/raid1/www/Hosts/bankrupt/TCR_Public/040305.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, March 5, 2004, Vol. 8, No. 46
Headlines
21ST CENTURY: Declares Quarterly Dividend Payable on June 1
ADELPHIA COMMS: New Capital Structure Based on Chapter 11 Plan
ADVANSTAR COMMUNICATIONS: Reports Positive 2003 Operating Results
AHOLD: President & CEO Anders Moberg at Shareholders' Meeting
AHOLD: Divests Thai Operation & Withdraws from Asia Completely
AINSWORTH LUMBER: Completes Private Placement of 6.750% Sr. Notes
AIRGAS INC: Selling $150 Million Senior Subordinated Notes
ALLEGHENY: Files Declaration Seeking to Amend Charter & Bylaws
AMAZON.COM INC: Jeffrey Bezos Discloses 26.1% Equity Stake
AMERICA WEST AIRLINES: Reports Record February 2004 Traffic
AMERISTAR: S&P Revises Outlook to Positive over Solid Performance
ANTARES PHARMA: Joseph Edelman Discloses 11.88% Equity Stake
APPLIED EXTRUSION: Will Present at Lehman Brothers March 22 Conf.
BIOVAIL CORPORATION: Provides Updated 2004 Guidance
BUDGET GROUP: Obtains Nod to Pay Peter Wemple's Defense Cost
CMS ENERGY: Will Disclose 2003 Earnings Result on March 10, 2004
CONSTANCE DIRAGO: Voluntary Chapter 11 Case Summary
ENRON CORP: Asks Court to Expunge $5 Million HoustonStreet Claim
ENRON CORP: ACON Investments Buys Mariner Energy for $271 Million
EXIDE TECH: Overview & Summary of Joint Reorganization Plan
FLEMING COS: Wants Plan-Filing Exclusivity Stretched to June 30
FLOWSERVE: Acquires Remaining Shares Of Thompsons, Kelly & Lewis
FOOTSTAR: Obtains Court Nod to Access New $300 Mil Credit Facility
FOSTER WHEELER: Names William Diaz as Director & GM in Puerto Rico
GENTEK INC: J.P. Morgan Chase Discloses 8.5% Equity Stake
GENTEK: S&P Assigns Low-B Credit & Senior Secured Debt Ratings
GLOBAL CROSSING: Qwest Presses for Payment of $500K Admin. Claim
HINES HORTICULTURE: Calif. State Teachers Reports 11.42% Equity
FRIENDLY ICE CREAM: Prices $175 Million of 8.375% Senior Notes
INFOUSA: Hires Two Senior Managers to Grow Small Business Sales
INTERPOOL INC: Completes & Files March 2003 Form 10-Q with SEC
INTERPOOL INC: Confirms James Walsh's Appointment as New CFO
IT GROUP: Proposes Pact to Settle Chevron Environmental Claim
JASCO ENTERPRISES: Case Summary & 15 Largest Unsecured Creditors
JOEAUTO INC: Section 341(a) Meeting Scheduled on March 11, 2004
JPG INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
JP MORGAN: Fitch Affirms D Rating on Series 1999-C8 Class K Notes
KENNEDY MANUFACTURING: Has Until March 12 to File Schedules
L-3: Wins $26MM+ Contract for Detection System in Israel Airport
LTV CORP: Airs Objections to Various Administrative Expense Claims
METRIS COMPANIES: $500MM Securitization Rolled into New Facility
MIKOHN GAMING: Retains Financial Relations Board
MIRANT: Bonneville Power Wants Funds Deposited in Court Registry
MORGAN STANLEY: Fitch Affirms Ser. 1996-WF1 Class G Notes at B+
MUZZY BROADCASTING: Case Summary & 20 Largest Unsecured Creditors
NAT'L CENTURY: Asks Court to Disallow Private Investment Claims
NETWORK STORAGE: Wants Approval to Hire Henry Henry as Attorney
NRG ENERGY: Edison Mission Asks Court to Allow Admin Expense Claim
OMEGA HEALTHCARE: Prices $18 Million Common Stock Offering
OWENS: Asks Court to Disallow $6MM Burchfield & Whitmire Claims
PARMALAT: Sao Paulo Judge Replaces Parmalat Brazil Management
PARMALAT GROUP: Parent Will Sue Bank if Brazilian Unit Collapses
PB ELECTRONICS: Files for Chapter 7 Bankruptcy in N. California
PB ELECTRONICS: Voluntary Chapter 7 Case Summary
PERISCOPE: Giant Group Vs. LH Friend Case Trial Set for June 30
PG&E NAT'L: Energy Trading Debtors Agree to Set-Off Midwest Claims
PILLOWTEX: Recharacterizes Nine Crescent Financial Lease Pacts
PREMIERE SUPER: Case Summary & 25 Largest Unsecured Creditors
QWEST SERVICES: S&P Assigns B- Rating to $1.75B Sr. Secured Loan
ROTECH HEALTHCARE: Inks New Pacts with Gentiva Health Services
SAKS INC: Names Steve Sadove as Chief Operating Officer
SAKS INC: Posts 14.7% Comparable Store Sales Increase in February
SAKS INC: Fourth Quarter Net Income Increases to $82 Million
SAMSONITE CORP: Marcello Bottoli Replaces Luc Van Nevel as CEO
SEITEL INC: Contrarian Entities Disclose Equity Stake
SIRIUS SATELLITE: Wellington Management Has 5.563% Equity Stake
SIX FLAGS: Full Year 2003 Net Loss Tops $61.7 Million
SLATER STEEL: Steelworkers Urges Acceptance of Purchase Offer
SOLUTIA INC: First Creditors' Meeting Slated for March 18, 2004
STONE & WOLF LLC: Voluntary Chapter 11 Case Summary
TARGET TWO: Signs-Up Nicholas Fitzgerald as Bankruptcy Counsel
TELETECH HOLDING: Awarded Multiyear Telecommunications Agreement
TENET: Amedisys to Buy 11 Home Health Agencies and 2 Hospices
TOYS R US: Office Depot Buying 124 Kids "R" Us Stores for $197M+
UNITED DEFENSE: Acquires Honolulu Shipyard Assets for $16 Million
UNIVERSAL COMMUNICATION: Alpha Capital Reveals 7.1% Equity Share
USG CORP: Wants Court to Stretch Lease Decision Time to Sept. 1
U.S. STEEL: Caps Price on 8 Million Common Stock Offering
VERITAS DGC: Completes Sale of Convertible Senior Notes Due 2024
VIALINK COMPANY: Amends Corporate Office Lease Agreements
VISTEON CORP: $450 Million Note Offering to Close on Mach 10
WEIRTON VENTURE: Case Summary & 20 Largest Unsecured Creditors
WKI: Ralph Denisco Named Pres. & COO of North American Business
* Turnaround Management's Spring Conference Set for March 12-13
* BOOK REVIEW: The Rise and Fall of the Conglomerate Kings
*********
21ST CENTURY: Declares Quarterly Dividend Payable on June 1
-----------------------------------------------------------
The Board of Directors of 21st Century Holding Company
(Nasdaq:TCHC), a vertically integrated financial services holding
company, declared a regular quarterly dividend of $0.12 per common
share payable on June 1, 2004 to shareholders of record as of
May 3, 2004.
The Company also announced that it will release its fourth quarter
and fiscal year 2003 financial results after the market closes on
Monday, March 15, 2004 and will hold an investor conference call
at 4:30 PM (ET) on Monday, March 15, 2004.
The Company's Chairman and President, Edward J. Lawson, and its
CEO, Richard A. Widdicombe, will discuss the financial results and
review the outlook for the Company. Messrs. Lawson and Widdicombe
invite interested parties to participate in the conference call.
Listeners can access the conference call by dialing toll free 888-
694-4641. Please call at least five minutes in advance to ensure
that you are connected prior to the presentation.
The Company, through its subsidiaries, underwrites standard and
non-standard personal automobile insurance, flood insurance,
general liability insurance, mobile home insurance and homeowners'
property and casualty insurance in the State of Florida. The
Company underwrites general liability in the state of Georgia as a
surplus lines carrier. In addition, the Company has underwriting
authority and process' claims for third party insurance companies.
In addition to insurance services, the Company offers premium
finance services to its insureds as well as insureds of third
party insurance companies. Lastly, the Company offers other
ancillary services including licensing of its tax preparation
software products, electronic income tax filing, tax preparation
and tag and title transfer services.
* * *
As previously reported in Troubled Company Reporter, 21st Century
Holding Company said that AM Best reaffirmed ratings for Federated
National Insurance Company ("B" rated) and American Vehicle
Insurance Company ("B+" rated) and changed their outlook from
negative to stable.
ADELPHIA COMMS: New Capital Structure Based on Chapter 11 Plan
--------------------------------------------------------------
The Reorganized Adelphia Communications Debtors' Chapter 11 Plan
provides that the capital structure will be comprised of:
(1) an exit facility consisting of:
(a) a working capital revolving credit facility; and
(b) high yield notes and/or a bridge credit facility;
(2) New Joint Venture Preferred Securities; and
(3) New Equity.
Exit Facility
Pursuant to the Plan, the ACOM Debtors will enter into an Exit
Facility, consisting of the Exit Facility Credit Agreements,
providing revolving credit for the Reorganized ACOM Debtors'
working capital needs, and term loans and the Exit Facility
Bridge/Indenture. The proceeds of the term loans and the
indebtedness under the Exit Facility Bridge/Indenture would be
available to pay the DIP Lender Claims, the Subsidiary Bank
Claims and other Claims to be paid in Cash under the Plan.
The Exit Facility would include covenants and terms and
conditions that are expected to be similar to comparably rated
companies obtaining similarly structured credit facilities and
high yield notes indentures at that time.
Exit Facility Credit Agreements
The Exit Facility Credit Agreements are one or more credit
agreements governing revolving credit or term indebtedness of
Reorganized ACOM or a direct or indirect Subsidiary of
Reorganized ACOM that directly or indirectly owns substantially
all of Reorganized ACOM's cable assets, which indebtedness will
be secured and guaranteed by the U.S. subsidiaries of the
Borrower, subject to certain permitted liens.
Exit Facility Bridge/Indenture
The Exit Facility Bridge/Indenture is either:
(1) a senior unsecured indenture of the Borrower and or a
direct or indirect parent of the Borrower relating to new
indebtedness, which indebtedness may or may not be
guaranteed by the U.S. subsidiaries of the New Notes
Issuer; or
(2) a bridge loan credit agreement relating to new
indebtedness, which indebtedness may or may not be
guaranteed by the U.S. subsidiaries of the New Notes
Issuer, and may or may not be secured.
Exit Facility Commitment
ACOM received commitments from JPMorgan Chase & Co., Credit
Suisse First Boston, Citicorp Inc., and Deutsche Bank AG for an
$8,800,000,000 fully-committed Exit Facility that will be used to
finance the cash payments to be made under the Plan and includes
a $750,000,000 revolving credit facility for the Reorganized ACOM
Debtors following emergence from bankruptcy. The terms of the
commitments are subject to Bankruptcy Court approval and other
conditions set forth in the applicable commitment documents, and
there can be no assurance that the financing will ultimately be
available to ACOM.
New Joint Venture Preferred Securities
In exchange for the joint venture interests in various joint
ventures with Comcast Corporation and various Tele-Media
entities, Reorganized ACOM or a direct or indirect subsidiary of
ACOM that also is, or directly or indirectly owns, ACOM will
issue New Joint Venture Preferred Securities to Comcast and Tele-
Media, with a value equal to the value of their joint venture
interests. Upon consummation of the Plan, the joint ventures
will be merged with and into the New Joint Venture Preferred
Securities Issuer in connection with which mergers the New Joint
Venture Securities will be issued.
New Equity
As of the Effective Date, it is estimated that the authorized
capital stock of Reorganized ACOM will consist of a yet
undetermined number of shares of New Common Stock, par value
$0.01 per share. These securities will be issued to specified
classes of existing creditors under and in accordance with the
Plan. In addition, as of the Effective Date, Reorganized ACOM
will implement the New Equity Incentive Plan, pursuant to which
certain employees, members of the Board of Directors of
Reorganized ACOM and certain other service providers will receive
options to purchase, or other awards that may be settled in, New
Common Stock. The rights of the holders of New Common Stock will
be subject to applicable Delaware law, the Reorganized ACOM
Certificate of Incorporation and the Reorganized ACOM Bylaws, the
New Equity Incentive Plan, and the Registration Rights
Agreement. The New Common Stock issued to creditors pursuant to
the Plan will be subject to dilution by the rights issuable
pursuant to the New Equity Incentive Plan.
The New Common Stock will have these material terms:
(1) the holders of New Common Stock will be entitled to one
vote per share for each share held of record on all
matters submitted to a vote of stockholders and are
entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally
available therefor;
(2) Reorganized ACOM will be subject to certain limitations on
the declaration and payment of dividends under the terms
of the Exit Facility, and it is not anticipated that any
cash dividends will be paid on the New Common Stock for
the foreseeable future; and
(3) the holders of New Common Stock will have no preemptive,
subscription, redemption or conversion rights. (Adelphia
Bankruptcy News, Issue No. 52; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ADVANSTAR COMMUNICATIONS: Reports Positive 2003 Operating Results
-----------------------------------------------------------------
Advanstar Communications Inc., a leading worldwide provider of B-
to-B marketing and business information products and services,
reported its 2003 operating results.
Revenue for 2003 of $323.7 million increased 5.4% from $307.2
million in 2002. Operating results improved from an operating loss
of $24.2 million in 2002 (which included a $37.2 million provision
for the write-off of a note from our affiliated dot.com company)
to operating income of $26.8 million in 2003 while our loss before
cumulative effect of accounting change improved from $57.5 million
in 2002 to $49.4 million in 2003.
Cash flows provided by operating activities was $45.8 million in
2003, compared to $24.3 million in 2002. The improvement was due
largely to a favorable change in the timing and flows of working
capital.
Adjusted EBITDA of $82.7 million for 2003 increased $1.4 million
or 1.8% from Adjusted EBITDA of $81.3 million in 2002.
This improvement in Adjusted EBITDA was achieved despite three
items with an aggregate adverse effect of $7.3 million. These
include a $2.8 million insurance recovery received in 2002 for
trade show losses suffered in the terrorist attacks of September
11, 2001; restructuring charges in 2003 totaling $2.7 million to
consolidate space in both our New York and U.K. offices; and $1.8
million fourth quarter charges related to venue space arrangements
for our trade shows.
Joe Loggia, President and CEO of Advanstar, said, "We are pleased
with the results of 2003. Our major trade shows, including our
MAGIC events, had increases in both revenue and attendance. Our
publishing properties, with the exception of travel and
technology, continued to show signs of recovery and remain well
positioned to capitalize on any sustained market improvements in
2004. The integration of our recent Thomson Healthcare properties
acquired in the fourth quarter continues as planned and should
offer us outstanding opportunities as we move ahead into the
coming year."
On October 1, 2003 we acquired a portfolio of healthcare industry
magazines and related custom service projects from the Thomson
Corporation. The integration of production and support activities
into our Duluth, MN operations center proceeded as planned and
were substantially completed by the end of December. We are
continuing our planned transition of the organizational structure
and are in the process of upgrading the available sales and
marketing tools and procedures. The acquired Thomson properties
contributed approximately $20.7 million, $6.7 million and $5.4
million to our fourth quarter publishing revenue, publishing
contribution margin and Adjusted EBITDA.
In 2003 we refinanced all but $25 million of our senior bank
credit facility term loan borrowings by issuing $230 million of
Second Priority Senior Secured Notes and $130 million of Second
Priority Senior Secured Floating Rate Notes. We also issued an
additional $70 million of Second Priority Senior Secured Notes and
received $60 million of equity contributions, through our parent
company, from DLJ Merchant Banking funds through the issuance of
Advanstar Holding Corp.'s common stock. We used these proceeds to
acquire the healthcare properties from Thomson.
Segment Operating Summary
Trade Shows and Conferences:
Revenue from trade shows and conferences declined $3.6 million, or
2.2%, to $155.5 million in 2003 from $159.1 million in 2002. Trade
shows and conferences serving markets other than technology
performed well in a difficult 2003. Total trade show square
footage for these non-technology events was essentially flat,
declining 1.0% while revenue increased 5.8% in 2003 over 2002.
Revenue for our MAGIC events increased approximately 4.2% over
2002. Strong performances also came from our trade shows serving
the beauty, home entertainment, licensing, travel and powersports
markets. We are also encouraged by the growth in attendance at
many of our key events in 2003. Our trade shows serving technology
markets continue to suffer from the curtailment of marketing
expenditures by technology companies, with revenue declining 27%
from 2002. These events made up approximately 13% of our total
square footage and 19% of total trade show revenue in 2003.
Contribution margin from trade shows and conferences declined $6.9
million, or 8.6%, to $74.0 million in 2003 from $80.9 million in
2002. Strong performances by events serving the fashion, beauty,
home entertainment, licensing and powersports markets were offset
by the impact of the $2.8 million insurance recovery received in
the last half of 2002, the $1.8 million fourth quarter charges
related to venue space arrangements and continued declines in our
events serving technology markets.
Publications:
Revenue from publications increased $21.1 million, or 16.1% to
$152.2 million in 2003 from $131.1 million in 2002. The
acquisitions of the Thomson healthcare properties in October of
2003 and Healthcare Traveler in October of 2002 resulted in
increased revenue of approximately $23.8 million between 2002 and
2003. Publications in a wide array of our markets continued their
solid recovery, particularly those serving the beauty, healthcare,
home entertainment, licensing, pharmaceutical, science,
golf/landscape, veterinary and automotive markets. Revenue from
technology and travel publications declined $10.3 million or 26%
from 2002 as advertising pages continued to decline in these
markets. Excluding the effect of acquisitions, technology and
travel, advertising pages increased 10.3% and revenue increased
8.3% across all our other markets.
Contribution margin from publishing of $47.1 million increased
$10.7 million, or 29.4% over 2002. This increase was primarily due
to the strong performance of the publication groups discussed
above and the acquisition of the Thomson publications partially
offset by declines in our publications serving the technology and
travel markets.
Marketing Services and Other:
Revenue from marketing services and other of $16.0 million
declined 5.8% from $17.0 million in 2002 primarily due to softness
in classified and recruitment advertising. Contribution margin
from marketing services and other of $6.7 million decreased $0.8
million from 2002 due to certain investments in sales staff
resources dedicated to developing our small space advertiser page
opportunities.
Department and support costs of $5.9 million increased $0.7
million from 2002 due to increased departmental production staff
related to the Thomson acquisition.
About Advanstar
Based in New York, NY, Advanstar Communications Inc. (S&P, B
Corporate Credit Rating, Stable) is a worldwide business
information company serving specialized markets with high-quality
information resources and integrated marketing solutions.
Advanstar produces 113 business magazines and directories, 76
trade shows and conferences, numerous Web sites, and a wide range
of print and electronic direct marketing, database and reference
products and services. Advanstar serves targeted market sectors in
the automotive, beauty, e-learning, call center, digital media,
entertainment/marketing, fashion and apparel, healthcare and
pharmaceutical, manufacturing and processing, powersports,
science, telecommunications and travel/hospitality industries. The
Company has more than 1,400 employees and currently operates from
multiple offices in North America, Latin America, Europe and Asia.
For more information, visit http://www.advanstar.com/
AHOLD: President & CEO Anders Moberg at Shareholders' Meeting
-------------------------------------------------------------
Koninklijke Ahold N.V. released a transcript of President and CEO
Anders C. Mosberg's comments to shareholders at an Extraordinary
General Meeting held on Wed., Mar. 3, in The Netherlands, to talk
about corporate governance and other matters:
"Good afternoon, dear shareholders, ladies and gentlemen.
"Welcome to this special meeting on corporate governance. We
are pleased to be among the first companies in the Netherlands to
implement the Tabaksblat code. Our initiative takes us
substantially toward complete compliance with the code. If not
completely we will explain clearly why.
"We are also very proud to be the first company to convene a
meeting of shareholders devoted solely to corporate governance. We
did this because there should be no question about the value we
place on transparency. Corporate governance, accountability and
controls are at the heart of our 'Road to Recovery' strategy.
"The proposals before you today will result in significant
improvement in transparency and a far-reaching increase in the
power of Ahold's shareholders; they put Ahold at the forefront of
corporate governance in the Netherlands.
"In a few moments, Peter Wakkie and Sir Michael Perry will
review these proposals in detail. Before I update you on the
fundamental transformation, I want to make some remarks on
'dealing with the past' and the media attention.
"By now, we've all read the crisis anniversary coverage, all
the reconstructions, all the leaked reports and all the anonymous
comments in the media. Our attention is constantly diverted to the
past. We are asked to 'deal with the past'.
"I do understand that you have questions. You are asking the
right questions. And I certainly understand that you want answers.
I also realize that we need to deal with the past as part of the
process to regain your full trust.
"We will continue to cooperate fully with the extensive
investigations still underway. We are committed to seeing this
lengthy and complex legal process through to a conclusion that is
in the best interests of all shareholders.
"I hope you will understand that we cannot and will not spend
our time on speculation. We have to base our response on facts. We
will wait until the findings of the investigations before
commenting on the allegations.
"Every associate at Ahold recognizes that we do not have the
luxury of time or distraction. Our future, the future returns to
our shareholders and the value we bring to customers, depends upon
our undivided focus on rebuilding the strength of our business.
Shareholders must also understand the importance of our need to
stay focused on improving our competitiveness in all markets.
"Shareholders, you should recognize that the commotion will
continue, as the company awaits the findings of investigations and
other proceedings, including those by the SEC, the U.S. Department
of Justice, the Dutch Prosecutor and the class action lawsuits.
"With regard to this, ladies and gentlemen, and with all due
respect for you as individuals and the people you represent, it is
not in the best interests of the company to start any additional
investigation. I want to appeal to you to wait at least until the
current investigations are concluded.
"Let me make it clear that the difficulties which occurred
in 2003 were the result of poor controls, and the misguided
actions of a handful of individuals, and not wholesale corruption
throughout our company. Those individuals found to have been
involved, have been dealt with. 39 executives and managers have
been removed and 60 faced disciplinary action of different
degrees.
"In this regard, I'd like us all to remember that rumor and
speculation, no matter how often repeated, are not evidence. These
individuals have rights and we at Ahold will respect those rights.
We endorse the centuries-old principle of innocence until proven
guilty. And as soon as there is proof, we have taken and will take
action.
"We have spent, as stated before, over 100 million Euros on
the legal and accounting advice fees in 2003. In addition, the
costs related to the rights issue amount to about 115 million
Euros. There are also additional fees on other financing
activities. Needless to say that this is an enormous amount of
money. We do not intend to be in this position ever again.
"We have reported on several occasions that we are
overhauling our financial controls to make them as strong as
possible. The most important 'control' is making clear to our
people what we expect of them going forward.
"We have initiated a company-wide financial integrity
program. This is aimed at 15,000 managers - the entire middle and
top ranks of our organization. The goal of the program is to
underscore the importance of integrity and to help our people in
the real-world business environment.
"However, it is one year on, and we have come a very long way
in that time. If you are left with the impression that not much
progress has been made, then you would be wrong. The
transformation program is underway at unprecedented speed.
"First the rights issue. On behalf of our associates, we'd
like to thank our shareholders for your vote of confidence in
approving our recent 3 billion Euro rights issue. Ahold underwent
one of the most extensive external audits in corporate financial
history.
"Following the completion of the independent investigations
commissioned by Ahold, the General Meeting of Shareholders
approved three years of restated accounts, on which the rights
issue was based. This has provided us with the financial stability
that we need to go forward.
"Second, this meeting [Wednes]day and our corporate
governance initiatives are also important milestones, achieved
without argument or delay. They are considered by third party
experts to be amongst the best in the Netherlands. Peter Wakkie
will explain our initiatives in greater detail.
"No one should underestimate the extent to which we have
gone, and will go, to establish good corporate governance. Ahold
is a Netherlands-registered company but we also aspire to
compliance with international standards of corporate governance.
The vast majority of our business is in the United States, and we
are quoted on the New York Stock Exchange. Hundreds of associates
in both Europe and the United States are now involved in
implementing the relevant requirements of the U.S. Sarbanes-Oxley
legislation to ensure that we are fully compliant, as required by
that law, by the end of 2005. Among other things resulting from
the new law, every one of our operating company CEOs will be
required to certify the financial accounts for their business
unit. Hannu Ryopponen and I will then be personally required to
sign off on Ahold's accounts as specified by U.S. law. There will
be no room for error or irregularity.
"Third, we are putting Ahold's house in order in many
otherfar-reaching ways.
-- "The new management team is taking shape and is shaping
the future. Three out of five Executive Board members are
new. We have made announcements concerning the rotation of
the remaining members of the Executive Board, and in so
doing, have provided for both continuity and succession.
The Supervisory Board is also undergoing a transition, as
already announced and on today's agenda.
-- "I have just spent three weeks on business reviews
throughout our company. And let me tell you, there is no
doubt about the sense of urgency and dedication with which
our teams are resolving the issues, and making plans to
improve organic growth, decrease cost base and enhance
competitiveness.
-- "The new management team under Larry Benjamin at U.S.
Foodservice is making impressive progress in restoring
U.S. Foodservice to competitive strength. The change
process at U.S. Foodservice is underway and we look
forward to updating you on its performance and business
plan at the next shareholders' meeting.
-- "The re-shaping of the U.S. Retail business is also well
underway. In January 2004, we began the integration of
the Stop & Shop and Giant-Landover back offices, and the
Ahold USA support office. Last month, we announced our
intention to divest Bruno's and BI-LO, in addition to the
sale of Tops convenience stores, Golden Gallon gas
stations and forecourtstores.
-- "Our divestment and restructuring program in the other
regions in which we operate is also on track. In January,
we announced the closure of the European Competence
Center. We are in the process of selling our Spanish
operation and our hypermarkets in Poland. On Monday we
announced the sale of Bompreco in Brazil and today we
announced the sale of CRC Ahold in Thailand. Let me
repeat that our financial situation is such that all our
divestment candidates will be sold as part of a careful,
caring process. There will be no fire sale.
"Essential is that the majority of our company is firmly
focused on the future. The entire company is engaged in bringing
about a vital transformation: in structure, culture and leadership
style required by our strategic business objectives. This
transformation won't happen overnight, but I am confident that we
will meet our objectives.
"Before I hand over the meeting, may I conclude by saying
that 2004 will be a year of action: for divestment, for
restructuring, for cost-reduction, for increased efficiency and
for competitiveness. The start of the year has been good, with
sales in line with expectations.
"We have made some clear but tough choices, and we are on
track in achieving our 'Road to Recovery' strategic objectives.
"We have a huge amount on our plate. In order to succeed, we
must keep our associates focused on serving our customers and we
must create the environment that keeps them motivated, in a year
where we know that the negative publicity around the company's
past will continue.
"Nevertheless, we are moving, and we are moving fast. Our
people are focused on restoring pride and credibility in our
business. We are not dragging our heels. We are making good
progress.
"But the opinion that counts the most belongs to you -- our
shareholders. As CEO of Ahold, let me repeat my personal
commitment to you: First of all, accountability for results;
Second, integrity in how we do business; and Third, my commitment
to share all information as soon as investigations are finalized.
And please have some patience.
"I took on this challenge and I am very confident about
Ahold's future, but I and our 350,000 associates need your
continuing support.
"We are focused on creating value for you and our customers,
and to set new standards in corporate governance and performance.
"Thank you."
* * *
As previously reported, Fitch Ratings, the international rating
agency, assigned Netherlands-based food retailer Koninklijke Ahold
NV a Stable Rating Outlook while removing it from Rating Watch
Negative. At the same time, the agency has affirmed Ahold's Senior
Unsecured rating at 'BB-' and its Short-term rating at 'B'.
The Stable Outlook reflects the benefits from the shareholder
approval, granted on Wednesday, for a fully underwritten
EUR3billion rights issue. Ahold however continues to face
financial and operational difficulties which have been reflected
in the Q303 results. Ahold announced in early November its
strategy for reducing debt through its EUR3bn rights issue and
EUR2.5bn of asset disposals as well as improving the trading
performance of its core retail and foodservice businesses. Whilst
the approved rights issue addresses immediate liquidity concerns,
operationally, the news is less positive with Ahold's core Dutch
and US retail operations both suffering from increased
competition, mainly from discounters, resulting in operating
profit margin erosion. Ahold's European flagship operation, the
Albert Heijn supermarket chain in the Netherlands, recently
reported both declining sales and profits, as consumers turn to
discount retailers. In reaction to this, Albert Heijn, has amended
its pricing structure which in turn would suggest that it will be
more challenging in the future to match historic operating margin
levels.
AHOLD: Divests Thai Operation & Withdraws from Asia Completely
--------------------------------------------------------------
Ahold reached an agreement on the sale of its stake in CRC.Ahold,
operating in Thailand, to its partner, the Central Group. The
divestment, which is effective immediately, is the final step in
the overall sale of Ahold's Asian operations. The transaction sum
was not disclosed.
Currently, CRC.Ahold Co. Ltd. operates 47 stores and has a
wholesale business delivering to some 300 convenience stores in
Thailand with unaudited aggregate 2003 sales of approximately EUR
312 million. Ahold employs about 6,000 people in Thailand.
The Central Group is one of Thailand's largest private
corporations. Central Group consists of six main divisions:
retail, hotels, property, wholesale, manufacturing and food
franchises.
"Ahold has finalized its withdrawal from Asia with the divestment
of its Thai operation," said Theo de Raad, Ahold Corporate
Executive Board member responsible for Latin America and Asia,
commenting on the agreement. "We have every confidence that all
our stakeholders, including customers, associates and suppliers,
will continue to flourish under new ownership."
The divestment of Ahold's activities in Asia is part of Ahold's
strategy to optimize its portfolio and to strengthen its financial
position by reducing debt. In 2003, Ahold already completed the
sale of its Indonesian and Malaysian operations.
* * *
As previously reported, Fitch Ratings, the international rating
agency, assigned Netherlands-based food retailer Koninklijke Ahold
NV a Stable Rating Outlook while removing it from Rating Watch
Negative. At the same time, the agency has affirmed Ahold's Senior
Unsecured rating at 'BB-' and its Short-term rating at 'B'.
The Stable Outlook reflects the benefits from the shareholder
approval, granted on Wednesday, for a fully underwritten
EUR3billion rights issue. Ahold however continues to face
financial and operational difficulties which have been reflected
in the Q303 results. Ahold announced in early November its
strategy for reducing debt through its EUR3bn rights issue and
EUR2.5bn of asset disposals as well as improving the trading
performance of its core retail and foodservice businesses. Whilst
the approved rights issue addresses immediate liquidity concerns,
operationally, the news is less positive with Ahold's core Dutch
and US retail operations both suffering from increased
competition, mainly from discounters, resulting in operating
profit margin erosion. Ahold's European flagship operation, the
Albert Heijn supermarket chain in the Netherlands, recently
reported both declining sales and profits, as consumers turn to
discount retailers. In reaction to this, Albert Heijn, has amended
its pricing structure which in turn would suggest that it will be
more challenging in the future to match historic operating margin
levels.
AINSWORTH LUMBER: Completes Private Placement of 6.750% Sr. Notes
-----------------------------------------------------------------
Ainsworth Lumber Co. Ltd. closed the private placement of US$210
million aggregate principal amount of 6.750% Senior Notes due
March 15, 2014. As previously announced, the net proceeds of the
offering of the Senior Notes, together with cash on hand, are
being used to pay the consideration under the tender offers and
consent solicitations, initiated on February 17, 2004, pertaining
to Ainsworth's existing 13.875% Senior Secured Notes due July 15,
2007, and its existing 12-1/2% Senior Secured Notes due July 15,
2007. The purchase of Secured Notes under the tender offers was
conditional on the completion of the sale of the Senior Notes.
Ainsworth Lumber Co. Ltd. has operated as a forest products
company in Western Canada for over 50 years. The company's
facilities have a total annual capacity of approximately 1.5
billion square feet - 3/8" of oriented strand board (OSB), 155
million square feet - 3/8" of specialty overlaid plywood, and 55
million board feet of lumber. In Alberta, the company's
operations include an OSB plant at Grande Prairie and a one-half
interest in an OSB plant at High Level. In B.C., the company's
facilities include an OSB plant at 100 Mile House, a veneer plant
at Lillooet, a plywood plant at Savona and finger-joined lumber
plant at Abbotsford.
* * *
As previously reported in the Feb. 19, 2004, issue of the Troubled
Company Reporter, Standard & Poor's Ratings Services raised its
long-term corporate credit rating on wood products producer
Ainsworth Lumber Co. Ltd. to 'B+' from 'B-' due to a strong
financial performance and a strengthened balance sheet following
completion of the company's proposed refinancing. At the same
time, Standard & Poor's assigned its 'B+' senior unsecured debt
rating to Ainsworth's proposed US$200 million notes maturing in
2014. The outlook is stable.
"The upgrade stems from Ainsworth's strengthened balance sheet
following strong profitability and cash generation in a year of
record demand and pricing for oriented strandboard (OSB)," said
Standard & Poor's credit analyst Clement Ma. Using a combination
of approximately C$194 million cash and the new senior unsecured
notes, Ainsworth is expected to retire its US$281.5 million in
existing secured debt through a public tender offer. Following the
refinancing, the company's total debt to capitalization should
eventually decrease to less than 45% from approximately 67% at
Dec. 31, 2003.
The ratings on Ainsworth reflect the company's narrow product
concentration in the production of OSB, and its mid-size market
position. These risks are partially offset by the company's strong
cost position stemming from its modern asset base, and its high
fiber integration.
AIRGAS INC: Selling $150 Million Senior Subordinated Notes
----------------------------------------------------------
Airgas, Inc. (NYSE: ARG) priced its senior subordinated notes
offering. Airgas will sell $150,000,000 of its 6.25% senior
subordinated notes due 2014. Net proceeds from the offering will
be used to redeem in their entirety the $75 million in 7.14%
medium term notes due this month and reduce the outstanding
balance under Airgas' existing revolving credit facility. The
transaction is expected to close March 8, 2004.
The notes are being sold in the United States to qualified
institutional buyers in reliance on Rule 144A, and outside the
United States in compliance with Regulation S, under the
Securities Act of 1933, as amended. These notes have not been
registered under the Securities Act of 1933, as amended, or any
state securities laws and may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements.
About Airgas, Inc.
Airgas, Inc. (NYSE: ARG) (S&P, BB Corporate Credit Rating,
Positive) is the largest U.S. distributor of industrial, medical
and specialty gases, welding, safety and related products. Its
integrated network of nearly 800 locations includes branches,
retail stores, gas fill plants, specialty gas labs, production
facilities and distribution centers. Airgas also distributes its
products and services through eBusiness, catalog and telesales
channels. Its national scale and strong local presence offer a
competitive edge to its diversified customer base.
ALLEGHENY: Files Declaration Seeking to Amend Charter & Bylaws
--------------------------------------------------------------
Allegheny Energy, Inc., a Maryland corporation and a registered
holding company, has filed a Declaration pursuant to Sections 6(a)
and 12(e) of the Public Utility Holding Company Act of 1935, as
amended, and Rules 62 and 65 under the Act, requesting authority:
(1) to amend its charter to eliminate the requirement of
cumulative voting in the election of directors,
(2) to amend its bylaws to require a simple majority vote for
approval of control share voting rights,
(3) to institute a simple majority vote of stockholders for
removal of directors,
(4) to eliminate classification of the Board of Directors,
(5) to eliminate the application of provisions of the Maryland
Business Combination Act to the extent these provisions
require supermajority approval of certain business
combinations, and
(6) to solicit proxies to implement the Proposed Amendments
from the holders of Allegheny's shares of common stock.
Allegheny requested that the Securities and Exchange Commission
issue a public notice of the Declaration and an order authorizing
proxy solicitations for the Proposed Amendments no later than
March 10, 2004, thereby affording Allegheny sufficient time to
solicit proxies in advance of its annual stockholders meeting.
Allegheny further requested that as soon as practicable after
issuing an order authorizing proxy solicitations, the Commission
issue an order authorizing the Proposed Amendments.
* * *
Standard & Poor's Ratings Services revised its outlook on
Allegheny Energy Inc. and its subsidiaries to stable from negative
with the pending refinancing of its bank loans, which alleviates
concerns associated with near-term refinancing risk.
At the same time, Standard & Poor's assigned its 'B' rating and a
recovery rating of '2' to the $1.3 billion secured credit facility
at Allegheny's generation subsidiary, Allegheny Energy Supply. The
'2' recovery rating indicates Standard & Poor's expectation that
holders of the bank loan can expect substantial (80% to 100%)
recovery of principal in the event of a default.
AMAZON.COM INC: Jeffrey Bezos Discloses 26.1% Equity Stake
----------------------------------------------------------
As of December 31, 2003, Mr. Jeffrey P. Bezos owned 26.1% of the
outstanding common stock of Amazon.com, Inc. The percentage is
due to the beneficial holding by Mr. Bezos of 105,104,315
shares of Amazon.com's common stock. He shares power to vote, or
to direct the vote of 6,822 shares, with shared power to dispose
of, or direct the disposition of 6,822 shares. These shares are
held with Mr. Bezos's wife in a joint brokerage account. Mr. Bezos
holds sole voting and dispositive powers over the remaining
105,097,493 shares.
Amazon.com, a Fortune 500 company based in Seattle, opened its
virtual doors on the World Wide Web in July 1995 and today offers
Earth's Biggest Selection. Amazon.com seeks to be Earth's most
customer-centric company, where customers can find and discover
anything they might want to buy online, and endeavors to offer its
customers the lowest possible prices. Amazon.com and sellers list
millions of unique new and used items in categories such as health
and personal care, jewelry and watches, gourmet food, sporting
goods, apparel and accessories, books, music, DVDs, electronics
and office, kids and baby and home and garden.
At September 30, 2003, Amazon.com's balance sheet shows a total
shareholders' equity deficit of about $1.1 billion.
AMERICA WEST AIRLINES: Reports Record February 2004 Traffic
-----------------------------------------------------------
America West Airlines (NYSE: AWA) reported traffic statistics for
the month of February and year-to-date 2004. Revenue passenger
miles for February 2004 were a record 1.7 billion, an increase of
12.7 percent from February 2003. Capacity for February 2004 was a
record 2.3 billion available seat miles, up 11.1 percent from
February 2003. The passenger load factor for the month of February
was a record 71.8 percent versus 70.8 percent in February 2003.
"Although our year-over-year unit revenues were slightly down, we
continue to post record load factors and experience demand growth
that surpasses our capacity growth," said Scott Kirby, executive
vice president, marketing and sales. "Monday we inaugurated our
fourth point-to-point transcontinental route between San Francisco
and Boston. We're excited about this growth plan given the appeal
of our simplified fare structure and the popularity of the new
first class fare restructure that we recently put into place."
America West Airlines is the nation's second largest low-fare
airline and the only carrier formed since deregulation to achieve
major airline status. America West's 13,000 employees serve nearly
55,000 customers a day in 93 destinations in the U.S., Canada,
Mexico and Costa Rica.
* * *
As previously reported, Fitch Ratings initiated coverage of
America West Airlines, Inc., a subsidiary of America West Holdings
Corp., and assigned a rating of 'CCC' to the company's senior
unsecured debt. The Rating Outlook for America West is Stable.
AMERISTAR: S&P Revises Outlook to Positive over Solid Performance
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Ameristar Casinos Inc. to positive from stable.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating and other ratings on the company. The Las Vegas,
Nev.-based casino owner and operator had $718 million in debt
outstanding at Dec. 31, 2003.
"The outlook revision follows Ameristar's solid operating results
during the fiscal year ended Dec. 31, 2003, resulting in improved
credit measures with the expectation that this trend will continue
in the near term," said Standard & Poor's credit analyst Peggy
Hwan. Also, with major capital spending completed, the company is
expected to generate discretionary cash flow available for further
debt reduction during fiscal 2004, providing a cushion within the
rating to complete modest share repurchases and/or dividends and
to accomplish its growth objectives.
Ratings reflect Ameristar's relatively small portfolio of casino
assets and relatively aggressive growth intentions. These factors
are offset by the company's leading competitive positions in its
markets served, a somewhat geographically diverse portfolio of
casino assets, good credit measures for the rating, and lower
near-term capital spending.
Consolidated EBITDA for fiscal 2003 rose 24%, compared with the
prior fiscal year, to $203.5 million due to strong performance in
St. Charles and relatively stable performance at the company's
other properties. As a result of this performance, EBITDA coverage
of interest is about 3.1x and total debt to EBITDA was 3.5x for
the 12 months ended Dec. 31, 2003. Given expected cash flow
growth and the anticipation that the company will further de-lever
the balance sheet, debt to EBITDA is expected to be under 3x at
the end of 2004.
ANTARES PHARMA: Joseph Edelman Discloses 11.88% Equity Stake
------------------------------------------------------------
Joseph Edelman beneficially owns 3,591,000 shares of the common
stock of Antares Pharma Inc., which represents 11.88% of the
outstanding common stock of the Company. Mr. Edelman holds sole
power both to vote, or direct the voting of, the stock, as well as
the sole power to dispose of, or to direct the disposition of the
entire 3,591,000 shares.
The 3,591,000 shares are comprised of 2,700,000 shares and
warrants to purchase 891,000 shares held by Perceptive Life
Sciences Master Fund Ltd., a Cayman Islands company of which the
investment manager is Perceptive Advisors LLC, a Delaware limited
liability company of which Mr. Edelman is the managing member.
* * *
Liquidity and Going Concern Uncertainty
In its most recent Form 10-Q filed with the Securities and
Exchange Commission, Antares Pharma reported:
"The [Company's] financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets
and the satisfaction of liabilities and other commitments in the
normal course of business.
"The Company had negative working capital of $2,824,398 at
December 31, 2002 and working capital of $962,626 at September 30,
2003, respectively, and incurred net losses of $23,344,988 and
$30,032,000 for the three and nine-month periods ended September
30, 2003. In addition, the Company has had net losses and has had
negative cash flows from operating activities since inception. The
Company expects to report a net loss for the year ending
December 31, 2003, as marketing and development costs related to
bringing future generations of products to market continue and due
to approximately $23,000,000 in noncash charges related to the
restructuring of the Company's balance sheet during 2003. Long-
term capital requirements will depend on numerous factors,
including the status of collaborative arrangements, the progress
of research and development programs and the receipt of revenues
from sales of products. In July 2003 the Company raised $4,000,000
through two private placements of common stock. In September 2003
all outstanding convertible debentures and accrued interest and
all term notes and accrued interest due to the Company's largest
shareholder were converted into equity. Convertible debentures and
accrued interest of $1,693,743 was converted into 949,998 shares
of common stock and 243,749 shares of Series D Convertible
Preferred Stock. Principal of $2,300,000 and accrued interest of
$98,635 due to the Company's largest shareholder was converted
into 2,398,635 shares of common stock. Management believes that
the combination of the equity financing of $4,000,000, the
conversion of all debt to equity and projected product sales and
product development and license revenues will provide the Company
with sufficient working capital through the second quarter of
2004.
"Effective July 1, 2003, the Company's securities were delisted
from The Nasdaq SmallCap Market and began trading on the Over-the-
Counter Bulletin Board under the symbol."
APPLIED EXTRUSION: Will Present at Lehman Brothers March 22 Conf.
-----------------------------------------------------------------
Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) will make
a presentation to institutional portfolio managers and security
analysts at the Lehman Brothers 2004 High Yield Bond and
Syndicated Loan Conference in Orlando, Florida on Monday, March
22, 2004.
To listen to a live broadcast via the Internet, visit the Investor
Relations section of AET's website at http://www.aetfilms.com/
Applied Extrusion Technologies, Inc. is a leading North American
developer and manufacturer of specialized oriented polypropylene
(OPP) films used primarily in consumer products labeling and
flexible packaging applications.
* * *
As reported in yesterday's edition of the Troubled Company
Reporter, Standard & Poor's Ratings Services lowered its corporate
credit rating on New Castle, Delaware-based Applied Extrusion
Technologies Inc. to 'B-' from 'B'.
At the same time, Standard & Poor's lowered its senior unsecured
debt rating to 'CCC' from 'B-'.
"The downgrade reflects Applied Extrusion's extended poor
operating and financial performance, weak liquidity position, very
aggressive debt leverage, and negative cash flows," said Standard
& Poor's credit analyst Paul Blake.
The company may be challenged to remain in compliance with minimum
EBITDA levels required in its bank credit agreement, should
operating profitability fail to improve. Additionally, the
company's ability to make a $15 million semi-annual coupon payment
in July 2004 appears uncertain based on current operating trends.
The ratings could be lowered soon if operating profitability and
cash generation do not substantially improve beyond current
levels, or if other issues, including a potential breach of
financial covenants or pending debt maturities, result in further
weakness to the company's already-strained liquidity position.
BIOVAIL CORPORATION: Provides Updated 2004 Guidance
---------------------------------------------------
Biovail Corporation (NYSE:BVF) (TSX:BVF) announced revised revenue
and earnings guidance for 2004. The Company believes that the
financial guidance contained herein is conservative, achievable
and reflects the Company's strategic desire to invest in its
Research and Development and Sales and Marketing infrastructure --
balancing return on investment with investments for long-term
sustainable organic growth.
Biovail is updating its previously announced guidance based on
several changes within its business including:
-- The successful launch of Wellbutrin XL in the U.S. marketplace
such that Biovail's licensee, GlaxoSmithKline, has recently
increased their manufacturing orders and revenue guidance;
-- Expanding the Company's U.S. sales force with the launch of 63
new specialty sales representatives to focus on Nephrology and
63 new specialty sales representatives to focus on Dermatology
& OB/GYN. Based on anticipated incremental Wellbutrin revenue,
the Company believes this ongoing investment in its U.S. sales
force will result in higher revenue long term for its U.S.
promoted products and will strengthen Biovail's position in the
competitive U.S. marketplace;
-- Conservatively reducing revenue expectations for the Company's
U.S. promoted products business until the sales force efforts
prove successful;
-- Conservatively reducing revenue expectations on Legacy brands
which are declining faster than previously expected and the
Company's need to under-ship demand; and,
-- Conservatively removing from the Company's guidance any out-
licensing revenue expectation until such time an out-licensing
agreement is consummated. The Company is currently in
discussions with multiple partners regarding potential product
out-licensing opportunities including Ralivia (R), Biovail's
once-daily pain formulation intended for the treatment of
chronic moderate to moderately severe pain. This is consistent
with the Company's conservative financial approach.
Gross margins are forecast to be higher in 2004 than in 2003 and
are expected to be in the range of 74% to 78% of product sales
revenue on an annual basis, although lower earlier in the year.
Research and development spending is forecast to be in the range
of $80 million to $100 million, reflecting an expected increase in
clinical activity.
Amortization expenses for 2004 will likely be in the range of $65
million to $70 million, excluding amortization associated with a
generic version of Prilosec. The Company's tax rate is expected to
be in the 4% to 6% range.
The Company believes that the establishment of an effective U.S.
sales and marketing infrastructure is critical to be a leading
Specialty Pharmaceutical company competing in the competitive U.S.
marketplace. Early new prescription (NRx) and total prescription
(TRx) trends in Cardizem LA, Teveten and Zovirax are tracking well
and the Company has made the decision that additional investment
to support these products should produce revenue growth over the
next few years. In this regard, the Company is revising its
previous guidance for selling, general and administrative expenses
from $260-290 million to $300-350 million or 31-36% of total
revenue.
Fully diluted earnings per share for 2004 are expected to be in
the range of $1.35 and $1.70. Quarterly earnings during 2004 will
be impacted by the growth of Wellbutrin XL and the increasing
supply price that the company receives on higher levels of end
market sales by GSK.
Biovail Corporation (S&P, BB+ Long-Term Corporate Credit Rating,
Stable) is an international full-service pharmaceutical company,
engaged in the formulation, clinical testing, registration,
manufacture, sale and promotion of pharmaceutical products
utilizing advanced drug delivery technologies. More information on
Biovail Corporation can be found on http://www.biovail.com.
BUDGET GROUP: Obtains Nod to Pay Peter Wemple's Defense Cost
------------------------------------------------------------
XL Specialty Insurance Company asks the Court to lift the
automatic stay, to the extent applicable, to allow XL to advance
and pay, under a Directors and Officers Liability Policy, certain
legal fees and expenses incurred, and to be incurred, in defense
of a pending claim against Peter Wemple, Vice-President of Budget
Group, Inc.
Ronald S. Gellert, Esq., at Eckert Seamans Cherin & Mellott, LLC,
in Wilmington, Delaware, relates that on August 26, 2002, 5331
Cicero LLC filed in the Circuit Court of Cook County, Illinois a
lawsuit against Mr. Wemple, alleging fraud, consumer fraud and
negligent misrepresentation. The lawsuit was dismissed with a
leave to replead its fraud count. Cicero filed the same case in
the same court.
XL issued Management Liability and Company Reimbursement Policy
No. ELU 82360-02 to Budget for the period April 24, 2002 to
April 24, 2003. This Policy was later converted by endorsement
to run-off and extended to November 22, 2008. Subject to all of
its terms and conditions, the Policy potentially affords coverage
up to a maximum aggregate liability limit of $25,000,000,
inclusive of Defense Expenses.
The Policy contains three insuring agreements:
(1) Coverage is provided for covered Loss incurred by the
directors and officers of Budget for claims made against
them if the Loss is not indemnified by Budget;
(2) The Policy insures Budget to the extent that it
indemnifies the directors and officers for covered Loss,
including Defense Expenses, in connection with claims
made against the directors and officers; and
(3) The Policy insures Budget for Loss incurred in
connection with "Securities Claims" asserted against it
under Insuring Agreement C.
The Policy is subject to a $0 retention for each claim under
Insuring Agreement I(A) and a $500,000 retention for each claim
under Insuring Agreements I(B) or I(C).
According to Mr. Gellert, the Policy defines "Loss" to include,
in pertinent part, "damages, judgments, settlements or other
amounts . . . and Defense Expenses in excess of the Retention
that the insured is legally obligated to pay." The Policy
defines "Defense Expenses" to include "reasonable legal fees and
expenses incurred in the defense of any Claim."
Coverage under the Policy is subject to various limitations and
exclusions. XL reserved its right to deny and limit coverage for
the claims asserted in the first and second Cicero Actions on the
basis of various terms, conditions and exclusions to coverage
contained in the Policy and under applicable law.
Under the Policy, Mr. Gellert points out that XL has no duty to
defend the Insured against any Claim made against them. The
Policy further provides that XL will advance Defense Expenses on
a current basis in excess of the retention amount on written
request of an Insured before the disposition of a Claim for which
the Policy provides coverage. As a condition for advancement of
Defense Expenses, XL may require a written undertaking by the
Insured to repay any amount paid to or on behalf of an Insured if
it is finally determined that the Loss incurred is not covered
under the Policy.
The Policy provides that the retention applicable to Insuring
Agreement I(B) "shall apply to any Loss as to which
indemnification by [Budget] is legally permissible, whether or
not actual indemnification is made unless such indemnification is
not made by [Budget] solely be reasons of its financial
insolvency." In that event, the retention applicable to Insuring
Agreement I(A), which is $0, will apply.
The Policy also contains a Priority of Payments endorsement which
provides that, if covered Loss, including Defense Expenses, is
payable under more than one of the Insuring Agreements, XL will
first make payment under Insuring Agreement I(A) then under
Insuring Agreement I(B) and lastly, under Insuring Agreement
I(C).
Mr. Wemple requested coverage under the Policy and asked XL to
advance Defense Expenses pursuant to Section IV(C) and V(A) of
the Policy. XL is agreeable at this time to advancing to, or on
behalf of, Mr. Wemple reasonable and necessary Defense Expenses
incurred in his defense subject to:
(1) XL's full reservation of right to deny coverage for the
two Cicero lawsuits; and
(2) other standard conditions, like the execution by Mr.
Wemple of a binding written undertaking to repay XL if it
ultimately is determined that Mr. Wemple is not entitled
to coverage:
(a) the amount of any indemnification paid to him by
Budget for Defense Expenses incurred in his defense up
to the $500,000 retention applicable under Insuring
Agreement I(B), in the event and to the extent the
indemnification is paid by Budget; and
(b) all monies advanced.
On August 15, 2003, Mr. Gellert recalls that XL sought to lift
the automatic stay with respect to certain claims that had been
made against certain of Budget's directors by the Official
Committee of Unsecured Creditors. The Committee opposed XL's
request. However, the Court granted the request on September 10,
2003.
XL submits that, under the broad language of the September 10
Order, which does not specifically limit the modification of the
automatic stay to any particular case of claim, it may advance
and pay defense costs incurred by Mr. Wemple without violating
the stay. However, out of abundance of caution, XL asks the
Court to lift the automatic stay for the purposes of advancing
reasonable and necessary legal fees and expenses incurred and to
be incurred by Mr. Wemple in defense of the Cicero Action.
Mr. Gellert contends that "cause" exists for lifting the stay to
permit XL to make interim payments of Mr. Wemple's Defense
Expenses under the Policy. D&O policies are obtained for the
protection of individual directors and officers. In essence and
at its core, a D&O Policy remain a safeguard of officer and
director interests and not a vehicle for corporate protection.
Thus, recognizing the importance of a director's interest in the
proceeds of a D&O Policy obtained primarily for his or her
benefit, courts typically lift the stay to permit payment by the
insurer of the director's defense expenses, even where the courts
otherwise conclude that the proceeds of the policy are property
of the debtor's estate.
Mr. Wemple's interest in the Policy proceeds should be given
priority over any theoretical interest of the Debtors in those
proceeds. The Policy was purchased for the purpose of providing
insurance coverage for the directors and officers and, in fact,
contains a Priority of Payments endorsement that subordinates the
Debtors' rights of coverage to those of the directors and
officers, Mr. Gellert asserts.
Furthermore, Mr. Gellert argues that if the stay were not lifted,
there would be far greater harm to Mr. Wemple, whose needs are
immediate and concrete, than there would be to the Debtors, whose
harm is speculative and remote at best. Indeed, the Debtors are
unlikely to suffer any harm as a result of the advancement of
funds under the Policy for Mr. Wemple's Defense Expenses. The
advancement of Defense Expenses will be subject to the insurer's
reservation of rights and an undertaking to repay by Mr. Wemple.
Accordingly, in the event there is no coverage under the Policy
for the claims asserted in the Cicero Action based on exclusion
or other limitation on coverage, the Policy would not be depleted
at all. Moreover, use of the proceeds to pay the cost of
defending Mr. Wemple against the claims asserted in the Cicero
Action would benefit the Debtors' estate to the extent that Mr.
Wemple is entitled to indemnification for the expenses from the
estate.
* * *
Judge Case grants XL's request and modifies the automatic stay to
allow XL to advance and pay expenses of Peter Wemple in defense
of the Cicero Action.
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. 35; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CMS ENERGY: Will Disclose 2003 Earnings Result on March 10, 2004
----------------------------------------------------------------
CMS Energy (NYSE: CMS) will discuss its 2003 consolidated earnings
results and update its business and financial outlook with
investors, analysts and others at 10 a.m. EST on Wednesday,
March 10, 2004.
Those interested may participate in an Internet Webcast on the
2003 results and outlook by going to the CMS Energy home page
-- http://www.cmsenergy.com/-- and selecting "2003 Financial
Results and Outlook." An audio replay of the presentation will be
available approximately two hours after the webcast, and will be
archived for 30 days on CMS Energy's website in the "Invest in
CMS" section.
CMS Energy (Fitch, B- Preferred Share Rating, Stable Outlook) is
an integrated energy company, which has as its primary business
operations an electric and natural gas utility, natural gas
pipeline systems, and independent power generation.
For more information on CMS Energy, visit its Web site at
http://www.cmsenergy.com/
CONSTANCE DIRAGO: Voluntary Chapter 11 Case Summary
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Debtor: Constance Dirago
aka Constance Sukunda
aka Constance Sukunda-Dirago
583 Lattintown Road
Marlboro, New York 12542
Bankruptcy Case No.: 04-35479
Chapter 11 Petition Date: March 2, 2004
Court: Southern District of New York (Poughkeepsie)
Judge: Cecelia G. Morris
Debtor's Counsel: Lewis D. Wrobel, Esq.
12 Raymond Avenue
Poughkeepsie, NY 12603
Tel: 845-473-5411
Fax: 845-473-3430
Total Assets: $2,612,301
Total Debts: $1,169,805
The Debtor did not file a list of its 20-largest creditors.
ENRON CORP: Asks Court to Expunge $5 Million HoustonStreet Claim
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According to Melanie Gray, Esq., at Weil, Gotshal & Manges LLP,
in New York, Enron Net Works LLC and HoustonStreet Exchange LLC
entered into an Agreement effective December 4, 2000. At the
time the Agreement was entered into, New Works was engaged in the
operation of an Internet-based energy trading platform called
EnronOnline, through which certain of the Debtors conducted their
online commodity and derivatives trading activities.
HoustonStreet also owns and operates an Internet-based energy
trading platform. Through the HoustonStreet platform -- located
at http://www.houstonstreet.com/-- HoustonStreet subscribers can
enter into energy commodities and derivatives trades by "hitting"
on the process posted.
By the terms of the Agreement, Ms. Gray explains that Net Works
and HoustonStreet intended to create interfaces between the
EnronOnline and HoustonStreet.com platforms. The Interfaces
would allow the Debtors' derivative and commodity prices posted
on EnronOnline to be simultaneously posted on HoustonStreet.com,
thereby enabling HoustonStreet subscribers to transact with the
Debtors by "hitting" a posted price on HoustronStreet.com and
seamlessly completing the transaction through EnronOnline.
The Agreement provides the specification for each Interface, the
party responsible for building and paying for each Interface, and
the manner in which the Interface is tested and accepted. If a
responsible party fails to complete the Interface for which they
are responsible by the Interface Completion Date, the Agreement
may be terminated by the other party.
Ms. Gray reports that HoustonStreet failed to complete the
Interfaces for which it was responsible by the original Interface
Completion Date of April 9, 2001. At HoustonStreet's request,
the parties entered into an Amendment to the Agreement, extending
the Interface Completion Date to May 11, 2001.
The Amendment provides that the May 11th deadline was chosen as
the "period of time that would be sufficient, in HoustonStreet's
judgment, to permit HoustonStreet to satisfy" the Agreement's
criteria for its Interfaces. Furthermore, in the Amendment,
HoustonStreet "acknowledge[d] that it [was] estopped from
claiming that Enron refused to grant HoustonStreet a reasonable
period of time to satisfy" the criteria for its Interfaces "in
the event Enron subsequently terminates" that Agreement. Each
party also agreed that time was of the essence in the performance
of the parties' obligations.
Despite the extension of the Interface Completion Date, Ms. Gray
notes, HoustonStreet failed to satisfy the necessary criteria for
its Interfaces by the May 11, 2001 Interface Completion Date. As
a result, Net Works terminated the Agreement on May 14, 2001,
pursuant to Section 12 of the Agreement, as amended.
On November 1, 2001, HoustonStreet filed a demand for arbitration
in the Houston office of the American Arbitration Association.
In its Arbitration Demand, HoustonStreet claimed breach of
contract, misrepresentation and fraudulent inducement against Net
Works. HoustonStreet requested damages amounting to $5,000,000
purportedly expended in reliance upon the Agreement. The
arbitration was administratively stayed pending bankruptcy.
On October 8, 2002, HoustonStreet filed Claim No. 7221 for
$5,000,857. The Claim attaches a bill for professional legal
services, a transmittal letter, AAA cover sheet and the
Arbitration Demand.
The Debtors object to Claim No. 7221 because it fails to state a
claim for recovery. The Agreement, as amended, was terminated by
Net Works in accordance with its terms due to HoustonStreet's
failure to complete the Interfaces on time. Furthermore,
HoustonStreet voluntarily agreed that it was estopped from
claiming that Net Works failed to provide a reasonable time to
meet the Interface criteria, and that time was of the essence.
Accordingly, the Debtors ask the Court to disallow and expunge
HoustonStreet's Claim No. 7221.
If Claim No. 7221 is not formally expunged, HoustonStreet would
receive significant voting rights with respect to Net Works to
which it is not entitled, to the extreme prejudice of Net Work's
other creditors. (Enron Bankruptcy News, Issue No. 100; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ENRON CORP: ACON Investments Buys Mariner Energy for $271 Million
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ACON Investments successfully consummated the purchase of Mariner
Energy Inc. from an affiliate of Enron Corporation. This is one of
the completed five privately negotiated investments by ACON in the
last several months in transactions valued at over $550 million.
ACON Investments, in partnership with Carlyle-Riverstone Holdings
II, completed the purchase of Mariner Energy Inc. from an
affiliate of Enron for $271 million. The purchase was approved by
the U.S. Bankruptcy Court for the Southern District of New York on
February 19, 2004.
Mariner is a leading oil and gas exploration firm with significant
assets in the Gulf of Mexico and throughout the southwestern
United States. Mariner has over 220 Bcfe of proven assets and has
recently added significant additional resources to its natural
resource asset base. ACON and Carlyle-Riverstone believe that
Mariner was significantly impaired over the last eighteen months
because of its relationship to Enron, and, as a result, the
company has been limited in its access to capital, industry
partnerships and new exploration opportunities. Under new
leadership, ACON and Carlyle-Riverstone expect that Mariner will
once again be open to partnerships with leading oil and gas
exploration and development firms and should have no barriers to
impede its continued growth.
Mariner will be led by Scott Josey an experienced CEO with over 25
years experience in the oil and gas industry. Josey intends to
continue to steer Mariner, which under Enron focused on deep-water
exploration, towards less risky opportunities in progressively
shallower waters of the Gulf of Mexico. Along with ACON and
Carlyle-Riverstone, Josey believes the timing of the transaction
is auspicious given the outlook for the sector, current commodity
prices and recent developments within the company.
Debt financing for the transaction was provided by The Union Bank
of California and Paribas Capital Markets.
ACON Investments is a Washington, D.C.-based private equity
investment firm with approximately $700 million of capital under
management. Founded in 1996, ACON manages private equity funds and
special purpose investment partnerships with investments in the
United States, Europe and Latin America. Among its activities,
ACON is affiliated with Texas Pacific Group, one of the leading
private equity organizations in the world. ACON pursues a theme-
based investment strategy by focusing on industries or businesses
at key inflection points in their development and pursues these
opportunities in close partnership with established management
teams. ACON has offices in Washington, D.C. and Madrid, Spain.
Among the other recent investments ACON has made is the founding
of Impremedia, a new entity formed together with Clarity Partners
and Halyard Capital to consolidate the Spanish language newspaper
sector. Impremedia has since successfully consummated the
acquisitions of El Diario/La Prensa in New York and La Opinion in
Los Angeles, representing the oldest and largest Spanish language
daily newspapers, respectively, and making ImpreMedia one of the
nation's largest network of Spanish language daily newspapers in
terms of circulation. ACON has also recently invested in RadioVisa
Corporation, a Spanish language radio station and syndicated
programming company. Additionally, ACON owns Signal International,
a marine construction company headquartered in Pascagoula, MS,
which was purchased out of bankruptcy in 2003 and Florimex
International, the world's largest distributor of fresh cut
flowers headquartered in Amsterdam, Holland, which was acquired in
2001 from the bankrupt estate of USA Floral.
EXIDE TECH: Overview & Summary of Joint Reorganization Plan
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Following Exide Technologies' Confirmation Hearing, on December
30, 2003, the U.S. Bankruptcy Court for the District of Delaware
denied confirmation of the Fourth Amended Plan. The Court found
the Debtors' enterprise value to be in the range of $1,400,000,000
to $1,600,000,000 -- higher than the valuation on which the Fourth
Amended Plan was predicated. Thus, the Official Committee of
Unsecured Creditors, the Debtors, the Agent and their advisors
negotiated for several weeks in an effort to reach a consensual
plan of reorganization. On January 22, 2004, the parties reached
an agreement in principle, which is the basis for a new Joint Plan
of Reorganization.
The Joint Plan of the Debtors and the Creditors Committee aims to
restructure the Debtors' debt to provide them with a capital
structure that can be supported by the cash flow of their
operations. Assuming that all Allowed Class P3 and S3
Prepetition Credit Facility Claimholders choose to receive New
Exide Common Stock as payment for their claims, the Joint Plan
will reduce the Debtors' and the non-Debtors' subsidiary debt and
accrued interest by $1,400,000,000 and future annual interest
expense by $55,000,000 to $60,000,000. If the Joint Plan is not
confirmed, the Debtors believe that they will be forced to either
file an alternate plan of reorganization or liquidate under
Chapter 7 of the Bankruptcy Code. In either event, the Debtors
believe that their unsecured creditors and equity holders would
realize a less favorable distribution of value, or, in certain
cases, none at all, for their Claims or Equity Interests under an
alternative plan or liquidation.
Substantive Consolidation
The Debtors' Estates have not been consolidated, substantively or
otherwise. Any Claims held against one of the Debtors will be
satisfied solely from the cash and assets of such Debtor. Except
as specifically set forth in the Joint Plan, nothing will
constitute an admission that one of the Debtors is subject to or
liable for any claim against the other Debtors. The claims held
by creditors against multiple Debtors will be treated as separate
claims with respect to each Debtor's estate for all purposes, and
such claims will be administered as provided in the Joint Plan.
Issuance of New Securities
On the Effective Date, Reorganized Exide will issue 25,000,000
shares of New Exide Common Stock. The New Exide Common Stock
will be authorized pursuant to the New Exide Certificate of
Incorporation. Reorganized Exide will use its best efforts to
cause the New Exide Common Stock to be listed on the New York
Stock Exchange or the Nasdaq National Market as soon as
practicable after the Effective Date.
Also on the Effective Date, Reorganized Exide will issue for
distribution New Exide Warrants initially exercisable for
6,250,000 shares of New Exide Common Stock, which shares will be
reserved for issuance upon the exercise of the New Exide
Warrants. The New Exide Warrants will expire seven years after
the Effective Date. They will have customary anti-dilution
protections for stock splits, stock dividends, stock
combinations, cheap stock issuances and similar transactions but
will be subject to dilution pursuant to a Company Incentive Plan.
The exercise price of the New Exide Warrants will initially be
set at $32.11 per share. Reorganized Exide will use its best
efforts to cause the New Exide Warrants to be listed on the New
York Stock Exchange or the Nasdaq National Market as soon as
practicable after the Effective Date.
Amended Prepetition Foreign Credit Agreement
Allowed Class P3 and Class S3 Prepetition Credit Facility
Claimholders who choose the Class P3 Option B will, among other
things, have their prepetition foreign secured claims as against
the foreign subsidiary borrowers reinstated pursuant to an
Amended Prepetition Foreign Credit Agreement.
Noteholder Distribution Settlement
In recognition and settlement of claims relating to the
contractual subordination of the 2.9% Convertible Notes to the
10% Senior Notes in the 2.9% Convertible Note Indenture, the 2.9%
Convertible Note Indenture Trustee will be deemed to have
transferred the 2.9% Subordination Payment to the 10% Senior Note
Indenture Trustee and the 10% Senior Note Indenture Trustee will
be deemed to have transferred the 2.9% Settlement and
Reallocation Payment to the 2.9% Convertible Note Indenture
Trustee, and all Creditors will be deemed to have waived any and
all contractual subordination rights that they may have with
respect to the 2.9% Note Settlement and Reallocation Payment
provided under the Joint Plan. In recognition of these deemed
transfers, the Reorganized Debtors will make the distributions
set forth in the Joint Plan.
Post-Confirmation Estate
The Reorganized Debtors will continue to exist after the
Effective Date as separate corporate entities with all the powers
of a corporation under the laws of their individual states of
incorporation. Except as otherwise provided in the Joint Plan,
on the Effective Date, all property of the Debtors' Estates, and
any property they acquired under the Joint Plan, will vest in the
Reorganized Debtors, free and clear of all Claims, liens,
charges, or other encumbrances.
Restructuring
Before the Confirmation Date:
(i) Exide will form a new Dutch company -- Exide CV --
owned by Exide and a new wholly owned domestic subsidiary
of Exide; and
(ii) Exide CV will form another new, wholly owned Dutch
company -- Exide BV.
After the Confirmation Date, but on or before the Effective Date:
(i) Exide will transfer the shares of two existing foreign
subsidiaries, Exide Holding Asia PTE Limited and Exide
Holding Europe SA, along with its interest in the Exide
Holding Europe participating loan, to Exide CV in exchange
for equity of Exide CV;
(ii) Exide CV will transfer its newly acquired shares of Exide
Holding Asia and a portion of its newly acquired shares of
Exide Holding Europe to Exide BV in exchange for equity of
Exide BV;
(iii) Exide Holding Europe will be converted from a French SA to
a French S.A.S. and/or S.A.R.L; and
(iv) Exide will enter into an assumption and indemnification
agreement with Deutsche Exide regarding Deutsche Exide's
obligations under the Prepetition Credit Facility.
Dismissal of Creditors Committee Adversary Proceeding,
Smith Adversary Proceeding and other Settlements
The provisions of the Joint Plan will constitute a good faith
compromise and settlement of all Claims and controversies
resolved pursuant to the Joint Plan including, without limitation
to:
(a) the releases set forth in the Joint Plan;
(b) the Creditors Committee Adversary Proceeding;
(c) the Smith Adversary Proceeding;
(d) the Smith Management LLC and HSBC Bank USA appeals of the
Opinion on Confirmation, dated December 30, 2003, and the
Order, dated December 30, 2003, denying confirmation of
the Debtors' Fourth Amended Joint Plan of Reorganization;
and
(e) the Adversary Proceeding between the Committee and R2
Investments, LDC.
The entry of the Confirmation Order will constitute the Court's
approval of each of the compromises or settlements, and all other
compromises and settlements provided for in the Joint Plan,
including the releases. On the Effective Date:
(a) the Creditors Committee, R2 Investments and each Holder of
General Unsecured Claims will dismiss their claims under
the Creditors Committee Adversary Proceeding, with
prejudice and in their entirety;
(b) Smith Management LLC will dismiss its claims under the
Smith Adversary Proceeding with prejudice and in their
entirety;
(c) Smith Management LLC and HSBC Bank USA will dismiss with
prejudice any appeals of the Opinion on Confirmation,
and the Order, dated December 30, 2003, denying
confirmation of the Debtors' Fourth Amended Joint Plan of
Reorganization; and
(d) the Creditors Committee will dismiss with prejudice, and
the Creditors Committee and the individual members of the
Creditors Committee will be deemed to have released R2
Investments, LDC and R2 Top Hat, Ltd. from any and all
claims, allegations and causes of action described in or
related to the allegations set forth in the Committee/R2
Motion.
Liquidation Analysis
The Debtors believe that the Joint Plan will produce a greater
recovery for Claimholders and Equity Interest holders than would
be achieved in a Chapter 7 liquidation. The Debtors, with the
assistance of AlixPartners, prepared a liquidation analysis to
assist Holders of Claims and Equity Interests to reach a
determination as to whether to accept or reject the Plan. The
Liquidation Analysis estimates the proceeds to be realized if
Debtors were to be liquidated under Chapter 7 of the Bankruptcy
Code:
Asset Value Summary
(In thousands)
Estimated
Book Value Hypothetical Liquidation
Asset Category At 12/31/03 Recovery % Value
-------------- ----------- ------------ -----------
Cash and Cash Equivalents $4,272 100.0% $4,272
Accounts Receivable (net) 136,917 76.3 104,427
Intercompany Receivables 34,053 10.5 3,567
Inventories 151,564 66.9 101,370
Other Current Assets 18,445 0.0 -
Property, Plant & Equipt. 235,183 31.0 72,871
Goodwill 40,965 0.0 -
Investment in Affiliates 1,760 0.0 -
Intercompany Notes Rec. 238,019 3.0 8,377
Other 42,370 0.0 -
---------- ----------
Total Assets $948,548 $294,885
========== ==========
Distribution Analysis
(In thousands)
Estimated
Estimated Hypothetical Liquidation
Claims Recovery % Value
--------- ------------ -----------
Net Proceeds Available for
Distribution $294,855
Estimated Court Ordered
Environmental Claim $40,000 100.0% 40,000
Less: Chapter 7 Admin Claims
* Chapter 7 Trustee Fees 8,847 100.0% 8,847
* Chapter 7 Professional Fees 12,000 100.0% 12,000
* Wind Down Costs - Mfg 26,600 100.0% 26,600
* Wind Down Costs - G&A 16,577 100.0% 16,577
* Key Employee Retention Plan 5,000 100.0% 5,000
------- -------
Total 69,023 69,023
-------
Net Proceeds Available
after Chapter 7 Admin Claims 185,862
Less: Superpriority Claims
* Carve-Out for Prof Fees 5,000 100.0% 5,000
* DIP Facility 166,724 100.0% 166,724
------- -------
Total 171,724 171,724
-------
Net Proceeds Available
after Superpriority Claims 14,138
Less:
Prepetition Secured Claims 713,062 2.0% 14,138
Net Proceeds Available
after Prepetition
Secured Claims -
Less:
Admin and Priority Claims 302,417 0.0 -
General Unsecured Claims 1,287,663 0.0 -
Convertible Notes 321,132 0.0 -
Net Proceeds Available -
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
(Exide Bankruptcy News, Issue No. 41; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FLEMING COS: Wants Plan-Filing Exclusivity Stretched to June 30
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The Fleming Debtors and the Official Committee of Unsecured
Creditors sought and obtained a further extension of the Company's
exclusive periods to file a plan and solicit votes. Citing the
pending Amended Plan and Disclosure Statement, the Debtors and the
Committee convinced Judge Walrath that it is appropriate to extend
the exclusive periods to allow the Plan process to unfold and,
hopefully, be confirmed. Judge Walrath agrees to extend the
exclusive Plan Filing Period through and including June 30, 2004,
and the exclusive Solicitation Period through and including
August 31, 2004.
The Debtors and the Committee are currently devoting substantial
time and effort addressing fundamental issues, such as making
significant progress with regard to the replacement postpetition
financing. Furthermore, the Debtors are currently reconciling
and resolving the more than 14,000 claims filed by the Bar Date.
The Debtors are also in the process of analyzing potential claims
that the estates may have against third parties. They have
already filed hundreds of suits to determine reclamation rights.
The Debtors and the Committee believe that the Joint Plan takes
into account the interests of all of the Debtors and their
estates, creditors and other stakeholders, is in the best
interests of the estates, and should be confirmed. The Debtors
and the Committee also believe that the Plan will be confirmed by
the second quarter of 2004.
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. 26; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FLOWSERVE: Acquires Remaining Shares Of Thompsons, Kelly & Lewis
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Flowserve Corp. (NYSE:FLS) announced its acquisition of the
remaining shares of Thompsons, Kelly & Lewis Pty. Ltd., a leading
Australian designer, manufacturer and supplier of centrifugal
pumps, railway trackwork products and steel castings, for about
US$11.3 million in cash.
TKL is headquartered in Castlemaine, Australia and had revenues in
2003 of about US$36 million. Previously, TKL was 75 percent owned
by BTR Engineering (Australia) Ltd., a subsidiary of Invensys plc,
and 25 percent owned by Flowserve.
"This acquisition is part of Flowserve's overall strategy to
become the preferred global supplier of flow motion and control
products and services," said Tom Ferguson, president of the
Flowserve Pump Division. "It fits the Pump Division's growth plans
by adding products complementary to Flowserve's existing
portfolio, strengthening our product offering in the mining
industry and broadening our manufacturing footprint in the Asia
Pacific region."
Separately, the company said it is considering divesting some
relatively small, non-core businesses that are not consistent with
its growth strategies. The company did not disclose the businesses
being considered.
Flowserve Corp. (S&P, BB- Corporate Credit Rating, Stable) is one
of the world's leading providers of industrial flow management
services. Operating in 56 countries, the company produces
engineered and industrial pumps for the process industries,
precision mechanical seals, automated and manual quarter-turn
valves, control valves and valve actuators, and provides a range
of related flow management services.
FOOTSTAR: Obtains Court Nod to Access New $300 Mil Credit Facility
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Footstar, Inc. reported that it has received interim court
approval to access a new $300 million debtor in possession (DIP)
financing package that was committed to it by a bank group led by
Fleet National Bank and GECC Capital Markets Group, Inc. This
credit facility is now available to the Company, along with
existing cash and cash flow from operations, to help fund its
operations during the Chapter 11 process. The Company intends to
make timely payment for goods received and services provided after
the filing date in the normal course of business and in accordance
with the terms of existing vendor agreements.
Judge Adlai S. Hardin of the United States Bankruptcy Court for
the Southern District of New York in White Plains today also
granted interim approval for all other "first-day motions" that
Footstar made as part of its filings for reorganization under
Chapter 11 of the United States Bankruptcy Code, including the
motion granting vendors administrative expense priority status for
post petition delivery of goods. In addition, the Court gave final
approval for a motion authorizing the Company to continue to pay
active employees in the normal manner and continue all employee
health and benefit plans.
Dale W. Hilpert, Chairman, President and Chief Executive Officer
of Footstar, said: "The first day of our Chapter 11 proceeding was
productive. We are pleased to have received initial approval for
our DIP facility and other first-day motions, which will enable us
to transition into Chapter 11 with minimal disruption and to
maintain normal operations as we move forward."
Footstar, Inc., with annual revenues of approximately $2 billion
and 14,087 associates, is a leading footwear retailer. The
Company offers a broad assortment of branded athletic footwear and
apparel through its two athletic concepts, Footaction and Just For
Feet and their websites at http://www.footaction.com/and
http://www.justforfeet.com/and discount and family footwear
through licensed footwear departments operated by Meldisco. As of
January 31, 2004, the Company operated 431 Footaction stores in 40
states and Puerto Rico, 88 Just For Feet superstores located
predominantly in the Southern half of the country, and 2,504
Meldisco licensed footwear departments and 39 Shoe Zone stores.
The Company also distributes its own Thom McAn brand of quality
leather footwear through Kmart, Wal-Mart and Shoe Zone stores.
FOSTER WHEELER: Names William Diaz as Director & GM in Puerto Rico
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Foster Wheeler Ltd. (OTCBB: FWLRF) announced that William Diaz has
been appointed as director and general manager of Foster Wheeler
USA Corporation's Puerto Rico Branch Operations. Based in San
Juan, William will develop local opportunities for Foster Wheeler,
primarily in the pharmaceutical, biotechnology and healthcare
industries. Leveraging Foster Wheeler's resources and proven
project execution track record in the world's key pharmaceutical
investment locations, William will play a key role in developing
an enhanced offering to our clients in the region, building upon
the high quality validation services currently provided by the
Puerto Rico Operations Centre.
Clive Mullins, global business development director,
pharmaceuticals, Foster Wheeler, said: "William brings in-depth
business development, quality management and business
administration experience to further strengthen our already highly
successful team. Puerto Rico is a key location for Foster Wheeler
and in the last two years alone, this office has completed over 70
validation projects. With William at the helm, we will continue to
build on this success.
"Clients in Puerto Rico had a chance to meet with William and the
key members of his team at a seminar which Foster Wheeler
sponsored at the Banker's Club, Hato Rey, Puerto Rico, on 17
February ," he continued.
Diaz is a graduate of the University of Puerto Rico, Mayaguez
Campus, and holds a Bachelor of Science degree in Chemical
Engineering. In addition, he has completed graduate courses
towards a Master's degree in Marketing and Human Resources from
the Interamerican University of Puerto Rico. He has over 15 years'
experience of business development, project management,
engineering design, quality systems implementation and business
administration for major engineering and construction companies in
the USA and the Caribbean.
He is an associate director of the Puerto Rico Manufacturers'
Association as well as an active member of the American Society
for Quality (ASQ) and the American Society for Engineering
Management (ASEM).
Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research and
plant operation services. Foster Wheeler serves the refining, oil
and gas, petrochemical, chemicals, power, pharmaceuticals,
biotechnology and healthcare industries. The corporation is based
in Hamilton, Bermuda, and its operational headquarters are in
Clinton, New Jersey, USA. For more information about Foster
Wheeler, visit its Web site at http://www.fwc.com/ Foster
Wheeler's balance sheet shows the company is insolvent, with
liabilities exceeding assets by nearly $900 million at
September 26, 2003.
GENTEK INC: J.P. Morgan Chase Discloses 8.5% Equity Stake
---------------------------------------------------------
J.P.Morgan Chase & Co. beneficially owns 856,148 shares of the
common stock of GenTek, Inc. The amount held represents 8.5% of
the outstanding common stock of GenTek. J.P. Morgan Chase & Co.
hold sole powers to both vote and/or dispose of the stock held.
GenTek Inc. is a diversified manufacturer of telecommunications
and other industrial products. Additional information about the
company is available on GenTek's Web site at
http://www.gentek-global.com/
GenTek Inc. is a technology-driven manufacturer of communications
products, automotive and industrial components, and performance
chemicals. The Debtor and its debtor-affiliates filed for Chapter
11 relief on October 11, 2002 (Bankr. Del. 02-12986) and emerged
from bankruptcy on November 2003. Mark S. Chehi, Esq. at Skadden,
Arps, Slate, Meagher & Flom LLP serves as the Debtors' Counsel.
GENTEK: S&P Assigns Low-B Credit & Senior Secured Debt Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Hampton, New Hampshire-based GenTek Inc. At the
same time Standard & Poor's assigned its 'B' senior secured rating
(with a second lien) and recovery rating of '5' to the company's
$250 million senior secured term loan with a second lien, dated
Nov. 10, 2003, and maturing Nov. 10, 2008. The '5' recovery rating
indicates the likelihood of a negligible recovery of principal
(0%-25%) in a default scenario.
The term notes were issued in conjunction with the company's exit
from Chapter 11 in November 2003. The rated notes have no
scheduled amortization, but prepayment tests exist for excess cash
flow and asset sale proceeds.
Total debt as of Dec. 31, 2003, was about $285 million. The
outlook is stable.
GenTek has a moderately aggressive financial profile and below-
average business profile as a diversified provider of automotive
and industrial products, communications equipment, and specialty
chemicals. Revenues are around $1 billion, divided roughly equally
into manufacturing, communications, and performance products
segments.
"Diverse business segments are expected to enable GenTek to
generate internal cash flow sufficient to fund capital spending
and pension requirements. Longer-term, some debt reduction is
possible," said Standard & Poor's credit analyst Robert Schulz.
"Although the company's strategy is likely to evolve over the
intermediate term, the rating does not incorporate significant
debt-financed acquisitions."
GenTek's growth in the past was mainly through acquisitions, but
it is expected that the company will now focus on internal growth
in the near term, although future acquisitions and divestitures
are possible once the new board, installed as a result of the
bankruptcy proceeding, completes formulation of its strategy.
Standard & Poor's rating on the senior secured notes incorporates
the fact that the noteholders will have a second lien on the same
collateral (with the exception of certain Canadian assets) as the
company's unrated first-priority revolving credit facility, which
is secured by a first-priority security interest in all of the
tangible and intangible assets and the capital stock of the
company and its subsidiaries (limited to 65% of foreign
subsidiaries). Domestic subsidiaries have granted a first-priority
security interest in their respective assets. The noteholders are
subordinated, both to the senior credit facility lenders and also
to the priority obligations of the non-guarantor subsidiaries.
Non-guarantor subsidiaries represent around 40% of assets.
GLOBAL CROSSING: Qwest Presses for Payment of $500K Admin. Claim
----------------------------------------------------------------
Qwest Corporation is a provider of telecommunication services to
the GX Debtors. According to David J. Mark, Esq., at Holland &
Knight LLP, the Global Crossing Debtors have failed to pay certain
administrative claims relating to dial-around compensation as
mandated by orders of the Federal Communications Commission.
Dial-around compensation is intended to provide compensation to
the owner or operator of pay telephones whose telephones are used
to generate revenue to a third party, such as Global Crossing, by
the use of "800" numbers, calling cards and the like, that enable
a consumer to use a pay telephone without directly paying for its
use.
Qwest believes that these amounts are due from the Debtors since
the Petition Date:
Year Quarter Amounts Due Payment Received Balance
---- ------- ----------- ---------------- -------
2002 2 $335,986 $239,418 $96,568
2002 3 427,050 305,847 121,203
2002 4 430,589 287,125 143,464
2003 1 348,994 271,024 77,970
2003 2 458,790 333,551 125,239
----- ----------- ---------------- -------
Total $2,001,410 $1,436,966 $564,444
Mr. Mark explains that the services provided by Qwest constitute
administrative expenses by virtue of the utility orders entered
by the Court in the Debtors' Chapter 11 cases. On the Petition
Date, the Court entered an order pursuant to Sections 105(a) and
356(b) of the Bankruptcy Code authorizing the Debtors to provide
adequate assurance to utility companies. The First Day Utility
Order specifically includes Qwest as a utility company. On
March 15, 2002, the Court entered an order pursuant to Sections
105(a) and 362(b) of the Bankruptcy Code deeming the Utility
Companies adequately assured of future performance. The Utility
Order also includes Qwest within its scope. Both the First Day
Utility Order and the Utility Order compel Qwest to continue
providing telecommunication services to the Debtors. In return,
the Orders provide that Qwest will have an administrative claim
and a priority claim under Sections 503(b) and 507(a)(1) for any
unpaid postpetition utility charges. Qwest's services have
already been deemed by the Court to constitute actual and
necessary expenses of the Debtors' estates and, therefore,
constitute administrative priority claims.
Thus, Qwest asks the Court to compel the Debtors to immediately
pay the amounts due with regard to its administrative expense
claims. (Global Crossing Bankruptcy News, Issue No. 56; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
HINES HORTICULTURE: Calif. State Teachers Reports 11.42% Equity
---------------------------------------------------------------
The California State Teachers Retirement System beneficially owns
2,520,598 shares of the common stock of Hines Horticulture Inc.,
with shared voting and dispositive powers. The amount held
represents 11.42% of the outstanding common stock of the Company.
Hines Horticulture (S&P, B+ Corporate Credit Rating, Stable
Outlook) is a leading operator of commercial nurseries in North
America, producing one of the broadest assortments of container
grown plants in the industry. Hines Horticulture sells nursery
products primarily to the retail segment, which includes premium
independent garden centers, as well as leading home centers and
mass merchandisers, such as Home Depot, Lowe's and Wal-Mart.
FRIENDLY ICE CREAM: Prices $175 Million of 8.375% Senior Notes
--------------------------------------------------------------
Friendly Ice Cream Corporation (AMEX: FRN) has priced $175 million
aggregate principal amount of 8.375% senior notes due 2012 in a
private placement to eligible purchasers. The private placement
will be made only to qualified institutional buyers within the
United States under Rule 144A and non-U.S. investors outside the
United States under Regulation S.
Friendly's intends to use the net proceeds from the offering,
together with available cash and approximately $4 million under
its revolving credit facility, to purchase or redeem its existing
10.5% senior notes due December 1, 2007. The offering is expected
to close on or about March 8, 2004.
The notes have not been registered under the Securities Act of
1933, as amended, or applicable state securities laws, and may not
be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act and applicable state laws.
* * *
As reported in the Troubled Company Reporter's February 26, 2004
edition, Standard & Poor's Ratings Services assigned its 'B-'
rating to Wilbraham, Massachusetts-based Friendly Ice Cream
Corp.'s proposed $175 million senior unsecured note offering due
2012.
The notes are rated one notch below the corporate credit rating on
Friendly because of the significant amount of priority debt ahead
of them.
At the same time, Standard & Poor's revised its ratings outlook on
Friendly to positive from stable. The outlook revision is based on
the company's stabilized operating performance and operational
improvements over the past two years.
The 'B' corporate credit rating on the company was affirmed.
INFOUSA: Hires Two Senior Managers to Grow Small Business Sales
---------------------------------------------------------------
infoUSA, (Nasdaq:IUSA) the leading provider of proprietary
business and consumer databases and sales and marketing solutions,
announced that it has hired two senior professionals in order to
further implement its strategy to increase its penetration in the
Small Business market.
Tom McSweeny will be joining the company after 20 years at ADP,
where he rose from sales representative to Divisional Vice
President, responsible for $70 million in sales, 700 customers and
a sales force of 200. His responsibility as VP, Sales, for
infoUSA, will be to grow the small business customer base. He will
initially concentrate on the Chicago region, where he will
implement a proven successful sales growth model that will be
scalable nationwide.
Dan Fowler will be joining infoUSA as VP, Sales and Training, and
will be responsible for training and managing the small business
sales force at the company's field offices/infoUSA stores. Mr.
Fowler spent over twenty years in sales and management in the
wireless communications industry, in a variety of senior sales and
training positions. Most recently he was Vice President, National
Sales, at AT&T Wireless, where he was responsible for multiple
channel sales, including corporate accounts, direct marketing and
telesales as well as designing and training a large sales force in
custom data solutions.
Vin Gupta, Chairman and CEO, infoUSA, commented, "We are very
excited about the addition of these accomplished managers to our
team. Small businesses represent a potential multibillion dollar
market for our products and services, and we have dedicated our
resources to the development of innovative sales solutions that
target these customers. We expect that these two talented
professionals will greatly contribute to the revenue growth and
penetration in this relatively untapped and very promising small
business market."
About infoUSA
infoUSA -- http://www.infoUSA.com/-- (S&P, BB Corporate Credit
Rating, Stable), founded in 1972, is the leading provider of
business and consumer information products, database marketing
services, data processing services and sales and marketing
solutions. Content is the essential ingredient in every marketing
program, and infoUSA has the most comprehensive data in the
industry, and is the only company to own a proprietary database of
250 million consumers and 14 million businesses under one roof.
The infoUSA database powers the directory services of the top
Internet traffic-generating sites, including Yahoo! (Nasdaq:YHOO)
and America Online (NYSE:TWX). Nearly 4 million customers use
infoUSA's products and services to find new customers, grow their
sales, and for other direct marketing, telemarketing, customer
analysis and credit reference purposes. infoUSA headquarters are
located at 5711 S. 86th Circle, Omaha, NE 68127 and can be
contacted at (402) 593-4500.
INTERPOOL INC: Completes & Files March 2003 Form 10-Q with SEC
--------------------------------------------------------------
Interpool, Inc. announced that, in another major step toward
completing its financial statements and Securities and Exchange
Commission filings, which have been delayed due to its recently
completed financial restatements for the years 2000 through 2002,
the company filed its Form 10-Q report for the three months ended
March 31, 2003, with the SEC on February 27, 2004.
Interpool's financial results for the first quarter of 2003,
included in its Form 10-Q, are substantially consistent with the
preliminary financial information for the first quarter which was
included in Interpool's November 5, 2003, press release. Interpool
reported total revenues of $89.2 million for the three months
ended March 31, 2003, compared to restated revenues of $74.5
million for the three months ended March 31, 2002. Net income was
$10.9 million in the first quarter of 2003, compared to restated
net income of $6.2 million in the corresponding quarter of 2002.
Stockholders' equity was $346.9 million at March 31, 2003,
compared to $336.2 million at December 31, 2002. Results for the
other quarters of 2003 will be affected adversely by the
additional costs associated with the restatement of the Company's
financial results for prior years and the related Audit Committee
and SEC investigations described in its March 31, 2003 Form 10-Q.
Martin Tuchman, Chairman and Chief Executive Officer, said,
"Submitting this Form 10-Q report was another important milestone
in getting our financial statements in order. In addition, this
filing illustrates the ongoing strength of our revenues and
reflects our confidence that with the restatement uncertainties
behind us we are moving forward successfully in our efforts to
comply with the SEC's filing requirements."
Interpool also announced that, as further described in its March
31, 2003 Form 10-Q, it has obtained new waivers under its debt
agreements from its lenders and other financial institutions with
respect to the filing of its 2003 Form 10-Q reports and its
December 31, 2003 Form 10-K report, as well as its 2004 Form 10-Q
reports. The company stated that it intends to complete and file
these reports earlier than the deadlines agreed to by its
financial institutions. Interpool stated that it expects to be
current in its compliance with SEC filing requirements later this
year.
Interpool noted that it has appealed the December 29, 2003,
decision by the staff of the New York Stock Exchange to suspend
trading in Interpool's common stock and other listed securities,
as well as the staff's recommendation that the company's stock and
other listed securities be delisted. A hearing on Interpool's
appeal is scheduled for March 10, 2004, and the company cannot
predict either the timing of any decision or the likely outcome of
its appeal.
Currently, Interpool's common stock is traded over the counter
under the symbol "IPLI," and its price and trading information can
be accessed using any quote program.
Interpool is one of the world's leading suppliers of equipment and
services to the transportation industry. The company is the
world's largest lessor of intermodal container chassis and a
world-leading lessor of cargo containers used in international
trade.
* * *
As reported in the Troubled Company Reporter's January 15, 2004
edition, Standard & Poor's Ratings Services said that its ratings
on Interpool Inc. (BB/Watch Neg/--) remained on CreditWatch with
negative implications, where they were placed on Oct. 10, 2003.
The CreditWatch update follows Interpool's Jan. 9, 2004, filing of
its 2002 10K, including restated 2000 and 2001 financial
statements, with the SEC. The initial delay of the filing of the
financial statements occurred in March 2003, due to several
restatements in the way the company accounted for finance lease
transactions and, more recently, an insurance claim receivable.
"Standard & Poor's will continue to monitor Interpool's situation
regarding its completed audited financial statements, the SEC
investigation, the resumption of trading in its shares by the
NYSE, and continued lender support to resolve the CreditWatch,"
said Standard & Poor's credit analyst Betsy Snyder.
INTERPOOL INC: Confirms James Walsh's Appointment as New CFO
------------------------------------------------------------
Martin Tuchman, Chairman and Chief Executive Officer, of
Interpool, Inc. announced that the appointment of James Walsh as
Interpool's new Chief Financial Officer was made effective
February 26, 2004.
Walsh, who joined Interpool as Executive Vice President - Finance
in November 2003 after many years of experience in senior
financial positions with companies in the leasing industry,
including GE Capital and Polaris Aircraft Leasing, signed
Interpool's March 31, 2003 Form 10-Q in his capacity as Chief
Financial Officer. As previously announced, Richard Gross, who has
served as Acting Chief Financial Officer since July 2003, has been
appointed Executive Vice President and Chief Operating Officer of
the Interpool Limited container division.
"When Jim Walsh joined us a few months ago, our Board believed
that his background and experience would make him an excellent CFO
of Interpool," Tuchman said. "In that short time, he has
established solid relationships with our lenders, our
stockholders, our employees and our other constituencies. Working
with Jim has underscored that our Board's confidence in him was
very well founded."
Tuchman added, "I and our entire Board and management team express
our sincere gratitude to Rick Gross, who has served us well as CFO
during this interim period. Rick has over 25 years of experience
in this industry on both the financial and marketing sides, and we
are delighted that Rick will now be running our international
container division."
Interpool is one of the world's leading suppliers of equipment and
services to the transportation industry. The company is the
world's largest lessor of intermodal container chassis and a
world-leading lessor of cargo containers used in international
trade.
* * *
As reported in the Troubled Company Reporter's January 15, 2004
edition, Standard & Poor's Ratings Services said that its ratings
on Interpool Inc. (BB/Watch Neg/--) remained on CreditWatch with
negative implications, where they were placed on Oct. 10, 2003.
The CreditWatch update follows Interpool's Jan. 9, 2004, filing of
its 2002 10K, including restated 2000 and 2001 financial
statements, with the SEC. The initial delay of the filing of the
financial statements occurred in March 2003, due to several
restatements in the way the company accounted for finance lease
transactions and, more recently, an insurance claim receivable.
"Standard & Poor's will continue to monitor Interpool's situation
regarding its completed audited financial statements, the SEC
investigation, the resumption of trading in its shares by the
NYSE, and continued lender support to resolve the CreditWatch,"
said Standard & Poor's credit analyst Betsy Snyder.
IT GROUP: Proposes Pact to Settle Chevron Environmental Claim
-------------------------------------------------------------
As of the Petition Date, Chevron Environmental Management Company
and Debtor IT Corporation were parties to an amended services
agreement, originally entered into by their predecessors-in-
interest in 1998. As amended, the Services Agreement provided
that IT Corp. would conduct environmental remediation at the
Purity Oil Superfund Site in Fresno, California, in anticipation
of which Chevron advanced $8,488,247 as "Cleanup Funds" to IT
Corp. between March and May 1999.
Chevron and IT Corp. also entered into a relocation expense
agreement, dated July 27, 2001, concerning the allocation of
expenses incurred and to be incurred in connection with the
relocation of families living adjacent to the Site. By separate
agreement, the United States Environmental Protection Agency
agreed to reimburse Chevron for up to $1,500,000 of the costs of
the relocation process. In the Relocation Agreement, Chevron
agreed to provide IT Corp. with a portion of the amount provided
by the EPA as reimbursement of IT Corp.'s associated expenses.
The Disputed Claim
All cleanup work under the Services Agreement was suspended in
December 2001. At that time, IT Corp. had performed some work
required by the Services Agreement, which Chevron values at
$637,516. IT Corp., however, values the work at $2,945,119. The
Court authorized IT Corp. to reject the Services Agreement on
May 10, 2002.
Based on the rejection of the Services Agreement, Chevron filed
Claim No. 3812 seeking payment of $8,520,852, which consists of
the full amount of the Cleanup Funds and attorneys' fees of
$32,605. Chevron maintains that it also suffered consequential
damages and is potentially liable to the EPA for penalties
resulting from delays in cleaning up the Site. Chevron asserts
that it is entitled to amend its Claim to account for these
damages.
To resolve the dispute, the Debtors and Chevron engaged in arm's-
length and good faith negotiations, which resulted to a
settlement agreement. By this motion, the Debtors ask the Court
to approve its settlement agreement with Chevron.
Under the Settlement Agreement, Gregg M. Galardi, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington,
Delaware, relates that the Debtors and Chevron agreed to resolve
Claim No. 38812, which will be allowed as a general unsecured
claim for $6,016,546. This amount was arrived at by:
(1) splitting the difference between Chevron's and IT
Corp.'s valuations of the work actually performed by IT
Corp. under the Services Agreement;
(2) splitting the difference between Chevron's and IT
Corp.'s calculation of the relocation expenses incurred by
IT Corp. and subject to the Relocation Expense Agreement;
(3) deducting Chevron's attorneys' fees from the amount
claimed; and
(4) permitting Chevron to retain past and future
reimbursements from the EPA.
Chevron also releases the Debtors from any and all claims arising
directly or indirectly or consequentially from the Services
Agreement, the Relocation Expense Agreement, or in any way
related to environmental remediation of the Site.
If the dispute were not settled, future litigation between the
parties would result in additional, unnecessary expense for the
Debtors and their estates. Furthermore, while the Debtors have
formulated defenses to certain aspects of the disputed claims,
and could support their valuations of the damages incurred by
Chevron as a result of the rejection of the Services Agreement,
the likelihood of success of the defenses are uncertain.
In light of this uncertainty, the Settlement Agreement represents
a favorable outcome for the Debtors and Chevron. Accordingly,
the Debtors believe that the Settlement Agreement is appropriate
and should be approved.
Headquartered in Monroeville, Pennsylvania, The IT Group, Inc.
-- http://www.theitgroup.com/-- together with its 92 direct and
indirect subsidiaries, is a leading provider of diversified,
value-added services in the areas of consulting, engineering and
construction, remediation, and facilities management. The Company
filed for chapter 11 protection on January 16, 2002 (Bankr. Del.
Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate
Meagher & Flom, represents the Debtors in their restructuring
efforts. On September 30, 2001, the Debtors listed $1,344,800,000
in assets and 1,086,500,000 in debts. (IT Group Bankruptcy News,
Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000)
JASCO ENTERPRISES: Case Summary & 15 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Jasco Enterprises Ltd.
41 West 57th Street
New York, New York 10019
Bankruptcy Case No.: 04-11349
Type of Business: The Debtor operates Wolf's Delicatessen
-- a restaurant and delicatessen --
located in Midtown Manhattan. See
http://www.wolfsdeli.geomerx.com/
Chapter 11 Petition Date: March 3, 2004
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Neal M. Rosenbloom, Esq.
Finkel Goldstein Berzow Rosenbloom & Nash, LLP
26 Broadway, Suite 711
New York, NY 10004
Tel: 212-344-2929
Fax: 212-422-6836
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 15 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
41 West 57th Street LLC $400,000
405 East 61st Street
New York, NY 10022
U.S. Foodservice $41,794
Johns Market $18,058
Paramount Paper and Plastic Corp. $5,276
White Coffee Corp. $4,929
WOR Radio 710 AM $3,875
Arista Air Conditioning $2,817
Tuscan Dairies $2,473
Carousel Cakes $2,232
S & S Cheesecake, Inc. $2,160
Protection People 2 $1,244
Verizon $1,177
United Pickle Products Corp. $980
Sunshine Ice Cream $553
AT&T $394
JOEAUTO INC: Section 341(a) Meeting Scheduled on March 11, 2004
---------------------------------------------------------------
The United States Trustee will convene a meeting of JoeAuto,
Inc.'s creditors at 10:00 a.m., on March 11, 2004, at Suite 3401,
515 Rusk Ave, Houston, Texas 77002. This is the first meeting of
creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy
cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in The Woodlands, Texas, JoeAuto, Inc.,
-- http://www.joeauto.com/-- an auto service and repair company,
filed for chapter 11 protection on January 30, 2004 (Bankr. S.D.
Tex. Case No. 04-31492). Christopher Adams, Esq., at Bracewell &
Patterson, LLP represent the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $11,100,000 in total assets and $16,100,000 in total debts.
JPG INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: JPG Industries, Inc.
935 South Lake Boulevard
Mahopac, New York 10541
Bankruptcy Case No.: 04-35484
Chapter 11 Petition Date: March 3, 2004
Court: Southern District of New York (Poughkeepsie)
Judge: Cecelia G. Morris
Debtor's Counsel: Thomas Genova, Esq.
Genova & Malin
Hampton Business Center
1136 Route 9
Wappingers Falls, NY 12590
Tel: 845-298-1600
Fax: 845-298-1265
Total Assets: $848,282
Total Debts: $1,238,244
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Hitachi Credit America Value of Collateral: $186,222
Corporation $180,000
New Holland Credit Value of Collateral: $185,104
$165,000
Carmel Winwater Works Co. $150,229
Formula Equipment $128,946
Tilcon New York Inc. $110,854
Citicapital Value of Collateral: $105,774
$100,000
Reiner Pump Systems, Inc. $58,254
Beck Equipment, Inc. $31,829
Ward Pavements $20,140
Contech Construction Products $18,700
Laborer's Local #17 $18,235
Joint Benefit Funds
MCM Contracting, Inc. $14,250
Newburgh Winwater Works Co. $11,161
United Rentals $10,294
Precast Concrete Sales Co. $9,977
Tetz & Sons $9,475
Viking $6,750
Edward Zmuda Excavating $6,250
Advanced Drainage Systems $6,165
Farm Plan $5,253
JP MORGAN: Fitch Affirms D Rating on Series 1999-C8 Class K Notes
-----------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-
through certificates series 1999-C8 is downgraded by Fitch Ratings
as follows:
--$23.8 million class J to 'CC' from 'CCC'.
The following classes were upgraded by Fitch:
--$36.6 million class B to 'AAA' from 'AA+';
--$32.9 million class C to 'AA-' from 'A+'.
In addition Fitch affirms the following classes:
--$114.4 million class A-1 'AAA';
--$357.0 million class A-2 'AAA';
--Interest-only class X 'AAA';
--$14.6 million class D 'A';
--$25.6 million class E 'BBB+';
--$11.0 million class F 'BBB';
--$16.5 million class G 'BB+';
--$20.1 million class H 'BB-';
--$3.8 million class K at 'D'.
Fitch does not rate the class NR certificates.
The upgrades are primarily the result of increased subordination
levels due to loan amortization. As of the February 2004
distribution date, the pool's aggregate principal balance has been
reduced by 10% to $656.3 million from $731.5 million at issuance.
The downgrade to class J is attributed to the anticipated losses
on several of the specially serviced loans. Currently, six loans
(3.4%) are in special servicing, including four delinquent loans
(2%). The largest specially serviced loan (0.87%) is secured by a
mixed-use property in Danville, IN. The loan is 90 days delinquent
and the special servicer is evaluating options. One loan (0.56%),
secured by a healthcare property in Cape Coral, FL, is 90 days
delinquent and the special servicer is evaluating the foreclosure
or note sale options. One loan (0.30%), secured by retail property
in Albuquerque, NM, is real estate owned (REO) and is being
marketed for sale.
In re-modeling the pool Fitch applied the expected loss to the
trust as well as various hypothetical stress scenarios. Even under
these stress scenarios, the resulting subordination levels were
sufficient to upgrade classes B and C and downgrade class J.
KENNEDY MANUFACTURING: Has Until March 12 to File Schedules
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Ohio, gave
Kennedy Manufacturing Company and its debtor-affiliates more time
to file their schedules of assets and liabilities, statements of
financial affairs and lists of executory contracts and unexpired
leases required under 11 U.S.C. Sec. 521(1). The Debtors have
until March 12, 2004, to deliver these financial disclosure
documents to the Bankruptcy Court.
Headquartered in Van Wert, Ohio, Kennedy Manufacturing Company
-- http://www.kennedymfg.com/-- produces and markets industrial
tool storage equipment worldwide, including steel tool chests,
roller cabinets, stationary and mobile workbenches, modular
storage cabinets and specialized tool storage. The Company,
together with three of its affiliates, filed for chapter 11
protection on February 12, 2004 (Bankr. N.D. Oh. Case No.
04-30794). Richard L. Ferrell, Esq., Timothy J. Hurley, Esq.,
and W. Timothy Miller, Esq., at Taft Stettinius & Hollister LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, they listed both
estimated debts and assets of over $10 million.
L-3: Wins $26MM+ Contract for Detection System in Israel Airport
----------------------------------------------------------------
L-3 Communications (NYSE: LLL) announced that its Security and
Detection Systems division has received a competitively-awarded
contract by the Israel Airport Authority (IAA) to supply an
initial quantity of five eXaminer(R) 3DX 6000 explosive detection
systems to the new Ben Gurion Airport terminal with an option to
purchase up to 20 systems.
The total value of the contract could be worth in excess of $26
million and the award follows a successful one-year rigorous
demonstration and evaluation of the eXaminer. The IAA is a new key
international customer for L-3's airport security product line. To
date, L-3 has delivered and installed over 500 eXaminer systems in
the United States and at major international airports including
Italy's Fiumicino and Ciampino airports, Singapore's Changi
Airport and others.
As a part of this project, L-3 will provide IAA with a networking
system equipped with features that include distributed threat
analysis. With this system, operators and supervisors will be able
to view complete 3D images at multiple workstations, resulting in
faster threat resolution. System-level performance, accessible by
supervisors at separate workstations offering advanced 3D views of
all baggage, allows for real-time management of all equipment on
the network. These key features proved to be a major discriminator
for L-3's solution, offering unmatched technical capability and
significant cost advantages.
"We are honored to be selected by Israel to supply our EDS
products to Ben Gurion Airport, an organization at the forefront
of utilizing advanced security technology and recognized worldwide
as expert in airport security," said Joseph Paresi, president of
L-3 Security and Detection Systems. "This selection by the Israeli
authorities gives them a significant upgrade in technology and
capability over the equipment from the incumbent vendor. The
eXaminer's advanced 3D on-screen imaging tools and networking
capability allows for faster threat resolution and provides the
IAA with enhanced security value."
The eXaminer 3DX 6000 is the only Explosive Detection System (EDS)
that is capable of completely and continuously scanning over 500
bags per hour when integrated with an in-line baggage handling
system. The eXaminer utilizes an advanced Computer Tomography (CT)
technology that generates a complete 3D reconstructed image of the
entire bag while automatically analyzing and detecting a wide
range of threats. Because of eXaminer's unique 3D imaging
capability, operators can easily and effectively view a bag in
detail for quick threat resolution. Advanced Networked Explosives
Detection Systems (NEDS) capability has also been recently
deployed with eXaminer's installed at John Wayne Airport in Orange
County, CA, resulting in faster alarm resolution and improving
throughput while enhancing the overall efficiency of their in-line
EDS system.
With a broad range of systems and technology, and an installed
base of over 18,000 units of various models, L-3 Security and
Detection Systems offers X-ray screening for numerous major
security applications that include: (1) aviation systems for
checked and oversized baggage, (2) cargo and air freight
screening, (3) port and border inspection, (4) and facility
protection. Security and Detection Systems' customer base includes
major airlines, airports, numerous domestic agencies that include
the U.S. Customs Service, U.S. Marshals Service, U.S. Department
of Agriculture and U.S. Department of State, and international
authorities throughout Europe, Asia and South America.
Headquartered in New York City, L-3 Communications (S&P, BB+
Corporate Credit Rating, Positive Outlook) is a leading provider
of Intelligence, Surveillance and Reconnaissance (ISR) systems,
secure communications systems, aircraft modernization, training
and government services and is a merchant supplier of a broad
array of high technology products. Its customers include the
Department of Defense, Department of Homeland Security, selected
U.S. Government intelligence agencies and aerospace prime
contractors.
To learn more about L-3 Communications, please visit the company's
Web site at http://www.L-3Com.com/
LTV CORP: Airs Objections to Various Administrative Expense Claims
----------------------------------------------------------------
LTV Steel Company, Inc., and The LTV Corporation object to another
batch of administrative expense claims filed in their cases.
Group I: Invalid Claims
The LTV Debtors discovered that 10 administrative claims assert
liabilities that are not owed by them or their estates. As a
result, the amounts asserted in the Invalid Claims should be
disallowed and expunged in their entirety because the Invalid
Claims:
(1) represent alleged obligations that are not valid
liability of the Debtors or their estates, or
otherwise are not due and owing;
(2) represent alleged obligations that have already
been paid or otherwise satisfied; or
(3) are technically deficient and fail to describe valid
liability of LTV Steel. The Invalid Claims lack
proper documentation as required by the Trade Claims
Bar Date Order or the Non-trade Claims Bar Date Order.
The Invalid Claims are:
Debtors' Reasons
Claimant Claim Amount For Disallowance
-------- ------------ ----------------
Alliance Machine $348,371.46 Not owed
Blue Cross/Blue Shield Unliquidated Paid in ordinary Course
Centers for Medicare Unliquidated Paid in ordinary Course
CSX Transportation 242,047.66 Paid
Antonio DeLoa 8,000,000.00 Litigation claim;
No merit
General Elec. Capital 58,820.55 Paid by Copperweld;
Trico Steel's Debt
Nissan North America 31,237.78 Satisfied
Dale J. Scopelite 45,724.12 Stock losses not
valid claim
Dale J. Scopelite 8,426.00 WARN suit dismissed;
No valid claim
Dale J. Scopelite 4,479.07 Claim for benefits
invalidated by contract
Group II: Improperly Classified Claims
LTV Steel observes that 29 administrative claims improperly assert
liabilities that are not entitled to priority treatment. The
underlying liabilities do not meet the statutory criteria for
priority status under any provision of the Bankruptcy Code.
Accordingly, LTV Steel asks the Court to reclassify these claims
as general, unsecured, non-priority claims against its estate.
The Improperly Classified Claims are:
Claimant Claim Amount
-------- ------------
Benmit Division $25,326.45
Blake & Pendleton, Inc. 4,692.89
Brookville Carriers Inc. 17,882.95
Commonwealth of Pennsylvania Unliquidated
Commonwealth of Pennsylvania 4,223,806.00
Thomas A. Crane 52,700.00
Earnhardt & Sons Inc. 31,970.00
Earnhardt & Sons Inc. 14,751.00
Filters for Industry, Inc. 1,728.00
Four County Landbill 453,616.00
Graystone Express Ltd. 35,578.64
Eugene H. Kazubski 22,578.96
Randall lJ. Krajewski Unliquidated
L&M Radiator Inc. 3,754.20
L.A. Dalton Systems, Inc. 39,924.53
Thomas Lavin 30,000.00
Fernandon Marinucci Unliquidated
Thomas Marlow Unliquidated
Mid-American Express, Inc. 4,734.72
Norfolk Southern Railway Co. 109,887.28
Pacific Press Technologies LP 3,082.63
Picoma Industries Inc. 36,381.82
Praxair Surface Tech. Inc. 15,000.00
Harold W. Rankin Jr. 47,080.95
Dale J. Scopelite 13,719.00
John Shultz 20,000
Selectcare HMO Inc. Unliquidated
State of Ohio Bureau of Workers Comp 1,172,970.89
Wendell L. Turpin 30,000.00
Group III: Overstated Claims
LTV Steel finds three claims that assert liabilities in excess of
the amounts currently reflected in its books and records as due
and owing with respect to the underlying obligations to the
claimants. LTV Steel has determined that the amounts in these
claims are overstated because the claim has already been paid or
otherwise satisfied. Therefore, LTV Steel asks the Court to
reduce the Overstated Claims.
The Overstated Claims are:
Claimant Claim Amount Reduced Amount
-------- ------------ --------------
Abtrex Industries, Inc. $317,413.00 $147,478.00
Enron Energy Services 265,158.31 175,632.02
Schweizer Dipple Inc. 276,896.00 264,666.99
Group IV: Duplicate Claims
Certain claims are duplicates of other filed administrative
claims. The duplicate claims should be expunged and disallowed in
their entirety and replaced by a single surviving claim, which
should then be allowed in the amount and priority agreed to by the
Debtors.
The Debtors found 20 Duplicate Claims:
Claimant Duplicate Claim Amount
-------- ----------------------
Abtrex Industries, Inc. $317,413.00
Affival Inc. 114,022.28
Air Products & Chemicals Inc. 481,215.13
CC Metals and Alloys Inc. 23,623.88
Charcas Innovations 24,466.90
Chief Freight Lines 7,962.26
Chief Freight Lines 7,926.20
ESM Group Inc. 168,230.05
Four Star Design Services LLC 9,254.00
Foxboro Co. 83,832.18
Hobart Equipment Co. Inc. 5,656.89
Independence Corn By Products 24,166.10
Janitorial Services Inc. 10,819.15
K&J International Inc. 26,423.04
NMHG Financial Services Inc. 741,352.45
Norfolk Southern Railway Co. 109,887.28
Safety-Kleen (WT) Inc. 39,840.49
Stollberg Inc. 44,563.62
Earl Van Liere Unliquidated
Earl Van Liere 40,500.00
Group V: Amended and Superseded Claim
LTV Steel reports that certain creditors filed administrative
claims that amended and superseded the original administrative
claims filed in their cases. By filing Amended Claims, the
claimants liquidated, reduced, increased or otherwise modified the
liabilities originally included in the Original Claims.
Although the Amended Claims are identified on their face as claim
amendments that supersede and replace the Original Claims, the
Original Claims, as a technical matter, remain on the claims
docket as outstanding liabilities until they are withdrawn by the
claimants or disallowed by the Court. Therefore, the Original
Claims remain potential liabilities of LTV Steel that either:
(i) duplicate the amounts included in the Amended Claims;
or
(ii) are no longer identified as outstanding liabilities
by the claimants.
LTV Steel asks the Court to disallow the Original Claims to
prevent the claimants from obtaining a double recovery on account
of any single obligation, and limit the claimants to a single
claim for only those amounts currently identified by the claimant
as owing.
The five Original Claims to be disallowed are:
Claimant Original Claim Amount
-------- ---------------------
Commonwealth of Pennsylvania Unliquidated
Esquire Staffing Group Ltd. $14,000.00
Ohio Dept. of Job & Family Services Unliquidated
Rediehs Transit Line Inc. 1,956.48
Earl Van Liere 40,500.00
Group VI: Request to Liquidate Unliquidated Claims
LTV Steel reports that the amounts due and owing with respect to
two unliquidated administrative claims, as reflected in its books
and records, are identified as "Liquidated Amounts." The
Liquidated Amounts are necessary to establish the appropriate
amount of the underlying liabilities and, ultimately, permit the
Unliquidated Claims to be satisfied. Accordingly, LTV Steel asks
the Court to fix and allow each of the Unliquidated Claims as an
administrative expense claim against its estate in the applicable
Liquidated Amount.
The Unliquidated Claims are:
Claimant Claim Amount Liquidated Amount
-------- ------------ -----------------
Thomas M. Rumcik Unliquidated $25,000.00
Earl Van Liere Unliquidated 13,500.00
Group VII: Warnock Claim
LTV Steel observes that the claim filed by Robert Warnock Company,
Inc. for $2,478.14 asserts liabilities in excess of the amounts
currently reflected in its books and records as due and owing.
The Warnock Claim is overstated to include an administrative
expense amount that is not a liability of LTV Steel or its estate.
The Claim includes invoices for goods or services not provided to
LTV Steel on a postpetition basis as well as valid prepetition
amounts that should be reduced and allowed as a general, unsecured
non-priority claim. The Debtors want the Warnock Claim reduced to
$1,008.84.
Group VIII: Improper Debtor Claim
LTV Steel asserts that the claim filed by Minntech Electronics,
Inc. has been filed against the wrong Debtor. Based on LTV
Steel's review of its books and records, the appropriate Debtor
for this claim is LTV Steel Mining Company, Inc. None of the
other Debtors are jointly or severally liable with LTV Steel
Mining on this claim. Therefore, LTV Steel asks the Court to
reclassify the claim against LTV Steel Mining's estate. LTV Steel
Mining has agreed with the proposed reclassification.
Group IX: Industrial Technical Sales Claim
LTV Steel contends that the claim filed by Industrial Technical
Sales & Service, Inc. for $7,156.18 is filed against the wrong
Debtor. Based on a review of its books and records and its
analysis of the underlying liabilities, LTV Steel identifies
Copperweld Tubing Products Company as the appropriate Debtor,
which is liable for any valid amounts asserted in the Industrial
Technical Sales Claim. None of the other Debtors are jointly or
severally liable with Copperweld Tubing on the claim. Therefore,
LTV Steel asks the Court to reclassify the claim against
Copperweld Tubing's estate. Copperweld Tubing has agreed with the
proposed reclassification.
LTV Steel also argues that the Industrial Technical Sales Claim
improperly asserts an entitlement to administrative expense
priority. Industrial Technical Sales fails to meet the Bankruptcy
Code requirements for that status. Accordingly, LTV Steel asks
the Court to reclassify the Industrial Technical Sales Claim as a
general, unsecured, non-priority claim against Copperweld Tubing's
estate to ensure that Industrial Technical Sales does not receive
a disproportionately large distribution on account of its asserted
liabilities.
Headquartered in Cleveland, Ohio, The LTV Corporation is a
manufacturer with interests in steel and steel-related businesses,
employing some 17,650 workers and operating 53 plants in Europe
and the Americas. The Company filed for chapter 11 protection on
December 29, 2000 (Bankr. N.D. Ohio, Case No. 00-43866). Richard
M. Cieri, Esq., and David G. Heiman, Esq., at Jones, Day, Reavis &
Pogue, represent the Debtors in their restructuring efforts. On
August 31, 2001, the Company listed $4,853,100,000 in assets and
$4,823,200,000 in liabilities. (LTV Bankruptcy News, Issue No. 61;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
METRIS COMPANIES: $500MM Securitization Rolled into New Facility
----------------------------------------------------------------
Metris Companies Inc. (NYSE:MXT) announced that Metris
Receivables, Inc. (MRI), its wholly owned subsidiary, through the
Metris Master Trust (MMT), has defeased the $500 million series
1999-1 asset-backed securitization from the MMT. Series 1999-1 was
scheduled to mature on June 20, 2004. The new private conduit,
series 2004-A, matures in May 2004. The current conduits
outstanding in the Metris Master Trust, Series 2003-A, 2003-B and
2003-1, have been repaid.
Metris Companies Inc., based in Minnetonka, Minn., is one of the
largest bankcard issuers in the United States. The company issues
credit cards through Direct Merchants Credit Card Bank, N.A., a
wholly owned subsidiary headquartered in Phoenix, Ariz. For more
information, visit http://www.metriscompanies.com/or
http://www.directmerchantsbank.com/
* * *
As reported in the Troubled Company Reporter's November 21, 2003,
edition, Fitch Ratings placed Metris Companies Inc. 'CCC' senior
unsecured rating on Rating Watch Negative following the company's
announcement that its external auditor, KPMG LLP, has issued a
letter to the Audit Committee citing material weakness surrounding
internal controls around the valuation of the company's retained
interest in securitized assets. As a result, Metris has delayed
the filing of its quarterly 10-Q report to the Securities and
Exchange Commission. Fitch's Rating Watch reflects the uncertainty
around this recently identified issue, and the ultimate impact on
Metris' financial condition and liquidity. Fitch will settle the
Rating Watch after evaluating the financial impact, if any, once
the issue is resolved between KPMG and Metris.
MIKOHN GAMING: Retains Financial Relations Board
------------------------------------------------
Mikohn Gaming Corporation (Nasdaq:MIKN), a leading provider of
diversified products and services used in the gaming industry
worldwide, has retained Financial Relations Board to assist the
Company with its investor relations program.
Chief Financial Officer Michael A. Sicuro stated: "Financial
Relations Board is one of the largest and most respected investor
relations firms in the world. They have an excellent team of
professionals including Moira Conlon and Jill Fukuhara who are
very focused on helping their clients build shareholder value. My
previous experiences with this team have been superb. We plan to
augment our experience with their expertise to improve the
Company's visibility and communication with the financial
community."
About Financial Relations Board
Financial Relations Board is a leading investor relations firm,
with offices in New York, Chicago, Los Angeles, San Francisco and
London, operates as a unit of The Interpublic Group of Companies
(NYSE:IPG). The Interpublic Group of Companies is among the
world's largest advertising and marketing services organizations.
For further information, visit the firm's Web site at:
http://www.financialrelationsboard.com/
Mikohn (S&P, B- Corporate Credit Rating, Negative Outlook) is a
leading supplier of innovative and diversified products and
services used in the gaming industry worldwide. The company
develops, manufactures and distributes an expanding array of slot
games, table games and advanced player tracking and accounting
systems for slot machines and table games. The Company is also a
market leader in exciting visual displays and progressive jackpot
technology for casinos worldwide. There is a Mikohn product in
virtually every casino in the world. For further information,
visit the company's website at http://www.mikohn.com/
MIRANT: Bonneville Power Wants Funds Deposited in Court Registry
----------------------------------------------------------------
On December 5, 2003, Bonneville Power Administration asked the
Court to modify the automatic stay to permit termination of a
Confirmation Agreement. However, the Court denied Bonneville's
request on December 23, 2003.
By a letter dated December 24, 2003, the Mirant Corp. Debtors
demanded the return of the Adequate Assurance Payment by close of
business on December 29, 2003. The Debtors agreed to extend this
deadline to January 7, 2004.
On January 8, 2004, Bonneville filed an appeal of the Lift Stay
Order.
By this motion, the United States of America, on behalf of
Bonneville, asks the Court, pursuant to Rule 67 of the Federal
Rules of Civil Procedure and N.D. TX L.B.R. 7067.1 of the Local
Rules of the U.S. Bankruptcy Court for the Northern District of
Texas, to authorize the payment of the Adequate Assurance Payment
into the Court's registry.
Civil Rule 67 provides in pertinent party that:
"In an action in which any party of the relief sough is
a judgment for a sum of money or the disposition of a
sum of money or the disposition of any other thing
capable of delivery, a party, upon notice to every
other party, and by leave of court, may deposit with
the court all or any party of such sum."
Matthew J. Troy, Esq., of the U.S. Department of Justice, in
Washington, D.C., contends that under Civil Rule 67, the Court
should allow Bonneville to deposit the funds to the Court because
Bonneville disputes that it owes the Adequate Assurance Payment
to MAEM. In its Termination Letter, Bonneville agreed to return
the Adequate Assurance Payment only upon MAEM's payment of the
net Termination Payment. MAEM disputed the validity of the
termination and the demand for the net Termination Payment
contentions with which the Court agreed. Bonneville appealed the
Court's orders and if successful on the appeal, Bonneville holds
a $1,085,040 claim for the Termination Payment and would be
entitled to assert setoff or recoupment rights against the
Adequate Assurance Payment. Absent payment of the Adequate
Assurance Payment into the Court's registry, Bonneville's
voluntary payment of the Adequate Assurance Payment to MAEM may
cause the Debtors to argue that Bonneville lost its right of
setoff or recoupment.
In contrast to Bonneville's harm, Mr. Troy points out that the
Debtors cannot argue that they must have this money now -- they
are holding $1,700,000,000 in cash. Having to wait for the
resolution of Bonneville's appeal causes no harm to the Debtors.
"Nor does deposit of the funds delay adjudication of Bonneville's
appeal," Mr. Troy remarks. (Mirant Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
MORGAN STANLEY: Fitch Affirms Ser. 1996-WF1 Class G Notes at B+
---------------------------------------------------------------
Morgan Stanley Capital Inc.'s commercial mortgage pass-through
certificates, series 1996-WF1 are upgraded as follows:
--$33.3 million class D to 'AAA' from 'AA';
--$9.1 million class E to 'AA+' from 'A+';
--$21.2 million class F to 'BBB' from 'BB+';
In addition, Fitch affirms the following classes:
--$94.1 million class A-3 at 'AAA';
--Interest only class X at 'AAA';
--$36.3 million class B at 'AAA';
--$30.3 million class C at AAA';
--$21.2 million class G at 'B+'.
The $16.4 million class H certificates are not rated by Fitch
Ratings.
The upgrades are a result of increased subordination levels due to
additional loan amortization and prepayments. As of the February
2004 distribution date, the pool's aggregate collateral balance
has been reduced by approximately 57%, to $261.8 million from
$605.4 million at issuance.
Two loans (6.9%) are currently in special servicing. The largest
specially serviced loan (4.0%) is a retail property located in
Auburn, ME and is current. The loan transferred to special
servicing due to the borrower's request for a restructuring of
escrows. The second specially serviced loan (2.9%) is a 268-room
full service hotel located in Reno, NV and is real estate owned
(REO) with a receiver in place. The trust is currently in the
process of taking over the property and is actively marketing it
for sale. Significant losses are expected upon the disposition of
the loan.
Fitch applied various hypothetical stress scenarios taking into
consideration the specially serviced and other loans of concern.
Even under these stress scenarios, the resulting subordination
levels were sufficient to upgrade the designated classes.
MUZZY BROADCASTING: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Muzzy Broadcasting, LLC
aka RLM Communications Inc.
aka Americus Communications LLC
500 Division Street
Stevens Point, Wisconsin 54481
Bankruptcy Case No.: 04-10804
Type of Business: The Debtor is a broadcasting company that owns
WSPT-AM, WSPT-FM and WKQH-FM radio stations
located at 500 Division St., Stevens Point.
Chapter 11 Petition Date: February 6, 2004
Court: Western District of Wisconsin (Eau Claire)
Judge: Thomas S. Utschig
Debtor's Counsel: Howard D. White, Esq.
Farmers Store Office Plaza, Suite 101
202 Eau Claire Street
P.O. Box 228
Eau Claire, WI 54702-0228
Tel: 715-831-9565
Total Assets: $4,306,000
Total Debts: $3,032,377
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
GE Capital Information Trade debt $1,600,000
Technologies
260 Long Ridge Road
Stamford, CT 06927-9622
McMaster, Ronald A. Bank loan $200,000
ASCAP Trade debt $152,505
Foley & Lardner Trade debt $90,902
Premiere Radio Network Trade debt $74,990
Internal Revenue Service Trade debt $52,297
Broadcast Music Inc. Trade debt $44,270
Alt, Donald Trade debt $40,319
Stewart Properties Trade debt $39,867
Wipfli Ulrich & Bertelson, Trade debt $32,580
LLP
Citi Cards - Master Card Trade debt $15,774
Marathon Media Trade debt $15,513
First Federal Leasing, Inc. Trade debt $15,363
Associated Bank Bank loan $23,899
Value of Collateral:
$9,500
Unsecured: $14,399
Westwood One Companies Trade debt $10,500
City Of Stevens Point Trade debt $9,827
Valley Richards Consulting Trade debt $9,643
Associated Press Trade debt $6,644
Fleet Credit Card Services Trade debt $6,081
Wicks Broadcast Solutions Trade debt $5,730
NAT'L CENTURY: Asks Court to Disallow Private Investment Claims
---------------------------------------------------------------
National Century Financial Enterprises, Inc., and its debtor-
affiliates reviewed nine claims filed by Private Investment Bank
Limited against them:
Debtor Claim No. Claim Amount
------ --------- ------------
National Century Financial 275 $150,000,000
Enterprises, Inc.
NPF XII, Inc. 276 150,000,000
National Premier Financial 277 150,000,000
NPF VI, Inc. 278 150,000,000
NPF Capital, Inc. 279 150,000,000
NPF-LL, Inc. 280 150,000,000
NPF X, Inc. 281 150,000,000
NPF Capital Partners, Inc. 282 150,000,000
NPF Capital, Inc. 283 150,000,000
Based on a review of their books and records and their analysis
of the asserted liabilities, the Debtors determined that each
PIBL Claim is not a valid liability against them because it
lacks:
(a) an explanation of its basis; or
(b) adequate supporting documentation.
According to Joseph M. Witalec, Esq., at Jones, Day, Reavis &
Pogue, in Columbus, Ohio, each PIBL Claim attached copies of what
purport to be:
(a) three Short Form Debentures entered into by PIBL and Med
Diversified, Inc., each dated December 28, 2001; and
(b) two Short Form Convertible Debentures, entered into by
PIBL and Med Diversified, each dated December 28, 2001.
The Short Form Debentures and the Short Form Convertible
Debentures purport to state that collateral "shall be provided to
PIBL by way of a lock-box assignment from NCFE, a copy of which
is attached hereto. . . ." Significantly, Mr. Witalec tells
Judge Calhoun, none of the Debentures contains any
acknowledgement by any of the Debtors as to any agreement to a
lock-box assignment.
Mr. Witalec adds that PIBL does not allege the loss or
destruction of the Alleged Lock-Box Agreement or purport to
provide any statement, pursuant to the requirements of Rule
3001(e) of the Federal Rules of Bankruptcy Procedure, of the
circumstances of any alleged loss or destruction of the Alleged
Lock-Box Agreement. Accordingly, PIBL failed to provide the
explanation and documentation required to show that it has any
valid claim against the Debtors.
Because the Debtors determined that PIBL has no right to payment
on account of the PIBL Claims, the PIBL Claims should be
disallowed and expunged in their entirety. Moreover, Mr. Witalec
explains, if the PIBL Claims are not disallowed, PIBL will
receive a distribution in these cases where there otherwise is no
valid liability, in contravention of the provisions and policies
of the Bankruptcy Code and to the direct detriment to the
Debtors' estates and creditors.
Thus, the Debtors ask the Court to disallow the nine PIBL Claims.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader
in healthcare finance focused on providing medical accounts
receivable financing to middle market healthcare providers. The
Company filed for Chapter 11 protection on November 18, 2002
(Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones,
Day, Reavis & Pogue represents the Debtors in their restructuring
efforts. (National Century Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NETWORK STORAGE: Wants Approval to Hire Henry Henry as Attorney
---------------------------------------------------------------
Network Storage Solutions, Inc., is asking the U.S. Bankruptcy
Court for the Eastern District of Virginia, Alexandria Division,
for permission to employ Henry, Henry, O'Donnell & Dahnke, P.C. as
its legal counsel in its Chapter 11 proceeding.
The Debtor relates that the effective undertaking of its
responsibilities as Debtor-in-Possession, as well as its
successful reorganization require the employment and compensation
of legal counsel skilled in complex bankruptcy matters.
Considering its needs and the expertise and resources of Henry,
the Debtor submits that it is in its best interest to hire the
firm as its counsel.
Henry will be compensated at its usual hourly rates for attorneys,
which presently range from $225 per hour to $295 per hour. The
Debtor has tendered a $20,000 retainer in connection with this
engagement.
Kevin M. O'Donnell, Esq., a Henry, Henry, O'Donnell & Dahnke
principal and officer, assures the Court that his firm has no
connection with the Debtor, the U.S. Trustee, or with any party in
interest in connection with this case, or their respective
attorneys or accountants, and represents no interest adverse to
the Estate.
Mr. O'Donnell adds that his firm provided prepetition legal advice
to the Debtor with respect to reorganization matters and
prebankruptcy planning.
Headquartered in Chantilly, Virginia, Network Storage Solutions,
Inc. -- http://www.nssolutions.com/-- develops and markets
network attached storage (NAS) systems and SAN storage products.
The Company filed for chapter 11 protection on January 28, 2004
(Bankr. E.D. Va. Case No. 04-10350). Kevin M. O'Donnell, Esq., at
Henry & O'Donnell, P.C., represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $540,000 in total assets and $9,251,000
in total debts.
NRG ENERGY: Edison Mission Asks Court to Allow Admin Expense Claim
------------------------------------------------------------------
Edison Mission Marketing & Trading Inc. seeks the allowance and
payment of an administrative expense claim in the amount of no
less than $2,500,000 and a maximum of $42,200,000 against Debtor
NRG Power Marketing Inc.
According to David M. Posner, Esq., at Hogan & Hartson, in New
York, NRG PMI and Edison Mission, as successor to Citizen Power
Sales, entered into a Power Sales Agreement dated March 24, 1999.
Under the Agreement, NRG PMI agreed to sell and deliver electric
energy and capability to Edison Mission through January 17, 2017.
The Contract also constitutes a rate schedule providing for the
sale of electricity at wholesale and, thus, is subject to
exclusive regulation by the Federal Regulatory Commission
pursuant to the Federal Power Act. Debtor NRG Energy executed a
Guarantee and Support Agreement, dated March 24, 1999, in favor
of Edison Mission, guaranteeing NRG PMI's obligations under the
Contract to supply power to Edison Mission.
Edison Mission also entered into a contract to supply power to CL
Power Sales Eight, L.L.C., which in turn resells the power to
Central Maine Power as part of a restructuring of a power sales
agreement between CMP and an independent power producer. The
restructuring of that contract created significant benefits for
CMP and its ratepayers.
Edison Mission resells the power purchased from NRG PMI under the
Contract to CL Eight at Edison Mission's cost. Edison Mission
collaterally assigned its interest in the Contract to CL Eight.
Mr. Posner relates that Edison Mission administers the affairs of
CL Eight pursuant to an Amended and Restated Administration
Agreement dated August 31, 2000.
On June 12, 2003, the Debtors sought to reject certain executory
contracts, including the Power Sale Agreement Contract.
On June 27, 2003, Edison Mission objected to the Debtors' request
on the ground that NRG PMI failed to obtain authorization from
the FERC to cease performance under the Contract. On the same
date, Edison Mission sought relief from the automatic stay to
file a complaint before FERC against NRG PMI. Edison Mission
asked the FERC to enforce its police and regulatory power under
the FPA with respect to NRG PMI's efforts to modify or terminate
the Contract. The Court denied Edison Mission's request,
approved NRG PMI's request to reject the Contract, and authorized
NRG PMI to cease performance under the Contract without regard to
NRG PMI's obligations under the FPA.
Edison Mission appealed the order denying relief from the
automatic stay and the order rejecting the Contract. The Appeals
assert, in part, that the Court erred in authorizing NRG PMI to
cease performance pursuant to the Contract, as, under the FPA,
only the FERC is capable of authorizing termination or
modification of performance under the Contract/Rate Schedule.
The Appeals are currently pending in the U.S. District Court for
the Southern District of New York.
Accordingly, Edison Mission asks the Court to allow its claim
against NRG PMI as an administrative expense pursuant to Section
503(b) of the Bankruptcy Code.
If Edison Mission succeeds on the Appeals, NRG PMI would not have
been entitled to cease performance of the Contract postpetition
and Edison Mission is entitled to an administrative expense claim
for its damages suffered as a result of NRG PMI's failure to
perform under the Contract/Rate Schedule postpetition.
As the FERC did not excuse NRG PMI from performance under the
Contract, NRG PMI was obligated to continue to provide Edison
Mission with power postpetition. NRG PMI's failure to provide
Edison Mission with power postpetition conferred a substantial
and direct benefit to NRG PMI's estate.
Mr. Posner notes that NRG PMI essentially admitted that
discontinuation of performance under the Contract was necessary
to preserve its estate and to facilitate its reorganization.
Accordingly, NRG PMI's failure to perform helped preserve the
estate and assisted with its rehabilitation for the benefit of
all creditors, thereby entitling Edison Mission to the allowance
and payment of an administrative expense claim for damages. (NRG
Energy Bankruptcy News, Issue No. 23; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
OMEGA HEALTHCARE: Prices $18 Million Common Stock Offering
----------------------------------------------------------
Omega Healthcare Investors, Inc. (NYSE:OHI) announced that
Explorer Holdings, L.P. has priced the public offering of its
18,118,246 shares of Omega common stock at $9.85 per share. The
closing of this sale is expected to occur on March 8, 2004.
Omega has granted the underwriters a 30-day option to buy up to
2,717,736 additional shares of Omega common stock at a price of
$9.85 per share, less underwriting discounts, to cover over-
allotments, if any, in connection with the offering. Omega will
not receive any proceeds from the sale of the shares sold by
Explorer, and will only receive proceeds from the offering if the
over-allotment option is exercised. Upon completion of the
offering, Explorer will no longer own any of Omega's common stock.
The joint book running managers for the common stock offering are
UBS Investment Bank and Deutsche Bank Securities. The co-lead
manager is Banc of America Securities LLC.
Omega (S&P, B+ Corporate Credit Rating, Stable) is a Real Estate
Investment Trust investing in and providing financing to the long-
term care industry. At December 31, 2003, Omega owned or held
mortgages on 211 skilled nursing and assisted living facilities
with approximately 21,500 beds located in 28 states and operated
by 39 third-party healthcare operating companies.
OWENS: Asks Court to Disallow $6MM Burchfield & Whitmire Claims
---------------------------------------------------------------
Owens Corning and its debtor-affiliates object, pursuant to
Section 502(b) of the Bankruptcy Code and Rule 3007 of the Federal
Rules of Bankruptcy Procedure, to:
(1) Claim No. 8651, filed by Michael Burchfield, for
unliquidated damages for $3,000,000; and
(2) Claim No. 8622, filed by R.Q. Whitmire, for unliquidated
damages for $3,000,000.
The Debtors also seek a declaratory judgment that neither Owens
Corning nor its officers, employees, agents, and assigns,
including, but not limited to Michael H. Thaman and Charles W.
Stein, breached any duties owed to Burchfield and Whitmire.
The Burchfield Claim alleges an unsecured, non-priority claim for
fraud and misrepresentation and seeks unliquidated damages
amounting to $3,000,000. The Whitmire Claim alleges an
unsecured, non-priority claim for fraud and misrepresentation and
seeks unliquidated damages amounting to $3,000,000.
According to J. Kate Stickles, Esq., at Saul Ewing LLP, in
Wilmington, Delaware, the Burchfield Claim and the Whitmire Claim
are identical in all respects. Both claims arise from a dispute
relating to the establishment by Owens Corning of an installed
services business.
Burchfield and Whitmire allegedly suffered damages in connection
with their employment with ServiceLane.com, Inc., a company in
which Owens Corning held an indirect interest.
The Debtors deny the allegations of fraud and misrepresentation
made by Burchfield and Whitmire. The Debtors further deny that
Burchfield and Whitmire suffered any compensable injury as a
result of any action or inaction of Owens Corning or its
officers, employees, agents, and assigns. The Debtors are not
liable to Burchfield or Whitmire on any alleged cause of action
asserted in the Burchfield or Whitmire Claims.
In the event the Court does not disallow the Burchfield and the
Whitmire Claims, the Debtors demand strict proof of the amount
asserted.
Headquartered in Toledo, Ohio, Owens Corning
-- http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
68; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARMALAT: Sao Paulo Judge Replaces Parmalat Brazil Management
-------------------------------------------------------------
Sao Paulo Judge Carlos Henrique Abrao, of the 42nd District Civil
Court in Sao Paulo, ousted the board and management of Parmalat
Brasil SA Industria de Alimentos in a move to save the unit, the
Bloomberg News reports.
Judge Abrao appointed three administrators to manage Parmalat
Brasil SA Industria de Alimentos, replacing president Ricardo
Goncalves. The new administrators are former employees of the
Central Bank in Brazil, Parmalat Brasil spokesman Waldecir
Veldelho said. The new administrators are Jorge Lobo, Ruben
Salles de Carvalho and Keyler Carvalho Rocha. Mr. Rocha will
serve as Parmalat Brasil's president.
Judge Abrao pointed out that Parmalat Brasil had been hurt by
engaging in "artificial" financial transactions ordered by the
parent in Italy. "If we don't do anything at this time, we will
see the collapse of Parmalat Alimentos," Judge Abrao noted in a
57-page decision.
The displaced managers have filed an appeal challenging the order
forcing them to resign. (Parmalat Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARMALAT GROUP: Parent Will Sue Bank if Brazilian Unit Collapses
----------------------------------------------------------------
Parmalat Finanziaria SpA threatens to take legal action against
Japanese bank, Sumitomo Mitsui Banking Corp., if Parmalat Brasil
SA Industria de Alimentos collapses, the Dow Jones reports.
Parmalat administrator Enrico Bondi indicated in a letter that
Parmalat Finanziaria SpA and Parmalat SpA would hold Sumitomo
responsible for "any damages caused to the subsidiary and its
creditors by the management which has been empowered to act
pursuant your request." The note was faxed from Italy to
Sumitomo.
Parmalat Brazil owes Sumitomo $10,000,000 in unpaid loans. The
Japanese bank won a court injunction in mid-January blocking
Parmalat Brasil from selling any businesses or transferring funds
abroad. At Sumitomo's request, a Sao Paulo judge also appointed
an administrator to take over Parmalat's operations in Brazil.
(Parmalat Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PB ELECTRONICS: Files for Chapter 7 Bankruptcy in N. California
---------------------------------------------------------------
NEC Corporation's U.S. subsidiary, PB Electronics, Inc. filed a
petition for liquidation under chapter 7 of the Bankruptcy Code,
Computing News reported.
Formerly Packard Bell NEC Inc., the company discontinued its
personal computer business operation in the United States in 2000.
This filing represents the final steps surrounding a closure that
began four years ago. The filing has no effect on NEC Solutions
America or other NEC businesses currently operating in the United
States. NEC-branded computers and servers will continue to be
widely available and supported through NEC Solutions America. NEC
will also continue to offer Packard Bell-branded computers through
NEC Computers International, Inc. in the European markets,
reported the magazine. (ABI World, March 3)
PB ELECTRONICS: Voluntary Chapter 7 Case Summary
------------------------------------------------
Debtor: PB Electronics, Inc.
aka Packard Bell Electronics, Inc.
aka Packard Bell NEC, Inc.
aka Packard Bell NEC Sales Co.
aka NEC Computer Systems Division
aka Zenith Data Systems Corp.
aka Swan Technologies Corp.
aka Veritechnology Electronics Corp.
c/o Norio Tanoue
2890 Scott Boulevard #300
Santa Clara, California 95050
Bankruptcy Case No.: 04-51268
Type of Business: The Debtor is a computer vendor selling in major
retail outlets in the USA.
Chapter 11 Petition Date: March 1, 2004
Court: Northern District of California (San Jose)
Judge: James R. Grube
Debtor's Counsel: Elaine M. Seid, Esq.
McPharlin, Sprinkles and Thomas
10 Almaden Boulevard #1460
San Jose, CA 95113
Tel: 408-293-1900
This chapter 7 filing, DesignTechnia reports, "represents the
final steps surrounding a closure that began four years ago."
Japan Times reports that the move follows the completion of asset
disposal and settlements of other problems by the NEC Corp.
subsidiary.
PERISCOPE: Giant Group Vs. LH Friend Case Trial Set for June 30
---------------------------------------------------------------
Giant Group, Ltd., (OTC Bulletin Board: GPOL) reported that a
trial date has been set for the pending litigation between GIANT,
as plaintiff and L.H. Friend, Gregory Presson and Robert Campbell
(LH Friend), as defendants. The trial is scheduled to commence on
June 30, 2004 in the California Superior Court for the County of
Los Angeles located in Santa Monica, California.
This lawsuit asserts causes of action for breach of contract,
breach of fiduciary duty, constructive fraud and professional
negligence arising from LH Friend's services provided to the
Company related to the acquisition of Periscope Sportswear, Inc.
in December 1998. Periscope filed for bankruptcy protection in
November 2000. The amount sought by GIANT in this lawsuit is
approximately $35.2 million. Management is unable to predict the
outcome of this legal action.
* * *
As reported in the Troubled Company Reporter's December 15, 2003
edition, Fitch changed the Rating Outlook on Phelps Dodge to
Positive from Stable and affirmed the company's senior unsecured
rating at 'BBB-', commercial paper at 'F3' and the company's
mandatory convertible preferred at 'BB+'.
PG&E NAT'L: Energy Trading Debtors Agree to Set-Off Midwest Claims
------------------------------------------------------------------
Pursuant to Sections 362(d) and 553 of the Bankruptcy Code and
Rules 4001 and 9019 of the Federal Rules of Bankruptcy Procedure,
the Energy Trading debtor-affiliates of PG&E National Energy Group
Inc. ask the Court to approve an agreement that modifies the
automatic stay solely to the extent required to permit Midwest
Independent Transmission System Operator, Inc., to set off its
prepetition claim for the amounts owed by NEGT Energy Trading -
Power, LP, against the cash collateral held by Midwest.
The Energy Trading Debtors are:
NEGT Energy Trading Holdings Corporation
NEGT Energy Trading Gas Corporation
NEGT ET Investments Corporation
NEGT Energy Trading Power, LP
The Cash Collateral
Before the Petition Date, the ET Debtors entered into utility
service agreements associated with their business activities,
including electric transmission service agreements for the
purpose of using certain public utilities' facilities under an
Open Access Transmission Tariff administered by Midwest. To
pursue the transactions, ET Power entered into Cash Collateral
Agreements with Midwest whereby ET Power will provide cash
collateral. ET Power's cash collateral is required to secure its
performance under the Agreements as required by the terms of
Midwest's public utility tariff approved by the Federal Energy
Regulatory Commission. As of December 1, 2003, Midwest held
$1,124,846 in Cash Collateral from ET Power.
As of the Petition Date, ET Power owed Midwest $78,460 for
prepetition transmission charges under the Agreements. Thus,
Midwest is over collateralized by $1,046,385.
The Set-off
Because the amount of the Cash Collateral held by Midwest greatly
exceeds the amount of prepetition transmission service charges
owed by ET Power for its electric transmission service utility
obligations, the parties agree that Midwest will:
(a) satisfy ET Power's obligations for the prepetition utility
service from the amount held by Midwest; and
(b) subsequently terminate the Agreements under which Midwest
is obligated to provide electric utility transmission
service to ET Power.
In exchange, Midwest agrees to return to ET Power the Cash
Collateral less the Claim Amount, along with an accounting of the
funds.
The Stipulation would allow Midwest recover for prepetition
transmission service charges incurred by ET Power, and would
result a recovery to ET Power's estate of more than $1,000,000.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- develops, builds, owns and operates
electric generating and natural gas pipeline facilities and
provides energy trading, marketing and risk-management services.
The Company filed for Chapter 11 protection on July 8, 2003
(Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq.,
Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at
Willkie Farr & Gallagher represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $7,613,000,000 in assets and
$9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PILLOWTEX: Recharacterizes Nine Crescent Financial Lease Pacts
--------------------------------------------------------------
General Electric Capital Corporation entered into certain Lease
Agreements with Debtors Pillowtex Corporation and Fieldcrest
Cannon, Inc. for the use of certain production equipment in the
Debtors' manufacturing operations:
(a) GECC entered into eight lease agreements with Pillowtex
between January 2, 1998 and December 1, 1998; and
(b) GECC and Fieldcrest executed Equipment Lease Schedule
C-96-1 with on November 26, 1996 under the Fieldcrest
Master Lease Agreement.
Subsequently, GECC assigned all its right, title, interest and
obligations under the Pillowtex Lease Agreements and the
Fieldcrest Lease Schedule to The CIT Group/Equipment Financing,
Inc. In the Debtors' Prior Chapter 11 Case, the nine Lease
Agreements were amended to grant Pillowtex and Fieldcrest options
to purchase the Equipment at the conclusion of the lease term for
no additional consideration. On May 9, 2002, pursuant to a
Bankruptcy Court Order, the Debtors assumed the Lease Agreements.
On September 30, 2003, CIT entered into an Assignment and Bill of
Sale with Crescent Financial LLC, an affiliate of GGST, pursuant
to which CIT assigned to Crescent the Lease Agreements and
substantially all of CIT's rights, title, interest, claims and
remedies under the Lease Agreements and in the Equipment for
$2,550,000.
Pursuant to a Court-approved Sale Agreement for the sale of
substantially all of the Debtors' fixed assets to GGST dated
October 2, 2003, the parties must jointly determine prior to the
closing of the sale of the Assets, whether each Subject Capital
Lease must be treated as a true lease. If the parties determined
that a Subject Capital Lease is not a true lease, GGST could
instruct the Debtors to commence proceedings to determine:
-- whether the lease is a true lease or a financing lease;
-- in the event that the Lease is a financing lease, the
liquidation value of the equipment covered by the lease;
and
-- whether the Debtors' obligations under the lease are
secured by a valid, binding, enforceable and perfected
lien.
The Sale Agreement also entails GGST to reimburse the Debtors for
the actual amount of any payments relating to any financing lease
that the Bankruptcy Court requires and are attributable to the
period from and after the Petition Date. In addition, GGST is
required to assume the Debtors' liabilities under any financing
lease relating to equipment that GGST elects to include in the
Assets and arising on or after the date on which the Court
authorizes the assumption of the lease by the Debtors and its
assignment to GGST, but only to the extent that the liabilities:
-- are subject to a valid, binding, enforceable and perfected
lien on the equipment; and
-- do not exceed the liquidation value of the equipment.
The Sale Agreement does not provide that any deficiency claim of
an under-secured lender arising out of a financing lease will be
assumed by GGST.
Upon their review of the Lease Agreements and other relevant
documents, the Debtors, Crescent and GGST agreed that the Lease
Agreements must be treated as financing leases. By a notice
dated November 2, 2003, GGST elected to include the Equipment in
the Assets.
With the Court's consent, the Debtors, GGST and Crescent, as
assignee of The CIT Group/Equipment Financing, Inc., stipulate
that:
(a) The Lease Agreements are not true leases under the
Bankruptcy Code and accordingly are recharacterized as
financing leases or secured loans;
(b) The Equipment is property of the Debtors' estates;
(c) Crescent, as assignee of CIT under the Lease Agreements,
has a valid, binding, enforceable and perfected, first
priority security interest in the Equipment and
accordingly, a secured claim against Pillowtex and
Fieldcrest equal to the liquidation value of the Pillowtex
Equipment and the Fieldcrest Equipment;
(d) As of the Petition Date, the aggregate balance due or to
become due under the Pillowtex Lease Agreements was
$3,200,081 and the aggregate balance due or to become due
under the Fieldcrest Lease Schedule was $604,105;
(e) The liquidation value of the Pillowtex Equipment is
$2,145,060 and the liquidation value of the Fieldcrest
Equipment is $404,940;
(f) In consideration of the Secured Claim, the Debtors will
transfer to GGST good legal and beneficial title to the
Equipment, free and clear of all liens, claims,
encumbrances and interests of any kind or nature;
(g) GGST will have an allowed unsecured prepetition non-
priority deficiency claim against Pillowtex for $1,055,021
and an allowed unsecured prepetition non-priority
deficiency claim against Fieldcrest for $199,165, without
being required to file proofs of claim; and
(h) Crescent and GGST fully and forever release and
discharge the Debtors from any and all claims that
Crescent or GGST has or may have against the Debtors under
or relating to the Lease Agreements.
Headquartered in Dallas, Texas, Pillowtex Corporation --
http://www.pillowtex.com/-- sells top-of-the-bed products to
virtually every major retailer in the U.S. and Canada. The Company
filed for Chapter 11 protection on November 14, 2000 (Bankr. Del.
Case No. 00-4211). David G. Heiman, Esq., at Jones, Day, Reavis &
Poque represents the Debtors in their restructuring efforts. On
July 30, 2003, the Company listed $548,003,000 in assets and
$475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 60;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PREMIERE SUPER: Case Summary & 25 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: Premiere Super Markets, Inc.
dba Buccaneer Foodland
dba Buckhannon Foodland
dba Philippi Foodland
dba Nutter Fort Foodland
P.O. Box 160
Philippi, West Virginia 26416
Bankruptcy Case No.: 04-00376
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
C.S.W. Enterprises 04-00377
Type of Business: The Debtor owns a Food Store.
Chapter 11 Petition Date: February 6, 2004
Court: Northern District of West Virginia (Elkins)
Judge: L. Edward Friend II
Debtor's Counsel: John T. Miesner, Esq.
1411 Virginia Street, East Suite 201
Charleston, WV 25301
Tel: 304-343-2600
Total Assets: $3,283,905
Total Debts: $3,032,535
A. Premiere Super Markets' 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Stephen Anderson Unstated
Bloomer Candy Co. Unstated
Barbour Publishing Co. Unstated
Coca Cola Bottling Company Unstated
Fikes Dairy Unstated
Frito-Lay, Inc. Unstated
Hooten Equipment Co. Unstated
Hillandale Farms Unstated
Hobart Sales & Service Unstated
Keebler Company Unstated
Kemps Food, LLC Unstated
McKee Foods Corp. Unstated
The Mountain Statesman Unstated
Nabisco, Inc. Unstated
RC Cola Unstated
Royal Biscuit Co. Unstated
Schwan's Consumer Brands Unstated
Chas. M. Sledd Co. Unstated
Supervalu Pittsburgh Division Unstated
Young & Stout Company Unstated
B. C.S.W. Enterprises' 5 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Andrew Insurance Assoc's, Inc. Unstated
Bolton's Plumbing Unstated
Floyd Sign Co. Unstated
Reed's Heating & AC Unstated
Reliable Roofing Co., Inc. Unstated
QWEST SERVICES: S&P Assigns B- Rating to $1.75B Sr. Secured Loan
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Qwest Services Corp.'s $1.75 billion senior secured bank loan,
consisting of a $750 million revolving credit and a $1 billion
term loan. A recovery rating of '2' also was assigned to the loan,
indicating substantial recovery prospects (80%-100%) in the event
of a default. QSC is a funding unit for Denver, Colorado-based
diversified telecommunications provider Qwest Communications
International Inc.
The outstanding ratings on Qwest, including the 'B-' corporate
credit rating, were affirmed. The outlook is developing.
"The ratings on Qwest reflect the high degree of risk that
continues to surround the diversified telecommunications carrier
due to the ongoing criminal investigation by the U.S. Department
of Justice, a separate investigation by the Securities and
Exchange Commission, a General Services Administration
investigation, and various shareholder lawsuits," said Standard &
Poor's credit analyst Catherine Cosentino. These issues are the
factors behind the below-average business risk, since they
outweigh the core incumbent local exchange carrier's fundamentally
sound business. The company may also face some potentially
significant shortfalls in the funding of its pensions and other
post-retirement benefits. For 2002, the company had a gross
pension and OPEB liability of about $14.5 billion, compared with
total pension and OPEB-related assets of $10 billion. However,
Standard & Poor's recognizes that Qwest continues to hold a
leading position in its local exchange markets in a 14-state
region in the Western U.S., with 16.2 million access lines.
In terms of Qwest's business profile, the company continues to
benefit from the relative stability of Qwest Corp.'s core local
exchange telephone business. This business generated operating
cash flow margins of 46% for the nine months ended Sept. 30, 2003.
Qwest has also secured interLATA relief in all 14 of its states,
providing it the flexibility to increase revenue per customer in
these jurisdictions, as well as to assist in the company's local
win-back efforts. The latter issue is particularly important given
ongoing retail consumer access line losses, which totaled 229,000
in the fourth quarter of 2003.
ROTECH HEALTHCARE: Inks New Pacts with Gentiva Health Services
--------------------------------------------------------------
Rotech Healthcare Inc. (Pink Sheets:ROHI) has signed an agreement
with Gentiva Health Services, Inc. (Nasdaq:GTIV), the nation's
largest home healthcare company, to supply respiratory therapy and
durable medical equipment services to patients, with primary
preferred provider status in 23 states and shared preferred
arrangements in 10 states, through Gentiva's CareCentrix managed
care network.
CareCentrix provides managed care organizations with a wide range
of homecare services, including central access, care coordination,
utilization management and claims processing. CareCentrix homecare
services - including traditional home nursing, chronic and acute
infusion therapies, and durable medical and respiratory equipment
and services - are delivered by a combination of Gentiva's own
branch operations and a national network of third party provider
locations that will now include Rotech's operating centers.
Rotech has also signed a three-year primary preferred provider
agreement with Gentiva to provide CareCentrix patients in 48
states with CPAP (continuous positive airway pressure) devices and
related products for the alleviation of snoring and obstructive
sleep apnea (in which people stop breathing repeatedly during
sleep). Under a special program, patients receive quicker access
to equipment, including shipping within 24 hours of the order
being received. Equipment settings are calibrated to patients'
unique needs, according to physician orders and under the
supervision of specialized respiratory therapists. As part of the
program, Rotech is also providing CareCentrix with ongoing
supervision and patient contact, including patient access to a
call center with specially trained staff to answer questions 24
hours a day, 7 days a week.
Philip L. Carter, President and Chief Executive Officer commented
that he was pleased that Gentiva had agreed to partner with Rotech
to establish the new system for CPAP delivery, and anticipated
that this development may open up new opportunities for Rotech
with other managed care organizations. "We believe that our
annualized revenue from these Gentiva contracts could well be
greater than $25 million as we enter 2005," he said.
About Rotech Healthcare
Rotech Healthcare Inc. is a leading provider of home respiratory
care and durable medical equipment and services to patients with
breathing disorders such as chronic obstructive pulmonary diseases
(COPD). The Company provides its equipment and services in 48
states through approximately 500 operating centers, located
principally in non-urban markets. Rotech's local operating centers
ensure that patients receive individualized care, while its
nationwide coverage allows the Company to benefit from significant
operating efficiencies.
* * *
As reported in the Troubled Company Reporter's December 16, 2003
edition, Standard & Poor's Ratings Services placed its 'BB'
corporate credit, its 'BB' senior secured, and 'B+' subordinated
debt ratings on home respiratory provider Rotech Healthcare Inc.
on CreditWatch with negative implications.
"The action reflects Orlando, Fla.-based Rotech's vulnerability to
recently signed Medicare legislation that could hurt the company's
reimbursement for both respiratory drugs and durable medical
equipment," said Standard & Poor's credit analyst Jesse Juliano.
SAKS INC: Names Steve Sadove as Chief Operating Officer
-------------------------------------------------------
Retailer Saks Incorporated (NYSE: SKS) announced the appointment
of Steve Sadove, Vice Chairman of Saks Incorporated, to the
additional post of Chief Operating Officer of the Company.
George Jones, President/CEO of Saks Department Store Group (SDSG);
Fred Wilson, Chairman/CEO of Saks Fifth Avenue Enterprises (SFAE);
and Jim Coggin, Chief Administrative Officer of the Company, will
report to Sadove. In this role, Sadove will chair the 18-member
Senior Executive Committee of Saks Incorporated, which is
comprised of the CEOs of SDSG and SFAE; the Presidents of
Proffitt's/McRae's, Carson Pirie Scott & Co., and Saks Fifth
Avenue; and senior corporate staff and sales support executives.
In addition to Sadove, Doug Coltharp, Chief Financial Officer;
Charles Hansen, General Counsel; and the corporate real estate
functions will continue reporting to Brad Martin, Chairman and CEO
of the Company.
Martin said, "Steve Sadove has made an outstanding contribution in
the two years since he joined the leadership team of Saks
Incorporated. Throughout his career, he has demonstrated the
ability to innovate and to identify and maximize strategic
business opportunities while generating best-of-class operating
performance.
"In the role of Vice Chairman and Chief Operating Officer for Saks
Incorporated, Steve will foster an enhanced connection between the
operations of our two principal business segments and our central
corporate support group, including information technology, credit
administration, and logistics, as well as provide leadership on
key business processes such as strategic planning and human
resources policies. Organizing along these lines will foster an
even greater alignment between our terrific corporate staff and
sales support groups, with the outstanding leadership teams we
have in place at our operating businesses."
"We have the right organizational structure and teams in place to
assure clarity and focus, and therefore, great business results,"
Martin further noted.
Prior to joining Saks in January 2002, Sadove had a distinguished
marketing and consumer products career spanning over 25 years.
Sadove held various posts of increasing responsibility with
Bristol-Myers Squibb Company between 1991 and 2001, including
President, Bristol-Myers Squibb Worldwide Beauty Care and
Nutritionals. During his tenure at Bristol-Myers Squibb, among
other accomplishments, Sadove led Clairol to become the leading
hair care business in the United States. Between 1975 and 1991, he
held various management positions with General Foods USA. Sadove
is a graduate of Hamilton College and holds a MBA with distinction
from Harvard Business School.
Saks Incorporated (Fitch, BB+ Secured Bank Facility and BB- Senior
Note Ratings, Negative) operates Saks Fifth Avenue Enterprises
(SFAE), which consists of 62 Saks Fifth Avenue stores and 54 Saks
Off 5th stores. The Company also operates its Saks Department
Store Group (SDSG) with 243 department stores under the names of
Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie
Scott, Bergner's, and Boston Store and 19 Club Libby Lu specialty
stores.
SAKS INC: Posts 14.7% Comparable Store Sales Increase in February
-----------------------------------------------------------------
Retailer Saks Incorporated (NYSE: SKS) announced that for the four
weeks ended February 28, 2004 compared to the four weeks ended
March 1, 2003 total sales increased 16.1% and comparable store
sales increased 14.7% on a total company basis. By segment,
comparable store sales increased 8.0% for SDSG and increased 25.2%
for SFAE for the month. Sales below are in millions and represent
sales from owned departments only.
Merchandise categories with the best sales performances for SDSG
in February were accessories, moderate and better women's
sportswear, cosmetics, men's furnishings, soft home, and
outerwear. Categories with softer sales performances for SDSG in
February were furniture, children's apparel, and juniors' apparel.
Categories with the best sales performances for SFAE in February
were women's designer apparel, women's contemporary sportswear,
eveningwear, women's private brand apparel, outerwear, fine
jewelry, and handbags. Categories with the softest performances
for SFAE in February were hosiery, intimate apparel, and fashion
jewelry.
Saks Incorporated (Fitch, BB+ Secured Bank Facility and BB- Senior
Note Ratings, Negative) operates Saks Fifth Avenue Enterprises
(SFAE), which consists of 62 Saks Fifth Avenue stores and 54 Saks
Off 5th stores. The Company also operates its Saks Department
Store Group (SDSG) with 243 department stores under the names of
Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie
Scott, Bergner's, and Boston Store and 19 Club Libby Lu specialty
stores.
SAKS INC: Fourth Quarter Net Income Increases to $82 Million
------------------------------------------------------------
FOURTH QUARTER AND YEAR-END HIGHLIGHTS
-- Saks Incorporated recorded net income of $81.8 million, or $.57
per diluted share, for the fourth quarter ended January 31,
2004, compared to last year's net income of $68.1 million, or
$.47 per diluted share.
-- The fourth quarter ended January 31, 2004 included charges of
$18.3 million (net of taxes), or $.13 per share, primarily
attributable to debt restructuring, transition costs associated
with SFAE leadership changes, the write-off of a preferred
stock investment in FAO, Inc., and store impairment charges.
The comparable prior year period included charges of $16.3
million (net of taxes), or $.11 per share, primarily comprised
of store impairment charges and divisional consolidation
activity.
-- Saks Incorporated recorded net income of $82.8 million, or $.58
per diluted share, for the year ended January 31, 2004 compared
to last year's net income of $24.2 million, or $.17 per diluted
share.
-- The current year included net charges of $8.3 million, or $.06
per share, resulting from charges totaling $22.6 million (net
of taxes), or $.16 per share, partially offset by gains
totaling $14.3 million (net of taxes), or $.10 per share. The
charges for the year primarily related to debt restructuring,
transition costs associated with SFAE leadership changes, the
write-off of the FAO investment, impairment charges, and the
disposition of long-lived assets. The gains for the year
related to a tax credit and the sale of the private label
credit card portfolio. The comparable prior year period
included charges of $66.2 million (net of taxes), or $.45 per
share, which included $45.6 million, or $.31 per share, related
to the cumulative effect of a change in accounting for
goodwill.
-- During 2003, the Company significantly advanced a number of
major initiatives including:
-- Strengthened the leadership team and further streamlined its
organizational structure,
-- Further improved its financial position,
-- Enhanced its real estate portfolio, and
-- Made continued investments in strategic systems improvements.
Retailer Saks Incorporated (NYSE: SKS) announced results for the
fourth quarter and year ended January 31, 2004.
The Company currently operates two business segments, Saks
Department Store Group ("SDSG") and Saks Fifth Avenue Enterprises
("SFAE"). SDSG consists of the Company's department stores under
the Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson
Pirie Scott, Bergner's, and Boston Store nameplates and Club Libby
Lu specialty stores. SFAE is comprised of the Saks Fifth Avenue
luxury department stores and Saks Off 5th outlet stores.
Earnings Overview
Saks Incorporated's results of operations are presented in
accordance with generally accepted accounting principles.
Saks Incorporated recorded net income of $81.8 million, or $.57
per share, for the fourth quarter ended January 31, 2004, compared
to net income of $68.1 million, or $.47 per share, last year. The
current year fourth quarter included charges of $18.3 million (net
of taxes), or $.13 per share, primarily related to debt
restructuring, transition costs associated with SFAE leadership
changes, the write-off of a preferred stock investment in FAO,
Inc., and store impairment charges. The comparable prior year
period included charges of $16.3 million (net of taxes), or $.11
per share, primarily comprised of store impairment charges and
divisional consolidation activity.
For the year ended January 31, 2004, the Company recorded net
income of $82.8 million, or $.58 per share, compared to net income
of $24.2 million, or $.17 per share, last year. The current year
included net charges of $8.3 million, or $.06 per share, resulting
from charges totaling $22.6 million (net of taxes), or $.16 per
share, partially offset by gains totaling $14.3 million (net of
taxes), or $.10 per share. The charges for the year primarily
related to debt restructuring, transition costs associated with
SFAE leadership changes, the write-off of the FAO investment,
store impairment charges, and the disposition of long-lived
assets. The gains for the year related to a tax credit recorded
following the resolution of federal income tax issues for prior
years and the sale of the private label credit card portfolio. The
comparable prior year period included charges of $66.2 million
(net of taxes), or $.45 per share, which included $45.6 million,
or $.31 per share, related to the cumulative effect of a change in
accounting for goodwill.
On April 15, 2003, the Company consummated its strategic credit
card alliance with Household International, in order to reduce its
future financing requirements and to enhance long-term returns on
invested capital (ROIC). The net credit contribution is reflected
as a reduction in SG&A expense. Primarily as a result of the
transaction, the Company's SG&A expense for the fourth quarter was
increased by $20 million and for the year was increased by
approximately $51 million related to a decrease in the net credit
contribution.
Fourth Quarter Comments
R. Brad Martin, Chairman and Chief Executive Officer of Saks
Incorporated, commented, "The Company's fourth quarter earnings
growth reflected a 6.9% total sales increase (and a 5.9%
consolidated comparable store sales increase) and an 190 basis
point gross margin rate improvement, partially offset by increased
SG&A expenses and a $10.5 million debt restructuring charge."
The $75 million increase in SG&A primarily resulted from:
-- Approximately $40 million of expenses related to payroll,
advertising, and service initiatives associated with increased
sales in existing and seven new stores,
-- the aforementioned $20 million reduction in the net private
label credit card contribution (last year's net credit
contribution included a FAS 140 gain of $8 million), and
-- $5 million of charges related to the leadership changes at
SFAE.
Inventories at January 31, 2004 totaled $1.45 billion, an 11%
increase over the prior year end. Comparable store inventories
increased approximately 9% over last year, reflecting improving
sales trends and early spring receipts.
Comments on 2003
Martin noted, "2003 was a year of continued progress for Saks
Incorporated. We saw an improvement in the top line for the second
half of the year. We are positioned to take advantage of an
improving economic environment in 2004.
"Strategic accomplishments over the last year included:
-- Substantially strengthening our leadership team and
streamlining our organizational structure. Fred Wilson, former
Chairman, President, and CEO of Donna Karan, joined SFAE as its
Chairman and CEO, and Andrew Jennings, former President of Holt
Renfrew, Canada's definitive luxury store, was named President
and Chief Merchandising Officer of Saks Fifth Avenue. In
addition, Ron Frasch, former Chairman and CEO of Bergdorf
Goodman, recently joined Saks Incorporated. George Jones,
President and CEO of SDSG, assumed the CEO role at Parisian
while retaining the reporting relationships with the
President/CEOs of Carson Pirie Scott & Co. and
Proffitt's/McRae's. Key executives also were added to
merchandising, store, and marketing positions at Parisian. In
addition, Carson Pirie Scott & Co. successfully completed the
consolidation of Younkers' home offices into its operations.
-- Further improving our financial position and strengthening our
balance sheet. In addition to consummating the strategic credit
card alliance with Household International, we took additional
steps to strengthen our financial condition. We increased our
revolving credit facility to $800 million and extended the
maturity to early 2009. There were no borrowings under the
revolver during 2003. We completed an exchange offer on our
2008 senior debt, which lowered the coupon rates, extended
maturities, and reduced debt by approximately $50 million. At
year end, our debt-to-capitalization ratio was 35.5%, and cash
on hand totaled $366 million. During the year, we purchased
approximately 7.9 million shares of stock (for a total price of
approximately $80 million) under our common stock repurchase
programs. We have approximately 21.9 million shares remaining
under the authorization. In January 2004, we also made a
voluntary cash contribution of $70 million to our pension
plans, substantially alleviating the under funded position of
the plans and obviating cash contributions for 2004. We have
the financial resources and liquidity to pursue our strategies.
-- Enhancing our real estate portfolio. Our store base is in
excellent condition. Our real estate strategy remains centered
on entering key strategic markets and enhancing our position in
existing core markets, growing our square footage about 1% to
2%, on average, each year. During the year, we spent
approximately $180 million in capital (and received
approximately $15 million in proceeds from asset dispositions).
Of this total, approximately $70 million was spent on opening
seven new stores and renovating six others, adding
approximately 700,000 square feet to our store base. Saks Fifth
Avenue opened stores in two new key markets - Indianapolis,
Indiana (a former Jacobson's unit) and Richmond, Virginia, and
at SDSG, we strengthened our position in several existing
markets including Omaha, Nebraska; Lansing, Michigan; Green
Bay, Wisconsin; and Peoria, Illinois. We also opened a new Off
5th store in St. Louis, Missouri. In addition, we closed or
converted six underproductive units. These actions are leading
to improved returns on invested capital and higher sales per
square foot. We ended the year with 34.4 million square feet of
store space.
-- Continuing to invest in strategic systems improvements to
enhance sales performance and/or improve efficiency and
productivity. We completed the conversion of each of our
operating divisions to a common technology platform with
greatly enhanced inventory management tools, permitting more
sophisticated inventory planning and more precise by-store
inventory allocation. We also began the company-wide
installation of enhanced point-of-sale systems which will allow
more advanced clienteling and customer relationship management
capabilities. Logistics enhancements installed at our
distribution centers have increased the efficiency with which
merchandise arrives at our stores. Web-enabled technology is
becoming more important with multiple applications throughout
the Company, including benefits administration, travel
management, e-procurement for supply purchasing, and "reverse"
auctions for private brand merchandise sourcing which is
leading to enhanced profitability in this increasingly
important area of our business."
Outlook for 2004
Martin noted, "Our business segments have outstanding leadership
and a clear direction. Business plans are in place to grow
comparable store sales, expand operating margins, and improve ROIC
in 2004 and beyond."
Based on prevailing trends and conditions, management believes
that the Company will achieve earnings growth in 2004 over 2003
levels. Management believes the following assumptions are
reasonable for 2004:
-- Moderate consolidated comparable store sales growth.
-- Continued improvement in the gross margin rate driven by
enhanced merchandise mix, inventory control, and systems
investments.
-- SG&A held relatively constant year-over year on a rate of sales
basis, as operating leverage is partially offset by potential
increases in health care costs and certain other insurance
premiums, and a first quarter decline in net credit
contribution of $10 million to $12 million as the Company
anniversaries the Household transaction closing on April 15,
2004.
-- Capital spending for 2004 of approximately $225 million to $250
million, which includes five new and replacement stores;
several expansions, remodels, and renovations; information
technology upgrades; and other replacement capital.
-- Interest expense lower than 2003, resulting from lower
anticipated debt levels and the reduction in coupon related to
the exchange offer.
-- Depreciation and amortization increasing modestly over 2003
expense, primarily related to the capital investments made in
2003.
-- An effective tax rate of approximately 36.5%.
Store News
During the fourth quarter, the Company opened a new Off 5th store
in St. Louis, Missouri and closed two unproductive units - its
Carson Pirie Scott store in Waukegan, Illinois and its Off 5th
store in Kansas City, Kansas. At year end, Saks operated 242 SDSG
stores with 26.5 million square feet, 62 Saks Fifth Avenue stores
with 6.5 million square feet, and 53 Off 5th units with 1.4
million square feet. During the quarter, the Company also opened
three Club Libby Lu stores, bringing the total to 19.
For 2004, the Company has announced plans for five new or
replacement stores:
Nameplate Location Sq. Footage Opening Date
--------- -------- ----------- ------------
McRae's (replacement) Birmingham, AL 260,000 SF October 2004
Younkers Des Moines, IA 160,000 SF October 2004
Saks Fifth Avenue Raleigh, NC 80,000 SF September
2004
Saks Fifth Avenue Plano, TX 120,000 SF September
2004
Off 5th Destin, FL 30,000 SF June 2004
----------
TOTAL 650,000 SF
About the Company
Saks Incorporated (Fitch, BB+ Secured Bank Facility and BB- Senior
Note Ratings, Negative) operates Saks Fifth Avenue Enterprises
(SFAE), which consists of 62 Saks Fifth Avenue stores and 54 Saks
Off 5th stores. The Company also operates its Saks Department
Store Group (SDSG) with 243 department stores under the names of
Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie
Scott, Bergner's, and Boston Store and 19 Club Libby Lu specialty
stores.
SAMSONITE CORP: Marcello Bottoli Replaces Luc Van Nevel as CEO
--------------------------------------------------------------
Samsonite Corporation (OTC Bulletin Board: SAMC) announced the
appointment of Marcello Bottoli to succeed Luc Van Nevel as Chief
Executive Officer.
Mr. Bottoli, an Italian national, was President and Chief
Executive Officer of Louis Vuitton, part of the LVMH group. He
began his career with Procter and Gamble, in France and the U.S.,
and joined the Benckiser Group in 1991, after spending two years
with the Boston Consulting Group in Paris and Milan. During his
10-year tenure at Benckiser and, subsequently, Reckitt Benckiser,
Mr. Bottoli worked in various positions in Spain, France, the
Netherlands and the United Kingdom and became a Management Board
member and Executive Vice President as of 1993.
Joining Samsonite on March 3, Mr. Bottoli will assume the office
of President and Chief Executive Officer of Samsonite Corporation
as of April 15, 2004.
Marcello Bottoli commented: "I am delighted to join the world
leader in luggage and casual bags at such an exciting moment,
following the recapitalization of the Company last July. I look
forward to joining an outstanding team and have tremendous respect
for what Samsonite has achieved through the years under Luc Van
Nevel's leadership."
Samsonite's board of directors recognizes the exceptional
achievements of Mr. Van Nevel during his 30-year career at the
Company. Under his leadership, Samsonite enhanced its sales and
profitability in Europe. He successfully managed the Company's
entry into Asia, which is currently one of Samsonite's fastest
growing regions. He was instrumental in restructuring the
Company's Americas business and showed strong leadership in the
recapitalization of the Company concluded last July. Mr. Van Nevel
will continue his relationship with Samsonite as an adviser to the
board of directors.
Luc Van Nevel commented: "I am proud to be leaving Samsonite, a
company where I have spent most of my career, in a strong
competitive and financial position, poised for the next round of
growth."
Board member Tony Ressler commented: "On behalf of Ares Corporate
Opportunities Fund, Bain Capital, and Teachers' Merchant Bank, we
are incredibly excited that Marcello Bottoli will be joining the
Company. He is a world-class executive who will bring tremendous
energy and creativity to Samsonite. We also want to convey our
deep gratitude to Luc Van Nevel for his extraordinary leadership
and commitment to Samsonite for the last 30 years."
Samsonite (S&P, B Corporate Credit and CCC+ Subordinated Debt
Ratings) is one of the world's largest manufacturers and
distributors of luggage and markets luggage, casual bags,
backpacks, business cases and travel-related products under brands
such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R)
and SAMSONITE(R) black label.
SEITEL INC: Contrarian Entities Disclose Equity Stake
-----------------------------------------------------
Contrarian Capital Management, L.L.C. beneficially owns 2,512,150
shares of the common stock of Seitel Inc., while Contrarian Equity
Fund, L.P beneficially owns 1,437,150 of Seitel's common stock.
Contrarian Capital Management, L.L.C.'s stock holding represents
9.09% of the total outstanding common stock of Seitel, while
Contrarian Equity Fund, L.P's holding represents 5.66% of Seitel's
outstanding common stock.
Shared power to vote, or to direct the vote of, the stock is held
by Contrarian Capital Management, L.L.C. over the 2,512,150
shares, and by Contrarian Equity Fund, L.P over the 1,437,150
shares. Shared power to dispose, or to direct the disposition, of
the stock is held by Contrarian Capital Management, L.L.C. over
the 2,512,150 shares, and by Contrarian Equity Fund, L.P over the
1,437,150 shares.
Nothwithstanding the above, the two entities disclaim beneficial
ownership in the shares reported here, except to the extent of
their pecuniary interest therein.
* * *
Houston, Texas-based Seitel and 30 of its United States based
subsidiaries filed for Chapter 11 bankruptcy protection (Bankr.
Del. Case No. 03-12227) on July 21, 2003. Scott D. Cousins, Esq.
of Greenberg Traurig LLP represents the Debtors in its
restructuring efforts. When it filed for bankruptcy protection,
the company listed assets of $379,406,000 and debts of
$345,525,000.
As reported in the Troubled Company Reporter's February 10,
2004 edition, the Bankruptcy Court approved the Third Amended
Disclosure Statement filed in connection with Seitel's previously
announced plan of reorganization. The Bankruptcy Court also
established February 4, 2004, as the voting record date for
holders of claims and equity interests in the Debtors. The voting
period for the Plan ends at 5:00 PM on March 9, 2004. The
Bankruptcy Court has set a hearing for March 18, 2004, at 1:30 PM
prevailing eastern time to consider confirmation of the Plan.
SIRIUS SATELLITE: Wellington Management Has 5.563% Equity Stake
---------------------------------------------------------------
Wellington Management Company, LLP beneficially owns 59,602,790
shares of the common stock of Sirius Satellite Radio. 59,602,790
shares represents 5.563% of the outstanding common stock of the
Company. Wellington Management shares voting power over
47,646,790 shares and shares dispositive powers over 59,602,790
such shares.
The securities reported upon here were filed by Wellington
Management Company, in its capacity as investment adviser, and are
owned of record by clients of Wellington Management Company. Those
clients have the right to receive, or the power to direct the
receipt of, dividends from, or the proceeds from the sale of, such
securities. No such client is known to have such right or power
with respect to more than five percent of this class of
securities.
* * *
As previously reported, Standard & Poor's Ratings Services
assigned its 'CCC-' rating to Sirius Satellite Radio Inc.'s new
$250 million convertible notes due 2009.
At the same time, Standard & Poor's affirmed its existing ratings,
including its 'CCC' corporate credit rating, on the satellite
radio broadcaster. The outlook is stable. The New York, New York-
based firm has approximately about $450 million in debt.
"The company is expected to use the proceeds for general corporate
purposes, including expanding distribution and product
development," according to Standard & Poor's credit analyst Steve
Wilkinson. He noted, "The added liquidity is important to ratings
stability given the considerable cash being consumed as Sirius
works to accelerate subscriber growth."
SIX FLAGS: Full Year 2003 Net Loss Tops $61.7 Million
-----------------------------------------------------
Six Flags, Inc. (NYSE: PKS and PKS-B) reported results of
operations for the fourth quarter and full year ended December 31,
2003.
The results reflect the Company's adoption of FASB Interpretation
No. 46 ("FIN 46"). Under FIN 46, the results of Six Flags Over
Georgia, Six Flags White Water Atlanta, Six Flags Over Texas and
Six Flags Marine World are now consolidated in the financial
statements of the Company. Previously, those parks had been
reported as unconsolidated operations under the equity method of
accounting. Prior period results are also presented as if the
adoption of FIN 46 had then been in place in order to provide
meaningful year over year comparisons.(1) The adoption of FIN 46
did not change previously reported net income. However, gross
revenues and gross expenses (including minority interest expense)
did change by equivalent amounts. Unless otherwise indicated,
financial amounts reflected herein are expressed in accordance
with FIN 46.
Full Year Results
Revenues in 2003 were $1.24 billion, representing a 0.5% decrease
from 2002 revenues. The decrease resulted from a 1.8% decline in
attendance, offset by a 1.4% increase in total per capita
revenues. On a same-park basis, excluding from both periods the
results of the New Orleans park, which was acquired in late August
2002, revenues were down $28.8 million (2.3%) in 2003, with
attendance down 3.8% and per capita revenues up 1.6%.
Operating costs and expenses, including depreciation and
amortization and non-cash compensation, were $1,050.4 million in
2003, as compared to $998.9 million in 2002.
Operating costs and expenses, excluding depreciation and
amortization and non-cash compensation, were $863.8 million in
2003, as compared to $816.6 million for 2002, an increase of $47.2
million (5.8%). If the expenses of the New Orleans park were
excluded from both periods, the cash expense increase would have
been $31.4 million (3.9%).
EBITDA (Modified) was $372.9 million in 2003 as compared to $425.6
million in 2002.(2) Adjusted EBITDA for 2003, excluding the
interests of third parties in EBITDA from the parks previously
accounted for by the equity method, was $331.2 million in 2003, as
compared to $382.6 million in 2002.(3)
The net loss for 2003 was $61.7 million. In 2002, the net loss was
$105.7 million, $44.6 million before the cumulative effect of a
change in accounting principle recognized in 2002. There was a
loss on debt retirement in 2003 of $27.6 million, $17.1 million
net of the tax benefit. A similar loss of $29.9 million, $18.5
million net of tax benefit, was incurred in 2002. Under prior
treatment, these losses would have been considered extraordinary
items. Absent those net losses, and the effect of the change in
accounting principle, the loss was $44.6 million in 2003 and $26.1
million in 2002. Net loss applicable to common stock was $83.7
million in 2003, as compared to $127.7 million in 2002, $66.6
million in 2002 excluding the cumulative effect of a change in
accounting principle.
Discussion and Outlook
Kieran E. Burke, Chairman and Chief Executive Officer of Six
Flags, said, "We have previously commented on our 2003 season.
These reported results are in line with performance expectations
we provided last November.
"The 2003 season was on the whole very disappointing," Mr. Burke
continued. "We experienced a significant attendance decline caused
by a persistent economic slowdown and very poor weather in a
number of markets in the first part of the season. However, we did
experience a significantly improved performance trend in the
latter part of the season, with park operating revenue increasing
by 5.3% from the end of July through November 2, the end of our
core operating season. This provides an encouraging sign as we
move into 2004.
"To date this year, we have had very limited operations at our
parks, which are just commencing weekend operations. Those parks
in operation are performing in line with expectations. In
addition, while it is still very early, we are pacing in line with
our targets for season pass sales and hard ticket group bookings.
"We anticipate generating Adjusted EBITDA of $345-350 million in
2004. This is based on expected revenue growth of 4-5%, driven by
attendance growth of approximately 2.5% and a per capita spending
increase of approximately 2%.
"Our capital program for 2004 entails an expenditure of
approximately $75 million. This includes marketable rides and
attractions at a number of parks, an investment in park revenue
opportunities, as well as expenditures for general park appearance
and guest amenities.
"In late 2003 and early 2004, we concluded a series of financing
transactions pursuant to which we retired our nearest maturing
public debt, expanded our term loan and secured a relaxation of
our bank loan covenants. We expect to remain comfortably in
compliance with these covenants. We have no public debt maturity
before the $375 million notes due 2009. We continue to have ample
liquidity and financing in place and, with an expected cash
interest expense of approximately $195 million and a capital
expenditure program of $75 million, expect to generate meaningful
free cash flow this year."
Six Flags (S&P, B+ Corporate Credit and Senior Secured Bank Loan
Ratings, Negative Outlook) is the world's largest regional theme
park company, currently with thirty-nine parks throughout North
America and Europe.
SLATER STEEL: Steelworkers Urges Acceptance of Purchase Offer
-------------------------------------------------------------
Wayne Fraser, the United Steelworkers' Ontario/Atlantic Director,
said at a news conference that the Toronto Dominion and Scotia
Banks must act now and accept the $13-million offer by DSC
Managers LP to purchase Slater Steel's Hamilton Specialty Bar
Division and save hundreds of good-paying jobs.
The news conference was held during shift change outside the
Hamilton plant at 319 Sherman Avenue North, where hundreds of
Slater employees and their supporters expressed frustration at
having an offer on the table while the banks hold out for more.
"Time has simply run out," said Fraser. "If we do not hear
positive feedback from the banks by noon tomorrow (Thursday,
March 4), we will begin an aggressive campaign amongst the
citizens of Hamilton to persuade them to pull their accounts from
these banks."
Fraser said the union wants to know by noon tomorrow that DSC's
offer has been accepted or a demonstration will go ahead in front
of the TD Bank at 100 King Street East in Hamilton.
The union's Assistant Ontario/Atlantic Director, Marie Kelly,
added: "Our union and its members have worked very hard to reach
and agreement with DSC in order to save this business and
facilitate a sale.
"We have a collective agreement in place that would save hundreds
of good-paying jobs, and protect the pensions and health
insurance of more than 400 retirees and surviving spouses.
"For the banks to simply ignore the needs of the community and
refuse to accept a reasonable offer is irresponsible," she said.
Throughout all of its financial difficulties, Kelly said the
Slater plant has continued producing world class steel products to
supply the demands of its customers.
"Customers are not going to accept instability forever," she said.
"They need reassurance that the plant can continue to fill orders,
which keep our members, and their community, working.
"We want the banks to know that they can't make these kinds of
decisions about people's lives behind closed doors, and that
Hamiltonians and Canadians in general will hold them accountable
for sacrificing their futures so that the banks can squeeze
another dime out of the deal."
SOLUTIA INC: First Creditors' Meeting Slated for March 18, 2004
---------------------------------------------------------------
The United States Trustee for Region 2 has called for a meeting
of the Solutia, Inc. Debtors' Creditors pursuant to Section 341(a)
of the Bankruptcy Code to be held on March 18, 2004 at 2:00 p.m.
at the Office of the United States Trustee, 80 Broad Street, 2nd
Floor, in New York. All creditors are invited, but not required,
to attend. The Official Meeting of Creditors offers the one
opportunity in a bankruptcy proceeding for creditors to examine a
Debtors' representative and question a responsible office of the
Debtors under oath.
Headquartered in St. Louis, Missouri, Solutia, Inc.
-- http://www.solutia.com/-- with its subsidiaries, make and sell
a variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Company filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000)
STONE & WOLF LLC: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Stone & Wolf, LLC
251 South Thurmond
Sheridan, Wyoming 82801
Bankruptcy Case No.: 04-20177
Type of Business: The Debtor is an independent oil and gas
exploration company.
Chapter 11 Petition Date: February 11, 2004
Court: District of Wyoming (Cheyenne)
Judge: Peter J. McNiff
Debtor's Counsel: Georg Jensen, Esq.
Law Offices of Georg Jensen
1613 Evans Avenue
Cheyenne, WY 82001
Tel: 307-634-0991
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
TARGET TWO: Signs-Up Nicholas Fitzgerald as Bankruptcy Counsel
--------------------------------------------------------------
Target Two Associates LP asks the U.S. Bankruptcy Court for the
Southern District of New York for approval to retain and
Associates as its bankruptcy counsel.
Nicholas Fitzgerald, Esq., as counsel, will:
a. give the Debtor legal advice with respect to its powers
and duties as Debtor-in-Possession in the continued
operation of its business;
b. prepare, on behalf of the Debtor, as Debtor-in-Possession,
all necessary applications, answers, orders, reports and
other legal papers required in connection with the
administration of the Chapter 11 estate;
c. represent the Debtor corporation in any adversary
proceeding, either commenced by or against the Debtor in
its case;
d. assist the Debtor in negotiating a plan or plans of
reorganization with its creditors and to perform all legal
services necessary to obtain creditor approval,
confirmation and implementation of such a plan; and
e. perform all other legal services for the Debtor, as
Debtor-in-Possession, which may be necessary herein.
The Debtors tells the Court that Mr. Fitzgerald has considerable
experience in matters of this nature. The Debtor believes that
Mr. Fitzgerald is qualified to represent it in this proceeding.
The Company turned over $5,000 cash to Mr. Fitzgerald. Of this
amount, $830 has been utilized to pay the filing fee. The
remaining $4,170 is to be placed in Mr. Fitzgerald's trust fund
account.
Headquartered in New York, NY, Target Two Associates L.P., filed
for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y.
Case No. 04-11180). Nicholas Fitzgerald, Esq., at Fitzgerald and
Associates represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $18,000,000 in total assets and $13,648,300 in total debts.
TELETECH HOLDING: Awarded Multiyear Telecommunications Agreement
----------------------------------------------------------------
TeleTech Holdings, Inc. (Nasdaq: TTEC), a global provider of
customer solutions, announced it was awarded a multiyear agreement
with a major telecommunications company that provides global
integrated communications services.
Under terms of the agreement, TeleTech provides a multitiered
technology solution for wireless local number portability (WLNP)
initiatives. WLNP allows customers to maintain their existing
phone numbers when switching wireless carriers. By offering a
centralized platform of solutions on a global scale, TeleTech
increases the client's business efficiency and enables customers
to experience seamless interactions.
TeleTech optimizes the customer experience by utilizing feature-
rich network capabilities to ensure rapid response rates.
TeleTech's dispositioning technology enables customer interaction
tracking that provides the client with real-time insight to
proactively adjust program results.
"This WLNP solution was developed by TeleTech's wireless vertical
management team and adds to our diversity of offerings for the
wireless industry," said William S. Beans, Jr., TeleTech's
president, communications and media. "Our team's industry
experience and in-depth understanding of wireless customers' needs
make us the ideal partner to help strengthen brand preference,
increase revenue and enhance customer relationships."
ABOUT TELETECH
TeleTech is a global leader of integrated customer solutions
designed to help clients acquire, grow and retain profitable
relationships with their customers. TeleTech has built a worldwide
capability supported by more than 31,000 professionals in North
America, Latin America, Asia-Pacific and Europe. For additional
information, visit http://www.teletech.com/
* * *
LIQUIDITY AND CAPITAL RESOURCES
Historically, capital expenditures have been, and future capital
expenditures are anticipated to be, primarily for the development
of customer interaction centers, technology deployment and systems
integrations. The level of capital expenditures incurred in 2003
will be dependent upon new client contracts obtained by the
Company and the corresponding need for additional capacity. In
addition, if the Company's future growth is generated through
facilities management contracts, the anticipated level of capital
expenditures could be reduced. The Company currently expects total
capital expenditures in 2003 to be approximately $40.0 million to
$50.0 million, excluding the purchase of its corporate
headquarters building. The Company expects its capital
expenditures will be used primarily to open several new non-U.S.
customer interaction centers, maintenance capital for existing
centers and internal technology projects. Such expenditures are
expected to be financed with internally generated funds, existing
cash balances and borrowings under the Revolver.
The Company's Revolver is with a syndicate of five banks. Under
the terms of the Revolver, the Company may borrow up to $85.0
million with the ability to increase the borrowing limit by an
additional $50.0 million (subject to bank approval) within three
years from the closing date of the Revolver (October 2002). The
Revolver matures on December 28, 2006 at which time a balloon
payment for the principal amount is due, however, there is no
penalty for early prepayment. The Revolver bears interest at a
variable rate based on LIBOR. The interest rate will also vary
based on the Company leverage ratios (as defined in the
agreement). At June 30, 2003 the interest rate was 2.5% per annum.
The Revolver is unsecured but is guaranteed by all of the
Company's domestic subsidiaries. At June 30, 2003, $39.0 million
was drawn under the Revolver. A significant restrictive covenant
under the Revolver requires the Company to maintain a minimum
fixed charge coverage ratio as defined in the agreement.
The Company also has $75 million of Senior Notes which bear
interest at rates ranging from 7.0% to 7.4% per annum. Interest on
the Senior Notes is payable semi-annually and principal payments
commence in October 2004 with final maturity in October 2011. A
significant restrictive covenant under the Senior Notes requires
the Company to maintain a minimum fixed charge coverage ratio.
Additionally, in the event the Senior Notes were to be repaid in
full prior to maturity, the Company would have to remit a "make
whole" payment to the holders of the Senior Notes. As of June 30,
2003, the make whole payment is approximately $11.9 million.
During the second quarter of 2003, the Company was not in
compliance with the minimum fixed charge coverage ratio and
minimum consolidated net worth covenants under the Revolver and
the fixed charge coverage ratio and consolidated adjusted net
worth covenants under the Senior Notes. The Company has worked
with the lenders to successfully amend both agreements bringing
the Company back into compliance. While the Revolver and Senior
Notes had subsidiary guarantees, they were not secured by the
Company's assets. In connection with obtaining the amendments, the
Company has agreed to securitize the Revolver and Senior Notes
with a majority of the Company's domestic assets. As part of the
securitization process, the two lending groups need to execute an
intercreditor agreement. If an intercreditor agreement is not in
place by September 30, 2003, the lenders could declare the
Revolver and Senior Notes in default. The lenders and the Company
believe they will be able to execute the intercreditor agreement
by September 30, 2003. However, no assurance can be given that the
parties will be successful in these efforts. Additionally, the
interest rates that the Company pays under the Revolver and Senior
Notes will increase as well under the amended agreements. The
Company believes that annual interest expense will increase by
approximately $2.0 million a year from current levels under the
Revolver and Senior Notes as amended. The Company believes that
based on the amended agreements it will be able to maintain
compliance with the financial covenants. However, there is no
assurance that the Company will maintain compliance with financial
covenants in the future and, in the event of a default, no
assurance that the Company will be successful in obtaining waivers
or future amendments.
From time to time, the Company engages in discussions regarding
restructurings, dispositions, mergers, acquisitions and other
similar transactions. Any such transaction could include, among
other things, the transfer, sale or acquisition of significant
assets, businesses or interests, including joint ventures, or the
incurrence, assumption or refinancing of indebtedness, and could
be material to the financial condition and results of operations
of the Company. There is no assurance that any such discussions
will result in the consummation of any such transaction. Any
transaction that results in the Company entering into a sales
leaseback transaction on its corporate headquarters building would
result in the Company recognizing a loss on the sale of the
property (as management believes that the current fair market
value is less than book value) and would result in the settlement
of the related interest rate swap agreement (which would require a
cash payment and charge to operations of $5.4 million).
TENET: Amedisys to Buy 11 Home Health Agencies and 2 Hospices
-------------------------------------------------------------
Tenet Healthcare Corporation (NYSE:THC) announced it has finalized
an agreement to sell 11 home health agencies and two hospices
owned by Tenet subsidiaries to Amedisys, Inc. (Nasdaq:AMED) and
will complete the transaction by May 1, 2004.
Gross proceeds from the sale of the 11 home health agencies and
two hospices are estimated at approximately $19 million for
property, plant and equipment at closing, and approximately $4.3
million from working capital liquidation over several months
subsequent to closing. The agreement calls for closing to occur in
three stages, with control over the first four agencies
transferring effective March 1. The second group will transfer on
April 1, 2004, with the final transfer effective on May 1, 2004.
The 11 home health agencies and two hospices, located in seven
southern states, are: Tenet Home Care of Palm Beach, Delray Beach,
Fla.; Tenet Home Care of Broward County, Lauderdale Lakes, Fla.;
St. Mary's Hospital Home Health, W. Palm Beach, Fla.; Tenet Home
Care of Miami-Dade, N. Miami Beach, Fla.; Professional Home
Health, Biloxi, Miss.; Memorial Home Care, New Orleans, La.;
Spalding Regional Home Health, Griffin, Ga.; First Community Home
Care, Dallas, Texas; Cypress-Fairbanks Home Health, Houston,
Texas; Brookwood Home Care Services, Birmingham, Ala.; Brookwood
Medical Center Hospice, Birmingham, Ala. and St. Francis Home
Health and Hospice, Memphis, Tenn. Amedisys, a leading provider of
home health care nursing services based in Baton Rouge, La.,
operates sites across 11 southern and southeastern states.
"The sale of these assets is part of our strategic focus on our 69
core hospitals, which will provide our platform for future
growth," said Trevor Fetter, Tenet's president and chief executive
officer. "Home health care is not a significant part of Tenet's
business."
Tenet anticipates the sale will have minimal effect on patients
and that there will be no interruption in home care or hospice
service as a result of the transaction.
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates acute care hospitals and numerous related health care
services. Tenet's hospitals aim to provide the best possible care
to every patient who comes through their doors, with a clear focus
on quality and service. Tenet can be found on the World Wide Web
at http://www.tenethealth.com/
* * *
As reported in the Troubled Company Reporter's February 5, 2004
edition, Fitch Ratings downgraded Tenet Healthcare Corp.'s senior
unsecured debt and bank facility ratings to 'B+' from 'BB'. The
Rating Outlook is Negative.
The downgrade reflects continued weak operating performance
primarily as it relates to cash flow. The company's weakness in
earning power is mostly attributed the company's difficulty in
achieving market-level increases in its managed care contracting
efforts and continued bad debt exposure driven, in part, by the
company's price structure.
TOYS R US: Office Depot Buying 124 Kids "R" Us Stores for $197M+
----------------------------------------------------------------
Toys "R" Us, Inc. announced results for its fourth quarter and
fiscal year ended January 31, 2004.
Toys "R" Us, Inc. and Office Depot, Inc. also announced that they
have reached an agreement under which Office Depot will acquire
124 of the former Kids "R" Us stores for $197 million in cash plus
the assumption of lease payments and other obligations.
Total sales for the fourth quarter of 2003 were $4.94 billion, up
1.4% from $4.87 billion for the fourth quarter of 2002. Excluding
the impact of currency translation, total sales were $4.76 billion
for the fourth quarter of 2003. For the fiscal year ended January
31, 2004, sales in U.S. dollars were $11.57 billion this year, up
2.3% (and decreased 0.6% excluding currency translation) from last
year's $11.31 billion.
The company reported net earnings of $144 million, or $0.67 per
share, for the fourth quarter of 2003, compared with net earnings
of $278 million, or $1.30 per share, for the fourth quarter of
2002. For the year ended January 31, 2004, the company reported
net earnings of $88 million or $0.41 per share versus net earnings
of $229 million, or $1.09 per share for 2002. Consolidated net
earnings excluding the impact of currency translation were $130
million for the fourth quarter and $78 million for the year. (All
per share figures refer to diluted per share amounts.)
Operating earnings for the fourth quarter of 2003 were $259
million versus $462 million for the prior year comparable quarter.
For the year ended January 31, 2004, operating earnings were $262
million compared with $471 million for 2002.
Results for the fourth quarter and fiscal year of 2003 were
substantially affected by charges associated with the previously
announced decision to close the 146 free-standing Kids "R" Us
stores and the 36 free-standing Imaginarium stores as well as by
the impact of provisions of Emerging Issues Task Force Issue No.
02-16, "Accounting by a Customer (Including a Reseller) for
Certain Consideration Received from a Vendor" (EITF 02-16). Both
of these factors are discussed in further detail later in this
press release, and pages 7-8 of this release show financial
results inclusive and exclusive of EITF 02-16.
Balance Sheet and Inventory Management
The company ended the fourth quarter of 2003 with $2 billion in
cash and cash equivalents. On February 13, 2004, $506 million of
this cash was used to pay off a maturing Eurobond including
accrued interest. This Eurobond represented the company's last
significant debt maturity until July 2006 when a $250 million bond
issue matures.
Net capital expenditures were $264 million in 2003, well below the
company's $348 million ($324 million net of accelerated
depreciation related to store closings) depreciation expense. In
2003, cash flow from operations net of capital expenditures (free
cash flow) was $533 million, up substantially from $176 million in
2002. Approximately $60 million of the 2003 cash flow was
generated by the closing of the free-standing Kids "R" Us and
Imaginarium stores, partially as a result of successful
liquidation sales conducted during the fourth quarter.
At year-end, total inventories, excluding the impact of currency
translation, were down 5.7% versus last year, and down 2.0%
excluding the impact of reduced inventory at Kids "R" Us. U.S. toy
store inventories were down $43 million, or 3.1% including the
impact of EITF 02-16.
John Eyler, Chairman and Chief Executive Officer, said, "While we
were disappointed in the sales and earnings performance of our
U.S. toy stores in 2003, we were pleased with the record
performance of our Babies "R" Us, International and Toysrus.com
divisions. Our discipline in inventory management was also
excellent throughout 2003.
"We completed our three-year plan to term out debt, pre-fund the
company's 2004 maturities, and reduce our dependence on the more
volatile short-term debt markets in the fall of 2003. These
efforts contributed to our strong year-end balance sheet and ample
liquidity. Our annual cash flow and year-end cash balances
surpassed our expectations as a result of improved working capital
management and increased operational discipline as well as the
better than expected results of the Kids "R" Us liquidation sales.
Our solid financial footing gives us increased flexibility as we
conduct our strategic evaluation of our company and its assets."
Business Segment Performance
In the U.S. Toy Store division, comparable store sales decreased
5.1% for the fourth quarter of 2003. This decrease was primarily
attributable to the video game business, which declined 22% versus
last year's fourth quarter. Operating earnings for the fourth
quarter of 2003 were $164 million versus $268 million in the
fourth quarter of 2002. Operating earnings for the year ended
January 31, 2004 were $119 million versus operating earnings of
$275 million for 2002. Excluding the impact of EITF 02-16,
operating earnings were $150 million for the year ended January
31, 2004.
In the International division, comparable toy store sales in local
currencies were flat during the fourth quarter of 2003 following a
4.7% gain last year in the fourth quarter. Operating earnings were
$170 million for the fourth quarter of 2003 compared to $157
million in 2002. Excluding the impact of EITF 02-16, operating
earnings for the fourth quarter were $179 million this year.
Operating earnings for fiscal 2003 were $173 million versus $160
million in 2002. Excluding the impact of EITF 02-16 for the year
ended January 31, 2004, operating earnings were $188 million, an
improvement of 17.5% over 2002. Excluding the impact of currency
translation, total sales were $1.1 billion or down 0.9% for the
quarter and $2.2 billion for 2003, up 1.6%. Operating earnings,
excluding the impact of EITF 02-16 and currency translation, were
$154 million for the quarter, down 1.9% from 2002. For the year,
operating earnings excluding the impact of EITF 02-16 and currency
translation were $166 million, a 3.8% increase over 2002.
The Babies "R" Us business posted an 8.9% increase in total sales,
a 2.9% increase in comparable store sales and a 15% increase in
operating earnings to $46 million from $40 million for the fourth
quarter of 2002. EITF 02-16 had no impact on operating earnings
for the quarter. Annual operating earnings were $202 million, up
from $174 million in 2002. Excluding the impact of EITF 02-16,
operating earnings for 2003 were $206 million. Sixteen new Babies
"R" Us stores opened during 2003. Approximately 20 additional new
store openings, along with additional store renovations, are
planned this year.
At Toysrus.com, fourth quarter 2003 sales totaled $198 million, an
increase of 2.6% from 2002 sales of $193 million; however, fourth
quarter sales increased 8.4% from last year after adjusting for
the sale of Toysrus.com Japan to Toys "R" Us Japan during the
third quarter of 2003. Sales for fiscal 2003 rose 10.6% to $376
million from $340 million in 2002. Fiscal 2003 sales increased
12.8% after adjusting for Toysrus.com Japan. Operating earnings
for the fourth quarter of 2003 increased to $4 million from $3
million in 2002. For the year ended January 31, 2004, the
operating loss was $18 million versus an operating loss of $37
million for the comparable period in 2002.
The Kids "R" Us business reported sales of $130 million for the
fourth quarter of 2003, up from $103 million in the prior year
quarter. Total sales for 2003 were $423 million, down from $454
million for 2002. Operating losses at Kids "R" Us increased to $65
million for the year, up from $26 million in 2002. This year's
operating results include costs associated with the decision to
cease operations in the free-standing Kids "R" Us stores, as
discussed below. These costs include liquidation related markdowns
($49 million) and accelerated depreciation ($24 million) but do
not include restructuring charges.
Closing of Free-standing Kids "R" Us
and Imaginarium Stores
On November 17, 2003, the company announced plans to close the 146
free-standing Kids "R" Us and the 36 free-standing Imaginarium
stores as well as three distribution centers that supported these
stores. The majority of these facilities were closed on or before
January 31, 2004. In conjunction with these actions, the company
estimated it would incur restructuring and other charges totaling
approximately $280 million pre-tax; however, the amount of this
charge was preliminary and subject to change, pending the outcome
of negotiations with vendors, landlords and other third parties.
Toys "R" Us, Inc. and Office Depot, Inc. today announced an
agreement under which Office Depot will acquire 124 of the former
Kids "R" Us stores for $197 million in cash plus the assumption of
lease payments and other obligations. The 124 stores include
properties owned by Toys "R" Us, Inc. as well as stores with
ground or operating leases. This transaction is expected to close
in phases over the next several months.
"We are very pleased to be selling the majority of the former Kids
"R" Us locations to Office Depot," commented John Eyler. "Overall,
the activities related to the closing of our 146 free-standing
Kids "R" Us stores including reduced receipt flow, the inventory
liquidation and the disposition of real estate, are progressing
extremely well. This transaction with Office Depot largely
completes the disposition of the Kids "R Us real estate portfolio.
As previously discussed, we have set aside 14 stores for
conversion to Babies "R" Us over the next two years. In addition,
5 of the Kids "R" Us stores had leases that ended on January 31,
2004. Thus, only 3 leased stores remain and all of these leases
expire in less than 48 months. These actions put us well ahead of
our original schedule and frees up resources that will be
refocused on our company's strategic evaluation."
All 36 Imaginarium stores have been closed and roughly half of the
leases have been terminated with the remaining lease terminations
under negotiation.
The company recorded costs and charges of $158 million in the
fourth quarter of 2003 primarily for the closing of the free-
standing Kids "R" Us and Imaginarium stores. These costs and
charges include $49 million of inventory markdowns recorded in
cost of goods sold, as well as $24 million of depreciation that
was accelerated through the closing periods. Additional charges of
approximately $10 million are expected to be recorded primarily
during the first quarter of 2004. These total charges of
approximately $168 million are significantly below the company's
preliminary estimate of $280 million primarily as a result of the
favorable disposition of the Kids "R" Us real estate portfolio.
Mr. Eyler continued, "We are well on our way to exiting the Kids
"R" Us business, and, to date, have successfully generated
substantial cash from store closing activities. We anticipate that
we will generate even more cash in 2004 when we receive payment
from Office Depot, Inc. for the sale of the Kids "R" Us real
estate."
Update on Company's Strategic Evaluation
"As we indicated on January 8, 2004, the company and the Board of
Directors are currently in the process of conducting a thorough
strategic evaluation of all of our assets and operations to
determine the optimal configuration and use of these resources. We
have retained Credit Suisse First Boston LLC as our financial
advisor to assist us in this process, and we have also retained
real estate and other experts to provide appraisals of our real
estate assets and other holdings," Mr. Eyler said.
"We are undertaking this strategic evaluation from a position of
strength. The company's balance sheet is stronger today than it
has been in many years and our liquidity is outstanding. Our
Babies "R" Us and International divisions are healthy and vibrant.
Toysrus.com has made enormous progress in the past few years and
is approaching annual profitability. Although the U.S. toy stores
have not performed as well as we had hoped, the division remains
profitable and continues to generate significant amounts of cash.
"The fact-finding phase of the evaluation is well underway. We are
committed to an exhaustive and thorough review of all of the
assets of the corporation including all real estate. Once we have
gathered all of the necessary valuations and other relevant
information, management will begin a process of reviewing all of
the strategic alternatives and make its recommendations to the
Board. We anticipate that this process will take a number of
additional months of work," Mr. Eyler concluded.
Implementation of Emerging Issues Task Force Issue No. 02-16
"Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor" (EITF 02-16)
The company commenced implementation of Emerging Issues Task Force
Issue No. 02-16, "Accounting by a Customer (Including a Reseller)
for Certain Consideration Received from a Vendor" (EITF 02-16)
during the first quarter of 2003 and continued this implementation
during the year. The provisions of EITF 02-16 unfavorably impacted
the company's fourth quarter 2003 results by $6 million, net of
tax, or by $0.02 per share, and negatively impacted results for
the year ended January 31, 2004 by $32 million, net of tax, or
$0.15 per share. EITF 02-16 has no impact on the company's cash
flows.
Excluding the impact of EITF 02-16, operating earnings for the
fourth quarter of 2003 would have been $269 million compared to
last year's $462 million. For this fiscal year, operating
earnings, excluding EITF 02-16, would have been $312 million
versus $471 million for 2002. Again, excluding the impact of EITF
02-16, net earnings for the fourth quarter would have been $150
million and earnings per share would have been $0.69, compared to
net earnings of $278 million and earnings per share of $1.30 for
the fourth quarter of 2002. The net earnings for the year would
have been $120 million or $0.56 per share excluding EITF 02-16,
versus net earnings of $229 million or $1.09 per share for the
prior year.
Toys "R" Us, one of the world's leading retailers of toys, baby
products, and children's apparel currently sells merchandise
through 1,500 stores worldwide: 681 toy stores in the United
States; 574 international toy stores, including licensed and
franchise stores; 199 Babies "R" Us stores, 42 Kids "R" Us stores
and 4 Geoffrey stores, and through its Internet sites at
http://www.toysrus.com/, http://www.babiesrus.com/
http://www.imaginarium.com/and http://www.sportsrus.com/
* * *
As reported in the Troubled Company Reporter's January 12, 2004
edition, Standard & Poor's Ratings Services lowered its ratings on
Toys "R" Us Inc. The long-term corporate credit rating was lowered
to 'BB+' from 'BBB-' and the short-term corporate credit rating
was lowered to 'B' from 'A-3'. In addition, the long-term ratings
on the company were placed on CreditWatch with negative
implications.
"The downgrade reflects the continued deterioration in Toys "R"
Us' U.S. toy business and Standard & Poor's expectation that the
company will not show the recovery in performance and credit
ratios that was incorporated into the previous ratings," said
credit analyst Diane Shand. Toys' operations are being affected by
intense competition from Wal-Mart and Target. Although Toys is the
largest specialty toy retailer in the U.S., discount department
stores have been gaining share since the late 1990s, as price has
proven to be a compelling driver of seasonal sales.
UNITED DEFENSE: Acquires Honolulu Shipyard Assets for $16 Million
-----------------------------------------------------------------
United Defense Industries, Inc. (NYSE:UDI) has completed its
acquisition of the U.S. Navy ship repair business of Honolulu
Shipyard Inc. (HSI) for $16.1 million.
HSI had revenues of $40 million in 2003. The new company, Hawaii
Shipyards, Inc., will continue to partner with Southwest Marine
(SWM), a unit of United States Marine Repair (USMR), a UDI
subsidiary. The Company recently announced a teaming agreement
with Bath Iron Works, a subsidiary of General Dynamics (NYSE:GD),
for work on the USS CHAFEE (DDG 90), home ported in Hawaii.
"I welcome the HSI team to our family of shipyards," said Al
Krekich, president of USMR. "We look forward to working with this
well-established, talented group of ship repair professionals. HSI
has been a vital member of the community since the 1920's, and
they have grown to become the premier ship repair firm on the
island. Together we can provide the Navy with an even higher level
of expertise and customer service."
United States Marine Repair serves the U.S. Navy, its primary
customer, and other defense and commercial customers at ship
repair operations in Norfolk, Va.; San Diego, San Francisco and
San Pedro, Calif.; Pearl Harbor, Hawaii; and Ingleside, Texas.
About United Defense
United Defense designs, develops and produces combat vehicles,
artillery, naval guns, missile launchers and precision munitions
used by the U.S. Department of Defense and allies worldwide, and
provides non-nuclear ship repair, modernization and conversion to
the U.S. Navy and other U.S. Government agencies. To learn more
about United Defense, visit http://www.uniteddefense.com/
* * *
As reported in the Troubled Company Reporter's March 1. 2004
edition, Fitch Ratings upgraded the rating on United Defense
industries' senior secured credit facilities to 'BB+'. The Rating
Outlook has been revised to Stable from Positive. The rating
upgrade reflects UDI's sustained solid operating performance and
cash flow generation, which have translated into strong credit
metrics and substantial cash balances. UDI also benefits from
continued strong defense spending and its position as a
significant player in the U.S. Army's transformation.
UNIVERSAL COMMUNICATION: Alpha Capital Reveals 7.1% Equity Share
----------------------------------------------------------------
Alpha Capital Aktiengesellschaft of Liechtenstein, beneficially
owns 7,462,471 shares of the common stock of Universal
Communication Systems, Inc., representing 7.1% of the outstanding
common stock of Universal Communications Systems. Alpha Capital
holds sole voting and dispositive powers over the entire amount of
stock reported here.
Universal Communications Systems is currently focusing its
operations on the design, manufacture and sale of water production
and generation systems along with solar power systems.
The Company will require short-term outside investment on a
continuing basis to finance its current operations and capital
expenditures. If it does not obtain short term financing it may
not be able to continue as a viable concern. The Company does not
have a bank line of credit and there can be no assurance that any
required or desired financing will be available through bank
borrowings, debt, or equity offerings, or otherwise, on acceptable
terms. If future financing requirements are satisfied through the
issuance of equity securities, investors may experience
significant dilution in the net book value per share of common
stock.
As of September 30, 2003 the Company's total working capital was
deficient in the amount of $1,390,556. This represents a $760,729
decrease over its September 30, 2002 deficiency of $2,151,285.
Until revenues commence from the sale of its AirWater equipment,
the Company will need to obtain funding from external sources to
finance its current operations. Management of the Company
anticipates revenues in the second quarter of fiscal year
September 30, 2004.
Since Universal Communications Systems began operations, it has
generated minor revenues and has incurred substantial expenditures
and operating losses. In view of this fact, its auditors have
stated in their report for the fiscal year ended September 30,
2003 and 2002 that there is substantial doubt about the Company's
ability to continue as a going concern, dependent upon its ability
to meet future financing requirements, and the success of its
future operations, the outcome of which cannot be determined at
this time. In order to finance its working capital requirements,
the Company has, and continues to negotiate equity investments
with several sophisticated investors, but there can be no
assurance that the Company will obtain this capital in the future,
or that it will be obtained on terms favorable to it. If the
Company does not obtain short term financing management indicates
that the Company may not be able to continue as a viable concern.
There is no bank line of credit and there can be no assurance that
any required or desired financing will be available through bank
borrowings, debt, or equity offerings, or otherwise, on acceptable
terms. If future financing requirements are satisfied through the
issuance of equity securities, investors may experience
significant dilution in the net book value per share of common
stock.
On June 6, 2003, the Company defaulted on the January 6, 2003 12%
notes in the amount of $60,000, which came due on that date. The
holders of the Notes, who also hold a portion of the convertible
debentures, did not take action to foreclose on the Notes. These
notes have been included in a proposed negotiated settlement
whereby the notes and the debentures will be converted into shares
of common stock at a fixed conversion price.
USG CORP: Wants Court to Stretch Lease Decision Time to Sept. 1
---------------------------------------------------------------
Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, informs the Court that the USG Corporation
Debtors now have 185 remaining Real Property Leases. Given the
number of these Leases and their importance to the Debtors'
ongoing operations, it would be imprudent to require the Debtors
to elect whether to assume or reject the Leases at this stage in
their Chapter 11 cases. Unless they are granted additional time
to make their election regarding the Leases, the Debtors are at
risk of prematurely and improvidently assuming or rejecting such
Leases without necessary evaluations, determinations, negotiations
and discussions with the relevant landlords and various creditor
constituencies.
Thus, by this motion, the Debtors ask the Court to extend the
time within which they must assume or reject any Real Property
Lease through and including September 1, 2004.
Mr. Heath assures the Court that pending the Debtors' election to
assume or reject the Leases, the Debtors will perform all their
obligations arising from and after the Petition Date in a timely
fashion, including payment of postpetition rent due. As a
result, there should be little or no prejudice to the landlords.
In fact, the aggregate amount of prepetition arrearages under the
Leases is relatively small, as rent under many of the Leases was
paid in advance. Therefore, as of the Petition Date, there was
only a minimal amount of accrued but unpaid rent under the
Leases.
The Court will convene a hearing on April 26, 2004 to consider
the Debtors' request. By application of Del.Bankr.LR 9006-2, the
deadline is automatically extended through the conclusion of that
hearing. (USG Bankruptcy News, Issue No. 61; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
U.S. STEEL: Caps Price on 8 Million Common Stock Offering
---------------------------------------------------------
United States Steel Corporation (NYSE: X) agreed to sell 8,000,000
shares of its common stock at a price of $38.50 per share in an
underwritten public offering. U. S. Steel has agreed to an
underwriting discount of $1.73 per share with net proceeds to U.
S. Steel of $36.77 per share.
U. S. Steel intends to use the net proceeds from the sale of its
common stock to redeem 35 percent of the $535 million face amount
of its 10-3/4% debentures, and any remaining proceeds will be used
for general corporate purposes, which may include the redemption
of up to 35 percent in aggregate principal amount of its 9-3/4%
Senior Notes due May 15, 2010, the reduction of other debt and
payments to employee benefit plans.
U. S. Steel has granted the underwriters an option to purchase up
to 1,200,000 additional shares to cover over-allotments. Goldman,
Sachs & Co., J.P. Morgan Securities Inc. and Morgan Stanley are
acting as joint book-runners, and Lehman Brothers Inc. and UBS
Securities LLC as co-managers.
Copies of the final prospectus supplement, when available, may be
obtained from Goldman, Sachs & Co., 85 Broad Street, New York, NY,
10004, Attn: Prospectus Department, telephone 212-902-1171, or
from the Prospectus Department of J.P. Morgan Securities Inc., One
Chase Manhattan Plaza, Floor 5b, New York, NY, 10081, telephone
212-552-5164, or from Morgan Stanley, Prospectus Department, 1585
Broadway, New York, NY, 10036, fax 212-761-0211.
U. S. Steel, through its domestic operations, is engaged in the
production, sale and transportation of steel mill products, coke,
and iron-bearing taconite pellets; the management of mineral
resources; real estate development; and engineering and consulting
services and, through its European operations, which include U.S.
Steel Kosice located in Slovakia and U.S. Steel Balkan located in
Serbia, in the production and sale of steel mill products. Certain
business activities are conducted through joint ventures and
partially owned companies. United States Steel Corporation is a
Delaware corporation.
* * *
As reported in the Troubled Company Reporter's February 4, 2004
edition, Standard & Poor's Ratings Services assigned its
preliminary 'BB-' senior unsecured and preliminary 'B'
subordinated debt ratings to United States Steel Corp.'s $600
million universal shelf. The company may also issue preferred
stock under the shelf.
At the same time, Standard & Poor's affirmed all its existing
ratings, including the 'BB-' corporate credit rating on U.S. Steel
and revised its outlook on the company to stable from negative.
Total debt for the Pittsburgh, Pennsylvania-based company was $2.2
billion (including operating leases) for the December 2003
quarter.
"The outlook revision reflects the anticipated improvements in the
company's financial profile owing to its ongoing cost-reduction
initiatives, as well as benefits from management's actions to
moderate potentially high cash outlays for its pension obligations
in the next few years," said Standard & Poor's credit analyst Paul
Vastola.
The ratings reflect the company's aggressive financial leverage--
including its underfunded postretirement benefit obligations--and
challenging market conditions, which overshadow its good liquidity
and its improved market share and cost position following its May
20, 2003, acquisition of National Steel Corp. The company also
benefits from a product mix that is more diverse than its
competitors. Following its acquisition of the assets of National,
U.S. Steel's domestic steel production capability increased to
19.4 million tons, making it the largest integrated steel producer
in North America.
VERITAS DGC: Completes Sale of Convertible Senior Notes Due 2024
----------------------------------------------------------------
Veritas DGC Inc. (NYSE & TSX: VTS) closed its previously announced
private offering of $125 million aggregate principal amount of
Floating Rate Convertible Senior Notes Due 2024.
The convertible notes are senior unsecured obligations of the
Company and are convertible under certain circumstances into a
combination of cash and common stock of the Company at a fixed
conversion price of $24.03 (subject to adjustment in certain
circumstances), which is equivalent to an initial conversion
ratio of approximately 41.6146 per $1,000 principal amount of
convertible notes. In general, upon conversion of a convertible
note, the holder of such note will receive cash equal to the
principal amount of the note and common stock of the Company for
the note's conversion value in excess of such principal amount.
The convertible notes bear interest at a per annum rate which
will equal three month LIBOR, adjusted quarterly, minus a spread
of 0.75%. The convertible notes will mature on March 15, 2024 and
may not be redeemed by the Company prior to March 20, 2009.
Holders of the convertible notes may require the Company to
repurchase some or all of the convertible notes on March 15,
2009, 2014 and 2019.
The Company used approximately $100 million of the net proceeds
from the offering to prepay a portion of amounts outstanding
under its existing bank credit facility and used approximately
$20 million of the net proceeds to repurchase in negotiated
transactions shares of its common stock sold short by certain
purchasers of the convertible notes in connection with the
offering.
The convertible notes were sold only to qualified institutional
buyers in accordance with Rule 144A under the Securities Act of
1933, as amended. The convertible notes and the underlying common
stock issuable upon conversion have not been registered under the
Securities Act or any applicable state securities laws and may
not be offered or sold in the United States absent registration
or an applicable exemption from such registration requirements.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities.
* * *
As previously reported, Standard & Poor's Ratings Services
affirmed its ratings on Veritas DGC Inc. (BB+\Negative\--)
following the company's announcement that it will refinance a
large portion of its secured debt by issuing new unsecured
convertible notes. The outlook remains negative, S&P says.
VIALINK COMPANY: Amends Corporate Office Lease Agreements
---------------------------------------------------------
The viaLink Company has amended its lease agreement for its
Corporate Offices. The amended lease agreement provides for a cash
payment of $100,000 for amounts due prior to December 31, 2003,
plus a cash payment of $67,792.50 for the prepayment of rent
through April 1, 2004. The amendment decreases the rented area
from 21,696 square feet to 12,052 square feet within the same
building. The Basic Monthly Rent decreased effective
January 1, 2004 from $44,500.04 to $22,597.50.
Additionally, the Company received loan proceeds totaling $375,000
from certain existing stockholders. In exchange, the Company
executed promissory notes and issued warrants. For each increment
of $10,000 loaned to the Company warrants to purchase 50,000
shares were issued. The notes bear interest at an annual rate of
ten percent (10%) and mature upon the earlier of six months from
the issuance date or a triggering event as defined in the notes.
The warrants expire five (5) years from the date of issuance, and
the stock underlying the warrants is currently authorized but not
registered. The Company may obtain additional loan proceeds on the
same terms and conditions and in that event will similarly report
such receipt.
The Vialink Company's September 30, 2003, balance sheet shows a
working capital deficit of about $2 million, and a total
shareholders' equity deficit of about $1.6 million.
The Vialink Company provides subscription-based, business-to-
business electronic commerce services that enable companies in the
consumer packaged goods, retail and automotive industries to
efficiently manage their highly complex supply chain information.
Our services allow manufacturers, wholesalers, distributors, sales
agencies (such as food brokers) and retailers to communicate and
synchronize item, pricing and promotion information in a more
cost-effective and accessible way than has been possible using
traditional electronic and paper-based methods.
The Company's independent auditors have issued their Independent
Auditors' Report on the Company's consolidated financial
statements for the fiscal year ended December 31, 2002 with an
explanatory paragraph regarding the Company's ability to continue
as a going concern. The Company has generated net losses for the
years ended December 31, 2000, 2001 and 2002 and have generated an
accumulated deficit of $93.0 million as of September 30, 2003. The
Company has incurred operating losses and negative cash flow in
the past and expect to incur operating losses and negative cash
flow during 2003.
VISTEON CORP: $450 Million Note Offering to Close on Mach 10
------------------------------------------------------------
Visteon Corporation (NYSE: VC) announced the pricing of $450
million notes due 2014. The offering of notes is expected to
close on March 10, 2004 and is subject to various terms and
conditions. The notes will be issued at a public offering price
of 99.957 percent of par and bear interest at a rate of 7.00
percent per year, payable semi-annually on each March 10 and
September 10 until maturity on March 10, 2014. J.P. Morgan
Securities Inc. and Citigroup are acting as the managing
underwriters for the offering.
The net proceeds of the offering of the notes are currently
anticipated to be used to repurchase a portion of Visteon's
existing 7.95 percent notes due 2005 pursuant to a previously
announced tender offer, to pay fees and expenses related to the
tender offer and for working capital and other general corporate
purposes. The offering is being made pursuant to Visteon's
effective shelf registration statement previously filed with and
declared effective by the Securities and Exchange Commission.
Visteon Corporation is a leading full-service supplier that
delivers consumer-driven technology solutions to automotive
manufacturers worldwide and through multiple channels within the
global automotive aftermarket. Visteon has approximately 72,000
employees and a global delivery system of more than 180 technical,
manufacturing, sales and service facilities located in 25
countries.
* * *
As reported in the Troubled Company Reporter's December 26, 2003
edition, Standard & Poor's Ratings Services lowered its corporate
credit rating on Visteon Corp. to 'BB+' from 'BBB' because of the
company's weak financial results and weaker business risk profile
than previously believed, as evidenced by the recent restructuring
of its relationship with Ford Motor Co. (BBB-/Stable/A-3).
WEIRTON VENTURE: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Weirton Venture Holdings Corporation
400 Three Springs Drive
Weirton, West Virginia 26062
Bankruptcy Case No.: 04-00674
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
FW Holdings, Inc. 04-00673
Type of Business: The Debtor is a wholly owned subsidiary of
Weirton which which is engaged in the business
of marketing and distribution of steel and
steel related products.
Chapter 11 Petition Date: February 26, 2004
Court: Northern District of West Virginia (Wheeling)
Judge: L. Edward Friend II
Debtors' Counsels: Arch W. Riley, Jr., Esq.
Bailey, Riley, Buch & Harman, LC
P.O. Box 631
Wheeling, WV 26003-0081
Tel: 304-232-6675
Fax: 304-232-9897
Mark E. Freedlander, Esq.
McGuireWoods LLP
625 Liberty Avenue
Dominion Tower, 23rd Floor
Pittsburgh, PA 15222-3142
Tel: 412-667-6000
Fax: 412-667-6050
Estimated Assets Estimated Debts
---------------- ---------------
Weirton Venture Holdings $1 M to $10 M $10 M to $50 M
Corporation
FW Holdings, Inc. $1 M to $10 M $50 M to $100 M
Debtors' 3 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Pension Benefit Guaranty Claims related to $45,897,048
Corp. Pension Plan
1200 K. Street, NW Suite 340
Washington, DC 20004-4026
MABCO Steam Company, LLC Undersecured loan $27,128,001
c/o Cleveland-Cliffs Inc. claim
Diamond Building, 18th Fl.
1100 Superior Avenue
Cleveland, OH 44114-2589
Balli Group, P.L.C. Unknown
5 Stanhope Gate
London, W1Y 5LA
United Kingdom
WKI: Ralph Denisco Named Pres. & COO of North American Business
---------------------------------------------------------------
WKI Holding Company, Inc., which operates principally through its
subsidiary World Kitchen, Inc., announced the appointment of Ralph
Denisco to the position of President/Chief Operating Officer of
North American business, effective immediately.
Mr. Denisco will report to James A. Sharman, President and Chief
Executive Officer of WKI. He will be responsible for integrating
the Sales, Marketing, and Operations teams throughout North
America while leading World Kitchen's worldwide supply chain
network.
Mr. Denisco joins World Kitchen from a series of successful
assignments over the last 20 years as President and CEO of
Drumstick Company, Nestle Ice Cream, Norse LP and most recently,
President and CEO of Rexall Sundown, the world's largest
manufacturer of nutritional supplements and vitamins.
Mr. Denisco previously held various sales and marketing positions
for Lever Brothers Company, American Can Company and Season-All
Industries, Inc.
"Ralph has streamlined operations, reduced costs, improved
productivity and significantly increased profitability in each of
his previous assignments," states Mr. Sharman. "He has an
impressive track record of launching new products and integrating
diverse business units. We believe he will quickly become a key
contributor to our leadership team, and ultimately, to the success
of World Kitchen."
Mr. Denisco earned a Bachelor's degree in business marketing from
the University of Illinois. He will be located in the company's
Chicago office.
About World Kitchen
Headquartered in Reston, Virginia, World Kitchen and its
affiliates (S&P, B Corporate Credit Rating, Negative), manufacture
and market glass, glass ceramic and metal cookware, bakeware,
tabletop products and cutlery sold under well-known brands
including CorningWare(R), Pyrex(R), Corelle(R), Revere(R),
EKCO(R), Baker's Secret(R), Magnalite(R), Chicago Cutlery(R) and
OXO(R). The Company employs approximately 2,900 people, and has
major manufacturing and distribution operations in the United
States, Canada, and Asia-Pacific regions. For more information,
visit http://www.worldkitchen.com/
* Turnaround Management's Spring Conference Set for March 12-13
---------------------------------------------------------------
Signs of an improving economy are everywhere, yet the 400
turnaround professionals gathering at the Four Seasons Resort and
Club at Las Colinas in Irving, Texas, on March 12-13, find plenty
of troubled companies to talk about. Industry experts lend a hand
in panel discussions during the Turnaround Management
Association's Spring Conference, on topics such as how to lead a
recovering company during the transitioning economy, the forecast
for the distressed debt and M&A market, what can turn the sluggish
retail market around and how to find financing for the
reorganization plan.
In addition, keynote speakers include:
-- 12:30 p.m., Friday, March 12 -- Wilbur L. Ross, Chairman
and CEO of WL Ross & Co. LLC, a leader in investing in and
rescuing distressed companies, speaks on "The Distressed
Debt Landscape Today"
-- 8:30 p.m., Friday, March 12 -- Daniel P. Garton, Executive
Vice President - Marketing, AMR Corporation, tells the
continuing story of the recovery of American Airlines,
which came within minutes of bankruptcy in 2003.
-- 9 a.m., Saturday, March 13 - Robert DiNicola, Chairman,
Zale Corporation, speaks on participating in Zale's
remarkable turnaround, achieved by focusing on customers
and returning to the company's basic principles.
Turnaround Management Association -- http://www.turnaround.org/--
is the only international non-profit association dedicated to
corporate renewal and turnaround management. With international
headquarters in Chicago, TMA's 6,800 members in 33 regional
chapters comprise a professional community of turnaround
practitioners, attorneys, accountants, investors, lenders, venture
capitalists, accountants, appraisers, liquidators, executive
recruiters and consultants. Members adhere to a Code of Ethics
specifying high standards of professionalism, integrity and
competence. Its Certified Turnaround Professional program
recognizes professional excellence and provides an objective
measure of expertise related to workouts, restructurings and
corporate renewal.
* 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, Aileen M.
Quijano and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***