/raid1/www/Hosts/bankrupt/TCR_Public/031127.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, November 27, 2003, Vol. 7, No. 235
Headlines
ADELPHIA COMMS: Has Until Jan. 15 to File Schedules of Assets
AIR CANADA: CCAA Monitor E&Y Submits Solicitation Process Report
AMERADA HESS: Closes $600MM Public Offering of Conv. Preferreds
AMERCO: Wants Solicitation Exclusivity Extended to Feb. 28, 2004
AMERICAN AIRLINES: Files Registration Statement on SEC Form S-3
AMNIS SYSTEMS: Sept. 30 Balance Sheet Upside-Down by $8 Million
ANTEON: S&P Ups Corp. Credit Rating to BB over Improved Profits
ARBIOS SYSTEMS: Limited Cash Resources Raise Going Concern Doubt
ASTRALIS LTD: Must Raise New Financing to Continue Operations
ATLANTIC COAST AIRLINES: Shareholder Revokes Initial Consent
AVIVA AMERICA: Section 341(a) Meeting Convenes on December 18
BOOT TOWN: Wants Lease Decision Period Extended Until March 15
BURLINGTON: BII Trust Sues 84 Creditors to Recover Preferences
CHANNEL MASTER: US Trustee Names 5-Member Creditors' Committee
CHESAPEAKE ENERGY: Receives Consents to Amend Note Indenture
COMMERCIAL MORTGAGE: Fitch Affirms BB+ Class H Note Rating
CONTIMORTGAGE: S&P Drops 6 Note Class Ratings to Junk & D Levels
COVANTA: Ormat Nevada Pitches Best Bid for Geothermal Assets
COVANTA ENERGY: Court Okays Sale of Geothermal Assets to Ormat
CMS ENERGY: Reaches Settlement Agreement with Regulatory Body
CRESCENT REAL: Ritz-Carlton Palm Beach Sold for $92 Million
CRYOPAK INDUSTRIES: Sept. 30 Working Cap. Deficit Tops C$6 Mill.
DEACONESS HOSPITAL: Retains Hahn Loeser as Bankruptcy Counsel
DEEP HOLDINGS INC.: Case Summary & Largest Unsecured Creditors
DIRECTV: Stipulation Resolving Fees & Disbursement Issues Okayed
DOMAN IND.: Sues B.C. Gov't for Contractual Obligations Breach
ENRON: ECT Selling Nutech Partnership & Series B Units for $2.5M
EQUINOX HOLDINGS: Gets S&P's Lower-B Level Credit & Note Ratings
GAP INC: Neal Goldberg Resigns as Outlet Division President
GE CAPITAL: Fitch Affirms 6 Low-B Ser. 2002-3 Note Class Ratings
GENUITY INC: Balks at Three Verizon Lease Guaranty Claims
GLOBAL CROSSING: Wants Nod to Amend Plan and Related Documents
GMACM MORTGAGE: Fitch Rates Class B-1 and B-2 Certs. at BB and B
HAYES LEMMERZ: GE Capital Demands $7.5MM Admin Expense Payment
HYPERFEED TECH.: Sells Data Feed Biz. Assets to Interactive Data
IMPERIAL METALS: Huckleberry Initiates Management Restructuring
IMPERIAL PLASTECH: August Working Capital Deficit Tops $16.2MM
INTEREP: Withdraws Request for Funding from Boston Ventures
ISTAR ASSET: Fitch Ups Ratings on Various Series 2002-1 Notes
J & B HOUSTON: Case Summary & 17 Largest Unsecured Creditors
J.A. JONES: Paul Hastings Signs-Up as Gov't Contracts Counsel
JP MORGAN CHASE: Fitch Affirms Low-B Class F and G Note Ratings
KMART: Court Disallows $1.8 Million of Employee Severance Claims
KEVN INC: Chapter 11 Case Summary & 20 Largest Unsec. Creditors
LYONDELL CHEMICALS: Fitch Affirms Ratings & Keeps Neg. Outlook
MEASUREMENT SPECIALTIES: Settles Dispute over Terraillon Sale
MERCURY AIR: Will File Annual Report on Form 10-K by December 31
MICHAEL FOODS: Initiating Temporary Lay-Off at Iowa Facility
MILLENNIUM CHEMS: Closes Sale of $125MM Convertible Debentures
MIRANT CORP: Wants to Walk Away from Brazos Supply Agreement
MOUNT SINAI MEDICAL: Fitch Rates $107MM Series 2004 Bonds at BB
NEXSTAR: S&P Rates Proposed $55MM Sr. Sec. Credit Facility at B+
NRG ENERGY: 21 Units Confirm Separate Plan of Reorganization
NRG ENERGY: Hires David W. Crane as New Company President & COO
OMNOVA SOLUTIONS: Elects David J. D'Antoni to Board of Directors
PAC-WEST: Gets Tenders & Consents from Majority of Noteholders
PATCH SAFETY: Relieved of Loan Default Status After Refinancing
PC CONNECTION: Gets Waiver of Technical Default Under Loan Pact
PENN. REAL ESTATE: Fitch Gives B+ Rating to $124 Mil. Preferreds
PILLOWTEX CORP: Wins Nod to Amend GGST Asset Purchase Agreement
PINNACLE ENTERTAINMENT: S&P Rates Sr. Sec. Credit Facility at B+
PRIME HOSPITALITY: Promotes Bryan K. Hayes to VP of Operations
PRO SKATE OPERATIONS: Voluntary Chapter 11 Case Summary
PROVIDENT FIN'L: Will Present at Friedman Billings Conference
RELIANCE: Liquidator Asks Court to OK Coast Insurance Settlement
RELIANT RESOURCES: Settles Trading and Price Issues with CFTC
RESIDENTIAL ACCREDIT: Fitch Rates 2 Note Classes at Low-B Level
ROYAL & SUNALLIANCE: AM Best Chops Financial Strength Rating to B
SELECT MEDICAL: Board Declares Initial Quarterly Cash Dividend
SENSUS METERING: S&P Assigns B+ Credit & Sr. Sec. Loan Ratings
SEQUOIA MORTGAGE: Fitch Rates Class B-4 and B-5 Notes at BB/B
SIEBEL SYSTEMS: Will Host Investor Audio Conference on Wednesday
SIERRA HEALTH: Selling Workers Compensation Unit to Folksamerica
SILVERLEAF RESORTS: Enters Pacts to Amend Sr. Credit Facilities
SITESTAR: Cash Resources Insufficient to Continue Operations
SIX FLAGS INC: Lenders Relax Covenants Under Credit Agreement
SMARTSERV: Appoints Grant Thornton, LLP as New Auditing Firm
SOLA INT'L: Receives Requisite Consents for Debt Tender Offer
SPIEGEL INC: Requests Additional Time to File Audited Financials
TECH DATA CORP: Reports Weaker Third-Quarter Financial Results
TEMBEC INC: Walks Away from Joint Venture Talks with Domtar
TEREX CORP: Completes $300-Million Senior Sub. Debt Offering
TEXAS PETROCHEMICALS: Files Plan & Disclosure Statement in Texas
UNIVERSAL CARE: A.M. Best Junks Financial Strength Rating at C
UNLIMITED HLDGS.: Case Summary & 20 Largest Unsecured Creditors
US AIRWAYS: Enters Stipulation Reducing 5 First Chicago Claims
VANGUARDE MEDIA: Case Summary & 20 Largest Unsecured Creditors
WCI STEEL: Silicon Electrical Steel Line Will be Idled in Jan.
WEIRTON STEEL: Court Clears Fleet Capital Commitment Agreement
WESTPOINT STEVENS: Intends to Assume Ralph Lauren License Pact
WORLDCOM INC: Court Okays Deloitte's Engagement as Consultant
W.R. GRACE: Taps Protiviti as Sarbanes-Oxley Compliance Advisors
*********
ADELPHIA COMMS: Has Until Jan. 15 to File Schedules of Assets
-------------------------------------------------------------
The Adelphia Communications Debtors obtained the Court's
permission to further extend their deadline to file their
Schedules of Assets through January 15, 2004. (Adelphia Bankruptcy
News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
AIR CANADA: CCAA Monitor E&Y Submits Solicitation Process Report
----------------------------------------------------------------
Air Canada advises that the Twelfth Report of the Monitor, an
update on developments relating to the Company's Equity
Solicitation Process under the Companies' Creditors Arrangement
Act, has been completed by Ernst and Young Inc. and is now
available at http://www.aircanada.com/
The Report includes the following:
- An update of the Company's Equity Solicitation Process and
the Company's selection of Trinity Time Investments Limited
as the equity plan sponsor;
- An overview of the investment agreement between Air Canada
and Trinity;
- An overview of the standby purchase agreement with Deutsche
Bank Securities Inc. in connection with the proposed equity
rights to be offered by Air Canada to creditors; and
- Details concerning the unsuccessful bid by Cerberus Capital
Management, L.P. as well as the subsequent unsolicited
investment proposals made by Cerberus.
The following highlights from the report are provided with respect
to the equity solicitation process, the selection of Trinity and
conclusion.
Equity Solicitation Process
In its Report to the Court the Monitor reviewed the extensive four
month Equity Solicitation Process and expressed the view that, as
overseen by the Monitor, the result was a very competitive and
thorough process taking into account the size and complexity of
the Company, the specialized nature of the airline industry, the
"fast track" timeline followed in the Equity Solicitation Process,
and the need for multiple parties to conduct extremely detailed
due diligence on a concurrent basis. Both bidders submitted their
proposals on November 7, 2003 and the Board of Directors selected
Trinity on November 8, 2003.
Process leading to Investor Proposal Selection
by the Board of Directors
In the two weeks prior to November 7, 2003, the Monitor was in
regular contact with representatives of each of the two investors.
Each was provided unfettered access to the Monitor alone or with
representatives of the Applicants.
The Monitor attended both the Restructuring Committee and Board of
Directors meetings held on November 8, 2003 to consider the two
investment agreements. Neither management nor its financial
advisors made a recommendation to either the Restructuring
Committee or the Board of Directors regarding the selection of the
equity plan sponsor. Furthermore, Mr. Milton abstained as a
Director from voting on the equity plan sponsor.
Commonalities in Cerberus and Trinity Time Proposals
Material matters affecting Air Canada's financial position and its
ability to exit CCAA that had not yet been resolved prior to
November 7, 2003 were left as closing conditions in favour of the
investor. Both agreements required the following material matters
to be resolved in a manner acceptable to the potential investors
in connection with:
a. The deficit funding of the pension plans;
b. Regulatory matters;
c. Aircraft purchase commitments and aircraft financing
arrangements;
d. The absence of a deterioration in the financial
condition or prospects of Air Canada prior to closing;
and
e. Approval by the Court, and successful exit from CCAA
proceedings.
Given the difficulty in establishing firm conditions in the face
of uncertainty on items (a), (b) and (c) above, the Company's
financial advisor suggested to each of Cerberus and Trinity that
their respective investment agreement contain consistent
conditions with respect to these issues.
Both the Cerberus and Trinity Time proposals of November 7, 2003
required the retention of Robert Milton, Air Canada's CEO and
Calin Rovinescu, the airline's Chief Restructuring Officer, as
well as one or more other senior officers depending on the
proposal. Both proposals offered a restricted share grant of 1% to
each of Robert Milton and Calin Rovinescu and both proposals
provided for a similar stock option program for management. This
was designed to motivate current senior management to remain with
the Company to execute the business plan presented to the
potential investors once the Company emerged from CCAA
proceedings.
Selection of Trinity
In the Report the Monitor listed its understanding of the main
reasons for the selection of Trinity by the board of directors,
specifically:
a) Cerberus' proposal contained additional risk with
respect to satisfaction of Canadian ownership and
control-in-fact tests;
b) Trinity did not require Canadian ownership rulings from
Canadian regulators since Trinity is owned and
controlled by a Canadian citizen;
c) A global industrial partner could provide the Company
with additional synergies and business opportunities
over an equity fund investor;
d) There was a likelihood of better trading performance of
Air Canada securities post-emergence from CCAA with
Trinity as principal investor; and
e) Stakeholder views
Motion for Court Approval of the Trinity Investment Agreement and
the Deutsche Bank Standby Purchase Agreement
In the Report, the Monitor requested that the Court begin the
process of considering Air Canada's motion for approval of the
Trinity Investment Agreement and the Deutsche Bank Standby
Agreement as soon as possible such that the issues raised by the
Unsolicited Offer and the Supplemental Unsolicited Offer can be
addressed as soon as possible.
On November 24, 2003 Air Canada applied for approval of the
Trinity Investment Agreement and the Deutsche Bank Standby
Purchase Agreement announced by Air Canada on October 24, 2003.
The two agreements in total would provide for $1.1 billion of
equity investment in the Air Canada restructuring.
Further announcements will be made in due course as circumstances
warrant.
AMERADA HESS: Closes $600MM Public Offering of Conv. Preferreds
---------------------------------------------------------------
Amerada Hess Corporation (NYSE: AHC) has closed a $600 million
offering of its Mandatory Convertible Preferred Stock (12 million
shares with a liquidation preference of $50 per share).
The Company also announced that the underwriters have notified the
Company of their intention to exercise their option to purchase an
additional $75 million (1.5 million shares) of the Company's
Mandatory Convertible Preferred Stock. The Mandatory Convertible
Preferred Stock was issued pursuant to Amerada Hess' shelf
registration statement declared effective by the Securities and
Exchange Commission on November 14, 2003.
Shares of the Mandatory Convertible Preferred Stock have an annual
dividend yield of 7.0 percent and a threshold appreciation price
of $60.20, which is 24 percent above the $48.55 closing price of
the common stock on November 19, 2003. The preferred stock will
mandatorily convert into Amerada Hess common shares on December 1,
2006.
Net proceeds from the offering totaled approximately $581 million.
In addition, net proceeds from the purchase of the optional shares
is expected to be approximately $73 million. Proceeds from the
offering and the purchase of the optional shares will be used for
general corporate purposes, including reduction of debt.
Separately, Amerada Hess has offered to purchase for cash up to an
aggregate $594 million in principal amount of certain of its
outstanding series of notes.
Amerada Hess, headquartered in New York, is a global integrated
energy company engaged in the exploration for and the production,
purchase, transportation and sale of crude oil and natural gas, as
well as the production and sale of refined petroleum products.
Goldman, Sachs & Co. served as sole book-running manager for the
offering. Copies of the prospectus and prospectus supplement
related to the public offering may be obtained from Goldman, Sachs
& Co., Prospectus Department, One New York Plaza, New York, NY
10004. Goldman, Sachs & Co. is also serving as dealer manager for
the Company's offer to purchase up to $594 million of its
outstanding debt.
As previously reported, Standard & Poor's assigned its 'BB+'
rating to $600 million offering of its Mandatory Convertible
Preferred Stock (12 million shares with a liquidation preference
of $50 per share), with negative outlook.
Amerada Hess, headquartered in New York, is a global integrated
energy company engaged in the exploration for and the production,
purchase, transportation and sale of crude oil and natural gas, as
well as the production and sale of refined petroleum products.
AMERCO: Wants Solicitation Exclusivity Extended to Feb. 28, 2004
----------------------------------------------------------------
Bridget Robb Peck, Esq., at Beesley, Peck & Matteoni, Ltd., in
Reno, Nevada, relates that the AMERCO Debtors' Chapter 11 cases
involve a complex capital structure with more than $1,000,000,000
in secured and unsecured obligations. In addition, the Debtors
also guaranteed certain indebtedness of U-Haul International, Inc.
and its subsidiaries under the Terminal Rental Adjustment Clause
Leases.
The Debtors' primary restructuring objectives include:
(a) rationalizing their complex capital structure;
(b) implementing a restructuring that de-leverages their
balance sheet, without impairing existing equity
interests in Amerco; and
(c) emerging from their Chapter 11 cases as soon as
practicable.
As of Amerco's Petition Date, Ms. Peck states that the Debtors
faced considerable obstacles to achieve the objectives:
(1) The Debtors are unable to reach agreement with any of
their key creditors regarding a consensual plan of
reorganization;
(2) Republic Western Insurance Company, one of the Debtors'
subsidiaries that provides insurance to U-Haul's rental
fleet, was placed under direct administrative
supervision by the Arizona Department of Insurance, which
can potentially jeopardize the insurance RepWest provides
to Amerco and U-Haul;
(3) Amerco was confronted with the very real possibility of
having its preferred stock and common stock de-listed
from the NYSE and NASDAQ; and
(4) The Debtors were in the process of restating, with the
assistance of newly retained auditors, their financial
statements for fiscal years ending 2001 and 2002, and the
filing of their annual and quarterly reports.
Since June 20, 2003, the Debtors overcame each of the obstacles.
In fact, since then:
(a) The Debtors were able to negotiate consensual cash
collateral stipulations with JPMorgan Chase Bank,
Citibank, NA and Bank of Montreal under two synthetic
lease facilities;
(b) The Debtors got the Court's approval of the $300,000,000
DIP financing facility, which provides for them the
needed stability to avoid the Arizona Department of
Insurance from taking further regulatory action against
RepWest;
(c) On August 12, 2003, the Debtors entered into a
Restructuring Agreement with the AREC Noteholders, which
provides for the consensual treatment under the plan of
reorganization of the AREC Notes;
(d) On September 8, 2003, the Debtors and JPMorgan entered
into a Restructuring Agreement, which provides for the
consensual treatment of the Senior Secured Facility under
a plan of reorganization;
(e) The Debtors filed within the 120-day exclusive period the
Plan and Disclosure Statement;
(f) On November 5, 2003, the Debtors and Wells Fargo Foothill,
Inc. entered into a commitment letter wherein Foothill
agreed to provide the Debtors a $550,000,000 exit
financing; and
(g) On November 12, 2003, the Debtors and the Official
Committee of Unsecured Creditors entered into a Plan
Support Agreement, which provides full payment of more
than $700,000,000 of Amerco unsecured debt and effects a
de-leveraging of Amerco without impairing any existing
equity interests in Amerco.
In addition, since June 20, 2003, the Debtors are able to
maintain their listing status on both NYSE and NASDAQ,
successfully restated their financial statements for fiscal years
2001 and 2002 and have timely filed all quarterly reports.
Moreover, as evidenced in the most recent Form 10-Q, the Debtors
have also successfully operated their businesses during the
Chapter 11 proceedings -- increasing their profits in the second
quarter by $10,000,000 from the same quarterly period in fiscal
year 2003. The market for Amerco's equity also responded
favorably to the progress that has been made in these Chapter 11
proceedings. As of November 17, 2003, the total equity market
capitalization for Amerco was $703,000,000, which represents a
substantial increase since the Petition Date.
To implement the Support Agreement and to resolve certain
objections to the Disclosure Statement, the Plan will be amended
and the Disclosure Statement revised. The Debtors committed to
file the Amended Plan and Disclosure Statement no later than
November 26, 2003. According to Ms. Peck, the Court scheduled a
final hearing to consider approval of the Disclosure Statement
for December 12, 2003 and a confirmation hearing on February 2,
2004. As evidenced by the Support Agreement, the AREC
Restructuring Agreement and the JPMorgan Restructuring Agreement,
the Amended Plan will have the support of the vast majority of
the Debtors' creditors. In addition, under the Amended Plan,
existing equity interests in the Debtors will remain unimpaired.
Section 1121(b) of the Bankruptcy Code provides for an initial
120-day period after the Petition Date during which a debtor has
the exclusive right to file a Chapter 11 plan. Section
1121(c)(3) provides that, if a debtor proposes a plan within the
exclusive filing period, it has a period of 180 days after the
Petition Date to obtain acceptances of the plan.
Ms. notes that Amerco's initial Exclusive Period to solicit plan
acceptances will expire on December 17, 2003 while AREC's will
expire on February 9, 2004.
By this motion, the Debtors ask the Court to extend their
exclusive period to solicit votes to accept or reject the Plan up
to and including February 28, 2004. (AMERCO Bankruptcy News, Issue
No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMERICAN AIRLINES: Files Registration Statement on SEC Form S-3
---------------------------------------------------------------
AMR Corporation (NYSE: AMR), the parent company of American
Airlines, Inc., and American Airlines have filed a universal shelf
registration statement on Form S-3 with the Securities and
Exchange Commission in connection with the potential future offer
and sale, from time to time, of up to $3,000,000,000 aggregate
amount of AMR's common stock, preferred stock, debt securities and
other types of securities, and American Airlines' pass through
certificates, debt securities and other types of securities.
These securities, which may be offered in one or more offerings
and in any combination, will in each case be offered pursuant to a
separate prospectus supplement issued at the time of the
particular offering that will describe the specific types,
amounts, prices and terms of the offered securities. Unless
otherwise described in the applicable prospectus supplement
relating to the offered securities, the companies anticipate using
the net proceeds of each offering for general corporate purposes.
This universal shelf registration statement replaces a shelf
registration statement covering debt securities and pass through
certificates filed by American Airlines and AMR with the
Securities and Exchange Commission in 2002 and a shelf
registration statement covering debt securities filed by AMR in
1998, which together had approximately $2,728,137,000 of unused
availability.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission but has not yet
become effective. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration statement
becomes effective.
American Airlines (Fitch, CCC+ Convertible Unsecured Note Rating,
Negative) is the world's largest carrier. American, American
Eagle and the AmericanConnection regional carriers serve more than
250 cities in over 40 countries with more than 3,900 daily
flights. The combined network fleet numbers more than 1,000
aircraft. American's award-winning Web site, AA.com, provides
users with easy access to check and book fares, plus personalized
news, information and travel offers. American Airlines is a
founding member of the oneworld Alliance.
Current AMR Corp. news releases can be accessed via the Internet
at http://www.amrcorp.com
AMNIS SYSTEMS: Sept. 30 Balance Sheet Upside-Down by $8 Million
---------------------------------------------------------------
Amnis Systems Inc. (OTC Bulletin Board: AMNM), a leading global
provider of networked streaming video systems, has exceeded its
revenue goals for the third quarter ending September 30, 2003.
Sales for the period reached $516,185, a two-fold increase over
the previous quarter. Contributing to the increase in sales are
fourteen (14) separate accounts, which include Boeing, Hughes
Networks, Best Buy, Matsushita (Panasonic) and Northrop Grumman.
"I am very encouraged by the upward trend in revenues," said Steve
Peltier, President and CEO of Amnis Systems. "This is a testament
to our leadership position in the growing enterprise network video
market."
At September 30, 2003, the Company's balance sheet shows a working
capital deficit of about $7 million, and a total shareholders'
equity deficit of about $8 million.
In addition to the increase in revenue, the company also launched
a new product line and signed two new resellers. "We had an
exceptionally productive third quarter," said Mr. Peltier, "Not
only did we exceed our revenue targets, we also made significant
progress in other areas of the business that will ensure future
revenue growth." The company recently expanded its market
presence in the Government sector by opening an office in the
Washington, D.C. area. "Homeland Security initiatives and other
measures taken by the Federal Government have created exceptional
opportunities for the company," said Mr. Peltier. " We were
recently invited to attend a conference for the organizations
responsible for setting video standards within the Federal
Government. In addition, we will be exhibiting at the Government
Technology Video Expo in Washington, D.C. We see a great deal of
momentum building in this sector."
Amnis Systems Inc., which acquired Optivision, Inc. in 2001, is
the market leader in the networked streaming video market. The
company develops, manufactures and delivers MPEG network video
products for high-quality video creation, management and
distribution worldwide both directly and through leading industry
partners. Based in Palo Alto, California, Amnis Systems products
are used in diverse applications such as such as surveillance,
distance learning, content distribution, corporate training,
telemedicine, video-on-demand and high-quality video conferencing.
To find out more about Amnis Systems Inc., visit its Web site at
http://www.amnisinc.com
Amnis Systems is not affiliated or related to Amnis Corporation of
Seattle, Washington.
ANTEON: S&P Ups Corp. Credit Rating to BB over Improved Profits
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Anteon International Corp. to 'BB' from 'BB-' and
assigned a 'BB' rating to the proposed refinanced senior secured
bank facility. The outlook is stable.
Fairfax, Virginia-based Anteon International Corp is a provider of
information technology and engineering services, primarily to the
U.S. government. Pro forma for the proposed refinancing of its
senior subordinated debt, the company had approximately $164
million in debt on its balance sheet as of Sept. 30, 2003.
The ratings actions are based on Anteon's strengthened
profitability and improved capital structure. The refinancing of
its senior subordinated notes with lower-interest bank debt also
improves the company's interest coverage and extends debt
maturities.
"A fairly stable cash flow base, supported by a large backlog,
limits Anteon's downside credit risk," said Standard & Poor's
credit analyst Ben Bubeck. "We expect management to structure and
pace acquisitions to support current credit quality."
Standard & Poor's rated Anteon's proposed refinanced senior
secured bank facility the same as the corporate credit rating
because it believes there is a likelihood of meaningful, but not
full, recovery of principal in the event of a default. The
facility consists of a $200 million revolving credit line
(maturing 2008) and a $125 million term loan (maturing 2010).
The term loan will be put into place to refinance both a $75
million senior subordinated note issue and an $18.4 million term
loan balance. Proceeds will also be used to pay down a portion of
the revolving credit facility balance and cover various expenses
associated with the transaction.
ARBIOS SYSTEMS: Limited Cash Resources Raise Going Concern Doubt
----------------------------------------------------------------
Historical Autographs U.S.A., Inc., a Nevada corporation that
recently changed its name to "Arbios Systems, Inc.", was formed as
a Nevada corporation in February 1999 for the purpose of engaging
in the business of acquiring and marketing historical documents,
such as letters, photographs and signatures of political and
military figures, inventors, Nobel Prize winners, significant
physicians entertainers, musicians, composers, authors, artists,
and well-known athletes. The Company's business to date has been
conducted exclusively through its website:
http://www.historical-autographs.com Its business has not,
however, achieved success, and from its inception through
September 30, 2003, the Company had generated less than $200,000
of revenues from its business and had accumulated an operating
deficit of $48,000.
For the nine months ended September 30, 2003, the Company had a
net loss of $9,422 on gross revenues of $6,000. Because of its
lack of success in its existing business, Arbios Systems
considered the acquisition of other, better funded, companies. On
October 7, 2003, the Company entered into a letter of intent with
Arbios Technologies, Inc., a Delaware corporation regarding a
possible reorganization transaction, pursuant to which (i) Arbios
Technologies would become a wholly-owned subsidiary of Arbios
Systems, (ii) the stockholders of Arbios Technologies would become
the controlling stockholders of Arbios Systems, and (iii) the
officers and directors of Arbios Technologies would become the
officers and directors of Arbios Systems. On October 20, 2003,
Arbios Systems, HAUSA Acquisition, Inc., a Nevada corporation and
a newly-formed wholly-owned subsidiary of Arbios Systems, Arbios
Technologies and certain stockholders of Arbios Systems, entered
into an Agreement and Plan of Reorganization to effect the
Reorganization. HAUSA Acquisition was formed for the sole purpose
of merging with and into Arbios Technologies as part of the
Reorganization.
On October 30, 2003, Arbios Systems completed the Reorganization.
As a result of the Reorganization, Arbios Technologies became a
wholly-owned subsidiary of Arbios Systems, and all of the issued
and outstanding shares of Arbios Technologies common stock, and
all of Arbios Technologies' outstanding options and warrants, were
converted into or exchanged for shares of common stock, options or
warrants of Arbios Systems. Immediately prior to the
Reorganization, Arbios Technologies had 11,930,598 shares of its
common stock outstanding, which were exchanged for 11,930,598
shares of Arbios Systems' $0.001 par value common stock. As a
result of the Reorganization, the holders of common stock
immediately prior to the Reorganization now own approximately 9.3%
of the issued and outstanding common stock.
In addition, in the Reorganization Arbios Systems assumed (i)
options to purchase 198,000 shares of Arbios Technologies common
stock, and (ii) warrants to purchase an aggregate of 5,450,000
shares of Arbios Technologies common stock. The options and
warrants are exercisable at prices ranging from $0.15 per share to
$2.50 per share. Of these warrants, warrants to purchase a total
of 4,400,000 shares of common stock at a price of $2.50 per share
are exercisable for three years and will be callable by Arbios
Systems at $0.01 per share at any time after the common stock
trades for 20 consecutive trading days at an average closing sales
price of $4.00 or more.
As a result of the Reorganization the stockholders of Arbios
Technologies acquired control of Arbios Systems by acquiring a
majority of the outstanding shares of common stock and by
replacing the existing officer and director of Arbios Systems. The
source of consideration used by the stockholders of Arbios Systems
in the Reorganization were the shares of common stock of Arbios
Technologies owned or held beneficially by the Arbios Technologies
stockholders prior to the Reorganization.
Going Concern Uncertainty
The Company's financial statements have been prepared
assuming that the Company will continue as a going concern. For
the nine months ended September 30, 2003, the Company has a net
loss of $9,422, an accumulated deficit of $47,792 and limited
cash resources. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. The future
of the Company is dependent upon its ability to obtain financing
and upon future profitable operations from the commercial success
of its retail venture. Management's plans are to seek additional
capital through sales of the Company's stock.
The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or
the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
ASTRALIS LTD: Must Raise New Financing to Continue Operations
-------------------------------------------------------------
Astralis Ltd. is an emerging biotechnology company based in New
Jersey and engaged primarily in the research and development of
novel treatments for immune system disorders and skin diseases.
The Company is currently developing two products. Its primary
product, Psoraxine, is an innovative immunotherapeutic agent under
development for the treatment of psoriasis. The Company's second
product is for the treatment of leishmaniasis.
Pharmaceutical products must undergo an extensive process,
including testing in compliance with U.S. Food and Drug
Administration regulations, before they can be commercially sold
and distributed in the United States. FDA testing occurs in
various phases over several years. The Company commenced clinical
testing of Psoraxine in the third quarter of 2003. The Company
will need significant additional funds to complete all of the
testing required by the FDA. Currently, the Company has no
products approved for commercial sale and therefore no means to
generate revenue. These conditions raise substantial doubt about
the Company's ability to continue as a going concern.
Management is pursuing opportunities to sell equity securities
privately to limited investors in 2003. These funds, in addition
to its cash and marketable securities held at September 30, 2003,
will be needed in order to finance the Company's currently
anticipated needs for operating and capital expenditures for 2004,
including the cost to complete Phase II of the FDA testing process
for Psoraxine. The Company will also need to raise significant
additional funds from outside sources in future years in order to
complete future phases of FDA required testing.
The Company's ability to adhere to its current business plan is
dependent upon raising capital through debt and equity financing.
There can be no assurance that the Company will successfully raise
the required future financing on terms desirable to the Company or
that the FDA will approve Psoraxine for use in the United States.
If the Company does not obtain the needed funds, it will likely be
required to delay development of its products, alter its business
plan, or in the extreme situation, cease operations.
The Company's financial statements have been prepared assuming the
Company will continue as a going concern. Continuing as a going
concern is dependent upon successfully obtaining additional
working capital as described above. The financial statements do
not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets and amounts and
classifications of liabilities that might result from the outcome
of this uncertainty.
ATLANTIC COAST AIRLINES: Shareholder Revokes Initial Consent
------------------------------------------------------------
Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI) announced
that the consent ACA received on October 23, 2003, in connection
with Mesa Air Group, Inc.'s (Nasdaq: MESA) consent solicitation
has been revoked and therefore the 60-day consent solicitation
period has not yet commenced. This development does not affect
the October 23, 2003 record date set by ACA's Board of Directors
with respect to Mesa's consent solicitation.
The Company noted that, at the time the initial consent was
received, it was believed that Mesa's and ACA's solicitation
materials could be mailed to ACA stockholders promptly. The
Company did not anticipate Mesa's extended delay in clearing its
consent solicitation materials with the Securities and Exchange
Commission and mailing them to ACA stockholders. Therefore, ACA
believes that the revocation of the initial consent will result in
the Company's stockholders having an appropriate opportunity to
consider carefully the information about the consent solicitation.
ACA currently operates as United Express and Delta Connection in
the Eastern and Midwestern United States as well as Canada. On
July 28, 2003, ACA announced plans to establish a new, independent
low-fare airline to be based at Washington Dulles International
Airport. The Company has a fleet of 148 aircraft-including a
total of 120 regional jets-and offers over 840 daily departures,
serving 84 destinations. ACA employs approximately 4,600 aviation
professionals.
The Company has filed with the SEC a preliminary consent
revocation statement on Schedule 14A and intends to file its
definitive consent revocation statement on Schedule 14A shortly.
The definitive consent revocation statement will contain important
information about ACA's position regarding Mesa's consent
solicitation. You are urged to read carefully the definitive
consent revocation statement, which you will receive from the
Company after it has been filed, before taking any action or
making any decision with respect to Mesa's consent solicitation.
You may obtain a copy of the Company's preliminary consent
revocation statement on Schedule 14A, and will be able to obtain a
copy of the Company's definitive consent revocation statement,
when filed, free of charge at the website maintained by the SEC at
http://www.sec.gov In addition, you may obtain documents filed
with the SEC by ACA free of charge by requesting them in writing
from ACA, 45200 Business Court, Dulles, VA 20166, Attention:
Director, Corporate Communications.
ACA and certain of its directors and executive officers may be
deemed to be participants in the solicitation. A detailed list of
the names of ACA's directors and executive officers is contained
in ACA's preliminary consent revocation statement, which may be
obtained without charge at the Web site maintained by the SEC at
http://www.sec.gov
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 Atlantic Coast Airlines,
visit its Web site at http://www.atlanticcoast.com
Atlantic Coast Airlines (S&P, B- Corporate Credit Rating,
Developing) employs over 4,600 aviation professionals. The common
stock of parent company Atlantic Coast Airlines Holdings, Inc. is
traded on the Nasdaq National Market under the symbol ACAI. For
more information about ACA, visit the Web site at
http://www.atlanticcoast.com
AVIVA AMERICA: Section 341(a) Meeting Convenes on December 18
-------------------------------------------------------------
The United States Trustee will convene a meeting of Aviva America,
Inc.'s creditors on December 18, 2003, at 11:00 a.m., in the
Office of the U.S. Trustee, 1100 Commerce St., Room 976, Dallas,
Texas 75242. This is the first meeting of creditors required under
11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Dallas, Texas, Aviva America, Inc., is an
independent oil and gas company. The company operated one property
known as Breton Sound 31 located twenty miles offshore Louisiana
in sixteen feet of water. The Company filed for chapter 11
protection on November 18, 2003 (Bankr. N.D. Texas Case No. 03-
81855). Franklin L. Broyles, Esq., Goins, Underkofler, Crawford &
Langdon represent the Debtor in its restructuring efforts.
BOOT TOWN: Wants Lease Decision Period Extended Until March 15
--------------------------------------------------------------
Boot Town, Inc., asks the U.S. Bankruptcy Court for the Northern
District of Texas, Dallas Division to extend the time within which
they must decide whether to assume, assume and assign, or reject
their unexpired nonresidential real property leases.
The Debtor relates that the Leases may be rejected by operation of
law. The consequences of such statutory rejection are numerous and
may frustrate the Debtor's goals of restructuring their finances
and maximizing its estate for the benefit of their creditors.
Additionally, the Debtor's case is large and complex. At the
commencement of the case, the Debtor focuses on the bulk of its
energy on stabilizing its business and providing the groundwork
for a successful chapter 11 case. The Debtor will work diligently
to meet the deadline for submission of Schedules and Statements of
Financial Affairs and to provide this Court, the US Trustee and
the creditors with all of requested documents on a timely basis.
One component of the restructuring process will be reviewing the
Leases and determining whether or not it is in the best interests
of the Debtor, its estate and its creditors to continue to
participate in the Leases. To prematurely force the Debtor to
decide whether to assume or reject the Leases would substantially
prejudice its ability to maximize creditor recovery.
The Leases are in connection to the Debtor's retail locations and
are essential to its business. The Debtor is currently evaluating
the profitability of each of its retail locations to determine
which are beneficial and which could impede its ability to
successfully reorganize.
Consequently, the Debtor asks to extend the time within which it
may elect to assume or reject the Leases until the later of
March 15, 2004 or the confirmation of the Debtor's plan of
reorganization.
Headquartered in Farmers Branch, Texas, Boot Town, Inc., is a
retailer of brand name boots and western wear: hats, belts,
buckles, and jeans. The Company filed for chapter 11 protection
on November 17, 2003 (Bankr. N.D. Tex. Case No.: 03-81845).
Cynthia Cole, Esq., Esq. Neligan Tarpley Andrews & Foley, L.L.P.
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed more
than $10 million in both estimated assets and debts.
BURLINGTON: BII Trust Sues 84 Creditors to Recover Preferences
--------------------------------------------------------------
In separate Court filings, the BII Distribution Trust, as
representative of the bankruptcy estates of Burlington Industries,
Inc., now known as BII Liquidation, Inc., seeks to avoid and
recover preferential transfers of property from certain creditors.
According to Rebecca L. Booth, Esq., at Richards, Layton &
Finger, in Wilmington, Delaware, during the 90-day period prior
to the Petition Date, 84 creditors received from the Debtors one
or more transfers by check, wire transfer or their equivalent:
Entities Amount
-------- ------
A. Dewavrin Segard $177,987
A-F Leasing, Ltd. 87,830
Abco Industries, Incorporated 1,031,964
Allenberg Cotton Co. 636,871
Amoco Fabrics and Fibers Company 261,247
Anosa, Inc. 397,732
Arizona Chemical Company 1,149,330
Birs, Inc. 496,413
Bonar Floors, Inc. 1,640,690
Buffalo Color Corporation 1,506,132
Carolina Mills, Incorporated 2,289,198
Carolina Power & Light Company 2,258,632
Center Point Energy Resources Corp.
as successor-in-interest to Arkla, Inc. 325,876
Certified Sales and Service, Inc. 2,321,142
Chargeurs Wool USA Inc.
doing business as Prouvost USA 3,485,027
Chase Bank of Texas 511,897
Ciba Specialty Chemicals Corporation 1,116,750
CitiCapital Commercial Leasing 100,118
Citi Corp Vendor Finance, Inc. 132,548
Colchas Mexico, S.A. de C.V. 471,276
Conso Products 1,248,293
Crown Credit Company Ltd. 118,383
CSI Crown, Inc., now known as
Exxon Chemical Services Americas Inc. 1,113,744
Cyborg Systems Inc. 130,277
Drake Extrusion, Inc. 1,979,368
E I DuPont De Nemours and Company 21,716,077
Elders Wool International 594,814
Eplus Group, Inc. 402,101
Federal Express Corporation 599,899
Fed-X EDI 107,647
Fibertex A/S 1, 665,519
Fox & Lillie 298,357
GE Capital Financial, Inc. 756,478
Gilbos of America, Inc. 173,570
GMAC Commercial Credit, LLC 681,741
Grupo Zet International S.A. de C.V. 376,984
Hamlett Associates, Inc. 139,565
Harriet & Henderson Yarns, Inc. 1,098,949
HBSC Business Credit (USA) Inc. 1,064,812
Intera Corporation 62,747
Int'l Garment Processors & Finishers 3,067,967
Ira L. Griffin Sons, Inc. 328,971
Kosa, LLC 3,532,557
Lempiere Australia 721,494
Louis Dreyfus & Co. 1,706,760
Manhattan Properties I, LLC 103,223
Martelli Lavorazioni Tessili 480,059
Mel Bounds, LP 64,500
Miroglio Textiles USA 505,350
Mississippi Power Company 1,183,213
M. S. Carriers, Inc. 1,973,891
National Starch & Chemical Corporation 157,369
NESS Technologiges, Inc.,
successor to USoft Group 58,803
Oneup Enterprises, Inc. 399,390
Piedmont Natural Gas Company, Inc. 301,530
Preston South Property Owners Asso. 22,156
Ray Thomas Petroleum Company 240,116
Regions Bank 300,363
Relocation Resources International, Inc. 563,690
Ronile, Inc. 4,189,635
Saurer Inc.,
as successor to American Barmag Corp. 360,246
Symtech, Inc. 291,595
Schoen Machinery Co. 293,900
Sitrick and Company 191,475
SKA/FBOP Associates, LLC 71,018
Staple Cotton Co-Operative Association 5,337,435
Staubli Corporation 405,516
Summit Yarn, LLC 8,596,618
Sun Trust Bank 598,771
Parkdale Mills, Incorporated 1,253,131
Rosenthal & Rosenthal 787,464
Xpress Global Systems, Inc. 463,150
The Bacova Guild, Ltd. 6,108,815
The Hipage Company, Incorporated 513,254
The Partners Healthcare Group, Inc. 537,953
Total Life Cycle Carpet Care, Inc. 498,847
Turbo Yarn S.A. de C.V. 792,132
UAE Mecklenburg Cogeneration LP 15,072
Unifi, Inc. 7,249,656
Vaughn Mechanical Inc. 156,480
Virginia Electric and Power Company,
doing business as Dominion Virginia Power 2,256,508
Welcome Industrial Corp. 325,856
Wellman, Inc. 597,168
XL Adhesives LLC,
doing business as XL Flooring 915,348
The Transferees were creditors of the Debtors at the time of the
Transfers within the meaning of Section 101(10)(A) of the
Bankruptcy Code. At the time of the Transfers, the Transferees
had a right to payment on account of an obligation owed to them
by the Debtors. The Transfers were to or for the benefit of a
creditor within the meaning of Section 547(b)(1) of the
Bankruptcy Code because the Transfers either reduced or fully
satisfied a debt then owed by the Debtors to the creditors.
As of November 12, 2003, Ms. Booth relates, each of the Creditors
has not returned the Transfers. The Transfers were on account of
a debt for which these Debtors were legally bound to pay before
the Transfers were made within the meaning of Section 101(12) of
the Bankruptcy Code.
Ms. Booth adds that the Debtors were insolvent throughout the
Preference Period within the meaning of the Bankruptcy Code, in
that the sum of their debts was greater than the fair value of
their assets.
As a result of the Transfers, the creditors received more than
they would have received if:
(a) the Debtors' cases were cases under Chapter 7;
(b) the Transfers had not been made; and
(c) the creditors received payment under the provisions of
Chapter 11.
To the extent that the Transfers are avoided under Section 547 as
Preferences, the Debtors are entitled to recover the Transfers
from the creditors or any immediate or mediate transferee of the
creditors under Section 550(a)(1).
Thus, the Debtors ask the Court for:
(a) a judgment that the Transfers and any other transfers from
the Debtors to the creditors during the Preference Period
discovered after November 12, 2003 are avoided;
(b) a judgment that the Debtors will recover from the
creditors or any immediate or mediate transferee of the
creditors the Transfers and any other avoided transfers
discovered after November 12, 2003;
(c) an award of pre-judgment interest at the maximum legal
rate running from the time of the preference until the
date of judgment;
(d) an award of post-judgment interest at the maximum legal
rate running from the date of judgment until the date the
judgment is paid in full; and
(e) an award of costs incurred in the lawsuit. (Burlington
Bankruptcy News, Issue No. 43; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CHANNEL MASTER: US Trustee Names 5-Member Creditors' Committee
--------------------------------------------------------------
The United States Trustee for Region 3 appointed 5 creditors to
serve on an Official Committee of Unsecured Creditors in Channel
Master Holdings, Inc.'s Chapter 11 cases. The five committee
members are:
1. Bruce Armstrong
9 Grange Way, Sandbach, Cheshire, CW11 1ES
Phone: (44) 1270-766548, Fax: (44) 1270-763157;
2. John Stephen Mitchell A.C.A.
Hawthorne Cottage Winterbourne
Berkshire, UK, R920 8BB
Phone: (44) 7785-994372, Fax: (44) 1635-248782;
3. Scotland Container, Inc.
Attn: Steve C. Wright
P.O. Box 1625, Laurinsburg, NC 28353
Phone: (910) 277-0400, Fax: (910) 277-0184;
4. WKK Technology LTD
c/o WKK America Holdings, Inc.
Attn: Bruce Bacon
1307 South Mary Avenue, Suite 201
Sunnyvale, CA 94087
Phone: (408) 738-3131, Fax: (408) 738-3166; and
5. NEC Electronics (Europe) GmbH
c/o Skadden, Arps, Slate, Meager & Flom, LLP
Attn: Mark S. Chehi, Esq.
P.O. Box 636, Wilmington, DE 19899
Phone: (302) 651-3000, Fax: (302) 651-3001.
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' 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 Debtors 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 Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Smithfield, North Carolina, Channel Master
Holdings, Inc., with the Debtor-affiliates, are leading designer
and manufacturer of high-volume, superior quality antenna products
for the satellite communications industry both in the U.S. and
internationally. The Company filed for chapter 11 protection on
October 2, 2003 (Bankr. Del. Case No. 03-13004). David B.
Stratton, Esq., at Pepper Hamilton LLP 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.
CHESAPEAKE ENERGY: Receives Consents to Amend Note Indenture
------------------------------------------------------------
Chesapeake Energy Corporation (NYSE: CHK) announced, pursuant to
its previously announced cash tender offer and consent
solicitation for any and all of its $110,669,000 aggregate
principal amount outstanding of 8.5% Senior Notes due 2012 (CUSIP
# 165167AN7), it has received the consents necessary to adopt
certain proposed amendments to the indenture governing the
Notes. The proposed amendments will eliminate substantially all
of the restrictive covenants of the indenture. Adoption of the
proposed amendments requires the consent of holders of at least a
majority of the aggregate principal amount of the outstanding
Notes.
Holders who validly tendered their Notes by 5:00 p.m., Eastern
Standard Time, on November 25, 2003, and consented to the proposed
amendments will receive the total consideration of $1,063.37 per
$1,000.00 principal amount of Notes accepted for purchase,
consisting of (i) the purchase price of $1,033.37 and (ii) the
consent payment of $30.00, plus accrued interest up to, but not
including, the date of acceptance. Acceptance of and payment for
such Notes is expected to occur on November 26, 2003, subject to
satisfaction or waiver of certain conditions. Upon payment for
such Notes, the amendments will become effective.
The Offer is scheduled to expire at 12:00 midnight, Eastern
Standard Time, on December 10, 2003, unless extended. Holders who
validly tender their Notes after the Consent Date and prior to the
Expiration Date will receive the purchase price of $1,033.37 per
$1,000.00 principal amount of Notes accepted for purchase.
Payment for Notes tendered after the Consent Date is expected to
be on or about December 11, 2003. All holders whose Notes are
accepted for payment will also receive accrued and unpaid interest
up to, but not including, the applicable date of payment for the
Notes.
The Offer is subject to the satisfaction of certain conditions,
including the completion of a recently announced private offering
of senior notes which will be used to finance the Offer. The
terms of the Offer are described in the Company's Offer to
Purchase and Consent Solicitation Statement dated November 12,
2003, copies of which may be obtained from D.F. King & Co., Inc.,
the information agent for the Offer, at (800) 628-8532 (US toll
free) and (212) 493-6920 (collect).
The Company has engaged Banc of America Securities LLC to act as
dealer manager and solicitation agent in connection with the
Offer. Questions regarding the Offer may be directed to Banc of
America Securities LLC, High Yield Special Products, at (888) 292-
0070 (US toll-free) and (704) 388-4813 (collect).
Chesapeake Energy Corporation (Fitch, BB+ Senior Secured Bank
Facility and BB- Senior Note Ratings, Positive) is one of the six
largest independent natural gas producers in the U.S.
Headquartered in Oklahoma City, the company's operations are
focused on exploratory and developmental drilling and producing
property acquisitions in the Mid-Continent region of the United
States.
COMMERCIAL MORTGAGE: Fitch Affirms BB+ Class H Note Rating
----------------------------------------------------------
Fitch Ratings upgrades Commercial Mortgage Acceptance Corp.,
commercial mortgage pass-through certificates, Series 1999-C1, as
follows:
-- $33 million Class B to 'AA+' from 'AA';
-- $34.9 million Class C to 'AA+' from 'A';
-- $11 million Class D to 'A' from 'A-';
-- $23.9 million Class E to 'BBB+' from 'BBB';
-- $12.8 million Class F to 'BBB' from 'BBB-'.
The following classes are affirmed:
-- $84.5 million Class A-1 'AAA';
-- $409.5 million Class A-2 'AAA';
-- Interest only Class X 'AAA';
-- $12.8 million Class H 'BB+'.
Fitch does not rate the $1.8 million class G, $20.2 million class
J, $5.5 million class K, $7.4 million class L, $9.2 million class
M, $5.5 million class N, $3.7 million class O, and $9.2 million
class P.
The rating upgrades are a result of increased subordination levels
and stable performance of the mortgage pool. As of the November
2003 distribution date, the pool's certificate balance has paid
down 6.7% to $684.8 million from $733.8 million at issuance. The
master servicer, Midland Loan Services, collected year end (YE)
2002 operating statements for 97% of the pool by collateral
balance. The YE 2002 weighted average debt service coverage ratio
is stable at 1.63 times compared to 1.64x at YE 2001 and increased
from 1.35x at issuance.
Fitch has concerns with the four specially serviced loans,
representing 1.82% of the pool. Three loans (1.52%) transferred to
the special servicer in October 2003 due to payment delinquency.
All three of these loans have the same borrower, and the special
servicer is determining a workout plan. The other specially
serviced loan (0.3%), Westlake Village Apartments, is secured by a
140 unit multifamily property located in Sherman, TX. The loan
transferred to the special servicer in June 2003 due to imminent
default and is now 30-days delinquent. The special servicer is
working with the borrower to determine a workout plan.
CONTIMORTGAGE: S&P Drops 6 Note Class Ratings to Junk & D Levels
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on one class
of certificates from ContiMortgage Home Equity Loan Trust series
1997-3 and lowered its ratings on six classes from six other
ContiMortgage Home Equity Loan Trust transactions. Simultaneously,
ratings are affirmed on the remaining 72 classes from 19
ContiMortgage Home Equity Loan Trust transactions (including the
six aforementioned).
The raised rating reflects an increase in credit support
percentage to the M-2A class of series 1997-3 due to the rapid
prepayments, combined with the shifting interest feature of the
transaction. Standard & Poor's believes the class has adequate
credit support in the form of subordination,
overcollateralization, and excess interest to absorb possible
future losses. Credit enhancement provided by subordination and
overcollateralization represents more than 64% of the remaining
collateral balance. While losses for the ContiMortgage pools have
spiked during 2003 due to a reassessment of charge-off policies by
the servicer, they have resulted in minor reductions in the
overcollateralization amounts each month.
The lowered ratings on the B classes of series 1997-5, 1998-1, and
1999-1 reflect the fact that these classes have suffered principal
losses of $1,183,198, $125,365, and $40,007, respectively, during
the respective distribution periods ending Sept. 15, 2003, Sept.
25, 2003 and Oct. 25, 2003. Loss amounts exceeding monthly excess
interest reduced the overcollateralization to zero. The remaining
additional loss amounts resulted in write-downs to the class B
certificate balances and will continue to do so whenever the loss
exceeds the excess interest and overcollateralization amounts.
Based on current performance, it is not likely that the principal
losses will be recoverable. In addition, future interest payments
will be made on the new, lower balances.
The lowered ratings on class B-I from series 1998-3, class B from
series 1999-2, and class B from series 1999-3 reflect a decrease
in credit support percentages to the subordinate classes due to
net losses that consistently exceed excess interest, resulting in
an erosion of overcollateralization. The dramatic increase in
losses for these pools and most other ContiMortgage pools
continues to result from the fact that the servicer charged off
loans that were previously in loss mitigation where advances have
now been deemed to be nonrecoverable. This trend is expected to
continue in the near term as the portfolios' loss characteristics
continue to be reassessed. Standard & Poor's therefore projects
overcollateralization to be depleted for these classes within the
next three to 12 months.
The affirmations on the classes in the 1997-3, 1997-4, 1998-1,
1998-2, and 1998-4 transactions reflect adequate remaining credit
support percentages for the senior classes. However, upgrades are
not warranted at this time because of persistent high
delinquencies and projected losses.
Credit support for the 1997-3, 1997-4, 1997-5, 1998-1, 1998-2,
1998-3, 1998-4, 1999-1, 1999-2, and 1999-3 transactions is
provided by subordination, excess interest, and
overcollateralization. Additional credit support for the senior
classes of the 1997-4, 1997-5, 1998-1, 1998-2, 1998-3, 1998-4, and
1999-2 transactions is provided by bond insurance issued by MBIA
Insurance Corp. Additional credit support for the senior classes
of the 1999-1 and 1999-3 transactions is provided by bond
insurance issued by Ambac Assurance Corp.
The affirmations on the 1995-1, 1995-2, 1995-3, 1995-4, and 1996-1
transactions are solely based on bond insurance provided by
Financial Guaranty Insurance Co. The affirmations on the 1994-3,
1994-4, 1994-5, 1996-2, 1996-3, and 1996-4 transactions are solely
based on bond insurance provided by MBIA Insurance Corp.
As of the October 2003 distribution date, total delinquencies
across all 21 transactions ranged from 25.44% (series 1996-1) to
40.44% (series 1995-1). Serious delinquencies ranged from 15.84%
(series 1996-2) to 30.15% (series 1998-1), and cumulative losses
ranged from 5.17% (series 1997-3 group 2) to 7.90% (series 1997-3
group 1).
All of the transactions are backed by fixed- and adjustable-rate
subprime home equity mortgage loans secured by first and second
liens on owner-occupied one- to four-family residences.
RATINGS RAISED
ContiMortgage Home Equity Loan Trust
Pass-thru certs
Rating
Series Class To From
1997-3 M-2A AA A
RATINGS LOWERED
ContiMortgage Home Equity Loan Trust
Pass-thru certs
Rating
Series Class To From
1997-5 B D CC
1998-1 B D CC
1998-3 B-I CCC BB+
1999-1 B D CCC
1999-2 B CC CCC
1999-3 B CCC BB
RATINGS AFFIRMED
ContiMortgage Home Equity Loan Trust
Pass-thru certs
Series Class Rating
1994-5 A-4 AAA
1995-1 A-5, A-6IO, A-7IO AAA
1995-2 A-5, A-6 AAA
1995-3 A-5, A-6 AAA
1995-4 A-8, A-9, A-11, A-12, AAA
1995-4 A-13IO AAA
1996-1 A-6, A-7, A-8, A-9IO AAA
1996-2 A-8, A-9, A-10IO AAA
1996-3 A-7, A-8, A-9IO AAA
1996-3 A-10IO AAA
1996-4 A-8, A-9, A-10 AAA
1996-4 A-11IO, A-12IO AAA
1997-3 A-8, A-9, M-1A AAA
1997-3 M-1F AA
1997-3 B-1A B
1997-4 A-7, A-9 AAA
1997-5 A-6, A-8, A-10 AAA
1998-1 A-6, A-7, A-8, A-9 AAA
1998-2 A-6, A-7, A-8, A-9 AAA
1998-2 B BB
1998-3 A-6, A-7, A-8, A-9 AAA
1998-3 A-16, A-17, A-18 AAA
1998-3 A-20 AAA
1998-3 B-II BB
1998-4 A AAA
1999-1 A-5, A-6, A-7, A-8 AAA
1999-2 A-5, A-6, A-7, A-8 AAA
1999-3 A-5, A-6, A-7, A-8 AAA
COVANTA: Ormat Nevada Pitches Best Bid for Geothermal Assets
------------------------------------------------------------
Weil, Gotshal & Manges LLP, one of the world's leading law firms,
advised Ormat Nevada, Inc.'s subsidiaries in a successful auction
bid for all the geothermal assets of Covanta Energy Corporation.
Covanta Energy Corp. filed for bankruptcy protection in April
2002. Ormat's bid for $214M was declared the "highest and best."
The U.S. Bankruptcy Court for the Southern District of New York
has approved the purchase agreement.
With the completion of this transaction, Ormat will become the
third-largest player in the geothermal sector in North America.
Ormat brings three decades of experience in the development,
manufacture, and marketing of innovative power systems.
Weil, Gotshal & Manges LLP is an international law firm of
approximately 1,100 attorneys, including over 285 partners. Weil
Gotshal is headquartered in New York, with offices in Austin,
Boston, Brussels, Budapest, Dallas, Frankfurt, Houston, London,
Miami, Paris, Prague, Silicon Valley, Singapore, Warsaw and
Washington, D.C.
Weil, Gotshal & Manges LLP's Team
Partners: J. Philip Rosen, Corporate, Co-head, Property
Transactions & Finance (New York)
Associates: Kathryn Turner, Business Finance & Restructuring (New
York); Daniel Holzman, Corporate (New York); Marcello Tamez,
Corporate (Dallas); Sacha Jamal, Corporate (Dallas); David
Berlyne, Corporate (New York)
COVANTA ENERGY: Court Okays Sale of Geothermal Assets to Ormat
--------------------------------------------------------------
According to Tina L. Brozman, Esq., at Bingham McCutchen, in New
York, General Electric Capital Corp. may not object to the
Proposed Sale (of Geothermal Projects) assuming that:
(a) the Proposed Stalking Horse Buyer emerges as the holder of
the highest and best offer for the Geothermal Interests;
(b) the Covanta Energy Debtors first cure any defaults under
the SIGC Lease Documents, to GECC's satisfaction, as part
of the assumption of the SIGC Lease Documents;
(c) the Proposed Stalking Horse Buyer fully complies with the
requirements of the SIGC Lease Documents and provides
adequate assurance of future performance including, the
required funding of the SIGC Lease Reserve, as provided in
the SIGC Lease Documents;
(d) the Debtors intend to assume and assign all of the SIGC
Lease Documents and leases and agreements relating to the
HFC Project and the HGC Project to the Proposed Stalking
Horse Buyer; and
(e) other requirements and closing conditions in the
Geothermal Sale Motion, including the payment in full of
the secured obligations owed to GECC in relation to the
HGC Project, are fully satisfied.
However, in the event another entity emerges as the successful
bidder at the auction on the Geothermal Projects, or the
underlying structure of the sale of the Geothermal Interests is
modified in a manner that adversely affects GECC's interests,
GECC specifically reserves all of its rights, including the right
to:
(a) object to the assumption by the Debtors and subsequent
assignment of any of the SIGC Lease Documents to the
Proposed Stalking Horse Buyer or a Successful Bidder for
any reason that may apply under the Bankruptcy Code;
(b) object to the ability of the Proposed Stalking Horse Buyer
or the Successful Bidder to provide adequate assurance of
future performance as required by Section 365(f)(2)(B) of
the Bankruptcy Code, or pursue discovery in relation
thereto; and
(c) take any other action allowable under law or in equity
that GECC may believe to be necessary or desirable to
protect its rights and interests.
Ms. Brozman adds that pursuant to Section 365(b)(1), GECC
specifically reserves the right to claim any additional cure
amounts to which it may be entitled to in relation to the
Debtors' attempt to assume the SIGC Lease Documents and in
respect to the funding of the SIGC Lease Reserve.
* * *
For the purpose of receiving higher or better offers, the
Debtors, pursuant to the Bidding Procedures Order held an auction
on November 19, 2003. As a result of the Auction, the Debtors
determined that the offer submitted by Orheber 1 Inc., Orheber 2
Inc., Orheber 3 Inc. and Ormammoth Inc. contained in a Purchase
Agreement, dated as of November 21, 2003, as may be amended and
supplemented by the Agreement, dated as of November 21, 2003, by
and among Ormat Nevada, Inc., the Debtors, the Committee, the
Bondholders Committee, and the DIP Agents, which provides for a
base purchase price of $214,000,000, subject to a working capital
purchase price adjustment mechanism, was the Successful Bid.
The Purchase Agreement, among others, provides for the sale of
the:
(i) Equity Interests held by Debtor Covanta Energy Americas,
Inc. in SIGC One Sub and SIGC Two Sub, which entities, in
turn, collectively own all Equity Interests in Amor and
all the Equity Interests in SIGC Project Company;
(ii) Equity Interests held by Debtors Heber Loan Partners, ERC
Energy, Inc. and ERC Energy II, Inc. in HGC Project
Company;
(iii) Equity Interests held by Debtors Covanta Heber Field
Energy, Inc. and Heber Field Energy II, Inc. in HFC
Project Company; and
(iv) Equity interests held by non-debtor affiliate Covanta
Power Pacific, Inc. in non-debtor affiliates Pacific
Geothermal Company and Mammoth Geothermal Company, which
entities, in turn, collectively own 50% of the partnership
interests in Mammoth Pacific, L.P.
Judge Blackshear finds that the Purchase Agreement presents the
best opportunity to realize the highest value for the Geothermal
Interests and related assets. The Court declares that the
consideration provided by the Buyers pursuant to the Purchase
Agreement:
(a) is fair and reasonable;
(b) is the highest and best offer for the Geothermal Interests
and related assets; and
(c) constitutes reasonably equivalent value and fair
consideration under the Bankruptcy Code and under the laws
of the United States, any state, territory, possession or
the District of Columbia.
Judge Blackshear makes it clear that the transfer of the
Geothermal Debtor Equity to the Buyers will be a legal, valid and
effective transfer of the Geothermal Debtor Equity and will vest
the Buyers with all rights, title and interests of the Debtors to
the Geothermal Debtor Equity free and clear of all Interests,
other than the GECC Liens and Permitted Encumbrances and the
liens on the Geothermal Debtor Equity and assets of the Heber
Debtors being granted by the Buyers on the Effective Date to
secure the financing of the Purchase Price. (Covanta Bankruptcy
News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
CMS ENERGY: Reaches Settlement Agreement with Regulatory Body
-------------------------------------------------------------
CMS Energy (NYSE: CMS) has reached a settlement agreement with the
Commodity Futures Trading Commission on a previously disclosed
matter regarding the inaccurate reporting of natural gas trading
information to energy industry publications.
The CFTC approved Tuesday an order settling an administrative
action against two CMS Energy subsidiaries, CMS Marketing,
Services and Trading and CMS Field Services. The affected CMS
Energy subsidiaries will pay a fine of $16 million. In the
settlement, the Company neither admits nor denies the findings in
the CFTC's order.
The settlement resolves the CFTC investigation involving CMS
Energy companies.
CMS Energy disclosed on November 4, 2002 that an internal review
initiated by the parent Company found that certain employees of
CMS MST, then based in Houston, Texas, and of CMS Field Services,
then based in Tulsa, Okla., had engaged in the inaccurate
reporting of natural gas trades. At that time, the Company also
announced that these subsidiaries had permanently stopped
providing trade data to energy industry publications.
The Company has cooperated with the CFTC's investigation and with
other appropriate federal agencies. The CFTC order recognizes CMS
Energy's cooperation.
None of those involved in the inaccurate reporting are employed
now by CMS Energy. CMS Energy has exited the wholesale energy
trading business, closed its Houston office, and is phasing out
the remaining CMS MST operations. It sold CMS Field Services
earlier this year.
CMS Energy (Fitch, BB- Senior Secured and B+ Senior Unsecured
Ratings, Stable) is an integrated energy company, which has as its
primary business operations an electric and natural gas utility,
natural gas pipeline systems, and independent power generation.
For more information on CMS Energy, please visit its Web site at:
http://www.cmsenergy.com
CRESCENT REAL: Ritz-Carlton Palm Beach Sold for $92 Million
-----------------------------------------------------------
Crescent Real Estate Equities Company (NYSE:CEI) announced the
sale of the Ritz-Carlton Palm Beach resort owned by Manalapan
Hotel Partners, LLC, of which Crescent and Westbrook Real Estate
Fund IV, L.P. each hold 50%. In 1997, Crescent held a 25% interest
in the 270-key five star resort through an affiliate.
Following a series of transactions in late 2002, Crescent
increased its interest in the property to 50%. The sales price of
the resort was $92.1 million. Net proceeds to Crescent were $19.0
million. Crescent had $15.5 million invested in the property as of
September 30, 2003.
John C. Goff, vice chairman and chief executive officer,
commented, "The strategic plan that we've been articulating to the
market has been to selectively increase the size of our core
business of owning and managing high quality office properties
and, over time, to decrease our non-core holdings. We saw an
opportunity to sell Ritz-Carlton Palm Beach at what we believe is
an attractive price and decided, collectively with Westbrook, to
sell the resort. This transaction allows us to free up capital for
office investment."
Crescent Real Estate Equities Company (NYSE: CEI) is one of the
largest publicly held real estate investment trusts in the nation.
Through its subsidiaries and joint ventures, Crescent owned and
managed, as of September 30, 2003, a portfolio of 74 premier
office properties totaling 29.7 million square feet, located
primarily in the Southwestern United States, with major
concentrations in Dallas, Houston, Austin and Denver. In addition,
the Company has investments in world-class resorts and spas and
upscale residential developments.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its ratings on Crescent Real Estate Equities
Co., and Crescent Real Estate Equities L.P., and removed them
from CreditWatch, where they were placed on Jan. 23, 2002. The
outlook remains negative.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
CRYOPAK INDUSTRIES: Sept. 30 Working Cap. Deficit Tops C$6 Mill.
----------------------------------------------------------------
Cryopak Industries Inc. (TSX-V:CII) (OTCBB:CYPKF) reported its
results for the three-month period ended September 30, 2003. (All
amounts are expressed in Canadian dollars unless specified
otherwise).
Operating Results
Sales for the three-month period ended September 30, 2003 were
$3.5 million, an increase of 29.1% over sales of $2.7 million
during the same period last year. Gross profit for the three-month
period decreased to $1.0 million from $1.1 million in the prior
year. The relative strength of the Canadian dollar versus the US
dollar in three-month period as compared to the same period last
year had a negative impact on revenue, and gross margin, as the
Company continues to sell a significant proportion of products
into the United States and those sales are denominated in US
dollars. As well, the second quarter is a seasonally slow quarter
for retail sales of the Company's products so consequently, the
fixed manufacturing cost component of product costs decreased the
gross margins.
Sales and marketing expenses for the three-month period totalled
$1.1 million or 31.2% of sales as compared with $0.5 million or
17.4% of sales in the prior period. The increase in expenses was
primarily due to an increase in the provision for doubtful
accounts receivable, the write-off of certain advances, and the
accrual of severance liabilities during the period.
General and administrative costs for the three-month period
totalled $0.8 million or 22.6% of sales as compared with $0.7
million or 26.2% of sales in the prior period. General and
administrative expenses increased due to severance accruals and
higher legal, accounting, and advisory costs as compared to the
prior period. The increased legal, accounting, and advisory costs
were in part due to the restatement of the previously reported
quarterly results for Fiscal 2003 and the ongoing convertible loan
agreement negotiations. However, as part of the Company's cost
reduction initiatives, general and administrative costs have been
significantly reduced going forward, the results of which will
begin to be seen in the third quarter of Fiscal 2004. Already in
this quarter there has been a reduction in corporate printing,
financial and public relations costs as a result of the decrease
in focus on investor relations activities.
The net loss for the three-month period ended September 30, 2003
was $1.4 million, which is in alignment with management's
expectations, based on the restructuring initiatives that were put
in place during the quarter.
At September 30, 2003, the Company's balance sheet shows that its
total current liabilities outweighed its total current assets by
about $6 million, while its net capital shrank to $2.8 million
from about $5 million at March 31, 2003.
Convertible Loan Agreement
The Company also announced that it has extended to December 5,
2003 the expiry date for the offer to the holders of the $3.6
million convertible loan agreement to amend and restate the CLA.
Completion of the amendment is subject to regulatory and other
approvals and is conditional upon a minimum overall acceptance of
the amended terms by holders representing not less than 80% of the
outstanding dollar amount of the CLA. To-date the Company has
received certificates representing 51% of the total outstanding
dollar amount of the CLA. Management continues to discuss the
amended terms of the CLA with representatives for the other
certificate-holders.
Cryopak Industries Inc. develops, manufactures and markets quality
temperature-controlling products such as the premium patented
Cryopak Flexible Ice(TM) Blanket, as well as flexible hot and cold
compresses, gel packs, and instant hot and cold packs.
Cryopak Industries Inc. trades on both the TSX Venture Exchange
and the OTC Bulletin Board (TSX-V:CII and OTCBB:CYPKF).
DEACONESS HOSPITAL: Retains Hahn Loeser as Bankruptcy Counsel
-------------------------------------------------------------
Deaconess Hospital, LLC and its debtor-affiliates are seeking
permission from the U.S. Bankruptcy Court for the Northern
District of Ohio to employ and retain Hahn Loeser & Parks LLP as
their legal Counsel.
The Debtors tell the Court that Hahn Loeser's attorneys have had
significant roles in many large reorganization cases and believe
that the firm is well suited and able to represent them in these
cases in a most efficient and responsive manner.
In its capacity as counsel, Hahn Loeser will:
(a) provide legal advice with respect the Debtors' powers
an duties as debtors-in-possession in the continued
operation their businesses and the management their
properties;
(b) take all necessary action to protect arid preserve the
Debtors' estates, including the prosecution of actions
on behalf of the Debtors, the defense of any actions
commenced against the Debtors, negotiations concerning
all litigation in which the Debtors are involved and
objections to claims filed against the Debtors'
estates;
(c) prepare on behalf of the Debtors all necessary motions,
answers, orders, reports, and other legal papers in
connection with the administration of their estates
herein;
(d) assist the Debtors in preparing for and filing one or
more disclosure statements in accordance with Section
1125 of assist' the Debtors in preparing for and filing
one or more plans of reorganization at the earliest
possible date;
(f) perform any and all other legal services for the
Debtors in correction with the Chapter 11 Cases; and
(g) perform such legal services as the Debtors may request
with respect to any matter, including, but not limited
to, health care, corporate finance and governance,
reimbursement, real estate, contract, environmental,
antitrust, labor and tax matters.
The current hourly rates charged by those Hahn Loeser
professionals and paraprofessionals who are anticipated to render
their services during these chapter 11 cases are:
Partners
--------
Daniel A. DeMarco $350 per hour
Arthur L. Cobb $360 per hour
Associates
----------
Julie K. Zurn $225 per hour
Christopher W. Peer $165 per hour
Paralegals
----------
Colleen M. Beitel $155 per hour
Eileen J. Rooney $145 per hour
Cheryl A. Sweeney $85 per hour
Headquartered in Cleveland, Ohio, Deaconess Hospital, LLC is a
287-bed facility with over 500 employees. The Company filed for
chapter 11 protection on November 21, 2003 (Bankr. N.D. Ohio Case
No. 03-25461). When the Company filed for protection from its
creditors, it listed $15,022,560 in total assets and $14,314,343
in total debts.
DEEP HOLDINGS INC.: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Deep Holdings, Inc.
4205 Pinemont Road
Houston, Texas 77018
Bankruptcy Case No.: 03-46444
Type of Business: Machinery Manufacturing
Chapter 11 Petition Date: November 19, 2003
Court: Southern District of Texas (Houston)
Judge: Wesley W. Steen
Debtor's Counsels: Edward L. Rothberg, Esq.
Melissa Anne Haselden, Esq.
Weycer Kaplan Pulaski & Zuber
11 Greenway Plaza
Suite 1400
Houston, TX 77046
Tel: 713-961-9045
Fax: 713-961-5341
Total Assets: $2,190,901
Total Debts: $2,015,157
Debtor's Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Jack Woodyard Real Estate $57,865
Texas Workforce Commission Payroll Taxes $56,147
HR&P Solutions Trade Debt $38,465
Doall Houston Trade Debt $32,025
Travelers Insurance Worker's Compensation $31,130
IQUBED, Inc-2 Trade Debt $30,037
Peter Johnson, Attorney Legal Fees $24,901
O'Donnell, Ferebee & Legal Fees $19,091
McGonigal
Reliant Energy Utility Bills $18,051
Matthew Landrum Trust Real Estate $14,591
Catarina D. Zorola Trade Debt $11,510
CNA Insurance Medical Insurance $10,812
Cintas Trade Debt $10,389
United Healthcare Medical Insurance $8,968
Secretary of the State Franchise Tax $8,466
Of Texas
Spring Branch Med Center Trade Debt $8,353
IOS Hospital Lease Arrearage $6,513
Browning-Ferris Ind. Trade Debt $5,386
Harris County Texas Personal Property Tax $5,003
CNA Unisource, Inc. Trade Debt $4,308
DIRECTV: Stipulation Resolving Fees & Disbursement Issues Okayed
----------------------------------------------------------------
On April 14, 2003, the U.S. Bankruptcy Court overseeing DirecTV
Latin America, LLC's bankruptcy proceedings established procedures
for Interim Compensation and Reimbursement of Chapter 11
Professionals. Pursuant to these Procedures, the professionals
retained by the Official Committee of Unsecured Creditors must
file interim applications to receive interim payment of fees and
reimbursement of professional services rendered and incurred in
the Chapter 11 case.
The Court authorized the Committee to retain Pachulski, Stang,
Ziehl, Young, Jones & Weintraub PC as its counsel and Huron
Consulting Group LLC as its financial advisors.
On June 3, 2003, the Court authorized the Debtor to obtain
postpetition financing pursuant to Section 364(c) of the
Bankruptcy Code from Hughes Electronic Corporation. Among other
things, the Financing Order provides for a $2,000,000 Carve-Out
which may be used to pay Court-approved fees and disbursements
relating to services rendered and disbursements incurred on and
after June 2, 2003 by the professionals retained by the Creditors
Committee that relate to the investigation and prosecution of any
Claims and Defenses.
Subsequently, Pachulski and Huron filed interim fee applications.
In a Stipulation and Consent Order signed by Judge Walsh, the
Debtor, Hughes, the Creditors Committee, Pachulski and Huron
agree that:
(a) Hughes' failure to object to Huron's and Pachulski's Fee
Applications or any other Fee Application filed by any
other Estate Professional for fees or reimbursement of
disbursements relating to the services rendered and
disbursements incurred on and after June 2, 2003 will not
constitute or be deemed to constitute a waiver by Hughes
of any objection with respect to the Fee Application on
any grounds;
(b) Nothing contained in the Stipulation will preclude Hughes
from filing an objection on any grounds to any Fee
Application; and
(c) Nothing contained in the Stipulation or in any order
approving on an interim basis any Fee Application will
constitute or will be deemed to constitute a finding by
the Court, or an admission or concession by any Party
regarding, the allocation of Huron's or Pachulski's fees
and disbursements. (DirecTV Latin America Bankruptcy News,
Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
DOMAN IND.: Sues B.C. Gov't for Contractual Obligations Breach
--------------------------------------------------------------
Doman Industries Limited learned that the Government of British
Columbia has introduced legislation which purports to extinguish
retroactively the right to certain compensation from the
Government. Doman, along with three other companies, is suing the
Government for breaching its contractual obligations to owners of
timber licences in the Province by compelling them to pay stumpage
instead of royalty on those licences. The litigation has been
complex and lengthy. The case was set to go to trial in April. If
enacted in its current form this legislation would appear to
extinguish Doman's right to seek compensation from the Government
with respect to those contractual obligations.
Extinguishing the right to sue and receive compensation for
breaches of duty on this scale is, Doman believes, unprecedented
in the Province's history. Such action does not, in Doman's view,
inspire confidence in the Government respecting agreements that
the Government enters into or the rule of law.
As the Ontario Court of Appeal has said:
"The Government occupies a unique - and uniquely powerful - role
in its relationship with the public. This power imbalance, in
turn, creates a duty on the government to act in a way that
enhances public confidence in reliable fairness from the
government."
Doman is considering all of its options, both legal and non-legal,
to address this unprecedented action by the Government.
* * *
As previously reported, Doman Industries Limited announced that
KPMG Inc., the Monitor appointed by the Supreme Court of British
Columbia under the Companies Creditors Arrangement Act filed with
the Court a special purpose report which is primarily intended to
provide summary information on the Company's progress with respect
to certain provisions of the Restructuring Process Order issued by
the Court on October 10, 2003, for the period from October 21,
2003 to November 12, 2003.
ENRON: ECT Selling Nutech Partnership & Series B Units for $2.5M
----------------------------------------------------------------
Enron debtor-affiliate, ECT Merchant Investments Corporation,
pursuant to Sections 105, 363, 365 and 1146 of the Bankruptcy Code
and Rules 6004 and 6006 of the Federal Rules of Bankruptcy
Procedure, asks the Court to:
(a) approve the terms and conditions of a Purchase and Sale
Agreement for the sale of limited partnership units and
converted Series B units in NuTech Energy Alliance, Ltd.;
and
(b) authorize the consummation of the transactions
contemplated therein, including the assumption and
assignment of certain executory contracts.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
relates that effective as of October 7, 1999, ECT, as one of the
four limited partners, entered into the Limited Partnership
Agreement of NuTech Energy Alliance, Ltd. NuTech Management LP
is the general partner of the Partnership. The Partnership is a
privately held oilfield service company whose core business is to
provide a specialized form of well log analysis that attempts to
identify bypassed oil and gas reserves. Well logs are sets of
recorded data consisting of naturally occurring properties or
induced responses of the formations that exist from the surface
to the total depth of the well, which are gathered for individual
wells.
In February 2001, Ms. Gray reports that ECT made its $4,300,000
initial investment to acquire a 67.48% ownership interest in the
Partnership, which was documented in the Second Amended and
Restated Partnership Agreement. During the later part of 2001,
ECT made an additional $1,100,000 contributions under Series B
units, which were made available under the Third Amended and
Restated Partnership Agreement, to support the Partnership's
investments in oil and gas assets.
In connection with these Series B units, NuTech Management had an
option to repurchase these units within one year of issue to
avoid dilution. NuTech Management never exercised its repurchase
option. Accordingly, NuTech Management's ownership interest was
automatically diluted, giving ECT an 85.66% ownership interest in
the Partnership. However, Ms. Gray notes that this dilution
event was never documented and NuTech Management never officially
agreed to a revised allocation of ownership interests.
Pursuant to the Partnership Agreement, the General Partner is
required to:
(i) provide ECT with at least a 30% return on ECT's
investment;
(ii) repay ECT on account of its Initial Investment; and
(iii) repay ECT on account of its Additional Capital
Contributions prior to making any other distributions of
Partnership assets, except mandatory tax distributions as
required by the Partnership Agreement.
To date, no distributions have been made to ECT.
In December 2001, NuTech Management began marketing ECT's
ownership interest in the Partnership. Given NuTech Management's
technical expertise, ECT relied heavily on it to market its
interest. NuTech Management's focus was on investors interested
in oil field service companies, oil and gas companies, or both.
Once potential buyers were identified, NuTech Management agreed
to make full technological presentations to each interested
group. In some cases, potential buyers evaluated the
Partnership's technology by providing test data for NuTech
Management to analyze. Out of 10 potential buyers NuTech
Management identified, only two written offers for $2,500,000
each, which included the offer of NuTech Investors LP, and
one verbal offer for $2,000,000 were received. All offers,
except the offer of NuTech Investors, have been withdrawn. To
ensure a complete marketing process, ECT contacted the seven
remaining potential buyers and attempted to contact additional
potential investors. ECT's efforts produced no additional bids.
ECT believes that the price NuTech Investors offers is the
highest and best offer it will receive for the Assets. Moreover,
given the lack of interest in the Assets, ECT believes that
further marketing of the Assets would be an exercise in futility,
the cost of which would in all likelihood significantly reduce
the economic benefits ECT would otherwise realize from the sale
of the Assets. Accordingly, Ms. Gray informs Judge Gonzalez that
ECT is no longer marketing these Assets.
ECT and NuTech Investors negotiated the terms of the Purchase and
Sale Agreement and agreed that:
A. Consideration
Purchase Price is $2,500,000 plus Assumed Liabilities. Of
the Purchase Price, $300,000 has been deposited with the
Escrow Agent upon the execution of the Agreement. At Closing,
the Purchase Price, less the Deposit and interest thereon,
will be paid to ECT by wire transfer of immediately available
Funds into an account ECT will designate.
B. Assets Acquired
The Assets constitute ECT's entire interest in the
Partnership, which interest represents at least 67.48% of the
Partnership units outstanding.
C. Assumed Liabilities
NuTech Investors will assume ECT's post-Closing liabilities,
if any, arising out of the Partnership.
D. Closing
Closing must occur by no later than 60 days after execution
of the Agreement.
E. Financial Capability
NuTech Investors represents and warrants that it has a good
faith belief that on the Closing Date it will have the
financial wherewithal to consummate the transactions
contemplated by the Agreement. NuTech Investors has
delivered a binding commitment letter from Western National
Bank of Odessa, Texas to provide financing for the Purchase
Price.
F. Expense Reimbursement
In the event of the termination of the Agreement by:
(i) NuTech Investors, provided it is not in breach of its
obligations under the Agreement and (x) Closing does
not occur by the Outside Date and ECT is in breach of
its obligations under the Agreement, (y) ECT is in
material breach of its obligations under the Agreement
and has not cured the default within 10 days of notice
of the breach, or (z) an Asset Adverse Material Charge
has occurred; or
(ii) either party, provided NuTech Investors is not in breach
of its obligations under the Agreement and the
Bankruptcy Court either (x) approves an Alternative
Transaction or (y) denies the Motion,
ECT will reimburse NuTech Investors for up to $75,000 of
its Transaction Costs, which costs will be entitled to
administrative expense priority status.
G. Guarantee
Partners in NuTech Investors who are signatories to the
Agreement agree to guaranty, severally but not jointly and
severally, on a pro rata basis the obligations of NuTech
Investors under the Agreement.
H. Closing Conditions
Closing is subject to, among other things, representations
and warranties made in the Agreement being true as of the
Closing Date and Bankruptcy Court approval.
I. Solicitation of Further Bids
ECT agrees not to solicit bids for the Assets to any party
other than NuTech Investors nor provide the other party with
any information relating to the Assets. Potential buyers,
however, are free to offer unsolicited bids and the sale of
the Assets is subject to the highest and best offer.
J. Governing Law and Jurisdiction
Claims arising under the Agreement will be governed by the
laws of New York without regard to conflict of law
principles. Moreover, ECT and NuTech Investors submit to the
jurisdiction of New York courts for disputes relating to the
Agreement.
Ms. Gray argues that sufficient business justifications merit the
approval of the contemplated sale under the terms of the
Agreement:
(a) The Agreement represents value to ECT as it provides for
favorable terms for the disposition of an otherwise
illiquid asset no longer providing benefit to its estate;
(b) Absent the approval, ECT may be deprived of cash
consideration totaling $2,500,000;
(c) ECT ahs not realized the contractually agreed upon rate
of return from the Partnership, nor has it been
reimbursed for its Initial Investment or Additional
Capital Contributions;
(d) The Purchase Price represents the highest and best offer
for the Assets;
(e) The Assets have been extensively marketed;
(f) The Assets are not core assets needed for ECT's
reorganization;
(g) The Agreement was negotiated by the Parties at arm's
length and in good faith; and
(h) Other than the DIP liens, ECT is not aware, to the best
of its knowledge, of any liens relating to the Assets.
Moreover, Ms. Gray contends that, to the extent the Partnership
Agreement or any of the other Contracts constitutes executory
contracts within the meaning of Section 365, the assumption and
assignment to NuTech Investors the Contracts is warranted since
the Partnership Agreement specifically provides that ECT may
effectuate the assignment contemplated herein (i) notwithstanding
any restriction on transferability otherwise applicable to other
partners in the Partnership and (ii) without prior notification
or consent from any partner or other person.
Section 1146(c) of the Bankruptcy Code provides that "the
issuance, transfer or exchange of a security, or the making or
delivery of an instrument of transfer under a plan confirmed
under Section 1129 of the Bankruptcy Code may not be taxed under
any law imposing a stamp or similar tax. Thus, ECT asks Judge
Gonzalez to find the sale of the Assets to be exempt from
transfer taxes under Section 1146(c). (Enron Bankruptcy News,
Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000)
EQUINOX HOLDINGS: Gets S&P's Lower-B Level Credit & Note Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to fitness club operator Equinox Holdings Inc.
At the same time, Standard & Poor's assigned its 'B-' rating to
the company's proposed $150 million senior unsecured notes due
2009. The outlook is stable. The New York, New York-based company
had total debt outstanding of $109.8 million at Sept. 30, 2003.
"The ratings reflect Equinox's geographic concentration,
relatively small scale, aggressive financial profile, debt-
financed expansion plans, and the increasingly competitive fitness
market," said Standard & Poor's credit analyst Andy Liu. These
considerations are partly offset by the company's strong New York
City club cluster, good same-club revenue and membership growth,
and better margins than industry peers. Equinox is an operator of
upscale fitness clubs offering spas and other ancillary services.
The company currently operates 18 clubs and is in the process of
developing a broader footprint with additional locations in New
York City, New York; Chicago, Illinois; and Los Angeles and San
Francisco, California.
Equinox has a significant regional exposure with 15 of its 18
clubs located in the New York metropolitan area. While the
company plans to expand its presence in Chicago and Los Angeles,
its New York-based clubs will continue to generate the bulk of its
cash flow in the medium term. Industry wide, new member and
revenue growth rates have been weak during the past two years due
to the soft economy. However, Equinox had been able to maintain a
relatively healthier growth rate partly due to a higher number of
newer clubs. About 35% of the company's revenue is generated
through ancillary services such as spas, retail and personal
training. Beside their revenue potential, ancillary services also
help drive member retention.
GAP INC: Neal Goldberg Resigns as Outlet Division President
-----------------------------------------------------------
Gap Inc. (NYSE: GPS) announced that Neal Goldberg has resigned as
head of the company's Outlet Division, effective immediately. The
company said it would begin a search for a replacement, both
internally and externally.
Gap Inc. (Fitch, BB- Senior Unsecured Debt Rating, Stable Outlook)
is a leading international specialty retailer offering clothing,
accessories and personal care products for men, women, children
and babies under the Gap, Banana Republic and Old Navy brand
names. Fiscal 2002 sales were $14.5 billion. As of
November 1, 2003, Gap Inc. operated 4,210 store concepts (3,075
store locations) in the United States, the United Kingdom,
Canada, France, Japan and Germany. In the United States, customers
also may shop the company's online stores at http://www.gap.com/
http://www.BananaRepublic.com/and http://www.oldnavy.com/
Convertible Bond Activity
For a week or more this month, Gap's $1.38 billion issue of 5.750%
Convertible Notes due March 15, 2009 has hit the list of the 10
most active high yield bonds reported in the Bond Market Data Bank
column in The Wall Street Journal. The convertible notes trade
well above par, around 148. The securities' conversion price is
around $16 and GPS common shares trade at $20+ today.
GE CAPITAL: Fitch Affirms 6 Low-B Ser. 2002-3 Note Class Ratings
----------------------------------------------------------------
Fitch Ratings affirms GE Capital Commercial Mortgage Pass-Through
Certificates, Series 2002-3 as follows:
-- $373.2 million class A-1 'AAA';
-- $553.8 million class A-2 'AAA';
-- Interest-only classes X-1 and X-2 'AAA';
-- $46.8 million class B 'AA';
-- $16.1 million class C 'AA-';
-- $26.3 million class D 'A';
-- $14.6 million class E 'A-';
-- $10.2 million class F 'BBB+';
-- $17.6 million class G 'BBB';
-- $11.7 million class H 'BBB-';
-- $27.8 million class J 'BB+';
-- $10.2 million class K 'BB';
-- $8.8 million class L 'BB-';
-- $10.2 million class M 'B+';
-- $8.8 million class N 'B';
-- $5.9 million class O 'B-'.
Fitch does not rate the $17.6 million class P certificate.
The rating affirmations reflect the consistent loan performance
and minimal reduction of the pool collateral balance since
closing.
GEMSA Loan Services, the master servicer, collected year-end 2002
financials for 61% of the pool balance. Based on the information
provided the resulting YE 2002 weighted average debt service
coverage ratio is 1.49 times compared to 1.54x at issuance for the
same loans.
Fitch reviewed credit assessments of the Westfield Portfolio loan
(8.3%) and the Colonie Center loan (3.6%). Based on the stable
performance, the loans maintain investment grade credit
assessments.
The Westfield Portfolio is secured by two regional malls.
Shoppingtown Galleria at Roseville Mall, located in Roseville CA,
is a regional mall containing 462,330 square feet of in-line and
1.0 million sf in total space. The building was originally
constructed in 2000 and is anchored by Macy's, Sears, J.C. Penney
and Nordstrom. The Shoppingtown MainPlace Mall, located in Santa
Ana, California, is a regional mall consisting of 448,864 sf of
in-line and 1.1 million sf of total space. The mall was originally
constructed in 1958; however a majority of the building was
demolished and rebuilt in 1987 with substantial renovations in
1987. The overall weighted average occupancy for the centers as of
June 2003 was 93% compared to 94% at issuance.
The Colonie Center loan is secured by fee interest in 668,343 sf
of a 1.2 million sf regional shopping mall located in Albany, New
York. The major tenants of the mall include Macy's, Sears and
Boscov's. The Fitch stressed DSCR for the loan is calculated using
servicer provided net operating income less reserves divided by
Fitch stressed debt service payment. The stressed DSCR for the YE
2002 remained stable at 1.59x compared to 1.59x at issuance.
Fitch will continue to monitor this transaction, as surveillance
is ongoing.
GENUITY INC: Balks at Three Verizon Lease Guaranty Claims
---------------------------------------------------------
The Genuity Debtors object to Verizon Communications Inc.'s
Claims, Nos. 4178, 4179 & 4180, based on various Lease Guarantees.
Genuity asks the Court to limit the Claims to the cap established
by Section 502(b)(6) of the Bankruptcy Code. The Claims, D. Ross
Martin, Esq., at Ropes & Gray, in Boston, Massachusetts explains,
relate to Verizon guarantees and other secondary liability for
real estate leases to which the Debtors were a party.
Mr. Martin tells Judge Beatty that the present corporate and
capital structure of the Genuity Group is a byproduct of the June
2000 merger between Bell Atlantic Corporation and GTE
Corporation, which resulted in the creation of Verizon
Communications Inc.
In particular, the companies had difficulty meeting the
requirements of the Telecommunications Act of 1996, which
prohibited the regional Baby Bells, like Bell Atlantic, from
owning long distance assets until they received approvals from
numerous state regulators based on their having opened up their
local telephone service monopolies to effective competition --
the 271 Approvals. The Federal Communications Commission
regulations classified the Internet backbone assets of GTE
Internetworking and certain services provided by GTE
Internetworking as long-distance assets. As a result, without
some regulatory relief, the merged company would not be permitted
to own the GTE Internetworking Internet business.
After extended discussions with the FCC, GTE and Bell Atlantic
developed the IPO Spin-Out, a corporate structure to address the
problem. The parties proposed to the FCC that GTE
Internetworking would conduct an initial public offering of
stock, giving the public more than 90% of the voting equity
securities in the corporation, which was renamed Genuity Inc.
Initially, Verizon would retain less than 10% of the voting stock
of Genuity Inc., but could regain control of the company, by
conversion of its shares, if and when it obtained 271 Approvals
in the former Bell Atlantic territory. The FCC approved the
structure. On June 27, 2000, the Genuity Inc. board of directors
approved the IPO Spin-Out, and the IPO Spin-Out was consummated
on June 30, 2000.
Verizon's Financial Support of Genuity
-- the Lease Guarantees
In a June 29, 2000 letter and in connection with the IPO Spin-
Out, Verizon agreed to provide transitional financial support to
the Genuity Group, for the period not exceeding six months, until
credit rating agencies published credit ratings for the Genuity
Group, in the form of guarantees of real estate leases. The
Verizon Lease Guaranty Support Letter provided that at Genuity
Inc.'s request and on the payment of a guaranty fee to Verizon,
GTE Corporation which is now merged into Verizon, would provide a
guaranty to landlords from whom the Genuity Group was leasing
space during the transitional period.
Another condition of the Verizon Lease Guaranty Support Letter
was that, with respect to each lease guaranty that Verizon
provided, Genuity Inc. would agree to reimburse Verizon for any
amounts paid on the guaranty.
>From time to time during the transitional period after the IPO
Spin-Out, that is until October 30, 2000, Genuity Inc. requested
the lease guarantees. In each case, Genuity Inc. executed the
required undertaking or the "Genuity Reimbursement Letters". As
a result, Verizon guaranteed at least 27 leases -- the
Contractually Guaranteed Leases -- pursuant to the Verizon Lease
Guaranty Support Agreement.
As part of the Verizon Lease Guaranty Claims, Verizon also
asserted lease guaranty claims for certain leases that Verizon
assigned to members of the Genuity Group -- the Assignment-
Guaranteed Leases. Verizon asserts a contingent claim based on
the Assignment-Guaranteed Leases based on its secondary liability
as assignor of those leases.
Credit rating agencies published ratings for the Genuity Group on
October 30, 2000. Effective that date, Verizon was unwilling to
provide further lease guarantees, as evidenced by a letter dated
December 12, 2000.
Verizon Lease Guaranty Claims Are Limited
Mr. Martin points out that the Verizon Lease Guaranty Claims
totaling $126,000,000, is well in excess of the $14,800,000 cap
on real estate lease claims imposed by Section 502(b)(6).
Section 502(b)(6) caps real estate rejection damages claims to
the greater of one year or 15% of the remaining lease term, not
to exceed three years of rent, plus any prepetition arrearages.
In general, Mr. Martin says, the Debtors were current on their
lease payments prepetition. Therefore, the amount of the Verizon
Lease Guaranty Claims attributable to arrearages is negligible.
It is well and long established that a real estate lease claim
against a debtor-guarantor is capped by Section 502(b)(6). The
seminal case, Mr. Martin continues, is Judge Hand's decision
construing the predecessor Bankruptcy Act provision, in the
action captioned Hippodrome Bldg. Co. v. Irving Trust Co. (In re
Radio-Keith-Orpheum Corp.), 91 F.2d 753 (2d Cir. 1937). The
statutory cap on real estate lease rejection claims operates as a
liquidated damages provision with respect to these types of
claims, which are highly contingent and uncertain of measure,
given the length of lease terms, the possibilities of mitigation
and other matters. Without this cap, any claims arising from
real estate lease guarantees can quickly dwarf other claims in a
bankruptcy case.
Mr. Martin adds that the portions of the Verizon Lease Guaranty
Claim that relate to the Assignment Guaranteed Leases are plainly
limited by Section 502(b)(6) and the rule of the Hippodrome case.
Verizon's claims are really claims of the landlords, which
Verizon may have by way of subrogation.
"The only distinction in this case is that, with respect to the
Contractually Guaranteed Leases, it is not the landlord directly
asserting a claim against the debtor-guarantor," Mr. Martin says.
Here, a non-bankrupt guarantor is asserting a claim against a
bankrupt debtor that is a secondary obligor. However, the logic
of Hippodrome remains the same -- these kind of highly contingent
claims must be limited in bankruptcy.
Furthermore, Verizon's claim against Genuity Inc. on the Verizon
Reimbursement Letters is, as a practical matter, the claim of the
landlord. The claim is one for reimbursement of amounts paid to
the landlord. Section 502(e) of the Bankruptcy Code prohibits a
party from asserting a claim for reimbursement until the primary
creditor is paid in full. Thus, Verizon has no claim with
respect to the Verizon Reimbursement Letters until it pays the
relevant landlord in full, at which point Verizon is in fact
standing in the shoes of the landlord. The person who has a
claim only after coming to stand in the landlord's shoes, by
virtue of Section 502(e), must be limited by the same Bankruptcy
Code provision that limits the landlord's claims against
secondary obligors, Mr. Martin says.
Finally, Mr. Martin maintains, an extension of the Hippodrome
rule to impose the Section 502(b)(6) cap in this situation is
necessary to prevent landlords from simply contracting around the
cap. Bankruptcy abhors the structural evasion of Code provisions
like Section 502(b)(6).
Verizon Improperly Computed the Cap
Even if the Section 502(b)(6) cap applies, Verizon says it still
believes that its claim equals $17,800,000. Mr. Martin says
Verizon's math is wrong. Proper application of the Section
502(b)(6) cap leaves Verizon with a lease guaranty claim of only
$14,800,000. Genuity asks Judge Beatty to find that Verizon's
claim should be disallowed to the extent that the cap is
improperly calculated.
Estimation of Certain Guaranty Claims at Zero
Among the leases for which Verizon is asserting a lease-guaranty
claim are leases that have been assumed and assigned to Level 3
Communications LLC, as part of the sale of substantially all of
the Debtors' assets to Level 3. In connection with the sale
hearing, a showing was made that Level 3 provided adequate
assurance of future performance of many executory contracts,
including several very large contracts with Verizon. Verizon did
not object to the assumption and assignment of those contracts,
and has therefore acknowledged that Level 3 is a creditworthy
entity.
Verizon now asserts a contingent lease-guaranty claim in the
event that, at some undetermined date in the future, Level 3
defaults on the leases assumed and assigned to it. Mr. Martin
notes that since Verizon has already acknowledged in the sale
proceedings that Level 3 is creditworthy, the lease guaranty
claim in respect of those leases should be estimated at zero.
Having had a full and fair opportunity to litigate the question
of Level 3's creditworthiness at the sale hearing, Verizon is now
collaterally estopped from relitigating the matter in the guise
of its lease-guaranty claims. Based on the doctrine of
collateral estoppel, Mr. Martin asserts, the Verizon claims must
be disallowed.
In addition, Mr. Martin explains that:
-- pursuant to Section 502(e), Verizon's lease guaranty claims
are disallowable to the extent that Verizon has not
actually paid amounts to the landlords who are the
beneficiaries of the guarantees; and
-- pursuant to Section 509, Verizon's lease guaranty claims
are subordinated to the claims of the landlords who are
beneficiaries of the guarantees, to the extent Verizon has
not yet paid those landlords in full.
The Debtors reserve the right to raise further objections to the
Verizon Lease Guaranty Claims, including objections as to
which Debtor is liable on which Verizon Lease Guaranty Claims.
The Debtors further reserve the right to seek equitable
subordination of Verizon's Lease Guaranty Claims. (Genuity
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
GLOBAL CROSSING: Wants Nod to Amend Plan and Related Documents
--------------------------------------------------------------
On the Effective Date of the Global Crossing Debtors' Plan:
* Global Crossing Ltd. and Global Crossing Holdings Ltd. will
transfer substantially all of the Debtors' assets to a
newly formed GX subsidiary -- GC Acquisition Limited; and
* New Global Crossing will guarantee new senior secured notes
for $200,000,000.
The New Senior Secured Notes will be issued pursuant to an
indenture and will have a maturity of three years and bear an 11%
interest annually. Pursuant to the Plan, the New Senior Secured
Notes will be distributed to certain classes of creditors in
partial satisfaction of their claims.
According to the Plan, GX, New Global Crossing, all of its
material subsidiaries, and the indenture trustee for the New
Senior Secured Notes will enter into a security agreement,
pursuant to which the New Senior Secured Notes will be secured.
In accordance with the Global Security Agreement, the security
interest will be a first priority lien on the equity in, and
assets of, Global Crossing Intermediate UK Holdings Ltd. and
Global Marine Systems Limited. New Global Crossing will also
grant a lien on its equity in and all other assets and its
material subsidiaries ranking junior only to its first lien on
all or substantially all assets and its material subsidiaries for
up to $150,000,000 of senior secured indebtedness. The Working
Capital Financing may be provided before or after the Plan
Effective Date.
Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York,
believes that the GX Debtors are very close to the finish line
for closing the transaction contemplated under the Purchase
Agreement and emerging from Chapter 11. Most notably, on
September 19, 2003 and October 8, 2003, the GX Debtors cleared
the final hurdles in connection with the regulatory approval
processes of the Committee on Foreign Investment in the United
States and the Federal Communications Commission.
The Debtors, the Joint Provisional Liquidators, the Creditors
Committee, the Prepetition Lenders, and ST Telemedia have been
working diligently to prepare for the closing of the Transaction.
By this motion, the Debtors ask the Court to approve certain non-
material modifications to:
(i) the Plan;
(ii) certain documents contained in the Plan Supplement filed
with the Court; and
(iii) the record date for distributions under the Plan.
Mr. Basta relates that the Modifications to the Plan and Plan-
Related Documents reflect Hutchison's withdrawal from the
Transaction. These modifications also clarify certain provisions
of the Plan Documents and the Confirmation Order. Certain issues
that have arisen in the course of preparing for the Transaction
Closing have also been addressed by the Modifications.
The Debtors want to amend the Plan to remove all references to
Hutchison and to update the corresponding defined term
"Investors" to the singular term "Investor." Mr. Basta explains
that these technical modifications to the Plan are consistent
with Hutchison's letter dated April 30, 2003, terminating its
rights and obligations under the Purchase Agreement, and with the
Court's order dated July 8, 2003, granting Hutchison and the
Debtors mutual releases.
Mr. Basta also informs the Court that the Related Document
Modifications reflect the Hutchison Withdrawal, clarify certain
provisions of the Plan-Related Documents, and reflect the
negotiated refinement of the primary Plan-Related Documents. The
Record Date, on the other hand, is modified for administrative
reasons. As the Parties contemplated a relatively quick Closing
following the Plan's Confirmation, the Record Date was set on
December 26, 2002. According to Mr. Basta, as the Closing was
delayed due to regulatory issues, the current Record Date would
make it very difficult to track the beneficial claimholders
entitled to receive distributions, including distributions of the
New Senior Notes. Therefore, the Debtors ask the Court to fix
the Record Date as the Plan Effective Date.
The Debtors believe that the Modifications are permitted under
the Plan and are mostly technical refinements and clarifications
of the general agreement of the parties. In addition, the
Modifications do not adversely impact any of the Debtors'
creditors. Nevertheless, out of an abundance of caution and in
the spirit of full disclosure, the Debtors are seeking the
Court's approval of the Modifications.
Mr. Basta also points out that as the New Global Crossing will
have the expertise and the institutional knowledge required to
address issues arising in connection with the claims reserved for
in the Administrative Expense and Priority Claim Reserve, and as
any residual amounts will be distributed to New Global Crossing,
the Parties are currently discussing the administration of the
Administrative Expense and Priority Claim Reserve by New Global
Crossing in lieu of the Estate Representative. The results of
these ongoing discussions will be presented at the hearing.
Mr. Basta contends that the Plan Modifications, the Related
Document Modifications, and the Establishment of a New Record
Date are technical and non-material. The revisions are designed
to clarify the Confirmation Order and conform the Plan to the
termination of Hutchison's participation in the Purchase
Agreement. As the Purchase Agreement and Plan contemplated the
assumption of the rights and obligations of either Investor by
the other, these conforming changes do not substantively modify
the Plan, much less are material or adverse to any creditors.
These modifications also address conflicts between the Plan and
applicable laws, ambiguities or omissions in the Plan and the
Plan Documents, and administrative issues that have arisen since
the Plan was confirmed, Mr. Basta says. (Global Crossing
Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
GMACM MORTGAGE: Fitch Rates Class B-1 and B-2 Certs. at BB and B
----------------------------------------------------------------
Fitch rates $502.0 million GMACM Mortgage Pass-Through
Certificates, 2003-J8 Classes A, PO, IO, R-I and R-II certificates
($501.9 million) 'AAA'. In addition, the class M-1 certificates
($6,445,000) are rated 'AA', the class M-2 certificates
($3,093,000) are rated 'A', the class M-3 certificates
($1,546,000) are rated 'BBB', the privately offered class B-1
certificates ($1,031,000) are rated 'BB', and the privately
offered class B-2 certificates ($773,000) are rated 'B' by Fitch.
The privately offered class B-5 certificates are not rated by
Fitch.
The 'AAA' rating on the senior certificates reflects the 2.65%
subordination provided by the 1.25% Class M-1 certificate, the
0.60% Class M-2 certificate, the 0.30% Class M-3 certificate, the
0.20% privately offered Class B-1 certificate, the 0.15% privately
offered Class B-2 certificate, and the 0.15% privately offered
Class B-3 certificate. The ratings on the Class M-1, M-2, M-3, B-
1, and B-2 certificates are based on their respective
subordination.
Fitch believes the above credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud and
special hazard losses in limited amounts. In addition, the ratings
reflect the quality of the mortgage collateral and the strength of
the legal and financial structures and GMAC Mortgage Corporation's
servicing capabilities as servicer. Fitch currently rates GMAC
Mortgage Corporation a 'RPS1' for servicing.
As of the cut-off date, November 1, 2003, the trust consists of
one group of mortgage loans with an aggregate principal balance of
$515,619,250. The mortgage pool consists 1,133 conventional, fully
amortizing 30-year fixed-rate, mortgage loans secured by first
liens on one- to four-family residential properties. The average
unpaid principal balance as of the cut-off date is $455,092. The
weighted average original loan-to-value ratio is 67.88%. The
weighted average FICO score for the pool is 735. Rate/Term and
Cash-out refinance loans represent 60.34% and 22.26% of the loan
pool, respectively. The states that represent the largest portion
of the mortgage loans are California (24.26%), Massachusetts
(12.56%) , New Jersey (9.02%), Illinois (6.35%) and Michigan
(4.30%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
The loans were sold by GMAC to Residential Asset Mortgage
Products, the depositor. The depositor, a special purpose
corporation, deposited the loans in the trust, which then issued
the certificates. For federal income tax purposes, election will
be made to treat the trust fund as a real estate mortgage
investment conduit.
HAYES LEMMERZ: GE Capital Demands $7.5MM Admin Expense Payment
--------------------------------------------------------------
As of the Petition Date, the Hayes Lemmerz Debtors and General
Electric Capital Corporation were parties to prepetition leases of
personal property, including a December 28, 1992 Master Lease
Agreement No. 4048100 and 60 associated equipment schedules.
Under the prepetition leases, the Debtors leased from GE Capital
manufacturing equipment and other equipment, much of which
continues to be used by the Debtors in their business operations.
According to Julianne E. Hammond, Esq., at Blank Rome LLP, in
Wilmington, Delaware, 16 of the 60 Equipment Schedules under the
Master Lease are:
Schedule Qty Equipment Cost Facility
------- ---- --------- ---- --------
30 3 Okuma Horizontal
Turning Center $884,442 La Mirada, LA
31 5 Okuma Horizontal
Turning Center 1,072,370 La Mirada, LA
32 2 Motch Vertical
Turning Centers 231,658 Huntington, IN
1 Okuma & Howa Vertical
Turning Centers 330,000 Gainesville, GA
35 2 Kira Machining
Centers 131,250 Howell, MI
1 Emco Drilling
Center 151,370 La Mirada, LA
36 1 Emco Drilling
Center 154,700 La Mirada, LA
37 1 Okuma & Howa Vertical
Machining Center 242,990 Gainesville
38 6 Motch Turning
Centers 2,211,583 Gainesville
40 3 Motch Turning
Centers 1,105,792 Gainesville
48 2 Emco Wheel
Drilling Centers 366,550 La Mirada, LA
59 1 Nigata Horizontal
Machining Center 310,000 Gainesville
1 Chiron Wheel
Drilling Machine 218,796 Gainesville
62 1 Emco Drilling 184,290 La Mirada, LA
Machine
2 Okuma Turning 817,606 La Mirada, LA
Centers
80 1 Motch Vertical
Numerical Chucker
1 Motch Two Spindle
Vertical Chucker 815,895 Sedalia, MO
92 1 Enshu Lathe 286,706
1 Okuma Lathe 272,316
5 Okuma Lathe 1,584,886 Pulaski, KY
97 2 Nigata Horizontal
Machining Centers 900,000 Gainesville
98 1 Okuma & Howa Millac
Vertical Machining
Center 224,000 Gainesville
102 3 Okuma & Howa Twin
Spindle Vertical
Turning Centers 1,948,200 Gainesville
Ms. Hammond notes that the Debtors are obligated to make monthly
rental payments plus applicable taxes to GE Capital under the
lease terms. Additionally, the Debtors are obligated to:
(i) properly maintain and repair all of the Equipment;
(ii) indemnify GE Capital for all risks of direct and
consequential loss and damage to any of the Equipment;
and
(iii) return the Equipment in accordance with the return
provisions set in the Master Lease and the Schedules.
The Master Lease further provides that the Debtors are in default
under the Schedules if the Debtors breach their obligations to
pay rent or any other sum when due, and fail to cure the breach
within 10 days, or if the Debtors breach any of its obligations
and fails to cure the breach within 30 days after written notice.
After a default, Ms. Hammond notes that the Debtors must pay to
GE Capital the Equipment's Stipulated Loss Value, calculated on
the rental next preceding the declaration of default, plus
rentals and other sums due under the applicable Equipment
Schedule.
Ms. Hammond tells the Court that that Schedules 30, 31, 32, 35,
36, 37, 38, 40, 48, 59, 62, 80, 92, 97, 98, and 102 were
previously rejected by the Debtors. Prior to the rejections, the
Debtors used the Equipment in the postpetition operation of their
businesses for their estates' benefit. But the Debtors failed to
properly maintain and repair the Equipment.
The Debtors failed to comply with the terms governing the return
of the Equipment in that they carelessly, negligently, and in an
unworkmanlike manner detached and removed the Equipment from
their original locations and dumped the equipment in storage
areas inside, or in some case, outside their various facilities.
This occurred at about the time that the Schedules were rejected
without notifying or otherwise obtaining the GE Capital's
consent.
Ms. Hammond relates that none of the Equipment has been returned
to GE Capital in the same condition and appearance as when
received by the Debtors, normal wear and tear excepted, or in
good working order for its originally intended purpose. Most of
the Equipment were rejected and returned to GE Capital, months,
if not years, after the Petition Date. Clearly, the Debtors are
guilty of postpetition breaches of their obligations under the
Schedules, Ms. Hammond contends.
Upon GE Capital's inspection of the Equipment after the
rejections, it discovered that the Equipment had been worn out,
irreparably damaged, and permanently rendered unfit for use.
Much of the Equipment have become almost commercially worthless.
This is evidenced by the fact that GE Capital received only
$352,000 on account of the re-sale of the Equipment, which had
over $12,500,000 in total original cost. Most of the Equipment
had been leased to the Debtors for less than seven years.
For these reasons, GE Capital asks the Court to allow it an
administrative expense claim totaling $7,550,539 based on the
terms of the Schedules, computed according to the Stipulated
Loss Value:
Schedule Stipulated Loss Value Re-sale Value
-------- --------------------- -------------
30 $251,093 $54,000
31 272,446 25,000
32 323,399 14,000
35 165,300 6,000
36 57,793 500
37 142,327 6,000
38 1,315,538 24,000
40 668,528 12,000
48 255,852 1,000
59 446,209 17,500
62 654,616 19,000
80 152,140 2,000
92 1,549,955 105,000
97 507,816 18,000
98 122,956 10,500
102 1,016,571 37,500
Ms. Hammond notes that the Debtors never offered to repair any of
the damage to the Equipment caused by their postpetition failures
to maintain, repair and return the Equipment and have not
tendered any payment to GE Capital on account of the damage.
The Debtors and their estates have benefited from their wrongful
conduct because their estates did not incur the costs associated
with the proper maintenance, repair, and return of the Equipment.
GE Capital further asks the Court to compel the Debtors to
immediately turn over available funds necessary to satisfy their
allowed administrative expense claim.
GE Capital reserves its right to adjust the damage amounts in any
way as it continues to assess its rights and remedies under the
Schedules and applicable law with respect to the Equipment.
Ms. Hammond explains that this request amends, replaces, and
relates back to GE Capital's application for allowance and
payment of its $187,748 administrative expense claim arising from
certain unexpired leases of personal property previously filed in
July 2003.
Debtors Object
Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in
Wilmington, Delaware, argues that pursuant to Section 365(d)(10)
of the Bankruptcy Code, GE Capital is not entitled to an
administrative expense because:
-- The condition of the Equipment did not rise to the level
of Casualty Occurrence;
-- The condition of the Equipment that allegedly constitutes
a Casualty Occurrence and the alleged obligation to pay
the Stipulated Loss Value pursuant to any Schedule did not
arise between the 60th day after the Petition Date and the
rejection of the Schedules; and
-- No obligation allegedly breached by the Debtors arose
between the 60th day following the Petition Date and the
rejection of the Schedule.
GE Capital is also not entitled to an administrative expense
under Section 503(b) of the Bankruptcy Code because:
(a) The expense did not arise out of a postpetition
transaction between GE Capital and Debtors. The Master
Lease and the Schedules, which form the basis of GE
Capital's claim, were entered into long before the
Petition Date;
(b) The alleged failure to maintain and repair the Equipment
conferred no concrete benefit on the Debtors or
alternatively, the benefit allowable as an administrative
expense is not measured by the Stipulated Loss Value, but
by the actual benefit to the Debtors, which if any is far
less than the stipulated amount;
(c) GE Capital's claim for an administrative expense is based
on an alleged breach of contract, not a tort; and
(d) The Debtors were not unjustly enriched by the alleged
breaches so as to justify allowing an administrative
expense.
The Debtors do not waive, but expressly preserve, their rights to
file additional amended or supplemental objections to GE
Capital's claim for the allowance of an administrative expense.
(Hayes Lemmerz Bankruptcy News, Issue No. 41; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
HYPERFEED TECH.: Sells Data Feed Biz. Assets to Interactive Data
----------------------------------------------------------------
On October 28, 2003, HyperFeed Technologies, Inc., a Delaware
corporation, HYPRWare, Inc., a Delaware corporation and wholly
owned subsidiary of the Company, and Interactive Data Corporation,
a Delaware corporation entered into an Asset Purchase and Sale
Agreement.
Pursuant to the Purchase Agreement, certain customer contracts
related to the consolidated data feed business of the Company and
HYPRWare were sold to IDCO on October 31, 2003 in exchange for a
sale price of $8.5 million, which included (1) an initial payment
of $7.0 million cash paid on October 31, 2003, (2) $625,000 in
holdbacks payable upon completion of custom software and the
fulfillment of a transition services agreement and (3) an $875,000
indemnification holdback. The Sale Price was determined by arms-
length negotiation between the Company and IDCO following the
Company's selection of IDCO from among several other parties as
the most suitable potential purchaser.
In addition to the sale of its consolidated market data feed
service contracts, the Company also entered into a licensing
agreement with IDCO to utilize the Company's customer premise
technologies for a period of five years and a transition services
agreement for operating the Company's consolidated ticker plant
during a transition year.
At September 30, 2003, Hyperfeed's balance sheet shows that its
total current liabilities exceeded its total current assets by
about $1.5 million, while accumulated deficit of about $45 million
further whittled down the company's net capitalization to about
$1.4 million from $2.6 million nine months ago.
IMPERIAL METALS: Huckleberry Initiates Management Restructuring
---------------------------------------------------------------
Imperial Metals Corporation (III:TSX) said that shareholders of
Huckleberry Mines Ltd., owner of the Huckleberry copper mine
located near Houston, British Columbia, have agreed to restructure
the management of the mine.
The Huckleberry mine will now be operated by HML under the
leadership of Jim O'Rourke as President and Director. Imperial
will continue to have significant influence on Huckleberry and
will act in an advisory capacity on mine operations. There are no
changes to the ownership of HML. Imperial retains its 50% equity
interest.
The move, which is cash neutral to Imperial, will significantly
improve Imperial's balance sheet. Up to now HML's financial
position and operations have been included in Imperial's financial
statements on a proportionate consolidation basis. Imperial will
now account for its interest in HML on the equity basis. As a
result, all of HML's assets and liabilities will be deconsolidated
from Imperial's balance sheet resulting in the elimination of
approximately $68 million in HML debt and the reversal of
Imperial's negative working capital.
Under the equity accounting basis Imperial will no longer record
its share of HML revenues and expenses on a line by line basis.
Instead, Imperial will record its 50% share of HML's operating
results as a single line item in its Statement of Income.
The management restructuring at Huckleberry will give Imperial
more time to focus on its 100% owned Mount Polley property. Over
the last few months, Imperial has announced two discoveries of
high grade copper-gold mineralization at Mount Polley. The first,
a near surface high grade copper-gold silver strike in the
Northeast Zone. The second, deep seated copper-gold mineralization
in the Springer Zone.
Both discoveries are expanding with drilling underway at Springer
and soon to be resumed at the Northeast Zone, funded by the $10
million bought deal private placement financing announced on
November 6, 2003.
IMPERIAL PLASTECH: August Working Capital Deficit Tops $16.2MM
--------------------------------------------------------------
Imperial PlasTech Inc. (TSX: IPQ) reported its financial results
for the three-month period ended August 31, 2003. The Company
reported a loss of $5.0 million on sales of $3.1 million for the
quarter ended August 31, 2003, compared to a loss of $2.0 million
on sales of $10.3 million for the same period in the prior year.
Reorganization Proceedings
The Company filed a plan of compromise and arrangement with
the Ontario Superior Court of Justice on November 18, 2003. The
Company distributed the Plan to its creditors and has called a
meeting of unsecured creditors to be held on December 5, 2003 for
the purpose of voting on the Plan. The Plan provides that each
holder of a proven unsecured claim will receive its pro rata share
of $1,400,000. The interests of secured creditors and trust claims
are not addressed by the Plan and will not be compromised through
the Companies' Creditors Arrangement Act proceedings.
Approval of the Plan and emergence from the reorganization
proceedings are subject to a number of conditions including
regulatory approval. There is no assurance that the Company will
emerge from the reorganization proceedings.
Results from Operations
The Company reported a loss of $5.0 million for the quarter ended
August 31, 2003 compared to a loss of $2.0 million for the same
quarter of fiscal 2002.
Sales were $3.1 million for the quarter ended August 31, 2003
compared to $10.3 million for the same quarter of fiscal 2002. The
reduction in sales reflects the suspension of operations of the
Company's core business during the receivership proceedings, the
inactivity of the Company's non-core business and a lack of
manufacturing supplies and payment terms following the restart of
operations.
The Company recorded a slight gross margin loss for the quarter
ended August 31, 2003 compared to a gross margin loss of $0.4
million for the same quarter of fiscal 2002. The gross margin loss
results from a decrease in sales, ongoing fixed costs incurred
during the period and significant labor savings.
Operating expenses for the quarter ended August 31, 2003 were
$5.0 million, compared to $2.5 million for the same quarter of
fiscal 2002. The increase in operating expenses reflects expenses
incurred in the receivership proceedings and the reorganization
proceedings, including professional and restructuring fees,
damages to a previous landlord, employee severance costs and
losses from the disposal of property.
Liquidity and Capital Resources
The Company had a cash flow deficiency from operations during the
quarter ended August 31, 2003, before changes in non-cash working
capital, of $(4.5) million compared to $(2.3) million for the same
quarter of fiscal 2002. The increase in outflow reflects the
financial condition of the Company.
Cash used in operations during the quarter ended August 31, 2003
was $(0.1) million compared to $(0.7) million during the same
quarter of fiscal 2002. The changes in non-cash working capital
reflected increased receivable collections and inventory
reductions, offset by an increase in accounts payable.
The Company had a working capital deficiency of $(16.2) million as
at August 31, 2003 compared to positive working capital of $4.3
million as at August 31, 2002. The working capital deficiency
increased from the amount reported at the end of the previous
year's quarter as a result of long-term debt being reclassified as
current debt combined with a decrease in accounts receivable, a
decrease in inventory and an increase in accounts payable.
Accounts receivable of $1.7 million as at August 31, 2003
reflected a reduction of $0.5 million in accounts receivable
during the third quarter of fiscal 2003 compared to a reduction of
$2.0 million in accounts receivable during the third quarter of
fiscal 2002. The reduction of accounts receivable during the third
quarter of fiscal 2003 reflects a 69.7% decrease in sales compared
to the same quarter of fiscal 2002.
Accounts payable and accrued charges of $12.6 million as at
August 31, 2003, reflected an increase of $3.3 million in accounts
payable and accrued charges during the third quarter of fiscal
2003 compared to a decrease of $2.2 million in accounts payable
and accrued charges during the same quarter of fiscal 2002. The
increase in accounts payable was due in part to the professional
and restructuring fees.
The PlasTech Group is a diversified plastics manufacturer
supplying a number of markets and customers in the residential,
construction, industrial, oil and gas and telecommunications and
cable TV markets. Currently operating out of facilities in Atlanta
Georgia, Peterborough Ontario and Edmonton Alberta, the PlasTech
Group is focusing on the growth of its core businesses and
continues to assess its non-core businesses. For more information,
please access the group's Web site at http://www.implas.com
INTEREP: Withdraws Request for Funding from Boston Ventures
-----------------------------------------------------------
Interep National Radio Sales (OTC Bulletin Board: IREP) and Boston
Ventures announced a mutual agreement to terminate Boston
Ventures' $50 million investment commitment to Interep.
Interep withdrew its request for funding after recent hires from
Katz Radio Group terminated their employment with Interep.
Proceeds were to be used for the acquisition of representation
contracts and for general corporate purposes.
Ralph Guild, Chairman and CEO of Interep, said, "Due to the events
of last week, we do not feel that additional funding of this
magnitude is necessary at this time. However, we value the strong
relationship that we have developed with Boston Ventures. As
additional opportunities develop, we look forward to their
continued support."
Barry Baker a general partner at Boston Ventures said, "We
continue to have great admiration for Ralph and Interep, and
should the opportunity arise, we remain willing to provide the
capital necessary to support the future growth of the company."
Interep (OTC Bulletin Board: IREP) is the nation's largest
independent advertising sales and marketing company specializing
in radio, the Internet and complementary media, with offices in 17
cities. Interep is the parent company of ABC Radio Sales, Allied
Radio Partners, Cumulus Radio Sales, D&R Radio, Infinity Radio
Sales, McGavren Guild Radio, MG/Susquehanna, SBS/Interep, as well
as Interep Interactive, the company's interactive representation
and web publishing division specializing in the sales and
marketing of on-line advertising, including streaming media.
Interep Interactive includes Winstar Interactive, Cybereps and
Perfect Circle Media. In addition, Interep provides a variety of
support services, including: consumer and media research, sales
and management training, promotional programs and unwired radio
"networks." Clients also benefit from Interep's new business
development team, the Interep Marketing Group, as well as Morrison
& Abraham, Interep's sales consulting division focusing on non-
traditional revenue.
Interep National Radio Sales' March 31, 2003 balance sheet shows a
total shareholders' equity deficit of about $10.5 million.
Boston Ventures Management, Inc. -- http://www.bostonventures.com
-- is a private equity firm that has been an active investor and
financial partner to management teams in the media, entertainment,
and communications sectors since 1983, earning the firm a
franchise position in the private equity community. Boston
Ventures' general partners and principals are accomplished and
experienced professionals who have a diverse and complementary
range of skills and a broad network of domestic and international
relationships. The existing Boston Ventures Fund VI Partnership
has attracted leading U.S. institutions and individuals from 16
countries.
ISTAR ASSET: Fitch Ups Ratings on Various Series 2002-1 Notes
-------------------------------------------------------------
Fitch Ratings upgrades iStar Asset Receivables Trust (STARs)
Trust, commercial mortgage pass-through certificates, series 2002-
1 as follows:
-- $40.0 million class B to 'AAA' from 'AA+';
-- $26.6 million class C to 'AAA' from 'AA';
-- $21.3 million class D to 'AAA' from 'AA-';
-- $42.6 million class E to 'AA+' from 'A+';
-- $26.6 million class F to 'AA' from 'A';
-- $21.3 million class G to 'AA-' from 'A-';
-- $26.6 million class H to 'A+' from 'BBB+';
-- $26.6 million class J to 'A' from 'BBB';
-- $26.6 million class K to 'A-' from 'BBB-';
-- $21.3 million class L to 'BBB+' from 'BB+';
-- $18.6 million class M to 'BBB-' from 'BB';
-- $24.0 million class N to 'BB+' from 'BB-';
-- $21.3 million class O to 'BB' from 'B+';
-- $18.6 million class P to 'BB-' from 'B';
-- $16.0 million class Q to 'B' from 'B-';
-- $16.0 million class S to 'B-' from 'CCC'.
In addition, the $43.3 million class A-1 and the $381.3 million
class A-2 are affirmed at 'AAA'. Fitch does not rate the $40.0
million class T.
The upgrades are a result of improved performance combined with
increased credit enhancement after the prepayment of four loans
totaling $174 million, or 19.4%. The four loans that prepaid were
collateralized by the Windsor hotel portfolio, the EPT movie
theatre portfolio, and an office property in San Francisco, 123
Townsend Street. The prepayment of the hotel and theatre loan has
reduced the exposure to operating business risk to 16.4% from
27.8% of the pool at issuance.
The certificates are collateralized by 37 loans on 46 commercial
properties consisting mainly of office (50%) and industrial (20%)
properties. The largest geographic concentrations are in
California (22%) and New York (16%). The portfolio has limited
property-type and geographic diversity, which has been accounted
for through additional stresses in the remodeling of the mortgage
pool.
As part of the review of this transaction, Fitch analyzed the
performance of each loan and its underlying collateral. The debt
service coverage ratio is calculated using borrower reported net
operating income adjusted for reserves and capital expenditures
and a Fitch stressed debt service constant. The fiscal year ended
2002 DSCR for the pool was 1.50x compared to 1.37x at issuance.
The Headquarters/Mission-Critical Facilities Loan Portfolio, the
Goodyear Tire & Rubber Company Loan, and the Chelsea Piers Loan
maintain the investment grade credit assessment ratings assigned
at issuance and represent 45% of the pool compared to 37% at
issuance.
Headquarters/Mission-Critical Facilities (25%) are secured by 19
cross-collateralized and cross-defaulted first mortgage loans. The
properties include 13 office, five industrial, and two
office/industrial properties located in ten states. Major tenants
include Nike, Inc. (22% of NRA), Eagle Global Logistics (15% of
NRA), and IBM (12% of NRA). Overall, the portfolio is currently
98% leased. The loan portfolio has experienced improved
performance with FYE 2002 DSCR of 1.63x compared to 1.41x at
issuance. Although many of the properties are leased to non-rated
single tenants, the loan portfolio benefits from a 20-year
amortization schedule, geographic diversity, and cross-
collateralization and cross-default provisions.
The Goodyear Tire & Rubber Company Loan (12%) is secured by six
industrial warehouse properties located in five states. The
properties are 100% occupied by Goodyear Tire & Rubber Company
under a single, non-cancelable 20-year lease that commenced on
December 2001. The lease is a triple-net lease that includes a
rent increase in January 2012. A $20 million letter of credit
issued by BNP Paribas, rated 'AA' by Fitch, serves as additional
collateral for the loan. Performance has been stable with DSCR of
1.67x at FYE 2002 compared to 1.62x at issuance.
Chelsea Piers (8%) is secured by a 30-acre 1.7 million square foot
entertainment/mixed-use complex in Manhattan, New York. The
Chelsea Piers mortgage is subject to a ground lease with the State
of New York Department of Transportation. The lease commenced in
June 1994 for an initial term of 10 years (and expires in 2004);
the lease may be extended for four consecutive, 10-year renewal
periods. The property's performance has been stable since issuance
with a FYE 2002 DSCR of 1.99x compared to 2.00x at issuance. The
property is currently 99% leased.
The sixteen non-credit assessed loans in the pool consist of first
mortgage, second mortgage, third mortgage, and mezzanine loans.
These assets continue to perform well with an all-in DSCR of 1.79x
and stable occupancy levels.
Fitch will continue to monitor this transaction, as surveillance
is ongoing.
J & B HOUSTON: Case Summary & 17 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: J and B Houston Healthcare, Inc.
PO Box 477
Alto, Texas 75925
aka Healthy Horizons
aka Alto Community Mental Health Center
Bankruptcy Case No.: 03-62468
Type of Business: Medical Services
Chapter 11 Petition Date: November 25, 2003
Court: Eastern District of Texas (Tyler)
Judge: Bill Parker
Debtor's Counsel: Kyle S. Morrison, Esq.
Holcomb & Morrison
111 North Spring Street
Tyler, TX 75702
Tel: 903-597-5595
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1 Million to $10 Million
Debtor's 17 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Healthcare Financing government contract $3,500,000
Administration
1301 Young Street,
8th Floor
Dallas, TX 75202
Patricia & Richard Wars judgement $142,000
Roland Brown $20,000
Gosling & Sachse insurance premium $8,000
Advanta Bank Corp. credit card debt $5,469
Bancorp South loan $5,168
IRS District Director 2001-2002 FUTA & FICA $3,283
Capital One credit card debt $3,200
AT&T trade debt $2,312
Kathryn Williams contract counseling $1,750
services
Bancorp South loan $1,242
Dr. Stephen Westmoreland contract counseling $1,140
service
State of Texas $1,000
C/O Susan Miller, Asst.
Attorney General
Moore Medical trade debt $773
AM/PM Signius trade debt for $497
Communications, Inc. service provided by
Aegis Communications
Heritage Company trade debt $404
IRS District Director tax penalty $191
J.A. JONES: Paul Hastings Signs-Up as Gov't Contracts Counsel
-------------------------------------------------------------
J.A. Jones, Inc., and its debtor-affiliates sought and obtained
approval from the U.S. Bankruptcy Court for the Western District
of North Carolina to employ Paul, Hastings, Janofsky & Walker LLP
as Special Corporate Counsel to:
a) provide legal counsel and advice with respect to the
Governmental Contracts; and
b) assist the Debtors and their general bankruptcy counsel
with respect to proceedings related to the Debtors'
bankruptcy cases.
The Debtors have selected Paul Hastings because they have
considerable experience in matters of this nature. Paul Hastings
has also acted as Debtors' counsel regarding certain of their
Government Contract for several years prior to the Petition Date.
Charles Sharbaugh, Esq., will lead the engagement team in this
matter. Mr. Sharbaugh reports that the Paul Hasting's hourly rate
range from:
Partners $430 to $525 per hour
Associates $185 to $320 per hour
Legal Assistants $150 per hour
Headquartered in Charlotte, North Carolina, J.A. Jones, Inc. was
founded in 1890 by James Addison Jones, J.A. Jones is a subsidiary
of insolvent German construction group Philipp Holzmann and a
holding company for several US construction firms. The Company
filed for chapter 11 protection on September 25, 2003 (Bankr.
W.D.N.C. Case No. 03-33532). John P. Whittington, Esq., at
Bradley Arant Rose & White LLP and W. B. Hawfield, Jr., Esq., at
Moore & Van Allen represent the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed debs and assets of more than $100 million
each.
JP MORGAN CHASE: Fitch Affirms Low-B Class F and G Note Ratings
---------------------------------------------------------------
Fitch Ratings upgrades JP Morgan Chase Commercial Securities
Corp., Series 2001-A, as follows:
-- $6.8 million class B to 'AA+' from 'AA';
-- $7.9 million class C to 'A+' from 'A'.
Fitch Affirms the following classes:
-- $44.6 million class A-2 'AAA';
-- Interest only class X 'AAA';
-- $10.8 million Class D 'BBB';
-- $3.4 million Class E 'BBB-';
-- $5.1 million Class F 'BB';
-- $7.8 million Class G at 'B'.
Fitch does not rate the $14.4 million class NR. Class A-1 has paid
in full.
The rating upgrades are due to the increased subordination levels
resulting from an 11.5% paydown of the pool's certificate balance
to $100.7 million from $113.8 million at issuance.
The majority of the collateral in this transaction are loans that
were originated for securitization over the past five years but
were removed from prospective conduit pools.
The master servicer, GMAC Commercial Mortgage Corp., collected
year-end 2002 operating statements for 94% of the pool by
collateral balance. The YE 2002 weighted average debt service
coverage ratio for these loans is 1.36 times compared to 1.36x at
YE 2001 and 1.49x at issuance.
Currently, there are two loans, representing 7.6% of the pool, in
special servicing. The largest specially serviced loan (3.8%),
Comfort Inn Lakewood, is secured by a 121 room hotel located in
Lakewood, CO. The loan transferred to the special servicer in
September 2002 due to payment delinquency and became real estate
owned (REO) in February 2003. The property now operates as a Days
Inn and the special servicer is marketing the property for sale.
The other specially serviced loan (3.8%), Hearthside Hotel, is
secured by a 142 room extended-stay hotel located in Dallas, TX.
The loan transferred to the special servicer in June 2002 due to
payment delinquency after becoming adversely affected by highway
construction. The borrower failed to perform under a forbearance
agreement and the special servicer is pursuing foreclosure.
Fitch applied various hypothetical stress scenarios taking into
consideration the above concerns. Even under these stress
scenarios, the resulting subordination levels were sufficient to
upgrade the designated classes. Fitch will continue to monitor
this transaction as surveillance is ongoing.
KMART: Court Disallows $1.8 Million of Employee Severance Claims
----------------------------------------------------------------
The Kmart Debtors found 36 proofs of claim filed by former
employees asserting claims for prepetition severance obligations.
After review and analysis, the Debtors determined that the Claims
are not supported by either an established policy or any written
employment agreement.
At the Debtors' request, the Court disallows 32 Employee
Severance Claims, aggregating $1,779,771. The Court will
continue the hearing on four remaining Claims:
Claimant Claim No. Amount
-------- --------- ------
Conaway, Charles 38498 $19,635,003
Dunkel, Kenneth 10181 54,350
McDonald, John 41768 2,109,397
Mower, James 2687 1,640
The Debtors also identified seven claims filed by employees that
are supported by written employment agreements. However, these
Claims do not comply with the terms of the claimants' employment
agreements and are overstated. The Debtors reviewed each of the
applicable employment agreements for the Overstated Severance
Claims and calculated the appropriate amount of the Claim. At
the Debtors' request, the Court allows these Overstated Severance
claims at their reclassified amounts:
Claim Reclassified
Claimant Claim No. Amount Amount
-------- --------- ------ ------------
Boyer, Jeffrey N. 38776 $1,098,626 $1,098,626
Bozic, Michael 40621 225,000 225,000
Carlson, Larry E. 37393 30,333 30,333
Driggs, Charles S. 23503 74,250 74,250
Giffen, Shavan M. 38779 35,075 35,075
Phillips, Kevin W. 40084 375,000 375,000
St. John, Stephen W. 11630 656 656
(Kmart Bankruptcy News, Issue No. 65; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KEVN INC: Chapter 11 Case Summary & 20 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: KEVN, Inc.
2000 Skyline Drive
Rapid City, South Dakota 57701
Bankruptcy Case No.: 03-50592
Type of Business: The debtor is a parent company of the
Rapid City FOX, a broadcasting network
providing news, weather reports, sports
and current events.
Chapter 11 Petition Date: November 20, 2003
Court: District of South Dakota, Western Div. (Rapid City)
Judge: Irvin N. Hoyt
Debtor's Counsel: Clair R. Gerry
PO Box 966
Sioux Falls, SD 57101-0966
Tel: 605-336-6400
Total Assets: $7,289,338
Total Debts: $6,655,095
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
William S. Reyner, Jr. $979,992
1031 East Mountain Drive
Santa Barbara, CA 93108
Amcito Partners, LP $454,575
630 Fifth Avenue, #2620
New York, NY 10111
Millennium Sales & Marketing $26,544
FOX Broadcasting Co. - NFL $26,000
C/O Ernst & Young
FOX Broadcasting Co. - Primetime Buyback $14,255
Twentieth Century Fox TV Synd. $12,756
WSI Corp. $11,830
Buena Vista Television $11,007
Paramount Domestic TV $10,547
ASCAP TV Billing Department $8,800
Preston-Patterson Co., Inc. $4,058
Carsey-Werner Distribution $3,900
FOX News Network Edge $3,743
BMI $3,627
Nielsen Media Research Inc. $2,094
Hogan & Hartson LLP $2,049
Associated Press $2,047
Columbia Pictures TV, Inc. $1,300
Marketron International $790
Cellular One $650
LYONDELL CHEMICALS: Fitch Affirms Ratings & Keeps Neg. Outlook
--------------------------------------------------------------
Fitch Ratings has affirmed Lyondell Chemical Company's senior
secured credit facility rating at 'BB-', Lyondell's senior secured
notes at 'BB-', and Lyondell's senior subordinated notes at 'B'.
Fitch has also affirmed the 'BB-' rating on Equistar Chemicals
L.P.'s senior secured credit facility, and the 'B' rating on
Equistar's senior unsecured notes. The Rating Outlook remains
Negative for both Lyondell and Equistar.
The Negative Rating Outlook for both companies reflects Fitch's
concern that margins at Lyondell and Equistar will continue to
remain under pressure into 2004. In addition, Fitch is concerned
with the uncertainty in the overall economy, energy and raw
materials costs, and the pace of improvement in demand.
Lyondell is currently refinancing its existing $85 million
accounts receivable securitization program and replacing it with a
new four-year, $100 million accounts receivable purchase program.
Equistar is also in the process of replacing its existing $354
million senior secured revolving credit facility and $100 million
accounts receivables securitization program with a new four-year,
$250 million inventory revolving credit facility, and a four-year,
$450 million accounts receivables purchase program.
As of Sept. 30, 2003 the outstanding borrowings under the existing
credit facility include $29 million revolver balance and $173
million term loan. Equistar used the proceeds of a $250 million
10-5/8% senior unsecured notes issued November 18, 2003, to repay
the remaining balance on the term loan and the revolver. The
remaining cash proceeds will be used to enhance Equistar's
liquidity position. The new inventory backed credit facility and
accounts receivables program will allow Equistar greater
flexibility through poor business conditions.
Both companies are heavily leveraged and expect high debt levels
to remain high until cash generation from operations improves.
Debt repayment may not occur until 2005 or beyond. Fitch expects
that Lyondell will need to obtain further covenant relief early in
2004 if operating margins do not improve in the next three to six
months as financial covenants under Lyondell's senior secured
credit facility become more restrictive at the end of the first
quarter in 2004. Even though both Lyondell and Equistar have
manageable debt maturities over the next few years, the ratings
reflect concerns that both companies may be totally dependent on
their revolving lines of credit if current cash balances decrease
and margin improvement does not materialize.
The ratings continue to be supported by both Lyondell and
Equistar's strong access to liquidity via senior secured credit
facilities and capital market transactions. Cash balances at the
end of the third quarter were $393 million and $128 million for
Lyondell and Equistar, respectively. Lyondell's liquidity was
further enhanced in mid-October from a $171 million equity
offering. Throughout 2003 Lyondell and Equistar have successfully
refinanced bank debt and extended maturities. Lyondell has no
substantial maturities of long-term debt until 2005 and Equistar
has no substantial maturities until 2006.
Lyondell and Equistar's ratings are linked due to the integration
of their operations and the ownership relationship between
Lyondell and Equistar. In addition, Lyondell is the guarantor of
approximately $300 million Equistar's long-term debt. As of Sept.
30, 2003 Equistar's total debt was $2.25 billion and Lyondell's
total debt was $4.15 billion. Lyondell and Equistar continue to
manage liquidity during the downturn and plan to extinguish debt
when business conditions improve and a sustainable recovery is
evident.
Lyondell is a leading global producer of intermediate and
performance chemicals. The company benefits from strong technology
positions and barriers to entry in its major product lines. Last
year Lyondell completed an equity swap with Occidental Petroleum,
as a result, the company's ownership of Equistar Chemicals L.P., a
leading producer of commodity chemicals, is 70.5%. The company
also owns 58.75% of Lyondell-Citgo Refining L.P., a highly complex
petroleum refinery, which benefits from a long-term, fixed-margin
crude supply agreement. On a proportionate share basis, Lyondell
and its joint ventures generated over $8 billion of sales and
EBITDA of approximately $742 million in 2002.
MEASUREMENT SPECIALTIES: Settles Dispute over Terraillon Sale
-------------------------------------------------------------
Measurement Specialties, Inc. (Amex: MSS), a designer and
manufacturer of sensors and sensor-based consumer products, has
reached a settlement with Hibernia Capital Partners I, ilp and
Hibernia Capital Partners II, ilp, who had previously filed a
lawsuit against the Company in the High Court of Dublin.
Under the terms of the settlement, Measurement Specialties agreed
to pay $150,000 as full and final settlement of all matters
between Hibernia and Measurement Specialties arising out of the
agreement between the two companies for the sale of shares in
Terraillon Holdings Limited in June 2001.
"We are very pleased with the terms of the settlement and to have
this piece of litigation behind us," commented Frank Guidone,
Company CEO.
Measurement Specialties is a designer and manufacturer of sensors,
and sensor-based consumer products. Measurement Specialties
produces a wide variety of sensors that use advanced technologies
to measure precise ranges of physical characteristics, including
pressure, motion, force, displacement, angle, flow, and distance.
Measurement Specialties uses multiple advanced technologies,
including piezoresistive, application specific integrated
circuits, micro-electromechanical systems, piezopolymers, and
strain gages to allow their sensors to operate precisely and cost
effectively.
* * *
Going Concern Uncertainty
As previously reported, Measurement Specialties' independent
accountants Grant Thornton LLP, in its Auditors' Report dated
May 20, 2003, stated:
"The accompanying [sic] consolidated financial statements have
been prepared assuming that the Company will continue as a going
concern...[T]he Company incurred net losses of $9,097,000 and
$29,047,000 for the fiscal years ended March 31, 2003 and 2002,
respectively. Additionally, the Company is a defendant in a
class action lawsuit and is also the subject of investigations
being conducted by the Division of Enforcement of the United
States Securities and Exchange Commission and the United States
Attorney for the District of New Jersey. These factors, among
others, raise substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty."
MERCURY AIR: Will File Annual Report on Form 10-K by December 31
----------------------------------------------------------------
Mercury Air Group, Inc. (Amex: MAX; PCX) announced that on
November 24, 2003 the American Stock Exchange accepted Mercury's
plan to regain compliance with the Exchange's continued listing
standards and, therefore, subject to certain conditions, the
Company's listing on the Exchange was being continued pursuant
to an extension to allow Mercury time to come into compliance.
As described in its plan, as submitted to the Exchange, the
Company intends on filing its Annual Report on Form 10-K for its
fiscal year ended June 30, 2003 with the Securities and Exchange
Commission no later than December 31, 2003 and, within 5 business
days thereafter, filing its Quarterly Report on Form 10-Q for the
period ended September 30, 2003.
Mercury initially received notice from the Exchange on October 17,
2003 that as a result of not filing its 2003 10-K by the SEC's
filing deadline, that the Company was not in compliance with the
Exchange's continued filing requirements. Mercury advised the
Exchange on November 11, 2003 that it required additional time to
file its 2003 10-K with the SEC. In response to Mercury's notice,
the Exchange reiterated that Mercury was not in compliance with
the continued listing requirements and requested Mercury to submit
a plan to bring Mercury into compliance. In its plan, as
submitted to the Exchange, Mercury intends to engage its current
independent accountants to conduct and complete a re-audit of its
financial statements for the previous two fiscal years ended
June 30, 2002 and 2001. The projected filing date of December 31,
2003 for Mercury's 2003 10-K should allow adequate time for
Mercury to file its 2003 10-K with the SEC, to be followed within
five business days by its 1st Quarter 10-Q.
On November 24, 2003 the Exchange advised the Company that the
Exchange had accepted Mercury's plan, and that the Company will
remain listed for the duration of the plan period, subject to,
among other things, periodic review by the Exchange to determine
whether Mercury is making progress consistent with the plan.
Mercury has also advised the Exchange that it intends to issue a
press release regarding the Company's financial results for its
1st quarter ended September 30, 2003 no later than December 5,
2003.
Although it is the Company's intent to file its 2003 10-K on or
before December 31, 2003, the Company cannot ensure that the
report will be filed with the SEC in accordance with the plan.
The Exchange advises that it is authorized, if it deems necessary,
to initiate immediate delisting proceedings at any time during the
plan period. If Mercury has not come into compliance with the
Exchange's continued listing standards by December 31, 2003 the
Exchange will likely initiate delisting procedures.
Los Angeles-based Mercury Air Group (Amex: MAX; PCX) provides
aviation petroleum products, air cargo services and
transportation, and support services for international and
domestic commercial airlines, general and government aircraft and
specialized contract services for the United States government.
Mercury Air Group operates four business segments worldwide:
Mercury Air Centers, Inc., MercFuel, Inc., Maytag Aircraft
Corporation and Mercury Air Cargo, Inc. For more information,
please visit http://www.mercuryairgroup.com/
* * *
As reported in Troubled Company Reporter's October 30, 2003
edition, Allied Capital Corporation (NYSE: ALD) acquired Mercury
Air's $24.0 million Senior Subordinated 12% Note Due December 31,
2005 from J.H. Whitney Co. Mezzanine Fund and has also entered
into a definitive agreement, subject to Mercury's stockholders'
approval, the completion of due diligence and regulatory agency
consents, for Allied to purchase 100% of the stock of Mercury Air
Centers, Inc., the wholly-owned subsidiary of Mercury Air Group
which provides fixed base operations at 19 locations throughout
the United States.
The Mercury FBO Sale provides for a purchase price of $70 million,
including an escrow relating to a lease extension, adjustments
related to certain capital investments made by Mercury, working
capital and other customary terms and conditions. Upon completion
of the sale transaction, which is planned to occur by December 31,
2003, the new promissory note issued to Allied in replacement of
the Whitney Note, and other debt will be retired with the proceeds
from the Mercury FBO Sale.
As previously disclosed, Mercury was required to seek
opportunities for asset sales or refinancings to prepay all or
part of the $24.0 million Senior Subordinated 12% Note by
December 31, 2003. Failure to make certain prepayments to Whitney
by such date would have required the issuance of up to 10% of the
Company's stock pursuant to warrants with a nominal exercise
price, as well as issuance of an additional note in the amount of
$5.0 million. Under the provisions of the Allied Note these
penalty provisions were waived. Allied, upon the acquisition of
the Whitney Note, also acquired detachable warrants to purchase
226,407 shares of Mercury's common stock from Whitney with Whitney
retaining the right to purchase 25,156 shares of Mercury's common
stock. Mercury agreed to reduce the exercise price of these
warrants to $6.10 per share.
MICHAEL FOODS: Initiating Temporary Lay-Off at Iowa Facility
------------------------------------------------------------
Michael Foods, Inc., will be incurring a temporary lay-off at its
Lenox, Iowa facility. Mark Witmer, Treasurer, said that "the
displacement of workers has come about as a result of a need to
expand our facility." Construction at the egg products facility
is expected to begin in the first quarter of 2004 and should be
completed by August. The lay-off is expected to begin late
January. Employees affected by the lay-off will be recalled as
positions become available.
Michael Foods, Inc. (S&P, B+ Corporate Credit Rating, Positive
Outlook), headquartered in Minnetonka, Minnesota, is a
diversified food processor and distributor with particular
interests in egg products, refrigerated grocery products and
refrigerated potato products. Principal subsidiaries include M. G.
Waldbaum Company, Papetti's Hygrade Egg Products, Inc., Crystal
Farms Refrigerated Distribution Company, and Northern Star Co.
MILLENNIUM CHEMS: Closes Sale of $125MM Convertible Debentures
--------------------------------------------------------------
Millennium Chemicals (NYSE:MCH) consummated the sale of $125
million aggregate principal amount of its 4% Convertible Senior
Debentures due 2023.
As a consequence of the sale of the Debentures and application of
the proceeds, the Credit Agreement amendment described in
Millennium's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003 has become effective.
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB-' rating to Millennium Chemicals Inc.'s proposed
$125 million convertible debentures due 2023, based on preliminary
terms and conditions. Proceeds of the notes will be used to reduce
secured borrowings under committed bank facilities and to add
liquidity to refinance utilization of an existing accounts
receivables securitization facility. The notes are guaranteed by a
wholly owned subsidiary, Millennium America Inc.
At the same time, Standard & Poor's affirmed its 'BB-/Stable/--'
corporate credit rating on Millennium Chemicals Inc. and raised
the ratings on the existing $150 million revolving credit facility
to 'BB' from 'BB-', to recognize the benefits of a pending
amendment (subject to the successful sale of at least $110 million
of long-term notes) that will improve lenders prospects for full
recovery in the event of a default. Hunt Valley, Maryland-based
Millennium, with about $1.6 billion of annual sales and
approximately $1.3 billion of outstanding debt (excluding
adjustments to capitalize operating leases), is primarily engaged
in the production of commodity chemicals. The outlook is stable.
MIRANT CORP: Wants to Walk Away from Brazos Supply Agreement
------------------------------------------------------------
Brazos Electric Power Cooperative, Inc. and Mirant Americas
Energy Marketing, LP are parties to a Power Purchase and
Exchange, Facilities Operation and Maintenance, and Fuel Supply
Agreement dated as of October 8, 1998. Pursuant to the Supply
Agreement, MAEM is entitled to dispatch and receive the output of
Brazos Electric's generating facilities. Furthermore, MAEM
provides Brazos Electric with the capacity and electric energy
needed to meet the requirements of Brazos Electric's load,
subject to certain exclusions. The Supply Agreement also set
MAEM's obligations with respect to the operation and maintenance
of the "Owned Resources" -- the Miller Plant and the North Texas
Plant Brazos Electric owned.
On June 28, 2002, Brazos Electric and MAEM entered into the
Amendment, whereby the parties clarified responsibility for
certain costs under the Supply Agreement in light of the changes
that had occurred in the structure of the wholesale electricity
market in Texas since 1998. Also, MAEM agreed to commit the
output of certain resources to satisfy its obligations to Brazos
Electric in return for increased payments. Under the Amendment,
MAEM's O&M Obligations were terminated and MAEM is no longer
required to perform those O&M Obligations or otherwise manage
Brazos Electric's generating resources. However, MAEM is still
obligated to supply the energy and fuel to Brazos Electric
required under the Contracts.
Ian Peck, Esq., at Haynes and Boone LLP, in Dallas, Texas,
relates that the Debtors are likely to suffer market losses of at
least $3,300,000 for the months of September 1 through
December 31, 2003 in connection with the Contracts. In fact, the
Debtors already suffered market losses of about $7,000,000 for
the months of July 14 through August 31, 2003 that are
attributable to the Contracts.
According to Mr. Peck, MAEM posted a $15,000,000 cash as
collateral with the Electric Reliability Council of Texas in
connection with its transaction with its activities related to
the Contracts, which will be returned to MAEM upon rejection.
Mr. Peck tells the Court that the Contracts are not essential
service contracts of the Debtors. That is why the Debtors want
to reject the Contracts. Notwithstanding, the Debtors are
willing to continue to provide to Brazos Electric (at its option)
the energy it requires in excess of the energy available from
Brazos Electric's generating plants and Brazos Electric's
existing long-term power purchases from other parties through
December 31, 2003, at market based rates. Therefore, there is no
threat to Brazos Electric, or its customers, that its access to
electricity will be suddenly interrupted by the Debtors' intent
to reject the Contracts.
Accordingly, pursuant to Section 365(a) of the Bankruptcy Code,
the Debtors seek the Court's authority to reject the Contracts.
(Mirant Bankruptcy News, Issue No. 13; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MOUNT SINAI MEDICAL: Fitch Rates $107MM Series 2004 Bonds at BB
---------------------------------------------------------------
Fitch Ratings assigns a 'BB' rating to the approximately $107
million series 2004 Mount Sinai Medical Center, Florida. Bond
proceeds will be used to current refund the series 2001B and 2001C
bonds ($105 million), fund debt service reserve fund ($9 million),
and pay costs of issuance.
In addition, Fitch affirms the 'BB' rating on approximately $184.6
million of outstanding debt listed below. The Rating Outlook is
Stable. The bonds are expected to price in January 2004 through
negotiation led by Merrill Lynch & Co. Fitch will publish its full
rating report nearer to the time of pricing.
The rating is primarily supported by MSMC's continued financial
improvement brought about by good management practices. MSMC's
operating and excess margins improved to negative 3.7% (negative
$12.1 million) and negative 2.4% (negative $7.9 million),
respectively, through the nine months period ended Sept. 30, 2003,
from negative 10% (negative $31.9 million) and negative 9.7%
(negative $30.8 million), respectively, through the same period in
fiscal 2002. Additionally, MSMC's balance sheet is stronger. Days
in accounts receivable at Sept. 30, 2003 declined to 48.1 days
from a high of 89 days at fiscal 2000. MSMC's days cash on hand
(including unrestricted foundation cash and investments) also
improved to 79.6 days at Sept. 30, 2003 from 66.7 days at fiscal
2002. Ongoing strengths remain MSMC's good market position,
foundation support and good disclosure practices. Mount Sinai
maintains its position as the only full service hospital provider
on Miami Beach and benefits from strong foundation support through
a guaranty and a security interest in its unrestricted revenues
and receivables. Fitch commends management's above average
disclosure practices, which include quarterly and annual financial
reporting to both Fitch and bondholders, and quarterly conference
calls.
Credit concerns include declining utilization trends, and future
capital needs. MSMC's admissions, outpatient surgeries, and
emergency room visits through Sept. 30, 2003 decreased 2.6%, 9.4%,
and 7.1% compared to the prior year. Despite these declines,
revenue increased when compared to the same period last year. MSMC
is budgeting a bottom line loss for fiscal year 2003 of $9.9
million with no expected transfers from the Foundation. MSMC's
capital spending as a percent of depreciation expense in 2001 and
2002 was 82.5% and 33.5%, respectively. Despite remaining bond
funds from the series 2001 issuance, Fitch believes capital needs
are growing.
Fitch also notes MSMC's bottom line is $1.8 million below its
budget through the first nine months of fiscal 2003. Management
indicated that this shortfall is primarily due to more
conservative accrual practices related to insurance and bad debt
expense. Fitch believes views these practices positively.
The rating and outlook reflect MSMC's continued improvement in
profitability. Management has budgeted a $241,000 bottom line in
fiscal 2004, not including expected cash flow from a dedicated
capital campaign expected to begin in calendar 2004, which would
mark the first time the medical center has posted a profit since
1996. The budget includes initiatives that would result in $9.8
million of improvement from staffing and productivity, supply
chain management, medical enterprise, medical management, and
managed care contracting. Fitch believes these goals are
achievable, given MSMC's previous success in meeting financial
targets. Fitch will evaluate MSMC's progress towards its budgeted
goals throughout the coming fiscal year.
SunTrust, the trustee for the bonds, recently filed a notice of
events of default for a debt service covenant violation in fiscal
2002 which was based on the auditors report, and failure of Cap
Gemini, Ernst and Young to deliver a document certifying that all
consultant recommendations were being met in fiscal 2002.
Management indicated that they believe the debt service covenant
violation is inaccurate and is making every effort to have these
events of default lifted. Fitch expects the events of default will
be withdrawn and therefore believes they should have no material
impact on the rating.
MSMC is a two campus health care provider offering a wide range of
tertiary services with 979 licensed beds (780 staffed) located in
Miami Beach, FL. MSMC has total operating revenue of $437 million
in 2002.
Outstanding debt:
-- $92,125,000 City of Miami Beach Health Facilities Authority,
hospital revenue bonds, series 2001A (Mount Sinai Medical
Center of Florida Project);
-- $30,430,000 City of Miami Beach Health Facilities Authority,
hospital revenue bonds, series 2001B (Mount Sinai Medical
Center of Florida Project);
-- $70,640,000 City of Miami Beach Health Facilities Authority,
hospital revenue bonds, series 2001C (Mount Sinai Medical
Center of Florida Project);
-- $98,000,000 City of Miami Beach Health Facilities Authority,
hospital revenue bonds, series 1998 (Mount Sinai Medical Center
of Florida Project).
NEXSTAR: S&P Rates Proposed $55MM Sr. Sec. Credit Facility at B+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Nexstar Finance LLC's and Nexstar Finance Inc.'s proposed $55
million senior secured credit facility.
At the same time, Standard & Poor's assigned its 'B+' rating to
Mission Broadcasting Inc.'s $140 million senior secured term loan
C. These debt obligations are guaranteed by Nexstar Broadcasting
Group LLC. Standard & Poor's also assigned its 'B-' rating to
Nexstar Finance LLC's and Nexstar Finance Inc.'s proposed $125
million senior subordinated notes due 2013, which were not
guaranteed by Nexstar Broadcasting Group LLC. Proceeds from the
transactions are expected to be used to refinance existing debt
and preferred securities, and to help fund the company's
acquisition of Quorum Broadcast Holdings LLC.
In addition, Standard & Poor's revised its outlook to stable from
negative, and affirmed its 'B+' long-term corporate credit rating
on Nexstar Broadcasting. The Irving, Texas-based television
broadcaster had approximately $557.1 million in pro forma total
debt outstanding at Sept. 30, 2003.
"The rating action incorporates the expectation that Nexstar will
continue to generate cash flow that can be used to reduce debt,
and maintain a comfortable cushion of financial covenant
compliance notwithstanding expected acquisitions, and advertising
and election cycles," said Standard & Poor's credit analyst Alyse
Michaelson. The rating can accommodate the company's expected
moderate acquisition activity, which could lead to temporary
increases in leverage. Nexstar's recent initial public offering
also enables the company to use equity financing for expansion,
which could help temper acquisition related-financial risk. From a
business perspective, the Quorum acquisition expands Nexstar's
U.S. television household reach to 7%, from 3.5%, and enhances its
cash flow diversity.
Including pending acquisitions and dispositions, Nexstar will own
and operate 42 television stations, with 13 duopoly markets, in 26
small- to mid-size markets. Included in its portfolio are
stations affiliated with the three major broadcast networks. Of
these, the NBC and CBS affiliated stations contribute the majority
of total broadcast cash flow. Nexstar's local news programs,
ranked number one or number two in 15 of its 26 markets, are an
important driver of cash flow and station identity. No market
accounts for more than 11% of total revenue, which helps mitigate
the impact of regional economies on ad demand. However, the
health of automotive advertising is key, given that it is the
largest ad category for local TV broadcasters. Furthermore, the
absence of meaningful political ad dollars this year creates
difficult, albeit very predictable, revenue comparisons,
particularly in the second half of the year.
NRG ENERGY: 21 Units Confirm Separate Plan of Reorganization
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York,
the Honorable Prudence Carter Beatty presiding, entered an order
confirming the Plan of Reorganization for 21 of NRG Energy, Inc.'s
operating subsidiaries in the Northeast and South Central regions
of the United States.
The subsidiaries, which are owned by NRG Northeast Generating LLC
and South Central Generating LLC, operate power generation
facilities in New York, Connecticut, Massachusetts and Louisiana.
A key condition of the subsidiaries' Plan of Reorganization is
completion of $2.215 billion in exit financing which will be used
to pay off all existing secured debt of the subsidiaries covered
by the Plan. The subsidiaries are expected to emerge from
bankruptcy upon completion of the financing. The confirmation
follows yesterday's order by the Court confirming NRG Energy,
Inc.'s Plan of Reorganization.
NRG Energy, Inc. owns and operates a diverse portfolio of power-
generating facilities, primarily in the United States. Its
operations include competitive energy production and cogeneration
facilities, thermal energy production and energy resource recovery
facilities.
NRG ENERGY: Hires David W. Crane as New Company President & COO
---------------------------------------------------------------
Matthew A. Cantor, Esq., at Kirkland & Ellis, in New York, tells
Judge Beatty that prior to the Petition Date, the NRG Energy
Debtors' principal creditors agreed that a committee consisting of
two designees of the Noteholder Group and two designees of the
Global Steering Committee would be formed to head the search for a
permanent chief executive officer to manage the Debtors upon its
emergence from its Reorganization Case.
The Debtors and the Executive Search Committee interviewed and
ultimately retained the executive search firm Russell, Reynolds
Associates to help the Debtors identify and retain a chief
executive officer and members for the board of directors of the
Reorganized Debtors. The Debtors also retained Deloitte & Touche
to assist the Debtors, the Executive Search Committee, the
Committee and the Interim Board in the design of a competitive
market-based employment agreement and compensation package
to be offered to the executive candidate.
After several weeks of deliberations, the Executive Search
Committee and the Debtors agreed that David W. Crane possesses
the necessary industry-specific leadership and overall management
skills needed to effectively lead the Reorganized Debtors. Mr.
Cantor reports that Mr. Crane:
-- has over 12 years of experience in the energy field;
-- has spent the last three years as the chief executive
officer of London-based International Power, a public
company that develops, owns, and operates fossil-fueled
power plants in North America, Europe, Asia, and Australia;
-- was a senior vice president in the Global Power Group at
Lehman Brothers prior to serving as chief executive officer
of International Power, as well as having held various
positions at ABB Energy Ventures, including serving as vice
president for the Asia-Pacific Region; and
-- holds a Bachelor of Arts Degree from Princeton
University's Woodrow Wilson School of Public and
International Affairs and a Juris Doctor degree from
Harvard Law School.
Thus, the Debtors seek the Court's authority to enter into an
employment agreement to retain Mr. Crane. The principal terms of
the Agreement are:
A. Duties
Mr. Crane will serve as the Debtors' president and chief
executive officer. Mr. Crane will exercise all duties,
responsibilities, functions and authorities customarily
exercised by the president and chief executive officer of a
company of the size and nature of the Debtors. Mr. Crane will
devote best efforts and all business time and attention to the
Debtors' business and affairs.
B. Term
The term of Mr. Crane's employment will be three years. The
term will be automatically renewed for additional one-year
terms unless either party provides notice to the other party
that it has elected not to renew the employment period.
C. Compensation:
(a) Salary: Mr. Crane will be paid a base salary of $875,000
for the period commencing on his date of employment and
ending on December 31, 2004. Thereafter, Mr. Crane's base
salary will be reviewed and set by the board of directors.
The salary to be paid to Mr. Crane between the Employment
Commencement Date and December 31, 2003, will be pro-rated
based on the $875,000 annual base salary.
(b) Bonuses
* Mr. Crane will be entitled to receive a one-time, lump-
sum signing bonus of $1,750,000 refundable to the
Debtors on a pro-rata basis in the event of termination
by Mr. Crane for other than "good reason" or termination
by the Board for "cause" within one year of the
Employment Commencement Date, except as otherwise
described under "Downside Protection";
* Beginning in fiscal year 2004, Mr. Crane will be
entitled to an annual, lump-sum bonus with a target
amount of 100% of base salary, with a bonus of not less
than 75% of base salary guaranteed for fiscal year 2004;
and
* Beginning in fiscal year 2004, Mr. Crane will be
eligible for an annual, lump-sum "stretch bonus" in an
amount up to, but not exceeding, 50% of Mr. Crane's then
base salary, based on Mr. Crane's achievement of
criteria determined by the Board.
(c) Benefits
* Mr. Crane will be eligible to receive retirement, health
insurance, welfare, and disability insurance benefits as
the benefits are provided to the senior management of
the Debtors;
* The Debtors will provide Mr. Crane with term life
insurance with a death benefit of $7,750,000 through the
continuation of the term life insurance provided to Mr.
Crane by his former employer immediately prior to Mr.
Crane's employment with the Debtors;
* Mr. Crane will be entitled to coverage under the
Debtors' director and officer liability insurance
policy;
* Mr. Crane will be reimbursed the costs, not to exceed
$10,000 per year, incurred to obtain additional
disability insurance with a benefit of up to $30,000 per
month;
* Mr. Crane will be entitled to five weeks paid vacation
each calendar year;
* Mr. Crane will be entitled to reimbursement for the cost
of temporary housing and reasonable commuting expenses
for weekly trips between his permanent residence in New
Jersey and the NRG offices in Minnesota;
* Mr. Crane will be entitled to receive reasonable moving
and relocation expenses; and
* Mr. Crane will be reimbursed for reasonable expenses
he incurred for tax preparation, tax advice, financial
planning and legal services in connection with the
negotiation of the Agreement.
(d) Long Term Incentive
Mr. Crane will receive a combination of restricted stock
or units and stock options to be distributed to Mr. Crane
on the Debtors' emergence from bankruptcy. The
restricted stock will participate currently in dividends
and 100% of the restricted stock will vest on the third
anniversary of the Employment Commencement Date. The
stock options will vest over a three-year period
commencing at the end of Mr. Crane's first year of
employment after the Employment Commencement Date. All
equity grants to Mr. Crane will accelerate and vest upon
a "change of control" of the Debtors.
(e) Downside Protection
If the effective date of the Debtors' reorganization plan
has not occurred on or before June 30, 2004, then Mr.
Crane may terminate his employment, receive a $3,500,000
lump-sum payment and retain 100% of his signing bonus.
Mr. Crane must exercise this option by July 31, 2004 and
the payments are contingent on Mr. Crane's release of the
Debtors for any possible claims Mr. Crane may have
against the Debtors.
D. Termination
Mr. Crane may be terminated by the Debtors in the event of his
death or continuing mental or physical disability, for "cause"
or without "cause," or upon a "change of control" of the
Debtors.
E. Severance
Mr. Crane will receive a lump-sum severance payment in an
amount equal to two times his base salary and 50% of the
target annual bonus then in effect -- 75% of the target annual
bonus for fiscal year 2004 only -- excluding the "stretch
bonus," pro-rated for the number of days during the year that
Mr. Crane was employed by the Debtors, with the severance
payment being conditioned on Mr. Crane's execution of a
release:
(a) if Mr. Crane terminates his employment without "good
reason" or is terminated due to death or continuing
mental or physical disability or for "cause," he will
receive his base salary earned through the date of
termination, as well as the amount of any bonus or
incentive compensation earned through the date of
termination, and any vacation pay, expense
reimbursement, or other cash entitlement accrued
through the date of termination, each to the extent not
paid previously; or
(b) if Mr. Crane terminates with "good reason," or is
terminated by the Debtors without "cause," on a "change
of control," or if the Agreement is not renewed.
Mr. Cantor asserts that Mr. Crane's employment is critical as the
Debtors enter the homestretch in its quest to emerge from
bankruptcy by December 15, 2003. The Debtors worked with
investment bankers, the ratings agencies and numerous fund
managers, all of whom have stressed the importance of solid
executive management and leadership, of the very type that Mr.
Crane will bring to the Debtors.
Mr. Cantor adds that the appointment of Mr. Crane as president
and chief executive officer will help the Debtors move forward
with its business plan and emerge from the Reorganization Case
poised to resume business as a strong and viable energy industry
competitor.
* * *
Judge Prudence Carter Beatty of the U.S. Bankruptcy Court in the
Southern District of New York approved the appointment of David
Crane, currently the President and Chief Executive Officer of
London-based International Power, as NRG's new President and
Chief Executive Officer. Mr. Crane will join NRG on December 1.
(NRG Energy Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
OMNOVA SOLUTIONS: Elects David J. D'Antoni to Board of Directors
----------------------------------------------------------------
OMNOVA Solutions (NYSE: OMN) announced the election of David J.
D'Antoni to the Company's Board of Directors. Mr. D'Antoni is
Senior Vice President and Group Operating Officer, Ashland Inc.
"We are delighted to welcome Dave to our board," said Kevin
McMullen, OMNOVA Solutions Chairman and Chief Executive Officer.
"His record of delivering value for customers and shareholders in
the chemical and building products industries will add to our
strong group of existing independent directors. He is a seasoned
strategic business leader whose wealth of expertise in related
markets will be a significant asset to the corporation."
Mr. D'Antoni joined Ashland in 1973 and has served in a number of
leadership roles for the company. He assumed responsibility for
APAC, Ashland's road-construction operations, and Valvoline in
November 2001, and was named President of APAC in July 2003. He
was appointed to Ashland Inc.'s executive committee in 1996 and
became a group operating officer for the corporation in 1999,
responsible for Ashland Specialty Chemical and Ashland
Distribution.
Earlier in his career, Mr. D'Antoni served as Vice President and
General Manager of the Polyester Division of the former Ashland
Chemical Company. He became Executive Vice President and Chief
Operating Officer of Ashland Chemical in 1987. In 1988, he was
named Senior Vice President of the corporation and President of
the chemical company.
Mr. D'Antoni serves on the Board of Directors of State Auto
Financial Corporation (NASDAQ), the National Association of
Manufacturers, and the American Road and Transportation Builders
Association. He is Chairman of the Board of Trustees of Franklin
University in Columbus, Ohio. Mr. D'Antoni is a chemical
engineering graduate of Virginia Polytechnic Institute and
attended the Harvard Business School's Advanced Management
Program.
OMNOVA Solutions (Fitch, BB- Senior Secured Credit Facility and B+
Senior Secured Note Ratings, Negative) is a technology-based
company with 2002 sales of $681 million and 2,150 employees
worldwide. OMNOVA is a major innovator of decorative and
functional surfaces, emulsion polymers and specialty chemicals.
For more information, visit http://www.omnova.com
PAC-WEST: Gets Tenders & Consents from Majority of Noteholders
--------------------------------------------------------------
Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated
communications services to service providers and small and medium-
sized enterprises in the western U.S., announced, pursuant to the
terms of its previously announced cash tender offer to purchase up
to $59.0 million, or approximately 62.0%, of the $95.1 million
outstanding principal amount of its Series B 13.5% Senior Notes
due 2009 and related consent solicitation, that it has received
valid tenders and consents representing greater than a majority in
principal amount of the Notes outstanding as of the expiration of
the early tender premium deadline at 5:00 p.m., New York City
time, on November 25, 2003.
Accordingly, pursuant to the terms of the Tender Offer, the
Company has executed a supplemental indenture, which, on the
settlement date, will among other things, remove substantially
all of the restrictive covenants of the indenture governing the
Notes. Upon execution of the supplemental indenture, the
withdrawal deadline expired. Accordingly, pursuant to the terms of
the Tender Offer, any tender, whether made before or after the
withdrawal deadline, may now no longer be withdrawn.
As of the early tender premium deadline, 5:00 p.m., New York City
time, on November 25, 2003, $76.8 million in aggregate principal
amount, or approximately 80.7%, of the Notes outstanding had been
validly tendered and not withdrawn. The amount of the Notes
tendered and not withdrawn prior to the early tender premium
deadline exceeds the $59.0 million maximum principal amount of the
Notes the Company offered to purchase. As a result, assuming
all of the conditions to completing the Tender Offer are satisfied
or waived, the Company expects to accept $59.0 million of the
validly tendered Notes, whether tendered prior to or following the
early tender premium deadline, on a pro rata basis.
The Tender Offer is scheduled to expire at 5:00 p.m., New York
City time, on December 18, 2003.
UBS Securities LLC is acting as exclusive dealer manager and
solicitation agent for the Tender Offer and the consent
solicitation. The depositary for the Tender Offer is Wells Fargo
Bank Minnesota, N.A. Questions regarding the Tender Offer and
consent solicitation may be directed to Brian Taylor, at UBS
Securities LLC, telephone number 415-352-6085. Requests for copies
of the Offer to Purchase and Consent Solicitation Statement and
related documents may be directed to Georgeson Shareholder,
telephone number 800-843-0079 (toll-free).
Founded in 1980, Pac-West Telecomm, Inc. is one of the largest
competitive local exchange carriers headquartered in California.
Pac-West's network carries over 100 million minutes of voice and
data traffic per day, and an estimated 20% of the dial-up Internet
traffic in California. In addition to California, Pac-West has
operations in Nevada, Washington, Arizona, and Oregon. For more
information, please visit Pac-West's Web site at
http://www.pacwest.com/
* * *
As reported in Troubled Company Reporter's May 1, 2003 edition,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on
the 13.5% senior notes due 2009 was lowered to 'D' from 'C'.
S&P explained, "Given the company's significant dependence on
reciprocal compensation (the rates of which the company expects to
further decline in 2003) and its limited liquidity, Pac-West will
likely find the implementation of its business plan continue to be
challenging."
PATCH SAFETY: Relieved of Loan Default Status After Refinancing
---------------------------------------------------------------
Patch Safety Services Ltd., announced that for the three month
period ended September 30, 2003, the Company continued the trend
towards profitability that began in the first quarter this year.
Revenues for the three month period were up 51% from the same
quarter in 2002 to $2,928,320. Patch earned a profit of $6,940
compared to a loss of $242,177 for the same period last year.
EBITDA for the quarter was $278,276 compared to EBITDA of negative
$142,732 a year ago. On a year-over-year basis, the turnaround in
Patch's ability to generate the cashflow necessary to run and grow
its business is very significant.
On a year-to-date basis, for the first nine months of the current
fiscal year ended September 30, revenues were nearly 50% higher
than a year ago, rising to $9,254,476. YTD revenue for 2003 is
over $1 million higher than total revenue for the entire fiscal
year ended December 31, 2002.
The profit to September 30 was $245,923 or $0.025 per share. This
compares to a loss of $635,733 for the same period in fiscal 2002.
EBITDA for the nine-month period was $1,134,446, a significant
improvement from negative $107,181 for the first three quarters of
last year.
The Earnings per Share figures to September 30, 2003 were based on
the 9,691,833 weighted average shares outstanding prior to the
refinancing announced October 27, 2003 that resulted in a
significant increase in the total shares outstanding.
Besides the significant improvement in financial performance, in
the third quarter of 2003 Patch structured, announced and executed
a major financial and management restructuring that was announced
September 16, and that closed October 27.
Outlook
Patch is entering what could be the busiest winter drilling season
on record. As Patch enters a period of high business activity, it
is useful to review the major changes in the Company from a year
ago resulting from the refinancing and restructuring and summarize
their potential impact.
1) Stronger balance sheet. As a result of the refinancing, Patch
is no longer in default of any of its lending covenants, has a
vastly improved working capital situation, and has total debt
servicing requirements well within its financial capabilities in
the current business environment. This gives the Company the
financial capability to maintain and enhance its existing asset
base and consider a capital program for 2004 if current industry
conditions continue.
2) New management and direction. The new senior management team
and Board of Directors have approximately 200 years of combined
successful oilfield experience. This success was built by
understanding how to concurrently meet the needs of customers,
employees, suppliers and capital providers. This team will provide
the employees of Patch with the direction and guidance required to
achieve the Company's objectives.
3) Back on track for growth. Patch was founded to consolidate the
fragmented oilfield safety sector and to create a larger entity
with more depth capable of better serving its valuable client
base. By spreading more revenues across a fixed cost base, Patch
will be able to increase profitability while working at market
prices. By offering a larger, integrated suite of products and
services, Patch can provide enhanced support for clients by
reducing procurement expenses and increasing efficiency in field
delivery. After the initiatives undertaken in the third quarter
and completed in October, the Company can continue on its mission.
Since 2000, Patch has established itself as an industry leader in
oilfield safety services. Core business areas include breathing
equipment for personnel operating in high hazard environments,
fire/shower units for worker and equipment protection where
flammable or corrosive substances are employed, safety training,
and downwind monitoring. Patch operates from seven service centers
strategically located in the major producing areas of Western
Canada.
PC CONNECTION: Gets Waiver of Technical Default Under Loan Pact
---------------------------------------------------------------
PC Connection, Inc. (NASDAQ: PCCC), a leading direct marketer of
information technology products and solutions, announced its
lenders have affirmed their $45 million line of credit and key
inventory purchase security agreements. The lenders granted a
waiver of a technical default resulting from the loss of a General
Services Administration contract earlier this month by
GovConnection, Inc., a subsidiary of holding company PC
Connection, Inc., formed following the acquisition of ComTeq
Federal, Inc. of Rockville, Md. in 1999.
Under the terms of its lender agreements, any event that has a
potential adverse material effect on a subsidiary of PC
Connection, Inc. is a technical default under the credit
agreements. The GSA contract is a purchasing vehicle that enables
GovConnection to supply technology products and parts to federal
government agencies. GovConnection continues to supply federal
agencies through a variety of other contracts and the open market,
and expects to apply for a new GSA contract in the near future.
PC Connection, Inc., currently maintains a $45 million line of
credit as well as key inventory purchase security agreements with
its lenders. Lines of credit are maintained on a short-term basis
for routine cyclical business operations such as the build-up of
inventory prior to periods of expected strong sales.
Mark Gavin, Chief Financial Officer of PC Connection, Inc., said,
"The ability to borrow funds on a short-term basis should we need
them gives us the flexibility to take advantage of opportunities
in the marketplace and to invest in the products, service
offerings, and infrastructure we need to grow our business." Gavin
continued, "Contrary to the impression made by news reports
published last week, PC Connection did not miss any payments to
creditors. However, we were in technical default due to the
GovConnection GSA contract matter until the waivers were granted.
We had cordial meetings to discuss the matter with our lenders and
they granted the waivers. Overall, our balance sheet is healthy
and the state of our business is sound."
PC Connection, Inc. and its subsidiaries carry no long-term debt.
For October 2003, consolidated sales for all PC Connection, Inc.
sales subsidiaries grew 19.5 percent over the same month in 2002.
PC Connection, Inc., a Fortune 1000 company, operates through
three sales subsidiaries, PC Connection Sales Corporation of
Merrimack, NH, GovConnection, Inc. of Rockville, MD and
MoreDirect, Inc. of Boca Raton, FL. PC Connection Sales
Corporation is a rapid-response provider of information technology
products and solutions offering more than 100,000 brand-name
products to businesses through its staff of technically trained
outbound sales account managers and catalog telesales
representatives, its comprehensive Web sites at
http://www.pcconnection.com/and http://www.macconnection.com/
and its catalogs PC Connection (1-800-800-5555) and MacConnection
(1-800-800-2222). GovConnection, Inc. is a rapid-response provider
of IT products and solutions, offering more than 100,000 brand-
name products to federal, state, and local government agencies and
educational institutions (1-800-800-0019). MoreDirect, Inc.
provides corporate technology buyers with a comprehensive web-
based e-procurement solution and in-depth IT supply-chain
expertise, serving as a one-stop source by aggregating more than
300,000 products from the inventories of leading IT wholesale
distributors and manufacturers. All three subsidiaries can deliver
custom-configured computer systems overnight.
PENN. REAL ESTATE: Fitch Gives B+ Rating to $124 Mil. Preferreds
----------------------------------------------------------------
Fitch Rating has assigned a 'B+' rating to PREIT's $124 million of
11% cumulative preferred stock, following the close of
Pennsylvania Real Estate Investment Trust's merger with Crown
American Realty Trust. Fitch's Rating Outlook is Stable. In
addition, Fitch has withdrawn its 'B+' rating on a $124 million
class of 11% cumulative preferred stock previously issued by
Crown. The PREIT preferred shares were reissued at the time of the
merger in exchange for the substantially similar Crown shares.
In general, Fitch views the credit profile of the newly merged
entity as fundamentally stronger than that of the former stand-
alone Crown entity. After adjusting for the stepped up cost basis
of the Crown assets as a result of the merger, debt-plus-preferred
leverage has been reduced to approximately 58% of undepreciated
book capitalization in the new entity from 65% in the stand-alone
Crown entity. Furthermore, unencumbered assets as a proportion of
total assets have risen from nearly zero to one-quarter, fostering
significantly better recovery rates for the preferred equity
investors in the event of a liquidation. Lastly, with the closing
of the $500 million credit facility, PREIT has grown its near-term
liquidity to allow for as much as $220 million of additional
borrowing availability.
Another noteworthy improvement to the credit profile stems from
the larger market capitalization, which is expected to improve the
company's access to capital markets by providing additional
liquidity to investors. The successful equity offering conducted
in August of this year, which resulted in $185 million in net
proceeds for PREIT, underscores this point. Proceeds from that
offering were used primarily to acquire a 70% outside interest in
Willow Grove Park Mall, but also to pay down $94 million in
outstanding line debt and fund merger closing costs. The closing
of the credit facility with 16 different banks, compared to the
single bank on Crown's secured facility, also illustrates this
stronger capital markets access.
Despite these improvements to overall credit quality, Fitch
continues to highlight a number of key concerns still endemic
within the company. Geographic concentration, while certainly no
worse than under Crown, remains high with 62% of the portfolio in
Pennsylvania and 82% in the Mid-Atlantic region. Also, property-
level and corporate-level integration risks remain a challenge due
to the vast amount of transition that PREIT has undergone since
the beginning of the year. Between the complete disposition of the
19-property multifamily portfolio in June and July 2003, the
acquisition of six malls from The Rouse Company for $550 million
in June and July 2003 and the 26-property Crown acquisition for
$1.3 billion in November 2003, nearly three-quarters of the
company's total assets are less than six months old to management.
Although Fitch's multiple visits with PREIT's senior management
team have offered ample evidence of its collective expertise in
owning and managing malls, the strategic shift recently
implemented would pose onerous demands on even the most seasoned
team.
While near-term liquidity may have increased, near-term capital
needs are expected to remain high, particularly as the company
begins to execute on its active redevelopment plans for the former
Crown assets. Also, despite currently low ground-up development
exposure, Fitch anticipates a some increase in these projects over
coming quarters. Debt maturities over the medium term are
moderate, with the exception of more than 20% of total debt
maturing in 2006 when the bank line expires. Over the longer term,
Fitch would hope to see a terming out of the capital structure in
order to reduce dependency on the bank line as the sole source of
unsecured borrowing.
Following the merger, PREIT stands as a $2.6 billion (Fitch-
estimated undepreciated book capitalization of PREIT as of Nov.
20, 2003) owner and manager of regional malls, community shopping
centers and industrial properties located substantially in the
Mid-Atlantic states. As of Nov. 20, 2003, the portfolio consisted
of 58 properties in 14 states, including 40 shopping malls, 14
strip and power centers and four industrial properties.
PILLOWTEX CORP: Wins Nod to Amend GGST Asset Purchase Agreement
---------------------------------------------------------------
Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnel, in
Wilmington, Delaware, reminds the Court that on August 4, 2003,
The Pillowtex Debtors sought to sell a substantial portion of
their assets, including "designation rights" with respect to
certain real property, executory contracts and unexpired leases.
On October 7, 2003, the Court approved the sale of the Assets to
GGST LLC on the terms and conditions of the Asset Purchase
Agreement.
According to Ms. Harris, after the entry of the Sale Order the
Debtors and GGST discovered that Schedule 6.13(a) -- the Real
Property Schedule -- listed two parcels of vacant land that the
Debtors no longer own. The Debtors sold these parcels prior to
the signing of the Original Agreement. In order to facilitate
the Closing of the Sale, GGST agreed to delete these parcels from
the Real Property Schedule without a corresponding purchase price
reduction.
Pursuant to GGST's request as a condition to the effectiveness of
the Amendment and to the consummation of the Sale, the Debtors
sought and obtained the Court's approval of the:
(a) First Amendment to the Amended and Restated Asset Purchase
Agreement dated October 2, 2003 among the Debtors and
GGST;
(b) Assumption and Assignment Agreement among the Debtors and
Velvet Demo LLC, a special purpose limited liability
company wholly owned by Gibbs International. Inc.; and
(c) the subsequent sale of the Data Center Property located at
One Lake Circle Drive, Kannapolis, North Carolina separate
from the remainder of the Kannapolis Property, pursuant to
the terms and conditions of the Amended Agreement and the
Assignment Agreement.
Amendment and Assignment Agreement
The material terms of the Amendment and the Assignment Agreement
are:
A. Assignment of Designation Rights
At the Closing, without additional consideration or other
adjustment to the Purchase Price, the Debtors will sell,
assign and transfer to Velvet Demo the Designation Rights
with respect to the Data Center Property, free and clear of
all liens, claims, encumbrances and other interests. Any
interest against or in the Data Center Property or the
Designation Rights will attach solely to the portion of the
Closing Cash Payment ultimately attributable to the
Designation Rights with respect to the Data Center Property,
in the order of priority and with the same validity, force and
effect that the interest may now have against the Data Center
Property or the Designation Rights with respect thereto.
Any subsequent sale of the Data Center Property will be free
and clear of all liens, claims, encumbrances and other
interests, except:
-- those expressly assumed by GGST or Velvet Demo pursuant
to the Amended Agreement or the Assignment Agreement;
-- encumbrances of the type specified in clauses (g)(i),
(g)(ii) and (g)(iii) of the definition of "Permitted
Encumbrance," and
-- the rights of tenants under Section 365(h) of the
Bankruptcy Code.
In addition, on Velvet Demo's exercise of the
Designation Rights with respect to the Data Center Property,
the Data Center Property will be transferred to Velvet Demo's
designee separate from the remainder of the Kannapolis
Property.
B. Terms of Designation Rights
The provisions of Sections 3.1, 3.2 and 3.3 of the Original
Agreement governing the nature, procedure, exercise, rights
and obligations of and with respect to the Designation Rights
will apply to the Designation Rights with respect to the Data
Center Property assigned to Velvet Demo under the Assignment
Agreement.
C. Access Fees
Velvet Demo will assume all obligations to pay Access Fees
with respect to the Data Center Property that would otherwise
have been payable by GGST under the Original Agreement during
the period commencing on the date that is 45 days after GGST's
delivery to the Debtors and Velvet Demo of a notice that GGST
no longer desires to have access to the Data Center Property
and ending upon the earliest to occur of:
-- the expiration of the Fee Designation Period;
-- forty-five days after the delivery by Velvet Demo to the
Debtors of an Exclusion Notice with respect to the
Data Center Property; and
-- the occurrence of a closing relating to the sale of the
Data Center Property to Velvet Demo's designee, provided
that, as to subsection (iii), the designee will be
responsible for all Access Fees from and after the
Closing.
D. Additional Representation
The Debtors will represent and warrant that all actions and
all governmental approvals required to effectuate a
subdivision on the transfer, independent of the disposition
of any other property, of the Data Center Property or the
remainder of the Kannapolis Property have been taken or
received. (Pillowtex Bankruptcy News, Issue No. 55; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PINNACLE ENTERTAINMENT: S&P Rates Sr. Sec. Credit Facility at B+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Pinnacle Entertainment Inc.'s proposed $290 million senior secured
bank facility. Proceeds from the proposed bank facility will be
used to refinance the company's existing credit facilities, to
help provide funding for several of the company's planned capital
investments, including the Lake Charles development project and
the Belterra expansion, and for general corporate purposes. The
bank loan is rated one notch above the corporate credit rating,
reflecting the very strong likelihood of full recovery of
principal under a default or bankruptcy scenario.
At the same time, Standard & Poor's affirmed the its 'B' corporate
credit and 'CCC+' subordinated debt ratings on the company. The
rating on the company's existing senior secured bank facility will
be withdrawn once the new facility is funded. The outlook is
stable. Total debt outstanding (net of the $64 million in 9.5%
senior subordinated notes held for redemption) at Sept. 30, 2003,
was $623 million.
"The ratings reflect the company's relatively small portfolio of
casino properties that are not generally market leaders, high debt
leverage, the expected increase in near-term growth-oriented
capital spending, and construction and start-up risks associated
with its Lake Charles development project," said Standard & Poor's
credit analyst Michael Scerbo. "These factors are somewhat offset
by steady same-store operating results, minimal near-term
maturities, and adequate current liquidity."
Las Vegas, Nevada-headquartered Pinnacle owns and operates casino
facilities in Reno, Nevada; New Orleans and Bossier City,
Louisiana; Biloxi, Missouri; in Switzerland County, Indiana. In
addition, the company operates casino facilities in Argentina. The
company's future growth opportunities include the construction of
a $325 million dockside gaming facility in Lake Charles,
Louisiana, and the addition of a 300-room hotel tower at southern
Indiana riverboat facility, Belterra, in early 2004.
PRIME HOSPITALITY: Promotes Bryan K. Hayes to VP of Operations
--------------------------------------------------------------
Prime Hospitality Corp. (NYSE: PDQ), announced that Bryan K.
Hayes, C.H.A has been promoted to Vice President of Operations -
East Division effective immediately.
In his new role, Mr. Hayes will oversee all Eastern Division field
operations for AmeriSuites and Wellesley Inns & Suites including
supervision of Regional Vice Presidents of Operations. Mr. Hayes,
who joined Prime in October, 1995, has over 20 years of
hospitality management and operations experience, including his
tenure as Regional Vice President of Operations for the Midwest
for Prime.
"I am very pleased to announce the promotion of Bryan to his new
position and I am delighted that he has accepted this very
important role for the company," said A.F. Petrocelli, Prime's
Chairman and Chief Executive Officer. "This promotion recognizes
the important contributions Bryan has made to the improvements in
our business during this challenging environment."
Prime Hospitality Corp. (S&P, BB- Corporate Credit Rating,
Negative Outlook), one of the nation's premiere lodging companies,
owns, manages, develops and franchises more than 240 hotels
throughout North America. The Company owns and operates three
proprietary brands, AmeriSuites(R) (all-suites), Prime Hotels &
Resorts(SM) (full-service) and Wellesley Inns & Suites(R) (limited
service). Also within Prime's portfolio are owned and/or managed
hotels operated under franchise agreements with national hotel
chains including Hilton, Radisson, Sheraton and Holiday Inn.
Prime can be accessed over the Internet at
http://www.primehospitality.com
PRO SKATE OPERATIONS: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Lead Debtor: Pro Skate Operations, LLC
1000 Cornwall Road
South Brunswick, New Jersey 08810
Bankruptcy Case No.: 03-48293
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Coppermine Development Corporation 03-48294
Type of Business: The debtor provides skating facilities,
training services and entertainment.
Chapter 11 Petition Date: November 24, 2003
Court: District of New Jersey (Newark)
Judge: Morris Stern
Debtors' Counsel: Allison M. Berger, Esq.
Hal L. Baume, Esq.
Fox Rothschild LLP
997 Lenox Drive,
Building 3
Lawrenceville, NJ 08648
Tel: 609-896-3600
Fax: 609-896-1469
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
PROVIDENT FIN'L: Will Present at Friedman Billings Conference
-------------------------------------------------------------
Provident Financial Services, Inc. (NYSE:PFS) announced that Paul
M. Pantozzi, Chairman, CEO and President, will make a presentation
at the Friedman Billings Ramsey 10th Annual Investor Conference to
be held in New York City, New York on December 2, 2003 beginning
at 2:50 p.m.
Interested individuals can access a live webcast of the
presentation over the internet by accessing
http://www.wallstreetwebcasting.com/webcast/fbr3 If you are
unable to participate during the live presentation, a replay will
be available on the aforementioned website for 60 days beginning
December 4, 2003. Further information is available at the Friedman
Billings Ramsey website at http://www.fbr.com
A copy of the slides used in the presentation will be available on
the Company's Web site -- http://www.providentnj.com-- within the
Investor Relations section under Presentations.
Provident Financial Group, Inc. (S&P, BB+/B Counterparty Credit
ratings, Negative) is a bank holding company located in
Cincinnati, Ohio. Its main subsidiary, The Provident Bank,
provides a diverse line of banking and financial products,
services and solutions through retail banking offices located in
Southwestern Ohio, Northern Kentucky and the West Coast of
Florida, and through commercial lending offices located
throughout Ohio and surrounding states. At December 31, 2002,
Provident Financial Group had $9.1 billion in loans outstanding,
$9.8 billion in deposits, and assets of $17.5 billion.
RELIANCE: Liquidator Asks Court to OK Coast Insurance Settlement
----------------------------------------------------------------
On March 31, 2001, Coast National Insurance Company acquired all
the capital stock of Reliant Insurance Company and Reliant
Casualty Company under a stock and asset Purchase Agreement.
Both companies were wholly owned subsidiaries of RIC in the
property and casualty business. Coast is a subsidiary of Bristol
West Insurance Group.
The Agreement included several common representations and
warranties, including a covenant by RIC that it would conduct
business in the ordinary and usual course, including maintaining
Reliant's books and records consistent with past practice and
complying with all applicable law. The Agreement also contained
a representation and warranty by RIC that Reliant's business was
being conducted in compliance with all laws. RIC assured Bristol
that Reliant was not subject to any agreement, consent decree or
order with any insurance regulatory authority.
RIC agreed to indemnify Coast for losses resulting from:
(a) RIC's breach of any representation or warranty in the
Purchase Agreement or any related agreements;
(b) RIC's non-fulfillment of any agreement or covenant in the
Purchase Agreement; and
(c) severance payments and stay bonuses paid to run-off
employees in excess of $1,046,000.
The Purchase Agreement provided a procedure for adjustments to
the closing purchase price under which Coast agreed that it would
deliver to RIC a closing balance sheet for Reliant consistent
with its December 31, 2000 statutory balance sheet. If RIC
disagreed and sent Coast a disagreement notice, the Parties would
try to negotiate a resolution within 10 days. If no resolution
were reached, the Parties would submit the dispute to a mutually
agreed actuarial firm to determine the purchase price.
Ann B. Laupheimer, Esq., at Blank, Rome LLP, recounts that at
closing, RIC delivered to Coast an Escrow Agreement, Services
Agreement and an Aggregate Excess of Loss Reinsurance Agreement.
Pursuant to the Escrow Agreement, RIC deposited $1,100,000 of the
cash purchase price into the Escrow Account to secure its
fulfillment of its indemnification obligations. Under the
Services Agreement, Coast's affiliate, APEX Adjustment Bureau
agreed to provide policy administration and claims management
services to RIC for $23,500,000. RIC paid Coast $6,500,000 at
closing and deposited securities worth $8,500,000 into a trust
account. This amount represented half the remaining costs of
services and secured the unpaid balance of fees pursuant to the
Service Fee Trust Account Agreement. Pursuant to the Aggregate
Excess of Loss Reinsurance Agreement, RIC reinsured Reliant's
aggregate exposure to losses and loss adjustment expenses on
insurance or reinsurance bound by or on behalf of Reliant before
the closing date. RIC's obligations to Reliant were secured
under a trust account in which RIC deposited $5,000,000.
In September 2001, Coast claimed that RIC owed $2,284,097 as a
result of:
(1) required adjustments to the purchase price; and
(2) alleged breaches of covenants, warranties and
representations to the Purchase Agreement.
Coast asserted that it was entitled to adjust the closing price
to include employee paid time off, employee bonus payments, tax
adjustments, reimbursements for regulatory fines for failure to
make timely filings, and reimbursement of Deloitte & Touche fees.
Additionally, Coast alleged that, in breach of warranties and
representations in the Purchase Agreement, RIC failed to:
(a) deliver a December 31, 2000 statutory balance sheet for
Reliant; and
(b) timely file the 2000 Annual Statement, Actuarial
Opinion, MD&A report and Audited Financial Report for
Reliant.
Coast asserted that due to RIC's breach, it had to retain
Deloitte to audit Reliant's balance sheets and was forced to pay
regulatory fines and lost licenses to operate in several states.
Compensation that may arise under these disputes was secured by
the Escrow Account funds.
For several months, RIC consulted with its advisors and reviewed
documentation and information on its operations and claims. RIC
determined that certain adjustments for employee matters were
appropriate. Also, some of Coast's allegations posed a risk of
exposure.
In March 2002, RIC and Coast agreed in principle to settle
Coast's $2,284,097 claim for $1,097,189. The Settlement sum is
comprised of:
-- compensation for Coast's undisputed loss of six insurance
licenses; and
-- adjustments to the closing price relating to payments to
former RIC employees.
The Settlement will be paid by a withdrawal from the Escrow
Account Funds.
By this motion, M. Diane Koken, Insurance Commissioner of the
Commonwealth of Pennsylvania and Liquidator of Reliance Insurance
Company, asks Judge James Gardner Collins of the Commonwealth
Court to approve the Settlement.
Ms. Laupheimer assures the Court that the Settlement confers
valuable benefits to RIC. First, it allows RIC to withdraw
securities pledged in the Services Fee Trust valued at
$4,659,546. Second, it permits RIC to withdraw $2,500,000 from
the Reinsurance Trust. Third, Coast has agreed to consider
requests for further reductions to the Reinsurance Trust based
upon periodic actuarial reviews of collateral levels. Moreover,
Coast will continue to provide policy, financial, administrative
and statistical reporting services, claims management, record
retention and information technology services to RIC as requested
by the Liquidator for the foreseeable future. (Reliance Bankruptcy
News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
RELIANT RESOURCES: Settles Trading and Price Issues with CFTC
-------------------------------------------------------------
Reliant Resources, Inc. (NYSE: RRI) and its subsidiary, Reliant
Energy Services, Inc., have concluded a settlement with the
Commodity Futures Trading Commission of a previously disclosed
investigation relating to certain trading and price reporting
issues.
The settlement addresses the reporting of natural gas trading
information to energy industry publications that compile and
report index prices and seven offsetting and pre-arranged
electricity trades (involving standard, 25-megawatt electricity
contracts) that were executed on an electronic trading platform in
2000.
The CFTC filed an administrative action against RES and,
simultaneously, approved an order settling the action. Under this
order, RES agreed to pay a civil monetary penalty in the amount of
$18 million. In the settlement, RES neither admitted nor denied
the findings in the CFTC order. As noted in the CFTC order, RRI
cooperated with the CFTC in its investigation.
RRI is not aware of any evidence that the seven offsetting and
pre-arranged trades, or its previous reporting, had any effect on
electricity or gas prices or affected any of the price indices
compiled by energy industry publications.
"As we have previously stated, we are committed to resolving all
remaining issues relating to our past trading operations," said
Joel V. Staff, Reliant Chairman and Chief Executive Officer.
"There comes a point where the costs, burdens, and uncertainties
associated with ongoing investigations and litigation outweigh the
costs of settlement. We are pleased to have the CFTC close its
investigation, allowing the company to move one more step forward
in putting the past behind it."
As previously disclosed, there are continuing investigations by
the United States Attorneys in the Southern District of Texas and
Northern District of California regarding certain trading-related
activities, including natural gas price reporting and alleged
price manipulation. Reliant is cooperating with those
investigations, which are not affected by this settlement with the
CFTC.
Reliant Resources, Inc., based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers
in the U.S. and Europe, marketing those services under the Reliant
Energy brand name. The company provides a complete suite of
energy products and services to approximately 1.7 million
electricity customers in Texas ranging from residences and small
businesses to large commercial, industrial and institutional
customers. Reliant also serves large commercial and industrial
clients in the PJM (Pennsylvania, New Jersey, Maryland)
Interconnection. The company has approximately 20,000 megawatts
of power generation capacity in operation, under construction or
under contract in the U.S. and nearly 3,500 megawatts of power
generation in operation in Western Europe. For more information,
visit http://www.reliantresources.com/
* * *
As reported in Troubled Company Reporter's October 7, 2003
edition, Fitch anticipated no change in Reliant Resources, Inc.'s
credit ratings or Rating Outlook based on the announcement that
RRI had reached a settlement agreement with the Federal Energy
Regulatory Commission with respect to certain western energy
market investigations.
RRI's ratings are as follows:
- senior secured debt 'B+';
- senior unsecured debt 'B';
- convertible senior subordinated notes 'B-'
RESIDENTIAL ACCREDIT: Fitch Rates 2 Note Classes at Low-B Level
---------------------------------------------------------------
Fitch rates Residential Accredit Loans, Inc. $176,670,480 mortgage
pass-through certificates, series 2003-QS20 classes A-I, CB, A-P,
A-V, R certificates (senior certificates) 'AAA'. In addition, the
class M-1 certificate ($3,179,200) is rated 'AA', the class M-2
certificate ($454,200) is rated 'A', the class M-3 certificate
($635,900) is rated 'BBB', the privately offered class B-1
certificate ($272,600) is rated 'BB', the privately offered class
B-2 certificate ($181,700) is rated 'B' and the privately offered
class B-3 certificate ($272,979) is not rated by Fitch.
The 'AAA' ratings on senior certificates reflect the 2.75%
subordination provided by the 1.75% class M-1, the 0.25% class M-
2, the 0.35% class M-3, the 0.15% privately offered class B-1, the
0.10% privately offered class B-2, and the 0.15% privately offered
class B-3 (which is not rated by Fitch). Fitch believes the above
credit enhancement will be adequate to support mortgagor defaults
as well as bankruptcy, fraud and special hazard losses in limited
amounts. In addition, the ratings reflect the quality of the
mortgage collateral, strength of the legal and financial
structures, and Residential Funding Corp.'s servicing capabilities
(rated 'RMS1' by Fitch) as master servicer.
The trust consists of two cross-collateralized groups of 1,146
conventional, 15-year fixed-rate, mortgage loans secured by first
liens on one- to four-family residential properties with an
aggregate principal balance of $181,667,059. As of the cut-off
date, November 1, 2003, the mortgage loans in Group A-I consist of
87 conventional, fully amortizing, 15-year fixed-rate, mortgage
loans secured by first liens on one- to four- family residential
properties with an aggregate principal balance of $39,092,906. The
mortgage pool has a weighted average original loan-to-value ratio
of 67.98%. The pool has a weighted average FICO score of 715, and
approximately 41.57% and 7.03% of the mortgage loans possess FICO
scores greater than or equal to 720 and less than 660,
respectively. Loans originated under a reduced loan documentation
program account for approximately 52.84% of the pool, equity
refinance loans account for 49.72%, and second homes account for
3.51%. The average loan balance of the loans in the pool is
$449,344. The three states that represent the largest portion of
the loans in the pool are California (38.30%), Texas (9.39%) and
Colorado (5.22%).
All of the group A-I mortgage loans were purchased by the
depositor through its affiliate, Residential Funding, from
unaffiliated sellers except in the case of 25.3% of the mortgage
loans, which were purchased by the depositor through its
affiliate, Residential Funding, from HomeComings Financial
Network, Inc., a wholly owned subsidiary of the master servicer.
No other unaffiliated seller sold more than approximately 7.0% of
the mortgage loans to Residential Funding. Approximately 85.5% of
the mortgage loans are being subserviced by HomeComings Financial
Network, Inc. (rated 'RPS1' by Fitch).
The mortgage loans in Group CB consists of 1,059 conventional,
fully amortizing, 15-year fixed-rate, mortgage loans secured by
first liens on one- to four-family residential properties with an
aggregate principal balance of $142,574,153. The mortgage pool has
a weighted average original loan-to-value ratio of 65.44%. The
pool has a weighted average FICO score of 724, and approximately
53.7% and 4.48% of the mortgage loans possess FICO scores greater
than or equal to 720 and less than 660, respectively. Loans
originated under a reduced loan documentation program account for
approximately 68.32% of the pool, equity refinance loans account
for 48.79%, and second homes account for 2.18%. The average loan
balance of the loans in the pool is $134,631. The three states
that represent the largest portion of the loans in the pool are
California (26.61%), Texas (11.41%) and New York (5.99%).
All of the group CB mortgage loans were purchased by the depositor
through its affiliate, Residential Funding, from unaffiliated
sellers except in the case of 41.6% of the mortgage loans, which
were purchased by the depositor through its affiliate, Residential
Funding, from HomeComings Financial Network, Inc., a wholly owned
subsidiary of the master servicer. Approximately 19.2% of the
mortgage loans were purchased from and are being subserviced by
National City Mortgage Company. No other unaffiliated seller sold
more than approximately 7.1% of the mortgage loans to Residential
Funding. Approximately 78.9% of the mortgage loans are being
subserviced by HomeComings Financial Network, Inc.
None of the mortgage loans are a 'high-cost home loan' as defined
in the Georgia Fair lending Act, as amended, the New York
Predatory Lending Law, the Arkansas Home Loan Protection Act, as
amended, the Kentucky Revised Statutes, as amended and the Florida
Home Loan Protection Act. In addition, none of the mortgage loans
are a 'covered loan' as defined in the District of Columbia Home
Loan Protection Act. None of the mortgage loans secured by
mortgaged property in Maine is a 'high-rate, high-fee mortgage' as
defined in the Maine Consumer Credit Code and none of the mortgage
loans secured by mortgaged property in Nevada is a 'home loan' as
defined in Nevada Revised Statutes.
The mortgage loans were originated under GMAC-RFC's Expanded
Criteria Mortgage Program (Alt-A program). Alt-A program loans are
often marked by one or more of the following attributes: a non-
owner-occupied property; the absence of income verification; or a
loan-to-value ratio or debt service/income ratio that is higher
than other guidelines permit. In analyzing the collateral pool,
Fitch adjusted its frequency of foreclosure and loss assumptions
to account for the presence of these attributes.
Deutsche Bank Trust Company Americas will serve as trustee. RALI,
a special purpose corporation, deposited the loans in the trust,
which issued the certificates. For federal income tax purposes, an
election will be made to treat the trust fund as a real estate
mortgage investment conduit.
ROYAL & SUNALLIANCE: AM Best Chops Financial Strength Rating to B
-----------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength ratings of the
Royal & SunAlliance USA Insurance Pool (Charlotte, NC) (NYSE: RSA)
and the Royal Surplus Lines Insurance Company (Charlotte, NC) to B
(Fair) from B+ (Very Good).
The surplus lines company is a wholly-owned subsidiary of Royal
Insurance Company of America, a member of the pool. The ratings
have been removed from under review with negative implications,
and a negative outlook has been assigned to both entities.
The ratings had been placed under review on September 26, 2003,
following the September 4 announcement by the U.S. group's U.K.
parent, Royal & Sun Alliance Insurance Group plc, of the group's
restructuring of its U.S. business. The restructuring will include
a substantial third quarter net charge for loss reserves, as well
as ongoing disposition of a sizable portion of Royal USA's mid-
market commercial business and personal lines business. The
restructuring of the U.S. group includes actions taken to make
more efficient use of assets, increasing the U.S. admissibility
for solvency.
While reducing the group's global consolidated risk capital
requirements for ongoing business, the negative impact on the
business profile of its U.S. operations, as well as the
significant erosion to the capital position and financial
flexibility of R&SA's U.S. insurance entities, precludes the U.S.
operations from a Secure A.M. Best rating.
In addition, the companies' ability to sustain additional adverse
loss reserve development remains in question as does the outcome
of a significant lawsuit with MBIA over fraudulent student loans.
The ultimate outcome of this lawsuit is not expected to be known
for another year and, if adverse to Royal USA, could further erode
the U.S. surplus position. In A.M. Best's opinion, there is
potential for additional reserve development in light of the
significant and lengthy history of reserve deficiencies
experienced by the U.S. entities. As a result of the significant
level of uncertainty regarding all of these issues, A.M. Best has
assigned a negative outlook to the ratings.
For a complete list of Royal & SunAlliance USA Insurance Pool's
financial strength ratings, visit
http://www.ambest.com/press/112501rsausa.pdf
SELECT MEDICAL: Board Declares Initial Quarterly Cash Dividend
--------------------------------------------------------------
Select Medical Corporation (NYSE: SEM) announced that its Board of
Directors has declared an initial quarterly cash dividend of $0.06
per share. The dividend will be payable on or about December 29,
2003 to Select stockholders of record as of the close of business
on December 5, 2003. This is the first dividend declared by
Select since the Company's stock began trading publicly in April
2001.
On November 13, 2003, Select announced that its Board of Directors
approved a 2-for-1 split of its common stock. The stock split is
being effected in the form of a 100% stock dividend that is
payable on or about December 22, 2003 to stockholders of record as
of the close of business on December 5, 2003. After giving effect
to the stock split described above, Select's quarterly cash
dividend will amount to $0.03 per share.
"The initiation of a quarterly dividend reflects our strong
earnings performance and the expectation of continued strong cash
generation in the future," said Robert A. Ortenzio, Select Medical
Corporation's President and Chief Executive Officer. He further
commented, "We anticipate having sufficient cash flow to continue
to internally fund our development initiatives. We also expect to
have ample cash and credit facility borrowing capacity to
undertake strategic acquisitions from time to time."
Select Medical Corporation (S&P, BB- Corporate Credit Rating,
Stable) is a leading operator of specialty hospitals in the United
States. Select operates 77 long-term acute care hospitals in 24
states. Select operates four acute medical rehabilitation
hospitals in New Jersey. Select is also a leading operator of
outpatient rehabilitation clinics in the United States and Canada.
Select operates approximately 829 outpatient rehabilitation
clinics in the United States and Canada. Select also provides
medical rehabilitation services on a contract basis at nursing
homes, hospitals, assisted living and senior care centers, schools
and worksites. Information about Select is available at
http://www.selectmedicalcorp.com/
SENSUS METERING: S&P Assigns B+ Credit & Sr. Sec. Loan Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to newly formed Sensus Metering Systems Inc.
Standard & Poor's also assigned its 'B+' senior secured bank loan
rating to the company's proposed $340 million senior secured
credit facilities due in seven years. At the same time, Standard &
Poor's assigned its 'B-' subordinated debt rating to the company's
proposed offering of $225 million subordinated notes due in 2013
(under Rule 144A with registration rights). The proceeds from
these transactions will be used to fund the $650 million purchase
of the Invensys PLC (BB-/Negative/--) metering business, which
will become Sensus Metering.
Raleigh, North Carolina-based Sensus, a leading producer of water
meters and automatic meter reading systems, pipe joining and
repair products, die-casting products for meters and Tier 1 auto
suppliers, will have about $500 million in debt funded at the
close of the transaction expected in late December. The outlook is
stable.
"The ratings are not expected to change over the intermediate
term," said Standard & Poor's credit analyst John Sico, "as the
company operates on a stand-alone basis in a competitive
environment, with leverage within parameters for the rating,
absent any significant acquisitions or dividends to the owners,
which are currently restricted."
Jordan Co., a privately owned investment company, is leading the
purchase from Invensys for about 6.8x pro forma EBITDA of $95
million. Sources include equity of $200 million, proceeds from a
new bank term loan of $265 million, and $225 million subordinated
notes. Pro forma ownership of the company will be Jordan Co.'s
Resolute Fund 65%; GS Capital Partners 32.5%; and management 2.5%.
The senior secured bank loan is comprised of a seven-year term
loan in the amount of $265 million, and a six-year revolving
credit facility will provide revolving loans up to $75 million
with a $250 million limit for the issuance of letters of credit.
Essentially all the assets of the company and stock in the
subsidiaries secure the credit facility. Standard & Poor's
enterprise value analysis, which simulates a default as a result
of severe decline in industrial and economic activity and slower
acceptance of AMR, shows likelihood of meaningful recovery of
principal in the event of a default, despite potentially
significant loss exposure.
SEQUOIA MORTGAGE: Fitch Rates Class B-4 and B-5 Notes at BB/B
-------------------------------------------------------------
Sequoia Mortgage Trust 2003-7 mortgage pass-through certificates,
classes A-1, A-2, X-1, X-2, X-B and A-R ($795,100,100) are rated
'AAA' by Fitch Ratings. In addition, Fitch rates class B-1
($16,607,000) 'AA', class B-2 ($6,642,000) 'A', class B-3
($4,982,000) 'BBB', class B-4 ($2,490,000) 'BB', class B-5
($1,660,000) 'B'. The class B-6 certificates are not rated by
Fitch.
The 'AAA' rating on the senior certificates reflects the 4.25%
subordination provided by the 2.00% class B-1, the 0.80% class
B-2, the 0.60% class B-3, and the 0.30% privately offered class
B-4, the 0.20% privately offered class B-5 and the 0.35% privately
offered class B-6 certificates. The ratings on the class B-1, B-2,
B-3, B-4, and B-5 certificates are based on their respective
subordination.
The trust consists of two cross-collateralized groups of
adjustable rate mortgage loans, designated as group 1 loans and
group 2 loans, with an aggregate principal balance of
$724,046,689.
The group 1 loans consist of 764 fully amortizing 25- and 30-year
adjustable rate mortgage loans secured by first liens on one to
four-family residential properties, with an aggregate principal
balance of $264,084,598. All of the loans have interest-only terms
of either five or ten years, with principal and interest payments
beginning thereafter. The borrowers' interest rates adjust monthly
based on the one-month LIBOR rate plus a margin (30.87% of the
loan group) or semi-annually based on the six-month LIBOR rate
plus a margin (69.13% of the loan group). Greenpoint Mortgage
Funding, Inc. and Morgan Stanley Dean Witter Credit Corporation
originated 78.93% and 21.07% of the group 1 mortgage loans,
respectively. The group 1 mortgage loans have an average principal
balance of $345,660, a weighted average original loan-to-value
ratio of 68.64%, and a weighted average FICO of 734. Second home
and investor-occupied properties comprise 7.93% and 1.68% of the
loans in group 1, respectively. The states with the largest
concentration of mortgage loans are California (35.40%) and
Florida (10.18%). All other states represent less than 5% of the
outstanding balance of the pool.
The group 2 loans consist of 1,364 fully amortizing 25- and 30-
year adjustable rate mortgage loans secured by first liens on one
to four-family residential properties, with an aggregate principal
balance of $459,962,092. All of the loans have interest only terms
of either five or ten years, with principal and interest payments
beginning thereafter. All of the borrowers' interest rates adjust
semi-annually based on the six-month LIBOR rate plus a margin.
Greenpoint Mortgage Funding, Inc. and Morgan Stanley Dean Witter
Credit Corporation originated 93.41% and 6.59% of the group 2
mortgage loans, respectively. The group 2 mortgage loans have an
average principal balance of $337,216 a weighted average original
loan-to-value ratio of 68.86%, and a weighted average FICO of 732.
Rate/Term refinance and cash-out refinance loans represent 44.66%
and 27.32% of the loan pool, respectively. Second home and
investor-occupied properties comprise 6.12% and 1.17% of the loans
in group 2, respectively. The states with the largest
concentration of mortgage loans are California (38.16%), Florida
(6.33%), Arizona (6.17%), and Georgia (5.54%). All other states
represent less than 5% of the outstanding balance of the pool.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
Sequoia Residential Funding, Inc., a Delaware corporation and
indirect wholly-owned subsidiary of Redwood Trust, Inc., will
assign all its interest in the mortgage loans to the trustee for
the benefit of certificate holders. For federal income tax
purposes, an election will be made to treat the trust as multiple
real estate mortgage investment conduits. HSBC Bank USA will act
as trustee.
SIEBEL SYSTEMS: Will Host Investor Audio Conference on Wednesday
----------------------------------------------------------------
Siebel Systems, Inc. (NASDAQ: SEBL), a leading provider of
multichannel business applications software, announced that Siebel
executive management will host an audio Webcast at 2:00 p.m. (PT)
on December 3, 2003, for financial analysts and investors. The
audio Webcast is intended to provide a forum to answer questions
regarding company operations, products, customers, and
partnerships.
The call can be accessed by dialing 1-800-719-7103 in the U.S. or
1-212-676-5252 outside the U.S. It also will be broadcast live
over the Internet at http://www.siebel.com/investor
A replay of the call will be available through January 2, 2004, on
the same Web site or by calling 1-800-633-8284 in the U.S. or 1-
402-977-9140 outside the U.S., with reservation number 21167293.
Siebel Systems, Inc. (Nasdaq:SEBL) (S&P, BB Corporate Credit and
B+ Subordinated Ratings), is a leading provider of eBusiness
applications software, enabling corporations to sell to, market
to, and serve customers across multiple channels and
lines of business. With more than 3,500 customer deployments
worldwide, Siebel Systems provides organizations with a proven
set of industry-specific best practices, CRM applications, and
business processes, empowering them to consistently deliver
superior customer experiences and establish more profitable
customer relationships. Siebel Systems' sales and service
facilities are located in more than 28 countries.
SIERRA HEALTH: Selling Workers Compensation Unit to Folksamerica
----------------------------------------------------------------
Sierra Health Services Inc. (NYSE:SIE) has reached a definitive
agreement to sell its workers' compensation subsidiary, California
Indemnity Insurance Co. Inc., to Folksamerica Holdings Co. Inc.
Folksamerica is a subsidiary of White Mountains Insurance Group,
Ltd. (NYSE:WTM), a Bermuda-based insurance holding company. CIIC
and its subsidiaries are engaged in writing workers' compensation
insurance in nine Western and Midwestern states. CIIC's
subsidiaries include Commercial Casualty Insurance Co., Sierra
Insurance Co. of Texas and CII Insurance Co.
The deal, valued at $79.5 million, is expected to close in the
first quarter of 2004, subject to regulatory approvals, including
from applicable insurance regulatory authorities. At the closing,
Sierra will receive $15.5 million in cash, subject to adjustment.
The deal also includes a contingent payment of up to $64.0
million, payable to Sierra in January 2010. The contingent payment
can be increased or decreased depending on favorable or adverse
claim and expense development from the date of closing through
Dec. 31, 2009, and other offsets based on certain customary
agreements between the parties.
After the closing, a third-party claims administrator will be
engaged by the companies to administer claims for a period of 15
years. Sierra will be responsible for this administrator's costs
and for providing certain transition services for varying terms on
behalf of CIIC. Folksamerica will reimburse Sierra for these costs
from an account consisting of the unallocated loss adjustment
expense reserves as of the closing, a percentage of premiums
earned after the closing, plus accrued liabilities as of the
closing.
In the fourth quarter of 2003, Sierra expects to record a charge
of between $15.0 and $20.0 million. The charge includes the
difference in CIIC's equity, in accordance with accounting
principles generally accepted in the United States of America, at
Sept. 30, 2003, of approximately $90.7 million, and the combined
cash and contingent payment amount of $79.5 million, plus certain
related costs.
"We are very pleased to have reached an agreement with
Folksamerica," said Anthony M. Marlon, M.D., chairman and chief
executive officer of Sierra. "The sale of our workers'
compensation business allows us to direct our attention to our
core managed care operations, which make a significant
contribution to our profitability."
Sierra's Nevada-based workers' compensation TPA, Nevada
Administrators, is not part of the deal with Folksamerica and will
continue to operate as a subsidiary of the parent company.
CIIC is a wholly owned subsidiary of CII Financial Inc., which is
a wholly owned subsidiary of Sierra Health Services Inc., a Las
Vegas-based diversified health care services company that operates
health maintenance organizations, indemnity and workers'
compensation insurers, military health programs, preferred
provider organizations and multispecialty medical groups. Sierra's
subsidiaries serve more than 1.2 million people through health
benefit plans for employers, government programs and individuals.
For more information, visit the company's Web site at
http://www.sierrahealth.com
Folksamerica is a multiline broker market reinsurer and a wholly
owned subsidiary of White Mountains Insurance Group, Ltd. With $1
billion in capital, the company ranks among the top U.S. broker
market reinsurance companies. Additional items of interest are
available at White Mountains' Web site located at
http://www.whitemountains.com
Sierra Health Services Inc., based in Las Vegas, is a diversified
healthcare services company that operates health maintenance
organizations, indemnity and workers' compensation insurers,
military health programs, preferred provider organizations and
multispecialty medical groups. Sierra's subsidiaries serve more
than 1.2 million people through health benefit plans for
employers, government programs and individuals. For more
information, visit the company's Web site at
http://www.sierrahealth.com
Sierra Health Services, Inc.
-- Long-term issuer 'BB'/Stable;
-- Senior debt 'BB'/Stable.
Health Plan of Nevada
Sierra Health & Life Insurance Company
-- Insurer financial strength 'BBB'/Positive.
California Indemnity Insurance Co.
Commercial Casualty Insurance Co.
CII Insurance Co.
Sierra Insurance Company of Texas
-- Insurer financial strength 'BBB'/Evolving.
SILVERLEAF RESORTS: Enters Pacts to Amend Sr. Credit Facilities
---------------------------------------------------------------
Silverleaf Resorts, Inc. (OTC:SVLF) has entered into agreements
with its three senior lenders to amend its senior credit
facilities to modify certain financial covenants under which the
Company has been in default since March 31, 2003.
The amended covenants will:
-- increase from 52.5% to 55% the maximum permitted ratio of sales
and marketing expenses to total sales for each quarter
beginning with the quarter ended March 31, 2003; and
-- exclude the Company's $28.7 million increase in its allowance
for uncollectible notes in the quarter ended March 31, 2003
from the calculation of the Company's minimum required
consolidated net income, and from the calculation of the
Company's minimum required interest coverage ratio of 1.25 to
1.0.
In addition to the above amendments, the Company also received
waivers under its senior credit facilities of covenant defaults
which occurred in the first quarter of 2003 due to the Company's
increase in its allowance for uncollectible notes and its failure
to maintain a ratio of sales and marketing expense to total sales
of no more than 52.5%.
As a result of these amendments and waivers the Company is now in
full compliance with all of its credit facilities with its senior
lenders. However, the Company's ability to borrow any new amounts
under its loan agreements with its three current senior lenders
will expire on March 31, 2004.
The Company is currently negotiating amendments to the agreements
with two of these senior lenders, which would extend the time
period during which the Company could continue to borrow under
those agreements; however, there can be no assurances that the
Company will be successful in obtaining extensions from these two
lenders. Failure by the Company to obtain such extensions before
March 31, 2004, or to obtain alternative lines of credit would
materially impact the Company's liquidity and ability to finance
its operations at existing levels and would likely result in a
sharp curtailment of the Company's current operations.
Based in Dallas, Silverleaf Resorts, Inc. currently owns and
operates 12 timeshare resorts in various stages of development.
Silverleaf Resorts offer a wide array of country club-like
amenities, such as golf, swimming, horseback riding, boating, and
many organized activities for children and adults. Silverleaf has
a managed ownership base of over 109,000.
SITESTAR: Cash Resources Insufficient to Continue Operations
------------------------------------------------------------
Sitestar Corporation is a mid-Atlantic Internet Service Provider
and Computer Services company offering a broad range of services
to business and residential customers. Sitestar serves primarily
the Virginia and North Carolina markets. It utilizes its own
infrastructure and has affiliations that allow it to expand its
network and services to most of the United States and Canada.
The products and services provided include: Internet access
services; Web design services; Web hosting services; End-to-end e-
commerce solutions; Online marketing consulting; Computer and
related products sales and services; Toner and ink cartridge
remanufacturing services; and Computer programming and consulting
services.
Sitestar Corporation's consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As shown in the financial statements, the Company
incurred a net loss of $45,769 during the nine months ended
September 30, 2003 and, as of that date, had a working capital
deficit of $1,655,473. Those conditions raise substantial doubt
about the Company's ability to continue as a going concern.
However, management has indicated a belief that the Company's
existing cash, cash equivalents, and cash flow from operations and
the ability to obtain favorable financing will be sufficient to
meet Sitestar's working capital and capital expenditure
requirements for at least the next 12 months.
As of September 30, 2003, the Company's convertible debentures are
past their maturity and callable at any time by the debenture
holders. The debenture holders have served notice to the Company
that the convertible debentures are in default. As of
September 30, 2003, there is a discrepancy between the balance
maintained by the Company and the balance calculated by the
debenture holders.
The Company believes that it has proper documentation to support
its position in this matter; however, in the event the Company is
not successful in reconciling and resolving this matter, the
outstanding balance of the convertible debenture could increase
significantly. As of September 30, 2003, the Company has disclosed
that the outstanding principal balance is $139,412. This
outstanding balance could increase to over $300,000 if the
debenture holders are able to demonstrate that their balance is
the correct balance.
On December 31, 2002, the debenture holders filed a complaint
against the Company alleging breach of contract and breach of
fiduciary duties. Management is currently engaged in negotiations
to resolve the complaint and satisfy the outstanding principal and
accrued interest associated with the debenture. It is too early to
make an evaluation of the matter as to outcome, although damages
are alleged at approximately $425,000.
SIX FLAGS INC: Lenders Relax Covenants Under Credit Agreement
-------------------------------------------------------------
Six Flags, Inc., (NYSE: PKS) has finalized an amendment to its
$1.0 billion Senior Credit Facility that relaxes the existing
financial covenants relating to the leverage ratio through 2005
and to the fixed charge coverage ratio through June 30, 2007.
The amendment, which was consented to by over 80% in interest of
the lenders under the Credit Facility, also permits the Company to
enter into fixed-to-floating interest rate hedge arrangements.
Six Flags, Inc. (S&P, BB- Corporate Credit Rating, Negative) is
the world's largest regional theme park company, with thirty-nine
parks in markets throughout North America and Europe.
For more information, visit http://www.kcsa.com/
SMARTSERV: Appoints Grant Thornton, LLP as New Auditing Firm
------------------------------------------------------------
SmartServ Online, Inc. (OTC: SSRV) has appointed Grant Thornton,
LLP as its new auditing firm.
Grant Thornton, a nationally recognized accounting and consulting
firm, will commence its new engagement with the review of
SmartServ's third quarter Form 10-QSB filing that is expected to
be filed by mid-December.
SmartServ (OTC: SSRV) is a wireless applications service provider
offering applications, development and hosting services.
SmartServ's customer and distribution relationships exist across a
network of wireless carriers, strategic partners, and a major
financial institution. Our applications can be delivered via
Java(TM) 2 Platform, Micro Edition (J2ME(TM)), QUALCOMM's Binary
Runtime Environment for Wireless(TM) (BREW(TM)) solution, WAP and
SMS, as well as RIM Blackberry and Pocket PC devices. For more
information, visit http://www.SmartServ.com
* * *
As reported in Troubled Company Reporter's September 10, 2003
edition, the economic downturn in general, and its impact on the
telecommunications industry in particular, have caused
telecommunications service providers to reduce capital spending,
personnel and debt, as well as new service introductions. This
has resulted in delays in the build-out of high speed carrier data
networks and availability of data-enabled wireless devices,
causing the market for SmartServ's financial data and transaction
services to be lackluster. In addition, many financial services
firms have curtailed new product development to focus on data
security and recovery. Consequently, the potential demand for the
Company's products and services has been significantly delayed.
Such delays have had a very detrimental effect on the Company's
operations and have resulted in the Company's inability to
implement its business plan and related marketing strategies.
Consequently, in May 2002, the Company commenced an effort to
realign its infrastructure and related overhead to correlate with
reductions in projected revenue. As part of this effort,
management closed the Company's UK and Hong Kong sales offices and
downsized its domestic operations through staff reductions to a
level sufficient to support the Company's projected operations.
During 2003, the Company has continued to reduce its cost
structure through the termination of additional personnel.
Personnel headcount has been reduced from 66 in May 2002 to the
current level of 10. These efforts have reduced the Company's
average monthly operating expenses from approximately $1,090,000
in July 2002 to approximately $230,000 commencing September 2003,
excluding noncash stock compensation and depreciation and
amortization. The Company has also reviewed its revenue producing
contracts as of June 30, 2003 and reduced its projection of near
term revenues as a result of lower than anticipated demand for
the Company's products and services. As a result of the factors
identified above, the Company is in need of additional capital to
enable it to continue as a going concern.
No assurance can be given that the Company will be able meet its
revenue projections, maintain its cost structure as presently
configured, or raise additional capital on satisfactory terms.
Should the Company be unable to raise additional debt or equity
financing, it will be forced to seek a merger or cease operations.
The Company's financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal course
of business. The Company has, since its inception, earned limited
revenues and incurred substantial recurring operating losses,
including net losses of $6,725,058 for the six month period ended
June 30, 2003, net losses of $8,037,173 and $14,819,860 for the
years ended December 31, 2002 and 2001, respectively, and net
losses of $30,993,559 and $7,124,126 for the years ended June 30,
2000 and 1999, respectively. Additionally, it had an accumulated
deficit of $79,584,064 at June 30, 2003 and has debt service
requirements of $2,750,000 during the 12 month period ending
June 30, 2004. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
SOLA INT'L: Receives Requisite Consents for Debt Tender Offer
-------------------------------------------------------------
SOLA International Inc. (NYSE: SOL) said that in connection with
its offer to purchase and consent solicitation for its outstanding
11% Senior Notes due 2008, it has received the requisite and
additional consents (as defined in the Offer to Purchase document)
from holders of its Notes. The consent solicitation expired at
5:00 p.m., London time on November 20, 2003.
UBS Limited and UBS Securities LLC are serving as Dealer Managers
and Solicitation Agents in connection with the offer.
Questions concerning the terms of the Solicitation of Consents
and/or the Tender Offer may be directed to UBS' Limited Liability
Management Group at 44 (20) 7567 7480 or UBS Securities' LLC
Liability Management Group at 203-719-4210. Questions concerning
the procedures for tendering the Notes or requests for the Offer
to Purchase documents may be directed to D.F. King & Co., the
Information Agent, at either 212-269-5550 or 44 (20) 7920 9700.
SOLA International Inc. (S&P, BB Corporate Credit Rating,
Negative) designs, manufactures and distributes a broad range of
eyeglass lenses, primarily focusing on the faster-growing plastic
lens segment of the global lens market, and particularly on
higher-margin value-added products. SOLA's strong global presence
includes manufacturing and distribution sites in three major
regions: North America, Europe and Rest of World (primarily
Australia, Asia and South America) and approximately 6,800
employees in 28 countries servicing customers in over 50 markets
worldwide. For additional information, visit the company's Web
site at http://www.sola.com
SPIEGEL INC: Requests Additional Time to File Audited Financials
----------------------------------------------------------------
The Spiegel Group filed a motion with the U.S. District Court in
Chicago asking to modify the Amended Partial Final Judgment and
Order of Permanent Injunction and Other Equitable Relief entered
on March 27, 2003.
The company is requesting an additional 126 days from December 3,
2003 until April 7, 2004, to file its 2002 fiscal year annual
report on Form 10-K and its three quarterly reports for the 2003
fiscal year on Forms 10-Q with the Securities and Exchange
Commission.
The company previously reported that the Court confirmed that
Spiegel, Inc. would not be in contempt of the Amended Partial
Final Judgment as a result of its inability to file its periodic
reports on Forms 10-K and 10-Q with the SEC until after the
completion of the report of the Independent Examiner appointed by
the Court as part of the Amended Partial Final Judgment, but no
later than December 3, 2003.
The Independent Examiner's report was submitted to the Court on
September 5, 2003. The Independent Examiner's report identified
accounting issues and raised concerns about the audit work
performed by KPMG LLP, the company's outside auditors. Due to the
questions raised in the Independent Examiner's report concerning
the company's financial statements, Spiegel, Inc. has decided to
conduct an internal review to determine whether it can continue
to rely on its financial statements beginning with the 2000 fiscal
year or the audit opinions expressed in relation to those
financial statements. Also, the company concluded that its
interest would be best served by bringing in new auditors. On
November 17, 2003, Spiegel, Inc. terminated its engagement of
KPMG. In light of these circumstances, the company remains unable
to meet its periodic reporting obligations under the securities
laws.
The Spiegel Group is a leading international specialty retailer
marketing fashionable apparel and home furnishings to customers
through catalogs, specialty retail and outlet stores, and e-
commerce sites, including eddiebauer.com, newport-news.com and
spiegel.com. The Spiegel Group's businesses include Eddie Bauer,
Newport News and Spiegel Catalog. Investor relations information
is available on The Spiegel Group Web site at
http://www.thespiegelgroup.com
TECH DATA CORP: Reports Weaker Third-Quarter Financial Results
--------------------------------------------------------------
Tech Data Corporation (Nasdaq: TECD), a leading provider of IT
products and logistics management services, announced results for
the third quarter ended October 31, 2003.
Net sales for the third quarter of fiscal 2004 were $4.4 billion,
an increase of 15.3 percent from $3.8 billion in the third quarter
of the prior year and a 5.2 percent increase from the second
quarter of the current year. On a regional basis, net sales in
Europe increased 31.7 percent (13.1 percent on a local currency
basis) and in the Americas increased 1.1 percent over the
comparable prior year period. On a sequential basis, net sales in
Europe increased 7.0 percent (8.2 percent on a local currency
basis) and in the Americas increased 3.2 percent compared to the
second quarter of the current fiscal year. Both the second and
third-quarter results include a full quarter of operations from
the company's Azlan Group Limited acquired on March 31, 2003.
Net income, based upon Generally Accepted Accounting Principles
("GAAP"), for the third quarter totaled $26.5 million, or $.46 per
diluted share, compared with net income of $32.8 million, or $.57
per diluted share in the prior year third quarter.
"We clearly capitalized on improving demand conditions and
generated sales and operating profits that exceeded our
expectations for the third quarter," commented Steven A. Raymund,
Tech Data's chairman and chief executive officer. "The difficult
cost-cutting actions we took in the second quarter also supported
our solid performance during the period, achieving the savings we
anticipated without adversely affecting customer service levels."
Financial Highlights
* Third-quarter net sales were $4.4 billion, exceeding the
company's forecast for the quarter and increasing both
sequentially and on a year-over-year basis.
* Net sales in Europe during the third quarter were $2.3
billion or 53 percent of worldwide sales, while sales in
the Americas totaled $2.1 billion or 47 percent of
worldwide sales.
* Results for the third quarter ended October 31, 2003
include a reclassification pursuant to Emerging Issues Task
Force Issue No. 02-16 "Accounting by a Customer (Including
a Reseller) for Certain Consideration Received from a
Vendor". EITF 02-16 requires that, under certain
circumstances, consideration received from vendors be
treated as a reduction of cost of goods sold and not as a
reduction of selling, general and administrative expenses.
As a result $15.0 million was reclassified from SG&A with
$13.2 million of this amount being recorded as a reduction
of cost of goods sold and $1.8 million deferred pending the
sale of the related inventory. Year to date, $29.9 million
has been reclassified from SG&A with $25.6 million of this
amount recorded as a reduction of cost of goods sold and
$4.3 million deferred pending the sale of the related
inventory. The company expects the guidance to be applied
to virtually all of its vendor arrangements by the end of
fiscal 2004.
* Gross margin for the third quarter was 5.58 percent, an
increase from 5.43 percent in the prior year third quarter
and a decrease from 5.68 percent in the second quarter of
this year. The year-over-year increase in gross margin is
the result of the inclusion of results from the company's
Azlan operations and the impact of the company's adoption
of EITF 02-16, partially offset by a decrease in gross
margin due to the competitive pricing environment.
Sequentially, the decline in gross margin from 5.68 percent
in the second quarter was attributable to a decline in
gross margin resulting from the competitive pricing
environment, partially offset by an increase from the
adoption of EITF 02-16.
* Third-quarter SG&A expense was $203.5 million or 4.63
percent of sales, a decrease from second-quarter SG&A on a
non-GAAP basis (excluding second-quarter special charges of
$3.1 million) of $207.1 million or 4.96 percent of sales.
The sequential decrease relates to the realization of
benefits associated with cost cutting measures taken in
prior periods, partially offset by variable costs incurred
as a result of incremental sales volume, and the
reclassification of vendor funding pursuant to EITF 02-16.
Third-quarter SG&A includes approximately $5.3 million
related to the upgrade of the company's European systems.
* Worldwide operating income was .95 percent of sales, an
increase from .73 percent of sales when compared to second-
quarter operating income on a non-GAAP basis (excludes
special charges of $3.1 million) and a decrease from 1.42
percent of sales in the prior year third quarter.
Geographically, operating income was 1.74 percent of sales
in the Americas and .25 percent of sales in Europe.
* The worldwide effective income tax rate for the third
quarter and estimated effective rate for fiscal 2004 is 31
percent.
Nine-month Results
Net sales for the nine month period ended October 31, 2003 were
$12.5 billion, increasing 6.5 percent over $11.7 billion in the
comparable prior year period. Net sales in Europe represented 53
percent of sales and increased 24.6 percent (3.6 percent on a
local currency basis) to $6.6 billion from $5.3 billion for the
nine-month period ended October 31, 2002. Net sales in the
Americas represented 47 percent of sales and decreased 8.3 percent
to $5.9 billion from $6.5 billion in the prior year period. The
results for the nine-month period ended October 31, 2003 include
seven months of results of operations from the company's Azlan
Group Limited acquired on March 31, 2003.
Gross margin for the nine-month period was 5.52 percent, up from
5.34 percent in the prior year comparable period. The increase in
gross margin is the result of the impact of the reclassification
due to EITF 02-16 and the impact of the company's Azlan
operations, offset by declines in gross margin due to the
competitive pricing environment.
Operating income on a GAAP basis for the nine-month period ended
October 31, 2003 was $104.2 million or .83 percent of sales
compared with $164.4 million or 1.40 percent of sales in the prior
year. Non-GAAP operating income, which excludes the charges
associated with closing the company's U.S. education business, was
$107.2 million, or .86 percent of sales.
GAAP net income for the nine-month period ended October 31, 2003
was $65.2 million or $1.14 per diluted share. Net income on a
non-GAAP basis, which excludes the charges associated with closing
the company's U.S. education business, was $67.2 million, or $1.17
per diluted share.
Business Outlook
The outlook for the fourth quarter ending January 31, 2004,
including expenses related to the harmonization and upgrade of the
company's European systems infrastructure, but excluding any
restructuring or other special charges that may be incurred, is as
follows:
* Net sales are expected to be in the range of $4.5 billion
to $4.6 billion.
* Net income is expected to be in the range of $29 million to
$32 million.
* Diluted earnings per share is expected to be in the range
of $.50 to $.55.
Tech Data Corporation (Nasdaq: TECD) (Fitch, BB+ Senior Unsecured
Debt & BB Conv. Subordinated Debt Ratings, Stable), founded in
1974, is a leading global provider of IT products, logistics
management and other value-added services. Ranked 117th on the
Fortune 500, the company and its subsidiaries serve more than
100,000 technology resellers in the United States, Canada, the
Caribbean, Latin America, Europe and the Middle East. Tech Data's
extensive service offering includes pre- and post-sale training
and technical support, financing options and configuration
services as well as a full range of award-winning electronic
commerce solutions. The company generated sales of $15.7 billion
for its most recent fiscal year, which ended January 31, 2003.
TEMBEC INC: Walks Away from Joint Venture Talks with Domtar
-----------------------------------------------------------
Tembec Inc. and Domtar decided to end their discussions on the
creation of a forest products joint venture.
On June 19, 2003, Tembec and Domtar announced that they had
reached an agreement-in-principle to create a joint venture that
would put together the timber and softwood lumber operations of
both companies in the provinces of Ontario and Quebec. Today's
announcement puts an end to the proposed transaction.
"We gave it our best shot. With the complexity of the proposed
transaction, involving numerous forest management agreements and
over 20 sawmills, along with the relative valuations, was just too
much under current circumstances," said Frank A. Dottori,
President and Chief Executive Officer of Tembec. "We believe both
companies have benefited from the exercise".
Tembec (S&P, BB Long-Term Corp. Credit, Negative) is an integrated
Canadian forest products company principally involved in the
production of wood products, market pulp and papers. The Company
has sales of approximately $4 billion, with over 55 manufacturing
sites in the Canadian provinces of New Brunswick, Quebec, Ontario,
Manitoba, Alberta and British Columbia, as well as in France, the
United States and Chile. Tembec's common shares are listed on the
Toronto Stock Exchange under the symbol TBC. Additional
information on Tembec is available on its Web site at
http://www.tembec.com
TEREX CORP: Completes $300-Million Senior Sub. Debt Offering
------------------------------------------------------------
Terex Corporation (NYSE: TEX) has completed the issuance of
$300,000,000 principal amount of 7.375% Senior Subordinated Notes
due 2014. As previously announced on November 10, 2003, the notes
were issued with a coupon of 7.375% and a yield to maturity of
7.5%. Terex used $100,000,000 of the proceeds from the issuance of
the notes to prepay a portion of its existing bank term loans.
Terex also prepaid an additional $100,000,000 of its existing bank
term loans with cash on hand.
Terex also completed an amendment of its existing bank credit
facility. The amendment, among other things, permits the
redemption of Terex's 8.875% Senior Subordinated Notes due 2008
with proceeds from the issuance of the new notes, allows for the
repurchase of Terex's 10.375% Senior Subordinated Notes due 2011
on or after April 1, 2006, and modifies certain financial
covenants for the second half of 2004 and 2005.
Terex announced that it will redeem the remaining outstanding
principal amount of $200,000,000 in principal amount of its 8.875%
senior subordinated notes due 2008 with the remaining proceeds
from the issuance of the notes and cash on hand. The 8.875% Senior
Subordinated Notes will be redeemed at a price of 104.438% of
principal amount, for a total of approximately $208,900,000
million. The date for redemption of the Senior Subordinated Notes
has been set for December 26, 2003.
The result of these transactions will be to reduce total debt by
$100,000,000.
Terex Corporation (S&P, BB- Corporate Credit Rating, Stable) is a
diversified global manufacturer based in Westport, Connecticut,
with 2002 revenues of $2.8 billion. Terex is involved in a broad
range of construction, infrastructure, recycling and mining-
related capital equipment under the brand names of Advance,
American, Amida, Atlas, Bartell, Bendini, Benford, Bid-Well, B.L.
Pegson, Canica, Cedarapids, Cifali, CMI, Coleman Engineering,
Comedil, CPV, Demag, Fermec, Finlay, Franna, Fuchs, Genie,
Grayhound, Hi-Ranger, Italmacchine, Jaques, Johnson-Ross,
Koehring, Lectra Haul, Load King, Lorain, Marklift, Matbro,
Morrison, Muller, O&K, Payhauler, Peiner, Powerscreen, PPM, Re-
Tech, RO, Royer, Schaeff, Simplicity, Square Shooter, Telelect,
Terex, and Unit Rig. Terex offers a complete line of financial
products and services to assist in the acquisition of Terex
equipment through Terex Financial Services. More information on
Terex can be found at http://www.terex.com
TEXAS PETROCHEMICALS: Files Plan & Disclosure Statement in Texas
----------------------------------------------------------------
Texas Petrochemicals LP, and its affiliates filed on October 31,
2003 separate Plans of Reorganization and a common Disclosure
Statement, specifying the detailed components of their anticipated
restructuring.
TPC and its affiliates originally filed for protection from
creditors under the provisions of Chapter 11 of the Bankruptcy
Code on July 20, 2003 in the Southern District of Texas -- Houston
Division. Under the terms of the TPC Plan, which are still subject
to modification and amendment, approximately $238 million in
unsecured debt will be eliminated through both conversion to
equity and discharge, leaving the Reorganized TPC with a projected
$61 million in debt outstanding on the Effective Date. The exact
amount of debt on the Effective Date of the Plans will depend on a
number of factors including the date of effectiveness and the
results of TPC's operations prior to effectiveness. The affiliate
Plans are simple liquidation plans with no value available for
creditors. The primary provisions of the TPC Plan filed are as
follows:
Approximately $238 million in unsecured debt, consisting of TPC's
11.125% Senior Subordinated Notes, related accrued interest and
claims held by unsecured trade creditors of TPC not attributed
administrative claim status, will be satisfied by conversion of
all of this debt to common stock of TPC. The conversion will take
place in conjunction with the new equity infusion described in the
TPC Plan.
The TPC Plan includes a new equity capital infusion of a minimum
of $20 million to be received on the Effective Date. TPC has
received certain proposals that, subject to due diligence and
negotiation of definitive documentation, would provide this
investment at terms generally acceptable to TPC. TPC is currently
working with those parties submitting such favored proposals on
due diligence as well as continuing to negotiate on the specific
terms of those proposals, including the percentage of the equity
in Reorganized TPC to be received on the Effective Date.
The TPC Plan provides that approximately $28 million in
prepetition administrative claims (such as those held by creditors
approved by the court as critical vendors, or to be granted such
status through the assumption of executory contracts, and the
payment of convenience claims and financing costs) that will be
paid in full on the Effective Date.
The TPC Plan further provides that TPC's existing prepetition $60
million Senior Secured Revolving Credit Facility will be replaced
with a new $50 million Senior Secured Revolving Credit Facility on
the Effective Date. TPC will use its current cash position and
borrowings under the new revolving credit facility to repay in
full the remaining $42.2 million in prepetition obligations
outstanding under the existing facility on the Effective Date.
After a broad solicitation process, LaSalle Business Credit, Inc.
was selected as the preferred provider of the new revolving credit
facility, and TPC is working with LaSalle Business Credit, Inc.
toward a definitive commitment, which is subject to negotiation of
definitive documentation and due diligence. Based on the proforma
projections included in the TPC Plan, upon the consummation of all
exit financing, approximately $11 million will be outstanding
under the new revolving credit facility on the Effective Date. The
actual amount outstanding on the new revolving credit facility
will depend on the date of effectiveness of the Plan and on the
amount of TPC's actual cash generated from operations prior to
such effectiveness.
The TPC Plan further provides that TPC's existing prepetition 14%
Senior Secured Term Loan will be replaced with a new $50 million
13% Senior Secured Term Loan on the Effective Date. TPC will use
the combined proceeds from the new term loan and its current cash
position to repay in full the remaining $57.1 million in
prepetition obligations outstanding under the old term loan on the
Effective Date. After a broad solicitation process, Lehman
Commercial Credit, Inc. was selected as the preferred provider of
the new term loan, and TPC is working with Lehman toward a
definitive commitment, which is subject to negotiation of
definitive documentation and due diligence. The new term loan will
be funded, in full, on the Effective Date.
The Plans also provide that the old equity of Texas Petrochemical
Holdings, Inc., the holding company parent of TPC, and the
unsecured 13.5% Discount Notes issued by Texas Petrochemicals
Holdings, Inc., will be cancelled, extinguished or discharged as
part of the Plans. It is anticipated that the holders of those
securities will not receive a distribution under the Plans.
TPC continues to operate under the court-approved cash collateral
order, and expects to continue to do so through the pendency of
the bankruptcy process. The cash collateral order requires TPC to
follow a specified cash budget, which has been approved by the
court. TPC has maintained a substantial cash position since the
filing date and as of October 31, 2003 had a net cash balance
exceeding $25 million. TPC is authorized to use this cash, and
cash generated in its future operations, to meet TPC's operating
needs for the duration of the restructuring and ensure that all
postpetition obligations are paid currently. TPC's Plan
anticipates that cash balances will continue to increase through
the projected Effective Date because of improved credit terms on
postpetition transactions and because of projected positive cash
flow from operations. The cash balance estimated to be available
on the Effective Date for use in satisfying claims is projected to
be $45.7 million, however, the exact amount of cash that will
ultimately be available on the Effective Date will be a function
of the credit benefits attained, the actual results of operations
prior to the Effective Date and the actual date of effectiveness.
While the Plans are still subject to amendment by TPC, to the
approval of the Bankruptcy Court and to objection of the
creditors, TPC has a hearing scheduled for the approval of the
adequacy of the Disclosure Statement on December 11, 2003, and
hopes to obtain confirmation of the Plans and Disclosure Statement
sometime in the first quarter of 2004.
Copies of the Plans may be obtained through the Bankruptcy Court,
or by contacting BSI Services, Inc., TPC's balloting agent, at
646-282-2500.
TPC is a producer of quality C4 chemical products widely used as
chemical building blocks for synthetic rubber, nylon carpets,
adhesives, catalysts and additives used in high-performance
polymers. TPC also manufactures fuel products used in the
formulation of cleaner burning gasoline. The company has
manufacturing facilities in the industrial corridor adjacent to
the Houston Ship Channel and operates product terminals in
Baytown, Texas and Lake Charles, Louisiana. For more information
about TPC products and services visit the company online at
http://www.txpetrochem.com
UNIVERSAL CARE: A.M. Best Junks Financial Strength Rating at C
--------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to C
(Weak) from B- (Fair) of Universal Care (Signal Hill, CA). The
rating has been placed under review with negative implications.
This rating action reflects significant net loss reported as of
June 30, 2003 and continuing capital erosion.
The under review negative rating status reflects A.M. Best's
ongoing assessment of Universal Care's proposed actions to
mitigate future losses and prevent further erosion of surplus.
Future downgrades may follow as A.M. Best monitors developments of
actions being taken by Universal Care to increase Tangible Net
Equity under California Knox-Keene requirements. Universal Care is
currently reporting a TNE deficiency of almost $4 million.
Universal Care has reported three consecutive years of losses. The
company reported a net loss of $5.1 million for the fiscal year
ended June 30, 2003. As a result of the large net losses,
Universal Care's capital and surplus has been almost entirely
depleted, currently stands at $2.1 million and has decreased by
60% since June 30, 2002.
The financial flexibility of Universal Care is extremely
constrained as it is a privately held, family-owned health plan,
and all contributions are from family members. In order to meet
TNE, the company has been forced to increase subordinated debt.
Universal Care is susceptible to concentration risks related to
the Medi-Cal business segment, which provides coverage for
medical, dental, mental health and long-term care to low income
families, elderly and disabled residents in California. Medi-Cal
membership represents 54% of total company enrollment. A.M. Best
believes Universal Care's profit margins will continue to be
pressured by this concentration in a government-related product
line with a premium reimbursement not under its direct control.
Universal Care primarily operates within seven Southern California
counties. It is one of the few remaining mixed model HMOs
(company-owned staff multi-specialty clinics/network model).
Universal Care provides services to individuals, small and large
employer groups and beneficiaries in government-sponsored
programs.
UNLIMITED HLDGS.: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Unlimited Holdings Co., Inc.
10 West 33rd Street
New York, New York 10001
Bankruptcy Case No.: 03-17493
Type of Business: The Debtor is a wholesaler of ladies and
children hair accessories and cosmetics.
Chapter 11 Petition Date: November 26, 2003
Court: Southern District of New York (Manhattan)
Judge: Cornelius Blackshear
Debtors' Counsel: Gilbert A. Lazarus, Esq.
Lazarus & Lazarus, P.C.
240 Madison Avenue
8th Floor
New York, NY 10016
Tel: 212-889-7400
Fax: 212-684-0314
Total Assets: $1,615,000
Total Debts: $3,454,524
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Rivoran Trading Inc. $796,115
1575 50th Street
Brooklyn, NY 11219
Tel: 718-686-0900
A&A Accessories $613,049
8th Floor, No. 92 Nan-King E. Rd.
Taipei, Taiwan, R.O.C.
Tel: 886-227-48552
Everyglory $364,476
7 Fl. 17, Size Ping St.
Tiapan, Taiwan, R.O.C.
Tel: 886-225-651338
JPI Express Inc. $340,294
147-34 176 Street
Jamaica, NY 11434
Tel: 718-995-8400
Key Sales Group, Inc. $340,294
11011 Smetana Road
Minnetonka, MN 55343
Tel: 952-278-0900
Robalo Enterprises $220,124
United Way International Inc. $66,236
Amster Rothstein & Ebenstein $33,563
Accessory Fashions $28,838
Micsonic Enterprise Co. Ltd. $27,838
Consolidated Freight $18,334
Daylight Transport $15,897
Trendy Collection Co. Ltd. $13,136
Gettry Marcus Stern & Lehrer $11,200
Roadway Express Inc. $2,558
Schmutter Strull Fleish $2,403
Federal Express $2,382
TTI National, Inc. $2,417
Cannon Business Solutions $2,313
The Guardian Insurance $2,056
US AIRWAYS: Enters Stipulation Reducing 5 First Chicago Claims
--------------------------------------------------------------
In November 2002, First Chicago Leasing Corporation filed Claim
Nos. 4126, 4127, 4128, 4129 and 4130 in the aggregate amount of
$138,500,505, against the Reorganized US Airways Debtors. The
Proofs of Claim assert tax indemnities relating to Aircraft
bearing Registration Tail Nos. N406US, N407US, N408US, N409US and
N415US.
On January 24, 2003, the Reorganized Debtors objected to the
Claims. Now, First Chicago Leasing and the Reorganized Debtors
have reached a Stipulation that resolves the Objection and the
Claims. The parties agree to reduce and allow the Claims as
general unsecured Class USAI-7 Claims for all purposes under the
Plan:
Claim No. Amount
--------- ------
4126 $3,336,047
4127 3,210,610
4128 3,210,610
4129 3,210,610
4130 3,210,610
All other First Chicago Leasing Claims are disallowed. (US Airways
Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VANGUARDE MEDIA: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Vanguarde Media, Inc.
315 Park Avenue South
11th Floor
New York, New York 10010
Bankruptcy Case No.: 03-17509
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
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Vanguarde Holdings, Inc. 03-17511
Type of Business: The Debtor publishes magazines for the urban
woman (Heart & Soul and Honey), the affluent
African-American (Savoy), and people in the
urban music business (Impact).
Chapter 11 Petition Date: November 26, 2003
Court: Southern District of New York (Manhattan)
Judge: Allan L. Gropper
Debtors' Counsel: Ira A. Reid, Esq.
Baker & McKenzie
805 Third Avenue
New York, NY 10022
Tel: 212-891-3976
Fax: 212-759-9133
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
------ --------------- ------------
Communication Data Trade Debt $800,510
Services
1901 Bell Avenue
Des Moines, IA 50315
Ken Barloon
Tel: 515-246-6814
Stora Enzo North America Trade Debt $766,161
2386 Collections Center Dr.
Chicago, IL 60693
Paula Berger
Tel: 715-422-4113
Quebecor World Trade Debt $756,134
340 Pemberwick Rd.
Greenwich, CT 06831
Robert Zullo
Tel: 203-532-3488
Central Lewmar Trade Debt $400,276
60 McClellan St.
Newark, NJ 07114
Mark Aurback
Tel: 973-622-6377
Three Z Printing Company Trade Debt $218,819
Ron Stodghill Employee Severance $194,192
Icon Communications, Inc. Trade Debt $150,920
American Express Trade Debt $125,096
ProCirc Trade Debt $101,536
Lindenmeyer Central Trade Debt $92,240
TM Park Avenue LLC Landlord $79,152
Horizons Marketing Trade Debt $52,717
Group Intl., Inc.
Mediamark Research, Inc. Trade Debt $40,554
Leonard Burnett Jr. Employee Severance $40,192
5th & Sunset Enterprises Trade Debt $34,948
LLC
Colorfx Marketing Services Trade Debt $29,309
Michaela Angela Davis Employee Severance $28,874
Gary Lewis Employee Severance $24,326
Kefta, Inc. Trade Debt $21,000
Corynne Corbette Employee Severance $20,307
WCI STEEL: Silicon Electrical Steel Line Will be Idled in Jan.
--------------------------------------------------------------
WCI Steel, Inc. announced that its silicon electrical steel line
will be idled effective Jan. 31, 2004 due to continuing volume
deterioration and negative profit margins.
Silicon electrical steels are used in the production of motors,
generators and transformers. Product substitution and the
migration of customer production to Mexico and Asia have reduced
demand for WCI's silicon electrical steels.
Edward R. Caine, president and chief executive officer of WCI,
noted that silicon steel previously was one of WCI's most
profitable product lines, but the recent shift of silicon
customers' plants to outside the United States has adversely
impacted demand and profit margins.
"We do not see market conditions improving in the near future to
the point that would allow us to produce silicon steel at a
profit," Caine said. "Our order book is strong, with the exception
of silicon."
All current silicon orders will be filled, Caine added.
On Sept. 16, 2003, WCI filed a voluntary petition for protection
under Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of Ohio, Eastern
Division in Youngstown.
Headquartered in Warren, Ohio, WCI Steel, Inc. is an integrated
steelmaker producing more than 185 grades of custom and commodity
flat-rolled steels. The Company filed for chapter 11 protection on
September 16, 2003 (Bankr. N.D. Ohio, Case No. 03-44662).
Christine M. Pierpont, Esq., and G. Christopher Meyer, Esq., at
Squire, Sanders & Dempsey, L.L.P. represent the Debtors in their
restructuring efforts. As of April 30, 2003, the Debtors listed
$356,286,000 in total assets and $620,610,000 in total debts.
WEIRTON STEEL: Court Clears Fleet Capital Commitment Agreement
--------------------------------------------------------------
Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh,
Pennsylvania, reminds the Court that pursuant to the terms of the
First Amended Plan of Reorganization, the Weirton Steel Debtor
will distribute cash, notes, warrants and equity, as the case may
be, to holders of secured and unsecured claims against the Debtor.
Section 7.4 of the Amended Plan authorizes the Debtor to enter
into an Exit Facility comprised of revolving credit and government
guaranteed term debt financing for the purpose of funding the
Debtor's obligations under the Amended Plan.
Fleet Capital Corporation, as agent under the Term Loan Facility,
filed, on Weirton's behalf, an application with the Emergency
Steel Guarantee Loan Board in accordance with the regulations
governing the Emergency Steel Guarantee Loan Program at 13 C.F.R.
Chapter IV, for a federal guarantee of a portion of the principal
amount of the loans comprising the Term Loan Facility.
On November 13, 2003, the Debtor agreed to the terms of a
Commitment Letter with Fleet Capital where Fleet Capital agreed
to provide exit financing to the Debtor at the Effective Date
under the Debtor's Amended Plan. On November 13, 2003, the
Debtor also agreed to a letter agreement with Fleet Capital and
Fleet Securities Inc., outlining the various fees to be charged
in association with the Exit Facility. Mr. Freedlander says that
the Fee Agreement has been provided to the Court, the Official
Committee of Unsecured Creditors, JPMorgan and the Ad Hoc
Committee of Noteholders, but is not being filed of record with
the Court due to sensitive market and competitive information
contained therein.
Fleet Securities, an affiliate of Fleet Capital, will serve as
the Arranger for the loans, which are to be syndicated, and Fleet
Capital will serve as Administrative Agent for the lenders.
Pursuant to the Commitment Letter, the Exit Facility will consist
of a senior secured revolving credit facility of up to
$200,000,000 and a senior secured term loan facility of up to
$175,000,000. The Revolving Credit Facility and the Term Loan
Facility will be made available on the Closing Date and the
proceeds will be used:
(1) to repay debtor-in-possession loans;
(2) for general operating capital needs of the Debtor in a
manner consistent with the provisions of the Revolving
Credit Loan Agreement;
(3) to pay fees and expenses in connection with the Revolving
Loan Facility and Term Loan Facility and otherwise as set
forth in the Term Loan and Security Agreement; and
(4) for capital improvement projects.
The Revolving Credit Facility and the Term Loan Facility are
specifically conditioned on the approval of the ESGLB
application, a determination of which has not occurred to date.
Under the Commitment Letter, the Debtor is obligated to indemnify
and hold harmless each Lender and each of the Lender's affiliates
and their officers, directors, employees, agents and advisors
from and against any and all claims, damages, losses, liabilities
and expenses that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in
connection with or by reason of, the Commitment Letter or the
transactions contemplated, including the preparation for a
defense of any investigation, litigation or proceeding arising
out of, related to or in connection with the Commitment Letter or
any of the other transactions contemplated by the Commitment
Letter, except to the extent the claim, damage, loss, liability
or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from the
Indemnified Party's gross negligence or willful misconduct.
For Fleet Capital and Fleet Securities to commence the
syndication process in respect of the Term Loan Facility, the
Debtor is required to execute and return to Fleet Capital and
Fleet Securities executed versions of the Commitment Letter and
the Fee Letter. The Commitment Letter requires that the Debtor
pay a $650,000 commitment acceptance fee payable on the return of
the executed Commitment Letter to Fleet Capital and Fleet
Securities, which Commitment Acceptance Fee is fully earned and
non-refundable when paid. If the Revolving Credit Facility and
Term Loan Facility are funded, the Commitment Acceptance Fee is
to be applied to the $8,500,000 underwriting fee.
Accordingly, the Debtor sought and obtained the Court's authority
to execute the Commitment Letter with Fleet Capital and the Fee
Agreement for Exit Financing.
The Court further orders that the Commitment Letter and the Fee
Agreement may be revised, and re-executed by the Debtor, without
further Court order provided that the revisions are approved by
the Debtor, Fleet Capital, the Official Committee of Unsecured
Creditors, the Ad Hoc Noteholders Committee and JPMorgan Trust
Company, N.A., as trustee. (Weirton Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WESTPOINT STEVENS: Intends to Assume Ralph Lauren License Pact
--------------------------------------------------------------
In the ordinary course of operating their businesses, the
WestPoint Stevens Debtors entered into various licensing
agreements to obtain the right to manufacture and sell products
incorporating licensed trademarks.
Michael F. Walsh, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells the Court that a significant portion of the Debtors'
sales is derived from licensed, designer trademarks, constituting
an integral element of the Debtors' business that enables them to
capitalize on well-known consumer brands which are supported by
the trademark owners with investments for marketing and
advertising. The Debtors typically pay licensing and royalty
fees on the sales of licensed products, which are offset by
charging a premium for the established brand. Consumers tend to
pay a premium for a particular brand because they are seeking the
"lifestyle" look of that designer, just as in apparel.
Mr. Walsh recounts that before the Petition Date, the Debtors
entered into a license agreement with Ralph Lauren Home
Collection, Inc., Polo Ralph Lauren Corporation, and The
Polo/Lauren Company, L.P. The License Agreement grants the
Debtors an exclusive right to produce a full assortment of Ralph
Lauren brand-name bedroom and bathroom home fashion products
throughout the United States, Canada, Mexico, and most of Europe
under certain licensed marks, including Lauren by Ralph Lauren(R)
and Ralph Lauren Home(R). Products manufactured and sold by the
Debtors under the terms of the License Agreement include towels,
coordinated bedding products, blankets, and down comforters.
The Debtors believe that the License Agreement is critical to
their operations and that its loss could have a material adverse
effect on their ongoing business. The Debtors derive great
benefits from their relationship with Ralph Lauren, which is a
well known, respected, and successful company whose branded
products are marketed worldwide through proprietary stores as
well as luxury and discount department stores. The Debtors have
been Ralph Lauren's licensee for 20 years, and were, in fact, the
first manufacturers of the Ralph Lauren Home Collection.
Currently, the Debtors are Ralph Lauren's second most successful
license, in terms of revenue. The Ralph Lauren brand name is the
most prestigious in the home fashions industry, and is a keystone
of the Debtors' branding portfolio. In fact, the strength of the
Ralph Lauren brand enables the Debtors to attract other licenses
and brands.
The License Agreement expires by its term on December 31, 2005.
Pursuant to the License Agreement, the Debtors pay Ralph Lauren
yearly royalty fees based on a percentage of revenue realized by
the Debtors from the sale of products utilizing Ralph Lauren's
designs. These royalty fees are subject to yearly minimums of
$125,000,000 for 2003 through 2005. The Licensing Agreement also
obligates the Debtors to share in the costs associated with
constructing or outbuilding up to four new Ralph Lauren Home
stores for $5,800,000, and for WestPoint Stevens (Europe)
Limited, the Debtors' European affiliate, to contribute up to
$1,600,000 for construction costs associated with opening a
Polo/Ralph Lauren flagship store in London. Additional
obligations of the Debtors under the Licensing Agreement include
contributions for marketing and advertising costs amounting to
$9,300,000 for 2003 through 2005, as well as yearly contributions
equal to $125,000 for design and travel costs.
Mr. Walsh tells the Court that because of the critical need to
maintain their Ralph Lauren licenses, the Debtors engaged in
extensive, good faith, arm's-length negotiations with Ralph
Lauren for the continued use of the Ralph Lauren trademarks. In
exchange for the Debtors' assumption of the License Agreement,
the Debtors obtained a $10,400,000 reduction of the royalty
minimums provided for under the License Agreement for the 2003
through 2005 periods. The Debtors also obtained a full
$7,400,000 concession with respect to any potential contribution
for constructing new Ralph Lauren Home stores. The $7,400,000
concession includes $1,600,000 for the Debtors' European
affiliate.
Accordingly, the Debtors seek the Court's authority to assume the
Ralph Lauren License Agreement, as amended. The Debtors estimate
that the cure amount due to Ralph Lauren on account of the
assumption is $5,700,000.
"Producing and selling bed and bath products using the well-known
Ralph Lauren designs allows the Debtors to participate in the
lucrative high-end branded home fashions market. The Debtors'
assumption of the License Agreement will ensure a continuing and
essential relationship with Ralph Lauren at substantially reduced
minimum royalty obligations and without the obligation to share
costs for the opening of new Ralph Lauren Home stores," Mr. Walsh
says.
Mr. Walsh maintains that the Debtors' production and sale of a
wide variety of bed and bath products featuring Ralph Lauren's
designs under the License Agreement allows the Debtors to benefit
from Ralph Lauren's perennial popularity. The ability to produce
and market goods with the Ralph Lauren brand under the more
favorable economic terms reflected in the License Agreement,
which provides for $17,800,000 in savings and concessions, will
be invaluable to the continued viability of the Debtors' business
operations. (WestPoint Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
WORLDCOM INC: Court Okays Deloitte's Engagement as Consultant
-------------------------------------------------------------
Worldcom Inc. and its debtor-affiliates obtained the Court's
authority to employ Deloitte Consulting LP to render certain
consulting services, nunc pro tunc to September 7, 2003.
Deloitte Consulting will provide these services:
(a) Assist the Debtors in gathering documents and information
identified by the Debtors in connection with the
completion of their financial reporting processes;
(b) Assist in the Debtors' documentation and remediation
of financial and related internal control processes, as
necessary and mutually agreed to by the Deloitte and the
Debtors; and
(c) Provide assistance to the Debtors at the Debtors'
request and as may be agreed to by Deloitte Consulting,
regarding issues specific to companies in bankruptcy.
In connection with these Projects, Deloitte is also prepared to
provide other assistance as the Debtors may request.
The specific procedures that Deloitte will perform in connection
with the Projects will include assisting the Debtors in:
-- establishing a project management office at the Debtors'
premises;
-- conducting interviews with the Debtors' finance,
accounting, systems and operating personnel regarding the
Debtors' information and the status of the Projects;
-- their review of schedules, timetables and work plans
prepared, as well as in preparing updated project plans,
task lists and timelines;
-- accumulating and analyzing their financial, systems,
control and operational information and other relevant data
in connection with the Debtors' completion of their
financial reporting process;
-- documenting their financial and related control processes
and functions, and helping the Debtors, prepare remediation
actions that may be deemed necessary by the Debtors; and
-- other project management and facilitation activities as
directed by the Debtors.
The Debtors will pay Deloitte Consultants, based on the hours
actually expended by each professional at 75% of each
professional's then current regular hourly billing rate. The
range of Deloitte Consulting's hourly billing rates based on
classification of personnel, before any applicable discount, is:
Principal/Director $550 - 750
Senior Manager 500 - 590
Manager 400 - 520
Senior Consultants 250 - 400
Consultants 150 - 275
Analysts 75 - 120
(Worldcom Bankruptcy News, Issue No. 43; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
W.R. GRACE: Taps Protiviti as Sarbanes-Oxley Compliance Advisors
----------------------------------------------------------------
The W.R. Grace Debtors seek the Court's authority to employ
Protiviti LLP as Sarbanes-Oxley compliance advisors, nunc pro tunc
to June 20, 2003.
Protiviti's services include:
(1) Identification and prioritization of financial
statement elements by working with Grace Internal
Audit professionals to visit operating sites, both
international and domestic;
(2) Documenting the Pilot "Close the Books" and
Financial Reporting Processes by working with
Internal Audit professionals to develop remediation
plans and with operating professionals to implement
necessary remediation;
(3) Completion of Sarbanes-Oxley Act Diagnostic Tool,
and perform testing of the controls to ensure
readiness for external audit of internal controls
in 2004;
(4) Identification of key contacts and documentation
available to supporting critical processes by
documenting the controls in place at client sites
in accordance with standards established for
Sarbanes-Oxley compliance; and
(5) Validation of the results of Phase I with external
auditors.
Protiviti, at the Debtors' request, also may render additional
related support deemed appropriate and necessary to the benefits
of the Debtors' cases. The Debtors argue that these services are
"necessary to enable [them] to maximize the value of their
estates and to reorganize successfully."
The Debtors will compensate Protiviti in accordance with its
customary hourly rates. The normal hourly rates charged by
Protiviti personnel are:
Managing Director $300
Associate Directors 275
Managers 225
Senior Consultants 175
Consultants 150
Marie Hendrixson, a managing director of Protiviti, avers that
Protiviti is a "disinterested person" within the meaning of the
Section 101(14) of the Bankruptcy Code and holds no interest
adverse to the Debtors or their estates in the matters for which
it is to be employed. However, Protiviti is a nationwide firm
with hundreds of employees, and because the Debtors are a large
enterprise, Protiviti is unable to state with certainty that
every client relationship or other connection has been disclosed
-- but if Protiviti discovers additional material information
that it determines requires disclosure, it will file a
supplemental disclosure promptly. (W.R. Grace Bankruptcy News,
Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000)
*********
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
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Copyright 2003. All rights reserved. ISSN: 1520-9474.
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