York, NY 10286
Ralph Lauren Home Trade $3,025,097
Collections, Inc. ("RLHC")
103 Foulk Road, Suite 201
Wilmington, DE. 19803,
Polo Ralph Lauren Corp.
650 Madison Avenue
New York, NY 10022-1029
Nanya Plastics Trade $1,912,580
P.O. Box 1067
Charlotte, NC 28201
(843) 389-7800
Parkdale Mills Inc. Trade $1,086,311
P.O. Box 75077
Charlotte, NC 28201
(704) 874-5000
Wellman Inc. Trade $926,348
P.O. Box 751316
Charlotte, NC 28275
(704) 357-2040
Atlas Down Co. LLC Trade $563,247
64 Greenpoint Avenue
Brooklyn, NY 11222-1504
(718) 383-0565
Kosa Arteva Specialties Trade $509,454
P.O. Box 7247-8529
Philadelphia, PA 19170-8529
(704) 586-7306
Buhler Quality Yams Corp. Trade $482,477
P.O. Box 506
Jefferson, GA 30549
(706) 367-9834
Progress Energy Carolinas Trade $457,482
Raleigh, NC 27698-001
(800) 452-2777
Dupont Textile & Interior Trade $455,693
P.O. Box 905430
Charlotte, NC 28290-5430
(800) 947-3746
CIT Group/Comm Trade $406,652
Serv/Hoffman Mills
P.O. Box 1036
Charlotte, NC 28210-1036
(212) 684-3700
Johnston Industries Trade $401,333
P.O. Box 2153
Dept. #3384
Birmingham, AL 35287
Lee Tucker
Unifi, Inc. Trade $366,588
P.O. Box 1036
Charlotte, NC 28201-1036
(336) 294-4410
E. I. Dupont DE Nemours Trade $361,336
P.O. Box 905552
Charlotte, NC 28290-5552
(704) 362-7400
Apex Mills Corporation Trade $350,336
Box 960670
Charlotte, NC 28201-11036
Jefferson Smurfit Trade $346,420
P.O. Box 651564
Charlotte, NC 28265-1546
Imex Vinyl Packaging Trade $343,144
5311 77 Ctr. Dr., Suite 95
Charlotte, NC 28217
(704) 527-1785
Steve Jeffery
Belding Hausman Inc. Trade $341,589
P.O. Box 1036
Charlotte, NC 28201-1036
R.L. Stowe Mills Inc. Trade $321,842
P.O. Box 601596
Charlotte, NC 28260-1596
(704) 825-5314
WILLIAMS: Mulls $500 Million Senior Unsecured Notes Offering
------------------------------------------------------------
Williams (NYSE: WMB) is considering an underwritten public
offering of $500 million of senior unsecured notes.
Williams is evaluating the market and likely pricing for the
notes offering and provides no assurance that the offering will
occur, or that it will occur as anticipated. If the offering
proceeds, the notes will be issued under the company's $3
billion shelf registration statement on Form S-3.
The company expects that the net proceeds from the offering
would be used to improve corporate liquidity, for general
corporate purposes, and for payment of maturing debt
obligations, including the partial repayment of the company's
senior unsecured 9.25 percent notes due March 2004.
Williams, through its subsidiaries, primarily finds, produces,
gathers, processes and transports natural gas. Williams' gas
wells, pipelines and midstream facilities are concentrated in
the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard.
As reported in Troubled Company Reporter's May 27, 2003 Edition,
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.
WORLD AIRWAYS: Provides Update on Ritetime Aviation Contract
------------------------------------------------------------
World Airways, Inc.,(Nasdaq: WLDA) began, on May 28, 2003, its
non-stop flights between Atlanta, Georgia and Lagos, Nigeria,
the most populous nation in Africa.
Under the contract with Ritetime Aviation and Travel Services,
Inc., World Airways will provide weekly non-stop air services
from both Atlanta, Georgia, and JFK Airport in New York to
Lagos, Nigeria. The JFK departure is planned for June 1, 2003.
The Company will also begin flying between Houston and Lagos on
August 5, 2003. The program will utilize an MD-11 passenger
aircraft, and the initial contract is scheduled through
December 30, 2003 with a possible extension through 2004.
Flight information and reservations for this service can be
obtained by going to Ritetime's Web site at
http://www.flyritetime.com
World Airways will be the first U.S. registered carrier to re-
establish passenger flight service to Nigeria since 1993.
Utilizing a well-maintained fleet of international range,
widebody aircraft, World Airways has an enviable record of
safety, reliability and customer service spanning more than 55
years. The Company is a U.S. certificated air carrier providing
customized transportation services for major international
passenger and cargo carriers, the United States military and
international leisure tour operators. Recognized for its modern
aircraft, flexibility and ability to provide superior service,
World Airways meets the needs of businesses and governments
around the globe. For more information, visit the Company's Web
site at http://www.worldair.com
World Airways Inc.'s March 31, 2003 balance sheet shows a
working capital deficit of about $22 million, and a total
shareholders' equity deficit of about $22 million.
WORLDCOM INC: Wants Court Nod on Settlement with Allegiance
-----------------------------------------------------------
Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New
York, informs the U.S. Bankruptcy Court for the Southern
District of New York that prior to the Petition Date, certain
of the Worldcom Inc., and its debtor-affiliates entered into
various agreements with Allegiance Telecom, Inc. and its
affiliates and subsidiaries.
Specifically:
-- Allegiance, WorldCom, Inc. and Intermedia Communications,
Inc. are parties to an Asset Purchase Agreement, dated
November 30, 2001;
-- Allegiance and WorldCom, Inc., Intermedia Communications,
Inc., Shared Technologies Fairchild, Inc., Shared
Technologies Fairchild Telecom, Inc., and MCI WorldCom
Communications, Inc., are parties to an Asset Purchase
Agreement, dated June 17, 2002; and
-- WorldCom and Allegiance are parties to a Domestic and
Metro Private Line Special Carrier Service Agreement,
dated September 29, 2000, as amended;
-- WorldCom and Allegiance also provide services to each
other pursuant to other agreements, tariffs, and service
orders.
Ms. Goldstein admits that both WorldCom and Allegiance have
alleged claims and disputes against the other that arise, inter
alia, from the Agreements. For example, WorldCom has asserted
claims against Allegiance in an informal complaint with the
Federal Communications Commission relating to the historic
interstate access rates charged to WorldCom by Allegiance. On
the other hand, Allegiance has asserted numerous prepetition
claims against WorldCom, including $11,000,000 indemnification
claims against WorldCom for alleged WorldCom breaches of
warranties, representations and covenants arising under the
November 2001 Agreement. Allegiance has also notified WorldCom
that it intends to assert indemnification claims against
WorldCom for alleged WorldCom breaches of warranties and
representations under the June 2002 Agreement.
In addition, WorldCom and Allegiance have also asserted other
additional claims against one another pursuant to the June 2002
Agreement arising out of the closing, post-closing obligations
of the parties, and relating to certain vehicles owned or leased
by WorldCom to Allegiance that were provided to Allegiance as
part of the STFI Agreement. Additionally, Allegiance has
notified WorldCom that it intends to return to WorldCom these
vehicles. Finally, Allegiance has asserted claims of a right of
setoff of all prepetition amounts allegedly owed to WorldCom
against all prepetition amounts WorldCom allegedly owes
Allegiance.
Ms. Goldstein recounts that on December 9, 2002, due to alleged
late payments by Allegiance of postpetition amounts and
WorldCom's concerns regarding Allegiance's creditworthiness,
WorldCom placed Allegiance on a credit hold and has refused to
provide additional services to Allegiance until Allegiance
provides additional security to WorldCom. As a result, WorldCom
has ceased providing additional services to Allegiance.
WorldCom and Allegiance have agreed, subject to approval by this
Court, to settle all outstanding claims between them arising
prepetition, all claims relating to the vehicles, all
postpetition settlement amounts paid by the parties, and all
postpetition, pre-settlement charges and disputes not otherwise
identified by the parties. Therefore, on April 15, 2003,
WorldCom and Allegiance entered into an Agreement for Additional
Services, Security, and Settlement of Certain Matters, as
amended by Addendum No. 1, dated as of April 15, 2003.
By this Motion, the Debtors seek entry of an order, pursuant to
Rule 9019(a) of the Federal Rules of Bankruptcy Procedure,
approving the Settlement Agreement with Allegiance Telecom Inc.
The Settlement Agreement provides for confidential treatment of
the specific terms of the Settlement Agreement. A summary of
the significant terms are:
A. Within 15 days of entering into the Settlement Agreement,
Allegiance will provide to WorldCom, as sole beneficiary,
an irrevocable letter of credit with a term until
April 30, 2005 in an amount equal to three times the new
monthly volume commitment under the MSA as security for
purchases of services and products by Allegiance from
WorldCom, including, but not limited to, those products
and services provided pursuant to the original
Agreements, tariff, the Settlement Agreement, or pursuant
to new agreements. WorldCom will have the right to draw
on the letter of credit if Allegiance fails to pay
WorldCom undisputed amounts for Services within 60 days
after the receipt by Allegiance of an invoice and after
15 days prior written notice to Allegiance of WorldCom's
intention to draw on the letter of credit. WorldCom will
pay all fees and costs associated with the letter of
credit fees after the first 12 months. The letter of
credit may be terminated if, inter alia, this Court does
not approve the Settlement Agreement by May 30, 2003,
and, if the letter of credit is terminated early because
the Settlement Agreement is not approved by this Court by
May 30, 2003, WorldCom will pay one-half of Allegiance's
out-of-pocket costs and fees associated with the issuance
of the letter of credit.
B. After receipt of the letter of credit, WorldCom will
release the Credit Hold on all Allegiance pending and
future orders and WorldCom will not reinstate the Credit
Hold during the term of the letter of credit unless:
a) the letter of credit has been fully drawn and
b) Allegiance has failed to timely pay any undisputed
charges for Services;
provided, however, that if WorldCom reinstates a credit
hold, Allegiance's commitments outlined below to purchase
Services from WorldCom will be reduced during the period
of the credit hold.
C. For the postpetition period through March 31, 2003,
WorldCom and Allegiance have reconciled undisputed
amounts due and owing to each other as well as amounts
billed but disputed. The parties have agreed to make
appropriate payments concurrent with the execution of the
Settlement Agreement to bring the parties current on
Undisputed postpetition amounts owed through
March 31, 2003.
D. After approval of the Settlement Agreement by the
Bankruptcy Court, Allegiance will commit to purchase from
WorldCom an aggregate of $14,000,000 of Services from
February 28, 2003 to April 30, 2004 and an aggregate of
at least $12,000,000 of Services from May 1, 2004 through
April 30, 2005; provided, however, that any purchases of
Services purchased in excess of the April 2004 Commitment
during the Initial Commitment Period will be applied
towards the April 2005 Commitment.
E. After approval of the Settlement Agreement by the
Bankruptcy Court, the term and pricing under the MSA will
be extended until April 30, 2005 and the volume
commitment under the MSA will be raised from $700,000 per
month to $900,000 per month through April 30, 2005. This
amount is included in the April 2004 Commitment and
April 2005 Commitment.
F. Until April 30, 2005, Allegiance will use commercially
best efforts to procure certain additional Services from
WorldCom that Allegiance is not currently purchasing from
WorldCom if Allegiance does not already have an
obligation to purchase these Services from third parties.
G. WorldCom agrees to cooperate with Allegiance in its'
efforts to collect amounts owed by the City of New York
relating to equipment sold to the City in connection with
the events of September 11, 2001, which amounts were part
of the accounts receivable transferred to Allegiance
under the June 2002 Agreement.
H. WorldCom and Allegiance agree to waive and release all
outstanding claims between the parties arising
prepetition, all claims relating to the vehicles provided
by WorldCom to Allegiance, all postpetition settlement
amounts paid by the parties, and all postpetition, pre-
settlement charges and disputes not otherwise identified
by the parties. In furtherance of these releases, once
this Court approves the Settlement Agreement, WorldCom
will waive its right to convert its Access Charge
Complaint into a formal complaint at the Federal
Communication Commission. The parties, however,
expressly reserve all claims not specifically released,
including, inter alia, postpetition claims
relating to Excluded Liabilities under the Prepetition
Agreements.
I. The parties agree that each of Allegiance and WorldCom
may through June 30, 2005 setoff postpetition, post-
settlement undisputed amounts owed by Allegiance and
WorldCom against any postpetition post-March 31, 2003
undisputed amounts owed to Allegiance and WorldCom if the
other party is more than 45 days late in payment,
notwithstanding mutuality, on 15 days prior written
notice.
J. WorldCom agrees to accept the return of the vehicles and
the parties have agreed to a certain amount in settlement
of the dispute arising from the return, which amount will
be taken into consideration in calculating the net
postpetition amount to be paid pursuant to the Settlement
Agreement.
K. The effectiveness of the Settlement Agreement is
expressly conditioned on this Court's approval and, if
this Court does not approve the Settlement Agreement by
May 30, 2003, either party may on prior written notice
terminate the Settlement Agreement.
L. The Settlement Agreement is confidential.
Ms. Goldstein tells the Court that Settlement Agreement's
increased revenue commitments will be beneficial to the Debtors'
estates. In addition, without the Settlement Agreement, the
Debtors were at risk of Allegiance transferring certain traffic
and circuits to other carriers absent the settlement. Further,
the Settlement Agreement also benefits the estate by providing
WorldCom with assurance about the future performance of
Allegiance. Finally, the Settlement Agreement is favorable over
litigation of the various issues. Litigation would be lengthy,
would pose substantial hurdles to full success on the merits,
and would entail uncertain but significant discovery and trial
costs and would require the time and attention of the Debtors'
management. (Worldcom Bankruptcy News, Issue No. 29; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
Worldcom Inc.'s 7.875% bonds due 2003 (WCOE03USR1) are presently
trading between 29.625 to 30 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE03USR1
for real-time bond pricing.
WORLDCOM INC: Six Groups Call on GSA to Debar MCI/WorldCom
----------------------------------------------------------
Adding to the growing backlash against new federal contracts for
fraud-riddled MCI/WorldCom is a new letter to the General
Services Administration from six organizations calling for the
"immediate" debarment of MCI/WorldCom from the U.S. government
contracting process.
The six organizations signing the May 29, 2003 letter to the GSA
Administrator Stephen A. Perry are the Communications Workers of
America, National Consumers League, Gray Panthers, National
Black Chamber of Commerce, Inc., Labor Council for Latin
American Advancement, and National Native American Chamber of
Commerce. Generated by many of the same organizations that held
an October 30, 2002 news conference to urge the GSA debarment of
WorldCom, the new letter to the GSA notes that, in the
intervening seven months, MCI/WorldCom has admitted to billions
of dollars of additional accounting fraud, found itself the
subject of legal action by four state attorneys general, and the
focus of a Capitol Hill investigation in the wake of a number of
suspect federal contract deals, including a controversial no-
bid deal to rebuild the wireless phone system in war-torn Iraq.
The May 29, 2003 letter to the GSA reads in part: "In October
2002, many of us wrote you as a diverse group of organizations
representing labor, consumers, small businesses, civil rights
organizations, and American citizens to urge the General
Services Administration to suspend WorldCom from bidding on
future federal contracts because of their fraudulent business
practices. Since that time, we have learned that MCI/WorldCom's
overstatement of earnings has risen from $8 to $11 billion
dollars, that the scandal has wiped out over $4 billion dollars
in pension fund value across the country, and that MCI/WorldCom
paid federal taxes on their overstated earnings to perpetuate
its fraudulent activity-receiving to-date over $300 million
dollars in tax refunds."
The letter from the six groups also points out that the recent
actions by state attorneys general in Oklahoma, Indiana, Alabama
and West Virginia is a precursor to their filing criminal
charges against MCI/WorldCom. A conviction in state court would
automatically debar MCI/WorldCom from holding federal contracts.
As the letter states: "The State Attorneys Generals took this
action for two primary reasons -- (1) there is just cause in the
action, and to uphold the integrity of the state criminal
justice systems, and (2) due to inaction on behalf of the
federal government to hold MCI/WorldCom accountable for its
actions."
The letter also asks the GSA to investigate the Defense contract
with MCI/WorldCom to build a mobile telephone network in Baghdad
to, "better understand (1) what type of vetting process was
undertaken to award this contract, and (2) why MCI/WorldCom was
selected as the provider of mobile telephone service in Baghdad
when they do not provide the service at all in the United
States?"
Gray Panthers Director, Corporate Accountability Project, Will
Thomas said: "We must ask: Will the public ever know what
standard the General Services Administration actually uses to
determine who can get Federal contracts? MCI/WorldCom still
benefits from preferential treatment in Federal contracting,
such as the outrageous no-bid contract from the Department of
Defense to rebuild Iraq's phone system. It's hard to look at
MCI/WorldCom's contract to build a cellular network in Baghdad
as anything but evidence that the Pentagon is unfairly awarding
contracts to a preferred provider while skipping the bother of
competition or open review."
Communications Workers of America President Morton Bahr said:
"The United States government does not need to do business with
MCI/WorldCom. We believe the integrity of the United States
government and our economic system stands above all else, and we
risk allowing the current crisis of corporate confidence to
become a crisis of government confidence if the United States
continues to negotiate new contracts with MCI/WorldCom ... We
also firmly believe that our recommendation for debarment will
not bring about the loss of additional jobs in the
telecommunications industry. Conversely, we believe that this
action may in fact save jobs."
National Consumers League President Linda Golodner said: "We are
renewing the call for the GSA to take the lead at the federal
level and debar MCI/WorldCom from conducting business with the
federal government. Consumers want corporate fraud to be
penalized, not rewarded! We are urging the GSA to immediately
commission an investigation into the conduct of MCI/WorldCom and
the awarding of federal contracts to this company."
Since early November of 2002, WorldCom has been awarded three
major contracts totaling $691 million for the provision of
telecom services: the Department of State, the Veterans
Administration, and the General Services Administration. In
addition, MCI/WorldCom was recently awarded a wireless telephone
concession worth approximately $45 million to rebuild Baghdad's
mobile telephone system.
Under GSA rules, the federal government may award contracts only
to "responsible" companies -- i.e., firms with "a satisfactory
record of integrity and business ethics." A firm may be
suspended if "adequate evidence" exists that it committed fraud,
made false statements to federal securities regulators, or
committed "any other offense indicating a lack of business
integrity or business honesty."
About the Groups
The Communications Workers of America is America's largest
communications and media union, representing over 700,000 men
and women in both private and public sectors, including over
half a million workers who are building the Information Highway.
CWA members are employed in telecommunications, broadcasting,
cable TV, journalism, publishing, electronics and general
manufacturing, as well as airline customer service, government
service, health care, education and other fields. The union
includes some 1,200 chartered local unions across the United
States, Canada and Puerto Rico. Members live in approximately
10,000 communities, making CWA one of the most geographically
diverse unions.
The Gray Panthers is an intergenerational advocacy organization
with over 40,000 activists working together for social and
economic justice. Gray Panthers' issues include universal health
care, jobs with a living wage and the right to organize,
preservation of Social Security, affordable housing, access to
quality education, economic justice, environment, peace and
challenging ageism, sexism, racism.
The Labor Council for Latin American Advancement is a national
Latino trade union association representing 1.5 million Latino
workingmen and women in 43 international unions, in 74 chapters
in 24 states and Puerto Rico. As the Latino constituency group
within the AFL-CIO, LCLAA advocates for the rights of all Latino
workers and their families and their communities in all phases
of the American trade union movement and the political process
on a non-partisan basis.
The National Black Chamber of Commerce is the largest Black
business association in the world. The NBCC has 207 chapters
located in 40 states and eight nations with direct access to
85,000 Black owned businesses located in the United States. The
NBCC is a nonprofit, nonpartisan, nonsectarian organization
dedicated to the economic empowerment of African American
communities.
The National Consumers League, founded in 1899, is America's
pioneer consumer organization. Its mission is to identify,
protect, represent, and advance the economic and social
interests of consumers and workers. NCL is a private, nonprofit
membership organization.
The National Native American Chamber of Commerce promotes job
creation, economic growth, sustainable development and improved
living standards for Tribal Nations, Native Americans and Native
American businesses by working in partnership with businesses,
universities, communities and workers. Primary goals include:
building for the future and promoting competitiveness in the
U.S. and global marketplaces by strengthening and safeguarding
economic infrastructure; keeping Tribal Nations, Native
Americans and Native American businesses competitive with
cutting-edge science and technology and an unrivaled information
base; and providing effective management and stewardship of the
nation's resources and assets to ensure sustainable economic
opportunities.
For the full text of the May 29, 2003 letter, go to
http://www.graypanthers.orgon the Web.
W.R. GRACE: Court Okays Oct. 1 Lease Decision Period Extension
--------------------------------------------------------------
W.R. Grace & Co. and its debtor-affiliates sought and obtained
Judge Fitzgerald's approval to extend its deadline to decide
whether to assume, assume and assign, or reject unexpired non-
residential real property leases until October 1, 2003. (W.R.
Grace Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
XCEL ENERGY: Receives Waiver Re Payment of Common Stock Dividend
----------------------------------------------------------------
Xcel Energy (NYSE:XEL) received notification that the Securities
and Exchange Commission granted the company a waiver to pay two
quarterly dividends on its common stock from paid-in-capital.
"We will call a special meeting of our board of directors and
recommend they approve payment of our delayed first quarter
dividend of 18.75 cents per share, said Wayne Brunetti, Xcel
Energy chairman, president and CEO. "We know the delay in this
payment has created hardships for many of our shareholders and
we will take steps to send the dividend checks to them as
quickly as possible."
"We've always had enough cash to pay the dividend. With this
authorization from the SEC we expect to declare and pay the July
dividend on a normal schedule."
Xcel Energy is a major U.S. electricity and natural gas company
with regulated operations in 12 Western and Midwestern states.
Formed by the merger of Denver-based New Century Energies and
Minneapolis-based Northern States Power Co., Xcel Energy
provides a comprehensive portfolio of energy-related products
and services to 3.2 million electricity customers and 1.7
million natural gas customers through its regulated operating
companies. In terms of customers, it is the fourth-largest
combination natural gas and electricity company in the nation.
Company headquarters are located in Minneapolis. More
information is available at http://www.xcelenergy.com
ZIFF DAVIS: Debt Reduction Prompts S&P to Up Junk Rating to CCC
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Ziff Davis Media Inc. to 'CCC' from 'CCC-'.
In addition, Standard & Poor's removed the rating from
CreditWatch where it was placed on Aug. 14, 2001. At the same
time, Standard & Poor's assigned its 'CC' rating to Ziff-Davis'
$98 million 12% senior subordinated compounding notes due 2009.
The outlook is developing. The New York, New York-based computer
and video game magazine publisher had $304 million of debt as of
March 31, 2003.
"The rating actions reflect Ziff-Davis' reduction in debt levels
and cash interest expense following its recapitalization in
which the company exchanged $238 million (or 95%) of its 12%
senior subordinated notes due 2010 for a combination of
compounding notes, cash, warrants, and preferred stock and
raised $80 million in new preferred stock from its controlling
stockholder," said Standard & Poor's credit analyst Hal Diamond.
Ziff Davis incurred restructuring and writedown charges of
$128.2 million during 2002 to implement an operational
restructuring, which included the discontinuation of
unprofitable publications, consolidation of operations, and
workforce reduction. Standard & Poor's expects that 2003 EBITDA
improvement will be restrained by relatively flat technology
advertising demand and fierce competition. Discretionary cash
flow has been negative during the past two years, though
improving profitability and reduced capital spending are
narrowing cash flow deficits.
Rating stability could be undermined if the company does not
successfully execute its business plan, raise profitability, and
generate positive discretionary cash flow over the near term. On
the other hand, some modest rating upside potential exists if
the company is able to improve operating performance, reduce its
debt burden, maintain a covenant cushion, and restructure large
intermediate-term bank debt maturities.
* BOND PRICING: For the week of June 2 - 6, 2003
------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
Adelphia Communications 6.000% 02/15/06 10
Adelphia Communications 7.875% 05/01/09 51
Adelphia Communications 10.875% 10/01/10 53
Akamai Technologies 5.500% 07/01/07 70
Alamosa Delaware 12.500% 02/01/11 72
Alamosa Delaware 13.625% 08/15/11 74
Alexion Pharmaceuticals 5.750% 03/15/07 74
American & Foreign Power 5.000% 03/01/30 74
AMR Corp. 9.000% 08/15/07 49
AMR Corp. 9.000% 09/15/16 50
AnnTaylor Stores 0.550% 06/18/19 65
Best Buy Co. Inc. 0.684% 06/27/21 73
Burlington Northern 3.200% 01/01/45 60
Calpine Corp. 7.875% 04/01/08 67
Calpine Corp. 8.500% 02/15/11 70
Calpine Corp. 8.625% 08/15/10 67
Calpine Corp. 8.750% 07/15/07 69
Charter Communications, Inc. 4.750% 06/01/06 51
Charter Communications, Inc. 5.750% 01/15/05 54
Charter Communications Holdings 8.250% 04/01/07 70
Charter Communications Holdings 8.625% 04/01/09 69
Charter Communications Holdings 9.625% 11/15/09 68
Charter Communications Holdings 10.000% 04/01/09 69
Charter Communications Holdings 10.000% 05/15/11 69
Charter Communications Holdings 10.250% 01/15/10 69
Charter Communications Holdings 10.750% 10/01/09 70
Charter Communications Holdings 11.125% 01/15/11 70
Cincinnati Bell Telephone 6.300% 12/01/28 73
Collins & Aikman 11.500% 04/15/06 66
Comcast Corp. 2.000% 10/15/29 30
Conseco Inc. 8.750% 02/09/04 27
Continental Airlines 4.500% 02/01/07 71
Continental Airlines 6.795% 08/02/18 70
Cox Communications Inc. 0.348% 02/23/21 72
Cox Communications Inc. 2.000% 11/15/29 41
Cox Communications Inc. 3.000% 03/14/30 45
Crown Cork & Seal 7.375% 12/15/26 74
Cummins Engine 5.650% 03/01/98 68
Curagen Corp. 6.000% 02/02/07 74
Delta Air Lines 7.900% 12/15/09 73
Dynex Capital 9.500% 02/28/05 2
Elwood Energy 8.159% 07/05/26 69
Finisar Corp. 5.250% 10/15/08 70
Finova Group 7.500% 11/15/09 40
Fleming Companies Inc. 10.125% 04/01/08 18
Geo Specialty 10.125% 08/01/08 55
Gulf Mobile Ohio 5.000% 12/01/56 65
Health Management Associates Inc. 0.250% 08/16/20 65
I2 Technologies 5.250% 12/15/06 70
Inhale Therapeutic Systems Inc. 3.500% 10/17/07 63
Inhale Therapeutic Systems Inc. 5.000% 02/08/07 68
Inland Steel Co. 7.900% 01/15/07 72
Internet Capital 5.500% 12/21/04 39
LCI International Inc. 7.250% 06/15/07 62
Lehman Brothers Holding 8.000% 11/13/03 71
Level 3 Communications 6.000% 09/15/09 62
Level 3 Communications 6.000% 03/15/10 59
Liberty Media 3.500% 01/15/31 74
Liberty Media 3.750% 02/15/30 64
Liberty Media 4.000% 11/15/29 67
Lucent Technologies 6.450% 03/15/29 69
Lucent Technologies 6.500% 01/15/28 70
Magellan Health 9.000% 02/15/08 34
Mirant Americas 7.200% 10/01/08 62
Mirant Americas 8.500% 10/01/21 58
Missouri Pacific Railroad 4.750% 01/01/20 74
Missouri Pacific Railroad 4.750% 01/01/30 70
Missouri Pacific Railroad 5.000% 01/01/45 70
NTL Communications Corp. 7.000% 12/15/08 19
Northern Pacific Railway 3.000% 01/01/47 57
Revlon Consumer Products 8.125% 02/01/06 61
Revlon Consumer Products 8.625% 02/01/08 46
Southern Energy 7.900% 07/15/09 54
United Airlines 10.250% 07/15/07 9
United Airlines 10.670% 05/01/04 12
US Timberlands 9.625% 11/15/07 57
Weirton Steel 10.750% 06/01/05 23
Weirton Steel 11.375% 07/01/04 14
Westpoint Stevens 7.875% 06/15/08 19
Worldcom Inc. 6.400% 08/15/05 29
Worldcom Inc. 6.950% 08/15/28 29
Worldcom Inc. 7.750% 04/01/07 29
Xerox Corp. 0.570% 04/21/18 65
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies
with insolvent balance sheets whose shares trade higher than $3
per share in public markets. At first glance, this list may
look like the definitive compilation of stocks that are ideal to
sell short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true
value of a firm's assets. A company may establish reserves on
its balance sheet for liabilities that may never materialize.
The prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
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firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
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*** End of Transmission ***