/raid1/www/Hosts/bankrupt/TCR_Public/040615.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, June 15, 2004, Vol. 8, No. 119
Headlines
ABITIBI-CONSOLIDATED: S&P Rates Senior Unsecured Notes at BB
ADELPHIA: Assumes Carrier Access Supply Pact & Notes $943K Payable
AGILENT TECH: Will Participate in Thomas Weisel Forum on Thursday
ARLINGTON HOSPITALITY: Reports May 2004 Results & 3 Hotel Sales
ATLANTIC MUTUAL: Names Daniel H. Olmsted as New President
ATLAS AIR WORLDWIDE: S&P Withdraws All Ratings
AWNING WINDOWS: Case Summary & 20 Largest Unsecured Creditors
BIOVAIL CORPORATION: Amends 2004 Stock Option Plan Proposal
BNS CO: Shareholders Approve U.K. Property Sale
CAITHNESS COSO: Fitch Upgrades $303MM Senior Debt Rating to BB+
COINSTAR: S&P Assigns BB- Corp. Debt Rating with Stable Outlook
COMMUNITY HEALTH: Case Summary & 20 Largest Unsecured Creditors
COTT: Plans to Build New Manufacturing Plant in Southwestern U.S.
COUNSEL CORP: Fails to Comply with NASDAQ's Listing Standard
COVAD COMMS: Elects Two New Directors & Ratifies PwC's Retention
CREDIT SUISSE: Fitch Assigns Low-Bs to 5 Series 2004-C2 Classes
CRESCENT REAL: Shareholders' Meeting Set for June 28 in Dallas
DOMAN INDUSTRIES: Court Sanctions Plan of Compromise & Arrangement
ENRON: Operational Energy & Mobile Energy Settle Claim Disputes
ENRON: Wind Debtors Enter into Aeolos & Iweco Settlement Pact
ENRON: Offshore Power, et al., Retain Farrell Fritz as Counsel
FEDERAL-MOGUL: Files Third Amended Reorganization Plan
GEO SPECIALTY: Panel Hires Otterbourg Steindler as Lead Counsel
GEO SPECIALTY: Panel Hires Duane Morris as Local Counsel
HALLIBURTON: SEC Investigates Nigerian Joint Venture
HAVENS STEEL: Employs Shughart Thomson as Special Counsel
HAYES LEMMERZ: First Quarter 2004 Net Loss Narrows to $2.7 Million
HERBST GAMING: Completes $160 Million Senior Debt Offering
HOLLINGER INC: Completes C$211 Million Financing
INTEGRATED SECURITY: CEO Rundell Provides $100,000 Cash Investment
INTERNATIONAL WIRE: Files Reorganization Plan in New York
KMART CORP: Wants Restraining Order Against Harvard Real Estate
INTERCEPT INC: Hires Jefferies & Company to Explore Possible Sale
JILLIAN'S ENTERTAINMENT: US Trustee Appoints Creditors' Committee
LEFT RIGHT MARKETING: Retains Beadle McBride as New Accountants
LITTLEFIELD, TEXAS: S&P Lowers Revenue Bond Rating To BB from BBB
MANDALAY RESORT: Rejects MGM Mirage Merger Proposal
MAXIM CRANE: Files for Chapter 11 Protection in W.D. Pennsylvania
MAXIM CRANE WORKS: Case Summary & 20 Largest Unsecured Creditors
MIDWAY MOTOR SALES: Case Summary & 20 Largest Unsecured Creditors
MILACRON INC: S&P Raises Corporate Credit Rating to B- from CCC
MJ RESEARCH: Lionel Sawyer Employed as Special Nevada Counsel
MOLECULAR IMAGING: Demands Delisting from Berlin Stock Exchange
NANOGEN INC: Completes SynX Pharma Inc. Acquisition
NATIONAL CENTURY: Court Refuses To Quash Poulsens/Cammick Subpoena
NATURADE: Health Holdings & David Weil Extend Additional $100,000
NEWAVE: Reports Record Monthly Revenues of Over $600,000 in May
NORTEL NETWORKS: Enters into Venture Agreement with VoltDelta
NORTHLAND INT'L: Case Summary & 3 Largest Unsecured Creditors
NUMED HOME: Bankruptcy Lawyers Move to Withdraw as Counsel
OWENS CORNING: Disputes 59 Overstated & 26 Satisfied Claims
PALMYRA FUNDING: S&P Downgrades Class B Note Rating to BB+
PARK CITY: PAYGo Sales Exceed Expectations in Grocery Segment
PARMALAT: Deminor Group Named Lead Plaintiff In Bondholder Suit
PASCACK VALLEY HOSPITAL: S&P Places BB+ Rating on Watch Negative
PEGASUS SATELLITE: Honoring Prepetition Customer Obligations
PEGASUS: Obtains Approval To Maintain Dealer Business Relationship
PIERRE FOODS: S&P Assigns B+ Rating to Corporate Debt & Bank Loan
PILLOWTEX: Asks for Authority to Pay Additional Withholding Taxes
PREFERRED RIVERWALK: Hires Keith Baker as Bankruptcy Attorney
PRICE-DAVIS CONSTRUCTION: Case Summary & 20 Unsecured Creditors
RCN CORP: Asks Court to Approve Blackstone's Retention As Advisor
RF MICRO: Will Present at Thomas Weisel Forum on Thursday
SANDISK CORP: CEO to Present at Thomas Weisel Forum Tomorrow
SCIENDA LLC: Voluntary Chapter 7 Case Summary
SHILOH INDUSTRIES: S&P Raises Corporate Credit Rating to B+
SK GLOBAL: Hana Bank Asks Court To Dismiss Section 304 Petition
SOLUTIA INC: Wants Court Nod To Enter Into Intercreditor Agreement
USA BIOMASS: Reorganized Company's Financial Woes Not Over Yet
USG CORP: Wants Authority To Assume Current Headquarters Lease
WEIRTON STEEL: Wants To Reject International Mill Contract
WESTEK GEORGIA: Shareholders' Motion to Appoint Trustee Denied
WORLDCOM INC: Court Approves PT-1 Settlement Agreement
W.R. GRACE: Issues 2nd Report On Claim Reconciliation Process
* Fixed Income Analysts Society Elects Diane Vazza as President
* PwC's Carter Pate Sees Long-Term Decline in Large Chapter 11s
* Large Companies with Insolvent Balance Sheets
*********
ABITIBI-CONSOLIDATED: S&P Rates Senior Unsecured Notes at BB
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
Montreal, Quebec-based Abitibi-Consolidated Co. of Canada's US$200
million floating rate notes due 2011, and US$200 million 7.75%
notes due 2011. The notes are unconditionally guaranteed by
Abitibi-Consolidated Inc. At the same time, Standard & Poor's
affirmed its 'BB' long-term corporate credit rating on Abitibi.
The outlook is negative.
The proceeds will be used to reduce debt outstanding under
Abitibi's existing revolving credit facility, and to repay the
US$118 million floating-rate term loan maturing on June 30, 2004,
of Alabama River Newsprint Co., which recently became a wholly
owned subsidiary of Abitibi, and for general corporate purposes.
"The note issue modestly improves Abitibi's liquidity and maturity
profile, as it increases availability under the company's
revolving credit facility and lengthens the debt repayment
schedule," said Standard & Poor's credit analyst Daniel Parker.
The ratings reflect Abitibi's high debt levels, heavy exposure to
cyclical commodity-oriented groundwood papers, and weak financial
performance in the wake of unfavorable industry conditions.
The negative outlook reflects the risks to the company of a
stronger Canadian dollar, a potential labor dispute if contracts
are not successfully renegotiated, and greater-than-expected
pressures from structural changes to the newsprint industry. Any
of these factors could further impair Abitibi's cash flow
protection. Abitibi could be challenged to average the targeted
EBITDA interest coverage of 4x and FFO to total debt of 20%
through the cycle. Failure to make progress toward these targets
in the near term will result in a downgrade.
ADELPHIA: Assumes Carrier Access Supply Pact & Notes $943K Payable
------------------------------------------------------------------
On March 13, 1999, Carrier Access Corporation and Adelphia
Business Solutions, Inc., (ABIZ) entered into a supply agreement
pursuant to which ABIZ purchased telecommunications equipment and
associated software licenses. ABIZ previously scheduled a
$544,330 outstanding payable to Carrier Access but it now
believes that the amount is inaccurate.
With Judge Gerber's consent, both parties agree that ABIZ will
assume the Supply Agreement. The Supply Agreement will be
amended to substitute ABIZ in the place of Hyperion
Telecommunications, Inc. ABIZ will amend its schedule to reflect
a $943,435 outstanding payable to Carrier Access.
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. 60; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AGILENT TECH: Will Participate in Thomas Weisel Forum on Thursday
-----------------------------------------------------------------
Agilent Technologies Inc. (NYSE:A) announced it will participate
in the following event with the financial community for the month
of June:
Thomas Weisel Partners Growth Forum 6.0
Laguna Beach, Calif.
June 17, 2004
7:35 a.m. (PT)
Bill Sullivan, executive vice president and chief
operating officer
This webcast can be accessed at http://www.investor.agilent.comby
selecting "Thomas Weisel Partners Growth Forum 6.0" in the "Recent
News and Events" box. A replay of each event will be available
soon after the conclusion of the presentation.
About Agilent Technologies
Agilent Technologies Inc. (NYSE:A) is a global technology leader
in communications, electronics, life sciences and chemical
analysis. The company's 28,000 employees serve customers in more
than 110 countries. Agilent had net revenue of $6.1 billion in
fiscal year 2003. Information about Agilent is available on the
Web at www.agilent.com
* * *
As reported in the Troubled Company Reporter's May 27, 2004
edition, Standard & Poor's Ratings Services revised its outlook on
Palo Alto, California-based Agilent Technologies Inc. to positive
from negative. The 'BB' corporate credit and senior unsecured debt
ratings were affirmed. The outlook revision reflects a
strengthening operating profile, as evidenced by significant
improvements in profitability and a return to revenue growth in
recent quarters, combined with a liquid balance sheet.
"Agilent has sharply improved its profitability over the past
three quarters following an extended period of losses. A
continuation of current operating performance could result in a
higher rating within a few quarters," said Standard & Poor's
credit analyst Joshua Davis.
The ratings on Agilent continue to reflect volatility in
profitability resulting from a three-year downturn in overall
operating performance and challenges in gearing the company's cost
structure to the reduced revenue levels. This partially is offset
by a broad and diverse business profile, entrenched positions in
test and measurement and other segments, and relatively strong
balance sheet liquidity. Agilent serves the communications,
electronics, and life science markets with test, measurement, and
other instruments, and also makes semiconductor products.
ARLINGTON HOSPITALITY: Reports May 2004 Results & 3 Hotel Sales
---------------------------------------------------------------
Arlington Hospitality, Inc. (NASDAQ/NM: HOST), a hotel development
and management company, announced May 2004 same-room operating
results for the AmeriHost Inn hotels in which the company has an
ownership interest, and the sale of two AmeriHost Inn hotels and
one non-AmeriHost Inn hotel.
May Results
Same-room revenue per available room (RevPAR) in May 2004
increased 3.6 percent to $34.49, compared to May 2003. Occupancy
increased 4.0 percent to 60.0 percent, while average daily rate
(ADR) decreased 0.5 percent to $57.45. The May 2004 same-room
results include 54 AmeriHost Inn hotels, which have been opened
for at least 13 months.
One Month Two Months Five Months Twelve Months
Ended Ended Ended Ended
May 31 May 31 May 31 May 31
--------- ----------- ----------- -------------
Occupancy - 2004 60.0% 59.6% 52.9% 56.6%
Occupancy - 2003 57.7% 56.9% 52.2% 56.4%
Increase (decrease) 4.0% 4.7% 1.3% 0.4%
Average Daily Rate -
2004 $57.45 $56.82 $56.15 $57.28
Average Daily Rate -
2003 $57.71 $56.54 $55.39 $56.99
Increase (decrease) (0.5%) 0.5% 1.4% 0.5%
RevPAR - 2004 $34.49 $33.84 $29.72 $32.41
RevPAR - 2003 $33.29 $32.19 $28.90 $32.13
Increase (decrease) 3.6% 5.1% 3.6% 1.1%
According to Smith Travel Research, preliminary results for May
2004 indicate that RevPAR for the midscale without food and
beverage segment of the lodging industry improved between 2
percent and 4 percent, compared to May 2003.
Sales/Development Activity
The company sold one wholly owned AmeriHost Inn hotel in May 2004,
and another wholly owned AmeriHost Inn hotel thus far in June
2004. Also in June, the company facilitated the sale of one
unconsolidated, non-AmeriHost Inn hotel owned by a joint venture
in which the company is a partner, bringing to three the total
number of hotels sold in the 2004 second quarter.
The revenue and profit/loss from the sale of hotels, as well as
the reduction of debt, will be reported in the company's financial
statements during the quarter in which the sale transactions
close.
Year to date, including these sales, the company has sold four
wholly owned AmeriHost Inn hotels and facilitated the sale of one
non-AmeriHost Inn hotel owned by a joint venture.
The company currently has seven hotels under contract for sale,
which are expected to be consummated within the next six months.
When the company has hotels under contract for sale, even with
nonrefundable cash deposits in certain cases, certain conditions
to closing remain, and there can be no assurance that these sales
will be consummated as anticipated.
The sales and development activities set forth above, do not
represent guidance on, or forecasts of, the results of the
company's entire consolidated operations, which are reported on a
quarterly basis.
For more information regarding Arlington's hotels for sale and
development opportunities either on a joint venture or turnkey
basis, contact Stephen Miller, Senior Vice President - Real Estate
and Business Development via email at
stevem@arlingtonhospitality.com, or by telephone at (847) 228-
5401, ext. 312.
About Arlington Hospitality
Arlington Hospitality, Inc. is a hotel development and management
company that builds, operates and sells mid-market hotels.
Arlington is the nation's largest owner and franchisee of
AmeriHost Inn hotels, a 106-property mid-market, limited-service
hotel brand owned and presently franchised in 20 states and Canada
by Cendant Corporation (NYSE: CD). Currently, Arlington
Hospitality, Inc. owns or manages 60 properties in 14 states,
including 54 AmeriHost Inn hotels, for a total of 4,344 rooms,
with additional AmeriHost Inn & Suites hotels under development.
Liquidity And Capital Resources
In its Form 10-Q for the quarterly period ended March 31,2004
filed with the Securities and Exchange Commission, Arlington
Hospitality, Inc. reports:
"The net cash flow from the operations of many of our hotels has
been insufficient to support their related mortgage debt payments,
or lease payments, primarily to PMC, as well as necessary and
ongoing capital expenditures. In addition, our hotel development
activity for joint ventures has also decreased over the past two
years, with only one joint venture project completed in 2003 and
one joint venture project completed thus far in 2004. As a result,
the cash flow from all of our business segments, with the largest
amount funded by the sale of hotel properties, has been utilized
to maintain liquidity and meet the line-of-credit availability
reductions. A smaller amount has been used for investment in new
hotel development.
"We believe that during the next twelve months, in order to
maintain our liquidity, it is critical for us to continue to sell
hotel properties. In addition, we seek to increase income from our
existing hotel properties by focusing on new revenue enhancement
opportunities, and aggressive cost controls. We believe that an
upturn in the economy will result in increased demand for hotel
rooms, including ours, and such upturn could result in
significantly improved hotel operating results. However,
historically we have seen that lodging demand trends will
typically lag six to nine months behind any such economic trends.
We have also been in discussions with PMC requesting a reduction
in our subsidiary's monthly lease payment and other modifications.
"In addition to our normal operational and growth oriented
liquidity needs, other contingencies may also have a significant
impact on us, including the impact of seasonality on our hotel
operations and hotels sales, and the inability to pay off mortgage
loans when maturing.
"Our hotels are seasonal in nature, with the second and third
calendar quarters being the strongest from a cash flow standpoint,
and the fourth and first calendar quarters being the weakest. In
addition, the buyers of our hotels tend to purchase hotels on a
seasonal basis, wanting to acquire the property just in time for
the stronger summer season. As the sale of hotel properties is a
critical part of our liquidity, our inability to sell during the
winter months could have a negative impact on our liquidity, if we
do not generate strong cash flow from our other segments, or if we
do not have adequate financing sources.
"We believe our revenues, together with proceeds from financing
activities, will continue to provide the necessary funds for our
short-term liquidity needs. However, material changes in these
factors, including factors that could inhibit our ability to sell
hotels under acceptable terms and within certain time frames, or
ability to secure new hotel level or corporate level debt, may
adversely affect net cash flows. Such changes, in turn, would
adversely affect our ability to fund debt service, lease
obligations, capital expenditures, and other liquidity needs. In
addition, a material adverse change in our cash provided by
operations may affect the financial performance covenants under
our unsecured line of credit and certain mortgage notes."
ATLANTIC MUTUAL: Names Daniel H. Olmsted as New President
---------------------------------------------------------
The Board of Directors of Atlantic Mutual has announced a new
president and other management changes.
Daniel H. Olmsted was promoted to President of Atlantic Mutual and
a member of the Board of Trustees; Richard J. Hertling to
Executive Vice President and Chief Financial Officer; and Martha
Van Hise to Vice President of Human Resources. John K. Shea was
appointed Vice President of Commercial Claims.
"I am delighted with the new management team at Atlantic Mutual,"
said Chairman and CEO Klaus Dorfi. "In particular, the promotions
of Dan Olmsted and Rich Hertling reflect their tremendous
contributions as we restructured the company to become a well-
capitalized writer of affluent personal lines business. They will
be a driving force in the company as we move forward."
Dan Olmsted joined the company in 1984 and was most recently
Senior Vice President of the Personal Insurance Division. Mr.
Olmsted has earned a CPCU designation, a MBA from the College of
Insurance, and a JD from Fordham University.
Rich Hertling has been serving as CFO since his appointment in
September, 2003. His promotion from Senior Vice President to
Executive Vice President reflects the senior management role he
now plays in the company. Mr. Hertling joined Atlantic Mutual in
1979 and has a BS in mathematics from York College. He was
accepted as a Fellow of the Casualty Actuarial Society in 1990.
Martha Van Hise joined Atlantic Mutual in 1999 with 20 years of
experience in human resources. She will assume full responsibility
for human resources and compensation & benefits. Ms. Van Hise has
a BA in political science from Bucknell University and a MBA in
quantitative techniques from Fairleigh Dickenson University in NJ.
With the appointment of John Shea as Vice President of Commercial
Claims, the Board approved the restructuring of the Claims
organization around the critical tasks of running off commercial
claims and further enhancing claims service for personal lines.
Mr. Shea will officially join Atlantic Mutual on June 14, 2004
with almost 30 years of experience in claims, including time as
President and COO of a prominent TPA, loss adjusting and case
management company. His appointment gives Atlantic Mutual a proven
leader who can manage complex commercial claims in a run-off
situation, and it frees Bill Bernecker, VP of Claims, to
concentrate more fully on personal lines. Mr. Shea has a BA from
Keene State College in New Hampshire.
About Atlantic Mutual
Atlantic Mutual offers property-casualty insurance products for
individuals with substantial assets to protect. The Atlantic
Mutual Insurance Co., formed in 1842, is a mutual insurance
company owned by its policyholders and has neither capital stock
nor shareholders. Its products are sold through independent
agents. Additional information about Atlantic Mutual can be found
at http://www.atlanticmutual.com/
As reported in the Troubled Company Reporter's April 20, 2004
edition, Standard & Poor's Ratings Services lowered its
counterparty credit and financial strength ratings on Atlantic
Mutual Insurance Co., Centennial Insurance Co., and Atlantic
Lloyds Insurance Co. of Texas (collectively referred to as
Atlantic Mutual) to 'BB+' from 'BBB'.
Standard & Poor's also lowered its surplus note rating on Atlantic
Mutual Insurance Co. to 'B+' from 'BB+'.
At the same time, all the ratings were removed from CreditWatch
where they were placed on Dec. 5, 2003, following Atlantic
Mutual's announcement that it had reached an agreement to sell
most of its remaining commercial lines business to OneBeacon
Insurance Co. The outlook is stable.
"The downgrades are based on the less diversified business
position of the company following its exit from commercial lines,
a substantial decline in surplus driven primarily by reserve
strengthening, uncertainty regarding the adequacy of reserves for
the discontinued commercial lines business, low interest coverage
prospectively, and minimal financial flexibility," said Standard &
Poor's credit analyst John Iten. "Another factor is the high
proportion of surplus derived from surplus notes and surplus
generated by reinsurance transactions."
These concerns are offset to some extent by the continued support
of Atlantic Mutual's agents in placing business with the company,
good capitalization relative to its ongoing book of personal lines
business, and a high-quality investment portfolio.
ATLAS AIR WORLDWIDE: S&P Withdraws All Ratings
----------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on Atlas
Air Worldwide Holdings Inc. and unit Atlas Air Inc., including the
'D' corporate credit ratings.
On June 9, 2004, Standard & Poor's lowered certain ratings on
equipment trust certificates issued by Atlas Air Inc.
In the press release published in conjunction with that rating
action, Standard & Poor's stated that it planned to withdraw all
ratings shortly because of uncertainties over whether Atlas would
be rated by Standard & Poor's following its emergence from
bankruptcy and due to limited availability of information needed
to maintain surveillance. Atlas and various of its subsidiaries
filed for bankruptcy protection on Jan. 30, 2004. A confirmation
hearing has been scheduled for July 14, 2004, and Atlas expects to
emerge from Chapter 11 bankruptcy protection shortly thereafter.
Atlas Air Worldwide Holdings provides heavyweight air cargo
services through its Atlas Air Inc. subsidiary and scheduled,
high-frequency airport-to-airport cargo
services through its Polar subsidiary.
AWNING WINDOWS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Awning Windows, Inc.
Carr 2 KM 115 173 Calle Comercial
Isabela, Puerto Rico 00662
Bankruptcy Case No.: 04-05802
Chapter 11 Petition Date: June 1, 2004
Court: District of Puerto Rico (San Juan)
Judge: Sara E. De Jesus
Debtor's Counsel: Carmen D. Conde Torre, Esq.
C. Conde & Assoc.
254 Calle San Jose 5th Floor Suite
San Juan, Puerto Rico 00901-1523
Tel: 787-729-2900
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Western Bank $3,064,527
P.O. Box 308
Aguadilla, PR 00605
Bank Trust $2,532,738
c/o Carlos Sosa Padro
P.O. Box 191682
San Juan, PR 00919-1682
Ala Auto $1,000,000
Villas de Oaseo
Sol, Apt. B-20
200 Blvd. De la Fuente
San Juan, PR 00926
Minerva Velez Cortes $670,000
c/o Celina Romany Law Offices
268 Munoz Rivera Ave.
San Juan, PR 00918
GE Capital $662,821
P.O. Box 70256
San Juan, PR 00936-8256
Metal Conversions Ltd. $314,984
P.O. Box 787
Mansfield, OH 44901
Delta Industrial Systems $102,011
Cast Product, S.A. $93,803
National Die Casting $82,803
Ferro Enamel Espanola, SA $74,448
Thumb Tool & Engineering $63,945
Autoridad de Energia Electrica $57,702
Banco Santander $55,554
P.P.G. Industries, Inc. $53,844
Onyx Environmental Services, L.L.C. $50,588
Anderson $47,540
Progressive Financial Service $46,551
Govesan, S.A. $39,729
Sanfast Del Caribe, Inc. $36,807
Unlimited Glass Calle Munoz $33,588
BIOVAIL CORPORATION: Amends 2004 Stock Option Plan Proposal
-----------------------------------------------------------
Biovail Corporation (NYSE:BVF)(TSX:BVF) announced that the
Company's Board of Directors has amended its proposal to adopt a
new stock option plan as described in the Company's 2004 Proxy
Statement, subject to regulatory approval. The amended plan will
be subject to shareholder approval at Biovail's annual and special
meeting on June 25, 2004.
Under the terms of the amended plan, the maximum number of common
shares issuable pursuant to the exercise of options will be
reduced from 10 million to 5 million. Further, the maximum number
of common shares issuable pursuant to options to non-employee
directors, together with the number of common shares issuable to
such directors under outstanding options, will be capped at
350,000. All other terms and restrictions, including the maximum
number of shares issuable to any one person, remain unchanged as
per the Company's Proxy Statement. The new stock option plan will
replace the existing plan, originally established in 1993, and has
been updated to conform to current New York Stock Exchange and
Toronto Stock Exchange regulations.
Kenneth G. Howling, Vice President, Finance commented, "The
original proposal was based on a long-term outlook for the new
option plan. However, following several recent meetings with
shareholders, the feedback we received was that a shorter time-
horizon and a corresponding lower option pool is the most
appropriate course of action. The new plan, with a pool of 5
million options, if approved by our shareholders, will allow
Biovail to attract, retain and reward key employees as the Company
progresses through an important phase of its evolution."
The annual and special meeting of shareholders of Biovail
Corporation will be held at The Toronto Stock Exchange Theatre,
Broadcast and Conference Centre, Exchange Tower, 130 King Street
West, Toronto, Ontario on Friday, June 25, 2004 at 10:00 a.m.
(Eastern Daylight Time).
Biovail Corporation is an international full-service
pharmaceutical company, engaged in the formulation, clinical
testing, registration, manufacture, sale and promotion of
pharmaceutical products utilizing advanced drug delivery
technologies.
As reported in the Troubled Company Reporter's March 11, 2004
edition, Standard & Poor's Ratings Services revised the outlook on
pharmaceutical company Biovail Corp. to negative from stable. At
the same time, the ratings on Mississauga, Ontario-based Biovail,
including the 'BB+' long-term corporate credit rating, were
affirmed. The action is in response to the company's lower 2004
earnings guidance.
BNS CO: Shareholders Approve U.K. Property Sale
-----------------------------------------------
BNS Co. (OTCBB:BNSXA) announced that at its Annual Meeting held
the company's shareholders approved the sale of the company's U.K.
assets, consisting of approximately 86.5 acres of land currently
operated as a landfill near Heathrow Airport, for an aggregate of
5.5 million British Pounds. The terms of the sale are more fully
described in the company's Proxy Statement filed with the SEC
prior to the Annual Meeting. The company intends to complete the
transaction in the next few days.
At the same meeting, the shareholders voted to approve the
election of four directors, two of whom are current directors and
two new candidates. Henry D. Sharpe, III and J. Robert Held were
re-elected to serve until the 2007 Annual Meeting. Joining the
board will be Jack Howard and Jim Henderson, both representatives
of Steel Partners, the holder of approximately 19.9% of the
outstanding Class A common stock of the company. They will be
replacing vacancies created by the retirement as directors of
Howard Fuguet and John Nelson. Mr. Fuguet, a partner of the law
firm of Ropes and Gray, Boston, has been a director since 1990.
Mr. Nelson, a former Chairman of the Board of BNS Co, has been a
director since 1975. The final proposal approved by shareholders
was the ratification of Ernst and Young as auditors for the 2004
fiscal year.
The following statement was presented at the meeting by Michael
Warren, President and CEO of the company, to expand upon the
company's future plans as outlined in the proxy statement for the
meeting.
"Now that we have shareholder approval to complete the sale of our
UK property, we expect to close that transaction in the next few
days. After that closing, the company's balance sheet will
primarily consist of assets in the form of cash and cash
equivalents, a few remaining liabilities, and the contingent
liabilities relating to product liability claims which are more
fully described in the proxy statement.
"In addition to this approval, we have added today two new
directors to the team that will help determine a new direction for
the Company. We welcome the experience and contributions of Jack
Howard and Jim Henderson, and look forward to working with them.
"Let me now comment briefly on what that direction might be.
"As we have stated before, after the sale of the company's
remaining assets, it has been, and continues to be, the board's
intention to liquidate and dissolve the company, or seek other
strategic alternatives. These strategic alternatives may take one
of the following the forms:
1. The sale of the Company through a merger or other change of
control transaction;
2. A liquidation, either through proceedings in the Chancery
Court of Delaware, or in a voluntary Chapter 11 federal
bankruptcy reorganization.
3. Continuation of the Company as a going-concern.
"These alternatives are described in more detail in your proxy
statement. A year ago, we had hopes that one of the first two
alternatives would be a likely outcome. But after extensive
investigation of the issues surrounding the company's contingent
liabilities, and after extensive conversations with outside
counsel and potential partners and acquirers, each of the first
two has proven to be problematic. The primary obstacle continues
to be the uncertain nature of the contingent product liability
claims (both the number of future claims that may be filed, and
the costs to settle or defend the company). To date these claims
have not had a material impact on the company's financial results.
In 2002, we settled 42 of them for an aggregate of $30,000, and
this year we settled one claim for $500 and secured dismissal of
another 67. However, there can be no way of knowing what costs in
the future might be. And this uncertainty makes it difficult to
determine what, if any, cash distributions can be made to
shareholders.
"It is currently the consensus of the board of directors,
including Mr. Howard and Mr. Henderson, our new members, that the
last of these alternatives, the so-called "going concern"
strategy, is likely to be the best path to preserve or enhance
shareholder value. It is an alternative that will allow us to
preserve the use of the company's approximately $45 million in net
operating loss carry-forwards to offset otherwise taxable
earnings. It may also give us time to continue effectively
resolving, through settlement or dismissal, the product liability
claims. It seems clear to us that if we cannot safely make
significant cash distributions to shareholders now, then a
reasonable course of action would be to put that cash to work
through some form of investment or acquisition, with the prospect
of distributions in the future.
"For these and other good reasons, it seems likely that the
company will move in that direction. Brown & Sharpe has had a long
and colorful history in Rhode Island. First organized in 1833, it
is one of the oldest corporate names in America. I find it
somewhat ironic that BNS Co, the successor entity that can trace
its roots all the way back to the original business, after a
concerted effort to liquidate and dissolve, may find itself back
in a real operating business.
"However, I would emphasize that the board has made no decision
regarding this. The board, with its two new members, will be
meeting soon to set a definite direction for the company and
determine appropriate actions. When that decision is made, we will
inform the investment community."
CAITHNESS COSO: Fitch Upgrades $303MM Senior Debt Rating to BB+
---------------------------------------------------------------
Fitch Ratings has upgraded the rating of Caithness Coso Funding
Corp.'s $303 million senior secured notes due 2009 to 'BB+' from
'BB' and removed the Rating Watch Evolving. The rating action is
due to the recent upgrade of Southern California Edison, the
contractual counterparty for the project's output. The rating
reflects Coso's weaker financial profile following the expiry of
the fixed energy price period under the SCE settlement agreement.
During the fixed energy price period, Coso's credit fundamentals
were stronger than typical for the rating category.
In April 2004, Fitch upgraded SCE's unsecured debt rating to 'BBB'
from 'BB' because of SCE's improved fundamentals and financial
recovery following the execution of a settlement agreement with
the California Public Utilities Commission. Though SCE's rating is
no longer an active constraint on the rating of Coso, any future
deterioration in SCE's credit quality could affect the rating on
the Coso notes.
Coso receives an energy price of 5.37 cents/kWh during the fixed
energy price period, which expires in April 2007. Debt service
coverage ratios range from 1.70 times (x) to 1.87x, while the
fixed energy price period is in effect. After April 2007,
contractual pricing reverts to SCE's prevailing short-run avoided
cost. Under current regulatory policies, SRAC is based on the
market price of natural gas at the Malin trading hub. A natural
gas price of approximately $4.80/MMBtu results in an SRAC price of
5.37 cents/kWh. Fitch relies on a base case that projects natural
gas prices of approximately $3.70/MMBtu in 2008, which would
result in SRAC prices of approximately 4.30 cents/kWh. If SRAC
averages 4.30 cents/kWh in 2008 and 2009, DSCRs would fall to
approximately 1.3x. Coso management anticipates that the U.S. Navy
will extend the term of the ground lease. Accordingly, the cost of
extension-contingent capital improvements is incorporated in the
financial projections.
However, capital expenditures scheduled after 2007 are considered
discretionary. If Coso deferred these capital expenditures, DSCRs
in 2008 and 2009 would improve by approximately 0.1x. Thus, Coso
has some flexibility to improve its liquidity position in the
event a potentially low SRAC results in reduced energy payments.
Coso would also be expected to reduce capital expenditures if the
U.S. Navy does not renew the ground lease.
Coso is a special-purpose funding vehicle formed to issue senior
secured notes on behalf of the Coso partnerships, the owners of
the Coso projects. The Coso projects consist of three interlinked
80 MW geothermal power plants, transmission lines, steam gathering
systems, and other ancillary facilities located at the Navy
Weapons Center in Inyo County, California. All electric energy and
capacity is sold to SCE under three long-term power purchase
agreements. Coso pays royalties to the U.S. Navy and the Bureau of
Land Management for use of the geothermal resource.
COINSTAR: S&P Assigns BB- Corp. Debt Rating with Stable Outlook
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Coinstar Inc. The outlook is stable.
At the same time, Standard & Poor's assigned its 'BB-' bank loan
rating, as well as a recovery rating of '4', to Coinstar's
proposed $300 million senior secured credit facilities, comprising
a $250 million seven-year term loan due 2011 and a $50 million
five-year revolving credit facility due 2009. The '4' recovery
rating indicates the expectation for a marginal recovery of
principal (25%-50%) in the event of a default. Proceeds of the
$250 million term loan will be largely used to fund the cquisition
of American Coin Merchandise Inc. Coinstar signed a definitive
agreement to acquire ACMI for $235 million, representing about
7.3x ACMI's March 31, 2004 last-12-month EBITDA of $32 million.
"The ratings on Coinstar reflect significant customer
concentration, the relatively short-term nature of its contracts
with retail partners, higher operating risks at ACMI, and
potential risks integrating this operation," said Standard &
Poor's credit analyst Ana Lai. "These risks are partly mitigated
by the company's relatively efficient proprietary coin
processing technology, positive operating performance, and
adequate credit protection measures."
Coinstar owns and operates a network of fully-automated, self-
service coin-counting machines that are primarily installed in
supermarkets and other retail outlets. American Coin Merchandising
Inc. owns and operates coin-operated amusement vending equipment
in the U.S. Combined, Coinstar and ACMI generated about $400
million in sales and about $94 million in EBITDA for the last 12
months ended March 31, 2004.
Coinstar's retail customers are concentrated in supermarkets.
Customer concentration is high, with two supermarket chains,
Kroger Co. and Albertson's Inc., accounting for about 34% of total
revenues. In 2003, Coinstar terminated its agreement with Safeway,
which represented about 9% of total sales. Although the
acquisition of ACMI diversifies Coinstar's revenue base, the
company still derives over a third of its sales from its top three
retail customers. Coinstar recently renewed a number of contracts
with key retailers, which are expected to provide the company
with a recurring revenue stream. Still, current agreements are
typically three years or less, and Coinstar could face increased
pricing pressure from retailers to increase revenue sharing.
COMMUNITY HEALTH: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Community Health Net
1202 State Street
Erie, Pennsylvania 16501
Bankruptcy Case No.: 04-11414
Type of Business: Medical and dental service provider.
See http://www.community-healthnet.com/
Chapter 11 Petition Date: May 29, 2004
Court: Western District of Pennsylvania (Erie)
Judge: Warren W. Bentz
Debtor's Counsel: Guy C. Fustine, Esq.
Knox McLaughlin Gornall & Sennett, P.C.
120 West Tenth Street
Erie, PA 16501
Tel: 814-459-2800
Estimated Assets: $1,500,000
Estimated Debts: $4,000,000
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
PA Medical Assistance Program $1,547,853
833 Health & Welfare Building
Harrisburg, PA 17120
Choice Health $425,128
4465 Fulton Drive, NW, Suite 201
Canton, OH 44718
Highmark Blue Cross Blue Shield $419,609
P.O. Box 360513
Pittsburgh, PA 15251-6513
Bureau of Primary Health Care $234,000
Community Health Centers Program
Titusville Area Health Svcs & $143,600
Titusville Area Hospital
PA Unemployment Comp. Fund $102,481
Bureau of Employer Tax Operations
Booker T. Washington Center $62,711
Erie Community Foundation $60,000
PBL Associates, LP $50,133
Companion Technologies $38,295
Bayfront NATO, Inc. $29,701
Mark Wilcox Construction $27,953
John F. Kennedy Center $25,352
Verizon Ad. $24,220
Reliance Standard Life Insurance $20,640
Company
Patterson Dental Supply, Inc. $17,276
Root Spitzna & Smiley, Inc. $18,500
Allstar Cleaning Company $12,380
Hagan Business Machines $11,561
Hispanic American Council $11,192
COTT: Plans to Build New Manufacturing Plant in Southwestern U.S.
-----------------------------------------------------------------
Cott Corporation (NYSE: COT; TSX:BCB) announced that it plans to
build a new beverage manufacturing facility in the south western
United States. The company expects to commence construction in the
third quarter of 2004 and anticipates that the plant will be in
full production by Q4 2005. It is expected to produce 40 million
cases annually and employ approximately 130 people. This new plant
increases the company's beverage manufacturing plants to nine in
the United States and twenty worldwide.
Total capital expenditures in 2004 are projected to rise from the
previously announced $55 million to approximately $65 million.
About Cott Corporation
Cott Corporation (S&P, BB Long-Term Corporate Credit and BB+
Senior Secured Debt Ratings) is the world's largest retailer brand
soft drink supplier, with the leading take home carbonated soft
drink market shares in this segment in its core markets, the
United States, Canada and the United Kingdom.
COUNSEL CORP: Fails to Comply with NASDAQ's Listing Standard
------------------------------------------------------------
Counsel Corporation (NASDAQ:CXSN) (TSX:CXS) announced that it has
received a Nasdaq Staff Determination indicating that Counsel
fails to comply with the market value of listed shares requirement
for continued listing set forth in Marketplace Rule
4310c(2)(B)(ii), and that its Common Stock will be delisted from
The Nasdaq SmallCap Market at the opening of business on June 21,
2004, unless the Company requests a hearing before a Nasdaq
Listing Qualifications Panel before the end of business on June
17, 2004.
Counsel intends to request a hearing to appeal the Nasdaq
determination. The hearing is expected to be scheduled within 45
days of the filing of the hearing request. Under applicable rules,
the hearing request will stay the delisting of the Company's
Common Stock, pending a decision by the Nasdaq Panel.
There can be no assurance that the decision of the Nasdaq Panel
will be favorable to Counsel. If Counsel's Common Stock is
delisted following the hearing, Counsel's Common Stock may be
eligible for listing on the Over the Counter Bulletin Board.
About Counsel Corporation
Counsel Corporation (TSX:CXS / NASDAQ:CXSN) -- whose March 31,
2004 balance sheet shows a stockholders' deficit of $16,648,000 --
is a diversified company focused on acquiring and building
businesses using its financial and operational expertise in two
specific sectors: communications and real estate. Counsel's
communications platform is focused on building upon its existing
communications investment, Acceris Communications Inc. (OTCBB:
ACRS), through organic growth and by acquiring additional customer
revenues. Counsel's real estate platform has a focused strategy of
investing in and developing income producing commercial
properties, primarily retail shopping centers. For further
information, visit Counsel's website at
http://www.counselcorp.com/
COVAD COMMS: Elects Two New Directors & Ratifies PwC's Retention
----------------------------------------------------------------
Covad Communications Group, Inc. (OTCBB:COVD), announced the
results of its Annual Meeting of Stockholders held Thursday in
Santa Clara, California.
Stockholders approved all matters set forth in the company's proxy
statement. The stockholders:
-- Elected L. Dale Crandall and Hellene S. Runtagh to the Board
of Directors with terms ending upon the 2007 annual
stockholders meeting.
-- Ratified the appointment of PricewaterhouseCoopers LLP as
independent auditors of the company for the fiscal year
ending December 31, 2004.
"Covad's Annual Meeting gave our team an ideal opportunity to
personally communicate our achievements and demonstrate our new
Voice over IP service," said Charles Hoffman, president and chief
executive officer of Covad. "We continue to deliver on the 2004
strategic initiatives as we enter an exciting new phase for Covad
as an integrated voice and data communications provider."
A Webcast of the meeting will be available on Friday, June 11,
2004 at http://www.covad.com/companyinfo/investorrelations/
About Covad
Covad is a leading nationwide provider of integrated voice and
data communications. The company offers DSL, Voice Over IP, T1,
Web hosting, managed security, IP and dial-up, and bundled voice
and data services directly through Covad's network and through
Internet Service Providers, value-added resellers,
telecommunications carriers and affinity groups to small and
medium-sized businesses and home users. Covad broadband services
are currently available across the nation in 44 states and 235
Metropolitan Statistical Areas (MSAs) and can be purchased by more
than 57 million homes and businesses, which represent over 50
percent of all US homes and businesses. Corporate headquarters is
located at 110 Rio Robles, San Jose, CA 95134. Telephone: 1-888-
GO-COVAD. Web Site: http://www.covad.com/
As of March 31, 2004, Covad Communications Group, Inc., reports a
stockholders' deficit of $10,102,000 compared to a $5,553,000
deficit at December 31, 2003.
CREDIT SUISSE: Fitch Assigns Low-Bs to 5 Series 2004-C2 Classes
---------------------------------------------------------------
Credit Suisse First Boston Mortgage Securities Corp.'s commercial
mortgage pass-through certificates, series 2004-C2, are rated by
Fitch Ratings as follows:
--$195,525,000 class A-1 'AAA';
--$392,792,000 class A-2 'AAA';
--$245,584,000 class A-1-A 'AAA';
--$966,842,374 class A-X 'AAA'
--$824,407,000 class A-SP 'AAA';
--$26,588,000 class B 'AA';
--$10,877,000 class C 'AA-';
--$20,546,000 class D 'A';
--$9,668,000 class E 'A-';
--$9,668,000 class F 'BBB+';
--$9,669,000 class G 'BBB';
--$10,877,000 class H 'BBB-';
--$6,043,000 class J 'BB+';
--$3,625,000 class K 'BB';
--$3,626,000 class L 'BB-';
--$6,043,000 class M 'NR';
--$2,417,000 class N 'B';
--$1,208,000 class O 'B-';
--$12,086,374 class P 'NR'.
Classes A-1, A-2, B, C, D, and E are offered publicly, while
classes A-1-A, A-X, A-SP, F, G, H, J, K, L, M, N, O, and P are
privately placed pursuant to rule 144A of the Securities Act of
1933. The certificates represent beneficial ownership interest in
the trust, primary assets, of which are 109 fixed-rate loans
having an aggregate principal balance of approximately
$966,842,374, as of the cutoff date.
CRESCENT REAL: Shareholders' Meeting Set for June 28 in Dallas
--------------------------------------------------------------
Crescent Real Estate Equities Company (NYSE:CEI) announced that
its Annual Meeting of Shareholders will be held on June 28, 2004,
10:00 a.m. central time, at the Hotel Crescent Court in Dallas,
Texas. The Company will host a live audio webcast and replay of
the meeting, accessible on the investor relations page at
http://www.crescent.com/
About The Company
Celebrating its tenth year, Crescent Real Estate Equities Company
(NYSE:CEI) is one of the largest publicly held real estate
investment trusts in the nation. Through its subsidiaries and
joint ventures, Crescent owns and manages a portfolio of more than
75 premier office buildings totaling more than 30 million square
feet primarily located in the Southwestern United States, with
major concentrations in Dallas, Houston, Austin, Denver, Miami and
Las Vegas. In addition, Crescent has investments in world-class
resorts and spas and upscale residential developments. For more
information, visit the Company's website at
http://www.crescent.com/
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its ratings on Crescent Real Estate Equities
Co., and Crescent Real Estate Equities L.P., and removed them
from CreditWatch, where they were placed on Jan. 23, 2002. The
outlook remains negative.
Ratings Affirmed And Removed From CreditWatch
Issue To From
Crescent Real Estate Equities Co.
Corporate credit rating BB BB/Watch Neg
$200 million 6-3/4%
preferred stock B B/Watch Neg
$1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg
Crescent Real Estate Equities L.P.
Corporate credit rating BB BB/Watch Neg
$150 million 6 5/8% senior
unsecured notes due 2002 B+ B+/Watch Neg
$250 million 7 1/8% senior
unsecured notes due 2007 B+ B+/Watch Neg
DOMAN INDUSTRIES: Court Sanctions Plan of Compromise & Arrangement
------------------------------------------------------------------
Doman Industries Limited announces that in connection with
proceedings under the Companies' Creditors Arrangement Act (CCAA),
the Supreme Court of British Columbia has issued an order
sanctioning the Plan of Compromise and Arrangement. A copy of the
court order and Plan may be obtained by accessing the Company's
website at http://www.domans.com/
It is anticipated that implementation of the Plan will occur on or
about July 26, 2004. To accommodate the implementation of the Plan
the stay has been extended to July 31, 2004.
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.
ENRON: Operational Energy & Mobile Energy Settle Claim Disputes
---------------------------------------------------------------
Operational Energy Corporation, one of Enron's debtor-affiliates,
sought and obtained a Court order:
(a) approving a settlement agreement and mutual release it
entered into with Mobile Energy Services Company, LLC; and
(b) authorizing it to enter into a mutual release of all
claims, obligations, and liabilities relating to an
Operation and Maintenance Agreement, dated as of
February 1, 2001.
According to Martin A. Sosland, Esq., at Weil, Gotshal & Manges,
LLP, in New York, Operational Energy and Mobile Energy are
parties to the O&M Agreement pursuant to which Operational Energy
agreed to perform certain operational and maintenance services in
connection with the Mobile Energy Complex located in Mobile,
Alabama.
On November 5, 2003, an explosion occurred at the Facility.
Mobile Energy has alleged that the explosion was due, in part, to
Operational Energy's actions. Mr. Sosland relates that Mobile
Energy has asserted that Operational Energy is obligated to
reimburse it for a portion of the costs associated with the
damages to the Facility resulting from the alleged actions
estimated to be about $270,000.
Mobile Energy is in the process of selling the Facility to DTE
Energy Services, Inc. In this connection, on February 10, 2004,
Mobile Energy notified Operational Energy of its election to
terminate the O&M Agreement under its terms. Under the O&M
Agreement, upon its termination, Mobile Energy is obligated to
pay Operational Energy $225,000 for certain termination fees.
Mr. Sosland reports that the parties have held various
discussions to resolve the claims arising in connection with the
O&M Agreement, including Mobile Energy's purported violation of
the automatic stay by sending the termination notice, the amount
due for the early termination of the O&M Contract, and any
amounts due to Mobile Energy for Operational Energy's alleged
actions in connection with the explosion at the Facility.
To amicably settle their disputes, Operational Energy and Mobile
Energy agree that:
(a) Mobile Energy will pay Operational Energy $100,000;
(b) at Operational Energy's receipt of the Settlement
Payment, the O&M Agreement will be deemed automatically
null and void and unenforceable;
(c) Operational Energy and Mobile Energy will release each
other from any and all claims, obligations, demands,
actions and liabilities, which arise from or relate to
the Claims; and
(d) All proofs of claim Mobile Energy have against the
Debtors will be deemed withdrawn with prejudice.
Mr. Sosland assures the Court that the Settlement Agreement is a
product of arm's-length bargaining between the parties. (Enron
Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ENRON: Wind Debtors Enter into Aeolos & Iweco Settlement Pact
-------------------------------------------------------------
Enron Wind Energy Systems, LLC (formerly known as Zond Energy
Systems, Inc.) and Aeolos S.A. entered into a Wind Turbine
Generator Purchase and Warranty Agreement, dated as of June 4,
1998, pursuant to which EWES agreed to sell 18 model Z-550 wind
turbine generators to Aeolos. EWES also agreed to provide a
five-year warranty for parts, power curve, and availability.
EWES and Iweco Megali Vrissi S.A. entered into a Wind Turbine
Generator Purchase and Warranty Agreement, dated as of June 4,
1998, pursuant to which EWES agreed to sell nine model Z-550 wind
turbine generators to Iweco. EWES also agreed to provide a five-
year warranty for parts, power curve and availability.
Aeolos' and Iweco's Warranty Claims
Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that Aeolos has asserted warranty claims,
aggregating $1,921,662, under the Aeolos Contract for parts and
power curves. Iweco, on the other hand, asserted warranty claims
for $761,211.
EWES, Aeolos and Iweco have agreed that Warranty Claims EWES owed
are $1,719,160 for Aeolos and $540,085 for Iweco.
Turbine Spare Parts
EWES currently holds a spare parts inventory relating to the Z-
550 turbines having a $630,000 book value. Based on a market
survey of wind farms using the model Z-550 turbines, EWES
believes that there is limited market for the Spare Parts.
The Settlement Agreement
Enron Wind Development Holdings, B.V., owns all of the issued
shares in the capital of Crete Hellas Holdings, B.V. Crete owns
all of the issued shares in the capital of Aeolos and Iweco.
Mr. Sosland reports that EWDH has negotiated the sale of the
Shares of Crete, and its subsidiaries, Aeolos and Iweco, to Eucom
Real Estate & Investment, Ltd. The transfer of the Spare Parts
is integral to the Sale Transactions as spare parts for the
turbines currently operated by Aeolos and Iweco are in short
supply. In addition, Eucom has expressed a strong interest that
the Spare Parts be transferred prior to the consummation of the
Sale Transactions. According to Mr. Sosland, EWES has been able
to resolve the amount of the warranty claims owed to Aeolos and
Iweco. Thus, the parties wish to amicably settle all matters
between them, including the Warranty Claims.
EWES, on one hand, and Aeolos and Iweco, on the other hand, have
reached a settlement of the issues between them pertaining to the
Contracts and the Warranty Claims. Pursuant to a Settlement
Agreement, EWES, Aeolos and Iweco agree to:
(i) terminate the Contracts;
(ii) settle any and all claims arising from the Contracts,
including the Warranty Claims;
(iii) enter into a mutual release of claims relating to the
Contracts; and
(iv) transfer the Spare Parts to Aeolos and Iweco free and
clear of all liens, claims, interest, rights of setoff,
recoupment, netting and deduction.
Although the Spare Parts have a $630,000 book value, Mr. Sosland
explains that to reflect the estimated creditor recovery rate
applicable to EWES, the parties have agreed to reduce the amount
of the Warranty Claims by $1,354,282 upon the transfer of the
Spare Parts. In effect, Aeolos and Iweco have agreed to reduce
their claims and have allowed general unsecured claims against
EWES' bankruptcy estate for $898,826 and $6,136.
Given the declining market for the Spare Parts, to facilitate the
Sale Transaction, and due to fact that EWES has ceased its
business operations, EWES believes that it is in its best
business interest to terminate the Contracts, obtain releases of
the obligations under the Contracts, and transfer the Spare Parts
in return for the agreed reduction in the Warranty Claims.
The Sale of the Crete Shares
Mr. Sosland informs Judge Gonzalez that since September 2003,
EWDH has been extensively marketing the Crete Shares. EWDH
contacted 74 potential buyers, 11 of which submitted indicative
bids. Subsequently, four binding bids were submitted and in
December 2003, one bidder was selected as having the best bid for
the Shares. However, negotiations with that bidder were
terminated due to the bidder's concerns over obtaining necessary
governmental approvals. Eucom, as the next best bidder, was
selected and negotiations for the sale of the Shares were
commenced.
On March 29, 2004, EWDH and Eucom executed an Agreement for the
Acquisitions of the Entire Issued Share Capital of Crete Hellas
Holdings BV and of Certain Project Debt. Pursuant to the
Purchase Agreement, Eucom has agreed to pay about $9,693,308,
comprised of these estimated amounts:
(1) $341,246 cash paid to EWDH as consideration for the sale
of the Shares;
(2) $2,220,956 cash paid to HVB to pay the Secured Debt on
behalf of Aeolos and Iweco;
(3) $6,316,155 cash for the purchase of the outstanding notes
payable owed by the Greek Project Companies -- Crete,
EWES and Iweco -- to the Project Creditors;
(4) assumption of intercompany amounts payable to Aeolos from
Iweco S.A. and Enron Wind Hellas S.A. - Construction
Management Services of Wind Power Stations, totaling
$254,081; and
(5) assignment by the Greek Project Companies to their
Project Creditors on a pro rata basis of all remaining
amounts owing to the Greek Project Companies from Enron-
affiliated companies with an estimated value of $560,870.
Compromise of Intercompany Claims
To effectuate the Sale Transaction, Mr. Sosland relates that the
Project Creditors -- Wind Debtors and Enron Wind Corp. Holdings,
B.V., Enron Wind International Holdings, LLC, and Enron Wind
Hellas S.A. - Operation and Maintenance Services for Wind Power
Stations -- are required to compromise claims owed to them by the
Greek Project Companies. The Wind Debtors are composed of EWES,
Enron Wind, LLC, Enron Wind Systems, LLC, and Enron Wind
Development, LLC. As of April 30, 2004, it is estimated that the
accounts payable owed by the Greek Project Companies to the
Project Creditors will total about $28,200,000.
The Greek Project Companies are owed amounts by other Enron-
affiliated companies, which amounts have an estimated recovery
value of $560,870. As part of the Sale Transaction, the Greek
Project Companies are to assign the Project Claims to their
Project Creditors on a pro rata basis, in partial payment of the
Project Debt. After the assignment of the Project Claims to the
Project Creditors, the Project Debt will be reduced by the
Project Claims Value, and the remaining balance due to the
Project Creditors is the Net Project Debt.
The Project Debt Consideration will be paid to the Project
Creditors on a pro rata basis of the Project Debt in
consideration for the transfer of the Net Project Debt by the
Project Creditors to Eucom.
After the closing of the Sale Transaction, EWDH, Enron Wind
International and Enron Wind Hellas propose to pay certain costs
associated with the Sale Transaction and for the dissolution of
the remaining legal entities related to the wind power
development efforts and wind power operations in Greece. The
Transaction and Dissolution Costs are currently estimated to be
$600,000. EWDH, Enron Wind International and Enron Wind Hellas
will use their proceeds from the Sale Transaction to pay the
Transaction and Dissolution Costs.
By this motion, EWES and the Wind Debtors ask the Court to:
(a) approve the Settlement Agreement between EWES, Aeolos and
Iweco;
(b) authorize EWES to terminate the Contracts;
(c) authorize EWES to enter into a mutual release of all
claims, obligations and liabilities relating to the
Contracts;
(d) authorize EWES to transfer the Spare Parts to Aeolos and
Iweco, free and clear of all liens, claims, encumbrances,
right of setoff, recoupment, netting and deduction;
(e) allow Aeolos and Iweco general unsecured claims against
EWES for $898,826 and $6,136;
(f) authorize and approve the compromise of the Project Debt
owed to the Wind Debtors; and
(g) authorize and approve the sale of the Net Project Debt by
the Wind Debtors to Eucom in accordance with the Purchase
Agreement.
Mr. Sosland contends that the contemplated transactions should be
authorized and approved because:
-- the Contracts are terminated without litigation;
-- the consummation of the transactions would facilitate the
Sale Transaction;
-- the Settlement Agreement saves substantial administrative
expenses and preserves the assets of EWES' estate;
-- the Wind Debtors' interest in Crete and the wind power
projects held by Aeolos and Iweco are not integral to or
contemplated to be part of the Debtors' reorganization;
-- the transactions were negotiated at arm's length and in
good faith; and
-- EWES is not aware of any liens relating to the Spare Parts.
(Enron Bankruptcy News, Issue No. 111; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENRON: Offshore Power, et al., Retain Farrell Fritz as Counsel
--------------------------------------------------------------
Offshore Power Production C.V., Enron India Holdings, Ltd., and
Enron Mauritius Company sought and obtained the Court's authority
to employ Farrell Fritz, PC, as their bankruptcy counsel, nunc pro
tunc to April 8, 2004.
Ted A. Berkowitz, Esq., at Farrell Fritz, PC, in Uniondale, New
York, relates that the firm will be:
(a) taking all necessary action to protect and preserve the
OPP Debtors' estates, including the prosecution of
actions on the OPP Debtors' behalf the defense of any
actions commenced against the OPP Debtors, negotiations
concerning all litigation in which the OPP Debtors are
involved and objecting to claims filed against the
estates -- each only to the extent the OPP Debtors are
not represented by Special Counsel in those actions;
(b) preparing, assembling and filing on behalf of the OPP
Debtors as debtors-in-possession, all necessary motions,
applications, answers, orders, reports and papers in
connection with the administration of the estates;
(c) negotiating and preparing on behalf of the OPP Debtors a
plan of reorganization or liquidation and all related
documents;
(d) representing the OPP Debtors in hearings before the
Court;
(e) coordinating on bankruptcy matters with the Joint
Provisional Liquidators for EIHL and EMC appointed by
the courts in the Cayman Islands and Mauritius; and
(f) performing all other necessary legal services in
connection with these Chapter 11 cases.
The OPP Debtors agreed to pay Farrell a $100,000 retainer, which
the firm will hold as security for payment of its fees and
expenses. Farrell will seek compensation of its services based
on the hourly rates of its professionals, currently at:
Ted A. Berkowitz $395
Patrick Collins 280
Robert C. Yan 205
Maria M. Siffert 150
Offshore Production has agreed to obtain agreements from limited
partners, EFS India-Energy B.V. and India Power Investments B.V.,
to contribute sufficient capital to Offshore Production to fund
the OPP Debtors' allowed but unpaid legal fees and expenses of
Farrell. Farrell will be named as third party beneficiary in the
agreements. Notwithstanding, Farrell will only represent the OPP
Debtors and not the interests of EFS or India Power.
Mr. Berkowitz assures the Court that:
(i) Farrell does not hold or represent any interest adverse
to the estates;
(ii) Farrell is a "disinterested person" as that phrase is
defined in Section 101(14) of the Bankruptcy Code; and
(iii) neither Farrell nor its professionals have any connection
with the OPP Debtors, their creditors or any other party-
in-interest, except as disclosed.
Mr. Berkowitz tells the Court that Farrell represented or
currently represents six Enron Adverse Clients -- Virginia
Transformer Corporation, Smith Pump Company, Inc., Lewis and
Clark College, Harold Levinson Associates, Inc., Swisstex
California, Inc., and Tissurama Industries, Inc. Mr. Berkowitz
tells the Court that Farrell's representation of the Enron
Adverse Clients does not constitute representation of an interest
adverse to the OPP Debtors' estates since the OPP Debtors have
been severed from the bankruptcy cases of the Enron Debtors and
the management of the OPP Debtors is independent from the
management of the Enron Debtors. (Enron Bankruptcy News, Issue No.
111; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FEDERAL-MOGUL: Files Third Amended Reorganization Plan
------------------------------------------------------
On June 4, 2004, Federal-Mogul Corporation, together with the
Unsecured Creditors Committee, Asbestos Claimants Committee,
Equity Security Holders Committee, the Legal Representative for
Future Asbestos-Related Claimants, and JPMorgan Chase Bank as
Administrative Agent for the Debtors' prepetition lenders,
delivered to the Court their Third Amended Joint Plan of
Reorganization and Disclosure Statement.
A free copy of Federal-Mogul's Third Amended Plan is available
at:
http://bankrupt.com/misc/Federal_Mogul_3rd_Amended_Plan.pdf
A free copy of Federal-Mogul's Third Amended Disclosure Statement
is available at:
http://bankrupt.com/misc/3rd_Amended_Disclosure_Statement.pdf
The Plan Proponents modified the Disclosure Statement and Joint
Plan of Reorganization to reflect the changes ordered by the
Court at the May 11, 2004 Disclosure Statement Hearing. The
Third Amended Plan modifications include:
A. Convertible Subordinated Debentures
The Plan Proponents disclose that the Indenture Trustee for
the Convertible Subordinated Debentures asserts that the
aggregate outstanding amount of the Convertible Subordinated
Debentures was $216,454,300 as of December 31, 2003. The Plan
Proponents believe that the aggregate outstanding principal
amount of the Convertible Subordinated Debentures as of that
date was $211,042,367.
B. Asbestos PD Claimants Committee
The Plan Proponents clarify that the Official Committee of
Asbestos Property Damage Claimants is not a proponent of the
Third Amended Plan. The Asbestos PD Committee has recommended
that asbestos property damage claimants vote against the Plan.
C. Recusal of Judge Wolin
The Plan Proponents disclose that the United States Court of
Appeals for the Third Circuit disqualified Judge Wolin from
continuing to preside over the asbestos issues in the
bankruptcy cases of Owens Corning, W.R. Grace & Co., and USG
Corporation. Because none of the parties in the Debtors'
cases had sought to recuse Judge Wolin, the Court of Appeals
declined to disqualify Judge Wolin from presiding over the
Debtors' cases.
D. Assignment of Asbestos Claims to the Trust
The Asbestos Personal Injury Claim holder asserting a claim
against the Reorganized Hercules-Protected Entities will be
deemed to have assigned to the Trust the proceeds of those
claims.
All holders of Asbestos Personal Injury Claims will be deemed
to have assigned to:
(a) the Reorganized T&N, any rights respecting the
Hercules Policy; and
(b) the Trust, any rights respecting the EL Coverage in
each case being rights transferred to the holder by
operation of law under the Third Parties (Rights
Against Insurers) Act of 1930 of the United Kingdom.
The EL Coverage are insurance policies held on account of the
Employers Liability Act 1969 of the United Kingdom, as amended
from time to time, that afford T&N Limited and any applicable
U.K. Debtors with rights of indemnity or insurance coverage
with respect to any Asbestos Personal Injury Claim.
E. Payment of Asbestos Claims
To facilitate the payment of Asbestos Personal Injury Claims
covered by the Hercules Policy, the Trust will subscribe for
72% of the Reorganized Federal-Mogul Class B Common Stock for
GBP361,802,160. After the Trust's receipt of the stock, the
Reorganized Federal-Mogul will be deemed to have assigned to
the Reorganized T&N, by way of capital contribution, all of
its right to payment from the Trust.
F. Trust Expenses
The Trust will allocate its expenses between and among the
Personal Injury Trust Funds on a reasonable basis to be
determined with the consent of the Trust Advisory Committee
and the Future Claimants Representative. Any PI Trust Fund
may advance any other PI Trust Fund monies with which to pay
the expenses of the latter Fund, including the expenses of
insurance coverage litigation, provided that the PI Trust Fund
that received the advance reimburses the PI Trust Fund that
made the advance as soon as the monies become available.
G. Receipt of Trust Assets
As of June 4, 2004, the Trust Assets are not in the form of
cash and also may not be in the form of cash as of the
Effective Date. The Trust will allocate any assets it
receives subsequent to its creation, including insurance
proceeds to the PI Trust Fund liable to pay PI Trust Claims
against those assets.
H. Treatment of Claims
The treatment of some claims in the Third Amended Joint Plan
is modified to include these recoveries:
Class Description Recovery Under the Plan
----- ----------- -----------------------
7I Non-Priority Estimated Percentage Recovery:
Pension Plan Variable, depending on the
Employee Benefit elected treatment
Claims Against
Federal-Mogul
Ignition (UK)
Limited
IJ, 5J, Asbestos Personal On the Hercules Policy Expiry
6J, 11J, Injury Claims Date, the Reorganized Debtors
15J, 17J, will be released and discharged
19J, from Asbestos Personal Injury
21J-23J, Claims.
42J,
129J-157J From and after the EL Coverage
Expiry Date, the Reorganized
Debtors will release and
discharge from Asbestos Personal
Injury Claims in excess of both:
(a) the GBP690 million retention
and the GBP500 million layer
of coverage under the
Hercules Policy; and
(b) all other sums as are
attributable to or otherwise
represent the Hercules
Insurance Recoveries to the
extent the amounts exceed
the GBP500 million layer of
coverage.
Estimated Percentage Recovery:
Variable
I. Classification and Allowance of Claims
The procedures for the allowance of Other U.K. Claims differ
from the allowance procedures for Unsecured Claims against the
U.S. Debtors. Pursuant to the Plan, Other U.K. Claims include
Asbestos Property Damage Claims and any other Claims asserted
against a U.K. Debtor, other than an Administrative Claim,
Administration Claim, Asbestos Personal Injury Claim, Bank
Claim, Noteholder Claim, and Secured Surety Claims.
To be allowed as an Other U.K. Claim, the claim must be:
(a) a portion of a non-contingent Claim;
(b) accepted by the Administrators or Voluntary Arrangement
Supervisors of the relevant U.K. Debtor as owing by
that U.K. Debtor;
(c) accepted by the relevant Reorganized U.K. Debtor as
owing by that U.K. Debtor; or
(d) determined to be by Final Order of the U.K. Court
pursuant to the terms of the Scheme of Arrangement or
Voluntary Arrangement for the U.K. Debtor.
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 Oct. 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.
57; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GEO SPECIALTY: Panel Hires Otterbourg Steindler as Lead Counsel
---------------------------------------------------------------
The Official Unsecured Creditors Committee appointed in GEO
Specialty Chemicals, Inc.'s chapter 11 cases, asks the U.S.
Bankruptcy Court for the District of New Jersey for permission to
retain Otterbourg, Steindler, Houston & Rosen, PC as its lead
counsel.
Otterbourg Steindler will:
a. assist and advise the Committee in its consultation with
the Debtors relative to the administration of this case;
b. attend meetings and negotiate with the representatives of
the Debtors and other parties in interest;
c. assist and advise the Committee in its examination and
analysis of the conduct of the Debtors' affairs;
d. assist the Committee in the review, analysis, negotiation
and preparation of any plan(s) of reorganization that may
be filed and to assist the Committee in the review,
analysis, negotiation and preparation of the disclosure
statement accompanying any plans) of reorganization;
e. assist the Committee in the review, analysis, and
negotiation of any financing agreements;
f. take all necessary action to protect and preserve the
interests of the Committee, including:
(i) the prosecution of actions on its behalf,
(ii) negotiations concerning all litigation in which the
Debtors are involved, and
(iii) if appropriate, review and analysis of claims filed
against the Debtors' estate;
g. generally prepare on behalf of the Committee all necessary
motions, applications, answers, orders, reports and papers
in support of positions taken by the Committee;
h. appear, as appropriate, before this Court, the Appellate
Courts, and the United States Trustee, and to protect the
interests of the Committee before said courts and the
United States Trustee; and
i. perform all other necessary legal services in this case.
Otterbourg Steindler's hourly rates range from:
Designation Billing Rate
----------- ------------
Partner/Counsel $450 to $675 per hour
Associate $225 to S485 per hour
Paralegal/Legal Assistant $175 per hour
Headquartered in Harrison, New Jersey, GEO Specialty Chemicals,
Inc. -- http://www.geosc.com/-- develops, manufactures and
markets a wide variety of specialty chemicals, including over 300
products sold to major industrial customers for various end-use
applications including water treatment, wire and cable, industrial
rubber, oil and gas production, coatings, construction, and
electronics. The Company filed for chapter 11 protection on March
18, 2004 (Bankr. N.J. Case No. 04-19148). Alan Lepene, Esq., and
Robert Folland, Esq., at Thompson Hine, LLP, and Howard S.
Greenberg, Esq., Morris S. Bauer, Esq., and Stephen Ravin, Esq.,
at Ravin Greenberg, PC represent the Debtors in their
restructuring efforts. On September 30, 2003, the Debtors listed
total assets of $264,142,000 and total debts of $215,447,000.
GEO SPECIALTY: Panel Hires Duane Morris as Local Counsel
--------------------------------------------------------
The Official Unsecured Creditors Committee appointed in GEO
Specialty Chemicals, Inc., and its debtor-affiliates' chapter 11
cases, sought and obtained approval from the U.S. Bankruptcy Court
for the District of New Jersey to employ Duane Morris LLP as its
local counsel.
Duane Morris will:
a) provide legal advice with respect to the Committee's
rights and interests in the review and negotiation of any
plan of reorganization and related corporate documents;
b) respond on behalf of the Committee to any and all
applications, motions, answers, orders, reports and other
pleadings in connection with the administration of the
estate in this case; and
c) perform any and other legal services requested by the
Committee in connection with the chapter 11 cases and the
confirmation and implementation of a plan of
reorganization, in the Debtors' chapter 11 cases.
The attorneys and paralegals that will likely perform services in
these cases and their hourly rates are:
Professionals Designation Billing Rate
------------- ----------- ------------
William Katchen Partner $545 per hour
David J. Stein Partner $345 per hour
Joseph H. Lemkin Associate $295 per hour
Jonathan Cutty Paralegal $140 per hour
Vanessa Marchello Legal Assistant $80 per hour
Headquartered in Harrison, New Jersey, GEO Specialty Chemicals,
Inc. -- http://www.geosc.com/-- develops, manufactures and
markets a wide variety of specialty chemicals, including over 300
products sold to major industrial customers for various end-use
applications including water treatment, wire and cable, industrial
rubber, oil and gas production, coatings, construction, and
electronics. The Company filed for chapter 11 protection on March
18, 2004 (Bankr. N.J. Case No. 04-19148). Alan Lepene, Esq., and
Robert Folland, Esq., at Thompson Hine, LLP, and Howard S.
Greenberg, Esq., Morris S. Bauer, Esq., and Stephen Ravin, Esq.,
at Ravin Greenberg, PC represent the Debtors in their
restructuring efforts. On September 30, 2003, the Debtors listed
total assets of $264,142,000 and total debts of $215,447,000
HALLIBURTON: SEC Investigates Nigerian Joint Venture
----------------------------------------------------
Halliburton (NYSE: HAL) announced that the United States
Securities and Exchange Commission (SEC) has commenced a formal
investigation into payments made in connection with TSKJ's
construction of a natural gas liquefaction facility in Nigeria.
TSKJ is a private limited liability company registered in Madeira,
Portugal whose members are Technip SA of France, Snamprogetti
Netherlands B.V., which is an affiliate of ENI SpA of Italy, JGC
Corporation of Japan, and Kellogg Brown & Root, each of which owns
25% of the venture.
The United States Department of Justice and the SEC have met with
Halliburton to discuss these matters and have asked Halliburton
for cooperation and access to information in reviewing these
matters in light of the requirements of the United States Foreign
Corrupt Practices Act. While Halliburton does not believe that it
has violated the Foreign Corrupt Practices Act, Halliburton's own
internal investigation of these matters is ongoing and there can
be no assurance that government authorities would not conclude
otherwise.
As previously reported, a French magistrate has been investigating
this matter. Representatives of Halliburton have recently met with
the French magistrate to express their willingness to cooperate
with the investigation.
TSKJ and other similarly owned entities have entered into various
contracts to build and expand the liquefied natural gas project
for Nigeria LNG Limited, which is owned by the Nigerian National
Petroleum Corporation, Shell Gas B.V., Cleag Limited (an affiliate
of Total), and Agip International B.V.
Halliburton, founded in 1919, is one of the world's largest
providers of products and services to the petroleum and energy
industries. The company serves its customers with a broad range of
products and services through its Energy Services and Engineering
and Construction Groups. The company's World Wide Web site can be
accessed at http://www.halliburton.com/
HAVENS STEEL: Employs Shughart Thomson as Special Counsel
---------------------------------------------------------
Havens Steel Company, wants to employ Shughart Thomson & Kilroy as
its special counsel. The Debtor tells the U.S. Bankruptcy Court
for the Western District of Missouri, Kansas City Division, that
Shughart Thomson will:
a) provide representation with regard to general corporate
matters and operational issues;
b) communicate and negotiate with general contractors,
subcontractors and suppliers in connection with existing
and future construction contracts;
c) draft renegotiated construction contracts and future
construction contracts;
d) communicate and negotiate with St. Paul in connection with
existing construction contracts and operational matters;
e) communicate with employees and union representatives;
f) review and provide analysis of all budgets, cash flow
summaries, and financial statements of Debtor; and
g) formulate of business plans and assistance to Debtor's
bankruptcy counsel in the development of any Chapter 11
plans.
Roy Bash, Esq., will lead the team in this engagement. Mr. Bash
says that his firm will bill the Debtor its current hourly rates.
Those rates are not disclosed.
Headquartered in Kansas City, Missouri, Havens Steel Company
-- http://www.havenssteel.com/-- provides design-build services
from engineering to fabrication and erection to steel management
systems and on-site project management. The company filed for
chapter 11 protection on March 18, 2004 (Bankr. W.D. Mo. Case No.
04-41574). Jonathan A. Margolies, Esq., and R. Pete Smith, Esq.,
at McDowell, Rice, Smith & Buchanan represents the Debtors in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed estimated debts and assets of over $10
million each.
HAYES LEMMERZ: First Quarter 2004 Net Loss Narrows to $2.7 Million
------------------------------------------------------------------
Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) reported that
sales for the fiscal first quarter, ended April 30, 2004, rose 15
percent to $594.1 million from $515.3 million a year earlier.
Earnings from operations for the first quarter rose sharply to
$26.2 million, compared with $14.4 million a year earlier,
excluding fresh start accounting adjustments and reorganization
items.
"Our intense focus on operational excellence and financial
discipline is bearing fruit," said Curtis Clawson, President,
Chief Executive Officer and Chairman of the Board. "This is by far
our best quarter, both operationally and financially, since Hayes
Lemmerz emerged from Chapter 11 reorganization in June 2003. Our
sales were up strongly across all segments of the business and our
operational efficiency continued to improve, with gross margins
increasing to 12.5 percent from 10.0 percent a year ago."
The Company reported a net loss of $2.7 million for the first
quarter of fiscal 2004, after taking a charge of $12.2 million for
early extinguishment of debt. This compares with a year earlier
loss of $22.6 million.
Cash generated from operations rose strongly in the quarter to
$71.9 million, from $17.1 million in the year-earlier quarter.
Capital expenditures were $29.3 million in the recent quarter,
compared with $20.0 million a year earlier.
During the first quarter, Hayes Lemmerz redeemed $87.5 million of
its 10-1/2 percent Senior Notes and prepaid $16.0 million of its
Term Loan B, following completion of a $125.5 million follow-on
equity offering on February 11. First quarter results reflected a
$12.2 million charge for early debt extinguishment.
With those debt reductions, net debt at the end of first quarter
was $578.6 million, a reduction of $150 million from year-end
fiscal 2003. The Company has not borrowed under its $100 million
revolving credit facility since its emergence from Chapter 11.
"Our balance sheet is healthy, and we have ample financial
resources to continue improving efficiency and expanding into new
markets as opportunities arise," added Mr. Clawson.
Because Hayes Lemmerz emerged from Chapter 11 reorganization in
June 2003, financial results for the current year and prior year
are not fully comparable, the Company noted.
About the Company
Hayes Lemmerz International, Inc. is a leading global supplier of
automotive and commercial highway wheels, brakes, powertrain,
suspension, structural and other lightweight components. The
Company has 44 facilities in 14 countries and approximately 11,000
employees worldwide.
More information about Hayes Lemmerz International, Inc. is
available at http://www.hayes-lemmerz.com/
HERBST GAMING: Completes $160 Million Senior Debt Offering
----------------------------------------------------------
Herbst Gaming Inc. announced that it has completed an offering of
$160,000,000 in aggregate principal amount of its 8-1/8% Senior
Subordinated Notes due 2012 in a private placement transaction.
In addition, on June 10, 2004, Herbst Gaming Inc. entered into a
new $150,000,000 credit facility with a syndicate of lenders that
provides for a $90,000,000 revolving credit facility and a
$60,000,000 term loan. The company will use the proceeds from the
offering of the Senior Subordinated Notes and borrowings under its
credit facility, along with cash on hand, to purchase the 10-3/4%
Senior Secured Notes due 2008 tendered in connection with its
tender offer and consent solicitation, to pay related transaction
fees and expenses and to fund a distribution to its stockholders.
The 8-1/8% Senior Subordinated Notes have not been registered
under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent such registration or
an applicable exemption from the registration requirements of the
Securities Act.
Herbst Gaming Inc. also announced the expiration of its previously
announced cash tender offer for all of its Notes (CUSIP
#42703XAB5). The tender offer expired at 5 p.m., New York City
time, on June 10, 2004.
Herbst Gaming Inc. received tenders of Notes from holders of a
total of $210,929,000, or approximately 97%, of the aggregate
principal amount of Notes prior to the Expiration Date. Herbst
Gaming Inc. has accepted for payment and paid for all Notes
tendered pursuant to the tender offer and consent solicitation.
The proposed amendments to the indenture governing the Notes,
which eliminated substantially all of the restrictive covenants,
certain events of default and amended defeasance provisions
contained in the indenture, became effective today.
Lehman Brothers Inc. acted as exclusive dealer manager and
solicitation agent in connection with the tender offer and consent
solicitation. The information agent and tender agent for the
tender offer and consent solicitation was D.F. King & Co. Inc.
* * *
As reported in the Troubled Company Reporter's May 24, 2004
edition, Standard & Poor's Ratings Services raised its ratings on
Herbst Gaming Inc., including its corporate credit rating to 'B+'
from 'B', given continued solid operating performance and the
expectation that this trend will continue in the intermediate
term.
In addition, Standard & Poor's assigned a 'B+' rating and the
recovery rating of '3' to the company's proposed bank facility,
indicating a meaningful recovery of principal (50-80%) in the
event of default. The facility consists of a $90 million five-year
revolver and $60 million five-year term loan. Standard & Poor's
also assigned a 'B-' rating to the company's proposed $150 million
senior subordinated notes due 2012. Las Vegas, Nevada-based Herbst
is a slot machine route operator.
HOLLINGER INC: Completes C$211 Million Financing
------------------------------------------------
Hollinger Inc. (TSX:HLG.C) (TSX:HLG.PR.B) is pleased to announce
that, further to its press release of June 8, 2004, it has
completed the applicable payments required to be made following
satisfaction of the escrow conditions in connection with its
offering of C$211 million of subscription receipts. Effective 5:00
p.m. (Eastern Standard Time) on June 11, 2004, each Subscription
Receipt was automatically converted, without payment of any
additional consideration, into one Series II Preference Share of
Hollinger.
Hollinger has deposited into escrow with a licensed trust company
10,981,538 shares of Class A Common Stock of Hollinger
International Inc. As a result, Hollinger is currently in a
position to honour retractions of its outstanding Series II
Preference Shares. The Escrowed Shares will be held in escrow and
will be released by the Share Escrow Agent from time to time in
order to satisfy retraction requests from the holders of all of
the issued and outstanding Series II Preference Shares.
Following completion of the Payments, US$78.0 million aggregate
principal amount of Hollinger's 11.875% senior secured notes due
2011 remain outstanding and all of its Series III Preference
Shares have been redeemed and have been delisted from the Toronto
Stock Exchange effective at the close of trading on June 11, 2004.
Hollinger's principal asset is its approximately 72.3% voting and
29.7% equity interest in Hollinger International Inc. Hollinger
International is a global newspaper publisher with English-
language newspapers in the United States, Great Britain and
Israel. Its assets include The Daily Telegraph, The Sunday
Telegraph and The Spectator and Apollo magazines in Great Britain,
the Chicago Sun-Times and a large number of community newspapers
in the Chicago area, The Jerusalem Post and The International
Jerusalem Post in Israel, a portfolio of new media investments and
a variety of other assets.
* * *
As reported in the Troubled Company Reporter's March 3, 2004
edition, Hollinger Inc. (TSX: HLG.C; HLG.PR.B; HLG.PR.C) did not
make the interest payment due March 1, 2004, on its outstanding
US$120 million aggregate principal amount of 11.875% senior
secured notes due 2011. The non-payment of interest does not
constitute an event of default under the indenture governing the
Senior Secured Notes unless such non-payment continues for a
period of 30 days from the date such interest is due. Hollinger,
together with its advisors, are continuing to actively examine
Hollinger's available options in order to satisfy its obligations
under the Senior Secured Note indenture in a timely manner.
INTEGRATED SECURITY: CEO Rundell Provides $100,000 Cash Investment
------------------------------------------------------------------
In exchange for an aggregate of $100,000 cash investment,
Integrated Security Systems, Inc. issued a promissory note to
C. A. Rundell, Jr., Chairman and Chief Executive Officer of the
Company, on April 28, 2004.
The promissory note is in the original principal amount of
$100,000 and has an annual interest rate of 6 1/2%. The promissory
note, plus interest, is due on August 28, 2004. Interest is
payable in monthly installments on the first day of each month.
* * *
Liquidity and Capital Resources
As reported in its Form 10-QSB For The Quarterly Period Ended
March 31, 2004, Integrated Security Systems, Inc. reports:
"The Company's cash position decreased by $87,797 during the nine
months ended March 31, 2004. At March 31, 2004, the Company had
$89,281 in cash and cash equivalents and had approximately $1.2
million outstanding under its accounts receivable factoring
facility. The factoring facility, which is secured by accounts
receivable and inventory, permits the Company to borrow up to a
combined $3.0 million, subject to availability under its borrowing
base.
"For the nine months ended March 31, 2004, the Company's
operating activities used $916,929 of cash compared to $184,500
of cash used in operations during the nine months ended March 31,
2003. The Company used $193,102 for the purchase of property and
equipment during the nine months ended March 31, 2004, compared
to $61,428 for the nine months ended March 31, 2003. In
addition, the Company used cash of $737,130 in connection with
the asset purchase and merger with ARMR Services Corporation.
"During the nine months ended March 31, 2004, the Company financed
its operations with cash flows from borrowings of $2,003,007
compared to $627,277 during the nine months ended March 31, 2003.
The Company made payments of $411,838 on debt and other
liabilities during the nine months ended March 31, 2004, compared
to payments of $136,776 on debt and other liabilities during the
nine months ended March 31, 2003.
"During the nine months ended March 31, 2004, the Company
received $500,000 in cash from BFS US Special Opportunities
Trust PLC in exchange for a convertible promissory note in order
to finance the purchase/merger of ARMR Services Corporation.
"The cash that the Company receives from the accounts receivable
factoring facilities is utilized to support Company-wide
operations. The Company's working capital requirements will
depend upon many factors, including future sales of the
Company's products, the Company's operating results, the
status of competitive products, and actual profits compared
to the Company's business plan. The Company is currently
experiencing declining liquidity, which makes it difficult for
the Company to meet its current cash requirements and may
jeopardize the Company's ability to continue as a going
concern and the Company's auditor issued a going concern
modification in their auditors' report for our year ended June 30,
2003. The Company intends to address its liquidity problems by
controlling costs, seeking additional funding and maintaining
focus on revenues and collections. At the present time and in the
foreseeable future, the Company will need to obtain additional
financing either through equity placement or additional debt.
There can be no assurance that the Company will be able to secure
such financing. If the Company's liquidity does not improve, it
may have to seek a merger partner, limit its operations or seek
protection under the federal bankruptcy laws. Any of the
foregoing options may be on terms that are unfavorable to the
Company or disadvantageous to the Company's stockholders."
INTERNATIONAL WIRE: Files Reorganization Plan in New York
---------------------------------------------------------
International Wire Group, Inc., and its debtor-affiliates filed
their Joint Chapter 11 Reorganization Plan and an accompanying
Disclosure Statement with the U.S. Bankruptcy Court for the
Southern District of New York. Full-text copies of the documents
are available for a fee at:
http://www.researcharchives.com/bin/download?id=040604221545
and
http://www.researcharchives.com/bin/download?id=040604221813
The Plan outlines 8 classes of claims and interests according to
how they should be treated:
Class Treatment
----- ---------
N/A - Administrative Unimpaired; Will be paid in full in
Expense Claims cash.
N/A - Priority Tax Unimpaired; At the option of the Debtors
Claims either:
(i) paid in full, in Cash,
(ii) paid over a six-year period from
the date of assessment, with
interest, or
(iii) other terms as established by the
Bankruptcy Court.
1 - Other Priority Unimpaired; Will be paid in full in
Claims Cash.
2 - Secured Claims Unimpaired; At the option of the
Debtors either
(i) reinstated and rendered unimpaired
by curing all outstanding
defaults, with all rights
remaining unaltered,
(ii) paid in full, in Cash, plus
interest, or
(iii) fully and completely satisfied by
delivery or retention of the
Collateral securing the Secured
Claims.
3 - Subordinated Impaired; Distribution of pro rata
Note Claims shares of:
(i) New Notes in the aggregate
principal amount of $75,000,000
and
(ii) New Common Stock representing 96%
of New Common Stock, subject to
dilution by New Options.
4 - General Unimpaired; Rights unaltered or
Unsecured otherwise rendered unimpaired.
Claims
5 - Tort Claims Unimpaired; Rights unaltered or
otherwise rendered unimpaired.
6 - Intercompany Unimpaired; Rights unaltered or
Clams otherwise rendered unimpaired.
7 - Existing IWG Impaired; Distribution of a pro rata
Common Stock share of New Common Stock representing
4% of New Common Stock distributed
subject to dilution by New Options.
8 - Subsidiary Unimpaired; Unimpaired and reinstated.
Equity Interests
Headquartered in Saint Louis, Missouri, International Wire Group,
Inc., designs, manufactures and markets bare and tin-plated copper
wire and insulated copper wire products for other wire suppliers
and original equipment manufacturers. The Company filed for
chapter 11 protection on March 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11991). Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
$393,000,000 in total assets and $488,000,000 in total debts.
KMART CORP: Wants Restraining Order Against Harvard Real Estate
---------------------------------------------------------------
An actual controversy exists between Kmart Corporation and
Harvard Real Estate-Allston, Inc., regarding the effect of prior
Court orders and Kmart's exercise of its option to renew a lease
agreement with Harvard for the property in Brighton,
Massachusetts, its assumption of the Lease, and its right to
occupy the leased premises. Harvard asserts that Kmart's
exercise of the option to renew the Lease is null and void, and
that Kmart is a holdover tenant. Harvard seeks to evict Kmart
from the Leased Premises.
Thus, Kmart asks the Court to:
(a) enter a temporary restraining order maintaining the status
quo by preventing Harvard from taking action to evict it
from the Leased property, until the Court can conduct a
full hearing on a preliminary injunction; and
(b) preliminarily enjoin Harvard from evicting it based on
defaults alleged, or that could have been alleged, in
Harvard's objection to the lease assumption, and from
violating the discharge injunction and the Confirmation
Order. (Kmart Bankruptcy News, Issue No. 75; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERCEPT INC: Hires Jefferies & Company to Explore Possible Sale
-----------------------------------------------------------------
InterCept, Inc. (Nasdaq: ICPT), a leading provider of technology
products and services for financial institutions, announced that
it will explore strategic alternatives to enhance shareholder
value, including a possible sale of the company, and has retained
Jefferies & Company, Inc. as its financial advisor to assist the
company in doing so.
In addition, InterCept and JANA Partners LLC announced that they
have agreed to settle their proxy contest and pending litigation
and to jointly support a panel of director nominees for election
at the 2004 annual meeting of InterCept shareholders.
According to John W. Collins, Chairman and Chief Executive Officer
of InterCept, "Based on recent strong levels of interest from
prospective purchasers and feedback provided by some of our
shareholders, we believe that an exploration of strategic
alternatives at this time is in the best interest of the company.
To avoid the distraction of a proxy fight and improve our ability
to achieve maximum value for our shareholders, we have settled our
dispute with JANA. We look forward to working with JANA to
enhance value for all InterCept shareholders."
InterCept and JANA have agreed that, on or before June 24, 2004,
the size of the InterCept Board will be increased from six to nine
members, and that Kevin J. Lynch and Marc Weisman, two nominees
proposed by JANA, will be elected to fill the newly-created Class
II and III director seats and Robert Finzi of Sprout Group will be
offered the newly-created Class I board seat. InterCept and JANA
also have agreed to dismiss the litigation pending in the United
States District Court for the Northern District of Georgia,
Atlanta Division, relating to the conduct of the 2004 annual
meeting, and that InterCept will reimburse JANA for up to $750,000
of its expenses if the shareholders approve a sale of the company.
InterCept also agreed to hold its 2005 annual meeting, if
necessary, not later than April 15, 2005.
According to Barry S. Rosenstein, managing member of JANA
Partners, "InterCept's board of directors has been responsive to
our proposal to explore strategic alternatives and to allow JANA's
representatives to have a role in the InterCept boardroom. We are
eager to work with the InterCept board to maximize shareholder
value."
InterCept also announced that at the annual meeting scheduled for
June 24, 2004, management, with the support of JANA, intends to
convene and then adjourn the annual meeting until September 14,
2004. "Due to the possibility that we may be convening a
shareholders meeting in the coming months to approve a sale,
business combination or other strategic transaction, we have
decided to postpone our annual meeting in order to avoid the time
and expense associated with perhaps conducting two shareholder
meetings in close proximity to one another," noted Collins. At
the 2004 annual meeting, the InterCept board and JANA will jointly
support the election of Mr. Finzi or another independent nominee
as a Class I director, Mr. Lynch as a Class II director and John
W. Collins, Arthur G. Weiss and Marc Weisman as Class III
directors.
About InterCept
InterCept, Inc. is a single-source provider of a broad range of
technologies, products and services that work together to meet the
technology and operating needs of financial institutions.
InterCept's products and services include core data processing,
check processing and imaging, electronic funds transfer, debit
card processing, data communications management, and related
products and services. For more information about InterCept, go
to http://www.intercept.netor call 770.248.9600.
* * *
Liquidity and Capital Resources
In the Form 10-Q for the quarterly period ended March 31, 2004
filed with the Securities and Exchange Commission, Intercept Inc.
reports:
"Since our incorporation, we have financed our operations and
capital expenditures through cash from operations, borrowings from
banks and sales of our common and preferred stock. In the second
half of 2003, we enhanced our liquidity and capital resources by:
* obtaining a $60 million three-year credit facility from Bank
of America,
* issuing shares of Series A preferred stock for $10 million,
and
* obtaining $12 million in lease financing from GE Capital.
"As of May 5, 2004, the outstanding balance on our credit facility
was $19.5 million. We have no off-balance sheet arrangements. We
believe that borrowings under our Bank of America facility, funds
provided by operations and our GE Capital lease financing will be
sufficient to meet our anticipated capital expenditures and
liquidity requirements for at least the next 12 months as well as
the longer term. We are unlikely to have repaid the credit
facility in full by its maturity in September 2006 out of our cash
from operations, so we face the prospect of refinancing that
facility at that time if we have not repaid it from sales of
assets or proceeds of additional equity offerings.
"Cash and cash equivalents were $2.1 million at March 31, 2004.
Short-term investments with a maturity of one year or less were
$115,000 at March 31, 2004. Net cash provided by operating
activities was $4.1 million for the three months ended March 31,
2004, and March 31, 2003. The decrease in the net cash provided by
operating activities was primarily attributable to the sale of our
merchant services division.
"Net cash provided by investing activities was $1.5 million for
the three months ended March 31, 2004 and $561,000 for the three
months ended March 31, 2003. The increase was primarily due to the
sale of our merchant services division, partially offset by
decreases in purchases of property and equipment.
"Net cash used in financing activities was $5.1 million for the
three months ended March 31, 2004 and$12.6 million for the three
months ended March 31, 2003. The decrease in net cash used in
financing activities was primarily due to the repayment of debt
with the proceeds from the maturity of several certificates of
deposit during 2003.
"Historically, we have grown, in part, through strategic
acquisitions. Assuming we are able to raise additional capital or
obtain sufficient credit, we expect to make additional
expenditures to make acquisitions and integrate the acquired
companies. We can give no assurances with respect to the actual
timing and amount of the capital we raise or of the acquisitions
we may make with the capital so raised. In addition, we can give
no assurance that we will complete any acquisitions on terms
favorable to us, if at all, or that additional sources of
financing will be available to us."
JILLIAN'S ENTERTAINMENT: US Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The United States Trustee for Region 8 appointed seven creditors
to serve on an Official Committee of Unsecured Creditors in
Jillian's Entertainment Holdings, Inc.'s Chapter 11 cases:
1) Bridge East Capital, L. P.
Attn: John P. Oswald, President and CEO
575 Fifth Avenue, 22nd Floor
New York, New York 10017
Tel: (212) 277-1015
2) Katy Mills Limited Partnership
Attn: Charles Corbin, Group Vice President and
Senior Operations Counsel
c/o The Mills Corporation
1300 Wilson Boulevard, Suite 400
Arlington, Virginia 22209
Tel: (703) 526-5066
3) U. S. Foodservice
Attn: Linda M. Fitzgerald, Corporate Credit Manager
80 International Drive
Greenville, South Carolina 29615
Tel: (864) 676-8654
4) U. S. Premium Finance
Attn: William J. Villari, President
141 Hurricane Shoals Road
Lawrenceville, Georgia 30045
Tel: (678) 376-3236
5) Simon Property Group, LP and its related entities
Attn: Ronald M. Tucker
Vice President/Bankruptcy Counsel
115 West Washington Street
Indianapolis, Indiana 46204
Tel: (317) 263-2346
6) Peabody Place Centre, GP
Attn: Jimmie Williams, Chief Financial Officer
100 Peabody Place, Suite 1400
Memphis, Tennessee 38103
Tel: (901) 260-7270
7) New Boston Albany Limited Partnership/New Boston
Rochester Limited Partnership
Attn: Jeffrey Gerson, Attorney
60 State Street, Suite 1525
Boston, Massachusetts 02109-1803
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Louisville, Kentucky, Jillian's Entertainment
Holdings, Inc. -- http://www.jillians.com/-- operates more than
40 restaurant and entertainment complexes in about 20 US states.
The Company filed for chapter 11 protection on May 23, 2004
(Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at
Frost Brown Todd LLC, represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed estimated assets of more than $100
million and estimated debts of over $50 million.
LEFT RIGHT MARKETING: Retains Beadle McBride as New Accountants
---------------------------------------------------------------
Left Right Marketing Technology has appointed Beadle, McBride,
Evans & Reeves, LLP, as its independent accountants for the year
ending December 31, 2004.
Following discussions with CFO Advantage, Inc. and meetings with
the Company's Executive Management and members of the Company's
Board of Directors, the parties agreed to end their relationship.
The change in accountants was recommended by Left Right Marketing
Technology's Executive Management and approved by its Board of
Directors.
Beadle, McBride, Evans & Reeves, LLP was engaged by the Company on
April 23, 2004. Richard M. "Mick" Hall, CEO and president of Left
Right Marketing Technology, did consult with Beadle, McBride,
Evans & Reeves, LLP on the personal tax consequences of the recent
CRAZYGRAZER merger.
The audit reports issued by CFO Advantage, Inc. with respect to
Left Right Marketing Technology's financial statements for
December 31, 2003 contained an issuance of going concern opinions.
The Company assures that the change in accountants does not result
from any dissatisfaction with the quality of professional services
rendered by CFO Advantage, Inc., as the independent accountants of
the Company, nor does it result from any doubts in the quality of
management or accounting records of Left Right Marketing
Technology.
LITTLEFIELD, TEXAS: S&P Lowers Revenue Bond Rating To BB from BBB
-----------------------------------------------------------------
Standard & Poor's Ratings Services' has lowered its standard long-
term rating and underlying rating to 'BB' from 'BBB' on
Littlefield, Texas' outstanding combined tax and revenue bonds
based on the fiscal stress associated with the Bill Clayton
Detention Facility, specifically the city's ability to cover debt
service payments should the facility become vacant in the future.
The outlook is stable.
The rating also reflects the city's limited, although stable,
local economy and tax base; weak financial performance and eroding
general fund reserves; and high debt levels currently offset by
contract revenues, which provide significant debt service support.
"The ability of the city to raise sufficient revenues to cover
debt service on the facility, should it become vacant, is in doubt
given the current condition of the general fund and its reliance
on enterprise fund revenues," said Standard & Poor's credit
analyst Ryan Brady.
The City of Littlefield, which owns the Bill Clayton Juvenile
Detention Facility, was under contract with the Texas Youth
Commission to provide juvenile detention services for up to 120
youths at a per diem rate of $106. However, the state of Texas
ceased housing prisoners in the facility, effective Aug. 31, 2003,
leaving the facility without a tenant. The city used some excess
funds in the debt service fund to satisfy debt service
requirements for fiscal year-end 2004, but did not dip into the
required debt service reserve fund. Subsequently, the city entered
into an agreement with the state of Wyoming Department of
Corrections and the Correctional Services Corp. The contract is
for the provision of minimum and medium security services for up
to 310 adult inmates under WDOC's jurisdiction. However, the
contract may be terminated, without cause or reason, by either
party, with 90 days' notice.
The city's financial performance is weak as evidenced by seven
consecutive years of operating deficits. In addition, the
financial position is dependant on transfers from the enterprise
fund. The city closed fiscal 2003 with a $667,000 net operating
deficit in the general fund primarily due to costs associated with
updating and maintaining the city's water and sewer lines and
meters. After a $705,000 transfer from the enterprise fund in
fiscal 2003, the unreserved general fund balance remained low at
$26,000, or less than 1% of general fund expenditures.
The stable outlook reflects the expectation for continued
uncertainty and potential stress associated with the detention
facility.
Littlefield, population 6,200, is the Lamb County seat and is 35
miles northwest of Lubbock.
The city's total debt outstanding is $11.085 million.
MANDALAY RESORT: Rejects MGM Mirage Merger Proposal
---------------------------------------------------
Mandalay Resort Group (NYSE: MBG) announced that, after a thorough
review of the MGM Mirage proposal to acquire Mandalay, including
consultation with its legal and financial advisors, the Board of
Directors rejected the proposal because it did not provide
sufficient assurance to Mandalay shareholders that the transaction
would close.
Glenn Schaeffer, president and chief financial officer of Mandalay
Resort Group, said, "The terms of the MGM Mirage proposal asked
Mandalay shareholders to bear a far disproportionate share of the
risk. It is not in the best interest of Mandalay shareholders to
agree to a deal that gives MGM control over whether it closes."
Schaeffer further noted, "Mandalay's earnings power is on a
decided upswing, represented by a string of record quarterly
results. Our track record for expansion, innovation and strong
profit margins speaks well for our strong future." Schaeffer then
concluded, "This company's consistent and shareholder-friendly
return of value through share repurchases and dividends also
distinguishes the company among its competitors."
On June 3, 2004, Mandalay Resort Group announced record financial
performance for the first quarter ended April 30 of $1.30 per
share compared to $0.69 in the prior year's quarter.
Merrill Lynch & Co. is the company's financial adviser and
Cravath, Swaine & Moore LLP is the company's legal adviser.
Mandalay Resort Group owns and operates 11 properties in Nevada:
Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in
Las Vegas; Circus Circus -- Reno; Colorado Belle and Edgewater in
Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass
in Henderson. The company also ownsand operates Gold Strike, a
hotel/casino in Tunica County, Mississippi. The company owns a 50%
interest in Silver Legacy in Reno, and owns a 50% interest in and
operates Monte Carlo in Las Vegas. In addition, the company owns
a 50% interest in and operates Grand Victoria, a riverboat in
Elgin, Illinois, and owns a 53.5% interest in and operates
MotorCity in Detroit, Michigan.
As reported in the Troubled Company Reporter's June 9, 2004
edition, Fitch Ratings has placed the following long-term debt
ratings of MGM MIRAGE (MGG) and Mandalay Resort Group (MBG)on
Rating Watch Negative.
MGG
--Senior secured debt 'BB+';
--Senior subordinated debt 'BB-'.
MBG
--Senior unsecured debt 'BB+';
--senior subordinated debt 'BB-'.
The action follows the June 4, 2004 announcement that MGG made an
offer to purchase MBG for $68 per share, or approximately $4.9
billion in cash plus the assumption of $2.8 billion in debt.
MAXIM CRANE: Files for Chapter 11 Protection in W.D. Pennsylvania
-----------------------------------------------------------------
Maxim Crane Works, the largest crane rental company in the United
States, announced it has reached a lock-up, voting and consent
agreement with the majority of its senior secured lenders on a
financial restructuring of the Company. Under the terms of the
agreement, Maxim's total debt will be reduced by approximately
$450 million from approximately $700 million, and the senior
secured lenders will receive the majority of the equity in the
Company.
To implement the financial restructuring plan, Maxim Crane filed
voluntary petitions for reorganization through a pre-negotiated
Chapter 11 of the U.S. Bankruptcy Code. The Company said that it
has already received the prerequisite number of commitments from
its senior creditors to confirm a plan of reorganization. The
Company intends to file its plan of reorganization and disclosure
statement with the Court by mid-summer and emerge from Chapter 11
during the fourth quarter of this year.
The Company also announced it has received a commitment for up to
$70 million in debtor-in-possession (DIP) financing from a group
of lenders led by Goldman Sachs and Fleet Boston, which will be
used to fund post-petition operating expenses and supplier and
employee obligations.
"The issues we face are financial, not operational," said Al Bove,
Chief Executive Officer of Maxim Crane Works. "Although the
Company's financial performance remains strong, the slowdown in
the economy and the leveraged balance sheet that was created in
the late 1990s have made it necessary for Maxim to restructure its
balance sheet. Over the past three years, we have systematically
adjusted our cost structure and have always generated positive
cash flow. With the economy showing signs of recovery, now is the
time to strengthen our capital structure."
Company Will Fulfill Customer Obligations,
Conducting Business As Usual
"During the restructuring and beyond, we will continue to operate
as one of the nation's safest heavy equipment rental companies,"
said Arthur Innamorato, President of Maxim Crane Works. "We will
maintain high standards for the maintenance of all equipment and
our commitment to quality customer service. Bonds and permits on
existing projects remain in place, and our insurance coverage
remains unchanged."
"With the financing facility in place, Maxim Crane's liquidity
position will be stronger than it has been in three years. All
post-petition expenses will be paid, and we are confident our
suppliers will continue to support us while we complete our
restructuring" said Mr. Innamorato. "Looking ahead, we will
continue to focus on effectively serving our existing customers,
renewing contracts, and writing new business."
Maxim Will Meet Employee Obligations
Mr. Bove stressed that the restructuring will have no impact on
the Company's ability to fulfill its obligations to employees. The
Company emphasized that it will be business as usual during its
brief restructuring period and day-to-day operations will continue
as usual without interruption. "Today's filing removes the cloud
of uncertainty under which we all have been operating," said Mr.
Bove. "During our voluntary restructuring, there will be no
interruption in benefits or wages; employees will be paid as
before, and all benefits will continue."
Looking Ahead
"Once the restructuring plan is fully implemented, Maxim will have
the strongest balance sheet in the industry," concluded Mr. Bove.
"The accompanying reduction in debt service will significantly
increase our ability to invest in the future through new equipment
purchases and other growth initiatives, thus solidifying our
position as the leading crane rental company in the U.S."
The Company filed its voluntary petitions in the United States
Bankruptcy Court for the Western District of Pennsylvania in
Pittsburgh.
About Maxim Crane Works
Maxim Crane Works, the nation's leading coast-to-coast, full-
service crane rental company, currently operates over 45 branch
offices in six regions. Maxim specializes in the rental and sales
of cranes, aerial work platforms, rough-terrain telescopic
forklifts, boom trucks and other ancillary equipment.
MAXIM CRANE WORKS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Lead Debtor: Maxim Crane Works, LLC
800 Waterfront Drive
Pittsburgh, Pennsylvania 15222
Bankruptcy Case No.: 04-27861
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Anthony Crane Rental Holdings, L.P. 04-27847
ACR Management, L.L.C. 04-27848
ACR/Dunn Acquisition, Inc. 04-27851
Anthony Crane Sales & Leasing, L.P. 04-27852
Anthony Crane Capital Corporation 04-27853
Anthony International Equipment Services 04-27854
Corporation
Anthony Crane Holdings Capital Corporation 04-27855
Anthony Sales & Leasing Corporation 04-27856
Anthony Crane Rental, L.P. 04-27857
Anthony Crane International, L.P. 04-27858
Carlisle Equipment Group, L.P. 04-27859
Carlisle GP, L.L.C. 04-27862
Sacramento Valley Crane Service, Inc. 04-27863
Husky Crane, Inc. 04-27864
The Crane & Rigging Company, LLC 04-27865
Thompson & Rich Crane Service, Inc. 04-27866
Type of Business: The Debtor is a full service crane rental
company. See http://www.maximcrane.com/
Chapter 11 Petition Date: June 14, 2004
Court: Western District of Pennsylvania (Pittsburgh)
Judge: Bruce McCullough
Debtors' Counsel: Douglas Anthony Campbell, Esq.
Campbell & Levine, LLC
1700 Grant Building
Pittsburgh, PA 15219
Tel: 412-261-0310
Fax: 412-261-5066
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtors' Consolidated List of 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
US Bank National Association 12.375% Discount $48,000,000
225 Asylum Street Debentures
Hartford, CT 06103
L B X Company, LLC Trade Debt $340,735
Excavation Parts
P.O. Box 640831
Cincionnati, OH 45264-0831
Link Belt Construction Trade Debt $97,789
Premier Technologies, Inc. Trade Debt $75,987
JLG Industries, Inc. Trade Debt $54,032
The Rubinoff Company Trade Debt $38,549
Concrete and Steel Exectors Trade Debt $28,759
Reeve Trucking Company Trade Debt $25,461
Liebherr-Cranes, Inc. Trade Debt $22,680
Verizon Communications, Inc. Trade Debt $22,431
Industrial Information Trade Debt $20,259
Resources, Inc.
Contractors Cargo Trade Debt $20,000
Ohio Car Trade Debt $18,754
Cingular Wireless Trade Debt $18,190
JCR Crane, Inc. Trade Debt $18,000
B P Oil Company Trade Debt $15,627
Smoke Oil Company Trade Debt $15,472
Nextel Communications Trade Debt $15,243
Crane and Tractor, Inc. Trade Debt $14,721
International Commodity Trade Debt $12,575
Carriers, Inc.
MIDWAY MOTOR SALES: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Midway Motor Sales, Inc.
4290 State Route 7
New Waterford, Ohio 44445
Bankruptcy Case No.: 04-42726
Type of Business: The Debtor is a truck dealer.
See http://www.midwaymotorsales.com/
Chapter 11 Petition Date: June 3, 2004
Court: Northern District of Ohio (Youngstown)
Judge: Successor to Judge William T. Bodoh
Debtor's Counsel: Melissa M. Macejko, Esq.
Suhar & Macejko, LLC
1101 Metropolitan Tower
P.O. Box 1497
Youngstown, OH 44501-1497
Tel: 330-744-9007
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
General Motors Acceptance $910,000
Corp.
Suite 340
25000 Great Northern Corp.
Center
North Olmsted, OH 44070-5341
Larry Kannal Signature Loan $180,000
Cargo Tech Equipment $153,090
Michael E. Bushey, DDS Signature Loan $55,000
Gene Norris GMC $40,414
Fallsway Equipment Equipment $36,361
Christopher M. DeVito, Esq. Professional fee $27,000
Agresta GMC $26,131
Steve Colu Vehicle pay-off $20,864
Penske Truck Leasing Co. Service work $20,000
Cross Truck Equipment Equipment $18,335
Supreme Corp. Equipment $17,956
Jerry R. Barber Vehicle pay-off $17,932
Sonia Furrie Vehicle pay-off $17,178
HM Services Vehicle pay-off $15,748
Trader Publishing- Cleveland Advertising $10,962
Smart Buys Media Advertising $9,000
NAPA Auto Parts Parts $6,736
WQXR Radio Advertising $6,475
Akron Auto & Truck Tire Service work $6,378
Center
MILACRON INC: S&P Raises Corporate Credit Rating to B- from CCC
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Cincinnati, Ohio-based Milacron Inc. to 'B-' from 'CCC'
and assigned a positive outlook. The $225 million 11.5% senior
secured notes due 2011 issued in May 2004, which were in escrow
pending the shareholder vote, have now been released and are
assigned a 'CCC+' rating as was previously indicated would be the
case. All ratings on the company, a leader in the plastics
machinery sector, were removed from CreditWatch where they were
placed on Feb. 12, 2004.
"The rating on the notes reflects the collateral package securing
the notes but also the amount of priority obligations, including
various obligations of non-guarantor subsidiaries, which are
senior to the notes," said Standard & Poor's credit analyst Robert
Schulz.
"The upgrade and the resolution of the CreditWatch reflect
approval by Milacron's shareholders of various refinancing
transactions," Mr. Schulz said.
These approvals were necessary for the company to implement recent
refinancing transactions that repaid various near-term debt
maturities and bolstered the company's equity base.
The company's liquidity is still constrained but is greatly
improved by the refinancing.
"As end-markets recover, earnings and cash generation should
improve to levels consistent with the rating into 2005. Over the
next two years, ratings could be raised if improved and
sustainable performance led to debt to EBITDA measures of less
than 5x," Mr. Schulz said
MJ RESEARCH: Lionel Sawyer Employed as Special Nevada Counsel
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada gave its nod
of approval to MJ Research, Incorporated to employ Lionel Sawyer &
Collins as its Nevada Special Reorganization Counsel.
The Debtor has selected the firm of Lionel Sawyer as its Nevada
special attorneys because of the firm's extensive experience and
knowledge Nevada bankruptcy matters, as well as the firm's
capacity to assist the Debtor in non-bankruptcy related areas
pertaining to Nevada law.
Lionel Sawyer will provide assistance to co-counsel Stutman,
Treister & Glatt and will:
a) advise the Debtor with respect to its powers and duties as
debtor and debtor-in possession in the continued
management and operation of its business and properties;
b) attend meetings and negotiate with representatives of
creditors and other parties in interest and advise and
consult on the conduct of the case, including all of the
legal and administrative requirements of operating in
chapter 11;
c) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on
its behalf, the defense of any actions commenced against
the estate, negotiations concerning all litigation in
which the Debtor may be involved, including the Applera
litigation, and objections to claims filed against the
estate;
d) prepare on behalf of the Debtor all motions, applications,
answers, orders, reports and papers necessary to the
administration of the estate;
e) negotiate and prepare on the Debtor's behalf plan(s) of
reorganization, disclosure statement(s) and all related
agreements and/or documents and take any necessary action
on behalf of the Debtor to obtain confirmation of such
plan(s);
f) advise the Debtor in connection with any sale of assets;
g) appear before this Court, any appellate courts, and the
United States Trustee, and protect the interest of the
Debtor's estate before such courts and the United States
Trustee; and
h) perform all other necessary legal services and provide all
other necessary legal advice to the Debtor in connection
with this chapter 11 case.
Stutman Treister, as principal special reorganization co-counsel
will take the lead counsel role in these cases, advising,
consulting with and representing the Debtor on most reorganization
matters, including without limitation the formulation,
negotiation, preparation, filing and confirmation of one or more
plans of reorganization.
Lionel Sawyer will bill the Debtor its current hourly rates:
Designation Billing Rate
----------- ------------
Partners $230 to $525 per hour
Associate $130 to $300 per hour
Legal Assistants $120 to $155 per hour
Headquartered in Reno, Nevada, MJ Research, Incorporated
-- http://www.mjr.com/-- is a leading biotechnology company
specializing in the instrument and reagent technology needed for
modern biological research. The Company filed for chapter 11
protection on March 29, 2004 (Bankr. D. Nev. Case No. 04-50861).
Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represents the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed both estimated debts and
assets of over $10 million.
MOLECULAR IMAGING: Demands Delisting from Berlin Stock Exchange
---------------------------------------------------------------
Molecular Imaging Corporation (OTCBB:MLRI), a leading provider of
Molecular Imaging services to healthcare entities in the U.S.,
announced that it has sent a letter to the Berlin Stock Exchange
requesting immediate de-listing from that exchange. The Company's
common stock is currently listed on the Berlin Stock Exchange
without the Company's consent.
The impermissible listings, which may include as many as 200 U.S.
publicly traded companies, are believed to be part of an organized
effort by domestic and foreign brokers to circumvent the recent
National Association of Securities Dealers (NASD) and the
Securities and Exchange Commission laws against "naked short
selling."
"We believe this listing is detrimental to the interests of our
current stockholders. When we learned of the listing, we requested
the Berlin Stock Exchange to immediately de-list our stock from
that exchange," said Paul Crowe, President and Chief Executive
Officer of the Company.
About Molecular Imaging Corporation
Molecular Imaging Corporation is a leading national service
provider of Positron Emission Tomography ("PET") diagnostic
imaging services. PET is a 3-Dimensional Full Body molecular
imaging procedure used to diagnose stage and assess treatment
outcomes for many cancers, cardiovascular disease and neurological
disorders. The Company operates both mobile and permanent (fixed)
PET imaging technologies for hospitals, diagnostic imaging centers
and physician group practices offices across the U.S. The
Company's clinical web site, www.PETadvances.com addresses
questions about the various cancers and how molecular imaging can
assist and benefit physicians and their patients. The Company's
commercial web site, -- http://www.molecularimagingcorp.com--
addresses questions about our commercial services and investor
relations.
* * *
Liquidity and Capital Resources
In its Form 10-QSB for the quarterly period ended March 31,2004,
Molecular Imaging reports:
"At March 31, 2004 our total assets were $26,166,609 compared to
$21,788,908 at June 30, 2003. The increase was primarily the
result of adding one mobile unit and adding a stationary facility
and the cyclotron. Our current assets at March 31, 2004 totaled
$5,470,772 and our current liabilities were $18,740,019 compared
to current assets of $3,805,598 and current liabilities of
$8,434,193 at June 30, 2003. Our current liabilities exceed
current assets because under Generally Accepted Accounting
Principles, we are required to record as a current liability our
capital lease obligations due within the next twelve months. As a
result of not meeting our payment requirements with GE and Siemens
we have reclassified all the lease payments to GE and Siemens as
current. As discussed in Note 12-Commitments, several of our units
are also financed under non-cancelable operating leases that are
not recorded as liabilities until the monthly payment is due. Our
current assets, on the other hand, include only those accounts
receivable that are outstanding from service revenues recognized
and typically represent 30 to 60 days of service revenues.
"Stockholders' equity decreased to $1,461,415 at March 31, 2004
from $3,749,744 at June 30, 2003 due primarily to the net loss of
$2,705,841 for the nine months ended March 31, 2004.
"The Company has separate ongoing discussions with both Siemens
and GE to restructure the payment schedules. As a result of these
discussions with Siemens and GE, Siemens has withdrawn the default
status on the Siemens Leases, and GE withdrew its final demand for
payment. The Company has been working with both Siemens and GE to
reach a mutually agreeable refinancing arrangement. The Company
believes it will be able to restructure the Siemens Leases and GE
Leases to resolve the overdue amounts and allow the Company to
meet its obligations going forward. However, there can be no
assurance that the Company will be able to restructure the Siemens
Leases or the GE Leases. Should the Company be unable to
restructure the Siemens Leases or GE Leases, the Company would
likely become in default under such leases. In the event of such a
default, Siemens and GE would have the right to terminate the
Siemens Leases and GE Leases, respectively; repossess the
molecular imaging equipment operated by the Company under the
leases; and demand payment for all costs and expenses related to
repossessing and reselling the equipment. A default under the
Siemens Leases and GE Leases could also result in a default under
the three molecular imaging equipment leases assigned to Ascendant
PET Partners-I, LLC in May of 2003. In the event of such a
default, PET Partners would also be entitled to repossess the
equipment and demand payment for costs and expenses. The Company
generates substantially all of its revenue from the operation of
the molecular imaging equipment under these Leases. The
repossession of all or a portion of this molecular imaging
equipment would result in the Company's inability to generate
further revenues and, therefore, would have a material adverse
affect on the Company's operations and its ability to continue as
a going concern."
NANOGEN INC: Completes SynX Pharma Inc. Acquisition
---------------------------------------------------
On April 21, 2004, Nanogen, Inc. completed the acquisition of SynX
Pharma Inc. pursuant to a plan of arrangement whereby all of the
common shares and debentures of SynX were acquired in exchange for
shares of Nanogen common stock. SynX is now a wholly-owned
subsidiary of Nanogen.
Under the plan of arrangement, each SynX shareholder is entitled
to receive 0.123 shares of Nanogen common stock per SynX common
share. Accordingly, approximately 1.6 million shares of Nanogen
common stock are issuable to former SynX shareholders and to
holders of replacement warrants and options. In addition, the CDN
$3.5 million principal amount of subordinated secured debentures
of SynX (together with unpaid interest) were acquired in exchange
for approximately 300,000 shares of Nanogen common stock.
About Nanogen
Nanogen, Inc. develops and commercializes products for the in
vitro diagnostics market. The company seeks to establish the
unique, open-architecture NanoChip(R) Molecular Biology
Workstation and NanoChip(R) Cartridge as the standard platform for
the prediction, diagnosis and treatment of genetic and infectious
diseases. Nanogen offers Analyte Specific Reagents and related
products to research and clinical reference labs for the
development of tests for the detection of genetic mutations
associated with a variety of diseases, such as cystic fibrosis,
Alzheimer's disease, and cardiovascular disease. The company's ten
years of research involving nanotechnology may also have future
applications in medical diagnostics, biowarfare and other
industries. For additional information please visit Nanogen's Web
site at http://www.nanogen.com/
* * *
In its Form 10-K For the fiscal year ended December 31, 2003,
Nanogen Inc, reports:
"We expect that our existing capital resources, combined with
$33.7 million in gross proceeds from the sale of the Company's
common stock in March 2004, and anticipated revenues from
potential product sales, reagent rentals, leases or other types of
acquisition programs for the NanoChip System, sponsored research
agreements, contracts and grants will be sufficient to support our
planned operations, including an estimated investment of
approximately $6-8 million related to the pending acquisition of
SynX and wind down costs related to our joint venture, Nanogen
Recognomics, through at least the next eighteen months. This
estimate of the period for which we expect our available sources
of liquidity to be sufficient to meet our capital requirements is
a forward-looking statement that involves risks and uncertainties,
and actual results may differ materially.
"Our future liquidity and capital funding requirements will depend
on numerous factors including, but not limited to, commercial
success of our products, or lack thereof, the extent to which our
products under development are successfully developed and gain
market acceptance, the timing of regulatory actions regarding our
potential products, the costs and timing of expansion of sales,
marketing and manufacturing activities, prosecution and
enforcement of patents important to our business and any
litigation related thereto, the results of clinical trials,
competitive developments, and our ability to maintain existing
collaborations and to enter into additional collaborative
arrangements.
"We have incurred negative cash flow from operations since
inception and do not expect to generate positive cash flow to fund
our operations for at least the next several years. We may need to
raise additional capital to fund our research and development
programs, to scale-up manufacturing activities and expand our
sales and marketing efforts to support the commercialization of
our products under development. Additional capital may not be
available on terms acceptable to us, or at all. If adequate funds
are not available, we may be required to curtail our operations
significantly or to obtain funds through entering into
collaborative agreements or other arrangements on unfavorable
terms. Our failure to raise capital on acceptable terms when
needed could have a material adverse effect on our business,
financial condition or results of operations."
NATIONAL CENTURY: Court Refuses To Quash Poulsens/Cammick Subpoena
------------------------------------------------------------------
John E. Haller, Esq., at Shumaker Loop & Kendrick, in Columbus,
Ohio, reports that the National Century Financial Enterprises,
Inc. Debtors served a subpoena on Stephen Cammick & Associates,
seeking all of Lance and Barbara Poulsen's personal brokerage
account records in Cammick's possession. The stated purpose for
the Debtors' Rule 2004 requests is that they need to discover if
they have any causes of actions to assert against their former
officers and directors, including the Poulsens.
Mr. Haller points out that the Debtors' special counsel has
already filed, in its role as counsel for the Debtors'
Noteholders, three lawsuits in the state of Arizona that allege
causes of action against the Debtors. Those cases have been
consolidated in the United States District Court for the Southern
District of Ohio by the Judicial Panel on Multidistrict
Litigation. Discovery in the consolidated cases is currently
stayed.
The overreaching Rule 2004 subpoenas served by the Debtors, Mr.
Haller continues, relate more to early discovery in the
consolidated cases and touch on topics, like the pre-judgment
identification of assets of defendants in the consolidated cases,
rather than identifying whether the Debtors have a cause of
action against defendants like the Poulsens.
Even under Rule 2004 of the Federal Rules of Bankruptcy
Procedure, a subpoena must relate to the purpose for which it is
served. If it is overreaching, the court can sustain objections
to it and strike it.
Mr. Haller points out that Cammick has no connection with the
Debtors and the purpose of the subpoena served on Cammick is not
to determine whether the Debtors have causes of action against
the Poulsens, but to make a wholesale, unrestricted and
unprotected inquiry into the Poulsens' private business affairs.
The burden of establishing some connection between Cammick and
the Debtors rests on the Debtors. However, Mr. Haller contends,
no connection exists, and the subpoena is improper.
Mr. Haller reminds that Court that establishing only a tangential
relationship to issues related to the Debtors and harassing
unrelated third parties with overreaching discovery requests is
simply not the purpose envisioned under Bankruptcy Rule 2004.
Accordingly, the Poulsens ask the Court to quash the Cammick
subpoena in its entirety.
Debtors Object
Kathy Patrick, Esq., at Gibbs & Bruns, in Houston, Texas, argues
that the Poulsens' request is untimely because the request came
more than a month after the deadline for filing a motion. The
Debtors issued the Cammick subpoenas on February 20, 2004. Thus,
any motion to quash was due by March 5, 2004, 14 days after the
subpoenas' issuance. Cammick made their responsive documents
available for the Debtors' inspection on March 22. It was not
until April 9, 2004 that the Poulsens filed their request. Ms.
Patrick notes that the Poulsens attempted to quash subpoenas even
through the subpoenaed parties have already responded to the
subpoenas.
Ms. Patrick also notes that good cause exists for the issuance of
the Cammick subpoenas. Based on factual information developed
through the course of Rule 2004 discovery, the Poulsens are
suspected of engaging in multi-million dollar transactions that
benefited themselves personally with the Debtors' funds. The
Debtors are allowed under Rule 2004 to discover the extent of the
Poulsens' self-dealing and, in addition, trace the assets the
Poulsens are suspected to have wrongfully misappropriated. The
Poulsens' financial advisors are obviously a category of people
who could reasonably be expected to have information that would
shed light on the Poulsens' conduct in that regard. Hence, a
Rule 2004 subpoena to the Poulsens' financial advisors is
entirely appropriate, justified and necessary.
Ms. Patrick observes that the Poulsens' argument that the Rule
2004 discovery is directed toward gaining an advantage in a
parallel proceeding brought by certain NCFE investors, and not
legitimate Rule 2004 discovery, is without merit. There is
clearly good cause for the Debtors to be investigating potential
fraudulent transfers to the Poulsens.
* * *
Judge Calhoun denies the Poulsens' request.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader
in healthcare finance focused on providing medical accounts
receivable financing to middle market healthcare providers. The
Company filed for Chapter 11 protection on November 18, 2002
(Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones,
Day, Reavis & Pogue represents the Debtors in their restructuring
efforts. (National Century Bankruptcy News, Issue No. 41;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NATURADE: Health Holdings & David Weil Extend Additional $100,000
-----------------------------------------------------------------
On May 3, 2004, Naturade, Inc borrowed an additional $100,000
under its agreement with certain lenders dated April 14, 2003.
Proceeds of the loan will be used for working capital.
When the Company originally entered into the Loan Agreement on
April 14, 2003, the Lender Group consisted of Health Holdings &
Botanicals, LLC, a principal stockholder of the Company, and David
A. Weil, a director and stockholder of the Company. The Loan
Agreement provided for an original loan of $450,000 as of April
14, 2003 and, subject to the discretion of the Lender Group,
advances of up to an additional $300,000. All advances under the
Loan Agreement bear interest at the rate of 15% per annum, are due
on December 31, 2004, are secured by substantially all of the
assets of the Company, and are subordinated to the Company's
indebtedness to Wells Fargo Business Credit, Inc. The advances
under the Loan Agreement have been and will be used by the Company
for working capital and general corporate purposes.
On April 14, 2004, the terms of the Loan Agreement were modified
by the Joinder of Bill D. Stewart, the Chief Executive officer of
the Company, as a member of the Lender Group, subject to all of
the terms and conditions of the Loan Agreement, and the Lender
Group advanced an additional $200,000, of which Bill D. Stewart
advanced $100,000.
The May 3, 2004 advance of $100,000 consisted of a $25,000 advance
by Mr. Weil and a $75,000 advance by HHB. The total balance under
the Loan Agreement is $750,000 and there are no additional amounts
available to advance by the Lender Group under the terms of the
Loan Agreement. Of the principal amount owed under the Loan
Agreement, a total of $600,000 was loaned by HHB, $100,000 by
Mr. Stewart and $50,000 by Mr. Weil.
Headquartered in Irvine, California, Naturade provides healthy
solutions for weight loss consistent with its commitment -- since
1926 -- to improve the health and well-being of consumers with
innovative, natural products. Its premier brand, Naturade Total
Soyr, is a complete line of meal replacement products for weight
loss and cholesterol reduction, which is sold at major supermarket
and club, health food, drug and mass merchandise stores throughout
the U.S. and Canada. Well known for over 50 years of leadership in
soy protein, Naturade also markets a complete line of protein
boosters for low carbohydrate dieters, a new line of safe, natural
weight loss products under the Diet Lean(TM) brand and a line of
SportPharmar sports nutrition products for fitness-active
consumers. Naturade's other brands include Calcium Shake(TM),
Naturade Total Soy Menopause Relief(TM), Power Shaker and Aloe
Vera 80r. For more information, visit http://www.naturade.com/
At March 31, 2004, Naturade Inc's balance sheet shows a
stockholders' deficit of $3,462,380 compared to a deficit of
$2,861,638 at December 31, 2003.
NEWAVE: Reports Record Monthly Revenues of Over $600,000 in May
---------------------------------------------------------------
NeWave, Inc. (OTC Bulletin Board: NWAV) a provider of membership-
based online products and services through its subsidiary
OnlineSupplier.com announced record monthly revenues of over
$600,000 in May.
NeWave CEO Michael Hill stated, "In just two months so far this
quarter, we have already surpassed our reported first quarter
revenues of $1 million. Our accelerated growth can be attributed
to dramatic improvement in the quality of our product and services
and increased member satisfaction." He added, "The current
environment for e-commerce is extremely robust and we believe the
future outlook will remain bright as consumers have begun to
embrace the internet-based shopping experience."
About NeWave, Inc.
NeWave, Inc. through its wholly-owned subsidiary
Onlinesupplier.com offers a comprehensive line of products and
services at wholesale prices through its online club membership.
Additionally, NeWave's technology allows both large complex
organizations and small stand-alone businesses to create, manage,
and maintain effective website solutions for e-commerce. To find
out more about NeWave (OTC Bulletin Board: NWAV), visit
http://www.newave-inc.com/or http://www.onlinesupplier.com/
As reported in the Troubled Company Reporter's June 8, 2004
edition, Kabani & Company's report on the Company's consolidated
financial statements for the fiscal years ended December 31, 2003
and December 31, 2002 included an explanatory paragraph wherein
they expressed substantial doubt about NeWave's ability to
continue as a going concern.
NORTEL NETWORKS: Enters into Venture Agreement with VoltDelta
-------------------------------------------------------------
June 11, 2004 / Business Wire
Nortel Networks (NYSE:NT) (TSX:NT) and VoltDelta, a wholly owned
subsidiary of Volt Information Sciences, Inc. (NYSE:VOL) have
entered into an agreement under which Nortel Networks will
contribute certain assets and liabilities of its directory and
operator services (DOS) business to VoltDelta.
In return, Nortel Networks will receive a minority equity interest
in VoltDelta, a leading provider of DOS in North America and
Europe. This transaction between the companies is expected to
close during the third quarter of calendar year 2004.
Nortel Networks expects approximately 160 DOS employees in North
America and Mexico to join VoltDelta. Nortel Networks will retain
its Traffic Operator Position System (TOPS) business, based
primarily in Research Triangle Park, N.C.
"By capitalizing on the synergies between the two companies, we
expect to be able to accelerate development, work more
efficiently, and increase interoperability between the products in
our customers' networks," said Sue Spradley, president, Wireline
Networks, Nortel Networks. "This will lead to faster time-to-
market and help our customers reduce the level of investment in
future products."
"VoltDelta is committed to providing comprehensive wireless and
wireline solutions that include the necessary databases,
technology, and human capital that enable carriers to deploy
state-of-the-art, cost competitive operator services," said Joe
DiAngelo, president, VoltDelta. "We will work closely with Nortel
Networks to maintain quality and efficiency and to provide
seamless service to all of Nortel Networks directory and operator
assistance customers, many of which are also existing VoltDelta
customers."
VoltDelta's DOS business will provide continued focus and
investment to develop next generation directory assistance voice
over packet based solutions - particularly for the wireless market
- to meet rapidly evolving customer requirements. The venture will
provide existing and future DOS customers with new solutions,
giving customers access to an expanded suite of products, content
and enhanced services.
About VoltDelta
VoltDelta, a subsidiary of Volt Information Sciences (reported as
Volt's Computer Systems segment) is a leading provider of enhanced
directory assistance solutions and information services to the
global telecommunications market. Thirty years of operator
services experience have enabled VoltDelta to meet evolving market
requirements providing innovative technology and services to
wireline and wireless markets. For further information please
visit http://www.voltdelta.com/or http://www.volt.com/
About Nortel Networks
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges information.
The Company is supplying its service provider and enterprise
customers with communications technology and infrastructure to
enable value-added IP data, voice and multimedia services spanning
Wireless Networks, Wireline Networks, Enterprise Networks, and
Optical Networks. As a global company, Nortel Networks does
business in more than 150 countries. More information about Nortel
Networks can be found on the Web at http://www.nortelnetworks.com/
* * *
As reported in the troubled Company Reporter's April 30, 2004
edition, Standard & Poor's Rating Services lowered its 'B' long-
term corporate credit rating and other long-term ratings on Nortel
Networks Corp. and Nortel Networks Ltd. to 'B-'. The CreditWatch
implications are revised to developing from negative. The short-
term corporate credit and commercial paper ratings are unchanged,
and remain on CreditWatch with negative implications.
"The actions reflect an increased possibility that holders of
Brampton, Ontario-based Nortel Networks' securities could provide
notice of noncompliance to Nortel Networks, following its
announcement of major changes to its senior executive team, in
addition to an expansion of the existing investigation into its
accounting for fiscal years 2001 through 2003," said Standard &
Poor's credit analyst Bruce Hyman.
NORTHLAND INT'L: Case Summary & 3 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Northland International, Inc.
P.O. Box 140580
Arecibo, Puerto Rico 00614
Bankruptcy Case No.: 04-05797
Chapter 11 Petition Date: June 1, 2004
Court: District of Puerto Rico (San Juan)
Judge: Enrique S. Lamoutte
Debtor's Counsel: Luis D. Flores Gonzalez, Esq.
80 Calle Georgetti Suite 202
San Juan, PR 00925-3624
Tel: 787-758-3606
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 3 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Walmart Puerto Rico, Inc. Trade Debt $536,967
c/o LCDO Juan C. Salichs
G.P.O. Box 363507
San Juan, PR 00936-3507
Departamento De Hacienda $194,872
Fondo del Seguro del Estado $2,548
NUMED HOME: Bankruptcy Lawyers Move to Withdraw as Counsel
----------------------------------------------------------
Citing irreconcilable differences, lawyers for NuMED Home Health
Care, Inc., the company's bankruptcy lawyers ask the U.S.
Bankruptcy for permission to withdraw as counsel.
Richard J. McIntyre, Esq., at Trenam, Kemker, Scharf, Barkin,
Frye, O'Neill & Mullis, P.A., in Tampa, Florida, reminds the Court
that NuMed applied to employ his Firm on Nov. 1, 2000, and the
Debtor's application was approved on Mar. 20, 2001.
"Irreconcilable differences exist between Debtor and Trenam
Kemker," Mr. McIntyre says, providing no further explanation.
"The continued representation of the Debtor will result in an
uncreasonable financial burden on Trenam Kemker," Mr. McIntyre
adds.
Mr. McIntyre advises that the Debtor's current address is:
NuMed Home Health Care, Inc.
5025 West Lemon Street
Tampa, Florida 33609
If the Debtor can't or won't employ new counsel this month, Mr.
McIntyre suggests pleadings be served on the Debtor directly.
NuMed and its eight wholly owned subsidiaries filed voluntary
petitions for relief under Chapter 11 of the United States
Bankruptcy Code on November 1, 2001 (Bankr. M.D. Fla. Case No.
8:00-bk-16984-PMG).
OWENS CORNING: Disputes 59 Overstated & 26 Satisfied Claims
-----------------------------------------------------------
Owens Corning determined that:
(1) 59 claims have been partially paid and, as a result, the
amounts asserted in the claims exceed the amounts actually
due and owing; and
(2) 26 claims were paid in full and, as a result, should be
disallowed and expunged in their entirety.
Accordingly, the Debtors ask the Court to reduce the amount of
the 59 Overstated Claims:
Claim Asserted Allowed
Claimant Number Amount Amount
-------- ------ -------- -------
Alamo Packaging 5648 $8,528 $7,772
Avery Dennison 5066 1,271 790
Ballen Corporation 3753 1,469 1,054
Cascade 9023 3,715 3,576
Cemplank 5558 183,007 171,919
CMS Marketing Services 4906 17,235 1,548
Corporate Protection Services 4264 2,297 1,449
Davison Petroleum Products 6914 412,346 382,559
Electric Supply & Equipment 4574 8,555 7,803
Express Services, Inc. 233 38,993 16,935
Fedex Ground Package System 336 2,078 1,664
Fine Products, Co. 4584 714 397
Fisher Group, Inc. 6858 6,293 3,873
Garbage Disposal Services 4486 271 123
General Electric Company 5756 11,409 3,884
Hy-lite Products, Inc. 8971 36,963 35,021
John Manley, et al. 2470 17,255 16,977
K Rynbeck 5088 1,560 1,404
Koetter Development, Inc. 5124 305 83
Labor Service 5176 29,721 28,958
Lease Acceptance Corporation 4831 2,652 1,591
M & M Asphalt & Supply, Inc. 5199 26,733 26,403
McNaughton McKay Electric 6274 10,967 1,128
Minutemen Press 3317 687 674
Mountain West Wholesale 4025 428 38
New Concept Louvers, Inc. 4887 4,112 4,014
Newcome Electronic Systems 7438 45,298 42,646
North Coast Two Way Radio 3672 3,040 2,827
Omega Engineering, Inc. 12077 1,514 938
Overhead Door Co. of Rockford 6575 590 330
Piedmont Natural Gas Co., Inc. 3793 1,270 954
Pioneer Rubber & Gasket, Co. 4597 12,420 11,338
Power Tool Sales & Services 4218 2,779 2,292
Precision Graphic Services 3674 11,072 9,882
Pro Pak Industries 6195 1,447 945
R E Brown & Associates 5187 4,576 3,706
Ready Rent All, Inc. 4701 1,492 476
Seoco, Inc. 3802 622 509
Sherwin Williams 5343 37 3,920
Shin & Kim 2725 2,566 1,102
St. Lucie County Tax Collector 4180 375 50
Starlift Equipment, Co. 3773 549 359
Suburban Recycling Services 5652 20,976 20,602
Synergy Gas 4457 4,109 3,278
Tampa Bay Coffee & Catering 3833 54 27
Techi Sand 6296 15,943 15,586
Temco 4464 17,862 16,817
The Cincinnati Gas & Electric 2047 43,487 41,552
The Trane Company 4709 936 565
Think Resources, Inc. 3613 7,883 6,976
Tire Distribution Systems 4570 95 31
Towlift, Inc. 4188 3,031 2,611
United Corporate Services, Inc. 3812 350 125
Van Waters & Rogers, Inc. 287 141,369 140,563
Vesco Industrial Trucks 4472 3,021 2,830
Wendt-Bristol, Erinwood 5915 2,104 1,909
Wirtz Rentals, Co. 4384 7,596 7,546
Zastrow 4384 77 31
Ziegler, Inc. 3646 4,688 27
The Debtors also ask the Court to disallow and expunge the 26
Satisfied Claims in their entirety:
Claim Claim
Claimant Number Amount
-------- ------ ------
All State Fastener Corporation 12324 $2,002
American Chamber of Commerce Publishers 127 151
Ball General Contractors, Inc. 766 10,043
Benton & Benton 3917 350
Bolet & Terrero 5830 1,310
Brent Industries, Inc. 4160 594
Concentra Managed Care Services 4462 1,275
Cranel Incorporated 2177 357
Dykes Materials 3896 4,201
Filtration Systems 3526 299
Hydraquip 5473 203
John Gochnauer 4900 411
Key Bellevilles, Inc. 3972 956
Landauer, Inc. 12441 710
McKinney Trailers 4821 160
Metal Supermarkets 4209 598
National Employers Concepts 5217 876
Nim Cor, Inc. 4681 374
Quality Farms & Fleet 3822 242
Reit Lubricants, Co. 3611 736
Shelby Electric, Co., Inc. 3184 83
Sterling Paper, Co. 3762 931
Texican Industrial Energy Marketing 3003 210,902
Universal Conveyor Rental & Leasing 4742 310
Valmet, Inc. -- Honeycomb Div. 2477 1,680
Van Dyke, Gardner, Lynn & Burkhart 3259 248
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com-- manufactures fiberglass insulation,
roofing materials, vinyl windows and siding, patio doors, rain
gutters and downspouts. The Company filed for chapter 11
protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PALMYRA FUNDING: S&P Downgrades Class B Note Rating to BB+
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Palmyra
Funding Ltd.'s class B credit-linked notes due June 2006 to 'BB+'
from 'A-' and removed it from CreditWatch, where it was placed
Dec. 18, 2003. In addition, Standard & Poor's affirmed its 'A-'
rating on Palmyra Funding Ltd.'s class A notes due June 2004 and
removed it from CreditWatch, where it was also placed
Dec. 18, 2003.
The rating actions reflect the valuation prices of five previously
defaulted reference credits and credit deterioration in the $1.117
billion pool of reference credits. The notional amount of the
reference pool will be reduced as a result of the defaults.
PARK CITY: PAYGo Sales Exceed Expectations in Grocery Segment
-------------------------------------------------------------
Park City Group, Inc. (OTCBB:PKCY)(Berlin: WKN# 925919) announced
that a better than anticipated response to PAYGo, the Pay-As-You-
Go subscription offering has resulted in a targeted sales focus
and an increase in anticipated revenue generation from sales to
the mid to small sized grocery chains. The mid to small sized
grocery chains represent 58% (46,800 stores) of the total domestic
grocery and supermarkets in the 2003 census according to the
Progressive Grocer 71st annual report of the Grocery Industry
published in April of this year.
"There is significant potential in this market which is the focus
of our efforts," notes Randy Fields, CEO and President of Park
City Group. "If we were able to capture between 1-5% of the stores
within this segment we'd be looking at 470 to 2,340 locations.
When you consider that a single department within a location using
the PAYGo option would be around $350 in subscription fees per
month, the Company would be generating approximately $165,000 a
month with just a 1% market penetration. Recognizing that the
average deployment of our Fresh Market Manager product usually is
to at least 3 departments, it would mean that within the same 470
locations an additional $329,000 per month is not an unreasonable
estimate for the monthly potential revenues."
Recurring and predictable revenues, like those from a subscription
option such as PAYGo were identified in a recent Wall Street
Journal article as a better indicator to shareholders of the
stability, potential revenues and growth of a company. Recurring
revenues help to smooth the traditional software company's roller-
coaster sales revenue recognition and recurring revenues are
consistent and represent a more stable revenue and growth model.
The PAYGo program itself has been in place for less than two
months and the Company's first PAYGo customer, Marvelous Market of
Fairfax Virginia was announced at the IDDBA tradeshow last week.
"Marvelous Market defied the traditional sales cycle with their
rapid decision to use PAYGo," said Fields. "We're hoping they are
just the first of many opportunities that will come to a decision
and initiate an implementation in about a third of the time of a
traditional license sale."
"It was our plan to have three new PAYGo customers licensed,
implemented and acting as customer references by September,"
continues Fields. "The response has been almost overwhelming and
based on the number and quality of the presentations we have made
and the rapid progression of the sales cycle, it is looking like
we may have to ramp-up our efforts to support more customers than
we had planned."
About Park City Group
Park City Group, Inc. -- whose March 31, 2004 balance sheet shows
a stockholders' deficit of $5,965,339 -- develops and markets
patented computer software that helps its retail customers to
increase their sales while reducing their inventory and labor
costs: the two largest, controllable expenses in the retail
industry. The technology has its genesis in the operations of Mrs.
Fields Cookies, co-founded by Randy Fields, CEO of Park City
Group, Inc. Industry leading customers such as The Home Depot,
Victoria's Secret, The Limited, Anheuser Busch Entertainment and
Tesco Lotus benefit from our software. Feel free to contact us
(Media Contact Randy Fields) at 800-772-4556 or
info@parkcitygroup.com.
To find out more about Park City Group (OTCBB: PKCY, Berlin: WKN#
925919), visit http://www.parkcitygroup.com/
PARMALAT: Deminor Group Named Lead Plaintiff In Bondholder Suit
---------------------------------------------------------------
On May 21, 2004, the U.S. District Court for the Southern
District of New York appointed a group of investors, advised by
Deminor, as lead plaintiff for the class of Parmalat bondholders.
The group consists of both institutional and private investors.
The class action has been filed against Parmalat, its directors
and internal auditors, Grant Thornton, Deloitte & Touche,
Citigroup and Bank of America and may be extended to other
defendants at a later stage.
In a May 24, 2004 press release, Deminor said that as lead
plaintiffs for the class of bondholders, these investors will,
with the firm's assistance, try to recover a maximum amount of
damages for all class members. The entire class of bondholders
has suffered a loss of more than EUR8 billion. Equity holders --
having suffered a loss of about EUR1 billion -- will be
represented by another investor who will act as lead plaintiff on
their behalf.
Deminor's clients are represented in Court by U.S. law firms
Cohen, Milstein, Hausfeld & Toll and Spector, Roseman & Kodroff.
Besides the assistance and advice given to the group of
bondholders acting as lead plaintiffs in the U.S. class action,
Deminor advises several Parmalat institutional investors and, in
collaboration with consumer association Altroconsumo, a group of
more than 2,000 Parmalat retail investors. Deminor will ensure
to coordinate the U.S. law suit with Italian damages claims and
other actions aimed at maximizing the recovery of losses suffered
by Parmalat investors.
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. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PASCACK VALLEY HOSPITAL: S&P Places BB+ Rating on Watch Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' rating on New
Jersey Health Care Facilities Finance Authority's outstanding
bonds, issued on behalf of Pascack Valley Hospital, on CreditWatch
with negative implications.
The rating was placed on CreditWatch with negative implications
due to final results for fiscal 2003 (ended Dec. 31, 2003) that
were not consistent with management's internal year-end numbers.
"Audited financials show a sizable operating loss of $11.2 million
for fiscal 2003, generating very poor debt-service coverage and
resulting in a covenant violation. This compares unfavorably to
the internal results reported to Standard & Poor's," said Standard
& Poor's credit analyst Anita Varghese.
Pascack's balance sheet is characterized by high leverage of 78%
and weak cash-to-debt of 24% (as of Dec. 31, 2003).
Furthermore, audit results show Pascack's accounts payable nearly
doubled from the prior year, which could negatively impact
currently slim liquidity levels. Unrestricted cash and investments
were $20.4 million, as of Dec. 31, 2003, equating to 54 days' cash
on hand.
Standard & Poor's affirmed its 'BB+' rating on Pascack Valley
Hospital and changed its outlook to negative from stable on May 7,
2004, based on unaudited financials, which, at the time, indicated
an operating profit of $485,000 and debt-service coverage of 1.5x.
The rating affirmation and outlook change at that time reflected
the hospital's failure to meet its budget due to lower-than-
expected outlier payments, and its limited flexibility to
strengthen a weak balance sheet.
The rating will remain on CreditWatch with negative implications
pending a full discussion of audit results with management. This
is expected to occur during the next 30 days.
Pascack Valley Hospital is located in Westwood, New Jersey, an
affluent suburb of Bergen County. The hospital is the smallest of
five acute-care providers in a highly competitive county.
PEGASUS SATELLITE: Honoring Prepetition Customer Obligations
------------------------------------------------------------
The Pegasus Satellite Communications, Inc. Debtors generally offer
two options for acquiring the equipment necessary to receive
DirecTV programming -- the Pegasus Digital One Plan and the
Standard Sale Plan.
Under the Pegasus Digital One Plan, subscribers are provided with
equipment, consisting of a satellite receiving antenna and one or
more set top receivers, obtain DirecTV programming for a monthly
programming fee, enter into an initial 12-month commitment
secured by a credit card, and enjoy the benefits of repair
service without additional monthly cost. Under the Pegasus Plan,
the Debtors retain title to the set top receivers and remote
controls provided to subscribers. Subscribers who terminate
service but do not return the equipment and access cards are
assessed equipment non-return fees and may be assessed access
card non-return fees. Failure to satisfy the 12-month
commitment, including, downgrading of service, typically results
in the imposition of cancellation fees.
Under the Standard Sale Plan, subscribers obtain equipment
consisting of a satellite-receiving antenna and one or more set
top receivers, and DirecTV programming for a monthly programming
fee. Unlike the Pegasus Digital One Plan, the subscribers own
the equipment under the Standard Sale Plan. The Debtors require
most Standard Sale Plan subscribers to make an initial 12-month
commitment. Failure to satisfy the 12-month programming
commitment typically results in the imposition of cancellation
fees. The imposition of cancellation fees is intended to
reimburse the Debtors in part for their costs of special
introductory promotional offers, equipment and installation
subsidies paid to retailers to induce them to provide these items
at a low cost or no cost to subscribers, and dealer commissions.
Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, in
Portland, Maine, relates that prior to the Petition Date and in
the ordinary course of their businesses, the Debtors engaged in
certain practices to develop and sustain a competitive position
in the marketplace for their products and services. Among these
practices have been warranties, rebates, alleged defective
product return policies, and other similar programs directed at
customers. The common goals of the Customer Practices have been
to meet competitive pressures, ensure customer satisfaction, and
generate goodwill for the Debtors, thereby retaining current
customers, attracting new ones, and ultimately enhancing net
revenue.
Accordingly, the Debtors sought and obtained the Court's
authority to:
(a) perform their prepetition obligations related to the
Customer Practices as they see fit; and
(b) continue, renew, replace, implement new, or terminate the
Customer Practices as they see fit, in the ordinary course
of business, without further application to the Court.
The Debtors want to continue during the postpetition period those
Customer Practices that they believe were beneficial to their
businesses and cost-effective during the prepetition period. Mr.
Keach maintains that continuing the Debtors' Customer Practices
is necessary to preserve critical business relationships with
more than 1,100,000 customers and goodwill for the benefit of the
estates.
The Debtors estimate that the aggregate cost of performing their
prepetition obligations in regard to the Customer Practices will
be $1,241,027, with the exception of those services for which
customers have prepaid prior to the Petition Date. Most, if not
all, of the estimated costs will be incurred by the Debtors in
the form of replacement products and credit obligations. The
Debtors maintain that the cash outlay required to continue the
Customer Practices postpetition is extremely modest given the
scope of Pegasus' cases.
Generally, the prepetition customer obligations relating to the
Debtors' Customer Practices are:
A. Customer Pre-Payment: The Debtors bill subscribers in advance
of their monthly services. As a result, subscribers must pre-
pay for programming services each month. Certain of the
Debtors' customers may pay for programming services up to one
year in advance. The only programming that the Debtors do not
charge for in advance are pay-per-view movies and events. As
of the Petition Date, the Debtors owe programming services to
almost all of their customers with respect to customer
payments made prior to the Petition Date.
B. Customer Rebate Program: The Debtors offer rebates to certain
of their new customers that currently range between $50 and
$100 depending on the customer's credit score, the type of
offer and the selected programming packages. The rebates are
paid in the form of programming credits that are applied to
the customer's account.
The rebates are offered to certain prospective customers to
give them incentive to subscribe to the Pegasus Digital One
Plan. The Debtors' failure to honor the rebates payable to
its customers would significantly erode the Debtors' new
customer base and impair the Debtors' ability to successfully
attract additional subscribers. If the Debtors do not honor
the rebate claims, those customers with rebate claims may
attempt to offset those claims against the amount they owe the
Debtors. Payment of the rebate claims may have minimal impact
on the funds available to the Debtors' unsecured creditors.
As of the Petition Date, the Debtors estimate a $125,712
liability for the cost of rebates arising from prepetition
agreements with certain subscribers. However, because the
rebates are granted in the form of a credit applied to a
particular customer's account, the Debtors do not believe that
they have any cash liability to their customers with respect
to the rebate claims.
C. Warranty and Alleged Defective Return Policies: Pursuant to
the Pegasus Digital One Plan, the Debtors lease equipment to
subscribers of DirecTV programming services and offer
warranties relating to certain components of the leased
equipment. The warranties cover the repair or replacement of
any inoperable portion of covered leased equipment that has
been used properly in accordance with its intended purpose and
instructions.
Although the Debtors do not believe that as of the Petition
Date they have any cash liability on account of these warranty
claims, the Debtors want to be allowed to continue performing
their warranty obligations in the ordinary course of business
after the Petition Date.
D. Customer Deposit Obligations: In the ordinary course of their
business, the Debtors require a small segment of their
customers to remit cash deposits in exchange for the use of an
"access card." The access card provides security and
encryption information and allows subscribers to control the
use of their programming systems. The access card also allows
the Debtors to capture billing information that is specific to
each customer's account. Although most new subscribers obtain
an access card when they purchase new equipment, some
subscribers may require replacement access cards when they
purchase used equipment or have a lost, stolen or damaged
access card. To receive a replacement access card,
subscribers must deposit $90 with the Debtors, which is
charged to the particular subscriber's DirecTV programming
account. Subscribers are eligible to receive a refund of the
$90 deposit only upon the return of an undamaged original card
within 10 days of the receipt of the replacement card.
The Debtors possess a number of customer deposits that were
deposited prior to the Petition Date. It is unclear whether
portions of the customer deposits relate to the prepetition
period, because the use of the access cards by the Debtors'
customers straddles the prepetition and postpetition periods.
Thus, the Debtors want to refund certain customer deposits
pursuant to the access card deposit program, including those
deposits that may relate to the prepetition period. The
Debtors believe that they may be required to refund
$193,650 of customer deposits held as of the Petition Date.
E. General Customer Refunds: The Debtors have maintained certain
refund policies under certain reasonable circumstances
designed to accommodate their customers' needs. The general
customer refunds relate to certain issues that arise in the
course of providing DirecTV programming services or related
equipment and include billing or programming errors, problems
with programming service, problems with equipment, termination
of service where programming was prepaid and other similar
refunds and credits.
The Debtors want to honor their general customer refund
obligations in accordance with their prepetition policies and
practices. The Debtors believe that the General Customer
Refunds that have accrued and that are projected to accrue in
respect of prepetition customer obligations prior to the
Petition Date amount to $53,207.
F. Special Promotional Programs: The Debtors make special
promotional offers from time to time. These programs may be
used to encourage customers to sign up for special programming
channels or to utilize pay-per-view programming options. The
offers may be in the form of credits to the subscriber's
account or coupons that may be exchanged for an account
credit. The Debtors estimate an $868,458 potential liability
on account of special promotional programs as of the Petition
Date. However, of the aggregate total, $456,8080 [sic.]
relates to coupons for pay-per-view events. Historically,
only 10% of the coupons are actually redeemed by the Debtors'
subscribers. As a result, the Debtors believe that their
actual liability with respect to special promotional programs
could be significantly lower than estimated.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on
June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq.,
at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in
their restructuring efforts. When the Debtors filed for protection
from their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PEGASUS: Obtains Approval To Maintain Dealer Business Relationship
------------------------------------------------------------------
At Pegasus Satellite Communications, Inc.'s behest, the Court
allows Pegasus to operate in the ordinary course of business and
to maintain their business relationships with the certain dealers
including the performance or payment of certain prepetition
obligations.
Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, in
Portland, Maine, relates that the Debtors obtain new subscribers
for their DirecTV programming services through several channels
of distribution. The most significant method of distribution is
the Debtors' independent retail network, which consists of dealer
relationships with over 4,000 dealers. The Dealers are not
employees of the Debtors. To become a retail Dealer for the
Debtors, a prospective Dealer must enter into a Retail Dealer
Agreement, which provides certain valuable protections to the
Debtors and may be terminated for any reason or no reason upon
written notice by either the Dealer or the Debtors. The Debtors'
primary commission plan with the Dealers involves the marketing
of the Pegasus Digital One Plan. This commission plan is
generally governed by the Dealer Rules, Policies, and Procedures,
restated as of May 10, 2004. In general, the Dealer Rules
provide that the Dealers will market the Pegasus Digital One Plan
to residential subscribers who are not current DirecTV
programming subscribers and who have not subscribed to DirecTV
programming through the Debtors during the prior 12 months. The
Dealers are responsible for enrolling subscribers to the Debtors'
DirecTV programming, providing subscribers with the necessary
equipment, and arranging for installation of the equipment.
The Dealers are typically paid directly through a variety of
incentive programs, including equipment subsidies, installation
subsidies, commissions, and flex payments. The Debtors change
the incentives from time to time in accordance with certain
business initiatives to encourage and reward particular Dealer
behavior or to achieve a particular mix of sales offers. In
addition, the Dealers may participate in the Pegasus Cooperative
Advertising Program. Under the Cooperative Advertising Program,
eligible Dealers are allocated monthly cooperative advertising
funds to offset a certain percentage of their qualified
advertising expenditures.
Mr. Keach reports that the strength of the Debtors' Direct
Broadcast Satellite business is based on their widespread
national presence in rural markets. In contrast to metropolitan
areas, it is difficult to establish sales and distribution
channels in rural areas. Most retailers in rural areas are
independently owned and operate a limited number of store
locations that serve large geographic areas. As a result, the
Debtors rely on their 4,000 independent Dealers to distribute
DirecTV programming services to certain areas of the country that
are otherwise difficult to penetrate. The Debtors' ability to
maintain a network of Dealers and to penetrate rural markets on a
wide-scale basis is critical to the success of their
restructuring efforts. Furthermore, the Debtors' operations are
dependent on obtaining a sufficient number of quality subscribers
and retention of subscribers for extended periods of time. The
Debtors' Dealer compensation and incentive programs are designed
to ensure that the Dealers maximize their efforts in enlisting
new and maintaining existing quality subscribers to the Debtors'
DirecTV programming services.
Failure to pay the prepetition amounts owing to the Dealers will
have a material, adverse effect on the Debtors' business, Mr.
Keach says. The Dealers' sole source of revenue from the sale of
Direct Broadcast Satellite programming and equipment for the
Debtors is from the commission programs. The Dealers do not
receive any profit margin on the satellite equipment they sell.
In addition, although the Dealers must comply with certain
performance standards under their contracts with the Debtors, the
agreements do not obligate the Dealers to sell a pre-defined
number of programming packages or to aggressively solicit new
customers.
Moreover, Mr. Keach points out that the Dealers' incentive to
expend the effort to sell the Debtors' services is tied directly
to the Dealers' commission package not to any express covenants
or other agreements in the Dealer Retail Agreement. Thus, if the
Dealers are not paid on account of the prepetition obligations,
the Dealers can and will discontinue or substantially reduce
their sales efforts on behalf of the Debtors, thereby impeding
the Debtors' access to quality, credit-worthy subscribers in
rural markets.
Many of the Dealers also provide services to the Debtors'
existing subscribers. Mr. Keach points out that if the Dealers
discontinue their sales operations on account of the Debtors'
non-payment, they may also discontinue servicing the Debtors'
current subscribers, which may cause defections of the Debtors'
existing customers.
Mr. Keach asserts that the uninterrupted payment of the Dealers
is critical to maintaining the Dealers' allegiance to the
Debtors. One factor contributing to the Dealers' loyalty to the
Debtors during the prepetition period was the Debtors' ability to
make timely payments to the Dealers. Many of the Dealers are
dual providers of the Direct Broadcast Satellite services offered
by the Debtors and the satellite broadcast programming services
offered by the Debtors' competitors. In many of the Debtors'
sales territories, the various satellite service providers
compete intensely for market share by offering generous
compensation packages to Dealers and competitive programming
packages to customers. If the Dealers go unpaid, the Debtors
believe that the Dealers may channel their efforts to market the
products and services of the Debtors' competitors against the
Debtors' Direct Broadcast Satellite services, or they may violate
their obligations to the Debtors under the Retail Dealer
Agreement by soliciting the Debtors' existing customers to
transfer their programming to one of the Debtors' competitors.
The Debtors' concerns over Dealer and customer defections are
particularly acute because the industry has seen significant
disruption and volatility in the past. In 2002, EchoStar, one of
the Debtors' competitors, made an attempt to acquire DirecTV.
Although the acquisition was ultimately unsuccessful, it caused
the Dealers to question the Debtors' future in the Direct
Broadcast Satellite industry, despite the Debtors' clear
communication to its Dealers that an acquisition would leave the
Debtors' unaffected. Similarly, the media attention surrounding
the on-going litigation between the Debtors and DirecTV has
raised doubts among the Dealer network regarding the Debtors'
position in the Direct Broadcast Satellite business and prompted
inquiries regarding the litigation's impact on the Debtors or the
effect it will have on the individual Dealers. Based on the
recent past, the Debtors believe that the filing of their Chapter
11 cases will add to the Dealers' uncertainty concerning the
Debtors' future. Mr. Keach contends that paying the Dealers on
account of the prepetition obligations will reassure the Dealers
that the Debtors intend to, and will, continue performing their
obligations to the Dealers during the postpetition period.
If certain Dealer locations refused to deal with the Debtors or
were forced to cease operations, the effect of the failure to
serve at least 1,100,000 customers in those territories would be
very damaging to the Debtors' business and their ability to
complete a successful Chapter 11 process. The Debtors' goodwill,
national presence, and brand recognition, which are enhanced by
those locations, would be substantially harmed by a loss of
locations and the resulting erosion of the Debtors' customer
base, geographic service area and revenue streams. The Debtors'
ongoing business efforts require them to fully serve customers in
their exclusive territories, which requires the full support of
the entire Dealer network.
The Debtors compensate their Dealers weekly in arrears by a lump
sum payment to each Dealer for each of the Dealer programs.
Dealer compensation includes a mix of commission programs,
equipment and installation subsidies, bonus programs and
cooperative advertising programs. As of the Petition Date, the
Debtors estimate that the aggregate cost of performing all of
their prepetition obligations to their Dealers will be
$1,224,524.
Furthermore, the Debtors believe that it is likely that they will
assume their Retail Dealer Agreements during the course of the
reorganization and therefore any prepetition amounts owed to the
Dealers would likely be considered cure obligations at the time
of assumption.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on
June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq.,
at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in
their restructuring efforts. When the Debtors filed for protection
from their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No.
2; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PIERRE FOODS: S&P Assigns B+ Rating to Corporate Debt & Bank Loan
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Cincinnati, Ohio-based prepared foods
manufacturer Pierre Foods Inc. At the same time, Standard & Poor's
assigned its 'B+' bank loan rating and a recovery rating of '3' to
the company's proposed $190 million senior secured credit
facilities. The issue is part of a financing plan in which
Pierre will be acquired by Madison Dearborn Partners.
The ratings are based on preliminary offering statements and are
subject to review upon final documentation. The bank loan rating
is the same as the corporate credit rating; this and the '3'
recovery rating indicate the expectation of a meaningful (50%-80%)
recovery of principal in the event of default. Standard & Poor's
has also assigned a 'B-' rating to Pierre Foods' proposed $125
million senior subordinated notes due 2012, to be issued under
Rule 144A with registration rights.
The outlook is negative.
Pro forma for the transaction, total debt will be about $275
million.
In a deal announced in May 2004, Pierre Foods agreed to be
acquired by Madison Dearborn Partners for a total of $420 million.
The plan includes the aforementioned debt and a private equity
placement of at least $140 million. Proceeds will be used to
purchase the existing owners' equity, refinance existing debt of
approximately $138 million, and pay transaction fees.
"The ratings on Pierre Foods Inc. reflect its leveraged financial
profile, modest scale of operations, and a high level of customer
concentration," said Standard & Poor's credit analyst Paul Blake.
"This is partially mitigated by its leading position in the niche
formed, pre-cooked beef and microwaveable sandwich markets and by
its ability to manage raw material costs through cost-plus
contracts."
With sales of approximately $360 million, Pierre Foods is a
manufacturer and marketer of processed food items with a specific
focus on formed, pre-cooked protein products and hand-held
convenience sandwiches. Its products include burgers, meatloaf,
boneless rib sandwiches, sausage biscuits, chicken strips, and
bakery items. Many of its products are custom-developed to meet
specific customer requirements.
Pierre Foods distributes its fully cooked frozen products from its
two plants to diverse, stable end markets consisting of national
accounts (this consists of quick-service restaurants), schools,
food service, vending, convenience stores, and warehouses/grocery
stores. Among its national accounts, CKE Restaurants Inc.
(B/Stable/--), which includes the Hardee and Carl's Jr.
franchises, represent about 24% of the firm's sales, and this is a
rating concern. Nevertheless, the fast food segment is also the
leading growth area for the company, with 82% growth during the
past three years.
PILLOWTEX: Asks for Authority to Pay Additional Withholding Taxes
-----------------------------------------------------------------
In the ordinary course, the Pillowtex Corporation Debtors made
deductions from employees' paychecks to make withholding payments
for various federal, state and local income, FICA and other
withholding taxes. On the Petition Date, the Debtors sought and
obtained the Court's permission to pay the withholding taxes in
compliance with applicable laws. The Debtors estimated that the
unremitted withholding taxes aggregate $800,000.
The Debtors acknowledged that the withholding taxes constituted
"trust fund taxes," which must be collected from employees and
held in trust for payment to the appropriate taxing authority.
To the extent the "trust fund taxes" were collected, they were
not property of the Debtors' estates under Section 541(d) of the
Bankruptcy Code.
On July 31, 2003, Judge Walsh authorized the Debtors to pay
$600,000 to the Taxing Authorities in respect of the withholding
taxes.
In April 2004, the Debtors became aware that federal and state
withholding taxes that have been deducted prepetition from
certain bonus payments and income tax gross up payments made in
January 2003 to their former Chief Executive Officer were
inadvertently never paid to the Taxing Authorities. While the
Former CEO received his bonus and income tax gross up payments,
net of withholding taxes, the withholding taxes have not yet been
paid over to the Taxing Authorities. The Debtors estimate that
they withheld before the Petition Date, and owe the Taxing
Authorities, $490,000 in additional withholding taxes.
Since the Debtors were unaware of the Additional Withholding
Taxes, the Debtors underestimated the aggregate amount of
withholding taxes they would need to remit to the Taxing
Authorities after the Petition Date. Taking into account the
Additional Withholding Taxes, the Debtors now estimate that the
total amount of withholding taxes that will need to be remitted
to the Taxing Authorities postpetition aggregates $1,290,000.
By this motion, the Debtors seek the Court's authority to pay the
Additional Withholding Taxes, and any related interest and
penalties, to the extent the interest or penalties constitute a
priority claim under Section 507(a)(8), to the Taxing
Authorities.
Committee Responds
William J. Burnett, Esq., at Blank Rome, LLP, in Wilmington,
Delaware, tells the Court that the Official Committee of
Unsecured Creditors has significant concerns regarding the merits
of the transaction between the Debtors and the Former CEO.
Although the Debtors may be required to make the withholding tax
payments to the Taxing Authorities, the Committee reserves its
rights regarding any claims or causes of action that may exist
against the Former CEO, including any claim for the return of the
bonus, income tax gross up payments, and any payments made to the
Taxing Authorities pursuant to the Debtors' request.
Headquartered in Dallas, Texas, Pillowtex Corporation --
http://www.pillowtex.com/-- sells top-of-the-bed products to
virtually every major retailer in the U.S. and Canada. The Company
filed for Chapter 11 protection on November 14, 2000 (Bankr. Del.
Case No. 00-4211). David G. Heiman, Esq., at Jones, Day, Reavis &
Poque represents the Debtors in their restructuring efforts. On
July 30, 2003, the Company listed $548,003,000 in assets and
$475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 65;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PREFERRED RIVERWALK: Hires Keith Baker as Bankruptcy Attorney
-------------------------------------------------------------
Preferred Riverwalk, LP sought and obtained approval from the U.S.
Bankruptcy Court for the Western District of Texas, San Antonio
Division, to retain Keith M. Baker, Attorney at Law, of San
Antonio, Texas, as its attorney in its bankruptcy case.
Mr. Baker will:
a) give the Debtor advice in the continued operation of its
business and management of its property and duties and
responsibilities as Debtor;
b) prepare on behalf of the Debtor necessary applications,
notices, answers, adversaries, orders, reports and other
legal papers;
c) assist the Debtor in negotiation of a plan satisfactory to
parties in interest, and to prepare a disclosure statement
which will be submitted to parties in interest after it
has been approved by the Court; and
d) perform other legal services for the Debtor which may be
necessary and appropriate in this chapter 11 case.
Mr. Baker charges $200 per hour for his services and $80 per hour
for any paralegal services.
Headquartered in San Antonio, Texas, Preferred Riverwalk, L.P.,
doing business as Sheraton Four Points, filed for chapter 11
protection on May 4, 2004 (Bankr. W.D. Tex. Case No. 04-52666).
Keith M. Baker, Esq., represent the Debtor in its restructuring
efforts. When the Company filed for protection from its creditors,
it listed both estimated debts and assets of over
$10 million.
PRICE-DAVIS CONSTRUCTION: Case Summary & 20 Unsecured Creditors
---------------------------------------------------------------
Debtor: Price-Davis Construction, Inc.
1928 South Boulevard, Suite 300
Charlotte, North Carolina 28209
Bankruptcy Case No.: 04-32021
Type of Business: The Debtor is a building and tenant service
company that offers construction, office
technology consulting.
See http://www.pricedavis.com/
Chapter 11 Petition Date: June 7, 2004
Court: Western District of North Carolina (Charlotte)
Judge: J. Craig Whitley
Debtor's Counsel: Kevin Michael Profit, Esq.
Travis W. Moon, Esq.
Hamilton Gaskins Fay and Moon, PLLC
2020 Charlotte Plaza
201 South College Street
Charlotte, NC 28244-2020
Tel: 704-344-1117
Fax: 704-344-1483
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Atlanta Flooring $135,354
Kastle Cabinets $117,345
Folsom Construction Company $100,718
McKenney's Inc. $94,493
Southern Mechanical LLC $93,972
Poe's Heating & Air Condition $90,840
Providence Paint Company, Inc. $90,018
Pleasants Hardware Co. $85,194
Garmon & Co., Inc. $80,688
Bonitz Contracting Co., Inc. $73,213
Reliable Electric Service Inc. $73,018
Luwa Bahnson, Inc. $71,925
MCC Mechanical $69,715
Mayberry Electric, Inc. $68,213
Warco Construction Inc. $67,164
Built Rite Drywall $64,682
Preferred Electric Co., Inc. $64,243
Wallkrafters, Inc. $59,005
Bryant's Millwright Const., Inc. $57,133
Mechanical Contractors, Inc. $51,280
RCN CORP: Asks Court to Approve Blackstone's Retention As Advisor
-----------------------------------------------------------------
Prior to their bankruptcy petition date, the RCN Corp. Debtors
engaged The Blackstone Group, LP, to provide advice in connection
with their preparation for the commencement of these Chapter 11
cases. In providing prepetition services to the Debtors,
Blackstone's professionals worked closely with the Debtors'
management and other professionals, and have become well
acquainted with the Debtors' operations, debt structure, business
operations and related matters.
The Debtors presently require the services of a capable and
experienced financial advisory firm. Deborah M. Royster, RCN
Corporation's General Counsel and Corporate Secretary, asserts
that since Blackstone has developed significant relevant
experience and expertise regarding the Debtors, the firm will be
able to assist RCN in providing the much-needed effective and
efficient services in these Chapter 11 cases.
Blackstone's resources, capabilities, and experience in advising
the Debtors will fulfill a critical need that complements the
services offered by the Debtors' other restructuring
professionals, Ms. Royster explains.
The Debtors, therefore, seek the Court's authority to employ
Blackstone as financial advisors in their bankruptcy cases.
Ms. Royster informs Court that Blackstone will concentrate its
efforts in formulating strategic alternatives, negotiating with
the Debtors' banks, bondholders, and other creditor
constituencies, and assisting the Debtors to formulate and
implement a viable Chapter 11 reorganization plan.
Specifically, as financial advisors, Blackstone will:
(a) assist in the evaluation of the Debtors' businesses and
prospects;
(b) assist in the development of financial data and
presentations to the Debtors' Boards of Directors,
various creditors and other third parties;
(c) analyze the Debtors' financial liquidity and evaluate
alternatives to improve the liquidity;
(d) analyze various restructuring scenarios and the
potential impact of these scenarios on the recoveries of
those stakeholders impacted by the Restructuring;
(e) provide strategic advice with regard to a Restructuring
of the Debtors' obligations;
(f) evaluate the Debtors' debt capacity and alternative
capital structures;
(g) participate in negotiations among the Debtors and its
creditors, suppliers, lessors and other interested
parties;
(h) advise the Debtors and negotiate with lenders with
respect to potential waivers or amendments of various
credit facilities;
(i) prepare a valuation of the business and a liquidation
analysis, if requested;
(j) provide expert witness testimony concerning any of the
subjects encompassed by the other financial advisory
services, if requested;
(k) assist the Debtors in preparing marketing materials in
conjunction with a possible transaction;
(l) assist the Debtors in identifying potential buyers or
parties-in-interest to a transaction and assist in the due
diligence process;
(m) assist and advise the Debtors concerning the terms,
conditions and impact of any proposed Transaction;
(n) seek sources of other debt or equity capital in
connection with a Restructuring or a Transaction; and
(o) provide other advisory services as are customarily
provided in connection with the analysis, negotiation,
documentation, confirmation, and consummation of a
Restructuring or a Transaction, as requested and
mutually agreed.
Pursuant to an Engagement Letter between the parties, RCN
Corporation agrees to pay Blackstone the fees for the financial
advisory services rendered pursuant to these terms:
-- RCN has agreed to pay Blackstone monthly advisory fees of
$200,000. RCN also paid Blackstone a $25,000 retainer,
which is to be credited against any unpaid prepetition
invoices and unbilled fees, charges, and disbursements, it
being agreed and understood that the unused portion of the
retainer will be held by Blackstone and applied against any
of the fee applications filed and approved by the
Court.
-- Upon consummation of a Restructuring, a fee of between $6
million and $8 million, subject to reduction by a
Transaction Credit equal to 0% to 50% of the Transaction
Fee:
Date on which Restructuring Transaction
Restructuring Fee is earned Fee Credit
--------------------------- ------------- -----------
Prior to Sept. 9, 2004 $8,000,000 None
On or after Sept. 9, 2004
but prior to March 9, 2004 7,000,000 25%
On or after March 9, 2004 6,000,000 50%
-- After the consummation of a Transaction, a fee equal to 2%
of the gross value of all cash, securities and other
properties paid, payable or raised directly or indirectly,
in one transaction or in a series or combination of
transactions, to or for the benefit of the Company, in
connection with the Transaction or a related transaction.
Additionally, the Transaction Credit will not exceed the
Restructuring Fee, and the sum of the Transaction Fee will not
exceed $10.5 million.
As part of the overall compensation payable to Blackstone under
the terms of the Engagement Letter, the Debtors have agreed to
certain indemnification and contribution obligations under an
Indemnification Agreement. The Debtors will indemnify each
Indemnified Party, except to the extent that any loss, claim,
damage, or liability -- or related expenses -- is finally
judicially determined by a court of competent jurisdiction to
have resulted primarily from Blackstone's gross negligence or
willful misconduct.
Blackstone will also be reimbursed for reasonable out-of-pocket
expenses, and other fees and expenses, including reasonable
expenses of counsel.
After conducting a conflicts check and due inquiry, Timothy
Coleman, Senior Managing Director of Blackstone, informs the
Court that the firm is a "disinterested person," as defined in
Section 101(14) of the Bankruptcy Code, and represents no
interest adverse to the Debtors' estates with respect to the
matters on which it is to be retained.
Wells Fargo Objects
Wells Fargo & Company asks the Court to deny the retention of The
Blackstone Group, LP, as the Debtors' financial advisors.
Since the Debtors intend to essentially eliminate equity in a
pre-planned reorganization in favor of their unsecured creditors
and debt holders, Peter S. Goodman, Esq., at Andrews Kurth, LLP,
in New York, argues that Blackstone's retention is unjustified
given the pre-planned nature of the bankruptcy and the large fees
the Debtors would incur in retaining the firm. The Debtors
simply failed to provide a valid reason for retaining Blackstone
beyond the typical information provided in similar applications.
It is unclear what value Blackstone would be adding to justify
its success fee, Mr. Goodman says. Moreover, if the Application
is approved, Blackstone will be entitled to indemnification. The
Debtors have not explained why indemnification is warranted.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- is a provider of bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 04-13638) on
May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for protection
from their creditors, they listed $1,486,782,000 in assets and
$1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue
No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RF MICRO: Will Present at Thomas Weisel Forum on Thursday
---------------------------------------------------------
RF Micro Devices, Inc. (Nasdaq: RFMD), a leading provider of
proprietary radio frequency integrated circuits (RFICs) for
wireless communications applications, announced the Company will
present at the Thomas Weisel Partners Growth Forum 6.0 in Laguna
Beach, Calif. on Thursday, June 17, 2004, at 9:55 a.m. Pacific
Time (12:55 p.m. Eastern Time). Bob Bruggeworth, president and
chief executive officer, and Doug DeLieto, director of investor
relations, will provide an overview of Company events.
A live audio webcast of the presentation will be available via the
RFMD(R) Investor Relations web page at the following URL:
http://ir.ccbn.com/ireye/ir_site.zhtml?ticker=RFMD&script=2100
RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified
manufacturer, designs, develops, manufactures and markets
proprietary RFICs primarily for wireless communications products
and applications such as cellular and PCS phones, base stations,
WLANs and cable television modems. The Company offers a broad
array of products - including amplifiers, mixers,
modulators/demodulators, and single-chip receivers, transmitters
and transceivers - representing a substantial majority of the
RFICs required in wireless subscriber equipment. The Company's
goal is to be the premier supplier of low-cost, high-performance
integrated circuits and solutions for applications that enable
wireless connectivity. RF Micro Devices, Inc. is traded on the
Nasdaq National Market under the symbol RFMD. For more information
about RFMD, please visit http://www.rfmd.com/
* * *
As reported in the Troubled Company Reporter's May 10, 2004
edition, Standard & Poor's Ratings Services affirmed its 'B+'
corporate credit rating and other ratings on Greensboro, North
Carolina-based RF Micro Devices Inc. (RFMD), and revised the
ratings outlook to stable from negative.
"The action recognized improving business conditions and a growing
business base, resulting in improved profitability and stronger
debt-protection measures. The ratings continue to reflect the
company's relatively concentrated revenue base, high debt levels,
and rapid technology and marketplace evolution, as well as its
good position in its niche market and strong customer
relationships," said Standard & Poor's credit analyst Bruce Hyman.
SANDISK CORP: CEO to Present at Thomas Weisel Forum Tomorrow
------------------------------------------------------------
SanDisk Corporation (Nasdaq:SNDK), announced that Eli Harari,
President and CEO, will present to the investment community
attending the Thomas Weisel Partners Growth Forum 6.0 in Laguna
Beach, Calif., on Wednesday, June 16, 2004 at 11:05 a.m. Pacific
Time. The session is being webcast and can be accessed live from
SanDisk's website at http://www.sandisk.com/IRor by using the
following URL:
http://www.veracast.com/webcasts/twp/growth-forum-2004/91411445.cfm
The webcast will also be available on-demand following the
conference.
About SanDisk
SanDisk, the world's largest supplier of flash memory data storage
card products, designs, manufactures and markets industry-
standard, solid-state data, digital imaging and audio storage
products using its patented, high density flash memory and
controller technology. SanDisk is based in Sunnyvale, Calif.
* * *
As reported in the Troubled Company Reporter's March 3, 2004
edition, Standard & Poor's Ratings Services raised its corporate
credit rating on SanDisk Corp. to 'B+' from 'B' and its
subordinated debt rating to 'B-' from 'CCC+'. The outlook is
stable.
"The action reflects SanDisk's sustained growth in profitability,
despite substantial business risk," said Standard & Poor's credit
analyst Joshua Davis. "The presence of substantial balance-sheet
liquidity offsets anticipated capital expenditures and contingent
liabilities stemming from SanDisk's flash memory fabrication joint
venture, FlashVision," with Toshiba Corp. (BBB-/Negative/A-3).
Potential exists for supply/demand imbalances resulting from
excessive industry investment in NAND flash capacity, which could
lead to acceleration in price declines and accumulation of
unwanted inventory. While current demand is outpacing supply
growth, which is expected to continue for least the next year,
significant industry investment in NAND capacity could pose a risk
starting in 2005.
SCIENDA LLC: Voluntary Chapter 7 Case Summary
---------------------------------------------
Debtor: Scienda, LLC
aka Scienda Building Sciences
aka C3 Industries, LLC
P.O. Box 2569
Orangeburg, South Carolina 29116
Bankruptcy Case No.: 04-06797
Type of Business: The Debtor is a pioneer in the development and
production of revolutionary, integrated steel
framing solutions for residential and light
commercial construction.
See http://www.scienda.com/
Chapter 11 Petition Date: June 9, 2004
Court: District of South Carolina (Columbia)
Judge: John E. Waites
Debtor's Counsel: William E. Calloway, Esq.
P.O. Box 12287
Columbia, SC 29211
Tel: 803-256-6400
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.
SHILOH INDUSTRIES: S&P Raises Corporate Credit Rating to B+
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Cleveland, Ohio-based Shiloh Industries Inc. to 'B+'
from 'B'. Shiloh had total balance-sheet debt of about $148
million at April 30, 2004. The outlook is positive.
"The upgrade reflects Shiloh's reduced debt leverage, materially
improved cash flow protection measures, and enhanced financial
flexibility," said Standard & Poor's credit analyst Nancy Messer.
Shiloh's debt has declined about $23 million since July 2003
because of the disciplined use of free cash flow to lower
leverage. Cost control and operating efficiency measures have been
used to reduce the company's breakeven point and materially
increase EBITDA margins.
Shiloh manufactures steel blanks and stamped components for the
automotive industry. The company expects to expand its higher-
margin laser-welded blanks segment, where it holds the largest
market share, through new business awards; although, the garnering
of new program wins can be an uneven process. The company's near-
term growth will likely be organically driven.
Shiloh operates as a stand-alone entity, although the company is
56%-owned by MTD Products Inc. (unrated), a private company.
"Should strong markets and productive operating initiatives allow
the company to sustain the current credit protection measures,
combined with a continuation of the existing financial policy, the
ratings could be raised in the next one to two years," Ms Messer
said.
SK GLOBAL: Hana Bank Asks Court To Dismiss Section 304 Petition
---------------------------------------------------------------
Hana Bank, serving as the foreign representative of SK Global
Co., Ltd., seeks to dismiss its Petition pursuant to Section 304
of the Bankruptcy Code to Commence a Case Ancillary to a Foreign
Proceeding.
Andrew B. Eckstein, Esq., at Blank Rome LLP, in New York, recalls
that on March 19, 2003, proceedings were commenced in the
Republic of Korea pursuant to the Corporate Restructuring
Promotion Act of 2001, for the purpose of restructuring SK
Global's indebtedness.
As a result of the CRPA Proceedings, SK Global's debt payments to
financial institution creditors were deferred for a period of
three months and those creditors were legally barred from
bringing actions against SK Global.
Certain creditors sought to evade the jurisdiction of Korea and
the CPRA by seeking to exercise their rights and remedies in the
courts of the United States.
On April 10, 2003, Hana Bank filed a petition for relief in the
United States under Section 304.
Contemporaneously with the filing of the Petition, Hana Bank also
filed an order to show cause why the Court should not issue a
temporary restraining order, a motion for temporary restraining
order and a notice of motion for a preliminary injunction,
seeking a preliminary injunction enjoining the commencement or
continuation of any action against SK Global or its property, or
the creation or enforcement of any lien against the property.
Citibank, N.A., Hong Kong Branch objected to the Petition and the
Motion for Injunction. Certain of SK Global's creditors also
continued to pursue actions against SK Global's domestic U.S.
subsidiary -- SK Global America, Inc.
Consequently, SK Global America filed its own Petition commencing
its own Chapter 11 case.
Mr. Eckstein points out that no further proceedings occurred with
respect to the Petition and the Motion for Injunction. But in
the interim, extensive and protracted restructuring negotiations
continued among creditors in Korea. The Petition has been
adjourned from time to time, and the Court, with respect to the
Petition, has entered no order or injunction.
"We are pleased to advise [the] Court that as a result of the
ongoing negotiations, a consensual restructuring of SK Global has
been completed. As a result, there is no longer a need to
proceed with the Petition," Mr. Eckstein says.
* * *
Judge Blackshear will convene a hearing on July 14, 2004 at 10:00
a.m., to be held in Courtroom 601, One Bowling Green, New York,
New York 10004, to consider Hana Bank's motion to dismiss the
Petition pursuant to Section 304 of the Bankruptcy Code to
Commence a Case Ancillary to a Foreign Proceeding.
Objections, if any, to Hana Bank's request must be set forth in
writing containing the name of the objecting party and its
interest in the proceeding and describing the basis of the
objection, which will be filed with the Court electronically and
served so as to be received on or before July 11, 2004 by:
Blank Rome LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attn: Michael Z. Brownstein, Esq., and
Andrew B. Eckstein, Esq.
(SK Global Bankruptcy News, Issue No. 18; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SOLUTIA INC: Wants Court Nod To Enter Into Intercreditor Agreement
------------------------------------------------------------------
With the Court's approval, the Solutia, Inc. Debtors entered into
a DIP Financing Agreement dated as of January 16, 2004, with
certain lenders and with Citicorp USA, Inc., as collateral agent,
administrative agent and documentation agent. Pursuant to the
DIP Financing Agreement, the DIP Lenders agreed to make loans to
the Debtors up to an aggregate principal amount of $525,000,000
on a postpetition basis. In exchange, the DIP Agent was granted:
(a) an allowed superpriority administrative expense claim
against the Debtors in the amount of all obligations under
the DIP Facility; and
(b) first-priority liens on substantially all of the Debtors'
assets, subject only to certain limitations explicitly set
forth in the DIP Order.
While the DIP Order did specify certain types of liens that were
not primed by those of the DIP Order, and thus would continue to
hold a first-priority security interest, the liens not primed did
not include the liens held by the indenture trustee for the
Debtors' prepetition 11.25% Senior Secured Notes due 2009.
Rather, the DIP Order stated explicitly that the DIP Agent's
liens would prime those of the 2009 Note Trustee, and that as
adequate protection for that priming, the 2009 Note Trustee would
be granted second priority liens in all of the Postpetition
Collateral. Neither the 2009 Note Trustee nor the existing ad
hoc committee of holders of 2009 Notes objected to this
treatment.
The Foreign Pledge Agreements
M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in
New York, relates that the liens granted by the DIP Order,
including both the DIP Agent's liens and the 2009 Note Trustee's
adequate protection liens, became effective immediately. The DIP
Order provides explicitly that "no additional steps" needed to be
taken to perfect those liens. Nevertheless, to ensure that the
priorities established by the DIP Order would be recognized with
respect to assets located outside the United States, the DIP
Lenders asked the Debtors to provide foreign pledge agreements
that would establish the relative priorities in accordance with
local law. The Debtors have made good faith efforts to comply
with this requirement. However, the parties have recently been
advised by local counsel in the Netherlands and Belgium that
Dutch and Belgian law will not recognize the DIP Agent's first-
priority lien unless the 2009 Note Trustee affirmatively acts to
remove or subordinate its own liens that pre-dated the Chapter 11
filing.
During the discussions that ensued among the Debtors, the 2009
Note Trustee and the Ad Hoc Committee, Ms. Labovitz reports that
the Ad Hoc Committee indicated that, rather than withdrawing the
2009 Note Trustee's lien filings in the Netherlands and Belgium,
it would prefer to cause the 2009 Note Trustee to enter into an
intercreditor agreement affirmatively recognizing the priorities
set forth in the DIP Order, which could be filed where
appropriate in jurisdictions outside the United States. The DIP
Agent has indicated that an intercreditor agreement would satisfy
the DIP requirements. The Debtors have been advised by counsel
to the Ad Hoc Committee that the Ad Hoc Committee has issued a
direction letter instructing the 2009 Note Trustee to sign the
Proposed Intercreditor Agreement.
To protect the interests of minority holders of 2009 Notes who
are not Ad Hoc Committee members, the 2009 Note Trustee asked the
Debtors to obtain an appropriate Court order directing the 2009
Note Trustee to execute the Proposed Intercreditor Agreement.
In addition, the Ad Hoc Committee asked the Debtors for
reimbursement of legal expenses incurred in connection with
ensuring that the DIP Agent's liens are accorded first-priority
status in foreign jurisdictions. Although the Court has
previously authorized the Debtors to reimburse the Ad Hoc
Committee for certain legal expenses, the Ad Hoc Committee
believes that its expenditures in connection with the approval
and execution of the Proposed Intercreditor Agreement and the
actions which must be taken pursuant thereto, together with other
similar collateral actions that may be needed in the future, will
exceed the cap on reimbursable legal expenses the Court
established.
Accordingly, the Debtors ask the Court to:
(a) authorize the DIP Agent and direct the Debtors and the
2009 Note Trustee to execute the Proposed Intercreditor
Agreement, and to file it in jurisdictions outside the
United States as a means of furthering the implementation
of the DIP Order; and
(b) increase the limit on the amount of legal expenses of the
Ad Hoc Committee, which they are permitted to reimburse by
$175,000.
Ms. Labovitz asserts that, as the Court has already found and no
party now contests, the lien priorities set forth in the DIP
Order are consistent with the Bankruptcy Code. Furthermore, the
increase of the cap on the Ad Hoc Committee's reimbursable legal
expenses is necessary to compensate the Ad Hoc Committee for its
involvement in the process. By involving the Ad Hoc Committee
directly in the process, the Debtors have already reduced, and
expect in the future to reduce, the costs associated with the
disputes.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Company filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000)
USA BIOMASS: Reorganized Company's Financial Woes Not Over Yet
--------------------------------------------------------------
USA Biomass Corporation's business focus is on the waste transport
and recycling industry. It currently operates in Central and
Southern California. California state law requires 50% of the
waste stream of every community to be diverted from landfill. The
Company provides critical transport logistics for several
companies located in Central and Southern California. It
transports a variety of recyclables such as green waste, paper,
plastics and metals. It transports solid waste in Southern
California under contract with Waste Management, Inc.
MDF Transport, Inc., its wholly-owned subsidiary acquired in July
2003, provides green waste transport services from Southern
California to several "waste to energy" electric energy generating
plants in the San Joaquin Valley of Central California. MDF
delivers recycled agricultural by-products, such as almond hulls,
from the San Joaquin Valley to Southern California, where they are
used as a cattle feed component for the large dairy industry.
During 2002 the Company discontinued its clean green waste
processing activities, although it continues to provide green
waste transport services to deliver "boiler fuel" for electric
power generation in California. Also in 2002 the Company cancelled
all but one of its contract waste transportation contracts with
Waste Management Corporation.
Management believes there are considerable opportunities to grow
in the environmentally conscious California market, particularly
as local communities intensify compliance with State mandated
recycling.
The Company's overall financial condition as of December 31, 2002
as compared to the period preceding the filing for protection
under Chapter 11 of the Federal Bankruptcy Act has changed
significantly, principally due to its current obligations
exceeding its cash resources by more than $3 million. In December
2000 the Company filed for protection under Chapter 11 of the
Federal Bankruptcy Act. This liquidity crisis resulted in the
Company filing for protection under Chapter 11 of the Federal
Bankruptcy Act, in United States Bankruptcy Court, Central
District of California, Los Angeles Division, case # LA00-44126ES.
This provided the flexibility to develop a plan to address its
liquidity crisis.
USA Biomass' liabilities as of December 31, 2002 amounted to
$3,317,513 not subject to compromise, and $12,140,164 subject to
compromise. Its current assets were $85,970. The Company's
Reorganization Plan, which became effective February 10, 2003,
provided for the transfer of substantially all Company assets and
liabilities to a Liquidating Trust for the benefit of its
creditors.
The protection from creditors provided by Chapter 11 allowed USA
Biomass to pay its operating costs out of operations without
paying amounts it owed prior to the filing.
Subsequent to its emergence from bankruptcy on February 10, 2003,
the Reorganized Company has operated at a loss, and at March 31,
2004, had substantially depleted its cash resources. In addition,
the Company was in default on the obligation to the IRS, a note
payable of $100,000 related to the acquisition of MDF Transport, a
note payable to John Pivovaroff related to the purchase of 10
trailers, and was in default on the management agreement with John
Pivovaroff, the Company's general manager.
The Company is attempting to raise capital through the sale of
debt and/or equity securities, but there is no assurance that
sufficient funds will be raised in a timely manner. There is also
no assurance that even with additional capital that the Company
will be able to achieve profitable operations.
USG CORP: Wants Authority To Assume Current Headquarters Lease
--------------------------------------------------------------
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A.,
in Wilmington, Delaware, relates that the USG Corporation Debtors'
new corporate headquarters lease provides that the building which
will serve as the Debtors' new corporate headquarters will be
constructed by the new landlord at 550 W. Adams Street in downtown
Chicago, Illinois. The Debtors expect the New Headquarters Lease
location to be constructed and fully ready for occupancy in the
first half of 2007.
In the meantime, the Debtors will remain at their current office
lease location through essentially the end of its term, at which
time they will be moving to their New Headquarters Lease
location. The current headquarters landlord has asked the
Debtors to assume the Current Headquarters Lease, and the Debtors
are willing to do so.
By this motion, the Debtors seek the Court's authority to assume
the Current Headquarters Lease with American National Bank and
Trust Company of Chicago -- solely as Trustee under a Trust
Agreement dated March 15, 1986. The Current Headquarters Lease
covers the Debtors' worldwide corporate headquarters in Chicago,
Illinois.
The salient terms of the Current Headquarters Lease are:
(a) Tenants: USG Corporation, United States Gypsum Company and
L&W Supply Corporation;
(b) Landlord: American National Bank and Trust Company of
Chicago, not personally but solely as Trustee under Trust
Agreement dated March 15, 1986 and known as Trust No.
66917;
(c) Site: 125 S. Franklin Street in downtown Chicago,
Illinois;
(d) Leased Premises: Seven full floors and one partial floor
of the Building. The rental space is approximately
263,000 square feet;
(e) Commencement Date: July 1, 1992;
(f) Term: 15 years, ending on June 30, 2007;
(g) Base Rent: The rent for the Leased Premises for certain
periods are:
(i) approximately $814,000 per month for the period
July 1, 2003 through June 30, 2004;
(ii) approximately $852,000 per month for the period
July 1, 2004 through June 30, 2005;
(iii) approximately $890,000 per month for the period
July 1, 2005 through June 30, 2006; and
(iv) approximately $928,000 per month for the period
July 1, 2006 through June 30, 2007;
(h) Additional Rent: Taxes and operating expenses for the
Building based on the Tenants' proportionate share of the
Building premises; and
(i) Option to Extend Term: The Tenants have two options to
extend the Term, each option being for a five-year
extension. The first option is exercisable prior to the
commencement of the final lease year.
The Debtors estimate that the amount required to cure prepetition
arrearages under the Current Headquarters Lease is $2,380.70.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones, Day, Reavis & Pogue represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $3,252,000,000 in assets and
$2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 67;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WEIRTON STEEL: Wants To Reject International Mill Contract
----------------------------------------------------------
The Weirton Steel Corporation Debtors and International Mill
Service, Inc., are parties to an Amended and Restated Service
Agreement effective August 1, 1997, as amended by letters dated
March 11, 1999 and October 25, 2001, and as further amended by a
First Amendatory Agreement dated December 11, 2002. The IMS
Contract expires on December 31, 2013, unless earlier terminated
according to its terms. Pursuant to the IMS Contract, IMS
provides various services to the Debtors, including metal recovery
services, slag processing and slab carrier services. These
services are necessary to the operation of the Debtors' steel
making facilities.
Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh,
Pennsylvania, says that the IMS Contract will not be assigned to
ISG Weirton, Inc., as part of the sale of substantially all of
the Debtors' assets to ISG Weirton.
Pursuant to the Purchase Agreement, the Debtors and ISG are
negotiating a Transition Services Agreement that will dictate the
various services that ISG and the Debtors will be obligated to
provide to each other after the Closing Date, to facilitate the
transfer of operations from the Debtors to ISG Weirton. Pursuant
to the Transition Services Agreement, ISG Weirton will be
entitled to receive the IMS Services for up to 90 days after the
Closing Date.
By this motion, the Debtors ask the Court to:
(a) authorize them to reject the IMS Contract effective 90
days after the Closing Date; and
(b) confirm IMS' obligation to continue to perform under the
IMS Contract until the Rejection Date.
The Debtors have to reject the IMS Contract to avoid unnecessary
depletion of their estates' assets. The adverse consequences of
failing to relieve the Debtors of the burden of the IMS Contract
after the Rejection Date far outweigh the potential costs of any
damage claims that may arise as a result of the rejection.
Pending the rejection of the IMS Contract, IMS is required to
continue to perform under the IMS Contract until the Rejection
Date. To minimize any uncertainty or risk that IMS may perceive
regarding the payment for services to be provided by IMS after
the Closing Date, ISG has agreed to provide these protections:
(a) ISG will pay IMS all contractual obligations under the IMS
Contract arising from and after the Closing Date;
(b) ISG will pay into escrow for IMS' benefit a $1,000,000
deposit, which is equal to approximately one month of
charges under the IMS Contract. The deposit will be made
pursuant to a third-party escrow agreement reasonably
acceptable to all parties. The agreement will provide
that IMS may receive payment from the escrow if both the
Debtors and ISG fail to pay the amounts due to IMS. Any
funds remaining in escrow after payment in full of all due
amounts will be returned to ISG;
(c) All of IMS' claims under the IMS Contract arising from
the Petition Date through the Closing Date will remain at
all times "Assumed Liabilities" as that term is defined
in the Purchase Agreement; and
(d) ISG will pay the Debtors $100,000. (Weirton Bankruptcy
News, Issue No. 27; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WESTEK GEORGIA: Shareholders' Motion to Appoint Trustee Denied
--------------------------------------------------------------
Former shareholders of Westek Georgia, Inc., LLC (Bankr. M.D. Ga.
Case No. 03-55298 RFH), filed a motion asking the Bankruptcy Court
to appoint a Chapter 11 trustee. Judge Hershner declined the
invitation.
Westek was a tire cord manufacturer, having acquired Westek Inc.'s
assets -- including, among other things, a manufacturing facility
and equipment -- in November 2002; but after operating the tire
cord business for a number of months, Debtor ceased its operations
and leased the manufacturing facility and equipment to Royal Cord
Inc.
Westek's shareholders and some other creditors, on November 12,
2003, filed an involuntary bankruptcy proceeding under Chapter 7
of the Bankruptcy Code. Westek, on January 14, 2004, exercised
its right to convert the Chapter 7 case to a Chapter 11 case.
Shareholders Gregory W. Phillips, Robert E. Johnson and Alan R.
Oglesbee asked for appointment of a Chapter 11 trustee for cause
as provided for in section 1104(a)(1) of the Bankruptcy Code. The
United States Trustee, opposing that appointment, told the Court
that Debtor is current in the filing of its operating reports and
payment of its quarterly fees. Royal Cord Inc. and Flag Bank, two
creditors, also oppose appointment of a Chapter 11 trustee, while
the Upson County Commissioner, who has testified that Debtor owes
property taxes of $326,891.29 for 2001, 2002 and 2003, supports
the bid for a Chapter 11 trustee.
Judge Hershner Reviews And Applies
The Law Providing For Appointment Of A Chapter 11 Trustee
Judge Hershner observes that section 1104 authorizes appointment
of a chapter 11 trustee or examiner if two conditions are
satisfied: One, that confirmation of a plan has not yet occurred;
and, two, that cause exists that would justify such an
appointment; such cause being, among others, "fraud, dishonesty,
incompetence or gross mismanagement of the affairs of the debtor
by current management, either before or after commencement of the
case. . . ."
Further clarifying the conditions that justify appointment of a
chapter 11 trustee, Judge Hershner, relying on Collier on
Bankruptcy, writes that appointment of a chapter 11 trustee is an
extraordinary remedy. "The drafters of the Code recognized that,
as a general rule, in the absence of fraud, dishonesty,
incompetence, gross mismanagement, or similar grounds, the
debtor's management should be given an opportunity to propose a
plan of reorganization for the debtor." For this reason, writes
Judge Hershner for the Court, there is a strong presumption that
the debtor should be permitted to remain in possession absent a
showing of need for the appointment of a trustee or a significant
postpetition change in the debtor's management.
The evidence presented at the hearing, observes the Judge, shows
that Debtor made a number of prepetition monetary transfers
totaling about $1.4 million to Adam Runsdorf, the managing member
of Debtor, and to certain entities related to him. Most of the
transfers occurred during the one-year period prior to Movants
filing the involuntary bankruptcy petition against Debtor.
Mr. Runsdorf, continues Judge Hershner, had advanced substantial
sums to Debtor so that it could meet payroll, purchase materials
and operate its business. The transfers at issue were prepetition
repayments of money advanced by Mr. Runsdorf to Debtor. The
transfers have been disclosed, and the Court, remarks Judge
Hershner, finds no effort by Debtor or Mr. Runsdorf to hide the
transfers.
The Movants, however, point out the Judge, argue that Mr. Runsdorf
will not scrutinize the transfers to determine whether the
transfers could be set aside as fraudulent or preferential.
Debtor has responded that its Chapter 11 plan of reorganization
will provide for the scrutiny through an independent attorney or
accountant. And it is further contended that a creditors'
committee may, with leave of court, be authorized to bring an
avoidance action if a debtor unjustifiably fails to do so. 5
Collier on Bankruptcy, section 547.11[4] (15th ed. rev. 2003).
Additionally, when Movants also assert that Debtor failed to list
on its bankruptcy schedules a Ford Taurus automobile, Debtor
answers this additional attempt to prove a trustee is necessary
with the contention that the automobile is included in certain
personal property valued at $1.4 million on an identified
schedule -- a response which satisfies the Court, observes Judge
Hershner.
Thus, from a study of the evidence presented, Judge Hershner
writes in his Memorandum Opinion, that the Movants have not
carried their burden of showing that a Chapter 11 trustee should
be appointed; that the transfers do not rise to the level of
fraud, dishonesty, incompetence or gross mismanagement which would
require appointment of a Chapter 11 trustee. The Court is
persuaded, instead, concludes Judge Hershner, that Debtor is
operating within the requirements of Chapter 11 and should
continue as debtor-in-possession.
WORLDCOM INC: Court Approves PT-1 Settlement Agreement
------------------------------------------------------
PT-1 Communications, Inc., PT-1 Long Distance, Inc., and PT-1
Technologies, Inc., are retail providers of telecommunications
services. Prior to 2001, the Worldcom Inc. Debtors sold network
interconnection and other services to PT-1 and its parent
company, Star Telecommunications.
On March 9, 2001, PT-1 filed for Chapter 11 petition before the
United States Bankruptcy Court for the Eastern District of New
York. The Debtors asserted a secured claim in PT-1's estate for
$100 million. The PT-1 creditors' committee argued that the
claim should properly be filed against Star, which also filed for
Chapter 11 in the U.S. Bankruptcy Court for the District of
Delaware.
The Debtors and PT-1 disputed the claim for several months.
Eventually, they reached a resolution pursuant to which the
Debtors would purchase PT-1's operating assets for $108.8
million. Of that amount, $75 million will represent a bid of the
Debtors' claim. The Debtors will assume $5.8 million of PT-1's
obligations, and the remaining $28 million will be paid in cash.
The Debtors anticipated that when the asset purchase agreement is
closed, they would integrate the PT-1 business with their own.
The Asset Purchase and Management Agreements
PT-1 agreed that the Debtors will take over PT-1's management and
will be responsible for its cash flow. To the extent PT-1 would
have excess cash, the Debtors could use that cash to fund the $28
million cash component of the purchase price. But to the extent
PT-1's cash flow is negative, the Debtors would be required to
supply the necessary funds for operating expenses.
In 2002, the Bankruptcy Court for the Eastern District of New
York approved the Asset Purchase Agreement and the Management
Agreement. The Debtors then took over PT-1's management and
commenced the process of obtaining "Necessary Approvals", which
consisted of governmental approvals and third-party contractual
arrangements.
C. Steven Tomashefsky, Esq., at Jenner & Block, LLP, in Chicago,
Illinois, relates that PT-1 produced positive cash flow, and the
Debtors were able to fund the $28 million cash component of the
purchase price from that cash flow. Pursuant to the APA, the
cash was placed in an escrow account controlled by PT-1's
bankruptcy counsel pending the closing.
With their bankruptcy filing in July 2002, the Debtors began
evaluating various options, and the process of pursuing the
Necessary Approvals slowed down. During the Fall of 2002, the
Debtors decided to explore the possibility of assuming and
assigning the APA and MA to a third party pursuant to Section 363
of the Bankruptcy Code. To facilitate that process, it was
necessary to permit potential bidders access to confidential
information about PT-1 pursuant to a standard due diligence
process. But the APA contained a confidentiality provision that
required PT-1's approval before confidential information could be
revealed to third parties. As a result, the Debtors negotiated
the terms of a waiver agreement with PT-1 until early 2003,
however, no agreement was reached.
On December 23, 2002, the Debtors advised PT-1 that all required
governmental approvals had been obtained. Thus, PT-1 was
entitled to dissolve the escrow and take ownership of the $28
million cash, but it did not do so at that time.
The Debtors determined that the most attractive alternative is to
close the transaction and liquidate PT-1's assets that consisted
mainly of cash and accounts receivable. To do that, it was not
necessary to obtain the remaining component of the Necessary
Approvals -- the new contractual arrangements with third-party
providers. However, a small amount of PT-1's business consisted
of serving long-distance customers under contract. If the
Debtors closed on the APA without obtaining the remaining
Necessary Approvals, PT-1 would find itself immediately unable to
service those customers. The subscribers would no longer have a
long distance provider.
The Debtors believe that a gradual wind-down of the long-distance
business would best protect all the parties' interests, including
PT-1's estate against which disappointed customers might attempt
to assert claims.
The Escrowed Funds
In July 2003, at PT-1's request, the Honorable Judge Conrad
Duberstein of the Eastern District of New York Bankruptcy Court
permitted the escrow to be disbursed to PT-1, except for the
$400,000 required by the APA and the MA to be held back until the
closing. Thus, PT-1 held the vast majority of the consideration
for the sale since July 2003.
Eventually, PT-1 became frustrated with the length of time it was
taking to close the APA and liquidate its estate. PT-1 asserted
that it could not propose or confirm a plan of reorganization so
long as it still held legal title to its assets. In December
2003, PT-1 served the Debtors with a Notice of Termination, which
triggered the "unwind" provisions of the APA and the MA. Under
that provision, PT-1 would keep the assets and the Debtors would
receive a payout calculated under a formula, which PT-1 estimated
would total between $17 and $20 million.
The Debtors asked the Court for a ruling to show cause why PT-1's
termination letter did not violate the automatic stay and sought
sanctions against PT-1 and its Creditors Committee.
Subsequently, the parties informed the Court that they had agreed
to a standstill until January 12, 2004 to allow them to discuss a
potential resolution.
The Thurston Group Agreement
On February 3, 2004, the Debtors and PT-1 reached an agreement in
principle with The Thurston Group, which had expressed an
interest in buying the Debtors' position. The Thurston Agreement
would settle all the outstanding disputes, involving a
$25,350,000 cash payment to the Debtors for the full assignment
of the Debtors' rights under the APA and the MA.
For one month, the parties attempted to finalize the necessary
documentation, which involved negotiation of a new agreement,
pursuant to which the Debtors would provide continuing
telecommunications services to PT-1 under Thurston's ownership.
In addition, the PT-1 Creditors Committee asked the Debtors to
modify a significant aspect of the proposed deal. The Debtors
agreed to do so.
In late March 2004, Thurston expressed its view that the PT-1
assets have declined in value since the original deal was made.
Thurston stated that it will not proceed with the transaction
unless the price was reduced by at least $2,000,000. The other
parties were not willing to proceed on that basis.
Another Buyer
Shortly thereafter, a group led by PT-1's current management
offered to step into the Thurston deal provided the Debtors were
willing to reduce the price by $500,000 and accept payment of
$7,850,000 over time. After further negotiations, the parties
reached a settlement.
As approved by the Court, the parties agree that:
(a) The Debtors will receive $16,500,000 cash payment from
PT-1;
(b) The Debtors will receive a $500,000 second cash payment
from PT-1 on the earlier of September 1, 2004 or the
Effective Date of PT-1's Plan of Reorganization. The PT-1
Plan will generally provide that the current PT-1
management will own the stock of the reorganized PT-1 as
of the Plan Effective Date;
(c) The Debtors will receive PT-1's secured note for
$7,850,000. The Note will be payable in 18 equal monthly
installments. The first payment is due on the earlier of
September 1, 2004 or one month after the Effective Date of
the PT-1 Plan. The Note will bear interest at the
JPMorgan Chase Bank prime rate plus one percent. The Note
will be secured by all of PT-1's operating assets,
including cash and accounts receivable;
(d) The Debtors' rights and obligations under the APA and the
MA will be extinguished;
(e) The Debtors and PT-1 will exchange mutual releases;
(f) All pending motions arising out of the disputed APA
termination will be withdrawn with prejudice;
(g) The Debtors will provide new pricing to PT-1 for
telecommunications services on terms acceptable to both
parties. The new pricing takes effect as of April 1,
2004. The new pricing will include a two-year commitment
by PT-1 to purchase communications services from the
Debtors for $7.5 million on a "take or pay" basis; and
(h) The remaining escrowed $400,000 will be released to PT-1.
Though the management group members are "insiders," the Debtors
find the PT-1 management's proposal fair because it is
substantially similar to the original terms negotiated with
Thurston, and provides greater consideration than the reduced
Thurston proposal that the Debtors deemed unacceptable.
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. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000)
W.R. GRACE: Issues 2nd Report On Claim Reconciliation Process
-------------------------------------------------------------
According to David W. Carickhoff, Esq., at Pachulski Stang Ziehl
Young Jones & Weintraub, PC, in Wilmington, Delaware, the W.R.
Grace & Co. Debtors have filed five Omnibus Objections. As a
result of the First and Second Omnibus Objections, 867 claims were
expunged from the record and 427 claims were reconciled, leaving
14,446 claims for review. The Debtors' Third, Fourth and Fifth
Omnibus Objections have been filed and sustained as to non-
responding parties. These Objections reconcile an additional 302
claims, leaving 14,144 claims yet to be reconciled.
The Debtors are currently preparing their Sixth Omnibus Objection
to be filed in June 2004.
Types of Claims and Proposed Treatment
A. Asbestos Property Damage
Total claims filed 4,296
Claims expunged 318
-----
Remaining claims 3,968
Upon approval of their request to waive certain local rule
requirements, the Debtors will proceed with substantive
objections and common issue litigation. One exception is "Solow
and Solow Development Corp. v. Grace & Co.," a suit pending in
the New York State Appellate Court. The Debtors intend to ask
the Court to lift the automatic stay so that case can proceed.
Solow is on appeal and the Debtors have posted a bond. Interest
is accruing on the appellate bond and the Debtors believe it is
best for all parties to conclude the appeal.
B. Contract/Lease
Total claims filed 526
Claims expunged 48
----
Remaining claims 478
Numerous Contract/Lease claims either relate to litigation that
was pending on the Petition Date, or, although not related to
pending litigation, include a cause of action in the claim. The
Contract/Lease claims include:
(i) Sealed Air. Approximately 34 claims have been filed
by Sealed Air Corporation, Cryovac, Inc., Sealed Air
Corporation US, and 14 other Sealed Air subsidiaries,
all in regard to the March 1998 transaction by which
the Debtors' Cryovac packaging business became part
of Sealed Air.
The claims are for alleged liabilities under the
Agreements governing the 1998 transaction and can be
divided into three general categories:
(1) asbestos and tax liability;
(2) unliquidated amounts related to contractual
issues; and
(3) reimbursement in connection with the payment
by Sealed Air of public debt under a guaranty.
The claims are in large part indemnity claims and
can be addressed once the underlying issues with
respect to asbestos personal injury and certain tax
litigation is resolved. Thus, the claims are "on
hold" at the present time.
(ii) Fresenius. Approximately 210 claims were filed
relating to the 1996 transaction by which the
Debtors' National Medical Care business became a part
of the Fresenius group. Fresenius National Medical
Care, Inc., Fresenius Medical Care Holdings, Inc.,
and Fresenius USA, Inc., each filed claims against
all 62 of the Debtors, while six direct subsidiaries
of NMC filed 12 additional claims. The claims are
for alleged liabilities arising under the Agreements
governing the 1996 transaction, including claims for
indemnification of NMC and FMCH for liabilities not
related to the NMC business. None of the claims are
liquidated, and primarily relate to asbestos personal
injury litigation. Thus, like the Sealed Air claims,
the claims continue to be on hold at this time.
(iii) Insurance Companies. Two of the Debtors' insurance
companies each filed a claim in all of the Debtors'
62 cases. The claims cover all liabilities under
the insurance policies issued by each claimant
without specifying a liquidated amount.
Other insurers and surety bond issuers filed 17
claims for liquidated and contingent claims in
connection with settlements, policies or amounts
outstanding on bonds.
All of these claims will be dealt with in connection with
resolution of the liability of the underlying claim, or as part
of the general strategy for addressing Contract/Lease claims.
C. Litigation
Total claims filed 242
Claims expunged 44
---
Remaining claims 198
Litigation Claims includes claims for employment discrimination,
indemnification as a result of a lawsuit -- as opposed to a
specific indemnification agreement -- non-asbestos personal
injury, product liability, and settlements of lawsuits. Many of
the claims relate to asbestos liability. In addition, there may
be as many as 20 additional non-asbestos litigation claims for
which no proof of claim has been filed, but where a pending suit
against the Debtors existed on the Petition Date and which remain
open.
The Litigation Claims do not lend themselves to an omnibus
objection process. The Debtors believe a Court-supervised
mediation process would be productive. The Debtors will shortly
file a request setting forth the proposed procedure for the
mediation process. With respect to any filed Litigation Claim,
the Debtors will request mediation.
To the extent that any Litigation Claim is not resolved through
mediation, the Debtors propose these procedures:
(a) Immature Litigation: For claims where litigation has
not substantially progressed prior to the Petition
Date, the Debtors believe that the claims should
proceed to litigation in the Bankruptcy Court.
(b) Mature Litigation: Where litigation has progressed
through the discovery stage and was substantially
ready for trial prior to the Petition Date, or where
judgment was rendered and the matter is on appeal,
the Debtors believe that the automatic stay should be
lifted to permit the case to proceed to trial or
appellate determination.
(c) Fully Insured Claims: The Debtors suggest that, as
to claims covered by insurance for which there is no
deductible, the stay should be lifted and the
Debtors' insurer should defend the claims.
Where no proof of claim is filed or none is filed timely, further
investigation is needed. Specifically:
(a) Where Bar Date Notice Was Received: The Debtors
will:
(1) review the Schedules to determine how the
claimant was listed;
(2) if the claimant was listed as holding an
undisputed, liquidated or non-contingent claim,
treat the claim as if a proof of claim was
filed and proceed to mediation in the same
manner as if a proof of claim was filed; and
(3) if the claimant was listed on the Schedules as
holding an unliquidated, contingent or disputed
claim, notify the claimant that the Bar Date
has passed and the claim is barred; and
(b) Bar Date Notice Not Received or Untimely Received:
The Debtors will:
(1) determine if the claimant in fact was sent the
claims bar date notice;
(2) if the notice was sent, determine if the bar
date notice was sent timely and whether it was
returned in the mail;
(3) if the notice was not sent at all or was
returned as undeliverable, attempt to
ascertain the correct contact information;
(4) provide the known claimants who did not receive
the bar date notice or received it untimely
with an additional opportunity to file a proof
of claim within a limited period of time;
(5) upon receipt of the claim, proceed with
mediation; and
(6) with respect to claimants who still do not file
a proof of claim after the additional bar date,
proceed with the process for barred claims.
Status on Asbestos Personal Injury and ZAI Claims
While no bar date has been set for the filing of prepetition
asbestos personal injury or ZAI claims, a significant number of
these claims have already been filed, even if the claims are not
placed in a category with the word "asbestos" in the title.
The ZAI claims are subject to a separate procedure already
underway before the Bankruptcy Court. The Debtors have addressed
the Asbestos Personal Injury Claims in various case management
proposals still pending before the U.S. District Court for the
District of Delaware. (W.R. Grace Bankruptcy News, Issue No. 63;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
* Fixed Income Analysts Society Elects Diane Vazza as President
---------------------------------------------------------------
Diane Vazza, Managing Director at Standard & Poor's and head of
its Global Fixed Income Research group, was elected President of
the Fixed Income Analysts Society (FIASI), a New York-based not-
for-profit professional society dedicated to the education of its
membership and the fixed income community at large, at its annual
meeting Thursday.
Other officers elected were Steven D. Berkley, Managing Director
and head of index development in the Research Department of Lehman
Brother's Fixed Income Division, elected Vice President; Joel
Glasky, Managing Director of J.P. Morgan responsible for the Debt
Private Placement and Global Ratings/Capital Structure Advisory
Group, elected Secretary; and Richard M. Cantor, Ph.D., Managing
Director at Moody's Investors Service, where he is responsible for
default research and measuring the performance of Moody's ratings,
was elected Treasurer. All will serve one-year terms.
The Fixed Income Analysts Society is a national membership
organization of hundreds of credit professionals who value the
opportunity to discuss important credit issues with colleagues
across the industry. FIASI sponsors educational programs and
workshops covering topics of current interest and presented by
distinguished industry leaders.
Diane Vazza is Managing Director of Global Fixed Income Research
at Standard & Poor's. Ms. Vazza is responsible for global credit
market trend analysis and commentary, global corporate default
research, and research studies measuring the performance of
Standard & Poor's bond ratings. She also serves on Standard &
Poor's Investment Policy Committee. Prior to joining Standard &
Poor's, Ms. Vazza held various positions in banking and credit
research at Drexel Burnham Lambert, Citibank, and Chase Manhattan
Bank. She has worked in the U.S., as well as in Asia, West Africa,
Europe, Latin America, and the Middle East.
Founded in 1888, The McGraw-Hill Companies is a global information
services provider meeting worldwide needs in the financial
services, education and business information markets through
leading brands such as Standard & Poor's, BusinessWeek and McGraw-
Hill Education. The Corporation has more than 322 offices in 33
countries. Sales in 2003 were $4.8 billion. Additional information
is available at http://www.mcgraw-hill.com/
* PwC's Carter Pate Sees Long-Term Decline in Large Chapter 11s
---------------------------------------------------------------
PricewaterhouseCoopers forecasts that approximately 110 public
companies will file for bankruptcy in 2004, substantially fewer
than in any of the past six years, based on improving conditions
in 2003 and the anticipation of continued economic growth in 2004.
Since 2001, Chapter 11 bankruptcy filings of U.S. public companies
have declined 48 percent (from 257 to 133 in 2003). Similar
conditions in 1992 preceded an eight-year decline in total
bankruptcy filings, and PricewaterhouseCoopers expects another
long-term decline in already in progress.
During 2003, measures in each of the predictive factors that
PricewaterhouseCoopers tracks in its bankruptcy forecasting model
moved in favorable directions, supporting expectations of lower
levels of bankruptcies in 2004.
* Borrowing costs declined, as indicated by the falling yield
on AAA corporate bonds, and the risk premium demanded by
investors on such corporate debt relative to U.S. Treasuries
shrank. As a result, companies had improved access to
capital.
* Companies were successful in reducing inventory levels during
the year, indicating improved market conditions for firms'
products. Companies with speculative-grade credit quality
benefited from these conditions, and the default rate among
such companies fell by nearly fifty percent during 2003,
according to Standard & Poor's data.
* The amount of high-yield debt issued declined in 2003 to
$267.1 billion, according to Thomson Financial data.
PricewaterhouseCoopers has found that the number of public
company bankruptcies tends to follow the volume of high-yield
debt issued with a lag, so 2002 and 2003 declines in high-
yield debt issuance are favorable for the corporate
bankruptcy picture in 2004 and beyond.
* A positive outlook for 2004 is also supported by expectations
that interest rates will remain low, even if the U.S. economy
is expected to expand at a 4.5 percent annual rate. The risk
premium on AAA-rated corporate debt is expected to remain low
and may narrow further during 2004. Investors willing to
assume more risk in pursuit of higher returns are expected to
continue to provide the type of liquidity that is critical to
companies in financially precarious positions. The recent
infrequency of defaults on speculative debt may serve to
embolden such strategies.
It may be noted that the ready availability of capital in 2003 and
2004 may have implications for future years. To the extent that
lenders relax standards in a competitive search for lending volume
and higher yields, companies with higher risk business models may
receive funding. In the future, such companies may enter periods
of distress and potentially bankruptcy.
Recovering Industries:
Pharmaceuticals, Computers, Airlines
The favorable economic conditions should help several industries
that experienced a high proportion of the bankruptcies in 2002 and
2003 record fewer in 2004:
* Pharmaceuticals
In the pharmaceutical industry, the Medicare Prescription Drug
Improvement and Modernization Act (Medicare Rx), generic drug
sales, and branded over-the-counter sales are expected to expand
and extend the economic life of prescription drugs.
* Computer Software and Equipment
Computer software producers and equipment manufacturers will
continue to benefit from the recent recovery in information
technology spending, as well as from continued consumer spending
that will enable them to increase personal computer unit sales.
* Airlines
Several major airlines continue to experience financial distress
and the acquisition of weaker players is anticipated; however,
business travel stabilized in 2003 and is expected to increase in
2004, while leisure travel is expected to continue expanding.
Barring new terrorist acts involving aircraft, no new major
airline bankruptcies are forecasted to occur.
PricewaterhouseCoopers -- http://www.pwc.com/is the world's
largest professional services organization. Drawing on the
knowledge and skills of more than 125,000 people in 139 countries,
we build relationships by providing services based on quality and
integrity. "PricewaterhouseCoopers" refers to the network of
member firms of PricewaterhouseCoopers International Limited, each
of which is a separate and independent legal entity.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. PCSAD (293) 574 (364)
Alliance Imaging AIQ (40) 683 44
Akamai Technologies AKAM (175) 279 140
Amazon.com AMZN (1,036) 2,162 568
Bally Total Fitness BFT (158) 1,453 (284)
Blount International BLT (397) 400 83
Blue NLE Inc. NILE (27) 62 16
Cell Therapeutic CTIC (83) 146 72
Centennial Comm CYCL (579) 1,447 (99)
Choice Hotels CHH (118) 267 (42)
Cincinnati Bell CBB (640) 2,074 (47)
Compass Minerals CMP (144) 687 106
Cubist Pharmaceuticals CBST (18) 223 91
Delta Air Lines DAL (384) 26,356 (1,657)
Deluxe Corp DLX (298) 563 (309)
Diagnostic Imag DIAM 0 20 (3)
Echostar Comm DISH (1,033) 7,585 1,601
WR Grace & Co GRA (184) 2,874 658
Graftech International GTI (97) 967 94
Imax Corporation IMAX (52) 250 47
Imclone Systems IMCL (271) 382 (3)
Kinetic Concepts KCI (246) 665 228
Lodgenet Entertainment LNET (129) 283 (6)
Lucent Technologies LU (3,371) 15,765 2,818
Maxxam MXM (582) 1,107 133
Memberworks Inc. MBRS (20) 248 (89)
Millennium Chem. MCH (46) 2,398 637
McDermott International MDR (363) 1,249 (24)
McMoRan Exploration MMR (54) 169 83
Milacron Inc MZ (34) 712 17
Northwest Airlines NWAC (1,775) 14,154 (297)
Nextel Partner NXTP (13) 1,889 277
ON Semiconductor ONNN (499) 1,161 213
Pinnacle Airline PNCL (48) 128 13
Primus Telecomm PRTL (96) 751 (26)
Per-Se Tech Inc. PSTI (18) 172 41
Qwest Communications Q (1,016) 26,216 (1,132)
Quality Distributors QLTY (19) 371 7
Revlon Inc.-A REV (1,726) 892 (32)
Sepracor Inc SEPR (619) 1,020 256
St. John Knits Int'l SJKI (65) 234 69
I-Stat Corporation STAT (1) 64 33
Syntroleum Corp. SYNM (12) 67 11
Triton PCS Holdings TPC (180) 1,519 52
US Unwired Inc. UNWR (230) 719 311
UST Inc. UST (115) 1,726 727
Valence Tech VLNC (18) 36 4
Vector Group Ltd. VGR (3) 628 142
Western Wireless WWCA (224) 2,522 15
*********
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.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
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
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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.
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*** End of Transmission ***