/raid1/www/Hosts/bankrupt/TCR_Public/031128.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 28, 2003, Vol. 7, No. 236
Headlines
ADELPHIA COMMS: Has Until Feb 17 to Make Lease-Related Decisions
AHOLD N.V.: 2003 First Three Quarter Results Sink into Red Ink
AIR CANADA: Sept. 30 Net Capital Deficit Widens to $3.4 Billion
ALTERRA HEALTHCARE: Delaware Court Confirms Second Amended Plan
AMDL INC: Recurring Losses Continue to Deplete Cash Resources
AMERADA HESS CORP: Caps Price of Tender Offer for 5.90% Notes
AMERCO: Secures Go-Signal to Sell Four Real Estate Properties
ANC RENTAL: Judge Walrath Approves Joint Disclosure Statement
ANP FUNDING: S&P Cuts Ratings to Highly Speculative Level
ARMOR HOLDINGS: Completes Sale Of ArmorGroup for $33.6 Million
ATLANTIC COAST: Amends Complaint Filed against Mesa Air Group
AURORA FOODS: Enters Workout Deal to Combine with Pinnacle Foods
AUTOMODULAR CORP: Obtains Waiver of Bank Covenant Violation
BIONOVA HOLDING: AMEX Will Halt Equity Trading Soon
BOOT TOWN INC: Wants to Use Frost National's Cash Collateral
BUDGET GROUP: Wants to Keep Plan-Filing Exclusivity Until Dec 15
CASCADES INC: Restructuring Operations at Lachute, Quebec Plant
CEDARA SOFTWARE: Enters into New Partnership with BITC in China
CELL ROBOTICS: Seeking Sufficient Financing to Fund Operations
CHANNEL MASTER: Committee Hires Monzack and Monaco as Co-Counsel
CHESAPEAKE ENERGY: Completes $200MM 6.875% Senior Debt Offering
COEUR D'ALENE: Redeems Final $4.6MM of 9% Sr. Convertible Notes
CONCHO CELLULAR TELEPHONE: Involuntary Chapter 11 Case Summary
CONE MILLS: Committee Signs-Up Hahn & Hessen as Co-Counsel
CWMBS INC: Fitch Rates Class B-3 and B-4 Notes at Low-B Levels
DIOMED HOLDINGS: Stockholders Approve $23.2MM Equity Financing
DOMAN IND.: Court-Appointed Monitor, KPMG, Files November Report
DOMAN INDUSTRIES: FIR Charges Union with Unfair Labor Practices
DRIVER-HARRIS COMPANY: Case Summary & Largest Unsecured Creditors
EB2B COMMERCE: Sept. 30 Balance Sheet Upside-Down by $4 Million
ENRON: EESH Unit Selling ServiceCo to Linc Group for $32 Million
FLEXTRONICS: Reaches Full Settlement of Beckman Coulter Suit
FLEXTRONICS INT'L: Will Pay Beckman Coulter $23MM to Settle Suit
FLOW INT'L: October 31 Balance Sheet Upside-Down by $3.4 Million
GASEL TRANSPORTATION: Sept. 30 Net Capital Deficit Tops $2.5MM
GENERAL DATACOMM: Howard S. Modlin Discloses 11.93% Equity Stake
GENUITY INC: Balks at Three Verizon DSL Set-Off Claims
GLOBAL CROSSING: Wants Extension of SingTel Termination Date
GULFWEST ENERGY: Capital Deficit Raise Going Concern Uncertainty
HAGERSTOWN HOTEL: Case Summary & 20 Largest Unsecured Creditors
HAYES LEMMERZ: Court Okays Final Fee Applications for $50 Million
IGAMES ENTERTAINMENT: Launching Recapitalization Plan
ITRONICS: Hires Cacciamatta Accountancy Corp. as New Accountants
J.A. JONES: Appoints BSI as Claims, Notice and Balloting Agent
J. CREW GROUP: Will Publish Third-Quarter Results on December 5
JLG INDUSTRIES: Files Shelf Registration Statement on Form S-3
JP MORGAN MORTGAGE: Fitch Rates Class B-4 and B-5 Notes at BB/B
KMART CORP: Court Disallows 965 Wage Claims Totaling $9 Million
LA QUINTA CORP: Underwriters Exercising Overallotment Option
MANDALAY RESORT: MotorCity Unit Inks Settlement with Lac Vieux
MARINER HEALTH: Amends Six-Year Term Credit and Guaranty Agreement
MIDWEST EXPRESS: Completes Two Equity & Debt Private Placements
MIRANT CORP: Court Okays Skadden Arps as Debtor's Special Counsel
NATIONAL CENTURY: Reaches Plan Settlement with Noteholders
NATIONAL DATACOMPUTER: Must Generate Sufficient Cash to Continue
NEENAH FOUNDRY: S&P Affirms Low-B- and Junk-Level Ratings
NESTOR INC: Significant Losses Raise Going Concern Uncertainty
NEXTEL PARTNERS: S&P Assigns B Rating to Planned $475M Bank Loan
NEXTERA ENTERPRISES: Will Close Asset Sale Transaction Today
NORTHWEST GOLD: Taps Singer Lewack as Grant Thornton Replacement
NORTHWESTERN CORP: Completes Sale of Expanets Unit to Avaya Inc.
NORTHWESTERN CORP: Avaya Confirms Purchase of Expanets Assets
NRG ENERGY: Court Approves Recapitalization Financing Documents
OAKWOOD HOMES: Selling All Assets to Clayton Homes for $373 Mill.
OCIS INC: Hires Child Sullivan as New Independent Auditors
ONENAME CORP: US Trustee Appoints Official Creditors' Committee
OXIS INTERNATIONAL: Must Obtain New Funds to Continue Operations
PACIFICARE HEALTH: Will Present at Merrill Lynch Conference Wed.
PG&E CORP: CEO Glynn Will Provide Bankruptcy Update on Wednesday
PHYAMERICA PHYSICIAN: Court to Consider Chapter 11 Plan Monday
PILLOWTEX CORP: Selling Macon Facility to 247 Group for $1.3MM
PRO SKATE OPERATIONS: Case Summary & Largest Unsecured Creditors
QUANTUM CORP: Undertaking Consolidation of Two Business Groups
RELIANCE GROUP: Delays Filing of Form 10-Q for September Quarter
ROGERS COMMUNICATIONS: Board Declares Semi-Annual Cash Dividend
SBA COMMS: Commences Tender Offer for $153MM of 12% Senior Notes
SCOTTELLO LLC: Case Summary & Largest Unsecured Creditors
SIBLEYS SHOES INC: Intends to Close 29 Retail Footwear Stores
SIEBEL SYSTEMS: Will Present at CSFB Conference on Tuesday
SIRVA INC: Completion of IPO Spurs S&P to Up Credit Rating to BB
SIX FLAGS: Gary Story Resigning as Company's President and COO
SPECIAL METALS: Emerges from Bankruptcy After Plan Consummation
SPEIZMAN INDUSTRIES: Board Won't Implement Reverse Stock Split
SPEIZMAN INDUSTRIES: Nasdaq Will Delist Shares Effective Monday
TYVOLA ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors
UNITED AIRLINES: US Bank Seeks Stay Relief for LAX Project Fund
US AIRWAYS GROUP: Resolves Claims Dispute with Viacom Inc.
WEIRTON STEEL: Taps Imperial Capital and Hatch as Fin'l Advisors
WICKES INC: Barry Segal Agrees to Exchange $3.5 Million of Notes
WORLD HEART CORP: Completes Financial Restructuring Transactions
WORLDCOM: Court Approves Huron's Engagement as Fin'l Advisors
W.R. GRACE: Brings-In Fred Festa as New Company President & COO
* BOOK REVIEW: Transnational Mergers and Acquisitions
in the United States
*********
ADELPHIA COMMS: Has Until Feb 17 to Make Lease-Related Decisions
----------------------------------------------------------------
The U.S. Bankruptcy Court extends the Adelphia Communications
Debtors' deadline to decide whether to assume, assume and assign,
or reject an Unexpired Lease to February 17, 2004.
However, if the Debtors seek to reject the Lease with Scranton
Mall Associates that govern the premises located at the Mall at
Steamtown, in Scranton, Pennsylvania, at any time prior to
January 31, 2004, the effective date of the rejection will be no
earlier than January 31, 2004. (Adelphia Bankruptcy News, Issue
No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AHOLD N.V.: 2003 First Three Quarter Results Sink into Red Ink
--------------------------------------------------------------
Ahold NV released its results for the first three quarters of
2003.
In certain instances, results presented in this press release
exclude the impact of fluctuations in currency exchange rates used
in the translation of Ahold's foreign subsidiaries' financial
statements into Euros, in order to provide a better insight into
the operating performance of foreign subsidiaries. In addition, in
certain instances, operating income for Ahold's business segments
presented in this press release excludes the impact of the
impairment and amortization of goodwill and exceptional losses.
Operating income before impairment and amortization of goodwill
and exceptional losses is a non-GAAP financial measure. A
reconciliation of this non-GAAP financial measure to the Dutch
GAAP measure of operating income, as well as management's
explanation for the use of this measure, are set forth in Annex B.
Highlights for the first three quarters of 2003:
-- Net sales amounted to Euro 43.3 billion, a decrease of 10.5%
compared to the same period last year, or an increase of 3.3%
excluding foreign currency translation impact
-- Operating income before impairment and amortization of
goodwill and exceptional losses amounted to Euro 857 million,
a decrease of 53.4% compared to the same period last year, or
a decrease of 45.5% excluding foreign currency translation
impact
-- Net loss amounted to Euro 62 million (net income of Euro 17
million last year), including exceptional non-cash losses of
Euro 130 million
-- Net cash from operating activities totaled Euro 873 million
compared to Euro 1,692 million in the same period last year
Ahold published its results for the first three quarters of 2003.
Commenting on the results, Hannu Ryopponen, CFO, said: "The
results for the third quarter of 2003 reflected the trends of the
first half-year as published on November 7, 2003 with some
slippage of operating income in our U.S. retail operations and an
increase in operating losses at U.S. Foodservice. Non-recurring
items have negatively affected results both at our U.S. retail
operations and in U.S. Foodservice. Operating income in Europe
declined primarily due to a decrease at Albert Heijn."
Net sales
The 10.5% decrease in net sales was largely attributable to lower
currency exchange rates against the Euro, particularly for the
U.S. Dollar. The average U.S. Dollar to Euro exchange rate
decreased approximately 16.7% in the first three quarters of 2003
compared to the same period last year. Net sales excluding
currency impact increased by 3.3% mainly due to a 3.2% increase in
net sales in the U.S. retail trade operations, a 1.3% increase in
the Europe retail trade operations and a 1.2% increase at U.S.
Foodservice.
In addition, net sales in the first three quarters of 2003 were:
-- favorably impacted by the full period consolidation in Ahold's
consolidated financial statements of Disco and Santa Isabel in
South America, which began to be consolidated in the second
and third quarters of 2002, respectively;
-- favorably impacted by the acquisition of Lady Baltimore and
Allen Foods in September and December 2002, respectively,
which, together with the consolidation of Disco and Santa
Isabel discussed above, contributed approximately 1.2% of the
3.3% net sales growth; and
-- marginally negatively impacted by the divestments of Jamin and
De Tuinen in The Netherlands in the second quarter of 2003 and
of the Company's Chilean, Malaysian, Indonesian and Paraguayan
operations and De Walvis in The Netherlands in the third
quarter of 2003.
Operating Income
The 49.0% decrease in operating income was primarily caused by
weaker operating performance in all business segments, the
weakening of the U.S. Dollar against the Euro and higher audit,
legal and consultancy fees. In addition, as discussed below,
exceptional losses of Euro 130 million were recorded in the third
quarter of 2003 related to the divestment of a number of foreign
subsidiaries, principally Ahold's Chilean activities. Operating
income in the same period last year was negatively impacted by an
exceptional loss of Euro 372 million in the first three quarters
of 2002. The exceptional loss was caused by the default by Velox
Retail Holdings, Ahold's former joint venture partner, on bank
debt that Ahold had guaranteed.
Operating income before impairment and amortization of goodwill
and exceptional losses in 2003 decreased by 53.4% compared to the
same period last year. Excluding currency impact, operating income
before impairment and amortization of goodwill and exceptional
losses would have decreased by 45.5% in the first three quarters
of 2003 compared to the same period last year. As mentioned above,
this decrease was primarily caused by a weaker operating
performance across all business segments, as well as higher audit,
legal and consultancy fees.
Goodwill Amortization
Goodwill amortization in the first three quarters of 2003 amounted
to Euro 131 million, a decrease of 35.1% compared to the same
period last year. This decrease was primarily due to lower
goodwill balances at year-end 2002 resulting from the goodwill
impairment charges of Euro 1,281 million recorded in fiscal 2002
of which Euro 1,185 million were recognized in the fourth quarter
of fiscal 2002 and to the lower average currency exchange rate of
the U.S. Dollar against the Euro.
Goodwill Impairment
No goodwill impairment charges were recorded in the first three
quarters of 2003 compared to Euro 96 million in the same period
last year. The goodwill impairment charge recorded in the first
three quarters of 2002 mainly related to the purchase of the
remaining shares in DAIH in July and August 2002.
Exceptional Losses
Exceptional losses of Euro 130 million were recorded in the third
quarter of 2003 related to the divestment of foreign subsidiaries,
principally Ahold's Chilean activities. Of these exceptional
losses, Euro 90 million related to the recognition of accumulated
foreign currency translation adjustments in the statement of
operations and Euro 36 million to the reversal of goodwill, both
of which had previously been charged to shareholders' equity.
These exceptional losses were non-cash and had no impact on the
overall level of shareholders' equity. Exchange rate differences
related to the translation of the financial results of foreign
subsidiaries are recorded directly in shareholders' equity.
When these exchange rate differences are realized upon the sale or
liquidation of the underlying foreign subsidiary, the cumulative
foreign currency translation adjustments are recognized in the
statement of operations. Also, under Dutch GAAP, goodwill
previously deducted directly from shareholders' equity upon
acquisition has to be reclassified pro-rata to the statement of
operations if sold within six years of the initial acquisition.
Net Financial Expense
Net interest expense increased by 4.1% due to an increase in
banking fees and interest expenses related to the credit facility
signed on March 3, 2003, new debt assumed or incurred in
connection with acquisitions in the course of 2002 and an increase
in cash dividends paid in 2002. This increase in banking fees and
interest expenses was partly offset by a favorable currency
impact, especially relating to the U.S. Dollar against the Euro.
Net interest expense excluding currency impact increased by 18.8%.
The increase in banking fees and interest expenses was due in part
to the higher applicable borrowing rate for the 2003 credit
facility compared with the previous credit facility. The
applicable borrowing rate under the 2003 credit facility as of the
end of the third quarter of 2003 was LIBOR (or EURIBOR on Euro
borrowings) plus 3.25%. The applicable borrowing rate under the
previous credit facility as of year-end 2002 was LIBOR (or EURIBOR
on Euro borrowings) plus a margin of 0.35% to 0.40%, depending
upon the amount of debt drawn under the facility.
Ahold's level of borrowing and letters of credit under its 2003
credit facility have increased compared to the level under the
previous credit facility. Ahold also has incurred significant fees
under the 2003 credit facility and in connection with the
extension and amendment of its accounts receivable securitization
programs. Ahold's borrowings under the 2003 credit facility as of
the end of the third quarter of 2003 were USD 750 million and Euro
600 million, plus USD 353 million of issued letters of credit that
bore a fee of 3.25% of the stated amount. Its borrowings under the
previous credit facility as of year-end 2002 were USD 80 million,
plus USD 150 million of issued letters of credit with a fee of
0.40%.
The gain on foreign exchange in the first three quarters of 2003
amounted to Euro 16 million and mainly related to the positive
impact of the revaluation of the Argentine Peso on U.S. Dollar-
denominated debt in Argentina. In the first three quarters of
2002, a foreign exchange loss of Euro 85 million was mainly
incurred related to the negative impact of the devaluation of the
Argentine Peso on U.S. Dollar-denominated debt and inflation
adjustment losses related to Argentine Peso-denominated debt in
Argentina.
Income Taxes
The effective income tax rate, adjusted for the impact of non-tax-
deductible impairment and amortization of goodwill and exceptional
losses, increased to 50.9% in the first three quarters of 2003
compared to 30.0% in the same period last year. The main factor
contributing to this increase in the effective tax rate was a
different geographic mix of earnings, and higher losses in areas
where no tax credit could be recorded.
Share in Income (Loss) of Joint Ventures
and Equity Investees
The share in income (loss) of joint ventures and equity investees
in the first three quarters of 2003 amounted to an income of Euro
139 million, compared to a loss of Euro 42 million in the same
period last year. The share in income of ICA, included in European
joint ventures, increased considerably in the first three quarters
of 2003 mainly as a result of a gain related to the sale and
leaseback of several distribution centers.
The loss in the first three quarters of 2002 was primarily caused
by losses at DAIH. The loss at DAIH of Euro 126 million reflects
the losses incurred at Disco and Santa Isabel at the time that
they were not consolidated, which were mainly caused by the
negative impact of the devaluation of the Argentine Peso on U.S.
Dollar-denominated debt, as well as inflation adjustment losses on
third-party Argentine Peso-denominated debt in Argentina. The
losses in the first three quarters of 2002 at DAIH were partially
offset by income from ICA AB, Jeronimo Martins Retail and Paiz
Ahold in this period.
Net Income (Loss)
Net loss in the first three quarters of 2003 was Euro 62 million,
compared to a net income of Euro 17 million in the same period
last year. The net loss in the 2003 period was primarily caused by
lower operating performance at all business segments and higher
audit, legal and consultancy fees, as well as the weakening of the
U.S. Dollar against the Euro and the Euro 130 million of
exceptional losses related to divestments.
Net Income (Loss) after Preferred Dividends
per Common Share-Basic
Net loss after preferred dividends per common share-basic amounted
to Euro 0.10 per common share in the first three quarters of 2003
compared to a net loss of Euro 0.01 per common share in the same
period last year.
Retail Trade -- United States
Third Quarter 2003
Operating income before impairment and amortization of goodwill
and exceptional losses in the third quarter of 2003 decreased as a
result of reduced gross margin due to increased promotional
activity, particularly at Giant-Landover and Tops. Stop & Shop
continued its solid performance during the quarter.
Operating income also was significantly impacted by impairment
charges relating to long-lived assets and other non-recurring
items. In addition, in the third quarter of 2002, real estate
gains totaling Euro 29 million had a positive impact on operating
income, as reported last year, versus a gain of Euro 4 million
this year.
First Three Quarters 2003
The decrease in net sales in the first three quarters of 2003 was
largely attributable to a lower U.S. Dollar to Euro exchange rate.
U.S. Dollar net sales increased by 3.2% resulting from comparable
sales growth and the opening of new stores. Identical sales
increased by 0.1% and comparable sales at existing and replacement
stores increased by 0.9%. At Stop & Shop and Giant-Carlisle, U.S.
Dollar net sales increased by 6.6% and 7.8%, respectively. Giant-
Landover and Tops experienced pressure on net sales due to the
weak economy and heightened competition, resulting in only slight
increases in U.S. Dollar net sales. Due to the difficult trading
environment in the southeastern United States, U.S. Dollar net
sales at Bruno's and BI-LO (excluding Golden Gallon) were lower.
Operating income before impairment and amortization of goodwill
and exceptional losses in the first three quarters of 2003
decreased primarily as a result of the decline in the third
quarter. Operating expenses at all of the companies in the U.S.
retail operations were impacted by higher pension expenses, as
well as continued rising health care costs. The pressure on
operating expenses caused by these factors was partially offset by
various cost saving initiatives.
Retail Trade -- Europe
Third Quarter 2003
Operating income before impairment and amortization of goodwill
and exceptional losses at Albert Heijn in the third quarter of
2003 decreased significantly compared to the same period in 2002.
The decrease was primarily due to lower net sales and gross
margins partially offset by lower operating expenses from cost
reduction programs. As part of these programs, Albert Heijn is
restructuring its head office and logistics functions, including
through the reduction of 440 jobs.
Operating income before impairment and amortization of goodwill
and exceptional losses at other Europe retail trade operations
increased in the third quarter of 2003, compared to the same
period in 2002. This increase was primarily due to a strong
increase at Schuitema as a result of higher sales and lower
operating costs. In Central Europe, operating loss before
impairment and amortization of goodwill and exceptional losses
increased partly due to fixed asset impairment charges related to
the sale of two hypermarkets in Poland and increased operating
costs due to new stores. Spain incurred a small operating loss
before impairment and amortization of goodwill and exceptional
losses mainly due to slightly lower gross margins and higher
operating costs partly related to new stores as well as fixed
asset impairment charges.
First Three Quarters 2003
Net sales at Albert Heijn in the first three quarters of 2003
decreased by 2.0% compared to the same period last year. Identical
sales at Albert Heijn in the first three quarters of 2003 declined
by 2.0% primarily due to lower consumer spending and a negative
market sentiment towards Albert Heijn. As a result, Albert Heijn
introduced a new pricing strategy in October 2003. Net sales at
other Europe retail trade operations in the first three quarters
of 2003 increased by 4.1% compared to the same period last year,
primarily due to strong net sales growth at Schuitema and an
increase in net sales in Central Europe and Spain. Net sales were
marginally offset by the disposals of Ahold's specialty stores
(Jamin and De Tuinen) in The Netherlands, which were completed in
the second quarter of 2003. In Central Europe and Spain, net sales
increased due to the opening of new stores, however, net sales in
Central Europe were negatively impacted by deflation and a
negative currency impact.
Operating income before impairment and amortization of goodwill
and exceptional losses in the Europe retail trade operations
decreased primarily due to lower operating income at Albert Heijn.
This was principally caused by lower net sales and gross margins,
partially offset by lower operating expenses due to the start-up
of cost reduction programs. In response to the competitive
environment, Albert Heijn announced its price repositioning
campaign on October 5, 2003.
Operating income before impairment and amortization of goodwill
and exceptional losses at other Europe retail trade operations in
the first three quarters of 2003 was almost at the same level as
the comparable period of last year.
Foodservice -- United States
Third Quarter 2003
The operating loss before impairment and amortization of goodwill
and exceptional losses in the third quarter of 2003 was primarily
due to continued substantial pressure on gross profit at U.S.
Foodservice as a result of its continued focus on controlling
inventory levels and, hence, reduced purchases from vendors. As a
result of the latter, volume allowances, which are based on
purchases from vendors and which are an offset against cost of
goods sold, were reduced.
First Three Quarters 2003
Net sales at U.S. Foodservice in the first three quarters of 2003
decreased by 15.7% compared to the same period last year primarily
due to a lower currency exchange rate of the U.S. Dollar against
the Euro. U.S. Dollar net sales increased slightly by 1.2% due to
the acquisition of Lady Baltimore and Allen Foods in September and
December 2002, respectively, which contributed approximately 1.8%
of the increase in net sales in the first three quarters of 2003,
meaning that there has been a slight decrease in net sales
excluding these acquisitions.
The operating loss before impairment and amortization of goodwill
and exceptional losses was primarily due to substantial pressures
on operating profit at U.S. Foodservice principally as a result of
the repercussions from the accounting issues and investigations in
2003. Furthermore, U.S. Foodservice experienced a weakening of its
procurement leverage as vendors raised prices and shortened
payment terms, resulting in a sharp deterioration in
profitability.
Food Service -- Europe
Net sales at the Deli XL food service operations, located in The
Netherlands and Belgium, in the first three quarters of 2003
decreased by 3.3% compared to the same period last year. This
decrease was primarily due to continuing unfavorable economic
circumstances.
Operating income at the Deli XL food service operations in the
first three quarters of 2003 decreased by 75.0% compared to the
same period last year.
Other Business Areas
Retail Trade -- South America
Net sales in the South America retail trade operations in the
first three quarters of 2003 increased by 13.6% compared to the
same period last year. This increase was mainly due to the
consolidation of Disco and Santa Isabel since the second and third
quarter of 2002, respectively. This increase was partially offset
by the impact of the divestment of Santa Isabel's Chilean and, to
a lesser extent, Paraguayan operations in July and September 2003,
respectively.
The operating loss before impairment and amortization of goodwill
and exceptional losses in the first three quarters of 2003 was a
result of the consolidation of Disco and Santa Isabel since the
second and third quarter of 2002, respectively, both of which had
operating losses, and the negative impact of lower net sales and
lower margins recorded at the company's Brazilian operations.
Retail Trade -- Asia
Net sales in the Asia retail trade operations in the first three
quarters of 2003 decreased by 17.7% compared to the same period
last year. This decrease was primarily due to the disposal of
operations in Malaysia and Indonesia completed in September 2003
and a decline in net sales in Thailand due to strong competition.
The increase in operating loss was primarily due to lower net
sales and gross margin and to restructuring charges incurred as a
result of the divestment program in Asia in the first three
quarters of 2003.
Other Activities
Other activities include operations of three real estate companies
which acquire, develop and manage store locations in Europe and
the United States and corporate overhead costs of the Ahold parent
company. The operating loss before impairment and amortization of
goodwill and exceptional losses in the first three quarters of
2003 partially reflected corporate costs of Euro 124 million
compared to Euro 24 million in the same period last year. The
higher corporate costs in the 2003 period were mainly caused by
the significant costs incurred in connection with the forensic
accounting and legal investigations that have been conducted,
ongoing litigation and ongoing government and regulatory
investigations, as well as higher audit fees in connection with
the audit of the company's 2002 financial statements. Furthermore,
corporate costs increased as a result of an increase in the
company's provision for self insurance and a decrease in gains
from the sale of real estate compared to the same period last
year.
Cash Flow Statement
Net cash from operating activities in the first three quarters of
2003 decreased by 48% compared to the same period last year,
mainly as a consequence of lower operating income. Changes in
working capital resulted in a cash outflow of Euro 131 million in
the first three quarters of 2003 partly due to shorter payment
terms imposed by certain suppliers to U.S. Foodservice as a
consequence of the discovery of the accounting irregularities as
announced. As a consequence, changes in accounts payable resulted
in a cash outflow of Euro 532 million in the first three quarters
of 2003. This was offset by a cash inflow related to changes in
inventory partly as a result of U.S. Foodservices' focus on
controlling inventory levels and purchases from vendors.
Investments in tangible fixed assets in the first three quarters
of 2003 amounted to Euro 805 million compared to Euro 1,445
million in the same period last year. Divestments of tangible and
intangible fixed assets amounted to Euro 455 million in the first
three quarters of 2003 compared to Euro 318 million in the same
period last year.
Shareholders' Equity
Shareholders' equity, expressed as a percentage of the balance
sheet total, was 10.0% at the end of the third quarter of 2003
compared to 10.5% at year-end 2002.
Debt Position
The rolling interest coverage ratio at the end of the first three
quarters of 2003 amounted to 1.2, compared to 2.5 at the end of
the same period last year. The rolling net debt / EBITDA ratio
amounted to 4.3 at the end of the third quarter of 2003, compared
to 3.1 at the end of the same period last year.
Outlook for 2003
Ahold expects that its consolidated net sales in 2003, excluding
currency impact, will be slightly higher than in 2002, primarily
as a result of an increase in net sales in the U.S. retail trade
operations resulting from comparable sales growth and the opening
of new stores. This positive factor will be partially offset by
the weakened global economy and strong competition in the markets
that the company serves, as well as the need for management to
deal with the repercussions of the announcements on February 24,
2003 and related developments. In addition, 2003 net sales will be
negatively affected by completed and future divestments closed in
2003.
Operating expenses, excluding the impact of currency exchange
rates and the impact of goodwill impairment and amortization and
exceptional losses, are expected to be significantly higher in
2003 than in 2002. The company expects that net interest expense,
excluding currency impact, will be above 2002 levels.
Nevertheless, the company expects to report net income for the
full year 2003, excluding the impact of any goodwill impairment
and amortization that may be incurred in the fourth quarter of
2003 and excluding exceptional losses with respect to its
divestments.
At the end of 2003, Ahold will evaluate the carrying amount of its
goodwill for possible impairment and will determine whether any
goodwill impairment charges are required to be taken. No
triggering event has been identified in 2003 as of the date of
this press release.
Ahold expects that it will incur exceptional losses upon
completion of the divestitures of certain Latin American
operations, which is expected to occur prior to the end of 2003 or
in 2004. The completion of these divestitures will lead to the
recognition of accumulated foreign currency translation
adjustments in the statement of operations as well as in some
cases the reversal of goodwill previously charged to shareholders'
equity. The cumulative exchange rate differences charged to
shareholders' equity at the end of the third quarter of 2003
amounted to Euro 330 million and Euro 215 million for Brazil and
Argentina, respectively. The respective amounts of goodwill
reversed should a transaction have taken place at the end of the
third quarter of 2003 would have been Euro 255 million for Brazil
and Euro 82 million for Argentina, respectively.
The performance of U.S. retail in the fourth quarter of 2003 is
expected to improve compared to the third quarter partly due to
seasonality. The company expects EBITA margin in the fourth
quarter to improve to approximately the level achieved in the
first three quarters of 2003.
At Albert Heijn, operating profit will be negatively impacted in
the fourth quarter by the price repositioning announced on October
5. However, the company expects that this negative impact will be
partly offset by higher volume. So far, the customer response to
Albert Heijn's price repositioning has been positive.
Ahold expects its food service operations in the United States to
have a clearly lower operating loss before impairment and
amortization of goodwill and exceptional losses in the fourth
quarter of 2003 compared to the third quarter of 2003, excluding
currency impact.
US GAAP Reconciliation
The audited 2002 Financial Statements on Form 20-F filed with the
U.S. Securities and Exchange Commission contains a reconciliation
from Dutch GAAP to US GAAP of net income (loss) and shareholders'
equity. Ahold has not provided a US GAAP reconciliation on a
quarterly basis in 2003 but intends to do so in 2004.
Accounting Principles
The accounting principles applied have not changed compared to the
accounting principles as stated in the Ahold 2002 Annual Report,
which was published in English and Dutch, both of which have been
posted on the Ahold web site -- http://www.ahold.nl
In November 2002, the Emerging Issues Task Force of the Financial
Accounting Standards Board in the United States reached consensus
on Issue No. 02-16, Accounting for Consideration Received from a
Vendor by a Customer (Including a Reseller of the Vendor's
Products). Under the consensus, cash considerations received from
a vendor should be considered an adjustment to the price of the
vendor's products or services and, therefore, characterized as a
reduction of cost of sales when sold unless (1) the cash
consideration represents a reimbursement of a specific,
incremental, identifiable cost incurred in selling the vendor's
products and therefore characterized as a reduction of those costs
or (2) the cash consideration represents a payment for assets or
services delivered to the vendor and therefore characterized as
revenue.
The Company will adopt the provisions of EITF 02-16 for Dutch GAAP
in the fourth quarter of 2003. The Company has not yet completed
its analysis of the effect on the consolidated financial
statements as a result of the adoption of EITF 02-16.
The 2002 numbers included in this press release have been restated
as disclosed in note 3 of the Ahold 2002 Annual Report.
Other
The data included in this press release are unaudited. The balance
sheet items as per December 29, 2002 have been derived from the
Ahold 2002 Annual Report.
As reported in Troubled Company Reporter's November 11, 2003
edition, Standard & Poor's Ratings Services revised to positive
from negative the implications of its CreditWatch listing on
Netherlands-based food retailer and food-service distributor Ahold
Koninklijke N.V., following the group's announcement of its
refinancing plan.
All the long-term ratings on Ahold, including the 'BB-' long-term
corporate credit rating, remain on CreditWatch, where they were
placed on Feb. 24, 2003, following the announcement of substantial
accounting irregularities. In addition, Standard & Poor's affirmed
its short-term 'B' ratings on the group.
AIR CANADA: Sept. 30 Net Capital Deficit Widens to $3.4 Billion
---------------------------------------------------------------
For the third quarter ended September 30, 2003, Air Canada
reported operating income before reorganization items of $17
million. This compared to income of $168 million in the same
quarter of 2002. Due in large part to the impact of SARS on summer
travel from around the world, passenger and other operating
revenues were down $517 million or 19 per cent. As a result of
reduced flying and the Corporation's restructuring and cost saving
initiatives, operating expenses were reduced by $366 million or 14
per cent in the quarter, before reorganization items. While under
the Companies' Creditors Arrangement Act (CCAA), the Corporation
is revising its cost structure, including labor costs, supplier
contracts and leasing arrangements. Once new agreements are
reached, the Corporation reflects the revised cost in its
operating expenses with the exception of certain aircraft lease
amendments which are conditional upon successful emergence from
CCAA. In the case of these aircraft lease amendments, the cost of
the original agreement continues to be recorded in operating
expenses.
On April 1, 2003, Air Canada obtained an order from the Ontario
Superior Court of Justice providing creditor protection under
CCAA. Air Canada also made a concurrent petition under Section 304
of the U.S. Bankruptcy Code.
At September 30, 2003, Air Canada's balance sheet shows a working
capital deficit of about $600 million and a total shareholders'
equity deficit of about $3.4 billion.
"In light of the difficult revenue environment, we are satisfied
to report an operating profit of $17 million for this quarter.
While modest by historical earnings for the quarter, given that we
are expensing all operating costs while in CCAA, this profit still
highlights our significant progress in reducing operating costs
and making permanent structural changes," said Robert Milton,
President and Chief Executive Officer. "Through aggressive cost
cutting and operational efficiencies we are successfully adapting
to a permanently reduced domestic yield environment.
"Given the rapid and precipitous fall off in revenues due to SARS,
I am pleased with the speed with which we were able to eliminate
costs during the period. Almost two-thirds of our revenue short
fall was due to a dramatic drop- off in international revenues.
"The current low fare environment in Canada and the increase
capacity by low cost carriers continued to put downward pressure
on revenues and yields. While our domestic capacity was down 5 per
cent in the quarter, every other Canadian carrier increased
capacity. This is the new and challenging industry reality in
Canada and it only serves to underline the importance of
continuing to aggressively restructure our operating costs.
"We are making good progress in our restructuring. Our employees,
who collectively demonstrated remarkable resilience and dedication
during trying operational circumstances in the quarter, are
adapting to the necessary changes we are making. Our customers
have responded positively to the initiatives we have introduced to
provide greater value for money and simplify their travel
experience. We continue to look to the future with a sense of
confidence."
As a result of restructuring under CCAA, the Corporation has and
will continue to record a number of significant reorganization
items directly associated with the restructuring. These
"reorganization items" represent revenues, expenses, gains and
losses, and provisions for losses that can be directly associated
with the reorganization and restructuring of the business under
CCAA, and do not relate to the normal operating expenses of the
airline. A number of significant reorganization items recorded in
the third quarter relate to the anticipated allowable claims
resulting from repudiated contracts, including aircraft leases
that have been repudiated. Reported as compromised liabilities,
the claims will be dealt with under CCAA.
Also included in reorganization items are foreign exchange
adjustments on compromised debt, aircraft rent expense incurred as
a result of the restructuring, labor-related and other items.
Including these reorganization items, loss before foreign exchange
on long-term monetary items and income taxes was $276 million. The
net loss was $263 million compared to net income of $125 million
in the third quarter of 2002. Adjusted pre-tax income was $13
million, before reorganization items (a).
(a) Adjusted pre-tax income before reorganization items is a non-
GAAP earnings measure. Reorganization items which are not
reflective of the underlying financial performance of the
Corporation from ongoing operations have been removed from
reported earnings/losses. For the third quarter 2003, adjusted
pre-tax income before reorganization items is calculated by
removing reorganization items of $273 million from the
reported GAAP loss before income taxes of $260 million.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
OPERATING REVENUES
For the quarter, consolidated passenger revenues declined $435
million or 19 per cent from the prior year. This represented an
improvement from the 26 per cent revenue decline recorded in the
second quarter, however, US and Pacific markets continued to show
a weak performance. The SARS outbreak in the spring and a second
outbreak in May had a severe negative impact on travel demand
worldwide and to Canada as the SARS crisis peaked when travelers
were firming up summer travel plans. Increased competition and the
lingering impact of SARS contributed to the passenger traffic
decline of 13 per cent. As a result of the weak traffic
environment, the Corporation reduced available seat mile capacity
by 12 per cent. Passenger revenue per revenue passenger mile and
passenger revenue per available seat mile were both down 7 per
cent from the third quarter of 2002.
Third quarter domestic passenger revenues were down $158 million
or 17 per cent. Domestic passenger traffic was down 4 per cent and
ASM capacity was reduced by 5 percent. Domestic yield declined 13
per cent resulting from increased price competition and the
Corporation taking initiatives to stimulate traffic. As a result,
domestic RASM declined 12 per cent.
US transborder passenger revenues were down $111 million or 23 per
cent. US transborder traffic declined 20 per cent reflecting a 21
per cent reduction to ASM capacity and a competitive market with
increased US carrier capacity over last year. As a result of a 4
per cent yield deterioration, US transborder RASM was down by 3
per cent.
Other international passenger revenues were $166 million or 18 per
cent below the prior year. Atlantic revenues declined 4 per cent
and RASM decreased 7 per cent mainly reflecting a 5 per cent
decrease in yield. The Pacific market continued to be severely
impacted by SARS resulting in a 52 per cent decline in passenger
revenues from the third quarter of 2002. Pacific traffic was down
47 per cent with flying capacity reduced by 49 per cent. Yield was
down 9 per cent reflecting ongoing softness in the business
market. South Pacific, Caribbean, Mexico and South America
revenues were up 2 per cent.
Cargo revenues decreased $32 million or 21 per cent due largely to
reduced cargo capacity on Pacific routes. Other revenues were $50
million or 20 per cent lower largely as a result of reduced third
party aircraft maintenance revenues in the Technical Services
division.
For the quarter, total operating revenues declined $517 million or
19 per cent compared to the third quarter of 2002.
OPERATING EXPENSES
During the quarter, Air Canada paid all suppliers and creditors in
accordance with established arrangements, with the exception of
aircraft lease payments to certain aircraft lessors with whom
renegotiated leases had not been completed and unsecured debt
principal repayments and interest.
While under the Companies' Creditors Arrangement Act (CCAA), the
Corporation is revising its cost structure, including labor costs,
supplier contracts and leasing arrangements. Once new agreements
are reached, the Corporation reflects the revised cost in its
operating expenses with the exception of certain aircraft lease
amendments which are conditional upon successful emergence from
CCAA. In the case of these aircraft lease amendments, the cost of
the original agreement continues to be recorded in operating
expenses.
Significant progress was made in the quarter on reducing operating
costs in line with Air Canada's restructuring plan. Operating
expenses were reduced $366 million or 14 per cent from the third
quarter of 2002 on a 12 per cent reduction to consolidated ASM
capacity. Salaries and wage expense declined $136 million or 21
per cent reflecting a reduction of over 6,300 full-time equivalent
employees as well as changes to work rules and salaries for
unionized and non-unionized labor groups. Employee benefits
expenses increased $14 million largely due to net favorable
adjustments recorded in 2002. Fuel expense decreased $37 million
or 10 per cent due to reduced flying partly offset by higher fuel
prices compared to last year. Aircraft rent expense decreased $22
million reflecting the impact of aircraft returns and renegotiated
lease rates. Cash rental payments have resumed for aircraft leases
that have been renegotiated under the restructuring process.
Aircraft maintenance materials and supplies expense was down $43
million or 36 per cent due mainly to reduced flying activity, the
return of high maintenance cost aircraft and the retirement of
older aircraft. Commission expense was down $21 million or 22 per
cent resulting from reduced passenger revenues compared to the
prior year. Year-over-year cost reductions were recorded in other
categories including food, beverages and supplies expenses,
communications and information technology and many other expense
areas. Despite the 12 per cent reduction in consolidated ASM
flying capacity, airport and navigation fees were only down 1 per
cent due to cost increases imposed by many airport authorities.
Unit cost, as measured by operating expense per ASM, was 2 per
cent below the third quarter of 2002 for the Mainline-related
operations, before reorganization items. This unit cost reduction
was accomplished despite the major reduction in flying capacity.
Operating expense, net of cargo and other non-ASM revenues per
ASM, was unchanged from the prior year.
REORGANIZATION ITEMS
As a result of the CCAA filing, the Corporation is following
accounting policies applicable to an entity under creditor
protection.
Reorganization items totaling $273 million were recorded in the
third quarter of 2003 and were comprised of: claims resulting from
repudiated leases and contracts, foreign exchange adjustments on
compromised debt, aircraft rent expense incurred as a result of
the restructuring, labor-related and other items.
NON-OPERATING EXPENSE
A loss on disposal of assets of $1 million was recorded in the
2003 quarter mainly as a result of provisions of $28 million
related to the write- down of non-operating aircraft, spare parts
and other investments offset by a gain of $29 million related to
an earn out provision on the sale of Galileo Canada which occurred
in 1998. In the 2002 quarter, the Corporation recorded, in "other"
non-operating income, gains of $100 million from the purchase of
Air Canada debt including $92 million from the purchase of
Japanese Yen perpetual debt.
Income from foreign exchange on long-term monetary items amounted
to $16 million in the third quarter of 2003. This compared to a
loss of $86 million in the same quarter of 2002. In 2003, foreign
exchange adjustments on compromised debt are recorded as
"reorganization items" and amounted to $45 million in the quarter.
CASH FLOW
Cash flows from operations amounted to $27 million in the quarter,
a $62 million decrease from the 2002 quarter. This deterioration
was mainly due to lower operating results partially offset by
aircraft lease payments less than (in excess of) rent expense
which provided cash of $90 million mainly due to the moratorium on
aircraft lease payments allowed under the Court order.
As at September 30, 2003, cash and cash equivalents amounted to
$810 million and the US$700 million DIP secured financing from
General Electric Canada Inc. remained undrawn.
As at November 26, 2003, the Corporation's combined cash balance,
measured on the basis of cash in its Canadian and United States
bank accounts, amounted to an estimated $960 million and no funds
had been drawn against the US$700 million DIP secured financing,
however, letters of credit were outstanding from that facility in
the amount of US$14 million.
YEAR-TO-DATE
For the nine months ending September 30, 2003, the Corporation
recorded an operating loss before reorganization items of $607
million compared to operating income of $70 million in 2002. Net
loss, which included $494 million of reorganization items, was
$1,099 million versus a net loss of $64 million in the prior year.
RESTRUCTURING UPDATE
Since filing for CCAA on April 1, 2003, Air Canada has achieved
significant progress in its restructuring process, including the
following recent developments:
- on October 24, Air Canada reached agreement with Deutsche Bank
whereby Deutsche Bank will act as standby purchaser of a
comtemplated rights offering to Air Canada's creditors in a
minimum amount of $350 million and a maximum amount of $450
million, as determined by Air Canada.
- on November 8, 2003, Air Canada's Board of Directors selected
Trinity Time Investments controlled by Victor T.K. Li as equity
sponsor from the two equity plan sponsor finalists announced in
September. The agreement contemplates a $650 million equity
investment, which will represent approximately 31% of the common
equity in a restructured Air Canada. This agreement is subject
to certain conditions;
- on November 24th, Air Canada applied for approval of the Trinity
Investment Agreement and the Deutsche Bank Standby Purchase
Agreement.
The two agreements in total would provide for $1.1 billion of
equity investment in the Air Canada restructuring;
- commencement of the detailed evaluation process to select the
aircraft manufacturer for the 70-100 seat aircraft required for
the implementation of the business plan.
Air Canada's 2003 third quarter results are being made available
on Air Canada's Web site at http://www.aircanada.comand at
http://www.SEDAR.com A copy may also be obtained on request by
contacting Air Canada Shareholder Relations at (514) 422-5787 or
1-800-282-7427.
ALTERRA HEALTHCARE: Delaware Court Confirms Second Amended Plan
---------------------------------------------------------------
Alterra Healthcare Corporation (OTCBB:ATHC) announced that the
United States Bankruptcy Court for the District of Delaware has
entered an order confirming its Second Amended Plan of
Reorganization.
This will position the Company to emerge from bankruptcy over the
next several weeks upon the closing of the transactions described
in the Plan.
The Alterra plan of reorganization contemplates: (i) a $76 million
equity investment in reorganized Alterra by FEBC-ALT Holdings
Inc., a subsidiary of a joint venture formed by Fortress
Investment Group LLC, Emeritus Corporation and NW Select LLC; (ii)
the reorganized Alterra will continue to operate 305 residences
located in 21 states financed primarily by pre-existing mortgage
loan and sale lease-back financing arrangements; and (iii) the
extinguishment of substantially all of Alterra's pre-petition
unsecured debt as well as its common stock and other equity
securities in consideration of an aggregate cash distribution
payable to unsecured creditors of up to $23 million, subject to
adjustment based on the terms of the plan of reorganization.
Consummation of the plan of reorganization and the FEBC
investment, which the Company anticipates completing in December
2003, is subject to satisfaction of various conditions, including
but not limited to securing certain regulatory approvals.
Mark Ohlendorf, President of Alterra, noted, "We are pleased to
announce the anticipated completion of our restructuring
activities. With support of our secured lenders and lessors and
the substantial equity investment by our new owners, we were able
to complete the Chapter 11 process in less than twelve months. We
appreciate the consistent support we received from our employees
and resident families as we completed this necessary financial
restructuring, and anticipate that Alterra will again be a
vibrant, healthy company committed to providing the best possible
care to our residents. I am very proud of all of the employees in
the Company. Their level of dedication and commitment to our
corporate mission throughout these challenging times has been
truly inspiring."
Alterra offers supportive and selected healthcare services to our
nation's frail elderly and is the nation's largest operator of
freestanding Alzheimer's/memory care residences. After the
restructuring, Alterra will operate in 21 states.
AMDL INC: Recurring Losses Continue to Deplete Cash Resources
-------------------------------------------------------------
AMDL Inc. is primarily engaged in the commercial development of,
and the obtaining of, various governmental regulatory approvals
for the marketing of its proprietary diagnostic tumor-marker test
kit, DR-70, to detect the presence of colorectal and other types
of cancer. The Company's product line also includes a selection of
diagnostic test kits for several types of cancer, infectious
diseases, endocrinology, diabetes, nephrology and allergy. The
Company also owns a proprietary combination immunogene therapy
technology.
Since the beginning of the year the Company has conducted a number
of private placement offerings and is continuing the current
offering of units of common shares and warrants. Through
September 30, 2003 the Company generated aggregate net proceeds of
$2,289,730 from these offerings, which proceeds increased
liquidity and enabled the Company to complete the DR-70
application to the FDA. Between October 1, 2003 and November 10,
2003, the Company received additional net proceeds of
approximately $1,074,000 from the exercise of warrants and the
issuance of shares for cash.
The Company has an accumulated deficit of $22,986,044 as of
September 30, 2003, continues to generate low levels of sales from
its DR-70 product, and has incurred significant continuing losses
from operations through September 30, 2003. However, the Company
believes that its cash position of $2,005,256 at November 10, 2003
is sufficient to fund its operations and working capital
requirements through at least December 31, 2004.
AMDL's total outstanding current liabilities increased to $400,801
at September 30, 2003 as compared to $243,585 at December 31,
2002. The increase resulted from accrued expenses related to the
offerings and negotiated deferred payment terms for $52,000 due to
directors and $54,000 due to a trade creditor.
As of November 10, 2003, cash is being depleted at the rate of
approximately $140,000 per month, excluding clinical trial costs
and other non-recurring costs estimated to aggregate approximately
$75,000. The amount of cash on hand is sufficient to meet
operating expenses through at least December 31, 2004. Without a
significant change in sales, the Company's only source of
significant additional funds to meet future operating expenses is
the sale of the Company's securities.
There are significant uncertainties that negatively affect AMDL's
operations. These are principally related to (i)the lack of US
FDA approval and absence of any strong distribution network for
its DR-70 kits, (ii)the early stage of development of its
Combination Immunogene Therapy technology and the need to enter
into a strategic relationship with a larger company capable of
completing the development of any ultimate product and the
subsequent marketing of such product, and (iii)the absence of any
commitments or firm orders from its distributors in Taiwan and
Hong Kong, Australia and Korea. In addition, the lack of a market
for its PyloriProbe product due to changes in technology and the
presence of improved competitive products in the United States has
led management to conclude that investment in this product and any
inventory on hand will have no further realizable value
domestically. Moreover, there is no assurance as to when, if ever,
the Company will be able to conduct its operations on a profitable
basis. The Company's limited sales to date and the lack of any
purchase requirements in the existing distribution agreements,
makes it impossible to identify any trends in its business
prospects.
The Company does not expect to incur any material capital
expenditures until sales volume increases substantially. Any
required future capital expenditures for manufacturing equipment
will be funded out of future revenues or additional equity. The
Company does not have any long term or contingent obligations that
must be satisfied.
Additionally, in order to ensure that sufficient funds are
available to pay ongoing general and administrative expenses, the
Company is currently seeking to raise additional funds through the
potential sale of additional securities in a private placement
offering. The potential impact of either an adverse determination
in the action brought by AcuVector Group, Inc., poor results in
ongoing German trials or an adverse response from the FDA could
materially impact the Company's ability to obtain the additional
working capital. There is no assurance the Company will be able to
generate sufficient revenues or obtain sufficient funds when
needed, or whether such funds, if available, will be obtained on
terms satisfactory to the Company. In addition, the filing of the
AcuVector lawsuit may have an effect on AMDL's ability to license
the CIT technology.
As reported in its financial statements and in the report of its
auditors for the year ended December 31, 2002, there was a
substantial doubt as to the Company's ability to continue as a
going concern.
AMERADA HESS CORP: Caps Price of Tender Offer for 5.90% Notes
-------------------------------------------------------------
Amerada Hess Corporation (NYSE: AHC) announced the reference yield
for its previously announced tender offer for its 5.90% Notes due
August 15, 2006.
Tender Offer Reference Yield Fixed Spread Purchase Price
per $1,000
principal
amount of Notes
------------ --------------- ------------ ---------------
5.90% Notes due 2.333% 0.75% $1,072.25
August 15, 2006
CUSIP 023551AG9)
Amerada Hess will pay a price on the settlement date equivalent to
a yield to maturity equal to the sum of (a) the reference yield
and (b) the fixed spread, set out above, plus accrued interest up
to, but excluding, the date of payment. Assuming a settlement
date of December 5, 2003 for 5.90% Notes tendered before 5:00
p.m., New York City time, on December 2, 2003, the purchase price
would be as set out above, plus accrued interest on the 5.90%
Notes up to, but excluding, the date of payment. Holders must
tender by the Early Tender Date in order to receive the purchase
price set out above.
Holders who tender after the Early Tender Date, but before 5:00
p.m., New York City time, on December 16, 2003 will receive a
lower purchase price of $1,063.75 per $1,000 principal amount of
notes. Holders may not tender 5.90% Notes after the Expiration
Time. The settlement date for 5.90% Notes tendered after the
Early Tender Date but before the Expiration Time is expected to be
December 19, 2003.
The offer for the 5.90% Notes is made on the terms and subject to
the conditions described in the Offer to Purchase dated
November 17, 2003, and the related Letter of Transmittal.
Goldman, Sachs & Co. is acting as dealer manager. Questions
concerning the terms of the tender offer may be directed to
Goldman, Sachs & Co. at 800-828-3182 (toll free) or 212-902-4419
(collect). Questions concerning the procedures for tendering
5.90% Notes or requests for the Offer to Purchase documents may be
directed to D.F. King & Co., Inc., the Information Agent and
Tender Agent, at (800) 848-3416.
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: Secures Go-Signal to Sell Four Real Estate Properties
-------------------------------------------------------------
The AMERCO Debtors obtained permission from the Court, authorizing
AREC to sell four real estate properties in the ordinary course of
business, in accordance with the terms of the prepetition sales
agreements to:
(1) Yonus Attai,
(2) Jim Keras Buick Co., Inc.,
(3) Gustine Properties, Inc., and
(4) Scott Homes II LLC.
The Court authorizes the Debtors to sell the Properties to the
Buyers in the ordinary course of business, in accordance with the
terms of the Agreements. The Debtors should place the proceeds
of the sale of the two Properties located at the southwest corner
of Elliot Road and Rural Road in Tempe, Arizona, into an escrow
account until an agreement is reached regarding the distribution
of the proceeds among and between the Debtors, JPMorgan Chase
Bank, Citibank, N.A. and BMO Global Capital Solutions, or until
the Court orders otherwise.
* * *
The salient terms of the Sales Agreements are:
A. Attai Sale Agreement dated August 22, 2003
* Property Sold: A 1.41-acre real property at Manassas
Drive in Manassas Park, Virginia
* Sale Price: $475,000 with $10,000 Deposit
* Closing Date: November 19, 2003
B. Keras Sale Agreement dated March 7, 2003
* Property Sold: a 1.329-acre real property at 5005 Summer
Avenue in Memphis, Tennessee
* Sale Price: $475,000 with $25,000 deposit
* Closing Date: November 19, 2003
* Lease Assignment: The Property is currently leased by
Keras. This Lease will be assumed and assigned to Keras on
the Closing Date.
C. Gustine Properties Sale Agreement dated February 26, 2003
* Property Sold: a 2.5-acre real property at the corner of
Elliot Road and Rural Road in Tempe, Arizona
* Sale Price: $2,458,613, subject to adjustments payable in
the form of a $25,000 deposit on the execution date,
additional $25,000 payable within 90 days after the
Agreement was executed and the balance payable in cash on
the closing of the sale
* Closing Date: December 30, 2003
* Joint Ownership: The Property is jointly owned by AREC,
with 46.5% interest ownership, Michael L. Shoen, with 25%
interest ownership and Samuel W. Shoen, with 28.5% interest
ownership. The sale price will be divided among the three
owners in an amount equal to each party's ownership interest
in the Property.
* Sale Price Adjustments: The sale price was calculated at
$20.45 per square foot on the assumption that the Property
consists of exactly 120,225 net square feet. If the survey
indicates that the Property consists of more or less than
120,225 square feet, the sale price will be adjusted
accordingly.
D. The Scott Homes Agreement dated February 18, 2003
* Property Sold: a 13.63-acre real property at the corner of
Elliot Road and Rural Road in Tempe, Arizona
* Sale Price: $4,541,981, subject to adjustments, in the
form of a $50,000 deposit on the execution date, additional
$50,000 payable within 90 days after the Agreement was
executed and the balance payable in cash on the closing of
the sale
* Closing Date: December 30, 2003
* Joint Ownership: The Property is jointly owned by AREC,
with 46.5% interest ownership, Michael L. Shoen, with 25%
interest ownership and Samuel W. Shoen, with 28.5% interest
ownership. The sale price will be divided among the three
owners in an amount equal to each party's ownership interest
in the Property.
* Sale Price Adjustments: The sale price was calculated at
$7.65 per square foot on the assumption that the Property
consists of exactly 593,273 net square feet. If the survey
indicates that the Property consists of more or less than
593,273 square feet, the sale price will be adjusted
accordingly. (AMERCO Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANC RENTAL: Judge Walrath Approves Joint Disclosure Statement
-------------------------------------------------------------
U.S. Bankruptcy Court Judge Walrath finds that the ANC Rental
Debtors and the Official Committee of Unsecured Creditors' Joint
Disclosure Statement contains adequate information within the
meaning of Section 1125 of the Bankruptcy Code. Accordingly, the
Court approves the Joint Disclosure Statement. Any and all
objections to the Disclosure Statement are overruled or deemed
withdrawn with prejudice.
Judge Walrath further grants authority to the Debtors and the
Committee to make non-substantive modifications to the Disclosure
Statement prior to its dissemination. (ANC Rental Bankruptcy News,
Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANP FUNDING: S&P Cuts Ratings to Highly Speculative Level
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured bank facility ratings on ANP Funding I LLC to
'B' from 'BBB-'. The outlook is negative.
The downgrade reflects the weakened position of the merchant power
markets in the U.S., which suffer from overcapacity, a lack of
liquidity, compressed spark spreads, and regulatory uncertainty.
"The negative outlook reflects the looming risk of refinancing all
of the debt associated with a portfolio of primarily merchant
assets. While the portfolio can sustain some uncertain pricing
scenarios, markets have been experiencing low prices for the past
two years," said Standard & Poor's credit analyst Arleen Spangler.
"Both ERCOT and NEPOOL do not expect a recovery until well into
the next decade, which may result in low power prices for many
years," continued Ms. Spangler.
Standard & Poor's also said that as the refinancing date
approaches and the market for power does not improve, coupled with
the capital market's decreased appetite for merchant power risk, a
further downgrade may occur.
The 100% cash sweep mechanism during the term of the bank facility
alleviates some of the refinancing risk; however, ANP Funding
expects its cash available for debt service in 2003 to be roughly
75% less than it had originally forecast at the time of the
original financing.
ANP Funding benefits in the short term from performance liquidated
damages paid by Alstom.
ANP Funding is an indirect, wholly owned subsidiary of American
National Power, which, in turn, is an indirect wholly owned
subsidiary of International Power PLC.
ARMOR HOLDINGS: Completes Sale Of ArmorGroup for $33.6 Million
--------------------------------------------------------------
Armor Holdings, Inc. (NYSE: AH), a leading manufacturer of
security products and armored vehicles, has completed the sale of
ArmorGroup, its security service division, for $33,660,000 million
in cash to a group of private investors led by Granville Baird
Capital Partners of London, England and Management.
Armor Holdings received $31,360,000 million in cash at closing
and is scheduled to receive another $2,300,000 million by the end
of 2004.
Armor Holdings also expects to realize a reduction in tax payments
of approximately $10,000,000 million on its 2003 tax return as a
result of the sale.
"With the sale of our service business behind us, we are now a
pure play manufacturer," said Robert R. Schiller, Chief Operating
Officer of Armor Holdings. "The pending acquisition of Simula
will complete our transformation into a leading provider of life
saving equipment to the defense, aerospace and law enforcement
markets." The Simula shareholders' meeting to approve the
acquisition is currently scheduled for Friday, December 5th.
Armor Holdings (S&P, BB Corporate Credit Rating, Stable), included
in FORBES magazine's list of "200 Best Small Companies" in 2002,
and a member of the S&P Smallcap 600 Index, is a leading
manufacturer of security products for law enforcement personnel
around the world through its Armor Holdings Products division and
is one of the world's largest and most experienced passenger
vehicle armoring manufacturers through its Mobile Security
division. Armor Holdings Products manufactures and sells a broad
range of high quality branded law enforcement equipment. Such
products include ballistic resistant vests and tactical armor,
less-lethal munitions, safety holsters, batons, anti-riot products
and a variety of crime scene related equipment, including narcotic
identification kits. Armor Holdings Mobile Security, through its
commercial business, armors a variety of vehicles, including
limousines, sedans, sport utility vehicles, and money transport
vehicles, to protect against varying degrees of ballistic and
blast threats. Through its military program, it is the prime
contractor to the U.S. Military for the supply of armoring and
blast protection for High Mobility Multi-purpose Wheeled Vehicles,
commonly known as HMMWVs.
ATLANTIC COAST: Amends Complaint Filed against Mesa Air Group
-------------------------------------------------------------
Atlantic Coast Airlines Holdings, Inc., (Nasdaq: ACAI) has amended
its complaint previously filed in the United States District Court
for the District of Columbia against Mesa Air Group, Inc.,
(Nasdaq: MESA) alleging, among other things, that Mesa and UAL
Corporation (OTC Bulletin Board: UALAQ) are in violation of
federal antitrust law.
Specifically the claims include the following:
-- United and Mesa acted in concert and conspired in violation
of Section 1 of the Sherman Act to eliminate ACA as a low-
cost competitor based at Washington Dulles International
airport, the 5th largest local travel market in the U.S.
with more than 40 million local passengers per year. Under
the Memorandum of Understanding entered into between Mesa
and United on November 12, 2003, United has agreed to
increase the fees it pays to Mesa if Mesa's nominees are
elected to ACA's board and contract with United.
-- Mesa's attempt to take control of ACA to limit competition
is in violation of Section 7 of the Clayton Act.
ACA has simultaneously filed a motion for a preliminary injunction
that would, among other things, prohibit Mesa from moving forward
with its consent solicitation and from taking any other action to
attempt to acquire control of ACA or its Board of Directors.
ACA said, "The facts speak for themselves. United has made it
clear that a critical element to its emergence from bankruptcy is
resolving its contract negotiations with ACA and maintaining its
presence at Dulles. Remarkably, their solution was to collude
with Mesa to eliminate a competitor -- United entered a written
agreement with Mesa which pays Mesa for doing nothing more than
delivering ACA's routes to United and preventing ACA from
competing independently as a low-cost carrier."
Among other things, the amended complaint, as with the complaint
previously filed on October 28, 2003, alleges that Mesa made
materially false and misleading statements and omissions in
violation of federal securities laws in connection with its
proposed consent solicitation and potential exchange offer. Among
other things, ACA alleges that Mesa has failed to identify United
Airlines, Inc., as a participant in the consent solicitation and
in Mesa's proposed transaction, and also has omitted material
information from its consent solicitation regarding (i) Mesa's
financial position and its reason for proposing to acquire ACA;
(ii) questionable trading in Mesa stock by Mesa's chairman and
chief executive officer and other Mesa insiders shortly before the
announcement of Mesa's takeover proposal; (iii) the inappropriate
short-swing trades in which Mesa insiders have engaged; (iv) the
self-dealing and lack of independence of Mesa's directors; and (v)
the lack of independence of several of Mesa's nominees to ACA's
Board of Directors.
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.
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.
AURORA FOODS: Enters Workout Deal to Combine with Pinnacle Foods
----------------------------------------------------------------
Aurora Foods Inc. (OTC Bulletin Board: AURF), a producer and
marketer of leading food brands, has entered into a definitive
agreement with Crunch Equity Holding, LLC (Purchaser), a company
owned by J.P. Morgan Partners LLC, J.W. Childs Equity Partners
III, L.P., and C. Dean Metropoulos and Co., pursuant to which
Aurora will undertake a comprehensive restructuring transaction in
which it will be combined with Pinnacle Foods Holding Corporation.
Upon completion of the combination, C. Dean Metropoulos, Chief
Executive Officer of Pinnacle, will serve as Chairman and Chief
Executive Officer of the combined Pinnacle/Aurora business.
Aurora also announced that the restructuring transaction, as
previously disclosed to its senior lenders, has received the
support of such lenders. In addition, an informal committee of
bondholders representing approximately $202.7 million of the
Company's $400 million in senior subordinated notes participated
in the negotiation of the transaction.
The combination of Pinnacle and Aurora is subject to consummation
of the acquisition of Pinnacle by the Purchaser, which occurred
today. Additionally, effectiveness of the definitive agreement is
subject to satisfactory completion by Aurora and the informal
committee of bondholders of their due diligence investigations of
Pinnacle. Upon effectiveness of the definitive agreement,
Aurora's previous agreement with J.W. Childs (announced on
July 14, 2003) will be terminated.
"Execution of the definitive agreement brings us closer to
successfully completing Aurora's financial restructuring through a
transaction that maximizes value for Aurora's stakeholders," said
Dale F. Morrison, Aurora's Chairman and interim Chief Executive
Officer. "The combination of these two businesses creates a
strong branded food company that will be well positioned for
future growth."
Under the terms of the definitive agreement, the transaction will
include the following elements:
* Aurora's senior lenders will be paid in full in cash in
respect of principal and interest under the Company's
existing credit facility and, assuming the credit facility
is paid in full by March 31, 2004, will receive $15 million
in cash in respect of certain leverage and asset sale fees
under the credit facility.
* Holders of Aurora's 12% senior unsecured notes due 2005
will be paid in full in cash in respect of principal and
interest, but will not receive $1.9 million in respect of
unamortized original issue discount.
* Holders of Aurora's outstanding 8.75% and 9.875% senior
subordinated notes due 2008 and 2007, respectively, will
receive either (i) cash in the amount of $0.50 per each
dollar of principal amount of subordinated notes, or (ii)
equity in the combined company (held indirectly through
a voting trust), which will be valued at approximately
$0.53 per each dollar of principal amount of subordinated
notes, subject to adjustment, plus certain subscription
rights pursuant to which holders electing equity can
increase their investment in the combined company (through
the purchase of additional voting trust interests). Upon
consummation of the transaction, former holders of senior
subordinated notes will own up to approximately 41.9% of
the equity of the combined company, subject to adjustment.
* Existing common and preferred stockholders will not receive
any distributions and the existing common and preferred
shares will be cancelled.
* The Purchaser will contribute the equity in Pinnacle, to
which it will have contributed at least an additional $85
million, in exchange for the remaining equity in the
combined company, subject to adjustment.
* All trade creditors will be paid in full.
* All other claims against Aurora will be unimpaired, except
for certain litigation claims that may be impaired upon
agreement of the Purchaser, Aurora and the representative
of the holders of senior subordinated notes. Certain real
estate leases will be rejected.
* The transaction will be effected through a prearranged
bankruptcy reorganization case, which is expected to be
completed by March 31, 2004.
The transaction is subject to a number of conditions, including
completion of due diligence on Pinnacle by Aurora and the informal
committee of bondholders, receipt of financing, bankruptcy court
approvals, and regulatory approvals. The agreement is terminable
under certain circumstances, including termination by either party
if the transaction does not close by March 31, 2004. No assurance
can be given that the definitive agreement will become effective,
the conditions to closing the transaction will be satisfied, or
that the transaction ultimately will be consummated.
Aurora Foods Inc., based in St. Louis, Missouri, is a producer and
marketer of leading food brands, including Duncan Hines(R) baking
mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R)
syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R)
frozen seafood; Aunt Jemima(R) frozen breakfast products;
Celeste(R) frozen pizza and Chef's Choice(R) skillet meals. More
information about Aurora may be found on the Company's Web site at
http://www.aurorafoods.com
At September 30, 2003, Aurora Foods' balance sheet shows a net
capital deficit of about $91 million.
AUTOMODULAR CORP: Obtains Waiver of Bank Covenant Violation
-----------------------------------------------------------
Automodular Corporation has obtained a waiver of the bank covenant
breach previously reported and has negotiated revised banking
arrangements.
BIONOVA HOLDING: AMEX Will Halt Equity Trading Soon
---------------------------------------------------
Bionova Holding Corporation (Amex: BVA) has been informed that its
appeal to retain its listing on the American Stock Exchange was
rejected by the Listing Qualifications Panel of the AMEX Committee
on Securities and that trading of its common stock on the AMEX
will be suspended within the next several trading days.
The Company expects its shares to begin trading on the pink sheets
simultaneously with the suspension of trading by the AMEX.
As stated in the Company's 12b-25 filing on November 19, Bionova
Holding experienced an issue in reconciling the financial
statements of its Mexican subsidiary for the quarter ending
September 30, 2003. This reconciliation was finally completed
today, November 26, and the Company's financial management expects
to complete its review with its audit committee by no later than
Monday, December 1. The Company will file its 10-Q for the
quarter ending September 30, 2003 immediately following
satisfactory review by the Company's Audit Committee.
Bionova Holding's June 30, 2003 balance sheet shows a working
capital deficit of about $80 million and a total shareholders'
equity deficit of about $43 million.
BOOT TOWN INC: Wants to Use Frost National's Cash Collateral
------------------------------------------------------------
Boot Town, Inc., is seeking authority from the U.S. Bankruptcy
Court for the Northern District of Texas to use its secured
lenders' cash collateral to finance the ongoing operation of its
business while in chapter 11.
In order to continue operations, the Debtor must be able to meet
its payroll, reimburse employee expenses, purchase new
merchandise, fund the shipping of new merchandise, disburse sales
and use taxes and pay service fees to credit card companies, in
addition to being able to satisfy its ordinary expenses such as
advertising, utilities and rental payments.
Absent immediate use of the lender's Cash Collateral to fund
payroll and other critical expenses, the Debtor will lose
employees that are vital to its reorganization efforts. Further,
as is the case in any retail company that fails to compensate
employees, the risk of shrinkage of the Debtor's inventory
increases dramatically if the Debtor's employees are not paid
timely.
As of November 14, 2003, Boot Town owed The Frost National Bank
$11.8 million. The Debtor asserts that considering the value of
its inventory and the Additional Collateral, Frost is oversecured.
This equity cushion alone adequately protects Frost. Likewise,
Frost will receive a replacement lien on post-petition inventory,
which is purchased with its Cash Collateral and replacement lien
on proceeds from the sale of its pre-bankruptcy collateral.
If the Debtor is not permitted to use Cash Collateral, the Debtor
will be forced to terminate its operations, lay off employees,
lose entirely its existing customers, and, most significantly
liquidate its assets on a "fire-sale" basis. Such liquidation
would dramatically reduce the value of those assets, reduce
Frost's recovery and likely eliminate any meaningful recovery by
unsecured creditors. Denial of the use of Cash Collateral would
effectively scuttle all prospects for reorganization and result in
a substantial loss to all parties in interest, including the
Debtor's creditors.
The Debtor agrees to limit use of Frost's Cash Collateral in
accordance with this weekly Budget:
23-Nov 30-Nov 7-Dec
------ ------ -----
Sales 750 880 880
Beginning Cash 1,000 500 500
Cash receipts 692 742 870
Operating expenses 450 130 575
Cash expenses 780 835 1,165
Cash flow (87.6) (93.2) (294.6)
Cash Balance 500 500 500
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.
BUDGET GROUP: Wants to Keep Plan-Filing Exclusivity Until Dec 15
----------------------------------------------------------------
The Budget Group Debtors ask the Court to extend their exclusive
periods to:
-- file a Chapter 11 plan or plans of reorganization to
December 15, 2003; and
-- solicit acceptances of that plan to February 25, 2004.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in
Wilmington, Delaware, relates that the Debtors, with the
assistance of their professionals:
(1) continued to implement their cooperative plan with the
Creditors Committee for the reconciliation and resolution
of the $5,000,000,000 scheduled and filed claims made
against their estates;
(2) continued to facilitate discussions between the Creditors
Committee and the UK Administrator regarding the
resolution of allocation and other intercompany issues
and determining the best strategy for effectively
consummating a plan in light of these complex issues;
(3) set a supplemental bar date by which requests for the
allowance of certain administrative expense claims against
BRACII must be received; and
(4) continued to attend to the various post-closing issues
involved with the North American Sale and the EMEA Sale,
including proceeding with the litigation against Cherokee
Acquisition Corporation, Cendant Corporation and Jaeban
(U.K.) Limited and continuing to administer the Debtors'
estates.
Claims Management and Reconciliation
As part of the reconciliation of the 4,900 claims asserted
against the Debtors' estates with the claims assumed in
connection with the North American Sale, the Debtors, with the
cooperation of the Creditors Committee, filed two omnibus
objections to the various claims filed against the Debtors'
estates and are in the process of preparing additional omnibus
objections. Moreover, the Debtors are communicating with the
Creditors Committee on a regular basis to address and resolve the
outstanding scheduled and filed proofs of claim and the complex
claims issues caused as a result of the sales process. In
addition, the Debtors and their tax advisors, with the Creditors
Committee's input, continue to work through and resolve the
remaining tax-related claims and interact with the various taxing
authorities regarding audit requests and tax assessments.
Allocation and Other Intercompany Issues
The Creditors Committee and the UK Administrator reached an
agreement in principle concerning the resolution of the
allocation and intercompany issues that exist between BRACII and
the U.S. Debtors. As a result, the Allocation Procedures was
placed on hold to allow the parties to definitively document the
Allocation Settlement. The UK Administrator and the Creditors
Committee, with the Debtors' assistance, are in the process of
finalizing the details of the Allocation Settlement and the
Debtors anticipate that the parties will be prepared to execute a
formal settlement agreement shortly.
Furthermore, Mr. Brady continues, as part of the Allocation
Settlement, the Debtors, with the assistance of the Creditors
Committee and the UK Administrator, established November 10, 2003
as the date by which parties were required to file requests for
the allowance of certain postpetition claims against BRACII,
excluding professional fees, which are entitled to priority in
accordance with Sections 503(b) and 507(a) of the Bankruptcy
Code. Also, the Debtors, with the assistance of the Creditors
Committee and the UK Administrator, established December 8, 2003
as the date by which certain supplemental parties not covered by
the BRACII Administrative Expense Bar Date must file requests for
the allowance of certain postpetition claims against BRACII,
excluding professional fees, which are entitled to priority in
accordance with Sections 503(b) and 507(a). The BRACII
Administrative Expense Bar Date and the Supplemental BRACII
Administrative Expense Bar Date are an integral step towards the
finalization of the Allocation Settlement.
Plan and Disclosure Statement
The Debtors anticipate that good faith negotiations will continue
in finalizing the plan and disclosure statement, taking into
account the Allocation Settlement, the UK Administrator's needs
regarding the parallel UK Administration proceeding and the
Creditors Committee's continuing input.
Post-Closing Issues Associated with the
North American Sale and EMEA Sale
The Debtors, with the Creditors Committee's approval and input,
filed separate adversary proceedings against Cendant and
Cherokee, and Jaeban over issues in connection with the closing
of the ASPA and the EMEA APA. The Debtors continue to actively
pursue the lawsuits.
Procedures for Further Extensions of the
Debtors' Exclusive Periods
To more efficiently devote their time to the plan process itself,
the Debtors worked cooperatively with the Creditors Committee,
the U.S. Trustee and the UK Administrator to create an expedited
procedure for the extension of the Exclusive Periods, which gives
the Debtors the flexibility to seek further extensions of their
Exclusive Periods and protects the interests of all parties
without the need to continuously burden the Court for extensions
of the Exclusive Periods.
The Extension Procedures, approved by the Court on September 26,
2003, require the Debtors to obtain the consent of the UK
Administrator, the Creditors Committee and the U.S. Trustee
regarding any further extension of the Exclusive Periods without
motion to the Court. For the proposed extension, however, the
Debtors were unable to obtain the required consent from the
Creditors Committee, thereby prompting them to seek a Court
order.
Exclusive Periods Should Be Extended
Mr. Brady contends that the Debtors continued to make
considerable progress in these cases. Most importantly, the
Debtors believe that they are poised to bring these cases to
successful completion -- and at the same time to conclude the UK
Administration -- on resolution of the allocation and other
intercompany issues through the finalization and execution of the
Allocation Settlement and solidification of the plan structure
and its components. Each of these tasks is underway and
significant progress was made working with the Creditors
Committee and the UK Administrator, but the complexities and
competing interests involved necessitate additional time for
resolution and finalization. The Debtors believe that continued
exclusivity in these cases will foster the finalization of the
Settlement Agreement and consensual Chapter 11 plan.
The requested extension of the Exclusive Periods will not
prejudice the legitimate interests of any creditor, Mr. Brady
assures the Court. The Debtors, the Creditors Committee and the
UK Administrator continue to work cooperatively through the
myriad issues associated with the UK Administration, the
Settlement Agreement and the plan. Additionally, the Debtors
continue to make timely payment of all of their postpetition
obligations
The Court will convene a hearing on December 8, 2003 to consider
the Debtors' request. By application of Rule 9006-2 of the Local
Rules of Bankruptcy Practice and Procedures of the United States
Bankruptcy Court for the District of Delaware, the Debtors'
exclusive filing deadline is automatically extended through the
conclusion of that hearing. (Budget Group Bankruptcy News, Issue
No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CASCADES INC: Restructuring Operations at Lachute, Quebec Plant
---------------------------------------------------------------
Cascades Inc. (CAS-TSX) announced that its Tissue Group has
informed the employees of its Lachute, Quebec mill that, as of
March 1st 2004, it will no longer be producing paper bags.
The Company has decided to withdraw from this non-core sector in
order to concentrate operations at this mill on the manufacture of
hand towels produced from recycled paper fibers.
Management and union representatives are working together to
minimize the impact of this decision, the consequences of which
will include the elimination of 49 jobs. Employees affected by
this decision will be offered a number of options including
reclassification and early retirement.
The Lachute mill, which has been part of the Cascades Group since
1995 and is now entering its 124th year of operations, will
henceforth have an employee base of 147 workers.
Cascades Tissue Group is a leader in the manufacturing of tissue
paper in the consumer and away-from-home markets. With 15 plants,
13 distribution centers and 2,200 employees, Cascades Tissue Group
is ranked the 2nd largest tissue producer in Canada and 4th in
North America. Its line of products include: bathroom tissue,
household towels, facial tissues, hand towels and napkins.
Cascades Inc. (S&P, BB+, LT Corporate Credit Rating) is a leader
in the manufacturing of packaging products, tissue paper and
specialized fine papers. Internationally, Cascades employs 14,000
people and operates close to 150 modern and versatile operating
units located in Canada, the United States, France, England,
Germany and Sweden. Cascades recycles more than two million tons
of paper and board annually, supplying the majority of its fiber
requirements.
CEDARA SOFTWARE: Enters into New Partnership with BITC in China
---------------------------------------------------------------
Cedara Software Corp. (TSX:CDE/OTCBB:CDSWF) a leading independent
developer of medical software technologies for the global
healthcare market, announced an agreement with Beijing Invention &
Technology Corporation (BITC) to market Cedara's I-Suite(TM)
Picture Archiving and Communications System family of products in
China.
Specializing in Healthcare Information Systems, BITC has the
certification to sell to Chinese military hospitals and is well
established in that arena, with a customer base of over 200
military hospitals and numerous civilian hospitals. The agreement
with BITC accelerates Cedara's strategic plans to extend its PACS
business into the Chinese marketplace.
"With demand for PACS healthcare solutions steadily increasing in
China, we needed to partner with a PACS vendor that could provide
a high quality solution to our customers. After careful research
and deliberation, we selected Cedara's PACS solution," stated Bo
Hong, CEO of BITC. "With Cedara's broad experience in image
acquisition, image processing, and image management, and our brand
and market advantage in the healthcare industry, we can provide
China's healthcare market with a winning solution."
Under the terms of the agreement, BITC will integrate Cedara's
PACS product suite with their hospital information and image
management system to provide a complete solution tailored to meet
the needs of Chinese hospital workflow. BITC believes that such an
integrated solution will result in direct cost savings,
significant improvements in radiologist and physician
productivity, and more clinical value from captured patient
images.
"With their qualifications to sell to Chinese military hospitals,
BITC is in the unique position of promoting their HIS and PACS
solutions to this exclusive market segment. In entering this new
agreement, Cedara has gained a knowledgeable partner with
extensive experience in the delivery of healthcare information
systems. Together we are in an excellent position to deliver a
valuable PACS solution to the people of China," said Minglin Li,
Cedara's Director of PACS and Director Asia Pacific Business
Development. "Signing another distribution agreement this year in
China is further evidence that our initiative to enter the Chinese
healthcare market is a success."
Cedara's PACS product suite is designed to meet the image
management needs of the entire healthcare-enterprise. The suite
includes an image archiving and distribution system (Cedara
I-Store(TM)), diagnostic review workstation (Cedara
I-SoftView(TM)), web-based image distribution server (Cedara
I-Reach(TM)), and hospital system interface products. This easy-
to-integrate PACS is used to review, analyze, store and distribute
medical images that allow system integrators to build robust,
flexible, and scalable image storage management solutions.
Beijing Invention & Technology Corporation located in Beijing,
China, is a solution provider and system integrator focusing on
business solutions in the healthcare industry. BITC is an ISO 9001
quality system certified organization. Their products include
Hospital Information Systems, Office Automation, Picture Archiving
and Communication Systems, Postal Sorting Systems, university
campus networks, satellite communications, and multi-media
teleconferencing systems.
Cedara Software Corp. -- whose September 30, 2003 balance sheet
shows a total shareholders' equity deficit of about C$167,000 --
is a leading independent provider of medical technologies for many
of the world's leading medical device and healthcare information
technology companies. Cedara software is deployed in hospitals and
clinics worldwide - approximately 20,000 medical imaging systems
and 4,600 Picture Archiving and Communications System workstations
have been licensed to date. Cedara is enabling the future of the
healthcare industry with new innovative approaches to workflow,
data and image management, integration, the web, software
components and professional services. The company's medical
imaging solutions are used in all aspects of clinical workflow
including the capture of patient digital images; the sharing and
archiving of images; sophisticated tools to analyze and manipulate
images; and even the use of imaging in surgery. Cedara is unique
in that it has expertise and technologies that span all the major
digital imaging modalities including angiography, computed
tomography, echo-cardiology, digital X-ray, fluoroscopy,
mammography, magnetic resonance imaging, nuclear medicine,
positron emission tomography and ultrasound.
CELL ROBOTICS: Seeking Sufficient Financing to Fund Operations
--------------------------------------------------------------
Since inception, Cell Robotics International Inc. has incurred
operating losses and other equity charges which have resulted in
an accumulated deficit of $31,747,185 at September 30, 2003 and
operations using net cash of $1,060,534 in the first nine months
of 2003.
The Company's ability to improve cash flow and ultimately achieve
profitability will depend on its ability to raise capital and
significantly increase sales. Accordingly, the Company is
manufacturing and marketing the Lasette, a sophisticated laser-
based medical device, that leverages the Company's existing base
of technology. The Company believes the markets for this product
are broader than that of the scientific research instruments
market and, as such, offer a greater opportunity to significantly
increased sales. In addition, the Company is pursuing development
and marketing partners for some of its new medical products. If
obtained, the Company believes these partnerships may enhance the
Company's ability to rapidly ramp-up its marketing and
distribution strategy, and possibly offset the products'
development costs.
Although the Company has begun manufacturing and marketing the
Lasette and the Company continues to market its scientific
research instrument line, it does not anticipate achieving
profitable operations until after 2003. As a result, the Company
expects that additional operating funds will be required under its
September 2002 promissory note or under alternative financing
sources and that its accumulated deficit will increase in the
foreseeable future.
The Company's current ratio at September 30, 2003 was .41 compared
to 1.38 at December 31, 2002. Cell Robotics' total current
liabilities increased $1,095,657 from $1,192,729 at December 31,
2002 to $2,288,386 at September 30, 2003. The Company's working
capital decreased from $454,520 at December 31, 2002 to a deficit
of $1,342,399 at September 30, 2003. The decrease in working
capital was primarily due to its operating losses that
experienced in the nine-month period ended September 30, 2003.
Cell Robotics' management expects to experience operating losses
and negative cash flow for the foreseeable future. Therefore, the
Company does not have sufficient cash to sustain those operating
losses without additional financing. The Company presently needs
financing to repay its current indebtedness, including payment of
its notes in the aggregate principal amount of approximately
$849,000, of which approximately $652,000 is currently due. In
addition to debt service requirements, the Company will require
cash to fund its operations. Based on current operations,
management estimates that cash needs approximate $200,000 each
month for the foreseeable future and will be a total of
approximately $1,200,000 from September 30, 2003 through March 31,
2004. Operating requirements depend upon several factors,
including the rate of market acceptance of Company products,
particularly the Lasette, the Company's level of expenditures for
manufacturing, marketing and selling its products, costs
associated with staffing and other factors.
Cell Robotics has been funding operating requirements with
proceeds from small private placements of its equity securities
and indebtedness for borrowed money, particularly with financings
with Mr. Oton Tisch, one of the Company's directors, and with
sales of its products. However, historically, these sources of
capital have only been adequate to meet the Company's short-term
needs. Cell Robotics needs immediate financing to fund both its
short-term and long-term needs. Mr. Tisch's obligation to fund the
Company under his September 2002 note is discretionary in the case
of the Loan A facility, and is limited and subject to, in the case
of the Loan B facility, and may not be available at all if Mr.
Tisch determines that he is not satisfied with Cell Robotics'
capital raising activities. Consequently there is no assurance
that Mr. Tisch will make any further advances under this note.
Therefore, the Company intends to continue to seek to raise equity
or debt financing. Although management has had discussions with
potential investors, the Company has not been able to obtain
sufficient long-term financing on acceptable terms. No assurance
can be given that it will be able to obtain any additional
financing on favorable terms, if at all. If operating requirements
vary materially from those currently planned, Cell Robotics may
require more financing than currently anticipated. Borrowing money
may involve pledging some or all Company assets. Raising
additional funds by issuing common stock or other types of equity
securities may further dilute existing shareholders. If the
Company cannot obtain additional financing in a timely manner,
management has stated that the Company will not be able to
continue operations. In addition, the reports received from its
independent auditors covering the Company's fiscal years ended
December 31, 2002 and 2001 financial statements contain an
explanatory paragraph that states that the Company's recurring
losses and negative cash flows from operations raise substantial
doubt about its ability to continue as a going concern.
CHANNEL MASTER: Committee Hires Monzack and Monaco as Co-Counsel
----------------------------------------------------------------
The duly appointed Unsecured Creditors' Committee in Channel
Master, LLC's chapter 11 cases sought and obtained approval from
the U.S. Bankruptcy Court for the District of Delaware to hire
Monzack and Monaco, PA, nunc pro tunc as of October 10, 2003, as
its local counsel.
At the request of the Committee, Monzack and Monaco has rendered
services from October 10, 2003. The Committee wants Monzack and
Monaco to continue to render these services, including:
a) generally attend hearings pertaining to the cases, as
necessary;
b) periodically review applications and motions filed in
connection with the cases;
c) communicate with Traub, Bonacquist & Fox LLP, the
Committee's lead counsel, as necessary;
d) communicate with and advise the Committee and
periodically attend meetings of the Committee, as
necessary;
e) provide expertise on the substantive law of the State of
Delaware and procedural rules and regulations applicable
to these cases; and
f) perform all other services for the Committee that are
necessary for the co-counsel to perform in these cases.
Monzack and Monaco has advised the Committee that the rates
applicable to the principal attorneys and paralegal proposed to
represent the Committee are:
Francis A. Monaco, Jr. $375 per hour
Joseph J. Bodnar $290 per hour
Kevin J. Mangan $260 per hour
Heidi Sasso $130 per hour
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: Completes $200MM 6.875% Senior Debt Offering
---------------------------------------------------------------
Chesapeake Energy Corporation (NYSE: CHK) has completed its
private placement of $200,000,000 of 6.875% Senior Notes due
January 15, 2016.
Chesapeake used a portion of the proceeds from this sale to
purchase $104,845,000 principal amount of its outstanding 8.5%
Senior Notes due 2012 tendered for early payment pursuant to its
previously announced cash tender offer for any and all of the 2012
Notes. The principal amount of $5,824,000 of the 2012 Notes
remains outstanding and subject to the tender offer, which is
scheduled to expire at 12:00 midnight, Eastern Standard Time, on
December 10, 2003, unless extended.
The 6.875% senior notes sold by Chesapeake have not been
registered under the Securities Act of 1933 and may not be offered
or sold in the United States absent registration or an applicable
exemption from registration requirements.
Chesapeake Energy Corporation (Fitch, BB- Senior Note and B
Preferred Share 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.
COEUR D'ALENE: Redeems Final $4.6MM of 9% Sr. Convertible Notes
---------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE: CDE), the world's largest
primary silver producer, announced the redemption of the remaining
outstanding $4.6 million principal amount of the Company's 9%
Senior Convertible Notes due February 26, 2007.
The notes are being redeemed, in accordance with the terms of the
indenture, in exchange for a cash payment of approximately
$13,490,000 representing payment for the market value of the note,
including accrued interest and make-whole interest.
The transaction is being funded from the proceeds of a common
stock sale. The Company has filed a prospectus supplement with the
Securities and Exchange Commission related to the public offering
of 3,149,225 shares of its common stock.
"Coeur is pleased to announce the complete redemption of the
Company's outstanding 9% Senior Convertible Notes," said Dennis E.
Wheeler, Chairman and Chief Executive Officer. "The timing of
these transactions is beneficial to our shareholders since the
shares Coeur is issuing now to fund the redemption are
approximately 3% fewer shares, based on current market value, than
if the convertible notes had been held to full maturity."
Coeur d'Alene Mines Corporation (S&P, CCC Corporate Credit Rating,
Positive) is the world's largest primary silver producer, as well
as a significant, low-cost producer of gold, with anticipated 2003
production of 14.6 million ounces of silver and 112,000 ounces of
gold. The Company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.
CONCHO CELLULAR TELEPHONE: Involuntary Chapter 11 Case Summary
--------------------------------------------------------------
Alleged Debtor: Concho Cellular Telephone Co., Inc.
5454 Wisconsin Avenue
Suite 720
Chevy Chase, Maryland 20815
Involuntary Petition Date: November 24, 2003
Case Number: 03-32168
Chapter: 11
Court: District of Maryland (Greenbelt)
Judge: Paul Mannes
Petitioners' Counsel: Counsel for Paul Kozel
Joel L. Dahnke, Esq.
Henry, Henry, O'Donnell & Dahnke
4103 Chain Bridge Road, Suite 100
Fairfax, VA 22030
Tel: 703-273-1900
Counsel for Eugene and Alexander Kozel
Bruce W. Henry, Esq.
Henry, Henry, O'Donnell & Dahnke
4103 Chain Bridge Rd., Ste. 100
Fairfax, VA 22030
Tel: 703-273-1900
Petitioners: Paul L. Kozel
100 South Birch Road, Suite 2801
Ft. Lauderdale, Florida 33316
Eugene Kozel
295-A Corral de Tierra Road
Corral de Tierra, California 93908
Alexander Kozel
2350 FM 195
Paris, Texas 75462
Amount of Claim: $7,760,550
CONE MILLS: Committee Signs-Up Hahn & Hessen as Co-Counsel
----------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Cone
Mills Corporation's chapter 11 cases asks the U.S. Bankruptcy
Court for the District of Delaware to approve its application to
employ Hahn & Hessen LLP as Co-Counsel.
The Committee believes that Hahn & Hessen attorneys are well
qualified to represent it in this case. Hahn & Hessen has been
representing creditors' interests in insolvency proceedings for
more than 70 years.
The professional services Hahn & Hessen will perform include:
a) rendering legal advice to the Committee with respect to
its duties and powers in this case;
b) assisting the Committee in its investigation of the
acts, conduct, assets, liabilities and financial
condition of the Debtors, the operation of the Debtors'
businesses, the desirability of continuing such business
and any other matters relevant to these proceedings or
to the business affairs of the Debtors;
c) advising the Committee with respect to any proposed plan
of reorganization and the Debtors' prosecution of claims
against third parties, if any, and any other matters
relevant to the proceeding or to the formulation of a
plan of reorganization;
d) assisting the Committee in requesting the appointment of
a trustee or examiner pursuant to Section 1104 of the
Bankruptcy Code, if necessary and appropriate; and
e) performing such other legal services, which may be
required by, and which are in the best interests of, the
unsecured creditors, which the Committee represents.
Mark S. Indelicato, Esq., reports that the hourly rates charged by
Hahn & Hessen for its services range from:
partners $425 to $580 per hour
associates $190 to $380 per hour
special counsel and counsel $410 to $475 per hour
paralegals $125 to $175 per hour
Headquartered in Greensboro, North Carolina, Cone Mills
Corporation is one of the leading denim manufacturers in North
America. The Debtor also produces fabrics and operates a
commission finishing business. The Company, with its debtor-
affiliates filed for chapter 11 protection on September 24, 2003
(Bankr. Del. Case No. 03-12944). Pauline K. Morgan, Esq., at
Young, Conaway, Stargatt & Taylor represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $318,262,000 in total assets and
$224,809,000 in total debts.
CWMBS INC: Fitch Rates Class B-3 and B-4 Notes at Low-B Levels
--------------------------------------------------------------
CWMBS, Inc.'s Mortgage Pass-Through Certificates, CHL Mortgage
Pass-Through Trust 2003-57 Classes A-11, PO and A-R (senior
certificates, $242,499,950) are rated 'AAA' by Fitch. In addition,
Class M ($3,750,000) is rated 'AA', Class B-1 ($1,500,000) is
rated 'A', Class B-2 ($875,000) is rated 'BBB', the privately
offered Class B-3 ($500,000) is rated 'BB', and the privately
offered Class B-4 ($375,000) is rated 'B'.
The 'AAA' rating on the senior certificates reflects the 3.00%
subordination provided by the 1.50% Class M, the 0.60% Class B-1,
the 0.35% Class B-2, the 0.20% privately offered Class B-3, the
0.15% privately offered Class B-4, and the 0.20% privately offered
Class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3, and B-4
are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective
subordination only.
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
also reflect the quality of the underlying mortgage collateral,
strength of the legal and financial structures and the master
servicing capabilities of Countrywide Home Loans Servicing LP -
rated RMS2+ by Fitch, a direct wholly owned subsidiary of
Countrywide Home Loans, Inc.
The certificates represent an ownership interest in a pool of
conventional, fully amortizing, 30-year fixed-rate mortgage loans,
secured by first liens on one-to four- family residential
properties. As of the closing date (November 26, 2003), the
mortgage pool demonstrates an approximate weighted-average loan-
to-value ratio of 72.37%. Approximately 56.21% of the loans were
originated under a reduced documentation program. Cash-out
refinance loans represent 12.79% of the mortgage pool and second
homes 4.22%. The average loan balance is $511,059. The weighted
average FICO credit score is approximately 738. The three states
that represent the largest portion of mortgage loans are
California (34.81%), New York (12.52%) and New Jersey (6.65%). The
deal is 76.66% funded as of the closing date (November 26, 2003).
Fitch ensures that the deposits of subsequent loans conform to
representations made by Countrywide Home Loans, Inc.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
Approximately 92.19% and 7.81% of the mortgage loans were
originated under CHL's Standard Underwriting Guidelines and
Expanded Underwriting Guidelines, respectively. Mortgage loans
underwritten pursuant to the Expanded Underwriting Guidelines may
have higher loan-to-value ratios, higher loan amounts, higher
debt-to-income ratios and different documentation requirements
than those associated with the Standard Underwriting Guidelines.
In analyzing the collateral pool, Fitch adjusted its frequency of
foreclosure and loss assumptions to account for the presence of
these attributes.
CWMBS purchased the mortgage loans from CHL and deposited the
loans in the trust, which issued the certificates, representing
undivided beneficial ownership in the trust. The Bank of New York
will serve as trustee. For federal income tax purposes, an
election will be made to treat the trust fund as a real estate
mortgage investment conduit.
DIOMED HOLDINGS: Stockholders Approve $23.2MM Equity Financing
--------------------------------------------------------------
Diomed Holdings, Inc. (AMEX: DIO), a leading developer and
marketer of minimal and micro-invasive medical technologies,
announced that its stockholders have approved the company's $23.2
equity financing announced September 2, 2003.
Following stockholder approval, the company closed on stage two of
the equity financing, providing the company the final $16.7
million in equity capital.
"The completion of this financing is a critical component of our
growth strategy," commented James Wylie, Diomed's President and
Chief Executive Officer. "With a total of $23.2 in equity
financing, key management and exclusive rights to the EVLT(R)
technology now in place, we are very well positioned to take full
advantage of the company's strategic growth initiatives."
The first stage of the equity financing agreement provided for an
infusion of $6.5 million in convertible debt that converted to
common stock upon today's closing of the second stage of the
financing. Additionally, $15.5 million held in escrow was invested
in the company's common stock at $0.10 per share. May 2003 bridge
notes totaling $1.2 million in principal amount were also
converted into common stock as part of stage two of the financing.
"We are very excited about the completion of our financing and the
opportunity it provides," commented Geoffrey Jenkins, Diomed's
Chairman." Stockholder approval of the equity financing, along
with the actual investment by a significant number of experienced
medical technology investors, provide a very solid endorsement of
the company's plan for growth."
Diomed develops and commercializes minimal and micro-invasive
medical procedures that use its proprietary laser technologies and
disposable products. Diomed focuses on EndoVenous Laser Treatment
(EVLT(R)) for use in varicose vein treatments, photodynamic
therapy (PDT) for use in cancer treatments, and dental and general
surgical applications. The EVLT(R) procedure and the Company's
related products were cleared by the United States FDA in January
of 2002. Along with lasers and single-use procedure kits for
EVLT(R), the Company provides its customers with state of the art
physician training and practice development support. Additional
information is available on the Company's Web site at
http://www.evlt.com
* * *
Between December 2002 and May 2003, the Company obtained
$3,200,000 of bridge financing from Gibralt US, Inc., an affiliate
of Samuel Belzberg, a director and significant stockholder of the
Company, James A. Wylie, Jr., a director and the Company's chief
executive officer and Peter Norris, a former director and a
stockholder of the Company. In order to fund its operations in
2003, the Company requires additional debt or equity financing to
support the Company's commercialization of EVLT(R). The Company
will require the proceeds of any such financing, together with its
current cash resources, to continue as a going concern. As a
result of the additional financing needed to support operations in
2003, the auditors' opinion for the year ended December 31, 2002
expressed substantial doubt about the Company's ability to
continue as a going concern.
On September 2, 2003, the Company entered into an equity financing
transaction in which 119 accredited investors agreed to purchase
254,437,500 shares of common stock for an aggregate purchase price
of $23,200,000. Twenty two million dollars of the aggregate
purchase price is payable in cash, and $1,200,000 will be paid by
conversion of the Company's outstanding debt previously issued in
connection with the Company's May 2003 bridge financing.
The first closing of the Equity Financing occurred on September 3,
2003. At that time, the Investors funded $6,500,000 of the Equity
Financing in the form of secured bridge loans. The second closing
of the Equity Financing will occur after the Company satisfies the
conditions to the second closing, which is expected to be within
90 days after the first closing. The notes that the Company
issued in connection with the secured bridge loans at the first
closing will convert into common stock at the second closing at a
price of $0.08 per share. Also at the second closing, the
remaining $16,700,000 of the Equity Financing will be provided to
DioMed by the Investors for the purchase of common stock at a
price of $0.10 per share. Of the $16,700,000 to be provided by
the Investors at the second closing, $15,500,000 will be paid by
the Investors in cash and $1,200,000 will be paid by conversion of
the Company's outstanding Class D notes due 2004 that were issued
in connection with loans made in DioMed's May 2003 interim
financing transaction. The $15,500,000 in cash payable at the
second closing is currently on deposit with a third party acting
as escrow agent.
The Company believes that the Equity Financing is absolutely
essential to its continued existence. If the Company is unable to
obtain stockholder approval and complete the Equity Financing
within 90 days of the first closing, or December 2, 2003, the
Company will be obligated to return the $15,500,000 held in
escrow for the second closing to the Investors. The Company's
inability to complete the Equity Financing would cause the Company
to reduce or cease operations, seek a sale of the Company or enter
into a business combination with a third party. If the Company
does not complete the Equity Financing, then the Company will
attempt to sell its business and assets, to merge with another
Company or to enter into some other business combination. The
Company has not begun any discussions with any third parties to
enter into any such transaction if the Company does not complete
the Equity Financing. If the Company's cash inflows and cash
outflows continue at their historic rate for the remainder of
2003, and if the Equity Financing is not completed, then the
Company expects to exhaust its current cash resources at the end
of 2003.
DOMAN IND.: Court-Appointed Monitor, KPMG, Files November Report
----------------------------------------------------------------
Doman Industries Limited announces that KPMG Inc., the Monitor
appointed by the Supreme Court of British Columbia under the
Companies Creditors Arrangement Act, has filed with the Court its
report for the period from October 9, 2003 to November 25, 2003.
Pursuant to the Restructuring Process Order issued by the Court on
October 10, 2003, UBS Securities, the Company's financial adviser,
was required to submit to Court a report on the interim results of
the refinancing solicitation process.
A copy of this report is attached as Appendix H to the Monitor's
report. The Monitor's report, a copy of which may be obtained by
accessing the Company's Web site - http://www.domans.com- or the
Monitor's Web site - http://www.kpmg.ca/doman- also contains
selected unaudited financial information prepared by the Company
for the period.
DOMAN INDUSTRIES: FIR Charges Union with Unfair Labor Practices
---------------------------------------------------------------
Forest Industrial Relations continues its efforts to keep
financially troubled Doman Industries running during the IWA
strike, saying that it has charged the union with unfair labour
practices.
"The IWA is attempting to extract a deal from a company that is in
a very fragile state," said FIR president and CEO Terry Lineker.
"With the threat of a strike as their hammer, the IWA is
attempting to box one company into a bad deal that may jeopardize
the long-term future of the industry and its workers."
FIR agreed earlier this week to release Doman Industries, which is
under bankruptcy protection, from any obligations to implement new
terms and conditions of employment. The IWA said they would end
the strike if members work under the old collective agreement
until a new agreement is negotiated and that is exactly what FIR
is allowing Doman to do.
The IWA continues to undermine the very foundation of the
collective bargaining process by threatening to strike Doman
unless the company reneges on its legal obligations to FIR under
the Labour Relations Code.
"What the IWA is intending to do is clearly an abuse of power and
FIR has filed an unfair labour practice complaint today at the
Labour Relations Board," said FIR president and CEO Terry Lineker.
"Imagine if the shoe was on the other foot. Imagine a company
asking a union to let its members drop out of the union if they
didn't want to be on strike," Lineker said. "The IWA can't operate
outside the law and try to force a separate agreement on an
economically desperate FIR member."
"Selective bargaining is not collective bargaining. It's an
affront to the labour laws of the province," Lineker said.
FIR comprises 61 forest products employers in coastal BC,
Vancouver Island, and the Terrace area in the north. Member
companies employ 65 percent of the coastal industry workforce and
include large, publicly traded companies as well as small,
privately owned firms.
DRIVER-HARRIS COMPANY: Case Summary & Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Driver-Harris Company
200 Madison Avenue
Convent Station, New Jersey 07960
Bankruptcy Case No.: 03-48541
Type of Business: The debtor mainly produces insulated
electrical, thermocouple, and resistance wire;
specializes in the manufacture of insulated
electrical cable.
Chapter 11 Petition Date: November 26, 2003
Court: District of New Jersey (Newark)
Debtor's Counsel: Daniel M. Eliades
Forman, Holt & Eliades LLC
218 Route 17 North
Rochelle Park, NJ 07662
Tel: 201-845-1000
Total Assets: $1,000
Total Debts: $3,195,059
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
PBGC Note $1,574,757
c/o Michael Dempsey, Esq.
Dempsey & Johnson
1880 Century Park East,
Ste 516
Los Angeles, CA 90067
Corinne Driver Pension obligation $486,275
33 Birdseye Glen
Verona, NJ 07044
Frank Driver Salary $242,652
Frank Driver Accrued health care $150,000
benefits
Timothy Driver Salary $146,713
Frank Driver Loan payable $136,000
Harrison Realty Settlement $120,000
Frank Driver Expenses $72,000
American Stock Exchange Exchange Fees $46,000
Timothy Driver Severance $33,333
T. Carey Director's Fees $20,700
David Driver Director's Fees $20,250
L. Biggerstaff Director's Fees $20,250
R. Bartlett Director's Fees $20,250
Timothy Driver Director's Fees $17,500
K. Mathews Director's Fees $16,200
L. Emery Consulting Fees $15,774
L. Emery Severance $15,000
T. Carey Consulting Fees $10,450
Frank Driver Accrued 401K payments $9,231
EB2B COMMERCE: Sept. 30 Balance Sheet Upside-Down by $4 Million
---------------------------------------------------------------
eB2B Commerce, Inc. (OTCBB: EBTB.OB), a leading provider of
business-to-business integration and transaction management
solutions, announced its third quarter 2003 results.
Revenue for quarter ended September 30, 2003 was $823,000,
compared to $828,000 for the same period in 2002, a decrease of
$5,000 or 1%. Compared to the $1,213,000 reported in the second
quarter of 2003, total revenue decreased by $390,000, or 32%. The
decrease in sequential revenue is primarily attributable to the
timing of completed large projects and revenue recognition based
on completion. Revenue for the nine-months period ended September
30, 2003 was $3,067,000, an increase of $322,000, or 12%, from the
$2,745,000 reported for the same period in 2002.
The Company's core transaction services business revenue was
$622,000, an increase of $69,000, or 12%, from the third quarter
of 2002. For the nine-months ending September 30, 2003 revenue
from the Company's core business was $2,088,000, an increase of
$303,000, or 17%, from the $1,785,000 reported for the same period
in 2002. The increase was attributable to the completion of
several large projects as well as continued growth in eB2B's Trade
Gateway network of suppliers.
Net loss in the third quarter of 2003 was $238,000, or ($.08) per
share, compared to a loss of $2,158,000, or ($1.09) per share, for
the same period last year. The improvement in net loss is the
result of revenue increases coupled with the cost reductions that
have been implemented by the Company over the past 12 months.
Loss from continuing operations for the nine months ended
September 30,2003 was $15,000 compared to a loss of $4,583,000 for
the first nine months of 2002. Net loss for the nine-months ended
September 30, 2003 was $21,000, or $.00 per share compared to a
net loss of $5,345,000, or ($2.80) per share for the same period
in 2002.
For the third quarter of 2003, the Company reported positive
EBITDA (a non-GAAP measure defined as earnings before interest,
taxes, depreciation and amortization) of $89,000, as compared to
an EBITDA loss of $719,000 for the same period a year ago. This is
the fourth consecutive quarter of positive EBITDA achieved by the
Company. eB2B Commerce believes that EBITDA is a meaningful
measurement of operating performance as it allows for comparison
of performance between other competitors in the transaction
services industry. Please see the attached Financial Summary for a
reconciliation of EBITDA to net loss.
Net cash used in continuing operations for the nine months ended
September 30, 2003 was $124,000 versus net cash used in operating
activities of $1,830,000 for the same period in 2002. Total cash
and cash equivalents at September 30, 2003 was $277,000. As of
September 30, 2003 the Company had a negative working capital
position of $4,865,000.
As of November 20, 2003 the Company had cash and cash equivalents
of approximately $115,000.
At September 30, 2003, the Company's balance sheet shows a working
capital deficit of about $5 million, and a total shareholders'
equity deficit of about $4 million.
The Company is currently in discussions with its secured creditors
to cure a default condition on its January 2002 and July 2002
senior secured convertible Notes, totaling $3,200,000. As of
September 30,2003, this condition had not been cured. The Company
is exploring its options to secure additional financing to improve
its working capital position, and provide capital for growth.
During the quarter, the Company added over 275 new suppliers to
its TradeGateway(TM) e-commerce community. Additionally, the
Company entered an agreement with a major U.S. retailer to provide
outsourced, fully integrated Electronic Data Interchange for its
internal operation, as well as provide supplier enablement
services for over 100 of its key suppliers.
eB2B Commerce is a leading provider of business-to-business
transaction management services that simplify trading partner
integration, automation, and collaboration across the order
management life cycle. The eB2B Trading Network and Transaction
Lifecycle Management solutions provide enterprises large and small
with a total solution for improving trading partner relationships
that enhance productivity and bottom line profitability.
ENRON: EESH Unit Selling ServiceCo to Linc Group for $32 Million
----------------------------------------------------------------
In 1998, Enron Corporation acquired Limbach Facility Services,
Inc., a mechanical and electrical construction business, and
several related service companies through a series of
acquisitions. At the time of their acquisitions, Enron intended
to utilize Limbach and its subsidiaries as a key delivery arm for
the construction, services and facility management portion of
Enron Energy Services LLC's outsourcing product. However,
Limbach and its related companies were better suited for large
scale construction and servicing projects than the servicing
needs for EES's contracts and were never fully integrated or
utilized by EES.
Beginning in the fall of 2000, Martin A. Sosland, Esq., at Weil,
Gotshal & Manges LLP, in New York, relates that EES made the
strategic decision to distance itself from construction and move
towards the service side of the business. To execute this
strategic decision, on September 28, 2001, EES, though its
indirect, wholly owned subsidiary EES Service Holdings, Inc., and
certain third party investors created a new company, ServiceCo
Holdings, Inc., using the service businesses related to Limbach.
For the creation of ServiceCo:
(i) EESH contributed certain facilities-service businesses
and $15,000,000 for 85.8% of the shares of ServiceCo;
(ii) the Ontario Teachers' Pension Plan Board contributed
$30,000,000 and received 5.3% of the shares of ServiceCo;
and
(iii) a group of accredited investors -- the FX Holders -- of
FieldCentrix, Inc. contributed 98.7% of FX in return for
8.9% of the shares of ServiceCo.
EESH subsequently monetized 5.07% of its interest (or 4.35% of
ServiceCo) through a sale to Pyramid I Asset, LLC, a non-debtor,
special purpose entity, for $25,000,000.
Today, ServiceCo provides on-site facilities management services,
vendor management services and heating, ventilation, air
conditioning, electrical and other general maintenance and repair
services on a national scale.
Mr. Sosland reports that the Debtors' bankruptcy filing had a
negative impact on ServiceCo's business and future prospects. In
addition, OTPPB and a number of the FX Holders instituted
minority shareholder arbitration proceedings and lawsuits against
ServiceCo. The combination of these actions and events made it
difficult to market the stock or assets of ServiceCo to a third
party. To resolve these actions and facilitate a sale,
ServiceCo, Enron, EESH, Pyramid, OTPPB, FX and certain of the FX
Holders1 entered into a Court-approved Redemption Agreement,
dated as of April 25, 2003, pursuant to which ServiceCo unwound
the original transaction through a two-stage redemption of (i)
all of the outstanding shares of ServiceCo's capital stock held
by OTPPB, Pyramid and the FX Holders who participated in the
redemption, and (ii) a portion of the outstanding shares of
ServiceCo's capital stock held by EESH. The transactions
contemplated by the Redemption Agreement closed on June 9, 2003.
According to Mr. Sosland, ServiceCo has solicited bids for its
business on three separate occasions. In August 2002, ServiceCo
received several credible offers. However, all but one required
settlement of the shareholder disputes just discussed. A
management buy-out bid received pursuant to this solicitation
ultimately served as the basis for the terms of the Redemption
Agreement.
In December 2002, ServiceCo received two credible offers that
were contingent on the signing of the Redemption Agreement.
Unfortunately, the equity partner of the lead bidder became
uncomfortable with the business during due diligence and
subsequently walked away from the transaction.
In April 2003, ServiceCo received three offers. Global
Innovation Partners LLC submitted the highest and best bid, and
ServiceCo moved forward with the negotiation of a definitive
agreement.
On November 7, 2003, Mr. Sosland reports that the Seller Parties
-- ServiceCo, Linc Mechanical Services, Inc., Linc Service
Holdings, Inc., Linc Service Company, Affiliated Building
Services, Inc., The LINC Corporation, Integrated Process
Technologies LLC, Pierce Mechanical, Inc., Jon Pierce
Incorporated, ServiceCo Corporate Services, Inc., ServiceCo
Operations, Inc., The LINC Corporation Holding Company, Enron
Energy Services Process Technologies, Inc., Affiliated Building
Services, Inc. Investment Company, The LINC Corporation
Investments Company, Enron EES Acquisition I Corp., Affiliated
Building Services, Inc. Holding Company and The LINC Company --
Global and The Linc Group LLC, a Delaware limited liability
company Global formed to facilitate the Sale Transaction,
executed the Purchase Agreement for the sale of the assets and
liabilities of ServiceCo and its subsidiaries. The salient terms
and conditions of the Purchase Agreement are:
A. Consideration
In consideration of the sale of the Acquired Assets, The Linc
Group will pay to the Seller Parties $32,309,438, plus the
amount of available cash of ServiceCo at the time of Closing,
and plus or minus adjustments for certain working capital
items including, among other things, accounts receivables,
notes receivable, current assets and current liabilities in
accordance with the Purchase Agreement.
B. Acquired Assets -- the Business
At the Closing, and on the terms and subject to the
conditions in the Purchase Agreement, the Seller Parties will
sell, assign, transfer, deliver, and convey to The Linc Group,
and The Linc Group will purchase and accept from the Seller
Parties, for the Purchase Price, all of the Seller Parties'
right, title and interest in and to the assets, properties,
and rights that are both owned by any Seller Party and
(a) used or usable by any Seller Party in the operation of
the Business; or
(b) otherwise relate to the Business, of every type and
description, real, personal, and mixed, and tangible and
intangible, wherever located and whether or not reflected
on the books and records of a Seller Party, including any
and all Real Property, Contract Rights, Cash, Leases,
Accounts Receivable, Equipment and Furniture, Inventory,
Intellectual Property, Claims, Seller Permits, the Seller
Books and Records and the Seller Marks, other than the
Excluded Assets.
C. Assumed Liabilities
At the Closing, and on the terms and subject to the
conditions in the Purchase Agreement, The Linc Group will
assume and agree to pay, perform, fulfill, and discharge, as
or when due from and after the Closing:
(a) all Liabilities related to or arising out of the Acquired
Assets or the Business and which are, in either case,
reflected on the Financial Statements;
(b) all Liabilities related to or arising out of the Acquired
Assets or the Business, which are, in either case,
incurred in the Ordinary Course since the Financial
Statements Date;
(c) all Liabilities in respect of all Contracts, Contract
Obligations, Leases, Seller Permits, Guarantees, and
Accounts Payable of each Seller Party;
(d) all Liabilities assumed by The Linc Group under the
Employee Matters Agreement and the other documents and
instruments executed and delivered by The Linc Group at
Closing;
(e) Liabilities for all bonuses, wages and other similar
benefits with respect to each Seller Party, which are
attributable to any period prior to the Measurement Date
to the extent the Purchase Price has been adjusted in
accordance with Section 2.2 to reflect the assumption of
the Liabilities; and
(f) all Liabilities arising out of or in respect of the
matters disclosed in Schedule 4.11 and Schedule 4.19 and
the contracts described in Schedule 4.12, but excluding
all Excluded Liabilities.
D. Deliveries by the Seller Parties
At the Closing, the Seller Parties will, among other things,
deliver to The Linc Group the General Conveyances, Assumption
Agreements, Employee Matters Agreement, Transition Agreement,
Seller Books and Records, and the Escrow Agreement.
E. Deliveries by The Linc Group
At the Closing, The Linc Group will, among other things, pay
the Initial Cash Purchase Price to the Seller Parties, and
deliver executed copies of the Assumption Agreements,
Employee Matters Agreement, Transition Agreement, and Escrow
Agreement, and other customary documents.
F. Closing Conditions
The Closing is subject to:
(a) representations and warranties being true as of the
Closing Date;
(b) covenants and agreements having been performed;
(c) the Court's approval of the Sale; and
(d) other customary conditions having been satisfied.
G. Termination
The Purchase Agreement may be terminated and the transactions
contemplated therein abandoned:
(a) by mutual written consent of the Parties;
(b) by either party if necessary approvals under antitrust or
anti-competition laws have not been obtained within 45
days of execution of the Purchase Agreement;
(c) by either party in the event of issuance of a final
unappealable governmental order prohibiting the sale
contemplated by the Purchase Agreement;
(d) by either party if the Closing will not occur within 120
days of execution of the Purchase Agreement; provided,
that the terminating party is not in material default of
its obligations under the Purchase Agreement;
(e) by either party if the other party breached any
representation, warranty or covenant; provided, that the
terminating party is not in material default of its
obligations under the Purchase Agreement; or
(f) by either party if the Seller Parties will accept or
select, and the Bankruptcy Court entered a final and
nonappealable order authorizing and approving the
consummation of, an Alternative Sale under a definitive
agreement.
H. Effect of Termination
No payment is due from the Seller Parties to The Linc Group
in the event of termination of the Purchase Agreement except:
(a) if the Closing has not occurred within 120 days of
execution of the Purchase Agreement due to the Seller
Parties' failure to perform a required obligation or
covenant, the Seller Parties will pay to The Linc Group an
amount equal to either The Linc Group's expenses, the
amount not to exceed $500,000; or
(b) if the Seller Parties will accept or select, and the
Bankruptcy Court enters a final and nonappealable order
authorizing and approving the consummation of, an
Alternative Sale, the Seller Parties will pay to The Linc
Group a $1,200,000 termination fee out of the proceeds of
the Alternative Sale.
In connection with the Sale Transaction, Mr. Sosland informs
Judge Gonzalez that EESH will also execute the Transition
Agreement. Currently, certain employees of EESH and its
affiliates perform certain accounting, tax, legal and other
services for ServiceCo and its affiliates. As a result of the
Sale Transaction, most or all of the employees of ServiceCo and
its subsidiaries will become employees of The Linc Group or its
affiliates. To provide for a smooth transition of the Business
to The Linc Group, and clarify the ServiceCo obligations, EESH
and The Linc Group will execute the Transition Agreement at the
Closing.
Pursuant to the Transition Agreement, EESH will grant to The Linc
Group the right to use, and access to, certain information
technology systems, reports and licenses of EESH and its
affiliates. EESH will also provide, to the extent being provided
by EESH to ServiceCo as of the Closing Date and to the extent
EESH has the capability and resources to do so, certain network
access and related services, payroll and finance/accounting
services, help desk, lotus notes administration, user account
maintenance, telephony support, IT procurement support, Oracle
and Vertex support, tax services, treasury and treasure-related
services, migration services and other services. EESH will also
grant a temporary easement to The Linc Group and its Affiliates
to access and use certain office space being used by ServiceCo
prior to the Closing as described in the Transition Agreement.
In return for EESH's provision of the services provided under the
Transition Agreement, The Linc Group will pay to EESH a $104,000
monthly fee.
Accordingly, by this motion, EESH asks the Court, pursuant to
Sections 105 and 363 of the Bankruptcy Code, to authorize and
approve:
(a) its necessary and appropriate consent, by and through its
subsidiaries and affiliates, to the sale of the Business
to The Linc Group pursuant to the terms and conditions of
the Purchase Agreement; and
(b) the consummation of the contemplated transactions,
including, without limitation, its entry into the
Transition Agreement.
Mr. Sosland explains that the sale of the Business does not
directly involve property of the estate. Nonetheless, the Sale
Transaction affects the Debtors' Chapter 11 estates in that the
Seller Parties are indirect majority owned subsidiaries of the
Debtors. Thus, it is in the best interest of the Debtors, their
creditors and all parties-in-interest to maximize the value of
the Seller Parties, and in particular, the Business.
In accordance with the internal policies and control procedures,
Enron's Board of Directors reviewed and approved the Sale
Transaction. Notwithstanding, the Purchase Agreement requires
the Court's approval as a condition precedent to closing of the
Sale. Mr. Sosland contends that the Court should approve the
Sale Transaction because:
(a) the Business is not integral to or contemplated to be
part of Enron's reorganization;
(b) since 2002, ServiceCo has been extensively marketing the
Business to get the best and highest offer;
(c) the Purchase Agreement was negotiated at arm's length and
represents a fair market value for the Business;
(d) the Transition Agreement is necessary to ensure a smooth
transition of the sale of the Business to The Linc Group
and EESH will be compensated at what it believes is a
fair and reasonable amount in return for its services;
(e) EESH and the Seller Parties are not aware of any liens
encumbering the Business that would not allow the sale
to be free and clear of all liens, claims and
encumbrances; and
(f) The Linc Group is a good faith purchaser.
Mr. Sosland notes that since ServiceCo had extensively marketed
the Business in the past, the contemplated sale transaction
should be declared a private sale, without any need for auction,
pursuant to Bankruptcy Rule 6004(f)(1). (Enron Bankruptcy News,
Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FLEXTRONICS: Reaches Full Settlement of Beckman Coulter Suit
------------------------------------------------------------
Flextronics International Ltd. (Nasdaq: FLEX) announced that a
full settlement has been reached in the Beckman Coulter lawsuit.
The settlement includes an agreement whereby Flextronics will pay
$23 million to Beckman to completely resolve this matter.
"Although the settlement remains larger than we believe the law
would have allowed, it relieves the company of the significant
burden and distraction that the original verdict imposed," stated
Michael E. Marks, Chief Executive Officer of Flextronics.
The settlement will result in Flextronics recognizing an unusual
charge of approximately 3 cents per diluted share in the December
quarter for the amount of the settlement in excess of its previous
accrual of approximately $8 million for this matter.
Headquartered in Singapore, Flextronics (S&P, BB+ Corporate
Credit Rating, Stable) is the leading Electronics Manufacturing
Services provider focused on delivering supply chain services to
technology companies. Flextronics provides design, engineering,
manufacturing, and logistics operations in 29 countries and five
continents. This global presence allows for supply chain
excellence through a network of facilities situated in key markets
and geographies that provide customers with the resources,
technology, and capacity to optimize their operations.
Flextronics' ability to provide end-to-end services that include
innovative product design, test solutions, manufacturing, IT
expertise, network services, and logistics has established the
Company as the leading EMS provider with revenues of $13.4 billion
in its fiscal year ended March 31, 2003. For more information,
visit http://www.flextronics.com
FLEXTRONICS INT'L: Will Pay Beckman Coulter $23MM to Settle Suit
----------------------------------------------------------------
Beckman Coulter, Inc. (NYSE: BEC) has reached a settlement
agreement with Flextronics International Ltd. (Nasdaq: FLEX) in
the amount of $23 million.
This taxable settlement, which will be recorded by Beckman Coulter
in the fourth quarter of 2003, resolves Beckman Coulter's claim
for compensatory and punitive damages and includes reimbursement
for legal and other related expenses. Other details of the
settlement were not disclosed.
This settlement is the result of a lawsuit filed by Beckman
Coulter, Inc. against Flextronics International Ltd. and its U.S.
subsidiary Flextronics USA, Inc. The case was filed during the
second quarter of 2001 seeking damages for breach of contract and
other claims.
Due to the uncertainty of the final outcome, the extensive
additional judicial review required to continue litigation, and
Flextronics' willingness to enter into serious negotiations,
Beckman Coulter determined that it was in the best interest of its
shareholders to bring the matter with Flextronics to a close.
Beckman Coulter, Inc. is a global biomedical company,
headquartered in Fullerton, California. The company develops and
markets instruments, chemistries, software and supplies that
simplify and automate laboratory processes throughout the
biomedical testing continuum. Through pioneering medical research
and drug discovery, specialty testing, and patient care
diagnostics, Beckman Coulter supports all phases of the battle
against disease. Annual sales for the company totaled $2.06
billion in 2002, with 62% of this amount generated by recurring
revenue from supplies, test kits and services. For more
information, visit http://www.beckmancoulter.com
Headquartered in Singapore, Flextronics (S&P, BB+ Corporate
Credit Rating, Stable) is the leading Electronics Manufacturing
Services provider focused on delivering supply chain services to
technology companies. Flextronics provides design, engineering,
manufacturing, and logistics operations in 29 countries and five
continents. This global presence allows for supply chain
excellence through a network of facilities situated in key markets
and geographies that provide customers with the resources,
technology, and capacity to optimize their operations.
Flextronics' ability to provide end-to-end services that include
innovative product design, test solutions, manufacturing, IT
expertise, network services, and logistics has established the
Company as the leading EMS provider with revenues of $13.4 billion
in its fiscal year ended March 31, 2003. For more information,
visit http://www.flextronics.com
FLOW INT'L: October 31 Balance Sheet Upside-Down by $3.4 Million
----------------------------------------------------------------
Flow International Corporation (Nasdaq: FLOW), the world's leading
developer and manufacturer of ultrahigh-pressure waterjet
technology equipment used for cutting, cleaning (surface
preparation) and food safety applications, reported results for
its fiscal 2004 second quarter ended October 31, 2003.
On a consolidated basis, FLOW reported fiscal second quarter
revenues of $42.7 million and a net loss of $3.7 million or $0.24
diluted loss per share. Results for the quarter include
restructuring charges of $1.0 million. This compares to revenues
of $41.8 million and a net loss of $8.9 million or $0.58 diluted
loss per share in the second fiscal quarter of 2003, which
included a $5.6 million charge associated with the write-off of
deferred tax assets. The Flow Waterjet Systems segment reported
revenues of $32.1 million and a net loss of $1.9 million or $0.12
diluted loss per share. The Avure Technologies segment recorded
revenues of $10.6 million and a net loss of $1.9 million or $0.12
diluted loss per share.
At October 31, 2003, the Company's balance sheet shows a total
shareholders' equity deficit of about $3.4 million.
"Our cost reduction and restructuring efforts are beginning to
show positive results," said Stephen R. Light, Flow's President
and Chief Executive Officer. "During the quarter, we generated an
operating profit in our waterjet segment, significantly reduced
our losses at Avure, continued to reduce senior debt and generated
cash from operations, while remaining in full compliance with all
loan covenants. We also received our first major order in what we
believe will be a significant growth market for our high-pressure
food systems: ready-to-eat meats and meals. This order was
received as the USDA's new food safety inspection system rules
took effect in early October. These new rules require that all
ready-to-eat meat producers publicly identify the processes they
are using to protect consumers from harmful biological
contaminants in their products."
For the six months ended October 31, 2003, the company recorded
consolidated revenues of $79.9 million and a net loss of $10.9
million or $0.71 diluted loss per share. Results for the six
months include restructuring charges of $2.3 million. This
compares to revenues of $81.8 million and a net loss of $12.9
million or $0.84 diluted loss per share for the first six months
of fiscal 2003, which included a $5.6 million charge associated
with the write-off of deferred tax assets.
Segment Review
Waterjet Systems: For the quarter, Waterjet Systems reported
revenues of $32.1 million and a net loss of $1.9 million or $0.12
diluted loss per share, compared to revenues of $34.3 million and
a net loss of $5.8 million or $0.38 diluted loss per share in the
year-ago quarter. Included in the prior year quarter was a $5.6
million charge associated with the write-off of deferred tax
assets. Within total Waterjet Systems sales:
-- Total systems revenues decreased 9% during the quarter to
$20.0 million, based on lower new equipment sales in North
America.
-- Consumables and spare parts revenues declined 2% to $12.1
million, with weak North American sales offsetting growth
in the rest of the world. FlowParts.com, the company's
online parts store launched at the end of the first fiscal
quarter of 2004, accounted for approximately 10% of
the daily domestic order volume by the end of the second
quarter.
-- Outside of the United States, Waterjet revenue declined 2%
to $16.8 million, with sales to Asia and Europe down 3% and
11% respectively, to $5.4 million and $6.1 million versus
the second fiscal quarter of 2003.
-- Waterjet Systems sales to the automotive and aerospace
markets increased 13% to $7.7 million.
Avure Technologies: For the quarter, Avure recorded revenues of
$10.6 million and a net loss of $1.9 million or $0.12 diluted loss
per share, compared to revenues of $7.5 million and a net loss of
$3.1 million or $0.20 diluted loss per share in the year-ago
quarter. Within the Avure Technologies segment:
-- General Press revenues increased 41% to $6.9 million. The
increased revenue primarily occurred outside the United
States. The company's General Press sales are recognized
on a percentage-of-completion basis and vary depending on
the company's backlog and overall economic activity. The
company expects General Press revenues to remain cyclical
despite recent press system orders and other pending
proposals, which are expected to provide a solid backlog
throughout the remainder of the current calendar year and
well into calendar 2004.
-- Avure's Fresher Under Pressure food product line revenues
increased 43% to $3.7 million.
-- Subsequent to the end of the quarter the company received
an order from an internationally recognized ready-to-eat
meat producer for a total of 8 high pressure food
processing systems, including options on 4 systems. This
represents the company's first substantial order in the
ready-to-eat meat industry, which the company considers to
be one of the major developing markets for its machines.
These orders also represent the first for its new "Turn
Key" technology, which was developed over the previous six
months to increase throughput rates.
-- A total of 12 new food systems inclusive of options have
been ordered during or shortly after the quarter
representing approximately $13 million of additional
backlog.
-- Even with the recent success of food system sales, the
company, as part of the restructuring plan, has reduced its
Avure workforce without compromising its manufacturing,
sales and service capabilities. The company continues to
evaluate strategic alternatives for Avure, which include
the continuation of operations on its newly diminished
scale, suspension of operations, shutdown, or a complete or
partial divestiture.
Flow provides total system solutions for various industries,
including automotive, aerospace, paper, job shop, surface
preparation, and food production. For more information, visit
http://www.flowcorp.com
GASEL TRANSPORTATION: Sept. 30 Net Capital Deficit Tops $2.5MM
--------------------------------------------------------------
Gasel Transportations Lines, Inc., (OTCBB:GSEL) currently
operating as a debtor in possession under Chapter 11
Reorganization, announced results for fiscal third quarter 2003.
For the three months ended September 30, 2003, freight income
revenue totaled $3,303,539 and training school revenue was $109,
750 for combined revenue of $3,413,289, representing a 3.09%
decline from prior year combined revenue of $3,522,063. Combined
revenue for the nine month period ended Sept. 30, 2003 of
$10,453,844 was 7% lower than the $11,257,485 recorded for the
same period one year prior. The revenue decline is largely a
result of the Company's downward fleet size that was adjusted to
meet depressed freight demand commensurate with the sluggish
domestic economy over the past year, particularly in manufacturing
and "dry freight" sectors.
Net loss narrowed by 19.07% to $330,619 from year prior results of
$411,721. Earnings per share EPS for Q3, 2003 were $0.033. Net
loss for the nine month period ended Sept. 30, 2003 totaled
$2,246,079 as compared to net loss of $678,167 for the same nine
month period one year prior.
Total Operating Expenses for the third quarter of 2003 were
reduced by 20.12% to $462,734 from $579,313 in the third quarter
of 2002, indicative of the Company's down sizing and intense cost
cutting actions. Reorganization costs totaled $69,304 for the
quarter and included $42,000 of professional and bankruptcy fees
and $27,304 loss on disposition of Assets-post-Petition.
The loss for the third quarter 2003 was significantly lower than
the loss incurred during the pre-petition period this past year
(including: 4th quarter 2002, 1st and 2nd quarters 2003)
indicative of the Company's success with the implementation of a
comprehensive economic recovery plan, developed and initiated in
June 2003.
At September 30, 2003, the Company's balance sheet shows that its
total liabilities exceeded its total assets by about $2.5 million.
Mike Post, President & CEO commented that: "We are quite pleased
with our progress for the third quarter of 2003. The ongoing
reorganization has certainly strained the company, but in spite of
our current status, we significantly reduced our third quarter net
loss by over 19% compared to the same period last year, and hugely
cut the loss compared to the prior two quarters of this year. In
addition, we acquired substantial new contracts and changed our
sales mix to increase revenues and equipment efficiencies, and
recent financial results suggest that those initiatives are
translating to the bottom line. Recently acquired sales contracts
with major national customers are expected to continue to have a
significant positive impact our top line revenues as well as
improve our operating cost through better equipment and driver
productivity. We are also pleased to see a big turnaround in
external factors in the transportation industry. The overall
improvement in the economy and commercial purchasing is
revitalizing demand for freight shipping services and Gasel is
firmly positioned to meet the increased demand from current and
future customers. We have also made significant progress in our
reorganization process and continue to receive excellent
cooperation from our creditors. Hopefully, Gasel will achieve
mutually agreeable and final terms in the near future with our
creditors, and emerge a much more effective Company with excellent
prospects for future growth."
Gasel Transportation Lines, Inc., based in Marietta, Ohio, with a
terminal and sales offices in Columbus, Ohio, is a national long
and regional haul truckload common and contract carrier, and
provides logistic services throughout the continental United
States and Canada. For more information, visit
http://www.gasel.net
GENERAL DATACOMM: Howard S. Modlin Discloses 11.93% Equity Stake
----------------------------------------------------------------
Howard S. Modlin beneficially owns 470,546 shares of the common
stock of General Datacomm Industries, which amount represents
11.93% of the outstanding common stock of the Company. Mr. Modlin
holds sole voting and dispositive powers over the stock held.
9,053 of these shares are owned by Mr. Modlin's law firm. Pursuant
to Rule 13d-3 an additional 1,550 shares are deemed owned based on
options to purchase common stock which could be exercised by Mr.
Modlin as follows: 500 at $123.125 per share, 450 at $37.50 per
share and 600 at $26.875 per share, respectively, expiring
October 9, 2005, March 4, 2008 and October 20, 2009 respectively.
The total does not include an aggregate of 178,845 shares of
common stock, or 4.53% of the outstanding shares, consisting of
(i) 11,200 shares of common stock and 3,400 shares of Class B
Stock owned by the Mr. Modlin's wife, the beneficial ownership of
which Mr. Modlin disclaims, and (ii) an aggregate of 164,245
shares beneficially owned by the Estate of Charles P. Johnson,
General Datacomm Industries' former Chairman, of which Howard S
Modlin is the sole executor, the beneficial ownership of which Mr.
Modlin disclaims. Such shares held by the Estate of Charles P.
Johnson consist of 151,367 shares of Class B Stock convertible
into a like number of shares of common stock, 9,215 share of
common stock and an additional 3,663 shares of common stock if
20,000 shares of the Company's 9% Cumulative Convertible
Exchangeable Preferred Stock are converted into common stock at
$136.50 per share. In calculating the aforesaid percentage of
excluded shares, the amount of 3,663 shares acquirable on
conversion is added to the shares of the Company outstanding at
September 30, 2003.
* * *
On October 1, 2003, General Datacomm Industries, Inc. was advised
by its independent accountants, PricewaterhouseCoopers LLP, that
such accountants had declined to stand for re-election as
independent accountants for the Company with respect to the audit
of the Company's financial statements as of, and for, the year
ended September 30, 2003.
The Company received a letter from them that the client-auditor
relationship between the Company and such independent accountants
will cease upon the issuance of the report of
PricewaterhouseCoopers LLP related to the audits of the Company's
financial statements as of September 30, 2002 and 2001 and for the
years then ended. The Company was a debtor and debtor in
possession under Chapter 11 of the Federal Bankruptcy Code between
November 2, 2001 and September 15, 2003 and has not filed its Form
10-K reports or audited financial statements for the years ended
September 30, 2001 or 2002. While the Company has filed monthly
operating reports with the Bankruptcy Court during the bankruptcy
period and included financial results contained therein and
additional consolidated results in Form 8-K filings,
PricewaterhouseCoopers LLP performed no procedures whatsoever
regarding such financial information.
GENUITY INC: Balks at Three Verizon DSL Set-Off Claims
------------------------------------------------------
On August 4, 2000, the Genuity Debtors executed a Master Agreement
for Wholesale ISP DSL Services with GTE.Net, LLC, doing business
as Verizon Internet Solutions, also known as Verizon Online Inc.,
a provider of wireline and wireless communications in the United
States. Under the VOL Agreement, the Debtors agreed to provide
Verizon Online with internet infrastructure services which are
high speed telecommunications data services through digital
subscriber line technology. Verizon Online agreed to pay for the
services.
In April 2001, the Debtors also entered into the InfoSpeed DSL
Solutions Term and Volume Discount Program Purchase Agreement
with VADI -- Verizon Advanced Data Inc. and Verizon Advanced Data
Virginia Inc. Under VADI Agreement, the Debtors procured the use
of high-speed digital data transmission lines for internet
interconnectivity between individual customer premises and
Genuity's internet network. The Debtors agreed to pay for the
services pursuant to the terms of the VADI agreement and related
tariffs.
The Debtors provided services to Verizon Online pursuant to the
VOL Agreement until the consummation of the sale of substantially
all of the Debtors' assets to Level 3 Communications LLC on
February 4, 2003. With respect to services rendered through
February 4, 2003, Verizon Online was indebted to the Debtors
under the VOL Agreement in excess of $82,000,000. Of this
amount, only $14,000,000 has been paid, leaving an unpaid balance
of $66,000,000. As a result of accrual of late fees since
February 3, 2003, the $66,000,000 unpaid VOL debt has increased
and is currently in excess of $75,000,000.
Verizon asserts that $32,000,000 of the unpaid VOL debt may be
set off, recouped or otherwise credited against prepetition
amounts owed by Genuity Solutions. William F. McCarthy, Esq., at
Ropes & Gray, in Boston, Massachusetts, argues that the alleged
set-off does not stem from amounts owed by Genuity Solutions to
Verizon Online. Instead, the alleged set-off represents amounts
that are allegedly owed by Genuity Solutions to VADI for
prepetition services, or for prepetition accrued charges under
the VADI Agreement.
Set-0ff is Not Available
Mr. McCarthy remarks there is no dispute that:
-- under different contracts, Verizon Online is indebted to
Genuity, and Genuity is indebted to VADI;
-- each counterparty is a separate entity, and that there is
no contractual right of set-off; and
-- these debts are prepetition in nature.
The issue now, McCarthy clarifies, is whether the debts and the
claims are mutual.
Mutual debts are debts "due to and from the same person in the
same capacity." It is a matter of well-settled law in New York
that a subsidiary's debt may not be set off against the credit of
a parent or other subsidiary, or vice versa, because no mutuality
exists under the circumstances.
Hence, allowing a set-off by Verizon would be a clear violation
of the prohibition against a corporation using its subsidiary or
affiliate to gain mutuality of claim and debt with another
business entity. Moreover, Mr. McCarthy asserts, the Court
should disallow secured status of any VADI claim.
Recoupment Is Not Available
Historically, Mr. McCarthy remarks, courts recognized a limited
equitable exception to the set-off doctrine. The doctrine of
recoupment may provide an alternative basis for cancellation of
debts under certain circumstances. However, the Second Circuit
made clear that recoupment is only available where equity could
not permit any result other than offsetting or cancellation.
Recoupment may only be applied in bankruptcy where "both debts
arise out of a single integrated transaction so that it would be
inequitable for the debtor to enjoy the benefits of that
transaction without also meeting its obligations."
Mr. McCarthy points out that the services rendered by VADI to
Genuity, and by Genuity to Verizon Online were not governed by
one contract. Instead, the counterparties were contracted in
separate agreements. The separate contracts were discrete and
independent of one another, involving different parties,
different subject matter, and different payments.
Mr. McCarthy reports that the prepetition course of conduct of
the parties confirms this matter. At intervals, Verizon and
Genuity personnel would meet to reconcile amounts due in three
separate categories:
-- amounts due to Verizon Online;
-- amount due to VADI; and
-- amounts due to a separate Verizon entity, Verizon
TeleProducts, for local loop modem purchases under yet
another agreement.
There would then be three separate checks or wire transfers sent:
-- one by Verizon Online to Genuity Solutions,
-- one from Genuity Solutions to VADI; and
-- one from Genuity Solutions to Verizon TeleProducts.
Thus, these contracts and the payments to be made under them
cannot be collapsed so as to support recoupment. The
telecommunications industry in which Verizon Online operates is
highly regulated. A major part of these regulations are intended
to maintain the separation of local and long-distance telephone
services. That separation was the very reason for the creation
of Genuity Inc. and the IPO Spin-Out.
Notwithstanding these regulations, Verizon is now seeking to
recoup amounts that it owes for long-distance service -- the VOL
Debt to Genuity Solutions for internet services -- against
amounts that another Verizon subsidiary is owed for local
telephone services, the so-called "local-loops" that VADI sold to
Genuity Solutions. Having purchased and provided services using
separate entities, Verizon cannot be allowed to disregard the
distinctions between those entities or agreements by claiming
them to be intertwined. The Court should not give Verizon, by
way of recoupment, rights eschewed by the distinctions Verizon
elected to use outside of bankruptcy, Mr. McCarthy argues.
A grant of recoupment in this instance would be totally
inconsistent with the equitable nature of the recoupment remedy.
With Verizon asserting recoupment and asking for an equitable
remedy that looks across the corporate boundaries of different
Verizon entities, the Court should evaluate that request only in
light of Verizon's conduct generally with respect to the Debtors.
As the Court is well aware, Verizon was the direct cause of the
Debtors' bankruptcy filing, precipitated when Verizon converted
its stock of Genuity Inc. in a manner that triggered defaults
under credit lines that a Verizon subsidiary had provided to
Genuity Inc. and credit lines that banks had provided to Genuity
Inc. Even if that stock conversion and triggering of events of
default would not give rise to legal liability for Verizon, it
would be completely inequitable to permit the direct cause of the
bankruptcy to benefit from the de facto secret liens that the
recoupment doctrine provides. Recoupment would elevate Verizon
unjustly, allowing it to avoid payments otherwise clearly payable
to Genuity Solutions by using claims of its affiliates that the
affiliates themselves could not use without leapfrogging over the
Debtors' unsecured creditors with legitimate prepetition claims,
thus subverting the bankruptcy process.
Accordingly, the Debtors object to Verizon's Claims Nos. 4178,
4179 & 4180, to the extent that Verizon asserts set-off,
recoupment or any other theory of secured status under Section
506(a) with respect to receivables that Verizon Online owes to
Genuity Solutions.
In the event that the Court determines that set-off or recoupment
is applicable, the Debtors dispute the amounts payable to VADI.
The Debtors believe that VADI's claim does not exceed
$26,400,000. The Debtors object to any claims by those entities
in excess of those amounts. The disputes include VADI claims
already paid as cure for executory contracts and other matters.
The Debtors further reserve their right to raise further
objections the DSL Setoff Claims. (Genuity Bankruptcy News, Issue
No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GLOBAL CROSSING: Wants Extension of SingTel Termination Date
------------------------------------------------------------
According to Michael F. Walsh, Esq., at Weil, Gotshal & Manges
LLP, in New York, the Global Crossing Debtors are now in the final
stages of documenting and granting liens on their assets located
in 30 countries and resolving certain other issues in connection
with the Closing of the Purchase Agreement with Singapore
Technologies Telemedia Pte Ltd.
Mr. Walsh explains that the Debtors, the Joint Provisional
Liquidators, the Creditors Committee, JPMorgan -- as agent under
the Amended and Restated Credit Agreement -- and ST Telemedia
have been working diligently over the past months to prepare for
the Closing. However, the complexity of closing the Transaction,
which is subject to multiple legal regimes throughout the world,
has taken longer than the parties anticipated. Accordingly, the
Debtors seek to extend the Voluntary Termination Date under
Amendment No. 4 of the Purchase Agreement to December 5, 2003, so
as to complete the process and commence making distributions to
the creditors.
Mr. Walsh informs the Court that the final stages to complete the
Transaction require granting liens on the Debtors' property
throughout the world. That process, which involves the
coordinated efforts of 60 legal counsels on four continents, is
complicated, expensive, and time-consuming. The final stages of
this process has presented numerous complex legal and factual
issues and has unforeseeably taken longer than anticipated when
the Debtors filed their motion to approve Amendment No. 3. In
light of the delay in completing the collateral package required
under the Plan, the Debtors and ST Telemedia both seek the added
assurance of a formal, Court-approved extension of the Voluntary
Termination Date that will lock in both parties' commitments
through the completion of the Collateral Package.
The GX Debtors believe that extending the Voluntary Termination
Date of the Purchase Agreement will enable them to continue
working toward Closing with an assured commitment from ST
Telemedia and absent any distractions that could be brought on
without the extension. (Global Crossing Bankruptcy News, Issue No.
51; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GULFWEST ENERGY: Capital Deficit Raise Going Concern Uncertainty
----------------------------------------------------------------
As shown in the Company's financial statements, GulfWest Energy
Inc. had a working capital deficiency of $41,817,861 at
September 30, 2003 and $41,645,520 for the year ended December 31,
2002. This and other conditions raise substantial doubt about
GulfWest's ability to continue as a going concern.
On July 24, 2003 the Company signed a letter of agreement with
Starlight Corporation of Denver to pursue a merger of the two
companies. A definitive agreement and plan of merger is being
developed, which will be subject to board and shareholder approval
by both companies, as well as regulatory approvals and customary
due diligence.
If approved, the merger is planned to be achieved through a stock-
for-stock exchange, whereby 100% of the Starlight stock will be
exchanged for GulfWest stock with GulfWest as the surviving
entity. The merger is contingent upon achieving consolidated re-
financing of the combined company with terms agreeable to both
parties, as well as GulfWest's largest debt holder. The
refinancing will include significant new capital for development
projects on the Gulf Coast and in the Rockies.
At September 30, 2003, Company current liabilities exceeded its
current assets by $41,817,861. GulfWest had a loss of $399,457
for the quarter compared to a loss of $924,750 for the period in
2002.
The Company's consolidated financial statements include the
Company itself and its wholly-owned subsidiaries: RigWest Well
Service, Inc. formed September 5, 1996; GulfWest Texas Company
formed September 23, 1996; DutchWest Oil Company formed July 28,
1997; Southeast Texas Oil and Gas Company, L.L.C. acquired
September 1, 1998; SETEX Oil and Gas Company formed August 11,
1998; GulfWest Oil and Gas Company formed February 8, 1999; LTW
Pipeline Co. formed April 19, 1999; GulfWest Development Company
formed November 9, 2000; and, GulfWest Oil and Gas Company
(Louisiana) LLC formed July 31, 2001.
HAGERSTOWN HOTEL: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Hagerstown Hotel Associates, LLC
901 Dual Highway
Hagerstown, Maryland 21740
dba Clarion Hotel & Conference Center Antietam Creek
Bankruptcy Case No.: 03-66639
Type of Business: Hotel
Chapter 11 Petition Date: November 26, 2003
Court: District of Maryland (Baltimore)
Judge: E. Stephen Derby
Debtor's Counsel: Joel Perrell, Esq.
Miles & Stockbridge, P.C.
10 Light Street
Baltimore, MD 21202
Tel: 410-385-3762
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Ocean Bank $6,200,000
c/o Richard Hagerty, Esq.
Troutman Sanders
1660 International Drive
Suite 600
McLean, VA 22102
Ocean Bank $255,683
780 NW 42nd Avenue
Miami, FL 33126
Magna Hospitality Group, LC $151,813
Turner Enterprises $65,000
Comptroller of Maryland $46,263
Choice Hotels International $42,204
Allegheny Power $36,272
Columbia Gas $25,051
Sysco Food Service of VA, Inc. $22,776
Image Edge $21,735
LE Barnhart Investigations $19,239
Marsh USA, Inc. $17,428
A/C R&H Services $17,148
Artim Seafood $13,334
Guest Distribution $12,419
FPC Food Services $12,100
Advertising, Inc. $11,670
LAN Computer Technology Corp. $11,400
Aetna US Healthcare $10,623
Washington County Treasurer's Office $10,396
HAYES LEMMERZ: Court Okays Final Fee Applications for $50 Million
-----------------------------------------------------------------
Thirteen professionals employed or retained by the Hayes Lemmerz
Debtors sought and obtained Court approval of their fees and
expenses on a final basis without prejudice to later allowance of
requested unapproved expenses:
Professional Period Fees Requested Fees Allowed
------------ ------ -------------- ------------
Skadden, Arps,
Slate, Meagher
& Flom 12/05/01-06/03/03 $12,018,585 $969,138
Lazard Freres
& Co., LLC 12/05/01-06/03/03 8,367,741 129,896
KPMG LLP 02/01/03-06/03/03 5,627,533 126,495
Akin, Gump
Strauss, Hauer
& Feld LLP 12/17/01-06/03/03 3,038,788 173,638
Klett, Rooney
Lieber &
Schorling PC 12/05/02-06/04/03 375,392 50,642
Chanin Capital
Partners LLC 02/22/02-05/31/03 2,287,500 83,900
Professional
Resources
International,
Inc. 07/19/02-06/03/03 785,045 165,977
Deloitte &
Touche LLP 05/08/02-06/03/03 375,274 18,526
Smart &
Associates, Inc. 07/01/02-05/31/03 650,850 24,654
Miguel Angel
Hernandez Romo 04/23/03-05/31/03 19,370 0
Alix Partners
LLC 12/05/01-06/03/03 14,269,004 925,199
Sonnenschein
Nath & Rosenthal
LLP 12/04/02-06/03/03 332,361 8,758
McKinsey &
Company, Inc. 12/05/01-04/12/03 3,100,000 152,257
Judge Walrath directs the Debtors to promptly pay each
Professional the difference, if any, between the allowed fees and
expenses approved and the actual interim payments received by
each Professional.
Furthermore, the Professionals are authorized to set off any
amounts approved against any postpetition retainer.
Judge Walrath clarifies that:
-- these provisions are without prejudice to the
Professionals' rights to seek further allowance and payment
of compensation and reimbursement of expenses upon
application to the Court; and
-- the ruling is a separate order for each Professional and
the appeal of any order with respect to any Professional
will have no effect on the authorized fees and expenses of
other Professionals. (Hayes Lemmerz Bankruptcy News, Issue
No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000)
IGAMES ENTERTAINMENT: Launching Recapitalization Plan
-----------------------------------------------------
iGames Entertainment Inc. (OTC Bulletin Board: IGMS) announced a
recapitalization plan to support the previously announced proposed
transactions with Money Centers of America and Chex Services, Inc.
The plan consists, in part, of a one-for-four reverse stock split
of the Company's Common Stock. As a result, each four shares of
iGames Common Stock, par value $.01 per share, will automatically
be converted into one share of Common Stock, par value $.04 per
share. The existing holders of Common Stock will therefore
receive one share of new Common Stock for each four shares held by
them on the record date of December 10, 2003.
Jeremy Stein, Chief Executive Officer of iGames Entertainment
stated, "The re-capitalization plan will help accommodate the
proposed acquisitions of Money Centers of America and Chex
Services. We look forward to successful completions of these
transactions and feel the recapitalization will assist us in our
goals."
iGames Entertainment, Inc. develops, manufactures and markets
technology-based products for the gaming industry. The Company's
growth strategy is to develop or acquire innovative gaming
products and systems and market these products worldwide. For a
complete corporate profile on iGames Entertainment, Inc., please
visit the Company's corporate Web site at
http://www.igamesentertainment.com/
* * *
Going Concern Uncertainty
In its most recent Form 10-Q filed with the Securities and
Exchange Commission, iGames Entertainment reported:
"The [Company's] financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has
a net loss of $940,395 for the six months ended September 30,
2003, an accumulated deficit of $3,808,343 at September 30, 2003,
cash used in operations of $576,088 for the six months ended
September 30, 2003, and requires additional funds to implement our
business plan. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
"Management is in the process of implementing its business plan
and has begun to generate revenues. Management believes that sales
of its Protector and placement of new table games will continue to
contribute to its operating cash flows. Additionally, management
is actively seeking additional sources of capital, but no
assurance can be made that capital will be available on reasonable
terms. Management believes the actions it is taking allow the
Company to continue as a going concern. The financial statements
do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern."
ITRONICS: Hires Cacciamatta Accountancy Corp. as New Accountants
----------------------------------------------------------------
On October 30, 2003 Itronics Inc. was informed by its certifying
accountant, Kafoury, Armstrong & Co., that the certifying
accountant had not registered with the Public Company Accounting
Oversight Board (PCAOB) and was discontinuing its SEC practice. On
November 7, 2003 the certifying accountant was still researching
whether it could continue to perform SEC related work until year
end, including performance of quarterly reviews. Due to the
critical timing of completing the third quarter review, the
Company accepted the certifying accountant's resignation on that
date.
For each of the past two years the certifying accountant's report
on the Company's financial statements was modified as to an
uncertainty. The uncertainty in each of the two years was a
substantial doubt about the Company's ability to continue as a
going concern.
Itronics' Board of Directors has approved the change in certifying
accountants.
On November 7, 2003 the Cacciamatta Accountancy Corporation of
Irvine, California was appointed as Itronics' new certifying
accountant.
J.A. JONES: Appoints BSI as Claims, Notice and Balloting Agent
--------------------------------------------------------------
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 appoint Bankruptcy Services LLC as Claims,
Noticing and Balloting Agent in its chapter 11 cases.
The Debtors have numerous creditors, potential creditors and
parties in interest. The sheer number of creditors makes it
impracticable and inefficient for the Debtors to undertake the
task of sending notices to the creditors and other parties in
interest.
J.A. Jones will look to BSI to:
(a) prepare and serve required notices in these chapter 11
cases, including:
(1) a notice of commencement of these chapter 11 cases and
the initial meeting of creditors under Bankruptcy Code
section 341 (a);
(2) a notice of the claims bar date;
(3) notices of objections to claims;
(4) notices of any hearings on a statement and
confirmation of a plan of reorganization; and
(5) such other miscellaneous notices as the Debtors or the
Court may deem necessary or appropriate for an orderly
administration of these chapter 11 cases;
(b) within five business days after the service of a
particular notice, file with the Clerk's Office an
affidavit of service that includes
i) a copy of the notice served,
ii) an alphabetical list of persons on whom the notice
was served, along with their addresses, and
iii) the date and manner of service;
(c) maintain copies of all proofs of claim and proofs of
interest filed in this case;
(d) maintain official claims registers in this case by
docketing all proofs of claim and proofs of interest in a
claims database that includes the following information
for each such claim or interest asserted:
(1) the name and address of the claimant or interest
holder and any agent thereof, if the proof of claim or
proof of interest was filed by an agent;
(2) the date the proof of claim or proof of interest was
received by the Noticing Agent and/or the Court;
(3) the claim number assigned to the proof of claim or
proof of interest; and
(4) the asserted amount and classification of the claim;
(e) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
(f) transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
(g) maintain a current mailing list for all entities that have
filed proofs of claim or proofs of interest and make such
list available upon request to the Clerk's Office or any
party in interest;
(h) provide access to the public for examination of copies of
the proofs of claim or proofs of interest filed in these
cases without charge during regular business hours;
(i) record all transfers of claims pursuant to Bankruptcy Rule
3001(e) and provide notice of such transfers as required
by Bankruptcy Rule 3001(e);
(j) comply with applicable federal, state, municipal and local
statutes, ordinances, rules, regulations, orders and other
requirements;
(k) provide temporary employees to process claims, as
necessary;
(l) promptly comply with such further conditions and
requirements as the Clerk's Office or the Court may at any
time prescribe; and
(m) provide such other claims processing, noticing and related
administrative services as may be requested from time to
time by the Debtors.
BSI's professional fees are:
Kathy Gerber $210 per hour
Senior Consultants $185 per hour
Programmer $130 to $160 per hour
Associate $135 per hour
Data Entry/Clerical $40 to $60 per hour
Schedule Preparation $225 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.
J. CREW GROUP: Will Publish Third-Quarter Results on December 5
---------------------------------------------------------------
J.Crew Group, Inc. will release third quarter financial results
for the period ended November 1, 2003 on Friday, December 5, 2003.
The Company will hold a conference call and simultaneous webcast
to discuss third quarter financial results on Friday, December 5,
2003 at 11 a.m. Eastern Time. To access the Company's earnings
release on December 5, 2003, please visit http://www.jcrew.comand
click on "Help" and "Investor Relations." To access the webcast
of the conference call, please visit http://www.jcrew.com(click
on "Help" and "Investor Relations") or
http://www.companyboardroom.com
A replay of the conference call will be available through
December 12, 2003 at (888) 286-8010, reference #12386215. The
webcast will also be archived at http://www.jcrew.comand
http://www.companyboardroom.com
J.Crew Group, Inc., whose August 2, 2003 net capital deficit
amounts to $415 Million, is a leading retailer of men's and
women's apparel, shoes and accessories. As of August 2, 2003, the
Company operated 155 retail stores, the J.Crew catalog business,
jcrew.com, and 42 factory outlet stores.
JLG INDUSTRIES: Files Shelf Registration Statement on Form S-3
--------------------------------------------------------------
JLG Industries, Inc. (NYSE:JLG) announced the filing of a Form S-3
shelf registration statement with the Securities and Exchange
Commission.
When effective, the shelf registration will position the Company
for the possible future offer and sale, from time to time, of its
common stock, preferred stock, debt securities and/or warrants,
with an aggregate public offering price up to $125 million.
"The shelf registration allows us to streamline the process of
offering certain securities and gives us additional flexibility in
accessing capital markets when market conditions are favorable or
financing needs arise in order to support our anticipated growth,"
commented Jim Woodward, Executive Vice President and Chief
Financial Officer. "Unless otherwise specified in a particular
offering, net proceeds of a future securities sale will be used
for general corporate purposes, which could include capital
expenditures, possible acquisitions, investments, repurchase or
repayment of outstanding debt or other purposes."
JLG Industries, Inc. (S&P, BB- Corporate Credit Rating) is the
world's leading producer of access equipment and highway-speed
telescopic hydraulic excavators. The Company's diverse product
portfolio encompasses leading brands such as JLG(R) aerial work
platforms; JLG, Sky Trak(R), Lull(R) and Gradall(R) telehandlers;
Gradall excavators; and an array of complementary accessories that
increase the versatility and efficiency of these products for end
users. JLG markets its products and services through a multi-
channel approach that includes a highly trained sales force,
marketing, the Internet, integrated supply programs and a network
of distributors. In addition, JLG offers world-class after-sales
service and support for its customers in the industrial,
commercial, institutional and construction markets. JLG's
manufacturing facilities are located in the United States and
Belgium, with sales and service locations on six continents.
For more information, visit http://www.jlg.com
JP MORGAN MORTGAGE: Fitch Rates Class B-4 and B-5 Notes at BB/B
---------------------------------------------------------------
J.P. Morgan Mortgage Trust $267.0 million mortgage pass-through
certificates, series 2003-A2 classes 1-A-1, 1-A-2, 2-A-1 through
2-A-5, 3-A-1, 4-A-1, 4-A-2, 5-A-1, and A-R (senior certificates)
are rated 'AAA'. The class B-1 certificates ($3.7 million) are
rated 'AA', the class B-2 certificates ($1.8 million) are rated
'A', the class B-3 certificates ($1.1 million) are rated 'BBB',
the privately offered class B-4 certificates ($550,500) are rated
'BB', the privately offered class B-5 certificates ($550,500) is
rated 'B' and the privately offered class B-6 certificate is not
rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 3.00%
subordination provided by the 1.35% class B-1, the 0.65% class
B-2, the 0.40% class B-3, the 0.20% privately offered class B-4,
the 0.20% privately offered class B-5 and the 0.20% privately
offered class B-6 certificates. 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 also reflect the quality of the
underlying mortgage collateral, strength of the legal and
financial structures, the primary servicing capabilities of
Cendant Mortgage Corporation, which is rated 'RPS1-' by Fitch,
Countrywide Home Loans Servicing LP, and Wells Fargo Home
Mortgage, Inc., which are rated 'RPS1" by Fitch, and the master
servicing capabilities of Wells Fargo Bank Minnesota, National
Association, which is rated 'RMS1' by Fitch.
The trust consists of five cross-collateralized groups of 555
conventional, adjustable rate mortgage loans secured by first
liens on one-to-four family residential properties with an
aggregate scheduled balance of $275,299,016. The average unpaid
principal balance of the aggregate pool as of the cut-off date is
$496,034. The weighted average original loan-to-value ratio is
68.19%. The loans were originated by Cendant (67.64%), Countrywide
Home Loans, Inc. (28.50%), and Wells Fargo (3.86%).
The mortgage loans in Group 1 consists of 90 one-to four-family
residential properties with aggregate principal balance of
$38,938,614, as of the cut-off date, November 1, 2003. The
mortgage pool has a weighted average LTV of 67.73% with a weighted
average mortgage rate of 5.030%. All of the mortgage loans have
mortgage rates that are fixed for approximately ten years, and
will be adjusted annually thereafter. Loans originated under a
reduced loan documentation program account for approximately 7.10%
of the pool, cash-out refinance loans 27.64%, and second homes
3.49%. The average loan balance is $432,651 and the loans are
primarily concentrated in California (37.30%), New York (7.88%)
and New Jersey (6.67%).
The mortgage loans in Group 2 consists of 191 one-to four-family
residential properties with aggregate principal balance of
$95,027,625, as of the cut-off date. The mortgage pool has a
weighted average LTV of 69.08% with a weighted average mortgage
rate of 5.108%. All of the mortgage loans have mortgage rates that
are fixed for approximately ten years, and will be adjusted semi-
annually thereafter. With the exception of one mortgage loan, all
of the Pool 2 mortgage loans provide for payment of interest at
the related mortgage rate but no payment of principal, for a
period of ten years following the origination of the mortgage
loan. Loans originated under a reduced loan documentation program
account for approximately 19.94% of the pool, cash-out refinance
loans 22.20%, and second homes 7.92%. The average loan balance is
$497,527 and the loans are primarily concentrated in California
(29.07%), New York (9.83%) and New Jersey (9.71%).
The mortgage loans in Group 3 consists of 148 one-to four-family
residential properties with aggregate principal balance of
$80,746,118, as of the cut-off date. The mortgage pool has a
weighted average LTV of 64.86% with a weighted average mortgage
rate of 4.778%. All of the mortgage loans have mortgage rates that
are fixed for approximately seven years, and will be adjusted
semi-annually thereafter. With the exception of one Mortgage Loan,
all of the Pool 3 mortgage loans provide for payment of interest
at the related mortgage rate but no payment of principal, for a
period of seven years following the origination of the mortgage
loan. Loans originated under a reduced loan documentation program
account for approximately 25.35% of the pool, and cash-out
refinance loans 32.53% of the pool. The average loan balance is
$545,582 and the loans are primarily concentrated in California
(25.30%), New York (12.26%) and New Jersey (11.25%).
The mortgage loans in Group 4 consists of 97 one-to four-family
residential properties with aggregate principal balance of
$50,254,924, as of the cut-off date. The mortgage pool has a
weighted average LTV of 73.25% with a weighted average mortgage
rate of 4.462%. All of the mortgage loans have mortgage rates that
are fixed for approximately three years, and will be adjusted
annually thereafter. Approximately 49.87% of the Pool 4 mortgage
loans provide for payment of interest at the related mortgage rate
but no payment of principal, for a period of three years following
the origination of the mortgage loan. Loans originated under a
reduced loan documentation program account for approximately
66.82% of the pool, cash-out refinance loans 8.81%, and second
homes 12.11%. The average loan balance is $518,092 and the loans
are primarily concentrated in California (47.02%), Florida (7.31%)
and New Jersey (5.61%).
The mortgage loans in Group 5 consists of 29 one- to four-family
residential properties with aggregate principal balance of
$10,331,735, as of the cut-off date. The mortgage pool has a
weighted average LTV of 63.20% with a weighted average mortgage
rate of 3.869%, and such mortgage rates will adjust annually.
Loans originated under a reduced loan documentation program
account for approximately 34.87% of the pool, and cash-out
refinance loans 26.51%. The average loan balance is $356,267 and
the loans are primarily concentrated in New Jersey (17.11%),
California (15.60%) and Ohio (14.14%).
None of the mortgage loans are "high cost" loans as defined under
any local, state or federal laws.
Wachovia Bank, National Association will serve as trustee. J.P.
Morgan Acceptance Corporation I, a special purpose corporation,
deposited the loans in the trust which issued the certificates.
For federal income tax purposes, the trustee will elect to treat
all or portion of the assets of the trust funds as comprising
multiple real estate mortgage investment conduits.
KMART CORP: Court Disallows 965 Wage Claims Totaling $9 Million
---------------------------------------------------------------
The Kmart Debtors received 999 proofs of claim filed by their
current and former employees that assert claims for:
* prepetition wages,
* unpaid personal and sick-time vacation,
* overtime,
* bonus payments,
* commission, and
* business expenses.
As part of their restructuring, the Debtors are authorized to
continue to honor all prepetition employee wage obligations in
the ordinary course of business. Pursuant to the Prepetition
Wages Order, the Debtors continued to satisfy all their wage
obligations, including compensation to their employees pursuant
to established practices.
The Debtors relate that certain of the Wage Claims assert amounts
that have already been paid pursuant to the Prepetition Wages
Order. In other cases, the Wage Claims assert amounts that
exceed the amount to which the claimant was entitled to receive
pursuant to the established practices. The Debtors reviewed the
Claims and, where appropriate, reduced the amount to comply with
their practices with respect to unused and unpaid vacation and
personal time to the extent that these benefits were not
satisfied pursuant to the Prepetition Wages Order.
At the Debtors' request, Judge Sonderby disallows and expunges
965 Wage Claims, which total $9,123,505. Judge Sonderby allows
19 Wage Claims in their reduced amounts, aggregating $3,827.
The Court will continue the hearing on 15 Wage Claims:
Claimant Claim No. Amount
-------- --------- ------
Allgood, Wayne 32693 $7,120
Ames, Rose 32419 376
Athar, Art 2374 651,854
Blosser, Susan 13256 12,638
Dunn, Darlene 42443 2,459
Foster, John 29859 285,000
Gordon, Jeffrey 40547 33,687
Hoffmeister, Joseph 19413 267,935
Janssen, Charles 27324 1,208
Nacion, Giovanni 32557 50,000
Pawluk, Victor 41572 11,832
Potter, Jim 32424 11,562
Retecki, Deborah 43052 1,299
Stark, Jeffrey 40589 0
Ward, Dorothea 29348 2,140
(Kmart Bankruptcy News, Issue No. 65; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
LA QUINTA CORP: Underwriters Exercising Overallotment Option
------------------------------------------------------------
La Quinta Corporation and La Quinta Properties, Inc. (NYSE: LQI)
announced that the underwriters of its recent 30.0 million share
public stock offering have exercised their right to purchase an
additional 4.5 million shares of La Quinta common stock, pursuant
to the over-allotment option granted to the underwriters in
connection with the offering.
Including the over-allotment, La Quinta sold a total of 34.5
million shares in the offering at $5.55 per share for net proceeds
of approximately $184 million, after deducting underwriting fees
and commissions and its estimated expenses. La Quinta intends to
use the net proceeds of the offering for general corporate
purposes, including for potential acquisitions of lodging
properties, lodging companies and/or brands; debt reduction;
and/or redemption of preferred stock.
In connection with the offering, Morgan Stanley & Co. Incorporated
served as the bookrunning manager and Credit Lyonnais Securities
(USA) Inc. and CIBC World Markets Corp. served as co-managers.
Dallas based La Quinta Corporation and its controlled subsidiary,
La Quinta Properties, Inc., a limited service lodging company,
own, operate or franchise over 350 La Quinta Inns and La Quinta
Inn & Suites in 33 states.
As previously reported, Standard & Poor's Ratings Services revised
its outlook on La Quinta Corp. to stable from negative and its
related La Quinta Properties Inc. and Meditrust Exercisable Put
Options Securities Trust.
At the same time, Standard & Poor's affirmed its ratings,
including its 'BB-' corporate credit ratings, on the company and
its affiliates. The Irving, Texas-headquartered hotel owner and
operator has about $900 million of debt outstanding.
MANDALAY RESORT: MotorCity Unit Inks Settlement with Lac Vieux
--------------------------------------------------------------
Mandalay Resort Group (NYSE: MBG) announced that its 53.5%-owned
Detroit affiliate, MotorCity Casino, has signed a settlement
agreement with the Lac Vieux Desert Band of Lake Superior Chippewa
Indians.
The settlement agreement must still be approved by the courts in
which the Lac Vieux litigation is pending. The parties will also
request dissolution of the injunction preventing MotorCity from
proceeding with construction of its expanded facility. Upon the
courts' approval of the settlement agreement, MotorCity will pay
to the Lac Vieux Tribe $3 million, plus attorneys' fees. Under
the terms of the settlement agreement, MotorCity will pay an
additional $5.75 million on the first and second anniversaries of
the first payment and $1 million annually for 25 years, beginning
on the third anniversary. The occurrence of certain events would
suspend, lower and/or terminate the payments. There can be no
assurance as to when the courts will act with respect to this
matter, or what action the courts will take.
Mandalay Resort Group (S&P, BB+ Corporate Credit Rating, Stable)
owns and operates 11 properties in Nevada: Mandalay Bay, Luxor,
Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus
Circus-Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike
and Nevada Landing in Jean and Railroad Pass in Henderson. The
company also owns and operates Gold Strike, a hotel/casino in
Tunica County, Mississippi. The company owns a 50% interest in
Silver Legacy in Reno, and owns a 50% interest in and operates
Monte Carlo in Las Vegas. In addition, the company owns a 50%
interest in and operates Grand Victoria, a riverboat in Elgin,
Illinois, and owns a 53.5% interest in and operates MotorCity in
Detroit, Michigan.
MARINER HEALTH: Amends Six-Year Term Credit and Guaranty Agreement
------------------------------------------------------------------
Mariner Health Care, Inc. is currently the borrower under a
$297,000,000 senior credit facility, with a syndicate of lenders
that provides for a $212,000,000 six-year term loan facility and
an $85,000,000 revolving credit facility.
At September 30, 2003, $208,800,000 in borrowings were
outstanding under the Term Loan, which bears interest, at
Mariner's election, using either a base rate or eurodollar rate,
plus an applicable margin which ranges from 2.25% to 3.25% for
base rate loans and 3.25% to 4.25% for eurodollar rate loans,
subject to quarterly adjustment depending on Mariner's total debt
leverage ratio. At September 30, 2003, the per annum interest
rate ranged from 5.37% to 7.25%.
The Term Loan amortizes in quarterly installments at a rate of
0.25% of the original principal balance, or $500,000, payable on
the last day of each fiscal quarter and mature on May 13, 2008.
The Term Loan can be prepaid at Mariner's option without penalty
or premium and is subject to mandatory prepayment in certain
events such as some asset or securities sales or Mariner's
receipt of certain insurance proceeds. The Term Loan is also
subject to annual mandatory prepayment to the extent of 75% of
consolidated excess cash flow. Any mandatory prepayment of the
Term Loan reduces Mariner's remaining financial flexibility by
reducing its available cash balance. While Mariner is currently
unable to quantify the extent to which this will affect its
future operations, it is possible that it will make it more
difficult or impossible for Mariner to fund future operations,
which could impair its operating results.
Borrowings under the $85,000,000 Revolving Credit Facility may be
used for general corporate purposes, including working capital
and permitted acquisitions. Usage under the Revolving Credit
Facility, which matures on May 13, 2007, is subject to a
borrowing base determined using a percentage of the eligible
accounts receivable and a percentage of the real property
collateral value of substantially all of Mariner's skilled
nursing facilities. No borrowings were outstanding under the
Revolving Credit Facility as of September 30, 2003. However,
$36,300,000 of letters of credit issued under the Revolving
Credit Facility were outstanding on that date which reduces
Mariner's borrowing capacity under the Revolving Credit Facility
on a dollar-for-dollar basis.
The Senior Credit Facility is guaranteed by substantially all of
Mariner's subsidiaries and is secured by liens and security
interests on substantially all of their real property and
personal property assets. In addition, covenants negotiated in
the Senior Credit Facility restrict Mariner's ability to borrow
funds in the event it maintains a cash book balance in excess of
$25,000,000 and also require it to maintain compliance with
certain financial and non-financial covenants, including minimum
fixed charge coverage ratios, minimum consolidated adjusted
EBITDA, maximum total leverage and senior leverage ratios, as
well as maximum capital expenditures.
Effective March 31, 2003, Mariner amended the Senior Credit
Facility to adjust certain financial covenants through
December 31, 2004, which also increased the interest rates.
Mariner was in compliance with the financial covenants at
September 30, 2003.
On October 1, 2003, Mariner further amended the Senior Credit
Facility to permit the sale of 20 Florida skilled nursing
facilities to an affiliate of Formation Capital LLC and Longwing
Real Estate Ventures, LLC, and the termination of capital leases
on seven other Florida facilities. The October amendment also
adjusts the capital expenditure covenant and extends the deadline
for Mariner to hedge a portion of its variable interest rate
interest exposure.
A full-text copy of the Third Amendment to the Credit and
Guaranty Agreement filed on Form 10-Q with the Securities and
Exchange Commission is available for free at:
http://www.sec.gov/Archives/edgar/data/882287/000095014403012991/g85913exv10
w1.txt
(Mariner Bankruptcy News, Issue No. 53; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIDWEST EXPRESS: Completes Two Equity & Debt Private Placements
---------------------------------------------------------------
Midwest Express Holdings, Inc. (NYSE: MEH) reported that, as
expected, the company completed two financing transactions it
announced on September 30:
-- The second step, in the amount of $10 million, in a sale
of $25 million in convertible senior secured notes.
-- An issuance of 1,882,353 shares of common stock to certain
investors at a price of $4.25 per share.
The convertible senior secured notes and the common stock sold to
the investors were not, and will not be, registered under the
Securities Act of 1933, as amended. Accordingly, the securities
may not be offered or sold in the United States except pursuant to
an effective registration statement or an applicable exemption
from the registration requirements of the Securities Act. As part
of the transactions, the company has agreed to register the resale
of the shares of common stock issuable upon conversion of the
convertible senior secured notes and the resale of the common
stock sold in the private placement.
Midwest Airlines features nonstop jet service to major
destinations throughout the United States. Skyway Airlines, Inc. -
- its wholly owned subsidiary -- operates Midwest Connect, which
offers connections to Midwest Airlines as well as point-to-point
service between select markets on regional jet and turboprop
aircraft. Together, the airlines offer service to 50 cities. More
information is available at http://www.midwestairlines.com
* * *
As reported in Troubled Company Reporter's August 26, 2003
edition, Midwest Express Holdings reached labor and aircraft
financing restructuring agreements with its unions and aircraft
lessors and lenders have been fully documented and finalized on
terms that the company had anticipated. The company expects these
restructuring measures to reduce costs by approximately $20
million annually going forward.
The negotiation of these agreements enabled the company to avert
the necessity of filing for reorganization under Chapter 11 of the
Bankruptcy Code. Outlining the next step for the company, Robert
S. Bahlman, Midwest's chief financial officer, noted, "Now we are
in a better position to secure additional financing to complete
our restructuring program."
MIRANT CORP: Court Okays Skadden Arps as Debtor's Special Counsel
-----------------------------------------------------------------
Pursuant to Section 327(e) of the Bankruptcy Code, the Mirant
Debtors sought and obtained the Court's authority to employ
Skadden, Arps, Slate, Meagher & Flom LLP as their special counsel,
nunc pro tunc to July l4, 2003.
Michelle C. Campbell, Esq., at Haynes and Boone LLP, in Dallas,
Texas, relates that prior to the Petition Date, the Debtors
retained Skadden to provide them with legal advice in connection
with their attempt to restructure their indebtedness pursuant to
exchange offers and solicitation of a prepackaged plan of
reorganization. Towards that end, Skadden has taken a lead role
in connection with the negotiation and documentation of the
various exchange offers and the Plan, as well as the transmittal
of the exchange offers and the solicitation of votes in respect
of the Plan. Skadden has also been instrumental in the
negotiation and documentation of the Debtors' proposed DIP
Facility. Ms. Campbell tells the Court that Skadden has acted as
lead counsel for Mirant regarding the litigation commenced by
certain holders of MAG bonds who are opposed to the granting of
liens by certain subsidiaries proposed as part of the exchange
offers and the Plan, styled "California Public Employees'
Retirement System, et al., v. Mirant Corporation, et al." pending
in the Chancery Court of the State of Delaware.
Through Skadden's intense efforts in connection with the Debtors'
prepetition restructuring and the MAG Litigation, it has
developed valuable knowledge about certain matters. Given
Skadden's role in the prepetition solicitation efforts and the
negotiation of the DIP Facility, Skadden's continued contribution
relating to the prepetition services will substantially increase
the efficiency of the administration of these Chapter 11 cases.
During these Chapter 11 cases, the Debtors expect Skadden to:
(i) provide advice in connection with or related to any
remaining matters relating to the aborted negotiation,
documentation and consummation of the prepetition exchange
offers and prepetition Plan solicitation;
(ii) provide advice in connection with or related to the
negotiation, documentation and closing of the DIP
Facility, to the extent sought by the Debtors;
(iii) serve as litigation counsel in connection with prosecuting
and defending the Debtors in connection with the MAG
Litigation;
(iv) provide advice regarding the interpretation of the Mirant
Mid-Atlantic LLC lease transaction documents; and
(v) provide advice in connection with any amendments to the
Mirant Corp. 4-year Credit Facility as may be required to
extend letters of credit thereunder.
Ms. Campbell contends that it is crucial that Skadden be employed
in these Chapter 11 cases to ensure that the Debtors can draw on
Skadden's vast knowledge. The Debtors will require Skadden to
play a role in these Chapter 11 cases to ensure that they are
receiving as much value as possible and that none of the
professionals are "reinventing the wheel."
The Debtors and their various counsels have conferred extensively
to establish a mechanism to ensure that there is no undue
duplication of efforts among the various counsels, and that the
estates receive the best value possible. Based on the high level
of coordination among the professionals, the likelihood of undue
duplication of services is minimal.
J. Gregory Milmoe, Esq., a partner at Skadden, Arps, Slate,
Meagher & Flom LLP, informs Judge Lynn that prior to the Petition
Date, Skadden received from the Debtors a $1,000,000 retainer for
services rendered in connection with the prepetition
restructuring efforts and other matters. This amount has been
applied to all outstanding fees and expenses incurred. In
addition, a final reconciliation was completed.
For services to be rendered postpetition, Mr. Milmoe relates that
his firm will apply to the Court the allowance of compensation
and reimbursement of expenses as permitted by or in accordance
with applicable provisions of the Bankruptcy Code, the Federal
Rules of Bankruptcy Procedure and the Local Rules and Orders of
the Court. Skadden will charge the Debtors for the services
based on its customary hourly rates that are in effect from time
to time, which currently are:
Partners and "of counsel" $495 - 725
Counsel and associates 240 - 485
Legal assistants and support staff 80 - 195
To the best of his knowledge, Mr. Milmoe assures the Court that
the members, counsel and associates of Skadden:
(i) do not have any connection with or any interest adverse
to the Debtors, their creditors or any other party-in-
interest, or their attorneys and accountants; and
(ii) do not represent or hold any interest adverse to the
Debtors and their estates with respect to matters on
which the firm is to be engaged. (Mirant Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
NATIONAL CENTURY: Reaches Plan Settlement with Noteholders
----------------------------------------------------------
National Century Financial Enterprises, Inc., formerly one of the
largest purchasers of healthcare accounts receivable in the United
States, announced that a settlement in principle has been reached
among the company's noteholder constituencies regarding the terms
of a plan of liquidation.
David Coles, President and Chief Executive Officer of NCFE, said,
"This is a major milestone in completing the chapter 11 process
for the NCFE companies. Although some hurdles remain, this
settlement will give us significant momentum as we proceed to the
disclosure statement approval and plan confirmation stages of
chapter 11."
Pursuant to the settlement, which will be consummated pursuant to
a plan of liquidation, the intercompany claims between NCFE's two
receivables purchasing subsidiaries, NPF VI, Inc. and NPF XII,
Inc., will be resolved. NPF VI will pay $72.8 million in cash that
it presently holds, plus an additional $6.5 million in cash that
is generated from NPF VI assets, to an account for the benefit of
holders of NPF XII notes. ING Barings, Inc. and its affiliates,
which hold NPF VI notes, will repay to NPF VI a $43.1 million
prebankruptcy payment.
After the payments described above have been made and other plan
obligations have been satisfied, the cash held by NPF VI and NPF
XII will be distributed to holders of NPF VI and NPF XII notes,
respectively. NPF XII noteholders will receive any net recovery on
a lawsuit for repayment of a $75 million prebankruptcy payment
made to Credit Suisse First Boston and affiliates. NPF VI and NPF
XII noteholders will share together on a pro rata basis, based on
the amount of notes they hold, in the recoveries on all other
assets of NPF VI and NPF XII, including recoveries from healthcare
providers, tax refunds and litigation against NCFE's founders and
other parties. Liquidation and litigation trusts will be
established to administer the company's assets after the
bankruptcy is completed.
Coles, who is also a managing director of Alvarez & Marsal, which
provides crisis management services to NCFE, noted that, under the
settlement, ongoing litigation among the noteholder constituencies
will terminate immediately. He said, "This is one of the major
benefits of the settlement. This will assure that we are focused
on maximizing the amount that goes to noteholders, instead of
fighting over how it is split up."
According to Coles, the settlement was the "culmination" of
several months of difficult negotiations among the noteholder
groups. Coles singled out the efforts of the official creditors'
committees in the NCFE cases to reach the settlement. "I also
appreciate the efforts of Metropolitan Life Insurance Company and
Lloyds TSB Bank, p.l.c., two significant NPF XII noteholders, to
help mediate the final resolution of the dispute," he added.
The U.S. Bankruptcy Court in Columbus, Ohio has scheduled a
hearing on approval of NCFE's amended disclosure statement for
December 18, 2003. Coles said that he anticipates that NCFE will
emerge from bankruptcy in the first quarter of 2004.
More information on NCFE is available on its home page at
http://www.ncfe.com
NATIONAL DATACOMPUTER: Must Generate Sufficient Cash to Continue
----------------------------------------------------------------
National Datacomputer, Inc. designs, develops, manufactures,
markets and services a line of hand-held battery powered
microprocessor-based data collection products and computers and
associated peripherals for use in mobile operations. The Company's
products and services include data communications networks,
application-specific software, hand-held computers and related
peripherals, associated training and support services.
The Company has incurred an accumulated deficit of approximately
$17.5 million through September 30, 2003. As a result of this
accumulated deficit, the report of its independent public
accountant relating to the financials for 2002 contains an
explanatory paragraph regarding substantial doubt about the
Company's ability to continue as a going concern.
In the event the Company's operations are not profitable or do not
generate sufficient cash to fund the business, or if the Company
fails to obtain additional financing, if required, management will
have to substantially reduce its level of operations. These
circumstances raise substantial doubt about the Company's ability
to continue as a going concern.
The Company has financed its operations primarily from operating
results and working capital. At September 30, 2003, the Company
had cash of $318,553 and working capital of $147,408. During the
nine month period ended September 30 2003, the Company's
operations have provided approximately $165,000 in cash. The
increase in cash was mainly a result of the Company's net income
of $198,872 along with a decrease in inventory of $182,077. This
was offset by an increase in accounts receivable of $179,012, a
decrease in accounts payable of $119,587 and a decrease in
deferred revenues of $75,097.
NEENAH FOUNDRY: S&P Affirms Low-B- and Junk-Level Ratings
---------------------------------------------------------
Standard & Poor's Ratings Services affirmed its B/Stable/--
corporate credit rating on Neenah Foundry Co. Standard & Poor's
also affirmed its 'CCC+' senior secured and subordinated ratings
on the company.
Neenah Foundry, based in Neenah, Wisconsin, has about $280 million
of total debt outstanding.
Neenah provides a broad line of cast manhole covers, sewer grates,
and other cast-iron products to state and municipal customers.
Neenah also provides various components to the heavy-duty truck,
agricultural, heating, ventilating, and air-conditioning (HVAC),
and other industrial end-markets. Neenah's weak EBITDA over the
past several years has mainly been the result of depressed end-
market conditions, especially in the heavy-duty truck and general
industrial markets, both of which remain soft. In addition, as a
result of weak market conditions and growing foreign competition
(especially in the company's industrial business segment), pricing
pressures have been intensifying within the industry, which has
resulted in decreasing operating returns for most North American
casting companies.
"We expect that the company will have to gradually increase
spending as volumes return and in order to remain competitive,
which will further limit debt reduction in the near-term," said
Standard & Poor's credit analyst Heather Henyon.
NESTOR INC: Significant Losses Raise Going Concern Uncertainty
--------------------------------------------------------------
Nestor Inc.'s current focus is to offer customers products and
services to be utilized in intelligent traffic management
applications. Its leading product is its CrossingGuard video-based
red light enforcement system and services, sold and distributed
exclusively by NTS. Effective July 1, 2002, the Company assigned
its royalty rights in the field of financial services,
substantially eliminating ongoing product royalty revenue from
prior non-traffic related lines of business.
The Company has incurred significant losses to date and at
September 30, 2003 had a significant accumulated deficit. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern without additional financing to carry
out product delivery efforts under current contracts, to
underwrite the delivery costs of future systems delivered under
turnkey agreements with municipalities, for continued development
and upgrading of its products, for customer support, and for other
operating uses. If the Company does not realize additional equity
and/or debt capital or revenues sufficient to maintain its
operations at the current level, management of the Company would
be required to modify certain initiatives, including the cessation
of some or all of its operating activities until additional funds
become available through investment or revenues.
On October 15, 2003, the Company raised $2,000,000 through the
issuance of a convertible note to Silver Star Partners I, LLC. The
Company continues to actively seek additional sources of equity
and debt financing. There can be no assurance, however, that the
Company's operations will be sustained or be profitable in the
future, that adequate sources of financing will be available at
all, when needed or on commercially acceptable terms or that the
Company's product development and marketing efforts will be
successful.
In regard to the convertible note mentioned above, William B.
Danzell is the Chief Executive Officer of Nestor, Inc., the
President of Danzell Investment Management Ltd., and the Managing
Director of Silver Star. The note is due on January 15, 2004 and
bears interest at the rate of 7% per year. The Company's
obligations under the note may, at the Company's option, be
satisfied, in whole or part, by issuing shares of the Company's
common stock, par value $.01 to Silver Star. If the Company
chooses to satisfy any of its obligations under the note by
issuing shares of common stock, the conversion price will be the
price to broker-dealers acting as underwriters or placement agents
in the first registered public offering of such shares made after
October 15, 2003 or, if no such offering is made before the
maturity date of the Note, then the 20 day moving average closing
price of the common stock during the first thirty day period
starting on, or after, November 1, 2003 during which, in the
Company's reasonable judgment, all material information about the
Company has been publicly available less a 20% discount. The
conversion price is subject to adjustment for stock splits,
reverse stock splits or stock dividends.
The Company's financial statements have been prepared assuming
that Nestor, Inc., will continue as a going concern. The Company
is currently expending cash in excess of cash generated from
operations, as revenues are not yet sufficient to support future
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern without
additional financing.
NEXTEL PARTNERS: S&P Assigns B Rating to Planned $475M Bank Loan
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' bank loan
rating to the proposed $475 million senior secured credit
facilities of Nextel Partners Operating Corp., a wholly owned
subsidiary of Kirkland, Washington-based wireless service provider
Nextel Partners Inc. This bank loan, comprising a $375 million
term loan B maturing in 2010 and a $100 million revolver maturing
in 2009, will replace the company's existing $475 million senior
secured credit facilities. The proposed bank loan is rated one
notch above the corporate credit rating, indicating a strong
likelihood of full recovery of principal on a fully drawn basis in
the event of financial distress.
In addition, Standard & Poor's revised the outlook on Nextel
Partners Inc. to positive from stable. The ratings, including the
'B-' corporate credit rating, were affirmed. Pro forma for the
aforementioned refinancing and the recent retirement of $67.7
million of notes with a portion of proceeds from the issuance of
new common equity, total debt was about $1.65 billion at Sept. 30,
2003. Although Nextel Communications Inc. owns 30.2% of Nextel
Partner's common equity, it does not provide any credit support to
the company.
"The outlook revision reflects Standard & Poor's improved view of
Nextel Partner's business risk profile," explained credit analyst
Michael Tsao. "Standard & Poor's is increasingly confident that
Nextel Partners' entrenched subscriber base and experience in
delivering differentiated services (e.g., push-to-talk [PTT] and
customized applications) will enable the company to maintain a
good competitive position." Much of the entrenched subscriber base
in several sectors (e.g., construction, transportation, real
estate, agriculture and landscaping, and utilities) has come to
rely on Nextel Partners for business needs. Because the company
and Nextel Communications operate an exclusive network that is not
compatible with those operated by other wireless carriers,
subscribers are less likely to churn off, as doing so would entail
losing access to critical user groups. Furthermore, wireless users
associated with these sectors are more likely to select Nextel
Partners as their wireless service provider.
While the company is well situated in a still growing industry,
the rating is dominated by Nextel Partners' significant leverage.
Since starting operations in 1998, the company used substantial
debt to finance the building of its network and funding operating
losses that typically occur in the early stages of a business.
Nextel Partners has adequate liquidity. Pro forma for the recent
equity issuance and the proposed bank loan, the company had about
$300 million of cash equivalents and $100 million of bank
availability at Sept. 30, 2003. This level of liquidity is
sufficient to fund estimated cash burn of up to $70 million in
2004, beyond which Standard & Poor's expects the company to become
free cash flow positive. Nextel Partners has adequate headroom
under the proposed bank covenants and no material debt
amortizations until 2008.
NEXTERA ENTERPRISES: Will Close Asset Sale Transaction Today
------------------------------------------------------------
Nextera Enterprises, Inc. (NASDAQ: NXRA) expects to close the
proposed sale of substantially all of the assets of the Company's
direct and indirect subsidiaries, Lexecon Inc., CE Acquisition
Corp. and ERG Acquisition Corp., to LI Acquisition Company, LLC, a
wholly owned subsidiary of FTI Consulting, Inc., today.
In accordance with the Nasdaq Stock Market's letter dated
October 30, 2003, the Company has notified Nasdaq of the expected
closing date.
As previously announced, the Company's securities will be delisted
from the Nasdaq Stock Market following completion of the asset
sale, effective as of the close of trading November 28, 2003,
because the asset sale will result in the Company lacking tangible
business operations under Nasdaq's Marketplace Rules 4300 and
4330(a). The Company is in the process of securing market makers
for its common stock and two market makers are applying for
quotation of the Company's common stock on the Over-the-Counter
(OTC) Bulletin Board. However, no assurances can be given that any
market maker will make a market in the Company's common stock or
that the Company's common stock will become authorized for
quotation on the OTC Bulletin Board.
Nextera Enterprises Inc., through its wholly owned subsidiary,
Lexecon, provides a broad range of economic analysis, litigation
support, and regulatory and business consulting services. One of
the nation's leading economics consulting firms, Lexecon assists
its corporate, law firm and government clients reach decisions and
defend positions with rigorous, objective and independent
examinations of complex business issues that often possess
regulatory implications. Lexecon has offices in Cambridge and
Chicago. More information can be found at http://www.nextera.com
and http://www.lexecon.com
* * *
Liquidity and Capital Resources
In its SEC Form 10-Q for the quarter ended March 31, 2003, Nextera
Enterprises reported:
"Consolidated working capital was $6.1 million on March 31, 2003,
compared to a working capital of $5.2 million on December 31,
2002. Included in working capital were cash and cash equivalents
of $0.6 million and $1.6 million on March 31, 2003 and
December 31, 2002, respectively.
"Net cash used in operating activities was $8.4 million for the
three months ended March 31, 2003. The primary components of net
cash used in operating activities was an increase of $5.0 million
of prepaid and other assets (relating to Messrs. Fischel and
Carlton's non-compete agreements), an increase of $4.4 million of
accounts receivable, a $1.6 million decrease of accounts payables
and accrued expenses (primarily bonus payments), and a net loss of
$3.1 million. These cash outflows were offset in part by $5.2
million of non-cash items relating to depreciation, provision for
doubtful accounts, amortization of non-compete agreements, non-
cash compensation charges, and interest paid-in-kind.
"Net cash provided by investing activities was $2.6 million for
the three months ended March 31, 2003, almost entirely
representing decreases in restricted cash.
"Net cash provided by financing activities was $4.8 million for
the three months ended March 31, 2003. The primary component of
net cash provided by financing activities was $5.0 million of
borrowings under the Company's Senior Credit Facility.
The Company's primary sources of liquidity are cash on hand,
restricted cash (for bonus payments only) and cash flow from
operations. The Company believes that if it is successful in
reducing its current days sales outstanding level and achieving
its forecasted profitability, it will have sufficient cash to meet
its operating and capital requirements for the next twelve months.
However, there can be no assurances that the Company's actual cash
needs will not exceed anticipated levels, that the Company will
generate sufficient operating cash flows, by reducing its current
days sales outstanding level and achieving its forecasted
profitability, to fund its operations in the absence of other
sources or that acquisition opportunities will not arise requiring
resources in excess of those currently available. In particular,
the Company has the option of extending the employment and non-
compete agreements with Messrs. Fischel and Carlton from their
current expiration of July 16, 2003 to January 15, 2004. In order
to exercise such option, the Company must pay Messrs. Fischel and
Carlton an aggregate amount of approximately $3.5 million,
including interest, on or before July 15, 2003 and an aggregate
amount of approximately $1.6 million, plus interest at 3.5% per
annum from January 15, 2003 through the date paid, within five
days of collection of a specified receivable but in no case later
than December 31, 2003, whether or not the receivable is collected
by that date. The Company hopes to exercise such option from cash
flows from operations, however, such funding from operations is
dependent upon reducing current days sales outstanding and
achieving forecasted profitability. To the extent that cash flows
from operations are not sufficient, the Company will need to
obtain alternative financing sources. In order for the Company to
further extend these agreements from January 16, 2004 through
December 31, 2008, the Company will need to make aggregate
payments to Messrs. Fischel and Carlton of $20.0 million by
January 15, 2004. We will require additional financing in amounts
that we cannot determine at this time in order to make all of the
payments required to extend these agreements to December 31, 2008.
We expect that we will need to raise funds through one or more
public or private financing transactions.
"Effective December 31, 2002, the Company entered into a Second
Amended and Restated Credit Agreement, which amended the Prior
Credit Agreement. As part of the Senior Credit Facility, Knowledge
Universe, Inc. purchased a $5.0 million junior participation in
the Senior Credit Facility. On January 7, 2003, the Company
borrowed $5.0 million under the Senior Credit Facility to fund the
first payment required under the employment and non-compete
agreements entered into with Messrs. Fischel and Carlton. The
Company's outstanding liability under the Senior Credit Facility
after the borrowing of the above mentioned $5.0 million was $32.2
million. The Senior Credit Facility requires that $4.7 million of
outstanding borrowings be permanently reduced in each of 2003 and
2004. The maturity of the Senior Credit Facility was extended to
January 1, 2005. Borrowings bear interest at the lender's base
rate plus 1.5%. The Company will continue to pay annual
administrative fees of $0.3 million, payable monthly, and the $0.9
million in aggregate back-end fees will continue to be payable
upon the maturity of the Senior Credit Facility. The back-end fees
can be waived if the Company repays the Senior Credit Facility
prior to maturity. All administrative fees paid to the senior
lenders are recorded by the Company as interest expense. An
affiliate of Knowledge Universe has agreed to continue to
guarantee $2.5 million of the Company's obligations under the
Senior Credit Facility. The Senior Credit Facility contains
covenants related to the maintenance of financial ratios,
operating restrictions, restrictions on the payment of dividends
and disposition of assets. The covenants are measured quarterly
and have been set at varying rates, the most restrictive at
approximately 15% below the Company's projected operating results.
If the results of operations significantly decline below projected
results and we are unable to obtain a waiver from the Company's
senior lenders, the Company's debt would be in default and
callable by the senior lenders. If our projections of future
operating results are not achieved and our debt is placed in
default, we would experience a material adverse impact on our
reported financial position and results of operations."
NORTHWEST GOLD: Taps Singer Lewack as Grant Thornton Replacement
----------------------------------------------------------------
Effective September 2, 2003, the firm of Grant Thornton, LLP,
Northwest Gold Inc.'s independent accountant for the seven months
ended December 31, 2002, was dismissed as a result of a change in
control of the Company. Grant Thornton had audited the Company's
financial statements for the seven months ended December 31, 2002
and the fiscal year ended May 31, 2002.
The audit report of Grant Thornton on the financial statements of
Northwest Gold, as of December 31, 2002 and May 31, 2002 and for
the seven months ended December 31, 2002 and the year ended
May 31, 2002, was qualified as follows:
Grant Thornton's report contained a separate paragraph stating
that "the accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note A to the financial statements, the Company has
suffered recurring losses, has no current operations, and has a
significant accumulated deficit, matters that raise substantial
doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described
in Note A. The financial statements do not include any
adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to
continue as a going concern."
Northwest Gold has retained the firm of Singer Lewack Greenbaum &
Goldstein LLP, Los Angeles, California, to audit its financial
statement for its fiscal year ending December 31, 2003, and
include such report as part of the Company's annual report on Form
10- KSB for its fiscal year ended December 31, 2003. This change
in independent accountants was approved by the Board of Directors
of Northwest Gold Inc.
NORTHWESTERN CORP: Completes Sale of Expanets Unit to Avaya Inc.
----------------------------------------------------------------
NorthWestern Corporation (OTC Pink Sheets: NTHWQ) has completed
the sale of its Expanets communications services unit to Avaya,
Inc. (NYSE: AV).
Under the terms of the purchase agreement, Avaya purchased
substantially all of the Expanets assets for $152 million in cash
and the assumption of specified liabilities, less certain post-
closing working capital adjustments and the payment of certain
excluded liabilities. The proceeds to be received by Expanets
from the transaction following post-closing adjustments and the
payment of certain specified liabilities will be administered by
Expanets in accordance with the terms of applicable lending
agreements, its corporate charter and provisions of Delaware law.
Following completion of this process, NorthWestern estimates it
will receive net cash proceeds of approximately $70 million.
Gary G. Drook, NorthWestern's President and Chief Executive
Officer, said, "The successful divestiture of our largest
nonutility business represents significant progress toward our
goal of becoming an energy-focused company."
As previously announced, Expanets engaged Bear, Stearns & Co. to
conduct an auction of the Expanets business subject to defined
auction procedures. At the auction held on Oct. 29, 2003, in New
York, the final bid by Avaya was approved by Expanets.
NorthWestern, as controlling shareholder, consented to the
transaction.
NorthWestern Corporation, currently operation as a debtor-in-
possession, is one of the largest providers of electricity and
natural gas in the Upper Midwest and Northwest, serving
approximately 600,000 customers in Montana, South Dakota and
Nebraska.
NORTHWESTERN CORP: Avaya Confirms Purchase of Expanets Assets
-------------------------------------------------------------
Avaya Inc. (NYSE: AV) a leading global provider of communications
solutions and services for businesses, has completed the
acquisition of substantially all of the assets of Expanets, the
nation's largest provider of converged communications for mid-
sized businesses, from NorthWestern Corporation, which is
currently operating as a debtor-in-possession.
Expanets is also one of the largest resellers of Avaya's products
in the United States. The acquisition will allow Avaya to
continue providing quality sales and service support for Expanets'
customers' and grow its small and mid-sized business.
Avaya purchased the Expanets assets at an auction on October 29,
2003, conducted on behalf of NorthWestern Corporation, Expanets'
parent.
Avaya Inc. designs, builds and manages communications networks for
more than 1 million businesses worldwide, including 90 percent of
the FORTUNE 500(R). Focused on businesses large to small, Avaya
is a world leader in secure and reliable Internet Protocol (IP)
telephony systems and communications software applications and
services. Driving the convergence of voice and data
communications with business applications -- and distinguished by
comprehensive worldwide services -- Avaya helps customers leverage
existing and new networks to achieve superior business results.
For more information visit the Avaya Web site:
http://www.avaya.com
NorthWestern Corporation is one of the largest providers of
electricity and natural gas in the Upper Midwest and Northwest,
serving more than 598,000 customers in Montana, South Dakota and
Nebraska. NorthWestern also has investments in Expanets, Inc., a
nationwide provider of networked communications and data services
to small and mid-sized businesses, and Blue Dot Services Inc., a
provider of heating, ventilation and air conditioning services to
residential and commercial customers. More information can be
found on the company's Web site at http://www.northwestern.com
Expanets is a nationwide provider of networked communications and
data services to small and mid-sized businesses. While national
in scope, Expanets delivers local service and solutions through
its team of more than 3,000 associates based in more than 100
offices throughout the U.S. Its broad portfolio is based on its
strategic relationships with industry-leading manufacturers,
service providers, carriers and application developers. More
information can be found on the Company's Web site at
http://www.expanets.com.
NRG ENERGY: Court Approves Recapitalization Financing Documents
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Beatty authorizes the NRG Energy
Debtors to enter into the documentation evidencing the Senior
Credit Facilities and the High Yield Securities or the Interim
Loans and to grant liens and security interests to the Lenders in
the collateral contemplated by the transactions. The documents,
liens and security interests are approved.
The Commitment Letter, the Engagement Letter, the Fee Letter and
any or all other documents signed by the Debtors will be binding
and enforceable against the Reorganized Debtors upon and after
the Effective Date as if then executed and delivered by the
Reorganized Debtors notwithstanding any provision in the Plan or
the Confirmation Order to the contrary.
* * *
As previously reported, the Debtors sought and obtained the
Court's authority to accept and perform all of their obligations
under each of the Commitment Letter, the Fee Letter and the
Engagement Letter, along with any other documents necessary or
appropriate to effectuate the transactions contemplated.
Pursuant to the terms of the Commitment Letter, CFSB and Lehman
will commit to provide up to $2,215,000,000 in funds -- the
Recapitalization Financing. The key terms of the proposed
Recapitalization Financing Facility includes:
A. Senior Credit Facility
Borrower NRG Energy, Inc. and with respect to the
revolving credit facility, NRG Power Marketing,
Inc. or a successor
Type and Up to a $932,500,000 to $1,032,500,000 term loan
Amount facility (including a $250,000,000 to 350,000,000
letter of credit facility), and a $150,000,000 to
$250,000,000 revolving credit facility, subject
to a borrowing base formula
Duration Three years for the revolving credit facility
Seven years for term loan facility
Guarantors NRG Power Marketing Inc. or its successor, NRG
South Central, NRG Northeast, NRG Mid-Atlantic
and other existing or subsequently acquired or
organized subsidiaries of NRG to be agreed upon
Security Revolving credit facility to have first priority
lien on the inventory and accounts receivable of
NRG and NRG Power Marketing Inc
Term loans to be secured by first priority lien
on substantially all of the assets of NRG and
each of the guarantors and on the stock of all
subsidiaries
Indicative Term loans: LIBOR + 3.00% or Base Rate + 2.00%
Interest Revolving loans: LIBOR + 2.75% or Base Rate +
Rates 1.75%.
Mandatory On receipt of funds from transactions as asset
Prepayments sales, equity offerings or debt issuances, or
from insurance proceeds and excess cash flow
Representations Customary
& Covenants
Events of Customary
Default
Fees Customary fees, including, upon closing, payment
of:
(1) 1/2 of the Commitment Fee attributable to the
Senior Credit Facility,
(2) a Closing Fee, and
(3) an Administrative Agent Fee which, in some
cases, are subject to reduction or credits
depending upon the credit rating of the
reorganized company and the time of closing.
B. Interim Loans or High Yield Notes
Borrower NRG Energy, Inc.
Type Up to $1,032,500,000 of interim term loans
& Amount
Duration One year with conversion feature
Mandatory If interim term loans are not paid in full on
Conversion maturity and no defaults exist at that time, the
Feature interim term loans automatically convert to term
loans, which may be exchanged for exchange notes,
maturing in 10 years from the closing of the
Interim Loans
Indicative 8% per annum with, at least a 50 basis point
Interest increase every three monyhs, with a maximum
Rates interest of 16% (or 17% based on ratings)
Guarantors Same guarantors as under the Senior Credit
Facility
Security Second lien on collateral under the term loan
portion of the senior credit facility
Terms of Upon mandatory conversion, the interest on the
Rollover rollover loans will be a floating rate, will be
Loans determined quarterly, and will equal the sum of:
(1) LIBOR,
(2) a spread determined so that, on the maturity
date of the Interim Loans, the sum of the
spread and LIBOR will equal the interest rate
in effect on the maturity date, and
(3) 0.50% initially and increasing by 50 basis
points every three months.
The maximum interest rates will not exceed 16%.
Fees Customary fees in the event the Interim Loan
is funded, including:
(1) on closing, a Bridge Closing Fee and 1/2 of
the Commitment Fee attributable to the
Interim Loan,
(2) in the event of a conversion to a term loan,
a Rollover Fee, and
(3) in the event the Interim Loans are repaid or
redeemed, a Refinancing Fee.
If the High Yield Notes are issued in lieu of the
Interim Loan, there will be a Placement Fee for
the issuance of the notes which will be subject
to reduction or a credit depending on the credit
rating of the reorganized company and the time of
closing.
NRG, NRG Northeast and NRG South Central, and certain of their
subsidiaries, will also enter into definitive documentation
evidencing the Senior Credit Facility and Interim Loan or High
Yield Notes and grant the liens and security interests required
as a part of the Recapitalization Financing transactions. On the
satisfaction of all conditions of funding, CSFB and Lehman will
fund to the Debtors an aggregate of $2,215,000,000, which will be
used by the Debtors as:
(a) $556,500,000 to satisfy the applicable Debtors'
obligations due under the Northeast Notes;
(b) $750,750,000 to satisfy the applicable Debtors'
obligations due under the South Central Notes;
(c) $406,500,000 to satisfy the applicable Debtors'
obligations due under the Mid-Atlantic Term Loan;
(d) $500,000,000 in the form of a revolving credit facility
and letter of credit facility, both of which will be
available to the Debtors to fund working capital and
trading operations.
Furthermore, CSFB and Lehman require the payment of certain fees
and the reimbursement of expenses associated with the negotiation
and documentation of the commitment:
(a) The Recapitalization Financing Commitment provides for a
commitment fee of 0.875% of the aggregate commitments,
which will result in a Commitment Fee of $19,381,250;
(b) One half of the Commitment Fee is due upon the approval of
the Debtors' request. The remainder of the Commitment Fee
will be due on the Closing Date;
(c) The Recapitalization Financing Commitment obligates the
Debtors to reimburse the expenses of CSFB and Lehman, and
their advisors. The Debtors will reimburse the Expense
Reimbursements on at least a monthly basis. The Debtors
estimate that the Expense Reimbursements could total
$6,000,000 through the closing of the commitments; and
(d) The Debtors would be obligated to pay a bank closing fee
and placement fee -- the Closing Fees -- projected at an
aggregate amount of $41,530,000 or 1.875% of the aggregate
commitments, subject to reduction based on the final
credit rating of the Debtors and the actual closing date.
The commitment of CSFB and Lehman under the Commitment Letter
will expire on December 31, 2003. The Debtors anticipate that
the NRG Plan and the Northeast/South Central Plan will both go
effective on or before December 15, 2003. However, NRG will have
the option to extend the commitments to March 31, 2004, by paying
an additional fee 50% of the aggregate commitments -- $11,075,000
-- pro rated for the number of months extended. The Debtors seek
the Court's authority to pay the Extension Fee if they determine
to extend the containment.
The Recapitalization Financing Commitment also obligates the
Debtors to indemnify CSFB and Lehman and certain other parties
for claims and causes of action arising out of the
Recapitalization Financing Commitment or the Debtors' bankruptcy
cases. (NRG Energy Bankruptcy News, Issue No. 16; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
OAKWOOD HOMES: Selling All Assets to Clayton Homes for $373 Mill.
-----------------------------------------------------------------
Oakwood Homes Corporation's (OTC Bulletin Board: OKWHQ) Board of
Directors has approved an agreement pursuant to which
substantially all of the Company's operations and non-cash assets
would be acquired by Clayton Homes, Inc., a subsidiary of
Berkshire Hathaway Inc., for approximately $373 million cash,
subject to certain adjustments. All cash at closing will be left
with the Company.
The purchase is expected to be accomplished through an amendment
to the Company's plan of reorganization currently pending in the
United States Bankruptcy Court for the District of Delaware, and
is subject to the approval of the amended plan by the Company's
creditors and the Bankruptcy Court, compliance with the Hart Scott
Rodino Act and other customary conditions. The parties expect the
proposed transaction to close by March 31, 2004. The Company has
been informed that, subject to the extension of certain
post-petition financing commitments, the proposed sale to Clayton
has the support of the Company's Official Committee of Unsecured
Creditors.
Myles E. Standish, Chairman and Chief Executive Officer of
Oakwood, commented: "Although we were poised to emerge from
Chapter 11 as a standalone company, after considering Clayton's
offer, the Board and the creditor's committee decided that the
cash recovery provided by the Clayton offer was in the best
interest of the financial stakeholders. We look forward to
teaming with Clayton Homes, and we believe this strategic alliance
will secure the best future for Oakwood employees and business
partners. We eagerly anticipate our association with the
Berkshire Hathaway family of companies."
Kevin T. Clayton, Chief Executive Officer and President of Clayton
Homes, stated: "Since the 1940's, Oakwood Homes has had a
longstanding tradition of manufacturing, retailing and financing
high value, affordable homes. The combination of our two
companies presents synergistic opportunities by integrating
Oakwood's plants, retail locations and mortgage-servicing platform
with Clayton operations to efficiently serve a greater number of
markets. We recognize and respect Oakwood's outstanding
independent and Company-owned retailers and look forward to
contributing additional value to those relationships, as well as
continuing to provide high quality product offerings and value to
our existing independent and company-owned retailers. We intend
to employ a substantial majority of Oakwood's employees and
continue to operate the acquired operations under the Oakwood name
and sell product under the quality brand names Schult, Marlette,
Golden West and Crest."
Oakwood Homes Corporation and its subsidiaries are engaged in the
production, sale, financing and insuring of manufactured housing
throughout the U.S. The Debtors filed for chapter 11 protection
on November 15, 2002 (Bankr. Del. Case No. 02-13396). Robert J.
Dehney, Esq., Derek C. Abbott, Esq., at Morris, Nichols, Arsht &
Tunnell and C. Richard Rayburn, Esq., and Alfred F. Durham, Esq.,
at Rayburn Cooper & Durham, P.A., represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $842,085,000 in total assets and
$705,441,000 in total debts.
OCIS INC: Hires Child Sullivan as New Independent Auditors
----------------------------------------------------------
OCIS, Inc., a Nevada corporation was informed by its auditor,
David T. Thomson, P.C., that it would no longer be engaged in
auditing public companies. Accordingly, on November 5, 2003, OCIS
engaged the auditing firm of Child, Sullivan & Company to act as
OCIS's independent certified public accountant. Child and
Sullivan will begin reviewing OCIS's quarterly accounting and
10QSB filings starting with the September 30, 2003, quarter and
handle the audit for the December 31, 2003, fiscal year.
David T. Thomson, P.C. audit opinion included an explanatory
paragraph discussing an uncertainty as to OCIS' ability to
continue as a going concern.
The change in auditors has been approved by OCIS Board of
Directors on November 5, 2003.
ONENAME CORP: US Trustee Appoints Official Creditors' Committee
---------------------------------------------------------------
The United States Trustee for Region 18 appointed 5 creditors to
serve on an Official Committee of Unsecured Creditors in OneName
Corporation's Chapter 11 cases. The five committee members are:
1. Theodore L. McCaugherty
1420 Fifth Avenue, Suite 2200
Seattle, Washington 98101
Tel: (206) 521-5979
Fax: (206) 224-2880
ted@mccaugherty.com
2. Loren West
5717-95th Place S.W.
Mukilteo, Washington 98275
Tel: (425) 743-3338
Fax: (928) 222-4556
legal@lorenwest.com
3. David G. Watkins
2807 Rancho Diamonte
Carlsbad, California 92009
Tel: (760) 476-3769
Fax: (760) 602-1270
davidwatkins@sbcglobal.net
4. Lance Hood
17909-NE 106th Connecticut
Redmond, Washington 98052
Tel: (425) 442-4913
Lance.j.hood@verizon.net
5. Gordon Stowe
P.O. Box 130413
Carlsband, California 92013
Tel: (760) 822-2324
Fax: (760) 295-6694
stoweski@yahoo.com
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 Seattle, Washington, OneName Corporation,
formerly known as Intermind Corporation, has invented a patented
means to provide persistent internet identity, i.e., the ability
for any resource on the internet to maintain an ongoing identity
that can cross different companies, websites, and other domains.
The Company filed for chapter 11 protection on September 30, 2003
(Bankr. W.D. Wash. Case No. 03-22581). Lawrence R. Ream, Esq.,
and Richard G Birinyi, Esq., represent the Debtor in its
restructuring efforts. As of September 29, 2003, the Debtors
listed $9,783,337 in total assets and $4,457,580 in total debts.
OXIS INTERNATIONAL: Must Obtain New Funds to Continue Operations
----------------------------------------------------------------
OXIS International, Inc.'s financial statements have been prepared
on a going concern basis, which contemplated the realization of
assets and the satisfaction of liabilities in the normal course of
business.
The Company has incurred recurring losses and at September 30,
2003 had an accumulated deficit of $59,274,000. For the nine
months ended September 30, 2003, the Company sustained a net loss
of $571,000. These factors, among others, indicate that the
Company may be unable to continue as a going concern for a
reasonable period of time. The Company's continuation as a going
concern is contingent upon its ability to obtain additional
financing, and to generate revenue and cash flow to meet its
obligations on a timely basis.
Sales of research assays increased by $336,000, or 28%, from
$1,181,000 in the first nine months of 2002 to $1,517,000 in the
first nine months of 2003. This increase was due primarily to an
increase in sales volumes.
Sales of bSOD in the first nine months of 2003 and 2002 consisted
of one shipment of bulk bSOD to the Company's Spanish licensee.
Sales of bSOD in 2002 came in one order shipped in the first nine
months of 2002 ($380,000). The Company expects that sales of bSOD
in 2003 will be split into two equal shipments; one which occurred
in the first nine months of 2003 ($242,000) and another shipment
expected to occur in the fourth quarter of 2003. Future sales of
bulk bSOD beyond 2003 are largely dependent on the needs of the
Company's Spanish licensee. Because such needs are uncertain and
difficult to predict, no assurance can be given that the Company
will continue to sell bulk bSOD to its Spanish licensee.
Cost of product sales for the first nine months of 2002 was
$916,000, or 58% of revenues, compared to $933,000, or 53% of
revenues for the first nine months of 2003. This
decrease in the cost of sales as a percentage of sales is due
primarily to a reduction in the cost of manufacturing.
Gross profit for the first nine months of 2002 was $659,000, or
42% of revenues. Gross profit for the first nine months of 2003
was $837,000, or 47% of revenues. This
change is due primarily to the reduction in the cost of materials.
Research and development expenses decreased from $350,000 in the
first nine months of 2002 to $262,000 in the first nine months of
2003. Research and development expense as a percentage of revenues
were 22% in the first nine months of 2002 compared to 15% in the
first nine months of 2003 primarily due to a reduction in the
Company's therapeutic development efforts.
Selling, general and administrative expenses increased by
$125,000, from $1,019,000, or 65% of revenues, in the first nine
months of 2002 to $1,144,000, or 65% of revenues, in the first
nine months of 2003. The increase is primarily the result of the
Company's investment in its animal health profiling program.
During the first quarter of 2003, the Company sold its equity
interest in Caprius Inc., resulting in other income of $8,000.
During the first quarter of 2002, in association with the closing
of the Company's instrument manufacturing facility in 2001, the
Company settled certain trade payables with creditors resulting in
other income of $62,000.
The Company continued to experience losses in the first nine
months of 2003. The first nine months of 2003 net loss of $571,000
was $86,000 less than the $657,000 net loss for the first nine
months of 2002. The decrease in the net loss is primarily due to
an increase in revenues partially offset by the investment in the
animal health profiling program.
The Company's working capital decreased during the first nine
months of 2003 by $295,000, from $284,000 at December 31, 2002 to
a deficit of $11,000 at September 30, 2003. The decrease in
working capital resulted primarily from the net loss of $571,000
adjusted for depreciation and amortization.
Cash and cash equivalents decreased from $424,000 at December 31,
2002 to $238,000 at September 30, 2003. This decrease of $186,000
is primarily due to the $326,000 used for operations offset by
proceeds from exercised warrants during the first nine months of
2003.
The Company expects to incur operating losses for the foreseeable
future. These losses and expenses may increase and fluctuate from
quarter to quarter. There can be no assurance that the Company
will ever achieve profitable operations. The report of the
Company's independent auditors on the Company's financial
statements for the period ended December 31, 2002, includes an
explanatory paragraph referring to the Company's ability to
continue as a going concern. The Company anticipates that it will
expend capital resources for the continuation of operations
(marketing, product research and development, therapeutic and
nutraceutical development). Capital resources may also be used for
the acquisition of complementary businesses, products or
technologies. The Company's future capital requirements will
depend on many factors including: continued marketing and
scientific progress in the Company's research and development
programs; the magnitude of such programs; the success of pre-
clinical and potential clinical trials; the costs associated with
the scale-up of manufacturing; the time and costs required for
regulatory approvals; the time and costs involved in filing,
prosecuting, enforcing and defending patent claims; the cost of
complying with the requirements of the French COB; technological
competition and market developments; the establishment of and
changes in collaborative relationships and the cost of
commercialization activities and arrangements.
The Company has incurred losses in each of the last six years. As
of September 30, 2003, the Company has an accumulated deficit of
$59,274,000. The Company expects to incur operating losses for the
foreseeable future. The Company needs to raise additional capital
for continuing operations of the health products segment and to
complete the Company's contemplated drug development programs and
no assurances can be given that the Company will be able to raise
such capital on terms favorable to the Company or at all. The
unavailability of additional capital could cause the Company to
cease or curtail its operations and/or delay or prevent the
development and marketing of the Company's existing and potential
products.
Although the Company has been able to reduce its operating losses
during prior years, the Company cannot predict its ability to
continue cost reductions or to obtain profitability with its
limited capital resources. As stated, the Company expects to incur
research and development expenses as the Company continues testing
its products and the Company anticipates that its sales and
marketing expenses may increase as it attempts to sell certain of
its products into new markets. The Company's losses and expenses
may increase and fluctuate from quarter to quarter. As reported
above, the report of the Company's independent auditors on the
Company's financial statements for the period ended December 31,
2002 includes an explanatory paragraph referring to the Company's
ability to continue as a going concern.
While the Company believes that certain of its new products and
technologies show considerable promise, its ability to realize
significant revenues from such products and technologies is
dependent upon many factors, including (i) the Company's ability
to sell its assays and other products to companies in industries
which have not previously purchased such products from the Company
and (ii) the Company's success in developing business alliances
with nutraceutical/pharmaceutical and/or other health related
companies to develop and market the Company's products. To date,
the Company has not successfully sold its products into new
markets in material amounts and has not established such business
alliances and there can be no assurance that the Company's effort
to develop such new markets and business alliances will be
successful.
Although the Company has been able to reduce its operating losses
the past two years, the Company cannot predict its ability to
continue cost reductions or achieve profitability with its limited
capital resources. The Company currently does not have sufficient
capital resources to complete its contemplated development and
commercialization programs. No assurances can be given that the
Company will be able to raise such needed capital on terms
favorable to the Company or at all. The unavailability of
additional capital could cause the Company at any time to cease or
curtail its operations and/or delay or prevent the development and
marketing of the Company's potential products. Such events would
likely cause investors who have invested in the Company to lose
some or all of their investment in the Company.
PACIFICARE HEALTH: Will Present at Merrill Lynch Conference Wed.
----------------------------------------------------------------
PacifiCare Health Systems, Inc. (NYSE: PHS) announced that Gregory
W. Scott, executive vice president and chief financial officer, is
scheduled to make a presentation at the Merrill Lynch Health
Services Investor Conference at the Waldorf Astoria in New York
City. PacifiCare's presentation is scheduled for Wednesday,
December 3th at 2:30 PM Eastern Time.
A live webcast of the presentation will be available at
http://www.pacificare.com, and may be accessed by clicking on
About PacifiCare, then the Investor Relations tab and the Investor
Presentations page.
PacifiCare Health Systems is one of the nation's largest consumer
health organizations with approximately 3 million health plan
members and approximately 9 million specialty plan members
nationwide. PacifiCare offers individuals, employers and Medicare
beneficiaries a variety of consumer-driven health care and life
insurance products. Currently, more than 99 percent of
PacifiCare's commercial health plan members are enrolled in plans
that have received Excellent Accreditation by the National
Committee for Quality Assurance. PacifiCare's specialty
operations include behavioral health, dental and vision, and
complete pharmacy and medical management through its wholly owned
subsidiary, Prescription Solutions. More information on
PacifiCare Health Systems is available at
http://www.pacificare.com
* * *
Fitch's Recent Rating Action
As previously reported, Fitch Ratings revised the Rating Outlook
for PacifiCare Health Systems Inc. to Positive from Stable. The
rating action affects approximately $800 million of debt
outstanding.
Rating Actions
PacifiCare Health Systems, Inc.
-- 3.0% Convertible Subordinated debentures 'B+'/ Positive;
-- 10.75% Senior Unsec Notes due 2009 'BB-' / Positive;
-- 7.0% Senior notes due 2003 'BB'/Positive;
-- Bank Loan rating 'BB'/Positive;
-- Long-term rating 'BB'/Positive.
PG&E CORP: CEO Glynn Will Provide Bankruptcy Update on Wednesday
----------------------------------------------------------------
Robert D. Glynn, Jr., Chairman, CEO and President of PG&E
Corporation, (NYSE: PCG) will speak to the Financial Community in
New York on Wednesday, December 3, 2003 at 12:30 p.m. EST.
Mr. Glynn's audio presentation will be available via webcast at
http://www.pgecorp.com
Who: Robert D. Glynn, Jr., Chairman, CEO and President, PG&E
Corporation
Subject: Pacific Gas and Electric Company Chapter 11 Update
When: Wednesday, December 3, 2003, 12:30 p.m. EST
Where: http://www.pgecorp.com
How: Live over the Internet -- log on to the web at the
Address above.
Contact: Investor Relations 415-267-7080
If you are unable to listen to the live webcast, the audio
presentation will be archived at:
http://www.pgecorp.com/financial/news/presentations.html
for 30 days.
PG&E Corporation is an energy-based holding company, headquartered
in San Francisco, California. Its operations include electric
generation, natural gas and electric transmission, and utility
distribution. It is the parent company of Pacific Gas and Electric
Company.
PHYAMERICA PHYSICIAN: Court to Consider Chapter 11 Plan Monday
--------------------------------------------------------------
PhyAmerica Physician Group, Inc. announced that the United States
Bankruptcy Court for the District of Maryland issued an interim
ruling as part of the company's proposed Plan of Reorganization
that the purchase offer sponsored by Resurgence Asset Management
to acquire the assets of the emergency services business was
deemed to be higher than the proposal made by the Company's
founder and Chairman, Steven M. Scott, M.D.
The confirmation hearing on the company's proposed Plan of
Reorganization will continue on Monday, December 1, in the United
States Bankruptcy Court in Baltimore, Maryland.
During the plan confirmation proceedings before the court, the
Company supported the proposal made by PhyAmerica Acquisition
Corporation, an entity formed by Dr. Scott to acquire the
emergency services business of PhyAmerica and the medical clinic
business of Scott Medical Group. PhyAmerica and its affiliates
continue to operate as debtors in possession and will continue to
fulfill all of their commitments and obligations to all of their
clients. The company is committed to maintaining all services at
the highest level to all of its constituents throughout the
confirmation process and to keeping all of the constituents and
clients informed as to all future developments.
PhyAmerica and numerous subsidiaries and affiliates filed for
protection under Chapter 11 on November 11, 2002 as a result of
the abrupt halt of funding by senior financing source, National
Century Financial Enterprises, Inc. (NCFE), in late October, 2002.
Since that time the Company has successfully continued its
operations on a profitable basis, notwithstanding the difficulties
of operating under chapter 11. Services to all hospital clients
have continued unimpeded and there has been no termination or
interruption of patient care at any hospital, medical clinic or
physician practice. Management is extremely appreciative of the
tremendous cooperation and support it has received from all
physicians and employees.
PILLOWTEX CORP: Selling Macon Facility to 247 Group for $1.3MM
--------------------------------------------------------------
Christopher M. Winter, Esq., at Morris, Nichols, Arsht & Tunnel
in Wilmington, Delaware, relates that the Pillowtex Debtors own a
Facility that is part of an industrial park located in Macon, Bibb
County, Georgia. Prior to September 2002, the Macon Facility was
used in the Debtors' bed and bath division as a warehouse and
distribution center. The Debtors do not believe that the Macon
Facility, which requires significant maintenance and repair work,
is readily convertible for alternative uses.
In September 2002, the Debtors discontinued their operations at
the Macon Facility. In December 2002, the Debtors retained Art
Batty of Coldwell Banker Commercial Eberhardt & Batty to market
and sell the Macon Facility. The Debtors agreed to pay the Mr.
Batty 6% of the gross purchase price paid by a buyer of the
Facility, pursuant to a standard brokerage and listing agreement.
Since his retention, Mr. Batty has marketed the Macon Facility to
numerous parties through publication of announcements and
advertisements in trade magazines, postings on internet sites and
direct marketing. As a result of these efforts, the Debtors
received three offers from potential purchasers, which includes
247 Group LLC. After considering all the offers, the Debtors
determined that 247 Group's offer was the highest or otherwise
best offer.
Consequently, in September 2003, the Debtors began negotiations
in earnest with 247 Group on definitive terms for the sale of the
Macon Facility.
Pursuant to the Agreement, at the closing, 247 Group will pay the
Debtors $1,300,000 in cash, which includes an earnest deposit of
$70,000 already paid upon the signing of the Agreement, and the
Debtors will convey fee simple title in the Facility to 247 Group
by deed with special or limited warranty, subject to certain
permitted exceptions.
The sale of the Macon Facility is on an "as is" basis and the
Debtors are not making any representation or warranty as to the
condition of the property.
Mr. Winter points out that the sale of the Macon Facility to 247
Group was subject to the submission of higher or otherwise better
offers. As no Qualified Competing Bid was received, 247 Group is
the successful bidder for the Macon Facility and the Agreement is
the successful bid.
Accordingly, the Debtors sought and obtained Judge Walsh's
approval to sell the Macon Facility to 247 Group, free and clear
of all liens, claims, encumbrances and interests. (Pillowtex
Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
PRO SKATE OPERATIONS: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
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.
Teresa M. Dorr, 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
A. Pro Skate Operations' 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Unity Bank $369,104
Attention: Robert A. Roguso
2426 Plainfield Avenue
South Plainfield, NJ 07080
Advantage Bank $92,437
Ridolfi Friedman Frank et al. $20,021
PSE&G $18,897
Stobezki Marra & Zelltsky LLC $13,000
Consignment Sports, Inc. $12,000
Embroidery Shop $8,213
SYSCO $5,729
McMaster-Carr Supply Co. $5,712
Cananwill, Inc. $4,802
Frontline Solutions, Inc. $4,250
Nastus Brothers, Inc. $4,135
Ben's Verona Sports Center, Inc. $2,342
Pepsi-Cola $2,166
The Princeton Packet, Inc. $2,050
Signs by Tomorrow $1,360
Field & Higgins $1,075
Greater Media Newspapers $1,000
Verizon $1,000
G&B Janitorial Supply, Inc. $755
B. Coppermine Development Corporation's Unsecured Creditor:
Entity Claim Amount
------ ------------
BDE Computer Service $2,342
QUANTUM CORP: Undertaking Consolidation of Two Business Groups
--------------------------------------------------------------
Quantum Corp. (NYSE: DSS), a global leader in data storage, said
it is reorganizing to create a stronger operational platform for
profit and growth and leverage synergies across the company.
Quantum's two business groups, the DLTtape(TM) Group and the
Storage Solutions Group, are being integrated into one
organization with a consolidated operations function and three
business units -- Storage Devices, Media, and Storage Systems.
The company will also combine the DLTG and SSG sales organizations
into one OEM sales force and one Quantum-branded sales force.
Rick Belluzzo will continue in his role as chairman and CEO, and
John Gannon, who has been president of DLTG, will assume the
position of president and COO for the company.
"Over the past year, we've made progress in a number of areas,
including gaining market share, increasing our tape drive revenue
and gross margins, growing our automation revenues and reducing
operating expenses," said Belluzzo. "The changes announced
[Tues]day will enable us to build on this progress by combining
our strengths across Quantum to serve customers even better,
further reduce costs and provide greater opportunities for
growth."
By integrating the two separate business groups, Quantum will
eliminate duplicative functions and make it easier for customers,
suppliers and other partners to do business with the company.
Customers, in particular, will be able to leverage Quantum's full
range of products -- from the entry-level DLT VS80 tape drive to
the new enterprise-level "MAKO" PX720 tape library -- as well as
its expertise, technology, services and support, from a single
dedicated Quantum team that understands all their backup, archive
and recovery needs. With one operational platform for Quantum's
tape drives, tape media, tape libraries and disk-based backup
systems, customers will benefit from improved cost efficiencies,
product integration and time-to-market. At the same time, as an
industry leader in data protection committed to meeting end-user
needs, Quantum will continue to work closely with its automation
partners in delivering DLTtape-based solutions and continue to
provide multiple tape drive formats in the company's broad range
of tape libraries.
"Our strategy remains the same -- to deliver highly reliable
backup, archiving and recovery solutions that meet demanding
requirements for data integrity and availability with superior
price performance," said Belluzzo.
As a result of the organizational changes, Quantum will reduce its
workforce by approximately 110 employee and 20 contractor
positions, through the elimination of duplicative jobs and other
streamlining. In addition, Larry Orecklin - who has been president
of the Storage Solutions Group -- has chosen to leave the company
to pursue other opportunities.
The company expects to incur restructuring charges related to the
current reorganization, as well as previously discussed
restructuring, of approximately $10 million to $15 million over
the next several quarters, with the majority being taken in the
current quarter.
In conjunction with this announcement, Quantum also provided GAAP
guidance for the December quarter. Quantum said it expects
revenue and GAAP gross margins to be roughly flat sequentially,
with GAAP operating expenses in the range of $78 million to $83
million. As a result, the company said it expects the GAAP loss
per share for the December quarter to be in the range of 14 to 17
cents. Non-GAAP expectations remain the same as previously stated
on Oct. 23.
The difference between GAAP and non-GAAP numbers for the December
quarter reflects approximately $14 million to $19 million in
severance- and facility-related charges -- including a $7 million
impairment charge associated with Quantum's Colorado Springs
facility -- as well as approximately $4 million in amortization of
intangibles.
Quantum Corp. (S&P, BB- Corporate Credit and B Subordinated Debt
Ratings, Negative), founded in 1980, is a global leader in
storage, delivering highly reliable backup, archive and recovery
solutions that meet demanding requirements for data availability
and integrity with superior price performance. Quantum is the
world's largest supplier of half-inch cartridge tape drives, and
its DLTtape technology is the industry standard for tape backup,
archiving, and recovery of business-critical data for the midrange
enterprise. Quantum is also a leader in the design, manufacture
and service of autoloaders and automated tape libraries used to
manage, store and transfer data. Over the past year, Quantum has
been one of the pioneers in the emerging market of disk-based
backup, offering a solution that emulates a tape library and is
optimized for data protection. Quantum sales for the fiscal year
ended March 31, 2003, were approximately $871 million. Quantum
Corp., 1650 Technology Drive, Suite 800, San Jose, CA 95110, 408-
944-4000, http://www.quantum.com
RELIANCE GROUP: Delays Filing of Form 10-Q for September Quarter
----------------------------------------------------------------
Paul W. Zeller, President and CEO of Reliance Group Holdings,
discloses to the Securities and Exchange Commission in a Form
12b-25 filing on November 14, 2003, that there have been
significant changes in RGH's operational (underwriting, claims),
corporate (systems, actuarial, financial) and organizational
structure and staffing.
These changes occurred within the last half of 2000 and early 2001
as a result of the decision to discontinue the ongoing insurance
business and commence run-off operations. As a result, RGH's
accountants, Deloitte & Touche LLP, have been unable to complete
the work necessary to complete its audit for fiscal year 2000.
Until the audit is completed, it will not be possible to prepare a
Form 10-Q for the quarter ended September 30, 2003. (Reliance
Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ROGERS COMMUNICATIONS: Board Declares Semi-Annual Cash Dividend
---------------------------------------------------------------
Rogers Communications Inc. (TSX: RCI.A and RCI.B, NYSE: RG)
announced that its Board of Directors has declared a semi-annual
dividend of C$0.05 per share on each of its outstanding Class B
Non-Voting shares, Class A Voting shares, and Series E Preferred
shares.
The semi-annual dividend declared today will be paid on January 2,
2004 to shareholders of record on December 12, 2003. This will be
the second semi-annual dividend following the Company's adoption
of a dividend policy in May 2003 of $0.10 per share annually,
through two semi-annual dividend payments of $0.05 per share.
Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RG)
(S&P/BB+ L-T Corporate Credit Rating/Negative) is Canada's
national communications company, which is engaged in cable
television, Internet access and video retailing through Rogers
Cable Inc.; digital PCS, cellular, and wireless data
communications through Rogers Wireless Communications Inc.; and
radio, television broadcasting, televised shopping, and publishing
businesses through Rogers Media Inc.
SBA COMMS: Commences Tender Offer for $153MM of 12% Senior Notes
----------------------------------------------------------------
SBA Communications Corporation (Nasdaq: SBAC) commenced a cash
tender offer to purchase up to $153,300,000 aggregate principal
amount of its 12% Senior Discount Notes Due 2008, constituting 70%
of the $219,000,000 aggregate principal amount of Notes
outstanding.
In connection with the cash tender offer, the Company is
soliciting holders of the Notes to consent to certain proposed
amendments to the indenture under which the Notes were issued.
The tender offer and consent solicitation will expire at 12:00
midnight New York City time, on December 23, 2003, unless
extended. Holders of Notes who tender their Notes on or prior to
5:00 p.m., New York City time, on December 4, 2003, unless
extended, will receive, to the extent such holder's Notes are
accepted for payment, the total consideration of $1,090 per $1,000
principal amount of Notes validly tendered. The total
consideration is the sum of the tender offer consideration of
$1,060 per $1,000 of principal amount of Notes tendered plus a
premium of $30 per $1,000 of principal amount of Notes tendered
paid to each holder of Notes who tenders Notes on or prior to
the Consent Date. Holders who tender their Notes after the
Consent Date, but prior to the Expiration Date, will receive, to
the extent such holders' Notes are accepted for payment, only the
tender offer consideration, and will not receive the Consent
Premium. In each case, holders who tender their Notes will
receive accrued and unpaid interest from the last interest payment
date to, but not including, the payment date, payable on the
payment date if, and only to the extent, the holders' Notes are
accepted for payment. Holders who tender their Notes will be
required to consent to the proposed amendments to the indenture.
The valid tender of Notes will constitute the delivery of a
consent with respect to the Notes.
Holders who wish to consent to the proposed amendments to the
indenture without tendering their Notes will be eligible to
receive $2.50 per $1,000 of principal amount of Notes for which
Non-Tender Consents are given on or prior to the Consent Date.
Non-Tender Consents received after 5:00 p.m., New York City time,
on the Consent Date will not be valid.
Tenders of Notes made on or before the Consent Date may not be
withdrawn or revoked unless the Company reduces the amount of
consideration offered for the Notes, the Consent Premium, the
amount of Notes subject to the tender offer, or is otherwise
required by law to permit withdrawal. Tenders of Notes made after
the Consent Date may be withdrawn at any time up until the
Expiration Date. The tender offer and consent solicitation are
conditioned upon, among other things, the completion by the
Company of certain related financing transactions. Once
delivered, a Non-Tender Consent may not be revoked unless the
consent solicitation is terminated or unless required by law.
Only holders of record as of the close of business on November 25,
2003 are entitled to tender Notes and deliver the related Consents
or deliver Non-Tender Consents. No tenders of Notes will be valid
if submitted after the Expiration Date.
If more than $153.3 million aggregate principal amount of Notes
are tendered in the tender offer, the Company will purchase such
amount of Notes on a pro rata acceptance basis. Holders will not
receive the Consent Premium with respect to any Notes not accepted
for payment.
Holders of approximately 50% of the currently outstanding Notes
have agreed to tender, and not withdraw, their Notes and deliver,
and not revoke, the related consents in the tender offer and
consent solicitation.
The Company has retained Lehman Brothers to serve as the Dealer
Manager for the tender offer and Solicitation Agent for the
consent solicitation. Requests for the tender offer documents,
including the transmittal documents, may be directed to D.F. King
& Co., Inc., the Information Agent, by telephone at (800) 431-9643
(toll-free) or (212) 269-5550 or in writing at 48 Wall Street,
22nd Floor, New York, NY 10005. Questions regarding the tender
offer may be directed to Lehman Brothers, at (800) 438-3242 (toll-
free) or (212) 528-7581, Attention: Liability Management Group.
The complete terms and conditions of the tender offer and consent
solicitation are set forth in the Offer to Purchase and Consent
Solicitation Statement dated November 25, 2003 and the related
Consent and Letter of Transmittal and the Non-Tender Consent Form,
which will be mailed to holders of the Notes. Holders of the
Notes are urged to read the tender offer documents carefully
because they contain important information.
SBA (S&P, CCC Corporate Credit Rating, Developing Outlook) is a
leading independent owner and operator of wireless communications
infrastructure in the United States. SBA generates revenue from
two primary businesses -- site leasing and site development
services. The primary focus of the company is the leasing of
antenna space on its multi-tenant towers to a variety of wireless
service providers under long-term lease contracts. Since it was
founded in 1989, SBA has participated in the development of over
20,000 antenna sites in the United States.
SCOTTELLO LLC: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Scottello, LLC
P.O. Box 1226
Southaven, Mississippi 38671
Bankruptcy Case No.: 03-17345
Type of Business: Contracting & Land Development Services.
Chapter 11 Petition Date: November 17, 2003
Court: Northern District of Mississippi (Aberdeen)
Judge: David W. Houston III
Debtor's Counsel: James W. Amos, Esq.
2430 Caffey Street
Hernando, MS 38632
Tel: 662-429-7873
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Ford Motor Credit Company $3,000
SECURED VALUE:
$19,000
Hughes Supply, Inc. $8,844
Network Telephone $6,276
Power Equipment Company $1,706
SIBLEYS SHOES INC: Intends to Close 29 Retail Footwear Stores
-------------------------------------------------------------
Sibleys Shoes, Inc., is pursuing a path that will likely result in
the closure of all of its 29 retail footwear stores.
The Michigan based company and its advisors have spent several
months considering restructuring alternatives and have been
unsuccessful in finding the needed capital to keep the business
operating as a going concern. While the company will continue to
seek alternatives that will allow it to continue as a going
concern, it has determined that it has no other choice but to
begin store closing sales in all of its locations.
Art Artrip, the company's President and CEO, stated, "Sibleys and
its advisors have evaluated all alternatives before deciding to go
this route. Although Sibleys wants to sell to a buyer with the
financial backing to continue operations, the likelihood of this
happening now looks very remote."
The company has experienced lagging sales for the past couple of
years fueled by the sluggish economy and the decrease in overall
mall traffic.
Sibleys Shoes, which was founded in 1920 and began with a single
store on Sibley Street in Detroit, operates a chain of 29 retail
footwear stores throughout Michigan and Ohio.
SIEBEL SYSTEMS: Will Present at CSFB Conference on Tuesday
----------------------------------------------------------
Siebel Systems, Inc. (Nasdaq:SEBL), a leading provider of
multichannel business applications software, announced that
Kenneth Goldman, Senior Vice President, Finance and Administration
and Chief Financial Officer, will present at the Credit Suisse
First Boston Annual Technology Conference at 3:00 p.m. MST on
December 2, 2003, at the Phoenician Resort in Phoenix, Arizona.
Live and archived Webcasts of the discussions will be available at
http://www.siebel.com/about/investor_information/
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.
SIRVA INC: Completion of IPO Spurs S&P to Up Credit Rating to BB
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on SIRVA Inc. and its primary operating subsidiary, North
American Van Lines Inc., to 'BB' from 'B+'. The rating was removed
from CreditWatch, where it was placed on Oct. 27, 2003. At the
same time, Standard & Poor's assigned its 'BB' corporate credit
rating to SIRVA Worldwide Inc., affirmed its 'BB' rating on the
company's proposed $600 million bank facility, and raised the
rating on NAVL's subordinated notes to 'B+' from 'B-'. The outlook
is stable.
"Ratings on SIRVA were raised following the completion of the
company's IPO, with proceeds of approximately $250 million," said
Standard & Poor's credit analyst Kenneth L. Farer. "The IPO is
part of a financial restructuring, which also includes a new $600
million bank facility and creation of SIRVA Worldwide as the
parent of several operating subsidiaries, and strengthens SIRVA's
financial profile by reducing overall debt levels, extending debt
maturities, and increasing revolver availability," the analyst
continued. Pro forma for the restructuring, lease-adjusted debt
will decline to approximately $615 million, compared with $800
million at year-end 2002.
The ratings on Westmont, Illinois-based SIRVA Inc. (formerly
Allied Worldwide Inc.) and its subsidiary, SIRVA Worldwide Inc.,
whose primary operating subsidiary is NAVL, reflect a significant
debt burden incurred to acquire the relocation business operated
under the Allied and Pickfords names from Exel PLC in late 1999,
participation in the low-margin, relocation business, and an
active, ongoing acquisition program. Positive credit factors
include the strong market presence of northAmerican, Allied, and
Pickfords.
SIRVA Worldwide provides household domestic and international
moving, document and record management, and specialized logistics.
In the U.S., Allied and northAmerican are among the largest
relocation companies, operating through a large network of local
agents and owner/operators. Major competitors to Allied and
northAmerican include Cendant Mobility Services Corp. and
Prudential Relocation. Substantial portions of the agent contracts
in the U.S. are for multiyear periods, although many are on a
rolling multimonth basis. Outside the U.S., especially in Europe
and Asia, the networks of Allied and Pickfords are wholly owned
and operated.
SIRVA's other subsidiaries include SIRVA Mortgage, SIRVA Finance,
and SIRVA Relocation Credit. These entities provide limited
customer financing to support relocation services provided by
SIRVA Worldwide. Additional services provided to corporate
customers include assistance with the sale of the employee's home,
the purchase of the employee's home, and assistance with the
purchase of a new home, including mortgage and title services.
SIRVA Worldwide's bank facility is rated the same as its corporate
credit rating. The bank facility is secured by substantially all
of the company's tangible and intangible assets and capital stock.
SIRVA Worldwide's bank facility is guaranteed by NAVL, Allied, and
the other U.S. operating subsidiaries of SIRVA Worldwide, though
SIRVA Mortgage, SIRVA Finance, and SIRVA Relocation Credit are not
borrowers or guarantors under the bank facility. The bank
facilities' collateral coverage should provide for meaningful
recovery of principal in the event of default or bankruptcy,
despite potentially significant loss exposure.
Although SIRVA's earnings are expected to benefit from cost
efficiencies and the recovering economy, a heavy debt burden and
likely additional debt-financed acquisitions constrain its
financial profile.
SIX FLAGS: Gary Story Resigning as Company's President and COO
--------------------------------------------------------------
Six Flags, Inc. (NYSE: PKS) announced, that for health reasons,
Gary Story will resign as President and Chief Operating Officer of
Six Flags and become a special advisor to the Company's Chairman
and Chief Executive Officer.
The transition to his new position is expected to occur at the end
of 2003.
In connection with Mr. Story's position-change, the Company has
added a fifth Executive Vice President. Four of the Executive Vice
Presidents have responsibility for the operations of the Company's
parks in various regions, and the fifth has oversight
responsibility for in-park revenue systemwide. The Executive Vice
Presidents will report directly to the Chief Executive Officer.
Kieran E. Burke, Chairman and Chief Executive Officer of the
Company, stated "Over the past twenty years, Gary Story has made
an immeasurable contribution to our Company's growth and
development. We are very gratified that he will continue to be an
active part of our group in a new role that will give him the time
and flexibility to properly address his type 1 diabetes and to
spend more time with his family."
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/
SPECIAL METALS: Emerges from Bankruptcy After Plan Consummation
---------------------------------------------------------------
Special Metals Corporation (SMCXQ.PK) has consummated its Plan of
Reorganization, thereby effectively emerging from bankruptcy.
"The Company met a significant number of challenges over the
course of the reorganization process, including the ratification
of six new collective bargaining agreements, the assumption of the
Company's three largest pension plans by the Pension Benefit
Guaranty Corporation, and today's closing of the exit financing, a
new $200 million revolving credit facility," said Special Metals
Chief Operating and Restructuring Officer, Dennis L. Wanlass.
"We appreciate the efforts and patience of our employees during
the Company's reorganization process, as well as the continued
support of our customers, suppliers, lenders, retirees and elected
officials," said Wanlass. "With a much stronger financial
position, a significant reduction in debt, lower interest payments
and operating costs, we look forward to our future and the
opportunity to focus our attention solely on the business, with an
emphasis on growth and customer service."
Special Metals is the world's largest and most-diversified
producer of high-performance nickel-based alloys. Its specialty
metals are used in some of the world's most technically demanding
industries and applications, including: aerospace, power
generation, chemical processing, and oil exploration. Through its
10 U.S. and European production facilities and a global
distribution network, Special Metals supplies over 5,000 customers
and every major world market for high-performance nickel-based
alloys.
SPEIZMAN INDUSTRIES: Board Won't Implement Reverse Stock Split
--------------------------------------------------------------
Speizman Industries, Inc. (Nasdaq: SPZNC) announced that, although
a proposal to effect a reverse stock split was approved by the
Company's stockholders at its annual meeting, the Company's Board
of Directors decided not to go forward with the reverse stock
split at this time.
The Board of Directors believes the reverse stock split is not in
the best interests of the Company's stockholders at this time.
The Company has advised the Nasdaq SmallCap Market that it does
not intend to proceed with a reverse stock split and anticipates
that the common stock will promptly be delisted from the Nasdaq
SmallCap Market.
Speizman Industries is a leader in the sale and distribution of
specialized industrial machinery, parts and equipment. The
Company acts as exclusive distributor in the United States,
Canada, and Mexico for leading Italian manufacturers of textile
equipment and is a leading distributor in the United States of
industrial laundry equipment representing several United States
manufacturers.
For additional information on Speizman Industries, please visit
the Company's Web site at http://www.speizman.com
As reported in Troubled Company Reporter's April 7, 2003 edition,
Speizman Industries, effective March 31, 2003, entered into a
Sixth Amendment and Forbearance Agreement relating to its credit
facility with SouthTrust Bank, extending the maturity date until
December 31, 2003. The credit facility as amended provides a
revolving credit facility up to $10.0 million and an additional
line of credit for issuance of documentary letters of credit up to
$7.5 million. The availability under the combined facility is
limited to a borrowing base as defined by the bank. The Company,
as of March 31, 2003, had borrowings with SouthTrust Bank of $4.8
million under the revolving credit facility and had unused
availability of $2.5 million.
SPEIZMAN INDUSTRIES: Nasdaq Will Delist Shares Effective Monday
---------------------------------------------------------------
Speizman Industries, Inc. (Nasdaq: SPZNC) received notification
from the Nasdaq Listing Qualifications Panel that the Company's
securities will be delisted effective with the opening of business
on December 1, 2003.
The Company's securities will be immediately eligible for
quotation on the OTC Bulletin Board on December 1, 2003. The OTC
Bulletin Board symbol assigned to the Company is SPZN.
Speizman Industries is a leader in the sale and distribution of
specialized industrial machinery, parts and equipment. The
Company acts as exclusive distributor in the United States,
Canada, and Mexico for leading Italian manufacturers of textile
equipment and is a leading distributor in the United States of
industrial laundry equipment representing several United States
manufacturers.
For additional information on Speizman Industries, please visit
the Company's Web site at http://www.speizman.com
As reported in Troubled Company Reporter's April 7, 2003 edition,
Speizman Industries, effective March 31, 2003, entered into a
Sixth Amendment and Forbearance Agreement relating to its credit
facility with SouthTrust Bank, extending the maturity date until
December 31, 2003. The credit facility as amended provides a
revolving credit facility up to $10.0 million and an additional
line of credit for issuance of documentary letters of credit up to
$7.5 million. The availability under the combined facility is
limited to a borrowing base as defined by the bank. The Company,
as of March 31, 2003, had borrowings with SouthTrust Bank of $4.8
million under the revolving credit facility and had unused
availability of $2.5 million.
TYVOLA ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Tyvola Associates
P.O. Box 241
Clemmons, North Carolina 27012
Aka a North Carolina General Partnership
Bankruptcy Case No.: 03-34332
Chapter 11 Petition Date: November 19, 2003
Court: Western District of North Carolina (Charlotte)
Judge: J. Craig Whitley
Debtor's Counsel: Mary Catherine Holcomb, Esq.
HOLCOMB & FLETCHER, PLLC
831 East Morehead, Suite 550
Charlotte, NC 28202
Tel: 704-370-6501
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Hilton Hotels Corporation $121,621
Scott Insurance $10,281
Sysco Food Services $7,351
Duke Power $4,104
High Grove Partners $3,888
Guest Distribution Inc. $3,553
Paramount Carowinds $3,500
Cemco $2,815
Lodgenet Entertainment $2,590
Douglas Displays $2,550
IBM Corp. $2,446
Servant Travel Co. $2,340
Amex Business Finance $2,298
Otis Elevator Company $1,990
NC Dept. of Transportation $1,800
Homisco $1,532
Trayco Inc. $1,379
Focus Services, Inc. $1,102
Diversey Lever Institutional $1,086
US LEC of NC $1,018
UNITED AIRLINES: US Bank Seeks Stay Relief for LAX Project Fund
---------------------------------------------------------------
U.S. Bank asks Judge Wedoff, who oversees the United Airlines
Debtors' bankruptcy proceedings, to lift the automatic stay to
exercise its rights and remedies to certain funds on deposit in a
construction fund.
U.S. Bank serves as Trustee with the California Statewide
Communities Development Authority. In April 2001, the Authority
issued the California Statewide Communities Development Authority
Special Facilities Revenue Bonds (United Air Lines, Inc. - Los
Angeles International Airport Cargo Project) Series 2001 in the
principal amount of $34,590,000. The Authority deposited a
portion of the proceeds into the Construction Fund. The
Authority agreed to loan to United, upon satisfaction of various
terms and conditions, the proceeds of the Bonds on deposit in the
Construction Fund. The loans were used to finance a portion of
the cost of acquisition, construction and improvement of the LAX
Project. United is obligated to repay these loans.
Steven J. Heim, Esq., at Dorsey & Whitney, states that the
Construction Fund contains $2,975,509. On December 5, 2002,
United submitted a disbursement request seeking $1,191,547 for
eligible construction costs. On December 13, 2002, United
submitted a second request for an additional $233,824. U.S. Bank
has not honored either request.
Mr. Heim tells the Court that United has no equity in the
Construction Fund. The amounts in the Construction Fund are not
necessary for an effective reorganization. United waived its
rights to the funds when it defaulted on principal and interest
payments due.
Debtors Object
James H.M. Sprayregen, Esq., at Kirkland & Ellis, recounts that
on several occasions, United submitted to U.S. Bank requisitions
for disbursements from the Construction Fund as reimbursements
for costs it properly incurred on the LAX Project.
On December 5, 2002, United submitted Trustee Requisition No. 11,
directing U.S. Bank to disburse $1,191,547 from the Construction
Fund. On December 13, 2002, United submitted Trustee Requisition
No. 12 for $233,824. Despite U.S. Bank's express obligation to
apply the amounts in the Construction Fund to the costs of the
LAX Project, it did not honor the Requisitions. In reliance on
U.S. Bank's promise, United has incurred an additional $30,094 in
additional LAX Project costs that should be a proper charge
against the Construction Fund.
Mr. Sprayregen asserts that the amounts in the Construction Fund
are property of the Debtors' estates pursuant to Section
541(a)(1) of the Bankruptcy Code. The Debtors have the right to
a present possessory interest in a portion of the Construction
Fund. The existence of an event of default does not alter the
conclusion that the amounts in the Construction Fund are property
of the Debtors' estate. The funds are necessary for an effective
reorganization. (United Airlines Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS GROUP: Resolves Claims Dispute with Viacom Inc.
----------------------------------------------------------
On November 4, 2002, Viacom, Inc., filed Claim Nos. 3366 to 3370
and 3899 to 3906 in the aggregate amount of $71,776,906,
asserting various claims relating to Aircraft bearing
Registration Tail Nos. N519AU to N522AU, N532AU, N533AU, N425AU,
N915HA, N916HA, N917HA, and N920HA to N928HA. On January 24,
2003, the Reorganized US Airways Debtors objected to the Claims.
Viacom filed a response to the Objection.
After good faith, arm's-length negotiations, the parties agree to
resolve the Objection and the Response and the Claim amounts.
The parties agree to reduce and allow these Claims as general
unsecured Class USAI-7 Claims:
Claim No. Amount
--------- ------
3366 $1,520,320
3367 1,480,029
3368 3,153,638
3369 3,504,216
3370 1,480,029
3903 780,623
3904 1,295,917
3905 1,520,320
3906 3,153,638
Claim Nos. 3899, 3900, 3901, 3902 and any other Viacom Claims
relating to the Tail Nos. are withdrawn. (US Airways Bankruptcy
News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
WEIRTON STEEL: Taps Imperial Capital and Hatch as Fin'l Advisors
----------------------------------------------------------------
By this motion, J.P. Morgan Trust Company, N.A. -- as indenture
trustee of and collateral agent with respect to each of (1) the
10% Senior Secured Notes and (2) the Secured Pollution Control
Revenue Refunding Bonds Due 2012 -- and the Informal Committee of
Senior Secured Noteholders of Weirton Steel Corporation seek to
exercise their reserved right to employ a financial advisor and to
amend the Final DIP Order by increasing the amount of their carve-
outs to cover the fees, costs and expenses of their financial
advisor.
Pursuant to the Final DIP Order, JPMorgan and the Informal
Committee advised the Debtor as well as other parties-in-interest
that they anticipated the need to secure the services of a
financial advisor at some point, but in order to preserve the
assets of the estate to the greatest extent possible, JPMorgan
and the Informal Committee agreed not to do so until it was
absolutely necessary.
Eric A. Schaffer, Esq., at Reed Smith, in Pittsburgh,
Pennsylvania, notes that the Debtor's Plan of Reorganization
impairs the rights of JPMorgan and the Informal Committee.
JPMorgan and the Informal Committee now require the assistance of
a financial advisor to understand and evaluate the feasibility
and confirmability of the proposed Plan, as well as the value of
their collateral.
JPMorgan and the Informal Committee have selected Imperial
Capital, LLC and Hatch Consulting as their financial advisors
because of their extensive financial advisory experience as well
as their extensive experience in assessing the operating
structure of integrated steel mills, including the quality of
fixed assets.
JPMorgan and the Informal Committee have determined that they
require the assistance of IC/Hatch to:
(a) provide analysis of the Debtor's operations, business
strategy, and competition in each of its relevant markets;
(b) provide analysis of the Debtor's financial condition,
operating forecasts, and management;
(c) provide financial valuation of the ongoing operations of
the Debtor;
(d) assist JPMorgan and the Informal Committee in developing,
evaluating, structuring and negotiating the terms and
conditions of a potential restructuring plan, including
the value of the securities, if any, that may be issued to
the Noteholders;
(e) provide analysis of potential divestitures by the Debtor;
and
(f) provide other and further financial advisory services with
respect to the Debtor's financial issues as may arise
during the course of the restructuring as requested by the
JPMorgan and the Informal Committee.
IC/Hatch will be paid a $100,000 monthly financial advisory fee,
payable each month in advance on the first day of each month
beginning October 1, 2003. The Monthly Advisory Fee will
continue no longer than seven consecutive months, or through
April 2004.
In addition, IC/Hatch will be paid a transaction fee, payable on
the consummation of the Restructuring of the Obligations. The
Transaction Fee:
(a) will be payable as 1% of the Total Consideration received
by the Noteholders less an amount representing a recovery
by the Noteholders of 30% of the principal amount
outstanding of the Obligations, whether the recovery is
received pursuant to any plan of reorganization of the
Debtor or in an asset sale;
(b) is payable in the same form of consideration as is
received by the Noteholders in the Restructuring; and
(c) will be reduced by all Monthly Advisory Fees after the
third month of the engagement.
Under all circumstances, IC/Hatch will not receive less than the
aggregate Monthly Advisory Fee earned. IC/Hatch also will be
reimbursed for all reasonable out-of-pocket expenses.
JPMorgan and the Informal Committee agreed to engage IC/Hatch on
a monthly fee rather than an hourly fee basis because JPMorgan
and the Informal Committee believe that the value and ultimate
benefit that will be provided by IC/Hatch cannot be properly
measured on an hourly basis. Rather, in negotiating the amount
and structure of the fees to be paid, JPMorgan and the Informal
Committee focused on IC/Hatch's expertise, the time commitment
required by the engagement, and the complexity of the tasks they
are being engaged to perform. Moreover, Imperial Capital, LLC
does not accept restructuring engagements on an hourly basis.
Mr. Schaffer points out that at the time the Debtor will have
obtained formal acceptances of a Plan, IC/Hatch will have
completed all of the work contemplated to be performed pursuant
to the Engagement Letter and the Transaction Fee will have been
earned in full. However, the Transaction Fee will be payable
either on the confirmation of any Plan or on the closing of an
asset sale, as the case may be.
JPMorgan and the Informal Committee agreed to seek
indemnification of IC/Hatch pursuant to the terms set forth on an
Engagement Letter. JPMorgan and the Informal Committee maintain
that the terms of the Indemnification are in compliance with the
Court's October 1, 2003 General Order Relating to Retention of
Professionals. However, to the extent the terms of the
Indemnification and the General Order conflict, JPMorgan, the
Informal Committee and IC/Hatch recognize that the General Order
controls.
Accordingly, JPMorgan and the Informal Committee ask the Court to
amend the Final DIP Order effective as of September 26, 2003, and
provide them with additional adequate protection by:
(1) expanding their carve-outs to encompass the IC/Hatch fees,
costs and expenses; and
(2) indemnify IC/Hatch pursuant to the terms of the
Indemnification. (Weirton Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WICKES INC: Barry Segal Agrees to Exchange $3.5 Million of Notes
----------------------------------------------------------------
Wickes Inc. (OTCBB:WIKS.OB), a leading distributor of building
materials and manufacturer of value-added building components,
reported that Barry Segal of Bradco Supply has entered into an
exchange agreement whereby all $3.55 million in senior
subordinated notes owned by Barry Segal, totaling 16.8% of the
Company's senior subordinated notes outstanding, will be exchanged
for the cash and new note option outlined in the Company's
exchange offer launched on November 4, 2003.
The exchange agreement also requires Bradco Supply to purchase and
leaseback to the Company two parcels of real estate currently
owned by the Company in Walden, New York and Exton, Pennsylvania.
In addition, Wickes senior management has agreed to purchase all
of the 1.3 million shares of Wickes common stock owned by Barry
Segal, Bradco and their affiliates. All of the agreements between
Barry Segal, his affiliates, Wickes and its senior management are
contingent upon the completion of the Company's current exchange
offer.
Commenting on the recent agreements, Jim O'Grady, Wickes President
and Chief Executive Officer, stated, "This arrangement has the
potential to be a real win-win for our employees, for our
noteholders and stockholders, and for everyone else interested in
contributing to Wickes success. In particular, our senior
management team has collectively committed to purchase more than a
15% interest in our Company immediately upon the completion of our
exchange offer."
Mr. O'Grady added, "Equally important to our success, we need
every holder of our senior subordinated notes to act on our
exchange offer. The offer is open until December 3rd and the
initial response has been very encouraging. However, I believe it
is important to make it clear that every noteholder's commitment
is necessary to improve our capital structure and avoid a default
on our notes. An exchange offer outcome with less than everyone's
commitment will significantly limit the choices available to the
Company and our noteholders."
On November 4, 2003 the Company commenced an offer to exchange (i)
cash and its new 10% Convertible Notes due June 15, 2007 or (ii)
its new Convertible Notes, for all of its $21,123,000 aggregate
principal amount of outstanding 11 5/8% Senior Subordinated Notes
due December 15, 2003. Tendering noteholders may elect to receive
for each $1,000 principal amount of Senior Subordinated Notes
tendered, either (i) $500 in cash and $250 principal amount of new
Convertible Notes or (ii) $1,000 principal amount of new
Convertible Notes. In either event, if the exchange offer is
completed, tendering noteholders will also receive accrued and
unpaid interest on the Subordinated Notes from June 16, 2003
through the closing date of the exchange offer.
This release contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are information of a non-historical nature and are
subject to risks and uncertainties that are beyond the Company's
ability to control. The Company cautions shareholders and
prospective investors that the following factors may cause actual
results to differ materially from those indicated by the forward-
looking statements: costs of materials sold; changes in selling
prices; competition within the building materials supply industry;
the effects of economic conditions; as well as other factors set
forth in the Company's Form 10-K, its Form 10-Qs, the Offering
Memorandum and other documents which are on file with the
Securities and Exchange Commission.
WICKES INC. -- whose September 27, 2003 balance sheet shows a
total shareholders' equity deficit of about $12.7 million -- is a
leading distributor of building materials and manufacturer of
value-added building components in the United States, serving
primarily building and remodeling professionals. The Company
distributes materials nationally and internationally, operating
building centers in the Midwest, Northeast and South. The
Company's building component manufacturing facilities produce
value-added products such as roof trusses, floor systems, framed
wall panels, pre-hung door units and window assemblies. Wickes
Inc.'s web site, http://www.wickes.com,offers a full range of
valuable services about the building materials and construction
industry.
WORLD HEART CORP: Completes Financial Restructuring Transactions
----------------------------------------------------------------
The financial restructuring of World Heart Corporation was
completed Tuesday, subject to certain filings, by vote of
shareholders at a Special Meeting of Shareholders in Toronto,
Ontario.
On September 23, 2003, WorldHeart completed a $63.5 million issue
of common shares and warrants and converted US$58 million of
preferred shares to approximately 4.98 million common shares.
Shareholders approved yesterday the conversion of the remaining
US$20 million preferred shares, plus approximately US$3.5 million
of accrued dividends for 3.5 million common shares, and 7 million
warrants carrying similar terms as warrants issued as part of the
September 23, 2003 transaction.
WorldHeart's capital is now represented by approximately 105
million common shares. The company also has no debt (except for
normal trade obligations) and following conversion of the US$20
million Series A preferred shares, there will be no preferred
shares outstanding. Based on the September 30, 2003 financial
statements, the company's net book value per common share for 105
million shares outstanding would be $0.56, compared with ($2.86)
before these financing transactions.
Shareholders also approved a consolidation of common shares on a
one for seven basis. The company will issue new share certificates
to existing shareholders, with one new common share to be issued
for each seven existing common shares that are held. Total shares
outstanding post-consolidation will be approximately 15 million,
with net book value per share, based on the September 30, 2003
financial statements, of $3.92. Trading on a post-consolidation
basis is expected to begin on the Toronto Stock Exchange and in
the U.S. Over-the-Counter Bulletin Board late next week, following
required filings.
The company will issue a statement in advance of the trading date
when that date is fixed.
WorldHeart believes that, after the consolidation, it will meet
all requirements for NASDAQ listing except for minimum trading
price per common share. To meet NASDAQ requirements, the minimum
closing bid price for 90 consecutive trading days must be at least
US$4.00 per share for NASDAQ Smallcap Market listing, and at least
US$5.00 per share for National Market listing. The company intends
to pursue a NASDAQ listing as soon as the share price requirement
is satisfied.
The Employee Stock Option Plan was amended and approved by
shareholders with total options available to employees reduced to
10% of outstanding shares, compared with 16% prior to the
financial restructuring.
Chief Executive Officer, Roderick M. Bryden, told shareholders
that production of Novacor(R) LVAS (left ventricular assist
system) will increase from 103 units in 2003 to 400 units in 2004,
in response to increased demand. "We do not yet have order backlog
to ensure that all production will be sold during 2004, but the
potential cost of carrying extra inventory into 2005 will be much
less than the cost savings resulting from predictable increased
production volume," Mr. Bryden said.
"The Novacor LVAS has an excellent record for reliability, and we
sell with a three-year warranty unique in the industry. Our risk
of stroke is now competitive with the approved alternative,
permitting patients to more confidently have the long-term
reliability and predictability of Novacor LVAS," he said.
"Since the company was funded on September 23, 2003, we have
enjoyed response from U.S. implant centers that have, to this
time, not implanted Novacor LVAS. Since the November 5, 2003
announcement of an intended Randomized Trial for Equivalency with
the HeartMate(R) XVE LVAS (left ventricular assist system) for
Destination Therapy, some 20 U.S. centers have initiated
discussion with us for potential participation in this Trial. We
intend to submit Trial design and protocols to the Food and Drug
Administration in early January 2004, with an anticipated 30-day
response. We expect to begin enrolling centers and patients during
the first quarter of 2004," Mr. Bryden told the meeting.
Enhancements to Novacor LVAS are expected to be approved by the
FDA this year, which reduce the size and weight of external
batteries, and make operation of the system simpler and quieter.
A decision is expected during the first quarter of next year
respecting the previously announced Premarket Approval Supplement
seeking expansion of the population eligible to receive Novacor
LVAS as Bridge to Transplantation.
Novacor LVAS is an implanted electromagnetically driven pump that
provides circulatory support by taking over part or all of the
workload of the left ventricle. With implants in over 1490
patients, no deaths have been attributed to device failure, and
some recipients have lived with their original pumps for as long
as four years - statistics unmatched by any other implanted
mechanical circulatory support device on the market.
Novacor LVAS is commercially approved as a bridge to
transplantation in the U.S. and Canada. In Europe, the Novacor
LVAS has unrestricted approval for use as a bridge to
transplantation, an alternative to transplantation and to support
patients who may have an ability to recover the use of their
natural heart. In Japan, the device is commercially approved for
use in cardiac patients at risk of imminent death from non-
reversible left ventricular failure for which there is no
alternative except heart transplantation.
World Heart Corporation, a global medical device company based in
Ottawa, Ontario and Oakland, California, is currently focused on
the development and commercialization of pulsatile ventricular
assist devices. Its Novacor LVAS (Left Ventricular Assist System)
is well established in the marketplace and its next-generation
technology, HeartSaverVAD(TM), is a fully implantable assist
device intended for long-term support of patients with heart
failure.
World Heart Corporation's June 30, 2003 unaudited balance sheet
shows a total shareholders' equity deficit of about CDN$53
million, while its June 30, 2003, Proforma balance sheet shows a
total shareholders' equity deficit of about CDN$69 million.
WORLDCOM: Court Approves Huron's Engagement as Fin'l Advisors
-------------------------------------------------------------
The Worldcom Debtors obtained the Court's authority to employ
Huron Consulting Group LLC as financial advisors for their
Chapter 11 cases, nunc pro tunc to August 25, 2003.
Huron Consulting's scope of services is detailed as:
(1) advising the Debtors with respect to reconciling,
objecting to or otherwise resolving the claims filed
against them in the course of the bankruptcy proceeding;
(2) tracking the Debtors' work with regard to their decisions
on executory contracts rejections, assumptions and cure
amounts; and
(3) preparing analyses to support the Debtors' decisions with
regard to when and if to pursue preference payments or
other avoidance actions.
In connection with these Projects, Huron Consulting is also
prepared to provide other assistance as the Debtors request.
The specific procedures that Huron Consulting is to perform in
connection with the Projects will include, in addition to other
procedures that the firm and the Debtors may mutually agree upon:
(a) building and maintaining a claims database linking claims
data with scheduled debt data, objection data, duplicate
claim data, settlement data, and any other relevant,
mutually agreed upon data. Maintenance includes updating
the database, reconciling it to the Bankruptcy Services,
Inc. claims register and running ad hoc queries as
required;
(b) building and maintaining an executory contracts database
consisting of data pertaining to existing contracts,
contracts assumed and rejected since March 2003, and any
other relevant, mutually agreed upon data;
(c) assisting the Debtors to manage the claims objection
process by preparing exhibits to omnibus objections to
claims and coordinating with Debtors' claims agent and the
Debtors' employees, counsel and advisors;
(d) assisting the Debtors to manage the claims resolution
process by tracking the status of claims resolution in
each claim category, identifying potential issues
impacting the claims resolution process, tracking
estimated claims values for the largest claims
within each category, coordinating the tracking
adjustments to the Debtors' accounting records, and other,
day-to-day tasks the Debtors ask during the course of
the engagement; and
(e) assisting the Debtors to gather and analyze the data
necessary to allow management to make the appropriate
decisions with regard to when and if to pursue avoidance
actions.
The Debtors will compensate Huron Consulting for its services
based on the hours actually expended by each professional at each
professional's current regular hourly billing rate:
Managing Director $445 - 600
Director 315 - 450
Manager 265 - 350
Associate 185 - 250
Analyst 135 - 175
(Worldcom Bankruptcy News, Issue No. 43; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
W.R. GRACE: Brings-In Fred Festa as New Company President & COO
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Fitzgerald approved the W.R. Grace
Debtors' application to bring-in a new Company President and Chief
Operating Officer.
Judge Fitzgerald holds that the benefits, if any, that a
candidate is entitled to receive under the Debtors' LTIPs, Annual
Incentive Programs, revised severance pay programs, including the
Debtors' change-of-control severance program, and any other key
employee retention programs, are subject to the prior Court
orders with respect to the terms of, and the Debtors' performance
on, the programs.
* * *
W. R. Grace & Co. (NYSE:GRA) announced that its Board of Directors
has elected Fred Festa to be President and Chief Operating Officer
effective immediately. Paul Norris remains Chairman and Chief
Executive Officer.
Festa began his business career at General Electric where he
spent 12 years in financial management positions. While there,
he completed G.E.'s Financial Management Training Program and its
benchmark General Management Course. After leaving G.E., he
joined Allied Signal (now Honeywell) where he held a series of
increasingly responsible positions in Finance and General
Management. Following his experience at Allied Signal he was
President and CEO of ICG Commerce, a privately held on-line
procurement service. Most recently he has been a partner at
Morgenthaler Private Equity, an $850 million venture/buy out
firm.
"Fred brings a great set of experiences to Grace," said Paul
Norris, Chairman and CEO. "He has been successful in some very
demanding and competitive environments, and he has in-depth
knowledge of the global chemical industry. I know Grace will
benefit from Fred's experience and strong leadership skills as it
continues to evolve into an integrated specialty chemicals
company." (W.R. Grace Bankruptcy News, Issue No. 49; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
* BOOK REVIEW: Transnational Mergers and Acquisitions
in the United States
-----------------------------------------------------
Author: Sarkis J. Khoury
Publisher: Beard Books
Softcover: 292 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Order your personal copy today at
http://www.amazon.com/exec/obidos/ASIN/1587981505/internetbankrupt
Transnational Mergers and Acquisitions in the United States will
appeal to a wide range of readers. Dr. Khoury's analysis is
valuable for managers involved in transnational acquisitions,
whether they are acquiring companies or being acquired themselves.
At the same time, he provides a comprehensive and large-scale look
at the industrial sector of the U.S. economy that proves very
useful for policy makers even today. With its nearly 100 tables
of data and numerous examples, Khoury provides a wealth of
information for business historians and researchers as well.
Until the late 1960s, we Americans were confident (some might say
smug) in our belief that U.S. direct investment abroad would
continue to grow as it had in the 1950s and 1960s, and that we
would dominate the other large world economies in foreign
investment for some time to come. And then came the 1970s, U.S.
investment abroad stood at $78 billion, in contrast to only $13
billion in foreign investment in the U.S. In 1978, however, only
eight years later, foreign investment in the U.S. had skyrocketed
to nearly #41 billion, about half of it in acquisition of U.S.
firms. Foreign acquisitions of U.S. companies grew from 20 in
1970 to 188 in 1978. The tables had turned an Americans were
worried. Acquisitions in the banking and insurance sectors were
increasing sharply, which in particular alarmed many analysts.
Thus, when it was first published in 1980, this book met a growing
need for analytical and empirical data on this rapidly increasing
flow of foreign investment money into the U.S., much of it in
acquisitions. Khoury answers many of the questions arising from
the situation as it stood in 1980, many of which are applicable
today: What are the motives for transnational acquisitions? How do
foreign firms plans, evaluate, and negotiate mergers in the U.S.?
What are the effects of these acquisitions on competition, money
and capital markets; relative technological position; balance of
payments and economic policy in the U.S.?
To begin to answer these questions, Khoury researched foreign
investment in the U.S. from 1790 to 1979. His historical review
includes foreign firms' industry preferences, choice of location
in the U.S., and methods for penetrating the U.S. market. He
notes the importance of foreign investment to growth in the U.S.,
particularly until the early 20th century, and that prior to the
1970s, foreign investment had grown steadily throughout U.S.
history, with lapses during and after the world wars.
Khoury found that rates of return to foreign companies were not
excessive. He determined that the effect on the U.S. economy was
generally positive and concluded that restricting the inflow of
direct and indirect foreign investment would hinder U.S. economic
growth both in the short term and long term. Further, he found no
compelling reason to restrict the activities of multinational
corporations in the U.S. from a policy perspective. Khoury's
research broke new ground and provided input for economic policy
at just the right time.
Sarkis J. Khoury holds a Ph.D. in International Finance from
Wharton. He teaches finance and international finance at the
University of California, Riverside, and serves as the Executive
Director of International Programs at the Anderson Graduate School
of Business.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P.
Villavelez and Peter A. Chapman, Editors.
Copyright 2003. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
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