/raid1/www/Hosts/bankrupt/TCR_Public/030722.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, July 22, 2003, Vol. 7, No. 143
Headlines
360NETWORKS: Committee Sues Pirelli to Recover $17 Million
AAR CORP: Fitch Pulls Unsec. Debt Rating Down 2 Notches to BB-
AES CORP: Fitch Affirms Gener S.A. Unit's Currency Ratings at B+
AGERE SYSTEMS: Adds Richard S. Hill & Thomas P. Salice to Board
AIR CANADA: 10 Airport Authorities Want Relief from Injunction
AK STEEL: Reports $78 Million Net Loss for Second Quarter
ALL STAR GAS: Files for Chapter 11 Reorganization in Arizona
ALL STAR GAS: Case Summary and Largest Unsecured Creditors
ALPHARMA INC: Will Expense Fee Related to April Note Issue
ALTERRA HEALTHCARE: Emeritus Pitches Winning Bid for Company
AMERCO: Wins Nod to Pay $46 Mill. to Republic Western Insurance
AMERICAN CELLULAR: Preparing to Offer $900 Million of Sr. Notes
AMERISTAR CASINOS: J. William Richardson Elected to Co.'s Board
ANC RENTAL: Court Sanctions Cash Collateral Use Until Sept. 28
ARMSTRONG: Lease Decision Period Extension Hearing on August 29
AVAYA INC: Files $1 Bill. Shelf Registration Statement with SEC
BAYOU STEEL: Secures Exclusivity Extension through January 15
BETHLEHEM STEEL: CSX Transportation Wants $1.5 Mil. Cure Payment
BURLINGTON INDUSTRIES: Asks Court to Confirm Auction Procedures
CMS ENERGY: Completes JV $170 Million Limited Recourse Financing
CONNECTICUT HEALTH: S&P Knocks Bond Rating Down to BB from BBB
CONSTELLATION BRANDS: Provides Q2 & Full-Year Earnings Guidance
CREDIT SUISSE: S&P Hacks Ratings on Class F, G, & H to B+/B/CCC
CROWN CASTLE: Declares Quarterly Dividend on 6.25% Preferreds
CROWN PACIFIC: Court Okays $40 Mil. DIP Financing on Final Basis
DOMAN INDUSTRIES: KPMG Inc Files Report for Period Ended July 11
DYNTEK INC: Investors' Group Forgives $5MM Sub. Unsecured Note
ELAN: Pulls Plug on JV Relationship with Spectral Diagnostics
ENRON: Judge Gonzalez Allows San Juan Gas' Proposed Asset Sale
ENVIRONMENTAL ELEMENTS: Implementing Restructuring Initiatives
EXIDE TECHNOLOGIES: Taps Ernst & Young as Advisor on Tax Matters
EXTREME NETWORKS: Reports Improved Q4 2003 Financial Performance
FIRST CONSUMERS: S&P Takes Rating Actions on 2 ABS Transactions
FLEETWOOD ENTERPRISES: Will Host Q4 Conference Call Tomorrow
FLEMING COMPANIES: Court Approves Asset Sale Bidding Procedures
FLEXXTECH: Changes Name to Network Installation & Symbol to NWIS
GALAXY CLO 1999-1: Fitch Affirms Class C-2 and D Notes to BB-/B-
IMC GLOBAL: Amends Tender Offer Terms to Purchase 6.55% Notes
INA CBO 1999-1: Fitch Cuts Ratings on 3 Class A Notes to BB/CC
INTEGRATED HEALTH: Settles Claim Disputes with PharMerica Inc.
LEAP WIRELESS: Signs-Up PricewaterhouseCoopers as Accountants
LORAL SPACE: Wants More Time to File Schedules and Statements
MASSEY ENERGY: Court Requires $55M Appeal Bond in Harman Lawsuit
MDC CORP: Selling Interest in Custom Direct Income Fund for $30M
MEMORIAL MEDICAL (NM): Fitch Hatchets Revenue Bonds Rating to B
MERCY HOUSING: Sr. & Sub. Housing Bond Ratings Cut to BBB- & BB-
MIRANT CORP: Secures Blessing to Continue Cash Management System
MITEC TELECOM: Restructuring Yields Improved Results for Q4 2003
MOHEGAN TRIBAL: Purchases $280 Million of 8.75% Sr. Sub. Notes
NATIONAL STEEL: Seeks Clearance for USWA Memorandum of Agreement
NEXTEL COMMS: Will Redeem All 11.125% Series E Preferred Shares
NEXTEL COMMS: Fitch Ups Senior Unsecured Notes Rating to BB-
NICKELSON PLASTICS: Case Summary and 20 Largest Unsec. Creditors
NORTEL: Reorganizing Joint Euro Telecommunications Operations
OXFORD INDUSTRIES: Fiscal 4th Quarter Results Show Improvement
OWENS CORNING: Hires Adelman Lavine as Claims Conflict Counsel
OWENS-ILLINOIS: Declares Convertible Preferred Share Dividend
PAC-WEST: SBC to Invoke FCC Intercarrier Compensation Order
PACIFIC GAS: Files Settlement Plan and Disclosure Statement
PEREGRINE SYSTEMS: Delaware Court Confirms Reorganization Plan
PG&E NATIONAL: USGen Seeks Injunction against Utility Companies
PILLOWTEX CORP: Lenders' Forbearance Pact Continues Until Friday
PLIANT CORP: Will Hold Second Quarter Conference Call on Aug. 13
QUAIL PIPING: Wants Until August 15 to File Schedules
ROHN INDUSTRIES: Commences Trading on OTCBB Effective July 21
ROSSBOROUGH-REMACOR: Selling Assets to MagTech for $3.2 Million
RURAL CELLULAR: Offering $325 Million of Senior Notes
RURAL CELLULAR: Won't Pay Dividend on 11-3/8% Preferred Shares
RURAL CELLULAR: Reports Preliminary Second Quarter 2003 Results
RURAL/METRO CORP: Receives Exception to Continue Nasdaq Listing
SAFETY-KLEEN: Gets Open-Ended Solicitation Exclusivity Extension
SCORES HOLDING: March 31 Balance Sheet Upside-Down by $950K
SIRIUS SATELLITE: Will Publish Second Quarter Results on Aug. 6
SMITHFIELD FOODS: Acquires Global Culinary Solutions, Inc.
SOLUTIA INC: Will Hold Second Quarter Conference Call on July 30
SPIEGEL GROUP: Court Approves Aird & Berlis as Canadian Counsel
SRL OF ELY INC: Case Summary and 20 Largest Unsecured Creditors
SYSTECH RETAIL: Plan Confirmation Hearing to Convene on Aug. 28
TENET: Indicted for Illegal Use of Physician Relocation Pacts
TENET HEALTHCARE: Shareholder Committee Calls for 'Reformation'
TEXAS PETROCHEMICALS: Begins Chapter 11 Reorganization in Texas
TEXAS PETROCHEMICALS LP: Case Summary & Largest Unsec. Creditors
UNIFI INC: Inks LOI to Form JV Company with Kaiping Polyester
UNITED AIRLINES: Wants to Pay Amendment Fees to DIP Lenders
US AIRWAYS: Pilots Lash at Lost Jobs Due to Punitive Measure
US DATAWORKS: Fiscal Year 2003 Results Show Marked Improvement
WEIRTON STEEL: Second Quarter 2003 Net Loss Stands at $44 Mill.
WEIRTON STEEL: Court Approves Stipulation with Alliance Energy
WHEELING-PITTSBURGH: Court Approves Settlement with Noranda Inc.
WINN-DIXIE: Names Philip Payment VP, Central Procurement Support
WINN-DIXIE: Appoints Stan Timbrook VP of Grocery Merchandising
WINSTAR COMMS: Trustee Seeks Clearance for Hartford Settlement
WORLDCOM INC: Asks Court to Approve Broadwing Settlement Pact
W.R. GRACE: Wants Court to Raise Allotted "Science Trial" Budget
* Fasken Martineau Brings Three New Partners into IP Group
* Large Companies with Insolvent Balance Sheets
*********
360NETWORKS: Committee Sues Pirelli to Recover $17 Million
----------------------------------------------------------
The Official Committee of Unsecured Creditors, on the 360networks
inc. Debtors' behalf, seeks the avoidance, recovery and turnover
of certain preferential transfers 360networks (USA) inc. and
360fiber, inc. made to Pirelli Communications Cables and Systems
USA LLC, formerly known as Pirelli Cables and Systems LLC,
pursuant to Rule 7001 of the Federal Rules of Bankruptcy
Procedure, Sections 547 and 550 of the Bankruptcy Code, the Plan
and the Confirmation Order.
Peter D. Morgenstern, Esq., at Bragar Wexler Eagel & Morgenstern
LLP, in New York, relates that within 90 days prior to the
Petition Date, the Debtors made Transfers amounting to $17,330,645
to or for Pirelli's benefit.
On March 26, 2002, the Debtors demanded Pirelli to return the
Transfers. However, Pirelli never returned the Transfers as
requested.
Mr. Morgenstern tells the Court that:
(a) the Transfers were made to Pirelli for or on account of
an antecedent debt the Debtors owed before the Transfers
were made;
(b) Pirelli was a creditor at the time of the Transfers;
(c) the Transfers were made while the Debtors were insolvent;
and
(d) by reason of the Transfers, Pirelli was able
to receive more than it would otherwise receive if:
-- these Cases were cases under Chapter 7 of the
Bankruptcy Code;
-- the Transfers had not been made; and
-- it received debt payment in a Chapter 7 proceeding in
the manner the Bankruptcy Code specified.
Thus, the Committee asks the Court to:
(a) declare that the Transfers are avoidable pursuant to
Section 547 of the Bankruptcy Code;
(b) pursuant to Section 547, declare that Pirelli
must pay at least $17,330,645, plus interest from the
date of the Demand Letter as permitted by law,
representing the amounts it owed to the Debtors;
(c) pursuant to Section 550, declare that Pirelli
pay at least $17,330,645, plus interest from the date of
the Demand Letter as permitted by law;
(d) pursuant to Section 502(d), provide that any and all
claims against the Debtors Pirelli filed in
these cases will be disallowed until it repays in full
the Transfers plus all applicable interest; and
(e) award to the Committee all costs, reasonable attorneys'
fees and interest. (360 Bankruptcy News, Issue No. 52;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
AAR CORP: Fitch Pulls Unsec. Debt Rating Down 2 Notches to BB-
--------------------------------------------------------------
Fitch Ratings has downgraded the unsecured debt of AAR Corp. to
'BB-' from 'BB+'. The rating change affects approximately $190
million of AAR's outstanding senior unsecured notes. The Rating
Outlook for AAR is revised to Negative from Stable.
The rating action reflects ongoing concerns regarding the weakness
of AAR's operating performance and cash flow generation as the
company seeks to adjust to a radically different level of demand
for aviation-related services. Although AAR had been reporting
reasonable quarter-over-quarter improvement in revenues and cash
flow during the first year after the September 2001 demand shock,
operating performance took a turn for the worse in AAR's fiscal
fourth quarter ended May 31, 2003. To a large extent, weak results
in the May quarter reflected the impact of major airline customer
schedule reductions and poor demand for older-generation aircraft
and engine parts. Demand conditions in AAR's inventory supply and
MRO (maintenance, repair and overhaul) segments can be expected to
stabilize somewhat through the remainder of the year as airline
traffic and capacity levels improve. Still, AAR's free cash flow
generation in the current fiscal year is likely to remain weak.
In addition to poor operating conditions, the recovery position of
unsecured debt holders has been eroded by a series of financing
transactions designed to shore up liquidity in anticipation of an
October debt maturity totaling $23 million. A new $30 million
secured credit facility with Merrill Lynch, a renewed $35 million
accounts receivable securitization program, and a secured mortgage
financing involving the company's Wood Dale, IL headquarters
building have contributed to the erosion of asset protection
levels for unsecured noteholders.
AAR's Outlook is tied closely to the future recovery of the global
airline and aerospace industry, as well as the company's success
in completing a transition away from older generation aircraft and
engine platforms. Until AAR's remaining inventory of older-
generation airframe and engine parts is worked down, margins will
remain under pressure and operating cash flow should remain well
below levels seen prior to the 2001 demand shock. While improving
cash flow from operations and modest capital spending requirements
will limit further damage to the balance sheet, credit measures
are likely to remain weak for an extended period. AAR indicated in
its late June earnings call that a swing to positive net income
was expected in the first or second quarter of the current fiscal
year. Should quarter-over-quarter improvement in profitability and
operating cash flow fail to materialize, the company's liquidity
position would be eroded. A future downgrade of AAR's debt could
follow if operating cash flow levels do not improve steadily in
the current fiscal year.
Following the repayment of the remaining $23 million balance on
the unsecured notes maturing in October, AAR faces rather modest
debt maturities through fiscal year 2006. Approximately $17
million of the original $50 million in unsecured notes due this
October was refinanced to be paid down ratably over three years
beginning in October 2004. AAR has already paid down $10 million
of the October notes. The company also has approximately $33
million in non-recourse debt due in the current fiscal year
related to an aircraft currently on lease. A failure to amend the
terms of the debt and the associated lease agreement could result
in a return of the aircraft to the debtholder without any impact
on AAR's other debt. AAR has reported an equity value of
approximately $3 million for this aircraft. This equity position
would be at risk if the non-recourse debt and the related lease
cannot be restructured.
Over the longer term, the repositioning of AAR's product and
service mix should establish a foundation for better margins and a
stabilization of key credit measures. The transition to new
markets with better fundamentals (e.g., regional jet components
and maintenance services) could be complicated by near-term
working capital risks related to the effective management of
exposure to older-generation assets (aircraft, engines and
components).
AAR Corp. (NYSE: AIR) is a provider of aviation-related services
and manufactured products to major commercial airlines, the
military and original equipment manufacturers. Based in Wood Dale,
IL, AAR operates in four principal segments - inventory and
logistics services, maintenance/repair/overhaul, manufacturing,
and aircraft advisory services.
AES CORP: Fitch Affirms Gener S.A. Unit's Currency Ratings at B+
----------------------------------------------------------------
Fitch Ratings affirmed the senior unsecured local and foreign
currency ratings of AES Gener S.A., at 'B+' and the Chilean
national scale rating at 'Chl BB+'. The Rating Outlook has also
been revised to Stable from Negative.
The ratings of Gener and Stable Outlook reflect the reduction of
near-term liquidity concerns supported by recent financial
performance, improving sector fundamentals and stabilizing
financial markets. The Stable Outlook also reflects Fitch's view
of the company's ability to address the refinancing of US$503
million of convertible bonds due in March 2005 and US$200 million
of Yankee bonds due in January 2006. The ratings further reflect
the company's continued strong position in the Chilean electricity
market, its portfolio of thermal generating plants, its strategy
of focusing on core electricity generation in Chile, a soundly
administered regulatory system, an economically sound and growing
service area and experienced management.
Gener is currently pursuing refinancing alternatives for the CB
and Yankee bonds and to assist in this process, the company has
hired a financial advisor and a local electricity consultant to
determine a neutral fair valuation of the company. The company has
begun talking with the CB holders, primarily represented by the
local Chilean pension funds (AFP), and discussions have centered
around the potential recapitalization of Gener via the voluntary
conversion of the debt to equity. The AFPs generally participate
in both debt and equity of Chilean companies and in fact, were
previously holders of Gener shares prior to the acquisition by AES
in 2000 and 2001.
While additional steps and further refinement of the restructuring
proposal are needed, the proactive refinancing activities by
management, positive sector fundamentals to support financial
performance and developing capitalization and/or refinancing
opportunities have stabilized Gener's credit profile. In the event
of a successful capital increase or debt reduction, Fitch would
expect a positive impact on Gener's credit ratings as the
company's credit protection measures should show immediate
improvement. Material delays into the first quarter of 2004 in
addressing the 2005 maturity could result in downward ratings
pressure.
In order to facilitate its restructuring plans, Gener has also
begun addressing the Intercompany loan with Inversiones Cachagua,
Gener's direct holding company. As a first step to approach this
matter, in April 2003, AES negotiated the distribution of 100% of
Gener's net income (approximately US$41 million) as a dividend to
immediately repay a portion of the intercompany loan. Cachagua
then, on May 15, 2003, pledged all of its shares of Gener in favor
of the company as collateral for the intercompany loan, which
matures in February 2004. Also, there was a shareholder's meeting
on July 9, 2003 to make some changes to Gener's by-laws regarding
the company's ringfencing structure; the changes do not have an
impact on its credit ratings. As a result of the active steps
taken by AES and Gener, the company has become more palatable to
both debt and local equity markets.
Operating performance has been solid with financial results that
are considered above-average for the assigned rating. Through
March 2003, Gener reported EBITDA-to-interest of 2.7 times with
total consolidated leverage, as measured by debt-to-EBITDA, of
5.77x. As of June, total consolidated debt is comprised of US$759
million at Gener, US$147 million at its Chilean operating
subsidiaries, US$146 million of project finance debt at TermoAndes
and InterAndes, and US$307 million of non-recourse debt at Chivor,
its Colombian hydroelectric plant. Omitting the effects of a
potential equity conversion, leverage should decline as the
company aggressively amortizes bank debt through next year.
The operating fundamentals of Gener continue to reflect the
company's sound position in the Chilean electricity market.
Electricity demand in Chile has recently been increasing, up to
almost 7% since March compared to 4% during 2002, and regulated
prices have continued their upward trend, increasing 3.5% in U.S.
dollar term in April 2003 tariff adjustment. Gener further
benefits from its project-like structural characteristics,
including long-dated power purchase agreements (PPAs) with
financially strong customers and fuel supply contracts that reduce
business risk. The result for Gener is an underlying, relatively
stable base of long-term cash flows that should support a more
appropriate capital structure, either with longer-term debt
without the equity conversion, or as a much stronger credit with
lower debt and increased equity.
AGERE SYSTEMS: Adds Richard S. Hill & Thomas P. Salice to Board
---------------------------------------------------------------
Agere Systems (NYSE: AGR.A, AGR.B) has added two new members to
its board of directors. Richard S. Hill and Thomas P. Salice will
join Agere's board effective immediately.
Richard S. Hill is chairman and CEO of San Jose, Calif.-based
Novellus Systems Inc. and has been with that company since 1993.
Novellus, an S&P 500 company, manufactures, markets and services
advanced deposition, surface preparation and chemical mechanical
planarization equipment for advanced integrated circuits. Prior
to his current position, Hill spent 12 years at Tektronix Inc.,
and earlier held engineering management positions with General
Electric, Motorola and Hughes Aircraft.
Thomas P. Salice is vice chairman of AEA Investors LLC, a private
equity firm with offices in New York and London. Salice is also a
director of Marbo Inc., Mettler-Toledo International Inc.,
Sovereign Specialty Chemicals Inc. and Waters Corporation.
"I'm very pleased to welcome Rick and Tom to Agere's board," said
H. A. Wagner, chairman of Agere's board of directors. "Both
executives have deep experience in the management of fast-paced
global businesses like Agere's. Their guidance will be invaluable
as we position Agere for long-term growth."
Other members of the Agere board include Rajiv L. Gupta, CEO of
Rohm and Haas Co.; Richard Clemmer, former CFO of Quantum Corp.
and former CEO of PurchasePro.com; Rae F. Sedel, managing director
of Russell Reynolds Associates; Krish Prabhu, a partner with
Morgenthaler Ventures; John A. Young, former president and CEO of
Hewlett-Packard; and John T. Dickson, president and CEO of Agere.
Agere Systems, whose $220 million Convertible Notes are rated by
Standard & Poor's at 'B', is a premier provider of advanced
integrated circuit solutions that access, move and store network
information. Agere's access portfolio enables seamless network
access and Internet connectivity through its industry-leading
WiFi/802.11 solutions for wireless LANs and computing
applications, as well as its GPRS offering for data-capable
cellular phones. The company also provides custom and standard
multi-service networking solutions, such as broadband Ethernet-
over-SONET/SDH components and wireless infrastructure chips, to
move information across metro, access and enterprise networks.
Agere is the market leader in providing integrated circuits such
as read-channel chips, preamplifiers and system-on-a-chip
solutions for high-density storage applications. Agere's
customers include the leading PC manufacturers, wireless
terminal providers, network equipment suppliers and hard-disk
drive providers. More information about Agere Systems is
available from its Web site at http://www.agere.com
AIR CANADA: 10 Airport Authorities Want Relief from Injunction
--------------------------------------------------------------
At least 10 owners and operators of airport systems throughout the
United States object to the continuation of the preliminary
injunction:
1. Broward County, owner and operator of Fort Lauderdale-
Hollywood International Airport,
2. Indianapolis Airport Authority,
3. Metropolitan Washington Airports Authority,
4. City of Phoenix, owner and operator of Phoenix Sky Harbor
International Airport,
5. Port of Portland,
6. City of Cleveland, owner and operator of Cleveland-Hopkins
International Airport,
7. Metropolitan Nashville Airport Authority, operator of the
Nashville International Airport in Nashville, Tennessee,
8. Port of Seattle,
9. Wayne County Airport Authority, owner and operator of Detroit
Metropolitan Wayne County Airport, and
10. City and County of San Francisco, owner and operator of the
San Francisco international Airport
The Airports complain that the Preliminary Injunction Order is
broad and contains provisions which run counter to United States
and local law. They complain that that the Injunction restrains
them from commencing any proceeding to demand or recover passenger
facility charges Air Canada collected before and after the CCAA
Petition Date. The Airports contend that the statute and
regulatory scheme creating the Passenger Facility Charges are
clear that these charges are trust funds -- not Air Canada's
property.
Passenger Facility Charges were created in the late 1980s to allow
airports to respond to the rapid growth of air travel by imposing
charges on passengers to fund projects that improve airport
facilities, increase safety, and serve other governmental purposes
like noise reduction and security. Pursuant to 49 U.S.C. Section
40117(g) "passenger facility revenues that are held by an air
carrier or an agent of the carrier after collection of a passenger
facility fee constitute a trust fund that is held by the air
carrier or agent for the beneficial interest of the eligible
agency imposing the fee. Such carrier or agent holds neither
legal nor equitable interest in the passenger facility revenues
except for any handling fee or retention of interest collected on
unremitted proceeds as may be allowed by the [Secretary of
Transportation]."
The Airports insist that Air Canada must concede that the
Passenger Facility Charges are trust funds and are not the
property of its estates under Section 541(d) of the Bankruptcy
Code. Pursuant to Bankruptcy Code Section 541(d), no lien can be
asserted over the Passenger Facility Charges in Air Canada's
possession or in any Passenger Facility Charges Air Canada
collected because it collects and holds the Passenger Facility
Charges revenue in trust for the Airports' benefit. Air Canada
is required to report the Passenger Facility Charges on its
financial statements as trust funds.
Certain Airports also complain that the Injunction restrain them
from taking actions to collect postpetition landing fees, despite
the fact that such actions are clearly allowed under the U.S.
Bankruptcy law. The Airports further point out that the
Injunction Order allows the liens granted with respect to the
CCAA Credit Facility to attach to their facilities leased to Air
Canada. This is in direct contravention of the lease provisions
and United States law. The Airports tell the Court that neither
the filing of a bankruptcy nor the status of a party as debtor-
in-possession changes or allows the rights and obligations under
an executory contract or an unexpired lease to be changed.
The Airports want the Court to amend the Injunction Order:
-- to indicate that the Passenger Facility Charges are not Air
Canada's property and that the Injunction Order does not
restrict their ability or affect their right to enforce
their right on the Passenger Facility Charges;
-- to allow them to enforce their rights to collect
postpetition landing fees and rent payments;
-- to clarify that the CCAA Lender's charge will not attach to
the leased airport facilities.
Air Canada operates at the Airports' facilities, pursuant to
various agreements. Air Canada uses the facilities in the
operation of its business by, among other things, causing
passenger aircraft to land at and to take off from the Airports'
facilities, using the baggage handling facilities, occupying
ticket counters, offices, and maintenance facilities, among other
things.
Court Continues Injunction
Marc E. Richards, Esq., at Blank Rome LLP, advises Judge Prudence
Beatty of the U.S. Bankruptcy Court for the Southern District of
New York that absent the continuation of the Preliminary
Injunction, Air Canada and seven other Foreign Debtors will be
irreparably harmed. There is a serious risk that creditors will
commence actions against Air Canada in the United States or will
attempt to seize its U.S. assets or repossess aircraft landing in
U.S. airports. Mr. Richard explains that the Preliminary
Injunction should be continued to maintain the status quo and
provide Air Canada with a "breathing spell" to prevent any
creditors from gaining a preference while the CCAA Proceedings
are pending and to implement the restructuring process in the
CCAA Proceedings. Mr. Richard assures the Court that the
continuation of the Preliminary Injunction will not cause
hardships to interested parties.
Mr. Richard appeared on behalf of Ernst & Young Inc., in its
capacity as the Foreign Representative of Air Canada.
On July 16, 2003, Judge Beatty extended the Preliminary Injunction
indefinitely until further Court order. All persons subject to
the jurisdiction of the U.S. Court are enjoined and restrained
from commencing or continuing any action to collect a prepetition
debt without obtaining relief from the Court.
Air Canada is in the process of resolving objections.
Judge Beatty will convene a hearing on October 9, 2003 at 2:30
p.m. to consider whether to continue the terms of the Preliminary
Injunction beyond that date. (Air Canada Bankruptcy News, Issue
No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AK STEEL: Reports $78 Million Net Loss for Second Quarter
---------------------------------------------------------
AK Steel (NYSE: AKS) reported a net loss of $78.2 million, or
$0.72 per diluted share of common stock, for the second quarter of
2003. Net sales were $1,021.4 million on shipments of 1,399,000
tons. The company said the results reflect the combined impacts
of lower flat-rolled selling prices, higher raw material, energy
and maintenance costs and several one-time charges. Shipments
were about 7% lower than in the second quarter of 2002, partially
the result of the company's decision to reduce shipments to
certain spot markets where prices continue to be depressed. The
company said its average flat-rolled selling price decreased
nearly 4%, to $682 per ton, from the second quarter of 2002.
A planned maintenance outage was performed on the company's
Middletown blast furnace during the second quarter at a cost of
$11.4 million. In addition, the company experienced continuing
high costs for purchased slabs, carbon and stainless scrap, nickel
and natural gas. During the quarter, the company shut down a
sinter ore recycling plant in Middletown, resulting in a write-off
of $4.1 million. AK Steel said it had modified its requirements
in order to utilize a more cost-effective fluxed iron ore pellet
at the Middletown blast furnace, eliminating the need for the
sinter ore recycling plant. At the company's Ashland, Kentucky
plant, work was performed in preparation to resume coke making on
a battery placed on hot idle status in 2001. While the additional
capacity will result in lower annual coke costs of approximately
$3 million, the company expended $2.4 million in the second
quarter in preparation for the restart planned for later this
month.
"Market conditions, high input costs and legacy burdens continue
to make bottom-line improvements elusive," said Richard M.
Wardrop, Jr., chairman and CEO of AK Steel. "We are, nonetheless,
committed to leaving no stones unturned to find opportunities for
cost reductions and efficiencies."
AK Steel (S&P/BB- Corporate Credit Rating) produces flat-rolled
carbon, stainless and electrical steel products for automotive,
appliance, construction and manufacturing markets, as well as
tubular steel products. In addition, the company produces snow
and ice control products and operates an industrial park on the
Houston, Texas ship channel. Additional information about AK
Steel is located on the company's Web site at
http://www.aksteel.com
ALL STAR GAS: Files for Chapter 11 Reorganization in Arizona
------------------------------------------------------------
All Star Gas Corporation has filed for Chapter 11 relief in order
to restructure quickly the debt of the Company and its
subsidiaries. The company has reached agreement in principle with
its major creditors on a post-petition financing plan that will be
presented to senior noteholders and is optimistic that agreement
will be reached promptly on this plan.
"Our number one priority is to continue operating as a safe,
reliable supplier of propane for our customers," said John Gordon,
chief executive officer of All Star Gas. "We believe the
fundamentals of the propane business are solid and that All Star
Gas has a strong presence in the markets where the company
operates. Our goal is to improve the long-term financial health of
All Star Gas by restructuring its debt. A Chapter 11 filing is the
most efficient way to get that done."
Gordon was initially appointed to the position of interim chief
executive officer effective March 31, 2003, replacing Paul S.
Lindsey, Jr., following a special meeting of stockholders on
March 24, 2003. On May 8, 2003, Gordon was named president and
chief executive officer of All Star Gas and its subsidiaries.
Financing provided by the holders of the senior notes, which
represent the bulk of the company's debt, will be used to purchase
propane during the winter season and pay operating expenses. The
company intends to honor all customer deposits for the 2003-2004
winter season, and has filed a motion with the court to make an
expedited approval of its plan.
The Chapter 11 petitions were filed Monday in United States
Bankruptcy Court in Phoenix, Arizona. The following affiliated
companies were included in the petition: All Star Gas Corporation,
All Star Gas Inc. of Arkansas, All Star Gas Inc. of Arizona, All
Star Gas Inc. of Colorado, All Star Gas Inc. of Missouri, All Star
Gas Inc. of Wyoming, All Star Gas Transports Inc. - MO, All Star
Energy Services Inc., All Star Gas Field Services Inc., Red Top
Gas Inc., Ellington Propane Inc., Utility Collection Corporation,
Empire Underground Storage, Inc., All Star Gas Inc. of Arma, All
Star Gas Inc. of Louisiana, All Star Gas Inc. of Michigan, All
Star Gas Inc. of South Carolina, All Star Gas Inc. of North
Carolina, All Star Gas Inc. of California, and All Star Gas Inc.
of Jacksonville.
All of the company's 290 employees have been retained, and all 59
retail locations continue to operate.
For more than 30 years, All Star Gas has provided dependable,
affordable propane to residential and business customers. The
company and its subsidiaries currently supply approximately 48,000
customers in Arkansas, Arizona, Colorado, Missouri, Oklahoma and
Wyoming. Further information on All Star Gas is accessible at
http://www.allstargas.com
ALL STAR GAS: Case Summary and Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: All Star Gas Corporation, a Missouri corporation
PO Box 303
119 West Commercial Street
Lebanon, MO 65536
Bankruptcy Case No.: 2-03-12705-CGC
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
2-03-12703-SSC ALL STAR GAS INC. OF ARIZONA
2-03-12704-RTB ALL STAR ENERGY SERVICES INC., a
Missouri corporation
2-03-12706-EWH ALL STAR GAS FIELD CORPORATION, a
Delaware corporation
2-03-12707-JMM ALL STAR GAS INC. OF ARKANSAS, an
Arkansas corporation
2-03-12709-RTB ALL STAR GAS INC. OF CALIFORNIA, a
California corporation
2-03-12710-RTB ALL STAR GAS INC. OF COLORADO, a
Colorado corporation
2-03-12711-GBN ALL STAR GAS INC. OF JACKSONVILLE,
a Delaware corporation
2-03-12712-GBN ALL STAR GAS INC. OF LOUISIANA, a
Louisiana corporation
2-03-12713-SSC ALL STAR GAS INC. OF MICHIGAN, a
Michigan corporation
2-03-12714-CGC ALL STAR GAS INC. OF MISSOURI,
a Delaware corporation
2-03-12715-RJH ALL STAR GAS INC. OF NORTH
CAROLINA, a North Carolina
corporation
2-03-12716-CGC ALL STAR GAS INC. OF SOUTH
CAROLINA, a South Carolina
corporation
2-03-12807-RJH ALL STAR GAS INC. OF ARMA, a Kansas
corporation
Type of Business: The Debtor, together with its direct and
indirect subsidiaries, has been in business for
40 years and engaged primarily in the retail
marketing of propane and propane-related
appliances, supplies, and equipment to
residential, agricultural, and commercial
customers.
Chapter 11 Petition Date: July 21, 2003
Court: District of Arizona (Phoenix)
Judge: Charles G. Case II
Debtors' Counsel: Rob Charles, Esq.
Lewis and Roca LLP
1 South Church Ave Ste 700
Tucson, AZ 85701-1611
520-629-4427
Fax : 520-879-4705
Email: rcharles@lrlaw.com
Susan M. Freeman, Esq.
Lewis and Roca
40 N. Central Ave
Phoenix, AZ 85004-4429
602-262-5756
Fax : 602-262-5747
Email: SMF@LRLAW.COM
Total Assets: $43,704,000 (as of December 31, 2002)
Total Debts: $105,580,000 (as of December 31, 2002)
List of Debtors' Largest Unsecured Creditors:
A. All Star Gas Corporation
Entity Nature Of Claim Claim Amount
------ --------------- ------------
IBJ Schroder Bank & Trust Co. Subordinated Debt $9,728,800
Trustee for 9% Subordinated
1 State Street Plaza Debenture due
New York, NY December 31, 2007
Attn: Stephen Giurlando
Tel: 212-858-2000
Duke NGL Services L.P. Trade Payable $471,360
370 17th Street, Suite 900
Denver, CO 80202
Attn: Robert Heilman
Tel: 303-605-1804
Fax: 303-389-1988
Conocophillips Company Trade Payable $414,636
315 S. Johnstone 1310A POB
Bartlesville, OK 74004
Attn: Carolyn Pickens
Tel: 918-661-4276
Fax: 916-662-2976
Kinetic Resources U.S.A Trade Payable $353,579
Suite 950
333 5th Ave. S.W.
Calgary, Alberta CD T2P3B6
Attn: Norm Soulsby
Tel: 403-262-5971
Fax: 403-262-5973
Devon Gas Services L.P. Trade Payable $297,645
20 North Broadway
Oklahoma City, OK 73102
Attn: Michael Howell
Tel: 405-228-4254
Fax: 405-552-4667
NGL Supply Co. Ltd. Trade Payable $251,087
1520, 700-4th Avenue SW
Calgary, Alberta T2P 3J4
Attn: Maurice Gratton
Tel: 403-515-3960
Fax: 403-265-1987
BKD LLP Professional Fees $124,531
Turner Gas Company Trade Payable $91,858
Propane Resources Supply Trade Payable $79,456
& Marketing LLC
United Pacific Energy Trade Payable $58,909
Amerigas Propane L.P. Trade Payable $42,500
FTI Policano & Manzo Professional Fees $38,763
Centennial Gas Liquids LLC Trade Payable $27,004
Shook, Hardy & Bacon Legal Fees $25,495
Wachtell, Lipton, Rosen Professional Fees $25,000
& Katz
Apple Court North Rent $23,330
Burgers Smokehouse Inc. Trade Payable $21,919
Stinson, Morrison & Hecker Professional Fees $20,690
Foster Energy Trade Payable $19,774
Shipman & Goodwin Trade Payable $18,105
B. All Star Gas Inc. of Arizona
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Lee Chambers Petroleum Inc. Trade Payable $55,671
McTier Supply Company Trade Payable $8,248
Leran Gas Products Trade Payable $1,944
Gas Equip. Co. of Denver, Inc Trade Payable $1,802
Hughes Supply Inc. Trade Payable $1,295
Gas Equipment Company, Inc. Trade Payable $1,247
R & W Supply, Inc. Trade Payable $1,104
PES Trade Payable $986
Steve Arthur's Service Trade Payable $765
Mountain Truck & Trailer Inc. Trade Payable $727
Young's Future Tire, Inc. Trade Payable $658
Ken's Mobile RV/Truck Service Trade Payable $628
Mid-State Pipe & Supply Co. Trade Payable $624
Steve Coury Customer Refund $510
Earth Mover Tire Sales Inc. Trade Payable $452
GoLightly Trade Payable $441
Trinity Industries Trade Payable $418
Sierra Vista Ace Trade Payable $355
Waynes World of Tires, LLC Trade Payable $341
Glenn's Auto Trade Payable $319
C. All Star Gas Inc. of Arkansas
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Sanders Fleet Service Trade Payable $9,941
Jasper Engines Trade Payable $5,318
New Sulphur Freewill Bapt Customer Refund $4,008
Bradley Farms Trade Payable $1,538
Emerald Isle Distribution Trade Payable $1,104
Leran Gas Products Trade Payable $946
Suburban Equipment Trade Payable $808
Newton Hydro & Meter Proving Trade Payable $540
Jack R/ Lillian Barnes Sr. Customer Refund $492
Gas Equipment Company Inc. Trade Payable $452
Great Western Trade Payable $388
Marie Olive Customer Refund $305
Arkansas Propane Gas Assoc. Trade Payable $225
Energy Additives, Inc. Trade Payable $185
Mike's Towing & Repair Trade Payable $185
Newman's Garage Trade Payable $175
John Franklin Customer Refund $173
Larry/Mary McReynolds Customer Refund $166
Marty Martin Customer Refund $156
Al's Towing & Recovery Trade Payable $135
D. All Star Gas Inc. of Colorado
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Gas Equip. Co. of Denver Inc. Trade Payable $14,858
Fairbank Equipment Inc. Trade Payable $10,921
Jasper Engines Trade Payable $8,670
Royal Gorge Truck Center Inc. Trade Payable $7,086
Leran Gas Products Trade Payable $5,728
Newton Hydro & Meter Proving Trade Payable $4,985
High Country Proco Trade Payable $4,387
B&T Auto Service Trade Payable $4,775
Gas Equipment Company Inc Trade Payable $3,236
Ben's Diesel Service Trade Payable $3,019
Mountain Truck & Equipment Co Trade Payable $2,746
Diesel Pros Trade Payable $2,635
WCAS, Inc. Trade Payable $2,013
Worthington Cylinder Corp. Trade Payable $1,853
Goodyear Tire & Rubber Co. Trade Payable $1,564
Gilmore Auto Parts Trade Payable $1,500
Eric/ Barbara Smith Customer Refund $1,339
Poudre Valley Hospital Trade Payable $1,271
American Welding & Tank Trade Payable $1,128
Edward Butcher Trade Payable $1,022
E. All Star Energy
Entity Nature of Claim Claim Amount
------ --------------- ------------
Morelock Ross Properties Mgt. Rent $3,006
Chalkboard Inc. Trade Payable $1,300
Industrial Sealing & Trade Payable $139
Lubrication
All Year Heating & A/C Trade Payable $106
Quality Ford Inc. Trade Payable $6
F. All Star Gas Field Corporation
Entity Nature of Claim Claim Amount
------ --------------- ------------
Flynt Paint Products Trade Payable $32,903
Goodyear Tire and Rubber Co. Trade Payable $21,808
Jasper Engines Exchange Inc. Trade Payable $11,536
Bergquist, Inc. Trade Payable $8,972
Tonia Brow Trade Payable $4,056
Truck Parts & Supply Co., Inc Trade Payable $3,723
T&J Welding Inc. Trade Payable $3,360
Base Engineering Inc. Trade Payable $3,000
Gas Equipment Company, Inc. Trade Payable $2,219
Springfield Brake Co. Trade Payable $1,704
Purcell Tire Co. Trade Payable $1,667
Screen Graphics, Inc. Trade Payable $1,545
Ideal crane Div. Trade Payable $1,426
Parkhurst Cor
A-1 Automotive Trade Payable $1,315
Farmers Produce Exchange 139 Trade Payable $1,266
Owen Sandblasting Inc. Trade Payable $985
Hubbell Mechanical Supply Co. Trade Payable $749
Viking Corporation Trade Payable $735
O'Reilly- Lebanon Trade Payable $731
Lawson Products Inc. Trade Payable $559
G. All Star Gas Inc. of Missouri
Entity Nature of Claim Claim Amount
------ --------------- ------------
Silas & Joyce Vitzhume Note $60,000
Suburban Equipment Trade Payable $29,579
Leran Gas Products Trade Payable $14,133
Trinity Industries Trade Payable $13,474
Department #258201 Trade Payable $6,275
KA Bergquist
Gas Equipment Company Inc. Trade Payable $3,893
Precision Automotive Trade Payable $2,610
Worthington Cylinder- Trade Payable $2,229
Charlotte
Kasten Masonry Sales Inc. Trade Payable $2,181
Owen Sandblasting Inc. Trade Payable $1,919
American Welding & Tank Trade Payable $1,632
The Alignment Specialists Trade Payable $1,509
Benton County Tire Supply Trade Payable $1,308
Trans-Central Suppliers, Inc. Trade Payable $1,166
Norman Burzen Customer Refund $1,135
E-Z Trench Mfg. Inc. Trade Payable $1,072
Estate of Gladys Tate Customer Refund $946
Fairbank Equipment, Inc. Trade Payable $931
Bledsoe Conoco Trade Payable $911
Goodman Midwest Trade Payable $845
ALPHARMA INC: Will Expense Fee Related to April Note Issue
----------------------------------------------------------
Alpharma Inc. (NYSE: ALO), a leading global specialty
pharmaceutical company, announced that fees associated with a
previously reported April 2003 refinancing will be expensed rather
than capitalized. Future interest expense will be lower than if
the fees were amortized over the life of the notes issued.
As previously reported on April 24, 2003, the company sold $220
million aggregate principal amount of 8-5/8% Senior Notes due 2011
in a private placement. The proceeds of the offering, after
deducting fees and expenses, were $197 million. These proceeds,
together with funds available from other sources, were used to
repay existing 12.5% Senior Subordinated Notes of the company.
The fees paid to the initial purchasers of the Senior Subordinated
Notes of $22.2 million were made pursuant to arrangements
originally entered into in December 2001.
In April, the company and its independent accountants concluded
that the issuance of the new 8-5/8% Senior Notes represented a
modification of the existing Senior Subordinated Notes, and
accordingly, planned to amortize the fees over the life of these
notes. Due to the uniqueness of the transaction, the company
sought guidance from the Securities and Exchange Commissions as to
the appropriate accounting for the costs associated with the April
2003 debt issuance. On July 17, 2003, the SEC advised the company
that it viewed the April 2003 debt issuance as an extinguishment
of the existing Senior Subordinated Notes. As a result, both the
fees of $22.2 million paid in April 2003 and the unamortized loan
costs of $6.2 million associated with the Senior Subordinated
Notes, will be expensed in the company's second quarter 2003
reported earnings.
Expensing these fees has no impact on the company's compliance
with its debt covenants.
Alpharma Inc. (NYSE: ALO) is a growing specialty pharmaceutical
company with expanding global leadership positions in products for
humans and animals. Uniquely positioned to expand internationally,
Alpharma is presently active in more than 60 countries. Alpharma
is the #5 manufacturer of generic pharmaceutical products in the
U.S., offering solid, liquid and topical pharmaceuticals. It is
also one of the largest manufacturers of generic solid dose
pharmaceuticals in Europe, with a growing presence in Southeast
Asia. Alpharma is among the world's leading producers of several
important pharmaceutical-grade bulk antibiotics and is
internationally recognized as a leading provider of pharmaceutical
products for poultry, swine, cattle, and vaccines for farmed-fish
worldwide. For more information on the Company, visit its Web site
at http://www.alpharma.com
As reported in Troubled Company Reporter's April 21, 2003 edition,
Standard & Poor's Ratings Services assigned a 'B+' senior
unsecured debt rating to generic drug maker Alpharma Inc.'s new
$220 million in senior unsecured notes due 2011.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit and senior secured debt ratings on Alpharma, as well as
the company's 'B' subordinated debt rating. In addition, Standard
& Poor's affirmed ratings on a subsidiary company, Alpharma
Operating Corp., including its 'BB-' corporate credit and 'B'
subordinated debt ratings.
ALTERRA HEALTHCARE: Emeritus Pitches Winning Bid for Company
------------------------------------------------------------
Emeritus Assisted Living (AMEX:ESC) and Alterra Healthcare
Corporation jointly announced that a majority owned subsidiary of
Emeritus, with financing provided by an affiliate of Fortress
Investment Group LLC, was the winning bidder at an auction
conducted yesterday in the Alterra bankruptcy proceeding, pursuant
to which Alterra was offering for sale 100% of the equity of the
restructured Alterra upon its emergence from its Chapter 11
bankruptcy proceeding.
The proposed acquisition is expected to be consummated upon
confirmation of Alterra's Chapter 11 plan of reorganization, and
is contingent upon satisfaction of various conditions, including
receipt of Bankruptcy Court approval and consents from certain of
Alterra's secured lenders and lessors.
Alterra, a national assisted living company headquartered in
Milwaukee, filed a voluntary Chapter 11 bankruptcy petition on
January 22, 2003. On April 10, 2003, the Bankruptcy Court approved
bidding procedures establishing a process for Alterra to seek and
select a transaction to address its capital and liquidity needs
upon completion of its bankruptcy reorganization by selling its
capital stock or assets. A hearing in the Bankruptcy Court to
approve the Emeritus bid as the highest and best bid is scheduled
for July 23, 2003.
Upon emerging from its Chapter 11 reorganization, Alterra is
expected to be comprised of approximately 300 communities with bed
capacity of 13,000. Upon completing the acquisition, Emeritus will
operate approximately 475 communities comprising 26,500 units in
38 states. Combined annual operated revenue is expected to be
approximately $800 million.
Emeritus Assisted Living is a national provider of assisted living
and related services to seniors. Emeritus is one of the largest
developers and operators of freestanding assisted living
communities throughout the United States. These communities
provide a residential housing alternative for senior citizens who
need help with the activities of daily living with an emphasis on
assistance with personal care services to provide residents with
an opportunity for support in the aging process. Emeritus
currently holds interests in 174 communities representing capacity
for approximately 18,000 residents in 33 states. Emeritus's common
stock is traded on the American Stock Exchange under the symbol
ESC, and its home page can be found on the Internet at
http://www.emeritus.com
Alterra offers supportive and selected healthcare services to our
nation's frail and elderly and is the nation's largest operator of
freestanding Alzheimer's/memory care residences. Alterra currently
operates in 24 states.
AMERCO: Wins Nod to Pay $46 Mill. to Republic Western Insurance
---------------------------------------------------------------
Bruce T. Beesley, Esq., at Beesley, Peck & Matteoni, Ltd., in
Reno, Nevada, relates that Republic Western Insurance Company is a
wholly owned Amerco subsidiary. Republic Western provides several
types of property and casualty insurance for Amerco and certain of
its subsidiaries, including U-Haul International, Inc. -- Amerco's
largest operating subsidiary.
The Insurance Polices include policies for policy years 1999,
2000, 2001, 2002 and 2003 for various purposes, including
commercial auto for minimum financial responsibilities, umbrella
and generally liability policies. These Insurance Policies
contain high deductible payments or retrospective premium
provisions or "loss corridor" deductibles. Mr. Beesley notes that
while the Insurance Polices shift the underwriting risk to Amerco,
they expose Republic Western to credit risk based on Amerco's
ability to pay its deductibles and claims. Republic Western
claims that Amerco's total liability under the Insurance Policies
is approximately $46,000,000 reflecting:
-- $41,000,000 in billed claims paid; and
-- $5,000,000 in unbilled claims Republic Western paid on
claims for Amerco's benefit and other costs Republic
Western incurred on Amerco's behalf.
With Amerco's default, Mr. Beesley reports, in February 2003, the
Arizona Department of Insurance commenced a limited scope
examination, pursuant to Title 20, Arizona Revised Statutes, to
determine the impact of Amerco's defaults and financial condition
on its ability to fulfill its obligations to Republic Western.
The Department concluded that credit risk exposure to Republic
Western stemming from uncertainty over Amerco's ability to pay
deductible and other obligations to Republic Western required
significant reductions of Republic Western's surplus to a point
below levels necessary for Republic Western to operate pursuant
to applicable state statutes. The Department further concludes
that Amerco's obligations to Republic Western for accrued
retrospective premiums and federal income tax sharing receivables
were a significant non-payment risk, leaving Republic Western
with insufficient capital and surplus.
On May 20, 2003, the Department placed Republic Western under
supervision, pursuant to Article 2, Chapter 1, Title 20, Arizona
Revised Statutes. Under the Supervision Order, Mr. Beesley tells
Judge Zive that Republic Western is required to provide the
Department with a corrective plan acceptable to the Department,
which addresses and eliminates the credit risks associated with a
business transactions with Amerco.
Accordingly, Amerco acknowledges that under the McCarran-Feguson
Act, the States retain exclusive and absolute regulatory
authority over Amerco's insurance subsidiaries, notwithstanding
the bankruptcy. This includes the ability to maintain and
enforce the Supervision Order, undertake further regulatory
action under State law and require ongoing compliance with State
law and regulations. Amerco also acknowledges that the proper
venue and jurisdiction for legal action relating to matters
within the Department's regulatory authority is in State Court.
Thus, Mr. Beesley concludes, failing to satisfy the Department
could lead to the commencement of receivership proceedings
against Republic Western. Mr. Beesley fears that this could have
a material adverse impact on Amerco's restructuring.
By this motion, Amerco asks the Court to:
(a) enter an interim order approving the payment of amounts
due and owing under the Insurance Policies and Insured
Obligations on an interim basis pending a final hearing
and directing Amerco to promptly file a motion to assume
the Insurance Policies, subject to and conditioned on a
plan of reorganization consummation; and
(b) schedule a final hearing on this request on an expedited
basis to take place on or before July 31, 2003.
Mr. Beesley contends that Amerco's request is warranted because:
(a) the insurance services Republic Western provided under
the Insurance Polices and other outstanding executory
contracts are a necessary and integral part of Amerco's
and U-Haul's ability to continue normal business
operations, including the generation of the substantial
majority of Amerco's cash flow;
(b) of the obligations of, and claims against Amerco, Republic
Western is a substantial Amerco unsecured creditor, and
continues to provide a necessary service that cannot be
reasonably or less expensively obtained elsewhere in the
market;
(c) the Department's continuing supervision and concern over
Amerco's financial condition, and the impact of that
condition on Republic Western, as well as Republic
Western's obligation to provide a corrective plan
addressing the substantial surplus write downs have
created a pressing need to stabilize Amerco's credit and
insurance relationship with Republic Western;
(d) any interruption or cessation of insurance coverage
available to Amerco and U-Haul from Republic Western
would irreparably harm Amerco and U-Haul, to the
detriment of creditors and equity holders expecting
recovery on their investments;
(e) Amerco has no practical or legal alternatives to deal
with Republic Western other than payment of its claims,
as failure to pay may result in the Department placing
Republic Western into receivership; and
(f) since the Department is an agency of the State of Arizona,
there is a possibility that its actions fall within
police and regulatory powers and would not be subject to
the automatic stay.
Under the Insurance Policies, Mr. Beesley points out that Amerco
is required to pay certain amounts to Republic Western on an
ongoing basis as premiums, loss and loss adjustment expense
deductibles, claims handling fees and policy servicing fees.
Although it is impossible to predict precisely the amount of
these obligations per month, Amerco estimates that, on average,
its aggregate obligation to Republic Western per month is
approximately $12,000,000.
According to Mr. Beesley, Section 1108 of the Bankruptcy Code
authorizes a trustee to operate the business and manage the
properties of the estate in the ordinary course of business.
Thus, Mr. Beesley asserts, Amerco should be authorized to pay its
obligations under the Insurance Policies that arise postpetition
as it constitute ordinary contractual debts arising under the
terms of the Insurance Policies.
* * *
On an interim basis, Judge Zive authorizes Amerco to pay its
obligations to Republic Western under the Insurance Policies and
Insurance Obligations pending a final hearing. (AMERCO Bankruptcy
News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
AMERICAN CELLULAR: Preparing to Offer $900 Million of Sr. Notes
---------------------------------------------------------------
American Cellular Corporation and ACC Escrow Corp., jointly
announced plans to effect a private offering of $900 million in
senior notes due 2011. The offering will be made by ACC Escrow
Corp., a recently formed corporation that was organized to merge
into American Cellular Corporation as part of a recently announced
plan to restructure American Cellular's capital and indebtedness.
Upon consummation of the restructuring, including the merger, the
net proceeds from the offering will be used to fully repay
American Cellular's existing bank credit facility and to pay all
or a portion of the expenses of the reorganization, with any
remaining net proceeds to be used for general corporate purposes.
The notes will be offered only to qualified institutional buyers
under Rule 144A and to persons outside the United States under
Regulation S. The notes have not been registered under the
Securities Act of 1933 or under any state securities laws, and,
unless so registered, may not be offered or sold in the United
States except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities
Act and applicable state securities laws. This press release does
not constitute an offer, offer to sell, or the solicitation of an
offer to buy any securities in any jurisdiction in which such
offering, solicitation or sale would be unlawful.
American Cellular is jointly owned by Dobson Communications
(Nasdaq:DCEL) and AT&T Wireless (NYSE:AWE).
As reported in Troubled Company Reporter's July 17, 2003 edition,
Standard & Poor's Ratings Services lowered the corporate credit
rating on American Cellular Corp. to 'SD' from 'CC' and the
subordinated debt rating on the company to 'D' from 'C'. The
ratings have been removed from CreditWatch, where they were placed
April 5, 2002.
The rating actions followed the company's announcement of its
proposed restructuring, which would involve a tender offer of less
than full value for the company's approximately $700 million of
9.5% senior subordinated notes due 2009. The deal also proposes a
prepackaged bankruptcy plan if the tender offer is not successful.
The 'CC' bank loan rating on the company had been affirmed and was
also removed from CreditWatch. The outlook on the bank loan rating
is negative. The debt exchanged is viewed by Standard & Poor's as
tantamount to a default on the original debt issue terms.
AMERISTAR CASINOS: J. William Richardson Elected to Co.'s Board
---------------------------------------------------------------
Ameristar Casinos, Inc. (Nasdaq: ASCA) has elected J. William
Richardson as a member of its Board of Directors. Mr. Richardson
has had a distinguished career of more than 30 years in the hotel
industry. He held several executive positions in Finance with
Interstate Hotels Corporation since 1988, most recently Vice
Chairman/Chief Financial Officer. The company was the nation's
largest independent hotel management company and managed or owned
more than 200 upscale, resort and independent hotels before its
merger with Patriot/Wyndham in 1998 for a value of $2.1 billion.
Among his accomplishments at Interstate, Mr. Richardson led an IPO
that raised $375 million, he completed numerous debt offerings,
structured and led a number of acquisitions, created several
successful start-up divisions, and completed a large number of
financial restructurings.
Mr. Richardson began his hotel/finance career in 1970 as Hotel
Controller with Marriott Corporation, then became Vice President
and Corporate Controller of Interstate Hotels in 1981, and Vice
President of Finance with the start-up hotelier Stormont Company
in 1984, before re-joining Interstate in 1988.
Ameristar President and Chief Executive Officer Craig H. Neilsen
said of the election: "I am very pleased that Bill is joining the
Ameristar Board. His many years of executive leadership in the
hospitality industry as well as his depth of experience in
corporate finance will bring tremendous value to our Board and
Audit Committee."
Mr. Richardson holds a bachelor's degree in Business/Finance from
the University of Kentucky. He serves on the board of directors
of LendSource, Inc., and is actively involved in the community
through board service for the Leukemia & Lymphoma Society,
Childrens International Summer Villages and the River City Brass
Band.
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.
ANC RENTAL: Court Sanctions Cash Collateral Use Until Sept. 28
--------------------------------------------------------------
U.S. Bankruptcy Court Judge Walrath authorizes ANC Rental
Corporation, and its debtor-affiliates to continue to use their
Lenders' Cash Collateral until the earlier of September 28, 2003
or the closing of the sale of substantially all of the Debtors'
assets. (ANC Rental Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ARMSTRONG: Lease Decision Period Extension Hearing on August 29
---------------------------------------------------------------
For the fifth time, Armstrong World Industries and its debtor-
affiliates ask the Court to extend the deadline by which they must
decide whether to assume, assume and assign, or reject unexpired
non-residential real property leases. The Debtors ask for an
extension to December 15, 2003, subject to the rights of any
lessor to request, for cause shown, that the extension granted by
shortened as to a particular lease.
Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil
Gotshal & Manges LLP in New York, report that AWI has only 17 real
property leases left, with ten separate landlords, on which no
decision has been made on assumption or rejection. These 10
landlords and 17 leases are:
Landlord Type of Lease
-------- -------------
Alabama & Gulf Coast Railway Railway leases (2)
906 Olive Street
St. Louis, Missouri
Area Jobs Development Association Warehouse lease
231 East Broadway
Bradley, Illinois
Blake Development Corporation Office lease
1150 Connecticut Avenue NE
Suite 1200
Washington, DC
Briarwood Center Partnership Warehouse lease
Dba Mississippi Warehousing Company
P. O. Box 23309
Jackson, Mississippi
City of Pensacola Sign agreement
P. O. Box 1991
Pensacola, Florida
Illinois Central Gulf Railroad Spur track agreement
P. O. Box 91644
Chicago, Illinois
National Railroad Passenger Siding agreements (5)
Group #5
P. O. Box 1582
Washington, DC
Norfolk Southern Corporation Park lot lease (1)
P. O. Box 277531 land lease, track
Atlanta, Georgia crossing agreement,
Well/water line
agreement
Perdido Bay Holdings, Inc. Warehouse lease
36 Mussey Road
Scarborough, Maine
The Lancaster Airport Authority Hangar lease
Airport Manager, Lancaster Airport
500 Airport Road, Suite G
Litiz, Pennsylvania
Mr. Karotkin explains that these 17 leases include land use
agreements and lease agreements regarding warehouse space, office
space, land, and parking lots located throughout the United
States. Since the Petition Date, these leases have remained in
effect and continue to be effective according to their own terms.
Accordingly, each of these 17 leases is an "unexpired lease" which
may be assumed or rejected by the Debtors under the terms of the
Bankruptcy Code.
Mr. Karotkin reminds Judge Newsome that in the Debtors' Plan, AWI
has identified the Unexpired Leases that it intends to assume or
reject. The hearing to consider confirmation of the Plan -- and
assumption and rejection of the Unexpired Leases -- is currently
scheduled for November 17, 2003.
Various courts have discussed what constitutes sufficient cause
for to extend the time period within which a debtor may determine
to assume or reject an unexpired lease. The Debtors suggest that
these factors should be considered in determining whether "cause"
exists:
(a) whether the leases are important assets of the estates
such that a decision to assume or reject would be
central to a plan of reorganization;
(b) whether the case is complex and involves large numbers
of leases; or
(c) whether the debtor has had insufficient time to
intelligently appraise each lease's value to a
plan of reorganization.
AWI stores many of its products, which are shipped throughout the
United States, in the warehouses included in the leases subject to
this Motion. In addition, AWI uses its leased railway space to
transport many of its products and carries out essential functions
out of its leased offices. Consequently, the unexpired leases are
important assets of AWI's estate and are integral to the continued
operation of AWI's business. Accordingly, decisions to assume or
reject these unexpired leases are central to any plan of
reorganization.
The Plan provides for the treatment of the Unexpired Leases.
Given the importance of these leases to AWI's ongoing operations,
AWI does not want to forfeit any lease that could be potentially
valuable as a result of the "deemed rejected" provision of the
Bankruptcy Code effective whenever the period for assumption or
rejection expires with leases still in effect but upon which the
debtor has not made a court-approved decision. This is
particularly important in the event the Plan is not approved at
the November confirmation hearing.
Mr. Karotkin assures Judge Newsome that the Debtors continue to
pay all amounts due under the unexpired leases in the ordinary
course of its business, and will do so until an appropriate
decision is made or plan confirmation occurs. Thus, Ms. Booth
asserts, the extension will not result in any harm or prejudice to
the other parties of the unexpired leases, but will relieve AWI of
having to make a premature decision with respect to the leases.
By local rule of court, the Debtors' deadline to assume or reject
these leases is automatically extended to and included the hearing
scheduled for August 29, 2003, on this Motion. (Armstrong
Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
AVAYA INC: Files $1 Bill. Shelf Registration Statement with SEC
---------------------------------------------------------------
Avaya Inc. (NYSE: AV), a leading global provider of communications
networks and services for businesses, has filed a universal shelf
registration statement with the Securities and Exchange Commission
that, once declared effective by the SEC, would allow the company
to sell up to $1 billion of common or preferred stock, debt
securities or warrants.
Avaya said it filed the registration statement to replace its
existing shelf registration statement.
Avaya Inc., whose March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $25 million, designs, builds
and managers communications networks for more than one million
businesses around the world, including 90 percent of the Fortune
500(R). A world leader in secure and reliable Internet Protocol
telephony systems, communications software applications and
services, Avaya is driving the convergence of voice and data
application across IT networks, enabling businesses large and
small to leverage existing and new networks to enhance value,
improve productivity and gain competitive advantage. For more
information visit the Avaya Web site: http://www.Avaya.com
BAYOU STEEL: Secures Exclusivity Extension through January 15
-------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the Northern District of
Texas, Bayou Steel Corporation and its debtor-affiliates obtained
an extension of their exclusive periods. The Court gives the
Debtors, until October 1, 2003, the exclusive right to file their
plan of reorganization, and until January 15, 2004, to solicit
acceptances of that Plan from their creditors.
Bayou Steel Corp., a producer of light structural shapes and
merchant bar steel products, filed for chapter 11 protection on
January 22, 2003 (Bankr. N.D. Tex. 03-30816). Patrick J. Neligan,
Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP, represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $176,113,143 in
total assets and $163,402,260 in total debts.
BETHLEHEM STEEL: CSX Transportation Wants $1.5 Mil. Cure Payment
----------------------------------------------------------------
The Bethlehem Steel Debtors and CSX Transportation, Inc. were
parties to several contracts and price agreements. Under the
agreements, CSX provided various rail transportation services at
certain prices.
On May 13, 2003, the Debtors filed an Amended Schedule to their
Asset Purchase Agreement with International Steel Group Inc., and
ISG Acquisition Corp., and added these contracts and agreements
with CSX to the list of contracts to be assumed and assigned to
ISG:
-- Railroad Transportation Contract CSXT-C-82050, and
associated Private Price Lists: CSXT 3325, CSXT 3326; CSXT
3327; CSXT 3328;
-- Agreement on March 20, 2003, regarding Private Price List
CSXT 53355.1;
-- Agreement regarding Private Price List CSXT 96430;
-- Railroad Transportation Contract CSXT-C-80196, on
March 1, 2000, as Amended; and
-- Railroad Transportation Contract CSXT-C-81533, on
January 1, 2002.
According to John H. Maddock III, Esq., at McGuireWoods LLP, in
Richmond, Virginia, the Debtors did not list a proposed Cure
Amount for any of the Assumed Contracts on the Amended Schedule.
Naturally, CSX assumed that the Debtors' proposed Cure Amounts
for each of the Assumed Contracts was $0.
Mr. Maddock tells the Court that CSX's books and records show
that these amounts are due and owing since May 7, 2003 for
services provided by CSX to the Debtors under each of the Assumed
Contracts:
Assumed Contracts Due Amounts
----------------- -----------
Railroad Transportation Contract
CSXT-C-82050, and Associated
Private Price Lists:
CSXT 3325 $715,478
CSXT 3326 43,119
CSXT 3327 169,109
CSXT 3328 106,927
Agreement on March 20, 2003
Private Price List:
CSXT 53355.1 60,473
Agreement regarding
Private Price List:
CSXT 96430 185,952
Railroad Transportation Contract
CSXT-C-80196 on March 1, 2000 0
Railroad Transportation Contract
CSXT-C-81533 on January 1, 2002 252,091
Thus, CSX asks the Court to compel the Debtors to pay the total
cure amount, as of the Closing Date, equal to $1,533,148 for the
Assumed Contracts. (Bethlehem Bankruptcy News, Issue No. 39;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BURLINGTON INDUSTRIES: Asks Court to Confirm Auction Procedures
---------------------------------------------------------------
Rebecca L. Booth, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, recalls that the Modified Bidding Procedures
Order provides for a marketing, due diligence and sale process and
possibly proceeding to an auction without a stalking horse offer.
Pursuant to the Modified Bidding Procedures, Burlington
Industries, Inc., and debtor-affiliates sent Qualified Bidders a
form of purchase agreement soliciting offers to purchase the
Debtors' business through either a whole Company transaction or a
consortium transaction.
The Form Purchase Agreement has these salient terms:
A. Purchase of Burlington
The Form Purchase Agreement provides for the sale of
substantially all of the Business to a prospective Buyer or
Buyers in a Stock Transaction, Whole Company Asset
Transaction or Partial Asset Transaction, as applicable.
B. Purchase Price and Adjustments
The Purchase Price for the Business will be an amount agreed
to by Burlington and an applicable Buyer and will be adjusted
on an interim basis five business days before the time of
Closing to reflect the estimated changes in the working
capital of the Business from a specified benchmark amount.
An escrow will be set up at the time of Closing to hold an
amount equal to $5,000,000. The Escrow Amount will secure
any possible working capital adjustment in favor of the
applicable Buyer.
C. Discharged Liabilities
Upon the Closing, all of the Debtors' liabilities will be
discharged by the Plan to the full extent permitted under
Chapter 11, except as otherwise provided in the Plan.
D. Operation of Burlington Pending Closing
From the date of the Agreement through the time of Closing,
Burlington will be subject to certain restrictions on its
operations to ensure that Burlington continues to operate its
business consistent with past practices and consult or obtain
the consent of the applicable Buyer to certain actions.
Among other things, Burlington agrees to assume only certain
designated Contracts relating to the Business and to refrain
from selling assets relating to the Business, subject to
certain specific exceptions.
E. Termination of Form Purchase Agreement
The Form Purchase Agreement provides that it may be
terminated by the mutual agreement of Burlington and the
applicable Buyer.
The Form Purchase Agreement also provides that it may also be
terminated by either Burlington or the applicable Buyer if:
(a) the Closing has not occurred by the date that is 270 days
from the date of the Agreement, as long as the breach by
the terminating party has not caused the failure to
close;
(b) the other party has materially breached its
representations, warranties or covenants and the breach
is not curable or, if curable, has not been cured within
15 business days after receipt of notice of the breach;
(c) a court (other than the Bankruptcy Court) or other
Governmental Authority issues a final order or a law
(other than the Bankruptcy Code) is in effect that, in
either case, materially restricts or prohibits the
transaction or makes it illegal;
(d) the Bankruptcy Court issues a final order that materially
restricts or prohibits the transactions contemplated by
the Form Purchase Agreement or makes them illegal;
(e) a person other than a Buyer is selected as the Successful
Bidder in the Auction;
(f) the Bankruptcy Court confirms a plan of reorganization
that does not contemplate the transaction; or
(g) the Bankruptcy Court approves, or Burlington enters into,
an agreement providing for an Alternative Transaction.
F. Break-up Fee
The Form Purchase Agreement provides that Burlington must pay
a break-up fee in a Stock Transaction or a Whole Company Asset
Transaction if the applicable Buyer was selected as the
Stalking Horse Bidder or the Buyer's bid was selected as the
Opening Bid and if the Agreement is terminated because:
-- the Bankruptcy Court confirms a plan of reorganization
that does not contemplate the transaction; or
-- the Bankruptcy Court approves, or Burlington enters into,
an agreement providing for an Alternative Transaction; and
in either case, at the time of the termination the
Agreement could not have been terminated by Burlington due
to the Buyer's breach.
The Break-up Fee amount, which is payable upon the
confirmation of a plan of reorganization or the consummation
of the Alternative Transaction, in either case that occurs
within one year of the termination, will be an amount not to
exceed 1% of the aggregate Purchase Price.
G. No Shop
After the date of the Auction Approval Order, subject to
certain exceptions, Burlington is prohibited from taking,
directly or indirectly, any action to solicit, negotiate,
assist or otherwise knowingly facilitate an Alternative
Transaction.
It currently is the Debtors' intention to proceed with the Auction
on July 28, 2003 and to seek the Court's approval of the Auction
results at the Auction Approval Hearing on July 31, 2003.
By this motion, the Debtors ask the Court to confirm, approve and
close the Auction and make findings that:
(a) good and sufficient notice of the Auction Approval Hearing
and of the relief sought in this Renewed Motion was given,
was in accordance with the Modified Bidding Procedures
Order and was in compliance with Rules 2002, 6004 and 9014
of the Federal Rules of Bankruptcy Procedure;
(b) the Debtors' decision to sell its business, pursuant to
the purchase agreement with the Successful Bidder and
subject to confirmation of the Plan, is an exercise of
sound business judgment;
(c) the Auction was conducted in all materials respects in
accordance with the Modified Bidding Procedures and the
Modified Bidding Procedures Order;
(d) the Debtors afforded interested potential purchasers a
full, fair and reasonable opportunity to make a higher and
better offer to purchase its business;
(e) the offer by the Successful Bidder to purchase the
applicable business represented the highest and best offer
for the applicable business at the Auction;
(f) the Debtors have exercised sound business judgment in
choosing the Successful Bid;
(g) the purchase agreement with the Successful Bidder was
negotiated in good faith, without collusion and at arms'
length; and
(h) the Purchase Price offered by the Buyer is fair and
reasonable and constitutes fair consideration and
reasonably equivalent value for the applicable business.
Ms. Booth clarifies that the Debtors are not seeking authority at
this time to consummate the transactions contemplated by any
purchase agreement with a Successful Bidder as that approval will
be sought in connection with the confirmation of the Plan.
(Burlington Bankruptcy News, Issue No. 36; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
CMS ENERGY: Completes JV $170 Million Limited Recourse Financing
----------------------------------------------------------------
CMS Energy's (NYSE: CMS) joint venture with the National Power
Company, Jubail Energy Company, has closed a $170 million limited
recourse project financing for construction of a co-generation
plant designed to produce up to 250 megawatts and 510 tons of
industrial steam per hour.
The plant will be located within the Saudi Petrochemical Company's
complex at the Jubail Industrial City in Saudi Arabia. CMS Energy
owns 25 percent of JEC, which has entered into a long-term
contract with SADAF for the entire output of the plant.
The plant is expected to be in operation in 2005 and will be the
first independent power plant in Saudi Arabia.
The limited recourse bank facilities were arranged by Banque Saudi
Fransi, Credit Agricole Indosuez, Arab National Bank, Arab
Petroleum Investments Corporation, and Riyad Bank.
Ken Whipple, the chairman and chief executive officer of CMS
Energy, said the SADAF project fits the Company's strategy of
meeting its commitments in the Middle East and Africa, while
selling other overseas assets.
"Our strategy is to focus on our utility operations in the United
States and sell non-performing international assets, when it makes
financial sense to do so," Whipple said. "The SADAF project
offers us an opportunity to do what we do best: Build and operate
an efficient power plant that provides reliable electricity to our
customer. The entire output of this plant is committed to SADAF
under a long-term contract, so this project also fits in with our
strategy of reducing risk and producing more predictable
earnings."
CMS Energy (S&P, senior secured rated 'BB-', Rating Outlook
Negative) is an integrated energy company, which has as its
primary business operations an electric and natural gas utility,
natural gas pipeline systems, and independent power generation.
For more information on CMS Energy, visit http://www.cmsenergy.com
CONNECTICUT HEALTH: S&P Knocks Bond Rating Down to BB from BBB
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the
Connecticut Health and Educational Facilities Authority's bonds,
issued for the Hospital for Special Care, to 'BB' from 'BBB' and
changed its outlook on the rating to negative from stable.
The downgrade reflects a sharp deterioration in financial
performance in fiscal year 2003, ending March 31, 2003 (based on
unaudited numbers), resulting in expected covenant violations for
debt service coverage and liquidity; a weak balance sheet,
characterized by high leverage and a modest decline in liquidity;
a vulnerable payor mix; and a delay in the fiscal year 2003 audit,
due to a possible restatement of prior-year numbers to account for
a supplemental employee retirement plan and other open items.
A lower rating is currently precluded by a market niche as a
unique chronic disease and intensive rehabilitation services
hospital and steady volumes.
The rating incorporates a vacancy for the CFO position, which in
the interim is being filled by an outside consultant. Management
is actively recruiting candidates and expects to fill the position
permanently by the end of September 2003.
The bonds are secured by a gross revenue pledge of the obligated
group, which includes the Hospital for Special Care, a 200-bed
rehabilitation and chronic care hospital, and HSC Community
Services Inc. (consisting primarily of the 284-bed Brittany Farms
Health Center, a nursing home). Non-obligated entities include the
Foundation of Special Care. All numbers cited in this analysis
include the parent company, The Center for Special Care Inc., and
subsidiaries.
The Hospital for Special Care has a unique market niche as a
provider of inpatient and outpatient rehabilitation, respiratory
care, and specialized pediatrics. Services cater to cases
involving spinal cord injuries, pulmonary rehabilitation, acquired
brain injuries, stroke, ventilator management, and geriatrics. It
is one of only three hospitals in the state that offer these types
of services and the only one to offer them all. Despite recent
financial difficulties, admissions and nursing home occupancy are
stable.
The Center for Special Care Inc. is highly dependent on
governmental payors for revenues. The hospital payor mix is 59%
Medicaid; 17% Medicare; and 24% private insurance, worker's
compensation, and self-pay. The nursing home payor mix is 55%
Medicaid, 28% Medicare, and 17% private pay.
CONSTELLATION BRANDS: Provides Q2 & Full-Year Earnings Guidance
---------------------------------------------------------------
Constellation Brands, Inc. (NYSE: STZ), a leading international
producer and marketer of beverage alcohol brands, has added
earnings per share guidance for its second quarter and full year
based on a new capital structure that assumes completion of its
concurrent public offerings announced late last week.
Outlook
The following statements are management's current diluted earnings
per share expectations both on a comparable basis and a reported
basis for the second quarter ending August 31, 2003 and fiscal
year ending February 29, 2004:
-- Diluted earnings per share on a comparable basis for Second
Quarter 2004 is expected to be within a range of $0.61 to $0.64
versus $0.53 for Second Quarter 2003.
-- Diluted earnings per share on a comparable basis for Fiscal
2004 is expected to be within a range of $2.46 to $2.53 versus
$2.07 for Fiscal 2003.
-- Diluted earnings per share on a reported basis for Second
Quarter 2004 is expected to be within a range of $0.24 to $0.27
versus $0.53 for Second Quarter 2003.
-- Diluted earnings per share on a reported (GAAP) basis for
Fiscal 2004 is expected to be within a range of $1.90 to $1.97
versus $2.19 for Fiscal 2003.
This outlook is made as of the date of this press release, is
forward-looking and is based on management's current expectations,
including: its last guidance on operating profit announced July 1,
2003; the success of its previously announced offerings; and an
assumed additional 14,674,198 shares of class A common stock
outstanding weighted for the remaining portion of the Second
Quarter 2004 and Fiscal 2004 used in the diluted earnings per
share calculation. Assuming the full exercise of the underwriters'
over-allotment option in connection with the offerings, an
additional 2,132,140 shares would be outstanding, resulting in
diluted earnings per share on a comparable basis for Fiscal 2004
in the range of $2.43 to $2.50 and on a reported basis to $1.88 to
$1.95. The exercise of the over-allotment option would not have a
material impact on the expected diluted earnings per share for
Second Quarter 2004. Actual results may differ materially from
these expectations due to a number of risks and uncertainties. A
reconciliation of reported estimates to comparable estimates is
included in this press release
Items Affecting Comparability
Inventory step-up -- The Hardy acquisition resulted in an
allocation of purchase price in excess of book value to certain
inventory on hand at the date of purchase. This allocation of
purchase price in excess of book value is referred to as inventory
step-up. The inventory step-up represents an assumed manufacturing
profit attributable to Hardy pre-acquisition. For inventory
produced and sold after the acquisition date, the related
manufacturer's profit will accrue to the Company. The Company
expects inventory step-up impacts of approximately $0.12 per share
during the current fiscal year.
Financing costs -- In connection with the Hardy acquisition, the
Company recorded amortization expense for deferred financing costs
associated with non-continuing financing, primarily related to the
bridge loan agreement. The Company expects to incur additional
amortization expense of $0.05 per share during the current fiscal
year.
Restructuring charges -- Restructuring charges resulted from the
realignment of business operations in the Company's wine division,
as previously announced in the fourth quarter of last fiscal year.
The Company expects to incur charges of approximately $0.05 per
share during the current fiscal year.
Imputed interest charge -- In connection with the Hardy
acquisition and in accordance with purchase accounting, the
Company was required to take a one-time imputed interest charge
for the time period between when the Company obtained control of
Hardy and the date it paid shareholders. The Company expects this
charge to be approximately $0.01 per share for the current fiscal
year.
Gain on change in fair value of derivative instruments -- In
connection with the Hardy acquisition, the Company entered into
derivative instruments to cap the cost of the acquisition in U.S.
dollars. The Company recorded a gain in the first quarter, which
represented the net change in value of the derivative instruments
from the beginning of the first quarter until the date Hardy
shareholders were paid. The Company expects this gain to be
approximately $0.01 per share for the current fiscal year.
Exiting U.S. commodity concentrate product line -- The Company has
made a decision to exit the commodity concentrate product line --
located in Madera, California. The commodity concentrate product
line is facing declining sales and profits and is not part of the
Company's core business, beverage alcohol. The Company will
continue to produce and sell value-added, proprietary products
such as MegaColors. The Company expects this charge to be
approximately $0.33 per share for the current fiscal year. The
Company expects the restructuring project to improve overall
profitability and asset utilization resulting in increased return
on invested capital, and to be immediately cash flow positive.
More than half of the charges are non-cash charges.
Status of Business Outlook
During this quarter, Constellation may reiterate the estimates set
forth above under the heading Outlook. Prior to the start of the
Quiet Period, the public can continue to rely on the Outlook as
still being Constellation's current expectations on the matters
covered, unless Constellation publishes a notice stating
otherwise.
Beginning August 16, 2003, Constellation will observe a "Quiet
Period" during which the Outlook no longer constitutes the
Company's current expectations. During the Quiet Period, the
Outlook should be considered to be historical, speaking as of
prior to the Quiet Period only and not subject to update by the
Company. During the Quiet Period, Constellation's representatives
will not comment concerning the Outlook or Constellation's
financial results or expectations. The Quiet Period will extend
until the day when Constellation's next quarterly Earnings Release
is published, presently scheduled for Tuesday, September 30, 2003,
after market hours.
Constellation Brands, Inc. is a leading international producer and
marketer of beverage alcohol brands with a broad portfolio across
the wine, spirits and imported beer categories. The Company is the
largest multi-category supplier of beverage alcohol in the United
States; a leading producer and exporter of wine from Australia and
New Zealand; and both a major producer and independent drinks
wholesaler in the United Kingdom. Well-known brands in
Constellation's portfolio include: Corona Extra, Pacifico, St.
Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Estancia,
Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo,
Alice White, Vendange, Almaden, Arbor Mist, Stowells of Chelsea
and Blackthorn.
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB' rating to beverage alcohol producer
Constellation Brands Inc.'s $1.6 billion senior secured credit
facilities and its $450 million senior unsecured bridge loan.
At the same time, Standard & Poor's affirmed its 'BB' corporate
credit and senior unsecured debt ratings on Constellation Brands,
as well as the 'B+' subordinated debt rating on the company.
CREDIT SUISSE: S&P Hacks Ratings on Class F, G, & H to B+/B/CCC
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on classes B
and C of the commercial mortgage pass-through certificates series
1998-C1 issued by Credit Suisse First Boston Mortgage Securities
Corp. Concurrently, the ratings on classes F, G, and H are
lowered. Also, the ratings are affirmed on six other classes from
the same transaction.
The rating actions reflect the increased credit enhancement
levels, which are offset by the high level of REO, delinquent, and
specially serviced loans (8.6% of pool combined). The lowered
ratings are due to potential losses associated with the five REO
loans ($29.19 million, 1.3% of the loan pool) and 13 delinquent
loans ($55.695 million, 2.5%), which have a total exposure
(outstanding principal plus advances) of $95.92 million (4.3% of
the loan pool) and a combined appraisal reduction of $33.75
million as of June 2003. In addition, accumulated realized losses
total $10.88 million.
Since Standard & Poor's last rating change in November 2001, which
resulted in the rating on the class H being lowered to 'B-' from
'B', the pool has declined in performance. In comparison to the
2001 review, the loan pool's debt service coverage (DSC) has
decreased to 1.46x from 1.66x.
A brief description of the five REO loans is listed below:
-- A $12.89 million loan secured by a movie theatre in Lutz,
Florida was transferred to the special servicer, Lennar
Partners Inc., in February 2001 when the operator filed
for bankruptcy and vacated the premises. The total loan
exposure is $15.19 million, and the appraisal reduction
total is $8.06 million. The property is listed for sale at
$6.2 million and there has been some interest in the
property.
-- A $5.43 million loan, secured by three Sleep Inn Hotels in
Sarasota, Florida, Ocean, Miss., and Flagstaff, Ariz., was
transferred to Lennar in November 2000; two properties,
one in Mississippi and the other in Arizona, sold for
$4.23 million. The hotel in Sarasota is listed for sale
at $2.5 million. The year-to-date financials ending May
2003 reflect an average daily rate of $51.71, with 61.6%
occupancy.
-- A $4.5 million loan secured by an eight-story, 88,663-
square-foot (sq. ft.) class B office building in Fort
Worth, Texas was transferred to Lennar in July 2001 when
the largest tenant vacated. As of June 2003, the occupancy
is 43%; Lennar has prospective tenants for about 44,000 sq
ft. An October 2002 appraisal valued the property at $3.5
million, with a stabilized value of $4.7 million. The
total loan exposure is $5.4 million, and the appraisal
reduction total is $2.1 million.
-- A $4.1 million loan secured by a 222-room hotel in
Lancaster, Pennsylvania became REO in July 2002 and is
operating without a flag. Lennar was awaiting the
conclusion of an appeal by other hotel owners regarding a
March 2003 approval for a convention center to be built
next to the subject; however, the hotel is listed for sale
at $6.1 million. The total loan exposure is $5.6 million,
and the appraisal reduction total is $3.0 million.
-- A $2.3 million loan secured by a 310,100 sq. ft.
industrial office building located in Kenosha, Wisconsin
was transferred to Lennar in March 2002 when the single
tenant vacated; local brokers were unable to sell the
property. Consequently, Lennar intends to sell the
property through a sealed bid auction in August 2003. The
total loan exposure is $3.3 million, and the appraisal
reduction total is $1.1 million.
Of the 13 delinquent loans, the following two healthcare loans are
90-plus days delinquent and substantial losses are expected. A
$6.4 million loan (total exposure is $6.8 million) secured by a
180-bed skilled healthcare facility in Whiting, New Jersey, is in
default due to the operator defaulting on the lease in early 2003.
The borrower has been unsuccessful in attempting to replace the
operator; therefore, Lennar has initiated foreclosure. As of
September 2002, the reported DSC was 0.54x, with a 92% occupancy.
The facility was appraised at $3.5 million in March 2003. The
other $5.6 million loan (total loan exposure is $7.4 million),
secured by a 118-bed assisted living complex in Carson City, Nev.,
is under contract for $2.1 million and should close in September
2003. The sale is contingent on the purchaser receiving its
license from the State of Nevada.
Furthermore, there are nine other loans ($108.79 million, 4.8%)
being specially serviced that are current with debt service
payments as of June 2003. Three of the nine loans are secured by
retail properties where Kmart is a tenant; two stores will remain
open due to negotiated rent reductions whereas the Kmart store in
Inglewood, Calif. closed in April 2003. The special servicer is
negotiating a discounted payoff of $8.2 million on this $9.9
million loan.
As of June 2003, the master servicer, ORIX Capital Markets LLC
(ORIX), reported 77 loans ($653.54 million, 31.6%) on its
watchlist. Forty-two loans ($197.19 million or 8.7%) were reported
on the watchlist due DSCs below 1.0x, while the remaining loans
reported a decline in occupancy, outstanding property issues, or
bankrupt tenants. All of the watchlist loans were current with
debt service payments. Standard & Poor's stressed the REO,
delinquent, and some of the weaker performing watchlist loans in
its analysis, and the stressed credit enhancement levels
adequately support the assigned ratings.
The weighted average DSC for the remaining loans (77% of loans
reporting interim and year-end 2002 financials) declined to 1.46x
from 1.68x at issuance. Standard & Poor's excluded the credit
leases from the weighted average DSC ratio calculations, which
total 61 loans, or 15.2% of the loan pool. As of June 2003, the
mortgage pool balance decreased to 314 loans totaling $2.26
billion, from 325 loans totaling $2.48 billion at issuance.
The loan pool remains diverse with multiple property types that
include retail (38%), multifamily (21%), hotel (16%), and office
(15%). The pool also remains geographically diverse with
properties located in the District of Columbia, Puerto Rico,
Mexico, U.S. Virgin Islands, and throughout 40 states, with only
California and New York exceeding a 10% concentration.
RATINGS RAISED
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-thru certs series 1998-C1
Rating Credit
Class To From Support (%)
B AA+ AA 25.89
C A+ A 19.85
RATINGS LOWERED
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-thru certs series 1998-C1
Rating Credit
Class To From Support (%)
F B+ BB 5.84
G B BB- 5.01
H CCC B- 2.82
RATINGS AFFIRMED
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-thru certs series 1998-C1
Credit
Class Rating Support (%)
A-1A AAA 31.94
A-1B AAA 31.94
A-2MF AAA 31.94
A-X AAA 0
D BBB 13.81
E BBB- 12.16
CROWN CASTLE: Declares Quarterly Dividend on 6.25% Preferreds
-------------------------------------------------------------
Crown Castle International Corp.'s (NYSE: CCI) quarterly dividend
on its 6.25% Convertible Preferred Stock will be paid on August
15, 2003 to holders of record on August 1, 2003. The dividend
will be paid in shares of the Company's common stock, and the
dividend rate will be announced in a press release on or before
the record date of August 1, 2003.
Contact Regarding Dividend Payments: Patti Knight, Mellon Investor
Services at 214-922-4420.
Crown Castle International Corp. engineers, deploys, owns and
operates technologically advanced shared wireless infrastructure,
including extensive networks of towers and rooftops as well as
analog and digital audio and television broadcast transmission
systems. The Company offers near-universal broadcast coverage in
the United Kingdom and significant wireless communications
coverage to 68 of the top 100 United States markets, to more than
95 percent of the UK population and to more than 92 percent of the
Australian population. The Company owns, operates and manages
over 15,500 wireless communication sites internationally. For
more information on Crown Castle visit: http://www.crowncastle.com
As reported in Troubled Company Reporter's July 11, 2003 edition,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
the $230 million convertible senior notes issued by wireless tower
operator Crown Castle International Corp. Proceeds from this
public issuance, due 2010, were used to redeem the company's
10-5/8% senior discount notes due 2007.
Simultaneously, Standard & Poor's affirmed its 'B-' corporate
credit rating on the Houston, Texas-based Crown Castle.
The outlook remains negative. The company had total debt of about
$3.2 billion at March 31, 2003.
CROWN PACIFIC: Court Okays $40 Mil. DIP Financing on Final Basis
----------------------------------------------------------------
Crown Pacific Partners, L.P. (OTC Bulletin Board: CRPP), an
integrated forest products company, and its affiliates have
received a final order from the Bankruptcy Court approving a $40
million debtor-in-possession loan facility with The CIT
Group/Business Credit, Inc., a unit of CIT Group (NYSE: CIT). The
DIP facility had been previously implemented under an interim
order issued on July 2, 2003.
With the DIP facility in place, the Partnership should have
adequate liquidity to pay its vendors for goods delivered to and
services provided to the Partnership after the filing of Chapter
11 petitions on behalf of the Partnership and its affiliates on
June 29, 2003. During the reorganization process, vendors who
deliver goods and provide services to the Partnership receive
priority payment protection under the bankruptcy law for such
obligations.
"The DIP facility will help the Partnership continue its normal
business operations during the reorganization period and help us
maintain adequate inventories to meet our customers' needs," said
Steven E. Dietrich, Senior Vice President and Chief Financial
Officer.
Crown Pacific Partners, L.P., is an integrated forest products
company. Crown Pacific owns and manages approximately 524,000
acres of timberland in Oregon and Washington, and uses modern
forest practices to balance growth with environmental protection.
Crown Pacific operates mills in Oregon and Washington, which
produce dimension lumber, and also distributes lumber products
through its Alliance Lumber operation.
DOMAN INDUSTRIES: KPMG Inc Files Report for Period Ended July 11
----------------------------------------------------------------
Doman Industries Limited announces that KPMG Inc., the Monitor
appointed by the Supreme Court of British Columbia under the
Companies Creditors Arrangement Act, has filed with the Court its
report for the period ended July 11, 2003.
The report, a copy of which may be obtained by accessing the
Company's Web site - http://www.domans.com- or the Monitor's Web
site - http://www.kpmg.ca/doman- contains selected unaudited
financial information prepared by the Company for the period.
DYNTEK INC: Investors' Group Forgives $5MM Sub. Unsecured Note
--------------------------------------------------------------
DynTek, Inc. (Nasdaq: DYTK, DYTKP, DYTKW), a leading provider of
technology, management and cyber security solutions to the state
and local government sector, announced that a group of private and
institutional investors has forgiven the company's $5 million
subordinated, unsecured note, which the group recently acquired
from DynCorp, a subsidiary of Computer Sciences Corporation (NYSE:
CSC). In connection with the transaction, the group has also
forgiven the associated $625,000 in accrued interest on the note.
DynTek also announced that the group of private and institutional
investors canceled common stock purchase warrants to acquire
7,500,000 shares of DynTek common stock, which were also recently
acquired by the group from DynCorp along with DynCorp's remaining
10,336,663 shares of DynTek common stock.
Finally, DynTek announced that it has received a limited release
and indemnification by DynCorp of DynTek's obligation to indemnify
DynCorp and the surety, respectively, against certain liabilities
under a $2.4 million payment bond, which was issued and recently
drawn upon in connection with DynTek's Virginia Medicaid
Transportation contract.
"These transactions create a dramatic improvement in our available
working capital," said Steve Ross, DynTek's chief executive
officer. "The increased working capital will facilitate our
projected business growth in divisions such as security and human
services, which should result in significant operating
improvements over the next fiscal year."
DynTek is a premier provider of technology, management and cyber
security solutions to the state and local government sector. The
company offers a comprehensive solution, which includes
consulting, IT security, systems integration, application
development, legacy integration, support and management services.
DynTek's solution has enabled major government entities in 17
states to enhance customer service, increase efficiency and
improve access to government functions. For more information,
visit http://www.dyntek.com
* * *
Dyntek Inc.'s March 31, 2003 balance sheet shows that its total
current liabilities outweighed its total current assets by about
$9 million.
Going Concern Uncertainty
In its Form 10-Q filed for the quarter ended March 31, 2003, the4
Company reported:
"As indicated by the [Company's] consolidated financial
statements, the Company has incurred consolidated net losses.
Additionally, the Company has significant deficits in working
capital. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
"The [Company's] consolidated financial statements have been
prepared assuming the Company will be able to continue as a going
concern. Accordingly, the consolidated financial statements do not
include any adjustments relative to the recoverability and
classification of assets, or the amounts and classification of
liabilities that might be necessary in the event the Company is
unable to continue operations."
ELAN: Pulls Plug on JV Relationship with Spectral Diagnostics
-------------------------------------------------------------
Spectral Diagnostics Inc. (TSX: SDI) has reached an agreement with
Elan Corporation, plc (NYSE:ELN) and its affiliates to terminate
their joint venture relationship established in August 1998, as
well as the termination of all related agreements.
This joint venture was formed to develop and commercialize sepsis
assays and successfully developed and secured 510(k) marketing
approval from the FDA for the Endotoxin Activity Assay which
identifies patients at risk for developing severe sepsis on
admission to the intensive care unit. The termination of the joint
venture is a result of Elan's restructuring efforts and desire to
focus on its core businesses in neurology, pain and autoimmune
diseases.
Under the terms of the termination agreements, Spectral will own
all rights to the EAA and any subsequent sepsis assays which may
be developed, including all related intellectual property and
marketing rights. Spectral has agreed to make a payment of
Cdn.$1.2 million in cash to Elan, to be paid by September 17,
2003. If Spectral does not make such a payment to Elan within this
period, Spectral has agreed to issue 750,100 shares of Spectral to
Elan, subject to regulatory approval. In addition, Spectral has
agreed to pay Elan a certain percentage on future revenues that
may be realized by Spectral from the commercialization of the EAA,
up to a maximum of U.S.$10 million. In addition, the development
loan of U.S.$3 million and accrued interest, to Sepsis Inc. will
be extinguished upon the payment of the cash or the issuance of
the shares, as applicable.
"Spectral's relationship with Elan has been very positive and the
parties successfully collaborated in the joint venture to develop
and obtain 510(k) marketing clearance from the FDA to
commercialize the EAA. This agreement with Elan enables Spectral
to begin its commercialization strategy for the EAA in a manner
that brings significant return on effort and money invested into
the development of this unique assay." said Dr. Paul M. Walker,
President and CEO of Spectral, "The EAA fits well into Spectral's
strategic plan, which includes cost efficient manufacturing and
specific distribution agreements to maximize the competitive
advantages of its products."
Spectral is a developer of innovative technologies for
comprehensive disease management. Spectral provides accurate and
timely information to clinicians enabling the early initiation of
appropriate and targeted therapy. Current products are rapid
format tests measuring markers of myocardial infarction (Cardiac
STATus(R) test). New products include rapid diagnostics for sepsis
(the Endotoxin Activity Assay). Spectral Diagnostics Inc
manufactures the EAA and Cardiac STATus(R) products. Spectral's
common shares are listed on the Toronto Stock Exchange: SDI.
Elan is focused on the discovery, development, manufacturing, sale
and marketing of novel therapeutic products in neurology, pain
management and autoimmune diseases. Elan shares trade on the New
York, London and Dublin Stock Exchanges.
As reported in Troubled Company Reporter's June 30, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Elan Corp. PLC to 'CCC' from 'B-'. Standard & Poor's
also lowered all of its other ratings on Elan, a specialty
pharmaceutical company, and its affiliates, and the ratings have
been placed on CreditWatch with negative implications.
ENRON: Judge Gonzalez Allows San Juan Gas' Proposed Asset Sale
--------------------------------------------------------------
After due consideration, U.S. Bankruptcy Court Judge Gonzalez
approves the sale of Enron Corporation's San Juan Gas Company,
Inc.'s Assets to SJG Acquisition Corporation for $4,650,000,
subject to adjustment under the terms of the Purchase and Sale
Agreement dated as of June 16, 2003.
On June 16, 2003, San Juan Gas and SJG Acquisition entered into
the Purchase Agreement, which contains these terms and conditions:
A. Purchase Price
In addition to SJG Acquisition assuming the Assumed
Liabilities, the purchase price for the Assets is
$4,350,000, subject to adjustment.
B. Deposit Escrow Arrangement; Payment of Purchase Price
SJG Acquisition will execute and deliver to Banco Popular de
Puerto Rico, as escrow agent, an escrow agreement and deposit
by wire transfer in immediately available funds $465,000.
C. Closing Date Payment
At the Closing, SJG Acquisition will pay to San Juan Gas by
wire transfer an amount equal to the Purchase Price less the
Deposit and $2,000,000 -- the Environmental Escrow Funds,
which will be deposited by SJG Acquisition with the
Environmental Escrow Agent.
D. Interest
If SJG Acquisition does not fully and promptly pay either the
Deposit, the Closing Date Payment or the Environmental Escrow
Funds, the unpaid amounts will accrue interest on a daily
basis at the Interest Rate, compounded quarterly until the
unpaid amount has been paid in full.
E. Assumed Liabilities; Retained Liabilities
As of the Closing, SJG Acquisition will assume and thereafter
in due course pay and fully satisfy:
(i) all of San Juan Gas' Environmental Liabilities;
(ii) all of San Juan Gas' liabilities and obligations under
the Assumed Contracts -- other than the Big River
Construction Agreement, other than those liabilities
and obligations that relate to San Juan Gas' breach
on or prior to the Closing Date; and
(iii) all of San Juan Gas' liabilities and obligations under
the Big River Construction Agreement that arise from
and after the Closing Date.
SJG Acquisitions will not assume or be liable for any other of
San Juan Gas' obligations or liabilities. Except for the
Assumed Liabilities, San Juan Gas will retain all of its
liabilities, obligations and claims.
F. Deposit and Disbursement of Environmental Escrow Funds
On the Closing Date, SJG Acquisition will pay and deposit
into escrow the amount of the Environmental Escrow Funds.
The Environmental Escrow Funds will be held, maintained and
disbursed by Banco Popular de Puerto Rico. From and after
the Closing Date until the date that is 18 months after the
Closing Date -- the Reimbursement Period -- San Juan Gas
agrees to reimburse SJG Acquisition out of the Environmental
Escrow Funds the amount of any Environmental Losses, but only
to the extent the Environmental Losses are directly
attributable to San Juan Gas' Environmental Liability that
existed or occurred on or prior to the Closing Date;
provided, however, that:
(i) San Juan Gas' reimbursement obligation to SJG
Acquisition for Environmental Losses will be limited to,
and will in no event exceed, the amount of the
Environmental Escrow Funds; and
(ii) no claim by SJG Acquisition for reimbursement out of the
Environmental Escrow Funds may be asserted, nor may a
Claim Notice be delivered by SJG Acquisition with
respect thereto, for Environmental Losses paid or
required to be paid, after the expiration of the
Reimbursement Period.
Provided that a Claim Notice is delivered to San Juan Gas
prior to the end of the Reimbursement Period, reimbursement
from the Environmental Escrow Funds will continue until the
final resolution of the claim. Notwithstanding, San Juan Gas
will have no responsibility for and SJG Acquisition will have
no access to the Environmental Escrow Funds for any
Environmental Losses that arise out of or relate to any
investigation, remediation, clean-up or similar activity that
is voluntarily undertaken by SJG Acquisition at or on any of
the Assets that is neither required by EPA, EQB or a
Governmental Authority nor pursuant to a settlement of a
Third Party Claim, including Remediation:
(a) conducted by SJG Acquisition solely to discover or avoid
potential liability under statutory provisions that
generally prohibit Releases of materials that could
affect the environment,
(b) neither required by Environmental Laws nor pursuant to a
settlement of a Third Party Claim, or
(c) associated with improving any of the Assets'
marketability or preparing any assets for sale to a third
Person.
G. San Juan Gas' Closing Conditions
San Juan Gas' obligation to proceed with the Closing
contemplated by the Purchase Agreement is subject, at its
option, to the satisfaction on or prior to the Closing Date
of all of these conditions:
(a) Representations, Warranties, and Covenants. The
representations and warranties of SJG Acquisition will
be, subject to cure, true and correct in all material
respects on and as of the Closing Date, except for those
representations and warranties of SJG Acquisition that
speak as of a certain date, which representations and
warranties will have been true and correct as of that
date, and SJG Acquisition's covenants and agreements to
be performed on or before the Closing Date will have been
duly performed in all material respects in accordance
with the Purchase and Sale Agreement; provided, however,
that this condition will be deemed to have been satisfied
so long as any failure of any representations and
warranties to be true and correct, individually or in the
aggregate, would not reasonably be expected to result in
a Buyer Material Adverse Effect;
(b) No Action. On the Closing Date, no Action will be
pending or threatened before any Governmental Authority
of competent jurisdiction seeking to enjoin or restrain
the consummation of the Closing or recover damages from
San Juan Gas or any of its Affiliate;
(c) U.S. Bankruptcy Court Order. The U.S. Bankruptcy Court
will have entered an order approving the sale; and
(d) Transfer Requirements. All Transfer Requirements will
have been satisfied.
H. SJG Acquisition's Closing Conditions
SJG Acquisition's obligation to proceed with the Closing
contemplated in the Purchase Agreement is subject, at its
option, to the satisfaction on or prior to the Closing Date
of all of these conditions:
(a) Representations, Warranties, and Covenants. San Juan
Gas' representations and warranties will be, subject to
cure, true and correct in all material respects on and as
of the Closing Date, except for San Juan Gas'
representations and warranties that speak as of a certain
date, which will have been true and correct as of that
date, and San Juan Gas' covenants and agreements to be
performed on or before the Closing Date will have been
duly performed in all material respects in accordance
with the Purchase Agreement; provided, however, that
this condition will be deemed to have been satisfied so
long as any failure of any representations and warranties
to be true and correct, individually or in the aggregate,
would not reasonably be expected to result in a Seller
Material Adverse Effect;
(b) No Action. On the Closing Date, no Action will be pending
or threatened before any Governmental Authority seeking to
enjoin or restrain the consummation of the Closing or
recover damages from SJG Acquisition or any of its
Affiliate;
(c) U.S. Bankruptcy Court Order. The U.S. Bankruptcy Court
will have entered the Bankruptcy Court Order;
(d) Transfer Requirements. All Transfer Requirements,
including the issuance by the PSC of a franchise, and the
Telecommunications Board of a certification, to SJG
Acquisition, in form and substance reasonably satisfactory
to SJG Acquisition, will have been satisfied. To the
extent that the consent or approval of any Governmental
Authority is required to transfer or amend any Permit the
consent or approval will have been obtained or SJG
Acquisition will in its discretion be satisfied that the
consent or approval will be obtained within a reasonable
time after the Closing Date;
(e) Absence of Material Adverse Effect. No event or
circumstance will have occurred between the date of the
Purchase Agreement and the Closing Date and is continuing
on the Closing Date that would reasonably be expected to
result in a Seller Material Adverse Effect;
(f) Title Policy. SJG Acquisition will have obtained at its
expense, a title insurance policy with respect to the
Owned Real Estate in customary ALTA form, in an amount
Equal to the value it allocated in its reasonable opinion
to the Owned Real Estate, issued by a title insurance
company SJG Acquisition selected, and insuring its fee
simple title to the Real Property, free and clear of any
and all defects whatsoever, other than usual and ordinary
title exceptions reasonably acceptable to SJG Acquisition,
and that the Owned Real Estate is not subject to Liens
other than customary easements that do not affect the full
use and enjoyment thereof.
I. Closing
Provided that the Purchase Agreement conditions are fulfilled
or waived prior to the Closing, each Party agrees to close
and consummate the transactions contemplated in the Purchase
Agreement on the Closing Date at 10:00 a.m., Puerto Rico
Time, at the offices of Cancio Covas & Santiago, LLP or at
other time and place as the Parties agree.
J. San Juan Gas' Closing Obligations
At Closing, San Juan Gas will execute and deliver, or cause
to be executed and delivered, to SJG Acquisition:
(a) a certificate, dated the Closing Date and executed by an
authorized officer of San Juan Gas on its behalf, as to
the matters set forth in the Purchase Agreement;
(b) the Assignment and Assumption Agreement and the Bill of
Sale to SJG Acquisition San Juan Gas duly executed;
(c) the instruments, agreements and other documents identified
in the Transfer Requirements, including the Deed of
Purchase and all other deeds required to be executed by
San Juan Gas that are necessary to consummate the transfer
of all Real Estate Assets;
(d) other certificates of resolutions or other action,
incumbency certificates and other certificates of San
Juan Gas officers of as SJG Acquisition may reasonably
require to establish the identities of and verify the
authority and capacity of the officers who are taking any
action in connection with the Purchase Agreement,
including the execution and delivery thereof;
(e) the Environmental Escrow Agreement;
(f) the Closing Date Accounts Receivable Schedule; and
(g) Notice to the Deposit Escrow Agent San Juan Gas duly
executed.
K. SJG Acquisition's Closing Obligations
At Closing, SJG Acquisition will deliver, or cause to be
delivered, to San Juan Gas:
(a) the Closing Date Payment;
(b) the Environmental Escrow Funds;
(c) the Environmental Escrow Agreement;
(d) a certificate, dated the Closing Date and executed by an
authorized SJG Acquisition officer on its behalf, as to
the matters set forth in the Purchase Agreement;
(e) the Assignment and Assumption Agreement and the Bill of
Sale, SJG Acquisition duly executed;
(f) certificates of resolutions or other action, incumbency
certificates and other certificates of SJG Acquisition
officers of as San Juan Gas may require to establish the
identities of and verify the authority and capacity of
the SJG Acquisition officers who are taking any action
in connection with the Purchase Agreement;
(g) the instruments, agreements and other documents identified
in the Transfer Requirements, including the Deed of
Purchase, and all other deeds required to be executed by
SJG Acquisition that are necessary to consummate the
transfer of all real property included in the Assets; and
(h) Notice to the Deposit Escrow Agent SJG Acquisition duly
executed.
Mr. Sosland contends that the request is warranted because:
(a) the terms and conditions of the proposed Purchase
Agreement were negotiated by the Parties at arm's length
and in good faith;
(b) SJG Acquisition does not hold any material interest in
any Enron companies and is not otherwise affiliated with
any of the Enron Companies or their officers or directors;
(c) San Juan Gas believes that the design and conduct of the
sale process, the selection of SJG Acquisition as the
successful bidder and the final terms reflected in the
Purchase Agreement are fair;
(d) other than those granted under the DIP Facility, San Juan
Gas is not aware of liens on the Assets; and
(e) the assignment of the Assumed Contracts to SJG
Acquisition, in and of itself, will provide the
non-debtor contracting party with adequate assurance of
the future performance under the Assumed Contracts. (Enron
Bankruptcy News, Issue No. 75; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ENVIRONMENTAL ELEMENTS: Implementing Restructuring Initiatives
--------------------------------------------------------------
Environmental Elements Corporation (Amex: EEC) began to implement
a restructuring plan in order to respond to lowered demand for its
large, custom designed and engineered products and to continue its
focus on the service, maintenance and rebuild work that it
performs for its customers. The Company indicated that numerous
positions are being consolidated and/or eliminated resulting in a
reduction in staff of twenty people. The costs of this
restructuring are expected to be accrued and paid within the
quarter ending September 30, 2003 and will result in a charge of
approximately $140,000 for severance and other costs.
Also on July 18, 2003, John L. Sams, President and Chief Executive
Officer and a member of the Company's Board of Directors, resigned
from the Company effective immediately. Lawrence Rychlak,
currently the Senior Vice President and Chief Financial Officer,
was named the interim President, replacing Mr. Sams.
The Company said that it is responding to the changing marketplace
for its goods and services in several ways. In addition to the
greater emphasis on its service and maintenance business and the
resulting reduction in force, it is continuing to explore its
strategic alternatives with the assistance of the investment
banking arm of Legg Mason Wood Walker and is in negotiations with
its bank to restructure its debt.
Environmental Elements Corporation -- whose March 31, 2003 balance
sheet shows a total shareholders' equity deficit of about $10
million -- is a solutions-oriented, global provider of innovative
technology for plant services, air pollution control equipment and
complementary products. The Company serves a broad range of
customers in the power generation, pulp and paper, waste-to-
energy, rock products, metals and petrochemical industries.
EXIDE TECHNOLOGIES: Taps Ernst & Young as Advisor on Tax Matters
----------------------------------------------------------------
Exide Technologies and its debtor-affiliates want to employ Ernst
& Young LLP to provide tax and other tax related advisory
services. The Debtors need Ernst & Young to:
-- analyze their historical tax position;
-- work with the appropriate Exide personnel and agents in
developing an understanding of the tax issues and options
related to their Chapter 11 filing, including understanding
the reorganization and restructuring alternatives they are
evaluating with their existing bondholders, or other
creditors, that may result in a change in the equity,
capitalization or ownership of their shares or their
assets;
-- assist and advise them with respect to bankruptcy and post-
bankruptcy restructuring objectives by determining the
advantageous federal, state and local and international tax
strategies to achieve these objectives, including, as they
may need and request, research and analysis of Internal
Revenue Code Sections, treasury regulations, case law and
other relevant tax authorities which could be applied to
business valuation and restructuring models;
-- provide tax consulting regarding the availability,
limitations, preservation and increasing tax attributes,
like net operating losses, lowering of tax costs in
connection with stock or asset sales, if any, and
assistance with tax issues arising in the ordinary course
of business while in bankruptcy; and
-- develop and implement for Exide a restructuring of its
foreign operations through the formation of a foreign
international holding and finance company structure, which
allows international operations to be held in a tax-
efficient manner from both a foreign and U.S. tax
perspective.
The Debtors represent that Ernst & Young is qualified to provide
the services. The firm has extensive experience in providing tax
services in restructurings and reorganizations. Specifically, it
is one of the country's leading accounting firms with expertise
in mergers and acquisitions, restructurings, and other accounting
and auditing services. Ernst & Young has extensive experience in
reorganization proceedings and enjoys an excellent reputation for
services, which the firm has rendered in large and complex Chapter
11 cases throughout the United States on behalf of both debtors
and creditors.
Ernst & Young Partner Kenneth L. Robin assures the Court that the
firm's members and associates do not represent and do not hold
any interest adverse to the Debtors' estates or to their
creditors. Ernst & Young is disinterested within the meaning of
Section 101(14) of the Bankruptcy Code. Mr. Robin also notes
that Ernst & Young has not represented and has no adverse
connection with the Debtors, its creditors, stockholders, or any
other party-in-interest, U.S. Trustee in any matter relating to
the Debtors or their estates.
The Debtors propose to compensate Ernst & Young for its services
in accordance with the firm's customary, standard hourly rates:
Partners and Principals $704 - 990
Senior Managers 649 - 699
Managers 500 - 656
Seniors 313 - 513
Staff 130 - 352
The Debtors inform the Court that Ernst & Young has not received
a retainer in connection with the postpetition services to be
rendered to them. (Exide Bankruptcy News, Issue No. 27; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
EXTREME NETWORKS: Reports Improved Q4 2003 Financial Performance
----------------------------------------------------------------
Extreme Networks, Inc. (Nasdaq: EXTR), a leader in Ethernet
broadband networking solutions, announced financial results for
the fiscal fourth quarter ended June 29, 2003. Net revenue for the
fourth quarter was $87.3 million, an increase from the third
quarter revenue of $85.2 million.
"We are pleased to show sequential sales growth, particularly in
the U.S. market, during this challenging economy," said Gordon
Stitt, president and CEO of Extreme Networks. "Initial customer
response to our newly introduced Unified Access Architecture,
which includes our Summit(R) 300 and Altitude(R) 300 WLAN
switches, our new Triumph-based products, and our Fourth
Generation Network Silicon System, has been very positive. Our
ongoing commitment to R&D during this economic downturn continues
to generate results."
In accordance with the Statement of Financial Accounting Standards
No. 109, the Company recorded a non-cash charge of $154 million
for the fourth quarter of fiscal 2003 to establish a valuation
allowance against its deferred tax assets. The net loss for the
quarter, including this non-cash charge, was $170.4 million or
$1.47 per share, which includes a loss of $1.33 per share for the
tax charge. Pro-forma results, net of the tax valuation allowance
and one-time charges resulted in revenues of $87.3 million, up
from $85.2 million in the third quarter, and a loss of $0.06 per
share, compared to the previous quarter loss of $0.06 per share.
"The SFAS No. 109 places greater weight on previous cumulative
losses than the outlook for future profitability when determining
whether deferred tax assets can be used," added Stitt. "We will
periodically review this valuation allowance, and it can be
reversed, partially or totally in the future."
Extreme Networks (S&P, B Corporate Credit & CCC+ Conv. Sub. Note
Ratings, Stable) delivers the most effective applications and
services infrastructure by creating networks that are faster,
simpler and more cost-effective. Headquartered in Santa Clara,
Calif., Extreme Networks markets its network switching solutions
in more than 50 countries. For more information, visit
http://www.extremenetworks.com
FIRST CONSUMERS: S&P Takes Rating Actions on 2 ABS Transactions
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on all
classes of First Consumers Master Trust's series 1999-A and First
Consumers Credit Card Master Note Trust's series 2001-A. The
ratings remain on CreditWatch with negative implications, where
they were placed March 28, 2002.
The lowered ratings reflect substantial deterioration in the
performance of the underlying pool of credit card receivables
since new purchases on existing accounts were restricted in March
2003, as a result of the Office of the Comptroller of the
Currency's recommendation for First Consumers National Bank to
cease lending credit, and the bankruptcy of Spiegel, the parent
company. In addition, Standard & Poor's expects that collateral
performance will continue to deteriorate further. This continued
deterioration in the collateral pool performance has increased the
probability that the subordinated noteholders of each series will
not receive full repayment of their original principal investment,
even though certain classes of subordinated notes may fare better
as a result of the deals' structure and the availability of
dedicated class credit protection.
The deterioration of key credit performance metrics in the
receivables has accelerated at an alarming pace during the past
four months. Most noticeably, the trust's principal payment rate,
which is a key indicator of how quickly investors will be paid
out, fell to 3.11% in June 2003 from 9.28% in February 2003. Prior
to the transactions' early amortization in March 2003, the trust's
principal payment rate averaged approximately 9.75%. The total
payment rate for the month ending June 2003 was 4.77%. The trust
has also displayed an upward trend in charge-off rate and
delinquencies. The charge-off rate reached its current peak in
June 2003 at 25.34%, and total delinquencies have increased to
18.36% from 13.63% in February 2003. The trust yield, which
historically averaged above 30%, has also declined to its current
level of approximately 21%.
After the two series entered early amortization in March 2003,
noteholders began receiving principal collections to pay down
their bonds in sequential order, beginning with class A, on
April 15, 2003. As of the July 15, 2003 distribution date, the
class A balances of series 1999-A and 2001-A had been reduced by
approximately 37.5% and 35%, respectively. The class B notes of
both series and the class C notes of series 2001-A are currently
at their initial balances.
The class C notes of series 2001-A benefits from a spread account,
which is available to cover the class C monthly interest to the
extent monthly cash flows are insufficient. At the class C
expected maturity date, amounts in the spread account will be used
to pay down any remaining principal balance of the class C notes
and reimburse class C noteholders for any previous unreimbursed
defaults. The spread account was funded from series excess spread
over the past two years, as series performance worsened. The
current amount on deposit in the spread account is equal to the
size of the class C notes, $36 million.
On March 5, 2003, Standard & Poor's lowered its ratings on all
classes of each series, reflecting concerns about the impending
servicer transfer from FCNB and the closing of the underlying
credit card accounts' ability to make new purchases on their cards
due to First Consumers National Bank's inability to fund them.
Standard & Poor's believed that both events would have a negative
impact on the portfolio performance. The closing down of the open-
to-buy would affect payment rates most directly, as higher quality
obligors paid off their accounts in full or completed balance
transfers. Consequently, fewer creditworthy obligors would remain
in the pool, reducing future payment collections. In addition, the
loss of card utility for new purchases could reduce the
cardholders' incentive to keep their accounts current, leading to
higher charge-offs.
In line with the OCC's requirement for FCNB to liquidate its
bankcard portfolio, FCNB discontinued the charging privileges on
the accounts as of March 7, 2003. In addition, on March 14, 2003,
the OCC issued an order that required FCNB to terminate servicing
June 30, 2003 or by the date by which a successor servicer was
appointed and assumed the bank's servicing obligations, whichever
comes first. According to the order, the servicing fee payable to
FCNB increased to 7%, 6%, and 5% for the months of April, May, and
June 2003, respectively, while FCNB remained the interim servicer.
First National Bank of Omaha, a division of First National of
Nebraska, has been appointed as successor servicer for the trust
and has now assumed servicing of the portfolio. The agreed-upon
servicing fee is 4.35%. The conversion process between FCNB and
FNBO was completed by the end of June 2003. FCNB cardholders were
advised to remit payments to the FNBO lockbox in their July
billing statements.
Standard & Poor's believes that the deteriorating performance
trends exhibited by the trust will continue, reflecting the
growing number of lower-quality obligors that remain in the trust
and that overall payment rate could deteriorate even further.
Standard & Poor's has revised its performance assumptions for the
portfolio and has determined that the available credit support for
each class is insufficient to support the ratings at their prior
levels.
Standard & Poor's will continue to monitor the performance of the
key risk indicators associated with the series listed below and
will continue to advise the market as developments become
available.
RATINGS LOWERED AND REMAIN ON CREDITWATCH NEGATIVE
First Consumers Master Trust
Series 1999-A
Rating
Class To From
A BB/Watch Neg BBB+/Watch Neg
B CCC/Watch Neg BB-/Watch Neg
First Consumers Credit Card Master Note Trust
Series 2001-A
Rating
Class To From
A BB/Watch Neg BBB+/Watch Neg
B CCC/Watch Neg BB/Watch Neg
C CCC/Watch Neg BB/Watch Neg
FLEETWOOD ENTERPRISES: Will Host Q4 Conference Call Tomorrow
------------------------------------------------------------
Fleetwood Enterprises, Inc. (NYSE: FLE), the nation's largest
manufacturer of recreational vehicles and a leading producer and
retailer of manufactured housing, will host a conference call to
discuss the results for its fourth quarter and fiscal year ended
April 27, 2003. The Company will release its results before
market on the same day.
The call will be held on Wednesday, July 23, 2003, at 1:30 p.m.
Eastern Daylight Time. It will be broadcast live over the Internet
at http://www.streetevents.comand http://www.companyboardroom.com
and will be accessible from the Company's Web site,
http://www.fleetwood.com The call will be available through
an archive at all three sites shortly after the end of the call.
For further information, please contact: Lyle Larkin, Vice
President and Treasurer, +1-909-351-3535, or Kathy Munson,
Director-Investor Relations, +1-909-351-3650, both of Fleetwood
Enterprises, Inc.
As reported in Troubled Company Reporter's March 28, 2003 edition,
Fleetwood Enterprises' lenders in its syndicated revolving line of
credit agreed to restate the financial covenant relating to
earnings before interest, taxes, depreciation and amortization
(EBITDA).
The Company had previously indicated that it did not expect to
meet that covenant following its fourth fiscal quarter ending
April 27, 2003. Fleetwood now anticipates that it will meet the
revised covenant through the remaining term of the credit
facility, which is scheduled to expire in July 2004. Fleetwood
also amended its inventory financing agreement with Textron
Financial, which incorporated the same covenant.
FLEMING COMPANIES: Court Approves Asset Sale Bidding Procedures
---------------------------------------------------------------
On July 17, 2003, the U.S. Bankruptcy Court approved procedures
for the sale of Fleming Companies, Inc., grocery wholesale
operations. As previously announced, Fleming and C&S Wholesale
Grocers, Inc., have signed a definitive asset purchase agreement
to sell Fleming's wholesale grocery business to C&S. The sale
procedures provide for other bidders to submit offers by July 28,
with an auction to follow on July 31. The final sale hearing would
be held August 4, 2003 and the closing date for the sale would be
expected in mid-August. The sale is contingent upon fulfilling
closing conditions, obtaining regulatory approvals, and reaching
satisfactory resolution of cure claims arising under executory
contracts which may be assigned to C&S in the bankruptcy process.
Fleming's Core-Mark convenience business, which operates as a
separate entity, is not affected by this action.
Fleming (OTC Pink Sheets: FLMIQ) is a supplier of consumer package
goods to independent supermarkets, convenience-oriented retailers
and other retail formats around the country. To learn more about
Fleming, visit the company's Web site at http://www.fleming.com
Fleming and its operating subsidiaries filed voluntary petitions
for reorganization under Chapter 11 of the U.S. Bankruptcy Code on
April 1, 2003. The filings were made in the U.S. Bankruptcy Court
in Wilmington, Delaware. Fleming's court filings are available via
the court's website, at www.deb.uscourts.gov .
FLEXXTECH: Changes Name to Network Installation & Symbol to NWIS
----------------------------------------------------------------
Flexxtech Corporation (OTC Bulletin Board: FLXE), d/b/a Network
Installation Corp., has formally changed its name to Network
Installation Corp., and will now trade under the new trading
symbol of NWIS.
Network Installation Corp. is one of Southern California's leading
independent designers and installers of wired and wireless
networks. Some of Network's clients include; IBM, Cisco Systems,
The Travelers, UPS, University of Southern California, UCLA, The
Counties of Los Angeles and Orange, among other Fortune 1000
companies and highly regarded institutions. The Company is also
focused on backbone and infrastructure opportunities within the
Wi-Fi marketplace. Additional information on Network Installation
can be found at http://www.networkinstallationcorp.com The
Company's public financial information and filings can be viewed
at http://www.sec.gov
Flexxtech Corp.'s March 31, 2003 balance sheet shows a total
shareholders' equity deficit of about $3 million.
GALAXY CLO 1999-1: Fitch Affirms Class C-2 and D Notes to BB-/B-
----------------------------------------------------------------
Fitch Ratings has affirmed the following classes of notes issued
by Galaxy CLO 1999-1 Limited:
-- $92,500,000 class B-2 notes 'BBB-';
-- $30,000,000 class C-2 notes 'BB-';
-- $50,000,000 class D notes 'B-';
The Issuer is a collateralized debt obligation consisting of high
yield loans and bonds managed by AIG Global Investment Corp.
Fitch has reviewed in detail the performance of the Issuer. In
conjunction with its review, Fitch discussed the current state of
the portfolio with the collateral manager as well as their
portfolio management strategy going forward as the transaction
will remain in its reinvestment period through June 2006.
Since the closing of this transaction in June 1999, it has passed
its class A overcollateralization test on each payment date. The
class B OC test has been falling in and out of compliance over the
last year. The availability of significant amounts of excess
spread provides strength to the transaction. According to the most
recent trustee report dated June 7, 2003, the class A OC test is
passing at 117.28% with a trigger of 117%. The class B OC test is
failing at 104.89% with a trigger of 105.2%. On the June 17, 2003
payment date the class B OC test was brought back into compliance
by diversion of excess spread to pay down senior notes. The
portfolio has 3.55% in defaulted securities and 4.05% in
securities rated 'CCC+' or lower (excluding defaults).
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates going forward relative to the minimum cumulative
default rates required for the rated liabilities. As a result of
this analysis, Fitch has determined that the original ratings on
the above referenced notes, still reflect the current risk to
noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
IMC GLOBAL: Amends Tender Offer Terms to Purchase 6.55% Notes
-------------------------------------------------------------
IMC Global Inc., (NYSE: IGL) is amending certain terms of its
tender offers to purchase for cash up to $100 million aggregate
principal amount of its 6.55% Notes due 2005 and up to $200
million aggregate principal amount of its 7.625% Senior Notes due
2005. The tender offer to purchase the 6.55% Notes has been
amended to increase the maximum aggregate principal amount of
6.55% Notes that IMC Global may purchase from $100 million to $140
million. The tender offer to purchase the 7.625% Notes has been
amended to increase the maximum aggregate principal amount of
7.625% Notes that IMC Global may purchase from $200 million to
$273 million.
In addition, both tender offers have been amended to extend the
expiration date from 5:00 p.m., New York time, today, to 12:00
p.m. noon, New York time, on August 1, 2003, unless extended or
earlier terminated, in either case, by the Company in its sole
discretion and to extend the early tender date from 12:00 midnight
New York time, on Tuesday, July 8, 2003 to 12:00 p.m. noon, New
York time, on August 1, 2003. Consequently, the total
consideration for any 6.55% Notes properly tendered and accepted
before 12:00 p.m. New York time, on August 1, 2003 will be 104.0%
of the principal amount of the 6.55% Notes and the total
consideration for any 7.625% Notes properly tendered and accepted
before 12:00 p.m. New York time, on August 1, 2003 will be 106.5%
of the principal amount of the 7.635% Notes. The other terms and
conditions of the tender offers, including the total maximum
consideration (i.e. the tender offer consideration together with
the early tender premium) for Notes tendered prior to 12:00
midnight, New York time, on the Early Tender Date and accepted,
have not been amended.
The consummation of the tender offers is subject to several
conditions, including the receipt of net proceeds from a debt
financing sufficient to pay for Notes accepted in the tender
offers. Notes tendered pursuant to the tender offers may not be
withdrawn unless the tender offer, with respect to such Notes, is
terminated without any Notes being purchased thereunder.
As of July 17, 2003, approximately $137 million aggregate
principal amount of the 6.55% Notes, representing approximately
91% of the 6.55% Notes outstanding, and approximately $257 million
aggregate principal amount of the 7.625% Notes, representing
approximately 86% of the 7.625% Notes outstanding, had been
tendered.
The tender offers are made upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 23, 2003.
Copies of the Offer to Purchase can be obtained from Bondholder
Communications Group at (888) 385-BOND (888-385-2663), Attention:
Irene Miller. Goldman, Sachs & Co. and J.P. Morgan Securities
Inc. are serving as the Dealer Managers for the tender offers.
None of IMC Global Inc., Goldman, Sachs & Co., J.P. Morgan
Securities Inc. or the Information Agent makes any recommendation
as to whether or not holders should sell their Notes pursuant to
the tender offers, and no one has been authorized by any of them
to make such a recommendation. Holders must make their own
decision as to whether to sell Notes, and if so, the principal
amount of Notes to sell. Questions concerning the terms of the
offers may be directed to Goldman, Sachs & Co., Liability
Management Group, toll free at (800) 828-3182. Questions
concerning procedures regarding the offers may be directed to
Bondholder Communications Group, toll free at (888) 385-BOND
(888-385-2663).
With 2002 revenues of $2.1 billion, IMC Global is the world's
largest producer and marketer of concentrated phosphates and
potash crop nutrients for the agricultural industry and a leading
global provider of feed ingredients for the animal nutrition
industry.
As reported in Troubled Company Reporter's July 21, 2003 edition,
Standard & Poor's Ratings Services assigned its 'B+' rating to
fertilizer producer IMC Global Inc.'s proposed $310 million senior
unsecured notes due 2013.
Standard & Poor's said that at the same time it has affirmed its
'B+' corporate credit rating on the company. Lake Forest, Ill.-
based IMC is one of the largest global producers of phosphate and
potash crop nutrients for the agricultural industry and has more
than $2.1 billion of debt outstanding. The outlook is stable.
INA CBO 1999-1: Fitch Cuts Ratings on 3 Class A Notes to BB/CC
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A-2F, A-2, and A-3 notes issued by INA CBO 1999-1 Ltd. and
co-issued by INA CBO 1999-1 (Delaware) Corp., and removed them
from CreditWatch with negative implications. At the same time, the
ratings on the class A-1L, A-1F, and A-1 notes are affirmed due to
the level of overcollateralization available to support them (see
list).
The lowered ratings reflect several factors that have negatively
affected the credit enhancement available to support the notes
since the ratings were lowered in March 2002. These factors
include par erosion of the collateral pool securing the rated
notes and a downward migration in the credit quality of the assets
within the pool.
Standard & Poor's notes that $34.52 million (or approximately
14.77%) of the assets currently in the collateral pool come from
obligors rated 'CC', 'D', or 'SD'. As a result of asset defaults
and credit risk sales at distressed prices, the
overcollateralization ratios have deteriorated significantly since
the transaction was last reviewed. As of the June 17, 2003 trustee
report, the transaction was failing the senior class A
overcollateralization ratio, which covers all of the class A-1 and
A-2 notes, at 115.6%, versus a minimum required ratio of 120% and
a level of 130.1% when the transaction was last reviewed. The
transaction was also failing the class A overcollateralization
ratio, which covers all of the class A notes, at 94.7%, versus a
required minimum of 109% and a level of 108.8% when the
transaction was last reviewed.
The credit quality of the collateral pool has also deteriorated
since the March 2002 downgrade. Currently, $17.25 million (or
approximately 8.66%) of the performing assets in the collateral
pool come from obligors with ratings on CreditWatch with negative
implications. Of the performing assets in the pool, $34 million
(or approximately 14.55%) come from obligors with ratings in the
'CCC' range.
Standard & Poor's has reviewed the current cash flow runs
generated for INA CBO 1999-1 Ltd. to determine the future defaults
the transaction can withstand under various stressed default
timing scenarios while still paying all of the rated interest and
principal due on the class A-2F, A-2, and A-3 notes. Upon
comparing the results of these cash flow runs with the projected
default performance of the current collateral pool, Standard &
Poor's has determined that the ratings previously assigned to the
class A-2F, A-2, and A-3 notes were no longer consistent with the
credit enhancement currently available, resulting in the lowered
ratings.
Standard & Poor's will remain in close contact with Bear Stearns
Asset Management, the collateral manager, and will continue to
monitor the performance of the transaction to ensure the ratings
assigned to all the notes remain consistent with the credit
enhancement available.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE
INA CBO 1999-1 Ltd./INA CBO 1999-1 (Delaware) Corp.
Rating Balance ($ mil.)
Class To From Orig. Current
A-2F BB A+/Watch Neg 45 45
A-2 BB A+/Watch Neg 35 35
A-3 CC B+/Watch Neg 40 40
RATINGS AFFIRMED
INA CBO 1999-1 Ltd./INA CBO 1999-1 (Delaware) Corp.
Balance ($ mil.)
Class Rating Orig. Current
A-1L AAA 86 61.159
A-1F AAA 38 38
A-1 AAA 8 8
INTEGRATED HEALTH: Settles Claim Disputes with PharMerica Inc.
--------------------------------------------------------------
PharMerica, Inc. is in the business of providing pharmaceutical
products and services to health care facilities and provides
these services to Integrated Health Services, Inc.'s long-term
care facilities and specialty hospitals.
Until recently, the relationship between IHS and PharMerica had
been governed by:
1. The Second Amended and Restated Preferred Provider
Agreement dated May 1, 1999;
2. A series of separate Independent Contractor Agreements for
Pharmaceutical Services entered into prepetition by
individual Debtors operating individual Long-Term Care
Facilities; and
3. A series of separate postpetition agreements between the
Debtors' operating individual Specialty Hospitals and
PharMerica.
Joseph M. Barry, Esq., at Young, Conaway, Stargatt & Taylor, LLP,
in Wilmington, Delaware, relates that the Preferred Provider
Agreement required IHS to designate PharMerica as a "preferred
provider," to the degree that when a pharmaceutical services
agreement expired or terminated, the applicable Long-Term Care
Facility operator was required to contract with PharMerica. The
Preferred Provider Agreement was to expire on August 20, 2005
unless sooner terminated by IHS or PharMerica for cause.
Each of the Long-Term Care Facility Agreements provided that the
applicable Long-Term Care Facility operator engaged PharMerica to
provide needed pharmaceutical dispensing and distribution services
and pharmaceutical products. Each of the Long-Term Care Facility
Agreements was to expire on August 31, 2005, unless sooner
terminated for cause by one of the parties.
Mr. Barry tells the Court that the products and services provided
nationally by PharMerica are available on terms generally
equivalent to those offered by PharMerica, but without requiring
the Debtors to be locked in through August 2005. Accordingly, by
orders dated January 14, 2003 and February 25, 2003, the Debtors
rejected the Preferred Provider Agreement and the Long-Term Care
Facility Agreements, and the latter agreements were replaced by
new agreements providing that either party could terminate without
cause on thirty days' notice.
During the negotiations that resulted in the Settlement Agreement,
the parties entered into a series of stipulations so-ordered by
the Court, extending PharMerica's bar date for filing claims for
damages arising from the Debtors' rejection of the Preferred
Provider Agreement and the Long-Term Care Facility Agreements.
PharMerica's current bar date is August 15, 2003. Under the
Settlement Agreement, PharMerica will waive its right to seek
rejection damages.
Mr. Barry reports that PharMerica filed a series of proofs of
claim, asserting prepetition contractual liabilities arising from
its provision of goods and services to the Debtors. Specifically,
PharMerica filed an original claim for $424,096,428.17, an amended
claim for $424,889,920.39 and a series of smaller claims against
individual subsidiaries aggregating to the approximate amount of
the Original Claim.
Under the Settlement Agreement, the Original Claim will be
disallowed and expunged and the Amended Claim will be allowed as
a non-priority unsecured claim for $24,889,970.39, the approximate
amount of the corresponding liability reflected in the Debtors'
books and records. While the Subsidiary Claims are not disallowed
and expunged under the Settlement Agreement, that Agreement
provides that PharMerica will not receive a distribution on any
amount in excess of the amount of the Amended Claim.
In February 2001, Mr. Barry recounts that the Debtors and
PharMerica entered into a stipulation tolling the Debtors'
deadline for asserting avoidance actions against PharMerica and
its affiliates to permit settlement discussions. These
discussions culminated in the resolution set forth in the
Settlement Agreement. Also, in February 2001, the Debtors
commenced an action in the Bankruptcy Court against Highland
Healthcare, an affiliate of PharMerica, asserting preference and
fraudulent conveyance claims aggregating $303,935.05 or more.
Thereafter, the Debtors and Highland Healthcare agreed to extend
Highland Healthcare's time to answer the complaint co-extensive
with the tolling period agreed to with respect to PharMerica.
The tolling period, with respect to both PharMerica and Highland
and their affiliates, was extended further by agreement. It
currently runs through August 1, 2003.
The Debtors identified potentially avoidable payments or transfers
to PharMerica and its affiliates aggregating $5,000,000 and
potentially ranging as high as $17,000,000. In response,
PharMerica contended that its preference and fraudulent conveyance
exposure was eliminated or largely mitigated because:
1. certain of the payments did not constitute a payment of the
Debtors' assets, but rather constituted a use of funds held
in trust by the Debtors for their managed Facilities;
2. certain of the payments were made on account, in advance of
services to be provided;
3. certain of the payments were made in the ordinary course;
and
4. certain of the payments were a contemporaneous exchange for
new value.
Under the Settlement Agreement, the Debtors will waive the
avoidance claims that were asserted or could have been asserted
against PharMerica.
Mr. Barry affirms that PharMerica continued to provide goods and
services to the Debtors after the Petition Date, and during the
administrative period a number of issues arose concerning claimed
overpayments and misapplied payments. Specifically, IHS
contended that:
1. the Debtors made $44,000 in overpayments to PharMerica with
respect to goods and services PharMerica provided to the
Brockton Long-Term Care Facility;
2. the Debtors made $711,000 in overpayments with respect to
goods and services PharMerica provided to the Debtors'
specialty hospitals; and
3. PharMerica misapplied $178,000 in payments, which should
have been applied to the Debtors' obligations and were
instead applied to Lyric Healthcare's obligations.
Under the Settlement Agreement, PharMerica will issue an $889,000
credit against the Debtors' postpetition obligations in addition
to the $43,000 credit PharMerica has already provided.
To sum up, the Settlement Agreement provides that:
1. PharMerica will waive its right to seek rejection damages
arising from the Debtors' rejection of their executory
contracts with PharMerica;
2. PharMerica's general unsecured prepetition claim will be
allowed for $24,889,970.30, and PharMerica will not receive
a distribution on any amount in excess of that sum;
3. The Debtors will waive the avoidance claims that were
asserted or could have been asserted against PharMerica;
4. PharMerica confirms a previous $43,000 postpetition credit
and will issue another credit amounting to $889,000 in full
satisfaction of the three postpetition disputes described
in the Settlement Agreement; and
5. The parties will exchange releases.
Mr. Barry asserts that the Settlement Agreement consensually
resolves a series of disputes between the parties that would be
costly and time-consuming to resolve and could unnecessarily
threaten IHS' relationship with its principal supplier of
pharmaceutical goods and services. Under the settlement, the
Debtors will:
1. acknowledge a prepetition obligation in the approximate
amount reflected in IHS' books and records;
2. maintain its beneficial relationship with PharMerica under
a new series of agreements that do not require exclusivity
and permit termination without cause, while eliminating
liability for rejection damages of the numerous rejected
predecessor agreements;
3. waive the Debtors' right to pursue preference actions,
which they believe were meritorious, but would have been
hotly contested, with the outcome far from certain; and
4. resolve a series of postpetition disputes in exchange for
credits totaling $932,000.
"Apart from avoiding the risks and administrative expense
inherent in litigating these issues, the settlement will allow
the Debtors to avoid the disruption and distraction that would
result from litigation with the Company's principal
pharmaceutical supplier and allow the Debtors to focus their
attention on completing their reorganization," Mr. Barry adds.
(Integrated Health Bankruptcy News, Issue No. 61; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LEAP WIRELESS: Signs-Up PricewaterhouseCoopers as Accountants
-------------------------------------------------------------
Leap Wireless International Inc., and its debtor-affiliates seek
the Court's authority to employ PricewaterhouseCoopers LLP as
independent public accountants.
Eric D. Brown, Esq., at Latham & Watkins LLP, in Los Angeles,
California, tells the Court that the Debtors are familiar with
PwC's professional standing and reputation. The Debtors
understand that PwC has a wealth of experience in providing
accounting, auditing and tax services in restructurings and
reorganizations and enjoys an excellent reputation for services it
has rendered in large and complex Chapter 11 cases on behalf of
debtors and creditors throughout the United States.
PwC has provided accounting, auditing and tax services to the
Debtors since its inception. During this time, PwC has developed
a great deal of institutional knowledge regarding the Debtors'
operations, finance and systems. This experience and knowledge
will be valuable to the Debtors in its efforts to reorganize.
Mr. Brown insists that PwC's services are necessary to enable the
Debtors to maximize the value of their estates and to reorganize
successfully. Furthermore, PwC is well qualified and able to
represent the Debtors in a cost-effective, efficient and timely
manner.
PwC will provide accounting, auditing and tax services as deemed
appropriate and feasible in order to advise the Debtors in the
course of these Chapter 11 cases, including:
A. Accounting and Auditing:
-- audits of the Debtors' financial statements as may be
required from time to time, and advice and assistance
in the preparation and filing of financial statements
and disclosure documents required by the Securities and
Exchange Commission including Forms 10-K and 10-Q as
required by applicable law or as requested by the
Debtors;
-- audits of any benefit plans as may be required by the
Department of Labor or the Employee Retirement Income
Security Act, as amended;
-- review of the Debtors' unaudited quarterly financial
statements as required by applicable law or as
requested by the Debtors;
-- performance of internal controls review and required
attestation services with respect to compliance with
Section 404 of the Sarbanes Oxley Act; and
-- performance of other related accounting services for the
Debtors as may be necessary or desirable.
B. Tax:
-- review of and assistance in the preparation and filing
of any tax returns;
-- advice and assistance regarding tax planning issues,
including calculating net operating loss carry forwards
and the tax consequences of any proposed plans of
reorganization, and assistance in the preparation of any
Internal Revenue Service ruling requests regarding the
future tax consequences of alternative reorganization
structures;
-- assistance regarding existing and future IRS
examinations; and
-- any and all other tax assistance as may be requested
from time to time.
Pursuant to the March 3, 2003 Engagement Letter outlining the
terms of retention, PwC will:
-- prepare and sign the U.S. Corporation Income Tax Return,
Form 1120 and required federal forms, for Leap for the tax
year beginning January 1, 2002 through December 31, 2002;
-- prepare and sign the required state and local corporate
income tax returns for tax year beginning January 1, 2002
through December 31, 2002; and
-- prepare all required federal and state extension requests
for 2002 and all required estimated tax payments for 2003.
The Debtors and PwC recently entered into an engagement letter
dated May 15, 2003, pursuant to which PwC will assist the Debtors
in analyzing certain tax aspects of the proposed bankruptcy plan,
including:
-- determination of a reasonable estimate of the Excess Loss
Account of each member of the Leap consolidated group;
-- determination of a reasonable estimate of the Cancellation
of Debt income at each subsidiary;
-- determination of a reasonable estimate of the tax
attributes, stock basis, and inside asset basis of each
Leap legal entity;
-- determination of the possible tax attribute reduction and
asset basis reduction resulting from the COD income;
-- consideration of the optimal form of tax attribute
reduction as between separate company basis and
consolidated basis; and
-- consideration of whether ELAs may be triggered by the
proposed restructuring and propose alternatives that might
have more beneficial tax results.
PwC Partner Richard F. Kalenka assures the Court that the Firm:
(i) has no connection with the Debtors, their creditors or
other parties-in-interest in this case;
(ii) does not hold any interest adverse to the Debtors as
debtors-in-possession or their estates with respect to
the matters on which PwC is to be engaged; and
(iii) is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code.
However, Mr. Kalenka discloses that PwC currently provides
services in unrelated matters to these parties:
A. Secured Lenders: Credit Suisse First Boston, Goldman Sachs
Group Inc., Perry Principals LLC, Societe Generale, ML CBO
IV (Cayman) Ltd., Bank One, Lucent technologies and Bear
Stern Investments;
B. Unsecured Creditors: Depository Trust Co., Northern Trust,
Goldman Sachs, Morgan Stanley, JP Morgan Chase, RBC
Dominion Securities, Citibank N.A., ABN Amro, Credit Suisse
First Boston, Pershing LLC, Bank of New York, Brown Bros.
Harriman & Co., Deutsche Bank, RBC Dain Bauscher Inc., and
National Financial Services LLC;
C. Indenture Trustee: U.S. Bank National Association; and
D. Trade Creditors: Nokia, AAS Inc., BellSouth Atlanta, Nortel
Networks, AT&T, Qwest, WorldCom and Lucent.
PwC will conduct a periodic review of its files to ensure that no
conflicts or other disqualifying circumstances exist or arise.
If any new facts or circumstances are discovered, PwC will
supplement its disclosure to the Court.
According to Mr. Kalenka, PwC is not owed any amounts with
respect to its prepetition fees and expenses. For the 90-day
period prior to the Petition Date, PwC received $269,600 from the
Debtors for accounting and auditing professional services
performed and expenses incurred and $39,112 from the Debtors for
tax consulting professional services and expenses.
The customary hourly rates, subject to periodic adjustments,
charged by PwC's personnel anticipated to be assigned to this
case are:
Fees for Accounting and Auditing Professional Services:
National Office Partners $800
Local Office Partners 500
Senior Managers/Directors 385
Managers 300
Senior Associates 250
Associates 135
Administration/Paraprofessionals 60
Fees for Tax Compliance Professional Services:
Partners $366
Senior Managers/Directors 327
Managers 258
Senior Associates 154
Associates 110
Administration/Paraprofessionals 50
Fees for Tax Consulting Professional Services:
National Office Partners $674
National Office Senior Managers 554
Partners 513
Senior Managers/Directors 457
Managers 361
Senior Associates 216
Associates 153
Administration/Paraprofessionals 55
Mr. Kalenka states that PwC will be paid not more than $900,000
based on the hourly rates during the period from the Petition
Date through March 31, 2004 for accounting and auditing services
related to audit of the Debtors' annual financial statements, the
reviews of the Debtors' Form 10-Qs, and audits of the benefit
plan. Additionally, audit and review fees and expenses payable
to PwC will not exceed $75,000 per month for the months of April
2003 through January 2004. The parties will enter into an
engagement letter consistent with these terms and other
provisions specified by the Court. Since the Petition Date, PwC
has recorded but not received payment for $80,000 in fees and
expenses related to preparation and filing of the Debtors' Form
10-Q for the first quarter of this year.
The Engagement Letter estimates that fees for services performed
will be $125,000 and any assistance in gathering information,
analyzing data, or formatting and calculating schedules would be
provided at $225 per hour. The March 3 Engagement Letter further
provides that other additional services may be billed at these
rates:
Partners $510
Directors 450
Senior Managers 400
Managers 360
Senior Associates 240
As of June 5, 2003, PwC was paid an $80,000 advance and has
incurred $19,396 in fees. Therefore, as of June 5, 2003, total
payments received from the Debtors for tax compliance services as
specified in the Engagement Letter exceed actual hours incurred
at the indicated rates by $60,604.
Fees for services provided are consistent with the hourly rates.
Specifically, the hourly rates are:
National Office Partners $674
National Office Senior Managers 554
Partners 513
Senior Managers/Directors 457
Managers 361
Senior Associates 216
Associates 153
Administration/Paraprofessionals 55
The Debtors and PwC have agreed that:
1) Any postpetition controversy or claim with respect to, in
connection with, arising out of, or in any way related to
this Application or the services provided by PwC to the
Debtors, including any matter involving a successor-in-
interest or agent of any of the Debtors or of PwC, will be
brought in the Bankruptcy Court or the United States
District Court for the Southern District of California if
the District Court withdraws the reference;
2) PwC and the Debtors and any and all successors and assigns
consent to the jurisdiction and venue of the court as the
sole and exclusive forum for the resolution of claims,
causes of actions or lawsuits;
3) PwC and the Debtors, and any and all successors and
assigns, waive trial by jury, with the waiver being
informed and freely made;
4) If the Bankruptcy Court, or the District Court, does not
have or retain jurisdiction over the claims and
controversies, PwC and the Debtors, and any and all
successors and assigns, will submit first to non-binding
mediation; and, if mediation is not successful, then to
binding arbitration, in accordance with the dispute
resolution procedures; and
5) Judgment on any arbitration award may be entered in any
court having proper jurisdiction. (Leap Wireless Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
LORAL SPACE: Wants More Time to File Schedules and Statements
-------------------------------------------------------------
Loral Space & Communications Ltd., and its debtor-affiliates asks
the U.S. Bankruptcy Court for the Southern District of New York to
extend the deadline by which the company must prepare and deliver
their:
i) schedules of assets and liabilities,
ii) schedules of current income and expenditures,
iii) schedules of executory contracts and unexpired leases,
and
iv) statements of financial affairs
required under Section 521 of the Bankruptcy Code and Bankruptcy
Rule 1007.
Due to the complexity and diversity of their operations, the
Debtors say it'll be impossible to complete their Schedules in the
mere 15 days provided under Bankruptcy Rule 1007(c).
To prepare their Schedules, the Debtors must compile information
from books, records, and documents relating to thousands of
claims, assets, and contracts. This information is voluminous and
is located in numerous places throughout the Debtors'
organization. Collection of the necessary information requires an
enormous expenditure of time and effort on the part of the Debtors
and their employees.
While the Debtors, with the help of their professional advisors,
are mobilizing their employees to work diligently and
expeditiously on the preparation of the Schedules, resources are
limited. In view of the amount of work entailed in completing the
Schedules and the competing demands upon the Debtors' employees
and professionals to assist in efforts to stabilize business
operations during the initial postpetition period, the Debtors
will not be able to properly and accurately complete the Schedules
within the required fifteen-day time period.
At present, the Debtors anticipate that they will require at least
90 additional days to complete their Schedules. Consequently, the
Debtors request that the Court extend the schedules filing
deadline through October 28, 2003.
The Debtors submit that the vast amount of information that must
be assembled and compiled, the multiple places where the
information is located, and the number of employee and
professional hours required to complete the Schedules all
constitute good and sufficient cause for granting the requested
extension of time.
Loral Space & Communications Ltd., headquartered in New York, New
York, and together with its affiliates, is one of the world's
leading satellite communications companies with substantial
activities in satellite-based communications services and
satellite manufacturing. The Company filed for chapter 11
protection on July 15, 2003 (Bankr. S.D.N.Y. Case No. 03-41710).
Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal &
Manges LLP, represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from its creditors, it
listed $2,654,000,000 in total assets and $3,061,000,000 in total
debts.
MASSEY ENERGY: Court Requires $55M Appeal Bond in Harman Lawsuit
----------------------------------------------------------------
Massey Energy Company (NYSE: MEE) has been ordered by the trial
judge in Boone County, West Virginia, to post appeal surety in the
amount of $55 million, including interest, pending its appeal of
the previously announced August 1, 2002 verdict of $50 million in
the lawsuit brought by Hugh Caperton and various companies owned
by him, including Harman Mining Corporation. The trial court has
not yet ruled on the Company's post-trial motions asking that this
verdict be overturned or reduced.
The Company provided for this contingency in its recently
completed refinancing and expects to be able to meet this
requirement within the allocated timeframe. The Company continues
to believe that the verdict in this case was unjustified and plans
to continue vigorously pursuing an appeal.
Massey Energy Company, headquartered in Richmond, Virginia, is the
fourth largest coal company in the United States based on produced
coal revenue.
As reported in Troubled Company Reporter's July 15, 2003 edition,
Standard & Poor's Ratings Services revised its outlook on Massey
Energy Company to stable from negative. At the same time, Standard
& Poor's assigned its BB+ rating to Massey's $355 million secured
credit facility. In addition, Standard & Poor's affirmed its
existing ratings on the company.
"The outlook revision reflects the enhancement to Massey's
liquidity with the establishment of its new bank credit facility,
which has alleviated near term maturity concerns," said credit
analyst Dominick D'Ascoli.
The new $355 million bank credit facility was rated 'BB+', one
notch above the corporate credit rating. The new facility consists
of a $250 million term loan due 2008 and a $105 million revolver
due 2007 and is secured by various assets including certain
account receivables, inventory, and certain property, plant &
equipment. The term loan has a manageable amortization schedule of
$0.6 million per quarter until maturity, and an early maturity
trigger based on whether Massey's existing 6.95% senior notes are
refinanced before January 1, 2007.
The ratings reflected its substantial coal deposits and contracted
production, which are tempered by high costs that have increased
volatility in the company's financial performance.
MDC CORP: Selling Interest in Custom Direct Income Fund for $30M
----------------------------------------------------------------
MDC Corporation Inc., of Toronto has agreed to sell an additional
2.964 million units of Custom Direct Income Fund for gross
proceeds of $29.64 million. The sale will be completed by way of a
private placement, which will be fully underwritten by a syndicate
of underwriters. The private placement is scheduled to close on
July 29, 2003.
The units have not been, and will not be, registered under the
U.S. Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption from
the registration requirements of that Act.
The proceeds from the private placement, together with amounts
received in connection with the initial public offering of the
Fund, will result in MDC having realized gross cash proceeds of
approximately $208.1 million (before commissions and expenses)
from the sale of its 80% interest in Custom Direct including the
term loan portion of Custom Direct's credit facility.
Following the closing of the private placement, MDC will continue
to own a 20% subordinated interest in the business (which it has
agreed not to sell until after December 21, 2003) exchangeable
into approximately 3.9 million units of the Fund.
Proceeds received by MDC from this offering will be used for
general corporate purposes.
Custom Direct Income Fund indirectly holds an 80% interest in the
Custom Direct business. Based in Maryland and Arkansas, Custom
Direct has been selling cheques and cheque related accessories
across the United States since 1992 and offers the industry's
widest selection of product designs. Custom Direct is the second
largest participant in the direct-to-consumer segment of the U.S.
cheque industry.
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.
As reported in Troubled Company Reporter's July 2, 2003 edition,
Standard & Poor's Ratings Services withdrew its 'BB-' long-term
corporate credit rating on marketing communications and secure
transaction services provider MDC Corp. Inc., at the company's
request.
At the same time, Standard & Poor's withdrew its 'B' rating on the
company's US$86.4 million 10.5% senior subordinated notes due
2006, following MDC's redemption of these notes.
MEMORIAL MEDICAL (NM): Fitch Hatchets Revenue Bonds Rating to B
---------------------------------------------------------------
Fitch Ratings downgrades to 'B' from 'BBB-' the rating on the
approximately $44.7 million New Mexico Hospital Equipment Loan
Council Hospital Revenue Bonds (Memorial Medical Center, Inc.
Project), series 1998 and $13.5 million New Mexico Hospital
Equipment Loan Council Hospital Revenue Bonds (Memorial Medical
Center, Inc. Project), series 1996. The bonds remain on Rating
Watch Negative. 'B' ratings indicate that significant credit risk
is present, but a limited margin of safety remains. Financial
commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable
business and economic environment.
The downgrade to 'B' is based on further deterioration in Memorial
Medical Center's financial performance, which resulted in an event
of default and the uncertainty regarding the future of the
organization. This downgrade follows another downgrade in April
2003 to 'BBB-' from 'BBB' and placement on Rating Watch Negative.
Of particular concern is the drastic difference between interim 12
month results (Dec. 31) and audited results. Audit adjustments of
approximately $9 million included prior years' settlements,
additional professional liability costs, contractual allowances,
accrual of county health services, and a large unrecorded invoice.
MMC's interim financials indicated a 1.2 times debt service
coverage (negative $3 million bottom line) in fiscal 2002, which
turned to negative 0.7x (negative $12.4 million bottom line) after
the audit adjustments.
MMC is currently in an event of default due to the rate covenant
violation and bonds may be accelerated at any time. The
probability of the acceleration of bonds is unclear and the
trustee may declare the principal of the debt due immediately upon
written request of owners of 25% of outstanding bonds. Fitch notes
that MMC's fiscal 2002 auditor's report contains a going concern
explanatory paragraph in relation to reclassifying $58 million of
debt as a current liability due to the violation of the rate
covenant. Debt service payments to date have been timely and the
debt service reserve funds for both bond issues remain intact.
MMC's financial performance through the four months ended April
30, 2003 continues to be weak with a bottom line loss of $4.3
million, resulting in debt service coverage of negative 0.4x.
MMC's financial position has been exacerbated by the opening of a
new for profit hospital owned by Triad. Volume dropped off
substantially in the fourth quarter of 2002, but admissions have
somewhat stabilized at a lower level through the five months from
February to June 2003 at approximately 1,000 admissions per month.
Management has indicated that the losses per month continue to
improve from $2.4 million in January 2003 to $400,000 in May 2003.
Financial improvement initiatives include staff reductions and
managed care contract renegotiations. Despite bottom line losses,
MMC's liquidity position remains stable, although light, with
$15.4 million of unrestricted cash. Days cash-on-hand was 42 days
at April 30, 2003, compared to 37 days at fiscal year-end 2002.
Under the current organization, the hospital is leased from the
city and county. The future of the organization remains uncertain
as the city and county continue to pursue other options for the
hospital including a possible sale or lease. The terms of the
operating lease include upon termination of the lease, possession
and control of all hospital assets and liabilities (including
series 1996 and 1998 bonds) revert to the city and county. MMC
remains on Rating Watch Negative pending more information
regarding possible bondholder action and further developments of
the city's and county's efforts in finding alternatives for the
hospital.
Memorial Medical Center is a 256-staffed bed hospital located in
Las Cruces, N.M., with $181 million in total net revenue in fiscal
2002. MMC covenants to provide annual audited statements within
180 days of fiscal year-end and quarterly disclosure within 60
days of quarter end to the Trustee. Audits will be submitted to
the Nationally Recognized Municipal Securities Information
Repositories by the Trustee and bondholders may receive quarterly
disclosure on request. MMC has been providing timely disclosure to
Fitch, though inaccuracy in its interim reporting is a concern.
MERCY HOUSING: Sr. & Sub. Housing Bond Ratings Cut to BBB- & BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Maricopa
County Industrial Development Authority's multifamily housing
revenue bonds, issued for Mercy Housing, to 'BBB-' from 'A-' and
to 'BB-' from 'BBB-', on the senior series 1997A and subordinate
series 1997B, respectively, based on a downward trend in debt
service coverage and extensive maintenance needs at Mercy
Housing's three properties. The outlook remains negative on both
series.
"The downward trend in debt service coverage has reached a 1.13x
level on the senior bonds and 0.98x on the subordinate bonds, and
extensive deferred maintenance needs at all three of Mercy's
affordable housing properties is another major concern," said
Standard & Poor's credit analyst Karen Fitzgerald, who added that
a weak rental housing market in the Phoenix area is yet another
factor in the downgrade. A slightly tempering factor to these
concerns is the continued financial support to the properties of
Mercy Housing, Inc., considered to be a strong owner by Standard &
Poor's.
The bonds were originally issued to finance the acquisition of
Mercy Housing's three affordable housing projects in Phoenix,
consisting of 350 units on 11.6 acres. The downgrade on the senior
bonds affects $10.07 million in debt and the downgrade on the
subordinate bonds affects about $570,000 in debt.
Mercy Housing Inc. owns three Standard & Poor's-rated affordable
housing projects in Phoenix, Arizona; Orangewood, Wishing Well
Villas, and Wishing Well II. On a scale of one to five (with one
being the highest) Standard & Poor's rates the properties 3, 3.5,
and 4.5, respectively.
MIRANT CORP: Secures Blessing to Continue Cash Management System
----------------------------------------------------------------
Prior to the Petition Date, Mirant Corp., and its debtor-
affiliates utilized an integrated cash management system that
provides well-established mechanisms for the collection,
concentration, management and disbursement of funds used in their
operations. Robin Phelan, Esq., at Haynes and Boone LLP, in
Dallas, Texas, tells the Court that the Debtors generate cash
principally from the sale of power produced by Mirant
Corporation's power generation subsidiaries -- the Operating
Subsidiaries -- and proceeds derived from commodities and
financial product trading activities.
In each case, a substantial part of the Debtors' business
activities with third parties are transacted through Mirant
Americas Energy Marketing, LP, which serves as asset manager for
the Operating Subsidiaries and engages in proprietary commodities
trading activities for its own account. As the asset manager,
MAEM purchases and arranges for the delivery of fuel required to
operate most of the Operating Subsidiaries' power generation
assets. MAEM also sells and arranges for the dispatch and
delivery of power generated by the Operating Subsidiaries and
collects the proceeds of the sales. Certain of the Debtors'
Operating Subsidiaries are self-managed, procuring fuel and
ancillary services from and selling power to third parties for
their own accounts.
Revenue derived from MAEM's asset management and proprietary
trading activities is received into either one of three collection
accounts or the MAEM Master Account. Funds collected in each of
the collection accounts are swept automatically into the MAEM
Master Account. On a monthly basis, MAEM settles its accounts
with the managed Operating Subsidiaries and funds are transferred
to or from the MAEM Master Account from and to accounts maintained
by each Operating Subsidiary, as applicable. On the other hand,
self-managed Operating Subsidiaries receive funds directly into
accounts the relevant Operating Subsidiaries maintained.
On a daily basis, MAEM's funding requirements are determined and
excess funds in the Master Account are transferred to a
concentration account Mirant maintained. To the extent that MAEM
requires additional funding to meet its daily obligations, funds
are transferred from a Mirant concentration account to the MAEM
Master Account.
According to Mr. Phelan, the Operating Subsidiaries are organized
into several operating units:
A. Mirant Americas MidAtlantic Marketing, Inc -- MIRMA
Excess funds deposited with the MIRMA Operating Subsidiaries
are swept automatically and consolidated into a MIRMA
concentration account. As funds are required by the MIRMA
Operating Subsidiaries, they receive automatic sweeps from the
MIRMA concentration account.
B. Mirant Americas Generation LLC -- MAGI
Excess funds deposited with the MAGI Operating Subsidiaries
are swept automatically into a concentration account
maintained by MAGI at Bank of America, N.A. From time to
time, a determination is made to transfer funds to the MAGI
concentration account at Citibank, N.A. As funds are required
by the MAGI Operating Subsidiaries, they receive automatic
sweeps from the MAGI concentration account maintained at Bank
of America or a determination is made to fund the MAGI
Operating Subsidiary from the MAGI concentration account
maintained at Citibank.
C. Mirant Americas, Inc.
Regarding the MAI Operating Subsidiaries, a daily
determination of the funding requirements is made for each
Operating Subsidiary and any excess funds deposited with the
MAI Operating Subsidiaries are transferred to a Mirant
concentration account. To the extent that a MAI Operating
Subsidiary requires additional funding to meet its daily
obligations, funds are transferred from a Mirant concentration
account to the applicable Operating Subsidiary Account.
Mr. Phelan relates that certain entities contained within the
Debtors' cash flows are not substantial enough to justify
inclusion in the consolidated cash management system. For these
entities, from time to time, a determination of funding
requirements are made and funds are transferred to or from the
relevant operating account, which transfers, prior to the
Petition Date, were generally in the form of a dividend or
capital contribution, as applicable.
The Debtors make distributions in several ways:
(a) MAEM makes payments as asset manager and on account of
its proprietary trading activities from zero-balance
disbursement accounts that draw directly from the MAEM
Master Account;
(b) MIRMA and MAGI make disbursements on account of certain
operating expenses from their Operating Subsidiaries
Accounts, which draw funds directly from a MIRMA or MAGI
concentration account, as applicable;
(c) Other Operating Subsidiaries are manually funded on an as-
needed basis; and
(d) The Debtors' payroll and employee benefits functions and
certain of the operating expenses that are not included
within MAEM's asset management functions are centrally
managed by Mirant Services, LLC. With respect to
to employees located at the various Operating Subsidiaries
and Mirant headquarters, Mirant Services allocates on a
monthly basis the amounts to each entity and bills each
entity for those amounts. Mirant Services makes payments
from several disbursement accounts, which draw funds
automatically from a Mirant concentration account. All
payments made by Mirant Services on behalf of the
Operating Subsidiaries are recorded and settled on a
monthly basis.
Mr. Phelan asserts that the Debtors' existing cash management and
intercompany accounting procedures are essential to the ordinary
operation of the Debtors' business. Indeed, forcing the Debtors
to implement a new cash management system would:
-- cause confusion,
-- diminish the prospects for a successful reorganization,
-- introduce inefficiency at a time when efficiency is most
critical, and
-- place a strain on the Debtors' relationships with
customers, trading partners and vendors.
By contrast, the existing cash management system permits the
Debtors to:
-- provide availability of funds when and where necessary; and
-- develop timely and accurate accounting information.
Accordingly, the Debtors sought and obtained the Court's
authority to continue using their existing cash management
system. (Mirant Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MITEC TELECOM: Restructuring Yields Improved Results for Q4 2003
----------------------------------------------------------------
Mitec Telecom Inc. (TSX: MTM), a leading designer and provider of
wireless network, Satcom and radio frequency products for a
variety of industries, reported its results for the fourth quarter
and 2003 fiscal year ended April 30, 2003. (All succeeding amounts
are expressed in Canadian dollars unless specified otherwise).
The Company's restructuring and streamlining project, launched
last October, has yielded substantially improved quarter-over-
quarter results. For the fourth quarter, Mitec recorded positive
EBITDA of $2.1 million before restructuring charges, a significant
turnaround compared to the negative EBITDA before restructuring of
$2.6 million reported in the third quarter. Sales for the fourth
quarter reached $25.4 million, up 7% from the $23.7 million
reported in the previous quarter. Gross profit for the quarter
reached $3.2 million, up 18% compared to the third quarter.
The net loss for the fourth quarter was reduced to $3.8 million,
or $0.09 per share after goodwill amortization and write-down,
compared to $4.9 million, or $0.20 per share in the previous
quarter. Gross profit was up 18% quarter-over-quarter.
"I am delighted that Mitec has reached the important EBITDA-
positive milestone earlier than expected. The markedly improved
quarter-over-quarter results, in virtually every key area, testify
to the tenacity and commitment of our people, and the strong
support and growing confidence of our customers. With the planned
introduction of new products over the next two quarters, Mitec is
now entering a new and exciting phase," said Rajiv Pancholy,
Mitec's President and CEO.
For the fiscal year, Mitec's sales reached $101.1 million,
compared to $122.2 million reported in fiscal 2002. The year-over-
year decline is attributable to the curtailed spending of telecom
OEMs and service providers. Gross profits were $11.9 million,
compared to $14.1 million in the previous year.
Net loss for fiscal 2003 totaled $20.2 million, or $0.71 per share
after goodwill amortization and write-down, a substantial
reduction compared to the loss of $28.2 million or $1.54 per share
after goodwill amortization and write- down a year earlier. "It is
important to note that the greatest share of our net loss was
incurred before our Company-wide revitalization program began to
show its effects," said Keith Findlay, Mitec's Executive Vice
President, Finance and CFO. "The significant reduction in net loss
in the fourth quarter of fiscal 2003 provides a more accurate
snapshot of the direction in which we are heading."
Mitec's comprehensive restructuring program also contributed to a
significant year-over-year reduction in its operating expenses,
from $26.9 million in 2002 to $24.4 million for the year ended
April 30, 2003. These reduced operating expenses have contributed
substantially to the Company's bottom line improvement.
Mitec's April 30, 2003 balance sheet shows that its total current
liabilities eclipsed its total current assets by about $12
million, while total shareholders' equity dwindled by nearly half
to about $28 million.
FINANCING UPDATE
Mitec's restructuring and financing initiatives of fiscal 2003
have substantially improved its financial position. As previously
reported, in December 2002 the Company successfully renegotiated
key conditions relating to its banking credit facility. The
revised credit facilities include the suspension or modification
of financial covenants until October 31, 2003.
During the fourth quarter, the Company closed a successful private
placement and public unit offering. The aggregate proceeds raised
from these two offerings amounted to $6.1 million. Following the
completion of these offerings, Mitec also secured an additional $5
million in financing, in the form of a loan and a loan guarantee,
from La Financiere du Quebec, a subsidiary of Investissement
Quebec.
"The Company's financing efforts have allowed us to reduce our
term debt by approximately $1 million," Mr. Findlay said.
"Further, we intend to substantially reduce our term debt in 90
days, excluding the sub-debt from La Financiere."
NEW CONTRACT WINS
- Subsequent to year-end, the Company won orders and a multiple-
year supply agreement from key customers worth a combined value
of approximately CAN$80 million. The supply agreement and
purchase orders call for a range of products, including several
new offerings.
RECENT IMPORTANT EVENTS
- Subsequent to year-end, the Company announced that it concluded
the sale of Microwave Technology Company, its subsidiary in
Thailand, to the local management team. The sale price was
CAN$1.5 million, of which $750,000 was paid upon closing. The
cash has been used to reduce Mitec's term debt. "The sale of
this non-core asset allows us to strengthen our financial
situation and consolidate our Asian operations in Suzhou,
China," said Mr. Pancholy. "Mitec is now emerging as a leaner,
revitalized and more focused operation."
- Also subsequent to year-end, Mitec announced the appointment of
Mr. Jean-Marc Roberge to the position of Vice President, Global
Operations. Mr. Roberge brings to Mitec over 17 years of in-
depth operations experience with Sanmina-SCI and Nortel
Networks, for whom he held a variety of leadership positions.
"Mr. Roberge fills an important new position at Mitec," stated
Mr. Pancholy. "Over the past year we have concentrated on
consolidating our operations around the world, and we are now
able to address the needs of our global client base with a
seamless operational and supply chain structure."
- Also subsequent to year-end, Mitec reached a settlement with Com
Dev International pursuant to a claim for indemnification. The
settlement paid to Mitec was approximately CAN$1 million.
OUTLOOK: FIRST QUARTER REVENUES IN $18-$20 MILLION RANGE;
PROFITABILITY TO IMPROVE IN FY 2004
"For the first quarter of fiscal 2004, we see revenues of $18-$20
million for our core wireless and satcom business, excluding
BEVE," said Mr. Pancholy. "Moreover, as the turnaround continues,
we expect our profitability to improve over the current fiscal
year. The actions we've taken over the past year have revitalized
the Company considerably, and have given us the ability to
diversify our wireless revenue base. The new Mitec is leaner, more
competitive, and resolutely focused on actively seizing the
opportunities that lie ahead."
Mitec Telecom is a leading designer and provider of products for
the telecommunications industry. The Company sells its products
worldwide to network equipment providers for incorporation into
high-performing wireless networks used in voice and data/Internet
communications. Additionally, the Company provides value-added
services from design to final assembly and maintains test
facilities covering a range from DC to 60 GHz. Headquartered in
Montreal, Canada, the Company also operates facilities in the
United States, Sweden, the United Kingdom and China.
Mitec Telecom Inc. is listed on the Toronto Stock Exchange under
the symbol MTM. On-line information about Mitec is available at
mitectelecom.com .
MOHEGAN TRIBAL: Purchases $280 Million of 8.75% Sr. Sub. Notes
--------------------------------------------------------------
The Mohegan Tribal Gaming Authority announced that, pursuant to
its cash tender offer for its $300,000,000 aggregate principal
amount of 8.75% Senior Subordinated Notes due 2009, it has
purchased approximately $280.3 million aggregate principal amount
of the Notes, representing approximately 93% of the total
principal amount of the Notes. The Offer expired at midnight, New
York City time, on July 17, 2003. The Authority paid approximately
$302.5 million in cash to purchase the Notes in the Offer.
Approximately $19.7 million in aggregate principal amount of the
Notes remain outstanding and are scheduled to mature on January 1,
2009. On July 1, 2003, the Authority and U.S. Bank National
Association (as successor to State Street Bank and Trust Company)
entered into a Second Supplemental Indenture for the Notes, which,
among other things, deleted certain covenants in the Indenture,
modified events of default and eliminated the change of control
repurchase premium.
The Authority is an instrumentality of the Mohegan Tribe of
Indians of Connecticut, a federally recognized Indian tribe with
an approximately 405-acre reservation situated in southeastern
Connecticut, which has been granted the exclusive power to conduct
and regulate gaming activities on the existing reservation of the
Tribe located near Uncasville, Connecticut, including the
operation of the Mohegan Sun, a gaming and entertainment complex
that is situated on a 240-acre site on the Tribe's reservation.
The Tribe's gaming operation is one of only two legally authorized
gaming operations in New England offering traditional slot
machines and table games. Mohegan Sun currently operates in an
approximately 3.0 million square foot facility, which includes the
Casino of the Earth, Casino of the Sky, the Shops at Mohegan Sun,
a 10,000-seat Arena, a 300-seat Cabaret, meeting and convention
space and an approximately 1,200-room luxury hotel. More
information about Mohegan Sun and the Authority can be obtained by
visiting http://www.mohegansun.com
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB-' rating to the Mohegan Tribal Gaming Authority's
proposed $330 million senior subordinated notes due July 15, 2009.
Concurrently, Standard & Poor's revised its outlook for MTGA to
stable from negative, while affirming its 'BB+' corporate credit
rating.
NATIONAL STEEL: Seeks Clearance for USWA Memorandum of Agreement
----------------------------------------------------------------
National Steel Corporation, its debtor-affiliates and the United
Steelworkers of America have maintained a collective bargaining
relationship for decades and have been parties to numerous
agreements, including various benefit programs. Together with
other labor organizations, the USWA represents over 80% of the
8,000 National Steel employees. The USWA also represents 16,000
retirees.
Under the Collective Bargaining Agreements, the Debtors could
have significant pension plan, legacy and other post-employment
benefits obligations for their current employees and retirees.
The USWA also asserted claims against the Debtors based on
amounts owed to the retirees it represents.
In connection with the sale of substantially all of their assets
to United States Steel Corporation, the Debtors agreed that it
would be appropriate for the USWA to receive:
(i) reimbursement of fees and expenses of certain USWA-
employed professionals, subject to an overall cap, to
assist the USWA with the negotiations; and
(ii) payment of a success fee to USWA's investment banker,
based on a formula tied to the amount actually received
by National Steel in a sale.
The Debtors sought assurance that if a sale with a new collective
bargaining agreement with a buyer were accomplished, the USWA
would agree to a consensual termination of the Collective
Bargaining Agreements. Under these Collective Bargaining
Agreements, USWA and its represented workers and retirees
continued to have significant claims against the Debtors'
estates, which claims the Debtors desired to minimize and settle
on consensual terms. The Debtors believe that the administrative
claims the USWA seek exceed $10,000,000.
To resolve all remaining issues, the Debtors entered into
negotiations with the USWA regarding the terms of the consensual
termination of the Collective Bargaining Agreements. These
negotiations culminated into a memorandum of agreement.
Pursuant to the MOA, the USWA agrees to waive certain
administrative claims against the Debtors. This results in a
substantial, direct benefit to the Debtors and their estates.
The salient terms of the MOA are:
(1) Termination of all Collective Bargaining Agreements, any
of the Debtors' obligations related to these agreements,
and a mutual release of claims;
(2) Transition to U.S. Steel of certain benefits and benefit
programs, like workers' compensation and conversion
privileges for life insurance, and the parties'
cooperation in this process, including with respect to the
transfer of 401(k) plan assets and pro-rata share of the
National Voluntary Employee Beneficiary Association;
(3) Treatment of claims incurred by employees or their
eligible dependents before the date of the U.S. Steel Sale
Closing for medical, vision or dental services, sickness
and accident benefits and life insurance;
(4) Payment of health and life insurance benefits for retirees
through July 31, 2003 at a cost to be paid for by the
VEBA;
(5) COBRA continuation rights with premium costs covered by
retirees and former employees for the period from August
2003 through December 2003, with the VEBA covering costs
in excess of premiums up to $1,410,000 in aggregate for
retirees;
(6) Retention by the USWA of a $650,000,000 general unsecured
claim against the Debtors relating to other post-
employment benefit liabilities; and
(7) Payment of certain actual costs and expenses incurred by
the USWA during the cases amounting to $1,600,000.
By this motion, the Debtors ask the Court to approve their
agreement with USWA pursuant to Rule 9010 of the Federal Rules of
Bankruptcy Procedure and Sections 1113 and 1114 of the Bankruptcy
Code.
The Debtors tell the Court that there is sufficient business
justification for them to enter into the MOA because they are
able to resolve all of the outstanding issues with USWA. The
Debtors also note that, providing for the consensual termination
of the Collective Bargaining Agreements and resolution of issues
with respect to outstanding retiree benefits, the MOA avoids the
uncertainty and costs associated with Bankruptcy Code Sections
1113 and 1114 litigation between the two parties.
The Debtors further believe that it is appropriate for the
estates to reimburse certain fees and expenses of the USWA's
professionals and pay success fee to its investment bankers. The
Debtors determined that a new collective bargaining agreement for
their employees was a critical aspect of their restructuring
efforts. By agreeing to the reimbursement, the Debtors allowed
the USWA and their professionals to negotiate a new collective
bargaining agreement in a manner that maximized potential
recoveries for all of their creditor constituencies. Critically,
the aggregate amount of the fees is substantially less than the
Administrative Claims the USWA could have asserted if no overall
Agreement was reached. (National Steel Bankruptcy News, Issue No.
32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
NEXTEL COMMS: Will Redeem All 11.125% Series E Preferred Shares
---------------------------------------------------------------
Nextel Communications Inc. (NASDAQ:NXTL) will redeem all
outstanding shares of its 11.125% Series E Exchangeable Preferred
Stock, which had a total liquidation preference at June 30, 2003
of $392 million.
The redemption is being made pursuant to the terms of the
preferred stock, which is redeemable at Nextel's option at a
redemption price, as of August 16, 2003, equal to $1,055.625 per
share plus an amount equal to accrued but unpaid dividends on the
shares. The elimination of the Series E preferred stock from
Nextel's capital structure will reduce Nextel's annual preferred
dividend obligations by about $44 million. The redemption date has
been set for August 16, 2003.
Nextel Communications, a Fortune 300 company based in Reston, Va.,
is a leading provider of fully integrated wireless communications
services and has built the largest guaranteed all-digital wireless
network in the country covering thousands of communities across
the United States. Nextel and Nextel Partners Inc., currently
serve 198 of the top 200 U.S. markets. Through recent market
launches, Nextel and Nextel Partners service is available today in
areas of the U.S. where approximately 241 million people live or
work.
* * *
As reported in the Troubled Company Reporter's March 12, 2003
edition, Fitch Ratings revised the Rating Outlook on Nextel
Communications Inc. to Positive from Stable. The Positive Outlook
applies to Nextel's senior unsecured note rating of 'B+', the
senior secured bank facility of 'BB' and the preferred stock
rating of 'B-'. The Positive Outlook reflects Fitch's view that
favorable financial and operating trends will continue over the
next several quarters based on the positive momentum produced from
the three factors during 2002:
-- The significant improvement in operating performance
through strong cost containment, low churn and solid
ARPUs despite a somewhat unfavorable climate within the
wireless industry and a weak economic environment.
-- The reduction in financial risk due to the repurchase
of $3.2 billion in debt and associated obligations.
-- A strong competitive position relative to other
operators due to the unique push-to-talk application
that allows Nextel to target higher-value and lower
churn business users.
NEXTEL COMMS: Fitch Ups Senior Unsecured Notes Rating to BB-
------------------------------------------------------------
Fitch Ratings has upgraded the ratings on Nextel Communications
Inc.'s senior unsecured notes to 'BB-' from 'B+', Nextel's senior
secured bank facility to 'BB+' from 'BB' and Nextel's preferred
stock rating to 'B' from 'B-'. Additionally, Fitch has assigned a
'BB-' rating to Nextel's proposed $1 billion senior redeemable
twelve-year note offering. Proceeds of the offering will be used
to repurchase all of the outstanding 10.65% senior redeemable
discount notes due 2007 and all of the outstanding shares of
Nextel's 11.125% preferred stock redeemable in 2010. The Rating
Outlook remains Positive.
The rating upgrade reflects Nextel's excellent progress in
deleveraging its balance sheet through excess cash from
operations, open market purchases and the issuance of equity
thereby reducing its interest and preferred dividend obligations.
Moreover, operational trends are positive, as Nextel has exceeded
financial and operational targets set for 2003. Expectations are
for Nextel to strengthen credit protection measures in 2003 to 3.0
times debt to EBITDA or less, which surpasses original
expectations of 3.4x or less. The improvement in cash generation
should lead to at least $600 million in positive free cash flow
based on management's outlook for 2003.
With a $5 billion shelf registration available and approximately
two thirds of its debt callable, Fitch expects Nextel to pursue
further improvements to its capital structure utilizing its free
cash flow, excess liquidity cushion and opportunistic equity and
debt issuances to refinance Nextel's highest cost debt. Reflecting
this strategy, Nextel has announced a $1 billion offering to
refinance its series E preferred stock and 10.65% senior
redeemable discount notes. These improvements to the capital
structure will extend maturities beyond 2010 while reducing
medium-term maturity levels and lowering the average cost of debt.
Despite Nextel's aggressive deleveraging efforts requiring
approximately $1.9 billion of cash over the last six quarters,
liquidity remains solid with approximately $2 billion of cash
(accounting for the redemption of the series D preferred stock),
$1.3 billion of availability on its bank facility and positive
free cash flow generation.
Even though Fitch expects Nextel's positive operating trends to
continue over the next year, challenges and risks remain which
could moderate the pace of anticipated credit profile improvement.
Shorter-term issues include the decision by the Federal
Communications Commission on the 800 MHz consensus plan, the weak
economic environment and fundamentals supporting the wireless
industry. From an intermediate to longer term perspective, the
concerns include the competitive threats to Nextel's Direct
Connect offering, wireless number portability, potential funding
requirements of the 800 MHz consensus plan and technical viability
of the iDEN platform.
Perhaps Nextel's greatest longer term challenge is the competitive
push-to-talk (PTT) threat from other wireless operators. While
CDMA competitors have indicated the potential for a PTT service in
the marketplace during 2003, Fitch believes near-term concerns to
Nextel have been exaggerated as competitive PTT services will
clearly have their own hurdles to overcome. Potential PTT issues
include PTT call setup latencies, lack of intercarrier
operability, uncertainty regarding other technical issues and PTT
handset functionality.
Moreover, Nextel operates from a firmly entrenched position and
competitive PTT offerings will have to emphasize coverage, niche
markets, new feature capabilities and price to compensate for any
service limitations. Thus, Fitch believes competitive PTT
offerings will have a negligible effect on Nextel in 2003 while
possibly gaining some traction and dampening net subscriber growth
in 2004. Nextel's individual users segment, which contains many
business users who have applied for service under their own credit
and constitutes approximately 30% of Nextel's subscriber base, is
likely to be vulnerable. Additionally, PTT competition could
affect Nextel's ability to attract existing subscribers on
competing networks that desire PTT capabilities.
The Positive Outlook reflects the expectation that Nextel will
continue to improve credit metrics and that qualitative issues
surrounding the FCC consensus plan, competitive PTT challenges and
wireless number portability will resolve themselves in a way that
is not detrimental to Nextel's credit profile. This continued
positive trend and issue resolution may result in Fitch
considering additional upgrades of Nextel's rating.
NICKELSON PLASTICS: Case Summary and 20 Largest Unsec. Creditors
----------------------------------------------------------------
Lead Debtor: Nickelson Plastics Inc.
100 Industrial Drive
Osceola, Wisconsin 54020-0459
Bankruptcy Case No.: 03-44930
Type of Business: PVC resin dipping/coating and metal fabrication
Chapter 11 Petition Date: July 9, 2003
Court: District of Minnesota (Minneapolis)
Judge: Nancy C. Dreher
Debtors' Counsel: William I. Kampf, Esq.
Kampf & Associates PA
821 Marquette Ave South
Ste 901
Minneapolis, MN 55402
Total Assets: $3,553,770
Total Debts: $4,495,962
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Work Connection Trade $72,310
Lakeside Plastics Trade $56,888
Ratner Steel Trade $55,745
Chicago Tube Trade $46,767
Peerless Chain Co. Trade $37,233
Wilkerson Gutnama, et al. Trade $23,408
Louis Industries Trade $20,000
Polyone $15,393
Stone Hill Group, LLP Trade $12,764
Loes Enterprises Trade $11,749
Dalco Trade $9,838
Foresight Products, LLC Trade $8,586
Minneapolis Oxygen Co. Trade $7,721
East Center Pallet, Inc. Trade $7,553
Citibank Business Card Trade $7,446
Amada America, Inc. Maintenance Contract $7,043
Snelling Personnel Svcs Trade $6,353
People Management Trade $6,100
Linquist & Vennum Services $6,031
Fehlhaber, Larson, et al. Services $5,952
NORTEL: Reorganizing Joint Euro Telecommunications Operations
-------------------------------------------------------------
Nortel Networks (NYSE:NT)(TSX:NT) and EADS (stock exchange symbol:
EAD) will reorganize their joint telecommunications activities in
France and Germany. The companies jointly announced the increase
of their respective individual ownership in, and direct control
over, their core businesses in France and Germany, consistent with
each of their overall global business strategies.
Nortel Networks will acquire the 42 percent ownership interest in
Nortel Networks Germany GmbH & Co. KG and the 45 percent ownership
interest in Nortel Networks France SAS, currently held by EADS.
When completed, these transactions will bring Nortel Networks
ownership in each company to 100 percent. Nortel Networks Germany
and Nortel Networks France are responsible for the sales and
marketing of Nortel Networks products in those markets. At the
same time, EADS will increase its ownership in EADS Telecom, the
integrator of EADS turnkey, secure defense-related
telecommunications solutions, from 59 percent to 100 percent as a
result of acquiring Nortel Networks current ownership stake in
that company.
The announced transactions are subject to the receipt of customary
regulatory approvals, which are expected to be received within the
third quarter of 2003. Nortel Networks and EADS will continue to
work together through technology and commercial agreements in
those markets as well as outside of Europe.
"Nortel Networks has enjoyed a strong and growing European
presence for a number of years," said Steve Pusey, president, EMEA
(Europe, Middle East, Africa), Nortel Networks. "Establishing 100
percent ownership in Nortel Networks France and Nortel Networks
Germany will reinforce our commitment to these markets, our
customers and our core differentiators. It will also be indicative
of our continued focus on growth markets with one of the
industry's most comprehensive solutions portfolios."
"With this step, EADS will concentrate its worldwide
telecommunications activities on defence and homeland security
solutions," said Tom Enders, chief executive officer, Defence &
Security Systems Division, EADS. "State-of-the-art communication
technologies and networks are at the very heart of military
transformation and domestic security programs of our various
customers. This is why the complete control of EADS Telecom
greatly enhances our strategy to provide innovative communication
systems solutions."
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 valued-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
can be found on the Web at http://www.nortelnetworks.com
EADS is the second largest aerospace and defense company in the
world with revenues of EUR 29.9 billion in the year 2002 and a
workforce of more than 100,000. It is a systems integrator and as
such is one of the few companies worldwide capable of combining
various products and technologies to form complete systems. EADS
is a market leader in civil aeronautics, defence and security
technology, helicopters, launchers, satellites, military transport
and combat aircraft and the associated services. The EADS Group
includes the aircraft manufacturer Airbus, the world's largest
helicopter supplier Eurocopter and MBDA (a joint venture), the
second largest missile producer in the global market. EADS is the
major partner in the Eurofighter consortium, is the prime
contractor for the Ariane launcher, develops the A400M military
transport aircraft and is the largest industrial partner for the
European satellite navigation system Galileo. EADS has over 70
sites in France, Germany, Great Britain and Spain and is active in
many regions worldwide, amongst them America, Russia and Asia.
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.
OXFORD INDUSTRIES: Fiscal 4th Quarter Results Show Improvement
--------------------------------------------------------------
Oxford Industries, Inc. (NYSE: OXM) announced its financial
results for the fourth quarter and full year ended May 30, 2003.
The company reported that, for the full year, net sales increased
approximately 13% to $765 million versus $677 million during
fiscal 2002. Fully diluted earnings per share for the full year
increased approximately 91% to $2.68 versus $1.40 in fiscal 2002.
For the fourth quarter, Oxford reported that net sales increased
approximately 3% to $198 million versus $192 million in the fourth
quarter of last year. Due to expenses incurred in connection with
the closure of its Izod Club golf business and interest and fees
related to the Viewpoint acquisition, the Company reported a
decline in fully diluted earnings per share to $0.60 versus $0.74
in the fourth quarter of fiscal 2002.
J. Hicks Lanier, Chairman and Chief Executive Officer of Oxford,
commented, "We are very pleased with our progress during the past
year with respect to financial results, operations, and strategic
positioning. These accomplishments are particularly meaningful
given the challenging economic and retail environment that
prevailed during the period. All four of our operating groups
showed sales and earnings growth for the year."
Lanier Clothes, the company's tailored clothing group, reported a
3% sales increase for the year and saw enhanced profitability
during both the fourth quarter and the full year due to lower
markdowns and greater manufacturing and sourcing efficiencies.
Better than expected shipments of women's sportswear led the
Oxford Womenswear Group to an 11% sales increase in the fourth
quarter and a 22% increase for the year. Oxford Slacks achieved a
sales increase of 1% for the fourth quarter and 20% for the full
year, driven by the rollout of Lands' End product to Sears retail
stores. The Oxford Shirt Group also benefited from the
introduction of a Lands' End assortment to Sears stores, with a 6%
sales increase for the year.
Gross margins for the year increased 1.2 percentage points to
20.9% for fiscal 2003 due to favorable sourcing costs and higher
capacity utilization rates at company-owned manufacturing
facilities. Operating expenses declined as a percentage of sales
to 16.3% from 17.1%. Expense leverage was partially offset by a
portion of the transaction costs for the Viewpoint acquisition and
by costs to shut down the Izod Club golf business.
Mr. Lanier noted, "Supply chain management initiatives paid
handsome dividends in the form of lower markdowns and improved
inventory turns over the course of the year. Additionally,
improvements in sourcing and manufacturing efficiencies led to
higher gross margins. The net result was a dramatic improvement
in our profitability."
Mr. Lanier continued, "Most importantly this year, we made
enormous progress in the long-term strategic positioning of Oxford
Industries. We announced and subsequently completed the
acquisition of Viewpoint International, Inc., owner of the Tommy
Bahama(R) brand. Tommy Bahama is a compelling lifestyle brand
that brings to Oxford a host of new opportunities. Viewpoint and
Oxford are quite complementary in terms of products, customers,
price points, skill sets and distribution channels. The
combination of our two businesses creates a broadly diversified
apparel company with exciting prospects for continued sales growth
and significant opportunities for incremental profitability
improvements."
The balance sheet reflects the proceeds of the senior notes
offering that were held in escrow from May 16, 2003, until the
Viewpoint acquisition was closed on June 13, 2003. Interest and
financing fees incurred in connection with the offering accounted
for all of the increase in interest expense over the previous
year.
Also, Oxford issued financial guidance for fiscal 2004. The
company expects to report fiscal 2004 sales, which will include
the results of Viewpoint, of between $1.05 billion and $1.1
billion. It expects to report earnings per fully diluted share in
the range of $4.35 to $4.65. For the first quarter, the company
anticipates sales in the range of $230 to $240 million and
earnings per share in the range of $0.75 to $0.80. For the second
quarter, the company anticipates sales in the range of $245 to
$255 million and earnings per share in the range of $0.80 to
$0.85. For the third quarter, the company believes appropriate
targets for sales are in the range of $280 to $295 million and for
earnings per share of between $1.20 and $1.30. For the fourth
quarter, the company believes appropriate targets for sales are in
the range of $295 to $310 million and for earnings per share of
between $1.60 and $1.70.
Mr. Lanier concluded, "We believe that, while the market
environment is likely to remain challenging, we have an excellent
opportunity to demonstrate superior results over the course of the
coming year. Fiscal 2003 has been a dramatic and exciting time
for the development of our business and we are now looking forward
to leveraging the infrastructure improvements and the strategic
progress we have made to deliver strong returns and enhanced value
for our shareholders."
Oxford Industries, Inc. is a diversified international
manufacturer and wholesale marketer of branded and private label
apparel for men, women and children. With manufacturing and
sourcing operations in over 40 countries around the globe, Oxford
provides retailers and consumer with a wide variety of apparel
products and services to suit their individual needs. Major
licensed brands include Tommy Hilfiger(R), Nautica(R), Geoffrey
Beene(R), Slates(R), and Oscar de la Renta(R). Oxford's private
label customers are found in every major channel of distribution
including national chains, specialty catalogs, mass merchandisers,
department stores, specialty stores and Internet retailers.
Oxford Industries recently purchased Viewpoint International, the
owner of the Tommy Bahama brand of lifestyle apparel and home
furnishings. This brand includes upscale men's and women's
sportswear, swimwear, accessories and a complete home collection.
Viewpoint also produces two additional collections under the Tommy
Bahama label, Indigo Palms(TM) and Island Soft(TM). It operates
over 30 Tommy Bahama retail locations across the country,
including six retail/restaurant compounds.
Oxford's stock has traded on the NYSE since 1964 under the symbol
OXM. Visit the Web site at http://www.oxfordinc.comfor more
information on the Company.
As reported in Troubled Company Reporter's May 1, 2003 edition,
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Oxford Industries Inc. At the same
time, Standard & Poor's assigned its 'B' unsecured debt rating to
the company's proposed $175 million senior notes due 2011. The
notes are being offered pursuant to Rule 144A under the Securities
Act of 1933, with registration rights.
The ratings outlook on Oxford is stable.
The senior notes' rating is subject to Standard & Poor's review of
the final documentation. The senior unsecured debt rating is two
notches below the corporate credit rating due to its junior
position relative to the large amount of secured bank debt.
OWENS CORNING: Hires Adelman Lavine as Claims Conflict Counsel
--------------------------------------------------------------
J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, informs the Court that to date, over 12,000 proofs of
claim have been filed in these cases, asserting over 24,000
separate claims against Owens Corning Debtors' estates. While the
Debtors thus far have reviewed and objected to a large number of
Proofs of Claim, they estimate that a significant number of
additional objections still need to be filed. Based on the work
done to date, it appears that certain Proofs of Claim to which the
Debtors may object are held by parties, which are or may be
represented by Saul Ewing LLP, the Debtors' lead counsel, in
other matters. Accordingly, to ensure that they can properly
bring and prosecute these actions, the Debtors need the
assistance of a special claims conflict counsel.
Accordingly, the Debtors seek the Court's authority to employ
Adelman Lavine Gold and Levin, as their special claims conflict
counsel. Adelman Lavine has experience and knowledge in the
field of bankruptcy and bankruptcy litigation, and with an office
in Wilmington, Delaware. Adelman Lavine's employment, Ms.
Stickles asserts, is necessary to ensure that the Debtors satisfy
their duties with respect to filing all required Claim
Objections.
Adelman Lavine's Qualifications
Adelman Lavine is well qualified to act as the Debtors' special
claims conflict counsel and has broad experience in all types of
bankruptcy representations, including debtors' and creditors'
rights and business reorganizations. Adelman Lavine has been
involved in a number of bankruptcy cases and has represented
debtors in their Chapter 11 proceedings in numerous cases
including Logan Square East, Franklin Computer Corporation,
Abbotts Dairies of Pennsylvania, Inc., Metro Transportation,
Inc., Target Food Systems, Inc., Valley Forge Plaza Associates
and Wall-to-Wall Sound & Video, Inc.
Raymond H. Lemisch, an Adelman Lavine shareholder, will have
primary responsibility for the contemplated engagement. Mr.
Lemisch has over 15 years of experience in bankruptcy and
bankruptcy-related matters and has been with Adelman Lavine since
1988. Mr. Lemisch will also work closely with other attorneys of
Adelman Lavine's Wilmington and Philadelphia offices, each of
whom is experienced in bankruptcy matters.
Adelman Lavine will be responsible for the preparation, filing
and prosecution of only those Claim Objections, which are
asserted against parties, which Saul Ewing represents in other
matters. Saul Ewing will remain responsible for all other
aspects of the bankruptcy cases that it has been employed to
handle. The Debtors submit that due to the nature of Adelman
Lavine's proposed representation, there will be no duplication of
services provided to the Debtors.
As special claims conflict counsel, Adelman Lavine will:
1. prepare, file and prosecute Claim Objections, which Saul
Ewing cannot appropriately pursue due to Saul Ewing's
representation of affected claimants in other matters; and
2. undertake other related activities as may be mutually
agreed upon by Adelman Lavine and the Debtors from time to
time.
Compensation and Reimbursement of Adelman Lavine
In accordance with Section 330(a) of the Bankruptcy Code,
compensation will be payable to Adelman Lavine on an hourly
basis, plus reimbursement of actual, necessary expenses incurred
by the law firm. Some of the attorneys and paralegals presently
designated to represent the Debtors with respect to these matters
and their current standard hourly rates are:
Raymond H. Lemisch shareholder $360
Gary D. Bressler shareholder 360
William Hinchman associate 275
Bradford J. Sandler associate 250
Jennifer Hoover associate 145
Sandi Van Dyk paralegal 140
Liz Hein clerk 95
These hourly rates are subject to periodic adjustments to reflect
economic and other conditions. Other attorneys and paralegals
may from time to time provide services to the Debtors in
connection with the matters for which Adelman Levine is employed.
These hourly rates are Adelman Lavine's standard hourly rates for
work of this nature. These rates are set at a level designed to
fairly compensate the firm for the work of its attorneys and
paralegals and to cover fixed and routine overhead expenses.
It is the firm's policy to charge its clients in all areas of
practice for all other expenses incurred in connection with the
client's case. The expenses charged to clients include, among
other things, telephone and telecopier toll and other charges,
mail and express mail charges, special or hand delivery charges,
document processing, photocopying charges, travel expenses,
expenses for "working meals," computerized research,
transcription costs, as well as non-ordinary overhead expenses
i.e. secretarial and other overtime. Adelman Lavine will charge
the Debtors for these expenses in a manner and at rates
consistent with charges made generally to the firm's other
clients. Adelman Lavine believes that it is better to charge
these expenses to the clients incurring them than to increase the
hourly rates and spread the expenses among all clients.
Adelman Lavine will file interim and final fee applications
pursuant to the Bankruptcy Code, the Federal Rules of Bankruptcy
Procedure and applicable Court orders, including, without
limitation the June 24, 2002 Fee Order. The Debtors also seek
the Court's authority to pay Adelman Lavine's monthly fees and to
reimburse Adelman Lavine for its costs and expenses as provided
in the Agreement, upon approval by the Court of interim and final
applications pursuant to the Fee Order.
Disclosure Concerning Conflicts of Interest
Mr. Lemisch assures the Court that Adelman Levine does not hold
or represent any interest adverse to the Debtors or their
estates, and is a "disinterested person" at that term is defined
in Section 101(14) of the Bankruptcy Code. Furthermore, Mr.
Lemisch adds that Adelman Lavine has no connections with the
Debtors, their key creditors, and other parties-in-interest.
(Owens Corning Bankruptcy News, Issue No. 55; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
OWENS-ILLINOIS: Declares Convertible Preferred Share Dividend
-------------------------------------------------------------
Owens-Illinois, Inc.'s (NYSE: OI) board of directors has declared
the quarterly dividend of $0.59375 on each share of the company's
$2.375 Convertible Preferred Stock, payable on August 15 to
holders of record as of August 1.
Owens-Illinois is the largest manufacturer of glass containers in
North America, South America, Australia and New Zealand, and one
of the largest in Europe. O-I also is a worldwide manufacturer of
plastics packaging with operations in North America, South
America, Europe, Australia and New Zealand. Plastics packaging
products manufactured by O-I include consumer products (blow
molded containers, injection molded closures and dispensing
systems) and prescription containers. More information on the
Company can be obtained at http://www.o-i.com
As reported in Troubled Company Reporter's April 25, 2003 edition,
Fitch Ratings assigned a 'BB' rating to Owens-Illinois' (NYSE:
OI) $450 million senior secured notes and a 'B+' rating to its
$350 million senior notes offered in a private placement. The
senior secured notes are due 2011 and the senior notes are due
2013. The Rating Outlook remains Negative.
PAC-WEST: SBC to Invoke FCC Intercarrier Compensation Order
-----------------------------------------------------------
Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated
communications services to service providers and business
customers in the western U.S., has been notified by SBC California
of SBC's intention to invoke the Federal Communication
Commission's Intercarrier ISP Compensation Order, effective
August 1, 2003.
The FCC Order is one of the compensation methodologies available
to SBC under the terms of the recently signed interconnection
agreement between Pac-West and SBC. If implemented, Pac-West
believes the FCC Order will apply to all carriers with whom SBC
interconnects with in California.
The FCC Order contemplates pricing tiers based on the composition
and balance of traffic between carriers. The terms and conditions
for implementing the FCC Order are unclear at this time, but may
result in lower reciprocal compensation revenues for Pac-West than
other pricing methodologies available to SBC. Pac-West is
currently assessing the implementation requirements of the order,
and any related operational and financial impacts to the company.
The company will provide further information on its upcoming
second quarter 2003 earnings call, which is scheduled for
Thursday, July 31, 2003 at 8:30 a.m. Pacific Time/11:30 a.m.
Eastern Time. Investors are invited to participate by dialing 1-
888-291-0829 or 706-679-7923. The call will be simultaneously
webcast on Pac-West's Web site at http://www.pacwest.com/investor
Pac-West plans to announce its financial and operating results for
the second quarter 2003 on Wednesday, July 30, 2003, after market
close.
Founded in 1980, Pac-West Telecomm, Inc. is one of the largest
competitive local exchange carriers headquartered in California.
Pac-West's network carries over 100 million minutes of voice and
data traffic per day, and an estimated 20% of the dial-up Internet
traffic in California. In addition to California, Pac-West has
operations in Nevada, Washington, Arizona, and Oregon. For more
information, visit Pac-West's Web site at http://www.pacwest.com
* * *
As reported in Troubled Company Reporter's May 1, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Stockton, Calif.-based competitive local exchange
carrier Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on
the 13.5% senior notes due 2009 has been lowered to 'D' from
'C'.
S&P explained, "Given the company's significant dependence on
reciprocal compensation (the rates of which the company expects to
further decline in 2003) and its limited liquidity, Pac-West will
likely find the implementation of its business plan continue to be
challenging."
PACIFIC GAS: Files Settlement Plan and Disclosure Statement
-----------------------------------------------------------
As previously reported, PG&E Corporation and its subsidiary,
Pacific Gas and Electric Company and the staff of the California
Public Utilities Commission entered into a proposed settlement
agreement that contemplates a new reorganization plan to
supercede the competing plans submitted in PG&E's Chapter 11
proceeding. On June 27, 2003, PG&E Corporation, PG&E, and the
Official Committee of Unsecured Creditors, as co-proponents,
filed the Settlement Plan with the Bankruptcy Court.
A copy of the Settlement Plan is available for free at:
http://bankrupt.com/misc/PG&E_settlement_plan.pdf
A copy of the Plan disclosure statement is available, in two
parts, for free at:
http://bankrupt.com/misc/settlement_plan_disclosure_statement.pdf
and
http://bankrupt.com/misc/settlement_plan_disclosure_statement2.pdf
Overview & Summary of Settlement Plan
The Settlement Plan is designed to reaffirm Pacific Gas and
Electric Company's financial viability and provide for the
payment in full of all allowed claims, plus postpetition
interest. The purpose of the Plan is to pay all allowed claims
in full, and enable PG&E to emerge from Chapter 11 with a strong
and sustainable business. The Plan assures that Reorganized PG&E
will be financially sound going forward, thus providing the
necessary assurance that it will be able to service the debt
issued in connection with or reinstated under the Plan, and
provide safe and reliable service to its customers.
Pursuant to the Settlement Plan, PG&E will remain an integrated
electric and gas utility company serving predominantly retail
customers in Northern and Central California. Reorganized PG&E
will retain its existing gas and electric distribution,
transmission and customer service assets. It will provide
distribution customer services and revenue cycle services, and
will provide and administer public purpose programs for retail
electric and gas customers. Reorganized PG&E will retain the
obligation to procure gas on behalf of its core gas customers and
the obligation to procure power on behalf of its retail electric
customers.
Reorganized PG&E will also assume and retain the bilateral energy
purchase agreements with (a) third party gas suppliers, and (b)
qualifying facilities and other third party power suppliers,
including the irrigation districts. Reorganized PG&E will retain
its electric generation assets, including the 2,174 MW capacity
Diablo Canyon nuclear plant, its conventional and pumped storage
hydro-electric generating facilities with an aggregate capacity
of 3,896 MW, and two small fossil generating facilities.
Reorganized PG&E will remain subject to rate regulation of the
CPUC for its electric distribution, generation and procurement
operations, and for its gas distribution, procurement,
transmission and storage operations. Reorganized PG&E's high
voltage electric transmission assets will provide services for
its own retail customers as well as wholesale market
participants, both under the FERC jurisdiction.
Financing the Plan
All financing necessary to consummate the Plan will be arranged
and placed by a financing team led by PG&E. The team will
include CPUC representatives and will be duly authorized by the
CPUC. The team will also be subject to the authority and duty of
the boards of directors of PG&E and parent PG&E Corporation to
approve the financing.
UBS Warburg LLC and Lehman Brothers will be the exclusive book
runners, lead managers and hedging providers of all financings
pursuant to the Plan. Both firms will have equal economics for
80% of the aggregate of total fees and commissions payable on
such financings. Each firm has agreed to:
(i) limit its consummation and advisory fee to $20,000,000,
which will be payable on the Effective Date -- in
Lehman's case, inclusive of advisory fees already paid
by PG&E Corp. and further subject to the crediting
provisions contained in its engagement letter with PG&E
Corp., and, in UBS Warburg's case, in lieu of the full
consummation fee calculated pursuant to its engagement
letter with the CPUC and the Official Committee of
Unsecured Creditors; and
(ii) jointly provide the bank facilities determined by PG&E
to be necessary under the Plan.
To the extent that PG&E adds co-managers, the CPUC will have the
right to appoint one additional manager at the highest level of
economics available to co-managers.
The financing cost, including principal, interest, any fees or
discounts payable to investment bankers, capital markets
arrangers or book runners, including the fees to be paid to UBS
Warburg and Lehman, as well as any past or future call premiums
on reacquired debt, will be fully recoverable as part of the cost
of debt to be collected in PG&E's retail gas and electric rates
without further review.
Equity Securities
No new equity securities will be issued to claimholders in
satisfaction of Allowed Claims under the Plan.
New Money Notes
On or before the Effective Date, Reorganized PG&E will sell and
issue $8,700,000,000 in new long-term debt securities. To the
extent the amount of Allowed Claims is greater or the amount of
PG&E's Cash available for the payment of Allowed Claims is lower
than the estimates on which the Plan is based, the amount of New
Money Notes will be increased. To the extent the amount of
Allowed Claims is lower or the amount of PG&E's Cash available
for the payment of Allowed Claims is greater than the estimates
on which the Plan is based or to the extent the credit facilities
or the accounts receivable financing programs under the Plan are
used to fund Claims payment, the amount of New Money Notes will
be decreased.
If the New Money Notes are secured on the Effective Date,
contingent notes may be issued under the same indenture as the
New Money Notes and ranking pari passu with that, as security for
Reorganized PG&E's obligations after the Effective Date. The
amounts under the contingent notes will be payable only to the
extent that Reorganized PG&E has failed to satisfy the underlying
obligation.
Working Capital Facilities
Reorganized PG&E will establish one or more credit facilities for
the purpose of:
-- funding operating expenses and seasonal fluctuations in
working capital;
-- providing letters of credit; and
-- performing its obligations under the Plan.
Reorganized PG&E will also use letters of credit as collateral to
facilitate natural gas purchases, and for other purposes.
Reorganized PG&E may also establish one or more customer accounts
receivable financing programs for the same purposes, and also, in
lieu of contingent notes, to provide security for its obligations
after the Effective Date.
Hedging
PG&E may enter into hedge agreements with commercial and
investment banks to reduce the effect to Reorganized PG&E of any
increase in interest rates on the New Money Notes. The hedge
agreements may include futures contracts, forward contracts,
option agreements, swaps, and other similar contracts designed to
limit the risk to borrowers of future interest rate changes.
These hedge agreements are likely to require that PG&E provide
either cash collateral, in the case of futures, forwards, and
swaps, or an upfront cash payment, in the case of options, as
credit enhancement. The cash settlement of these hedge
agreements will occur before or on the Effective Date.
New Mortgage Bonds
If the New Money Notes are not secured on the Effective Date,
Reorganized PG&E will also issue New Mortgage Bonds to replace
each series of Mortgage Bonds.
Conditions Precedent to
Effectiveness of the Plan
The Settlement Plan will not become effective unless and until
these conditions will have been satisfied or waived pursuant to
the Plan:
* The Effective Date will occur by March 31, 2004;
* All actions, documents and agreements necessary to implement
the Plan will be effected or executed;
* PG&E and PG&E Corp. will receive all authorizations,
consents, regulatory approvals, rulings, letters, no-action
letters, opinions or documents that they determine to be
necessary to implement the Plan;
* Standard & Poor's will issue a long-term issuer credit
rating for Reorganized PG&E of not less than BBB-, and
Moody's Investors Service will issue an issuer rating for
Reorganized PG&E of not less than Baa3;
* S&P and Moody's will issue credit ratings for the New Money
Notes of not less than BBB- and Baa3;
* The CPUC will give its Final Approval of the Proposed
Settlement Agreement on behalf of the Commission;
* The CPUC will give its Final Approval for all rates, tariffs
and agreements necessary to implement the Plan and the
Proposed Settlement Agreement;
* The CPUC will give its Final Approval for all of the
financings, securities issuances and accounts receivable
programs provided for in the Plan;
* The Plan will not be modified in a material way, including
any modification pursuant to the Plan, since the
Confirmation Date; and
* Reorganized PG&E will consummate the sale of the New
Money Notes as contemplated by the Plan.
In the event that one or more of the conditions have not occurred
or been waived on or before March 31, 2004:
(i) the Order confirming the Plan will be vacated;
(ii) no distributions under the Plan will be made;
(iii) PG&E and all Claim and Equity Interest holders will be
restored to the status quo ante as of the day immediately
preceding the Confirmation Date -- as though the
Confirmation Order had never been entered; and
(iv) PG&E's obligations with respect to the Claims and Equity
Interests will remain unchanged.
However, any amounts paid pursuant to the Plan on account of
postpetition interest may be re-characterized as a payment on the
applicable Allowed Claims, in the Plan Proponents' sole
discretion, but PG&E will not otherwise seek to recover those
amounts.
On June 23, 2003, Moody's announced that it placed PG&E's
ratings, including its senior unsecured debt at Caa2, under
review for possible upgrade following the announcement of the
Settlement Agreement. On July 1, 2003, Fitch Ratings announced
that it had raised the ratings of PG&E's senior secured debt and
preferred stock to 'BB-' and 'DDD', respectively, from 'DDD' and
'D'. PG&E's secured debt and preferred stock remains on Rating
Watch Positive by Fitch. Fitch stated that the ratings reflect
the fact that PG&E is currently paying all interest payments on
its outstanding debt securities and Fitch's view that the Utility
is likely to continue to do so through the remainder of the
bankruptcy process.
CPUC Prehearing Conference
The CPUC conducted a Prehearing Conference on July 9, 2003 to
determine further proceedings regarding the proposed settlement
agreement. As requested by the CPUC, on July 1, 2003, PG&E
submitted a proposed schedule of procedures it believes are
needed under the California Public Utilities Code and CPUC
policies and practices to implement the proposed settlement
agreement and Settlement Plan. The PG&E's proposed schedule
calls for evidentiary hearings to be completed by September 12,
2003, for a proposed CPUC decision to be issued by November 18,
2003, and for a final CPUC decision to be issued by December 18,
2003.
Disclosure Statement Hearing
The Court will convene a hearing on July 30, 2003 to consider
whether to approve the proposed disclosure statement describing
the Settlement Plan. (Pacific Gas Bankruptcy News, Issue No. 60;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PEREGRINE SYSTEMS: Delaware Court Confirms Reorganization Plan
--------------------------------------------------------------
Peregrine Systems, Inc. (OTC: PRGNQ), a leading provider of
Consolidated Asset and Service Management software, announced that
the U.S. Bankruptcy Court has confirmed its Plan of
Reorganization.
Judge Judith Fitzgerald, presiding judge in the Bankruptcy Court
in the District of Delaware in Wilmington, approved the proposed
order submitted by Peregrine, ruling that the company had
satisfied the necessary requirements for confirmation of its Plan.
Earlier this month, Peregrine reached consensus on the Plan with
the Official Committee of Unsecured Creditors and the Official
Committee of Equity Holders, which represents the company's
creditors and shareholders respectively.
"We are nearing the end of our reorganization with the Court's
confirmation of the Plan standing as one of the final milestones.
We expect to emerge from the Chapter 11 process in August," said
Gary Greenfield, Peregrine's CEO. "Peregrine has overcome many
obstacles in the past year, and we look forward to continuing to
serve our customers with best-in-class solutions in Consolidated
Asset and Service Management as a reorganized company."
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 functionalities. 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. For more information,
visit http://www.peregrine.com
PG&E NATIONAL: USGen Seeks Injunction against Utility Companies
---------------------------------------------------------------
In the ordinary course of business, USGen New England, Inc., uses
water, heat, natural gas, electricity, electrical interconnection,
waste removal, sewage, telephone and telecommunications and other
utility services from various companies. USGen estimates that the
average monthly cost of the services provided by the Utility
Companies is $2,400,000.
According to John Lucian, Esq., at Blank Rome LLP, in Baltimore,
Maryland, USGen's continued business operations depend on the
uninterrupted utility services. For this reason, USGen asks the
Court to prohibit Utility Companies from altering, refusing or
discontinuing their services or discriminating it on the basis of
its Chapter 11 filing or on account of any unpaid invoice for
prepetition services. USGen asserts that the Utility Companies
have been provided with adequate assurance of payment. The
administrative expense priority provided pursuant to Sections
503(b) and 507(a)(1) of the Bankruptcy Code and its prepetition
payment history adequately assure the Utility Companies of
continued payment for their services -- without the need for
deposits or other security.
Mr. Lucian represents that USGen will pay its undisputed
postpetition utility charges as billed and when due. Mr. Lucian
reports that as of July 7, 2003, USGen had $30,100,000 in cash
and marketable securities. Thus, it will have more than
sufficient liquidity to meet timely all postpetition utility
obligations.
Nevertheless, USGen proposes that any Utility Company seeking
additional adequate assurance in the form of a deposit or other
security is required to make a written request setting forth the
location for which the utility services were provided. Any
request for additional adequate assurance must indicate a payment
history for the most recent six months and a description of any
prior entry material payment delinquency or irregularity.
USGen will promptly file a Motion for Determination of Adequate
Assurance of Payment if a Utility Company timely and properly
issues a Request, which it believes is unreasonable. If a
Determination Motion is filed or a Determination Hearing is
scheduled, that Utility Company will be deemed to have adequate
payment assurance until the Court enters a final order finding
otherwise. Any Utility Company that does not make a timely
request will be deemed to have adequate assurance. (PG&E National
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PILLOWTEX CORP: Lenders' Forbearance Pact Continues Until Friday
----------------------------------------------------------------
Pillowtex Corporation (OTC Bulletin Board: PWTX) announced its
term loan lenders had extended a forbearance agreement which
expired yesterday, under which the Company's lenders agreed to
abstain from exercising the rights and remedies available to them
as a result of certain defaults under the Company's term loan
agreement. The forbearance agreement is now in effect through
July 25, 2003. The Company is continuing to work with its term
loan and revolving loan lenders in reviewing its strategic
alternatives.
Pillowtex Corporation, with corporate offices in Kannapolis, N.C.,
is one of America's leading producers and marketers of household
textiles including towels, sheets, rugs, blankets, pillows,
mattress pads, feather beds, comforters and decorative bedroom and
bath accessories. The Company's brands include Cannon, Fieldcrest,
Royal Velvet, Charisma and private labels. Pillowtex currently
employs approximately 7,800 people in its network of manufacturing
and distribution facilities in the United States and Canada.
PLIANT CORP: Will Hold Second Quarter Conference Call on Aug. 13
----------------------------------------------------------------
Pliant Corporation announced that Brian Johnson, Executive Vice
President and Chief Financial Officer, will host a conference call
to discuss the Company's Second Quarter 2003 operating results and
to answer questions about the business. The call will take place
at 1:00 p.m. Eastern Daylight Saving Time on Wednesday, August 13,
2003.
Participants in the United States can access the conference call
by calling 888-390-8568, using the access code Pliant, or
internationally by calling 630-395-0017 and using the same access
code (Pliant). Participants are encouraged to dial-in at least ten
minutes prior to the start of the teleconference.
Following the call's completion, the replay will be available
through 5:00 p.m. Eastern Daylight Saving Time on Monday, August
18, 2003. Telephone numbers to access the replay are as follows:
United States 800-294-9511, International 402-220-3773. No access
code required for the replay.
Pliant Corporation is a leading producer of value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Company operates 26
manufacturing and research and development facilities around the
world, and employs approximately 3,250 people.
As reported in Troubled Company Reporter's May 22, 2003 edition,
Standard & Poor's Ratings Services assigned its 'B-' rating to
Pliant Corp.'s new $250 million second-priority senior secured
notes due 2009.
At the same time, Standard & Poor's raised its bank loan rating
on Pliant's existing senior secured credit facility to 'BB-'
from 'B+' reflecting lenders' improved prospects for full
recovery due to the smaller proportion of priority debt relative
to the pledged collateral and the benefits of a substantial
subordinate debt cushion.
At the same time, Standard & Poor's revised its outlook on Pliant
Corp. to stable from negative, as the successful completion of the
senior secured notes issuance would ease liquidity pressures and
significantly improve the company's onerous debt amortization
schedule.
Standard & Poor's also affirmed its 'B+' corporate credit rating
on the Schaumburg, Ill.-based company. Total debt outstanding was
$736 million as at March 31, 2003.
PNC MORTGAGE: Fitch Ups Note Rating on Class I-B-5 to BB from B
---------------------------------------------------------------
Fitch Ratings has taken rating actions on the following PNC
Mortgage Securities Corporation mortgage pass-through
certificates:
PNC Mortgage Securities Corporation, mortgage pass-through
certificates, series 2000-1 Group 1
-- Class I-A affirmed at 'AAA';
-- Class I-B-1 affirmed at 'AAA';
-- Class I-B-2 upgraded to 'AAA' from 'AA+';
-- Class I-B-3 upgraded to 'AA+' from 'AA-';
-- Class I-B-4 upgraded to 'A' from 'BB';
-- Class I-B-5 upgraded to 'BB' from 'B'.
These rating actions are being taken as a result of low
delinquencies and losses, as well as increased credit support.
QUAIL PIPING: Wants Until August 15 to File Schedules
-----------------------------------------------------
Quail Piping Products, Inc., tells the U.S. Bankruptcy Court for
the Northern District of Texas it needs more time to file its
schedules of assets and liabilities, statements of financial
affairs and lists of executory contracts and unexpired leases
required under 11 U.S.C. Sec. 521(1). The Debtor tells the Court
that it needs until August 15, 2003, to finish and file these
required documents.
The Debtor points out that the complexity of its operations, and
the limited company personnel who are able and available to assist
the Debtor's counsel, the Debtor anticipates that it will be
unable to complete its Schedules prior to the expiration of the
time allotted by Bankruptcy Rule 1007.
To prepare the required Schedules, the Debtor must gather
information from books, records and documents relating to a
multitude of transactions and operations. Consequently,
collection of the necessary information required an expenditure of
substantial time and effort. Given the present burdens, the Debtor
tells the Court that it needs an additional time to accurately and
comprehensively complete and file its Schedules.
Quail Piping Products, Inc., headquartered in Wichita Falls,
Texas, manufactures pressure pipes and corrugated pipes. The
Company filed for chapter 11 protection on July 15, 2003 (Bankr.
N.D. Tex. Case No. 03-70583). Charles A. Dale, III, Esq., at
Gadsby Hannah, LLP, represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated debts and assets of over $10
million each.
ROHN INDUSTRIES: Commences Trading on OTCBB Effective July 21
-------------------------------------------------------------
The Nasdaq Listing Qualifications Panel determined to delist ROHN
Industries, Inc.'s (Nasdaq: ROHNE) securities from the Nasdaq
Stock Market with the opening of business on Monday, July 21, 2003
due to the fact that the Company has been unable to meet the
minimum bid price requirement as set forth in Marketplace Rule
4310(c)(4).
Also as of the opening of business on July 21, 2003, the Company's
securities were eligible for inclusion on the OTC Bulletin Board.
The Company's OTC Bulletin Board symbol is ROHN.
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. The Company has a manufacturing location in
Frankfort, IN along with offices in Peoria, IL and Mexico City,
Mexico.
* * *
As previously reported in Troubled Company Reporter, 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.
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.
ROSSBOROUGH-REMACOR: Selling Assets to MagTech for $3.2 Million
---------------------------------------------------------------
Rossborough-Remacor, LLC wants to sell its assets, free of liens,
claims, and encumbrances to Magnesium Technologies Corporation for
$3.2 million. In this regard, the Debtor asks for approval from
the U.S. Bankruptcy Court for the Northern District of Ohio for
the sale, subject to better and higher offer.
While Debtor had prepetition discussions with potential purchasers
regarding the sale of various parts of its remaining business
operations and assets, the significant amount of the Debtor's
indebtedness, the risk attendant to creditor claims to the extent
the debt payable to creditors were not paid in full. The
continuing operating losses being incurred by the Debtor made the
sale of Debtor's remaining business operations and assets
impracticable absent structuring the related sales as sales of
property. The Debtor says that MagTech was the sole party who
expressed any interest in acquiring the Debtor's Desulf Operations
and Chipped Magnesium Operations.
Shortly before the commencement of this chapter 11 case, MagTech
offered to acquire substantially all of the assets used in the
Debtor's Desulf Operations and Chipped Magnesium Operations. The
Parties agree that MagTech will pay the Debtor an amount equal to
a base amount of $3,200,000.
MagTech will pay $2,800,000, less a credit for the amount of the
cure costs, to the Debtor in cash at Closing. In addition,
MagTech will deliver, at Closing, a promissory note in the amount
of $400,000.
Excluded Assets from the transaction are:
(i) any and all rights in respect of any causes of action
arising under the Bankruptcy Code or applicable state
law, including, without limitation, all rights and
avoidance claims of Debtor arising under chapters of
the Bankruptcy Code,
(ii) all of the Debtor's cash, cash equivalent and accounts
receivable,
(iii) the Debtor's Avon Lake, Ohio facility,
(iv) the Steelside Operations and all related property,
assets or rights used in the production of Debtor's
steelside product line,
(v) the West Pittsburg Equipment,
(vi) the Debtor's rights in any amounts which may hereafter
become payable to the Debtor under the terms of the
Share Purchase Agreement relating to the Debtor's sale
of its interest in Stormvalley, and
(vii) any other assets, properties or rights which MagTech
may elect to exclude, provided, that, any such
exclusion shall not serve to reduce or otherwise affect
the amount of the Purchase Price.
Under certain conditions, MagTech will be entitled to the payment
of a $100,000 breakup fee and up to $100,000 in an expense
reimbursement in the event the Sale Assets are sold to another
party in an alternative sale transaction.
The Debtor believes that it was in its best interest and the best
interest of its creditors to execute the asset sale. The Debtor
submits that the sale of the Desulf Operations and Chipped
Magnesium Operations as a "going concern", combined with the
orderly liquidation and sale of the balance of its assets and
business operations, is the best way to maximize the value of the
Debtor's assets for the benefit of its creditors.
Furthermore, due to its operating losses, decreased profit margins
and the uncertain future of the integrated steelmaking segment of
the North American steel industry, the Debtor believes that the
value of the Target Business Operations continue to decline.
Accordingly, the purchase price MagTech offers is fair and
reasonable.
Rossborough-Remacor, LLC, headquartered in Avon Lake, Ohio, is a
producer of additives used to deoxidize, desulfurize and condition
steel slag. The Company filed for chapter 11 protection on June
18, 2003 (Bankr. N.D. Ohio Case No. 03-18020). Diana M. Thimmig,
Esq., at Arter & Hadden LLP, represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $18,709,681 in total assets and
$22,644,854 in total debts.
RURAL CELLULAR: Offering $325 Million of Senior Notes
-----------------------------------------------------
Rural Cellular Corporation (OTCBB:RCCC) will be offering $325
million of senior notes due 2010. The Company said that completion
of the notes offering is subject to market conditions and the
closing of a credit facility amendment.
The Company will use the net proceeds from the offering together
with existing cash to reduce its outstanding borrowings under its
credit facility by $356.1 million. Such reduction will be in
conjunction with a proposed amendment to the credit facility. The
amendment is a condition of the offering and there can be no
assurance that either will be completed.
The offering will be made solely by means of a private placement
either to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended, or to certain
persons in offshore transactions pursuant to Regulation S under
the Securities Act.
The securities have not been and will not be registered under the
Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption from
registration requirements.
Rural Cellular Corporation, based in Alexandria, Minnesota,
provides wireless communication services to Midwest, Northeast,
South and Northwest markets located in 14 states.
At March 31, 2003, Rural Cellular's balance sheet shows a total
shareholders' equity deficit of about $490 million.
RURAL CELLULAR: Won't Pay Dividend on 11-3/8% Preferred Shares
--------------------------------------------------------------
Rural Cellular Corporation (OTCBB:RCCC) announced that the
quarterly dividends on its 12-1/4% Junior Exchangeable Preferred
Stock will be paid on August 15, 2003, to holders of record on
August 1, 2003. The Junior Exchangeable Preferred Stock dividend
will be paid in shares of Junior Exchangeable Preferred Stock at a
rate of 3.0625 shares per 100 shares. Fractional shares for the
Junior Exchangeable Preferred Stock will be paid in cash.
Rural Cellular Corporation further announced that its Board of
Directors has determined not to declare the quarterly dividend
payable on the 11-3/8% Senior Exchangeable Preferred Stock. This
dividend would have been payable in cash on August 15, 2003, to
holders of record on August 1, 2003.
Rural Cellular Corporation (OTCBB:RCCC), based in Alexandria,
Minnesota, provides wireless communication services to Midwest,
Northeast, South and Northwest markets located in 14 states.
At March 31, 2003, Rural Cellular's balance sheet shows a total
shareholders' equity deficit of about $490 million.
RURAL CELLULAR: Reports Preliminary Second Quarter 2003 Results
---------------------------------------------------------------
Rural Cellular Corporation (OTCBB:RCCC) announced certain
preliminary financial and customer results for the 2nd quarter of
2003.
The Company's 2nd quarter of 2003 service revenue increased 13% to
approximately $90 million as compared to the same period last year
while roaming revenue was approximately $32 million, and operating
income was approximately $41 million. Depreciation and
amortization for the 2nd quarter of 2003 was approximately $20
million.
The Company did not utilize its phone service leasing program
during the second quarter of 2003 while $6.4 million in handsets
were included in the phones service program during the second
quarter of 2002. Total capital expenditures for the 2nd quarter of
2003 were approximately $12 million.
Including the cost of the Company's planned technology overlays,
total capital expenditures for 2003 through 2005 are expected to
range from $190 to $230 million. RCC anticipates funding these
capital expenditures by using its existing cash on hand, potential
borrowing under its credit facility, and internally generated cash
flows. At June 30, 2003, Rural Cellular has $147.0 million in cash
and cash equivalents and $896.9 million outstanding under its
credit facility.
During the 2nd quarter of 2003, total customers, including
wholesale, increased by 10,309 and totaled 739,015 at the end of
the quarter. During the 2nd quarter of 2003, postpaid retention
was 98.4%, reflecting postpaid net customer additions of 7,970. In
addition, wholesale customers increased by 3,301 and prepaid
customers decreased by 962.
Richard P. Ekstrand, president and chief executive officer,
commented: "We believe this quarter's financial performance
reflects solid operations. We are particularly encouraged by our
improvement in certain key operating metrics including this
quarter's local service revenue per customer, which increased to
$44 compared to $41 last year at this time."
RCC plans to release its final second quarter financial and
operating results and conduct its quarterly teleconference call in
early August 2003.
Rural Cellular Corporation, based in Alexandria, Minnesota,
provides wireless communication services to Midwest, Northeast,
South and Northwest markets located in 14 states.
At March 31, 2003, Rural Cellular's balance sheet shows a total
shareholders' equity deficit of about $490 million.
RURAL/METRO CORP: Receives Exception to Continue Nasdaq Listing
---------------------------------------------------------------
Rural/Metro Corporation (Nasdaq:RURLE/RUREC), a leading U.S.
provider of ambulance and fire protection services, has received a
written determination of the Nasdaq Listing Qualifications Panel
to continue the listing of the company's stock on The Nasdaq
SmallCap Market subject to satisfying a Sept. 30, 2003 deadline
for filing its Form 10-Q for the third quarter ended March 31,
2003 and its Form 10-K for the fiscal year ended June 30, 2003.
Jack Brucker, president and chief executive officer, said, "We are
pleased with the Panel's decision and look forward to returning to
full compliance upon filing our Form 10-Q and Form 10-K by the
deadline set forth."
The company announced on May 20, 2003 that it would file its Form
10-Q for the third quarter ended March 31, 2003 following the
completion of its analysis related to the restatement adjustments
necessary to increase its allowance for Medicare, Medicaid and
contractual discounts and doubtful accounts in the range of $35 to
$45 million. On June 16, 2003, the company announced preliminary
unaudited operating results for the three and nine months ended
March 31, 2003 and 2002. The company does not currently believe
that the operating results for these periods will be impacted by
the restatement adjustments.
In a July 17, 2003 letter, the Panel noted the company's
significant efforts to conduct a thorough review of its accounts
receivable with the assistance of its independent accountants and
the significant expenditure of time and resources by the company
to correct the accounting issues. The Panel also acknowledged the
company's efforts to keep the investing public apprised of the
anticipated charge as well as the fact that the company has
publicly disclosed the operating results for the quarter ended
March 31, 2003.
In addition to granting the filing exception through Sept. 30,
2003, the Panel specifically requires the company to timely file
all periodic reports with the Securities and Exchange Commission
and Nasdaq for all reporting periods ending on or before March 31,
2004. Should the company miss a filing deadline in accordance with
the exception, it will not be entitled to a new hearing on the
matter and its securities may be delisted from The Nasdaq Stock
Market.
The company's common stock will continue to be traded on The
Nasdaq SmallCap Market throughout the exception period, with the
conditional listing identified by the character "C" appended to
its trading symbol. Accordingly, effective with the open of
trading on Monday, July 21, 2003, the trading symbol of the
company's securities will be changed from RURLE to RUREC.
Rural/Metro Corporation, whose December 31, 2002 balance sheet
shows a total shareholders' equity deficit of about $160 million,
provides emergency and non-emergency medical transportation, fire
protection, and other safety services in approximately 400
communities throughout the United States. For more information,
visit the Rural/Metro Web site at http://www.ruralmetro.com
SAFETY-KLEEN: Gets Open-Ended Solicitation Exclusivity Extension
----------------------------------------------------------------
Safety-Kleen Corp. and its subsidiary and affiliate debtors
obtained permission from the Court to further extend their
exclusive solicitation period until plan confirmation.
To recall, on April 25, 2003, the Debtors sent a notice
rescheduling the confirmation hearing to August 1, 2003.
Subsequently, on May 4, 2003, the Debtors announced that they had
voluntarily extended until July 25, 2003, the period of time for
their prepetition lenders to cast their votes with respect to the
Debtors' Plan. (Safety-Kleen Bankruptcy News, Issue No. 60;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SCORES HOLDING: March 31 Balance Sheet Upside-Down by $950K
-----------------------------------------------------------
Scores Holding Company Inc., (OTC Bulletin Board: SCOH) announced
that due to improved performance in the 2nd quarter the Company is
reporting for the six months ended June 30, Net Sales of $805,745,
an increase of $749,000 over the reported Net Sales of $56,250 for
the same period last year and expects to report savings of over
$200,000 in General, Administration and Promotion expenses over
the 1st quarter of 2003.
"We are very pleased that we achieved our two main goals for the
2nd quarter, namely increasing our net sales and reducing our
costs in order to better position ourselves for profitable growth
in the future," said Chairman and Chief Executive Officer Richard
Goldring.
"Looking ahead, we expect the net income from operations to
continue to grow in 2003. We expect to report a profit for the
year with Club Licensing revenues projected to show double-digit
growth in the 3rd and 4th quarters as a result of the continued
cash generating power of SCORES SHOWROOM in New York City. SCORES
SHOWROOM is expected to generate $500,000 in licensing fees for
the Company in the 3rd and 4th quarters. We believe that the
opening of SCORES CHICAGO and SCORES WEST in the 4th quarter could
generate an additional $150,000 to $200,000 in quarterly licensing
fees to the Company."
"Licensing of the SCORES name to adult entertainment nightclubs
will remain our largest and most profitable business in the near
future. Additional club locations suitable to license the "SCORES"
name are continually being investigated across the country and
licensing relationships with existing clubs are being cultivated.
Through these relationships the Company has targeted and expects
to sign an additional twenty five (25) clubs to a SCORES licensing
agreement over the next three years," said Goldring.
Scores Holding Company's March 31, 2003 balance sheet shows a
working capital deficit of about $1.4 million, and a total
shareholders' equity deficit of close to $1 million.
SIRIUS SATELLITE: Will Publish Second Quarter Results on Aug. 6
---------------------------------------------------------------
SIRIUS Satellite Radiop (Nasdaq: SIRI), known for delivering the
very best in commercial-free music and premium audio entertainment
to cars and homes across the country, will announce second quarter
2003 financial and operating results on Wednesday, August 6, 2003.
The company will hold a conference call at 10 A.M. Eastern
Daylight Time. To access the call, please dial one of the numbers
listed below 5-10 minutes prior to the start time.
Toll-free number: (888) 955-8963
Toll number: (212) 547-0203
Pass code: SIRIUS
The conference call will also be web-cast in real-time on the
company's Web site at http://www.sirius.comat 10 A.M. EDT on
August 6. The web-cast ID number is 5753024 and the pass code is
SIRIUS.
If you are unable to participate in the live call on August 6, an
audio replay will be available after 12 P.M. EDT on August 6,
through midnight EDT on September 6. To access a replay of the
call, please visit the company's Web site at http://www.sirius.com
or dial the toll-free number below.
Toll-free replay number: (800) 666-8698
Pass code: 8475
Conference ID and pass code for the web replay are the same as for
the real-time web-cast and are listed above.
SIRIUS is the only satellite radio service bringing listeners more
than 100 streams of the best music and entertainment coast-to-
coast. SIRIUS offers 60 music streams with no commercials, along
with over 40 world-class sports, news and entertainment streams
for a monthly subscription fee of only $12.95, with greater
savings for upfront payments of multiple months or a year or more.
Stream Jockeys create and deliver uncompromised music in virtually
every genre to our listeners 24 hours a day. Satellite radio
products bringing SIRIUS to listeners in the car, truck, home, RV
and boat are manufactured by Kenwood, Panasonic, Clarion and
Audiovox, and are available at major retailers including Circuit
City, Best Buy, Car Toys, Good Guys, Tweeter, Ultimate
Electronics, Sears and Crutchfield. SIRIUS is the leading OEM
satellite radio provider, with exclusive partnerships with
DaimlerChrysler, Ford and BMW. Automotive brands currently
offering SIRIUS radios in select new car models include BMW, MINI,
Chrysler, Dodge, Jeep(R), Nissan, Infiniti and Mazda. Automotive
brands that have announced plans to offer SIRIUS in select models
include Ford, Lincoln, Mercury, Mercedes-Benz, Jaguar, Volvo,
Audi, Volkswagen, Land Rover and Aston Martin.
As previously reported, Standard & Poor's Ratings Services
assigned its 'CCC-' rating to the 3-1/2% Convertible Notes, and
also raised its corporate credit rating on Sirius Satellite Radio
Inc. to 'CCC' from 'D', stating, "The rating actions and the
stable outlook reflect the company's improved capital structure
and liquidity following its recent recapitalization," according to
Standard & Poor's.
SMITHFIELD FOODS: Acquires Global Culinary Solutions, Inc.
----------------------------------------------------------
Smithfield Foods, Inc. (NYSE: SFD) announced the acquisition of
Global Culinary Solutions, Inc., and the formation of the
Smithfield Innovation Group to develop new products for customers
in retail, club store, and food service channels. Global Culinary
Solutions is an integrated food product development,
manufacturing, and marketing company headed by Michael J. Brando,
a certified master chef with over 30 years of experience in
culinary arts. Chef Brando will assume the role of president of
the Smithfield Innovation Group.
Smithfield retained Chef Brando's company last year to assist in
new product development. "We saw so much creativity and such
immediate benefit to our business, that we decided to acquire the
company and bring the operation in-house," said C. Larry Pope,
Smithfield's president and chief operating officer. "While
Smithfield Foods has made tremendous progress in ramping up our
efforts in the value-added foods category in general and
pre-cooked entrees in particular, we have only scratched the
surface," added Mr. Pope. "We are creating the Smithfield
Innovation Group to take our value-added business to a new level
of creativity, volume growth, and margin expansion."
Chef Brando's group will strive to leverage Smithfield company
assets while developing innovative new food products. "The new
venture will utilize the production facilities of the various
Smithfield companies and have access to Smithfield's superior raw
materials," said Bob Slavik, Smithfield Foods corporate vice
president of sales and marketing. "We now have the added
resources to provide unique and innovative new products to our
customers to drive sales. Growth through innovation will be our
primary goal."
In the last twelve years, Chef Brando and his team have developed
and launched several hundred new food products for the retail and
foodservice markets. "In Chef Brando we are partnering with a
product innovator who has a highly successful track record in the
industry," remarked Mr. Slavik. Chef Brando's new group will
include a team of five chefs with over 100 years of combined
product development and culinary arts experience. "The measure of
a successful food product development team is the number of
products that ultimately reach and remain in the marketplace,"
noted Chef Brando.
Chef Brando recently announced the completion of his new product
development center. "We have simulated the operations of a full-
service restaurant in our new test kitchen, so that when we
present new products to customers we are able to demonstrate how
the products will perform in their respective environments,"
remarked Chef Brando. "Our product development is driven around
the kitchen because that is where food products are ultimately
prepared." In addition to foodservice and retail product
development, the new culinary facilities will provide a resource
for sales training, marketing support, and customer presentations.
Offices and test kitchen for Smithfield Innovation Group are in
Buffalo Grove, IL. Terms of the acquisition were not disclosed.
As reported in Troubled Company Reporter's July 17, 2003 edition,
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit rating and senior secured notes ratings on leading hog
producer and processor Smithfield Foods Inc., on CreditWatch with
negative implications. The 'BB' senior unsecured and 'BB-'
subordinated debt ratings on Smithfield Foods were also placed on
CreditWatch with negative implications.
SOLUTIA INC: Will Hold Second Quarter Conference Call on July 30
----------------------------------------------------------------
Solutia Inc. (NYSE: SOI) announced that due to scheduling
conflicts, the company will now hold its second quarter earnings
conference call on Wed., July 30, 2003 at 9 a.m. central time (10
a.m. eastern). The earnings report will be released at
approximately 5 p.m. central time on Tues., July 29, 2003.
A live, listen-only webcast of our conference call will be
available on its Web site at http://www.solutia.com under the
presentation and speeches tab in the investor relations section.
A replay of the conference call, as well as, the question and
answer session will be available at the site for approximately
five days following the call.
Solutia -- http://www.Solutia.com-- uses world-class skills in
applied chemistry to create value-added solutions for customers,
whose products improve the lives of consumers every day. Solutia
is a world leader in performance films for laminated safety glass
and after-market applications; process development and scale-up
services for pharmaceutical fine chemicals; specialties such as
water treatment chemicals, heat transfer fluids and aviation
hydraulic fluid and an integrated family of nylon products
including high-performance polymers and fibers. At March 31, 2003,
the Company's balance sheet shows a total shareholders' equity
deficit of about $232 million.
SPIEGEL GROUP: Court Approves Aird & Berlis as Canadian Counsel
---------------------------------------------------------------
The Court approved the The Spiegel Debtors' request to employ Aird
& Berlis LLP as Canadian counsel nunc pro tunc to March 17, 2003.
The Debtors need Aird & Berlis to provide advice concerning
Canadian proceedings of their subsidiaries under the Companies
Creditors Arrangement Act and to make appearances as necessary in
those cases and otherwise provide the services needed to protect
the interests of Spiegel's Canadian subsidiaries. The Debtors
selected Aird & Berlis because of its expertise in many areas of
business law including corporate restructuring and insolvency.
Aird & Berlis has considerable experience with rendering these
services to debtors, creditors and other parties in numerous
Canadian and cross-border bankruptcy cases.
As Spiegel's Canadian counsel, Aird & Berlis will:
(a) advise the Debtors regarding their rights and obligations
under Canadian law;
(b) prepare pleadings under the CCAA necessary to protect the
interests of Spiegel's Canadian subsidiaries;
(c) appear and represent the interests of Spiegel's Canadian
subsidiaries in the CCAA proceedings;
(d) advise on the coordination of CCAA proceedings and these
Chapter 11 cases;
(e) advise on debtor-in-possession finance for Spiegel's
Canadian subsidiaries; and
(f) take other action and perform other services as the
Debtors may require.
Aird & Berlis is a law firm comprised of 150 lawyers. Aird &
Berlis has represented the Debtors since March 2003.
The Debtors emphasize that the services Aird & Berlis will
provide will not be duplicative of the services rendered by their
general insolvency counsel or any other employed professional.
Aird & Berlis Partner Lawrence J. Crozier ascertains that the
firm has no connection with any of the Debtors' creditors or
other parties-in-interest. Aird & Berlis also does not hold or
represent any interest adverse to the Debtors or to their estates
in the maters with respect to which the firm is to be engaged.
In consideration for the firm's services, the Debtors will
compensate Aird & Berlis in accordance with its standard hourly
rates. The Debtors will also reimburse the firm for its out-of-
pocket expenses.
Aird & Berlis professionals who will primarily work for the
Debtors and their customary hourly rates are:
Lawrence J. Crozier Partner $475
Jeff Goldenthal Associate 425
Steven Graff Partner 385
Stephanie Fraser Associate 210
Mary Gartland Law Clerk 150
Articling Students 140
(Spiegel Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
SRL OF ELY INC: Case Summary and 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: SRL of Ely Inc.
dba Silver Rapids Lodge
459 Kawishiwi Trail
Ely, Minnesota 55731
Bankruptcy Case No.: 03-50905
Type of Business: All season resort
Chapter 11 Petition Date: July 10, 2003
Court: District of Minnesota (Duluth)
Judge: Robert J. Kressel
Debtor's Counsel: Robert T. Kugler, Esq.
Robins Kaplan Miller & Ciresi LLP
800 Lasalle Ave Ste 2800
Minneapolis, MN 55402-2015
Total Assets: $1,570,000
Total Debts: $940,000
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Zup's $1,969
Lake County Auditor $24,988
Advance Me $13,651
Ferrel Gas $10,573
Cook County $8,168
Starkman Oil $8,094
American Agency $6,771
First USA $5,376
Lake County Power $3,698
American Express $4,135
Bank One $5,344
James G-Men $3,667
Bill Michaels Architect $3,509
Jeff Norquist CPA $3,500
Tom Turner Appraisal $3,000
Capitol One $2,130
Fraboni's $2,091
Menards $2,066
Ely Shopper $1,982
Queen City Bank $26,532
SYSTECH RETAIL: Plan Confirmation Hearing to Convene on Aug. 28
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina approved the Disclosure Statement filed by Systech Retail
Systems (USA) Inc., explaining its plan of reorganization. The
Bankruptcy Court found that the document contains adequate
information to allow the Debtors' creditors to arrive at reasined
decisions about whether to vote to accept or reject the Plan.
A hearing to consider confirmation of the Debtors' Plan is
scheduled for August 28, 2003 at 10:00 a.m. in the United States
Bankruptcy Court, U.S. Courthouse & P.O. Building, Room 208, 300
Fayetteville Street Mall, Raleigh, North Carolina. All written
objections to the confirmation of the plan must be filed on or
before August 21, 2003.
Systech Retail Systems (USA) Inc., along with two other affiliates
filed for chapter 11 protection on January 13, 2003, (Bankr.
E.D.N.C. Case No. 03-00142). Systech, headquartered in Raleigh,
North Carolina, is an independent developer and integrator of
retail technology, including software, systems and services to
supermarket, general retail and hospitality chains throughout
North America. N. Hunter Wyche, Esq., at Smith Debnam Narron
Wyche & Story represents the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated debts and assets of over $50
million.
TENET: Indicted for Illegal Use of Physician Relocation Pacts
-------------------------------------------------------------
Tenet Healthcare Corporation (NYSE:THC) said a federal grand jury
in San Diego late Thursday afternoon returned an indictment
accusing Alvarado Hospital Medical Center Inc., and Tenet
HealthSystem Hospitals Inc., of illegal use of physician
relocation agreements. Tenet HealthSystem Hospitals Inc. is the
legal entity that was doing business as Alvarado Hospital Medical
Center during some of the period mentioned in the indictment.
The company had disclosed earlier this week that it expected the
indictment to be returned.
"We believe this very broad indictment mistakenly attacks a well-
established, lawful and common means by which U.S. hospitals
attract needed physicians to their communities," said Trevor
Fetter, Tenet's president and acting chief executive officer. "We
are confident that our corporate policy on physician relocation
agreements is entirely appropriate under the law, and we intend to
defend ourselves vigorously. This prosecution, if successful,
threatens a practice in the health care industry that is
beneficial to communities."
Physician relocation agreements are used to help hospitals meet a
demonstrated need in their communities for additional or
specialized health care resources. Typically, hospitals or other
entities such as a group practice pay a portion of a physician's
cost to relocate from one community to another plus income
guarantees for a set period of time, usually one year. In return,
physicians typically commit to provide health care services in the
local community for at least three years. The agreements permit
the physicians to refer patients to any hospital, not just the
facility that helped them to relocate. Such agreements are
generally permitted under rules promulgated by the U.S. Department
of Health and Human Services.
Alvarado Hospital Medical Center is a 311-bed facility that is one
of only two hospitals serving a population of about 470,000 in
eastern San Diego County. Its community includes a very diverse,
medically under-served immigrant population. Although San Diego is
often thought of as a desirable place to live, it is facing a
severe shortage of physicians. The San Diego Medical Society, in a
2002 survey, found that 71 percent of the county's established
physicians were having difficulty bringing new doctors into their
practices. A poor reimbursement environment coupled with high
housing and business operating costs were the most frequently
cited reasons in the survey for the reluctance of new doctors to
relocate to San Diego.
Tenet said it believes that its corporate policy on physician
relocation agreements, which has been in place since 1996, is
entirely appropriate under the law. The policy is posted on the
company's Web site at http://www.tenethealth.com About 42,000
physicians have admitting privileges at Tenet's 114 hospitals in
16 states. Of those, fewer than 2.5 percent have relocation
agreements now in place, and about 1 percent are currently
eligible for revenue protection under income guarantees during the
start-up of their practices.
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates 114 acute care hospitals with 27,743 beds and numerous
related health care services. Tenet and its subsidiaries employ
approximately 116,500 people serving communities in 16 states.
Tenet's name reflects its core business philosophy: the importance
of shared values among partners -- including employees,
physicians, insurers and communities -- in providing a full
spectrum of health care. Tenet can be found on the World Wide Web
at http://www.tenethealth.com
As reported in Troubled Company Reporter's July 14, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on health care service provider
Tenet Healthcare Corp. to a speculative-grade 'BB' rating from
'BBB-'. At the same time, the ratings were removed from
CreditWatch, where they had been placed June 23, 2003.
The outlook is negative. Tenet, based in Santa Barbara,
California, had about $4.1 billion of debt as of March 31, 2003.
TENET HEALTHCARE: Shareholder Committee Calls for 'Reformation'
---------------------------------------------------------------
M. Lee Pearce, M.D., chairman of the Tenet Shareholder Committee,
called on Tenet's five "holdover" directors, Fr. Lawrence Biondi,
Sanford Cloud, Van Honeycutt, Robert Kerry and Dr. Floyd
Loop, to implement the Committee's proposals for reform or step
aside and allow an adequate number of new, totally independent,
qualified directors to be appointed to the board.
"The continuing, growing list of government lawsuits,
investigations and allegations of patient abuse is prima facie
evidence that the company has experienced a wholesale failure of
its internal controls, safeguards and procedures. Obviously,
Tenet management failed to do its job and the board failed to
exercise proper oversight, despite the clear warnings we gave them
three years ago," Pearce said.
Four of the current ten members of Tenet's board are leaving the
board on July 23, the date of the company's annual meeting. This
has made room for the appointment of four new, independent
directors, but left six "holdover" directors who will remain on
the board.
Pearce said that Monica C. Lozano, who was only recently appointed
to the board, deserves an opportunity to demonstrate the much-
needed independence and vigilance required of board members.
The Tenet Shareholder Committee has also recommended that the
board be expanded by three to five additional members to
adequately staff the board committees.
"What is particularly disturbing is that these same 'holdover'
board members have emphasized their concerns on business and
professional ethics in their occupations outside Tenet; however,
they apparently forgot to exercise those same standards inside the
Tenet board room," Pearce said.
* Dr. Floyd Loop, in an article in the Cleveland Plain Dealer
on June 25, 2003, said, "Commercialism in medicine should be
avoided; if it occurs, it will create troubling conflicts of
interest, erode the trust between patient and doctors and
economics will drive ethics more than it does today .... We
physicians have the obligation not only to practice at the highest
level of which we are capable ... but also to eliminate its
shortcomings, expunge egregious behavior and ... earn and re-earn
the trust and respect of our patients and the public."
* Fr. Lawrence Biondi, who is president of St Louis
University, wrote in a letter published in Modern Healthcare's
March 26, 2001, issue, "Change at the organizational level offers
the best hope of achieving safer, higher quality health care. ...
a consensus has emerged that the visible error -- the one that
harmed the patient -- often is a result of a string of errors deep
within an organization."
* When Texaco faced a national scandal, Sanford Cloud was
quoted in the San Francisco Chronicle of Nov. 2, 1996, saying the
company should "openly complete its independent investigation" and
"take the prompt and public remedial steps promised."
* Van Honeycutt, who is chairman and CEO of Computer Sciences
Corp., was a founder of a program, in cooperation with the
Department of Justice, to promote ethical behavior online on the
Internet. The Cybercitizen Partnership, of which Honeycutt serves
as chairman, was "created to promote computer ethics and civic
responsibility in the cyber age." This is from a CSC press
release of March 15, 1999.
* J. Robert Kerry, president of the New School University,
introduced a new lecture series at the university covering
"corporate scandals and business ethics," according to the
school's April 30, 2002 press release.
"The great tragedy," Pearce added, "is that these same board
members allowed Tenet to operate in a manner that, in our opinion,
was inconsistent with their own statements of beliefs in medical
and business ethics.
"Tenet was run by an imperial CEO, but that does not excuse
the board's basic rubber stamp behavior," Pearce said.
Pearce added:
* "Dr. Loop ignored our Dec. 9, 2002, letter urging him, as
the one medical doctor on Tenet's board, to assert leadership and
address the apparent breakdown and absence of quality in patient
care.
* "Therefore, on Dec. 9, 2002, we wrote to all the non-
management board members, requesting the immediate appointment of
an independent board committee to investigate the recent scandals
and urging other reforms to improve quality care. Sanford Cloud
replied that these matters would be reviewed some time in the
future.
* "Van Honeycutt served on the board's small compensation
committee that rewarded the CEO with a huge bonus and a golden
parachute, after shareholders had suffered terrible losses.
* "Fr. Biondi, chairman of the Ethics, Quality and Compliance
Committee, did not respond to our urgent request for a special
board investigation, for immediate remedial action to improve the
quality of care and for a complete reform of the company's
compliance reporting. Apparently, Biondi acquiesced in the
unacceptable and inherently conflicted arrangement of the
company's chief counsel also serving as the company's chief
compliance officer.
* "Former Senator J. Robert Kerry gained $850,000 from insider
trading that received media attention and scrutiny."
In April of this year, the Office of Inspector General in the
Department of Health and Human Services and the American Health
Lawyers Association released their guidelines for the duties of
Boards of Directors for health care organizations, entitled
"Corporate Responsibility and Corporate Compliance: A Resource for
Health Care Boards of Directors." The document recommended:
* " ... directors should make inquiries to management to
obtain information necessary to satisfy their duty of care."
* "A director has a duty to attempt in good faith to assure
that 1) a corporate information and reporting system exists and 2)
this reporting system is adequate to assure the board that
appropriate information as to compliance with applicable laws will
come to its attention in a timely manner as a matter of ordinary
operations."
* "The duty to make reasonable inquire increases when
'suspicions are aroused or should be aroused'; that is when the
director is presented with extraordinary facts or circumstances of
a material nature (e.g. indications of financial improprieties,
self-dealing, or fraud) or a major government investigation."
* " ... once presented (through the compliance program or
otherwise) with information that causes (or should cause) concerns
to be aroused, the director is then obligated to make further
inquiries until such time as his/her concerns are satisfactorily
addressed and favorably resolved."
* "Thus, while the corporate director is not expected to serve
as a compliance officer, he/she is expected to oversee senior
management's operation of the compliance program."
* " ... a director's failure to reasonably oversee the
implementation of a compliance program may put the organization at
risk and, under extreme circumstances, expose individual directors
to personal liability for losses caused by the corporate non-
compliance."
Pearce said, "Tenet's board failed in their oversight. They
did not announce the formation of appropriate independent
committees to investigate, among other items, claims of:
1) false, inaccurate and incomplete disclosures,
2) violations of fraud and abuse 'anti-kickback' statutes,
3) wrongful deaths and unnecessary procedures, and
4) gaming of the Medicare outlier system."
"The board has been put on notice of these acts by major
government investigations, by multiple suits from patients, by
published reports in the press, shareholders, and the government,
by repeated calls for reform from the Tenet Shareholder Committee
and the dramatic loss in the value of the company's stock," Pearce
continued.
"Yet the board failed to discharge its duty of care to the
company and its shareholders," Pearce added. "The board
apparently failed to form an independent committee to investigate
these matters, failed to remedy obvious conflicts of interest in
the reporting structure, continued to rely on a management that
has demonstrated abject failure, and failed to make appropriate
inquiries.
"In short," he added, "they have failed to exercise their
fiduciary responsibility of oversight."
Pearce said that "others will decide if these board members
are personally and legally liable, but from the Tenet Shareholder
Committee's point of view, there is no doubt that the board failed
Tenet shareholders, patients and employees."
Pearce said, "Even at this late date, we call on these
'holdover' board members to come to their senses and:
* Make a clean sweep of remaining, contaminated senior
management;
* Proceed immediately to hire the best CEO in America, someone
with an M.D. or M.H.A., with unquestioned experience and
integrity, from outside the company;
* Form independent committees to investigate allegations of
up-coding, outlier payment fraud, violations of anti-
kickback statues, patient abuse and the breakdown of quality
care;
* Reform compliance procedures, requiring that fraud and abuse
compliance report directly to a board committee. It is
critical that the inherent conflict of a chief counsel who
is also the chief compliance officer be eliminated; and
* Close the Santa Barbara headquarters as soon as possible."
TEXAS PETROCHEMICALS: Begins Chapter 11 Reorganization in Texas
---------------------------------------------------------------
Texas Petrochemicals LP, and its affiliates Texas Petrochemical
Holdings, Inc., Petrochemical Partnership Holdings, Inc, TPC
Holding Corp, and Texas Butylene Chemical Corporation, announced
that to facilitate a financial restructuring, they have filed
voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of Texas. TPLP owns and operates petrochemical
manufacturing facilities in Houston, Texas and operates product
terminals in Baytown, Texas and Lake Charles, Louisiana.
The Chapter 11 filings were necessitated primarily by the drastic
and likely permanent reduction in MTBE demand, arising from
regulatory changes, and by recent higher raw material and energy
costs. These factors led to the conclusion that future cash flows
of the companies would be insufficient to meet their subordinated
bond debt obligations over the long term, requiring a permanent
financial restructuring. The Chapter 11 filings will allow the
companies to reduce significantly and restructure their debt,
while permitting TPLP to continue to operate its core, profitable
business sectors in compliance with the company's long-standing
commitment to the health and safety of its employees and the
communities in which it operates. No plant closures are expected
as a result of the filings, and the restructuring will have only
minimal impact on day-to-day business operations, which will
continue as usual and without interruption.
Carl S. Stutts, president and chief executive officer of TPLP,
stated, "With the assistance of our professional advisors, we
conducted a thorough and complete review of all available options
for the restructure of our indebtedness. We decided that, though
the decision to file for reorganization under Chapter 11 was very
difficult, this process is the best way to restore and enhance the
existing operational and competitive strengths of TPLP. The
Chapter 11 process provides us the opportunity to financially
restructure the companies, while not unduly disrupting day-to-day
business operations and ongoing relations with our valued
employees, suppliers and customers. Our vendors will be paid in
full for all goods and services provided after the filing date,
and TPLP intends to continue to meet its commitments to employees,
customers and suppliers. We expect TPLP to emerge from the
reorganization with a significantly improved financial structure
that will position TPLP for long-term success in our core
butadiene, specialty chemicals and gasoline alkylate businesses,
while phasing out our on-purpose MTBE production."
E. Joseph Grady, TPLP's chief financial officer, said, "Over the
past several months, TPLP has reduced costs and implemented
continuing operational efficiencies. We intend to complete these
initiatives in the weeks and months ahead. We believe that TPLP
will have more than sufficient liquidity to fund the restructuring
process and the cash requirements necessary for our ongoing
businesses, including its operating needs, working capital,
capital expenditures and other purposes during the bankruptcy
case."
For over a month, TPLP has been engaged in active discussions with
advisors to an ad hoc committee of holders of TPLP's 11-1/8%
Senior Subordinated Notes on restructuring alternatives and
believes that significant progress has been made on a general
framework for restructuring. TPLP will continue to work with all
parties toward a quick and consensual plan of reorganization.
TPLP is a Houston-based petrochemical company specializing in C4
hydrocarbons. TPLP products are widely used as chemical building
blocks for synthetic rubber, nylon carpets, adhesives, catalysts
and additives used in high-performance polymers. TPLP also
manufactures fuel products used in the formulation of cleaner
burning gasoline. The company has manufacturing facilities in the
industrial corridor adjacent to the Houston Ship Channel and
operates product terminals in Baytown, Texas and Lake Charles,
Louisiana. TPLP is a Responsible Care(R) company dedicated to
supporting the continuing effort to improve the industry's
responsible management of chemicals.
TEXAS PETROCHEMICALS LP: Case Summary & Largest Unsec. Creditors
----------------------------------------------------------------
Lead Debtor: Texas Petrochemicals LP
Three Riverway
Suite 1500
Houston, Texas 77056
Bankruptcy Case No.: 03-40258
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Texas Petrochemical Holdings, Inc. 03-40259
TPC Holding Corp. 03-40260
Petrochemical Partnership Holdings, Inc. 03-40261
Texas Butylene Chemical Corporation 03-40262
Type of Business: The Debtors are one of the largest producers of
butadiene, butene-1 and third largest producer
of methyl tertiary-butyl ether in North America.
Chapter 11 Petition Date: July 20, 2003
Court: Southern District of Texas (Houston)
Judge: Letitia Z. Clark
Debtors' Counsel: Mark W. Wege, Esq.
Bracewell & Patterson, LLP
711 Louisiana
Suite 2900
Houston, TX 77002
Tel: 713-223-2900
Fax: 713-437-5306
Total Assets: $512,417,000
Total Debts: $448,866,000
A. Texas Petrochemicals LP's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
US Bank Promissory Note $222,501,354
Attn: Michael Hopkins
225 Asylum Street, 23rd Fl
Hartford, CT 06103
Fax: 860-241-6897
(Indenture Trustee for
Sub. Notes)
Dow Chemical Co. Trade $9,869,408
Attn: Gary Ginaedinger
PO Box 6004
Midland, MI 48641-6004
Tel: 517-636-2282
Fax: 713-978-3680
Center Point Energy Gas Trade $7,935,259
Resources
Attn: Ben Reese
1111 Louisiana St.,
20th Floor
Houston, TX 77002-5231
Nova Chemicals Corp. Trade $3,637,146
Attn: Carl McArthur
PO Box 3070
Sarnia, Ontario,
Canada N7T8E3
Coral Energy Resources LP Trade $2,765,858
Attn: Donna Lively
909 Fannin, Suite 700
Houston, TX
Tel: 713-767-5400
Fax: 713-767-5644
Formosa Plastics Corp. Trade $2,142,456
Attn: Hungyi Lee
9 Peachtree Hill Road
Livingston, NJ 07039
Chevron-Phillips Chemicals Trade $1,866,991
Co. LP
Attn: Paul Farmer/
Martin Dale
10001 Six Pines Dr.
Livingston, NJ 07039
Tel: 713-289-4389
Fax: 832-813-4565
Polimeri Europa Americas, Trade $1,862,275
Inc.
Attn: Cosimo Carracciolo
2000 West Loop South,
Suite 2010
Houston, TX 77027
Tel: 713-940-0704
Fax: 713-940-0725
Conoco Phillips Co. Trade $1,807,963
Attn: Jeremiah Palmer
Desk 1290
12 PO Box
Bartlesville, OK 74006
Tel: 918-661-6051
Fax: 918-661-8528
Eastman Chemical Fin Corp Trade $1,659,801
Attn: Steve Dickerson
PO Box 7444
Longview, TX 75607-7444
Fax: 903-237-6343
BMC Holdings, Inc. Trade $1,615,127
Attn: Doug Stone
600 Fourth St.,
PO Box 6000
Sioux City, Iowa 51102-6000
Tel: 918-660-6268
Fax: 918-664-3617
E.I. Dupont Trade $1,470,774
Attn: Kevin Parkhurst
Barley Mill Plaza 13-2172
PO Box 80013
Wilmington, DE 19880-0013
Tel: 615-847-6920
Fax: 302-999-3822
PMI Trading Trade $1,139,334
Attn: Javier Garcia
Sara Costa
Marina Nacional 329, Torre
Ejecutiva Piso 20
Col. Huasteca, Mexico 11311
Tel: 713-567-0118
Fax: 713-567-0143
Shell Chemical LP Trade $915,081
Attn: Scott Woods
PO Box 4603
Houston, TX 77210-4603
Tel: 713-241-8744
Fax: 713-241-8765
Exxon/Mobil - Basic Trade $868,536
Chemicals Americas
Attn: Terry Sappenfield/
Ron Harper/ Jeff
Miller (Fuels)
13501 Katy Freeway
Houston, TX 77079-1398
Tel: 281-870-6788
Fax: 281-588-4687
Dynegy Trade $558,658
Attn: Hunter Battle
1000 Louisiana
Suite 5800
Houston, TX 77002
Tel: 713-767-6000
Fax: 713-507-6575
ACF Industries Trade $558,658
Attn: Kurt Meck
1610 Woodstead Ct.
Suite 230
The Woodlands, TX 77380
Tel: 281-364-0197
BP Amoco Trade $534,559
Attn: Mike Todd
Mail Code 3-OLE
150 West Warrenville Rd.
Naperville, IL 60563-8460
Fax: 630-961-7400
Austin Industrial Trade $515,427
Attn: Barry Babyak
8031 Airport Blvd.
Houston, TX 77287-7888
Tel: 713-869-2893
Fax: 713-641-2424
CASS Information Systems Trade $505,227
Attn: Mary Krebs
PO Box 67
St. Louis, MO 63078
Fax: 314-506-5929
B. Texas Petrochemical Holdings' 3 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
The Huff Alternative Promissory Notes $61,973,750
Income Fund, LP
67 Park Place
9th Floor
Morristown, NY 07960
Tel: 973-984-1233
Fax: 973-984-5818
US Bank
Attn: Michael Hopkins
225 Asylum Street,
23rd Floor
Hartford, CT 06103
(Indenture Trustee for
Discount Notes)
Tel: 860-241-6820
Fax: 860-241-6897
Bank of American, NA Loan Guarantor Unknown
Credit Suisse First Boston Loan Guarantor Unknown
C. TPC Holding Corp. and Petrochemical Partnership's 2 Largest
Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bank of American, NA Loan Guarantor Unknown
Credit Suisse First Boston Loan Guarantor Unknown
UNIFI INC: Inks LOI to Form JV Company with Kaiping Polyester
-------------------------------------------------------------
Unifi, Inc., (NYSE: UFI) has signed a non-binding letter of intent
to form a joint venture type company with Kaiping Polyester
Enterprises Group Co. in Kaiping, Guangdong, P.R. China to
manufacture and sell certain polyester and nylon products. It is
anticipated that Unifi will own seventy-five percent (75%) of the
joint venture company, which is estimated to have approximately
$300 million in annual sales.
Kaiping, a company owned and operated by the Kaiping City
Government, is one of the largest polyester textile filament
producers in China. Kaiping owns approximately 56% of Guangdong
Kaiping Chunhui Co., Ltd., a publicly traded company on the
Shenzhen Stock Exchange, which ownership interest is anticipated
to be part of the assets Kaiping contributes to the joint venture.
Closing the proposed transaction is contingent upon satisfactory
completion of the parties' due diligence procedures, negotiation
and agreement on definitive agreements (including certain key
financial terms), and receipt of certain governmental, third party
and corporate approvals. The letter of intent contemplates that
the proposed transaction will close by the end of calendar year
2003.
Unifi (S&P, BB Corporate Credit Rating, Stable) is one of the
largest producers and processors of textured yarns in the world.
Its primary business is the texturing, dyeing, twisting, covering,
and beaming of multi-filament polyester and nylon yarns. Unifi's
textured yarns are found in home furnishings, apparel and
industrial fabrics, automotive, upholstery, hosiery and sewing
thread.
UNITED AIRLINES: Wants to Pay Amendment Fees to DIP Lenders
-----------------------------------------------------------
United Airlines asks Judge Wedoff for permission to pay Amendment
Fees to its DIP Lenders and enter into Waivers and Amendments to
the Bank One DIP Facility.
United, Bank One and the Club DIP Lenders -- comprised of
JPMorgan Chase Bank, Citicorp USA, Bank One, The CIT
Group/Business Credit, and a syndicate of lenders party to the
Club DIP Facility -- have amended the DIP Credit Facilities to
modify provisions and to document waivers of alleged technical
defaults.
The Club DIP Waiver and Amendment and the Bank One Waiver and
Amendment provide for these waivers and modifications to the DIP
Credit Facilities:
a) waiver of defaults connected to United's actions with
Section 1110 assets, financing agreements and failure to
provide requisite notice of discontinuation, modification
and/or temporary suspension of service on certain routes;
b) waiver of defaults related to insurance premium financing
and fuel hedging arrangements;
c) consent to United's suspension of service along specified
routes and reduced utilization of slots;
d) authorize United to make principal and interest payments
to Section 1110 financiers;
e) authorize United to utilize its fuel inventory to secure
fuel hedges;
f) authorize United to incur liens on unearned premiums to
secure insurance premium financing indebtedness; and
g) authorize United to refinance Section 1110 assets to permit
additional Section 1110 indebtedness.
Additionally, United and its DIP Lenders amended the Slot, Gate
and Route Security Pledge Agreement to modify provisions and
document waivers of technical defaults. The waivers and
modifications are:
a) waiver of technical cross defaults resulting from defaults
under the DIP Credit Facilities; and
b) authorize United to provide 14 days prior written notice of
discontinuation or material modification of service on any
route or supporting facilities and suspension of service
over any primary route.
In exchange for the waivers and amendments, United will pay one-
tenth of 1% of each Club DIP Lender's total commitment, which
will not exceed $947,500. United will pay a $1,000,000
Arrangement Fee to JPMorgan Chase and a $300,000 Amendment Fee to
Bank One.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells Judge
Wedoff that the waivers and amendments provide United with
enhanced operational and financial flexibility. This will help
United in its efforts to decrease expenses and manage costs.
Also, payment of the fees allows United to conclude transactions
that cure alleged technical defaults. This will free United's
efforts to restructure, optimize their Section 1110 assets and
decrease overall financing costs. (United Airlines Bankruptcy
News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
US AIRWAYS: Pilots Lash at Lost Jobs Due to Punitive Measure
------------------------------------------------------------
Union leaders representing pilots at US Airways' wholly owned
subsidiaries Allegheny, Piedmont, and PSA Airlines met last week
to discuss possible actions seeking a reversal of the parent
airline's recent decision to outsource new small-jet operations to
Mesa Airlines.
"We believe that the US Airways management decision to divert
express- carrier small jet flying away from its subsidiaries
stemmed in part out of frustration related to the inability to
reach an agreement with its mainline pilots," said Capt. Duane
Woerth, president of the Air Line Pilots Association,
International.
The conflict between US Airways and its mainline pilots relates to
the specific type of airplane the carrier may acquire and deploy
for express operations in accordance with the mainline pilots'
contractual job protections. When the mainline pilots demanded
adherence to weight and size limitations restricting the use of a
specific type of express jet that US Airways sought to acquire,
the carrier's management converted its order for 25 of those jets
to take delivery of an equal number of slightly smaller airplanes
with specifications matching the labor-contract size requirements.
However, management switched the deployment of those aircraft away
from its subsidiaries to Mesa. The move would deprive pilots at
both the mainline and wholly owned subsidiary operations of jobs
within the US Airways system.
"Aside from its punitive effects on pilots, the decision makes no
sense in any other context," said Captain Olav Holm, chairman of
ALPA's unit representing pilots at US Airways subsidiary Piedmont
Airlines. "By opting to use Mesa, US Airways management is trying
to wedge a square peg into a round hole. There just isn't a good
fit," Holm said.
"Mainline management underestimates the operational and cost
efficiencies of using its integrated resources, including
employees intimately familiar with the US Airways operation
through years of exposure to it," Holm added. "We fail to see this
as a meaningful step toward successful economic recovery.
According to Mr. Bruce Ashby, president of US Airways Express
operations, Mesa airlines is already behind on current obligations
to US Airways, and recently also made additional commitments to
United Airlines. The result could be an inferior product for our
customers," he said.
According to Capt. Richard O'Leary, chairman of the Allegheny
pilot ALPA unit, in the context of US Airways' recent history,
management's action becomes doubly insulting to the subsidiary
employees. "US Airways' move betrays the spirit of cooperation and
partnership that the pilots thought they had forged with
management to get us through bankruptcy. Last year we made
sizeable sacrifices and committed to providing the kind of top-
shelf service that garnered the FAA's Diamond Certificate of
Excellence Award for 2002 and recent recognition that Allegheny is
the top performer of all the affiliates and wholly-owned carriers
flying under the US Airways code. In return, we were told the
subsidiary carriers would participate in the new small-jet
deployments. Management clearly isn't keeping its end of the
bargain," O'Leary said.
In their meeting at union headquarters, the pilot leaders
discussed possible recourses. "We're looking at our options via
the grievance provisions of the Railway Labor Act and through
other legal avenues available under the pilot contracts," Woerth
said. "Specifically we are examining the financing arrangement
related to the recent announcement that US Airways will take
delivery of seventy-seat jets and lease them to Mesa Airlines."
The contracts at Allegheny and Piedmont Airlines provide that
these aircraft financed by US Airways must be flown by the wholly-
owned airlines.
Representing 66,000 pilots at 42 airlines in the U.S. and Canada,
ALPA is the world's oldest and largest union of airline cockpit
crews.
US DATAWORKS: Fiscal Year 2003 Results Show Marked Improvement
--------------------------------------------------------------
US Dataworks (Amex: UDW), a leading software provider of payment
processing solutions, announced significant improvements in its
operating results reported for the year ended March 31, 2003.
Revenue for fiscal 2003 more than doubled to $2,168,125, up 107%,
while operating expenses were trimmed by 38% from the previous
year. In 2003, the Company also restructured its balance sheet and
restated the previous two year's financial results to account for
the acquisition of US Dataworks, Inc., using the purchase
accounting method. Full text of the company's financial results
and management summary can be viewed in its SEC Form 10KSB, for
fiscal year ended March 31, 2003.
Key to its revenue growth in fiscal 2003, US Dataworks aligned
itself with eight strategic partners as a key component of its
distribution strategy. Each of these partners has a distinctive
market space that provides UDW with coverage across the breadth of
the financial services market. Strategic distribution partnerships
formed in 2003 include agreements with: BancTec, Cash Management
Systems, Computer Sciences Corporation, IBML, ISD, Net Deposit,
OPEX Corporation, and Thompson Financial Publishing. US Dataworks'
management believes that, in addition to the growth from organic
sales, aggressive partnering with industry leaders will continue
to result in rapid capture of market share.
To fuel its projected growth, the Company has secured a $4,000,000
financing commitment that will be used for working capital.
US Dataworks Chairman and CEO Chuck Ramey said, "We are pleased to
report that our distribution partnerships are strengthening
revenue growth as a expected. As we emerge from our developmental
phase, management has remained focused on profitability and
believe that the progress we have made over the past year toward
restructuring our balance sheet, combined with the financing
recently closed, will afford us continued growth toward that
goal."
The Company's software solutions have been designed to comply with
the new standards being defined in the Check Truncation Act (Check
21) that is now being considered by Congress. Terry Stepanik,
President and COO stated, "We're working with our existing
customers and with several new partners to bring a fully
functioning Check 21 system to market prior to the legislative
effective date. The timing is critical since the banking industry
will need system availability to take full advantage of the cost
savings generally associated with Check 21." Industry experts are
confident that this legislation will be signed by the President
sometime in the second half of 2003.
The Federal Reserve Board has developed a draft Federal law, the
proposed Check Truncation Act (Check 21) that would remove certain
legal impediments to check truncation (i.e., electronic
information about the truncated checks is presented to paying
banks instead of the original paper checks themselves). Check 21
is designed to facilitate check truncation, to foster innovation
in the check collection system without mandating the receipt of
checks in electronic form, and to improve the overall efficiency
of the nation's payments system.
The proposed Check Truncation Act may result in substantial
payments system benefits, depending on the extent to which banks
take advantage of provisions of the proposed Act to expand the use
of electronics in the collection and return of checks. The
proposed Act should result in faster collection and return of
checks and lower costs in the long run; in addition, the proposed
Act would reduce banks' reliance on air and ground transportation
for collection and return of checks. The more rapid check
collection and return process could be accomplished in many ways,
with benefits likely accruing to both banks and their customers.
For additional information, go to the Federal Reserve Bank Web
site at:
http://www.federalreserve.gov/paymentsystems/truncation/proposed.htm
Established in 1997, US Dataworks develops markets and supports
payment processing software and services for the financial
services industry. Its customer base includes many of the largest
financial institutions as well as credit card companies and
government institutions within the United States.
As reported in Troubled Company Reporter's June 25, 2003 edition,
the Audit Committee and the Board of Directors of US Dataworks
Inc. approved a change in the Company's independent accountants
for the fiscal year ending March 31, 2003 from Singer Lewak
Greenbaum & Goldstein LLP to Ham, Langston & Brezina, LLP.
As a result, US Dataworks informed Singer Lewak that, effective
June 11, 2003, they had been dismissed as its independent
accountants. The report of Singer Lewak for the fiscal years ended
March 31, 2002 and March 31, 2001, contained an explanatory
paragraph concerning US Dataworks' ability to continue as a going
concern.
WEIRTON STEEL: Second Quarter 2003 Net Loss Stands at $44 Mill.
---------------------------------------------------------------
Weirton Steel Corporation (OTC Bulletin Board: WRTL) reported a
net loss of $44.2 million for the second quarter of 2003, or $1.05
per diluted share, which included an extraordinary gain related to
the early extinguishment of debt of $6.8 million, or $0.16 per
diluted share.
During the second quarter 2003 Weirton recognized the following: a
$2.1 million charge related to the write-off of deferred financing
fees as the result of the pay-off of the Senior Credit Facility, a
$4.1 million charge due to the write-down of certain fixed assets
and $2.6 million of reorganization expenses related to the
Company's on-going chapter 11 reorganization. The charges in the
second quarter of 2003 were partially offset by a reduction in
interest expense of $4.4 million resulting from the exchange offer
completed during the second quarter of 2002. In addition, after
filing for chapter 11 protection, the Company no longer accrues
for interest expense on unsecured and undersecured debt.
This compares with a net loss of $35.8 million, or $0.85 per
diluted share for the second quarter of 2002, which included an
extraordinary gain on the early extinguishment of debt of $0.2
million, the sale of the Company's excess nitrogen oxide (NOX)
allowances for $4.4 million and a tax refund of $3.5 million. Net
sales in the second quarter of 2003 were $243.1 million on
shipments of 523,100 tons, compared to $251.0 million on 579,300
tons of shipments for the same period in 2002.
The Company recorded a net loss of $119.0 million for the first
half of 2003, or $2.83 per diluted share, which included an
extraordinary gain related to the early extinguishment of debt of
$6.8 million, or $0.16 per diluted share. Additionally, the first
half results included the 2003 second quarter items mentioned
above and a pension curtailment charge of $38.8 million related to
a freeze of further benefit accruals under the Company's defined
benefit pension plan. The 2003 first half charges were partially
offset by the sale of the Company's excess nitrogen oxide (NOX)
allowances for $1.3 million and the reduction in interest expense
of $10.7 million resulting from the exchange offer completed
during the second quarter of 2002. In addition, after filing for
chapter 11 protection, the Company no longer accrues for interest
expense on unsecured and undersecured debt. The Company also
recorded an other comprehensive loss of $15.3 million in the first
half of 2003 as a result of the pension plan's accumulated benefit
obligation exceeding plan assets.
This compares with a net loss of $80.4 million for the first half
of 2002, or $1.92 per diluted share. Last year's first half
results included the sale of Prudential common stock for $3.2
million as a result of Prudential's demutualization in addition to
the non recurring items mentioned above. Net sales for the first
half of 2003 were $503.0 million on shipments of 1,076,300 tons
compared to $487.0 million on shipments of 1,145,000 tons for the
same period last year.
As previously reported, the Company filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code on May 19,
2003. Continued weak demand and falling selling prices for sheet
products combined with increased raw material and overwhelming
post-retirement obligations, which include pension funding,
retiree healthcare benefits and life insurance, known as legacy
costs were the prevailing circumstances leading to the Bankruptcy
filing.
The Company obtained a $225.0 million debtor-in-possession
financing facility, on May 19, 2003 which was subsequently
approved by the bankruptcy court. Total liquidity (amount
available under the DIP Facility plus unrestricted cash) at
June 30, 2003 was $50.4 million.
Weirton Steel is a major integrated producer of flat rolled carbon
steel with principal product lines consisting of tin mill products
and sheet products. The Company is the second largest domestic
producer of tin mill products with approximately 25% of the
domestic market share.
WEIRTON STEEL: Court Approves Stipulation with Alliance Energy
--------------------------------------------------------------
To settle Alliance Energy Services Inc.'s request for relief from
Court injunction against Utility Companies, Weirton Steel and
Alliance entered into a Court-approved Stipulation containing
these terms:
(a) Alliance is not a Utility as that term is defined in the
Utility Order and is therefore not subject to the Utility
Order;
(b) Pursuant to Section 556 of the Bankruptcy Code, Alliance
is permitted to liquidate its forward NYMEX positions to
generate gross proceeds of $1,675,750 in full satisfaction
of the Prepetition Claim in accordance with the Agreement;
(c) Weirton's obligations under the Agreement will be
postpetition obligations;
(d) Weirton has entered into the Agreement postpetition in the
ordinary course of business and the Agreement is a sound
exercise of Weirton's reasonable business judgment;
(e) Neither the Agreement nor this Stipulation constitutes an
assumption or rejection of the Supply Agreement. In the
event that Weirton assumes or rejects the Supply
Agreement, the Agreement provides that Alliance has waived
any right to assert a cure claim or a claim for rejection
damages;
(f) Weirton will be entitled to purchase new forward NYMEX
positions through Alliance in accordance with the
Agreement; and
(g) Upon the occurrence of any Event of Default under the
Agreement, the automatic stay of Section 362 of the
Bankruptcy Code will be automatically lifted to permit
Alliance to exercise its remedies, subject to:
-- Weirton's right to cure any event of Default in
accordance with the Agreement, and
-- Weirton's right to challenge in a court of competent
jurisdiction Alliance's declaration of an Event of
Default and exercise of its remedies. (Weirton
Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WHEELING-PITTSBURGH: Court Approves Settlement with Noranda Inc.
----------------------------------------------------------------
Karen A. Visocan, Esq., at Calfee Halter & Griswold LLP in
Cleveland, tells Judge Bodoh that, in the fall of 2002, Wheeling-
Pittsburgh Steel Corp., with the assistance of its counsel,
performed an extensive analysis of payments made by WPSC within 90
days of the Petition Date and potential claims to avoid and
recover certain allegedly preferential or fraudulent transfers
received by various entities and individuals from WPSC. As a
result of that analysis, including potential defenses, WPSC
designated approximately 360 entities or individuals against which
avoidance actions should be brought.
Ms. Visocan reminds Judge Bodoh that he approved procedures
whereby the Debtors could file complaints, but delay serving
process, while settlements were explored. None of the 360
preference actions filed have actually been served.
In the Noranda avoidance action, WPSC seeks to avoid and recover a
wire transfer in the amount of $1,388,101.48 that was made to
Noranda on October 5, 2000, as a preference. Noranda disputes
that this transfer is avoidable and has indicated that it intends
to defend the avoidance action vigorously. Noranda has raised
certain defenses to the claims of WPSC, including an "ordinary
course of business" defense and other alleged defenses.
WPSC has reviewed the defenses asserted by Noranda. The time
period it took WPSC to pay the challenged transfer was not much
beyond the stated terms. However, a review of pertinent case law
indicates that there is a split in case law as to whether wire
transfers in and of themselves are outside of the ordinary course
of business. Thus, if WPSC were to litigate the Noranda avoidance
action, the outcome would be uncertain.
In addition to the Noranda avoidance action, the parties are also
involved in litigation involving a reclamation claim asserted by
Noranda on October 3, 2000. The original reclamation demand was
in the amount of $569,013.01 and was asserted as secured.
However, WPSC valued the reclamation claim at $342,037. On
January 7, 2003, WPSC filed its Motion for entry of an Order
confirming the non-priority status of the Noranda reclamation
claim and deeming it to be general, unsecured claim against WPSC.
Noranda filed an Objection to Debtors' Motion, which was
overruled, and Noranda appealed.
The parties have engaged in settlement discussions and have
resolved each of these disputes. The resolution that the parties
have reached, subject to this Court's approval, is summarized as:
(A) In full and complete satisfaction of all of WPSC's
claims against Noranda arising from or in relation to
the challenged transfers, Noranda will pay to WPSC
$500,000 by check or wire transfer upon approval of
this settlement;
(B) In return for the payment of $500,000, Noranda will
be allowed a general, unsecured claim against WPSC in
the amount of $500,000;
(C) Noranda will waive and release its reclamation claim
and dismiss its appeal;
(D) Noranda will be allowed a general, unsecured claim
against WPSC in the aggregate amount of
$2,572,769.72;
(E) In the event that the Settlement Agreement is not
approved by the Bankruptcy Court, WPSC will
immediately return the $500,000 payment to Noranda;
and
(F) The parties exchange general releases, including
releases of all claims arising from or in relation
to the challenged transfers, all preference
and other avoidance claims, and all other claims that
Noranda has or may have against WPSC or its estate,
arising from or in relation to the challenged
transfers, the reclamation claim and the appeal.
WPSC's Justifications For Settlement
WPSC has determined, using its best business judgment, that the
Settlement Agreement is in the best interests of WPSC's estate.
In making this determination, WPSC examined the criteria set forth
by the United States Supreme Court:
1. The probability of success in the litigation. The
challenged transfers were not extraordinarily far
outside of the parties' ordinary course of dealings,
and case law is split as to whether a wire transfer,
such as the one made by WPSC to Noranda, is outside
of the ordinary course of business, Thus, if WPSC were
to pursue the avoidance action, a successful outcome
would not be certain.
2. The difficulties, if any, to be encountered in the
matter of collection. There would be a substantial
delay in WPSC's receipt of any funds if the avoidance
action is litigated and WPSC is successful due to the
time the matter will be in litigation and then the
necessity of having to enforce any judgment awarded.
Furthermore, the costs of litigating and collecting
any judgment awarded would reduce the total net
recovery of WPSC's estate. On the other hand, the
Settlement Agreement allows WPSC to immediately
collect $500,000 and avoid the expense of litigation.
3. The complexity of the litigation involved, and the
expense, inconvenience and delay necessarily attending
it. Another justification for the settlement with
Noranda is to avoid the substantial costs and expenses
which will be incurred by WPSC's estate if both the
avoidance action and the appeal are litigated. Even if
WPSC succeeds in litigation, the net recovery to
WPSC's estate will almost certainly be substantially
less than the total of the challenged transfers
received by Noranda. Due to the complexity of the
legal issues in these disputes, the possibility exists
that WPSC might not succeed in whole or even in part
if these disputes are litigated.
4. The paramount interests of WPSC's creditors and a
proper deference to their reasonable views. WPSC is
first and foremost striving to maximize the net assets
of its estate so as to obtain the greatest possible
distribution to its creditors. Based on this
factor, and using its best business judgment, WPSC
believes that the proposed settlement with Noranda
meets this objective and is in the best interests of
WPSC, its estate and its creditors.
When the costs and complexities of the avoidance action and the
appeal, the costs of enforcing any judgment, the delay in
collecting any judgment, and the risks of litigation are
considered, Ms. Visocan thinks Judge Bodoh will agree that the
proposed Settlement Agreement is in the best interest of and of
the greatest net benefit to WPSC estate.
Judge Bodoh takes another matter off the docket by approving this
settlement. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 43;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
WINN-DIXIE: Names Philip Payment VP, Central Procurement Support
----------------------------------------------------------------
Winn-Dixie Stores, Inc. (NYSE: WIN) announced the appointment of
Philip Payment as Vice President of Central Procurement Support.
Senior Vice President of Supply Chain and Merchandising Dick Judd
made the announcement. Payment will report directly to Judd. In
his new role, Payment will oversee internal procurement systems
and related supplier and supply chain initiatives.
Payment has 30 years of experience with Winn-Dixie in several
areas of retail and corporate operations. His retail experience
includes store and district management, store set supervision and
general merchandise and grocery merchandising in multiple
divisions. Payment was instrumental in the centralization of
procurement and most recently served as Vice President of Grocery
Merchandising.
"Philip brings a wealth of experience to this new position in
Central Procurement," said Judd. "Having well-managed systems for
internal procurement and information flow is critical to Winn-
Dixie's profitability and increasing our shareholder value."
Winn-Dixie Stores, Inc. (NYSE: WIN) is one of the largest food
retailers in the nation and ranks 149 on the FORTUNE 500 (R) list.
Founded in 1925, the company is headquartered in Jacksonville, FL
and operates 1,075 stores in 12 states and the Bahamas. Frank
Lazaran is President and Chief Executive Officer. For more
information, visit http://www.winn-dixie.com
As reported in Troubled Company Reporter's June 18, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Winn-Dixie Stores Inc. to 'BB+' from 'BBB-' and its bank
loan rating for the company to 'BBB-' from 'BBB'. The downgrade
was based on disappointing sales and cash flow, which is hindering
expected improvement in operating and credit measures. The 'BB+'
senior unsecured rating is affirmed. The outlook is negative.
The senior unsecured rating, now rated the same as the corporate
credit rating, was rated one notch below it to reflect a
substantial amount of secured bank borrowings. Since the bank term
loan is paid off and revolving credit borrowings are expected to
be minimal, Standard & Poor's no longer believes senior unsecured
debt is disadvantaged in the capital structure. The Jacksonville,
Florida-based company had $337 million in funded debt as of
April 2, 2003.
WINN-DIXIE: Appoints Stan Timbrook VP of Grocery Merchandising
--------------------------------------------------------------
Winn-Dixie Stores, Inc. (NYSE: WIN) announced Stan Timbrook as
Vice President of Grocery, Dairy and Frozen Foods Merchandising.
Senior Vice President of Supply Chain and Merchandising Dick Judd
made the announcement. Timbrook will report directly to Judd and
replaces Philip Payment, who will now serve as Vice President of
Central Procurement Support, overseeing internal procurement
systems and related supplier and supply chain initiatives.
Timbrook has over 25 years of experience with Winn-Dixie in retail
operations, procurement, category management and merchandising.
He has a broad background of management positions, including Store
Manager, District Manager, Grocery, Dairy and Frozen Foods
Merchandiser, Retail Operations Superintendent, and Corporate
Director of Procurement for Grocery, Dairy and Frozen Foods.
"Stan has built a career at Winn-Dixie," said Judd. "His in-depth
knowledge of grocery merchandising and strong background in retail
management are critical to our plans for continued growth,
increased sales and customer satisfaction. We're excited about
the direction in which Stan's leadership will take us."
Winn-Dixie Stores, Inc. (NYSE: WIN) is one of the largest food
retailers in the nation and ranks 149 on the FORTUNE 500 (R) list.
Founded in 1925, the company is headquartered in Jacksonville, FL
and operates 1,073 stores in 12 states and the Bahamas. Frank
Lazaran is President and Chief Executive Officer. For more
information, visit http://www.winn-dixie.com
WINSTAR COMMS: Trustee Seeks Clearance for Hartford Settlement
--------------------------------------------------------------
Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP,
in Wilmington, Delaware, informs the Court that Winstar
Communications Debtors and Hartford Fire Insurance Company entered
into certain insurance contracts with respect to workers'
compensation, auto liability and general liability policies.
These Policies contained retrospective rating and deductible
provisions, which required the Debtors to reimburse Hartford for
certain amounts paid under the Policies.
The Debtors issued a letter of credit to secure its obligations
under the Policies. Hartford is holding proceeds from the Letter
of Credit totaling $2,027,907.02.
The Trustee and Hartford explored and took contrary positions
with respect to the amounts due under the retrospective rating
provisions of the Policies. However, after engaging in extensive
good faith settlement negotiations, the Trustee and Hartford have
agreed to resolve all claims that the Trustee and Hartford may
have against each other in connection with the Policies and any
and all other matters, known or unknown, through entering into a
proposed settlement agreement.
The salient terms of the Settlement Agreement are:
1. In full satisfaction of any obligations that may be due
under the retrospective rating and deductible provisions of
the Policies, the Trustee will pay to Hartford $520,000 out
of the Letter of Credit Proceeds;
2. The remainder of the Letter of Credit Proceeds amounting to
$1,507,907.02 will be sent to the Trustee by wire transfer
without further delay; and
3. Upon Court approval of the Settlement Agreement, the
parties agree to mutually release each other from any and
all claims, except for the obligations detailed in the
Settlement Agreement.
By this motion, the Trustee asks the Court to approve the
Settlement Agreement pursuant to Rule 9019 of the Federal Rules
of Bankruptcy Procedures.
Mr. Rennie asserts that with the Settlement Agreement, the
Trustee avoids the need for costly litigation and believes this
is a fair and reasonable resolution of the claims under the
Policies and to the Letter of Credit Proceeds. (Winstar Bankruptcy
News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
WORLDCOM INC: Asks Court to Approve Broadwing Settlement Pact
-------------------------------------------------------------
Worldcom Inc., and its debtor-affiliates ask the Court to approve
their settlement agreement and compromise of certain matters with
Broadwing Communications Inc. and Cincinnati Bell Telephone
Company.
Alfredo R. Perez, Esq., at Weil Gotshal & Manges LLP, in New
York, recounts that on March 25, 1999, MCI Telecommunications
Corporation and WorldCom Network Services, Inc. entered into a
master service agreement with IXC Communications Services, Inc.
Pursuant to the MSA, the Debtors lease DS-1, DS-3 and OC-x
capacity on a fiber optic and digital microwave
telecommunications system owned by Broadwing. The MSA has a
five-year term commencing on February 1, 1999. Thereafter, the
term of the MSA will automatically renew on a month-to-month
basis unless terminated by either party after 30 days' prior
written notice.
Under the original terms of the MSA, the Debtors are required to
pay at least $230,000,000 for the Capacity through the
termination of the MSA. The MSA further provides that the
Debtors will pay Broadwing $4,200,000 a month for use of the
Capacity until the Total Revenue Commitment is paid in full; the
monthly minimum is subject to certain credits for, inter alia,
late delivery and interruption.
On September 24, 2002, the Debtors sought to reject a Master
Service Agreement with Broadwing Communications Services. On
December 10, 2002, through a stipulated order, the Debtors and
Broadwing agreed that after December 31, 2002, the Debtors would
only be liable under the MSA for their actual use of Capacity,
and have no minimum monthly purchase requirement. In addition,
the Stipulation provides that if the Debtors ultimately reject
the MSA, the Parties will deem the rejection effective as of
December 31, 2002. On March 19, 2003, the Court granted the
Debtors' Rejection Motion.
Additionally, pursuant to the Digital Services Agreements,
Telecommunications Service Agreement, and Virtual Internet
Provider Agreement and various Indefeasible Right of Use
Agreements between the Parties, Broadwing purchases voice
services, including international toll free, carrier origination
and termination and data services from the Debtors.
Broadwing asserts that the Debtors refused to honor their
obligations under the MSA by failing to pay the minimum monthly
lease charges and any allegedly disputed charges for the months
of September, October, November and December 2002. As a result,
Broadwing claims that the Debtors owe them $12,000,000 in unpaid
rentals through December 2002. Moreover, Broadwing contends that
these amounts constitute a junior superpriority administrative
expense claim.
But the Debtors insist that during this time, they used only a
portion of the Capacity and are only obligated to pay for their
actual usage of the Capacity. Additionally, the Debtors claim
that as of December 31, 2002, they ceased using any Capacity and
therefore were improperly charged $2,000,000 for January 2003
after the Parties agreed that the minimum usage requirement would
be eliminated as of December 31, 2002. Broadwing contends,
however, that this additional amount represents postpetition
disputed amounts, which are unrelated to the minimum monthly
lease charge.
The Debtors maintain that any unpaid postpetition debt under the
MSA constitutes rejection damages and cannot be afforded
administrative expense priority because these amounts relate to
Capacity, which the Debtors neither used nor received an actual
benefit from. Additionally, the Debtors claim that Broadwing
owes $17,000,000 in postpetition debt related to the various
agreements between the Parties. Broadwing asserts that it ceased
making payments to the Debtors as a means of protecting its
alleged right to offset its outstanding postpetition debt against
the Debtors' outstanding postpetition debt.
Conversely, the Debtors assert that Broadwing is not entitled to
offset its debt against the Debtors' debt because the unpaid
minimum monthly lease charges represent a prepetition debt, which
stems from the rejection of the MSA, rather than a postpetition
debt. As a result, the Debtors claim that Broadwing does not
have a right to offset postpetition amounts owing to the Debtors
against the prepetition amounts that the Debtors owe.
Mr. Perez relates that Broadwing filed prepetition proofs of
claim totaling $18,672,749.69, which the Debtors dispute in part.
Broadwing also asserts a $41,166,037.20 claim for damages
resulting from the rejection of the MSA. However, the Debtors
dispute the amount of this claim. On May 19, 2003, the Debtors
and Broadwing entered into a letter agreement, and on June 13,
2003, the Parties entered into an amendment to the letter
agreement to resolve the disputes.
In summary, the Settlement Agreement provides:
A. Broadwing will pay the Debtors, by wire transfer,
$13,700,000 on the third business day after a Court order
approving the Settlement Agreement becomes final and
non-appealable.
B. The Parties will waive and release all claims, of whatever
kind or nature, and other amounts owed or allegedly owed by
the other party, which arose on or before March 31, 2003,
provided, however, the waiver and releases will not apply
to amounts owed for services which may become due after
March 31, 2003, in the ordinary course under normal billing
cycles, regardless of whether the underlying service was
provided before or after March 31, 2003.
C. Broadwing will be entitled to offset its accounts
receivable against the Debtors' accounts receivable.
D. Broadwing will be deemed to have a $14,500,000 allowed
general unsecured prepetition claim against the Debtors,
which will satisfy its Rejection Claim.
E. The Debtors will amend some of and assume all of the 11
IRUs. These amendments will include a reduction in:
(i) IRU fee from $89,569 per month to $45,000 per month
for each of the five and a half years remaining under
the Construction and Use Agreement dated May 20,
1993;
(ii) Maintenance from $1,879,650 per annum to $1,100,000
per annum for each of the 16 years remaining under
the Fiber Optic Construction and Use Agreement dated
May 7, 1997; and
(iii) Maintenance from $166,720 per annum to $107,800 per
annum for each of the 18 years remaining under the
IRU and Maintenance Agreement dated August 1, 1996.
F. The Parties will enter into a new contract which
incorporates the Buy-Side Agreements and the Amended
Buy-Side Agreements. Additionally, the contracts referred
to as the Amended Buy-Side Agreements will be amended to:
(i) provide for an aggregate "take or pay" minimum
monthly usage for the Amended Buy-Side Agreements
amounting to $2,000,000 in capacity and services for
24 months commencing on January 1, 2003, and
(ii) re-rate the services provided under the Amended Buy-
Side Agreements to achieve an aggregate reduction of
at least $350,000 per month.
This re-rating will be completed before September 30, 2003.
G. All cure costs otherwise payable pursuant to Section 365 of
the Bankruptcy Code will be waived after the Order becoming
final and non-appealable.
H. Broadwing will award the outstanding RFP for 700 IXC
circuits to the Debtors.
I. The Debtors will consent to the assignment by Broadwing of
certain agreements to C III Communications Operations, LLC
or Broadwing Communications Real Estate Services, LLC,
which is itself to be assigned to C III Communications LLC
as part of the proposed sale of substantially all of the
assets of Broadwing's broadband business.
Absent authorization to enter into and implement the Settlement
Agreement, Mr. Perez fears that the Parties might require
extensive judicial intervention to resolve their many disputes
and it is uncertain which of the Parties would emerge with a
favorable and successful resolution of their claims. This
litigation would be costly, time-consuming, and distracting to
management and employees alike. Furthermore, approval of the
Settlement Agreement and authorization of the Parties to enter
into and implement this agreement would eliminate the attendant
risk of litigation.
Mr. Perez asserts that the Settlement Agreement is the product of
extensive, arm's-length, good faith negotiations between the
Parties. Moreover, the Settlement Agreement falls well within
the range of reasonableness, and represents a benefit to the
Debtors' creditors and all parties-in-interest. Further and
perhaps most importantly, the Settlement Agreement resolves
certain issues between the Parties and provides for a significant
reduction in the Rejection Claim asserted by Broadwing.
Additionally, the Settlement Agreement represents substantial
cost recovery to the Debtors and their estates without the need
for protracted litigation. (Worldcom Bankruptcy News, Issue No.
32; Bankruptcy Creditors' Service, Inc., 609/392-0900)
W.R. GRACE: Wants Court to Raise Allotted "Science Trial" Budget
----------------------------------------------------------------
The W.R. Grace Debtors and the ZAI Claimants join in asking Judge
Fitzgerald to increase the allotted "science trial" budget to
allow for additional work to completion preparation for the trial
in September.
During the July 2002 Omnibus Hearing on this matter, some 11
months ago, the Court set an initial litigation budget of $1.5
million for attorney's fees, and $500,000 of expense (including
expert witness costs) per side.
To date, the parties and their counsel have undertaken
substantial amounts of work and have successfully met the Court's
deadlines for completion of fact discovery, completion and
submission of all expert reports, and completion of the
depositions of fact witnesses, expert witnesses, and the ZAI
Claimants. The parties' mutual effort to get the facts
efficiently on both sides without protracted motion practice has
both kept trial preparation on schedule and reduced the cost in
time and delay that numerous motions to compel would have
required.
The parties contemplate completion of the ZAI science trial in
accordance with the Court's Order setting discovery and
submission deadlines in this matter. Despite counsel's efforts
to keep costs down by continually negotiating limitations on
requests for materials, information and depositions, and, where
possible, scheduling multiple depositions for one location, the
amount of work necessary to timely complete fact discovery and
the extensive work with expert witnesses has exceeded
expectations.
Through May 2003, the Debtors have incurred attorney's fees of
approximately $1.5 million, and expenses of approximately
$261,000 in the ZAI science trial, not including substantial
expert witness fees incurred, but not paid, in May. Through
March 2003, ZAI Claimants have incurred attorney's fees of
approximately $1.49 million and expenses of approximately
$400,000. Significant bills for the recently completed expert
depositions are not included in these figures.
The parties have prepared their evidence to support their motions
for summary judgment and other relief, and for opposition and
replies due soon, followed by witness preparation and exhibit
organization for the science trial scheduled for mid-September
2003.
In order to timely complete the ZAI science trial in a manner
that properly presents the relevant facts, witnesses, evidence
and advocacy, the Debtors and ZAI Claimants anticipate that each
will need an additional $950,000 for attorney's fees and
expenses. The parties therefore ask that the budget for each
side increased by that amount. (W.R. Grace Bankruptcy News, Issue
No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900)
* Fasken Martineau Brings Three New Partners into IP Group
----------------------------------------------------------
Louis Bernier, Managing Partner of the Canadian national law firm
Fasken Martineau, announced that Marek Nitoslawski as well as
Jean-Philippe Mikus and Christian Leblanc, have joined the firm as
Partners in the Technology & Intellectual Property Group in its
Montreal office.
"Fasken Martineau is aware of the importance of providing a
complete and extensive array of expertise allowing its clients to
optimize their intellectual property assets and related
information technologies. We evolve in a knowledge-based high tech
economy where client requirements are continuously increasing. The
arrival of our three new partners shows our continuous commitment
to provide our clients access to outstanding quality services and
expertise," said Louis Bernier.
Marek Nitoslawski is recognized by his peers as a prominent
practitioner in the fields of Intellectual Property, Technology
Law, and Media and Defamation.
His specialty is in Intellectual Property, Internet, Media and
Communications Law, acting for broadcasters, electronic commerce
providers and many leading edge businesses seeking to protect
their intellectual property assets. His practice includes advising
the press and the electronic media on issues relating to free
speech and defamation. Mr. Nitoslawski regularly appears before
the Quebec courts and the Federal Court of Canada, both at the
trial and appellate levels, as well as before various
administrative tribunals, including the CRTC and the Copyright
Board.
Called to the Quebec Bar in 1984, Marek Nitoslawski has co-
authored Internet en milieu de travail, a training manual on the
legal consequences of Internet use in the workplace.
Jean-Philippe Mikus was called to the Quebec Bar in 1995. He
practices mainly in Intellectual Property Law, Technology Law,
Commercial Law and Entertainment Law. He is a member of the board
of directors of ALAI Canada and he is a member of the Alliance
Numericq. He is the author of the book Droit de l'edition et du
commerce du livre published in 1996 by Editions Themis in
Montreal, for which he received a "Best New Author" award from the
Quebec Bar Foundation in 1998. He was a contributor to the book
Business and Internet Law published by Editions Best-Of and
McGraw-Hill in 1996, as well as to Internet in the Workplace, a
manual on the legal aspects of the use of Internet in the
workplace.
Christian Leblanc received his degree in law from University of
Montreal and has been a member of the Quebec Bar since 1992. He is
also a member of Ad Idem (Advocates in Defence of Expression in
the Media), a national association of media defence lawyers. His
principal areas of practice are Media and Communications Law,
Computer and High-Technology, Employment Law and Commercial
litigation. He is recognized by his peers as a prominent
practitioner in the field of Media and Defamation Law.
Fasken Martineau is a leading Canadian business law and litigation
firm that is recognized for its strength and expertise in
financial services, corporate finance, securities, mergers and
acquisitions, mining, environmental, aboriginal, tax, wealth
management, insolvency and restructuring, litigation and
arbitration, labour and employment, intellectual property and
information technology. With nearly 540 lawyers, the firm provides
expertise in both of Canada's legal systems, common and civil law,
and in both official languages. Along with its broad national
presence in Vancouver, Calgary, Yellowknife, Toronto, Montreal and
Qu,bec City, Fasken Martineau also practices Canadian law from
offices in New York and London, England. Fasken Martineau DuMoulin
LLP is a limited liability partnership under the laws of Ontario.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Alliance Imaging AIQ (39) 683 43
Akamai Technologies AKAM (168) 230 60
Alaris Medical AMI (32) 586 173
Amazon.com AMZN (1,353) 1,990 550
Aphton Corp APHT (11) 16 (5)
Arbitron Inc. ARB (100) 156 (2)
Alliance Resource ARLP (46) 288 (16)
Atari Inc. ATAR (97) 232 (92)
Actuant Corp ATU (44) 295 18
Avon Products AVP (91) 3,327 73
Saul Centers Inc. BFS (13) 389 N.A.
Blount International BLT (370) 428 91
Caraco Pharm Lab CARA (20) 20 (2)
Cincinnati Bell CBB (2,104) 1,467 (327)
Cubist Pharmaceuticals CBST (7) 221 131
Choice Hotels CHH (114) 314 (37)
Columbia Laboratories COB (8) 13 5
Campbell Soup Co. CPB (114) 5,721 (1,479)
Centennial Comm CYCL (470) 1,607 (95)
Echostar Comm DISH (1,206) 6,260 1,674
D&B Corp DNB (19) 1,528 (104)
W.R. Grace & Co. GRA (222) 2,688 587
Graftech International GTI (351) 859 108
Hollywood Casino HWD (92) 553 89
Hexcel Corp HXL (127) 708 (531)
Imax Corporation IMAX (104) 243 31
Imclone Systems IMCL (186) 484 139
Gartner Inc. IT (29) 827 1
Jostens JOSEA (512) 327 (71)
Journal Register JRC (4) 702 (20)
KCS Energy KCS (30) 268 (16)
Kos Pharmaceuticals KOSP (75) 69 (55)
Lodgenet Entertainment LNET (101) 298 (5)
Level 3 Comm Inc. LVLT (240) 8,963 581
Memberworks Inc. MBRS (21) 281 (100)
Moody's Corp. MCO (327) 631 (190)
McDermott International MDR (417) 1,278 154
McMoRan Exploration MMR (31) 72 5
Maguire Properti MPG (159) 622 N.A.
MicroStrategy MSTR (34) 80 7
Northwest Airlines NWAC (1,483) 13,289 (762)
ON Semiconductor ONNN (548) 1,203 195
Petco Animal PETC (11) 555 113
Primedia Inc. PRM (559) 1,835 (248)
Primus Telecomm PRTL (168) 724 65
Per-Se Tech Inc. PSTI (39) 209 32
Qwest Communications Q (1,094) 31,228 (1,167)
Rite Aid Corp RAD (93) 6,133 1,676
RCN Corporation RCNC (39) 1,990 85
Revlon Inc REV (1,640) 939 (44)
Ribapharm Inc RNA (363) 199 92
Sepracor Inc SEPR (392) 727 413
St. John Knits Int'l SJKI (76) 236 86
I-Stat Corporation STAT 0 64 33
Town and Country Trust TCT (2) 504 N.A.
Tenneco Automotive TEN (75) 2,504 (50)
TiVo Inc. TIVO (25) 82 1
Triton PCS Holdings TPC (36) 1,617 172
UnitedGlobalCom UCOMA (3,040) 5,931 (6,287)
United Defense I UDI (30) 1,454 (27)
UST Inc. UST (47) 2,765 829
Valassis Comm. VCI (33) 386 80
Valence Tech VLNC (17) 36 4
Ventas Inc. VTR (54) 895 N.A.
Warnaco Group WRNC (1,856) 948 471
Western Wireless WWCA (464) 2,399 (120)
Xoma Ltd. XOMA (11) 72 30
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
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related conferences are encouraged. Send announcements to
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Bond pricing, appearing in each Thursday's edition of the TCR, is
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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.
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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.
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*** End of Transmission ***