/raid1/www/Hosts/bankrupt/TCR_Public/030818.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, August 18, 2003, Vol. 7, No. 162
Headlines
5 G WIRELESS: Ex-Accountant Deutchman Airs Going Concern Doubt
ADELPHIA COMMS: Court Clears Uniform Excess Asset Sale Protocol
AEGIS COMMS: June 30 Net Capital Deficit Widens to $54 Million
AFC ENTERPRISES: Nasdaq to Knock-Off Shares Effective Today
AIRGATE PCS: June Balance Sheet Upside-Down by $369 Million
ALPINE GROUP: June 30 Balance Sheet Insolvency Widens to $835MM
ALTERRA HEALTHCARE: June 30 Balance Sheet Insolvency Tops $518MM
ALLMERICA FIN'L: S&P Affirms Ratings & Revises Outlook to Pos.
AMERIPATH INC: Reports Weaker Financial Performance for Q2 2003
ANNUITY & LIFE RE: June Quarter Net Loss Balloons to $69 Million
ANTARES PHARMA: June 30 Balance Sheet Upside-Down by $6 Million
ANTICLINE URANIUM: Brings-In Pritchett Siler as New Auditors
ARRIS GROUP: S&P Downgrades Ratings Due to Weak Profitability
AURORA FOODS: June 30 Net Capital Deficit Widens to $77 Million
AZUREL LTD: Signs-Up Marcum & Kliegman for Accounting Services
BEACON POWER: Successfully Averts Delisting from Nasdaq Market
BIO-RAD LABORATORIES: Completes Tender Offer for 11-5/8% Notes
BRIDGEWATER SPORTS: Hires Ravin Greenberg as Bankruptcy Counsel
BUDGET: Committee Seeks Appointment as Estate Representative
CALPINE CORP: Construction Finance Unit Obtains New Funding
CANADIAN HYDRO: June Working Capital Deficit Tops $3.9 Million
CASTLE DENTAL: Reports Improved Financial Results for Q2 2003
CEATECH USA INC: PwC Resigns as Independent Accountants
CENTURION GOLD: Company's Ability to Continue Ops. Uncertain
CLEAN HARBORS: Second-Quarter 2003 Net Loss Tops $7 Million
CONSECO INC: Files SEC Form 10-Q for June 2003 Quarter
DIVINE SAVIOR: Outlook on BB+ Bond Rating Revised to Positive
DIGEX INC: June 30, 2003 Net Capital Deficit Tops $93 Million
DVI INC: Fitch Says D Rating Will Follow Bankruptcy Filing
EMPIRE ENERGY: Hires Malone & Bailey as New Independent Auditors
ENVIRONMENTAL ELEMENTS: June 30 Net Capital Deficit Tops $11MM
EPIC FIN'L: Unit Entering into Alliance with Hermandad Mexicana
FIBERCORE INC: Fails to File Form 10-Q; Submitting 8K Instead
FIFE VINEYARDS: Files for Chapter 11 Protection in California
FIFE VINEYARDS LLC: Voluntary Chapter 11 Case Summary
FLEMING COS: Obtains Approval for Greenwich Insurance Agreement
FLEXTRONICS INT'L: Will Host Mid-Quarter Conference Call Today
GENERAL MEDIA: Seeks Okay to Pay Vendors' Prepetition Claims
GRUPO IUSACELL: Unit Seeks Extension of Temporary Default Waiver
HORIZON PCS: Files for Chapter 11 Protection in S.D. of Ohio
HORIZON PCS: Voluntary Chapter 11 Case Summary
I2 TECHNOLOGIES: June 30 Net Capital Deficit Narrows to $258MM
IMAGEWARE: Shoos-Away PwC & Engages Stonefield as Replacement
IMMTECH INT'L: Red Ink Continued to Flow in Fiscal 1st Quarter
INNOVATIVE GAMING: Files to Deregister Common Shares with SEC
INTERPLAY ENTERTAINMENT: June 30 Net Capital Deficit Tops $14MM
ISLE OF CAPRI: First Quarter Results Show Slight Improvement
KAISER ALUMINUM: June 2003 Balance Sheet Upside-Down by $1.2-Bil
KASPER ASL: Court Confirms Jones Apparel Group as Best Bidder
LTV CORP: Copperweld Debtors File Plan and Disclosure Statement
MALDEN MILLS: Successfully Emerges From Chapter 11 Bankruptcy
MAXXAM INC: Second Quarter Net Loss Balloons to $8.1 Million
MED-EMERG INT'L: Half-Year Fin'l Report Shows Marked Improvement
MILACRON INC: Bank Group Relaxes Covenants Under Credit Facility
MIRANT CORP: Brings-In Forshey & Prostok as Special Counsel
MIRANT: Deutsche Bank's Notice to Preferred Trust Holders
MIRENCO INC: Ability to Continue as Going Concern Uncertain
MOTELS OF AMERICA: Gets Nod for Interim Cash Collateral Use
MSF FUNDING: Series 2000-1 Note Ratings on Watch Negative
NEVADA POWER: S&P Rates $350 Million Mortgage Notes at BB
NIMBUS GROUP: Cuts-Off Professional Ties with Berkovitz Lago
NORTHWESTERN CORP: Reports Net Capital Deficit of $504 Million
OWENS CORNING: Obtains Go-Signal for $1MM Ohio Property Sale
PACIFIC GAS: Committee Intends to Amend Solicitation Package
PACKAGED ICE: Shareholders Approve Proposed Merger with Cube
PER-SE TECH.: S&P Assigns B+ Rating to $175MM Sr. Sec. Bank Loan
PETROLEUM GEO: Tapping Linklaters as Special English Counsel
PG&E NATIONAL: Hires Charles River as Litigation Consultant
PILLOWTEX CORP: Wants to Honor Prepetition Shipment Obligations
PRIDE INT'L: Second-Quarter Net Loss Balloons to $18 Million
PRIME RETAIL: Covenant Defaults Spur Going Concern Uncertainty
SAGENT TECHNOLOGY: June 30 Balance Sheet Upside-Down by $780,000
SAMUELS JEWELERS: Files Plan and Disclosure Statement in Del.
SEITEL INC: Second-Quarter 2003 Results Zoom into Positive Zone
SENTRY TECHNOLOGY: June 30 Net Capital Deficit Narrows to $300K
SMITHFIELD FOODS: Will Host Q1 Conference Call on August 21
SPIEGEL GROUP: Names Richard Mozack as New Chief Info. Officer
SYSTEMONE TECHNOLOGIES: June 30 Net Capital Deficit Tops $42MM
TERAFORCE: June 30 Net Capital Deficit Doubles to $5.4 Million
THANE INT'L: Reports Improved First Quarter Financial Results
UNIFRAX CORP: $135-Mill. Facility Gets B+ Senior Secured Rating
UNITED AIRLINES: Gets OK to Turn Over Assets to Northern Trust
UNITEDGLOBALCOM: June 30 Net Capital Deficit Narrows to $2.7BB
US PLASTIC LUMBER: Continues Exploring Strategic Alternatives
WEIRTON STEEL: Committee Turns to CIBC World for Fin'l Advice
WESTFORT ENERGY: Brings-In Hein & Associates as New Auditors
WESTPOINT STEVENS: Court Extends Lease Decision Time to Dec. 1
WESTPOINT STEVENS: June 30 Net Capital Deficit Widens to $896MM
WINFIELD CAP.: Violation of SBA Rule Raises Going Concern Doubt
WINSTAR COMMS: Court Clears Stratex Settlement Agreement
WOMEN FIRST HEALTHCARE: Red Ink Flows in Second Quarter 2003
WORLDCOM INC: Wants Nod for Amended Downers Grove, Chicago Lease
WORLDCOM: Yankee Group Calls Allegations Hindrance to Emergence
WORLDCOM INC: Reports Improved June Monthly Operating Results
WORLDCOM: Anthony Amodio Sues Citigroup and SSB to Recoup Losses
* BOND PRICING: For the week of August 18 - 22, 2003
*********
5 G WIRELESS: Ex-Accountant Deutchman Airs Going Concern Doubt
--------------------------------------------------------------
Effective on July 31, 2003, the independent accountant who was
previously engaged as the principal accountant to audit 5 G
Wireless Communications, Inc.'s financial statements, Michael
Deutchman, CPA, was dismissed. This dismissal was approved by the
Board of Directors. Michael Deutchman, CPA, audited the Company's
financial statements for the fiscal year ended December 31, 2002.
This accountant's report on these financial statements was
modified as to uncertainty that 5 G Wireless Communications will
continue as a going concern.
Effective on August 5, 2003, the firm of Carter & Balsam, A
Professional Corporation, was engaged to serve as the new
independent accountant to audit the Company's financial
statements. The decision to retain this firm was approved by the
Board of Directors.
ADELPHIA COMMS: Court Clears Uniform Excess Asset Sale Protocol
---------------------------------------------------------------
The Adelphia Communication Debtors sought and obtained the Court's
approval to create a streamlined procedure by which they would
have authority to sell certain non-core excess assets with a book
value and fair market value up to, but not exceeding, $1,000,000,
free and clear of liens, claims and encumbrances, on notice to
certain parties. The ACOM Debtors also got clearance to retain
brokers and appraisers to assist with these sales, as required.
The proposed procedures governing the sale of excess assets are:
A. Sales may only be completed upon ten days written notice, by
fax or hand delivery, to:
-- the Office of the United States Trustee for the Southern
District of New York;
-- counsel to the agents for the Debtors' prepetition and
postpetition lenders;
-- counsel to the Creditors' Committee;
-- counsel to the Equity Committee; and
-- any party known by the Debtors to assert a lien on the
asset to be sold;
B. Any notice must include:
-- a description of the Excess Assets to be sold;
-- the purchase price being paid for the assets;
-- the name and address of the purchaser, as well as a
statement that the purchaser is not an insider or
affiliate of any Debtor;
-- the name of the applicable Debtor; and
-- a copy of the proposed purchase agreement intended to
govern the sale;
C. All sales will be made subject to higher and better written
offers received by the Debtors prior to the expiration of the
10-day notice period;
D. The Debtors may employ brokers and appraisers to assist in
the sales process on usual and customary terms;
E. If a written objection to any sale is received by the Debtors
within the notice period, then, absent a settlement, Court
approval of the sale will be required;
F. All sales will be free and clear of liens, claims, and
encumbrances, with any liens, claims, and encumbrances to
attach to the proceeds of the sale; and
G. The Debtors will keep a detailed accounting of the proceeds
from all dispositions and the cost of any broker services
used for each transaction, if any. All proceeds of the
dispositions will be allocated and managed in accordance with
this Court's DIP Order, including the Cash Management
Protocol.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New
York, assured the Court that the Debtors' lenders and the
Committees will have an opportunity to review any proposed
transactions. Moreover, a prompt sale of the Excess Assets will
cut off unnecessary administrative expenses associated with
storing, maintaining and securing the Excess Assets.
With respect to all of the Notice Parties, the Debtors will
provide them with a minimum of ten days notice prior to the
consummation of any sale. If any of the Notice Parties objects to
a proposed sale on any ground, except if the objection relates
solely to the use of proceeds from the sale, then the matter will
be resolved by the Court if the objection cannot be resolved
amicably by the parties. If the objection relates solely to the
use of proceeds from the sale, then the sale will proceed, but the
Debtors will hold the proceeds of the sale in a segregated account
pending further order of the Court. (Adelphia Bankruptcy News,
Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900)
AEGIS COMMS: June 30 Net Capital Deficit Widens to $54 Million
--------------------------------------------------------------
Aegis Communications Group, Inc. (OTC Bulletin Board: AGIS), a
marketing services company that enables clients to make customer
contact efforts more profitable, reported its results for the
second quarter of 2003.
REVENUES
Total revenues from continuing operations generated during the
quarter ended June 30, 2003 were $36.6 million as compared to
$33.1 million in the second quarter of 2002, an increase of $3.5
million or 10.6%. For the six months ended June 30, 2003 revenues
were $77.0 million, 4.8% higher than the $73.5 million of revenue
generated during the prior year comparable period. The increase in
revenues versus the three and six months ended June 30, 2002 was
driven primarily by expansion of work from existing clients.
OPERATING LOSS
Operating loss for the second quarter of 2003 was $1.5 million as
compared to an operating loss of $6.2 million in the second
quarter of 2002. For the six months ended July 30, 2003 the
Company generated an operating loss of $3.5 million as compared to
an operating loss of $7.2 million for the six months ended
June 30, 2002. The decline in operating loss over the quarterly
comparative period of a year ago is primarily attributable to the
decrease in selling, general and administrative expenses that
centered around reducing labor and associated employee benefit
costs, and other overhead costs as part of our cost reduction
efforts.
"Although we are pleased with our comparative revenue growth, we
recognize that the improvement is more a function of strengthening
our existing client relationships than adding new clients. The new
programs we have introduced in the past nine months have not
developed at the pace we had expected. In an effort to preserve
cash and service our debt levels, we introduced an additional
round of significant cost reduction actions during the second
quarter, which has generated the improvement in our operating loss
performance. We continue to face the challenges presented by a
soft economy, restructuring client segments and aggressive
offshore competition," stated Herman Schwarz, the Company's
President and Chief Executive Officer.
NET LOSS
The Company incurred a net loss available to common stockholders
of $5.0 million for the quarter ended June 30, 2003. During the
prior year comparable quarter, the Company incurred a net loss
available to common stockholders of approximately $10.4 million.
For the six months ended June 30, 2003, the Company generated a
net loss available to common stockholders of $9.9 million, as
compared to $57.7 million or $1.10 per common share for the six
months ended June 30, 2002. Excluding one-time items discussed
below, net loss available to common stockholders for the six
months ended June 30, 2002 was $11.8 million.
Several one-time items affected earnings for the six months ended
June 30, 2002. During the quarter ended June 30, 2002, and in
connection with the adoption of Financial Accounting Standards
Board Statement No. 142 concerning new accounting rules related to
business combinations, the Company completed the transitional
goodwill impairment test. As a result of the performance of the
impairment test, the Company concluded that goodwill was impaired
and recorded a non-cash goodwill impairment loss of $43.4 million,
as a cumulative effect of an accounting change retroactive to
January 1, 2002. During the quarter ended June 30, 2002, the
Company recognized a gain of $8.3 million on the sale of assets of
Elrick & Lavidge, the Company's marketing and research division.
During the second quarter of 2002, the Company also recorded $0.9
million in restructuring charges related to the closing of one of
its U.S. call centers, and recorded a provision for income taxes
of $9.8 million as the Company increased the valuation allowance
for its deferred tax asset. The net impact of these one-time items
on net loss available to common shareholders for the six months
ended September 30, 2002, was $45.8 million, or $0.88 per common
share.
Revenue Mix. Together, inbound customer relationship management
and non-voice and other revenues represented 75.0% of the
Company's revenues in the second quarter of 2003 versus 80.4% in
the second quarter of 2002. Outbound CRM revenues accounted for
25.0% of total revenues for the three months ended June 30, 2003
as compared to 19.6% in the comparable prior year period.
Cost of Services. For the quarter ended June 30, 2003, cost of
services increased by approximately $2.8 million, or 12.3%, to
$25.6 million versus the quarter ended June 30, 2002. Cost of
services as a percentage of revenues for the quarter ended June
30, 2003 increased to 69.9%, from 68.9% during the comparable
prior year period. For the six months ended June 30, 2003 cost of
services increased $5.2 million to $54.3 million compared to the
first six months of 2002. As a percentage of sales, cost of
services rose over the same period, from 66.9% to 70.6%. Cost of
services rose over the three and six months ended June 30, 2003,
due to data and sales lead costs for an enhanced pay for
performance project that began in January 2003.
Selling, General and Administrative. Selling, general and
administrative expenses, which include certain payroll costs,
employee benefits, rent expense and maintenance charges, among
other expenses, were reduced 23.3% to $9.6 million in the quarter
ended June 30, 2003 versus $12.5 million the prior year second
quarter. For the quarter ended June 30, 2003, selling, general and
administrative expenses as a percentage of revenue were 26.2% as
compared to 37.8% for the prior year period. For the six months
ended June 30, 2003, selling, general and administrative expenses
were $20.1 million or 26.1% of revenues versus $24.3 million or
33.1% of revenues for the six months ended June 30, 2002. The
reduction in selling, general and administrative expenses over the
three and six months ended June 30, 2003 is primarily attributable
to reduced labor and associated benefit costs, and other overhead
costs achieved as part of our cost reduction efforts.
Depreciation and Amortization. Depreciation and amortization
expenses decreased $0.2 million, or 5.2% in the quarter ended June
30, 2003 as compared to the quarter ended June 30, 2002. As a
percentage of revenue, depreciation and amortization expenses were
8.1% in the quarter ended June 30, 2003 versus 9.5% in the quarter
ended June 30, 2002. For the six months ended June 30, 2003 and
June 30, 2002, depreciation and amortization expenses were $6.1
million or 7.9% of revenues, and $6.3 million or 8.6% of revenues,
respectively.
Income Tax Provision. The Company regularly evaluates the
realizability of the Company's deferred tax asset, and determined
as of June 30, 2002, that more likely than not, the deferred tax
asset would not be realized in the near future. As a result, at
June 30, 2002 the Company increased its valuation allowance
approximately $9.8 million (a non-cash charge) representing the
amount of the deferred tax asset for which a valuation allowance
had not been previously established, thereby reducing the carrying
amount of the deferred tax asset to zero ($16.5 million less a
valuation allowance of $16.5 million). The Company has not
provided an income tax benefit to the operating loss incurred
during 2002 or during the first and second quarters of 2003, as
such benefit would exceed the projected realizable deferred tax
asset.
Discontinued Operations. As reported previously, on April 12,
2002, the Company completed the sale of assets of Elrick &
Lavidge, its marketing research division, to Taylor Nelson Sofres
Operations, Inc., a wholly-owned subsidiary of United Kingdom
based Taylor Nelson Sofres plc. The Company recognized a gain on
disposal of the segment of $8.3 million, which was reported in its
second quarter 2002 results. Elrick & Lavidge's revenues, reported
in discontinued operations, for the six months ended June 30, 2002
were $6.2 million.
Change in Accounting Principle. In connection with the adoption of
SFAS 142, the Company completed the transitional goodwill
impairment test during the quarter ended September 30, 2002. A
third party engaged by the Company performed the valuation. As a
result of the performance of the impairment test, the Company
concluded that goodwill was impaired, and accordingly, recognized
a goodwill impairment loss of $43.4 million. The non-cash
impairment charge was reported as a cumulative effect of an
accounting change retroactive to January 1, 2002, in accordance
with the provisions of SFAS 142. The goodwill impaired was related
to prior acquisitions for which the perceived incremental value at
time of acquisition did not materialize.
Cash and liquidity. Cash and cash equivalents at June 30, 2003
were $0.04 million as compared to $1.6 million at December 31,
2002. Working capital at December 31, 2002 was $4.8 million as
compared to a deficit of $15.9 million at June 30, 2003. The
change in working capital is primarily attributable to the
reclassification of our revolving line of credit and subordinated
indebtedness due to affiliates from a long-term liability to a
current liability. The change in reclassification results from the
fact that these liabilities are scheduled to mature in the second
quarter of 2004. Availability under the Company's revolving line
of credit was $6.9 million at June 30, 2003. Outstanding bank
borrowings under the line of credit at June 30, 2003 were $8.5
million versus $5.9 million at December 31, 2002.
The Company's revolving line of credit agreement, which was due to
mature in June 2003, was amended on April 14, 2003. The credit
facility now expires on April 16, 2004. Subordinated debt
instruments held by certain stockholders, which were due to mature
in 2003, were also amended on April 14, 2003, and now mature on
April 17, 2004 or later. Based on the trailing twelve-month
covenants for the period ended March 31, 2003, the Company was in
default of certain covenants under the revolving line of credit
agreement. Such covenants, however, were waived under the new
amended agreement and the Company is in compliance with these
amended covenants at June 30, 2003.
EBITDA
The Company has historically reported Earnings Before Interest,
Taxes, Depreciation and Amortization. Because of the complex
nature of the Company's tax, equity, and debt structure,
management has found this measure to be of significant internal
reporting value in understanding Company financial performance.
EBITDA for the six months ended June 30, 2003 was $2.5 million as
compared to EBITDA of $7.5 million in the prior year comparable
period. EBITDA for the six months ended June 30, 2002 includes the
Company's gain on the sale of its marketing research division in
April 2002. EBITDA for the three months ended June 30, 2003 and
2002 was $1.4 million and $5.3 million respectively. Excluding
certain one-time items, the Company generated EBITDA of $1.4
million for the quarter ended June 30, 2003 versus a loss of $2.1
million for the prior year comparable period. A reconciliation of
EBITDA to net income is included in the schedules that follow.
Aegis Communications' June 30, 2003 balance sheet shows a total
shareholders' equity deficit of about $54 million.
Aegis Communications Group, Inc., is a marketing services company
that enables clients to make customer contact efforts more
profitable. Aegis' services are provided to a blue chip,
multinational client portfolio through a network of client service
centers employing approximately 4,300 people and utilizing over
5,100 production workstations. Further information regarding Aegis
and its services can be found on its Web site at
http://www.aegiscomgroup.com
AFC ENTERPRISES: Nasdaq to Knock-Off Shares Effective Today
-----------------------------------------------------------
AFC Enterprises, Inc. (Nasdaq:AFCEE) (S&P, BB Corporate Credit
Rating, Negative), the franchisor and operator of Popeyes(R)
Chicken & Biscuits, Church's ChickenT, Cinnabon(R) and the
franchisor of Seattle's Best Coffee(R) in Hawaii, on military
bases and internationally, announced that the Nasdaq Listing
Qualifications Panel has notified the Company that its common
stock will be delisted from the Nasdaq National Market as of the
opening of business today.
As previously announced, the Nasdaq Listing Qualifications Panel
indicated that it would not make a determination regarding whether
to provide the Company with additional time to complete the
restatement of its financial statements and to file its late
financial reports until the Panel had received a report regarding
the investigation being conducted by AFC's Audit Committee. On
August 8, 2003, the Audit Committee delivered to the Panel a
report on its investigation.
The Panel acknowledged the significant amount of time and effort
expended to complete the Audit Committee investigation and
complete AFC's filings and that the report of the Audit Committee
concluded that the there was no evidence that AFC used improper
accounting treatment to manipulate reported earnings or that there
was wrongdoing on the part of AFC. In a determination delivered to
the Company on August 14, 2003, the Panel indicated, however, that
in light of the length of the ongoing delinquency in the Company's
SEC filings the Panel had determined to deny the Company's request
for a further exception to the filing requirements and to delist
the Company's common stock.
Following the delisting, the Company expects that its common stock
will continue to be quoted on the National Quotation Service
Bureau for unsolicited trading. However, the Company's common
stock will not be eligible for quotation on the OTC Bulletin Board
because it will not have publicly available financial statements
that would be as of a date within six months of the possible
quote. Once the Company has released the required financial
statements, the Company's common stock could become eligible for
quotation on the OTC Bulletin Board if a market maker makes an
application to have the shares quoted and such application is
approved by the Nasdaq Compliance Unit.
The Company is currently making every effort to complete the
restatements and audits of its financial statements for 2002, 2001
and 2000 and to file its Form 10-K for fiscal year 2002, as well
as its quarterly reports on Form 10-Q for the first two quarters
of 2003, as soon as possible.
The Audit Committee of AFC's Board of Directors, together with
special legal counsel and an independent forensic accounting firm,
has substantially completed an investigation into accounting
practices and related internal control matters as a result of
several accounting issues that arose in connection with the
restatement and audits of AFC's financial statements. While the
investigation has covered a wide array of items, it specifically
has focused on the following accounting practices: creation and
maintenance of reserve and accrual balances, application of asset
impairment and goodwill analysis, treatment of gains and losses
from restaurant conversions, capitalization of expenses and cash
balance accounting. The investigation has involved extensive
document review as well as interviews with current and former AFC
directors, officers and employees. On August 8, 2003, the Audit
Committee delivered to the Panel a report concluding that AFC
neither used improper accounting treatment to manipulate reported
financial results nor engaged in any wrongdoing, fraud or
intentional misconduct. The Audit Committee has also concluded
that AFC lacked adequate internal controls and accounting
procedures and that the accounting and financial reporting
functions investigated needed improvement. The Audit Committee has
further concluded that AFC's internal technical accounting
expertise was not as strong as it needed to be, and that enhanced
training and staffing in the accounting and audit areas were also
needed. The report found that AFC management has proactively
identified a number of these issues and has independently taken
steps to address them. The report made further recommendations to
strengthen AFC's internal control, accounting and financial
reporting functions. The Audit Committee is following up on
several open items and expects to complete its investigation
shortly.
The Panel's determination also indicated that it would afford the
Company the opportunity to re-list its common stock on The Nasdaq
National Market subject only to the continued listing standards
(rather than the initial listing standards) if the Company
satisfied the following two requirements. First, on or before
October 17, 2003, the Company would be required to file a listing
application and demonstrate compliance with all requirements for
continued listing on The Nasdaq National Market, including the
requirement that it be current in its SEC filings as of that date.
Second, the Company must provide the Panel with any supplemental
findings from the Audit Committee's investigation, a list of all
corrective measures that have been implemented, and a
corresponding list of all corrective measures that have yet to be
implemented. Upon satisfying those two requirements, the Panel
would determine whether to re-list the Company's common stock. The
determination also indicated that if the Company failed to comply
with the National Market requirements at that time but satisfied
all requirements for continued listing on The Nasdaq SmallCap
Market, it will be considered for listing on that market. The
Company presently complies with all requirements for initial
listing, as well as continued listing, on the Nasdaq National
Market, other than the requirement that it be current in its
SEC filings, but there is no assurance that the Company would
comply with those requirements in the future.
The Company is currently in discussions with its lenders regarding
any amendments to its credit facility that will be necessary due
to the status of the ongoing restatement and the audits of its
financial statements.
AFC Enterprises, Inc. is the franchisor and operator of 4,006
restaurants, bakeries and cafes as of July 14, 2003, in the United
States, Puerto Rico and 35 foreign countries under the brand names
Popeyesr Chicken & Biscuits, Church's ChickenT, Cinnabonr and the
franchisor of Seattle's Best Coffee(R) in Hawaii, on military
bases and internationally. AFC's primary objective is to
be the world's Franchisor of Choice(R) by offering investment
opportunities in highly recognizable brands and exceptional
franchisee support systems and services. AFC Enterprises had
system-wide sales of approximately $2.7 billion in 2002 and can be
found on the World Wide Web at http://www.afce.com
AIRGATE PCS: June Balance Sheet Upside-Down by $369 Million
-----------------------------------------------------------
AirGate PCS, Inc. (OTCBB: PCSA), a PCS Affiliate of Sprint,
announced financial and operating results for its third fiscal
quarter and nine months ended June 30, 2003.
Highlights of the quarter include the following:
-- For stand-alone AirGate, cash and cash equivalents increased to
$30.8 million from $20.9 million from the second fiscal quarter
of 2003 and from $0.9 million from the first fiscal quarter of
2003.
-- Consolidated net loss improved to ($8.2) million from ($50.1)
million in the third fiscal quarter of 2002, which included the
losses from the unrestricted iPCS subsidiary in the third
fiscal quarter of 2002.
-- For stand alone AirGate, EBITDA, earnings before interest,
taxes, depreciation and amortization, was $14.1 million, an
increase of $11.7 million from $2.4 million in the third fiscal
quarter of 2002.
Total consolidated revenues for the third fiscal quarter ended
June 30, 2003 were $83.2 million compared with $122.8 million for
the prior-year period. The Company reported a net loss of $8.2
million for the three months ended June 30, 2003, compared with a
net loss of $50.1 million in the same period of fiscal 2002. The
results of the unrestricted iPCS subsidiary are included in the
consolidated results of the third fiscal quarter of 2002, but are
excluded from the third fiscal quarter of 2003 as a result of iPCS
filing a Chapter 11 bankruptcy petition on February 23, 2003 for
the purpose of effecting a court-administered reorganization. On
an AirGate stand-alone basis, total revenues were $83.2 million
during the third fiscal quarter of 2003 compared with $81.1
million for the same period last year. Net losses for AirGate on
a stand-alone basis were $8.2 million for the third fiscal quarter
of 2003 and $25.7 million in the same period of fiscal 2002.
Consolidated EBITDA, a non-GAAP financial measure, was $14.1
million during the third quarter of fiscal 2003, which compares
with an EBITDA loss of $3.8 million during the third quarter of
fiscal 2002. EBITDA for the third quarter of fiscal 2003 was
favorably impacted by $1.8 million of settlements from Sprint.
EBITDA for the third quarter of fiscal 2002 was negatively
impacted by $5.4 million primarily due to a revenue reduction for
terminating access revenue previously paid to the Company by
Sprint PCS on behalf of long distance carriers. On a stand-alone
basis, EBITDA for AirGate was $14.1 million during the third
fiscal quarter of 2003 and $2.4 million for the third fiscal
quarter of 2002.
For the nine months ended June 30, 2003, the Company reported
consolidated revenues of $320.7 million compared with $319.4
million for the same period last year. The Company reported a net
loss of $76.9 million, for the nine months ended June 30, 2003,
compared with a net loss of $381.6 million in the same period of
2002. For the nine months ended June 30, 2003, stand-alone AirGate
had revenues of $241.8 million and a net loss of $40.0 million.
For the same period in 2002, stand-alone AirGate had revenues of
$226.1 million and a net loss of $321.5 million.
Consolidated EBITDA was $24.7 million for the first nine months of
fiscal 2003. EBITDA for the first nine months of fiscal 2003 was
favorably impacted by $7.4 million due to settlements from Sprint.
On a stand-alone basis, EBITDA for AirGate was $31.9 million for
the same period.
At June 30, 2003, AirGate PCS's total shareholders' equity deficit
tops $369 million.
"Our management team made a commitment six months ago to focus on
improving EBITDA and increasing cash while realizing slower
subscriber growth under our 'smart-growth' strategy," said Thomas
M. Dougherty, president and chief executive officer of AirGate
PCS. "Now, two quarters after articulating that strategy, we are
very pleased to report that AirGate has a much more stable
financial position and has produced two consecutive quarters of
solid operating results, demonstrating the execution of that
strategy by our management team. Not only have we improved our net
losses for stand-alone AirGate over last quarter, but we also had
our second consecutive quarter of double-digit positive EBITDA.
Furthermore, we increased our cash position to over $30 million
during the third fiscal quarter, which compares to just over $20
million last quarter and less than $1 million the quarter before
that. This was all achieved while maintaining positive, but
modest, subscriber growth and generating some of our most
impressive network operating statistics in the history of the
company."
"We have been single-minded in making decisions to improve our
cash generation," Dougherty continued. "We have increased our
focus on the appropriate structure for our operations, as
evidenced by another reduction in headcount of approximately 70
employees in April 2003. While this produced a modest negative
impact on cash flow in the short term, it should provide benefits
going forward. Furthermore, we continue to leverage our existing
1x-RTT network, thus minimizing required capital investment in the
network."
"As for the measured pace of our subscriber growth under our
'smart-growth' strategy, we have focused our efforts on enhancing
the quality of our customer base by attracting and retaining more
prime credit quality customers, which accounted for approximately
80% of our gross additions during the quarter and approximately
70% of our total subscriber base at the end of the quarter," added
Dougherty. "While we are adding fewer new subscribers than we have
in the past, we believe our 'smart-growth' strategy will have
greater long-term benefits for AirGate as we develop a more stable
subscriber base that should be less likely to churn."
As previously announced, our unrestricted subsidiary, iPCS, Inc.
and its subsidiaries, iPCS Wireless, Inc. and iPCS Equipment,
Inc., filed a Chapter 11 bankruptcy petition on February 23, 2003,
for the purpose of effecting a court-administered reorganization.
Subsequent to February 23, 2003, AirGate no longer consolidates
the accounts and results of operations of iPCS and the accounts of
iPCS are recorded as an investment using the cost method of
accounting. The financial and operating results presented here for
the third fiscal quarter of 2003 are for AirGate stand-alone.
Accordingly, the accompanying consolidated balance sheet as of
June 30, 2003 does not include the consolidated accounts of iPCS.
It does, however, include the Company's investment in iPCS as of
February 23, 2003.
AirGate PCS, Inc., excluding its unrestricted subsidiary iPCS, is
the PCS Affiliate of Sprint with the right to sell wireless
mobility communications network products and services under the
Sprint brand in territories within three states located in the
Southeastern United States. The territories include over 7.2
million residents in key markets such as Charleston, Columbia, and
Greenville-Spartanburg, South Carolina; Augusta and Savannah,
Georgia; and Asheville, Wilmington and the Outer Banks of North
Carolina.
iPCS, Inc., a wholly owned unrestricted subsidiary of AirGate PCS,
Inc., is the PCS Affiliate of Sprint with the right to sell
wireless mobility communications network products and services
under the Sprint brand in 37 markets in Illinois, Michigan, Iowa
and eastern Nebraska. The territories include over 7.4 million
residents in key markets such as Grand Rapids, Michigan;
Champaign-Urbana and Springfield, Illinois; and the Quad Cities
areas of Illinois and Iowa.
AirGate and iPCS are separate corporate entities that have
discrete and independent financing sources, debt obligations and
sources of revenue. As an unrestricted subsidiary, iPCS's lenders,
noteholders and creditors do not have a lien or encumbrance on
assets of AirGate. Further, AirGate generally cannot provide
capital or other financial support to iPCS.
Sprint operates the largest, 100-percent digital, nationwide PCS
wireless network in the United States, already serving more than
4,000 cities and communities across the country. Sprint has
licensed PCS coverage of more than 280 million people in all 50
states, Puerto Rico and the U.S. Virgin Islands. In August 2002,
Sprint became the first wireless carrier in the country to launch
next generation services nationwide delivering faster speeds and
advanced applications on Vision-enabled Phones and devices. For
more information on products and services, visit
http://www.sprint.com/mr PCS is a wholly-owned tracking stock of
Sprint Corporation trading on the NYSE under the symbol "PCS."
Sprint is a global communications company with approximately
72,000 employees worldwide and nearly $27 billion in annual
revenues and is widely recognized for developing, engineering and
deploying state-of-the-art network technologies.
ALPINE GROUP: June 30 Balance Sheet Insolvency Widens to $835MM
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The Alpine Group, Inc. (OTC Bulletin Board: ALPG) reported results
for its 2003 second quarter ended June 30, 2003.
Revenues for the quarter ended June 30, 2003 were $87.3 million
compared to $391.8 million for the quarter ended June 30, 2002.
The decrease is due primarily to the effects of the
deconsolidation of the Company's former majority-owned subsidiary,
Superior Telecom Inc., effective December 11, 2002. On
December 11, 2002, Alpine acquired from Superior substantially all
of the assets and related liabilities of Superior's electrical
wire business and the capital stock of DNE Systems, Inc. On a
comparable business basis, after excluding the revenues of the
Superior businesses not acquired from the June 30, 2002 quarter,
sales decreased $45.9 million or 34%. This decrease in revenues
is primarily due to lower sales volume at Essex Electric as a
result of restructuring activities in response to industry market
and competitive conditions. Net loss per diluted share for the
quarter ended June 30, 2003 was $0.25 compared to $1.76 for the
quarter ended June 30, 2002. The pre tax loss for the quarter
ended June 30, 2003 included restructuring and other charges of
$2.4 million compared to $19.1 million of such charges in the
prior year quarter (which includes the operations of Superior).
Alpine's revenues were $184.8 million for the six months ended
June 30, 2003, a decrease of 76% compared to revenues of $768.6
million for the comparable prior year period due primarily to the
deconsolidation of Superior. Excluding the revenues of the
Superior businesses not acquired for the prior year period, the
decrease was $81.9 million, or 31%. This decrease in revenues for
the six month period is also due to lower sales volume at Essex
Electric as indicated in the previous paragraph. The loss per
diluted share before the cumulative effect of accounting changes
for the six month period ended June 30, 2003 was $0.41 compared to
$3.12 for the six month period ended June 30, 2002. The net loss
for the six months ended June 30, 2002 included a per share loss
of $26.22 related to the cumulative effect of an accounting change
for goodwill impairment.
At June 30, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $835 million, up from a
deficit of about $829 million six months ago.
Steven S. Elbaum, Chairman and Chief Executive Officer stated,
"Alpine has made substantial progress toward achieving its
business objectives and building a base to enhance shareholder
value. Since the acquisition of DNE and Essex Electric we have
implemented restructuring actions to improve competitiveness,
sharpen our business strategy and strengthen our balance sheet."
"DNE exited the lower margin and more capital intensive contract
manufacturing business and increased revenues in its ongoing
tactical communications and other products for the Department of
Defense and other government agencies business. DNE's operating
income for the six-month period ended June 30, 2003 improved over
the same 2002 period even though revenues declined by 30% due to
the discontinuance of the contract manufacturing business."
"We established a restructuring plan for Essex Electric in
response to severe pricing deterioration in the building wire
industry resulting from excess industry capacity and decreased
demand. The focus of our plan is on cost reduction, consolidation
of facilities and improved customer service. Our goal is to become
a low cost and efficient producer of building wire while
maintaining industry leading service levels. We expect to spend
approximately $25 million on new equipment and consolidation and
rationalization of plants and warehouses along with restructuring
costs to accomplish our goal of being a highly competitive
business from which we can intelligently grow market share."
"Another primary goal at Alpine for 2003 is debt reduction. On
December 11, 2002, we borrowed $78.5 million in addition to our
$10 million equity contribution to acquire the net assets of Essex
Electric, the stock of DNE and 47% of Superior Cable Ltd.
(Superior Israel). As a result of carefully managing working
capital while we restructure, we have reduced debt to $30 million
even though we spent approximately $10 million on capital and
restructuring costs."
"On June 23, 2003, we completed a private placement of our Series
A Preferred Stock for $3.1 million to our officers and directors.
We immediately followed the private placement with an offer to our
shareholders to exchange common stock for 6% Junior Subordinated
Notes. This Exchange offer closed on August 4, 2003 with
approximately 3.5 million shares tendered. And finally, on August
7, 2003 we filed a registration statement to offer our common
shareholders the opportunity to invest in the Series A Preferred
Stock."
The Alpine Group, Inc., headquartered in New Jersey, is a holding
company which owns 100% of Essex Electric Inc. and DNE Systems,
Inc. Essex Electric Inc. is a leading manufacturer of a broad
range of copper electrical wire for residential, commercial and
industrial buildings for sale to electrical distributors and
retailers. DNE Systems, Inc. is a designer and manufacturer of
communications equipment, integrated access devices and other
electronic equipment for defense, government and commercial
applications.
ALTERRA HEALTHCARE: June 30 Balance Sheet Insolvency Tops $518MM
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Alterra Healthcare Corporation (OTCBB:ATHC) announced financial
results for the three-month period ended June 30, 2003. At
quarter-end, the Company operated or managed 370 residences with a
total capacity to serve approximately 17,700 residents.
OPERATING AND FINANCIAL RESULTS
The Company reported revenues of $102.0 million for the quarter
ended June 30, 2003, a 1.1% increase over revenues of $100.9
million for 2002. In the second quarter of 2003, the Company's
residence level operating margins were 30.0%, a decrease of 4.2%
over residence level operating margins in the second quarter of
2002. Monthly rates averaged $2,949 as of June 30, 2003, an
increase of 4.5% over the average monthly rate at June 30, 2002.
In addition, general and administrative costs (excluding costs
related to the Company's restructuring activities) were $9.0
million in the quarter ended June 30, 2003, a 30.0% reduction from
the quarter ended June 30, 2002. The Company's income from
operations for the quarter ended June 30, 2003 was $873,000. The
Company's net loss for the quarter ended June 30, 2003 was $17.6
million and includes $7.0 million of non-cash expenses including
depreciation and amortization and payment-in-kind interest
expenses and reflects the impact of asset dispositions,
reorganization costs, and $5.6 million of losses reflected as
discontinued operations. As of June 30, 2003, the Company reported
overall average occupancy of 80.2%.
Alterra's June 30, 2003, balance sheet shows a working capital
deficit of about $230 million and a net capital deficit topping
$518.7 million.
The June 30, 2003 financial statements have been prepared on a
going concern basis, which assumes continuity of operations and
realization of assets and satisfaction of liabilities in the
ordinary course of business, and in accordance with Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code." Accordingly, all pre-petition
liabilities subject to compromise, approximately $590.6 million at
June 30, 2003, have been segregated in the Consolidated Balance
Sheets and classified as Liabilities subject to compromise, at the
estimated amount of the applicable allowable claim. Liabilities
not subject to compromise are separately classified as current and
non-current. Revenues, expenses, realized gains and losses, and
provisions for losses resulting from the reorganization,
approximately $3.7 million at June 30, 2003, are reported
separately as Reorganization items. Cash used for reorganization
items is disclosed separately in the Consolidated Statements of
Cash Flows. Additionally, interest expense accrued subsequent to
the bankruptcy filing that is deemed to be impaired and unlikely
to be paid is excluded from the financial statements. As of June
30, 2003, approximately $11.1 million of interest expense on the
PIK and Convertible Debentures and other miscellaneous notes
payable is excluded from the financial statements in accordance
with SOP 90-7.
CHAPTER 11 BANKRUPTCY AND RESTRUCTURING ACTIVITIES
As previously announced, on January 22, 2003, the Company filed a
voluntary petition with the U.S. Bankruptcy Court for the District
of Delaware to reorganize under Chapter 11 of the Bankruptcy Code.
None of the Company's subsidiaries or affiliates is included in
the Chapter 11 Filing. The Company believes that its Chapter 11
Filing is an appropriate and necessary step to complete the
restructuring of its senior financing obligations and to commence
and complete the restructuring of its junior capital structure,
which includes unsecured obligations and claims, convertible
subordinated debentures and preferred and common stock.
In conjunction with the Chapter 11 Filing, in January 2003 the
Company secured a $15.0 million debtor-in-possession credit
facility, of which $6.5 million has been borrowed as of
June 30, 2003.
The Company incurred $3.7 million in reorganization costs for the
three months ended June 30, 2003. These reorganization costs
include legal, financial advisory and other professional fees
incurred in relation to the reorganization.
On July 17, 2003, the Company conducted an auction to identify the
highest and best transaction available to provide for the
liquidity needs of the Company as it emerges from Chapter 11, and
to maximize the recovery to the Company's creditors. FEBC-ALT
Investors was the winning bidder, proposing a merger transaction
pursuant to which FEBC will acquire all of the equity interests in
Alterra. FEBC will be a majority owned subsidiary of Emeritus
Corporation (AMEX: ESC) at the time of the merger.
On July 22, 2003, the Company executed the Merger Agreement with
FEBC, pursuant to which FEBC will acquire 100% of the common stock
of the Company upon emergence from the Chapter 11 bankruptcy
proceeding. Pursuant to the Merger Agreement, FEBC will pay the
Company $76.0 million of merger consideration, which may be
adjusted downward in certain circumstances. The merger
consideration will be used (i) to fund costs of the Company's
bankruptcy and reorganization and to provide for the working
capital and other cash needs of the restructured Company and (ii)
to fund a distribution to the Company's unsecured creditors. The
consummation of the merger, which is not expected to occur before
the fourth quarter of 2003, is subject to the satisfaction of
numerous conditions including, without limitation, confirmation of
the Company's Chapter 11 plan of reorganization by the Bankruptcy
Court, receipt of consents and approvals from certain of the
Company's secured lenders and lessors and compliance with
applicable state and local health regulatory licensing
requirements.
On July 23, 2003, the Company presented FEBC's merger proposal as
the winning bid at a Bankruptcy Court hearing in accordance with
the court-approved bidding procedures. Following the hearing, the
Bankruptcy Court entered an order authorizing the Company to
execute the Merger Agreement and approving the proposed merger as
the highest and best bid at the auction conducted by the Company
on July 17, 2003.
Alterra offers supportive and selected healthcare services to our
nation's frail elderly and is the nation's largest operator of
freestanding Alzheimer's/memory care residences. Alterra currently
operates in 24 states.
ALLMERICA FIN'L: S&P Affirms Ratings & Revises Outlook to Pos.
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' counterparty
credit and senior unsecured debt ratings and its 'B-' preferred
stock rating on Allmerica Financial Corp. (NYSE:AFC) and revised
its ratings outlook to positive from negative.
At the same time, Standard & Poor's affirmed its 'B+' counterparty
credit and financial strength ratings on AFC's life subsidiaries
Allmerica Financial Life Insurance & Annuity Co. and its wholly
owned subsidiary First Allmerica Financial Life Insurance Co., and
revised the outlook to positive from negative.
Standard & Poor's also affirmed its 'BBB+' counterparty credit and
financial strength ratings on AFC's property/casualty (P/C)
subsidiaries Hanover Insurance Co., Citizens Insurance Co. of
America, and other affiliates (collectively, Allmerica P/C) and
revised the outlook to stable from negative.
Standard & Poor's also affirmed its 'B' short-term counterparty
credit and commercial paper ratings on AFC and its 'B' short-term
counterparty credit and short-term financial strength ratings on
First Allmerica Financial Life Insurance Co. and withdrew all
these ratings at the company's request.
"The outlook revision on AFL reflects improved capitalization,
reduced credit risk exposure to below-investment-grade assets, and
expense reductions consistent with the management of its
discontinued businesses," said Standard & Poor's credit analyst
Robert Hafner. "The ratings on AFC and AFL could improve following
the appointment of a new CEO, provided corporate leadership is
stabilized and strategic direction is clearly established," added
Standard & Poor's credit analyst John Iten.
The financial strength rating on Allmerica P/C reflects its
favorable market position as a regional insurer, historically good
underwriting performance, and adequate capital position for the
current rating category. These strengths have been offset to some
degree by the geographic concentration of the P/C business, with
four states-Michigan, Massachusetts, New Jersey, and New York-
constituting more than 70% of premiums. Allmerica P/C's
underwriting results have not improved to Standard & Poor's
expectations given the strong pricing environment of the past
three years. This reflects in large part the challenges faced by
insurers writing personal automobile business in the states in
which the company is concentrated. In the second-quarter 2003, the
company was forced to add $10 million to its reserves for Michigan
personal injury protection claims. Personal lines constituted
about 65% of total premiums in 2002. Also of concern is the lack
of premium growth in a hard market. The primary reasons for the
lack of growth have been the company's decision to terminate 377
agents at the end of 2001 that were not producing acceptable
profitability and also the contagion risk from the problems
encountered in 2002 by AFL.
The ratings on AFL reflect acceptable capital levels and weak
earnings that will continue to be highly sensitive to equity
market volatility and policyholder behavior. The ratings also
reflect AFL's decision to cease writing new business as a
necessary step in managing its capital and to minimize further
dependence on capital contributions from AFC and indirectly from
Allmerica P/C. The ratings on AFC reflect relatively low financial
leverage (about 20% including hybrid securities) and good pro
forma coverage ratios for 2003, offset by the issues affecting
AFL.
AMERIPATH INC: Reports Weaker Financial Performance for Q2 2003
---------------------------------------------------------------
AmeriPath, Inc. (S&P, B+ Corporate Credit Rating), a leading
national provider of cancer diagnostics, genomics, and related
information services, reported its financial results for the
second quarter and the six-month period ended June 30, 2003.
Net revenues for the second quarter of 2003 were $119.9 million
compared to $120.7 million in the same quarter of 2002. Net
revenues for the six months ended June 30, 2003 were $238.9
million compared to $233.6 million for the same period in 2002.
Net revenues for both the second quarter and six months ended June
30, 2003 were negatively impacted by charges of $2.3 million to
revenues to reflect changes in our estimated contractual
allowances resulting from the analysis of some of our managed care
contracts.
Same store net revenue, excluding revenue from national labs, for
the second quarter of 2003 increased 2.1%, or $2.4 million,
compared to the second quarter of 2002. Same store net revenue,
excluding revenue from national labs, for the six months ended
June 30, 2003 increased 3.6%, or $7.8 million when compared to the
six months ended June 30, 2002. For the second quarter of 2003,
national lab revenue was $1.0 million, down $6.6 million when
compared to the second quarter of 2002. For the six months ended
June 30, 2003, national lab revenue was $3.8 million, down $10.7
million when compared to the six month period ended June 30, 2002.
As previously disclosed, the national labs continue to reduce the
amount of volume subcontracted to AmeriPath and such volume is
expected to be minimal during the remainder of 2003.
EBITDA (earnings before interest, taxes, depreciation and
amortization), which is a non-GAAP financial measure, for the
second quarter of 2003, including merger-related and restructuring
costs of $4.4 million, was $16.0 million compared to $28.7 million
for the same quarter of the prior year. EBITDA for the six months
ended June 30, 2003, including merger-related and restructuring
costs of $15.7 million, was $26.1 million compared to $55.5
million for the same period in 2002. EBITDA, excluding these
merger-related and restructuring costs, for the second quarter of
2003 and the six months ended June 30, 2003 were $20.5 million and
$41.8 million, respectively. EBITDA, excluding merger-related and
restructuring costs and a $2.3 million charge to revenues to
reflect changes in our estimated contractual allowances and a $2.5
million charge increasing the provision for doubtful accounts, for
the second quarter of 2003 and the six months ended June 30, 2003
were $25.3 million and $46.6 million, respectively.
Cost of services for the second quarter of 2003 increased to $61.3
million (51.1% of net revenues) from $58.9 million (48.8% of net
revenues) in the second quarter of 2002. Cost of services for the
six-month period ended June 30, 2003 increased to $123.5 million
(51.7% of net revenues) from $113.2 million (48.5% of net
revenues) for the six months end June 30, 2002. The increase in
cost of services as a percentage of net revenues is primarily due
to increased medical malpractice costs and excess lab capacity.
Selling, general and administrative expenses for the second
quarter 2003 increased to $22.5 million (18.8% of net revenues)
from $20.6 million (17.1% of net revenues) in the second quarter
2002. Selling, general and administrative expenses for the six
months ended June 30, 2003 increased to $44.2 million (18.5% of
net revenues) from $40.7 million (17.4% of net revenues) in the
comparable period in 2002. The increases for both the second
quarter of 2003 and the six-month period ended June 30, 2003 are
primarily due to investments in information technology and
expansion of sales and marketing efforts.
The provision for doubtful accounts for the second quarter 2003
increased to $17.9 million (14.9% of net revenues) from $14.4
million (12% of net revenues) in the same period of 2002. The
provision for doubtful accounts for the six months ended June 30,
2003 increased to $32.9 million (13.8% of net revenues) from $28.1
million (12.0% of net revenues) in the same period of 2002. The
provisions for doubtful accounts for both the second quarter and
the six months ended June 30, 2003 were increased by charges of
$2.5 million to reflect the net realizable value of certain
receivables based on our analysis of the ability to collect
historical revenues and billings associated with clinical
professional component services.
Net loss for the second quarter of 2003 was $0.5 million compared
to net income of $13.8 million for the same quarter of the prior
year. The net loss was negatively impacted by merger-related and
restructuring costs of $4.4 million and higher interest expense of
$10.3 million associated with the financing of the merger with
Welsh, Carson, Anderson and Stowe. Net loss for the six months
ended June 30, 2003 was $1.0 million compared to net income of
$26.4 million for the same period in 2002. The net loss was
negatively impacted by merger-related and restructuring costs of
$15.6 million and higher interest expense of $11.0 million
associated with the financing of the merger with Welsh, Carson,
Anderson and Stowe.
During the second quarter and six months ended June 30, 2003, we
recorded costs related primarily to the completion of the
acquisition of AmeriPath by Welsh, Carson, Anderson and Stowe IX,
L.P. These costs included merger-related costs of $2.4 million in
the second quarter of 2003 and $12.4 million for the six months
ended June 30, 2003 and the write-off of previously deferred
financing costs of $1.0 million for the six months ended June 30,
2003. In addition, we incurred approximately $3.2 million of
restructuring costs during the six months ended June 30, 2003,
primarily severance costs, in connection with a reduction in
workforce at certain laboratories and at the Company's corporate
office. It is estimated that these restructuring costs will
rationalize excess capacity at certain labs and save approximately
$12 million in annual operating costs. Of this $3.2 million, $1.2
million was recorded during the first quarter of 2003, with the
remaining $2.0 million recorded in the second quarter of 2003.
More detailed information regarding the business, operations and
financial performance of the Company through June 30, 2003, and
related and other matters, is included in the Company's Form 10-Q
for the quarter ended June 30, 2003, which was filed with the SEC
on August 14, 2003.
AmeriPath is a leading national provider of cancer diagnostics,
genomics, and related information services. The Company's
extensive diagnostics infrastructure includes the Center for
Advanced Diagnostics, a division of AmeriPath. CAD provides
specialized diagnostic testing and information services including
Fluorescence In-Situ Hybridization, Flow Cytometry, DNA Analysis,
Polymerase Chain Reaction, Molecular Genetics, Cytogenetics and
HPV Typing. Additionally, AmeriPath provides clinical trial and
research development support to firms involved in developing new
cancer and genomic diagnostics and therapeutics.
ANNUITY & LIFE RE: June Quarter Net Loss Balloons to $69 Million
----------------------------------------------------------------
Annuity and Life Re (Holdings), Ltd., (NYSE: ANR) reported
financial results for the three-month period ended June 30, 2003.
The Company reported a net loss of $68,716,440 for the three month
period ended June 30, 2003 as compared to a net loss of
$20,293,998 for the three month period ended June 30, 2002. The
loss in the second quarter of 2003 was primarily the result of
losses associated with recaptures and terminations of life and
annuity reinsurance agreements and adverse claims experience under
the Company's life and annuity reinsurance agreements.
Net realized investment gains for the three month period ended
June 30, 2003 were $4,896,176 as compared with net realized
investment gains of $1,837,672 for the three month period ended
June 30, 2002. The increase in net realized investment gains
during the three months ended June 30, 2003 is attributable to the
strong credit quality of the Company's portfolio and low interest
rates.
Jay Burke, Chief Executive Officer and Chief Financial Officer of
the Company, commented, "While we expect one or two more companies
to recapture their agreements with us in the third quarter, the
downsizing of the Company through the recapture and termination of
life and annuity reinsurance agreements is essentially complete.
During the second quarter, we were able to successfully negotiate
the termination of our largest guaranteed minimum death benefit
contract, which eliminated a drain on our earnings. With our
downsizing essentially completed, we are now shifting our focus
toward the future.
"On August 5, 2003, we were notified by XL Life Ltd that it
intends to recapture its 50% quota share reinsurance contract with
us. This caused us to expense approximately $21 million of
deferred acquisition costs associated with that contract. We
continue to discuss a comprehensive termination and settlement of
all of our reinsurance relationships with XL Life and its
affiliates.
"We made further progress in reducing our unsecured letter of
credit facility at Citibank. Its exposure is now $29 million
compared to $89 million in the summer of 2002 when we first agreed
to reduce or eliminate its exposure. While we were not able to
collateralize the credit facility by June 30, 2003, Citibank
continues to work with us. We expect further reductions to occur
in the coming quarters.
"We have also made significant progress in reducing future
operating expenses. We have reduced our staffing levels by 40%,
and are now turning our efforts toward normalizing our costs
associated with outside professional services.
"We have completed an analysis of our remaining book of business,
including anticipated third quarter recaptures. After
repositioning the investment portfolio through the second half of
2003 we expect to see a small profit in 2004. With respect to the
annuity business, which now consists of four accounts, while we
expect a slight profit, results from this segment have
historically been volatile.
"Overall, while we still face certain challenges, we have made
great strides toward stabilizing the Company and bringing our
operating costs in line with the Company's expected premium
volume."
During the second quarter of 2003, the Company negotiated the
recapture and termination of several life reinsurance agreements,
an annuity reinsurance agreement and its largest guaranteed
minimum death benefit reinsurance agreement. As noted above, the
Company was recently notified by XL Life that it intends to
recapture its 50% quota share reinsurance contract. In connection
with all these recaptures and terminations, the Company incurred
losses of approximately $(55,000,000), resulting from the write
down of deferred acquisition costs and cash payments made to
cedents net of reserve releases associated with the recaptures and
terminations.
The net loss for the three months ended June 30, 2003 was also
affected by adverse claims experience under the Company's life and
annuity reinsurance agreements, contributing losses of
$11,400,000. Approximately $8,500,000 of the loss was related to
life and annuity contracts that were recaptured in the second
quarter.
A reduction in investment income and losses on embedded
derivatives also contributed to the Company's net loss for three
months ended June 30, 2003.
Unrealized gains on the Company's investments were $2,641,227 as
of June 30, 2003 compared to $6,162,525 at December 31, 2002. The
Company's investment portfolio currently maintains an average
credit quality of AA+. Cash used by operations for the six month
period ended June 30, 2003 was $86,149,537, compared to cash
provided by operations of $18,395,545 for the comparable period
ending June 30, 2002. At June 30, 2003, virtually all of the
Company's invested assets were pledged as collateral for the
benefit of its U.S. based clients and letter of credit providers.
Book value per share at June 30, 2003 was $5.52 compared to $10.28
at December 31, 2002. Tangible book value, which is book value
excluding deferred acquisition costs was $1.44 per share at
June 30, 2003.
Life Segment Results
Life segment loss for the three month period ended June 30, 2003
was $39,338,329, as compared with segment income of $6,451,436 for
the comparable prior period of 2002. The significant segment
loss in the second quarter of 2003 is primarily due to a loss of
approximately $28,310,000 relating to the recaptures of life
reinsurance agreements by the Company's cedents, reflecting the
write down of deferred acquisition costs and cash payments made to
cedents net of reserve releases. Approximately $21,000,000 of
this amount relates to the anticipated recapture of the 50% quota
share reinsurance agreement with XL Life.
Adverse mortality experience continued into the second quarter and
losses of $8,480,000 were incurred on the Company's life
reinsurance agreements. Reinsurance agreements that have now been
recaptured were responsible for approximately $6,200,000 of this
loss.
Reduced investment income also contributed to the Company's net
loss for the three months ended June 30, 2003. This reduced
investment income is the result of a lower yields and a lower
level of invested assets resulting from recaptures. The Company
decided to maintain a high quality portfolio with a large cash
position for the first six months of 2003 to maximize the
Company's ability to meet collateral requirements of its cedents
and letter of credit providers and reduce financial market risk.
The Company plans to reposition the portfolio in the second half
of 2003.
Annuity Segment Results
Annuity segment loss was $33,063,939 for the three month period
ended June 30, 2003, as compared with a loss of $29,790,379 for
the three month period ended June 30, 2002, reflecting a
$20,400,000 loss related to the termination of the Company's
largest guaranteed minimum death benefit reinsurance agreement,
$2,900,000 of losses on that agreement during the quarter, a loss
of $4,100,000 relating to the termination of another annuity
reinsurance agreement and embedded derivative losses of
$1,700,000.
Annuity and Life Re (Holdings), Ltd. provides annuity and life
reinsurance to insurers through its wholly owned subsidiaries,
Annuity and Life Reassurance, Ltd. and Annuity and Life
Reassurance America, Inc.
As reported in Troubled Company Reporter's June 2, 2003 edition,
A.M. Best Co. downgraded the financial strength ratings to C+
(Marginal) from B- (Fair) of Annuity and Life Re Holdings'
(NYSE:ANR) life insurance subsidiaries, Annuity and Life
Reassurance, Ltd. (both of Bermuda) and Annuity & Life
Reassurance America, Inc (Connecticut), and removed them from
under review. The outlook for the ratings is stable.
ANTARES PHARMA: June 30 Balance Sheet Upside-Down by $6 Million
---------------------------------------------------------------
Antares Pharma, Inc. (OTC Bulletin Board: ANTR) reported a 57%
decrease in gross revenue to approximately $740,000 for the second
quarter ended June 30, 2003, compared to approximately $1,716,000
for the same period in 2002. Total revenues decreased 20% to
approximately $908,000 from $1.129 million for the quarters ended
June 30, 2003 and 2002, respectively. Fluctuation in gross revenue
and total revenue is primarily due to the timing of receipt and
earning of licensing fees and a decrease in product sales made to
licensees in connection with clinical studies and other
development activities. A net loss applicable to common shares of
$3.720 million for the second quarter ended June 30, 2003,
compared to $1.967 million for the second quarter 2002, was also
reported. The majority of the increase in net loss applicable to
common shares in 2003 over the same period in 2002 is a non-cash
charge of $1.696 million in loss on common stock warrants and
approximately $227,000 in interest expense on notes and
debentures, which increased the loss per common share by $0.16.
For the six months ended June 30, 2003, the Company reported a 12%
increase in gross revenue to $2.858 million in the current six-
month period compared to $2.554 million in the same period in
2002. Total revenues increased 1% for the current six-month
period compared to the same period in 2002. Net loss applicable
to common shares was $6.737 million for the six-month period ended
June 30, 2003, compared to $4.114 million for the same period in
2002, representing a 27% increase. The 2003 six-month period
included a $1.581 million non-cash mark-to-market accounting
charge relating to warrants classified as debt, which increased
the loss by $0.13 per common share.
Commenting on the results, Dr. Roger G. Harrison, CEO and
President of Antares Pharma, said, "During the first half of the
year, several of our product platforms have progressed in clinical
evaluations. Specifically, our new reusable technology, the MJ8,
has been used in further human evaluation studies, as has our
mini-needle technology. Our transdermal gel products have also
moved forward with our U.S. partner, BioSante Pharmaceuticals.
BioSante has announced completion of its Phase II/III studies with
transdermal estradiol, its plans for pivotal registration studies,
and its progress into Phase II trials with testosterone for female
sexual dysfunction. Revenues from licensing fees have not met
expectations during this quarter, as reaching closure on certain
opportunities is taking longer than anticipated. However, we
remain confident in our technology and in our business strategy.
We have also made progress in reducing monthly expenses, and I am
pleased with the excellent efforts of our staff as we continue to
build business efficiencies across our operations, as reflected in
our decrease in operating loss of 4% for the current three-month
period and 8% for the current six-month period compared to the
same periods last year."
Balance Sheet
Cash and cash equivalents at December 31, 2002, and June 30, 2003,
were approximately $268,000 and $305,000, respectively. Assets at
December 31, 2002, and June 30, 2003, were $6.409 million and
$5.869 million, respectively, and net shareholders' equity
(deficit) at December 31, 2002, and June 30, 2003, was
approximately $655,000 and ($5.828) million, respectively.
The decrease in net shareholders' equity reflects the effects of
operations continuing at a loss and a non-cash mark-to-market
accounting charge relating to warrants classified as debt.
Antares Pharma develops pharmaceutical delivery systems, including
needle-free and mini-needle injector systems and transdermal gel
technologies. These delivery systems are designed to improve both
the efficiency of drug therapies and the patient's quality of
life. The Company currently distributes its needle-free injector
systems in more than 20 countries. In addition, Antares Pharma
conducts research and development with transdermal gel products
and currently has several products in clinical evaluation with
partners in the US and Europe. The Company is also conducting
ongoing research to create new products that combine various
elements of the Company's technology portfolio. Antares Pharma has
corporate headquarters in Exton, Pennsylvania, with manufacturing
and research facilities in Minneapolis, Minnesota, and research
facilities in Basel, Switzerland.
ANTICLINE URANIUM: Brings-In Pritchett Siler as New Auditors
------------------------------------------------------------
Hansen, Barnett & Maxwell, independent certified public
accountants, of Salt Lake City, Utah, audited the balance sheets
of Anticline Uranium, Inc., a Utah corporation, as of Dec. 31,
2002 and 2001, and the related statements of operations,
stockholders' deficit, and cash flows for the years then ended and
for the period from August 10, 2001(date of inception of the
exploration stage) through December 31, 2002.
During July 2003, management of the Company consulted with a
representative of Pritchett, Siler & Hardy, certified public
accountants, Salt Lake City, Utah, for the purpose of determining
whether Pritchett, Siler & Hardy would be interested in becoming
the Company's new independent auditors. After such discussions, on
July 28, 2003, the Company's Board of Directors resolved to
dismiss Hansen, Barnett & Maxwell and retain Pritchett, Siler &
hardy as the Company's independent auditors.
During the two years ended December 31, 2002 and during the
subsequent period through July 21, 2003, the reports of Hansen,
Barnett & Maxwell expressed that there was substantial doubt about
the Company's ability to continue as a going concern.
ARRIS GROUP: S&P Downgrades Ratings Due to Weak Profitability
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Duluth, Georgia-based Arris Group Inc. to 'B' from 'B+'
and lowered its subordinated debt rating to 'CCC+' from 'B-'. The
ratings were removed from CreditWatch, where they had been placed
on June 18, 2003. The outlook is negative.
"The rating downgrades stem from weakened profitability, combined
with an uncertain outlook for deployment of telephony services
over cable systems by multiple service operators," said Standard &
Poor's credit analyst Joshua Davis.
Arris has experienced weakened operating performance over recent
quarters, reflecting sharply lower investment by key multiple
service operator (MSO) customers Comcast Corp. (BBB/Negative) and
Cox Communications Inc. (BBB/Stable/A-2), as well as the loss of
other customers, such as unrated Cabovisao of Portugal. Arris'
business profile is negatively affected by the general
tentativeness among cable MSOs in deploying or expanding telephony
services, as well as by the delay in equipment investment caused
by the transition to "voice-over-IP" (VoIP) from traditional
circuit-switched technology.
"Future cable telephony services will increasingly employ Internet
protocol-based technology, and Arris is positioned to tap this
market as it develops," Mr. Davis said. VoIP technology, however,
is still in the relatively early stages of its development, and
widespread use is still some way off. Comcast, Cox, and other MSOs
are currently testing telephony services using IP-based equipment
in select markets, but large-scale deployment is not expected
until 2004 at the earliest.
AURORA FOODS: June 30 Net Capital Deficit Widens to $77 Million
---------------------------------------------------------------
Aurora Foods Inc. (OTC Bulletin Board: AURF), a producer and
marketer of leading food brands, announced results for the second
quarter ended June 30, 2003, and that its financial results for
the years ended December 31, 2002 and 2001, as well as interim
quarters, would be restated to reflect adjustments to deferred
taxes.
The restatements do not affect previously recorded net sales,
operating income (loss) or past or expected future cash tax
obligations. In addition, the restatements are expected to have no
effect on the Company's previously announced financial
restructuring, including the $200 million equity investment in the
Company by J.W. Childs Equity Partners III, L.P.
Second Quarter Results
Aurora's EBITDA (earnings before interest, taxes, depreciation,
and amortization) for the quarter was $26.3 million compared with
EBITDA of negative $5.5 million in the same period last year. The
second quarter 2003 EBITDA included charges of $4.4 million,
primarily related to the corporate staff reduction announced by
the Company on April 1, 2003, and $4.2 million for financial
restructuring and divestiture related costs, partially offset by
income of $2.7 million related to the disposition of Aurora's Yuba
City, Calif. facility. The second quarter 2002 EBITDA included a
charge of $30.3 million, primarily related to the closing of the
Company's West Seneca, N.Y. facility.
Aurora's net sales in the second quarter 2003 were $161.1 million
versus $172.9 million in the second quarter 2002. The Company's
net loss in the second quarter 2003 was $14.9 million, as compared
to a prior year loss, as restated, of $55.7 million. The second
quarter of 2003 includes an income tax expense of $6.0 million,
versus $5.1 million in the second quarter of 2002, primarily
associated with recording deferred tax liabilities related to book
versus tax amortization of goodwill.
In the second quarter of 2003, Aurora's unit volume was down 12.0%
versus the same quarter in the prior fiscal year. The decline in
unit volume is attributable to several factors. First, Aurora's
shipments to its retail customers materially lagged consumption as
the trade reduced inventory levels and overall weeks of supply
versus the previous year. Second, Aurora's unit volume was
affected by reduced marketing spending and increased competitive
activity in the baking mix category as well as planned changes in
the pricing strategy for Aurora's syrup business.
The Company had cash and availability under its accounts
receivable facility of $26.3 million as of June 30, 2003.
At June 30, 2003, the Company's balance sheet shows a working
capital deficit of about $1 billion, and a total shareholders'
equity deficit of about $77 million.
Update on Business Improvement Initiatives
and Financial Restructuring
"Since we began the turnaround process at Aurora last fall, we
have had two key priorities," said Dale F. Morrison, Aurora's
Chairman and interim Chief Executive Officer. "The first priority
has been to stabilize and fix the business while the second
priority has been to significantly reduce our balance sheet
leverage. While many challenges remain, we are making progress on
both priorities. Aurora's EBITDA performance for the second
consecutive quarter was in line with the Company's 2003 business
plan. In addition, we continue to make progress on the business
improvement initiatives that will provide a solid foundation for
future growth. The comprehensive restructuring plan announced on
July 2, 2003, and the signing of the definitive agreement with
J.W. Childs Equity Partners III, L.P. on July 11, 2003, are very
positive steps toward achieving our second priority of
deleveraging the balance sheet. We believe that the restatement
will have no economic impact on the business or future operations
of the Company," concluded Mr. Morrison.
John Childs, President of J.W. Childs Associates, L.P., stated:
"We are comfortable with the restatement and the facts underlying
the restatement, and they will have no impact on our willingness
to go forward with the investment as currently structured."
Under the terms of the definitive agreement, J.W. Childs will make
a $200 million capital infusion in the Company in return for
common stock representing approximately two thirds of the equity
of the reorganized Company. In addition to entering into the
definitive agreement with J.W. Childs, the Company launched its
vendor lien program, is in discussions regarding the terms of a
debtor-in-possession financing facility, and has been engaged in
discussions with its bank group and bondholders regarding the
restructuring. "We have been moving forward on our restructuring
process and remain confident that it is the best path for
rationalizing the Company's capital structure and positioning
Aurora for the future," said Mr. Morrison.
Restatements Related to Deferred Taxes
As a result of accounting interpretations recently conveyed to it
by the Company's independent accountants, PricewaterhouseCoopers,
the Company reevaluated its deferred tax accounting. The Company
determined that its valuation allowance for net deferred tax
assets, which had been recorded by the Company at December 31,
2002, should have been recorded at December 31, 2001, and that the
Company should have provided for ongoing deferred tax liabilities
subsequent to January 1, 2002 (the effective date of the adoption
of SFAS (Statement of Financial Accounting Standards) 142-Goodwill
and Other Intangible Assets for certain of the differences between
the book and tax amortization of the Company's goodwill and
indefinite lived intangibles as defined by SFAS 142. The impact of
the adjustments for the year ended December 31, 2001, was to
increase income tax expense and the net loss by $65.4 million. For
the year ended December 31, 2002, the impact was to decrease
income tax expense by $30.9 million, increase the expense recorded
for the cumulative effect of the change in accounting principle by
$60.8 million, all of which increased the net loss by $29.9
million. In addition, the impact on the statement of operations
for the three months ended March 31, 2003, was to increase income
tax expense and the net loss by $3.6 million. While provision for
this deferred tax liability is required by existing accounting
literature, due to the existence of net operating tax loss carry
forwards, which expire at various times through the year 2022, the
Company does not expect that these potential taxes will be payable
in the foreseeable future, if ever.
Attached are Aurora's financial data for the second quarter ended
June 30, 2003. The Company intends to reflect the necessary
adjustments to all affected periods and to file the applicable
amended financial statements promptly.
Aurora Foods Inc., based in St. Louis, Missouri, is a producer and
marketer of leading food brands, including Duncan Hines(R) baking
mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R)
syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R)
frozen seafood; Aunt Jemima(R) frozen breakfast products;
Celeste(R) frozen pizza and Chef's Choice(R) skillet meals. More
information about Aurora may be found on the Company's Web site at
http://www.aurorafoods.com
AZUREL LTD: Signs-Up Marcum & Kliegman for Accounting Services
--------------------------------------------------------------
Effective April 25, 2003, Azurel, Ltd., a Delaware corporation
dismissed Grassi & Co. CPAs, P.C. as its independent accountants,
which action was approved by the Company's Board of Directors and
the Audit Committee of the Board of Directors. Feldman Sherb &
Co., P.C., a professional corporation of certified public
accountants, was the independent accounting firm for Azurel for
the year ended December 31, 2001 and through the period ended
April 19,2002. Feldman was merged into Grassi on April 17, 2002
with Grassi as the successor firm.
The reports of Feldman or Grassi on the financial statements of
Azurel for the past two fiscal years contained an expression of
substantial doubt regarding the Company's ability to continue as a
going concern.
On April 25, 2003 Marcum & Kliegman LLP was engaged as the
Company's new independent accountants commencing with the audit
for the year ended December 31, 2002 which action was approved by
the Company's Board of Directors and the Audit Committee of the
Board of Directors.
BEACON POWER: Successfully Averts Delisting from Nasdaq Market
--------------------------------------------------------------
Beacon Power (NASDAQ:BCON), a leader in sustainable energy storage
and power conversion systems, announced that it has been notified
by the Nasdaq Stock Market that the Nasdaq Listing Qualifications
Panel has determined that a continuation of the listing of the
Company's securities on the Nasdaq SmallCap Market has been
granted and that its stock will continue to be listed on the
SmallCap Market until October 6, 2003.
As previously announced, on June 6, 2003, the staff of the Nasdaq
Stock Market notified the Company that its stock would be removed
from the SmallCap Market due to its failure to satisfy the $1.00
bid price requirement, and on July 18, 2003 the Company requested
a hearing before the Nasdaq Listing Qualifications Panel to appeal
the Company's delisting. The Panel exercised its discretionary
authority and granted the Company an extension in light of a
proposal that Nasdaq has made to the Securities and Exchange
Commission that, if approved by the SEC, would provide two 180-day
periods in which to satisfy the bid price requirement (in addition
to the two 180-day periods currently provided by Nasdaq) for
issuers, such as the Company, that meet core initial-listing
criteria.
There is no way to predict what action, if any, the SEC will take
on this matter before October 6, 2003, and there is no assurance
that the Company's stock will continue to be listed on the Nasdaq
SmallCap Market after that date. If the SEC rejects the Nasdaq's
proposal and the Company is unable to satisfy the $1.00 bid price
requirement, then the Nasdaq may cause the Company's stock to be
removed from the SmallCap Market.
Beacon Power Corporation is a development-stage company which
designs, develops, configures, and offers for sale power systems
that provide highly reliable, high-quality, uninterruptible
electric power. It is best known for its environmentally friendly,
flywheel-based products (employing a flywheel made from
proprietary composite materials) that can store and deliver energy
in a variety of configurations. Such products have longer life,
reduced maintenance, quicker recharging, remote monitoring and
other advantages over competing solutions.
* * *
Liquidity and Going Concern Uncertainty
In its latest Form 10-Q for the period ended March 31, 2003, the
Company reported:
"Based on our operating baseline, which includes the cash flow
benefits of our significantly reduced headcount, development
spending and capital expenditures, we believe that our cash and
cash equivalents and future cash flow from operations will satisfy
the Company's working capital needs through 2004. However, this
belief assumes no expenditures for prototype development or
production capabilities, which would require significant amounts
of cash. In the event that we are not able to obtain development
contracts from customers to fund prototype development, these
expenditures will significantly reduce the number of months our
cash and cash equivalents and future cash flow from operations
will satisfy our working capital needs. In as much as we do not
expect to become profitable or cash flow positive until 2006, our
ability to continue as a going concern will depend on our being
able to raise additional capital. We may not be able to raise
this capital at all, or if we are able to do so, it may be on
terms that are extremely dilutive to our shareholders."
BIO-RAD LABORATORIES: Completes Tender Offer for 11-5/8% Notes
--------------------------------------------------------------
Bio-Rad Laboratories, Inc. (AMEX: BIO, BIO.B), a multinational
manufacturer and distributor of life science research products and
clinical diagnostics, announced the results of its cash tender
offer and consent solicitation for all of its outstanding 11-5/8%
Senior Subordinated Notes due 2007, which expired today at 12:01
a.m., New York City time. The Company received tenders from
holders of approximately 97% of the notes subject to the tender
offer and has accepted these notes for purchase.
Holders who validly tendered their notes by 5:00 p.m., New York
City time, on July 30, 2003, received the total consideration of
110.625% of the principal amount of notes, which includes a
consent payment of 1.5% of the principal amount of the notes.
Holders who validly tendered their notes after the Consent Payment
Deadline and prior to 12:01 a.m., New York City time today were
not entitled to the consent payment, and received as payment for
their notes the total consideration minus the consent payment, or
109.125% of the principal amount of notes. Tendering holders also
received accrued and unpaid interest on the principal amount of
their notes to, but not including, the date of repurchase.
In addition, the Company announced today that it has called for
redemption, in accordance with the terms of the indenture
governing the notes, any and all of the notes that remain
outstanding after the completion of the tender offer. The
redemption date for the remaining notes will be September 15,
2003, at a redemption price equal to 100% of the principal amount
of the notes plus the applicable premium calculated in accordance
with the indenture governing the notes, plus accrued and unpaid
interest to September 15, 2003.
The Company retained Goldman, Sachs & Co., to act as the exclusive
Dealer Manager and Solicitation Agent in connection with the
tender offer and consent solicitation.
As reported in Troubled Company Reporter's July 30, 2003 edition,
Standard & Poor's Ratings Services assigned a 'BB-' rating to
Bio-Rad Laboratories Inc.'s $200 million senior subordinated
debentures due 2013 to be privately placed in reliance on Rule
144A. This new issue will be used to retire high-cost debt used to
fund the Pasteur Sanofi Diagnostics acquisition and to boost cash
balances. The 'BB+' corporate credit and 'BBB-' senior secured
ratings are affirmed. The outlook is stable.
BRIDGEWATER SPORTS: Hires Ravin Greenberg as Bankruptcy Counsel
---------------------------------------------------------------
Bridgewater Sports Arena, L.P., requests permission from the U.S.
Bankruptcy Court for the District of New Jersey to employ Ravin
Greenberg PC as its attorneys.
Because of Ravin Greenberg's extensive general experience and
knowledge, and in particular, its recognized expertise in the
field of reorganizations under chapter 11 of the Bankruptcy Code,
the Debtor retained the firm in connection with the commencement
and prosecution of its Chapter 11 case.
Consequently, the Debtor wishes to continue employing Ravin
Greenberg for the duration of this proceeding. The Debtor
anticipates Ravin Greenberg will:
a) give advice to the Debtor with respect to its powers and
duties as Debtor-In-Possession in the continued
operation of its business and in the management of its
property.
b) meet with creditors of the Debtor in negotiating a Plan
or Plans of Reorganization and to take the necessary
legal steps in order to confirm said Plan(s), including,
if need be, negotiating any financing pertaining to said
Plan(s).
c) prepare on behalf of the Debtor, as Debtor-In-
Possession, necessary applications, answers, orders,
reports and other legal papers.
d) appear before the Bankruptcy Judge and to protect the
interests of the Debtor before said Bankruptcy Judge,
and to represent the Debtor in all matters pending
before said Bankruptcy Judge.
e) perform all other legal services for Debtor, as Debtor-
In-Possession, which may be necessary herein, including,
but not limited to.
Morris S. Bauer, Esq., a member of Ravin Greenberg discloses the
customary hourly rates of the firm's professionals:
Nathan Ravin $450 per hour
Howard S. Greenberg $495 per hour
Stephen B. Ravin $375 per hour
Allan M. Harris $375 per hour
Bruce J. Wisotsky $360 per hour
Larry Lesnik 1974 $345 per hour
Morris S. Bauer $335 per hour
Brian L. Baker $240 per hour
Sheryll S. Tahiri $215 per hour
Chad B. Friedman $190 per hour
Bridgewater Sports Arena, L.P., headquartered in Bridgewater, New
Jersey, is a recreational facility in Central New Jersey. The
Company filed for chapter 11 protection on August 5, 2003 (Bankr.
N.J. Case No. 03-35809). Brian L. Baker, Esq., and
Morris S. Bauer, Esq., at Ravin Greenberg, PC represent 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.
BUDGET: Committee Seeks Appointment as Estate Representative
------------------------------------------------------------
Currently, the Budget Group Debtors, the Committee and the UK
Administrators are working collectively to establish procedures
for determining the allocation of the sale proceeds of the North
American Sale and EMEA Sale and resolving intercompany issues.
For purposes of this process, the parties recognize that the
Committee's interests are more closely aligned with those of the
creditors of the U.S.-based Debtors than with creditors of BRACII
and its debtor subsidiaries, BRAC Rent-A-Car of Japan, Inc. and
BRAC Rent-a-Car Asia-Pacific, Inc., and that the UK Administrators
represent the creditors of BRACII Group.
Accordingly, the Committee asks the Court to appoint it as estate
representative and confer standing on it to prosecute, defend,
settle and take all other reasonable actions in the Bankruptcy
Court or any other court of competent jurisdiction with respect
to certain claims.
Pursuant to Section 1103(c)(2) of the Bankruptcy Code, the
Committee may "investigate acts, conducts, assets, liabilities,
and financial condition of the debtor, the operation of the
debtor's business . . ." The Committee may also "raise and may
appear and be heard on any issue in a case under this chapter."
The Committee wants Judge Walrath to grant it standing to be
heard as estate representative of all the relevant Debtor estates
other than the BRACII Group with respect to certain claims
between the BRAC Group and the BRACII Group.
On April 30, 2003, the UK Administrators, on BRACII's behalf,
filed a proof of claim against BRACC asserting a claim of "at
least $20 million". The Administrators did not delineate the
basis of the claim. Thus, the Committee seeks the Court's
authority to act as estate representative in respect of the
defense of BRACC against the Administrators' claim before any
court of competent jurisdiction. Additionally, the Committee
seeks to assert in both the UK Administration and the Chapter 11
Cases a claim against BRACII for breach of contract and dilution
of the Budget brand and prosecute the claim before any court of
competent jurisdiction.
Specifically, Mr. Brady explains, BRACII operated the EMEA
Operations under the Budget brand name pursuant to the terms of a
License Agreement dated June 8, 1965 between BRACC, as licensor,
and BRACII, as licensee.
On September 27, 2002, the Debtors filed their Statements and
Schedules in accordance with Rule 1007 of the Federal Rules of
Bankruptcy Procedure. In those Statements and Schedules, the
Debtors scheduled these BRAC Group claims against BRACII:
Estate Asserting the Claim Amount of Claim
-------------------------- ---------------
BRAC Group Inc. $87,361,931.28
BRAC Rent-A-Car Corporation 34,520,243.00
The Debtors scheduled these claims as "undisputed", "non-
contingent", and "liquidated". As a consequence, pursuant to
Bankruptcy Rule 3003(b), the claims are prima facie valid,
subject to objection by parties-in-interest. The Committee seeks
to assert these claims on behalf of the BRAC Group and the BRACC
estate in these Chapter 11 cases and in the UK Administration,
and to prosecute them before any court of competent jurisdiction.
In connection with the parties' efforts to formulate and
implement the Proposed Intercompany Procedures, the Debtors have
proposed, and the Committee agrees, that the Committee is best
suited to take the lead in prosecuting, defending or otherwise
resolving the Claims.
Section 1109(b) of the Bankruptcy Code authorizes the Court to
enter orders granting the Committee the right to act as estate
representative for the purpose of representing the estates in
respect of the Claims. Section 1109(b) provides, in pertinent
part, that the Committee "may raise and may appear and be heard
on any issue in a case under this chapter." Courts have
interpreted this section as conferring authority upon the court
to appoint a committee as the estate representative with respect
to the prosecution of claims where the debtor-in-possession will
not prosecute the claims.
Mr. Bowden informs the Court that the Debtors support the
Committee's request. In addition, appointing the Committee as
estate representative is appropriate given the fact that
substantially all of the estates' assets of the estates have been
sold and converted to cash and the Debtors and the Committee have
been cooperating in the orderly and efficient administration of
assets and resolution of claims. In this regard, the Debtors
have agreed to fully cooperate with the Committee in the defense
and prosecution of the Claims, including without limitation,
making witnesses available, producing requested documents, and
providing the affidavits as the Committee reasonably deems
necessary or appropriate.
The Debtors will remain parties-in-interest in all respects and
for all purposes concerning the Claims, and the Court on
appropriate notice will approve any settlement of any of the
Claims. (Budget Group Bankruptcy News, Issue No. 24; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
CALPINE CORP: Construction Finance Unit Obtains New Funding
-----------------------------------------------------------
Calpine Corporation (NYSE: CPN), a leading North American power
company, announced that its wholly owned subsidiary, Calpine
Construction Finance Company, L.P., has received funding on its
$750 million institutional term loans and secured notes offering.
The offering was comprised of the following:
-- $385 million of First Priority Secured Institutional Term
Loans Due 2009 offered at 98% of par and priced at Libor
plus 600 basis points, with a Libor floor of 150 basis
points.
-- $365 million of Second Priority Secured Floating Rate
Notes Due 2011 offered at 98.01% of par and priced at
Libor plus 850 basis points, with a Libor floor of 125
basis points.
The noteholders' recourse will be limited to CCFC I's seven
natural gas-fired electric generating facilities located in
various power markets in the United States, and related assets and
contracts.
Net proceeds from the offering were used to refinance a portion of
CCFC I's existing indebtedness, which matures in November 2003.
The remaining balance of CCFC I was repaid from cash on hand.
The First Priority Secured Institutional Term Loans Due 2009 were
offered in the institutional term loan market. The Second
Priority Secured Floating Rate Notes Due 2011 were offered in a
private placement under Rule 144A, have not been and will not be
registered under the Securities Act of 1933, and may not be
offered in the United States absent registration or an applicable
exemption from registration requirements.
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'B' rating to Calpine Corp.'s $3.3 billion second-
priority senior debt. The $3.3 billion includes: a $750 million
term loan due 2007, $500 million floating rates notes due 2007,
$1.15 billion 8.5% secured notes due 2010, and $900 million
secured notes due 2013.
The notes carry the same rating as other Calpine senior secured
debt and are rated two notches higher than the 'CCC+' rated senior
unsecured debt.
At the same time, Standard & Poor's affirmed its 'B' corporate
credit rating on Calpine, its 'B' rating on Calpine's secured
debt, its 'CCC+' rating on Calpine's senior unsecured bonds, and
its 'CCC' rating on Calpine's preferred stock. The 'BB-' rating on
the existing $950 million secured term loan and the $950 million
secured revolver are withdrawn, as this debt was refinanced with
the proceeds of the recent $3.8 billion financing.
CANADIAN HYDRO: June Working Capital Deficit Tops $3.9 Million
--------------------------------------------------------------
Canadian Hydro Developers, Inc. reported earnings of $864,367 on
generation of 99 million kWh for the second quarter ended June 30,
2003, compared to $948,595 on generation of 85 million kWh for Q2
2002. Cash flow from operations for Q2 2003 increased 20% to
$2,319,668 compared to $1,930,963 for Q2 2002.
Earnings for the six months ended June 30, 2003 were $1,189,475
on generation of 158 million kWh, compared to $1,378,577 on
generation of 148 million kWh for the same period in 2002. Cash
flow from operations for the six months ended June 30, 2003
increased to $3,555,773 compared to $3,377,185 for the same period
in 2002.
The Q2 2003 and year to date financial results, which included
record generation, higher revenue, EBITDA1, cash flow from
operations, and earnings before income taxes, were the result of
the Pingston Hydroelectric Plant (15 MW net) achieving commercial
operations on May 8, 2003, and higher average Power Pool of
Alberta prices received for electricity on the Company's merchant
plants (Q2 2003 - $51/MW; Q2 2002 - $48/MWh; 2003 - $61/MWh; 2002
- $43/MWh). Approximately 12% of the Company's generation was
exposed to the Pool in Q2 2003 (Q2 2002 - 21%), and 13% of
generation for the six months ended June 30, 2003 (2002 - 19%),
with the balance being sold under various long-term sales
agreements.
Q2 2003 Achievements:
- Achieved commercial operations at the Pingston Hydroelectric
Plant on May 8, 2003;
- Executed a credit agreement with a syndicate of Canadian
lenders for additional credit facilities in the amount of $59.4
million to assist in capital expenditures to construct the 25
MW Grande Prairie EcoPower(TM) Centre, the 7.5 MW (net)
Pingston Expansion and the 25 MW Upper Mamquam Hydroelectric
Projects;
- Filed a final prospectus to issue 16.22 million common shares
at a price of $1.85 per share for gross proceeds of $30
million, which closed on July 11, 2003. Net proceeds from the
offering will be used to fund the construction of the Upper
Mamquam and Pingston Expansion Hydroelectric Projects, with the
balance of the proceeds being utilized for the development of
prospects and for general corporate purposes; and
- Commenced construction on the Grande Prairie EcoPower(TM)
Centre.
At June 30, 2003, the company's working capital deficit tops $3.9
million.
"The addition of Pingston this May provided a significant amount
of cash flow in a short period of time," said John Keating, Chief
Executive Officer. "The plant is operating extremely well and
continues to be at 100% output."
On the topic of the Company's recently completed debt and equity
financings, Mr. Keating noted, "We are extremely pleased with
these financings, which will fully finance our three current
construction projects, as well as provide additional cash reserves
for development projects and other opportunities. We would like to
welcome all new shareholders and lenders, as well as thank our
existing shareholders and lenders for their continued support.
Your support paves the way for our ongoing growth plans."
Canadian Hydro is a developer, owner and operator of ten "run of
river" hydroelectric plants, three wind plants and one natural
gas-fired plant, totalling 103.9 MW net to the Company's interest.
In addition, other projects in excess of 215 MW are in various
stages of permitting for construction in the next five years.
All of the Company's plants and projects are located in British
Columbia, Alberta and Ontario. Canadian Hydro's wind and water
plants are certified under the EcoLogo(R) program. All of the
Company's future projects, including the Grande Prairie
EcoPower(TM) Centre, Pingston Expansion and Upper Mamquam
Hydroelectric Projects are slated for certification as low-impact
renewable energy facilities.
Canadian Hydro Developers, Inc. is committed to the concept of
low-impact power generation. Through its wind and run-of-river
hydro facilities, Canadian Hydro is demonstrating that commitment
to the benefit of the environment and its shareholders.
CASTLE DENTAL: Reports Improved Financial Results for Q2 2003
-------------------------------------------------------------
Castle Dental Centers, Inc., (OTC Bulletin Board: CASL) has net
income of $21.5 million, for the three months ended June 30, 2003,
including a gain of $21.8 million on early extinguishment of debt
related to the financial restructuring completed in May. Excluding
the gain on extinguishment of debt and related restructuring
costs, the Company earned $424,000 on patient revenues of $24.1
million in the second quarter of 2003, compared to a loss of $0.7
million on patient revenues of $25.1 million in the second quarter
of 2002. The decline in revenues resulted primarily from the
closing of eight dental centers in the past year. Revenues from
existing dental centers were flat to last year.
For the six months ended June 30, 2003, Castle Dental reported net
income of $22.0 million, including the gain on early
extinguishment of debt, compared to a loss of $39.8 million in the
first six months of 2002. The loss in 2002 included a $37.0
million charge related to goodwill impairment resulting from the
adoption of Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets". Excluding these
unusual charges and restructuring costs, the Company earned $1.0
million in the first six months of 2003 compared to a loss of $1.7
million in the prior year period. Patient revenues of $48.5
million were $2.1 million, or 4.1% lower than patient revenues in
the first six months of 2002. The lower revenues resulted from the
closing of eight dental centers as same store revenues increased
by 0.7%.
Excluding unusual charges, restructuring costs and severance costs
primarily associated with the previously announced resignation of
the Company's president in June, earnings before interest, taxes,
depreciation and amortization was $2.2 million for the quarter
ended June 30, 2003, a 38% increase from EBITDA of $1.6 million in
the second quarter of 2002. For the six months ended June 30,
2003, EBITDA was $5.1 million, 53% higher than EBITDA of $3.2
million for the comparable period of 2002.
During the second quarter 2003, the Company also completed the
previously announced recapitalization and debt restructuring. This
included the sale of $12.4 million in preferred stock and
subordinated notes and the restructuring of the Company's senior
credit facility, resulting in a significant reduction in
outstanding debt. At June 30, 2003, total debt outstanding was
$20.2 million compared to $51.4 million at December 31, 2002.
Castle Dental Centers' June 30, 2003 balance sheet shows that its
total current liabilities exceeded its total current assets by
about $2 million, while total shareholders' equity tops $6
million, up from a deficit of about $22 million six months ago.
Castle Dental Centers, Inc. develops, manages and operates
integrated dental networks through contractual affiliations with
general, orthodontic and multi-specialty dental practices in the
U.S. Castle manages 75 dental centers with approximately 160
affiliated dentists in Texas, Florida, Tennessee and California
with annual patient revenues of approximately $100 million.
* * *
As reported in Troubled Company Reporter's May 20, 2003 edition,
the Company completed its previously announced recapitalization
plan, which included the sale of $13.0 million in subordinated
notes and preferred stock to a group of investors led by Sentinel
Capital Partners II, L.P., and the restructuring of its senior
credit facility, resulting in a $27 million reduction in the
Company's outstanding debt. Sentinel Capital Partners is a New
York-based institutional private equity investment firm that
specializes in buying and building smaller middle market companies
in the United States and Canada in partnership with management.
The new senior credit facility consists of a $16.0 million term
loan and revolving credit facility provided by GE Healthcare
Financial Services, with a final maturity date of November 2007.
Sentinel and certain other investors, including members of
Castle Dental's management, purchased $6.0 million in Series B
preferred stock and $7.0 million in subordinated notes due in five
years. Sentinel will own a majority of the voting stock of the
Company and will be entitled to elect a majority of the board of
directors of Castle Dental.
CEATECH USA INC: PwC Resigns as Independent Accountants
-------------------------------------------------------
On July 28, 2003, PricewaterhouseCoopers LLP resigned as the
independent accountants for Ceatech USA, Inc.
PWC's reports on the Company's consolidated financial statements
as of and for the years ended January 31, 2003 and
January 31, 2002 contained a separate paragraph expressing
substantial doubt regarding the Company's ability to continue as a
going concern.
CENTURION GOLD: Company's Ability to Continue Ops. Uncertain
------------------------------------------------------------
Salberg & Company, PA was dismissed as the independent auditor for
Centurion Gold Holdings Inc. on August 6, 2003 based upon the
acquisition by the Company of one hundred percent (100%) of the
issued and outstanding capital stock of Omaruru Exploration
Company (Proprietary) Limited.
Salberg's reports on the financial statements of the Company for
the fiscal year ended December 31, 2002, for the period from
August 9, 2001 (inception) through December 31, 2001 and for the
period from August 9, 2001 (inception) through December 31, 2002
contained an explanatory paragraph relating to the ability of
Centurion Gold Holdings to continue as a going concern.
The Company's Board of Directors approved the change in
accountants.
CLEAN HARBORS: Second-Quarter 2003 Net Loss Tops $7 Million
-----------------------------------------------------------
Clean Harbors, Inc. (NASDAQ: CLHB) (S&P, BB- Corporate Credit
Rating, Negative), the leading provider of environmental and
hazardous waste management services throughout North America,
announced financial results for the second quarter ended June 30,
2003.
The Company reported second-quarter revenues of $172.0 million,
compared with $60.1 million in the same quarter in 2002. The
significant increase in revenues is attributable to the
acquisition of Safety-Kleen's Chemical Services Division and a
major emergency contract the Company was awarded in the second
quarter of 2003 to clean up an oil spill on Cape Cod. Net loss for
the second quarter of 2003 was $6.8 million, which compares with
net income of $483,000 for the same quarter in 2002.
First half revenues for 2003 were $314.3 million compared with
$113.4 million for the same period in 2002. Net loss for the first
six months of 2003 was $13.9 million, compared with net income of
$241,000 for the same period in 2002.
The Company's June 30, 2003 balance sheet shows that its total
current liabilities exceeded its total current assets by about $15
million, while total shareholders' equity is down to $14 million
from about $22 million six months ago.
Comments on the Second Quarter
"Clean Harbors second-quarter revenues were driven by our lead
role in managing a major Cape Cod oil spill clean up, which was
the largest emergency response project in the Company's history,"
said Alan S. McKim, Chairman and Chief Executive Officer of Clean
Harbors. "While we exceeded our quarterly revenue guidance, our
bottom-line results were below our expectations as a result of
substantial volume shortfalls in our landfill business and other
softness in waste disposal volumes into our facilities in the
second quarter. The drop in volumes to these facilities is an
industry-wide phenomenon that our competitors, as well as our
remediation and engineering clients are all experiencing."
"We also continued to experience a reduction in revenues from our
distributors and brokers due to the increased financial pressures
they are facing," said McKim. "We expect these volumes to continue
to be constrained because of the uncertain economic status of some
of our traditional brokers and our conservative policy of not
incurring any substantial credit risks with these customers. In
addition to the significant volume shortfall and a competitive
market environment, our bottom-line results were affected by
higher-than-expected health care costs, the negative impact
associated with the strengthening Canadian dollar on U.S. dollar
denominated sales in Canada, the settlement of a state sales tax
audit and final settlement of outstanding invoicing issues with
Safety-Kleen. In total, these four additional factors affected our
bottom-line by over $4 million in the quarter."
"We are intensifying our program to control expenses and eliminate
costs," McKim said. "Furthermore, we are continuing our
integration efforts of the CSD assets acquired from Safety-Kleen.
We are accelerating the internalization of select transportation
and waste disposal functions - steps we previously anticipated
taking next year. We are also currently reviewing our network of
plants and facilities for areas to further streamline our
organization and increase efficiencies. Finally, we are taking
more aggressive steps to grow our core revenues, increase EBITDA
and regain profitability as quickly as possible. We are seizing
opportunities we have identified in several key vertical markets
by hiring additional sales personnel during the third quarter."
Revised Loan Agreements
Mark Burgess, Executive Vice President of Administration and Chief
Financial Officer, stated, "The original covenant packages
negotiated with our lenders were established last year before the
CSD acquisition was finalized and were based upon pre-acquisition
forecasts as to expected revenue and EBITDA. In light of our
actual experience over the past year and the current state of the
Company, we have worked closely with our lenders to amend those
covenants to more appropriate levels given the current market
environment. The new amended covenants we have negotiated with our
lenders provide Clean Harbors with flexibility to successfully
pursue its long-term growth objectives."
"Our revised covenants require the Company to generate
approximately $60 million in EBITDA over the next four quarters,
and more realistically reflect the lower sales levels we are
experiencing versus those projected a year ago. Our fixed charge
ratio has also been amended to incorporate the Company's
expectations over the coming quarters on EBITDA generation, as
well as environmental and capital spending requirements."
Non-GAAP Second Quarter Results
The Company reported EBITDA for the second quarter of 2003 of $9.2
million compared with EBITDA of $6.1 million in the second quarter
of 2002.
Clean Harbors reports EBITDA results, which are non-GAAP, as a
complement to results provided in accordance with accounting
principles generally accepted in the United States and believes
that such information provides an additional measurement of the
Company's performance.
Outlook
"Clean Harbors continues to operate in a challenging environment,
but we are taking aggressive actions to address the shortfall in
our landfill and incineration businesses," said McKim. "We remain
confident about the opportunity that the CSD acquisition affords
us. We will continue to leverage our broad asset infrastructure,
which is unmatched in the industry. While we do not anticipate an
immediate turnaround in waste volumes, we are optimistic about our
long-term prospects based on our growing sales pipeline."
"Our site services business is performing well, and our growth
initiatives in this segment are beginning to show in the top
line," said McKim. "In addition, we anticipate that new government
standards, which become effective in September, will benefit Clean
Harbors by potentially forcing some competitors to shut down
certain facilities thereby reducing capacity in the marketplace
and causing the owners of captive incinerators to consider
outsourcing as a solution to their incineration needs."
Financial Guidance
Based on its second-quarter results, Company expectations and
current economic conditions, Clean Harbors is establishing the
following third-quarter and full-year revenue guidance, and
rescinding its previously announced 2003 full-year guidance for
EBITDA and EPS:
Third Quarter
Revenues of $155 million to $170 million
Full-Year 2003
Revenues of $630 million to $660 million
Clean Harbors, Inc. through its subsidiaries provides a wide range
of environmental and waste management services to a diversified
customer base including a majority of the Fortune 500 companies,
thousands of smaller private entities and numerous governmental
agencies. Within its international footprint, Clean Harbors has
service and sales offices located in 36 states, six Canadian
provinces, Mexico, and Puerto Rico, and operates 52 waste
management facilities strategically located throughout North
America. For more information, visit the Company's Web site at
http://www.cleanharbors.com
CONSECO INC: Files SEC Form 10-Q for June 2003 Quarter
------------------------------------------------------
Conseco, Inc. (OTCBB:CNCEQ) reported that it filed its Form 10-Q
for the quarter ended June 30, 2003, with the Securities and
Exchange Commission. The full text of the Form 10-Q will be
available at the SEC's Web site -- http://www.sec.gov
Information regarding the company's Chapter 11 bankruptcy
proceedings is available at http://www.bmccorp.net/conseco
DIVINE SAVIOR: Outlook on BB+ Bond Rating Revised to Positive
-------------------------------------------------------------
Standard & Poor's Ratings Services has revised its rating outlook
on Wisconsin Health and Educational Facilities Authority's
outstanding revenue bonds series 1999, issued for Divine Savior
Healthcare Inc., to positive from stable. The 'BB+' rating has
been affirmed.
"The positive outlook reflects the capacity that Divine has
demonstrated to maintain profitable operations and liquidity while
taking on new debt during the construction of a replacement
hospital," said Standard & Poor's credit analyst Antionette
Maxwell. "Favorable operating trends coupled with a smooth
transition to the new facility from the current hospital would
warrant an upgrade. No additional debt is expected in the near
future," she added.
The rating reflects stable operations, indicated by operating
margins of 4.27% and 3.98%, respectively, for the 11 months ended
May 31, 2003, and fiscal year-ended June 30, 2002. Additional
rating factors include stable profitability, generating adequate
maximum debt service coverage of 1.83x; and improved liquidity,
reflected in days' cash on hand of 194 at May 31, 2003, up from
164 at June 30, 2001.
Offsetting factors include the hospital's debt position, with
leverage of 58%; risk associated with the transition to the new
hospital from the current facility; and high dependency on leading
10 admitters.
Approximately $12.125 million of outstanding debt is affected.
Divine Savior Healthcare Inc. is a 49-staffed-bed acute care
facility located in Portage, Wis., approximately 40 miles north of
Madison. It operates four physician clinics and a 105-bed nursing
home. Divine is in the process of building a replacement hospital
adjacent to a newly constructed ambulatory center. The new
hospital will staff 52 beds, up from the current 49, and provide
for future expansion to accommodate demand. The facility is
expected to be completed on schedule in October 2003.
DIGEX INC: June 30, 2003 Net Capital Deficit Tops $93 Million
-------------------------------------------------------------
Digex, Incorporated (OTC Bulletin Board: DIGX), a leading provider
of enterprise hosting services, announced revenue of $37.2 million
for the quarter-ended June 30, 2003, compared with $48.7 million a
year ago. Ending the quarter, managed servers totaled 2,949 with
average monthly revenue per server of $3,938. Gross margin in the
quarter totaled 43.5%. Net loss available to common stockholders
for the quarter totaled $23.4 million or $0.36 per share.
New customers added this quarter include: Brady Communications, FM
Global, Marsh & McLennan Companies, Inc., Mitsubishi Digital
Electronics America, Inc., Paradigm Integration Corporation,
Sebring Capital, StatementOne.com and Thomson CenterWatch. A
number of customers also upgraded or renewed their services
including: American Honda Motor Co., Inc., Baker Hughes, Brinker
Capital, Cambrex, Delphi Corporation, Docent, Inc., Global Reports
LLC, Indus International, Inc. and Nestle USA.
Financial highlights for Digex include:
* Net cash used in investing activities totaled $4.3 million in
the first six months of 2003, down approximately 81% from the
2002 amount
* Quota-carrying salespeople totaled 56 for the quarter, compared
with 49 last quarter and 114 in the year-ago period
* Total employees ending June 30, 2003 was 768, compared with 776
last quarter and 1,182 in the year-ago period 2Q03 1Q03 4Q02
3Q02 2Q02
At June 30, 2003, Digex's balance sheet shows that its current
debts exceeded its current assets by $146.8 million. The company's
net capital deficit tops $93 million.
Additional quarterly highlights for Digex include:
* Introduced Comprehensive Hosting Services for Microsoft Windows
Server 2003 -- As a result of a two-year co-engineering effort
with Microsoft's Joint Development Program (JDP), Digex has
enhanced its Enterprise Hosting Service capabilities to ensure
full integration and support for the Microsoft Windows Server
2003 platform. Digex announced these services concurrent with
Microsoft's Windows Server 2003 release on April 24, 2003.
* Achieved British Standards (BS) 7799 Part 2 Certification -
Part 2 of the 2002 standard requires bi-annual continuing
assessment visits to ensure compliance is maintained
appropriately to meet the criteria for the certification. The
BS7799-2:2002 is a thorough evaluation of the established
Information Security Management System through the British
Standards Institution.
* Expanded Managed Server Platform -- Clients experience seasonal
traffic spikes. Some are using their Web sites for large
marketing and advertising campaigns which overload their site.
Unpredictable growth patterns can lead to exaggerated
architectures and excess capacity. To keep pace with client
needs for flexibility and cost reduction, Digex has strengthened
its Managed Platform offerings to include Utility-Enabled
Servers. Web servers that are designated Utility-Enabled can
be added or removed from active configuration with four simple
steps in our interactive portal, ClientCentral(SM). While
servers are disabled, Digex SmartServices(R) continue to provide
the necessary backups and security to keep them reliable and
ready to provide additional capacity as needed.
* Listed in the "Leaders" quadrant in Gartner, Inc.'s 2003 North
American Web Hosting Magic Quadrant*. This achievement marks the
third year in a row that Gartner has listed Digex in the
"Leaders" quadrant.
* Engineered managed services for two leading enterprise software
packages: Oracle 11i and SAP (4.6 and mySAP). Digex's Oracle and
SAP managed services include application-specific automated
process monitors, an array of pre- and post-production services,
and advanced service levels specifically designed to improve the
security and reliability of these applications when they are
deployed on the Internet. These are in addition to the managed
services built in the first quarter for Siebel 7 and PeopleSoft
8.
* Launched 'Empower Your Enterprise' Promotion -- A special
promotional offer for organizations seeking to transition to
Digex from other hosting providers or from internal corporate
data centers. Digex has the expertise to quickly and seamlessly
migrate e-business applications and infrastructure from one
environment to another. The promotion offers assistance and
incentives to ease the transition to our professional hosting
environment within any Digex SmartCenter(R).
Digex, Incorporated is a leading provider of enterprise hosting
services. Digex customers, from Fortune 1000 companies to leading
Internet-based businesses, leverage Digex's trusted infrastructure
and advanced services to successfully deploy business-critical and
mission-critical Web sites, enterprise applications and Web
Services on the Internet. Additional information on Digex is
available at http://www.digex.com
The MCI-Digex affiliation strategically combines the custom
managed Web and application hosting expertise of Digex with the
shared, dedicated and colocation hosting technologies of MCI
(WCOEQ, MCWEQ) to offer businesses of all sizes the full continuum
of secure, dependable hosting services. Powered by the reach and
reliability of the facilities-based MCI global network, the
MCI-Digex affiliation rapidly delivers scalable, high-availability
outsourced solutions that enable companies throughout North
America, Europe and Asia to better focus on their core business.
DVI INC: Fitch Says D Rating Will Follow Bankruptcy Filing
----------------------------------------------------------
On Aug. 13 DVI, Inc. announced that it expects to file for
Bankruptcy under Chapter 11 of the U.S. Bankruptcy Code within the
next several days. In addition, DVI also announced that it
discovered improprieties in its dealings with lenders involving
misrepresentations as to the amount and nature of pledged
collateral. DVI's audit committee is presently conducting an
investigation into the matter and Chief Financial Officer Steven
Garfinkel has been placed on administrative leave.
Fitch anticipates that it will lower DVI's senior unsecured debt
rating to 'D' from 'C' following a formal bankruptcy filing. A
single 'D' rating reflects Fitch's belief that the recovery
potential for the rated securities is very low (below 50%). This
view is based on the lack of any substantial unencumbered assets
on DVI's balance sheet. Further, a meaningful component of the
value of assets pledged to secured lenders in excess of secured
obligations consists of non-accruing, delinquent, and repossessed
assets. Fitch also believes that DVI's historical delinquency and
chargeoff trends will weaken if the company or its principal
lending officers are not able to continue servicing the
receivables. Loss severity may be heightened depending upon the
scope of DVI's misrepresentations regarding its collateral.
EMPIRE ENERGY: Hires Malone & Bailey as New Independent Auditors
----------------------------------------------------------------
On May 19, 2003, the Board of Directors of Empire Energy
Corporation was notified by Pickett, Chaney & McMullen LLP, the
Company's independent auditor, that it would decline to stand for
reelection as the Company's independent auditor for the year
ending December 31, 2003. On August 6, 2003 the Board of Directors
of the Company engaged Malone & Bailey, PLLC as the Company's
independent auditor. During the time between Pickett's resignation
and the hiring of Malone, the Company did not have an auditor and
filed no reports.
The report of Pickett, Chaney & McMullen LLP on the financial
statements of the Company as of December 31, 2002 and December 31,
2001 and for the years then ended included an explanatory
paragraph concerning the Company's ability to continue as a going
concern.
ENVIRONMENTAL ELEMENTS: June 30 Net Capital Deficit Tops $11MM
--------------------------------------------------------------
Environmental Elements Corporation (Amex: EEC) reported a net loss
of $274,000 on sales of $10.5 million for its first fiscal quarter
ended June 30, 2003, compared to a net loss of $394,000 on sales
of $14.3 million for the same 7period last year.
"The Company continues to suffer the effects of spending slowdowns
in our main customer groups, the utility and pulp and paper
producers," said interim President and Chief Financial Officer
Lawrence Rychlak. "We have taken the appropriate steps to reduce
our spending including a painful, but necessary reduction in
force, but anxiously await the end of this slowdown of air
pollution control spending on capital equipment and service and
maintenance. As our customers resume their spending on the
products and services that EEC supplies, we are well positioned to
respond to their needs and return to profitability. In addition,
we continue to have discussions with our Bank regarding a
restructuring of our debt and with the help of our investment bank
we continue to explore our strategic alternatives."
Environmental Elements Corporation 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.
Environmental Elements' June 30, 2003 balance sheet shows a
working capital deficit of about $10 million, and a total
shareholders' equity deficit of about $11 million.
EPIC FIN'L: Unit Entering into Alliance with Hermandad Mexicana
---------------------------------------------------------------
William R. Parker, President of Epic Financial Corporation
(OTCBB:EPFL), announced that the Company's wholly-owned
subsidiary, American National Mortgage, is entering into a
strategic alliance with Hermandad Mexicana Latinoamericana, Inc.
to offer mortgage services to its members and to assist Hermandad
Mexicana Latinoamericana, Inc. in the development of its own
mortgage lending business operations.
Hermandad Mexicana Latinoamericana, Inc. is a Santa Ana,
California - based company that provides various social,
educational and financial services to the Latino community
throughout California. It has a member base of 150,000 individuals
and is the largest non-public, community service organization
focused on the burgeoning Latino population in California.
Currently, Hermandad Mexicana Latinoamericana markets financial,
banking and insurance services to its Latino clientele.
Mr. Parker said, "American National Mortgage is pleased to enter
into this strategic alliance, whereby, initially, we will offer
mortgage services to the Hermandad Mexicana Latinoamericana member
base. At the same time, we will train certain of the
organization's staff members to serve as mortgage brokers and
assist with the mortgage broker licensing of Hermandad Mexicana
Latinoamericana by the State of California. Our ultimate mutual
goal is for Hermandad Mexicana Latinoamericana to operate as a
fully licensed, Fannie Mae-approved mortgage broker with American
National Mortgage acting as its mortgage banker."
Nativo Lopez, Chief Executive Officer of Hermandad Mexicana
Latinoamericana, stated, "We are looking forward to our working
relationship with American National Mortgage. We believe that the
addition of mortgage services to the list of financial services we
presently offer our members will be extremely well received by our
membership and will lead to a further expansion of our
membership."
Epic Financial Corporation is a financial services holding
company, which provides a network to mortgage bankers, brokers,
both retail and wholesale through our wholly-owned mortgage
company. For further information visit http://www.4epic.com
* * *
As previously reported, Epic Financial Corporation dismissed its
independent accountants Becker & Company CPAs. The report of
Becker & Company CPAs for the fiscal year ended December 31, 2002
contained an explanatory paragraph regarding the substantial doubt
about the Company's ability to continue as a going concern. The
decision to dismiss Becker & Company CPAs was made by the Board of
Directors of the Company.
On June 16, 2003, the Company engaged the firm of Kabani &
Company, Inc., of Fountain Valley, California, as independent
accountants for the Company.
FIBERCORE INC: Fails to File Form 10-Q; Submitting 8K Instead
-------------------------------------------------------------
FiberCore, Inc. (OTC Bulletin Board: FBCE.OB), a leading
manufacturer and global supplier of optical fiber and preform for
the telecommunication and data communications markets, will not be
filing its second quarter 10-Q in accordance with SEC reporting
requirements. Instead, the Company plans to submit its second
quarter financial results, which will not be reviewed by its
independent auditors, in the form of an 8-K filing as soon as
possible after August 15, 2003.
By failing to file a 10-Q in accordance with SEC requirements, the
Company will not be in compliance with the listing requirements of
the OTC-Bulletin Board, which will result in the Company's shares
being delisted from the Bulletin Board. In anticipation of that
event, the Company has started the process necessary to facilitate
the trading of its shares on the "pink sheets." However, no
assurance can be given that the Company's shares will be quoted in
the "pink sheets" or there will not be a break in trading activity
during the process.
Concurrently, the Company is seriously considering filing a Form
15 in order to deregister its common stock with the SEC. Filing a
Form 15 immediately relieves the Company of its obligation to file
certain reports and forms, including Forms 10-K, 10-Q, and 8-K
with the SEC as well as other reporting requirements. If a Form 15
were filed, the Company expects that deregistration would become
effective within 90 days.
Dr. Mohd Aslami, President and CEO stated, "The economic argument
against being a reporting company is quite compelling, given the
costs, both direct and indirect, in connection with preparing and
filing these reports; the substantial increase in costs associated
with being a reporting company in view of new regulations
resulting from Sarbanes-Oxley; the collapse of the Company's
market valuation; and other related factors."
"On associated matters, the Company has just begun settlement
talks with Shin-Etsu with respect to its recent arbitration award.
However, no assurance can be given that a settlement will be
reached, and the Company has not yet secured new financing, in
part owing to the Shin-Etsu award. In addition, the Company was
just recently sued for $400,000. The suit, which alleges that a
commission was earned in the summer of 2002 in connection with a
tender offer, is totally baseless. Nonetheless, the liquidity
situation continues to deteriorate, raising the possibility of an
insolvency filing," added Dr. Aslami.
FiberCore, Inc. develops, manufactures, and markets single-mode
and multimode optical fiber preforms and optical fiber for the
telecommunications and data communications markets. In addition to
its standard multimode and single-mode fiber, FiberCore also
offers various grades of fiber for use in laser-based systems up
to 10 gigabits/sec, to help guarantee high bandwidths and to suit
the needs of Feeder Loop (also known as Metropolitan Area
Network), Fiber-to-the Curb, Fiber-to-the Home and Fiber-to-the
Desk applications. Manufacturing facilities are presently located
in Jena, Germany and Campinas, Brazil.
For more information about the Company, its products, or
shareholder information, visit the company's Web site at:
http://www.FiberCoreUSA.com
* * *
As reported, FiberCore, Inc. received on June 12, 2003, a
notification of default from Riverview Group, LLC, Laterman & Co.,
and Forevergreen Partners, of the Company's 5% Convertible
Subordinated Debentures. Currently there is approximately $2.5
million outstanding under these debentures, plus accrued interest.
If the event of default on the debentures continues, the Holders
have the right to accelerate the maturity date and the entire
amount could become immediately due. The debentures are unsecured.
FIFE VINEYARDS: Files for Chapter 11 Protection in California
-------------------------------------------------------------
The small, award-winning Fife Vineyards and winery in Mendocino
County has become the latest North Coast vintner to file chapter
11 bankruptcy, the victim of a stalled economy and a grape glut
that are hobbling the wine industry, the Press Democrat reported.
"We're mortals and it takes more than that to succeed in the wine
business today," Fife Vineyards founder Dennis Fife said Monday.
"It takes more resources now than it ever did before."
Fife is the third North Coast winery in a year to file for chapter
11 bankruptcy, and the specter of at least two more years of a
grape glut due to overplanting means more failures across the
industry could be on the horizon unless business picks up. The 12-
year-old Fife Vineyards said it will cut its upcoming crush by a
third, an indicator that the impact of the bankruptcy will ripple
through to other parts of the wine business. Fife already has
notified 30 growers that it plans to cut purchases and to
renegotiate prices, reported the newspaper. (ABI World, August 13,
2003)
Fife's Owners
In a long and varied fine wine career, founder Dennis Fife was
president of Inglenook Napa Valley, Vice President of Sales and
Marketing for Beaulieu Vineyards, and held the title of
Consigliari at Stags' Leap Winery-all legendary estates in
California wine history.
In 1991, he realized a longtime dream and launched Fife Vineyards
in Napa Valley. In 1996, he acquired a winery and vineyard in
Mendocino to expand the Rh“ne varieties program.
Co-owner Karen MacNeil Fife is a nationally featured wine
lecturer; chairman of wine programs at the Culinary Institute of
America in the Napa Valley; a widely published food and wine
writer and author of the upcoming book "The Wine Bible".
Dennis and Karen believe strongly that wines should express the
personalities of the vineyards from which they come.
See http://www.fifevineyards.com
FIFE VINEYARDS LLC: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Fife Vineyards, LLC
P.O. Box 553
St. Helena, California 94574
Bankruptcy Case No.: 03-11922
Type of Business: Vineyards and winery. See
http://www.fifevineyards.com
Chapter 11 Petition Date: August 8, 2003
Court: Northern District of California (Santa Rosa)
Judge: Alan Jaroslovsky
Debtors' Counsel: Michael C. Fallon, Esq.
Law Offices of Michael C. Fallon
100 E St. #220
Santa Rosa, CA 95404-4606
Tel: 707-546-6770
FLEMING COS: Obtains Approval for Greenwich Insurance Agreement
---------------------------------------------------------------
Fleming Companies, Inc., and its debtor-affiliates sought and
obtained the Court's permission to enter into an agreement with
Greenwich Insurance Company to return defense expenses Greenwich
may advance to them in the event that it is finally determined
that the losses for which the defense expenses were incurred are
not covered under the Greenwich policy. Any such funds Greenwich
advanced to the Debtors will be placed in a segregated account and
will not be subject to the DIP Lenders' lien.
The Debtors purchased a Management Liability and Company
Reimbursement Insurance Coverage Policy from Greenwich, which
provides a $15,000,000 coverage to their directors and officers.
The Policy also covers losses the Debtors incurred from any
"Securities Claims" made against them during the claims reporting
period or optional extension period. An additional $85,000,000
coverage is provided by excess policies above the Greenwich
Policy.
Certain current and former Fleming directors and officers have
been named as defendants in seven putative class action
securities and derivative lawsuits in state and federal courts
and are also subject to a formal investigation being conducted by
the Securities and Exchange Commission into possible violations
of federal securities laws. Before the Petition Date, the
Debtors paid over $4,000,000 to reimburse the defense costs of
the D&O defendants, pay the retainers of law firms representing
the D&Os and defend with respect to the SEC investigation.
The Greenwich Policy entitles the Debtors to receive defense cost
advances. As a condition of the advance, Greenwich may require a
written undertaking to guarantee the repayment of any loss not
covered under the Policy.
The Debtors intend to execute such undertaking so Greenwich can
advance over $4,000,000 in defense costs that the Debtors already
incurred in defending themselves and their D&Os. The Debtors
also want to advance future defense costs in connection with the
SEC investigation as they are incurred. (Fleming Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
FLEXTRONICS INT'L: Will Host Mid-Quarter Conference Call Today
--------------------------------------------------------------
Flextronics (Nasdaq: FLEX), will host its regular mid-quarter
conference today.
The conference call, hosted by Flextronics' senior management,
will be held at 1:30 p.m. PDT and will provide a general update on
the Company and its future outlook. This call will be broadcast
via the Internet and may be accessed by logging on to the
Company's Web site at http://www.flextronics.com. A replay of the
broadcast will remain available on the Company's Web site after
the call.
Minimum requirements to listen to the broadcast are Microsoft
Windows Media Player software (free download at
http://www.microsoft.com/windows/windowsmedia/download/default.asp
) and at least a 28.8 Kbps bandwidth connection to the Internet.
Headquartered in Singapore, Flextronics is the leading Electronics
Manufacturing Services (EMS) provider focused on delivering supply
chain services to technology companies. Flextronics provides
design, engineering, manufacturing, and logistics operations in 29
countries and five continents. This global presence allows for
supply chain excellence through a network of facilities situated
in key markets and geographies that provide customers with the
resources, technology, and capacity to optimize their operations.
Flextronics' ability to provide end-to-end services that include
innovative product design, test solutions, manufacturing, IT
expertise, network services, and logistics has established the
Company as the leading EMS provider with revenues of $13.4 billion
in its fiscal year ended March 31, 2003. For more information,
visit http://www.flextronics.com
As previously reported in Troubled Company Reporter, Standard &
Poor's Ratings Services assigned its 'BB-' rating to Flextronics
International Ltd.'s $500 million senior subordinated convertible
notes due 2010. At the same time, Standard & Poor's affirmed
Flextronics' 'BB+' corporate credit and its other ratings. The
outlook is stable.
GENERAL MEDIA: Seeks Okay to Pay Vendors' Prepetition Claims
------------------------------------------------------------
General Media, Inc., and its debtor-affiliates want authority from
the U.S. Bankruptcy Court for the Southern District of New York to
pay prepetition claims owed to service providers that are
necessary and critical to the Debtors' ability to operate their
businesses. The Critical Service Providers fall into seven
categories:
i) artists and cartoonists,
ii) writers and editors,
iii) photographers and models,
iv) printers and shippers,
v) information technology services, which providers
maintain essential computer and other equipment for the
businesses,
vi) payroll processing related services, Utilities, and
vii) state agencies, the payment of various franchise and
corporation taxes to whom is a precondition to the good
standing of the Debtors or its restoration.
Many of the Critical Service Providers are owed payments on
account of unpaid prepetition Critical Services they provide to
the Debtors. Absent payment for their prepetition services, the
Debtors believe that the Critical Service Providers will not
continue to perform the Critical Services for the Debtors'
postpetition. In the case of the State Agencies, unless the
Debtors pay outstanding taxes, they will not be able to maintain,
or be restored to, good standing. Failure of the Debtors to
continue to obtain the benefit of the postpetition Critical
Services, and to maintain or be restored to good standing, could
have an immediate and adverse impact upon the Debtors' operations.
Accordingly, in the Debtors' reasonable business judgment and
discretion, the Debtors propose to pay the Critical Service
Provider Claims to the Critical Service Providers, conditioned on:
(i) the agreement of Critical Service Providers to continue
to provide the Debtors with postpetition services on
the same credit terms and limits; and
(ii) at the Debtors' option, the Debtors receipt of written
verification from the Critical Service Providers of the
Acceptable Credit Terms.
The Debtors estimate that, as of the Commencement Date, the
aggregate amount of Critical Service Providers Claims is $250,000.
The Debtors need to ensure that there is no disruption to the
services necessary to operate their businesses. While the Critical
Service Providers have been or will be assured payment for their
postpetition services, the Debtors believe that it is likely that
some or many of the Critical Service Providers will refuse to
continue to provide postpetition services to the Debtors promptly
and without disruption absent assurances of payment of the
prepetition amounts due and owing to such service providers. In
the case of the State Agencies, the Debtors' good standing will
not be restored unless the outstanding franchise and corporation
taxes are paid.
In short, without the continued assurances of the Critical
Services, the Debtors effectively would be unable to run their
businesses or maintain their corporate standing, prejudicing the
estates and all parties in interest. Authorizing payment of
Critical Service Provider Claims would salvage ongoing
relationships among the Debtors and Critical Service Providers and
protect the Debtors.
General Media Inc., headquartered in New York, New York, is a
subsidiary of Penthouse International, Inc., publishes Penthouse
magazine and other publications and is engaged in other
diversified media and entertainment businesses. The Company filed
for chapter 11 protection on August 12, 2003 (Bankr. S.D.N.Y. Case
No. 03-15078). Robert Joel Feinstein, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub P.C., 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 each.
GRUPO IUSACELL: Unit Seeks Extension of Temporary Default Waiver
----------------------------------------------------------------
Grupo Iusacell, S.A. de C.V. (BMV:CEL)(NYSE:CEL) announced that
its subsidiary, Grupo Iusacell Celular, S.A. de C.V. formally
requested an additional extension of its temporary Amendment and
Waiver of certain provisions and defaults under its US$266
million Amended and Restated Credit Agreement, dated as of
March 29, 2001. The lenders under the Credit Agreement acknowledge
receiving the Iusacell Celular request and are currently
considering and evaluating the Company's request.
During the first half of 2003, Iusacell Celular exceeded the
permitted leverage ratio under the Credit Agreement of 2.50. On
April 28, 2003 Iusacell Celular and the lenders entered into a
temporary amendment and waiver to the Credit Agreement to increase
the permitted leverage ratio from 2.50 to 2.70. After receiving
various extensions, on July 27, 2003, the amendment was further
extended until August 14, 2003.
Upon expiration of the amendment and if the additional extension
is not granted, an Event of Default (as defined in the Credit
Agreement) will occur as if the Amendment had never been executed.
Accordingly, the lenders under the Credit Agreement have the right
to declare the indebtedness under their loan immediately due and
payable.
Additionally, Iusacell previously publicly announced that, pending
agreement with its lenders on a restructuring plan, Iusacell
Celular did not made the US$7.5 million interest payment due on
July 15, on Iusacell Celular's 10% bonds due 2004. The 30-day cure
period to make the interest payment, before an event of default is
declared has expired. As a result, an event of default has
occurred under the Indenture governing the bonds, and the
bondholders have the right to accelerate the principal of the
bonds or take other legal actions, as specified in the Indenture,
as they deem appropriate.
Grupo Iusacell, S.A. de C.V. (NYSE:CEL)(BMV:CEL) is a wireless
cellular and PCS service provider in seven of Mexico's nine
regions, including Mexico City, Guadalajara, Monterrey, Tijuana,
Acapulco, Puebla, Leon and Merida. The Company's service regions
encompass a total of approximately 92 million POPs, representing
approximately 90% of the country's total population.
HORIZON PCS: Files for Chapter 11 Protection in S.D. of Ohio
------------------------------------------------------------
Horizon PCS, Inc., a PCS affiliate of Sprint (NYSE:PCS), and two
of its subsidiaries have filed voluntary petitions for relief
under Chapter 11 of Title 11 of the United States Code in the
United States Bankruptcy Court for the Southern District of Ohio.
"While the recent implementation of a cash conservation strategy
leaves Horizon PCS with a relatively strong cash position, this
filing should give us more flexibility to complete transactions in
the interest of our stakeholders," said William A. McKell,
Chairman and CEO. "We believe the bankruptcy process gives us the
best opportunity to restructure our debts and agreements, working
cooperatively with our creditors and negotiating with Sprint to
develop equitable and appropriate solutions that will allow our
company to continue to operate." Horizon Telcom, Inc. is not
included in the filing and will continue operating in the ordinary
course of business.
The Company and its subsidiaries expect to continue to manage
their properties and operate their businesses in the ordinary
course of business as "debtors-in-possession" subject to the
supervision and orders of the Bankruptcy Court pursuant to the
Bankruptcy Code.
Horizon PCS is one of the largest PCS affiliates of Sprint, based
on its exclusive right to market Sprint wireless mobility
communications network products and services to a total population
of over 10.2 million in portions of 12 contiguous states. Its
markets are located between Sprint's Chicago, New York and
Raleigh/Durham markets and connect or are adjacent to 15 major
Sprint markets that have a total population of over 59 million. As
a PCS affiliate of Sprint, Horizon markets wireless mobile
communications network products and services under the Sprint and
Sprint PCS brand names. For more information, visit
http://www.horizonpcs.com/
HORIZON PCS: Voluntary Chapter 11 Case Summary
----------------------------------------------
Lead Debtor: Horizon PCS Inc
68 East Main Street
Chillicothe, Ohio 45601
Bankruptcy Case No.: 03-62424
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Horizon Personal Communications Inc. 03-62425
Bright Personal Communications Services LLC 03-62426
Type of Business: The Debtor, one of the largest Sprint PCS
affiliates, provides digital wireless phone
service to 12 states.
Chapter 11 Petition Date: August 15, 2003
Court: Southern District of Ohio (Columbus)
Judge: Charles M. Caldwell
Debtors' Counsel: Jack R. Pigman, Esq.
Porter Wright Morris & Arthur LLP
41 South High Street
Columbus, OH 43215
Tel: 614-227-2119
-and-
Shalom L. Kohn, Esq.
Sidley Austin Brown and Wood
Bank One Plaza,
10 South Dearborn
Chicago, IL 60603
Tel: 312-853-7036
Total Assets: $303,594,183 (as of June 30, 2003)
Total Debts: $591,743,897 (as of June 30, 2003)
I2 TECHNOLOGIES: June 30 Net Capital Deficit Narrows to $258MM
--------------------------------------------------------------
i2 Technologies, Inc., (OTC:ITWO) announced its final results for
the second quarter ended June 30, 2003. The results were
consistent with preliminary estimated ranges announced by the
Company on July 21, 2003. Detailed information regarding the
Company's second quarter results can be found in its Form 10-Q,
filed with the SEC.
The Company reported that it was breakeven on a per-share basis
for the second quarter of 2003, compared to earnings of $0.09 per
share in the first quarter of 2003 and a loss of $2.18 per share
in the second quarter of 2002. This includes the impact of
recognition of restated deferred revenue and expenses as a result
of the Company's recent restatement.
i2 reported total revenues of $122 million in the second quarter
of 2003, compared to $158 million in the first quarter of 2003 and
$162 million in the second quarter of 2002. Total revenues
included $31 million in contract revenue consisting of $25 million
in revenue deferred from earlier periods as a result of the
Company's recent restatement and $6 million in revenue
attributable to development services projects.
Software license revenues totaled $17 million for the second
quarter of 2003 as compared to $19 million in the first quarter of
2003 and $19 million in the second quarter of 2002.
Total costs and operating expenses for the second quarter of 2003
were $119 million, including approximately $9 million of audit and
legal fees related to the Company's re-audits and investigations,
as compared to $110 million in the first quarter of 2003 and $201
million in the second quarter of 2002. Operating income for the
second quarter totaled $3 million.
License and development services revenues were spread across all
regions and all major industry sectors, with high-tech and
consumer goods and retail continuing to be leading industries for
i2, followed by the automotive industry.
In the second quarter, the Company prepaid its $60.9 million
senior convertible note for $59.2 million, representing a 5.5
percent discount to principal and interest accrued. This note was
due in September 2003. In addition, i2 settled a lease obligation
for a facility no longer in use for $7.6 million in cash and a
non-negotiable promissory note of $6.8 million. The Company ended
the second quarter with approximately $355 million in cash and
investments.
At June 30, 2003, i2's balance sheet shows a total shareholders'
equity deficit of about $258 million.
"We have focused heavily in improving i2's operations. As a
result, I believe that our products, services, and operational
organization are well-equipped to meet the challenges of the
marketplace," said Sanjiv Sidhu, i2 Chairman and CEO. "We enter
the second half of 2003 energized by the opportunities before us."
A leading provider of end-to-end supply chain management
solutions, i2 designs and delivers software that helps customers
optimize and synchronize activities involved in successfully
managing supply and demand. i2 has more than 1,000 customers
worldwide -- many of which are market leaders -- including seven
of the Fortune global top 10. Founded in 1988 with a commitment to
customer success, i2 remains focused on delivering value by
implementing solutions designed to provide a rapid return on
investment. Learn more at http://www.i2.com
IMAGEWARE: Shoos-Away PwC & Engages Stonefield as Replacement
-------------------------------------------------------------
On July 29, 2003, the Audit Committee of the Board of Directors of
ImageWare Systems, Inc. dismissed PricewaterhouseCoopers LLP as
the Company's independent auditor, and on July 31, 2003, engaged
Stonefield Josephson, Inc. as the Company's independent auditor
for the fiscal year ending December 31, 2003.
PwC's report on the consolidated financial statements of the
Company and its subsidiaries for the two fiscal years ended
December 31, 2002, includes a separate paragraph indicating that
the Company's losses from operations and net capital deficiency
raise substantial doubt about the Company's ability to continue as
a going concern. PwC's report on the consolidated financial
statements of the Company and its subsidiaries for the two fiscal
years ended December 31, 2001 also includes a separate paragraph
indicating that the Company's losses from operations and net
capital deficiency raise substantial doubt about the Company's
ability to continue as a going concern.
IMMTECH INT'L: Red Ink Continued to Flow in Fiscal 1st Quarter
--------------------------------------------------------------
Immtech International, Inc., (Amex: IMM) announced results for the
fiscal first quarter ended June 30, 2003.
For the three months ended June 30, 2003, revenues were $0.5
million, as compared to $0.4 million for the same period in 2002.
Loss from operations for the fiscal first quarter was $1.2
million, as compared to a loss of $1.8 million for the fiscal
first quarter of 2002. Net loss attributable to common
shareholders for the quarter ending June 30, 2003 was $2.3
million, compared to a loss of $1.8 million in the previous year.
At June 30, unrestricted cash and cash equivalents were $2.0
million as compared to $1.0 million in the prior year. For the
same periods, restricted funds on deposit were $3.3 million and
$0.3 million, respectively. In June 2003, Immtech received as
part of the restricted funds, a $1,025,201 initial payment of a
$2,466,475 million research subcontract from the University of
North Carolina at Chapel Hill, funded by The Bill & Melinda Gates
Foundation, to be used to accelerate the development of the drug
candidate DB289 for the treatment of African sleeping sickness
(Trypanosomiasis).
The Company is focused on the commercialization of its first oral
drug candidate DB289. DB289 is being tested in human clinical
trials for treatment of Pneumocystis carinii pneumonia, African
sleeping sickness (a parasitic disease affecting 60 million in the
Sub-Saharan region); and Malaria, an infectious disease affecting
over two billion people (300-400 million new cases annually) and
causes two million deaths in the world each year; including 1
million children (i.e. every 30 seconds one child dies from
Malaria).
"We are pleased with the continued progress that our first oral
drug candidate DB289 is making in clinical trials. During the
fiscal first quarter, we initiated an advanced Phase IIa clinical
human trial using an increased dosage of DB289 to treat PCP, a
fungus that can cause severe lung infections in immuno-suppressed
patients such as those with AIDS or cancer. We received positive
results from the Phase IIa pilot study that showed DB289 was safe
and effective with over 90% of the AIDS patients in the PCP trial
demonstrating improved lung functions. We also commenced a Phase
IIa clinical trial using DB289 to treat both the Plasmodium vivax
and Plasmodium falciparium, the two most common and deadly strains
of Malaria," stated T. Stephen Thompson, Immtech's President and
Chief Executive Officer.
Immtech International, Inc. is a pharmaceutical company focused on
the commercialization of oral treatments for infectious diseases
such as pneumonia, fungal infections, malaria, tuberculosis,
hepatitis and tropical diseases such as African sleeping sickness
and Leishmania. The Company has worldwide, exclusive rights to
commercialize a dicationic pharmaceutical platform from which a
pipeline of products may be developed to target large, global
markets. For further information, visit Immtech's Web site at
http://www.immtech.biz
* * *
As previously reported, since inception, the Company has incurred
accumulated losses of approximately $41,466,000. Management
expects the Company to continue to incur significant losses during
the next several years as the Company continues its research and
development activities and clinical trial efforts. There can be
no assurance that the Company's continued research will lead to
the development of commercially viable products. Immtech's
operations to date have consumed substantial amounts of cash. The
negative cash flow from operations is expected to continue in the
foreseeable future. The Company will require substantial funds to
conduct research and development, laboratory and clinical testing
and to manufacture (or have manufactured) and market (or have
marketed) its product candidates.
Immtech's working capital is not sufficient to fund the Company's
operations through the commercialization of one or more products
yielding sufficient revenues to support the Company's operations;
therefore, the Company will need to raise additional funds. The
Company believes its existing unrestricted cash and cash
equivalents and the grants the Company has received or has been
awarded and is awaiting disbursement of, will be sufficient to
meet the Company's planned expenditures through July 2003,
although there can be no assurance the Company will not require
additional funds. These factors, among others, indicate that the
Company may be unable to continue as a going concern.
The Company's ability to continue as a going concern is dependent
upon its ability to generate sufficient funds to meet its
obligations as they become due and, ultimately, to obtain
profitable operations. Management's plans for the forthcoming
year, in addition to normal operations, include continuing their
efforts to obtain additional equity and/or debt financing, obtain
additional grants and enter into various research, development and
commercialization agreements with other entities.
INNOVATIVE GAMING: Files to Deregister Common Shares with SEC
-------------------------------------------------------------
Innovative Gaming Corporation of America has filed a Form 15 with
the Securities and Exchange Act of 1934.
Upon filing of the Form 15, IGCA is no longer required to file
with the SEC certain reports and forms, including forms 10-K, 10-Q
and 8-K as well as proxy statements.
The Board of Directors, after careful consideration, concluded
that for IGCA the advantages of being a reporting company under
the 1934 Act do not affect the costs and administrative burdens
associated with SEC reporting requirements. In addition, the
trading volume of IGCA's common stock has been extremely thin. The
delisting is expected to become effective within 90 days of
filing.
* * *
As reported, Kafoury, Armstrong & Co. resigned as Innovative
Gaming Corp. of America's independent accountants on
July 17, 2003. The report of Kafoury, Armstrong & Co. on the
Company's December 31, 2001 consolidated financial statements
expressed substantial doubt about Innovative Gaming's ability to
continue as a going concern.
The Company's Audit Committee participated in and approved the
decision to change independent accountants pending the engagement
of a new independent auditor.
On July 17, 2003 the Company engaged the public accounting firm of
Virchow, Krause & Company, LLP, 7900 Xerxes Avenue South, Suite
2400, Bloomington, MN 55431 to conduct the audit of its financial
statements for the Fiscal Year ended December 31, 2002. Such
engagement was approved by the Company's Audit Committee and Board
of Directors on July 17, 2003.
INTERPLAY ENTERTAINMENT: June 30 Net Capital Deficit Tops $14MM
---------------------------------------------------------------
Interplay Entertainment Corp. (OTC Bulletin Board: IPLY) reported
operating results for the second quarter of 2003.
For the second quarter ended June 30, 2003, the Company reported a
net loss of $5.4 million, compared to a net income of $20.9
million in the same period last year. The decrease in net income
from last year is mainly a result of recording a $28.8 million
gain on the sale of Shiny Entertainment in the second quarter of
last year. Net revenues for the second quarter 2003 were $1.3
million versus $11.8 million in the same period a year ago, a
decrease of 89 percent. The decrease in net revenues was mainly a
result of not releasing a new title in the 2003 period compared to
releasing one new title in the 2002 period and lower back catalog
sales in the 2003 period. Finally, operating loss decreased 24
percent from the prior year to $5.4 million in the second quarter
2003 as compared to $7.1 million in the second quarter 2002.
For the six-month period ended June 30, 2003, the Company reported
a net income of $0.2 million, compared to a net income of $22.4
million in the same period last year. The decrease in net income
from last year is mainly a result of recording a $28.8 million
gain on the sale of Shiny Entertainment in the first six months of
last year. Net revenues for the six-month period ended June 30,
2003 were $20.0 million versus $27.2 million in the same period a
year ago, a decrease of 26 percent. Net revenues during the six-
month period ended June 30, 2003 included $15 million in revenue
related to the sale of all future interactive entertainment
publishing rights to the "Hunter: The Reckoning" franchise.
Finally, operating income increased 104 percent from the prior
year to $0.2 million in the six-month period ended June 30, 2003
as compared to a $5.6 million operating loss in the 2002 period.
Gross profit margin for the second quarter 2003 was 12 percent,
compared to 10 percent in the second quarter of 2002. Gross
profit margin was higher in the second quarter this year as
compared to last year mainly due to the lack of inventory
expenditures under the August 2002 distribution agreement with
Vivendi Universal Games, Inc. Under this agreement, Vivendi pays
us a lower per unit rate and in return is responsible for all
manufacturing, marketing and distribution expenditures. In
addition, the 2003 period included a $1.5 million decrease in
write-offs of canceled development projects or on titles that were
impaired because they were not expected to meet our desired profit
requirements Total operating expenses decreased 34 percent to
$5.5 million from $8.4 million in the second quarter of this year
as compared to the same period last year. The decrease in
operating expenses is a result of lower personnel costs and
general expenses, the lack of advertising expense under the terms
of the August 2002 distribution agreement with Vivendi and a
decrease in advertising expense and overhead fees paid to Virgin
Interactive, which changed its name to Avalon Interactive on
July 1, 2003.
Gross profit margin for the six-month period ended June 30, 2003
was 60 percent, compared to 45 percent in the same period of 2002.
Gross profit margin was higher in the 2003 period as compared to
the same period last year mainly due to the lack of inventory
expenditures under the August 2002 distribution agreement with
Vivendi and a $0.3 million decrease in write-offs of canceled
development projects or on titles that were impaired because they
were not expected to meet our desired profit requirements Total
operating expenses decreased 34 percent to $11.7 million from
$17.7 million in the first six months of 2003 as compared to the
same period last year. The decrease in operating expenses is a
result of lower personnel costs and general expenses, the lack of
advertising expense under the terms of the August 2002
distribution agreement with Vivendi and a decrease in advertising
expense and overhead fees paid to Virgin.
Interplay Entertainment's June 30, 2003 balance sheet shows a
working capital deficit of about $17 million, and a total
shareholders' equity deficit of about $14 million.
Commenting on the announcement, Interplay Chairman and Chief
Executive Officer Herve Caen said, "Due to continued cost controls
and stability in both development and distribution, we were able
to beat our initial estimate of a $9 million loss by 40 percent.
Our challenge ahead is clear: deliver on our key PC and console
titles for the all-important third and fourth quarters, while
improving our cash position."
Interplay Entertainment is a leading developer, publisher and
distributor of interactive entertainment software for both core
gamers and the mass market. Interplay develops games for personal
computers as well as video game consoles, many of which have
garnered industry accolades and awards. Interplay releases
products through Interplay, Black Isle Studios and its
distribution partners.
ISLE OF CAPRI: First Quarter Results Show Slight Improvement
------------------------------------------------------------
Isle of Capri Casinos, Inc. (Nasdaq: ISLE) (S&P, B+ Corporate
Credit Rating, Stable) reported record first quarter financial
results for the quarter ended July 27, 2003. For the first
quarter, the company reported first quarter net income of $13.6
million compared to net income of $12.2 million for the same
quarter last year. During the first quarter ended July 27, 2003,
Isle of Capri Casinos had first quarter net revenues of $285.8
million, compared to $276.7 million for the same period in fiscal
2003, and first quarter Adjusted EBITDA (1) of $67.4 million,
compared to $60.9 million for the same period in fiscal 2003.
First Quarter Results
Bernard Goldstein, Isle of Capri Casinos, Inc. chairman and chief
executive officer, said, "Geographic diversity has long been a
strong point of our strategy. This diversity helped the Isle of
Capri Casinos to achieve record first quarter results. Our solid
management team continually finds ways to better manage costs."
Timothy M. Hinkley, Isle of Capri Casinos, Inc. president and
chief operating officer, said, "Our results present tangible
proof that our combination of brand management and operating
efficiencies, what we call IsleStyle, works. This model has
allowed us to be flexible and adapt to the changing market
conditions. We performed well, generating more revenue quarter
over quarter, even without the market growth we anticipated."
The company's IsleOne(TM) Players Club, an industry-leading
members' club, continued growth in terms of acceptance and loyalty
with players. Revenue from club members, at the same properties,
quarter over quarter increased by approximately 10.3 percent.
IsleOne Players Club members who played in the first quarter of
fiscal 2004 and 2003 and were enrolled in the IsleMiles(TM)
program -- a groundbreaking deferred-rewards component of IsleOne
-- increased revenue in fiscal 2004 by approximately 16.1 percent
from the comparable period in fiscal 2003 versus members not
enrolled in the program.
To support and market IsleOne, the company rolled out a national
television advertising campaign this spring, featuring notable
actor Ricardo Montalban. The commercial was designed to convey
the unique brand, fun experience and the benefits of IsleOne
Players Club. As a result of the broadcast campaign, overall
awareness of the Isle of Capri by casino patrons increased by
approximately 18 percent on average based on recent market
research. As the economy and other factors improve, the company
believes it is positioned to grow its retail revenue component.
The company's focus on product improvement is a two-prong
approach, which includes creating a superior slot experience and
physical expansion to some of the company's properties.
Isle has recently installed ticket-in/ticket-out technology at 10
of its properties, providing coinless gaming at the slots, which
yields greater efficiencies and enjoyment for players. Kiosks are
currently being installed at the properties, allowing IsleOne
Players Club members the ability and flexibility to review their
accounts quickly and easily. Also, in the furtherance of the
company's goal to create the best slot experience available, the
company has improved service times on the casino floor by 31
percent, providing greater customer satisfaction.
Expansion at the Isle-Biloxi and the Isle-Bossier City continued
through the quarter as part of the company's previously announced
$135.0 million improvement plan to provide additional and upgraded
amenities. The plan, funded from operating cash flow, will allow
the Isle of Capri to offer a more resort-oriented product. This
plan will include an additional 400 hotel rooms for the
Isle-Biloxi, as well as an Isle-branded Kitt's Kitchen restaurant,
a 12,000 square-foot multi-purpose center, an expanded pool and
spa area, and a 1,000-space parking facility. The parking
facility is expected to be completed by winter 2003. Expansion
for the Isle-Bossier City includes an additional hotel tower with
265 rooms, a Kitt's Kitchen restaurant, a new pool and a deck and
a 12,000 square-foot convention/entertainment center. The Isle-
Bossier City expansion is expected to be completed by spring 2004.
The company has also upgraded its signature buffet restaurant,
Calypso's, at some of its properties, and is expanding the casino
at the Isle-Kansas City, and renovating the casinos at the Isle-
Bossier City and the Isle-Lake Charles. These projects are
expected to be completed by spring 2004.
Isle of Capri Casinos, Inc. owns and operates 15 riverboat,
dockside and land-based casinos at 14 locations, including Biloxi,
Vicksburg, Lula and Natchez, Mississippi; Bossier City and Lake
Charles (two riverboats), Louisiana; Black Hawk (two land-based
casinos) and Cripple Creek, Colorado; Bettendorf, Davenport and
Marquette, Iowa; and Kansas City and Boonville, Missouri. The
company also operates Pompano Park Harness Racing Track in Pompano
Beach, Florida.
For more information on the Company visit http://www.islecorp.com
KAISER ALUMINUM: June 2003 Balance Sheet Upside-Down by $1.2-Bil
----------------------------------------------------------------
Kaiser Aluminum reported a net loss of $61.4 million, or $.76 per
share, for the second quarter of 2003, compared to a net loss of
$50.4 million, or $.63 per share, for the second quarter of 2002.
For the first six months of 2003, Kaiser reported a net loss of
$126.5 million, or $1.58 per share, compared to a net loss of
$114.5 million, or $1.42 per share, for the first six months of
2002.
Net sales in the second quarter and first six months of 2003 were
$358.4 million and $697.8 million, compared to $386.3 million and
$756.9 million for the comparable periods of 2002.
In commenting on the company's performance in the second quarter
of 2003, Kaiser President and Chief Executive Officer Jack A.
Hockema said, "The company reported a larger operating loss than
it did in the year-ago period due mainly to higher energy costs;
increased pension-related expenses; lower shipments of primary
aluminum and fabricated products; and a decrease in income from
metal hedging contracts. The decline in primary aluminum shipments
was due to the curtailment of the 90%-owned Valco smelter in early
2003; the decline in shipments of fabricated products was due to
the exit from the can lid and tab stock market in the second
quarter of 2002 and weaker demand in the ground transportation
market.
"On a more favorable note," said Hockema, "Kaiser continues to
target a 2004 emergence from Chapter 11. Although there is still a
great deal of complex work to be done, we have made progress on a
number of important issues. To cite just a few examples, we have:
-- Instituted a process to explore the possible divestiture of one
or more of our commodities businesses;
-- Begun the necessary analysis relating to the development of a
framework for a plan of reorganization;
-- Initiated a process under section 1114 of the Bankruptcy Code
to address certain retiree benefits that must be modified or
terminated as part of the plan of reorganization;
-- Completed a recent amendment to our existing Credit Agreement
to extend the term by one year and to increase availability, as
of August 2003, by approximately $45 million.
"Moreover, we continue to achieve gains in cost improvement and to
maintain strong liquidity in the form of invested cash and
availability under our Credit Agreement," said Hockema. "In
particular, our internal measurement system shows that, in the
second quarter of 2003, Kaiser captured approximately $130 million
of annualized cost improvement as compared to 2001. In addition,
we continued to maintain liquidity of approximately $200 million
through the second quarter of 2003 and through July 2003."
Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer of
fabricated aluminum products, alumina, and primary aluminum.
At June 30, 2003, Kaiser's balance sheet shows a total
shareholders' equity deficit of about $1.2 billion.
KASPER ASL: Court Confirms Jones Apparel Group as Best Bidder
-------------------------------------------------------------
Kasper A.S.L., Ltd. (OTC Bulletin Board: KASPQ.OB) reported that
the Jones Apparel Group, Inc. (NYSE: JNY) bid for the Company was
approved by the U.S. Bankruptcy Court. As previously announced, an
auction was held on August 7, 2003 pursuant to Court-approved
bidding procedures to determine the highest or best offer for
Kasper. The Special Committee of Kasper's Board of Directors
determined that Jones made the highest and best offer to purchase
the Company. The Jones bid consists of $204 million in cash and
the assumption of deferred liabilities, primarily pre-paid
royalties, projected to be approximately $12.6 million at closing,
for an aggregate value of $216.6 million. In addition, the
purchase price is subject to adjustments. The transaction has the
support of the Official Creditors' Committee.
The sale of the Company will be implemented through an amended
plan of reorganization to be filed shortly that will require,
among other things, the approval of the requisite majority of the
Company's creditors and confirmation by the Bankruptcy Court. The
Company anticipates that the transaction will be consummated by
the end of the year.
Kasper A.S.L., Ltd. is a leading marketer and manufacturer of
women's suits and sportswear. The Company's brands include Albert
Nipon, Anne Klein, Kasper and Le Suit. These brands are sold in
over 3,000 retail locations throughout the United States, Europe,
the Middle East, Southeast Asia and Canada. The Company also
licenses its Albert Nipon, Anne Klein, and Kasper brands for
various men's and women's products.
LTV CORP: Copperweld Debtors File Plan and Disclosure Statement
---------------------------------------------------------------
The Copperweld Debtors delivered their Joint Plan of
Reorganization and Disclosure Statement to the Court on August 5,
2003.
The Copperweld Debtors consist of:
-- Copperweld Corporation;
-- Copperweld Bimetallic Products Company;
-- Copperweld Equipment Company;
-- Copperweld Marketing & Sales Company;
-- Copperweld Tubing Products Company;
-- Metallon Materials Acquisition Corporation;
-- Miami Acquisition Corporation;
-- Southern Cross Investment Company;
-- TAC Acquisition Corporation;
-- Welded Tube Co. of America; and
-- Welded Tube Holdings, Inc.
According to David G. Heiman, Esq., Heather Lennox, Esq., and
other attorneys at Jones Day in Cleveland, Ohio, and Jeffrey B.
Ellman, Esq., at Jones Day in Columbus, Ohio, the Plan includes
substantive consolidation of the Copperweld Debtors.
The Copperweld Plan is intended to:
* alter the Copperweld Debtors' debt and capital structures
to permit them to emerge from their Chapter 11 cases with
viable capital structures;
* maximize the value of the ultimate recoveries to creditor
groups on a fair and equitable basis; and
* settle, compromise or otherwise dispose of certain Claims
and Interests on terms that the Copperweld Debtors believe
to be fair and reasonable under the circumstances and in
the best interests of their estates, creditors and equity
holders.
To accomplish these objectives, the Plan calls for:
(i) the cancellation of certain indebtedness in exchange
for, as applicable, Cash and/or New Common Stock;
(ii) the discharge of certain prepetition Intercompany
Claims among the Copperweld Debtors;
(iii) the cancellation of the Old Common Stock of the
Copperweld Debtors;
(iv) the assumption, assumption and assignment or
rejection of certain Executory Contracts and
Unexpired Leases;
(v) the approval of amendments to the certificate of
incorporation, by-laws and a New Stockholders'
Agreement providing for certain corporate
governance matters, including the selection of the
board of directors of Reorganized Copperweld,
Reorganized Copperweld's agreement to register the
New Common Stock with the SEC in certain
circumstances and agreements relating to the
acquisition and sale of controlling blocks of the
New Common Stock; and
(vi) certain Restructuring Transactions designed to modify
the existing corporate structure of the Copperweld
Debtors.
Distribution
But if the Plan as presently filed is confirmed and consummated in
accordance with its terms, the only parties that will benefit will
be the DIP Lenders, one Class of Priority Claims in which the
Debtors claim that there are no claimholders, and two Classes of
Secured Claims estimated by the Debtors to aggregate $548,000.
Senior management will benefit from a New Restricted Stock Plan,
and all administrative claims are to be paid in full.
All holders of general unsecured claims and any other holder of
the common stock of any of the Copperweld Debtors are totally out
of the money.
The Copperweld Debtors appear to believe they have the requisite
support from their creditor constituencies to move forward to
confirmation. The difference between this Plan and liquidation
will be, from the standpoint of holders of the billions of dollars
of unsecured claims, non-existent.
Copperweld Won't Pursue Avoidance Suits
The Copperweld Debtors agree that a number of transactions
occurred prior to the Petition Date that may give rise to
avoidance actions for preferences or fraudulent transfers. As to
lawsuits to recover payments as preferential, the Debtors have
determined, in consultation with the Noteholders' Committee, not
to pursue any preference actions. The statute of limitations for
these actions expired without any action by the Debtors on
December 29, 2002. As to fraudulent transfer suits, the
Copperweld Debtors are "not aware of any transactions that they
would challenge as a fraudulent conveyance under the Bankruptcy
Code or applicable state law."
Suits Against Directors & Officers
The common law of Delaware provides a cause of action against
officers and directors of a corporation who breach their fiduciary
duties to the corporation. The two primary fiduciary duties of
officers and directors of corporations are the duty of care and
the duty of loyalty.
On June 27, 2003, the Administrative Claimants' Committee sent
letters to certain former officers and directors of the Copperweld
Debtors notifying them that the ACC has been investigating and may
assert causes of action against any or all of them. The ACC did
not identify with any specificity the causes of action, but
suggested that they might include breach of fiduciary actions.
Notwithstanding, the Copperweld Debtors "currently are not aware
of any transactions that are being challenged that include an
action against the directors and officers" of the Copperweld
Debtors that acted in those capacities at the relevant time for
breach of their fiduciary duties.
Exoneration & Release
The Joint Plan provides for a complete exoneration and release of
any Copperweld Debtor, the members of the Noteholders' Committee,
the Copperweld DIP Lenders, and each of their present or former
directors, officers, employees, attorneys, accountants,
underwriters, investment bankers, financial advisors and agents,
acting in such capacity. This release is in addition to the
discharge of Claims and termination of Interests provided in the
Plan and under the proposed Confirmation Order and the Bankruptcy
Code.
The Joint Plan provides that, as of the Effective Date, (i) each
holder of a Claim or Interest that votes in favor of the Plan, and
(ii) to the fullest extent permissible under applicable law, each
Entity that has held, holds or may hold a Claim, Administrative
Claim, Copperweld DIP Lender Claim or Interest or at any time was
a creditor or stockholder of any of the Copperweld Debtors and
that does not vote on the Plan or votes against the Plan will be
deemed to forever release, waive and discharge all claims,
obligations, suits, judgments, damages, demands, debts, rights,
causes of action and liabilities -- other than the right to
enforce the Copperweld Debtors' or the Reorganized Copperweld
Debtors' obligations under the Plan -- whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter
arising in law, equity or otherwise, that are based in whole or in
part on any act, omission, transaction or other occurrence taking
place on or prior to the Effective Date in any way relating to a
Copperweld Debtor, the Reorganization Cases or the Plan that such
Entity has, had or may have prior to the Effective Date.
Cramdown
For purposes of computations in the Joint Plan, the Effective Date
is assumed to occur on December 31, 2003, but the Copperweld
Debtors recognize this may occur only after a hard fight. The
"cramdown" provisions of Section 1129(b) of the Bankruptcy Code
permit confirmation of a Chapter 11 plan of reorganization in
certain circumstances even if the plan is not accepted by all
impaired classes of claims and interests. The Copperweld Debtors
have reserved the right to request confirmation of their Joint
Plan under the Bankruptcy Code's cramdown provisions, and to amend
the Plan if necessary, because:
(1) holders of Claims in Classes 3 and 4 and Interests in
Classes 5 through 8 will be deemed as a matter of law
to have rejected the Plan; and
(2) if any other class of Claims fails to accept the Plan,
as may occur.
Full-text copies of Copperweld's Plan and Disclosure Statement are
available at no charge at:
http://ltv.uniscribe.net/Copperweld/TOC.htm
(LTV Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service,
Inc., 609/392-00900)
MALDEN MILLS: Successfully Emerges From Chapter 11 Bankruptcy
-------------------------------------------------------------
Today Malden Mills Industries, Inc.'s consensual plan of
reorganization has been confirmed by Judge Joel B. Rosenthal of
the United States Bankruptcy Court in Worcester, MA. As a result,
the company will successfully emerge from Chapter 11 on August 26,
2003. The company is emerging from bankruptcy intact with 1200
employees based in Lawrence, MA, Methuen, MA and Hudson, NH.
This approved plan of reorganization contains a 3-year buyback
option for CEO Aaron Feuerstein to retain control of Malden Mills.
Mr. Feuerstein may exercise the option at any time during the 3-
year period. However, if he does not exercise his option by August
26, 2003, the buyback price increases. Commenting on the buyback
process, Mr. Feuerstein said, "I am very confident that I will
exercise the buyout option, as I am in the final stages of
obtaining the required funds."
Malden Mills has an application before the Export-Import Bank of
the United States. When asked for comment, Mr. Feuerstein stated,
"As a strong exporter, we at Malden Mills look forward to the Ex-
Im Bank's consideration of our request."
Should Mr. Feuerstein not execute his buyback option by August 26,
2003, a lender group led by General Electric Capital Corporation
will then hold majority control of Malden Mills. Mr. Feuerstein
would continue in his role as Chairman and President and as a
member of the Board of Directors. He would also remain as a
minority owner.
Malden Mills is best known as the innovator, manufacturer and
marketer of Polartec(R) brand technical fabrics. During 2003,
Malden Mills and Polartec(R) products have continued to receive
strong support from customers and consumers around the world. The
result has been growing earnings and a strong balance sheet.
Significant improvements have resulted from the restructuring of
the business including more efficient manufacturing, new product
innovation, strengthening of the Polartec(R) brand and
diversification into the military, hunting, fitness and electronic
textile markets. Regarding the successful turnaround, CEO and
President Aaron Feuerstein stated, "I am thankful to our lenders,
in particular GE Capital, as well as the creditors committee for
working with us to create a plan of reorganization that will
insure Malden Mills' future success. This past year has been one
of the most challenging in our company's history. I have often
said that our employees are Malden Mills' greatest asset. The way
that we have overcome adversity to continue to innovate and
manufacture high quality Polartec(R) products has again proven our
people to be world class. I am looking forward to successfully
emerging from Chapter 11 and expect our best days to lie ahead."
Malden Mills Executive Vice President Cesar Aguilar said, "On
behalf of all of our employees, I would like to thank our
customers and suppliers who have helped our company through this
challenging time. We are fortunate to work with the best technical
garment makers in the world and it is their quest for excellence
that continues to drive our innovation. We are emerging from
Chapter 11 a more focused company, with a strong commitment to
customer service and a dedication to creating the most advanced
performance materials in the world."
The company filed Chapter 11 on November 29th, 2001. The filing
was necessitated by the cost of servicing bank debt. A number of
factors contributed, including the high costs associated with
rebuilding after the devastating December 11, 1995 fire. Company
owner Aaron Feuerstein has continued to be recognized around the
world for his example of corporate responsibility for his decision
to rebuild the day after the fire -- and pay idled employees
during the process. Corporate responsibility to the employees,
community and the environment continue to be the core values of
Malden Mills.
MAXXAM INC: Second Quarter Net Loss Balloons to $8.1 Million
------------------------------------------------------------
MAXXAM Inc. (AMEX:MXM) reported a net loss of $8.1 million, or
$1.24 per share, for the second quarter of 2003, compared to a net
loss of $7.8 million, or $1.20 per share, for the second quarter
of 2002. Net sales for the second quarter of 2003 totaled $74.4
million, compared to $68.4 million in the same period of 2002.
For the first six months of 2003, MAXXAM reported a net loss of
$18.6 million, or $2.85 per share, compared to a net loss of $62.0
million, or $9.50 per share, for the same period of 2002. Net
sales for the first six months of 2003 were $143.1 million,
compared to $308.7 million for the first six months of 2002.
MAXXAM reported operating income of $5.1 million for the second
quarter and $4.4 million for the first six months of 2003,
compared to operating income of $0.1 million for the second
quarter and an operating loss of $20.3 million for the first six
months of 2002.
The differences between the results for the first half of 2003 and
2002 are primarily attributable to the deconsolidation of Kaiser
Aluminum's financial results beginning Feb. 12, 2002, the date
Kaiser Aluminum filed for Chapter 11 reorganization.
For the first six months of 2002, after excluding aluminum
operations, MAXXAM reported net sales of $141.2 million, operating
income of $3.3 million, and a net loss of $13.6 million, or $2.08
per share.
FOREST PRODUCTS OPERATIONS
Lumber sales increased for the second quarter of 2003 as compared
to the second quarter of 2002 primarily due to higher prices for
redwood common grade lumber. The improvement in revenues due to
the increase in prices was partially offset by an unfavorable
shift in the mix of lumber from redwood to Douglas-fir. The
increase in lumber sales, in addition to an increase in sales of
surplus power from Pacific Lumber's cogeneration power plant, led
to improved operating results for the second quarter of 2003.
REAL ESTATE OPERATIONS
Net sales and operating results improved for the second quarter of
2003 versus the same period of 2002, reflecting increases in real
estate sales at the Company's Fountain Hills and Mirada
development projects, as well as an increase in revenues generated
by the segment's commercial lease properties (primarily
attributable to the acquisition of the Cooper Cameron building
and Motel Six properties in the fourth quarter of 2002).
RACING OPERATIONS
The decreases in net sales and operating results for the second
quarter of 2003 versus the comparable prior year period were
primarily due to lower average daily attendance at both Sam
Houston Race Park and Valley Race Park and to lower levels of
wagering on simulcast races at both locations. Operating losses
were also impacted by an increase in selling, general and
administrative expenses in 2003, which was due in part to costs
associated with legislative efforts.
OTHER MATTERS
As previously announced in prior earnings statements, MAXXAM may
from time to time purchase shares of its common stock on national
exchanges or in privately negotiated transactions.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's ratings on Maxxam Inc., and Pacific Lumber Co., remain on
CreditWatch with negative implications where they were placed
January 15, 2002. Maxxam Inc., guarantees the 12% senior secured
notes due Aug. 1, 2003, at its Maxxam Group Holdings Inc.,
subsidiary. The actions on MAXXAM and Pacific Lumber reflect
concerns regarding Kaiser as well as issues affecting the wood
products business. Wood product market conditions are weak, with
oversupply and soft demand resulting in volatile pricing for
lumber and logs. In addition, the company has not always been
able to harvest at desired levels because the governmental
approval process has been slow, although it has reportedly
improved recently. Still, recent cost cutting measures and a
focus on unit cost optimization, should improve cash flow and
earnings coverages.
Ratings Remaining on CreditWatch
with Negative Implications
MAXXAM Inc. Ratings
Corporate credit rating B
Senior secured debt CCC+
Pacific Lumber Co.
Corporate credit rating B
Maxxam Group Holdings Inc.
Senior secured debt CCC+
(gtd. by MAXXAM Inc.)
MED-EMERG INT'L: Half-Year Fin'l Report Shows Marked Improvement
----------------------------------------------------------------
Med-Emerg International Inc (OTC BB - MDER) announced that for the
six months ended June 30, 2003 revenues have increased 50% to
$31,556,472 from $21,051,852. For the second quarter ended June
30, revenues increased by 63 % to 18,412,652 from $11,310,318. For
the six months ended June 30, 2003, the company reported positive
EBITDA of $5,624 as compared to $266,264. For the second quarter
ended June 30, 2003 EBITDA declined to ($56,014) from $86,627.
Increased interest and financing costs ($349,727) associated with
borrowings at unfavorable rates as well as the impact of stock
compensation expenses ($1,118,856) resulted in the Company
reporting a net loss of ($1,609,237), before preferred share
dividends, for the six months ended June 30, 2002.
The significant increase in revenue reflects the impact of the
Canadian Armed Forces contract that was awarded in March 2001 and
the impact of revenue generated while servicing the SARS contract
which was awarded in March 2003. The operating results reflect
expenses incurred in servicing the Canadian Armed Forces contract.
The Company is currently remedying the underlying issues in
servicing the contract.
Dr. Ramesh Zacharias said, "The second quarter was a busy time for
Med-Emerg International Inc. The Company was instrumental in
assisting the people of Ontario in dealing with the SARS epidemic.
MEII provided over 240 healthcare professionals and more than
44,000 hours of service. Despite increased revenue our operating
results did not meet our expectations because of unforeseen
challenges in executing the DND contract. We are confident that
the efforts we are taking will remedy this situation in the coming
months. Our immediate financial goals are to strengthen the
Company's balance sheet. To this end we recently renegotiated our
working capital facility which will reduce our borrowing costs by
40%. MEII is becoming one of Canada's premier medical health
companies providing staffing and management expertise to the
medical industry."
MEII has built a pre-eminent clinic network across Canada with
more than 750,000 patient lives and 20 clinics under management.
MEII specializes in the coordination and delivery of emergency and
primary health care related services in Canada. These services
include physician and nurse staffing and recruitment, clinical
management services, the development and management of urgent care
centers, and a comprehensive physician practice management
program. Med-Emerg currently holds the contract to provide all
contract healthcare support services to the Canadian Forces for
members in-garrison in Canada.
At Dec. 31, 2002, Med-Emerg's balance sheet discloses a total
shareholders' equity deficit of about $1.7 million.
MILACRON INC: Bank Group Relaxes Covenants Under Credit Facility
----------------------------------------------------------------
Milacron Inc. (NYSE: MZ), a leading supplier of plastics
processing equipment and supplies and industrial fluids, has
reached an agreement with its principal bank group to amend
certain terms of its revolving credit facility. The purpose of the
amendment is to relax certain financial covenants through the end
of 2003 in light of the extended downturn in the plastics
industries and to allow Milacron to execute its recently announced
initiatives to return to profitability.
"We very much appreciate the flexibility our bank group has given
us during this prolonged manufacturing recession," Milacron
chairman and chief executive officer Ronald D. Brown said. "This
amendment enables us to move ahead with our needed profit-
improvement initiatives while continuing to help our customers
meet their needs as well."
In the newly amended agreement, the covenant specifying minimum
levels of cumulative EBITDA (earnings before interest, taxes,
depreciation and amortization - including adjustments as defined
in the agreement) has been relaxed for the third and fourth
quarters. In addition, the limit on restructuring expenses has
been raised to allow Milacron to move forward with profit-
improvement initiatives designed to save the company approximately
$20 million annually. The facility is now capped at $65 million,
of which $54 million is currently utilized. The availability of
the remaining $11 million is subject to certain new restrictions
based on the company's cash position.
The amendment, which contains other new conditions, is being filed
today with the Securities and Exchange Commission. Terms of the
facility that remain unchanged include a final step-down to a $55
million cap on December 15, 2003 and its expiration on March 15,
2004.
Milacron's principal bank syndicate includes Deutsche Bank,
arranger and administrative agent, and PNC Bank, documentation
agent.
First incorporated in 1884, Milacron is a leading global supplier
of plastics-processing technologies and industrial fluids, with
about 3,500 employees and major manufacturing facilities in North
America, Europe and Asia. For further information, visit
http://www.milacron.com
MIRANT CORP: Brings-In Forshey & Prostok as Special Counsel
-----------------------------------------------------------
Mirant Corp. and its debtor-affilaites are concerned that there
might be conflict of interest issues in White & Case LLP's and
Haynes and Boone LLP's representation of the Debtors as co-
counsels. Thus, to avoid unnecessary litigation and reduce the
overall expenses of administering these cases, the Debtors seek
Judge Lynn's permission to employ Forshey & Prostok, LLP as
special conflicts counsel.
Ian T. Peck, Esq., at Haynes and Boone LLP, in Dallas, Texas,
tells Judge Lynn that White & Case, Haynes and Boon, and Forshey
will carefully coordinate their efforts and clearly delineate
their duties to prevent any duplication of effort.
J. Robert Forshey, Esq., a partner at Forshey & Prostok LLP,
informs the Court that, to the best of his knowledge, Forshey's
members and associates do not have any connection with or any
interest adverse to the Debtors, their creditors, or any other
party-in-interest, or their attorneys and accountants, except
that:
-- from time to time, Forshey has represented TXU Energy and
Lone Star Gas, who may be creditors in the Debtors' cases,
in unrelated matters; and
-- Forshey may have in the past, represented some creditor
or party-in-interest to the Debtors but in unrelated
matters.
Thus, Mr. Forshey concludes that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Forshey does not hold a prepetition claim against the Debtors'
estates. In fact, the Debtors fully paid Forshey for all
services previously performed and any retainer amounts have
already been refunded to the Debtors.
However, in preparation of the Debtors' Chapter 11 filing,
Forshey received a $5,000 retainer to cover these prepetition
services. All charges and expenses have been deducted from the
Retainer, with the remaining amount to be placed in the firm's
trust account.
Mr. Forshey informs the Court that the firm will charge the
Debtors pursuant to these hourly rates:
Robert Forshey $350
Jeff Prostok $325
From time to time, the billing rates of Forshey personnel working
on these cases may change, which rate changes will then pass on
to the Debtors. In addition, the Debtors will also seek
reimbursement in full for all travel costs, long distance calls,
express mail, special or hand delivery, copying costs, document
processing, overtime help, overtime meals, Lexis, Westlaw, Court
fees, transcript costs, facsimile costs and all extraordinary
expenses.
* * *
Pending a final hearing, the Court authorizes the Debtors to
employ Forshey & Prostok, LLP as their special conflicts counsel
effective July 14, 2003. (Mirant Bankruptcy News, Issue No. 4;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
MIRANT: Deutsche Bank's Notice to Preferred Trust Holders
---------------------------------------------------------
Notice to Holders of the
$345,000,000.00
6-1.4% Preferred Securities Certificates
of Mirant Trust I (f/k/a SEI Trust I)
Cusip No.: 60467Q102
THIS NOTICE CONTAINS IMPORTANT INFORMATION THAT IS OF INTEREST TO
THE BENEFICIAL OWNERS OF THE SUBJECT SECURITIES. IF APPLICABLE,
ALL DEPOSITORIES, CUSTODIANS, AND OTHER INTERMEDIARIES RECEIVING
THIS NOTICE ARE QUESTED TO EXPEDITE RETRANSMITTAL TO SUCH
BENEFICIAL OWNERS IN A TIMELY MANNER.
This notice is being given by Deutsche Bank Trust Company
Americas, formerly known as Bankers Trust Company, as property
trustee under that certain Amended and Restated Trust Agreement
dated as of October 1, 2000, among Mirant Corporation, formerly
known as Southern Energy, Inc., as depositor, Bankers Trust
(Delaware), as Delaware Trustee, the Property Trustee, and the
administrative trustees named therein, relating to the issuance of
the $345,000,000.00 6-1/4% Preferred Securities Certificates (the
"Preferred Securities") of SEI Trust I, now known as Mirant Trust
I. Reference is made to that certain Indenture dated as of
October 1, 2000, between the Depositor and Law Debenture Trust
Company of New York, as successor to Bankers Trust Company, as
trustee. Capitalized terms not otherwise defined herein shall
have the same meanings set forth in the Trust Agreement.
Pursuant to Section 8.02 of the Trust Agreement, the Property
Trustee hereby informs you that an Indenture Event of Default
under Section 501(7) of the Indenture has occurred as a result of
the filing by the Depositor of a voluntary petition for bankruptcy
under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of Texas on July 14,
2003 (Case No. 03-46590-bjh11), which constitutes an Event of
Default on the Preferred Securities pursuant to Section 1.01 of
the Trust Agreement. Please be advised that pursuant to Section
9.02(i) of the Trust Agreement, the Trust may be dissolved and
terminated upon the occurrence of a Bankruptcy Event in respect of
the Depositor.
Please note that Section 8.19 of the Trust Agreement provides that
the Securityholders of a majority in aggregate Liquidation
Preference of the Preferred Securities may direct the time, method
and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred
on the Property Trustee. Please be further advised that under
Section 8.01 of the Trust Agreement, the Property Trustee shall
not be required to expend or risk its own funds or otherwise incur
any financial liability in the performance of its duties, or in
the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it. In addition, Section 8.03(iv) of the
Trust Agreement, the Property Trustee is not required to exercise
any [of] its rights or powers at the request of any of the
Securityholders, unless such Securityholders shall have offered to
the Property Trustee security or indemnity satisfactory to the
Property Trustee against the costs, expenses and liabilities which
might be incurred by it or in compliance with such request or
direction.
The Property Trustee at this time does not intend to pursue any
remedies, without the prior written request of the Securityholders
provided in accordance with the provisions of the Trust Agreement.
This notice is without prejudice and does not waive any other
right or remedy that the Property Trustee may have as of the date
hereof or in the future, all of which are hereby reserved.
DATED: July 23, 2003
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Property Trustee
Corporate Trust & Agency Services
80 Wall Street, 27th Floor
New York, NY 10005-2858
MIRENCO INC: Ability to Continue as Going Concern Uncertain
-----------------------------------------------------------
On July 23, 2003, Mirenco Inc.'s Board of Directors approved
minutes terminating the services of Grant Thornton, LLP of Kansas
City, Missouri as the Company's independent auditors. The
termination of Grant Thornton resulted from a business decision
made by the Board of Directors because of cost considerations.
The Company formally notified Grant Thornton, concurrent with the
Board's approval of minutes of the Board Meeting where the
decision was made.
Grant Thornton, LLP's report on the financial statements for the
past two years contained a going concern opinion expressing
substantial doubt about the ability of the Company to continue as
a going concern for the fiscal year ended December 31, 2002. For
the most recent year Grant Thornton issued a material weakness in
internal control report advising the Company that the controls
necessary to develop reliable financial statements do not exist.
The Company's Board of Directors discussed this reportable event
with Grant Thornton and has authorized Grant Thornton to fully
respond to inquiries of the successor accountant regarding this
matter.
On July 23, 2003, the Board of directors approved minutes which
approved the retention of the accounting firm of Stark, Winter,
Schenkein & Co., LLP, Certified Public Accountants of Denver,
Colorado as its independent auditors for the fiscal year ending
December 31, 2003.
MOTELS OF AMERICA: Gets Nod for Interim Cash Collateral Use
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
Eastern Division gave the Motels of America, L.L.C., a second
interim extension to use its Lender's Cash Collateral to finance
ongoing operations in its chapter 11 case.
The Court first gave the Debtor interim approval to use cash
collateral through July 31, 2003. Criimi Mae Services Limited
Partnership as special servicer to LaSalle National Bank objected.
Criimi Mae and the Debtor presented an agreement permitting
further use of cash collateral through the conclusion of a final
Cash Collateral Hearing.
On an interim basis, the Court determines that the Debtor has an
immediate and continuing need to use, in the ordinary course of
its business, any and all cash, income, receivables, proceeds
received from or on account of its prepetition or postpetition
business operations, and all other cash equivalents constituting
cash collateral within the meaning of section 363 of the
Bankruptcy Code.
The Debtor has an immediate need of cash, among others, to pay its
operating expenses and to continue to pay the Tenants of the
Leased Properties their excess cash pursuant to the terms of the
Leases. Thus, all banks maintaining bank accounts in which Debtor
holds an interest are authorized and directed by the Court to
honor and pay any and all checks and drafts drawn in favor of the
Tenants on Debtor's bank accounts whether issued prior to or after
the Petition Date.
The Debtor's use of the Cash Collateral in this Second Interim
Period will be governed by the August 2003 Budget:
Debt Service $1,390,184
Escrowed Amounts 384,886
Tenant Reimbursements 3,449,246
Expenditure from Escrow 150,000
Franchise Expense 192,175
Property Operating Expenses 853,295
Payroll Expense 674,070
Professional Fees 200,000
Management Fees 171,422
LaSalle National Bank is entitled, pursuant to section 361 and
363(c) of the Bankruptcy Code, to adequate protection of its
interest in the Prepetition Collateral, including the Cash
Collateral, for and equal in amount to the aggregate diminution of
value of LaSalle's interest in the Prepetition Collateral
The final hearing will take place on August 28, 2003, at 10:00
a.m. Objection if any, to the final order approving Debtor's use
of the Cash Collateral must be filed with the Court and served
upon:
i) Debtor's counsel
McDermott, Will & Emery
227 West Monroe Street
Suite 4400, Chicago, 1L 60606-5096
Attn: Nathan Coco, and
50 Rockefeller Plaza
New York, NY
Attn: Stephen Selbst; and
ii) the Office of the United States Trustee,
on or before August 21, 2003.
Motels of America LLC, headquartered in Des Plaines, Illinois
filed its chapter 11 protection on July 10, 2003 (Bankr. N.D. Ill.
Case No. 03-29135). Mohsin N. Khambati, Esq., Nathan F. Coco,
Esq., and Stephen Selbst, Esq., at McDermott Will & Emery
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
estimated debts and assets of over $100 million each.
MSF FUNDING: Series 2000-1 Note Ratings on Watch Negative
---------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on MSF
Funding LLC's $80 million floating-rate asset-backed notes series
2000-1 on CreditWatch with negative implications. The notes are
backed by medical equipment leases originated by DVI Inc.'s
Brazilian operations.
DVI, which is headquartered in the U.S., announced Aug. 13, 2003,
that their chief financial officer was placed on administrative
leave and that they "discovered apparent improprieties in its
prior dealings with lenders involving misrepresentations as to the
amount and nature of collateral pledged to lenders." This is
further to DVI's announcement Aug. 1, 2003, that it would not make
an interest payment due on its 9-7/8% senior notes due 2004. This
prompted Standard & Poor's to lower DVI's counterparty credit and
senior unsecured debt ratings to 'D'.
Furthermore, on Aug. 13, 2003, JPMorganChase Bank, the trustee,
declared an early amortization event with respect to the notes
based on information including the aforementioned factors relating
to DVI. The early amortization event can be waived or deferred
only if 66-2/3% of each class of noteholders decides so for their
respective class of notes.
DVI's Brazilian operations, Medical Systems Finance S.A. (MSF),
Healthcare Systems Finance S.A. (HSF), and Oferil S.A., sold the
medical equipment leases to MSF Funding. MSF and HSF are the
master servicers of the portfolio of medical equipment leases.
Standard & Poor's credit and legal analysis of the ratings on the
MSF Funding notes assumes that the structure can withstand an
insolvency of DVI's Brazilian operations. Upon such insolvency, a
backup servicer, JPMorganChase Bank, would assume the servicing of
the lease portfolio. Funds in MSF Funding's accounts may be used
to cover expenses relating to the transfer of servicing to
JPMorganChase.
The reserve account, which is currently $4.3 million, can be used
to cover the cost of servicing transfer, commingling risk, and/or
liquidity issues relating to delinquent leases. Standard & Poor's
analysis assumed the default frequency on the lease portfolio was
multiples of the historical performance and no recovery value
would be obtained on the liquidation of any defaulted leases.
Nevertheless, due to the declaration of an early amortization
event and in light of the unique nature of the collateral and
highly specialized servicing requirements, the financial
uncertainty surrounding DVI, and the heightened likelihood of a
servicer transition, Standard & Poor's is placing the series 2000-
1 notes on CreditWatch. Should delinquencies and defaults increase
markedly during a transition period or the early amortization
period, remaining enhancement may not be consistent with the
current ratings on the notes.
Performance on the Brazilian lease portfolio to date has been
steady; only seven leases, or 2.6% of the total pool balance, have
defaulted. Total delinquencies as of the July payment date were
3.46% of the outstanding pool. Thirty percent of the rated note
balances remain outstanding. When the outstanding balances of the
class D and the unrated class E notes equals 25% of their original
issuance amounts, principal amortization will cease on these two
classes until all of the class A, B, and C notes have been
redeemed. Interest on the notes is paid monthly on a timely basis.
Principal on the notes is not due until the stated maturity
date in July 2007.
Standard & Poor's will continue to monitor developments as they
unfold.
RATINGS PLACED ON CREDITWATCH NEGATIVE
MSF Funding LLC
Rating
Class To From
A A/Watch Neg A
B BBB/Watch Neg BBB
C BB/Watch Neg BB
D B/Watch Neg B
E N.R. N.R.
NEVADA POWER: S&P Rates $350 Million Mortgage Notes at BB
---------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
Nevada Power Co.'s (B+/Negative/--) upcoming $350 million general
and refunding mortgage notes series G offering, as Nevada Power's
secured obligations are rated two notches higher than the firm's
corporate credit rating. The outlook is negative.
"The higher, secured rating reflects Standard & Poor's
expectations that the value of the asset collateral will
substantially exceed the maximum amount of first mortgage and
general and refunding bonds that could be outstanding under the
terms of the indenture," said credit analyst Swami Venkataraman.
"Therefore, Standard & Poor's has confidence that secured
bondholders would receive their principal, albeit delayed, in a
bankruptcy scenario," he added.
While Nevada Power benefits from fast-growing demand for
electricity in the Las Vegas region, the huge dependence upon
wholesale markets for its energy needs, coupled with adverse
rulings by the Public Utility Commission of Nevada (PUCN), have
decimated credit quality. However, Standard & Poor's believes that
the risk of disallowance is materially lower going forward.
The consolidated financial profile is weak for the rating. The
$173.4 million loss for the quarter ended June 30, 2003 does not
affect ratings because much of that loss is noncash in nature and
because the rest pertains to the May disallowance of deferred
power costs by the PUCN. In fact, following the Aug. 11, 2003,
shareholder vote, most of the $123 million marked-to-market
expense related to the convertible notes will be reversed in the
coming quarter. Standard & Poor's expects that deferred costs
collected over the next three years would be used to aggressively
reduce debt and that management would exercise its option to
convert the notes issued in February into equity rather than
redeem them with cash.
NIMBUS GROUP: Cuts-Off Professional Ties with Berkovitz Lago
------------------------------------------------------------
Nimbus Group, Inc. has dismissed Berkovitz, Lago & Company, LLP as
its independent accountant, effective August 6, 2003.
The report of Berkovitz on the financial statements of the Company
for the past fiscal year was modified to include an explanatory
paragraph wherein Berkovitz expressed substantial doubt about
Nimbus Group's ability to continue as a going concern.
The decision to dismiss Berkovitz was recommended by management of
the Company and approved by its Audit Committee.
Nimbus Group Inc.'s March 31, 2003 balance sheet shows a working
capital deficit of about $350,000 and a total shareholders' equity
deficit of about $350,000.
NORTHWESTERN CORP: Reports Net Capital Deficit of $504 Million
--------------------------------------------------------------
NorthWestern Corporation (NYSE: NOR) reported a consolidated loss
on common stock of $57.8 million for the second quarter ended June
30, 2003, compared with a consolidated loss on common stock of
$21.4 million in the same period last year.
Results in the second quarter of 2003 were adversely affected by
an asset impairment charge of $12.4 million related to the
Company's investment in the Montana First Megawatts generation
project, an $11.7 million increase in operating expenses,
primarily due to increased legal and other professional services
and employee benefit costs, an $11.2 million increase in interest
expenses and a $6.2 million write-off associated with a final
order from the Montana Public Service Commission disallowing the
recovery of some natural gas costs the Company incurred last year
and in the first quarter of 2003.
During the second quarter of 2003, NorthWestern implemented a
process to sell its interest in Expanets, the Company's
communications services business, and Blue Dot, the Company's
heating, ventilation and air conditioning business, and other
noncore subsidiaries as part of its announced turnaround plan. In
accordance with Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," results from those subsidiaries were reported as
discontinued operations for the three months and six months ended
June 30, 2003.
As a result, for the second quarter of 2003, NorthWestern reported
a loss from its continuing operations of $44.8 million, compared
with a loss of $6.4 million in the same period from continuing
operations in 2002. For the second quarter of 2003, the Company
recorded a loss of $13.0 million from discontinued operations,
compared with a loss of $15.0 million from discontinued operations
in the same period in 2002.
For the first six months of 2003, the Company reported a
consolidated loss on common stock of $47.9 million compared with a
consolidated loss on common stock of $73.8 million in the same
period in 2002. Results from continuing operations for the first
six months of 2003 were a loss of $51.1 million compared with a
loss of $14.1 million in the same period in 2002. Discontinued
operations reported income on common stock of $3.2 million in the
first half of 2003, compared with a loss of $59.8 million in the
same period in 2002.
Revenues from continuing operations in the second quarter of 2003
were $235.5 million, a 32.7 percent increase, compared with $177.4
million in the same quarter in 2002. Revenues primarily increased
during the quarter due to higher recovered natural gas and
electricity supply costs including the sale of surplus energy. For
the first six months of 2003, revenues were $524.3 million,
compared with $353.5 million in the first six months of 2002.
Results in 2002, included only five months of Montana utility
operations.
Cash Position Update
As of June 30, 2003, cash and cash equivalents were $50.5 million,
compared with $25.1 million as of June 30, 2002. Cash flows used
in continuing operating activities during the six months ended
June 30, 2003, were $86.3 million, compared to cash provided by
continuing operations of $106.8 million during the six months
ended in June 30, 2002. Due in part to the recent downgrades of
credit ratings, the Company has experienced reduced vendor credit
terms which have contributed to $57.6 million in cash used by
changes in operating assets and liabilities during the six months
ended June 30, 2003.
NorthWestern reported that if the Company is unable to generate
cash from additional funding sources or proceeds from the sale of
noncore assets, then the amount of cash being generated from its
continuing operations may not be sufficient to sustain current and
anticipated interest payments, capital expenditures and working
capital requirements, which have risen significantly due to
reductions in trade credit demanded by vendors, additional
professional and other fees related to the Company's turnaround
plan and certain stockholder and derivative litigation. Interest
payment obligations of approximately $39 million are due in
September 2003 with respect to outstanding indebtedness. The
Company has the ability to defer $31 million in interest payments
due on Sept. 15, 2003, for up to 30 days. The Company also owes
approximately $38 million in property taxes in Montana, which are
due by the end of November 2003.
In light of NorthWestern's current liquidity situation, the
Company has reviewed its debt instruments for default and cross-
default provisions that would occur if it is unable to meet
interest payments and tax obligations. The Company has
reclassified approximately $1.2 billion of long-term debt to
current maturities of long-term debt on its balance sheet as of
June 30, 2003, based on the amount of debt that would become due
under the various default and cross-default provisions of our debt
instruments.
The Company is currently seeking a new working capital facility,
however, there are no assurances that the Company will be able to
consummate this or any similar financing. NorthWestern has
retained a financial restructuring firm to assist the Company in
implementing its turnaround plan. If the Company is unable to
obtain funds to address its immediate liquidity needs or to
effectuate the Company's turnaround plan, which will require
significantly reducing debt, restructuring debt and generating
cash from additional funding sources or proceeds from the sale of
noncore assets, then the Company may be required to seek
protection under the U.S. Bankruptcy Code. NorthWestern said it
cannot predict when a bankruptcy filing, if any, would be made,
but it could occur in the near term.
Northwestern's June 30, 2003, balance sheet discloses a working
capital deficit of about $1.1 billion while net capital deficit
tops $504 million.
Results from Continuing Utility Operations
NorthWestern's core electric and natural gas utility operations
reported operating income of $25.8 million for the three months
ended June 30, 2003, compared with operating income of $29.1
million in the same period in 2002. Results during the second
quarter were adversely affected by a write-off associated with an
order from the Montana Public Service Commission disallowing the
recovery of $6.2 million of actual natural gas costs the Company
incurred during the past year. NorthWestern has filed suit in
Montana District Court seeking to overturn the MPSC's decision.
For the first six months of 2003, NorthWestern's utility
operations had operating income of $78.7 million, compared with
$71.3 million in the first six months of 2002. Results in the
first six months of 2002 included five months of Montana utility
operations.
Revenues in the second quarter of 2003 for NorthWestern's electric
and natural gas utility operations increased to $233.4 million,
compared to $175.8 million in the same period in 2002. Revenues
increased primarily due to higher recovered electricity and
natural gas supply costs and the sale of surplus energy. Revenues
for the first six months of 2003 were $519.6 million, compared
with $351.2 million in the first six months of 2002.
Total sales of electricity increased to approximately 2.4 million
megawatt hours during the second quarter of 2003, and were
relatively unchanged from last year's volumes during the second
quarter. Total sales of natural gas were approximately 9.6 million
dekatherms in the second quarter of 2003, compared with
approximately 10.3 million dekatherms sold in the same period
in 2002.
Asset Sales Update and Results from Discontinued Operations
NorthWestern has engaged a financial advisor to assist the Company
in selling Blue Dot and Expanets. A private auction is being
conducted for Blue Dot. Although disposition of Blue Dot may be
concluded in 2003, the Company does not anticipate receiving a
material amount of net cash proceeds in excess of liabilities from
the transaction. NorthWestern is also seeking to sell Expanets and
is attempting to conclude the transaction in 2003. If successful
in consummating the sale of Expanets, the Company hopes to receive
net cash proceeds significantly in excess of liabilities to third
parties. Any final arrangements relating to the sale of Blue Dot
or Expanets are subject to numerous legal, accounting, financial
and business issues being resolved.
During the second quarter of 2003, NorthWestern consummated the
sale of One Call Locators, Ltd., and received cash consideration
of $6.6 million and a note receivable of $4.7 million. The Company
also sold the assets of NorthWestern Communications Solutions in
July 2003 for $.2 million in cash and a note receivable of $.3
million. The Company is attempting to sell other noncore assets.
Blue Dot reported operating income of $2.9 million in the second
quarter of 2003, compared with operating income of $1.4 million in
the second quarter of 2002. Revenues for the second quarter were
$115.0 million, compared with revenues of $117.8 million in the
second quarter of 2002. For the first six months of 2003, Blue Dot
reported an operating loss of $1.4 million, compared with an
operating loss of $2.7 million in the same period in 2002.
Revenues for the first half of 2003 were $226.2 million, compared
with $212.3 million during the same period in 2002. The operating
results for the three and six months ending June 30, 2003, reflect
the results of operations of 18 sold business locations through
the date of sale.
During the second quarter of 2003, Expanets reported an operating
loss of $6.8 million, compared with an operating loss of $18.6
million in the same period in 2002. Revenues for the second
quarter of 2003 were $162.1 million, compared with revenues of
$191.4 million in the same period in 2002. For the first six
months of 2003, Expanets reported operating income of $14.4
million, compared to an operating loss of $45.8 million in the
same period in 2002. Results during the first six months of 2003
included a gain on debt extinguishment during the first quarter of
2003 of $27.3 million. Revenues for the first six months of 2003
were $328.7 million, compared with revenues of $370.6 million in
the first half of 2002.
NorthWestern Corporation is one of the largest providers of
electricity and natural gas in the Upper Midwest and Northwest,
serving approximately 598,000 customers in Montana, South Dakota
and Nebraska. NorthWestern also has investments in Expanets, Inc.,
a leading nationwide provider of networked communications and data
services to small and mid-sized businesses, and Blue Dot Services
Inc., a provider of heating, ventilation and air conditioning
services to residential and commercial customers.
OWENS CORNING: Obtains Go-Signal for $1MM Ohio Property Sale
------------------------------------------------------------
J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, informed the Court that Owens Corning owns real property
located at 341 O'Neill Drive in Hebron (Licking County) Ohio. The
Debtors have ceased all activity at the Property and no longer
need it for their operations. Accordingly, the Debtors decided to
sell the Property and have entered into a Purchase and Sale
Agreement with Golden Property Management LLC.
The Settlement Agreement's principal terms are:
1. The gross purchase price for the Property is $1,015,000.
The Agreement requires a $25,000 security deposit, which is
refundable if the contingencies are not satisfied or waived
by Golden Property, or if Golden Property terminates the
Agreement on or prior to the expiration of the
Investigation Period.
2. The Agreement provides for an "Investigation Period,"
commencing with the execution of the Agreement and
continuing for 60 days after the date the order approving
the Agreement is final and no longer subject to timely
appeal. During the Investigation Period, Golden Property
is entitled to investigate certain matters regarding the
Property, including:
a. the Property's zoning, any applicable use permits or any
other governmental rules and regulations limiting the
use of the Property;
b. documents regarding, inter alia, environmental
assessment data, real property leases, construction
contracts, management contracts, reciprocal easement
agreements, real property tax bills and soil and
building reports and engineering data; and
c. the Property's environmental condition.
3. During the Investigation Period, Golden Property is
entitled to review the Title Commitment to be obtained with
respect to the Property and is required to either approve
the Commitment or notify Owens Corning of any items which
are reasonably objectionable. In the event there are any
objections, the Agreement contains provisions for their
resolution.
4. The Agreement requires Owens Corning to satisfy, except to
the extent prohibited by the Court, any liens or
encumbrances affecting the Property that are dischargeable
after payment of a fixed or ascertainable sum of money that
do not constitute "Title Objections" under the Agreement.
In the event the Court does not authorize the payment at
Closing of the liens or encumbrances, Owens Corning is
obligated to use commercially reasonable best efforts to
either deliver a release of the Property from the lien or
encumbrance, or cause the company issuing the Title
Commitment to insure over any lien or encumbrance. The
Agreement may be terminated by Owens Corning in the event
the cost of removing liens or encumbrances with respect to
the Property exceeds $100,000, so long as the termination
occurs on or before July 17, 2003.
5. The Agreement provides that it may be terminated by Golden
Property at any time prior to the expiration of the
Investigation Period, for any or no reason. After any
termination, Golden Property is entitled to a return of its
security deposit.
6. The Agreement contains representations by Owens Corning
that the Property does not contain any hazardous or
toxic materials in violation of applicable environmental
laws or regulations. The Agreement contains an
environmental indemnity provision by which Owens Corning is
obligated to indemnify and defend Golden Property with
respect to the presence of hazardous substances on the
Property, after Golden Property has paid for the first
$30,000 of expenses relating to any substances.
7. Golden Property Management has agreed to accept the
Property in an "as is, where is" condition, although Owens
Corning is required to remove all personal property at the
Property and to make certain repairs to the Property.
8. Closing under the Agreement will be no later than 30 days
following completion of the Investigation Period, subject
to a potential 30-day extension upon the posting by Golden
Property of an additional $25,000 security deposit.
The Debtors sought and obtained the Court's authority to sell the
Property free and clear of all liens, claims, and encumbrances,
with any liens, claims, and encumbrances to attach to the proceeds
of sale. The Debtors also obtained the approval, pursuant to
Sections 105 and 363 of the Bankruptcy Code, to pay the Property
Taxes from the proceeds of sale.
In addition, the Court also exempts, pursuant to Section 1146(c)
of the Bankruptcy Code, the sale from stamp or similar taxes.
(Owens Corning Bankruptcy News, Issue No. 55; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Committee Intends to Amend Solicitation Package
------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Pacific Gas and Electric Company and its
debtor-affiliates sought and obtained the Court's permission to
include its Report and Recommendation regarding the Settlement
Plan in the solicitation package. The Solicitation Package
contains, among other things, the approved form of Disclosure
Statement and a ballot to permit unsecured creditors in impaired
classes to vote to accept or reject the Plan.
The Committee has played an integral role in the plan
formulation, revision and analysis process, focusing on the
payment of the creditors in full, with interest, and without
delay. At the conclusion of the process, the Committee prepared
the Report and Recommendation, which:
-- summarizes the Plan;
-- analyzes the positive and negative attributes of the Plan;
and
-- offers a recommendation to unsecured creditors with regard
to the voting.
After analysis of various restructuring options, including the
Pacific Gas & Electric Company's liquidation, the Committee has
concluded that the Settlement Plan is superior to other available
options and plans. The Settlement Plan has the potential to pay
creditors in full with interest and to enable the PG&E to emerge
from bankruptcy with an investment grade credit rating.
The Settlement Plan, like the predecessor restructuring plan
filed by PG&E and its parent PG&E Corporation and the competing
plan proposed by the California Public Utilities Commission and
supported by the Creditors' Committee, classifies general
unsecured claims under Class 5. PG&E estimates that allowed
Class 5 claims would total $4,600,000,000.
While the Joint Plan provided for interest payment on certain
claims at certain negotiated rates incorporated into the Original
PG&E Plan, it did not provide for a set-up in interest rates if
the Effective Date of the Joint Plan were delayed beyond
January 31, 2003. The negotiated rates of postpetition date
interest and the set-up interest rates are incorporated into the
Settlement Plan with respect to accrued and unpaid claims in
Classes 3 through 10.
Unlike the Original PG&E Plan, which proposed to satisfy a
portion of allowed claim amount through the issuance of long-term
debt securities, the Settlement Plan provides the same creditors
with full cash payments for their claims on the Effective Date.
Because creditors need not be compensated for the theoretical
cost of selling debt securities, the Settlement Plan, unlike the
Original PG&E Plan, will not provide for the payment of any
placement fee to unsecured creditors.
Sources of Funds under the Settlement Plan
Sources of Funds Settlement Plan
---------------- ---------------
Cash at Effective Date $2,589,000,000
New Mortgage Bonds 7,682,000,000
New Short-term Debt 500,000,000
Reinstated Debt 1,160,000,000
Reinstated Preferred Stock 430,000,000
---------------
Total Sources $12,361,000,000
===============
In the Committee's opinion, the Settlement Plan proposes a
desirable combination of the Original PG&E Plan and the Joint
Plan while incorporating simple but important modifications that
enhance the financial feasibility of the Settlement Plan and
foster confirmation prospects and an environment that will
eliminate the serious risk of appeals and post-confirmation
litigation associated with the Original PG&E Plan and the Joint
Plan.
These are the key enhancements that make the Settlement Plan a
valuable compromise between the two competing plans:
(1) The Settlement Plan establishes a $2,210,000,000
regulatory asset as a separate part of PG&E rate base --
a $450,000,000 increase over that proposed in the Joint
Plan;
(2) The Settlement Plan proposes to maintain PG&E's
currently authorized rate of return for equity, which is
higher than that provided for in the Joint Plan, while
lowering rates and paying unsecured creditors in full, and
promotes regulatory stability, which will increase the
likelihood that the Settlement Plan will be approved by
the boards of directors of PG&E Corporation and PG&E;
(3) The Settlement Plan settles significant ratemaking and
regulatory litigation that arose between the CPUC and PG&E
as a result of the energy crisis; and
(4) CPUC approval of the Settlement Agreement and confirmation
of the Settlement Plan ensure that the terms will be
enforceable against the CPUC for many years to come.
The Report and Recommendation contains a clear comparison of the
attributes and risk inherent in the Plan, including the relative
likelihood and extent of the risks. The analysis is designed to
give creditors a clear picture of what to expect before and after
the hypothetical confirmation of the Plan including
recommendations as to how creditors should vote on the Plan.
The Committee is in a unique position to opine on the Plan from
the point of view of unsecured creditors. As a result, the
Report and Recommendation represents the culmination of an
extensive effort by the Committee and its professionals with
regard to the Plan. (Pacific Gas Bankruptcy News, Issue No. 61;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PACKAGED ICE: Shareholders Approve Proposed Merger with Cube
------------------------------------------------------------
Packaged Ice, Inc., (Amex: ICY) (S&P, B- Corporate Credit Rating,
Developing) announced that at an annual meeting of the Company's
shareholders held Thursday, approximately 68 percent of the
Company's outstanding shareholders voted for the proposed merger
of the Company with Cube Acquisition Corp., while only 0.25
percent of its shareholders voted against the merger. Cube is a
subsidiary of Reddy Ice Holdings, Inc., an entity formed jointly
by Trimaran Capital Partners and Bear Stearns Merchant Banking for
purposes of the merger. It is anticipated that, provided certain
conditions are met or waived, the merger will become effective
tomorrow and that, as a result of the merger, the
surviving corporation will be renamed Reddy Ice Group, Inc., and
will become a wholly-owned subsidiary of Reddy Ice Holdings and a
privately held company.
Accordingly, the Company will file notices with the Securities and
Exchange Commission and with the American Stock Exchange
requesting termination of registration and application for
withdrawal from listing, respectively. As a result of these
filings, the American Stock Exchange will suspend trading in the
Company's common stock effective at the end of the trading day on
which it receives such notice.
Following the merger, entities controlled by Trimaran Capital
Partners and Bear Stearns Merchant Banking and an investor group
including William P. Brick, the Company's Chairman and Chief
Executive Officer, Jimmy C. Weaver, the Company's President, Chief
Operating Officer and Director and certain other members of the
Company's management will be the indirect owners of Reddy Ice
Group through their ownership of Reddy Ice Holdings.
Under the terms of the merger, shareholders of the Company's
common stock, par value $0.01 per share other than those
shareholders who properly pursue an appraisal of the shares, will
have the right to receive approximately $3.638 per share of Common
Stock. Instructions explaining how shareholders may exchange
their shares of Common Stock for the merger consideration will be
mailed to recordholders in the near future.
Packaged Ice is the largest manufacturer and distributor of
packaged ice in the United States. With over 1,700 employees, the
Company sells its products primarily under the widely known Reddy
Ice brand to more than 73,000 locations in 31 states and the
District of Columbia. The Company provides a broad array of
product offerings in the marketplace through traditional direct
store delivery, warehouse programs, and its proprietary Ice
Factory technology. Packaged Ice serves most significant consumer
packaged goods channels of distribution, as well as restaurants,
special entertainment events, commercial users and the
agricultural sector.
PER-SE TECH.: S&P Assigns B+ Rating to $175MM Sr. Sec. Bank Loan
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Per-Se Technologies Inc.'s $175 million senior secured bank
facility, composed of a $125 million term loan due 2008 and a $50
million revolving credit line due 2006, and revised the company's
outlook to positive from stable. At the same time, Standard &
Poor's affirmed the company's 'B+' corporate credit rating.
"The bank loan rating is the same as the corporate credit rating
and reflects the likelihood of marginal recovery of principal
under a default or bankruptcy scenario," said credit analyst Emile
Courtney. The outlook revision reflects the expectation that Per-
Se will be able to profitably generate modest levels of internal
sales growth while pursuing a limited acquisition strategy.
Standard & Poor's expects Per-Se will use the term loan proceeds,
along with existing cash balances and asset sale proceeds, to
repay the remaining $160 million of its senior notes due 2005. In
addition, Per-Se is expected to continue to reduce leverage from
free cash flow over the intermediate term.
Standard & Poor's reviewed the company's likely enterprise value
in a distress scenario, as the security consists of assets that
are likely to remain part of a going concern. Based on a review
of likely cash flow levels in a distressed scenario, the company's
enterprise value would cover less than 50% of principal, resulting
in marginal recovery on the part of lenders. As such, the bank
loan is not notched up from the corporate credit rating.
The ratings on Per-Se Technologies Inc. reflect the company's
small share of an evolving and highly fragmented health-care
services and technology marketplace, offset only partially by the
company's substantial recurring revenues and improved operating
efficiency. Atlanta, Ga.-based Per-Se provides business-
outsourcing services to hospital-based physician practices,
medical software, and electronic transaction processing, primarily
to physicians and hospitals. Total pro-forma lease-adjusted debt
is expected to be around $160 million as of June 2003.
Despite modest sales growth over the past year, Per-Se has
improved its operating margins before depreciation and
amortization through cost reductions and productivity improvements
in its core outsourcing business. In July 2003, the company sold
its Patient1 clinical software application, which generated
operating losses and negative cash flow, and is expected to use
the estimated proceeds of $27 million for debt reduction.
Management's ongoing challenge is to successfully leverage its
large customer base of physicians and hospitals to achieve
continued revenue growth, while maintaining profitable operations.
PETROLEUM GEO: Tapping Linklaters as Special English Counsel
------------------------------------------------------------
Petroleum Geo-Services ASA asks the U.S. Bankruptcy Court for the
Southern District of New York for authority to employ and retain
Linklaters as its Special English and International Coordinating
Counsel.
The Debtor reports that it engaged Linklaters since September
2002. Linklaters has served as counsel to the Debtor on myriad
issues, including, financial restructuring, international
bankruptcy issues, numerous English law matters related to the
Debtor's finance agreements (primarily bank facilities and finance
leases) governed by U.K. law, and has been primarily responsible
for the coordination of legal matters relating to the Debtor's
debt restructuring initiative.
The Debtor expects that Linklaters, in its role as special
counsel, will continue to provide services to the Debtor
respecting issues that arise under U.K. law and will continue in
its role as international coordinating counsel on legal matters
relating to the Debtor's proposed plan of reorganization.
The Debtor assures the Court that Linklaters is prepared to work
closely with each professional in this case to ensure that there
is no unnecessary duplication of effort or cost. The matters that
Linklaters will advise the Debtor on are limited to issues that
may arise under U.K. law. The Debtor noted that none of the
Debtor's other counsel has the background or expertise to handle
U.K. legal issues, which, as a result of the plan of
reorganization to be proposed by the Debtor, will be pertinent to
the conduct of this case. Further, Linklaters will assist in the
international coordination of legal matters implicated in this
case.
Joseph Stephen Campion Windsor, a partner in Linklaters disclose
that his firm will charge the Debtor its current hourly rates,
which are:
Robert Elliot Partner GBP475 per hour
Jo Windsor Partner GBP440 per hour
Bruce Bell Managing Associate GBP350 per hour
Laura Hensby Associate GBP225 per hour
Petroleum Geo-Services ASA, headquartered in Lysaker, Norway is a
technology-based service provider that assists oil and gas
companies throughout the world. The Company filed for chapter 11
protection on July 29, 2003 (Bankr. S.D.N.Y. Case No. 03-14786).
Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher
represents the Debtor in its restructuring efforts. As of May 31,
2003, the Debtor listed total assets of $3,686,621,000 and total
debts of $2,444,341,000.
PG&E NATIONAL: Hires Charles River as Litigation Consultant
-----------------------------------------------------------
With Judge Mannes' permission, the NEG Debtors will employ
Charles River Associates as Litigation Consultants to provide, in
particular, economic and financial analysis of gas and electric
markets and its impact on the operation and value of the Debtors'
assets. Charles River will render support and expert testimony
in connection with litigation of various tolling agreements.
Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston L.L.P., in
Baltimore, Maryland, asserts that Charles River is well qualified
to serve as the Debtors' litigation consultants. Charles River
has developed a familiarity with the NEG Debtors' operations and
businesses. Charles River had prepetition engagements with the
Debtors. The firm also assists Attala Energy Company, a non-
debtor NEG subsidiary, in connection with arbitration proceedings
related to a tolling contract with Attala Generating Company.
The Debtors will compensate Charles River on an hourly basis, and
reimburse actual and necessary expenses incurred. Charles
River's standard hourly billing rates are:
Vice Presidents $400 - 800
Principals 350 - 500
Associate Principals 325 - 400
Senior Associates 250 - 400
Consulting Associates 200 - 300
Analysts and Associates 150 - 275
Support Staff 95
Before the Petition Date, the NEG Debtors paid Charles River
$675,461 for its economic and financial consulting services and
$275,000 as a retainer. Expenses were billed at cost.
In certain instances, the Debtors relate that Charles River may
provide advisory services to Willkie Farr & Gallagher, the
Debtors' general bankruptcy counsel, in connection with the
litigation matters. Charles River's work may be of fundamental
importance in the formation of mental impressions and legal
theories by Willkie Farr, which may be used in counseling and
representing the Debtors. In this case, the Debtors elaborate,
Charles River's advisory services will require Willkie Farr to
disclose its legal analysis, privileged information and attorney
work product to Charles River. Moreover, any writings, analysis,
communications, and mental impressions Charles River produced in
connection with its assistance to Willkie Farr will be deemed to
be Willkie Farr's work product. But the confidential or
privilege status of Charles River's Litigation Work Product will
not be affected.
James Speyer, Vice President of Charles River, ascertains that
the firm does not hold or represent an interest adverse to the
estate and is a disinterested person as that term is defined
under Section 101(14) of the Bankruptcy Code. (PG&E National
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
PILLOWTEX CORP: Wants to Honor Prepetition Shipment Obligations
---------------------------------------------------------------
Pillowtex Corporation and its debtor-affiliates seek the Court's
authority to make payments, in their sole discretion, with respect
to certain prepetition obligations relating to shipment of goods
used.
Payments to Carriers
The Debtors believe that many of the domestic and international
common carriers, ocean freighters and truckers responsible for
the delivery of the raw materials, work in process or supplies
used in the Debtors' operations, and the finished products the
Debtors manufacture, may be entitled to possessory liens for
transportation of the goods in their possession as of the
Petition Date and will refuse to deliver the goods before their
claims have been satisfied and their liens redeemed. Under the
laws of most states, a carrier has a lien on the goods in its
possession, which secures charges or expenses incurred in
connection with transportation of the goods.
In addition, the Debtors expect that, as of the Petition Date,
certain of the Carriers will have outstanding invoices for the
raw materials, work in process, supplies and finished products
that were delivered to the Debtors prior to the Petition Date.
The Debtors are concerned that certain Carriers may discontinue
services and withhold shipment of the goods if they fail to pay
these unrelated prepetition invoices. In many cases, the value
of goods in the Carriers' possession, and the potential injury to
the Debtors if the goods are not released, is likely to be far in
excess of the value of the invoices.
Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, asserts that paying the Carriers on account
of certain prepetition claims is necessary and essential to the
orderly liquidation of the Debtors' estates and to gain access to
their property now in the Carriers' possession. The Debtors wish
to pay, in their sole discretion, directly or through an agent,
the prepetition claims of the Carriers in an amount not to exceed
$150,000.
Payments of Custom Duties
According to Ms. Harris, the Debtors import some raw materials,
finished goods and greige cloth from overseas, which goods are
either resold or used in the manufacturing of the Debtors'
products. On an annual basis, the Debtors pay approximately
$15,100,000 in customs duties with respect to these goods. When
the goods arrive in the United States, the Debtors' customs
broker files an "entry" on the Debtors' behalf. Within 30 days
from the filing of the entry, the Debtors pay an estimated duty
directly to the United States Customs Service or through their
customs broker.
The Debtors and the customs broker, as the Debtors' agent, wish
to continue to make the Entry Payments to the Customs Service
even if the Debtors incurred the liability for the relevant
entries prior to the Petition Date. Ms. Harris notes that if the
Entry Payment is not made by the 12th day, the Customs Service
may demand redelivery to its custody of the Debtors' goods and
materials already released. If the goods and materials are not
redelivered to the Customs Service, the Customs Service may
detain future deliveries of the Debtors' goods and materials, as
well as implement various sanctions against the Debtors,
including fines. Furthermore, if the Debtors' goods and
materials remain in the custody of the Customs Service for over
48 hours, the Debtors are charged for the storage of the goods
and materials.
When an Entry Payment is made and the goods and materials are
delivered to the Debtors, an import specialist at the Customs
Service reviews the documents the Debtors submitted and
determines whether the amount paid for the entry was correct. If
the specialist determines that further duty amounts are owed, an
additional amount is assessed and a bill "at liquidation" is
issued. The liquidation amount is payable by the Debtors.
If the assessed Liquidation Payments are not made promptly, the
Customs Service will assess interest charges and may impose
sanctions against the Debtors. The sanctions may include denial
of importing privileges and substantial monetary penalties. At
the least, the Customs Service is likely to demand that all goods
and materials the Debtors import be paid on a "cash before
receipt," rather than "entry" basis.
Ms. Harris points out that this so-called "live entry" policy
would delay the Debtors' receipt of their goods and materials and
would result in increased storage costs the Customs Service
charges. Thus, the Debtors desire to be allowed to make certain
timely Liquidation Payments even if they were assessed
prepetition.
Ms. Harris contends that pursuant to Section 507(a)(8)(F) of the
Bankruptcy Code, a substantial portion, if not all, of the
Customs Duties sought to be paid would be entitled to priority.
Section 507(a)(8)(F), in pertinent part, affords eighth priority
in payment to the allowed unsecured claims of governmental units
for customs duty arising out of the importation of merchandise:
(i) entered for consumption within one year before the
Petition Date;
(ii) covered by an entry liquidated or re-liquidated within one
year before the Petition Date; or
(iii) entered for consumption within four years before the
Petition Date but unliquidated on the date, if the
Secretary of the Treasury certifies that failure to
liquidate the entry was due to an investigation pending on
the date into assessment of anti-dumping or countervailing
duties or fraud, or if information needed for the proper
appraisement or classification of the merchandise was not
available to the appropriate customs officer before the
date.
In addition, professional customs brokers and freight forwarders
advance, on the Debtors' behalf, amounts necessary to pay the
fees of certain Carriers and certain miscellaneous storage and
handling expenses and may be owed fees for the performance of
other necessary services. Ms. Harris notes that these customs
brokers and freight forwarders may refuse to continue to make
further Advances if the outstanding prepetition Advances and the
Fees remain unpaid. This would lead to a severe disruption of
the Debtors' supply network, possibly endangering the Debtors'
receipt of goods necessary for the winding up of their operations
and liquidation of their estates.
The Debtors estimate that the amount of any Customs Duties,
Advances and Fees owed, but unpaid, prepetition will not exceed
$475,000 in the aggregate. Accordingly, the Debtors ask the
Court to authorize them, in their discretion, to pay prepetition
Customs Duties, Advances and Fees in an amount not to exceed
$475,000.
Ms. Harris assures Judge Walsh that the Debtors intend to only
pay the prepetition claims where they believe, in their business
judgment, that either:
(i) the payments are necessary to ensure the continued
delivery of those goods that are necessary to the winding
up of the Debtors' businesses and the orderly liquidation
of their estates, or
(ii) the value of the goods exceeds the amount of the
prepetition payments.
The Debtors anticipate that they will have access to sufficient
DIP financing to pay the Carrier claims, Custom Duties, Advances
and Fees in the amounts requested in the ordinary course of their
businesses. (Pillowtex Bankruptcy News, Issue No. 48; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PRIDE INT'L: Second-Quarter Net Loss Balloons to $18 Million
------------------------------------------------------------
Pride International, Inc., (NYSE: PDE) reported a net loss for the
second quarter of 2003 of $18,411,000 on revenues of $408,615,000.
Results for the quarter include a loss provision of $30,485,000,
net of estimated taxes, related to construction of deepwater
platform rigs on behalf of two customers. For the same period in
2002, Pride reported a net loss of $4,313,000 on revenues of
$309,484,000.
For the six-month period ended June 30, 2003 the net loss was
$14,663,000 on revenues of $804,036,000. Results for the period
include net losses of $28,261,000 net of estimated taxes, related
to construction of deepwater platform rigs on behalf of two
customers. For the corresponding six-month period in 2002, the net
loss was $4,204,000 on revenues of $608,041,000.
Performance in our contract drilling and E&P services businesses
for the second quarter of 2003 improved considerably over the
prior year period and sequentially over the first quarter of 2003.
In the Gulf of Mexico, results were positively impacted by the
deployment to Mexico and startup of nine jackup rigs and one
semisubmersible subsequent to the first quarter of 2002 and to
higher dayrates among our jackups operating in the U.S. Gulf of
Mexico. Average utilization of the Company's Gulf of Mexico jackup
fleet during the second quarter of 2003 increased to 62% from 41%
during the second quarter of 2002. Utilization was also 62%
during the first quarter of 2003. Average daily revenues per rig
during the second quarter of 2003 increased to $30,800 from
$24,700 during the prior year second quarter and from $30,500
during the first quarter of 2003.
Results from international offshore operations also increased from
the second quarter of 2002 and the first quarter of 2003,
reflecting the continued high utilization of the Company's
floating rigs and international jackups. The return to a full
quarter's operation of two semisubmersibles, the Pride South
America and Pride South Atlantic, following scheduled periodic
surveys completed during the first quarter contributed to improved
results, as did the commencement of a higher dayrate contract for
the jackup rig Pride Pennsylvania in May 2003. Results were
negatively affected by scheduled periodic surveys on the jackup
rig Pride Cabinda and the tender-assisted rig Piranha during the
quarter.
Results for the Company's international land operations and E&P
Services segment improved considerably from the second quarter of
2002 and first quarter of 2003, due primarily to accelerating
activity levels in Venezuela and Argentina and the commencement of
operations of a 3,000-horsepower rig deployed in Kazakhstan during
the fourth quarter of 2002.
In Kazakhstan, we operate two large land rigs under contracts that
required substantial engineering, logistics and construction work
to modify, enhance and deploy the rigs in accordance with the
customer's specifications. We received up-front fees that are
being recognized over the period of drilling. The unamortized
balance of these fees at June 30, 2003 was $26.4 million, net of
taxes, of which approximately $23.9 million is expected to be
recognized in the third quarter of 2003 and $2.5 million in the
fourth quarter.
Pride International, Inc. (S&P/BB+/Stable/--), headquartered in
Houston, Texas, is one of the world's largest drilling
contractors. The Company provides onshore and offshore drilling
and related services in more than 30 countries, operating a
diverse fleet of 331 rigs, including two ultra-deepwater
drillships, 11 semisubmersible rigs, 35 jackup rigs, and 29
tender-assisted, barge and platform rigs, as well as 254 land
rigs.
PRIME RETAIL: Covenant Defaults Spur Going Concern Uncertainty
--------------------------------------------------------------
Prime Retail, Inc. (OTC Bulletin Board: PMRE, PMREP, PMREO)
announced its operating results for the second quarter ended
June 30, 2003.
FFO Results:
Funds from Operations, a widely accepted measure of REIT
performance, was $6.0 million, or $0.01 per diluted share (after
allocations to preferred shareholders) for the quarter ended
June 30, 2003 compared to $2.3 million, or $(0.08) per diluted
share, for the same period in 2002. FFO was $11.1 million, or
$0.00 per diluted share for the six months ended June 30, 2003
compared to $9.2 million, or $(0.05) per diluted share, for the
same period in 2002. The quarter and six months ended June 30,
2003 FFO results include $1.0 million and $2.0 million,
respectively, of net interest expense attributable to mortgage
indebtedness that was defeased in December 2002. This net interest
expense had no impact on the Company's operating cash flow during
2003 because such payments were made from previously established
escrows. FFO adjusted to exclude the impact of the net interest
expense attributable to the defeased indebtedness was $7.0
million, or $0.02 per diluted share, for the quarter ended
June 30, 2003 and $13.1 million, or $0.03 per diluted share, for
the six months ended June 30, 2003. A reconciliation of the
Company's loss from continuing operations to FFO and Adjusted FFO
is presented in the accompanying supplemental information page in
this press release.
The increases in the Company's Adjusted FFO results during the
2003 periods compared to its FFO results for the same periods in
2002 also reflects (i) interest savings attributable to the
repayment of indebtedness, (ii) a non-recurring charge of $3.0
million in the second quarter of 2002 related to pending and
potential tenant claims with respect to certain lease provisions,
and (iii) reduced bad debt expense. These items were partially
offset by (i) the impact of reduced weighted-average portfolio
occupancy during the 2003 periods, (ii) the impact of changes in
economic rental rates and (iii) the loss of net operating income
resulting from the dispositions of properties during 2002,
partially offset by interest savings attributable to the repayment
of indebtedness.
GAAP Results:
The Company reports its operating results in accordance with
accounting principles generally accepted in the United States.
Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." In accordance with
the requirements of FAS No. 144, the Company has classified the
operating results, including gains and losses related to
dispositions, for certain properties disposed of during 2002 as
discontinued operations in the accompanying Statements of
Operations. However, the operating results for seven properties
that were sold into joint venture partnerships during 2002 have
not been classified as discontinued operations in the accompanying
Statements of Operations because the Company still retains a
significant continuing involvement in their operations. Their
operating results are reflected in continuing operations in the
accompanying Statements of Operations through their respective
dates of disposition.
The Company's GAAP loss from continuing operations was $8.5
million and $20.6 million for the quarters ended June 30, 2003 and
2002, respectively. For the second quarter of 2003, the net loss
applicable to common shareholders was $14.2 million, or $0.33 per
share. For the second quarter of 2002, the net loss applicable to
common shareholders was $35.9 million, or $0.82 per share.
The GAAP results for the second quarter of 2003 include a
provision for asset impairment of $6.6 million, or $0.15 per
share. The GAAP results for the second quarter of 2002 include (i)
a net loss on the sale of real estate of $11.0 million, or $0.25
per share and (ii) the previously discussed non-recurring charge
of $3.0 million, or $0.07 per share. During the second quarter of
2002, the Company also reported a loss from discontinued
operations of $9.6 million, or $0.22 per share. This loss from
discontinued operations included a (i) gain related to
dispositions of $2.2 million and (ii) a provision for asset
impairment of $12.2 million.
The GAAP loss from continuing operations before minority interests
was $10.8 million and $10.2 million for the six months ended
June 30, 2003 and 2002, respectively. For the six months ended
June 30, 2003, the net loss applicable to common shareholders was
$22.1 million, or $0.51 per common share on a basic and diluted
basis. For the six months ended June 30, 2002, the net loss
applicable to common shareholders was $39.8 million, or $0.91 per
common share on a basic and diluted basis.
The GAAP results for the six months ended June 30, 2003 include a
second quarter provision for asset impairment of $6.6 million, or
$0.15 per share. The GAAP results for the six months ended June
30, 2002 include (i) a net gain on the sale of real estate of $5.8
million, or $0.13 per share and (ii) the above noted second
quarter non-recurring charge of $3.0 million, or $0.07 per share.
During the six months ended June 30, 2002, the Company also
reported a loss from discontinued operations of $18.3 million, or
$0.42 per share. This loss from discontinued operations included a
(i) net loss related to dispositions of $7.5 million and (ii) a
provision for asset impairment of $12.2 million.
Merchant Sales:
For the three and six months ended June 30, 2003, same-store sales
in our outlet center portfolio increased by 1.2% and decreased by
2.8%, respectively, compared to the same periods in 2002. "Same-
store sales" is defined as the weighted-average sales per square
foot reported by merchants for stores opened and occupied since
January 1, 2002. For the fiscal year ended December 31, 2002, the
weighted-average sales per square foot reported by all merchants
was $245.
Going Concern:
The Company's liquidity depends on cash provided by operations and
potential capital raising activities such as funds obtained
through borrowings, particularly refinancing of existing debt, and
cash generated through asset sales. Although the Company believes
that estimated cash flows from operations and potential capital
raising activities will be sufficient to satisfy its scheduled
debt service and other obligations and sustain its operations for
the next year, there can be no assurance that it will be
successful in obtaining the required amount of funds for these
items or that the terms of the potential capital raising
activities, if they should occur, will be as favorable as the
Company has experienced in prior periods.
During 2003, the Company's first mortgage and expansion loan (the
"Mega Deal Loan") is anticipated to mature with an optional
prepayment date on November 11, 2003. The Mega Deal Loan, which is
secured by a 13 property collateral pool, had an outstanding
principal balance of approximately $262.1 million as of
June 30, 2003 and will require a balloon payment of $260.7 million
at the anticipated maturity date. If the Mega Deal Loan is not
satisfied on the optional prepayment date, its interest rate will
increase by 5.0% to 12.782% and all excess cash flow from the 13
property collateral pool will be retained by the lender and
applied to principal after payment of interest. Certain
restrictions have been placed upon the Company with respect to
refinancing the Mega Deal Loan in the short term. If the Mega Deal
Loan is not refinanced, the loss of cash flow from the 13 property
collateral pool would eventually have severe consequences on the
Company's ability to fund its operations.
Based on the Company's discussions with various prospective
lenders, it believes a potential shortfall will likely occur with
respect to refinancing the Mega Deal Loan as the Company does not
currently intend to refinance all of the 13 assets. Nevertheless,
the Company believes this shortfall can be alleviated through
potential asset sales and/or other capital raising activities,
including the placement of mezzanine level debt and mortgage
debt on at least one of the assets the Company does not currently
plan on refinancing. The Company cautions that its assumptions are
based on current market conditions and, therefore, are subject to
various risks and uncertainties, including changes in economic
conditions which may adversely impact its ability to refinance the
Mega Deal Loan at favorable rates or in a timely and orderly
fashion and which may adversely impact the Company's ability to
consummate various asset sales or other capital raising
activities.
As previously announced, on July 8, 2003 an affiliate of The
Lightstone Group, LLC, a New Jersey-based real estate company, and
the Company entered into a merger agreement. In connection with
the execution of the Merger Agreement, certain restrictions were
placed on the Company with respect to the refinancing of the Mega
Deal Loan. Specifically, the Company is restricted from
negotiating or discussing the refinancing of the properties
securing the Mega Deal Loan with any lenders until
September 15, 2003, at which time the Company is only able to
enter into refinancing discussions with certain enumerated
lenders. After November 11, 2003, the Company may seek refinancing
from other lenders. In addition, the Company is precluded from
closing any loans relating to the Mega Deal Loan until
November 11, 2003. This November 11, 2003 date may be extended
until January 11, 2004, at the election of Lightstone, if
Lightstone elects prior to September 15, 2003 to (i) pay (A) one-
half of the additional interest incurred by the Company between
November 11, 2003 and December 31, 2003, and (B) all of the
additional interest incurred by the Company between January 1,
2004 and January 11, 2004, if so extended, in respect of the Mega
Deal Loan and (ii) loan the Company any shortfall in cash flow
that results from the excess cash flow restrictions (all excess
cash flow from the 13 property collateral pool will be retained by
the lender and applied to principal after payment of interest)
under the Mega Deal Loan that become effective on November 11,
2003 and thereafter until the Mega Deal Loan is paid in full.
In addition to the restrictions with respect to the refinancing of
the Mega Deal Loan, pursuant to the terms of the Merger Agreement,
the Company has also agreed to certain conditions pending the
closing of the proposed transaction. These conditions provide for
certain restrictions with respect to the Company's operating and
refinancing activities. These restrictions could adversely affect
the Company's liquidity in addition to its ability to refinance
the Mega Deal Loan in a timely and orderly fashion.
If the Merger Agreement is terminated under certain circumstances,
the Company would be required to make payments to Lightstone
ranging from $3.5 million to $6.0 million which could adversely
affect the Company's liquidity.
In connection with the completion of the sale of six outlet
centers in July 2002, the Company guaranteed to FRIT PRT Bridge
Acquisition LLC (i) a 13% return on its $17.2 million of invested
capital, and (ii) the full return of its invested capital by
December 31, 2003. As of June 30, 2003, the Mandatory Redemption
Obligation was approximately $14.9 million.
The Company continues to seek to generate additional liquidity to
repay the Mandatory Redemption Obligation through (i) the sale of
FRIT's ownership interest in the Bridge Properties and/or (ii) the
placement of additional indebtedness on the Bridge Properties.
There can be no assurance that the Company will be able to
complete such capital raising activities by December 31, 2003 or
that such capital raising activities, if they should occur, will
generate sufficient proceeds to repay the Mandatory Redemption
Obligation in full. Failure to repay the Mandatory Redemption
Obligation by December 31, 2003 would constitute a default, which
would enable FRIT to exercise its rights with respect to the
collateral pledged as security to the guarantee, including some of
the Company's partnership interests in the 13 property collateral
pool under the aforementioned Mega Deal Loan. Because the
Mandatory Redemption Obligation is secured by some of the
Company's partnership interests in the 13 property collateral pool
under the Mega Deal Loan, the Company may be required to repay the
Mandatory Redemption Obligation before, or in connection with, the
refinancing of the Mega Deal Loan. Additionally, any change in
control with respect to the Company accelerates the Mandatory
Redemption Obligation.
In connection with the execution of the Merger Agreement,
Lightstone has agreed to provide sufficient financing, if
necessary, to repay the Mandatory Redemption Obligation in full at
its maturity. The new financing would be at substantially similar
economic terms and conditions as those currently in place for the
Mandatory Redemption Obligation and would have a one-year term.
The Company has fixed rate tax-exempt revenue bonds collateralized
by properties located in Chattanooga, Tennessee which contain (i)
certain covenants, including a minimum debt-service coverage
ratio financial covenant and (ii) cross-default provisions with
respect to certain of its other credit agreements. Based on the
operations of the collateral properties, the Company was not in
compliance with the Financial Covenant for the quarters ended
June 30, September 30 and December 31, 2002. In the event of non-
compliance with the Financial Covenant or default, the holders of
the Chattanooga Bonds had the ability to put such obligations to
the Company at a price equal to par plus accrued interest. On
January 31, 2003, the Company entered into an agreement with the
Bondholders. The Forbearance Agreement provides amendments to the
underlying loan and other agreements that enable the Company to be
in compliance with various financial covenants, including the
Financial Covenant. So long as the Company continues to comply
with the provisions of the Forbearance Agreement and is not
otherwise in default of the underlying loan and other documents
through December 31, 2004, the revised financial covenants will
govern. Additionally, certain quarterly tested financial covenants
and other covenants become effective June 30, 2004. Pursuant to
the terms of the Forbearance Agreement, the Company was required
to fund $1.0 million into an escrow account to be used for
conversion of certain of the retail space in the collateral
properties to office space and agreed that an event of default
with respect to the other debt obligations related to the property
would also constitute a default under the Chattanooga Bonds. The
Company funded this required escrow in February 2003. The
outstanding balance of the Chattanooga Bonds was approximately
$17.9 million as of June 30, 2003.
With respect to the Chattanooga Bonds, based on the Company's
current projections, it believes it will not be compliance with
certain quarterly tested financial covenants when they become
effective on June 30, 2004 which would enable the Bondholders to
elect to put the Chattanooga Bonds to the Company at their par
amount plus accrued interest. The Company continues to explore
opportunities to (i) obtain alternative financing from other
financial institutions, (ii) sell the properties securing the
Chattanooga Bonds and (iii) explore other possible capital
transactions in order to generate cash to repay the Chattanooga
Bonds. There can be no assurance that the Company will be able to
complete any such activity sufficient to repay the amount
outstanding under the Chattanooga Bonds in the event the
Bondholders are able and elect to exercise their put rights.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
Prime Retail is a self-administered, self-managed real estate
investment trust engaged in the ownership, leasing, marketing and
management of outlet centers throughout the United States and
Puerto Rico. Prime Retail currently owns and manages 36 outlet
centers totaling approximately 10.2 million square feet of GLA.
The Company also owns 154,000 square feet of office space. As of
June 30, 2003, the Company's owned portfolio of properties were
84.8% occupied. Prime Retail has been an owner, operator and
developer of outlet centers since 1988. For additional
information, visit Prime Retail's Web site at
http://www.primeretail.com
SAGENT TECHNOLOGY: June 30 Balance Sheet Upside-Down by $780,000
----------------------------------------------------------------
Sagent (Nasdaq OTCBB: SGNT.OB), a leading provider of enterprise
business intelligence solutions, announced its financial results
for the second quarter ended June 30, 2003.
Sagent's total revenue for the second quarter of 2003 was $7.6
million, compared with $7.4 million for the first quarter of 2003
and $9.2 million for the second quarter of 2002. Sagent's license
revenue for the second quarter of 2003 totaled $4.0 million,
compared with $3.9 million on a sequential basis and $4.8 million
reported a year earlier.
Net loss for the second quarter of 2003 was $2.1 million. This
compared with a net loss of $4.6 million for the first quarter of
2003 and a net loss of $6.6 million for the second quarter of
2002.
For the six months ended June 30, 2003, Sagent's total revenue was
$15.0 million, compared with $20.5 million for the same period of
2002. Net loss for the six months ended June 30, 2003 was $6.7
million, compared with a loss of $10.3 million.
At June 30, 2003, Sagent's cash and cash equivalents, including
restricted cash, were $4.9 million, compared with $10.6 million at
December 31, 2002.
Sagent Technology's June 30, 2003 balance sheet shows a working
capital deficit of about $10 million, and a total shareholders'
equity deficit of about $780,000.
As previously announced, on April 15, 2003, Sagent and Group 1
Software, Inc., entered into an Asset Purchase Agreement, as
described more fully in the exhibit to a Form 8-K filed with the
SEC on April 16, 2003. Subject to the terms and conditions of the
Asset Purchase Agreement, Group 1 will pay up to $17 million to
Sagent in exchange for substantially all of the assets of Sagent.
Group 1's board of directors approved the transaction on May 7,
2003. Subject to the approval of Sagent's stockholders, the sale
of assets is expected to be completed in the third quarter of
2003. Sagent intends to wind up its business in accordance with
applicable law following the closing of the asset sale, and
thereafter effect a complete liquidation and dissolution.
Additional Information
In connection with the proposed sale of assets to Group 1, and the
subsequent liquidation and distribution to its stockholders,
Sagent has filed a proxy statement and other relevant documents
concerning the transaction with the Securities and Exchange
Commission setting September 30, 2003 as of the meeting date for
the special stockholders meeting for stockholders as of the record
date of August 6, 2003. Stockholders of Sagent are urged to read
the proxy statement any other relevant documents filed with the
SEC because they contain important information. Investors and
security holders can obtain free copies of the proxy statement and
other relevant documents by contacting Sagent Technology, Inc.,
800 West El Camino Real Suite 300, Mountain View, CA 94040. In
addition, documents filed with the SEC by Sagent will be available
free of charge at the SEC's Web site at http://www.sec.gov
Sagent's patented technology fundamentally changes the way that
data warehouses are built and accessed. Sagent's unique data flow
server enables business users to easily extend the structure of a
data warehouse with new analytics that support immediate business
needs. This technology is at the core of Sagent's ETL, EII and
business intelligence solutions, as well as multiple partner
solutions that address the needs of specific vertical and
functional application areas. Sagent has more than 1,500 customers
worldwide, including: AT&T, Boeing Employees Credit Union, BP
Amoco, Carrefour, Citibank, Diageo, Heineken, Kawasaki, Kemper
National Insurance, La Poste, NTT-DoCoMo, Siemens, and Singapore
Telecom. Key partners include Advent Software, Cap Gemini Ernst &
Young, HAHT Commerce, Hyperion, Microsoft, Satyam, Sun
Microsystems, and Unisys. Sagent is headquartered in Mountain
View, California. For more information about Sagent, visit
http://www.sagent.com
SAMUELS JEWELERS: Files Plan and Disclosure Statement in Del.
-------------------------------------------------------------
Samuels Jewelers, Inc., filed its Chapter 11 Plan of
Reorganization and an accompanying Disclosure Statement with the
U.S. Bankruptcy Court for the District of Delaware. Full-text
copies of the Plan and the Disclosure Statement are available for
a fee at:
http://www.researcharchives.com/bin/download?id=030812203115
and
http://www.researcharchives.com/bin/download?id=030812202932
The Debtor believes that the Plan provides the greatest and
earliest possible recoveries to creditors and that acceptance of
the Plan is in the best interests of creditors, and that any
alternative would result in unnecessary delay, uncertainty, and
expense to the Estate. The Debtor therefore recommends that all
eligible creditors entitled to vote on the Plan cast their ballots
to accept the Plan.
The Plan designates each separate class of claims and equity
interests either as impaired or unimpaired. If a class of claims
is impaired, the holders of claims in that class are entitled to
vote on the plan. If a class of claims is unimpaired, the holders
of claims in that class are deemed to accept the plan. The
Debtor's Plan provides for the distribution of 7 classification of
claims and one equity interest class.
Class Description Impairment Treatment
----- ----------- ---------- ---------
None Administrative Unimpaired Paid in cash on the
Claims and Effective Date
Priority Claims
1 DDJ Capital Impaired Will become the
Tranche A Senior Postconfirmation Term
Indebtedness Debt and will accrue
interest at the same
rate, payable at the
same time, as the
interest due and payable
under the Exit
Financing.
2 DDJ Capital Impaired Will receive 95% of the
Tranche B Senior aggregate New Common
Indebtedness Stock (after giving
effect to the Plan and
the shares reserved for
management and employees
under the 2003 Employee
Equity Incentive Plan).
3 Residual Unimpaired At its option, the
Consignment Debtor will either:
Inventory a) return to such
supplier the Residual
Consignment Inventory
that is the subject
of such Claim, or
b) pay such supplier, in
cash and in full, the
amount of its Allowed
Claim
4 Secured Tax Unimpaired Unless agreed otherwise,
Claims the Disbursing Agent
will pay cash on the
later of:
a) as soon as reasonably
practicable after the
Effective Date,
b) 30 days after the
date on which such
Claim becomes an
Allowed Claim, and
c) the date such Allowed
Secured Tax Claim
becomes due
5 Other Secured Unimpaired Unless otherwise agreed,
Claims the Debtor will:
a) cure any default,
with respect to the
Allowed Claim,
b) reinstate the
maturity of such
Allowed Claim as the
maturity existed
before any default,
c) compensate such
holder for any actual
damages incurred, and
d) leave unaltered all
other legal,
equitable, and
contractual rights of
such holder with
respect to such
Allowed Claim
6 Critical Impaired Will receive payment in
Continuing full of its Allowed
Vendor Claims Claim, without interest
7 General Impaired On or before the
Unsecured Distribution Date,
Claims holders of Allowed Class
7 Claims will receive a
Pro Rata share of the
General Unsecured Fund
8 Interests Impaired Will be cancelled and
will receive and retain
no value under the Plan
Samuels Jewelers, Inc., headquartered in Austin, Texas, operates a
national chain of specialty retail jewelry stores located in
regional shopping malls, power centers, strip centers and stand-
alone stores. The Company filed for chapter 11 protection on
August 4, 2003 (Bankr. Del. Case No. 03-12399). Scott D. Cousins,
Esq., William E. Chipman Jr., Victoria W. Counihan, Esq., at
Greenberg Traurig LLP represent the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $42,500,000 in total assets and $78,400,000
in total debts.
SEITEL INC: Second-Quarter 2003 Results Zoom into Positive Zone
---------------------------------------------------------------
Seitel, Inc. (OTC Bulletin Board: SEIE; Toronto: OSL) reported
revenue for the six months ended June 30, 2003 of $62.1 million
compared with revenue of $69.6 million in the first half of 2002.
For the second quarter ended June 30, 2003, revenue was $31.8
million compared to $47.1 million of revenue in last year's second
quarter. Reported revenue in the 2002 periods benefited from
unusually high rates of data selections by clients. Partially
offsetting these reduced selections in the first six months of
2003 were higher cash licensing sales from the Company's seismic
data library and increased revenue from new data acquisition
coupled with a return to more normal patterns of deferrals and
selections.
For the six months ended June 30, 2003, the Company reported a net
loss of $1.2 million, compared with a net loss of $97.2 million in
the first half of the prior year. Results for both periods include
certain adjustments, charges and costs. In the 2003 six-month
period, expenses totaling $6.0 million were incurred for
professional fees related to the Company's restructuring efforts
and the Company's Chapter 11 filing on July 21, 2003. Partially
offsetting a portion of these expenses in 2003 were gains of
$681,000 relating to the settlement of certain liabilities at less
than their carrying value, $3 million due to a strengthening of
the Canadian dollar and a reduction of $2.0 million in liabilities
associated with certain litigation that has since been settled for
amounts less than previously accrued. The 2002 six-month period
included costs of $9.5 million for charges related to compensation
accrued or paid to and allowances for the collection of notes
receivable from certain former executives and $3.2 million for
professional fees related to the Company's restructuring efforts
and costs related to litigation. In addition, the 2002 six month
period includes impairment charges of $25.7 million relating to
the carrying value of the Company's seismic data library, a loss
of $58.7 million relating to the discontinued oil and gas business
of the Company, and a charge of $17.2 million ($11.2 million, net
of tax) relating to the cumulative effect of a change in
accounting policy for amortizing its seismic data library.
Offsetting a portion of these expenses in 2002 was a gain of
$700,000 due to a strengthening of the Canadian dollar.
For the quarter ended June 30, 2003, the Company reported net
income of $903,000, compared with a net loss of $78.9 million in
the second quarter of 2002. Results for both periods include
certain adjustments, charges and costs. In the 2003 quarterly
period, expenses totaling $2.9 million were incurred for
professional fees related to the Company's restructuring efforts
and the Company's Chapter 11 filing on July 21, 2003. More than
offsetting these expenses in the 2003 second quarter were gains of
$681,000 relating to the settlement of certain liabilities at less
than their carrying value, $1.6 million due to a strengthening of
the Canadian dollar and a reduction of $2.0 million in liabilities
associated with certain litigation that has since been settled for
amounts less than previously accrued. The 2002 three-month period
included costs of $9.5 million for charges related to compensation
accrued or paid to and allowances for the collection of notes
receivable from certain former executives and $2.6 million for
professional fees related to the Company's restructuring efforts
and costs related to litigation. In addition, the 2002 three month
period includes impairment charges of $25.7 million relating to
the carrying value of the Company's seismic data library, and a
loss of $57.8 million relating to the discontinued oil and gas
business of the Company. Offsetting a portion of these expenses in
2002 was a gain of $800,000 due to a strengthening of the Canadian
dollar.
As reported on July 21, 2003, Seitel and 30 of its U.S. based
subsidiaries filed for Chapter 11 bankruptcy protection in the
District of Delaware. Contemporaneously with such filing, a
motion, subsequently granted by the Bankruptcy Court, was filed to
dismiss all of the previously filed involuntary bankruptcy
proceedings initiated on June 6, 2003 by certain former holders of
the Company's unsecured notes. As a result of the voluntary
filings made on July 21, 2003, Seitel and its 30 U.S. based
subsidiaries have become debtors- in-possession under Chapter 11
of the Bankruptcy Code. As debtors-in- possession, the Company and
these subsidiaries have continued to operate their business in the
ordinary and normal course. Also, as previously disclosed, the
Company's Canadian subsidiaries are not debtors in the bankruptcy
cases, and the bankruptcy filing does not impact any operations or
creditors of Seitel's Canadian subsidiaries.
In addition, on July 21, the Company filed a joint plan of
reorganization and on August 5, 2003, a disclosure statement was
filed with the Bankruptcy Court with respect to the Plan. The
Bankruptcy Court has set a hearing on the disclosure statement for
3:30 PM on September 19, 2003 in Wilmington, Delaware. The Company
also has filed a motion requesting that the Bankruptcy Court set a
last date on which any person may file proofs of claims against or
equity interests in the Company or any of the Debtors. Such date
has not yet been set by the Bankruptcy Court.
The Plan is to be funded by Berkshire Hathaway Inc., and as a
result of this funding, if the Plan is confirmed and consummated,
Seitel will become a wholly owned subsidiary of Berkshire. As
previously disclosed, Ranch Capital L.L.C., purchased all $255
million of outstanding principal amount of Seitel's unsecured
notes and subsequently transferred the Notes to Berkshire. As a
result, Seitel estimates that Berkshire owns 99% of all of the
unsecured claims against all of the Debtors.
The Plan generally provides, in summary, for the (i) payment in
full on agreed terms or the reinstatement on existing terms of all
secured debt; (ii) the assumption and reaffirmation of obligations
under the Company's previously issued data license agreements with
its customers; (iii) payment in full in cash of all allowed
unsecured claims, other than the Note claims (which are to recover
approximately 71% of their face value) owing by Debtors that
conduct Seitel's principal operations; (iv) payment of cash equal
to 25% of allowed unsecured claims which are owing or are
guaranteed by entities not presently conducting operations or
which have no substantial assets; and (v) subject to the
confirmation of the Plan on or before November 18, 2003 and the
affirmative vote of Seitel shareholders, the distribution of
approximately $10.15 million in cash (equivalent to $.40 per
share) to the holders of Seitel common stock in respect of the
cancellation of such stock. If shareholders were to vote to reject
the Plan and the Plan nevertheless is confirmed by the Bankruptcy
Court, the Plan provides that Seitel's existing common stock will
be cancelled and no distribution will be made to existing Seitel
shareholders. In all events, if the Plan is confirmed and
consummated, all presently existing Seitel common stock and all
options and warrants to acquire such stock will be cancelled upon
the effective date of the Plan. This foregoing description of the
treatments and recoveries under the Plan is only a summary, and
any discrepancy between such descriptions and the Plan is
controlled exclusively by the Plan. The Company intends to use its
best efforts to have the Plan confirmed and consummated; however,
there can be no assurance that such confirmation or consummation
will occur.
Seitel markets its proprietary seismic information/technology to
more than 400 petroleum companies, licensing data from its library
and creating new seismic surveys under multi-client projects.
Berkshire Hathaway Inc. is a holding company owning subsidiaries
engaged in a number of diverse business activities, the most
important of which is the property and casualty insurance business
conducted on both a direct and reinsurance basis through a number
of subsidiaries.
Ranch Capital L.L.C. is a San Diego based investment firm formed
in October 2002 by Lawrence S. Hershfield and Randall L. Jensen.
Mr. Hershfield previously worked with Berkshire when he was
employed by Leucadia National Corporation and ran Finova Group on
behalf of Berkadia LLC, a joint venture of Berkshire and Leucadia.
SENTRY TECHNOLOGY: June 30 Net Capital Deficit Narrows to $300K
---------------------------------------------------------------
Sentry Technology Corporation (OTC Bulletin Board: SKVY) reported
financial results for the Company's second quarter ended June 30,
2003.
Revenues for the second quarter were $2,326,000, compared to
revenues of $3,181,000 reported in the second quarter of the prior
year. The reduction in revenues is primarily attributable to the
timing of orders received from major customers, which we see
improving in the third quarter. The net profit in the second
quarter of 2003 was $530,000, compared to net loss of $1,085,000
in the second quarter of last year. Included in the net income for
the second quarter of 2003 was an extraordinary gain related to
the negotiated settlement with trade creditors of past due debt of
$522,000 net of $348,000 of income taxes.
For the first six months ended June 30, 2003, revenues were
$5,900,000, compared to $7,923,000 reported in the previous year.
Net profit was $36,000, compared to a net loss of $1,435,000 in
the first six months of last year.
At June 30, 2003, the Company's balance sheet shows a working
capital deficit of about $400,000, and a total net capitalization
of about $300,000.
"We have completed many steps in our turn around including
restructuring 80% of past due supplier debt, a 50% reduction in
the work force and termination of the long term lease of our
current premises, while retaining key customers," said Peter L.
Murdoch, President and CEO of Sentry Technology Corporation. "Cost
cutting has very significantly reduced operating expenses and our
decision to out-source manufacturing has added 20% to gross
profits. These changes have dramatically improved the Company's
cash flow allowing us to concentrate on building sales. Recent
SmartTrack orders from Lowe's Companies, Fred Meyer and Cabelas
Sporting Goods in the US, combined with strong performance in
Europe from B&Q, CORA, Auchan, Carrefour and Iper give us
confidence when the world's largest retailers are reordering
Sentry's market leading core product line."
Sentry Technology Corporation designs, manufactures, sells and
installs a complete line of Radio Frequency and Electro-Magnetic
EAS systems and Closed Circuit Television solutions. The CCTV
product line features SentryVision(R), a proprietary, patented
traveling Surveillance System, including our latest SmartTrack
system. The Company's products are used by retailers to deter
shoplifting and internal theft and by industrial and institutional
customers to protect assets and people. The recent partnership
with Dialoc ID Holdings, B.V. expands the Company's product
offering to include proximity Access Control and Radio Frequency
Identification (RFID) solutions. For further information, visit
the Company's Web site at http://www.sentrytechnology.com
SMITHFIELD FOODS: Will Host Q1 Conference Call on August 21
-----------------------------------------------------------
Smithfield Foods, Inc. (NYSE: SFD) will announce its fiscal 2003
First quarter earnings on Thursday, August 21 before the market
opens.
The company will host a conference call at 9:30 a.m., Eastern
Daylight Time, Thursday, August 21. The call can be accessed live
on the Internet at Vcall at:
http://www.vcall.com/ClientPage.asp?ID=84558
The webcast will be archived on the Smithfield Foods web site at:
http://www.smithfieldfoods.com/investor/calls
* * *
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 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.
SPIEGEL GROUP: Names Richard Mozack as New Chief Info. Officer
--------------------------------------------------------------
The Spiegel Group has named Richard Mozack as vice president and
chief information officer of the company, effective immediately.
Reporting to Alexander Birken, senior vice president and chief
administrative officer of The Spiegel Group, Mozack leads all of
the information systems application development, technical
services and network services for The Spiegel Group. Mozack
replaces David Kardesh who resigned to accept a position at
another company.
"We are delighted to have someone with Rich's capabilities to step
into the position of chief information officer and make an
immediate and meaningful contribution," said Alexander Birken. "He
has the broad skill set necessary to effectively lead our
information services team," Birken said.
Mozack, 39, joined the company in 1994 as a project manager of
mainframe system software. Since that time, he has served in a
number of information services positions through which he has
demonstrated his outstanding skills as he has assumed new areas of
responsibility. He has served as manager of technical services,
director of information processing services, divisional vice
president of operations and technical services, and vice president
of operations and technical services. Prior to being named chief
information officer, he served as vice president of application
development.
Prior to joining The Spiegel Group, Mozack held a variety of
hardware development and marketing positions at IBM, including
development engineer, systems engineer, account systems engineer
and advisory marketing specialist. He earned a bachelor of science
degree in electrical engineering and graduated with honors from
the University of Illinois in Champaign-Urbana, Ill.
The Spiegel Group is a leading international specialty retailer
marketing fashionable apparel and home furnishings to customers
through catalogs, specialty retail and outlet stores, and e-
commerce sites, including eddiebauer.com, newport-news.com and
spiegel.com. The Spiegel Group's businesses include Eddie Bauer,
Newport News and Spiegel Catalog. Investor relations information
is available on The Spiegel Group Web site at
http://www.thespiegelgroup.com
SYSTEMONE TECHNOLOGIES: June 30 Net Capital Deficit Tops $42MM
--------------------------------------------------------------
SystemOne Technologies Inc. (OTC Bulletin Board: STEK) reported
its second quarter 2003 operating results.
Revenues for the three months ended June 30, 2003 were $5,686,000
compared to revenues of $4,366,000 in the corresponding period of
2002, a 30.2% increase. The Company generated an operating profit
for the three months ended June 30, 2003 of $1,305,000 compared
with an operating profit of $1,011,000 in the corresponding period
of 2002. The Company's net profit for the three months ended
June 30, 2003 was $647,000, compared with a net profit of $281,000
in the corresponding period of 2002. The Company's net profit to
common stock after preferred dividends for the three months ended
June 30, 2003 was $96,000 compared with a net loss of $243,000 in
the corresponding period of 2002.
Revenues for the six months ended June 30, 2003 were $11,310,000
compared to revenues of $8,820,000 in the corresponding period of
2002, a 28.2% increase. The Company generated an operating profit
for the six months ended June 30, 2003 of $2,799,000 compared with
an operating profit of $2,089,000 in the corresponding period of
2002. The Company's net profit for the six months ended June 30,
2003 was $1,446,000, compared with a net profit of $489,000 in the
corresponding period of 2002. The Company's net profit to common
stock after preferred dividends for the six months ended June 30,
2003 was $343,000 or a profit of 7 cents per share, compared with
a net loss of $558,000 or a loss of 12 cents per share, in the
corresponding period of 2002.
Chief Executive Officer Paul I. Mansur stated, "We are pleased to
report that the Company's second quarter operating results reflect
a significant improvement over the corresponding period of the
prior year and the Company's second consecutive quarter of net
profit. We are also pleased to report that the company has
certified its quarterly report pursuant to 18 U.S.C. section 1350,
as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002.
Founded in 1990, SystemOne Technologies designs, manufactures,
sells and supports a full range of self contained, recycling
industrial parts washing products for use in the automotive,
aviation, marine and general industrial markets. The Company has
been awarded eleven patents for its products which incorporate
innovative, proprietary resource recovery and waste minimization
technologies. The Company is headquartered in Miami, Florida.
TERAFORCE: June 30 Net Capital Deficit Doubles to $5.4 Million
--------------------------------------------------------------
TeraForce Technology Corporation (OTCBB:TERA) announced financial
results for the second quarter ended June 30, 2003.
Financial Results
Second quarter 2003 net revenue amounted to $1,385,000. The
comparable net revenue amount for the second quarter of 2002 was
$1,659,000. Net revenue amounted to $953,000 in the first quarter
of 2003.
For the second quarter of 2003 the Company reported a net loss of
$1,887,000. In the second quarter of 2002 the Company had a net
loss of $2,067,000. For the first six months of 2003 the Company
had a net loss of $4,078,000 as compared to net income of
$2,717,000 in the first six months of 2002. The first six months
2002 results include a gain of $6,300,000 from the settlement of
litigation.
On August 4, 2003 the Company completed its previously announced
private placement of 12% Convertible Subordinated Notes Due 2005.
In this private placement the Company issued a total of $3,010,000
principal amount of the notes. Net proceeds to the Company after
costs related to the offering amounted to approximately
$2,800,000.
Teraforce Technology's June 30, 2003 balance sheet shows a working
capital deficit of about $5.6 million, and a total shareholders'
equity deficit of about $5.4 million.
Management Commentary
TeraForce chairman and chief executive officer, Herman Frietsch,
stated, "Accomplishments during the second quarter of 2003 were
pivotal to achieving our objectives for the year. We raised
working capital that is necessary to effectively execute the
buildup in customer orders we have been receiving this year, as
well as additional significant orders we expect to receive during
the third and fourth quarters. Concurrently, we completed the
restructuring of our debt with the primary benefit of eliminating
any scheduled repayments until June 2004.
"While our second quarter revenues increased over the first
quarter, we did note delays in orders from some customers during
that time. This experience appears to have been widespread in our
industry and is generally believed to be a temporary phenomenon
related to federal funding processes. We are now seeing firm
indications of resumption of order activity.
"We are expecting further production orders from design wins we
have previously disclosed, and we are pursuing a significant
number of additional program opportunities for our VQG4 products
and our new EagleT product line. Our progress to date and the
opportunities we see ahead are also enhancing our ability to
develop strategic positioning in our industry through cooperative
relationships."
Conference Call Scheduled Today
The Company will host a management conference call today, 12:00
p.m. Central Daylight Time, to review the Company's quarterly
results and the status of its refinancing activities. Shareholders
and investors interested in attending the conference call should
dial 904-779-4779 ten minutes prior to the call, reservation code
18603826. A live webcast of the conference call will also be
available on the TeraForce Web site
http://www.teraforcetechnology.com/
A replay of the conference call will be available later today from
4:00 p.m. Eastern Daylight Time on August 18 through 4:00 p.m.
Eastern Daylight Time on September 18. To access the playback,
please call 402-220-2491. The reservation code for the replay is
18603826. A replay will also be available online through the
TeraForce Web site http://www.teraforcetechnology.com/
Based in Richardson, Texas, TeraForce Technology Corporation
(OTCBB: TERA) designs, develops, produces and sells high-density
embedded computing platforms and digital signal processing
products, primarily for applications in the defense electronics
industry. TeraForce's primary operating unit is DNA Computing
Solutions, Inc., http://www.dnacomputingsolutions.com
THANE INT'L: Reports Improved First Quarter Financial Results
-------------------------------------------------------------
Thane International, Inc., (OTC Bulletin Board: THAN) announced
financial results for the quarter ended June 30, 2003.
For the first quarter of fiscal 2004, revenues were $32.9 million,
representing an 11.8% decrease when compared to revenues of $37.4
million for the same quarter last year. Loss from continuing
operations for the quarter ended June 30, 2003 was $685,000,
compared to income from continuing operations of $1.8 million for
the first quarter ended June 30, 2002. Net income was $5.0 million
for the quarter ended June 30, 2003, which included a $5.2 million
gain on extinguishment of debt related to the Company's subsidiary
Krane Products, Inc., compared to net income of $2.3 million for
the first quarter ended June 30, 2002.
As of December 31, 2002, Krane was in default of its credit
facility with LaSalle Bank National Association due to violations
of certain debt covenants. The Company was unable to negotiate a
waiver for these violations or a short-term extension of this
facility upon its maturity in February 2003. On June 18, 2003,
LaSalle exercised its secured rights under this facility, and
accordingly, took possession of 100% of the capital stock of
Krane. As a result of LaSalle exercising its rights, the Company
recorded a non-taxable, extraordinary gain from extinguishment of
debt of $5.2 million during the quarter ended June 30, 2003.
Additionally, the income from the operating results of Krane has
been reclassified and presented as discontinued operations for the
quarters ended June 30, 2003 and 2002, in the amounts of $574,000
and $440,000 respectively.
Thane is a global leader in the multi-channel direct marketing of
consumer products in the fitness, health and beauty and housewares
product categories. Thane's distribution channels in the United
States, and through its 186 international distributors and
strategic partners, in 80 countries around the world, include
direct response TV, home shopping channels, catalogs, retail,
telemarketing, print advertising, credit card inserts and the
Internet. Thane develops and acquires products, arranges low-cost
manufacturing (primarily offshore), and then markets and
distributes its products through its various distribution
channels. Thane believes its management of each facet of this
process enables it to maximize the return on investment on its
products and create profitable products for target markets. The
Company's Web site is http://www.thaneinc.com
UNIFRAX CORP: $135-Mill. Facility Gets B+ Senior Secured Rating
---------------------------------------------------------------
On Aug. 14, 2003, Standard & Poor's Ratings Services assigned its
'B+' senior secured bank loan rating to the $135 million senior
secured credit facilities of Unifrax Corp. in conjunction with the
planned $210 million acquisition by unrated American Securities
Capital Partners LLC of Unifrax from unrated Kirtland Capital
Partners.
Proceeds will be used to finance a portion of the purchase price
of the acquisition, refinance existing bank debt due October 2003
and the company's $83 million 10.5% senior unsecured notes due
November 2003, and for working capital and general corporate
purposes. In addition, American Securities and management will
provide approximately $101 million of equity.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating on Unifrax. The outlook remains stable. Pro forma
for the transaction, the company will have $116.5 million of total
rated debt outstanding.
Niagara Falls, New York-based Unifrax is a worldwide producer of
ceramic fiber products used in high-temperature applications
serving a wide variety of industries, including metals, chemical
process, power generation, ceramic/glass, automotive, appliance,
fire protection, and aerospace.
The company's $135 million senior secured credit facilities will
consist of a $35 million revolving credit facility due 2008 and a
$100 million term loan due 2009. They will be secured by a first-
priority perfected security interest in all material assets and
100% of the capital stock of the company and its direct and
indirect subsidiaries (and limited to 65% of the capital stock of
its foreign subsidiaries).
"The rating on the facilities reflects the likelihood of marginal
recovery attributable to collateral or structure in event of
default or bankruptcy," said Standard & Poor's credit analyst
Linlee Chee.
Ceramic fiber is a heat-resistant material used by a variety of
industries because of its stability at high temperatures and its
lightweight and low-heat transmission properties. Although it is
considered to be a cost-effective alternative to the traditional
bricks used most often, ceramic fiber represents only about 5% of
total refractory shipments. Unifrax's customer base is relatively
diverse, including steel, petrochemical, automotive, and utility
companies.
"Unifrax should be able to maintain relatively stable operating
profits, even during downturns, due to substantial retrofit
business," said Ms. Chee.
UNITED AIRLINES: Gets OK to Turn Over Assets to Northern Trust
--------------------------------------------------------------
On October 4, 1989, UAL Corporation and National Bank of Detroit
entered into a Trust Agreement. The Agreement created a trust
that held certain assets to fund the Debtors' retirement benefits
liabilities for certain former directors. On June 15, 1997,
Northern Trust Company was appointed successor trustee to NBD.
According to James H.M. Sprayregen, Esq., at Kirkland & Ellis,
Section 3(a) of the Trust Agreement provides that in a UAL
bankruptcy, Northern Trust will dispose of any assets in the
Trust only as a "court of competent jurisdiction" may direct to
satisfy the claims of the Debtors' creditors.
The Debtors and Northern Trust have agreed that all assets in the
Trust will be remitted to the Debtors, minus application fees and
any outstanding expenses payable to Northern Trust. The current
estimated value of assets in the Trust is $1,512,000. In the
agreed Stipulation, Northern Trust will liquidate the Trust's
assets and deliver the proceeds to the Debtors, less $1,266 in
fees and expenses.
Accordingly, the Court gave it permission for Northern Trust to
liquidate the assets and remit the funds to the Debtors. (United
Airlines Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
UNITEDGLOBALCOM: June 30 Net Capital Deficit Narrows to $2.7BB
--------------------------------------------------------------
UnitedGlobalCom, Inc., (Nasdaq: UCOMA) announced its operating and
financial results for the quarter ended June 30, 2003. UGC's
significant and consolidated operating subsidiaries include United
Pan-Europe Communications N.V., a leading pan-European broadband
communications company; and VTR GlobalCom S.A., the largest
broadband communications provider in Chile.
Second Quarter Highlights
* Revenue for the three months ended June 30, 2003 was $465
million, an increase of 23% when compared to the same period in
2002. Adjusting for the deconsolidation of UPC Germany for the
prior period, revenue increased 26%. On a sequential basis from
the quarter ended March 31, 2003, revenue increased by 6.7% or
$29 million.
* Adjusted EBITDA for the three months ended June 30, 2003 was
$149 million, a 112%, or $79 million improvement, from $70
million for the same period in 2002. Adjusting for the
deconsolidation of UPC Germany for the prior period, Adjusted
EBITDA improved by 133% or $85 million. On a sequential basis
from the quarter ended March 31, 2003, Adjusted EBITDA increased
by 22% or $27 million.
* Net Income for the three months ended June 30, 2003 was $622
million, an increase of 9.2% when compared to the same period in
2002. This increase primarily relates to: (i) improved operating
results, (ii) consummation of the United Australia Pacific, Inc.
reorganization plan in April 2003, which resulted in accounting
recognition of a deferred gain associated with the sale of our
indirect 49.9% interest in UAP in November 2001, and (iii)
recognition of our proportionate share of UAP's gain from the
extinguishment of its outstanding senior notes, offset by the
non-recurrence of a gain upon the extinguishment of certain UPC
debt securities in the second quarter of 2002.
* RGUs at June 30, 2003 were over 8.9 million, a 3.3% decrease
from June 30, 2002. Excluding UPC Germany subscribers for the
prior period, RGUs increased 3.3% or 281,100. On a sequential
basis from March 31, 2003, RGUs increased by 0.5% or 41,200.
* Video subscribers at June 30, 2003 were 7.4 million, a 6.6%
decrease from June 30, 2002. Excluding UPC Germany for the prior
period, video subscribers increased 0.9%, or 62,500. On a
sequential basis from March 31, 2003, video subscribers remained
flat.
* Voice and Internet subscribers at June 30, 2003 exceeded 1.5
million for the first time, a 17% increase from June 30, 2002.
On a sequential basis from March 31, 2003, voice and Internet
Subscribers increased by 2.9% or 43,000.
UnitedGlobalCom, Inc.'s June 30, 2003 balance sheet shows that its
total liabilities exceeded its total assets by about $2.7 billion.
Management Comments
Gene Schneider, Chairman and CEO, stated: "We are pleased to
report our tenth consecutive quarterly improvement of Adjusted
EBITDA, which increased 112% to $149 million for the second
quarter ended June 30, 2003 compared to the same period in 2002.
In addition, we continue to make progress on the European
restructuring with the recent recommendation of the Dutch Attorney
General to dismiss the ICH appeal. We look forward to the Dutch
Supreme Court decision expected later this month and the
completion of the restructuring shortly thereafter."
Mike Fries, President and COO, added, "In addition to reporting
strong financial results, we are optimistic regarding our
prospects for a rebound in RGU growth during the second half of
the year. Although UPC's net additions in the first half were
below our expectations, the shortfall is almost entirely related
to the implementation of a new subscriber management system in the
Netherlands. This process was substantially complete at the end of
Q2 2003, and it has had a positive impact on UPC's cash flow by
enabling improved cash collection. In all other countries, net
sales and net subscriber gains have been strong."
Subscribers
UGC continues to focus on growing its total customer base,
particularly in areas where the Company has upgraded its networks
to provide broadband services, primarily in Western Europe and
Chile. RGUs, excluding UPC Germany, increased 3.3% from last
year's second quarter to 8.9 million, and increased by 41,200 on a
sequential basis from March 31, 2003. UPC's net gain in the first
half of 2003 was lower than expected due primarily to the
implementation of a new subscriber management system in the
Netherlands. This new system has enabled a systematic reduction in
the period over which an overdue account is disconnected for non-
payment of service fees and has resulted in a reduction in the
number of subscribers in the Netherlands during the second quarter
2003. Net subscriber growth has, however, been strong in most
other respects, particularly considering the seasonality in Europe
and the ongoing nature of UPC's restructuring. UGC added 43,000
voice and Internet subscribers during the quarter, 28,400 in Chile
and 14,200 in Europe.
Revenue
UGC's revenue for the second quarter ended June 30, 2003 was $465
million, an increase of 23%, or $85 million from the same period
last year. The increase was due primarily to the appreciation of
the euro and depreciation of the Chilean peso relative to the U.S.
dollar (approximately $74 million), as well as increases in RGUs
and average revenue per unit in both Europe and Chile. In
addition, when excluding the results of UPC Germany in full for
the quarter ended June 30, 2002, revenues increased 26%.
Adjusted EBITDA
UGC's Adjusted EBITDA for the second quarter was positive $149
million, a 112%, or $79 million improvement over the same period
last year. Approximately $25 million of that increase was due to
the appreciation of the euro and depreciation of the Chilean peso
relative to the U.S. dollar. UPC and VTR both demonstrated a
substantial improvement in Adjusted EBITDA on a year-over-year
basis (144% and 47%, respectively), as well as solid improvements
on a sequential basis.
Capital Expenditures
Capital expenditures for the six months ended June 30, 2003 were
$132 million, a decrease of 30%, or $57 million compared to the
same period last year. Capital expenditures for the quarter ended
June 30, 2003 were $75 million, an increase of 0.6%, or $0.5
million compared to the same period last year. On a sequential
basis from the quarter ended March 31, 2003, capital expenditures
increased by $18 million.
Free Cash Flow Summary
Free Cash Flow for the three months ended June 30, 2003 was $25
million, an increase of $269 million compared to the same period
last year. This change is due to a substantial improvement in cash
flow from operating activities, which is due to a combination of
several factors, including: an appreciation of euro the relative
to the U.S. dollar, an increase in both RGUs and ARPU, as well as
ongoing cost savings (primarily in Europe) and improved working
capital management.
EUROPE
UPC is a leading pan-European broadband communications company
offering cable television, telephony and high-speed Internet
access services in European countries and serving approximately
6.9 million video subscribers, 459,200 voice subscribers and
723,300 Internet subscribers. UGC owns approximately 53.1% of UPC.
Upon the successful completion of UPC's restructuring, UGC will
own approximately 67% of UGC Europe Inc. (formerly called New
UPC). It is anticipated that UGC Europe's common stock will trade
on the NASDAQ National Market under the ticker symbol UGCE.
Second Quarter Highlights
* Video subscribers at June 30, 2003 were 6.9 million, a 7.3%
decrease from 7.4 million at June 30, 2002. Excluding the
results of UPC Germany in full for the prior periods, video
subscribers increased 0.6%. On a sequential basis from March 31,
2003, video subscribers decreased 0.1% or 8,300.
* Voice subscribers, including UPC's broadband cable-phone
operations and its traditional voice network in Hungary at
June 30, 2003 were 459,200, a 1.2% decrease from June 30, 2002.
On a sequential basis from March 31, 2003, voice subscribers
decreased by 0.7%, or 3,100.
* Internet subscribers reached 723,300 at June 30, 2003, an
increase of 22% from 594,800 at June 30, 2002. On a sequential
basis from March 31, 2003, Internet subscribers increased by
2.4%, or 17,200.
* ARPU increased 3.1% to EUR 13.68 for the quarter ended June 30,
2003 compared to EUR 13.27 for the same period last year. On a
sequential basis from March 31, 2003, ARPU decreased by 0.4%.
* Revenue increased 0.1% to EUR 359 million (US$409 million) for
the three months ended June 30, 2003 compared to EUR 359 million
(US$331million) for the same period last year. Excluding UPC
Germany, revenue increased 3.6%. On a sequential basis from
March 31, 2003, revenue was flat.
* Adjusted EBITDA improved 78% to EUR 120 million (US$137 million)
for the three months ended June 30, 2003, compared to EUR 67
million (US$62 million) for the same period last year. Excluding
UPC Germany, Adjusted EBITDA increased by 97%, or Euro 59
million. On a sequential basis from March 31, 2003, Adjusted
EBITDA increased by 13%.
Recent Events -- Europe
Dutch Attorney General Recommends Rejection of Appeal: On July 11,
2003, the Dutch Attorney General delivered advice to its Supreme
Court, which concluded that all of the grounds for ICH's appeal in
relation to the ratification of UPC's proposed restructuring are
without merit and that, therefore, the appeal should be dismissed.
The Supreme Court, which is independent of the Dutch Attorney
General, generally takes into account the conclusion of the Dutch
Attorney General and, in most cases, comes out with the same
result as the Dutch Attorney General. We expect that the Supreme
Court will deal with the matter expeditiously. The Supreme Court
will be the final point of ICH's appeal.
UPC Awarded Exclusive Soccer Broadcast Rights in Netherlands: On
July 25, 2003, UPC announced that the UEFA (soccer) awarded the
exclusive Pay TV rights to UPC for the UEFA Champions League in
the Netherlands for the next three seasons, 2003-2006. Under this
deal with UPC, a new broadcaster of the UEFA Champions League,
viewers in the Netherlands will be able to watch all UEFA
Champions League matches live and in full for the first time via
eight channels. Viewers will have the possibility to choose the
live match of their favorite soccer team, alternate between games,
or will be able to choose which of the other games they would like
to watch later.
Chello Broadband Launches New Product Offerings: On June 30, 2003,
UPC's subsidiary, chello broadband, announced the extension of its
broadband Internet service offering with a chello light and chello
plus product in the Netherlands, chello professional plus and
classic in Austria and chello light in France. With the
introduction of these new services, chello anticipates to the
growing need for different broadband Internet products and the
growing need for speed. chello plus is a premium product offering
unparalleled download speeds and the possibility to connect
multiple computers and devices to the Internet. chello light is
very attractively priced, much faster than typical dial-up
internet services though slower than the other chello products.
chello professional is a product targeted at small businesses.
UPC Polska Proposed Recapitalization: On June 19, 2003, UPC Polska
Inc., a subsidiary of UPC that holds UPC's Polish operations,
executed a binding agreement with its creditors to restructure its
balance sheet. These creditors hold approximately 86% of UPC
Polska's total debt and include an ad- hoc committee of
bondholders that holds approximately 68% of UPC Polska's publicly
traded bonds. The restructuring agreement contemplates that
essentially all of the existing debt, including principally the
$477 million in intercompany loans and affiliated debt held by two
UPC subsidiaries and approximately $77 million in accreted value
of Notes held by a UPC subsidiary, as well as the $373 million in
accreted value of Notes held by third parties, will be cancelled
and in exchange the Notes held by the third party bondholders will
receive $80 million in cash and $60 million in new 9.0% senior
notes due 2006. The two UPC subsidiaries will receive $15 million
in cash and 100% of the newly issued common stock of the
reorganized UPC Polska in exchange for the cancellation of their
claims.
CHILE (VTR)
VTR, an indirect wholly-owned subsidiary of UGC, is a leading
broadband communications company offering cable television,
telephony and high-speed Internet access services in Chile and had
approximately 1.7 million homes passed, 1.0 million two-way homes
passed, 478,500 video subscribers, 245,000 voice subscribers and
99,100 Internet subscribers at June 30, 2003.
Second Quarter Highlights
* VTR's video subscribers at June 30, 2003 were 478,500, an
increase of 4.8% from 456,500 at June 30, 2002. On a sequential
basis from March 31, 2003, video subscribers increased 1.5%, or
7,000.
* VTR's voice subscribers at June 30, 2003 were 245,000 a 17%
increase from 208,900 at June 30, 2002. This represents a 25%
penetration rate based on two-way homes serviceable as of
June 30, 2003 compared to 23% as of June 30, 2002. On a
sequential basis from March 31, 2003, voice subscribers
increased 5.0% or 11,600.
* VTR's Internet subscribers at June 30, 2003 were 99,100, a 130%
increase from 43,000 at June 30, 2002. The increase was due to
continued strong demand for VTR's 300Kbps Broadband product as
well as its new 64Kbps "Broadband Light" service aimed at
converting current dial-up users. On a sequential basis from
March 31, 2003, Internet subscribers increased 20%, or 16,800.
* ARPU increased 6.1% to CP 15,874 (US$22.35) for the quarter
ended June 30, 2003 compared to CP 14,965 (US$22.69) for the
same period last year. On a sequential basis from March 31,
2003, ARPU increased by 2.4% from CP 15,505 (US$21.04).
* VTR's revenue for the quarter ended June 30, 2003 increased 24%
to CP 38,331 million (US$54.0 million) from CP 30,967 million
(US$47.0 million) for the same period in 2002 on a local
currency basis. On a sequential basis from March 31, 2003,
revenue increased 6.0%.
* VTR's Adjusted EBITDA for the quarter ended June 30, 2003
increased 64% to CP 11,694 million (US$16.5 million) from CP
7,115 million (US$11.2 million) for the same period in 2002 on a
local currency basis. On a sequential basis from March 31, 2003,
Adjusted EBITDA increased 27%.
Recent Events -- Chile
* Accelerating Internet growth: Strong residential demand for high
speed Internet access service resulted in a 20% increase in
Internet subscribers on a sequential basis from March 31, 2003
to 99,100 subscribers at June 30, 2003. VTR remains the market
leader with a 43% market share in residential broadband due to
its first mover advantage and greater coverage versus ADSL.
* Strong growth in telephony: Voice lines in service increased 17%
in the second quarter compared to the same period in the prior
year, currently totaling 276,100 lines. This represents a 28%
penetration rate based on two-way homes serviceable as of
June 30, 2003.
* Bundling rollout: As of June 30, 2003, triple play subscribers
were 73,800, a 121% increase compared to the same period in the
prior year and 9.0% of total RGUs. As of June 30, 2003 bundled
RGUs represented 60% of VTR's total RGUs within its triple play
footprint.
* Successfully Amended Syndicated Loan: On May 29, 2003, VTR
completed the refinancing of its Senior Secured Credit Facility.
Highlights of the refinancing included an extension of the final
maturity to December 31, 2006, as well as revised covenant and
amortization schedules based upon VTR's business plan. The
interest rate on the Facility was reduced to LIBOR plus a spread
of 5.5% compared to a previous spread of 6.5%. As a result of
the refinancing, VTR has secured a long-term solution with
respect to its capital structure and further benefits from the
stability provided by its low financial leverage. VTR does not
anticipate the need for any additional capital contributions
from UGC.
Other Investments
Austar United Update: In July, Austar United launched an equity
rights issue to raise approximately A$75.2 million in additional
capital. UGC and affiliates of CHAMP (another significant
shareholder in Austar) have agreed to fully underwrite the Austar
United rights issue in the amount of A$44.3 million and A$30.9
million, respectively. UGC expects to satisfy its underwriting
obligation with restricted cash and certain receivables owed by
Austar. Upon completion of this transaction, UGC expects to
indirectly own between 37% and 38% of Austar United.
Sale of Megapo Interest: In June 2003, we sold our indirect
approximate 90.3% interest in Megapo Comunicaciones de Mexico, S.A
de C.V., for $45.2 million in cash (including settlement of
certain liabilities owed to us and our affiliates prior to
closing) and a $5.0 million promissory note, deposited into
escrow. A loss of $3.3 million was recognized during the second
quarter of 2003 from the sale of this interest for the difference
between the net carrying value of our investment in Megapo and the
consideration received, less costs to sell. Subsequent to the
sale, the purchaser asserted a claim of approximately $3.4 million
against the escrowed amount. That amount will remain in escrow
pending resolution of the purchaser's claim. We believe this claim
is without merit. The remaining amount of $1.6 million (in the
form of a replacement note) has been released from escrow and
delivered to ULA. This note matures on September 10, 2003.
SBS Broadcasting Purchase: On April 9, 2003 UGC purchased 6.0
million shares of SBS Broadcasting (Nasdaq: SBTV) from UPC for
total consideration of $107.2 million. Based on the closing stock
price on August 13, 2003, the current value of that interest is
approximately $138 million.
UGC is the largest international broadband communications provider
of video, voice, and Internet services with operations in numerous
countries. Based on the Company's operating statistics at June 30,
2003, UGC's networks reached approximately 12.6 million homes
passed and 8.9 million RGUs, including approximately 7.4 million
video subscribers, 704,200 voice subscribers, 825,600 high speed
Internet access subscribers. UGC's major operating subsidiaries
include UPC, a leading pan-European broadband communications
company; VTR GlobalCom, the largest broadband communications
provider in Chile; and Austar United Communications, a leading
pay-TV provider in Australia.
US PLASTIC LUMBER: Continues Exploring Strategic Alternatives
-------------------------------------------------------------
U.S. Plastic Lumber Corp. (OTCBB:USPL.OB) announced its operating
results for the three and six months ended June 30, 2003. The
results and discussion that follow pertain solely to the Company's
continuing Plastic Lumber operations, as USPL completed the
previously announced sale of its environmental recycling and
remediation business, Clean Earth, Inc., on September 9, 2002.
Revenues for the second quarter of 2003 were $9.7 million compared
with $14.9 million for the same quarter in 2002, a decrease of
35%. The decrease was mainly due to lower sales of the Company's
building products and the sale of the Cornerboard operations in
May of 2003. Income from continuing operations was $1.9 million as
compared to loss from continuing operations of $4.1 million in the
second quarter of 2002.
In the second quarter of 2003, the Company recorded a gain on the
sale of the cornerboard operation of $4.3 million. Excluding this
one-time item, loss from continuing operations would have been
approximately $2.4 million as reduction in gross margins in 2003
were more than offset by significantly lower interest expense and
selling, general and administrative expenses. Net income for the
second quarter of 2003 was $2.2 million, compared to a net loss of
$3.7 million for the second quarter of 2002. In the second quarter
of 2003, USPL recorded $350,000 of income from discontinued
operations as a result of the settlement of litigation with the
purchaser of CEI. Income from discontinued operations was $419,000
in the second quarter of 2002.
Revenues for the first six months of 2003 were $20.9 million
compared with $29.1 million for the same period in 2002, a
decrease of 28%. The Company attributed part of this decrease to
not having sufficient inventory to meet the demand for its
building products during the first six months of 2003, mainly due
to cash constraints and slower production rates of some of its
newly formulated decking products. Revenues were also negatively
impacted by the sale of the Cornerboard operations in May of 2003.
Loss from continuing operations was $0.4 million, or $0.01 per
basic and diluted share, as compared to loss from continuing
operations of $7.4 million, or $0.18 per basic and diluted share,
for the first six months of 2002. Excluding the gain on the sale
of the cornerboard division, loss from continuing operations would
have been approximately $4.7 million, or $0.07 per basic and
diluted share. USPL continued to benefit from substantially lower
interest expense in 2003 as a result of the restructuring of the
balance sheet in the second half of 2002, which resulted in lower
debt levels and the elimination of certain non-cash interest
charges; which had materially impacted the Company's earnings in
2002. In addition, SG&A decreased by approximately $1.8 million
for the first six months of 2003 as compared to 2002, due to cost
reduction initiatives that began in late 2002 and have continued
into 2003.
Net loss for the first six months of 2003 was $66,000, compared to
$6.5 million for the first six months of 2002, as USPL recorded
$350,000 of income from discontinued operations for the first six
months of 2003, compared with income from discontinued operations
was $903,000 during the comparable period of 2002.
Mark Alsentzer, Chairman, CEO and President of USPL said, "While
USPL has made substantial progress to improve its balance sheet
over the last two quarters, the focus for the remainder of 2003 is
to increase sales across all of our product lines, which in turn
should improve our gross margins. Over the past two quarters, we
have reduced our Selling, General and Administrative Expense and
significantly lowered our interest expense as a result of paying
down debt. We believe that the strengthening demand for
alternative wood products combined with our improved balance sheet
and reduced cost structure, position the Company well to improve
sales and enable the Company to re-gain profitability."
As previously announced, USPL completed the sale of its
cornerboard operation in May of 2003. The net proceeds of
approximately $8.2 million were used to pay down debt and for
general working capital purposes. Although the Company did receive
a default notice on July 10, 2003 from its senior lender, Guaranty
Business Credit Corporation, for failure to meet EBITDA-related
financial covenants, GBCC is continuing to work with the Company
as it explores various strategic alternatives to restructure its
debt with GBCC.
U.S. Plastic Lumber Corp. is engaged in the manufacture of plastic
lumber, returnable packaging and other value added products from
recycled plastic. U.S. Plastic Lumber is the nation's largest
producer of 100% HDPE recycled plastic lumber. Headquartered in
Boca Raton, Florida, USPL is a highly integrated, nationwide
processor of a wide range of products made from recycled plastic
feedstocks. USPL creates high quality, competitive building
materials, furnishings, and industrial supplies by processing
plastic waste streams into purified, consistent products. USPL's
products are environmentally responsible and are both
aesthetically pleasing and maintenance friendly. They include such
brand names as Carefree Xteriors(R), RecycleDesign(TM), Trimax(R),
Earth Care(TM), and OEM products including Cyclewood(R). USPL
currently operates three plastic manufacturing centers.
WEIRTON STEEL: Committee Turns to CIBC World for Fin'l Advice
-------------------------------------------------------------
The Official Committee of Unsecured Creditors in Weirton Steel
Corporation's Chapter 11 case seeks the Court's authority to
retain CIBC World Markets Corp. as its exclusive financial advisor
effective as of May 28, 2003 in connection with a Restructuring
Transaction with respect to the Debtor.
The Committee and CIBC entered into an engagement letter dated
June 2, 2003. Pursuant to the Engagement Letter, CIBC is:
(a) assisting the Committee in analyzing and reviewing the
acts, conduct, assets, liabilities and financial condition
of the Debtor;
(b) familiarizing itself to the extent appropriate with the
operation of the Debtor's business;
(c) advising the Committee as to the current state of the
steel and restructuring markets;
(d) advising the Committee as to potential restructuring
alternatives and issues;
(e) providing general strategic advice with respect to a plan
of reorganization, sale of the Debtor or any other
Restructuring Transaction; and
(f) providing any other tasks as mutually agreed upon by CIBC
and the Committee.
Michael Z. Brownstein, Esq., at Blank Rome LLP, in New York,
relates that CIBC is one of the few full service global
investment banks with a full-time, dedicated financial
restructuring group. CIBC's professionals have assisted, advised
and provided valuation services to debtors, creditors,
bondholders, investors and other entities of similar size to the
Debtor's case. Its services have included assistance in
developing, analyzing, evaluating, negotiating and executing out-
of-court workouts, as well as confirming plans of reorganization
and testifying regarding debt restructuring, feasibility and
other relevant issues.
CIBC proposes to be paid:
(a) a $150,000 cash fee per month starting June 2, 2003 until
the effective date of termination of the Engagement
Letter;
(b) a Success Fee equal to 100 basis points of the aggregate
dollar amount of all claims of all classes whose interests
are represented by the Committee. The Success Fee will be
payable 50% in cash and 50% in the same kind of
consideration delivered to the classes whose interests
are represented by the Committee; and
(c) periodic reimbursement by the Debtor when invoiced for all
of its reasonable out-of-pocket expenses in connection
with the performance of its services, regardless of
whether a Restructuring Transaction occurs.
It is contemplated that the Monthly Fee and reimbursement of
expenses will be paid in accordance with the May 21, 2003 Court
Order establishing procedures for the compensation of
professionals, but the Success Fee will not be paid until the
Court approves the fee application pursuant to Sections 330 and
331 of the Bankruptcy Code.
Daniel W. Dienst, Managing Director of CIBC World Markets,
attests that CIBC is "disinterested" as defined in Section
101(14) of the Bankruptcy Code and represents no interest adverse
to the estates or the Committee. To the extent that CIBC
discovers any additional relationships, it will supplement this
disclosure to the Court promptly. Moreover, CIBC has no
connection with the Debtor, any of the Debtor's creditors, any
other party-in-interest, their attorneys or accountants, the U.S.
Trustee, or any person employed in the Office of the U.S.
Trustee. (Weirton Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
WESTFORT ENERGY: Brings-In Hein & Associates as New Auditors
------------------------------------------------------------
Mr. Norris R. Harris, President and CEO of Westfort Energy Ltd.
announced that the Board of Directors, at a meeting held on
August 14, 2003, have designated and appointed the Certified
Public Accounting firm of Hein & Associates LLP, the principal
offices of which is 14755 Preston Road, Dallas, Texas, as
Westfort's auditors.
Hein & Associates, LLP has consented to this employment and
agreements for a financial and a forensic audit has been executed.
Hein & Associates, LLP will immediately commence the financial
audit of the company so that the financial statements of the
corporation and its subsidiary may be prepared as required by
applicable law and regulations. Upon completion of the audit a
legal annual general meeting may be called and conducted.
The auditors have also been directed to conduct a forensic audit
of the Company, with particular emphasis on the company's prior
relationship with The Genesis Group. The forensic audit will
account for payments made by the Company to The Genesis Group and
its principals and affiliated persons, of both money and
securities and the value of the services, if any, provided by
The Genesis Group to the Company.
It is also announced that the Board has appointed Mr. David
Biffett, subject to regulatory approval, as a member of the Board
of Directors to replace Mr. Mike Muzylowski, who resigned.
The plan of reorganization under which the company will emerge
from Chapter 11 is being developed for submission to the United
States Bankruptcy Court for the Southern District of Mississippi.
Under consideration is to put 50% of the Pelahatchie asset into a
royalty pool for shareholders holding allowed interests in the
Company pursuant to the United States Bankruptcy Code. After the
plan is approved and the shareholders meet and elect a new Board
of Directors the process to get the Company trading again will be
put into place.
WESTPOINT STEVENS: Court Extends Lease Decision Time to Dec. 1
--------------------------------------------------------------
As previously reported, WestPoint Stevens Inc., and its debtor-
affiliates are parties to 82 leases as of the Petition Date. John
J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP, in New York,
told Judge Drain that because the Debtors' cases are large and
complex, they need more time to complete their evaluation of each
lease and determine which of the unexpired leases should be
assumed or rejected.
Accordingly, the debtors sought and obtained Court approval to
extend their lease decision deadline to December 1, 2003.
(WestPoint Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
WESTPOINT STEVENS: June 30 Net Capital Deficit Widens to $896MM
---------------------------------------------------------------
WestPoint Stevens Inc. (OTC Bulletin Board: WSPTE) --
http://www.westpointstevens.com-- reported results for the second
quarter ended June 30, 2003.
The Company's net sales for the second quarter of 2003 decreased
19% to $365.7 million compared with $449.6 million a year ago.
Reflecting the combined effects of retailers' efforts to reduce
inventories and the ongoing weak retail environment, sales
declined in every product category, and across all distribution
channels, with the exception of specialty stores where the
Company's efforts to increase market share have been successful.
Net income for the second quarter of 2003 was a loss of $72.0
million compared with net earnings of $2.0 million in 2002.
Income loss before taxes for the second quarter of 2003 was $106.8
million compared with income before taxes in 2002 of $3.1 million
and included in the 2003 period a $46.3 million charge for
goodwill impairment, $16.6 million in expenses related to
WestPoint Stevens previously announced restructuring initiatives,
and $6.2 million in expenses related to the current bankruptcy
proceedings.
At June 30, 2003, the Company's balance sheet shows a working
capital deficit of about $224 million, and a total shareholders'
equity deficit of about $896 million.
M. L. "Chip" Fontenot, WestPoint Stevens President and COO
commented, "Retailers started the second quarter with excess
inventories given disappointing sales early in 2003. As a result,
reorder activity slowed substantially. In this environment, we
have focused on what we can control -- inventories and cash.
During the quarter our inventories declined $37 million, or 8%
compared with year ago levels and under our $300 million debtor-
in-possession facility, we ended the quarter with availability of
$195 million."
Mr. Fontenot continued, "We are moving forward with our
restructuring efforts and continue to maintain our industry-
leading reputation for customer service. While the retail
environment was especially challenging in the second quarter we
are seeing signs of improvement in the current quarter and are
well positioned to benefit from recent market opportunities
associated with Pillowtex's pending liquidation."
WestPoint Stevens Inc. is the nation's premier home fashions
consumer products marketing company, with a wide range of bed
linens, towels, blankets, comforters and accessories marketed
under the well-known brand names GRAND PATRICIAN, PATRICIAN,
MARTEX, ATELIER MARTEX, BABY MARTEX, UTICA, STEVENS, LADY
PEPPERELL, SEDUCTION, VELLUX and CHATHAM -- all registered
trademarks owned by WestPoint Stevens Inc. and its subsidiaries --
and under licensed brands including RALPH LAUREN HOME, DISNEY
HOME, GLYNDA TURLEY and SIMMONS BEAUTYREST. WestPoint Stevens is
also a manufacturer of the MARTHA STEWART and JOE BOXER bed and
bath lines. WestPoint Stevens can be found on the World Wide Web
at http://www.westpointstevens.com
WINFIELD CAP.: Violation of SBA Rule Raises Going Concern Doubt
---------------------------------------------------------------
Winfield Capital Corp. (WCAP:OTCBB) reported a net gain of
$176,758 for the quarter ended June 30, 2003 versus a net loss of
$1,908,129 for the quarter ended June 30, 2002. This net gain in
the first three months of fiscal year 2004 was primarily
attributable to a decrease in unrealized depreciation in the value
of investments totaling $485,847 (or $484,963 excluding short-term
marketable securities) compared with an increase in the first
three months of fiscal year 2002 in the unrealized depreciation in
the value of investments totaling $1,190,975 (or $1,183,698
excluding short-term marketable securities).
Unrealized depreciation in fiscal year 2004 was principally
related to the increase in fair value of three portfolio
investments versus the decrease in market price of seven
investments in publicly-traded portfolio companies in fiscal year
2003. In fiscal 2004, the net gain included a realized net gain of
$91,037 on the sale of the Company's entire position in one of its
portfolio companies as compared to a realized net loss of $45,423
for the fiscal year 2003 period.
The Company's investment income increased by $229,416 to $369,127
for the first three months of fiscal year 2004 compared with
investment income of $139,711 for the same period in fiscal 2003.
The increase in investment income was largely attributable to an
increase in interest from small business concerns of $326,234 as a
result of the Company's increased investments in loans. Interest
from idle funds decreased by $97,218 as a result of both decreases
in interest rates and in the idle funds that were invested.
Operating expenses decreased by $42,189 from $372,487 for the
quarter ended June 30, 2002 to $330,298 for the quarter ended June
30, 2003. This decrease was primarily attributable to a decrease
of $63,131 in payroll and payroll-related expenses due to the
resignation of an executive officer effective December 31, 2002
partially off-set by increases in professional fees of $17,065 and
insurance expense of $14,060. There were miscellaneous net
decreases totaling $10,183. Interest expense was $438,955 for the
three months ended June 30, 2003 and for the three months ended
June 30, 2002 period.
According to the U.S. Small Business Administration Regulations,
the Company is required to be in compliance with the capital
impairment rules, as defined by regulation 107.1830 of the SBA
Regulations. The Company has been notified by the SBA that the
Company is no longer in compliance with the SBA's capital
impairment requirements and that the SBA has accelerated the
maturity date of Winfield Capital's debentures. The aggregate
principal, interest and fees due under the debentures totaled
approximately $25.6 million as of June 30, 2003, including
interest and fees due through the next semi-annual payment date.
The SBA has transferred Winfield Capital's account to liquidation
status where any new investments and material expenses are subject
to prior SBA approval. Although it has not done so as of the date
of this filing, and may not do so, the SBA has the right to
institute proceedings for the appointment of the SBA or its
designee as receiver. If the SBA were to require the Company to
immediately pay back the entire indebtedness including accrued
interest, certain private security investments may need to be
disposed of in a forced sale which may result in proceeds less
than their carrying value at June 30, 2003. As such, this
impairment could have a material adverse effect on the Company's
financial position, results of operations and cash flows which
raises substantial doubt about the Company's ability to continue
as a going concern. Management has submitted a plan to the SBA
providing for the liquidation of the Company over a three-year
period; however, to date, the SBA has not indicated whether it
will approve of the proposed plan. The Company continues to
explore various strategic alternatives, including a third party
equity infusion, although there can be no assurance that it will
be successful in its ability to consummate or implement these or
any other strategic alternatives.
Winfield Capital is a small business investment company that makes
loans and equity investments pursuant to funding programs
sponsored by the SBA and is a non-diversified, closed-end
investment company that is a business development company under
the Investment Company Act of 1940. The Company's common stock is
traded on the Over the Counter Bulletin Board under the symbol
"WCAP". For more information, visit Winfield Capital's Web site
at: http://www.winfieldcapital.com/
WINSTAR COMMS: Court Clears Stratex Settlement Agreement
--------------------------------------------------------
Winstar Communications' Chapter 7 Trustee commenced an adversary
proceeding against Stratex Networks, formerly known as Digital
Microwave Corporation, to avoid and recover transfers pursuant to
Sections 547 and 550 of the Bankruptcy Code. After settlement
discussions with Digital, the Trustee signed a Settlement
Agreement with Digital on June 5, 2003.
The Trustee's complaint against Digital asserted a $9,821,910.30
gross preference amount. Digital provided strong evidence of
statutory new value, as well as payments made in the ordinary
course of business. To avoid litigation costs and delay, the
Trustee agreed to accept $2,083,874.00 in full and final
settlement of all claims and the parties will exchange mutual
releases.
Accordingly, the Trustee obtained the Court approval for the
Settlement Agreement with Stratex. (Winstar Bankruptcy News, Issue
No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WOMEN FIRST HEALTHCARE: Red Ink Flows in Second Quarter 2003
------------------------------------------------------------
Women First HealthCare, Inc. (Nasdaq:WFHC) reported second quarter
results that showed marked improvement from the first quarter but
continued to be impacted by decisions outlined in the year-end
2002 conference call. The Company reported net revenues of $1.5
million in the second quarter 2003 compared to $12.1 million in
the year earlier period. Amounts invoiced by the Company for
product shipped totaled $3.8 million in the second quarter 2003
versus $12.9 million in the 2002 quarter. For the six-month period
2003, the Company reported net revenues of $2.9 million versus
$21.5 million in the 2002 period. Amounts invoiced for product
shipped were $7.9 million and $23.6 million in the six months
ended June 30, 2003 and 2002, respectively. The decreases from the
prior periods resulted from the adequacy of product already in the
distribution channel in 2003 to meet prescription demand.
Operating expenses consisting of marketing and sales expenses,
general and administrative expenses and regulatory, research and
development expenses for the current quarter totaled $7.0 million
as compared to $7.4 million in the prior period. The current
quarter's expenses included $0.8 million for the write-off of
pharmaceutical samples and $0.3 million for legal fees associated
with restructuring the Company's senior secured notes. There were
no similar charges in the 2002 period. For the current six-month
period, operating expenses were $17.6 million compared to $13.5
million in the 2002 period. The increase is primarily the result
of sales and marketing expenses related to Vaniqa(R), which was
acquired at the end of June 2002, and additional spending for
legal and auditing fees associated with the current year's
activities. The six-month 2003 results included a product-rights
impairment charge of $5.9 million and restructuring expenses of
$0.7 million. There were no similar charges in the six-month 2002
period.
The Company reported a second quarter 2003 net loss to common
stockholders, after giving effect to financing charges and
preferred stock accretion, of $12.6 million, as compared to a net
profit to common stockholders of $61,000 in the prior year period.
For the six months ended June 30, 2003, the Company reported a net
loss to common stockholders of $34.1 million, as compared to a net
profit to common stockholders of $0.3 million in the prior year
period.
Commenting on the results, Edward F. Calesa, Women First chairman
and CEO, said, "The results of the first half of the year reflect
the decisions we outlined at year-end -- limit sales to the
distribution channel, downsize, and restructure the loan
covenants. The second half should reflect the decision to resume
shipments to our customers, which we did in July, now that the
distribution channel is down. We believe the restructuring and
downsizing are behind us and that opportunity lies ahead."
President and COO Michael Sember commented, "I'm here because I
believe in the future and the opportunity. We've had great success
with our hormone therapy patch, Esclim(TM), with prescription
growth of 57% year over year, with 60% fewer sales reps, after
being up 109% in 2002. Vaniqa(R) prescriptions, which were down
66% in the 16 months prior to the initiation of our efforts, have
declined less than 10% since the beginning of the year. The
success of our relatively small sales force in creating demand for
Esclim is the focus of analysis for future activity. Our
distribution channel is much improved and product in the
distribution channel has been reduced 57% and 49% since year-end
for Esclim and Vaniqa, respectively. Our goal for the remainder of
the year is to be cash flow positive on an operating basis and to
operate within the confines of our debt covenants."
The Company's cash position at June 30, 2003 was $6.7 million,
down $2.4 million from $9.1 million at year-end 2002.
Stockholders' equity decreased to $14.9 million at June 30, 2003
from $45.9 million at year-end 2002.
Also, at June 30, 2003, the Company's balance sheet shows a
working capital deficit of about $7 million, while total net
capitalization dropped to about $15 million from $46 million six
months ago.
Business Outlook
The Company suspended its fiscal year 2003 guidance in May 2003.
Women First HealthCare, Inc. (Nasdaq:WFHC) is a San Diego-based
specialty pharmaceutical company. Founded in 1996, its mission is
to help midlife women make informed choices regarding their health
care and to provide pharmaceutical products -- the Company's
primary emphasis -- and lifestyle products to meet their needs.
Women First HealthCare is specifically targeted to women age 40+
and their clinicians. Further information about Women First
HealthCare can be found online at htt://www.womenfirst.com About
Us and Investor Relations.
As reported in Troubled Company Reporter's May 15, 2003 edition,
Women First HealthCare Inc. received $2.5 million of new capital
through a private placement of its common stock and completed
agreements to obtain waivers of past defaults and restructure the
terms of both its $28.0 million principal amount of senior secured
notes and convertible redeemable preferred stock issued to finance
the company's acquisition of Vaniqa(R) Cream.
WORLDCOM INC: Wants Nod for Amended Downers Grove, Chicago Lease
----------------------------------------------------------------
The Court grants the Worldcom Debtors' request to assume an
amended non-residential real property lease with National Build to
Suit Corridors I LLC for the premises in Downers Grove, Illinois.
The Premises serves as the Debtors' wholesale services customer
support center for the entire Midwest, and houses sales, sales
support, legal, operations and provisioning employees. The
Premises is a "lit" facility which has the Debtors' own
telecommunications fiber running into the building, allowing the
Debtors to bypass the purchase of local service from another
local exchange carrier. It contains a strong network support
infrastructure. The Debtors use the facility as the information
systems hub of the Chicago region. The Debtors have installed
$95,000 in new server hardware at the Premises to enable the
information systems management and data storage. Therefore, the
Premises is important to the Debtors' ongoing business
operations.
The Premises consists of a 149,500-square foot building commonly
known as Corridors Two. The Premises is located at 2655
Warrenville Road in Downers Grove. The Downers Grove Lease
commenced on December 1, 1999 and will expire by its terms on
December 31, 2009. The Lease, as amended on August 30, 2000,
provides for monthly rental obligations starting at $196,010 on
the first year, and increasing to $223,723 on the 7th year.
The Debtors have engaged in discussions with National with
respect to the renegotiation of the Lease on terms more
favorable. As a result of the negotiations, the parties executed
an amendment to the Lease. The terms of the Amendment include:
a. Expansion Floors:
1. Effective as of April 1, 2003, the leased Premises will
exclude the fourth and fifth floors. The Premises will
only include the first, second, and third floors,
containing 87,685 square feet, as well as two "IDF
Closets" located on the fourth and fifth floors of the
building, containing MCI WorldCom Communication's fire
suppression system and EPO switches. Certain furniture
located on the fourth and fifth floors will be sold and
transferred to National pursuant to a bill of sale;
2. The Debtors will have the right of access to the
surrendered fourth and fifth floors for the purpose of
removing certain personal properties; and
3. In the event that National leases, or otherwise permits
occupancy of, the fourth or fifth floors to any third
party and the tenancy or occupancy requires the use of
the areas containing the IDF Closets, National will give
the Debtors not less than 30 days prior written notice.
The Debtors will take all actions to vacate and
surrender the IDF Closets, in accordance with the
Amendment.
b. MCI WorldCom Communication's Share and Portion: From and
after April 1, 2003, MCI WorldCom Communication's Share --
the ratio that the rentable area of the Premises bears to
the entire Building rentable area as of the start of the
Lease -- will be amended to 58.5%. From and after April 1,
2003, MCI WorldCom Communication's Portion -- the ratio
that the rentable area of the Premises bears to the entire
rentable area in the Building and in the Corridors I
building -- will be amended to 29.25%.
c. Term of the Lease: The initial Lease term will be deemed
to expire on February 28, 2008.
d. Base rent: The base rent for the modified initial term of
the Lease will be:
Lease Base Annual Monthly
Months Rent Rate Base Rent Base Rent
------ --------- --------- ---------
1-24 $12.00 $1,052,220 $87,685
25-36 14.20 1,245,127 103,760
37-59 15.90 1,394,191 116,182
e. Expansion Option: The Debtors will have the right to expand
into the fourth or fifth floors. The Debtors must exercise
this expansion right, if at all, by written notice to
National no later than December 31, 2003. This right will
further be limited to the fourth floor as long as any
portion of the fourth floor remains unleased.
f. Right of First Refusal: In addition to the expansion
rights, but subject to any existing expansion or extension
rights as of April 1, 2003 of another Premises tenants, the
Debtors will have a one-time right of first refusal to
expand into any portion of the Expansion Space at such time
that National is in receipt of a bona fide third party
offer to lease any portion of the Expansion Space.
National will notify the Debtors of the terms and
conditions contained in the bona fide offer.
Based on its market analysis, Hilco Real Estate, LLC, the
Debtors' real estate professionals, advised the Debtors that as a
result of the Lease renegotiation, the annual rent payable will
reflect the fair market rental value of the Premises and that the
Lease terms, as amended, are indeed favorable to the Debtors.
Pursuant to the Amendment, the base rent under the Lease is
reduced from $15.55 to $17.75 per square foot to $12 to $15.90
per square foot. Hilco's analysis indicates that the Lease
renegotiation will result in aggregate savings for the Debtors
approximating $17,046,859 over the term of the Lease. (Worldcom
Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
WORLDCOM: Yankee Group Calls Allegations Hindrance to Emergence
---------------------------------------------------------------
The Yankee Group, the global leader in communications and
networking research and consulting, advised MCI's enterprise
customers to put into context the current fraud allegations and
the recent GSA decision to bar the company from future government
contracts.
In a new research note, "Allegations Hinder MCI in its Struggle to
Emerge From Bankruptcy," released today, the research firm offers
perspective on the recent allegations facing the communications
giant (formerly WorldCom) as it emerges from bankruptcy.
Research director and note author Bryan Van Dussen, writes, "If
the fraud is not proven, or if the GSA fails to formally debar
MCI, we would advise enterprise customers to see these events as
little more than a determined effort by MCI's competitors to
disrupt its bankruptcy reorganization...but if business customers
remain doubtful of the company's financial stability and integrity
things will be much tougher."
The research note goes on to explore the fraud allegations, and
put them in context of industry practices: "... at the core of the
fraud allegations is the legal practice of least cost routing,
which is commonly used by all carriers in the industry including
AT&T."
Yankee Group analysts, communication industry executives, and
business decision-makers will together explore the critical issues
affecting business communication strategies and planning at its
upcoming annual Telecom Industry Forum, the world's most reputable
industry event, this year held in Washington, D.C., on
November 3 & 4.
The Yankee Group -- http://www.yankeegroup.com-- is the global
leader in communications and networking research and consulting.
The company helps businesses understand the opportunities, risks,
and competitive pressures of developing, deploying, and consuming
products and services that drive communication or information
exchange. Now in its fourth decade, the Yankee Group is based in
Boston with offices throughout North America, Europe, Latin
America, and the Pacific Rim.
WORLDCOM INC: Reports Improved June Monthly Operating Results
-------------------------------------------------------------
MCI (WCOEQ, MCWEQ) filed its June 2003 monthly operating report
with the U.S. Bankruptcy Court for the Southern District of New
York. During the month of June, MCI recorded $2.075 billion in
revenue versus $2.034 billion in May 2003. Operating income in
June was $146 million versus $116 million in May. The Company had
net income in June of $84 million compared to net income of $46
million in May.
June reorganization items were $46 million versus $44 million in
May. The reorganization expenses consisted primarily of contract
termination expenses, professional fees, losses on property and
equipment dispositions and severance costs.
During the restructuring process, certain business activities will
drive one-time costs that will be recognized in the month in which
they were incurred. These expenses are expected to fluctuate from
month to month as the Company implements its cost reduction plans.
In June, MCI recorded capital expenditures of $43 million. MCI
ended June with $4.6 billion in cash on hand, an increase of
approximately $400 million from the beginning of the month.
"While the business environment remained highly competitive in
June, we continued to make steady and solid progress executing
against our plan of reorganization," said Bob Blakely, MCI chief
financial officer. "Our customer loyalty remains strong and we are
on track to emerge from Chapter 11."
The financial results discussed in the June 2003 Monthly Operating
Report exclude the results of Embratel. Until MCI completes a
thorough balance sheet evaluation, the Company will not issue a
balance sheet or cash flow statement as part of its Monthly
Operating Report.
The Monthly Operating Reports are available on MCI's Restructuring
Information Desk at: http://global.mci.com/news/infodesk/
Based on current information and a preliminary analysis of its
ability to satisfy outstanding liabilities, MCI believes that when
it emerges from bankruptcy proceedings, its existing WorldCom and
Intermedia preferred stock and WorldCom group and MCI group
tracking stock issues will have no value.
WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business
under the MCI brand name, is a leading global communications
provider, delivering innovative, cost-effective, advanced
communications connectivity to businesses, governments and
consumers. With the industry's most expansive global IP backbone,
based on the number of company-owned POPs, and wholly- owned data
networks, WorldCom develops the converged communications products
and services that are the foundation for commerce and
communications in today's market. For more information, go to
http://www.mci.com
WORLDCOM: Anthony Amodio Sues Citigroup and SSB to Recoup Losses
----------------------------------------------------------------
The law firm Babbitt, Johnson, Osborne & LeClainche, P.A., has
sued Citigroup and its Salomon Smith Barney brokerage for
emotional distress and loss of life savings on behalf of a retired
MCI-WorldCom systems designer.
The firm filed suit on behalf of Anthony Amodio of Delray Beach,
Fl., who lost his life savings by following the advice of
Citigroup and Salomon as well as the recovery of $2 million in
losses as the result of WorldCom's bankruptcy.
Amodio sued under Florida's tort of "outrage" in Palm Beach County
Circuit Court, charging that Salomon and Citigroup advised him to
retain his $2 million in WorldCom stock - nearly all of his
retirement money - knowing that the stock was overinflated and
would eventually be worthless. (Amodio v. Citigroup, Inc., et al.,
Fifteenth Judicial Circuit, Palm Beach County, Fl., Case No.
502003 CA 008635, Judge Timothy McCarthy).
Mr. Amodio's lawyer, Theodore Babbitt, also filed notices of sworn
depositions of former WorldCom CEO Bernard Ebbers, former Salomon
telecommunications analyst Jack Grubman and Citigroup CEO Sanford
Weill.
"This is the first suit ever filed seeking a mental pain and
suffering award for losses suffered by millions of investors who
relied on the false advice of Salomon and Citigroup about
WorldCom," said Mr. Babbitt, a partner in the West Palm Beach
plaintiff's trial law firm Babbitt, Johnson, Osborne & LeClainche,
P.A. "This will also be the first civil suit to allow the taking
of depositions that will get to the heart of this fiasco. The
principals in this mess have never been subjected to a real cross-
examination and this suit will change that."
Salomon earned more than $1 billion in investment banking fees
from telecom deals in the late 1990s, much of it fueled by
Grubman's bullish reports on WorldCom's stock. Grubman served as
an advisor, analyst and consultant to WorldCom, then under CEO
Ebbers and received $25 million in 1998 alone for his work while
at the same time offering independent advice to purchasers of
WorldCom stock.
Mr. Amodio's retirement savings dwindled to virtually nothing, he
said, as investment advisers repeatedly advised a concerned Mr.
Amodio to hold onto his WorldCom stock as late as spring 2002,
just before WorldCom's collapse.
According to the suit, as early as July 1999, Mr. Amodio - who had
23,820 shares - spoke to Citigroup and Salomon about his concern
about having nearly his entire portfolio in WorldCom stock.
Salomon's representatives assured him the stock was strong and
that Jack Grubman said the stock would break "the triple digits"
by the end of the year.
When that didn't happen, Mr. Amodio again relayed his concerns
about his portfolio, and again was told of Mr. Grubman's
confidence in the stock.
And so it went as late as April 15, 2002, when WorldCom stock had
dropped to $7 a share. The Salomon adviser told Mr. Amodio that
Salomon's senior management, including Grubman, were projecting
WorldCom stock to rise to $150 by late 2002 or early 2003, saying
that "the Saudis were in the market big and were purchasing the
stock."
The suit says: "The conduct of these Defendants was either
intentional or reckless, that is, they intended their behavior
when they knew or should have known that severe emotional distress
would likely result to the Plaintiff from their behavior...The
conduct of these Defendants was outrageous, that is, it went
beyond all bounds of decency so as to be regarded as odious and
utterly intolerable in a civilized community."
In addition to the count of outrageous conduct, the six-count suit
includes counts of fraud, breach of contract and violation of
Florida's Blue Sky laws, which prohibit people and companies
"directly or indirectly...to employ any device, scheme or artifice
to defraud."
* BOND PRICING: For the week of August 18 - 22, 2003
----------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
Ahold Financial USA 6.875% 05/01/29 71
AK Steel Corp. 7.750% 06/15/12 72
AK Steel Corp. 7.875% 02/15/09 75
Alexion Pharmaceuticals 5.750% 03/15/07 70
Allegheny Ludlum Corp. 6.950% 12/15/25 74
Allmerica Financial 7.625% 10/15/25 75
American & Foreign Power 5.000% 03/01/30 60
AMR Corp. 9.000% 08/01/12 62
AMR Corp. 9.000% 09/15/16 61
AnnTaylor Stores 0.550% 06/18/19 68
Applied Extrusion 10.750% 07/01/11 66
Best Buy Co. Inc. 0.684% 06/27/21 75
Burlington Northern 3.200% 01/01/45 50
Burlington Northern 3.800% 01/01/20 71
Calpine Corp. 8.500% 02/15/11 66
Calpine Corp. 8.625% 08/15/10 67
Calpine Corp. 8.750% 07/15/07 72
Cincinnati Bell Telephone 6.300% 12/01/28 65
Cincinnati Bell Telephone 7.250% 06/15/23 75
Collins & Aikman 11.500% 04/15/06 74
Comcast Corp. 2.000% 10/15/29 29
Coastal Corp. 6.950% 06/01/28 65
Coastal Corp. 7.420% 02/15/37 68
Continental Airlines 4.500% 02/01/07 74
Corning Inc. 6.850% 03/01/29 73
Cox Communications Inc. 0.348% 02/23/21 72
Cox Communications Inc. 0.426% 04/19/20 50
Cox Communications Inc. 2.000% 11/15/29 35
Crown Cork & Seal 7.500% 12/15/96 67
Crown Cork & Seal 8.000% 04/15/23 74
Cummins Engine 5.650% 03/01/98 59
Dana Corp. 7.000% 03/15/28 74
Dana Corp. 7.000% 03/01/29 74
Delta Air Lines 7.900% 12/15/09 71
Delta Air Lines 8.300% 12/15/29 61
DDI Corp. 5.250% 03/01/08 6
DVI Inc. 9.875% 02/01/04 32
Dynex Capital 9.500% 02/28/05 2
Dynegy Holdings Inc. 6.875% 04/01/11 72
El Paso Corp. 7.750% 01/15/32 72
El Paso Energy 7.800% 08/01/31 72
Elwood Energy 8.159% 07/05/26 68
GB Property Funding 11.000% 09/29/05 65
Goodyear Tire & Rubber 7.000% 03/15/28 65
Goodyear Tire & Rubber 7.857% 08/15/11 71
Gulf Mobile Ohio 5.000% 12/01/56 64
Hasbro Inc. 6.600% 07/15/28 70
Health Management Associates 0.250% 08/16/20 63
IMC Global Inc. 7.300% 01/15/28 68
IMC Global Inc. 7.375% 08/01/18 73
International Wire Group 11.750% 06/01/05 53
Level 3 Communications Inc. 6.000% 09/15/09 58
Level 3 Communications Inc. 6.000% 03/15/10 57
Liberty Media 3.500% 01/15/31 67
Liberty Media 3.750% 02/15/30 55
Liberty Media 4.000% 11/15/29 58
Lucent Technologies 6.450% 03/15/29 63
Lucent Technologies 6.500% 01/15/28 63
Mirant Americas 8.300% 05/01/11 69
Mirant Corp. 5.750% 07/15/07 39
Missouri Pacific Railroad 4.750% 01/01/30 70
Missouri Pacific Railroad 5.000% 01/01/45 58
Motorola Inc. 5.220% 10/01/97 74
Northwest Airlines 7.875% 03/15/08 67
Northwest Airlines 8.750% 06/01/06 70
Northwest Airlines 9.875% 03/15/07 71
Northwest Pipeline 7.125% 12/01/25 73
Northwestern Corporation 7.875% 03/15/07 74
Northwestern Corporation 8.750% 03/15/12 73
NTL Communications Corp. 7.000% 12/15/08 19
Panamsat Corp. 6.875% 01/15/28 73
Reliant Resources 5.000% 08/15/10 69
Salomon SB Holdings 0.250% 02/18/10 74
Silicon Graphics 5.250% 09/01/04 74
Sonat Inc. 7.000% 02/01/18 71
Southern Natural Gas 7.350% 02/15/31 75
Tennessee Gas 7.000% 10/15/28 72
Transcontinental Gas PL 7.080% 07/15/26 73
Transcontinental Gas PL 7.250% 12/01/26 74
Universal Health Services 0.426% 06/23/20 63
US Timberlands 9.625% 11/15/07 60
US West Communications 6.875% 09/15/33 69
US West Communications 7.125% 11/15/43 71
US West Communications 7.200% 11/10/26 73
US West Communications 7.250% 10/15/35 74
US West Communications 7.250% 10/15/35 72
Xerox Corp. 0.570% 04/21/18 65
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR, is
provided by DebtTraders in New York. DebtTraders is a specialist
in global high yield securities, providing clients unparalleled
services in the identification, assessment, and sourcing of
attractive high yield debt investments. For more information on
institutional services, contact Scott Johnson at 1-212-247-5300.
To view our research and find out about private client accounts,
contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing
available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C.
de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A.
Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***