/raid1/www/Hosts/bankrupt/TCR_Public/040514.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 14, 2004, Vol. 8, No. 95
Headlines
ACCURIDE: Profits Pare March 31 Equity Deficit to $60.8 Million
ADELPHIA BUSINESS: Agrees to Pay $450K of Public Service's Claims
AFFINITY: Warns Litigation Outcome May Spur Bankruptcy Filing
AIRGATE PCS: Posts $91.5 Million Equity Deficit at March 31, 2004
ANC RENTAL: Hires Gazes & Associates as Claims & Notice Agent
ARTEMIS INTERNATIONAL: First Quarter Net Loss Widens to $3.9 Mil.
ATLANTIS SYSTEMS: Accepts Falcon's $8 Million Financing Offer
AURORA FOODS: Fenway Entities Dump Equity Interests
BIG CREEK UNDERGROUND: Case Summary & 20 Unsecured Creditors
BOWATER INC: S&P Rates $435 Million Bank Facility at BB
BRILLIANT DIGITAL: Auditors Express Going Concern Doubt
BUFFETS INC: S&P Places Low-B Ratings on CreditWatch Negative
CARRIAGE CROSSING: Voluntary Chapter 11 Case Summary
CLM INVESTMENTS: Voluntary Chapter 11 Case Summary
COBBLESTONE DEVT: Case Summary & 6 Largest Unsecured Creditors
COMMAND POST: Technicolor Creative Acquires 97.04% Equity Stake
DII INDUSTRIES: Nominates 7 Asbestos PI Trust Committee Members
DOMAN INDUSTRIES: Equity Deficit Climbs to $461MM at March 31
DRUID RESTAURANT: Case Summary & 19 Largest Unsecured Creditors
DT INDUSTRIES: Files for Chapter 11 Protection in S.D. Ohio
DT INDUSTRIES INC: Case Summary & 88 Largest Unsecured Creditors
ENRON: Court Approves Borden Chemicals Claim Settlement Pact
EXIDE TECHNOLOGIES: Court Okays Patton Boggs' Retention as Counsel
EXTENDED STAY: Blackstone Group Affiliate Completes Acquisition
EXTENDED STAY: S&P Withdraws Low-B Ratings After Blackstone Merger
FEDERAL-MOGUL: Hiring Garden City Group as Voting Agent
FLEMING COS: Northstar Asserts $2.6MM Cure Amount Due Under Pact
FORT HILL SQUARE: Case Summary & 36 Largest Unsecured Creditors
FOURTH & WASHINGTON: Case Summary & Largest Unsecured Creditors
FRIEDMAN'S INC: Planning to Appeal NYSE Delisting Action
HILLCREST MEDICAL: S&P Places B- Bond Rating On Watch Developing
I-PREFERRED TERM SECURITIES: S&P Rates Class D Notes at BB
INTERPUBLIC: Secures 2 New Credit Facilities Totaling $700 Million
IVACO INC: First Quarter Sales Up by 1.4% to $220.8 Million
IVACO INC: Ontario Court Extends CCAA Protection to June 18, 2004
KOPPERS: Balance Sheet Upside Down by $66.9 Million at March 31
LANGUAGE LINE: S&P Assigns 'B' Corporate Credit Rating
LEVI STRAUSS: Explores Sale of Dockers Brand to Reduce Debt
LIBERATE TECHONOLOGIES: Retains Richards Layton as Co-Counsel
MEGA GROUP: Singer Lewak Replaces Aronson & Co. as Auditors
MEGA GROUP: Merritt C. Brown Steps Down as Chief Financial Officer
MEMEC GROUP: S&P Rates Corporate Credit & Senior Debt at B+/BB-
MIRANT: Court Authorizes $2.6M Learjet Interest Sale to Bombardier
MIRAVANT MEDICAL: Needs New Financing Sources to Fund Operations
MUZAK LLC: S&P Assigns B+ Rating to $35 Million Term B Loan
NEW HEIGHTS: Wants to Sign-Up Klett Rooney as Bankruptcy Counsel
O'SULLIVAN: Shareholders' Deficit Tops $154 Million at March 31
PARMALAT CAPITAL: Prosecutors Find New Evidence in Malta Probe
PLEJ'S LINEN: Has Until May 17 to File Schedules & Statements
RESIDENTIAL ACCREDIT: Fitch Assigns B Rating to Class B-2 Notes
ROYAL OLYMPIC: Applies to Transfer Securities to Nasdaq Smallcap
SALTON INC: Third Quarter Loss Multiplies to $58 Million
SELECT MEDICAL: Proposed Rule Change Spurs S&P's Negative Watch
SOLECTRON: Finalizes Early Settlement Offer for Equity Units
SPIEGEL: Court Gives Go-Ahead for $22MM Fisher Road Property Sale
TNH ANDOVER SPRINGHILL: Case Summary & 12 Unsecured Creditors
TRICOM S.A.: NYSE Suspends Trading of American Depositary Shares
TWODAYS PROPERTIES: Wants to Hire JP Weigand as Realtor
UNIFRAX CORP: S&P Assigns B+ Rating to $135MM Senior Bank Loan
UNITED AIR: Agrees To Settle Wisconsin Tax Disputes
US AIR: Philip Morris Refuses 2nd Payment as Ratings Fall Short
US UNWIRED: Commences Tender Offer for 13-3/8% Senior Sub. Notes
UTEX INDUSTRIES: Names Richard Schiro as Future Claimants' Rep.
VIVENDI UNIVERSAL: S&P Upgrades Corporate Credit Rating to BB+
VLASIC: Liquidity Solutions Returns Three Claims Totaling $105,445
VOUGHT AIRCRAFT: Balance Sheet Insolvent by $346.6MM at March 28
WARNACO GROUP: Reorganized Debtor Reports First Quarter Profits
WCI STEEL: Gives Up Exclusive Right to File Reorganization Plan
WEIRTON: Court Denies Motion To Stay Weirton Sale Pending Appeal
WESTPOINT: Enters Into Lease Settlement Agreement with Suntrust
WOMEN FIRST: Bankruptcy Management Appointed as Claims Agent
WORLDCOM: Court Deems Lowe's $1.9 Million Claim as Timely Filed
WRENN ASSOCIATES: Taps Gagliuso & Gagliuso as Special Counsel
* BOOK REVIEW: Wildcatters -- A Story of Towns, Oil & Money
*********
ACCURIDE: Profits Pare March 31 Equity Deficit to $60.8 Million
---------------------------------------------------------------
Accuride Corporation announced net sales of $111.4 million for the
first quarter ended March 31, 2004. This compares to net sales of
$88.2 million for the first quarter of 2003, an increase of 26.3%.
The increase is due primarily to greater demand across all market
segments.
Adjusted EBITDA of $22.3 million for the first quarter ended March
31, 2004, is up from $16.8 million for the first quarter of 2003,
an increase of 32.7%. The resulting EBITDA margin has increased to
20.0% of net sales from 19.0% of net sales in last year's first
quarter primarily due to volume. The purpose and reconciliation of
Adjusted EBITDA for the Company to the most directly comparable
GAAP measure is set forth on Pages 4 and 5 of this press release.
"Due to the continued improvement in demand, revenue in the first
quarter was at its highest level since the second quarter of
2000," said Terry Keating, Accuride's President and CEO. "The
rising production levels due to the strength in net orders should
lead to a robust recovery in 2004."
The Company's liquidity position remained strong at March 31,
2004, with $29.4 million in cash and revolver availability of
$41.0 million.
Accuride had net income of $4.8 million, or 4.3% of net sales, for
the first quarter ended March 31, 2004, compared to a net loss of
$0.6 million, or a negative 0.7% of net sales, for the first
quarter of 2003.
At March 31, 2004, Accuride's balance sheet shows a stockholders'
deficit of $60.8 million.
About Accuride
Accuride Corporation is North America's largest manufacturer and
supplier of wheels for heavy/medium trucks and trailers. The
Company offers the broadest product line in the North American
heavy/medium wheel industry and is the only North American
manufacturer and supplier of both steel and forged aluminum
heavy/medium wheels. Accuride Corporation also produces wheels for
buses, commercial light trucks, pick-up trucks, sport utility
vehicles, and vans. Accuride Corporation has steel wheel
operations in Henderson, Kentucky; London, Ontario, Canada; and
Monterrey, Mexico. Accuride has aluminum wheel operations in Erie,
Pennsylvania, and Cuyahoga Falls, Ohio. Additionally, the Company
produces tire molds at its Erie, Pennsylvania, facility. Accuride
is also involved in a commercial tire and wheel assembly joint
venture in Springfield, Ohio. For more information, visit
Accuride's website at http://www.accuridecorp.com/
ADELPHIA BUSINESS: Agrees to Pay $450K of Public Service's Claims
-----------------------------------------------------------------
Adelphia Business Solutions Investment, LLC, and Public Service
Electric and Gas Company are parties to a Distribution Pole
Communication Cable Attachment License Granted to ABS Investment,
dated November 1, 1996, pursuant to which ABS Investment obtained
a license to install, attach, and maintain fiber optic
communication cables to certain utility poles located in New
Jersey.
ABS Investment and Public Service Electric also are parties to an
underground license agreement, dated June 1, 1997, pursuant to
which ABS Investment rented certain wholly owned Public Service
Electric duct space located in New Jersey in which to construct,
install, maintain, and operate a fiber optic communications
system in exchange for an annual rental charge payable by ABS
Investment to Public Service Electric.
Pursuant to the terms of the License Agreements, ABS Investment
and Public Service Electric entered into a number of construction
contracts pursuant to which ABS Investment engaged PSE&G to
construct, install, relocate, maintain, and/or operate portions
of ABS Investment's fiber optic network.
Public Service Electric alleges damages aggregating $964,866.39,
and ABS Investment disputes the alleged amount of Public Service
Electric's claims.
The parties mutually agreed that Public Service Electric would
have an allowed general, unsecured prepetition claim against ABIZ
for $509,956. Furthermore, in exchange for the release of all
other claims, ABS Investment will pay Public Service Electric
$450,000, payable as:
-- $75,000 on the Plan effective date; and
-- the remaining sum to be paid in 36 equal and consecutive
monthly installments, each for $10,400.
The Parties agree to release each other from all claims.
Pursuant to the Stipulation, the License Agreements will also be
assumed.
Headquartered in Coudersport, Pennsylvania, Adelphia Business
Solutions, Inc., now known as TelCove -- http://www.adelphia-
abs.com/ -- is a leading provider of facilities-based integrated
communications services to businesses, governmental customers,
educational end users and other communications services providers
throughout the United States. The Company filed for Chapter 11
protection on March March 27, 2002 (Bankr. S.D.N.Y. Case No. 02-
11389) and emerged under a chapter 11 plan on April 7, 2004.
Harvey R. Miller, Esq., Judy G.Z. Liu, Esq., Weil, Gotshal &
Manges LLP represent the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed $ 2,126,334,000 in assets and $1,654,343,000 in debts.
(Adelphia Bankruptcy News, Issue No. 58; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AFFINITY: Warns Litigation Outcome May Spur Bankruptcy Filing
-------------------------------------------------------------
To date, Affinity Technology Group, Inc. has generated substantial
operating losses and has been required to use a substantial amount
of cash resources to fund its operations. At December 31, 2003,
the Company had cash and cash equivalents of $578,398. The Company
believes that its existing cash resources are sufficient to fund
its ordinary course operating expenses through the remainder of
2004. However, the Company's ability to continue its operations
for the remainder of 2004 is contingent upon the final outcome of
the Company's litigation with Temple Ligon, and the ability of the
Company to extend the maturity date of all or substantially all of
its convertible notes that are due in June 2004. If the Company
becomes obligated to pay more than an amount of damages in
connection with the Temple Ligon litigation, or is unable to
extend the maturity date of all, or substantially all, of the
convertible notes that are due in June 2004, the Company will be
forced to consider alternatives for winding down its business,
which, according to the Company, may include filing for bankruptcy
protection.
To remain viable, the Company must generate working capital
through the sale of patent licenses or by raising additional
capital. To date, the Company generally has been unable to enter
into licensing agreements with potential licensees upon terms that
are acceptable to the Company. As a result, the Company has been
forced to become involved in litigation with alleged infringers.
Currently, the Company is involved in three patent litigation
actions. The Company believes that these lawsuits may take an
extended period of time to complete, and no assurance can be given
that the Company will have the resources necessary to complete
these lawsuits or that it will be successful in obtaining a
favorable outcome. Two of the alleged infringers (Federated and
Ameritrade) have notified the Company that they have filed a
request with the PTO to reexamine the Company's patent covering
the fully automated establishment of a financial account (U. S.
Patent No. 6,105,007). If the PTO grants the reexamination
request, it is likely that it will take an extended period of time
to complete the reexamination proceeding and the related
litigation with Federated and Ameritrade. Moreover, the
uncertainties of these litigation matters and other factors
affecting the Company's short and long-term liquidity will likely
impede the Company's ability to raise additional capital. To
maintain the minimal resources necessary to support its current
operations and execute a patent licensing strategy, the Company
does not believe that substantial additional reductions in its
operating expenses are feasible. No assurances can be given that
the Company will be able to raise additional capital or generate
working capital from its patent licensing business.
The Company is a defendant in a lawsuit brought by Temple Ligon,
who claims that the Company breached an agreement to give him a 1%
equity interest in the Company in consideration of services he
claims to have performed in 1993 and 1994 in conjunction with the
formation of the Company. In January 2004, this litigation
resulted in a jury verdict against the Company of $386,148. The
Company is seeking to have the verdict overturned by the trial
judge. If it is unsuccessful in doing so, the Company intends to
appeal any adverse decision. No assurances can be given that the
Company will be successful in overturning the verdict or, if it
appeals the decision, in obtaining a favorable outcome on appeal.
If the Company becomes obligated to pay more than an insignificant
amount of damages in connection with this litigation, it will be
forced to consider alternatives for winding down its business,
which may include filing for bankruptcy protection.
AIRGATE PCS: Posts $91.5 Million Equity Deficit at March 31, 2004
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AirGate PCS, Inc. (Nasdaq: PCSA), a PCS Affiliate of Sprint,
announced financial and operating results for its second fiscal
quarter and six months ended March 31, 2004.
Highlights of the quarter include the following:
-- Gross additions were 41,741, a 17% increase from 35,601 in
the first fiscal quarter of 2004.
-- Churn decreased to 2.92% in the second fiscal quarter of
2004 from 3.30% in the second fiscal quarter of 2003 and
3.10% in the first fiscal quarter of 2004.
-- Net additions were 7,909 compared to 438 in the first fiscal
quarter of 2004.
-- Net loss for the period was ($9.9) million compared to
($21.0) million in the second fiscal quarter of 2003, which
included a loss from discontinued operations of ($14.3)
million.
-- EBITDA, earnings before interest, taxes, depreciation and
amortization, was $13.2 million compared to $15.1 million in
the second fiscal quarter of 2003.
-- In February 2004, the Company completed its recapitalization
and re-listed its Common Stock on the Nasdaq National
Market.
At March 31, 2004, Airgate PCS, Inc.'s balance sheet shows a
stockholders' deficit of $91.5 million compared to a $377 million
deficit reported at September 30, 2003.
Notable financial effects during the second fiscal quarter of 2004
include:
-- A reduction of bad debt expense related to a $1.2 million
settlement from Sprint resulting from a change in the bad
debt profile for certain subscribers.
-- An increase of general and administrative expenses of $0.8
million related to costs associated with the
recapitalization completed February 13, 2004.
-- Interest expense includes the accrual of interest related to
the 9 3/8% notes beginning January 1, 2004 and the 13.5%
notes tendered as part of the recapitalization from
January 1, 2004 through February 12, 2004. The Company
anticipates interest expense for the third fiscal quarter of
2004 will not exceed $8 million.
Notable financial effects during the second fiscal quarter of 2003
include:
-- A reduction of cost of service and roaming of $3.6 million
related to a special settlement with Sprint.
-- An increase of general and administrative expenses of $1.2
million related to consulting fees incurred as part of an
operational restructuring.
-- Net income was negatively affected by losses of
($14.3) million from the discontinued operations of iPCS.
Management Commentary
"Now that our recapitalization is complete, we have renewed our
efforts to develop and retain a more stable and profitable
customer base," said Thomas M. Dougherty, president and chief
executive officer of AirGate PCS. "Not only did we increase our
gross additions over the prior quarter, but we also reduced our
churn rate by approximately 20 basis points, largely due to a
decrease in involuntary churn. We believe the decisions we made
over the last two years to improve the quality of the subscriber
base are showing positive results for AirGate."
"We can now focus our full attention on further growing the core
business as well as identifying future growth strategies for the
Company," Dougherty continued. "We are grateful for the support we
received during the recapitalization and we are now actively
engaged in evaluating our strategic alternatives."
About AirGate PCS
AirGate PCS, Inc. is the PCS Affiliate of Sprint with the right to
sell wireless mobility communications network products and
services under the Sprint brand in territories within three states
located in the Southeastern United States. The territories include
over 7.4 million residents in key markets such as Charleston,
Columbia, and Greenville-Spartanburg, South Carolina; Augusta and
Savannah, Georgia; and Asheville, Wilmington and the Outer Banks
of North Carolina.
ANC RENTAL: Hires Gazes & Associates as Claims & Notice Agent
-------------------------------------------------------------
The ANC Rental Debtors seek the Court's authority to employ Gazes
& Associates, LLP, as substitute claims and noticing agent for the
Clerk of the United States Bankruptcy Court for the District of
Delaware. As substitute agent for and custodian of the Clerk's
records, Gazes will maintain the list of the Debtors' creditors
and make updates as required.
Gazes will provide services attendant to the maintenance of the
claims dockets like:
(1) maintaining the list of the Debtors' creditors;
(2) serving as the Court's agent for the receipt and docketing
of all proofs of claim filed against the Debtors; and
(3) providing the Debtors with consulting and computer
software services and support for the effective
reorganization, management and control of creditors'
claims against the Debtors.
In addition, Gazes will maintain the proof of claim docket
created by the former claims agent, Donlin, Recano & Company,
which will reflect in sequential order the claims filed in the
Debtors' Chapter 11 cases, specifying:
(1) the claim number;
(2) the date the claim was received by the Clerk's office;
(3) the name and address of the claimant and the agent that
filed the proof of claim;
(4) the amount of the claim; and
(5) the classification of the claim if designated by the
claimant.
The Debtors will also utilize other services offered by Gazes,
like:
(1) providing other notices that will be required as their
Chapter 11 cases progress; and
(2) providing other administrative services that may be
required by the Debtors.
Gazes will be compensated based on the services it provides as
substitute claims and notice agent at the flat rate of $7,500 per
month, plus expenses. The services provided by Gazes as
substitute claims and noticing agent is separate and distinct
from the claims reconciliation work and litigation work on behalf
of the Debtors and their post-confirmation estates for which
Gazes was retained pursuant to a Court order dated December 19,
2003.
Ian J. Gazes, a principal at Gazes, assures the Court that the
firm does not have any connection with the Debtors, their
creditors, and any party-in-interest, and that it does not
represent any interest adverse to the Debtors' estates with
respect to the matters upon which it is to be engaged.
Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation,
is the world's third-largest publicly traded car rental company.
The Company filed for chapter 11 protection on November 13, 2001
(Bankr. Del. Case No. 01-11200). Brad Eric Scheler, Esq., and
Matthew Gluck, Esq., at Fried, Frank, Harris, Shriver & Jacobson,
represent the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
$6,497,541,000 in assets and $5,953,612,000 in liabilities. (ANC
Rental Bankruptcy News, Issue No. 53; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ARTEMIS INTERNATIONAL: First Quarter Net Loss Widens to $3.9 Mil.
-----------------------------------------------------------------
Artemis International Solutions Corp. (OTCBB:AMSI), one of the
leading providers of enterprise portfolio and project management
software solutions, reported its financial results for the first
quarter ended March 31, 2004.
Artemis reported $13.6 million in total revenue for the first
quarter of 2004, compared with $16.2 million for the first quarter
of 2003, down by $2.6 million or 15.9%. Earnings before interest,
taxes, depreciation and amortization (EBITDA) was $(2.2) million
for the quarter ended March 31, 2004, compared with $0.6 million
for the prior year quarter. US GAAP reported net loss for the
quarter ended March 31, 2004, was $(3.9) million, or $(0.39) per
common share, compared to $(0.9) million, or $(0.09) per common
share for the comparable 2003 period.
The company ended the quarter with $5.0 million in cash compared
to $2.6 million at Dec. 31, 2003 and $7.4 at March 31, 2003.
During the first quarter of 2004, the company announced its new
President and CEO Patrick Ternier, and initiated restructuring
activities to reduce costs and better align its global
infrastructure. As a result, the company recorded restructuring
charges of $1.2 million during the first quarter of 2004.
"The last two months of the quarter have been focused on
restructuring the company for profitability and consistency in
execution," stated Ternier. "We are now in a position to benefit
from the growth of the portfolio management solutions market. The
very positive reception by our initial customers of the recently
launched Artemis7 platform, in part a result of very short
implementation cycles through our vertical solutions approach, is
strengthening our pipeline for both upgrades and new customers
looking for a proven and quick return on investment. This is valid
throughout the geographies we cover."
About Artemis International Solutions Corp.
Artemis International Solutions Corp. -- whose December 31, 2003
balance sheet shows a stockholders' deficit of $2.5 million -- is
one of the world's leading providers of investment planning and
control solutions that help organizations execute strategy through
effective portfolio and project management. Artemis has refined 30
years experience into a suite of solutions and packaged consulting
services that address the specific needs of both industry and the
public sector including: IT management, new product development,
program management, fleet and asset management, outage management
and detailed project management. With a global network covering 44
countries, Artemis is helping thousands of organizations to
improve their business performance through better alignment of
strategy, investment planning and project execution. For more
information visit http://www.aisc.com/
ATLANTIS SYSTEMS: Accepts Falcon's $8 Million Financing Offer
-------------------------------------------------------------
The Board of Directors of Atlantis Systems Corp. met on March 11,
2004 and accepted the Falcon offer of financing. The Board
directed Management to recommend the Falcon proposal to all
shareholders at the earliest possible date. The Toronto Stock
Exchange has conditionally approved the Falcon offer, subject to
satisfaction of a number of conditions, including shareholder
approval, which may be obtained in writing. In an effort to
accelerate the shareholder approval process, Atlantis will seek to
obtain written consent from the holders of a majority of the
outstanding shares, failing which, a meeting will be held to seek
approval for the Falcon offer.
Falcon's financing offer consists of $6 million in equity units
and a $2 million 10% term debt facility. As of this morning,
Falcon had arranged for the delivery of share subscriptions for
$5 million in equity units and had lodged $4.5 million in escrow,
pending acceptance by Atlantis of Falcon's unsolicited offer.
Falcon has indicated to management of Atlantis that the monies
were lodged in escrow to evidence the seriousness of their offer.
The $0.40 equity units consist of one common share and one half of
a common share purchase warrant. Each full common share purchase
warrant is exercisable for two years following the closing of the
financing and the exercise price is $0.50 per share for the first
twelve months following the closing and $0.60 per share for the
second twelve months following the closing.
The Falcon offer replicates the Claymore offer with respect to the
conversion of $3.75 million of outstanding liabilities into equity
as described in the Management Information Circular dated March
25, 2004. The shareholders approved this debt conversion at the
meeting held on May 10, 2004 at which the Claymore offer was
rejected.
As previously reported, Atlantis received a notice of an event of
default from Claymore, under the terms of the Commitment Letter
entered into by Atlantis with Claymore. Claymore claims that under
the terms of the Commitment Letter, the non-receipt of an interest
payment was an event of default. The Board of Directors of
Atlantis contests Claymore's assertion. Regardless, Atlantis has
paid the outstanding interest amount and believes that the alleged
event of default has been rectified. A mutual attempt to avoid
this dispute by waiving the alleged event of default was not
successful, as the Board of Atlantis was unable to accept the
waiver conditions advanced by Claymore.
It was also reported that if the Claymore offer was voted down by
the shareholders of Atlantis, the Commitment Letter with Claymore
requires the payment by Atlantis of a break fee of $250,000 and
Claymore's out-of-pocket expenses. As well, Atlantis will be
required to repay the outstanding capital advance under the
Commitment Letter by July 30, 2004. There is a possibility
that Claymore may attempt to accelerate the repayment of the
capital advanced prior to that date.
Moreover, the corporate transition is accompanied by the departure
of John Wright from all responsibilities at Atlantis, where he was
most recently President and COO and a member of the Board of
Directors. "John is a very distinctive personality whose
enterprise and perseverance played an important role in assisting
the Company to this point", stated Neil Raymond, Chairman.
The Board has requested that Martyn Exon, V.P. and General Manager
of ASI and Tom Wallace, Treasurer of ASI assist the Executive
Committee in its deliberations until a Chief Executive Officer is
appointed.
Atlantis is a globally recognised developer of simulation-based
aircraft training systems, with a client base that spans defence
forces and government agencies throughout the world, as well as
major commercial airlines and aircrew training centres. Atlantis
trades on the Toronto Stock Exchange under the symbol AIQ.
AURORA FOODS: Fenway Entities Dump Equity Interests
---------------------------------------------------
Fenway Partners Capital Fund II, L.P., Fenway Partners II, LLC,
Fenway Partners Management, Inc., Fenway Partners, L.P., Peter
Lamm and Richard C. Dresdale no longer own common stock of Aurora
Foods, Inc. As of the close of business on March 19, 2004, neither
the Entities nor persons reported here are the beneficial owner of
more than five percent of the Company's common stock.
On March 19, 2004, in the Chapter 11 case entitled In re Aurora
Foods, Inc., et al., Case No. 03-13744 (MFW) pending in the United
States Bankruptcy Court for the District of Delaware, the First
Amended Joint Reorganization Plan of the Company and Sea Coast
Foods, Inc. became effective.
Pursuant to the Plan, each share of common stock and Series A
Cumulative Convertible Preferred Stock of the Company outstanding
prior to the effectiveness of the Plan was cancelled. The 12%
unsecured promissory notes due October 1, 2006 previously issued
by the Company to the Fenway Funds, FPIP and FPIP Trust and other
existing stockholders of the Company, were cancelled pursuant to
the Plan in exchange for an aggregate of $27,696,500. The warrants
previously issued by the Company to the Fenway Funds, FPIP and
FPIP Trust and such other stockholders of the Company in
connection with the Notes were also cancelled pursuant to the
Plan, as were the warrants previously issued by the Company to
Fund I and other existing stockholders of the Company, in
connection with a Revolving Loan Subordinated Participation
Agreement.
BIG CREEK UNDERGROUND: Case Summary & 20 Unsecured Creditors
------------------------------------------------------------
Debtor: Big Creek Underground Utilities Inc.
dba Big Creek Construction
201 East Main Street
P.O. Box 1730
Pilot Mountain, North Carolina 27041
Bankruptcy Case No.: 04-51317
Type of Business: The Debtor is a General Contractor.
Chapter 11 Petition Date: May 7, 2004
Court: Middle District of North Carolina (Winston-Salem)
Judge: William L. Stocks
Debtor's Counsel: Robert A. Lefkowitz, Esq.
Fisher, Clinard and Cornwell, PLLC
Suite 800, 101 South Main Street
P.O. Box 1150
High Point, NC 27261
Tel: 336-883-9156
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Newcourt Financial Equipment $43,120
Vermeer Carolinas Parts supplier $30,893
Briggs Construction $24,519
Mitchell Distributors Vendor $18,303
Martin Bernard $16,985
Tarheal Contractors Parts $15,382
Ditch Witch Greensboro Parts $15,165
Samet Payne Horton Company $13,225
City of Pilot Mountain Vendor utilities $13,063
Scottsdale Insurance Prior Insurance $11,543
Soil Solutions Vendor $8,943
Fuelman of Carolinas Vendor $8,622
Sprint-CMR Claims Department Vendor $8,056
Carolina West Vendor $7,475
Maurice Ferguson $6,662
Employment Staffing Vendor $6,098
Total Communications Vendor $5,695
RA-Tech Services Vendor $5,630
Bestracs-James River Parts-vendor $5,578
Equipment
Virginia Carolina Group $5,285
BOWATER INC: S&P Rates $435 Million Bank Facility at BB
-------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' bank loan
rating to newsprint producer Bowater Inc.'s $435 million senior
unsecured revolving credit facility due 2007. All other ratings
were affirmed at 'BB'. The outlook is stable.
The new facility, which consists of a $400 million U.S. tranche
and a $35 million Canadian tranche, replaces two senior unsecured
credit facilities totaling $600 million--a $500 million facility
due to expire in April 2005 and a $100 million facility due to
expire in October 2004.
"The ratings reflect Bowater's high debt burden, caused by three
years of weak earnings, elevated capital spending and near-term
prospects for modest--although improving--cash-flow generation,"
said Standard & Poor's credit analyst Pamela Rice. These factors
outweigh the company's leading market positions in cyclical
newsprint, pulp, and coated groundwood paper, substantial
operating leverage, and valuable timberland holdings.
Financial covenants for the new facility are generally looser than
those that existed under the previous facilities, and include a
minimum consolidated net worth of $1.5 billion, compared to the
previous requirement of $1.625 billion, and a maximum total debt
to capital ratio of 62.5% compared with 60% previously. However,
the new agreement requires Bowater to maintain an annual minimum
EBITDA of $250 million from March 31, 2005 through Dec. 31, 2005,
and $400 million thereafter. The previous facilities had no
minimum EBITDA requirement.
Greenville, South Carolina-based Bowater is North America's
second-largest maker of newsprint and a major market pulp
producer. The company also manufactures coated papers used for
magazines; catalogs; direct mail; and advertising inserts; and
produces lumber. Although Bowater has a diverse product mix,
its major paper grades continue to experience low--albeit rising--
prices and demand, causing weak operating earnings and negative
free cash flow.
Standard & Poor's expects that Bowater's debt burden will remain
stubbornly high relative to free operating cash flow for at least
the next year, despite gradually improving market conditions and
substantially lower capital spending. Debt increased over the past
12 months by about $100 million to $2.6 billion, because of weak
earnings and elevated capital spending, despite the receipt of
$150 million in timberland sale proceeds. With higher prices and a
sharp fall in capital spending, Standard & Poor's expects Bowater
to turn free-cash-flow positive during the second quarter of 2004,
with more cash flow improvement during the remainder of the year.
BRILLIANT DIGITAL: Auditors Express Going Concern Doubt
-------------------------------------------------------
As of December 31, 2003, cash and cash equivalents of Brilliant
Digital Entertainment, Inc. totaled approximately $880,000. This
is an increase of $644,000 as compared to December 31, 2002. As
of December 31, 2003; the Company had a working capital deficit of
$5,763,000. Included in this working capital deficit are accounts
payable of $516,000 which are over 90 days past due.
The Company currently satisfies its working capital requirements
primarily through cash flows generated from operations and sales
of equity securities. It is seeking additional funding and
believes that, if it is successful in raising additional capital,
this may result in improved operating results. There can be no
assurance, however, that with any additional financing, higher
cash flows will be generated by operations.
The Company's consolidated financial statements have been prepared
assuming that Brilliant Digital Entertainment will continue as a
going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
The carrying amounts of assets and liabilities presented in the
financial statements do not purport to represent realizable or
settlement values. However, the Company has suffered recurring
operating losses and at December 31, 2003, had, as stated,
negative working capital of approximately $5,763,000, and a
stockholders' deficit of approximately $4,594,000. These
factors raise substantial doubt about the Company's ability to
continue as a going concern. Management anticipates that current
cash reserves, plus expected generation of cash from existing
operations in 2004, may not be sufficient to fund anticipated
expenditures. Consequently, the Company may require additional
equity or debt financing during 2004, the amount and timing of
which will depend in large part on the Company's spending program.
The report of the Company's Independent Certified Public
Accountants for the December 31, 2003 financial statements
include an explanatory paragraph expressing substantial doubt
about Brilliant Digital Entertainment, Inc.'s ability to continue
as a going concern.
BUFFETS INC: S&P Places Low-B Ratings on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings for
restaurant company Buffets Inc., including the 'B+' corporate
credit rating, on CreditWatch with negative implications. Eagan,
Minn.-based Buffets had $437 million of debt outstanding as of
April 7, 2004.
The CreditWatch listing follows the announcement by Buffets
Holdings Inc. of a $75 million senior discount note
offering due 2010. Proceeds from the offering will be used to
redeem Buffets Holdings' series B junior subordinated notes due
2011 and make a distribution to stockholders. "The notes will add
about $65 million in incremental debt to an already highly
leveraged capital structure," said Standard & Poor's credit
analyst Robert Lichtenstein.
Standard & Poor's will assign a rating to the new $75 million
senior discount notes upon review of documentation. Standard &
Poor's will also review the impact of the transaction and the
company's financial policy, which will likely result in a one-
notch downgrade.
CARRIAGE CROSSING: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Carriage Crossing, Inc.
P.O. Box 64223
Fayetteville, North Carolina 28306
Bankruptcy Case No.: 04-03461
Chapter 11 Petition Date: March 29, 2004
Court: Eastern District of North Carolina (Wilson)
Judge: A. Thomas Small
Debtor's Counsel: Trawick H Stubbs, Jr., Esq.
Stubbs & Perdue, PA
P.O. Drawer 1654
New Bern, NC 28563
Tel: 252-633-2700
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $0 to $50,000
The Debtor did not file a list of its 20-largest creditors.
CLM INVESTMENTS: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: CLM Investments, L.L.C.
40 Karydan
St. Charles, Missouri 63301
Bankruptcy Case No.: 04-46331
Chapter 11 Petition Date: May 12, 2004
Court: Eastern District of Missouri (St. Louis)
Judge: James J. Barta
Debtor's Counsel: Robert E. Eggmann, Esq.
Copeland, Thompson et al.
231 South Bemiston, Suite 1220
St. Louis, MO 63105
Tel: 314-726-1900
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
COBBLESTONE DEVT: Case Summary & 6 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Cobblestone Development, LLC
26 Mississippi Street
P.O. Box 1019
Buffalo, New York 14202
Bankruptcy Case No.: 04-13303
Chapter 11 Petition Date: May 6, 2004
Court: Western District of New York (Buffalo)
Judge: Michael J. Kaplan
Debtor's Counsel: Robert R. Goods, Esq.
P.O. Box 1126
Amherst, NY 14226-7126
Tel: 716-839-1196
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Hatch Leonard Naples Trade debt $16,543
Verizon Trade debt $4,921
Labor Ready Trade debt $350
Fed Ex Trade debt $102
Foit-Albert Trade debt $100
Thomas Dorey, Esq. Equity interest unknown
COMMAND POST: Technicolor Creative Acquires 97.04% Equity Stake
---------------------------------------------------------------
Command Post and Transfer Corporation and Technicolor Creative
Services Canada, Inc. announced that Technicolor is taking up and
paying for 19,213,801 common shares of the Company pursuant to its
previously announced cash offer for all of the common shares of
the Company.
Following this transaction, Technicolor will hold approximately
97.04% of 19,798,359 common shares of the Company outstanding.
Technicolor also announced that it intends to proceed to acquire
the remaining common shares of the Company pursuant to the
compulsory acquisition provisions of applicable corporate
legislation and that it will initiate steps to nominate and elect
the Company's Board of Directors.
"We're very pleased to complete our acquisition of Command Post
and its outstanding film laboratory and postproduction
operations," stated Technicolor Creative Services-Canada
president, Claude Gagnon. "We look forward to serving the Canadian
film and broadcast and commercial productions industries and all
North American projects that choose to work in Toronto and
Vancouver."
Technicolor Entertainment Services, part of Thomson's Digital
Content Solutions division, is the number one processor of motion
picture film worldwide and a leading provider of creative/post-
production, cinema distribution and digital cinema services. With
facilities worldwide, TES service lines include:
- Technicolor Film Lab Services processes and prints
16/35/65/70 mm formats, dailies, answer prints,
intermediates, and trailers.
- Technicolor Creative Services provides production, post-
production and post post-production services ranging from
film and audio restoration and preservation, in both analog
and digital formats, to DVD compression and authoring, VOD
encoding, to episodic television and commercial advertising
completion.
- Technicolor Cinema Distribution Services provides high-
quality distribution and logistics management services for
motion picture release prints and advertising collateral
through state-of-the-art technologies and an efficient
distribution pipeline.
- Technicolor Digital Cinema is the leading provider of a
comprehensive suite of digital cinema services and
solutions, which include compression, encryption,
distribution, storage and scheduling/playback as well as
in-theatre management systems, maintenance and support.
Command is Canada's largest full service post-production and
special effects company and is an industry leading provider of
audio, video and film post-production services. Founded in 1986 as
a provider of post-production services in Toronto, Ontario,
Command currently services the North American and European
entertainment industry through its various facilities located in
Toronto, Ontario, Vancouver, British Columbia and Hollywood,
California.
* * *
As reported in the Troubled Company Reporter's February 4, 2004
edition, Command continues to experience financial challenges in
light of a very difficult film and television production market.
Although new projects recently obtained by the company have been
encouraging and cash flow from operations has been meeting
Command's working capital requirements to date, management
projects that Command will be in default of its secured loan
agreement with its bankers shortly unless additional cash is
injected into the company or a solution is agreed to with
Command's bankers. Negotiations have begun in an attempt to remedy
this situation.
DII INDUSTRIES: Nominates 7 Asbestos PI Trust Committee Members
---------------------------------------------------------------
The DII Industries, LLC Debtors submit to the Court seven nominees
for the initial members of the Asbestos PI Trust Advisory
Committee:
(1) Steve Baron
Silber Pearlman, LLP
2711 North Haskell Avenue, 5th Floor
LB33
Dallas, TX 74204
(2) John Cooney
Cooney & Conway
120 North LaSalle Street, 30th Floor
Chicago, IL 50502
(3) Theodore Goldberg
Goldberg, Persky, Jennings & White, P.C.
1030 Fifth Avenue
Pittsburgh, PA 15219
(4) Steven Kazan
Kazan, McClain, Edises, Abrams,
Fernandez, Lyons & Farrise
171 Twelfth Street, Suite 300
Oakland, CA 94607
(5) Michael Kelley
Kelley & Ferraro, LLC
1300 East Ninth Street, Suite 1901
Cleveland, OH 44144
(6) Glen Morgan
Reaud, Morgan & Quinn
801 Laurel
Beaumont, TX 77701
(7) Perry Weitz
Weitz & Luxenburg
180 Maiden Lane
New York, NY 10038
The Asbestos TAC was created pursuant to the Asbestos PI Trust
Agreement.
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. 11;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DOMAN INDUSTRIES: Equity Deficit Climbs to $461MM at March 31
-------------------------------------------------------------
Doman Industries Limited announces the Company's first quarter
2004 results.
Earnings
The net loss for the first quarter of 2004 was $44.3 million
compared to a net loss of $14.5 million in the immediately
preceding quarter and net earnings of $52.2 million in the first
quarter of 2003.
Contributing to the net loss for the first quarter of 2004 was an
unrealized foreign exchange loss of $10.0 million on the
translation of debt denominated in US dollars. This compares with
foreign exchange gains of $35.3 million and $73.9 million in the
immediately preceding quarter and the first quarter of 2003
respectively.
Operating earnings for the first quarter were almost break-even,
showing a small loss of $0.8 million compared to a loss of $24.2
million in the preceding quarter and earnings of $3.6 million in
the first quarter of 2003. The significant improvement in
operating earnings for the quarter reflects higher prices for
lumber and pulp. However, this benefit was negatively impacted by
the stronger Canadian dollar. For the first quarter of 2004 the
Canadian dollar averaged US $0.76 compared to US $0.76 in the
immediately preceding quarter and US $0.65 in the first quarter of
2003. The Company estimates that the strengthening Canadian dollar
reduced operating earnings by approximately $17 million in the
first quarter of 2004 compared to the first quarter of 2003.
Softwood lumber duties expensed in the first quarter of 2004
totalled $9.5 million compared to $9.3 million in the immediately
preceding quarter and $7.8 million in the first quarter of 2003.
Solid Wood Segment
Sales in the solid wood segment were $119.4 million in the first
quarter compared to $113.4 million in the previous quarter and
$113.6 million in the same quarter of 2003 reflecting a higher
lumber sales volume and reduced outside volume of log sales.
EBITDA for the solid wood segment in the first quarter was $17.7
million compared to $(1.1) million in the previous quarter and
$20.0 million in the same quarter of 2003. Lumber prices were
higher in the first quarter compared to the previous quarter, but
the stronger Canadian dollar had a significant negative impact on
the current quarter's results compared to the first quarter
of 2003. A new market-based timber pricing system became effective
on February 29, 2004 which is expected to reduce stumpage fees by
approximately $8 per cubic metre. As a result of the timing of
this new system, as well as seasonal factors, logging operations
did not get fully under way until March. Production of 769 km(3)
increased from 709 km(3) in the previous quarter and 681 km(3) in
the first quarter of 2003 as a result of this higher production
in March 2004.
Pulp Segment
Pulp sales for the quarter were $46.9 million compared to $51.7
million in the previous quarter and $56.9 million in the same
quarter of 2003. The average list price of NBSK, delivered to
Northern Europe, was US $590 per ADMT in the first quarter of 2004
compared to US $557 per ADMT in the previous quarter and US $482
per ADMT in the same quarter of 2003. However, the stronger
Canadian dollar acted to offset some of these US dollar price
increases.
EBITDA for the pulp segment in the quarter was $(5.0) million
compared to $(7.3) million in the previous quarter and $(3.8)
million in the first quarter of 2003. The Squamish pulpmill
operated for 81 days in the first quarter of 2004, producing
63,724 ADMT. It was down for 10 days in January due to a
shortage of wood chips. The Port Alice dissolving sulphite mill
did not operate during the first quarter due to fibre shortages.
Changes in Financial Position and Liquidity
Cash flow from operations in the first quarter of 2004, before
changes in non-cash working capital, was $(21.6) million compared
to $(33.5) million in the previous quarter and $(8.7) million in
the first quarter of 2003. After changes in non-cash working
capital, cash provided by operations in the first quarter of 2004
was $0.1 million compared to $7.5 million in the previous quarter
and $7.4 million in the first quarter of 2003. The major reason
for the cash "inflow" from working capital arises from the fact
that interest payments on the Company's outstanding bond
indebtedness continue to be accrued, but payments are stayed under
the Company's CCAA proceedings.
Additions to property, plant and equipment in the first quarter
were $5.7 million, almost all of it being for road construction in
the logging sector.
Bank indebtedness increased by $2.5 million in the quarter.
The Company's cash balance at March 31, 2004 was $19.6 million. In
addition, $29.1 million was available under its revolving credit
facility.
Sale of Port Alice Pulpmill
On May 11, 2004 a sale of the Port Alice pulpmill to Port Alice
SpecialtyCellulose Inc., a subsidiary of LaPointe Partners, Inc.,
was approved by the Supreme Court of British Columbia, with
closing on the same date. Under the purchase and sale agreement,
the purchaser acquires for one dollar substantially all the assets
used primarily or exclusively in the Port Alice mill, including
$2.73 million of adjusted working capital (as defined) and the
assumption of outstanding obligations relating to the pulpmill,
including employee and pension liabilities.
Restructuring
On April 6, 2004 the Supreme Court of British Columbia adjourned
until April 30, 2004 an application made by certain of Doman's
unsecured noteholders to move forward with a plan of arrangement
approved by those noteholders. It also gave the Company until
April 30, 2004 to file its own plan and set June 7, 2004 as the
suggested meeting date for the consideration of a restructuring
plan by the Company's unsecured creditors and ordered the shutdown
of the Port Alice mill on May 11, 2004 unless a buyer could be
found.
On April 26, 2004 the Company announced it had reached an
agreement in principle with the unsecured noteholder group and on
April 30, 2004 the Court issued an order authorizing the filing of
the Plan that was approved by the Doman Board of Directors and
directing the Company to hold a meeting of unsecured creditors on
June 7, 2004. The main features of the Plan are summarised in the
attached Notes to Consolidated Financial Statements and a copy of
the Meeting Order, Information Circular, Plan and related
documents may be obtained by accessing the Company's website at
http://www.domans.com/
Concluding Remarks
In conclusion, Rick Doman stated, "I am very pleased that a
restructuring Plan has been agreed upon with the unsecured
noteholder Committee. Assuming a positive vote on June 7 from the
affected creditors, the Plan will bring stability to our
organization and enable our talented and loyal workforce to focus
on running the business and returning it to profitability. A
number of challenges, in particular a resolution to the softwood
lumber dispute, remain to be solved. However, strong markets for
both our lumber and NBSK pulp products and a very significantly
reduced debt load should enable the newly restructured
organization to emerge on a strong footing."
At March 31, 2004, Doman Industries' balance sheet shows an equity
deficit of $461,466,000 compared to a deficit of $417,125,000 at
December 31, 2003.
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.
DRUID RESTAURANT: Case Summary & 19 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Druid Restaurant, Inc.
1357 Cambridge Street
Cambridge, Massachusetts 02139
Bankruptcy Case No.: 04-13766
Type of Business: The Debtor operates a restaurant.
Chapter 11 Petition Date: May 5, 2004
Court: District of Massachusetts (Boston)
Judge: William C. Hillman
Debtor's Counsel: Timothy M. Mauser, Esq.
Mauser & Mauser
180 Canal Street
Boston, MA 02114
Tel: 617-720-5585
Total Assets: $1,480,610
Total Debts: $235,930
Debtor's 19 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Commonwealth of Mass. Sales and Meals $120,000
Taxes in arrears
East Cambridge Savings Bank $60,000
Michael Murphy $15,000
Aidan Burke, Inc. $7,500
William Mcgwoan Accounting bill $7,000
James O'Connor $6,000
Internal Revenue Service 941 Taxes $5,000
NStar Electric $3,500
Excel Financial $2,500
Boston Metro $2,370
Donal Sinclar $2,100
United Liquors $1,900
BMI $1,029
Alarmex $720
BFI $450
D.E.T. $441
The Boston Globe $300
Gorham Life Appliance $120
Interbay Funding LLC Unknown
DT INDUSTRIES: Files for Chapter 11 Protection in S.D. Ohio
-----------------------------------------------------------
DT Industries, Inc. (Nasdaq: DTII), an engineering-driven
designer, manufacturer and integrator of automated systems and
related equipment used to manufacture, assemble, test or package
industrial and consumer products, announced that it, together with
its domestic subsidiaries, filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of Ohio -
Western Division. The Company has obtained a debtor-in-possession
financing facility structured to provide it with the financing,
subject to approval of the bankruptcy court, to operate its
business during the course of the bankruptcy proceedings.
The Company also announced that it has entered into an asset
purchase agreement to sell substantially all of the assets of its
Detroit Tool and Engineering Company, Assembly Technology & Test,
Inc. and Advanced Assembly Automation, Inc. subsidiaries, and all
of the issued and outstanding capital stock of its DT Assembly &
Test Europe GmbH subsidiary in Neuwied, Germany, to Assembly and
Test Worldwide, Inc. in a transaction to be consummated pursuant
to an auction process under the United States Bankruptcy Code.
Assembly and Test Worldwide, Inc. is owned by Thompson Street
Capital Partners L.P. and certain current and former members of
management of the subsidiaries being sold. Excluded from the
transaction are the assets of the Company's Assembly & Test Europe
Limited subsidiary in Buckingham, U.K., which will continue to
operate outside of the bankruptcy proceedings. The consummation of
the transaction is subject to the satisfaction of certain closing
conditions, including the entry of an order approving the
transaction by the bankruptcy court.
"With [yester]day's filing, we are progressing on a difficult but
necessary path to address our financial situation," said Steve
Perkins, CEO of the Company. "We believe that, under the
circumstances, this filing was the best course of action for DT
Industries and will enable us to preserve jobs for our employees
and the remaining value of our operating businesses."
If the transaction contemplated by the asset purchase agreement is
consummated, the Company will use the net proceeds from the
transaction to repay its debtor-in-possession financing and a
portion of the outstanding indebtedness under its senior credit
facility. The Company will attempt to sell the assets that will
remain in the bankruptcy estate following consummation of the
transaction. The Company does not expect proceeds from these asset
sales to be available for distribution to any remaining unsecured
creditors or common stock holders.
The Company also announced that it received notice from the NASDAQ
National Market that it is not in compliance with certain
continued listing requirements, including the minimum bid price
and market capitalization requirements. The Company believes that
its common stock will be delisted from the NASDAQ National Market
within the next week as a result of its noncompliance with these
listing standards and its petition for bankruptcy relief.
DT INDUSTRIES INC: Case Summary & 88 Largest Unsecured Creditors
----------------------------------------------------------------
Lead Debtor: DT Industries, Inc.
907 West Fifth Street
Dayton, Ohio 45407
Bankruptcy Case No.: 04-34091
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Advanced Assembly Automation, Inc. 04-34092
Assembly Machines, Inc. 04-34093
DTI Pennsylvania Subsidiary, Inc. 04-34094
Assembly Technology and Test, Inc. 04-34095
Detroit Tool and Engineering Company 04-34096
DT Resources, Inc. 04-34097
DTI Massachusetts Subsidiary, Inc. 04-34098
DTI Lebanon Subsidiary, Inc. 04-34099
DTI Leominster Subsidiary, Inc. 04-34100
Hansford Manufacturing Corporation 04-34101
Mid-West Automation Enterprises, Inc. 04-34102
Mid-West Automation Systems, Inc. 04-34103
Vanguard Technical Solutions, Inc. 04-34104
Type of Business: The Debtor is an engineering-driven designer,
manufacturer and integrator of automated
systems and related equipment used to
manufacture, assemble, test or package
industrial and consumer products.
See http://www.dtindustries.com/
Chapter 11 Petition Date: May 12, 2004
Court: Southern District of Ohio (Dayton)
Judge: Thomas F. Waldron
Debtors' Counsel: Ronald S. Pretekin, Esq.
Coolidge Wall Womsley & Lombard
Suite 600, 33 West First Street
Dayton, OH 45402-1235
Tel: 937-223-8177
Fax: 937-223-6705
Total Assets: $150,593,000
Total Debts: $142,913,000
A. DT Industries, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Northwestern Mutual Subordinated $14,980,000
Attn: Tim Wegener Unsecured Debt
720 East Wisconsin Ave.
Milwaukee, WI 53202
Citicorp Subordinated $10,010,000
Attn: John Petschler Unsecured debt
242 Trumbull Street
Hartford, CT 06115
David Babson Subordinated $10,010,000
Attn: Mark Ahmed Unsecured Debt
1500 Main Street Ste 2800
Springfield, MA 01115
CNA Reimbursement of $85,507
Claims
MCI WorldCom Telecommunication $83,839
Services
Lockton Companies Ocean Cargo Policy $77,407
Delaware Secretary of State Franchise Fee $66,000
John F. Logan Former Director/ $61,000
Employee Deferred
Compensation
CCC Risk Management Reimbursement of $41,120
Claims
ADP Payroll Processing $30,432
Services
Primacy Relocation Employee Relocation $24,483
Expenses
Moody's Investor Service Annual Listing Fee $20,000
Blackwell Sanders Legal - Intellectual $17,964
Property
Edwards & Angell Legal - Product $15,724
Liability
Multiple Benefit Services Employee Benefits $15,000
Advisory
Integrated Marketing Employee Manuals $13,240
Services
Financial Relations Investor Relations $12,933
Metrogroup for Reed Settlement of Claim $12,500
- Cancelled
Exhibition Booth
McMahon Berger Hanna Legal $12,003
Right Management Outplacement Services $10,400
B. Advanced Assembly Automation's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Pyxis Parts $256,435
12070 Farmington Road
Livonia, MI 48150
Guide Equipment Parts $221,721
Knight Industries, Inc. Parts $215,280
City-Wide Develop. Corp. Rent $200,293
ASE Final Phase (5) Parts $132,742
IT Equipment Parts $115,784
City-Wide Develop. Corp. Rent $99,920
Telesis Technologies, Inc. Parts $82,070
Rexel Machining $78,660
C.A.M. Machine, Inc. Parts $76,026
Becker's Electric Supply Parts $70,730
Electro-Matic Prod. Inc. (5) Parts $50,800
Stell Master Transfer Inc. Parts $50,307
Pyramid Riggers Parts $45,731
Weber Auto Screwdrivers Parts $43,867
Krups Conveyor Systems Parts $42,485
Etamic Corporation Parts $42,400
Dysinger Tool & Die Inc. Machining $36,098
Michigan Tool and Broach Machining $34,000
DMJ Tech Machining $29,202
C. Assembly Technology and Test's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
AAS, Korea Co., Ltd. Commissions $170,000
Atlas Copco Tools & Assembly Parts $139,500
Electromatic Prod. Inc. Parts $112,238
Hayes Manufacturing, Inc. Parts $108,442
Mid America Systems, Inc. Installation Contract $104,290
Bauer Controls Parts $98,624
ATC, Inc. Parts $87,733
Oberlander Installation Contract $86,960
Fortune Tool & Machine Parts $79,888
McNauhton McKay Parts $61,568
Bank One Parts $58,553
Linwood Tool Company, Inc. Machine Services $45,754
National Instruments Parts $44,253
Blackedge Tool Parts $40,973
Fletcher Precision Machine Parts $38,814
Hydra Flex, Inc. Parts $37,404
DTR Manufacturing Parts $32,246
McDonald Enterprises, Inc. Parts $31,659
Gosen Tool & Machine Parts $30,572
Intra Corp. Parts $28,380
D. Detroit Tool and Engineering's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
LaClede County Collector Property Taxes $216,469
M&R Precision Machining Inc. Parts $169,928
SMC Electric Supply Co. Parts $120,895
Sterling Staffing, Inc. Engineering Services $101,588
Domino Amjet, Inc. Parts $88,635
Welding Technology Corp. Parts $80,170
Sturgis Automation, Inc. Parts $71,576
Full Service Supply Parts $70,270
Epson America, Inc. Parts $67,733
Affiliated Control Equipment Parts $65,307
AC Tool & Machine Co. Parts $60,929
Danly Die Set Corp. Parts $55,510
Future Products Parts $52,420
Gemel Precision Tool Co, Inc Parts $51,184
Power Motion Sales, Inc. Parts $45,093
Gros-Ite Prec Engrd Spindles Parts $44,964
Visibility Corp. Maintenance Contract $42,760
Scott Special Tools, Inc. Parts $42,493
Earle M. Jorgensen Co. Raw Materials $41,426
Tennessee Rand Parts $36,031
E. Hansford Manufacturing Corp.'s 6 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Van Buren Hansford Jr. Rent $166,750
Van Buren Hansford Jr. Cost Reimbursement $112,076
Under Lease
Agreement
Rochester Gas & Electric Utilities $5,773
Pitney Bowes Credit Corp. Mall Machine $975
Monroe County Water Utilities $100
Frontier Telephone Utilities $90
F. Mid-West Automation Systems' 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
1400 Busch Parkway LLC $432,141
c/o Nicholson Porter & List, Inc.
1300 W. Higgins Road, Suite 104
Park Ridge, IL 60068
Can Commercial Insurance $78,963
ENRON: Court Approves Borden Chemicals Claim Settlement Pact
------------------------------------------------------------
Enron Energy Services, Inc., as successor-in-interest to Enron
Capital & Trade Resources Corporation, entered into an Enfolio
Master Firm Sales Agreement with Borden Chemicals and Plastics
Operating Limited Partnership, dated April 1, 1996. Under the
Sales Agreement, Enron Energy supplied natural gas to Borden
Chemicals' manufacturing facility.
Frank Oswald, Esq., at Togut, Segal & Segal, LLP, in New York,
relates that on April 3, 2001, Borden Chemicals filed for Chapter
11 protection in the United States Bankruptcy Court for the
District of Delaware. In October 2001, Enron Energy timely filed
a proof of claim for $919,793 in Borden Chemicals' cases in
connection with the Sale Agreement. On March 22, 2002, BCP
Management, Inc., the general partner of Borden Chemicals, also
filed for Chapter 11 protection.
On February 5, 2003, the Delaware Bankruptcy Court confirmed the
Third Amended Joint Plan of Liquidation of (1) Borden Chemicals
and BCP Finance Corporation and (2) BCP Management, Inc. The
Joint Plan provided for the dissolution of Borden Chemicals and
BCP Management on the Effective Date, which occurred on March 13,
2003. The Joint Plan further provided for the formation of BCP
and BCPM Liquidating, LLC, successor-in-interest of BPP
Management, to liquidate the remaining assets of Borden Chemicals
and BCP Management, and pursue all causes of action. The Joint
Plan estimated the distribution to general unsecured creditors to
be between 0.2% and 2.9%.
On March 27, 2003, five months after the Enron Energy Services,
Inc. Debtors' Bar Date, BCP filed Claim No. 22722 based on
allegedly preferential transfers to Enron Energy totaling
$2,365,637, pursuant to Sections 547, 550 and 551 of the
Bankruptcy Code.
Mr. Oswald reports that BCP and the Debtors entered into a
tolling agreement pursuant to which the parties agreed to extend
the deadline for BCP to commence an adversary proceeding
regarding the Avoidance Claim until September 24, 2003 in an
effort to explore a settlement. On August 26, 2003, BCP asked
the Court to allow its late-filed claim and to lift the automatic
stay to commence the Avoidance Claim. BCP and Enron entered into
a second tolling agreement, dated September 12, 2003, pursuant to
which the deadline for BCP to commence an adversary proceeding
was stayed until 20 days after the entry of a final order
adjudicating the Lift Stay Motion. The Lift Stay Motion remains
pending before the New York Bankruptcy Court.
On October 10, 2003, Enron Energy timely filed a $1,028,737 claim
in BCP Management's Chapter 11 case. Based on the Joint Plan's
estimated distribution to general unsecured creditors, Mr. Oswald
notes that the distribution on the Enron Claims will likely not
exceed $50,000.
To settle their disputes, the parties entered into a Stipulation,
which provides that:
(a) BCP, for itself and Borden Chemicals, releases, acquits,
and forever discharges the Debtors from any and all
claims, causes of action, suits, debts, liens,
obligations, liabilities, demands, losses, costs and
expenses of any kind, character or nature whatsoever,
that BCP may have or claim to have now or which may later
arise out of or be connected with the BCP Claims or the
Sales Agreement;
(b) BCPM, for itself and BCP Management, releases, acquits,
and forever discharges the Debtors from any and all
claims, causes of action, suits, debts, liens,
obligations, liabilities, demands, losses, costs and
expenses of any kind, that BCPM may have or claim to have
now or which may later arise out of or be connected with
the BCP Claims and the Sales Agreement;
(c) The Debtors release, acquit, and forever discharge BCP,
Borden Chemical, BCPM and BCP Management from any and all
claims, causes of action, suits, debts, liens,
obligations, liabilities, demands, losses, costs and
expenses of any kind, that the Debtors may have or claim
to have now or which may later arise out of or be
connected with the Enron Claims or the Sales Agreement;
(d) The Settlement Agreement must be approved by both
parties' Bankruptcy Courts to become effective; and
(e) The BCP Claims and each of the Enron Claims will be deemed
irrevocably withdrawn, with prejudice, and to the extent
applicable expunged, and each of the BCP Claims and the
Enron Claims will be disallowed in their entirety.
At the Debtors' request, the Court approves the Stipulation with
BCP and BCPM pursuant to Rule 9019 of the Federal Rules of
Bankruptcy Procedure. (Enron Bankruptcy News, Issue No. 107;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
EXIDE TECHNOLOGIES: Court Okays Patton Boggs' Retention as Counsel
------------------------------------------------------------------
Judge Carey approves the Exide Technologies, Inc. Debtors' request
to employ Patton Boggs, subject to these modifications:
(a) Patton Boggs will be employed nunc pro tunc to December 1,
2003;
(b) Patton Boggs will be compensated $150,000 for its
representations of the Debtors during the months of
September through November 2003 as an Ordinary Course
Professional;
(c) The scope of Patton Boggs' employment will include both
the Special Counsel Matters and the Additional Special
Counsel Matters; and
(d) Patton Boggs will be entitled to allowance of compensation
and reimbursement of expenses, for services rendered and
expenses incurred by it on behalf of the Debtors from and
after December 1, 2003, upon filing and approval of fee
applications.
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. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
EXTENDED STAY: Blackstone Group Affiliate Completes Acquisition
---------------------------------------------------------------
Extended Stay America, Inc. announced that it has completed its
merger with an affiliate of The Blackstone Group. Under the terms
of the merger agreement, ESA stockholders will receive $19.625 per
share in cash, without interest.
As of 8:00 A.M. Eastern Daylight Time (EDT) on Tuesday, May 11,
2004, approximately $169,100,000 in the aggregate principal amount
of the ESA 9.15% Senior Subordinated Notes due 2008, constituting
approximately 85% of the 2008 Notes, and approximately
$291,851,000 in the aggregate principal amount of the ESA 9 7/8%
Senior Subordinated Notes due 2011, constituting approximately 97%
of the 2011 Notes, had been tendered and not withdrawn in
connection with the previously announced cash tender offers for
the Notes. All Notes validly tendered and not withdrawn in the
offers have been accepted for payment. In addition, ESA announced
that it has successfully completed the related consent
solicitations for the Notes. The offer to acquire all of the
outstanding Notes expired, as scheduled, on Tuesday, May 11, 2004
at 8:00 A.M. EDT.
About The Blackstone Group
The Blackstone Group -- http://www.blackstone.com/-- a private
investment and advisory firm with offices in New York, London and
Hamburg, was founded in 1985. The firm has raised a total of
approximately $32 billion for alternative asset investing since
its formation. The Blackstone Group's six core businesses are
Private Equity Investing, Private Real Estate Investing, Corporate
Debt Investing, Marketable Alternative Asset Management, Corporate
Advisory, and Restructuring and Reorganization Advisory.
About Extended Stay America
Extended Stay America -- http://www.extstay.com/-- develops, owns
and operates three brands of "extended stay" lodging hotels,
designed for business and personal travelers in need of
affordable, high quality accommodations for a week or more. The
Company's brands include: Crossland Economy Studios, Extended
StayAmerica Efficiency Studios and StudioPLUS Deluxe Studios. The
Company owns and operates 475 hotels in 42 states, including 95
StudioPLUS Deluxe Studios, 341 Extended StayAmerica Efficiency
Studios and 39 Crossland Economy Studios hotels, making the
Company the leading provider of value-priced extended stay
lodging.
EXTENDED STAY: S&P Withdraws Low-B Ratings After Blackstone Merger
------------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'BB-' corporate
credit and 'B' subordinated ratings on Extended Stay America Inc.
These ratings were removed from CreditWatch where they were placed
on March 8, 2004.
The rating withdrawal reflects the completion of ESA's merger with
an affiliate of the Blackstone Group and the expiration of the
cash tender offer for the publicly outstanding debt.
FEDERAL-MOGUL: Hiring Garden City Group as Voting Agent
-------------------------------------------------------
The Federal-Mogul Debtors seek the Court's permission to employ
The Garden City Group, Inc., as their Voting Agent.
James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub, P.C., in Wilmington, Delaware, relates that the
Debtors previously retained The Garden City to act as claims
agent, and its affiliate, GCG Communications, Inc., to act as
their claims notice consultant.
As Voting Agent, The Garden City will:
-- prepare the lists of addresses to whom the Debtors'
noticing agent will dispatch Solicitation Packages;
-- receive all Ballots and Master Ballots in these
reorganization proceedings;
-- tabulate the results of the balloting process;
-- submit the results to the Court for purposes of determining
acceptance or rejection by creditors and interest holders
of the Plan;
-- initially act as the principal initial contact point to
which the holders of Claims against and Interests in the
Debtors can address questions respecting the Plan and the
balloting process; and
-- be responsible for the telephone "helplines" and Web site
concerning the solicitation process.
The Debtors submit that The Garden City's prior services makes it
an optimal choice to act as Voting Agent in these proceedings.
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.
54; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FLEMING COS: Northstar Asserts $2.6MM Cure Amount Due Under Pact
----------------------------------------------------------------
In December 1998, the Fleming Companies, Inc. Debtors signed a
Refrigeration Supply Agreement with Wisvest Corporation, which
subsequently assigned its payment rights under the agreement to
Wisvest Ther-Max, LLC. In December 2002, Wisvest Ther-Max and the
Debtors agreed to assign Wisvest Ther-Max's rights under the
agreement to Northstar Refrigeration, LLC. This agreement remains
in effect through July 31, 2009.
In connection with the sale of their LaCrosse, Wisconsin
warehouse to SuperValu, the Debtors advise Northstar of their
intention to reject the Agreement.
Northstar Objects
Northstar Refrigeration, LLC, complains that the Cure Notice
provided by the Debtors incorrectly identifies the contract as
belonging to Wisvest Ther-Max, LLC, and also incorrectly
identifies the cure amount as zero.
Kevin J. Mangan, Esq., at Monzack & Monaco in Wilmington,
Delaware, tells Judge Walrath that the agreement provides that
if, at any time during its term, the Debtors should agree to sell
the building housing the refrigeration system that is the subject
of the agreement, the Debtors must purchase the system unless
Northstar agrees to the assignment of the agreement to the
building purchaser.
Mr. Mangan also notes that the agreement requires the Debtors to
compensate Northstar for the fair market value of the system, to
be not less than 1.3 times the net present value, using an 8%
discount rate, of the remaining reservation charges. Those
charges are $33,750 per month. According to Northstar's
calculation of the system's purchase price using the remaining
reservation charges as of July 30, 2003, and the formula provided
in the agreement, Northstar's cure amount is $2,565,395.77.
Additionally, the Debtors have failed to remit the use charge
plus the applicable sales tax, less the electricity credit, for
the month of March 2003, amounting to $23,306.93, and late fees
totaling $745.82. Accordingly, the total cure amount owed by the
Debtors to Northstar is $2,589,448.52 and increasing as interest
accrues.
On learning of the proposed assignment of the LaCrosse warehouse
where the refrigeration equipment subject to the agreement is
located to SuperValu, and before the actual closing, Northstar
notified the Debtors of their obligation to buy the refrigeration
equipment if the warehouse was sold. Consequently, the Debtors
and SuperValu are well aware that, should the sale close -- as it
has -- prior to resolution of the agreement, the Debtors would be
obligated to buy the refrigeration supply equipment, or assign --
with Northstar's consent and a proper cure -- the agreement to
SuperValu.
The Debtors elected to sell the warehouse without rejecting or
assigning the agreement. At the time of closing of the warehouse
sale, there was approximately $10,000,000 in refrigeration
inventory that was part of the sale to SuperValu. Mr. Mangan
contends that the cost to install the equipment is significant,
as is the cost of removal, and the equipment has very little
value on removal. Northstar has advised both the Debtors and
SuperValu, the proposed assignee, that it does not object to the
assignment of the agreement to SuperValu. However, neither the
Debtors nor SuperValu have responded to Northstar's
communications.
Northstar initially received notice that the Debtors intended to
assume the contract. Now, the Debtors have changed course and
seek to reject an agreement that cannot be rejected because the
rejection was not performed before the closing of the sale to
SuperValu.
Accordingly, Northstar asks Judge Walrath to impose a
constructive trust on the proceeds of the sale of the warehouse
to ensure the payment of its administrative claim for the
refrigeration supply.
Either the Debtors have assumed a $2,482,287.32 administrative
obligation under the agreement's buy-out provisions, or the
agreement has been assigned through the sale of the warehouse in
which it is located to SuperValu, in which case SuperValu is
liable for the payment due under the Refrigeration Supply
Agreement. In either event, no rejection should be permitted as
this is only an agreement to pay Northstar money, is not
executory any more, and cannot be rejected or assigned without
cure and Northstar's consent.
Mr. Mangan argues that an obligation under this type of agreement
arises when the legally enforceable duty to perform it arises.
While the agreement is prior to the Petition Date, the obligation
to perform the buy-out arises subsequent to the Petition Date.
The Debtors received a postpetition benefit from the sale of the
warehouse with the refrigeration equipment intact, and a sale of
inventory including millions of dollars of perishables preserved
by that equipment. The Debtors elected to sell the LaCrosse
warehouse without first rejecting the agreement with Northstar.
The Debtors must now pay the piper.
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. 32; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FORT HILL SQUARE: Case Summary & 36 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Fort Hill Square Associates
One International Place
Boston, Massachusetts 02110
Bankruptcy Case No.: 04-13855
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Fort Hill Square Phase 2 Associates 04-13857
Type of Business: The Debtor manages and develops One
International Place that consists of two
separate but interconnected office towers
consisting of over 1.8 million square feet.
Chapter 11 Petition Date: May 7, 2004
Court: District of Massachusetts (Boston)
Judge: Carol J. Kenner
Debtors' Counsel: Alex M. Rodolakis, Esq.
Hanify & King
One Beacon Street
Boston, MA 02108
Tel: 617-423-0400
Fax: 617-556-8985
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
A. Fort Hill Square Associates' 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Structure Tone Inc. $279,740
711 Atlantic Avenue
Attn: Claude Mack
Boston, MA 02111
Unicco Services Inc. Cleaning $166,127
N3TAR Electric $135,308
Greenberg Traurig LLP $130,000
Piper Rudnick LLP $98,238
Northeast Security Inc. $79,614
Fujitec America Inc. $65,429
Meyers Parking System Inc. $26,357
Kelley Habib John $26,085
Goulston & Storrs PC $9,524
Margulies & Associates Inc. $4,500
Harry R. Feldman Inc. $3,750
Haley & Aldrich Inc. $2,596
Visnick & Caulfield Assoc. Inc. $2,338
Cannon Design $2,317
Costar Realty Information Inc. $1,430
AAT Communications Corp. $1,035
Kunic-Key Lock $740
Turnaround & Crisis Management $496
Copy Cop $144
B. Fort Hill Square Phase 2's 16 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
N3TAR Electric $107,378
Unicco Services Inc. $100,347
Structure Tone Inc. $67,580
Northeast Security Inc. $56,490
Fujitec America Inc. $43,360
Meyers Parking System Inc. $20,046
Kelley Habib John Integrated Marketing $19,123
Goulston & Storrs, PC $12,928
GEMSA Loan Service $7,000
Piper Rudnick LLP $3,726
Visnick & Caufield Assoc., Inc. $3,245
Harry R. Feldman Inc. $2,750
Haley & Aldrich Inc. $1,903
Costar Realty Information Inc. $1,048
Enterprise Technology GRP $843
Copy Cop $41
FOURTH & WASHINGTON: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Fourth and Washington LLC
dba Historic Suits of St. Louis
dba WS on Washington
201 South Central Suite 103
Clayton, Missouri 63105
Bankruptcy Case No.: 04-45890
Type of Business: The Debtor is engaged in the business of
operating a hotel.
Chapter 11 Petition Date: May 3, 2004
Court: Eastern District of Missouri (St. Louis)
Judge: James J. Barta
Debtors' Counsel: Randall F. Scherck, Esq.
Lathrop and Gage, L.C.
10 South Broadway, Suite 1300
St. Louis, MO 63102
Tel: 314-613-2508
Total Assets: $16,000,000
Total Debts: $12,500,000
Debtor's 10 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Otis Elevator Contract $26,000
Ameren UE Utility Debt $10,000
Ferguson Surveying Trade debt $9,532
Advantage Club Services Bank Loan $9,336
FNF Capital Bank Loan $2,815
Hi Clay Trade debt $2,048
Steven Straub Bank Loan $1,900
RBG & Co. Trade Debt $1,750
MSD Utility Debt $1,039
Michael Markenson, Esq. Trade Debt $1,000
FRIEDMAN'S INC: Planning to Appeal NYSE Delisting Action
--------------------------------------------------------
Friedman's Inc. announced that it has been notified that the New
York Stock Exchange (NYSE) has made a determination to delist the
company's Class A Common Stock that traded under the ticker symbol
FRM on the NYSE effective May 11, 2004. Friedman's is evaluating
an appeal of the decision of the NYSE.
The Company noted that while it is disappointed with the NYSE's
decision, the delisting from the Exchange does not affect
Friedman's day-to-day business operations. The Company also noted
that although its common stock is not eligible for trading on the
NASD over-the-counter bulletin board (OTC), the Company
understands that market makers have independently begun to make a
market in the company's common stock on the Pink Sheets under the
symbol "FRDM."
Friedman's Inc. is a leading specialty retailer of fine jewelry
based in Savannah, Georgia. The Company is the leading operator of
fine jewelry stores located in power strip centers. At April 12,
2004, Friedman's Inc. operated a total of 711 stores in 20 states,
of which 224 were located in power strip centers and 487 were
located in regional malls.
* * *
As reported in Troubled Company Reporter's January 2, 2003
edition, the Company was notified by its lenders that it is in
default under certain provisions of its credit agreement. As the
preliminary financial information becomes available, the Company
will be in discussions with its lenders regarding these matters in
an attempt to resolve them prior to the filing of its annual
report.
At present, the Company's lenders continue to provide the
Company with the benefits of its credit agreement, with certain
limited exceptions, although they have the right to terminate
their support at any time.
HILLCREST MEDICAL: S&P Places B- Bond Rating On Watch Developing
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B-' rating on
Oklahoma Development Finance Authority, Okla.'s $219.24 million
series 1999A and $16.96 million series 1999B hospital revenue and
refunding bonds issued for Hillcrest Medical Center (HMC) on
CreditWatch with developing implications due to May 11, 2004
announcement that Hillcrest HealthCare System (HHS), the
parent corporation of HMC, signed a definitive agreement to sell
HHS to Ardent Health Services Inc. Ardent is a for-profit health
care provider headquartered in Nashville, Tenn.
HHS indicated it intends to use the proceeds from the transaction
to repurchase all of its outstanding bonds at par. On May 11,
2004, Standard & Poor's placed the 'B+' long-term corporate credit
rating of Ardent on CreditWatch with negative implications due to
the expected increase in its financial leverage.
The completion date for the proposed transaction is sometime this
summer and the two parties are in the process of making all the
necessary regulatory filings required.
Standard & Poor's will monitor the progress of the proposed sale
and its effect on the rated debt of HMC.
I-PREFERRED TERM SECURITIES: S&P Rates Class D Notes at BB
----------------------------------------------------------
Standard and Poor's assigned ratings to various classes of
I-Preferred Term Securities IV Ltd./I-Preferred Term Securities IV
Inc., a CDO backed primarily by insurance and bank trust preferred
securities.
The ratings are based on the following:
-- Adequate credit support provided in the form of
overcollateralization, subordination, and excess spread;
-- Characteristics of the underlying collateral pool,
consisting primarily of insurance and bank trust preferred
securities;
-- Hedge agreements entered into with an appropriately rated
counterparty to mitigate the interest rate risk created by
having fixed-rate assets and floating-rate liabilities;
-- Scenario default rates of 48.55% for the class A notes,
36.86% for the class B notes, 33.48% for the class C
notes, and 26.54% for the class D notes; and break-even
loss rates of 61.90% for the class A notes, 38.66%
for the class B notes, 34.17% for the class C notes, and
29.23% for the class D notes;
-- Weighted average rating of 'BB';
-- Weighted average maturity for the portfolio of 28.36
years;
-- S&P default measure (DM) of 1.15%;
-- S&P variability measure (VM) of 1.50%; and
-- S&P correlation measure (CM) of 1.
Interest on the class B, C, and D notes may be deferred up until
the legal final maturity of June 2034 without causing a default
under these obligations. The ratings on the class B, C, and D
notes, therefore, address the ultimate payment of interest and the
ultimate payment of principal.
Ratings Assigned
I-Preferred Term Securities IV Ltd./I-Preferred Term Securities IV
Inc.
Class Rating Amount (mil. $)
A-1 AAA 162.5
A-2 AAA 37.0
A-3 AAA 13.9
B-1 A- 54.6
B-2 A- 25.5
C BBB 12.4
D BB 6.2
INTERPUBLIC: Secures 2 New Credit Facilities Totaling $700 Million
------------------------------------------------------------------
The Interpublic Group (NYSE: IPG) announced that it has entered
into two new credit facilities, replacing its two existing
committed facilities which were scheduled to mature on May 15,
2004 and June 26, 2005, respectively. The new facilities are
comprised of a $250 million 364-day facility and a $450 million
3-year facility.
The new facilities permit Interpublic to make payments of
dividends on preferred stock of $45 million annually and
additional payments of dividends on its common and preferred stock
and share repurchases of up to $50 million annually. The $50
million amount is twice the amount permitted in the previous
facilities and may be carried over to succeeding years to the
extent unused, up to a maximum in any year of $125 million. The
new credit agreements provide that the company may make new
acquisitions for cash of up to $100 million, as did the previous
credit facilities. But the new agreements allow Interpublic to
carry over unused amounts to succeeding years, up to $250 million
in any year. Under the new facilities the company's capital
expenditures are capped at $225 million annually, with a carry-
over of up to $50 million. The previous facilities capped capital
expenditures at $175 million and permitted up to $40 million of
any unused amounts to be carried forward to the next calendar
year. In addition, the new facilities bear interest at an interest
spread above LIBOR of 1.125%, representing a savings of .625% when
compared to the prior facilities.
About Interpublic
Interpublic is one of the world's leading organizations of
advertising agencies and marketing services companies. Major
global brands include Draft, Foote, Cone & Belding Worldwide,
Golin/Harris International, Initiative Media, Lowe & Partners
Worldwide, McCann-Erickson, Octagon, Universal McCann and Weber
Shandwick Worldwide. Leading domestic brands include Campbell-
Ewald, Deutsch and Hill Holliday.
* * *
As reported in the Troubled Company Reporter's April 6, 2004
edition, Fitch Ratings affirmed the ratings on The Interpublic
Group of Companies, Inc.'s (IPG) senior unsecured debt at 'BB+',
multi-currency bank credit facility at 'BB+' and convertible
subordinated notes at 'BB-'. The Rating Outlook has been revised
to Stable from Negative. Approximately $2.3 billion of debt is
affected. The ratings on IPG's debt consider the progress made
with its cost structure and strengthened balance sheet as well as
the company's position as a leading global advertising holding
company and its diverse client base with long term relationships
with key accounts. Of concern remains the resolution of the
operation of the Silverstone racetrack and the sizeable related
liabilities and negative organic revenue growth.
The Stable Outlook reflects Fitch's expectation that IPG's
turnaround efforts have begun to steady operating earnings and
cash flow generation. Also acknowledged are the improvements to
IPG's balance sheet and its success in resolving certain non-
operating issues that have been a distraction for the company's
management, including the shareholder lawsuits and asset
dispositions.
IVACO INC: First Quarter Sales Up by 1.4% to $220.8 Million
-----------------------------------------------------------
Ivaco Inc., which is currently operating under the protection of
the Companies' Creditors Arrangement Act, reported its results for
the quarter ended March 31, 2004.
Net sales for the first quarter of 2004 were $220.8 million, up
$3.1 million or 1.4% over first quarter 2003 net sales of $217.7
million. Demand for steel wire rod and fastener products was
strong with total tons shipped higher than the same quarter last
year. Tons shipped at the Wire Group were less than last year as
total tons shipped in 2003 included sales of Sivaco Georgia, which
was shutdown in 2003. The impact of the higher value of the
Canadian dollar versus the US dollar of approximately 12.7%
compared to the same period in 2003, was a significant factor
contributing to the lower sales dollars but was more than offset
by recently announced scrap surcharges and price increases. The
Company reported operating earnings before income taxes,
amortization and other items of $6.4 million for the quarter ended
March 31, 2004. This compares with operating earnings before
income taxes, amortization and other items of $9.2 million for the
same period last year. The stronger Canadian dollar in relation to
the US dollar was a significant factor in the reduction of
consolidated EBITDA in the first quarter of 2004.
"Despite the increase in net loss compared to last year, we are
pleased with the steady improvements we have made during the first
quarter in improving our efficiency and competitiveness, both
essential elements for a sustainable return to profitability,"
said Gordon Silverman, President and CEO of Ivaco. "In the short
term, the industry is enjoying a strong year which will benefit
the Company during 2004. Our efforts at restructuring are
continuing and we are on track with the process established by the
Court. Our goal remains to emerge from Court protection with a
restructured Company that is both viable and sustainable over the
long term and through all market cycles."
About Ivaco
Ivaco is a Canadian corporation and is a leading North American
producer of steel and fabricated steel products. Ivaco's modern
steel operations include Canada's largest rod mill, which has a
rated production capacity of 900,000 tons of wire rods per annum.
In addition, Ivaco's fabricated steel products operations have a
rated production capacity in the area of 350,000 tons per annum of
wire, wire products and processed rod, and over 175,000 tons per
annum of fastener products. Shares of Ivaco are traded on The
Toronto Stock Exchange (IVA).
IVACO INC: Ontario Court Extends CCAA Protection to June 18, 2004
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Ivaco Inc., which is currently operating under the protection of
the Companies' Creditors Arrangement Act, announced that the
Ontario Superior Court of Justice has extended the period of Court
protection until June 18, 2004. The Company's management and Board
of Directors are still of the view that Ivaco's shareholders,
including the holders of its preferred shares, are unlikely to
receive any value for their shares under any restructuring
scenario.
About Ivaco
Ivaco is a Canadian corporation and is a leading North American
producer of steel and fabricated steel products. Ivaco's modern
steel operations include Canada's largest rod mill, which has a
rated production capacity of 900,000 tons of wire rods per annum.
In addition, Ivaco's fabricated steel products operations have a
rated production capacity in the area of 350,000 tons per annum of
wire, wire products and processed rod, and over 175,000 tons per
annum of fastener products. Shares of Ivaco are traded on The
Toronto Stock Exchange (IVA).
KOPPERS: Balance Sheet Upside Down by $66.9 Million at March 31
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Koppers Inc. announced financial results for the quarter ended
March 31, 2004.
Sales for the quarter ended March 31, 2004 were $227.4 million as
compared to $191.0 million for the prior year. The increase in
sales of $36.4 million or 19.1% is a result of increased volumes
from the US railroad and carbon materials and chemicals markets as
well as higher sales of $6.7 million from the consolidation of
operations in China effective January 1, 2004. Earnings before
interest and taxes (EBIT) for the quarter were $10.8 million as
compared to $6.5 million in 2003. The $4.3 million or 66% increase
in 2004 EBIT compared to 2003 reflects increased profitability
from US railroad products and chemical sales of $4.5 million as
well as the consolidation of profits from operations in China of
$1.3 million. These increases were partially offset by lower
profits from European operations due to lower volumes and margins.
Net losses for the quarter ended March 31, 2004 were $0.1 million
compared to net income before the cumulative effect of accounting
changes at March 31, 2003 of $0.4 million as increased profits
from operations were offset by higher interest expense and
increased minority interest in profits.
Borrowings, net of cash, at March 31, 2004 were $357.8 million
compared to $331.1 million at December 31, 2003. Cash flows from
operations for the first quarter of 2004 were $4.4 million
compared to a use of cash of $3.9 million in the first quarter of
2003, due primarily to lower working capital requirements. A
dividend of $25 million was paid in January 2004.
Commenting on the first quarter, President and CEO Walter W.
Turner said, "I am very pleased with the results for the first
quarter. They were well above prior year and above our
expectations. It was good to see that the restructuring actions
taken in 2003 have begun to contribute benefits in 2004. The
operating results for the first quarter of 2004 were positively
impacted by the strength of sales in the US where we experienced
increased volumes and margins from sales to the US railroads,
increased profits from our coke operations due to the new long-
term contract for supply of coke to ISG and increases in volumes
and profits from sales of chemicals. I was also pleased with the
results of our Chinese joint venture that contributed $1.3 million
of EBIT for the first quarter and reaffirmed our decision to re-
enter the joint venture and our confidence in the strategically
important Chinese market. Throughout the first quarter, we
struggled with the quality of coal tar in the US and, as a result,
we incurred additional costs that negatively impacted our margins.
We continue to focus on cost reduction initiatives as a way to
improve our competitiveness. Based on our first quarter
performance, I believe that we are well positioned to achieve our
2004 targets.
"As a result of our continued focus on cash, I am pleased that we
achieved our first quarter target for borrowings, net of cash, of
$357.8 million. We continue to be driven by our strategy of
providing our customers with the highest quality products and
services while continuing to focus on safety, health and
environmental issues."
At March 31, 2004, Koppers Inc.'s total liabilities exceed its
total assets by $66.9 million
About Koppers
Koppers, with corporate headquarters and a research center in
Pittsburgh, Pennsylvania, is a global integrated producer of
carbon compounds and treated wood products. Including its joint
ventures, Koppers operates 38 facilities in the United States,
United Kingdom, Denmark, Australia, the Pacific Rim and South
Africa. The company's stock is shared by a large number of
employee investors and by majority equity owner Saratoga Partners
of New York, NY.
Koppers management expects to conduct its next conference call in
August to review the first six months of 2004. Specific
information relating to this call will be made available upon the
release of its second quarter results.
LANGUAGE LINE: S&P Assigns 'B' Corporate Credit Rating
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Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Language Line Inc.
At the same time, Standard & Poor's assigned its 'B' rating and a
'4' recovery rating to the company's proposed $375 million credit
facilities, indicating that the lenders may only recover a
marginal proportion of principal (25%-50%) in a default scenario.
The facilities consist of a $40 million revolving credit facility
due 2010 and a $335 million term B loan due 2011.
A 'CCC+' rating was also assigned to the proposed $170 million
senior subordinated notes due 2012. Pro forma for the
transactions, Monterey, California-based Language Line had total
debt plus debt-like securities outstanding of $618.8 million. The
debt-like securities consist of $30 million in pay-in-kind (PIK)
redeemable, convertible security and $82 million in PIK senior LLC
units due 2013, both at the holding company level. The $30 million
redeemable, convertible security is redeemable only if specific
leverage covenants are met. Otherwise, the security will be
converted into common equity. Outlook is stable.
The ratings reflect the price-competitive over-the-phone
interpretation (OPI) market and Language Line's high debt
leverage. These concerns are only partially mitigated by the
company's dominant share in the niche outsourced-OPI market, a
flexible cost structure, favorable demographic trends, and good
discretionary cash flow generation.
Language Line provides OPI services to about 10,000 customers in
various industry sectors including financial services, healthcare,
utilities, and government entities. The company's services are
available in more than 150 languages, 24 hours a day, and seven
days a week. Clients typically use Language Line to supplement in-
house multilingual capabilities, although some clients are
completely dependent on the company for specific language skills.
"Language Line has been able to acquire additional call volume
from existing customers by offering volume discounts," said
Standard & Poor's credit analyst Andy Liu. "This along with the
company's flexible cost structure should help Language Line
maintain its financial performance. However, a noticeable decline
in average revenue per billed minute without commensurate declines
in operating costs and increases in billed minutes could prompt an
outlook review."
LEVI STRAUSS: Explores Sale of Dockers Brand to Reduce Debt
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Levi Strauss & Co. announced that it is exploring the sale of its
worldwide Dockers casual clothing business. The company has
retained Citigroup Inc. to assist with the potential sale of the
Dockers business.
The Dockers brand is one of the world's largest apparel brands,
generating annual worldwide revenue of approximately $1.4 billion,
including more than $360 million in licensee wholesale revenue. It
is the leading casual pants brand in the United States and has a
worldwide presence with sales in more than 50 countries in North
America, Latin America, Europe and Asia.
"We are choosing to sell the Dockers brand because we want to
reduce our debt substantially, improve the capital structure of
the company, and focus our resources on growing our Levi's and
Levi Strauss Signature(TM) businesses," said Phil Marineau, chief
executive officer. "We have made good progress in improving our
competitiveness and financial strength, including taking cost and
complexity out of our business, revamping our Levi's brand
products and marketing, and expanding our Levi Strauss
Signature(TM) brand for value-conscious consumers. Selling the
Dockers business would be a significant next step towards
achieving our long-term financial performance goals for the
company."
Bobbi Silten, president of the Dockers brand, said: "During this
process our Dockers brand teams around the world will continue to
move full steam ahead to bring innovative new products and
marketing programs to the marketplace without interruption. We
will minimize disruption for our customers, suppliers and
licensees, and expect to make any transition as seamless as
possible."
As of May 9, 2004, Levi Strauss & Co. had available liquidity
resources of approximately $490 million and total debt, less cash,
of approximately $2.02 billion. "We have sufficient liquidity and
expect to remain in covenant compliance throughout the year
whether we sell the Dockers business or not," said Jim Fogarty,
chief financial officer. "This proposed transaction is a strategic
choice that we've made as one of a number of actions we've been
taking to reduce our debt, improve our financial strength, focus
our resources and investment, and make us more competitive. We
believe the sale of the Dockers business, coupled with our
previously announced initiatives to deliver more competitive
operating and SG&A margins in 2005, would transform Levi Strauss &
Co."
The company will seek amendments to its current lending agreements
to facilitate the proposed sale of the Dockers business.
About the Dockers brand
The Dockers brand was introduced by Levi Strauss & Co. in 1986,
creating an entirely new category of casual clothing in the United
States. A year later, it became the fastest growing apparel brand
in history. Throughout the 1990s, the Dockers brand was
instrumental in fueling the casual businesswear trend in the
United States, changing what office workers wear to work. Today,
the Dockers brand is the leader in the casual pants category in
the United States. For example, our U.S. market research shows
that:
-- Three out of four men in the United States who own casual
pants own and wear Dockers pants.
-- Three out of four men view Dockers pants as "the original
khaki."
-- Dockers brand satisfaction among men is the highest of
any major casual pant brand.
-- Dockers brand quality is rated higher by men than
products from the brand's major competitors.
The Dockers brand offers a broad range of stylish, comfortable and
versatile casual clothes and lifestyle products, including head-
to-toe wardrobe options for men, women, boys and girls; eyewear;
and a wide range of products for the home. The brand has been a
leader in developing innovative apparel design and performance
features in recent years, such as the Dockers Mobile(TM) Pant,
Dockers Go Khaki pants and shirts with Stain Defender(TM) finish
and the Dockers original khaki with Dockers Individual Fit
waistband technology. More information about Dockers brand
products is available at http://www.dockers.com/
Levi Strauss & Co. is one of the world's leading branded apparel
companies with 2003 net sales of $4.1 billion. LS&CO. markets its
products in more than 110 countries worldwide. The company designs
and markets jeans and jeans-related pants, casual and dress pants,
shirts, jackets and related accessories for men, women and
children under the Levi's, Dockers and Levi Strauss Signature(TM)
brands.
* * *
As reported in the Troubled Company Reporter's December 11, 2003
edition, Standard & Poor's Ratings Services lowered its long-term
corporate credit and senior unsecured debt ratings on Levi Strauss
Inc. to 'CCC' from 'B'. At the same time, the bank loan rating on
the company's $650 million asset-based revolving credit facility
due 2007 was lowered to 'B' from 'BB' and the rating on the $500
million term loan facility due 2006 was lowered to 'B-' from
'BB-'. The outlook is developing.
"The rating actions follow Standard & Poor's operational review
and Levi Strauss' announcement that it has hired Alvarez & Marsal
to accelerate the company's turnaround plan after a period of
lackluster sales and poor performance," said Standard & Poor's
credit analyst Susan Ding. At the same time, the company announced
the departure of its chief financial officer. A&M is expected to
advise Levi's on strategies to reduce debt and costs. Furthermore,
operating results and financial measures will be weaker than
Standard & Poor's expectations in light of the revised revenue and
earnings figures. Standard & Poor's remains concerned about the
company's ability to revitalize sales and margins given the
current soft retail environment.
While there are currently no immediate liquidity issues, the
beneficial impact of any recommended cost and debt reduction
strategies will not likely be realized in the near term. More
important, with the management changes and the retention of A&M,
the company's business direction is uncertain. Standard & Poor's
recognizes that, with A&M currently exploring alternatives, the
ultimate outcome of Levi's financial strategies could be
detrimental to bondholders.
LIBERATE TECHONOLOGIES: Retains Richards Layton as Co-Counsel
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Liberate Technologies asks the U.S. Bankruptcy Court for the
District of Delaware for permission to employ Richards, Layton &
Finger, PA as its local co-counsel in its bankruptcy proceeding.
Richards Layton is expected to:
a) advise the Debtor of its rights, powers and duties as a
debtor and debtor in possession;
b) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on
the Debtor's behalf, the defense of any actions commenced
against the Debtor, the negotiation of disputes in which
the Debtor is involved, and the preparation of objections
to claims filed against the Debtor's estate;
c) prepare on behalf of the Debtor all necessary motions,
applications, answers, orders, reports, and papers in
connection with the administration of the Debtor's estate;
d) negotiate and prepare on behalf of the Debtor a plan of
reorganization and all related documents; and
e) perform all other necessary legal services in connection
with the Debtor's chapter 11 case.
The Debtor will pay Richards Layton its current hourly rates. The
professionals who will be in-charged in this engagement and their
current hourly rates are:
Professionals Billing Rate
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Daniel J. DeFranceschi $425 per hour
Rebecca L. Booth $245 per hour
Cynthia L. Collins $225 per hour
Amy K. Rude $130 per hour
Headquartered in San Mateo, California, Liberate Technologies
-- http://www.liberate.com/-- is a provider of software and
services for digital cable systems. The Debtor's software enables
cable operators to run multiple digital applications and services
including interactive programming, high definition television,
video on demand, personal video recorders and games, on multiple
platforms. The Company filed for chapter 11 protection on April
30, 2004 (Bankr. Del. Case No. 04-11299). Daniel J. DeFranceschi,
Esq., at Richards, Layton & Finger represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $257,000,000 in total assets and
estimated debts of over $50 million.
MEGA GROUP: Singer Lewak Replaces Aronson & Co. as Auditors
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On February 26, 2004, Mega Group, Inc. engaged Singer Lewak
Greenbaum & Goldstein LLP as its independent auditors for the year
ended December 31, 2003 to replace the firm of Aronson & Company
who resigned as the Company's independent public accountants on
February 26, 2004.
Following the engagement, Singer Lewak Greenbaum & Goldstein LLP
will audit the Company's financial statements as of, and for, the
year ended December 31, 2003.
The decision to accept Aronson & Company's resignation and engage
Singer Lewak Greenbaum & Goldstein LLP as the Company's
independent auditors was approved by the Board of Directors of the
Company on February 26, 2004.
Aronson & Company's reports on the Company's financial Statements
for the last two fiscal years ended December 31, 2002 contained a
going concern statement.
Mega Group, Inc. -- whose September 30, 2003 balance sheet shows a
total stockholders' equity deficit of $3,029,216 -- was
incorporated on December 28, 1983 in the State of New York. The
current business plan is to provide diversified financial services
to ethnic communities and faith-based entities in the United
States and to operate as a specialized financial institution
providing loans and investments for businesses in low and moderate
income communities.
MEGA GROUP: Merritt C. Brown Steps Down as Chief Financial Officer
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March 9, 2004, Merritt C. Brown resigned as Chief Financial
Officer of Mega Group, Inc. On March 9, 2004, the Board of
Directors of the Company appointed Joyce L. Brown acting Chief
Financial Officer.
Mega Group, Inc. -- whose September 30, 2003 balance sheet shows a
total stockholders' equity deficit of $3,029,216 -- was
incorporated on December 28, 1983 in the State of New York. The
current business plan is to provide diversified financial services
to ethnic communities and faith-based entities in the United
States and to operate as a specialized financial institution
providing loans and investments for businesses in low and moderate
income communities.
MEMEC GROUP: S&P Rates Corporate Credit & Senior Debt at B+/BB-
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Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to San Diego, California-based Memec Group Ltd. At
the same time, Standard & Poor's assigned its 'BB-' senior secured
debt rating, with a recovery rating of '1', to Memec's $100
million revolving credit facility maturing in 2009 and to the $100
million secured Senior A Term Loan facility maturing in 2009.
"The 'BB-' rating on each facility is one notch higher than the
corporate credit rating on Memec. The '1' recovery rating
indicates a high expectation of full recovery of principal in the
event of default," said Standard & Poor's credit analyst Martha
Toll-Reed.
Standard & Poor's assigned its 'B' rating, with a recovery rating
of '3', to the $100 million second-priority secured Senior B Term
Loan Facility maturing in 2010. The '3' recovery rating on the
Senior B term loan indicates that holders can expect meaningful
(50%-80%) recovery of principal in the event of default, and
incorporates a material amount of priority debt in the capital
structure. The proceeds from the facilities will be used to
refinance existing debt of Memec.
Memec, part of a group of companies that compose a global
distributor of semiconductor devices, had pro forma (for the
completion of the proposed credit facilities) debt outstanding as
of Dec. 31, 2003, of approximately $226 million. The outlook is
stable.
The ratings on Memec reflect the company's leveraged financial
profile, weak but improving profitability measures, and revenue
concentration with a major supplier. These factors are partially
offset by Memec's good market position as a global specialty
distributor of semiconductor products, and consistent operating
profitability.
MIRANT: Court Authorizes $2.6M Learjet Interest Sale to Bombardier
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Since no overbids were received by the Mirant Debtors for the
Learjet Interest, the Court authorizes the Debtors to sell the
Learjet Interest to Bombardier Aerospace Corporation (Flexjet) for
$2,617,307, subject to final adjustments required under the
Governing Documents, free and clear of all liens, claims,
encumbrances and interests.
As reported in the Troubled Company Reporter's April 28, 2004
edition, Michelle C. Campbell, Esq., at White & Case, LLP, in
Miami, Florida, related that on April 26, 2002, Mirant Americas
Procurement, Inc. and Bombardier Aerospace Corporation -- Flexjet
-- entered into the "Flexjet Program Agreement" for the purchase
of the undivided 43.75% interest in Learjet 45, Tail Number
N430FX, Serial Number 166. The Flexjet Agreement is a master
document comprised of the Governing Agreements, including the
Purchase Agreement, Management Agreement, Joint Ownership
Agreement and Dry Lease Agreement.
The Debtors previously purchased fractional interest in other
larger aircraft to support a geographically distributed business
in Europe. The Debtors subsequently exited the European portion
of their business. Thus, the Debtors exercised their options to
put the aircraft back to Flexjet and entered into the current
Flexjet Agreement for a smaller aircraft and share commitment.
At the time MAPI entered into the current Flexjet Agreement, Ms.
Campbell notes that the airline industry was in a period of
instability created by heightened security, which resulted in
frequent travel delays and flight unpredictability. The travel
delays, lack of flexibility in flights and security concerns
resulted in lost productivity for the Debtors. Therefore, the
Debtors concluded that the benefit of travel flexibility, fewer
delays and safety concerns justified the cost of purchasing the
Learjet Interest.
Under the present circumstances, the Debtors determine that the
on-going costs associated with the Learjet Interest outweigh the
concomitant benefits. Thus, the Debtors concluded that the
Learjet Interest should be sold back to Flexjet in a manner set
forth by the Governing Agreements or, alternatively, to a
Qualified Overbidder.
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. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000)
MIRAVANT MEDICAL: Needs New Financing Sources to Fund Operations
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Mirvant Medical Technologies is a pharmaceutical research and
development company specializing in photodynamic therapy, or
PDT, a treatment modality based on drugs that respond to light.
When activated by light, these drugs induce a photochemical
reaction in the presence of oxygen that can be used to locally
destroy diseased cells and abnormal blood vessels. The Company has
branded its novel version of PDT technology with the trademark
PhotoPoint(R). Its drugs and devices are in various stages of
development and have not yet been evaluated for regulatory
approval. Its most advanced drug, PhotoPoint SnET2, has completed
Phase III clinical trials for the treatment of wet age-related
macular degeneration, or AMD, and the Company is preparing to
submit a New Drug Application, or NDA, for its marketing approval.
Miravant Medical Technologies has been unprofitable since its
founding and has incurred a cumulative net loss of approximately
$197.0 million as of December 31, 2003. It expects to
continue to incur significant, and possibly increasing, operating
losses over the next few years, and believes it will be required
to obtain substantial additional debt or equity financing to fund
operations during this time as it seeks to achieve a level of
revenues sufficient to support its anticipated cost structure.
The Company's independent auditors, Ernst & Young LLP, have
indicated in their report accompanying Miravant's December 31,
2003 consolidated financial statements that, based on generally
accepted auditing standards, the Company's viability as a going
concern is in question.
Although the Company continues to incur costs for research and
development, preclinical studies, clinical trials and general
corporate activities, it has continued to adhere to its cost
restructuring program implemented in 2002 which has helped reduce
its overall costs. The Company's ability to achieve sustained
profitability depends upon its ability, alone or with others, to
receive regulatory approval on its NDA submission for SnET2 in
AMD, to successfully complete the development of its proposed
products, obtain the required regulatory clearances and
manufacture and market its proposed products. No revenues have
been generated from commercial sales of SnET2 and only limited
revenues have been generated from sales of its devices. The
Company's ability to achieve significant levels of revenues within
the next few years is dependent on the timing of receiving
regulatory approval, if at all, for SnET2 in AMD and its ability
to establish a collaboration, with a corporate partner or other
sales organization, to commercialize SnET2 once regulatory
approval is received, if at all. The Company's revenues to date
have consisted of license reimbursements, grants awarded,
royalties on its devices, SnET2 bulk active pharmaceutical
ingredient, or bulk API sales, milestone payments, payments for
its devices, and interest income. Management does not expect any
significant revenues until the Company has established a
collaborative partnering agreement, receive regulatory approval
and commence commercial sales.
Miravant's significant funding activities over the last eighteen
months have consisted of the following:
* A $2.0 million convertible debt financing completed in
February 2004;
* Warrant exercises through March 15, 2004 providing
proceeds of $1.4 million;
* The sale of its investment in an affiliate, Xillix
Technologies Corp., or Xillix, in December 2003,
providing net cash proceeds of $1.6 million;
* A $6.0 million convertible debt financing completed in
August 2003;
* Settlement of its $10.0 million debt with Pharmacia AB, a
wholly owned subsidiary of Pfizer, Inc., or Pharmacia,
that required a cash payment of $1.0 million; and
* A $12.0 million convertible debt financing which provides
for monthly borrowings through June 2004 under which
Miravant has borrowed $6.3 million through March 15,
2004.
Management believes the Company can raise additional funding to
support operations through corporate collaborations or
partnerships, through licensing of SnET2 or new products and
through public or private equity or debt financings prior to June
30, 2004. If additional funding is not available when required,
Management believes that as long as the Company receives the
remaining $5.7 million available to it under the 2002 Debt
Agreement and its debt does not go into default and become
immediately due, then the Company has the ability to conserve
cash required for operations through December 31, 2004 by the
delay or reduction in scope of one or more of its research and
development programs, and adjusting, deferring or reducing
salaries of employees and by reducing operating facilities and
overhead expenditures. However, there can be no assurance that
Miravant will receive the remaining $5.7 million under the 2002
Debt Agreement, if certain requirements are not met or are not
satisfactory to the 2002 Lenders and there is no guarantee that
the Company will be successful in obtaining additional financing
or that financing will be available on favorable terms.
MUZAK LLC: S&P Assigns B+ Rating to $35 Million Term B Loan
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Muzak LLC's $35 million term B loan, an addition to its existing
secured bank loan facility. At the same time, a recovery rating of
'1' was assigned to the entire $95 million secured bank loan
facility, indicating high expectations for a full recovery of
principal in a default scenario. In addition, Standard & Poor's
lowered its rating on Muzak's senior unsecured debt to 'CCC+' from
'B-', because recovery values for these lenders may be reduced by
the increase in priority debt in the revised capital structure.
Standard & Poor's affirmed all other ratings, including the 'B'
corporate credit rating on Muzak and its parent Muzak Holdings
LLC, which are analyzed on a consolidated basis. The outlook is
negative.
The term loan will be used to refinance about 60% of Muzak's $56
million in 13% senior discount notes. Pro forma for the
transaction, the Fort Mill, South Carolina-based business music
provider would have had $420 million in debt and $140 million in
debt-like preferred stock at Dec. 31, 2003.
"The refinancing of a portion of the senior notes with lower rate
bank debt will reduce future interest expenses slightly, but it
does not materially alter Muzak's credit profile," according to
Standard & Poor's credit analyst Steve Wilkinson. He continued,
"The rating on Muzak continues to reflect its high financial risk
due to a heavy reliance on debt and debt-like preferred stock to
fund its growth. The rating also reflects the business risks
associated with Muzak's lack of operating diversity. Also, despite
the company's long operating history, the demand for its products
is limited, a fact evidenced by its low target market penetration.
The company is further hindered by the large upfront capital
it requires to fund new customer accounts."
Partially offsetting these concerns are the company's leading
market position, sizable recurring revenue base, solid margins,
and customer diversity.
Muzak is the leading provider of business music services and has
good competitive positions in its respective niches. Customer
diversity is good with the top 20 clients representing less than
20% of revenue. Five-year, automatically renewable contracts lend
some stability to revenue, and annual churn is moderate at about
10%.
NEW HEIGHTS: Wants to Sign-Up Klett Rooney as Bankruptcy Counsel
----------------------------------------------------------------
New Heights Recovery & Power, LLC asks for permission from the
U.S. Bankruptcy Court for the District of Delaware to retain Klett
Rooney Lieber & Schorling, PC as its attorneys in its bankruptcy
proceeding.
Eric Lopez Schnabel, Esq., Jeffrey A. Deller, Esq., and Denise
Adamucci, Esq., are the principal attorneys who will represent the
debtor.
The Debtor tells the Court that it has selected Klett Rooney as
its counsel because of the firm's national expertise in the field
of debtor and creditor law and business reorganizations under
Chapter 11 of the Bankruptcy Code, as well as its specific
knowledge of the Debtor's business and financial affairs.
Klett Rooney will:
a) advise the Debtor with respect to its rights, powers and
duties as a debtor and debtor-in-possession, and taking
all necessary action to protect and preserve the Debtor's
estate, including but not limited to prosecuting actions
on the Debtor's behalf, defending any actions commenced
against the Debtor, negotiating all disputes involving the
Debtor, and preparing objections to claims filed against
the Debtor's estate;
b) prepare necessary pleadings, motions, applications, draft
orders, notices, schedules and other documents, reviewing
all financial and other reports to be filed in this
Chapter 11 case, and advising the Debtor concerning, and
preparing responses to, applications, motions, other
pleadings, notices and other papers that may be filed and
served in this Chapter 11 case;
c) review the nature and validity of any liens asserted
against the Debtor's properties and advising the Debtor
concerning the enforceability of such liens;
d) counsel the Debtor in connection with the negotiation and
promulgation of a plan of reorganization or liquidation
and related documents, and taking all further actions as
may be required in connection with the Plan during the
Debtor's Chapter 11 case;
e) advise and assist the Debtor in connection with any
potential asset dispositions;
f) advise the Debtor concerning executory contract and
unexpired lease assumptions, assignments, rejections and
lease restructurings and recharacterizations; and
g) perform all other necessary legal services in connection
with this Chapter 11 case.
Prior to the Petition Date, Klett Rooney received a $60,000
retainer from the Debtor to secure the payment of fees for legal
services rendered prior to the Petition Date and any unused
portion to be used against the firm's postpetition fees.
Headquartered in Ford Heights, Illinois, New Heights Recovery &
Power, LLC -- http://www.tires2power.com/-- is the owner and
operator of the Tire Combustion Facility and other tire rubber
processing facilities. The Company filed for chapter 11 protection
on April 29, 2004 (Bankr. Del. Case No. 04-11277). Eric Lopez
Schnabel, Esq., at Klett Rooney Lieber & Schorling represents the
Debtor in its restructuring efforts. When the Company filed for
chapter 11 protection, it listed both its estimated debts and
assets of over $10 million.
O'SULLIVAN: Shareholders' Deficit Tops $154 Million at March 31
---------------------------------------------------------------
O'Sullivan Industries Holdings, Inc. (Pinksheets: OSULP), a
leading manufacturer of ready-to- assemble furniture, announced
its fiscal 2004 third quarter and year to date operating results
for the period ended March 31, 2004.
Net sales for the third quarter of fiscal 2004 were $73.2 million,
in line with previous guidance, a decrease of 15.7% from sales of
$86.9 million in the comparable period a year ago. Year to date
fiscal 2004 sales were $209.9 million, a decrease of 11.6% from
sales of $237.5 million in the comparable period a year ago.
Operating income for the third quarter of fiscal 2004 was $3.3
million, or 4.5% of net sales, down from operating income of $8.7
million, or 10.0% of net sales, in the comparable period a year
ago. Year to date fiscal 2004 operating income was $9.9 million,
or 4.7% of net sales, down from operating income of $24.7 million,
or 10.4% of net sales, in the comparable period a year ago. The
decrease in operating income was generally caused by lower sales
levels, changes in customer and product mix and increasing raw
material prices.
The long-term operations of O'Sullivan Furniture are supported by
the previously announced new capital structure that provides the
company long-term financial flexibility by reducing required debt
amortization and eliminating quarterly financial covenant burdens
through October 2008. The short-term operations of O'Sullivan
Furniture are supported by a capital structure that includes over
$17 million in cash as of March 31, 2004, and an untapped
revolving line of credit.
For the third quarter of fiscal 2004, we recorded a $5.3 million
net loss compared to net income of $2.7 million in the same period
a year ago. Year to date fiscal 2004 net loss was $18.0 million,
compared to net income of $6.2 million in the comparable period a
year ago. The current year to date net loss reflects the reduction
in operating income noted above. Net loss for this year was also
impacted by the non-cash write-off of debt issuance costs related
to the refinancing of our previous senior secured credit facility
of $3.3 million in September partially offset by a gain of
$616,000 on the repurchase of $4.0 million of our senior
subordinated notes in the quarter ended December 31, 2003. The net
loss also reflects the July 1, 2003 adoption of an accounting
pronouncement, Statement of Financial Accounting Standard No. 150,
Accounting for Certain Financial Instruments with Characteristics
of Both Liabilities and Equity, that requires dividends on our
mandatorily redeemable senior preferred stock to be recorded as
interest expense. The financial impact of adopting SFAS 150 was
$1.1 million and $3.2 million for the three and nine month periods
ended March 31, 2004.
EBITDA for the third quarter of fiscal 2004 was $6.4 million, or
8.7% of net sales, compared to EBITDA of $12.4 million, or 14.2%
of net sales in the comparable period a year ago. Year to date
fiscal 2004 EBITDA was $16.9 million, or 8.0% of net sales,
compared to EBITDA of $35.0 million, or 14.7% of net sales in the
comparable period a year ago. The current year EBITDA balance
reflects the sales shortfall and the related decrease in gross
margin dollars. Further, the year to date EBITDA amount reflects
the $2.7 million in other financing costs for the write-off of
debt issuance costs and gain on the repurchase of the senior
subordinated notes. The attached table reconciles net income
(loss) to EBITDA.
EBITDA should be considered in addition to, but not as a
substitute for or superior to, operating income, net income,
operating cash flow and other measures of financial performance
prepared in accordance with generally accepted accounting
principles. EBITDA may differ in the method of calculation from
similarly titled measures used by other companies. EBITDA provides
another measure of the operations of our business and liquidity
prior to the impact of interest, taxes and depreciation. Further,
EBITDA is a common method of valuing companies such as O'Sullivan.
Working Capital
Cash on hand at March 31, 2004 was $17.6 million compared to the
same level of $17.6 million in the prior year. Inventory at March
31, 2004 rose to $52.6 million from $42.0 million in the prior
year. The growth in inventory was generally caused by an increase
in raw materials and finished goods in anticipation of higher
production and sales levels during the current year fourth quarter
in comparison to the prior year. Accounts receivable at March 31,
2004 decreased to $27.6 million from $36.3 million in the prior
year.
Net cash provided by operating activities for the nine months
ending March 31, 2004 was $12.5 million, compared to net cash
provided by operating activities of $23.4 million in the
comparable period a year ago. Capital expenditures for the nine
months ending March 31, 2004 were $1.5 million, down from the $4.8
million spent in the comparable period a year ago.
Total debt on the balance sheet at March 31, 2004 was $218.5
million compared to $219.5 million in the comparable period a year
ago. At March 31, 2004 the borrowing base on our revolver was
approximately $35.0 million. We have no outstanding balances on
our revolver and approximately $14.0 million in outstanding
letters of credit.
Management Comments
"Both our top and bottom line results continue to be a challenge,"
stated Richard Davidson, president and chief executive officer of
O'Sullivan Furniture. "However our new long-term capital structure
has allowed us to focus the company's energies on the important
tasks of creating new top line growth and improving profitability.
Highlights of some of our new product initiatives include:
-- Our home organization and storage product lines, including
both Coleman(R) and O'Sullivan Furniture(R) branded
products, continues to gain retail floor space. Recently we
expanded our storage initiative to include office storage,
and have already successfully placed an office storage
product line in the office superstore channel. We continue
to work with a broad spectrum of retailers to maximize our
company's opportunity in this $6.4 billion market.
-- Our Intelligent Designs(R) commercial office furniture
initiative received an important new product line, TQ
Solutions(TM). TQ Solutions provides the highest quality
and most flexible desking solutions ever offered by our
company. TQ Solutions along with our Maestro(TM) and X-
Platform(TM) furniture systems position Intelligent Designs
as offering the most comprehensive commercial office product
line in our industry.
"During the recent High Point furniture market, our new product
lines that focus on incremental opportunities in kitchen
furniture, bedroom furniture, closet organization and flat screen
television furniture were well received. These categories
represent new opportunities for growth and diversity for
O'Sullivan Furniture."
Richard Davidson continued, "Today, the major challenge for
O'Sullivan Furniture is reversing our disappointing top and bottom
line results with current and new product and category
initiatives. Our recent activities have extended our reach beyond
the traditional RTA core market and into other areas with exciting
growth potential. While we were very disappointed in the latest
quarter and year to date results, we are making progress in
reversing the current downward trends and continuing the process
of transforming O'Sullivan Furniture into a stronger company for
the future."
Mr. Davidson concluded, "Through the end of our fiscal 2004 third
quarter we continued to experience spotty point of sale results.
Looking forward, we expect the fourth quarter sales to improve
over last year and to be flat to up slightly in fiscal 2005, as we
see our initiatives gaining traction in the marketplace. However,
we expect the rising price of particleboard and other raw
materials to continue to challenge our margins for the foreseeable
future. We are working to mitigate many of these increases through
price increases to our customers, operational efficiency
improvements and our value analysis program. Based on this, we
expect sales in the fourth quarter of fiscal 2004 will be about
$55 to $65 million with operating income of approximately $1.7 to
$2.2 million."
At March 31, 2004, O'Sullivan Industries reported a shareholders'
deficit of $154 million compared to the $138 million deficit
recorded at June 30, 2003.
Lamar, Missouri-based O'Sullivan is the second-largest designer,
manufacturer, and distributor of ready-to-assemble furniture
products, selling primarily to the U.S. home office and home
entertainment markets.
PARMALAT CAPITAL: Prosecutors Find New Evidence in Malta Probe
--------------------------------------------------------------
The visit paid by Italian prosecutors to Malta more than a week
ago yielded new documents about Parmalat Capital Finance, Malta
Media News reports. These documents are presently with the Malta
Financial Service Authority.
The report did not specify what these documents are.
Citing judicial sources interviewed by Reuters, the paper said,
"PricewaterhouseCoopers who are consulting the proxy hope that
these documents will fill in the gaps in [Parmalat Capital's]
documentation."
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. 15; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PLEJ'S LINEN: Has Until May 17 to File Schedules & Statements
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of North
Carolina gave Plej's Linen Supermarket SoEast Stores, LLC and its
debtor-affiliates an extension to file their schedules of assets
and liabilities, statements of financial affairs and lists of
executory contracts and unexpired leases required under 11 U.S.C.
Sec. 521(1). The Debtors have until May 17, 2004, to prepare and
deliver these financial disclosure documents to the Bankruptcy
Clerk.
Headquartered in Rock Hill, South Carolina, Plej's Linen
Supermarket SoEast Stores LLC, with its debtor-affiliates, are
engaged primarily in two core businesses: retail sale of first
quality program home accessories for bed, bath, window, decorative
and house wares and limited closeout and discontinued
opportunistic merchandise; and wholesale distribution of similar
bed and bath textiles. The Company filed for chapter 11 protection
on April 15, 2004 (Bankr. W.D. N.C. Case No. 04-31383). John R.
Miller, Jr., Esq., and Paul R. Baynard, Esq., at Rayburn Cooper &
Durham, P.A., represent the Debtors in their restructuring
efforts. When the Company filed for protection from their
creditors, they listed both estimated debts and assets of over $10
million.
RESIDENTIAL ACCREDIT: Fitch Assigns B Rating to Class B-2 Notes
---------------------------------------------------------------
Fitch Ratings has taken action on the following Residential
Accredit Loan mortgage-pass through certificate:
Residential Accredit Loans, Inc. Mortgage Asset Backed Pass-
Through Certificates, Series 2001-QS19
--Classes A, R affirmed at 'AAA';
--Class M-1 affirmed at 'AAA';
--Class M-2 upgraded to 'AA+' from 'AA';
--Class M-3 upgraded to 'A+' from 'BBB+';
--Class B-1 upgraded to 'BB+' from 'BB';
--Class B-2 affirmed at 'B'.
The upgrades are being taken as a result of low delinquencies and
losses, as well as increased credit support levels. The
affirmations are due to credit enhancement levels consistent with
future loss expectations.
ROYAL OLYMPIC: Applies to Transfer Securities to Nasdaq Smallcap
----------------------------------------------------------------
Royal Olympic Cruise Lines (Nasdaq: ROCLF) announced that, as a
result of its inability to maintain a minimum market value of
publicly held shares ("MVPHS") of $5 million over the previous 90
consecutive calendar days, as required by Marketplace Rule
4450(e)(1), and the advice by The Nasdaq Stock Market, Inc. that
the company will be de-listed from the NASDAQ National Market at
the opening of business on May 13, 2004, as previously reported on
May 10, 2004, the company has decided to exercise its right to
apply to Nasdaq to transfer its securities to The Nasdaq SmallCap
Market.
According to Nasdaq rules, upon the Company submitting its
transfer application and paying the applicable listing fees by
May 11, 2004, initiation of the delisting proceedings will be
stayed pending Nasdaq staff's review of the transfer application.
The transfer application is subject to Nasdaq approval, and there
can be no assurance at this time of the result.
Royal Olympic Cruise Lines is currently operating two cruise ships
owned by subsidiary companies that are under the protection of
Article 45 of the Greek Courts. Discussions with creditors and
lenders continue and the company continues to seek capital needed
to continue operations of the company.
SALTON INC: Third Quarter Loss Multiplies to $58 Million
--------------------------------------------------------
Salton, Inc. (NYSE: SFP) announced its results for the third
fiscal quarter ended March 27, 2004.
The Company reported net sales of $191.4 million for the quarter
versus $166.4 million for the same period in fiscal 2003. The
increase in net sales was due primarily to continued expansion of
the Company's international operations, which offset a $22.8
million decline in domestic market sales. The international
expansion resulted from the Company's inclusion of Amalgamated
Appliances Holdings Limited ("AMAP"). Salton reported a loss of
$58.0 million or ($5.14 per share), versus a loss of $12.1 million
or ($1.08 per share) for the third quarter of fiscal 2003. The
2004 third quarter loss included a non-cash asset impairment
charge under SFAS No. 142, in accordance with U.S. GAAP, of $34.3
million, which is $29.9 million after tax or $2.65 per share.
Gross profit for the third fiscal quarter of 2004 was $38.6
million or 20.2% of net sales, compared to $37.3 million or 22.5%
of net sales in the third quarter of fiscal 2003. The third
quarter was impacted by lower margin sales of AMAP, increased
distribution expenses and additional expenses for returns and
allowances.
SG&A expenses increased to 35.7% of net sales or $68.3million in
the third quarter of 2004 compared to 28.1% of net sales or $46.7
million for the third quarter of 2003. The increase was primarily
due to an $8 million increase in reserves as a result of increased
retailer deductions in the quarter. Management's desire to regain
and preserve shelf space and maintain a competitive edge in a
weakened consumer environment, led to providing the additional
advertising and promotional support. Other increases include $2.6
million in legal and professional fees associated with litigation
and Sarbanes-Oxley compliance and a $1.7 million charge to
increase the allowance for doubtful accounts.
For the nine months ended March 27, 2004, Salton reported net
sales of $827.0 million versus $705.7 million for the same period
in fiscal 2003. Salton reported a loss of $44.9 million, or ($4.01
per share), versus net income of $16.8 million or $1.51 per share
($1.11 per diluted share) for the first nine months of fiscal
2003. These results included the non-cash pre-tax impairment
charge of $34.3 million described above versus a non-cash
impairment charge of $0.8 million in the similar period one year
ago.
In light of the Company's third quarter results, the Company
failed to comply with the consolidated fixed charge ratio
contained in its senior secured revolving credit facility for the
month ended March 27, 2004 and anticipates future near-term non-
compliance with certain financial covenants. The senior lenders
have agreed to a forbearance of their rights, until June 10, 2004,
surrounding the exercising of their remedies arising from such
covenant violations and certain anticipated violations during
April and May, 2004. The Company is currently in discussions with
its senior lenders with respect to an amendment to the senior
secured revolving credit facility to establish, among other
things, revised financial covenants.
The Company is implementing a U.S. restructuring plan in the
domestic market, in order to align domestic operating costs with
current sales levels. Salton plans to reduce annual domestic
operating expenses by a minimum of $40 million through a reduction
in advertising and coop expenses and through consolidation of U.S.
operations. In connection with these initiatives, Salton expects
to record significant charges in the fourth quarter.
"Our third quarter loss was impacted by significant promotional
activity and lower sales in the U.S., which offset continued
strength internationally," said Leonhard Dreimann, Chief Executive
Officer of Salton, Inc. "We had to aggressively support our
domestic retailers in order to maintain and regain shelf space.
This led to higher marketing expenses and price concessions to
retailers. However, we are determined to return our domestic
operations to profitability and are immediately taking steps to do
so. We have identified areas within our U.S. operations where we
can eliminate costs. We have begun a rigorous evaluation of all of
our business units and realize the immediate need to align our
cost structure to support the current annual domestic business."
Business Outlook
"While we are pursuing these cost reduction initiatives
immediately, we have positioned the Company for growth through new
product initiatives," continued Mr. Dreimann. "We just completed
the best Housewares Show we ever had. Retailer enthusiasm was high
for our introduction of 40 new products and product groups, which
compares to our launch of 6 last year.. We believe the
introduction of the new George Foreman Grill line with removable
plates will help to accelerate the replacement cycle for the
product line. We have seen signs of stabilization in our domestic
business, and our international operations continue to grow
rapidly through strong results from South Africa, Europe,
Australia and Brazil. We remain confident that a combination of
new products and a lower cost structure will return Salton to
profitability."
About Salton, Inc.
Salton, Inc. is a leading designer, marketer and distributor of
branded, high quality small appliances, home decor and personal
care products. Our product mix includes a broad range of small
kitchen and home appliances, tabletop products, time products,
lighting products, picture frames and personal care and wellness
products. We sell our products under our portfolio of well
recognized brand names such as Salton, George Foreman,
Westinghouse, Toastmaster, Melitta, Russell Hobbs, Farberware,
Ingraham and Stiffel. The company believes its strong market
position results from its well-known brand names, high quality and
innovative products, strong relationships with customer base and
focused outsourcing strategy.
* * *
As reported in the Troubled Company Reporter's February 13, 2004
edition, Standard & Poor's Ratings Services lowered its corporate
credit rating on small appliance marketer Salton Inc. to 'B' from
'B+', and lowered its bank loan rating on the company to 'B+' from
'BB-', after the company reported lower than expected
profitability during the critical Christmas selling season. At the
same time, Standard & Poor's lowered its subordinated debt rating
on the company to 'CCC+' from 'B-'. The outlook remains negative.
The ratings continue to reflect Salton Inc.'s participation in the
highly competitive small appliance market, accelerating price
deflation at the retail level, and the company's high debt
leverage. Somewhat mitigating these risks is Salton's solid track
record in developing new products and in successfully marketing
its existing branded product portfolio.
SELECT MEDICAL: Proposed Rule Change Spurs S&P's Negative Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and 'B' subordinated debt ratings on long-term acute care
and rehabilitation services provider Select Medical Corp. on
CreditWatch with negative implications.
Select Medical has announced that a proposed rule change by the
Centers for Medicare & Medicaid Services will hurt its earnings.
Under current agreements, the company leases space within acute
care hospitals. These, in turn, provide a significant number of
the patients for Select Medical's units. However, under the new
rule, reimbursement for such services would be reduced,
undercutting its business model. The proposed rule change would
become effective Sept. 1, 2004.
Select Medical's credit measures have been higher than the medians
for a 'BB-' rated company, reflecting Standard & Poor's concern
about the company's fast growth and its exposure to regulatory
changes in LTAC services. However, given the immediate prospect
for the weakening of financial protection, the extent to which the
company can reduce its costs and gain patients from outside
sources are significant uncertainties. Moreover, in light of the
regulatory news and a recent sharp decline in its stock price, the
pace of the company's efforts to expand its rehabilitation
services segment through acquisitions and/or to repurchase
its shares may affect previously moderate financial policies.
"Standard & Poor's expects to review management's plans to cope
with these developments before resolving the CreditWatch listing,"
said Standard & Poor's credit analyst Michael Kaplan.
SOLECTRON: Finalizes Early Settlement Offer for Equity Units
------------------------------------------------------------
Solectron Corporation (NYSE:SLR) announced the final results of
its previously announced early settlement offer for up to 41.8
million of its 7.25 percent Adjustable Conversion-Rate Equity
Security Units. The offer expired at midnight EDT May 5, 2004.
Solectron accepted for exchange, at a purchase price per Equity
Security Unit of 2.5484 shares of its common stock and cash in the
amount of $1.97, all 41,429,202 validly tendered Equity Security
Units, or approximately 94 percent of the total that were
outstanding. The purchase price applies to all Equity Security
Units tendered.
Following the completion of the settlement offer and the recent
public offering of approximately 17 million shares of common
stock, Solectron will have approximately 962 million shares
outstanding.
The settlement offer reduces by approximately $1 billion the
company's debt, which was approximately $3.3 billion at Feb. 28,
2004, and is expected to reduce the company's quarterly interest
expense by approximately $19 million starting in the fourth
quarter of fiscal 2004.
"This is another major step in the strengthening of Solectron's
balance sheet," said Mike Cannon, president and chief executive
officer.
As a result of the early settlement, Solectron intends to record a
one-time transaction expense in the range of $75 million to $85
million, which will be reported in Other Expenses in the fiscal
third quarter. Also in the third quarter, Solectron will record
interest expense of approximately $17 million, which represents
the accrual of the regularly scheduled interest on the equity
units exchanged through May 11, 2004.
The company also said the early settlement does not impact the
company's previously stated guidance for the third quarter.
Solectron -- http://www.solectron.com/-- (S&P, B+ Corporate
Credit Rating Stable Outlook) provides a full range of worldwide
manufacturing and integrated supply chain services to the world's
premier high-tech electronics companies. Solectron's offerings
include new-product design and introduction services, materials
management, high-tech product manufacturing, and product warranty
and end-of-life support. The company is based in Milpitas,
Calif., and had sales from continuing operations of $9.8 billion
in fiscal 2003.
SPIEGEL: Court Gives Go-Ahead for $22MM Fisher Road Property Sale
-----------------------------------------------------------------
Eddie Bauer, Inc., and Distribution Fulfillment Services, Inc.,
received no qualified overbids for the Fisher Road Property.
Pursuant to the terms of the Bidding Procedures, no auction was
conducted, and Industrial Realty Group, LLC, is deemed to be the
successful bidder. The $22,000,000 purchase price, as set forth
in the Purchase Agreement, is also deemed to be the highest bid.
Accordingly, Judge Blackshear authorizes Eddie Bauer and
Distribution Fulfillment to fully assume, perform under,
consummate and implement the Final Purchase Agreement. The Court
also directs Eddie Bauer and Distribution Fulfillment to transfer
and assign the Fisher Road Property free and clear of all
interests in and to the Property, with all these interests to
attach to the net proceeds of the Sale in the order of their
priority.
Moreover, the Court authorizes Eddie Bauer and Distribution
Fulfillment to:
(a) assume Distribution Fulfillment's Contracts and the Sears
Lease, and assign them to Industrial Realty, effective on
the closing of the sale, free and clear of all
Encumbrances; and
(b) execute and deliver the documents or other instruments
as may be necessary to Industrial Realty, and cause
Industrial Realty to assume the Distribution Fulfillment
Contracts and the Sears Lease.
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- whose businesses include Eddie Bauer,
is a leading international general merchandise and specialty
retailer that offers apparel, home furnishings and other
merchandise through catalogs, e-commerce sites and approximately
560 retail stores. The Company filed for Chapter 11 protection on
March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L.
Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman &
Sterling represent the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed $1,737,474,862 in assets and 1,706,761,176 in debts.
(Spiegel Bankruptcy News, Issue No. 24; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
TNH ANDOVER SPRINGHILL: Case Summary & 12 Unsecured Creditors
-------------------------------------------------------------
Debtor: TNH Andover Springhill L.P.
410 Severn Avenue, Suite 314
Annapolis, Maryland 21403
Bankruptcy Case No.: 04-42386
Chapter 11 Petition Date: April 27, 2004
Court: District of Massachusetts (Worcester)
Judge: Joel B. Rosenthal
Debtor's Counsel: John F. Ventola, Esq.
Choate, Hall & Stewart
53 State Street
Exchange Place
Boston, MA 02109-2891
Tel: 617-248-5085
Fax: 617-248-4000
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Regency Savings Bank, F.S.B. Unsecured $8,200,000
11 West Madison St. deficiency claim
Oak Park, IL 60302
Marriott International, Inc. Unsecured $1,475,000
One Marriott Drive deficiency claim
Bethesda, MD 20058
Thayer Lodging Group, Inc. Assets management $240,000
fees
Springhill SMC Corporation management services $159,220
Hogan & Hartson L.L.P. Legal services $53,729
STSN Capital Equipment leases $28,316
Thayer Interactive Group, Website maintenance $20,000
Inc.
Walpert & Wolpoff, LLP Audit services $17,350
American Express Tax & Tax and audit $14,225
Business Services services
500 Springhill Limited Common area charges $1,000
Partnership
Troutman Sanders LLP Legal services $856
Delaware Secretary of State Corporate fees $400
Division of Corporations
TRICOM S.A.: NYSE Suspends Trading of American Depositary Shares
----------------------------------------------------------------
Tricom, S.A. announced that the New York Stock Exchange, Inc.
(NYSE) has determined to suspend trading and pursue delisting of
the Company's American Depositary Shares (ADSs), ticker symbol
TDR. The NYSE reached its decision following the Company's
financial restructuring update announcement on May 6, 2004.
The Company believes that its ADSs may be quoted on the OTC (over-
the-counter) Bulletin Board ("OTCBB") within the next several
days. The OTCBB is a regulated quotation service that displays
real-time quotes, last-sale prices and volume information in OTC
equity securities. More information about OTCBB can be found at
http://www.otcbb.com/
Financial Restructuring Update
As previously announced, the Company is continuing negotiations
with its secured and unsecured lenders, which include an ad hoc
committee of holders of its 11-3/8% Senior Notes due 2004,
regarding an agreement on a consensual financial restructuring of
its balance sheet. Although there is no assurance that such an
agreement will occur, the Company is optimistic that these
negotiations will lead to a consensual agreement in the near term.
The Company's future results and its ability to continue
operations will depend on the successful conclusion of the
restructuring of its indebtedness.
Since these negotiations are ongoing, the treatment of the
Company's existing secured and unsecured creditors, as well as the
interest of its existing shareholders, is uncertain at this time.
However, the financial restructuring could possibly result in the
conversion of at least all or a substantial portion of the
Company's outstanding 11-3/8% Senior Notes and unsecured
commercial bank debt into equity in a manner that would reduce
substantially, or eliminate, the value of the Company's current
equity. Accordingly, investors in the Company's debt and equity
securities may be substantially diluted or lose all or
substantially all of their investment in the Company's securities.
About TRICOM
Tricom, S.A. is a full service communications services provider in
the Dominican Republic. We offer local, long distance, mobile,
cable television and broadband data transmission and Internet
services. Through Tricom USA, we are one of the few Latin American
based long distance carriers that is licensed by the U.S. Federal
Communications Commission to own and operate switching facilities
in the United States. Through our subsidiary, TCN Dominicana,
S.A., we are the largest cable television operator in the
Dominican Republic based on our number of subscribers and homes
passed. For more information about Tricom, please visit
http://www.tricom.net/
TWODAYS PROPERTIES: Wants to Hire JP Weigand as Realtor
----------------------------------------------------------
TwoDays Properties LLC is selling its properties as part of its
reorganization process. The Debtor is asking permission from the
U.S. Bankruptcy Court for the District of Kansas to employ JP
Weigand & Sons, Inc., as its realtor.
JP Weigand, located at 150 North Market in Wichita, Kansas, was
selected by the Debtor because of its expertise as a commercial
property realtor.
The firm will receive a 6% commission on the sale of any real and
personal property. Grant Tideman assures the Court that his firm
is a disinterested party in this matter.
TwoDays Properties LLC is a Wichita, Kansas based management and
real estate company, which owns the real estate under 12
restaurants, and in turn leases all 12 to the operating companies.
The Company filed for chapter 11 protection on April 8, 2004
(Bankr. D. Kans. Case No. 04-11792). Edward J. Nazar, Esq., at
Redmond & Nazar LLP and Douglas S. Draper, Esq., at Heller,
Draper, Hayden, Patrick & Horn, LLC represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed both estimated debts and assets of
over $10 million.
UNIFRAX CORP: S&P Assigns B+ Rating to $135MM Senior Bank Loan
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' senior
secured bank loan rating and recovery rating of '5' to Unifrax
Corp.'s $135 million senior secured term loan due May 2010. The
recovery rating indicates that in a default scenario, asset values
are estimated to provide the first-priority term loan and
revolving credit facility lenders with a negligible recovery
of principal (0%-25%).
Standard & Poor's revised the outlook on 'B+'-rated Unifrax to
negative, reflecting a more aggressive financial policy
characterized by the willingness to raise debt to fund a dividend
to shareholders, weakening the company's financial profile.
Proceeds will be used to refinance existing bank debt and pay a
dividend to American Securities Capital Partners LLC.
At the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating on Unifrax and its senior secured bank loan rating
on the company's $35 million existing senior secured revolving
credit facility due Sept. 4, 2008. Standard & Poor's also assigned
its recovery rating of '5' to the Niagara Falls, New York-based
company's revolving credit facility.
Unifrax's pro forma total debt outstanding at March 31, 2004, is
about $153 million.
Unifrax is a worldwide producer of ceramic fiber products used in
high-temperature applications in a wide variety of industries,
including chemical process, power generation, ceramic/glass,
automotive, fire protection, and aerospace.
"The negative outlook reflects the need for management to
demonstrate a more conservative financial policy over time, given
a potential for future distributions, although currently there is
a provision in the bank agreement that limits shareholder
distributions," said Standard & Poor's credit analyst Linli Chee.
"The timing and magnitude of an expected recovery in end-market
demand will affect the company's ability to strengthen its credit
profile, given its small revenue base. Ratings could be lowered if
credit measures fail to remain within expectations for the
rating."
UNITED AIR: Agrees To Settle Wisconsin Tax Disputes
---------------------------------------------------
The United Airlines Debtors ask the Court for permission to settle
tax claims with the Wisconsin Department of Revenue.
The Wisconsin Revenue Department filed Claim No. 41984 against
the Debtors for $150,000 on account of 1999 and 2000 ad valorem
taxes. The Revenue Department also filed Claim No. 41927 for
$33,000 representing sales and use taxes from 2000 until 2002.
Claim No. 41927 also alleges that the Debtors are liable to
Wisconsin for:
(a) a $44 prepetition, unsecured priority claim for
withholding taxes;
(b) a $102,430 prepetition, general unsecured claim,
consisting of $39,967 in corporate taxes and $62,463 for
interest; and
(c) $6,897 in penalties on the amounts owed.
Pursuant to the Settlement, the Revenue Department will withdraw
its Claims. The Debtors will pay the Revenue Department $11,000
in satisfaction of the sales and use tax claims. The Debtors
will also pay $75,000 after the effective date of a
reorganization plan filed in their cases.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells the Court
that litigating these claims would be an inefficient use of the
Debtors' monetary resources and personnel. The Settlement will
allow the Debtors to avoid potentially protracted litigation,
with costs that may exceed the amount of claimed deficiency.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. the Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
US AIR: Philip Morris Refuses 2nd Payment as Ratings Fall Short
---------------------------------------------------------------
On Philip Morris Capital Corporation's behalf, David Neier, Esq.,
at Winston & Strawn, in New York City, tells Judge Mitchell that,
pursuant to the March 26, 2003 Letter Agreement, the Reorganized
U.S. Airways Debtors agreed to assume the Philip Morris Leases and
Philip Morris agreed to provide funds to Debtors under certain
conditions. Specifically, the Letter Agreement stipulated that
Philip Morris would pay the Debtors $20,000,000, with payment
milestones staggered over an 18 month period, as long as the
Debtors met several conditions precedent.
Mr. Neier emphasizes that every condition precedent of the Letter
Agreement had to be met, including the Sixth Condition:
"On any Payment Date, [Philip Morris'] obligation to pay
the specified Payment Amount is subject to the satisfaction
(or waiver by [Philip Morris] in its sole discretion) of
each of the following conditions:
* * *
and (vi) solely with respect to Payment Dates which occur
after January 1, 2004, the credit ratings of US Airways'
senior unsecured debt by Moody's Investors Service, Inc.
and Standard & Poor's Ratings Services, a division of
McGraw Hill Companies, Inc., shall not be below B3 and B-,
respectively, and neither rating shall be on credit watch
with negative implications."
If any conditions precedent were not met, Philip Morris was not
obligated to make a payment to the Debtors. As per the Debtors'
request for time to obtain the specified ratings, the Sixth
Condition did not apply to the first payment milestone. Because
all conditions in the Letter Agreement on the first Payment Date
were met, Philip Morris paid $5,000,000 on July 1, 2003. As the
Debtors admit, however, as of January 5, 2004, the second Payment
Date -- to which the Sixth Condition applies -- the Debtors had
not obtained the specified ratings for senior unsecured debt.
Accordingly, Philip Morris had no obligation to make the second
payment.
The Reorganized Debtors allege that the Letter Agreement should
be interpreted differently than the parties intended. According
to Mr. Neier, the Debtors' request should be denied because the
Debtors cannot demonstrate that the parties' intent differed from
the plain language of the Letter Agreement. If the Court decides
to retain this matter, the Court should set a discovery schedule
and order that this matter be tried. (US Airways Bankruptcy News,
Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000)
US UNWIRED: Commences Tender Offer for 13-3/8% Senior Sub. Notes
----------------------------------------------------------------
US Unwired Inc. (OTCBB:UNWR) announced that it has offered to
purchase for cash any and all of its $400,000,000 aggregate face
amount of 13-3/8% senior subordinated discount notes due 2009.
Holders who validly tender their Notes prior to 5:00 p.m., EST, on
May 25, 2004, will receive total consideration of $1,050 per
$1,000 face amount of Notes accepted for purchase, consisting of a
tender price of $1,020 per $1,000 face amount of Notes and a
consent payment of $30 per $1,000 face amount of Notes. Holders
who validly tender their Notes by the Consent Date will receive
payment on the initial payment date, which is expected to be
promptly following the satisfaction of the Financing Condition
described below. The Consent Payment relates to a consent
solicitation being conducted concurrently with the tender offer to
eliminate certain events of default and restrictive covenants from
US Unwired's indenture governing the Notes.
The offer is scheduled to expire at midnight EST, on June 9, 2004,
unless extended or earlier terminated (the Expiration Date).
Holders who validly tender their Notes after the Consent Date and
prior to the Expiration Date will receive the Tender Offer
Consideration of $1,020 per $1,000 face amount of Notes accepted
for purchase. Holders who validly tender their Notes after the
Consent Date will not receive the Consent Payment. Payment for
Notes tendered after the Consent Date will be made promptly after
the Expiration Date.
The offer is subject to the satisfaction of certain conditions,
including there being validly tendered and not validly withdrawn
at least a majority of the aggregate face amount of the Notes
outstanding and US Unwired having available funds sufficient to
pay the aggregate Total Consideration from an offering of debt
securities.
US Unwired has been in discussions with certain holders of the
Notes regarding a potential exchange of all or a portion of such
holders' Notes for common stock of US Unwired. Any such exchange
would be effected pursuant to Section 3(a)(9) of the Securities
Act of 1933, as amended. There can be no assurance that any such
exchange will be consummated, but if consummated (which would
require approval of the Board of US Unwired), the amount of Notes
sought to be purchased in the Offer will be reduced by the face
amount of the Notes so exchanged.
The complete terms and conditions of the offer are set forth in an
Offer to Purchase and Consent Solicitation Statement that is being
sent to holders of Notes. Copies of the Offer to Purchase and
Consent Solicitation Statement may be obtained from the
Information Agent for the Offer, D.F. King & Co., Inc., at (800)
290-6431 (US toll-free) and (212) 269-5550 (collect).
Lehman Brothers is the sole Dealer Manager and Solicitation Agent
for the Offer to Purchase and Consent Solicitation. Questions
regarding the Offer to Purchase and Consent Solicitation may be
directed to Lehman Brothers, Inc. Liability Management Group, at
(800) 438-3242 (US toll-free) and (212) 528-7581 (collect).
About US Unwired
Headquartered in Lake Charles, La., US Unwired Inc. -- whose March
31, 2004 balance sheet shows a total stockholders' deficit of
$239,200,000 -- holds direct or indirect ownership interests in
five PCS Affiliates of Sprint: Louisiana Unwired, Texas Unwired,
Georgia PCS, IWO Holdings and Gulf Coast Wireless. Through
Louisiana Unwired, Texas Unwired, Georgia PCS and IWO Holdings, US
Unwired is authorized to build, operate and manage wireless
mobility communications network products and services under the
Sprint brand name in 68 markets, currently serving over 650,000
PCS customers. US Unwired's PCS territory includes portions of
Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
Oklahoma, Tennessee, Texas, Massachusetts, New Hampshire, New
York, Pennsylvania, and Vermont. For more information on US
Unwired and its products and services, visit the company's web
site at http://www.usunwired.com.US Unwired is traded on the OTC
Bulletin Board under the symbol "UNWR".
UTEX INDUSTRIES: Names Richard Schiro as Future Claimants' Rep.
---------------------------------------------------------------
Utex Industries, Inc., asks approval from the U.S. Bankruptcy
Court for the Southern District o Texas, Houston Division, to
appoint Richard B. Schiro, Esq., to serve as its Legal
Representative for Future Asbestos Claimants.
The Debtor reports that the appointment of the Legal
Representative now is required to afford appropriate protections
to persons who may subsequently hold asbestos-related claims and
demands. The appointment of the Legal Representative at this time
will enable the parties to move forward efficiently to
confirmation of the Debtor's prepackaged plan of reorganization.
The Debtor relate that a key element of the Plan is the issuance
of channeling injunctions directing all current and future
asbestos-related claims and demands against the Debtor to a 524(g)
trust established under the Plan. The Trust will be empowered
equitably to distribute available Trust assets to holders of all
allowed claims and to the holders of claims and demands allowed in
the future. Channeling injunctions under Sec. 524(g) require
appointment of a legal representative to protect the rights of
persons that might subsequently assert claims against the Trust.
The appointment of the Legal Representative will facilitate the
confirmation of the Plan and will assure the interests of future
claimants will be protected in this process.
The hourly rate charged by Mr. Schiro for his time and for the
time of other professionals in his office are
Professionals Billing Rate
------------- ------------
Mr. Schiro $350 per hour
Associate $150 to $185 per hour
paralegal $100 per hour
Headquartered in Houston, Texas, Utex Industries, Inc.
-- http://www.utexind.com/-- has been in the fluid sealing
industry since 1940. It has expanded its market base to include:
oil and gas, petrochemical, pulp and paper, power generation,
fossil and nuclear fuel, agriculture, municipalities and a variety
of other industries. The Company filed for chapter 11 protection
on March 26, 2004 (Bankr. S.D. Tex. Case No. 04-34427). William
A. Wood III, Esq., at Bracewell & Patterson, LLP represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed over $10 million in
estimated assets and over $100 million in estimated debts.
VIVENDI UNIVERSAL: S&P Upgrades Corporate Credit Rating to BB+
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on U.S.-based media company Vivendi Universal Entertainment
LLLP (VUE) to 'BB+' from 'BB' and its senior secured bank loan
rating to 'BBB-' from BB+'. The ratings remain on CreditWatch with
positive implications, where they were placed Sept. 3, 2003.
The upgrade follows completion of the merger plan announced in
September under which Vivendi Universal S.A. (VU) (BB/Watch Pos/B)
agreed with General Electric Co. (GE; AAA/Stable/A-1+) to merge
its approximately 86%-owned subsidiary VUE with GE's fully owned
media subsidiary NBC to form one of the largest media groups
worldwide, NBC Universal.
"We expect that VUE's rated debt, which is being assumed by
unrated NBC Universal and is not being guaranteed by GE, will be
refinanced through unrated financings," said Standard & Poor's
credit analyst Guy Deslondes. "We plan to withdraw our existing
VUE ratings upon completion of the refinancing."
"We believe that unrated NBC Universal, with reported pro forma
2003 revenues of more than $13 billion, annual EBITDA of about $3
billion, and operating margins that should be above average for
major media and entertainment companies in the U.S., would have
strong potential for an investment-grade corporate credit rating,
especially as an 80% GE-owned entity," said Standard & Poor's
credit analyst Heather Goodchild.
At the same time, the corporate credit and senior unsecured debt
ratings on French media and telecommunication group VU remain on
CreditWatch with positive implications where they were placed on
Sept. 3, 2003. Standard & Poor's expects to complete its review of
VU's group's business and financial profile--including a review of
management's strategies for the group following the disposal of
VUE--by the end of May 2004. That said, Standard & Poor's
reiterates its Oct. 8, 2003, guidance that Vivendi Universal's
ratings will most likely be raised by a notch upon resolution
of the CreditWatch.
VLASIC: Liquidity Solutions Returns Three Claims Totaling $105,445
------------------------------------------------------------------
On April 16, 2004, Liquidity Solutions, Inc., transferred three
claims against Vlasic aggregating $105,445.49 back to their
original holders:
Transferee Claim Amount
---------- ------------
Creditek $34,221.93
Cloud Corporation, LLC 21,630.50
New Zealand Milk Products 49,593.06
(Vlasic Foods Bankruptcy News, Issue No. 42; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
VOUGHT AIRCRAFT: Balance Sheet Insolvent by $346.6MM at March 28
----------------------------------------------------------------
Vought Aircraft Industries, Inc. reported financial results for
its first quarter ending March 28.
Net sales for the first quarter 2004 were $294.9 million, an
increase of 12 percent compared to $263.5 million in the same
period a year ago. The increase in net sales is due to the
acquisition of The Aerostructures Corp. in July 2003 partially
offset by lower C-17 revenues. Net loss for the first quarter 2004
was $23.7 million, compared to a net loss of $9.8 million for the
same period last year. Net loss in the first quarter 2004 was
impacted by restructuring charges of $18.0 million related to the
company's Feb. 26 announcement to consolidate its Nashville and
Stuart, Fla., operations to its Dallas facility. Adjusted EBITDA,
as defined by our senior secured credit agreement, for the first
quarter 2004 was $27.2 million, compared to $43.2 million for the
same period last year. The decrease in adjusted EBITDA is
primarily the result of reduced revenue on the C-17 program.
"We are taking the necessary steps to consolidate and modernize
our facilities, which position us well for the long term," said
Vought's President and Chief Executive Officer Tom Risley. "We
must continue to focus on producing quality products on-time while
implementing this ambitious restructuring of the company."
At March 28, 2004, Vought Aircraft Industries' balance sheet shows
a stockholders' deficit of $346.6 million as compared to a deficit
of $322.9 million at December 31, 2003.
About Vought Aircraft
Vought Aircraft Industries, Inc. -- http://www.voughtaircraft.com/
-- is one of the world's largest independent suppliers of
aerostructures. Headquartered in Dallas, the company designs and
manufactures major airframe structures such as wings, fuselage
subassemblies, empennages, nacelles and other components for prime
manufacturers of aircraft. Vought has annual sales of
approximately $1.2 billion and more than 6,000 employees in seven
U.S. locations.
WARNACO GROUP: Reorganized Debtor Reports First Quarter Profits
---------------------------------------------------------------
The Warnaco Group, Inc. (Nasdaq: WRNC) announced results for the
first quarter ended April 3, 2004. Net income for the quarter was
$20.2 million, or $0.44 per diluted share. Net revenues were
$393.3 million and income from continuing operations was $23.7
million, or $0.51 per diluted share.
The Company emerged from bankruptcy on February 4, 2003, and
therefore the Company's prior year quarterly results reflect the
two-month period commencing on February 5, 2003 and ending on
April 5, 2003. For that two-month period, net income was $22.3
million, or $0.49 per diluted share. Net revenues were $313.3
million and income from continuing operations was $22.4 million,
or $0.49 per diluted share.
Joseph R. Gromek, President and Chief Executive Officer commented,
"We are proud of our many strategic and operational achievements
during the quarter. Our diversified and dynamic operating model
proved successful as we met most of our goals, demonstrated by,
among other things, our improved brand positioning and product
successes. During the first quarter of fiscal 2004 consumers
responded favorably to our merchandise at retail resulting in
better-than-expected performances reported in our Calvin Klein(R)
underwear and Calvin Klein jeans business units, and our Swimwear
Group. This was offset by disappointing results in our Warner's(R)
and Olga(R) brands, where we have identified initiatives focused
on product innovation and improved execution which we believe
will, over time, improve results."
"We believe the Company is poised for growth," Mr. Gromek
continued. "At quarter-end, our balance sheet showed an improved
cash position and a reduced inventory balance, as compared to the
end of the first quarter of fiscal 2003. In the near term, we
expect to build upon momentum and the enthusiasm for our new brand
launches such as JLO by Jennifer Lopez(R) lingerie and Chaps(R)
denim. Over time, we believe organic opportunities along with
other strategic initiatives will enable us to increase our
profitability and our market position and continue to create value
for our shareholders."
During the first quarter of fiscal 2004, the Company:
* Elected Robert Bowman to the Board of Directors and elected
Charles Perrin Non-Executive Chairman of the Board;
* Commenced shipments of Lejaby Rose(R), a new line under the
Lejaby(R) brand; and
* Launched, in conjunction with Speedo International, a global
public relations campaign to introduce Speedo(R) Fastskin
FSII swimsuits prior to the Olympic Games in Athens.
Subsequent to the end of the quarter, the Company:
* Elected Cheryl Turpin to the Board of Directors;
* Named Frank Tworecke as Group President of Sportswear;
* Announced, in conjunction with Calvin Klein Inc, that Oscar-
winning actress Hilary Swank will be the exclusive celebrity
model for the new Calvin Klein Sensual Support intimate
apparel collection; and
* Reached settlement with the Securities and Exchange
Commission ("SEC") regarding the SEC's investigation into
certain events during the time period 1998-2001, which
settlement was announced on May 11, 2004.
Financial Highlights
The following information is presented on an adjusted combined
basis:
* Net revenues were $393.3 million for the first quarter of
fiscal 2004, compared to $423.5 million reported for the
first quarter of fiscal 2003, a 7% decline. Intimate
Apparel Group revenues declined $5.6 million and Sportswear
Group revenues were down $31.5 million, partially offset by
a $6.9 million increase in Swimwear Group revenues. The
Company notes that, as previously disclosed, first quarter
of fiscal 2003 net revenues benefited from incremental jeans
revenues of $22 million from sales to certain membership
clubs and off-price retailers. Additionally, the early sales
of certain Speedo swimwear in December 2003 negatively
affected Speedo sales for the first quarter of fiscal 2004
by $4 million;
* Gross profit was $141.5 million, or 36.0% of net revenues,
for the first quarter of fiscal 2004 compared to $154.0
million, or 36.4% of net revenues, for the first quarter of
fiscal 2003. The Company believes further benefits from the
restructuring and reorganization initiatives it has
undertaken will be realized later in the year;
* Selling, general and administrative expenses were $95.7
million, or 24.3% of net revenues, for the first quarter of
fiscal 2004 compared to $96.4 million, or 22.8% of net
revenues, for the first quarter of fiscal 2003. Advertising
spend as a percent of net revenues increased to 6%. The
Company recorded a year-over-year increase of $1.7 million
in the Swimwear Group's marketing spend relating to
marketing activities in advance of the summer Olympics and
brand building for the group's designer segment.
Additionally, the Company recorded a $0.6 million increase
in Lejaby's marketing spend associated with a new European
advertising campaign and the launch of Lejaby Rose;
* Restructuring and reorganization expenses for the first
quarter of fiscal 2004 totaled $2.3 million and were
primarily associated with the divestiture of the Company's
manufacturing facility located in San Luis, Mexico and the
Company's facility in Honduras. This represents a
significant reduction from the $29.9 million incurred in the
first quarter of fiscal 2003;
* Operating income increased to $43.2 million, or 11.0% of net
revenues, for the first quarter of fiscal 2004, from $23.8
million, or 5.6% of net revenues, for the first quarter of
fiscal 2003, primarily as a result of lower restructuring
and reorganization expenses in the current quarter;
* Income from continuing operations increased to $23.7 million
for the first quarter of fiscal 2004 from $0.6 million in
the first quarter of fiscal 2003; and
* Net income improved to $20.2 million, or $0.44 per diluted
share, for the first quarter of fiscal 2004 compared to
breakeven results for the first quarter of fiscal 2003.
The Company noted the following balance sheet highlights as of
April 3, 2004:
* Cash increased to $69.0 million at April 3, 2004
representing an increase of $42.6 million, or more than
160%, from April 5, 2003. During the first quarter of fiscal
2004, the Company received net proceeds of $14.8 million
associated with the sale of all of the assets of its A.B.S.
by Allen Schwartz(R) division; and
* Inventories declined by $61.6 million to $241.2 million at
April 3, 2004 compared to April 5, 2003, primarily
reflecting improvements in inventory management.
"Our disciplined focus on efficiency and profitability drove the
results reported today," stated Larry Rutkowski, Chief Financial
Officer. "We are off to a good start and, on a comparable basis,
expect to achieve our targeted guidance. On balance and over time
we are targeting (i) modest near term revenue growth increasing in
future years; (ii) gross margin increases on average of 100 basis
points annually; (iii) competitive selling, general and
administrative expense; and (iv) annual double digit growth in
operating margin percentage. Warnaco is benefiting from its
migration to a flexible, multi-faceted sourcing base and its
consolidation of global distribution to Company operated
facilities. These infrastructure initiatives have enabled us to
increase our cash flow, which will allow us to capitalize on
growth opportunities, including brand extensions, license
opportunities and strategic acquisitions."
About Warnaco Group
The Warnaco Group, Inc., headquartered in New York, is a leading
apparel company engaged in the business of designing, marketing
and selling intimate apparel, menswear, jeanswear, swimwear, men's
and women's sportswear and accessories under such owned and
licensed brands as Warner's(R), Olga(R), Lejaby(R), Body Nancy
Ganz(TM), Speedo(R), Anne Cole Collection(R), Cole of
California(R) and Catalina(R) as well as Chaps(R) sportswear and
denim, JLO by Jennifer Lopez(R) lingerie, Nautica(R) swimwear and
Calvin Klein(R) men's and women's underwear, men's accessories,
men's, women's, junior women's and children's jeans and women's
and juniors swimwear.
WCI STEEL: Gives Up Exclusive Right to File Reorganization Plan
---------------------------------------------------------------
WCI Steel, Inc. announced the company agreed to a stipulated order
terminating its right of exclusivity to file a Plan of
Reorganization.
WCI filed its Plan of Reorganization on April 20 in the U.S.
Bankruptcy Court for the Northern District of Ohio, Eastern
Division. Sponsored by The Renco Group, Inc., WCI's ultimate
parent, the plan includes a recently negotiated labor agreement
(subject to ratification) with the United Steelworkers of America.
The plan is subject to approval by the bankruptcy court and a vote
of creditors and other stakeholders.
Edward R. Caine, WCI's vice chairman and chief restructuring
officer, said that the company met its fiduciary duties in
marketing the assets but stipulated to the termination order to
underscore WCI's commitment to emerge from the Chapter 11
proceedings in the strongest financial position possible.
"We believe WCI has presented the most viable reorganization plan
possible, but we want any party interested in WCI to have ample
opportunity to forward a competing plan," Caine said.
Richard Seltzer, the USWA's attorney, appeared in court Tuesday
and reasserted the union's strong support of the Renco-sponsored
plan and its agreement to the lifting of exclusivity.
On Sept. 16, 2003, WCI filed a voluntary petition for protection
under Chapter 11 of the U.S. Bankruptcy Code.
WCI is an integrated steelmaker producing more than 185 grades of
custom and commodity flat-rolled steel at its Warren, Ohio
facility. WCI products are used by steel service centers,
convertors and the automotive and construction markets. The
company has approximately 1,700 employees.
WEIRTON: Court Denies Motion To Stay Weirton Sale Pending Appeal
----------------------------------------------------------------
The Informal Committee of Senior Secured Noteholders, J.P. Morgan
Trust Company, National Association, as indenture trustee, and
Corsair's Special Situations Fund, L.P., ask the Court to stay
the Order authorizing:
(a) the sale of substantially all of Weirton Steel's assets to
ISG Weirton and International Steel Group, Inc., free and
clear of liens, claims, encumbrances and other interests;
and
(b) the assumption, assignment and sale of certain executory
contracts and unexpired leases, pending appeal, without
requiring the posting of security.
In the alternative, if posting of security is required, the
Appellants seek that the posting of security will be no more than
a minimal amount.
Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld, in
New York, relates that the Weirton Sale Order authorizes the sale
of substantially all of the Debtors' assets to ISG Weirton, Inc.,
despite a qualified bid by the Trustee/WSC that was at least
$125.7 million higher.
JPMorgan Trust is the indenture trustee of Weirton's obligations
dated June 18, 2002 -- the 10% Senior Secured Notes and the
Secured Pollution Control Revenue Refunding Bonds Due 2012. The
Informal Committee was formed in 2002 to negotiate an exchange
offer on June 18, 2002 relating to the Obligations. It now
consists of holders of the Obligations, including Corsair.
On April 6, 2004, JPMorgan Trust, in conjunction with WSC
Acquisition Corporation, submitted a joint credit bid for the
Sale Assets. WSC is a Delaware corporation formed to acquire the
Sale Assets of the USG Corporation Debtors. WSC became collateral
agent for the Obligations.
Ms. Beckerman emphasizes that unless the Court acts now to grant
a stay, the Debtors' creditors will be irreparably harmed because
hundreds of millions of dollars of claims, including the secured
claims of the holders of the Obligations, will be effectively
wiped out. The holders of the Obligations will recover only a
14% recovery on their claims and unsecured creditors will get
nothing. If the Court does not act now to stay the Debtors'
stated intention to close the sale very soon, which the Court
Order permits, the Debtors will undoubtedly argue that any appeal
is moot under Section 363(m) of the Bankruptcy Code.
Moreover, Ms. Beckerman argues that the Appellants will prevail
in their appeal because the Trustee/WSC's Bid was both the
highest and best bid, leaving no doubt that creditors would
benefit considerably by reversing the Bankruptcy Court's decision
to approve ISG's Inferior Bid.
The Trustee/WSC's Bid provides value for constituencies other
than the DIP Lenders, including full payment of administrative
claims and distributions of equity for the unsecured creditors.
Even in a hypothetical liquidation scenario, the Collateral is
worth more than the price being paid by ISG. Moreover, approval
of the sale to ISG violates multiple sections of the Bankruptcy
Code.
Ms. Beckerman notes that a stay will serve the public interest
because the approved sale undermines the express provisions of
the Bankruptcy Code and the fundamental nature of the law of
secured transactions. A stay pending appeal will uphold the
principles of the Bankruptcy Code and Congress' right to enact
laws that the Debtors and the judicial system cannot ignore.
* * *
The Court has determined that Weirton Steel is in a precarious
financial status and has been for several years. Despite the
fact that the steel prices "spiked" in the last month, Weirton
Steel has consistently shown that it is unable to earn a profit
on a stand-alone basis. During the pendency of its bankruptcy,
Weirton Steel has suffered $93 million in losses. Historically,
Weirton Steel has suffered $1.7 billion dollars in accumulated
losses since its inception. Weirton Steel had a $3 million
profit in March, but this was after the Court terminated the
health insurance benefits and pensions, which cost $9 million a
month. Weirton Steel is also in default of its loan covenants
with Fleet Capital Corporation and the defaults have not been
waived by Fleet.
Furthermore, the Court determines that the Informal Committee, et
al. cannot satisfy the outstanding contingencies on their bid.
The financial funds are not in place and the union has a contract
with ISG for its employees. The union has concluded, and the
Court concurs, that Weirton Steel cannot earn a profit as a
stand-alone entity.
The Informal Committee, et al. allege that harm will occur if
their request for stay is not granted. The Court disagrees. If
the sale does not take place soon, Weirton Steel may never be a
viable operating entity. Over the period of the bankruptcy, $93
million of losses have occurred. There is no reason to believe
that this trend will discontinue. Weirton Steel's forecasts are
notoriously inaccurate as all parties have agreed. If the raw
material costs increase or the "spike" in the selling price
diminishes, Weirton Steel could be forced into a Chapter 7
liquidation, jobs would be lost, environmental problems would be
catastrophic, and any chance of an operating entity would
disappear.
Accordingly, Judge Friend denies the Informal Committee, JPMorgan
Trust and Corsair Special's request for a stay pending appeal.
(Weirton Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
WESTPOINT: Enters Into Lease Settlement Agreement with Suntrust
---------------------------------------------------------------
Prior to its bankruptcy petition date, WestPoint Stevens, Inc., as
lessee, entered into a master lease with SunTrust Leasing
Corporation. Under the Master Lease, the WestPoint Stevens
Debtors lease approximately 400 trailers and 25 tractors, which
are critical for maintaining the uninterrupted operation of their
ongoing businesses. The Leased Equipment is essential for
transporting raw materials to the Debtors' various manufacturing
locations and finished goods to both purchasers' and the Debtors'
own outlet store locations.
John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New
York, tells the Court that the Debtors lease the Leased Equipment
pursuant to three schedules to the Master Lease:
(1) 190 Dorsey Trailers, Model AIDT-LSW and 10 Dorsey
Trailers, Model AIDT-LSCGW, pursuant to Master Lease
Schedule No. 423-01, dated December 10, 1997;
(2) 25 Volvo Tractors (2000), pursuant to Master Lease
Schedule No. 423-03, dated September 28, 1999; and
(3) 200 Dorsey Trailers (2000), pursuant to Master Lease
Schedule No. 423-04, dated September 29, 1999.
The terms of the lease of equipment under Schedule No. 1 expired
on October 31, 2003 while Schedule No. 2 expired on December 31,
2003. The lease of equipment under Schedule No. 3 is set to
expire on August 31, 2005.
On the expiration of the applicable lease term, the Debtors have
an option to either return the equipment or to make a lump-sum
payment to purchase the equipment. Under Schedule No. 1, the
purchase price of the equipment is $695,898 while under Schedule
No. 2, the purchase price is $287,400.
The Debtors believe that the equipment leased under Schedules No.
1 and 2 has substantial equity value in excess of the purchase
price. Thus, purchasing the equipment is economically preferable
to either leasing new equipment or purchasing replacement
equipment, and would avoid the possibility of a significant
disruption in the Debtors' business operations.
However, SunTrust has asserted that the Debtors are in default
under Schedule No. 1 and Schedule No. 2 and therefore cannot
exercise the purchase option. The Debtors dispute this
assertion. To resolve their dispute, the Debtors and SunTrust
engaged in extensive, arm's-length, and good faith negotiations.
Those negotiations culminated in a compromise and settlement
embodied by the terms and conditions set forth in a Settlement
Agreement.
Pursuant to the Settlement Agreement, the Debtors will purchase
the equipment under Schedule No. 1 and Schedule No. 2 over time
rather than making a lump-sum payment, with final payment due on
January 1, 2005. Other salient terms of the Settlement Agreement
are:
* The Debtors will purchase the equipment leased under
Schedules No. 1 and No. 2 pursuant to this schedule:
(1) With respect to Schedule No. 1:
a. On or before June 1, 2004, the Debtors will tender to
SunTrust, in immediately available funds, a $298,511
payment; and
b. Commencing on July 1, 2004 and continuing on the
first day of each month thereafter up to and
including January 1, 2005, the Debtors will tender
to SunTrust, in immediately available funds, monthly
payments of $59,702;
(2) With respect to Schedule No. 2:
a. On or before June 1, 2004, the Debtors will tender to
SunTrust, in immediately available funds, a $123,283
payment; and
b. Commencing on July 1, 2004 and continuing on the
first day of each month thereafter up to and
including January 1, 2005, the Debtors will tender to
SunTrust, in immediately available funds, monthly
payments of $24,657;
* SunTrust will retain title to and ownership of the
Schedule No. 1 and Schedule No. 2 equipment until all of the
relevant purchase payments have been made, and on receipt
by SunTrust of all the payments, SunTrust will transfer
title of the equipment to the Debtors;
* Except as modified by the Settlement Agreement, all terms
and conditions of the Lease Documents will remain unchanged
and in full force and effect, including, but not limited to,
the payment terms set forth therein and the provisions
requiring the Debtors to maintain adequate insurance with
respect to the Leased Equipment, and maintain the Leased
Equipment in good repair, normal wear and tear accepted; and
* Before November 1, 2004, the Debtors will not take any steps
or file any pleadings or papers seeking a rejection of all
or any portion of Schedule No. 3 or the Master Lease.
Accordingly, the Debtors ask the Court to approve their settlement
with SunTrust with respect to their use of the Leased Equipment.
The Debtors believe that continued use of the Leased Equipment is
essential to their ongoing business operations. If the Debtors
do not maintain sufficient capacity to transport raw materials to
their various manufacturing locations, Mr. Rapisardi points out,
production of finished goods would be significantly and
detrimentally impacted. In addition, transportation of finished
goods to purchasers, as well as the Debtors' own outlet store
locations, would similarly suffer. The settlement with SunTrust
will enable the Debtors to continue uninterrupted use of the
Leased Equipment, thus avoiding any disruption in their business
operations. (WestPoint Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
WOMEN FIRST: Bankruptcy Management Appointed as Claims Agent
------------------------------------------------------------
Women First Healthcare, Inc., sought and obtained approval from
the U.S. Bankruptcy Court for the District of Delaware to appoint
Bankruptcy Management Corporation as notice, claims and balloting
agent in its chapter 11 proceeding.
As agent of the Court, Bankruptcy Management will:
a. prepare and serve required notices in this chapter 11
case, including, without limitation:
(1) the notice of commencement of this chapter 11 case and
the initial meeting of creditors under Section 341(a)
of the Bankruptcy Code;
(2) notices of claims bar, dates;
(3) notices of opportunity to vote to accept or reject a
proposed plan;
(4) notice of any hearings on a disclosure statement and
confirmation of a plan; and
(5) other miscellaneous notices to any entities, as the
Debtor or the Court may deem necessary or appropriate
for an orderly administration of thus chapter 11 case;
b. within five business days after the mailing of a
particular notice, file with the Clerk's Office a
certificate of service that includes a copy of the notice
involved, an alphabetical list of persons on whom the
notice was served, along with their addressees, and the
date and manner of service;
c. receive, examine and maintain originals of all proofs of
claim and proofs of interest filed;
d. create and maintain an official claims register in the
Debtor's case by docketing all proofs of claim and proofs
of interest in the claims database that includes, among
other things, the following information:
(1) the name and address of the claimant or interest
holder and any agent thereof, if the proof of claim or
proof of interest was filed by an agent;
(2) the date the proof of claim or interest was received
by Bankruptcy Management or the Court;
(3) the claim number assigned to the proof or claim or
interest; and
(4) the asserted amount and classification of the claim;
e. implement necessary security, control and verification
measures to ensure the completeness and integrity of the
claims register;
f. periodically audit the claims information to satisfy the
Clerk's Office that the claims information is being
appropriately and accurately recorded in the Court's
claims register;
g. transmit to the Clerk's Office a copy of the claims
register on an agreed upon frequency;
h. maintain an up-to-date mailing list for all entities that
have filed a proof of claim or proof of interest, which
list shall be available upon request to the Clerk's Office
or any party in interest;
i. provide access to the public for examination of copies of
the proofs of claim or interest without charge during
regular business hours;
j. record all transfers of claims pursuant to Bankruptcy Rule
3001(e) and provide notice of such transfers as required
by Bankruptcy Rule 3001(e);
k. comply with applicable federal, state, municipal and local
statutes, ordinances, rules, regulations, orders and other
requirements;
l. provide temporary employees to process claims, as
necessary;
m. allow the Clerk's Office to independently audit the claims
information at any time;
n. allow the Clerk's Office to inspect its premises at any
time;
o. promptly comply with such further conditions and
requirements as the Clerk's Office may at any time
prescribe;
p. respond to inquires of a ministerial nature regarding
claims and balloting;
q. receive, review and tabulate ballots cast, and make
determinations with respect to each ballot as to its
timeliness, compliance with the Bankruptcy Code,
Bankruptcy Rules and procedures ordered by this Court
subject, if necessary, to review and ultimate
determination by the Court;
r. certify the results of the balloting; and
s. perform such other administrative and support services
related to noticing, claims, docketing, solicitation and
distribution as the Debtor or the Clerk's Office may
request.
Bankruptcy Management's hourly consulting rates are:
Professional Billing Rate
------------ ------------
Seniors/Principals $205 to $300 per hour
Consultants $110 to $195 per hour
Case Support $65 to $110 per hour
Administrative Support $45 to $65 per hour
Headquartered in San Diego, California, Women First HealthCare,
Inc. -- http://www.womenfirst.com/-- is a specialty
pharmaceutical company dedicated to improve the health and
well-being of midlife women. The Company filed for chapter 11
protection on April 29, 2004 (Bankr. Del. Case No. 04-11278).
Michael R. Nestor, Esq., and Sean Matthew Beach, Esq., at Young
Conaway Stargatt & Taylor represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $49,089,000 in total assets and
$73,590,000 in total debts.
WORLDCOM: Court Deems Lowe's $1.9 Million Claim as Timely Filed
--------------------------------------------------------------
As previously reported, on March 27, 2003, the Worldcom Inc.
Debtors notified Lowe Enterprises Colorado, Inc., as agent for
North Colorado-SERS Inc., that they were rejecting an office lease
at 5775 Mark Dabling Blvd., in Colorado Springs, Colorado. The
effective date of rejection was March 31, 2003, and the deadline
for the submission of a rejection claim was April 30, 2003.
Lowe's counsel, James B. Holden, Esq., at Ballard Spahr Andrews &
Ingersoll, LLP, in Denver, Colorado, erroneously calendared the
rejection claim submission deadline as May 30, 2003. Mr. Holden
proceeded diligently to prepare the claim, intending to file it
early. On April 16, 2003, Lowe sent its economic calculations to
Mr. Holden regarding the amount of the rejection claim, and Mr.
Holden prepared the claim. It was only while preparing to mail
the claim on May 5, 2003 that Mr. Holden discovered that he had
mistakenly entered the due date.
On May 6, 2003, Mr. Holden sent the claim to the WorldCom Claims
Docketing Center for filing by overnight delivery service. The
claim was allegedly received by the Docketing Center on May 7.
However, a copy of the claim was returned to Mr. Holden stamped
May 9, 2003.
According to David L. Pollack, Esq., at Ballard Spahr, in
Philadelphia, Pennsylvania, the circumstances related to Lowe's
late-filed claim constitute "excusable neglect" under the
standard established by the Supreme Court. Mr. Pollack points
out that the late filing arose from an understandable "mistake."
Furthermore, Mr. Holden did not delay in preparing the claim, but
proceeded promptly to gather the required information, intending
to file the claim early. Due diligence further resulted in the
mistake being detected and corrected within one week of the due
date.
Mr. Pollack argued that the Debtors will not be prejudiced if
Lowe's unsecured prepetition claim for $1,885,202 is deemed
timely filed. The Debtors paid postpetition rent through the
rejection date and, thus, there is no administrative claim.
Debtors and Committee Object
The WorldCom, Inc. Debtors complains that Lowe Enterprises fails
to articulate a reason for their delay in filing an untimely claim
other than mistake. Lowe asserts that there is no prejudice to
the Debtors because the Debtors have been on notice that the claim
won't be filed on time, and the Debtors knew the economic effect
of lease rejections.
Alfredo R. Perez, Esq., at Weil Gotshal & Manges, LLP, in Houston,
Texas, however, argues that, if that were the case, then there
would be no reason to impose a deadline. Lowe could simply rely
on its own calculations and schedules of known creditors. The Bar
Date does not function merely as a procedural gauntlet, but as an
integral part of the reorganization process.
Mr. Perez further explains that, if the Debtors are constantly
receiving late claims, the post-confirmation process will be
severely impeded to the detriment of all creditors who timely
filed their claims.
While the Debtors do not dispute Lowe's assertion that it acted
in good faith, the Debtors contend that Lowe failed to establish
that its error was the result of excusable neglect. Therefore,
Lowe's request should be denied.
* * *
Judge Gonzalez deems Lowe Enterprises' claim for $1,885,202 as
timely filed, subject to the Debtors' substantive objections.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI-- 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.
On April 20, the company (WCOEQ, MCWEQ) formally emerged from U.S.
Chapter 11 protection as MCI, Inc. This emergence signifies that
MCI's plan of reorganization, confirmed on October 31, 2003, by
the U. S. Bankruptcy Court for the Southern District of New York
is now effective and the company has begun to distribute
securities and cash to its creditors. (Worldcom Bankruptcy News,
Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WRENN ASSOCIATES: Taps Gagliuso & Gagliuso as Special Counsel
-------------------------------------------------------------
Wrenn Associates is seeking permission from the U.S. Bankruptcy
Court for the District of New Hampshire to employ Gagliuso &
Gagliuso as its special counsel.
The Debtor tells the Court that it needs Gagliuso to:
a. represent the Debtor in legal actions brought by Wrenn in
the state and federal courts of New Hampshire, and
coordinating and monitoring the prosecution of such
actions in other jurisdictions;
b. represent the Dbetors, its project owners and sureties, in
legal actions brought by subcontractors and others, to the
extent that management determines that it is in Wrenn's
best interests to defend such actions, and coordinating
and monitoring the defense of such actions in other
jurisdictions;
c. draft, revise and negotiate contracts with project owners,
subcontractors, suppliers and others doing business with
Wrenn;
d. provide ongoing legal advice and consultation to Wrenn's
management and other employees regarding legal issues and
problems as they arise;
e. consult with management and Wrenn's other advisors and
consultants regarding the legal and financial issues that
will arise during the chapter 11 proceedings.
Wrenn will provide its services and will be compensated in an
hourly basis. The professionals that will be principally engaged
in this case are:
Professionals Billing Rate
------------- ------------
Kelly Gagliuso $210 per hour
William Gannon $210 per hour
Courtney Merrill $140 per hour
paralegals $75 per hour
Headquartered in Merrimack, New Hampshire, Wrenn Associates, Inc.
-- http://www.wrenn.com/-- is a construction management firm.
The Company filed for chapter 11 protection on
April 16, 2004 (Bankr. D. N.H. Case No. 04-11408). William S.
Gannon, Esq., represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $4,037,000 in total assets and $7,778,494 in total debts.
* BOOK REVIEW: Wildcatters -- A Story of Towns, Oil & Money
-----------------------------------------------------------
Author: Sally Helgesen
Publisher: Beard Books
List Price: $34.95
Following three generations of Texas oilmen, Wildcatters covers
the history of this field of business that had its beginnings in
the late 1800s. Oil exploration, drilling, and refinement in Texas
has always had the image as a rough-and-tumble business attracting
the adventurous and bold. Few know much about this field beyond
its somewhat mythic, larger-than-life image.
Helgesen does not spoil the image. If anything, her book gives it
support by her portrayals of a number of men, and a few women
relations of theirs, of the different generations. In those early
days of the oil industry in the United States, Texas was the "wild
cutting edge of the industry." In those days before the big oil
companies such as Rockefeller's Standard Oil and later Exxon and
Mobil had gained control of the business, it was "open to any
white man who could hustle up the money for a rig, talk a farmer
into leasing the mineral rights to his land, and then maintain
enough optimism or pigheadedness to drill up his leasehold until
he either found oil or convinced himself that he had made a
mistake." Helgesen's portrayal of the first generation of Texas
oilmen connotes their characteristic energy, enthusiasm, risk-
taking, and also their visions of success which were the basis for
the myth that grew up around them.
The ones who did tap into deposits of oil used the profits to buy
up new leases and founded a dynasty. Monty Moncrief was one such
man. A good part of Wildcatters focuses on the life of Dick
Moncrief, Monty's grandson. Helgesen sees a symmetry between the
first generation and the third generation of Texas oilmen. The
second, or middle generation, was left mainly to the task of
overseeing the dynasties founded by their fathers.
[[[[This was in the middle decades of the 1900s. The oil giants
such as Exxon and Mobil had looked abroad, mostly in the Middle
East, for vast deposits of oil they could develop by dealing with
an Arab sheik or regional tyrant instead of having to negotiate
with numbers of individual farmers and other landowners as they
had had to do in Texas in the first phases of the oil industry.
Besides, all the easy drilling for oil had been done in Texas.]]]]
With the giant oil companies supplying the U.S. from abroad with
all the oil it needed at low cost, the Texas oil business slowed
down. "The young bulls of the middle generation found no terrain
on which they might challenge the old bulls' achievements."
[[[[Thus this generation spent their time golfing and card-playing
at the country clubs and managing the real estate and other
investments their fathers had made with the fortunes they earned
from drilling for oil.]]]]
But circumstances changed for the third generation. In 1973, the
cartel named Organization of Petroleum Exporting Countries (OPEC)
decided to raise the prices of their oil. This suddenly made the
Texas oil fields competitive again, and also presented
opportunities for developing oil fields overseas. Dick Moncrief
and other third-generation oilmen throughout Texas sprang into
action to pursue the opportunities that had unexpectedly opened up
for them. Separated by decades in age from their pioneering
grandfathers and facing government bureaucratic regulations in the
oil industry, the third generation nonetheless showed something of
the same initiative, boldness, enterprise, and ambition as the
first generation. By finding overlooked or underdeveloped oil
fields in foreign countries, forming partnerships with Mexico's
state-controlled oil industry, reviving Texas's moribund oil
business, and searching for new oil fields in the West, the
younger generation of Texas oilmen made their mark as their
grandfathers had. Dick Moncrief was the behind-the-scenes
organizer of a plan to increase production at an Israeli oil
field. And he sought new fields in the Rocky Mountains.
Wildcatters portrays representative Texas oilmen, and is a well-
woven narrative about this legendary sector of American business.
Beyond this, Helgesen sees the Texas oil business as exemplifying
and to some degree preserving the frontier spirit of overcoming
challenges with determination, ingenuity, confidence, and
optimism. As she writes in her Preface, her experiences in Texas
in writing the book turned her into an "optimist in regard to the
American free enterprise system, and filled [her] with hope for
the future of this country."
Sally Helgesen works as a speaker and consultant in the areas of
leadership and workplace change. She is the author of five books
in these areas, one of which, THE FEMALE ADVANTAGE - WOMEN'S WAYS OF
LEADERSHIP, was cited in the Wall Street Journal as one of the all-
time best books on leadership. Articles on her work have appeared
in Fortune and other leading business periodicals.
*********
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, Rizande B. Delos Santos, Paulo
Jose A. Solana, Jazel P. Laureno, 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-
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*** End of Transmission ***