/raid1/www/Hosts/bankrupt/TCR_Public/040123.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 23, 2004, Vol. 8, No. 16
Headlines
4902 DUVAL CONDOMINIUMS: Voluntary Chapter 11 Case Summary
ABITIBI-CONSOLIDATED: Will Publish 4th Quarter Results on Jan. 28
ACTRADE FINANCIAL: Successfully Emerges from Chapter 11 Process
ACXIOM CORP: Reports Strong Third-Quarter Financial Results
ADELPHIA COMMS: Fee Committee Brings-In Kronish Lieb as Counsel
ADELPHIA: Deploys Sigma Systems' Service Management Portfolio
AFC ENTERPRISES: Reports Improved Q4 2003 Performance Results
ALLIED WASTE: Prices Unit's $825 Million Senior Debt Offering
ALLIED WASTE: S&P Rates Unit's $825 Million Senior Notes at BB-
ALLIED WASTE: Fitch Rates $28M Proposed Sr. Secured Notes at BB-
ALLMERICA FINANCIAL: A.M. Best Ups First Allmerica's Low-B Rating
AMERIGAS: Fitch Says UGI's Equity Acquisition Won't Affect Ratings
AMERICAN HOMEPATIENT: W. Wayne Woody Elected to Board of Directors
AMR CORP: Fourth-Quarter Net Loss Narrows to $111 Million
ANC RENTAL: Sues 75 Vendors to Recover $1.6 Million in Transfers
AURORA FOODS: Court Approves Debevoise as Committee's Counsel
BARNEYS NEW YORK: Howard Socol Discloses 6.7% Equity Stake
BMC INDUSTRIES: Receives Bank Waiver Extension through March 15
BOISE CASCADE: Frontier Resources Acquires Boise's Yakima Mills
BOYD GAMING: Declares Quarterly Cash Dividend Payable on March 2
BOYD GAMING: Will Publish Fourth-Quarter Results on February 4
BRIDGEWATER: Case Summary & 20 Largest Unsecured Creditors
BUDGET GROUP: Court Allows Payment of Linda Burch's Success Fee
CANWEST GLOBAL: First-Quarter 2004 Results Show Solid Growth
CRESCENT REAL: Reports Dividend Distributions Taxable Allocations
CUMULUS MEDIA: Will Host 4th-Quarter Conference Call on Feb. 17
DDI CORP: Completes $16 Million Common Stock Private Placement
DESC S.A.: Fitch Rates Foreign & Local Currency Rating at B+
DII INDUSTRIES: KBR Secures Nod to Assume Barracuda Agreements
DIRECTV LATIN: Court Approves Buena Vista Claim Settlement Pact
DONELLY'S HOME: Case Summary & 20 Largest Unsecured Creditors
ELAN CORP: Raises $70 Million in Four Separate Transactions
ENCOMPASS SERVICES: Has Until Feb. 26, 2004 to Challenge Claims
ENRON: Wants Go-Signal to Implement KERP and Severance Plan III
ENRON CORP: EMI Selling Partnership Interest to VF II for $10MM
ENUCLEUS INC: Agrees to Acquire PrimeWire Inc.'s Assets
FLEMING: Court Clears Amendment to C&S Asset Purchase Agreement
FRONTIER OIL: S&P Says Refinery Fire Will Not Affect Ratings
GAP INC: Brings-In Cynthia Harriss to Head Outlet Division
GLOBAL CROSSING: Court Disallows 63 Duplicate Tax Claims
JPS INDUSTRIES: Will Webcast Q4 Conference Call on January 29
KAISER ALUMINUM: Selling 65% Stake in Alpart to Glencore AG
KAISER ALUMINUM: Wants Nod for Pension Plan Distress Termination
KB HOME: Fitch Assigns BB+ Rating to $250MM Sr. Unsec. Debt Issue
KMART CORP: Asks Court to Expunge $1.8MM Account Payable Claims
LONE STAR TECHNOLOGIES: Red Ink Continues to Flow in 4th Quarter
MAGELLAN HEALTH: Executes Warrant Agreement with Wachovia Bank
MAGNATRAX CORP: Names Dennis Smith as New President and CEO
MAIL-WELL INC: Launches Tender Offer for 8-3/4% Sr. Sub. Notes
MAIL-WELL INC: Prices $320MM Senior Subordinated Debt Offering
MAIL-WELL I: S&P Assigns B Rating to $320 Million Sr. Sub. Notes
MAIL-WELL: Discloses 2004 Earnings Estimates
MASSEY ENERGY: Completes $130 Mill. Asset-Based Credit Facility
MASSEY ENERGY: Sets Q4 and FY 2003 Conference Call on January 30
METATEC INC: Completes Sale of All Assets to MTI Acquisition
MILESTONE CAPITAL: Brings-In Williams & Webster as New Auditors
MIRANT: MAGI Committee Turns to Houlihan Lokey for Fin'l Advice
MIRANT CORP: Perryville Seeks $7-Million Admin Claim Payment
NATIONAL CENTURY: Asks Court to Clears Quantum Health Settlement
NET PERCEPTIONS: Receives Obsidian's Proposal with New Conditions
NEW VISUAL: Completes Convertible Debentures Private Placement
NORTHSTAR CBO: S&P Keeps Watch On Class A-2 & A-3 Notes Ratings
NOVADEL PHARMA: Hires JH Cohn to Replace Wiss & Co. as Auditors
PARMALAT CAPITAL FINANCE: Section 304 Petition Summary
PARMALAT: Orlandia Files Bankruptcy Case against Parmalat Brazil
PARMALAT: S&P Sheds Light on Questions re Parmalat Brazil & Italy
PETRO STOPPING CENTERS: S&P Keeps Low-B Ratings on Watch Negative
PETRO STOPPING: Reports Pending Notes & Warrants Offer Results
PG&E NATIONAL: ET Debtors Want Second Exclusivity Extension
PILLOWTEX CORP: Court Approves Hilco as Real Estate Consultants
QUINTEK TECH: Begins Offering Aperture Card Outsourcing Services
QWEST: Launches New Int'l Voice Offerings for Business Customers
REDBACK NETWORKS: Dec. 31 Balance Sheet Upside-Down by $104 Mil.
RESOURCE AMERICA: Redeems $53 Million of 12% Senior Notes
ROYAL CARIBBEAN: Will Host 4th-Quarter Conference Call on Jan 29
SHAW COMMS: Board Ups Quarterly Dividend on Class A & B Shares
SIEBEL SYSTEMS: Sets Financial Analyst Day for February 13, 2004
SIEBEL SYSTEMS: Fourth-Quarter Results Stay Within Guidance Range
SILICON GRAPHICS: Dec. 26 Net Capital Deficit Widens to $240MM
SOLUTIA INC: Wants to Pull Plug on Monsanto Distribution Pact
SPECTRUM SCIENCES: Completes Significant Debt Restructuring Deal
TRICO MARINE: Pursuing Refinancing Options to US Credit Facility
ULTRA EXPRESS: Case Summary & 20 Largest Unsecured Creditors
UNIFI INC: Second-Quarter 2004 Net Loss Balloons to $9 Million
UNITED AIRLINES: Flight Attendants Refusing to Sign Agreement
UNITED AIRLINES: Lauds Gov't Effort to Reduce O'Hare Congestion
UNIVERSAL HEALTH: Declares Cash Dividend Payable on March 15
US AIRWAYS: Allows Allegheny Airport's $211 Million Claim
U.S. STEEL: Holding Q4 and FY 2003 Conference Call on January 30
USEC INC: Will Publish Q4 & FY 2003 Results on February 3, 2004
USG CORP: Trade Creditors Sell 226 Claims Totaling $1.1 Million
WESTPOINT STEVENS: Signs-Up Dickstein Shapiro as Special Counsel
WEYERHAEUSER: Selling Slave Lake Mill to Tolko for CDN$56 Million
WICKES INC: Case Summary & 20 Largest Unsecured Creditors
WRC MEDIA INC: Lenders Waive Potential Loan Covenant Violations
* BOOK REVIEW: The Rise and Fall of the Conglomerate Kings
*********
4902 DUVAL CONDOMINIUMS: Voluntary Chapter 11 Case Summary
----------------------------------------------------------
Debtor: 4902 Duval Condominiums, LLC
1000 North IH-35
Austin, Texas 78701
Bankruptcy Case No.: 04-10142
Type of Business: Real Estate
Chapter 11 Petition Date: January 5, 2004
Court: Western District of Texas (Austin)
Judge: Frank R. Monroe
Debtor's Counsel: Douglas J. Powell, Esq.
820 West 10th Street
Austin, TX 78701
Tel: 512-476-2457
Fax: 512-477-4503
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
ABITIBI-CONSOLIDATED: Will Publish 4th Quarter Results on Jan. 28
-----------------------------------------------------------------
Abitibi-Consolidated Inc. (TSX: A; NYSE:ABY) will release fourth
quarter results before the market opens on Wednesday, January 28,
2004.
Management will host a conference call and question-and-answer
session to discuss earnings that day at 11:00 A.M. (EST).
Participants will include President and Chief Executive Officer,
John W. Weaver as well as Pierre Rougeau, Senior Vice-President,
Corporate Development and Chief Financial Officer.
To participate in the conference call, investment professionals
and business media may dial 1-800-387-6216 or 514-861-6560 ten
minutes before the beginning of the call.
Who: Abitibi-Consolidated Inc.
What: Fourth Quarter and 2003 Results
When: Wednesday, January 28, 2004 at 11:00 A.M. (EST)
Conference
Call: Dial 800-387-6216 or 514-861-6560
Webcast: A live webcast of the quarterly results may be
accessed through the Company's Web site
http://www.abitibiconsolidated.com/under the
"Investors" section - "Events and
Presentations". Listeners should allow ample
time to access the webcast.
A replay of the webcast will be archived on the
Company's website.
Abitibi-Consolidated (Moody's, Ba1 Outstanding Debentures Rating)
is the world's leading producer of newsprint and value-added paper
as well as a major producer of wood products, generating sales of
$5.1 billion in 2002. With 16,000 employees, the Company does
business in more than 70 countries. Responsible for the forest
management of 18 million hectares, Abitibi-Consolidated is
committed to the sustainability of the natural resources in its
care. The Company is also the world's largest recycler of
newspapers and magazines, serving 17 metropolitan areas with more
than 10,000 Paper Retriever(R) collection points. Abitibi-
Consolidated operates 27 paper mills, 21 sawmills, three
remanufacturing facilities and one engineered wood facility in
Canada, the US, the UK, South Korea, China and Thailand.
ACTRADE FINANCIAL: Successfully Emerges from Chapter 11 Process
---------------------------------------------------------------
On January 7, 2004, the United States Bankruptcy Court for the
Southern District of New York entered an order confirming the
Second Amended Joint Plan of Liquidation of Actrade Financial
Technologies Ltd., and one of its direct U.S. subsidiaries,
Actrade Capital Inc., dated December 15, 2003, as amended, in
connection with the Debtors' cases under chapter 11 of Title 11 of
the United States Code (jointly administered under Case no. 02-
16212).
The Effective Date of the Plan was on January 8, 2004.
Further inquiries regarding the Plan or the Confirmation Order
should be directed to:
Joseph M. Vann, Esq.
Cohen Tauber Spievack & Wagner LLP
420 Lexington Avenue, 24th Floor
New York, New York 10170
Actrade Financial filed its Chapter 11 petition on December 12,
2002. The Reorganized Debtor was a publicly traded holding company
incorporated in the State of Delaware. Its business operations
were conducted through its subsidiaries that provided payment
technology solutions that automate financial processes and enhance
business-to-business commerce relationships.
ACXIOM CORP: Reports Strong Third-Quarter Financial Results
-----------------------------------------------------------
Acxiom(R) Corporation (Nasdaq: ACXM) announced revenue and
earnings results for the third quarter ended December 31, 2003.
Revenue and diluted earnings per share were $255.2 million and
$.22, respectively. Operating cash flow of $79.3 million and free
cash flow of $59.9 million for the quarter represent record cash
flow performances for the Company.
"Our third-quarter revenue, earnings, cash flow and new-business
results are all strong," Company Leader Charles D. Morgan said.
"And with the building momentum of our new Customer Information
Infrastructure (CII) grid-based solution architecture we are
establishing a solid foundation for fiscal 2005."
Highlights of Acxiom's third-quarter performance include:
-- Revenue of $255.2 million and diluted earnings per share of
$.22, which includes a $3 million distribution from the
Montgomery Ward bankruptcy and a loss of $1.4 million related
to investments.
-- Operating cash flow of $79.3 million and free cash flow of
$59.9 million, which are quarterly records for the Company and
the 10th consecutive quarter of strong cash flow performance.
Free cash flow is a non-GAAP financial measure and a
reconciliation to the comparable GAAP measure, operating cash
flow, is attached to this release.
-- New contracts that will deliver $49 million in annual revenue
and renewals that total $14 million in annual revenue.
-- Committed new deals in the pipeline that are expected to
generate $44 million in annual revenue.
-- The acquisition of Claritas Europe was completed effective
January 1, 2004.
-- The completion of a long-term, multi-faceted strategic alliance
with Accenture that is expected to drive new revenue and
improve the efficiency of Acxiom's services delivery model.
"Our increased presence in Europe and our new partnership with
Accenture represent landmark deals that will help define the
future of Acxiom," Morgan said. "Bringing Claritas Europe's data
assets together with Acxiom's proven services expertise creates an
attractive value proposition for the European marketplace.
Similarly, Accenture's strengths and Acxiom's strengths are very
complementary, and combining those strengths should improve
bottom-line results for both companies."
Morgan noted that Acxiom expanded its services agreement with
JPMorgan Chase in the quarter to include the financial
institution's credit card customer database. Other contracts were
completed with blue-chip clients including Equifax in the United
Kingdom and AutoNation Inc., Bank One Corporation, IMS Health,
Marriott Vacation Club International and Microsoft Corporation in
the U.S.
Outlook
The financial projections stated here are based on the Company's
current expectations. These projections are forward looking, and
actual results may differ materially. These projections do not
include the potential impact of any mergers, acquisitions,
divestitures or other business combinations that may be completed
in the future.
For the fourth quarter of the 2004 fiscal year, the Company
expects:
-- Revenue of $265 million to $270 million, which includes the
Claritas Europe operations.
-- Earnings per share of $.16 to $.18, which includes the
previously announced expected loss of $.02 a share from the
Claritas Europe operations.
-- Operating cash flow in excess of $40 million and free cash flow
in excess of $25 million, which increases the Company's fiscal
2004 projection for operating cash flow to more than $220
million and free cash flow to more than $155 million.
For the fiscal year ending March 31, 2005, the Company estimates
revenue of $1.14 billion to $1.19 billion and diluted earnings per
share of $.68 to $.70. The Company estimates that it will generate
operating cash flow in excess of $200 million and free cash flow
in excess of $135 million.
Acxiom Corporation (Nasdaq: ACXM) (S&P, BB+ Corporate Credit
Rating, Stable) integrates data, services and technology to create
and deliver customer and information management solutions for many
of the largest, most respected companies in the world. The core
components of Acxiom's innovative solutions are Customer Data
Integration (CDI) technology, data, database services, IT
outsourcing, consulting and analytics, and privacy leadership.
Founded in 1969, Acxiom is headquartered in Little Rock, Arkansas,
with locations throughout the United States and Europe, and in
Australia and Japan.
ADELPHIA COMMS: Fee Committee Brings-In Kronish Lieb as Counsel
---------------------------------------------------------------
At the request of the Adelphia Communications Debtors' Fee
Committee, Judge Gerber authorizes the Fee Committee to retain
Kronish Lieb Weiner & Hellman LLP as its counsel, nunc pro tunc to
November 5, 2003.
According to Jeffrey Lawton, Chairperson of the Fee Committee,
the Fee Committee determined that to effectively carry out its
responsibilities, it requires the advice of legal counsel. Most
importantly, the Fee Committee determined that it requires
counsel to effectively file objections to fee applications, to
appear in court to argue objections and, if necessary, prosecute
the objections in evidentiary hearings.
As counsel, Kronish Lieb will:
(1) assist the Fee Committee in appearing at hearings on
behalf of the Fee Committee;
(2) assist the Fee Committee with legal issues raised by
inquiries to and from the Retained Professionals and
Legal Cost Control, Inc., the auditor for the Committee;
and
(3) where necessary, attend meetings between the Fee
Committee, Legal Cost Control, and the Retained
Professionals.
Mr. Lawton relates that other than in connection with what is
necessary to render legal advice to the Fee Committee, Kronish
Lieb will not independently review fee applications or otherwise
duplicate the work performed by Legal Cost Control.
Kronish Lieb intends to apply to the Court for allowance of
compensation and reimbursement of expenses.
Mr. Lawton informs the Court that Kronish Lieb possesses
extensive knowledge and expertise in the areas of bankruptcy law
relevant to these cases, and that the firm is well qualified to
represent the Fee Committee. In selecting its counsel, the Fee
Committee sought counsel with experience in representing debtors,
creditors' committees and other committees in large Chapter 11
cases and other debt-restructuring scenarios. The attorneys in
the bankruptcy group of Kronish Lieb have the experience, having
represented a number of debtors, creditors committees and equity
security holder committees in significant reorganizations under
Chapter 11.
The firm's hourly rates in effect as of January 1, 2003 are:
Partners $525 - 550
Associates 215 - 405
Paraprofessionals 170 - 190
Kronish Lieb will maintain detailed, contemporaneous records of
time and any actual and necessary expenses incurred in connection
with the rendering of the legal services by category and nature
of the services rendered.
As a law firm with a diversified practice, Kronish Lieb in the
past had, currently has, and from time to time in the future will
have numerous interactions with the law firms, accountants, and
financial advisors who are or may be applicants for allowance of
fees and expenses in these cases, the sole matter as to which the
Fee Committee has responsibilities. It is undoubtedly true that
Kronish Lieb has had representations on the same side as and
opposed to many of the Retained Professionals and has hired many
of the firms as experts or consultants and has represented
clients in matters in which the other professionals have been
experts or consultants on the other side.
James Beldner, Esq., a member of Kronish Lieb, assures Judge
Gerber that Kronish Lieb is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code in that
Kronish Lieb, its members, counsel, and associates:
(1) are not creditors, equity security holders, or insiders of
the Debtors;
(2) are not and were not investment bankers for any
outstanding security of the Debtors;
(3) have not been, within three years before the Petition
Date:
(a) investment bankers for a security of the Debtors; or
(b) an attorney for an investment banker in connection
with the offer, sale, or issuance of a security of the
Debtors;
(4) are not and were not, within two years before the Petition
Date, a director, officer, or employee of the Debtors or
of any investment banker; and
(5) do not have an interest materially adverse to the interest
of the Debtors' estates or of any class of creditors or
equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest in,
the Debtors or an investment banker.
Mr. Beldner further discloses that:
(1) Over the past few years, the tax department of Kronish
Lieb performed certain tax work for Lazard Freres & Co.
LLC. The gross fee number was less than one tenth of one
percent of Kronish Lieb's annual billing. Kronish Lieb is
not currently rendering legal or tax consulting services
for Lazard;
(2) Don Turlington, a tax partner of Kronish Lieb, was
retained to be an expert witness in a significant tax
shelter litigation involving a Swiss pharmaceutical firm.
Sidley Austin Brown & Wood P.C. is counsel for the
pharmaceutical firm and Kronish Lieb will be an expert
witness for the pharmaceutical firm. Kronish Lieb is being
paid directly by Sidley, as is customary for experts.
However, Kronish Lieb is not performing the work on behalf
of Sidley, but for the corporate client. In discussion
with Mr. Turlington Kronish Lieb would have no issue in
being adverse to Sidley in the Adelphia case if that is
required;
(3) Kronish Lieb is counsel for the creditors committee in The
Walking Company bankruptcy case pending in Los Angeles,
and Klee, Tuchin Bogdanoff & Stern was retained by the
creditors committee as local counsel;
(4) Kronish Lieb is counsel for a creditors committee in the
Jacobsons bankruptcy case pending in Detroit. Pepper
Hamilton LLP was retained by the creditors committee as
local counsel;
(5) Kronish Lieb represented Metromedia Fiber Corp. in its
recent successful Chapter 11 case in the Southern District
of New York. Kronish Lieb continues to represent
Metromedia in certain follow-up bankruptcy and litigation
matters. Kronish Lieb filed a claim on behalf of
Metromedia against Adelphia Business Solutions which
company is not one of the present Debtors. Kronish Lieb
was advised by Adelphia Business Solutions that the
Metromedia claim is in fact a claim against Adelphia
Communications Corporation and thus, it may be necessary
that Metromedia file its claim in the Adelphia
Communications Corporation case. In that circumstance,
the General Counsel or other outside counsel representing
Metromedia will file the claim and prosecute said filing
if necessary. Kronish Lieb will not represent Metromedia
in ACOM's case;
(6) Kronish Lieb does not represent Kroll Zolfo Cooper LLC,
however, Michael Gottlieb, the son of Lawrence Gottlieb, a
bankruptcy partner, works as a junior analyst at Kroll on
matters unrelated to these Chapter 11 cases. Lawrence
Gottlieb will not work on this engagement and will have no
access to the documentation pertaining to these cases;
(7) Kronish Lieb previously represented Michael Mulcahey, a
former officer of the Debtors, in connection with
investigations of the Debtors and various officers,
directors and employees conducted by the U.S. Attorneys
Office for the Southern District of New York and the U.S.
Securities and Exchange Commission. Kronish Lieb withdrew
from its representation and ceased rendering services in
October 2002;
(8) Home Box Office, Inc. is a present client of Kronish Lieb
in matters unrelated to these Chapter 11 cases; and
(9) Viacom, Inc. is a present client of Kronish Lieb in
matters unrelated to these Chapter 11 cases. (Adelphia
Bankruptcy News, Issue No. 48; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ADELPHIA: Deploys Sigma Systems' Service Management Portfolio
-------------------------------------------------------------
Sigma Systems -- http://www.sigma-systems.com/-- the global
leader in cable broadband operational support systems has
successfully deployed the Sigma Service Management Portfolio(TM)
at Adelphia Communications.
This multi-service product portfolio provides the order
management, service provisioning and billing system integration
for Adelphia's PowerLink High Speed Data and Internet offerings,
and lays the OSS foundation for multi-service provisioning of
Adelphia's IP-enabled future services.
"One of Adelphia's most important business initiatives is to
increase the speed, performance and subscriber growth for our
residential high-speed data offerings," said Adelphia's Chief
Technology Officer, Marwan Fawaz. "We selected Sigma Systems as a
key vendor to automate service delivery processes, accelerate
service deployment and improve our bottom-line. Sigma's
demonstrated global cable deployments and impeccable customer
references coupled with its product's proven architecture were key
factors in our decision to implement Sigma's service management
products."
The solution at Adelphia comprises the Sigma Service Management
Platform and the Sigma Service Management Suite for Internet
services as well as adapters to integrate with third-party
billing, device provisioning and e-mail systems. The Sigma Service
Management Portfolio facilitates rapid commercial deployment and
integrates easily with external systems while providing the
necessary scale and performance to manage millions of
geographically-spread subscribers. The solution includes pre-
defined high-speed data service definitions, a robust and
configurable service network topology model and the automated
workflow processes to provision high-speed data and Internet
services.
"The Sigma Service Management Solution provides a configurable and
adaptable solution for IP services," said Adelphia's Director of
High Speed Data Strategy and Product Development, Matt Bell. "The
solution was instrumental in our achieving a critical milestone in
preparing to deliver all IP related services across our nationwide
network. The Sigma solution provides the service management
platform for our Adelphia PowerTools OSS infrastructure; which
enables us to respond to market demands quickly and effectively."
As part of the implementation, Sigma Systems' team defined the
solution's requirements, provided product configuration and
customizations and integrated its Service Management Platform with
Adelphia's billing systems from CSG Systems and DST Innovis, as
well as service infrastructure systems from ADC, OpenWave and
SupportSoft. Sigma's product suite was configured and delivered to
Adelphia in under 30 days with all subscribers migrated in 73
days, making this installation fast, efficient and seamless.
Today, the suite supports more than one million high-speed data
subscribers on Adelphia's state-of-the-art network.
"We are delighted to play a key part of Adelphia's IP Services
framework," says Tim Spencer, President and COO, Sigma Systems.
"Our significant and ongoing investments in our product ensures
our cable broadband solutions can be rapidly deployed and easily
integrated. Our deployment at Adelphia is a perfect example of our
expertise in complex service management environments."
The Sigma Service Management Platform is the core of Sigma's
comprehensive portfolio of service management solutions, which
also includes advanced capabilities for subscriber and service
provisioning for data services, voice over IP, wireless and
satellite services, network and resource management and advanced
service quality tools. With more than 8 million subscribers under
management world-wide, Sigma Systems is a global leader,
recognized in providing the finest solutions in multi-service
service management solutions for cable operators. Sigma's
comprehensive capabilities include support for multi-vendor,
multi-service networks including Packet cable telephony, SIP
telephony, GR303/V5.2 telephony, cable high-speed internet, ISP
services, wireless 1x, 2.5G/3G infrastructures, and advanced set-
tops.
Sigma Systems is the premier provider and leader in designing,
developing and deploying broadband OSS solutions including
creating managing, provisioning and diagnosing broadband services.
The company's award-winning Service Management(TM) Platform
empowers broadband service providers for cable, wireless and
satellite to automate their service delivery environment,
significantly lower their operating and capital expenses, while
leveraging their existing technology and back-office investments.
Sigma Systems is also the first OSS provider to deliver automated
service provisioning solutions for cable high-speed Internet,
interactive TV and cable telephony services. The company's OSS
products are the most configurable, adaptable, scalable and
reliable in the market place today - where operators can readily
deploy with confidence based upon Sigma's commercial experience.
Additional information about Sigma Systems can be found at
http://www.sigma-systems.com/
AFC ENTERPRISES: Reports Improved Q4 2003 Performance Results
-------------------------------------------------------------
AFC Enterprises, Inc. (Ticker: AFCE), the franchisor and operator
of Popeyes(R) Chicken & Biscuits, Church's Chicken(TM),
Cinnabon(R) and the franchisor of Seattle's Best Coffee(R) in
Hawaii, on military bases and internationally, announced operating
performance results for the fourth quarter of 2003, which included
the Company's fiscal period 11 (10/6-11/2), period 12 (11/3-11/30)
and period 13 (12/1-12/28). Results for periods 11 and 12 were
previously announced in a press release dated December 16, 2003.
Overall Performance
Domestic Same-Store Sales Growth
AFC reported that blended domestic same-store sales growth at its
restaurants and bakeries were up 0.4 percent for the fourth
quarter of 2003, compared to a decrease of 3.3 percent for the
fourth quarter of 2002. The Company continued to see improvements
in its domestic same-store sales growth throughout the quarter,
representing AFC's first quarter of positive domestic performance
since the second quarter of 2002.
AFC's average check for the fourth quarter of 2003 also improved
primarily due to the Company's expanded promotional offerings and
sustained operational focus. The average check in the fourth
quarter of 2003 was up 4.8 percent for Church's, 3.0 percent for
Popeyes and 0.7 percent for Cinnabon.
Specific drivers that helped to improve same-store sales in the
fourth quarter of 2003 included:
-- Church's continued an effective promotional strategy that
included the holiday bundle, an eight piece mixed bundle
with sides and four biscuits for $9.99, in addition to a
Zesty Shrimp Crunchers promotion offering 14 to 16 pieces
at $2.99.
-- Church's discontinued the previous "full life" advertising
campaign and replaced it with new food-focused
advertising.
-- Popeyes worked closely with franchisees to optimize
execution at the restaurant level by mobilizing and
coordinating marketing and operational resources in key
large city Designated Market Areas to focus on sales
building activities, media programs and operational issues
such as training, store appearance and drive-thru
efficiency.
-- Popeyes returned to historically strong promotions,
including crawfish and the holiday platter featuring a
free 2-liter of coke with any 12-piece or larger bundle
offering.
-- Cinnabon remained focused on its "Operational Excellence"
initiative that emphasized quality, availability and guest
service, which facilitated improved capture rates.
-- Cinnabon helped to drive additional brand awareness by
expanding its licensing initiatives, partnering with
General Mills and launching the Cinnabon Streussel Muffins
into the club channels.
AFC reported that full-year blended domestic same-store sales
growth decreased 2.5 percent for 2003. This figure was in line
with the Company's previously stated full-year blended domestic
same-store sales growth projection of a 2.5-3.5 percent decrease.
New System-wide Openings
The AFC system opened 110 restaurants, bakeries and cafes during
the fourth quarter of 2003, compared to 139 total system-wide
openings in the fourth quarter of 2002. For the full year of
2003, the AFC system opened 336 new units as compared to 422 new
units opened in 2002. The 336 new units opened in 2003 were
slightly lower than the previous forecast of 345-370 new unit
openings due primarily to construction and permitting delays for
Church's and Cinnabon.
On a system-wide basis, AFC had 4,091 units at the end of the
fourth quarter of 2003. The composition of units at the end of
the fourth quarter of 2003 was comprised of 3,139 domestic units
and 952 international units in Puerto Rico and 35 foreign
countries. The unit count represented 437 Company owned
restaurants and bakeries, in addition to 3,654 franchised
restaurants, bakeries and cafes.
Commitments
The Company signed 128 new commitments for unit expansion in the
fourth quarter of 2003 versus 472 signed in the fourth quarter of
2002. On a full-year basis, AFC added 325 new commitments in 2003
versus 976 signed in 2002. This number was somewhat below AFC's
expectation of 350-400, primarily driven by lengthened
international negotiations for new Cinnabon development. The
year over year decline in new commitments signed was largely due
to the Company's inability to participate in certain domestic
franchise sales-related activities, including the sale of new
commitments, due to the delayed fiscal year 2002 and quarterly
2003 financial statements. The Company will reengage in domestic
franchise sales after finalizing and filing its franchise offering
circulars and renewing its state franchise registrations. This
process will follow the release of its 2003 audited financial
statements.
Commenting on AFC's operational performance, Dick Holbrook,
President and COO of AFC Enterprises, stated, "We remain focused
on what is needed to improve business performance. The crusade of
our brands is to work closely with our franchise partners to
identify brand-building opportunities that will yield dividends
for their business. These intense efforts are evidenced in the
improving sales as we concluded 2003. The Company continues to
implement initiatives that we expect will improve these business
trends further in 2004."
Other Key Business Matters
Status of 2003 Regulatory Filings
The Company remains focused on preparing its 10-Q filings for the
first three quarters of 2003. AFC and its independent auditor,
KPMG, LLP, are working diligently to facilitate the audit and
prepare its Annual Report on Form 10-K for 2003 in March of this
year. Upon completion and filing of such statements, the Company
intends to begin the Nasdaq listing application process.
Outstanding Debt
AFC's outstanding debt under its credit facility agreement, net of
investments, at the end of 2003 was approximately $126 million
versus $218 million at the end of 2002.
Unusual Expenses
AFC is still expecting to incur $19-$20 million of unusual
expenses in 2003. As previously reported, these unusual expenses
are related to the re-audit process for fiscal years 2002, 2001
and 2000, expenses related to the amendment of AFC's credit
facility agreement, shareholder litigation and the Company's
productivity initiative.
Concluding Remarks
Remarking on AFC's key business matters, Chairman and CEO Frank
Belatti, stated, "2003 represented a challenging year for the
Company but we remained focused on the items that needed to get
executed. We look to 2004 as a year for driving value to our
stakeholders as we focus on completing the financials, continuing
to improve the performance of the business and managing the
portfolio."
AFC Enterprises, Inc. is the franchisor and operator of 4,077
restaurants, bakeries and cafes as of November 30, 2003, in the
United States, Puerto Rico and 35 foreign countries under the
brand names Popeyes(R) Chicken & Biscuits, Church's Chicken(TM),
Cinnabon(R) and the franchisor of Seattle's Best Coffee(R) in
Hawaii, on military bases and internationally. AFC's primary
objective is to be the world's Franchisor of Choice(R) by offering
investment opportunities in highly recognizable brands and
exceptional franchisee support systems and services. AFC
Enterprises had system-wide sales of approximately $2.7 billion in
2002 and can be found on the World Wide Web at
http://www.afce.com/
* * *
Credit Facility and Current Ratings
The Company's outstanding debt under its credit facility
agreement, net of investments, at the end of Period 9 of 2003 was
approximately $125 million, down from approximately $218 million
at the end of 2002 as a result of cash generated from ongoing
operations and the sale of its Seattle Coffee Company subsidiary.
On August 25, 2003, Standard & Poor's Ratings Services raised the
Company's senior secured bank loan ratings to 'B' from 'CCC+' and
on August 28, 2003, Moody's Investor Service lowered the Company's
secured credit facility rating from Ba2 to B1.
ALLIED WASTE: Prices Unit's $825 Million Senior Debt Offering
-------------------------------------------------------------
Allied Waste Industries, Inc. (NYSE: AW) announced that Allied
Waste North America, Inc., its direct, wholly-owned subsidiary,
has priced its offerings of $400 million in Senior Notes due 2011
at 5.75% and $425 million in Senior Notes due 2014 at 6.125% in a
private placement under Rule 144A and Regulation S of the
Securities Act of 1933.
These new notes have been rated BB-, Ba3 and BB- by Standard &
Poor's, Moody's and Fitch, respectively.
Allied intends to use the proceeds from these senior notes to
redeem $825 million of AWNA's 7.875% Senior Notes due 2009. The
Company expects to receive the proceeds from these new notes on or
about January 27, 2004.
The offer of these senior notes was made only by means of an
offering memorandum to qualified investors and has not been
registered under the Securities Act of 1933 and may not be offered
or sold in the United States absent registration under the
Securities Act or an exemption from the registration requirements
of the Securities Act.
Allied Waste Industries, Inc. (S&P, BB Corporate Credit Rating,
Stable Outlook), is the second largest, non-hazardous solid waste
management company in the United States, providing non-hazardous
waste collection, transfer, disposal and recycling services to
approximately 10 million customers. As of June 30, 2003, the
Company operated 333 collection companies, 171 transfer stations,
171 active landfills and 64 recycling facilities in 39 states.
ALLIED WASTE: S&P Rates Unit's $825 Million Senior Notes at BB-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
the $825 million of senior notes due 2011 and 2014 of Allied Waste
North America Inc.
The notes are guaranteed by AWNA's parent, Allied Waste Industries
Inc. (BB/Stable/--) and subsidiaries of AWNA, and are offered
under Rule 144A with registration rights. At the same time,
Standard & Poor's affirmed its existing ratings, including the
'BB' corporate credit rating, on Allied Waste.
The outlook is stable on Scottsdale, Arizona-based Allied Waste,
the second-largest solid waste management concern in the U.S.
About $8 billion of debt is outstanding.
The notes will be issued on the same basis as AWNA's existing
senior notes and are rated one notch below Allied Waste's
corporate credit rating, reflecting their junior position compared
to the better-secured bank facilities. Proceeds of the notes will
be used to call $825 million of AWNA's 7.875% senior notes due
2009.
"Allied Waste has a relatively weak, albeit improving, financial
profile, which outweighs the company's strong competitive business
position," said Standard & Poor's credit analyst Roman Szuper.
Allied Waste provides collection, transfer, disposal, and
recycling services to about 10 million residential, commercial,
and industrial customers in 38 states, generating about $5 billion
in annual revenues. A national network of facilities creates
opportunities for modest growth through internal development,
focusing on the vertical integration business model. The firm's
market position is enhanced by a low cost structure, very good
collection-route density, and a high rate of waste
internalization.
A recent agreement with the holders of Allied Waste's $1 billion
preferred stock to convert it into common stock improves the
capital structure and saves about $500 million in cash over the
next six years by eliminating future dividend payments.
Debt maturities are manageable at $350 million from 2004 to 2005.
Based on current expectations, there is likely to be a reasonable
cushion in financial covenants under the credit facilities.
ALLIED WASTE: Fitch Rates $28M Proposed Sr. Secured Notes at BB-
----------------------------------------------------------------
Fitch Ratings assigned a rating of 'BB-' to Allied Waste North
America's (NYSE: AW) proposed $825 million senior secured notes
due 2011. The notes are expected to be issued in seven and ten-
year tranches, with the amounts of each tranche to be determined.
Net proceeds will be used towards reduction of its outstanding
7.875% senior notes due 2009. The Rating Outlook is Stable.
During 2003, AW has significantly improved its capital structure
and maturity schedule through the issuance of mandatory
convertible preferred stock, the conversion of $1.3 billion of
preferred stock to common stock, asset divestitures, free cash
flow, and equity issuance. Total debt at September 30, 2003 was
approximately $8.2 billion, and Fitch estimates that fourth
quarter free cash flow and proceeds from asset sales should
provide the capacity to reduce debt by an additional $200 million.
Despite continued debt reduction, leverage remains high in
relation to cash flow.
Interest and other fixed obligations will be meaningfully reduced
in 2004 as a result of debt reduction in 2003 and projected
further reductions in 2004 (including recent asset sales), lower
effective interest rates related to the company's numerous
refinancing activities and the elimination of the Series A
preferred dividend obligation. Interest costs could be reduced by
$100 million in 2004, while the Series A dividend payments were
scheduled to total approximately $90 million annually starting in
July 2004.
Debt reduction from free cash flow is expected to continue in
2004, with lower interest costs and any improvement in economic
conditions supporting an increase from 2003 levels. The company's
high leverage, however, indicates that free cash flow as a
percentage of total debt will still be limited to 5%-8%. Even upon
a reversal in the economic environment, Allied Waste is expected
to remain in a consistent free cash flow position. Following $225
million debt (7.375% senior notes) that comes due in January 2004,
there are no significant maturities in 2004 and 2005. Continued
debt reduction could warrant a review of the Outlook or the rating
during 2004.
The notes will be guaranteed by Allied Waste Industries, Inc., and
substantially all of its subsidiaries. The notes will rank equally
with AW's outstanding senior secured notes, and will be
subordinated to debt under the company's senior secured bank
facility. Total bank debt of $1,435 million at September 30, 2003,
consisting of $1,185 million of Term Loan B and $250 million of
Term Loan C, accounted for 21.5% of total secured debt. The
company's debt reduction and growth in its equity base continue to
improve the position of all creditors, with bank creditors in
particular benefiting over the last several years as the
proportion of bank debt has declined in relation to total debt.
ALLMERICA FINANCIAL: A.M. Best Ups First Allmerica's Low-B Rating
-----------------------------------------------------------------
Allmerica Financial Corporation (NYSE: AFC) announced that the
A.M. Best Company upgraded the financial strength ratings of its
property and casualty and life insurance subsidiaries. The rating
upgrades affirm the effectiveness of a successful restructuring
effort launched during the fourth quarter of 2002.
Earlier Wednesday, Best upgraded the financial strength ratings
assigned to Allmerica's property and casualty companies, Citizens
Insurance Company of America and The Hanover Insurance Company, to
A- (Excellent) from B++ (Very Good), and its life insurance
companies, Allmerica Financial Life Insurance and Annuity Company,
and First Allmerica Life Insurance Company of America, to B+ (Very
Good) from B- (Fair).
In 2002, Best lowered the financial strength ratings of
Allmerica's life insurance companies and consequently reduced the
ratings of its property and casualty companies based on concerns
that Citizens and Hanover might need to make capital contributions
to support the life companies.
Since then, Allmerica implemented a broad corporate restructuring
plan, dramatically enhancing the capital position of its operating
companies, including Citizens Insurance Company of America, The
Hanover Insurance Company, Allmerica Financial Life Insurance and
Annuity Company and First Allmerica Financial Life Insurance
Company, effectively addressing rating agency concerns.
"This rating upgrade reflects the confidence A.M. Best has in the
overall financial condition of our companies and the strong market
position of our property and casualty companies," said Frederick
H. Eppinger, Jr., President and Chief Executive Officer of
Allmerica Financial Corporation.
"It also better positions us to further our goal to become a world
class company committed to partnering with winning agents to meet
their customers' insurance needs and to profitably grow their
business over the long-term," Eppinger said. "We are committed to
maintaining a financially solid company, creating even deeper
partnerships with our independent agent partners, building the
very best underwriting and product capabilities in our markets,
and providing responsive service. We believe our ratings affirm
our ability to achieve these goals."
Worcester, Massachusetts-based Allmerica Financial Corporation is
the holding company for a group of insurance and financial
services companies, led by Citizens Insurance Company of America
and The Hanover Insurance Company. Howell, Michigan-based
Citizens, founded in 1915, and Worcester, Massachusetts-based
Hanover, founded in 1852, are leading regional property and
casualty insurance companies. Citizens and Hanover offer a wide
range of commercial and personal lines products through
independent agents located predominantly in the Northeast, South
and Midwest.
AMERIGAS: Fitch Says UGI's Equity Acquisition Won't Affect Ratings
------------------------------------------------------------------
Fitch Ratings does not expect UGI Corp's announced proposed
purchase of the remaining ownership interests of AGZ Holdings, the
parent company of Antargaz, to impact the ratings of Amerigas
Partners, L.P. (APU, senior unsecured debt rated 'BB+' by Fitch)
or its operating subsidiary, Amerigas L.P. (AGP, senior secured
debt rated 'BBB'). The proposed acquisition of the remaining 81.5%
ownership interests of Antargaz, one of France's largest
distributors of liquid petroleum gas, would total 250 million
euros and would be financed with $100 million in cash and the
proceeds of a future UGI equity issuance.
UGI is the indirect 2% general partner and 46% limited partner of
APU, a master limited partnership and the nation's largest retail
propane distributor. APU, in turn, is an MLP for APG, an operating
limited partnership. Fitch's ratings for APU and APG recognize the
absence of significant financial or operational ties between the
general partner and APU. Although UGI offers AGP limited credit
support by way of a $20 million revolving credit facility from the
general partner (expiring in 2006), this facility is subordinated
to all senior debt of the operating partnership and AGP has
otherwise operated as a standalone, self-financing entity. The
current MLP structure of APU will be unaffected by the proposed
acquisition.
AMERICAN HOMEPATIENT: W. Wayne Woody Elected to Board of Directors
------------------------------------------------------------------
American HomePatient, Inc. (OTC: AHOM) announced that W. Wayne
Woody has been appointed to the Company's Board of Directors.
Mr. Woody will serve on the audit committee of the Board of
Directors and will hold the role of audit committee financial
expert for the Company.
From 1968 until his retirement in 1999, Mr. Woody was employed by
KPMG LLP and its predecessor firms, Peat Marwick Mitchell & Co.
and Peat Marwick Main. As a Senior Partner, he served in a number
of key positions, including Partner-in-Charge of Professional
Practice and Firm Risk Management for the southeastern United
States and Puerto Rico, and Securities and Exchange Commission
Reviewing Partner. Mr. Woody was a member of the KPMG LLP Board of
Directors from 1990 through 1994. From 2000 to 2001, Mr. Woody
served as the Interim Chief Financial Officer for Legacy
Investment Group, a boutique investment firm, where he was
responsible for guiding the company through a transition in
accounting and reporting.
Currently, Mr. Woody serves on the Boards of Directors of Coast
Dental Services, Inc., a provider of comprehensive business
services and support to general dentistry practices (NASDAQ:
CDEN), and Wells Real Estate Investment Trust Inc., a real estate
investment management firm.
American HomePatient, Inc. -- whose September 30, 2003 balance
sheet shows a total shareholders' equity deficit of about $38
million -- is one of the nation's largest home health care
providers with 288 centers in 35 states. Its product and service
offerings include respiratory services, infusion therapy,
parenteral and enteral nutrition, and medical equipment for
patients in their home. American HomePatient, Inc.'s common stock
is currently traded in the over-the-counter market or, on
application by broker-dealers, in the NASD's Electronic Bulletin
Board under the symbol AHOM.OB.
AMR CORP: Fourth-Quarter Net Loss Narrows to $111 Million
---------------------------------------------------------
AMR Corporation (NYSE: AMR), the parent company of American
Airlines, Inc., reported a net loss of $111 million for the fourth
quarter, or $.70 per share. This compares with last year's fourth
quarter net loss of $529 million, or $3.39 per share.
Building on the added momentum of this financial improvement,
American announced a major restructuring of its hub operations at
Miami that will make the hub -- American's principal gateway to
Latin America -- more efficient, increase its on-time
dependability, and give customers added convenience and a wider
choice of flights.
The airline also announced that it will enter into a robust new
codesharing partnership with Mexicana, the premier airline of
Mexico.
AMR's fourth quarter results include a handful of special items --
both gains and losses -- resulting from the company's continuing
restructuring efforts, a federal income tax settlement during the
quarter, and gains on the sale of investments. In addition, in
keeping with the provisions of SFAS 109, AMR's fourth quarter 2003
results do not reflect a provision for federal and state income
taxes. Conversely, AMR's fourth quarter 2002 results reflected a
tax benefit. To provide a better comparison between the two
periods, after adjusting for these special items and taxes, the
company recorded a loss (pre-tax and excluding special items) of
$95 million this quarter, or $.59 per share, versus a loss (pre-
tax) of $828 million, or $5.31 per share, in the fourth quarter of
last year. For the fourth quarter of 2003, AMR had operating
income of $103 million, excluding special items. In the fourth
quarter of 2002, AMR posted a net operating loss of $679 million.
(A reconciliation of all non-GAAP measures included in this
earnings release is provided in the attachments.)
For the full year 2003, AMR reported a net loss of $1.2 billion,
or $7.76 per share, compared to a full year net loss of $3.5
billion, or $22.57 per share, in 2002. When adjusted for special
items and the year-over-year tax differences mentioned above, AMR
posted a 53 percent improvement in financial results, registering
a full year loss of $1.5 billion in 2003 compared to a full year
loss of $3.2 billion in 2002.
"The improvement in our year-over-year results is a direct result
of our ongoing efforts to restructure our business and the
willingness of every one of us to sacrifice and accept change as
an inevitable fact of life in the airline industry," said Gerard
Arpey, AMR's president and CEO. "While the work required to make
our company consistently profitable has just begun, the momentum
we have created together is powerful. Perhaps the best
illustration of this is the fact that we have now achieved an
operating profit, excluding special items, two quarters in a row.
And unlike a year ago, when we were burning through millions of
dollars of cash every day, our operation is now generating
positive cash flow."
The Miami hub restructuring and the new relationship with Mexicana
will strengthen American's network and add to the company's
financial progress, Arpey said.
With a combined total of more than 130 years of service between
the U.S. and Mexico, American and Mexicana will forge a
relationship that will give customers enhanced service to the most
important markets in the United States and Mexico, as well as
connections across their global networks. For American, it will
mean new flight availability to 21 additional cities in Mexico and
the ability to offer service in 27 new, nonstop transborder
markets. The relationship also includes a reciprocal frequent-
flyer agreement that will allow passengers to accrue and redeem
miles in American's AAdvantage(R) program or Mexicana's
Frecuenta(R) program on more than 500 U.S.-Mexico flights per
week.
American and Mexicana will launch the partnership in April,
pending governmental approval.
In Miami, the airline's principal gateway to Latin America,
American will spread its operations more evenly by increasing the
number of daily flight banks to 13 from seven, effective May 1. In
doing so, the airline will be able to operate more flights in and
out of Miami using fewer aircraft, thereby greatly increasing the
hub's efficiency and assisting in the company's overall objective
to lower costs.
At the same time, the restructured Miami hub will significantly
enhance customer service, allowing American to offer passengers
more flight choices, giving customers more time to make their
flight connections, and spreading out the flow of international
passengers in ways that will make it easier to clear customs and
immigration processing.
Longer term, the new hub design will give American and American
Eagle room to grow at Miami within the framework of the new
terminal facility that is now under construction. "Miami is one of
the linchpins of our global network," Arpey said. "And this
initiative will enable us to operate more flights in and out of
that hub -- using fewer aircraft -- reduce costs, and relieve some
of the pressure that hub has been under from the ongoing terminal
construction project."
At the heart of AMR's financial progress in 2003, Arpey said, were
the strides it made toward achieving the company's critical goal
of $4 billion in annual capacity-independent cost savings. These
efforts were given a huge boost when employees agreed to a
restructuring that added $1.8 billion a year in labor-cost savings
to savings of $2 billion a year from strategic initiatives and
another $200 million from vendors, suppliers and creditors.
"Lower costs go hand in hand with our ability to protect and build
on our leading share in the marketplace," Arpey said. "Today,
thanks to the sacrifices, hard work and ingenuity of American's
people, our costs -- while still not as low as our low-cost
competitors -- are continuing to improve to help us compete
vigorously for every customer."
Although unquestionably pleased by its progress, Arpey said AMR is
not yet satisfied with its financial results and recognizes that
it still has lots of work in front of it.
"We've made great progress," Arpey said, "but we also realize the
many challenges that lie ahead."
Arpey pointed to the following progress in each of the four tenets
of the AMR Turnaround Plan:
-- Lower Costs To Compete: This is where AMR has made its
most dramatic progress, underscored by an 11.9 percent
decline in unit costs in the fourth quarter, excluding
special items and regional affiliates. If not for rising
fuel prices, AMR's progress would have been even more
dramatic, with a year-over-year drop in unit costs of
12.8 percent. To further reduce costs, AMR has returned
underused gate space, consolidated terminal space,
depeaked its Chicago and Dallas/Fort Worth hub schedules
(now adding Miami to that list), closed a reservations
center, reduced the size of the St. Louis hub,
accelerated the retirement of TWA aircraft, and improved
aircraft utilization across the fleet.
-- Fly Smart, Give Customers What They Value: This tenet
focuses on customer service and revenue production, with
emphasis on improving AMR's relative revenue performance.
Key moves in this area are adding seats to American's 757
and A300 fleets and restructuring the mid-continent hubs
at Chicago, DFW and St. Louis (next up, Miami). Another
step is expanding alliances. Progress here includes a
domestic codeshare with Alaska Airlines, approval of
codesharing with British Airways, the addition of SWISS
International to the oneworld alliance, and the new
codeshare linkage with Mexicana.
-- Pull Together, Win Together: Fostering greater
cooperation than ever between the company and employees,
AMR has adopted an unprecedented level of openness with
employee groups and labor unions. Arpey holds regular
Town Hall-style meetings with employees, AMR's chief
financial officer meets monthly with union leaders to
walk them through the company's financial results in the
same way he briefs AMR's Board, and the Overland Group, a
firm expert in bringing union groups and management
together, has been engaged to help all parties within AMR
move to a philosophy of active involvement. On Jan. 28
and 29, American will conduct its first Customer Strategy
meeting with frontline employees to advance this process
and improve the customer experience.
-- Build A Financial Foundation For The Future: AMR ended
the fourth quarter with $3.1 billion in total cash and
short-term investments (including $527 million in
restricted cash and short-term investments),
substantially greater than the $1.8 billion in cash
and short-term investments at the close of the first
quarter. From April 1 to Dec. 31, AMR's cash flow from
operations totaled $1.1 billion, giving AMR greater
access to the capital markets. AMR also has been able to
sell some non-core assets, such as its stakes in
Worldspan and Hotwire. These are the first of many steps
AMR will be taking over time to repair the damage done to
its balance sheet as it works to overcome its financial
crisis.
American Airlines (Fitch, CCC+ Convertible Unsecured Note Rating,
Negative) is the world's largest carrier. The airline's balance
sheet liabilities exceed assets by more than $500 million.
American, American Eagle and the AmericanConnection regional
carriers serve more than 250 cities in over 40 countries with more
than 3,900 daily flights. The combined network fleet numbers more
than 1,000 aircraft. American's award-winning Web site, AA.com,
provides users with easy access to check and book fares, plus
personalized news, information and travel offers. American
Airlines is a founding member of the oneworld Alliance.
ANC RENTAL: Sues 75 Vendors to Recover $1.6 Million in Transfers
----------------------------------------------------------------
The ANC Rental Corporation Debtors seek to recover $1,589,444 paid
to 75 vendors during the 90-day period prior to the Petition Date.
The Debtors contend that these payments were preferential and are
Avoidable Transfers pursuant to Section 550(a) of the Bankruptcy
Code. The Debtors ask Judge Walrath to:
-- direct these Vendors to return the money, plus interest
and costs; and
-- pursuant to Section 502(d), disallow any claim of the
Vendors against the Debtors until the Vendors pay in full
the amount owed.
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. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AURORA FOODS: Court Approves Debevoise as Committee's Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors of the Aurora Foods
Debtors sought and obtained the Court's authority to retain
Debevoise & Plimpton LLP as its bankruptcy counsel, nunc pro tunc
to December 18, 2003, to advise and represent it in the Debtors'
Chapter 11 cases and in all related matters.
Committee Chairperson, Kenneth Liang of OCM Opportunities Fund
III, LP, relates that Debevoise's extensive experience and
expertise in bankruptcy and insolvency matters, particularly
business reorganizations under Chapter 11, and its expertise in
representing creditors committees in Chapter 11 cases, makes the
firm well qualified to represent the Committee in the Debtors'
bankruptcy cases.
Steven R. Gross, a partner at Debevoise, indicates that apart
from the firm's representation as counsel, Debevoise will also:
-- request the Committee members to apprise them of any
reduction in the Committee's current ownership of their
Senior Subordinated Notes; and
-- promptly notify the Debtors when a Committee member holds
less than 50% of the aggregate outstanding face amount of
the Senior Subordinated Notes.
Debevoise will be compensated based on the hourly rates of their
professionals:
Steven R. Gross $700
Andrew N. Berg 700
William D. Regner 555
Jonathan Levitsky 450
James B. Roberts 425
Jesko Kornemann 350
Maureen A. Cronin 310
Martin Phillips 190
The firm will also be reimbursed of its out-of-pocket expenses.
Mr. Liang relates that Debevoise performed services for an ad hoc
committee of holders of the Debtors' 8.75% Senior Subordinated
Notes due 2008 and 9.875% Senior Subordinated Notes due 2007
beginning June 15, 2003 through December 18, 2003. As counsel to
the Ad Hoc Committee, Debevoise:
(a) amended the Merger Agreement to which the Debtors are
parties;
(b) drafted the documents governing the Delaware business
trust, interests in which the holders of the Senior
Subordinated Notes will receive with respect to their
claims against the Debtors;
(c) reviewed and provided comments on the Debtors' proposed
Plan of Reorganization and Disclosure Statement; and
(d) reviewed and provided suggestions on the Debtors'
proposed ballots and election forms.
All of the members of the Ad Hoc Committee were subsequently
appointed to the Official Committee of Unsecured Creditors.
According to Mr. Liang, Debevoise has been paid for all accrued
time and expenses for its prepetition representation of the Ad
Hoc Committee through the Petition Date totaling $1,249,618,
inclusive and including estimated fees for December 5 to 7, 2003.
Additionally, in connection with the execution of the Engagement
Letter, Debevoise received a $200,000 cash retainer.
Debevoise underestimated a portion of the final bill, thus, it
applied the $70,047 arrearages against the Retainer. The amount
applied against the Retainer is included in the $1,249,618.
Debevoise has indicated to the Committee that it intends to apply
the balance of the Retainer to:
-- unpaid prepetition expenses; and
-- fees and expenses accrued and incurred postpetition.
Mr. Gross attests that the firm is a "disinterested person" as
defined in Section 101(14) of the Bankruptcy Code.
Aurora Foods Inc. -- http://www.aurorafoods.com/-- based in St.
Louis, Missouri, produces and markets leading food brands,
including Duncan Hines(R) baking mixes; Log Cabin(R), Mrs.
Butterworth's(R) and Country Kitchen(R) syrups; Lender's(R)
bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt
Jemima(R) frozen breakfast products; Celeste(R) frozen pizza; and
Chef's Choice(R) skillet meals. With $1.2 billion in reported
assets, Aurora Foods, Inc., and Sea Coast Foods, Inc., filed for
chapter 11 protection on December 8, 2003 (Bankr. D. Del. Case No.
03-13744), to complete a pre-negotiated sale of the company to
J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P.,
and C. Dean Metropoulos and Co. Sally McDonald Henry, Esq., and
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP provide Aurora with legal counsel, and David Y. Ying at Miller
Buckfire Lewis Ying & Co., LLP provides financial advisory
services. (Aurora Foods Bankruptcy News, Issue No. 5; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
BARNEYS NEW YORK: Howard Socol Discloses 6.7% Equity Stake
----------------------------------------------------------
As of January 5, 2004, Howard Socol beneficially owned 992,234
shares of Barneys New York Inc.'s common stock, representing
approximately 6.7% of the outstanding shares of common stock of
the Company (based on the number of shares outstanding as of
December 12, 2003 of 14,103,227 shares).
Such shares include Options to purchase up to 396,117 shares of
common stock which were exercisable as of January 5, 2004. The
number of shares indicated as being beneficially owned by Mr.
Socol does not include the shares of common stock held by Bay
Harbour and Whippoorwill which are the subject of a stockholders
agreement and with respect to which Mr. Socol disclaims beneficial
ownership.
Mr. Socol holds shared voting power over the 992,234 shares, and
shares dispositive power over 792,234 of those shares.
Pursuant to an employment agreement effective as of January 8,
2001, as amended on January 10, 2003, between the Company and Mr.
Socol, Mr. Socol has been granted options to purchase up to
792,234 shares of common stock, which vest over the term of his
employment. Options to purchase 396,117 shares of common stock are
currently vested and Options to purchase the remaining 396,117
shares will vest on January 31, 2004. Pursuant to Rule
13d-3(d)(1)(i)(A) of the Securities Exchange Act of 1934, as of
December 2, 2003, Mr. Socol is deemed to beneficially own the
396,117 shares that underlie the Options that vest on January 31,
2004 because he has the right to acquire such shares within 60
days.
On January 10, 1996, Barney's, Inc. and subsidiaries filed
voluntary petitions for reorganization under chapter 11 of the
United States Bankruptcy Code. The Predecessor company's plan of
reorganization was confirmed on December 21, 1998, by the U.S.
Bankruptcy Court for the Southern District of New York, and
became effective on January 28, 1999.
As previously reported, Standard & Poor's Ratings Services
assigned its 'B' corporate credit rating to Barneys New York Inc.
Standard & Poor's also assigned its 'B-' rating to Barneys
Inc.'s proposed $100 million senior secured notes due in 2008.
The outlook is stable.
BMC INDUSTRIES: Receives Bank Waiver Extension through March 15
---------------------------------------------------------------
BMC Industries, Inc. (OTCBB:BMMI) announced that its bank group
has granted the company an additional waiver on certain covenants
under its credit agreement.
Following notice by BMC to its bank group that the company
expected to be out of compliance with certain covenants and
obligations under its credit agreement as of June 30, 2003, the
company's banks granted an initial two-week waiver to BMC on June
30, 2003, and subsequent waivers on July 15, 2003, September 15,
2003, and November 19, 2003.
The waiver announced also extends the time period for BMC to make
certain scheduled principal and fee payments, and defers all
interest payment obligations until March 15, 2004, the termination
date of this waiver extension. In addition, the agreement
continues to require the company to remit net proceeds of asset
sales and certain other cash flows to its lenders in partial
repayment of interest and principal obligations. Since July 30,
2003, the date of the first interest deferral, the company has
incurred interest obligations of $4.4 million and made interest
payments of $2.4 million. The latest waiver agreement defers
current and projected interest payments totaling approximately
$3.3 million, subject to certain mandatory repayments to lenders.
As in previous waivers, the banks and the company have agreed that
no additional borrowings will be extended during the waiver
period. Discussions continue between BMC, its banks and the
company's advisors, regarding a longer-term financial resolution.
BMC Industries Inc., founded in 1907, is currently comprised of
two business segments: Optical Products and Buckbee-Mears. The
Optical Products group, operating under the Vision-Ease Lens trade
name, is a leading designer, manufacturer and distributor of
polycarbonate and glass eyewear lenses. Vision-Ease Lens also
distributes plastic eyewear lenses. Vision-Ease Lens is a
technology and a market share leader in the polycarbonate lens
segment of the market. Polycarbonate lenses are thinner and
lighter than lenses made of other materials, while providing
inherent ultraviolet (UV) filtering and impact resistant
characteristics. The Buckbee-Mears group is the only North
American manufacturer of aperture masks, a key component in color
television picture tubes. The company has announced its plans to
wind down the operations of its Buckbee-Mears division by June
2004. For more information about BMC Industries, visit the
company's Web site at http://www.bmcind.com/
BOISE CASCADE: Frontier Resources Acquires Boise's Yakima Mills
---------------------------------------------------------------
Boise Cascade Corporation (NYSE: BCC) reached agreement for the
sale of its Yakima, Washington, plywood plant and sawmill complex
to Frontier Resources, LLC, of Eugene, Oregon.
Thomas A. Lovlien, vice president, Boise Building Solutions,
Manufacturing, said the company's decision to sell the Yakima
facilities followed two years of evaluations in which numerous
options had been considered. "In this instance," Lovlien said,
"the outcome of our studies is a sale agreement with a qualified
buyer, Frontier Resources."
Lovlien said Boise will retain ownership of its approximately
200,000 acres of central Washington timberlands and will continue
to manage those holdings under the company's forestry programs and
environmental policies.
Frontier Resources has indicated that it is now in process of
developing its future plans for the acquired properties.
With the sale, Boise Building Solutions, a division of Boise,
operates 23 manufacturing facilities in the United States, Canada,
and Brazil. The business also operates 28 facilities that
distribute a broad line of building materials, including wood
products manufactured by Boise, to retail lumber dealers, home
centers specializing in the do-it-yourself market, and industrial
customers.
Boise (S&P, BB+ Corporate Credit Rating, Stable Outlook),
headquartered in Boise, Idaho, provides solutions to help
customers work more efficiently, build more effectively, and
create new ways to meet business challenges. Boise is a major
distributor of office products and building materials and an
integrated manufacturer and distributor of paper, packaging, and
wood products. Boise owns or controls more than 2 million acres
of timberland, primarily in the United States, to support our
manufacturing operations. Visit the Boise Web site at
http://www.bc.com/
BOYD GAMING: Declares Quarterly Cash Dividend Payable on March 2
----------------------------------------------------------------
Boyd Gaming Corporation (NYSE: BYD) announced that its Board of
Directors has declared a quarterly cash dividend of $.075 per
share, payable on March 2, 2004 to shareholders of record on
February 13, 2004.
Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD)
(Fitch, BB+ Senior Secured Bank Credit Facility and BB- Senior
Unsecured Debt Ratings) is a leading diversified owner and
operator of 13 gaming entertainment properties located in Nevada,
New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd
Gaming recently opened Borgata Hotel Casino and Spa at Renaissance
Pointe (AOL keyword: borgata or http://www.theborgata.com/), a
$1.1 billion entertainment destination hotel in Atlantic City,
through a joint venture with MGM MIRAGE. Additional news and
information on Boyd Gaming can be found at
http://www.boydgaming.com/
BOYD GAMING: Will Publish Fourth-Quarter Results on February 4
--------------------------------------------------------------
Boyd Gaming Corporation (NYSE: BYD) announced that the Company's
fourth quarter 2003 conference call to review the Company's
results will take place on Wednesday, February 4, 2004 at 4:30
p.m. EDT.
The conference call number is 800-361-0912 and the reservation
number is 711739. Please call up to 15 minutes in advance to
ensure you are connected prior to the call's initiation. The
Company will report its results on the same day at approximately
4:00 p.m. EDT.
The conference call will also be available live on the Internet at
http://www.boydgaming.com/or
http://www.firstcallevents.com/service/ajwz397631017gf12.html/
Following the call's completion, a replay will be available by
dialing 888-203-1112 or 719-457-0820 with the reservation number
on Wednesday, February 4, beginning two hours after the completion
of the call and continuing through Wednesday, February 11. The
replay will also be available on the Internet at
http://www.boydgaming.com/
Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD)
(Fitch, BB+ Senior Secured Bank Credit Facility and BB- Senior
Unsecured Debt Ratings) is a leading diversified owner and
operator of 13 gaming entertainment properties located in Nevada,
New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd
Gaming recently opened Borgata Hotel Casino and Spa at Renaissance
Pointe (AOL keyword: borgata or http://www.theborgata.com), a
$1.1 billion entertainment destination hotel in Atlantic City,
through a joint venture with MGM MIRAGE. Additional news and
information on Boyd Gaming can be found at
http://www.boydgaming.com/
BRIDGEWATER: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Bridgewater Enterprises Ltd
dba Bridgewater Custom Sound
P.O. Box 135
South Holland, Illinois 60473
Bankruptcy Case No.: 04-02142
Type of Business: The Debtor provides professional audio and
video sales and rentals. Designs, installs,
and services audio systems organizations.
See http://www.bridgewatersound.com/
Chapter 11 Petition Date: January 20, 2004
Court: Northern District of Illinois (Chicago)
Judge: Eugene R. Wedoff
Debtor's Counsel: David E. Grochocinski, Esq.
Grochocinski Grochocinski & Lloyd
800 Ravinia Place
Orland Park, IL 60462
Tel: 708-226-2700
Total Assets: $1,030,000
Total Debts: $937,382
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Huen Electric Inc. open account $62,496
West Penn Wire/CDT open account $31,053
Pro-Co Sound Inc. open account $16,747
Insurance Service, Inc. open account $14,461
Gapco International Inc. open account $14,001
Bose Corporation open account $12,791
Advertising Plus, Inc. open account $11,384
AAA Rental System open account $9,849
Steiner Electric Co. open account $8,199
RCMS open account $8,050
Turbosound, Inc. open account $6,140
Harman Pro North America open account $4,445
Middle Atlantic Products open account $4,152
Sennheiser Electronic Corp. open account $4,024
Newark Inone open account $2,772
Emerald Financia open account $2,566
Fender Pro Audio open account $2,536
Home Depot CRC open account $2,508
Witte Electric open account $2,500
Wright Express - Fleet open account $2,477
Fueling
BUDGET GROUP: Court Allows Payment of Linda Burch's Success Fee
---------------------------------------------------------------
U.S. Bankruptcy Court Judge Case, overseeing the Budget Group
Debtors' bankruptcy proceedings, approves the Committee's
supplemental application to provide Ms. Linda Burch with a $50,000
success fee in the event she materially contributes to a
settlement between Cendant and the Debtors regarding Cendant's
assumption of certain vehicle personal injury claims.
Backgrounder
On February 20, 2003, the Court permitted the Committee to retain
Linda Burch as Rental Vehicle Business Advisor in the Chapter 11
cases of Budget Group Inc. and its debtor-affiliates, nunc pro
tunc to December 2002. Ms. Burch was allowed to charge the
Committee $250 per hour for her services, in addition to costs and
expenses incurred.
After the North American Sale, the Committee asked Ms. Burch for
advice regarding the disposition of the Debtors' remaining
business operations in Europe. Ms. Burch assisted the Committee
in analyzing the rental vehicle business operations in Europe and
in determining whether to approve the EMEA Sale.
Because a dispute arose between the Debtors and Cendant regarding
certain terms of the Asset and Stock Purchase Agreement, on
May 5, 2003, the Debtors commenced an adversary proceeding
against Cendant seeking the Court's enforcement of certain ASPA
terms. The Cendant Litigation is currently ongoing.
Among the disputes between the Debtors and Cendant is Cendant's
refusal to fulfill its contractual obligations under the ASPA to
assume the liability for certain of the vehicle personal injury
claims asserted against the Debtors. If Cendant does not assume
the vehicle personal injury claims as it was required to do under
the ASPA, the potential exposure to the Debtors' estates of these
personal injury claims will amount to over $68,000,000.
The Committee sought Ms. Burch's assistance with the Cendant
Litigation, specifically the resolution of the dispute with
Cendant regarding the assumption of certain vehicle personal
injury claims.
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. 32; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CANWEST GLOBAL: First-Quarter 2004 Results Show Solid Growth
------------------------------------------------------------
CanWest Global Communications Corp., reported its financial
results for the three months ended November 30, 2003, the first
quarter of its 2004 fiscal year.
Consolidated net earnings were $81 million or $0.46 per share,
representing a 19% increase from the $68 million or $0.39 per
share reported for the first quarter of fiscal 2003.
On a combined basis, including the Company's 57.0% proportional
share of Network TEN, earnings before interest, taxes,
depreciation and amortization (EBITDA) were $208 million. This
result reflects a small improvement from the pro forma combined
EBITDA of $207 million recorded for the same period last year.
Combined revenues of $719 million for the quarter were in line
with pro forma combined revenues for the same quarter last year.
Actual combined revenues for the prior year were $740 million.
Pro forma results for fiscal 2003 provide a comparison based upon
the same asset base as existed for the period ended November 30,
2003. Pro forma results for the quarter ended November 30, 2002
therefore exclude the revenue and EBITDA contributions of certain
newspapers assets in Ontario that were sold on February 15, 2003.
On a consolidated basis, revenues for the three month period ended
November 30, 2003 were $586 million compared to consolidated
revenues of $634 million for the same period in the previous year.
On a pro forma basis revenues were $610 million for the first
quarter of fiscal 2003. Consolidated EBITDA in the first quarter
of fiscal 2004 was $153 million compared to reported EBITDA of
$177 million for the first quarter of fiscal 2003. On a pro forma
basis, consolidated EBITDA for the first quarter of fiscal 2003
was $170 million.
Overall, strong revenue performances in the Company's South
Pacific operations, particularly Network TEN, were offset by
reductions in revenue from Canadian broadcast operations and
Entertainment division. After relatively strong performance during
the summer months the Canadian television industry experienced
declining advertising sales in the quarter, and results from the
Company's broadcast operations reflect that overall market
weakness, where revenues for the quarter were $191 million this
year compared to $215 million in the same period last year. The
decline in revenue had a direct impact on EBITDA, reducing EBITDA
to $56 million in the current quarter compared to $81 million for
the same quarter in the prior period. Entertainment revenues were
$34 million, down from $48 million last year, reflecting the
division's reduced production slate and continuing weak demand for
programming in international markets.
A steady newspaper advertising market contributed to publishing
revenues of $303 million, up 2% from pro forma revenues of $297
million for the corresponding period last year. Stable newsprint
pricing and operating cost reductions resulted in an increase in
EBITDA for the quarter of 11% to $83 million from the pro forma
result of $75 million for the first quarter of fiscal 2003.
The Company's international operations registered significant
gains in the quarter. Network TEN reported record quarterly
television revenues and EBITDA, with CanWest's 57.0% interest in
TEN's EBITDA increasing by 42% to $53 million compared to $37
million in the same period last year. TEN again led the Australian
television industry in ratings in its target 16-39 demographic,
while also making gains in overall ratings. Eye Corp, TEN's
out-of-home advertising division, also registered significant
improvements with a 10% increase in revenues to $11 million, and
generating EBITDA of over $2 million for the quarter.
The Company's 3 and C4 Television Networks in New Zealand
(formerly referred to as TV3 and TV4 respectively) reported
aggregate EBITDA of $10 million, a 36% increase from the $7
million for the first quarter of fiscal 2003. New Zealand radio
operations registered a 32% increase in EBITDA to $7 million
compared to $5 million for the first quarter of fiscal 2003.
CanWest's 45% interest in TV3 Ireland's EBITDA was $4 million for
the quarter, about the same as last year.
Highlights for the quarter and the period since November 30, 2003
include the following:
- Global's Survivor VII continues to be the highest rated
television program in both the Toronto and Vancouver
markets among both 18-49 year olds and 25-54 year olds.
During the fall ratings period, CanWest had 12 of the top
25 programs in Toronto and 17 of the top 25 in Vancouver
among 18-49 year olds, compared to 10 and 5 programs
respectively for its main competitor.
- In October, CanWest re-launched TV4, the Company's second
television network in New Zealand, as C4, a music channel
geared to youth and young adult audiences. Initial audience
response to the new format has been very positive and,
given the relatively low production costs of the new
format, the Company is optimistic that C4 will reverse the
losses incurred by TV4 in recent years. TV3 had previously
been re-branded as 3 Television.
- In November, CanWest launched a new four tiered-system for
access to its online services including a new electronic
version of the Ottawa Citizen that provides subscribers
with 5:00 a.m. Internet access to their daily newspaper in
the same format as the home delivered paper. This new
subscription service became available for the National Post
in January and will roll out at other CanWest newspapers
over the next several months.
- In October, the Company announced the appointment of the
Honourable Frank McKenna P.C. Q.C. as Interim Chairman of
the Board, following the sudden passing on October 7, 2003
of I.H. Asper O.C., O.M., Q.C.
- On December 17, the company announced the nomination of two
new independent directors, Mr. Paul V. Godfrey and
Professor Ronald J. Daniels, both of Toronto, Ontario, to
stand for election to the Company's Board of Directors at
the forthcoming annual general meeting of shareholders to
be held in Montreal on January 29th, 2004.
- In December, Network TEN, secured a new five-year A$700
million syndicated loan facility on favourable terms, that
will help to reduce TEN's financing costs.
- In January, the Company received the previously announced
distributions of interest and dividends from Network TEN.
In total the Company received $100 million (A$103.5
million).
Commenting on the results, Leonard Asper, CanWest's President and
Chief Executive Officer, said, "For the most part, CanWest's media
operations performed well, particularly our television operations
in Australia and New Zealand, which outpaced the growth of the
television industries and the overall economies of those
countries. Our newspapers also experienced year-over-year gains,
during a period in which the Canadian economy was still recovering
from the well-known setbacks from SARS, massive forest fires, Mad
Cow disease and a power blackout in Ontario during the summer
months. However, the Canadian television market struggled during
the quarter, and declining advertising sales evident across the
television industry in the Fall months did not reflect the
improving Canadian economy."
"Looking ahead we expect the positive momentum of our
international operations to continue. In Canada we remain
optimistic that advertising markets will increasingly reflect the
underlying health in the Canadian economy and there are signs that
this is beginning to occur. The Fall schedule of Global Television
includes a number of promising new shows, including The Apprentice
and Average Joe, that should add positive momentum to our
television operations. The Company continues to focus on cost
savings through aggressive pursuit of operating efficiencies,
while also registering revenue gains from the sale of multi-media
advertising packages at both local and national levels. As before,
our main priorities are to accelerate the reduction of corporate
debt, improve operating margins and increase profits," Asper
added.
The Company's financial statements are available on the corporate
Web site http://www.canwestglobal.com/
CanWest Global Communications Corp. (S&P, B+ Long-Term Corporate
Credit and Senior Unsecured Ratings, Stable) (NYSE: CWG; TSX:
CGS.S and CGS.A) -- http://www.canwestglobal.com/-- is an
international media company. CanWest, Canada's largest publisher
of daily newspapers, owns, operates and/or holds substantial
interests in newspapers, conventional television, out-of-home
advertising, specialty cable channels, radio networks and web
sites in Canada, New Zealand, Australia, Ireland and the United
Kingdom. The Company's program production and distribution
division operates in several countries throughout the world.
CRESCENT REAL: Reports Dividend Distributions Taxable Allocations
-----------------------------------------------------------------
Crescent Real Estate Equities Company (NYSE:CEI) announced the
taxable allocations of the 2003 dividend distributions on its
common shares, 6-3/4% Series A Convertible Preferred Shares, and
9.50% Series B Redeemable Preferred Shares.
Shareholders are encouraged to consult with their personal tax
advisors as to their specific tax treatment of Crescent Real
Estate dividends.
Crescent Real Estate Equities Company (NYSE:CEI) is one of the
largest publicly held real estate investment trusts in the nation.
Through its subsidiaries and partners, Crescent owns and manages a
portfolio of over 75 premier office buildings totaling over 30
million square feet primarily located in the Southwestern United
States, with major concentrations in Dallas, Houston, Austin and
Denver. In addition, the company has investments in world-class
resorts and spas and upscale residential developments.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its ratings on Crescent Real Estate Equities
Co., and Crescent Real Estate Equities L.P., and removed them
from CreditWatch, where they were placed on Jan. 23, 2002. The
outlook remains negative.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
CUMULUS MEDIA: Will Host 4th-Quarter Conference Call on Feb. 17
---------------------------------------------------------------
Cumulus Media Inc. (NASDAQ: CMLS), will host a conference call on
Tuesday, February 17, 2004 at 5 p.m. ET to review the Company's
fourth quarter 2003 financial results, which will be released
shortly after market close and prior to the call, together with an
update of financial and operational developments. The call will be
open to the general public on a listen only basis.
The conference call dial in number is (484) 630-8922 for both
domestic and international calls. The pass code for the call is
CUMULUS. Please call five to ten minutes in advance to ensure that
you are connected prior to the presentation. The call may also be
accessed via webcast at http://www.cumulus.com/
Immediately after completion of the call, a replay can be accessed
until 11:59 p.m. ET Tuesday, February 24, 2004. Domestic and
international callers can access the replay by dialing (402) 220-
9730.
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.
DDI CORP: Completes $16 Million Common Stock Private Placement
--------------------------------------------------------------
DDi Corp. (OTC Bulletin Board: DDIO), a leading provider of time-
critical, technologically advanced interconnect services for the
electronics industry, completed a private placement of 1,000,000
shares of restricted common stock to institutional investors for
gross proceeds of $15,980,000, before placement fees and offering
expenses.
The shares were priced at $15.98 per share, which represents a
discount against the trading price of the Company's common stock
as of January 9, 2004. DDi has agreed to file a resale
registration statement within 30 days after the closing of the
transaction for purposes of registering the shares of common
stock.
DDi intends to use the net proceeds to reduce outstanding debt and
for general corporate purposes.
DDi is a leading provider of time-critical, technologically
advanced, electronics manufacturing services. Headquartered in
Anaheim, California, DDi and its subsidiaries offer fabrication
and assembly services to customers on a global basis, from its
facilities located across North America and in England.
DESC S.A.: Fitch Rates Foreign & Local Currency Rating at B+
------------------------------------------------------------
Fitch Ratings assigned a senior secured foreign and local currency
rating of 'B+' to Desc, S.A. de C.V., and downgraded the senior
unsecured debt rating to 'B' from 'B+'.
Fitch has also downgraded Desc's national scale rating to
'BBB-'(mex) from 'BBB'(mex). Fitch has taken all of Desc's ratings
off of Rating Watch Negative. The Rating Outlook is Stable.
The rating actions reflect the conclusion of a debt refinancing
process with bank creditors for approximately US$720 million or
70% of the company's debt. The restructuring agreements will
refinance the majority of Desc's short-term debt and prior
syndicated loans. The final terms of the restructuring include a
five-year tenor with a 30-month grace period beginning in January
2004, a US$40 million pre-payment to bank creditors and higher
interests rates, which may be reduced based on improvements in
financial ratios. Under the new loan agreements, Desc has granted
security in the form of fixed assets and equity shares of the
holding and operating companies. Under contractual covenants of
credit agreements with the International Finance Corporation and
under the dine senior notes due 2007, creditors of Desc's under
these agreements will also be granted security so that the
majority of Desc's existing debt will be secured. The new national
scale rating on Desc's medium term notes (Pagares de Mediano
Plazo) due 2006 and 2007 considers the structural subordination of
these instruments to the reminder of Desc's indebtedness.
Desc is one of Mexico's largest industrial conglomerates, with
operations in automotive parts, chemicals (petrochemicals,
phosphates, laminates, additives and particleboard), food
(production and sale of pork and branded food products) and real
estate (acquisition and development of land for upper-income
commercial, residential and tourism).
DII INDUSTRIES: KBR Secures Nod to Assume Barracuda Agreements
--------------------------------------------------------------
At the DII Industries, LLC, and Kellogg, Brown & Root Debtors'
request, the U.S. Bankruptcy Court for the Western District of
Pennsylvania:
(a) authorizes Kellogg, Brown & Root, Inc. to assume a
Contract and a Patent Sublicense Agreement with Barracuda
& Caratinga Leasing Company, B.V., the EPC Contractor
Consent and Agreement with Barracuda and one of the Senior
Project Lenders, the Limited Waiver and Consent Agreement
among the parties to the Barracuda Contract, and any other
agreements to which KBR is party in connection with its
work under the Barracuda Contract; and
(b) lifts the automatic stay to allow counterparties to the
Barracuda Contract, Patent Sublicense Agreement, the
Consent Agreement and any other agreements to which KBR is
a party in connection with its work under the Barracuda
Contract being assumed to exercise all rights and remedies
under the Agreements.
On June 30, 2000, KBR entered into a contact with Barracuda,
which is the project owner, to develop the Barracuda and
Caratinga crude oil fields, which are located off the coast of
Brazil. Barracuda's representative for the Barracuda Project is
Petroleo Brasilero SA, the Brazilian national oil company. When
completed, the Barracuda Project will consist of two converted
supertankers that will be used as floating production, storage
and offloading platforms, 33 hydrocarbon production wells, 18
water injection wells and all sub-sea flow lines and risers
necessary to connect the underwater wells to the FPSOs.
Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, in
Pittsburgh, Pennsylvania, notes that KBR's performance under the
Barracuda Contract is secured by:
(a) three performance letters of credit, which together have
a $266,000,000 available credit as of June 30, 2003;
(b) a retainage letter of credit in an amount equal to
$141,000,000 as of June 30, 2003; and
(c) a guarantee of KBR's performance of the Barracuda Contract
by Halliburton in favor of Barracuda.
In the event that KBR is alleged to be in default under the
Barracuda Contract, Barracuda may assert a right to draw on the
Letters of Credit. If the Letters of Credit were to be drawn,
KBR would be required to fund the amount of the draw to the
issuing banks.
To the extent KBR cannot fund the amount of the draw, Halliburton
would be required to do so, which could have a material adverse
effect on Halliburton's ability to obtain funding from its
lenders and, in turn, finance the Plan, and adversely impact its
operation results.
In the event that KBR was determined after an arbitration
proceeding to have been in default under the Barracuda Contract,
and if the Barracuda Project was not completed by KBR as a result
of that default, Barracuda may seek direct damages against KBR
for up to $500,000,000 plus the return of $300,000,000 in advance
payments previously received by KBR to the extent they have not
been repaid. Mr. Moser contends that Barracuda's termination of
the Contract could have a material adverse effect on the
Halliburton Group's financial condition and results of operation,
which would, in turn, adversely affect its ability to fund the
Plan.
As of June 30, 2003, the Barracuda Project was 75% complete and
KBR had recorded a pretax loss of $345,000,000 related to the
Barracuda Project, of which $173,000,000 was recorded in the
second quarter of 2003. The parties have significant on-going
disputes regarding the responsibility for delays in the
completion of the Barracuda Project. The probable unapproved
claims for compensation by KBR included in determining the
loss on the Barracuda Project were $182,000,000 as of
June 30, 2003. If the probable unapproved claims are not
recovered, the $182,000,000 will be added to the $345,000,000,
for a total loss of $527,000,000 on the Barracuda Project. KBR's
claims for compensation for the Barracuda Project most likely
will not be settled within one year and will likely result in
expensive and protracted litigation between the parties.
In October 31, 2003, Halliburton, KBR, Barracuda, Petrobras and
the senior lenders to the Barracuda Project entered into a
Limited Waiver and Consent Agreement and Barracuda and KBR
entered into Amendment No. 1 to the Barracuda Contract, which
resolved some of the disputed issues between Barracuda and KBR.
Specifically, Barracuda:
-- granted an extension of time to the original completion
dates and other milestone dates that average nine to 13
months;
-- delayed any attempt to assess the original liquidated
damages against KBR for project delays beyond the extended
dates and up to 18 months;
-- delayed any drawing of the Letters of Credit with respect
to the liquidated damages; and
-- delayed the repayment by KBR of any of the $300,000,000 in
advance payments until the earlier of the completion of
arbitration proceedings or December 7, 2004.
The deferral of the right to seek to draw the Letters of Credit,
impose liquidated damages and require repayment of the
$300,000,000 in advance payments postpones a possible significant
cash outflow from KBR, while the matters in dispute continue to
be negotiated or arbitrated. In addition, the extension of the
original completion dates and other milestones reduces the
likelihood of KBR incurring liquidated damages on the Barracuda
Project. Nevertheless, KBR continues to have exposure for
substantial liquidated damages for delays in the completion of
the Barracuda Project.
Amendment No. 1 to the Barracuda Contract also provides for a
separate liquidated damages calculation of $450,000 per day for
each of the Barracuda and the Caratinga FPSOs for delays from the
original schedule beyond 18 months and does not delay drawing
against the Letters of Credit for these liquidated damages.
Under Amendment No. 1 to the Barracuda Contract, Barracuda has
agreed to pay $59,000,000 to settle some of KBR's disputed
claims. The $59,000,000 payment, when received, will be counted
against the $182,000,000 of probable unapproved claims as of
June 30, 2003. In addition, Barracuda and KBR will either settle
or arbitrate the remaining claims. KBR's maximum recovery from
the remaining claims to be arbitrated is capped at $375,000,000.
Amendment No. 1 to the Barracuda Contract also allows Barracuda
or Petrobras, as a third-party beneficiary to the Barracuda
Contract, to arbitrate claims that they have against KBR, the
maximum recovery for which is capped at $380,090,000, not
including liquidated damages. Amendment No. 1 to the Barracuda
Contract does not affect the parties' right to assert claims for
time and money based on events that occur after June 17, 2003 and
the parties have reserved all defenses they have to any claims.
Mr. Moser explains that the parties entered into a Limited Waiver
and Consent Agreement to resolve certain of their differences and
avoid possible adverse consequences under the Barracuda Contract.
The Limited Waiver and Consent Agreement provides a breathing
spell to allow KBR to complete its work required under the
Barracuda Contract and preclude additional financial losses, both
to itself and Halliburton.
KBR has a meaningful reputation in the industry of completing
projects. Any failure of KBR to complete the Barracuda Project
could result in substantial detriment to its reputation and
ability to successfully compete in the industry. KBR could
suffer a loss of reputation in the offshore engineering industry
and project management business, thus further damaging its
ability to successfully compete in that industry, which would
have a material adverse effect on its financial condition and
ability to confirm the Plan.
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. 4;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DIRECTV LATIN: Court Approves Buena Vista Claim Settlement Pact
---------------------------------------------------------------
DirecTV Latin America, LLC obtained the U.S. Bankruptcy Court's
approval of a Settlement Agreement with Buena Vista International,
Inc.
On the Petition Date, DirecTV Latin America, LLC sought to reject
four prepetition Programming Agreements with Buena Vista
International, Inc. The Debtor's local operating companies
immediately ceased its delivery of The Disney Channel and other
Buena Vista programming to subscribers. On March 28, 2003, the
Court approved an agreement between the Debtor and Buena Vista
wherein the parties stipulated to the rejection of the
Programming Agreements, effective as of the Petition Date, but
reserved all of their claims and defenses. Subsequently, Buena
Vista timely filed a proof of claim asserting $633,000,000 for
damages resulting from the rejection and on account of other
prepetition amounts due.
The Debtor reviewed the Buena Vista Claim and assessed the extent
to which it can deliver The Disney Channel and certain other
programming licensed by Buena Vista on an economic manner. Thus,
the Debtor negotiated with Buena Vista to settle the Buena Vista
Claim and to allow the Debtor to resume the delivery of Buena
Vista programming to its ultimate subscribers.
The parties agreed that the Buena Vista Claim would be allowed as
a general unsecured claim against the Debtor for $275,000,000.
This agreement is conditioned, however, on the filing and ultimate
confirmation by the Debtor's Reorganization Plan providing for a
cash distribution to general unsecured claimholders in an amount
not less than 20% of each holders' allowed claims. In the event
the Debtor files a plan providing for a lesser or different
distribution to general unsecured creditors, or if the Debtor is
unable to ultimately confirm a plan, the proposed settlement of
the Buena Vista Claim will be null and void, and Buena Vista will
retain all its rights while the Debtor will retain all its
defenses.
Buena Vista and the Debtor agreed on the terms of a new
programming agreement pursuant to which Buena Vista will license
to the Debtor the rights to deliver "The Disney Channel" and "Fox
Kids" to its subscribers on a non-exclusive basis as part of its
packages. The New Buena Vista Agreement is a short-term agreement
that will terminate on December 31, 2004, provided that on the
Plan Effective Date, the term of the New Buena Vista Agreement
will automatically convert to an eight-year term ending on
December 31, 2011. As a result, in the event the Plan Effective
Date does not occur, and therefore the proposed settlement will be
null and void, the Debtor will not have any liability to Buena
Vista with respect to the contemplated extended term of the New
Buena Vista Agreement. (DirecTV Latin America Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000)
DONELLY'S HOME: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Donnelly's Mobile Home, Inc.
Route No. 26
Whitney Point, New York 13862
Bankruptcy Case No.: 04-60342
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Donnelly's Communities Family Partnership 04-60342
Type of Business: Manufactured Mobile Homes Wholesale &
Manufacturers.
Chapter 11 Petition Date: January 20, 2004
Court: Northern District of New York (Utica)
Debtors' Counsel: James C. Collins, Esq.
P.O. Box 713
Whitney Point, NY 13862-0713
Tel: 607-692-3344
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
J&S Mobile Home Service $52,126
Levene Gouldin & Thompson, LLP $23,190
Haylor, Freyer & Coon, Inc. $18,486
Agway $13,233
Alliance Bank $12,719
Wayne Piotti $11,862
Paychex $8,552
Wayne Piotti $8,310
XYZ Community Service $7,308
Wayne Piotti $5,040
Capital One FSB $3,996
Agway $3,202
The State Insurance Fund $3,028
Greenes Do It Center $2,712
Stylecrest $2,326
Tallmadge Tire $2,200
The Shopper $2,153
Time Sharmrock Weekly $2,139
Greenes Do It Center $2,096
1000 Island Ready Mix $1,935
ELAN CORP: Raises $70 Million in Four Separate Transactions
-----------------------------------------------------------
Elan Corporation, plc announced four transactions collectively
representing additional proceeds of approximately $70 million. The
transactions are:
-- The sale of the company's San Diego office property and the
completion of a multi-year rental agreement with the new owner
-- The sale, subject to certain closing conditions, of Elan Pharma
S.A., a manufacturing and research and development business
based in Mezzovico, Switzerland, to affiliates of a U.S.
investment banking firm, Sanders Morris Harris, together with
the associated fast-melt and effervescent intellectual property
-- The sale of the company's Segix Italia manufacturing business,
based in Pomezia, Italy, to a management buyout team
-- The receipt of a $25 million milestone payment, pursuant to a
previously announced term of the amended transaction agreement
between Elan and King Pharmaceuticals, Inc. that was contingent
upon ongoing patent exclusivity for Skelaxin(TM) (metaxalone).
Elan President and CEO Kelly Martin said, "These transactions are
consistent with our strategy of focusing our resources on our core
therapeutic focus areas, developing our pipeline, and bringing
innovative science to patients. They represent further success in
our commitment to reposition Elan for the future."
Elan (S&P, B- Corporate Credit and CCC Subordinated Debt Ratings,
Stable) is focused on the discovery, development, manufacturing,
sale and marketing of novel therapeutic products in neurology,
severe pain and autoimmune diseases. Elan shares trade on the New
York, London and Irish Stock Exchanges.
ENCOMPASS SERVICES: Has Until Feb. 26, 2004 to Challenge Claims
---------------------------------------------------------------
At the behest of the Encompass Services Debtors' Disbursing Agent,
Judge Greendyke extends the deadline to file objections to claims
to and including February 26, 2004.
Marcy E. Kurtz, Esq., at Bracewell & Patterson, LLP, in Houston,
Texas, relates that the Debtors have been diligently reviewing
the nearly 5,000 claims filed in their Chapter 11 cases to
determine whether these claims represent bona fide liabilities or
should be disallowed for a number of reasons. The Debtors'
limited number of employees have been performing numerous duties
besides reconciling the claim amounts with the Debtors' books and
records, negotiating with creditors, and filing objections where
necessary. Ms. Kurtz says that the claims objection process is
extremely time-consuming.
Disbursing Agent Todd A. Matherne has also been reviewing each
Debtor's schedules. Mr. Matherne is substantially complete with
his review process. To date, the Court has entered orders
disallowing 600 claims. Mr. Matherne has filed:
-- 25 omnibus objections, each of which objects to 25 to 50
claims;
-- 56 individual claim objections;
-- 20 objections to administrative applications; and
-- 16 motions to expunge the Debtors' schedules.
Moreover, 40 claim objections or motions are currently set for
hearing. The Disbursing Agent still has over 100 proofs of claim
to review. (Encompass Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ENRON: Wants Go-Signal to Implement KERP and Severance Plan III
---------------------------------------------------------------
Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York,
notes that the Enron Debtors' Key Employee Retention, Liquidation
Incentive and Severance Plan expired on February 28, 2003 and the
second Enron Corporation Key Employee Retention and Severance
Plan will expire on February 27, 2004.
Moving towards the approval and consummation of their Chapter 11
Plan, the Debtors remain focused on their paramount goal of
preserving and maximizing the value of their businesses,
liquidation of financial assets of the trading books, divesture
of non-core businesses, restructuring profitable core businesses,
litigation management and resolution of claims and
investigations. The Debtors' Key Employees are their most
valuable asset in tackling these functions. These individuals
possess vital and unique knowledge, skills, experience and
customer and supplier relationships, all of which are, in many
cases, impracticable or impossible to replicate. The continued
employment, dedication and motivation of the Key Employees are
essential to the preservation and prosperity of the Debtors and
to the success of the entire reorganization effort.
To retain the employees, Mr. Rosen relates that it is necessary
for the Debtors to provide a financial incentive for continued
commitment to employment and to assure employees that they will
be rewarded for dedicated service towards the Debtors'
reorganization effort.
Accordingly, pursuant to Section 363(b) of the Bankruptcy Code,
the Debtors ask the Court to approve the Enron Corp. Key Employee
Retention and Severance Plan III.
Mr. Rosen tells the Court that the KERP III was designed to
encourage the Debtors' key and critical employees who provide
essential management and other necessary services during the
Debtors' Chapter 11 cases to continue to do so while the Debtors
still have needs for their services. KERP III will aid the
Debtors in limiting unwanted or premature attrition and maintain
a level of much needed stability in the Debtors' workforce, in
addition to providing incentives as necessary to attract new
employees to fill critical yet vacant positions.
The Debtors carefully evaluated the costs associated with
premature Key Employee attrition. The Debtors have expended
significant time and resources in recruiting and training many of
the Key Employees, the value of which would be lost if they were
to depart before necessary tasks are completed. In addition to
the loss of institutional and internal systems knowledge,
attrition results in lost productivity and leads to recruiting
and administrative costs. Filling vacant positions is made that
much more difficult by the uncertain state of the Debtors'
businesses, and outsourcing many of these functions is
impractical. Moreover, the Debtors determined that outsourcing
work consistently and significantly would exceed the cost of
retaining employees through KERP III, and would not guarantee the
level of expertise and skill necessary to meet current business
objectives.
Indeed, Mr. Rosen reports that prior to the approval of KERP I,
employee attrition averaged to 34 voluntary resignations per
week. With KERP I in place, the attrition rate decreased to an
average of nine voluntary departures per week. When KERP II was
implemented, the Debtors lost, on the average, eight eligible
employees per week. Thus, the KERP proved to be an effective
tool in slowing the premature departure of Key Employees.
At this stage of the Debtors' bankruptcy cases, Mr. Rosen states
that the urgent need to implement KERP III is especially acute
for employees assisting in the liquidation of non-core businesses
in which they are employed. These employees are placed in the
untenable position of liquidating themselves out of jobs, while
at the same time seeking to maximize value for their soon-to-be
former employer. Without some security or compensation for the
employment risk attendant with these positions, these employees
have little or no reason to defer finding new jobs or to maintain
high levels of efficiency and productivity.
Aside from the disruption attendant to ongoing reductions in the
workplace and the suspension of the Key Employees' career paths,
their financial expectations have been and will continue to be
frustrated. The Debtors can no longer offer various equity-based
incentive compensation benefits previously granted to Key
Employees that would be available to them from other employers,
the Debtors' 401(k) plan has lost value to the extent invested in
the Debtors' common stock and in 2004, Key Employees will be
required to bear greater costs for benefits like health
insurance.
According to Mr. Rosen, KERP III has three primary components:
(a) a Retention component designed to retain employees;
(b) a Severance Benefits component to provide job
displacement protection for certain departing employees;
and
(c) a Completion Bonus component.
The Debtors propose that KERP III will commence on February 28,
2004 and conclude on December 30, 2005. For ease of
administration, KERP III will be administered on a calendar year
basis, with the first plan year commencing on the effective date
and ending on December 31, 2004 and the second plan year
commencing on January 1, 2005 and ending on December 30, 2005.
The Retention Component
The employees who have the expertise, duties, responsibilities
and experience critical to the Chapter 11 cases and the Debtors'
business operations would participate in the Retention Component.
The Enron Corp. Office of the Chief Executive, whose designated
constituents will constitute the administrative committee for
KERP III, will identify up to 390 employees in 2004 and 190
employees in 2005 as Retention Participants. However, the
Committee, in consultation with the Debtors' Chief Restructuring
Officer and Chief Executive Officer, continues to evaluate the
requirements of these cases and the Debtors' businesses in light
of changing economic and business conditions. Accordingly, the
Committee reserves the right to change the Key Employees who are
to participate in the Retention Payments component of KERP III.
Retention Participants are eligible to receive Retention Payments
for the quarters in each of the Plan Years. During the 2004
Retention Plan Year, the applicable quarters will be deemed to
end on June 30, 2004, September 30, 2004 and December 31, 2004.
During the 2005 Retention Plan Year, the applicable quarters will
be deemed to end on March 31, 2005, June 30, 2005, September 30,
2005 and December 31, 2005. A Retention Participant who is
terminated without cause mid-quarter will receive a pro rata
Retention Payment for that quarter but will not be eligible for
Retention Payments thereafter.
Under KERP III, Mr. Rosen says, the Debtors will maintain the
current Retention Payment distribution and deferral percentage of
50% -- that is, half the Quarterly Payment is paid as soon as
reasonably practicable at the end of the quarter, and the
remaining half of the Quarterly payment will be deferred. The
Deferred Payment for the applicable Retention Plan Year will be
paid as soon as practicable following the earlier of:
(i) the close of the applicable Retention Plan Year; or
(ii) the Participant's death, disability or involuntary
termination without cause.
By providing a deferred benefit payment, Mr. Rosen points out
that KERP III retains a powerful back-loaded incentive for Key
Employees to remain with the Debtors through the Deferred Payment
Date.
If a Retention Participant voluntarily resigns prior to the
Deferred Payment Date for each Retention Plan Year, as
applicable, Deferred Payments for the applicable year will be
forfeited. A Participant's failure or refusal to accept an offer
of subsequent employment with the Debtors will be deemed to be a
voluntary termination of employment except where the failure or
refusal is for "good reason."
If a Retention Participant is terminated for cause, any Deferred
Payments not yet paid will be forfeited. Any forfeited amounts,
or if the Committee determines that unused Retention Benefits
should be reallocated for other retention, bonus or severance
purposes, will be available for reallocation among the Retention
Participants as the Committee determines in its sole discretion.
In connection with the reallocation, until the later of the
Effective Date of the Plan or in the event the Court continues
the duties of the ENA Examiner beyond the Effective Date, until
the ENA Examiner's duties are fully terminated, the Debtors will
notify the Creditors Committee in writing of the terms of the
proposed reallocation, and may proceed without Court approval if
there is no objection from the Creditors Committee.
Amounts payable to Retention Participants under the Retention
component of KERP III will not exceed $29,000,000, exclusive of
amounts approved but unused under KERP I and II, which, if
authorized by the Court, will be carried over and made available
for awards under KERP III.
The Severance Benefits Component
The Severance Benefits component is intended to provide
competitive security for employees ineligible to participate in
the Retention Program and those Retention Participants who do not
receive Retention Payments of a certain level. Mr. Rosen informs
Judge Gonzalez that the calculation of payments under the
Severance Benefits component of KERP III is unchanged from KERP
II. Individuals who participated in the KERP I LIP remain
excluded from the Severance Benefits component of KERP III, as
are individuals who are eligible to participate in a plan of the
Debtors or their affiliates providing similar severance benefits.
Mr. Rosen explains that an employee who is eligible for Severance
Benefits will receive a minimum severance payment of $4,500. The
Severance Benefit will be calculated to be the greater of:
(i) two weeks of base salary per year, and partial year, of
total service, with a maximum of eight weeks of base
salary; or
(ii) two weeks of base salary per year, and partial year, of
total service plus two weeks of base salary per $10,000
increment, and partial increment, of base salary, with
the total sum not to exceed $13,500.
Retention Participants who are eligible to receive Severance
Benefits will have their Severance Benefits reduced dollar for
dollar by any Retention Payments earned by the Participant during
the applicable Severance Plan Year.
In the event a Severance Participant voluntarily terminates his
or her employment with the Debtors, or is terminated for cause,
the Severance Participant will forfeit all eligibility for
Severance Benefits under KERP III. A Severance Participant's
failure or refusal to accept an offer of subsequent employment
from the Debtors, their affiliates or a Divested Employer, other
than for Good Reason, will be deemed to be a voluntary
termination of employment for purposes of KERP III. In addition,
if a participant accepts an employment offer with the Debtors,
any affiliate or any Divested Employer, the Severance Participant
will not be eligible for Severance Benefits under the Plan.
The Debtors estimate that less than 110 employees in 2004 and 15
employees in 2005 will participate solely in the Severance
Benefits component of the KERP III. The Debtors further estimate
that fewer than 75 employees who are eligible for the Retention
Component will participate in the Severance Benefits component of
KERP III.
The maximum amount available to be paid under the Severance
Benefits component of KERP III will be the remainder of the
$7,000,000 approved for Severance Benefits under KERP I and
carried over under KERP II, plus an additional $1,500,000. In
the event of forfeiture of amounts authorized for Severance
Benefits, or the Debtors' determination that amounts authorized
for Severance Benefits are available and should be reallocated
for other retention, bonus or severance purposes, until the Plan
becomes effective, the Debtors will notify the Creditors
Committee in writing of any proposed reallocation and will
proceed with any reallocation without any requirement of Court
approval if there is no objection from the Creditors Committee.
The Completion Bonus Component
The Completion Bonus will be an additional incentive available to
Key Employees whom the Committee, in its sole discretion,
determines are essential to the remaining phases of the
reorganization and liquidation efforts at a level insufficiently
recognized by participation in the Retention component of KERP
III, to be payable upon the involuntary termination of employment
without cause. Generally, Mr. Rosen relates that Completion
Bonus Participants would be limited to employees who possess
critical historical knowledge, are multi-skilled, fulfill many
and an increasing number of organization roles, possess
specialized skills that are difficult and expensive to replace,
become more critical due to unexpected attrition or are
recognized for strong leadership skills, flexibility and
adaptability. The Debtors estimate that the number of Completion
Bonus Participants will be 65 in 2004 and 50 in 2005.
As with the Retention Payments, the Committee will determine the
Completion Bonuses at its sole discretion. Taking into account
the Completion Bonus Participant's initial Quarterly Retention
Target under the Retention Component of KERP III, the Committee
will establish a projected completion bonus for that Completion
Bonus Participant.
The Committee will determine the actual Completion Bonus to be
paid to any participant as soon as practicable after a Completion
Bonus Plan Year. However, the Completion Bonus Payment will be
deferred until the Participant's involuntary termination of
employment without cause, even if termination does not occur
until a subsequent year. The Committee will base its
determination on the previously established Completion Bonus
Target, taking into account the Completion Bonus Participant's
contribution and performance during the applicable Completion
Bonus Plan Year.
In the event the Completion Bonus Participant's employment is
terminated involuntarily without cause prior to the end of a
Completion Bonus Plan Year, the Participant will be paid any
Completion Bonus awarded for, and deferred from, a prior
Completion Bonus Plan Year. But the Participant will not be
eligible to receive Completion Bonus Payments for any subsequent
Completion Bonus Plan Year.
In the event that a Completion Bonus Participant's employment is
terminated due to death or disability prior to the end of a
Completion Bonus Plan Year, the Participant will be paid:
(1) any deferred Completion Bonus; and
(2) a pro rata portion of his or her Completion Bonus Target
for the current Completion Bonus Plan Year.
In the event a Participant voluntarily terminates his or her
employment with the Debtors or the Participant's employment is
terminated for cause, the Participant will forfeit all rights to
any deferred Completion Bonus Payments and to any payments based
on any Completion Bonus Target. A Participant's failure or
refusal to accept an offer of subsequent employment from the
Debtors' their affiliates or a Divested Employer, other than for
good reason, will be deemed to be a voluntary termination of
employment for purposes of eligibility to receive any Completion
Bonus Payments. In addition, if a Participant accepts an offer
of employment from any affiliate or Divested Employer, the
Participant will forfeit his or her rights to Completion Bonus
Payments under the Plan.
The aggregate amount payable to Completion Bonus Participants
will not exceed $5,7000,000, subject to any downward adjustment
that the Committee may make in its sole discretion. In the event
of forfeitures of amounts authorized for Completion Bonus
Payments, or as the Debtors determine that amounts authorized for
Completion Bonus Payments are available and should be reallocated
for other retention, bonus or severance purposes, the Debtors
will notify the Creditors Committee of any proposed reallocation.
If the Creditors Committee has no objection, the Debtors will
proceed with the reallocation without Court order.
KERP III Payment Conditions
To be eligible for payments under KERP III, each Participant must
certify that he or she has not engaged in certain acts
detrimental to the interest of the Debtors and their creditors,
including, inter alia, that they have not been named in lawsuits
or engaged in insider trading and will disgorge KERP III payments
if later adjudged to have engaged in acts of dishonesty or
willful misconduct. According to Mr. Rosen, to receive any Final
Payment under KERP III, Participants also must execute a general
release, which release all claims against the Debtors. However,
the release will not waive any Final Payment under KERP III,
rights to benefits under ERISA plans, claims for non-qualified
deferred and incentive executive compensation, workers'
compensation and unemployment insurance benefits, and director
and officer indemnification coverage. (Enron Bankruptcy News,
Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ENRON CORP: EMI Selling Partnership Interest to VF II for $10MM
---------------------------------------------------------------
Pursuant to Sections 363 and 365 of the Bankruptcy Code, EESO
Merchant Investments, Inc. asks the Court to authorize:
(a) its assumption of an Amended and Restated Limited
Partnership Agreement;
(b) its subsequent assignment of the Partnership Agreement
and sale of related limited partnership interest pursuant
to a Purchase and Sale Agreement to VF II Holdings LLC;
and
(c) the Assignment and Assumption Agreement by and between
EMI, VF II, Heartland Industrial Partners (E1) LP,
Heartland Industrial Associates LLC, Heartland Industrial
Partners LP and The Heartland Industrial Group LLC.
The Heartland Transactions
EMI, a wholly owned subsidiary of Enron Energy Services
Operations, Inc., was formed to facilitate equity investments in
other entities. However, Martin A. Sosland, Esq., at Weil,
Gotshal & Manges LLP, in New York, reports that the only
investment EMI ever made was its investment in Heartland
Industrial Partners (E1) LP. The Partnership is a parallel
investment fund to HIP LP, which represents itself to be a
$1,200,000,000 investment fund.
EMI is a party to an Energy Services Agreement dated as of May
2000 with HIP LP pursuant to which EMI was allowed to develop and
propose energy saving projects on an exclusive basis to HIP LP's
portfolio companies. In connection with the transactions
contemplated by the Energy Agreement, EMI acquired a 99% limited
partnership interest in the Partnership and entered into the
Partnership Agreement dated as of May 10, 2000, among HIA, as
general partner, and EMI, as the sole limited partner.
According to Mr. Sosland, HIA alleged that EMI was obligated to
contribute $21,500,000 in capital pursuant to the terms of the
Partnership Agreement and that EMI defaulted on the payment of
Partnership capital calls. Thus, on October 3, 2002, HIA filed
an unliquidated claim against EMI related thereto. In addition,
HIA declared EMI a "defaulting limited partner" pursuant to the
terms of the Partnership Agreement and purportedly transferred
50% of EMI's capital balance to HIA. EMI disputes the validity
of the actions HIA took in respect of the Partnership Agreement.
On June 3, 2003, Mr. Sosland reports, EMI and HIA entered into a
letter agreement whereby they agreed, among other things, that to
induce prospective purchasers to bid on the LP Interest, HIA
would, upon receipt of the Cure Payment:
(i) waive any allege defaults by EMI for failing to make any
required capital contributions under the Partnership
Agreement;
(ii) rescind any purported remedies HIA took; and
(iii) not unreasonably withhold its consent to the assignment
of the LP Interest.
EMI, HIA and HIP LP engaged in extensive, arm's-length and good
faith negotiations. After extensive negotiations, the Settlement
Parties determined that the settlement set forth in the
Assignment Agreement is in the best interest of all Settlement
Parties. The Settlement Parties desire to compromise and settle
any and all claims relating to or arising out of:
(i) the Partnership,
(ii) the Partnership Agreement, or
(iii) the Energy Agreement.
The Marketing Activities
Mr. Sosland informs Judge Gonzalez that since June 2003, EMI has
marketed the LP Interest. Before EMI initiated the auction for
the LP Interest, it received four unsolicited calls from parties
interested in purchasing the LP Interest. Of those four, two
purchased interests directly in HIP LP from its limited partners.
In August 2003, Auction instructions and bid documents were sent
to the remaining two parties as well as two brokers and the other
limited partners in HIP LP. The Auction resulted in two bids,
with stated cash purchase price of $10,170,000 and $11,600,000.
In consultation with its financial advisors, EMI selected the
$10,170,000 bid based on a material difference in the bidder's
ability to consummate the transaction.
The Sale Agreement
After substantial negotiations, on December 3, 2003, EMI and VF
II entered into the Sale Agreement, which provides for EMI's
transfer of all of its right, title and interest in and to the
Partnership Agreement, the LP Interest and the books and records
related thereto. The salient terms of the Sale Agreement are:
A. Purchase Price
The purchase price for the Assets will be an amount equal to:
(1) $10,250,000, minus
(2) any distributions made or deemed made to EMI by the
Partnership after June 30, 2003, plus
(3) the assumption of the Assumed Liabilities, minus
(4) the Cure Payment.
B. Deposit and Payment of Purchase Price
Contemporaneously with the execution of the Sale Agreement,
VF II deposited with, and paid to, EMI $1,025,000 as a
deposit. At the Closing, VF II will pay the Adjusted
Purchase Price, less the Deposit, by wire transfer of
immediately available funds to EMI and VF II will pay the
Cure Payment to HIA by wire transfer of immediately
available funds.
C. Assumption of Liabilities
Effective on the Closing, VF II will assume and agree to pay,
perform and discharge all liabilities arising out of, in
connection with, or related to the ownership of the Assets
after the Closing Date. EMI will retain any and all
liabilities arising out of, in connection with, or related to
any breach by EMI on or before the Closing Date of any
representations, warranties or covenants made by EMI for the
benefit of HIA, the Partnership or any of the partners
therein.
D. Closing Conditions
The parties' obligation to proceed with the Closing
contemplated by the Sale Agreement is subject to the
satisfaction on or prior to the Closing Date of certain
conditions EMI and VF II must meet.
E. Termination of Agreement
The Sale Agreement and the transactions contemplated thereby
may be terminated at any time prior to the Closing:
* by the written consent of each of EMI and VF II;
* by either party if the Closing has not occurred on or
before 60 days after execution -- as may be extended by
written agreement of the Parties -- provided that the
terminating party is not in default of its obligations
under the Sale Agreement in any material respect;
* by any Party, upon written notice to the other Parties, if
there will be an Applicable Law that makes the
consummation of the transactions contemplated thereby
illegal or otherwise prohibited or if any court of
competent jurisdiction or other Governmental Authority
will have issued a final and non-appealable order, decree
or ruling or taken any other action permanently
restraining, prohibiting or enjoining the consummation of
the transactions contemplated by the Sale Agreement; or
* by EMI, at any time after the Bankruptcy Court approves an
Alternative Transaction, or VF II, upon, but not prior to,
the financial closing of an Alternative Transaction.
F. VF II's Remedies
VF II's only remedy for EMI's breach of the Sale Agreement
prior to the Closing Date, will be its option to terminate
the Sale Agreement to the extent permitted by the terms
thereof and to receive the Deposit to the extent permitted by
the Sale Agreement.
G. Auction Process
Prior to the earlier of the Closing or the termination of the
Sale Agreement in accordance with its terms, EMI will not
solicit any inquiries, proposals, offers or bids from,
negotiate with, or enter into any agreement with, any Person
other than VF II relating to the direct or indirect sale,
transfer or other disposition, in one or more transactions,
of all or substantially all of the Assets, or otherwise take
any other affirmative action to cause, promote or assist with
any similar transaction with a third party -- an Alternative
Transaction -- provided, however, that (i) EMI or its
representatives may provide notice to third parties of the
filing of the request with respect to the Sale Agreement, and
(ii) if EMI receives an unsolicited bona fide proposal for an
Alternative Transaction, EMI and its representatives may:
(a) supply information relating to EMI, the Assets, and the
Partnership to prospective purchasers who have executed a
confidentiality agreement with EMI or the Partnership;
(b) respond to any inquiries or offers made in connection
with the Alternative Transaction;
(c) engage in negotiations; and
(d) if EMI determines in good faith that the proposal could
reasonably be expected to result in a Superior
Transaction, enter into, and seek Bankruptcy Court
approval of, any definitive agreement with respect
thereto.
The Assignment Agreement
With the Settlement Parties' desire to compromise and settle all
issues regarding the Heartland Transactions, pursuant to the
Assignment Agreement, they agree that on the Closing Date:
(i) EMI will assign all of its right, title and interest in
and to the LP Interest and the Partnership Agreement to
VF II;
(ii) VF II will assume all of the Assumed Liabilities;
(iii) VF II will pay to HIA, as consideration for HIA's consent
to the transfer of the LP Interest to VF II and the
release of the HIA Claims -- the Cure Payment;
(iv) Each of the Settlement Parties, for and on behalf of
itself and each of its affiliates, will release, acquit
and discharge each other party and each and every past
and present affiliate of each other party from any and
all claims, relating to the Heartland Transactions;
(v) Each proof of claim filed by or on behalf of the
Partnership, HIA and HIG against EMI in connection with
the LP Interests, will be deemed irrevocably withdrawn,
with prejudice, and to the extent applicable expunged and
all claims set forth therein disallowed in their
entirety; and
(vi) The Energy Agreement will be terminated.
Mr. Sosland contends that the contemplated transactions should be
approved because:
(a) Other than the DIP Liens, EMI is not aware of any liens,
claims and encumbrances relating to the LP Interest or
the other Assets;
(b) The terms of the Sale Agreement and the Settlement
Agreement were negotiated at arm's length and in good
faith;
(c) If the contemplated transaction is not consummated, EMI
would need to commence adversary or other proceedings to
determine the amount, if any, of the HIA Claim and
whether HIA's purported exercise of its remedies under
the Partnership Agreement were valid -- an expensive
undertaking with uncertain outcome; and
(d) EMI believes that selling the Assets will maximize its
value for the estate and will potentially result in a
greater return to creditors. (Enron Bankruptcy News, Issue
No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ENUCLEUS INC: Agrees to Acquire PrimeWire Inc.'s Assets
-------------------------------------------------------
eNucleus, Inc. (OTC Bulletin Board: ENCU), a next generation
software company, entered into an agreement to acquire the assets
of PrimeWire, Inc.
PrimeWire is an industry leading software Company servicing the
technology needs of brokers, insurance companies, marketing
organizations, payroll service bureaus and enrollment firms who
provide third party benefit administration.
PrimeWire's application, known as ASSETS(TM), manages all of the
complex business rules for eligibility and enrollment, billing and
reconciliation, as well as on-going change management for all
aspects of an employer's employee benefit program. More than 55
products are currently built on the system ranging from medical
insurance to pet insurance. Clients include MyBenefitSource,
Corporate Services, Inc., Holmes Shaw, United Specialty Benefits
and Communication Partners, Inc., Wahcovia Insurance Services,
Ferguson Marketing, and TM Hogan among others.
Robert Steele, PrimeWire's President, stated, "PrimeWire grew from
30,000 employees under management last year to over 130,000 this
open enrollment season. Additionally, our application managed
more than 755,000 individual benefit selections representing more
than $450 million of benefit premiums. Our unprecedented growth
forced us to look for a business partner, who could handle our
anticipated growth of more than 450,000 employees under management
by the end of 2004."
Under the terms of the transaction, eNucleus' subsidiary Financial
ASPx, Inc. will acquire software rights, client contracts, and all
other assets of PrimeWire for the consideration of cash and stock.
PrimeWire revenues for 2003 were $2.2 million with an adjusted
EBITDA of nearly $500,000.
Under the terms of the Agreement, PrimeWire will receive stock and
cash consideration under a three year earn out with stock
consideration priced at market upon the close of each of the
subsequent 12 quarters. Particulars of the transaction can be
found in the Company's 8K, which will be filed with the Securities
and Exchange Commission concurrently with the close the
transaction, scheduled for January 30, 2004.
"We are thrilled to welcome Robert Steele and the PrimeWire team
to the eNucleus family," stated John Paulsen, eNucleus' CEO.
"Their robust application and industry knowledge provides eNucleus
an unparalleled opportunity in attracting market share in this $45
Billion industry."
"eNucleus provides PrimeWire with the opportunity to expand our
reach into other vertical markets, build additional functionality,
expand the company to meet market demands, and continue to meet
current customer expectations," said Robert Steele, President of
PrimeWire.
eNucleus -- http://www.eNucleus.com/-- is a next generation
application company delivering robust software solutions to
companies in specific market verticals. The seamless and
immediate exchange of critical business information provided by
our software solutions allows our clients to run their businesses
with maximum efficiency and profitability.
PrimeWire -- http://www.primewire.com/-- is a technology company
specializing in the building of online applications for employee
benefits administration. The company is unique because its
solution integrates all aspects of benefits administration to all
stakeholders including enrollment, communication, administration,
customer service, and billing. Each stakeholder which includes
employers, employees, brokers and insurance companies all have
their own self-service module. The underlying technology is
Microsoft's .NET technology.
* * *
As previously reported, the Company's continued existence is
dependent on its ability to achieve future profitable operations
and its ability to obtain financial support. The satisfaction of
the Company's cash requirements hereafter will depend in large
part on its ability to successfully generate revenues from
operations and raise capital to fund operations. There can,
however, be no assurance that sufficient cash will be generated
from operations or that unanticipated events requiring the
expenditure of funds within its existing operations will not
occur. Management is aggressively pursuing additional sources of
funds, the form of which will vary depending upon prevailing
market and other conditions and may include high-yield financing
vehicles, short or long-term borrowings or the issuance of equity
securities. There can be no assurances that management's efforts
in these regards will be successful. Under any of these scenarios,
management believes that the Company's common stock would likely
be subject to substantial dilution to existing shareholders. The
uncertainty related to these matters and the Company's bankruptcy
status raise substantial doubt about its ability to continue as a
going concern.
Management believes that, despite the financial hurdles and
funding uncertainties going forward, it has under development a
business plan that, if successfully funded and executed, can
significantly improve operating results. The support of the
Company's creditors, vendors, customers, lenders, stockholders and
employees will continue to be key to the Company's future success.
FLEMING: Court Clears Amendment to C&S Asset Purchase Agreement
---------------------------------------------------------------
The Fleming Companies Debtors obtained U.S. Bankruptcy Court Judge
Walrath's approval of an amendment to their Asset Purchase
Agreement dated July 7, 2003 with C&S Acquisition LLC to allow for
the immediate payment of royalty amounts payable by C&S.
Under the C&S APA, Fleming is entitled to receive certain
prospective royalty payments from C&S -- on its own behalf and on
behalf of its third-party purchasers -- during the Royalty
Period. C&S -- only on behalf of its third-party purchasers --
may prepay the amount for the customer relationships or customer
agreements sold or transferred to a third-party purchaser equal
to the net present value, using a 10% discount rate, of 1% of the
estimate of the Sales to that customer over the four-year Royalty
Period -- the estimate to be based on the Average Actual Sales
annualized for the remaining four years.
To satisfy the Debtors' near-term liquidity needs, facilitate the
refinancing of the Debtors' current DIP facility, and alleviate
the administrative burdens associated with reconciling the
prospective payments, the Debtors found it important to promptly
monetize all remaining payments due from C&S.
The Debtors also sought to eliminate other risks inherent in the
C&S royalty payments. These payments are contingent on
prospective sales to Active Customers. However, there is no
guarantee that the underlying sales will be made. Further, if
C&S were to file for bankruptcy, C&S may be able to delay these
payments, or not make them at all. Further, if there are
disputes concerning prospective royalty payments, then Fleming
may be forced to litigate these differences, which will result in
additional uncertainty and delay concerning these payments.
The Amendment calls for C&S to make an immediate, one-time
payment to Fleming. The amount was determined by performing
substantially the same calculations for prepayment by third
parties that are outlined in the APA. However, for purposes of
determining the C&S prepayment, the parties used a royalty period
covering 4.25 years instead of the four-year period available to
third-party purchasers. This is a further benefit to the Debtors
because the longer period of time captures a larger amount of
anticipated sales, which, in turn, results in a larger royalty
amount.
The proposed prepayment would immediately provide the Debtors
with $14,764,179. This amount is net of a $3,383,249 initial
closing royalty payment paid by C&S and a 25% indemnity reserve
funding equal to $4,921,393. Thus, the Amendment directs that
the prepayment will total $19,685,573, made in full satisfaction
of all Royalty Amounts due or payable under the APA, other than
the Royalty Amounts owing to the Debtors in connection with
sales, transfers or dispositions to AWG Acquisition LLC or
Associated Wholesale Grocers, Inc., Associated Grocers
Acquisition Company or AG Florida, Supervalu Inc., and Grocers
Supply in their capacities as third-party purchasers.
C&S will make the prepayment immediately upon Court approval.
However, in accordance with the APA, 25% of the Royalty Amount,
or $4,921,393, will be deposited into the Indemnity Escrow. In
no event will this or any other deposit into the Indemnity Escrow
cause the total amount in the escrow to exceed $16,500,000.
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. 21; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FRONTIER OIL: S&P Says Refinery Fire Will Not Affect Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services said that Frontier Oil Corp.'s
(BB-/Stable/--) ratings would be unaffected by the coking unit
fire at its Cheyenne Refinery that occurred on Jan. 19, 2004.
The coking unit is expected to be out of service for about 30
days, during which time a reduced crude charge will likely be run.
During this time, Frontier's total operating capacity is estimated
to be over 80% for Frontier's Cheyenne (46,000 barrel per day
(bpd)) and El Dorado (110,000 bpd) refineries. Frontier has
developed a strong ratings cushion as a result of its cash
position, protracted debt maturity schedule, and a favorable
intermediate-term outlook for refining margins. As such, the
financial consequences of the fire are unlikely to negatively
affect the company's credit quality.
Frontier Oil Corporation is an independent refiner and wholesale
marketer of petroleum products, operating two refineries, a 46,000
barrel-per-day refinery in Cheyenne, Wyoming, and a 110,000 bpd
refinery in El Dorado, Kan. Frontier also offers its own branding
program in the Rocky Mountain market area to accommodate smaller,
independent gasoline marketers.
GAP INC: Brings-In Cynthia Harriss to Head Outlet Division
----------------------------------------------------------
Gap Inc. (NYSE: GPS) announced that Cynthia Harriss will join the
company as President of its Outlet division. She will report to
Gap Inc. CEO and President Paul Pressler, and will serve on the
company's Executive Leadership Team.
Gap Inc.'s Outlet division has successfully extended the Gap,
Banana Republic and Old Navy brands to outlet customers. The
division operates more than 200 outlet stores, offering styles
designed and produced exclusively for the division, in addition to
product from the brands.
"Cynthia is known for her tremendous ability to motivate people
and get the best out of her teams," said Mr. Pressler. "Her
extensive strategy and merchandising experience will ensure that
our brand expressions continue to be integrated, and targeted to
our Outlet customers."
Ms. Harriss, 51, most recently held the position of President of
the Disneyland Resort division of The Walt Disney Company; she
resigned from the company in October 2003. In that role, she
oversaw the management and long-term growth of the division, which
included the Disneyland and California Adventure parks, three
Disney hotels and the retail, dining and entertainment center
Downtown Disney.
Prior to her post at the Disneyland Resort, Ms. Harriss served as
Senior Vice President of Stores for The Disney Store, where she
oversaw growth from 140 store locations to 460. Prior to joining
Disney in 1992, she spent 19 years with Paul Harris Stores in
various operational and merchandising management capacities,
ranging from General Merchandise Manager to Senior Vice President
of Stores.
Gap Inc. (Fitch, BB- Senior Unsecured Debt Rating, Stable Outlook)
is a leading international specialty retailer offering clothing,
accessories and personal care products for men, women, children
and babies under the Gap, Banana Republic and Old Navy brand
names. Fiscal 2002 sales were $14.5 billion. As of
November 1, 2003, Gap Inc. operated 4,210 store concepts (3,075
store locations) in the United States, the United Kingdom,
Canada, France, Japan and Germany. In the United States, customers
also may shop the company's online stores at http://www.gap.com/
http://www.BananaRepublic.com/and http://www.oldnavy.com/
GLOBAL CROSSING: Court Disallows 63 Duplicate Tax Claims
--------------------------------------------------------
The Global Crossing Debtors determined that 63 claims were filed
by various federal, state or local taxing authorities against the
same Debtor for the same dollar amount and in respect of the same
obligation. As such, each of the Duplicate Tax Claims represents
only one obligation of the Debtors, and the Taxing Authorities
that filed Duplicate Tax Claims are entitled to only one
distribution.
To avoid double recovery by the claimants, the Debtors sought and
obtained a Court order disallowing and expunging the Duplicate
Tax Claims. The claims identified as Remaining Tax Claims will
be preserved.
The 63 Tax Claims include:
To be expunged Remaining
-------------------- -------------------
Claim Claim Claim Claim
Creditor Number Amount Number Amount
-------- ------ ------ ------ ------
Boulder County 8215 $132,667 3826 $132,667
Treasurer
Chicago Dept. of 214 103,859 186 103,859
Revenue, City of
Cost Recovery &
Collection Div.
Cohise County 5988 159,175 4721 159,175
Treasurer
Fairfax County, VA 9726 118,044 9877 118,044
Fulton County Tax 1068 952,732 1153 952,732
Commissioner
Missouri Department 95 1,188,921 77 1,188,921
of Revenue
Snohomish County 406 1,955,564 271 1,955,564
Treasurer
Texas Comptroller 9863 167,462 896 167,462
Of Public Accounts
(Global Crossing Bankruptcy News, Issue No. 54; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
JPS INDUSTRIES: Will Webcast Q4 Conference Call on January 29
-------------------------------------------------------------
JPS Industries, Inc. (Nasdaq: JPST) will provide an on-line, real-
time Web-cast and rebroadcast of its fourth quarter conference
call to be held on Thursday, January 29, 2004.
The live broadcast of JPS Industries' conference call will be
available on-line at:
http://www.irinfo.com/jpst/
or
http://www.firstcallevents.com/service/ajwz397702748gf12.html/
on Thursday, January 29, 2004, beginning at 11:00 a.m. (eastern
time). The on-line replay will follow immediately and continue for
30 days.
JPS Industries, Inc. is a major U.S. manufacturer of extruded
urethanes, polypropylenes, and mechanically formed glass
substrates for specialty industrial applications. JPS specialty
industrial products are used in a wide range of applications,
including: printed electronic circuit boards; advanced composite
materials; aerospace components; filtration and insulation
products; surf boards; construction substrates; high performance
glass laminates for security and transportation applications;
plasma display screens; athletic shoes; commercial and
institutional roofing; reservoir covers; and medical, automotive
and industrial components. Headquartered in Greenville, South
Carolina, the Company operates manufacturing locations in Slater,
South Carolina; Westfield, North Carolina; and Easthampton,
Massachusetts.
* * *
Liquidity and Capital Resources
In its latest Form 10-Q filed with Securities and Exchange
Commission, JPS Industries reported:
"The Company's principal sources of liquidity for operations and
expansion are funds generated internally and borrowings under its
Revolving Credit Facility. The current credit agreement expires in
May, 2004 and the related debt is classified as current. The
Company is currently seeking refinancing. Management believes that
the Company can obtain refinancing on terms equal to, or better
than, those of the Company's current credit agreement. However,
the ability of the Company to continue to pay its capital
obligations and implement its business plan is contingent on
obtaining such refinancing. There can be no assurance that we will
be able to obtain such refinancing on the terms and timetable
currently contemplated.
"Year to date for 2003, cash used in operating activities was $2.8
million. Working capital at November 2, 2002 was $23.6 million
compared with $8.8 million at August 2, 2003. From November 2,
2002 to August 2, 2003, accounts receivable decreased by $0.4
million due to timing and sales levels, inventories increased $0.1
million, and accounts payable and accrued expenses increased by
$0.1 million.
"The principal use of cash in 2003 was for capital expenditures of
$243,000 and funding of $5.5 million of pension contributions. The
Company anticipates that its total capital expenditures in Fiscal
2003 will be less than $1.0 million and expects such amounts to be
funded by cash from operations and bank financing sources.
"Based upon the ability to generate working capital through its
operations, its current credit agreement, and assuming the Company
is successful in securing refinancing on the terms and timetable
currently contemplated, the Company believes that it will have the
financial resources necessary to pay its capital obligations and
implement its business plan. At August 2, 2003, the Company had
$9.9 million available for borrowing under the Revolving Credit
Facility. The Company's Revolving Credit and Security Agreement is
with Wachovia Bank. On April 26, 2002, the Company amended the
Revolving Credit Facility to increase its flexibility and reduce
the unused line fee. The facility, as amended, provides for a
revolving credit loan facility and letters of credit in a maximum
principal amount equal to the lesser of (a) $25 million or (b) a
specified borrowing base, which is based upon eligible
receivables, eligible inventory, and a specified dollar amount
(currently $7.4 million subject to amortization). The Revolving
Credit Facility restricts investments, acquisitions, and
dividends. The Credit Agreement contains financial covenants
relating to minimum levels of net worth, as defined, and a minimum
debt to EBITDA ratio, as defined. All loans outstanding under the
Revolving Credit Facility bear interest at the 30-day LIBOR rate
plus an applicable margin. As of August 2, 2003, the Company's
interest rate under the Revolving Credit Facility was 3.8%.
"In conjunction with the recognition of the additional minimum
pension liability and resulting reduction to tangible net worth as
defined in the Credit Agreement, the Company violated the minimum
net worth covenant as of November 2, 2002. The Company has
obtained a waiver of any such default through November 2, 2003. As
of August 2, 2003, the Company was also out of compliance with the
total debt to EBITDA covenant. The Company has obtained a waiver
for this violation as well.
"As of August 2, 2003, unused and outstanding letters of credit
totaled $0.6 million. The outstanding letters of credit reduce the
funds available under the Revolving Credit Facility. At August 2,
2003, the Company had $9.9 million available for borrowing under
the Revolving Credit Facility. All borrowings under the Revolving
Credit Facility mature in May, 2004, and as such they are
classified as current."
KAISER ALUMINUM: Selling 65% Stake in Alpart to Glencore AG
-----------------------------------------------------------
Kaiser Aluminum & Chemical Corporation has signed an agreement to
sell its 65% interest in Alpart, a partnership that owns bauxite
mining operations and an alumina refinery in Jamaica, to Glencore
AG. Net cash proceeds are expected, at a minimum, to be in the
range of $160 million to $170 million, subject to certain closing
and post-closing adjustments.
The transaction, which is subject to several closing conditions as
noted below, includes the interests of Kaiser and certain of its
subsidiaries in Alpart and also may include certain alumina sales
contracts that are typically sourced from Kaiser's share of
alumina production at Alpart. The purchase price could increase
significantly depending on which contracts, if any, are ultimately
included in the transaction. Kaiser will be responsible for
prepayment of its approximately $14 million share of Alpart's
outstanding CARIFA loan, which becomes due in full upon
consummation of the transaction. The agreement also provides for
Glencore to supply Kaiser with alumina of up to 200,000 metric
tonnes in 2004 and up to 100,000 metric tonnes in 2005 at an
agreed percentage of London Metal Exchange aluminum prices.
Kaiser expects that, at the minimum end of the expected range of
proceeds, the transaction will result in a pre-tax book loss in
the range of $50 million.
The transaction is subject to approval by the United States
Bankruptcy Court for the District of Delaware, where Kaiser plans
to file a related motion and a copy of the agreement as promptly
as practicable. Kaiser anticipates requesting the Court to rule on
the motion during a regularly scheduled hearing on Feb. 23, 2004.
The transaction is also conditioned upon approval by the lenders
under Kaiser's Post-Petition Credit Agreement, as more fully
discussed in the company's most recent Quarterly Report on Form
10-Q. Subject to the satisfaction of these and certain other
conditions, Kaiser expects the transaction to close late in the
first quarter or early in the second quarter of 2004.
Until such time as the transaction closes, Kaiser will retain
management responsibility for Alpart and will involve appropriate
Glencore personnel on transitional issues.
Separately, under Alpart's existing partnership arrangement, Hydro
Aluminium a.s., which currently owns the remaining 35% of Alpart,
will have 30 days following Kaiser's receipt of Court approval to
elect to purchase Kaiser's interests at the price specified in the
agreement. If Hydro were to exercise this right, Glencore would be
entitled to receive from Kaiser reimbursement of certain expenses
incurred in negotiating the agreement, subject to a limit of
$250,000.
"This is another step toward our stated goal of emerging from
Chapter 11 in mid 2004," said Jack A Hockema, president and chief
executive officer of Kaiser Aluminum.
"Our relationship with the Government of Jamaica, the people of
Jamaica and, particularly, two generations of Alpart employees has
been a rewarding experience," he said. "In light of Glencore's
extensive investments in the alumina industry, including its
interests in Jamaica, and its strong financial profile, we believe
this transaction will give Alpart employees and other constituents
a sound opportunity for future investment and growth."
The Alpart refinery has substantially completed an expansion
program to increase the plant's capacity to 1.65 million metric
tonnes per year. It also controls bauxite reserves having an
annual production capacity of 3.5 million metric tonnes, which it
mines through a joint venture. Approximately 1,200 employees are
involved in refinery and mining operations.
Glencore AG is a subsidiary of Glencore International AG, a
privately owned company organized under the laws of Switzerland.
Together with its subsidiaries, Glencore is a leading, diversified
natural resources group with worldwide activity in the mining,
smelting, refining, processing and marketing of metals and
minerals, energy products and agricultural products. These
activities are supported by strategic investments in industrial
assets.
Kaiser Aluminum & Chemical Corporation is a leading producer of
fabricated aluminum products, alumina and primary aluminum. It is
the operating subsidiary of Kaiser Aluminum Corporation
(OTCBB:KLUCQ).
KAISER ALUMINUM: Wants Nod for Pension Plan Distress Termination
----------------------------------------------------------------
The Kaiser Aluminum Debtors ask the U.S. Bankruptcy Court,
overseeing its Chapter 11 cases, to:
(a) determine that the financial requirements for a "distress
termination" of the Pension Plans covering their hourly
and union employees under 29 U.S.C. Section 1341(c)(2)(B)
are satisfied;
(b) approve the termination of the Pension Plans under
29 U.S.C. Section 1341(c)(2)(B) and Section 363(b) of the
Bankruptcy Code, effective on the Court's approval of the
rejection of the applicable collective bargaining
agreements or as provided in any agreements reached with
the affected unions; and
(c) authorize the implementation of a replacement benefit plan
under a defined contribution arrangement -- or other
acceptable arrangement
Based on the actuarial determinations of the future minimum
funding requirements of the Pension Plans and the Debtors'
projected cash flow in any viable reorganization scenario, Daniel
J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, asserts that the distress termination of
the Pension Plan is required. The Replacement Plans will become
effective after the distress termination of the Pension Plans or
at another date to which the Debtors and the United Steelworkers
of America might agree or the Court may order.
Mr. DeFranceschi tells the Court that the Debtors may terminate
the Pension Plans if each contributing sponsor and each member of
the contributing sponsor's controlled group meets any of the
tests for a distress termination under Section 4041(c) of the
ERISA. The distress termination tests are:
(a) The Liquidation Test
An entity has filed, as of the proposed termination date,
a petition seeking liquidation in a case under the
Bankruptcy Code and the case has not, as of the proposed
termination date, been dismissed, or a reorganization case
is converted to a liquidation case as of the proposed
termination date;
(b) The Reorganization Test
An entity has filed, as of the proposed termination date,
a petition seeking reorganization in a case under the
Bankruptcy Code, in which the case has not, as of the
proposed termination date, been dismissed. The entity
should timely submit a copy of any requests for the
approval of the Bankruptcy Court of the plan termination
to the PBGC at the time the request is made, and the
Bankruptcy Court determines, that, unless the plan is
terminated, the entity will be unable to:
-- pay all of its debts pursuant to a reorganization plan;
and
-- continue in business outside the Chapter 11
reorganization process and approves the termination;
(c) The Business Continuation Test
An entity demonstrates to the satisfaction of the PBGC
that, unless a distress termination occurs, the entity
will be unable to pay its debts when due and will be
unable to continue in business; or
(d) The Pension Costs Test
An entity demonstrates to the satisfaction of the PBGC
that the costs of providing pension coverage have become
unreasonably burdensome to the entity, solely as a result
of a decline of its workforce covered as participants
under all single-employer pension plans for which it is a
contributing sponsor.
The Debtors propose to terminate the Pension Plans pursuant to
the "Reorganization Test".
"The Debtors will not under any viable scenario be able to
satisfy their pension benefit obligations," Mr. DeFranceschi
says.
Mr. DeFranceschi explains that the Debtors' Fabricated Products
Business, either alone or in combination with any or all of the
Commodities Assets, would not generate cash flow even remotely
sufficient to fund their pension benefit obligations. Any viable
reorganization plan requires the termination of the Pension Plans
and the provision of replacement benefits under defined
contribution arrangements for current, active employees. If the
Debtors cannot terminate the existing pension funding obligations,
they will be unable to reorganize and emerge as viable entities,
Mr. DeFranceschi says.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation
operates in all principal aspects of the aluminum industry,
including mining bauxite; refining bauxite into alumina;
production of primary aluminum from alumina; and manufacturing
fabricated and semi-fabricated aluminum products. The Company
filed for chapter 11 protection on February 12, 2002 (Bankr. Del.
Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis &
Pogue represents the Debtors in their restructuring efforts. On
September 30, 2001, the Company listed $3,364,300,000 in assets
and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No.
37; Bankruptcy Creditors' Service, Inc., 215/945-7000)
KB HOME: Fitch Assigns BB+ Rating to $250MM Sr. Unsec. Debt Issue
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to KB Home's (NYSE: KBH)
$250 million, 5.75% senior unsecured notes due February 1, 2014.
The Rating Outlook is Positive. Proceeds from the new debt issue
will be largely used to pay down bank debt in the short term and
for other corporate purposes. $175 million of 7-3/4% senior notes
will mature later in the year.
The current ratings and Outlook reflect KB Home's solid,
consistent profit performance in recent years and the expectation
that the company's credit profile will continue to improve as it
executes its business model and embarks on a new period of growth.
The ratings also take into account the company's primary focus on
entry-level and first-step trade-up housing (the deepest segments
of the market), its conservative building practices, and effective
utilization of return on invested capital criteria as a key
element of its operating model. Over recent years the company has
improved its capital structure and increased its geographic
diversity and has better positioned itself to withstand a
meaningful housing downturn. Fitch also has taken note of KB
Home's role as an active consolidator within the industry. Risk
factors also include the cyclical nature of the homebuilding
industry. Fitch expects leverage (excluding financial services) to
remain comfortably within KB Home's stated debt to capital target
of 45%-55%.
The company has expanded EBITDA margins over the past several
years on steady price increases, volume improvements and
reductions in SG&A expenses. Also, KB Home has produced record
levels of home closings, orders and backlog as the housing cycle
extended its upward momentum. KB Home realizes a significant
portion of its revenue from California, a region that has proved
volatile in past cycles. But the company has reduced this exposure
as it has implemented its growth strategy and currently sources
approximately 20% of its deliveries from California, compared with
69% in fiscal 1995. Over recent years KB Home shifted toward a
presale strategy, producing a higher backlog/delivery ratio and
reducing the risk of excess inventory and debt accumulation in the
event of a slowdown in new orders. The strategy has also served to
enhance margins. The company maintains a 4.2 year supply of lots
(based on deliveries management has projected for 2004), 47.4% of
which are owned and the balance controlled through options.
Inventory turnover has been consistently at or above 1.7 times
during the past seven years.
Balance sheet liquidity has continued to improve as a result of
efforts to reduce long-dated inventories, quicken inventory turns
and improve returns on capital. Progress in these areas has
allowed the company to accelerate deliveries without excessively
burdening the balance sheet.
As the housing cycle progresses, creditors should benefit from KB
Home's solid financial flexibility supported by cash and
equivalents of $116.6 million and $892.9 million available under
its $1 billion domestic unsecured credit facility (before
adjusting for $89.7 million of letters of credit) as of November
30, 2003. In addition, liquid, primarily pre-sold work-in-process
inventory totaling an estimated $2.3 billion provides comfortable
coverage for construction debt. As noted earlier, $175 million in
senior notes mature in 2004, but the balance of debt is well
laddered and the new $1 billion revolving credit facility matures
in four years.
Management's share repurchase strategy has been aggressive at
times, but has not impaired the company's financial flexibility.
KB Home repurchased $81.9 million of stock in fiscal 1999, $169.2
million in 2000, $190.8 million in 2002 and $108.3 million (2
million shares) in fiscal 2003. At the end of November, 2 million
shares remain under the board of directors' repurchase
authorization. Notwithstanding these repurchases, book equity has
increased $916.3 million since the end of 1999, while construction
debt grew $250.8 million. The company has had a small dividend. In
early December the board of directors sharply raised the annual
dividend from $0.30 per share to $1.00 per share - a pay out of
11.4%, based on trailing twelve months earnings. However, the cash
expenditures on dividends represent only about $40 million, based
on the current share count.
KBH has lessened its dependence on the state of California, but it
is still the company's largest market in terms of investment.
Operations are dispersed within multiple markets in the north and
in the south. During the 1990s the company entered various major
Western metropolitan markets, including Phoenix, Denver, Dallas,
Austin and San Antonio, and has risen to a top 5 ranking in each
market. In an effort to further broaden and enhance its growth
prospects it has established operations (greenfield and by
acquisition) in the southeastern U.S., including various markets
in Florida, Atlanta, Georgia, North and South Carolina. Recently,
the company entered the Midwest (Chicago) via acquisition. Fitch
recognizes the company as a consolidator in the industry, but
expects future acquisitions will be moderate in size and largely
funded through cash flow.
KMART CORP: Asks Court to Expunge $1.8MM Account Payable Claims
---------------------------------------------------------------
The Kmart Corporation reviewed their Books and Records and
determined that they never did business with certain accounts
payable claimants.
Accordingly, the Debtors ask the Court to expunge 223 No Liability
Accounts Payable Claims, aggregating $1,806,518:
Type of Claims Claim Amount
-------------- ------------
Secured $8,483
Priority 207,990
Unsecured 1,590,045
(Kmart Bankruptcy News, Issue No. 67; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
LONE STAR TECHNOLOGIES: Red Ink Continues to Flow in 4th Quarter
----------------------------------------------------------------
Lone Star Technologies, Inc. (NYSE: LSS) reported a net loss for
the fourth quarter of 2003 of $34.0 million, or $1.20 per diluted
share, which included charges of $25.0 million, or $0.88 per
diluted share, for goodwill impairment, LIFO inventory accounting
adjustments and additional interest related to a lawsuit under
appeal concerning an uncompleted acquisition.
This compared to a net loss of $50.5 million, or $1.77 per diluted
share, in the fourth quarter of 2002, which included charges of
$32.0 million, or $1.12 per diluted share, related to the same
lawsuit. The net loss for the year ended December 31, 2003 was
$68.2 million, or $2.40 per diluted share. The net loss for the
year ended December 31, 2002 was $69.2 million, or $2.52 per
diluted share. The net loss, excluding the charges of $25
million, in the fourth quarter of 2003 and the full fiscal year
was primarily attributable to continuing weakness in demand for
oil country tubular goods used in deep wells and to high steel
costs.
Fourth quarter 2003 revenues were $132.7 million, up slightly from
the quarter ended September 30, 2003, with total oilfield revenues
down 3.1% to $91.7 million. Revenues from sales of casing, tubing
and line pipe were down 5.5% on 4.2% lower shipment volumes and
1.3% lower average selling prices. Decreased OCTG sales were due
in part to reductions in purchases by distributors at year end.
Revenues from Lone Star's newly formed Star Energy Group, which
includes threading, inspection, heat-treating, and storage
services as well as coupling and production tubing manufacturing,
were up 7.9% from the third quarter. Revenues from specialty
tubing decreased 6.3% to $26.7 million due to lower sales of heat
recovery tubulars, partially offset by increased sales of
precision mechanical tubing. Revenues from flat rolled steel and
other products were up 60.7% to $14.3 million, primarily due to
increased demand related to tightening domestic steel supply.
At December 31, 2003, Lone Star had $33.3 million of cash and cash
equivalents on hand in addition to an unused $125 million
revolving credit facility. Earnings before interest, taxes,
depreciation and amortization (EBITDA), which included goodwill
impairment and LIFO inventory adjustments of $24.0 million, were
negative $23.0 million in the fourth quarter of 2003 and negative
$28.7 million for the year ended December 31, 2003.
Rhys J. Best, Chairman, President and Chief Executive Officer,
stated, "While our operating results for the fourth quarter
represent an improvement over the third quarter, we will not be
satisfied with our performance until we return to profitability.
We continue to take aggressive measures to accelerate the pace of
our recovery, and we expect to soon begin realizing the impact of
the raw material surcharges we imposed to mitigate rises in
natural gas and steel prices and our company-wide cost elimination
and profitability enhancement initiatives. Recent improvements in
the general economy are boosting demand for our precision
mechanical tubular products, and we expect the projected pick-up
in domestic drilling to generate increased demand for our oilfield
products as well. We are confident that these developments,
coupled with our ongoing cost saving and revenue enhancement
initiatives, solid balance sheet and operational strength, will
enable us to deliver an improved near-term performance in 2004."
Lone Star Technologies, Inc.'s (S&P, B+ Corporate Credit Ratings,
Stable) principal operating subsidiaries manufacture, market and
provide custom services related to oilfield casing, tubing,
couplings, and line pipe, specialty tubing products used in a
variety of applications, and flat rolled steel and other tubular
products.
MAGELLAN HEALTH: Executes Warrant Agreement with Wachovia Bank
--------------------------------------------------------------
On January 5, 2004, Magellan Health Services, Inc., a Delaware
corporation, together with certain of its subsidiaries,
consummated their Third Joint Amended Plan of Reorganization, as
modified, under chapter 11 of title 11 of the U.S. Code and,
accordingly, emerged from Bankruptcy Court supervision under
Chapter 11.
Further information regarding the consummation and effectiveness
of the Plan is contained in Magellan's Current Report on Form 8-K
dated January 5, 2004 filed with the Securities and Exchange
Commission. Pursuant to the Plan, on the Effective Date, Magellan
entered into a Warrant Agreement, dated as of January 5, 2004,
with Wachovia Bank, National Association, as Warrant Agent, and
warrants to purchase shares of Magellan's Ordinary common stock,
$0.01 par value per share, were authorized for issuance and
granted in accordance therewith to former holders of shares of
common stock and preferred stock of Magellan (which shares were
cancelled on the Effective Date in accordance with the Plan) and
to one holder of a claim against Magellan. The Warrant Agent was
directed on the Effective Date to issue the Warrants in book entry
form by deposit with Depository Trust Company for the account of
the persons entitled to receive Warrants in accordance with the
Plan and notices regarding such issuance are being delivered to
such persons in accordance with the Plan.
The Ordinary common stock has been registered by Magellan under
Section 12(g) of the Securities Exchange Act of 1934, as amended,
pursuant to Rule 12g-3 thereunder, effective as of January 5,
2003, and is listed for trading on the Nasdaq Stock Market. The
Warrants are being registered by Magellan under Section 12(g) of
the Exchange Act. The Warrants have not been listed on the Nasdaq
Stock Market or any other market and no such listing is expected.
No established market for trading Warrants exists at this time.
MAGNATRAX CORP: Names Dennis Smith as New President and CEO
-----------------------------------------------------------
MAGNATRAX Corporation, a leading manufacturer and supplier of
custom, pre-engineered buildings and components for builders and
the commercial construction market, announced that Dennis Smith
has become the company's new President and Chief Executive Officer
effective with the company's exit from the Chapter 11
restructuring process.
Smith brings to MAGNATRAX a wealth of experience working with the
commercial and residential contractor and construction markets
recently serving as President of Lennox International Inc.'s
(NYSE: LII) $1 billion retail sales and service subsidiary,
Service Experts Inc. At Service Experts, Inc., a roll-up of 200
commercial and residential HVAC contractors, Smith engineered a
substantial increase in financial performance leading a six-month
turnaround. He refocused the company on customer driven strategies
aimed at the commercial construction, residential construction and
replacement sales and service markets. Prior to that, he served as
chief operating officer of Simplex Time Recorder Company, a
leading provider of fire and security alarm products for
commercial buildings. During more than 20 years in corporate
leadership, he has held management roles at Premark International,
General Electric, Syntex, FMC Corporation and Westinghouse
Electric. Smith will report to a new six-member board of directors
that is chaired by the former co-founder and president of metal
buildings manufacturer Varco-Pruden and former chairman and CEO of
Robertson-Ceco Corp., Jack Hatcher.
"Dennis' direct experience with contractors and the commercial
construction marketplace, along with his proven ability to focus
organizations on responding more successfully to customer needs
while driving improved financial results, make him a perfect
choice to lead MAGNATRAX's strong portfolio of companies," said
Jack Hatcher, Chairman of the Board of MAGNATRAX.
"Having emerged from Chapter 11 so quickly and with a strong
balance sheet, all of the fundamentals are in place for MAGNATRAX
to set a new standard for the metal buildings industry," said
Dennis Smith, Chief Executive Officer of MAGNATRAX. "The company
has a solid employee base, a loyal and dedicated network of
Builders, a committed organization of vendors and suppliers and
experienced leadership at each of its building companies."
"I'm excited about the opportunity to lead such a dynamic group of
companies. The leadership of our companies is unmatched and boasts
more than 100 years of industry experience. As a result, we will
be squarely focused upon quality, service and engineering. We will
be a company that listens to the needs and concerns of our
customers and acts quickly to meet their high expectations of
quality," Smith added.
Executive search specialists Heidrick & Struggles conducted the
nationwide search for MAGNATRAX'S new CEO, which was overseen by
the company's board of directors.
MAGNATRAX Corporation is a leading manufacturer and supplier of
metal buildings and components to builders and the commercial
construction market. It has established a national presence
through its American Buildings Company division and strong
regional positions through its Kirby Building Systems, Gulf States
Manufacturers and CBC Steel Buildings divisions. The company's
VICWEST division is a leader in the metal building component
market, the Architectural Metal Systems division of American is a
leader in the custom-engineered metal roofing market and Polymer
Coil Coaters is a major provider of treated and coated metals.
MAIL-WELL INC: Launches Tender Offer for 8-3/4% Sr. Sub. Notes
--------------------------------------------------------------
Mail-Well, Inc., (NYSE: MWL) is commencing a cash tender offer and
consent solicitation for any and all of its $300,000,000
outstanding principal amount of its 8-3/4% Senior Subordinated
Notes due 2008, CUSIP Number 56032E AB 9.
The Offer is scheduled to expire at 12:00 midnight, New York City
time, on Wednesday, February 18, 2004, unless extended or earlier
terminated. The consent solicitation will expire at 5:00 p.m.,
New York City time, on Tuesday, February 3, 2004, unless extended
or earlier terminated. Holders tendering their Notes under the
indenture will be required to consent to certain proposed
amendments to the indenture governing the Notes, which will
eliminate substantially all of the restrictive covenants. Adoption
of the Proposed Amendments requires the consent of holders of at
least a majority of the aggregate principal amount of the
outstanding Notes under the indenture. Holders may not tender
their Notes without delivering consents or deliver consents
without tendering the Notes.
Holders who validly tender their Notes on or prior to the Consent
Date will receive the total consideration of $1,045, per $1,000
principal amount of Notes (if such Notes are accepted for
purchase), consisting of (i) the tender price of $1,015 and (ii)
the consent payment of $30, per $1,000 principal amount of Notes
(if such Notes are accepted for purchase). Holders who validly
tender their Notes after the Consent Date but on or prior to the
Expiration Date will receive the tender price of $1,015 per $1,000
principal amount of Notes (if such Notes are accepted for
purchase). In either case, Holders who validly tender their Notes
also will be paid accrued and unpaid interest up to, but not
including, the applicable date of payment for the Notes (if such
Notes are accepted for purchase).
The Offer is subject to the satisfaction of certain conditions,
including the Company's receipt of tenders of Notes representing a
majority of the aggregate principal amount of the Notes
outstanding under the indenture governing the Notes, consummation
of the required financing, consent from the lenders under the
Company's credit facility, as well as other customary conditions.
The terms of the Offer are described in the Company's Offer to
Purchase and Consent Solicitation Statement dated January 21,
2004, copies of which may be obtained from MacKenzie Partners,
Inc.
The Company has engaged Credit Suisse First Boston LLC to act as
dealer manager and solicitation agent in connection with the
Offer. Questions regarding the Offer may be directed to Credit
Suisse First Boston LLC, Liability Management Group, at (800) 820-
1653 (US toll-free) and (212) 538-4807 (collect). Requests for
documentation may be directed to MacKenzie Partners, Inc., the
information agent for the Offer, at (800) 322-2885 (US toll-free)
and (212) 929-5500 (collect).
Mail-Well (NYSE: MWL) (S&P, BB- Corporate Credit Rating, Negative)
specializes in three growing multibillion-dollar market segments
in the highly fragmented printing industry: commercial printing,
envelopes and printed office products. It holds leading positions
in each. Mail-Well currently has approximately 10,000 employees
and more than 85 printing facilities and numerous sales offices
throughout North America. The company is headquartered in
Englewood, Colorado.
MAIL-WELL INC: Prices $320MM Senior Subordinated Debt Offering
--------------------------------------------------------------
Mail-Well, Inc. (NYSE: MWL) priced its $320,000,000 in aggregate
principal amount of senior subordinated notes due 2013 to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended, and to persons outside the
United States under Regulation S of the Securities Act.
The notes will bear interest at a rate of 7-7/8% per annum, and
the initial price to purchasers is 100% of the principal amount.
The notes will be issued by the company's wholly-owned subsidiary,
Mail-Well I Corporation, and will be subordinated to all of the
company's other existing and future unsecured senior indebtedness.
The notes will be guaranteed on an unsecured senior subordinated
basis by Mail-Well, Inc. and certain of its subsidiaries.
The Company plans to use the proceeds of the offering to
consummate the cash tender offer and consent solicitation for any
and all of its $300,000,000 outstanding principal amount of 8-3/4%
senior subordinated notes due 2008, which Offer commenced
Wednesday.
The securities will not be registered under the Securities Act or
any state securities laws and, unless so registered, may not be
offered or sold in the United States except pursuant to an
exemption from the registration requirements of the Securities Act
and applicable state laws.
Mail-Well (NYSE: MWL) (S&P, BB- Corporate Credit Rating, Negative)
specializes in three growing multibillion-dollar market segments
in the highly fragmented printing industry: commercial printing,
envelopes and printed office products. It holds leading positions
in each. Mail-Well currently has approximately 10,000 employees
and more than 85 printing facilities and numerous sales offices
throughout North America. The company is headquartered in
Englewood, Colorado.
MAIL-WELL I: S&P Assigns B Rating to $320 Million Sr. Sub. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to the
proposed $320 million senior subordinated notes due 2013 to be
issued by Mail-Well I Corp. The notes are guaranteed by its 'BB-'
rated holding company, Mail-Well Inc., the world's largest
envelope manufacturer.
Proceeds will be used to consummate the cash tender offer and
consent solicitation for any and all of the company's $300 million
outstanding principal amount of 8-3/4% senior subordinated notes
due 2008 and for fees and expenses associated with the offering.
The outlook remains negative. Pro forma total debt outstanding at
Sept. 30, 2003, was approximately $780 million.
Ratings reflect Englewood, Colorado-based Mail-Well's narrow
business focus with its dependence on the envelope and commercial
print segments, competitive market conditions in the overall print
sector, and weak credit measures for the rating. These factors are
somewhat tempered by the company's good market positions in its
segments served and adequate liquidity.
The company's liquidity is provided by internally generated cash
flow and its $300 million revolving credit facility due June 2005.
The revolving credit facility is subject to a borrowing base based
on eligible accounts receivable, inventory, and fixed assets. As
of Sept. 30, 2003, approximately $113 million in availability
existed under this facility. In addition, Standard & Poor's is
comfortable with the company's covenant cushion under the bank
facility.
Liquidity is expected to remain adequate in the near term. The
company does not have any debt maturities until 2005, when its
revolving credit facility expires. Given expectations for moderate
capital expenditures in the near term, discretionary cash flows
are expected to improve and will likely be used to reduce
outstanding bank borrowings, further enhancing liquidity.
The negative outlook reflects the company's weak financial profile
and difficult business conditions that currently exist. Despite
the continuation of improving operating results, the ratings could
be lowered in the near term if the company's weak overall
financial profile does not continue to improve from current
levels.
MAIL-WELL: Discloses 2004 Earnings Estimates
--------------------------------------------
Mail-Well, Inc., (NYSE: MWL) filed a Form 8-K under Regulation FD
disclosing that on January 21, 2004 at presentations to potential
purchasers of the Company's new Senior Subordinated Notes, Paul
Reilly, the Company's Chairman and CEO, stated that analysts'
estimates of the Company's 2004 EBITDA were $139 and $140 million,
respectively, which were within management's preliminary range
of $135 million to $142 million.
Mail-Well (NYSE: MWL) (S&P, BB- Corporate Credit Rating, Negative)
specializes in three growing multibillion-dollar market segments
in the highly fragmented printing industry: commercial printing,
envelopes and printed office products. It holds leading positions
in each. Mail-Well currently has approximately 10,000 employees
and more than 85 printing facilities and numerous sales offices
throughout North America. The company is headquartered in
Englewood, Colorado.
MASSEY ENERGY: Completes $130 Mill. Asset-Based Credit Facility
---------------------------------------------------------------
Massey Energy Company (NYSE: MEE) entered into a new asset-based
revolving credit facility, which provides for borrowings of up to
$130 million, depending on the level of eligible inventory and
accounts receivable.
The facility replaces the Company's existing undrawn $80 million
accounts receivable-based financing program. The new facility
includes a $100 million sublimit for letters of credit.
Initially, this facility will support $36 million of letters of
credit previously supported by cash collateral. This new facility
will provide the Company with increased liquidity and letter of
credit capacity. The credit facility has a five-year term ending
in January 2009.
This credit facility represents the completion of the Company's
restructuring of its balance sheet, which began with the issuance
of $132 million of 4.75% Convertible Senior Notes in May 2003 and
a private offering of $360 million of 6.625% Senior Notes in
November 2003.
Massey Energy Company (S&P, BB Corporate Credit Rating, Stable
Outlook), headquartered in Richmond, Virginia, is the fourth
largest coal company in the United States based on produced coal
revenue.
MASSEY ENERGY: Sets Q4 and FY 2003 Conference Call on January 30
----------------------------------------------------------------
Massey Energy Company (NYSE: MEE) will hold a conference call to
review results for its fourth quarter and full year ended
December 31, 2003.
The public is invited to listen to the conference call broadcast
live on the Internet on Friday, January 30, 2004 at 11:00 a.m. ET,
with Don Blankenship, Chairman and Chief Executive Officer, Jim
Gardner, Chief Administrative Officer, Baxter Phillips, Chief
Financial Officer, and Tom Dostart, General Counsel.
Fourth quarter financial results will be released after the market
closes on Thursday, January 29, 2004. The press release will also
be posted on the Investor Relations section of the Company's Web
site at http://www.masseyenergyco.com/
Details
What: Massey Energy's Fourth Quarter 2003 Earnings
Conference Call
Date: Friday, January 30, 2004
Time: 11:00 a.m. ET
How: Log on to the Web
Go to the URL http://www.masseyenergyco.com/
Go to Investor Relations, select
Webcasts/Presentations
Replay: A replay of the conference call will be available on
Massey Energy's Web site. A telephone replay can
also be accessed through February 6, 2004 by calling
one of the following numbers: 800-396-1248 or
402-220-9835
If you have any questions, please call Massey's Investor Relations
department at (804) 788-1824.
Massey Energy Company (S&P, BB Corporate Credit Rating, Stable
Outlook), headquartered in Richmond, Virginia, is the fourth
largest coal company in the United States based on produced coal
revenue.
METATEC INC: Completes Sale of All Assets to MTI Acquisition
------------------------------------------------------------
On December 22, 2003, Metatec, Inc. completed the sale of
substantially all of its assets to MTI Acquisition, LLC, a wholly
owned subsidiary of ComVest Investment Partners II LLC, and an
affiliate of Commonwealth Associates Group Holdings LLC.
The Company, which on October 17, 2003, had filed a voluntary
petition for reorganization under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the
Southern District of Ohio, Case No. 03-65902, received final
approval from the Bankruptcy Court for the Asset Sale on December
22, 2003. MTI was the successful bidder for the Company's assets
in the sale process supervised by the Bankruptcy Court. Since the
completion of the sale, MTI has changed its name to Inoveris, LLC.
The purchase price for the Company's assets, which consisted
primarily of manufacturing equipment and machinery, office
furniture and equipment, other tangible assets, inventories,
customer purchase orders and certain other contact rights, and
certain intangible assets and intellectual property rights, was
composed of several components, including (i) a credit against
existing secured debt of approximately $9.35 million (ComVest II
was the Company's largest secured creditor and assigned a portion
of its secured claim to MTI), (ii) a $1.0 million cash payment to
the bankruptcy estate, and (iii) the assumption of approximately
$1.3 million of the Company's liabilities. MTI also assumed
certain executory contracts and leases of the Company. In
addition, MTI assumed the Company's $1.75 million post-petition
financing loan.
As the next step in the Company's Chapter 11 reorganization, the
Company intends to prepare and file a plan of reorganization with
the Bankruptcy Court concerning the complete liquidation of the
Company. It is anticipated that this plan of liquidation will be
filed with the Bankruptcy Court prior to June 30, 2004.
As previously disclosed, it is not anticipated that the
shareholders of the Company will realize any cash or other value
for their common shares of the Company in connection with the
liquidation of the Company.
MILESTONE CAPITAL: Brings-In Williams & Webster as New Auditors
---------------------------------------------------------------
Effective January 5, 2004, the Board of Directors of Milestone
Capital Inc. approved the replacement of J.H. Cohn, LLP as its
independent auditor for the third quarter ending September 30,
2003, and the fiscal year ending December 31, 2003, with Williams
& Webster, P.S.
J.H. Cohn, LLP was terminated effective January 5, 2004. The
reports of J.H. Cohn on the consolidated financial statements of
the Company for the year ended December 31, 2002, for which J. H.
Cohn's Independent Auditors' Report was dated in April 2003, were
qualified as to uncertainty concerning the ability of the Company
to continue as a going concern.
Milestone Capital, Inc.'s September 30, 2003 balance sheet shows a
working capital deficit of about $2.4 million, and a total
shareholders' equity deficit of about $1.4 million.
On November 27, 2002, the company and its subsidiary, Elite Agents
Mortgage Services, Inc. (formerly known as Elite Agents, Inc.),
filed voluntary petitions for protection under Chapter 11 of the
United States Bankruptcy code in the US Bankruptcy Court for the
District of New Jersey, in Newark (Case Nos. 03-41805 and
03-41806). This allows the companies to continue to operate while
a plan of reorganization is finalized.
In a recent SEC Form 10-Q filing, the Company said: "We are
pursuing the opportunity to acquire another mortgage company that
has significant mortgage processor infrastructure in place. We
are also trying to evolve Milestone into a technology licensing
company that would provide our software, for compensation, to
other mortgage companies. We further have ceased the origination
of any new mortgage loans. There are no assurances that either
strategy will be successful, and we may be forced to close the
company and sell the assets. All discussions regarding the
financial condition and results of operations should be read in
conjunction with the pending Chapter 11 proceedings. No funds
were available for distribution to stockholders after all approved
bankruptcy administration expenses were paid and distributions
have been made to the Company's creditors whose claims exceeded
the Company's potential resources from the sale of its operating
assets and public shell."
MIRANT: MAGI Committee Turns to Houlihan Lokey for Fin'l Advice
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Mirant Americas
Generation LLC seeks the Court's authority, pursuant to Sections
328(a) and 1103 of the Bankruptcy Code and Rule 2014 of the
Federal Rules of Bankruptcy Procedure, to retain Houlihan Lokey
Howard & Zukin as its financial advisor effective as of July 25,
2003.
Charles Greer, Co-Chairperson of the MAGi Committee, relates that
Houlihan is a nationally recognized investment banking and
financial advisory firm, with nine offices worldwide and more
than 275 professionals. Houlihan's financial restructuring group
is one of the leading advisors of and investment banks to
debtors, bondholder groups, secured and unsecured creditors,
acquirers and other parties-in-interest involved in financially
troubled companies, both in and outside of bankruptcy. In this
role, the firm has been, and is involved in, some of the largest
restructuring matters in the United States including serving as
the financial advisor to the Debtors in the Chapter 11
proceedings of XO Communications, Inc., Covad Communications,
Inc., Worldtex, Inc., among others. Houlihan has also served as
the financial advisor to the creditors committees in the Chapter
11 proceedings of Enron Corporation, NRG Energy, Inc., PG&E NEG,
Inc., Conseco, Inc., WorldCom, Inc., Armstrong Holdings, Inc.,
Pillowtex Corporation, and Laidlaw, Inc., to name a few.
Mr. Greer reports that Houlihan has had direct experience with
the Debtors and their businesses. Prior to the Petition Date,
the Informal Committee of Holders of Senior Notes issued by MAGi,
including certain members of the MAGi Committee, retained
Houlihan as financial advisor to represent the interests of the
Informal Committee. Houlihan continued to represent the
interests of the Informal Committee after the Petition Date up
until July 25, 2003, the date the MAGi Committee was appointed.
"This experience, combined with Houlihan's experience in other
Chapter 11 cases, means that Houlihan is well qualified to
efficiently represent the MAGi Committee," Mr. Greer remarks.
As financial advisor, Houlihan will be:
(a) evaluating the assets and liabilities of MAGi, its
subsidiaries and the other Debtors;
(b) analyzing and reviewing the financial and operating
statements of MAGi and the other Debtors;
(c) analyzing the business plans and forecasts of MAGi and
the other Debtors;
(d) evaluating all aspects of DIP financing, cash collateral
usage and any exit financing in connection with any plan
of reorganization and any budgets or forecasts relating
thereto;
(e) providing specific valuation or other financial analyses
as the MAGi Committee may require under the
circumstances;
(f) assisting Cadwalader, Wickersham & Taft, LLP, MAGi
Committee counsel, with the claim evaluation and
resolution process, and distributions relating thereto;
(g) assessing the financial issues and options concerning:
(1) the sale of any assets of MAGi and the other Debtors,
either in whole or in part; and
(2) the Debtors' plan(s) of reorganization or any other
plans of reorganization; and
(3) assisting the MAGi Committee in negotiating the terms
of any of the foregoing;
(h) preparing analysis and explanation of the Plan to
various MAGi Committee constituencies;
(i) providing testimony in court on behalf of the MAGi
Committee; and
(j) providing litigation support to Cadwalader, Wickersham &
Taft, LLP in any contested matter before the Court.
In consideration of the services, Houlihan will be compensated on
these terms:
(i) Monthly Fee: A $175,000 advance monthly fee for the first
24 months and $125,000 per month thereafter beginning
from July 25, 2003. The Monthly Fees will be considered
fully earned when due and are non-refundable regardless
of whether any Transaction is consummated;
(ii) Transaction Fee: Upon the closing or the consummation of
a Transaction, Houlihan will be entitled to an additional
fee based on the aggregate gross consideration, as
calculated pursuant to the Engagement Letter, received by
the Debtors' unsecured creditors. The Transaction Fee
will be determined as:
(a) for cumulative AGC up to $1,960,000,000, a $2,000,000
flat base fee; and
(b) for cumulative AGC above $1,960,000,000, a 0.50%
incentive fee of the incremental AGC.
The Transaction Fee will be payable upon the consummation
of the Transaction either (a) during the term of the
Engagement Letter; or (b) within two months of the
effective date of termination of Houlihan's engagement and
that MAGi will be entitled to a credit against any
Transaction Fee payable under the engagement Letter in an
amount equal to 50% of the all Monthly Fees paid after the
12th month after July 25, 2003; and
(iii) Reimbursement of Expenses. In addition to any other
payments and regardless of whether any Transaction is
consummated, Houlihan will be reimbursed for all
reasonably incurred out-of-pocket expenses in connection
with the rendering of services under the Engagement
Letter. The fees and expenses will include, but not
limited to, travel expenses, communications charges,
database charges, copying expenses and delivery and
distribution charges.
Mr. Greer asserts that the terms of Houlihan's Engagement Letter
are similar to and entirely consistent with the terms Houlihan
agreed to in similar restructuring engagements.
William H. Hardie, III, a director at Houlihan, reports that the
firm has not represented and has no relationship relating to the
Debtors' Chapter 11 cases.
Moreover, Mr. Hardie assures Judge Lynn that the Houlihan
principals and professionals:
-- do not have any connection with the Debtors, their
creditors, or any party-in-interest, or their attorneys;
-- do not hold or represent an interest adverse to the
estates; and
-- are "disinterested persons" within the meaning of Section
101(14) of the Bankruptcy Code.
* * *
On an interim basis, Judge Lynn permits the MAGi Committee to
retain Houlihan effective July 25, 2003 pursuant to the terms of
the amended Engagement Letter. The Court's approval will become
final today if no objection was filed with the Court yesterday.
(Mirant Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Perryville Seeks $7-Million Admin Claim Payment
------------------------------------------------------------
Mirant Americas Energy Marketing LP entered into a Tolling
Agreement with Perryville Energy Partners LLC, dated April 30,
2001, as amended. Pursuant to the Tolling Agreement, MAEM
acquired tolling rights, which provided it with certain output
generated by a power facility Perryville owned in Perryville,
Louisiana, in exchange for certain payments to Perryville.
Holland Neff O'Neil, Esq., at Gardere Wayne Sewell LLP, in
Dallas, Texas, relates that the Tolling Agreement expires by its
terms on December 31, 2022. The Facility was specifically
designed and built in consideration of the Tolling Agreement and
Perryville historically received all of its revenues from MAEM
under the Tolling Agreement.
According to Mr. O'Neil, on August 29, 2003, the Debtors sought
to reject the Tolling Agreement effective September 15, 2003.
During the period from the Petition Date through the Rejection
Date, Perryville, with the Debtors' knowledge and consent,
continued to provide services to MAEM pursuant to the terms and
conditions of the Tolling Agreement. MAEM chose not to reject
the Tolling Agreement prior to the Rejection Date because of:
(i) MAEM's entitlement to dispatch the unit and market the
power output of the Facility during the lucrative summer
months of July through September; and
(ii) the potential to preserve the financial benefits of a
prepetition termination agreement.
Under the prepetition Termination Agreement, Mr. O'Neil informs
Judge Lynn that Perryville agreed, in connection with the closing
of an anticipated sale transaction of the Facility, to let MAEM
terminate the Tolling Agreement in a manner that would have saved
Mirant hundreds of millions of dollars in future obligations to
Perryville. Even after the Petition Date, completion of the sale
would have eliminated the need to reject the Tolling Agreement
and avoid the very substantial claims against MAEM and certain
other related entities that would have resulted from the
rejection. Ultimately, Perryville was unable to reach a
financial arrangement on the sale, the Termination Agreement
expired by its own terms and MAEM sought rejection of the Tolling
Agreement.
During the postpetition period, Mr. O'Neil reports that MAEM made
and Perryville received payments in full for the services
rendered from the Facility for the period of July 15, 2003
through July 31, 2003. Moreover, based on the conversations
between MAEM and Perryville representatives, Perryville concluded
that the Debtors would pay Perryville for the Postpetition
Services at the rate specified in the Tolling Agreement. Based
on this understanding, Perryville determined not to challenge the
Debtors' request to reject the Tolling Agreement. However,
Perryville received no further payments for the Postpetition
Services. MAEM owes Perryville $7,165,632 for the Postpetition
Services.
Pursuant to the express terms of the Tolling Agreement, MAEM is
required to pay to Perryville $7,165,632 in Postpetition Services
from August 1, 2003 through the Rejection Date. Moreover, it is
undisputable that MAEM benefited from the postpetition
continuation of the Tolling Agreement because Perryville's sale
of the facility, if consummated while the Tolling Agreement
continued in full force and effect, would have eliminated
hundreds of millions of dollars in damage claims against the
Debtors that now have resulted from the rejection of the Tolling
Agreement. Nevertheless, MAEM informed Perryville that it is
currently unwilling to pay the amount. Mr. O'Neil points out
that there is no reason why MAEM should treat Perryville
differently than any other administrative expense creditor
providing goods and services to the Debtors in the ordinary
course of business. Since the Rejection Date, Perryville has
been unable to dispatch its Facility. It, therefore, has no
revenues to offset its costs and service its credit obligations.
Given the devastating effects that rejection has had on
Perryville, Mr. O'Neil argues that it is inequitable for MAEM to
delay payment of its pre-Rejection Date Obligations.
Accordingly, pursuant to Section 503(b) of the Bankruptcy Code,
Perryville asks the Court to compel the Debtors to immediately
pay its Administrative Claim.
Mirant Creditors Committee Objects
The Official Committee of Unsecured Creditors of Mirant
Corporation asks the Court to deny Perryville's request for
administrative claim because:
(a) Perryville failed to provide any supporting documentation
or any calculation of the administrative claim amount as
required by Rule 3001 of the Federal Rules of Bankruptcy
Procedure; and
(b) the requested amount does not appear to be based on the
reasonable value of the services provided by Perryville
to MAEM. (Mirant Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
NATIONAL CENTURY: Asks Court to Clears Quantum Health Settlement
----------------------------------------------------------------
On June 9, 2000, an involuntary bankruptcy petition was signed by
one of the two general parties of California Psychiatric
Management Services, Inc. against CPMS. On June 15, 2000, after
the non-filing general partner consented to the filing of the
bankruptcy petition, the United States Bankruptcy Court, Central
District of California, Los Angeles Division entered an order for
relief under Chapter 11 of the Bankruptcy Code in the CPMS Case.
CPMS operated two hospitals in or around San Diego, California --
Bayview Hospital and Villa View Hospital. In October 2000, the
Los Angeles Bankruptcy Court approved a postpetition financing
arrangement between Debtor NPF X, Inc. and CPMS.
In November 2001, with the Los Angeles Bankruptcy Court's
approval, CPMS sold Villa View Hospital to Quantum Health, Inc.
Pursuant to the sale, Quantum issued a $10,425,000 promissory
note to NPF X, dated October 17, 2001. As security for the
Quantum Note, Quantum granted NPF X a second priority deed of
trust on Villa View Hospital and a security interest in certain
personal property pursuant to a security agreement, dated
October 17, 2001.
The Sale Agreements
In addition, Charles M. Oellermann, Esq., at Jones, Day, Reavis &
Pogue, in Columbus, Ohio, relates, the Debtors provided financing
to Quantum pursuant to an October 27, 2001 Sale and Subservicing
Agreement, under the NPF XII accounts receivable financing
program. In consideration for the waiver, release and discharge
of all of the Debtors' claims against them, Quantum agreed to pay
NPF XII $2,458,378.
Loan by NPF Capital Partners. Inc.
Furthermore, Quantum and Debtor NPF Capital Partners, Inc.
entered into a Loan and Security Agreement on October 17, 2001,
which was modified on January 16, 2002. Pursuant to the
Agreement, NPF Capital loaned Quantum $1,800,000. Mr. Oellermann
says that $1,930,613, including interest and fees, remain due and
owing by Quantum under the Loan and Security Agreement.
Disputes Regarding the Quantum Note
The Official Committee of Unsecured Creditors of CPMS asserted in
the Los Angeles Bankruptcy Court that NPF X had no right to any
of the proceeds of the sale of Villa View Hospital, including the
Quantum Note. In light of this dispute, the Los Angeles
Bankruptcy Court ordered that NPC X was to receive nothing under
the Quantum Note, pending further Court Order.
On March 15, 2002, the CPMS Creditors Committee filed an
adversary proceeding, objecting to all of the Debtors' claims and
asserting counterclaims against the Debtors. The CPMS Creditors
Committee alleged that the Debtors and certain other parties
breached certain duties in their capacity as CPMS' management
committee. Moreover, the CPMS Creditors Committee asserts self-
dealing and a diminution of CPMS assets through the sale of Villa
View Community Hospital to Quantum for allegedly less than fair
market value.
On April 2, 2003, the Los Angeles Bankruptcy Court converted the
CPMS Chapter 11 case to Chapter 7. Subsequently, Alberta Stahl
was appointed Trustee.
Mr. Oellermann reports that the ownership and right to receive
proceeds of the NPF X Note remain the subject of a dispute with
the Trustee, who has sought to obtain the sole rights to the
Quantum Note and all other assets in the CPMS estate, including,
without limitation, approximately $361,000 in interest payments
previously paid by Quantum on the Quantum Note and approximately
$250,000 in other funds currently held by the Trustee.
Settlement Agreement with Quantum
Subsequently, Quantum approached the Debtors about paying off and
settling its obligations under the Sale Agreements. Quantum
advised the Debtors that entry into and consummation of a
settlement agreement will facilitate its entry into a replacement
accounts receivable funding arrangement and allow it to continue
normal business operations.
After protracted, arm's-length negotiations, the parties agreed
that:
A. Settlement Amount
Quantum will pay $4,388,991 in cash without further delay.
B. Termination of Certain Security Interests
Immediately upon payment of the Settlement Amount, Quantum
will be authorized to terminate the Debtors' ownership and
security interests in Quantum's accounts receivable. The
second priority security interests in real property and
fixtures granted in connection with the Quantum Note to NPF X
will remain in place.
C. Mail Forwarding Instructions
Quantum will inform the Debtors where to send any payments or
correspondence that the Debtors receive in the Lockbox
Accounts related to Quantum's accounts receivable. In
addition, Quantum will be responsible for informing all third
party payors as to where incoming payments should be
redirected. Any payments received by the Debtors after
consummation of the Settlement Agreement will not be property
of the Debtors' estates and will be turned over to Quantum or
its assignee.
D. Transfer of Liens to Proceeds
The termination of the Debtors' ownership and security
interests in Quantum's accounts receivable will bind any and
all parties that may assert a lien, claim or interest in or to
the Sale Agreements or any prior agreements, with any liens
transferring to the proceeds.
E. Mutual Releases
The parties will exchange mutual releases.
F. Termination of Bank Agreements
The Debtors and Quantum must direct The Huntington National
Bank to:
(i) terminate the lockbox agreements relating to the Sale
Agreements;
(ii) remit all funds that are in Quantum's lockbox accounts
as of the date of the Settlement Agreement to the
credit and direction of the Debtors and remit all funds
and correspondence received after the date of the
Settlement Agreement to Quantum;
(iii) terminate the zero balance agreement relating to the
Sale Agreements; and
(iv) use reasonable efforts to provide Quantum with
documents relating to account activity in the Lockbox
Accounts.
Quantum will be responsible for all bank fees and charges
related to the Lockbox Accounts.
G. Dismissal of Actions
Upon payment of the Settlement Amount, the Debtors will file
stipulations of dismissal, with prejudice, dismissing any and
all claims brought against Quantum in the adversary proceeding
pending against, among other parties, Quantum in the Ohio
Bankruptcy Court and the Ohio state court action, NPF XII,
Inc. et al. v. PhyAmerica Physicians Group, Inc., et al.,
Court of Common Pleas, Franklin County, Ohio.
H. Amended Quantum Note
The Quantum Note will be amended to reflect these terms:
(i) the amended, junior secured note will provide that
$3,000,000, plus certain earn-out amounts, will be
payable so long as there is no event of default;
(ii) the interest will be at an annual rate of prime plus
2%, with interest waived for the first year;
(iii) during years two and three of the note, interest only
will be due to NPF X; during years four and five
interest and principal will be due on a five-year
amortization schedule for the Amended Note, and the
balance of the Amended Note will be due at the
conclusion of year five;
(iv) the NPF X Note will retain a junior secured lien on the
hospital real property and fixtures described;
(v) Quantum will pay NPF X 20% of Quantum's EBITDA for each
of years two through five under the Amended Note:
(vi) if the principal amount of the Amended Note is paid in
full on or prior to the first anniversary of the
Amended Note, all interest payments and all EBITDA
payments will be waived; and
(vii) in the event of any default by Quantum, the NPF X Note
obligations will remain at the full amount originally
due under the Quantum Note. The Amended Note will be
subject to the Quantum Note Proceeds Order.
The CPMS Agreement
The Debtors and the CPMS Chapter 7 Trustee are seeking Court
approval, both in the Ohio Bankruptcy Court and in the Los
Angeles Bankruptcy Court, of the proposed restructuring of the
Quantum Note. The parties agreed further that the rights and
interests of the NPF X and the CPMS Chapter 7 Trustee:
-- remain in dispute;
-- are not resolved by the Settlement Agreement; and
-- will be determined by the Los Angeles Bankruptcy Court.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Court authorizes the Debtors to enter into the
Quantum Settlement Agreement and the CPMS Agreement, and to take
any and all actions to enter into any and all agreements and all
documents necessary to implement the Settlement Agreement and the
CPMS Agreement. (National Century Bankruptcy News, Issue No. 31;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NET PERCEPTIONS: Receives Obsidian's Proposal with New Conditions
-----------------------------------------------------------------
Net Perceptions, Inc. (Nasdaq:NETP) responded to the letter made
public Wednesday by Obsidian Enterprises, Inc., containing a
proposal to acquire all of the equity of the Company through a
merger of a wholly owned subsidiary of Obsidian with and into the
Company for the same consideration offered by Obsidian in its
pending exchange offer, with certain additional conditions.
Commenting on Obsidian's letter and related press release, Tom
Donnelly, president and chief financial officer of NetP, stated,
"Obsidian's actions to date have had the effect of diminishing Net
Perceptions' funds and delaying our ability to provide liquidity
to our stockholders. Nevertheless, as to Obsidian and other
potential acquirors, Net Perceptions and its board of directors
will continue to act fairly and in good faith in an effort to
obtain the highest value reasonably available to stockholders."
The text of the response letter sent by Glenn Pollack of
Candlewood Partners, LLC, the Company's financial advisor, to
Terry Whitesell of Obsidian is set forth below.
"We received your letter of January 19, 2004 and accompanying form
of proposed Agreement and Plan of Merger, which provides for the
same consideration to NetP's stockholders as is being offered in
your exchange offer, except that it provides for a downward price
adjustment if NetP's net cash at closing is less than a
predetermined target amount (which you estimate should be
approximately $10 million) and the closing is conditioned on NetP
having a predetermined minimum amount of net cash (which you
estimate should be approximately $7 million) and on NetP's legal
and financial advisory fees in connection with your proposed
merger not exceeding an amount which is not specified.
"Please note that we are not aware of any confusion or
misunderstanding on the part of NetP's president or its board of
directors regarding Obsidian's willingness to provide Candlewood
with non-public information regarding Obsidian. Prior to our
receipt of your January 19th letter, Obsidian's statements and
actions indicated quite clearly that it was not prepared to
provide such information. As described in NetP's Schedule 14D-9
(first paragraph on page 8), at a meeting on November 24, 2003
which you attended, I requested such information in order to
perform confirmatory due diligence regarding Obsidian's business,
financial condition and prospects as described to us. Mr. Durham
stated that he would prefer not to provide such information. As
you also know, and also as described in NetP's Schedule 14D-9
(last paragraph on page 9, carrying over to page 10), on December
5, 2003 we sent a letter to the parties that had submitted or
discussed with us an acquisition proposal, including Obsidian,
informing them that any revisions to any proposals, and any
additional information which they wished to be considered, would
need to be submitted by Tuesday, December 9, 2003. For your ease
of reference, a copy of that letter is attached. Obsidian provided
us with no information in response to this letter or otherwise.
"Your letter of January 19th appears to alter your prior position,
and if so, as we indicated on November 24, 2003 and in our letter
of December 5, 2003, we would be pleased to review any information
which you may wish to provide that you feel would assist us and
NetP's board of directors in evaluating your proposal. If such
information includes any projections or forecasts, please provide
detailed information regarding the underlying assumptions, and
include all projections or forecasts prepared within the last
twelve months and any other information which you believe supports
the reasonableness of such projections or forecasts. Given that
time is of the essence in order to conclude this process as soon
as possible, any information you decide to provide must be
provided to us no later than noon, eastern standard time, on
Friday, January 23, 2004.
"With regard to due diligence, while your characterization of
Obsidian's prior position regarding its due diligence review of
NetP is at odds with your representatives' previous statements and
the express terms of the various proposals you submitted, we
acknowledge your current statement that Obsidian is prepared to
rely on NetP's public filings to complete Obsidian's due diligence
of NetP."
* * *
Plan of Liquidation
In its latest Form 10-Q filed for period ended September 30, 2003,
Net Perceptions reported:
"The condensed consolidated financial statements were prepared on
the going concern basis of accounting, which contemplates
realization of assets and satisfaction of liabilities in the
normal course of business. On October 21, 2003, the Company
announced that its Board of Directors had unanimously approved a
Plan of Complete Liquidation and Dissolution which will be
submitted to the Company's stockholders for approval and adoption
at a special meeting of stockholders to be held as soon as
reasonably practicable. If the Company's stockholders approve the
Plan of Liquidation, the Company will adopt the liquidation basis
of accounting effective upon such approval. Inherent in the
liquidation basis of accounting are significant management
estimates and judgments. Under the liquidation basis of
accounting, assets are stated at their estimated net realizable
values and liabilities, including costs of liquidation, are stated
at their anticipated settlement amounts, all of which approximate
their estimated fair values. The estimated net realizable values
of assets and settlement amounts of liabilities will represent
management's best estimate of the recoverable values of the assets
and settlement amounts of liabilities.
"A preliminary proxy statement related to the Plan of Liquidation
was filed on Schedule 14A with the Securities and Exchange
Commission on November 4, 2003. The key features of the Plan of
Liquidation are (i) filing a Certificate of Dissolution with the
Secretary of State of Delaware and thereafter remaining in
existence as a non-operating entity for three years; (ii) winding
up our affairs, including selling remaining non-cash assets of the
Company, and taking such action as may be necessary to preserve
the value of our assets and distributing our assets in accordance
with the Plan; (iii) paying our creditors; (iv) terminating any of
our remaining commercial agreements, relationships or outstanding
obligations; (v) resolving our outstanding litigation; (vi)
establishing a contingency reserve for payment of the Company's
expenses and liabilities; and (vii) preparing to make
distributions to our stockholders."
NEW VISUAL: Completes Convertible Debentures Private Placement
--------------------------------------------------------------
New Visual Corporation completed the private placement to certain
private and institutional investors of $1,000,000 in principal
amount of its three-year 7% Convertible Debentures and signed
commitments to place an additional $1,000,000 of such Debentures
when the Company's registration statement covering the Company's
common stock, par value $0.001 underlying the Debentures, which
the Company intends to file in January 2004, is declared effective
by the Securities and Exchange Commission.
In connection with the issuance of the Debentures, the Company
issued five-year warrants to purchase up to 6,666,667 shares of
the Company's common stock and, upon issuance of the additional
Debentures following the effectiveness of the Registration
Statement, will issue five-year warrants for an additional
6,666,667 shares of common stock, in each case at a per share
exercise price of $0.25, subject to "cash-less" exercise
provisions; provided that the exercise period of the Warrants may
be reduced under certain conditions (primarily relating to the
effectiveness of the Registration Statement and the closing bid
price of the Company's publicly traded common stock exceeding
$1.00 for each of 20 consecutive trading days).
The Debentures are convertible into shares of common stock at a
conversion rate equal to $0.15 per share. This conversion price is
subject to adjustment if there are certain capital adjustments or
similar transactions, such as a stock split or merger. The terms
of the Debentures provide that under certain conditions (primarily
relating to the effectiveness of the Registration Statement and
the closing bid price of the Company's publicly traded common
stock exceeding $1.00 for each of 20 consecutive trading days),
the Company can require a mandatory conversion of the Debentures.
If not converted earlier, on the scheduled maturity date the
Convertible Debentures may, under certain conditions,
automatically convert into shares of New Visual's common stock at
the per share conversion price of $0.15.
The Investors have undertaken to purchase the additional
Debentures within five days after the effectiveness of the
Registration Statement; provided, that if the Registration
Statement is not declared effective by the close of business on
June 30, 2004, the holders' obligation to purchase such Debentures
and the Company's obligation to issue the Debentures and the
Warrants in connection therewith, will be cancelled.
From the proceeds raised, the Company repaid the $300,000
principal amount and accrued interest of its 7% unsecured
convertible debenture that was issued in November 2003 and is due
to mature by April 30, 2004.
Under the agreements with the holders of the Debentures, the
Company agreed to certain restrictions relating to any offer or
sale of its common stock (or securities convertible into common
stock) with any third party for a period of 180 days after the
effective date of the Registration Statement. In addition, under
certain circumstances, the Company will be obligated to pay
liquidated damages to the holders of the Debentures if the
Registration Statement is not filed by January 30, 2004, if it is
not declared effective by April 30, 2004 or if the effectiveness
of the Registration Statement is subsequently suspended for more
than certain specified permitted periods.
In connection with this investment, the Company has remitted and,
upon closing of the transactions for the additional Debentures
after the effectiveness of the Registration Statement, will be
remitting, to a finder 10% of the cash proceeds. The Company has
also issued to such finder five-year warrants to purchase up to
666,667 shares of the Company's common stock and, upon the closing
of the transactions for the additional Debentures, will issue to
the finder warrants to purchase an equivalent number of shares,
all at a per share exercise price of $0.15, subject to "cash-less"
exercise provisions; provided that the exercise period of these
warrants may be reduced under certain conditions (primarily
relating to the effectiveness of the Registration Statement and
the closing bid price of the Company's publicly traded common
stock exceeding $1.00 for each of 20 consecutive trading days).
The shares underlying these warrants have piggy-back registration
rights.
New Visual Corporation was incorporated under the laws of the
State of Utah on December 5, 1985.
In November of 1999, the Company began to focus its business
activities on the development of telecommunications technologies.
Pursuant to such plan, in February of 2000, the Company acquired
New Wheel Technology, Inc., a development stage, California-based,
technology company, which now operates as the Company's wholly-
owned subsidiary, NV Technology, Inc., a Delaware corporation. As
a result of the change in business focus, the Company became a
development stage entity commencing November 1, 1999.
The Company's condensed consolidated financial statements have
been prepared in conformity with accounting principles generally
accepted in the United States of America, which contemplate
continuation of the Company as a going concern. However, for the
nine months ended July 31, 2003, the Company incurred a net
operating loss of approximately $2,277,000 and had a working
capital deficiency of $3,554,516. The Company has limited finances
and requires additional funding in order to accomplish its growth
objectives and marketing of its products and services. There is no
assurance that the Company can reverse its operating losses, or
that it can raise additional capital to allow it to expand its
planned operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
The Company operates in two business segments, the production of
motion pictures, films and videos (entertainment segment) and
development of telecommunications technologies (telecommunication
segment). The success of the Company's entertainment business is
dependent on future revenues from the Company's current joint
venture production agreement.
The success of the Company's telecommunication segment is
dependent upon the successful completion of development and
marketing of its broadband technology. No assurance can be given
that the Company can complete such technology, or that it can
commercialize it on a large-scale basis or at a feasible cost. No
assurance can be given that such technology will receive market
acceptance.
Until the commencement of sales from either segment, the Company
will have no operating revenues, but will continue to incur
substantial operating expenses, capitalized costs and operating
losses.
Management's business plan will require additional financing. To
support its operations during the nine months ended July 31, 2003,
the Company borrowed $287,000 represented by convertible
promissory notes.
During the nine months ended July 31, 2003, the Company received
$2,657,813 from the sale of 15,233,411 shares of its common stock.
The Company is exploring other financing alternatives, including
private placements and public offerings.
The Company's ability to continue as a going concern is dependent
upon obtaining additional financing. These consolidated financial
statements do not include any adjustments relating to the
recoverability of recorded asset amounts that might be necessary
as a result of the above uncertainty.
NORTHSTAR CBO: S&P Keeps Watch On Class A-2 & A-3 Notes Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the class
A-2 and A-3 notes issued by Northstar CBO 1997-2 Ltd., a
high-yield CBO transaction originated in June 1997, on CreditWatch
with negative implications.
The CreditWatch placements reflect factors that have negatively
affected the credit enhancement available to support the notes
since the transaction was last downgraded, in November 2001. Chief
among these factors is a sharp increase in the number of defaults
in the collateral pool securing the notes.
As a result of asset defaults and the sale of credit risk assets,
the class A-2/A-3 overcollateralization ratio has dropped
significantly, and now stands at 68.5%. This contrasts with a
ratio of 89.2% when the notes were last downgraded, and is well
below their minimum requirement, which equaled 119.0% at the time
of the last rating action, but has now stepped up to 135.0%.
Including defaulted securities, $82.7 million (or approximately
60.4% of the collateral pool's par value) come from obligors now
rated in the 'CCC' range or lower.
RATINGS PLACED ON CREDITWATCH NEGATIVE
Northstar CBO 1997-2 Ltd.
Rating
Class To From
A-2 A/Watch Neg A
A-3 CCC-/Watch Neg CCC-
TRANSACTION INFORMATION
Issuer: Northstar CBO 1997-2 Ltd.
Co-issuer: Northstar CBO 1997-2 (Delaware) Corp.
Manager: ING Investments Inc.
Underwriter: Bear Stearns Cos. Inc. (The)
Trustee: US Bank
Transaction type: High-yield arbitrage CBO
TRANCHE INITIAL LAST CURRENT
INFORMATION REPORT ACTION ACTION
Date (MM/YYYY) 07/1997 11/2001 01/2004
A-2 notes rtg. AAA A A/Watch Neg
A-3 notes rtg. A- CCC- CCC-/Watch Neg
A-2/A-3 OC ratio N.A. 89.2% 68.5%
A-2/A-3 OC ratio min. 114.0% 119.0% 135.0%
A-2 note bal. $163.0mm $114.8mm $78.0mm
A-3 note bal. $90.0mm $90.0mm $90.0mm
PORTFOLIO BENCHMARKS CURRENT
S&P Wtd. Avg. Rtg. (excl. defaulted) B
S&P Default Measure (excl. defaulted) 5.85%
S&P Variability Measure (excl. defaulted) 4.89%
Obligors Rated 'BB-' and Above 13.66%
Obligors Rated 'B+' and Above 31.21%
Obligors Rated 'B' and Above 31.21%
Obligors Rated 'B-' and Above 39.61%
Obligors Rated in 'CCC' Range 13.25%
Obligors Rated 'SD' or 'D' 47.13%
S&P RATED LAST CURRENT
OC (ROC) RATING ACTION RATING ACTION
Class A-2 N.A. (A) 82.17% (A/Watch Neg)
Class A-3 N.A. (CCC-) 64.43% (CCC-/Watch Neg)
NOVADEL PHARMA: Hires JH Cohn to Replace Wiss & Co. as Auditors
---------------------------------------------------------------
On November 26, 2003, the Novadel Pharma Inc.'s independent
accounting firm, Wiss & Company, LLP, advised the Company that it
has resigned as the independent accountant to audit the Company's
financial statements.
The reports of W&C on the Company's financial statements within
the two most recent fiscal years, or any subsequent interim
period, was modified as to an uncertainty relative to going
concern for the years ended July 31, 2003 and July 31, 2002.
The Company's Board of Directors accepted the resignation of W&C.
The Company engaged J.H. Cohn, LLC, as its new independent
accountants as of November 26, 2003.
Novadel Pharma Inc., a Delaware corporation, is engaged in
development of novel application drug delivery systems for
presently marketed prescription and over-the-counter drugs and has
been a consultant to the pharmaceutical industry. Since 1992, the
Company has used its consulting revenues to fund its own product
development activities.
PARMALAT CAPITAL FINANCE: Section 304 Petition Summary
------------------------------------------------------
Petitioners: Gordon I. Macrae and James Cleaver,
as Joint Provisional Liquidators of the Debtor
Ernst & Young Ltd.
4th Floor, Bermuda House
Dr. Roy's Drive
George Town, Grand Cayman
Debtor: Parmalat Capital Finance Limited
P.O. Box 1102 GT
George Town, Grand Cayman
Cayman Islands
Case No.: 04-10362
Debtor affiliates:
Entity Case No.
------ --------
Dairy Holdings Limited 04-10363
Food Holdings Limited 04-10364
Type of Business: Procuring and placing funds within the
Parmalat group and in the raising of finance
for the group from institutional and other
investors.
Section 304 Petition Date: January 20, 2004
Court: Southern District of New York (Manhattan)
Petitioners' Counsel: Gregory M. Petrick, Esq.
Cadwalader, Wickersham & Taft LLP
100 Maiden Lane
New York, NY 10038
Tel: 212-504-6373
Fax: 212-504-6666
Estimated Assets: more than $100 Million
Estimated Debts: more than $100 Million
PARMALAT: Orlandia Files Bankruptcy Case against Parmalat Brazil
----------------------------------------------------------------
Produtos Alimenticios Orlandia SA Comercio e Industria asks the
29th Civil Court of Sao Paulo, Brazil -- the Tribunal de Justica
do Estado de Sao Paulo -- to declare Parmalat Brasil SA
insolvent.
Court records available at http://cpoacv.tj.sp.gov.br/relate the
Brazilian proceeding was filed on January 12, 2004, and is
identified as Proceeding No. 000.04.001896-2. Orlandia's lawyer,
Gilberto Massaro, filed the petition
Orlandia CEO Flavio Marcelo Cotian Alves says that Parmalat
Brazil's oil division owes Orlandia BRL900,000 or $320,000. The
Debt became due on December 15, 2003. Orlandia has given
Parmalat until February 2004 to meet its obligation.
Orlandia may withdraw the involuntary bankruptcy proceedings if
Parmalat enters into a settlement, News Italia Press reports.
Orlandia provides vegetable fat and grain for Parmalat Brazil.
Orlandia started doing business with Parmalat few months before
the scandal in Italy unfolded.
The local stock exchange halted trade in Parmalat Brazil's
(LCAS4.BR) highly illiquid shares as of Tuesday, demanding a
clarification about "bankruptcy proceedings reported in the
press." (Parmalat Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PARMALAT: S&P Sheds Light on Questions re Parmalat Brazil & Italy
-----------------------------------------------------------------
In the wake of the default of Italy's Parmalat SpA, certain
questions arise regarding the fate of the rating on the Brazilian
credit receivables fund, Parmalat - Fundo de Investimento em
Direitos Creditorios (the Parmalat FIDC), by Standard & Poor's
Ratings Services.
Standard & Poor's downgraded Parmalat Finanziaria SpA and Parmalat
SpA (Parmalat Italy) to 'D' and withdrew their ratings, as well as
those of related entities, Dec. 19, 2003. On Dec. 22, 2003,
however, Standard & Poor's affirmed its 'brAAAf' Brazilian
national scale fund rating on the Parmalat FIDC. The affirmation
was based on the lack of direct impact that these events had on
the creditworthiness of the Parmalat FIDC. How is this possible?
The following answers to FAQs shed light on the relationship
between the Parmalat FIDC and the Italian company, Parmalat SpA.
FAQs
* What Is a Brazilian Fundo de Investimento em Direitos
Creditorios (an FIDC)?
An FIDC is a financial vehicle that works under the financial
structure and administrative shell of a fund, in both open- and
closed-end types, but is a bankruptcy- remote entity that
demonstrates uniqueness of both structured transactions and
investment funds. Additionally, each fund manager can incorporate
a combination of credit portfolios (representing at least 50% of
the fund's total assets) and debt securities as an underlying
asset of the fund.
Compared with fixed-income securities, FIDCs do not promise
investors (shareholders) specific interest payments or principal
repayments. Thus, each shareholder only expects to receive a
targeted return on their investment (in the case of the Parmalat
FIDC, the targeted return is the Brazilian Spot Depositos
Interfinanceiros index plus 1.7%), and based on the performance
and the characteristics of the fund they can choose at any time to
redeem their shares.
The legal and administrative framework for credit receivables
funds was created Dec. 17, 2001, by the Security Exchange
Commission of Brazil's (Comissao de Valores Mobiliarios)
regulation Instrucao 356.
* What Distinguishes Brazilian National Scale FIDC Ratings From
Other Standard & Poor's Ratings?
Standard & Poor's assigns credit quality ratings to FIDCs, fixed-
income funds, and other managed pools of fixed-income assets. The
credit quality rating assigned to a fund addresses the level of
protection its portfolio holdings provide against losses from
credit defaults.
Standard & Poor's Brazilian national scale credit quality ratings,
which range from 'brAAAf' (highest level of protection) to
'brCCCf' (least protection), are based on an analysis of the
fund's overall portfolio credit quality, interest rate risk,
credit quality, liquidity, concentration, and currency risk.
Standard & Poor's Brazilian national scale credit ratings carry a
"br" prefix to denote "Brazil" and the scale's focus on Brazilian
financial markets. The Standard & Poor's Brazilian national credit
rating scale is not directly comparable with Standard & Poor's
global scale or with any other national rating scale operated by
Standard & Poor's or its affiliates, reflecting its unique
structure that is tailored to the needs of the Brazilian financial
markets.
On the other hand, a Standard & Poor's credit rating on a debt
obligation addresses an issuer's ability to pay interest and
principal on the obligation, according to the terms and conditions
of the obligation. This applies to ratings on debt securities in
the U.S. and across the globe, including emerging markets.
Standard & Poor's role when rating a debt obligation is to analyze
associated credit risks and any protections for those credit risks
to assess the likelihood that an issuer will meet all of its
promised payment obligations.
Standard & Poor's credit quality and credit ratings do not address
market risks such as the risk of early repayment of principal or
early redemption of shares to investors.
* What Are the Key Analytical Considerations Factored Into the
Rating on the Parmalat FIDC?
The Parmalat FIDC is a closed-ended fund whose main underlying
assets originally consisted of trade receivables directly
originated by Parmalat Brasil S.A. and Batavia S.A., both
indirectly controlled subsidiaries of Parmalat SpA, in Brazil.
These receivables were originated through the sale of shipped
products to specified obligors, cash, and other specified
investments. Senior shares of the fund total Brazilian reais (BrR)
110.5 million and were sold to investors Nov. 27, 2003.
Subordinated shares amount to BrR19.5 million and were retained by
the originators. The fund has a defined final maturity of three
years, which began Nov. 27, 2003. Under the terms and conditions
of the Parmalat FIDC, the fund's manager is able to include credit
receivables and other fixed-income securities in the fund's
portfolio at any time.
The credit enhancement mechanism determined for the 'brAAAf'
rating affords credit support for the Parmalat FIDC's senior
shares and is provided in the form of structural subordination.
The subordination level was originally set by the fund's sponsor
at 15%, while Standard & Poor's requirement consisted of the
larger of a floor subordination of 12% and a variable (dynamic)
subordination calculated regularly. The key strengths of the
Parmalat FIDC's senior shares observed during Standard & Poor's
rating analysis were the following:
-- The experience of Parmalat Brasil and Batavia as trade
receivables originators;
-- The robust cash flow structure in the form of
senior/subordinated shares;
-- The credit quality of the trade receivables supporting the
senior shares, which have a good historical performance record
in terms of payment;
-- The dynamic reserve (credit enhancement mechanism) included in
the structure to cover related credit risks (initial
subordination of 15% for the senior shares);
-- The capability of Banco Itau S.A., as custodian of the
transaction, to manage and perform servicing and reporting on
the transaction; and
-- The legal structure of the transaction, which has adequate
provisions for legally safeguarding the shareholders.
* Has the Recent Default of Parmalat SpA Affected the Performance
of the Parmalat FIDC?
The Dec. 19, 2003, default of Parmalat SpA has not directly
affected the performance or creditworthiness of the Parmalat FIDC.
The Parmalat FIDC is a bankruptcy-remote Brazilian credit
receivables fund that has no legal or direct financial connection
with Parmalat SpA or any of its subsidiaries. The fund has
sufficient receivables isolated from the originators to provide
the appropriate level of credit enhancement for a 'brAAAf' rating.
Other factors that keep the creditworthiness of the Parmalat FIDC
unaffected by Parmalat SpA's default are:
-- The servicer of the receivables is Banco Itau, an entity
unaffiliated with the originators (which are not rated by
Standard & Poor's);
-- The receivables represent sales of products that have already
been delivered;
-- The fund stopped purchasing new receivables Dec. 19, 2003;
-- The fund's outstanding receivables (representing less than 10%
of the fund's portfolio as of Jan. 14. 2004) are short-term in
nature and are due to be paid within approximately 15 days; and
-- The fund manager is now allocating all collections to the
fund's permitted investments.
* What Has Happened Since the Jan. 6, 2004, Parmalat FIDC
Shareholder Meeting?
Because of the events that affected Parmalat SpA and its
subsidiaries, the fund's sponsor, Intrag DTVM Ltda, called for an
extraordinary shareholders' meeting to take place Jan. 6, 2004.
The only resolution reached during that meeting was that another
meeting would be held Jan. 19, 2004, during which shareholders
will decide whether the fund should continue operating or be
redeemed early (repayment of shareholders).
Since the Parmalat FIDC started operating Nov. 27, 2003, Standard
& Poor's has been receiving several servicing reports and
additional portfolio information from the servicer, as requested.
These reports confirm that the fund's portfolio performance is in
line with the historical payment performance of the originators'
client base. Additionally, no early amortization or liquidation
event has occurred. As of the date of the present report, credit
receivables represent less than 10% of the fund's total assets.
The remaining holdings of the fund are permitted investments not
related to Parmalat SpA or any of its subsidiaries. These
permitted investments consist of overnight investments in 'brAA'
rated financial institutions, government bonds, or shares of other
fixed-income funds rated or assessed by Standard & Poor's.
* What Could Happen to the Rating on the Fund After the Upcoming
Jan. 19, 2004, Shareholders' Meeting?
Standard & Poor's opinion of the Parmalat FIDC's credit risk has
not changed significantly since its Dec. 22, 2003, rating
affirmation. Nevertheless, the impact of Parmalat SpA's default
could affect the originators' ability to continue generating
healthy receivables to be sold to the fund.
In addition, the originators' ability to generate new receivables
depends on the potential for recovery of their credit and
financial situation, which at the moment remains uncertain.
Consequently, Standard & Poor's would likely lower its rating on
the Parmalat FIDC significantly if the fund's shareholders decide
during the Jan. 19, 2004, meeting to continue with the fund's
operations and purchase new receivables from Parmalat Brasil and
Batavia. The downgrade would reflect the uncertainty of the true
credit and legal risks of the new receivables. Nevertheless, it is
Standard & Poor's opinion that the Parmalat FIDC's shareholders
are likely to liquidate the fund, in which case the rating would
be maintained until liquidation and then withdrawn, assuming there
are no other changes to the fund's performance or Standard &
Poor's opinion of its future performance.
PETRO STOPPING CENTERS: S&P Keeps Low-B Ratings on Watch Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services' ratings for Petro Stopping
Centers L.P. (operating company) and Petro Stopping Centers
Holdings L.P. (holding company), including the 'B' corporate
credit rating, remain on CreditWatch with negative implications.
Petro has announced a refinancing of its capital structure in
which it will issue $225 million of senior secured notes due 2012
at the operating company and $44 million of senior secured
discount notes due 2014 at the holding company. Proceeds from
these issues, along with cash, will be used to repay the company's
existing $135 million senior unsecured notes and the holding
company's existing $100 million of senior discount notes due 2008.
The new term loan will be $25 million, $20 million less than the
existing term loan.
Upon successful completion of the planned refinancing, Standard &
Poor's will affirm the 'B' corporate credit rating on the company
and the outlook will be negative. In addition, Standard & Poor's
will assign a 'B-'rating and a recovery rating of '3' to the $225
million senior secured notes due 2012. These notes will be issued
pursuant to Rule 144A with registration rights. The notes will be
rated one notch below the corporate credit rating; this and the
'3' recovery rating indicate the expectation of meaningful
recovery of principal (50%-80%) in the event of a default.
Standard & Poor's will also raise the rating on the operating
company's senior secured bank loan to 'BB-' from 'B+' and assign a
'1' recovery rating to the loan. The bank loan will be rated two
notches higher than the corporate credit rating; this and the '1'
recovery rating indicate a high expectation of full recovery of
principal in the event of a default.
The affirmation upon completion of the transaction will be based
on Petro's stable operating performance over the past two years,
as well as its enhanced liquidity as a result of extended
maturities and lower cash interest payments under the planned
refinancing. The negative outlook will reflect continued high
leverage and thin cash flow coverage ratios. A further
deterioration in these credit measures or reduced liquidity could
result in a ratings downgrade in the near term.
"The corporate credit rating reflects the company's participation
in the highly competitive and fragmented truck stop industry, its
high debt levels, and the volatility of diesel fuel prices," said
Standard & Poor's credit analyst Patrick Jeffrey. "These factors
are somewhat mitigated by Petro's maintenance of a leading
position in the industry."
El Paso, Texas-based Petro is one of the leading operators in the
truck stop industry, with the top five chains selling about 83% of
all over-the-road diesel fuel. Although Petro differentiates
itself through quality of service, Standard & Poor's believes that
the company's smaller size and lack of national scope relative to
other competitors make it more difficult to attract truck fleet
business. Because of this, the company has been more affected by
the economic slowdown in the U.S. than some of its competitors.
PETRO STOPPING: Reports Pending Notes & Warrants Offer Results
--------------------------------------------------------------
Petro Stopping Centers Holdings L.P. and Petro Holdings Financial
Corporation announced results to date related to the pending offer
and consent solicitation with respect to all of their outstanding
$113,370,000 aggregate principal amount at maturity senior
discount notes due 2008 (CUSIP No. 71646DAE2 and ISIN No.
US71646DAE22).
Petro Warrant Holdings Corporation also announces results to date
related to the pending consent solicitation with respect to all of
its outstanding warrants (CUSIP No. 716457114, ISIN No.
7164571140).
As of 5:00 p.m. Jan. 21, 2004, the Issuers had received tenders
from holders of approximately $107.6 million principal amount at
maturity (95%) of the Existing Notes and Petro Warrant Holdings
Corporation had received consents from holders of approximately
53.1% of its outstanding warrants. The expiration date for the
offer and each consent solicitation continues to be 5:00 p.m. New
York City time, on Jan. 27, 2004.
Informational documents relating to the offer will only be
distributed to eligible investors who complete and return, or have
completed and returned, an Eligibility Letter that has already
been sent to investors. If you would like to receive this
Eligibility Letter, please contact Global Bondholders Services,
the information agent for offer and consent solicitation, at 212-
430-3774 or 866-470-4200 (U.S. toll-free).
The New Notes to be issued to holders of Existing Notes electing
the New Note and Cash Option will not be registered under the
Securities Act of 1933, as amended, and will only be offered in
the United States to qualified institutional buyers or
institutional accredited investors in private transactions in
reliance upon an exemption from registration under the Securities
Act and outside the United States to persons other than U.S.
persons in off-shore transactions in reliance upon Regulation S
under the Securities Act.
PG&E NATIONAL: ET Debtors Want Second Exclusivity Extension
-----------------------------------------------------------
Due to the fact the ET Debtors are part of a large and complex
business enterprise, which, on their own, represent a significant
business enterprise with a complex financial structure, the ET
Debtors ask the Court to further extend their Exclusive Proposal
Period to May 19, 2004, and their Exclusive Solicitation Period
to July 19, 2004.
Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston, LLP, in
Baltimore, Maryland, tells the Court that the ET Debtors need
additional time to negotiate a plan with the Official Committee
of Unsecured Creditors for winding down their business
operations. The ET Debtors have rejected a number of contracts,
including contracts with pipeline companies for natural gas
transportation and storage, and tolling agreements. The ET
Debtors are also trying to resolve their trading and tolling
contracts disputes consensually with the aid of a mediator, aside
from other active settlement discussions with numerous trading
contact counterparties.
Moreover, Mr. Nussbaum states that the ET Debtors have
significant unresolved contingencies. The Court has established
procedures for the settlement of certain derivative contracts to
which the ET Debtors were parties, and to which "safe harbor"
provisions of the Bankruptcy Code apply. Resolving and settling
the numerous disputes relating to the Safe Harbor Contracts is a
complex and time-consuming process, which directly affects the
winding down of the ET Debtors' business operations and in direct
relation to any reorganization plan.
According to Mr. Nussbaum, in the process of winding down, the ET
Debtors are liquidating their business assets; and postpetition
obligations that are being incurred are paid as they become due.
Furthermore, at this time, there is reason to believe the ET
Debtors will soon reach a consensus with the ET Creditors
Committee with respect to a Plan. (PG&E National Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PILLOWTEX CORP: Court Approves Hilco as Real Estate Consultants
---------------------------------------------------------------
Pursuant to a Real Estate Consulting and Advisory Services
Agreement dated December 18, 2003, the Pillowtex Corporation
Debtors agreed to employ Hilco Real Estate, LLC to provide certain
consulting services with respect to the sale of their real
properties that were not included in the GGST Sale.
Hilco is a member of the Hilco Trading family of companies. John
F. Sterling, Pillowtex Vice President, General Counsel and
Secretary, points out that the Hilco Trading companies:
-- are widely recognized as national leaders in the provision
of liquidation and appraisal services;
-- assist debtors and their creditors to liquidate assets of
all types; and
-- participated in the liquidation of assets worth several
billion dollars.
The Debtors determined that Hilco's assistance in the liquidation
of their properties will maximize the value of their assets. The
Debtors selected Hilco because Hilco and its principals have
recognized expertise in providing high quality real estate
consulting services to debtors and creditors in bankruptcy
reorganizations and liquidations. Moreover, Hilco has
demonstrated to the Debtors an extensive knowledge of the
Debtors' real property and how to maximize the Debtors' recovery.
As real estate consultants, Hilco will:
(a) meet with the Debtors, their advisors and the Creditors'
Committee to ascertain the Debtors' goals, objectives and
financial parameters for the sale of the Properties;
(b) develop and design a marketing program for the sale of the
Properties;
(c) coordinate and organize the bidding procedures and sale
process, where appropriate and in conjunction with the
Debtors, in order to maximize the attendance of all
interested bidders for the sale of the Properties;
(d) at the Debtors' direction and on the Debtors' behalf,
negotiate the terms of the purchase agreements for the
sale of the Properties;
(e) report periodically to the Debtors regarding the status
of negotiations;
(f) at the Debtors' direction, work to reduce property related
carrying costs associated with the Properties; and
(g) provide other real estate consulting services that the
Debtors and Hilco may agree upon.
The Debtors require qualified professionals to render these
essential professional services, explains Mr. Sterling. Hilco
has substantial expertise in all of the areas for which the
Debtors propose to employ them.
The Debtors propose to pay Hilco a fixed percentage of the total
amount of cash paid by the buyer of a property. On the closing
of the sale of a property, Hilco will earn:
(a) 4% of the Gross Proceeds for each Property located in
Hanover, Pennsylvania; Tunica, Mississippi; and Dallas,
Texas; and
(b) 3% of the Gross Proceeds for each Property located in
North Carolina, provided that, if the Property located in
Kannapolis, North Carolina is sold to either Atlantic
American Properties or its affiliates, or to Ken Lingafelt
or his affiliates, then, with respect to that sale, Hilco
will earn 2% of the Gross Proceeds up to the amount of the
offer submitted prior to the effective date of the
Services Agreement, and provided further that, if any of
these parties purchase the Kannapolis Property, Hilco will
earn a fee of 3% of the difference between the Gross
Proceeds and the original offer submitted prior to the
effective date of the Services Agreement.
The Debtors also propose to reimburse Hilco for all reasonable
out-of-pocket expenses resulting from Hilco's performance of its
services in accordance with the written expense budget agreed to
by the Debtors. In addition, the Debtors agree to indemnify
Hilco against, and reimburse it for reasonable costs and expenses
in relation to, any claim in connection with the Services
Agreement.
The Debtors or Hilco may terminate the Services Agreement for
cause at any time upon 30 days' prior written notice and the
Debtors may terminate the Services Agreement without cause upon
60 days' prior written notice.
The Debtors believe that the Fee Structure is fair and
reasonable. The Fee Structure appropriately reflects the nature
of the services that Hilco will provide and the fee structure
typically utilized by real estate consultants.
Hilco proposes to submit to the Debtors monthly bills to be paid
no later than 30 days after the date of the invoice, without
further application to the Court. Because Hilco's compensation
is based on specified percentages without regard to hours worked
or services rendered, the Debtors submit that there is no need
for Hilco to file fee applications.
Hilco has researched its client files and records to determine
its connections with the Debtors, creditors and any other party-
in-interest on the list of parties-in-interest provided by the
Debtors. Alan Lieberman, Hilco Executive Vice President, states
that Hilco has not been retained to assist any entity or person
other than the Debtors on matters relating to these Chapter 11
cases. Mr. Lieberman further discloses that Hilco or certain of
its affiliates:
(a) performed real estate consulting services for:
* Comerica Bank Detroit-Michigan,
* Deutsche Bank Trust Co. Americas,
* Societe Generale,
* Wells Fargo Bank NA,
* Congress Financial Corporation,
* Fleet Bank,
* Foothill Capital Corporation,
* The CIT Group Commercial Services,
* Houlihan Lokey,
* Bank of America Strategic Solutions, Inc.,
* Credit Suisse First Boston,
* KPMG,
* Bank of America Distressed Trade,
* Regiment Capital, Ltd.,
* Buhler Quality Yarns Corp., and
* Wellman, Inc; and
(b) have been represented by Jones, Day, Reavis & Pogue during
the past three years in matters unrelated to these Chapter
11 cases. Jeffrey W. Linstrom, General Counsel of Hilco
Trading Co., an affiliate of the Debtors, was previously
employed as an attorney by Jones Day.
Hilco does not believe that these relationships create a conflict
of interest regarding the Debtors or these Chapter 11 cases. Mr.
Lieberman assures the Court that Hilco is a "disinterested
person," as defined in Section 101(14) of the Bankruptcy Code, as
modified by Section 1107(b) of the Bankruptcy Code, and as
required under Section 327(a) of the Bankruptcy Code.
Accordingly the Debtors sought and obtained the Court's authority
to employ Hilco as real estate consultants in their Chapter 11
cases. Judge Walsh also approved the Fee Structure. (Pillowtex
Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
QUINTEK TECH: Begins Offering Aperture Card Outsourcing Services
----------------------------------------------------------------
Quintek Technologies, Inc. (OTCBB:QTEK), the only manufacturer of
a chemical-free desktop microfilm solution, expands into the
service industry. Effective immediately the Company will begin
accepting and bidding on jobs for the creation of aperture cards
for third parties.
The Company made the decision to expand its offerings due in part
to the news announced January 16, 2004 that Continental Graphics,
a company owned by Boeing (NYSE:BA), would close their commercial
operations.
Quintek will accept information from virtually all digital file
formats. In addition, Quintek's patented solution and proprietary
in-house knowledge base will allow it to provide a high-quality
economical solution for customers who choose to outsource their
aperture card production needs.
Robert Steele, Chairman and CEO stated, "Many of the customers
that we have been calling on have expressed a strong desire to
outsource aperture card production. With the recent exit of
Continental, an opportunity has been created right in our own
backyard." Steele added, "We are highly confident that this
expansion into providing outsourced services will help us capture
more business within our own customer base, improve margins and
help us to recoup more of our cost of sales by increasing our
sales closing ratio."
Andrew Haag, Quintek CFO commented, "The consistent cash flow
provided by a recurring revenue stream of service work will help
us to continue to add shareholder value to Quintek. The recent
financing agreements and the improved financial condition of the
Company provide the opportunity to further develop our
relationships, expand the Company and explore new growth
opportunities."
Quintek is the only manufacturer of a chemical-free desktop
microfilm solution. The company currently sells hardware, software
and services for printing large format drawings such as blueprints
and CAD files (Computer Aided Design) directly to microfilm.
Quintek does business in the content and document management
services market, forecast by IDC Research to grow to $2.4 billion
by 2006 at a combined annual growth rate of 44%. Quintek targets
the aerospace, defense and AEC (Architecture, Engineering and
Construction) industries.
Quintek's printers are patented, modern, chemical-free, desktop-
sized units with an average sale price of over $65,000.
Competitive products for direct output of computer files to
microfilm are more expensive, large, specialized devices that
require constant replenishment and disposal of hazardous
chemicals.
The company's June 30, 2003, balance sheet discloses a total
shareholders' equity deficit of about $1.3 million.
QWEST: Launches New Int'l Voice Offerings for Business Customers
----------------------------------------------------------------
Qwest Communications International Inc. (NYSE: Q) announced its
newest international voice offerings for business customers, which
complement Qwest's existing international data and Internet
protocol services.
Together, these offerings create an entire array of global
services to meet customers' communications needs. With Qwest's
international offerings, businesses of all sizes can take
advantage of an entire portfolio of services to communicate with
their overseas offices or customers in hundreds of countries while
still saving costs and benefiting from some of the
telecommunications industry's highest quality services.
Qwest has several new international voice plans that provide
businesses with clear, international direct-dial calls at rates
unparalleled in the industry. Qwest made network enhancements to
its global network infrastructure resulting in improvements of the
quality of customers' international communications experience and
better rates. Businesses can take advantage of these low rates
simply by choosing Qwest as their long-distance provider. Qwest
new international long-distance voice services include:
* Direct-dial switched and dedicated long-distance calls
from the United States to more than 250 destinations
around the world. Rates start as low as $.02 cents per
minute for some of the most popular calling destinations
such as Canada and Mexico.
* Qwest worldcard(TM), which offers international and
domestic business travelers a cost-effective and
convenient calling card to connect with their corporate
offices back home or customers and suppliers abroad.
* International toll-free service that allows businesses to
offer their customers a toll-free number from more than 50
countries. Businesses can chose to have different,
localized toll-free numbers from different countries, or
the same number.
In addition to its international voice services, Qwest offers an
extensive selection of international data and IP services
including:
* Asynchronous transfer mode
* Dedicated Internet access
* Frame relay
* Private line
* Virtual private network
To deliver these international data and IP services, Qwest works
directly with industry-leading global and regional partners to
provide coverage across the globe. This partnering strategy
enables Qwest to offer customers a high quality, seamless,
integrated international communications portfolio that addresses
all their voice, data and IP needs.
"Many of our customers are conducting business globally and
because of that, they require a communications provider that can
offer international services that complement their domestic
services," said Cliff Holtz, executive vice president for Qwest
business markets group. "Through improvements to our network and
operations as well as with new rate plans, Qwest's international
voice services are second to none for quality connections,
coverage and cost. Also, our vast network of global data and IP
partners gives customers a seamless, end-to-end global solution,
all through one provider and with one Qwest contact."
To give businesses the best rates possible on all their
communications, Qwest customers that bundle their communications
services under a single Qwest agreement -- such as Qwest Long-
Distance Advantage(TM), Qwest Voice Advantage(TM) or Qwest Total
Advantage(TM) -- may receive volume discounts on almost all their
services, including special promotions on international long-
distance services.
"We have reduced rates, enhanced our service portfolios and
improved operational excellence so that we are second to none in
the entire communications industry," continued Holtz. "These
actions prove Qwest's commitment to our customers and our drive to
grow long-lasting and profitable relationships with businesses of
all shapes and sizes."
Qwest Communications International Inc. (NYSE: Q) is a leading
provider of voice, video and data services to more than 25 million
customers. The company's 47,000 employees are committed to the
"Spirit of Service" and providing world-class services that exceed
customers' expectations for quality, value and reliability. For
more information, please visit the Qwest Web site at
http://www.qwest.com/
At March 31, 2003, Qwest Communications's balance sheet shows a
total shareholders' equity deficit of about $2.6 billion.
REDBACK NETWORKS: Dec. 31 Balance Sheet Upside-Down by $104 Mil.
----------------------------------------------------------------
Redback Networks Inc. (Nasdaq:RBAK), a leading provider of
broadband networking systems, announced its fourth quarter and
fiscal year end results for the period ended December 31, 2003.
Net revenue for the fourth quarter of 2003 was $28.4 million,
compared with $27.4 million for the third quarter of 2003 and
$27.6 million for the fourth quarter of 2002. Net revenue for the
fiscal year ending December 31, 2003 was $107.5 million, compared
with $125.6 million for the fiscal year 2002.
"I am extremely pleased with the results this quarter, especially
in light of the high potential for distractions as we worked
through the final phase of our financial restructuring process,"
said Kevin DeNuccio president and chief executive officer of
Redback Networks. "We successfully completed the financial
restructuring during the first week in January. As we look forward
to 2004 our focus will be on execution of our business model, in
what appears to an improving business climate."
The financial results for the fourth quarter and fiscal year 2003
reflect the company undergoing the transition of a complete
financial restructuring, a process successfully completed January
2, 2004. GAAP net loss for the fourth quarter of 2003 was $ 24.9
million or $ 0.14 per share compared to a GAAP net loss of $34.2
million or $0.20 per share in the fourth quarter of 2002. GAAP net
loss for fiscal year 2003 was $ 118.8 million or $ 0.65 per share
compared to a GAAP net loss of $186.9 million or $1.13 per share
in fiscal year 2002. Non-GAAP net loss for the fourth quarter of
2003 was $24.2 million or $0.13 per share compared to a non-GAAP
net loss of $26.8 million or $0.15 per share in the fourth quarter
of 2002. Non-GAAP net loss for fiscal year 2003 was $95.1 million
or $0.52 per share compared to a non-GAAP net loss of $117.0
million or $0.71 per share in fiscal year 2002. Non-GAAP results
exclude impairment charges relating to fixed assets, amortization
of intangible assets, restructuring charges, stock-based
compensation, write-off of certain investments, certain impairment
and inventory charges, the reversal of an accrual for cancellation
of an engineering services contract, the sale of previously
reserved inventory, partial recovery of previously written down
investments, and bond redemption charges.. See the attached table
for a reconciliation of our non-GAAP results to GAAP results.
At December 31, 2003, Redback's balance sheet shows a total
shareholders' equity deficit of about $104 million.
As announced January 5, 2004, Redback successfully completed its
financial restructuring, eliminating approximately $467 million of
its existing debt, resulting in a stronger financial model with an
improved balance between revenue and expenses. In addition,
Redback Networks received $30 million in equity funding from
Technology Crossover Ventures, a premier provider of growth
capital to technology companies. The financial restructuring and
new equity funding strengthens the ability of Redback Networks to
address the long-term needs of existing and potential customers
and to participate fully in new market growth opportunities for
strategic broadband infrastructure.
Redback Networks enables carriers and service providers to build
profitable next-generation broadband networks. The company's User
Intelligent Networks(TM) product portfolio includes the industry-
leading SMS(TM) family of subscriber management systems, and the
SmartEdge(R) Router and Service Gateway platforms, as well as a
comprehensive User-to-Network operating system software, and a set
of network provisioning and management software.
Founded in 1996 and headquartered in San Jose, Calif., with sales
and technical support centers located worldwide, Redback Networks
maintains a growing and global customer base of more than 500
carriers and service providers, including major local exchange
carriers, inter-exchange carriers, PTTs and service providers.
RESOURCE AMERICA: Redeems $53 Million of 12% Senior Notes
---------------------------------------------------------
Resource America Inc. (NASDAQ:REXI) completed the redemption of
all of the Company's remaining outstanding $53.0 million 12%
Senior Notes due August 2004.
The Company issued $115.0 million of these notes on July 22, 1997.
The remaining outstanding balance was redeemed yesterday at 103%
of principal plus accrued interest.
Resource America Inc. (S&P, B Corporate Credit Rating, Negative)
is a proprietary asset management company that uses industry
specific expertise to generate and administer investment
opportunities for its own account and for outside investors in the
energy, real estate and equipment leasing industries. For more
information please visit its Web site at
http://www.resourceamerica.com/or contact Investor Relations at
pschreiber@resourceamerica.com/
ROYAL CARIBBEAN: Will Host 4th-Quarter Conference Call on Jan 29
----------------------------------------------------------------
Business Wire Jan 21
Royal Caribbean Cruises Ltd. (NYSE:RCL) (OSE:RCL) scheduled a
conference call with analysts for 10 a.m. Eastern time, Thursday,
January 29, 2004, to discuss the company's fourth quarter
financial results. The call can be listened to by all interested
parties at the company's investor relations Web site at
http://www.rclinvestor.com/
Visual aids relating to the call will also be available at the web
site. A replay of the webcast will be available at the same site
for a month following the call.
Royal Caribbean Cruises Ltd. (S&P, BB+ Corporate Credit Rating,
Negative) is a global cruise vacation company that operates Royal
Caribbean International and Celebrity Cruises, with a combined
total of 25 ships in service and three under construction. The
company also offers unique land-tour vacations in Alaska, Canada
and Europe through its cruise-tour division. Additional
information can be found on http://www.royalcaribbean.com/
http://www.celebrity.com/or http://www.rclinvestor.com/
SHAW COMMS: Board Ups Quarterly Dividend on Class A & B Shares
--------------------------------------------------------------
Shaw Communications Inc.'s Board of Directors increased the
quarterly dividend by $0.02 for the Class A Participating Shares
and Class B Non-Voting Participating Shares payable March 31, 2004
to all holders of record at the close of business on
March 15, 2004. The Class A Participating Share dividend will be
$0.04875 and the Class B Non-Voting Participating Share dividend
will be $0.05. The increase of $0.02 per share reflects the
increased earnings and generation of free cash flow being achieved
by the Company.
Shaw Communications Inc. (S&P, BB+ Corporate Credit Rating,
Stable} is a diversified Canadian communications company whose
core business is providing broadband cable television, Internet
and satellite direct-to-home services to approximately 2.9 million
customers. Shaw is traded on the Toronto and New York stock
exchanges and is included in the S&P/TSX 60 index. (Symbol: TSX -
SJR.B, NYSE - SJR).
SIEBEL SYSTEMS: Sets Financial Analyst Day for February 13, 2004
----------------------------------------------------------------
Siebel Systems, Inc. (Nasdaq:SEBL), a leading provider of business
applications software, announced its Financial Analyst Day will
take place on February 13, 2004, in Burlingame, California.
Further details regarding the Webcast and replay can be accessed
over the Internet at http://www.siebel.com/investor/
Siebel Systems, Inc. (Nasdaq:SEBL) (S&P, BB Corporate Credit and
B+ Subordinated Ratings), is a leading provider of eBusiness
applications software, enabling corporations to sell to, market
to, and serve customers across multiple channels and
lines of business. With more than 3,500 customer deployments
worldwide, Siebel Systems provides organizations with a proven
set of industry-specific best practices, CRM applications, and
business processes, empowering them to consistently deliver
superior customer experiences and establish more profitable
customer relationships. Siebel Systems' sales and service
facilities are located in more than 28 countries.
SIEBEL SYSTEMS: Fourth-Quarter Results Stay Within Guidance Range
-----------------------------------------------------------------
Siebel Systems, Inc. (Nasdaq:SEBL), a leading provider of business
applications software, announced results for the fourth quarter
ended December 31, 2003, above the range of management guidance
presented October 15, 2003, and in line with preliminary financial
results presented January 5, 2004.
Total revenues for the fourth quarter of 2003 were $366.7 million.
Revenues from license fees were $150.3 million. Revenues from
maintenance, consulting, and other services were $216.5 million.
Net income for the fourth quarter of 2003 was $41.5 million or
$0.08 per share.
Previous management guidance provided on October 15, 2003, had
been for total revenues for the fourth quarter of 2003 to be in
the range of $335 million to $355 million, license revenues to be
in the range of $120 million to $140 million, and earnings per
share to be $0.05-$0.06 per share. Preliminary financial results
provided on January 5, 2004, had been for total revenues for the
fourth quarter of 2003 to be approximately $365 million, license
revenues to be approximately $150 million, and earnings per share
to be approximately $0.08 per share.
The company's cash, cash equivalents, and short-term investments
were $2.023 billion as of December 31, 2003, the net result of
$53.4 million in cash generated during the quarter offset by a
reduction of $57.2 million for the UpShot and Motiva acquisitions,
which closed in the fourth quarter. Days sales outstanding in
accounts receivable were 64 days in the fourth quarter of 2003.
Quarterly Highlights
The following highlights were announced or occurred since Siebel
Systems' last earnings statement:
Siebel Systems Secures New Customers: The company concluded new
software licensing agreements with more than 151 new customers in
the fourth quarter, including Abbey National Plc.; Agilent
Technologies Inc.; Blue Cross & Blue Shield of N. Carolina; Candle
Corporation; Home Depot Inc.; ING Life Insurance Co., Ltd.;
Neopost; Nippon Shinyaku Company, Ltd.; Novartis Pharma HQ AG;
Organon Nederland BV; Philips Medical Systems Nederland BV;
Procter & Gamble Company; Roche; Sallie Mae, Inc.; Telstra
Corporation; and Vodafone Network.
Siebel Systems Secures Repeat Orders: In the fourth quarter, the
company concluded additional software licensing agreements with
more than 255 existing customers, including Allstate Insurance
Company; American Express Corporate Services; Cesky Telecom a.s.;
DHL WorldWide Express, LLC; Eli Lilly & Company Ltd.; Fleet
National Bank; General Dynamics Corp.; GlaxoSmithKline
Pharmaceuticals S.A; IT Telecom S.p.A.; Lansforskringar AB; MCI
Worldcom Network Services Inc.; Minnesota Mining and Manufacturing
Co.; Nokia Corporation; Reuters Ltd.; Sabre, Inc.; Rabobank
Nederland; Security Service Federal Credit Union; Sky Italia
S.r.l.; South African Revenue Services; Sprint Corporation; Terra
Networks, S.A.; The McGraw Hill Companies, Inc.; Thomson Learning
Prometric; and Westpac Banking Corporation.
Siebel Systems Receives Industry Accolades: During the fourth
quarter of 2003, Siebel Systems also received industry honors from
analysts, media, and users, including:
-- Network World Italy readers selected Siebel business
applications the "CRM Platform 2003," validating Siebel
Systems' deep domain expertise in industry-specific, best-
practice CRM.
-- Hong Kong Call Center Association (HKCCA) honored Siebel
Systems as Vendor Awards Best Supplier for the second
consecutive year. The HKCCA lauded Siebel Systems "for
providing call centers the ability to implement best practices"
in key areas.
-- San Jose Magazine named Siebel Systems one of the 50 best
companies to work for in Silicon Valley. The ranking was based
in large part on Siebel's employee-friendly standard benefits
package, which includes tuition assistance, child-care,
telecommuting, and on-site fitness center, among other
benefits.
-- META Group has ranked Siebel Systems a market leader in META
Group's METAspectrum vendor analysis for Enterprise Marketing
Portfolio Management Applications, the highest ranking awarded
by META Group. Siebel Systems was specifically recognized for
its strength in analytics, lead management, technical
architecture, strong integration capabilities, and vertical
expertise.
-- Frost & Sullivan named Siebel Systems the CRM market leader in
Asia Pacific and Japan for the third consecutive year. Frost &
Sullivan's latest research indicates that, despite an overall
6.6 percent decline in the regional CRM market, Siebel Systems'
market share rose nearly 5 percent in 2002, which extends
Siebel Systems' lead over its regional competitors with almost
twice the market share of its nearest competitor and an annual
license revenue share of 38 percent in 2002.
Siebel Systems Corporate Governance Update
Marc F. Racicot Appointed to Board of Directors Committee: Siebel
announced today that Marc F. Racicot has been appointed to the
Compensation Committee and the Nominating and Corporate Governance
Committees of the Board of Directors, effective December 3, 2003.
Racicot, an independent director, previously served as Governor
and Attorney General of the State of Montana as well as Chief
Prosecutor in the United States Army. Racicot joined the Board in
2001.
C. Scott Hartz Appointed to Board of Directors and Committee: As
previously disclosed, C. Scott Hartz was appointed to the Board of
Directors and its Audit Committee effective July 31, 2003. Hartz,
an independent director, is the managing partner of Spire Capital
Group LLC and previously served as CEO of PwC Consulting.
Michael Spence Resigns from Board of Directors: Siebel announced
today that Dr. A. Michael Spence resigned from its Board of
Directors, effective March 1, 2004, to pursue other personal and
professional interests. "Since joining the Board in 1995, Mike
Spence has made enormous contributions to the Company," said
Chairman and CEO Thomas M. Siebel. "All of us at Siebel Systems
owe Mike a great debt of gratitude. We thank him for his many
years of dedicated service."
Corporate Governance Microsite Added to Siebel.com: In a
continuing effort to pursue its "best practices" approach to
corporate governance matters, the Company has recently adopted a
set of new charters for its Audit Committee, Compensation
Committee, and Nominating and Corporate Governance Committee. The
Company has posted these charters to its newly launched Corporate
Governance microsite on its Web site http://www.Siebel.com/which
can be directly accessed via the following URL:
www.siebel.com/about/investor_information/corporate_governance/index.shtm
(Due to the length of this URL, it may be necessary to copy and
paste this hyperlink into your Internet browser's URL address
field.)
Siebel Systems, Inc. is a leading provider of business
applications software, enabling corporations to sell to, market
to, and serve customers across multiple channels and lines of
business. With more than 3,500 customer deployments worldwide,
Siebel Systems provides organizations with a proven set of
industry-specific best practices, CRM applications, market-leading
analytics products, and business processes, empowering them to
consistently deliver superior customer experiences and establish
more profitable customer relationships. Siebel Systems' sales and
service facilities are located in more than 30 countries.
SILICON GRAPHICS: Dec. 26 Net Capital Deficit Widens to $240MM
--------------------------------------------------------------
Silicon Graphics (NYSE: SGI) announced results for its second
fiscal quarter, which ended December 26, 2003. GAAP revenue for
the quarter was $237.9 million, compared with $218.0 million for
the first quarter ended September 26, 2003. Gross margin was 46.7%
in the second quarter, up from 43.4% in the first quarter.
Operating expenses for the second quarter were $113.1 million,
compared with $138.2 million for the first quarter. SGI's second-
quarter operating loss was $2.1 million, compared with an
operating loss of $43.6 million in the first quarter. The
Company's second quarter results are consistent with the
preliminary results announced on January 8, 2004.
Non-GAAP operating expenses for the second quarter were $100.1
million, excluding $13.0 million in Other Operating Expense. This
compares with prior quarter non-GAAP operating expenses of $113.9
million, which excluded Other Operating Expense of $24.2 million.
These other operating expenses consisted of primarily severance
and non-cash charges relating to the previously announced
headquarters consolidation. SGI's second-quarter non-GAAP
operating profit was $10.9 million, compared to a non-GAAP
operating loss of $19.4 million in the first quarter.
"This was a quarter of significant progress for the company," said
Bob Bishop, Chairman and CEO of SGI. "The completion of our bond
exchange offer, coupled with solid operational performance and the
recently announced Altix 350 mid-range server has investors,
customers and partners taking a fresh look at the company. We're
confident, focused and ready to deliver value to all of our
stakeholders."
Unrestricted cash, cash equivalents and marketable investments on
December 26, 2003 were $108.8 million, in line with previous
guidance, as compared with $115.5 million at the end of the first
quarter.
The second-quarter net loss was $37.4 million or $0.18 per share,
compared with a net loss of $47.9 million or $0.23 per share in
the first quarter. This second quarter loss included a previously
announced non-cash charge of $30.5 million resulting from the
completion in December of the exchange offer for the 5.25% Senior
Convertible Debentures due September 2004.
At December 26, 2003, the Company's balance sheet shows a working
capital deficit of about $50 million and a total shareholders'
equity deficit of about $240 million.
SGI, also known as Silicon Graphics, Inc., is the world's leader
in high-performance computing, visualization and storage. SGI's
vision is to provide technology that enables the most significant
scientific and creative breakthroughs of the 21st century. Whether
it's sharing images to aid in brain surgery, finding oil more
efficiently, studying global climate or enabling the transition
from analog to digital broadcasting, SGI is dedicated to
addressing the next class of challenges for scientific,
engineering and creative users. With offices worldwide, the
company is headquartered in Mountain View, Calif., and can be
found on the Web at http://www.sgi.com/
SOLUTIA INC: Wants to Pull Plug on Monsanto Distribution Pact
-------------------------------------------------------------
M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher LLP, in New
York, recalls that the Solutia Debtors and New Monsanto Company
were both created as subsidiaries of Old Monsanto Company to
operate certain of Old Monsanto's business divisions. Before
September 1, 1997, Old Monsanto operated an agricultural products
business, a pharmaceuticals and nutrition business and a chemical
products business. Through a series of transactions entered into
between 1997 and 2002, Old Monsanto transferred the Chemicals
Business to the Debtors, transferred the Agricultural Business to
New Monsanto, and spun off the Debtors and New Monsanto to become
independent publicly owned companies. Old Monsanto currently
operates only the Pharmaceuticals Business. In April 2003, Old
Monsanto was acquired by Pfizer Inc., and is now Pfizer's wholly
owned subsidiary.
In connection with the Debtors' spin-off in 1997, Old Monsanto
and the Debtors entered into a distribution agreement, pursuant
to which the Debtors were required to assume financial
responsibility for, and to indemnify Old Monsanto against,
contingent, known and unknown liabilities related primarily to
the Chemicals Business, as well as:
(a) most of the remaining liabilities of sold or discontinued
businesses conducted by former Old Monsanto chemical units
or divisions;
(b) environmental remediation liabilities of Old Monsanto's
certain other sold or discontinued businesses; and
(c) liabilities associated with certain assumable commercial
paper.
Ms. Labovitz explains that the most significant liabilities
assumed by the Debtors under the Distribution Agreement relate
to:
* healthcare;
* life and disability insurance and pension costs for certain
of Old Monsanto's former employees who had retired before
the 1997 spin-off;
* environmental remediation;
* compliance and litigation defense; and
* judgment and settlement costs related to chemical products
formerly manufactured, released or used by Old Monsanto in
its operations and sites allegedly previously contaminated
by Old Monsanto.
Since the spin-off, the Debtors have spent, on average,
$100,000,000 a year to satisfy the Legacy Liabilities. In
addition to the tremendous expenditures that they have endured,
the Debtors expect that expenditures related to the Legacy
Liabilities would continue in future if they were to continue
performing under the Distribution Agreement.
Ms. Labovitz further informs the Court that in connection with
its spin-off in 2000, New Monsanto entered into a Separation
Agreement with Old Monsanto on September 1, 2000. Pursuant to
the Separation Agreement, New Monsanto agreed to indemnify Old
Monsanto for any liabilities of the Agriculture Business and the
Chemicals Business, including any liabilities assumed by the
Debtors under the Distribution Agreement to the extent that the
Debtors fail to pay, perform or discharge these liabilities. As
a result of the Separation Agreement, New Monsanto effectively
acts as a guarantor of the Debtors' indemnification obligations
under the Distribution Agreement.
On July 1, 2002, the Debtors, Old Monsanto and New Monsanto
entered into an amendment to the Distribution Agreement, wherein
the Debtors agreed to indemnify New Monsanto for losses it
suffered as a result of the Debtors failure or inability to
fulfill their obligations to Old Monsanto. In addition to the
July 1, 2002 amendment, the Distribution Agreement has been
amended or supplemented several other times.
Beyond the Distribution Agreement, the Debtors and certain of
their affiliates, on one hand, and Old Monsanto or New Monsanto,
on the other hand, are parties to a variety of other agreements.
The Debtors, for instance, are party to certain agreements with
Old Monsanto that relate to ongoing operations at manufacturing
plants in the United States and Europe.
Accordingly, the Debtors seek the Court's authority to reject the
Distribution Agreement pursuant to Section 365 of the Bankruptcy
Code.
Ms. Labovitz contends that the Distribution Agreement is not
necessary to the Debtors' current operations and that assumption
of the Distribution Agreement would not enhance prospects for a
successful reorganization. The enormous Legacy Liabilities and
other financial burdens heaped on the Debtors are among the
principal causes of their financial difficulties. The Debtors'
rejection of the Distribution Agreement will relieve them of
these burdens on an ongoing basis and will result in any
resulting damage claim being treated as an unsecured prepetition
claim pursuant to Section 365(g), thus allowing them to focus on
their ongoing business operations and on their emergence from
their Chapter 11 cases as healthier, reorganized companies
without the shadow of the Legacy Liabilities.
The Debtors believe that the total potential exposure relating to
the Chemicals Business, which was operated by Old Monsanto for
nearly 100 years before the spin-off, greatly exceeds any
potential claims that might be asserted against them relating to
the Pharmaceuticals Business and the Agriculture Business,
particularly given the ability of any claimants to pursue Old
Monsanto or New Monsanto directly. The Debtors' obligations on
account of the Legacy Liabilities can be projected to run to the
hundreds of millions of dollars. Whatever value may exist by
virtue of the indemnification of the Debtors in the Distribution
Agreement is undoubtedly substantially less than this amount and
is further reduced because all claims against the Debtors
relating to the Pharmaceuticals Business and the Agriculture
Business will be discharged through these bankruptcy cases.
Furthermore, given the nature and magnitude of the liabilities
imposed upon them under the Distribution Agreement, the Debtors
not believe that it can be assigned for value. (Solutia Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SPECTRUM SCIENCES: Completes Significant Debt Restructuring Deal
----------------------------------------------------------------
Spectrum Sciences & Software Holdings Corp. (OTC Bulletin Board:
SPSC), highly focused on Homeland Security through the provision
of full service, quality solutions to complex and diverse
government matters, completed a significant debt restructuring
with its principal lender.
The restructuring agreement, executed on December 31, 2003 with
SouthTrust Bank, the company's principal lender, extends the
maturity dates on all outstanding indebtedness, resulting in a
more favorable long-term classification. Pursuant to the terms of
the restructuring, the company and SouthTrust agreed to extended
terms of the company's total debt of approximately $2.4 million,
reclassifying approximately $1.7 million as long term. The bank's
agreement is largely based on Spectrum's performance and improving
financial condition. On a current basis, the company has
liquidated approximately $1.8 million in principal, representing
approximately 60% of the original debt. In addition, with the
extension of the maturity dates of the loans, the debt payments
are reduced by an annualized $120,000.
Consistent with the Spectrum 2004 strategic plan is the company's
intention to liquidate an additional $1.7 million in real estate
loans through the sale of the attendant real estate holdings,
currently with an estimated appraised value of approximately $2.75
million. The $1.7 million represents a significant portion of the
company's total $2.4 million in bank debt.
"Pursuant to our 2004 strategic plan, we are fully committed to
creating a debt free company by the conclusion of our fiscal
year," stated Nancy Gontarek, chief financial officer for
Spectrum. "The bank restructuring is an important component in
our mission of improving cash flow, enhancing our balance sheet
and improving efficiencies."
Spectrum Sciences & Software Holdings Corp. is highly focused on
Homeland Security through the provision of full service, quality
solutions to complex and diverse government matters. Spectrum is
dedicated to providing innovative, dependable and cost-effective
products and services to a broad range of government customers and
is headquartered in Fort Walton Beach, Florida. Founded in 1982,
the company currently has over 130 employees. Primary markets
include engineering services, operation, maintenance, information
technology and manufacturing. Spectrum provides and maintains
Software Model Development and Safety Footprint Development to the
Air Force, Army, Navy and many of our allied nations. Spectrum
also operates and manages the largest air-to-ground bombing range,
located in Gila Bend, in the United States. The Information
Technology Division provides a full range of IT services including
web site development and hosting, software development and GIS
services. To find out more about Spectrum, visit its Web site at
http://www.specsci.com/
At September 30, 2003, Spectrum Sciences' balance sheet shows a
working capital deficit of about $3 million, and a total
shareholders' equity deficit of about $1 million.
TRICO MARINE: Pursuing Refinancing Options to US Credit Facility
----------------------------------------------------------------
Trico Marine Services, Inc. (Nasdaq: TMAR) announced its efforts
to arrange a new $50 million senior secured credit facility, the
proceeds of which would be used to refinance its existing U.S.
revolving credit facility.
The Company has previously indicated that it does not expect to be
able to comply with the debt covenants under its U.S. Dollar
Facility. The Company anticipates that the new senior secured
credit facility will have a five year maturity, while the U.S.
dollar facility is scheduled to mature December 2005.
In addition to extending the maturity for the Company's credit
facility, the refinancing would also provide incremental available
liquidity.
The completion of the new credit facility is subject to a number
of conditions, including the completion of definitive
documentation. While Trico is confident about the prospect for
the new credit facility, no assurance can be given that the
facility can be arranged on terms and conditions acceptable to
Trico. In the event Trico is unable to obtain this new facility
on acceptable terms, the Company would be required to negotiate an
amendment or obtain a waiver from the lenders under its existing
facility.
Trico Marine (S&P, B Corporate Credit Rating, Negative) provides a
broad range of marine support services to the oil and gas
industry, primarily in the Gulf of Mexico, the North Sea, Latin
America, and West Africa. The services provided by the Company's
diversified fleet of vessels include the marine transportation of
drilling materials, supplies and crews, and support for the
construction, installation, maintenance and removal of offshore
facilities. Trico has principal offices in Houma, Louisiana, and
Houston, Texas. Visit http://www.tricomarine.com/for more
information on the Company.
ULTRA EXPRESS: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Ultra Express Coach Inc.
15 Newark Avenue
Staten Island, New York 10302
Bankruptcy Case No.: 04-10158
Type of Business: The Debtor is a transportation provider, which
utilizes individually, designed limousine style
coaches. The Debtor's staff of highly skilled
drivers provides a professional service of
unparalleled quality. See
http://www.ultraexpress.com/
Chapter 11 Petition Date: January 7, 2004
Court: Eastern District of New York (Brooklyn)
Judge: Carla E. Craig
Debtor's Counsel: Charles R. Tropp, Esq.
30 Bay Street
Staten Island, NY 10301
Tel: 718-720-6060
Fax: 718-442-0923
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
US Bancorp Vehicle Lessor $668,279
13010 SW 68th Pkwy
Portland OR 97223
Commercial & Ind Cap Corp SIEDC Loan $133,344
Verizon Information Services Advertising $117,744
Best Trails & Travels Sub-contractor $45,000
Gala Tours Inc. Sub-contractor $44,970
SI Bank & Trust Bank Loan $44,350
American Express TRS Co. Credit Card $35,002
Bridgeview Petroleum LLC Fuel Service $27,019
Omega Express Ltd Sub-contractor $23,500
MCI Sales and Service Inc. Service & Repairs $21,549
Six Flaggs Great Adventure Tour fees $20,666
CitiBusiness Platinum Credit Card $12,078
Call-A-Head Corp. Waste service $9,333
Nextel Communications Telephone service $8,496
Ultimate Motor Coach Sub-contractor $8,000
Jo-Mac Truck Repair Inc. Repairs and service $7,824
Easton Coach Company Sub-contractor $7,250
Ambassador Publications Inc. Advertising $6,336
D and K Fuel LLC Fuel Service $6,220
Numero Uno Inc. Sub-contractor $6,000
UNIFI INC: Second-Quarter 2004 Net Loss Balloons to $9 Million
--------------------------------------------------------------
Unifi Inc. (NYSE: UFI), released operating results for its second
quarter of fiscal year 2004.
The Company reported a net loss of $9.2 million or 18 cents per
share for the quarter ending December 28, 2003, which compares to
a net loss of $2.2 million or 4 cents per share for the prior year
December quarter. The Company also reported a net loss of $13.8
million or 26 cents per share for the first half of fiscal 2004
versus net income of $2.2 million or 4 cents per share for the
first six months of fiscal 2003.
Net sales for the December quarter of $183.7 million reflect a
decrease of 9.0 percent compared to net sales of $201.9 million
for the prior year December quarter. Fiscal 2004 year-to-date net
sales of $363.9 million reflect a 14.1 percent decrease from net
sales of $423.4 million reported for the first six months of
fiscal 2003. Net sales decline for the current quarter and
year-to-date have been negatively impacted by changes in product
mix, the continued increases in imported fabric and apparel, and
the ongoing softness in the domestic textile and apparel
industries, resulting in an inordinate curtailment of production
in the month of December.
Net income for the current quarter was negatively impacted by a
reduction in earnings from the Company's unconsolidated equity
affiliates, which face the same challenging business and economic
conditions as the Company. The Company reported a pre-tax loss of
$0.1 million for the current December quarter from its share of
income from its equity affiliates compared to pre-tax income of
$2.6 million for the prior year December quarter.
Also included in the December 2003 quarterly results is a pre-tax
benefit, included in cost of sales, of $7.0 million generated by
the Company's manufacturing alliance with DuPont, which is
slightly below the $7.8 million benefit realized in the prior year
December quarter.
Continuing its ongoing strategic focus on strengthening its
balance sheet, the Company ended the December quarter without any
funded bank debt and reduced inventories to $115.1 million, a 7.6
percent reduction from inventories of $124.5 million as of the end
of September 2003. The Company ended the December quarter with
cash-on-hand of $59.3 million.
Brian Parke, chief executive officer for Unifi, said, "The first
two quarters of this fiscal year have continued to demonstrate
that imports of apparel and home goods at lower price points are
continuing to drive production offshore at a steady pace. Our
performance in this current quarter reflects this, as well as
similar pressures on our equity affiliates."
"Despite the fact that we have reduced our employment base from
approximately 5,500 to approximately 4,100 since December 2002, it
is obvious that with the continued pressure on pricing, we will be
taking further action to reduce our operating costs. In addition,
we remain committed to our downstream marketing efforts to
counterbalance this trend and to completing our acquisition in
China."
Unifi Inc. (NYSE: UFI) (S&P, B+ Corporate Credit and Senior
Unsecured Debt Ratings, Negative Outlook) is one of the world's
largest producers and processors of textured yarns. The company's
primary business is the texturing, dyeing, twisting, covering, and
beaming of multi-filament polyester and nylon yarns. Unifi's
textured yarns are found in home furnishings, apparel, and
industrial fabrics, automotive, upholstery, hosiery, and sewing
thread. For more information about Unifi, visit
http://www.unifi-inc.com/
UNITED AIRLINES: Flight Attendants Refusing to Sign Agreement
-------------------------------------------------------------
Just as the concessionary contract agreed to by United Airlines
management last spring finally arrived in the offices of the
carrier's flight attendant union, United management announced its
intent to illegally cut retiree health benefits and raise retiree
out of pocket costs, raising legal issues significant enough to
jeopardize the signing of the concessionary agreement by union
President Patricia Friend.
"I am not taking any action, including signing the contract, that
could be perceived as affirming the validity of the illegal cuts
United wants to make," said Friend, President of the Association
of Flight Attendants - CWA, AFL-CIO. "The court of public opinion
will decide if United is morally and ethically bankrupt. We are
going to fight in bankruptcy court and through every other legal
means possible to make sure United lives up to the contract it
agreed to so these devastating cuts don't happen."
Attorneys for the flight attendants say United management's
deceitful actions call into question the product and validity of
the concessionary negotiations. AFA is considering a number of
legal actions in addition to not signing the contract, including:
asking the bankruptcy court to set aside the 1113 relief (the
concessionary contract approved by the court last May), a bad
faith bargaining suit, a motion to compel United to allow peopek.
As part of that deal, United management signed a letter of
agreement in May 2003 to ensure that flight attendants retiring
before July 1, 2003 would have access to health care benefits that
were less costly and more comprehensive than those that would be
in place for those who retire after that date. Based on that
promise, over 2,500 flight attendants retired before the July 1
deadline.
United is now seeking to slash the medical benefits and
significantly raise the out-of-pocket costs for those retirees
despite the airline's return to profitability. The cuts are not
necessary for United's successful reorganization.
"People I worked with for 30 years retired because the deal United
management made was to limit health costs to those who retired
before July 1, 2003," said Friend. "Now those dedicated workers
won't be able to afford health care, or retirement, without
government assistance because of the lawlessness and callousness
United is displaying by reneging on that deal."
AFA has received hundreds of calls from retirees asking if
anything can be done through the courts to help protect them. All
say they cannot afford the massive financial hit they will take
after United forces them to pay hundreds of dollars per month of
their already modest pensions just to continue health insurance.
More than 46,000 flight attendants, including the 21,000 flight
attendants at United, join together to form AFA, the world's
largest flight attendant union. AFA is part of the 700,000 member
strong Communications Workers of America, AFL-CIO. Visit
http://www.unitedafa.org/
UNITED AIRLINES: Lauds Gov't Effort to Reduce O'Hare Congestion
---------------------------------------------------------------
United Airlines (OTC Bulletin Board: UALAQ) fully supports the
U.S. government's plans to address congestion issues at O'Hare
International Airport.
"This is great news for United's customers whose travel plans
include O'Hare," said Pete McDonald, United's Executive Vice
President - Operations. "A reduction in the number of flights
operating at the airport during the busier times of day will
provide United's customers with the levels of service and
reliability that they deserve.
"We want to thank Senator Durbin, Secretary Mineta, FAA
Administrator Marion Blakey and Chicago's Mayor Daley for their
leadership and willingness to work with United to find a solution
to the growing number of delays at O'Hare," McDonald added.
Effective March 2004, United will reduce its flight schedule at
O'Hare by 5% between 1 p.m. and 8 p.m. -- the busiest period of
the day at the airport. This action is part of an agreement
reached between The Government and United to reduce congestion at
the airport. In addition to reducing flights, United also will
de-peak its schedule at O'Hare beginning in February as another
means of easing congestion at the airport.
United and United Express operate more than 3,400 flights a day on
a route network that spans the globe. News releases and other
information about United may be found at the company's Web site at
http://www.united.com
UNIVERSAL HEALTH: Declares Cash Dividend Payable on March 15
------------------------------------------------------------
Universal Health Services, Inc. (NYSE: UHS) announced that its
Board of Directors voted to pay a cash dividend of $0.08 per share
on March 15, 2004 to shareholders of record as of March 1, 2004.
Universal Health Services, Inc. is one of the nation's largest
hospital companies, operating acute care and behavioral health
hospitals, ambulatory and radiation centers nationwide, in Puerto
Rico and in France. It acts as the advisor to Universal Health
Realty Income Trust, a real estate investment trust (NYSE: UHT).
For additional information on the Company, visit
http://www.uhsinc.com/
Universal Health Services' 0.426% bonds due 2020 are currently
trading way below par at about 65 cents-on-the-dollar.
US AIRWAYS: Allows Allegheny Airport's $211 Million Claim
---------------------------------------------------------
On March 30, 2003, the US Airways Debtors gave notice of their
intent to reject 18 agreements with the Allegheny County Airport
Authority. The rejected agreements include an Airline Operating
Agreement and Terminal Lease, dated June 9, 1988, between USAir
Inc., and the Authority.
The Authority filed Claim Nos. 2018, 2019, 3403, 4513, 5484,
5486, 5490, 5491 and 5492. The Reorganized Debtors disputed the
Claims.
To settle the dispute, the parties stipulate and agree to allow
Claim No. 5486 as a single, general unsecured class USAI-7 Claim
for $211,000,000. All other Claims are withdrawn with prejudice.
(US Airways Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
U.S. STEEL: Holding Q4 and FY 2003 Conference Call on January 30
----------------------------------------------------------------
United States Steel Corporation (NYSE: X) announced that
interested shareholders, investors and others may listen to the
company's fourth quarter and full year 2003 conference call with
securities analysts on Friday, January 30, at 2 p.m. EST on the
U. S. Steel web site. The call will cover fourth quarter and full
year 2003 financial results and may include forward-looking
information.
U. S. Steel officials participating in the call will be Thomas J.
Usher, chairman and CEO; John P. Surma, president and COO;
Gretchen R. Haggerty, executive vice president, treasurer and CFO;
and John Quaid, manager-investor relations.
Interested parties can visit the web site at
http://www.ussteel.com/and click on the "Investors" button to
access the webcast. Replays of the conference call will be
available on the U. S. Steel web site after 5:00 p.m. on
January 30.
Financial information, including earnings releases, certain SEC
filings and other investor-related material, is also available at
the company's web site.
United States Steel Corporation (S&P, BB- Corporate Credit Rating,
Negative) is engaged domestically in the production, sale and
transportation of steel mill products, coke and taconite pellets
(iron ore); steel mill products distribution; the management of
mineral resources; the management and development of real estate;
engineering and consulting services; and, through U. S. Steel
Kosice in the Slovak Republic and U. S. Steel Balkan, d.o.o. in
Serbia, in the production and sale of steel mill products and coke
primarily for the central and western European markets. As
mentioned in Note 5, effective June 30, 2003, U. S. Steel is no
longer involved in the mining, processing and sale of coal.
For more information about U.S. Steel visit
http://www.ussteel.com/
USEC INC: Will Publish Q4 & FY 2003 Results on February 3, 2004
---------------------------------------------------------------
USEC Inc. (NYSE:USU) will broadcast its next quarterly conference
call with shareholders and the financial community over the
Internet on Wednesday, February 4 at 8:30 a.m. ET. The Company
will release its earnings for the fourth quarter and full year
ended December 31, 2003 at the close of markets on Tuesday,
February 3, 2004.
The regularly scheduled call with shareholders and analysts will
be open to listeners who may log in through the Company's Web site
at http://www.usec.com/
A link to the call will be located in the Investor Relations
section, and a replay will be available through February 16. Those
interested in listening via the Internet should test their audio
software in advance of the call to assure access.
USEC Inc. (NYSE:USU) (S&P, BB Corporate Credit Rating, Stable), a
global energy company, is the world's leading supplier of enriched
uranium fuel for commercial nuclear power plants.
USG CORP: Trade Creditors Sell 226 Claims Totaling $1.1 Million
---------------------------------------------------------------
From November 5, 2003 to January 14, 2004, the Clerk of Court
recorded $1,103,677 in claim transfers.
Of the 226 claims, Debt Acquisition Company of America V, LLC
bought 170 claims totaling $232,026. Amroc Investments, LLC went
home with eight claims amounting to $523,068. Argo Partners,
Inc. acquired eight claims totaling $202,170. Fair Harbor
Capital, LLC bought 36 claims totaling $138,283. Sierra
Liquidity Fund also bought seven claims amounting to $8,130. (USG
Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WESTPOINT STEVENS: Signs-Up Dickstein Shapiro as Special Counsel
----------------------------------------------------------------
Before the Petition Date, the WestPoint Stevens Debtors and
certain predecessors-in-interest purchased various corrugated
containers and corrugated sheets from the Linerboard
Manufacturers. The Debtors and other purchasers of Linerboard
Products have commenced actions against 13 Linerboard
Manufacturers alleging that the manufacturers fixed prices of
Linerboard Products in violation of federal anti-trust laws. The
Linerboard Litigation is pending in the United States District
Court for the Eastern District of Pennsylvania. Based on current
calculations, the Debtors have an estimated claim for several
million dollars.
John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP, in New
York, relates that the Debtors are one among 62 plaintiff clients
represented by the law firm Dickstein Shapiro Morin & Oshinsky
LLP. As a result of its prepetition representation of the
Debtors, Dickstein has obtained valuable knowledge of the
particular facts and issues raised in the Linerboard Litigation.
The knowledge makes Dickstein uniquely qualified to represent the
Debtors in the Linerboard Litigation. The Debtors believe that
Dickstein's continued representation will promote efficiency and
avoid unnecessary duplication of effort by substituting new
counsel. The Debtors further contend that Dickstein's employment
pursuant to the terms of an engagement letter dated May, 28,
2003, is fair, reasonable, and consistent with industry
standards.
Accordingly, the Debtors seek the Court's authority to employ
Dickstein as their special litigation counsel in connection with
the Linerboard Litigation, nunc pro tunc to the Petition Date.
Pursuant to the Employment Agreement, Dickstein will be
compensated for its services on an existing contingency fee
basis, with the fees payable if and only when the firm is
successful in achieving a recovery in the Linerboard Litigation
for the benefit of the Debtors. Dickstein's contingent fee will
be 36% calculated against any and all recoveries, whether by
settlement or judgment, on behalf of the Debtors. In addition,
in the event the Linerboard Litigation is tried, in whole or in
part, Dickstein will also receive statutory award of attorneys'
fees paid by the Linerboard Defendants.
Mr. Rapisardi states that during the year immediately preceding
the Debtors' bankruptcy cases, Dickstein earned no fees in
respect of its work on the Linerboard Litigation, and earned fees
amounting to $15,628 in respect of its work relating to
intellectual property matters, all of which fees remain
outstanding and unpaid.
Thus, Dickstein holds an attorney's lien and related claims
against any recovery in the Linerboard Litigation under
applicable law on account of prepetition services under the
existing contingent fee agreement. Dickstein also holds an
attorney's lien and related claims against the Debtors for
$15,628 with respect to prepetition services rendered in
connection with various intellectual property matters.
Mr. Rapisardi also explains that because Dickstein is prosecuting
the Linerboard Litigation on behalf of all members of the
Dickstein Client Group, the vast majority of professional
services rendered by the firm will be for the collective benefit
of all its plaintiff clients, rather than for the benefit of any
single plaintiff client. Consequently, Dickstein is unable to
specifically allocate its hourly professional services to any
specific plaintiff client. The Debtors, therefore, request that
Dickstein be excused from complying with the Court's requirements
for fee applications. Instead, the Debtors request that
Dickstein be required to file fee applications with respect to
and at the time of each and any recovery from one or more
defendants that:
(i) briefly summarizes the nature of the professional
services rendered to the Debtors in connection with the
Linerboard Litigation;
(ii) identifies the total dollar amount of the Debtors'
recovery; and
(iii) calculates Dickstein's contingent professional fee as
the result of the Debtors' recovery.
R. Bruce Holcomb, a partner at Dickstein, assures the Court that
the firm does not have any connection with or interest adverse to
the Debtors, their creditors, or any other party-in-interest.
Dickstein also does not represent any entity other than the
Debtors in matters related to their Chapter 11 cases.
The Debtors also ask the Court to approve certain anticipated
settlements in accordance with Rule 9019(b) of the Federal Rules
of Bankruptcy Procedure, based on the condition of Supermajority
Approval. As in most complex multi-district litigation cases, it
is probable that some or all of the claims held by Dickstein
Client Group members will be resolved through a series of
separate settlements with individual or small subgroups of
Linerboard Defendants. Settlement recoveries can be maximized by
making strategic decisions about which of the jointly and
severally liable defendants should be permitted to avoid trial
through settlement. Defendants that settle later in the case are
traditionally required to pay escalating settlement amounts.
Because of the large size of the Dickstein Client Group, the
Dickstein lawyers should be able to employ considerable
settlement leverage in discussions with the Linerboard
Defendants. Consequently, Dickstein should be able to achieve
the best possible settlements for the members of the Dickstein
Client Group.
The Debtors further seek the Court's authority to enter into
binding and final settlement agreements with respect to claims
against the Linerboard Defendants, provided that any settlement
agreements are otherwise approved by at least 80% of the
individual members of the Dickstein Client Group at the time of
each settlement. In the event a proposed settlement with one or
more of the Linerboard Defendants is not approved by at least 80%
of the Dickstein Client Group members, but is nonetheless
supported by the Debtors, the Debtors will file an appropriate
request seeking approval of any such settlement.
With respect to each and every settlement or other recovery made
on their behalf in connection with the Linerboard Litigation, the
Debtors request that Dickstein be expressly authorized to deliver
to them the net proceeds of each and every settlement or other
recovery and retain its applicable contingency fee, calculated on
the recoveries received, in Dickstein's trust account pending
Bankruptcy Court approval of a corresponding contingent fee
application and the authorization of the payment of the
contingency fee to Dickstein. (WestPoint Bankruptcy News, Issue
No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WEYERHAEUSER: Selling Slave Lake Mill to Tolko for CDN$56 Million
-----------------------------------------------------------------
Weyerhaeuser Company (NYSE: WY) and Tolko Industries signed a
letter of intent for the sale to Tolko of the Weyerhaeuser
oriented strand board mill located at Slave Lake, Alberta for
approximately $C56 million ($US43 million).
The transaction is targeted to close on February 27, 2004, and is
subject to approval by the Weyerhaeuser board of directors, as
well as government and other required approvals.
"We are pleased to have reached an agreement with Tolko," said
William R. Corbin, executive vice president for Weyerhaeuser's
Wood Products businesses. "Weyerhaeuser remains committed to
maintaining a strong presence within the forest industry in
Alberta, but we believe that the Slave Lake mill offers strategic
benefits to Tolko that Weyerhaeuser has chosen not to pursue.
This is yet another step we are making within Wood Products to
improve the competitive performance of our overall portfolio."
Bill Blankenship, vice president Engineered Panels for
Weyerhaeuser added: "We will continue focus on our business
priority of serving our customers from our other facilities as we
improve our competitive position."
The Slave Lake OSB mill has annual production capacity of 240
million square feet (3/8-inch basis), and a timber allocation of
approximately 600,000 cubic meters per year. The mill directly
employs about 140 people.
Weyerhaeuser acquired the Slave Lake mill in 1992. In Alberta,
Weyerhaeuser also operates two other OSB mills at Edson and
Drayton Valley; a pulp mill at Grande Prairie, sawmills in Grande
Prairie and Drayton Valley; an engineered products plant at
Claresholm, as well several sales and customer service centers.
Weyerhaeuser Company (Fitch, BB+ Senior Unsecured Long-Term
Ratings, Stable Outlook), one of the world's largest integrated
forest products companies, was incorporated in 1900. In 2002,
sales were $29.1 billion ($18.5 billion US). It has offices or
operations in 18 countries, with customers worldwide.
Weyerhaeuser is principally engaged in the growing and harvesting
of timber; the manufacture, distribution and sales of forest
products; and real estate construction, development and related
activities. Weyerhaeuser Company Limited, a wholly owned
subsidiary, has Exchangeable Shares listed on the Toronto Stock
Exchange under the symbol WYL. Additional information about
Weyerhaeuser's businesses, products and practices is available at
http://www.weyerhaeuser.com/
WICKES INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Wickes Inc.
706 North Deerpath Drive
Vernon Hills, Illinois 60061
Bankruptcy Case No.: 04-02221
Type of Business: The Debtor is a retailer and manufacturer of
building materials, catering to residential
and commercial building professionals, repairs
and remodeling contractors and project do-it-
yourself consumers. See http://www.wickes.com/
Chapter 11 Petition Date: January 20, 2004
Court: Northern District of Illinois (Chicago)
Judge: Bruce W. Black
Debtor's Counsel: Richard M. Bendix Jr., Esq.
Schwartz Cooper Greenberger & Krauss
180 North Lasalle Street Suite 2700
Chicago, IL 60601
Total Assets: $155,453,000
Total Debts: $168,199,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
HSBC Bank USA Bondholder $21,123,000
452 Fifth Avenue
New York, NY 10018-0200
Owens Corning Trade Debt $1,681,539
One Owens Corning Parkway
Toledo, OH 43659
Georgia Pacific Corporation Trade Debt $1,165,677
4300 Wildwood Parkway
Atlanta, GA 30348
Iowa Industrial Erectors Lawsuit $552,314
Corp. c/o Steven Moore
Rasmussen, Willis, Dickey
& Moore
9200 Ward Parkway, Suite 310
Kansas City, MO 64114
Paris-Ballys Hotel & Casino Services(Hotel) $495,072
3645 Las Vegas Blvd. South
Las Vegas, NV 89109
Bailey's Lumber & Supply Co. Trade Debt $471,504
813 E. Pass Road
Gulfport, MS 39507
MI Home Products Trade Debt $356,507
650 W. Market Street
Gratz, PA 17030-0370
Buildscape Inc. Contract Dispute $333,332
7751 Belfort Parkway Ste 200
Jacksonville, FL 32256
AW Hastings of Ct. Inc. Trade Debt $255,800
P.O. Box 15500
Worcester, MA 01615
Merillat Industries Trade Debt $240,268
Schrock Cabinet Co. Trade Debt $202,068
Prime Source Inc. Trade Debt $192,352
Well, Gotschal & Manges LLP Professional Fees $155,478
Barnett Millwork Trade Debt $152,222
Huttig Building Products Trade Debt $145,495
United States Gypsum Trade Debt $140,195
Rehkemper & Sons, Inc. Trade Debt $129,813
Yorktowne Inc. Trade Debt $127,081
Kentucky Wholesale Bldg. Trade Debt $125,158
Prod.
Middle Atlantic Whise Trade Debt $123,843
WRC MEDIA INC: Lenders Waive Potential Loan Covenant Violations
---------------------------------------------------------------
On December 30, 2003, WRC Media Inc. received a waiver until
March 31, 2004 from the lenders under its credit agreement for its
expected non-compliance with certain financial covenants as of
December 31, 2003, subject to certain conditions.
The lenders under the Company's credit agreement have granted the
Company a waiver through March 31, 2004 with respect to the
Company's expected non-compliance with certain of the financial
covenants in its credit agreement as of December 31, 2003. The
waiver expires on March 31, 2004 and could terminate earlier upon
the occurrence of specified events, including the occurrence of an
event of default under the Company's credit agreement.
The Company currently has $13,000,000 in total borrowings,
including revolving loans and letters of credit, outstanding under
its revolving credit facility. Under the terms of the waiver, the
Company will be permitted to borrow an additional $13,000,000
under its revolving credit facility so long as the conditions to
future borrowings are satisfied.
Based on the Company's current forecast, if the Company is able to
continue to borrow under its revolving credit facility as provided
in the waiver, the Company believes such borrowings, together with
its current cash position, will be sufficient to pay its current
obligations through April 2004, after which it will begin to have
shortfalls in liquidity, unless the Company successfully amends or
refinances its existing credit facility.
The Company is currently in discussions with its lenders with
respect to amending the existing credit facility and is pursuing
the potential refinancing of a portion of its borrowings
thereunder. While the Company expects to complete an amendment of
the credit facility by March 31, 2004, it can give no assurances
as to whether the Company will be successful in achieving any such
amendment or refinancing, or if successful, when such transaction
would be completed, or what the impact on its costs of financing
would be. Unless the Company obtains an additional waiver or
successfully amends its credit agreement to make the financial
covenants less stringent or consummates an alternative financing
or other transaction, (a) the lenders under the Company's credit
agreement will have the right upon expiration of the waiver on
March 31, 2004, to declare an event of default with respect to the
Company's expected non-compliance with certain of its financial
covenants as of December 31, 2003, and (b) the Company does not
expect to be in compliance with certain of its financial covenants
as of March 31, 2004.
WRC Media Inc., a leading publishing and media company, creates
and distributes innovative supplementary educational materials for
the school, library, and home markets. WRC Media's product suite
includes some of the best-known brands in education, recognized
for their consistent high quality and proven effectiveness.
* BOOK REVIEW: The Rise and Fall of the Conglomerate Kings
----------------------------------------------------------
Author: Robert Sobel
Publisher: Beard Books
Softcover: 240 pages
List Price: $34.95
Review by David Henderson
Order your personal copy today at
http://www.amazon.com/exec/obidos/ASIN/1893122476/internetbankrupt
The marvelous thing about capitalism is that you, too, can be a
Master of the Universe. If you are of a certain age, you will
recall that is the name commandeered by Wall Street bond traders
in their Glory Days. Being one is a lot like surfing: you have to
catch the crest of the wave just right or you get slammed into the
drink, and even the ride never lasts forever. There are no
Endless Summers in the market.
This book is the behind-the-scenes story of the financial wizards
and bare-knuckled businessmen who created the conglomerates, the
glamorous multi-form companies that marked the high noon of post-
World War II American capitalism. Covering the period from the
end of the war to 1983, the author explains why and how the
conglomerate movement originated, how it mushroomed, and what
caused its startling and rapid decline. Business historian Robert
Sobel chronicles the rise and fall of the first Masters of the
Universe in the U.S. and describes how the era gave rise to a
cadre of imaginative, bold, and often ruthless entrepreneurs who
took advantage of a buoyant stock market to create giant
enterprises, often through the exchange of overvalued paper for
real assets. He covers the likes of Royal Little (Textron), Text
Thornton (Litton Industries), James Ling (Ling-Temco-Vought),
Charles Bludhorn (Gulf & Western) and Harold Geneen (ITT). This
is a good read to put the recent boom and bust in a better
perspective.
While these men had vastly different personalities and processes,
they had a few things in common: ambition, the ability to seize
opportunities that others were too risk-averse to take, willing
bankers, and the expansive markets of the 1960s. There is
something about an expansive market that attracts and creates
Masters of the Universe. The Greek called it hubris.
The author tells a good joke to illustrate the successes and
failures of the period. It seems the young son of a
Conglomerateur brings home a stray mongrel dog. His father asks,
"How much do you think it's worth?" To which the boy replies, "At
least $30,000." The father gently tries to explain the market for
mongrel dogs, but the boy is undeterred and the next afternoon
proudly announces that he has sold the dog for $50,000. The
father is proudly flabbergasted, "You mean you found some fool
with that much money who paid you for that dog?" "Not exactly,"
the son replies, "I traded it for two $25,000 cats."
While it lasted, the conglomerate struggles were a great slugfest
to watch: the heads of giant corporations battling each other for
control of other corporations, and all of it free from the rubric
of "synergy." Nobody could pretend there was any synergy between
U.S. Steel and Marathon Oil. This was raw capitalist power at
work, not a bunch of fluffy dot.commies pretending to defy market
gravity.
History repeats itself, endlessly, because so few people study
history. The stagflation of the 1970s devalued the stock of
conglomerates and made it useless a currency to keep the schemes
afloat. The wave crashed and waiting on the horizon for the next
big wave: the LBO Masters of the 1980s.
Robert Sobel was born in 1931 and died in 1999. He was a prolific
chronicler of American business life, writing or editing more than
50 books and hundreds of articles and corporate profiles. He was
a professor of business history at Hofstra University for 43 years
and he a Ph.D. from NYU.
*********
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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herein is obtained from sources believed to be reliable, but is
not guaranteed.
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