/raid1/www/Hosts/bankrupt/TCR_Public/031205.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, December 05, 2003, Vol. 7, No. 241
Headlines
ADEPT TECHNOLOGY: Initiates Management Team Restructuring
AFFILIATED FOOD: Case Summary & 20 Largest Unsecured Creditors
AFTERMARKET TECH.: S&P Affirms BB- Rating over Repurchase Plan
AIR CANADA: Reaches Modified Pact for Cara's Catering Services
AIR CANADA: Cara Confirms Catering Agreement Reinstatement
AIR CANADA: UAL Corporation Discloses $137 Million Exposure
AMERADA HESS: Declares Regular Quarterly Common Stock Dividend
AMERADA HESS: Repurchases $443 Million of Outstanding Debt
AMERCO: Provides Liquidation Analysis Under First Amended Plan
AMERICAN PLUMBING: Hires Deloitte & Touche for Auditing Services
AMERICAN REPROGRAPHICS: S&P Gives Low-B Ratings to New Facilities
AMF BOWLING: Ratings on S&P's Watch Neg. over Acquisition Pact
ANC RENTAL: Asks Court to Approve Oracle Settlement Agreement
ASPEN GROUP: Third-Quarter Results Enter Positive Territory
ATLANTIC COAST: Reports 11.9% Increase in November 2003 Traffic
ATS LIQUIDATING: Smith & Nephew Asserts Indemnification Claim
BALDWIN CRANE: Seeks Court OK to Retain Eric Hall as Accountants
BOB'S STORES: US Trustee Names 5-Member Creditors' Committee
BONUS STORES: Creditors Must File Claims by 4:00 P.M. Today
CABLEVISION SYSTEMS: Completes Five-Year Network Upgrade Process
CAMTECH: Case Summary & 20 Largest Unsecured Creditors
CASELLA WASTE: Reports Results for Fiscal 2004 Second Quarter
CATELLUS DEV'T: Declares Fourth-Quarter Regular Cash Dividend
CELESTICA: S&P Revises Outlook to Negative on Subpar Performance
CHC INDUSTRIES: Looks to Gulf Atlantic for Financial Advice
CHI-CHI'S: Wants to Stretch Lease Decision Period Until March 31
COMVERSE TECH.: Red Ink Continued to Flow in Third Quarter 2003
CONE MILLS: Paul Weiss Retained as General Bankruptcy Counsel
CONTINENTAL AIRLINES: SEC Form S-3 Filing Is Now Effective
COVANTA ENERGY: Wants to Keep Filing Exclusivity Until Feb. 24
DAN RIVER: Delivers Compliance Plan to New York Stock Exchange
DANA CORP.: Planned Asset Sale Spurs S&P's Positive Implications
DELTA AIR LINES: November 2003 System Traffic Up by 2.1%
DJ ORTHOPEDICS: Provides Financials Reflecting Asset Acquisition
EDISON INT'L: S&P's Corp. Credit Rating Up Five Notches to BB+
EL PASO CORP: Completes Sale of North American Nitrogen Assets
ENRON CORP: Examiner Neal Batson Files 140-Page Final Report
ENUCLEUS INC: Must Raise New Capital to Meet Cash Requirements
FAO, INC: Case Summary & 35 Largest Unsecured Creditors
FAO, INC: Inventory Sales for Three Affiliates Set in Motion
FLEMING COS.: Wants Nod to Assign Leases Not Part of C&S Sale
FORD: S&P Cuts Rating on Related Synthetic Transaction to BB
GENERAL CHEMICAL: Files Prepackaged Chapter 11 Restructuring
GENZYME CORP: Proposes to Issue $600MM Convertible Senior Notes
GEORGETOWN STEEL: UST Appoints 9-Member Creditors' Committee
GEORGIA GULF CORP: Consummates Various Refinancing Transactions
GRANITE BROADCASTING: S&P Junks $300MM Sen. Secured Notes at CCC
GRANT PRIDECO: SVP/CFO Louis A. Raspino Resigns from Company
GREENWICH CAPITAL: S&P Assigns Low-B Ratings to 6 Note Classes
HEALTHNOW NY: Improved Earnings Prompts S&P's Outlook Revision
HIBERNIA CORP: Merger Pact Prompts Fitch to Affirm Low-B Ratings
HOLIDAY RV: Signs-Up Blank Rome as Bankruptcy Counsel
HORIZON GROUP: Further Extends Odd Lot Share Repurchase Program
HUDSON'S BAY: Obtains S&P's BB Rating for C$150-Mil. MTN Program
IRON MOUNTAIN: Proposes $160MM Senior Subordinated Note Offering
ISTAR FINANCIAL: Commences $250-Million Senior Notes Offering
J.A. JONES: Braude & Margulies Serving as Litigation Counsel
KAISER ALUMINUM: Court Approves L.A. Scrap and CIT Settlement
KINGSWAY FINANCIAL: Laura Foster Appointed as AVP Internal Audit
KRATON: S&P Assigns Negative Outlook to BB- Corp. Credit Rating
LAIDLAW INC: Discloses Common Equity and Shareholder Matters
LTV: Court to Consider Liquidating Debtors' Plan on December 17
MAGELLAN HEALTH: Asks Court to Expand Ernst & Young's Engagement
MANDALAY RESORT: Reports Improved Third-Quarter 2003 Results
MARINER HEALTH: Bank Facility and Sub. Notes Earn S&P's Low-B's
MIRANT: Requests Court to Stay Director and Officer Litigation
MOSAIC GROUP: Administrative Expense Claims Bar Date is Today
NEWTECH RESOURCES: Taps Jones Simkins LLP as New Accountants
NORTHWEST AIRLINES: Flies 5.21BB Revenue Passenger Miles in Nov.
ON SEMICONDUCTOR: Will Phase Out Manufacturing in East Greenwich
ONEIDA LTD: October 25 Working Capital Deficit Reaches $73 Mill.
OWENS CORNING: Commercial Committee Wants Structural Relief
PACIFIC GAS: Revving-Up to Resume Critical Roles with Emergence
PENNEX FOODS: Slaps $226 Million Fraud Claim against Smithfield
PG&E NATIONAL: ET Debtors Keep Exclusivity Intact Until Jan. 19
PLANVISTA: Pursuing Alternatives to Pay Down or Off Indebtedness
PREMCOR INC: Undertaking Various Refinery Maintenance Activities
PRIDE INTERNATIONAL: Brings-In Louis A. Raspino as EVP and CFO
PSS WORLD MEDICAL: S&P Revises Outlook on BB- Rating to Positive
QWEST CORP: Over 35 Payphone Companies File Suit Against Qwest
REUNION IND.: Arranges New Facilities & Restructures Sr. Notes
ROSEBUD DISPLAY: Case Summary & 20 Largest Unsecured Creditors
ROUGE INDUSTRIES: Court Approves Severstal as Stalking Horse
RPS PETROLEUM INC: Case Summary & Largest Unsecured Creditor
RURAL/METRO: Wins New Pact as Ambulance Provider in Mesa, Ariz.
SAFETY-KLEEN CORP: Committee Demands Debtor Consummate Plan
SEITEL INC: Wants to Amend Plan to Include Auction Process
SOLUTIA INC: Remains Obligated Under Distribution Agreements
SPIEGEL GROUP: Gets Clearance to Execute Amended Escrow Pact
SWEETHEART CUP: S&P Affirms Ratings over Refinancing Plans
TELESOURCE INT'L: Ability to Continue Operations Uncertain
TRINITY IND.: Names Robert P. Herre as New EVP of Trinity Marine
TRIPLE 7 FOODS: Case Summary & 20 Largest Unsecured Creditors
TYCO INT'L: Fitch Ups Senior Unsecured Rating a Notch to BB+
WALTER INDUSTRIES: Firms-Up Sale of Former Headquarters Building
WARNACO GROUP: Makes Amendment to $325MM Exit Financing Facility
WEIRTON STEEL: Wins Court Nod for McCarl's Settlement Agreement
WESTERN GAS RESOURCES: Declares Common and Preferred Dividends
WESTPORT RESOURCES: Posts 2004 Capital and Operational Guidance
WHITEWING ENVIRONMENTAL: Cash Deficits Raise Going Concern Doubt
WOMEN FIRST: Defers November 2003 $3M Principal Payment to Wyeth
WORLD HEART: Commences Trading On a Post-Consolidated Basis
WORLDCOM: Court Approves Proposed Oracle Settlement Agreement
* BOOK REVIEW: Lost Prophets -- An Insider's History
of the Modern Economists
*********
ADEPT TECHNOLOGY: Initiates Management Team Restructuring
---------------------------------------------------------
Adept Technology, Inc. (OTCBB:ADTK.OB), a leading manufacturer of
flexible automation for the semiconductor, life sciences,
electronics and automotive industries, has reorganized its
management team.
This restructuring process began with Adept's recently announced
$10.0 million financing and the appointment of Robert Bucher as
Adept's new Chairman and CEO. Prior to joining Adept, Mr. Bucher
held executive positions of various capacities at Measurex
Corporation, a global market leader and innovator in process
optimization that was acquired by Honeywell International in 1998.
Additionally, from 1998 to 2001, Mr. Bucher held the position of
President and Chief Executive Officer of Norsat International Inc.
Brian Carlisle, President, and Bruce Shimano, Vice President of
Research and Development and Secretary, have resigned from Adept
effective December 5, 2003. Additionally, Mr. Shimano has also
resigned his seat as a member of the Board of Directors effective
December 2, 2003. Messrs. Carlisle and Shimano co-founded Adept in
1983 and established it as a technology leader in intelligent
automation.
Robert Bucher commented, "I have the highest respect for Brian and
Bruce and their contribution to Adept's development of world class
technology and products over the years. We are now ready to
tighten our focus on our market opportunities and execute our
strategies in a world-class manner."
For a discussion of risk factors relating to Adept's business, see
Adept's annual report on Form 10-K for the fiscal year ended
June 30, 2003, as amended, and its quarterly report on Form 10-Q
for the fiscal quarter ended September 27, 2003 including the
discussion in Management's Discussion and Analysis of Financial
Condition and Results of Operations contained therein.
Adept Technology -- whose June 30, 2003 balance sheet shows a
total shareholders' equity deficit of about $11 million --
designs, manufactures and markets factory automation components
and systems for the fiber optic, telecommunications,
semiconductor, automotive, food and durable goods industries
throughout the world. Adept's robots, controllers, and software
products are used for small parts assembly, material handling and
ultra precision process applications. Our intelligent automation
product lines include industrial robots, configurable linear
modules, flexible feeders, semiconductor process components,
nanopositioners, machine controllers for robot mechanisms and
other flexible automation equipment, machine vision, systems and
software, application software and simulation software. Founded in
1983, Adept is America's largest manufacturer of industrial
robots. More information is available at http://www.adept.com
AFFILIATED FOOD: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Affiliated Food Stores, Inc.
dba Abilene Distribution Company
aka Affiliated Foods
4109 Vine Street
Abilene, Texas 79604
Bankruptcy Case No.: 03-07101
Type of Business: The Debtor is a retailer of goods and
other products.
Chapter 11 Petition Date: December 2, 2003
Court: Northern District of Oklahoma (Tulsa)
Judge: Terrence L. Michael
Debtor's Counsel: John E. Howland, Esq.
Rosenstein, Fist & Ringold
525 South Main, Suite 700
Tulsa, OK 74103
Total Assets: $17,387,901
Total Debts: $14,505,402
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Dollar & Save Food Long term debt $1,239,100
Warehouse
P.O. Box 116, Antlers,
OK 74521
Associated Wholesale Attorney fees/cost $1,186,261
Grocery
P.O. Box 2932, Kansas
City, KS 661100
Love's Country Stores, Long term debt $559,315
Inc.
Crest Discount Foods Long term debt $342,143
7212 E. Reno, Midwest
City, OK 73110
Bud's Super Saver Long term debt $283,069
Tulsa, Oklahoma 74114
Pruett Food Long term debt $214,091
Grocers Supply Company Trade debt $159,968
Family Markets, Inc. Long term debt $150,324
Millers Markets No. 1 Long term debt $125,175
Pettys Fine Foods Long term debt $107,923
Toma Discount Long term debt $107,205
Triple T Quick Stop Long term debt $95,434
Hutchinson's Discount Long term debt $95,002
Jiffy "JT" Trip Long term debt $86,473
Gas-Up Long term debt $78,602
Thrifty Grocery Store Long term debt $78,042
AML Grocery Long term debt $75,817
Kuhlman's Food Long term debt $73,589
Otwell Food Store Long term debt $72,227
U.S. Smokeless Tobacco Trade debt $70,907
Brands, Inc.
AFTERMARKET TECH.: S&P Affirms BB- Rating over Repurchase Plan
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Aftermarket Technology Corp., following ATC's
announcement of its plan to use part of its cash balance to
repurchase up to $60 million of common stock.
The outlook on the Westmont, Illinois-based company is stable. The
company had total balance sheet debt of about $142 million as of
Sept. 30, 2003.
"The stock repurchase, if transacted as planned, is expected to
somewhat diminish the company's creditworthiness," said Standard &
Poor's credit analyst Nancy Messer. "However, ATC's credit
protection measures would remain adequate for the corporate credit
rating."
ATC's positive free cash flow generation, partly offset by the
company's below-average business risk profile, supports the rating
affirmation. The rating affirmation reflects Standard & Poor's
expectation that ATC will continue to balance strategic objectives
with a moderate financial policy.
"We expect ATC to maintain total debt to EBITDA in the 3x-3.5x
range, after the stock repurchase and to incorporate any
acquisitions, which should be relatively modest in size," Ms.
Messer said.
ATC derives about 70% of its revenues from selling remanufactured
transmissions, engines, and electronics parts to automotive
dealers, 25% from logistics services, and 5% from selling
remanufactured engines and transmissions to the independent
aftermarket. The company's business-risk profile reflects limited
product and service diversification, partly offset by a solid
position in the dealer market for remanufactured transmissions,
with a market share greater than 70%, and ATC's increasing end-
market diversity.
Although the company intends to use a substantial portion of its
$73 million cash balance to fund the stock repurchase, liquidity
is expected to remain adequate, albeit diminished.
AIR CANADA: Reaches Modified Pact for Cara's Catering Services
--------------------------------------------------------------
Air Canada has reached a modified contract with Cara Operations
Inc., for the airline's catering and commissary services.
Effective immediately, the contract reinstates a modified version
of Cara's previous contract with significant cost savings for the
airline. It includes a joint 'best practice' review of the
catering business to achieve increased efficiencies, financial
savings and service quality improvements.
"This contract with Cara marks the renewal of a valued and
longstanding partnership. In keeping with the new industry
realities, we have agreed to more favourable rates with a joint
review and a rigorous focus on maximizing operational efficiency
and customer service using best industry practices," said Brad
Moore, Vice President, Customer Service. "We have clearly
demonstrated with initiatives such as buy on board meals and
simple, online fares at aircanada.com that we are committed to new
ways of service delivery where it makes good sense for our
customers and our bottom line. The evolving catering industry
provides another opportunity for us to make industry leading
changes that respond to customer tastes and market trends while
supporting our goal of gaining greater costs efficiencies."
Air Canada and Cara
Air Canada and Cara have enjoyed a mutually beneficial business
relationship for 67 years. Cara provides Air Canada with full
service in-flight catering for both complimentary meals and the
airline's new buy on board meal service. As part of the process of
restructuring under the Companies' Creditor Arrangement Act
(CCAA), on November 7, Air Canada repudiated its previous contract
with Cara and entered into final negotiations on a contract at
more favorable rates and terms consistent with the airline's
business and customer service plans.
Air Canada's Recent and Upcoming In-flight
Food Service Enhancements
Air Canada has taken several significant initiatives in the past
two years to evolve and enhance its in-flight catering service. In
2002 Air Canada introduced new restaurant-style meal choices in
Executive First and has recently introduced an enhanced
Hospitality food service on international routes. On August 1,
2003 Air Canada launched an innovative buy on board meal service
in Hospitality Class on medium haul flights. The new service has
proven to be highly popular with customers and type trials
offering light meal and snack service for purchase on select short
haul domestic flights commenced last week. The buy on board
restaurant service will eventually be expanded to flights
throughout North America.
AIR CANADA: Cara Confirms Catering Agreement Reinstatement
----------------------------------------------------------
Cara Operations Limited has been successful in negotiations with
Air Canada over the past two weeks, resulting in the reinstatement
of a catering agreement with Air Canada on amended terms.
On November 10, 2003, Cara announced that that it has been advised
by Air Canada that pursuant to the rights given to the airline
under restructuring protection pursuant to the Companies'
Creditors Arrangement Act, ("CCAA") Air Canada had repudiated the
contract for the provision of catering and commissary services by
Cara to the airline. Subsequent negotiations have resulted in a
modified arrangement being agreed to, and Air Canada has formally
rescinded the original notice of repudiation.
In announcing that an amended catering agreement has been agreed
to with Air Canada running through to the original agreement
expiration date of November 2009, Cara advises that a complete
assessment of both the near and long term financial impact of the
amended agreement is dependent on several variables and will not
be known pending the outcome of a joint review with Air Canada to
determine the feasibility of Cara implementing a catering model
capable of achieving productivity enhancements and cost reductions
in excess of those previously contemplated by Cara. Based on the
information known to date, Cara estimates that under the terms and
conditions of the amended contract, its annual earnings may be
reduced by a range of between 3 cents and 7 cents per share.
"We are very pleased that Cara's 67 year relationship with our
valued customer, Air Canada, will continue. The amended agreement
reflects Cara's recognition of the significant changes occurring
not only at Air Canada, but within the airline industry as a
whole, and that these changes require that we rigorously explore
every possible opportunity for enhanced productivity and
efficiencies. As always, we remain supportive of the efforts of
Air Canada's management, and we wish the airline, it's employees
and management all the best as they work through the challenges of
their restructuring, and we look forward to working closely with
them for years to come," said Gabe Tsampalieros, President and
Chief Executive Officer of Cara.
In response to the original announcement of the repudiation by Air
Canada of the Cara catering agreement, Cara Holdings Limited who
had announced on August 29, 2003 it proposed to acquire indirectly
all of the outstanding Common shares (TSX:CAO) and Class A non-
voting shares (TSX:CAO.A) of Cara not owned directly or indirectly
by them at a price of $7.50 per share in a cash transaction,
issued a press release advising that it regarded the repudiation
of the Air Canada catering agreement as a material adverse
development while recognizing the difficulty of assessing with any
certainty the future impact of the repudiation on Cara. Cara has
advised Holdings of the reinstatement of the catering agreement on
amended terms, and Holdings has indicated, it will now complete
its re-evaluation of the proposed Transaction, and an appropriate
release regarding Holdings' intentions, will be made in due
course.
With annual system sales in excess of $1.8 billion, Cara
Operations Limited, based in Toronto, Ontario, Canada, is one of
Canada's leading integrated restaurant companies, and the largest
operator of full service restaurants in Canada, providing
employment for approximately 39,000 Canadians in its owned and
franchised operations. Cara's wholly owned businesses include
Swiss Chalet, Harvey's, Second Cup, Kelsey's Neighborhood Bar &
Brill, Montana's Cookhouse, and as a franchisee, Outback
Steakhouse restaurants in Eastern Canada; Cara Air Terminal
Restaurants Division; Cara Airport Services Division; and Summit
Food Service Distributors Inc. Cara also owns 74% of Milestone's
Restaurants Inc., an upscale casual restaurant chain. Cara is a
values-based organization and further information may be obtained
by visiting http://www.cara.com/
AIR CANADA: UAL Corporation Discloses $137 Million Exposure
-----------------------------------------------------------
In a regulatory filing with the United States Securities and
Exchange Commission on October 30, 2003, UAL Corporation, parent
company of United Airlines Inc., disclosed that during the first
quarter of 2003, it recorded a $137,000,000 non-operating special
charge in connection with Air Canada's CCAA filing. The charge
included $46,000,000 for the impairment of UAL's investment in
Air Canada preferred stock and $91,000,000 to record a liability
resulting from UAL's guarantee of Air Canada debt. UAL considers
this liability to be a prepetition obligation and accordingly,
classifies it in liabilities subject to compromise.
UAL also holds equity interest on three Airbus A330 aircraft
leased to Air Canada. UAL's net investment in this transaction
is $88,000,000. If Air Canada rejects these leases, UAL most
likely would incur a write-off of most or all of the transaction's
value. (Air Canada Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
AMERADA HESS: Declares Regular Quarterly Common Stock Dividend
--------------------------------------------------------------
The Board of Directors of Amerada Hess Corporation (NYSE: AHC)
declared a regular quarterly dividend of 30 cents per share
payable on the Common Stock of the Corporation on January 5, 2004
to holders of record at the close of business on December 15,
2003.
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.
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: Repurchases $443 Million of Outstanding Debt
----------------------------------------------------------
Amerada Hess Corporation (NYSE: AHC) announced the repurchase of
$443 million in principal amount of its outstanding debt.
This amount includes $145 million in principal amount of three
series of its outstanding notes repurchased on December 2, 2003
and $298 million in principal amount of a fourth series of notes
that it will repurchase on December 5, 2003, all in connection
with the offer to purchase it announced on November 17, 2003.
On December 2, 2003 Amerada Hess repurchased $81.8 million in
principal amount of its 5.30% Notes due August 15, 2004, $23.4
million in principal amount of its 9.25% Notes due April 15, 2005
and $39.9 million in principal amount of its 8.875% Notes due
October 1, 2007.
On December 5, 2003 Amerada Hess will repurchase all $298.3
million in principal amount of its 5.90% Notes tendered before
5:00 p.m., New York City time, on the Early Tender Date of
December 2, 2003. Amerada Hess' offer to purchase 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, and will remain open until 5:00 p.m., New York
City time, December 16, 2003.
Amerada Hess, headquartered in New York, is a global integrated
energy company engaged in the exploration for and the production,
purchase, transportation and sale of crude oil and natural gas, as
well as the production and sale of refined petroleum products.
Goldman, Sachs & Co. is acting as dealer manager. Questions
concerning the terms of the tender offer for 5.90% Notes 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.
AMERCO: Provides Liquidation Analysis Under First Amended Plan
--------------------------------------------------------------
AMERCO and its debtor-affiliates present to the Court a
Liquidation Analysis under their First Amended Plan of
Reorganization to demonstrate that stakeholders fare better under
their plan than they would in a chapter 7 liquidation proceeding:
Consolidated Amerco
Liquidation Analysis
Unaudited
(in thousands)
Estimated Recovery
Low High
--------------------
Asset Sale Proceeds:
Cash $72,758 $74,258
Receivables, net 38,503 50,008
PMSR Receivable 5,000 7,500
Inventory 6,583 11,604
Prepaid expenses 151 298
Investments in unconsolidated subs 20,546 46,066
SACH receivables 256,790 300,868
Other assets and long-term expenses 1,927 3,204
Real Estate 795,666 879,421
Rentals, trucks, equipment & others 214,320 268,912
Furniture and equipment 8,517 11,285
---------- ----------
Total Asset Sale Proceeds 1,420,762 1,653,423
Chapter 7 Administrative Claims
Trustee Fees 38,048 45,848
Real estate transaction fees 23,479 25,951
Other professional fees 18,000 12,000
Wind-down expenses 75,900 67,300
---------- ----------
Total Chapter 7 Administrative Claims 155,427 151,099
Net Recovery Available to Creditors 1,265,335 1,502,324
Recovery to Creditors:
Secured Claims
DIP Facility 51,250 51,250
Revolver 153,750 153,750
RepWest Mortgage 18,399 18,399
---------- ----------
Total Secured Claims 223,399 223,399
Remaining Proceeds for Distribution 1,041,936 1,278,925
Chapter 11 Administrative Claims:
Postpetition liabilities 1,000 1,000
Insurance Claims 212,254 212,254
Insurance administration 16,980 16,980
---------- ----------
Total Administrative Claims 230,234 230,234
Remaining Proceeds for Distribution 787,702 1,024,691
Priority Claims:
Employee accrued payroll & benefits 14,465 14,465
Tax claims 19,719 19,719
Customer deposits 1,630 1,630
---------- ----------
Total Priority Claims 35,813 35,813
Remaining Proceeds for Distribution 755,889 1,012,878
Senior Unsecured Claims:
AREC Notes 100,000 100,000
---------- ----------
Total Administrative Claims 100,000 100,000
Remaining Proceeds for Distribution 675,889 912,878
General Unsecured Claims:
Accounts payable and accrued expenses 212,054 286,407
Unconsolidated affiliates 49,052 66,251
Long term debt 386,735 522,337
Lease rejection claims 28,049 37,884
---------- ----------
Total General Unsecured Claims 675,889 912,878
(percentage) (59%) (80%)
Remaining Proceeds for Distribution 0 0
To Remaining Interests
(AMERCO Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN PLUMBING: Hires Deloitte & Touche for Auditing Services
----------------------------------------------------------------
American Plumbing & Mechanical Inc., and its debtor-affiliates are
seeking permission from the U.S. Bankruptcy Court for the Western
District of Texas to retain and employ Deloitte & Touche LLP as
auditors and accountants in these chapter 11 cases.
The Debtors expect Deloitte & Touche to provide services
including:
a) auditing and reporting on the Debtors' 2002 benefit plan
and quarterly and annual financial statements, and such
auditing and reporting services for subsequent audits;
b) providing various reorganization advisory services and
assistance as may be requested by the Debtors, and as
agreed to by Deloitte; and
c) providing certain tax and tax advisory services, in
addition to such other professional services as may be
requested from time to time by the Debtors and as agreed
to by Deloitte.
Deloitte & Touche's fees are based on the hours actually expended
by its personnel, multiplied by their hourly billing rate for this
engagement. The standard hourly rates range from:
Partner, Principal, or Director $350 - $620 per hour
Senior Manager $275 - $500 per hour
Manager $240 - $450 per hour
Senior Consultant/Senior Associate $185 - $350 per hour
Staff/Associate $140 - $275 per hour
Paraprofessional $ 75 - $125 per hour
Headquartered in Round Rock, Texas, American Plumbing &
Mechanical, Inc. and its affiliates provide plumbing, heating,
ventilation and air conditioning contracting services to
commercial industries and single family and multifamily housing
markets. The Company filed for chapter 11 protection on October
13, 2003 (Bankr. W.D. Tex. Case No. 03-55789). Demetra L.
Liggins, Esq., at Winstead Sechrest & Minick P.C., represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $282,456,000 in total
assets and $256,696,000 in total debts.
AMERICAN REPROGRAPHICS: S&P Gives Low-B Ratings to New Facilities
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
American Reprographics Company LLC's planned $130 million first
lien senior secured credit facility.
At the same time, a 'B' rating was assigned to the company's
planned $225 million second lien senior secured credit facility.
Proceeds from the proposed bank facilities will be used to
refinance existing bank debt, repay mezzanine financing that exist
at the holding company and operating company level, and for fees
and expenses. A 'BB-' corporate credit rating was also assigned to
the company. Therefore, the first lien notes are rated the same as
the corporate credit rating. The outlook is stable. Pro forma for
the refinancing, debt outstanding at Sept. 30, 2003, was
approximately $355 million. Glendale, Calif.-based ARC is the
largest provider of outsourced reprographics and related business
services in the U.S.
"Ratings reflect ARC's dependence on a single print industry
segment (reprographics), high debt levels, and exposure to the
cyclical commercial construction industry," said Standard & Poor's
credit analyst Sherry Cai. "These factors are somewhat offset by
the company's leading position in the architectural, engineering,
and construction (AEC) reprographics segment, diversified customer
base, stable operating margins, adequate liquidity, good free cash
flow and the expectation that the company's historically
aggressive acquisition strategy will moderate substantially,"
Ms. Cai added.
ARC serves a customer base of more than 100,000 customers, through
179 service locations in 65 metropolitan markets. ARC, through
its aggressive acquisition strategy over the last several years,
has established a national footprint that gives it a leading
position in the AEC reprographic industry. In addition, the
company's leading market position is driven by long-standing
customer relationships, a diversified customer base with no single
customer comprising more than 2% of the company's expected sales
in 2003, and a substantial recurring revenue and cash flow stream,
as customer retentions have historically been high. Still, the
company derives almost two-thirds of its revenue from the AEC
markets. As a result, ARC's cash flow is highly dependent upon
commercial construction spending, which could be highly vulnerable
to economic downturns.
While the company has historically been very aggressive in its
acquisition activity, in the future, management is committed to
organic growth through further technology improvements and
capitalize on its strong national presence. However, given that
most of ARC's acquired companies continue to operate under a
highly decentralized system with significant autonomy in daily
operations, management may need to gradually consolidate back
office/administrative operations and create a more integrated
control system to achieve successful organic growth. This
transition could create some challenges over the next several
years.
AMF BOWLING: Ratings on S&P's Watch Neg. over Acquisition Pact
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on AMF
Bowling Worldwide, Inc., including its 'B' long-term corporate
credit rating, on CreditWatch with negative implications.
The Richmond, Virginia-based operator of bowling facilities had
total debt outstanding of $396.1 million at Sept. 28, 2003.
"The CreditWatch listing is based on AMF's announcement that it
has agreed to be acquired by an affiliate of Code Hennessy &
Simmons LLC, a private equity firm, in a deal valued at about $660
million in cash and the assumption of debt," said Standard &
Poor's credit analyst Andy Liu. The transaction is subject to
approval by AMF shareholders and is contingent on Code Hennessy's
ability to obtain financing. The transaction is expected to close
during the first quarter of 2004.
The company's operations are still under pressure from the
declining popularity of bowling. The number of games bowled per
lane per day has been decreasing for several years, and the trend
is unlikely to reverse in the near term. Thus far, the revenue
impact from fewer games bowled has largely been offset with price
increases. However, this is not sustainable. Recent improvements
in key credit measures have been accomplished mainly through cost
reductions and the elimination of some discounting.
Mr. Liu added, "Resolution of the CreditWatch will be determined
by the capital structure of the surviving company or new entity,
as well as an assessment of management's strategic focus,
financial policies, and near-term operating outlook." Increasing
debt levels could pressure the ratings.
ANC RENTAL: Asks Court to Approve Oracle Settlement Agreement
-------------------------------------------------------------
On February 17, 1997, Oracle Corporation and AutoNation, Inc., a
ANC Rental Corporation debtor-affiliate, entered into a Software
License and Services Agreement. On March 23, 1998, the parties
entered into Amendment One to the Licensing Agreement, pursuant to
which AutoNation executed a Network License Order Form dated March
23, 1998, and Amendment One to the Network License Order Form
dated May 4, 1999.
Under the terms of the Contract, Oracle agreed to provide to
AutoNation software program licenses for certain Oracle software
programs, and product support and update subscription services
for the programs and, AutoNation agreed to pay Oracle $8,577,433
for the licenses and related services.
On June 23, 2000, AutoNation assigned the Contract to ANC.
Pursuant to the assignment, ANC obtained all rights, title and
interest to the licenses and related services subject to the
Contract, and assumed all duties and obligations under the
Contract.
In August 2001, pursuant to the Contract, ANC renewed technical
support for the period of March 26, 2001 to March 25, 2002, for a
total net Technical Support fee of $1,575,000, plus applicable
fees and taxes.
As of the Petition Date, Bonnie Glantz Fatell, Esq., at Blank
Rome LLP, in Wilmington, Delaware, reports that the Debtors owed
Oracle $1,043,438 in prepetition technical support fees and
$3,620 in fees related to various Oracle education products.
On January 13, 2003, Oracle filed a Proof of Claim in the
Debtors' bankruptcy case for the recovery of $1,047,067 that
remained unpaid by ANC.
Oracle and ANC now wish to enter into a settlement agreement to
resolve Oracle's Claim. Although ANC is obligated to pay the
amounts under the Settlement Agreement, Ms. Fatell informs the
Court that Vanguard agreed to make the payment to Oracle on ANC's
behalf. The Settlement Agreement provides that ANC will pay
$600,000 to Oracle in full and final satisfaction of Oracle's
Claim. In return for the payment, Oracle agreed to withdraw its
proof of claim. Both ANC and Oracle also agreed that the
Contract will be terminated upon the Effective Date of the
Settlement Agreement. The Settlement Agreement also provides for
certain mutual releases between the Debtors and Oracle with
regard to the Contract.
By this motion, the Debtors ask the Court, pursuant to Rule 9019
of the Federal Rules of Bankruptcy Procedure, to approve
Settlement Agreement with Oracle.
Ms. Fatell assures the Court that the Settlement Agreement is
fair and reasonable since it resolves all outstanding issues with
regard to the Contract and Vanguard agreed to make the $600,000
settlement payment, which eliminates the prepetition claim. (ANC
Rental Bankruptcy News, Issue No. 43; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ASPEN GROUP: Third-Quarter Results Enter Positive Territory
-----------------------------------------------------------
Aspen Group Resources Corporation, (TSX: ASR), announced its
financial results for the third quarter and nine months of fiscal
2003 ended September 30, 2003. Aspen reports its results in U.S.
dollars.
For the nine-month period ended September 30, 2003, Aspen reported
revenues of $7.0 million compared to $6.3million recorded in the
same period last year. For the period, Aspen recorded a net loss
of $22 thousand, or $0.00 per share, versus a net loss of $8.3
million or $0.22 per share. Cash flow from operations for the
nine-month period was $2.3 million compared to negative $800
thousand for the same period in 2002.
In the third quarter ended September 30, 2003, Aspen reported
revenues of $2.6 million compared to $1.5 million recorded in the
same period last year. For the period, Aspen recorded a gain of
$181 thousand, or $0.003 per share, versus a net loss of $6.8
million or $0.17 per share in the same period in 2002. Cash flow
from operations for the three-month period was $1 million compared
to negative $1 million in the same period last year.
Results from operations were positively impacted in 2003 by
company-wide reductions in G&A and operating costs for a savings
of $2.2 million for nine months.
Average prices received for the nine months ended September 30,
2003 were $21.26 per bbl. for oil and $4.76 per mcf for natural
gas. Net production in the nine-month period averaged 860 boe/d
(barrel of oil equivalent/day, 6:1 conversion) compared to net
production of 1330 boe/d for the nine-month period ended September
30, 2002. The year over year average production decrease is
primarily due to the Company's sale of non-core properties. The
proceeds of the sales have been applied to reduce the bank debt.
Aspen Group Resources Corporation is an independent oil and
natural gas producer engaged in the acquisition, exploration,
production and development of oil and natural gas properties in
the Mid Continent Region in the US and Western Canada. Aspen's
shares trade on The Toronto Stock Exchange under the symbol ASR.
As reported in Troubled Company Reporter's February 13, 2003
edition, Aspen was addressing other areas of its operations in
order to reduce operating expenses, rationalize its portfolio US
and Canadian properties and rejuvenate its drilling and production
programs. To date, the Company took several steps in this process
including:
-- Significant staff reductions and the initiation company-
wide cost controls including the relocation of the Company's
Oklahoma City offices to more efficient, cost effective
facilities. The net effect of these reductions will have a small
impact on the fourth quarter results, but became very apparent
throughout 2003.
-- A thorough review of the Company's operations, assets,
and reserves for the purpose of determining the properties, which
provided Aspen the highest production and growth potential. The
Company identified several properties that had been deemed non-
core and would be sold in order to raise additional capital for
re-investment into core areas and further reduction of debt.
Through this review, Aspen determined that it would focus solely
on natural gas which currently accounts for 85 percent of its
current production. Therefore, management elected to monetize one
of its oil producing assets, which is located in the El Dorado
Field in Kansas.
-- The Company negotiated with its lender regarding the
default in its credit facility.
ATLANTIC COAST: Reports 11.9% Increase in November 2003 Traffic
---------------------------------------------------------------
Atlantic Coast Airlines (Nasdaq: ACAI) reported preliminary
consolidated passenger traffic results for November 2003.
Systemwide, the company generated 266.1 million revenue passenger
miles, an 11.9 percent increase over the same month last year,
while available seat miles rose to 391.7 million, a 6.5 percent
increase.
Load factor was 67.9 percent versus 64.7 percent in November 2002.
For the month, 663,061 passengers were carried, a 3.8 percent
increase over the same month last year.
For the eleven months ended November 30, 2003, compared to the
same period in 2002, RPMs grew to 3.0 billion, an increase of 18.6
percent, while ASMs were 4.2 billion, a 6.7 percent increase. The
company carried 7,726,998 passengers during the eleven months
ended November 30, 2003, compared to 6,463,398 in 2002, an
increase of 19.6 percent on a year-over-year basis.
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 -- to be called Independence Air. The company has a fleet
of 148 aircraft -- including a total of 120 regional jets-and
offers over 840 daily departures, serving 84 destinations. ACA
employs approximately 4,600 aviation professionals.
The common stock of parent company Atlantic Coast Airlines
Holdings, Inc. is traded on the Nasdaq National Market under the
symbol ACAI. For more information about ACA, visit its Web site
at http://www.atlanticcoast.com/
Atlantic Coast Airlines (S&P, B- Corporate Credit Rating,
Developing) employs over 4,600 aviation professionals.
ATS LIQUIDATING: Smith & Nephew Asserts Indemnification Claim
-------------------------------------------------------------
The ATS Liquidating Trust (ATISZ.PK) announced that Smith &
Nephew's Wound Management business has asserted an indemnification
claim against the Trust.
The claim is a result of a decision by the United States Patent
and Trademark Office to grant a request for ex parte reexamination
of Patent 4,963,489 (the "489 Patent"), which is among the assets
Advanced Tissue Sciences, Inc., sold to Smith & Nephew Wound
Management (La Jolla) in the asset sales agreement dated April 28,
2003.
The 489 Patent covers a three-dimensional cell and tissue culture
system relating to tissue cultures on scaffolds and is a key
patent protecting the Trust's Anginera(TM) cardiovascular
technology. The 489 Patent was issued in 1990 and assigned by the
inventors, Gail K. Naughton and Brian A. Naughton, to Marrow-Tech,
Inc., which later became Advanced Tissue Sciences, Inc. The 489
Patent is scheduled to expire in 2008.
The decision by the PTO to grant the request for reexamination was
in response to an undisclosed requestor who requested
reexamination based on questions it asserts regarding
patentability of some of the original patent claims submitted by
the Naughtons in 1990.
The possible outcomes of a reexamination proceeding range from
confirmation of some or all of the claims in the 489 Patent to the
rejection of some or all of the 489 Patent claims.
The decision by the PTO to grant the reexamination of the 489
Patent could affect both the timing and amount of projected cash
distributions by the Trust from the sale of its Anginera
cardiovascular technology. The reexamination could also delay any
Anginera sales agreement or reduce the amount potential buyers
might offer. If the reexamination were to find some or all of the
patent claims invalid, it could preclude any sale of Anginera by
the Trust.
Smith & Nephew asserts that the reexamination of the patent is a
breach of the representations and warranties of the April 2003
sale agreement between ATS and Smith & Nephew and that they may be
entitled to indemnification, both from the $1,000,000 reserve set
aside from the purchase price paid by Smith & Nephew under the
sale agreement between ATS and Smith and Nephew dated October 2002
and now held by the Trust, and the set-off of future revenues
owing the Trust by Smith & Nephew under the April Sale Agreement
through the period ending in December 2004.
The Trustee disputes the assertion that Smith & Nephew has any
claim against the reserve. The Trustee believes that the
representations and warranties were accurate at the time the asset
sale closed, that the sale was "as is," and that there were no
warranties against future challenges to the 489 Patent.
However, should Smith & Nephew prevail in their claim, the maximum
liability of the Trust to Smith & Nephew would be the $1,000,000
in the reserve account, plus the loss of future revenue, if any,
from Smith & Nephew under the Sale Agreement to the extent
liability exceeds $1,000,000.
While the matter is pending, the Trust will not be able to make
those funds available for distribution to Trust beneficiaries that
held ATS stock as of the effective date of ATS' Liquidating
Chapter 11 Plan of Reorganization.
The Trustee cannot predict how long it will take to resolve these
matters.
As a result of the Chapter 11 Liquidating Plan of Reorganization
which was confirmed by the Bankruptcy Court by a final order dated
March 21, 2003 and which became effective on March 31, 2003, the
stock of ATS was cancelled and its former stockholders now hold
non-trading interests in the ATS Liquidating Trust. According to
the terms of the Plan, the Interests in the ATS Liquidating Trust
are not to trade and the Liquidating Trustee will only recognize
as beneficiaries of the Trust those equity holders of record as of
the effective date of the Plan. Any trading that may be occurring
after the effective date of the Plan under the symbol "atisz.pk"
or otherwise is unauthorized by the Plan and will not be
recognized by the Trustee. As a result of the terms of the Plan
and the order of the bankruptcy court confirming the Plan, the
Securities and Exchange Act of 1934 as amended and the rules
promulgated thereunder no longer apply to the Company since it has
no issued stock, no shareholders, and is no longer in business.
BALDWIN CRANE: Seeks Court OK to Retain Eric Hall as Accountants
----------------------------------------------------------------
Baldwin Crane & Equipment Corporation tells the U.S. Bankruptcy
Court for the District of Massachusetts that it needs to employ
Eric Hall of R.A. Hall & Company as its accountants.
Baldwin says it needs a Certified Public Accountant who will be
able to examine the corporate structure, review the financial
issues of the corporation and to prepare such returns as are
appropriate. In addition to that, Mr. Hall will:
a) prepare the corporate and sales tax returns;
b) prepare the periodic statements of the Debtor-in-
Possession's operations as required by the rules of this
Court; and
c) prepare projections and other financial statements
necessary to proceed to confirmation of a Chapter 11
Plan.
The Debtor will be billed by R.A. Hall for services at its current
hourly rates of:
Principal $200 to $250 per hour
Associate $74 to $175 per hour
Headquartered in Wilmington, Massachusetts, Baldwin Crane and
Equipment Corp., a crane-operating business, filed for chapter 11
protection on October 3, 2003 (Bankr. Mass. Case No. 03-18303).
Nina M. Parker, Esq., at Parker & Associates represents the Debtor
in its restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated debts and
assets of over $10 million each.
BOB'S STORES: US Trustee Names 5-Member Creditors' Committee
------------------------------------------------------------
The United States Trustee for Region 3 appointed 5 creditors to
serve on an Official Committee of Unsecured Creditors in Bob's
Stores, Inc.'s Chapter 11 cases:
1. Columbia Sportswear
Attn: Kim Keierleber
14375 NW Science Park Drive., Portland, OR 97229
Phone: (503) 985-4542, Fax: (503) 985-5953;
2. Levi Strauss & Co.
Attn: Debbie Staton
3125 Chad D rive, Eugene, OR 97 408
Phone: (541) 242-7087, Fax: (541) 242-7577;
3. Nike USA, Inc.
Attn: Traci Neys
One Bowerman Drive
Beaverton, OR 97225
Phone: (503) 532-7753, Fax: (503) 532-7990;
4. The Timberland Company
Attn: Dawn B. Lynch
200 Domain Drive, Stratham, NH 03885
Phone: (603) 772-9500, Ext. 1188, Fax: (603) 773-1639;
5. Justin Brands, Inc. dba Chippew a Shoe Company
Attn: David J. Dungan
610 West Daggett Avenue, Fort Worth, TX 76104
Phone: (817) 390-2518, Fax: (817) 348-2932.
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.
A retail clothing chain headquartered in Meriden, Connecticut,
Bob's Stores, Inc., filed for chapter 11 protection on October 22,
2003 (Bankr. Del. Case No. 03-13254). Adam Hiller, Esq., at Pepper
Hamilton and Michael J. Pappone, Esq., at Goodwin Procter, LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed debts
and assets of more than $100 million.
BONUS STORES: Creditors Must File Claims by 4:00 P.M. Today
-----------------------------------------------------------
Today, Dec. 5, 2003, at 4:00 p.m. (Eastern Time) is the deadline
set by the U.S. Bankruptcy Court for the District of Delaware for
creditors, other than Governmental units, of Bonus Stores, Inc.,
to file their proofs of claim against the Debtor or be forever
barred from asserting their claims.
Proofs of claim must be delivered to the Debtor's Claims Agent:
The Trumbull Group, LLC
4 Griffin Road North
Windsor, CT 06095.
Bonus Stores, Inc., headquartered in Columbia, Mississippi, is a
chain of over 360 stores in 13 Southeastern states that offers
everyday deep discount prices on basic everyday items. The
Company filed for Chapter 11 protection on July 25, 2003 (Bankr.
Del. Case No. 03-12284). Joel A. Waite, Esq., at Young Conaway
Stargatt & Taylor, represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed an estimates debts and assets of over $50
million each.
CABLEVISION SYSTEMS: Completes Five-Year Network Upgrade Process
----------------------------------------------------------------
Cablevision Systems Corp. (NYSE: CVC) announced the completion of
a network upgrade process that began five years ago and has
produced a state-of-the-art platform that is currently supporting
the company's traditional cable offerings and a suite of advanced
digital services including digital cable, high-speed Internet and
digital voice-over-cable.
The announcement occurred at The Western Show 2003, a cable
industry conference where Tom Rutledge, Cablevision's president of
cable and communications, was participating in a panel discussion
with other industry leaders, moderated by Larry King.
Separately, the company also announced that it had already
achieved its 2003 year-end guidance for between 1,025,000 and
1,050,000 high-speed data customers, and will exceed its guidance
of between 875,000 and 900,000 digital cable customers by the end
of the year.
Cablevision's entire 40,000-mile network has been upgraded to at
least 750 megahertz. Highly concentrated population areas have
been upgraded to 860 megahertz. The network passes approximately
4.4 million homes in the New York metropolitan area and comprises
the nation's largest contiguous cable system. Cablevision's
service area includes Long Island, Westchester, parts of New York
City, southern Connecticut and northern and central New Jersey.
"This was an enormous undertaking, to build a telecommunications
network worthy of the premiere market for these services, the New
York metropolitan area," Rutledge said before the panel
discussion. "We have taken a network that was already advanced in
many respects and added the capacity and integrity necessary to
deliver the advanced and highly reliable digital services our
customers are demanding. We are extremely proud of this
accomplishment, and gratified by our customers' very strong
response to the industry-leading video, data and voice services
that travel over this world class platform."
In 1998, Cablevision began a process aimed at upgrading its entire
network to extremely high design standards. With a goal of
creating the "platform of choice," the project called for all
40,000 miles of network to be upgraded to at least 750 megahertz,
and 860 megahertz in areas of high concentration like the
company's New York City systems. The plan called for no more than
500 homes per node, to ensure necessary capacity to each
residence, localized battery back-up systems to keep the network
operating for several hours even in the event of a loss of power,
and self-healing fiber rings to maintain overall network
integrity.
Cablevision provides cable service to nearly 3 million customers
in the New York metropolitan area. By year-end, more than
900,000, or 30%, of these cable customers will be iO: Interactive
Optimum digital cable customers -- up from 216,545, or 6.5%, at
the end of last year. iO offers customers access to more than 200
channels, including 50 premium movie channels, 45 channels of
commercial-free digital music, more than 700 titles available on
demand and other benefits.
Cablevision is currently providing its Optimum Online high-speed
Internet service to more than 1,025,000 customers -- already
surpassing the low-end of its guidance for the end of the year.
With average downstream speeds of 3.5 megabits per second, and
average upstream speeds of 1 megabit per second, Optimum Online is
the fastest Internet service for the home in Cablevision's service
area, and one of the fastest ISPs in the nation. This fall,
Cablevision introduced its third consumer service, Optimum Voice
digital voice-over-cable, across its service area as a companion
service for Optimum Online customers. Optimum Voice offers
unlimited local, regional and long-distance calling throughout the
50 states and Canada for a flat rate of $34.95 per month, and
includes five popular calling features and fully-functioning E-911
service.
Cablevision Systems Corporation (S&P, BB Corporate Credit Rating,
Negative) is one of the nation's leading entertainment and
telecommunications companies. Its cable television operations
serve 3 million households located in the New York metropolitan
area. The company's advanced telecommunications offerings include
its Lightpath integrated business communications services; its
Optimum-branded high-speed Internet service and iO: Interactive
Optimum, the company's digital television offering. Cablevision's
Rainbow Media Holdings, Inc. operates programming businesses
including AMC, The Independent Film Channel and other national and
regional services. In addition, Rainbow is a 50 percent partner in
Fox Sports Net. Cablevision also owns a controlling interest and
operates Madison Square Garden and its sports teams including the
Knicks and Rangers. The company operates New York's famed Radio
City Music Hall and owns and operates Clearview Cinemas, one of
the tri-state area's leading motion picture exhibition circuits.
Additional information about Cablevision Systems Corporation is
available on the Web at http://www.cablevision.com
CAMTECH: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: Center for Advanced Manufacturing and Technology
aka CAMtech
Knowledge Park
5451 Merwin Lane
Erie, Pennsylvania 16510
Bankruptcy Case No.: 03-12940
Type of Business: The Center for Advanced Manufacturing and
Technology (called CAMtech) offers degrees,
programs and courses designed to "build and
rebuild the regional work force." CAMtech says
its "goal is to help provide qualified workers
who can adapt to constant changes in the work
environment." The school was formerly known as
Erie County Technical Institute. See
http://www.gocamtech.com/
Chapter 11 Petition Date: December 2, 2003
Court: Western District of Pennsylvania (Erie)
Judge: Warren W. Bentz
Debtor's Counsel: Guy C. Fustine, Esq.
Knox McLaughlin Gornall & Sennett, P.C.
120 West Tenth Street
Erie, PA 16501
Tel: 814-459-2800
Total Assets: $12,003,921
Total Debts: $19,006,183
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Department of Education Overpayments $16,000,000
333 Market Street
Harrisburg, PA 17126-0333
GEIDC Lease of commercial $75,118
property (Schedule G)
Penn State NPTI invoices $35,216
Commonwealth of PA Grant administration $18,339
Allegheny Educational spectraLight 0200 $8,293
Systems, Inc. CNC Mill Teklink
Times Publishing Co. Advertising $7,380
Dollor Bank Leasing Corp. Lease of scanner $5,885
(Schedule G)
H.T. Kerr Technology Center Instruction $3,440
Unigraphics Solution, Inc. Software license $2,400
Verizon Credit Contract: Norstar phone $2,197
system (Schedule G)
Thomson Learning Books $2,070
Sunshine Services Cleaning services $1,755
Accord Associates Consulting $1,500
Gayle J. Marco Consulting re: $1,500
faculty development
Softek, Inc. Consulting $1,200
Schnidler Elevator Monthly elevator $1,123
Corporation maintenance
National Fuel Gas $1,119
American Assoc. of Dues $1,035
Community Colleges
Pearson Education Books $636
Von Holtzbrinck Publishing Text books $468
CASELLA WASTE: Reports Results for Fiscal 2004 Second Quarter
-------------------------------------------------------------
Casella Waste Systems, Inc. (Nasdaq: CWST), a regional, non-
hazardous solid waste services company, reported financial results
for the second quarter of its 2004 fiscal year.
For the quarter ended October 31, 2003, the company reported
revenues of $112.0 million. The company's net income per common
share was $0.20. Operating income for the quarter was $10.2
million. The company's earnings before interest, taxes,
depreciation and amortization (EBITDA), was $25.2 million.
Results included a benefit of $1.4 million, or $0.06 per share,
from a change in the company's effective tax rate.
The company also announced that cash provided by operating
activities for the quarter was $8.0 million; as of October 31,
2003, the company had cash on hand of $3.6 million, and had an
outstanding total debt level of $308.6 million.
"We continue to drive continuous improvement of all our assets in
every corner of our business," John W. Casella, chairman and chief
executive officer, said. "Combined with our recent successes in
adding disposal capacity, we continue to develop significant
momentum for the short- and long-term."
For the six months ended October 31, 2003, the company reported
revenues of $225.9 million. The company's net income per common
share was $0.42. Operating income for the period was $20.6
million. The company's earnings before interest, taxes,
depreciation and amortization (EBITDA), was $50.3 million, and
cash provided by operating activities was $23.0 million.
Company Executes Operating Agreement for Landfill
in Ontario County, New York
The company has executed a twenty-five year operation, management
and lease agreement with Ontario County, New York for the
operation of the Ontario County Landfill. The Ontario County
Landfill consists of a 387-acre landfill permitted to accept
624,000 tons per year of municipal solid waste. The landfill has a
permitted capacity of 4.1 million cubic yards and an additional
5.3 million cubic yards expected to be approved in early 2004.
Additional potential expansions include 11.7 million cubic yards.
The company expects to close the transaction and commence
operations on January 1, 2004.
Company Acquires Right to Operate a Third Landfill
in Central Massachusetts
The company also announced that it recently completed the purchase
of Wood Recycling, Inc., which owns a construction and demolition
debris processing facility and operates a landfill owned by the
Town of Southbridge, Massachusetts.
The Southbridge facility consists of a 52-acre landfill permitted
to accept 194,000 tons per year of construction and demolition
debris residuals and a limited amount of MSW; and a 13-acre
construction and demolition debris recycling facility. The
landfill has a permitted capacity of 4.6 million cubic yards. The
landfill is operated under a twenty-year contract with the Town of
Southbridge.
"Our focus remains on adding disposal capacity," Casella said. "We
are in the process of seeking to reposition the facility to make
it an integral part of the MSW disposal infrastructure in eastern
and central Massachusetts; Ontario County, of course, allows us to
strengthen our existing presence in western and central New York."
Casella Waste Systems, headquartered in Rutland, Vermont, provides
collection, transfer, disposal and recycling services primarily in
the northeastern United States.
Casella Waste Systems (S&P, BB- Corporate Credit Rating, Stable),
headquartered in Rutland, Vermont, provides collection, transfer,
disposal and recycling services primarily in the northeastern
United States.
For further information, visit the company's Web site at
http://www.casella.com/
CATELLUS DEV'T: Declares Fourth-Quarter Regular Cash Dividend
-------------------------------------------------------------
The Board of Directors of Catellus Development Corporation (NYSE:
CDX) declared a regular cash dividend for the quarter ending
December 31, 2003, of $0.27 per share of common stock payable on
January 15, 2004, to stockholders of record at the close of
business on December 29, 2003.
The $0.27 per share dividend is approximately equal to the
recently paid $0.30 per share dividend for the third quarter when
adjusted for the increase in the number of shares outstanding that
will result from the stock portion of the special earnings and
profits distribution scheduled for December 18, 2003.
Additionally, Catellus Development Corporation announced the
completion of the merger of affiliated entities as part of the
restructuring of the company's business operations to allow the
company to operate as a real estate investment trust, or REIT,
effective January 1, 2004. The restructuring included the
formation of Catellus SubCo, Inc. and Catellus Operating Limited
Partnership. On December 1, 2003, the predecessor Catellus
Development Corporation merged with and into Catellus Operating
Limited Partnership. Catellus SubCo, Inc. owns, directly or
indirectly, all of the equity interests of that partnership.
Catellus SubCo, Inc., which, concurrently with the merger, changed
its name to Catellus Development Corporation, has become the
publicly traded, New York Stock Exchange listed company in place
of Old Catellus, and succeeds to and will continue to operate,
directly or indirectly, the businesses of Old Catellus. As a
consequence of the merger, each share of Old Catellus common stock
will be converted into one share of common stock of the successor
Catellus Development Corporation.
Catellus Development Corporation (S&P, BB Corporate Credit Rating,
Positive) is a publicly traded real estate development company
that owns and operates approximately 38.2 million square feet of
predominantly industrial property in many of the country's major
distribution centers and transportation corridors. The company's
principal objective is sustainable, long-term growth in earnings,
which it seeks to achieve by applying its strategic resources: a
lower-risk/higher-return rental portfolio, a focus on expanding
that portfolio through development, and the deployment of its
proven land development skills to select opportunities where it
can generate profits to recycle back into its business. More
information on the company is available at http://www.catellus.com
CELESTICA: S&P Revises Outlook to Negative on Subpar Performance
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
Celestica Inc., the fourth-largest electronic manufacturer
services provider in the world to negative from stable. At the
same time, the ratings on the company, including the 'BB+' long-
term corporate credit rating, were affirmed.
The ratings on Toronto, Ont.-based Celestica reflect weak end-
market conditions in the highly competitive EMS sector, low
capacity utilization, and subpar operating performance relative to
its peers. These factors are partially offset by the company's
tier-one position in the EMS sector, longer-term trends favoring
electronic manufacturing outsourcing and its liquidity position
that should provide it with adequate financial flexibility in the
medium term.
The market conditions, particularly information technology and
communication end-markets, remain challenging for companies in the
EMS sector as customers continue to defer spending. Although
revenue for third-quarter 2003 increased 2.3% to US$1.63 billion
from US$1.59 billion in the previous quarter, continued weakness
in the sector contributed to a 16.5% year-over-year decline from
revenue generated in third-quarter 2002.
Celestica has responded to the challenging industry environment by
implementing a restructuring program to reduce excess capacity in
high cost locations in North America and Europe, while
transitioning to low cost locations in Asia, North America, and
Europe. Nevertheless, credit measures continue to be pressured by
manufacturing overcapacity arising from a severe and prolonged
industry downturn, which has caused capacity utilization to remain
in the range of 50%; pricing pressure caused by a highly
competitive industry environment and a shift in product mix
towards lower-margin products. Adjusted operating margins (before
depreciation and amortization) declined to 3.9% in the third
quarter (ended Sept. 30, 2003), down from 7.1% in the same period
last year. In third-quarter 2003, EBITDA interest coverage was
5.6x (compared to 12.0x in the same period last year), funds from
operations to total debt was 16.6% (compared with 38.4%) and total
debt to EBITDA was 3.6x (compared with 2.0x).
The negative outlook reflects the possibility that ratings could
be lowered if Celestica's operating performance does not improve,
and if the company does not moderate its negative free operating
cash flow to breakeven in the near term.
CHC INDUSTRIES: Looks to Gulf Atlantic for Financial Advice
-----------------------------------------------------------
CHC Industries, Inc., wants to employ Gulf Atlantic Capital
Corporation as its Financial Advisor and Exclusive Investment
Banker during its chapter 11 restructuring.
The Debtor reports that prior to the Petition Date, it engaged
Gulf Atlantic to provide necessary services. This has afforded
Gulf Atlantic intimate knowledge of the Debtor's business.
In this engagement, the Debtor expects Gulf Atlantic to provide:
A) Financial Advisory Services
a) assist CHC with developing and maintaining a weekly
budget and rolling collateral position for cash
collateral and operational purposes;
b) as appropriate, assist CHC in pursuing capital sources,
including debtor-in-possession financing;
c) assist CHC with the bankruptcy proceedings, including
preparing information for the Company's creditors,
assisting with court and U.S. Trustee reporting
requirements, court appearances and other issues that
may arise in the course of the bankruptcy proceedings;
d) assist CHC in negotiations with secured and unsecured
creditors, including debtor-in-possession financing
negotiations with SunTrust;
e) assist CHC's counsel with matters, as requested;
f) assist CHC with developing a plan of reorganization and
disclosure statement; and
g) other services as the Company shall request.
B) Investment Banking Services
a) if necessary, amend or revise the sale memorandum
currently being used to introduce the Company to
prospective purchasers;
c) continue to amend and add to the list of prospective
purchasers for CHC, including strategic and financial
investors;
d) initiate contact with prospective purchasers to assess
their level of interest in pursuing a transaction;
e) provide CHC with regular reports (normally weekly) of
the status of the M&A process, including the identity of
the entities contacted, an assessment of the level of
interest and the stage of the entity's due diligence;
f) assist CHC with developing and structuring a transaction
with prospective purchasers;
g) assist CHC with purchaser due diligence;
h) assist CHC with negotiating and closing a sale
transaction;
i) as necessary, provide expert testimony related to any
proposed transaction.
Gulf Atlantic's hourly advisory fees are $200 to $350. The hourly
rates for the individuals with primary engagement responsibility
are:
Theodore Gumienny President $350 per hour
Richard Gillies Director $310 per hour
Michael Verdisco Director $295 per hour
Brad Snyder Associate $265 per hour
Michael Germana Associate $255 per hour
In addition to the advisory fees, Gulf Atlantic will also be
billed a Success Fee earned at the closing of any sale transaction
equal to 2% of the Sales Price.
Headquartered in Palm Harbor, Florida and formerly known as
Cleaners Hanger Company, CHC Industries, Inc., manufactures and
distributes steel wire coat hangers. The Company filed for
chapter 11 protection on October 6, 2003 (Bankr. M.D. Fla. Case
No. 03-20775). Scott A. Stichter, Esq., at Stichter, Riedel,
Blain & Prosser, PA represent the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $25,000,000 in total assets and $20,000,000
in total debts.
CHI-CHI'S: Wants to Stretch Lease Decision Period Until March 31
----------------------------------------------------------------
Chi-Chi's Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware for more time to determine
whether to assume, assume and assign, or reject their unexpired
nonresidential real property leases.
The Debtors report that they are parties to 122 prepetition
nonresidential real property leases. The Debtors want their lease
decision period extended through March 31, 2004.
The Debtors point out that they are substantially current on their
postpetition obligations regarding the Unexpired Leases (to the
extent those obligations are not disputed); and are paying each
Unexpired Lease obligation as it becomes due.
If the requested extension is not granted, the Debtors will be
compelled either to assume the Unexpired Leases now, giving rise
to substantial administrative expense claims applicable to the
entire remaining terms of the Unexpired Leases, or to reject the
Unexpired Leases prematurely thereby diminishing the value of
their businesses to certain potential purchasers and adversely
affecting their ability to reorganize.
Headquartered in Irvine, California, Chi-Chi's Inc., and its
debtor-affiliates are all direct or indirect operating subsidiary
of Prandium and FRI-MRD Corporation and each engages in the
restaurant business. The Company filed for chapter 11 protection
on October 8, 2003 (Bank. Del. Case No. 03-13063). Bruce Grohsgal,
Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub represent the Debtors in their
restructuring efforts.
COMVERSE TECH.: Red Ink Continued to Flow in Third Quarter 2003
---------------------------------------------------------------
Comverse Technology, Inc. (NASDAQ: CMVT) announced sales of
$193,843,000 for the third quarter of fiscal year 2003, ended
October 31, 2003, an increase of 15.7% compared to sales of
$167,469,000 for the third quarter of fiscal 2002, ended
October 31, 2002.
Net loss on a generally accepted accounting principles ("GAAP")
basis for the third quarter of fiscal 2003 was $3,437,000 ($0.02
per share) compared to a net loss of $79,683,000 ($0.43 per share)
for the third quarter of fiscal 2002. Net loss on a pro forma
basis was $1,570,000 ($0.01 per share) in the third quarter of
fiscal 2003 and $25,290,000 ($0.13 per share) in the third quarter
of fiscal 2002. A reconciliation between net loss on a GAAP basis
and net loss on a pro forma basis is provided in a table
immediately following the Pro Forma Consolidated Statements of
Operations.
Kobi Alexander, Chairman and CEO of Comverse Technology, stated,
"Each of our three major operating units achieved year-over-year
revenue growth in the third quarter, and we once again generated
positive operating cash flow. Our two telecom-focused units,
Comverse, our network systems division, and Ulticom, both saw
year-over-year sales growth, despite operating in a carrier
capital spending environment that continues to be challenging. Our
Verint Systems division achieved record sales and earnings, due
primarily to an expansion in its activities relating to digital
security and surveillance."
The Company ended the quarter with cash and cash equivalents, bank
time deposits and short-term investments of $2,103,944,000,
working capital of $2,095,516,000, total assets of $2,669,349,000
and stockholders' equity of $1,644,783,000.
Comverse Technology, Inc. (NASDAQ: CMVT) (S&P, BB- corporate
credit and senior unsecured ratings) is the world's leading
provider of software and systems enabling network-based multimedia
enhanced communications services. More than 400 wireless and
wireline telecommunications network operators, in more than 100
countries, have selected Comverse's enhanced services systems and
software, which enable the provision of revenue-generating value-
added services including call answering with one-touch call
return, short messaging services, IP-based unified messaging
(voice, fax, and email in a single mailbox), 2.5G/3G multimedia
messaging, wireless instant messaging, wireless information and
entertainment services, voice-controlled dialing, messaging and
browsing, prepaid wireless services, and additional personal
communication services. Other Comverse Technology business units
include: Verint Systems (NASDAQ: VRNT), a leading provider of
analytic solutions for communications interception, digital video
security and surveillance, and enterprise business intelligence;
and Ulticom (NASDAQ: ULCM), a leading provider of service enabling
network software for wireless, wireline, and Internet
communications. Comverse Technology is an S&P 500 and NASDAQ-100
Index company. For additional information, visit the Comverse
Technology Web site at http://www.cmvt.com
CONE MILLS: Paul Weiss Retained as General Bankruptcy Counsel
-------------------------------------------------------------
Cone Mills Corporation and its debtor-affiliates are seeking
permission from the U.S. Bankruptcy Court for the District of
Delaware to retain Paul, Weiss, Wharton & Garrison LLP as their
General Bankruptcy Counsel.
Paul, Weiss will work closely with Young Conaway Stargatt &
Taylor, LLP, taking whatever steps are necessary and appropriate
to avoid any unnecessary duplication of efforts.
Specifically, the Debtors expect Paul Weiss to:
a) advise the Debtors with respect to their powers and
duties as debtors and debtors-in-possession in the
continued management and operation of their business and
properties;
b) attend meetings and negotiating with representatives of
creditors and other parties in interest and advising and
consulting on the conduct of the cases, including all of
the legal and administrative requirements of operating
in chapter 11;
c) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions
commenced under the Bankruptcy Code on their behalf, and
objections to claims filed against the estates;
d) prepare on behalf of the Debtors all motions,
applications, answers, orders, reports and papers
necessary to the administration of the estates;
e) negotiate and prepare on the Debtors' behalf chapter 11
plan(s), disclosure statement(s) and all related
agreements and/or documents and taking any necessary
action on behalf of the Debtors to obtain confirmation
of such plan(s);
f) advise the Debtors with respect to any sale of assets
and negotiating and preparing on the Debtors' behalf all
agreements related thereto;
g) appear before this Court and any appellate courts, and
protecting the interests of the Debtors' estates before
such courts; and
h) perform all other legal services in connection with
these chapter 11 cases.
Paul Weiss' billing rates currently range from:
partners $550 to $750 per hour
counsel $505 to $535 per hour
associates $295 to $495 per hour
paraprofessionals $145 to $200 per hour
The professionals who will be primarily responsible in this
retention are:
Andrew N. Rosenberg Partner $625 per hour
Brian S. Heimann Associate $485 per hour
Erica G. Weinberger Associate $450 per hour
Joel S. Moss Associate $400 per hour
Daniele Chinea Associate $375 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.
CONTINENTAL AIRLINES: SEC Form S-3 Filing Is Now Effective
----------------------------------------------------------
Continental Airlines, Inc. (NYSE: CAL) announced that the
Securities and Exchange Commission has declared effective the Form
S-3 registration statement relating to Continental's $175 million
5.0% Convertible Notes due in 2023.
Continental Airlines (S&P, B Corporate Credit Rating, Stable
Outlook) is the world's seventh-largest airline with more than
2,200 daily departures to 127 domestic and 96 international
destinations throughout the Americas, Europe and Asia. With
42,000 mainline employees, the airline has hubs serving New York,
Houston, Cleveland and Guam, and carries approximately 41 million
passengers per year. Fortune ranks Continental one of the 100
Best Companies to Work For in America, highest among major U.S.
carriers in the quality of its service and products, and No. 2 on
its list of Most Admired Global Airlines. For more company
information, visit http://www.continental.com/
COVANTA ENERGY: Wants to Keep Filing Exclusivity Until Feb. 24
--------------------------------------------------------------
The Covanta Energy Debtors and their professionals have continued
to take key steps toward a successful and consensual resolution of
these Chapter 11 cases. James L. Bromley, Esq., at Cleary,
Gottlieb, Steen & Hamilton, in New York, points out that the
Debtors achieved these developments:
A. Filing of the Plans
The Debtors filed the Reorganization Plan and the Liquidation
Plan on September 8, 2003, the Heber Plan on September 24,
2003, and sought the approval of the Disclosure Materials on
October 3, 2003. The Debtors have also engaged in extensive
negotiations with D.E. Shaw Laminar Portfolios, LLC to arrange
for the provision of post-confirmation financing. D.E. Shaw
has indicated its willingness to provide up to $45,000,000 of
financing on the Effective Date of the Reorganization Plan.
Furthermore, the Debtors have continued to consider proposals
for alternative plans of reorganization.
B. Heber Plan, Sale of Geothermal Assets, and Heber Settlement
A significant accomplishment since September 18, 2003 is the
Debtors' sale of the Geothermal Assets pursuant to the Heber
Plan. The sale of the Geothermal Assets is integral to the
consummation and confirmation of the Heber Plan and the
Reorganization Plan.
The Debtors also obtained approval for settlement of certain
claims against the Heber Debtors concerning royalties owed
under real property leases that the Heber Debtors use in their
business. With respect to non-royalty claims against the
Heber Debtors, the Debtors have also reached settlements and
have filed a motion seeking approval of those settlements
requiring Court approval.
C. Claims Objections
Since September 18, 2003, the Debtors have filed seven
separate omnibus objections to claims.
D. Amendments to DIP Financing Facility
The Debtors have negotiated two amendments to the DIP
Financing Facility, which was dated September 15, 2003 and
November 3, 2003.
E. Sale of Non-Core Businesses
The Debtors have continued and largely completed the process
of eliminating their non-core businesses. The principal
achievement in recent weeks has been the Debtors' negotiation
of the disposal of their interests in the Anaheim Assets. In
addition to the disposal of the Anaheim Assets, the sale of
the Ottawa Assets was consummated on August 26, 2003. The
Debtors also continued to pursue the sale of smaller non-core
assets. Recently, the Debtors filed a motion to approve the
sale of the last of their real estate holdings in Montana.
F. Automatic Stay Issues and Adversary Proceedings
There are currently 31 separate lawsuits where parties have
sought relief from automatic stay imposed by Section 362 of
the Bankruptcy Code. Each has required that the Debtors
negotiate with the opposing party in order to seek to protect
their interests while at the same time allowing important
litigation to proceed. The Debtors have been actively engaged
in this process, and have reached tentative resolutions of
automatic stay issues with various parties.
In accordance with rights reserved under the Final DIP Order,
the Creditors Committee commenced an adversary proceeding
challenging the 9.25% Debenture Holders' status. Pursuant to
the April 22, 2003 Order, this was referred to mediation with
all the parties' consent. Further negotiations on the
settlement were held after the Informal Committee of 9.25%
Debenture Holders indicated that it would object to the
Reorganization Plan as filed. The matter has been resolved,
and appropriate modifications to the Disclosure Statement and
the Reorganization Plan have been made.
G. WTE Facilities
The Debtors have continued to work on issues relating to their
WTE facilities:
(1) Prior to the Petition Date, Covanta Onondaga, LP, filed
suit against Onondaga County Resource Recovery Agency
to resist OCRRA's termination of the Onondaga Service
Agreement involving the provision of waste disposal
services. The parties recently reached a settlement,
which calls for numerous modifications to the Onondaga
Agreement to which the Court approved on October 9,
2003.
(2) On June 20, 2003, Covanta Lake, Inc. initiated an
adversary proceeding seeking to collect amounts due
under the WTE Lake Service Agreement between Lake
County, Florida and Covanta Lake. The Debtors and Lake
County have initiated negotiations and have reached a
tentative settlement of the dispute. The settlement
is contingent upon a favorable resolution of a claim
asserted by F. Brown Gregg. The matter was tried by
the Court on November 3, 2003.
(3) Covanta Tulsa, Inc. operates a WTE Facility in Tulsa,
Oklahoma. Covanta Tulsa leases the facility from CIT
Group/Capital Finance, Inc., and has been engaged in
negotiations to restructure its lease agreement. The
Debtors have wound down their businesses at the Tulsa
WTE Facility, and Covanta Tulsa will be liquidated
under the Liquidation Plan.
(4) Covanta Warren Energy Resource Co., LP has ongoing
negotiations with the Pollution Control Financing
Authority of Warren County for an agreement for Covanta
Warren to operate a WTE Facility in Warren County, New
Jersey. Covanta Warren is not currently included as
one of the Debtors covered by the Plans. As indicated
in the Disclosure Statement, in the event that no
resolution can be reached, the Debtors may choose to
elect or reject certain contracts related to Covanta
Warren, file a plan of reorganization for Covanta
Warren or liquidate Covanta Warren.
(5) Covanta Babylon, Inc. provides waste disposal services
under a service agreement to the Town of Babylon, New
York. On May 22, 2003, the Town of Babylon filed a
claim alleging that Covanta Babylon, Inc. has failed to
accept the levels of waste that it is required to under
the service agreement.
H. Covanta Tampa Construction
The Debtors have separately sought to address certain issues
related to Covanta Tampa Construction. CTC, the Debtors'
subsidiary, is in the process of completing construction of a
25,000,000 gallon-per-day desalination water facility under a
contract with the Tampa Bay Water Authority. In October 2003,
Tampa Bay issued a notice to CTC indicating that it considered
CTC in default of the parties' contract. Tampa Bay also
attempted to commence arbitration proceedings against CTC. On
October 29, 2003, CTC filed its voluntary petition for relief
under Chapter 11, and its case is now being jointly
administered with the other Debtors' cases. Further, the
Debtors have been engaged in ongoing discussions with their
prime subcontractor at the Tampa facility to reach a
resolution of the conflict with Tampa Bay.
I. Canadian Loss-Sharing
The Debtors have continued the process of resolving litigation
between the Debtors and the Canadian Loss Sharing Lenders. As
a result, the parties have reached a settlement, which has
been integrated into the Reorganization Plan and further
modified since the filing of the Reorganization Plan.
J. Business Operations and Employee Issues
The Debtors have continued to seek court approval for matters
that have arisen in the course of operating their business.
On October 30, 2003, the Court authorized the Debtors' entry
into insurance premium financing agreements necessary to the
Debtors' business. Similarly, on October 22, 2003, the
Debtors sought to renew their primary casualty insurance
coverage.
The Debtors have also been occupied by various issues
involving their current and former employees. A central
element of the Reorganization Plan entails the establishment
of a trust created under an employee stock ownership plan to
which Covanta will contribute all of its stock.
Furthermore, Mr. Bromley points out, the Debtors recently amended
the Plans so as to remove Covanta Tampa Construction, Inc. and
Covanta Tampa Bay, Inc. from the Plans. The Debtors have also
reserved the right to remove further Debtors from the Plans. Mr.
Bromley informs the Court that the Debtors are in the process of
formulating plans of reorganization or liquidation for the Non-
Plan Debtors.
In light of the Debtors' ongoing fiduciary duty to maximize
recoveries for their creditors and out of an abundance of
caution, the Debtors are still in the process of considering
possible alternative plans. Mr. Bromley assures the Court that
the Debtors remain committed to emerging from Chapter 11
bankruptcy as soon as possible.
By this motion, the Debtors ask the Court to extend the period
during which they have the exclusive right to file a plan of
reorganization, through and including February 24, 2004.
Furthermore, provided a plan is filed within that time, the
Debtors also ask the Court to extend their exclusive right to
solicit acceptances of that plan, through and including March 24,
2004. (Covanta Bankruptcy News, Issue No. 42; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
DAN RIVER: Delivers Compliance Plan to New York Stock Exchange
--------------------------------------------------------------
Dan River Inc. (NYSE: DRF) (S&P, B+ Long-Term Corporate Credit
Rating, Stable Outlook) announced that the New York Stock Exchange
has notified the Company that it is not currently compliant with
the NYSE's continued listing standards, in that its stock price
has fallen below $1.00 based on a 30 trading day average.
The Exchange requested that the Company submit materials that
address the Company's intentions with respect to curing this
deficiency. The Exchange has advised the Company that it will
review the materials and make a determination regarding continued
listing on the Exchange and the length of any potential cure
period.
The Company has submitted its business plan to its senior secured
lenders in compliance with its amended credit facility and has
provided a copy of the plan to the Exchange. The Company
anticipates that it will engage in further discussions with both
its senior lenders and the Exchange concerning the business plan.
At September 27, 2003, the Company's balance sheet shows that its
total current liabilities exceeded its total current assets by
about $64 million, while net capitalization dropped over 50% to
about $109 million.
DANA CORP.: Planned Asset Sale Spurs S&P's Positive Implications
----------------------------------------------------------------
Standard & Poor's Ratings Services' 'BB' corporate credit and
senior unsecured debt ratings on Dana Corp. remained on
CreditWatch but that it revised the implications to positive from
negative following Dana's announcement that it intends to sell the
company's automotive aftermarket group. Dana is targeting a 2004
completion date for the sale. The group, which employs more than
15,000 people worldwide, had sales of about $2.2 billion in 2002.
At Sept. 30, 2003, debt outstanding at Dana, accounting for Dana
Credit Corp. by the equity method, was about $2.4 billion.
"By selling its aftermarket business, Toledo, Ohio-based Dana will
be able to focus its resources on its core original equipment
operations that include components and systems serving the light
vehicle, commercial vehicle, and off-highway vehicle markets,"
said Standard & Poor's credit analyst Daniel DiSenso.
Dana has said that the possible uses of proceeds from the sale
include reinvestment in its core operations, debt reduction, and a
cash contribution to its pension plans.
Standard & Poor's will monitor developments as they unfold and
meet with management to discuss the specifics of the divestiture
plan. Other topics for discussion will include the near-term
industry outlook and Dana's strategic and operating plans, as well
as the firm's financial policy and goals. Ratings could be raised
should Dana delever the balance sheet and should business
prospects continue to improve.
DELTA AIR LINES: November 2003 System Traffic Up by 2.1%
--------------------------------------------------------
Delta Air Lines (NYSE: DAL) (S&P, BB- Corporate Credit Rating,
Negative) reported traffic results for the month of November 2003.
System traffic for November 2003 increased 2.1 percent from
November 2002 on a capacity decrease of 1.8 percent. Delta's
system load factor was 71.0 percent in November 2003, up 2.7
points from the same period last year.
Domestic traffic in November 2003 increased 3.2 percent year over
year while capacity increased 1.3 percent. Domestic load factor in
November 2003 was 69.9 percent, up 1.3 points from the same period
one year ago. International traffic in November 2003 decreased 1.6
percent year over year on a 12.5 percent decrease in capacity.
International load factor was 75.7 percent, up 8.4 points from
November 2002.
During November 2003, Delta operated its schedule at a 99.5
percent completion rate, compared to 99.3 percent in November
2002. Delta boarded 8,518,018 passengers during the month of
November 2003, a decrease of 1.5 percent from November 2002.
Detailed traffic and capacity are attached.
DJ ORTHOPEDICS: Provides Financials Reflecting Asset Acquisition
----------------------------------------------------------------
dj Orthopedics, Inc. (NYSE: DJO), a designer, manufacturer, and
marketer of products and services for the orthopedic sports
medicine market, released unaudited pro forma combined financial
information reflecting the Company's recently completed
acquisition of the bone growth stimulation device business from
OrthoLogic Corporation. The acquisition was completed on
November 26, 2003.
"With this acquisition, we have added a profitable, strategic
growth engine to dj Orthopedics and created a compelling operating
platform with considerable scale and enhanced sales growth,
earnings and cash flow, focused on selling a broad array of
products into a larger segment of the orthopedics market," said
Les Cross, dj Orthopedics' President and CEO. "Our pro forma
combined financial statements highlight the positive contribution
we expect the bone growth stimulation business to have on our
future results. The addition of the OL1000 and SpinaLogic(R)
products, which are sold into markets that are growing faster than
most of our core rehabilitation markets, will expand our revenue
growth rate from its historical range. For the nine months ended
September 27, 2003, our historical revenue growth was 5.4 percent
over the comparable 2002 period. On a pro forma basis, including
the impact of this acquisition, our combined revenue growth
increased to 8.7 percent for the same period. Our profitability
will also be enhanced by the acquisition, which, on a pro forma
basis, contributed incremental earnings per share of 13 cents for
the nine months ended September 27, 2003, or 17 cents before the
impact of purchase accounting adjustments to charge off a step up
in the value of the acquired inventory and the assigned value of
the acquired customer order backlog. Because our reported 2003
fourth quarter results will include only one month of the acquired
operations, we expect any incremental earnings per share to be
fully offset by purchase accounting adjustments during the month."
Pro forma combined balance sheet information was provided by the
Company as of September 27, 2003, as if the acquisition had taken
place on that date and pro forma combined statement of income
information was provided for the nine months ended September 27,
2003 and the three-month periods ended March 29, 2003, June 28,
2003 and September 27, 2003, each illustrating the effect of the
acquisition as if it had occurred on January 1, 2003. The Company
reported that, for the nine months ended September 27, 2003, pro
forma combined revenues were $177.7 million, including $34.4
million of net revenue from the bone growth stimulation device
business, and net income was $10.2 million, or 56 cents per
diluted share, reflecting a net contribution from the bone growth
stimulation device business, after amortization of acquired
intangible assets and increased interest expense, of $2.2 million,
or 13 cents per diluted share. The 28 percent increase in net
income is net of the impact of short-term purchase accounting
adjustments to increase costs of goods sold by $0.8 million, as a
result of a step up in the value of acquired inventories, and
operating expenses by $0.6 million, as a result of the
amortization of the intangible value assigned to acquired customer
order backlog. These two purchase accounting adjustments affect
the first four months of pro forma combined operations and, in the
aggregate, amounted to $0.8 million after tax, or four cents per
diluted share.
"We intend to manage our new bone growth stimulation business as
dj Orthopedics' Regentek(TM) division in its existing location in
Tempe, Arizona, under the leadership of Shane Kelly, Vice
President and General Manager," continued Cross. "With the
acquisition completed, we have increased the size of our sales
organization to well over 300 strong. Our sales channels will
remain focused on their respective markets, but there is much
anticipation and excitement as we begin to leverage the strength
of our combined relationships and product lines, on a market-by-
market approach. An example of this is our OfficeCare(R) channel,
where we believe the majority of our existing customers utilize
bone growth stimulation products, but less than half of them use
the OL1000 product. This provides a meaningful opportunity to
convert business in these accounts where our DonJoy(R)
relationships are strong. We have also already begun examining
opportunities for product synergies within our national accounts
contracts. With several of the nation's largest supply contracts
already committed to DonJoy and ProCare(R) products, the addition
of Regentek(TM) products to these contracts will be an important
objective in 2004. With an abundance of sales opportunities such
as these before us, we intend to invest in 2004 in further
strengthening our sales management and in a modest sales force
expansion. We are also excited about our new sales relationship
with market leader DePuy Spine, which has continued to gain
market share with the SpinaLogic(R) product, the first dj
Orthopedics product to be sold into the high growth spinal market.
"In summary, with this acquisition, we have a compelling
opportunity to combine our strong customer relationships, our full
range of rehabilitation and regeneration products and services and
our broad distribution capabilities, which reach orthopedic
physicians and spinal surgeons in both the office and hospital
setting, domestically and abroad, to drive higher revenue and
earnings growth."
Pro Forma Combined Balance Sheet
and New Senior Credit Agreement
The Company indicated that the total purchase price for the bone
growth stimulation device acquisition was $93 million, plus
transaction costs of approximately $0.9 million. The Company also
stated that the valuation of the total assets acquired is
preliminary and consists of accounts receivable, inventories and
fixed assets aggregating approximately $9.7 million, net of
assumed liabilities of approximately $1.8 million, identifiable
intangible assets of $45 million and goodwill of approximately
$39.2 million. The identifiable intangible assets will be
amortized to expense over estimated useful lives ranging from four
months to ten years.
The Company financed the acquisition with approximately $12
million of cash on hand and a portion of the proceeds of a new
$100 million senior secured term loan. The Company also
refinanced its existing $15.5 million of bank term debt and
replaced its existing $25 million revolving credit facility with a
new $30 million revolving facility. The new term loan bears
interest at LIBOR plus 2.75%, currently 3.94%, and requires
minimum quarterly principal repayments of $1.25 million, with
final maturity in May 2009. The revolving credit facility is
currently undrawn and is available through November 2008. The
Company incurred debt issuance costs of approximately $2.6 million
in connection with the new credit agreement, which will be
amortized over the life of the agreement as additional interest
expense.
dj Orthopedics is a global orthopedic sports medicine company
focused on the design, manufacture and marketing of products and
services that regenerate and rehabilitate soft tissue and bone
after trauma, help protect against injury and treat osteoarthritis
of the knee. Its broad range of over 600 rehabilitation products,
many of which are based on proprietary technologies, includes
rigid knee braces, soft goods, specialty and other complementary
orthopedic products such as cold therapy and pain management
systems. The Company's regeneration products consist of two bone
growth stimulation devices, the OL1000, approved by the FDA in
1994, which utilizes patented Combined Magnetic Field technology
to deliver a highly specific, low-energy signal for the non-
invasive treatment of an established nonunion fracture acquired
secondary to trauma, excluding vertebrae and all flat bones, and
SpinaLogic(R), a state-of-the-art device used as an adjunct to
primary lumbar spinal fusion surgery for one or two levels,
approved by the FDA in late 1999. The Company's products provide
solutions for orthopedic professionals and their patients
throughout the continuum of care, enabling people of all ages to
maintain active lifestyles.
* * *
As reported in the Troubled Company Reporter's October 13, 2003
edition, Standard & Poor's Ratings Services assigned its 'B+'
senior secured debt rating to dj Orthopedics Inc.'s proposed $130
million credit facility, consisting of a $105 million term loan
and a $25 million revolving credit facility maturing in 2008 and
2009, respectively. Standard & Poor's also affirmed its 'B+'
corporate credit and 'B-' subordinated debt ratings on the
company.
At the same time, Moody's Investors Service placed these ratings
of dj Orthopedics, LLC on review for possible downgrade:
- Senior implied rating of B1;
- Issuer rating of B2;
- B1 rating on the $15.5 million guaranteed senior secured
term loan due 06/30/2005;
- B1 rating on the $25 million guaranteed senior secured
revolving credit loan due 06/30/2005; and
- B3 rating on the $75 million 12.625% guaranteed senior
subordinated global notes due 06/15/2009.
Moody's cites that the review is prompted by the increase in debt
associated with the company's acquisition of the bone growth
stimulator assets of OrthoLogic Corporation. Dj Orthopedics plans
to finance the acquisition with senior bank debt.
EDISON INT'L: S&P's Corp. Credit Rating Up Five Notches to BB+
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit and
senior unsecured debt ratings on Rosemead, California-based
utility holding company Edison International to 'BB+' from 'B-'.
The outlook was revised to stable from developing. The corporate
credit ratings of Edison's wholly owned, regulated utility
subsidiary, Southern California Edison Co., and Edison's
investment arm, Edison Funding Co., were raised to 'BBB' and 'BB+'
from 'BB' and 'B-', respectively. The outlooks for SCE's and EFC's
ratings were also revised to stable from developing. The short-
term and commercial paper ratings for EFC were also raised to 'B'
from 'C'.
These positive ratings actions do not extend to the corporate
credit ratings assigned to Edison's merchant energy subsidiaries,
whose ratings were lowered on Oct. 28, 2003. The lower-rated
affiliate companies include: Mission Energy Holding Co., Edison
Mission Energy, Homer City Funding LLC, Midwest Generation LLC,
Midwest Funding LLC, and Edison Mission Midwest Holdings Co.
"Edison's, SCE's, and EFC's ratings are supported by these three
companies' consolidated financial and credit profiles, and are
evaluated independently of their merchant energy affiliates," said
Standard & Poor's credit analyst David Bodek.
The upgraded Edison, SCE, and EFC ratings reflect:
Expectations that SCE and EFC should produce sound operating cash
flow coverage of their own debt service, as well as that of
Edison; SCE's completion of the collection of $3.6 billion of
historical power procurement expenses that it was barred from
recovering when the expenses were incurred in 2000 and 2001;
Recent decisions of the California Supreme Court that strongly
suggest that the federal appeal challenging SCE's right to recover
historical power procurement expenses will be resolved in SCE's
favor; and Statutory provisions that, in spite of ambiguities and
short-lived effective dates, should protect SCE against the
recurrence of a financial meltdown like the one experienced in
2000 and 2001.
Although credit metrics are sound, further rating upgrades are not
imminent. The outcome of California Public Utilities Commission
proceedings that will set rates and establish long-term
procurement practices will be important to the direction of future
credit quality. In particular, unresolved procurement issues call
into question the ability to predict future financial performance.
Moreover, because the CPUC is using balancing accounts to address
mismatches between revenues and expenses, Standard & Poor's will
look for evidence that the CPUC will act to protect bondholders by
preserving an appropriate alignment of revenues and expenses that
yields sound coverage of debt obligations.
EL PASO CORP: Completes Sale of North American Nitrogen Assets
--------------------------------------------------------------
El Paso Corporation (NYSE: EP) closed on the sale of its North
American nitrogen business to Dyno Nobel with net proceeds
totaling approximately $57 million.
The proceeds include the nitrogen production facilities and
associated working capital located in Cheyenne, Wyoming; St.
Helens, Oregon; and Battle Mountain, Nevada.
This sale supports El Paso's previously announced 2003 five-point
business plan, which includes exiting non-core businesses quickly
but prudently, and strengthening and simplifying the balance sheet
while maximizing liquidity.
El Paso Corporation (S&P, B+ L-T Corporate Credit Rating,
Negative) is the leading provider of natural gas services and the
largest pipeline company in North America. The company has core
businesses in pipelines, production, and midstream services. Rich
in assets, El Paso is committed to developing and delivering new
energy supplies and to meeting the growing demand for new energy
infrastructure. For more information, visit http://www.elpaso.com
ENRON CORP: Examiner Neal Batson Files 140-Page Final Report
------------------------------------------------------------
On November 24, 2003, Enron Examiner Neal Batson delivered to the
Court his 140-page Final Report dated November 4, 2003.
In his prior reports, Mr. Batson found that Enron's officers,
directors, accountants, attorneys and financial institutions had
different roles and duties in the SPE transactions. Certain
persons and entities may be liable to Enron and others for their
roles in these transactions. Regardless of their legal
liability, these parties are included within a circle of
responsibility for Enron's financial demise. Moreover, Mr.
Batson had reported on the role and potential liability of
Enron's officers and certain financial institutions.
The primary focus of the Final Report is on additional persons
and entities that may be have liability under applicable legal
standards for the Debtors' misuse of their SPE structures. Mr.
Batson concludes that:
A. Andersen
There is sufficient evidence from which a fact-finder could
conclude that Andersen:
(a) committed professional negligence in the rendering of
accounting services to Enron; and
(b) aided and abetted certain Enron officers in breaching
their fiduciary duties to Enron by causing Enron to enter
into SPE transactions that were designed to manipulate
the Debtors' financial statements and that resulted in
the dissemination of financial information known by these
officers to be materially misleading.
However, because Enron's officers participated in the
wrongful conduct, Andersen may assert that the actions by the
Enron officers should be imputed to Enron and consequently,
that claims by Enron should be barred or reduced under
comparative fault rules.
B. In-house Attorneys
There is sufficient evidence from which a fact-finder could
conclude that certain Enron in-house attorneys committed
legal malpractice by:
(a) failing to advise Enron adequately regarding the
disclosure of its SPE transactions, including the related
party transactions;
(b) failing to advise adequately Enron's Board of Directors
and certain of its committees with respect to legal and
corporate governance issues raised by certain related
party transactions; and
(c) failing to advise the Enron Board of material facts
surrounding Enron's use of SPEs.
There is also sufficient evidence from which a fact-finder
could conclude that certain in-house attorneys breached their
fiduciary duties by assisting certain officers who breached
their fiduciary duties to Enron by causing the Debtors to
enter into SPE transactions that were designed to manipulate
the Debtors' financial statements and that resulted in the
dissemination of financial information known to be materially
misleading. However, because Enron's officers participated
in the wrongful conduct, these attorneys may assert that the
actions by the Enron officers should be imputed to Enron and
consequently, that claims by Enron should be barred or
reduced under comparative fault rules.
C. Outside Attorneys
There is sufficient evidence from which a fact-finder could
conclude that certain of Enron's outside attorneys:
(a) committed legal malpractice in connection with their
legal services provided to Enron with respect to the SPE
transactions; or
(b) aided and abetted certain Enron officers in breaching
their fiduciary duties.
However, since Enron's officers participated in the wrongful
conduct, these attorneys may assert that the actions by the
Enron officers should be imputed to Enron and consequently,
that claims by Enron should be barred or reduced under
comparative fault rules.
D. Kenneth Lay and Jeffrey Skilling
There is sufficient evidence from which a fact-finder could
conclude that Mr. Lay, Enron's Chairman and Chief Executive
Officer, and Mr. Skilling, Enron's President and Chief
Operating Officer, in their capacities as officers, breached
their fiduciary duties under applicable law by failing to
provide adequate oversight of Enron's use of SPEs because they
failed to respond appropriately to the existence of "red
flags" indicating that certain senior officers were misusing
SPE transactions to disseminate materially misleading
financial information. If a fact-finder so concludes, the
director exculpation provision in Enron's articles of
incorporation would not protect Mr. Lay and Mr. Skilling from
a claim because this failure occurred in their capacity as
officers.
Also, there is sufficient evidence from which a fact-finder
could conclude that Mr. Lay and Mr. Skilling, in their
capacities as members of the Enron Board, breached their
fiduciary duty of good faith under applicable law in
approving the LJM1/Rhythms non-economic hedging transaction
and certain LJM2/Raptors non-economic hedging transactions
because there is evidence that they were in possession of
facts necessary to conclude that these transactions lacked
any rational business purpose. If a fact-finder so
concludes, the director exculpation provision in Enron's
articles of incorporation would not protect Mr. Lay and Mr.
Skilling from a claim because it involved acts or omissions
not in good faith.
In addition, there is sufficient evidence from which a fact-
finder could conclude that Mr. Skilling, in his capacity as
an officer, breached his fiduciary duties under applicable
law by failing adequately to inquire into red flag with
respect to the transactions between LJM1 and Enron and LJM2
and Enron, including red flags relating to the compensation
that Andrew S. Fastow, Enron's Chief Financial Officer,
received in connection with LJM1 and LJM2. Because this
failure occurred in Mr. Skilling's capacity as an officer, the
director exculpation provision in Enron's articles of
incorporation would not apply to this claim.
Moreover, there is sufficient evidence from which a fact-
finder could conclude that:
(a) Mr. Lay's repayment to Enron of more than $94,000,000 of
loans with Enron stock was not duly authorized or
approved by the Enron Board under applicable corporate
law; and
(b) the repayment is voidable by Enron, which would result in
Mr. Lay being obligated to repay in excess of $94,000,000
to Enron and Enron returning the stock to Mr. Lay.
There is sufficient evidence from which a fact-finder could
conclude that:
(a) Mr. Skilling's repayment to Enron of more than $2,000,000
of loans with Enron stock was not duly authorized or
approved by the Enron Board under applicable corporate
law; and
(b) the repayment is voidable by Enron, which would result in
Mr. Skilling being obligated to repay in excess of
$2,000,000 to Enron and Enron returning the stock to him.
E. Outside Directors
Although the oversight of the SPE transactions by the Enron
Board, the Audit and Compliance Committee of the Enron Board
and the Finance Committee of the Enron Board may be
criticized, Mr. Batson has not discovered sufficient evidence
from which a fact-finder could conclude that members of the
Enron Board who served during the period 1997 to the Petition
Date, other than Mr. Lay and Mr. Skilling, and these
committees either:
(a) abdicated or displayed sustained inattention to their
monitoring responsibilities; or
(b) consciously disregarded red flags indicating that Enron
officers were misusing the SPE transactions to
disseminate materially misleading financial information.
In the absence of this type of conduct, because of the
director exculpation provision in Enron's articles of
incorporation, the Outside Directors would not have liability
to Enron arising out of their duty of oversight.
However, there is sufficient evidence from which a
fact-finder could conclude that certain of the Outside
Directors breached their fiduciary duty of good faith under
applicable law in approving the LJM1/Rhythms Hedging
Transaction and certain of the LJM2/Raptors Hedging
Transactions because there is evidence that they were in
possession of facts necessary to conclude that these
transactions lacked any rational business purpose. If a
fact-finder so concludes, the director exculpation provision
in Enron's articles of incorporation would not protect the
Outside Directors from the claim because it involves acts or
omissions not in good faith.
F. Additional Financial Institutions
There is sufficient evidence from which a fact-finder could
conclude that certain financial institutions not previously
discussed in the prior reports that were involved in Enron's
SPE transactions aided and abetted certain Enron officers who
breached their fiduciary duty by causing Enron to enter into
SPE transactions that were designed to manipulate the
Debtors' financial information known by these officers to be
materially misleading. The Financial Institutions are:
(1) The Royal Bank of Scotland plc and its affiliates and
predecessors;
(2) Credit Suisses First Boston, Inc. and its affiliates and
predecessors; and
(3) Toronto Dominion Bank and its affiliates and
predecessors.
However, because Enron's officers participated in the
wrongful conduct, the Financial Institutions may assert that
the actions by the Enron officers should be imputed to Enron
and consequently, either that Enron lacks standing to assert
any such claim or that the doctrine of in pari delicto is a
defense to defeat a claim by Enron.
There is sufficient evidence from which a fact-finder could
conclude that:
(a) certain of the Financial Institutions that were involved
in the LJM1/Rhythms Hedging Transactions had actual
knowledge of the wrongful conduct of Mr. Fastow in this
transaction, which resulted in Mr. Fastow breaching his
fiduciary duty of loyalty;
(b) these Financial Institutions gave substantial assistance
to Mr. Fastow by participating in transactions designed
to circumvent restrictions imposed by the Enron Board in
connection with the LJM1/Rhythms Hedging Transactions;
and
(c) injury to the Debtors was the direct or reasonable
foreseeable result of that conduct.
As a result, a fact-finder could conclude that these
Financial Institutions aided and abetted Mr. Fastow in
breaching his fiduciary duties.
Furthermore, there is sufficient evidence of inequitable
conduct by the Financial Institutions in connection with the
SPE transactions for a court to determine that the claims of
the Financial Institutions, totaling in excess of
$1,000,000,000, may be equitably subordinated to the claims
of other creditors.
In the final report, Mr. Batson addresses the question many
people have asked: how could this have happened? Mr. Batson
explains that for several reasons, the Enron Board did not
function as an effective check and balance. This failure may
have resulted from:
(i) a carefully orchestrated strategy of Enron's senior
officers;
(ii) the failure of Mr. Lay and Mr. Skilling, in their
capacities as executive officers, to assist the Outside
Directors;
(iii) inadequate assistance from Enron's professionals;
(iv) inattention by the Enron Board to its oversight function;
or
(v) insufficient understanding of how the SPE transactions
were being used by Enron's officers.
Free copies of the Final Report and its Appendices are available
at:
http://bankrupt.com/misc/14455BatsonsFinalReport.pdf
http://bankrupt.com/misc/14455AppendixA.pdf
http://bankrupt.com/misc/14455AppendixBPart1.pdf
http://bankrupt.com/misc/14455AppendixBPart2.pdf
http://bankrupt.com/misc/14455AppendixC.pdf
http://bankrupt.com/misc/14455AppendixD.pdf
http://bankrupt.com/misc/14455AppendixE.pdf
http://bankrupt.com/misc/14455AppendixF.pdf
http://bankrupt.com/misc/14455AppendixG.pdf
(Enron Bankruptcy News, Issue No. 89; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENUCLEUS INC: Must Raise New Capital to Meet Cash Requirements
--------------------------------------------------------------
eNucleus, Inc. is a next generation software and managed hosting
company. eNucleus' business strategy is to acquire companies that
have proprietary software applications that fulfill core and niche
business processes (i.e., Enterprise Resource Management, Customer
Resource Management, Integrated IP Communications, Sales
Automation, Tracking) in specific market verticals (i.e.
Healthcare, Education, Distribution Services and Financial
Services). It is particularly focused on products that enjoy
strong customer loyalty and can be enabled for delivery over the
Internet for a recurring monthly fee on either a managed hosting
or pure ASP basis.
On November 6, 2003, eNucleus received its final decree from the
United States Bankruptcy Court for the Northern District of
Illinois, successfully concluding the Company's restructuring and
emergence from bankruptcy.
Although the restructuring plan resulted in a substantial
reduction in debt, further improvements in the Company's liquidity
position will be subject to the success of initiatives it is
undertaking to increase sales, reduce operating expenses and the
effects on its liquidity of market conditions in the industry. The
Company's uses of capital are expected to include working capital
for operating expenses and satisfaction of current liabilities,
capital expenditures and payments on outstanding debt facilities.
The Company continues to incur losses from operations. During the
nine month period ended September 30, 2003, it incurred a net loss
of $702,000, of which approximately $378,000 relates to non-cash
charges for stock based compensation and expenses, bankruptcy
related expenses and depreciation and amortization charges. During
2002, it incurred a net loss of $5.8 million for the year ending
December 31, 2002, of which $4.5 million was related to its
restructuring and closing of its data center.
The Company's continued existence is dependent on its ability to
achieve future profitable operations and its ability to obtain
financial support. The satisfaction of the Company's cash
requirements hereafter will depend in large part on its ability to
successfully generate revenues from operations and raise capital
to fund operations. There can, however, be no assurance that
sufficient cash will be generated from operations or that
unanticipated events requiring the expenditure of funds within its
existing operations will not occur. Management is aggressively
pursuing additional sources of funds, the form of which will vary
depending upon prevailing market and other conditions and may
include high-yield financing vehicles, short or long-term
borrowings or the issuance of equity securities. There can be no
assurances that management's efforts in these regards will be
successful. Under any of these scenarios, management believes that
the Company's common stock would likely be subject to substantial
dilution to existing shareholders. The uncertainty related to
these matters and the Company's bankruptcy status raise
substantial doubt about its ability to continue as a going
concern.
Management believes that, despite the financial hurdles and
funding uncertainties going forward, it has under development a
business plan that, if successfully funded and executed, can
significantly improve operating results. The support of the
Company's creditors, vendors, customers, lenders, stockholders and
employees will continue to be key to the Company's future success.
FLEMING COS.: Wants Nod to Assign Leases Not Part of C&S Sale
-------------------------------------------------------------
Fleming and its debtor-affiliates seek Judge Walrath's authority
to assume and assign certain real property leases and subleases,
which are not related to the C&S sale. The Debtors want to
assume and assign all of their right, title and interest in the
Leases to certain Assignees pursuant to the terms of the
Assignment Agreements.
The Debtors further seek approval of the Assignment Agreements
and authority to execute and deliver the Assignment Agreements in
connection with the Assigned Leases to effectuate the
assignments. The Debtors also ask Judge Walrath to expressly
order that they are relieved of any liability under the Assigned
Leases, accruing or arising after the assignment of the leases
and subleases.
Leases With Montpelier and McDaniel Food
Before the Petition Date, Debtor Fleming Companies, Inc., entered
into certain lease transactions with Montpelier Food Corporation,
the assignee for a lease identified as ID-023, and McDaniel Food
Management, Inc., the assignee for a lease identified as LA-072.
Under the Leases, Fleming conveyed its leasehold interest in the
Prepetition Leases to the Prepetition Assignees. Even though
Fleming assigned certain of its rights and obligations under the
Prepetition Leases to the Prepetition Assignees as part of these
lease transactions, Fleming retained a right of re-entry,
remained a party to the Leases, and retained its primary
liability for the obligations and burdens under the Leases.
The Assignment Agreements
In November 2003, Fleming entered into Assignment Agreements with
the Prepetition Assignees pursuant to which Fleming assigned all
of its remaining right, title and interest under the Prepetition
Leases to the Prepetition Assignees, subject to Court approval.
The assignments will release the Debtors from any future
contingent liability under the Prepetition Leases, including
liability upon any defaults by the Prepetition Assignees.
Cure Costs -- $0; Profit -- $25,000
To the extent there are any cure costs associated with the
Prepetition Leases, the Prepetition Assignees will be responsible
for any and all costs or cure claims, in the event the landlords
under the Leases make any claim in the future. According to the
Debtors' records, the cure amount for the Prepetition Leases is
nil.
In consideration for the assignment, McDaniel Food Management
will pay $25,000 to Fleming without further delay.
Sandwich Leases to be Assigned Back
to the Master Lessors
In October and November 2003, Fleming entered into Assignment
Agreements with the landlords of leases AR-084, AR-090 and
TX-003. The Assigned Leases are all sandwich leases where
Fleming is currently the tenant and the sublandlord. The Leases
and Subleases have no further value to the Debtors' estates
because the Debtors do not make any profit from the sandwich
leases.
Pursuant to the Assignment Agreements, Fleming assigned all of
its right, title and interest under the Assigned Leases, as
tenant and sublandlord, to certain landlords. The Assigned
Leases are:
Name of Property
Lease No. Tenant Address Assignee
--------- ------- -------- --------
AR-084 Fleming Co. 601 Pointer Trail E. TFJ Nominee Trust
C.V.'s IGA Van Buren, AR 72956 1900 North Bryant
Ste. 300
Little Rock, AR
AR-084.a Fleming Co. Same Same
C.V.'s IGA
AR-090 Fleming Co. 1101 West Main T.F. James Realty
Kroger Russellville, AR 7707 T Street
Little Rock, AR
AR-090.a Fleming Co. Same Same
Kroger
CA-015 Fleming Co. 12200 Perris Blvd. Ralphs Grocery
Moreno Valley, CA 1100 West Artesia
Compton, CA
CA-015.a Fleming Co. Same Same
ID-023 Fleming Co. 130 South 4th Street Montpelier Food
Peterson's Montpelier, ID 130 South 4th
Jubilee Street
Montpelier, ID
LA-072 Fleming Co. 5336 Cypress McDaniel Food
Claiborne West Monroe, LA 404 Wall Street
Food Town Columbia, LA
TX-003 Fleming Co. 920 North Willis Walton Abilene
United Abilene, Texas Retail Investors
Supermkt #547 900 Michigan Ave
Chicago, IL
TX-003.a Fleming Co. Same Same
United
Supermkt #547
VA-111 HSN 1 HSN Drive Robertson RE
Fulfillment St. Petersburg, FL Group
1301 Southside
Salem, MA
Cure Costs -- $0
The Assignees for Leases AR-084, AR-090 and TX-003 have agreed to
waive any cure costs required by the Bankruptcy Code, although
according to the Debtors' records, the cure amount for these
Leases is $0.
The Assignment Agreements will also release the Debtors from any
future contingent liability under the Assigned Leases, including
liability upon any defaults by the subtenants, and will relieve
the Debtors' estates of the cost and expenses of administering
the subleases as the sublandlords.
Sandwich Lease to be Assigned to Ralphs
Fleming also entered into an Assignment Agreement with the
subtenant for a lease identified as CA-015, another unprofitable
sandwich lease where Fleming is currently the tenant and the
sublandlord.
Under the terms of the Assignment Agreement for the Lease,
Fleming assigned all of its right, title and interest under the
Assigned Leases, as tenant and sublandlord, to Ralphs Grocery
Company, the current subtenant under the sublease.
Cure Costs -- $0; Profit -- $80,000
To the extent there is any cure costs, Fleming will pay for those
costs. According to Fleming's records, the cure amount for the
Lease is $0. On the income side, in consideration for the
assignment, Ralphs will pay $80,000 to Fleming without further
delay.
Besides the $80,000 income from the assignment, the assignment
will release Fleming from any future contingent liability under
the Assigned Lease, including liability upon any defaults by the
subtenant and incurring the cost and expenses of administering
the sublease as the sublandlord.
Owned Property Sold to Robertson
Lease VA-111 is an owned property that Fleming currently leases
to a third party. This property was auctioned on October 14,
2003. However, the winning bidder, Robertson Real Estate Group,
LLC, submitted only a purchase agreement, and not an assignment
and assumption agreement, as required. Nonetheless, the Court
approved the purchase agreement on October 24, 2003. Court
approval of the Assignment Agreement is required under the
purchase agreement to consummate the sale of the property.
The purchase price for the property is $1,846,000. Because this
is an owned property, the cure issue is moot.
Assignment Should Be Approved
Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young
Jones & Weintraub PC, in Wilmington, Delaware, informs the Court
that the Assigned Leases are unprofitable and will not be of any
benefit to the Debtors' estates and creditors. Based on the
analysis of the Debtors' real estate consultants, Keen
Consultants, LLC, the Assigned Leases have no value to the
Debtors' estates.
Mr. Lhulier says that the approval of the Assignment Agreements
will release the Debtors from any future contingent liability
under the Assigned Leases, including liability upon any defaults
by the subtenants, and incurring the cost and expenses of
administering the subleases as sublandlords. The assumption and
assignment of the Assigned Leases will substantially reduce
claims against the Debtors' estates that may result from
rejection of the Leases and will save the Debtors lease expenses
that arise under the Assigned Leases. According to the Debtors'
records, the cure amount for the Assigned Leases is $0.
Furthermore, the Debtors will receive about $2,000,000 in
consideration for assigning the Leases. (Fleming Bankruptcy News,
Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FAO, INC: Case Summary & 35 Largest Unsecured Creditors
-------------------------------------------------------
Lead Debtor: FAO, Inc.
2520 Renaissance Boulevard
King of Prussia, Pennsylvania 19406
aka The Right Start, Inc.
aka F.A.O. Inc.
aka Right Start
Bankruptcy Case No.: 03-13674
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
ZB Company, Inc. 03-13672
FAO Schwarz, Inc. 03-13675
The Right Start, Inc. 03-13676
Targoff-RS, LLC 03-13678
Type of Business: A specialty retailer of developmental,
educational and care products for infants and
children and high quality toys, games, books
and multimedia products.
Chapter 11 Petition Date: December 4, 2003
Court: District of Delaware (Delaware)
Judge: Joel B. Rosenthal
Debtors' Counsel: Mark D. Collins, Esq.
Richards Layton & Finger
One Rodney Square
PO Box 551
Wilmington, DE 19899
Tel: 302-651-7531
Fax: 302-651-7701
Total Assets: $102,079,000
Total Debts: $85,898,000
Debtors' 35 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Borders Group Trade Debt $2,804,017
100 Phoenix Drive
Ann, Arbor, MI 48108
Mattel Toys Trade Debt $1,096,098
P.O. Box 100125
Atlanta, GA 30384
Fisher Price, Inc. Trade Debt $668,774
636 Girard Avenue
East Aurora, NY 14052
Lights, Camera & Trade Debt $639,233
Interaction
P.O. Box 590
Westport, CT 06881
Learning Curve - RC2 Trade Debt $575,645
Brands, Inc.
75 Remittance Drive
Chicago, IL 60675-3031
Lego Systems Trade Debt $464,785
555 Taylor Road
P.O. Box 1600
Enfield, CT 06083-1600
Carmichael International Trade Debt $394,393
Service
P.O. Box 51025
Los Angeles, CA 90051-5325
Britax Child Safety, Inc. Trade Debt $387,530
13501 South Ridge Drive
charlotte, NC 28273
Small World Toys Trade Debt $343,540
5711 Buckingham Parkway
Culver City, CA 90230
Alex Trade Debt $318,138
251 Union Street
Northvale, NJ 07647
RR Donnelley Recievables, Trade Debt $310,845
Inc.
P.O. Box 13654
Newark, NJ 07188
Brio Scanditoy Corp. Trade Debt $304,302
N120 W18485 Freistadt Rd.
P.O. Box 1013
Germantown, WI 53022-8213
Gund, Inc. Trade Debt $298,450
P.O. Box 18148
Newark, NJ 07191
Fantasma Toys Inc. Trade Debt $285,074
P.O. Box 64116
St. Paul, MN 55164
Geomag NA Trade Debt $277,228
1025 Tristar Drive
Mississuaga, Ontario
Canada L5T 1V5
Plastwood Trade Debt $274,214
2130 Adams Avenue
San Leandro, CA 94577
Retail Print Services, Expense $265,366
Inc.
930 W North Avenue
Pittsburgh, PA 15233
Manhattan Toy Co. Trade Debt $243,979
Lee Middleton Original Trade Debt $232,538
Dolls Inc.
Toysmith Trade Debt $203,764
Action Products Trade Debt $201,012
International Playthings, Trade Debt $192,013
Inc.
Creativity for Kids Trade Debt $190,135
Playmobil USA Inc. Trade Debt $187,689
PNC Leasing, LLC Expense $184,442
AEC One Stop Inc. Trade Debt $181,680
Trump 767 Fifth Avenue LLC Expense $154,750
Newroads-Roanoke Expense $153,508
Fulfillment
Applause Trade Debt $124,763
The Maya Group, Inc. Trade Debt $120,142
Kids II, Inc. Trade Debt $115,900
Arandell Corporation Expense $107,007
Steiff North America Inc. Trade Debt $106,362
JL Media, Inc. Expense $106,191
Learning Resources Trade Debt $105,775
FAO, INC: Inventory Sales for Three Affiliates Set in Motion
------------------------------------------------------------
CPR (12/4/03)
Inventory clearance sales have begun in all 142 Zany Brainy, FAO
Schwarz and The Right Start stores nationwide. The sales
commenced after parent company FAO, Inc. (Nasdaq: FAOO), filed
voluntary petitions under Chapter 11 of the Bankruptcy Code in the
U.S. Bankruptcy Court for the District of Delaware for itself and
its operating subsidiaries ZB Company, Inc. and FAO Schwarz, Inc.
Subject to bankruptcy court approval, FAO, Inc. appointed a joint
venture consisting of Calabasas, California-based Buxbaum Group,
LLC; Columbus, Ohio-based SB Capital Group, LLC; and Boston,
Mass.-based Tiger Capital Group, LLC, as exclusive agent to
conduct an inventory clearance sale in all three brands throughout
the holiday season. Departments within Parisian, Carson Pirie
Scott, Proffitt's McRae's, Boston Store, Bergner's, Herberger's,
Younkers and Saks Fifth Avenue department stores, as well as in
Borders stores will not participate in the event.
In an earlier release, the company said that the purpose of the
Chapter 11 filing was to allow it to sell its FAO Schwarz and The
Right Start businesses and assets, and to liquidate its Zany
Brainy business (including leases) in an orderly manner. The
company disclosed that, at the request of its lenders, it had
engaged the liquidators to sell inventory of all three of its
brands pending the outcome of its efforts to find buyers for the
FAO Schwarz and The Right Start businesses, and close a
transaction by December 15, 2003. The company stated that if a
transaction was not completed by December 15, 2003, it could be
required to accelerate the liquidation of those two businesses and
sell remaining assets (including brands and leases) to conduct an
orderly wind-up of its affairs.
The joint venture stated that, aside from the deals being offered
through the sale on every item beginning Thursday, December 4,
2003, customers should not see any significant difference in
operations at the stores as a result of the filing through the
time its wind-down is completed early next year. Daily operations
will continue, stores will remain open, and transactions that
occur in the normal course of business will go on generally as
before, though sales would be final.
"Coming within a week after the kick-off of the 2003 holiday
season, this sale will offer discounts on every item in every
store," said David Ellis, principal of Buxbaum Group.
"The sale creates a great opportunity for savings on famous
brands, including Leapfrog, Playmobile, Lego and Barbie, as well
as such treasured collectibles as Steiff Plush Animals and Madame
Alexander Dolls, which are rarely seen on sale," noted Dan Kane,
principal of Tiger Capital Group.
"This is truly a once in a lifetime opportunity to get across-the-
board discounts on the high quality toy, hobby and educational
products for which these three premier retail brands are known"
added SB Capital principal Scott Bernstein.
All sales will be final during the inventory clearance sale, with
cash and credit cards accepted. For a complete list of store
locations, visit http://www.fao.comand click on the store locater
for each brand.
FORD: S&P Cuts Rating on Related Synthetic Transaction to BB
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on STEERS
Credit-Backed Trust Series 2002-3F and removed it from CreditWatch
with negative implications, where it was placed Nov 6, 2003.
The lowered rating and CreditWatch removal reflects the lowered
rating and CreditWatch removal of Ford Motor Co.'s long-term
corporate credit, senior unsecured debt, and preferred stock
ratings, and those of its related entities on Nov. 12, 2003.
The transaction is a swap-dependent synthetic transaction that is
weak-linked to the referenced obligation, Ford Motor Co. Capital
Trust II's preferred stock. The lowered rating and CreditWatch
removal reflects the credit quality of the underlying securities
issued by Ford Motor Co.
RATING LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE
STEERS Credit-Backed Trust Series 2002-3F
$100 million certificates series 2002-3F
Rating
Class To From
Credit-linked certs BB BB+/Watch Neg
GENERAL CHEMICAL: Files Prepackaged Chapter 11 Restructuring
------------------------------------------------------------
General Chemical Industrial Products Inc. (ticker: GNMP.OB,
exchange: OTC Bulletin Board) has filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
U.S. Bankruptcy Court for the District of New Jersey to facilitate
its "pre-arranged" restructuring.
The Company's subsidiaries and affiliate are leading producers of
soda ash and calcium chloride. General Chemical emphasized that
the Chapter 11 filing does not include any of its operating
subsidiaries, including General Chemical (Soda Ash) Partners and
General Chemical Canada Ltd. As a result, the Company does not
expect the filing to have any adverse effect on its business
operations.
General Chemical previously announced that it was in discussions
with its senior secured lender banks and an ad hoc committee of
holders of its 10-5/8% percent Senior Subordinated Notes relating
to a potential financial reorganization plan. The Plan proposed by
General Chemical, its senior secured lender banks and an ad hoc
committee of holders of its Notes will allow the Company to
significantly deleverage its balance sheet, if the proposed Plan
is approved by the Bankruptcy Court. Certain of the senior secured
lender banks have agreed to provide General Chemical with $17.5
million of debtor-in-possession financing. These same senior
secured lender banks have also agreed to provide the Company with
a $17.5 million credit facility upon its emergence from the
Chapter 11 process. If the proposed Plan is approved, General
Chemical's existing senior secured debt will be replaced with a
$45 million term loan upon its emergence from the Chapter 11
process. The balance of outstanding obligations including all
accrued interest thereon to the senior secured lender banks will
be converted into convertible preferred stock representing
approximately 68 percent of the Company's total equity, upon
approval of the proposed Plan. In addition, the Notes including
all accrued interest thereon will be converted into common stock
representing approximately 32 percent of General Chemical's total
equity, upon approval of the proposed Plan.
The Plan does not anticipate the impairment of any other creditor
classes, and the Company intends to honor all of its commercial
and contractual commitments.
General Chemical believes that the protection afforded by a
Chapter 11 filing best preserves its ability to continue to serve
its customers and preserves the value and goodwill of its
businesses, while it implements a financial reorganization to
deleverage the Company's balance sheet and create an improved
long-term capital structure.
The Company believes that its available cash, continued cash flow
from operations and debtor-in-possession financing should be
adequate to fund ongoing operations and meet all anticipated
obligations to customers, vendors and employees during the Chapter
11 process. The Company expects to continue its normal worldwide
operations without any adverse impact on its ability to serve
customers in North America and overseas.
General Chemical also announced today that, in order to facilitate
the financial restructuring outlined above, it has consolidated
its holding company structure through the merger, effective as of
Nov. 26, 2003, of New Hampshire Oak, Inc. (which held 100 percent
of the outstanding equity of General Chemical Industrial Products
Inc.) and The General Chemical Group Inc. (which held 100 percent
of the outstanding equity of New Hampshire Oak, Inc.) into General
Chemical Industrial Products Inc. This step was approved by the
respective stockholders and Board of Directors of the Company, New
Hampshire Oak, Inc., and The General Chemical Group, Inc., the
Company's senior secured lender banks and representatives of the
holders of the Notes and is not expected to have any effect on the
Company's operations or on any of its other creditors.
The Company is represented by:
* Debevoise & Plimpton as counsel,
* Porzio, Bromberg & Newman, P.C. as bankruptcy counsel,
* Blake, Cassels & Graydon LLP as Canadian counsel,
* Glass & Associates Inc. as financial advisor, and
* Deloitte & Touche L.L.P. as accountant and auditor.
The senior secured lender banks are represented by:
* Kelley Drye & Warren LLP as counsel,
* McMillan Binch LLP as Canadian counsel, and
* Loughlin, Meghji & Company as financial advisor.
The ad-hoc group of holders of the Notes is represented by:
* Stroock & Stroock & Lavan LLP as counsel
(Michael Sage (212) 806-6460),
* Lowenstein Sandler PC as local counsel,
* Bennett Jones LLP as Canadian counsel, and
* Jefferies & Company, Inc., as financial advisor
(Timothy O'Connor (212) 284-2520).
The Chapter 11 filing excludes General Chemical (Soda Ash)
Partners, all U.S. subsidiaries and all non-U.S. subsidiaries,
including General Chemical Canada Ltd.
This announcement does not constitute a solicitation for any vote
or an offering of securities. No such solicitation is being made
at this time, and will only be made by means of a Disclosure
Statement that has been approved by the Bankruptcy Court. The Plan
is subject to supplementation, modification and amendment prior to
confirmation. The description of the Plan contained herein is
qualified in its entirety by reference to the Plan.
General Chemical's subsidiaries and affiliate are leading
producers of soda ash and calcium chloride. Additional information
about the Company and its products is available online at
http://www.gogenchem.com/
GENZYME CORP: Proposes to Issue $600MM Convertible Senior Notes
---------------------------------------------------------------
Genzyme Corporation (Nasdaq: GENZ) plans to issue approximately
$600 million of convertible senior notes. The notes will be
convertible into Genzyme Corporation common stock.
Genzyme expects to use these proceeds to pay off amounts
outstanding under its credit facility, to redeem outstanding three
percent debentures and for general corporate purposes. Genzyme
currently has approximately $300 million outstanding under its
credit facility. The company has $575 million in outstanding three
percent convertible debentures, which are first redeemable on
May 20, 2004.
The notes, and the common stock issuable upon conversion of the
notes, have not been registered under the Securities Act of 1933,
as amended, or securities laws of any state or other jurisdiction,
and may not be offered or sold in the United States, absent
registration or an applicable exemption from registration
requirements.
Genzyme Corporation (S&P, BB+ Subordinated Debt Rating, Positive)
is a global biotechnology company dedicated to making a major
positive impact on the lives of people with serious diseases. The
company's broad product portfolio is focused on rare genetic
disorders, renal disease, and osteoarthritis, and includes an
industry-leading array of diagnostic products and services.
Genzyme's commitment to innovation continues today with research
into novel approaches to cancer, heart disease, and other areas of
unmet medical need. Genzyme's more than 5,000 employees worldwide
serve patients in more than 80 countries.
GEORGETOWN STEEL: UST Appoints 9-Member Creditors' Committee
------------------------------------------------------------
The United States Trustee for Region 4 appointed 9 creditors to
serve on an Official Committee of Unsecured Creditors in
Georgetown Steel Company, LLC's Chapter 11 cases:
1. Progress Rail Services Corp.
Doug Smith
5205 Olde Creek Way
Prospect, KY 40059
Tel: (502) 836-8601, Fax:(502) 292-2215
2. Applied Industrial Materials Corp.
Marydenise M. Feroce
1009 Beaver Grade Rd.
Coraopolis, PA 15108
Tel: (412) 264-4311 Ext 1205, Fax: (412) 264-4326
3. BSI Commodities, Inc.
Richard L. Baldridge
4955 Steubenville Pike - Suite 110
Pittsburgh, PA 15205-9604
Tel: (412) 787-8802, Fax: (412)787-2330
4. LWB Refractories Company
Brian T. Keim, Esquire
P. O. Box 1189
York, PA 17405-1189
Tel: (717) 771-3941, Fax: (717) 771-3929
5. Stevendoring Services of America
William J. Long
P.O. Box 1767
Savannah, GA 31402
Tel: (912) 966-1111, Fax: (912) 966-2288
6) Vesuvius USA Corp.
Steven J. DelCotto, Esquire
27 Nobletown Rd.
Carnegie, PA 15106-1632
Tel: (412) 429-1800 Ext 260, Fax: (412) 276-7252
7) Intersource, Inc.
Philip J. Scarsella
115 VIP Drive, Suite 210
Wexford, PA 15090
Tel: (724) 940-2220, Fax: (724) 940-2221
8) Kimmels Coal & Packaging, Inc.
Kevin Shoffler
P. O. Box 1
Wisconsico, PA 17097
Tel: (717) 362-2060, Fax: (717) 362-3090
9) United Steelworkers of America
David R. Jury, Esquire
Five Gateway Center - Room 807
Pittsburgh, PA 15222
Tel: (412) 562-1164, Fax: (412) 562-2429
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 Georgetown, South Carolina, Georgetown Steel
Company, LLC manufactures high-carbon steel wire rod products
using the Direct Reduced Iron (DRI) process. The Company filed
for chapter 11 protection on October 21, 2003 (Bankr. S.C. Case
No. 03-13156). Michael M. Beal, Esq., at McNair Law Firm P.A.,
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
estimated debts and assets of over $50 million each.
GEORGIA GULF CORP: Consummates Various Refinancing Transactions
---------------------------------------------------------------
Georgia Gulf Corporation (NYSE: GGC) has entered into an amendment
to its senior credit facility which provides for a new seven-year
$200 million term loan which matures in 2010 and increases the
available borrowings under the revolving credit facility from $100
to $120 million.
Georgia Gulf also announced it has completed the sale of
$100,000,000 in principal amount of its 7-1/8% Senior Notes due
2013 in a private placement transaction.
In addition, the Company announced it has accepted for payment all
of its 10-3/8% Senior Subordinated Notes due 2007 that were
tendered pursuant to the tender offer and consent solicitation
which expired on Tuesday, December 2, 2003, at midnight. Holders
of approximately 66% of the $200 million outstanding principal
amount of the notes had tendered their notes and consented to
amendments to the related indenture which have become operative.
The funds from the new term loan, borrowings under the revolving
credit facility, the proceeds of the 7-1/8% notes offering and a
$25 million increase in the Company's receivables securitization
program were used to repay the approximately $134 million existing
term loan under the senior credit facility which had a scheduled
maturity of 2007, pay the tender and consent payments of
approximately $140 million relating to the 10-3/8% notes and
related expenses and will provide the funds to redeem the
remaining outstanding 10-3/8% notes. The Company has called the
remaining 10-3/8% notes for redemption on December 21, 2003.
The 7-1/8% notes have not been registered under the Securities Act
of 1933 and neither may be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
Georgia Gulf (S&P, BB+ Corporate Credit Rating, Negative),
headquartered in Atlanta, is a major manufacturer and marketer of
two integrated product lines, chlorovinyls and aromatics.
GRANITE BROADCASTING: S&P Junks $300MM Sen. Secured Notes at CCC
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Granite Broadcasting Corp.'s proposed $300 million senior secured
notes due in 2010. Proceeds are expected to be used to refinance
existing debt and for general corporate purposes.
At the same time, Standard & Poor's affirmed its ratings,
including the 'CCC' long-term corporate credit rating, on Granite.
The outlook is negative. New York, N.Y.-based television station
owner and operator Granite had approximately $313 million in debt
outstanding at Sept. 30, 2003.
"The affirmation reflects ongoing concerns about Granite's weak
cash flow and heavy debt burden, despite the elimination of the
company's upcoming debt maturities by the proposed transaction,"
said Standard & Poor's credit analyst Alyse Michaelson.
Limited liquidity is derived from a relatively thin cash cushion,
particularly given the modest cash flow potential of Granite's
station portfolio. Although cash flow is expected to grow in 2004,
benefiting from political and Olympic advertising, Granite is
likely to need to complete a strategic transaction in order to
meet its near-term financial obligations. Management has
reiterated its plans to seek a sale of the WB affiliates or swap
stations for news-oriented stations that afford duopoly
opportunities to help shore up liquidity.
The rating on Granite reflects very high financial risk from
debt-financed TV station acquisitions, an expensive capital
structure, the prolonged ramp-up period for WB Network affiliates,
discretionary cash flow deficits, and limited liquidity. These
factors are only partially offset by Granite's ownership of major
network-affiliated stations that are profitable and have
relatively good margin potential and asset values.
The longer-than-expected ramp up in cash flow at Granite's WB
affiliates and intense competition facing its major television
network affiliates have been restraining overall cash flow growth.
Growth in local revenue, benefiting from improved sales efforts
and rating gains, has been stronger than national advertising.
Furthermore, the absence of significant political ad dollars in
2003 makes for difficult, albeit predictable, revenue comparisons
at the Big 3 affiliates, particularly in the second half of the
year. Political advertising contributed about 6.7% of Granite's
total revenue in 2002. Despite some traction at the WB affiliated
stations, they are still only approaching breakeven broadcast cash
flow. Television advertising in 2004 is expected to benefit from
sizable political and Olympic advertising. Although an improving
ad environment next year could help Granite sell assets at better
cash flow multiples, Granite's ability to execute a transaction is
still vulnerable to market conditions.
The rating could be lowered if the company's cash cushion erodes
and actions are not taken to bolster near-term liquidity. An
outlook revision to stable or potential upgrade will depend on
Granite's ability to boost its liquidity, execute a strategic
transaction, and enhance the cash flow potential of its station
portfolio.
GRANT PRIDECO: SVP/CFO Louis A. Raspino Resigns from Company
------------------------------------------------------------
Grant Prideco, Inc. (NYSE: GRP) announced that Louis A. Raspino,
Senior Vice President and CFO, has resigned from the company to
accept a position at Pride International.
Chairman and CEO, Michael McShane commented, "We are obviously
disappointed to accept Lou's resignation. He has been an integral
part of the senior management team since his arrival in 2001, and
he has been especially supportive of me personally during my
transition. All of us at Grant Prideco wish him the very best at
Pride International. We've already begun the search for a
replacement and hope to make an announcement regarding such in the
near future."
Grant Prideco (S&P, BB- Corporate Credit Rating, Stable) --
http://www.grantprideco.com-- headquartered in Houston, Texas, is
the world leader in drill stem technology development and drill
pipe manufacturing, sales and service; a global leader in drill
bit technology, manufacturing, sales and service; a leading
provider of high-performance engineered connections and premium
tubulars in North America; and a provider of products, services
and technological solutions to offshore markets worldwide.
GREENWICH CAPITAL: S&P Assigns Low-B Ratings to 6 Note Classes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Greenwich Capital Commercial Funding Corp.'s $1.8
billion commercial mortgage pass-through certificates series
2003-C2.
The preliminary ratings are based on information as of
Dec. 2, 2003. Subsequent information may result in the assignment
of final ratings that differ from the preliminary ratings.
The preliminary ratings reflect the credit support provided by the
subordinate classes of certificates, the liquidity provided by the
fiscal agent, the economics of the underlying loans, and the
geographic and property type diversity of the loans. Classes A-1,
A-2, A-3, A-4, B, and C are currently being offered publicly.
Standard & Poor's analysis determined that, on a weighted average
basis, the pool has a debt service coverage of 1.49x, a beginning
loan-to-value of 92.2%, and an ending LTV of 82.7%.
PRELIMINARY RATINGS ASSIGNED
Greenwich Capital Commercial Funding Corp.
Commercial mortgage pass-thru certs series 2003-C2
Class Rating Amount
A-1 AAA 121,523,000
A-2 AAA 309,250,000
A-3 AAA 491,329,000
A-4 AAA 518,269,000
B AA 53,020,000
C AA- 22,091,000
D A 44,183,000
E A- 15,465,000
F BBB+ 24,300,000
G BBB 26,510,000
H BBB- 26,510,000
J BB+ 24,301,000
K BB 17,673,000
L BB- 11,046,000
M B+ 11,046,000
N B 11,045,000
O B- 6,628,000
P N.R. 33,137,840
XP* AAA **0
XC* AAA **1,767,326,840
* Interest only. ** Notional amount.
HEALTHNOW NY: Improved Earnings Prompts S&P's Outlook Revision
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
HealthNow New York Inc., which does business as Blue Cross Blue
Shield of Western New York, to positive from stable because of the
company's recently improved earnings and the expectation of
improved capital levels by year-end 2003.
Standard & Poor's also said that it affirmed its 'BB' counterparty
credit and financial strength ratings on HealthNow.
"The ratings are based on the company's marginal historical
earnings and capital, lack of clear leadership, increasing equity
portfolio, and highly competitive market, which are slightly
offset by a favorable regulatory environment," said Standard &
Poor's credit analyst Tom Taillon.
Standard & Poor's expects the positive financial performance of
HealthNow to outweigh the possible negative implications of a
vacant CEO position and highly competitive market. HealthNow's
total enrollment is expected to grow about 8% for the full year in
2003 and slow to about 3% growth in 2004 as more profitable
membership growth is sought. Operating performance is expected to
continue its positive trend in the near term. For 2003 and 2004,
Standard & Poor's expects HealthNow's pretax gains to be about $75
million. Statutory capital should exceed $190 million at year-end
2003. At year-end 2002, Standard & Poor's expects that HealthNow's
capital will increase but remain below a good level. At the end of
2004, capital is expected to exceed $250 million.
HealthNow's business profile is average. HealthNow has a dominant
market position in the Buffalo, New York, area and strong
relationships with the provider community. These strengths are
partially offset by strong competition from regional managed care
companies that have contributed to HealthNow's significant
enrollment losses in previous years. As measured by enrollment and
premium volume, HealthNow's market position has improved over the
last year, with premium continuing to grow because of sharp rate
increases. HealthNow has changed its strategy and indicated its
lack of desire to chase unprofitable business for the sake of
market share.
HIBERNIA CORP: Merger Pact Prompts Fitch to Affirm Low-B Ratings
----------------------------------------------------------------
Hibernia Corporation signed a definitive merger agreement with
Coastal Bancorp, Inc. in a move to accelerate its expansion in
Texas. Following the announcement, Fitch Ratings has placed the
ratings of CBSA (long-term senior 'BB') and its banking
subsidiary, Coastal Banc, ssb, on Rating Watch Positive and
affirmed the current ratings of HIB (long-term senior 'A-').
The acquisition, which is expected to close around 2Q04 pending
regulatory and CBSA's shareholders' approvals, adds approximately
$2.6 billion in assets, $1.6 billion in deposits and 44 branches
in 18 Texas counties, creating an institution with approximately
$20 billion in assets. CBSA, a thrift institution, has been trying
to accelerate its transition to a more commercial banking like
organization with varying degrees of success. Although HIB is
currently concentrated in Louisiana, this acquisition along with
its recent de novo Texas initiatives will improve geographic
diversity as on a pro forma basis approximately 22% of HIB's
deposits will be located in Texas, an increase from 12%.
The $230 million acquisition price will lever HIB's current
capital levels with an expected pro forma leverage ratio of
between 7% and 8% depending on the final mix of acquisition
funding. While capital will remain above many peer comparisons,
the maintenance of high capital levels had been a positive
differentiating factor for HIB. As it has done historically, we
would expect to see HIB build capital levels through earnings
retention.
Additionally, while this transaction accelerates and augments
HIB's existing Texas expansion plans, HIB is buying a company that
will need incremental investment and work to improve its overall
returns and balance sheet mix. For instance, CBSA still relies
heavily on CDs and other borrowings for funding while its assets
include a concentration in purchased lower yielding residential
mortgage loans. CBSA's customer base should benefit from HIB's
broader product mix and CBSA's branch franchise may give a boost
to HIB's expansion efforts in the Houston market. As with all
acquisitions, integration risk remains a factor and while HIB's
track record with earlier acquisitions has been satisfactory, it
has not undertaken an acquisition of this size and geographic
breadth in the past.
Ratings affirmed:
Hibernia Corporation
-- Long-Term Senior 'A-';
-- Short-Term 'F1' ;
-- Individual 'B';
-- Support '5';
-- Outlook 'Stable'.
Hibernia National Bank
-- Long-Term Deposits 'A';
-- Long-Term Senior 'A-';
-- Short-Term 'F1';
-- Short-Term Deposits 'F1';
-- Individual 'B';
-- Support '5';
-- Outlook 'Stable'.
Ratings Placed on Rating Watch Positive:
Coastal Bancorp, Inc.
-- Long-Term Senior 'BB';
-- Short-Term 'B';
-- Individual 'C'.
Coastal Banc, ssb
-- Long-Term Deposits 'BB+';
-- Long-Term Senior 'BB';
-- Short-Term 'B';
-- Short-Term Deposits 'B';
-- Individual 'C'.
Coastal Capital Trust I
-- Trust Preferred 'BB-'.
HOLIDAY RV: Signs-Up Blank Rome as Bankruptcy Counsel
-----------------------------------------------------
Holiday RV Superstores, Inc., hired Blank Rome LLP as its Chapter
11 Counsel, nunc pro tunc to October 20, 2003. The Debtors report
to the U.S. Bankruptcy Court that Blank Rome's attorneys have
developed a familiarity with the Debtor's assets, affairs and
business.
In this engagement, Blank Rome will be required to:
a. advise the Debtor with respect to its powers and duties
as a debtor and debtor-in-possession in the continued
management of its business aid properties;
b. attend meetings and negotiate with representatives of
creditors and other parties in interest and advise and
consult on the conduct of the case, including all of the
legal and administrative requirements of operating in
Chapter 11;
c. take all necessary action to aid the Debtor in
protecting and preserving the Debtor's estate, including
the prosecution of actions on its behalf, the defense of
any actions commenced against its estate, negotiations
concerning all litigation in which the Debtor may be
involved and objections to ;claims filed against the
estate;
d. prepare and prosecute on behalf of the Debtor all
motions, applications, answers, orders, reports and
papers necessary to the administration of the estate;
e. negotiate and prepare on the Debtor's behalf a plan of
reorganization, disclosure statement and all related
agreements and/or documents ;and take any necessary
action on behalf of the Debtor to obtain confirmation of
such plan;
f. advise the Debtor in connection with any sale of assets;
g. appear before this Court, any appellate courts, and the
U.S. Trustee, and protect the interests of the Debtor's
estate before such courts and; the U.S. Trustee; and
h. perform all other necessary legal services and provide
all other necessary legal advice to the Debtor in
connection with this Chapter 11 case.
The attorneys presently designated to represent the Debtor and
their current standard hourly rates are:
Mark J. Packel $400 per hour
Elio Battista, Jr. $215 per hour
Headquartered in Ft. Lauderdale, Florida, Holiday RV Superstores,
Inc., owns real property which is leased to an RV dealership. The
Company filed for chapter 11 protection on October 20, 2003
(Bankr. Del. Case No. 03-13221). Mark J. Packel, Esq., at Blank
Rome LLP represent the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
$3,221,137 in total assets and $15,368,975 in total debts.
HORIZON GROUP: Further Extends Odd Lot Share Repurchase Program
---------------------------------------------------------------
Horizon Group Properties, Inc. (Nasdaq: HGPI), an owner, operator
and developer of factory outlet centers and land developer,
extended the expiration date of its odd lot share repurchase
program for the purchase of all shares of its common stock held by
persons owning 20 or fewer shares as of the close of business on
September 26, 2003, to December 8, 2003, 3:00 p.m. New York City
time. HGPI will pay $5.00 for each share submitted by
stockholders eligible to participate in the program.
Based in Chicago, Illinois, Horizon Group Properties, Inc. has 9
factory outlet centers in 7 states totaling more than 1.8 million
square feet and a 650 acre mixed use land development in Huntley,
Illinois.
As reported in Troubled Company Reporter's November 11, 2003
edition, Horizon Group Properties completed the restructuring of
the second of three loans which had been in default since October
2001.
On November 6, 2003, HGPI paid off, at a discount, the loan
secured by the outlet center in Gretna, Nebraska. As previously
announced, HGPI paid off, at a discount, the loan secured by the
outlet center in Sealy, Texas on November 3, 2003. The final
portion of the restructuring of the GST Loans is the reinstatement
to current status of the loan secured by the outlet center in
Traverse City, Michigan, which is expected to be completed by
November 20, 2003.
HUDSON'S BAY: Obtains S&P's BB Rating for C$150-Mil. MTN Program
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' rating to
department store retailer Hudson's Bay Co.'s C$150 million MTN
program. At the same time, the ratings outstanding on the Toronto,
Ontario-based company, including the 'BB+' long-term corporate
credit and senior unsecured debt ratings, were affirmed. The
outlook is negative.
"The ratings reflect the company's continued weak profitability;
continued market share declines; and debt protection measures that
remain slightly weak for the ratings category," said Standard &
Poor's credit analyst Don Povilaitis. "These factors are partially
offset by continued cost containment, a strengthened capital
structure given a reduction in long-term debt, and a commitment to
competitive merchandising strategies at both The Bay and Zellers
stores," Mr. Povilaitis added.
HBC's third-quarter (ended Oct. 31, 2003) results were largely
flat, as revenues of C$1.71 billion, operating income of C$134.8
million, and net income of C$5.5 million all improved from the
same period last year, but only marginally. Despite modestly
higher third-quarter EBIT at both The Bay (up C$0.7 million) and
Zellers (up C$5.2 million), same store sales declined 2.7% for the
quarter at The Bay, while Zellers saw its comparable store sales
decline 1%. Return on permanent capital on a rolling basis remains
weak for the ratings category at 8%. To counter this weak
profitability, HBC has introduced a rather ambitious new long-term
strategy to generate revenue growth, focusing on merchandising,
customer profiling, purchasing, and store productivity. This
program targets annual sales growth to 2008 of 4% and EBIT growth
of 17%.
Nonetheless, the retail environment remains sluggish in Canada,
although some recovery is expected for the fourth quarter of this
year. Both The Bay and Zellers continued to lose market share to
the likes of Wal-Mart, which has announced an even more aggressive
expansion plan relating to its Canadian operations.
Incorporated in the ratings are the expectations of a
strengthening of profitability to at least historical levels, as
well as the successful refinancing of HBC's various maturities in
the next year--all in the context of a stable capital structure.
Although strengthening cash flow will eliminate much of the risk
relating to the company's upcoming maturities, in light of reduced
full-year guidance twice thus far in 2003, as well as higher
corporate tax rates recently imposed by the Ontario government,
such continued profitability pressures could result in a lowering
of the ratings.
IRON MOUNTAIN: Proposes $160MM Senior Subordinated Note Offering
----------------------------------------------------------------
Iron Mountain Incorporated (NYSE: IRM), the leader in records and
information management services, proposed a public offering of
$160 million in aggregate principal amount of its senior
subordinated notes.
The Company expects to offer additional notes that will be
identical to its previously issued 6-5/8% Senior Subordinated
Notes due 2016 and to price the additional notes at a yield that
reflects prevailing market interest rates. The Company intends to
use the net proceeds from the offering to fund the repurchase or
redemption of the 8-1/8% Senior Notes due 2008 of Iron Mountain
Canada Corporation, a wholly-owned subsidiary, which the Company
has guaranteed on a senior subordinated basis, and for general
corporate purposes, including the repayment of a portion of its
real estate term loans, the possible repayment of outstanding
indebtedness under its revolving credit facility, the possible
repayment of other indebtedness and possible future acquisitions
and investments. The exact terms and timing of the offering will
depend upon market conditions and other factors.
The offering will be made only by means of a prospectus.
Iron Mountain Incorporated (S&P, BB- Corporate Credit Rating,
Stable) is the world's trusted partner for outsourced records and
information management services. Founded in 1951, the Company has
grown to service more than 150,000 customer accounts throughout
the United States, Canada, Europe and Latin America. Iron Mountain
offers records management services for both physical and digital
media, disaster recovery support services and consulting services
-- services that help businesses save money and manage risks
associated with legal and regulatory compliance, protection of
vital information, and business continuity challenges. For more
information, visit http://www.ironmountain.com/
ISTAR FINANCIAL: Commences $250-Million Senior Notes Offering
-------------------------------------------------------------
iStar Financial Inc. (NYSE: SFI) has commenced an offering of $250
million of Senior Notes due December 2010.
The offering is being managed by Deutsche Bank Securities, as the
sole book-running lead manager, Banc of America Securities LLC as
a co-lead manager, and Bear, Stearns & Co. Inc., Fleet Securities,
Inc., Goldman, Sachs & Co., and Lehman Brothers as co-managers.
The Notes will be unsecured senior obligations of iStar Financial.
The net proceeds of the offering will be used to repay existing
secured indebtedness.
The offering is being made solely by means of a prospectus
supplement and accompanying prospectus, copies of which will be
filed with the Securities and Exchange Commission and can be
obtained from Deutsche Bank Securities Inc., 60 Wall Street, New
York, New York 10005, Attn: Prospectus Department.
iStar Financial is the leading publicly traded finance company
focused on the commercial real estate industry. The Company
provides custom-tailored financing to high-end private and
corporate owners of real estate nationwide, including senior and
junior mortgage debt, senior, mezzanine and subordinated corporate
capital, and corporate net lease financing. The Company, which is
taxed as a real estate investment trust, seeks to deliver a strong
dividend and superior risk-adjusted returns on equity to
shareholders by providing innovative and value-added financing
solutions to its customers. Additional information on iStar
Financial is available on the Company's Web site at
http://www.istarfinancial.com
As previously reported, Fitch Ratings assigned a 'BB' rating to
iStar Financial Inc.'s 7-7/8% series E cumulative redeemable
preferred stock. The securities rank pari passu with iStar's
existing series A, B, C and D cumulative redeemable preferred
stock. iStar's senior unsecured debt rating and Rating Outlook is
'BBB-' and Stable, respectively.
J.A. JONES: Braude & Margulies Serving as Litigation Counsel
------------------------------------------------------------
J.A. Jones, Inc., and its debtor-affiliates seeks to employ
Braude & Margulies, PC as Special Litigation Counsel.
To fulfill their duties as debtors-in-possession under the
Bankruptcy Code, the Debtors will require assistance of special
litigation counsel for advice concerning litigation matters
related to certain unliquidated causes of action that the Debtors
hold against certain entities.
The professional services that the Firm, through its attorneys,
will render include:
a) advising the Debtors with respect to its rights and
remedies in the Lawsuits;
b) preparing on behalf of the Debtors all necessary
pleadings, discovery, notices, lien filings and other
legal documents in the Lawsuits;
c) representing the Debtors in negotiations, discussions,
litigation, mediation, arbitration or other proceedings
related to the lawsuits; and
d) performing any and all legal services on behalf of the
Debtors necessary to preserve or advance any rights and
remedies the Debtors may have in the Lawsuits. In the
opinion of the Debtors, employing the Firm for these
purposes is in the best interests of the Debtors, their
estates and creditors.
The Debtors will employ Braude & Margulies and compensate it on a
contingency pay basis of 25% of any amounts collected on the
Causes of Action. The Debtors believe that this contingency fee
is fair and reasonable and is commensurate with the fees the
Firm's customary charges.
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.
KAISER ALUMINUM: Court Approves L.A. Scrap and CIT Settlement
-------------------------------------------------------------
The Kaiser Aluminum Debtors operate an aluminum extrusion plant in
Commerce, California that, in the ordinary course of operations,
receives shipments of metals from numerous sources. In February
2002, Los Angeles Scrap Iron & Metal Corp. delivered various
shipments of scrap metal and 5,800 pounds of copper chop to the
Plant, which was used by the Debtors. The Scrap Metal cost
$535,934 while the Copper cost $3,697. In the same month, L.A.
Scrap made a written demand to the Debtors for the return of the
Scrap Metal and Copper. At the time the Reclamation Demand was
asserted, the Debtors had melted and incorporated all the Scrap
Metal and 75% of the Copper into the manufacturing process. The
Debtors believe that the Scrap Metal and Copper could still
potentially be traced through the process and to specific
products.
In July 2002, L.A. Scrap assigned any reclamation rights it held
against the Debtors to CIT Group/Business Credit, Inc.
Subsequently, L.A. Scrap and CIT filed an adversary proceeding
against the Debtors. In the Lawsuit, L.A. Scrap and CIT assert
entitlement to a reclamation claim pursuant to Section 546(c) of
the Bankruptcy Code and Section 2-702 of the Uniform Commercial
Code as adopted in California and Washington. L.A. Scrap and CIT
asked the Court to:
(a) affirm their reclamation right; and
(b) grant a $539,632 replacement lien or direct the Debtors
to immediately pay administrative expenses on account of
the Metal.
In addition, L.A. Scrap and CIT filed proofs of claim, each for
$1,404,443.
To resolve the disputes, the Debtors, L.A. Scrap and CIT entered
into a settlement agreement, which the Court approved. The
principal terms of the Settlement Agreement are:
(a) The Debtors will pay CIT $175,000 in satisfaction of the
Reclamation Claim;
(b) CIT's Claim No. 482 for $1,404,443 is reduced and allowed
as a general, non-priority, unsecured claim for $950,000;
(c) L.A. Scrap's Claim No. 7221 for $1,404,443 is disallowed
and expunged in its entirety; and
(d) The automatic stay is modified to permit the Debtors and
L.A. Scrap and CIT to effectuate the Settlement Agreement.
(Kaiser Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KINGSWAY FINANCIAL: Laura Foster Appointed as AVP Internal Audit
----------------------------------------------------------------
William G. Star, President & Chief Executive Officer of Kingsway
Financial Services Inc. (TSX:KFS, NYSE:KFS) announced the
appointment of Laura Foster to Assistant Vice President, Internal
Audit and Corporate Compliance of Kingsway Financial Services Inc.
Ms. Foster is a chartered accountant and brings over 7 years of
insurance industry experience to her new position. Prior to
joining Kingsway, Ms. Foster was Assistant Vice President,
Corporate Compliance with a multi-national life insurance company
in Canada.
"I am pleased to welcome Laura to our executive team", said Bill
Star, President and Chief Executive Officer. "I am confident that
we will benefit from her experience and expertise in these key
areas of corporate governance."
Kingsway's primary business is trucking insurance and the insuring
of automobile risks for drivers who do not meet the criteria for
coverage by standard automobile insurers. The Company currently
operates through nine wholly-owned insurance subsidiaries in
Canada and the U.S. Canadian subsidiaries include Kingsway General
Insurance Company, York Fire & Casualty Insurance Company and
Jevco Insurance Company. U.S. subsidiaries include Universal
Casualty Company, American Service Insurance Company, Southern
United Fire Insurance Company, Lincoln General Insurance Company,
U.S. Security Insurance Company, American Country Insurance
Company and Avalon Risk Management, Inc. The Company also operates
reinsurance subsidiaries in Barbados and Bermuda. Kingsway
Financial, Lincoln General Insurance Company, Universal Casualty
Insurance Company, Kingsway General, York Fire, Jevco and Kingsway
Reinsurance (Bermuda) are all rated "A-" Excellent by A.M. Best.
The Company's senior debt is rated investment grade 'BBB-'
(stable) by Standard and Poor's and 'BBB' (stable) by Dominion
Bond Rating Services. The common shares of Kingsway Financial
Services Inc. are listed on the Toronto Stock Exchange and the New
York Stock Exchange, under the trading symbol "KFS".
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'BB+' global scale preferred share rating to Kingsway
Financial Services' guarantee of Kingsway Financial Capital Trust
I's U.S. trust preferred securities issue of up to US$72 million.
The 'BBB' long-term counterparty credit rating on KFS remains
unchanged. The outlook is stable.
KRATON: S&P Assigns Negative Outlook to BB- Corp. Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Kraton Polymers LLC, and assigned a negative
outlook, following a review of the proposed refinancing plan
related to the company's recent acquisition by Texas Pacific Group
and J.P. Morgan Partners. The rating was removed from CreditWatch,
where it was placed on Aug. 20, 2003, with developing implications
following the announcement that Kraton's majority shareholder,
Ripplewood Holdings, was exploring a sale of the company.
At the same time, Standard & Poor's assigned its 'BB-' rating to
Kraton's proposed $60 million senior secured revolving credit
facility due 2008 and its $330 million senior secured term loan
due 2010, based on preliminary terms and conditions. Standard &
Poor's also assigned its 'B' rating to the company's proposed $230
million senior subordinated notes due 2013. Houston, Texas-based
Kraton is the leading global producer of styrenic block
copolymers. The outlook is negative.
"If completed as proposed, the financing package will be used to
fund Texas Pacific Group's and J.P. Morgan Partners' acquisition
of Kraton Polymers from Ripplewood Holdings for approximately $770
million," said Standard & Poor's credit analyst Franco DiMartino.
While the financing adds a material amount of debt to the
financial structure, a modest improvement in profitability and
material free cash generation over the next few years should
enable Kraton to reduce leverage to a level appropriate for the
current rating. The company is also aided by an improved debt
maturity profile and solid liquidity, provided by full
availability under the revolving credit facility at closing.
However, the negative outlook underscores the risk of a lower
rating if debt reduction is not achieved and highlights the fact
that Kraton's ability to withstand another operating challenge,
including the potential for sharply higher raw material costs, has
clearly diminished.
The ratings on Kraton reflect the company's aggressive financial
profile, including substantial leverage, offset by an average
business position as the leading producer of styrenic block
copolymers.
LAIDLAW INC: Discloses Common Equity and Shareholder Matters
------------------------------------------------------------
Laidlaw International, Inc.'s common stock was issued on the
effective date, June 23, 2003, and commenced trading on the
Toronto Stock Exchange under the symbol "BUS." Additionally, the
common stock is traded on the over-the-counter in the United
States with trades posted on the OTC Bulletin Board under the
symbol "LALW".
The initial holders of Laidlaw International common stock were
the creditors of the former company, Laidlaw Inc. Pursuant to
the Plan, the common stock of the Predecessor Company, Laidlaw
Inc., was cancelled for no consideration.
The high and low sale prices for the common stock traded on the
over-the-counter, as posted on the OTC Bulletin Board are:
HIGH LOW
---- ---
(in U.S. $)
YEAR ENDED AUGUST 31, 2003:
First Quarter NA NA
Second Quarter NA NA
Third Quarter NA NA
Fourth Quarter (from June 23, 2003) $10.52 $7.449
The high and low sale prices for the common stock traded on the
Toronto Stock Exchange are:
HIGH LOW
---- ---
(in Canadian $)
YEAR ENDED AUGUST 31, 2003:
First Quarter NA NA
Second Quarter NA NA
Third Quarter NA NA
Fourth Quarter (from June 23, 2003) $14.60 $10.00
On November 24, 2003, the last sale price of the common stock as
reported by the OTC Bulletin Board was $13.00 per share, and
CND$17.00 per share, in the Toronto Stock Exchange. There were
57 holders of record of Laidlaw International common stock.
Laidlaw International never paid any cash dividends in their
common stock, and Laidlaw's Board of Directors currently intends
to retain all earnings for use in their business for the
foreseeable future. Any future payment of dividends will depend
on the results of operations, financial condition, cash
requirements, restrictions contained in credit and other
agreements and other factors deemed relevant by the Board of
Directors. In addition, covenants in the indenture governing
senior notes and senior secured credit facility restrict
Laidlaw's ability to pay dividends, and may prohibit the payment
of dividends and certain other payments. (Laidlaw Bankruptcy News,
Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000)
LTV: Court to Consider Liquidating Debtors' Plan on December 17
---------------------------------------------------------------
Drawing only a Disclosure Statement objection from Oil States
International, and backed by a letter to all of the VP Buildings
Debtors' creditors by Glenn J. Moran, the VP Building Vice
President, the LTV Debtors win Judge Bodoh's approval of the
Disclosure Statement, but with certain modest modifications to
correct typographical and similar errors. The VP Building Debtors
presented to the Court their First Amended Disclosure Statement
and First Amended Plan to reflect "non-material modifications."
Judge Bodoh also set November 3, 2003 as the Record Date. Judge
Bodoh will convene a hearing on December 17, 2003 to consider the
confirmation of the Plan. Confirmation objections are due no ater
than December 11, 2003. (LTV Bankruptcy News, Issue No. 58;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
MAGELLAN HEALTH: Asks Court to Expand Ernst & Young's Engagement
----------------------------------------------------------------
The Magellan Health Services Debtors ask the Court pursuant to
Sections 327(a) and 328(a) and Rule 2014(a) of the Federal Rules
of Bankruptcy Procedure, to further expand the scope of Ernst &
Young, LLP's employment to include certain additional auditing
services as set forth in a letter agreement, dated October 15,
2003, between the Debtors and E&Y.
Mark S. Demilio, Executive Vice President and Chief Financial
Officer of Magellan Health Services, Inc., informs the Court that
the Debtors require the additional auditing services to comply
with certain contracts and regulations that require them to
provide audited financial statements of their subsidiaries.
Because E&Y has a wealth of experience in providing auditing
services and is extremely familiar with the Debtors' financial
affairs, the Debtors believe that E&Y has the necessary
background to satisfy these additional auditing needs.
Scope of the Auditing Services
Pursuant to the Letter Agreement, E&Y will audit and report on
the financial statements of these subsidiaries and divisions of
Magellan:
Subsidiary/Division Period
------------------- ------
Hamilton County Division of
Magellan Public Solutions Year ended August 31, 2003
Human Affairs International
of California, Inc. Year ended September 30, 2003
Merit Behavioral Care of
California, Inc. Year ended September 30, 2003
Vista Behavioral Health
Plans, Inc. Year ended September 30, 2003
Arizona Biodyne, Inc. Year ended September 30, 2003
Merit Behavioral Care of
North Carolina, Inc. Year ended September 30, 2003
According to Mr. Demilio, these entities are:
(1) regulated by state regulatory agencies to which they are
required to submit audited financial statements; or
(2) parties to a contract with a customer, which requires that
they submit audited financial statements to the customer.
Because the Debtors originally contemplated that they would have
emerged from Chapter 11 prior to the time that the audits for
these entities were conducted, they did not seek approval for E&Y
to perform these services, Mr. Demilio explains.
Proposed Compensation
The customary hourly rates, subject to periodic adjustments,
charged by E&Y's personnel anticipated to render the services
are:
Partners and Principals $530 - 650
Senior Managers 410 - 510
Managers 305 - 390
Seniors 210 - 285
Staff 155 - 185
E&Y will also request reimbursement of actual expenses incurred
in delivering the agreed services. E&Y intends to apply to the
Court for payment of compensation and reimbursement of expenses
in accordance with applicable provisions of the Bankruptcy Code,
the Bankruptcy Rules, the guidelines promulgated by the Office of
the United States Trustee for the Southern District of New York
and the Local Rules and Court orders.
E&Y's Disinterestedness
E&Y Partner, Gerald E. Stone, assures the Court that the firm
does not hold any interest adverse to the Debtors' estates and
that it is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
Mr. Stone notes that E&Y is a large company and may represent or
may have represented certain of the Debtors' creditors or equity
holders or other parties-in-interest in matters unrelated to
these cases. E&Y will supplement its disclosure to the Court as
new facts and circumstances arise.
Mr. Demilio contends that the Auditing Services are necessary to
enable the Debtors to comply with governmental and contractual
requirements. The Debtors believe that E&Y possesses extensive
knowledge and financial expertise relevant to these cases and the
Debtors' businesses, and that E&Y is well qualified to render the
Auditing Services efficiently and economically. The expansion of
E&Y's employment is necessary and essential.
The Auditing Services are not intended to be duplicative in any
manner with the services performed and to be performed by any
other party retained by the Debtors, Mr. Demilio assures the
Court. PricewaterhouseCoopers LLP serves as the Debtors'
internal auditors. E&Y, in concert with PwC, will undertake
every reasonable effort to avoid any duplication of their
services. (Magellan Bankruptcy News, Issue No. 19: Bankruptcy
Creditors' Service, Inc., 215/945-7000)
MANDALAY RESORT: Reports Improved Third-Quarter 2003 Results
------------------------------------------------------------
Mandalay Resort Group (NYSE: MBG) announced record results for its
third quarter ended October 31, 2003.
For the quarter, the company reported net income of $40.6 million,
or $.63 per diluted share, compared with $33.2 million, or $.47
per diluted share, in the prior year.
Results in the current year quarter include preopening expenses of
$4.0 million ($.04 per diluted share) related primarily to
THEhotel, the new 1,122-suite tower slated to open at Mandalay Bay
on December 17. Results for the quarter also include a gain of
$1.0 million ($.01 per diluted share) representing the quarterly
adjustment of the carrying value of investments associated with
the company's executive retirement plan. Excluding the above
items, the company's diluted earnings per share represent an all-
time record for the third quarter.
Results for the prior-year third quarter include preopening
expenses of $1.2 million ($.01 per diluted share) related to the
new convention center at Mandalay Bay that opened in January 2003,
and a loss of $2.5 million ($.02 per diluted share) representing
the quarterly adjustment to the carrying value of the retirement
plan investments.
Average diluted shares outstanding in the quarter were 64.9
million versus 71.1 million in the prior year, reflecting the
effect of share repurchases over the last three months of the
prior fiscal year (when the company repurchased 4.4 million
shares), as well as the settlement earlier this year of the
company's equity forward agreement (pursuant to which the company
acquired another 3.3 million shares). These share acquisitions
were partially offset by the issuance of 5.6 million shares of
stock pursuant to the exercise of employee stock options during
the current fiscal year (of which 3.4 million shares were issued
during the third quarter). These option exercises generated
almost $90 million in proceeds to the company. In addition, the
company will reap approximately $40 million in related income tax
benefits (the gain recognized by the option holder is deductible
by the company for tax purposes as compensation expense). In
fact, due in large part to the impact of stock option exercises,
the company anticipates that it will not pay any income taxes for
fiscal 2004. Total shares outstanding (excluding any dilutive
effect from outstanding stock options) were 64.9 million at
October 31, 2003, compared with 66.6 million at October 31, 2002.
Mandalay's operating cash flow was $167.0 million for the third
quarter, which compares with $152.0 million in the prior year
quarter. The financial schedules accompanying this release
provide a reconciliation of operating cash flow to net income as
required by the Securities and Exchange Commission's Regulation G.
LAS VEGAS STRIP
Operating cash flow at the company's Las Vegas Strip properties
(including the 50%-owned Monte Carlo) increased 24% in the third
quarter compared to the prior year, as revenue per available room
jumped 19%. Each of these properties reported double-digit
increases in REVPAR and operating cash flow.
Mandalay Bay generated operating cash flow of $44.8 million in the
third quarter, compared with $38.0 million last year. REVPAR rose
22% based on an average room rate of $186 and 90% occupancy, as
compared to an average room rate of $172 and 80% occupancy in the
prior year. Luxor, meanwhile, generated operating cash flow of
$31.5 million, up from $25.2 million in last year's third quarter.
REVPAR at this property increased 17%, as the average room rate
topped $106. Excalibur, for its part, produced the largest
increase in operating cash flow in the quarter, up 36% to $26.0
million. Not only did this property deliver a 17% increase in
REVPAR, but casino revenues were up 9% as well. "With rapidly
escalating results at Mandalay Bay, and Luxor and Excalibur
returning to their pre-9/11 levels, there is ample evidence of the
growing stature and drawing power of our Mandalay Mile," noted
Glenn Schaeffer, the company's President and Chief Financial
Officer.
At Circus-Circus, operating cash flow was $16.1 million in the
third quarter, up 18% from the prior year. REVPAR at this
property increased 10% compared to a year ago. Meanwhile, Monte
Carlo (50%-owned by Mandalay) reported a 28% increase in operating
cash flow, to $24.1 million from $18.9 million, with REVPAR rising
21%.
OTHER NEVADA MARKETS
On a combined basis, operating cash flow declined in the third
quarter at the company's other Nevada properties (in Reno,
Laughlin, Jean and Henderson). Results at these properties reflect
the effects of expanded Native American gaming in California.
Operating cash flow from these properties represents approximately
8% of the company's total operating cash flow.
OTHER MARKETS
In Elgin, Illinois, operating cash flow at the 50%-owned Grand
Victoria was $13.5 million in the third quarter, down from $21.6
million in the prior year. The decrease was attributable to
higher gaming taxes which took effect July 1, 2003 and raised the
top-end rate to 70% on gaming revenues exceeding $250 million.
This tax increase impacted Mandalay's earnings by approximately
$.04 per diluted share in the third quarter.
In Detroit, Michigan, MotorCity produced operating cash flow of
$32.5 million, up slightly from $31.8 million in the previous
year. Meanwhile, in Tunica County, Mississippi, operating cash
flow at the company's Gold Strike Resort increased 10% to $7.8
million from $7.1 million last year.
RECENT TRANSACTIONS
On November 1, 2003, the company paid a quarterly dividend of $.25
per share to shareholders of record October 15. On December 2,
2003, the company's Board of Directors declared a dividend of $.27
per share payable February 2, 2004 to shareholders of record
January 15, 2004.
On November 17, 2003, the company redeemed $145.6 million of its
$150 million 6.70% Debentures due 2096. These debentures were
redeemable at the option of their holders at 100% of their
principal amount plus accrued interest. This redemption was
funded utilizing borrowings under the company's revolving credit
facility.
On November 25, 2003, the company issued $250 million 6-3/8%
Senior Notes due 2011. The net proceeds, along with borrowings
under the company's revolving credit facility, were used to
permanently repay in its entirety the company's $250 million term
loan facility. The company has also entered into new fixed-to-
floating interest rate swap agreements tied to this issuance,
which reduced the effective interest rate on the new notes to
LIBOR plus 1.73%, slightly below the rate the company was paying
on its term loan facility.
In October, the company opened Mandalay Place, a retail center
located between Mandalay Bay and Luxor. The center will
eventually include 90,000 square feet of retail space and
approximately 40 stores and restaurants, including several
upscale, internationally branded retailers such as Oilily,
Davidoff, GF Ferre and Nike Golf. Approximately 25 of these
outlets are currently open, with the balance opening over the next
several weeks.
Construction is substantially completed on THEhotel, the new all-
suites tower at Mandalay Bay, which is slated to open December 17.
THEhotel will also feature meeting suites, a spa and fitness
center and two restaurants, including a rooftop venue "Mix in Las
Vegas" created by famed chef Alain Ducasse. The first "Mix"
recently opened in New York.
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: Bank Facility and Sub. Notes Earn S&P's Low-B's
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Mariner Health Care Inc.'s $220 million secured bank facility, and
its 'B-' rating to the company's $175 million senior subordinated
notes due 2013. The credit facility comprises an $85 million
revolving credit facility due 2007 and a $135 million term loan B
due 2009. At the same time, Standard & Poor's affirmed its 'B+'
corporate credit rating. Proceeds will be used to refinance the
company's existing debt.
Standard & Poor's rates the secured bank facility one notch above
the corporate credit rating, as the collateral value of the
company's assets in a distressed scenario should enable lenders to
fully recover outstanding principal.
The outlook on Mariner is stable. The Atlanta, Georgia-based
company owns and operates 264 nursing homes in 22 states and 12
long-term acute-care hospitals in four states.
"The speculative-grade ratings on Mariner Health Care Inc. reflect
its focus in an industry characterized by volatile reimbursement
and significant patient-liability exposure, factors offset by the
company's proactive corporate strategies to meet these
challenges," said Standard & Poor's credit analyst David Peknay.
The company emerged from bankruptcy in 2002 carrying a lighter
debt burden (a large acquisition-related debt load had contributed
to the company's need to seek creditor protection). As of
Sept. 30, 2003, total debt outstanding was $480 million.
Mariner's reasonably diversified portfolio has its largest
concentrations in Texas, Colorado, and North Carolina. Mariner
recently completed the divestiture of 26 of its 27 facilities in
Florida. The company is vulnerable to reimbursement risk, as more
than 80% of its revenues are derived from Medicare (34%) and
Medicaid (48%). Reimbursement trends have been historically
volatile, and there were significant cuts in the late '90s and
again in late 2002; however, pricing has recently been more
favorable. Medicare recently increased rates 6.26%, and Medicaid
rates have experienced, on average, modest increases.
Mariner is not expected to be acquisitive nor expand into other
businesses. Instead, it will focus its efforts on improving its
currently weak operating performance. The sale of the Florida
facilities will somewhat help margins, as significant costs of
patient liability in that state have been a major problem.
Mariner's operating margin was only 5.0% for the 12 months ended
Sept. 30, 2003, and will likely remain the lowest of the
comparable peer group of rated nursing home companies, partly
because of its large presence in Texas, a lower occupancy market
where the company has about 30% of its facilities. Debt has been
reduced with substantially all the proceeds from the sale of the
Florida facilities, but to a level still consistent with the
rating.
MIRANT: Requests Court to Stay Director and Officer Litigation
--------------------------------------------------------------
The Mirant Debtors ask the Court to:
(a) stay certain outstanding lawsuits against their
current and former officers, directors and indemnities,
pursuant to Sections 105(a) and 362 of the Bankruptcy
Code; and
(b) authorize insurance companies to make advancements and
payments in accordance with their D&O and fiduciary
insurance policies.
The Stay
Ian T. Peck, Esq., at Haynes and Boone LLP, in Dallas, Texas,
relates that the Debtors operate in an extremely volatile
industry and are currently subject to a staggering array of
pending litigations and investigations concerning their
operations in various markets. Currently, there are:
* two separate securities actions, one of which consolidates
20 actions, against the Debtors and their officers and
directors;
* 19 ratepayer actions alleging state antitrust or unfair
practices claims;
* four shareholder derivative actions; and
* more than 30 personal injury, contractual, employment,
environmental, liens and other tort matters.
On July 16, 2003, the Court directed the certain parties to
comply with Sections 362 and 525 of the Bankruptcy Code -- the
Stay Order. Pursuant to the Stay Order, the Debtors filed
Suggestions of Bankruptcy, or similar notices, in the Litigations
in which the Debtors are defendants and are affected by the Stay
Order. However, Mr. Peck notes that the Stay Order only affects
the matters to the extent the claims are made against one or more
of the Debtors. To the extent the Litigations involve officers
or director individual defendants or third-parties that one or
more Debtors agreed to indemnify or that has made a claim for
indemnification or whose liability the Debtors assumed and agreed
to defend, those matters continue to proceed notwithstanding the
Debtors' Chapter 11 petitions.
With this motion, the Debtors intend to place a structure on
these various private actions to allow them to conduct the
business of reorganization without the distraction, financial
drain and potential adverse consequences attendant to waging
litigation battles on multiple fronts. By getting the stay, the
Debtors hope to preserve the breathing room afforded to them by
Chapter 11 and, in a measured fashion, resolve the actions
against them and those they have committed to defend and
successfully reorganize.
Mr. Peck contends that the stay request should be granted
because:
(i) this Court has jurisdiction to enjoin other actions
related to the bankruptcy case under Section 1334(b) of
the Judiciary Code;
(ii) Section 105(a) allows the Bankruptcy Court to stay
actions or proceedings against non-debtors pursuant to
Section 362(a);
(iii) certain of the Debtors' current officers are essential in
their operations and in their efforts to reorganize
successfully;
(iv) pursuant to its indemnification obligations, Mirant is
responsible for paying the defense costs and any
liability incurred by the individual defendants, which
will very likely impose a negative impact on the Debtors'
estates; and
(v) the prerequisites of a preliminary injunction is present:
-- there is substantial likelihood that the Debtors will
successfully reorganize;
-- the Debtors will be harmed if the actions are not
enjoined because the continuation of the actions will
impede their ability to reorganize successfully and
will have a negative effect on the estate;
-- the harm to the Debtors outweighs any harm of delay to
the plaintiffs in those various actions; and
-- it will serve the public interest if the Debtors are
able to reorganize successfully.
The Insurance Policies
The Debtors currently operate under an umbrella of liability
insurance policies issued both prior to the spin-off from the
Southern Company in April 2001 and thereafter. Associated
Electric & Gas Insurance Services Limited issued a primary
insurance policy in favor of Southern and its subsidiaries
entitled "Directors and Officers Liability Insurance Policy No
D0278A1A99." The coverage period of the Southern D&O Policy was
from August 1, 1999 to August 1, 2002, with a $35,000,000 policy
limit. Since Mirant was formerly a subsidiary of Southern, the
Debtors are covered by the Southern D&O Policy with respect to
certain claims that arose in whole or in party prior to the spin-
off of Mirant from Southern in April 2001.
"The entities and individuals are also covered under certain
excess liability insurance policies from 14 different carriers,
which contain terms substantially similar to the primary Southern
D&O Policy," Mr. Peck states. When the excess policies are taken
together with the primary policy, Mirant has up to $400,000,000
of D&O insurance coverage for certain securities lawsuits,
derivative lawsuits and ratepayer lawsuits, subject to terms and
conditions of the policies. There is no reasonable likelihood
that payment of defense costs as requested in this motion will
materially deplete the available insurance proceeds under the
policies.
In addition to the Southern D&O Policy, Associated Electric also
issued to Southern a Fiduciary and Employee Benefit Insurance
Policy No. F0278A1A01. As with the Southern D&O Policy, the
Debtors and their officers and directors are entitled to coverage
with respect to certain claims under the Southern Fiduciary
Policy. Mirant also directly owns these primary policies under
which claims and notices have been made relating to the
Litigations:
(1) Directors and Officers Liability Insurance Policy No.
D1069A1A01; and
(2) Fiduciary and Employee Benefit Insurance Policy No.
F1069A1A01.
Mr. Peck asserts that, because substantially all of the relevant
litigations and proceedings concern the Southern D&O Policy, and
by extension the related excess liability policies, its terms are
most relevant here. Section I(a)(2) of the Southern D&O Policy
provides that Associated Electric will pay on behalf of Southern
all sums incurred pursuant to the indemnification provisions,
which Southern is legally obligated to pay to officers and
directors by reason of a "wrongful act" occurring during the
policy period and for which a claim is first made during the
policy period.
In addition, Endorsement 12, effective August 1, 1999, provides
that if Southern or its subsidiaries is named as a defendant in a
non-securities suit along with a covered officer or director,
Associated Electric will pay for the loss Southern incurred in
connection therewith, provided that the loss directly relates to
a claim that would be covered if asserted against an officer or
directors of the defendant, and provided that the claim is made
during the policy period.
Endorsement 13 expressly provides for reimbursement of defense
costs if securities claims are withdrawn without payment or
dismissed with a finding of no liability under specific
conditions.
Mr. Peck relates that important in this request is that there is
a "priority of payments" endorsement in the Mirant and Southern
D&O Policy that provides that the fees and expenses incurred by
the directors and officers, including payment of Defense Costs,
are to be paid firs -- i.e. prior to the amounts owed to Mirant.
Under Endorsement 15 of the Southern D&O Policy, Associated
Electric will first pay for covered claims on behalf of covered
directors and officers and then, as to remaining limits of
liability with respect to a covered loss, will pay or withhold
payment at the written request of the chief executive officer of
the covered company.
Associated Electric has provided notice to both Mirant and
Southern that, absent a Court Order, it cannot and will not make
advancements toward defense costs or payments of any losses or
liabilities under the D&O or fiduciary and employee benefit
policies. Associated Electric indicated that it is prepared to
make those advancements and payments, but that it requires an
order from the Court authorizing any advancements and payments
under the policies.
Through the near term, Mr. Peck informs the Court that the total
outstanding defense costs total about $815,000.
Accordingly, Mr. Peck contends that the Court should clarify that
the automatic stay does not prevent any of the D&O and fiduciary
insurers from performing under their policies during the pendency
of these bankruptcy cases. This relief is necessary because:
(i) to the extent the Court does not stay a proceeding
against any particular non-debtor defendant in the
Litigations, performance under the policies will reduce
the Debtors' postpetition financial obligations;
(ii) even if the Court grants the stay requested, certain
indemnified fees and expenses have accrued to date which
the Debtors have an obligation to pay and which can be
paid from the relevant insurance policies; and
(iii) the Section 105(a) relief does not apply to the
non-stayed Litigations and Investigations, which may
exempt from the automatic stay and which are currently
generating fees and expenses which can be paid from the
relevant policies.
Furthermore, Mr. Peck points out that:
-- the relevant policies are not property of the estate; and
-- to the extent that the Court finds that a particular D&O
or Fiduciary Policy is property of the estate, the Court
should lift the automatic stay to allow performance for
there is not legitimate concern that the payment of the
defense costs will materially deplete the available
coverage. (Mirant Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
MOSAIC GROUP: Administrative Expense Claims Bar Date is Today
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas sets
5:00 p.m. today as the administrative expense claims bar date in
the Chapter 11 cases of Mosaic Group (US) Inc., and its debtor-
affiliates. Claim holders must file appropriate pleadings with
the Court to have their claims allowed. Copies of the pleadings
must also be served on the Debtors' lawyers:
Akin Gump Strauss Hauer & Feld LLP
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
Attn: Charles R. Gibbs, Esq.
Kevin D. Rice, Esq.
-and-
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022
Attn: David H. Botter, Esq.
Creditors need not file to have their Administrative Expense
Claims allowed if they are on account of:
1. claims with necessary pleadings already previously
filed with the Bankruptcy Court;
2. claims previously allowed by the Bankruptcy Court;
3. claims for compensation and reimbursement of expenses
related to the Chapter 11 cases of the Debtors;
4. claims for fees and charges assessed against any
Debtor's bankruptcy estate; and
5. claims which arose after November 4, 2003.
Mosaic Group (US) Inc., a world-leading provider of results-
driven, measurable marketing solutions for global brands, filed
for chapter 11 relief on December 17, 2002. Charles R. Gibbs,
Esq., David H. Botter, Esq., and Kevin D. Rice, Esq., at Akin,
Gump, Strauss, Hauer & Feld, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed estimated debts and assets of over $100
million each.
NEWTECH RESOURCES: Taps Jones Simkins LLP as New Accountants
------------------------------------------------------------
On November 3, 2003, Newtech Resources, Ltd. dismissed Bingham and
Company, the principal accountant previously engaged to audit the
Company's financial statements and retained Jones Simkins LLP as
the principal accountants to replace Bingham. The Company's Board
of Directors approved the change of accountants from Bingham to
Jones.
The audit reports of Bingham on the Company's financial statements
for the fiscal years ending August 31, 2002 and August 31, 2001
were modified to include an explanatory paragraph for a going
concern uncertainty.
NORTHWEST AIRLINES: Flies 5.21BB Revenue Passenger Miles in Nov.
----------------------------------------------------------------
Northwest Airlines (Nasdaq: NWAC) announced a systemwide November
load factor of 76.3 percent, 5.2 points above November 2002.
Northwest flew 5.21 billion revenue passenger miles (RPMs) and
6.83 billion available seat miles (ASMs) in November 2003, a
traffic decrease of 1.1 percent and a capacity decline of 7.9
percent versus November 2002.
Northwest Airlines (S&P, B+ Corporate Credit Rating, Negative) is
the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,500 daily departures. With its travel partners,
Northwest serves nearly 750 cities in almost 120 countries on six
continents. In 2002, consumers from throughout the world
recognized Northwest's efforts to make travel easier. A
2002 J.D. Power and Associates study ranked airports at Detroit
and Minneapolis/St. Paul, home to Northwest's two largest hubs,
tied for second place among large domestic airports in overall
customer satisfaction. Readers of TTG Asia and TTG China named
Northwest "Best North American airline."
Visit Northwest's Web site at http://www.nwa.comfor more
information on the Company.
ON SEMICONDUCTOR: Will Phase Out Manufacturing in East Greenwich
----------------------------------------------------------------
As part of its continuing strategy to streamline its global
manufacturing network and improve its operating efficiency, ON
Semiconductor (Nasdaq: ONNN), announced its decision to phase out
manufacturing operations at its facility in East Greenwich, R.I.
by the end of 2004.
During the next year, the company plans to transfer the East
Greenwich production to its lower cost manufacturing facilities
outside of North America.
The discontinuation of manufacturing at the company's 209,000-
square-foot facility in East Greenwich will result in the
reduction of approximately 330 jobs and is expected to give rise
to a restructuring, asset impairment and other charge of $15 to
$20 million in the fourth quarter of 2003. ON Semiconductor
estimates that the cash component of this charge related to
employee severance payments will be approximately $4 million and
will be paid throughout 2004. As a result of these actions, the
company expects to realize manufacturing cost savings of $20 to
$25 million during 2005, as compared to the annualized costs for
the third quarter of 2003. The company anticipates modest savings
during 2004 as the East Greenwich manufacturing operations
transition to other facilities.
This decision impacts only the manufacturing operations in Rhode
Island. The company plans to maintain and develop its 100-employee
design and business support operations in the Rhode Island area.
ON Semiconductor obtained the East Greenwich manufacturing
facility as part of its acquisition of Cherry Semiconductor in
April 2000.
ON Semiconductor -- whose July 4, 2003 balance sheet shows a total
shareholders' equity deficit of about $750 million -- offers an
extensive portfolio of power- and data-management semiconductors
and standard semiconductor components that address the design
needs of today's sophisticated electronic products, appliances and
automobiles. For more information, visit ON Semiconductor's Web
site at http://www.onsemi.com
ONEIDA LTD: October 25 Working Capital Deficit Reaches $73 Mill.
----------------------------------------------------------------
Oneida Ltd. (NYSE:OCQ) announced financial results for the third
quarter and nine months ended October 25, 2003.
Sales for the third quarter were $117 million, compared to sales
of $127 million in the third quarter of the previous fiscal year
that ended January 2003.
Including charges related to plant closings and including a
deferred tax asset valuation allowance, Oneida reported a third
quarter net loss of $74.8 million, equal to a loss of $4.50 per
share, compared to year-ago net income of $1.6 million. Before the
charges and the allowance, Oneida reported a third quarter loss of
$ 0.13 per share, compared to year-ago third quarter earnings of $
0.09 per share. Included in the current quarter results was
miscellaneous income recorded as $3.0 million, or $ 0.11 per
share, primarily representing proceeds from the recent sale of two
non-business related sites. The charges related to plant closings,
totaling $41.4 million or equal to $ 2.49 per share, were in
connection with the company's decision as announced on October 31
to close five manufacturing sites; additional charges of $3.9
million for that decision are anticipated in the fourth quarter.
The deferred tax asset valuation allowance of $ 31.1 million,
equal to $ 1.87 per share, involved establishing the allowance in
accordance with Financial Accounting Standard No. 109.
For the first nine months of the fiscal year that ends in January
2004, Oneida's sales totaled $331 million, compared to sales of
$359 million for the same period a year ago. Including the charges
related to plant closings and including the deferred tax asset
valuation allowance, the company reported a nine-month net loss of
$81.9 million, equal to a loss of $ 4.94 per share, compared to
year-ago net income of $6.2 million. Before the charges and the
allowance, Oneida reported a nine-month loss of $ 0.56 per share,
compared to earnings of $ 0.37 per share for the first nine months
a year ago. The year-ago net income included miscellaneous income
recorded as $5.0 million, or $ 0.19 per share, primarily
representing income from insurance proceeds and a gain on the sale
of marketable securities.
At October 25, 2003, the Company's balance sheet shows that its
total current liabilities exceeded its total current assets by
about $73 million, while total shareholders' equity shrank further
to about $50 million from about $129 million nine months ago.
$30 MILLION IN ANTICIPATED SAVINGS
TO HELP RESTORE PROFITABILITY
"Spending for tabletop products such as ours remains sluggish
throughout the industry," said Peter J. Kallet, Oneida Chairman
and Chief Executive Officer. "This trend is reflected in consumer
retail markets and in foodservice markets where less activity at
restaurants and hotels translates to less demand for our products.
However, recently reported increases in overall consumer
confidence and spending, if maintained, do offer promise for the
coming year.
"We are countering our currently difficult conditions with
aggressive actions to control our expenses and, as previously
announced, achieve anticipated cost savings of approximately $30
million on an annual basis," Mr. Kallet added. "These anticipated
savings include approximately $12 million annually from the five
factory closings, and approximately $18 million annually from a
new lean manufacturing system that will be fully implemented at
our Sherrill, N.Y. flatware factory by the first quarter of the
2004 calendar year. We understand the disruptions and hardships
that these closings and other position reductions have caused for
our employees, but the moves are necessary for our long-term
efficiencies and competitiveness. The cost savings are expected to
help restore the company to profitability.
"In sum, all of these actions will enhance our operating
efficiencies and better position us for stronger performance
regardless of business conditions," Mr. Kallet concluded. "During
these challenging times, we continue to move forward with our
fundamental strengths that include 90% unaided brand awareness of
the Oneida name, well-established core business lines augmented
with new product introductions, and high standards of product
quality and customer service. We remain committed to our goals to
be the world's most complete tabletop supplier and to maximize our
shareholder value."
Oneida Ltd. is a leading source of flatware, dinnerware, crystal,
glassware and metal serveware for both the consumer and
foodservice industries worldwide.
OWENS CORNING: Commercial Committee Wants Structural Relief
-----------------------------------------------------------
William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht &
Tunnell, in Wilmington, Delaware, reminds the Court that no
lawyer or law firm can represent opposed interests in the same
proceeding. These legal and ethical principles are laid out in
black and white, long-established rules. In these Chapter 11
cases, the Owens Corning Debtors' resources are insufficient to
pay all creditors in full. Thus, Creditors are competing in a
"zero-sum game" -- for some creditors to get more, others must get
less. The fact that Owens Corning's case is a "zero-sum game"
brings into play both the demanding ethical precepts and the
requirement of "structural assurances" the Supreme Court recently
demanded to eliminate the conflicts of asbestos lawyers. The
asbestos lawyers and law firms ignored both, Mr. Sudell says.
The Official Committee of Unsecured Creditors details the two
types of fundamental and impermissible legal and ethical
conflicts that "paralyze, prolong, and threaten" these Chapter 11
cases:
(1) The numerous legal and ethical conflicts of interest of
the law firms representing asbestos claimants, which
conflicts permeate these Chapter 11 cases and inhibit and
frustrate its speedy, fair, and just resolution; and
(2) The legal conflicts, and hence legal inadequacy, of the
Future Representative. The Future Representative, a
proponent of the Proposed Plan, purports to represent all
future asbestos claimants in proposing and supporting the
Plan. The Proposed Plan fragments "futures" into sub-
groups with conflicting interests. As a result, the
Future Representative cannot, as a matter of law, be a
legally adequate representative for all "futures" in
connection with the proceedings relating to the Proposed
Plan.
Thus, Mr. Sudell asserts that the Court must impose structural
remedies. No principle of legal ethics is better established
than the principle that a lawyer cannot represent conflicting
interests in one proceeding. This rule also applies in
bankruptcy proceedings. It has special force because of the
context of bankruptcy. Judge Learned Hand explained both the
rule and the reason for courts' zealous enforcement with his
characteristic clarity in the Bankruptcy Act case of Silbiger v.
Prudence Bonds Corp., 180 F.2d 917, 920-21 (2d Cir.), cert.
denied, 340 U.S. 813 (1950):
"Certainly by the beginning of the Seventeenth Century it
had become a common-place that an attorney must not
represent opposed interests; and the usual consequence
has been that he is debarred from receiving any fee from
either no matter how successful his labors. Nor will the
court hear him urge, or let him prove, that in fact the
conflict of loyalties has had no influence upon his
conduct; the prohibition is absolute and the consequence
is a forfeiture of all pay . . . The purpose of the
prohibition is to insure the advantage to the client of
the undivided allegiance of his attorney. . . ."
This principle was repeatedly and strongly applied to protect
against lawyer conflicts in personal-injury litigation. For
example, in New York Ethics Opinion 639, 1992 WL 450729 (Dec. 7,
1992), the New York State Bar Association's Committee on
Professional Ethics considered whether "a lawyer [could]
represent two plaintiffs injured in the same occurrence in
separate actions against the same defendant where there likely
will be insufficient assets available for full satisfaction of
all claims." The New York State Bar's ethics panel concluded
that the representation was contrary to DR 5-105's requirement
that a lawyer must decline employment that would likely involve
him or her in representing differing interests. No one lawyer
could be fully loyal and fight for the best interests of both
tort plaintiffs in a "limited fund," "zero-sum game."
These fundamental legal and ethical rules apply in Chapter 11
cases. The recent opinion of the Ethics Committee of the
Maryland State Bar Association, Opinion, Ethics Docket 2003-10
(Aug. 14, 2003), explains and applies the same basic principle of
lawyer loyalty to prevent a lawyer from representing asbestos
creditors with conflicting interests in a "limited fund," "zero-
sum game" asbestos Chapter 11 case.
Mr. Sudell states that disabling conflicts of interests in the
asbestos context extend beyond the legal and ethical conflicts of
lawyers. The Supreme Court, in both Amchem Products, Inc. v.
Windsor, 521 U.S. 591 (1997) and Ortiz v. Fibreboard Corp., 527
U.S. 815 (1999), held that failure to avoid conflicts of interest
compelled the Court to reject proposed asbestos settlements. In
Amchem, a collective asbestos litigation, the Court required that
the litigation itself contain "structural assurance" by
asbestos "sub-groups" being separately represented. In the
"limited-fund" Ortiz case, the Court ordered that the litigation
itself contain not only "the structural protection of independent
representation for [asbestos] subclasses" with conflicting
interests, but also separate counsel "to eliminate conflicting
interests of counsel."
Accordingly, pursuant to Sections 1102, 1109, 1121, 1126 and 105
of the Bankruptcy Code, Rules 2002, 2019, 3018 and 9019 of the
Federal Rules of Bankruptcy Procedure and Rule 83.6(d)(2) of the
Local Bankruptcy Rule, the Commercial Committee asks the Court
for structural relief to eliminate the legal and ethical
conflicts and to eradicate the adverse effects they have
had on the resolution of Owens Corning's case. The Commercial
Committee asks Judge Fitzgerald to relieve the parties to Owens
Corning's case from, and protect them against, the malignant
consequences of the legal and ethical conflicts of the Law Firms,
and the legal inadequacy of the Future Representative to propose
and support the Plan.
According to Mr. Sudell, the purpose and effect of the structural
relief are designed to make Owens Corning's asbestos "limited
fund" Chapter 11 case viable, just as the Supreme Court in Ortiz
held structural assurances were required to make an asbestos
"limited fund" class action viable. The structural relief
requested, just like the "structural assurances" required by
Amchem and Ortiz and the legal and ethical rules binding lawyers,
aims at one core objective -- permitting the actual economic
interests to emerge and to negotiate a Chapter 11 plan of
reorganization.
A Small Number of Law Firms
Represents Most of the Asbestos Creditors
Mr. Sudell relates that it was long recognized in the asbestos-
litigation industry that a relatively small number of Law Firms
represent the overwhelming number of the hundreds of thousands of
persons asserting various types of claims based on alleged
inhalation of asbestos fibers. A smaller number of Law Firms,
the "asbestos elite," each represents tens of thousands of
persons asserting the claims. The names of these Law Firms are
well known to those who are engaged in or follow asbestos
matters, and include:
(1) Baron & Budd,
(2) Ness, Motley,
(3) Weitz & Luxenberg,
(4) Kelly & Ferraro,
(5) Goldberg Perskey, and
(6) Silber Pearlman.
It is more difficult to pin down even to the nearest thousand how
many asbestos claimants each purports to represent. The Law
Firms did not comply with the mandatory requirements of
Bankruptcy Rule 2019. It is in the economic interest of Law
Firms, particularly the "asbestos elite" Law Firms, not to
disclose the compositions of their "inventories," because the
conflicting interests of their clients would be apparent.
Despite the failure to comply with Bankruptcy Rule 2019(a), it is
nevertheless possible to establish that the "asbestos elite" Law
Firms can represent over 100,000 asbestos claimants in a "limited
fund," "zero-sum game" asbestos bankruptcy. As best as the
Commercial Committee can determine, prior to the filing of these
cases, 111 Law Firms said they represented 235,000 persons
asserting asbestos claims against the Debtors; a mere 10 Law
Firms said they represented 120,400 persons asserting asbestos
claims.
The Law Firms Call Large Numbers of Asbestos Clients
with Different Diseases the Law Firms' "Inventories"
Furthermore, Ms. Sudell relates that it was probably at least two
decades since any Law Firm representing asbestos claimants
referred to them as "clients." In the high-volume claims-
processing business that asbestos litigation became, the Law
Firms constantly use a casual -- if not callous -- word to
describe their pool of clients. They refer to their
clients as "inventories."
The use of the term "inventory" perniciously implies that no
client is different from any other client. This is false, Mr.
Sudell asserts. By using a term that describes fungibility and
uniformity, the Law Firms are affirmatively hiding the existence
of the significantly differing interests of the clients. The
term "inventory" obscures the differing interests of sub-groups
of clients vis-a-vis other sub-groups of clients, whose interests
conflict in a "limited fund," "zero-sum game."
The obvious, true facts are that members of the Law Firms' human
"inventories" are human beings asserting different types of
claims. The types or sub-groups of claimants include:
(1) Persons or their estates asserting claims for
mesothelioma, a rare, incurable cancer of the lining of
the chest cavity in the lung and lung cancer;
(2) Persons asserting claims for asbestosis, in which the
degree to which the person's ability to breathe can be
slightly impaired or moderately impaired or severely
impaired;
(3) Persons asserting "other" cancer claims, some of which
have a debatable if not dubious "causal" link to the
inhalation of asbestos fibers, e.g., stomach or colon
cancer; and
(4) Tens and tens of thousands of persons who may have
radiological evidence of inhaling asbestos but who have no
actual impairment or injury -- the large and growing
number of "unimpaireds."
According to Mr. Sudell, the number of claims of sub-groups of
claims in an "inventory" tends to be inversely proportional to
the asserted value to each claimant, for a variety of reasons.
There are relatively few mesothelioma and lung cancer claims, but
they command the highest value. "Other" cancer claims are few
and get significantly less value. Pleural "non-malignant" and
"fibrosis" claims comprise the overwhelming bulk of Law Firms'
"inventories." The vast, vast number of "pleurals" are
unimpaired.
In a "limited fund," "zero-sum game," the interests of sub-groups
of the Law Firms' "inventories" conflict. The basic duty of
loyalty and the legal and ethical rules forbid a Law Firm to help
one sub-group of its clients because that will hurt the other
sub-groups of clients. The Supreme Court requires structural
assurances that one counsel does not represent the sub-groups of
asbestos claimants with conflicting interests.
Conflicting Bases of Asbestos Claims in Owens Corning's
Chapter 11 Case -- Some Tort, Some Contract
Mr. Sudell explains that prior to the Petition Date, many of the
Law Firms entered into National Settlement Program Agreements.
Pursuant to NSP Agreements, if a claimant in the Law Firm's
"inventory" accepted the Owens Corning offer to settle, that
asbestos claimant had a contract with Owens. If Owens had not
paid the contract by the Petition Date, that claimant has a fixed
and liquidated claim against Owen. The Debtors admit that there
are 61,000 "asbestos claimants" among the Law Firms'
"inventories" with these fixed, liquidated claims.
In addition, there are also those who did not settle with Owens
prior to the Petition Date and who manifested some condition and
became clients of the Law Firms postpetition. These clients
have, for bankruptcy purposes, unliquidated and contingent tort
claims.
In the "limited fund, zero-sum game", all contract claimants have
the interest in not permitting invalid tort claims from sharing
in the "limited funds" that would thereby reduce the contract
claimants' pro rata recoveries. On the other hand, Mr. Sudell
says, the asbestos tort claimants want to get part of the
"limited fund" upon minimal showing that is less than required by
state law.
Hence, there is conflict between the interests of contract
claimants and the contingent, unliquidated tort claimants in the
Law Firm's "inventory" in Owens Corning's "limited fund" case.
The Law Firms have to hold on to their "inventories" to control
the "asbestos side" of the Chapter 11 case, and to decide the
"proper allocation" of the "limited fund" among their competing
and conflicting "inventory" sub-groups of clients in "zero-sum
game" asbestos bankruptcy. The Commercial Committee believes
that the Law Firms turn a blind eye in these legal and ethical
conflicts because of their massive personal financial interests.
The Basic Legal and Ethical Principle -- Loyalty
It is a basic principle of legal and ethical rules that a lawyer
or Law Firm is barred, in the absence of meaningful, unanimous
consent from each and every implicated client, from representing
conflicting interests. The rule applies the fundamental duty of
loyalty that lies at the heart of the attorney-client
relationship and the ancient, common sense axiom that no one can
simultaneously serve competing masters. The fundamental policy
underlying the rule is that it is impossible to fulfill the duty
of loyalty to clients who are seeking the same limited asset --
to help one is to hurt another.
The Structural Relief Required to Eradicate
the Effects of the Law Firms' Legal and Ethical Conflicts
Specifically, the Commercial Committee asks Judge Fitzgerald to:
(a) direct the U.S. Trustee to appoint asbestos claimants
willing to serve to an Asbestos Committee, and direct
that lawyers or other designees cannot purport, attend
meetings with their clients, to decide questions for an
appointee;
(b) require the U.S. Trustee to configure an Asbestos
Committee to be representative of the actual types of
asbestos claimants with differing economic or legal
interests in Owens Corning's case;
(c) authorize the so-reconstituted Asbestos Committee to
retain overall counsel, as well as additional, separate
counsel to represent sub-groups of asbestos claimants
with differing economic or legal interests;
(d) prohibit all lawyers, including the Law Firms, from
voting or advising how to vote on a plan of
reorganization, unless and until they ask the Court for
authority and (i) proffer an appropriate, valid power of
attorney or other authorization from an asbestos
claimant, (ii) establish that it is legally and ethically
proper for the lawyer to do so, and (iii) comply with
Bankruptcy Rule 2019;
(e) consider an appropriate form of communication to clients
of the legally and ethically conflicted Law Firms; and
(f) order that the Law Firms and lawyers therein may not
represent any person making a claim against the Owens'
estate, or any successor or entity established to
receive, evaluate, settle or otherwise pay asbestos
claims asserted against Owens, and directing that any and
all fees asserted to be owing to the Law Firms from
asbestos clients based on, arising out of, or related to
claims against Owens' estate are forfeit, and may not be,
directly or indirectly, collected by the Law Firms. (Owens
Corning Bankruptcy News, Issue No. 63; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PACIFIC GAS: Revving-Up to Resume Critical Roles with Emergence
---------------------------------------------------------------
In remarks to investors at Lehman Brothers Wednesday, Robert D.
Glynn, Jr., Chairman, CEO and President of PG&E Corporation (NYSE:
PCG), discussed the path the company is on to increased financial
performance and to resuming the roles Pacific Gas and Electric
Company has historically played in advancing California's energy
infrastructure and economic development, among other
contributions.
Glynn outlined details of the proposed settlement agreement
reached in June between the company and the staff of the
California Public Utilities Commission to resolve Pacific Gas and
Electric Company's Chapter 11 case. He said the company is
pleased that the Commission will have the opportunity to vote on
the proposed settlement in December. Pending the Commission's
vote and the confirmation of the associated plan of reorganization
by the federal bankruptcy court expected this month, the company
has targeted the end of the first quarter of 2004 for its exit
from Chapter 11.
"When it comes to the state's economy and that of the communities
served, few businesses have the potential to play such a critical,
positive role on the same scale that we do at Pacific Gas and
Electric Company -- and few have the history of doing so for many
decades," said Glynn. "When Pacific Gas and Electric is on the
firm financial footing provided by the terms of the proposed
settlement agreement and given a more stable regulatory
environment, it will be in a position to resume full participation
in investments like new utility generation that are vital to the
state's and customers' future -- investments that are out of reach
of sub-investment grade companies. We think the recent good faith
efforts of all the key parties show that they recognize the
importance of creating the conditions where investments like these
can proceed."
Glynn cited the important benefits that would result when the
proposed settlement agreement is approved and the associated plan
of reorganization is implemented, including:
-- Reducing rates on January 1, 2004, by approximately $670
million -- almost 7 percent on average -- with the
potential of even further rate reductions over time.
-- Allowing PG&E to have access to lower-cost capital to
invest in new infrastructure to serve California.
-- Enabling PG&E to resume its traditional role of securing
energy supplies for its customers, including cost-effective
demand-side and renewable resources.
-- Providing PG&E the ability to access lower-cost capital to
continue to reduce the environmental impact of its
operations; promote customer energy efficiency programs;
and to make more cost effective its promotion of
distributed generation, and advance metering and other new
technologies to benefit customers.
"These benefits are all part of PG&E's future outlook. We're
confident that California's consumers and policy-makers want to
see these opportunities realized as much as we do, and we look
forward to resuming the relationship that a great company should
have with a great state," said Glynn.
A Webcast replay of Glynn's presentation is available on the PG&E
Corporation web site, http://www.pgecorp.com/
PENNEX FOODS: Slaps $226 Million Fraud Claim against Smithfield
---------------------------------------------------------------
Pennexx Foods, Inc. (NASDAQ pink sheets: PNNX) has filed a
thirteen count Cross-Claim against Smithfield Foods, Inc. (NYSE:
SFD) seeking damages of $226,000,000.00 in a class action
securities suit brought against Pennexx and Smithfield and former
Pennexx directors on July 24, 2003 in federal court in
Philadelphia.
In the Cross-Claim, Pennexx alleges various wrongful acts of
Smithfield in seizing all of the Pennexx's assets and in taking
over the company's operations. The wrongful acts alleged in the
Cross-Claim include fraud, breach of fiduciary duty with regard to
a Pennexx/Smithfield joint venture, and tortuous interference with
Pennexx's contracts. The Cross-Claim also alleges breach of
contract claims and seeks contribution from Smithfield in the
securities class action case. In the Cross-Claim, Pennexx seeks
compensatory damages of $226,000,000.00 plus punitive damages.
Pennexx has hired the Philadelphia office of Frey, Petrakis, Deeb,
Blum, Briggs & Mitts, P.C., to defend the corporation and certain
directors against the class action securities litigation brought
by shareholders and to bring the Cross-Claim against Smithfield.
Attorneys Maurice R. Mitts and Eric F. Spade of the firm are
handling the litigation for Pennexx. Attorney Mitts was featured
in the September 11, 2000 edition of the National Law Journal
regarding a two-month-long jury trial that resulted in one of the
largest verdicts ever in Pennsylvania--$352,000,000.00. That case
involved complex lender liability claims against a U.S. bank.
Pennexx ceased operations in June 2003 after Smithfield foreclosed
on its assets and took over its operations. Prior to the takeover
by Smithfield, Pennexx was a leading provider of case-ready meat
to retail supermarkets in the Northeast, such as Pathmark. Pennexx
cut, packaged, processed and delivered case-ready beef, pork, lamb
and veal in compliance with the United States Department of
Agriculture regulations.
"Case-ready" refers to meat products that can be taken out of a
box and put directly into a retailer's meat case without any
further processing or packaging. For the consumer, case-ready meat
enhances food safety, provides leak-proof packaging and a greater
variety of meat in stock because the packaging offers longer shelf
life.
Pennexx commenced operations in 1999, as the company recognized
the opportunity to stake out a first-to-market position in the
emerging market category for case-ready meat. The Cross-Claim
alleges that in early 2001, Pennexx rejected an inquiry to
purchase the company by Smithfield. In June 2001, Smithfield
acquired 50% of the common stock of Pennexx and provided the
company a credit facility to fund the expansion of its operations.
Smithfield is the leading processor and marketer of fresh pork and
processed meats in the United States with annual sales of $8
billion. According to the Cross-Claim, Pennexx and Smithfield were
to work together through a joint venture in servicing the market
in the Northeast United States with case-ready meat. The
Cross-Claims states that Pennexx also agreed to assist Smithfield
by servicing Smithfield's branded pork to the New York market.
To meet increased demand and accommodate future growth under its
joint venture with Smithfield, Pennexx purchased a 145,000 square
foot building on ten acres in Philadelphia in April 2002. As part
of the joint venture, Smithfield agreed to renovate the building
into a state-of-the-art, automated plant for producing case-ready
meats. The Cross-Claim alleges that Smithfield mis-designed the
new plant in Philadelphia. The design problems with the plant then
allegedly caused Pennexx to suffer financial losses that triggered
a default under the company's credit facility with Smithfield.
Smithfield then foreclosed upon Pennexx, seized its assets and
took over its operations. The Cross-Claim further alleges that
Smithfield now operates the Philadelphia plant under a legal
entity called Showcase.
Pennexx filed its Cross-Claim against Smithfield in a securities
class action case pending before Judge John R. Padova in federal
court in Philadelphia. The securities class action case is
captioned The Winer Family Trust v. Michael Queen, Dennis Bland,
Thomas McGreal, Joseph W. Luter, IV, Michael H. Cole, Smithfield
Foods, Inc., and Pennexx Foods, Inc., Case No. 03-4318, United
States District Court for the Eastern District of Pennsylvania.
The Court has ordered that the case will enter the Civil Trial
Pool on November 1, 2004, and the final pre-trial conference will
be held November 4, 2004 with all parties prepared to commence
trial on that date.
* * *
As previously reported, Pennexx Foods failed to meet its payment
obligation, June this year, due to Smithfield Foods following the
collapse of negotiations between the two parties.
Under the terms of the Forbearance and Peaceful Possession
Agreement between Smithfield and Pennexx dated as of May 29, 2003,
the Forbearance Period ended, Smithfield was entitled to exercise
all of its rights as a secured party, and Pennexx is required to
grant Smithfield peaceful possession of the collateral.
Consequently, Pennexx commenced discussions with Smithfield
concerning transitional matters.
PG&E NATIONAL: ET Debtors Keep Exclusivity Intact Until Jan. 19
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Mannes extends the ET Debtors'
Exclusive Plan Filing Period to January 19, 2004 and their
Exclusive Solicitation Period to March 19, 2004. The ET Debtors
are:
* NEGT Energy Trading Holdings Corporation, formerly known as
PG&E Energy Trading Holdings Corporation;
* NEGT Energy Trading - Gas Corporation, formerly known as
PG&E Energy Trading - Gas Corporation;
* NEGT ET Investments Corporation, formerly known as PG&E ET
Investments Corporation;
* NEGT Energy Trading - Power, LP, formerly known as PG&E
Energy Trading - Power, LP;
* NEGT Energy Services Ventures, Inc., formerly known as PG&E
Energy Services Ventures, Inc.; and
* Quantum Ventures.
(PG&E National Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PLANVISTA: Pursuing Alternatives to Pay Down or Off Indebtedness
----------------------------------------------------------------
PlanVista Corporation (together with its wholly owned
subsidiaries) provides medical cost containment and business
process outsourcing solutions for the medical insurance and
managed care industries. Specifically, it provides integrated
national preferred provider organization (sometimes called PPO)
network access, electronic claims repricing, and network and data
management business process outsourcing services to health care
payers, such as self-insured employers, medical insurance
carriers, third party administrators (sometimes called TPAs),
health maintenance organizations (sometimes called HMOs), and
other entities that pay claims on behalf of health plans. It also
provides network and data management business process outsourcing
services for health care providers, including individual
providers, PPOs, and other provider groups.
Since June 2000, when PlanVista initiated a plan of
reorganization, it has divested certain of its underperforming and
non-growth businesses and restructured and refinanced its credit
facility. Currently, its term loan of $38.4 million is due in
quarterly installments of $50,000 with the remaining balance due
in full on May 31, 2004. Such term loan is subject to certain
financial covenants, which must be met on a monthly and/or
quarterly basis. Although there can be no assurances, management
believes, based on available information, that the Company will be
able to maintain compliance with the terms of its restructured
credit facility, including the financial covenants, until its
restructured credit facility becomes due in May 2004.
Except for the indebtedness due in May 2004, management believes
that all of the Company's consolidated operating and financing
obligations due in the next twelve months will be met from
internally generated cash flow from operations and available cash.
The ability to fund operations, make the scheduled payments of
interest and principal on indebtedness, and maintain compliance
with the terms of the restructured credit facility, including the
financial covenants, depends on PlanVista's future performance,
which is subject to economic, financial, competitive, and other
factors beyond Company control.
As mentioned, the Company's indebtedness comes due in May 2004.
PlanVista is currently pursuing alternatives to refinance this
indebtedness and/or raise additional equity capital to pay off or
pay down this indebtedness. There can be no assurance that the
Company will be able to repay the indebtedness or refinance such
indebtedness on terms that are acceptable to it. If unable to
generate sufficient cash flows from operations to pay financial
obligations and meet debt covenants, as required by the
restructured credit facility, or if PlanVista is unable to repay
or refinance its restructured credit facility in full in May 2004,
there may be a material adverse effect on its business, financial
condition, and results of operations.
The Company's operating revenue for the nine months ended
September 30, 2003 decreased $0.8 million, or 3.2%, to $23.9
million from $24.7 million during the same period in 2002. During
the first nine months of 2003, PlanVista added 38 new payer
accounts and generated operating revenue from those customers
totaling $2.6 million. The increase in operating revenue from this
new business was offset by a decrease in operating revenue due to
the departure of customers that are no longer in business,
decreased utilization by some customers, and a lower percentage of
high-dollar claims. Claims volume increased by approximately
92,000, or 3.4%, to 2,792,000 claims processed during the nine
months ended September 30, 2003 compared to 2,700,000 claims
processed in the same period in 2002.
Personnel expenses for the nine months ended September 30, 2003
and 2002 were $6.6 million. Personnel expenses as a percentage of
revenues increased slightly to 27.4% for the nine months ended
September 30, 2003 compared to the same period in 2002. Included
in personnel expenses for the nine months ended September 30, 2003
is $130,000 related to various severance agreements. Bonus expense
during the nine months ended September 30, 2003 was lower than the
same period in 2002 due to lower estimate of such costs for the
year ending December 31, 2003. Additionally, the Company continues
to benefit from efficiencies in its claim repricing operations
through increased use of its technology, which allowed it to
increase the number of claims processed per person during the nine
months ended September 30, 2003 compared to the same period in
2002.
Network access fees for the nine months ended September 30, 2003
increased $0.6 million, or 14.0%, to $4.6 million from $4.0
million in 2002. Network access fees as a percentage of operating
revenue were 19.1% in 2003 compared to 16.2% in 2002. Network
access fees relate to amounts charged by PlanVista's network and
cost containment partners for access to their provider network.
The increase in network access fees of $0.6 million was due to a
greater portion of operating revenue being derived from bill
negotiation services, which is contracted at a higher fee.
Other costs of operating revenue for the nine months ended
September 30, 2003 decreased $0.2 million, or 3.7%, to $4.2
million from $4.4 million in 2002. Other costs of operating
revenue primarily consists of marketing costs, occupancy and
related costs, professional services, and other administrative
costs. This decrease was partially the result of settlements of
outstanding balances with certain of the Company's vendors during
the three months ended March 31, 2003, resulting in $0.2 million
in savings, as well as from lower professional fees related to the
completion of a number of outstanding legal matters pertaining to
divested subsidiaries.
Depreciation of $0.4 million for the nine months ended
September 30, 2003 was comparable to the same period in 2002.
In June 2003, the Company signed a three-year joint marketing
agreement with ProxyMed, pursuant to which ProxyMed has agreed to
work with PlanVista to market PlanVista's products to ProxyMed's
existing and prospective customers. As part of the agreement,
PlanVista expensed $0.8 million, consisting of expenses related to
data services ($0.2 million), exclusivity ($0.1 million) and the
issuance of a warrant giving ProxyMed the ability to purchase
15.0% of the Company's outstanding common stock on a fully diluted
basis ($0.5 million). The fair value of the warrant was determined
by an independent consultant using the Black-Scholes pricing
model.
Bad debt expense for the nine months ended September 30, 2003
decreased $0.7 million, or 36.3%, to $1.3 million from $2.0
million during the same period in 2002. Bad debt expense is
recorded based on an estimate of uncollectible accounts
receivable.
On September 30, 2003, PlanVista negotiated a settlement for an
obligation to provide in-kind claims repricing services. Due to
this settlement, the Company recorded $650,000 of other income
during the nine months ended September 30, 2003.
Interest expense for the nine months ended September 30, 2003
decreased to $2.0 million from $4.6 million during the same period
in 2002. This reduction is due primarily to the lowering of
outstanding bank debt by $29.0 million upon the bank restructuring
on April 12, 2002, the lowering of the interest rate on such debt
from prime plus 6.0% to prime plus 1.0 %, and the repayment of
$1.7 million of such debt in the three months ended September 30,
2003.
The provision for income taxes for the nine months ended September
30, 2003 was $1.2 million. This provision was based on an
effective tax rate that was determined based upon an estimate of
taxable income for the year ending December 31, 2003. The benefit
for income taxes for the nine months ended September 30, 2002 was
$1.0 million. This benefit was based on an effective tax rate that
was determined based upon an estimate of taxable income for the
year ended December 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability to generate adequate amounts of cash to
meet financial commitments. PlanVista's primary source of cash is
fee revenue generated from the healthcare provider discounts that
it makes available to its customers. The Company's uses of cash
consist of payments to PPOs to provide access to their networks
for PlanVista's customers, payments for compensation and benefits
for Company employees, occupancy and related costs, general and
administrative expenses associated with operating its business,
debt service obligations, and taxes.
The Company had cash and cash equivalents totaling $3.0 million at
September 30, 2003 and $1.2 million at December 31, 2002. Net cash
provided by operating activities was $3.8 million and $0.7 million
during the nine months ended September 30, 2003 and 2002,
respectively. This increase in cash provided by operating
activities in 2003 is due primarily to improved accounts
receivable collections partially offset by decreases in accounts
payable and accrued expenses.
On April 12, 2002, the Company closed a transaction to restructure
and refinance its senior bank debt, which was $69.0 million prior
to the closing. Under the terms of the restructured agreement, the
Company entered into a $40.0 million term loan that accrues
interest at a variable rate, generally prime plus 1.0%, with
interest payments due monthly. Quarterly principal payments of
$50,000 became due beginning September 30, 2002, and because the
term loan is payable in full on May 31, 2004, it is classified as
a current liability on the Company's balance sheet as of September
30, 2003. The term loan is collateralized by all of the Company's
assets.
In exchange for retirement of the remaining amounts due to the
senior lenders, PlanVista issued 29,000 shares of its newly
authorized Series C convertible preferred stock and an additional
promissory note in the amount of $184,872, which was fully paid as
of June 30, 2003. The Series C convertible preferred stock accrued
dividends at 10.0% per annum during the first twelve months from
issuance and is currently fixed at 12.0% per annum. Dividends are
payable quarterly in additional shares of Series C convertible
preferred stock or, at the Company's option, in cash. As of
September 30, 2003, PlanVista has chosen to pay dividends in the
form of additional shares, and has issued to the Series C
stockholders an aggregate of 3,659 additional shares of Series C
convertible preferred stock.
The restructured credit agreement contains certain financial
covenants, including minimum monthly EBITDA levels, as defined in
the agreement, maximum quarterly and annual capital expenditures,
a minimum quarterly fixed charge ratio that is based primarily on
operating cash flows, and maximum quarterly and annual
extraordinary expenses, as defined in the agreement. The required
minimum EBITDA level beginning August 2003 is $1.0 million per
month. While the Company is in compliance with the financial
covenants as of September 30, 2003, there is no assurance that it
will remain in compliance in future periods. If not in compliance,
the senior lenders could demand repayment of the Company's
obligations. In such event, there can be no assurance that
PlanVista will be able to repay the indebtedness, or refinance
such indebtedness on terms that are acceptable to it.
In regard to the Company's indebtedness which comes due in May
2004, should PlanVista be successful in refinancing endeavors by
raising equity capital, there could be substantial dilution to the
common stockholders. If unable to generate sufficient cash flows
from operations to pay its financial obligations and meet its debt
covenants, as required by its restructured credit facility, or if
unable to repay or refinance its restructured credit facility in
full in May 2004, there may be a material adverse effect on
PlanVista's business, financial condition, and results of
operations.
PREMCOR INC: Undertaking Various Refinery Maintenance Activities
----------------------------------------------------------------
Premcor Inc. (NYSE: PCO) will undertake various refinery
maintenance projects at all three of its refineries in December.
The company has reduced crude rates at its 170,000 barrels per
day, or bpd, Lima, Ohio refinery to make repairs to the refinery's
isocracker unit. The work is expected to take between 10 and 15
days. The company plans to turnaround the FCC unit at its 190,000
bpd Memphis, Tennessee refinery beginning this week.
The entire refinery is expected to be down between 13 and 15 days,
with the FCC unit down for up to 20 days. At the end of the
month, the company expects to begin an approximately 30-day
turnaround of the reformer unit at its 250,000 bpd Port Arthur
refinery.
Thomas D. O'Malley, Premcor's Chairman and Chief Executive
Officer, said, "We had previously announced the fourth quarter
maintenance plans for our Lima and Port Arthur refineries.
However, the turnaround of our Memphis refinery, which we normally
run at between 150,000 and 160,000 bpd, represents an acceleration
of work we had originally planned for the first quarter of 2004
and will shift approximately $10 million of our capital
expenditure budget from 2004 to 2003. Considering the December
maintenance activity, we expect our fourth quarter crude
throughput rates will approximate 225,000 to 235,000 bpd for the
Port Arthur refinery, 130,000 to 140,000 bpd for the Lima refinery
and 120,000 to 125,000 bpd for our Memphis refinery. In addition
to our maintenance activities, we continue to make good progress
with our Tier 2 gasoline compliance upgrade projects and are on
track to produce gasoline under the new sulfur standards at our
Port Arthur refinery by the end of this year and at our Memphis
refinery by early in the second quarter of 2004."
Premcor Inc. (S&P, BB- Senior Unsecured Debt Rating, Negative) is
one of the largest independent petroleum refiners and marketers of
unbranded transportation fuels and heating oil in the United
States.
PRIDE INTERNATIONAL: Brings-In Louis A. Raspino as EVP and CFO
--------------------------------------------------------------
Pride International, Inc. (NYSE: PDE) has appointed Louis A.
Raspino as Executive Vice President and Chief Financial Officer of
the Company and W. Gregory Looser as Vice President, General
Counsel and Secretary.
Mr. Raspino will join the Company from Grant Prideco, Inc. where
he has been Senior Vice President - Finance and Chief Financial
Officer. Mr. Raspino previously held senior financial positions
with Halliburton Company, Burlington Resources, Inc. and Louisiana
Land and Exploration Company. Prior to that Mr. Raspino was an
Audit Manager with the firm of Ernst & Young. Mr. Raspino is a
certified public accountant with a Bachelor of Science degree from
Louisiana State University in New Orleans and a Masters of
Business Administration degree from Loyola University.
Mr. Looser has served as Assistant General Counsel of Pride since
May 1999. Prior to that time, Mr. Looser was with the firm of
Bracewell & Patterson, L.L.P. in Houston, Texas. Mr. Looser is a
graduate of the Baylor University School of Law and received a
Bachelor of Arts degree from Baylor University.
Earl W. McNiel has been appointed Vice President - Planning and
Corporate Development of the Company. Mr. McNiel joined Pride in
September 1994 as Chief Accounting Officer and has served as Vice
President and Chief Financial Officer of the Company since
February 1997.
Robert W. Randall is retiring from Pride after serving in the
capacity of Vice President, General Counsel and Secretary of the
Company since he joined Pride in May 1991.
Pride International, Inc. (Fitch, B+ Senior Unsecured Debt Rating,
Stable Outlook), headquartered in Houston, Texas, is one of the
world's largest drilling contractors. The Company provides
onshore and offshore drilling and related services in more than 30
countries, operating a diverse fleet of 328 rigs, including two
ultra-deepwater drillships, 11 semisubmersible rigs, 35 jackup
rigs, and 29 tender-assisted, barge and platform rigs, as well as
251 land rigs.
PSS WORLD MEDICAL: S&P Revises Outlook on BB- Rating to Positive
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on medical
products distributor PSS World Medical Inc. to positive from
stable. At the same time, Standard & Poor's affirmed its 'BB-'
corporate credit and senior secured debt ratings on the company.
The outlook revision reflects an improved credit profile resulting
from the company's successful restructuring efforts. The company
had approximately $112 million of debt outstanding as of
Oct. 3, 2003.
"The speculative-grade ratings on PSS World Medical Inc. reflect
Standard & Poor's concerns about whether the company can further
strengthen its otherwise well-established important position in
medical supply distribution markets," said credit analyst Jordan
Grant.
Jacksonville, Florida-based PSS is a leading national distributor
of medical products to the physician office and extended-care
markets. The company's broad product offerings, its computerized
order entry and inventory tracking systems (with customer Internet
access), and a large consultant sales force provide competitive
advantages.
PSS has focused on restructuring its operations during the past
two years. The company has reduced its number of distribution
centers to 46 from 72, added pharmaceuticals to its distribution
line and sold its unprofitable Diagnostic Imaging business, which
formerly accounted for about 40% of revenue. The restructuring has
made PSS World's operations both more efficient and profitable, in
addition to providing a clear direction for the company's growth.
The changes come after a troubled period at PSS. The company's
profitability suffered following its entry into the nursing home
supply field via the 1998 acquisition of Gulf South Medical Supply
Inc. PSS' attempted merger with Fisher Scientific International
Inc. was also disruptive. Although the agreement with Fisher was
terminated in September 2002 before the companies united, PSS
suffered for a time from increased employee turnover related to
the talks.
Currently, PSS management continues to focus on completing
restructuring plans that would reduce costs in the supply chain
and implementing new initiatives, such as practice management and
electronic medical records programs for physicians. Efforts to
streamline operations and restore profitability have begun to
produce positive results. Even so, the company faces competitive
pressures from larger and more broad-based companies in a
consolidating field.
By selling its unprofitable Diagnostic Imaging (DI) business in
late 2002, PSS generated $45 million in cash and reduced debt by
$71 million.
QWEST CORP: Over 35 Payphone Companies File Suit Against Qwest
--------------------------------------------------------------
More than 35 payphone companies filed suit against Qwest
Corporation (S&P, B- Senior Unsecured Facility Rating, Developing)
Wednesday in the U.S. District Court for the Western District of
Washington at Seattle seeking approximately $15 million in refunds
pursuant to a 1997 order of the Federal Communications Commission.
More companies are expected to join in the suit before it goes to
trial. The complaint is based on Qwest's failure to comply with
the FCC's "new services test" that dictated what Qwest was allowed
to charge the payphone companies for payphone lines and for fraud
protection. The plaintiffs seek refunds in all 14 states where
Qwest operates as a local telephone company. According to the
complaint, Qwest's overcharges and failure to voluntarily pay
refunds to the payphone companies violated several provisions of
the Communications Act.
Seattle attorney Brooks Harlow, of the Miller Nash law firm and an
attorney for the plaintiffs, noted, "Not only does the law require
Qwest to pay refunds, this is something that Qwest promised to do.
This is basically a collection action. Qwest promised to pay
refunds to customers who were overcharged and we are seeking to
enforce that promise."
According to the complaint, Qwest's promise to pay refunds enabled
it to collect hundreds of millions of dollars of compensation from
long distance companies beginning in 1997 that it otherwise would
not have collected.
Harlow estimated that the companies named in the suit are
collectively owed as much as $15 million for Qwest's overcharges
from 1997-2002. However, Harlow said that because additional
companies will want to join in the suit, Qwest could be required
to refund a much larger amount than that.
Miller Nash LLP is one of the Pacific Northwest's largest multi-
service law firms, serving clients locally and throughout the
world from its offices in Portland, Oregon, and Seattle and
Vancouver, Washington. Established in Oregon in 1873, the firm
represents clients in a wide variety of industries.
REUNION IND.: Arranges New Facilities & Restructures Sr. Notes
--------------------------------------------------------------
Reunion Industries, Inc. (Amex:RUN) was successful in refinancing
its existing bank loan facilities and restructuring its 13% senior
notes.
The new credit facility for up to $25.0 million is with Congress
Financial Corporation and replaces the Company's revolving credit
and term loan facilities with Bank of America. The Company has
also entered into $5.2 million of new loan facilities through a
$4.2 million secured term loan with a private capital fund and a
$1.0 million increase in an existing subordinated note payable.
The restructuring of its 13% senior notes includes the
cancellation of a total of $11.0 million of combined principal and
unpaid interest and the extension of the maturity to December
2006.
Reunion President Kimball Bradley stated in his comments, "This
success in refinancing and restructuring our debt completes the
final step in our plan to restructure Reunion. Over the last two
years, we have significantly reduced debt through asset sales,
realigned our cost structure and eliminated our dependence on
large capital projects, which historically had been a strain on
our liquidity. The improved working capital position will enable
us to shift our focus from survival to growth. We are now ideally
positioned to take advantage of the economic recovery in the
manufacturing sector. We thank our employees, customers and
creditors for their support."
Reunion manufactures and markets a broad range of metal and
plastic products and parts, including seamless steel pressure
vessels, fluid power cylinders, leaf springs, high volume
precision plastics products and thermoset compounds and provides
engineered plastics services. Reunion Industries is headquartered
at 11 Stanwix Street, Suite 1400, Pittsburgh, PA, 15222.
At June 30, 2003, the company's total shareholders' equity deficit
tops $32.2 million.
ROSEBUD DISPLAY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Rosebud Display & Packaging Corp.
4150 S Packers Avenue
Chicago, Illinois 60609
Bankruptcy Case No.: 03-48708
Chapter 11 Petition Date: December 2, 2003
Court: Northern District of Illinois (Chicago)
Judge: A. Benjamin Goldgar
Debtors' Counsel: Scott R. Clar, Esq.
Dannen Crane Heyman & Simon
135 S Lasalle Suite 1540
Chicago, IL 60603
Tel: 312-641-6777
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Stone Container $792,548
450 N. Avenue
Carol Stream, IL 60188-2195
Kodiak $255,847
10650 Galaxie
Ferndale, MI 48220
Inland $251,263
Attn: Elizabeth Louw
PO Box 93549
Chicago, IL 60673
Visy Packaging $235,326
Fulton Building $127,485
Corrugated Supplies $80,100
Janis Plastics $43,431
PCA $36,363
General Converting $32,700
Fox Valley Steel Rule Die $32,000
R&B Group $29,300
Luttrel $23,800
Thunder Tool $21,570
Weiss Sugar Dvorak & Dusek $20,600
Western Screen Print $15,269
Jet Corr $13,707
Shamrock Specialty $11,500
Motivational Fulfillment $11,134
Staffmark $10,900
Lyle Howard Co. $9,510
ROUGE INDUSTRIES: Court Approves Severstal as Stalking Horse
------------------------------------------------------------
Rouge Industries, Inc. announced that the United States Bankruptcy
Court for the District of Delaware in Wilmington approved the
break-up fee and bidding procedures related to the Amended and
Restated Asset Purchase Agreement with Severstal.
On November 24, 2003, the Company, certain of the Company's
subsidiaries, namely Rouge Steel Company and QS Steel Inc., and
Severstal entered into an Amended and Restated Asset Purchase
Agreement for the sale of substantially all of the Company's
assets, including the business of Rouge Steel Company, the
Company's primary operating subsidiary.
The Court's ruling gives Severstal "stalking horse," or priority
status, which generally allows Severstal to collect a break-up fee
should the Company agree to sell its assets to another party prior
to termination of the APA with Severstal.
The APA between the Company and Severstal, valued at approximately
$215 million, is subject to a number of conditions, including
termination or expiration of the waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act, obtaining certain
contractual consents, approvals and authorizations, and the
execution and ratification of a new collective bargaining
agreement by the International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America, UAW. The APA is
subject to higher and better offers submitted in accordance with
the procedures approved by the Bankruptcy Court under Sections 363
and 365 of the U.S. Bankruptcy Code.
Judge Mary F. Walrath of the Court also approved an expedited bid
period that will require competing bids to be submitted by
December 18, 2003, with the auction to be held on December 19,
2003. The final sale hearing date is scheduled for December 22,
2003. The Company expects to close the sale transaction by the
end of January 2004.
On October 23, 2003, the Company, including its subsidiaries Rouge
Steel Company, QS Steel Inc., and Eveleth Taconite Company, filed
voluntary petitions for protection under Chapter 11 of the U.S.
Bankruptcy Code in the Court. Rouge Steel Company continues to
produce and ship steel products and serve its customers.
RPS PETROLEUM INC: Case Summary & Largest Unsecured Creditor
------------------------------------------------------------
Debtor: RPS Petroleum Inc.
dba Clark Gas
500 E Ogden Avenue
Suite 103
Naperville, Illinois 60563
Bankruptcy Case No.: 03-48436
Type of Business: Gas station and convenience mart
Chapter 11 Petition Date: December 1, 2003
Court: Northern District of Illinois (Chicago)
Judge: Eugene R. Wedoff
Debtor's Counsel: James C. Truax, Esq.
James C. Truax & Associates
100 W Monroe Street
Suite 2001
Chicago, IL 60603
Tel: 312-236-4244
Total Assets: $1,404,600
Total Debts: $1,560,380
Debtor's Largest Unsecured Creditor:
Entity Claim Amount
------ ------------
Illinois Dept. of Revenue $20,000
RURAL/METRO: Wins New Pact as Ambulance Provider in Mesa, Ariz.
---------------------------------------------------------------
Rural/Metro Corporation (Nasdaq:RURL) announced that its Southwest
Ambulance division has been awarded a long-term contract to
continue as the exclusive provider of emergency ambulance services
in Mesa, Arizona. The award was approved this week on a unanimous
vote of the Mesa City Council following a competitive bidding
process.
The award includes an initial three-year term to begin on March 1,
2004, followed by two, three-year renewal periods, for a total
possible length of nine years. Contract negotiations are scheduled
to begin within the next several weeks.
Jack Brucker, President and Chief Executive Officer, said, "We are
gratified that Mesa's city leaders value our ability to deliver
quality care and service to the citizens who live and work in this
growing community. This award also reflects our continuing success
in sustaining our current customer base while expanding our market
share in key 911 service areas."
Mesa is Arizona's third-largest city and the nation's 40th-
largest, with a population of more than 445,000, representing a
35-percent growth rate since Southwest Ambulance began serving the
community in 1990. Southwest provides approximately 23,000 medical
transports in Mesa annually.
Barry Landon, President of Southwest Ambulance, said, "We are very
pleased to continue as a longstanding partner to the city's
emergency response system. We have worked diligently over the
years to enhance the strength of our public-private partnership in
Mesa and look forward to working together to build an even
stronger community presence in the future."
Rural/Metro Corporation provides emergency and non-emergency
medical transportation, fire protection, and other safety services
in 24 states and more than 400 communities throughout the United
States. For more information, visit the company's Web site at
http://www.ruralmetro.com/
At June 30, 2003, Rural/Metro Corp.'s balance sheet shows a total
shareholders' equity deficit of about $209 million.
SAFETY-KLEEN CORP: Committee Demands Debtor Consummate Plan
-----------------------------------------------------------
The Official Committee of Unsecured Creditors ask Judge Walsh to
order Safety-Kleen Corporation to consummate its First Amended
Plan without further delay.
The Committee finds it troubling that, after three years, these
cases have not "crossed the finish line." Even though the Plan
was confirmed on August 1, 2003, the Debtors continue to extend
indefinitely the Plan's Effective Date -- with the current target
possibly as far away as January 2004 -- mostly to the prejudice of
creditors who have been waiting patiently to collect on their
claims. The explanation the Committee repeatedly has heard is
that the Debtors require additional time to secure and document
their exit facility. The Debtors purportedly have been working
toward this goal since early this year, however, and their pace
should not be countenanced. Instead, affirmative action is
required.
Section 1142 of the Bankruptcy Code puts an affirmative duty on
the debtor to carry out the plan and expressly authorizes the
Court to direct a debtor to perform any act necessary to
consummate the plan. Section 1142 confers broad authority on the
Court and has been applied in a host of different circumstances --
especially with respect to recalcitrant debtors.
The Plan technically constitutes an amalgamation of 74 separate
plans and contemplates that one of the Debtors may reach an
effective date in isolation from the remaining 73. The Committee
only seeks to compel consummation of the Safety-Kleen Corporation
Plan, not the remaining 73 plans of Safety-Kleen's subsidiaries.
Since Safety-Kleen is being dissolved under the Plan, the Debtors'
progress toward securing exit financing is neither relevant to,
nor required for consummation. The Safety-Kleen Plan can,
therefore, take effect immediately.
"It's time to move on in these Chapter 11 cases," Robert J.
Dehney, Esq., at Morris Nichols Arsht & Tunnell, in Wilmington,
Delaware, states.
Mr. Dehney explains that activating the Plan for the Safety-Kleen
estate will enable the prompt reconciliation of two of the four
classes of unsecured claims receiving distributions. Moreover,
the Safety-Kleen Plan is the only Plan that contemplates cash
distributions for the holders of allowed claims. Each day the
Plan consummation is delayed enables the Debtors to reap the
benefits of holding more than $30,000,000 in cash and securities
designated for the holders of claims against the Safety-Kleen
estate. Accordingly, current circumstances warrant immediate
consummation of the Safety-Kleen Plan.
By well-established standards, Mr. Dehney contends that a five-
month delay -- assuming consummation occurs in January 2004 --
between the Confirmation Date and the Effective Date is
unreasonable. The effective date should be "reasonably close" to
the date of the confirmation hearing. Mr. Dehney points out that
the deadline to appeal the Confirmation Order has long since past.
The perpetuation of these cases prejudices creditors who have been
waiting for three years to realize on their claims.
Mr. Dehney also notes that since Safety-Kleen will be dissolved
pursuant to the Plan, consummation of the Plan does not require
the Debtors to close on the exit facility. Hence, there is simply
no reason to continue to adjourn the Effective Date with respect
to the Safety-Kleen Plan. Mr. Dehney asserts that if the Debtors
won't move on voluntarily, the Court should compel them to do so.
Secured Creditors Object
TD Securities (USA) Inc., for itself and as administrative
agent/advisor for the 120 financial institutions holding
$1,600,000,000 in aggregate secured and unsecured claims against
the Safety-Kleen Debtors, contends that the Unsecured Creditors
Committee's request is a bald attempt to receive a distribution
prior to any other creditor in "express violation" of the Debtors'
Plan and the terms of the Settlement Agreement reached between the
Committee and the Secured Lenders.
Paul N. Heath, Esq., at Richards Layton & Finger, in Wilmington,
Delaware, tells the Court that, as the Unsecured Creditors
Committee is well aware, if the conditions to consummation of the
Plan do not occur, Safety-Kleen's general unsecured creditors will
not receive a distribution. The request therefore is nothing more
than an attempt to take an end around the Plan and the Settlement
Agreement. As the conditions to consummation of the Debtors' Plan
have not been fulfilled and the Secured Lenders do not consent to
their waiver, the request must be denied.
Mr. Heath points out that the Debtors' Plan sets forth the
conditions necessary to consummate the Plan. These conditions
include the requirement that the Debtors have entered into an Exit
Facility approved by the Steering Committee of the Lenders, and
that the New Notes and New Preferred Stock have been issued to the
Secured Lenders. The Plan further provides that these conditions
may only be waived with the Secured Lenders' consent. Mr. Heath
relates that the Debtors are still in the process of negotiating
the terms of their Exit Financing Facility. Consummation of the
Plan, therefore, cannot occur. The Secured Lenders also
unequivocally object to the waiver of the conditions and to any
distribution being made to any creditor constituency prior to all
conditions to consummation being fulfilled.
According to Mr. Heath, it is important to emphasize that general
unsecured creditors in the Debtors' Chapter 11 cases will receive
nothing on account of their claims if the conditions to
consummation of the Debtors' Plan do not occur. As set forth in
the Disclosure Statement, any distribution to unsecured creditors
pursuant to the terms of the Settlement Agreement is contingent
upon the occurrence of the Effective Date. The Effective Date is
defined in the Plan as either the last calendar day of the month
or the first calendar day of the following month after all
conditions to consummation set forth in the Plan have been
satisfied or waived.
The Plan incorporates, among other things, the compromise and
settlement reached between the Secured Lenders Steering Committee
and the Unsecured Creditors Committee with respect to the
Committee Exclusivity Extension Objection and the Committee
Adversary Proceeding. As provided in the Disclosure Statement,
the Plan constitutes a motion for approval of the settlement. The
Confirmation Order, subject to the occurrence of the Effective
Date, will constitute a Court order finding and determining that
the settlement is (1) in the best interests of the Debtors and
their Estates, (2) fair, equitable, and reasonable, (3) made in
good faith and (4) approved by the Court. If the Effective Date
does not occur, Mr. Heath says, the settlement is null and void.
(Safety-Kleen Bankruptcy News, Issue No. 69; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SEITEL INC: Wants to Amend Plan to Include Auction Process
----------------------------------------------------------
Seitel, Inc. (OTC Bulletin Board: SEIEQ; Toronto: OSL) filed a
motion with the Bankruptcy Court amending its plan of
reorganization to include an auction process designed to guarantee
maximum recoveries for creditors and shareholders.
The motion, filed in support of Seitel's confirmation hearing,
will be heard by the Court on Wednesday, December 10, 2003.
Under the motion, if approved, competitive bids will be solicited
for a period of approximately sixty days after which the
reorganization plan for the Company would be considered for
confirmation.
In support of the auction process and to assure that all Seitel
creditors and shareholders will, in all events, recover at least
as much from the auction as presently provided under the Company's
pending plan of reorganization, Seitel also announced that
Berkshire Hathaway Inc. has agreed to and will submit an initial
bid in the amount of approximately $280 million. Such amount will
provide cash distributions equal to the amounts that would be made
under the Company's presently pending plan of reorganization,
including $10.15 million that would be distributed to
shareholders.
In anticipation of including the auction process as described
above, the Bankruptcy Court deferred to a later date confirmation
of the Company's presently pending plan. In addition, the
Bankruptcy Court deferred action on the disclosure statement filed
by the Equity Committee with respect to its proposed alternative
plan.
Final procedures for becoming a qualified bidder and submitting a
bid in the auction are expected to be approved at next week's
hearing and will be available publicly thereafter.
In addition, Seitel announced that it has reached agreement to
settle class action litigation initiated by certain shareholders
in April 2002. Under the settlement, which will become effective
upon the satisfaction of certain conditions, including approval by
the Bankruptcy Court and the District Court of the Southern
District of Texas, Seitel will pay approximately $980,000 to
resolve all claims against it and all of the individual defendants
in the case. All other costs related to the settlement will be
covered by Seitel's insurance carrier.
Seitel markets its proprietary seismic information/technology to
more than 400 petroleum companies, licensing data from its library
and creating new seismic surveys under multi-client projects.
SOLUTIA INC: Remains Obligated Under Distribution Agreements
------------------------------------------------------------
Solutia Inc. (NYSE: SOI) has notified Pharmacia Corporation and
Monsanto Company (NYSE: MON) that it will not be making
approximately $3 million of payments in connection with
settlements entered into earlier this year relating to asbestos
litigation in Texas.
"Solutia's failure to honor its payment obligations with respect
to these litigation settlements would be a breach of its
obligations under the distribution agreement entered into Sept. 1,
1997, between Pharmacia (then known as Monsanto Company) and
Solutia. Under the distribution agreement, Solutia assumed these
obligations and does not have the right to selectively determine
which obligations it honors," Pharmacia and Monsanto say.
The settlement agreements, which were entered into by Solutia in
April and August of 2003, respectively, relate to two asbestos
cases: Brignac, et al v. Pharmacia Corporation f/k/a Monsanto
Company, et al, and Campbell et al v. Pharmacia Corporation f/k/a
Monsanto Company, et al. Solutia was defending these cases as a
result of the 1997 distribution agreement.
As of September 30, 2003, Solutia Inc. reports a total
shareholders' deficit of $369 million compared to $249 million as
of December 31, 2002.
SPIEGEL GROUP: Gets Clearance to Execute Amended Escrow Pact
------------------------------------------------------------
The Spiegel Group Debtors sought and obtained the Court's
authority to:
* execute and perform under amended escrow agreements with
Expeditors International of Washington, Inc.; and
* enter into a continuation agreement and an inter-company
agreement among certain Debtors.
Prepetition Escrow Agreements
Andrew V. Tenzer, Esq., at Shearman & Sterling LLP, in New York,
informs the Court that Expeditors renders logistics services,
including consolidated cargo management, brokerage and air
freight forwarding services for Eddie Bauer, Inc. and Spiegel
Catalog, Inc. Expeditors currently acts as a customs broker on
behalf of Newport News, Inc. for a small number of shipments. In
the future, Newport News may rely on Expeditors for payments to
freight forwarders and ocean carriers in the way that Eddie Bauer
and Spiegel Catalog do currently. All of these types of
transport-related services are essential to the shipping of
merchandise in the operations of the Merchant Companies.
On August 14, 2002, Eddie Bauer, Expeditors and La Salle Bank
National Association entered into an escrow agreement
creating an escrow fund as credit support for Expeditors in its
dealings with Eddie Bauer. There is currently $1,000,000 in this
escrow fund. Spiegel Catalog, Expeditors and the Escrow Agent
also entered into an escrow agreement to support Expeditors in
its dealings with Spiegel Catalog. There is currently $600,000
in this escrow fund. Mr. Tenzer notes that no prepetition escrow
for the benefit of Expeditors existed with respect to Debtor
Newport News.
Amendments to Escrow Agreements
On October 31, 2003, the Eddie Bauer Escrow Agreement and the
Spiegel Escrow Agreement were amended. Expeditors requested that
the Amended Escrow Agreements be executed so as to be induced to
continue to provide services in the ordinary course of business
to Eddie Bauer, Spiegel Catalog and Newport News postpetition and
to provide Expeditors with adequate assurance of payment for its
services and advances of credit. The Merchant Companies have
agreed to enter into the Amended Escrow Agreements because:
(a) the services provided by Expeditors are critical to their
operations;
(b) no contract exists between Expeditors and any of the
Merchant Companies, which obligates Expeditors to continue
to perform these services; and
(c) it would be costly, time-consuming and detrimental to the
Merchant Companies' businesses to attempt to find a
substitute for Expeditors.
Mr. Tenzer states that to this end, the Amended Escrow Agreements
provide payment and reimbursement terms for the benefit of
Expeditors.
Furthermore, the Amended Escrow Agreements are intended to
clarify that the funds of Eddie Bauer and Spiegel Catalog in
escrow are collateral security for obligations owed to Expeditors
arising from August 14, 2002 through the postpetition period, so
long as these arrangements remain in effect. All prepetition
invoices due to Expeditors were paid pursuant to a first-day
order entered by the Court. In addition, Spiegel Catalog's
Amended Escrow Agreement provides that in certain instances,
Expeditors may draw on the Spiegel Catalog escrow funds to
satisfy obligations owed by Newport News. Since no prepetition
escrow fund existed for the benefit of Newport News, this
amendment was essential for Expeditors to continue to provide
services to Newport News, Mr. Tenzer says. Pursuant to the
Amended Spiegel Escrow Agreement terms, $100,000 out of the
$600,000 escrow will be returned to Spiegel Catalog, so long as
the remaining amount in the escrow is no less than $500,000.
Moreover, Expeditors has liens on the funds in the Eddie Bauer
and Spiegel Catalog escrows. According to Mr. Tenzer, these
liens are "permitted liens" under the Debtors' postpetition
secured financing facility previously approved by the Court, as
the term is defined in the DIP Facility. As a result,
Expeditors' liens are first priority, valid and perfected liens
senior to the lenders' liens under the DIP Facility.
Continuation Agreement
On October 31, 2003, Expeditors, Eddie Bauer and Spiegel Catalog
entered into an agreement for the continuation of escrow funds.
Mr. Tenzer explains that the Continuation Agreement memorializes
the business agreement between the parties, which is given effect
through the Amended Escrow Agreements. The Continuation
Agreement describes:
-- the payment terms of Expeditors' invoices;
-- the procedures associated with disbursement requests; and
-- the provision of notices.
Pursuant to the Continuation Agreement, Spiegel Catalog agreed
that Newport News' present or future obligations to Expeditors,
which are not paid when due, may be paid from Spiegel Catalog's
escrow fund established for Expeditors' benefit.
Inter-Company Reimbursement Agreement
In the Amended Spiegel Escrow Agreement, it is provided that the
escrow fund may be utilized and drawn upon in the event Newport
News does not timely pay its invoiced obligations to Expeditors.
Thus, Spiegel Catalog and Newport News have entered into an
inter-company agreement dated October 31, 2003, setting forth the
terms upon which Newport News is obligated to repay Spiegel
Catalog for any draws by Expeditors on its behalf. In
particular, to the extent Spiegel Catalog is not reimbursed by
Newport News, the Reimbursement Agreement provides that Spiegel
Catalog will have an administrative claim in Newport News'
bankruptcy case. (Spiegel Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SWEETHEART CUP: S&P Affirms Ratings over Refinancing Plans
----------------------------------------------------------
Standard & Poor's Ratings Services affirmed all of its ratings on
Owings Mills, Maryland-based Sweetheart Cup Co. Inc., following
the company's announcement that it plans to issue $95 million of
senior secured notes due in 2007 under Rule 144a with registration
rights and $20 million of junior subordinated notes due in 2008.
"Proceeds will be used to redeem all $93.8 million of Sweetheart's
12% callable senior unsecured notes maturing in July 2004 and to
repay a portion of its senior secured credit facility. The outlook
remains developing, which means that ratings could be raised or
lowered," said Standard & Poor's credit analyst Cynthia Werneth.
The notes due in 2004 must be refinanced before Dec. 31, 2003, to
avoid the accelerated maturity of the company's credit facility on
that date (in the absence of an extension).
If the refinancing is completed under the proposed terms and
conditions, Standard & Poor's will raise its corporate credit
rating on Sweetheart and subordinated debt rating on The Fonda
Group Inc. (which was merged into Sweetheart in 2002) by one notch
(to 'B-' and 'CCC', respectively). The ratings on the notes due in
2004 will be withdrawn and a 'CCC' senior secured debt rating will
be assigned to the new notes. The outlook will be stable. Standard
& Poor's is not rating the new subordinated debt, which will be
purchased by International Paper Co., one of Sweetheart's major
suppliers.
Subject to bank lender approval, the new notes will be secured by
property, plant, and equipment with a book value of about $45
million, and a market value that management estimates at about $90
million. The ratings on both the new senior secured and existing
subordinated notes will be two notches below the corporate credit
rating because of the significant amount of senior bank debt and
operating lease obligations secured with superior collateral, and
Standard & Poor's belief that in a distressed situation holders of
the new notes would only receive marginal recovery of principal
because the distressed asset value would likely be well below the
current market value.
If the refinancing is not completed and the bank debt is
accelerated, all the ratings will be lowered to 'D'.
TELESOURCE INT'L: Ability to Continue Operations Uncertain
----------------------------------------------------------
Telesource International, Inc. was incorporated in Delaware in
1994. Telesource was formed in 1994 to facilitate various intra-
corporate activities and, until July 1999, was a wholly owned
subsidiary of Sayed Hamid Behbehani & Sons Co. W.L.L., a Kuwait-
based civil, electrical and mechanical construction company.
Telesource is an international engineering and construction
company, engaged in constructing single family homes, airports,
radio towers and in the construction and operation of energy
conversion power plants. In Tinian, an island in the Commonwealth
of Mariana Islands (U.S. Territory), the Company operates a diesel
fired electric power generation plant for the sale of electricity
to the local power grid. The Company's facility in Lombard,
Illinois, annually handles the procurement, export and shipping of
U.S. fabricated products for use by the Company's subsidiaries or
for resale to customers outside of the mainland.
The Company conducts its operations through three subsidiaries.
The Company's Mariana subsidiary, Telesource CNMI, Inc., handles
construction and management of the Company's energy conversion
facilities in the Commonwealth of Mariana Islands and operates a
branch office in Guam to take advantage of future opportunities.
The Company's second subsidiary, Commsource International, is an
international export company that facilitates the purchase of
equipment in the U.S. The Company's third subsidiary, Telesource
Fiji, Ltd., handles the Company's construction activities in Fiji.
The Company has an office in the Republic of Palau which handles
construction activities in Palau.
During the fiscal years of 1998 through 2002, the Company
experienced significant operating losses with corresponding
reductions in working capital and net worth. As of September 30,
2003, the Company's current liabilities exceeded its current
assets by $20,442,657. The Company relies heavily on bank
financing to support its operations and its ability to refinance
its existing bank debt is critical to provide funding to satisfy
the Company's obligations as they mature. As of September 30, 2003
the Company had total outstanding debt of $33,514,991 of which
$24,084,991 is due in the next twelve months. As of September 30,
2003 the Company had an accumulated deficit of $33,836,714 and
total stockholders' deficit of $17,279,114.
The Company incurred operating losses of $2,855,164 and $462,971
for the nine months ended September 30, 2003 and 2002,
respectively, and operating losses of $3,118,300, $4,903,676 and
$1,516,103 for the years ended December 31, 2002, 2001 and 2000,
respectively.
The Company's net working capital deficiency, total stockholders'
deficit, recurring losses and negative cash flows from operations
raise substantial doubt about the Company's ability to continue as
a going concern. To address the going concern issue, management
has implemented financial and operational restructuring plans
designed to improve operating efficiencies, reduce and eliminate
cash losses and position Telesource for profitable operations by
also increasing revenues. Management expects the increase in
revenues to be achieved by securing additional substantial
projects during 2003 and 2004 through increasing revenues from
existing long-term power plant operation and maintenance
agreements as a result of continued expansion on the island of
Tinian and a new operation and maintenance agreement for three
power plants in Fiji. However, no assurance can be given that such
increased revenues will be achieved.
TRINITY IND.: Names Robert P. Herre as New EVP of Trinity Marine
----------------------------------------------------------------
Trinity Industries, Inc. (NYSE: TRN) announced Robert P. Herre has
been named Executive Vice President of Trinity Marine Products,
Inc., a subsidiary of Trinity Industries, Inc.
Herre is a 25-year veteran of both the marine and inland
shipbuilding industries, trained and experienced in engineering,
operations and general management. Most recently, Herre served as
President and Chief Operating Officer of Jeffboat LLC, a
subsidiary of American Commercial Lines, LLC.
"I'm extremely pleased to have someone of Bob's caliber joining
the company," said Paul Mauer, President of Trinity Marine. "His
background and experience enhance our existing management team,
providing a unique perspective from within the industry. Bob will
be involved in all areas of our business, focusing specifically on
those which require his strong capabilities in serving and
developing relationships with our customers."
Herre holds an undergraduate degree in Marine Engineering from the
United States Merchant Marine Academy, an MBA from Xavier
University and a Juris Doctorate from the University of Louisville
School of Law.
Trinity Industries, Inc. (S&P/BB/Stable/), with headquarters in
Dallas, Texas, is one of the nation's leading diversified
industrial companies. Trinity reports five principal business
segments: the Trinity Rail Group, Trinity Railcar Leasing and
Management Services Group, the Inland Barge Group, the
Construction Products Group and the Industrial Products Group.
Trinity's Web site may be accessed at http://www.trin.net
TRIPLE 7 FOODS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Triple 7 Foods, Ltd.
dba Cheddar's
P.O. Box 8250
Midland, Texas 79708-8250
Bankruptcy Case No.: 03-70852
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
White Foods Group 03-51450
*** White Foods' chapter 11 petition was summarized in the
*** Wed., Dec. 3, 2003, edition of Troubled Company Reporter
Type of Business: Food Services
Chapter 11 Petition Date: December 1, 2003
Court: Western District of Texas (Midland)
Judge: Ronald B. King
Debtors' Counsel: Roy Byrn Bass, Jr.
Harding, Bass, Fargason,
Booth & St. Clair, L.L.P.
P.O. Box 5950
Lubbock, TX 79408
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
US Food Service Trade Debt $59,341
Texas Comptroller of Trade Debt $14,626
Public Accounts
Arbor-Tech Horticulture Trade Debt $9,633
Clark's and Winford's Trade Debt $6,076
KTXC-FM Trade Debt $4,000
Cumulus Broadcasting Trade Debt $3,844
Bell Gandy's Diaries Trade Debt $3,728
National Linen Service Trade Debt $2,110
KWES TV Trade Debt $2,000
Coca-Cola Enterprises Trade Debt $1,642
Cintas Corporation #440 Trade Debt $1,547
Stadium Sports Trade Debt $1,406
Pure Air Air Conditioning Trade Debt $1,361
Edward Don & Company Trade Debt $1,282
Coca-Cola Bottling Trade Debt $1,280
Ecolab Trade Debt $960
Mid-West Glass Co. Trade Debt $691
F & B Texas Trade Debt $645
Hobart Corporation Trade Debt $519
Supreme Water Treatment Trade Debt $486
TYCO INT'L: Fitch Ups Senior Unsecured Rating a Notch to BB+
------------------------------------------------------------
Fitch Ratings has upgraded its ratings to 'BB+' from 'BB' on the
senior unsecured debt of Tyco International Ltd., as well as the
unconditionally guaranteed debt of its wholly owned direct
subsidiary Tyco International Group S. A. The commercial paper
rating remains at 'B'. The Rating Outlook is Stable. Approximately
$19 billion of debt is affected by this rating action.
Fitch's upgrade of Tyco's long-term debt recognizes the progress
made by the company with respect to debt reduction and improving
cash flow. In addition, the debt maturity schedule no longer
presents a major challenge to Tyco's liquidity as maturities in
each of the next two calendar years approximate $1 billion or
less, followed by $3.7 billion due in 2006. The rescheduling and
paydown of debt is proceeding through a number of actions
including the recent redemption in mid-November of $2.5 billion of
convertible debt and the anticipated replacement and extension of
Tyco's bank facilities in December, 2003 that are currently being
negotiated. Liquidity is further supported by cash balances of
$4.2 billion as of Sept. 30, 2003 (subsequently reduced by the
payout of convertible debt), the issuance of $1.0 billion of new
ten year unsecured notes in early November and an outlook for
continued strong free cash flow that reflects significant
reductions in capital spending for acquisitions and fixed assets.
Tyco's credit profile should benefit as the company demonstrates
progress in restoring better operating results, improved access to
capital markets and using free cash flow to reduce debt and
leverage.
The ratings are constrained by concerns about operating challenges
in several segments as well as by potential legal liabilities
relating to shareholder lawsuits and ongoing investigation by the
SEC. Operating margins, while below historical levels, appear to
have stabilized. In the Fire & Security segment, ADT's European
operation remains weak and ADT overall continues to experience
elevated attrition rates, in part due to actions taken to improve
the quality of its customer portfolio and rebuild long term
profitability. Two other segments, Engineered Products and
Plastics, face weak demand and will be part of the restructuring
and divestiture program announced recently that involves all
segments of Tyco. Although there likely will be accounting losses
from the program, the impact on near term cash flow should be
minimal with cash proceeds from asset sales expected to offset
cash restructuring costs. Longer term, the restructuring should
rationalize Tyco's cost structure and lead to improved margins and
cash flow. The planned sale of the TyCom Global Network and other
businesses represent 6% of Tyco's total sales. The divestitures
are intended to contribute to a sharper focus on the company's
core operations and help meet Tyco's objective for generating $3
billion in cash from ongoing strategic initiatives during the next
2-3 years that address strategic sourcing, Six Sigma programs and
working capital.
Liquidity continues to improve following ongoing debt
restructuring as Tyco rebuilds its operating performance and
further pays down debt. Weak operating earnings have offset the
impact of modest debt reduction on leverage, resulting in little
change in debt/EBITDA during 2003 as net debt/EBITDA declined from
2.8 times at the beginning of the year to 2.7x at Sept. 30, 2003.
Debt was reduced by $3.2 billion during 2003 but was funded in
large part by the draw-down of excess cash balances. Cash flow and
liquidity in 2004 would be modestly affected by any pension
contributions (approximately $200 million contributed in 2003) and
by cash spending against reserves for restructuring, purchase
accounting and holdback/earn-out liabilities that totaled $881
million at June 30, 2003. Even with these funding requirements,
Fitch looks for debt reduction to accelerate once Tyco has fully
implemented its operating strategies. In addition, a normal
cyclical rebound in the company's end-markets would further
benefit operating cash flow and contribute to long term financial
flexibility.
WALTER INDUSTRIES: Firms-Up Sale of Former Headquarters Building
----------------------------------------------------------------
Walter Industries, Inc. (NYSE: WLT) has completed the sale of its
former headquarters building in Tampa for $13.3 million.
Walter Industries vacated the building, located at 1500 North Dale
Mabry Highway, in November 2001 to move to its present
headquarters at Corporate Center Two at International Plaza in
Tampa. The buyer, Tampa-based Morin Development Group, plans to
demolish the building and construct a retail center on the site.
Walter Industries, Inc. (S&P, BB Corporate Credit Rating, Stable)
is a diversified company with five principal operating businesses
and annual revenues of $1.9 billion. The Company is a leader in
homebuilding, home financing, water transmission products, energy
services and specialty aluminum products. Based in Tampa, Florida,
the Company employs approximately 6,300.
WARNACO GROUP: Makes Amendment to $325MM Exit Financing Facility
----------------------------------------------------------------
Warnaco's Exit Financing Facility provides for a four-year, non-
amortizing revolving credit facility, including provisions that
allow Warnaco to increase the maximum available borrowing from
$275,000 to $325,000, subject to certain conditions -- including
obtaining the agreement of existing or new lenders to commit to
lend the additional amount. Borrowings under the Exit Financing
Facility bear interest at Citibank N.A.'s base rate plus 5.50% as
of October 4, 2003 or at London Interbank Offered Rate -- LIBOR
-- plus 3.65% as of October 4, 2003. Warnaco purchases LIBOR
contracts when it expects borrowing to be outstanding for more
than 30 days. The remaining balances bear interest at the base
rate plus 1.50%.
Pursuant to the terms of the Exit Financing Facility, the
interest rate Warnaco will pay on its outstanding loans will
decrease by as much as 0.5% in the event Warnaco achieves certain
defined ratios. The Exit Financing Facility contains financial
covenants that, among other things, require Warnaco to maintain
fixed charge coverage ratio above a minimum level and a leverage
ratio below a maximum level and to limit the amount of Warnaco's
capital expenditures. In addition, the Exit Financing Facility
contains certain covenants that, among other things:
(a) limit investments and asset sales;
(b) prohibit the payment of dividends -- subject to limited
exceptions; and
(c) prohibit Warnaco from incurring material additional
indebtedness.
As of October 4, 2003, Warnaco was in compliance with the
covenants of the Exit Financing Facility. Initial borrowings
under the Exit Financing Facility on the Effective Date were
$39,200,000. The Exit Financing Facility is guaranteed by
Warnaco Group and substantially all of the domestic subsidiaries
of Warnaco and the obligations under such guarantee, together
with their obligations under the Exit Financing Facility, are
secured by a lien on substantially all of the domestic assets of
Warnaco and its domestic subsidiaries. As of October 4, 2003
Warnaco had repaid all amounts owing under the Exit Financing
Facility and had $25,000,000 cash available as collateral against
outstanding $60,300,000 letters of credit. At October 4, 2003,
Warnaco had $151,300,000 credit available under the Exit
Financing Facility.
On November 12, 2003, Warnaco's lenders approved an amendment to
the Exit Financing Facility to modify certain definitions and
covenants and to permit certain asset sales, permit the use of
cash balances to fund acquisitions and allow Warnaco to
repurchase up to $10,000,000 of their outstanding Senior Notes
after June 30, 2004. (Warnaco Bankruptcy News, Issue No. 56;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WEIRTON STEEL: Wins Court Nod for McCarl's Settlement Agreement
---------------------------------------------------------------
Weirton Steel Corporation obtained the Court's approval of a
Settlement Agreement with McCarl's Inc., with respect to the
Mechanic's Lien Claim.
To recall, pursuant to a prepetition agreement between the Weirton
Steel Corporation Debtor and McCarl's Inc., as amended on March 7,
2003, McCarl's agreed to replace two stationary skids in the
walking beam furnace and water cooled lintel on the furnace in the
Hot Strip Mill property owned by the Debtor in Hancock County,
West Virginia.
McCarl's alleges that the contract price and value of the
materials and the work performed is $1,089,633. The Debtor does
not dispute the alleged claim amount or the propriety of McCarl's
Mechanic's Lien. However, the Debtor refused to pay McCarl's
claim, as it constitutes a prepetition claim. McCarl's filed and
perfected the Mechanic's Lien after the Petition Date against the
Debtor's real property in Hancock County.
The Debtor and McCarl's reached a settlement and compromise of the
Outstanding Obligations, where:
(a) The Debtor agreed to pay $980,670 to McCarl's; and
(b) McCarl's agrees to accept $980,670 from the Debtor as full
and complete payment in compromise and settlement of the
Outstanding Obligations and waive any and all interest
accrued associated with the Outstanding Obligations, in
full and complete satisfaction of the Mechanic's Lien
Claim. (Weirton Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
WESTERN GAS RESOURCES: Declares Common and Preferred Dividends
--------------------------------------------------------------
Western Gas Resources, Inc. (NYSE: WGR) announced that its Board
of Directors has declared a quarterly dividend of $0.05 per share
of common stock, payable to stockholders of record on December 31,
2003.
In addition, the Board declared quarterly dividends of $0.65625
per share on the $2.625 Cumulative Convertible Preferred Stock
(NYSE: WGR pfA). Preferred dividends are payable to stockholders
of record on December 31, 2003.
The dividends for all securities will be paid on February 13,
2004.
Western is an independent natural gas explorer, producer,
gatherer, processor, transporter and energy marketer providing a
broad range of services to its customers from the wellhead to the
sales delivery point. The Company's producing properties are
located primarily in Wyoming, including the developing Powder
River Basin coal bed methane play, where Western is a leading
acreage holder and producer. The Company also designs,
constructs, owns and operates natural gas gathering, processing
and treating facilities in major gas-producing basins in the Rocky
Mountain, Mid-Continent and West Texas regions of the United
States. For additional Company information, visit Western's Web
site at http://www.westerngas.com
As previously reported, Western Gas Resources, Inc.'s outstanding
credit ratings have been affirmed by Fitch Ratings as follows:
senior unsecured debt rating at 'BBB-'; senior subordinated notes
at 'BB+' and preferred stock at 'BB'. The Rating Outlook is
Stable.
WESTPORT RESOURCES: Posts 2004 Capital and Operational Guidance
---------------------------------------------------------------
Westport Resources Corporation (NYSE: WRC) announced its
operational and financial guidance for 2004.
The guidance assumes the closing of the previously announced
purchase of South Texas oil and gas assets scheduled for December
2003 and assumes no property divestitures.
The Company is targeting its 2004 daily production to average
between 550 and 590 Mmcfe/d, which is estimated to be 73% natural
gas. Based upon the Company's 2004 business plan, Westport
anticipates that its cost structure per Mcfe in 2004 will be
approximately:
Lease operating expense $0.57 -- $0.63
Transportation expense $0.09 -- $0.12
General and administrative expense $0.17 -- $0.19
Interest expense $0.25 -- $0.35
Depletion, depreciation and amortization expense $1.60 -- $1.80
Westport anticipates oil and natural gas price realizations to be
between 90% and 93% of NYMEX prices and production taxes to
average between 6% and 7% of pre-hedged oil and natural gas sales.
The Company expects capital expenditures during 2004 to be $370
million, with approximately 73% allocated for exploitation and 27%
allocated for exploration. Approximately 13% of the 2004 budget
will be allocated to the Northern Division, 23% to the Western
Division, 38% to the Southern Division and 26% to the Gulf of
Mexico Division. These ratios are subject to change based on
drilling expense, unanticipated transaction opportunities and
other factors. The Company does not budget or plan for
acquisitions, which have historically been a major part of the
Company's growth strategy, and accordingly, the capital budget and
all guidance estimates could be materially affected by such
transactions, if any. Westport intends to fund its 2004 capital
spending with internally generated cash flows.
"In 2004, we expect to increase our production by 20% to 30% and
to expand our capital budget by $100 million to $370 million.
Assuming 2004 NYMEX prices of $24.00/bbl for oil and $4.00/Mmbtu
for natural gas, we anticipate generating excess cash flows of
approximately $150 million to reduce debt and to maintain our
financial and operational flexibility to take advantage of
drilling and acquisition opportunities that may arise," commented
Don Wolf, Chairman and CEO of Westport.
Westport (S&P, BB Corporate Credit and Senior Unsecured, and B+
Senior Subordinated Debt Ratings) is an independent energy company
engaged in oil and natural gas exploitation, acquisition and
exploration activities primarily in the Gulf of Mexico, the Rocky
Mountains, Permian Basin/Mid-Continent and the Gulf Coast.
WHITEWING ENVIRONMENTAL: Cash Deficits Raise Going Concern Doubt
----------------------------------------------------------------
Whitewing Environmental Corp. was incorporated in 1993 under the
laws of the state of Delaware. The consolidated entity,
collectively referred to as the "Company", includes Whitewing,
Total Recycling Services, Inc., and Advanced Recovery Solutions,
Inc. d/b/a Complete Spill Solutions. TRS includes four wholly-
owned subsidiaries: EMP, Inc., Total Recycling Services of
Connecticut, Inc. d/b/a Total Recycling Services, Etters Realty,
Inc. and ARS Properties, Inc.
The Company's consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the
United States of America, which contemplate continuation of the
Company as a going concern. However, the Company has suffered
recurring losses, negative cash flows from operations of
approximately $1,796,000 during the nine months ended
September 30, 2003, negative working capital of approximately
$2,613,000 at September 30, 2003, and an accumulated deficit of
approximately $8,108,000 at September 30, 2003 and a stockholders'
deficiency of approximately $76,000. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
Management is in the process of raising additional funds from a
private placement which is intended to generate working capital
necessary to sustain the Company through the next twelve months
and positively impact revenues. Subsequent to September 30, 2003
until November 6, 2003, the Company has raised additional gross
proceeds of $465,500 and net cash proceeds of $419,000.
The Company's cash balance at September 30, 2003 was $372,727
which is an increase of $487,395 from the cash overdraft balance
at December 31, 2002.
WOMEN FIRST: Defers November 2003 $3M Principal Payment to Wyeth
----------------------------------------------------------------
Women First HealthCare Inc. (Nasdaq:WFHC) has reached an agreement
with Wyeth to defer half of the scheduled November 2003 principal
payment of $3,250,000 until May 2004. The original note was issued
in November 2001 as partial consideration for the purchase of
Synalgos(R) and Equagesic(R) from American Home Products (now
Wyeth).
Women First will pay interest quarterly on the deferred amount of
$1,625,000 at the rate of 12% per annum.
Women First President and Chief Operating Officer Michael Sember
commented, "This amendment provides us with additional flexibility
in managing our cash, complying with our debt covenants and
continuing to invest in our business."
Women First HealthCare Inc. (Nasdaq:WFHC) is a San Diego-based
specialty pharmaceutical company. Founded in 1996, its mission is
to help midlife women make informed choices regarding their health
care and to provide pharmaceutical products -- the company's
primary emphasis -- and lifestyle products to meet their needs.
Women First HealthCare is specifically targeted to women age 40+
and their clinicians. Further information about Women First
HealthCare can be found online at http://www.womenfirst.com/
* * *
At June 30, 2003, the Company's balance sheet shows a working
capital deficit of about $7 million, while total net
capitalization dropped to about $15 million from $46 million six
months ago.
As reported in Troubled Company Reporter's May 15, 2003 edition,
Women First HealthCare Inc. received $2.5 million of new capital
through a private placement of its common stock and completed
agreements to obtain waivers of past defaults and restructure the
terms of both its $28.0 million principal amount of senior secured
notes and convertible redeemable preferred stock issued to finance
the company's acquisition of Vaniqa(R) Cream.
WORLD HEART: Commences Trading On a Post-Consolidated Basis
-----------------------------------------------------------
Common shares of World Heart Corporation (WorldHeart) commenced
trading yesterday in Canada on the Toronto Stock Exchange (TSX)
and in the United States on the NASDAQ Over-the- Counter-Bulletin-
Board (OTCBB) on a post-consolidated basis.
As was previously announced, shareholders of WorldHeart had
approved a consolidation of shares whereby shareholders receive
one common share for each seven common shares that they previously
held. WorldHeart now has approximately 15,018,793 common shares
outstanding compared to t he 105,131,553common shares that were
outstanding prior to the share consolidation.
In addition, in accordance with NASDAQ regulations the listing
symbol on the OTCBB has been changed to "WHTOF", effective
December 4, 2003. The listing symbol on the TSX will remain as
"WHT".
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.
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 1,490
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'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 Proposed Oracle Settlement Agreement
-------------------------------------------------------------
Debtor MCI WorldCom Network Services, Inc. and Oracle Corporation
were parties to an Enterprise License Agreement, a software
license agreement entered in May 1998. Originally, the License
Agreement was executed by MCI Telecommunications Corporation,
which later changed its name to MCI WorldCom Network Services,
Inc.
The License Agreement grants the Debtor, as well as its
affiliates and subsidiaries, a perpetual, fully paid-up,
irrevocable, and worldwide license to certain Oracle products
that are essential to the Debtors' business.
Adam P. Strochak, Esq., at Weil, Gotshal & Manges LLP, in
Washington, D.C., recounts that a dispute between the parties
arose when Oracle claimed that the Debtors owe an undetermined
amount of debt under the License Agreement.
Oracle filed a lawsuit in the United States District Court for
the Eastern District of Virginia alleging copyright infringement
and breach of contract against the Debtors. In addition, Oracle
filed 222 proofs of claim in the Bankruptcy Court against the
Debtors based on the Virginia Litigation.
To resolve the dispute, Oracle and the Debtors entered into a
settlement agreement. Under the Agreement, the parties agreed
that:
(a) Debtor MCI WorldCom Network Services will assume the
Enterprise License Agreement, as amended, pursuant to the
Settlement Agreement;
(b) The Debtors will pay Oracle a $12,500,000 License
Conversion and Technical Support Fee as Settlement
Payment;
(c) The $12,500,000 payment serves as the full and final
satisfaction of any and all claims and causes of action
that Oracle has or may have against any and all of the
Debtors regarding the Virginia Litigation and the
Enterprise License Agreement Proofs of Claim;
(d) Oracle and the Debtors will execute an amendment to the
Enterprise License Agreement that will eliminate certain
restrictions on the Debtors' use of the licenses obtained
through the Enterprise License Agreement and modify
payments for technical support fees; and
(e) Oracle will file a stipulated dismissal with prejudice in
the United States District Court for the Eastern District
of Virginia, and Oracle will withdraw the Enterprise
License Agreement Proofs of Claim.
Accordingly, the Debtors sought and obtained Court approval of
their Settlement Agreement with Oracle Corporation, authorizing
the Debtors to assume the Enterprise License Agreement and fixing
the Debtors' License Conversion and Technical Support Fee, in
accordance with the parties' intent. (Worldcom Bankruptcy News,
Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* BOOK REVIEW: Lost Prophets -- An Insider's History
of the Modern Economists
----------------------------------------------------
Author: Alfred L. Malabre, Jr.
Publisher: Beard Books
Softcover: 256 pages
List Price: $34.95
Review by Henry Berry
Order your personal copy today at
http://www.amazon.com/exec/obidos/ASIN/1587981807/internetbankrupt
Alfred Malabre's personal perspective on the U.S. economy over the
past four decades is firmly grounded in his experience and
knowledge. Economics Editor of The Wall Street Journal from 1969
to 1993 and author of its weekly "Outlook" column, Malabre was in
a singular position to follow the U.S. economy in recent decades,
have access to the major academic and political figures
responsible for economic affairs, and get behind the crucial
economic stories of the day. He brings to this critical overview
of the economy both a lively, often provocative, commentary on the
picture of the turns of the economy. To this he adds sharp
analysis and cogent explanation.
In general, Malabre does not put much stock in economists. "In
sum, the profession's record in the half century since Keynes and
White sat down at Bretton Woods [after World War II] provokes
dismay." Following this sour note, he refers to the belief of a
noted fellow economist that the Nobel Prize in this field should
be discontinued. In doing so, he also points out that the Nobel
for economics was not one originally endowed by Alfred Nobel, but
was one added at a later date funded by the central bank of Sweden
apparently in an effort to give the profession of economists the
prestige and notice of medicine, science, literature and other
Nobel categories.
Malabre's view of economists is widespread, although rarely
expressed in economic circles. It derives from the plain fact
that modern economists, even hugely influential ones such as John
Meynard Keynes, are wrong as many times as they are right. Their
economic theories have proved incomplete or shortsighted, if not
basically wrong-headed. For example, Malabre thinks of the
leading economist Milton Friedman and his "monetarist colleagues"
as "super salespeople, successfully merchandising.an economic
medicine that promised far more than it could deliver" from about
the 1960s through the Reagan years of the 1980s. But the author
not only cites how the economy has again and again disproved the
theories and exposed the irrelevance of wrong-headedness of the
policy recommendations of the most influential economists of the
day. Malabre also lays out abundant economic data and describes
contemporary marketplace and social activities to show how the
economy performs almost independently of the best analyses and
ideas of economists.
Malabre does not engage in his critiques of noted economists and
prevailing economic ideas of recent decades as an end in itself.
What emerges in all of his consistent, clear-eyed, unideological
analysis and commentary is his own broad, seasoned view of
economics-namely, the predominance of the business cycle. He
compares this with human nature, which is after all the substance
of economics often overlooked by professional and academic
economists with their focus on monetary policy, exchange rates,
inflation, and such. "The business cycle, like human nature, is
here to stay" is the lesson Malabre aims to impart to readers
interested in understanding the fundamental, abiding nature of
economics. In Lost Prophets, in language that is accessible and
jargon-free, this author, who has observed, written about, and
explained economics from all angles for several decades,
persuasively makes this point.
In addition to holding a top position at The Wall Street Journal,
Malabre is also the author of the books, Understanding the New
Economy and Beyond Our Means, which received the George S. Eccles
Prize from the Columbia Business School as the best economics book
of 1987.
*********
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.
*********
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.
*** End of Transmission ***