/raid1/www/Hosts/bankrupt/TCR_Public/040109.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, January 9, 2004, Vol. 8, No. 6
Headlines
ADEPT TECHNOLOGY: Will Host Q2 2004 Conference Call on Jan. 21
AGCO CORP: S&P Rates New Senior Secured Bank Loan at BB+
AKAMAI: 1.0% Senior Noteholders Exercise Option to Purchase
AMES: Court Approves Stipulation Settling Guaranty's Admin Claim
ANC RENTAL: Fried Franks Wants Role as Counsel Clarified
ASTROPOWER INC: Lays Off 45 Employees, Cutting Workforce by 10%
ATLANTIC COAST: Reports 5.7% Increase in December 2003 Traffic
AURORA FOODS: US Trustee Appoints Official Creditors' Committee
BANC OF AMERICA: Fitch Rates 3 Note Classes at Low-B Level
BARCODE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors
BAYOU STEEL: Creditors' Ballots are Due on Jan. 29
BUDGET GROUP: Disclosure Statement Hearing to Convene on Monday
CASCADES INC: Acquires Scierie P.H. Lemay Ltd. Sawmill in Quebec
CHESAPEAKE ENERGY: Plans Public Offering of 20 Million Shares
COEUR D'ALENE MINES: Caps Price of $160MM Convertible Sr. Notes
COMDISCO: Sells Participation Interest in Certain Lease Payments
COMMUNICATIONS & POWER: S&P Assigns B+ Corporate Credit Rating
CONSOL ENERGY: Will Sell Stake in Australian Mine to JV Partner
CUMULUS MEDIA: Inks Pact to Acquire 7 Stations in Blacksburg, Va.
DESTINY RESOURCE: Arranges New Operating & Term Debt Facilities
DII INDUSTRIES: First Creditors' Meeting Slated for January 22
DIRECT INSITE: CEO James Cannavino's Engagement Extended to 2007
DRESSER INC: Unit Plans to Restructure Burlington Operations
DT INDUSTRIES: S&P Drops Rating to D After Missed $2.7MM Payment
ENRON: Pushing for Approval of Foster Wheeler Settlement Pact
EXIDE: Wants More Time to Move Pending Actions to Delaware Court
FEDERAL-MOGUL: Gets Nod to Expand Ernst & Young Engagement
FLEMING COMPANIES: Hires Watson Wyatt for Actuarial Services
FRIEDMAN'S INC: December Quarter Sales Reflect Slight Growth
GARDEN HILL, INC: Case Summary & 6 Largest Unsecured Creditors
GOLDEN NORTHWEST: Brings-In Stoel Rives as Bankruptcy Attorneys
GREAT LAKES: S&P Affirms Low-B Ratings Following Acquisition
HAWK CORP: Implementing Strategic Repositioning Action Plan
HAWK: Christopher DiSantis Will Lead Precision Components Group
INAMED CORP: Will Publish Financial Guidance for 2004 on Monday
INDIANAPOLIS POWER: Fitch Affirms BB+ Preferred Share Rating
INTEGRATED HEALTH: Seeks Court Clearance for Reliance Settlement
IRON MOUNTAIN: Proposes GBP125M Sr. Subordinated Notes Offering
IT GROUP: Details Plan Administrator's Duties Under Plan
ITS NETWORKS: Special Shareholders' Meeting Slated for Feb. 27
KAISER ALUMINUM: Court Fixes Parcels 2A & 2B Bidding Procedures
LNR PROPERTY: Fourth Quarter 2003 Results Reflect Steep Decline
LTV STEEL: Court Allows Payment of $2.4MM Admin Severance Claims
MAGELLAN HEALTH: Clarifies and Corrects Certain Info re Workout
MCCLENDON TRUCKING: Case Summary & 20 Largest Unsecured Creditors
MCLEMORE DEV'T: Pursuing Litigation Filed by "Duped" Home Buyer
MCMORAN EXPLORATION: Provides Gulf of Mexico Activity Updates
MIRANT CORP: Brazos Has Until March 31 to File Proof of Claim
NAT'L CENTURY: Board Finds Disclosure Statement Info. Inadequate
NAVIGATOR GAS: Court Clears Dickinson Cruickshank's Engagement
NDCHEALTH: Reports Drop in Q2 Results after Restructuring Charge
NORTHWEST AIRLINES: Initiates Mesaba Re-Accommodation Policy
NOVA CHEMICALS: S&P Affirms BB+ L-T Corporate Credit Rating
OXFORD INDUSTRIES: Second Quarter 2004 Results Show Improvement
PAPER WAREHOUSE: Court Grants OK for Grant Thornton's Engagement
PARMALAT: CONSOB Wants Company's 2002 Annual Report Annulled
PEMSTAR: Lenders Relax Financial Covenants Under Credit Facility
PERKINELMER: Will Publish Fourth Quarter 2003 Results on Jan. 28
PHYAMERICA: Executes Definitive Asset Purchase Agreements
PHILIP SERVICES: Successfully Emerges from Chapter 11 Process
PILLOWTEX CORP: Wants Approval of Account Settlement Procedures
PRIMUS TELECOMMS: Proposes $200 Million Senior Debt Offering
REDBACK NETWORKS: Brings-In Wilson Sonsini as Corporate Counsel
RIGHT ON CASUALS: Case Summary & 21 Largest Unsecured Creditors
SEABROOK SEAFOOD: Voluntary Chapter 11 Case Summary
SHILOH INDUSTRIES: Fourth-Quarter Results Enter Positive Zone
SK GLOBAL: Wants to Pay $1.2MM Severance Benefits to Employees
SLATER STEEL: Winding Down Atlas Stainless & Hamilton Operations
SLATER STEEL: Steelworkers to Demonstrate at Court Appearance
SOLUTIA INC: Court to Convene Final DIP Financing Hearing Today
SPECTRUM SIGNAL: Provides Strategic Alternatives Review Results
STARWOOD HOTELS: S&P Places Low-B Ratings on Watch Negative
THAXTON GROUP: Wants to Hire Nelson Mullins as Special Counsel
TRI-UNION: Signs-Up Liskow & Lewis to Represent Two Employees
TV AZTECA: Special Committee Taps Munger Tolles as Legal Counsel
UNIVERSAL GUARDIAN: Default on Notes Raises Going Concern Doubt
US AIRWAYS: Paladini Named Vice President of Customer Service
US ONCOLOGY: Will Present at JP Morgan Conference on Tuesday
USI HLDGS.: Closes Acquisition of Diversified Insurance Services
VENTAS INC: Offering 2% Discount on DRIP Purchases
WABASH NATIONAL: Reports Conversion of Series B 6% Preferreds
WARNACO: Non-Executive Chairman Stuart D. Buchalter Dies at 66
WEIRTON STEEL: MABCO Steam Asks Court to Allow $33 Million Claim
WESTPOINT STEVENS: Court Clears 1185 Sixth Lease Settlement Pact
WILD RIVER DUCTS: Case Summary & 17 Largest Unsecured Creditors
WORLD HEART CORP: OTCBB Stock Trading Symbol Reverts to "WHTOF"
WORLDCOM INC: GSA Removes Company from Excluded Parties List
WORLDCOM INC: MCI Reinstated as Federal Government Contractor
W.R. GRACE: Amends ART Loan and DIP Financing Agreement Terms
* Neal Gerber Expands Health Law Group with Two New Attorneys
* T. Zander Joins Sheppard Mullin as Partner at San Diego Office
* BOOK REVIEW: Competitive Strategy for Health Care
Organizations: Techniques for Strategic Action
*********
ADEPT TECHNOLOGY: Will Host Q2 2004 Conference Call on Jan. 21
--------------------------------------------------------------
Adept Technology, Inc. (OTCBB:ADTK.OB), a leading designer and
manufacturer of intelligent automation products, will hold its
quarterly conference call to discuss fourth quarter results and
the company's outlook on January 21, 2004, at 5:00 p.m. Eastern
Time (2 p.m. Pacific Time). The call will be hosted by Robert
Bucher, chairman and chief executive officer; and Michael Overby,
vice president and chief financial officer.
The live webcast and replay may be accessed for one month through
the investor relations section of the Company's Web site at
http://www.adept.com http://www.streetevents.comor
http://www.fulldisclosure.com
A replay of the call will also be available for five business days
following the call's conclusion by dialing 800.428.6051 and
entering PIN# 325023.
Adept Technology -- whose September 30, 2003 balance sheet shows a
total shareholders' equity deficit of about $13 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/
AGCO CORP: S&P Rates New Senior Secured Bank Loan at BB+
--------------------------------------------------------
Standard & Poor's Rating Services assigned its 'BB+' senior
secured bank loan rating, the same level as the corporate credit
rating, to AGCO Corp.'s $750 million senior secured bank credit
facility and placed the new rating on CreditWatch with negative
implications.
At the same time, Standard & Poor's assigned its recovery rating
of '2' to the bank credit facility, indicating substantial
recovery of principal (80%-100%) in the event of a default. The
'BBB-' rating on the previous bank credit facility was withdrawn.
At the same time, Standard & Poor's said that the 'BB+' corporate
credit and all other ratings on AGCO will remain on CreditWatch
with negative implications, where they were placed on Sept. 10,
2003.
"The corporate credit rating will be affirmed following completion
of the company's plan to issue at least $250 million of common
equity, with proceeds to be used to fund a portion of the just-
completed ?600 million acquisition of unrated Finland-based Valtra
Corp.," said Standard & Poor's credit analyst Daniel DiSenso.
AGCO, the world's third-largest manufacturer of agricultural
equipment, based in Duluth, Ga., has a satisfactory competitive
position. It has about $1.5 billion of outstanding debt.
The combination with Valtra, the market leader for tractors in the
Nordic region of Europe and solidly positioned in Latin America,
will strengthen AGCO's business profile. AGCO will benefit from
Valtra's technology, its efficient manufacturing operations, and
the cross-selling opportunities provided by the Valtra
distribution network.
The bank credit facility consists of a $450 million term facility
maturing in July 2009 and a $300 million revolving credit facility
maturing in January 2009.
The collateral package includes a perfected first-priority
security interest in substantially all of the tangible and
intangible assets of AGCO's material direct and indirect U.S.,
Canadian, Finnish, and U.K. subsidiaries; and a pledge of
outstanding capital stock, with certain exceptions, of the
company's material direct and indirect subsidiaries.
The bank facility is guaranteed by each of AGCO's present and
future material direct and indirect domestic subsidiaries.
Guarantees of foreign subsidiaries are confined to their
individual borrowings. The revolving credit facility has a
borrowing base consisting of an 85% advance on the book value of
accounts receivables and a 60% advance on the book value of
inventories as reflected on AGCO's consolidated balance sheet. The
term loan is subject to 1% annual amortization with the remaining
principal balance due at maturity.
AKAMAI: 1.0% Senior Noteholders Exercise Option to Purchase
-----------------------------------------------------------
Akamai Technologies, Inc. (NASDAQ: AKAM) announced that the
initial purchaser of its $175 million in principal amount of 1.0%
Senior Convertible Notes due December 15, 2033 has exercised its
option to purchase an additional $25 million aggregate principal
amount of the convertible notes. The Company expects the closing
of the sale of the additional convertible notes to occur on
January 9, 2004.
The convertible notes were offered only to qualified institutional
buyers in reliance on Rule 144A under the Securities Act of 1933,
as amended, and outside the United States pursuant to Regulation S
of the Securities Act. The convertible notes and the common stock
issuable upon conversion of the notes have not been registered
under the Securities Act, or any state securities laws. Unless so
registered, the convertible notes and the common stock issuable
upon conversion of the notes may not be offered or sold in the
United States or any state or to any U.S. person except pursuant
to an exemption from the registration requirements of the
Securities Act and applicable state securities laws.
Akamai(R) - The Business Internet, is the world's largest on
demand distributed computing platform for conducting profitable e-
business. Overcoming the inherent limitations of the Internet,
Akamai's services ensure a high-performing, scalable, and secure
environment for organizations to cost effectively extend and
control their e-business infrastructure. Headquartered in
Cambridge, Massachusetts, Akamai's industry-leading services,
matched with world-class customer care, are used by hundreds of
today's most successful enterprises and government agencies around
the globe. For more information, visit http://www.akamai.com/
Akamai Technologies' September 30, 2003 balance sheet shows a
total shareholders' equity deficit of about $182 million.
AMES: Court Approves Stipulation Settling Guaranty's Admin Claim
----------------------------------------------------------------
Ames Transportation Systems, Inc. and American Finance Group,
Inc. -- doing business as Guaranty Capital Corp. -- were parties
to a Master Lease Agreement dated April 25, 2000. Under the
Agreement, ATS leased more than 700 trailers and related
equipment pursuant to four rental schedules.
By a stipulation between the Ames Department Stores Debtors and
Guaranty Capital, which was approved by the Court on November 4,
2002, the Master Lease and the Rental Schedules were deemed
rejected. Pursuant to the Rejection Order:
* Guaranty Capital was granted a $348,369 allowed
administrative expense claim, under Section 503(b) of the
Bankruptcy Code, for unpaid rent due for September and
October 2002 under the Master Lease;
* The automatic stay was modified to permit Guaranty Capital
to retrieve the Trailers and sell them; and
* All rights and defenses of the parties were reserved with
respect to any missing or damaged Trailers;
After the Debtors and Guaranty Capital's efforts, all but 16 of
the Trailers were recovered and later sold.
Guaranty Capital filed:
(i) a general unsecured proof of claim against the Debtors
on March 22, 2002 for $12,756,186 asserting liability
on Ame's part pursuant to a guaranty of the Master
Lease and the Rental Schedules; and
(ii) a general unsecured proof of claim against ATS on
December 30, 2002 for $10,779,505 for damages under
the Master Lease and the Rental Schedules;
On July 22, 2003, Guaranty Capital sought:
(i) allowance of an additional administrative expense
claim amounting to $235,456 for the alleged value of
the Missing Trailers; and
(ii) payment of such claim and the Allowed Administrative
Claim.
The Debtors and Guaranty Capital have agreed to resolve the
issues raised, and to fix and finally allow all the claims held
by Guaranty Capital on account of the Master Lease, the Rental
Schedules, the Missing Trailers and damage to the recovered
trailers.
In a Court-approved stipulation, the parties agree that:
(1) Allowed Claims
(a) Guaranty Capital will have an additional allowed
administrative expense claim against the Debtors pursuant
to Section 503(b)(1)(A) of the Bankruptcy Code for
$145,000 on account of 11 Missing Trailers and damage to
the recovered trailers, and the Allowed Administrative
Claim will be deemed amended and increased in amount to
$493,369 to incorporate the additional allowed
administrative expense claim.
(b) The Ames Unsecured Claim relating to the Master Lease and
the Rental Schedules will be reduced and finally allowed
as a general unsecured claim for $2,346,237, determined
as:
Rejection Damage and TRAC Claims
--------------------------------
Stipulated return value of 704 trailers $2,989,061
for lessor's account at and of lease,
based on 25% of original cost
Less actual resale proceeds received (7,276,500)
by lessor on disposition of 693
recovered trailers at an average price
of $10,500 per trailer
Credit toward rejection damages ($4,287,438)
Rejection Damages
-----------------
Lease Payments:
44 months from 11/01/2002 to 6/30/2006
11 months at $174,415/month $1,951,563
33 months at $213,174/month 7,034,735
---------
Total Lease Payments 8,986,298
Present value of future lease payments 6,633,676
As of 09/01/2001 discounted monthly at
10.0% per annum
Net Unsecured Claim 2,346,237
(c) The Amended Allowed Administrative Claim and the Allowed
Unsecured Claim will not be subject to disallowance,
reductions or offsets on account of any claims by the
Debtors or their estates, including any defenses or
objections under Section 502(d) of the Bankruptcy Code.
(2) Disallowed Claim
The ATS Unsecured Claim will be disallowed in its entirety
and will be expunged from the official claims register
maintained in the Debtors' cases.
(3) Missing Trailers
In the event any of the Missing Trailers are located,
Guaranty Capital will be entitled to retain them and any
value recovered.
(4) Survival of Rejection Order
The Rejection Order, as may be modified by stipulation,
remains in full force and effect.
(5) Payment of the Allowed Claims
Any payment or other treatment on account of the Amended
Allowed Administrative Claim and the allowed Unsecured Claim
will be subject to further order or orders of the Bankruptcy
Court.
Headquartered in Rocky Hill, Connecticut, Ames Department Stores,
Inc., is a regional discount retailer that, through its
subsidiaries, currently operates 452 stores in nineteen states and
the District of Columbia. The Company filed for chapter 11
protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217).
Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal
LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at
Weil, Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed $1,901,573,000 in assets and
$1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No.
48; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANC RENTAL: Fried Franks Wants Role as Counsel Clarified
--------------------------------------------------------
Fried Frank Harris Shriver & Jacobson asks the Court to clarify
whether it may continue in its capacity as counsel to the ANC
Rental Debtors' estates pursuant to Sections 105(a) and 327(a) of
the Bankruptcy Code, in light of a preference action the Debtors
filed against it.
Fried Frank attorney, Janice McAvoy, recounts that, without any
prior notice, the Debtors commenced the Preference Action to
recover certain attorneys' fees paid during the 90-day period
before the Petition Date. The filing of the Preference Action
creates a clear conflict of interest between the Debtors' estate
and Fried Frank, which jeopardizes the firm's ability to continue
as the Debtors' counsel. Fried Frank believes that the
Preference Action is baseless, as even a cursory review of the
Debtors' files would show that the supposed preference payments
were made in the ordinary course and were not made for or on
account of an antecedent debt. The payment, therefore, cannot
constitute a preference.
Before the Petition Date, Fried Frank rendered legal advice to
the Debtors with respect to restructuring alternatives. Among
other motions filed on the Petition Date, Fried Frank filed an
employment application pursuant to Sections 327 and 328 on
November 13, 2001. In the Application, Fried Frank clarified
that it represented the Debtors before the Petition Date, but
that during the one-year period prepetition, it received from the
Debtors payments amounting to $4,027,010. Fried Frank also
informed the United States Trustee of the payments. In addition,
the information is found in the Declaration of Matthew Gluck
filed in conjunction with the Application.
The Court approved the Application on January 9, 2002. According
to Ms. McAvoy, the Court determined that Fried Frank did not hold
or represent an interest adverse to the Debtors' estates.
However, as a result of the Preference Action, Fried Frank now
holds an interest adverse to the Debtors' estates.
Among other things, the Preference Action alleges that $2,185,099
in preferential and fraudulent transfers were made to Fried
Frank. The Debtors demand that Fried Frank pay the Avoidable
Amounts, plus interest, to the Debtors' estate and that pursuant
to Section 502(d), any claims by Fried Frank against the Debtors
must be disallowed until it pays the Avoidable Amounts.
While the Sale of the Debtors' businesses is complete, Fried
Frank continues to represent the Debtors' estate. Among other
things, Fried Frank continues to assist the Debtors in
transferring assets to Cerberus Capital Management and Vanguard,
and be involved with the approval of the Debtors' disclosure
statement and the confirmation of the Liquidating Plan. Fried
Frank believes that ending its representation of the Debtors'
estate at this time will cause significant hardship on the
Debtors' estates as they wind down.
Debtors Still Need Fried Frank
The Debtors want to continue the services of Fried Frank Harris
Shriver & Jacobson as they near the end of their bankruptcy
cases. In this regard, the Debtors seek the Court's authority to
employ the firm as special counsel to perform certain post-
closing services, nunc pro tunc to November 10, 2003.
Despite the existence of the Preference Action, John Chapman, the
Debtors' President, tells Judge Walrath that the Debtors need
Fried Frank as special counsel to represent them in connection
with certain post-closing matters. Because of the firm's
previous experience representing the Debtors and their estates,
the professionals and paraprofessionals at Fried Frank have a
wealth of both historical and current institutional knowledge
with respect to, inter alia, the Debtors' assets, contractual
relationships, tax, corporate, environmental and intellectual
property issues, which cannot be matched by any other law firm.
As is common with most major sale transactions, there are
significant post-closing matters that remain to be completed in
order to satisfy all of the terms and conditions of the Asset
Purchase Agreement with the Purchasers.
As special counsel, the Debtors want Fried Frank to:
(1) file appropriate documentation with the SEC to deregister
the ANC common stock;
(2) analyze and resolve various tax issues that arise in
connection with the Debtors' plan of reorganization and
the sale to the Purchasers, including, the dual
consolidated loss issues, issues with regard to a tax
indemnification agreement and side letter with AutoNation
with respect to dual consolidated losses, cancellation of
indebtedness issues in the United States and Germany, IRS
audit issues, and various state tax issues;
(3) finalize ongoing negotiations with various parties in
connection with lease rejections, with Fifth Third Bank in
connection with the return of a $482,000 security deposit,
the completion and documentation of a final agreement in
connection with assuming and assigning numerous leases for
a substantial number of buses, address ongoing issues
with respect to numerous contracts to be rejected or
assumed, and ensure the completion of the assumption and
assignment of hundreds of contracts for which assumption
and assignment notices were already sent to
counterparties;
(4) analyze and determine various matters with respect to
their wind down and liquidation as well as their
non-debtor foreign subsidiaries;
(5) finalize the transfer of intellectual property to
the Purchasers in accordance with the terms of the Asset
Purchase Agreement;
(6) timely satisfy all the terms and conditions of their
Transition Services Agreement with the Purchasers;
(7) analyze and interpret various matters that arise
under the Asset Purchase Agreement, as amended; and
(8) advise on various environmental issues that may remain
obligations of their estates.
According to Mr. Chapman, Fried Frank was directly involved with
and had primary responsibility for all of these matters and many
more, has had discussions and negotiations with counterparties to
hundreds of contracts, worked closely with the Debtors' special
counsel on environmental issues, conducted negotiations with all
of the secured lenders concerning the use of cash collateral and
other financing issues, has a working knowledge of the Asset
Purchase Agreement, the Transition Services Agreement, and all of
the post-closing matters to be completed by the Debtors, as well
as the status and resolution of numerous issues that remain to be
addressed by the Debtors to complete the wind down of the
estates. Fried Frank currently has three partners and six
associates as well as paraprofessionals working on the Debtors'
Chapter 11 cases.
The Debtors acknowledge that, due to the Preference Action, Fried
Frank has an actual conflict of interest with their estates with
respect to the Preference Action. However, the Preference Action
is being transferred to the Creditors Committee. The Debtors
believe that the transfer removes any conflict.
Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation,
is the world's third-largest publicly traded car rental company.
The Company filed for chapter 11 protection on November 13, 2001
(Bankr. Del. Case No. 01-11200). Brad Eric Scheler, Esq., and
Matthew Gluck, Esq., at Fried, Frank, Harris, Shriver & Jacobson
represent the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
$6,497,541,000 in assets and $5,953,612,000 in liabilities. (ANC
Rental Bankruptcy News, Issue No. 45; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ASTROPOWER INC: Lays Off 45 Employees, Cutting Workforce by 10%
---------------------------------------------------------------
AstroPower, Inc. (OTC: APWR.PK) reduced its workforce by
approximately 10% through a layoff of 45 employees. This reduction
in force is a direct result of the company's continued efforts to
control costs and improve manufacturing efficiency. AstroPower
continues to manufacture solar electric power products to meet the
needs of its customers.
Interim Chief Executive Officer Carl H. Young III and Interim
Chief Financial Officer Eric I. Glassman have been assessing
AstroPower's operating expenses, revenues, and strategic direction
since their organization, Bridge Associates, LLC, was engaged to
stabilize the company's financial position and manage operations
in July. This reduction in force is part of an ongoing effort to
bring AstroPower's costs in line with its revenues and follows a
similar measure in August 2003. The differentiating factor between
the two reductions in force is the fact that this layoff
encompasses manufacturing positions as well as salaried,
professional positions.
"This reduction in force is a necessary step in controlling
AstroPower's costs. Even more so, however, it is a natural result
of the enhanced technologies, redeployed manufacturing assets, and
improved processes implemented throughout module operations over
the last six months," Mr. Young said. "These measures have enabled
AstroPower to greatly improve manufacturing efficiencies,
streamline operations, and better compete within a highly
competitive global marketplace."
In the last six months, AstroPower has also refined its module
product line - now offering customers a core range of high-quality
modules that generate solar electric power for a variety of
applications. Automation implemented during this period is
enabling AstroPower to produce these modules more efficiently and
cost effectively.
"Production capacity has not and will not be impacted by these job
cuts," Mr. Young added. "AstroPower continues to produce solar
electric power products as it navigates through its restructuring.
The company remains committed to serving its customers despite
these challenges."
"Furthermore, this careful and staged reduction in AstroPower's
workforce, although unfortunate, was necessary to the
restructuring and to avoid a need for more urgent measures later
in the restructuring."
Headquartered in Newark, Delaware, AstroPower manufactures solar
electric power products, and is a leading provider of solar
electric power systems for the mainstream residential market.
AstroPower develops, manufactures, markets and sells a range of
solar electric power generation products, including solar cells,
modules and panels, as well as its SunChoice(TM) pre-packaged
systems for the global marketplace. Solar electric power systems
provide a clean, renewable source of electricity in both off-grid
and on-grid applications. For more information, please visit
http://www.astropower.com/
* * *
As previously reported, AstroPower, Inc., engaged SSG Capital
Advisors, L.P., a nationally recognized specialty investment
banking firm focusing on special situation mergers and
acquisitions, capital raising, financial recapitalizations, and
restructurings, as its investment bankers.
On July 25, 2003, AstroPower engaged Bridge Associates LLC, a
nationally recognized restructuring, turnaround management and
expanded capabilities firm, to take charge of the day-to-day
operations of the company and to stabilize its financial position.
Bridge Associates' Carl H. Young III is serving as AstroPower's
interim Chief Executive Officer and Eric I. Glassman, CPA, is
serving as the company's interim Chief Financial Officer.
After evaluating the totality of AstroPower's overhead expenses,
the new interim management focused on reducing those expenses
throughout the company's operations and, on August 6, 2003,
reduced the workforce by approximately 10% through a layoff of
approximately 55 employees. The company is continuing to take
steps to "rightsize" the organization so as to better align it
with its current operations. The company continues to operate and
has orders for more product than it can produce due to cash
constraints. The company continues to have negative cash flow due
largely to lower sales than normal resulting from its inability to
purchase sufficient raw materials as well as expenses related to
the company's current financial difficulties.
The company has not yet filed its Annual Report on Form 10-K for
2002 or its Quarterly Reports on Form 10-Q for the first and
second quarters of 2003 due to the lack of audited financial
statements for Fiscal Year Ending 2002. The company is unable to
predict when the audit will be completed.
After evaluating the company's cash needs, interim management and
AstroPower's Board of Directors have decided to retain SSG Capital
Advisors to help manage the process of raising cash by, but not
limited to, an infusion of new equity, a strategic alliance or
alliances, or a sale of part or all of the company's business.
ATLANTIC COAST: Reports 5.7% Increase in December 2003 Traffic
--------------------------------------------------------------
Atlantic Coast Airlines (Nasdaq: ACAI) reported preliminary
consolidated passenger traffic results for December 2003.
Systemwide, the company generated 277.4 million revenue passenger
miles (RPMs), a 5.7% increase over the same month last year, while
available seat miles (ASMs) rose to 406.7 million, a 7.4%
increase. Load factor was 68.2% versus 69.3 percent in December
2002. For the month, 688,826 passengers were carried, a 1.2%
decrease over the same month last year.
For the twelve months ended December 31, 2003, compared to the
same period in 2002, RPMs grew to 3.3 billion, an increase of
17.4%, while ASMs were 4.6 billion, a 6.8% increase. The company
carried 8,415,824 passengers during the twelve months ended
December 31, 2003, compared to 7,160,480 in 2002, an increase of
17.5% on a year-over-year basis.
ACA (S&P, B- Corporate Credit Rating, Developing) 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 145 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 our website at
http://www.atlanticcoast.com/ For more information about
Independence Air, visit its "preview" site at http://www.flyi.com/
AURORA FOODS: US Trustee Appoints Official Creditors' Committee
---------------------------------------------------------------
Roberta A. DeAngelis, U.S. Trustee for Region 3, appoints these
five unsecured claimants to the Official Committee of Unsecured
Creditors, in Aurora Foods's Chapter 11 cases:
(1) Oz Management, LLC
Attn: Daniel S. Och
9 West 57th Street,
39th Floor, New York, NY 10019
Phone: (212) 790-0165
Fax: (212) 790-0065
(2) Lehman Brothers, Inc.
Attn: Frank Turner,
745 7th Avenue, New York, NY 10019
Phone: (212) 526-1463
Fax: (646) 758-1986
(3) OCM Opportunities Fund III, L.P.
c/o Oaktree Capital Management
Attn: Kenneth Liang
333 S. Grand Avenue,
28th Floor, Los Angeles, CA 90071
Phone: (213) 830-6422
Fax: (213) 830-8522
(4) Wilmington Trust Company,
as Indenture Trustee
Attn: Sandra R. Ortiz
1100 North Market Street,
Wilmington, DE 19890-1615
Phone: (302) 636-6056
Fax: (302) 636-4143
(5) Pequot Special Opportunities Fund, L.P.
c/o Pequot Capital Management, Inc.
Attn: Robert B. Webster
11111 Santa Monica Blvd.,
Suite 1210, Los Angeles, CA 90025
Phone: (310) 689-5100
Fax: (310) 689-5199
Headquartered in St. Louis, Missouri, Aurora Foods, Inc., produces
and markets premium brand food products to retail customers, the
food service industry, and a variety of other distribution
channels, including club stores and the military. The Company
filed for chapter 11 protection on December 8, 2003 (Bankr. Del.
Case No. 03-13744). Eric M. Davis, Esq., and Robert A. Weber,
Esq., at Skadden Arps Slate Meagher & Flom LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $1,227,912,000 in
assets and $1,318,605,000 in liabilities. JPMorgan Chase Bank has
arranged to extend up to $50 million of post-bankruptcy financing
to Aurora and Sea Coast. (Aurora Foods Bankruptcy News, Issue No.
4; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BANC OF AMERICA: Fitch Rates 3 Note Classes at Low-B Level
----------------------------------------------------------
Banc of America Alternative Loan Trust's (BoAALT) mortgage pass-
through certificates, series 2003-11, are rated by Fitch Ratings
as follows:
Groups 1, 2, and 3 certificates:
-- $219,502,000 classes 1-A-1, 2-A-1, CB-IO, 3-A-1
and 3-IO 'AAA';
-- $100 classes 1-A-R, 1-A-LR 'AAA';
-- $5,742,000 class 30-B-1 'AA';
-- $2,631,000 class 30-B-2 'A';
-- $1,197,000 class 30-B-3 'BBB';
-- $1,555,000 class 30-B-4 'BB';
-- $956,000 class 30-B-5 'B'.
Groups 4 and 5 certificates:
-- $95,043,000 classes 4-A-1, 4-A-2, 5-A-1, 5-A-2
and 15-IO 'AAA';
-- $1,276,000 class 15-B-1 'AA';
-- $490,000 class 15-B-2 'A';
-- $343,000 class 15-B-3 'BBB';
-- $196,000 class 15-B-4 'BB';
-- $99,000 class 15-B-5 'B'.
and certificates of all groups:
-- $7,017,645 class PO 'AAA'.
The 'AAA' ratings on the Groups 1, 2 and 3 senior certificates
reflect the 5.50% subordination provided by the 2.40% class 30-B-
1, 1.10% class 30-B-2, 0.50% class 30-B-3, 0.65% privately offered
class 30-B-4, 0.40% privately offered class 30-B-5 and 0.45%
privately offered class 30-B-6. Classes 30-B-1, 30-B-2, 30-B-3,
and the privately offered classes 30-B-4, and 30-B-5 are rated
'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their
respective subordination.
The 'AAA' ratings on the Groups 4 and 5 senior certificates
reflect the 2.65% subordination provided by the 1.30% class 15-B-
1, 0.50% class 15-B-2, 0.35% class 15-B-3, 0.20% privately offered
class 15-B-4, 0.10% privately offered class 15-B-5 and 0.20%
privately offered class 15-B-6. Classes 15-B-1, 15-B-2, 15-B-3,
and the privately offered classes 15-B-4, and 15-B-5 are rated
'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their
respective subordination.
The ratings also reflect the quality of the underlying collateral,
the capabilities of Bank of America Mortgage, Inc. as servicer
(rated 'RPS1' by Fitch), and Fitch's confidence in the integrity
of the legal and financial structure of the transaction.
The transaction is secured by five pools of mortgage loans. The
class 1-A, 2-A and 3-A certificates correspond to loan groups 1,
2, and 3 respectively. Loan groups 1, 2, and 3, are cross-
collateralized and share one set of subordinate certificates. The
class 4-A and 5-A certificates correspond to loan groups 4 and 5,
respectively. Loan groups 4 and 5 are cross-collateralized with
each other and share one set of subordinate certificates.
Approximately 5.86%, 67.09%, 86.59%, 19.19%, and 18.48% of the
mortgage loans in group 1, 2, 3, 4 and 5, respectively, were
underwritten using Bank of America's 'Alternative A' guidelines.
These guidelines are less stringent than Bank of America's general
underwriting guidelines and could include limited documentation or
higher maximum loan-to-value ratios. Mortgage loans underwritten
to 'Alternative A' guidelines could experience higher rates of
default and losses than loans underwritten using Bank of America's
general underwriting guidelines.
The group 1 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
four-family residential mortgage loans, with original terms to
stated maturity ranging from 240 to 360 months. The aggregate
outstanding balance of the pool as of the cut-off date is
$148,295,564, with an average balance of $120,077 and a weighted
average coupon of 6.239%. The weighted average original loan-to-
value ratio for the mortgage loans in the pool is approximately
67.86%%. The weighted average FICO credit score for the group is
731. The states that represent the largest geographic
concentration of mortgaged properties are California (37.65%) and
Florida (14.73%). All other states represent less than 5% of the
pool 1 mortgage loans.
The group 2 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
four-family residential mortgage loans, with original terms to
stated maturity ranging from 240 to 360 months. The aggregate
outstanding balance of the pool as of the cut-off date is
$74,149,005, with an average balance of $152,885 and a WAC of
6.237%. The weighted average OLTV for the mortgage loans in the
pool is approximately 81.58%. The weighted average FICO credit
score for the group is 727. The states that represent the largest
geographic concentration of mortgaged properties are California
(25.75%), Florida (10.98%), Texas (9.48%), Maryland (5.21%), and
Virginia (5.19%). All other states represent less than 5% of the
pool 2 mortgage loans.
The group 3 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
four-family residential mortgage loans, with original term to
stated maturity of 360 months. The aggregate outstanding balance
of the pool as of the cut-off date is $16,791,718, with an average
balance of $453,830 and a WAC of 6.296%. The weighted average OLTV
for the mortgage loans in the pool is approximately 70.42%. The
weighted average FICO credit score for the group is 730. The
states that represent the largest geographic concentration of
mortgaged properties are California (60.76%), Georgia (5.51%), and
Virginia (5.07%). All other states represent less than 5% of the
pool 3 mortgage loans.
The group 4 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
two-family residential mortgage loans with original terms to
stated maturity ranging from 120 to 180 months. The aggregate
outstanding balance of the pool as of the cut-off date is
$51,317,885, with an average balance of $108,724 and a WAC of
5.290%. The weighted average OLTV for the mortgage loans in the
pool is approximately 58.37%. The weighted average FICO credit
score for the group is 731. The states that represent the largest
geographic concentration of mortgaged properties are California
(41.85%), Florida (9.81%), and Texas (5.03%). All other states
represent less than 5% of the pool 4 mortgage loans.
The group 5 collateral consists of recently originated,
conventional, fixed-rate, fully amortizing, first lien, one- to
four-family residential mortgage loans, with original terms to
stated maturity ranging from 120 to 180 months. The aggregate
outstanding balance of the pool as of the cut-off date is
$46,767,376, with an average balance of $98,251 and a WAC of
5.963%. The weighted average OLTV for the mortgage loans in the
pool is approximately 63.03%. The weighted average FICO credit
score for the group is 733. The states that represent the largest
geographic concentration of mortgaged properties are California
(33.76%) and Florida (15.63%). All other states represent less
than 5% of the pool 5 mortgage loans.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
Banc of America Mortgage Securities, Inc. deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, elections will be made to treat the trust as two
separate real estate mortgage investment conduits (REMICs). Wells
Fargo Bank Minnesota, National Association will act as trustee.
BARCODE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Barcode Systems Inc.
13400 20th Street Northeast
Bellevue, Washington 98005
Bankruptcy Case No.: 04-10113
Type of Business: The Debtor is the one source for all bar code
solutions, offering a full selection of
Application Software and Data Collection
Equipment with experienced and knowledgeable
local service and support. For more information,
see http://www.bsidirect.com/
Chapter 11 Petition Date: January 7, 2004
Court: Western District of Washington (Seattle)
Judge: Samuel J. Steiner
Debtor's Counsel: Douglas W. Harris, Esq.
11120 North East 2nd Suite #220
Bellevue, WA 98004
Tel: 425-456-1832
Fax: 425-456-1835
Estimated Assets: $100,000 to $500,000
Total Debts: $ 2,992,188
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Royal Bank $1,550,000
c/o Williams Kastner & Gibbs PLLC
PO Box 21926
Seattle WA 98111-3926
Barcode Systems Vancouver $535,071
5250 Grimmer Street Suite 4
Burnaby BC V5H 2H2
Canada
Barcode Systems Inc T $420,336
2560 Matheson Blvd E #219
Mississauga ON L4W 4Y9
Canada
Business Development Bank of Canada $180,000
Manitoba Capital Fund $135,000
Connect $85,586
EMJ Data Systems Ltd $35,000
Telpar Inc. $14,199
Barcode Systems Winnipeg $10,236
Denso ID $4,612
Ryzex Re-Marketing $3,565
eBarcodesDirect $2,945
ScanSource $2,484
AT & T $2,250
Zebra Technologies Corp $2,184
Intermac PSG Services $1,496
Bands Marketing $1,300
Xerox Corporation $1,300
Bar Code Labels & Equipment $707
Dex Media West LLC $543
BAYOU STEEL: Creditors' Ballots are Due on Jan. 29
--------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas,
Dallas Division ruled on the adequacy of the Disclosure Statement
prepared by Bayou Steel Corporation and its debtor-affiliates to
explain their First Amended Joint Chapter 11 Plan.
The Court found that the Disclosure Statement contains the right
kind and amount of information to enable creditors to make
informed decisions about whether to accept or reject the Plan.
The Plan is already in creditors' hands and they are making those
decisions.
January 29, 2004, is the deadline for creditors to submit written
acceptances or rejections of the Plan. Creditors' ballots must be
returned to:
Bayou Steel Plan Balloting Agent
Neligan Tarpley Andrews & Foley LLP
1700 Pacific Avenue, Suite 2600
Dallas, TX 75201
Attn: Carolyn Perkins
The Honorable Barbara J. Houser will convene a hearing to consider
the confirmation of the Plan on February 5, 2004, at 11:00 a.m.
Central Time.
Objections, if any, to the confirmation of the Debtors' Plan must
be filed on or before January 29, with the Clerk of the Bankruptcy
Court. Copies must also be sent to:
1. Counsel for the Debtors
Neligan Tarpley Andrews & Foley LLP
1700 Pacific Avenue, #2600
Dallas, TX 75201
Attn: Patrick J. Neligan, Jr., Esq.
2. the Office of the United States Trustee
Northern District of Texas
1100 Commerce Street
Room 976
Dallas, TX 75242
Attn: Mary Fran E. Durham
3. Counsel for the Creditors' Committee
Warner, Stevens & Doby, LLP
1700 City Center Tower II
301 Commerce Street
Fort Worth, TX 76102
Attn: Michael Warner, Esq.
5. Counsel for the Noteholders' Committee
Strook & Strook & Lavan LLP
180 Maiden Lane
New York, NY 10038
Attn: Lawrence Handelsman, Esq.
6. Counsel for Congress Financial Corporation
Patton Boggs
2001 Ross Avenue
Suite 3000
Dallas, TX 75201
Attn: Bruce White, Esq.
Bayou Steel Corp., a producer of light structural shapes and
merchant bar steel products, filed for Chapter 11 protection on
January 22, 2003 (Bankr. N.D. Tex. 03-30816). Patrick J. Neligan,
Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP, represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $176,113,143 in
total assets and $163,402,260 in total debts.
BUDGET GROUP: Disclosure Statement Hearing to Convene on Monday
---------------------------------------------------------------
The Budget Group Debtors intend to present the Disclosure
Statement they filed on December 5, 2003, and any modifications
and changes thereto, for approval at a hearing before Judge
Charles G. Case, II, beginning at 2:00 p.m. prevailing Eastern
time on January 12, 2004 in the Unites States Bankruptcy Court for
the District of Delaware, 824 Market Street, 6th Floor, in
Wilmington, Delaware, 19801.
If Budget's Disclosure Statement is approved, the Plan that
document describes will be sent to creditors for a vote. Once the
voting results are in, the Company will return to Court asking
that the Plan be confirmed.
Headquartered in Daytona Beach, Florida, Budget Group, Inc.,
operates under the Budget Rent a Car and Ryder names -- is the
world's third largest car and truck rental company. The Company
filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case
No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq.,
at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and
Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor,
LLP represent the Debtors in their restructuring efforts. When
the Company filed for protection from their creditors, they listed
$4,047,207,133 in assets and $4,333,611,997 in liabilities.
(Budget Group Bankruptcy News, Issue No. 31; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CASCADES INC: Acquires Scierie P.H. Lemay Ltd. Sawmill in Quebec
----------------------------------------------------------------
Cascades Inc. (CAS-TSX) has announced its acquisition of all
shares in the Scierie P.H. Lemay Ltd., a sawing and planing plant
operating in the Saguenay-Lac-St-Jean region of Quebec. Prior to
this transaction, Cascades had a 50% holding in the company. Its
initial investment dates back to March 1996.
According to Eric Laflamme, President and COO, North America,
Cascades Boxboard Group, "This sawmill is using state of the art
technology and has a workforce of 160 employees. Additionally,
with an annual wood processing capacity of 400 000 cubic meters,
it provides a regular supply of wood chips to our pulp and
boxboard facilities in Jonquiere."
Cascades Inc., (S&P, BB+, LT Corporate Credit Rating) is a leader
in the manufacturing of packaging products, tissue paper and
specialized fine papers. Internationally, Cascades employs 14,000
people and operates close to 150 modern and versatile operating
units located in Canada, the United States, France, England,
Germany and Sweden. Cascades recycles more than two million tons
of paper and board annually, supplying the majority of its fiber
requirements. Cascades' common shares are traded on the Toronto
Stock Exchange under the ticker symbol CAS.
CHESAPEAKE ENERGY: Plans Public Offering of 20 Million Shares
-------------------------------------------------------------
Chesapeake Energy Corporation (NYSE: CHK) intends to commence a
public offering of 20.0 million shares of its common stock.
Chesapeake intends to use the net proceeds of the offering to pay
a portion of the aggregate $510 million purchase price of three
recently announced acquisitions. The largest of these, a pending
acquisition for $420 million of Concho Resources Inc., is expected
to close by January 31, 2004, subject to satisfaction of customary
closing conditions. If this acquisition does not close, excess
net proceeds of the offering will be used for general corporate
purposes, including repayment of debt or possible future
acquisitions.
The offering will be made under the company's existing shelf
registration statement. The company has also granted the
underwriters an option to purchase a maximum of 3.0 million
additional shares of its common stock to cover over-allotments.
Lehman Brothers, Banc of America Securities LLC, Citigroup and
Morgan Stanley will be joint book-running managers for the
offering. Copies of the preliminary prospectus relating to the
offering may be obtained from the offices of Lehman Brothers Inc.,
c/o ADP Financial Services, Integrated Distribution Services, 1155
Long Island Avenue, Edgewood, NY 11717, 631-254-7106; Banc of
America Securities LLC, 100 West 33rd Street, New York, NY 10001,
646-733-4166; Citigroup Global Markets Inc., Brooklyn Army
Terminal, 140 58th Street, 8th Floor, Brooklyn, New York 11220,
Attn: Prospectus Department, 718-765-6732; or Morgan Stanley,
Prospectus Department, 1585 Broadway, New York, NY 10036, 212-761-
4000.
Chesapeake Energy Corporation (Fitch, BB- Senior Note and B
Preferred Share Ratings, Positive) is one of the six largest
independent natural gas producers in the U.S. Headquartered in
Oklahoma City, the company's operations are focused on exploratory
and developmental drilling and producing property acquisitions in
the Mid-Continent region of the United States.
COEUR D'ALENE MINES: Caps Price of $160MM Convertible Sr. Notes
---------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE: CDE), the world's largest
primary silver producer, announced the pricing of its offering of
$160 million Convertible Senior Notes due 2024.
In addition, Coeur has granted the underwriters in this offering a
30-day option to purchase up to an additional $20 million
principal amount of Notes to cover over-allotments.
The Notes will be convertible into shares of Coeur common stock at
a conversion rate of approximately 131.5789 shares of Coeur common
stock per $1,000 principal amount of Notes, representing a
conversion price of $7.60 per share. Interest on the notes will
be payable in cash at the rate of 1.25% per annum beginning
July 15, 2004.
Coeur intends to use the proceeds of the Notes for general
corporate purposes, which may include the development of its
Kensington gold project and its San Bartolome silver project, each
of which are pending the completion of updated feasibility studies
and final construction decisions. The Notes will be general
unsecured obligations, senior in right of payment to Coeur's other
indebtedness.
The offering is being made through an underwriting led by Deutsche
Bank Securities. Offering of the Notes will be made only by means
of a prospectus under Coeur's existing shelf registration
statement, including the accompanying prospectus supplement
relating to the Notes. Copies of a prospectus and the
accompanying prospectus supplement included will be available from
Deutsche Bank Securities Inc., 60 Wall Street, New York, New
York 10005.
Coeur d'Alene Mines Corporation (S&P, CCC Corporate Credit Rating,
Positive) is the world's largest primary silver producer, as well
as a significant, low-cost producer of gold, with anticipated 2003
production of 14.6 million ounces of silver and 112,000 ounces of
gold. The Company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.
COMDISCO: Sells Participation Interest in Certain Lease Payments
----------------------------------------------------------------
Comdisco Holding Company, Inc. (OTC:CDCO) announced the sale to
Marathon Structured Finance Fund, Ltd., of Comdisco's
participation interest in certain Agere Systems, Inc., lease
payments.
The aggregate purchase price was approximately $18 million.
Approximately $15 million was received in cash and the remaining
$3 million was placed in escrow pending the resolution of post-
closing adjustments, if any, to be made over the next year.
The participation interest was included in Comdisco's
September 30, 2003 balance sheet in receivables at the present
value of the minimum payments, or approximately $24 million, and,
in a like amount, in deferred income. Prior to the transaction
announced today, and since September 30, 2003, Comdisco received
approximately $9 million in payments with respect to the
participation interest. All proceeds related to the participation
interest will be reflected in Comdisco's earnings when received.
Comdisco emerged from chapter 11 bankruptcy proceedings on
August 12, 2002. The purpose of reorganized Comdisco is to sell,
collect or otherwise reduce to money in an orderly manner the
remaining assets of the corporation. Pursuant to Comdisco's plan
of reorganization and restrictions contained in its certificate of
incorporation, Comdisco is specifically prohibited from engaging
in any business activities inconsistent with its limited business
purpose. Accordingly, within the next few years, it is anticipated
that Comdisco will have reduced all of its assets to cash and made
distributions of all available cash to holders of its common stock
and contingent distribution rights in the manner and priorities
set forth in the Plan. At that point, the company will cease
operations and no further distributions will be made.
COMMUNICATIONS & POWER: S&P Assigns B+ Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Communications & Power Industries Inc.
The outlook is stable.
At the same time, Standard & Poor's assigned its 'B+' rating to
the company's proposed $130 million secured credit facility due
2010 and assigned a recovery rating of '2', indicating a
substantial (more than 80%) recovery of principal in the event of
default. Standard & Poor's assigned its 'B-' rating to the
proposed $125 million senior subordinated notes due 2012, which
will be sold under rule 144A with registration rights.
"The ratings reflect the CPI's highly leveraged capital structure
after its acquisition by the Cypress Group and modest scope of
operations, offset somewhat by leading positions in niche
markets," said Standard & Poor's credit analyst Christopher
DeNicolo. CPI is to be acquired by the Cypress Group for a total
consideration of $315 million (including fees), which is to be
financed by a $90 million term loan, $125 million subordinated
notes, and $100 million of sponsor and management equity.
Leverage will be high, with debt to capital over 70% and debt to
EBITDA of around 4.4x.
CPI is a leading provider of vacuum electron devices used in
commercial and defense applications requiring high-power and/or
high-frequency power generation. VEDs are used in radar,
electronic warfare, satellite communications, and certain medical,
industrial, and scientific applications. CPI is first or second in
all of the markets in which it competes. Revenues related to
satellite communications have been negatively affected by the
weakness in the worldwide satellite market, but have benefited
recently from sales to direct-to-home video providers. Military
sales have benefited from increased defense spending, especially
for electronics. Program diversity is good with no one program
accounting for more than 3.7% of revenue. A significant portion of
CPI's products are consumable, resulting in a steady stream of
generally higher-margin aftermarket sales, which account for over
50% of total revenue.
CPI's $130 million secured credit facility is rated 'B+', the same
as the corporate credit rating (with a '2' recovery rating,
substantial recovery of principal). The facility consists of a $40
million revolver (initially undrawn) and a $90 million term loan,
both due 2010. Security is provided by a perfected first-priority
security interest in all of the company's tangible and intangible
domestic assets, as well as 66% of the capital stock of its
foreign subsidiaries. Financial covenants have not been set but
are likely to include minimum interest coverage, maximum total
leverage, and minimum fixed-charge coverage. The company's bankers
expect that covenants will provide a 15%-20% cushion to
management's forecast. Amortization of the term loan is also to be
determined, but is expected to be minimal. Funded secured bank
debt will comprise around 40% of total debt.
CPI's leading niche market positions and the positive outlook for
defense spending are likely to offset the company's high leverage
and continued weakness in the satellite communications market,
resulting in a credit profile consistent with current ratings.
CONSOL ENERGY: Will Sell Stake in Australian Mine to JV Partner
---------------------------------------------------------------
CONSOL Energy Inc. (NYSE: CNX), a producer of high-Btu coal and
coalbed methane gas, has agreed to sell its 50% interest in the
Glennies Creek Mine in New South Wales, Australia, to its joint
venture partner, AMCI Inc., a privately-held company based in
Greenwich, Connecticut, for a total of US$27.5 million and the
assumption of CONSOL Energy's 50% share of debt in the Glennies
Creek Mine.
"Although Glennies Creek was a good long-term investment, it will
require additional time and capital to reach its full potential,"
said J. Brett Harvey, president and chief executive officer.
"Even with world coking coal fundamentals currently are favorable,
our domestic coal and gas opportunities are even stronger, provide
better rates of return, and have lower risk."
CONSOL Energy purchased its interest in the Glennies Creek Mine in
December 2001 as the underground mine was being expanded to add a
longwall mining system. The mine produces a high-fluidity coking
coal sold primarily to steel makers in the Asia-Pacific region. In
2003, the mine produced 1.1 million tons of coal, of which CONSOL
Energy's share was 50 percent.
"Our immediate objective is to improve the performance of our core
mining business in the United States and to grow our domestic gas
business," said Harvey. "Shareholders' capital and management's
time need to be focused in that direction."
The transaction is expected to close in the first quarter of 2004.
CONSOL Energy also sold its 50% interest in its Universal
Aggregates joint venture to its joint venture partner, SynAggs, a
privately held Pittsburgh- based company, in December 2003.
Universal Aggregates is constructing a commercial facility in
Virginia that will convert coal-fired power plant fly ash waste
into a synthetic aggregate. CONSOL Energy developed the
technology for producing the aggregate material.
"Our goal for Universal Aggregates was to launch a commercially-
viable company that could help coal users such as power plants to
turn a waste stream into a valuable product," Harvey explained.
"We have succeeded with our goal and it is an appropriate time to
allow Universal Aggregate to move ahead on its own." He said
CONSOL Energy received cash at closing and also will receive
various royalty payments as new plants are built and aggregate is
produced.
"As we announced last year, we will continue to review the sale of
non-core assets as a means of enhancing our financial
flexibility," Harvey concluded.
CONSOL Energy Inc. (S&P, BB- Corporate Credit Rating, Negative) is
the largest producer of high-Btu bituminous coal in the United
States. CONSOL Energy has 20 bituminous coal mining complexes in
seven states and in Australia. In addition, the company is one of
the largest U.S. producers of coalbed methane with daily gas
production of approximately 135 million cubic feet from wells in
Pennsylvania, Virginia and West Virginia. The company also has a
joint-venture company to produce natural gas in Virginia and
Tennessee, and the company produces electricity from coalbed
methane at a joint-venture generating facility in Virginia.
CONSOL Energy Inc. has annual revenues of $2.2 billion. It
received the U.S. Department of the Interior's Office of Surface
Mining National Award for Excellence in Surface Mining for the
company's innovative reclamation practices in 2002 and 2003. Also
in 2003, the company was recognized as a leader in innovation in
business technology and IT operations by its addition to
Information Week magazine's "Information Week 500," one of only 28
energy and utility companies being honored. In 2002, the company
received a U.S. Environmental Protection Agency Climate Protection
Award. Additional information about the company can be found at
its Web site at http://www.consolenergy.com/
CUMULUS MEDIA: Inks Pact to Acquire 7 Stations in Blacksburg, Va.
-----------------------------------------------------------------
Cumulus Media Inc. (NASDAQ: CMLS) signed an Asset Purchase
Agreement to purchase WFNR-FM, WWBU-FM, WBRW-FM, WPSK-FM, WBWR-FM,
WFNR-AM and WRAD-AM, serving Blacksburg, Virginia (metro rank
221), from New River Valley Radio Partners, L.L.C. and Bedford
Radio Partners, L.L.C.
The purchase price for the stations is $7.0 million and is
payable, at the option of Cumulus, in cash or shares of Cumulus
Media Inc. Class A common stock. In addition to the operating
assets and broadcast licenses of the stations, Cumulus will also
receive $0.3 million in working capital as part of the
transaction. The closing of this transaction is expected to occur
in the first half of 2004.
Cumulus' Chairman and CEO, Lew Dickey, commented, "In this
transaction, we are acquiring a very strong and completed cluster
with significant upside potential."
This transaction was brokered by Larry Patrick of Patrick
Communications.
Cumulus Media Inc. (S&P, B+ Corporate Credit Rating, Stable
Outlook) is the second largest radio company in the United States
based on station count. Giving effect to the completion of all
announced pending acquisitions and divestitures, Cumulus Media
Inc. will own and operate 272 radio stations in 56 mid-size and
smaller U.S. media markets. The Company's headquarters are in
Atlanta, Georgia, and its Web site is http://www.cumulus.com/
Cumulus Media Inc. shares are traded on the NASDAQ National Market
under the symbol: CMLS.
DESTINY RESOURCE: Arranges New Operating & Term Debt Facilities
---------------------------------------------------------------
Destiny Resource Services Corp. announced new operating and term
debt facilities and the partial repayment and extension of
maturity of the outstanding debenture:
- the Company has entered into an agreement for operating banking
facilities with HSBC Bank Canada under which it will have an
operating line of up to $5mm, subject to margin against accounts
receivable. This facility is expected to be in place on
February 9, 2004 to match the expiry of Destiny's existing
operating line relationship with GMAC Canada. The facility will
be secured by a first charge on accounts receivable and a
floating charge on other assets of the Company.
- the Company has entered into an agreement with RoyNat Inc. for
the borrowing of $3.55mm. This term loan will be repayable over
3 years. The proceeds will be used to retire outstanding
equipment loans (including Destiny's present obligations to
RoyNat), to reduce other indebtedness and to supplement working
capital. This loan will be secured by a first charge on
Destiny's fixed assets and a floating charge on other assets of
the Company. The Company expects to draw down this facility in
January.
- the Company has reached agreement with Destiny Resource
Investment L.P., Destiny's majority shareholder and the holder
of the outstanding subordinated secured debenture due July 2,
2004 for:
- payment on the debenture of $2mm from the RoyNat term loan
- payment on the debenture of $3mm from the proceeds of sale
($3.8mm) of the heavy equipment of the former Battle River
Oilfield Construction division of Destiny, expected to occur on
January 31, 2004
- the extension of the maturity of the balance of the principal
($4.83mm) to July 2, 2008
- semi-annual principal payments on the debentures of excess cash
flow (being cash flow in excess of the sum of principal payments
on other debt and capital expenditures). The consent of HSBC
will be required for any such payments with respect to 2004 and
for any optional pre-payments of principal.
All matters are subject to the execution of definitive
documentation.
"These steps, together with the 3 divisional dispositions
previously announced, the successful sale of the assets of the
Team Pipeline division on December 4, 2003 and the January 31,
2004 scheduled closing referred to above, complete the
restructuring of Destiny and its balance sheet" said Bruce Libin,
Executive Chairman and CEO of Destiny. "We are now well positioned
and adequately capitalized to move forward focused on our Front-
End Seismic Service businesses and the opportunities afforded in
the markets for those businesses. We are encouraged by the current
level of activity in this sector and by what we presently see for
2004. We believe the current economic environment is conducive to
the Company's efforts to add value for our shareholders."
Destiny provides Seismic Front-End Services comprised of seismic
survey and mapping (Wolf Survey & Mapping), seismic line clearing
(Destiny Resources) and shot-hole drilling (Double R Drilling) to
energy explorers and producers and to seismic acquisition
companies.
At September 30, 2003, the Company's balance sheet shows that its
total current liabilities exceeded its total current assets by
about $4.5 million, while net capitalization entered positive zone
at $278,000 from a deficit of about $574,000.
DII INDUSTRIES: First Creditors' Meeting Slated for January 22
--------------------------------------------------------------
Joseph S. Sisca, Assistant United States Trustee for Region 3,
has called for a meeting of the DII Industries, and Kellogg, Brown
& Root Debtors' creditors pursuant to Section 341(a) of the
Bankruptcy Code on January 22, 2004 at 1:30 p.m. at 1001 Liberty
Avenue, Suite 970, in Pittsburgh, Pennsylvania.
All creditors are invited, but not required, to attend. The
Official Meeting of Creditors offers the one opportunity in a
bankruptcy proceeding for creditors to question a responsible
office of the Debtor under oath.
Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged
in the engineering and construction business, providing a wide
range of services to energy and industrial customers and
government entities in over 100 countries. DII has no business
operations. The Company filed for chapter 11 protection on
December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N.
Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at
Kirkpatrick & Lockhart LLP represent the Debtors in their
restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DIRECT INSITE: CEO James Cannavino's Engagement Extended to 2007
----------------------------------------------------------------
In December, 2003, Direct Insite Corporation extended its Services
Agreement with its Chief Executive Officer, James A. Cannavino,
for a term ending on August 24, 2007. The agreement calls for
compensation of $15,000 per month and 360,000 options, vesting
7,500 per month for the term of the agreement (48 months), to
purchase the Company's common stock at an exercise price of $1.16,
the closing price of the Company's common stock on the date the
agreement was effective. The agreement provides for reimbursement
of reasonable out-of-pocket expenses and further provides for
living and travel expenses not to exceed $11,000 per month.
In August, 2003, the Company executed an Employment Agreement with
its President, Robert L. Carberry for an employment term ending on
August 15, 2004 and thereafter a consulting period ending on
February 15, 2007. Compensation while serving as president will
be $240,000 per annum. Additionally, he was granted options to
purchase 200,000 shares of the Company's common stock, 150,000
vesting upon execution of the agreement with the balance fully
vesting by January 1, 2004. These options have an exercise price
of $1.16 per share. Further, in addition to reimbursement of
reasonable out of pocket business expenses, during his term as
President he will be entitled to living and travel expenses not to
exceed $3,100 per month. During the consulting period (August 16,
2004 through February 15, 2007) he will be required to consult
with the Company and its senior executive officers regarding its
respective businesses and operations. Such consulting services
shall not require more than 48 days in any calendar year, nor more
than four days in any month. The Company will pay $12,000 per
month.
Direct Insite Corp. is a leading provider of Electronic Invoice
Presentment and Payment solutions targeted at large enterprise
customers. The Company's offering improves the delivery and
management of high volumes of invoice-related data while providing
a customer workflow system that better manages the complexity of
the presentation, analysis, dispute resolution, approval and
payment process. This reduces the administrative and operating
expenses for both "Biller" and "Payer" alike. Direct Insite also
provides managed services using patented d.b.Express(TM)
technology, a management information tool that allows users to
visually data mine large volumes of transactional data via the
Internet. A complete Internet Customer Care tool set integrated
with the EIP&P product set is also available. Additionally, the
Company offers an integrated order entry, workflow management,
provisioning, and invoice verification solution for large
enterprise clients, currently marketed under the trade name AMS
(Asset Management System).
Headquartered in Bohemia, NY, with offices in Dallas, TX, and
Chicago, IL, Direct Insite Corp. employs a staff of 65. For more
information about Direct Insite Corp., visit its Web site at
http://www.directinsite.com/
Direct Insite's September 30, 2003 balance sheet shows a working
capital deficit of about $2 million, and a total shareholders'
equity deficit of about $740,000.
DRESSER INC: Unit Plans to Restructure Burlington Operations
------------------------------------------------------------
Dresser Flow Solutions, a unit of Dresser, Inc., intends to
restructure its industrial valve manufacturing operations in
Burlington, Ontario, Canada.
Burlington operations, which currently employs 96 manufacturing,
sales and service personnel, will be converted to a Nuclear Power
Sales Support Center as all manufacturing functions will be
consolidated into other Dresser facilities. As a result of the
restructuring there will be a significant decrease in the number
of Dresser employees in Burlington. The planned restructuring is
expected to be complete by May 1, 2004.
Andrew Norman, VP and General Manager, Control Valves, stated,
"Ongoing reduced demand in the process industries and current
economic conditions require that Dresser Masoneilan adjust
manufacturing capacity in the United States and Canada. We remain
committed to the Canadian market and will maintain the same high
standards of support and service that customers have come to
expect from Masoneilan. We will manage the restructuring in a
manner that recognizes the needs of our customers, channel
partners and employees through this period of transition."
Dresser Flow Solutions is a worldwide leader in the design,
manufacturing and supply of valves, meters, actuators and control
solutions for the energy and process industries.
Headquartered in Dallas, Texas, Dresser, Inc. (S&P, BB- Corporate
Credit Rating) is a worldwide leader in the design, manufacture
and marketing of highly engineered equipment and services sold
primarily to customers in the flow control, measurement systems,
and compression and power systems segments of the energy industry.
Dresser has a widely distributed global presence, with over 7,500
employees and a sales presence in over 100 countries worldwide.
The Company's Web site can be accessed at http://www.dresser.com/
DT INDUSTRIES: S&P Drops Rating to D After Missed $2.7MM Payment
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured credit facility ratings on DT Industries Inc.,
to 'D' from 'CCC+'.
The rating actions followed the Dayton, Ohio-based company's
announcement that it has failed to make a mandatory principal
prepayment totaling $2.7 million, due on Dec. 31, 2003, and is
negotiating a forbearance agreement with its senior lenders.
In addition, DTII has entered into an agreement to sell its
Converting Technologies division, with net proceeds from the sale,
which is expected to close in mid-January, to be used to reduce
debt and satisfy the principal payment.
DTII makes equipment used to manufacture, test, or package a
variety of industrial and consumer products.
"We will review DTII's ratings if the company is successful in
curing the recent default," said Standard & Poor's credit analyst
Nancy Messer. "However, even if the asset sale is completed, the
company will continue to be challenged to refinance its existing
credit facility that matures in July 2004."
ENRON: Pushing for Approval of Foster Wheeler Settlement Pact
-------------------------------------------------------------
Before EPC Estate Services, Inc., formerly known as National
Energy Production Company, filed for Chapter 11 protection, it
was engaged in the business of designing and constructing gas-
fired electricity generating facilities. In this connection, EPC
and Foster Wheeler Energy Corporation entered into Purchase Order
No. FR0114003, pursuant to which Foster Wheeler was to design,
fabricate and deliver a heat recovery steam generator and other
related equipment for EPC's use on a power plant construction
project in Linden, New Jersey.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
reports that EPC alleged that Foster Wheeler delivered the
Generator late and in a defective condition. As a result, EPC
withheld payment of Foster Wheeler's invoices and retainage
amounting to $2,862,963.
On September 4, 2001, Foster Wheeler initiated arbitration under
the administration of the American Arbitration Association,
seeking payment of its invoices and retainage totaling
$3,440,263. Subsequently, EPC asserted counterclaims in the
Arbitration totaling $4,113,613, for breach of warranty and
liquidated damages due to the late delivery. The Arbitration is
stayed with EPC's bankruptcy filing.
Ms. Gray notes that in December 2001, as the Project was nearing
completion, EPC became unable to pay its sub-contractors and
suppliers. Thus, on December 7, 2001, Foster Wheeler filed a
lien for $2,493,963 against the owner of the Project property.
On December 20, 2001, Foster Wheeler increased the Lien amount to
$2,862,963. Foster Wheeler was one of the 14 lien claimants
against the Project Property. The liens against the Project
Property total $18,000,000. However, under the New Jersey law,
the Project owner's liability is limited to the amount of the
unpaid contract balance owing to EPC, approximately $10,000,000,
which constitute the "lien pool" from which all lien claimants
are entitled to their pro rata share.
Since EPC disputed Foster Wheeler's claims, a dispute arose
between Foster Wheeler and the other claimants regarding Foster
Wheeler's share of the lien pool funds. By a January 14, 2003
Order, the Supreme Court of New Jersey, Chancery Division, Union
County, ruled that Foster Wheeler's share of the lien pool funds,
calculated to be $1,361,476, would be paid to Foster Wheeler only
if EPC did not recommence the Arbitration on or before
February 1, 2003.
On January 31, 2003, Ms. Gray reports that Foster Wheeler and EPC
entered into a Standstill Agreement wherein EPC agreed not to
recommence the Arbitration and Foster Wheeler agreed to place its
share of the lien pool funds into escrow for the settlement of
its disputes with EPC, net of a $50,000 payment each to EPC and
Foster Wheeler. As a result, Foster Wheeler placed $1,261,476
with JPMorgan Chase Bank as Escrow Agent on January 31, 2003.
According to Ms. Gray, Foster Wheeler claimed that EPC is liable
for:
(i) breach of contract by failing to pay Foster Wheeler for
invoices and retainage;
(ii) failure to cause other subcontractors to timely complete
their work, which caused a delay in the completion of
Foster Wheeler's portion of the work;
(iii) failing to timely unload the Generator; and
(iv) failing to properly coordinate deliveries.
Foster Wheeler further disputes EPC's claim that the delivery
schedule was not extended. On November 27, 2002, Foster Wheeler
filed an unsecured claim against EPC for $3,440,263.
Conversely, EPC asserted that it is entitled to liquidated
damages in accordance with the Purchase Order as a result of
Foster Wheeler's late delivery of the Generator as well as
additional field rework costs. EPC's total claim against Foster
Wheeler, net of withheld contract balance, is estimated to be
$1,249,651.
The Parties wish to resolve all claims and issues relating to the
Purchase Order, the Project, the Lien and the Arbitration and to
release each other from all claims, obligations, liabilities and
liens through a Settlement Agreement. EPC and Foster Wheeler
agree that:
(a) EPC's share of the Escrow Funds will be $471,476;
(b) Foster Wheeler's share of the Escrow Funds will be
$790,000;
(c) Accrued interest on the Escrow Funds will be credited to
Foster Wheeler;
(d) Applicable escrow fees will be assessed in accordance
with the Escrow Agreement, with unpaid fees, if any, to
be deducted from each party's share of the Escrow Funds;
(e) Foster Wheeler will file an amended unsecured claim
against the EPC estate reducing the portion of the claim
relating to the Project from $3,440,263 to $886,671; and
(f) The Parties will mutually waive, release and forever
discharge one another for all claims related to the
Purchase Order, the Project, the Lien, the Arbitration
and any other agreement for the design, engineering,
construction, start-up and testing of the Project,
provided that Foster Wheeler's right to file the Amended
Claim and its rights in the New Jersey Action are
preserved.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, Ms. Gray asserts that the Settlement Agreement should
be approved because:
(a) it resolves the parties' dispute without further
litigation;
(b) EPC saves additional and unnecessary expenses of future
litigation;
(c) it provides a mechanism for the prompt payment of a
signification portion of the amount EPC asserts it is owed
by Foster Wheeler;
(d) it provides a significant reduction of the unsecured
claim amount Foster Wheeler filed against EPC's estate;
and
(e) it results in the final resolution of the Arbitration.
Accordingly, EPC asks the Court to approve the Settlement
Agreement with Foster Wheeler in all respects. (Enron Bankruptcy
News, Issue No. 92; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
EXIDE: Wants More Time to Move Pending Actions to Delaware Court
----------------------------------------------------------------
James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones &
Weintraub P.C., in Wilmington, Delaware, tells the Court that
since the beginning of their Chapter 11 cases, the Exide
Technologies Debtors have been evaluating actions in which they
are plaintiffs, to determine which ones might be suitable for
removal. Subsequently, the Debtors developed a consolidated
database of all litigation matters.
Because they are not yet through with the evaluation, the Debtors
ask the Court to further extend the period within which they may
file notices of removal with respect to civil actions pending as
of the Petition Date, through and including March 31, 2004. The
Debtors also request that the March 31, 2004 deadline to remove
actions also apply to all matters specified in Rules
9027(a)(2)(A), (B) and (C) of the Federal Rules of Bankruptcy
Procedure.
Mr. O'Neill relates that the extension will preserve the status
quo and allow the Debtors to continue to address possible issues
regarding actions suitable for removal. Moreover, Mr. O'Neill
assures the Court that the Debtors' adversaries will not be
prejudiced by the extension since any party to a prepetition
action that is removed may seek to have it remanded to the state
court from which the action was removed.
The Court will convene a hearing on January 22, 2004 to consider
the Debtors' request. By application of Del.Bankr.LR 9006-2, the
Debtors' deadline to remove actions is automatically extended
through the conclusion of that hearing.
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
(Exide Bankruptcy News, Issue No. 37; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FEDERAL-MOGUL: Gets Nod to Expand Ernst & Young Engagement
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware, overseeing
the Federal-Mogul Debtors' bankruptcy proceedings, approves Ernst
& Young's modified scope of employment.
The have employed Ernst & Young LLP as Independent Auditors and as
Accounting, Tax, Valuation and Actuarial Advisors. With the
Court's approval, Ernst & Young will perform certain services that
are continuations or, at most, modest expansions of previously
approved services. Also, the Court approves to extend the time-
period for services that Ernst & Young has previously performed.
The Court, thus, grants the Debtors' request to:
(a) expand the Retention Orders to include the services
rendered to Federal-Mogul Corporation, Federal-Mogul
Piston Ring, Federal-Mogul Products, Federal-Mogul
Ignition Company, and Federal-Mogul Powertrain, for the
year ending December 31, 2003; and
(b) extend the services rendered to Federal-Mogul Corporation
Bentley to include the year ended March 31, 2003.
Additionally, Ernst & Young's proposed actuarial services will
assist Federal-Mogul with respect to valuations of Federal-
Mogul's liability for post-retirement benefits under Federal
Accounting Standards or FAS 106 and merely continues actuarial
work previously performed on the Debtors' on behalf by Ernst &
Young.
Specifically, the modified scope of Ernst & Young's continued
employment encompasses these additional services:
-- Auditing and reporting services with respect to the
Debtors' consolidated financial statements for the year
ending December 31, 2003;
-- Auditing and reporting services with respect to financial
statements of F-M piston Rings for the year ending
December 31, 2003, and reporting services with respect to
the consolidated financial statements of F-M Products, F-M
Ignition and F-M Powertrain for the year ending
December 31, 2003;
-- Auditing and reporting services with respect to the
financial statements of the Bentley 401(k) Plan for the
year ended March 31, 2003; and
-- Assisting the Debtors in identifying a news FAS 106
actuary by:
(i) assisting with the clean-up of employee/retiree
census data utilized in FAS 106 valuation; and
(ii) assisting in the preparation of a request for
proposal for FAS 106 actuarial services.
The Debtors will pay Ernst & Young $1,400,000, for auditing and
reporting on the consolidated financial statements of Federal-
Mogul Corporation for the year ended December 31, 2003, including
out-of-pocket expenses, with the exception of up to $30,000 of
travel expenses related to work to be performed in St. Louis,
Missouri, which will be reimbursed as incurred.
With respect the other Federal-Mogul subsidiaries, the Debtors
will pay Ernst & Young's fees for auditing and reporting on the
financial statements for the year ended December 31, 2003, as:
Subsidiary Fee
---------- ---
Federal-Mogul Products, Inc., and
Federal-Mogul Ignition Company, Inc. $75,000
Federal-Mogul Powertrain, Inc. 53,000
Federal-Mogul Piston Ring, Inc. 45,000
Bentley 401(k) Plan 8,500
The Debtors will likewise reimburse Ernst & Young's out-of-pocket
expenses. With respect to the FAS 106 actuarial services, the
Debtors will pay $28,000 plus expenses.
Ernst & Young fees are consistent with the fees charged by Ernst
& Young in the prior performance period. The total fixed fee for
the Additional Services is $1,611,500, while the total for the
fixed fee for the prior performance period was $1,523,833.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some $6
billion. The Company filed for chapter 11 protection on October
1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq.,
James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin
Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $10.15 billion in assets and $8.86
billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No.
48; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FLEMING COMPANIES: Hires Watson Wyatt for Actuarial Services
------------------------------------------------------------
The Fleming Debtors seek the Court's authority to employ Watson
Wyatt Worldwide to provide actuarial services, nunc pro tunc to
October 20, 2003.
Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young
Jones & Weintraub PC, in Wilmington, Delaware, explains that the
Debtors are currently preparing a request seeking relief in
connection with the Fleming Companies, Inc. Pension Plan, the
Pension Plan of S. M. Flickinger Co., Inc., the Godfrey Company
Subsidiaries' Pension Plan, the Retirement Plan for Arizona
Warehouse and Distribution Employees, and certain other pension
plans. There are 17,000 participants in the Fleming Pension
Plans. Except for the Fleming Companies Inc. Plan, each of the
Fleming Pension Plans is currently frozen.
Watson Wyatt has provided general plan administration and
actuarial services for the Fleming Pension Plans since 1997. The
Debtors want to continue that employment and have Watson Wyatt
assist in the preparation and prosecution of the Fleming Pension
Plans Motion.
Watson Wyatt will assist the Debtors in the:
(a) preparation of pension plan minimum funding
projections;
(b) preparation of plan termination liability reports;
(c) preparation of affidavits in support of the Fleming
Pension Plans Motion;
(d) performance of services in connection with appearance
as an expert witness in connection with the Fleming
Pension Plans Motion, if necessary; and
(e) performance of other actuarial services deemed by the
the Debtors and Watson Wyatt to be necessary and
required in connection with the Fleming Pension Plans
Motion.
Watson Wyatt's customary hourly rates, subject to periodic
adjustments, are:
Senior Actuary $430 - 605
Mid-level Actuary 300 - 430
Junior Actuary/Analyst 150 - 300
Administrative Support 100 - 150
James Sincovec, an actuary in Watson Wyatt, attests that the firm
has no connection with the Debtors or other parties-in-interest
except for its prior actuarial services to the Debtors. It does
not hold any interest adverse to the Debtors or their estates in
the matters for which it is to be employed. The firm is a
"disinterested person" within the meaning of the Bankruptcy Code.
Mr. Sincovec, however, discloses that Watson Wyatt has performed,
performs, and will continue to perform services for various
parties-in-interest in unrelated matters, including Kmart
Corporation, Kraft Foods, London Drugs Limited, Malt-O-Meal,
Mizuho Trust Company, Mutual of Omaha Insurance Co., Nash Finch,
Nationwide Advertising Services, Nestle USA, Northwestern Mutual
Life, Pepsico, Pfizer Inc., Phillips Petroleum, Playtex Products,
Procter & Gamble, Quaker Oats Company, Royal & Sun Alliance,
Royal Bank of Canada, Sara Lee, State Street Corporation,
Supervalu, Swire Pacific Holdings, Target Stores/Dayton-Hudson,
Transamerica Life Insurance, Unified Western Grocers, Unilever,
Wellington Management Co., Wells Fargo Bank, and Zurich American
Insurance Co.
In addition, Mr. Sincovec reports that the Debtors owe Watson
Wyatt $33,567 for prepetition fees and expenses. During the
90-day period before the Petition Date, Watson Wyatt received
$471,616 from the Debtors in compensation for its services and
expenses. Since April 1, 2003, Watson Wyatt has been paid
$578,915 by the Debtors for its services in connection with the
general administration of the Fleming Pension Plans.
Headquartered in Lewisville, Texas, Fleming Companies, Inc. --
http://www.fleming.com/-- is the largest multi-tier distributor
of consumer package goods in the United States. The Company filed
for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No.
03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq.,
Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$4,220,500,000 in assets and $3,547,900,000 in liabilities.
(Fleming Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FRIEDMAN'S INC: December Quarter Sales Reflect Slight Growth
------------------------------------------------------------
Friedman's Inc. (NYSE: FRM) announced sales results for its first
fiscal quarter ended December 27, 2003.
Net sales for the quarter increased 6.3%, to $210.6 million
compared to $198.1 million during the comparable period last year.
Comparable store sales increased 2.7% during the quarter. At
December 27, 2003, the Company had 710 stores in operation, an
increase of 7.3% compared to the first fiscal quarter of last
year.
As announced in November 2003, the Company is currently working
with Ernst & Young to complete the restatement of its financial
statements for at least the last three fiscal years. In
connection with the announced restatement, Ernst & Young withdrew
its audit opinions on the previously-filed annual financial
statements for the fiscal years 2000, 2001 and 2002. The principal
reason for the restatement is concern over the accounting for the
allowance for doubtful accounts. Until the Audit Committee
completes its previously announced internal investigation and
Ernst & Young is able to complete its audits, the total impact on
the Company's financial statements cannot be known. Based on the
current status of these matters, Friedman's expects to file its
Form 10-K by the end of February 2004 and to provide preliminary
financial information for the restated periods and the year ended
September 27, 2003 prior to that date.
In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, Consolidation of Variable Interest
Entities, which introduced a new consolidation model, the
"variable interests model", which determines control (and
consolidation) based on who receives the benefits or bears the
risk of gains and losses, respectively, of the entity being
evaluated for consolidation. In April 2003, the Company announced
that the Interpretation would result in the consolidation of
Crescent's financial statements with those of Friedman's for
financial reporting purposes with the reporting of its fiscal year
ending September 27, 2003, effective as of the beginning of fiscal
2003 (September 29, 2002).
In December 2003, the FASB issued a revised Interpretation which,
among other matters, delayed the required implementation of the
Interpretation to reporting periods ending after March 15, 2004.
Accordingly, Friedman's will delay consolidation of Crescent's
financial statements with those of Friedman's for financial
reporting purposes until the reporting of the Company's second
fiscal quarter ending March 27, 2004.
The Company has previously provided unaudited sales and other pro-
forma financial data for the consolidation of Crescent in advance
of the required implementation date of the Interpretation. The
Company has decided to discontinue that practice pending the
completion of the independent audits of Friedman's and Crescent.
Friedman's Inc. is a leading specialty retailer of fine jewelry
based in Savannah, Georgia. The Company is the leading operator
of fine jewelry stores located in power strip centers. At
December 27, 2003, Friedman's Inc. operated a total of 710 stores
in 20 states, of which 482 were located in power strip centers and
228 were located in regional malls. Friedman's Class A Common
Stock is traded on the New York Stock Exchange (NYSE Symbol, FRM).
As reported in Troubled Company Reporter's January 2, 2003
edition, the Company was notified by its lenders that it is in
default under certain provisions of its credit agreement. As the
preliminary financial information becomes available, the Company
will be in discussions with its lenders regarding these matters in
an attempt to resolve them prior to the filing of its annual
report.
At present, the Company's lenders continue to provide the
Company with the benefits of its credit agreement, with certain
limited exceptions, although they have the right to terminate
their support at any time.
GARDEN HILL, INC: Case Summary & 6 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Garden Hill, Inc.
dba Garden Hill Apartments
2119 N. Veterans Blvd.
Eagle Pass, Texas 78852
Bankruptcy Case No.: 04-50129
Type of Business: The Debtor is an operator of apartment complex.
Chapter 11 Petition Date: January 5, 2004
Court: Western District of Texas (San Antonio)
Judge: Ronald B. King
Debtor's Counsel: Dean William Greer, Esq.
Law Offices of Dean W. Greer
2929 Mossrock, Suite 105
San Antonio, TX 78230
Tel: 210-342-7100
Total Assets: $3,044,131
Total Debts: $3,585,138
Debtor's 6 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Pedro & Esther Garcia Loan $1,000,000
2119 N. Veterans Blvd #1202
Eagle Pass, TX 78852
Chase Automotive Financial Puchase Money $35,055
Value: $35,000
Bob Jaffer Loan $15,360
South Texas National Bank Parking Lot repairs $13,185
Southwestern Bell Yellow Advertising $459
Pages
Eagle Pass Chamber of Loan $150
GOLDEN NORTHWEST: Brings-In Stoel Rives as Bankruptcy Attorneys
---------------------------------------------------------------
Golden Northwest Aluminum, Inc., and its debtor-affiliates seek
permission from the U.S. Bankrutpcy Court for the District of
Oregon to hire the services of Stoel Rives LLP as Counsel in these
chapter 11 cases.
The Debtors submit that Stoel Rives is familiar with their
structure and operations due to its ongoing representation as
general counsel. Stoel Rives is also one of the largest law firms
in the Pacific Northwest with a substantial national practice.
Under this engagement, Stoel Rives will:
a) advise Debtors with respect to its powers and duties as
debtor-in-possession in the continued management and
operation of its business;
b) attend meetings and negotiate with representatives of
creditors and other parties in interest;
c) take all necessary action to protect and preserve
Debtors' estates, including: the prosecution of actions
on Debtors' behalf; the defense of any action commenced
against Debtors; negotiations concerning all litigation
in which Debtors are involved, and objections to claims
filed against the estates;
d) prepare on Debtors' behalf all motions, applications,
answers, orders, reports, and papers necessary to the
administration of the estates;
e) negotiate and prepare on Debtors' behalf a plan of
reorganization, disclosure statement, and all related
agreements and/or documents, and take any necessary
action on Debtors' behalf to obtain confirmation of such
plan;
f) represent Debtors in connection with obtaining post-
petition financing;
g) advise Debtors in connection with any potential sale of
assets;
h) appear before this Court and any appellate courts, and
protect the interests of Debtors' estate before such
Courts;
i) consult with Debtors regarding tax matters; and
j) perform all other necessary legal services and provide
all other necessary legal advice to Debtors in
connection with these Chapter 11 cases.
Stoel Rives will bill the Debtors its current hourly rates that
range from $165 and $395 per hour. Richard C. Josephson, Esq.,
and Hilary L. Barnes, Esq., will be primarily involved in this
engagement.
Headquartered in The Dalles, Oregon, Golden Northwest Aluminum,
Inc., is a primary aluminum producer. The Company, together with
three affiliates filed for chapter 11 protection on December 22,
2003 (Bankr. Oreg. Case No. 03-44107). Richard C. Josephson,
Esq., 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 each.
GREAT LAKES: S&P Affirms Low-B Ratings Following Acquisition
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating and its other ratings on Oak Brook, Ill.-based Great
Lakes Dredge & Dock Corp. after the company announced the
consummation of its acquisition by Madison Dearborn Partners LLC
(unrated).
The ratings were removed from CreditWatch, where they had been
placed on Nov. 13, 2003, after Great Lakes Dredge & Dock announced
its purchase by Madison Dearborn Partners LLC from Citigroup
Venture Capital for $340 million.
Standard & Poor's also affirmed its 'B+' bank loan rating and
assigned a recovery rating of '3' on Great Lakes' $120.3 million
senior credit facility. The recovery rating indicates an
expectation of a meaningful (50%-80%) recovery of principal in the
event of a default. In addition, Standard & Poor's affirmed its
'B-' rating on Great Lakes' $175 million senior subordinated notes
due 2013, which were issued under SEC Rule 144A with registration
rights.
Ratings on Great Lakes' prior bank facility and $155 million of
11.25% senior subordinated notes were withdrawn, as the newly
rated debt instruments have replaced them.
The outlook is now stable. As of Sept. 30, 2003, Great Lakes had
approximately $272 million of outstanding debt (including the
present value of operating leases) outstanding.
Great Lakes Dredge & Dock operates the largest fleet of dredging
equipment in the U.S.
"Limited growth opportunities, maintenance of an aggressive
financial profile, and marginal financial flexibility limit
potential for an upgrade," said Standard & Poor's credit analyst
Heather Henyon.
HAWK CORP: Implementing Strategic Repositioning Action Plan
-----------------------------------------------------------
Hawk Corporation (Amex: HWK) is initiating a plan to focus on its
two primary business segments, Friction Products and Precision
Components, and position the Company to improve its global
competitive cost position to support long-term growth initiatives
in these segments.
The plan involves three primary components:
-- Achieve cost savings at its Friction Products segment by
moving operations at its Brook Park, Ohio location to a
new U.S. production facility,
-- Enact a formal strategic plan that will lead to the sale
of Hawk's Motor segment, and
-- Engage an investment banker to advise the Company as it
reviews strategic alternatives relating to Hawk's Tex
Racing business unit.
"These moves will position Hawk to put our full force and effort
into carrying out the long-term strategic initiatives of our
Friction Products and Precision Components segments," stated
Ronald E. Weinberg, Hawk's Chairman and CEO. "These businesses are
each leaders in their field and will be the key to reinvigorated
growth as the economy improves. Focusing our management and
financial resources on our two business segments that have
critical mass and stronger market positions will provide the
greatest growth potential, which in turn, we believe will enable
us to deliver significant value to Hawk shareholders."
Hawk announced that its Wellman Products Group, a component of its
Friction Products segment, has signed a formal, non-binding letter
of intent agreeing to terms on the construction of a new 255,000
square foot facility. The letter of intent is subject to due
diligence and other customary terms and conditions. The Company
expects that relocation of the Brook Park operation will begin in
2004. As a result of the relocation, Hawk expects to realize
approximately $3.0 million of annual pre-tax savings when full
production in the new facility is achieved. These savings will
result from a reduction in manufacturing costs, supplemented by
state and local incentives.
In conjunction with the move, Hawk will close its Brook Park
operation, which employs approximately 200 people, upon completion
of the new facility. The Company expects to hire an equivalent
number of employees as the production in the new facility ramps
up. As a result, Hawk anticipates recording a pre-tax charge of
$1.9 million in the fourth quarter of 2003 related to the
curtailment of a defined benefit pension plan covering most of
the hourly employees of the Brook Park facility. Hawk will
continue to fund the plan and pay employee retirement benefits in
accordance with plan documents. Additionally, the Company
anticipates future pre-tax charges of approximately $3.5 to $4.0
million relating to the relocation of the Brook Park operation and
employee severance expense.
Although the Company's Motor segment, which manufactures die-cast
aluminum rotors for fractional and subfractional horsepower
electric motors, has experienced recent improvements in its
operating performance, it has failed to achieve profitability.
After completing an extensive analysis, Hawk has determined that a
divestiture of the segment would allow the Company to concentrate
on its core business segments, and that the timing is right for a
sale given recent initiatives in the segment that have allowed the
operation to stabilize. Hawk has initiated an active marketing
plan and anticipates selling the segment to a strategic buyer as
an ongoing business within the next 12 months. The Motor segment
will continue its aggressive program to improve operating
performance during the selling process.
Hawk will account for the results of the Motor segment as a
discontinued operation in its financial statements. The Company
anticipates reporting a pre-tax, non-cash charge of approximately
$5.1 million in the fourth quarter of 2003 related to
discontinuing the operations of the Motor segment. The Company
also expects to incur additional pre-tax charges of approximately
$1.0 to $1.5 million during 2004 related to the sale of the
segment.
Tex Racing, which produces driveline components and gears used by
many marquee teams of the NASCAR racing series, has been a
positive contributor to the Company's earnings since joining Hawk
in 2000. However, given Hawk's plan to renew its focus on its
core business segments, management has engaged an investment
advisor to review strategic alternatives relating to Tex Racing.
Tex Racing is a component of the Company's Performance Racing
segment.
Proceeds from the sale of the Motor segment will be used primarily
to reduce debt. The Company expects that at the end of the fourth
quarter of 2003 it will remain in compliance with all the
financial covenants contained in its bank lending facility.
However, beginning in the first quarter of 2004, the Company
believes that the costs of the repositioning plan, which needs to
be incurred prior to the Company achieving the benefits of the
plan, will require that the Company seek waivers from its lending
banks with respect to certain financial covenants. The Company is
in discussions with its banks to obtain the necessary waivers.
Hawk Corporation -- whose Corporate Credit Rating has been upgrade
by Standard & Poor's to 'single-B' -- is a leading worldwide
supplier of highly engineered products. Its friction products
group is a leading supplier of friction materials for brakes,
clutches and transmissions used in airplanes, trucks, construction
equipment, farm equipment and recreational vehicles. Through its
precision components group, the Company is a leading supplier of
powder metal and metal injected molded components for industrial
applications, including pump, motor and transmission elements,
gears, pistons and anti-lock sensor rings. The Company's
performance automotive group manufactures clutches and gearboxes
for motorsport applications and performance automotive markets.
The Company's motor group designs and manufactures die-cast
aluminum rotors for fractional and subfractional electric motors
used in appliances, business equipment and HVAC systems.
Headquartered in Cleveland, Ohio, Hawk has approximately 1,700
employees and 16 manufacturing sites in five countries.
Hawk Corporation is online at: http://www.hawkcorp.com/
HAWK: Christopher DiSantis Will Lead Precision Components Group
---------------------------------------------------------------
Hawk Corporation (Amex: HWK) promoted Christopher DiSantis to
President of the Hawk Precision Components Group.
Mr. DiSantis joined Hawk in 2000 as Vice President - Corporate
Development and in subsequent years was assigned the additional
responsibility of overseeing the Hawk Motor segment and Quarter
Master Industries, a component of the Hawk Racing Group.
Mr. DiSantis was also instrumental in launching and implementing
the Company's Six Sigma initiative.
"Chris has done a remarkable job with a variety of important
assignments, and I am confident that he will bring to HPCG the
same level of intensity that has made him successful to this
point," commented Ronald E. Weinberg, Hawk's Chairman and CEO.
Michael Corkran, previous President of HPCG, will remain active
with the Company, advising Mr. DiSantis during a transition
period, and working on the successful implementation of the
segment's entrance into the China market.
"We are very grateful for all the effort that Mike Corkran has
contributed to Hawk, particularly with respect to setting the
unified strategy for the powder metal companies that Hawk acquired
through the 1990's, and respect his decision to pursue other
personal business interests," stated Mr. Weinberg.
Hawk Corporation is a leading worldwide supplier of highly
engineered products. Its friction products group is a leading
supplier of friction materials for brakes, clutches and
transmissions used in airplanes, trucks, construction equipment,
farm equipment and recreational vehicles. Through its precision
components group, the Company is a leading supplier of powder
metal and metal injected molded components for industrial
applications, including pump, motor and transmission elements,
gears, pistons and anti-lock sensor rings. The Company's
performance automotive group manufactures clutches and gearboxes
for motorsport applications and performance automotive markets.
The Company's motor group manufactures die-cast aluminum rotors
for fractional and subfractional electric motors used in
appliances, business equipment and HVAC systems. Headquartered in
Cleveland, Ohio, Hawk has approximately 1,700 employees and 17
manufacturing, research and administrative sites in five
countries.
Hawk Corporation is online at: http://www.hawkcorp.com/
INAMED CORP: Will Publish Financial Guidance for 2004 on Monday
---------------------------------------------------------------
Inamed Corporation (Nasdaq:IMDC) will release financial guidance
for 2004 on Monday, January 12, 2004, after the financial markets
close.
In addition, the Company will host a conference call to discuss
its 2004 financial guidance on Monday, January 12, 2004, at 5:00
p.m. EST.
The Company will be providing guidance for 2004 earnings per share
based exclusively on GAAP earnings per share and will no longer be
providing guidance based on cash earnings per share.
Participating in the call will be Nick Teti, Chairman, President
and CEO, as well as other members of Inamed's senior management.
The conference call will be simultaneously broadcast over the
Internet and will be available to members of the news media,
investors and the general public. The conference call is expected
to last approximately 30 minutes and can be accessed via the
Internet by going to Inamed's Web site at http://www.inamed.com/
The event will be archived and available for replay for seven days
after the conference call.
Inamed (Nasdaq:IMDC) (S&P, BB- Corporate Credit Rating, Positive
Outlook) is a global healthcare company with over 25 years of
experience developing, manufacturing and marketing innovative,
high-quality, science-based products. Current products include
breast implants for aesthetic augmentation and for reconstructive
surgery; a range of dermal products to treat facial wrinkles; and
minimally invasive devices for obesity intervention, including the
LAP-BAND(R) System for morbid obesity. The Company's Web site is
http://www.inamed.com/
INDIANAPOLIS POWER: Fitch Affirms BB+ Preferred Share Rating
------------------------------------------------------------
Fitch Ratings expects to assign a 'BBB' rating to Indianapolis
Power & Light Company's new issuance of $100 million 6.60% first
mortgage bonds maturing in 2034.
The new issue will be secured by a first lien on substantially all
of IP&L's property and will rank equally with exiting and future
FMBs. The proceeds from the new issuance will be used to retire
IP&L's $80 million 6.05% first mortgage bonds due February 2004
and to fund expenditures previously incurred in connection with
the company's 2003-2006 capital expenditure program.
The ratings of IP&L are constrained by lower rated immediate
parent IPALCO Enterprises, Inc. (IPALCO, senior unsecured debt
rated 'BB' by Fitch) and by ultimate parent The AES Corp. (AES,
senior unsecured rated 'B'). IP&L's stand-alone credit profile is
consistent with companies in the 'AA' category. The rating
constraint considers the fact that IP&L is not entirely insulated
from the credit risk of its parents despite the various existing
regulatory and contractual ring-fencing mechanisms that limit
IP&L's ability to upstream dividend payments.
As an integrated utility, IP&L enjoys a strong competitive
position characterized by low cost generation resulting in one of
the lowest rates in the eastern region of the US. IP&L has a fuel
adjustment clause that allows the pass-through to customers of
changes in energy and purchased power costs on a quarterly basis.
IP&L is to recover purchased power costs based on a benchmark for
most retail service. If the cost per MWh of power purchases is not
greater than the benchmark (currently $77.50 per MWH), then the
purchased power costs should be recoverable. If the average cost
per MWh of power purchases is greater than the benchmark, then 85%
of the costs are recoverable if IP&L demonstrates the
reasonableness of those purchases to the IURC and meet certain
other conditions. IP&L is burdened by neither uneconomic purchase
power contracts, nor any other material stranded costs.
Another credit strength is Indiana's reasonably supportive
regulatory environment. The Indiana legislature is not expected to
pass any electric restructuring legislation in the foreseeable
future. Financially, IP&L's projected credit protection ratios
will continue to be strong with EBITDA/Interest coverage expected
to hover above 7 times and Debt/EBITDA to stay around 2.0x. In the
next three years, IP&L plans to spend about $202 million to reduce
the NOx emission to meet EPA mandated standards and it anticipates
additional program-related cash contributions for pension benefits
of up to approximately $74 million through 2005.
Fitch has also affirmed the existing ratings of IP&L as follows:
-- First mortgage bonds 'BBB';
-- Senior unsecured debt 'BBB-';
-- Preferred stock 'BB+';
-- Rating Outlook Stable.
IP&L is a wholly owned subsidiary of IPALCO Enterprises, Inc.,
which was acquired by The AES Corporation early in 2001. IP&L, a
regulated public utility, principally engages in providing
electric service to 450,000 customers in the Indianapolis
metropolitan area.
INTEGRATED HEALTH: Seeks Court Clearance for Reliance Settlement
----------------------------------------------------------------
IHS Liquidating LLC, as successor to Integrated Health Services,
Inc., asks the Court to approve a settlement agreement by and
between IHS Liquidating and M. Diane Koken, Insurance Commissioner
of the Commonwealth of Pennsylvania, in her official capacity as
Liquidator of Reliance Insurance Company.
Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, relates that over a course of several years
up to and including 1999, Reliance issued various insurance
policies to the Debtors, including workers compensation policies,
automobile liability policies, and general and professional
liability policies. Under the terms of the Policies, Reliance,
as insurer, is obligated to pay claims falling within the
coverage of the Policies, subject to the Debtors' obligation to
reimburse Reliance for payments made on claims up to the
deductible amount provided in the Policies and their endorsements.
The PL/GL Policy
One of the Policies issued by Reliance is a Health Care Medical
Professional Liability and General Liability Insurance Policy,
NGB0151564-00 for the 1999 Policy Year. The PL/GL Policy is a
matching deductible policy in that the limits of coverage are
equal to the Debtors' deductible obligations under the policy.
The PL/GL Policy provides professional liability coverage of
$2,000,000 per incident, with an initial aggregate coverage limit
of $4,500,000. In the Debtors' view, upon exhaustion of the
initial aggregate limit, the PL/GL Policy is subject to
"reinstatement" for an additional $4,500,000 of aggregate
professional liability coverage.
Pursuant to an Insurance Program Agreement between the Debtors
and Reliance, the Debtors were required to post collateral to
secure its payment obligations to Reliance for all deductible
amounts under the Policies. As of the Petition Date, Reliance
held collateral, in the form of cash, letters of credit and bonds
totaling $17,000,000. As of December 5, 2003, the collateral
held by Reliance consists entirely of cash totaling $10,474,128.
The Reliance Proof of Claim
On August 23, 2000, Reliance filed Claim No. 07812 against the
Debtors for $27,964,041, for which Reliance alleges that it holds
collateral, in the form of cash, letters of credit and surety
bonds, totaling $17,135,000, leaving an unsecured balance of
$10,800,000.
The Complaint
On September 20, 2002, the Debtors filed a Complaint for
Declaratory Judgment against M. Diane Koken, as Liquidator of
Reliance, in the Commonwealth Court.
In Count I of the Complaint, the Debtors sought a declaration
confirming that Reliance was obligated to pay claims under the
PL/GL Policy. The Debtors allege that Reliance is obligated to
pay claims for two reasons:
(a) The Liquidator is holding collateral sufficient to satisfy
the Debtors' deductible obligations; and
(b) In light of the Debtors' insolvency and the facts and
circumstances surrounding the issuance of the PL/GL
Policy, the Liquidator determined that Reliance has an
obligation under the PL/GL Policy to pay covered claims
without regard to the sufficiency of the collateral.
Counts II and III assert claims pertaining to the use and
application of the collateral, presently consisting of cash
totaling $10,474,128, posted by the Debtors to secure its payment
obligations to Reliance for deductible amounts under the
Policies. In the alternative, the Debtors seek declarations
either requiring the Liquidator to apply the collateral to the
payment of claims covered by the PL/GL Policy or to return the
collateral to the Debtors.
Counts IV and V seek judgment declaring that the $4,500,000
coverage limit under the PL/GL Policy for professional liability
claims is subject to reinstatement to provide the Debtors with an
additional $4,500,000 coverage, for a combined policy limit of
$9,000,000. Count IV alleges that the documents comprising the
PL/GL Policy reflect the parties' agreement that the policy is
subject to reinstatement and if the policy documents are not
sufficient, the PL/GL Policy must be reformed to provide for
reinstatement.
On October 10, 2002, the Liquidator asserted that the Complaint
violates and circumvents the mandatory proof of claim procedure
set forth in the Pennsylvania Insurance Department Act and is
otherwise legally insufficient. Since that time, the
Liquidator's professionals and the Debtors' professionals engaged
in extensive arm's-length negotiations to resolve the issues
raised in the Action. In addition, the parties engaged in
negotiations with the objective of fixing the amount and
classification of the claims which the Debtors would have against
the Reliance liquidation estate, on behalf of the PL/GL
Claimants, and the claims which the Reliance estate would have
against the Debtors with respect to the Debtors' unsatisfied
deductible obligations under the Policies.
The IHS Proof of Claim
Pursuant to the Plan, the IHS Liquidating Trust is authorized to
file a single claim in the Reliance liquidation proceeding to
seek recovery of all insurance proceeds available under the PL/GL
Policy on account of the PL/GL Claims.
Subsequently, IHS Liquidating filed its proof of claim in the
Reliance liquidation proceeding:
(a) on behalf of all holders of PL/GL Claims for all insurance
proceeds available as coverage for the PL/GL Claims under
the PL/GL Policy; and
(b) to resolve the issue raised in Counts IV and V of the
Complaint as to whether the $4,500,000 aggregate limit of
professional liability coverage under the PL/GL Policy is
reinstated to provide the Debtors with an additional
$4,500,000 of coverage for a combined professional
liability coverage limit of $9,000,000.
The aggregate limit of coverage under the PL/GL Policy for PL
Claims has been partially exhausted by payments made by Reliance
and by the Debtors for losses covered under the PL/GL Policy,
including payments of judgments, settlements and defense costs in
the aggregate amount of $3,650,000.
Mr. Barry reports that to facilitate the Liquidator's evaluation
of the Proceeds Claim, the Debtors and IHS Liquidating produced
to the Liquidator extensive documentation concerning the PL/GL
Claims and concerning the judgments and settlements entered into
aggregating in excess of $12,000,000 with respect to PL/GL
Claims. The Liquidator's professionals also had extensive
discussions with the Debtors' representatives with regard to the
nature and extent of the PL/GL Claims and with regard to the
judgments and settlements through which numerous PL/GL Claims
have been liquidated in amount.
The Settlement Agreement
Accordingly, IHS Liquidating and the Liquidator want to settle
their disputes relating to the claims asserted in the Complaint
and in the Action and with regard to the Reliance Proof of Claim
and the IHS Proof of Claim.
In a settlement agreement, the parties agreed that:
(a) IHS Liquidating will dismiss with prejudice Counts I, II
and III of the Complaint;
(b) The Reliance Claim will be fixed in this manner:
-- the Liquidator will have a secured claim against IHS
Liquidating for $10,474,128, which will be deemed
satisfied by application of the cash collateral held
by the Liquidator;
-- the Liquidator will have an unsecured claim for
$4,654,291; and
-- when the Policy Limit Claims are resolved, the
Liquidator will have an additional unsecured claim
in the amount by which the aggregate limit of
coverage available under the PL/GL Policy for claims
of professional liability is determined to be in
excess of $4,500,000;
(c) The Reliance Unsecured Claim and the Additional Reliance
Unsecured Claim will receive the same treatment as Class
6 General Unsecured Claims against the Debtors' bankruptcy
estates;
(d) The Liquidator may exercise all rights in and to the
Collateral, without restriction, and the Reliance Secured
Claim will be deemed satisfied in full, provided that the
Collateral will be administered in the Reliance
liquidation proceeding in a manner consistent with the
Insurance Program Agreement and PL/GL Policy, applicable
provisions of the Act, and orders of the Commonwealth
Court;
(e) Reliance will provide coverage to IHS Liquidating, as the
agent for all claims determined to be covered under the
PL/GL Policy;
(f) IHS Liquidating will have an allowed Proceeds Claim for:
-- $778,906, relating to coverage under the PL/GL
Policy for general liability claims; plus
-- the limits of liability under the PL/GL Policy for
professional liability claims, less the Aggregate
Loss Payment Amount;
(g) IHS Liquidating, solely on behalf of the PL/GL Claimants,
will participate in the same pro rata distribution of the
assets of the Reliance liquidation estate as all other
Class B claimants as defined in 40 P S 221 44(b), without
set-off, recoupment or diminution on account of the
deficiency of the Collateral or the inability of the
Debtors or IHS Liquidating to satisfy the outstanding
deductible amounts;
(h) Claims for coverage under the PL/GL Policy will only be
asserted against Reliance or the Liquidator by way of the
procedure provided in the IHS Plan and the Settlement
Agreement, and no claim under the defined PL/GL Policy may
be independently asserted against Reliance or the
Liquidator by any PL/GL Claimant;
(i) The Debtors and IHS Liquidating will dismiss Counts IV and
V of the Complaint and agree to pursue these claims and
any claims to determine the policy limit under the PL/GL
Policy exclusively through the IHS Proof of Claim. The
Debtors and IHS Liquidating will dismiss the adversary
proceeding presently pending against Reliance in the
Bankruptcy Court; and
(j) In exchange for the agreement of IHS and IHS Liquidating
to pursue Counts IV and V and the Policy Limits Claim
solely in the proof of claim procedure, the Liquidator
will expedite her review of the Policy Limits Claim.
Mr. Barry asserts that the Settlement Agreement must be approved
since it resolves substantial claims by and against the Debtors'
estates, thus facilitating the ultimate consummation of the Plan
and distributions to creditors. The Settlement Agreement also
provides for procedural framework pursuant to which the issue of
policy reinstatement can be determined expeditiously and with a
minimum cost.
Headquartered in Owings Mills, Maryland, Integrated Health
Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local
and regional networks that provide post-acute care from 1,500
locations in 47 states. The Company filed for chapter 11
protection on February 2, 2000 (Bankr. Del. Case No. 00-00389).
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP
represent the Debtors in their restructuring efforts. On
September 30, 1999, the Debtors listed $3,595,614,000 in
consolidated assets and $4,123,876,000 in consolidated debts.
(Integrated Health Bankruptcy News, Issue No. 69; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
IRON MOUNTAIN: Proposes GBP125M Sr. Subordinated Notes Offering
---------------------------------------------------------------
Iron Mountain Incorporated (NYSE: IRM), the leader in records and
information management services, proposed an offering of GBP 125
million in aggregate principal amount of its Senior Subordinated
Notes due 2014.
The Company intends to use the net proceeds from the offering to
fund the previously announced acquisition of Mentmore plc's 49.9%
equity interest in Iron Mountain Europe Limited for total
consideration of GBP 82.5 million, which includes the related
repayment of trade and working capital funding owed to Mentmore by
Iron Mountain Europe, and for general corporate purposes,
including the possible repayment of outstanding borrowings 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 notes are being sold only to qualified institutional buyers
under Rule 144A and to persons outside the United States under
Regulation S. The notes have not been registered under the
Securities Act of 1933 or under the securities laws of any other
jurisdiction, and, unless so registered under the Securities Act
of 1933, may not be offered or sold in the United States except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable
state securities laws.
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/
IT GROUP: Details Plan Administrator's Duties Under Plan
--------------------------------------------------------
The management, control, and operation of Reorganized IT Group
will be the general responsibility of a Plan Administrator,
subject to the supervision and direction of the Oversight
Committee as provided under the Plan. The Plan contemplates that
AlixPartners will serve as the Plan Administrator. In
particular, the Plan Administrator will be responsible for:
(a) implementing and administering the Plan;
(b) making Distributions in accordance with the Plan;
(c) managing the post-Effective Date affairs of Reorganized IT
Group; and
(d) prosecuting the Estate Causes of Action in accordance with
the Plan and subject to the supervision of the Oversight
Committee.
Notwithstanding any requirements that may be imposed pursuant to
Rule 9019 of the Federal Rules of Bankruptcy Procedure, from and
after the Effective Date, all Avoidance Actions may be
compromised and settled by the Plan Administrator according to
these procedures:
A. Subject to the Plan, these settlements or compromises of
Estate Causes of Action do not require the Courts' review or
approval:
(a) The settlement or compromise of an Estate Cause of Action
where the amount of recovery sought in any demand or
adversary proceeding is $250,000 or less; and
(b) The settlement or compromise of an Estate Causes of Action
where the difference between the amount of the recovery
sought in any demand or adversary proceeding and the
amount of the proposed settlement is $250,000 or less; and
B. These settlements or compromises will be submitted to the
Bankruptcy Court for approval:
(a) Any settlement or compromise not described in the Plan;
and
(b) Any settlement or compromise of an Estate Causes of Action
that involves an "insider," as defined in Section l01(31)
of the Bankruptcy Code.
With the consent of the Oversight Committee, in the exercise of
its business judgment, and subject to the provisions of the Plan,
the Plan Administrator may:
-- prosecute or decline to prosecute any Estate Causes of
Action;
-- settle, release, sell, assign, or otherwise transfer or
compromise any Estate Causes of Action; and
-- retain the services of attorneys, accountants, consultants,
and other agents, to assist and advise in the performance
of its duties under the Plan.
In the satisfaction of its duties under the Plan, the Plan
Administrator may bring any dispute concerning the performance of
its duties for resolution by the Bankruptcy Court and its
reasonable fees and expenses, including attorneys' fees, in
connection therewith will be paid by the Reorganized IT Group.
Any agreement on compensation for the Plan Administrator will be
agreed to by the Committee and the Agent and disclosed at or
prior to the Confirmation Hearing, and is subject to approval by
the Bankruptcy Court.
Subject to any applicable law, the Plan Administrator will not be
liable for any of its acts done or omitted in the performance of
its duties while acting in good faith and in the exercise of
business judgment. The Plan Administrator will not be liable in
any event except for gross negligence or willful misconduct in
the performance of its duties.
Except as otherwise set forth in the Plan and to the extent
permitted by applicable law, the Plan Administrator and any
attorneys, accountants, consultants, and other agents retained by
the Plan Administrator in the performance of its duties will be
defended, held harmless and indemnified from time to time by the
Reorganized IT Group against any and all losses, Claims, costs,
expenses and liabilities to which the Indemnified PA Parties may
be subject by reason of the Indemnified PA Party's execution of
duties pursuant to the discretion, power and authority conferred
on the Indemnified PA Party by the Plan or the Confirmation
Order.
However, the indemnification obligations arising pursuant to the
Plan will not indemnify the Indemnified PA Parties for any
actions taken by the Indemnified PA Parties constituting fraud,
gross negligence, or intentional breach of the Plan, or the
Confirmation Order.
Satisfaction of any obligation of the Reorganized IT Group
arising pursuant to the terms of the Plan will be payable only
from the assets of the Reorganized IT Group, including, if
available, any insurance maintained by the Reorganized IT Group.
These indemnification provisions will remain available to and be
binding upon any future Plan Administrator or the estate of any
decedent and will survive dissolution of the Reorganized IT
Group. (IT Group Bankruptcy News, Issue No. 38; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ITS NETWORKS: Special Shareholders' Meeting Slated for Feb. 27
--------------------------------------------------------------
Effective November 28, 2003, ITS Networks Inc. entered into a
Purchase Agreement with Mr. Hendrik van Elst. Under the terms of
the Agreement, Mr. van Elst agreed to purchase a given number of
shares of the common stock of the Company which will represent
approximately 60% of the issued and outstanding shares of the
common stock of the Company for a purchase price of 2,900,000
Euros. These shares of common stock of the Company shall be
subject to the restrictions imposed pursuant to Regulation S under
the Securities Act of 1933, as amended. No bank or other
financing was utilized in connection with the purchase of the
common stock of the Company by Mr. van Elst.
The Agreement provides for a special meeting of the stockholder of
the Company be held on or before February 27, 2004, to elect five
members to the Board of Directors of the Company, of which three
members are to be nominated by Mr. van Elst. The Agreement
further provides that the Company will file a Schedule 14C
information Statement with the U.S. Securities and Exchange
Commission within 20 days of the closing of the Agreement.
As a result of the Agreement, there will be a change in control of
the Company.
The Company is a provider of pre-paid telephone cards and other
telecommunication services and products primarily within Spain. At
June 30, 2003, the Company's balance sheet shows a working capital
deficit of about $6 million, and a total shareholders' equity
deficit of about $6 million.
KAISER ALUMINUM: Court Fixes Parcels 2A & 2B Bidding Procedures
---------------------------------------------------------------
The Kaiser Aluminum Debtors obtained the Court's permission to
establish a mechanism to identify higher and better offers for
Parcels 2A and 2B.
The Court set January 12, 2004 as the deadline for submission of
qualified bids and January 16, 2004 for the filing of objections,
if any, to the sale. The Debtors will conduct an auction on
January 13, 2004, if necessary.
The Bidding Procedures for the Auction of Parcels 2A and 2B are:
(a) The Debtors, in consultation with the Official Committee
of Unsecured Creditors, will prepare:
-- appropriate solicitation materials relating to Parcels
2A and 2B;
-- summaries of the Bidding Procedures; and
-- a form of purchase agreement substantially similar to
their Sale Agreement with Lanzce G. Douglass, in form
and substance reasonably satisfactory to the Creditors
Committee, to be distributed to any potential
purchasers;
(b) Persons or entities interested in potentially purchasing
Parcel 2A, Parcel 2B or both parcels should contact Joseph
A. Fischer, III, Esq., Kaiser Aluminum & Chemical
Corporation Assistant General Counsel, at 713-332-4764 or
at tre.fischer@kaiseral.com
(c) Upon delivery of executed confidentiality agreements, the
Debtors will provide the potential purchasers with access
to the documentation, personnel and financial data
necessary to evaluate Parcels 2A and 2B, including on-site
due diligence access to Parcels 2A and 2B as reasonably
asked by the potential purchasers; and
(d) Any potential purchaser that desires to become qualified
to participate in the auction of Parcels 2A and 2B may do
so by submitting bids:
-- in writing to:
Joseph A. Fischer, III, Esq.
Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2600, Houston, TX 77057
or
-- through facsimile at 713-332-4605.
Bids must be received on or before 5:00 p.m. Central Time
on January 12, 2004. The bid conditions are:
-- An $7,193,610 initial bid for Parcel 2A or a $1,380,000
initial bid for Parcel 2B;
-- Documentation of proof of delivery of $100,000 deposit
in immediately available funds for Parcel 2A and
$50,000 deposit for Parcel 2B to Spokane County Title
Company, the escrow agent, pursuant to instructions to
be provided by the Debtors; and
-- A Form Purchase Agreement for the applicable parcel
marked with any changes the potential purchaser may
request.
The Debtors will review the bid submissions received and
determine, in consultation with the Creditors Committee, the
Official Committee of Asbestos Claimants, and Martin J. Murphy,
the legal representative of future asbestos claimants, which
submissions are the highest and best offers for Parcels 2A and
2B, and with respect to Parcel 2A, which submissions are higher
and better offers than the terms set forth in the Douglass Sale
Agreement. The Debtors will determine whether Parcel 2B will be
sold before or after Parcel 2A and whether the bids for Parcel 2A
and 2B combined will be considered, as well as how any combined
bids will be treated. At the Auction, persons or entities that
have submitted Qualified Bids may submit offers in excess of the
Parcel 2A Initial Bid provided that the competing bids are in
increments of at least $100,000. Competing bids for Parcel 2B
are anticipated to be at increments of at least $25,000.
The Debtors, in their sole business judgment but after
consultation with the Creditors Committee, Asbestos Committee and
Futures Representative, will select the successful bid determined
to be the highest and best bid for each parcel or combination of
the parcels. At the conclusion of the Auction, the successful
bidder will then promptly:
(a) execute and deliver the Form Purchase Agreement containing
the price and terms offered as the final bid; and
(b) within 24 hours, deliver an additional $200,000 deposit
from the successful bidder for Parcel 2A or an additional
$50,000 deposit from the successful bidder for Parcel 2B,
in immediately available funds to Spokane Title Company.
In the event that Parcel 2A is sold to an entity other that Mr.
Douglass, the Debtors will provide Mr. Douglass a break-up fee
equal to 3% of the purchase price for Parcel 2A. The Debtors
will pay the Break-up Fee at the closing of the sale.
If Mr. Douglass submits the successful bid for Parcel 2A at the
Auction, he will be entitled to receive a reduction in the
purchase price equal to the Breakup Fee.
Kaiser Aluminum Corporation filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429). Through Kaiser
Aluminum & Chemical Corporation, and other subsidiaries,
affiliates and joint ventures, the company operates in all
principal aspects of the aluminum industry. Kaiser's $3 billion
of assets and 5,800 employees generate over $1.5 billion in annual
revenue. Corinne Ball, Esq., at Jones Day serves as lead counsel
in Kaiser's restructuring and Lazard Freres & Co. provides
financial advisory services to the Company. Kaiser's exclusive
period to propose a chapter 11 plan expires on February 20, 2004.
Bank of America leads a consortium of lenders providing $285
million of DIP Financing through February 13, 2005. (Kaiser
Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
LNR PROPERTY: Fourth Quarter 2003 Results Reflect Steep Decline
---------------------------------------------------------------
LNR Property Corporation (NYSE: LNR) one of the nation's leading
real estate investment, finance and management companies, reported
net earnings for its fourth quarter ended November 30, 2003 of
$19.6 million, or $0.65 per share diluted, compared to net
earnings of $30.4 million, or $0.91 per share diluted, for the
same quarter in 2002.
Before a $0.40 charge for early extinguishment of debt, earnings
per share were $1.05 for the fourth quarter ended November 30,
2003, compared to $0.91 for the same quarter in 2002. For the
year ended November 30, 2003, net earnings were $109.6 million, or
$3.57 per share diluted, compared to net earnings of $143.9
million, or $4.15 per share diluted for 2002. Before a $0.61
charge for early extinguishment of debt, earnings per share were
$4.18 for the year ended November 30, 2003, compared to $4.15 for
2002.
Mr. Jeffrey P. Krasnoff, President and Chief Executive Officer of
LNR, stated, "Throughout all of 2003, we remained very focused on
our strategic plan to create long-term value for our shareholders.
We took advantage of the strong demand for our valuable assets and
brought in $791 million in cash from asset sales, recognizing $131
million in pre-tax gains. We also took advantage of favorable
capital markets, issuing $1.0 billion of low-cost long-term debt,
while retiring higher-coupon debt with earlier maturities. We used
our strong cash position to both strengthen our balance sheet and
added, or have committed to add, approximately $1.7 billion of new
investments to our portfolio, including Newhall Land. In addition,
during the year, we repurchased over 4.1 million shares of our
stock at an average cost of $33.18 per share, which is less than
book value."
Mr. Krasnoff concluded, "With our strong balance sheet and the new
investments we have in place or in the pipeline, our franchise is
extremely well positioned to continue adding value for our
shareholders for many years to come. As the Newhall Land
acquisition is not anticipated to have much of an impact on
earnings until 2005, with the yields we expect next year on some
of our newer assets, and with no CMBS resecuritization transaction
currently planned for 2004, we have set our goal for fiscal 2004
earnings per share in the range of $3.55 to $3.75."
FOURTH QUARTER PERFORMANCE
Total revenues and other operating income increased by $2.5
million or 2% this quarter, compared with last year's fourth
quarter. Total revenues and other operating income increased due
to higher gains on sales of securities, higher management and
servicing fee income and higher equity in earnings of
unconsolidated partnerships. These increases were offset by lower
CMBS interest income, lower gains on sales of operating properties
and lower rental income.
Real Estate Properties
Earnings before income taxes from real estate property activities
were $25.5 million for the quarter ended November 30, 2003,
compared to $33.0 million for the same period in 2002. This
decrease was primarily due to lower gains on sales of real estate
property assets and lower net rents (rental income less costs of
rental operations, including net rents categorized as earnings
from discontinued operations), partly offset by higher equity in
earnings of unconsolidated partnerships.
Gains on sales of real estate property assets were $13.3 million
for the quarter ended November 30, 2003 (including $8.1 million
characterized as earnings from discontinued operations), compared
to $22.1 million for the same period in 2002. Gains on sales of
real estate property assets fluctuate from quarter to quarter
primarily due to the timing of asset sales.
Net rents decreased to $7.2 million for the quarter ended
November 30, 2003, from $13.1 million for the same period in 2002.
Over the past three years, the Company has limited its new
property acquisitions in favor of adding value to its existing
portfolio through development, repositioning and leasing. As
properties have come on-line, the Company has taken advantage of
strong buyer demand by selling many of the assets at premium
prices. As a result, the Company has reduced its stabilized
property portfolio by 36% over the prior year. At the end of the
quarter, 39% of the Company's $629.4 million owned property
portfolio was stabilized. At the end of the prior year, 51% of
the Company's $750.7 million owned property portfolio was
stabilized.
Equity in earnings of unconsolidated partnerships increased $4.7
million to $15.0 million for the quarter ended November 30, 2003,
from $10.3 million for the same period in 2002. This increase was
primarily due to earnings from partnerships that had gains on
asset sales in the current year.
On July 21, 2003, the Company entered into an agreement to acquire
The Newhall Land and Farming Company, through a joint venture
entity 50% owned by LNR and 50% owned by Lennar Corporation.
Newhall Land, a premier community planner in north Los Angeles
County, is primarily engaged in the planning of the Valencia and
Newhall Ranch communities, with over 48,000 acres of land in
California primarily related to real estate and agricultural
operations. The transaction is subject to the approval by the
California Public Utilities Commission of the change of control of
Valencia Water Company, a wholly-owned subsidiary of Newhall Land,
that will result from the purchase, and to customary closing
conditions. Simultaneously with the closing of the transaction,
expected to occur in early 2004, LNR will purchase existing income
producing commercial assets from Newhall Land for approximately
$228 million and Lennar Corporation will commit to purchase, and
receive options to purchase, certain homesites from Newhall Land.
Funding for the Newhall Land purchase is expected to be made
through capital contributions of approximately $200 million from
each of the partners, $600 million in senior credit facilities
secured by Newhall Land and assets of several other LNR/Lennar
joint ventures (which will provide working capital as well as a
portion of the purchase price), and the $228 million LNR is to pay
for the purchase of the income producing commercial assets. The
Newhall Land acquisition is not anticipated to have much of an
impact on the Company's earnings until 2005, when significant
homesite sales are planned to commence.
LNR's domestic real estate portfolio, including properties held in
unconsolidated partnerships, at quarter-end included approximately
6.5 million square feet of office, retail, industrial and
warehouse space, 0.3 million square feet of ground leases, 2,100
hotel rooms, and 11,000 apartments (9,500 in affordable housing
communities), either completed, under development or under
management. This compares with approximately 7.5 million square
feet of office, retail, industrial and warehouse space, 1.6
million square feet of ground leases, 2,100 hotel rooms, and
11,200 apartments (9,700 in affordable housing communities),
either completed, under development or under management twelve
months earlier. At November 30, 2003, LNR's wholly-owned
operating property portfolio, excluding $363.3 million of assets
undergoing development or repositioning and $56.9 million relating
to the affordable housing business, was yielding approximately
11.3% on net book cost.
Real Estate Loans
LNR's real estate loan business consists of lending in unique
high-yielding situations. Earnings before income taxes from real
estate loans were $12.9 million for the quarter ended November 30,
2003, compared to $11.1 million for the same period in 2002. This
increase was primarily due to higher interest income.
Interest income from real estate loans increased 26% to $13.1
million for the quarter ended November 30, 2003, from $10.4
million for the same period in 2002. This increase was primarily
due to a higher average level of loan investments, as well as
income in the fourth quarter of 2003 realized from the early
payoff of a loan investment that had a guaranteed return, partly
offset by the impact of lower interest rates on floating-rate
loans. Most of the Company's floating-rate interest is earned on
investments in structured junior participations in short-to-medium
term real estate loans.
During the fourth quarter, the Company funded four additional B-
note investments for $108.2 million and received $77.6 million
from the payment in full of three B-note investments. Subsequent
to the end of the fourth quarter, the Company funded three
additional B-notes for $116.5 million. Including these loans, the
total investments under the Company's B-note program will have a
face value of $559.5 million, a 47% increase over November 30,
2002.
Real Estate Securities
Earnings before income taxes from real estate securities were
$43.5 million for the quarter ended November 30, 2003, compared to
$32.4 million for the same period in 2002. This increase was
primarily due to higher gains on sales of securities and higher
management and servicing fee income, partly offset by lower
interest income.
As previously announced, during the third quarter of 2003, the
Company sold $420 million face amount of investment grade CMBS
through a resecuritization of non-investment grade CMBS
investments (LNR CDO 2003-1). LNR selected $703 million face
amount of non-investment grade bonds from its owned portfolio and
transferred those bonds to a qualified special purpose entity.
The Company committed to contribute up to $60 million face amount
of additional non-investment grade CMBS to the QSPE over a
nine-month period. The additional CMBS were identified and
transferred to the QSPE in September 2003. As a result of the
sale of the investment grade CMBS, the Company recognized a total
pre-tax gain of $47.7 million. Due to the timing of the purchase
of the $60 million of additional collateral, only $29.3 million of
this gain was recognized in the third quarter, and the remaining
$18.4 million was recognized in the fourth quarter. In 2002, a
pre-tax gain of $45.6 million was recognized on a similar
transaction, all in the third quarter.
Additionally, during the fourth quarter, the Company sold one
security originally purchased at a substantial discount, at just
under par, for a gain of $4.5 million. At the time of LNR's
original investment, this bond was subordinate to the B-rated
bonds in the transaction and senior to the unrated bonds, but did
not have a rating of its own from the rating agencies. Due to
the excellent performance of this securitization and LNR's efforts
as special servicer, the rating agencies upgraded all of the non-
investment grade rated bonds in the transaction to investment
grade. The bonds originally rated B are currently rated AAA and
A+ by Fitch and Standard & Poor's, respectively. LNR still owns
the unrated bonds in this transaction.
Management and servicing fee income increased to $8.5 million for
the quarter ended November 30, 2003, from $5.5 million for the
same period in 2002, primarily due to increased activity in the
Company's specially serviced portfolio.
Interest income from direct CMBS investments decreased to $18.4
million for the quarter ended November 30, 2003, from $32.5
million for the same period in 2002. This decrease was primarily
due to a lower average level of CMBS investments and lower overall
yields in the current year. The Company's annualized cash yield
on its fixed-rate CMBS portfolio is approximately 17%. The cash
yield on the unrated portion of this portfolio is approximately
29%.
During the quarter ended November 30, 2003, the Company acquired
$100.2 million face amount of non-investment grade fixed-rate CMBS
for $46.7 million. Subsequent to the end of the quarter, the
Company purchased or committed to purchase securities in eleven
additional CMBS transactions, two of which it already had an
investment in. In these transactions, the Company has acquired or
expects to acquire approximately $222.5 million face amount of
non-investment grade fixed-rate CMBS for approximately $102.6
million.
Assuming these transactions close as anticipated, the total face
amount of the Company's direct non-investment grade CMBS
investments will be approximately $2.4 billion with an amortized
cost of approximately $889 million. The rated portion of this
portfolio will be approximately $979 million of face value with an
amortized cost of approximately $597 million. The unrated portion
of this portfolio will be approximately $1.4 billion of face value
with an amortized cost of approximately $292 million.
With these new transactions, the Company will have an investment
in or be the special servicer for 128 CMBS pools with an aggregate
original face amount of approximately $114 billion, compared to
103 CMBS pools with an aggregate original face amount of $83
billion at November 30, 2002.
FISCAL YEAR PERFORMANCE
Real Estate Properties
For the year ended November 30, 2003, real estate property
earnings before income taxes were $113.7 million compared to $91.3
million for the same period in 2002.
Equity in earnings of unconsolidated partnerships increased to
$54.1 million for the year ended November 30, 2003, from $29.4
million for the same period in 2002. This increase was primarily
due to higher earnings from one partnership which is involved in
the development of approximately 585 acres of commercial and
residential land in Carlsbad, California. The partnership sold
75% of its interest in the land during the first quarter of 2003
for a gain. The increase was also partly due to higher earnings
from a partnership in Europe established in mid-2002 and from
Lennar Land Partners, a partnership owned 50% by LNR and 50% by
Lennar Corporation that is engaged in the acquisition, development
and sale of land.
Gains on sales of real estate property assets increased to $60.3
million for the year ended November 30, 2003 (including $43.6
million characterized as earnings from discontinued operations),
from $51.5 million for the same period in 2002, reflecting a
higher level of property sales activity in 2003.
Net rents decreased to $48.1 million for the year ended
November 30, 2003, from $56.6 million for the same period in 2002,
as the Company's stabilized property holdings were reduced since
the prior year.
General and administrative expenses related to real estate
properties increased to $30.4 million for the year ended
November 30, 2003, from $26.9 million for the same period in 2002.
This increase was primarily due to the start-up of the Company's
European property operations and to increased personnel and out-
of-pocket expenses related to overall growth in the
development/repositioning portfolio.
During the third quarter of 2003, the Company received a $24.0
million lease termination fee from a tenant that had originally
leased 100% of one of its office buildings for ten years.
Approximately $8.9 million of that fee was a recovery of
capitalized and deferred costs associated with the lease. The
remaining $15.1 million was recorded as other income, while a
$15.1 million impairment charge was recorded to reflect the
current market value of the building without the tenant. The
transaction had no impact on pre-tax earnings. The Company plans
to re-lease the building in the future.
Real Estate Loans
For the year ended November 30, 2003, real estate loan earnings
before income taxes were $47.5 million compared to $39.2 million
for the same period in 2002.
Interest income increased to $49.4 million for the year ended
November 30, 2003, from $39.6 million for the same period in 2002.
This increase was primarily due to a higher average level of loan
investments, as well as income in 2003 realized from the early
payoff of several loan investments, one that had a guaranteed
return and others purchased at discounts. This increase was partly
offset by the impact of lower interest rates on floating-rate
loans.
Real Estate Securities
For the year ended November 30, 2003, real estate securities
earnings before income taxes were $167.9 million compared to
$204.6 million for the same period in 2002.
Interest income decreased to $107.3 million for the year ended
November 30, 2003, from $139.7 million for the same period in
2002. This decrease was primarily due to lower overall yields in
the current year and the early collection of purchase discounts in
the prior year due to prepayments on seasoned transactions, offset
in part by a higher average level of CMBS investments.
Equity in earnings of unconsolidated partnerships decreased $15.3
million for the year ended November 30, 2003, compared to the same
period in 2002. The decline in earnings was primarily due to
reduced income from the Madison Square joint venture because of
lower interest income resulting from the timing and amount of
expected principal collections related to short-term floating-rate
securities owned by the venture. At the end of the year, the
Company's 25.8% investment in Madison, which owned $1.2 billion
face amount of CMBS at November 30, 2003, was $81.8 million. The
Company has received $163.7 million in cash distributions and fees
from Madison since its inception on an original investment of
$90.1 million.
Management and servicing fee income increased to $35.7 million for
the year ended November 30, 2003, from $26.6 million for the same
period in 2002, primarily due to increased activity in the
Company's specially serviced portfolio.
For the year ended November 30, 2003, gains on sales of securities
were $52.7 million, compared to $47.2 million for the same period
in 2002. This increase was partly due to the $4.5 million gain
recognized in the fourth quarter of 2003 from one security
originally purchased at a substantial discount and sold at just
under par and partly due to a higher gain recognized on the
resecuritization transaction completed during 2003 compared to the
resecuritization transaction completed during 2002.
FINANCING AND CAPITAL STRUCTURE
During the fourth quarter, the Company issued $400 million
principal amount of 7.25% senior subordinated notes due 2013 and
completed a tender offer to purchase the Company's outstanding
$250 million 10.5% senior subordinated notes due 2009. The
proceeds from the sale of the 7.25% notes were used to retire $205
million principal amount of the 10.5% notes at a premium,
including $73 million tendered in response to the Company's tender
offer and $132 million purchased in the open market, to reduce
senior secured debt and to redeem the $45 million principal amount
of 10.5% notes that were not either tendered or purchased by the
Company when they become callable in January 2004. Primarily as a
result of the retirement of the 10.5% notes at a premium, the
Company recorded a pre-tax charge of $18.3 million to earnings
from continuing operations during the quarter ended November 30,
2003, which is included in the "Corporate and Interest" segment.
The Company expects to report an additional charge of $3.4 million
in the first quarter of 2004 with regard to the redemption of the
remaining 10.5% notes at a premium in January 2004.
During the year ending November 30, 2003, the Company issued a
total of $985 million principal amount of senior subordinated
notes. Of the total amount, $235 million was of 5.5% convertible
notes due 2023, $350 million was of 7.625% notes due 2013, and
$400 million was the 7.25% notes discussed above. The proceeds
from these issuances were used to retire higher coupon, senior
subordinated notes with earlier maturities, to purchase Company
stock, to pay down senior secured and unsecured debt, most of
which can be re-borrowed, and for general corporate purposes. The
retirement of outstanding notes resulted in a charge to pre-tax
earnings for the year of $28.7 million.
At November 30, 2003, the Company's available liquidity was at
$2.0 billion, the highest level of liquidity it has ever reported.
Additionally, at November 30, 2003, the weighted average maturity
of the Company's debt portfolio was at its highest level ever and
only 2% of the Company's debt was scheduled to mature over the
next twelve months.
In order to minimize the effects of interest rate risk, the
Company has continued its efforts to maintain a highly match-
funded balance sheet. At November 30, 2003, 76% of its debt was
fixed-rate, 13% was floating-rate but had been swapped to fixed-
rate and 3% was match-funded against floating-rate assets. After
considering the floating-rate debt that had been swapped or was
match-funded, only 8% of the Company's total debt remained
floating-rate. Because floating-rate assets exceeded floating-rate
debt, a 100 basis point increase in LIBOR would increase net
earnings by $2.6 million, or $0.08 per share diluted.
Interest expense increased by 3% and 9% for the quarter and year
ended November 30, 2003, respectively, compared to the same
periods in the prior year. For the quarter, the increase was due
to slightly higher average interest rates, partly offset by a
slight decrease in average debt balances. For the year, the
increase was due to higher average debt balances, partly offset by
slightly lower average interest rates. The weighted average
interest rate on outstanding debt was 6.5% at November 30, 2003,
compared to 6.1% at November 30, 2002.
The Company continues to believe that the assets on its balance
sheet are conservatively stated relative to fair values. At
November 30, 2003, based on internal estimates, asset fair values
exceeded their amortized book cost by approximately $463 million.
This includes approximately $349 million of excess value that is
not reflected on the balance sheet and relates primarily to the
real estate property segment. The remainder represents
approximately $114 million of estimated fair value in excess of
amortized cost related to the available-for-sale CMBS portfolio,
which is reflected on the balance sheet, but most of which has not
yet been reflected in earnings. After considering this excess
value, the Company believes its net asset value per share is over
$43 at November 30, 2003.
At the end of the quarter, the Company was operating at a 1.27:1
net debt to book equity ratio and at a 1.04:1 net debt to equity
ratio, if book equity is adjusted to reflect the estimated fair
market value in excess of what is on the balance sheet.
As previously reported, Standard & Poor's Ratings Services
assigned its 'B+' senior subordinated debt rating to Miami Beach,
Florida-based LNR Property Corp.'s proposed issuance of $350
million, 10-year senior subordinated notes to be issued pursuant
to Rule 144A under the Securities Act of 1933, as amended.
The ratings on LNR, including the company's 'BB' long-term
counterparty credit rating, have been affirmed. The outlook
remains stable.
LTV STEEL: Court Allows Payment of $2.4MM Admin Severance Claims
----------------------------------------------------------------
The LTV Steel Company, Inc., obtained the U.S. Bankruptcy Court
Justice Bodoh's authority to:
(1) allow the severance claims of former Salaried
Employees as administrative expense claims against
LTV Steel's estate; and
(2) disallow any other administrative expense claims for
severance pay that any of these Salaried Employees
may have filed or otherwise asserted.
LTV Steel anticipates paying $2,417,209 in aggregate termination
claims, with most individual claims being less than $2,000 each.
(LTV Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MAGELLAN HEALTH: Clarifies and Corrects Certain Info re Workout
---------------------------------------------------------------
Magellan Health Services, Inc., (Nasdaq:MGLN) clarified and
corrected certain information regarding the transactions resulting
from its emergence from Chapter 11 bankruptcy as previously
disclosed on January 5, 2004.
The Company reiterated the change in the number of shares of
common stock that were issued under its plan of reorganization and
the effect such increase had on certain per share prices. As
previously disclosed, the Company was authorized in connection
with implementing the plan to increase the number of shares to be
issued pursuant to the plan to all parties proportionally. The
Company increased the number of shares by 2.3 times the number
stated in its plan, with the same effect as if the Company had
effected a 2.3 stock split. All share amounts and per share prices
were accordingly adjusted proportionally.
The effect of the stock split on some of the key components of the
plan of reorganization was as follows:
Post-Split
(as issued)
Equity Value per Share as Set Forth in the
Disclosure Statement $9.39 to $11.57
Shares issued to Subordinated Note Holders 20,518,830
(including 858,967 shares that elected
Cash-Out Option)
Price Paid by Onex for Shares Purchased
Pursuant to Investment Commitment $12.39
Price Paid by Onex for Shares Purchased
to Fund Cash-Out Election $ 9.78
Price Paid by Creditors and Onex to Purchase
Shares in Equity Offering $12.39
Total Shares Purchased by Onex 8,415,580
Total Shares Issued and Outstanding 35,356,537
(including approximately 0.5 million
shares being held pending the resolution
of certain disputed claims in the
bankruptcy)
The Company also said it had entered into documents clarifying the
terms of the warrants to purchase shares of its Ordinary Common
Stock that it issued to the former holders of the common stock and
the Series A Redeemable Preferred Stock of Magellan in connection
with the consummation of the Chapter 11 in order to reflect
correctly the stock split. The exercise price of the warrants was
corrected so as to equal $30.46 (rather than $30.20 as previously
announced), as required to give proper effect to the stock split.
Pursuant to a Warrant Agreement entered into on January 5, 2004,
warrants to purchase a total of 570,826 shares of Magellan's
Ordinary Common Stock were issued to the former holders of common
stock and Series A Redeemable Preferred Stock of Magellan as
provided by the plan of reorganization. The Warrants are
exercisable until January 5, 2011. The plan calls for such
warrants to be issued at an exercise price determined by a formula
which varies with the number of shares issued to other parties in
accordance with the plan. The stock split made in connection with
the implementation of the plan affected the exercise price of the
warrants. A clerical error was made in the calculation of the
exercise price applicable to the warrants after giving effect to
this adjustment and the exercise price included in the Warrant
Agreement and announced to be applicable to the warrants in the
Company's January 5 press release and Form 8-K Current Report was
incorrectly stated to be $30.20. The exercise price required by
the plan, giving correct effect to the adjustment, was $30.46. In
order to conform to this requirement and as permitted by the
Warrant Agreement, Magellan has entered into corrective documents
providing that the exercise price of the warrants is $30.46. No
other terms of the Warrants were changed.
Magellan Health Services is headquartered in Columbia, Maryland,
and is the leading behavioral managed healthcare organization in
the United States. Its customers include health plans,
corporations and government agencies. The Company filed for
chapter 11 protection on March 11, 2003, and confirmed its Third
Amended Plan on October 8, 2003. Under the Third Amended Plan,
nearly $600 million of debt will drop from the Company's balance
sheet and Onex Corporation will invest more than $100 million in
new equity.
MCCLENDON TRUCKING: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Glenn McClendon Trucking Co., Inc.
aka McClendon Trucking Co.
121 S. LaFayette Street
LaFayette, Alabama 36862
Bankruptcy Case No.: 04-80022
Type of Business: The Debtor is a leading Eastern U.S. carrier
with emphasis on time sensitive transportation
services, dedicated equipment, and a full range
of Logistics capabilities. See
http://www.mccl.com/for more information
Chapter 11 Petition Date: January 7, 2004
Court: Middle District of Alabama (Opelika)
Judge: William R. Sawyer
Debtor's Counsel: Charles-LH Parnell, Esq.
Parnell & Crum, P.A.
P.O. Box 2189
Montgomery, Alabama 36102
Tel: 832-4200
Total Assets: $8,200,000
Total Debts: $13,000,000
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Navistar Financial $936,000
2850 West Golf Road
rolling Meadows, IL 60008
Internal Revenue Service $810,286
1285 Carmichael Way
Montgomery, AL 36106
Farmers & Merchants Bank $657,976
P.O. Box 128
LaFayette, AL 36862
State of Tennessee $382,166
500 Deaderick Street
Nashville, TN 37242
Steward, Sneed, Hewes $189,915
EVE Partners, LLC $175,429
Frontier Bank $175,000
Bridgestone $113,818
Comdata $107,568
Pilot Fuel $75,239
Robinson Grimes $53,350
Multimedia/Trippak $49,038
Qualcom $41,930
Palomar $27,008
AFLC $18,764
Superior Tire $16,312
Kentucky State Treasurer $12,163
The St. Paul $9,209
Evergreen Transportation $8,511
Deltacom $6,242
MCLEMORE DEV'T: Pursuing Litigation Filed by "Duped" Home Buyer
---------------------------------------------------------------
Debtors Sam McLemore and Ann McLemore dba McLemore Development Co.
(Bankr. Case No. 02-13652) ask the United States Bankruptcy Court
for the Western District of Tennesseeto lift the automatic stay to
allow a lawsuit pending before the Madison County Circuit Court to
continue.
Doctors Gina and Stephen Johnston of Jackson, Tennessee, filed the
Circuit Court lawsuit against the McLemores on May 7, 2002, and an
amended complaint on June 7, 2002, alleging that they purchased a
home from the Debtors in June 1999, for $366,000; only to discover
shortly thereafter that the property was subject to severe
flooding.
Believing that the Debtors knew about the flooding problem at the
time of the sale, the Johnstons allege in their complaint that the
McLemores are liable for negligent and intentional
misrepresentation, breach of contract, breach of warranty and
violation of the Tennessee Consumer Protection Act. The Johnstons
ask for compensatory damages, treble damages pursuant to the
Tennessee Consumer Protection Act, punitive damages and a trial by
jury.
Attorney Timothy B. Latimer, Jackson, Tennessee, represents
McLemore Debtors.
The Debtors filed for Chapter 11 bankruptcy relief on August 14,
2002. The Johnstons filed a $366,000 claim in the case on
November 15, 2002. On December 10, 2002, the Johnstons filed an
adversary proceeding in the Bankruptcy Court claiming that the
Debtors' failure to disclose the severe flooding problem amounted
to a willful, malicious injury which is non-dischargeable under 11
U.S.C. section 523(a)(6). The adversary complaint asks the
Bankruptcy Court for a non-dischargeable judgment in the amount of
$366,000 plus interest from June 1999, the date they purchased
their home from the Debtors. The Debtors filed an Answer on
January 8, 2003.
When the Debtors, on February 28, 2003, filed their Motion to Lift
the Automatic Stay so that they might proceed with the Madison
County Circuit Court lawsuit, the Johnstons filed an objection to
the Debtors' motion on March 28, 2003. Judge Boswell, on April 2,
2003, conducted a hearing on the Debtors' Motion to Lift the
Automatic Stay and the Johnstons' Objection to Debtors' Motion.
Judge Boswell Reviews The Doctrine of Abstention:
Abstaining From Exercise Of Jurisdiction
The decision of whether or not to lift the automatic stay in this
case, the Honorable G. Harvey Boswell writes in his Memorandum
Opinion, hinges on the issue of abstention. There are two types
of abstention: permissive and mandatory. 28 U.S.C. section 1334
(c). If, "in the interest of justice, or in the interest of
comity with state courts or respect for state law," a bankruptcy
court wishes to abstain from hearing a core or non-core
proceeding, it may do so and decline to exercise its jurisdiction.
28 U.S.C. section 1334 (c) (1) (permissive abstention). See In
re Best Reception Systems, Inc., 220 B.R. 932, 952 (Bankr. E.D.
Tenn. 1998).
If, on the other hand, certain other factors are present:
(1) a party makes a timely motion;
(2) the proceeding is based on a state law claim or cause of
action;
(3) the proceeding is a non-core proceeding;
(4) an action on the claim or cause of action could not have
been brought in federal court absent the bankruptcy case;
(5) the action is commenced in the state court; and
(6) the action can be timely adjudicated in the state court,
then the bankruptcy court must abstain from exercising
jurisdiction over a particular proceeding. 28 U.S.C. Sec. 1334
(c)(2) (mandatory abstention).
There is no disputing that the adversary proceeding filed by the
Johnstons is a core proceeding, says Judge Boswell. As a result,
the Court may abstain from hearing the matter only if it finds
that permissive abstention is proper. The decision to abstain,
upon such a finding, is within the discretion of the bankruptcy
judge, writes Judge Boswell. In considering whether or not
permissive abstention is appropriate in a given matter, these are
some of the factors, among others, to be considered:
(a) the effect on the efficient administration of the estate
if the judge recommends abstention;
(b) the extent to which state law issues predominate over
bankruptcy issues;
(c) the presence of a related proceeding commenced in state
court or other nonbankruptcy court;
(d) the degree of relatedness or remoteness of the proceeding
to the main bankruptcy case;
(e) the substance rather than form of the asserted core
bankruptcy case;
(f) the existence of a right to jury trial; and
(g) the feasibility of severing state law claims from core
bankruptcy matters to allow judgments to be entered in
state court with enforcement left to the bankruptcy
court.
Best Reception Systems Inc., 220 B.R. at 953.
Judge Boswell finds that in examining the instant case, several
factors are found which lead to the conclusion that abstention is
appropriate as to the adversary proceeding brought by the
Johnstons:
First, there are five other parties named as defendants in the
Johnstons' state court complaint.
Secondly, the circuit court lawsuit was filed three months prior
to the filing of the bankruptcy case.
Thirdly, the debtors' liability in relation to the Johnstons'
claim is not a federal question nor is there any basis for
diversity jurisdiction. Therefore, there is no independent basis
for federal jurisdiction absent the chapter 11 case.
Fourthly, the Johnstons have made a jury demand in their circuit
court complaint. While bankruptcy courts have the authority to
conduct jury trials, surely the Madison County Circuit Court, says
Judge Boswell, is better suited for a jury trial on a state law
cause of action.
Finally, and most importantly, while it is true that only a
bankruptcy court may determine the dischargeability of a claim
under 11 U.S.C. section 523 (a) (6), the initial determination of
liability and damages is not within the exclusive jurisdiction of
the bankruptcy court. 11 U.S.C. section 523 (c) (1).
"Where a claim asserted against an estate involves legal issues in
which state law predominates, a claim can be litigated in state
court to the point of judgment, with enforcement of the judgment
stayed until further order of the bankruptcy court." Best
Reception Systems Inc., 220 B.R. at 955. See also Moore v.
Pagano, 85 B.R. 56, 60 (Bankr. S.D. Ohio 1988). ("This court has
exclusive jurisdiction to determine the dischargeability of the
debt in this case. However, the question of the damages which
will comprise the amount of debt is another matter.").
Judge Boswell concludes that as a result of these factors, the
Debtors' Motion to Lift the Automatic Stay is granted in part to
permit the litigation to proceed in the Circuit Court for Madison
County, Tennessee, to the point of determining liability and
damages.
Judge Boswell also concludes that the Debtors' Motion to Lift the
Automatic Stay is denied in part insofar as enforcement of any
judgment obtained against the Debtors will be stayed until further
order of this Court.
Judge Boswell also rules that the Johnstons' Objection to the
Motion to Lift the Automatic Stay is overruled in part insofar as
the Debtors will be allowed to continue with the state proceeding;
however, the Johnston's Objection to the Debtors' Motion is
granted to the extent that enforcement of the state court's
judgment will be stayed until further order of the Bankruptcy
Court, in that Judge Boswell finds, in his Opinion, that
dischargeability of debt is the exclusive province of the
Bankruptcy Court.
MCMORAN EXPLORATION: Provides Gulf of Mexico Activity Updates
-------------------------------------------------------------
McMoRan Exploration Co. (NYSE:MMR) announced that in an investor
conference being held Tuesday last week, Richard C. Adkerson,
Co-Chairman, President and CEO of McMoRan, provided an update on
the company's Gulf of Mexico drilling activities and discuss its
proposed Main Pass Energy Hub(TM) offshore LNG project.
McMoRan announced that drilling has commenced at its Dawson Deep
prospect at Garden Banks Block 625. The exploration well, which
spud on December 12, 2003, has been drilled to 20,500 feet where
casing has been set. Drilling will continue to a measured depth of
23,700 feet (a true vertical depth of 22,000 feet) to test the
deep exploration objectives. McMoRan has an arrangement with a
privately owned company whereby such company is participating in a
20 percent working interest (40 percent of McMoRan's 50 percent
interest). As a result, McMoRan owns a 30 percent working interest
and a 24 percent net revenue interest in the well.
Kerr-McGee Oil & Gas Corporation (NYSE:KMG) operates Dawson Deep
and owns a 25 percent working interest. Nexen Petroleum Offshore
U.S.A. Inc. (NYSE:NXY) owns a 15 percent working interest and Cal
Dive International, Inc. (NASDAQ:CDIS) owns the remaining 10
percent interest. The Dawson Deep prospect is located on a 5,760
acre block adjacent to the recently commissioned Gunnison spar
facility which achieved first production in December 2003 and is
located approximately 150 miles offshore Texas in over 2,900 feet
of water.
McMoRan plans to conduct an active exploration program during 2004
and is in discussions with potential investors regarding a program
targeting deep gas prospects on the shelf of the Gulf of Mexico,
where McMoRan has substantial experience and a large exploration
acreage position. The new program would target deep gas prospects
in the shallow waters of the Gulf of Mexico outside McMoRan's
rights in the JB Mountain/Mound Point area discussed below.
McMoRan's current inventory includes 17 prospects outside the JB
Mountain/Mound Point area and McMoRan plans to spud at least three
of these exploration prospects in the first quarter of 2004. The
three prospects include the Deep Lombardi prospect at Vermilion
Block 208, the Deep Tern prospect at Eugene Island Block 193, and
the Phoenix prospect at Eugene Island Block 212/213. McMoRan has a
commitment from a partner to participate in these prospects and
arrangements with other participants are being completed.
JB Mountain/Mound Point Area:
McMoRan also announced today a successful production test on the
South Marsh Island Block 223 #219 development well, which was
drilled to a total depth of 22,375 feet. The five hour production
test had an initial flow rate of 20.3 million cubic feet of gas
per day, 1,116 barrels of condensate per day, (approximately 27
million cubic feet of gas equivalent per day) and 0 barrels of
water on a 20/64ths choke. Flowing tubing pressure was
approximately 10,767 pounds per square inch at the end of the test
period and 13,106 pounds per square inch shut-in tubing pressure.
Initial production is expected in the first quarter of 2004.
The South Marsh Island Block 223 #221 ("JB Mountain No. 3") well
commenced drilling on December 15, 2003. This development well,
which is drilling below 10,800 feet, has a proposed total depth of
21,000 feet and is located approximately one mile south of the
original JB Mountain discovery well.
The JB Mountain and Mound Point deep-gas prospects are located in
shallow water depths in an area where McMoRan has rights to an
approximate 80,000-acre area and is a participant in an
exploration program which includes portions of OCS 310 and
portions of the adjoining Louisiana State Lease 340. The program
currently owns a 55 percent working interest and a 38.8 percent
net revenue interest in the JB Mountain prospect and a 30.4
percent working interest and a 21.6 percent net revenue interest
in the Mound Point Offset prospect. As previously reported, under
terms of the program, the operator is committed to fund all of the
costs attributable to McMoRan's interests in the JB Mountain and
Mound Point prospects and will own all of the program's interests
until the program's aggregate production from the prospects totals
100 billion cubic feet of gas equivalent (Bcfe) attributable to
the program's net revenue interest, at which point 50 percent of
the program's interests would revert to McMoRan.
McMoRan also announced that the Hurricane exploratory well at
South Marsh Island Block 217 has been drilled to a total depth of
20,224 feet. Wireline logs have indicated the presence of
potential hydrocarbon accumulations. The operator is preparing to
conduct a production flow test on this well. As previously
announced, the Hurricane well is located approximately two miles
northwest of the JB Mountain discovery well. McMoRan's net revenue
interest in the well approximates 19.4 percent. McMoRan would
participate in any production from this well immediately as it is
not subject to the production sharing arrangement with its
exploration program partner. McMoRan and its partners intend to
use the data from this well to evaluate additional drilling at the
Hurricane prospect.
Main Pass Energy Hub(TM) Project:
McMoRan continues to progress the establishment of an offshore
energy hub at Main Pass Block 299 in the Gulf of Mexico to
receive, process, store and distribute LNG and natural gas.
Advantages of the Main Pass facility include its close proximity
to shipping channels and pipelines, significant storage capacity
in its two-mile diameter salt dome, timing of construction and
operating cost advantages over other proposed projects. In
addition, the offshore location of the terminal would serve to
mitigate the security, safety and environmental issues faced by
onshore facilities.
McMoRan has completed conceptual engineering for the project and
intends to file a license application with the U.S. Coast Guard in
the first quarter of 2004. There is significant interest regarding
supply and distribution for the project and McMoRan is advancing
commercial arrangements in parallel with the permitting process.
McMoRan Exploration Co. is an independent public company engaged
in the exploration, development and production of oil and natural
gas offshore in the Gulf of Mexico and onshore in the Gulf Coast
area. Additional information about McMoRan is available at
http://www.mcmoran.com/
At September 30, 2003, McMoRan Exploration's balance sheet shows a
total shareholders' equity deficit of about $65 million.
MIRANT CORP: Brazos Has Until March 31 to File Proof of Claim
-------------------------------------------------------------
On September 2, 2003, the Mirant Debtors sought to reject the
Power Purchase and Exchange, Facilities Operation and Maintenance
and Fuel Supply Agreement dated October 8, 1998 and the Settlement
Agreement dated June 28, 2002 with Brazos Electric Power
Cooperative, Inc., The Brazos Contracts were deemed rejected on
October 1, 2003.
The Rejection Order provides that, to meet part of Brazos' load
requirements, Brazos and Mirant entered into a Tolling Agreement,
pursuant to which Mirant agreed to convert fuel provided by
Brazos into electricity for delivery to Brazos. The Tolling
Agreement will expire on December 31, 2003.
The Debtors' General Bar Date is December 16, 2003. However,
Brazos' contract rejection claim will not be liquidated on the
December 16, 2003 Bar Date. The true-up procedures under the
Tolling Agreement will take 60 to 75 days after the December 31,
2003 termination.
Accordingly, through a Court-approved Stipulation, the Debtors
and Brazos agree to extend the Bar Date as to Brazos until
March 31, 2004 at 5:00 p.m. (Mirant Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NAT'L CENTURY: Board Finds Disclosure Statement Info. Inadequate
----------------------------------------------------------------
While the Second Disclosure Statement and the Second Amended
Joint Plan of Liquidation substantively consolidate all of the
entities and their assets and liabilities, the Board of Directors
of National Century Financial Enterprises, Inc. notes that no
legal reason or justification or rationale is given.
NCFE, Inc. is a corporation created and existing under the laws
of the State of Ohio. Glen Ayers, Jr., Esq., at Langley &
Banack, Incorporated, in San Antonio, Texas, maintains that there
is no evidence that NCFE failed to maintain its corporate
existence under the laws of its state of incorporation. Further,
there is no evidence that NCFE is the alter ego of any of the
affiliates and subsidiaries or that there is any other factual
basis, which justifies substantive consolidation of NCFE and the
other affiliates. No evidence is offered that the assets and
liabilities of NCFE and its subsidiaries are co-mingled,
intertwined or anything else. No evidence or even argument is
made that NCFE should be consolidated with two bankruptcy remote
subsidiaries, NPF VI and NPF XII.
The Board asserts that claims against NCFE, including secured,
priority, and unsecured claims should not exceed $25,000,000.
This sum includes estimates of some unliquidated claims but does
not include claims made on the basis of tort or fraud against the
parent by any of the entities whose bankruptcy cases are being
administered jointly with that of NCFE.
NCFE's assets certainly exceed $30,000,000 and may exceed
$100,000,000. Again, while third parties may hold unliquidated
claims against NCFE, it is possible that NCFE's general unsecured
creditors could and should receive a dividend of 100% of claim
plus interest. In fact, there should be substantial
distributions to stockholders in Classes A, B and C, including
the employee stock plan.
The other entities, whose cases are being administered with the
NCFE case, and third parties, may assert claims against one or
more of the stockholders in one or more of the classes.
Mr. Ayers notes that the Plan does nothing more than aggregate
the assets of all of the entities and propose a distribution
scheme beginning with priority claims, including the
extraordinary administrative claims incurred by the professionals
naming and representing the Debtors.
The Board also determines that the Disclosure Statement as
presented is all but incomprehensible. According to Mr. Ayers,
the language, sentence structure, and content are such that
almost no creditor reading the Disclosure Statement could
possibly make an informed decision. The use of long complex
sentences in almost every paragraph makes the Disclosure
Statement difficult to read and almost impossible to comprehend.
The Board believes that there are only two viable alternatives to
the Plan:
(1) conversion of the case to one under Chapter 7; or
(2) a simple liquidating Plan for NCFE, administered by a
professional liquidating agent.
Mr. Ayers points out that either alternative is cheap and
efficient. The Board intends to seek for conversion or in the
alternative, for permission to file its own competing Plan. Mr.
Ayers contends that the only consideration for the Court between
the Plan and the conversion or stand-alone liquidation should be
costs and recovery maximization.
Accordingly, the NCFE Board asks the Court not to approve the
Disclosure Statement. (National Century Bankruptcy News, Issue No.
29; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NAVIGATOR GAS: Court Clears Dickinson Cruickshank's Engagement
--------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 cases involving Navigator Gas Transport PLC, and its
debtor-affiliates, sought and obtained approval from the U.S.
Bankruptcy Court for the Southern District of New York to retain
Dickinson, Cruickshank & Co. as foreign counsel, nunc pro tunc to
October 29, 2003.
On October 29, 2003, the Court terminated the Debtors' exclusivity
period, granting the Committee the opportunity to file a competing
plan of reorganization. The Committee selected Dickinson
Cruickshank as its Isle of Man counsel based on the firm's
expertise in Manx law and its familiarity with the matters
involving the Debtors. This familiarity was gained in the course
of the firm's engagement by the Unofficial Committee of
Noteholders that functioned prior to the Petition Date.
As Foreign Counsel, Dickinson Cruickshank will provide advice
regarding Manx law as the law may be implicated by the Debtors'
reorganization under the Committee's proposed plan; and will
prepare amended corporate documents for the reorganized debtors.
Dickinson Cruickshank will seek compensation from the Debtors'
estates for services rendered to the Creditors' Committee based on
its customary hourly rates. Said rates are:
Professionals: Hourly Rates
-------------- ------------
Partners $500 - $584 (GBP300- œ350)
Senior Associates $417 (GBP250)
Junior Associates $334 (GBP200)
Trainee Advocates $250 (GBP150)
The rates are generally adjusted on an annual basis. Dickinson
Cruickshank will also charge the Debtors' estates for
miscellaneous expenses. The firm will file interim and final
applications for compensation.
A core team from Dickinson Cruickshank will have primary
responsibility for representing the Creditors' Committee. They
are:
* Simon Cain - Partner, 10 years qualified
$584 (GBP350) per hour
* Nicholas Verardi - Partner, 9 years qualified
$584 (GBP350) per hour
* Joanne Kelly - Senior Associate, 6 years qualified
$417 (GBP250) per hour
* Kyle Sutherland - Junior Associate, Newly qualified
$334 (GBP200) per hour
Nicholas Brian Achille Verardi, Esq., a partner at Dickinson
Cruickshank assures the Court that the firm has no connection to
the Debtors and is a disinterested person within the meaning of
Section 101(14) of the Bankruptcy Code.
Navigator Gas Transport PLC's business consists of the transport
by sea of liquefied petroleum gases and petrochemical gases
between ports throughout the world. The Company filed for chapter
11 protection on January 27, 2003, (Bankr. S.D.N.Y. Case No. 03-
10471). Adam L. Shiff, Esq., at Kasowitz, Benson, Torres &
Friedman LLP represents the Debtors in their restructuring
efforts. When the Company filed for protection from its
creditors, it listed $197,243,082 in assets and $384,314,744 in
liabilities.
NDCHEALTH: Reports Drop in Q2 Results after Restructuring Charge
----------------------------------------------------------------
NDCHealth Corporation (NYSE: NDC) announced financial results for
its second quarter ended November 28, 2003. Revenue increased to
$115.2 million from $105.3 million in the second quarter of fiscal
2003.
Net income in the second quarter of fiscal 2004 was $8.7 million,
or $0.25 per diluted per share, compared with net income of $12.7
million, or $0.36 per diluted share, in the same quarter of fiscal
2003. As previously disclosed, the fiscal 2004 second quarter
results included a restructuring charge of $2.5 million, or $0.04
per diluted share primarily related to organizational
consolidation. The First Call consensus analyst expectation was
$0.27, but does not include the $0.04 restructuring charge.
For the six-month period ended November 28, 2003, net cash
provided by operating activities grew to $54.6 million from the
$40.6 million reported in the same period of fiscal 2003.
As expected, net income and earnings per share results in the
second quarter of fiscal 2004 were reduced by increased interest
expense related to the company's debt refinancing completed in
November 2002 and a step up in corporate and other costs
previously disclosed in its fiscal 2003 year-end report. On
December 19, 2003, NDCHealth completed the renegotiation of its
$225 million Credit Facility, which increases the company's
financial flexibility and will lower its future net interest
expense by approximately $525,000 per quarter. This reduction is
before any loan prepayments the company may make in future
periods.
"We delivered another solid quarter of progress in executing
against our eight quarter plan, highlighted by consistent growth
in revenue and net cash from operating activities," commented
Walter Hoff, chairman and chief executive officer, NDCHealth.
"Our strategy of selling solutions to increase our revenue per
claim by improving customer cash flow and profitability is
working. Our sales to hospitals have increased dramatically, and
we are continuing to pursue a number of pharmacy solution sales,
which lead us to believe we will achieve our goals and objectives
in the second half of fiscal 2004.
"We also experienced strong growth in our German Information
Management business during the quarter, and were successful in
selling additional base compensation and targeting and our new
Insight and Impact solutions domestically. In addition, our
Physician product sales showed good sequential growth, physician
claims transactions increased and electronic prescription volume
continues to rise," Mr. Hoff continued. "We remain focused on
delivering new products and services that create value for our
customers and generate additional revenue streams in both of our
business segments, as well as controlling our corporate costs and
leveraging the scale of our largely fixed cost infrastructure to
drive a sustainable trend in margin improvement."
Based on the company's first half results and its current outlook,
management's financial guidance is unchanged for fiscal 2004.
Full-year revenue is estimated to be approximately $475 to $490
million, and NDCHealth will continue to be a strong generator of
cash, with net cash provided by operating activities expected to
be in the range of $105 to $115 million for the current fiscal
year. In addition, management estimates that diluted earnings per
share will be in the range of $1.08 to $1.25, including the first
half restructuring charges of $0.07 per diluted share but
excluding the impact of lower interest expense and any additional
restructuring charges that may occur in the second half of fiscal
2004.
For additional information on NDCHealth's strategies and financial
and business outlook, please refer to the Current Report on Form
8-K, Quarterly Report on Form 10-Q and the company's Annual Report
on Form 10-K/A filed with the Securities and Exchange Commission
(SEC), which can be accessed from the Investor Relations page, SEC
Filings section of the company's Web site at
http://www.ndchealth.com/
NDCHealth (S&P, BB- Corporate Credit Rating, Stable) is a leading
provider of health information solutions to pharmacy, hospital,
physician, pharmaceutical and payer business. For more
information, visit http://www.ndchealth.com/
NORTHWEST AIRLINES: Initiates Mesaba Re-Accommodation Policy
------------------------------------------------------------
Northwest Airlines (Nasdaq: NWAC) announced a re-accommodation
policy for passengers holding tickets for travel on Mesaba
Aviation, Inc., a Northwest Airlines Airlink partner. This policy
has been developed in the event of a Jan. 10, 2004 strike by
Mesaba pilots.
The current re-accommodation policies are:
-- Applicable to tickets already issued (as of Jan. 7, 2004)
for travel on Mesaba-operated flights.
-- Tickets must be for travel between Jan. 9-17, 2004.
-- No change fees for eligible tickets.
-- Customers can re-book to fly between Jan. 7, 2004 (today)
and Feb. 9, 2004.
-- Customers may re-book on any Northwest Airlines or Pinnacle
Airlines-operated flight or change their travel from the
Mesaba flight to a flight leaving from any Northwest
Airlines hub or Northwest Airlines airport within 300 miles
of the original point of departure.
-- The class for the seat originally purchased must be
available in order for re-booking to occur.
-- Minimum and maximum stay restrictions must be met.
-- Customers who wish to make changes to tickets issued for
travel beyond Feb. 9, 2004 must pay any difference in
fares. However, any change fee will be waived.
Northwest also said that unaccompanied minors will not be booked
on any Mesaba-operated flights set to depart between Jan. 9-31,
2004.
Additional re-accommodation policies may be put into effect as
early as Jan. 10.
Passengers who wish to re-book their flights or obtain information
on re-accommodation may do so by calling Northwest Airlines
reservations at 1-800-225-2525 or by contacting their travel
agent.
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.com/for more
information on the Company.
NOVA CHEMICALS: S&P Affirms BB+ L-T Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Calgary,
Alta.-based Nova Chemicals Corp. to negative from stable. At the
same time, the ratings outstanding on Nova, including the 'BB+'
long-term corporate credit rating, were affirmed.
The outlook revision follows Nova's announcement that it expects
to refinance US$383 million in preferred securities outstanding
with medium-term notes. Standard & Poor's views the move as
increasing the effective leverage of Nova, given that partial
equity credit had previously been given to the preferred
securities. The preferred securities featured very long-term
maturity dates and contained some allowance for dividend payment
deferral, which were viewed as providing some enhancement to
Nova's financial flexibility. Importantly, the completion of this
transaction is counter to the ratings expectation that anticipates
a consistent commitment to the restoration of the financial
profile during the recovery portion of the petrochemical cycle.
The credit impact is partially offset, however, by the reduction
in interest and dividend service costs that Nova expects to
realize through the refinancing.
Nova, which generated revenues of US$3.1 billion in fiscal 2002
(year ended Dec. 31), has positions in two petrochemical product
categories: ethylene/polyethylene and styrenics. "The ratings on
Nova reflect the cyclicality and commodity-like nature of the
petrochemical industry and a weak financial profile, which has
been further eroded due to extended trough market conditions,"
said Standard & Poor's credit analyst Kenton Freitag. These risks
are partially offset by management's moderate financial policies,
which have emphasized the maintenance of good liquidity to
preserve credit quality until operating conditions improve.
Near-term prospects are uncertain due to lingering supply and
demand imbalances in Nova's markets compounded by raw material
price volatility. As a result, Nova's profit margins have been
pressured. Nevertheless, recent indications of stronger economic
growth should eventually spur demand and assist in restoring
balance to these markets, which would allow for margin
improvement.
The negative outlook reflects the potential for the ratings to be
lowered if business conditions or other strategic actions on the
part of management further delay the restoration of the company's
subpar financial profile.
OXFORD INDUSTRIES: Second Quarter 2004 Results Show Improvement
---------------------------------------------------------------
Oxford Industries, Inc. (NYSE: OXM) announced financial results
for the second quarter ended November 28, 2003.
The Company reported that second quarter net sales increased 37%
to $254 million versus $185 million during the second quarter of
fiscal 2003. Diluted earnings per share for the second quarter
increased 46% to $0.41 versus a split adjusted $0.28 in the second
quarter of fiscal 2003, slightly ahead of both the Company's
guidance and consensus estimates.
For the six months ended November 28, 2003, net sales increased
$138 million or 39% to $496 million compared to $358 million in
the previous year. Diluted earnings per share for the first half
increased 43% to $0.83. Per share results have been adjusted to
reflect the company's two-for-one stock split completed on
December 1, 2003.
J. Hicks Lanier, Chairman and Chief Executive Officer of Oxford,
Industries, Inc., commented, "We are pleased to report record
second quarter sales which include the first full quarter of
operation for the Tommy Bahama business. Not only did the Tommy
Bahama Group make a strong contribution to our financial results,
the integration of our two businesses has progressed very
smoothly. In general, while the market remains challenging, we
are growing increasingly confident that our strong financial
performance will continue throughout the remainder of the fiscal
year."
The company noted that it had rationalized its reporting to three
segments, the Menswear Group, the Womenswear Group and the Tommy
Bahama Group. The Menswear Group, which includes Lanier Clothes,
Oxford Slacks and Oxford Shirt Group, reported a second quarter
sales decline of 4% to $115 million, driven by a planned decline
in shipments to Sears and the wind-down of Izod Club Golf. Second
quarter sales for the Oxford Womenswear Group declined 4% from
last year to $62 million due primarily to the Company's decision
to discontinue business with Kmart. The Tommy Bahama Group
contributed $76 million in sales during the second quarter.
Mr. Lanier continued, "During the quarter, we were very pleased to
refine our segment and management structure and to appoint Michael
Setola as our President. Michael will have direct responsibility
for the operation of our Menswear Group. We are looking forward
to benefiting from his expertise, particularly in the menswear
business, and his energetic management style. He is a welcome
addition to our team."
Profitability for the second quarter was positively impacted by
the inclusion of the Tommy Bahama Group. Gross margins increased
10 full percentage points to 30.3% from 20.1% in last year's
second quarter. The inclusion of the Tommy Bahama Group, which
carries significantly higher gross margins than the corporate
average, was primarily responsible for the increase. Selling,
general and administrative expenses as a percentage of net sales
increased to 23.3% from 16.2% in the second quarter last year.
The increase was attributable to the Tommy Bahama Group's heavier
expense structure, partially offset by a decline in operating
expenses in Oxford's legacy businesses. Operating expenses for
the second quarter also included $1.7 million in non-cash
intangible asset amortization expenses associated with the Tommy
Bahama acquisition. Operating income for the second quarter
increased $9.9 million or 140% to $17.0 million from $7.1 million
in the same period last year.
Total inventories at quarter-end of $127 million were slightly
lower than plan. The increase in inventory over last year
reflects the inclusion of $32 million in Tommy Bahama inventory
and a moderate increase in the Company's other two segments. The
Company noted that well-managed inventory levels have contributed
to a reduction in markdowns compared to last year. Accounts
receivable increased $30 million over last year due entirely to
the inclusion of Tommy Bahama.
Interest expense increased in the second quarter to $6.1 million
from $61,000 last year, reflecting the debt incurred to finance
the purchase of Tommy Bahama. Debt to total capital stood at 48%
at quarter-end with no direct borrowings outstanding under the
Company's senior revolving credit facility.
The Company revised its guidance for the balance of this fiscal
year to reflect an expectation of continued strong financial
results in the remainder of the year and the two-for-one stock
split that became effective on December 1, 2003. For the fiscal
year ending May 31, 2004, the Company now anticipates sales in the
range of $1.065 to $1.090 billion and diluted earnings per share
in the range of $2.18 to $2.26. This compares to previous
earnings guidance, adjusted for the two-for-one stock split, of
$2.09 to $2.20. This increase stems from greater visibility in a
number of the Company's businesses. For the third quarter, the
Company now anticipates sales in the range of $275 to $285 million
and diluted earnings per share in a range of $0.51 to $0.55. For
the fourth quarter, the company now anticipates sales in the range
of $295 to $310 million and diluted earnings per share in the
range of $0.84 to $0.88.
The Company also reported that its Board of Directors had declared
a 14% increase in the quarterly cash dividend from $0.105 per
share to $ 0.12 per share on common stock payable February 28,
2004 to stockholders of record on February 17, 2004. This is the
175th consecutive quarterly cash dividend since Oxford became
publicly-owned in 1960.
Mr. Lanier concluded, "We continue to be pleased with the tenor of
business at both our newly acquired Tommy Bahama Group and with
our legacy segments. We believe that Oxford's combination of
operational expertise, a diversified mix of world-class retail
customers, and a balanced portfolio of labels led by one of the
strongest lifestyle brands in the apparel market provides our
shareholders with the prospect of excellent performance and
returns. We are pleased to continue to achieve our short-term
financial plan while positioning our business for continued growth
in sales and profitability."
Oxford Industries, Inc. (S&P, BB- Long-Term Corporate Credit
Rating, Stable) is a leading producer and marketer of branded and
private label apparel for men, women and children. Oxford provides
retailers and consumers with a wide variety of apparel products
and services to suit their individual needs. Oxford's brands
include Tommy Bahama(R), Indigo Palms(TM), Island Soft(TM), Ely &
Walker(R) and Oxford Golf(R). The Company also holds exclusive
licenses to produce and sell certain product categories under the
Tommy Hilfiger(R), Nautica(R), Geoffrey Beene(R), Slates(R),
Dockers(R) and Oscar de la Renta(R) labels. Oxford's customers are
found in every major channel of distribution including national
chains, specialty catalogs, mass merchants, department stores,
specialty stores and Internet retailers. The Company's common
stock has traded on the NYSE since 1964 under the symbol OXM. For
more information, visit its Web site at http://www.oxfordinc.com/
PAPER WAREHOUSE: Court Grants OK for Grant Thornton's Engagement
----------------------------------------------------------------
Paper Warehouse, Inc., sought and obtained approval from the U.S.
Bankruptcy Court for the District of Minnesota to employing Grant
Thornton LLP as its accountant. Grant Thornton will represent the
Debtor in connection with preparation of federal and all necessary
state tax returns for the fiscal year ending January 31, 2004.
Grant Thornton has represented Paper Warehouse in its accounting
matters for several years prior to the Chapter 11 filing, as well
as the period hence.
Grant Thornton's fee for its services, including tax return
preparation, is estimated at $15,000 to $23,000. In addition to
the fees, a 3% administrative and overhead charge to cover items
such as computer usage, telephone charges, faxes, copying and
postage will also be charged.
Grant Thornton assures the Court that it is a disinterested person
within the meaning of Sec. 101(14) of the Bankruptcy Code.
Paper Warehouse, Inc., and its subsidiaries are retail stores
specializing in party supplies and paper goods. The company filed
for chapter 11 protection on June 2, 2003 (Bankr. Minn. Case No.
03-44030). Michael L. Meyer, Esq., at Ravish Meyer Kirkman
McGrath & Nauman represents the Debtor in its restructuring
efforts. As of May 2, 2003, the Company listed $20,763,924 in
total assets and $26,546,615 in total debts.
PARMALAT: CONSOB Wants Company's 2002 Annual Report Annulled
------------------------------------------------------------
Parma, January 5, 2004 -- | Parma, 5 gennaio 2004 --
Parmalat Finanziaria S.p.A. | La Parmalat Finanziaria S.p.A.
communicates that it has today | comunica che in data odierna
received the summons in which | ha ricevuto l'atto di
Consob has asked Parma's Civil | citazione con il quale la
Court for an adjudication of | Consob ha chiesto al Tribunale
non-compliance, or the | Civile di Parma la
annulment of the Parmalat | dichiarazione di nullita o
Finanziaria S.p.A. shareholder | comunque l'annullamento della
meeting resolution of 30 April | delibera Assembleare del
2003, once the Court has | 30 aprile 2003 di Parmalat
completed its investigation | Finanziaria S.p.A., previo
into the non-compliance of the | accertamento della non
Parmalat Finanziaria S.p.A. | conformita del bilancio di
financial statements for the | esercizio al 31 dicembre 2002
fiscal year ended 31 December | alle norme che ne disciplinano
2002 with the regulations | i criteri di redazione, nonche
governing their compilation. | per l'accertamento della non
Similarly, Consob has requested | conformita del bilancio
that the Court investigate the | consolidato al 31 dicembre
non-compliance, on the same | 2002, approvato dal Consiglio
grounds, of the consolidated | di Amministrazione nella
financial statements for the | seduta del 28 marzo 2003, alle
fiscal year ended 31 December | norme che ne disciplinano i
2002, as approved by the | criteri di redazione.
Parmalat Finanziaria S.p.A. |
Board of Directors held on |
28 March 2003. |
2002 Annual Report
On March 28, 2003, Parmalat's Board of Directors met to examine
the company's statutory and consolidated financial statements for
the year ended December 31, 2002. Pursuant to article 82,
paragraph 2 of CONSOB Resolution 11971/99 and subsequent
amendments and supplements, Parmalat availed itself of the
exemption from publication of the quarterly report for the fourth
quarter 2002, from October 1 to December 31, 2002. Instead,
Parmalat presented the statutory and consolidated financial
statements for the year ended December 31, 2002 within 90 days of
the close of the financial year.
On April 10, 2003, Parmalat presented the company's 2002 results.
On April 30, Parmalat shareholders met to examine the statutory
financial statement for the year ended December 31, 2002.
Copies of Parmalat's 2002 financial statements are available, in
six parts, at no charge at:
Board of Directors' Report on Operations
-- http://www.parmalat.com/en/doc/Board_of_Directors_Report_on_Operations.pdf
Financial statements as at December 31, 2002
-- http://www.parmalat.com/en/doc/Financial_statements_as_at_December_31_2002.pdf
Report of the Board of Statutory Auditors
-- http://www.parmalat.com/en/doc/Report_of_the_Board_of_Statutory_Auditors.pdf
Auditors' report financial statements
-- http://www.parmalat.com/en/doc/Auditors_Report_financial_statements_2002.pdf
Consolidated financial statements as at December 31, 2002
-- http://www.parmalat.com/en/doc/Consolidated_financial_statements_as_at_December_31_2002.pdf
Auditors' report consolidated financial statements
-- http://www.parmalat.com/en/doc/Auditors_Report_consolidated_fin_stat_2002.PDF
The Commissione Nazionale per le Societa e la Borsa (CONSOB) is
the public authority responsible for regulating the Italian
securities market. (Parmalat Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PEMSTAR: Lenders Relax Financial Covenants Under Credit Facility
----------------------------------------------------------------
PEMSTAR Inc. (Nasdaq:PMTR), a leading provider of global
engineering, product design, manufacturing and fulfillment
services to technology, industrial and medical companies,
successfully reached an agreement with Congress Financial
Corporation, a subsidiary of Wachovia Bank N.A. and agent for
PEMSTAR's lenders, obtaining more favorable financial covenants
under its domestic credit facility.
The new terms replace monthly financial reporting requirements,
which were in effect during PEMSTAR's fiscal 2004 second quarter,
ended September 30, 2003, with quarterly reporting requirements.
Also, the company's consolidated and domestic EBITDA (earnings
before interest, taxes, depreciation and amortization) covenants
will be reduced. Complying with these reduced covenants will not
be required if PEMSTAR's available borrowing capacity stays above
certain levels. Given the more favorable terms, the company does
not need waivers from financial covenants for its fiscal 2004
third quarter, ended December 31, 2003.
PEMSTAR has also changed its domestic cash management relationship
to Fleet National Bank from US Bank National Association effective
December 2003. Fleet Capital Corporation is one of the four
lenders in its domestic bank lending group. The company expects
this change will reduce its costs and improve process efficiency.
"We are very pleased with the flexibility these amendments to our
covenant requirements provide and the new and improved cash
management relationship with Fleet National Bank. We value the
partnership we have with our lending institutions," said Greg Lea,
PEMSTAR's executive vice president and CFO.
PEMSTAR Inc. -- http://www.pemstar.com-- provides a comprehensive
range of global engineering, product design, automation and test,
manufacturing and fulfillment services and solutions to customers
in the communications, computing and data storage, industrial
equipment and medical industries. PEMSTAR provides these services
and solutions on a global basis through 15 strategic locations in
North America, South America, Asia and Europe. These customer
solutions offerings support customers' products from initial
product development and design, through manufacturing to worldwide
distribution and aftermarket support.
As reported in Troubled Company Reporter's October 30, 2003
edition, PEMSTAR said it expected net sales in the fiscal 2004
third quarter ending December 31, 2003, of $160 million to $175
million, and net income of $.04 per share to a net loss of $.04
per share. This compares with net sales of $171.8 million and a
net loss of $.05 per share for the third quarter of fiscal 2003.
Based on the financial covenants in effect November 4, 2003, if
PEMSTAR achieved the guidance above, it might need to seek waivers
or adjustments to the covenants from its lenders.
PERKINELMER: Will Publish Fourth Quarter 2003 Results on Jan. 28
----------------------------------------------------------------
PerkinElmer, Inc. (NYSE:PKI) announced that at the close of
business on Wednesday, January 28, 2004, the Company will release
fourth quarter 2003 results.
The Company will hold a conference call to discuss the results the
following day, January 29, 2004 at 10:00 a.m. ET. Gregory L.
Summe, chairman and chief executive officer, and Robert F. Friel,
senior vice president and chief financial officer, will host the
conference call.
To listen to the call live, please tune into the webcast via
http://www.perkinelmer.com/ A playback of this conference call
will be available beginning 1:00 p.m. ET, Thursday, January 29,
2004. The playback phone number is (719) 457-0820 and the code
number is 602615.
PerkinElmer, Inc. is a global technology leader focused in the
following businesses - Life and Analytical Sciences,
Optoelectronics and Fluid Sciences. Combining operational
excellence and technology expertise with an intimate understanding
of our customers' needs, PerkinElmer provides products and
services in health sciences and other advanced technology markets
that require innovation, precision and reliability. The Company
serves customers in more than 125 countries, and is a component of
the S&P 500 Index. Additional information is available through
http://www.perkinelmer.com/
As previously reported, Fitch Ratings affirmed PerkinElmer, Inc.'s
'BB+' senior secured debt rating, 'BB+' bank loan rating, and
'BB-' senior subordinated debt rating. The ratings apply to
approximately $570 million in senior secured and senior
subordinated debt. The Rating Outlook is Stable.
PHYAMERICA: Executes Definitive Asset Purchase Agreements
---------------------------------------------------------
PhyAmerica announced that PhyAmerica, NCFE, its largest creditor,
and R.D. PhyAm Acquisition Corporation executed the definitive
agreements for the sale of substantially all of PhyAmerica's
assets as previously approved by the Federal Bankruptcy Court in
Baltimore, Maryland.
Charles R. Goldstein of Navigant Consulting, Inc., the
court-appointed chief restructuring officer of PhyAmerica, said
"We are very pleased to have competed one of the final steps to
closing the sale approved by the Court. The Company remains on
track to closing the sale this month. The Company and its
employees are working diligently to effectuate a smooth transition
to the new owner group."
Dr. Stephen Dresnick, the President of RDA added, "We too are
pleased that the definitive documents have been signed and that we
are on track for closing. I am more impressed each day at the
dedication and enthusiasm of the PhyAmerica employees as we work
together to build a stronger and more vibrant company for the
future."
PhyAmerica provides emergency physician and allied health
professional staffing and management to emergency departments at
over 200 hospitals in 28 states. Founded as Coastal Healthcare
Group, the company bought Sterling Healthcare Group in 1999 from
FPA Medical Management Inc. of Miami, which had purchased Sterling
from Dr. Dresnick in 1996.
PHILIP SERVICES: Successfully Emerges from Chapter 11 Process
-------------------------------------------------------------
Philip Services Corporation emerged from Chapter 11 on
December 31, 2003. The US Bankruptcy Court for the Southern
District of Texas confirmed the Company's Plan of Reorganization
on December 10, 2003.
Pursuant to the Plan sponsored by an entity owned by Carl C.
Icahn, the Company received $170 million in equity and debt
financing. As a result, at the effective date of December 31,
2003, entities held by Mr. Icahn own virtually all of the
outstanding shares of the reorganized Company. The reorganized
Company does not have publicly traded securities.
The Ontario Superior Court of Justice in Toronto, Canada, granted
PSC an order facilitating the US Plan of Reorganization by
authorizing sale of substantially all of the business assets of
the Company's two Canadian operating subsidiaries to two new
subsidiaries of the reorganized Company. These new subsidiaries
will be known as PSC Industrial Services Canada Inc. and PSC
Analytical Services Inc. The Company's Canadian entities emerged
from Companies' Creditors Arrangement Act on December 31, 2003.
"PSC is emerging from this restructuring as a financially sound,
formidable competitor in the Industrial Cleaning, Environmental,
and Metals Services markets," stated Mike Ramirez, Chief Financial
Officer and Senior Vice President. "The Company's strengthened
balance sheet will afford us the ability to utilize working
capital to improve our operating efficiencies, grow our business,
and better serve the needs of our clients," Mr. Ramirez added.
Headquartered in Houston, Texas, Philip Services Corporation is an
industrial and metals services company with two operating groups:
PSC Industrial Services provides industrial cleaning and
environmental services; and PSC Metals Services delivers scrap
charge optimization, inventory management, remote scrap sourcing,
by-products services and industrial scrap removal to major
industry sectors throughout North America.
PILLOWTEX CORP: Wants Approval of Account Settlement Procedures
---------------------------------------------------------------
In the ordinary course of their business, the Pillowtex
Corporation Debtors sold goods to customers on credit, which sales
generated accounts receivable from such customers. The Debtors
maintain books and records documenting the Accounts Receivable,
including aging information.
The Debtors also maintain records with respect to customer
credits, incentives, and other customer arrangements that
represent offsetting obligations owing to such customers. In
certain cases, as is typical of customer relationships in the
industry, a portion of the Accounts Receivable have been disputed
by the customer, evidenced by the customer's unilateral deduction
of that amount from amounts paid to the debtor for invoices and
other amounts owed to the debtor.
Prior to the Petition Date, the Debtors determined from time to
time that certain of their claims in respect of Accounts
Receivable were uncollectible, either in whole or in part, or
were otherwise appropriately written off the Debtors' books for
accounting purposes. As of December 16, 2003, the Debtors' books
reveal outstanding balances owed by many customers. In many
cases, the Accounts Receivable are 90 or more days past due.
In the Debtors' experience, Gilbert R. Saydah, Jr., Esq., at
Morris Nichols Arsht & Tunnel, in Wilmington, Delaware, relates,
the likelihood of recovery of the full amount owed in respect of
problem accounts, especially smaller accounts, is low.
Furthermore, the efforts that would be necessary to successfully
collect the full amount of all Accounts Receivable, including
litigation expenses, is often cost-prohibitive.
Currently, some customers have raised defenses to their
obligation to pay for the goods the Debtors provided. The
Debtors anticipate that additional customers will raise defenses
to payment of the Accounts Receivable. The Debtors anticipate
many more disputes than they would normally encounter in the
course of their dealings as a result of their liquidation.
Pursuant to a November 7, 2003 Order, the Court authorized the
Debtors to enter into an Accounts Receivable Liquidation
Agreement with 9ci, Inc., for provision of collection services by
9ci in respect of the Accounts Receivable. The Debtors
determined that in order to secure prompt payment of Accounts
Receivable, they will need to reach settlements with various
customers, with the assistance of 9ci and other representatives.
Under Rule 9019(a) of the Federal Rules of Bankruptcy Procedure,
the Debtors would be required to provide notice and a hearing of
each settlement if each Account Receivable were treated as a
separate controversy. Because many customers can be expected to
raise defenses to payment, seeking individual Court approval
under Bankruptcy Rule 9019(a) would be inefficient and burdensome
to the Debtors.
Where many potential controversies fall within a single class of
disputes, Mr. Saydah notes, Bankruptcy Rule 9019(b) allows the
Court to authorize settlement of controversies within the class
without further hearing or notice. The Debtors believe that
treatment of the Accounts Receivable as a class under Bankruptcy
Rule 9019(b) would best facilitate prompt payment of the amounts
owed and would be the most advantageous solution for their
estates and their creditors.
Accordingly, the Debtors seek the Court's authority to allow them
and 9ci, on the Debtors' behalf, to negotiate settlements of the
Accounts Receivable, subject to these Settlement Procedures:
(a) For purposes of Settlement Procedures, the "Account
Receivable Balance" will mean, as to any customer:
(i) the sum of the customer's outstanding invoices,
deductions and debit memos as shown on the
Company's books and records, less
(ii) the sum of the offsetting credits, sales
incentives, and similar amounts that the Debtors
determine, in good faith and in their sound
business judgment, are owed to the customer as of
the date on which the relevant settlement is
reached;
(b) The Debtors and 9ci will be entitled to negotiate
settlements with respect to the collection of Write-Offs,
and the Debtors will be entitled to approve and enter into
settlements, without further notice or approval of the
Bankruptcy Court;
(c) The Debtors and 9ci will be entitled to negotiate
settlements in respect of any Accounts Receivable
involving forgiveness of up to the greater of the
Forgiveness Threshold, which is:
-- $15,000 or
-- 15% of the relevant Account Receivable Balance.
The Debtors will be entitled to approve and enter into
settlements, in each case without further notice or
approval of the Bankruptcy Court;
(d) The Debtors and 9ci will be entitled to negotiate
settlements in respect of any Accounts Receivable
involving forgiveness of amounts in excess of the
Forgiveness Threshold -- Material Settlements. The
Debtors will be entitled to approve and enter into
Material Settlements, subject to the Notice Procedures;
and
(e) The Debtors will be entitled to execute and deliver
releases as they, in their business judgment, consider
necessary and appropriate in connection with the
settlement of any Accounts Receivable.
If the Debtors propose to enter into a Material Settlement, these
Notice Procedures will apply:
(a) The Debtors will serve a Notice of Proposed Settlement,
on the Notice Parties:
(i) the U.S. Trustee,
(ii) Hahn & Hessen LLP, the Committee's counsel, and
(iii) BDO Seidman, the Committee's auditors and
accountants.
In order to ensure that pending and future negotiations in
respect of accounts receivable are not unnecessarily
jeopardized, notices of proposed material settlements will
not be filed with the Court or otherwise be made available
to any party other than the Notice Parties.
(b) The Notice Parties will have 10 days from the service of
a Notice of Proposed Settlement to object to any Material
Settlement, by providing written notice describing in
detail the nature and basis of an objection to:
(i) the Debtors,
(ii) Debevoise & Plimpton, the Debtors' counsel, and
(iii) the Notice Parties.
In order to ensure that pending and future negotiations in
respect of accounts receivable are not unnecessarily
jeopardized, the notice parties will be required to
maintain the confidentiality of the terms of, and the
existence of, any proposed Material Settlement. The
Notice Parties will not file any objection with the Court,
disclose the existence of any settlement or otherwise make
the terms of any settlement available to any person other
than the Debtors or another notice party.
(c) If no Objections are properly asserted prior to expiration
of the Notice Period, the Debtors will be authorized,
without further notice and without further Court approval,
to consummate the Material Settlement. Upon the
expiration of the Notice Period without the assertion of
any Objections, the Material Settlement will be deemed
final and fully authorized by the Court.
(d) If an Objection to a proposed Material Settlement is
received by the Debtors, the Debtors and the objecting
party will attempt to resolve the Objection on a
consensual basis. In the event the parties are unable to
formulate a mutually acceptable resolution to any
Objection, the Debtors may not proceed with the relevant
Material Settlement without:
(i) withdrawal of the Objection; or
(ii) entry of an Court order specifically approving the
Material Settlement.
If an Objection is not resolved on a consensual basis, the
Debtors or the objecting party may file a motion seeking
an order resolving the Objection at a hearing to be held
the next available omnibus hearing date in the Debtors'
cases by giving at least 10 days' written notice of the
hearing to each of the Notice Parties and all parties
entitled to receive notices pursuant to Bankruptcy Rule
2002(i).
Mr. Saydah contends that authorization of settlements of a class
of claims under Bankruptcy Rule 9019(b) is appropriate provided
that the Debtors recover a significant percentage of the balance
owed by each customer. The procedures are appropriate, Mr.
Saydah asserts, because the Debtors will only settle disputes
with respect to the Accounts Receivable without notice to the
Notice Parties if they are able to obtain an amount that:
-- is at least 85% of the balance owed by each customer; or
-- represents forgiveness of no more than $15,000.
In all other cases, the Debtors will be required to provide the
major creditor constituencies in their cases with notice and an
opportunity to object to the proposed settlement. In the event
that the Debtors and these creditor constituencies are unable to
arrive at a mutually acceptable resolution concerning the
settlement, the parties will request a hearing with notice to all
parties entitled to receive notices under Bankruptcy Rule
2002(i).
The Debtors recognize the importance of transparency in the
bankruptcy process, and acknowledge the heightened interest among
creditors regarding collection efforts in the context of a
liquidation. However, the Debtors believe that it is important
to ensure that delinquent customers not be given access to
information concerning settlements with other customers. The
Debtors' negotiating leverage will be severely impaired if these
customers have advance knowledge of the Debtors' final settlement
position in comparable negotiations.
In addition, the Notice Parties are sophisticated and highly
representative of the creditors, and have ample resources to
analyze any proposed settlement within the proposed parameters.
Moreover, the Settlement Procedures and related Notice Procedures
were formulated with input from the Committee. The Debtors
understand that the Committee supports the procedures.
The Settlement Procedures and Notice Procedures are intended to
balance the interests of the Debtors, their estates and creditors
in realizing the prompt and full payment in respect of the
Accounts Receivable, with the interests of avoiding substantial
costs associated with protracted collection efforts, including
litigation expenses. Ultimately, approval of the Settlement
Procedures would enable the Debtors to secure prompt payment of
the Accounts Receivable without the delay and financial burdens
of seeking individual approval of each settlement. (Pillowtex
Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
PRIMUS TELECOMMS: Proposes $200 Million Senior Debt Offering
------------------------------------------------------------
PRIMUS Telecommunications Group, Incorporated (Nasdaq:PRTL),
announced that its direct and wholly owned subsidiary, Primus
Telecommunications Holding, Inc., intends to offer, subject to
market conditions and other factors, $200 million of senior notes
due 2014.
The net proceeds are intended to be used to satisfy and discharge
all of the Company's outstanding 9-7/8% senior notes due 2008 and
the 11-1/4% senior notes due 2009 and the remaining net proceeds
are intended to be used to repay or repurchase other long-term
obligations or for working capital and general corporate purposes.
The Notes will be general unsecured obligations of the Issuer and
be fully and unconditionally guaranteed by PRIMUS
Telecommunications Group, Incorporated.
The offer will only be made to qualified institutional buyers
pursuant to Rule 144A and Regulation S under the Securities Act of
1933, as amended. The Notes will not be registered under the
Securities Act and may not be offered or sold in the United States
or to a United States person absent registration or an applicable
exemption from registration requirements.
PRIMUS Telecommunications Group, Incorporated (NASDAQ:PRTL) is a
global facilities-based telecommunications services provider
offering international and domestic voice, Internet, data and
hosting services to business and residential retail customers and
other carriers located primarily in the United States, Canada,
Australia, the United Kingdom and western Europe. PRIMUS provides
services over its global network of owned and leased transmission
facilities, including approximately 250 points-of-presence (POPs)
throughout the world, ownership interests in over 23 undersea
fiber optic cable systems, 19 carrier-grade international gateway
and domestic switches, and a variety of operating relationships
that allow it to deliver traffic worldwide. PRIMUS also has
deployed a global state-of-the-art broadband fiber optic ATM+IP
network and data centers to offer customers Internet, data,
hosting and e-commerce services. Founded in 1994, Primus is based
in McLean, VA. News and information are available at PRIMUS's Web
site at http://www.primustel.com/
At September 30, 2003, PRIMUS Telecommunications Group, Inc.'s
balance sheet shows a working capital deficit of about $40
million, and a total shareholders' equity deficit of about $118
million.
REDBACK NETWORKS: Brings-In Wilson Sonsini as Corporate Counsel
---------------------------------------------------------------
Redback Networks Inc., seeks authority from the U.S. Bankrutpcy
Court for the District of Delaware to retain and employ Wilson
Sonsini Goodrich & Rosati, PC as its Special Corporate and
Litigation Counsel.
The Debtors expect Wilson Sonsini to:
a. provide representation on general corporate matters;
b. advise the Debtor regarding compliance with reporting
requirements under securities laws;
c. provide representation to the Debtor in connection with
the Financial Restructuring other than with respect to
bankruptcy matters;
d. provide representation to the Debtor in connection with
the Financing Transactions and any other financing
matters;
e. provide representation to the Debtor in connection with
its Nasdaq listing;
f. defend the Debtor in the Securities Class Action;
g. provide representation to the Debtor in connection with
the Securities and Exchange Commission inquiry;
h. provide representation to the Debtor in any other
litigation or judicial or administrative proceeding in
which the Debtor is or becomes a party and seeks to
retain Wilson Sonsini as its counsel; and
i. advise the Debtor in employment benefits and other labor
and employment matters.
The attorneys in Wilson Sonsini and their current hourly rates
are:
John A. Fore $575 per hour
David R. Gerson $530 per hour
Terry T. Johnson $525 per hour
Roger D. Stern $505 per hour
Andrew J. Hirsch $490 per hour
Page Maillian $475 per hour
Daniel J. Weiser $425 per hour
Cynthia A. Dy $390 per hour
Lyle Roberts $380 per hour
Kathleen D. Rothman $380 per hour
Michael S. Russell $350 per hour
Gregory J. Batista $310 per hour
John P. Chase $310 per hour
Kristin A. Dillehay $310 per hour
Jason P. Sebring $300 per hour
Greg Harris $285 per hour
Micheal J. Reagan $275 per hour
Michelle Wallin $260 per hour
Clare M. Badaracco $235 per hour
Melissa A. Kosciuslco $235 per hour
Joan B. Moses $235 per hour
Lori A. Beresford $180 per hour
Headquartered in San Jose, California, Redback Networks, Inc. is a
leading provider of advanced telecommunications networking
equipment. The Company filed for chapter 11 protection on November
3, 2003 (Bankr. Del. Case No. 03-13359). Bruce Grohsgal, Esq.,
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub P.C., and G. Larry Engel, Esq., Jonathan N.P.
Gilliland, Esq., at Morgan Lewis & Bockius, LLP represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $591,675,000 in total
assets and $652,869,000 in total debts.
RIGHT ON CASUALS: Case Summary & 21 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Right On Casuals, Inc.
2496 Central Avenue
Yonkers, New York 10710
Bankruptcy Case No.: 04-22039
Type of Business: The Debtor owns a store, offering apparel,
shoes and accessories in junior and plus sizes,
and occupies spaces of 4,000 sq. ft. in malls
and strip centers.
Chapter 11 Petition Date: January 7, 2004
Court: Southern District of New York (White Plains)
Debtor's Counsel: Jay L. Silverberg, Esq.
Silverberg Stonehill & Goldsmith, P.C.
111 West 40th Street 33rd Floor
New York, NY 10018
Tel: 212-730-1900
Fax: 212-391-4556
Total Assets: $2,734,767
Total Debts: $3,487,050
Debtor's 21 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
IDB Factors Factor/Trade $161,034
Odds n' Evens/Over & Under Trade $126,856
Automotive Realty Trade $102,742
Corporation
Fashion Trend Trade $101,497
One Step Up Trade $74,796
G-111 Leather Fashion Inc. Trade $64,662
Marx Realty Improvement Landlord $53,852
Goldstone Hosiery Co. Trade $44,174
Davis & Gilbert LLP Trade $41,155
Ambiance Apparel Trade $39,978
S.G.M. Trade $37,774
Prestige Properties Landlord $34,748
FUBU / J.E. Sport Trade $34,007
Sans Souci Trade $33,292
Joylux Jes Inc. Trade $31,298
Two-G Trade $27,732
G.O. Max Trade $26,359
Jump Apparel Trade $26,018
Unity International Inc. Trade $25,348
NSB Group Trade $23,100
Mystic Trade $23,081
SEABROOK SEAFOOD: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Seabrook Seafood, Inc.
P.O. Box 776
Kemah, Texas 77565-0776
Bankruptcy Case No.: 04-80020
Type of Business: Specializing in fresh shrimp, farm-raised
catfish and frozen packaged fish.
Chapter 11 Petition Date: January 6, 2004
Court: Southern District of Texas (Galveston)
Judge: Letitia Z. Clark
Debtor's Counsel: Jeffrey P. Norman, Esq.
Gipson & Norman
17214 Mercury Drive
Houston, TX 77058
Tel: 281-488-6656
Fax: 281-488-8006
Total Assets: $1,127,827
Total Debts: $2,529,759
SHILOH INDUSTRIES: Fourth-Quarter Results Enter Positive Zone
-------------------------------------------------------------
Shiloh Industries, Inc. (Nasdaq: SHLO) announced results for the
fourth quarter and fiscal year ended October 31, 2003.
For the fourth quarter ended October 31, 2003, the Company
reported sales of $153.7 million compared to $173.3 million for
the fourth quarter of fiscal 2002, a decrease of $19.6 million, or
11.3%. Net income for the fourth quarter of fiscal 2003 was $3.3
million, or $0.21 per share, basic, and $0.20 per share, diluted,
compared to a net loss of $18.9 million, or $1.28 per share, both
basic and diluted, a year ago. The prior year fourth quarter
period includes charges of $16.0 million, or $1.07 per share,
related to the bankruptcy of an entity in which the Company has an
equity investment and $3.1 million, or $0.21 per share for
curtailment charges related to the Company's defined employee
benefit plans.
Sales for the fiscal year ended October 31, 2003 were $584.3
million, a decrease of $41.3 million, or 6.6% from sales of fiscal
2002. Net income for fiscal 2003 was $3.6 million, or $0.22 per
share, after including an after tax goodwill impairment charge of
$2.0 million, or $0.13 per share, recorded in the first quarter of
fiscal 2003 associated with an accounting change. For fiscal
2002, the Company reported a net loss of $26.8 million, or $1.81
per share.
For the Company's fourth quarter and full fiscal year periods, the
sales reductions were partially due to reduced automobile and
light truck production and customer insourcing and balancing-out
of old programs in engineered products. These factors accounted
for approximately $9.1 million of the sales reduction for the
fourth quarter and $26.0 million of the sales reduction for the
fiscal year. The balance of the fourth quarter and year-over-year
sales decline was due to reduced tooling sales and the sales of
business units that were closed in fiscal 2002 ($10.5 million for
the fourth quarter and $15.3 million for the fiscal year). The
Company has reduced tooling sales and closed business units,
primarily tool and die businesses, recognizing that these
activities would not contribute to the Company's future.
Operating income for the fourth quarter of fiscal 2003 was $8.6
million compared to a loss of $9.4 million in the prior year
quarter, which included a $9.8 million asset impairment charge.
For fiscal 2003, operating income was $21.3 million compared to
fiscal 2002's operating loss of $6.9 million. Operating results of
the fourth quarter and fiscal 2003 continued the trend of
improvements resulting from operating efficiencies in quality and
productivity, cost reductions and closure of certain facilities.
Liquidity
At October 31, 2003, the Company's borrowings under its revolving
credit facility were reduced to $148.6 million. Although the
revolving credit facility matures on April 30, 2004, the Company
has a commitment from a group of lenders for a new $185.0 million
revolving credit facility. The Company expects to finalize the
terms of this new facility in the first quarter of fiscal 2004.
Emphasis on working capital management and spending controls
combined with improved profitability have generated funds that
were used to reduce these obligations from their peak level of
$287.7 million at January 31, 2002. For the Company's fourth
quarter and full fiscal year periods, interest expense decreased
by $1.2 million and $5.4 million, respectively as compared to the
same periods in the prior fiscal year.
In commenting on the fourth quarter and fiscal 2003, President and
CEO, Theodore K. Zampetis stated, "Shiloh has adhered to its
sustainable business model and delivered steadily improving
operating results period to period in the last six quarters as
compared to the previous year's quarterly operating results.
Operating income for the fourth quarter and fiscal 2003 has
increased year over year on reduced sales with emphasis on
quality, productivity, waste control and spending practices, while
investing prudently in process characterization-process
optimization activities consistent with our business strategy.
Shiloh's positive cash flow has generated funds to reduce debt
from its peak levels of January 2002 and has enabled the Company
to obtain the commitment of a new lending group for a new credit
facility with terms that will contribute to our future success."
Headquartered in Cleveland, Ohio, Shiloh Industries (S&P, B
Corporate Credit Rating) is a leading manufacturer of blanks,
engineered welded blanks, engineered stampings and modular
assemblies for the automotive and heavy truck industries. The
Company has 11 operating locations in Ohio, Georgia, Michigan,
Tennessee and Mexico, and employs approximately 2,500.
SK GLOBAL: Wants to Pay $1.2MM Severance Benefits to Employees
--------------------------------------------------------------
SK Global America Inc.'s principal business involves trade-
related activities, including the importing, exporting, financing
and wholesale and general distribution of steel, grain,
chemicals, textiles and garments, telecommunications equipment
and a variety of other goods in North America and overseas. The
trading businesses are heavily dependent on the Debtor's parent,
SK Networks Co. Ltd., formerly known as SK Global Co. Ltd.
In accordance with the Global Restructuring, SK Networks agreed
with its and the Debtor's largest creditors that it would no
longer support the Debtor's trading operations. Consequently,
the Debtor determined to discontinue its trading operations and
close out its existing trading positions and contracts. Over the
next several months, the Debtor will terminate employees no
longer necessary to its operations. The Debtor currently employs
35 employees who support its various trading divisions and
administrative functions at its corporate headquarters.
By this motion, the Debtor seeks the Court's permission to pay
severance, specifically, COBRA benefits and outplacement
assistance to its employees, which will be paid on termination.
Scott E. Ratner, Esq., at Togut, Segal & Segal LLP, in New York,
relates that, before the Petition Date, the Debtor paid
severance, COBRA and outplacement benefits to its employees who
were involuntarily terminated because their business unit was
shut down. The Debtor's policy to pay these benefits was made as
a sign of goodwill and in appreciation of the loyalty displayed
by the employees in remaining with the Debtor in the face of
imminent termination.
The Debtor's Severance Package provides:
A. Severance Payments -- $1,254,633 total amount
Position Severance Payment Remarks
-------- ----------------- -------
Below Manager 2 weeks base salary for Min. Amt:
every year of service 0 to 2.5 years
of service --
1 additional month's base -- 2 mos. base
salary for each 5-year salary
period of service.
2.5 to 5 years
of service --
3 mos. base
salary
Manager 1 month base salary for Min. Amt: 6
each year of service mos. base
salary
B. Health Insurance (COBRA) -- $129,449 total expense
Position Severance Payment Remarks
-------- ----------------- -------
Below Manager Debtor pays first 3 mos. None
of COBRA expense beyond
termination
Manager Debtor pays first 6 mos. None
COBRA expense beyond
termination
C. Outplacement Assistance -- $10,000 total expense
The Debtor provides three months of Outplacement Assistance
after written notification of employment termination is
issued. The Outplacement Assistance includes some
considerations like providing employees with flexible
working hours or days, assistance for some of the programs
like group or individual interviewing workshops,
counseling, and job search cost.
D. Profit-Share for Tony Zaweski -- $10,920
Pursuant to an Employment Agreement between Tony Zaweski
and the Debtor, Mr. Zaweski is entitled to a percentage of
the annual Ordinary Profit arising from the operation of
the Vista Grain division during the applicable employment
period. Mr. Zaweski and the Debtor agreed that the
Operating Profit for the Vista Grain division for 2003 is
$546,000. Pursuant to the Employment Agreement,
Mr. Zaweski is entitled to 2% of $546,000 or $10,920.
According to Mr. Ratner, the Debtor merely wants to continue its
prepetition practice of making various payments to the Employees
who will be terminated upon the wind down of its business units.
The Debtor anticipates that aggregate severance payments to the
Employees will reach $1,500,000. As consideration for the
payment of the Severance, each of the Employees will be required
to execute a release discharging the Debtor from any claim that
the Employee may have against the Debtor and its estate.
Given the importance of the Employees to obtaining maximum value
for the Debtor's assets during a wind down, the Severance payment
should be allowed. Mr. Ratner explains that the Severance
payment serves as incentive for the Employees to remain with the
Debtor until each Employee's business unit is shut down or the
Debtor determines that the Employee's services are no longer
required.
Mr. Ratner points out that the Employees could have sought
alternative employment immediately upon the Debtor's decision to
file a voluntary Chapter 11 petition. But, at the Debtor's
urging, they remained in the Debtor's employ, enabling the Debtor
to maintain the value of its assets. It is essential that the
Employees continue to focus their efforts in supporting and
Debtor's operations during the wind down and obtain the maximum
value for those assets.
The Debtor's corporate support Employees provide essential
administrative and accounting functions and are essential to the
wind down of the Debtor's operations. The Debtor's ability to
maximize asset recoveries and reconcile claims asserted against
it will depend on the continued support of its corporate support
staff. The corporate support Employees possess unique knowledge
of the Debtor's business units, including its finances, accounts
receivable, accounts payable, customers, vendors, and other
matters concerning its operations. If the Debtor loses this
invaluable information resource, it will be extremely difficult
for the Debtor to wind down its businesses and realize the
maximum value for the assets, conduct an analysis and resolution
of the claims asserted by customers, suppliers or vendors, and
perform other tasks that are required to benefit its estate and
maximize the return to creditors. (SK Global Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SLATER STEEL: Winding Down Atlas Stainless & Hamilton Operations
----------------------------------------------------------------
Slater Steel Inc., will no longer pursue a stand-alone
restructuring of its Atlas Stainless Steels and Hamilton Specialty
Bar divisions.
The Company stated that a combination of factors - including an
unprecedented increase in input costs and insufficient liquidity
to fund working capital growth associated with rising nickel,
scrap and gas costs, the inability to obtain labour savings
integral to its business plan, the failure to finalize an asset
based refinancing facility on a timely basis and the rise in the
Canadian dollar - resulted in the decision.
Slater said that due to the combined effect of these issues, it
will propose to the Ontario Superior Court of Justice on January
9, 2004 the orderly wind down of the operations of both the Atlas
Stainless Steels and Hamilton Specialty Bar facilities. The
Company said that RBC Capital Markets will continue to seek buyers
for each of Atlas Stainless Steels and Hamilton Specialty Bar.
The Company affirmed that it is attempting to complete a going
concern sale of Sorel Forge and that it will continue to operate
the facility in the normal course of business. Slater also said
that it completed the sale of its Lemont facility today for gross
proceeds of US$9.5 million. The Company is also continuing to
pursue the sale of Atlas Specialty Steels and Fort Wayne Specialty
Alloys.
Slater said that while the exact timing of the wind down of Atlas
Stainless Steels and Hamilton Specialty Bar will be finalized over
the coming weeks, the two facilities will seek to operate in the
interim to fulfill customer orders. Approximately 430 hourly and
salaried positions at Atlas Stainless Steels and approximately 400
hourly and salaried positions at Hamilton Specialty Bar will be
impacted.
The Company reiterated that it does not expect that shareholders
will receive any value through this process.
Slater Steel is a mini mill producer of specialty steel products.
The Company's mini mills are located in Fort Wayne, Indiana;
Hamilton and Welland, Ontario and Sorel-Tracy, Quebec.
SLATER STEEL: Steelworkers to Demonstrate at Court Appearance
-------------------------------------------------------------
The United Steelworkers' Hamilton Area Council will send two
busloads of its members to Toronto this morning for a
demonstration (around 9:30 a.m.) at 393 University Avenue, where
Slater Steel Inc. is scheduled to ask a bankruptcy court to put it
out of business.
Earlier this week, Slater walked away from negotiations with the
Steelworkers' Local 4752, which was prepared to discuss a
restructuring plan, while the company demanded one-sided
concessions.
"This company has put no effort into a plan to save jobs and
create operational efficiencies," said Steelworkers' Area
Coordinator Tony DePaulo. "It's a disgrace and that is what we are
protesting. Our job is to save jobs. They want to cut and run. We
don't think Slater should be allowed to do that."
Slater went into bankruptcy protection under the Companies
Creditors Arrangement Act (CCAA) in June.
SOLUTIA INC: Court to Convene Final DIP Financing Hearing Today
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Beatty will convene a Final Hearing to
consider the Solutia Debtors' request to obtain DIP Financing
today at 11:00 a.m. in Manhattan. Objections, if any, must be
filed and served by January 5, 2003.
Lawrence V. Gelber, Esq., and Andrew R. Gottesman, Esq., at
SCHULTE ROTH & ZABEL LLP in New York represent Abelco Finance LLC
in Solutia's chapter 11 proceedings.
* * *
DIP Financing
The Solutia, Inc. Debtors filed for chapter 11 protection with
roughly $21 million in the bank. Because the chapter 11 filings
constitute an immediate event of default under their Existing
Credit Agreement with Ableco Finance LLC, a unit of Cerberus
Capital Management, L.P., Wells Fargo Foothill, Inc., Congress
Financial Corporation, and other syndicate lenders, the Debtors
have no access to on-going working capital financing unless the
Bankruptcy Court approves a post-bankruptcy financing facility.
Without available cash to meet the ongoing obligations that they
must incur to run their businesses, Solutia tells the Bankruptcy
Court that its business will fold. The Debtors urgently need
bank credit to purchase raw materials and inventory, pay their
employees, maintain their manufacturing and distribution systems
and otherwise continue their businesses and operations. Absent
immediate availability of new credit, the Debtors' operations
will be severely disrupted and they will be forced to cease or
sharply curtail operations of some or all of their businesses,
which in turn will limit or eliminate the Debtors' ability to
generate operating revenue.
Prior to the Petition Date, the Debtors solicited proposals from
potential post-bankruptcy lenders. Lenders, generally, weren't
receptive to talking. Talks with Ableco Finance, however, were
productive and culminated in documentation of a definitive
Secured Debtor-in-Possession Financing Facility providing the
Company with up to $500 million of new financing to (i) pay-off
the Existing Credit Facility and (ii) finance the company's
working capital needs through the chapter 11 restructuring
process.
The DIP Loans will consist of:
(a) a $50,000,000 Term Loan A Facility from:
* Congress Financial Corporation (Central) and
* Wells Fargo Foothill, Inc.
(b) a $300,000,000 Term Loan B Facility from:
* Ableco Finance LLC (together with its
affiliate assignees);
* Fortress Credit Opportunities I LP;
* Highbridge/Zwirn Special Opportunities Fund L.P.;
* Bernard National Loan Investors, Ltd.;
* Nylon & Films, L.L.C.;
* Oak Hill Securities Fund, L.P.;
* Oak Hill Securities Fund II, L.P;
* Cardinal Investment Partners I, L.P.;
* Lerner Enterprises, L.P.;
* Oak Hill Credit Partners I, Limited;
* Oak Hill Credit Partners II, Limited;
* P&PK Family Ltd. Partnership;
* TRS Thebe LLC; and
* Upper Columbia Capital Company, LLC; and
(c) a $150,000,000 revolving credit facility from:
* Congress Financial Corporation (Central) and
* Wells Fargo Foothill, Inc.
The DIP Facility provides the Debtors with access to financing
through December __, 2005, subject to a Borrowing Base equal to:
(1) the sum of:
(A) up to 85% of the value of the Net Amount of
Eligible Accounts less the amount, if any, of
a Dilution Reserve (if bad debts exceed 5%)
plus
(B) the sum of up to:
(x) 60% of the Book Value of the Eligible Inventory
constituting finished goods at such time
plus
(y) 40% of the Book Value of the Eligible Inventory
constituting raw materials at such time
plus
(z) the lesser of:
(1) 40% of the Book Value of the Eligible
Inventory constituting so-called Designated
Chemicals at such time and
(2) $20,000,000
minus
(2) such reserves as the Administrative Agent or the
Documentation Agent may deem appropriate in the
exercise of their business judgment made in good faith
and exercised reasonably based upon the lending
practices of the Administrative Agent or the
Documentation Agent consistent with the general
practices in the commercial finance industry.
The DIP Loans under each of the Term Loan Facilities will bear
interest at an annual rate equal to the greater of (a) the prime
rate announced by JPMorgan Chase Bank plus 9.125% and (b)
13.375%. The DIP Loans under the Revolving Credit Facility bear
interest at an annual rate equal to the greater of (x) the prime
rate announced by JPMorgan Chase Bank plus 2.0% and (y) 6.25%.
The Debtors will pay the Lenders a variety of Fees:
* a $4.5 or 5.0 million Closing Fee;
* a $150,000 Quarterly Loan Servicing Fee;
* 0.75% per year on every dollar NOT borrowed as an
Unused Line Fee;
* 6.00% Letter of Credit fees;
* $1,500 per day per examiner for financial auditing work;
and
* the cost of all visits, audits, inspections, valuations
and field examinations conducted by a third party on
behalf of the Agents.
The DIP Loans will be secured by superpriority liens pursuant to
11 U.S.C. Sec. 364, subject only to a consensual $15,000,000
Carve-Out to permit payment of Professional Fees and fees charged
by the U.S. Trustee and Court Clerk.
The Debtors agree to three key financial covenants:
(1) The Debtors agree to limit their Capital Expenditures to:
For the Period Maximum CapEx
-------------- -------------
Through December 31, 2003 $__________
In Fiscal Year 2004 $65,800,000
In Fiscal Year 2005 $88,200,000
(2) The Debtors covenant with the Lenders that Consolidated
EBITDA will be no less than:
Twelve-Month Period Ended Minimum Consolidated EBITDA
------------------------- ----------------------------
December 31, 2003 $76,800,000
January 31, 2004 $60,400,000
February 29, 2004 $60,300,000
March 31, 2004 $56,300,000
April 30, 2004 $61,800,000
May 31, 2004 $64,700,000
June 30, 2004 $61,200,000
July 31, 2004 $61,300,000
August 31, 2004 $61,600,000
September 30, 2004 $74,000,000
October 31, 2004 $73,800,000
November 30, 2004 $77,800,000
December 31, 2004 $91,800,000
January 31, 2005 $104,600,000
February 28, 2005 $105,800,000
March 31, 2005 $113,400,000
April 30, 2005 $115,500,000
May 31, 2005 $116,900,000
June 30, 2005 $119,200,000
July 31, 2005 $123,300,000
August 31, 2005 $124,700,000
September 30, 2005 $124,500,000
October 31, 2005 $126,000,000
November 30, 2005 $120,900,000
December 31, 2005 $121,400,000
(3) The Debtors further covenant with the Lenders that the
ratio of (i) the difference between (A) Consolidated EBITDA
and (B) Capital Expenditures (excluding the interest
portion of Capital Lease Obligations included in Capital
Expenditures) to (ii) the sum of (A) all principal of
Indebtedness scheduled to be paid or prepaid during the
period to the extent there is an equivalent permanent
reduction in the commitments, plus (B) Consolidated Net
Interest Expense, other than any one-time, non-cash
Writeoffs of fees related to the replacement of the
Existing Credit Agreement, plus (C) income taxes paid or
payable during the period, plus (D) cash dividends or
distributions paid (other than, in the case of any Loan
Party, dividends or distributions paid by such Loan Party
to any other Loan Party) during the period to fall below:
Maximum Fixed
Twelve-Month Period Ended Charge Coverage Ratio
------------------------- ---------------------
December 31, 2003 (0.04)
January 31, 2004 0.08
February 29, 2004 0.04
March 31, 2004 (0.03)
April 30, 2004 (0.02)
May 31, 2004 (0.02)
June 30, 2004 (0.09)
July 31, 2004 (0.11)
August 31, 2004 (0.09)
September 30, 2004 0.02
October 31, 2004 0.04
November 30, 2004 0.10
December 31, 2004 0.30
January 31, 2005 0.42
February 28, 2005 0.43
March 31, 2005 0.50
April 30, 2005 0.51
May 31, 2005 0.51
June 30, 2005 0.52
July 31, 2005 0.53
August 31, 2005 0.53
September 30, 2005 0.50
October 31, 2005 0.49
November 30, 2005 0.40
December 31, 2005 0.38
(Solutia Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SPECTRUM SIGNAL: Provides Strategic Alternatives Review Results
---------------------------------------------------------------
Spectrum Signal Processing Inc. (TSX: SSY, NASDAQ: SSPI) concluded
the review of its strategic alternatives that began in July 2003
and has determined that shareholders' interests will be best
served by the Company remaining independent while tightening its
focus and restructuring its operations to achieve profitability.
During the last six months, Spectrum engaged in strategic
discussions with several companies, a number of which expressed
interest in acquiring a portion or all of the Company. However,
the Company received no offer that it considered appropriate to
put forth to its shareholders when compared to the alternative of
executing on its stand-alone plan.
"Our strategic discussions over the past six months have
underscored the fact that acquirers are seeking financially
accretive businesses in the current business environment. As a
result, our primary goal for 2004 is to regain profitability while
operating on a stand-alone basis," stated Pascal Spothelfer,
Spectrum's President and CEO. "The first steps in achieving this
goal are to focus the Company's business activities and cut
operating expenses."
"The board believes that taking these immediate steps will
ultimately generate superior shareholder value over the other
options available to the Company at this time," stated Irving
Ebert, Chair of Spectrum's Board of Directors.
Under its stand-alone strategy, Spectrum will restructure its
business to focus on its wireless systems product line, which
generated approximately US$16.1 million in revenue during 2003.
Investment in the company's Voice over Packet product line will be
suspended and the Company will continue to pursue alternatives to
divest this business group. Finally, the Company is putting in
place plans to reduce annual operating costs, excluding
depreciation, restructuring and other charges, by approximately
27% or US$4.0 million compared to 2003. These cost reductions are
expected to allow the Company to achieve positive operating
earnings in 2004, excluding amortization, restructuring and other
charges, with wireless product revenue levels comparable to 2003.
As part of its restructuring, Spectrum will reduce its staff by
approximately 40 people, including the four Vice Presidents within
its business groups. Senior management positions in the new
organization will be filled internally. The Company expects to
incur restructuring and other costs totaling between US$2.5
million and US$3.5 million including non-cash items over the next
six to twelve months. Spectrum intends to pursue an equity
financing in the near term to fund its restructuring activities.
"By focusing our efforts on our flexComm(TM) software defined
radio product line, we expect to continue to demonstrate
leadership and meet the growing needs of our core markets and
customers," added Mr. Spothelfer. "We will exploit the opportunity
to increase revenues at attractive margins by capitalizing on the
numerous wireless programs the Company has already secured. This
revenue stream is expected to provide Spectrum with the ability to
invest the capital required to pursue additional wireless
programs, particularly in the expanding defense communications
market. Many of our customers depend on Spectrum for critical
components to their products and we want to ensure they have every
reason to continue to have confidence in our ability to service
their business. The restructuring and refocusing of Spectrum will
go a long way towards achieving this goal."
Spectrum Signal Processing designs, develops and markets high
performance wireless signal processing platforms for use in
defense and communications infrastructure equipment. Spectrum's
optimized hardware, software and chip technology work together to
collect, compress and convert voice and data signals. Leveraging
its 17 years of design expertise, Spectrum provides its customers
with faster time to market and lower costs by delivering highly
flexible, reliable and high-density solutions. Spectrum subsystems
are targeted for use in government intelligence, surveillance and
communications systems, satellite hubs and cellular base stations.
More information on Spectrum and its flexComm(TM) products is
available at http://www.spectrumsignal.com/
STARWOOD HOTELS: S&P Places Low-B Ratings on Watch Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit rating for Starwood Hotels & Resorts Worldwide Inc., and
other ratings, on CreditWatch with negative implications. The
White Plains, N.Y.-based hotel and leisure company had $4.9
billion in debt as of Sept. 30, 2003.
"The CreditWatch listing follows Starwood's recent announcement
that along with Lehman Brothers Holdings, Inc., it has acquired
all of the outstanding senior debt (approximately $1.3 billion) of
Le Meridien Hotels and Resorts Ltd.," said Standard & Poor's
credit analyst Craig Parmelee. Starwood will fund $200 million of
the purchase price for an approximate 16% share. As part of this
funding, Lehman and Starwood have entered into an exclusive
agreement to negotiate the recapitalization of Le Meridien in the
coming months.
"The CreditWatch listing does not relate to the initial $200
million investment by Starwood, but rather, considers the
possibility that Starwood may ultimately acquire Le Meridien in an
all cash deal which would have a more meaningful impact on
Starwood's credit measures," added Mr. Parmelee. Negotiations,
however, are in the early stages and the valuation of Le Meridien
and the structure of any transaction (if ultimately agreed upon)
is not yet certain.
In resolving the CreditWatch listing, Standard & Poor's will
monitor the situation as it develops. It is anticipated that the
CreditWatch listing will be resolved during the next 30 to 90
days, and Standard & Poor's expects that if a downgrade were the
ultimate outcome, it would be limited to one notch.
THAXTON GROUP: Wants to Hire Nelson Mullins as Special Counsel
--------------------------------------------------------------
The Thaxton Group, Inc., and its debtor-affiliates seek permission
from the U.S. Bankrutpcy Court for the District Of Delaware to
employ Nelson, Mullins, Riley & Scarborough, LLP, as Special
Counsel, nunc pro tunc to October 17, 2003.
The Debtors report that they retained Nelson Mullins for
representation in a number of areas including securities,
corporate, merger and acquisition, employment law, employment
benefits and related matters. The Debtors want Nelson Mullins to
oversee certain litigation against the Debtors which was pending
at the time of the Petition Date.
The Debtors seek to retain Nelson Mullins as corporate and
litigation counsel because of the firm's knowledge of the Debtors'
business, which experience is derived from its two years of prior
representation of the Debtors, as well as the significant
knowledge it has recently obtained through its current assistance
of the Debtors.
The attorneys at Nelson Mullins who are principally responsible
for the representation of the Debtors, and their current hourly
rates, are:
Augustus Dixon $315 per hour
Kevin Hall $315 per hour
Nelson Mullins's professional hourly rates range from:
attorneys $140 to $400 per hour
paralegals $75 to $140 per hour
Headquartered in Lancaster, South Carolina, The Thaxton Group,
Inc., is a diversified consumer financial services company. The
Company filed for chapter 11 protection on October 17, 2003
(Bankr. Del. Case No. 03-13183). Michael G. Busenkell, Esq., and
Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell
represent the Debtor in their restructuring efforts. When the
Company filed for protection from it creditors, it listed
$206,000,000 in total assets and $242,000,000 in total debts.
TRI-UNION: Signs-Up Liskow & Lewis to Represent Two Employees
-------------------------------------------------------------
Tri-Union Development Corporation and Tri-Union Operating Company
want to retain Liskow & Lewis as Special Litigation Counsel to
represent two employees who have been named "persons of interest"
with respect to issues concerning compliance with regulatory
agency rules and procedures.
In the Government inquiry regarding compliance issues, Liskow &
Lewis will represent the Employees, including communicating with
government authorities and representing the Employees on this and
any other matters.
The Debtors remain to deny wrongdoing and are aligned with the
Employees in seeking to address and resolve any complaints that
might arise.
Shaun G. Clarke, Esq., a partner with the firm of Liskow & Lewis,
has been selected to act as special counsel because of his
extensive experience representing corporate and individual
defendants who are subjects of grand jury investigations, his
expertise on compliance issues, his established reputation, and
his ability to advise the Employees with respect to compliance and
other government issues relating to the Grand Jury matters.
Liskow & Lewis will charge the Debtors for its legal services on
an hourly basis at its ordinary and customary hourly rates of
partners $185 to $375 per hour
associates $140 to $175 per hour
paraprofessionals $85 to $95 per hour
Mr. Clarke bills at $225 per hour.
Headquartered in Houston, Texas, Tri-Union Development Corporation
is an independent oil and natural gas company engaged in the
acquisition, development, exploration and production of oil and
natural gas properties. The Company filed for chapter 11
protection on October 20, 2003 (Bankr. S.D. Tex. Case No. 03-
44908). Charles A Beckham, Jr., Esq., Eric B. Terry, Esq., JoAnn
Lippman, Esq., and Patrick Lamont Hughes, Esq., at Haynes & Boone
represent the Debtors in their restructuring efforts. As of
March 31, 2003, the Debtors listed $117,620,142 in total assets
and $167,519,109 in total debts.
TV AZTECA: Special Committee Taps Munger Tolles as Legal Counsel
----------------------------------------------------------------
TV Azteca, S.A. de C.V. (NYSE: TZA) (BMV: TVAZTCA), one of the two
largest producers of Spanish-language television programming in
the world, announced that the entirety of its independent board
members has formed a special committee to review and make
recommendations regarding differences in opinion concerning
disclosures related to Unefon, in compliance with the
Sarbanes-Oxley Act.
The committee will act in total independence from TV Azteca's
management, and will be chaired by James Jones, a distinguished
independent board member of TV Azteca since 2000.
Following several meetings during the last two weeks to select
counsel, the committee has informed the rest of the board and
management that they have unanimously agreed to retain the Los
Angeles firm of Munger, Tolles and Olson as the independent legal
counsel to this committee. Munger, Tolles and Olson is a highly
regarded corporate law firm with special experience in corporate
investigations and US securities law matters. The committee has
also informed that the engaged firm will initiate its review
immediately.
TV Azteca is one of the two largest producers of Spanish-language
television programming in the world, operating two national
television networks in Mexico, Azteca 13 and Azteca 7, through
more than 300 owned and operated stations across the country. TV
Azteca affiliates include Azteca America Network, a new broadcast
television network focused on the rapidly growing US Hispanic
market, and Todito.com, an Internet portal for North American
Spanish speakers.
As previously reported, Fitch Ratings assigned a 'B+' senior
unsecured rating to TV Azteca S.A. de C.V. The Rating Outlook is
Stable.
The rating applies to $125 million 10.375% senior notes due 2004,
$300 million 10.5% senior notes due 2007, and $122 million of
long-term loans.
TV Azteca's ratings are based on the company's solid business
position, strong cash flow from its Mexican TV broadcasting
business, leveraged financial position, near term liquidity and
refinancing needs, and the indirect burden of debt at parent
company Azteca Holdings in the form of associated dividend
required to service this debt.
UNIVERSAL GUARDIAN: Default on Notes Raises Going Concern Doubt
---------------------------------------------------------------
Universal Guardian Holdings Inc. has incurred a net loss since its
inception, as of September 30, 2003, had a working capital
deficit, is in default on certain notes payable and is involved in
certain litigation. In addition, the Company was notified by the
U.S. Navy's prime-contractor that the task orders had been
terminated, to cease all work and to submit final invoices for the
Company, its subcontractors, equipment and related expenses.
This notification will significantly impact future revenue. These
matters raise substantial doubt about the Company's ability to
continue as a going concern.
Management plans to take the following steps that it believes will
be sufficient to provide the Company with the ability to continue
in existence. Management plans to raise additional capital
through private equity financing by selling shares of the
Company's common stock, to reduce its corporate overhead, and to
seek new profitable contracts to install its security systems.
In August 2003, three members of Universal Guardian Holdings'
senior management team, including its Chief Financial Officer,
resigned from their positions. In September 2003 another manager
resigned his position from the Company. Management indicates that
it does not believe that in the long run these departures will
have a material impact on operations.
US AIRWAYS: Paladini Named Vice President of Customer Service
-------------------------------------------------------------
US Airways (Nasdaq: UAIR) named Donna Paladini to fill the vacant
position of vice president of Customer Service, effective
immediately.
Paladini, who has been a managing director of Customer Service
since 2002, joined US Airways in 1982 as an auditor and has served
in a variety of management positions. These include regional
director of Customer Service, director of Customer Advocacy,
director of Dining and Cabin Services and divisional controller
for Customer Service.
"Donna brings a wealth of experience, energy and leadership talent
to US Airways' continuing efforts to deliver excellent customer
service, and after an exhaustive search, we concluded that she was
the most capable candidate to fill this open position," said Al
Crellin, executive vice president of operations, to whom she will
report.
As head of the Customer Service department, Paladini will be
responsible for airport operations, including ticketing, gates,
baggage and ramp functions, at 67 locations on the US Airways
system involving approximately 8,500 employees.
She holds a bachelor of science degree in business administration
from Robert Morris College in Pittsburgh.
US ONCOLOGY: Will Present at JP Morgan Conference on Tuesday
------------------------------------------------------------
US Oncology, Inc. (Nasdaq: USON) will be one of the presenting
companies at the 22nd Annual JP Morgan Healthcare Conference to be
held Jan. 12-15, 2004 at the Westin St. Francis Hotel in San
Francisco.
US Oncology Chief Financial Officer Bruce Broussard will deliver a
presentation outlining the company's current operations and
financial results, its position in the cancer-care services
industry and the impact of recently passed Medicare reform
legislation.
The 30-minute presentation on Tuesday, Jan. 13 at 11:30 a.m. (PST)
will be followed by a question-and-answer session. An electronic
copy of the presentation will be available on the Investor
Relations section of the US Oncology Web site at
http://www.usoncology.com/following Broussard's session.
US Oncology (S&P, BB Corporate Credit Rating, Negative),
headquartered in Houston, Texas, is America's premier cancer-care
services company. The company supports the cancer-care community
by providing oncology pharmaceutical services, cancer center
services, and cancer research services to community-based
practices. US Oncology is affiliated with more than 850
physicians operating in over 480 locations, including 76
outpatient cancer centers, in 30 states.
USI HLDGS.: Closes Acquisition of Diversified Insurance Services
----------------------------------------------------------------
U.S.I. Holdings Corporation, (Nasdaq: USIH) acquired all the
issued and outstanding capital stock of Chicago, IL-based
Diversified Insurance Services, Inc.
Established in 1985, Diversified provides group and individual
employee benefits to middle market clients. Patrick Moore,
President and CEO of Diversified will assume the role of Senior
Vice President and Client Manager for USI Insurance Services of
Illinois.
This acquisition will be integrated with USI's existing Chicago
operation and is expected to contribute $800,000 in revenues in
the next twelve months.
Commenting on the transaction, David L. Eslick, USI's Chairman,
President and CEO, said, "The acquisition of Diversified
exemplifies USI's commitment to complete acquisitions that
increase offerings to our clients. By combining the professional
resources of the two companies, USI will increase cross-sell
opportunities by providing clients a broad base of services,
previously unavailable to them from a single source. Diversified
has been serving the Chicago area since 1985 and we are pleased to
welcome Patrick Moore and his team to USI."
Jeffrey Ludwig, Executive Vice President and COO of USI Midwest,
added, "The associates of both agencies combine a depth of
experience and a history of relationships in the Chicago-area that
will enable us to better serve our clients. Patrick Moore and I
are committed to increasing our value to our clients by providing
a broad base of services through a single provider."
Also commenting on the news, Mr. Moore said, "By becoming part of
a larger team, we will be able to provide a more broad range of
services to our clients. The combination our relationships in the
Chicago-area with the strength of the USI team's capabilities and
offerings will increase our value to all our middle market
clients."
Founded in 1994, USI (S&P, BB- Counterparty Credit and Bank Loan
Ratings, Stable Outlook) is a leading distributor of insurance and
financial products and services to businesses throughout the
United States. USI is headquartered in Briarcliff Manor, NY, and
operates out of 63 offices in 19 states. Additional information
about USI may be found at http://www.usi.biz/
VENTAS INC: Offering 2% Discount on DRIP Purchases
--------------------------------------------------
Ventas, Inc. (NYSE: VTR) said that, beginning with its 2004 first
quarter dividend, it will offer a two percent discount on the
purchase price of its stock to shareholders who reinvest their
dividends and/or make optional cash purchases of Ventas common
stock through the Company's Distribution Reinvestment and Stock
Purchase Plan (DRIP).
"We're very pleased to offer this discount on DRIP purchases to
our shareholders, providing a convenient, economical and simple
approach for growing their investments in Ventas," Chairman,
President and CEO Debra A. Cafaro said. "In addition to the
discount, DRIP participants will not be charged any brokerage
commission or service charge for shares of common stock purchased
directly from Ventas. So this really is an excellent way for
existing shareholders and new investors to build their stakes in
Ventas."
Shareholders will be able to take advantage of this two percent
discount on the direct purchase of Ventas common stock beginning
with the 2004 first quarter dividend, which is expected to be paid
in March 2004. In most cases, dividend reinvestment purchases
will be limited to $25,000 each quarter and optional cash
purchases will be capped at $5,000 per month. Dividend
declarations remain subject to the discretion of the Ventas Board
of Directors, and there can be no assurance regarding the amount
or timing of any future dividends payable by the Company.
Ventas's DRIP has been effective since January 2002. The amended
DRIP program gives Ventas the flexibility to offer a sliding scale
discount of zero to five percent on purchases of common shares of
stock directly from the Company, as circumstances warrant. The
Company reserves the right to change or terminate its DRIP
program. Changes to the DRIP, including changes in the discount,
will be posted on the Company's Web site at
http://www.ventasreit.com/
The discount is not available to shares of Ventas common stock
purchased in the open market. Additionally, the discount is not
applicable to Ventas's 2003 fourth quarter dividend, which will be
paid on January 13, 2004.
For full details of the DRIP, please refer to the Company's
Prospectus and the Prospectus Supplement, both of which are
available from the Plan Administrator, National City Bank, at 1-
800-622-6757.
Ventas, Inc. -- whose September 30, 2003 balance sheet shows a
total shareholders' equity deficit of about $24 million -- is a
healthcare real estate investment trust that owns 42 hospitals,
194 nursing facilities and nine other healthcare and senior
housing facilities in 37 states. The Company also has investments
in 25 additional healthcare and senior housing facilities. More
information about Ventas can be found on its Web site at
http://www.ventasreit.com/
WABASH NATIONAL: Reports Conversion of Series B 6% Preferreds
-------------------------------------------------------------
Wabash National Corporation (NYSE: WNC) announced that holders of
the outstanding Series B 6% Cumulative Convertible Exchangeable
Preferred Stock totaling $17.6 million elected to convert the
Series B Preferred shares into common shares of Wabash.
The Series B Preferred Shares were converted into common shares of
Wabash prior to the redemption date at a conversion price of
$21.375 per share, plus accrued and unpaid dividends, and resulted
in the issuance of an additional 823,000 shares of common stock.
The number of common shares outstanding as of December 31, 2003
was approximately 26.8 million.
In addition, effective January 1, 2004, all of the conditions for
conversion of the Company's $125 million 3-1/4% Convertible Senior
Unsecured Notes into approximately 6.5 million common shares of
Wabash were met. As a result, approximately 6.5 million common
shares will be included in the number of shares outstanding for
purposes of calculating fully diluted earnings per share during
2004.
Wabash National Corporation designs, manufactures, and markets
standard and customized truck trailers under the Wabash(TM) brand
name. The Company is one of the world's largest manufacturers of
truck trailers and a leading manufacturer of composite trailers.
The Company's wholly owned subsidiary, Wabash National Trailer
Centers, is one of the leading retail distributors of new and used
trailers and aftermarket parts throughout the U.S. and Canada.
As reported in Troubled Company Reporter's April 16, 2003 edition,
Wabash National completed the amendment of its credit facilities,
which includes its revolving line of credit, its senior notes, its
receivables facility and its lease facility. The amendment revises
certain of the Company's financial covenants and adjusts downward
the required monthly principal payments during 2003.
In another previous report, the Company said it was not prepared
to predict that first quarter results, or any other future
periods, would achieve net income, and did not expect to announce
further results before the first quarter would be completed, given
the softness in demand and other factors.
The Company remains in a highly liquidity-constrained environment,
and even though its bank lenders have waived current covenant
defaults, there is no certainty that the Company will be able to
successfully negotiate modified financial covenants to enable it
to achieve compliance going forward, or that, even if it does, its
liquidity position will be materially more secure.
At September 30, 2003, Wabash National's balance sheet shows that
its total shareholders' equity has further shrunk to about $20
million from about $74 million nine months ago.
WARNACO: Non-Executive Chairman Stuart D. Buchalter Dies at 66
--------------------------------------------------------------
The Warnaco Group, Inc. (NASDAQ: WRNC) regretfully announced that
Non-Executive Chairman Stuart D. Buchalter, 66, passed away
unexpectedly earlier this week.
Mr. Buchalter joined the Warnaco Board in February 2000 and played
a critical role in the successful turnaround of the Company,
serving on the Board's restructuring committee from June 2001 to
February 2003. He was elected Non-Executive Chairman of the Board
in November 2001.
Joe Gromek, Warnaco's President and Chief Executive Officer, said,
"We are deeply saddened by the loss of Stuart, and our thoughts
and prayers are with his family. Stuart was admired and respected
as both a friend and colleague. His contributions to Warnaco were
instrumental to its reorganization. He will be greatly missed."
Mr. Buchalter was Of Counsel to the California-based law firm of
Buchalter, Nemer, Fields & Younger P.C. He also served as a
director of City National Corporation and as Chairman of the Board
of Trustees of Otis College of Art & Design. Mr. Buchalter earned
his law degree at Harvard University in 1962 and his Bachelor of
Arts degree at the University of California at Berkeley in 1959.
Warnaco's Board of Directors has named Charles R. Perrin Acting
Non-Executive Chairman of the Board. Mr. Perrin, 58, joined the
Warnaco Board in April 2003. He previously served as Chairman and
Chief Executive Officer of Avon Products, Inc., and before that
Chairman and Chief Executive Officer of Duracell International,
Inc., where he led the Company's successful privatization and
subsequent sale to The Gillette Company. Mr. Perrin is also the
Chairman of Clearpool, Inc. and a member of the Board of Directors
of Campbell Soup Company. Mr. Perrin holds an M.B.A. from Columbia
University and a B.A. from Trinity College.
Mr. Perrin said, "We were all greatly honored to work alongside
Stuart. His outstanding leadership, strong commitment and deep
integrity were all crucial factors in the renewed success of
Warnaco. Stuart was truly an inspiration to us all both
professionally and personally, and we will work to carry on his
legacy."
The Warnaco Group, Inc. (NASDAQ: WRNC), headquartered in New York,
is a leading manufacturer of intimate apparel, menswear,
jeanswear, swimwear, men's and women's sportswear and accessories
sold under such owned and licensed brands as Warner's(R), Olga(R),
Lejaby(R), Body Nancy Ganz(TM), Chaps Ralph Lauren(R), Calvin
Klein(R) men's and women's underwear, men's accessories, men's,
women's, junior women's and children's jeans and women's and
juniors swimwear, Speedo(R) men's, women's and children's
swimwear, sportswear and swimwear accessories, Anne Cole
Collection(R), Cole of California(R), Catalina(R) and Nautica(R)
swimwear.
WEIRTON STEEL: MABCO Steam Asks Court to Allow $33 Million Claim
----------------------------------------------------------------
MABCO Steam Company, LLC objects to the claim amount designated
by Weirton Steel Corporation for voting purposes.
According to James A. Byrum, Jr., Esq., at Schrader, Byrd &
Companion, in Wheeling, West Virginia, on October 26, 2001, FW
Holdings, Inc., a wholly owned subsidiary of the Debtor, sold a
steam generation plant and certain related plant boilers and
electricity generating assets for $30,000,000 to MABCO Steam
Company. The MABCO assets are essential to the operation of the
Debtor's integrated steel mill. Subsequently, MABCO agreed to
lease the MABCO Assets back to FW Holdings pursuant to a Lease
Agreement entered on October 26, 2001. Under the Lease, basic
rent is due quarterly:
-- beginning March 31, 2003 and continuing through
December 31, 2007 for $1,500,000; and
-- from March 31, 2008 through December 31, 2012 for
$1,600,000.
The obligations arising under the Lease are scheduled to be
completed on or about December 31, 2012.
Pursuant to a Guaranty Agreement dated October 26, 2001, the
Debtor guaranteed the obligations of FW Holdings under the Lease
in the event of a default by FW Holdings. One of the events of
default under the Lease is the Debtor's filing for Chapter 11
bankruptcy protection. Thus, Mr. Byrum notes, FW Holdings is
currently in default of its non-monetary obligations under the
Lease.
On October 17, 2003, MABCO filed a proof of claim for $33,096,367
that reflected the total remaining obligations due under the
Lease to MABCO by FW Holdings and guaranteed by the Debtor. The
Claim is a general unsecured claim and constitutes a Class 6
claim.
Mr. Byrum tells Judge Friend that the Debtor classified the claim
that MABCO filed as a Class 6 claim but determined that, for
voting purposes, the amount of the claim is only $1. The Debtor
has otherwise not objected to MABCO's Claim.
Accordingly, MABCO objects to the amount designated for its claim
by the Debtor for voting purposes. MABCO contends that its Claim
should be allowed for $33,096,367 for voting purposes only,
rather than in the amount of $1.
Mr. Byrum asserts that it would be wholly inequitable to prevent
MABCO from voting the full amount of its claim given:
(a) that voting to accept or reject the Plan will essentially
be the only opportunity for MABCO to voice its position on
the Plan;
(b) the limited ability of FW Holdings to make lease payments
without the Debtor's funds; and
(c) the significant impact that MABCO's claim may have on
Class 6.
Section 502(c) of the Bankruptcy Code provides for an estimation
of the amount of a contingent or unliquidated claim for purpose
of its allowance, when the actual liquidation of the claim as
determined by the Court, would unduly cause delay to the
administration of the case. In particular, Section 502(c)
states:
"There shall be estimated for purpose of allowance under this
section -
(1) any contingent or unliquidated claim, fixing or
liquidation of which, as the case may be, would unduly
delay the administration of the case; or
(2) any right to payment arising from a right to an
equitable remedy for breach of performance."
Mr. Byrum emphasizes that the language of Section 502(c) is
mandatory and places an affirmative duty on the Bankruptcy Court
to estimate unliquidated claims in the proper circumstance.
Moreover, MABCO's Claim must be estimated because waiting for a
determination of the Debtor's liability under the Lease before
determining which parties may vote on the Chapter 11 plan would
cause an unnecessary and undue delay to the Debtor's bankruptcy
proceedings. Additionally and in view of the size of MABCO's
Claim, it will have a significant impact on voting in Class 6.
"The bankruptcy court need only arrive at a reasonable estimate
of the probable value of the claim. The estimate does not imply
any certainty to the claim; it is not a finding or fixing of an
amount. It is merely the bankruptcy court's best estimate at the
time for the purpose of permitting the confirmation process to go
forward and thus not unduly delay the chapter 11 case," Mr. Byrum
says.
Mr. Byrum argues that there is no basis for the Debtor to limit
MABCO's Claim for voting purposes to $1. Therefore, MABCO asks
the Court to allow its Claim for $33,096,367 for voting purposes
only to permit MABCO to vote the full amount of its Claim in
Class 6. (Weirton Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
WESTPOINT STEVENS: Court Clears 1185 Sixth Lease Settlement Pact
----------------------------------------------------------------
WestPoint Stevens Inc., and its debtor-affiliates obtained the
U.S. Bankruptcy Court's approval of a Settlement Agreement with
1185 Sixth LLC.
The
salient terms of the Settlement Agreement include:
(a) Settlement Payment
1185 Sixth will pay $905,000 to the Debtors, which
represents the payment of:
(1) $720,000 in full settlement of the Refund Claims;
(2) $100,000 compensation for additional future costs
incurred by the Debtors from the modification of the
expense calculation and increased future Additional
Rent Payments under the Lease; and
(3) $85,000 as a risk allocation premium in the event
modifications to the expense calculations under the
Lease are greater than actual expenses incurred by the
potential purchaser of the Building.
(b) Expense Calculations Modification
For purposes of calculating the Debtors' pro rata share of
expenses to be included in Additional Rent Payments,
yearly "Management Fees" will be $300,000 for 2003 through
2005 and the "Contract Cleaning and Window Cleaning
Expense" will be $2,063,848 for 2004 and $2,125,764 for
2005. Additional Rent Payments for November and December
2003 will be $101,917 per month. The $100,000 incremental
increase in future Additional Rent Payments due from the
Debtors, which arise from the modification of the Lease,
be reimbursed and included as funds paid to the Debtors
under the Settlement Payment.
(c) Release
The Debtors will release 1185 Sixth and any potential
purchaser from any claims for overpayment of the
Additional Rent Payments for the period before January 1,
2004, subject to reconciliation of certain actual
expenses accrued during 2003 as provided for under the
Lease.
(d) Effectiveness
The Settlement Agreement is contingent upon obtaining
Court approval before January 31, 2004.
Backgrounder
WestPoint Stevens, Inc., as successor-in-interest to J.P. Stevens
& Co., Inc., is a tenant under a certain non-residential real
property lease with 1185 Sixth LLC. The premises subject to the
Lease, dated as of November 25, 1968, is located at 1185 Avenue
of the Americas, in New York.
Under the Lease, the Debtors rent the 9th through 13th floors, the
entire 15th floor, and 10,150 square feet of the Building's
basement. In addition, the Lease is subject to a license with
Ralph Lauren Home collection, a division of Polo Ralph Lauren
Corporation, under which Ralph Lauren occupies the entire 9th
floor and a portion of the 10th floor. The Debtors use the
Premises as their principal headquarters in New York for
administrative, marketing, and other corporate offices. The Lease
is scheduled to expire by its own terms on December 6, 2005.
Pursuant to the Lease terms, the Debtors are responsible for
certain charges in addition to monthly base rent, which represent
their pro rata share by square footage of various yearly expenses
that are incurred by 1185 Sixth. The expenses include cleaning
services, utilities, sanitation costs, security, repairs and
maintenance, management fees, and miscellaneous administrative
and operating costs. The Debtors' base rent and all other
expense obligations under the Lease total $3,100,000 yearly.
Recently, upon reviewing past Additional Rent Payments, the
Debtors believe that they have overpaid $720,000 in Additional
Rent Payments for the Lease years 2001 through 2003.
Accordingly, the Debtors sought an overpayment refund from 1185
Sixth.
Currently, 1185 Sixth is in the process of selling the Building
to a third party, with an anticipated closing date before the end
of 2003. Before closing a sale of the Building with the
potential purchasers, 1185 Sixth entered into negotiations with
the Debtors to settle the Refund Claims. 1185 Sixth also sought
certain modifications to the Debtors' Lease for calculating
Additional Rent Payments to more closely reflect the actual yearly
costs incurred and to make the Lease terms more consistent with
the leases of the other Building tenants. These modifications
would incrementally increase the Additional Rent Payments due from
the Debtors under the Lease. As consideration for the Debtors'
agreement to modify the Lease, 1185 Sixth offered to reimburse
the Debtors for the full amount of any increase in the future
Additional Rent Payments arising from the modifications.
After extensive, good faith, arm's-length negotiations, the
Debtors and 1185 Sixth entered into a Settlement Agreement to
resolve the Refund Claims and modify the Lease with respect to
certain expense calculations of Additional Rent Payments.
(WestPoint Bankruptcy News, Issue No. 15; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
WILD RIVER DUCTS: Case Summary & 17 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Wild River Ducts, Inc.
dba Midwest Ducts
780 River Avenue
Prairie Farm, Wisconsin 54762
Bankruptcy Case No.: 03-19290
Type of Business: The Debtor manufactures a complete line of
Duct, Pipe and fittings to meet the needs of
the residential housing contractor.
See http://www.midwestducts.com/for more
information.
Chapter 11 Petition Date: December 26, 2003
Court: Western District of Wisconsin (Eau Claire)
Judge: Thomas S. Utschig
Debtor's Counsel: Mart W. Swenson, Esq.
Leman & Swenson Law Offices
118 East Grand Avenue
P.O. Box 185
Eau Claire, WI 54702
Tel: 715-835-7779
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 17 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
North Pacific Steel Group Note $368,845
P.O. Box 3968
Portland, OR 97208-3968
Tri-Orient Purchases $173,525
Medinah Metals Purchases $133,536
Majestic Steel Service, Inc. Note $111,290
Pacesetter Steel Purchases $67,260
The Techs Purchases $67,172
Hubbell Steel Corp Note $63,042
King & Brainerd Sales Note $60,064
Associates
Gladwin Machinery & Supply Note $55,657
Co.
Menasha Packaging Company Note $54,126
Richard Jorgensen Cash $47,000
WestView Sales Purchases $37,666
Tier-Rack Corporation Purchases $15,004
Viking Electric Supply Note $11,679
Starwood Trading LLC Purchases $10,000
Quality Metals Note $9,863
Corporate Incentives Note $7,692
WORLD HEART CORP: OTCBB Stock Trading Symbol Reverts to "WHTOF"
---------------------------------------------------------------
World Heart Corporation (OTCBB: WHTOF, TSX: WHT) confirmed with
the NASDAQ that the change in the Company's stock symbol on the
Over-the-counter Bulletin Board from "WHTOF" to "WHTOE" instituted
by NASDAQ on January 6, 2004 was the result of an administrative
error in the electronic filing of the Company's 2002 annual Form
20-F that incorrectly recorded the Company as having a June 30
year end (the Company's year end is December 31) which would have
required the filing of an annual report on Form 20-F with the
SEC on or prior to December 31, 2003.
When NASDAQ monitoring systems did not detect the filing of this
expected report, the symbol was automatically changed in
accordance with NASDAQ procedures.
The Company's stock symbol reverted to "WHTOF" yesterday.
The Company has been and is currently in compliance with all
required filings.
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 INC: GSA Removes Company from Excluded Parties List
------------------------------------------------------------
A U.S. General Services Administration Suspension and Debarment
Official today removed WorldCom from the Excluded Parties Listing
System after finding that the telecommunications company had made
sufficient management and oversight changes.
This decision comes after an exhaustive review conducted by GSA
that included input from the WorldCom's court-appointed Corporate
Monitor, WorldCom's auditors, Deloitte & Touche and other outside
experts. The review also included input, both supporting and
opposing debarment, from Members of Congress including Senator
Susan Collins, Congressman Tom Davis and Congressman John Sweeney.
The decision to remove the company from the excluded parties list
is based on the fact that MCI WorldCom has remedied the two key
problems raised in the July 31, 2003, Notice of Proposed
Debarment: accounting controls and business ethics.
The decision to terminate the debarment proceedings reflects
WorldCom's improved system controls, a strong corporate financial
organization, enhanced authority and staff as well as tangible
positive results and improved business ethics.
Joseph A. Neurauter, GSA's Suspension and Debarment Official,
determined that MCI had changed sufficiently to warrant treatment
as a responsible federal contractor and can again compete for
government contracts while adhering to stringent GSA reporting
requirements for the next three years.
"I have concluded that the protection of the government's interest
does not require the debarment of WorldCom. Accordingly, I have
terminated the debarment proceedings against WorldCom. The
termination is effective immediately," Neurauter said in a
January 7, 2004, letter to Michael D. Capellas, CEO for WorldCom,
Inc.
The Administrative Agreement detailing the reporting requirements
runs for a term of three years and requires WorldCom to report to
GSA regularly during this period and to report any changes in
senior personnel, violations of ethics standards or other
divergences from the company's action plans. The decision allows
WorldCom to again compete for government contracts, but violation
of the agreement's provisions would constitute a cause for
WorldCom's debarment.
GSA initially proposed MCI WorldCom for debarment on July 31,
2003, based on information provided by GSA's Office of Inspector
General and MCI WorldCom, citing "significant weaknesses" in MCI
WorldCom's internal controls and corporate governance structure.
GSA is a centralized federal procurement, property management, and
policy agency created by Congress to improve government efficiency
and help federal agencies better serve the public. It acquires, on
behalf of federal agencies, office space, equipment,
telecommunications, information technology, supplies and services.
It also plays a key role in developing and implementing
government-wide policies. GSA, comprised of 13,000 associates,
provides services and solutions for the office operations of over
1 million federal workers located in more than 8,000 government-
owned and leased buildings in 2,000 U.S. communities.
WORLDCOM INC: MCI Reinstated as Federal Government Contractor
-------------------------------------------------------------
Wednesday, the U.S. General Services Administration announced it
has lifted the proposed debarment of MCI and the company is again
eligible to receive new government business and contract
extensions.
The following statement should be attributed to Michael Capellas,
MCI chairman and CEO:
"Over the past months, MCI and its employees have taken extensive
steps to ensure the company operates with the utmost integrity.
We have worked diligently to fulfill all of the ethics and
internal controls criteria necessary to being a good federal
government contractor.
"We enhanced our corporate ethics program and accounting controls,
hired a new Chief Ethics Officer and completed company-wide ethics
training. [Wednes]day's GSA decision is a sign of confidence in
the new MCI. Our employees are grateful to be eligible for new
government business and contract extensions again.
"We will continue to provide our federal and state government
customers with best-in-class service and support that they have
come to expect from MCI."
WorldCom, Inc. (WCOEQ, MCWEQ), which, together with its
subsidiaries, currently conducts business under the MCI brand
name, is a leading global communications provider, delivering
innovative, cost-effective, advanced communications connectivity
to businesses, governments and consumers. With the industry's
most expansive global IP backbone, based on the number of
company-owned POPs, and wholly-owned data networks, WorldCom
develops the converged communications products and services that
are the foundation for commerce and communications in today's
market. For more information, go to http://www.mci.com/
W.R. GRACE: Amends ART Loan and DIP Financing Agreement Terms
-------------------------------------------------------------
The W.R. Grace Debtors seek the Court's authority to amend their
Credit Agreement with Advanced Refining Technologies LLC to
extend the termination date from March 1, 2005, to March 1, 2006,
and increase the credit line under that Agreement from
$11,000,000 to $24,750,000.
The Debtors also seek to amend the restrictive covenants of their
DIP Facility so that W. R. Grace & Co.-Conn. can make loans under
the ART Credit Agreement under the increased credit line.
ART and Its Borrowing Funding
Effective March 1, 2001, Grace-Conn. and Chevron Products
Company, a division of Chevron USA, Inc., formed ART, a Delaware
limited liability company. ART develops, manufactures and sells
hydroprocessing catalysts, which are used in the petroleum
refining industry for the removal of certain impurities from
petroleum feedstock. Grace-Conn. owns a 55% interest in ART and
Chevron USA owns a 45% interest. ART is governed by a Limited
Liability Company Agreement of March 2001 between Grace-Conn. and
Chevron USA.
In connection with the formation of ART, Grace-Conn. and Chevron
Capital Corporation, an affiliate of Chevron USA, signed separate
Credit Agreements with ART under which they provide ART with
$20,000,000 revolving credit in proportion to the ownership of
ART -- $11,000,000 from Grace-Conn. and $9,000,000 from Chevron
Capital. The current ART Credit Agreements expire on March 1,
2005. Other than the credit amounts, the two ART Credit
Agreements are substantially identical.
The Operating Agreement provides that loans under the ART Credit
Agreements will be so administered that loans aggregating
$2,000,000 or integral multiples will be lent 55% by Grace-Conn.
and 45% by Chevron Capital. Whereas, for administrative
convenience, loans in lesser amounts will be made exclusively by
Grace-Conn. until their balance reaches $2,000,000.
ART's Funding
Currently, ART is funded in three ways:
(1) cash from ART's operations;
(2) extended payment terms for goods and services from
Grace-Conn. and its subsidiaries, and from Chevron
USA and its affiliates; and
(3) Grace's retention of ownership of catalyst inventory
until ART is ready to ship the inventory to its
customers.
Grace is currently the primary provider of extended payment terms
to ART because Grace manufactures and sells finished catalyst to
ART for resale to ART's customers. In addition, Grace provides
ART a greater level of research and development and sales and
administrative services than does Chevron. As of September 30,
2003, ART's payables to Grace and Chevron totaled $24,200,000, of
which $22,800,000 was owed to Grace and $1,400,000 was owed to
Chevron. On that same date, Grace held $8,200,000 of inventory
for eventual sale to ART.
The original payment terms at the time of ART's formation were 90
days for the supply of catalyst from Grace to ART, and 90 days
for all services from Grace and Chevron to ART. Effective on
July 1, 2003, the catalyst supply agreement term was reduced to
60-day payment. To further reduce the disproportionate financial
burden in Grace, effective on January 1, 2004, ART reduced the
payment term under its catalyst and services agreement with Grace
and Chevron to 30 days from the end of each month. In addition,
ART bought Grace's remaining hydroprocessing catalyst inventory
on December 31, 2003. After these changes, ART is expected to
have average month's end payables of $10,500,000 outstanding to
Grace and Chevron for catalyst and services, and Grace will no
longer hold inventory for ART.
To meet the cash requirements resulting from these changes, ART
will need borrowing capacity beyond the $20,000,000 currently
available under the ART Credit Agreements. After an extensive
financial analysis of the ART business, Grace and Chevron's
management and ART's Executive Committee concluded jointly that
the appropriate revised total borrowing capacity is $45,000,000.
This analysis looked at the 2004-2006 forecast period and
determined that ART will require a $40,000,000 maximum loan
during the second half of 2004.
While the Debtors believe that the $49,000,000 maximum
requirement reflects the most likely scenario, ART's business is
subject to uncertainty of timing as to shipments to customers.
Refiners replace fixed-bed catalysts once per year and certain
distillate catalysts even less frequently. If timing of orders
shifts by even a few months, then ART may be required to hold
inventories longer than expected and, therefore, require a
greater than expected working capital investment. By providing a
$45,000,00 capacity under the lines of credit, ART will have
available the funds necessary to carry its own finished goods
inventory, and pay its parents on 30-day terms for supplies and
services. The parties also concluded that, since current
projections indicate a need for parent financing of ART into
2006, and given the uncertainty of shipment timing, the term of
the ART Credit Agreements should be extended to March 1, 2006.
How Grace Benefits
The net effect on Grace of the payment and inventory changes is
expected to be positive. As of March 31, 2003, Grace had
$53,100,000 invested in ART working capital, which consisted of
$18,300,000 in finished goods inventory and $34,800,000 in
accounts receivable for supplies and services. The March 31,
2003 receivables were under the 90-day payment term. As of
March 31, 2004, Grace's working capital investment in ART is to
be reduced to $26,800,000, consisting of $9,800,000 in accounts
receivable for finished good inventory and services, and
$17,000,000 outstanding under the line of credit from ART. By
contrast, Chevron's investment in ART is projected to increase
from $1,400,000 at March 31, 2003, to $14,500,000 at March 31,
2004.
Based on ART's current three-year forecasts, the lines of credit
are expected to be paid back in full by 2006. After that time,
ART will be self-financing and Grace-Conn.'s investment in ART
will be reduced to the amount of its outstanding receivables for
finished goods, inventory and services, which are expected to
average $10,200,000 at month's end.
Need to Amend DIP Facility
Under the Debtors' DIP Facility, the Debtors currently are
permitted to lend ART no more than $11,000,000. The DIP Facility
will, therefore, have to be amended by the Lenders and the
Debtors to permit loans to ART of up to $24,750,000. The Debtors
and the Lenders have negotiated an amendment to the DIP Facility
to permit this. The Lenders require a $25,000 fee for the
amendment, payable ratably to those approving the amendment. (W.R.
Grace Bankruptcy News, Issue No. 52; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* Neal Gerber Expands Health Law Group with Two New Attorneys
-------------------------------------------------------------
Neal, Gerber & Eisenberg LLP (NGE), a premier, full service law
firm focusing on complex business, litigation, regulatory and
wealth management issues, announced that two attorneys have joined
the firm's Health Law Group.
The two are Jack A. Rovner, who will serve as co-chair with Dan J.
Hofmeister, Jr., and Kathryn A. Roe, who joins NGE as a partner.
Both were formerly partners at Michael Best & Friedrich LLP.
The NGE Health Law Group concentrates on advising and assisting
health care and managed care clients nationwide. The group focuses
on managed care, HIPAA, fraud and abuse, ERISA, insurance,
antitrust, and other regulatory counseling as well as health care
transactions and litigation.
"Bringing Jack and Kathy, two outstanding health care attorneys,
to Neal Gerber helps us achieve our goal of deepening our top tier
health law practice while enhancing our national reputation in the
field," said Jerry Biederman, NGE Managing Partner. "These lawyers
have an extraordinary track record for successfully handling
highly complex and difficult matters in the rapidly changing
health care field. Jack and Kathy will enhance the breadth of our
health law practice and give us the privilege of representing
additional market-leading clients. Given the scope of their
practice, there will be many opportunities for additional growth
due to synergies with other NGE practices."
"This is a real coup for us," said Dan Hofmeister. "Neal Gerber
continues to advance by hiring top notch leaders in their fields
and aligning them with stellar experts in their industry. These
new appointments will add to the diversity of our practice and
build upon our existing strengths in both health care and managed
care. Jack and Kathy possess considerable expertise in the
formation, governance and operation of hospital systems and
alliances, hospital group purchasing, provider contracting, health
insurance, managed care and other forms of health care financing.
In addition to counseling clients on compliance with anti-fraud
and abuse laws and HIPAA privacy, security and transaction
standards, Jack and Kathy represent a significant number of the
nation's Blue Cross and Blue Shield organizations and serve as
HIPAA/GLBA counsel for all Blue Cross and Blue Shield
organizations through the Blue Plan Legal Department Cooperative."
Commenting on the move to Neal Gerber, Jack Rovner said, "We were
looking for a firm that shared our pursuit of excellence and
dedication to client service as well as one that possessed the
resources to meet our clients' needs. In addition to those
attributes, the depth of Neal Gerber's various practice groups was
also a key factor in our decision as the areas of health care and
managed care increasingly require multi-disciplinary skills and
solutions. Finally, Neal Gerber offers an attractive,
entrepreneurial culture in which the firm's attorneys enjoy the
practice of law. The people at Neal Gerber are some of the most
talented in our profession. We look forward to contributing to a
new phase in the growth of Neal Gerber's Health Law Group."
Expansion of Health Law Practice Follows Growth of NGE's
Bankruptcy and
Intellectual Property Practices in Past Year
The growth of Neal Gerber's Health Law practice follows the
significant expansion of the firm's Bankruptcy practice last fall.
In October, seven attorneys from Freeborn & Peters joined the
firm, creating one of the largest bankruptcy practices in Chicago.
The group included partners Joseph D. Frank, Frances Gecker, and
Thomas C. Wolford. Also during the past year, NGE undertook a
major expansion of its Intellectual Property practice as 10 former
Altheimer & Gray (A&G) attorneys joined the firm in July. The
group included the former A&G intellectual property practice
leader Robert Browne.
"Similar to the complex issues that confront corporations as a
result of bankruptcy filings and intellectual property disputes,
the health care industry is one that is in constant turmoil as a
result of legislative changes, among other factors," said
Biederman. "These are issues that confront virtually every client
and require the expertise that only seasoned attorneys can
provide. Through the expansion of these practice areas, NGE is
well-positioned to advise clients and develop solutions for their
most pressing concerns and legal matters."
Strategic Expansion To Continue For Key Practice Areas
Biederman concluded, "We will continue to implement our controlled
and opportunistic growth plan with a focus on key practice areas.
That means adding talented and highly skilled individuals such as
those who now join our Health Law Group."
New Health Law Group Attorneys
Jack A. Rovner, Co-Chair and Partner
Jack A. Rovner, 57, brings nearly 30 years of experience in
servicing large health care and insurance corporations. His
practice areas include health law, antitrust, business counseling
and transactions, and commercial litigation. His health law
experience covers the formation, governance and operation of
hospital systems and alliances, hospital group purchasing, and
health care financing, including the formation and operation of
preferred provider organizations, physician-hospital
organizations, point of service plans and other managed care
initiatives. Mr. Rovner counsels on compliance with anti-fraud and
abuse laws, and the HIPAA privacy, security, and transaction
standards. He is the coordinator of the engagement as HIPAA/GLBA
counsel for all Blue Cross and Blue Shield organizations through
the Blue Plan Legal Department Cooperative. He has obtained
government antitrust clearance for hospital mergers and
affiliations, and participated in many of the key lawsuits that
have defined the antitrust limits on hospital group purchasing,
selective provider contracting, provider affiliations and
cooperative activities.
Mr. Rovner served as a member of the U.S. Department of Health and
Human Services Secretary's Advisory Committee on Regulatory Reform
(2002), and on the Editorial Board of the American Bar Association
publication, The Health Lawyer (1999-2002). He frequently speaks
and publishes on HIPAA, health care, and antitrust issues.
Mr. Rovner graduated from Brandeis University in 1968 with a B.A.
He earned his J.D. in 1976 cum laude from the Boston University
Law School.
Kathryn A. Roe, Partner
Kathryn A. Roe, 37, has over 10 years of experience counseling
health care clients of all types and in recent years has focused
her counseling on ERISA, HIPAA, GLBA, and other health care
regulatory compliance matters for all segments of the health care
market. Her practice also concentrates on managed care and health
plan regulation and contracting. Ms. Roe has several years'
experience working with health plans and trade associations on
issues arising from federal and state health benefits regulation
as well as with continuing care retirement communities, and other
long-term care providers on all aspects of their operation,
including their participation in alternative insurance
arrangements.
Prior to entering private practice in 1996, she served as an
attorney with a Chicagoland-based insurance company, where she
primarily handled contractual and legislative/regulatory matters
for the company's health insurance business.
Ms. Roe graduated from University of Notre Dame summa cum laude in
1988 with a B.A. She earned her J.D. in 1991 from Northwestern
University School of Law.
Neal, Gerber & Eisenberg LLP is one of the nation's premier full-
service law firms, providing a wide variety of legal services to
major corporations, private and publicly-held companies, financial
institutions and other clients throughout the United States and
around the world. The firm focuses on complex legal matters and
has experience in all areas of practice important to businesses,
including finance, mergers and acquisitions, real estate
transactions, bankruptcy and reorganizations, taxation,
litigation, health care, managed care, estate planning,
intellectual property, and labor and employment law. With
unparalleled dedication, the firm is committed to producing
superior results for both businesses and individuals. Founded in
1986 by 35 attorneys, today it is a firm of 155 attorneys.
* T. Zander Joins Sheppard Mullin as Partner at San Diego Office
----------------------------------------------------------------
Sheppard, Mullin, Richter & Hampton LLP announced that Troy Zander
has joined the firm as partner in the Finance and Bankruptcy
Practice Group in San Diego. Zander focuses his practice on
commercial finance, loan documentation and workouts, and
insolvency and creditor rights.
Zander said, "I was very attracted to Sheppard Mullin's breadth
and depth of practice areas and its collegial environment. In
addition to having one of the top finance and bankruptcy practices
in the nation, the firm enthusiastically advocates teamwork across
practices and offices."
Robert Sbardellati, administrative partner of the San Diego
office, commented, "We are delighted to have Troy join us in San
Diego. He is a recognized leader in the region and his expertise
in bankruptcy, finance and corporate matters adds valuable
additional resources to our office and firm. This is another step
for strategically growing the San Diego office and reinforcing the
firm's national expertise in finance and bankruptcy." Added
Richard Brunette, chair of the Finance and Bankruptcy Practice
Group, "Troy's commercial finance experience fits perfectly into
our client base and business model. Troy also brings a lot of
energy and enthusiasm to his practice."
Zander has represented lenders and companies in documenting high-
tech and middle-market loans aggregating in excess of $1.5
billion. Additionally, he has represented agents in syndicated
facilities aggregating in excess of $500 million. Zander has also
represented companies, secured and unsecured creditors,
committees, trustees and asset-purchasers in bankruptcy
proceedings. He has also represented lenders and companies in
federal, state and out-of-court proceedings restructuring debt in
excess of $500 million.
Zander received his law degree from the University of San Diego
School of Law in 1993, and his undergraduate degree, cum laude,
from the University of California at San Diego in 1989. He is
admitted to practice in California and Texas.
Zander is a member of the San Diego and Federal Bar Associations.
He is also a member of the Association for Corporate Growth, San
Diego, the American Bankruptcy Institute, the San Diego Bankruptcy
Forum (where he was previously on the Board) and the San Diego
Receivers Forum.
Frequently conducting presentations, Zander has addressed such
topics as perfecting security interests in intellectual property,
financing leveraged buyouts and management buyouts, and Division 9
of the Uniform Commercial Code.
Sheppard Mullin has more than 400 attorneys among its eight
offices in San Diego, Del Mar Heights, Orange County, Los Angeles,
West Los Angeles, Santa Barbara, San Francisco and Washington,
D.C. The full-service firm provides counsel in Antitrust and Trade
Regulation; Business Litigation; Construction, Environmental, Real
Estate and Land Use Litigation; Corporate; Entertainment and
Media; Finance and Bankruptcy; Financial Institutions; Government
Contracts and Regulated Industries; Healthcare; Intellectual
Property; International; Labor and Employment; Real Estate, Land
Use, Natural Resources and Environment; Tax, Employee Benefits,
Trusts and Estates; and White Collar and Civil Fraud Defense. The
Firm celebrated its 75th anniversary in 2002.
* BOOK REVIEW: Competitive Strategy for Health Care
Organizations: Techniques for Strategic Action
-------------------------------------------------------------
Authors: Alan Sheldon and Susan Windham
Publisher: Beard Books
Softcover: 190 pages
List Price: $34.95
Review by Francoise C. Arsenault
Order your personal copy today at
http://www.amazon.com/exec/obidos/ASIN/1587981351/internetbankrupt
Competitive Strategy for Health Care Organizations: Techniques for
Strategic Action is an informative book that provides practical
guidance for senior health care managers and other health care
professionals on the organizational and competitive strategic
action needed to survive and to be successful in today's
increasingly competitive health care marketplace. An important
premise of the book is that the development and implementation of
good competitive strategy involves a profound understanding of
change. As the authors state at the outset: "What may need to be
done in today's environment may involve great departure from the
past, including major changes in the skills and attitudes of
staff, and great tact and patience in bringing about the necessary
strategic training."
Although understanding change is certainly important in most
fields, the authors demonstrate the particular importance of
change to the health care field in the first and second chapters.
In Chapter 1, the authors review the three eras of medical care
(individual medicine, organizational medicine, and network
medicine) and lay the groundwork for their model for competitive
strategy development. Chapter 2 describes the factors that must be
taken into account for successful strategic decision-making. These
factors include the analysis of the environmental trends and
competitive forces affecting the health care field, past, current,
and future; the analysis of the competitive position of the
organization; the setting of goals, objectives, and a strategy;
the analysis of competitive performance; and the readaptation of
the business, if necessary, through positioning activities,
redirection of strategy, and organizational change.
Chapters 3 through 7 discuss in detail the five positioning
activities that are part of the model and therefore critical to
the development and implementation of a successful strategy:
scanning; product market analysis; collaboration; restructuring;
and managing the physician. The chapter on managing the physician
(Chapter 7) is the only section in the book that appears dated
(the book was first published in 1984). In this day of physician-
owned hospitals and physician-backed joint ventures, it is
difficult to envision the physician in the passive role of "being
managed." However, even the changing role of physicians since the
book's first publication correlates with the authors' premise that
their model for competitive strategic planning is based exactly on
understanding and anticipating change, which is no better
illustrated than in health care where change is measured not in
years but in months. These middle chapters and the other chapters
use a mixture of didactic presentation, graphs and charts,
quotations from famous individuals, and anecdotes to render what
can frequently be dry information in an entertaining and readable
format.
The final chapter of the book presents a case example (using the
"South Clinic") as a summary of many of the issues and strategic
alternatives discussed in the previous chapters. The final chapter
also discusses the competitive issues specific to various types of
health care delivery organizations, including teaching hospitals,
community hospitals, group practices, independent practice
associations, hospital groups, super groups and alliances, nursing
homes, home health agencies, and for-profits. An interesting quote
on for-profits indicates how time and change are indeed important
factors in strategic planning in the health care field: "Behind
many of the competitive concerns.lies the specter of the for-
profits. Their competitive edge has lain until now in the
excellence of their management. But developments in the past half-
decade have shown that the voluntary sector can match the for-
profits in management excellence. Despite reservations that may
not always be untrue, the for-profit sector has demonstrated that
good management can pay off in health care. But will the voluntary
institutions end up making the same mistakes and having the same
accusations leveled at them as the for-profits have? It is
disturbing to talk to the head of a voluntary hospital group and
hear him describe physicians as his potential competitors."
*********
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 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***