/raid1/www/Hosts/bankrupt/TCR_Public/040408.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, April 8, 2004, Vol. 8, No. 70
Headlines
ADELPHIA COMMS: Auctioning Outdated & Obsolete Cable Equipment
AERCO LIMITED: Fitch Downgrades Ratings on 8 Note Classes
AIR CANADA: Gets Nod to Restructure Canadian Bank's Aircraft Lease
AIR CANADA: Wants CCAA Stay Extended Until May 14, 2004
AIR CANADA: Sues WestJet over Alleged Misappropriation of Info
AIR CANADA: WestJet Holds Off Comments About Information Misuse
ALLIED WASTE: Fitch Rates Proposed Senior Notes at Low-B Level
AMERICHIP: Nominates Williams & Webster as New Auditor
ATA AIRLINES: March 2004 Service Traffic Increases by 12.4%
ATLANTIC COAST: Exits Delta Connection Program
ATLANTIC COAST: Independence Air Acquires Two More Airbus A319s
ATNG INC: Creditors Agree Withdraw Involuntary Bankruptcy Petition
BAY VIEW CAPITAL: Will Discuss First Quarter Results on April 28
COMMERCIAL FINANCIAL: JPMorgan Wants to Talk to William Bartmann
CONTIMORTGAGE: Fitch Takes Rating Actions on 5 Securitizations
CURATIVE HEALTH: S&P Assigns Low-B Credit & Senior Debt Ratings
DELTA AIR: Fitch Hatchets Senior Unsecured Debt Rating to CCC+
DENNY'S CORPORATION: Mellon HBV Discloses 8% Equity Stake
DII IND.: Millennium Asks Court to Reclassify Claims as Class 3
DOMAN IND.: Canadian Court Stretches CCAA Stay Until June 11
EAGLEPICHER: Releasing Q1 2004 Financial Results Monday, Apr. 12
ENRON: Committee Sues David Delainey to Recover $3 Mil. Transfer
EXIDE: Wooing Court to Extend Lease Decision Time Until June 30
FEDERAL-MOGUL: Jefferies & Company's Retention Expands
FIRST UNION: S&P Takes Rating Actions on Series 2000-C2 Notes
FLEMING COMPANIES: Hearing on Legal Fees Continued Sine Die
FRANKLIN CAPITAL: Auditors Maintain Going Concern Qualification
GLYCOGENESYS INC: Net Loss Narrows to $8 Million at December 2003
HAYES LEMMERZ: Posts $62 Million Operating Profit in Fiscal 2003
HOLLINGER INT'L: Board Declares Dividend Payable on April 30
IGAMES ENTERTAINMENT: Equitex Board Declines Merger Offer
INTEGRATED HEALTH: Ex-Officers Push to Set Up Admin Claims Reserve
INTERNATIONAL WIRE: Hires Rothschild as Financial Advisor
INTERTAN: RadioShack Terminates Agreements Citing Payment Default
INTERTAN: Responds to RadioShack's Contract Termination & Lawsuit
IPCS: Files Reorganization Plan with N.D. Georgia Bankruptcy Court
IPCS: Amends Affiliation Pacts with Sprint & Settles Litigation
KAISER ALUMINUM: Parcels 1 and 7 Sale Hearing Set for April 26
LABRANCHE: Selling New Senior Notes to Refinance Outstanding Debt
LAKE HAMILTON: Employing James F. Dowden as Bankruptcy Counsel
MB REAL ESTATE: Voluntary Chapter 11 Case Summary
MEDXLINK: Engages Newly Merged Chisholm Bierwolf as Auditor
MEGA-C POWER: Tamboril Files Involuntary Bankr. Petition in Nev.
MEGA-C POWER CORPORATION: Involuntary Chapter 11 Case Summary
METALS USA: Cases Reassigned to Judge Wesley Steen
MIRANT CORP: Will Be Late in Filing 2003 Annual Financial Report
NEVADA POWER: Planned $130 Million Debt Issue Gets S&P's BB Rating
NEW CENTURY: S&P Places Low-B Level Ratings on Watch Positive
NORTEL: Offering New Converged Solutions for Small Businesses
OMEGA PANCAKE: Case Summary & 17 Largest Unsecured Creditors
ONE PRICE: Court Approves Clear Thinking's Retention as Advisor
OWENS: Insurers Want Clarification Re Asbestos Claims Estimate
PAC-WEST: Upgrades Managed Dial Access Network to Lucent Platform
PARMALAT: Sao Paulo Court Keeps Rocha to Administer Brasil Unit
PG&E NATIONAL: USGen Gets Go-Signal to Hire Latham as FERC Counsel
PHOTOWORKS: Reaches Settlement of Service Provider Fees Dispute
POLYMER GROUP: S&P Assigns B+ Corporate Credit Rating
REGAL ROW FINA: Case Summary & 7 Largest Unsecured Creditors
SEGA GAMEWORKS: U.S. Trustee Meeting with Creditors on May 4, 2004
SITESTAR: Inks Settlement Pact with New Millennium & AJW Partners
SK GLOBAL: Court Adjourns Exclusivity Hearing to April 21, 2004
SMTC: Recapitalization Expected to Resolve Going Concern Issue
SPIEGEL GROUP: Miller Buckfire is Taking Bids for Eddie Bauer
SPIEGEL GROUP: Pangea Holdings Buying Newport News for $25MM+
STATEPARK BUILDING: Case Summary & 61 Largest Unsecured Creditors
STEMCELLS: 2003 Audit Report Includes Going Concern Qualification
STOCKERYALE: Look for 1st Quarter Financial Results on April 13
TSUNAMI OF PALM: Case Summary & 20 Largest Unsecured Creditors
UNITED AIRLINES: Reports March 2004 Traffic Results
US COMMERCIAL: Case Summary & 20 Largest Unsecured Creditors
VISTA MEDICAL: Needs Additional Funds to Continue Operations
VISTEON CORPORATION: Closes Tender Offer for 7.95% Notes Due 2005
W3 GROUP: Names Donahue Associates as New Independent Accountant
WALTER INDUSTRIES: Raises Full Year 2004 Earnings Guidance
WATERMAN INDUSTRIES: Gubler & Ide Serves as Special Counsel
WESTERN GAS: First Quarter 2004 Conference Call Set for May 6
WESTPOINT STEVENS: Assesses Available Capital Resources
WOLVERINE TUBE: Extends & Amends $37.5 Million Credit Facility
WORLDCOM INC: Court Authorizes Oklahoma Claims Settlement
XM SATELLITE: Offering $125MM Senior Secured Floating Rate Notes
* Dade Behring's John Duffey Named Chicago CFO of the Year
* State Street Appoints Peter Leahy as Chief Operating Officer
* Weil Gotshal's Mikumo & Goldstein Named 'Dealmakers of the Year'
*********
ADELPHIA COMMS: Auctioning Outdated & Obsolete Cable Equipment
--------------------------------------------------------------
Adelphia Communications and its debtor-affiliates currently own
certain cable equipment that either:
(1) can no longer be used in their cable systems because it
is outdated or obsolete; or
(2) is excess equipment for which they have no current or
future use or which is not likely to be utilized within
a 24-month period.
The Excess Equipment is located in 169 warehouses in 27 different
states. The Excess Equipment consists of excess and obsolete
inventory including, but not limited to, trunk coaxial cable and
associated line couples, distribution coax cable and associated
couples, older generation electronics no longer within new plant
design requirements, and miscellaneous nuts, bolts, splitters and
cable traps. Because of the administrative costs associated with
storing the Excess Equipment, and in light of rapidly declining
prices for the equipment generally, the ACOM Debtors determined
that the highest recoveries for the Excess Equipment could be
obtained only if it is sold quickly.
Thus, the Debtors seek the Court's authority to sell the Excess
Equipment, free and clear of any liens, through an auction to
achieve greater success in obtaining the highest and best value
for the Excess Equipment. The Debtors propose to conduct the
auction online as the property is dispersed widely throughout the
United States. (Adelphia Bankruptcy News, Issue No. 55; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
AERCO LIMITED: Fitch Downgrades Ratings on 8 Note Classes
---------------------------------------------------------
Fitch Ratings has downgraded the AerCo Limited notes as follows:
--Class A-2 to 'BBB+' from 'A+';
--Class A-3 to 'BBB' from 'A';
--Class A-4 to 'BBB' from 'A';
--Class B-1 to 'B+' from 'BBB';
--Class B-2 to 'B+' from 'BBB';
--Class C-1 to 'CCC' from 'BB-';
--Class C-2 to 'CCC' from 'BB-';
--Class D-2 to 'CC' from 'B-'.
The downgrades reflect Fitch's concern that continued impaired
lease rates, an aging fleet and rising expenses will continue to
weaken AerCo's cash collections. In addition, Fitch is concerned
that weak cash collections combined with a redirection of the
collections in the payment waterfall will likely result in the
suspension of interest payments on the B, C and D note classes in
the next several years.
Although AerCo's collections for the first three months of 2004
were $39 million, about equal to 2003 three-month collections,
Fitch sees deterioration of as much as 20% in monthly collections
in the next three to four years. Although the weighted average age
of AerCo's fleet is only about twelve years, Fitch has become
concerned about the portion of the fleet that is at this average
and older. These aircraft will likely see much less recovery in
lease rates and will require higher maintenance spending than
Fitch has previously forecast.
Currently, AerCo is paying scheduled principal on the class A-2
and A-4 notes, while the class A-3 notes do not pay principal.
When the class A-2 notes are repaid, by Fitch's estimate sometime
in the next several years, the class A-3 notes will start to pay
minimum principal. Class A minimum principal payments lie ahead of
class B, C and D interest in the waterfall, while class A
scheduled principal is behind class B, C and D interest in the
waterfall. The reduction in collections discussed above combined
with the redirection of collections in the payment waterfall ahead
of the class B, C and D interest will likely result in the
suspension of class B, C and D interest payments.
AerCo is a special purpose limited liability New Jersey company
formed to conduct limited activities, including the buying,
owning, leasing and selling of commercial jet aircraft. In July
1998 AerCo issued $800 million 2000, AerCo issued $960 million of
notes to refinance its class A-1 and D-1 notes and to acquire an
additional 30 aircraft. As of March 2004, AerCo owns 60 aircraft
and has $1 billion class A - D notes outstanding.
AIR CANADA: Gets Nod to Restructure Canadian Bank's Aircraft Lease
------------------------------------------------------------------
The Air Canada Applicants currently lease a Boeing 767-300ER
aircraft bearing MSN24082 powered by two General Electric CF6-80C2
engines s/n 690217 and 690221 from Royal Bank of Canada and CT
Corporate Services, Inc. pursuant to a June 9, 1988 aircraft lease
agreement. As part of their restructuring strategy, the
Applicants struck a deal with RBC and CT Corporate to restructure
the Lease with the Applicants acquiring:
-- CT Corporate's 50% interest in exchange for retiring a loan
extended by the Applicants; and
-- RBC's 50% interest for a purchase price of CN$11,934,000,
which will be financed by RBC pursuant to a purchase
facility.
The Applicants and CT Corporate agree that CT Corporate will
transfer all of its right, title and interest in and to the
Aircraft in full satisfaction of all amounts owing under a
CN$25,326,892 loan, plus interest, owing from CT Corporate to Air
Canada as of March 15, 2004.
Pursuant to an amended and restated letter agreement dated
March 19, 2004, the Applicants and RBC agree to terminate the
Lease and the Applicants will purchase RBC's interest in the
Aircraft. The CN$11,934,000 purchase price will be financed by
RBC and secured by a first ranking aircraft mortgage and
hypothec.
Consequently, the Applicants sought and obtained Mr. Justice
Farley's permission to consummate the Letter Agreement and grant
RBC a first ranking security on the Aircraft.
Headquartered in Saint-Laurent, Quebec Canada, Air Canada --
http://www.aircanada.ca/-- represents Canada's only major
domestic and international network airline, providing scheduled
and charter air transportation for passengers and cargo. The
Company filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and Section 304
petition with the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and
Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the
Debtors' U.S. Counsel. When the Debtors filed for protection from
its creditors, they listed C$7,816,000,000 in assets and
9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue
No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AIR CANADA: Wants CCAA Stay Extended Until May 14, 2004
-------------------------------------------------------
Air Canada provides the following update on the airline's
restructuring under the Companies' Creditors Arrangement Act:
The Twenty-Fourth Report of the Monitor has been completed by
Ernst and Young Inc. and is available at http://www.aircanada.com/
In the Report, the Monitor recommends that a thirty-day extension,
until May 14, 2004, to the stay of proceedings be granted to allow
Air Canada to stabilize its restructuring efforts and to develop a
detailed process for soliciting new equity or other post-emergence
financing.
Headquartered in Saint-Laurent, Quebec Canada, Air Canada --
http://www.aircanada.ca/-- represents Canada's only major
domestic and international network airline, providing scheduled
and charter air transportation for passengers and cargo. The
Company filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and Section 304
petition with the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and
Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the
Debtors' U.S. Counsel. When the Debtors filed for protection from
its creditors, they listed C$7,816,000,000 in assets and
9,704,000,000 in liabilities.
AIR CANADA: Sues WestJet over Alleged Misappropriation of Info
--------------------------------------------------------------
Air Canada filed a statement of claim in Toronto against WestJet
Airlines Ltd. and two of its employees, claiming damages and
injunctive relief because of the misappropriation and misuse by
WestJet of confidential information about Air Canada's passenger
loads, routes, and business operations.
Air Canada's motion for interim injunctive relief will be heard in
Toronto on April 15, 2004. Air Canada intends to vigorously pursue
this claim.
Headquartered in Saint-Laurent, Quebec Canada, Air Canada
-- http://www.aircanada.ca/-- represents Canada's only major
domestic and international network airline, providing scheduled
and charter air transportation for passengers and cargo. The
Company filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and Section 304
petition with the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and
Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the
Debtors' U.S. Counsel. When the Debtors filed for protection from
its creditors, they listed C$7,816,000,000 in assets and
9,704,000,000 in liabilities.
AIR CANADA: WestJet Holds Off Comments About Information Misuse
---------------------------------------------------------------
WestJet responded to a release by Air Canada that it has filed a
statement of claim against the airline. At this time, WestJet has
not reviewed Air Canada's statement of claim. As a result, it
would be inappropriate for WestJet to provide comment on this
matter.
WestJet will provide further statements once information becomes
available.
WestJet serves the 24 Canadian cities of Victoria, Comox,
Vancouver, Abbotsford/Fraser Valley, Prince George, Kelowna,
Grande Prairie, Calgary, Edmonton, Fort McMurray, Saskatoon,
Regina, Winnipeg, Thunder Bay, Windsor, London, Hamilton,
Toronto, Ottawa, Montreal, Moncton, Halifax, Gander and St.
John's. WestJet is publicly traded on the Toronto Stock Exchange
under the symbol WJA.
Headquartered in Saint-Laurent, Quebec Canada, Air Canada
-- http://www.aircanada.ca/-- represents Canada's only major
domestic and international network airline, providing scheduled
and charter air transportation for passengers and cargo. The
Company filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and Section 304
petition with the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and
Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the
Debtors' U.S. Counsel. When the Debtors filed for protection from
its creditors, they listed C$7,816,000,000 in assets and
9,704,000,000 in liabilities.
ALLIED WASTE: Fitch Rates Proposed Senior Notes at Low-B Level
--------------------------------------------------------------
Fitch Ratings has assigned the following ratings to Allied Waste
Industries (AW):
--Proposed $250 million senior secured notes due 2011 'BB-';
--Proposed $400 million senior unsecured notes due 2014 'B+'
--Proposed $200 million senior subordinated convertible bond due
2034 'B'.
AW has also has funded an additional $150 million term loan (term
loan D due 2010) under its senior credit facility, which is rated
'BB' by Fitch. Net proceeds will be used towards a reduction of
the majority of its outstanding 10% senior unsecured sub notes due
2009. The Rating Outlook is Stable.
AW's existing 10% senior sub notes are due 2009 and at Dec. 31,
2003, $1.49 billion was outstanding. Through the proposed
refinancing transactions, AW will extend its maturity profile and
reduce interest expense, providing further improvement in cash
flow generation and liquidity. AW meaningfully improved its
capital structure in 2003, which resulted in debt reduction of
$650 million and an increase in equity to $2.52 billion at year-
end (YE) 2003 from $689 million at YE 2002. Additionally, the
series A senior convertible preferred stock was converted to
common stock in 2003, which eliminated approximately $90 million
in annual cash dividends that would have started in July 2004.
Following YE 2003, AW paid down debt by over $300 million from
cash on hand. Currently, there are no large maturities due in 2004
and 2005.
The current refinancings are estimated to save approximately $30
million per year in interest expense, on top of $115 million in
interest savings from the 2003 refinancings, January 2004
refinancings, roll-off of interest swaps, and debt reduction. This
should help AW partially offset an anticipated increase in capex
this year and to maintain healthy free cash flow of approximately
$300 million. Capex is expected to rise by 20% in 2004.
On a pro forma basis, an increase of $150 million in bank debt
from December-end will marginally increase bank debt (including
receivables secured loan)/EBITDA to 1.1 times (x) from 1.0x, and
the increase in total senior secured debt of $400 million will
result in a slight deterioration in senior secured debt/EBITDA to
4.3x from 4.1x. Total debt/EBITDA at Dec. 31, 2003 was 5.2x at YE
2003 versus 5.3x at YE 2002. Given AW's consistent free cash flow
generation, progress in debt reduction, and potential EBITDA
improvement upon an upturn in the economy, the marginal increase
in senior secured debt does not raise concerns. The new senior
unsecured debt benefits from having the remaining subordinated
debt beneath it. Total debt at Dec. 31, 2003 was $8.23 billion,
and Fitch expects debt reduction in 2004 to exceed $665 million in
total, further improving AW's balance sheet.
AMERICHIP: Nominates Williams & Webster as New Auditor
------------------------------------------------------
On February 10, 2004, AmeriChip International Inc.'s Board of
Directors approved a decision to change auditors. On the same
date, the accounting firm, Morgan & Company was dismissed by
AmeriChip as its independent auditors. Morgan & Company was
dismissed because AmeriChip determined that it was in the
Company's best interest to have a United States independent
auditor.
The report of Morgan & Company on the Company's financial
statements covered the period from inception on October 17, 2000,
through November 30, 2002, and contained an explanatory paragraph
wherein Morgan & Company expressed substantial doubt about
AmeriChip's ability to continue as a going concern.
At the Company's Board Meeting on February 10, 2004, the Board of
Directors approved the decision to engage Williams & Webster,
P.S., as independent auditors for the Company's fiscal years
ending November 30, 2003. Williams & Webster had not accepted
such appointment as of February 17, 2004, and the Company
indicates that there is no assurance that Williams & Webster will
ever accept such appointment.
AmeriChip International Inc. was incorporated in the State of
Nevada on October 17, 2000 as Southborrough Technology Corporation
for the purpose of mineral exploration. Although the Company
obtained an option to acquire a 100% interest in a mineral claim
located in the Slocan Mining District Province of British
Columbia, Canada, the Company allowed the option on this claim to
expire on or about June 30, 2003. The Company changed its name to
AmeriChip International Inc. on December 1, 2003.
AmeriChip's initial business objective was to conduct mineral
exploration activities on the aforementioned mineral claim in
order to assess whether the claim possessed commercially
exploitable reserves of silver, lead or zinc. The Company was
unable to identify any commercially exploitable reserves.
On February 28, 2003, AmeriChip's board of directors approved the
termination of the Company's exploration activity and also
approved the acquisition of AmeriChip Ventures, Inc., a wholly
owned subsidiary which held the patents for the Laser Assisted
Chip Control technology. AmeriChip Ventures, Inc. acquired the
patented technology from its 80% owned subsidiary, AmeriChip, Inc.
The Company is currently engaged in the development of its
patented technology for use in manufacturing.
AmeriChip International Inc.'s November 30, 2003, balance sheet
reports a total stockholders' equity deficit of $965,243 and a
working capital deficit of $990,753.
ATA AIRLINES: March 2004 Service Traffic Increases by 12.4%
-----------------------------------------------------------
ATA Airlines, Inc., the principal subsidiary of ATA Holdings Corp.
(Nasdaq: ATAH), reported that March scheduled service traffic,
measured in revenue passenger miles (RPMs), increased 12.4 percent
on 16.3 percent more capacity, measured in available seat miles
(ASMs), compared to 2003. ATA's March scheduled service passenger
load factor decreased 2.6 points to 73.9 percent, and passenger
enplanements grew by 13.1 percent compared to 2003. ATA enplaned
1,032,846 scheduled service passengers in March and 2,704,249
million for the three months ending March 2004.
ATA Holdings Corp. common stock trades on the NASDAQ Stock Market
under the symbol "ATAH." As of March 31, 2004, ATA has a fleet of
32 Boeing 737-800s, 15 Boeing 757-200s, 12 Boeing 757-300s, and 6
Lockheed L-1011s. Chicago Express Airlines, Inc., the wholly owned
commuter airline based at Chicago-Midway Airport, operates 17 SAAB
340Bs.
ATA -- whose corporate credit is rated by Standard & Poor's at
'B-' -- is the nation's 10th largest passenger carrier, based on
revenue passenger miles and operates significant scheduled
services from Chicago-Midway, Indianapolis, St. Petersburg, Fla.
and San Francisco to over 40 business and vacation destinations.
Stock of the Company's parent company, ATA Holdings Corp.
(formerly known as Amtran, Inc.), is traded on the Nasdaq stock
market under the symbol "ATAH." For more information about the
Company, visit the Web site at http://www.ata.com/
ATLANTIC COAST: Exits Delta Connection Program
----------------------------------------------
Atlantic Coast Airlines Holdings, Inc. (ACA) (Nasdaq: ACAI) has
received formal notification from Delta Air Lines that it will end
its fee-per-departure agreement with ACA by invoking its right
under the Delta Connection Agreement to terminate without cause
upon 180 days notice. ACA has served in partnership with Delta
since August 2000, and currently operates a fleet of 30 Fairchild
Dornier 328JET aircraft from Delta's hubs in Cincinnati and
Boston.
In order to prepare for the transition of ACA out of the Delta
program, Delta also announced that effective July 2004, it will
consolidate the entire ACA/Delta Connection operation in
Cincinnati by moving the 10 328JET aircraft currently flown by ACA
at Delta's Boston hub to Cincinnati, as well as discontinuing ACA
flights from New York.
ACA/Independence Air Chairman and Chief Executive Officer Kerry
Skeen said, "We had anticipated Delta's decision for some time and
understand their reasons for ending our code share relationship.
Under the terms of our agreement, we now have the right to require
Delta to assume the leases on some or all of the 30 328JETs used
in the Delta program. We plan to use at least some of the time we
have during the notice period to review and evaluate our options
for the 328JETs before finalizing any decisions. If we ultimately
elect to require Delta to assume some or all of the leases, we
would anticipate developing a transition plan similar to the one
we just completed with United."
He added, "Our decision to become an independent low-fare airline
means that our focus going forward will not be on fee-per-
departure relationships that rely on other companies' brands and
business models. We believe that this decision by Delta will
significantly simplify our overall operation and allow us to focus
100% of our management and employee attention on our new
Independence Air service. The benefit to our customers is that the
entire company can now be based solely on providing excellent low-
fare service under our own Independence Air brand from Washington
and Northern Virginia to destinations across America."
Low-fare airline Independence Air will serve Washington Dulles
International Airport with a schedule of over 300 daily departures
this summer -- making it the largest low-fare hub in America.
Inaugural service on Independence Air is scheduled for June 16,
2004.
Under the terms of ACA's Delta Connection Agreement, if Delta
terminates without cause, ACA has the right during the 180-day
notification period to require Delta to assume the leases on some
or all of the 30 328JET aircraft used in the company's Delta
Connection operation. While the obligations on these aircraft
leases would be assigned to Delta, ACA may not be able to
extinguish its obligations under the leases unless Delta or its
assignee meet certain financial conditions at the time Delta
becomes obligated to assume the leases. Delta currently does not
meet those financial conditions.
Atlantic Coast Airlines (S&P, B- Corporate Credit Rating,
Developing) has a fleet of 142 aircraft -- including a total of
120 regional jets -- and offers 800 daily departures, serving over
80 destinations. The company employs approximately 4,100 aviation
professionals. For more information about Atlantic Coast Airlines
Holdings, Inc., visit its website at http://www.atlanticcoast.com/
* * *
As reported in the TCR's February 23, 2004 edition, Standard &
Poor's Ratings Services assigned its 'CCC' rating to Atlantic
Coast Airlines Holdings Inc.'s (B-/Negative/--) $125 million
convertible notes due 2034, offered under Rule 144A with
registration rights.
"The ratings on Atlantic Coast reflect its relatively small size
within the high-risk U.S. airline industry and substantial
operating lease burden, mitigated to some extent by revenue
stability that has been provided by fee-per-departure contracts
with major airline partners," said Standard & Poor's credit
analyst Betsy Snyder.
ATLANTIC COAST: Independence Air Acquires Two More Airbus A319s
---------------------------------------------------------------
Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI) and
Independence Air announce the acquisition of two additional 132-
passenger Airbus A319 aircraft, for a total of 27 firm Airbus
orders to date. These two will be acquired from International
Lease Finance Corporation (ILFC) and are scheduled to be delivered
in the second quarter of 2005. This brings the total Independence
Air fleet to 114 jets.
Independence Air Chairman and CEO Kerry Skeen said, "We're proud
that this summer Independence Air will transform Washington Dulles
into the largest low- fare hub in America. And by adding these new
Airbus planes, Independence Air will be able to offer even more
low-fare flights from Dulles to the most popular destinations in
Florida, the Midwest and the West Coast."
Independence Air's Airbus A319s will be configured with all-
leather interiors in a single class configuration with over 20
channels of live satellite TV at every seat. The first of these
new aircraft will arrive in September and is planned to begin
service in November. A total of four will arrive before the end of
this year with 18 scheduled for delivery in 2005, and the last
five expected during the first quarter of 2006.
Independence Air is scheduled to begin its inaugural service on
June 16th and quickly grow to over 300 daily departures this
summer at Washington Dulles International Airport. The "preview"
website for Independence Air is available now at FLYi.com. In May,
Independence Air will reveal all of its launch destinations, and
its schedule of convenient departures and low fares. On the date
of that announcement, the FLYi.com website will officially be
opened for business, and customers will be able to make
reservations directly on the site. Web visitors who sign up for
membership to the iCLUB now will receive additional information
about Independence Air services, and be offered the opportunity to
take advantage of special offers and promotions available only to
members.
Atlantic Coast Airlines (S&P, B- Corporate Credit Rating,
Developing) has a fleet of 142 aircraft -- including a total of
120 regional jets -- and offers 800 daily departures, serving over
80 destinations. The company employs approximately 4,100 aviation
professionals. For more information about Atlantic Coast Airlines
Holdings, Inc., visit its website at http://www.atlanticcoast.com/
* * *
As reported in the TCR's February 23, 2004 edition, Standard &
Poor's Ratings Services assigned its 'CCC' rating to Atlantic
Coast Airlines Holdings Inc.'s (B-/Negative/--) $125 million
convertible notes due 2034, offered under Rule 144A with
registration rights.
"The ratings on Atlantic Coast reflect its relatively small size
within the high-risk U.S. airline industry and substantial
operating lease burden, mitigated to some extent by revenue
stability that has been provided by fee-per-departure contracts
with major airline partners," said Standard & Poor's credit
analyst Betsy Snyder.
ATNG INC: Creditors Agree Withdraw Involuntary Bankruptcy Petition
------------------------------------------------------------------
ATNG Inc. (OTCBB:ATNG) announced that all parties involved in the
Involuntary Petition for Bankruptcy have either submitted
documents to withdraw their motions or signed a settlement
agreement with ATNG.
"We are pleased about the settlement agreements", says Robert
Simpson, Chairman-CEO of ATNG Inc. "When I joined ATNG there was
approximately $6,000,000 in payables plus significant pending
legal issues. The payables (old debt) have ostensibly been reduced
to less than 3% of what we inherited from the previous management.
Most of that remaining 3% has not been validated."
A motion for Court approval of the settlement will be filed as a
joint request of counsel for ATNG and counsel for the petitioning
creditors. The completion of the aforementioned settlement is
subject to approval of the Court. Completion of the settlement
should occur after notice to ATNG's creditors and a Court hearing.
Operating expenses have been reduced by over 90%; nearly all of
the old debt is settled; revenues are beginning to grow and
profits are predicted in the foreseeable future. The Company shall
continue to do its best to settle with the few remaining creditors
that have verifiable debt, and to fight for the benefit of its
shareholders and investors. ATNG will now resume acquisition
activities.
ABOUT ATNG
ATNG has several strategic alliances of profitable or soon to be
profitable companies in the works. The ATNG web site provides a
communication link to those interested in our progress. Visit the
company's Web site at http://www.atnginfo.com/
BAY VIEW CAPITAL: Will Discuss First Quarter Results on April 28
----------------------------------------------------------------
Bay View Capital Corporation (NYSE: BVC) announced that it plans
to release its first quarter 2004 results after the close of
market on Tuesday, April 27, 2004. The Company will host a
conference call at 2:00 p.m. PDT on Wednesday, April
28, 2004 to discuss its financial results.
Analysts, media representatives and the public are invited to
listen to this discussion by calling 1-888-793-6954 and
referencing the password "BVC." An audio replay of this
conference call will be available through Friday, May 28, 2004 and
can be accessed by dialing 1-800-294-2498.
Bay View Capital Corporation is a financial services company
headquartered in San Mateo, California and is listed on the NYSE:
BVC. For more information, visit http://www.bayviewcapital.com/
As reported in Troubled Company Reporter's January 29, 2004
edition, Bay View Capital Corporation announced fourth quarter
earnings and announced that it has discontinued its use of the
liquidation basis of accounting and re-adopted the going concern
basis of accounting effective October 1, 2003.
From September 30, 2002 through September 30, 2003, the Company
reported its results under the liquidation basis of accounting
because the Company had adopted a Plan of Dissolution and
Stockholder Liquidity in October 2002, pursuant to which the
Company would sell all of its assets, pay all of its liabilities,
then distribute the proceeds to the Company's stockholders and
then dissolve. As previously announced during the fourth quarter,
the Company's Board of Directors amended the Plan to become a
plan of partial liquidation under which the Company will complete
the liquidation of the assets and satisfaction of the liabilities
of Bay View Bank, N.A., remaining after the Bank's September 30,
2003 dissolution, distribute the proceeds to its stockholders
through a series of cash distributions, and continue to operate
its auto finance subsidiary, Bay View Acceptance Corporation, on
an ongoing basis. In accordance with the amended plan, the
Company made an initial cash distribution of $4.00 per share to
its stockholders on December 30, 2003.
COMMERCIAL FINANCIAL: JPMorgan Wants to Talk to William Bartmann
----------------------------------------------------------------
William B. Bartmann, was the founder, majority owner, president,
chairman of the board of directors and controlling presence at
Commercial Financial Services, Inc., a company that claimed to be
the nation's premier collector of charged-off credit card debt.
CFS purchased charged-off receivables and packaged the assets into
bankruptcy-remote securitization trusts that would issue private
debt securities to raise money to fund new purchases. CFS would
collect the receivables in exchange for a servicing fee.
In October, 1998, an anonymous letter sent to credit rating
agencies alleged an array of improper behavior and fraud at CFS.
In December, 1998, CFS and its CF/SPC NGU, Inc., affiliate, filed
for chapter 11 protection (Bankr. N.D. Okla. Case Nos. 98-05162-R
and 98-05166-R).
Following CFS' downfall, hundreds of investors, including:
* AAA Investment Co.
* Abbey National Treasury Services
* American International Life Assurance
* AUSA Life Insurance Co.
* Bank Austria
* Bank Hapoalim
* Bank of America, N.A.
* Bayerische Hypo-Und Vereinsbank AG
* Cerberus Partners
* Liberty Mutual Insurance Co.
* MPF Limited
* Peoples Benefit Life Insurance Co. and
* Pioneer Insurance Co.
sued J.P. Morgan Securities, Inc. (fka Chase Securities, Inc.),
Mr. Bartmann, Arthur Andersen and Mayer Brown Row & Maw in 14
federal actions and three state actions pending in Oklahoma. The
investors assert approximately $1.6 billion in damages. For
purposes of discovery, the federal actions are consolidated before
Magistrate Junge Sam A. Joyner and the state actions are
consolidated before the Hon. J. Michael Gassett. Magistrate Judge
Joyner and Judge Gassett have adopted mirror case management
orders and have held joint status conferences. Through a
coordinated effort, the parties established a document repository
at IKON for the production of documents and hundreds of boxes have
been produced for review. Depositions commenced in February,
2003, and fact discovery cut-off is set for July 31, 2004. Thus
far, over 100 witnesses have been deposed for a total of more than
250 deposition days.
In December, 2002, a federal grand jury returned an indictment
against Mr. Bartmann. During the pendency of those criminal
proceedings against Mr. Bartmann, he sought a stay of civil
discovery. Magistrate Judge Joyner denied that request and Mr.
Bartmann appealed to the United States Court of Appeals. In
December, 2003, Mr. Bartmann was acquitted of the criminal
charges. Accordingly, his motion for a stay of civil discovery is
moot. But another stay now impedes the parties' ability to depose
Mr. Bartmann. He and his wife Kathryn filed their own chapter 11
petition (Bankr. N.D. Okla. Case No. 03-04975-R). J.P. Morgan
wants the stay lifted in Mr. and Mrs. Bartmann's bankruptcy case
to allow a deposition to go forward.
Mr. Bartmann, Thomas C. Rice, Esq., at Simpson Thacher & Bartlett
LLP, representing J.P. Morgan, tells the Bankruptcy Court, is a
central figure in the CFS-Related Litigation. The lawsuits allege
that Mr. Bartmann was the person with overall responsibility for
CFS' collection model, historical performance, systems, operations
and procedures.
CONTIMORTGAGE: Fitch Takes Rating Actions on 5 Securitizations
--------------------------------------------------------------
Fitch Ratings has performed a review of various ContiMortgage
Corporation's home equity loan transactions. Based on this review,
the following rating actions are taken:
Series 1997-2 Group I:
--Class A-8 affirmed at 'AAA';
--Class A-9 affirmed at 'AAA';
--Class A-11IO affirmed at 'AAA';
--Class M-1F, rated 'AA+', placed on Rating Watch
Negative.
Series 1997-2 Group II:
--Class M-1A affirmed at 'AA+';
--Class M-2A affirmed at 'A+'.
Series 1998-2:
--Class A-6 affirmed at 'AAA';
--Class A-7 affirmed at 'AAA';
--Class A-8 affirmed at 'AAA';
--Class A-9 affirmed at 'AAA';
--Class B downgraded to 'B' from 'BB' .
Series 1998-3 Group I:
--Class A-6 affirmed at 'AAA';
--Class A-7 affirmed at 'AAA';
--Class A-8 affirmed at 'AAA';
--Class B-I downgraded to 'CCC' from 'B' .
Series 1998-3 Group II:
--Class A-9 affirmed at 'AAA';
--Class A-17 affirmed at 'AAA';
--Class A-18 affirmed at 'AAA';
--Class A-20 affirmed at 'AAA';
--Class B-II downgraded to 'CCC' from 'B'.
Series 1998-4:
--Class A affirmed at 'AAA';
--Class B downgraded to 'CCC' from 'B'.
Series 1999-3:
--Class B downgraded to 'CCC' from 'B'.
The negative rating actions are the result of poor performance of
the underlying collateral. The greater than expected level of
losses incurred on Conti's portfolio has consistently exceeded the
amount of available excess interest, resulting in a depletion of
overcollateralization.
The spikes in losses in the third quarter of 2003 were
attributable to procedural changes made by the servicer, Fairbanks
Capital Corp, to its processes regarding the reconciliation of
property values used in its net present value model.
As of March 2004 distribution, series 1997-2 Group I has $0
overcollateralization amount and Group II has an OC amount of
$1,550,000 equal to its current target requirement. Series 1998-2
has an OC amount of $5,695,916. Series 1998-3 Group I has an OC
amount of $1,441,885 and group II has an OC amount of $2,170,391.
Series 1998-4 has an OC amount of $1,433,577.93. Series 1999-3 has
an OC amount of $1,148,556.25.
The affirmations of the class A certificates of series 1998-2,
1998-3 Group 1 and 2, and 1998-4 solely reflect the external
credit support provided by MBIA financial guaranty insurance
policies. Affirmations of all other classes reflect credit
enhancement consistent with future loss expectations.
CURATIVE HEALTH: S&P Assigns Low-B Credit & Senior Debt Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to specialty pharmacy services and wound-care
management provider Curative Health Services Inc. At the same
time, Standard & Poor's assigned its 'B-' senior unsecured debt
rating to the company's proposed $185 million senior unsecured
notes due in 2011.
Standard & Poor's expects the company to use the proceeds from the
notes offering, as well as $14 million from an unrated revolving
credit facility, to purchase a specialty infusion company,
Critical Care Systems Inc., for approximately $150 million. At the
same time, Curative Health will refinance its $24 million term
loan and the $11 million balance on its revolving credit facility.
After the transaction, Curative will have approximately $212
million of total debt outstanding, including a $4 million
obligation to the Department of Justice (from a 2001 settlement
related to an allegation of causing false Medicare billing by
hospitals), and $8 million of notes related to prior acquisitions.
Standard & Poor's does not rate the company's $40 million senior
secured revolving credit facility due in 2009.
The outlook is stable.
"The low, speculative-grade ratings reflect Curative's narrow
business focus, potential margin pressure from payors and drug
manufacturers, its payor concentration, the integration risk it
faces, and the threat of new entrants into the specialty infusion
industry," said Standard & Poor's credit analyst Jesse Juliano.
"These concerns are only partially offset by the company's
relatively strong position in the growing and favorable specialty
infusion industry and by the greater product diversity the CCS
acquisition will provide."
Until 2001, Curative Health Services was focused on the management
of chronic wound care, and the company continues to provide these
services to hospital clients through 86 outpatient clinics in
about 30 states. In 2001, the company shifted its focus to
specialty distribution, building a specialty infusion therapy
franchise through 11 acquisitions. Curative purchases
biopharmaceutical products, which it then provides to patients via
retail pharmacies or overnight mail or which it delivers directly
to patients' homes. Before the CCS acquisition, Curative had about
300 payor contracts and 20 retail pharmacy contracts. CCS will add
a network of 28 company-owned and operated pharmacy branches and
about 150 payor contracts.
DELTA AIR: Fitch Hatchets Senior Unsecured Debt Rating to CCC+
--------------------------------------------------------------
Fitch Ratings has lowered the senior unsecured debt rating of
Delta Air Lines, Inc. to 'CCC+' from 'B'. The Rating Outlook for
Delta remains Negative.
The downgrade, affecting approximately $4.5 billion of outstanding
debt securities, reflects growing concerns over Delta's ability to
reduce pilot costs quickly enough to avoid an intensification of
liquidity pressures in 2005. While management remains focused on
the need to engage the Airline Pilots Association in discussions
to lower pilot pay scales and benefit levels, there is no
indication that a competitive contract can be negotiated before
the current ALPA contract becomes amendable in May 2005. Absent a
new deal, Delta will retain the least competitive cost structure
among the U.S. network carriers, and should continue to report
very weak operating cash flow results over the next several
quarters. With jet fuel prices remaining high, and with low-cost
carrier competition expected to block any meaningful recovery in
industry unit revenue this year, Delta faces a difficult operating
outlook and another year of substantially negative free cash flow
after factoring in $1.2 billion of planned 2004 capital spending
(including regional jet deliveries that are already financed). In
addition, heavy cash outflows tied to pension contributions and
debt maturities in the first quarter have led to a weakening of
Delta's liquidity position.
Delta management has indicated that a first quarter net loss of
approximately $400 million is likely. Modest improvement in
revenue per available seat mile in the quarter has been offset by
higher fuel, pension and interest expenses. Tight crude oil
supplies continue to keep jet fuel prices well above 2003 levels,
and Delta's full year 2004 fuel price target of 84 cents per
gallon now looks difficult to achieve in light of spot prices
above 95 cents per gallon. All remaining fuel hedge positions were
unwound in February, and the airline has noted that it will have
few opportunities to hedge effectively as long as fuel prices
remain high. A ten-cent change in jet fuel prices affects Delta's
annual pre-tax results by approximately $250 million.
Defined benefit pension plan funding remains a primary credit
concern for Delta. The company has noted that book pension expense
will be about $130 million higher this year. Cash funding of
pension plans this year is targeted at $440 million, and Delta has
already made a $325 million contribution to its non-pilot plans in
the first quarter. Required funding levels for 2005 and beyond
could be altered if pension relief legislation now being
considered by Congress passes. If proposed interest rate and
deficit reduction contribution (DRC) relief fails to pass this
year, Delta (along with the other big U.S. network carriers) would
be forced to make substantially higher cash contributions to
underfunded pension plans. Prospects for passage of the pension
relief legislation have worsened somewhat in recent days as a
result of opposition from some Senators who are unhappy with the
current bill's treatment of multi-employer defined benefit plans.
Whether or not relief is secured, though, Delta is expected to
face higher cash funding levels in 2005, adding to the cash flow
pressures tied to weak operating performance and heavy debt
payments. As of Sept. 30, 2003 (the last measurement date),
Delta's defined benefit pension plans were underfunded by $5.7
billion on a projected benefit obligation or PBO basis.
Importantly, while Delta reported a 15% investment return on
pension plan assets in the year before Sept. 30, most of the gains
in the asset balance were eroded in 2003 by unusually large cash
payments to retiring pilots. Cash benefits paid in the prior year
were $1.09 billion, compared with the plans' actual return of $991
million.
Scheduled debt maturities over the next three years are large - $1
billion this year, $1.2 billion in 2005 and $781 million in 2006.
Of the $1 billion in 2004 maturities, Delta estimates that $300
million may be refinanced as part of a third-party regional jet
secured financing arrangement. Delta made a payment of $236
million to retire maturing notes last month. The liquidity impact
of this maturity was offset by the issuance of $325 million in
convertible notes, which Delta completed in February. Total debt
and capital leases on the balance sheet reached $12.5 billion at
year-end 2003, compared with $10.7 billion at the end of 2002.
Unlike many of the other U.S. network carriers, unsecured notes
make up a large part of Delta's debt structure ($4.5 billion of
the $12.5 billion outstanding at December 31, 2003). This
difference could represent a significant advantage for Delta in
restructuring its debt obligations should a Chapter 11 filing
ultimately become necessary.
While liquidity and access to the capital markets have supported
Delta's credit profile during the industry's financial crisis,
weak operating results and heavy cash obligations will begin to
put pressure on Delta's unrestricted cash position over the next
several quarters. Cash outflows in the first quarter - driven by
the pension plan contribution, debt repayment and a large net
loss--should force the company's unrestricted cash balance to
approximately $2 billion at the end of the first quarter, compared
with $2.7 billion at year-end 2003. Fitch believes that typical
seasonal cash flow patterns and more limited pension and debt
payments should allow Delta to avoid a further erosion of its cash
position through the remainder of the year. This assumes, however,
that event-driven demand or fuel shocks do not undermine Delta's
operating performance further.
Although Delta was able to access the capital markets with its
convertible note offering in the first quarter, future
opportunities to raise cash through secured debt issuance will be
limited. The airline's unencumbered asset base has been eroded
significantly over the last few years, and Delta's only remaining
Section 1110-eligible aircraft are largely MD-11s and MD-90s with
very limited secondary market appeal. Further access to the
capital markets could also be affected by liquidity concerns if
Delta's unrestricted cash position continues to worsen. The
company does retain the flexibility to spin off its wholly-owned
regional airline subsidiaries Comair and ASA if such transactions
become necessary to support Delta's liquidity position.
The recent departure of former CEO Leo Mullin and President Fred
Reid introduces more uncertainty with respect to Delta's strategic
direction and its competitive response to the incursion of low-
cost carriers such as AirTran and JetBlue in Delta's core East
Coast markets and on increasingly competitive transcontinental
routes. New CEO Gerald Grinstein has indicated that a strategic
reassessment will be completed by July.
DENNY'S CORPORATION: Mellon HBV Discloses 8% Equity Stake
---------------------------------------------------------
Mellon HBV Alternative Strategies LLC, beneficially owns 3,244,000
shares of the common stock of Denny's Corporation, representing 8%
of the outstanding common stock of Denny's. Mellon HBV holds sole
voting and dispositive powers over the stock.
Mellon HBV Alternative Strategies LLC owns the common stock of
Denny's Corporation for investment purposes. Concerned by recent
developments suggesting the possibility in the near term of a
possible recapitalization of the Company, Mellon HBV Alternative
Strategies LLC notified Denny's of its concern and its intention,
when and if appropriate, to pursue a course of action necessary
to vigorously represent the rights of stockholders in the event of
a recapitalization of the Company, or any potential transaction
that could have the effect of inappropriately diluting the
interest of the Company's stockholders.
Mellon HBV Alternative Strategies LLC serves as investment advisor
of Mellon HBV Master Rediscovered Opportunities Fund L.P., Mellon
HBV Master Multi-Strategy Fund L.P., Axis RDO Ltd. and HFR DS
Performance Master Trust. None of the clients individually owns
more than 5% but the clients collectively hold the shares.
Mellon HBV Alternative Strategies LLC used funds from the working
capital of the clients
allocated by such clients to Mellon HBV Alternative Strategies LLC
for purposes of effecting investment transactions. The Company
used an aggregate of $3,797,065 to acquire the shares and borrowed
no funds to purchase any of the shares.
Denny's is America's largest full-service family restaurant chain,
operating directly and through franchisees 1,630 Denny's
restaurants in the United States, Canada, Costa Rica, Guam,
Mexico, New Zealand and Puerto Rico.
* * *
As previously reported, Standard & Poor's Ratings Services lowered
its ratings on family dining restaurant operator Denny's Corp. The
corporate credit rating was lowered to 'CCC+' from 'B-'. At the
same time, all ratings were removed from CreditWatch, where they
were placed July 31, 2003. The outlook is negative.
The rating actions are based on Denny's deteriorating operating
performance and cash flow protection measures, as well as Standard
& Poor's heightened concern that continued poor performance will
constrain the company's liquidity.
DII IND.: Millennium Asks Court to Reclassify Claims as Class 3
---------------------------------------------------------------
Millennium Petrochemicals, Inc. and KBR, Inc. entered into a
maintenance agreement through their predecessors-in-interest.
Under the Agreement, KBR agreed to furnish labor and supervision
services to Millennium. KBR also indemnified Millennium for
personal injury claims filed by KBR's employees against
Millennium. Certain of these KBR employees have sued Millennium
for alleged injury owing to exposure to products containing
asbestos located on Millennium's premises. Millennium has paid
settlement amounts to some plaintiffs, continues to litigate with
the others, and anticipates that future similar suits will be
filed against it.
Peter N. Pross, Esq., at Eckert Seamans Cherin & Mellott, LLC, in
Pittsburgh, Pennsylvania, relates that in 2001, Millennium filed
a Complaint for Declaratory Judgment in the United States
District Court for the Southern District of Texas, seeking a
declaratory judgment that it holds a contractual right of
indemnity against KBR. In February 2003, Judge Melinda Harmon
granted summary judgment in KBR's favor. Millennium filed an
appeal before the U.S. Court of Appeals for the Fifth Circuit.
The Debtors commenced their bankruptcy cases before the Fifth
Circuit panel issued a decision on the action.
Mr. Pross notes that the Debtors' Prepackaged Plan divides claims
into nine classes. Class 3 is an unimpaired class consisting of
all unsecured contract and trade claims. Class 4 is an impaired
class consisting of All Asbestos Unsecured PI Trust Claims, which
are defined in the Plan as asbestos-related claims, including
contractual claims for indemnification for asbestos-related
liabilities. While Class 3 claims will be paid in full,
satisfaction of Class 4 claims will be subject to the limitations
of the Asbestos PI Trust created under the Plan, thus, the Class
4 claims will only be partially paid. Under the Plan's
classification scheme, Millennium's contingent claims for
contractual indemnity against KBR for payments made by Millennium
would be Class 4 claims.
By this motion, Millennium asks the Court to classify
Millennium's contractual claims for indemnity against KBR as
Class 3 claims for all purposes.
Mr. Pross contends that the nature of Millennium's indemnity
claims against KBR are not "substantially similar" to asbestos-
related tort claims. Millennium's claims are contractual, in
contrast to the tort-based claims Class 4 comprises. This is not
a situation in which Millennium is stepping into the shoes of
injured workers to enforce their tort claims against the Debtors.
Millennium seeks not to enforce asbestos claims, but to enforce
its own claims created by contract. Classifying Millennium's
unsecured contract claims differently from other unsecured
contract claims in an impaired class arbitrarily discriminates
against it as a contract creditor. Millennium's claims against
KBR arise from the terms of their agreement, not from KBR's
tortious conduct. Thus, it is not equitable to treat
Millennium's contract claims differently from those of other
contract creditors.
Moreover, the agreement provides that KBR will indemnify
Millennium for claims resulting from its negligence, regardless
of the form of that negligence. Thus, the Plan would treat
indemnity claims arising out of Millennium's negligent use of
asbestos differently from indemnity claims arising out of any
other negligent act committed by Millennium. Such distinction is
arbitrary, and unfairly discriminates against Millennium.
The fact that some of Millennium's claims will be based on future
liability and will require estimation, much as the claims
representative is to do for asbestos claimants against KBR, does
not itself render the two types of claims substantially similar.
Although future liabilities under the indemnity are contingent
and unliquidated, the estimation will depend on Millennium's
experience with the claims asserted against it, not the claims
asserted against the Debtors. As a result, the factual bases for
the estimation proceeding will differ from the Class 4
proceeding.
Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged
in the engineering and construction business, providing a wide
range of services to energy and industrial customers and
government entities in over 100 countries. DII has no business
operations. The Company filed for chapter 11 protection on
December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N.
Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at
Kirkpatrick & Lockhart LLP, represent the Debtors in their
restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DOMAN IND.: Canadian Court Stretches CCAA Stay Until June 11
------------------------------------------------------------
The Supreme Court of British Columbia issued an order in
connection with Doman Industries Limited's proceedings under the
Companies' Creditors Arrangement Act, extending the stay of
proceedings to June 11, 2004. The application made by certain of
Doman's unsecured noteholders to move forward with a plan of
arrangement approved by those unsecured noteholders has been
adjourned until April 30, 2004.
The extension allows time for the Company to review the letter of
intent received on April 2, 2004 from Ableco Finance LLC and to
consider other possible restructuring alternatives, including a
proposal submitted by The Catalyst Capital Group Inc., with its
affected stakeholders. The Ableco letter of intent was filed with
the Court as well as a letter from counsel to Catalyst. Under the
order the Company has until April 30, 2004, to file its own plan.
The Court also set June 7, 2004 as the suggested meeting date for
the consideration of a restructuring plan by the Company's
unsecured creditors, ordered the shutdown of the Port Alice Mill
effective at the end of the production run on May 11, 2004, and
instituted a new claims process with a new claims bar date of 5:00
p.m. (Vancouver time) on May 25, 2004. The order does not preclude
the Company from seeking purchasers for Port Alice and the
Company's efforts to identify a purchaser for Port Alice are
continuing.
A copy of the order will be available on the Company's Web site at
http://www.domans.com/
Doman is an integrated Canadian forest products company and the
second largest coastal woodland operator in British Columbia.
Principal activities include timber harvesting, reforestation,
sawmilling logs into lumber and wood chips, value-added
remanufacturing and producing dissolving sulphite pulp and NBSK
pulp. All the Company's operations, employees and corporate
facilities are located in the coastal region of British Columbia
and its products are sold in 30 countries worldwide.
EAGLEPICHER: Releasing Q1 2004 Financial Results Monday, Apr. 12
----------------------------------------------------------------
EaglePicher Holdings, Inc. plans to release its financial results
and file its Quarterly Report on Form 10-Q for its fiscal quarter
ended February 29, 2004 on Monday, April 12, 2004. The full text
of the press release and the Form 10-Q will be available on the
SEC's web site at http://www.sec.govand on the company's internet
web site at http://www.eaglepicher.com/
On Tuesday, April 13, 2004, EaglePicher will also host a
conference call to discuss its progress and performance for the
quarter and the outlook for the future, followed by a question and
answer session. The conference call, which may include forward
looking statements, is scheduled to begin at 11:00 am Eastern Time
(8:00 am Pacific). The conference call may be accessed by dialing
(800) 893-5903 or +1 (706) 679-0506 for international callers a
few minutes prior to the scheduled start time. Callers should ask
for the EaglePicher 1st Quarter Conference Call hosted by Tom
Scherpenberg, Vice President and Treasurer. A copy of the
presentation materials will also be available on our internet web
site prior to the start of the call at:
http://www.eaglepicher.com/EaglePicherInternet/About_EaglePicher/InvestorRelations.htm
A replay of the conference call will be available following the
call. The replay can be accessed by dialing (800) 642-1687 or +1
(706) 645-9291 for international callers.
EaglePicher Incorporated, founded in 1843 and headquartered in
Phoenix, Arizona, is a diversified manufacturer and marketer of
innovative, advanced technology and industrial products and
services for space, defense, environmental, automotive, medical,
filtration, pharmaceutical, nuclear power, semiconductor and
commercial applications worldwide. The company has 4,000
employees and operates more than 30 plants in the United States,
Canada, Mexico, the U.K. and Germany.
EaglePicher Holdings, Inc. (S&P, D Preferred Share Rating) is the
parent of EaglePicher Incorporated.
ENRON: Committee Sues David Delainey to Recover $3 Mil. Transfer
----------------------------------------------------------------
Enron Corporation, Enron North America Corporation and ECT
Resources Corporation made, or caused to be made, a $3,000,000
transfer to David W. Delainey, on February 1, 2001.
Susheel Kirpalani, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
in New York, relates that pursuant to Section 547(b) of the
Bankruptcy Code, the Transfer is avoidable because it:
(a) was made within one year prior to the Petition Date,
when the Debtors were considered to be insolvent;
(b) constitutes transfer of interests of the Debtors'
property;
(c) was made to, or for the benefit of, a creditor;
(d) was made on account of an antecedent debt owed to the
creditor; and
(e) enabled Mr. Delainey to receive more than he would have
received if:
-- this case was administered under Chapter 7 of the
Bankruptcy Code;
-- the Transfer was not made; and
-- Mr. Delainey received payment of the debt to the
extent provided by the Bankruptcy Code.
Mr. Kirpalani contends that the Transfer is recoverable pursuant
to Section 550(a).
In addition, Mr. Kirpalani tells the Court that the Transfer is a
fraudulent transfer in accordance with Section 548(a)(1)(B) since
the Debtors received less than reasonably equivalent value in
exchange for some or all of the Transfer.
Mr. Kirpalani asserts that the Transfer should be considered a
fraudulent transfer that may be avoided and recovered pursuant to
Sections 554 and 550 of the Bankruptcy Code, Sections 270 to 281
of the New York Debtor and Creditor Law or other applicable law
on these additional grounds:
-- As a direct and proximate result of the Transfer, the
Debtors and their creditors suffered losses amounting to
at least the value of the Transfer; and
-- At the time of the Transfer, there were creditors holding
unsecured claims and there were insufficient assets to pay
the Debtors' liabilities in full.
Accordingly, the Official Committee of Unsecured Creditors, on
the Debtors' behalf, seeks a Court judgment:
(a) declaring the avoidance and setting aside of the Transfer
pursuant to Section 547(b);
(b) in the alternative, declaring the avoidance and setting
aside of the Transfer pursuant to Section 548(a)(1)(B);
(c) in the alternative, declaring the avoidance and setting
aside of the Transfer pursuant to Bankruptcy Code
Section 544, New York Debtor and Creditor Law Sections
270 to 281 or other applicable law;
(d) awarding to the Committee an amount equal to the
Transfer and directing Mr. Delainey to immediately pay
the Transfer pursuant to Section 550(a), together with
interest from the date of the Transfer; and
(e) awarding to the Committee its attorneys' fees, costs and
other expenses incurred. (Enron Bankruptcy News, Issue No.
103; Bankruptcy Creditors' Service, Inc., 215/945-7000)
EXIDE: Wooing Court to Extend Lease Decision Time Until June 30
---------------------------------------------------------------
Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub PC, in Wilmington, Delaware, tells Judge Carey that
the Exide Technologies Debtors are party to over 200 unexpired
leases, which includes office space, distribution centers and
strategically located branch facilities. In connection with the
Joint Plan of Reorganization, scheduled for hearing on April 16,
2004, the Debtors have substantially finalized their
determinations whether to assume or reject the Unexpired Leases.
In an abundance of caution, the Debtors require further extension
of their lease decision deadline to preserve their opportunity to
re-evaluate their lease determinations and to preserve the status
quo during the Court's deliberation on the Joint Plan.
Accordingly, the Debtors ask the Court to extend the lease
decision deadline through the earlier of:
(a) the Effective Date of the Joint Plan; or
(b) June 30, 2004.
Judge Carey will convene a hearing on May 13, 2004 to consider
the Debtors' request. By application of Del.Bankr.LR 9006-2, the
Debtors' lease decision period is automatically extended through
the conclusion of that hearing.
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
(Exide Bankruptcy News, Issue No. 43; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FEDERAL-MOGUL: Jefferies & Company's Retention Expands
------------------------------------------------------
At the Official Committee of Unsecured Creditors' request, Judge
Lyons approves the amendment of Jefferies & Company, Inc.'s
retention as the Committee's financial advisor, effective as of
February 1, 2004, in the Chapter 11 cases of Federal-Mogul
Corporation and its debtor-affiliates.
Eric M. Sutty, Esq., at The Bayard Firm, in Wilmington, Delaware,
explains that the modifications are necessary due to the
additional services to be provided by Jefferies since the Debtors
terminated the employment of their investment banker, Rothschild,
Inc. Rothschild was initially chosen to serve as the lead
financial advisor to take charge of the solicitation,
negotiation, documentation and Court approval of any exit
financing facility or facilities in connection with the Debtors'
Plan. After Rothschild's termination, the Plan Proponents
determined that Jefferies should become the lead financial
advisor in connection with the Exit Financing Services. The Exit
Financing Services, however, requires Jefferies to perform
substantially more services than the parties originally
negotiated.
The Committee and Jefferies agreed to amend the Original
Engagement Letter to provide the inclusion of the Exit Financing
Services in the scope of the firm's engagement as well as
increased compensation for the additional services. Under the
Amended Engagement Letter, Jefferies' compensation terms are
modified to provide that:
(a) As of February 1, 2004, the monthly cash fee payable to
Jefferies will be increased from $125,000 to $175,000 per
month. The Committee no longer has the option to reduce
the Monthly Retainer upon 30 days' written notice to
Jefferies as provided in the Original Engagement Letter;
(b) The success fee under the Amended Engagement Letter will
be $5,000,000, payable in cash on the effective date of
a confirmed plan of reorganization. The Original
Engagement Letter provides for a Success Fee equal to the
lesser of:
-- 1.25% of the Total Consideration, as defined in the
Original Engagement Letter, to the extent the Total
Consideration exceeds 20.0% of the aggregate allowed
claims of unsecured creditors other than asbestos
claimants, pension or post-retirement health benefits
claimants, subordinated debt holders, bank debt holders
or priority claimants; or
-- $5,000,000.
The Amended Engagement Letter also provides for these
modifications to the indemnification and contribution provisions:
(1) The indemnification and contribution obligations under the
Amended Engagement will extend to liabilities and
expenses incurred, related to or arising out of or in
connection with any Exit Financing Services; and
(2) The Debtors will reimburse the Indemnified Persons for
expenses incurred in connection with Jefferies'
professional personnel appearing as witnesses or being
deposed in connection with the Debtors' bankruptcy cases,
including in any action against any of the Plan
Proponents.
The Committee and Jefferies reserve any and all rights to further
amend or terminate the Original Engagement Letter or the Amended
Engagement Letter, subject to any necessary Court approval.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some $6
billion. The Company filed for chapter 11 protection on October
1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq.,
James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin
Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $ 10.15 billion in assets and $ 8.86
billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No.
52; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FIRST UNION: S&P Takes Rating Actions on Series 2000-C2 Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services took the following rating
actions on various classes from First Union National Bank
Commercial Mortgage Trust's series 2000-C2: three classes are
upgraded; two classes are downgraded and removed from CreditWatch
negative; and 11 classes are affirmed, one of which is removed
from CreditWatch negative.
The ratings on classes H, J, and K are removed from CreditWatch
negative, where they were placed in September 2003, due to
interest shortfalls caused by the recovery of previously advanced
amounts by the master servicer, Wachovia Bank N.A., related to the
Crowne Plaza loan. All three classes have since been repaid in
their entirety, as Wachovia has altered the timing of its advance
recoveries due to the favorable resolution of issues that were
pending when the advance recovery was determined. As a result, the
trust was reimbursed $820,000 for the March 2004 distribution
date. This change has also resulted in Standard & Poor's upgrade
of classes L, M, and N, which were set to 'D' during the September
2003 review. These classes were expected to incur interest
shortfalls for an extended period of time, but that no longer
appears to be the case. The lowered ratings on classes H and J are
due to the credit deterioration of the pool since Standard &
Poor's last review of this transaction. The affirmations reflect
credit enhancement levels that adequately support the remaining
ratings.
Standard & Poor's increased its loss estimate on three specially
serviced assets due to appraisal data received subsequent to its
last review. In addition, the watchlist component of this
transaction increased 27.2% to $245.9 million (45 loans) from
$193.3 million (39 loans) since Standard & Poor's last review. The
Belmont Shores Office Building, the seventh-largest loan in the
portfolio, continues to be of particular concern. This 143,000-
sq.-ft. property in Belmont, California has an outstanding
principal balance of $28.9 million (2.6% of the trust collateral),
and several tenants have recently vacated the property. Most
notably, Oracle Corp.'s lease on 52,600 sq. ft. expired in January
2004 and was not renewed. The lease on 11,400 sq. ft., occupied by
The McGraw-Hill Cos. (the parent of Standard & Poor's), expired in
December 2003 and was also not renewed. Within the next 12 months,
the property is subject to more than 40,000 sq. ft. of lease
expirations. Given the asking rents in the marketplace, coupled
with high vacancy levels, Standard & Poor's is concerned about the
future performance of the asset.
Standard & Poor's analysis included stressing the specially
serviced loans and loans on the watchlist. The resultant credit
support levels support the raised, affirmed, and lowered ratings.
RATINGS RAISED
First Union National Bank Commercial Mortgage Trust
Commercial mortgage pass-thru certs series 2000-C2
Rating
Class To From Credit Enhancement (%)
L B- D 2.85
M CCC+ D 2.33
N CCC D 1.82
RATINGS LOWERED AND REMOVED FROM CREDITWATCH
First Union National Bank Commercial Mortgage Trust
Commercial mortgage pass-thru certs series 2000-C2
Rating
Class To From Credit Enhancement (%)
H BB BB+/Watch Neg 5.83
J BB- BB/Watch Neg 5.06
RATING AFFIRMED AND REMOVED FROM CREDITWATCH
First Union National Bank Commercial Mortgage Trust
Commercial mortgage pass-thru certs series 2000-C2
Rating
Class To From Credit Enhancement (%)
K B B/Watch Neg 4.28
RATINGS AFFIRMED
First Union National Bank Commercial Mortgage Trust
Commercial mortgage pass-thru certs series 2000-C2
Class Rating Credit Enhancement (%)
A1 AAA 24.38
A2 AAA 24.38
B AA 19.32
C A 15.43
D A- 13.87
E BBB+ 12.19
F BBB 10.63
G BBB- 9.34
Q BB N.A.
X AAA N.A.
FLEMING COMPANIES: Hearing on Legal Fees Continued Sine Die
-----------------------------------------------------------
The Interim Compensation Procedures established by the Bankruptcy
Court on the Petition Date provides that the professionals
working in the Fleming Debtors' cases may be paid 80% of their
fees and 100% of their expenses on a monthly basis after filing
and providing notice to interested parties of their monthly bills.
Those payments are, however, subject to the subsequent filing of
quarterly fee applications and ultimate allowance by the Court
after notice and a quarterly fee hearing.
The First Quarterly Applications
Kirkland & Ellis LLP, the Debtors' lead bankruptcy counsel, and
Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., their co-
counsel, complied with the procedure and filed their first
interim fee applications covering the period from April 1 through
June 30, 2003. The First Interim Fee Applications sought in
excess of $25 million in fees and expenses. The first quarterly
fee hearing was scheduled in 2003, but because of more pressing
matters, Judge Walrath continued the hearing on the fee
applications generally and stated her intent to review the fee
applications and objections.
The U.S. Trustee's Objection
The U.S. Trustee filed a timely Report and Objections to the
pending fee applications of several of the professionals,
including Pachulski and Kirkland. In the Report and Objection,
the U.S. Trustee argued that the bankruptcy attorneys at Kirkland
billed at higher rates than many other attorneys practicing in
non-bankruptcy disciplines at Kirkland, other than Kirkland's tax
attorneys. The U.S. Trustee made other objections to both
counsels' applications, saying that the estates were being
overbilled by unnecessary litigation, emergency motions, and the
attendance of multiple senior counsel for the same matters. The
professionals responded to those objections, contesting the U.S.
Trustee's assertions. Kirkland and Pachulski filed supplemental
responses on December 1, 2003.
Judge Walrath Finds Fee Cut Warranted
Judge Walrath opines that the reduction in fees for Pachulski and
Kirkland requested by the U.S. Trustee was "warranted, based on
fact that multiple attorneys from the same firm routinely
attended the same hearing." Judge Walrath explains that, when
multiple attorneys represent a debtor at a hearing, each attorney
who attends a hearing should have a specific role. If two or
more professionals are billing time for the same hearing, they
each should make some contribution. Judge Walrath notes that
Pachulski and Kirkland failed to demonstrate adequately that each
of their attorneys present at hearings contributed in some
meaningful way.
Excessive Hourly Rates
Hourly rates charged by bankruptcy attorneys are to be
commensurate with hourly rates charged by attorneys in other
areas of practice. In enacting the bankruptcy fee provision,
Congress sought to encourage qualified attorneys to develop
bankruptcy expertise by assuring that they would be compensated
at the same level as their peers in other practice areas -- but
the bankruptcy fee provision does not entitle the debtors'
attorneys to higher compensation than that earned by non-
bankruptcy attorneys. A bankruptcy court, in ruling on
attorney's fee applications, must ensure that each attorney
exercises the "same billing judgment" as non-bankruptcy
attorneys.
To ensure that the blended hourly rate of roughly $419 charged by
attorneys who represented Chapter 11 debtors was not "inflated as
result of the law firm's decision to staff these cases with a
disproportionate number of senior personnel," Judge Walrath
requires additional evidence, including survey of local firms and
of other major firms practicing before the Delaware bankruptcy
courts, and their blended rate based on all attorneys' and
paralegals' billing fees in bankruptcy cases. To ensure that the
hourly rates charged by bankruptcy attorneys who represent the
Debtors were commensurate with the hourly rates charged by
attorneys in other areas of practice, Judge Walrath requires the
law firms representing the Debtors to provide a schedule of
hourly rates of all of their attorneys and paralegals in all
practice areas and offices.
Overly Litigious, Delaying and Improper Tactics
Kirkland and Pachulski fees should also be slashed based on the
conduct of the attorneys that is "overly litigious, that was
undertaken as a delaying tactic or for other improper purpose, or
that was simply not beneficial to the estates." Specifically,
Judge Walrath says this censorious conduct includes the
attorneys' failure to segregate funds as required by the Cash
Management Order, which caused numerous creditors to file
adversary proceedings to obtain the turnover of funds.
A. Inappropriate Litigation Tactics
A prime example of what Judge Walrath considers to be
inappropriate litigation tactics by the Debtors' counsels is
evident in the Debtors' conduct during the sale of their assets.
In connection with their request to sell certain assets, the
Debtors agreed to give the buyer an option period of six months
to decide whether to assume certain leases or executory
contracts. Nonetheless, the Debtors sent notice to the parties
to all their leases and executory contracts of the potential
intent to assume and assign their contracts, and what the Debtors
believed to be their cure amount. In most instances the cure
amount was stated to be zero. As a result, over 500 objections
involving numerous contracts were filed. In those objections, as
required by the sale procedures, the other parties stated what
they asserted was their cure amount.
Initially, the Debtors insisted that the Court hold an
evidentiary hearing and determine the amount of the cures before
approving the sale. Since this involved literally thousands of
contracts, numerous factual and legal issues, and would
constitute an advisory opinion -- since the buyer had made no
decision to take an assignment of any of them -- Judge Walrath
declined to do so.
To resolve the impasse, the buyer agreed to adjustments to the
asset purchase agreement to accept most of the burden of cures.
In contrast to the Debtors' recalcitrance, the buyer and its
counsel have used Herculean efforts to resolve the cure disputes
consensually, which have largely been successful to date.
The Debtors thereafter insisted on continuances, asserting they
needed protracted discovery on the cure disputes. Since the
leases were not yet designated as ones the buyer or its designee
wanted, Judge Walrath set many of the matters for separate
hearing and permitted discovery by both parties. However, over
the Debtors' objection, Judge Walrath also directed that
sufficient funds be escrowed from the sale proceeds to cover all
the asserted cure claims for which the Debtors might be liable.
At the hearing scheduled for October 2, 2003, one of those
matters was due to be tried. However, the Debtors filed a last
minute request for a continuance, asserting they needed
additional discovery. At that same hearing, however, the Debtors
sought to be heard on another request they filed to reduce the
reserve being held for the cures.
Judge Walrath views these tactics as inappropriate.
B. Deliberate Effort to Mislead Canadian Creditors
On July 17, 2003, the Debtors filed a request to clarify the
applicability of the Bar Date Order that had previously been
entered. The basis of the request was the ruling by Mr. Justice
Tysoe of the Supreme Court of British Columbia on the
applicability of the Bar Date to Canadian creditors. No
objections were filed to the request. However, at the August 4,
2003 hearing, Judge Walrath advised the Debtors that the form of
order presented by their counsel did not, in fact, comply with
the ruling of Justice Tysoe. Judge Walrath directed the counsel
to submit a revised form of order under certification of counsel.
The Debtors' counsel did so. However, once again, the proposed
order did not conform to the ruling of Justice Tysoe. As a
result, Judge Walrath modified the order herself.
If Justice Tysoe's Order were not just three pages long, Judge
Walrath would think these erroneous submissions were mistakes.
Judge Walrath does not think that was the case. Instead, Judge
Walrath concludes that the failure to comply with Mr. Justice
Tysoe's and her rulings was "deliberate and an effort to mislead
or prejudice the Canadian creditors."
C. Unnecessary "Emergencies"
Many of the "emergency" motions were routine requests where the
Debtors' counsel were aware of looming deadlines well in advance
of the filing of the requests. Judge Walrath can conceive of no
excuse for this. At any rate, the estate should not have to pay
attorneys' fees for the unnecessary time spent preparing and
filing a request to shorten notice necessitated by the counsel's
failure to act timely.
Judge Walrath also notes that Pachulski requested paralegal fees
for monitoring the docket and maintaining the calendar in the
case. "This system, though costly, was not effective," Judge
Walrath considers. Judge Walrath plans to reduce the fees for
this category and directs Pachulski to advise how much time and
fees were expended for this category.
D. Improper Shortening of Notice
The Local Rules require at least 15 days' notice of the hearing
on any request in a case, or longer if service is by mail or the
Federal Rules of Bankruptcy Procedure mandate it. Since omnibus
hearing dates are set in larger cases months in advance -- at the
request of counsel for the debtor -- requests to shorten notice
by the Debtors should be "necessary only in true emergency
circumstances."
Judge Walrath believes that an exorbitant number of requests to
shorten notice have been filed by the Debtors. In the period
covered by the first interim fee applications, the Debtors filed
a total of 16 requests, which they asserted were emergencies
worthy of shortening notice. This does not include any of the
requests filed on the Petition Date, which are heard on shortened
notice. "Emergency" requests, thus, represented 30% of all the
requests filed by the Debtors during that period, excluding pro
hac vice requests and the first day requests.
Judge Walrath reminds the counsels that, just as the hourly rates
charged by bankruptcy professionals must be reasonable, so must
the time spent by professionals on the various tasks to be
performed. Excessive or unnecessary time is not compensable. To
be compensable, the services performed by a bankruptcy
professional should provide a benefit to the estate. The
bankruptcy estate should not have to pay an attorney's fee for
unnecessary time spent preparing and filing motions to shorten
the notice period, if motion actually is necessitated by
counsel's failure to act timely.
Kirkland's Conflict of Interest
In its Supplemental Affidavit filed December 1, 2003, Pachulski
indicated that it took the lead role in defending the Debtors in
the litigation involving Sara Lee when Kirkland became conflicted
one month after the litigation began. The potential conflict of
interest with Sara Lee, however, was not disclosed in Kirkland's
Employment Application nor any Supplemental Affidavit filed by
it. Since this may warrant the disallowance of Kirkland's fees,
Judge Walrath requires Kirkland to present additional information
regarding this conflict.
Kirkland & Pachulski Respond
Kirkland & Ellis LLP and Pachulski, Stang, Ziehl, Young, Jones &
Weintraub PC assure Judge Walrath of their dedication to bring
the Debtors' cases to a successful resolution while working as
efficiently and consensually as possible and complying with the
Court's directives. Both firms admit that while mistakes did
happen, they were not willful and designed to frustrate the
legitimate expectations of all parties-in-interest or to make
misrepresentations to the Court or the opposing counsel.
Kirkland and Pachulski agree with some of the Court's criticisms:
-- There were too many emergency motions filed;
-- There were some inefficiencies in the manner in which the
cases were staffed;
-- The cases have at times been uncoordinated, contentious and
difficult; and
-- Local practice has on occasion not been followed.
Accordingly, Kirkland and Pachulski agree to reduce their
quarterly fee requests in some specific areas:
Fees
-----------------------
Items Listed By the Court Kirkland Pachulski
------------------------- -------- ---------
Hearing Attendance $30,804 $4,405
Expenses for Hearing Attendance 17,713 0
Intra-office Conferences 80,612 13,501
Cash Management Order 12,300 0
DSD Temporary Restraining Order 152,595 79,240
Reclamation 41,401 19,541
Motions to Shorten Time 1,129 789
Docket and Calendar Fees 0 971
DEC Investment Matter 0 30,772
Lease Rejection Modification 10,534 2,499
Modification of Pleadings 50,496 2,525
Omnibus Hearing Dates 0 270
Canadian Bar Date 3,750 942
Copy Charges 0 2,710
-------- ---------
TOTAL $401,338 $158,169
According to James H. M. Sprayregen, Esq., at Kirkland & Ellis,
the Court's opinion raises very serious issues that affect the
professional reputations of both firms -- issues that are far
more significant than the economic impact of the Court's proposed
fee reductions. Kirkland and Pachulski agree to demonstrate the
propriety and good faith of their substantive actions on the
Debtors' behalf at the evidentiary hearing scheduled by the
Court.
"In our view, the opinion does not correctly characterize [the]
counsel's motives or their actions, and in fact critics [the]
counsel for implementing proper client decisions that not only
benefited the estates, but also enjoyed the support of major
constituencies," Mr. Sprayregen says.
Although Kirkland and Pachulski agree to concede certain fees and
expenses, both firms believe that they have acted for the best
interest of the estates. Kirkland and Pachulski ask the Court to
consider the difficult circumstances of the Debtors' cases. In
the usual complex case, a counsel has at least some time to
prepare for a Chapter 11 filing, usually in conjunction with a
client who has stable management and information systems. But in
the Debtors' case, Mr. Sprayregen points out that Kirkland was
brought in when the Debtors' circumstances were already dire and
a filing was just days away. Mr. Sprayregen relates that
Kirkland was hired on March 24, 2003 to assist in what was then
believed to be an out-of-court restructuring. Over the next few
days, the Debtors' liquidity crisis worsened as vendors shortened
credit terms and refused to send product. It quickly became
clear that the Debtors would not make a bond payment due April 1,
2003. The only option was a Chapter 11 filing under the more
than usual distress. Turnover of management and restructuring
professionals compounded these difficulties.
According to Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, a strategic consensus on reorganization
options took months to emerge, as did efforts to stabilize the
crisis both inside and out of court.
"[W]e believe that the ship has been largely righted, and the
case headed for a successful outcome. While mistakes were made,
we made a good-faith professional commitment to create a path
towards a successful restructuring notwithstanding daunting
challenges," Ms. Jones says.
Kirkland asserts that its rates are reasonable under the
controlling market-based test. Pachulski also believes that its
rate structure is fair because it acted as far more than local
counsel, justifying a rate structure close to national firms
instead of the Wilmington-only market.
Regardless of the outcome of the fee review, Kirkland and
Pachulski assure the Court that going forward, the firms will
rigorously examine each of their activities with the Court's
opinion in mind.
Evidentiary Hearing Continued Sine Die
Judge Walrath initially scheduled a hearing to consider the
evidences submitted by the parties on February 10, 2004. At the
Debtors' request, the Court continued the evidentiary hearing
indefinitely.
The Debtors are concerned that distractions of the firms' and
their own management may interfere with their efforts to exit
Chapter 11 during the second quarter of 2004. The Debtors are
also concerned that fee-related issues will continue to arise
periodically and be a significant ongoing distraction to all
constituents of the cases.
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. 28; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FRANKLIN CAPITAL: Auditors Maintain Going Concern Qualification
---------------------------------------------------------------
In compliance with Section 610 of the American Stock Exchange
listing rules, as amended in December 2003, Franklin Capital
Corporation (ASE:FKL) announced that as in its audit reports for
the previous two years, it has received an audit report on its
2003 financial statements which again contains a going concern
qualification.
As reported in its press release of April 1, 2004, Franklin's
Board of Directors has authorized the retention of a financial
advisor to advise Franklin on various strategic, financial and
business alternatives available to it to maximize shareholder
value. These may include a reorganization, re-capitalization,
acquisitions, dispositions of assets, a sale or merger. There is
no assurance that any of the foregoing alternatives will occur.
Franklin is a business development company which seeks to achieve
capital appreciation through long-term investments in businesses
believed to have favorable growth potential.
GLYCOGENESYS INC: Net Loss Narrows to $8 Million at December 2003
-----------------------------------------------------------------
GlycoGenesys, Inc. (NASDAQ:GLGS), a biotechnology company focused
on carbohydrate drug development, announced results from its
recently filed Form 10-K for the year-ended December 31, 2003.
The net loss applicable to common stock for the years ended
December 31, 2003 and 2002 was $8,048,682, or $0.20 per share, and
$12,839,564, or $0.35 per share, respectively. The loss applicable
to common stock for the year ended December 31, 2003 included a
$426,481 charge for the accretion of dividends on the Series B
preferred stock compared to a charge of $2,725,387 for the final
accretion of dividends on the Series A preferred stock in
connection with terminating our joint venture and for dividends
accreted on the Series B preferred stock for the year ended
December 31, 2002.
"The full year loss narrowed by approximately $2.5 million in 2003
compared to 2002, excluding the accretion of preferred stock
dividends. This reduction was primarily attributable to lower
licensing fees, clinical trial costs and professional fees. The
full impact of these reductions was partially offset by higher
GCS-100 production costs, payroll costs and expenses now borne by
the Company, but previously charged to our now terminated joint
venture. During 2003, we made preparations for several new
clinical trials, the first planned to be initiated this quarter.
Among other achievements we planned the build-out of a new
glycobiology laboratory, which opened in March, that enhances our
discovery, preclinical, and manufacturing capabilities," stated
John W. Burns, Senior Vice President and Chief Financial Officer
of GlycoGenesys, Inc. "During the last twelve months we raised
over $8 million from new and existing institutional investors,"
added Mr. Burns.
Deloitte & Touche LLP issued their report dated March 29, 2004
that includes an explanatory paragraph relating to our ability to
continue as a going concern. We have received a similar opinion
from our independent auditors for the past three years.
The Company website is at http://www.glycogenesys.com/
HAYES LEMMERZ: Posts $62 Million Operating Profit in Fiscal 2003
----------------------------------------------------------------
Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) reported an
operating profit of $62 million for the fiscal year ended January
31, 2004, compared with an operating loss of $0.3 million in the
year earlier period. Earnings from operations excluding the impact
of certain gains and expenses related to the emergence from
Chapter 11 was $43.9 million for 2003, compared to $44.2 million
in 2002. Gross profit margin increased to 10.7% in 2003 from 10.4%
in 2002, despite an increase in depreciation and amortization
expense of $25.5 million in 2003 versus 2002.
Fiscal 2003 sales were $2.1 billion, an increase of approximately
3% over 2002 sales of $2 billion. Sales were favorably impacted by
foreign exchange rate fluctuations which more than offset
decreased unit pricing and lower customer production requirements.
Hayes Lemmerz' balance sheet was significantly strengthened in
fiscal 2003 through the Chapter 11 emergence process and continued
improvement in operations. Total liabilities were reduced to $1.7
billion as of January 31, 2004 from $2.9 billion a year earlier.
The Company's new $550 million credit facility, including a $100
million revolving credit facility, put in place as part of the
emergence process provides ample borrowing capability to meet
operational requirements. Cash on hand at January 31, 2004 was
$48.5 million, compared with $66.1 million a year earlier.
"Our continuing financial progress reflects the soundness of our
business plan and operational improvements," said Curtis Clawson,
Chairman and CEO. "We are strengthening the business by expanding
in our strongest segments and geographical regions while
rationalizing some less efficient operations."
As part of its focused investment strategy, Hayes Lemmerz is
expanding its low pressure aluminum wheel casting capabilities in
Thailand and in the Czech Republic to serve customers in Asia and
Europe, and plans to refurbish and expand the cast aluminum wheel
plant in Chihuahua, Mexico, utilizing low pressure casting
technology. Mr. Clawson said, "These investments in state- of-the-
art manufacturing technology around the globe will enhance our
global geographic advantage with advanced, low-cost production
facilities."
Hayes Lemmerz International, Inc. is a leading global supplier of
automotive and commercial highway wheels, brakes, powertrain,
suspension, structural and other lightweight components. The
Company has 44 facilities and approximately 11,000 employees
worldwide. More information about Hayes Lemmerz International,
Inc. is available at http://www.hayes-lemmerz.com/
HOLLINGER INT'L: Board Declares Dividend Payable on April 30
------------------------------------------------------------
Hollinger International Inc. (NYSE: HLR) stated that, following a
previously announced review of its dividend policy by its Board of
Directors, the Company's common stock dividend will remain
unchanged. The Board declared a quarterly dividend on its issued
and outstanding common stock in the amount of $0.05 per share.
The dividend is payable April 30, 2004, to stockholders of record
on April 15, 2004.
Hollinger International Inc. is a global newspaper publisher with
English-language newspapers in the United States, Great Britain,
and Israel. Its assets include The Daily Telegraph, The Sunday
Telegraph and The Spectator magazine in Great Britain, the Chicago
Sun-Times and a large number of community newspapers in the
Chicago area, The Jerusalem Post and The International Jerusalem
Post in Israel, a portfolio of new media investments and a variety
of other assets.
* * *
As reported in the March 17, 2004, issue of the Troubled Company
Reporter, Hollinger International Inc. (NYSE: HLR) announced that
primarily as a result of the ongoing investigation being conducted
by the Special Committee of the Company's Board of Directors, as
well as the disruption of management services provided to the
Company arising from its ongoing dispute with Ravelston
Corporation Limited, the Company was not able to complete its
financial reporting process and its audited financial statements
for inclusion in the Annual Report on Form 10-K for fiscal year
2003 by the filing deadline. The Company intends to complete its
financial reporting process as soon as practicable after the
completion of the investigation by the Special Committee, and then
promptly file the 10-K.
As a result of the delay in filing the 10-K, the Company announced
that there would be a corresponding delay in the date of the
Company's annual meeting of shareholders. The Company intends to
hold the annual meeting as soon as practicable following the
filing of the 10-K.
The company's September 30, 2003, balance sheet shows a working
capital deficit of about $293 million.
IGAMES ENTERTAINMENT: Equitex Board Declines Merger Offer
---------------------------------------------------------
Equitex, Inc. (Nasdaq:EQTX) announced that its Board of Directors
has turned down an unsolicited offer received on March 16, 2004,
from iGames Entertainment, Inc. to merge iGames with the Company.
The Company had previously terminated a stock purchase agreement
between the Company and iGames for various breaches of the stock
purchase agreement by iGames, as reported on the Company's press
release dated March 15, 2004.
About Equitex
Equitex, Inc. is a holding company operating through its wholly
owned subsidiary Chex Services of Minnetonka, Minnesota, as well
as its majority owned subsidiary Denaris Corporation. Chex
Services provides comprehensive cash access services to casinos
and other gaming facilities. Denaris was formed to provide stored
value card services.
About iGames Entertainment
iGames Entertainment, Inc. provides cash access and financial
management systems for the gaming industry, focusing on specialty
transactions in the cash access segment of the funds transfer
industry through its Money Centers of America, Inc. and Available
Money, Inc. subsidiaries. The Company's growth strategy is to
develop or acquire innovative gaming products and systems and
market these products worldwide. For a complete corporate profile
on iGames Entertainment Inc., visit iGames' corporate website at
http://www.igamesentertainment.com/
* * *
Going Concern Uncertainty
In its most recent Form 10-Q filed with the Securities and
Exchange Commission, iGames Entertainment reported:
"The [Company's] financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has
a net loss of $940,395 for the six months ended September 30,
2003, an accumulated deficit of $3,808,343 at September 30, 2003,
cash used in operations of $576,088 for the six months ended
September 30, 2003, and requires additional funds to implement our
business plan. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
"Management is in the process of implementing its business plan
and has begun to generate revenues. Management believes that sales
of its Protector and placement of new table games will continue to
contribute to its operating cash flows. Additionally, management
is actively seeking additional sources of capital, but no
assurance can be made that capital will be available on reasonable
terms. Management believes the actions it is taking allow the
Company to continue as a going concern. The financial statements
do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern."
INTEGRATED HEALTH: Ex-Officers Push to Set Up Admin Claims Reserve
------------------------------------------------------------------
C. Taylor Pickett and Daniel J. Booth were formerly employed as
officers of certain of the Integrated Health Debtors, including
Integrated Health Services, Inc. On February 27, 2001, Don G.
Angell commenced a lawsuit against the Former Officers in the
United States District Court for the Middle District of North
Carolina. Pursuant to the confirmation of the IHS Plan, the
Angell Lawsuit is proceeding in the North Carolina District Court.
Mr. Angell did not demand a specific monetary amount of alleged
damages but the Former Officers believe that Mr. Angell seeks to
recover as much as $40,000,000 in damages.
John D. Demmy, Esq., at Stevens & Lee, in Wilmington, Delaware,
relates that on January 11, 2001, Mr. Booth entered into a Court-
approved employment agreement with IHS, which provided that IHS
will indemnify and hold Mr. Booth and certain employees harmless
from any judgments, including from the Angell Lawsuit. On
December 31, 2001, Mr. Pickett also entered into an agreement
with IHS. Under the Pickett Agreement, IHS forever discharged
and agreed to indemnify Mr. Pickett from all claims or expenses
which were then known to IHS and arose out of any manner
connected with Mr. Pickett's Agreements with any member of the
IHS Group. At the time of the Pickett Agreement, Mr. Demmy
points out, the Debtors already knew of the Angell Lawsuit.
The Former Officers assert that the Agreements, as well as the
IHS by-laws, entitle them to indemnification from the Debtors
with respect to the Angell Lawsuit. Furthermore, IHS judicially
admitted the Former Officers' indemnification rights in an
adversary proceeding that it commenced against Mr. Angell, et al.
In the Adversary Proceeding, Joseph Bondi, IHS Chief Executive
Officer, testified that Messrs. Booth and Picket were entitled to
indemnification.
Mr. Demmy contends that IHS' obligation to Messrs. Booth and
Picket for indemnification represents an administrative expense
claim under the IHS Plan. Section 1129(a)(9) of the Bankruptcy
Code requires that administrative claims must be paid in full
upon confirmation of a plan.
Accordingly, the Former Officers ask the Court to require the
Debtors to create a cash reserve in the full amount of the
potential liability of the action, which is $40,000,000. The
Court must maintain the reserve until a final, non-appealable
judgment has been entered in the Angell Lawsuit.
Responses
A. The Debtors
The Debtors assert that it is unnecessary and unwarranted for
the Court to set a reserve for the Former Officers' Claims as
a result of the Angell Lawsuit.
Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, in
Wilmington, Delaware, contends that any of the Former
Officers' indemnifiable loss as a result of the Angell Lawsuit
will be completely covered by IHS' D&O insurance and thus will
not result in a claim for indemnification. There will be more
than adequate proceeds to cover any indemnifiable loss
suffered by the Former Officers since IHS' D&O insurance
consists of a primary policy with coverage of $35,000,000 and
excess policies extending aggregate coverage to $90,000,000.
Any claims for indemnification made by the Former Officers
must be disallowed under Section 502(e)(1)(B) of the
Bankruptcy Code as contingent claims because they are claims
for which IHS would otherwise have been vicariously liable.
Mr. Morton adds that even if the Former Officers could somehow
demonstrate that some reserve is necessary for their benefit,
it must be limited to a minimal amount because, even if
indemnifiable, the claims in the Angell Lawsuit lack merit or
will otherwise be dismissed as part of the Premiere
Settlement.
Finally, the distributions under the IHS Plan are relatively
small to the unsecured creditors both in pure dollars and as a
percentage of claim. To delay the unsecured creditors'
dividend after all these years, when no reserve for the Former
Officers is required is unfair to the unsecured creditors and
any balance of the equities should weigh in favor of the
unsecured creditors.
B. Official Committee of Unsecured Creditors
Stephanie A. Fox, Esq., at Klehr Harrison Harvey Branzburg &
Ellers, in Wilmington, Delaware, argues that even if the
Former Officers are entitled to indemnification as an
administrative expense, their claims must be disallowed
pursuant to Section 502(e)(1)(B) because the claims:
-- constitute claims for reimbursement;
-- constitute claims for which the Debtors, without
the automatic stay, would be vicariously liable; and
-- are contingent.
The Former Officers' request must also be denied because:
(1) the claims asserted in the Angell Lawsuit are not
entitled to indemnification or there is little
likelihood that the Angell Plaintiffs will succeed on
the claims;
(2) there is adequate and sufficient D&O insurance
available;
(3) the Committee agreed to set aside a reserve of any D&O
insurance proceeds in excess of $50,000,000 received in
the Compensation Action pending the adjudication of the
Angell Lawsuit and subject to further Court order; and
(4) it is inequitable to require a cash reserve for them
because it will delay distributions to holders of
allowed general unsecured claims for an undetermined
period of time.
Thus, the Committee asks the Court to disallow the
indemnification claims and deny the Former Officers' request
for a reserve, or in the alternative, set the amount of the
reserve at a nominal amount.
Headquartered in Owings Mills, Maryland, Integrated Health
Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local
and regional networks that provide post-acute care from 1,500
locations in 47 states. The Company filed for chapter 11
protection on February 2, 2000 (Bankr. Del. Case No. 00-00389).
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the Debtors in their restructuring efforts. On
September 30, 1999, the Debtors listed $3,595,614,000 in
consolidated assets and $4,123,876,000 in consolidated debts.
(Integrated Health Bankruptcy News, Issue No. 73; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERNATIONAL WIRE: Hires Rothschild as Financial Advisor
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave its stamp of approval to International Wire Group, Inc., and
its debtor-affiliates to employ and retain Rothschild Inc. to
serve as their financial advisor and investment banker in
connection with these chapter 11 cases.
Rothschild will:
a) continue to act as the Company's financial advisors;
b) advise and attend meetings of third parties and official
constituencies, as necessary;
c) if requested by the Debtors, participate in hearings
before the Bankruptcy Court and provide relevant testimony
with respect to the matters described in the Rothschild
Agreement, and issues arising in connection with a Plan;
and
d) render such other financial advisory and investment
banking services as may be agreed upon by Rothschild and
the Debtors in connection with any of the foregoing.
Neil A. Augustine reports that the Debtor will pay Rothschild
with:
i) a $150,000 monthly cash advisory fee; and
ii) a $3,000,000 Completion Fee.
Headquartered in Saint Louis, Missouri, International Wire Group,
Inc., designs, manufactures and markets bare and tin-plated copper
wire and insulated copper wire products for other wire suppliers
and original equipment manufacturers. The Company filed for
chapter 11 protection on March 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11991). Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
$393,000,000 in total assets and $488,000,000 in total debts.
INTERTAN: RadioShack Terminates Agreements Citing Payment Default
-----------------------------------------------------------------
InterTAN, Inc. (NYSE: ITN; Toronto: ITA), a leading consumer
electronics retailer of both private-label and internationally
branded products, announced that it has received a letter from
RadioShack Corporation purporting to terminate the Third Amended
and Restated InterTAN Advertising Agreement, the Second Amended
and Restated License Agreement and the Second Amended and Restated
Merchandise Agreement among InterTAN and RadioShack (and certain
of their affiliates).
The letter from RadioShack stated, as grounds for such
termination, that InterTAN has not paid a $55,000 annual fee under
the Advertising Agreement for 2004, which amount has not yet been
invoiced by RadioShack. RadioShack also filed a lawsuit in Texas
state court seeking to terminate the agreements. InterTAN believes
the notice is invalid, and intends to vigorously contest the
purported termination of these agreements.
This termination notice follows a notice received from RadioShack
on March 31, 2004, after the announcement of the execution of the
merger agreement between InterTAN and Circuit City Stores, Inc.,
exercising RadioShack's right to terminate the License Agreement
effective as of June 30, 2009. The License Agreement had been set
to expire June 30, 2010.
Circuit City has been advised of both RadioShack's actions and
InterTAN's response, and W. Alan McCollough, Chairman, President,
and Chief Executive Officer of Circuit City has stated that
"Circuit City is aware of RadioShack's position with respect to
these agreements, and remains strongly committed to consummating
the previously announced combination of InterTAN and Circuit
City."
Further information on the Circuit City transaction can be found
online at http://www.intertan.com/
InterTAN, Inc., headquartered in Barrie, Ontario, operates through
approximately 980 company retail stores and dealer outlets in
Canada under the trade names RadioShack(R), Rogers Plus(R), and
Battery Plus(R).
INTERTAN: Responds to RadioShack's Contract Termination & Lawsuit
-----------------------------------------------------------------
In light of RadioShack Corporation's purported termination of
various contracts and subsequent lawsuit, InterTAN, Inc. (NYSE:
ITN; Toronto: ITA) , a leading consumer electronics retailer of
both private-label and internationally branded products, responds
with this letter:
InterTAN, Inc.
Jeffrey A. Losch
Senior Vice President
Secretary & General Counsel
Direct: (705) 728-6242 - Ext. 4118
Fax: (705) 728-6742
VIA FAX and COURIER
April 5, 2004
Mr. Mark C. Hill
RadioShack Corporation
100 Throckmorton Street
Suite 1900
Fort Worth, Texas 76102
Re: Third Amended & Restated InterTAN
Advertising Agreement ("Advertising Agreement")
Dear Mr. Hill:
We saw for the first time today your letter dated April 2,
2004, which purports to terminate the above-referenced agreement
and, through cross-default provisions, the License Agreement and
the Merchandise Agreement (each as defined in your letter). A few
hours ago, we received another letter from you notifying us that
RadioShack filed suit today without giving us the courtesy of time
to respond to your first letter (which was faxed to a central fax
machine in the afternoon of Friday, April 2).
Your letters are transparently a pretext for RadioShack
Corporation to terminate the Advertising, License and
Merchandising Agreements because of InterTAN, Inc.'s announcement
of its pending acquisition by Circuit City Stores, Inc., which
termination is expressly prohibited by our letter agreement dated
April 6, 2001. Please be advised that InterTAN intends to hold
RadioShack responsible for all damages or losses that result to
InterTAN or its stockholders from your bad faith purported
termination of these agreements in breach of the April 6 letter.
Section 5 of the Advertising Agreement clearly contemplates
that RadioShack will invoice InterTAN for the 2004 $55,000 payment
provided for by Section 3(a). Indeed, in 2002 and 2003, RadioShack
sent such invoices in January and May, respectively, for the
annual payments, and InterTAN paid both invoices. As you know, we
have not received an invoice for 2004. Thus, your purported
termination violates the terms of the Advertising Agreement, the
meaning of which is evidenced by RadioShack's own prior course of
conduct under the Advertising Agreement. For those reasons, among
others, we reject your invalid purported termination and instead
will treat your letter as the invoice required under the
Advertising Agreement. Accordingly, enclosed is InterTAN's check
for $55,000, representing the 2004 payment. Additionally, although
we do not believe interest is due on this amount, to eliminate any
uncertainty about our full compliance with the Advertising
agreement, we are tendering a separate check in the amount of
$1,157.26 representing accrued interest on this payment.
We will respond to your lawsuit in due course.
Very truly yours,
/s/ Jeffrey A. Losch
Jeffrey A. Losch
IPCS: Files Reorganization Plan with N.D. Georgia Bankruptcy Court
------------------------------------------------------------------
iPCS, a Sprint PCS affiliate that owns and operates the Sprint PCS
network in 38 markets in four Midwestern states and serves more
than 220,500 customers, filed its plan of reorganization with the
United States Bankruptcy Court for the Northern District of
Georgia on March 31, 2004. We expect to file a disclosure
statement summarizing the plan of reorganization with the
Bankruptcy Court in April.
iPCS is the PCS Affiliate of Sprint with the exclusive right to
sell wireless mobility communications, network products and
services under the Sprint brand in 38 markets in Illinois,
Michigan, Iowa and eastern Nebraska with approximately 7.6 million
residents. The territory includes key markets such as Grand
Rapids, Mich., Champaign-Urbana and Springfield, Ill., and the
Quad Cities of Illinois and Iowa. iPCS is headquartered in
Schaumburg, Illinois.
On November 30, 2001, AirGate PCS, Inc. acquired 100% of the
shares of iPCS by means of a stock-for-stock merger. iPCS was
designated as an unrestricted subsidiary of AirGate and both
companies operated as separate business entities. On February 23,
2003, iPCS and its wholly owned subsidiaries filed voluntary
petitions seeking relief from creditors pursuant to Chapter 11 of
the Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Georgia. On October 17, 2003, AirGate PCS
irrevocably transferred all of its shares of iPCS common stock to
a trust organized under Delaware law. The beneficial owners of
AirGate common stock at the date of transfer are beneficiaries of
the trust. AirGate has no interest in the trust.
IPCS: Amends Affiliation Pacts with Sprint & Settles Litigation
---------------------------------------------------------------
iPCS, a Sprint PCS affiliate that owns and operates the Sprint PCS
network in 38 markets in four Midwestern states and serves more
than 220,500 customers, announced that it amended its affiliation
agreements with Sprint PCS and agreed to settlement terms to
resolve its litigation against Sprint PCS.
The amendments to iPCS' affiliation agreements with Sprint call
for substantial improvements in and simplification of the economic
terms of iPCS' relationship with Sprint. The amendments, which
became effective on April 1, 2004, are subject to iPCS' emergence
from bankruptcy. Specifically, the amended agreements improve the
predictability and clarity of key economic drivers in such areas
as roaming, reseller and back office services while providing an
immediate savings to iPCS' cost structure.
In addition to simplifying the way we conduct business with
Sprint, the amendments also establish a fixed reciprocal roaming
rate for voice and 2G data of $0.058 per minute through December
31, 2006, an increase of over 40% from the previous rate. Because
iPCS receives roaming revenue in excess of its cost, this
increased rate is beneficial to iPCS. In addition, the amendments
also establish a fixed reciprocal roaming rate for 3G data through
December 31, 2006.
Beginning in January, 2007, the reciprocal roaming rates and the
fees for established Sprint services will change based on an
agreed upon methodology.
In conjunction with the amendments to the affiliation agreements
with Sprint, iPCS, along with its secured and unsecured creditors,
agreed to settlement terms with Sprint regarding the litigation
currently pending against Sprint, including resolution of all
previously disputed charges between iPCS and Sprint. The
settlement, which becomes effective upon iPCS' emergence from
bankruptcy, calls for iPCS to pay a portion of the amounts
disputed. iPCS has also agreed to stay all of the litigation
against Sprint pending confirmation of iPCS' plan of
reorganization.
"We are very pleased to have reached this milestone in our
relationship with Sprint," said Tim Yager, iPCS' chief
restructuring officer. "We are excited about the reduced rate
structure for Sprint services as well as the new fixed roaming
rates, each of which offers significant benefits over the current
structure while also simplifying our relationship with Sprint and
providing us with greater long term predictability. The
satisfactory resolution of all of our outstanding issues with
Sprint, along with the confirmation of our reorganization plan,
will allow us to resolve our bankruptcy in a way that is
beneficial to iPCS' stakeholders, permitting us to focus on
serving our customers and building our business."
iPCS is the PCS Affiliate of Sprint with the exclusive right to
sell wireless mobility communications, network products and
services under the Sprint brand in 38 markets in Illinois,
Michigan, Iowa and eastern Nebraska with approximately 7.6 million
residents. The territory includes key markets such as Grand
Rapids, Mich., Champaign-Urbana and Springfield, Ill., and the
Quad Cities of Illinois and Iowa. iPCS is headquartered in
Schaumburg, Illinois.
On November 30, 2001, AirGate PCS, Inc. acquired 100% of the
shares of iPCS by means of a stock-for-stock merger. iPCS was
designated as an unrestricted subsidiary of AirGate and both
companies operated as separate business entities. On February 23,
2003, iPCS and its wholly owned subsidiaries filed voluntary
petitions seeking relief from creditors pursuant to Chapter 11 of
the Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Georgia. On October 17, 2003, AirGate PCS
irrevocably transferred all of its shares of iPCS common stock to
a trust organized under Delaware law. The beneficial owners of
AirGate common stock at the date of transfer are beneficiaries of
the trust. AirGate has no interest in the trust.
KAISER ALUMINUM: Parcels 1 and 7 Sale Hearing Set for April 26
----------------------------------------------------------------
Judge Fitzgerald will convene a hearing on April 26, 2004, at
1:30 p.m., Eastern Time, with regards to the sale of Parcels 1
and 7 as well as certain assets, contracts and intellectual
property used in conjunction with the Debtors' Automated Systems
Group business, either pursuant to:
(a) the terms of the sale agreement between the Debtors and
CVB Northwest, LLC; or
(b) the terms submitted by the successful bidder for the
Properties.
Any objections to the sale of the Properties must be filed and
served by 4:00 p.m., Eastern Time on April 13, 2004.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation
operates in all principal aspects of the aluminum industry,
including mining bauxite; refining bauxite into alumina;
production of primary aluminum from alumina; and manufacturing
fabricated and semi-fabricated aluminum products. The Company
filed for chapter 11 protection on February 12, 2002 (Bankr. Del.
Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis &
Pogue, represent the Debtors in their restructuring efforts. On
September 30, 2001, the Company listed $3,364,300,000 in assets
and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No.
41; Bankruptcy Creditors' Service, Inc., 215/945-7000)
LABRANCHE: Selling New Senior Notes to Refinance Outstanding Debt
-----------------------------------------------------------------
LaBranche & Co Inc. (NYSE: LAB) announced that it intends to
refinance a substantial portion of its outstanding indebtedness
over the next several weeks. The refinancing is being undertaken
to take advantage of current market opportunities that should
allow the company to extend the maturities and modify certain of
the terms of its outstanding debt. The company expects to
refinance outstanding senior and senior subordinated notes through
the issuance of new senior notes.
The company also announced that, as part of the refinancing, the
company has commenced a cash tender offer and consent solicitation
for all of its outstanding 9-1/2% Senior Notes due August 2004
(CUSIP No. 505447AB8) and 12% Senior Subordinated Notes due March
2007 (CUSIP No. 505447AD4).
The tender offer and consent solicitation is made pursuant to an
Offer to Purchase and Consent Solicitation Statement and related
Consent and Letter of Transmittal dated April 5, 2004, which set
forth a more detailed description of the tender offer and consent
solicitation. The tender offer will expire at 12:00 midnight (EDT)
on May 3, 2004, unless extended or terminated. The consent
solicitation will expire at 5:00 p.m. (EDT) on April 19, 2004,
unless extended or terminated.
Under the terms of the tender offer, the consideration for each
$1,000.00 principal amount of the 9-1/2% Notes tendered will be
determined on the next business day following the Consent Date.
The consideration for the 9-1/2% Notes will be calculated by
taking (i) the present value as of the payment date of the 9-1/2%
Notes calculated in accordance with standard market practice,
assuming each $1,000.00 principal amount of the 9-1/2% Notes would
be paid at a price of $1,000.00 on the maturity date of such
notes, discounted at a rate equal to the sum of (a) the yield to
maturity on the 2-1/8% U.S. Treasury Note due August 31, 2004, and
(b) 50 basis points, plus (ii) accrued and unpaid interest, if
any, up to, but not including, the payment date, minus (iii) the
consent payment described below of $20.00 per $1,000.00 principal
amount of notes.
The consideration for the 12% Notes will be an amount in cash
equal to (i) $1,200.00 plus (ii) accrued and unpaid interest, if
any, up to, but not including, the payment date, minus (iii) the
consent payment described below of $20.00 per $1,000.00 principal
amount of notes.
In conjunction with the tender offer, the company is also
soliciting the consent of holders of the notes to eliminate
substantially all of the restrictive covenants and certain events
of default under the indentures governing the 9-1/2% Notes and the
12% Notes, and to make certain other amendments to such
indentures. Holders cannot tender their notes without delivering a
consent and cannot deliver a consent without tendering their
notes. Any notes tendered before the Consent Date may be withdrawn
at any time on or prior to the Consent Date, but not thereafter,
except as may be required by law. Any notes tendered after the
Consent Date may not be withdrawn, except as may be required by
law.
The company will make a consent payment of $20.00 per $1,000.00
principal amount at maturity of notes validly tendered on or prior
to the Consent Date. Holders who tender their notes after the
Consent Date will not receive the consent payment.
The closing of the tender offer is subject to certain conditions
with respect to each series of notes, including: (i) receipt by
the company of gross proceeds from the sale of new senior notes
sufficient to finance the purchase of notes of such series in the
tender offer, and (ii) the receipt of consents from the holders of
at least a majority of the outstanding principal amount of such
notes to amend the corresponding indenture. The company's
obligation to purchase a series of notes in the tender offer is
not conditioned on the purchase of the other series of notes.
The proceeds from the sale of new senior notes will be used to
fund this refinancing as well as for other general corporate
purposes.
The company has retained Credit Suisse First Boston LLC to serve
as the exclusive Dealer Manager and Solicitation Agent for the
tender offer and the consent solicitation.
Requests for documents may be directed to Morrow & Co., Inc., the
Information Agent, by telephone at (800) 607-0088 (toll-free) or
(212) 754-8000 (collect), or by e-mail at LAB.info@morrowco.com
Questions regarding the tender offer may be directed to Credit
Suisse First Boston, at (800) 820-1653 (toll-free) or
(212) 538-4807 (collect).
This press release is not an offer to purchase, a solicitation of
an offer to sell or a solicitation of consent with respect to any
securities. The offer is being made solely by the Offer to
Purchase and Consent Solicitation Statement and related Consent
and Letter of Transmittal dated April 5, 2004.
The new senior notes or other securities that may be offered in
connection with the company's refinancing plan will be offered
pursuant to an exemption from registration under the Securities
Act of 1933. Such securities will not be registered under the
Securities Act and, accordingly, may not be offered or sold in the
United States absent registration under the Securities Act or an
applicable exemption from the registration requirements.
Founded in 1924, LaBranche is a leading Specialist firm. The
Company is the Specialist for more than 650 companies, seven of
which are in the Dow Jones Industrial Average, 30 of which are in
the S&P 100 Index and 103 of which are in the S&P 500 Index. In
addition, LaBranche acts as the Specialist in over 200 options.
* * *
As reported in the Troubled Company Reporter's February 3, 2004,
edition, Standard & Poor's Ratings Services removed from
CreditWatch and lowered its long-term counterparty credit rating
on LaBranche & Co Inc. to 'B' from 'B+'. The ratings had been
placed on CreditWatch Nov. 18, 2003. The outlook is negative.
The downgrade reflects the company's current earnings and interest
coverage ratios, which are substantially lower than in prior
years. Standard & Poor's also has continued concerns regarding the
ability of the company to meet its near-term debt obligations
given the possibility for sizable penalties as a result of the
NYSE and SEC investigations. These issues could impair the
company's ability to raise liquidity to meet its upcoming debt
maturity of $100 million in bonds due in August 2004.
LAKE HAMILTON: Employing James F. Dowden as Bankruptcy Counsel
--------------------------------------------------------------
Lake Hamilton Resort, Inc., sought and obtained approval from the
U.S. Bankruptcy Court for the Western District of Arkansas, to
employ the law firm of James F. Dowden, P.A., as its counsel.
The Debtor submits that it is in need of professional services of
competent, qualified, and experienced bankruptcy and commercial
law attorneys to represent it during this Chapter 11 case and
chooses to employ James F. Dowden, Esq.
Mr. Dowden will be employed under the terms of a general retainer
to represent the Debtor during this Chapter 11 case in all courts,
federal, state, local, and before all boards and administrative
agencies and with respect to all matters which may arise during
the course of this Chapter 11 case, at the rate of $210 per hour.
Mr. Dowden assures the Court that his firm is a "disinterested
person" as that phrase is defined in the Bankruptcy Code.
Headquartered in Hot Springs, Arkansas, Lake Hamilton Resort,
Inc., operates a hotel with amenities including indoor atrium
pool, hot tub, sauna, outdoor pool, tennis court, marina, boat
slips, private sandy beach, and nature trail. The Company filed
for chapter 11 protection on March 22, 2004 (Bankr. W.D. Ark. Case
No. 04-72002). James F. Dowden, Esq., represents the Debtor in
its restructuring efforts. When the Company filed for protection
from its creditors, it listed $4,468,461 in total assets and
$6,384,881 in total debts.
MB REAL ESTATE: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: MB Real Estate, Inc.
759 Cherry Circle
Washington, Utah 84780
Bankruptcy Case No.: 04-70295
Type of Business: The Debtor Owns and Operates Apartment Complex
in Wichita County, Texas.
Chapter 11 Petition Date: April 5, 2004
Court: Northern District of Texas (Wichita Falls)
Judge: Harlin DeWayne Hale
Debtor's Counsel: Ronald L. Yandell, Esq.
Law Offices of Ron L. Yandell
705 Eighth Street, Suite 720
Wichita Falls, TX 76301
Tel: 940-761-3131
Fax: 940-761-3133
Total Assets: $2,800,000
Total Debts: $2,600,000
The Debtor did not file a list of its 20-largest creditors.
MEDXLINK: Engages Newly Merged Chisholm Bierwolf as Auditor
-----------------------------------------------------------
On February 10, 2004, MedXLink was notified by Bierwolf, Nilson &
Associates, that due to partner rotation requirements of the
Sarbannes-Oxley Act, the accounting firm would be merging with a
Salt Lake City, Utah firm, Chisholm & Associates. The name of the
new accounting firm will be Chisholm, Bierwolf & Nilson, LLC.
The reports of Bierwolf, Nilson & Associates on MedXLink
Corporation's financial statements in its fiscal 2002 and 2001
reports contained an explanatory paragraph as to MedXLink Corp's
ability to continue as a going concern.
On February 11, 2004, the Company engaged Chisholm, Bierwolf &
Nilson, LLC, to review its financial statements for the periods
ending December 31, 2003, March 31, 2004 and June 30, 2004.
MEGA-C POWER: Tamboril Files Involuntary Bankr. Petition in Nev.
----------------------------------------------------------------
Tamboril Cigar Company (Pink Sheets: SMKE) has instituted an
involuntary Chapter 11 Bankruptcy proceeding against Mega-C Power
Corporation by filing a creditors petition in the US Bankruptcy
Court for the State of Nevada, Northern Division.
Commenting on the filing, John Petersen, the company's chief
financial officer and general counsel said, "The pending lawsuits
disclosed in our Annual Report on Form 10-KSB involve a number of
complex legal issues arising under the laws of the State of Nevada
and the United States. We believe that the Bankruptcy Court, which
has plenary jurisdiction over Mega-C, its properties and its
contracts, can most efficiently resolve these issues. We hope that
a prompt resolution of these legal issues in the Bankruptcy Court
will narrow the issues and reduce the future costs associated with
the ongoing Canadian litigation. We also hope that the Bankruptcy
Court proceeding will facilitate the registration and ultimately
simplify the distribution of the 117 million Tamboril shares that
are currently on deposit in an irrevocable Trust for the Benefit
of the Shareholders of Mega-C Power Corporation."
MEGA-C POWER CORPORATION: Involuntary Chapter 11 Case Summary
-------------------------------------------------------------
Alleged Debtors: Mega-C Power Corporation
c/o CSC Services of Nevada, Inc.
502 East John Street, Room E
Carson City, Nevada 89706
Involuntary Petition Date: April 6, 2004
Case Number: 04-50962
Chapter: 11
Court: District of Nevada (Reno)
Judge: Gregg W. Zive
Petitioners' Counsel: Teresa B. McKee, Esq.
Beesley, Peck, Matteoni, LTC
5011 Meadowood Mall WY #300
Reno, NV 89502
Tel: 775-827-8666
Petitioners: Tamboril Cigar Company
Axion Power Corporation
Thomas Granville
Amount of Claims: Unstated
METALS USA: Cases Reassigned to Judge Wesley Steen
--------------------------------------------------
On March 8, 2004, Judge Greendyke recused himself in the Metals
USA Debtors' cases, including pending adversary proceedings. The
Cases were initially reassigned to Judge Marvin Isgur, who also
recused himself on March 10, 2004.
Judge Wesley W. Steen now handles the Debtors' cases. (Metals USA
Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MIRANT CORP: Will Be Late in Filing 2003 Annual Financial Report
----------------------------------------------------------------
Dan Streek, Vice President and Controller of Mirant Corporation,
informed the Securities and Exchange Commission on March 16, 2004,
that because of the Debtors' Chapter 11 filings on July 14, 2003,
Mirant was unable to complete its annual financial reporting
process by the required due date. Mirant's time and resources
were focused on:
-- supporting bankruptcy-related activities;
-- the additional monthly financial reporting requirements
under the Bankruptcy Code; and
-- the timing of its year-end long-lived asset impairment
testing.
Mirant was also faced with high employee turnover. However, Mr.
Streek assures the SEC that Mirant continues to diligently work
toward completion of its annual financial reporting process and
intends to file its Form 10-K for the year ended
December 31, 2003 as soon as practicable.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. The Company filed for
chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590). Thomas E. Lauria, Esq., at White & Case LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $20,574,000,000
in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NEVADA POWER: Planned $130 Million Debt Issue Gets S&P's BB Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to the
proposed $130 million general & refunding mortgage notes, series
I, at Nevada Power Co. (NPC), a utility subsidiary of Sierra
Pacific Resources (SRP). In addition, Standard & Poor's affirmed
its 'B+' corporate credit rating SRP, NPC, and utility subsidiary
Sierra Pacific Power Co. (SPPC). It also affirmed the 'BB' rating
on the secured debt at the utilities, the 'B-' rating on the
unsecured debt at all three companies, and the 'CCC+' rating on
the preferred stock at the utilities. The outlook is negative.
Ratings on Sierra Pacific Resources (SRP) and its utility
subsidiaries Nevada Power Co. (NPC) and Sierra Pacific Power Co.
(SPPC) reflect the weak consolidated business and financial
profiles of the utilities and the parent. A troubled regulatory
climate in Nevada and a short capacity position that creates
exposure to the volatile wholesale power markets are the principal
sources of business risk for SRP. Also, management has been held
responsible for imprudent power procurement decisions made during
the western wholesale power markets crisis in 2000 and 2001, which
resulted in a significant revision in power procurement policies
and personnel over the last two years. Prior regulatory
disallowances in purchased power costs decimated SRP's financial
profile, with the utilities losing access to bank lines of credit
and to the unsecured credit markets. These weaknesses are partly
mitigated by recent more supportive regulatory actions and
stronger cash flows as the utilities collect deferred power costs.
NEW CENTURY: S&P Places Low-B Level Ratings on Watch Positive
-------------------------------------------------------------
Standard & Poor's Rating Services placed its ratings for Irvine
California based-New Century Financial Corp. (New Century, NASDAQ:
NCEN), including the company's 'BB-' counterparty credit and 'B+'
senior unsecured debt ratings, on CreditWatch with positive
implications.
"The CreditWatch placement follows the company's announcement that
its board of directors voted in favor of converting the company to
a REIT, subject to final Board approval of relevant legal,
accounting, and financial matters and shareholder approval," said
Standard & Poor's credit analyst Steven Picarillo. CreditWatch
with positive implications indicates that the rating could be
raised or affirmed.
"Standard & Poor's will meet with management and evaluate the
company's financial, corporate, and legal structure following this
proposed transaction, which will be weighed against factors that
impede the company's financial flexibility as it operates under a
REIT structure," Mr. Picarillo added. Resolution of the
CreditWatch placement will be finalized upon the company's
successful and ultimate completion of this proposed transaction.
New Century, through its subsidiaries, originates, sells, and
services nonprime residential mortgages. With total assets of $8.9
billion at Dec. 31, 2003, and an equity base of $542 million, the
company is one of the country's top originators of residential
nonprime loans.
NORTEL: Offering New Converged Solutions for Small Businesses
-------------------------------------------------------------
Nortel Networks (NYSE:NT)(TSX:NT) plans to enhance its award-
winning enterprise convergence portfolio to help small- and
medium-sized businesses (SMBs) as well as enterprise branch
offices drive lower communication costs, simplify network
operations and extend infrastructure investments by eliminating
single-purpose devices in favor of highly-reliable, multi-purpose
converged solutions.
The enhancements will include Nortel Networks Survivable Remote
Gateway (SRG) and Nortel Networks Business Communication Manager
(BCM) Release 3.6. Both are expected to be commercially available
in late May 2004.
"Recent analyst reports confirm our leadership position in IP
(Internet Protocol) telephony, and we will continue to innovate
to maintain the trust of the marketplace," said Aziz Khadbai,
general manager, Local Premise Solutions, Nortel Networks. "These
solutions offer feature-rich IP telephony options that fit each
customer need, allowing for IT investment protection and enabling
customers to migrate to IP at their own pace."
Nortel Networks Survivable Remote Gateway has been specifically
designed to extend the desktop features and user interface of
Nortel Networks Succession 1000 IP PBX (private branch exchange)
platform to give remote-site users full access to the same
features and applications available at the main corporate site.
SRG will also allow distribution of trunking across a Succession
1000 and SRG wide area network (WAN) to provide true, least-cost
routing and reduce toll costs. Local public switched telephone
network (PSTN) access will be provided by SRG for local calls and
E9-1-1. SRG will provide a suite of IP-based data and routing
capabilities, including dynamic host configuration protocol
(DHCP), Web caching and Virtual Private Network (VPN) support.
Chimes, a non-profit organization that provides services to
people with various barriers to independent living, sees SRG as a
good fit for its smaller sites in Maryland, Washington D.C.,
Delaware, New Jersey, Virginia, Pennsylvania and Israel, many of
which are group homes.
"Telecommunications is the key to binding our organization and
providing ongoing services to these sites," said Martin Lampner,
chief financial officer, Chimes. "We see the SRG solution fitting
into the infrastructure as a mechanism to make that 9-1-1 call in
emergency situations. We're especially looking to the inherent
reliability and flexibility this system offers. SRG ensures
communications in a variety of situations."
Also announced, BCM Release 3.6 will deliver new functionality to
the existing list of standard and optional BCM capabilities. BCM
is already recognized by industry experts for outstanding
performance and exceptional feature coverage and BCM 3.6 will add
a variety of new features, including:
-- Enhanced Basic, Professional and Multimedia Call Center
Packages -- BCM Release 3.6 will create a flexible, robust
call center architecture that will allow businesses to meet
the needs of its customers with maximum efficiency. By
providing quick customer access to sales and support personnel
via phone or Web, businesses can provide better service;
-- BCM400 Expansion Gateway -- By approaching scalability in a
modular fashion, new and existing customers will be able to
cost-effectively scale any BCM solution from 10 to 200+
extensions;
-- New Telephony Features -- The latest enhancements will
include the ability to automatically route calls based on
individual user preference, allowing business personnel to
complete tasks without interruption;
-- New IP Phones - BCM Release 3.6 will deliver new IP Phone
2001 and 802.3af Power over LAN (PoL) phones to the 2002 and
2004 models. Businesses of all sizes will be able to select a
Nortel Networks IP Phone for every user and environment, all
powered via the 802.3af standard;
-- Performance Management -- BCM 3.6 will take a proactive
approach to network performance by monitoring critical system
components. The result is expected to be lower support costs
through reduced network downtime and early problem detection.
"We've been using Nortel Networks Business Communications Manager
to enhance customer service across our retail sites in North
America and Australia," said Greg Clemens, Information Systems
manager, Worthington Ag Parts. "Customer service is key in our
industry. By leveraging BCM, we have been able to assist
customers in finding parts more quickly and efficiently and
connecting them with our various sites across our voice over IP
network. Due to this, we have been able to increase sales calls
and increase productivity and communication between sites, while
significantly lowering our communication costs."
SRG will leverage a customer's investment in and the value of
Nortel Networks Succession 1000 solution by connecting IP phones
over the WAN and seamlessly extending features to multiple sites
through IP connectivity and streamlined network management.
Business Communications Manager delivers small- and medium-sized
businesses and branch offices the only converged voice and data
solution in the industry that provides a choice of IP-enabled or
pure-IP strategies. Leveraging existing Succession 1000, Nortel
Networks Meridian and Nortel Networks Norstar, investments, BCM
has the capabilities businesses need to improve communication and
extend the benefits of IP to any size enterprise.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The Company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found on
the Web at http://www.nortelnetworks.com/or
http://www.nortelnetworks.com/media_center
* * *
As previously reported, Standard & Poor's Rating Services placed
its 'B' long-term corporate credit, senior secured debt, and other
ratings on telecom equipment supplier, Brampton, Ontario-based
Nortel Networks Ltd. on CreditWatch with negative implications.
"The CreditWatch placement follows the announcement by parent
Nortel Networks Corp. that it, and Nortel Networks Ltd.
(collectively Nortel Networks), will need to delay the filing of
its Form 10-K for the year-ended Dec. 31, 2003, with the U.S.
Securities and Exchange Commission," said Standard & Poor's credit
analyst Joe Morin. In addition, Nortel Networks will likely have
to revise its previously reported unaudited results for the year-
ended Dec. 31, 2003, and might have to restate previously filed
financial results.
As a result, Nortel Networks will not likely be in compliance with
the requirements under its public indentures, Export Development
Canada (EDC) support facility, and its credit facilities to
deliver their SEC filings. The inability of Nortel Networks to
meet these requirements results in near-term uncertainties.
Failure to meet SEC filings within the allowable cure periods
under the indentures or credit facilities could result in a
lowering of the ratings. Inability to obtain a temporary waiver
from EDC could result in additional uncertainties, which in turn
could result in a lowering of the ratings. Finally, the ratings
could also be lowered if Nortel Networks further revises, or
restates financials results, which result in a materially weakened
financial profile.
OMEGA PANCAKE: Case Summary & 17 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Omega Pancake House, Inc.
1300 Ogden Avenue
Downers Grove, IL 60515-2738
Bankruptcy Case No.: 04-12933
Type of Business: The Debtor operates a restaurant.
Chapter 11 Petition Date: April 1, 2004
Court: Northern District of Illinois (Chicago)
Judge: Susan Pierson Sonderby
Debtor's Counsel: A. Douglas Wellman, Esq.
7727 South Kedzie
Chicago, IL 60652
Tel: 773-778-8700
Total Assets: $3,002,000
Total Debts: $3,593,537
Debtor's 17 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Ellengee Market Co. $98,454
Zepole Supply Co. $45,311
Economy Packing Co. Inc. $37,863
Vienna Sausage MFG, Co. $29,000
Versa Foods, Inc. $28,295
Bake Mark $24,568
Sara Lee Coffee & Tea $16,595
Becker Diary $15,910
Delta Financial Services, Inc. $13,000
Boston Fish Market, Inc. $6,840
Pepsi Cola General Bottling $3,063
G & N Imports $2,879
S & K Foods, Inc. $2,875
Supreme Lobster & Seafood Co. $2,710
Alpha Baking Company, Inc. $2,567
Renzo & Sons, Inc. $2,209
Edy' Grand Ice Cream $1,402
ONE PRICE: Court Approves Clear Thinking's Retention as Advisor
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
last week approved the appointment of Clear Thinking Group as
financial advisor to the estate of One Price Clothing Stores, Inc.
(OTC Bulletin Board: ONPRQ). Concurrently, the court approved the
retention of Clear Thinking principal and managing director Lee A.
Diercks as responsible officer of the estate.
In this capacity, the Hillsborough, N.J.-based consulting firm
will be responsible for the liquidation of the business, the sale
of all assets, and overall administration of the bankruptcy
process for the estate, with veteran retailer Diercks serving as
the officer of record. Clear Thinking was initially selected by
the debtor to direct the process, before being ratified by the
Creditors Committee, the Trustee and, now, the Court.
Duncan, S.C.-based One Price Clothing filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on February 9, 2004. At the
time of the filing, the off-price women's and children's apparel
retailer operated 494 stores in 30 states, the District of
Columbia, Puerto Rico and the U.S. Virgin Islands under the One
Price Clothing, One Price & More!, BestPrice! Fashions and
BestPrice! Kids brands.
As of March 31, all of the company's stores had been closed and
its merchandise inventories sold. One Price Clothing's 500,000-
square-foot distribution center and headquarters building in
Duncan is currently being marketed for sale.
About Clear Thinking Group
Clear Thinking Group, Inc., a subsidiary of Liquidation World
(TSX: LQW), Calgary, Alberta, provides a wide range of corporate
turnaround, workout, and strategic consulting services to retail
companies, consumer product manufacturers/distributors and
industrial companies. The national advisory organization
specializes in assisting small- to mid-sized companies during
times of strategic change, opportunity, growth, acquisition, and
crisis. For more information, visit the firm's website at
http://www.clearthinkinggrp.com/
OWENS: Insurers Want Clarification Re Asbestos Claims Estimate
--------------------------------------------------------------
Affiliated FM Insurance Company, Allianz Insurance Company,
Allianz Underwriters Insurance Company, and AXA-Belgium ask the
Court to clarify that the Asbestos Personal Injury Claim
estimation to be conducted for plan confirmation purposes will be
used only for that purpose, and not for purposes of determining
their coverage obligations. Alternatively, the Insurers ask
Judge Fitzgerald to confirm their right to fully participate in
the Estimation process.
Under the Fourth Amended Joint Plan of Reorganization, the
Owens Corning Debtors seek an "estimation of asbestos-related
liability for the purposes of determining the relative allocation
of plan consideration. . . ." This estimation will encompass not
only present claims but also the present value of future claims or
demands. As a condition to confirmation, the Plan seeks a
finding of the value of OC Asbestos Personal Injury Claims and FB
Asbestos Personal Injury Claims "as determined by the Bankruptcy
Court and the District Court shall be an amount not less than $16
billion. . . ."
The Insurers are concerned that Owens Corning will assert in a
pending coverage litigation that the estimation, in conjunction
with confirmation, constitutes a "judgment" establishing their
liability to claimants for purposes of insurance coverage. On
its face, the Plan requires findings that appear designed to bind
the Insurers to the Estimation.
Notwithstanding these required confirmation findings, the
Official Committee of Asbestos Claimants' counsel, at the
December 1, 2003 omnibus hearing, objected to the Insurers'
standing to participate in the Estimation process. The Court
itself noted that standing was an issue. However, the Court
expressed the view that a claim estimation for confirmation
purposes would not affect coverage issues.
Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman LLP, in
Wilmington, Delaware, reminds the Court that, collectively, the
Insurers already paid Owens Corning hundreds of millions of
dollars in reimbursement of Owens Corning's asbestos-related
bodily injury liabilities. However, on October 26, 2001, Owens
Corning filed an insurance coverage action before the Ohio State
Court, styled as Owens Corning v. Birmingham Fire Ins. Co. of
PA., No. CI 0200104929, seeking coverage for so-called "non-
products" asbestos bodily injury liabilities. The Insurers are
parties to the Ohio Coverage Action, which is ongoing. The
Insurers have not denied coverage, but rather reserved their
rights pending the outcome of the litigation.
Notwithstanding the Court's and the Plan Proponents' statements,
the fact remains that Owens Corning may try to assert in the Ohio
Coverage Action that an Estimation constitutes an adjudication
binding the Insurers as to the amount of Owens Corning's
liability for Asbestos Personal Injury Claims, and an event that
triggers an immediate payment obligation. Mr. Rosner points out
that Owens Corning's Plan not only seeks an Estimation but also
findings that appear to be intended to bind the Insurers.
At the December 1, 2003 omnibus hearing, the Court ordered the
Debtors to set up a process to facilitate an Estimation hearing.
This process was to encompass "document production" and
"identification of witnesses" and was to be instituted "sooner
rather than later." While the Court recognized an issue as the
Insurers' standing, the Court advised that the Insurers should
participate in the process.
The Plan Proponents should be directed not to attempt to use an
Estimation finding in a coverage dispute or action or for any
purpose inconsistent with the Court's order, Mr. Rosner asserts.
The Plan Proponents cannot have it both ways -- object to
standing, refuse discovery and yet obtain findings from the Court
that the Insurers had an opportunity to be heard for purposes of
using Court rulings against them.
The Court should rule that the Insurers have the right to
participate fully in the Estimation proceeding, Mr. Rosner
argues. If the Plan Proponents want a finding that the Insurers
have had an opportunity to be heard, then the Insurers must be
given a meaningful opportunity, which includes:
-- discovery;
-- the right to present its own expert;
-- the right to cross-examine; and
-- the right to brief and argue in Court.
Moreover, if the Estimation is to be urged against the Insurers
as an "adjudication" of asbestos liability and damage for
purposes of triggering payments under policies, then the Insurers
also have a contractual right under their policies to participate
in the Estimation process.
Other Insurers Join In
Royal Indemnity Company and these AIG Insurers support the
request:
(1) Birmingham Fire Insurance Company of Pennsylvania,
(2) Granite State Insurance Company,
(3) Landmark Insurance Company,
(4) Lexington Insurance Company, and
(5) National Union Fire Insurance Company of Pittsburgh,
Pennsylvania
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.
71; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PAC-WEST: Upgrades Managed Dial Access Network to Lucent Platform
-----------------------------------------------------------------
Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of broadband
communications services to service providers and enterprise
customers in the western U.S., announced that it has completed the
upgrade of its managed dial access network to a Lucent
Technologies (NYSE: LU) platform.
Michael Hawn, Pac-West's vice president of customer network
services, said, "Upgrading to Lucent's platform improves the
stability and reliability of our network, accelerates our ability
to deliver next-generation services, such as VoIP (Voice over
Internet Protocol) to our customers, and significantly reduces our
network management costs. With the upgrade now complete, we are
evaluating future technologies and product offerings that will
help our service provider customers generate new revenue streams
and address the growing demand in the marketplace for IP-based
services."
Pac-West selected the APX(R) 8100 Universal Gateway solution from
Lucent's Accelerate(TM) VoIP portfolio, the Lucent VitalQIP(TM)
DNS/DHCP and IP Address Management software, and the
NavisRadius(TM) Authentication, Authorization and Accounting
Server. The Lucent platform requires fewer network elements, which
will significantly reduce Pac-West's network equipment and
operating costs.
"The APX(R) 8100 solution supports Pac-West's goals of reducing
operating expenses while continuing to provide the necessary next-
generation services their customers demand," said Gerry Cafaro,
vice president of sales for Lucent Technologies. "The APX(R) 8100
adds redundancy and reliability to Pac-West's network, while
providing a wider range of services in a fraction of the space
required by other products."
Pac-West serves California, Nevada, Arizona, Washington, and
Oregon, offering a menu of dial-up IP access and port wholesaling
services. Pac-West's managed dial access service enables Internet
and other types of service providers to offer their end-users
reliable access to the Internet from anywhere in Pac-West's
service area through a local call without having to build and
maintain their own dial access network. Pac-West supplies the
access ports, local access numbers, modems, routers, Internet
backbone, call detail and usage reports, and 24/7/364 network
monitoring and customer support.
About Lucent Technologies
Lucent Technologies, headquartered in Murray Hill, N.J., designs
and delivers the systems, software and services for next-
generation communications networks for service providers and
enterprises. Backed by the research and development of Bell Labs,
Lucent focuses on high-growth areas such as broadband and mobile
Internet infrastructure; communications software; web-based
enterprise solutions that link private and public networks; and
professional network design and consulting services. For more
information on Lucent Technologies, visit its Web site at
http://www.lucent.com.
About Pac-West Telecomm, Inc.
Founded in 1980, Pac-West Telecomm, Inc. (Nasdaq: PACW) is one of
the largest competitive local exchange carriers headquartered in
California. Pac- West's network carries over 100 million minutes
of voice and data traffic per day, and an estimated 20% of the
dial-up Internet traffic in California. In addition to California,
Pac-West has operations in Nevada, Washington, Arizona, and
Oregon. For more information, visit http://www.pacwest.com/
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's Ratings Services lowered its corporate credit rating on
Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on the 13.5%
senior notes due 2009 was lowered to 'D' from 'C'.
S&P explained, "Given the company's significant dependence on
reciprocal compensation (the rates of which the company expects to
further decline in 2003) and its limited liquidity, Pac-West will
likely find the implementation of its business plan continue to be
challenging."
PARMALAT: Sao Paulo Court Keeps Rocha to Administer Brasil Unit
---------------------------------------------------------------
Keyler Carvalho Rocha, a former Brazilian Central Bank director,
will remain as administrator of Parmalat Brasil SA Industria de
Alimentos, News Italia Press reports. Sao Paulo Judge Roque
Mesquita reversed an injunction that ordered Mr. Rocha, the
court-appointed administrator, to step down and return control of
Parmalat Brasil to its parent company by reinstating Ricardo
Goncalves as chief executive officer.
In February 2004, Sao Paulo Judge Carlos Henrique Abrao of the
42nd District Civil Court in Sao Paulo ousted the board and
management of Parmalat Brasil and installed Mr. Rocha along with
Jorge Lobo and Ruben Salles de Carvalho to oversee the company.
Mr. Rocha serves as Parmalat Brasil's president. Mr. Rocha can
stay on the job for now -- at least until a higher court rules on
the merit of Parmalat Brasil's request for bankruptcy protection.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-
11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. On June 30, 2003, the Debtors listed
EUR2,001,818,912 in assets and EUR1,061,786,417 in debts.
(Parmalat Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PG&E NATIONAL: USGen Gets Go-Signal to Hire Latham as FERC Counsel
----------------------------------------------------------------
Debtor USGen New England, Inc. sought and obtained Judge Mannes'
permission to employ Latham & Watkins, LLP, nunc pro tunc to the
Petition Date, as special Federal Energy Regulatory Commission
counsel pursuant to Section 327(e) of the Bankruptcy Code.
Latham will provide advisory services relating to, and draft,
revise, negotiate and possibly file with the FERC, agreements
between USGen and the Independent System Operator-New England,
Inc., for the ISO-NE to fund the environmental upgrades needed to
comply with the Massachusetts Department of Environmental
Protection's implementation of the Clean Air Act requirements,
and any related FERC filings and litigation matters.
As special FERC counsel, Latham will perform its services in
accordance with its normal hourly rates. Latham's fee
applications will include a description of the fees and expenses
incurred by R.W. Beck Inc., the consulting firm Latham retained
to advise on the engineering, procurement, and construction cost
process relating to the environmental upgrades of USGen's Salem
Harbor Facility, and to submit affidavits and testimony in
conjunction with the FERC proceedings that may arise from
Latham's legal work for USGen. R.W. Beck's fees and expenses
will not exceed $300,000, provided, that the amount may be
exceeded with the consent of the Official Committee of USGen
Unsecured Creditors and the Office of the United States Trustee.
In accordance to its standard hourly rates, L&W's compensation
are:
Partners $465 - 795
Associates 205 - 395
Legal Assistants 105 - 205
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.
18; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PHOTOWORKS: Reaches Settlement of Service Provider Fees Dispute
---------------------------------------------------------------
On February 18, 2004, PhotoWorks, Inc. and one of its service
providers reached a settlement agreement regarding disputed fees
for services provided to PhotoWorks.
Under the terms of the settlement agreement, the parties have
agreed to release all claims against each other regarding the
services provided to PhotoWorks and to fully and finally resolve
all such claims and potential claims without admission of any
kind. The following is a summary of the material terms of the
settlement agreement:
1. Outstanding amounts previously billed by the service
provider but not paid by PhotoWorks will be forgiven.
The amount of unpaid fees total $398,000.
2. Amounts previously billed by the service provider and
paid by PhotoWorks will be partially refunded by the
service provider and, subject to PhotoWorks meeting
certain obligations to a third party, will be payable
to PhotoWorks in annual installment payments of
$95,000 each in July 2004, 2005, 2006 and 2007 for a
total of $380,000.
3. The parties have agreed that the terms of the
settlement agreement and all negotiations leading to
it are confidential settlement communications.
The Company will recognize $398,000 of income related to the
amount of unpaid fees, which reflects the reversal of amounts that
were expensed in the period in which they were incurred. In
addition, the Company will recognize $340,000 of income ($380,000
net of imputed interest of $40,000 at an estimated borrowing rate
of 6%) to reflect the refund for fees previously paid. These
amounts will be reflected in the Company's financial statements in
the second quarter ending March 27, 2004.
* * *
Liquidity and Capital Resources
At December 27, 2003, Photoworks' balance sheet shows that its
total shareholders' equity is whittled further down to $128,000
from about $564,000 at Sept. 2003.
In a Form 10-Q filed with the Securities and Exchange Commission,
Photoworks Inc., reported:
"The Company has experienced significant revenue declines and has
incurred operating losses in recent years. Cash flow used in
operations during the first quarter of fiscal 2004 was $819,000,
primarily due to lower revenues that were partially offset by
lower operating costs. Cash flows from operations were positive in
fiscal 2003 and 2002 primarily due to income tax refunds
aggregating $5,780,000 related to tax net operating loss
carrybacks. Management has taken various actions, including
workforce reductions, store closures, and reduced
marketing and administrative expenditures to more closely align
its cost structure with its reduced revenue levels and to improve
its cash flows.
"Management believes that under current operational plans, its
current cash balances and projected future cash flows from
operations will be sufficient to fund operations through at least
the next twelve months. Further, management has both the ability
and intent to undertake additional actions to reduce expenses to
ensure cash balances are sufficient to meet its obligations as
they become due. However, the Company's inability to successfully
generate sufficient cash flow from operations would have a
material adverse impact on the Company's financial position and
liquidity and may require the Company to seek additional sources
of funding to enable it continue operations for at least the next
twelve months."
POLYMER GROUP: S&P Assigns B+ Corporate Credit Rating
-----------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to North Charleston, South Carolina-based Polymer
Group Inc.
At the same time, Standard & Poor's assigned its 'B+' rating and
its recovery rating of '3' to both the company's proposed $50
million senior secured revolving credit facility due 2009 and $225
million senior secured first-lien term loan due 2010, based on
preliminary terms and conditions. The rating is the same as the
corporate credit rating; this and the '3' recovery rating indicate
the expectation of a meaningful (50% to 80%) recovery of principal
in the event of a default.
In addition, Standard & Poor's assigned its 'B-' rating and a
recovery rating of '5' to the proposed $200 million senior secured
second-lien term loan due 2011. The 'B-' rating is two notches
lower than the corporate credit rating; this and the '5' recovery
rating indicate that the lenders can expect negligible (0%-25%)
recovery of principal in the event of a default. The lower rating
reflects the lenders' recovery prospects after considering the
priority claims of the revolving credit facility and first-lien
term loan lenders, and Standard & Poor's view that the large
amount of second-lien term loan debt will substantially dilute
recoveries for these lenders. The outlook is stable. Pro forma for
the refinancing transaction, Polymer Group will have approximately
$453 million in total debt outstanding.
"The ratings on Polymer Group reflect the company's below-average
business position as a producer of nonwoven and oriented
polyolefin products and its still very aggressive financial
profile, including a highly leveraged balance sheet, following the
company's emergence from Chapter 11 bankruptcy protection during
early 2003," said Standard & Poor's credit analyst Franco
DiMartino. These factors are partially offset by the company's
solid market positions in niche markets, good geographic sales and
manufacturing diversity, and favorable long-term growth prospects
in certain end markets.
With annual revenues approaching $800 million, Polymer Group
manufacturers products that are used in a wide range of disposable
consumer applications, including baby diapers, feminine hygiene
products, household and consumer wipes, disposable medical
products, and various industrial applications including
automotive, filtration and protective apparel. Nonwoven products
provide similar and often better functionality, in features such
as softness, strength, absorbency and filtration, compared to
textiles at a lower cost. The company's nonwovens are used by
leading global consumer, medical and industrial products
manufacturers. Long-term industry growth rates are favorable and
are driven by new applications for nonwovens in developed
countries and volume increases in existing products as income
levels increase in developing countries.
REGAL ROW FINA: Case Summary & 7 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Regal Row Fina, Inc.
302 Lakeside Court
Southlake, Texas 76092
Bankruptcy Case No.: 04-33857
Chapter 11 Petition Date: April 5, 2004
Court: Northern District of Texas (Dallas)
Judge: Steven A. Felsenthal
Debtor's Counsel: Robert M. Nicoud, Jr., Esq.
Olson, Nicoud & Gueck, LLP
1201 Main Street, Suite 2470
Dallas, TX 75202
Tel: 214-979-7300
Fax: 214-979-7301
Total Assets: $596,000
Total Debts: $1,596,484
Debtor's 7 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Washington Mutual 1st Lien $1,540,000
Bank, F.A. Value: $550,000
6301 E. Campus Cir. Drive Net Unsecured:
#110 $1,030,421
Irving Texas 75063 *Prior Liens Exist
Atlantic Oil & Gas, Inc. Contract Lien $13,688
Value: $8,000
Net Unsecured:
$5,688
Wells Fargo Financial Lease contract $1,365
Muzak Lease Agreement $700
GE Capital Lease Agreement $177
GE Capital Lease Agreement $132
Grandy's Inc. $1
SEGA GAMEWORKS: U.S. Trustee Meeting with Creditors on May 4, 2004
------------------------------------------------------------------
The United States Trustee will convene a meeting of SEGA Gameworks
LLC's creditors at 10:00 a.m., on May 4, 2004, in Room 2610 at 725
South Figueroa Street, Los Angeles, California 90017. 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 Glendale, California, SEGA Gameworks LLC
-- http://www.gameworks.com/-- operates 16 video arcades in 11 US
states, Canada, Guam, and Kuwait. The Company filed for chapter 11
protection on March 9, 2004 (Bankr. C.D. Calif. Case No. 04-
15404). Ron Bender, Esq., at Levene Neale Bender Rankin & Brill
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed both
estimated debts and assets of over $10 million.
SITESTAR: Inks Settlement Pact with New Millennium & AJW Partners
-----------------------------------------------------------------
Effective January 31, 2004, SiteStar Corporation entered into a
Settlement Agreement with New Millennium Capital Partners II, LLC
and AJW Partners, LLC whereby all legal action pending regarding
the convertible debentures held by the Convertible Debenture
Holders will be dismissed. The terms of the agreement include a
cash payment of $100,000 plus $80,000 worth of common stock. The
Convertible Debenture Holders agree to receive a limited amount of
stock from their Escrow Agent each month with limits on how much
can be sold. In exchange, SiteStar agrees to guarantee a certain
average price for the stock that is sold and will gross up the
balance, if any, the following year.
Sitestar Corporation is a mid-Atlantic Internet Service Provider
(ISP) and computer services company offering a broad range of
services to business and residential customers. Sitestar's main
customer base is primarily in the Virginia and North Carolina
markets but the company also sells most of its services
nationwide. Sitestar's wholly owned subsidiaries provide narrow
and broadband Internet access, Web-hosting and design services,
computer sales and repair and other technology-related solutions
to its residential and business customers.
* * *
In its latest Form 10-QSB filing with the SEC, the company
reported that:
"The consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in
the financial statements, the Company incurred a net loss of
$45,769 during the nine months ended September 30, 2003 and, as of
that date, had a working capital deficit of $1,655,473. Those
conditions raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty. However, we believe that our existing cash, cash
equivalents, and cash flow from operations and our ability to
obtain favorable financing will be sufficient to meet our working
capital and capital expenditure requirements for at least the next
12 months."
SK GLOBAL: Court Adjourns Exclusivity Hearing to April 21, 2004
---------------------------------------------------------------
Pursuant to Section 1121(d) of the Bankruptcy Code, SK Global
America Inc. asked the Court to extend its exclusive periods:
(a) to file a plan through and including June 16, 2004; and
(b) to solicit acceptances of that plan through August 19,
2004.
Cho Hung Bank Objects
On behalf of Cho Hung Bank, New York Branch, Stephen B. Selbst,
Esq., at McDermott, Will & Emery, in New York, argues that there
is no reason why the Debtor's plan of reorganization needs to be
delayed further.
"The Debtor has ceased operations and has already begun a
liquidation. Its remaining non-cash assets consist principally
of accounts receivables and inventory. The Debtor admits it is
in the process of collecting these accounts receivables. Thus,
the only plan that can be confirmed in this case is a liquidating
plan," Mr. Selbst explains.
According to Mr. Selbst, the Debtor's capital structure is not
complex and the number of financial creditors is small. These
facts belie the Debtor's claim that its Chapter 11 case is large
and complex, calling for additional time to develop a plan of
reorganization.
Cho Hung Bank, the Debtor's senior secured creditor, together
with Korea Exchange Bank, the Debtor's junior secured creditor,
have advised the Debtor that they support the filing of a
liquidating plan that will provide for the payment in full in
cash of Cho Hung's claims and the recognition of KEB's junior
secured status. Despite this clear statement from the Debtor's
two secured creditors, however, the Debtor has yet to make any
plan proposal to Cho Hung or KEB, instead claiming, as it did in
its request, that it needs additional time for creditor
negotiations.
The Debtor bears the burden of establishing cause with respect to
its request for an extension of exclusivity -- a burden that the
Debtor has not come close to establishing. Given that the Debtor
is already engaged in the process of liquidation, there is no
reason to delay the filing of a plan. If exclusivity is
terminated, Cho Hung together with KEB is prepared to file a
liquidating plan for the Debtor, within 30 days. The Debtor
should not be allowed to continue to use exclusivity to prevent
Cho Hung and KEB from proposing a plan that will give effect to
their relative lien priorities and bring the Chapter 11 case to a
prompt conclusion, Mr. Selbst says.
* * *
Cho Hung Bank and Korea Exchange Bank will continue discussions
with the Debtor over the terms of a plan. The Debtor agreed to
have the hearing on its request rescheduled.
Accordingly, Judge Blackshear extends the Debtor's exclusive plan
proposal period to April 30, 2004, and the exclusive solicitation
period to June 30, 2004. The hearing on the Debtor's request is
continued to April 21, 2004 at 10:00 a.m., or as soon thereafter
as counsel may be heard. (SK Global Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SMTC: Recapitalization Expected to Resolve Going Concern Issue
--------------------------------------------------------------
SMTC Corporation (Nasdaq: SMTX, TSX: SMX), filed its annual report
on Form 10-K with the United States Securities and Exchange
Commission on March 30, 2004. In response to a recent Nasdaq
requirement, SMTC announces that the Auditors' Report, included in
the Company's Annual Report on Form 10-K, included an unqualified
audit opinion with an explanatory paragraph related to
uncertainties about the Company's ability to continue as a going
concern, based upon the Company's historical financial performance
and the classification of its long-term debt as a current
liability at December 31, 2003, due to its maturity on
October 1, 2004.
The going concern issue is expected to be resolved as a result of
the series of recapitalization transactions, as announced on
February 17, 2004, which addressed the nearing maturity of the
debt. On March 4, 2004, the Company closed an equity private
placement into escrow for net proceeds of Cdn$37 million
(approximately US$26.7 million based on the exchange rate on
the closing date of the private placement). The private placement
and other components of the recapitalization transactions are
subject to stockholder approval. The Company expects to seek
approval for those transactions at the Annual Meeting in May 2004.
Separately, SMTC is addressing its financial performance by the
implementation of a multi-phased turnaround plan. The operational
restructuring phase has been completed, resulting in alignment of
costs with expected revenue. Further phases of the turnaround plan
are underway that are designed to improve revenue and earnings
going forward.
For more information please see the Company's Form 10-K.
SMTC Corporation is a global provider of advanced electronic
electronic manufacturing services to the technology industry. The
Company's electronics manufacturing, technology and design centers
are located in Appleton, Wisconsin, Boston, Massachusetts, San
Jose, California, Toronto, Canada, and Chihuahua, Mexico. SMTC
offers technology companies and electronics OEMs a full range of
value-added services including product design, procurement,
prototyping, printed circuit assembly, advanced cable and harness
interconnect, high precision enclosures, system integration and
test, comprehensive supply chain management, packaging, global
distribution and after-sales support. SMTC supports the needs of a
growing, diversified OEM customer base primarily within the
industrial networking, communications and computing markets. SMTC
is a public company incorporated in Delaware with its shares
traded on the Nasdaq National Market System under the symbol SMTX
and on The Toronto Stock Exchange under the symbol SMX. Visit
SMTC's web site at http://www.smtc.com/
SPIEGEL GROUP: Miller Buckfire is Taking Bids for Eddie Bauer
-------------------------------------------------------------
The Spiegel Group (Spiegel, Inc.) announced that, as part of its
ongoing restructuring process, it has directed Miller Buckfire
Lewis Ying & Co. to solicit parties who may be interested in
acquiring its Eddie Bauer business.
Bill Kosturos, interim chief executive officer and chief
restructuring officer of The Spiegel Group, said, "During the past
12 months we have taken targeted actions to strengthen Eddie
Bauer's financial performance, closing underperforming stores and
streamlining the organization, and we are pleased with the
profitable financial results. We will evaluate the level of
interest from potential buyers as we continue to work to develop a
plan of reorganization. Based on an analysis of alternatives and
negotiations with our Creditors' Committee, we believe that the
value of the Eddie Bauer business can be best realized by pursuing
a sale at this time."
Fabian Mansson, president and chief executive officer of Eddie
Bauer, said, "As we move through this process, we will remain
intensely focused on providing our customers the highest level of
service and the versatile, casual products that they expect from
Eddie Bauer. We have made significant progress this past year to
reinforce Eddie Bauer's rich outdoor heritage and refine the
product offer."
About Eddie Bauer
Eddie Bauer is a leading tri-channel specialty retailer, offering
distinctive clothing, accessories and home furnishings for men and
women that reflect a modern interpretation of the company's unique
outdoor heritage. Emphasizing classic styles, Eddie Bauer offers
versatile, comfortable, high- quality merchandise through its two
retailing concepts: Eddie Bauer(R) and Eddie Bauer Home(R). In its
84-year history, Eddie Bauer has evolved from a single store in
Seattle to a tri-channel, international company with more than 450
stores, catalogs and online Web sites: eddiebauer.com,
eddiebauerhome.com, and eddiebaueroutlet.com. Eddie Bauer operates
stores in the U.S. and Canada, and through joint venture
partnerships in Germany and Japan.
About The Company
The Spiegel Group is an international specialty retailer marketing
fashionable apparel and home furnishings to customers through
catalogs, specialty retail and outlet stores, and e-commerce
sites, including eddiebauer.com, newport-news.com and spiegel.com.
The Spiegel Group's businesses include Eddie Bauer, Newport News
and Spiegel Catalog. Investor relations information is available
on The Spiegel Group Web site at http://www.thespiegelgroup.com
SPIEGEL GROUP: Pangea Holdings Buying Newport News for $25MM+
-------------------------------------------------------------
The Spiegel Group (Spiegel, Inc.) announced that it has reached an
agreement with Pangea Holdings Limited to acquire substantially
all the assets of its wholly owned subsidiary, Newport News, Inc.
Under the agreement to purchase Newport News, Pangea will acquire
substantially all of the assets of Newport News for $25 million in
cash and assume certain liabilities. Newport News will continue to
be headquartered in New York and to operate a distribution
facility in Virginia.
The agreement was filed with the Bankruptcy Court on April 6 and a
hearing to approve the Newport News bidding procedures is expected
to be scheduled for mid-April. The Newport News transaction will
be subject to all higher or better offers.
Geralynn Madonna, president and chief executive officer of Newport
News, commented, "We are very pleased to see that Newport News
will move forward under new ownership. The success of this
transaction is a testament to both the strength of Newport News as
a business and the effort put forth by its employees. We will work
to complete the sales process expeditiously and to have a seamless
transition. At the same time, the Newport News team will remain
focused on serving its customers and delivering on its brand
promise of 'real style and real value.'"
Kosturos concluded, "These actions are important steps toward
negotiating and moving toward filing a plan of reorganization. We
continue to evaluate and review strategic alternatives for Spiegel
Catalog while focusing on preserving the value of its assets and
are in preliminary negotiations with an interested party."
Miller Buckfire Lewis Ying & Co. advised the company on the
Newport News transaction. All parties interested in participating
in the Newport News auction process or learning more about the
Eddie Bauer transaction should direct their inquiries to Stuart
Erickson, Principal at Miller Buckfire Lewis Ying & Co. (phone
212-895-1812).
About Newport News
Newport News is a dual-channel, direct marketer of moderately
priced women's fashions, providing customers with an informative
and rewarding shopping experience through catalogs and an e-
commerce site (newport-news.com). Delivering on its brand promise
of "real style, real value," Newport News fulfills the modern
woman's desire for versatile, on-trend designs at easily
affordable prices.
About The Company
The Spiegel Group is an international specialty retailer marketing
fashionable apparel and home furnishings to customers through
catalogs, specialty retail and outlet stores, and e-commerce
sites, including eddiebauer.com, newport-news.com and spiegel.com.
The Spiegel Group's businesses include Eddie Bauer, Newport News
and Spiegel Catalog. Investor relations information is available
on The Spiegel Group Web site at http://www.thespiegelgroup.com
STATEPARK BUILDING: Case Summary & 61 Largest Unsecured Creditors
-----------------------------------------------------------------
Lead Debtor: StatePark Building Group Ltd.
4145 Travis Street, Suite 204
Dallas, Texas 75204
Bankruptcy Case No.: 04-33916
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Colonnade at Turtle Creek L.P. 04-33922
StatePark Colleyville Ltd. 04-33928
Blackburn/Travis/Cole Ltd. 04-33932
Portobello, Ltd. 04-33934
Chapter 11 Petition Date: April 5, 2004
Court: Northern District of Texas (Dallas)
Judge: Harlin DeWayne Hale
Debtors' Counsels: Davor Rukavina, Esq.
Mark H. Ralston, Esq.
Munsch, Hardt, Kopf & Harr
1445 Ross Avenue, Suite 4000
Dallas, TX 75202
Tel: 214-855-7587
Estimated Assets Estimated Debts
---------------- ---------------
StatePark Building Group $500,000 to $1 M $1 M to $10 M
Ltd.
Colonnade at Turtle Creek $1 M to $10 M $1 M to $10 M
L.P.
StatePark Colleyville Ltd. $1 M to $10 M $1 M to $10 M
Blackburn/Travis/Cole Ltd. $1 M to $10 M $1 M to $10 M
Portobello, Ltd. $50,000-$100,000 $50,000-$100,000
A. StatePark Building Group's 7 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Palmer, Allen & McTaggart, Fees and expenses as $94,085
LLP counsel for the
Reciever
Jeffrey W. Hellberg Jr., PC Fees and expenses as $38,038
counsel for the
Reciever
Ross, Worth W. Fees and expenses $7,101
Reciever
John P. Wold & Associates, Fee Settlement $5,446
Inc.
Frena, Wayne Investigation Fees $4,995
Torkin Manes Cohen Arbus LLP Accounting Fees $3,644
Hagen & Parsons, P.C. Legal Fees $110
B. Colonnade at Turtle Creek's 17 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Palmer Allen & McTaggart LLP Legal fees and $31,652
Expenses as counsel
for the Reciever
Property Tax Advocates, Inc. Property Tax Protest $8,086
Ross, Worth W. Receiver's fees and $3,876
TXU Electric/Energy Utility Services $1,612
TXU Gas Gas Service $618
Appliance Warehouse Trade debt $475
SBC Trade debt $448
Scott Roofing & Siding Trade debt $450
Century Maintenance Supply Trade debt $427
Waste Management Trade debt $324
Thyssenkrupp Elevator Corp. Elevator Services $190
Metro Communication System Trade debt $155
Helping Hands Service Trade debt $148
Danone Waters of North Trade debt $29
America
Standard Supply Trade debt $26
Balloon City USA Trade debt $15
Texas Paint & Wallpaper Trade debt $13
C. StatePark Colleyville Ltd.'s 15 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Brown, William V. Arbitration Awards $238,495
Spring Garden HOA Non-Payment of HOA $106,104
Dues
Jeffrey W. Hellberg, Jr., PC Legal fees and $38,038
Expenses of
Receiver's counsel,
which are the joint
and several
liabilities of all
of the entities of
the Receivership
Palmer Allen & McTaggart LLP Legal fees and $37,621
Expenses of
Receiver's counsel,
which are the joint
and several
liabilities of all
of the entities of
the Receivership
Auerbach Albert & Gold Accounting Fees $13,404
John P. Wold & Associates, Fee Settlement $5,446
Inc.
Ross, Worth W. Receiver's Fees and $5,173
Expenses
Milkes Realty Valuation Appraisal of Lots $2,750
Frena, Wayne Investigation Fees $4,995
Campbell & LeBoeuf, PC Consultant Fees $1,125
Goodrich & Associates Appraisal of Houses $1,200
Curtis Law Firm, The Legal Fees $838
Hagen & Parsons Legal Fees $250
TXU Gas Gas Utilities for $223
Townhomes in
Colleyville
Texas Workforce Commission Interest for late $36
Tax payment
D. Blackburn/Travis/Cole Ltd.'s 15 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Portobello, Ltd. Loan $50,000
Palmer Allen & McTaggart LLP Legal Fees and $40,539
Expenses as Counsel
for the Receiver
Jeffrey W. Hellberg, Jr., PC Legal Fees and $38,038
Expenses as counsel
for the Receiver
Mesa Design Group Architectural Firm $10,410
Hagen & Parsons Legal Fees $5,847
John P. Wold & Associates, Fee Settlement $5,446
Inc.
Frena, Wayne Investigative $4,995
Services
Ross, Worth W. Receiver's Fees and $4,332
Expenses
Auerbach Albert & Gold Accounting Fees $4,032
Cowles & Thompson Legal Fees $3,337
Baum, Bernard Accounting Fees $2,500
Milkes Realty Valuation Appraisal of Land $2,000
Campbell & LeBoeuf, PC Consultant Fees $1,125
City of Dallas Street Lights less $952
TXU Electric/Energy 3226 Blackburn Street $150
E. Portobello, Ltd.'s 7 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Jeffrey W. Hellberg Jr., PC Receiver's Counsel's $38,038
fees and expenses
John P. Wold & Associates, Fee Settlement $5,446
Inc.
Frena, Wayne Investigative Fees $4,995
Auerbach Albert & Gold Accounting Services $4,150
Campbell & LeBoeuf, PC Consultant Fees $1,125
Ross, Worth W. Receiver's Fees and $297
TXU Energy Electric Services $79
STEMCELLS: 2003 Audit Report Includes Going Concern Qualification
-----------------------------------------------------------------
StemCells, Inc. (Nasdaq: STEM) reported its financial results for
the fourth quarter and the year ended December 31, 2003.
The Company reported a loss of $4,740,000, or $0.13 per share, for
the fourth quarter ended December 31, 2003, compared to a loss of
$3,051,000, or $0.11 per share, for the fourth quarter of 2002,
all before dividends and deemed dividends. For the fiscal year
ended December 31, 2003, the Company reported a loss of
$12,291,000, or $0.38 per share, as compared to a loss of
$11,644,000, or $0.46 per share, for the 2002 fiscal year, also
before dividends and deemed dividends. The net loss after
dividends and deemed dividends for the fiscal year 2003 is
$14,425,000, or $0.45 per share, applicable to common shareholders
as compared to a net loss of $13,276,000, or $0.53 per share, for
the fiscal year 2002. Total revenue for 2003 was $273,000,
compared with $415,000 in 2002. Revenue for 2003 and 2002 was
primarily from grants and licensing agreements. Cash and cash
equivalents were $13,082,000 at the end of 2003, compared with
$4,236,000 at the end of 2002.
The increase in net loss from 2002 to 2003 was primarily
attributable to the revision of a reserve for expenses related to
the lease of the Company's former corporate headquarters in Rhode
Island, offset by a decrease in operating expenses resulting from
a cost reduction program initiated in the last quarter of 2002,
the benefits of which flowed through into 2003. The revision is
reflected in the amended annual reports (Form 10-K/A) filed for
the years ended December 31, 2001 and 2002, and our annual report
on Form 10-K for the year ended December 31, 2003. The afore
mentioned reports were filed simultaneously on April 6, 2004.
Because StemCells retained a new accounting firm to audit its
financial statements and because of the new requirements under the
Sarbanes-Oxley Act applicable to the Company, the Company required
extra time to complete and file its annual report for 2003.
Accordingly, on March 31, the Company filed a Form 12b-25 with the
SEC notifying the Commission of its request for an extension of
the filing date. Form 10-K has been filed within the 15-day time
period permitted by the Commission's rules.
Martin McGlynn, President and CEO of StemCells, commented, "We are
proud of our many accomplishments in 2003. On the R&D front, the
company made great advances in the development of our stem cell
technology to treat diseases of the Central Nervous System (CNS),
liver and pancreas. Specifically, we reported data in three
distinct animal models showing that our human neural stem cells 1)
protect neurons from dying in a mouse model of neurodegenerative
disease, 2) restore motor function in a mouse model of spinal cord
injury, and 3) remyelinate nerve axons to restore function in
injuries to the spinal cord and certain diseases, such as multiple
sclerosis. The importance of our findings were further confirmed
with the receipt of a Small Business Innovation Research (SBIR)
grant from the National Institute of Neurological Disorders and
Stroke (NINDS) to continue our research efforts in spinal cord
injury with our collaborator Dr. Aileen Anderson, at the Reeve-
Irvine Center at the University of California, Irvine."
Mr. McGlynn continued, "StemCells also publicly announced that we
are targeting the filing of an IND with the FDA in the first
quarter of 2005 for the treatment of Batten Disease, a
neurodegenerative lysosomal storage disorder. Batten's is a
genetic disease that is always fatal to afflicted infants and
children. The company held a Pre-IND meeting with the FDA in June
2003. We are currently on track with our projected goal and are
working diligently to complete the necessary preclinical studies
to fulfill the FDA's requirements for this filing. A large part of
our efforts in 2004 will be focused on this endeavor."
"On the financial front, we made significant strides to strengthen
and simplify our capital structure. All our convertible preferred
shares were converted into common shares, thereby improving our
stockholders' equity on the balance sheet and in addition,
eliminating any further cumulative dividend payments on the
preferred shares. Despite the difficulties in the financial
markets, we were also able to bring in $17.6 million in new
financing from quality private investors. This accomplishment
along with increased operational efficiencies is readily reflected
in the increase in our cash position to $13.1 million at the end
of 2003 versus $4.2 million at the end of 2002. Our new accounting
firm has nonetheless included a going concern qualification in its
audit opinion contained in the 2003 annual report. While we
believe that our financial resources are sufficient to support our
operations through the end of 2004, we will continue to work with
our financial advisors to attract the additional capital we need
to support our future activities, including an emphasis in 2004 on
our goal to become, by 2005, the first company to transplant
neural stem cells into humans."
About StemCells, Inc.
StemCells, Inc is a biotechnology company focused on the
discovery, development and commercialization of stem cell-based
therapies to treat diseases of the nervous system, liver, and
pancreas. The Company's stem cell programs seek to repair or
repopulate neural or other tissue that has been damaged or lost as
a result of disease or injury. Further information about the
Company is available on its web site at
http://www.stemcellsinc.com
STOCKERYALE: Look for 1st Quarter Financial Results on April 13
---------------------------------------------------------------
StockerYale, Inc. (NASDAQ: STKR), a leading independent provider
of photonics-based products, announced that it will release first
quarter financial results on April 13, 2004.
The Company has indicated that revenues for the first quarter of
fiscal 2004 are expected to range between $4.1 to $4.2 million,
representing an increase of 25% to 28% over the fourth quarter of
2003. This growth in revenues was primarily a result of new
product introductions and increased OEM sales in the Company's
laser and LED product lines, as well as a significant rebound in
sales from the machine vision, automotive, and semi-conductor
sectors. The Company expects this trend to continue as bookings
jumped 37% over the fourth quarter of 2003 to $4.9 million.
On March 30, 2004, the Company filed its fiscal 2003 Form 10K with
the SEC. The Form 10K contained a going concern qualification from
its auditors relating to the Company's fiscal 2003 consolidated
financial statements. This qualification is similar to the
statement issued in fiscal 2002 and the Company will continue to
rely on external financing to fund ongoing cash flow requirements.
As previously reported, the Company raised $6.6 million in
February 2004. The proceeds were used to pay off the mortgage on
its Salem headquarters and for working capital purposes. The
Company will continue to take the necessary steps to strengthen
its balance sheet and raise growth capital, including the possible
sale of under-utilized assets.
Mark W. Blodgett, chief executive officer for StockerYale, stated
that, "After two difficult years, StockerYale is finally
benefiting from investments made in its core product lines -
namely lasers, LEDs and specialty fiber. Fueling this success has
been an increase in demand for our products, particularly from the
machine vision industry and Southeast Asia. We are very encouraged
by this quarter's record sales and feel confident that the Company
will exhibit marked financial improvement over the next several
quarters."
About StockerYale
StockerYale, Inc., headquartered in Salem, NH, is an independent
designer and manufacturer of structured light lasers, light
emitting diodes (LEDs), fiber optic, and fluorescent illumination
technologies as well as specialty optical fiber, phase masks, and
diffractive optics for use in a wide range of markets and
industries including the machine vision, telecommunications,
aerospace, defense and security, utilities, industrial inspection,
and medical.
StockerYale serves a widely varied, international customer base
and reinvests a significant percentage of its revenues in R&D to
meet the future requirements of its customers. StockerYale has
offices and subsidiaries in the U.S., Canada, Europe, and the
Pacific Rim.
For more information about StockerYale and their innovative
products, visit its web site at http://www.stockeryale.com/
TSUNAMI OF PALM: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Tsunami of Palm Beach, LLC
289 Spring Street
New York, New York 10013
Bankruptcy Case No.: 04-12325
Type of Business:
Chapter 11 Petition Date: April 6, 2004
Court: Southern District of New York (Manhattan)
Judge: Stuart M. Bernstein
Debtor's Counsel: Douglas E. Spelfogel, Esq.
Nixon Peabody LLP
990 Stewart Avenue
Garden City, NY 11530
Tel: 516-832-7500
Fax: 516-832-7555
Total Assets: $1,680,732
Total Debts: $1,875,395
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
City Place Retail, LLC Rent $205,824
Southern Wines & Spirits Trade $29,485
Cod 'N Capers Trade $10,366
Prajapati Associates Trade $7,485
Premiere Beverage Trade $5,919
National Distributing Co. Trade $5,129
Seven C's Linen Service Trade $4,356
Cape Florida Seafood, Inc. Trade $3,480
Fortessa, Inc. Trade $2,408
Premium Assignment Trade $2,408
Prawn Corp. of America Trade $2,278
The D. Whitaker Trade $2,120
Victoria L'Originale Trade $1,764
Fortessa, Inc. Trade $1,658
Smithco Services Trade $1,527
Smithco Services Trade $1,450
Air Processing Services of FL Trade $1,224
Earthly Delights, Inc. Trade $1,068
Korin Japanese Trading Co. Trade $983
Hy-Lite Productions Inc. Trade $950
UNITED AIRLINES: Reports March 2004 Traffic Results
---------------------------------------------------
United Airlines (OTC Bulletin Board: UALAQ) reported its traffic
results for March 2004. United reported a passenger load factor of
80.1 percent, up 6.4 points over March 2003. Total scheduled
revenue passenger miles (RPMs) increased in March 2004 by 9.9
percent on a capacity increase of 1.1 percent vs. the same period
in 2003.
United, United Express and Ted operate more than 3,400 flights a
day on a route network that spans the globe. News releases and
other information about United may be found at the company's Web
site at http://www.united.com/
US COMMERCIAL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: U.S. Commercial Lessors, Ltd.
210 Walnut Street
Lockport, New York 14094
Bankruptcy Case No.: 04-11882
Chapter 11 Petition Date: March 19, 2004
Court: Western District of New York (Buffalo)
Judge: Michael J. Kaplan
Debtor's Counsel: John H. Ring, III, Esq.
360 Dingens Street
Buffalo, NY 14206
Tel: 716-826-0770
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Niagara County Industrial Development $113,410
Northern Foam Systems Inc. $107,512
NYSEG $18,978
NYSEG $15,247
HD Wollaber Electric $13,752
Knoff Electric/Davis Electric $12,023
Advanta $11,132
Lawrence C. Brown, Esq. $10,804
Sherwin Williams $10,042
Upstate Disposal $5,948
SS Nicastro $4,800
NYSEG $4,446
Newfane Lumber $2,861
Mawhiney Trucking $2,078
Ace Hardware $1,909
Fastenal $1,432
City of Lockport Water $1,301
Turner Engineering $1,105
Office Max Credit Plan $989
VISTA MEDICAL: Needs Additional Funds to Continue Operations
------------------------------------------------------------
Vista Medical Technologies, Inc. (Nasdaq: VMTI) announced the
following:
* Its Form 10-K for the fiscal year ended December 31, 2003,
filed with the Securities and Exchange Commission on March
31, 2004, includes a "going concern" qualification in the
independent auditor's (Ernst & Young LLP) report to
shareholders. The report indicates that "The Company will
require additional financing to fund its operations through
January 2005. These factors raise substantial doubts about
the Company's ability to continue as a going concern."
* In recognition of the requirement to raise additional
financing, Vista Medical completed a private placement of
common stock in February, 2004, raising $588,000. Also, the
Company continues to actively pursue further sources of
finance.
* Vista Medical will hold its Annual Meeting of Stockholders
at 10:00 am on Monday, May 24, 2004, at its corporate
offices (2101 Faraday Avenue, Carlsbad, CA 92008.) The
record date for the Meeting is March 29, 2004.
* Vista Medical will also hold a Special Meeting of
Stockholders at 10:00 am on April 15, 2004, for the purpose
of approving the sale of its Visualization Technology
business to Viking Systems Inc. A proxy statement
describing this transaction was mailed to stockholders on or
about March 25, 2004.
President and Chief Executive Officer of Vista Medical, John R.
Lyon, said: "We are now focused on achieving these well-defined
near-term milestones as a necessary pre-requisite to the full
implementation of our strategy to become a pure-play health-care
services company dedicated to the disease state management of
morbid obesity. This business will be operated by our wholly-owned
subsidiary, VOW Solutions Inc, with Dr. Michael Owens as
President. The complete management team is now in place and we are
moving forward to implement our business model for obesity
surgical and medical programs. We believe that the combination of
the capital infusion resulting from the proposed sale of our
Visualization Technology business, the reduced cost structure that
will result from that transaction, and our efforts to raise
additional financing will enable Vista to effectively pursue the
growth opportunities in the obesity surgery market."
Vista Medical Technologies, Inc.
Vista Medical Technologies, Inc. operates two business units. The
Obesity Surgical and Medical Management Services business, based
in Carlsbad, CA, provides services to physicians and hospitals
involved in the surgical treatment of morbid obesity. Our services
include management of the Laparoscopic Bariatric Surgery
Preceptorship, a comprehensive introduction to starting a
minimally invasive gastric bypass surgical program. Additionally,
we offer systems, consulting and program management services which
enable the efficient operation of obesity surgery programs. The
Visualization Technology business, based in Westborough, MA,
develops, manufactures and markets products that provide
information to physicians performing minimally invasive general
surgical, cardiac surgical and other selected endoscopic and
interventional procedures. Our technology products combine a head
mounted display with video cameras to provide surgeons with
critical visual information during complex minimally invasive
procedures, and also incorporate the benefit of viewing
complementary information in a voice-controlled, picture-in-
picture format, to facilitate real-time decision making during
surgery. The Visualization Technology business also manufactures
compact, high-resolution endoscopic cameras for original equipment
manufacturer customers and strategic partners. Vista Medical
Technologies is traded on the NASDAQ SmallCap Market under the
stock symbol VMTI. The company's Website is at
http://www.vistamt.com/
VISTEON CORPORATION: Closes Tender Offer for 7.95% Notes Due 2005
-----------------------------------------------------------------
Visteon Corporation (NYSE: VC) has accepted and purchased
$250,022,000 aggregate principal amount of its 7.95% Notes due
2005 that were tendered in response to its previously announced
tender offer. The tender offer expired at 5:00 p.m. (EST), on
Friday, April 2, 2004.
Based on the final count by the depositary, the tender offer was
oversubscribed, with an aggregate principal amount of $315,701,000
of Notes having been tendered prior to the expiration time. The
Notes accepted for purchase in the tender offer were selected on a
pro rata basis from among all tendering holders, resulting in a
proration factor of approximately 79% (rounded up to the nearest
$1,000 of principal amount) of the Notes tendered.
Visteon paid approximately $271,793,000 for all of the notes
purchased in the tender offer, which included the purchase price,
the early tender premium, as applicable, and accrued but unpaid
interest up to, but not including, the settlement date. Visteon
used a portion of the proceeds from its recently completed
issuance of $450,000,000 in aggregate principal amount of 7.00%
Notes due 2014 to fund the purchase of the Notes in the tender
offer and to pay associated expenses and accrued interest.
Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.
acted as the dealer managers for the tender offer. Global
Bondholder Services Corporation acted as depositary and
information agent for the tender offer.
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 200 technical,
manufacturing, sales and service facilities located in 25
countries.
* * *
As reported in the Troubled Company Reporter's March 3, 2004
edition, Standard & Poor's Ratings Services assigned its 'BB+'
senior unsecured rating to Visteon Corp.'s proposed $400 million
senior unsecured notes due 2014. At the same time, Standard &
Poor's affirmed its 'BB+' corporate credit rating on the Dearborn,
Michigan-based company, which has total debt of about $2 billion,
including securitized accounts receivable and capitalized
operating leases. Proceeds from the new debt issue will be used to
refinance existing debt and for general corporate purposes. The
rating outlook is stable.
The proposed debt offering will reduce near-term debt maturities,
which currently total $350 million during 2004 and $538 million
during 2005.
"We expect Visteon to make gradual improvements to its competitive
position and financial profile, reaching a level consistent with
the ratings in the next few years," said Standard & Poor's credit
analyst Martin King. "Upside potential is limited by the company's
continued dependence on Ford Motor Co. and the cyclical and highly
competitive nature of the industry."
W3 GROUP: Names Donahue Associates as New Independent Accountant
----------------------------------------------------------------
On February 12, 2004, W3 Group, Inc. was informed that its
independent accountant, Janet Loss, C.P.A., PC., had resigned.
The Company's Board of Directors has accepted the resignation of
Loss and appointed Donahue Associates, L.L.C. as its independent
accountant. Donahue will perform the annual audit of W3 Group's
financial statements for the year ended December 31, 2003.
In connection with Loss' services to the Company, in the fiscal
year ended December 31, 2002, Loss prepared a report dated March
25, 2003 on the Company's financial statements for the fiscal year
ended December 31, 2002 and 2001. The opinion was qualified as to
the Company's ability to sustain itself as a going concern without
securing additional funding.
W3 Group has not had any business operations since the divestiture
of its former operating subsidiary, L'Abbigliamento, Ltd.,
effective March 31, 1999. The company has no operations and no
revenue.
WALTER INDUSTRIES: Raises Full Year 2004 Earnings Guidance
----------------------------------------------------------
Walter Industries, Inc. (NYSE: WLT) announced that it has raised
its full year 2004 earnings guidance to $0.75 to $0.90 per share,
which represents an increase of $0.15 per share from its
previously announced earnings estimate range of $0.60 to $0.75 per
share.
The Company also announced that results for the first quarter
would be within the originally predicted loss range of $0.11 to
$0.16 per share.
The higher full year earnings guidance is primarily due to strong
increases in metallurgical coal pricing at Jim Walter Resources,
the Company's coal mining and natural gas operation. Recently
executed 12-month contracts, which represent approximately 3.1
million tons of coal, include higher prices that will take effect
in the second half of this year and continue through the
first half of 2005.
In a related event, Jim Walter Resources announced that it would
extend its coal production schedule for Mine No. 5 into 2005. The
Company previously announced it would cease coal operations at the
mine in late 2004. However, due to the favorable increases in
metallurgical coal prices around the world, the Company will
extend coal operations at Mine No. 5, thereby increasing the
volume of coal production in 2004 and 2005.
"The significant demand for coal and the resulting increase in
worldwide pricing provides us the confidence to raise our 2004
earnings estimates," said Don DeFosset, Chairman and Chief
Executive Officer of Walter Industries. "With respect to our core
businesses, US Pipe's price increases are holding, sales volumes
are solid, and scrap pricing has recently leveled off. Portfolio
performance within our Financing business has been strong, thereby
continuing its stable earnings generation. Within Homebuilding,
2004 will be a difficult year as the new leadership team takes the
actions necessary to restore this operation to profitability.
Taken together with our positive projections for coal mining, I am
encouraged about our overall outlook."
The earnings guidance presented herein excludes special items such
as the Mine No. 5 closure costs. Additionally, total Mine No. 5
closure costs are likely to be slightly reduced due to the revised
closure period.
Walter Industries, Inc. (S&P, BB Corporate Credit Rating, Stable)
is a diversified company with revenues of approximately $1.3
billion. The company is a leader in homebuilding, home financing,
water transmission products and natural resources. Based in
Tampa, Florida, the company employs approximately 5,400 people.
For more information about Walter Industries, visit its web site
at http://www.walterind.com/
WATERMAN INDUSTRIES: Gubler & Ide Serves as Special Counsel
-----------------------------------------------------------
Waterman Industries, Inc., asks permission from the U.S.
Bankruptcy Court for the Eastern District of California, Fresno
Division, to employ Gubler & Ide as its special counsel.
The Debtor reports that Gubler & Ide will represent it in seeking
recoveries on in excess of $500,000 of overdue accounts. Gubler &
Ide's services will include bringing adversary proceedings in the
Bankruptcy Court for recovery on accounts and pursuing recovery on
other judicial forms throughout the United States.
Gubler & Ide will bill the Debtor in an hourly basis. The
professionals who will be responsible in this engagement are:
Professional's Name Billing Rate
-------------------- ------------
E. Warren Gubler $200 per hour
Nathan D. Ide $175 per hour
Steven M. Koch $75 per hour
Headquartered in Exeter, California, Waterman Industries, Inc.
-- http://www.watermanusa.com/-- provides water control and
irrigation control. The Company filed for chapter 11 protection
on February 10, 2004 (Bankr. E.D. Calif. Case No. 04-11065). Riley
C. Walter, Esq., at Walter Law Group, A Professional Corporation
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed over
$10 million in both estimated debts and assets.
WESTERN GAS: First Quarter 2004 Conference Call Set for May 6
-------------------------------------------------------------
Western Gas Resources, Inc. (NYSE: WGR) will release its first
quarter 2004 earnings results at 7:00 a.m. Eastern time on
Thursday, May 6, 2004. Western invites you to listen to its first
quarter conference call via telephone or live Webcast on Thursday,
May 6, 2004 at 11:30 a.m. Eastern, 9:30 a.m. Mountain time.
To listen via telephone, dial (719) 457-2602 five to ten minutes
before the start of the call. A replay will be available through
midnight, May 12, 2004, by dialing (719) 457-0820, pass code
584066.
The live conference call may also be accessed on the Internet by
logging onto Western's Web site at http://www.westerngas.com/
Select Financial/Investor Information, then the Current News
option on the menu. Log on at least ten minutes prior to the
start of the call to register, download and install any necessary
audio software. An audio replay of the call will also be
available on the Web site through May 28, 2004.
Western is an independent natural gas explorer, producer,
gatherer, processor, transporter and energy marketer providing a
broad range of services to its customers from the wellhead to the
sales delivery point. The Company's producing properties are
located primarily in Wyoming, including the developing Powder
River Basin coal bed methane play, where Western is a leading
acreage holder and producer, and the rapidly growing Pinedale
Anticline. The Company also designs, constructs, owns and
operates natural gas gathering, processing and treating facilities
in major gas-producing basins in the Rocky Mountain, Mid-Continent
and West Texas regions of the United States. For additional
Company information, visit Western's web site at
http://www.westerngas.com/
As reported in the Troubled Company Reporter's February 26, 2004
edition, Western Gas Resources, Inc.'s outstanding credit ratings
have been affirmed by Fitch Ratings as follows:
-- Senior unsecured debt rating 'BBB-';
-- Senior subordinated notes 'BB+';
-- Preferred stock 'BB'.
In addition, Fitch has assigned a 'BBB-' rating to WGR's $300
million revolving credit facility due April 2007. The Rating
Outlook is Stable.
WGR's ratings reflect the core competencies of its natural gas
midstream operations and growing Rocky Mountain natural gas
exploration and production (E&P) unit. In addition, the Stable
Rating Outlook incorporates WGR's improved balance sheet profile
and the expectation that consolidated credit measures will remain
consistent with WGR's ratings even under a stressed commodity
price environment.
WESTPOINT STEVENS: Assesses Available Capital Resources
-------------------------------------------------------
In its annual report filed with the Securities and Exchange
Commission on March 15, 2004, WestPoint Stevens Inc.'s management
says that it is difficult to predict the company's actual
liquidity needs and sources at this time. However, based on
current and anticipated levels of operations and efforts to
effectively manage working capital, WestPoint Stevens anticipates
that cash flows from operations, together with cash on hand, cash
generated from asset sales, and amounts available under the DIP
Credit Agreement, will be adequate to meet its anticipated cash
requirements during the pendency of its Chapter 11 cases.
In the event that cash flows and available borrowings under the
DIP Credit Agreement are not sufficient to meet future cash
requirements, WestPoint Stevens may be required to reduce planned
capital expenditures, sell assets or seek additional financing.
WestPoint Stevens can provide no assurances that the reductions
in planned capital expenditures, proceeds from asset sales would
be sufficient to cover shortfalls in available cash, or that
additional financing would be available or, if available, offered
on acceptable terms.
As a result of its Chapter 11 cases, WestPoint Stevens' access to
additional financing is, and for the foreseeable future will
likely continue to be, very limited. The company's long-term
liquidity requirements and the adequacy of its capital resources
are difficult to predict at this time, and ultimately cannot be
determined until a reorganization plan has been developed and
confirmed by the Bankruptcy Court. (WestPoint Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WOLVERINE TUBE: Extends & Amends $37.5 Million Credit Facility
--------------------------------------------------------------
Wolverine Tube, Inc. (NYSE: WLV) has extended its $37.5 million
Secured Revolving Credit Facility for two years and has amended
certain financial covenants. The Facility, as amended, matures on
March 31, 2007 versus a previous 2005 maturity. Amended financial
covenants pertain to minimum earnings before interest, taxes,
depreciation and amortization (EBITDA), fixed charge coverage
ratio and annual capital expenditures have been modified.
Specifically, amended financial covenants are as follows.
Minimum EBITDA for the trailing twelve months for the first,
second, third and fourth quarters of 2004 are $23 million, $23.5
million, $29.5 million and $36 million, respectively. For the
trailing twelve-month periods thereafter minimum EBITDA is $40
million. The fixed charge coverage ratio ranges from .05x1 to
1.05x1 during the term of the Facility. Annual capital spending
limits are $15 million, $20 million, $22 million and $25 million
for the years 2004-2007, respectively.
Commenting, James E. Deason, Executive Vice President and Chief
Financial Officer, stated, "We are pleased to have completed this
amendment and extension to our Secured Revolving Credit Facility.
The Facility, as amended, provides the Company with favorable
terms and conditions. The availability of the Facility along with
our cash flow from operations continues to provide the Company
with the financial liquidity needed as we continue to experience
improvement in our business."
About Wolverine Tube, Inc.
Wolverine Tube, Inc. (S&P, BB- Corporate Credit Rating, Negative
Outlook) is a world-class quality partner, providing its customers
with copper and copper alloy tube, fabricated products, metal
joining products as well as copper and copper alloy rod, bar and
other products. Internet addresses: http://www.wlv.com/
http://www.silvaloy.com/
WORLDCOM INC: Court Authorizes Oklahoma Claims Settlement
---------------------------------------------------------
At the Worldcom Debtors' request, Judge Gonzalez approves their
Deferred Prosecution Agreement with the State of Oklahoma, as well
as their Oklahoma Economic Development Agreement with the Oklahoma
Department of Commerce, to compromise alleged claims.
The Dispute
Before the Petition Date, the Debtors and the Oklahoma Department
of Commerce executed an agreement entitled "Oklahoma Quality Jobs
Program, Department of Commerce Combination Incentive Offer and
Acceptance," which provided for payments to be made by the
Oklahoma Department of Commerce to the Debtors if they maintained
or exceeded certain employment levels in the State. The Debtors
maintain a significant employment presence in Tulsa, Oklahoma.
In August 2003, the State of Oklahoma filed a "felony
information" against the Debtors and six of its former officers
and employees:
1. Bernard J. Ebbers,
2. Scott D. Sullivan,
3. David F. Myers,
4. Buford T. Yates, Jr.,
5. Betty L. Vinson, and
6. Troy M. Normand
The Felony Information charged each of the defendants, including
the Debtors, with 15 counts of violating the Oklahoma Securities
Act.
To resolve the Felony Information, the Debtors and the State of
Oklahoma engaged in discussions from September 2003 through March
2004. The Debtors explained to the State how they have taken
significant remediation efforts to completely divorce themselves
from the alleged fraudulent accounting activities conducted by a
select few former employees, including:
(1) conducting an internal investigation through an outside
counsel into the events that gave rise to the accounting
fraud, and disclosing the results of that investigation to
the public;
(2) entering into a settlement with the U.S. Securities and
Exchange Commission that will pay $750,000,000 in
restitution to the Debtors' former shareholders;
(3) terminating the employment of all employees whose culpable
conduct were principally responsible for the fraud;
(4) appointing a new Chief Executive Officer, President and
Chief Operating Officer, Chief Financial Officer, Chief
Ethics Officer and General Counsel, and an entirely new
Board of Directors;
(5) enacting sweeping changes to their corporate governance
procedures including, among other things, the development
of, and commitment to, an Ethics Pledge and extensive
employee training on business ethics and accounting rules;
(6) appointing a new outside auditor and engaging in a massive
effort involving the hiring of hundreds of accounting
personnel to develop a fair and accurate set of restated
financial statements;
(7) cooperating with and instituting recommendations made by a
Court-appointed Corporate Monitor; and
(8) voluntarily cooperating with numerous investigations,
including those conducted by several federal and state
enforcement agencies, various Congressional committees and
subcommittees, and the Examiner appointed by the
Bankruptcy Court.
The Deferred Prosecution Agreement
Eric B. Miller, Esq., at Piper Rudnick LLP, in Baltimore,
Maryland, explains that the terms of the Deferred Prosecution
Agreement between the Debtors and the State of Oklahoma enables
the Debtors to avoid criminal prosecution of the 15 counts of
alleged violations of the Oklahoma Securities Act and the
possible collateral consequences the conviction might have on
their business.
The principal terms of the Deferred Prosecution Agreement are:
-- The State of Oklahoma agrees to a deferred prosecution of
the Debtors in connection with the charges filed in the
Felony Information;
-- At the conclusion of the later of (1) two years from the
execution date of the Deferred Prosecution Agreement, or
(2) the conclusion of the trials in the criminal actions
brought by the State against the individual defendants
named in the Felony Information, the State will forfeit all
rights to reinstitute charges against the Debtors for
alleged offenses relating to the acts charged in the Felony
Information;
-- The Debtors agree to cooperate with the State's ongoing
investigations and prosecutions of the Former Personnel.
At the request of the Attorney General and in conformity
with a schedule agreed to between the Attorney General and
any state or federal prosecutors currently prosecuting some
or all of the Former Personnel, the Debtors will:
(a) make available any and all documents in their
possession relevant to the Felony Information; and
(b) make available then current WorldCom employees for
interviews and testimony;
-- The Debtors waive any rights to a speedy accusation and
speedy trial that they may have pursuant to the U.S.
Constitution and Article II, Sections 6 and 20 of the
Oklahoma Constitution; and
-- The Debtors agree to execute the Oklahoma Economic
Development Agreement with the Oklahoma Department of
Commerce.
The Economic Development Agreement
The Economic Development Agreement provides that:
(a) The Debtors will add 1,600 jobs in Oklahoma over the next
10 years at a rate of 160 jobs per year;
(b) If the Debtors will be unable to add 160 new jobs per
year, they will incur "Financial Commitments" of 5%
multiplied by the number of new jobs not added at a rate
of $35,000 per new job;
(c) For each new job added by the Debtors, the Oklahoma
Department of Commerce will issue "Credits" of 5%
multiplied by the total annual payroll of the new jobs;
(d) If the amount of Financial Commitments exceeds the Credits
as of January 1 on any year the Oklahoma Jobs Agreement is
in effect, the Debtors will remit to the Oklahoma
Department of Commerce the balance no later than
January 31 of the same year;
(e) The Economic Development Agreement supersedes the Original
Oklahoma Jobs Agreement. Had the Original Oklahoma Jobs
Agreement continued until its previously scheduled
November 6, 2005 termination date, the Debtors and the
Oklahoma Department of Commerce estimated that the Debtors
would have been entitled to payments in the range of
$1,500,000 through the date of termination at expected
employment levels;
(f) The Oklahoma Department of Commerce has no obligation to
make any payments to the Debtors under the Economic
Development Agreement; and
(g) The parties release each other from any and all claims
they may have against each other arising out of or
relating to the Original Oklahoma Jobs Agreement.
Headquarterd in Clinton, Mississippi, WorldCom, Inc.,
-- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. (Worldcom Bankruptcy News, Issue No. 50; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
XM SATELLITE: Offering $125MM Senior Secured Floating Rate Notes
----------------------------------------------------------------
XM Satellite Radio Inc. announced its intention to sell, subject
to market and other conditions, $125 million principal amount of
Senior Secured Floating Rate Notes Due 2009 to qualified
institutional buyers pursuant to Rule 144A under the Securities
Act of 1933.
The notes would be guaranteed by XM Satellite Radio Holdings Inc.
(Nasdaq: XMSR), parent of XM Satellite Radio Inc. The use of
proceeds from the offering would be to reduce drawn balances
outstanding under the company's $100 million revolving credit
facility with General Motors Corp. and for general corporate
purposes including possible repayment of other debt, replacement
of liquidity resources employed to repay the $35 million loan
outstanding to Boeing Inc., which is expected to be repaid by XM
Satellite Radio Holdings Inc. concurrent with the completion of
the offering of notes. The applicable interest rate and offering
price are to be determined by negotiations between XM and the
initial purchaser of the notes.
About XM
In the fall of 2001, XM Satellite Radio pioneered the introduction
of satellite radio in the U.S. Today, XM is America's #1 satellite
radio service with more than 1.6 million subscribers.
Broadcasting live daily from studios in Washington, D.C., New York
City and Nashville, Tennessee at the Country Music Hall of Fame,
XM's 2004 lineup includes more than 120 digital channels of choice
from coast to coast: 68 commercial-free music channels, featuring
hip hop to opera, classical to country, bluegrass to blues; 33
channels of premier sports, talk, comedy, children's and
entertainment programming; and 21 channels of the most advanced
traffic and weather information for major metropolitan areas
nationwide. Affordable, compact and stylish XM satellite radio
receivers for the home, the car, the computer and boom boxes for
"on the go" are available from retailers nationwide. In addition,
XM is available in more than 80 different 2004 car models. XM is
a popular factory-installed option on more than 40 new General
Motors models, as well as a standard feature on several top-
selling Honda and Acura models. Avis customers can enjoy XM as a
standard feature in the company's premium and luxury vehicles.
Passengers on JetBlue Airways and AirTran Airways will be able to
listen to XM's programming in-flight later in 2004.
For more information about XM, visit http://www.xmradio.com/
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's Ratings Services lowered its corporate credit ratings on
satellite radio provider XM Satellite Radio Inc., and its parent
company XM Satellite Radio Holdings Inc. (which are analyzed on a
consolidated basis) to 'SD' from 'CCC-'.
At the same time, Standard & Poor's lowered its rating on the
company's $325 million 14% senior secured notes due 2010 to 'D'
from 'CCC-'.
These actions follow XM's completion of its exchange offer on the
senior secured notes, at par, for new 14% senior secured notes due
2009.
All ratings were removed from CreditWatch with negative
implications where they were placed on Nov. 18, 2002.
* Dade Behring's John Duffey Named Chicago CFO of the Year
----------------------------------------------------------
Dade Behring Holdings, Inc. (NASDAQ:DADE) announced that John
Duffey, its chief financial officer, was chosen as "Chicago CFO of
the Year" by the Chicago chapter of the National Investor
Relations Institute (NIRI) and the Chicago Northwestern Kellogg
School of Management.
"There is no more deserving recipient of this honor than John
Duffey," said Jim Reid-Anderson, chairman, president and CEO of
Dade Behring. "John has done an exceptional job establishing and
leading initiatives to assure continued financial discipline for
the company. His integrity, experience, and strategic skills play
a key role in ensuring that we deliver on our promises to
customers, shareholders and employees."
Entries for "CFO of the Year" were evaluated by a panel of experts
in the field of investor relations including representatives from
Pactiv Corporation, CDW Corporation, the Kellogg School of
Management, Abbott Laboratories and Hewitt Associates.
"John Duffey represents a truly best-in-class recipient," said
Cindy Klimstra, president of NIRI-Chicago. "He not only
successfully navigated the company through immense challenges
these past few years, but he also established initiatives that
helped foster financial discipline across the entire Dade Behring
organization. His efforts have helped the company experience
continued financial success and increased visibility and
credibility among the investment community."
Duffey was instrumental in helping Dade Behring through its debt
restructuring, a brief pre-packaged Chapter 11 filing and
emergence from the Chapter 11 as a publicly traded company.
Building Dade Behring's investor relations discipline was one of
the many initiatives he oversaw and guided throughout this period.
When the company emerged from Chapter 11 in October 2002 it had
fewer than 90 shareholders and no sell-side analyst coverage. Due
in large part to Duffey's efforts, the company gained
approximately 8,000 shareholders and eight analysts covering the
company by the end of 2003. In addition, the stock price more than
doubled during the first twelve months it was listed on the
NASDAQr National Market.
"It is an honor to be selected by NIRI for this prestigious
award," said Duffey. "However, this award really reflects the
outstanding hard work of our entire leadership and finance teams
as well as the extraordinary achievements of our 6,000 Dade
Behring employees worldwide. Together, we overcame a number of
challenges and our strategy to engage in transparent
communications and corporate governance enabled us to continue
delivering on our commitments to customers and increase
shareholder value."
Duffey became CFO of Dade Behring in September 2001 after more
than six years with the company in roles of increasing
responsibility. He joined the company in 1995 as vice president,
tax, and in January 1997 was promoted to corporate vice president,
financial services. In 1999 he was promoted to corporate vice
president and controller. Prior to joining Dade Behring, Duffey
worked for the Chicago office of Price Waterhouse. He also worked
in the firm's Washington D.C. national office in the accounting
methods group. Duffey is a member of the AICPA and Michigan
Association of CPAs.
With 2003 revenues of nearly $1.4 billion, Dade Behring is the
world's largest company dedicated solely to clinical diagnostics.
It offers a wide range of products and systems designed to meet
the day-to-day needs of labs, making it today's best resource in
this field. Additional company information is available on the
internet at http://www.dadebehring.com/
About NIRI-Chicago
The members of NIRI-Chicago include corporate officers,
consultants, service providers, academics, and others involved in
the practice of investor relations - a strategic management
responsibility that integrates finance, communication, marketing
and securities law compliance. With 214 members, NIRI-Chicago is
one of the largest NIRI chapters in the United States. For more
information about our organization, please visit the Web site at
http://www.niri-chicago.org/
* State Street Appoints Peter Leahy as Chief Operating Officer
--------------------------------------------------------------
State Street Global Advisors, the investment management arm of
State Street Corporation (NYSE:STT) and the largest institutional
fund manager in the world, named Peter Leahy as chief operating
officer. He will report to Tim Harbert, chairman and chief
executive officer of State Street Global Advisors. Paul Brakke,
senior principal, will assume Leahy's role as head of the Global
Structured Products group.
Leahy, a 13-year SSgA veteran, will oversee finance, technology,
operations and human resource functions for State Street Global
Advisors worldwide. He will also retain his roles as a member of
the company's executive management team, vice-chairman of the
Investment Committee and chairman of the Independent Fiduciary
Committee. Leahy joined the company in 1991 as a member of the
Global Structured Products group which he has managed since 1996.
Under Leahy's leadership, the Global Structured Products team has
expanded significantly and today manages more than $500 billion
in assets. State Street Global Advisors is the second largest
manager of passive equity assets worldwide and the largest
manager of non-U.S. index assets.
"Peter has played an integral role in orchestrating the company's
expansion and success," Harbert said. "His exceptional leadership
during his tenure here makes him ideally suited for this new
role. Over the past decade, he has helped to build our base of
index clients to more than 1,800 worldwide and played a key role
in developing products that encompass a wide range of index
strategies throughout North America, Europe and Asia."
"At SSgA, we are committed to excellence throughout all parts of
the organization," Leahy said. "I look forward to working with my
colleagues to leverage our operational strengths so that we can
continue to deliver competitive investment strategies to our
clients worldwide."
State Street Global Advisors, the investment management group of
State Street Corporation, delivers investment strategies and
integrated solutions to clients worldwide across every asset
class, investment approach and style. With $1.1 trillion in
investment programs and portfolios, State Street Global Advisors
has investment centers in Boston, Hong Kong, Tokyo, Singapore,
London, Paris, Montreal, Munich, and Sydney, and offices in 28
cities worldwide. For more information, visit State Street Global
Advisors at http://www.ssga.com/
State Street Corporation (NYSE: STT) is the world's leading
specialist in providing institutional investors with investment
servicing, investment management and investment research and
trading. With $9.4 trillion in assets under custody and $1.1
trillion in assets under management, State Street operates in 24
countries and more than 100 markets worldwide. For more
information, visit State Street's Web site at
http://www.statestreet.com/
* Weil Gotshal's Mikumo & Goldstein Named 'Dealmakers of the Year'
------------------------------------------------------------------
The American Lawyer magazine has recognized Weil, Gotshal & Manges
LLP partners Akiko Mikumo and Marcia Goldstein as among the top
"Dealmakers of the Year." The article appears in the magazine's
April 2004 issue.
Ms. Mikumo, who is featured on the magazine's cover, was
recognized for the role she played as lead attorney for Vivendi in
the $14 billion sale of Vivendi Universal Entertainment to NBC, a
transaction the magazine calls "the most prestigious (and most
profitable) bit of deal work of last year."
The magazine also cited bankruptcy practitioners as stars of the
past year's deal-making, and Ms. Goldstein, who co-heads the
firm's Business Finance and Restructuring Department, was singled
out for handling of "the biggest case of them all, that of
WorldCom, Inc."
Stephen J. Dannhauser, chairman of Weil Gotshal, said, "We
congratulate Marcia and Akiko on this impressive accomplishment
and thank The American Lawyer for recognizing their success and
hard work. We also take pride in the fact that of the total 12
'Dealmakers of the Year,' the two women cited were both Weil
Gotshal partners."
Marcia Goldstein is a senior partner and co-head of the Business
Finance and Restructuring Department of Weil, Gotshal & Manges
LLP, where she has practiced for more than 25 years. She has
represented debtors, bank groups, secured and unsecured creditors,
statutory creditors' committees, trustees, and other parties in
major debt restructurings and Chapter 11 cases, including
WorldCom, Inc., Parmalat, Regal Cinemas, Inc., Washington Group
International, Inc., AMF Bowling Worldwide, Inc., Exide, Inc.,
Oxford Automotive, Inc., United Companies Financial Corp.,
Warnaco, Inc., CRIIMI MAE, Inc., Babcock & Wilcox, Inc., Purina
Mills, Inc., SGL Carbon Corp. and Marvel Entertainment.
Akiko Mikumo is a corporate partner in New York. She joined the
firm in 1982 and has been a partner since 1990. Between 1998 and
2002, she was the head of the U.S. practice in the firm's London
office. The focus of Akiko's practice is cross-border mergers and
acquisitions and private equity transactions. Her diverse
corporate and securities law practice includes representing
sellers and buyers of public and private companies, issuers and
underwriters in a wide range of public and private debt and equity
offerings, and institutional and strategic investors providing
private equity financing.
Weil, Gotshal & Manges LLP, one of the world's leading law firms,
was also recognized as having one of the nation's best litigation
departments in the January 2004 issue of The American Lawyer, the
nation's leading legal monthly publication.
Weil, Gotshal & Manges LLP is an international law firm of more
than 1,100 attorneys, including approximately 300 partners. Weil
Gotshal is headquartered in New York, with offices in Austin,
Boston, Brussels, Budapest, Dallas, Frankfurt, Houston, London,
Miami, Munich, Paris, Prague, Silicon Valley, Singapore, Warsaw
and Washington, D.C.
*********
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, Rizande B.
Delos Santos, Paulo Jose A. Solana, 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 ***