/raid1/www/Hosts/bankrupt/TCR_Public/030819.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, August 19, 2003, Vol. 7, No. 163
Headlines
ACP HOLDING: Files Prepackaged Plan in Delaware Bankruptcy Court
ADVANCED LIGHTING: Files Amended Joint Plan in N.D. of Illinois
AMERCO: Court Approves $300 Million DIP Financing Agreement
AMERICAN RESTAURANT: Reports Weaker EBITDA for Second Quarter
AMERICAN RESTAURANT: Completes Preferred Share Conversion
ANC RENTAL: Court Approves Asset Sale to Cerberus for $290 Mill.
ATCHISON CASTING: Wants Nod to Sign-Up Bryan Cave as Attorneys
ATLANTIC COAST: FMR Corp. Discloses 10.503% Equity Stake
BABCOCK & WILCOX: Court to Consider Plan on September 22, 2003
BRIDGE INFORMATION: Plan Administrator Sues CMEX to Recoup $1MM
BUDGET GROUP: UK Administrators Balk at BRAC and BRACC's Claims
BURLINGTON IND.: Plan Filing Exclusivity Extended to Sept. 30
CALICO COMMERCE: Calif. Court Confirms First Amended Joint Plan
COMDIAL CORP: June 30 Balance Sheet Upside-Down by $1.5 Million
CONSOLIDATED FREIGHTWAYS: TransForce Wants to Buy Canadian Unit
CORPORATE MEDIA: Files for Chapter 7 Liquidation in Tennessee
CORPORATE MEDIA GROUP: Voluntary Chapter 7 Case Summary
DAVEL COMMS: June 30 Net Capital Deficit Balloons to $95 Million
DIAMETRICS MEDICAL: June 30 Balance Sheet Upside-Down by $1.2MM
EZENIA! INC: June 30 Balance Sheet Insolvency Widens to $2.3MM
FLEXTRONICS: Inks Pact to Acquire Microcell for $80 Mil. + Debts
GENERAL MEDIA: Wants More Time to File Schedules and Statements
GENTEK INC: Asks Court to Fix Solicitation & Tabulation Protocol
GILAT SATELLITE: June 30 Net Capital Deficit Shrinks to $3.5MM
HYTEK MICROSYSTEMS: Independent Auditors Air Going Concern Doubt
INSCI CORP: Reports Weaker Fiscal 1st Quarter Financial Results
INTERLIANT: Disclosure Statement Hearing Convenes on Aug. 28
INTERWAVE COMMS: Promotes Padraig Stapleton to VP of Engineering
IT GROUP: Court Extends Plan Filing Exclusivity Until October 10
J. CREW GROUP: Scott M. Rosen Steps Down as EVP and CFO
LORAL SPACE: Red Ink Continued to Flow in Second Quarter 2003
LORAL SPACE: Intelsat Wants to Acquire N.A. Satellite Assets
LTV CORP: Copperweld Plan's Claims Classification and Treatment
MAXXIM MEDICAL: All Proofs of Claim Due by August 29, 2003
MED DIVERSIFIED: First Quarter Results Enter Positive Territory
MIRANT CORP: Brings-In Sitrick and Company as PR Consultants
MOTELS OF AMERICA: UST Appoints Official Creditors' Committee
NATIONAL CENTURY: Court OKs Long & Foster as Real Estate Brokers
NATIONAL WINE: June Quarter Results Swing-Down into the Red
NRG ENERGY: Xcel Records Q2 Charges Related to NRG's Bankruptcy
OGLEBAY NORTON: Continues Negotiations with Banks & Noteholders
ORGANOGENESIS: Bankruptcy Court Confirms Plan of Reorganization
OWENS CORNING: Court Okays Adelman Lavine as Special Counsel
PACIFIC GAS: Plan Confirmation Hearing to Commence on November 3
PEREGRINE SYSTEMS: Joseph E. Myers Named as Litigation Trustee
PETROLEUM GEO: Baker Botts Serving as U.S. Corporate Counsel
PG&E NATIONAL: Court Approves Blank Rome as USGen's Lead Counsel
PHILIP MORRIS: Judge Byron Orders $12-Billion Bond in 60 Days
PILLOWTEX CORP: Wants to Honor Prepetition Customer Obligations
PRIMEDIA INC: Names David Kirchhoff SVP and CFO for CMM Group
RENT-WAY INC: Fiscal Third-Quarter Results Show Strong Growth
REPTRON ELECTRONICS: Will Hold 2nd Quarter Conference Call Today
SEA CONTAINERS: Reports Slight Decline in Second Quarter Results
SEQUA CORP: Posts Higher Operating Results for Second Quarter
SHC INC: Asset Sale Auction Scheduled for September 3, 2003
SK GLOBAL AMERICA: Wants OK to Tap Ordinary Course Professionals
SL INDUSTRIES: Second Quarter Results Show Slight Improvement
SMITHFIELD FOODS: Will Publish First Quarter Results on Thursday
SPIEGEL: Asks Court to Fix Eddie Bauer Inventory Sale Procedures
STARBAND COMMS: Files Plan of Reorganization in Delaware
SUPERIOR TELECOM: Court Fixes Aug 25 Prepetition Claims Bar Date
TRICO MARINE: Hires Trevor Turbidy as New Chief Fin'l Officer
TRICO MARINE: Inks Pact to Sell North Sea Vessels for NOK 263MM
TWINLAB CORP: Fails to Beat SEC Form 10-Q Filing Deadline
UICI: Continues to Assess Goodwill Impairment at AMS Subsidiary
UNIBEX INC: Case Summary & 20 Largest Unsecured Creditors
UNITED AIRLINES: Wins Nod to Pay Amendment Fees to DIP Lenders
US AIRWAYS: Court Approves Establishment of Distribution Reserve
US DATAWORKS: Fiscal First Quarter Net Loss Reaches $2 Million
VENTAS INC: Board of Direc. Declares Regular Quarterly Dividend
WEIRTON: Committee & Union Balk at Houlihan Lokey's Engagement
WESTFORT ENERGY: Signs-Up Hein & Associates as Auditors
WESTPOINT STEVENS: Committee Hires E.J. Bird as Consultant
WORLDCOM INC: Fee Committee Taps Legal Cost Control as Analyst
WORLDSPAN L.P.: Second-Quarter Results Show Poor Performance
* Large Companies with Insolvent Balance Sheets
*********
ACP HOLDING: Files Prepackaged Plan in Delaware Bankruptcy Court
----------------------------------------------------------------
ACP Holding Company and its debtor-affiliates filed their
Prepackaged Chapter 11 Plan of Reorganization and an accompanying
Disclosure Statement with the U.S. Bankruptcy Court for the
District of Delaware. A full-text copy of the Debtors' Chapter 11
Plan is available for a fee at:
http://www.researcharchives.com/bin/query?area=0&kwords=acp+holding&hits=1
The Plan contemplates for the substantive consolidation of the
Debtors for the purpose of:
a) eliminating Distributions on account of Intercompany
Claims;
b) deeming the guarantees of NFC and the Subsidiary
Guarantors' obligations arising under the Existing Credit
Agreement, the PIK Note and the Existing Subordinated
Notes, as the case may be, eliminated so that any Claim
against any Debtor and any guaranty thereof executed by
any other Debtor and any joint and several liability of
any Debtor with another Debtor will be deemed to be one
obligation of the deemed consolidated Debtors; and
c) deeming each and every Claim against the Debtors as
asserted against the consolidated Estates of all of the
Debtors and eliminating duplicative Claims against
multiple estates.
The Plan groups claims and equity interests into classes and
outlines how each class will be treated:
Class Description Treatment
----- ----------- ---------
1 Non-Tax Not Impaired
Priority Claims
2 Intercompany Not Impaired
Claims
3 Existing Credit Impaired; Paid in full in Cash
Facility
Claims
4 PIK Note Claims Impaired; Will receive a pro rata
share of:
i) Second Secured Notes with a
principal amount of $13.134 and
Warrants to acquire up to 4.69% of
the New ACP Common Stock and
ii) $45,400 Cash which represents
partial payment of the $99,000
financing fee
5 Other Secured Not Impaired
Claims
6 Existing Impaired; Will receive directly from
Subordinated Neenah in full satisfaction, release,
Note Claims and discharge of all such Claims, its
pro rata share of:
a) $30 Million in Cash,
b) $100 Million of New Subordinated
Notes, and
c) shares representing 100% of the
issued and outstanding shares of
New ACP Common Stock on the
Effective Date as of the Effective
Date
7 ACP Note Impaired; No Distribution
Claims
8 NFC Note Impaired; No Distribution
Claims
9 General Not Impaired
Unsecured
Claims
10 Subsidiary and Not Impaired
Parent
Interests
11 ACP Interests Impaired; No Distribution
Neenah Foundry Company, the operating subsidiary of ACP Holding
Company is headquartered in Neenah, Wisconsin. The Company is in
the business of gray & ductile iron foundries, metal machining to
specifications and steel forging. The Company filed for chapter
11 protection on August 5, 2003 (Bankr. Del. Case No. 03-12414).
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young Jones &
Weintraub P.C., and James H.M. Sprayregen, P.C., Esq., and James
W. Kapp III, Esq., at Kirkland & Ellis LLP represent the Debtors
in their restructuring efforts. When the Company filed for
protection from its creditors, it listed $494,046,000 in total
assets and $580,280,000 in total debts.
ADVANCED LIGHTING: Files Amended Joint Plan in N.D. of Illinois
---------------------------------------------------------------
Advanced Lighting Technologies, Inc., (OTCBB:ADLTQ) has filed an
amended joint plan of reorganization with the US Bankruptcy Court
for the Northern District of Illinois, Eastern Division. The
amended disclosure statement and other definitive documents have
not yet been completed or filed with the Bankruptcy Court. Both
the amended plan and, when filed, the disclosure statement are
subject to revisions by the Debtors before the applicable hearing
dates and are subject to review and approval by the court. The
Debtors can give no assurance that the proposed plan will be
approved by the Bankruptcy Court, that the plan will receive the
required approvals of the creditors and, if necessary, equity
securityholders of the Debtors, or that the Debtors will be able
to implement the proposed plan.
Although the amended plan is subject to amendment and to court and
creditor approval, certain terms of the plan are summarized below
because of their importance to investors in the Common Stock of
ADLT. This release is not, and should not be construed as, a
solicitation of support for the amended plan of reorganization as
and when proposed by the Debtors.
After the Debtors' June announcement of an agreement in principle
for an amended plan of reorganization among the Debtors, the
Creditors' Committee and General Electric Company, the Debtors and
GE were approached by Saratoga Partners IV, LP to propose a new
investment in the Company on its emergence from bankruptcy
proceedings. As a result of these discussions, a Saratoga
Partners' affiliate, Saratoga Lighting Holdings LLC, has purchased
all of GE's equity interests in ADLT.
Under the amended plan, Saratoga Partners will make an $18,000,000
equity investment in ADLT in conjunction with plan confirmation
and the $100,000,000 8% Senior Notes and unpaid interest due on
such Notes will be exchanged for new Senior Notes having a
principal amount of approximately $108,260,000 and maturity in
2010. ADLT will establish an incentive plan that would give key
managers the opportunity to obtain about 9% of the equity of ADLT.
As in the previously announced agreement in principle, the holders
of ADLT's Common Stock, including holders of existing warrants and
options who timely acquire shares pursuant to the terms of such
instruments, will receive, in full and final satisfaction of their
interests, in aggregate $2,850,000 pro rata, less the professional
fees (up to $350,000) incurred by the committee representing the
common shareholders. After the restructuring, it is contemplated
that ADLT will no longer be a company with publicly traded stock.
It is presently expected that ADLT will continue to file periodic
reports with the SEC. Trade creditors will be offered the
alternative of taking payment at the time of confirmation of 85%
of the amount of their claims or being paid in full over a
12-month period.
"Upon confirmation of an amended plan, ADLT will continue its
business operations uninterrupted and will have substantially
improved its liquidity and opportunities for future success," said
ADLT CEO, Wayne Hellman. "All of the Company's vendors and
suppliers will be offered the opportunity to be paid 100% of the
amounts they are owed. Should the Courts approve the amended Plan,
the Company will emerge from bankruptcy with a new infusion of
equity and the strong support of Saratoga Partners."
Hellman continues, "ADLT will continue to be a leading producer
and developer of metal halide lighting products and advanced
material products in the world today."
In other recent developments, the case has been reassigned to the
Honorable Bankruptcy Judge A. Benjamin Goldgar. Information
regarding the filings in this case is available on the court's web
site. ADLT's case is jointly administered under case No. 03-05255.
ADLT is an innovation-driven designer, manufacturer and marketer
of metal halide lighting products, including materials, system
components, systems and equipment. ADLT and certain of its United
States subsidiaries, including APL Engineered Materials, Inc., are
currently operating as debtors-in-possession while the companies
reorganize under Chapter 11 of the United States Bankruptcy Code.
ADLT also develops, manufactures and markets passive optical
telecommunications devices, components and equipment based on the
optical coating technology of its wholly owned subsidiary,
Deposition Sciences, Inc., which is not operating under protection
of the Bankruptcy Code.
AMERCO: Court Approves $300 Million DIP Financing Agreement
-----------------------------------------------------------
AMERCO (Nasdaq: UHAEQ) announced that the United States Bankruptcy
Court has approved AMERCO's $300 million debtor-in-possession
(DIP) financing facility with Wells Fargo Foothill. As previously
announced, Wells Fargo foothill has also provided the Company with
a commitment for $650 million in exit financing to fund the
Company's reorganization plan.
The approval of the DIP facility was supported by the Company's
key creditor constituencies, including the Company's revolving
lender syndicate, led by JP Morgan Chase, and the holders of the
$100 million of notes issued by Amerco Real Estate Company. The
Company has reached agreements with both its revolving lenders and
the AREC noteholders with regard to the treatment of their claims
under the Company's plan of reorganization, and, in return, has
secured the commitment of its revolving lenders and the AREC
noteholders to support the Company's reorganization plan. Under
their respective agreements with the Company, the revolving
lenders and the AREC noteholders are to receive payment of a
majority of their claims in cash funded by the Wells Fargo
Foothill exit facility, with the balance to be represented by new
secured debt in the Company's reorganized capital structure, thus
preserving shareholder value.
"We are extremely pleased to be able to announce the approval of
our DIP facility and the agreements reached with our revolving
lenders and the AREC noteholders. These developments represent
very significant progress toward the successful conclusion of our
overall restructuring efforts," said Joe Shoen, AMERCO's Chairman.
"We will continue to work with our other creditors to reach
consensual agreements for the full payment of their claims. At the
same time, we will aggressively pursue reorganization efforts that
will accomplish the preservation of value for our shareholders and
an emergence from chapter 11 at the earliest practicable date."
AMERCO filed a voluntary petition to restructure under Chapter 11
on June 20, 2003, in the United States Bankruptcy Court, District
of Nevada, the honorable judge Gregg W. Zive, presiding.
AMERICAN RESTAURANT: Reports Weaker EBITDA for Second Quarter
-------------------------------------------------------------
American Restaurant Group, Inc. (S&P, B- Corporate Credit Rating,
Negative) announced its results for the second quarter ended
June 30, 2003.
Total revenues decreased from $74.1 million in the second quarter
of 2002 to $71.2 million in the second quarter of 2003. Same-store
sales decreased by 4.5% in the second quarter of 2003 compared to
2002. A planned reduction in the sale of promoted items resulted
in promotional counts down 2.7% during the second quarter of 2003
compared to the second quarter of 2002. Such promoted items, which
are often special products or specially priced combinations, are
offered at reduced profit margins. During the second quarter of
2003, the Company reduced advertising expense by $1.0 million
compared to the second quarter of 2002. The average dinner check
increased 1.3% from the second quarter of 2003.
Operating profit for the second quarter of 2003 was $4.2 million
or 6.0% of revenues. Operating profit for the prior year's
comparable quarter was $4.9 million or 6.5% of revenues. EBITDA
for the second quarter ended June 30, 2003 was $6.1 million versus
EBITDA for the prior year's comparable quarter of $6.6 million.
Over $0.5 million of the decrease in EBITDA occurred in April.
EBITDA as a percentage of revenues for the second quarter of 2003
was 8.5% compared to 8.9% for 2002.
CEO Ralph Roberts commented:
"Although our comparable-store sales trend was down 4.5% in the
second quarter, I am encouraged because of two factors. First, the
trend is extremely favorable as the direction of the second
quarter is a significant improvement. Second, continuing our
strategy of eliminating less-profitable promotions, roughly half
of the unfavorable variance was the result of discontinuing lower
price-point advertised products.
"Our operators continue to do an excellent job, as our average
check is positive for the quarter and all our margins are in
line."
Spectrum Restaurant Group
On August 6, 2003, we were notified that Spectrum Restaurant
Group, Inc. and its subsidiaries, each filed in United States
Bankruptcy Court a voluntary petition for bankruptcy and
reorganization under Chapter 11. On June 28, 2000, we sold all of
the outstanding stock of the Non-Black Angus Subsidiaries to SRG.
SRG owed the Company $138,000 as of June 30, 2003. As a result of
the bankruptcy, the Company has recorded a reserve of $69,000 or
50% of the outstanding receivable.
In connection with the sale, the Company transferred rights and
obligations to SRG. Management of the Company believes the Company
has no amounts due to SRG. There can be no assurance, however,
that third parties will not attempt to assert claims against the
Company for obligations, including those leases rejected by SRG
through bankruptcy procedures. No reasonable estimate can be made
at this time of the scope or size of any such potential claims.
Because the bankruptcy filing is so recent, we are unaware of how
any remaining obligations of SRG to the Company or other parties
will be resolved, including the length of payment schedules.
There were 109 Black Angus Restaurants operating as of June 30,
2003.
As previously reported in Troubled Company Reporter, Standard &
Poor's lowered its corporate credit and senior secured debt
ratings on casual dining restaurant operator American Restaurant
Group Inc., to 'B-' from 'B'.
The outlook is negative. Los Altos, California-based American
Restaurant Group had about $160 million of debt outstanding as
of September 30 2002.
AMERICAN RESTAURANT: Completes Preferred Share Conversion
---------------------------------------------------------
American Restaurant Group, Inc. (S&P, B- Corporate Credit Rating,
Negative), a California-based casual dining restaurant operator,
announced that as of August 15, 2003, all of the Company's
preferred stock, issued in February 1998 and through subsequent
PIK dividends semiannually thereafter, automatically converted to
common stock. The conversion was completed pursuant to the 2001
Amendment to the Certificate of Designation. As previously
reported, the Company's conversion of its preferred stock has been
an expected event for some time.
With the conversion, the holders of the preferred stock have
exchanged their interest in the preferred stock for substantially
all of the common stock ownership of American Restaurant Group,
Inc. The conversion of the preferred stock to common stock
eliminates a liability for $81.9 million in redeemable preferred
stock and converts it into Paid-in Capital.
ANC RENTAL: Court Approves Asset Sale to Cerberus for $290 Mill.
----------------------------------------------------------------
At least 25 lessors and parties-in-interest objected to the sale
and the resultant assumption and assignment of their contracts
and leases to the successful purchaser (Cerberus Capital, unless
the ANC Rental Debtors and the proposed assignee first satisfy all
of the requirements of Sections 365(b) and (f) of the Bankruptcy
Code.
The Objecting Parties include:
1. Union Station Venture, Ltd.;
2. General Electric Capital Corporation;
3. Metropolitan Nashville Airport Authority;
4. The City of Albuquerque International Sunport;
5. Broward County - Ft. Lauderdale - Hollywood International
Airport;
6. Metropolitan Washington Airports Authority;
7. The City of Oakland, a municipal corporation, acting
through its Board of Port Commissioners;
8. Pensacola Regional Airport-City of Pensacola;
9. Sarasota-Manatee Airport Authority;
10. Tulsa Airports Improvement Trust;
11. Charlotte/Douglas International Airport;
12. Port Authority of New York and New Jersey;
13. Dallas Fort Worth International Airport Board;
14. Port of Portland;
15. Kansas City Missouri Aviation Department;
16. Walt Disney World, Co.;
17. CIT Communications Finance Corporation;
18. Rockwell Firstpoint Contact Corp.;
19. Denver International Airport;
20. City of Palm Springs;
21. National Union Fire Insurance Company of Pittsburgh;
22. San Francisco International Airport;
23. City of Los Angeles, Dept. of Airport;
24. H & W Computer Systems, Inc.; and
25. MBIA Insurance Corporation.
Pursuant to Section 365, a debtor may not assume an executory
contract or unexpired lease if there has been a default in the
contract or lease unless, at the time of assumption, it:
-- cures, or provides adequate assurance that it will promptly
cure, the default;
-- compensates, or provides adequate assurance that it will
promptly compensate, affected contract parties for any
actual pecuniary loss resulting from the default; and
-- provides adequate assurance of future performance under the
contract or lease.
The Objecting Parties complain that the Debtors have not provided
any financial information regarding the proposed purchaser. It
does not appear from that the Purchaser's financial condition and
operating performance is similar to the Debtors' financial
condition and operating performance at the time the Debtors
became the lessee under the Leases, as required by Section
365(b)(3)(A). The Objecting Parties demand strict proof of the
fulfillment of this requirement.
Texas Taxing Authorities Seek Tax Payment
Certain Texas Taxing Authorities seek payment of various taxes
owed to them by the Debtors. The Taxing Authorities object to
the Sale if the payment is not satisfied. Alternatively, the
Taxing Authorities ask the Court to order the Debtors to allocate
a portion of the sale proceeds for the payment of these taxes.
The Texas Taxing Authorities are:
1. Bell County;
2. County of Comal;
3. County of Denton;
4. Longview Independent School District;
5. County of Guadalupe;
6. City of Seguin;
7. City of Selma;
8. Seguin Independent School District;
9. Lateral Roads;
10. Midland Central Appraisal District;
11. County of Taylor;
12. City of Abilene;
13. Abilene Independent School District;
14. County of Williamson;
15. Williamson County RFM;
16. City of Arlington;
17. Bexar County;
18. Cameron County;
19. City of Carrollton;
20. Coppell ISD;
21. Cypress-Fairbanks ISD;
22. Dallas County;
23. City of El Paso;
24. City of Harlingen;
25. Harlingen CISD;
26. Harris County/City of Houston;
27. Hidalgo County;
28. Houston ISD;
29. Humble ISD;
30. Jefferson County;
31. Katy ISD;
32. City of McAllen;
33. Montgomery County;
34. New Braunfels ISD;
35. Nueces County;
36. City of Richardson;
37. Round Rock ISD;
38. Tarrant County;
39. Lubbock Central Appraisal District;
40. Midland County Tax Office;
41. Potter County Tax Office;
42. Randall County Tax Office;
43. Spring Branch Independent School District;
44. Clear Creek Independent School District;
45. Alief Independent School District;
46. Spring Independent School District;
47. Brazoria County;
48. Brazos River Harbor Navigation District;
49. Special Road & Bridge;
50. Brazosport Independent School District;
51. Brazosport College;
52. Velasco Drainage District;
53. Northwest Harris County MUD #21;
54. Northwest Harris County MUD #22;
55. Arlington ISD;
56. City of Lake Jackson;
57. City of Fort Worth;
58. Fort Worth ISD;
59. City of Hurst;
60. Grapevine Colleyville; and
61. Clayton County Tax Commissioner.
Property taxes constitute a valid, liquidated secured claims
against the Debtors' property and are entitled to priority over
other secured claims under Section 506 of the Bankruptcy Code.
The laws of the State of Texas, Property Tax Code, Section
32.05(b), give the tax liens securing the property taxes
superiority over the lien of any other claim or lien against the
property. This tax claim is entitled to priority as a secured
claim, and over other secured claims, pursuant to Bankruptcy Code
Section 506.
These Taxing Authorities have each filed prepetition secured
proofs of claim against the Debtors for ad valorem property taxes
assessed against the Debtors' real and personal property for
years 2001 and prior. The aggregate prepetition tax debt
asserted by the Taxing Authorities is:
Tax Authority Prepetition Tax Debt
------------- --------------------
City of Arlington $10,019
Bexar County 506,684
Cameron County 7,023
City of Carrollton 5,888
Coppell ISD 18,063
Cypress-Fairbanks ISD 23,058
Dallas County 775,444
City of El Paso 42,314
City of Harlingen 10,009
Harlingen CISD 28,576
Harris County/City of Houston 984,167
Hidalgo County 25,966
Houston ISD 168,435
Humble ISD 13,321
Jefferson County 42,617
Katy ISD 111,493
City of McAllen 4,891
Montgomery County 27,661
New Braunfels ISD 12,305
Nueces County 28,087
City of Richardson 22,496
Round Rock ISD 10,720
Tarrant County 714,893
Cure Amount Objections
These entities object to the cure amounts determined by the
Debtors:
Cure Amount Cure Amount
Determined Determined
Entity by the Entity by the Debtors
------ ------------- --------------
Charleston County
Aviation Authority $74,195 $8,347
Port Authority of
New York & New Jersey 2,438,504 not stated
Dallas Fort Worth
International Airport 59,188 not stated
Port of Portland 1,233,000 not stated
* * *
U.S. Bankruptcy Court Judge Walrath affirms the Debtors' business
judgment and approves the sale of substantially all of their
assets to Cerberus Capital Management LP. Cerberus emerged as the
winning bidder at the Auction. Cerberus will assume
$2,060,000,000 of the Debtors' liabilities. Aside from the sale
price, Cerberus will provide the Debtors a line of credit of up to
$150,000,000. The sale is expected to close by September 30,
2003.
The offspring car rental company will be named Vanguard, which
will be managed by William Lobeck as chief executive officer.
Mr. Lobeck used to head National, which became AutoNation Inc.
after a series of buy-outs and mergers. Mr. Lobeck will replace
William Plamondon, ANC Rental's current CEO.
Tribune Business News reports that most of the proceeds of the
sale will be distributed to the Debtors' secured creditors like
Lehman Brothers and Liberty Mutual Insurance Company. Unsecured
creditors like General Motors, Walt Disney World and Perot
Systems stand to gain little from the transaction. (ANC Rental
Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ATCHISON CASTING: Wants Nod to Sign-Up Bryan Cave as Attorneys
--------------------------------------------------------------
Atchison Casting Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Western District of Missouri's for
permission to employ Bryan Cave LLP as their attorneys.
Mark G. Stingley, Esq., leads the engagement. In this retention,
Bryan Cave is expected to:
a) advise the Debtors with respect to their powers and
duties as debtors and debtors-in-possession in the
continued management and operation of their business and
properties;
b) attend meetings and negotiate with representatives of
creditors and other parties in interest;
c) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions
on its behalf, the defense of any actions commenced
against the estate, negotiations concerning litigation
in which the Debtors may be involved, and objections to
claims filed against the estate;
d) prepare on behalf of the Debtors all motions,
applications, answers, orders, reports, and papers
necessary to the administration of the estates;
e) negotiate and prosecute on the Debtors' behalf sales of
assets, plan(s) of reorganization, disclosure
statement(s), and all related agreements and/or
documents, and take any necessary action on behalf of
the Debtors to obtain confirmation of such plan;
f) appear before this Court, any appellate courts, and the
United States Trustee, and protect the interests of the
Debtors' estates before such courts and the United
States Trustee; and
g) perform all other necessary legal services and provide
all other necessary legal advice to the Debtors in
connection with the Chapter 11 cases.
Bryan Cave's 2003 professional hourly rates range from $110 to
$400 per hour.
Atchison Casting Corporation, headquartered in St. Joseph,
Missouri, together with its affiliates, produce iron, steel and
non-ferrous castings and machining for a wide variety of
equipment, capital goods and consumer markets. The Company filed
for chapter 11 protection on August 4, 2003 (Bankr. W.D. MO. Case
No. 03-50965). Mark G. Stingley, Esq., and Cassandra L. Writz,
Esq., at Bryan Cave LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $136,750,000 in total assets and
$96,846,000 in total debts.
ATLANTIC COAST: FMR Corp. Discloses 10.503% Equity Stake
--------------------------------------------------------
FMR Corp., a parent holding company, beneficially owns 4,750,888
shares of the common stock of Atlantic Coast Airlines Holdings,
Inc., which represents 10.503% of the outstanding common stock of
the Company. FMR has the sole power to vote, or to direct the
vote of 410,622 such shares and the sole power to dispose of, or
to direct the disposition of the entire 4,750,888 shares.
Various persons have the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of,
the common stock of Atlantic Coast Airlines Holdings Incorporated.
The interest of one person, FA Mid Cap Stock Fund, an investment
company registered under the Investment Company Act of 1940, in
the common stock of Atlantic Coast Airlines Holdings Incorporated,
amounted to 2,648,700 shares, or 5.855% of the total outstanding
common stock at July 31, 2003.
Atlantic Coast Airlines (S&P/B-/Negative) employs over 4,800
aviation professionals. The common stock of parent company
Atlantic Coast Airlines Holdings, Inc. is traded on the Nasdaq
National Market under the symbol ACAI. For more information about
ACA, visit its Web site at http://www.atlanticcoast.com
BABCOCK & WILCOX: Court to Consider Plan on September 22, 2003
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Louisiana
ruled on the adequacy of the Joint Disclosure Statement prepared
by Babcock & Wilcox Company together with its debtor-affiliates,
McDermott Inc., the Asbestos Claimants' Committee and the Legal
Representative for Future Asbestos Claimants' Committee to explain
the Proposed Third Amended Joint Chapter 11 Plan for the Debtors.
The Court found that the Disclosure Statement contains enough
information as required by 11 U.S.C. Section 1125, and if
creditors will read it, provides the right kind and amount of
information to enable creditors to make informed decisions whether
to accept or reject the Plan.
To be counted, creditors must submit their voting ballots
accepting or rejecting the Plan by August 29, 2003, before 5:00
p.m. Central Daylight Time.
A hearing to consider confirmation of the Plan will convene before
the Honorable Jerry A. Brown, on September 22, at 10:00 a.m.
The Plan calls for issuing certain injunctions that, among other
things, permanently channel claims -- including asbestos personal
injury claims -- into a trust.
Responses or objections to the Plan must be submitted on or before
August 29, as described in the detailed notice included in the
Solicitation Package.
You can obtain the Solicitation Package by (1) calling toll free
1-800-220-4453; (2) visiting babcock.com; or (3)writing to Babcock
& Wilcox Balloting Agent, P.O. Box 1664, Faribault, MN 55021-1664.
Babcock & Wilcox Company, together with its debtor-affiliates,
filed for Chapter 11 protection on February 22, 2000, (Bankr. E.D.
La. Case No. 00-10992). Jan Marie Hayden, Esq., at Heller, Draper,
Hayden, Patrick & Horn, L.L.C., represents the debtors in their
restructuring efforts.
BRIDGE INFORMATION: Plan Administrator Sues CMEX to Recoup $1MM
---------------------------------------------------------------
Scott P. Peltz, the Bridge Information Systems Debtors' Chapter 11
Plan Administrator, pursuant to Sections 547 and 550 of the
Bankruptcy Code, seeks to avoid and recover $1,119,407 in
preferential transfers from Chicago Mercantile Exchange.
According to Jennifer S. Kingston, Esq., at Bryan Cave LLP, in
St. Louis, Missouri, BIS America Administration made these
transfers of money to, or for, the benefit of Chicago Mercantile:
Check Check Check Date Check
Number Date Amount Honored
------ ----- ------ ----------
8100298 11/07/00 $1,804 11/17/00
8102803 12/14/00 396,477 12/26/00
8104294 01/08/01 1,804 01/16/01
8104551 01/11/01 358,474 01/18/01
Furthermore, TLR Administration, Inc. also made these transfers
of money to, or for, the benefit of Chicago Mercantile:
Check Check Check Date Check
Number Date Amount Honored
------ ----- ------ ----------
1517729 11/15/00 $19,795 11/20/00
1518114 12/14/00 152,055 12/20/00
1518441 01/11/01 174,409 01/16/01
1518591 01/25/01 14,589 02/01/01
Ms. Kingston asserts that the Transfers are avoidable because the
transfers:
(a) were of an interest of a Debtor in property;
(b) were to, or for, the benefit of a creditor;
(c) were for, or on account of, an antecedent debt owed by
the Debtors before the transfers were made;
(d) were made while the Debtors were insolvent;
(e) were made on, or within, 90 days before the Petition Date;
and
(f) enabled Chicago Mercantile to receive more than it would
have received if:
-- these cases had been filed as Chapter 7 cases;
-- the transfers had not been made; and
-- the Chicago Mercantile had received payment of the debt
to the extent provided by the provisions of the
Bankruptcy Code.
On November 8, 2002, Mr. Peltz demanded Chicago Mercantile to
return the Transfers. However, Chicago Mercantile refused.
Ms. Kingston argues that Mr. Peltz is entitled to recover the
Transfers from Chicago Mercantile because pursuant to Section
550(a)(1), Chicago Mercantile is the initial transferee of the
Transfers. (Bridge Bankruptcy News, Issue No. 48; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
BUDGET GROUP: UK Administrators Balk at BRAC and BRACC's Claims
---------------------------------------------------------------
During the ordinary course of Budget Group Inc., and its debtor-
affiliates' prepetition business operations, BRAC Group Inc.,
BRACC and BRACII engaged in certain intercompany transfers giving
rise to alleged intercompany claims. On September 27, 2002,
BRACII filed its schedules of assets and liabilities. The
Schedules reflect $122,000,000 in intercompany obligations and
further provide that the amounts are "undisputed", "non-
contingent" and "liquidated."
Based on information gathered by the UK Administrators concerning
the Intercompany Claims, it appears that as of December 2000, the
alleged BRACII intercompany payable was $284,000,000. Sometime
near the end of calendar year 2000, it appears that BRACII
capitalized nearly $184,000,000 of this amount, thereby reducing
the alleged intercompany obligation to $100,000,000. Furthermore,
in March 2001, BRACII capitalized an additional $31,800,000 of the
alleged intercompany obligation. These capitalization
transactions were recorded in BRACII's books and records.
As of June 30, 2001, BRAC Group Inc.'s books reflected an
intercompany receivable allegedly owing from BRACII for
$4,330,000. Additionally, as of the Petition Date, BRAC Group
Inc.'s books reflected that this intercompany receivable had
increased to $87,300,000. This amount is inclusive of the
$15,000,000 direct cash transfers made by BRAC Group Inc. to
BRACII from June 30, 2001 through June 30, 2002.
The UK Administrators object to the scheduled Intercompany Claims
of BRAC Group Inc. and BRACC and ask the Court to re-characterize
or, in the alternative, equitably subordinate the claims.
Re-characterization
Mark D. Collins, Esq., at Richards, Layton & Finger PA, in
Wilmington, Delaware, relates that re-characterization is
appropriate where circumstances show that a debt transaction was
actually an equity contribution. Courts considering the issue of
re-characterization will focus on whether a debt actually exists.
To the extent a court determines that the advance of money is
equity and not debt, the court may re-characterize the claim.
The effect of re-characterization is subordination of the claim
as a proprietary interest because the corporation repays capital
contributions only after satisfying all other obligations of the
corporation.
The Official Committee of Unsecured Creditors seeks to represent
all of the relevant Debtor estates other than the BRACII estate
with respect to, inter alia, all intercompany claims between
BRACII and BRACC.
The Intercompany Claims
The absence of notes or other instruments of indebtedness is a
strong indication that advances are capital contributions and not
loans. BRAC Group Inc., BRACC and BRACII did not formally
execute any documentation or loan instrument with respect to the
Intercompany Claims. It appears that the only evidence that BRAC
Group Inc. and BRACC could assert in support of their position
that the Intercompany Claims were in the nature of intercompany
indebtedness is the fact that the transfers are listed in
BRACII's Schedules as valid intercompany claims. Other than the
Schedules, the UK Administrator is not aware of any
communications, written or oral, between the representatives of
BRAC Group Inc., BRACC and BRACII that would support the
conclusion that the parties even attempted to identify or define
the nature or status of the Intercompany Claims.
Mr. Collins contends that it would be highly unusual for
sophisticated corporate entities to engage in an arm's-length
loan arrangement in the absence of definitive documentation
setting forth the parties' rights and obligations to the
transaction. The fact that the Intercompany Claims arise from
transactions between related corporate entities does not serve to
relieve BRAC Group Inc. and BRACC of the obligation to protect
their interests via the completion of appropriate documentation.
It must be assumed that BRAC Group Inc. and BRACC were more than
capable to protect their interests to the extent they intended to
act as lenders to BRACII.
Indeed, given the parent/subsidiary relationship between the
parties and the fact that the board of directors and corporate
officers of the companies are substantially identical, it stands
to reason that BRAC Group, Inc. and BRACC possessed significant
leverage to compel BRACII to document any intercompany loans to
the extent the parties deemed it necessary or desirable. At the
very least, BRAC Group Inc.'s and the BRACC's failure to document
the transfers that gave rise to the Intercompany Claims is an
indication that the transfers were capital infusions as opposed
to loans.
The UK Administrators are not aware of any communications,
written or oral, between the parties that would reveal the
parties' contemporaneous intent with respect to the transfers
giving rise to the Intercompany Claims.
While intent is difficult to discern without the benefit of
formal discovery, the parties' conduct is illuminating. First,
the parties did not formally document the transactions in
question. Failure to document the transactions is inconsistent
with commonly accepted lending practices. Second, on at least
two occasions, BRACII capitalized the intercompany obligations
allegedly owing to BRAC Group Inc. and BRACC. This further
establishes the parties' intent and understanding to treat these
intercompany "transfers" as capital contributions instead of as
debt.
In the absence of direct evidence of intent, the nature of
transaction may be inferred from its objective characteristics,
including the presence or absence of:
-- debt instruments;
-- collateral;
-- interest provisions;
-- repayment schedules or deadlines;
-- book entries, recording loan balances or interest payments;
-- actual payments; and
-- any other attributes indicative of an enforceable
obligation to repay the sums advanced.
The absence of a fixed maturity date and a fixed obligation to
repay is an indication that advances are capital contributions
and not loans. There is no evidence of any documentation or
agreement between BRAC Group Inc., BRACC and BRACII regarding the
fixing of a maturity date with respect to repayment of the
transfers giving rise to the Intercompany Claims. Indeed, there
is no evidence that BRACII was required, or expected, to ever
repay the amounts at all. There is no evidence:
1. of any documentation or agreement between BRAC Group Inc.,
BRACC and BRACII setting forth the rights of BRAC Group
Inc. and BRACC with respect to enforcing repayment of the
Intercompany Claims by BRACII;
2. that the parties intended that BRACII would repay any
funds; and
3. that BRACII was required to pay interest with respect to
the Intercompany Claims.
At the time of the transfers giving rise to the Intercompany
Claims, there was no certainty that the funds transferred would
be repaid in the event of BRACII's insolvency or liquidation.
There is no indication or evidence that BRAC Group Inc. or BRACC
attempted to perfect or assert any security interest in BRACII's
assets in connection with the transfers and BRACII did not
establish a sinking fund or any other means of repayment of the
Intercompany Claims. The absence of any asserted security
interest or other means of satisfying the Intercompany Claims
indicates that the advances were equity contributions and not
loans.
The UK Administrators believe that it is appropriate to re-
characterize the Intercompany Claims as equity contributions, as
a result of these factors:
-- the absence of any definitive loan documentation regarding
the transfers giving rise to the Intercompany Claims;
-- the dearth of any evidence indicating the parties' intent
to create debt pursuant to the transfers;
-- the absence of any documentation or agreement regarding the
fixing of a maturity date with respect to repayment of the
intercompany obligations;
-- the absence of evidence indicating any requirement that
BRACII repay the Intercompany Claim;
-- the presence of an exact correlation between the ownership
interests of the equity holders and their proportionate
share of the alleged debt;
-- the absence of any security interest being granted for the
Intercompany Claim;
-- the inability of BRACII to ever satisfy the Intercompany
Claims; and
-- the prior capitalization of these same intercompany
obligations.
Given the magnitude of the Intercompany Claims and the detailed
factual issues involved, the UK Administrators believe that the
Court should establish a discovery and briefing schedule so that
the factual and legal record with respect to this proceeding may
be developed fully. (Budget Group Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
BURLINGTON IND.: Plan Filing Exclusivity Extended to Sept. 30
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of Burlington
Industries, Inc. admits that:
-- the Debtors' case is a fairly large and complex case,
-- the Debtors are paying their bills as they become due, and
-- the fact that the Plan has been filed would seem to
indicate that at least some progress has been made towards
reorganization.
However, Donald J. Detweiler, Esq., at Saul Ewing, in Wilmington,
Delaware, argues that these factors alone are insufficient to
create cause to grant the Debtors' request to extend their
exclusive periods. As a result of multiple extensions of the
exclusivity periods, the Debtors have had a year and eight months
to propose a plan of reorganization and to successfully solicit
votes.
* * *
Pursuant to Section 1121(d) of the Bankruptcy Code, Judge Newsome
extends the Debtors':
(a) Exclusive Filing Period through and including
September 30, 2003; and
(b) Exclusive Solicitation Period through and including
November 30, 2003. (Burlington Bankruptcy News, Issue No.
37; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CALICO COMMERCE: Calif. Court Confirms First Amended Joint Plan
---------------------------------------------------------------
Calico Commerce, Inc., announced that on August 14, 2003, the
United States Bankruptcy Court for the Northern District of
California, San Jose Division, entered its Order Confirming First
Amended Joint Plan of Reorganization (Dated June 30, 2003) which
confirms the Plan filed by Calico Commerce, Inc. and the Official
Committee of Equity Security Holders appointed in the case.
The Plan provides for the payment in full of all undisputed, non-
contingent claims of creditors against the Company, with all
remaining assets to be distributed to the Company's stockholders.
Distributions will be made to all stockholders of record as of the
Record Date, which is defined in the Order as the close of
business on August 26, 2003. Payment to creditors of undisputed,
non-contingent claims will be made on or shortly after the
effective date of the Plan; distributions to stockholders are
expected to be made in October 2003.
The Company's stock transfer ledgers shall be closed on, and no
transfers of the Company's Common Stock shall be recognized on its
books after the Record Date.
As previously announced, the Plan also provides for resolution of
the purported class claim filed in the Company's bankruptcy case
by the plaintiffs in the IPO laddering class action lawsuit
pending in the United States District Court for the Southern
District of New York, by transferring jurisdiction and venue over
the class action claim for settlement or judgment to the District
Court, and limiting the sources of recovery on the claim to the
proceeds of directors' and officers insurance policies issued to
the Company and to certain claims assigned to a litigation trust
for the plaintiffs' benefit.
After distribution to creditors and equity holders, and entry of
the final decree in the bankruptcy case, the Company expects to
dissolve.
COMDIAL CORP: June 30 Balance Sheet Upside-Down by $1.5 Million
---------------------------------------------------------------
Comdial Corporation (OTC Bulletin Board: CMDZ), a leading provider
of IP telephony and unified communications solutions, reported
financial results for the quarter ended June 30, 2003.
Net sales for the three months ended June 30, 2003 were $13.0
million compared to $13.0 million for the same period in 2002.
Earnings before interest, taxes, depreciation and amortization for
the three months ended June 30, 2003 was $1.2 million compared to
$0.7 million for the same period in 2002. Net loss for the three
months ended June 30, 2003 was $1.1 million, compared to $2.0
million for the same period in 2002. Net loss on a pro forma
basis for the three months ended June 30, 2002, which excludes
$0.9 million of non-operational gains from restructurings, was
$3.0 million.
"We are pleased with Comdial's solid performance in the second
quarter, especially during a period of difficult economic
conditions in the global economy and Comdial's marketplace,"
stated Nick Branica, Chief Executive Officer. "Comdial's
innovative suite of products and services, combined with our
strong customer base, has contributed to the successful turn-
around of Comdial's operating performance."
"Comdial's cash flow from operations continued to improve during
the second quarter of 2003," said Ken Clinebell, Chief Financial
Officer. "This improvement primarily relates to higher sales and
gross margins earned from Comdial's award-winning product, the FX
II, driven partially by IP networking applications. Additionally,
Comdial continues its emphasis on streamlining the cost of
operations."
Net sales for the six months ended June 30, 2003 were $25.3
million compared to $25.3 million for the same period in 2002.
EBITDA for the six months ended June 30, 2003 was $1.8 million
compared to $1.4 million for the same period in 2002. Net loss
for the six months ended June 30, 2003 was $2.4 million compared
to net income of $10.1 million for the same period in 2002. Net
loss on a pro forma basis for the six months ended June 30, 2002,
which excludes $15.7 million of non-operational gains from
restructurings, was $5.6 million.
Comdial Corporation's June 30, 2003 balance sheet shows a total
shareholders' equity deficit of about $1.5 million.
CONSOLIDATED FREIGHTWAYS: TransForce Wants to Buy Canadian Unit
---------------------------------------------------------------
TransForce Income Fund (TSX:TIF.UN), a leader in the Canadian
transportation and logistics industry, has formulated a bid to
purchase substantially all the assets of Canadian Freightways
Limited and certain of its subsidiaries. Canadian Freightways is
headquartered in Calgary, Alberta.
Canadian Freightways is owned by Consolidated Freightways
Corporation and Consolidated Freightways Corporation of Delaware,
which are under Chapter 11 bankruptcy protection in the United
States. The Canadian subsidiaries of Consolidated Freightways
continue to operate as a going concern and are not under
bankruptcy protection in the U.S. or in Canada.
TransForce's bid is being made pursuant to court-approved bidding
procedures in the context of an orderly liquidation of the assets
of the Canadian subsidiaries owned by Consolidated Freightways as
part of the Chapter 11 bankruptcy proceedings in the United
States.
In order to become binding on TransForce, the bid must be accepted
by Consolidated Freightways and must be approved by the United
States Bankruptcy Court in California. The hearing date for court
approval has been scheduled for the end of August.
If its bid is successful, TransForce intends to operate Canadian
Freightways as an independent division with current management and
staff of approximately 1,500.
TransForce Income Fund -- http://www.transforce.ca--
headquartered in Montreal, Quebec, is one of Canada's leading
transport and logistics companies. TransForce, through its
businesses, operates in four well-defined business segments: Less
Than Truckload and Parcel Delivery, Truckload, Specialized
Truckload and Logistics and Warehousing Services. TransForce
offers its services across North America with a focus on Eastern
Canada.
TransForce's trust units (TIF.UN) are listed on the Toronto Stock
Exchange.
CORPORATE MEDIA: Files for Chapter 7 Liquidation in Tennessee
-------------------------------------------------------------
Americana Publishing, Inc. (OTC Bulletin Board: APBH) said its
Corporate Media Group, Inc. subsidiary has filed a Chapter 7
voluntary bankruptcy proceeding in the Federal Eastern District
Bankruptcy Court of Tennessee to dispose of the tape and CD
duplication company. Americana said the action would have a
material, positive effect by eliminating $2.1 million in debt from
its balance sheet. The filing will not impact the Company's cash
flow.
"The Tennessee-based subsidiary was an attempt to vertically
integrate our Company," said George Lovato, Jr., Americana
Publishing, Inc. chairman and chief executive officer. "However,
after we acquired the firm the company never performed to
expectations and despite significant cash infusions and management
initiatives, we were unable to curtail losses.
"The good news is that we suspended operations of the subsidiary
quite some time ago and eliminated the drain on our cash flow,"
Lovato added. "The last vestige of this ill-fated venture was the
more than $2 million in debt left by CMG which will be wiped off
Americana's consolidated balance sheet upon completion of the
proceedings. With this behind us we can concentrate our efforts on
our rapidly growing audio book business and getting our recently
launched subsidiary, Americana Entertainment, Ltd., off the
ground. We anticipate this organically grown subsidiary, when
completely funded, to have a positive impact on our operating
earnings."
Americana Publishing, Inc. is an up-and-coming leader in the
nearly $2 billion audio books industry. The Company currently has
approximately 450 book titles and should have well over 500 by
year-end, which it sells through the Internet, retail stores,
libraries as well as major truck stop distributors. The Company
also has a growing print book division and just launched a film
production and distribution division, Americana Entertainment,
Ltd.
Americana Publishing, Inc. is a vertically integrated multimedia
publishing company whose primary business is publishing and
selling audio books, print books and electronic books in a variety
of genres. Sales of its products are conducted through the
Internet as well as a distribution network of more than 35,000,
retail stores, libraries and truck stops. According to the Audio
Publishers Association, annual sales of audio books are nearly $2
billion. Currently 42 million Americans listen to audio books and
58 percent of that group listen to more than 2 per month. The
median income of listeners is $54,900 while the median age of male
listeners is 41.9 and female listeners is 44.2 years.
CORPORATE MEDIA GROUP: Voluntary Chapter 7 Case Summary
-------------------------------------------------------
Debtor: Corporate Media Group, Inc.
Suite 605
8203 Willow Place South
Houston, Texas 77064
Bankruptcy Case No.: 03-15217
Type of Business: Duplication services for cassette, video, CD,
CD-ROM, and floppy disc
Chapter 7 Petition Date: August 5, 2003
Court: Eastern District Of Tennessee (Chattanooga)
Judge: R. Thomas Stinnett
Debtor's Counsel: Forrest R. Carlton, II
303 San Maneo NE
Suite 104A
Albuquerque, NM 87108
DAVEL COMMS: June 30 Net Capital Deficit Balloons to $95 Million
----------------------------------------------------------------
Davel Communications, Inc. (OTCBB:DAVL) announced financial
results for the three-month and six-month periods ended June 30,
2003 and the default on the Company's $125.1 million secured debt,
as described below. The financial results in 2003 include the
results of PhoneTel Technologies, Inc., which have been reflected
in the Company's operations since July 24, 2002, the date on which
the Company acquired PhoneTel.
Total revenues for the second quarter were $19.7 million
(including revenue for PhoneTel) compared to $17.4 million last
year. Total revenues increased by $2.3 million, or 13%, compared
to the second quarter of 2002. This increase reflects a 26%
increase in the average number of payphones in service as a result
of the PhoneTel acquisition, offset by the continuing impact of
wireless communications on payphone usage and revenues per phone.
The decline in revenues per phone has contributed to the continued
strategic removal of low revenue phones. A significant reduction
in the number of payphones is expected in the third quarter of
2003 in an effort to improve profit margins on the Company's
payphones.
Operating expenses for the second quarter increased by $5.5
million, or 29%, over last year primarily due to the additional
payphones and related expenses resulting from the PhoneTel merger.
In the second quarter of 2003, the Company completed an evaluation
of its payphone assets and goodwill and recognized impairment
losses of $27.1 million to write-down the carrying values of such
assets to their fair values. The Company's operating loss
increased from $1.8 million in the second quarter of 2002 to $32.1
million in 2003 primarily as a result of these asset impairment
charges and the increase in operating expenses.
The net loss for the second quarter was $33.7 million, compared to
a net loss of $6.5 million in 2002. This increase was due to the
increase in the Company's operating loss described above offset in
part by a $3.1 million reduction in interest expense. This
decrease in interest expense related to the Company's debt-for-
equity exchange immediately prior to the PhoneTel merger in which
the Company exchanged approximately $219 million of indebtedness
for approximately 380.6 million shares of common stock. Following
the debt-for-equity exchange and the PhoneTel merger, the Company
had approximately 615.0 million shares of common stock
outstanding.
Total revenues for the six months ended June 30, 2003 were $42.6
million compared to $34.7 million in the prior year. This increase
includes a $3.9 million adjustment to dial-around revenue in the
first quarter of 2003 relating to the sale of a portion of the
Company's bankruptcy claim due from WorldCom for $4.9 million.
Without this sale, total revenues increased by $4.0 million, or
12%, compared to the first half of last year. Operating expenses
increased by $11.1 million over last year primarily due to the
PhoneTel merger. Operating expenses in both year-to-date periods
reflect net reductions in telephone charges of $0.8 million in
2003 and $3.3 million in 2002, primarily due to regulatory refunds
received from local exchange carriers under the FCC's "New
Services Test". The Company's operating loss increased from $5.1
million in the first six months of 2002 to $35.3 million in 2003
primarily as a result of the second quarter 2003 asset impairment
charges. Interest expense decreased by $6.0 million in 2003 due to
the debt-for-equity exchange in 2002. The net loss for the first
half of 2003 was $38.5 million, compared to a net loss of $14.3
million in 2002.
At June 30, 2003, the Company's balance sheet shows a working
capital deficit of about $130 million, and a total shareholders'
equity deficit of about $95 million.
The Company was not in compliance with certain financial covenants
under its secured credit agreement, which has an aggregate
outstanding balance of $125.1 million as of June 30, 2003. In
addition, the Company did not make certain payments totaling
approximately $2.0 million due on July 1 and August 1, 2003 and is
in default on this debt. The Company is evaluating certain
strategic alternatives available to it and is discussing the
potential deferral of required debt payments and waivers of the
financial covenant defaults with its lenders. There can be no
assurance that the Company's lenders, who own more than 90% of the
Company's Common Stock, will not declare this debt to be
immediately due and payable, or take such other action, including
instituting insolvency proceedings, to exercise their rights under
the secured credit facility. Under such circumstances, the Company
may not be able to continue as a going concern. This debt has been
classified as a current liability in the Company's June 30, 2003
consolidated balance sheet.
Founded in 1979, Davel is the largest independent provider of pay
telephones and related services in the United States with
operations in 48 states and the District of Columbia. Davel serves
a wide array of customers operating principally in the shopping
center, hospitality, health care, convenience store, university,
service station, retail and restaurant industries.
DIAMETRICS MEDICAL: June 30 Balance Sheet Upside-Down by $1.2MM
---------------------------------------------------------------
Diametrics Medical, Inc., (OTCBB:DMED) announced financial results
for the second quarter and six months ended June 30, 2003.
For the second quarter ended June 30, 2003, net sales totaled $2.8
million, compared with sales of $5.3 million for the comparable
three-month period last year, and with $2.2 million for the first
quarter of 2003. Revenue for the quarter was comprised of 76%
intermittent testing products and 24% continuous monitoring
products. Disposable products represented 55% of revenue,
including approximately 326,000 intermittent testing cartridges
and 1,250 continuous monitoring sensors. Hardware sales included
over 200 IRMA analyzers and 14 continuous monitoring systems.
The decline in second quarter sales from 2002 was primarily the
result of the termination of Diametrics' exclusive distribution
agreement with Philips Medical Systems on November 1, 2002, and
the subsequent and ongoing transition to Diametrics' new
distributor and direct sales force channel model. Revenue growth
of 30% from first quarter 2003 reflects the continued development
of the Company's new distribution channels and particular strength
in China, where the IRMA system is being used in SARS therapy.
The Company's net loss for the second quarter was $1.2 million and
included a net gain of $1.3 million as the result of modification
of the Company's Senior Secured Fixed Rate Notes in April 2003.
Net loss available to common shareholders was $2.2 million, which
includes a one-time deemed dividend on the preferred stock the
Company issued in May 2003, resulting from a beneficial conversion
feature of that offering. Net loss in the second quarter of 2002
was $2.1 million.
For the six months ended June 30, 2002, net sales were $5.0
million, versus $10.7 million for the comparable period a year
ago. The net loss for the six-month period was $4.1 million, and
net loss available to common shareholders was $5.1 million. Net
loss for the same period in 2002 was $3.2 million.
The Company's June 30, 2003 balance sheet shows a total
shareholders' equity deficit of about $1.2 million.
"We are very pleased with our quarterly revenue growth and reduced
operating losses since last year's fourth quarter, which was our
first quarter of operations post termination of our exclusive
distribution agreement with Philips Medical Systems," said David
B. Kaysen, President and CEO of Diametrics. "Sales through our new
distribution channels for the second quarter were 74% of total
revenue, compared to 52% in first quarter of this year and 27% in
fourth quarter 2002."
Business Update
On July 18, 2003, Diametrics announced that it had entered into an
Asset Purchase Agreement with International Technidyne
Corporation, a wholly owned subsidiary of Thoratec Corporation
(Nasdaq:THOR), to sell substantially all of the assets of its
intermittent testing business, primarily consisting of the IRMAr
SL Blood Analysis System and related cartridges for a broad range
of critical care, point-of-care blood analysis. The sale is
subject to approval by Diametrics' shareholders and customary
closing conditions. Assuming Diametrics' shareholder approval, the
transaction is expected to close during third quarter 2003. This
transaction will allow Diametrics to focus on the development of
its continuous monitoring business.
The terms of the Asset Purchase Agreement require ITC to pay
Diametrics approximately $5.2 million in cash, which may be
adjusted downward if any purchase price adjustments are required,
and to assume up to $550,000 of related liabilities. Of this $5.2
million cash payment, $780,000 will be placed in escrow by ITC for
180 days after the closing of the transaction to fund
indemnification obligations, if any, that may arise.
Financial Guidance
Upon receipt of shareholder approval for the sale of the
intermittent testing business, financial results of that business
segment will be recorded as a discontinued operation of the
Company until the sale transaction is closed. The close is
expected by the end of the third quarter, but specific timing is
not yet known and is subject to shareholder approval. The
intermittent testing business will also go through a transition in
its distribution channels in preparation for the sale. Additional
restructuring is expected to occur in the remaining Diametrics
business to bring the cost structure in line with the smaller
company going forward, focused on the continuous monitoring
business.
Given these factors, it is difficult to accurately forecast the
quarterly results of the Company for the remainder of 2003.
Revenue is expected to decline in the second half of 2003,
compared to the first half, due to the transition and sale of the
intermittent business. The operating loss is also expected to
decline, due to the sale of that business, but the decline may be
offset by restructuring costs incurred to lower the cost structure
of the Company's remaining business going forward.
The Company's cash balance on June 30, 2003 was $1.3 million. The
Company is carefully controlling costs and is pursuing interim
financing options to bridge it to completion of the intermittent
testing business sale, if necessary. The proceeds from that sale
are expected to be sufficient to fund the operations for
approximately the next 12 months, during which time the Company is
expecting to pursue additional financing to fund its operations
over the long term.
Diametrics Medical is a leader in critical care technology. The
Company's products improve the quality of healthcare delivery by
providing immediate, accurate and cost-effective blood and tissue
diagnostic information. Primary products include the IRMA(R)SL
point-of-care blood analysis system; the TrendCare(R) continuous
blood gas monitoring system, including Paratrend(R) and
Neotrend(R) for use with adult, pediatric and neonatal patients;
the Neurotrend(R) cerebral tissue monitoring system; and the
Integrated Data Management System. Additional information is
available at the Company's Web site, http://www.diametrics.com
EZENIA! INC: June 30 Balance Sheet Insolvency Widens to $2.3MM
--------------------------------------------------------------
Ezenia!(R) Inc. (OTC Bulletin Board: EZEN), a leading provider of
real-time collaboration solutions for corporate and government
networks and eBusiness, reported its operating results for its
fiscal second quarter and six months ended June 30, 2003.
As reported, the Company generated revenues of $2.1 million for
the second quarter of 2003, compared to $3.2 million for the
corresponding period of the previous year. For the six months
ended June 30, 2003, reported revenues were $4.5 million, as
compared with $5.9 million for the six months ended June 30, 2002.
Net loss for the fiscal second quarter and six months ended
June 30, 2003 was $644,000 and $766,000, respectively, compared to
a reported net loss for the quarter and six months ended June 30,
2002 of $8.5 million and $20.4 million, respectively. The net
loss for the quarter and six months ended June 30, 2002 included
the effect of a write-down of inventory of approximately $2.3
million, and a provision for impairment of long-lived assets of
approximately $2.1 million. In addition, the reported net
loss for the six-month period ended June 30, 2002 included a
write-off of goodwill of $10.7 million related to the adoption of
a new accounting standard.
Ezenia! Inc.'s June 30, 2003 balance sheet shows a total
shareholders' equity deficit of about $2.3 million.
"Our feelings are mixed with respect to the results for the second
quarter and first six months of 2003," noted Khoa Nguyen, Ezenia!
Chairman and CEO. "As expected, we have seen a decline in sales of
traditional videoconferencing products and services. This was
particularly steep in the second quarter, so much so that our
total net revenues reported this quarter were actually lower than
in the first quarter of 2003. We are encouraged to see a 32%
increase in reported revenues for the InfoWorkSpace(TM) software
product in the second quarter of 2003 over the same period last
year, and a 43% increase in the six-month period year over year.
Combined with the cost savings realized in our most recent
restructuring, we are confident that the direction we are taking,
which is to build our business towards profitability based on
sales of InfoWorkSpace, irrespective of the less predictable sales
and operating results for our legacy videoconferencing products,
is the right one. We were also pleased to reach an agreement with
General Dynamics (NYSE: GD), which closed shortly after the end of
the second quarter 2003, whereby in connection with an amendment
to a software development agreement, GD agreed to terminate a put
agreement with Ezenia!, resulting in the cancellation of our $2.9
million liability."
"However, the road ahead remains very challenging," continued Mr.
Nguyen. "InfoWorkSpace bookings for this quarter fell short of
expectations. A significant reason for this shortfall was the
lengthy delay in the issuance of the interim and final reports
from the Joint Interoperability Test Command and the Defense
Information System Agency certifying that InfoWorkSpace Version
2.5 has successfully complied with the Interoperability
requirements as an enhancement to the Department of Defense
Collaborative Tool Suite. We were also disappointed that we have
not been able to increase our gross profit margin on InfoWorkSpace
sales in as significant a way as we had hoped. Because of these
factors, our cash used in operations year to date is ($749,000),
exacerbating the already challenging situation regarding the
Company's liquidity and capital resources available at the end
of 2002. In that regard, in addition to focusing on generating
positive cash flow from operations during the remainder of 2003,
the Board of Directors for Ezenia! will be exploring whether there
are other external debt or equity financing alternatives which may
become available."
The Company also announced that it had initiated legal proceedings
against Datacraft Mexico, S.A. de CV, in an attempt to recover
approximately $280,000 that is overdue to the Company. The amount
unpaid represents approximately $255,000 overdue with respect to
Datacraft's purchase of videoconferencing equipment that was
resold to one of Datacraft's customers in Mexico, Comision Federal
de Electricidad, and another approximately $25,000 related to
consignment equipment never returned by Datacraft. Ezenia! will
be seeking recovery of the amounts withheld by Datacraft for both
the videoconferencing equipment order and the consignment item,
plus unspecified damages. Said Mr. Nguyen, "Our second quarter
2003 results were heavily dependent on Datacraft fulfilling its
contractual payment obligation to us for the videoconferencing
equipment order. The impact of not receiving this payment on our
reported second quarter 2003 revenue, ending cash balance, and, to
the extent of our gross profit on this transaction, reported net
loss, was severe. It is with deep regret and profound
disappointment that we have been forced to take this action
against our former reseller and partner, Datacraft. However, given
the acute liquidity and capital resource constraints the Company
is facing, we have concluded there is unfortunately no better
option but to move forward with this proceeding."
Ezenia! Inc. (OTC Bulletin Board: EZEN), founded in 1991, is a
leading provider of real-time collaboration solutions, bringing
new and valuable levels of interaction and collaboration to
corporate networks and the Internet. By integrating voice, video
and data collaboration, the Company's award-winning products
enable groups to interact through a natural meeting experience
regardless of geographic distance. Ezenia! products allow
dispersed groups to work together in real-time using powerful
capabilities such as instant messaging, whiteboarding, screen
sharing and text chat. The ability to discuss projects, share
information and modify documents allows users to significantly
improve team communication and accelerate the decision-making
process. More information about Ezenia! Inc. and its product
offerings can be found at the Company's Web site,
http://www.ezenia.com
FLEXTRONICS: Inks Pact to Acquire Microcell for $80 Mil. + Debts
----------------------------------------------------------------
Flextronics (Nasdaq: FLEX) (S&P, BB+ Corporate Credit Rating,
Stable), has signed an agreement to acquire Microcell Group, a
leading original design manufacturer of wireless Global System for
Mobile Communications, General Packet Radio Service, and Enhanced
Data Rates for Global Systems for Mobile Communications Evolution
handset products. Microcell's operations include product creation
centers in Finland and Denmark, administrative offices in
Switzerland and USA, and a manufacturing operation through a joint
venture in Nanjing, China.
The agreement provides for an initial cash purchase price to the
shareholders of Microcell of approximately $80 million, plus the
assumption of approximately $120 million of net liabilities. The
purchase price is subject to adjustments for contingent
consideration, based upon the acquired business achieving
specified levels of earnings through December 2005. Microcell
shareholders may, under certain circumstances, elect to receive a
portion of the purchase price and contingent consideration in
Flextronics shares rather than cash.
The acquisition will strengthen Flextronics' mobile phone ODM
capabilities by adding Microcell's competence in the GSM/GPRS/EDGE
field. Microcell is especially strong in the product creation
area with over 300 product creation engineers that have a proven
track record of providing mobile phone solutions to leading OEMs.
"We are pleased to become a part of Flextronics' world-class
organization," said Anders Torstensson, Chief Executive Officer of
Microcell. "We have worked hard to become a leading ODM company in
the mobile phone sector, and by teaming with Flextronics, we will
be better positioned together to offer existing and potential
customers a complete service offering."
"In addition to increasing capabilities for our telecom OEM
customers, this acquisition will bolster Flextronics' ODM
initiative in the areas of GSM, GPRS and EDGE mobile phone
technologies," said Michael E. Marks, Chief Executive Officer of
Flextronics. "The two companies have had a close working
relationship for the past few years during which Flextronics has
been a major supplier to Microcell. This long-standing
relationship gave us unique insight into their management team,
customer relationships and technical capabilities while we
evaluated this potential combination."
"I'm proud that Flextronics has chosen to make this investment in
Microcell and that we will play such an important role in their
ODM business efforts," says Jyrki Halikainen, Chairman of the
Microcell Group. "This is foremost a recognition of our employees,
know-how and skills."
The acquisition is expected to close in October and is subject to
a number of customary conditions, including regulatory approvals
and approval by the shareholders of Microcell.
The acquisition is not expected to have a significant impact on
sales and is expected to have a neutral to slightly positive
effect on the operating profits of Flextronics from the
acquisition closing date through its fiscal year ending March 31,
2004. For the subsequent fiscal year it is expected to be
additive to operating profits.
Headquartered in Singapore, Flextronics is the leading Electronics
Manufacturing Services 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,
please visit http://www.flextronics.com
Microcell designs, develops and produces mobile communication
devices. Microcell's first-class technological ability to produce
its own solutions enables it to act as a global partner to the
largest Original Equipment Manufacturers. For more information,
please http://www.microcell.fi
GENERAL MEDIA: Wants More Time to File Schedules and Statements
---------------------------------------------------------------
General Media, Inc., and its debtor-affiliates are seeking an
additional extension of time from the U.S. Bankruptcy Court for
the Southern District of New York to file their schedules of
assets and liabilities, statements of financial affairs and lists
of executory contracts and unexpired leases required under 11
U.S.C. Sec. 521(1).
The Debtors note that in order to prepare the Schedules and
Statement, they must gather a substantial amount of information
from their books, records and documents. In addition, that
information is dispersed among the Debtors' different locations.
Due to the voluminous amount of information, its location, the
nature of their businesses and a reduced workforce, the Debtors
anticipate that they will need an additional 45 days beyond the
prescribed 15 days to accurately and 15 days to accurately and
completely assemble the Schedules and Statements. The Debtors ask
the Court for an extension until October 11, 2003.
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.
GENTEK INC: Asks Court to Fix Solicitation & Tabulation Protocol
----------------------------------------------------------------
GenTek Inc., and its debtor-affiliates ask the Court to approve
certain procedures for the solicitation and tabulation of votes to
accept or reject their Joint Reorganization Plan. In addition,
the Debtors want Judge Walrath to approve:
* the forms applicable to the solicitation and plan noticing
process;
* voting materials and rules applicable to holders of claims
in various Classes;
* the proposed record date for Plan voting;
* the deadline for submission of ballots; and
* the deadline for filing objections to the Plan and the
hearing date to consider confirmation of the Plan.
Voting Agent
The Debtors employed Logan & Company, Inc. to serve as the
claims, noticing and balloting agent in their Chapter 11 cases.
Consistent with this engagement, the Debtors propose to utilize
Logan as their voting, solicitation and noticing agent with
respect to the Plan.
Voting Record Date
Rule 3017(d) of the Federal Rules of Bankruptcy Procedure
provides that the record date for determining the "holders of
stock, bonds, debentures, notes and other securities" entitled to
receive the ballots and other solicitation and voting materials
is the date the disclosure statement is approved or another date
fixed by the Court for a cause.
In the context of public debt and equity securities, the Debtors
believe that advance notice of the record date is necessary to
assemble record ownership lists as of the record date. Thus, the
Debtors propose to establish August 20, 2003 as the Record Date.
Ballots
The ballot forms for holders of Existing Lender Secured Claims in
Class 4, Tranche B Lender Secured Claims in Class 5, Other
Secured Claims in Class 6, General Unsecured Claims in Class 7,
and Trade Vendor Claims in Class 8 are derived from Official Form
No. 14 but include certain modifications necessary to facilitate
voting by large numbers of creditors and to meet the particular
requirements of the Plan. The forms of beneficial owner and
master ballots for Bondholder Unsecured Claimholders in Class 9
reflect developments in the law and practice with respect to
voting by holders of public debt securities. The ballot forms
for holders of California Tort Claims in Class 10 and
Pennsylvania Tort Claims in Class 11 reflect certain special
circumstances.
Solicitation of Votes
in Classes 4, 5, 6, 7, 8 and 9
Classes 4, 5, 6, 7, 8 and 9 are entitled to cast a vote to accept
or reject the Debtors' Plan. In this regard, during the
exclusive solicitation period, the Debtors propose to send, by
first class mail, to creditors in Classes 4, 5, 6, 7, 8 and 9 a
solicitation package that will contain:
* approved solicitation letters;
* notice of the Confirmation Hearing and Objection Deadline;
* a copy of the Disclosure Statement;
* a copy of the Plan;
* an appropriate Ballot;
* a pre-addressed postage-prepaid return envelope; and
* other information the Court may direct.
These particular Claimholders are permitted to vote and thus,
will receive solicitation packages:
(a) Holders, as of the Voting Record Date, of Class 4 and
Class 5 Claims, based on JPMorgan Chase Bank's records;
(b) Holders, as of the Voting Record Date, of Class 6,
Class 7 and Class 8 Claims who:
-- have filed timely proofs of claim or untimely proofs
of claim that have been allowed by the Court in
the amounts asserted in the proofs of claim provided
that these claims:
* have not been disallowed by a Court order entered on
or before the Voting Record Date;
* are not the subject of an objection pending as of the
Voting Record Date; or
* do not allege claims that are wholly contingent or
wholly unliquidated; or
-- have not filed timely proofs of claim but whose claims
are scheduled in the Debtors' schedules but are
not designated as contingent, unliquidated or disputed
or listed as zero or unknown in amount, in the amounts
disclosed in the schedules; and
(c) Record and beneficial holders of Class 9 Claims.
To avoid duplication and reduce expenses, voting creditors who
have filed duplicate claims, or who have asserted guarantee or
other multi-debtor claims for the same underlying liability that
are classified in the same class, will be entitled to receive
only one solicitation package and one Ballot. As to any claims
covered by insurance, the Debtors will limit the voting amount
assigned to the uninsured portions of those claims. This will
prevent holders of insured claims from having voting rights that
are disproportionate to the Debtors' actual exposure on the
claims.
The Debtors anticipate that they will require up to seven
business days after the approval date of the Disclosure Statement
to distribute the notices required under Bankruptcy Rule 2002,
including the mailing of Solicitation Packages.
Solicitation Letters
The Debtors will transmit to voting Claimholders a solicitation
letter from their management. The letter will encourage the
Claimholders to vote in favor of the Plan. The Debtors
anticipate that the Creditors' Committee, the Existing Lenders
and possibly other parties-in-interest may seek to send their own
solicitation letters encouraging votes either in favor or against
the Plan. The Debtors' solicitation letter is subject to Court
approval and will be included in the solicitation materials sent
to voting creditors.
Treatment of Contingent, Unliquidated or Disputed
Claims in Classes 6, 7 and 8
The Debtors propose that creditors in Classes 6, 7 or 8 whose
claim is (i) asserted as wholly unliquidated or wholly contingent
in a proof of claim filed before the Voting Record Date, or (ii)
asserted in a proof of claim as to which an objection to the
entirety of the claim is pending as of the Voting Record Date not
be permitted to vote on the Plan.
Temporary Allowance of Disputed Claims
The Debtors intend to distribute to holders of Disputed Claims a
package that includes:
* a Notice of Disputed Claim Status;
* approved letters soliciting Plan acceptance or rejection;
* the Disclosure Statement;
* the Plan; and
* other information.
The Disputed Claim Notice will inform the Claimants that their
claims have been designated as contingent, unliquidated or
disputed. The Notice also informs the Claimants that since they
have not made a formal request with the Court seeking permission
to vote on the Plan, they are precluded from submitting a vote
with respect to their claims. The Notice will instruct the
Claimants to contact Logan to receive a Ballot in case a Rule
3018(a) Motion is timely filed. The Claimants may file a Rule
3018(a) Motion for the temporary allowance of their claims for
voting purposes only.
By this motion, the Debtors also ask the Court to establish
September 24, 2003, 4:00 p.m., as the deadline to file Rule 3018
Motions. Any party timely filing and serving a Rule 3018 Motion
will be provided a Ballot and be permitted to cast a provisional
vote on the Plan. However, if the Debtors and the party
concerned are unable to resolve the issues raised by the 3018
Motion before the deadline to submit Plan votes, then at the
hearing on the confirmation of the Plan, the Debtors will ask the
Court to determine whether the provisional Ballot will be counted
as a vote. To avoid holding separate hearings on the 3018
Motions, the Debtors suggest that the Court consider all 3018
Motions at the Confirmation Hearing.
The Debtors reserve the right to request, on notice, that any
vote cast by a Disputed Claimholder be disallowed and not
counted. If no request is filed, the Disputed Claimholder will
be entitled to vote in accordance with its proof of claim.
Notice of Non-Voting Status
Under the Plan, Administrative Claims and Priority Tax Claims are
unclassified, non-voting claims entitled to treatment in
accordance with Section 1129(a)(9) of the Bankruptcy Code.
Classes 1, 2 and 3 creditors are considered unimpaired and are
also not entitled to vote on the Plan.
The Debtors propose to mail to the holders of these claims a
Notice of Non-Voting Status. The Notice summarizes the treatment
provisions of the Plan as applicable to the Classes of claims or
interests held by the Unimpaired Holders. The Non-Voting Status
Notice package provides:
-- a notice of the filing of the Plan;
-- a notice of the approval of the Disclosure Statement;
-- instructions regarding the various ways to obtain or view
copies of the Disclosure Statement and Plan and other
documents;
-- information regarding the Confirmation Hearing; and
-- directions for filing Plan confirmation objections.
The Debtors assert that the Notice of Non-Voting Status satisfies
the requirements of Bankruptcy Rule 3017(d) with respect the
Unimpaired Holders. The Debtors believe that they no longer have
to provide a copy of the Disclosure Statement and Plan to the
Unimpaired Holders.
The Debtors reserve the right to send to the holders of
Administrative Claims, Priority Tax Claims, and Class 1 Claims, a
copy of the Disclosure Statement and Plan, if any of these claims
may later be the subject of an objection to status or priority.
If successful, the Objection would render the claims either
General Unsecured Claims in Class 7 or Trade Vendor Claims in
Class 8.
Notice of Deemed Rejecting Status
Under the Plan, Creditors in Classes 12, 13, 14, 15 and 16 will
not receive a distribution from or retain any claim against or
interest in the Debtors. Accordingly, these Creditors are deemed
to have rejected the Plan. Solicitation of votes from these
claimholders is unnecessary, but nevertheless, the Debtors
propose to provide them a Notice of Deemed Rejecting Status. The
Notice will summarize the treatment provisions of the Plan that
apply to these Classes. The Notice will include:
-- notice of the filing of the Plan;
-- notice of the approval of the Disclosure Statement;
-- instructions on how to obtain copies of the Disclosure
Statement, the Plan, and other documents;
-- information regarding the Confirmation Hearing; and
-- directions for filing Plan confirmation objections.
Notice to Contract or Lease Parties Without Claims
Parties to certain of the Debtors' executory contracts and
unexpired leases may not have scheduled or filed claims, pending
the disposition of their contracts or leases by assumption or
rejection, and thus may not be in any group. To ensure that
these parties nevertheless receive notice of the Plan, the
Debtors propose to send a Contract or Lease Party Notice, which
describes the provisions of the Plan relating to the treatment of
executory contracts and unexpired leases. The Notice will also
include the same documents and information as can be found in the
Notice of Non-Voting Status and Notice of Deemed Rejecting
Status.
Procedures for Holders of Public Securities
The Debtors' public debt and equity securities consist of:
(i) the 11% Senior Subordinated Notes due 2009, which are
classified in Class 9 as Bondholder Unsecured Claims; and
(ii) the GenTek common stock, which is classified in Class
16 as GenTek Interests.
These Classes will receive the Solicitation Package and Notice of
Deemed Rejecting Status.
Because of the complexity associated with identifying and
reaching beneficial owners of public debt and equity securities,
many of which hold their securities in brokerage accounts and
through several layers of ownership, the Debtors propose that all
known record holders be required to provide Logan with the
addresses of the beneficial holders in electronic format no later
than August 25, 2003. The Debtors will send the Solicitation
Package to Class 9 holders, and the Notice of Deemed Rejecting
Status to Class 16 Claimholders. These mailings will be made no
later than the Solicitation Commencement Date to each beneficial
holder as of the Voting Record Date and to each Record Holder
Logan identified.
Record Holders who have failed to provide Logan with addresses of
beneficial holders in electronic format will promptly distribute
the solicitation materials or the appropriate notices to the
beneficial owners for whom they hold securities so that these
beneficial owners will receive these materials and be given the
opportunity to exercise their rights in a timely fashion.
The Solicitation Packages to be distributed by the Record Holders
to beneficial holders of Bondholder Unsecured Claims will include
a Ballot and a return envelope addressed to the requisite Record
Holders. The Record Holders will then summarize the individual
votes on a Master Ballot to be provided by the Debtors. The
Record Holders will return the Master Ballot to Logan by the
Voting Deadline. As an alternative, the Record Holders can opt
to pre-validate the Beneficial Owner Ballots so that the
beneficial owners can return them directly to Logan.
No Notice or Transmittal Necessary
No Solicitation Packages or other notices will be sent to:
(a) holders of claims listed on the schedules that have
already been paid in full or are authorized to be paid in
full;
(b) holders of claims listed on the schedules as contingent,
unliquidated or disputed or as zero or unknown in amount,
if the holders did not file proofs of claim; and
(c) any person to whom the Debtors mailed a notice of the
commencement of the case and first meeting of creditors or
a notice of the bar date for filing proofs of claim that
was returned and marked "undeliverable" or "moved -- no
forwarding address" or for a similar reason, unless the
Debtors have been informed in writing of the person's new
address.
Solicitation Packages and all ballot and notice forms will be
mailed for informational purposes to the U.S. Trustee and other
parties on the 2002 Service List maintained by the Debtors.
Voting Deadline
The Debtors ask the Court to set October 1, 2003, 4:00 p.m., as
the deadline by which all ballots must be received by Logan.
However, the Debtors further request that they be permitted to
extend the Voting Deadline as facts and circumstances may
require.
Tabulation Procedures
To serve as guidelines for the Debtors and Logan and to avoid
inconsistent results, the Debtors will adopt these tabulation
procedures:
(A) Votes Counted
Any Ballot timely received and that contains sufficient
information to identify the Claimant and that is cast as an
acceptance or rejection of the Plan will be counted and deemed as
an acceptance or rejection of the Plan. Ballots timely received
and indicate neither an acceptance nor a rejection of the Plan,
or that indicates both an acceptance and rejection of the Plan
will be counted as an acceptance.
(B) Votes Not Counted
These Ballots will not be counted or considered for any purpose
in determining whether the Plan has been accepted or rejected:
* Any Ballot received after the Voting Deadline unless the
Debtors have granted an extension with respect to this
Ballot;
* Any Ballot that is eligible or contains insufficient
information to permit the identification of the Claimant;
* Any Ballot cast by a person or entity that does not hold a
claim in a class entitled to vote on the Plan;
* Any Ballot cast for a claim designated as unliquidated,
contingent or disputed or as zero or unknown and for which
no Rule 3018(a) Motion has been filed by the motion
deadline; or
* Any unsigned Ballot.
(C) Changing Votes
Whenever two or more Ballots are timely cast voting the same
claim, the last Ballot received will be deemed to reflect the
voter's intent and thus to supersede the other Ballots.
(D) No Vote Splitting
Claim splitting is not permitted and creditors who vote will have
to vote all of their claims within a particular class.
(E) Withdrawal of Ballots
Any Claimant who has delivered a valid Ballot for the acceptance
or rejection of the Plan will be permitted to withdraw the vote
by delivering a written notice of withdrawal to Logan at any time
before the Voting Deadline. A valid notice of withdrawal must:
* contain the description of the claim to which it relates and
the aggregate principal amount represented by the claim;
* be signed by the withdrawing party in the same manner as the
Ballot being withdrawn; and
* contain a certification that the withdrawing party owns the
claim and possesses the right to withdraw the vote sought to
be withdrawn.
(F) No Voting by Facsimile
Original executed Ballots must be returned to Logan. Logan is
authorized to reject any Ballot that is sent via facsimile.
(G) Conversion of Currency
To facilitate Logan in the tabulation of votes, claim amounts
designated on proofs of claim in Canadian or other non-U.S.
currency will be converted to U.S. dollars, based on the exchange
rate existing as of the Petition Date.
(H) Counting Ballots
The procedures for tabulating votes cast with respect to the 11%
Senior Subordinated Notes by Class 9 creditors include:
(1) Banks, brokerage firms or agents electing to use the
Master Ballot voting process are required to retain for
inspection by the Court the Ballots cast by beneficial
owners for one year after the Voting Deadline;
(2) To avoid double counting, votes cast by beneficial owners
of 11% Notes through a Record Holder and transmitted
by means of a Master Ballot, will be applied against the
positions held by the Record Holder with respect to the
11% Notes. Votes submitted by a Record Holder on a Master
Ballot will not be counted in excess of the position
maintained by the bank or brokerage firm on the Voting
Record Date in the 11% Notes;
(3) To the extent that conflicting votes or overvotes are
submitted on a Master Ballot, Logan will attempt to
resolve the conflict or overvote before the Voting
Deadline to ensure that as many votes are accurately
tabulated as possible;
(4) To the extent that overvotes on a Master Ballot are not
reconcilable before the Voting Deadline, Logan will count
the votes in the same proportion as the votes submitted on
the Master Ballot that contained the overvote, but only to
the extent of the applicable bank's or brokerage firm's
position on the Voting Record Date in the 11% Notes;
(5) Banks and brokerage firms are voting on behalf of the
beneficial owners for whom they hold securities and the
Master Ballots that they fill-out merely reflect the
voting instructions given by those beneficial owners.
Thus, Record Holders will be authorized to complete
multiple Master Ballots, and the votes reflected will be
counted, except for those that are duplicative of other
Master Ballots. If two or more Master Ballots submitted
are inconsistent in whole or in part, the latest Master
Ballot timely received will supersede and revoke the
other; and
(6) To avoid inconsistent treatment, each beneficial owner of
an 11% Note is deemed to have voted the full principal
amount of its claim, notwithstanding anything to the
contrary on any Ballot.
Plan Confirmation
(i) Confirmation Hearing & Objection Deadline
The Debtors suggest that the Court set the Plan Confirmation
Hearing on October 8, 2003. The Debtors also suggest October 1,
2003, or seven days before the Confirmation Hearing, as the
deadline for filing Plan confirmation objections.
(ii) Confirmation Hearing Notice
The Confirmation Hearing Notice will be posted at the Debtors'
website at http://www.gentek-global.com/ The Notice will
contain, among others, relevant dates regarding the Plan
Objection Deadline and the Confirmation Hearing as well as
directions for filing confirmation objections.
The Debtors will publish a short-form notice of the Plan
Objection Deadline and the Confirmation Hearing in:
* The New York Times (national edition);
* The Contra Costa Times;
* The Philadelphia Inquirer;
* News Journal;
* Chicago Tribune;
* Detroit Free Press and News;
* Houston Chronicle;
* The Globe and Mail (Canada);
* The Toronto Star (Canada); and
* The Gazette-Montreal (Canada).
Special Solicitation Procedures
Due to certain unique circumstances, the Debtors want to adopt
special solicitation procedures with respect to the holders of
Class 10 California Tort Claims and Class 11 Pennsylvania Tort
Claims.
1. Class 10 California Tort Claims
California Tort Claims include Claims based on, arises out of or
relates to any alleged chemical release occurring at or from the
Debtors' facility located in Richmond, California. Class 10
Claimholders have filed over 73,000 proofs of claim in these
cases -- some in behalf of themselves while some filed through
lawyers. Of the 73,000, the Debtors believe that there are
substantial numbers of duplicate proofs of claim. Although the
Debtors dispute all these proofs of claim and believe them to be
without merit, no formal objection has been filed yet. The Plan
provides the opportunity for the claims to be liquidated in
California state court. Thus, if the Plan is accepted by the
requisite amount of claims and number of Claimants in Class 10, a
formal objection will not be necessary. In the meantime,
however, the Debtors tell the Court that the voting rights of the
Claimants will be addressed.
The Debtors relate that due to the way in which the different
lawyers completed the proof of claim forms, it would be
inequitable to apply the recognized rule that a claimant votes
the amount of its claim unless liquidated, contingent or
disputed. The Debtors maintain that each lawyer had asserted an
identical claim amount for his clients, which underscores the
lack of merit to the claims. Thus, certain Claimants would have
disproportionate voting rights depending on which lawyer filed
their proofs of claim. Under these circumstances, the Debtors
propose that each Class 10 California Tort Claimant holds a
$1,000 claim for plan voting purposes.
Lawyers who certify that they are authorized to vote on behalf of
their clients will each receive one complete Solicitation Package
with a Ballot. Attached to each Ballot will be a list of the
represented Claimants and a space to designate a vote on the Plan
on behalf of each claimant. These lawyers will also receive a
Lawyer Direction Notice, which requires each lawyer, within three
business days of receipt, to certify either that:
(a) they have full power to vote on behalf of the individuals
in whose name they filed proofs of claim and that no
solicitation materials need be provided to their clients;
or
(b) their client should be allowed to cast their own votes on
the Plan and that, as the lawyer, they will:
-- immediately provide Logan with their clients' home
address; or
-- commit to deliver to each client the approved
solicitation materials immediately after receipt of the
materials from Logan.
For those Claimants whose lawyers are not voting on their behalf,
the Debtors intend to send a Summary Class 10 Notice, which will
contain a short, plain-language summary of the Plan and a Ballot.
For any claimant who desires more detail, the Summary Class 10
Notice includes instructions on accessing the complete Disclosure
Statement and Plan.
California Tort Claimants who filed their own proofs of claim,
rather than through a lawyer will each receive a complete
Solicitation Package.
2. Class 11 Pennsylvania Tort Claims
Pennsylvania Tort Claims include Claims based on, arises out of
or relates to any alleged chemical release occurring at or from
the Debtors' facility located in Marcus Hook, Pennsylvania and
North Claymont, Delaware. At least 80 proofs of claim have been
filed on behalf of Pennsylvania Tort Claimholders -- all of which
have been filed by the law firm Golomb & Honik. The Debtors
dispute all of these claims.
The Debtors relate that all the individual proofs of claim were
filed as unliquidated but not less than a specified dollar
amount. The specified dollar amounts differ from claimant to
claimant, which the Debtors presume to be "on some rational basis
devised by Golomb & Honik." Although the claims are
unliquidated, rather than treating the claims as Disputed Claims
as to which a Rule 3018 Motion is required, the Debtors propose
to allow these claims to vote in the dollar amounts specified in
the proofs of claim. The Debtors contend that since the claims
are separately classified in Class 11, permitting a vote in the
specified amounts will not impact any other Classes.
Golomb & Honik filed six class proofs of claim -- two of which
are duplicates and must be expunged, while the other four appear
to be identical and allege the same liability. Although the
class proofs of claim are not authorized on any basis, the
Debtors intend to allow each Claim for $5,220,000 for voting
purposes only.
Otherwise, the Debtors will follow the solicitation procedures
that are applicable to Classes 4, 5, 6, 7 and 8. Specifically,
each Pennsylvania Tort Claimant will receive a Solicitation
Package, which will be delivered to Golomb & Honik. The firm
will be allowed to provide Logan with the home address of each
claimant so that the Solicitation Packages will be sent directly
to the addresses provided. If the packages are sent to Golomb &
Honik, the firm will be required to either distribute the
packages to its clients or, if authorized, vote and return the
Ballots on behalf of their clients. (GenTek Bankruptcy News, Issue
No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)
GILAT SATELLITE: June 30 Net Capital Deficit Shrinks to $3.5MM
--------------------------------------------------------------
Gilat Satellite Networks Ltd. (Nasdaq:GILTF), a worldwide leader
in satellite networking technology, reported its results for the
quarter ended June 30, 2003.
Revenues were US$52.1 million for the second quarter of 2003, an
increase of US$0.5 million over the US$51.6 million result for the
same period in 2002, as well as an increase of US$1.0 million over
the US$51.1 in the first quarter of 2003. Operating loss for the
second quarter was US$31.5 million and net loss was US$36.2
million or US$2.79 per share. The results above include a total of
US$21 million in write-offs associated with Statement of
Accounting Standard #144 "Accounting for the Impairment or
Disposal of Lived Assets" - SFAS #144, (US$18.9 million), and
charges relating to the company's restructuring process (US$2.1
million). The total cash and cash equivalents during the quarter
decreased by US$2.5 million leaving the Company with a stable cash
position.
At June 30, 2003, Gilat Satellite Networks' balance sheet shows a
total shareholders' equity deficit of about $3.5 million, as
compared to staggering $173 million six months ago.
During the quarter, a new management team and Board of Directors
was elected, headed by Shlomo Rodav as the new Chairman of the
Board, and Oren Most as the new President and CEO. With the
Company's financial restructuring process successfully completed,
Gilat also embarked on an effort to streamline the Company's
operations in order to increase efficiency and reduce costs. This
effort included a variety of measures including organizational and
structural changes and office consolidation leading to increased
efficiency as well as a reduction in the worldwide workforce by
13%, significantly reducing the company's labor costs by 30%.
Management is optimistic that the combination of the new strategy
it is currently finalizing and putting into place, as well as the
steps taken to streamline the Company's cost structure and improve
operations, together with leveraging Gilat's strong technology and
competitive position in the global marketplace, will lead to
improved economies and strengthen the Company's position as one of
the industry leaders.
The Company announces that Erez Antebi, COO of the Company, has
resigned effective September 15, 2003. The Company also announces
the resignation of board member, Mr. Doron Steiger.
Second Quarter Events
Gilat announces Alcatel subsidiaries join SATLYNX, R&D agreement
with SES Global, a major agreement in Bulgaria, an important
deployment in Australia and a continued strong deal flow for its
Spacenet subsidiary.
During the quarter, the Company announced a series of agreements
that contributed to the Company's continued strong deal flow and
demonstrated the growing confidence in the Company and in its
technology.
-- In June, Gilat and SES Global, the joint founding shareholders
of SATLYNX, Europe's premier 2-way satellite broadband services
provider, announced that Alcatel Space and SkyBridge LP,
subsidiaries of Alcatel, have joined the company and made an
investment which will yield up to a 17.9% stake in the venture.
-- Separately, SES Global and Gilat also executed an agreement to
fund the development of a low cost, Ka-band version of Gilat's
popular Skystar 360E family product line.
-- Also in Europe, Gilat signed an important agreement with the
Bulgarian company TRANSAT to deploy a Skystar 360E hub and VSAT
network with sites throughout Bulgaria. The network will
provide data connectivity to 450 gas stations, 17 corporate
regional branches, 30 bank branches and other applications.
-- Australia's major telecom Optus, was hired to run an IDL
network for the Australian government initiative to deliver
education to small rural towns, isolated schools, and remote
homesteads in New South Wales and the Northern Territory, using
Gilat's Skystar 360E VSAT platform. Gilat is providing a 310-
site, two-way satellite communications network to deliver
broadband Internet services to these rural communities, plus
540 more VSATs to Australia's world renowned 'School of the
Air'.
Spacenet Continues Strong Deal Flow
-- Gilat's subsidiary, Spacenet, has been awarded a five-year
contract by Rent-Way, Inc. to provide a two-way satellite-based
IP network to all of Rent-Way's 750+ stores. Rent-Way is one of
the nation's largest operators of rental-purchase stores. Rent-
Way's Connexstar Enterprise network is designed to support a
wide variety of services, including point-of-sale and inventory
control applications, as well as Internet and intranet access.
-- Spacenet has been selected by RTM Restaurant Group Inc. to
provide a broadband VSAT network to their Arby's restaurants
and other quick service restaurant locations. The five-year
commitment calls for Spacenet's Connexstar Enterprise service
to be deployed at 825 restaurant locations for a range of
applications including credit authorization, point-of-sale and
store polling as well as intranet-based back office
applications.
-- Spacenet signed an agreement with The Kroger Co. to provide
remote VSAT and base-band hub technology for a nationwide two-
way satellite network. The network will initially link multiple
video studios with Fred Meyer grocery store locations through a
broadband connection allowing high-speed Video on Demand
delivery and Voice over IP return for Interactive Distance
Learning and videoconferencing applications.
-- Spacenet has been chosen by Golden Corral Corporation to deploy
the Connexstar CX-500 commercial-grade, broadband satellite
service to its chain of Golden Corral family restaurants. This
service will be used by Golden Corral to run a broad range of
IP-based applications including high-speed credit
authorization, point-of-sale polling and web-based, back-office
applications.
-- Spacenet has signed an agreement with leading auto parts
retailer Genuine Parts Company to provide a high-speed
satellite communications network for its NAPA auto parts retail
stores. GPC's network will utilize Connexstar Enterprise, a new
variant of Spacenet's popular Connexstar service. The agreement
calls for Spacenet's VSAT service to be deployed at a minimum
of 750 of GPC's more than 5,000 locations.
-- Spacenet has also been selected by International Dairy Queen,
Inc. as its exclusive provider of satellite-based broadband
connectivity for its restaurant brands, including Dairy
Queen/Brazier(R) restaurants, throughout the United States. The
Connexstar service is a key component of Dairy Queen's plans to
enhance point-of-sale applications and link all franchise
locations to corporate headquarters.
Gilat Satellite Networks Ltd., with its global subsidiaries
Spacenet Inc., Gilat Latin America and rStar Corporation, is a
leading provider of telecommunications solutions based on Very
Small Aperture Terminal satellite network technology -- with
nearly 400,000 VSATs shipped worldwide. Gilat, headquartered in
Petah Tikva, Israel, markets the Skystar Advantage(R), DialAw@y
IP(TM), FaraWay(TM), Skystar 360E(TM) and SkyBlaster (a) 360 VSAT
products in more than 70 countries around the world. Gilat
provides satellite-based, end-to-end enterprise networking and
rural telephony solutions to customers across six continents, and
markets interactive broadband data services. Gilat is a joint
venture partner with SES GLOBAL, and Alcatel Space and SkyBridge
LP, subsidiaries of Alcatel, in SATLYNX, a provider of two-way
satellite broadband services in Europe. Skystar Advantage, Skystar
360E, DialAw@y IP and FaraWay are trademarks or registered
trademarks of Gilat Satellite Networks Ltd. or its subsidiaries.
Visit Gilat at http://www.gilat.com
HYTEK MICROSYSTEMS: Independent Auditors Air Going Concern Doubt
----------------------------------------------------------------
The reports of Hytek Microsystems Inc.'s independent auditors in
the fiscal 2002 financial statements included explanatory
paragraphs stating that there is substantial doubt with respect to
the Company's ability to continue operating as a going concern.
At March 29, 2003, the Company had a short-term note payable of
$315,000 outstanding under the renegotiated line of credit as
compared to $335,000 at December 28, 2002. At March 29, 2003, the
Company was not in compliance with certain covenants in relation
to its tangible net worth and quick ratio per the terms of the
note. On May 15, 2003, the bank converted the line of credit to a
short-term note in the amount of $295,000 bearing an interest rate
of 6.250% per annum with a maturity date of May 15, 2004. The
Company is required to make monthly minimum payments of $13,000
beginning June 15, 2003 with a final payment in the amount of
approximately $165,000 on or before the maturity date. It is
management's intention to accelerate principal payments to reduce
or eliminate the final balloon payment.
As of June 28, 2003, the Company is in violation of its quick
ratio covenants and minimum tangible net worth. The Company is
required to maintain a minimum tangible net worth of not less than
$4,302,000 and maintain a quick ratio of 1.10 to 1.00. Currently
the Company's quick ratio is .993 and tangible net worth is
$4,135,000. If the Company fails to maintain covenants, the bank
reserves the right to call the note, which would adversely affect
the Company's ability to continue operations.
The Company had a net loss of $40,000 in the quarter ended
June 28, 2003 and a net loss of $207,000 for the six-month period
ended June 28, 2003. This compares to net income of $122,000 in
the quarter ended June 29, 2002 and net income of $318,000 for the
six-month period ended June 29, 2002.
The Company had $295,000 in cash and cash equivalents at June 28,
2003 as compared to $446,000 at December 28, 2002 and $271,000 at
March 29, 2003. The net decrease of $151,000 from year-end is
comprised of $30,000 used in operating activities, $68,000 used
for the purchase of capital equipment and $53,000 used in
financing activities. The increase in cash and cash equivalents
during the quarter ended June 28, 2003 consisted primarily of
$101,000 refunded from amended Federal tax returns for the periods
of 1996, 1997, and 1999, adjusted by a net loss of $40,000,
$115,000 provided by other operating activities, $18,000 used to
purchase capital equipment and $33,000 used for principal payments
on the note payable. While the Company's cash position has
improved, any failure to collect existing accounts receivable in a
timely manner, a negative outcome of pending legal proceedings or
further decline in future revenue levels will have a serious
adverse affect on liquidity and results of operations.
Accounts receivable were $1,736,000 at June 28, 2003, as compared
to $1,490,000 at December 28, 2002. The increase is a result of
higher shipments in the last month of the quarter ended June 28,
2003 compared to the last month of the quarter ended December 28,
2002. At June 28, 2003, approximately 11% of total receivables
were in excess of 60 days, as compared to approximately 19% at
December 28, 2002 and 17% at March 29, 2003. The Company expects
to receive payment on certain of these past due receivables and
has reduced its allowance for doubtful accounts to $160,000 as
compared to approximately $208,000 at March 29, 2003. Should the
financial stability of the customers owing money to the Company
deteriorate, it may be necessary to make additional provisions for
bad debts, which would adversely affect the Company's cash and
liquidity position.
INSCI CORP: Reports Weaker Fiscal 1st Quarter Financial Results
---------------------------------------------------------------
INSCI Corp. (OTC Bulletin Board: INSS), a leading enterprise
content management solutions provider, announced results for its
fiscal 2004 first quarter ended June 30, 2003, by reporting its
eighth consecutive quarter of profitability.
President and CEO Henry F. Nelson said that product sales were up
36 percent and gross margins increased strongly in this fiscal
year's first quarter, compared to the prior fiscal year period,
even though total revenues in the fiscal 2004 first quarter dipped
8 percent due to a reduction in certain service related revenues.
During the first quarter of the current fiscal year, the Company
also continued expansion of its Alliance Partner program and
introduced a number of key new products.
Total revenues for the first quarter of fiscal 2004 were $2.1
million, compared to total revenues of $2.3 million for the same
period in the prior fiscal year. Product revenues for this fiscal
year's first quarter increased to $1.1 million from $793,000 in
the prior year period, reflecting rising demand for the Company's
enterprise content management products. Service revenues were
$1.0 million compared to $1.5 million in the first quarter of
fiscal 2003 with the decline partially due to lower service
revenues as the Company experienced a decline in large-scale
conversion contracts. Additionally, prior year maintenance
revenues included additional revenue recognized in the quarter due
to the collection of a substantially past due contract. Gross
margins for the fiscal 2004 first quarter increased to 86 percent
from 82 percent in the prior fiscal year's quarter as result of
cost containment and increased productivity.
Operating income for the first quarter of this fiscal year was
$165,000, compared to $378,000 for the prior year period, which
reflects year-over-year growth in sales and marketing and product
development expenses as the Company has invested in new sales and
marketing initiatives and the launch of a number of new products.
Net income for the first quarter ended June 30, 2003, was $58,000,
compared to $244,000 for the same period last fiscal year.
"Achieving product growth in a challenging and uncertain economic
climate is reflective of the market demand for content management
solutions such as those offered by INSCI," Nelson said. "We are
executing our growth strategy with expanded sales and marketing
efforts to drive product revenue and better leverage the Company's
service offerings."
In the fiscal 2004 first quarter, the Company expanded its
Alliance Partner program through a joint marketing partnership
with Handysoft, an industry recognized business process management
solutions provider, and broadened its European distribution
through the addition of value added reseller Ifin Sistemi, an
Italy-based document management systems integrator.
"We broadened our product offerings during the first quarter of
this fiscal year with the release of ESP+infostore for broad
digital asset support, and ESP+messenger, a notification solution
for on-line statement presentment," Nelson added. "These new
solutions substantially expand our product capabilities within the
enterprise content management market."
INSCI Corp. -- whose March 31, 2003 balance sheet shows a net
capitalization of about $3 million -- is a leading provider of
integrated enterprise content management solutions with over a
decade of experience providing advanced and cost effective
solutions. The Company's highly scalable ESP+ Solution Suite is
designed for the capture and long-term preservation of mass
volumes of wide-ranging digital assets, with Web-based presentment
capability for such content as banking and financial statements,
customer bills, explanation of benefits, e-mail, digital voice,
and transaction confirmations. By bringing this business-critical
content together and assuring future retrieval, INSCI enables its
use in e-commerce, customer service, regulatory compliance, or
cost-reducing business functions. The Company's innovative
technology provides a robust platform to meet the unique demands
of high-volume Internet-based content retrieval by thousands of
users. INSCI has strategic partnerships and relationships with
such companies as Xerox, Unisys, PFPC and EMC. For more
information about INSCI, visit http://www.insci.com
INTERLIANT: Disclosure Statement Hearing Convenes on Aug. 28
------------------------------------------------------------
On July 28, 2003, Interliant, Inc. (n/k/a I Sucessor Corp.) and
its debtor-affiliates filed their Chapter 11 Reorganization Plan
along with an accompanying Disclosure Statement to explain their
Plan.
The Honorable Adlai S. Hardin will convene a hearing on
August 28, 2003 at 10:30 a.m. Eastern Daylight Time to consider
the adequacy of the Disclosure Statement within the meaning of
Section 1125 of the Bankruptcy Code. At that hearing, the U.S.
Bankruptcy Court for the Southern District of New York will rule
on whether the Disclosure Statement contains the right kind and
amount of information that creditors need to make informed
decisions about whether to accept or reject the Plan.
Responses and objections to the Disclosure Statement must be filed
with the Bankruptcy Clerk on or before noontime on August 21.
Copies must also be served on:
1. Kronish Lieb Weiner & Hellman LP
Attn: Cathy Hershcopf, Esq.
Christopher A. Jarvinen, Esq.
1142 Avenue of the Americas
New York, NY 10036
2. Traub, Bonacquist & Fox LLP
Attn: Michael S. Fox, Esq.
Adam H. Friedman, Esq.
655 Third Avenue
21st Floor
New York, NY 10017
3. Office of the United States Trustee for the Southern
District of New York
Attn: Pamela Lustrin, Esq.
80 Broad Street
New York, NY 10004
Interliant, Inc. (n/k/a I Succesor Corp., Inc.), is a provider of
Web site and application hosting, consulting services, and
programming and hardware design to support the information
technologies infrastructure of its customers. The Company filed
for chapter 11 protection on August 5, 2002 (Bankr. S.D.N.Y. Case
No. 02-23150). Cathy Hershcopf, Esq., and James A. Beldner, Esq.,
at Kronish Lieb Weiner & Hellman, LLP represent the Debtors in
their liquidating efforts. When the Company filed for protection
from its creditors, it listed $69,785,979 in assets and
$151,121,417 in debts.
INTERWAVE COMMS: Promotes Padraig Stapleton to VP of Engineering
----------------------------------------------------------------
interWAVE(R) Communications International, Ltd. (Nasdaq: IWAV), a
pioneer in compact wireless communications systems, has promoted
Padraig Stapleton to vice president of engineering. Mr. Stapleton
will assume the leadership role of interWAVE's research and
development efforts, utilizing his 14 years of telecommunications
experience and established technology background.
Mr. Stapleton has served as director of software development for
interWAVE since joining the company in 1998. Prior, Mr. Stapleton
was a consultant for Cisco Systems with the company's telephony
Internet service unit. Previously, Mr. Stapleton held managerial
positions with SatCom Media and Centigram. Mr. Stapleton has
significant experience with CDMA technology, wireless local loop
software development and broadband communications. Mr. Stapleton
graduated with honors from the University of Limerick in Ireland.
Erwin Leichtle, interWAVE's president and chief executive officer,
commented, "Padraig has proven his dedication and ability during
his long tenure at interWAVE, and we are proud of being able to
recruit such an important position internally. His work ethic,
managerial abilities and industry experience will prove invaluable
to interWAVE as we continue to develop products and services to
keep interWAVE at the forefront of the wireless industry."
Mr. Stapleton replaces Bob Nakata, who resigned to pursue personal
interests.
interWAVE Communications International, Ltd. (Nasdaq: IWAV) is a
global provider of compact network solutions and services that
offer innovative, cost-effective and scalable networks allowing
operators to "reach the unreached." interWAVE solutions provide
economical, distributed networks that minimize capital
expenditures while accelerating customers' revenue generation.
These solutions feature a product suite for the rapid and simple
deployment of end-to-end compact cellular systems and broadband
wireless data networks. interWAVE's highly portable, mobile
cellular networks and broadband wireless solutions provide vital
and reliable wireless communications capabilities for customers in
over 50 countries. The Company's U.S. subsidiary is headquartered
at 2495 Leghorn Street, Mountain View, California, and can be
contacted at http://www.iwv.com
* * *
Liquidity and Capital Resources
In its Form 10-K filed with the Securities and Exchange Commission
on September 30, 2002, interWAVE stated:
"Net cash used in operating activities in 2002, 2001 and 2000
was primarily a result of net operating losses. Net cash used in
operating activities for 2002 was primarily attributable to net
loss from operations, decreases in accounts payable and accrued
expenses and other liabilities, offset by non-cash depreciation
and amortization and losses on asset impairments and sales, as
well as decreases in inventory and trade receivables and
increases in deferred revenue. For 2001, net cash used in
operating activities was primarily attributable to net loss from
operations, increases in inventory and decreases in accounts
payable, offset by non-cash depreciation and amortization and
losses on asset impairments and sales, as well as decreases in
trade receivables and increases in accrued expenses and other
current liabilities and deferred revenue. For 2000, net cash
used in operating activities were primarily attributable to net
loss from operations and increases in trade receivables, offset
by increases in accounts payable.
"Investing Activities. For 2002, the primary source of cash in
investing activities was the sale of short-term investments. For
2001, our investing activities consisted primarily of the sale
of short-term investments offset by cash used in acquisitions
for $18.5 million. Other uses of cash in investing activities
consisted of purchases of $8.2 million in capital equipment and
intangible assets. We expect that capital expenditures will
decrease due to our continued cost-cutting efforts and
conservation of cash resources. For 2000, the primary use of
cash in investing activities were the purchases of short-term
investments and capital equipment.
"Financing Activities. During 2002, we raised $2.5 million from
the sale of shares and the exercise of warrants, options and
ESPPs. In 2001, the primary use of cash in financing activities
were principal payments on notes payable net of receipts on our
issuance of notes receivable to several of our customers. In
January 2000, we completed our initial public offering, which
raised $116.3 million net of costs.
"Commitments. We lease all of our facilities under operating
leases that expire at various dates through 2006. As of June 30,
2002, we had $7.1 million in future operating lease commitments.
In August 2002, we signed a new lease for 2,300 square feet of
facility with Hong Kong Technology Centre. We moved into the new
office at the end of August 2002. The new lease expires in
August 2004. In the future we expect to continue to finance the
acquisition of computer and network equipment through additional
equipment financing arrangements.
"As of June 30, 2002, we have two capital leases with GE
Capital. Aggregate future lease payments are $0.5 million, $0.5
million and $0.3 million for fiscal years 2003, 2004 and 2005,
respectively.
"Summary of Liquidity. There can be no assurances as to whether
our existing cash and cash equivalents plus short-term
investments will be sufficient to meet our liquidity
requirements. We have had recurring net losses, including net
losses of $64.3 million, $94.1 million and $28.4 million for the
years ended June 30, 2002, 2001 and 2000, respectively, and we
have used cash in operations of $28.8 million, $49.4 million,
and $21.8 million for the years ended June 30, 2002, 2001 and
2000, respectively. Management is currently forming and
attempting to execute plans to address these matters. These
plans include achieving revenues and margins that will sustain
levels of spending, reducing levels of spending, raising
additional amounts of cash through the issuance of debt, equity
or through other means such as customer prepayments. If
additional funds are raised through the issuance of preferred
equity or debt securities, these securities could have rights,
preferences and privileges senior to holders of common stock,
and the terms of any debt could impose restrictions on our
operations. The sale of additional equity or convertible debt
securities could result in additional dilution to our
stockholders, and we may not be able to obtain additional
financing on acceptable terms, if at all. If we are unable to
successfully execute such plans, we may be required to reduce
the scope of our planned operations, which could harm our
business, or we may even need to cease operations. In this
regard, our independent auditor's report contains a paragraph
expressing substantial doubt regarding our ability to continue
as a going concern. We cannot assure you that we will be
successful in the execution of our plans."
IT GROUP: Court Extends Plan Filing Exclusivity Until October 10
----------------------------------------------------------------
The IT Group, Inc., and its debtor-affiliates obtained an
extension of their Exclusive Periods. The Debtors now have until
October 10, 2003, to exclusively file and proposes a Plan and
until November 7, 2003, to exclusively solicit acceptance of that
Plan from creditors.
The IT Group Inc., assesses risks and provides property and
equipment decontamination and restoration, including land disposal
sites that contain hazardous chemicals or radioactive materials.
With about 100 offices worldwide, it also offers environmental
engineering, construction, facilities management, and consulting
services. US Government contracts account for 50% of sales.
On January 16, 2002, the Company filed for Chapter 11 protection
in the U.S. Bankruptcy Court for the District of Delaware (Bankr.
Case No. 02-10118).
J. CREW GROUP: Scott M. Rosen Steps Down as EVP and CFO
-------------------------------------------------------
J.Crew Group, Inc. announced on August 11, 2003, that Scott M.
Rosen has resigned from his position as Executive Vice-President
and Chief Financial Officer of the Company and its wholly-owned
subsidiary, J.Crew Operating Corp., to pursue other opportunities.
The Company has initiated a search for a permanent successor to
Mr. Rosen. In the interim, Nicholas Lamberti, the Company's Vice-
President and Corporate Controller, will assume Mr. Rosen's
responsibilities.
J.Crew Group, Inc., whose May 3, 2003 balance sheet shows a
total shareholders' equity deficit of about $421 million, is a
leading retailer of men's and women's apparel, shoes and
accessories. As of May 31, 2003, the Company operated 154
retail stores, the J.Crew catalog business, jcrew.com, and 42
factory outlet stores.
LORAL SPACE: Red Ink Continued to Flow in Second Quarter 2003
-------------------------------------------------------------
Loral Space & Communications (OTCBB: LRLSQ) filed Thursday its
quarterly report on Form 10Q with the Securities and Exchange
Commission in which it reported financial results for the periods
ended June 30, 2003.
The results reflect the adverse economic conditions that continue
to negatively affect the satellite industry, in particular the
satellite manufacturing sector. For the three months ended
June 30, 2003, revenues as reported were $143 million, compared
with $316 million for the same period in 2002. Sales at Loral's
satellite manufacturing business before eliminations were $81
million in the second quarter versus $250 million a year earlier.
Fixed satellite services (FSS) revenues for the quarter were $73
million, compared to $103 million in the year earlier quarter.
For the second quarter 2003, Loral reported a net loss applicable
to common shareholders of $99 million, compared with a net loss
applicable to common shareholders of $69 million in last year's
quarter.
Loral ended the quarter with $128 million in cash. Net cash
provided by operating activities in the second quarter was $78
million.
In the second quarter, FSS had operating income before
depreciation and amortization of $44 million, compared with $60
million in the year ago quarter. Depreciation and amortization in
the second quarter was $37 million, compared with $38 million in
the quarter last year. As a result, FSS operating income was $7
million, compared with $22 million in the second quarter of 2002.
FSS second quarter 2003 results include a $9 million gain on an
insurance settlement.
Space Systems/Loral (SS/L) had an operating loss before
depreciation and amortization in the second quarter of $89
million, compared with operating income before depreciation and
amortization of $10 million in the second quarter of 2002.
Depreciation and amortization in the quarter was $7 million,
compared with $10 million in the year ago quarter. As a result,
SS/L had an operating loss of $96 million in the second quarter,
compared to breakeven operating income in the year ago quarter.
SS/L's results for the second quarter 2003 include $72 million of
charges, which are primarily due to the absence of new orders at
SS/L.
On July 15, 2003, Loral reached an agreement to sell its six North
American telecommunications satellites to Intelsat for up to $1.1
billion in cash. Also on July 15, 2003, in conjunction with this
sale and to facilitate the transfer of these assets without
encumbrances, Loral and certain of its subsidiaries filed
voluntary petitions under Chapter 11 of the United States
Bankruptcy Code.
Further details on the company's financial results for the second
quarter and first half of 2003 are available in Loral's 10Q
statement available via the company's Web site at
http://www.loral.com
Loral Space & Communications is a satellite communications
company. It owns and operates a global fleet of telecommunications
satellites used by television and cable networks to broadcast
video entertainment programming, and by communications service
providers, resellers corporate and government customers for
broadband data transmission, Internet services and other value-
added communications services. Loral is also a world-class leader
in the design and manufacture of satellites and satellite systems
for commercial and government applications including direct-to-
home television, broadband communications, wireless telephony,
weather monitoring and air traffic management.
LORAL SPACE: Intelsat Wants to Acquire N.A. Satellite Assets
------------------------------------------------------------
Intelsat, Ltd., a global satellite communications leader providing
services in over 200 countries and territories, reported that its
shareholders approved its proposed acquisition of six satellites
and orbital location rights from Loral Space & Communications
Corporation at a shareholders' meeting held Thursday in Amsterdam,
The Netherlands. Shareholder approval of the transaction was
required under Intelsat's Bye-laws.
The proposed acquisition of the Loral assets would complement
Intelsat's global network, which includes capacity on 26
satellites, by adding complete coverage of the important North
American market and by increasing Intelsat's customer base in the
cable television and broadcasting segments.
Intelsat's shareholders approved and adopted the asset purchase
agreement relating to the proposed acquisition, which is expected
to occur at the conclusion of an auction process under Section
363(b) of the U.S. Bankruptcy Code. If approved by the bankruptcy
court, the transaction will be subject to the receipt of
regulatory approvals and the satisfaction of other conditions.
"We thank our shareholders for their overwhelming support of the
Loral asset purchase," said Intelsat chief executive officer Conny
Kullman. "These assets would enable Intelsat to enhance its global
network to include a North American franchise and to offer
customers a global end-to-end solution. The acquisition would also
result in an increase in Intelsat's revenues from broadcasting,
cable television, private data network and other point-to-
multipoint traffic. With the shareholder vote successfully
concluded, we now look forward to the next milestone in this
process -- the successful conclusion of the bankruptcy court
auction process."
Intelsat, Ltd. offers telephony, corporate network, video and
Internet solutions around the globe via capacity on 26
geosynchronous satellites in prime orbital locations. Customers in
approximately 200 countries rely on Intelsat satellites and ground
resources for quality connections, global reach and reliability.
For more information, visit http://www.intelsat.com
LTV CORP: Copperweld Plan's Claims Classification and Treatment
---------------------------------------------------------------
The Copperweld Debtors estimate that the amount of Allowed
Copperweld DIP Lender Claims as of the Effective Date will be
approximately $242,000,000. As of the Effective Date, Reorganized
Copperweld will be authorized to issue 555.556 shares of New Class
A Common Stock, par value $0.01 per share with an $84,000,000
liquidation preference, and 5,000 shares of New Class B Common
Stock, par value $0.01 per share.
On the Effective Date of the Joint Plan, holders of the Allowed
Copperweld DIP Term Lender Claims will receive, in full
satisfaction of the Allowed Claims, their Pro Rata portion of:
(i) New Senior Secured Term Loan Facility Notes;
(ii) the New Class A Common Stock; and
(iii) 4,000 shares of the New Class B Common Stock.
As a result of this distribution, substantially all of the New
Common Stock of Reorganized Copperweld initially will be owned by
the Copperweld DIP Lenders, with the exception of 700 shares to be
distributed to senior management.
On the Effective Date, at the option of the Copperweld DIP
Revolving Lenders, holders of Allowed Copperweld DIP Revolving
Lender Claims will receive, in full satisfaction of their Allowed
Claims, their Pro Rata portion of:
(i) Cash equal to the amount of the Allowed Claims,
payable from the proceeds of the New Senior Secured
Revolving Credit Facility; or
(ii) New Senior Secured Revolving Credit Facility Notes.
The Plan provides that, on the Effective Date, the principal
amount of the Copperweld DIP Term Loans will be "substantially
reduced." Under the Plan, in consideration for the principal
amount reduction, the Copperweld DIP Term Lenders will receive the
majority of the New Common Stock. As to the remainder of the New
Common Stock, the Plan provides that, on the Effective Date,
approximately 1,000 shares, or 20%, of the authorized New Class B
Common Stock will be reserved for issuance to certain members of
senior management of Reorganized Copperweld pursuant to the New
Restricted Stock Plan, of which issuances of 700 shares will be
made by Reorganized Copperweld's Board of Directors to senior
management on the Effective Date.
New Class A Common Stock
The New Class A Common Stock will have an aggregate liquidation
preference amounting to $84,000,000, which is redeemable for an
amount equal to the liquidation preference. Upon a merger,
consolidation, winding-up or sale of all or substantially all the
assets of Reorganized Copperweld or a transaction in which a
person or group of persons obtains beneficial ownership of more
than 50% of the voting power of Reorganized Copperweld -- on a
fully diluted basis -- or 50% or more of the outstanding shares of
the New Class A Common Stock, the New Class A Common Stock will be
redeemed in Cash or assets equal to the liquidation preference,
and such redemption will be in priority to distribution to any
other classes of the New Common Stock. No dividends may be paid
to any other class of common stock so long as any of the New Class
A Common Stock is outstanding. After the New Class A Common Stock
is redeemed for its full liquidation preference, the New Class A
Common Stock will no longer be outstanding, and the holders of
the New Class A Common Stock will have no further rights in the
remaining assets of Reorganized Copperweld.
The holders of the New Class A Common Stock will be entitled to
one vote per share on all matters presented for approval by
stockholders. The approval of holders holding 85% of the New
Class A Common Stock, voting together as a single class, will be
required for an amendment to the terms of the New Class A Common
Stock and the filing by Copperweld of a registration statement
under the Securities Act of 1933, other than in connection with a
transaction in which all of the outstanding New Class A Common
Stock will be redeemed as set forth in the amended certificate of
incorporation of Reorganized Copperweld or as set forth in the New
Stockholders' Agreement. The holders of the New Class A Common
Stock will also have certain consent rights under the New
Stockholders' Agreement. The New Class A Common Stock will be
"stapled" to the shares of the New Class B Common Stock issued to
the holders of Allowed Copperweld DIP Term Lender Claims and will
trade as a unit, subject to the redemption of the New Class A
Common Stock pursuant to its terms.
Assigned Stock Values
The projected reorganization enterprise value of the Reorganized
Copperweld Debtors is insufficient to satisfy the Allowed
Copperweld DIP Lender Claims in full. For purposes of these
calculations, a value of $72,899.86 per share of New Class A
Common Stock and a value of $0.01 per share of New Class B Common
Stock have been assumed, based on the midpoint of the estimated
enterprise value of Reorganized Copperweld, and the 555.556 shares
of New Class A Common Stock, and 4,700 shares of New Class B
Common Stock to be issued on the Effective Date.
Although the Copperweld Debtors' management believes that these
valuation assumptions are reasonable, there is no assurance that
the New Common Stock will have the value assumed in the Plan.
Initially, the New Common Stock will not be listed on any
securities exchange or quoted on the NASDAQ Stock Market, and
there can be no assurance that the New Common Stock will ever be
so listed or quoted. The value of the New Common Stock ultimately
may be substantially higher or lower than reflected in the
valuation assumptions provided in the Plan because of a number of
other factors.
Classification & Treatment
In the Joint Plan, Administrative Claims, Copperweld DIP Lender
Claims and Priority Tax Claims have not been classified. Because
the Plan contemplates the substantive consolidation of all of the
Copperweld Debtors, the distributions in the Joint Plan with
respect to each class of Claims are presented on a combined basis
for all the Copperweld Debtors.
Class Description Treatment
----- ----------- ---------
1 Unsecured Priority Claims Unimpaired. Paid in
cash on the Effective
Date.
Estimate of aggregate claims
in this class: $0
Estimated Recovery: 100%
if any claims are allowed
2A Secured Claims for Taxes Impaired. On the
Effective Date, the
Claimant will retain lien
during deferred cash
payments over a period of
up to two years, payable
in equal quarterly
payments of principal and
simple interest at 6%.
First payment is on the
date of first the
Quarterly Distribution
Date after the Effective
Date.
Estimate of aggregate claims
in this class: $382,000
Estimated Recovery: 100% of
claims allowed
2B Other Secured Claims Impaired. Same treatment
as Class 2A.
Estimate of aggregate claims
in this class: $166,000
Estimated Recovery: 100% of
claims allowed
3 Unsecured Non-priority Claims Impaired. No
distribution.
Excludes Old Senior Note
Claims, Trade Claims,
Unsecured Claims of PBGC,
Tort Claims and Secondary
Liability Claims that are
unsecured.
Estimate of aggregate claims
in this class: $1.911 billion
Estimated Recovery: 0% of
claims allowed
4 Intercompany Claims Impaired. No
distribution.
Estimate of aggregate claims
in this class: $339 million
Estimated Recovery: 0% of
claims allowed
5 Old Common Stock of Impaired. No
Copperweld Corporation distribution. All
Old Common Stock to be
cancelled on the Effective
Date.
Estimate of aggregate claims
in this class: Not given
Estimated Recovery: 0% of
claims allowed
6 Old Common Stock of Impaired. No
Copperweld Subsidiaries distribution. All
Old Common Stock to be
cancelled on the Effective
Date.
Estimate of aggregate claims
in this class: Not given
Estimated Recovery: 0% of
claims allowed
7 Old Common Stock of Impaired. No
Welded Tube Holdings distribution. All
Old Common Stock to be
cancelled on the Effective
Date.
Estimate of aggregate claims
in this class: Not given
Estimated Recovery: 0% of
claims allowed
8 Old Common Stock of Impaired. No
Welded Tube distribution. All
Old Common Stock to be
cancelled on the Effective
Date.
Estimate of aggregate claims
in this class: Not given
Estimated Recovery: 0% of
claims allowed
(LTV Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service,
Inc., 609/392-00900)
MAXXIM MEDICAL: All Proofs of Claim Due by August 29, 2003
----------------------------------------------------------
On June 23, 2003, the U.S. Bankruptcy Court for the District of
Delaware entered a Bar Date Order requiring all creditors of
Maxxim Medical Group, Inc., and its debtor-affiliates, to file
their proofs of claim against on or before August 29, 2003, at
4:00 p.m. Eastern Time or be forever barred for asserting their
claims against the Debtors' estates. The Order details the
procedures for filing Proofs of Claim.
Proof of Claim forms, together with information concerning the
filing, have already been mailed to all known creditors and other
parties in interest. If you have not received this mailing and
believe that you have a claim against the Debtors or if you want a
full copy of the Bar Date Order, make a written request to the
Debtors' Claims Agent at:
Maxxim Medical Group, Inc., et al.
c/o Bankruptcy Services LLC
PO Box 5269 FDR Station
New York, NY 10150-5269
Maxxim Medical Group, Inc., a leading suppliers of custom-
procedure trays, non-latex examination gloves and other single-use
products, filed for chapter 11 protection on February 11, 2003
(Bankr. Del. Case No. 03-10438). Brendan Linehan Shannon, Esq.,
Edward J. Kosmowski, Esq., Matthew Barry Lunn, Esq., at Young,
Conaway, Stargatt & Taylor and Myron Treppor, Esq., Michael J.
Kelly, Esq., at Wilkie Farr & Gallagher represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed both debts and assets of
over $100 million.
MED DIVERSIFIED: First Quarter Results Enter Positive Territory
---------------------------------------------------------------
Med Diversified, Inc., (PINK SHEETS: MDDVQ), a leading provider of
home and alternate site health care services, announced its
financial results for the first quarter ended June 30, 2003, of
fiscal year 2004.
Net income for the quarter was $1.0 million. In comparison, net
loss was $16.2 million, for the same period in the fiscal year
ended March 31, 2003, and $38.9 million for the fourth quarter of
FY03.
Net sales for the first quarter of FY04 were $84.1 million,
compared to $97.8 million for the corresponding quarter of the
prior year and $82.0 million in the fourth quarter of FY03. The
decrease of $13.7 million is attributable to the sale or closure
of unprofitable locations and the execution of the Company's
strategy of providing higher-margin therapies.
Adjusted EBITDA, including equity from the Company's joint
ventures, was $4.9 million, compared to $0.7 million for the same
period in FY03 and $33.0 million in the fourth quarter of FY03.
Financial results reflect the reclassification of the Company's
distance medicine unit (the assets of which were sold in May 2003)
as discontinued operations.
"Med Diversified has delivered its strongest financial performance
ever, achieving positive net income for the first time in the
Company's history," said Frank P. Magliochetti, Jr., chairman and
chief executive officer. "Despite the reorganization process, our
management team is aggressively pursuing profitable sales
opportunities and identifying more areas for operational
efficiency. Pending a positive resolution to our bankruptcy
proceeding, we are optimistic about our ability to maximize our
competitive position in the marketplace."
Med Diversified operates companies in various segments within the
health care industry, including pharmacy, home infusion,
management, clinical respiratory services, home medical equipment,
home health services and other functions. For more information,
see http://www.meddiversified.com
MIRANT CORP: Brings-In Sitrick and Company as PR Consultants
------------------------------------------------------------
Mirant Corp., and its debtor-affiliates seek the Court's authority
to employ Sitrick and Company, Inc. as communications consultants,
nunc pro tunc to July 14, 2003.
Sitrick is expected to:
(a) develop and implement communications programs and related
strategies and initiatives for communications with the
Debtors' key constituencies, including employees,
vendors, customers, community members, lenders and
shareholders, regarding the Debtors' operations,
financial performance and progress through the Chapter 11
process;
(b) develop public relations initiatives for the Debtors to
maintain public confidence and internal morale during
these Chapter 11 cases;
(c) prepare press releases and other public statements for
the Debtors, including statements relating to asset sales
and other major Chapter 11 events;
(d) prepare other written communications to the Debtors' key
constituencies; and
(e) perform other communications consulting services as may
be requested by the Debtors.
Michael S. Sitrick, Chairman and Chief Executive Officer of
Sitrick, relates that to the best of his knowledge, his firm and
its employees 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 in matters unrelated
to these Chapter 11 cases.
In the year prior to the Petition Date, Sitrick received from the
Debtors retainers amounting to $804,051 in the aggregate for
services rendered in connection with the preparation of these
Chapter 11 cases. According to Mr. Sitrick, the amounts have
been applied to all outstanding fees and expenses incurred.
However, a final reconciliation has not been completed. After
the completion of the reconciliation, Sitrick will file a
subsequent disclosure with the Court. To the extent Sitrick
holds amounts that exceed the amount of fees and expenses
incurred to date, Sitrick will hold the amounts as a retainer to
be applied against future fees and expenses incurred in these
Chapter 11 cases.
For Sitrick's postpetition representation of the Debtors, it will
bill the Debtors based on their hourly billing rates in effect at
the time. Currently, Sitrick's hourly rates are:
Member of the Firm $305 - 625
Associate 150 - 245
Judith Elkin, Esq., at Haynes and Boone LLP, in Dallas, Texas,
asserts that the Sitrick's employment is warranted under Section
327(a) of the Bankruptcy Code because:
-- Sitrick has an excellent reputation for providing high
quality communications programs supporting specific
business objectives as well as managing complex, high
profile or sensitive business challenges;
-- Sitrick and its senior professionals have extensive
experience as communications consultants to companies
reorganizing under the Bankruptcy Code;
-- since the Debtors had employed Sitrick prior to the
Petition Date, Sitrick has the necessary background to
deal effectively and efficiently with many of the
potential communications issues and problems that may
arise in the context of the Debtors' Chapter 11 cases; and
-- it will enable the Debtors to maintain their current
customers and relationships as well as preserve their
reputation in the industry as a leading producer and
provider of energy products. (Mirant Bankruptcy News, Issue
No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900)
MOTELS OF AMERICA: UST Appoints Official Creditors' Committee
-------------------------------------------------------------
The United States Trustee for Region 11 appointed a 5-member
Official Committee of Unsecured Creditors in Motels of America's
Chapter 11 case:
1. Fernandina Beach Hotel Group LLC
2707 Sadler Road
Fernandina Beach, Florida 32034
Attn: Mr. Michael Mollod
2. Paraj, Inc.
404 Verbena Court
Naperville, Illinois 60565
Attn: Mr. Rajesh Patel
3. Litchfield Super 8
813 Spring Valley Court
Schaumburg, Illinois 60193
Attn: Mr. Piyush Patel
4. Elkhart Inn, Inc.
115 N. Pointe Boulevard
Elkhart, Indiana 46514
Attn: Mr. Parsh Patel
5. Shree Krishna LLC
630 N. Greenbay Road
Waukegan, Illinois 60085
Attn: Mr. Rakesh R. Shah
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtor and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
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.
NATIONAL CENTURY: Court OKs Long & Foster as Real Estate Brokers
----------------------------------------------------------------
National Century Financial Enterprises, Inc., and its debtor-
affiliates obtained Judge Calhoun's permission to employ The Long
& Foster Companies as real estate brokers to sell their interests
in three Washington residences, pursuant to Section 327 of the
Bankruptcy Code.
Long & Foster is the largest residential real estate broker in the
Metropolitan Washington, D.C. area. In the past two years, Long &
Foster has sold almost 200,000 properties for consideration in
excess of $22,000,000. Dawn K. Nichols, the real estate broker
responsible for marketing the Residences, sold 48 houses last year
aggregating $11,000,000.
Long & Foster will assist the Debtors in all aspects of the
marketing and sale of the Residences. In fact, Long & Foster
already has identified potential bidders for the Residences and
negotiated the terms of three contracts to sell the Residences.
The Debtors have previously retained Ruscilli Real Estate
Services, Inc. to assist with the sale of their Dublin
headquarters complex. However, Mr. Kairis explains, Ruscilli
does not provide residential real estate brokerage services in
the Washington, D.C. area. Therefore, the Debtors require Long &
Foster's services in these cases. The Debtors do not anticipate
that there will be any overlap between the services provided by
Ruscilli and Long & Foster.
Under the Engagement Letter, Long & Foster will receive a 5%
commission of the sale price of the Residences. (National Century
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NATIONAL WINE: June Quarter Results Swing-Down into the Red
-----------------------------------------------------------
National Wine & Spirits (S&P, B- Corporate Credit Rating,
Negative) reported that for the three months ended June 30,
2003, the Company's EBITDA was $4.1 million, as compared to $9.5
million for the prior year's comparable quarter. Net loss was
$0.05 million for the three months ended June 30, 2003, versus net
income of $4.4 million for the prior year's comparable quarter,
primarily resulting from the decline in the Company's Illinois
sales volume.
The Company's case volume and revenue from its Indiana, Michigan
and USB divisions remained stable for the three months ended June
30, 2003, as compared to the prior year's comparable quarter. USB
introduced Seagram Smooth, a malt based product that competes in
the ready to drink market sector and, during the quarter ended
June 30, 2003, USB incurred significant brand promotion and
advertising expenses relating to the Seagram Smooth introduction
and other seasonal brand investments. The Company has made
significant progress in its evaluation and resizing of its
Illinois operation during the quarter ended June 30, 2003. As the
Company's Illinois volume was decreasing during the quarter,
certain wage and operating costs were incurred, while the benefits
from the resizing will be experienced going forward. The Company
believes that a more efficient Illinois organization has been
formed and that it will benefit financially from any incremental
volume with the reduced cost structure. In addition, as a result
of this more efficient structure, the Company believes its
Illinois operations present a viable and attractive alternative to
suppliers in the Illinois market that could result in increased
revenues.
The Company repurchased approximately $9.6 million of its senior
notes on the open market during the quarter ended June 30, 2003,
resulting in approximately $80.3 million outstanding of the $110
million senior notes that were originally issued. By reducing the
Company's interest expense through open market repurchases of
senior notes, aggressive cost reduction initiatives in its
Illinois business, and stable to increasing earnings and cash flow
from Indiana, Michigan and USB businesses, the Company expects to
maintain adequate earnings and cash flow to fund working capital
and debt service needs for the year ending March 31, 2004.
Continuing efforts are also being made to replace lost revenue in
Illinois.
The Company was notified on July 8, 2003 that it had been selected
as the exclusive distributor of Schieffelin & Somerset spirits and
wine brands in Indiana. NWS Indiana does not currently distribute
the majority of S&S products, and brands added to the Indiana
portfolio include Johnnie Walker Scotch, Hennessy Cognac,
Tanqueray Gin, and Moet champagnes, among others. The distribution
agreement extends for five years.
The Company's Illinois business has been negotiating with several
new suppliers and has become the exclusive distributor of the wine
brands of W.J. Deutsch & Sons in Illinois. The primary brand for
this vendor is Yellow Tail, an Australian wine that is one of the
fastest growing labels in the United States.
Indianapolis-based National Wine & Spirits, Inc. is one of the
leading distributors of alcohol beverages in the U.S. The Company
has a strong portfolio that includes brands from Fortune Brands
[FO], Diageo [DEO], Louis-Vuitton Moet Hennessey [LVMHF], Pernod
Ricard [PDRDF], Constellation Brands [STZ], Brown-Forman
[BFA;BFB], Beringer Wine [BERW], Allied Domecq [AED], Sebastiani
Winery, Banfi, Kendall Jackson, and Southcorp [STHHY] among
others.
NRG ENERGY: Xcel Records Q2 Charges Related to NRG's Bankruptcy
---------------------------------------------------------------
Xcel Energy (NYSE:XEL) will record additional charges in the
second quarter of 2003 related to NRG, above those reported in
Xcel Energy's Aug. 1 preliminary earnings release.
"With NRG's situation, it is extremely difficult to determine the
precise date losses were incurred," said Dick Kelly, vice
president and chief financial officer. "Upon review of the
circumstances and conditions existing at the time of NRG's
bankruptcy filing on May 14, 2003, and considering subsequent
developments, Xcel Energy has decided to record higher losses at
NRG, which are attributable to the period before May 14."
Since all financial results of NRG prior to its May 14 bankruptcy
filing must be reflected by Xcel Energy without limitation, the
consequences of this decision are that Xcel Energy's preliminary
reported second quarter earnings are reduced and the company will
record a larger than originally estimated charge against retained
earnings. The additional charge is $115 million after taxes, or 29
cents per share, resulting in a retained earnings deficit of minus
$245 million at June 30. Xcel Energy's total financial results for
the second quarter 2003 were a loss of $284 million, compared with
earnings of $86 million for the same period in 2002.
"Under the Public Utility Holding Company Act, Xcel Energy, like
other registered holding companies, can only declare and pay
dividends out of retained earnings, absent an order from the
Securities and Exchange Commission," Kelly said. "At the time of
our preliminary earnings release we stated that under some
circumstances, Xcel Energy might not have sufficient retained
earnings to declare and pay its third quarter dividend.
"In light of the additional charges at NRG, it now appears
unlikely that Xcel Energy will have sufficient retained earnings
to pay third quarter dividends without a waiver from the SEC.
Accordingly, we intend to apply to the SEC for a waiver to pay the
third quarter dividends from capital and unearned surplus. In the
event an SEC waiver is not received, and assuming that the NRG
plan of reorganization is approved by NRG's creditors in 2003, as
expected, Xcel Energy currently expects to have sufficient
retained earnings to pay dividends from retained earnings by year-
end. Xcel Energy intends to make every effort to pay the full
annual dividend of 75 cents per share on its common stock and all
accrued dividends on its preferred stock during 2003."
OGLEBAY NORTON: Continues Negotiations with Banks & Noteholders
---------------------------------------------------------------
Oglebay Norton Company (Nasdaq: OGLE) remains in active
negotiations with its bank group and senior secured note holders
to achieve long-term amendments to their respective lending
agreements. Waivers that the Company had received from the lenders
for certain financial-related covenants of the Company's senior
secured debt agreements expired Thursday.
"While we are disappointed that we were not able to reach
definitive agreements before the waivers expired, we continue to
believe that mutually acceptable long-term agreements can be
achieved," said Oglebay Norton President and Chief Executive
Officer Michael D. Lundin.
Lundin said the Company would continue to operate with cash flow
from operations while it negotiates with its bank group and senior
secured note holders and explores all other strategic options.
"This does not affect our immediate ability to pay our employees
or vendors or fill orders and serve our customers," he said. "This
is the time of year when we are the busiest, and our cash flow is
the strongest."
Oglebay Norton Company, a Cleveland, Ohio-based company, provides
essential minerals and aggregates to a broad range of markets,
from building materials and home improvement to the environmental,
energy and metallurgical industries. Building on a 149-year
heritage, our vision is to become the premier growth company in
the industrial minerals industry. The company's Web site is
located at http://www.oglebaynorton.com
ORGANOGENESIS: Bankruptcy Court Confirms Plan of Reorganization
---------------------------------------------------------------
Organogenesis Inc. (ORGG-PK) announced that following a vote of
approval by the company's creditors, the U.S. Bankruptcy Court for
the District of Massachusetts Wednesday confirmed Organogenesis'
plan of reorganization dated June 26, 2003. The Company expects to
emerge from Chapter 11 during the week of August 25, 2003.
"We are pleased to announce another positive step toward
completing our reorganization process," said Alan Ades, chairman
and acting chief executive officer. "The court's confirmation of
our plan and the favorable vote of our creditors are absolutely
critical to our efforts to emerge from Chapter 11 before the end
of August."
Ades said the diligent efforts of all parties helped shape a plan
that makes Organogenesis a financially stronger company, more
favorably positioned to provide reliable and superior product, and
better able pursue new growth opportunities.
"We owe our success to the loyalty of our customers and suppliers,
and an extraordinary commitment among our employees for supporting
the company's restructuring efforts and allowing it to complete
its Chapter 11 reorganization in less than a year," he added.
As previously announced, the reorganization plan contemplates that
a cash distribution of up to 35 percent will be made to the
holders of allowed general unsecured claims but that no
distribution will be made on shares of the company's outstanding
preferred and common stock, which will be cancelled on the plan's
effective date. Organogenesis will now focus on completing the
remaining tasks of its restructuring before emerging from Chapter
11.
Organogenesis was the first company to develop and gain FDA
approval for a mass-produced product containing living human
cells. The Company's principal product, Apligraf(R), a living, bi-
layered skin substitute, has received FDA approval for the
treatment of diabetic foot ulcers and venous leg ulcers.
OWENS CORNING: Court Okays Adelman Lavine as Special Counsel
------------------------------------------------------------
Owens Corning and its debtor-affiliates obtained the Court's
authority to employ Adelman Lavine Gold and Levin, as their
special claims conflict counsel.
As special claims conflict counsel, Adelman Lavine will:
1. prepare, file and prosecute Claim Objections, which Saul
Ewing cannot appropriately pursue due to Saul Ewing's
representation of affected claimants in other matters; and
2. undertake other related activities as may be mutually
agreed upon by Adelman Lavine and the Debtors from time to
time.
Compensation and Reimbursement of Adelman Lavine
In accordance with Section 330(a) of the Bankruptcy Code,
compensation will be payable to Adelman Lavine on an hourly
basis, plus reimbursement of actual, necessary expenses incurred
by the law firm. Some of the attorneys and paralegals presently
designated to represent the Debtors with respect to these matters
and their current standard hourly rates are:
Raymond H. Lemisch shareholder $360
Gary D. Bressler shareholder 360
William Hinchman associate 275
Bradford J. Sandler associate 250
Jennifer Hoover associate 145
Sandi Van Dyk paralegal 140
Liz Hein clerk 95
(Owens Corning Bankruptcy News, Issue No. 55; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PACIFIC GAS: Plan Confirmation Hearing to Commence on November 3
----------------------------------------------------------------
The Co-Proponents to Pacific Gas and Electric Company's Settlement
Plan agree to a workable schedule on the hearing and confirmation
of the Plan. The Co-Proponents agree to commence depositions by
September 15 to October 10, 2003. Trial briefs will be due
October 15, 2003 and Exhibit Designations on October 20, 2003.
Confirmation Trial will begin November 3, 2003. (Pacific Gas
Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
PEREGRINE SYSTEMS: Joseph E. Myers Named as Litigation Trustee
--------------------------------------------------------------
Joseph E. Myers, a principal and managing director of Clear
Thinking Group, Inc., a retail, consumer products, and
manufacturing consultancy based here, has been appointed
Litigation Trustee for Peregrine Systems, Inc. (OTC: PRGNQ.PK),
effective with the company's emergence from Chapter 11 Bankruptcy
Protection on August 7th.
Peregrine's Plan of Reorganization was confirmed by the U.S.
Bankruptcy Court in the District of Delaware last month.
Peregrine filed a voluntary Chapter 11 petition on Sept. 22, 2002
after accounting irregularities came to light, requiring a
restatement of financial results for 11 quarters. Founded in 1981,
the company develops and sells application software to help large
global organizations manage and protect their technology
resources. Flagship offerings include ServiceCenter(R) and
AssetCenter(R), complemented by employee self service, automation
and integration functionalities.
The San Diego-based Peregrine's reorganization plan provides for
the establishment of a litigation trust to retain and preserve
certain litigation claims for enforcement by the trustee for the
benefit of certain beneficiaries. This trust is empowered to
pursue, prosecute, litigate, settle and liquidate all litigation
claims.
Myers and Clear Thinking Group currently also serve as Litigation
Trustee for Pennsylvania Fashions and previously served as Chief
Litigation Officer for Quality Stores. A CCE (Certified Credit
Executive) and Certified Expert Witness, Myers heads the firm's
Creditors Rights Practice Group.
Clear Thinking Group, Inc., a subsidiary of Liquidation World Inc.
(TSX: LQW) Calgary, Alberta, provides a wide range of corporate
strategic consulting services to retail companies, consumer
product manufacturers/distributors and industrial companies --
often on behalf of asset-based lenders that finance these
entities. The national advisory organization specializes in
assisting small- to- mid-size companies during times of strategic
change, opportunity, growth, acquisition, and crisis. For further
information, visit the firm's Web site at
http://www.clearthinkinggrp.com
PETROLEUM GEO: Baker Botts Serving as U.S. Corporate Counsel
------------------------------------------------------------
Petroleum Geo-Services ASA wants approval from the U.S. Bankruptcy
Court for the Southern District of New York to employ and retain
Baker Botts LLP as its U.S. Corporate, Employee Benefits and
Litigation Counsel.
The Debtor chose Baker Botts because the firm's attorneys have
extensive experience and knowledge in the fields of corporate
finance, commercial litigation, U.S. securities law, general U.S.
corporate and contract law matters, U.S. federal income tax,
employee benefits and employment litigation. Accordingly, the
Debtor believes that Baker Botts is well qualified to represent it
as counsel.
Baker Botts is expected to:
a) advise the Debtor in connection with, without
limitation, U.S. corporate, banking, securities, real
estate, litigation, tax and employee benefit matters;
b) take all necessary action to protect and preserve the
Debtor's estate, including, if required by the facts and
circumstances, the prosecution of actions on the
Debtor's behalf, the defense of any actions commenced
against the Debtor, and negotiations concerning
litigation in which the Debtor is involved;
c) prepare, on behalf of the Debtor, all necessary
applications, motions, answers, orders, briefs, reports
and other papers in connection with the administration
of the Debtor's estate, and more specifically, U.S.
corporate, banking, securities, real estate, litigation,
tax and employee benefit matters;
d) review and comment on the Debtor's proposed chapter 11
plan of reorganization, disclosure statement and related
matters;
e) represent the Debtor at hearings and proceedings as
required; and
f) perform other necessary legal services in connection
with this chapter 11 case.
Baker Botts' professionals will bill the Debtors at their current
hourly rates:
Attorneys Hourly Rate
--------- -----------
Joe S. Poff $475 per hour
Tull R. Florey $315 per hour
Gail w. Stewart $475 per hour
Tony P. Rosenstein $400 per hour
Jonathan R. Larrabee $265 per hour
Jeff Starzec $190 per hour
Courtney Watson $190 per hour
Legal Assistant
---------------
Susan Dillard $120 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: Court Approves Blank Rome as USGen's Lead Counsel
----------------------------------------------------------------
USGen New England, Inc. sought and obtained the Court's authority
to employ Blank Rome LLP as its lead bankruptcy counsel to
represent them in certain non-exclusive matters. Specifically,
Blank Rome will:
(a) advise USGen's management concerning its fiduciary
obligations to the estate, its creditors and the
Bankruptcy Court;
(b) assist in the administration and prosecution of USGen's
Chapter 11 case, including all necessary actions to
protect and preserve the estate;
(c) prepare all motions, applications, orders and other
pleadings to be filed with the Court, and together with
USGen, preparation of schedules, statements and operating
reports;
(d) represent USGen at all hearings concerning its Chapter
11 case and at statutory creditors' meetings by the Office
of the United States Trustee;
(e) assist in the formulation and negotiation of a
reorganization plan or liquidation and related disclosure
statement; and
(f) render other legal services requested by USGen.
Blank Rome will be paid its customary hourly rates and reimbursed
of its expenses. The firm's current hourly fees are:
Partners $275 - 600
Associates and Counsel 180 - 540
Paraprofessionals 100 - 225
USGen engaged Blank Rome several months before the Petition Date
in connection with restructuring strategies and actual
preparations of a Chapter 11 filing. Blank Rome received a
$200,000 retainer, in connection with the out-of-court
restructuring efforts.
USGen Senior Vice President Ernest K. Hauser relates that Blank
Rome attorneys have considerable experience in reorganization
matters. In addition, the partners in the firm's bankruptcy
department are recognized experts in the reorganization field and
have represented major debtors, creditors' committees and other
parties in major Chapter 11 cases.
Marc E. Richards, Esq., a partner at Blank Rome, discloses that
the firm has represented in wholly unrelated matters certain
USGen creditors like, JPMorgan Securities, Inc. and JPMorgan
Delaware, Stone and Webster Inc., Distrigas of Massachusetts
Corporation and Energy Enterprise Inc. But Blank Rome does not
and will not represent any of these creditors in USGen's case.
Mr. Richards ascertains that Blank Rome is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
(PG&E National Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
PHILIP MORRIS: Judge Byron Orders $12-Billion Bond in 60 Days
-------------------------------------------------------------
Madison County Circuit Court Judge Nicholas Byron ordered Philip
Morris USA to post a $12 billion bond -- the amount of the bond he
had originally established -- or face enforcement of the $10.1
billion judgment in the Price class action lawsuit.
Judge Byron then stayed his order for 60 days in order to give the
company an opportunity to post the bond, something he earlier had
acknowledged the company cannot do, and indicated that the
Illinois Supreme Court should decide whether the company should be
allowed to post a lower bond.
Although Judge Byron had initially ordered Philip Morris USA to
post a $12 billion bond in light of his March 21 judgment, he
decided on April 14, after lengthy hearings, that the company was
unable to post a bond that large. He instead required the company
to place a $6 billion note owed PM USA, the $420 million annual
interest the note generates and an additional $800 million in cash
payable in quarterly installments into an escrow account
controlled by the court clerk.
Attorneys for the class, after conceding in those hearings that
Judge Byron had the discretion to take such action, appealed the
bond order because they contended that, by rule, Judge Byron had
no discretion to reduce the bond required.
On July 14, the Illinois Fifth District Appellate Court, at the
request of Price plaintiffs, ruled that Judge Byron exceeded his
authority by setting a bond lower than the amount of the judgment,
plus costs and interest. The appellate court also had issued a
stay of that decision.
"Unfortunately, Judge Byron . . . had no alternative in ordering
the company to post a $12 billion bond based on the instructions
he received from the Illinois Fifth District Appellate Court, even
though he recognized that Philip Morris USA cannot post a bond in
that amount and remain a viable business," said William S.
Ohlemeyer, Philip Morris USA vice president and associate general
counsel.
"Philip Morris USA believes that the lower bond established
earlier by Judge Byron, while onerous to the company, was and is
sufficient to protect the financial interests of the class during
an appeal and the company is optimistic the Illinois Supreme Court
will agree.
"Philip Morris USA strongly believes that requiring a bond of $12
billion so burdens the company's right to appeal the Price verdict
as to deny due process under both the Illinois and United States
constitutions," Ohlemeyer said.
"Unless the Illinois Supreme Court overrules the appellate court
regarding Judge Byron's discretion in establishing the terms of a
lower bond, the company will face enormous financial uncertainty
in the short term, and may not be able to meet its financial
commitments under the Master Settlement Agreement with the states
in the longer term," he added.
At issue is Illinois Supreme Court Rule 305(b) that states in
part, "on notice and motion, and an opportunity for opposing
parties to be heard, the (trial) court may stay the enforcement of
any judgment . . . conditioned upon such terms that are just."
Ohlemeyer said that although the Supreme Court has yet to rule,
"[This] decision brings a renewed sense of urgency to the
company's petitions currently before the Illinois Supreme Court;
we believe it is entirely appropriate that the Court interpret its
own rules, particularly in a matter with so much at stake for all
parties and the public.
"We believe the language of the Illinois Supreme Court Rule, the
judicial decisions construing it and the Illinois and federal
Constitutions compel a finding that Philip Morris USA is entitled
to a stay on the terms of the previous $6.8 billion bond.
Demanding a $12 billion bond that cannot be posted and forcing
Philip Morris USA into bankruptcy in order to exercise its right
to appeal would be unconstitutional."
Philip Morris Lawsuit
The underlying class action lawsuit pending before the Madison
County Circuit Court and is styled Price (f/k/a Miles) v. Philip
Morris, Cause No. 00-L-112. Stephen Tillery, Esq., at Korein and
Tillery and Michael Brickman, Esq., at Richardson, Patrick,
Westbrook & Brickman in Charleston, South Carolina, represent the
Plaintiff Class. George Lombardi, Esq., and Jeffrey Wagner, Esq.,
at Winston & Strawn serve as national defense counsel to Philip
Morris.
R.J. Reynolds
Korein and Tillery and Richardson Patrick have a carbon copy
lawsuit against R.J. Reynolds Tobacco Company and R.J. Reynolds
Tobacco Holdings, Inc., pending before Judge Moran in Madison
County. That case, captioned Turner v. R.J. Reynolds (a/k/a
Wallace v. R.J. Reynolds), Cause No. 00-L-113 (Ill. Cir. Ct.), was
tendered to the Madison County clerk a minute after the Price
complaint was filed and assigned to Circuit Judge George J. Moran.
The RJR lawsuit is scheduled to go to trial on October 6, 2003, on
behalf of a class comprised of all persons who purchased Doral
Lights, Winston Lights, Salem Lights and Camel Lights, in
Illinois, for personal consumption, from the first date that the
tobacco companies sold those brands through November 14, 2001.
RJR denies all of the Turner Plaintiffs' substantive allegations
and asserts 16 separate defenses. Daniel F. Kolb, Esq., Anne
Berry Howe, Esq., and Matthew B. Stewart, Esq., at Davis, Polk &
Wardwell, represent R.J. Reynolds Tobacco Holdings, Inc., and
Elizabeth Grove, Esq., Mark A. Belasic, Esq., and Sean P.
Costello, Esq., at Jones, Day, Reavis & Pogue represent R.J.
Reynolds Tobacco Co.
Brown & Williamson
The Tillery-Brickman Duo has a third lawsuit concerning light
cigarettes on the Madison County docket: Howard v. Brown &
Williamson, Cause No. 00-L-136 (Ill. Cir. Ct.), filed August 2,
2002.
The B&W case is scheduled for trial on March 29, 2004. Circuit
Judge Matoesian certified a class on Dec. 18, 2001, of all
purchasers of Misty Lights, GPC Lights, Capri Lights and Kool
Lights in Illinois for personal consumption from the first date
that the tobacco companies sold those brands through December 18,
2001.
William E. Hoffman, Esq., W. Randall Bassett, Esq., Barry Goheen,
Esq., and Gordon Smith, Esq., at King & Spaulding and Frank N.
Gundlach, Esq, at Armstrong Teasdale, LLP, represent B&W.
* * *
In the mid-1950's, the scientific community reached a consensus
that cigarette smoking could cause disease, including lung
disease. Publication of this information in the press resulted in
a sharp drop in the consumption of cigarettes (per capita in the
U.S.) as the public became aware that cigarette smoking caused
lung cancer. In an effort to prevent smokers from quitting for
health reasons, the tobacco industry began marketing filtered
cigarettes and "low tar and nicotine" cigarettes.
In 1964, the Surgeon General released a report concluding that
cigarette smoking caused lung cancer in men, and cigarette
consumption in the U.S. once again declined. In response to the
public health efforts to inform and protect the public, the
tobacco industry modified the design of the cigarette in an effort
to reassure the public that smoking filtered or "low tar"
cigarettes was safe, or at least safer than unfiltered or high tar
products.
The three lawsuits were filed separately in February 2001 in the
Circuit Court of Madison County, Illinois. The Plaintiffs allege
that the Three Tobacco Companies:
(A) falsely represented that their "light" cigarettes deliver
lowered tar and nicotine in comparison to regular full-
flavor cigarettes when in fact "light" cigarettes are by
design not significantly lower in tar and nicotine than
regular full-flavor cigarettes when actually smoked; and
(B) intentionally manipulated the design of their "light"
cigarettes in order to maximize nicotine delivery while
falsely claiming that the "light" cigarettes have lowered
tar and nicotine content.
The Tobacco Companies deny they have done anything wrong. The
Plaintiffs want refunds of the purchase price paid for light
cigarettes for violation of Illinois false advertising and
consumer fraud laws.
What's a Light Cigarette?
The Plaintiffs argue that the term "light" is based on misleading
smoking machine tar and nicotine yields
Consumers equate the term "light" with "healthy." To the average
consumer, "light" means a product contains less of an unhealthy
ingredient. In the case of food and alcohol, the Food and Drug
Administration (FDA) regulates the use of the terms "light" and
"low," so that a "light" food product must contain significantly
fewer calories and less fat than its "regular" counterpart; a
"light" alcohol product such as beer contains fewer calories than
regular beer, and its alcohol content must be below a specified
percentage. The strict governmental regulation of the use of such
terms has no doubt served to reinforce the perception among
consumers that "light" means "healthy," even though there is no
similar regulation of the terms "light" or "low" as applied to
cigarettes. Nevertheless, there is a widespread belief among
consumers that "light" cigarettes contain less tar and nicotine, a
misperception fostered by light cigarette advertisements. In fact,
"light" cigarettes are lower in tar and nicotine only when they
are "smoked" artificially by a machine in a laboratory. Because of
the way in which people smoke cigarettes, they do not receive
those lower tar and nicotine levels.
In an attempt to avoid Federal Trade Commission, tobacco companies
voluntarily agreed among themselves in 1970 to a set of smoking
machine standards. Already aware that people do not smoke in the
same way the machine "smokes," the industry set about to fool the
smoking machine. Tobacco scientists designed "light" cigarettes
which resulted in very low levels of tar and nicotine when smoked
by machine, but much higher levels of tar and nicotine when smoked
by people. Those design features included making the cigarette
burn faster (so there will be fewer puffs during smoking-machine
testing), expanding the tobacco (less tobacco weight per
cigarette), and placing microscopic ventilation holes in the
cigarette filter which draw in air and dilute the smoke stream
when the cigarette is puffed.
"Compensatory" Smoking Behavior
Although they were designing "light" cigarettes to trick the
smoking machine, tobacco manufacturers recognized that smokers
would "compensate" - unconsciously modify their smoking behavior -
in a variety of ways to maintain their intake of nicotine. Because
of "compensation," smokers of "low tar" cigarettes would not
substantially reduce their intake of tar or nicotine or their
disease risk. Unaware of their "compensatory" behavior, smokers of
"light" cigarettes puff more frequently and take deeper puffs.
Most consumers do not even know the cigarette filter has
ventilation holes which smokers unwittingly block with their
fingers or lips.
Low Tar Cigarettes Do Not Reduce Disease Risk
Use of the phrase "low tar" spread until "low tar" cigarettes
became the dominant cigarette in the U.S. market. Ninety-seven
percent of the cigarettes sold in the United States are filtered
cigarettes. Nevertheless, lung cancer rates have climbed in the
U.S. in spite of the overwhelming popularity of "low tar"
cigarettes. It is now generally recognized in the scientific
community that these "low yield" products have not resulted in a
meaningful reduction in disease risk.
Light Doesn't Mean Less Tar
The Tobacco Companies say that the Plaintiffs misunderstand their
use of the English language. Light means not full-flavored, they
say, rather than safer or less inhaled tars and other toxic
substances.
Enid Sterling and Aurora Fatima Antonio provide continuing
coverage about these three lawsuits in the Class Action Reporter.
See http://www.beardgroup.com/class_action_reporter.htmlfor
additional information about that Beard Group publication.
PILLOWTEX CORP: Wants to Honor Prepetition Customer Obligations
---------------------------------------------------------------
Pillowtex Corporation and its debtor-affiliates have certain
outstanding prepetition obligations to their customers, which
otherwise would be honored in the ordinary course of their
businesses. Given the critical nature of the Debtors'
relationships with their customers to the orderly liquidation of
the Debtors' accounts receivable and inventory and the sensitivity
of the Debtors' creditors to the speed and price at which these
assets are liquidated, the Debtors seek the Court's authority, in
their sole discretion, to honor or pay certain Customer
Obligations without interruption and as part of the orderly
liquidation of the Debtors' businesses.
Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, reports that the cost of honoring or paying
all Customer Obligations will be approximately $30,530,000. These
Customer Obligations include:
A. Incentive Arrangements
Under the Incentive Arrangements, the Debtors:
(i) provide "opening order" discounts to customers who
purchase the Debtors' products to stock first-time
inventory at a new store,
(ii) provide "new color" discounts to customers who purchase
new products,
(iii) provide "event" subsidies to customers who temporarily
reduce retail sale prices of the Debtors' products, and
(iv) provide discounts and rebates to customers, some that
vary based on the volume of business with the customer,
to encourage the customer to purchase the Debtors'
product.
As of the Petition Date, the Debtors have unperformed
obligations to their customers under these Incentive
Arrangements and other similar arrangements. The Debtors
estimate that, as of the Petition Date, the aggregate amount
owed to customers for the Incentive Obligations was
approximately $16,000,000.
B. Promotional Arrangements
Under the Promotional Arrangements, the Debtors make payments
to Customers:
(i) for placement of the Debtors' products in certain prime
shelf locations or in-store displays, and
(ii) to subsidize the customers' advertising costs related
to the Debtors' products.
The Debtors estimate that, as of the Petition Date, the
aggregate amount owed to customers for the Promotional
Arrangements was approximately $1,230,000.
C. Credits
The Credits are prepetition claims or contingent prepetition
claims of the Debtors' customers for refunds, adjustments,
product returns or exchanges, discounts offered in lieu of
product returns and other credits. The Debtors estimate that,
as of the Petition Date, the amount of Credits relating to
contractual discounts offered in lieu of product returns was
approximately $6,500,000 and the amount of Credits relating to
returns, refunds or adjustments not yet specifically
identified because the customers had not informed the Debtors
of these Credits as of the Petition Date was approximately
$6,800,000. The latter amount has been reserved for in the
Debtors' books.
Ms. Harris asserts that any delay in honoring or paying Incentive
Obligations, Promotional Obligations or Credits will severely
impair the Debtors' customer relations at a time when these
relations are crucial to the success of the Debtors' liquidation.
The Debtors are concerned that the deterioration in their
customer relationships may undermine their ability to collect
outstanding accounts receivable from these very same customers.
In addition, on the Petition Date, the Debtors held approximately
$164,300,000 in finished goods inventory. Ms. Harris says that
the Debtors' existing customers are the logical buyers for most
of this inventory. Failure to honor Customer Obligations may
negatively impact the customers' willingness to buy these goods
or the price they are prepared to pay.
Moreover, many of the Debtors' customers to whom Customer
Obligations are owed have set-off rights, permitting them, with
Court approval, to offset the Debtors' obligations to them
against prepetition amounts they owe the Debtors. Since Customer
Obligations owing to customers who have set-off rights would be
effectively paid or otherwise satisfied from assets of the
Debtors' estates if those customers exercise their set-off
rights, the payment of the Customer Obligations would not deplete
the Debtors' assets generally available to other creditors.
The Debtors represent that they have sufficient cash reserves,
together with anticipated access to sufficient DIP financing, to
pay all amounts in respect of Incentive Obligations, Promotional
Obligations and Credits in the ordinary course of their
businesses.
Thus, the Debtors seek the Court's authority to:
(1) in their sole discretion, satisfy Customer Obligations, as
part of the orderly liquidation of their businesses, in
the same manner and on the same terms and conditions as
the obligations were satisfied prior to the Petition Date,
including by honoring and paying Incentive Obligations,
Promotional Obligations and Credits;
(2) continue honoring or paying all Customer Obligations that
arise from and after the Petition Date as part of the
orderly liquidation of their businesses; and
(3) direct all applicable banks and other financial
institutions, when requested by the Debtors, in their sole
discretion, to receive, process, honor and pay any and all
checks drawn on the Debtors' accounts in respect of
Customer Obligations, whether the checks were presented
prior to or after the Petition Date, provided that
sufficient funds are available in the applicable accounts
to make payments. (Pillowtex Bankruptcy News, Issue No.
48; Bankruptcy Creditors' Service, Inc., 609/392-0900)
PRIMEDIA INC: Names David Kirchhoff SVP and CFO for CMM Group
-------------------------------------------------------------
PRIMEDIA Inc. (NYSE: PRM) (S&P/B/Stable), the leading targeted
media company, announced two senior leadership appointments for
its Consumer Media and Magazine Group.
David P. Kirchhoff (37) has been named senior vice president and
Chief Financial Officer and Kevin Neary (39) has been appointed
senior vice president of finance. Mr. Kirchhoff replaces former
CMMG CFO Linda Jenkins, who will retire after seventeen years with
the company. Mr. Kirchhoff will report to David Ferm, President
and CEO of PRIMEDIA's Consumer Magazine and Media Group. Mr.
Neary will report to Mr. Kirchhoff.
Mr. Kirchhoff joins PRIMEDIA after working for the highly
successful Weightwatchers.com, Inc where he served as senior vice
president of strategy and business development since 2000, before
assuming the additional responsibilities of CFO in January 2003.
In this role, Kirchhoff led a multi-functional team across the
organization. Before going to Weightwatchers.com, Mr. Kirchhoff
spent time at Pepsico, Inc. as director of corporate strategy and
development and was a founding member of the Washington DC office
of the Boston Consulting Group.
Kevin Neary has spent the past twelve years in various leadership
positions at PRIMEDIA. Most recently, Neary served as Chief
Operating Officer and Chief Financial Officer of PRIMEDIA's
Television Group, which includes Channel One, Films for the
Humanities and Sciences, and Primedia Digital Video where he was
responsible for financial functions and strategic planning. Prior
to that, Mr. Neary was the director of acquisition analysis,
overseeing PRIMEDIA's financial areas of due diligence. Before
joining PRIMEDIA, Mr. Neary was an audit manager at Ernst & Young.
"David's extensive background in corporate strategy, development
and finance make him the ideal person to lead the CMMG financial
group going forward," said Mr. Ferm. "As an experienced leader
and strategic thinker with a strong pedigree, David brings to
PRIMEDIA the organizational, operating and financial acumen
critical to the long-term success of our business unit."
"We are also pleased to welcome Kevin to the CMMG family. He has
a deep understanding of PRIMEDIA's many media assets and
businesses and know he will bolster David and the entire finance
team," added Ferm.
PRIMEDIA is the largest targeted media company with leading
positions in consumer and business-to-business markets. Our
properties deliver content via print, along with video, the
Internet and live events and offer highly effective advertising
and marketing solutions in some of the most sought after niche
markets. With 2002 sales from continuing businesses of $1.6
billion, PRIMEDIA is the #1 special interest magazine publisher in
the U.S. with more than 250 titles. Our well known brands include
Motor Trend, Automobile, New York, Fly Fisherman, Power &
Motoryacht, Ward's Auto World, and Registered Rep. The company is
also the #1 producer and distributor of free consumer guides,
including Apartment Guides. PRIMEDIA Television's leading brand
is the Channel One Network and About is one of the largest sources
of original content on the Internet. PRIMEDIA's stock symbol is:
NYSE: PRM. More information about the company can be found at
http://www.primedia.com
RENT-WAY INC: Fiscal Third-Quarter Results Show Strong Growth
-------------------------------------------------------------
Rent-Way Inc. (NYSE: RWY) (S&P/B+/Stable) released financial
results for its fiscal third quarter, ended June 30, 2003. (All
current and historical results reflected in this press release
have been reclassified following the Company's recent sale of 295
stores, which were accounted for as discontinued operations in
accordance with SFAS 144.)
The Company reported consolidated revenues of $122.4 million for
its third fiscal quarter, versus $126.0 million in the same
quarter of the last fiscal year. Revenues in the Company's core
rental business were $113.4 million versus $116.1 million in the
same quarter last year. Same store revenues decreased 1.9% year-
over year. Consolidated operating income in the fiscal third
quarter of 2003 was $15.2 million, up from consolidated operating
income of $6.9 million in the same period last year. Consolidated
net income for the quarter was $4.5 million versus a consolidated
net loss of $6.0 million last year. The net income available to
common stockholders was $4.4 million, compared with a net loss of
$6.0 million in third quarter 2002.
The year-over-year increase in operating and net income is
primarily attributable to several significant items, which
impacted financial results in the quarter. Specifically, the
Company recorded $4.6 million of income related to an annual
retrospective insurance adjustment, a $1.6 million reduction in
personal property tax accruals, and $0.3 million of income from
the recovery of insurance reimbursement of legal fees, offset by
$0.8 million of restructuring expenses. In the third quarter of
last year, the Company's results reflected significant items
consisting of a retrospective insurance adjustment charge of $4.7
million and $1.9 million of income from the recovery of insurance
reimbursement of legal fees. Financial results in this release
that exclude these significant items represent non-GAAP financial
measures (as defined by SEC Regulation G). The Company believes
these measures provide useful information about operations in the
third quarter and offer investors greater comparability of
quarterly financial performance on a year-over-year basis. A
reconciliation of these measures with the most directly comparable
GAAP financial measures is presented in the supplemental
information chart attached to this release. Excluding the impact
of these significant items, the Company would have reported fiscal
third quarter 2003 operating income of $9.5 million and a net loss
of $1.2 million and operating income of $9.6 million and a net
loss of $3.2 million for its fiscal third quarter of 2002.
William E. Morgenstern, Chairman and CEO of Rent-Way, stated, "We
are excited about where Rent-Way is today and where we are headed.
With the distractions of the past 32 months fully behind us, the
Company can now focus 100% of its attention on the basics of our
business and our plans for growth. The initial objective of our
plan was to streamline operations to improve our margins and
profits. While our net income this quarter was supported by
several significant items, the over 200 basis point improvement in
rental gross margin versus last year is a clear indication that
our efforts are working. With these greater operational
efficiencies in place, we can now turn our attention to building
our top-line."
William A. McDonnell, Vice President and CFO commented, "Revenue
growth, particularly same store results, was negatively impacted
over the past 2-1/2 years as we worked through the financial and
legal hurdles facing the Company. Consequently, we entered this
summer with a lower existing agreement base from which to generate
revenues due to a slower summer last year. As a result, third
quarter same store revenue was lower. Despite this impact,
however, we are encouraged by the increase in total rental
agreements executed year-to-date and we continue to see new
traffic in our stores."
Mr. Morgenstern, continued, "We can now shift away from a
defensive business mode, and are positioned to invest back into
our business to regain the revenue and market share lost over the
past few years. In particular, we are pursuing a major, year-round
marketing and advertising program in our key markets to increase
brand awareness and drive customer traffic. We will also continue
to invest in our infrastructure. Our stores are well staffed with
highly knowledgeable sales associates and our showrooms are filled
with a broad selection of top brand, high quality products. With
this plan in place, we look forward with confidence that we can
meet our growth objectives in the next 18-24 months."
The Company reported EBITDA in the fiscal 2003 third quarter of
$20.0 million versus $13.3 million last year. EBITDA for the
Company is operating income plus depreciation of property and
equipment and amortization of goodwill and other intangibles and
includes the effects of each of the significant items discussed
above in the third quarters of both fiscal 2003 and 2002. Adjusted
to exclude these significant items, the Company reported EBITDA of
$14.3 million versus $16.1 million in the year-earlier quarter.
EBITDA and EBITDA adjusted to exclude significant items represent
non-GAAP financial measures (as defined by SEC Regulation G). The
Company believes these measures provide useful information
regarding its ability to service its debt and its ability to
generate cash for other purposes including for capital
expenditures and working capital. EBITDA and EBITDA as adjusted
are not measures of liquidity under GAAP and should not be
considered a substitute for other financial measures of liquidity.
These measures may differ from and may not be comparable to other
similarly titled measures used by other companies.
Rent-Way reduced its debt in the quarter to $235 million as of
June 30, 2003 versus $303 million for the comparable quarter last
year.
Mr. Morgenstern concluded, "We know from experience that a
customer that feels Welcome, Wanted and Important will return to
our stores and refer other customers. Our plan, coupled with a
financial structure that can support growth, truly positions Rent-
Way to capitalize on its new beginning and re-establish itself as
a growth business."
Rent-Way is one of the nation's largest operators of rental-
purchase stores. Rent-Way rents quality name brand merchandise
such as home entertainment equipment, computers, furniture and
appliances from 753 stores in 33 states.
REPTRON ELECTRONICS: Will Hold 2nd Quarter Conference Call Today
----------------------------------------------------------------
Reptron Electronics, Inc. (Nasdaq: REPT), an electronics
manufacturing services company, will hold a live Web cast of its
conference call to discuss its 2003 second quarter results on
Tuesday, August 19, 2003, at 11:00 a.m. Eastern Time.
In a previous announcement, Reptron Electronics, Inc. also
reported that it will file Form 12b-25 with the Securities and
Exchange Commission requesting a five-day extension to report its
second quarter 2003 Form 10Q.
If you would like to participate on the Web cast, please go to the
home page of the Reptron Electronics Web site,
http://www.reptron.com 10 minutes before 11:00 a.m. (EDT), on
August 19, 2003. A replay of this Web cast will be accessible for
30 days after the call at the Reptron Electronics corporate Web
site, http://www.reptron.comstarting at 2 p.m. (EDT), Tuesday,
August 19 and ending at midnight, September 18, 2003.
Reptron Electronics, Inc. is an electronics manufacturing services
company providing engineering services, electronics manufacturing
services and display integration services. Reptron Manufacturing
Services offers full electronics manufacturing services including
complex circuit board assembly, complete supply chain services and
manufacturing engineering services to OEMs in a wide variety of
industries. Reptron Display and System Integration provides
value-added display design engineering and system integration
services to OEMs. For more information, access
http://www.reptron.com
Restructuring the 6-3/4% Notes
As reported in Troubled Company Reporter's July 02, 2003 edition,
the Company reached an agreement on a term sheet to restructure
its 6-3/4% Subordinated Convertible Notes due in August, 2004. The
current outstanding balance on the Notes is approximately $76.3
million. The agreement was negotiated with an ad hoc committee of
Noteholders. Conclusion of the understanding reached is subject to
satisfaction of a number of conditions and the negotiation and
execution of definitive agreements.
In February this year, Standard & Poor's Ratings Services lowered
its corporate credit rating on Reptron Electronics Inc. to 'D'
from 'B-' and its subordinated note rating to 'D' from 'CCC',
after the Company failed to make the semiannual interest payment
due on Feb. 1, 2003, on its 6-3/4% convertible bonds.
SEA CONTAINERS: Reports Slight Decline in Second Quarter Results
----------------------------------------------------------------
Sea Containers Ltd. (NYSE: SCRA, SCRB) --
http://www.seacontainers.com-- marine container lessor, passenger
and freight transport operator, and leisure industry investor,
announced its results for the second quarter and six months ended
June 30, 2003.
Net earnings for the quarter were $9.3 million on revenue of $420
million, compared with net earnings of $16 million on revenue of
$337 million in the year earlier period. For the six months net
earnings were a loss of $1 million on revenue of $771 million,
compared with net earnings of $10 million on revenue of $556
million in the year earlier period.
Silja, the Baltic ferry operator subsidiary, incurred higher than
normal winter losses this year due to exceptionally harsh weather
with ice conditions prevailing until the beginning of May. There
were also reduced travel during the Iraq conflict and very high
fuel prices related to the war. However, Silja's traffic volumes
have recovered and it expects to report strong results for the
third quarter. Sea Containers issued in June, 2002 2.5 million
Class A common shares in part payment for the purchase of the
additional shareholding, increasing the average number of common
shares outstanding in the first half of 2003 by 8.5%.
Although the company sold the Isle of Man Steam Packet Company
effective June 30, 2003 for a gain of $100 million the Sea
Containers' auditors have indicated that this gain should be
recognized in the third quarter because the sale contract became
binding and the funds were received in July. The company feels
that recognizing the gain at June 30, 2003 would be a better
presentation of its financial position at that date but this is
merely a timing issue and will not affect the results for the
year. All benefit of ownership of the Steam Packet Company
transferred to the new owners from July 1, 2003.
For the second quarter, operating profits from other ferry
operations were about $1 million down from the prior year due to a
variety of factors none of which is significant in its own right.
Needless to say, the Iraq conflict rather discouraged travel
during the period and exceptionally high fuel prices (the company
was 50% hedged at lower prices) didn't help. In New York City
SeaStreak leased two new terminal facilities but will not get new
vessels to service them for several months. Ferry volumes in the
third quarter are satisfactory and the magnificent weather in
Europe has eliminated (so far) weather related delays. The
reduction in value of the U.K. pound to the European Euro has
stimulated travel from the Continent to the U.K. this summer.
The second quarter profits from rail are slightly down from the
year earlier quarter due to less penalty payments from Network
Rail.
The company's marine container leasing business has continued to
strengthen with operating profits for the second quarter of $10.8
million compared with $3.8 million in the year earlier period. For
the six months operating profits were $20.7 million vs. $12
million in the prior year period. Demand continues strong for new
containers placed on long leases. GE SeaCo, the company's joint
venture with GE Capital Corporation, placed on lease $83 million
of new containers in the first six months of 2003 and approx. $100
million of new containers are on order for delivery in the second
half of the year. The seasonal lease of refrigerated containers
was better than the year earlier period with 14,200 units leased
out in the winter of 2002/2003 vs. 13,500 leased out in the winter
of 2001/2002. The inability of lessors to accept return of older
standard dry cargo containers in low demand locations has caused a
modest slackening of demand for such equipment. However, demand
for specialized containers such as tanks, swap bodies and flat
racks is strong. GE SeaCo is the industry leader in specialized
container leasing. The company's depots and factories are
performing satisfactorily.
The company owns 47% of the common shares of Orient-Express Hotels
and reports its earnings from this investment on an equity basis.
In the second quarter of 2002 the company owned 60% of Orient-
Express Hotels. Orient-Express Hotels issued its second quarter
and six months results on August 6, 2003 and its earnings press
release can be reviewed on its Web site at
http://www.orient-express.com
In its earnings conference call on August 6 Orient-Express Hotels
management indicated that tourist train and cruise profits would
be substantially down on the prior year because the Iraq war
coincided with the main booking period for those products. Hotels
account for 80% of the company's profits and they will be stable
for the year compared with the year earlier period, assisted by
the recent acquisition of the Hotel Ritz in Madrid. Sea Containers
still has no present plans to sell its shareholding in Orient-
Express Hotels. It believes that 2004 will be unaffected by events
such as the Iraq war and SARS and travel will return to more
normal patterns which will be reflected in improved earnings for
Orient-Express Hotels and hopefully, improved share prices.
Mr. James B. Sherwood, Chairman, said that had the Steam Packet
sale been recorded as a June 30, 2003 event the company would have
reported profits of $2.76 per common share diluted for the six
months after recognizing $40 million for non-recurring charges.
Since this profit will be taken in the third quarter, the
company's main earnings period of the year, the total profit for
the period will be exceptionally high.
He said that the company wishes to operate its Dover-Calais fast
ferry service on a seasonal basis in the future. It already
operates its Newhaven-Dieppe service seasonally and this has
proved successful. Consultation with employees on this change in
operations will start shortly and until that process is complete
no date can be set for the change. Restructuring costs will be
included in the $40 million of non-recurring charges.
Mr. Sherwood said the outlook for the second half year was
encouraging, excluding the gain on sale of the Steam Packet
Company. All ferry units are enjoying a good peak season, rail
volumes are increasing, excellent growth is being experienced in
marine container leasing and Orient-Express Hotels should achieve
satisfactory results. Debt service costs were $1.7 million less in
the first six months of 2003 compared with the same period in
2002, due to lower interest rates and foreign exchange gains. In
the second half of 2003 the company will enjoy lower debt service
costs due to the retirement of $159 million of 9.5% and 10.5%
senior notes on July 1, 2003 achieved largely through gains on
asset sales. Sale of most of the company's port interests in
Newhaven and Folkestone is expected in the near future.
* * *
As reported in Troubled Company Reporter's July 17, 2003 edition,
Moody's Investors Service downgraded the ratings of Sea Containers
Ltd. Ratings outlook is negative.
Downgraded Ratings To From
* $115 million 10.75% Sr. Notes due 2006 B3 B1
* $150 million 7.875% Sr. Notes due 2008 B3 B1
* $98 million 12.5% Sr. Sub. Notes due 2004 Caa1 B2
* Senior implied B2 B1
* Issuer rating B3 B1
The downgrades conclude the ratings review Moody's started on
December 2002. The actions reflect the company's high debt levels,
weak cash flow and weak operating performance. These are however
offset by the company's fixed asset base, its position in certain
markets and improving financial performance.
Moody's is also concerned that "near-term debt maturities will not
be covered by the company's current level of operating cash flows,
and that additional asset sales or refinancing may be required to
meet debt obligations."
SEQUA CORP: Posts Higher Operating Results for Second Quarter
-------------------------------------------------------------
With improvement across a range of operations and particularly
strong advances at its metal coating, specialty chemicals and can
machinery business units, Sequa Corporation (SQAA, NYSE) generated
a 17 percent advance in operating income on nine percent higher
sales for the second quarter of 2003.
Operating income for the quarter ended June 30, 2003 increased to
$16.7 million from $14.3 million in the same period of 2002, while
sales totaled $420.3 million in the current year's second quarter,
up from sales of $384.4 million in the second quarter a year ago.
Operating income is after restructuring charges of $2.5 million in
the second quarter of 2003 and $0.9 million in the 2002 period.
For the 2003 period, operating income includes $3.1 million
derived from a reduction in the company's estimated obligation
related to a dispute on contractual issues at the commercial
aviation repair business of the aerospace segment.
Income from continuing operations advanced to $3.3 million for the
second quarter of 2003 from $1.4 million in the year-ago period.
The current quarter includes a pre-tax gain of $3.8 million on the
sale of assets. The gain, which is recorded as other income,
increased income from continuing operations by 24 cents per share.
The 2002 quarter included a $0.5 million gain on a natural gas
swap that added three cents per share to income from continuing
operations. Results for the second quarter and six months of 2002
have been restated for discontinued operations.
Income from discontinued operations - which represents the results
of the ARC propulsion business - was $2.1 million for the second
quarter of 2003 and $2.3 million for the same period a year ago.
Final net income amounted to $5.5 million in the second quarter of
2003, compared with net income of $3.7 million a year ago.
Summary of Results by Business Segment
Sequa's business segments changed in the second quarter, following
the May 2003 agreement to sell the ARC propulsion business to
GenCorp and the consequent reclassification of this business to
discontinued operations. As a result, Sequa established a new
segment, Automotive, that consists of the remaining ARC operation
- airbag inflator manufacturer ARC Automotive - and Casco
Products, a supplier of automobile cigarette lighters, power
outlets and electronic monitoring devices. Casco Products was
previously included in the other products segment.
Aerospace Chromalloy Gas Turbine, Sequa's largest operating unit,
recorded sharply lower sales and operating income for the second
quarter of 2003 compared with the same period last year, due to
the continued downturn and intense pricing pressure in the
commercial airline market. Second quarter operating income for the
segment is after a restructuring charge of $1.6 million. In
response to the persistent restrictive market conditions,
Chromalloy has consolidated its facility usage, intensified
internal efficiency efforts, and reduced its workforce. With
airline customers reporting modest improvement in the tone of
business, it appears likely that results for Chromalloy will be
higher in the third quarter of 2003 than in the second quarter.
Full-year results, however, are expected to be lower than in 2002.
Automotive. The two operations in the segment - ARC Automotive and
Casco Products - had higher sales for the second quarter, due
chiefly to advances at overseas units. Operating income declined,
as ARC Automotive recorded a small loss and Casco posted lower
results after restructuring charges and costs associated with the
transfer of operations from the Northeast to lower cost operating
regions. The effect of these factors was mitigated by the benefits
of higher sales, improved operating efficiencies and the
translation of foreign currency results into US dollars.
Metal Coating. Precoat Metals, which coats coils of steel and
aluminum for industrial end users, registered sharply higher sales
and profits for the second quarter. The sales gain was derived
chiefly from new metal management programs, although sales to the
large building products market began to strengthen in the quarter.
Profitability at this unit continued to benefit from ongoing Six
Sigma and other operational excellence initiatives.
Specialty Chemicals. Results of United Kingdom-based chemicals
supplier Warwick International moved sharply higher in the second
quarter, with sales up 27 percent and operating income more than
70 percent ahead. The gains reflect improvement at both the
detergent chemicals manufacturer and the specialty chemicals
marketing units. Warwick's results, which were bolstered by the
effects of Six Sigma and other operational excellence activities,
also reflect the benefit of a rise in the value of the Euro
against the British pound and the favorable effect of translating
foreign currency results into US dollars.
Other Products. Results improved for the two larger of three
operating units remaining in the other products segments. Sales of
the largest business, equipment supplier MEGTEC Systems, moved
higher, benefiting from increased European sales of emission
control products. This unit posted a modest profit for the second
quarter, despite continued poor conditions in one of its principal
markets - graphic arts. Results for MEGTEC are expected to
continue to improve over the balance of the year, as the benefits
derived from past restructuring actions and ongoing Six Sigma
efforts continue to accumulate. Sequa Can Machinery posted sharply
higher results for the quarter, as sales more than doubled and
profits rose substantially. Based on backlog at the end of the
quarter, results for this unit are expected to decline
substantially in the second half from the high level of the first
six months of 2003. The men's apparel unit, After Six, recorded
lower results for the second quarter, reflecting seasonally lower
sales and pricing constraints in the formal wear market.
Six Months Summary
For the first half of 2003, Sequa's sales rose nine percent to
$817.8 million from $750.5 million in the same period of 2002, and
operating income increased 17 percent to $23.6 million from $20.1
million. The company recorded a loss from continuing operations of
$0.1 million or 11 cents per share for the six months of 2003 and
a loss from continuing operations of $2.5 million or 34 cents per
share for the same period of 2002.
Results for the six months of 2002 were further reduced by a
change in accounting for goodwill - which lowered results by $13.0
million or $1.25 per share.
For the six months of 2003, income from discontinued operations
(ARC propulsion) was $2.5 million or 24 cents per share. In the
comparable period of 2002, the company recorded a loss from
discontinued operations of $98.7 million or $9.49 per share. The
2002 loss reflected income from discontinued operations (ARC
propulsion) of $3.1 million or 30 cents per share, offset by a
loss of $101.8 million or $9.79 per share from a change in
accounting for goodwill.
As reported in Troubled Company Reporter's June 05, 2003 edition,
Fitch Ratings downgraded the existing senior unsecured debt of
Sequa Corporation to 'B+' from 'BB-' and assigned a rating of
'B+' to SQA's $100 million senior unsecured notes that are
expected to close on June 5, 2003. Fitch has also revised the
Rating Outlook to Stable from Negative.
SHC INC: Asset Sale Auction Scheduled for September 3, 2003
-----------------------------------------------------------
On July 23, 2003, the U.S. Bankruptcy Court for the District of
Delaware authorized the sale of substantially all of the assets of
SHC, Inc., and its debtor-affiliates. The sale will be free and
clear of all liens and encumbrances and subject to higher and
better offers.
If a qualified competing bid is received, the Court will convene
an auction sale for the assets on Sept. 3, 2003, at 10:00 a.m.
Eastern Time at the offices of the Debtors' Counsel, Young Conaway
Stargatt & Taylor LLP.
Any party that wishes to take part in the process and submit a
competing bid must file it on or before August 27, and deliver a
copy to The Top-Flite Golf Company, 425 Meadow Street, Chicopee,
MA 01013-2135, Attn: Peter Arturi, Esq., General Counsel. Copies
must also be sent to:
1. Counsel for the Debtors
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Attn: Kenneth M. Schneider, Esq.
Andrew N. Rosenberg, Esq.
-and-
Young, Conaway Stargatt & Taylor LLP
The Brandywine Building
1000 West Street
17th Floor
PO Box 391
Wilmington, DE 19899-0391
Attn: Pauline K. Morgan, Esq.
2. Counsel for the Purchaser
Gibson, Dunn & Crutcher LLP
Jamboree Center
4 Park Plaza
Suite 1400
Irvine, California 92614-8557
Attn: Thomas Magill, Esq.
-and-
Morris, Nichols Arsht & Tunnel
1201 North Market Street
PO Box 1347
Wilmington, DE 19899-1347
Attn: Scott K. Charles, Esq.
3. Counsel for the Official Committee of Unsecured
Creditors
Squire, Sanders & Dempsey LLP
312 Walnut Street
Suite 3500
Cincinnati, OH 45202
Attn: Stephen D. Lerner, Esq.
Jeffrey A. Marks, Esq.
If no qualified bid is received by the bid deadline, the auction
will not be held. Buyer will be deemed the Successful Bidder and
at the Sept. 4 Sale Hearing, Seller will seek the Court's approval
to consummate the Sale Transaction.
At the Sale Hearing, the Debtors shall present both the Successful
Bid and the next highest and best Bid for approval. If the
Successful Bidder fails to consummate an approved Sale because of
a breach or failure to perform, the next highest Bid shall be
deemed approved as the Successful Bid.
SHC, Inc., headquartered in Chicopee, Massachusetts is a
manufacturer of golf balls and clubs and other sporting goods. The
Company filed for chapter 11 protection on June 30, 2003 (Bankr.
Del. Case No. 03-12002). Pauline K. Morgan, Esq., at Young,
Conaway, Stargatt & Taylor represents the Debtors in their
restructuring efforts.
SK GLOBAL AMERICA: Wants OK to Tap Ordinary Course Professionals
----------------------------------------------------------------
SK Global America's management identified six law firms that it
routinely turns to in the ordinary course of its business:
(1) Pryor Cashman Sherman & Flynn LLP
Pryor Cashman provides the Debtor with general corporate
work and currently represents the Debtor in seven
Actions.
(2) Ross & Hardies
Ross & Hardies is the Debtor's local counsel for an
Action against Kookmin Bank, New York Branch pending in
the Circuit Court of Cook County, Illinois.
(3) Skadden, Arps, Slate, Meagher & Flom LLP
Skadden is the Debtor's legal counsel in its defense of
the investigation by the U.S. Federal Government into
certain alleged embargo violations.
(4) Paul Hastings Janofsky & Walker
Paul Hastings is the Debtor's legal counsel in a civil
action Eun J. Yang filed in the Superior Court of
California, County of Los Angeles.
(5) Baker & McKenzie
Baker & McKenzie is the Debtor's legal counsel in a
civil case Jose Joaquin Lopez Montez Y Diaz filed in the
Mexican Federal Conciliation and Arbitration Board in
Mexico City.
(6) Bingham McCutchen
Bingham is the Debtor's legal counsel in two Actions.
Pursuant to Sections 105 and 327 of the Bankruptcy Code, the
Debtor is required to file formal applications with the Court
should it wish to employ professionals. However, the Debtor
finds it costly if each of these professionals were required to
step through the process of filing and prosecuting formal fee
applications.
To save itself from substantial expenses, the Debtor proposes
certain guidelines pertaining to preparing and prosecuting
interim fee applications together with the review process by
other parties-in-interest. Likewise, Scott E. Ratner, Esq., at
Togut, Segal & Segal LLP, in New York, reports that the procedure
will relieve the Court and the United States Trustee of the
burden of reviewing numerous fee applications involving
relatively small amounts of fees and expenses.
The Debtor suggests that each Professional will file an affidavit
with the Court, disclosing that it does not represent or hold any
interest adverse to the Debtor or its estate, in respect of the
matters in which each of them is engaged.
Pursuant to Sections 105(a) and 330, the Debtor further proposes
to pay, without formal application, 100% of the interim fees and
disbursements to each professional on the condition that the
interim fees and disbursements do not exceed $25,000 per month or
a total of $300,000 annually. In the event a professional is
paid more than $25,000 per month, the Debtor will submit a formal
application to employ that professional for compensation and
reimbursement of expenses.
The Debtor reserves the right to supplement its list of ordinary
course professionals from time to time, as necessary. The Debtor
will file a supplemental list with the Court and serve it on the
U.S. Trustee, and counsel to the Official Creditors' Committee,
once appointed. If no objections are filed to each supplemental
list within 10 days after service, then each list would be deemed
approved without the necessity of a Court hearing.
Accordingly, the Debtor seeks the Court's authority to employ and
compensate the Ordinary Course Professionals in the ordinary
course of its business. (SK Global Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SL INDUSTRIES: Second Quarter Results Show Slight Improvement
-------------------------------------------------------------
SL Industries, Inc., (AMEX & PHLX:SLI) announced that revenue for
the second quarter ended June 30, 2003 was $27,444,000, compared
to $27,924,000 for the second quarter last year, a decrease of
$480,000, or 1.7%. Net income from continuing operations was
$699,000, compared to net income of $117,000 for the same period
in 2002. Discontinued operations added net income of $214,000 in
2002 for a total net income of $331,000 in the three months ended
in June 30, 2002.
Net sales from continuing operations for the six months ended
June 30, 2003 were $53,662,000, compared to net sales of
$55,457,000 for the six months ended June 30, 2002, a decrease of
$1,795,000, or 3.2%. Net income from continuing operations for the
six months ended June 30, 2003 was $885,000, compared to a net
loss from continuing operations of $811,000 for the same period
last year. Discontinued operations added net income of $766,000
for a total net loss of $45,000 for the six month period ended
June 30, 2002. During the six month period ended June 30, 2002,
the Company incurred special charges of $1,834,000 (change-in-
control payments and proxy cost) and restructuring charges of
$265,000. No such charges were incurred during the six month
period ended June 30, 2003.
Results for the first six months of 2003 of each of the Company's
four business segments were mixed. The Power Electronics Group,
comprised of Condor D.C. Power Supplies, Inc. and Teal Electronics
Corp., recorded net sales of $29,465,000 and operating income of
$2,705,000, as compared to net sales of $26,286,000 and operating
income of $962,000 for the same period last year. SL Montevideo
Technologies, Inc. recorded net sales of $11,129,000 and operating
income of $806,000, as compared to net sales of $11,950,000 and
operating income of $940,000 for the first six months of 2002. RFL
Electronics Inc. recorded net sales of $12,043,000 and operating
income of $1,150,000, as compared to net sales of $16,033,000 and
operating income of $2,213,000 for the same period last year. And
SL Surface Technologies, Inc. recorded net sales of $1,025,000 and
a loss from operations of $256,000, as compared to net sales of
$1,188,000 and a loss from operations of $485,000 for the first
six months of last year.
Selling, general and administrative costs for the first six months
of 2003 decreased by $749,000, or approximately 6%, as compared to
the same period last year. During the first six months of this
year, the Company incurred approximately $580,000 in costs with
respect to the defense of a class action complaint related to
environmental matters. Without these defense costs, selling,
general and administrative expense would have decreased
$1,329,000, or 10% compared to the same six month period in 2002.
The Company reported net new orders of $24.4 million in the second
quarter of 2003, compared to net new orders of $28.9 million in
the second quarter of 2002. Backlog at June 30, 2003 was $37
million, as compared to $42.6 million a year earlier.
Commenting on the results, Warren Lichtenstein, Chairman and Chief
Executive Officer of SL Industries, Inc. said, "Our second quarter
results represent the third consecutive quarter of profitability
from continuing operations. The decrease in sales was largely
attributable to the power utility market, where we continue to
experience the postponement and deferral of capital improvement
projects. Nevertheless, improvements in productivity and working
capital management allowed the Company to record increased profits
and generate strong cash flows. During the first six months of
2003, bank debt was reduced by approximately $11 million, to $6.6
million."
"In 2003 the Company experienced sporadic demand in its served
markets, with particular softness in the power utility industry.
In addition, activity in the commercial aerospace and
semiconductor industries remains at or near historic lows. Our
tactical response in this economic environment has been to focus
on improving operational efficiencies and to invest the cost
savings to enhance product value, fund new product initiatives and
increase profitability. We have been able to accomplish all these
goals this year."
Lichtenstein concluded, "On May 29, the Company held its Annual
Shareholders Meeting, at which time shareholders re-elected all of
the directors standing for re-election and elected Mr. James
Risher to fill a vacancy on the Board. Jim Risher has an
outstanding record of accomplishment in the power electronics
industry, including having served as the President and Chief
Executive Officer of Exide Electronics Group, Inc. for 12 years.
His industry experience and sound judgment will be an outstanding
addition to the Board of Directors, as it moves forward to execute
our strategy to maximize shareholder value."
SL Industries, Inc. designs, manufactures and markets Power and
Data Quality equipment and systems for industrial, medical,
aerospace and consumer applications. For more information about SL
Industries, Inc. and its products, please visit the Company's Web
site at http://www.slindustries.com
* * *
In the Company's 2002 Annual Report filed on SEC Form 10-K,
Grant Thornton LLP, the Company's independent auditors, issued
this statement:
"We have audited the [Company's] consolidated balance sheet of SL
Industries, Inc. and its subsidiaries as of December 31, 2002, and
the related consolidated statements of operations, comperhensive
income (loss), shareholders' equity, andcash flows for the year
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
The financial statements of SL Industries, Inc. and its
subsidiaries as of and for the years ended December 31, 2001 and
2000, were audited by other auditors who have ceased operations
and who's report dated March 15, 2002 included an explanatory
paragraph that described certain uncertainties regarding the
Company's ability to continue as a going concern."
SMITHFIELD FOODS: Will Publish First Quarter Results on Thursday
----------------------------------------------------------------
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
http://www.vcall.com/ClientPage.asp?ID=84558. The webcast will be
archived on the Smithfield Foods Web site,
http://www.smithfieldfoods.com/investor/calls.
Smithfield Foods has delivered a 26 percent average annual
compounded rate of return to investors since 1975. With sales of
$8 billion, Smithfield Foods is the leading processor and marketer
of fresh pork and processed meats in the United States, as well as
the largest producer of hogs. For more information, visit
http://www.smithfieldfoods.com
* * *
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: Asks Court to Fix Eddie Bauer Inventory Sale Procedures
----------------------------------------------------------------
The Spiegel, Inc., and its debtor-affiliates recognized that
certain Eddie Bauer inventory has become obsolete, excessive, or
burdensome. Andrew V. Tenzer, Esq., at Shearman & Sterling, in
New York, says that it is essential for the Debtors to sell the
excess inventory in a manner, which will maximize value for their
estates.
Mr. Tenzer reports that the Debtors liquidate Excess Eddie Bauer
Inventory each year in the early fall through a combination of
sales through Eddie Bauer outlet stores, "warehouse" sales and
sales referred to as "jobbers." Jobbers are entities that
typically buy overstock inventory at reduced prices and perform
independent liquidation events, including resale of the inventory
to clear the products. The cost of the Excess Eddie Bauer
Inventory sold in this manner averaged, on an annual basis,
$5,000,000 to $8,000,000. This year, Eddie Bauer possesses
$4,000,000 to $6,000,000 in cost value of Excess Eddie Bauer
Inventory to be liquidated.
Due in part to the recent closure of various Eddie Bauer store
locations, the Debtors anticipate that they can maximize the
value of this year's Excess Eddie Bauer Inventory through sale to
one or more "jobbers" rather than conducting additional warehouse
sales. Accordingly, the Debtors propose to sell three "lots" of
Excess Eddie Bauer Inventory:
(1) first quality, overstock apparel merchandise that has not
left the distribution center;
(2) first quality, returned apparel merchandise; and
(3) first quality, Eddie Bauer home soft goods merchandise.
The Debtors will follow a two-phase sales process to sell the
Excess Eddie Bauer Inventory, on an "as is, where is" basis. Mr.
Tenzer notes that the Sale Procedures would give the Debtors the
option, but not impose the obligation, to accept an offer for
Excess Eddie Bauer Inventory without further Court approval. If
the Debtors conclude that they have not received a bid that is
acceptable to them, then they would seek to sell the Excess Eddie
Bauer Inventory through a public auction.
The Sale Procedures
The Debtors will sell the Excess Eddie Bauer Inventory free and
clear of any liens, claims, interests or encumbrances pursuant to
these Court-approved procedures in lieu of a separate motion and
a hearing, unless an auction is required:
(a) The Debtors propose to send a form of term sheet and the
list of the Excess Eddie Bauer Inventory for sale to
potential purchasers. The interested potential purchasers
will be invited to inspect the warehouse where the Excess
Eddie Bauer Inventory is located. Within two days after
the inspection, the potential purchasers would have to bid
on the excess inventory. Each potential purchaser may bid
on one or more of the three "lots" of Excess Eddie Bauer
Inventory. All bids must conform to the form of term
sheet supplied by the Debtors. Within two days after that
deadline, the Debtors will evaluate which proposals to
accept. If a potential purchaser's proposal is accepted,
the Debtors will provide notice of the proposed sale in
accordance with the Out-of-Court Sale Notice;
(b) The Debtors will give notice of the proposed sale to:
-- the Office of the United States Trustee,
-- counsel for the Creditors' Committee,
-- the Debtors' postpetition lenders, and
-- any known holder of a Lien on the property proposed to
be sold.
The Debtors will also file electronically the Out-of-
Court Sale Notice with the Clerk of the Bankruptcy Court.
(c) The Out-of-Court Notice will be served on the notice
parties by facsimile so as to be received by 5:00 p.m. on
the date of service and will specify:
-- the identity of the seller;
-- the identity of the purchaser;
-- the "lots" of Excess Eddie Bauer Inventory proposed to
be sold; and
-- the Debtors' marketing efforts for the Excess Eddie
Bauer Inventory proposed to be sold.
(d) The Notice Parties will have three business days after the
Out-of-Court Sale Notice is sent to object or request
additional time to evaluate the proposed transaction in
writing via facsimile to:
Shearman & Sterling
Attn: Andrew V. Tenzer, Esq.
Jill K. Frizzley, Esq.
Bankruptcy counsel for the Debtors
(646) 848-8174 (facsimile)
(e) If no written objection or request for additional time
is received before 5:00 p.m. on the appointed date, the
Debtors will be authorized to consummate the proposed sale
transaction and to take actions necessary to close it and
obtain the sale proceeds and it will be deemed consented
to by any entity having a Lien in the property sold
without further authorization from the Court;
(f) If a Notice Party provides a timely written request to
for additional time to evaluate the proposed transaction,
and Shearman & Sterling consents to the extension, only
the Notice Party will have an additional three business
days to object to the proposed transaction; and
(g) If a Notice Party timely objects to the proposed
transaction, the Debtors and the objecting party will use
good faith efforts to consensually resolve the objection.
If the Debtors and the objecting party are unable to reach
a consensual resolution, the Debtors will not proceed with
the proposed transaction but will seek the Court's
approval of the proposed transaction before it is
consummated.
In the event that there are no acceptable bids from potential
purchasers for a particular "lot" of Excess Eddie Bauer
Inventory, the Debtors are authorized to consummate sales of
Excess Eddie Bauer Inventory by way of a public auction and sale
hearing in accordance with these procedures:
(a) The Debtors will give notice, via facsimile, of the
proposed sale auction to:
-- the Office of the United States Trustee;
-- counsel for the Creditors' Committee;
-- the Debtors' postpetition lenders;
-- potential purchasers that were sent a list of
the Excess Eddie Bauer Inventory offered for sale; and
-- any known holder of a Lien on the property proposed to
be sold.
The Debtors will also file electronically the Auction
Notice with the Bankruptcy Court Clerk.
Auction Notices will specify the:
-- "lots" of the Excess Eddie Bauer Inventory to be sold;
-- identity of the Seller;
-- purchase prices;
-- bid increment requirements;
-- bid deadline; and
-- date, time and location of the Auction.
(b) The Auction will be held before Judge Blackshear. If
and when the Debtors determine that some or all of the
Excess Eddie Bauer Inventory is to be sold by public
auction, they will notify the Court in writing;
(c) Any party wishing to submit an offer must submit the bid
within one day of receipt of the Auction Notice to the:
-- bankruptcy counsel for the Debtors;
-- counsel for the Bank of America, N.A., Agent for the
Debtors' postpetition lenders; and
-- counsel for the Committee.
(d) If no bid is received, the Debtors will have the
discretion to hold the auction to obtain a bid for the
Excess Eddie Bauer Inventory;
(e) If only one bid is received, the Debtors will request
that the bid be confirmed as the highest and best bid for
the Excess Eddie Bauer Inventory. The Debtors will then
notify the Court in writing that no Auction will take
place;
(f) All competing bids must remain open and irrevocable until
the Court approves the sale; and
(g) Competing bids cannot be contingent upon completion of due
diligence, the receipt of financing or any board of
directors, shareholder or other corporate approval or any
other event expecting Court approval.
The purchasers of the Excess Eddie Bauer Inventory are entitled
to the protection afforded by Section 363(m) of the Bankruptcy
Code in the event of a reversal of modification on appeal of the
Court Order.
Mr. Tenzer relates that the Sale Procedures will allow the
Debtors to maximize value by allowing parties likely to pay the
highest price to participate in the bidding when these parties
might otherwise decline to participate for competitive reasons.
Furthermore, the Creditors' Committee will review and evaluate
all bids and the various forms of notice contemplated by the Sale
Procedures to gain comfort they are sufficient to allow
interested parties an opportunity to participate in this process.
The Sale Procedures would allow the Debtors to defray any lease,
storage or other additional costs associated with the Excess
Eddie Bauer Inventory. Mr. Tenzer reiterates that the expedited
procedures will permit the Debtors to be responsive to the needs
of interested purchasers, thereby maximizing value and guarding
against lost sales due to delay while still providing for a
review of the proposed transaction by the United States Trustee,
the Creditors' Committee, the Debtors' postpetition lenders and
any known entity asserting an interest in the Excess Eddie Bauer
Inventory to be sold. (Spiegel Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
STARBAND COMMS: Files Plan of Reorganization in Delaware
--------------------------------------------------------
StarBand, America's first consumer high-speed, two-way satellite
Internet provider, filed its reorganization plan with the U.S.
Bankruptcy Court in Delaware. The confirmation of the plan
expected by the end of 2003 will allow StarBand to emerge from
bankruptcy.
"StarBand's ability to file for emergence from Chapter 11 is
reflective of our unwavering focus, commitment to our customers
and partners, and flawless execution of key programs throughout
the company's reorganization period," said StarBand Chairman and
Chief Executive Officer Zur Feldman. "We used the time to continue
building a stronger, more efficient company while adding new
programs, services and products."
The company filed for Chapter 11 bankruptcy protection on May 31,
2002. Subsequent to this filing, StarBand expanded a new
nationwide sales channel now comprised of over 2,400 independent
dealers, improved its network performance and reliability, and
launched its fourth generation product line, the StarBand 480 Pro.
The new StarBand 480 Pro service offers high-speed downloading at
up to 1 mbps and 100 kbps Turbo Mode uploading speeds. The new
StarBand 480 Pro modem includes a built-in four-port Ethernet
router and is 'plug and play' compatible with most operating
systems including Windows, Macintosh, Unix, and Linux.
The company's capital structure has significantly improved with
the conversion of approximately $113 million of bank debt to
equity. In addition, approximately $90 million of debt to Gilat
Satellite Networks Ltd. will convert to equity and a $14 million
post-emergence note. Further, StarBand and Gilat have entered into
a new technology and hardware supply agreement including $7
million in additional financing.
Howard Lossing, Vice President of Sales and Marketing stated,
"StarBand has overcome many challenges since we filed for Chapter
11 protection and it is apparent we have become stronger as a
result. We consistently deliver reliable services and innovative
products that attract distributors to our Dealer Direct channel
and encourage world-class partners to defect to StarBand from
other satellite Internet providers."
StarBand Communications Inc., headquartered in McLean, Virginia,
is America's first nationwide provider of two-way, always-on,
high-speed Internet access via satellite to residential and small
office customers. In 2003, StarBand introduced its fourth
generation satellite modem, the StarBand 480 Pro, a professional-
strength, network-ready and business-grade modem delivering high
speed connectivity and instant networking capability. The StarBand
antenna accommodates both StarBand high-speed Internet service and
DISH Network satellite TV programming in the continental U.S.
StarBand's network comprises customers and service in all 50
states, Puerto Rico and the U.S. Virgin Islands. Visit StarBand at
http://www.StarBand.com
SUPERIOR TELECOM: Court Fixes Aug 25 Prepetition Claims Bar Date
----------------------------------------------------------------
The Honorable Jerry W. Venters of the U.S. Bankruptcy Court for
the District of Delaware fixes August 25, 2003, as the deadline
for Prepetition Claim Holders to file their Proofs of Prepetition
Claim against against Superior TeleCom and its debtor-affiliates
or be forever barred from asserting their claims.
All Proof of Claim forms must be received by 4:00 p.m. Eastern
Time on August 25. If filed by U.S. Mail, forms must be sent to:
Superior Telecom Claims Processing
c/o Bankruptcy Services LLC
PO Box 5013
FDR Station
New York, NY 10150-5013
if by messenger or overnight courier, to:
Superior Telecom Claims Processing
c/o Bankruptcy Services LLC
757 Third Avenue
3rd Floor
New York, NY 10017
A copy must also be sent to the Debtors' Counsel at:
Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C.
Attn: Laura Davis Jones, Esq.
919 North Market Street
16th Floor
PO Box 8705
Wilmington, Delaware 19899-8705 (Courier 19801).
The Court also sets the Governmental Claims bar date for September
5, 2002.
Entities asserting prepetition claims for rejection of executory
contracts or unexpired leases must submit their Prepetion Proofs
of Claim on or before August 25 or thirty days after the entry of
the order approving the rejection.
Prepetition Proofs of Claim need not be filed at this time if they
are on account of:
1. Claims already properly filed with the Bankruptcy
Court;
2. Claims not listed as disputed, contingent or
unliquidated;
3. Claims previously allowed by the Court; or
4. Administrative Expense Claims.
Superior TeleCom Inc., a leading manufacturer and supplier of
communications wire and cable products to telephone companies,
distributors and system integrators and magnet wire for motors,
transformers, generators and electrical controls, filed for
chapter 11 protection on March 3, 2003 (Bankr. Del. Case No. 03-
10607). Laura Davis Jones, Esq., and Michael Seidl, Esq., James
I. Stang, Esq., and Curtis A. Hehn, Esq. at Pachulski, Stang,
Ziehl Young Jones & Weintraub represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, it listed $861,716,000 in total assets and
$1,415,745,000 in total debts.
TRICO MARINE: Hires Trevor Turbidy as New Chief Fin'l Officer
-------------------------------------------------------------
Trico Marine Services, Inc. (Nasdaq: TMAR) hired Trevor Turbidy as
the Company's new Chief Financial Officer. Before joining Trico,
Mr. Turbidy was employed by Credit Suisse First Boston as a
Director in their Investment Banking Division.
"We are very pleased to have Trevor be part of the team at Trico,"
said Thomas E. Fairley, President and Chief Executive officer.
"Trevor's financial expertise will be a great asset as we continue
to work on our liquidity enhancement plan."
Trico Marine provides a broad range of marine support services to
the oil and gas industry, primarily in the Gulf of Mexico, the
North Sea, Latin America, and West Africa. The services provided
by the Company's diversified fleet of vessels include the marine
transportation of drilling materials, supplies and crews, and
support for the construction, installation, maintenance and
removal of offshore facilities. Trico has principal offices in
Houma, Louisiana, and Houston, Texas. Visit the Company's Web
site at http://www.tricomarine.com
As reported in Troubled Company Reporter's June 18, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on petroleum industry services provider Trico Marine
Services Inc., to 'B' from 'B+' and senior unsecured rating to
'CCC+' from 'B'. The ratings downgrade follows a review of Trico's
current and expected liquidity and financial performance. The
outlook remains negative.
As of March 31, 2003, Houma, Louisiana-based Trico had roughly
$382 million worth of debt outstanding.
TRICO MARINE: Inks Pact to Sell North Sea Vessels for NOK 263MM
---------------------------------------------------------------
Trico Marine Services, Inc. (Nasdaq: TMAR) (S&P, B Corporate
Credit Rating, Negative) said it is continuing to make progress in
executing on its liquidity enhancement plan.
The Company has entered into a definitive agreement to sell one of
its North Sea vessels for NOK 263 million. The vessel sale is
subject to customary closing conditions and is expected to be
completed during the third quarter of 2003. The Company has also
recently received a $4.5 million tax refund. Proceeds from the
sale of the vessel and the tax refund will be used to pay down
outstanding indebtedness under the Company's revolving credit
facilities and increase working capital.
Trico Marine provides a broad range of marine support services to
the oil and gas industry, primarily in the Gulf of Mexico, the
North Sea, Latin America, and West Africa. The services provided
by the Company's diversified fleet of vessels include the marine
transportation of drilling materials, supplies and crews, and
support for the construction, installation, maintenance and
removal of offshore facilities. Trico has principal offices in
Houma, Louisiana, and Houston, Texas. Visit the Company's Web
site at http://www.tricomarine.com
TWINLAB CORP: Fails to Beat SEC Form 10-Q Filing Deadline
---------------------------------------------------------
Twinlab Corporation (OTCBB:TWLB) filed a Form 12b-25 with the
Securities and Exchange Commission as it was unable to file timely
its Quarterly Report on Form 10-Q for the period ended June 30,
2003 as a result of the uncertainty concerning the appropriate
accounting treatment for certain of the Company's assets in light
of the deterioration of the Company's financial condition.
The Company's financial performance has been negatively affected
over the last several years due to declining sales and increased
allowances for sales returns and discounts (including
approximately $5.2 million of reserves relating to returns of
products containing ephedra during the quarter ended June 30,
2003) as well as higher operating costs relating to excess
manufacturing capacity and significant increases in insurance and
litigation costs. In response to this situation, over the last
eighteen months the Company implemented several cost reduction
initiatives including personnel reductions, the consolidation of
its manufacturing and distribution facilities, SKU
rationalizations and the discontinuation of sales of products
containing ephedra, as well as sales of non-strategic businesses
and other asset sales to reduce its debt. In spite of these
efforts, the resulting recurring losses from operations and
restructuring charges have negatively affected the Company's cash
flows from operations.
The Company's Revolving Credit Facility is scheduled to expire on
March 29, 2004. The Company was not in compliance with the
financial covenants contained in the Revolving Credit Facility and
the mortgage agreement relating to its Utah facility as of June
30, 2003. The Company obtained a waiver of its non-compliance
under the Revolving Credit Facility through August 27, 2003 and in
the absence of a future extension of the waiver, the Company would
cross-default under the terms of its senior subordinated notes. In
addition, the Company has suspended negotiations with its mortgage
lender.
Accordingly, borrowings outstanding under the Revolving Credit
Facility, mortgage payable and senior subordinated notes totaling
$29.1 million, $5.4 million and $39.9 million, respectively, as of
June 30, 2003, have been classified as current liabilities. As of
August 13, 2003, approximately $1.5 million of borrowings were
available under the Revolving Credit Facility. The deterioration
of the Company's financial performance (recurring losses from
continuing operations, accumulated deficit and a working capital
deficiency as of June 30, 2003), the temporary nature of the
waiver relating to the Revolving Credit Facility, the current
default under the mortgage agreement and the anticipated default
under the senior subordinated notes raise substantial doubt about
the ability of the Company to continue as a going concern.
The lenders of the Revolving Credit Facility have advised the
Company that they do not expect to extend the term of the
Revolving Credit Facility beyond August 27, 2003. The Company
believes that the possibility of obtaining an alternative
borrowing arrangement or obtaining an investment of additional
capital is remote. The Company is actively engaged in negotiations
with several prospective purchasers to sell all or substantially
all of its business which, in light of the Company's current
financial position and uncertainty of potential litigation
involving ephedra matters, would occur in conjunction with a
filing under Chapter 11 of the U. S. bankruptcy laws. While the
Company believes that such a sale may occur in the near future,
there can be no assurance that the Company will be able to
consummate such a transaction and it is unlikely that any purchase
price for the sale of the business would exceed the aggregate
principal amount of the Company's indebtedness and such deficiency
may be significant. In such a case, holders of the Company's
equity may receive no value. In the event the Company is unable to
consummate a sale of its business, the Company will be forced to
seek protection under Chapter 11 of the U. S. bankruptcy laws and
attempt to reorganize its business. The Company is also currently
engaged in negotiations with lenders for an alternate borrowing
arrangement in the event the Company files for Chapter 11 of the
U. S. bankruptcy laws.
Until such time as the Company seeks to reorganize its business
under Chapter 11 of the U.S. bankruptcy laws, it is not possible
to estimate the effect on the Company's recorded values of its
assets and liabilities.
Based upon preliminary data, the Company anticipates that net
sales for the three months ended June 30, 2003 will be
approximately $37.2 million, as compared to approximately $40.2
million for the three months ended June 30, 2002 and net sales for
the six months ended June 30, 2003 will be approximately $75.0
million, as compared to approximately $85.6 million for the six
months ended June 30, 2002. The net loss for the three months
ended June 30, 2003, excluding the effect of any additional
accounting adjustment of its assets, if necessary, is estimated to
be approximately $10.4 million versus a loss of approximately $3.6
million for the three months ended June 30, 2002, and
approximately $14.1 million for the six months ended June 30,
2003, excluding the effect of any additional accounting adjustment
of its assets, if necessary, versus net income of approximately
$112,000, or $0 per share for the six months ended June 30, 2002.
Additional Twinlab information is available on the World Wide Web
at: http://www.twinlab.com
UICI: Continues to Assess Goodwill Impairment at AMS Subsidiary
---------------------------------------------------------------
UICI (NYSE: UCI) reports that the deadline for filing its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2003
with the Securities and Exchange Commission is extended until
today.
As a result of previously disclosed events at the Company's
Academic Management Services Corp. subsidiary that occurred in
July 2003, the Company continues to assess whether the goodwill
associated with its investment in AMS has been impaired and, if
so, the magnitude of such impairment.
On August 1, 2003, the Company previously released operating
results at its Self-Employed Agency Division, Group Division, Life
Division and Other Key Factors business segments for the three and
six months ended June 30, 2003.
UICI (headquartered in North Richland Hills, Texas) through its
subsidiaries offers insurance (primarily health and life) and
selected financial services to niche consumer and institutional
markets. Through its Self Employed Agency Division, UICI provides
to the self-employed market health insurance and related insurance
products, which are distributed primarily through the Company's
dedicated agency field forces, UGA-Association Field Services and
Cornerstone America. Through its Group Insurance Division, UICI
provides tailored health insurance programs for students enrolled
in universities, colleges and kindergarten through grade twelve
and markets, administers and underwrites limited benefit insurance
plans for entry level, high turnover, hourly employees. Through
its Life Insurance Division, UICI offers life insurance products
to selected markets. The Company's Academic Management Services
Corp. unit (headquartered in Swansea, Massachusetts) seeks to
provide financing solutions for college and graduate school
students, their parents and the educational institutions they
attend by marketing, originating, funding and servicing primarily
federally guaranteed student loans and by providing student
tuition installment payment plans. In 2002, UICI was added to the
Standard & Poor's Small Cap 600 Index. For more information,
visit http://www.uici.net
Academic Management Services Corp., (based in Swansea, MA) is a
wholly owned subsidiary of UICI engaged in the student loan
origination and funding business, student loan servicing business,
and tuition installment payment plan business. AMS finances its
student loan origination activities through seven special
financing subsidiaries that issue debt securities secured by a
pledge of student loans and other qualified collateral.
On July 21, 2003, UICI reported the discovery of a shortfall in
the type and amount of collateral supporting two of the
securitized student loan financing facilities entered into by
three special financing subsidiaries of AMS. The problems at one
of the financing facilities (the EFG-III LP commercial paper
conduit facility) are of three types: insufficient collateral, a
higher percentage of alternative loans (i.e., loans that are
privately guaranteed as opposed to loans that are guaranteed by
the federal government) included in the existing collateral than
permitted by the loan eligibility provisions of the financing
documents and failure to provide timely and accurate reporting.
The problems related to the second financing subsidiary (AMS-1
2002, LP) consist primarily of a higher percentage of alternative
loans included in the existing collateral than permitted by the
loan eligibility provisions of the financing documents, and the
failure to provide timely and accurate reporting. In addition, AMS
and the other four special financing subsidiaries of AMS have
failed to comply with their respective reporting obligations under
the financing documents.
As announced on July 24, 2003, AMS has obtained waivers and
releases from interested third parties, as described more fully
below, with respect to four of the six securitized student loan
financing facilities. The waiver and release agreements were
entered into with Bank of America and Fleet Bank (the providers of
a liquidity facility that supports the EFG-III, LP commercial
paper facility), Bank One (the trustee under the indentures that
govern the terms of the debt securities issued by each of AMS'
special financing subsidiaries) and MBIA Insurance Corporation
(the financial guaranty insurer of debt securities issued by four
of the seven AMS financing subsidiaries).
The waiver and release agreement for the EFG-III, LP (one of AMS'
special purpose financing subsidiaries) commercial paper
securitized student loan facility calls for UICI's contribution of
$48.25 million ($1.75 million on July 24, 2003, $36.5 million on
July 31, 2003 and $10.0 million on August 15, 2003) in cash to the
capital of AMS, all of which, as of July 31, 2003, UICI had
contributed to AMS.
The financial institutions agreed to waive all existing defaults
under the relevant financing documents with respect to EFG-III, LP
and EFG Funding (both of which are exclusively involved in the
commercial paper program) until January 1, 2004, which date will
be automatically extended for successive 90-day periods through
September 30, 2004 if the outstanding amount of commercial paper
is reduced to agreed-upon levels from its current outstanding
amount (approximately $440 million). As previously announced, AMS
has agreed to partially address the under-collateralization
problem by transferring to EFG-III, LP approximately $189 million
of federally-guaranteed student loan and other assets that meet
loan eligibility requirements under the financing documents and by
transferring approximately $34.4 million of uninsured student
loans that do not meet loan eligibility requirements under the
financing documents. In addition, AMS will contribute to EFG-III
LP $46.5 million of the $48.25 million in cash contributed to AMS
by UICI either in the form of cash or federally guaranteed student
loans. These various transfers by AMS will substantially eliminate
the shortfall in collateral amount with respect to the EFG-III LP
commercial paper conduit facility.
With respect to the AMS-1 2002, LP facility, as of July 24, 2003,
the interested parties agreed to waive, for a period of 90 days,
all defaults, amortization events and events of default based
solely on defaults arising prior to July 24, 2003 resulting from
non-federally insured student loans included in the collateral in
excess of the maximum percentage limit for such loans as set forth
in the documents governing the financing, which waiver is not
extendable. In addition, with respect to four other student loan
financing facilities, the interested parties agreed to waive, as
of July 24, 2003, all immaterial previously-existing defaults
resulting from inaccurate or untimely reporting or any other
reporting deficiency by the applicable issuer under each such
facility, AMS or any other affiliate of AMS, for a period of 90
days, which period is not extendable. Upon expiration of the 90-
day waiver period, all then uncured events of default shall be
reinstated and be in full force and effect.
UICI believes that it has no obligations with respect to the
indebtedness of AMS' special financing subsidiaries or with
respect to the obligations of AMS relating to such financings.
Nonetheless, in exchange for UICI's capital contribution to AMS as
described above, the financial institutions named above have
agreed to release UICI from any and all existing claims or suits
(other than claims for fraud at the UICI level) that could arise
relating to the AMS student loan financing facilities.
UNIBEX INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Unibex, Inc.
1050 Connecticut Ave., NW
Suite 1000
Washington, DC 20036
Bankruptcy Case No.: 03-12574
Type of Business: Provider of electronic marketplace
infrastructure for online business communities
Chapter 11 Petition Date: August 15, 2003
Court: District of Delaware
Judge: Mary F. Walrath
Debtor's Counsel: Donna L. Harris, Esq.
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
Tel: 302-658-9200
Fax: 302-658-3989
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Taxes $89,498
CIT Communication Finance Trade $81,000
Dell Financial Services Trade $58,905
Greenberg Traurig Professional Services $57,645
The Lacek Group Trade $45,817
Creative Services Inc. Trade $40,248
McKenna & Cunco, LLP Professional Services $36,341
IBM Trade $31,644
MCI Trade $25,620
Eudson & Bonello, P.C. Professional Services $21,045
American Society of Professional Services $20,000
Association
The Falk Law Firm Professional Services $15,004
KPMG LLP Professional Services $15,000
Elliot Van Deutsch, Inc./ Trade $14,271
MHI DC, Inc.
Quasar Int'l Communications Trade $12,105
Limit
Grossberg, Vochelson, Professional Services $10,985
Fox & Beyda, LLP
kforce.com Trade $9,058
America Online, Inc. Trade $8,400
Hotjobs.com Trade $8,030
Macromedia Trade $6,367
UNITED AIRLINES: Wins Nod to Pay Amendment Fees to DIP Lenders
--------------------------------------------------------------
United Airlines obtained Judge Wedoff's permission to pay
Amendment Fees to its DIP Lenders and enter into Waivers and
Amendments to the Bank One DIP Facility.
* * *
United, Bank One and the Club DIP Lenders -- comprised of
JPMorgan Chase Bank, Citicorp USA, Bank One, The CIT
Group/Business Credit, and a syndicate of lenders party to the
Club DIP Facility -- amended the DIP Credit Facilities to modify
provisions and to document waivers of alleged technical defaults.
The Club DIP Waiver and Amendment and the Bank One Waiver and
Amendment provide for these waivers and modifications to the DIP
Credit Facilities:
a) waiver of defaults connected to United's actions with
Section 1110 assets, financing agreements and failure to
provide requisite notice of discontinuation, modification
and/or temporary suspension of service on certain routes;
b) waiver of defaults related to insurance premium financing
and fuel hedging arrangements;
c) consent to United's suspension of service along specified
routes and reduced utilization of slots;
d) authorize United to make principal and interest payments
to Section 1110 financiers;
e) authorize United to utilize its fuel inventory to secure
fuel hedges;
f) authorize United to incur liens on unearned premiums to
secure insurance premium financing indebtedness; and
g) authorize United to refinance Section 1110 assets to permit
additional Section 1110 indebtedness.
Additionally, United and its DIP Lenders amended the Slot, Gate
and Route Security Pledge Agreement to modify provisions and
document waivers of technical defaults. The waivers and
modifications are:
a) waiver of technical cross defaults resulting from defaults
under the DIP Credit Facilities; and
b) authorize United to provide 14 days prior written notice of
discontinuation or material modification of service on any
route or supporting facilities and suspension of service
over any primary route.
In exchange for the waivers and amendments, United will pay one-
tenth of 1% of each Club DIP Lender's total commitment, which
will not exceed $947,500. United will pay a $1,000,000
Arrangement Fee to JPMorgan Chase and a $300,000 Amendment Fee to
Bank One. (United Airlines Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
US AIRWAYS: Court Approves Establishment of Distribution Reserve
----------------------------------------------------------------
Viacom contends that the Reorganized US Airways Debtors have
understated the Proposed Estimated Amounts for two of its Claims -
- Claim Nos. 3367 and 3905. The Reorganized Debtors have omitted
their methodology or their justification that the Estimated
Amounts accurately reflect their maximum liability on the Claims.
Viacom filed 13 Proofs of Claim for aircraft leasing transactions
with the Reorganized Debtors. On January 24, 2003, the
Reorganized Debtors disputed the Claims. On February 27, 2003,
Viacom filed a response and request for hearing, alleging that
the Claims were valid.
Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton &
Garrison, in New York City, says that since the amount of New
Equity placed into the Distribution Reserve will represent the
upper limit on Viacom's recovery for its Claims, Viacom must
receive the deserved pro rata distribution under the Plan -- an
amount based on the full allowance of Viacom's Claims. Any other
treatment would violate Section 1123(a)(4) of the Bankruptcy
Code, which requires that a plan provide the same treatment for
each claim in a particular class, unless the claimholder agrees
to a less favorable treatment. Viacom has not agreed to a less
favorable treatment.
According to Mr. Shimshak, the Court should estimate the Claims
as Viacom set forth:
Claim Number Estimated Amount Viacom Amount
------------ ---------------- -------------
3367 $2,106,792 Not less than $3,671,407
3905 2,307,727 Not less than $3,671,407
(2) Multiple Objectors
The Objecting creditors are:
* Banc of America Leasing and Capital;
* AT&T Credit Holdings;
* Bay 2 Bay Leasing;
* DFO Partnership;
* Lone Star Air Partners;
* Comcast; and
* Airlease.
Brian L. Holman, Esq., at White & Case, in Los Angeles,
California, explains that the request makes no effort to inform
the Court of the substance of the 869 Aircraft Creditors' claims,
which aggregate $3,063,533,342.
The Creditors hold claims against Debtor US Airways, Inc. arising
out of various prepetition aircraft lease agreements. As set
forth in the Indemnification Claims -- that is, Claim Nos. 2927,
4944, 4945, 4946, 4947, 4948, 5008, 5009, 5061, 5062, 5063, 5064,
5065, 5067, 5513, 5514, 5516, 5523, 5524, 5527 and 5528 -- the
Creditors hold unliquidated indemnification claims, whereby US
Airways agreed to indemnify the Creditors against losses,
including losses arising out of US Airways' breach of the
aircraft leases.
However, the Debtors seek to estimate claims to establish a
Distribution Reserve that is to be used to satisfy the unsecured
creditors' unliquidated claims. The request would cap the
Creditors' claims for allowance and distribution, because, once a
reserve is set for an estimated claim, a Creditor cannot receive
in excess of the reserved amount. This is true even if the
Creditor is found to be owed more than the estimated amount.
Thus, under the guise of administration of their estates, the
Debtors seek to cap the Creditors' claims.
The Debtors' purposely-deflated proposed estimation amounts
should not be accepted. Rather, the Court should set the reserve
amounts for each Creditor's claim consistent with the Creditors'
$3,063,533,342 Proposed Cap.
(3) Wells Fargo
Wells Fargo filed claims against Allegheny Airlines, Inc., for
the lease rejection of two aircraft and for an administrative
claim related to postpetition use of the two aircraft.
According to Joel L. Dahnke, Esq., at Henry, Henry, O'Donnell &
Dahnke, it is impossible to determine how the Debtors' classified
Wells Fargo's claims. The Distribution Reserve Motion fails to
set forth any factual basis supporting the Debtors' request and
fails to adequately inform affected creditors of the grounds for
relief to allow an opportunity to respond. The Distribution
Reserve Motion is a disguised omnibus objection to claims that
will deny affected creditors the procedural protections, like
discovery and a full hearing on the merits, available in claim
objection and claim estimation proceedings.
The Debtors have estimated Wells Fargo's $6,717,993 general
unsecured claim for rejection of its aircraft lease at only
$468,996. If the Distribution Reserve Motion is granted, and
Wells Fargo's general unsecured lease rejection claim is
thereafter allowed in full, Wells Fargo will receive less than
11% of the amount it would have been entitled to. However, other
creditors with allowed claims will receive a full distribution.
(4) GMAC Commercial Credit
GMAC Commercial Credit holds US Airways Debt pursuant to Lease
Agreements. First National Bank of Boston is the lessor for
Boeing 737-301 Aircraft bearing Tail Nos. N504UA, N505UA and
N506UA.
GMACCC has a Claim for $36,154,484, which the Debtors, as per the
Distribution Reserve Motion, propose to estimate at $0. Douglas
J. Lipke, Esq., at Vedder, Price, Kaufman & Kammholz, argues that
the Debtors' request will inadequately establish the recovery
ceiling of GMACCC's claim.
(5) ABN AMRO Bank
ABN AMRO filed two proofs of claim -- a Secured Claim for
$18,024,786 and a Contingent Claim for $62,000,000. In the
Distribution Reserve Motion, the Debtors propose to set aside
$11,500,000 in New Equity for ABN AMRO's Secured Claim. The
Distribution Reserve Motion is tantamount to the Court making a
final determination that ABN AMRO's Secured Claim cannot exceed
$11,500,000.
Bradford F. Englander, Esq., at Linowes & Blocher, says that ABN
AMRO does not object to the establishment of a Distribution
Reserve, but objects to the Reserve Motion as it limits ABN
AMRO's right to establish the fair amount of its Secured Claim.
ABN AMRO asserts that its Claim should be allotted a $13,600,000
absolute minimum in New Equity.
(6) Banc One Leasing
Banc One is a lender under these three aircraft leveraged lease
transactions:
(a) de Havilland DHC-8-200 with Tail No. N993HA;
(b) de Havilland DHC-8-200 with Tail No. N994HA; and
(c) de Havilland DHC-8-200 with Tail No. N995HA.
Banc One filed three Proofs of Claim aggregating $27,064,992.
The Debtors propose to estimate the Claims at $0. Allyson B.
Russo, Esq., at Vedder, Price, Kaufman & Kammholz, argues that
the Debtors' request should be denied, as it will permanently
reduce Banc One's claim, regardless of future developments.
(7) First Chicago Leasing
First Chicago Leasing Corporation is an Owner Participant in five
aircraft leveraged lease transactions pertaining to:
-- Boeing 737-401 Tail No. N415US;
-- Boeing 737-401 Tail No. N409US;
-- Boeing 737-401 Tail No. N408US;
-- Boeing 737-401 Tail No. N407US; and
-- Boeing 737-401 Tail No. N406US.
First Chicago filed five Proofs of Claim aggregating more than
$138,000,000. The Debtors objected. Eric S. Prezant, Esq., at
Vedder, Kaufman, Price & Kammholz, says that the Debtors
improperly seek to cap First Chicago's recovery on these claims
at $0.
(8) Bank of New York
Bradley R. Duncan, Esq., at Hunton & Williams, tells Judge
Mitchell that the Bank of New York, as Trustee, filed a Proof of
Claim against the Debtors for $27,791,551. The Debtors assigned
$0 as the Claim amount.
Mr. Duncan says that the Debtors have not complied with the Plan
provisions because they have not "reasonably" determined the
amount of New Equity necessary to satisfy distributions to
General Unsecured Creditors or the Trustee. The estimations
proposed by the Debtors are capricious and arbitrary.
By proposing to estimate the Bank of New York's Claim at $0, the
Distribution Reserve Motion is a thinly disguised attempt to
object to the Claim without filing an objection. For each Claim
estimated by the Debtors at $0, they will not deposit any New
Equity into the Distribution Reserve, meaning there will never be
any New Equity in the Distribution Reserve to pay the Claim if
later allowed in an amount greater than $0.
(9) Boeing
The Boeing Company filed a Proof of Claim for $17,286,201. The
Debtors estimated Boeing's claim at $4,940,202.
Martin P. Willard, Esq., at Perkins, Coie, tells the Court that
if the Debtors want to dispute the claim amount, they may file an
objection and request a hearing. Attempts to reduce the claim
through the Distribution Reserve Motion are unfair.
(10) The Internal Revenue Service
Dara B. Oliphant, Esq., trial attorney for the Tax Division of
the U.S. Department of Justice, says that the Internal Revenue
Service filed a proof of claim against U.S. Airways Group, Inc.,
for $110,000,000 in corporate income taxes. However, the Debtors
propose to estimate the claim at $20,000,000, a discount
unacceptable to the IRS.
(11) PBGC
The Pension Benefit Guaranty Corporation has two matured fixed
claims totaling $2,085,000,000 for which each Debtor is jointly
and severally liable. The Debtors seek to impermissibly reduce
PBGC's claims related to the terminated Retirement Income Plan
for the Pilots of US Airways. The Distribution Reserve Motion
effectively deprives the Court of its ability to determine the
amount and allowability of the PBGC claims.
James J. Keightley, Esq., General Counsel at the PBGC in
Washington, D.C., says that the Reorganized Debtors offer no
basis for their position that the PBGC Claims should be estimated
at $0. At a minimum, any effort to challenge the PBGC's claims
should be identified and raised in a proper objection filed
pursuant to Rule 3007 of the Federal Rules of Bankruptcy
Procedure, to which the PBGC can fully respond.
Judge Mitchell's Ruling
Judge Mitchell grants the Debtors' request to establish a
Distribution Reserve, which will be formed by estimating
unliquidated and contingent claims and approving amounts placed
into the Reserve for other disputed claims.
All objections that were not withdrawn, waived or settled are
overruled on the merits. As provided in the Plan, Claimholders
will not receive New Equity in excess of the amount provided in
the Distribution Reserve. The PBGC claims will be reserved at
$2,083,600,000. (US Airways Bankruptcy News, Issue No. 36;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
US DATAWORKS: Fiscal First Quarter Net Loss Reaches $2 Million
--------------------------------------------------------------
US Dataworks (Amex: UDW), a leading software provider of payment
processing solutions, announced financial results for its fiscal
year 2004 first quarter ended June 30, 2003. Revenue for the
quarter ended June 30, 2003 was $486,763 versus $773,131 for the
comparable quarter of the prior fiscal year ended June 30, 2002.
Net loss for the first quarter of fiscal year 2004 was $2,047,474,
compared to a net loss of $585,252 for the corresponding period in
the prior year. Results of operations without giving effect to
financing costs and interest expense charges, the majority of
which are non-cash items, show the loss from operations for the
first quarter of fiscal year 2004 was $652,569 compared to a loss
from operations of $319,832 for the corresponding period in the
prior year. The Company's efforts to restructure its balance
sheet have continued to contribute to the losses shown in this
quarter.
US Dataworks' seven new distribution partners, BancTec, Cash
Management Services, Computer Sciences Corporation, Imaging
Business Machines LLC, Integrated Systems Development, NetDeposit,
and OPEX Corporation, are now establishing new business that is
expected to generate revenue, starting in the second quarter of
Fiscal 2004. "We are pleased to report that our new distribution
partners have begun to generate sales that will continue to
enhance our revenue growth for the remainder of this fiscal year,"
said US Dataworks Chairman and CEO Chuck Ramey. "As a result of
these new partner sales and direct sales made by our staff, major
customers, such as American Express, Chevron, May Department
Stores Company, and Regulus, are transitioning from a pilot phase
of their implementation schedule to full production usage. We
expected these customers to transition into production during the
first quarter of Fiscal 2004, though now we believe that the
majority of these transitions will occur over the remainder of the
fiscal year."
The Company's software solutions have been designed to comply with
the new standards being defined in the Check Truncation Act (Check
21), now before Congress. "We expect Check 21 to be a key
strategic initiative for the Company's financial performance,"
commented Terry Stepanik, President, and COO. "Our goal is to
deliver systems to our customers and prospects that will allow
them to take full advantage of the cost savings and flexibility
available under Check 21 as soon as the legislation becomes law."
Industry experts anticipate the Check 21 legislation will be
signed by the President sometime in the second half of 2003.
US Dataworks is a developer of payment processing software,
serving several of the top banking institutions, credit card
issuers, and United States government. The software developed by
US Dataworks is designed to enable organizations to transition
from traditional paper-based payment and billing processes to
electronic solutions. Core products include MICRworks(TM),
MICRworks-Lite(TM), Returnworks(TM), Remitworks(TM), and
Remitworks-Daemon(TM).
The Federal Reserve Board has developed a draft Federal law, the
proposed Check Truncation Act (Check 21) that would remove certain
legal impediments to check truncation (i.e., electronic
information about the truncated checks is presented to paying
banks instead of the original paper checks themselves). Check 21
is designed to facilitate check truncation, to foster innovation
in the check collection system without mandating the receipt of
checks in electronic form, and to improve the overall efficiency
of the nation's payments system.
Check 21 may result in substantial payments system benefits,
depending on the extent to which banks take advantage of
provisions of Check 21 to expand the use of electronics in the
collection and return of checks. Check 21 should result in faster
collection and return of checks and lower costs in the long run;
in addition, Check 21 would reduce banks' reliance on air and
ground transportation for collection and return of checks. The
more rapid check collection and return process could be
accomplished in many ways, with benefits likely accruing to both
banks and their customers. For additional information, please go
to the Federal Reserve Bank Web site at:
http://www.federalreserve.gov/paymentsystems/truncation/proposed.htm
* * *
As reported in Troubled Company Reporter's June 25, 2003 edition,
the Audit Committee and the Board of Directors of US Dataworks
Inc. approved a change in the Company's independent accountants
for the fiscal year ending March 31, 2003 from Singer Lewak
Greenbaum & Goldstein LLP to Ham, Langston & Brezina, LLP.
As a result, US Dataworks informed Singer Lewak that, effective
June 11, 2003, they had been dismissed as its independent
accountants. The report of Singer Lewak for the fiscal years ended
March 31, 2002 and March 31, 2001, contained an explanatory
paragraph concerning US Dataworks' ability to continue as a going
concern.
VENTAS INC: Board of Direc. Declares Regular Quarterly Dividend
---------------------------------------------------------------
Ventas, Inc.'s (NYSE:VTR) Board of Directors declared a regular
quarterly dividend of $0.2675 per share, payable in cash on
September 25, 2003 to stockholders of record on September 2, 2003.
The dividend is the third quarterly installment of the Company's
2003 annual dividend. The Company has approximately 79 million
shares of common stock outstanding.
Ventas, Inc. -- whose June 30, 2003 balance sheet shows a total
shareholders' equity deficit of about $47 million -- is a
healthcare real estate investment trust that owns 44 hospitals,
204 nursing facilities and nine other healthcare and senior
housing facilities in 37 states. The Company also has investments
in 25 additional healthcare and senior facilities. More
information about Ventas can be found on its Web site at
http://www.ventasreit.com
WEIRTON: Committee & Union Balk at Houlihan Lokey's Engagement
--------------------------------------------------------------
Marc E. Richards, Esq., at Blank Rome LLP, in New York, contends
that Houlihan Lokey's employment by Weirton Steel Corporation
based on the terms of its Engagement Letter is objectionable
because the Transaction Fee does not require the Court's approval
and notice to all parties-in-interest. Instead of binding the
estate in advance, Houlihan Lokey's Transaction Fees should be
subject to Court review and evaluation on notice under the
reasonableness standard pursuant to Section 330 of the Bankruptcy
Code. In this manner, the entitlement to a success-based
transaction fee, if any, and the amount thereof, would not be
predetermined but would be a matter to be considered by the Court
with participation and comment by all parties-in-interest,
including the U.S. Trustee. Otherwise, the estate could be
burdened by entitling Houlihan Lokey to success-based fees without
a showing of Houlihan Lokey's role in the transaction process or
without a showing that its efforts yielded a benefit to the
estate.
Moreover, Mr. Richards asserts that the Proposed Limitation on
contribution is not appropriate and should be stricken. The
Houlihan Lokey engagement letter provides that:
". . . the aggregate contribution of all Indemnified
Parties to any . . . losses, claims, damages, liabilities
and expenses will not exceed the amount of fees
actually received by Houlihan Lokey pursuant to the
[Engagement Letter]."
As to Houlihan Lokey's entitlement to indemnification from the
Debtor, with the exception of any loss, claim, damage or
liability which results from the willful misconduct or gross
negligence of any Indemnified Party, the Committee assumes that
"willful misconduct or gross negligence" also includes bad faith
and breach of the duty of loyalty, including the avoidance of
conflicts of interest and the obligation to be disinterested, and
of care.
Mr. Richards reiterates that the Committee is fully supportive of
the Debtor in its proposed employment of Houlihan Lokey. The
Committee merely wishes to ensure that:
(1) the Court retains the right to review and pass on
Houlihan Lokey's proposed Transaction Fees later in
Weirton's case under Section 330 of the Bankruptcy Code,
rather than under Section 328; and
(2) Houlihan Lokey's contribution to losses, claims,
damages, liabilities and expenses as a result of its
conduct not be limited to the amount of fees it
receives during its engagement.
2. The Independent Steelworkers Union
Richard A. Pollard, Esq., at Pietragallo, Bosick & Gordon, in
Pittsburgh, Pennsylvania, relates that the Independent
Steelworkers Union is a legal representative of 80% of the
Debtor's current employees and 8,900 of the Debtor's retirees.
The Steelworkers Union participated in and recommended to its
members, work force reductions, reductions in wages and benefits
of active employees, and reductions in benefits of retirees. The
Steelworkers and the Debtor accomplished these agreements without
strikes and work stoppages.
The Steelworkers Union does not object to Houlihan Lokey's
employment. However, the Union disputes the transaction fees
disclosed in Houlihan Lokey's agreement with the Debtor.
Mr. Pollard notes that the arrangement provides for a $3,000,000
restructuring transaction fee, less 50% of all advisory fees
received by Houlihan Lokey after the first six payments of
advisory fees. "[T]he restructuring transaction fee will be
payable in cash upon . . . the confirmation of a Chapter 11 plan
of reorganization."
The Steelworkers Union does not believe that a fee should be
payable upon the mere confirmation of a Chapter 11 reorganization
plan. Mr. Pollard argues that a fee should be payable only
subject to Bankruptcy Court review pursuant to Section 330 and
upon an express determination by the Court, after notice and
opportunity for hearing, that the fee is fair and reasonable in
light of all relevant facts and circumstances including:
(1) the nature and value of Houlihan Lokey's services in
connection with any restructuring transactions; and
(2) the extent to which Houlihan Lokey's services have
promoted the continued operation of the Company's
manufacturing facilities and the continued employment of a
significant portion of the Company's manufacturing
employees.
Accordingly, the Independent Steelworkers Union objects to
Houlihan Lokey's employment unless the terms of payment of
Transaction Fees is expressly modified. (Weirton Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WESTFORT ENERGY: Signs-Up Hein & Associates as 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: Committee Hires E.J. Bird as Consultant
----------------------------------------------------------
The Official Committee of Unsecured Creditors of WestPoint Stevens
Inc., sought and obtained the Court's authority to retain E.J.
Bird as a special purpose financial consultant.
The Committee finds the services of a special purpose financial
consultant necessary and appropriate to enable it to effectively
analyze and assist in the creation and implementation of a
business plan satisfactory to WestPoint's unsecured creditors.
Specifically, for the Debtors to propose what will hopefully be a
consensual plan, the Committee believes that the Debtors will
need its input early during the process of formulating a business
plan.
The Committee selected E.J. Bird because of his expertise in
compiling, analyzing and interpreting financial information and
other data necessary to create and implement a viable business
plan. Mr. Bird has previously worked alongside other advisors,
lawyers and accountants in formulating business strategies. Mr.
Bird has extensive experience in financial accounting. From 1991
to 2002, he was the Chief Financial Officer of ESL Investments,
an investment partnership with over $5,000,000,000 in assets.
Prior to working at ESL Investments, Mr. Bird was an Audit
Manager at Price Waterhouse for five years where he managed audit
engagements for Fortune 500 companies. Mr. Bird received his MBA
from the Stanford Graduate School of Business in 1991 and his BBA
in accounting, summa cum laude, from Baylor University in 1984.
As special purpose financial consultant, Mr. Bird will:
(a) review and analyze the business plans and financial
projections prepared by the Debtors including but not
limited to testing assumptions and comparing those
assumptions to historical and prospective Debtor and
industry trends;
(b) analyze SG&A expenses and review cash flow forecast;
(c) perform analysis of proposed plant closings and
reallocation of productive assets between plants and
review proposed closings of retail stores; and
(d) render other advisory services as may from time to
time be agreed upon by the Committee.
The Debtors agreed to cooperate with Mr. Bird and welcome his
participation in the business plan process.
Mr. Bird will charge $250 per hour for his consulting services.
Mr. Bird will also seek reimbursement for his expenses. During
periods of travel, Mr. Bird will be paid $100 per hour.
Mr. Bird's engagement will extend from June 13, 2003 for a period
of three months and may continue as the Committee may request.
Either Mr. Bird or the Committee can cancel the engagement on 10
days advance notice in writing at any time.
Mr. Bird ascertains that he does not have any connection with
Debtors, their creditors, or any other party-in-interest and does
not hold or represent an interest materially adverse to Debtors'
estates. Mr. Bird is a "disinterested person" under Section
101(14) of the Bankruptcy Code. (WestPoint Bankruptcy News, Issue
No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WORLDCOM INC: Fee Committee Taps Legal Cost Control as Analyst
--------------------------------------------------------------
The WorldCom Fee and Expense Review Committee sought and obtained
the Court's permission to retain Legal Cost Control, Inc. as its
automated fee and expense analyst. The Fee Committee determined
that the volume of fee and expense requests in the Debtors' cases
is too great to review without computer analysis. Legal Cost
Control will provide the Fee Committee with computer-generated
analysis of the fee applications during the course of the
bankruptcy proceeding and furnish a report on the compliance or
non-compliance of monthly statements and applications with the
requirements of the applicable provisions of the Bankruptcy Code,
the Federal Rules of Bankruptcy Procedure, the United States
Trustee Guidelines, and the Local Rules and General Orders of the
Bankruptcy Court for the Southern District of New York.
Committee Chairman Van Greenfield relates that Legal Cost
Control's work product and reports will be made for, and will
become the property of, the Committee. The documents will be
part of the Fee Committee's deliberative process. Legal Cost
Control will not provide or show its work product or reports to,
or discuss its work product or reports with, any entity other
than the Fee Committee's members and professional staff. Legal
Cost Control will hold in confidence any matters it discussed
with the committee or any of its members.
The Fee Committee will have the sole right to determine the
extent, if any, to which Legal Cost Control's work product and
reports will be made available to any other person. The
Committee may use all or any part of the Legal Cost Control work
product and reports in its discussions with billing professionals
and committee members in the WorldCom case, and in its Advisory
Reports to the Court. The Fee Committee may call on Legal Cost
Control to explain or advise as to its work product and reports
in meetings with billing professionals and committee members in
the WorldCom case and in presentation and testimony before the
Court.
Legal Cost Control will also provide to the Fee Committee other
reasonable consulting services as may be necessary.
As compensation for its services, Legal Cost Control will be paid
a fee equal to the lesser of 0.50% of the fees and expenses
submitted by the WorldCom Professional Services Providers and
reviewed by Legal Cost Control or $800,000. The Fee Committee
reserves the right to direct Legal Cost Control to not review
certain applications. Legal Cost Control will submit monthly
invoices for $100,000 for eight months, beginning June 2003.
Legal Cost Control currently serves as the Automated Fee and
Expense Analyst in a number of major bankruptcy cases. Legal
Cost Control worked as Fee Auditor in Enron; AmeriServe; NTL
Communications, Inc. and on behalf of the Resolution Trust
Corporation in the RTC litigation. In those cases, over
$1,000,000,000 in legal fees were subject to review and
evaluations. The Fee Committee believes that Legal Cost
Control's expertise and knowledge gained as a result of its role
in those major bankruptcy cases will assist the Fee Committee in
the performance of its duties.
John J. Marquess, Legal Cost Control director and officer, attests
that the firm has no connection with the Debtors, their creditors
and other parties-in-interest in these cases. Legal Cost Control
is a "disinterested person," as that term is defined in Section
101(14) of the Bankruptcy Code. (Worldcom Bankruptcy News, Issue
No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900)
WORLDSPAN L.P.: Second-Quarter Results Show Poor Performance
------------------------------------------------------------
Worldspan L.P., reported financial results for the quarter ended
June 30, 2003. For the second quarter, the company reported
revenue of $233.1 million and net income on a GAAP basis of $5.0
million.
"Worldspan's overall booking volumes grew slightly year over year
due in large part to our market position in e-commerce travel
distribution, which continued to grow despite an industry
downturn," said Rakesh Gangwal, chairman, president and chief
executive officer for Worldspan. "However, industry wide, travel
booking volumes were significantly depressed early in the quarter,
affected primarily by the conflict in Iraq and concerns over
SARS."
"During the quarter, we also completed the migration of
Hotwire.com's air bookings to Worldspan. We continue to be
recognized as the preferred provider for online travel
distribution technology," Gangwal noted.
Financial Highlights
Revenue: Second quarter revenue was $233.1 million, a 1.3 percent
decrease from $236.1 million in the year-ago quarter. This
decrease included a 0.8 percent decline in electronic travel
distribution revenues and a 5.4 percent decline in revenue from
information technology services on a quarter over quarter basis.
Operating income: Second quarter operating income was $24.1
million, a decrease of 24.2 percent from $31.8 million in the
second quarter of 2002.
Net income: Second quarter net income was $5.0 million compared to
$36.7 million in the same period last year, a decrease of 86.3
percent.
Special Items: Special items in the second quarter of 2003 include
$4.6 million for restructuring costs and $17.3 million for
personnel related expenses resulting from the change of control.
Business Review
Worldspan's global booking volumes increased 0.5 percent in the
second quarter of 2003 compared to the second quarter of 2002.
After declining sharply at the beginning of the quarter, booking
volumes recovered throughout the second half of the quarter as the
conflict in the Middle East diminished and the SARS outbreak was
contained. Leading the recovery in booking volumes was the online
channel, which grew 23.2 percent year over year, while traditional
travel agency bookings declined by 14.3 percent on a quarter over
quarter basis. During the quarter, the company expanded its online
presence through the conversion of Hotwire.com air bookings to the
Worldspan distribution system, in addition to expanding its
relationships with other significant online customers.
Information Technology Services revenues decreased by 5.4 percent
year over year, due primarily to reductions in operating expenses
which are passed through to customers on a cost-plus basis. In
addition, revenues from customized software development activities
decreased due to reductions in requests from airline customers.
Sale of Worldspan
Following the close of business on June 30, 2003, the company was
acquired by Travel Transaction Processing Corp. In connection to
the purchase, the company entered into a $175 million secured
credit facility and issued $280 million senior notes. The secured
credit facility, which includes $125 million of term debt and a
$50 million revolving credit facility, has a floating interest
rate and is payable over four years. The senior notes, bearing
interest at an annual rate of 9 5/8 percent, mature June 2011.
Worldspan is a leader in travel technology resources for travel
suppliers, travel agencies, e-commerce sites and corporations
worldwide. Utilizing fast, flexible and efficient networks and
computing technologies, Worldspan provides comprehensive
electronic data services linking approximately 800 travel
suppliers around the world to a global customer base. The company
offers industry-leading Fares and Pricing technology such as
Worldspan e-Pricing(SM), hosting solutions, and customized travel
products, including Worldspan Travel Enginuity(SM). Worldspan
enables travel suppliers, distributors and corporations to reduce
costs and increase productivity with best-in-class technology like
Worldspan Go!(R) and Worldspan Trip Manager(R). Worldspan is
headquartered in Atlanta, Georgia. Additional information is
available at http://www.worldspan.com
* * *
Highly Speculative Credit Rating
As reported in Troubled Company Reporter's June 19, 2003 edition,
Standard & Poor's Ratings Services assigned a its 'B+' corporate
credit rating to Atlanta, Georgia-based Worldspan L.P. Standard &
Poor's also assigned ratings to Worldspan's $549 million of debt
securities to be issued in connection with its acquisition by
Citigroup Venture Capital and Teachers' Merchant Bank, based on
a review of proposed terms and conditions.
The debt securities consist of $315 million senior notes due 2011,
rated 'B-'; a $100 million secured term loan and $50 million
secured revolving credit facility, both maturing 2007, rated
'BB-'; and $84 million senior subordinated notes due 2011, rated
'B-'. The ratings outlook is stable.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Alliance Imaging AIQ (39) 683 43
Akamai Technologies AKAM (168) 230 60
Alaris Medical AMI (32) 586 173
Amazon.com AMZN (1,353) 1,990 550
Aphton Corp APHT (11) 16 (5)
Arbitron Inc. ARB (100) 156 (2)
Alliance Resource ARLP (46) 288 (16)
Atari Inc. ATAR (97) 232 (92)
Actuant Corp ATU (44) 295 18
Avon Products AVP (91) 3,327 73
Saul Centers Inc. BFS (13) 389 N.A.
Caraco Pharm Lab CARA (20) 20 (2)
Cincinnati Bell CBB (2,104) 1,467 (327)
Cubist Pharmaceuticals CBST (7) 221 131
Choice Hotels CHH (114) 314 (37)
Columbia Laboratories COB (8) 13 5
Campbell Soup Co. CPB (114) 5,721 (1,479)
Centennial Comm CYCL (470) 1,607 (95)
Echostar Comm DISH (1,206) 6,260 1,674
D&B Corp DNB (19) 1,528 (104)
Graftech International GTI (351) 859 108
Hollywood Casino HWD (92) 553 89
Hexcel Corp HXL (127) 708 (531)
Integrated Alarm IASG (11) 46 (8)
Imax Corporation IMAX (104) 243 31
Imclone Systems IMCL (186) 484 139
Gartner Inc. IT (29) 827 1
Jostens JOSEA (512) 327 (71)
Journal Register JRC (4) 702 (20)
KCS Energy KCS (30) 268 (16)
Kos Pharmaceuticals KOSP (75) 69 (55)
Level 3 Comm Inc. LVLT (240) 8,963 581
Memberworks Inc. MBRS (21) 281 (100)
Moody's Corp. MCO (327) 631 (190)
McDermott International MDR (417) 1,278 154
McMoRan Exploration MMR (31) 72 5
Maguire Properti MPG (159) 622 N.A.
MicroStrategy MSTR (34) 80 7
Northwest Airlines NWAC (1,483) 13,289 (762)
ON Semiconductor ONNN (548) 1,203 195
Petco Animal PETC (11) 555 113
Primus Telecomm PRTL (168) 724 65
Per-Se Tech Inc. PSTI (39) 209 32
Qwest Communications Q (1,094) 31,228 (1,167)
Rite Aid Corp RAD (93) 6,133 1,676
Ribapharm Inc RNA (363) 199 92
Sepracor Inc SEPR (392) 727 413
St. John Knits Int'l SJKI (76) 236 86
I-Stat Corporation STAT 0 64 33
Town and Country Trust TCT (2) 504 N.A.
Tenneco Automotive TEN (75) 2,504 (50)
Thermadyne Holding THMD (665) 297 139
TiVo Inc. TIVO (25) 82 1
Triton PCS Holdings TPC (36) 1,617 172
UnitedGlobalCom UCOMA (3,040) 5,931 (6,287)
United Defense I UDI (30) 1,454 (27)
UST Inc. UST (47) 2,765 829
Valassis Comm. VCI (33) 386 80
Valence Tech VLNC (17) 36 4
Ventas Inc. VTR (54) 895 N.A.
Warnaco Group WRNC (1,856) 948 471
Western Wireless WWCA (464) 2,399 (120)
Xoma Ltd. XOMA (11) 72 30
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR, is
provided by DebtTraders in New York. DebtTraders is a specialist
in global high yield securities, providing clients unparalleled
services in the identification, assessment, and sourcing of
attractive high yield debt investments. For more information on
institutional services, contact Scott Johnson at 1-212-247-5300.
To view our research and find out about private client accounts,
contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing
available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C.
de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A.
Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***