/raid1/www/Hosts/bankrupt/TCR_Public/040629.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 29, 2004, Vol. 8, No. 131
Headlines
360NETWORKS: Inks Stipulation Settling Fishel Company's Claim
ADELPHIA COMMS: Equity Committee Wants to Intervene in Bank Suit
AIR CANADA: Plans To Remit Pension Plan Contributions by July 30
ALTAIR NANOTECHNOLOGIES: President Provides Shareholder Update
AMERICAN HOSPITALITY: Selling Ground Round Franchise Rights
ARMSTRONG: USWA Local 441 Okays New Contract With 9% Wage Increase
ATLAS AIR: Promotes Wake Smith to SVP & Chief Operating Officer
BRIAZZ: Gets Nod to Employ Kuno Ostrovsky as Bankruptcy Counsel
BURLINGTON INDUSTRIES: BII Trust Objects To Various Big Claims
CGM EXCAVATING: Case Summary & 20 Largest Unsecured Creditors
CONNECTICARE INC: HIP Acquisition News Spurs S&P's Positive Watch
CRUMP-PADGETT ANTIQUE: Case Summary & Largest Unsecured Creditors
DB COMPANIES: Wants Ordinary Course Professionals to Continue Work
DELTA AIR LINES: Capital Group Discloses 10.7% Equity Stake
EMPIRE FINANCIAL: Kevin Gagne Leaves Post as Chairman & CEO
ENRON CORPORATION: California Files Price Manipulation Lawsuit
ENRON CORPORATION: Court Approves JC Penney Settlement Agreement
ENRON DEVELOPMENT: Court Authorizes Enron Chengdu Loan Settlement
EXIDE TECHNOLOGIES: Filing Form 10-K Report with SEC Today
EYI INDUSTRIES: Secures Funding Commitment from Cornell Capital
FIBERMARK: Committee Employs Ryan Smith as Local Co-Counsel
FIREARMS TRAINING: Lenders Agree to Extend Loan to Oct. 2005
FLACK INTERIORS: Case Summary & 20 Largest Unsecured Creditors
FLEMING COMPANIES: Agrees to Resolve Teamsters Locals' Mega Claims
FMA CBO: S&P Junks Class B Rating & Removes Negative Watch
FUN-4-ALL: Has Until July 23 to Complete and File Schedules
GENTEK: Noma v. Woods Industries Trial to Commence November 9
HALLIBURTON: Wins $24 Million Judgment Against Smith International
HEALTH INSURANCE-NY: Fitch Affirms Long-Term Issuer Rating at BB+
HEALTHSOUTH CORP: Closes All Consent Solicitations for Public Debt
HERMITAGE LANES: Case Summary & 20 Largest Unsecured Creditors
HOLLINGER INC: Provides Update On Annual Shareholders' Meeting
IMCOR PHARMACEUTICAL: Shares Knocked Off Nasdaq SmallCap Market
INN OF THE MOUNTAIN: Will Release Q4 & FY 2004 Results Tomorrow
INTEGRATED BUSINESS: Terminates Dutchess Equity Credit Line
INTERPUBLIC GROUP: Names M. Roth as Chairman & R. Thompson as CFO
INVISION TECH: Stockholders Back General Electric Acquisition Plan
KB HOME: Fitch Assigns BB+ Rating to $350MM Senior Unsecured Debt
KITCHEN ETC: Wants to Employ Adelman Lavine as Attorneys
K-STAR TECH: Case Summary & 10 Largest Unsecured Creditors
LITHIUM TECH: Dismisses PricewaterhouseCoopers as Accountants
LOMA LINDA UNIVERSITY: S&P Raises Revenue Bond Rating To BB+
MACH ONE: S&P Assigns Low-B Ratings to 6 Series 2004-1 Classes
MAGELLAN MIDSTREAM: S&P Places BB Senior Debt Rating on Neg. Watch
METRIS COMPANIES: Adds $300 Million of Conduit Funding Capacity
METROMEDIA INT'L: Adds David Gale & Wayne Henderson to Board
MICRO COMPONENT: Receives $1.6M Order for Tapestry SC & Modules
MIRANT CORP: Asks Court To Approve Contra Costa Settlement Pact
NATIONAL CENTURY: Donald Ayers Moves To Advance Defense Costs
NAVISTAR: CAW Members Say Yes to New Labor Pacts for Chatham Plant
NEIGHBORCARE: Omnicare Extends Tender Offer Until July 30, 2004
NET PERCEPTIONS: Appeals Nasdaq's Delisting Determination
NETWORK INSTALLATION: Books First Ever Recurring Revenues
NEW WEATHERVANE: Asks to Continue Hiring Ordinary Course Profs.
NEXTEL PARTNERS: Perry Satterlee to Leave VP & COO Post Mid-July
NORTEL NETWORKS: Declares Preferred Share Dividends
OMI CORPORATION: Buying Two Arcadia Suezmax Vessels for $140MM
OMNI FACILITY: U.S. Trustee Names 5 Member Creditors' Committee
ONLINE POWER: Auctioning All Assets on August 20 in Denver, Colo.
PAC HOLDING: Lund International Completes Trenz Acquisition
PARMALAT GROUP: Jade Land Presses For Sale Contract Decision
PARMALAT GROUP: 52 Trade Creditors Sell Claims Totaling $563,959
PEGASUS: Wants Court Nod To Employ Ordinary Course Professionals
PG&E NAT'L: NEG, Attala & Certificateholders Resolve Claim Dispute
QUERREY CONCRETE: Case Summary & 20 Largest Unsecured Creditors
QWEST COMMS: Appoints Dan Yost as EVP -- Product & Marketing
RACE POINT CLO: Fitch Affirms $10.5MM Class D Note Rating at BB+
RCN CORPORATION: Employs Innisfree As Solicitation Agent
RELIANT ENERGY: ISO Takes Key So-Cal Power Plant out of Mothballs
RFC CDO: S&P Assigns 'BB' Preliminary Rating to Class E Notes
RICHTREE INC: Talking to Potential Investors for More Financing
SHAW GROUP: Awarded Syngenta Maintenance Contract
SPYGLASS DEVELOPMENT: Case Summary & Largest Unsecured Creditor
SURGICARE: Redeeming Preferred Stock from American International
TASHI ENTERPRISE: Voluntary Chapter 11 Case Summary
TRADE PARTNERS: US Trustee Fixes Sec. 341(a) Meeting on July 15
UNITED AIRLINES: Wants Nod To Enter Into Tax Refund Settlements
UNITEDGLOBALCOM: Appoints Managing Director for UPC Netherlands
VIVENDI: Advent Buys Canal+'s Sportfive Stake for E274 Million
VLASIC: Presents More Witnesses in $250MM Suit Against Campbell
WICKES INC: Agrees to Sell Most Operating Locations to 3 Buyers
WORLDCOM: Court Unseals Documents in KPMG Disqualification Suit
W.R. GRACE: Futures Representative Taps Swidler Berlin as Counsel
* Large Companies with Insolvent Balance Sheets
*********
360NETWORKS: Inks Stipulation Settling Fishel Company's Claim
-------------------------------------------------------------
On August 7, 2000, The Fishel Company and 360networks (USA),
inc., entered into an Engineering Services Agreement, which was
amended from time.
On March 26, 2002, 360 sent Fishel a letter in which 360 alleged
that certain payments it made under the Engineering Services
Agreement were avoidable preferences under Section 547 of the
Bankruptcy Code, and demanded that Fishel disgorge those
payments.
On April 29, 2002, the Court authorized the establishment of a
segregated deposit account. The Order provided that Fishel's
asserted liens affecting properties in California, Oregon, and
New York would attach to the account and be released from the
properties. 360 established the account with Bank of America,
N.A., with a $202,202 initial deposit. As of February 27, 2004,
the collected balance of the Account was $204,434.
On June 12, 2002, Fishel filed one or more proofs of claim
against 360 based on alleged services rendered pursuant to an
Engineering Services Agreement. On September 13, 2002, 360
objected to the allowance of the Fishel Claims.
To fully settle and compromise all claims between them, 360 and
Fishel agree that $130,000 from the Account will be paid to
Fishel. The remaining portion of the Account will be paid to
360.
Headquartered in Vancouver, British Columbia, 360networks, Inc. --
http://www.360.net/-- is a leading independent provider of fiber
optic communications network products and services worldwide. The
Company filed for chapter 11 protection on June 28, 2001 (Bankr.
S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on
October 1, 2002, and emerged from chapter 11 on November 12, 2002.
Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie
Farr & Gallagher, represent the Company before the Bankruptcy
Court. When the Debtors filed for protection from its creditors,
they listed $6,326,000,000 in assets and $3,597,000,000 in
liabilities. (360 Bankruptcy News, Issue No. 70; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ADELPHIA COMMS: Equity Committee Wants to Intervene in Bank Suit
----------------------------------------------------------------
The Official Committee of Equity Security Holders of Adelphia
Communications (ACOM) seeks the Court's permission to assert
additional claims in the adversary proceeding commenced by the
Official Committee of Unsecured Creditors on behalf of the ACOM
Debtors against the ACOM Debtors' prepetition secured lenders and
agents and certain of their affiliates.
Peter D. Morgenstern, Esq., at Bragar Wexler Eagel & Morgenstern,
LLP, in New York, asserts that the Additional Claims to be
asserted by the Equity Committee are likely to succeed and, if
successful, will result in multi-billion dollar recoveries.
Those recoveries would confer an enormous benefit on the ACOM
Debtors' estates and, ultimately, the ACOM Debtors' equity
security holders.
Significantly, the Additional Claims are based on the same core
facts concerning the Banks' conduct and their roles in the
Adelphia fraud. In the Equity Committee's view, these facts also
give rise to claims under legal theories inexplicably not
advanced in the Adversary Complaint.
The Equity Committee believes that the ACOM Debtors, or one of
the official committees on the ACOM Debtors' behalf, should
advance every viable legal theory that might result in
significant recoveries. Because the ACOM Debtors and the
Creditors Committee are unwilling to do so in the proceedings,
the Equity Committee will pursue the Additional Claims. Because
the Equity Committee believes that the ACOM Debtors are solvent,
it is arguably the Equity Committee and its constituents that has
the most direct and compelling interest in taking all appropriate
steps to maximize the value of the ACOM Debtors' assets,
including their potential legal claims against the Banks and
others.
The Equity Committee assures the Court that the incremental cost
and inconvenience of bringing the Additional Claims are minimal.
While there is little detriment in bringing the Additional
Claims, their value to the ACOM Debtors' estates and to the
equity holders is potentially enormous. With compensatory
damages in ACOM's Chapter 11 cases alone potentially reaching
billions of dollars, Mr. Morgenstern asserts that the ACOM
Debtors' failure to assert the Additional Claims is unreasonable.
The ACOM Debtors' refusal is even more unreasonable in light of
the fact that, if proven, certain of the Additional Claims --
those for violations of the Racketeer Influenced and Corrupt
Organizations Act -- require the award of mandatory treble
damages.
Whether the ACOM Debtors' refusal to bring the Additional Claims
stems from a desire not to antagonize the lenders who are funding
the ACOM Debtors' operations in Chapter 11, or from failure to
appreciate the merits and potential benefits of bringing the
Additional Claims, the Court should not permit the valuable
assets to be lost.
Equity Committee's Allegations
The Equity Committee seeks to redress the Defendants' knowing
participation, substantial assistance, and complicity in a
serious case of systematic corporate looting and breach of
fiduciary duty. According to Mr. Morgenstern, the fraud at ACOM
involved simple larceny, but on a massive scale. The Rigas
Family siphoned away over $3,400,000,000 from the ACOM Debtors --
funds knowingly and eagerly loaned by the Defendants. The Rigas
Family's principal tools in their fraudulent scheme, and their
primary source of ill-gotten gains from that scheme, were the
syndicated loans known as "Co-Borrowing Facilities." The
structure of those facilities was unprecedented for a major
public company like ACOM. Each "co-borrower" -- whether an
indirect Adelphia subsidiary or an unaffiliated entity owned by
the Rigas Family -- could borrow the entire amount of the
facilities, up to around $5,600,000,000, without regard to its
ability to repay and with all other co-borrowers being jointly
and severally liable to repay the loans.
Neither the Rigas Family nor the Co-Borrowing Lenders created a
borrowing structure that held the co-borrowers accountable based
on appropriate borrowing capacity, actual borrowings and their
balance sheets. The Rigas Family and certain of the Co-Borrowing
Lenders structured the Co-Borrowing Facilities knowing that:
(i) the entities controlled by the Rigas Family were
entitled to draw billions of dollars;
(ii) the entities owned a disproportionately small amount of
the assets from which the Co-Borrowing Lenders could
realistically expect repayment; and
(iii) the entities would not be able to repay their
borrowings, but instead would saddle the ACOM Debtors
with a massive bill for loans that the ACOM Debtors did
not utilize.
The primary purpose and the plain effect of each of the Co-
Borrowing Facilities was to use the ACOM Debtors' assets to give
the Rigas Family access to billions of dollars that only the ACOM
Debtors would have the wherewithal to repay, and to enable the
Rigas Family to maintain control over the ACOM Debtors by using a
substantial portion of the money to acquire Adelphia stock and
other securities. The very structure of the Co-Borrowing
Facilities provided the principal means by which the Rigas
Family's looting could occur. Moreover, the Co-Borrowing Lenders
actually knew or recklessly disregarded the fact that the looting
occurred and continued as soon as the Co-Borrowing Facilities
closed.
As a result of their extensive relationship with the ACOM Debtors
and the Rigas Family, the Defendants obtained confidential
information concerning the financial affairs of the ACOM Debtors
and the Rigas Family. In addition, before each of the Co-
Borrowing Facilities closed, the Rigas Family disclosed to the
Co-Borrowing Lenders that hundreds of millions of dollars of the
loan proceeds would be used to fund personal expenses and
investments of the Rigas Family.
Worse still, the Co-Borrowing Lenders lent the ACOM Debtors
billions of dollars with knowledge or reckless disregard of the
fact that the Rigas Family was causing the ACOM Debtors to
fraudulently conceal from the public and other creditors up to
$3,400,000,000 of their balance sheet liabilities under the Co-
Borrowing Facilities. While each of the Defendants had access to
non-public information that disclosed the actual amount of ACOM's
liabilities under the Co-Borrowing Facilities and other bank
debt, the Investment Banks induced other creditors to loan the
ACOM Debtors billions of dollars based on fraudulent financial
statements that grossly understated the obligations. None of the
financial statements disclosed the true amount of debt that had
been drawn by the Rigas Family, but for which the ACOM Debtors
were fully liable, under the Co-Borrowing Facilities. Despite
their knowledge of the fraudulent structure of the Co-Borrowing
Facilities and the Rigas Family's fraudulent conduct, the Co-
Borrowing Lenders approved each of the Co-Borrowing Facilities
and continued to authorize extensions of credit under them.
The Agent Banks' quid pro quo for funding the Co-Borrowing
Facilities was the Rigas Family's promise of lucrative
underwriting and other fees to the Investment Banks, each an
affiliate of an Agent Bank. To obtain these fees, several of the
Agent Banks violated their own lending policies by extending
credit in amounts far exceeding institutional exposure limits and
by funding the facilities despite the ACOM Debtors' massive debt
load, which far exceeded that of its competitors. Aware of
obvious red flags, many of the Co-Borrowing Lenders merely
rubber-stamped the Co-Borrowing Facilities so that their
affiliated Investment Banks could earn hundreds of millions of
dollars in fees.
Mr. Morgenstern relates that the ACOM Debtors used a central cash
management system that, as Defendants were well aware, was a
vehicle for the Rigas Family to commingle the ACOM Debtors' funds
with those of unaffiliated entities owned by the Rigas Family,
and ultimately to misappropriate those funds.
After May 1999, the date the first of the relevant Co-Borrowing
Facilities closed, the Defendants knew or recklessly disregarded
the fact that the Rigas Family used a significant portion of the
proceeds of other bank loans for the benefit of the Rigas Family.
The Non-Co-Borrowing Lenders -- many of whom also were Co-
Borrowing Lenders -- also approved draws directly from Non-Co-
Borrowing Facilities to the Rigas Family that they knew did not
benefit the ACOM Debtors. Several of these loans, although made
to the ACOM Debtors, were earmarked for the immediate transfer to
the bank lenders from Rigas Family entities in satisfaction of
those entities' independent obligations.
By this action, the Equity Committee, on behalf of the ACOM
Debtors and their estates, seeks, among other things, to:
(1) recover as fraudulent transfers the principal and interest
paid by the ACOM Debtors on the Co-Borrowing Facilities;
(2) avoid as fraudulent obligations the ACOM Debtors'
obligations, if any, to repay outstanding Co-Borrowing
Facilities and other loans made by the Defendants;
(3) recover damages for breaches of fiduciary duties to the
ACOM Debtors, for aiding and abetting fraud and breaches
of fiduciary duties by the Rigas Family, for violations of
the RICO Act, breach of contract, negligence, unjust
enrichment, breach of implied covenants of good faith and
fair dealing, fraudulent conduct and fraud;
(4) equitably subordinate, disallow or recharacterize each of
the Co-Borrowing Lenders' claims in the ACOM Debtors'
bankruptcy proceedings;
(5) avoid and recover certain fraudulent transfers made to
certain of the Defendants; and
(6) recover damages for violations of the Bank Holding
Company Act.
A full-text copy of the Equity Committee's Intervenor Complaint
and the list of additional claims are available at no charge at:
http://bankrupt.com/misc/EquityCommMotionToIntervene.pdf
Banks Want Complaint Dismissed
Several Bank Defendants ask the Court to dismiss the Complaint in
its entirety or some counts:
(1) Bank of America, N.A.,
(2) Wachovia Bank, National Association,
(3) Bank of Montreal,
(4) JP Morgan Chase Bank,
(5) Bank of Nova Scotia,
(6) Credit Lyonnais New York Branch
(7) Credit Lyonnais Securities (USA), Inc.,
(8) LCM I Limited Partnership,
(9) Citibank, N.A.,
(10) Citicorp USA, Inc.,
(11) CIBC, Inc.,
(12) Merrill Lynch, & Co., Inc.,
(13) SG Cowen Securities Corporation,
(14) Wachovia Securities, Inc.,
(15) Harry Nesbitt, Corp.,
(16) Credit Suisse First Boston (USA), Inc.,
(17) BNY Capital, Corp.,
(18) Banc of America Securities, LLC,
(19) Barclays Capital, Inc.,
(20) CIBC World Markets Corp.,
(21) Citigroup Global Markets Holdings, Inc.,
(22) Deutsche Banc Alex Brown, Inc.,
(23) Fleet Securities, Inc.,
(24) Morgan Stanley & Co., Inc.,
(25) PNC Capital Markets,
(26) Scotia Capital (USA), Inc.,
(27) Suntrust Securities, Inc.,
(28) TD Securities (USA), Inc.,
(29) Citigroup Financial Products, Inc.,
(30) ABN Amro Securities, LLC, and
(31) JP Morgan Securities, Inc.
The Creditors Committee and the Equity Committee oppose the
requests to dismiss the proceedings.
Tele-Media Wants to Intervene to Protect Interest
In 1970, Mr. Robert E. Tudek and Everett I. Mundy, both pioneers
in the cable television industry, joined forces to build cable
operations under the name "Tele-Media." In 1984, they formed
Tele-Media Corporation, a Delaware corporation, with its
principal place of business located in Pleasant Gap,
Pennsylvania.
Tele-Media Corporation and its affiliates had grown from a single
system cable operation into one of the industry's largest
privately held communication companies, focused on broadband
cable and radio broadcasting. Tele-Media Corporation also
provides management, engineering, design, marketing,
installation, and construction services to other leading cable
television operators.
As of the Petition Date, Mr. Tudek and Mr. Mundy each owned 50%
of the outstanding shares of Tele-Media. Mr. Mundy died on
June 29, 2003 and Mr. Tudek subsequently acquired all of Mr.
Mundy's equity security interests in Tele-Media, including Tele-
Media Corporation.
ACOM Affiliates first invested in certain Tele-Media operations
in 1992.
As of the Petition Date, Tele-Media Corporation was the sole
limited partner of Tele-Media Company of Tri-States, L.P., one of
the Adelphia Debtors. In turn, Tri-States is the general partner
and majority interest holder of Debtors CMA Cablevision
Associates VII, Limited Partnership, and CMA Cablevision
Associates XI, L.P.
As of the Petition Date, Mr. Tudek was a voting shareholder of
TMC Holdings and certain members of the Tudek Family and the
Mundy Family were non-voting shareholders of TMC Holdings.
TMC Holdings is the "sole member" of TMC Holdings, LLC, which
owns 100% of the outstanding shares of Adelphia Company of
Western Connecticut, and is the general partner of Eastern
Virginia Cablevision, L.P. Eastern Virginia is the general
partner of Tele-Media Company of Hopewell-Prince George, a
Virginia general partnership, and the sole member of Eastern
Virginia Cablevision Holdings, LLC -- the other general partner
of Hopewell-Prince. TMC Holdings, TMC Holdings LLC, Western
Connecticut, Eastern Virginia, Hopewell-Prince and Eastern
Virginia Cablevision are all ACOM Debtors.
Certain employees of Tele-Media Corporation and their family
members held limited partnership interests in Tele-Media
Investment Partnership, L.P. Tele-Media Investment is a debtor
in ACOM's Chapter 11 cases and is the sole limited partner of
Eastern Virginia.
Tri-States, CMA VII and CMA XI, TMC Holdings, TMC Holdings LLC,
Western Connecticut, Eastern Virginia, Hopewell-Prince, Eastern
Virginia and Tele-Media Investment are collectively known as the
"Tele-Media/Adelphia Debtors." The TM/A Debtors own and operate
cable systems in Connecticut, Virginia, West Virginia, Maryland
and Florida, with over 144,000 subscribers. The ACOM affiliates
own a majority interest of all the TM/A Debtors. All the ACOM
Affiliates that hold equity security interests in each of the
TM/A Debtors are also ACOM Debtors. None of the Tele-Media
Interests are in bankruptcy.
Pursuant to various management agreements, Tele-Media Corporation
managed each of the TM/A Debtors under the name of Tele-Media,
and not ACOM. During the pendency of ACOM's Chapter 11 cases,
the management agreements either expired by their terms or were
terminated at the request of the ACOM Affiliates.
As their manager, Tele-Media Corporation was intimately familiar
with the day-to-day financial and business operations of the TM/A
Debtors. As of the Petition Date, the assets of TM/A Debtors,
including cash collateral, were largely unencumbered. The TM/A
Debtors all experienced positive cash flow, paid all their on-
going expenses in the ordinary course of business, and only
looked to Adelphia for financing of capital expenditures, such as
up-grades to or build-outs of existing cable systems.
Tele-Media Corporation is a creditor of most of the TM/A Debtors
and has numerous claims against the other ACOM Debtors, which are
estimated to be in millions of dollars. Each of the Tele-Media
Interests filed proofs of claim based on the ACOM Debtors'
breaches of duty to the Tele-Media Interests arising out their
ownership of interests in Tri-States, Tele-Media Investment, and
TMC Holdings.
Effect of ACOM's Debt Structure on the Claims
and Interests of Tele-Media Interests
The Complaint identifies six prepetition groups of ACOM Debtors
known as "Borrowing Groups." As defined, each ACOM Debtor should
be a member of only one Borrowing Group. The names of the
Borrowing Groups identified in the Complaint are:
(1) "Frontier Vision;"
(2) "Parnassos;"
(3) "Century TCI;"
(4) "UCA/HHC" or "UCA;"
(5) "CCH" or "Century;" and
(6) "Olympus."
Repayment of each of the Co-Borrowing Facilities is allegedly
supported by guaranties and equity pledges from certain other
ACOM Debtors. The group of ACOM Debtors potentially liable for
part or all of the obligations under a Co-Borrowing Facility is
referred to as a "Co-Borrowing Group." Every TM/A Debtor belongs
to at least one Co-Borrowing Group as a borrower, guarantor and
pledgor.
Although the ACOM Debtors within one Borrowing Group may be
exposed to liability under the same Prepetition Credit Facility,
many of the Debtors also have creditors distinct from creditors
of the other debtors within the Borrowing Group. For most of the
ACOM Debtors, their capital structure loosely parallels the
structure of the Borrowing Groups. Most of the Debtors exposed
under a particular facility are also owned or controlled by the
same ACOM holding company.
Unlike many of the other ACOM Debtors, the capital structure of
many of the TM/A Debtors substantially differs from that of the
Borrowing Group to which a particular TM/A Debtor has been
assigned.
Up until a few days prior to the Petition Date, ACOM had not
disclosed fully to any of the Tele-Media Interests the structure
of the Prepetition Credit Facilities, the extent to which the
equity of the TM/A Debtors had been pledged as collateral for the
Co-Borrowing Facilities, or that ACOM representatives executed
guaranties on behalf of certain TM/A Debtors for obligations of
other ACOM entities on the Co-Borrowing Facilities without Tele-
Media's knowledge or consent. The extent of the TM/A Debtors'
exposure on the Equity Pledges or Cross Guaranties was never
disclosed on the financial reports of the TM/A Debtors or on any
other reports Adelphia ever provided Tele-Media.
Among other allegations, the Tele-Media Interests alleged in the
Tele-Media Claims that ACOM, without regard to the rights of the
Tele-Media Interests and to their damage:
-- conspired prior to the Petition Date with accountants,
lawyers, lenders and others, to use billions of dollars of
proceeds from the Bank Debt for the use and personal
benefit of third parties; and
-- caused every TM/A Debtor to agree contractually to be held
liable in at least one Borrowing Group as a borrower,
guarantor and pledgor under the Co-Borrowing Facilities.
Accordingly, Tele-Media Corporation, Mr. Tudek and the employees
of Tele-Media and their family members, who are non-voting
shareholders of TMC Holdings and who hold limited partnership
interests in Tele-Media Investment Partnership, seek the Court's
permission to intervene in the Adversary Proceeding to protect
their position as holders of equity security interests in certain
subsidiary ACOM Debtors.
The Tele-Media Interests assert that they have the unconditional
right to appear and be heard in the Adversary proceeding under
Section 1109(b) of the Bankruptcy Code. The Tele-Media Interests
are also entitled to intervene under Subsection (1) of Rule 24 of
the Federal Rules of Civil Procedure. The Tele-Media Interests
have an interest in the Adversary Proceeding and a continuing
stake in its outcome. Before the outcome of this litigation will
have any effect on distribution to unsecured creditors and ACOM
shareholders, it will affect first any distributions made to the
Tele-Media Interests as equity security holders in subsidiary
Adelphia Debtors.
Banks Object
Several Bank Defendants don't want Tele-Media in the picture:
(1) Bank of America;
(2) ABN Amro Securities, LLC,
(3) BNY Capita Corp.,
(4) Banc of America Securities, LLC,
(5) Barclays Capital, Inc.,
(6) CIBC World Markets, Corp.,
(7) Citigroup Financial Products, Inc.,
(8) Citigroup Global Markets Holdings, Inc.,
(9) Deutsche Banc Alex Brown, Inc.,
(10) Fleet Securities, Inc.,
(11) Morgan Stanley & Co., Inc.,
(12) PNC Capital Markets,
(13) Scotia Capital (USA), Inc.,
(14) Suntrust Securities, Inc.,
(15) TD Securities (USA), Inc.; and
(16) JP Morgan Chase Bank
Even ACOM, a plaintiff in the Complaint, does not want Tele-Media
intervening in the Adversary Proceedings.
Court Allows Tele-Media to Intervene
The Court rules that Tele-Media has standing to participate in
the Adversary Proceedings. Accordingly, the Court permits Tele-
Media to intervene.
Bank of Nova Scotia Moves to Dismiss
The Bank of Nova Scotia asks the Court to dismiss the claims
brought by the Equity Committee on its own behalf and,
purportedly, on behalf of the ACOM Debtors. BNS says the
Complaint fails to state a claim under Rule 12(b)(6) of the
Federal Rules of Civil Procedure and fails to plead fraud and
other allegations with particularity as required by Federal Rules
8 and 9.
The Complaint's 244 pages, BNS says, overflow with internal
inconsistencies, broadly and ambiguously defined terms and non-
particularized allegations that prevent the 378 named and 200
unnamed Defendants from preparing an effective defense to the 52
"Claims For Relief" alleged against them. The Complaint
completely ignores the pleading requirements of Rules 8 and 9(b)
of the Federal Rules of Civil Procedure. Briefing in connection
with the Complaint has, to date, occupied in excess of nine
months, generated thousands of pages of legal argument and cost
the ACOM Debtors' estates many millions of dollars. Nothing has
been resolved.
Continuing what may be described as an "aggressive" litigation
strategy in ACOM's Chapter 11 cases, the Equity Committee filed
the Proposed Intervenor Complaint as an exhibit to its motion for
leave to assert 13 additional claims on its own behalf and,
purportedly, on behalf of ACOM and its affiliated ACOM Debtors in
this adversary proceeding. This despite the fact that the ACOM
Debtors did not consent to the claims and the Equity Committee
was granted authority by the Bankruptcy Court to represent the
equity security holders of ACOM only, not its affiliates. Recent
testimony at the Rigas criminal trial demonstrates that what the
banks have been saying all along is true -- they are victims of
the Rigases' fraud as much as Adelphia and the investing public
are. Thus, it is time to narrow the proceedings, not expand them
further.
This submission pertains to only one of the Proposed Intervenor
Complaint's additional claims -- Claim 65 for fraud against the
Agent Banks and Investment Banks.
Bank of Nova Scotia responded to the Court out of an abundance of
caution, since it does not understand the claim to be directed at
it in connection with the Parnassos Non-Co-Borrowing Facility.
The Proposed Intervenor Complaint contains no allegations of
wrongdoing in connection with the Parnassos Non-Co-Borrowing
Facility. In the alternative, the claim must be dismissed under
Rules 8, 9 and 12(b)(6) of the Federal Rules of Civil Procedure,
made applicable by Rules 7012(b), 7008 and 7009 of the Federal
Rules of Bankruptcy Procedure, for failure to state a cause of
action against Bank of Nova Scotia.
With the exception of those claims based on the ACOM Debtors'
insolvency, the Proposed Intervenor Complaint adopts the
Complaint word-for-word, including these claims for relief
directed at Bank of Nova Scotia, the Parnassos Lenders, the
"Agent Banks" or all "Defendants":
Claim No. Named Defendant(s) Nature of Claim
--------- ------------------ ---------------
25 Bank of Nova Scotia Avoid around $622,800,000
in loan payments on the HVA
Facility as intentionally
fraudulent transfers
recoverable under Sections
544(b) and 550 of the
Bankruptcy Code.
26 Bank of Nova Scotia Same, but constructively
fraudulent transfers. Not
adopted by Equity
Committee.
27 Bank of Nova Scotia Avoid $10,400,000 in loan
payments on the HVA
Facility as intentionally
fraudulent transfers
recoverable under Sections
548 and 550 of the
Bankruptcy Code.
28 Bank of Nova Scotia Same, but constructively
fraudulent transfers. Not
adopted by Equity
Committee.
32 Agent Banks Unlawful tying under the
Bank Holding Company Act.
Treble damages
(unspecified).
33 All Defendants Equitable disallowance of
Co-Borrowing Lenders'
claims; equitable
subordination of the same
claims.
36 Agent Banks Breach of fiduciary duties
owed to "ACOM Debtors" by
approving the structure of
and participation in the
Co-Borrowing Facilities.
$5,000,000,000 in damages.
37 Agent Banks Aiding and abetting breach
of fiduciary duties owed to
"ACOM Debtors."
$5,000,000,000 in damages.
38 Agent Banks Aiding and abetting fraud
committed by the Rigas
Family and its accomplices.
$5,000,000,000 in damages.
39 Agent Banks Gross negligence by
approving the structure of
and participation in the
Co-Borrowing Facilities,
etc. $5,000,000,000 in
damages.
44 Parnassos Lenders Avoid approximately
$25,400,000 in loan
payments on the Parnassos
Facility as preferential
transfers. Not adopted by
Equity Committee.
(Adelphia Bankruptcy News, Issue No. 62; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AIR CANADA: Plans To Remit Pension Plan Contributions by July 30
----------------------------------------------------------------
Air Canada asks Mr. Justice Farley to lift the CCAA stay so
they may remit contributions into each of:
-- the Pension Plan for Pilots of Canadian Airlines
International Limited,
-- the Pension Plan for Dispatch Employees of Canadian
Airlines International Limited, and
-- the Pension Plan for CAW Members Employed by Canadian
Airlines International Limited.
The Applicants will specifically remit the 2003 special payments
identified in the latest actuarial valuation reports for the CAIL
pension plans, plus interest.
The Applicants also intend to remit contributions into each of
their Canadian defined benefit registered pension plans equal to
the current service costs relating to the second quarter of 2004
for each plan, less employee contributions, as set forth in the
latest actuarial valuation report for the plan.
The Applicants will make the contributions by July 30, 2004,
subject to the requirements of the Income Tax Act (Canada).
The Initial CCAA Order currently does not permit the Applicants
to make contributions or special payments to their pension plans
without Court approval.
Headquartered in Saint-Laurent, Quebec Canada, Air Canada --
http://www.aircanada.ca/-- represents Canada's only major
domestic and international network airline, providing scheduled
and charter air transportation for passengers and cargo. The
Company filed for CCAA protection on April 1, 2003 (Ontario
Superior Court of Justice, Case No. 03-4932) and Section 304
petition with the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and
Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the
Debtors' U.S. Counsel. When the Debtors filed for protection from
its creditors, they listed C$7,816,000,000 in assets and
C$9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue
No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALTAIR NANOTECHNOLOGIES: President Provides Shareholder Update
--------------------------------------------------------------
Altair Nanotechnologies Inc. (NASDAQ: ALTI) is providing a Company
update from Altair President Dr. Rudi E. Moerck, in its commitment
to keep shareholders and members of the financial community
current on the company's activities.
Corporate Update
Altair has completed its reorganization and the creation of the
Life Sciences and the Performance Materials Divisions. "This
reorganization, and the creation of two divisions, has allowed
Altair to focus on leveraging its proprietary technology to bring
pioneering product technology to market," commented Dr. Moerck.
"Further, both Divisions have made significant progress in taking
product concepts and developments to commercialization."
Life Sciences Division Update
This division utilizes Altair's patented processes in developing
rare earth compounds and metal oxide technology for the
development of pharmaceutical, drug delivery and biologically
important ion exchange processes. Altair's novel rare earth ion
exchange processes remove specific target compounds from fluids
and other process streams to almost non-detectable levels.
Altair's hollow, porous, high surface area, rigid ceramic
microstructures (TiNano Spheres(TM)) are currently made from
titanium and zirconium and show promise as drug delivery and
dental compounds.
RenaZorb(TM) -- Nanotechnology-based drug for ESRD
On May 26, 2004, Shire Pharmaceutical's CEO announced he expects
Fosrenol, the company's lanthanum carbonate tetra hydrate-based
drug candidate for phosphate control in kidney dialysis patients
with End Stage Renal Disease "ESRD" to receive approval from the
FDA in June 2004. Approval of Fosrenol has already been granted in
Sweden as a European Union Reference country. Shire has also
announced that it had licensed Fosrenol to Bayer AG, giving them
the exclusive rights to develop, market and sell Fosrenol in
Japan. The total potential value of the Fosrenol deal has been
reported to be in excess of $70 million, which includes up-front
license fees.
Altair's RenaZorb(TM) (lanthanum dioxycarbonate) represents a
second-in-class lanthanum-based drug for phosphate control in
patients with end-stage renal disease (ESRD). Interest in RenaZorb
among potential licensees has increased significantly over the
past several months. Altair has instituted additional non-clinical
testing in animal models to directly compare RenaZorb to lanthanum
carbonate tetra hydrate, (the active ingredient in Fosrenol) and
sevelamer (the active ingredient in Renagel(TM)). The results will
not be available until late July, but the company is optimistic
about preliminary data and the outcome of these tests.
Drug Delivery -- TiNano Spheres(TM) and
No-Defeat(TM) Drug Delivery Systems
TiNano Spheres(TM) are hollow, porous, high surface area, rigid
ceramic microstructures that are derived from Altair's patented
technology. The inside, outside or both can be coated with active
pharmaceuticals to provide controlled release characteristics. The
differentiating characteristic of Altair's TiNano Spheres compared
with commonly available polymer-based drug delivery systems is
that Altair's system may produce a sustained drug delivery system
for narcotics and other Class IV drugs that is both non-abuseable
and non-defeatable.
TiNano Spheres are in the early stage development for drug
applications. Altair plans to out-license the technology and
conduct co-development work on the No-Defeat(TM) system for
licensees and potential licensees. Discussions are ongoing with
pharmaceutical companies that are interested in incorporating
their active pharmaceutical ingredients into the TiNano
Spheres(TM) and No-Defeat(TM) systems.
Dental Nanomaterials
Altair continues to work with a research consortium sponsored by
the National Institutes of Health to strengthen polymer-based
dental fillings utilizing Altair's nano-zirconia. While the size
of the materials market for dental fillings is small, from a
tonnage perspective, the dollar value is considerable. The
development process is moving forward and management now expects
to have a suitable product available in the fourth quarter of
2004.
Performance Materials Division Update
The Performance Materials Division is taking pioneering
nanotechnology to market. This business unit uses novel chemical
processes to manufacture nano-to-micron-sized ceramic materials
with specific performance enhancing characteristics.
Titanium Dioxide Pigment --
Altair's Hydrochloride Pigment Process (AHPP)
Discussions continue with several companies that have interest in
producing white titanium dioxide pigment. Titanium dioxide pigment
is a $9 Billion global market.
In January 2004, Altair entered into a license agreement with
Western Oil Sands, Inc. for the production of titanium dioxide
pigment at the Athabasca Oil Sands Project in Canada. Altair is
now well into phase one of the agreement, with bulk samples of the
oil sands' tailings in the Reno plant for testing and processing
into white titanium dioxide pigment.
Altair has also entered into a licensing agreement with Avireco
USA to evaluate the Altair Process utilizing feedstock from
Vietnam to produce titanium dioxide pigment. The government of
Vietnam has approved $25 million to develop a domestic titanium
dioxide pigment infrastructure. However, work under the contract
has not yet been authorized.
Altair continues to work with Flowco International, Altair's
exclusive representative in the People's Republic of China (PRC).
Altair is in ongoing negotiations with a Chinese company and
several Indian companies that have interest in producing white
pigment for distribution in those respective countries.
Titanium Metal
Under Altair's January 2004 agreement with Titanium Metals
Corporation (NYSE: TIE), the company has begun providing
development services and selling developmental quantities of
custom nano titanium dioxide and titanium alloy oxide electrode
feedstock to Titanium Metals for their development program
pertaining to the manufacture of titanium metal based on the
patented FFC Cambridge process.
DARPA (Department of Defense), the agency funding the development
program through a $12.4 million grant, has awarded Altair
Nanotechnologies subcontractor status. The development program
provides Altair the opportunity to supply enough TiO2 to produce
50 pounds of titanium metal per day to meet the DARPA titanium
project goals as outlined by the program. Altair believes the
success of the testing program could result in a licensing
agreement for the production of titanium dioxide and titanium
alloy oxide electrode feedstock.
NanoCheck(TM)
Altair's unique nano-structured compound, NanoCheck(TM), has been
proven to safely and effectively prevent algae growth in swimming
pools in both independent and in-house laboratory testing. There
are approximately eight million pools and four million existing
spas and hot tubs worldwide with an additional 360,000 pools and
approximately 260,000 spas and hot tubs being installed annually.
The first phase of microbiological performance testing confirmed
NanoCheck compound's ability to retard and prevent algae growth
through absorption of phosphates from water. Field-testing focused
on evaluating Nanocheck compound effectiveness in providing an
algae-free environment for swimming pools is currently under way.
If the tests are successful, Altair or a licensee could
commercially launch NanoCheck(TM) in the first quarter of 2005.
United States Government Research Funds
Work between Altair, Western Michigan University (WMU) and
University of Nevada is underway, under the terms of a joint
development agreement funded by the Department of Energy's Office
of Science, Biological and Environmental Research. Altair and WMU
are currently working on the "lab-on-a-chip" elements, which will
comprise the technology being developed for detecting chemical and
biological agents, a homeland defense program.
In December 2003, Altair was notified by WMU of additional grant
funding for their joint development of nanosensors for detecting
chemical, biological and radiological agents. The $2 million grant
was included in the Omnibus Appropriations Bill and will commence
August 2004. WMU and Altair will continue to jointly seek Federal
support for nanotechnology research and development and will
utilize the new grant funding equally.
Altair recently received at $100,000 grant from the National
Science Foundation to fund the joint development work with
Hosokawa Micron's Nano Particle Technology Center and Rutgers
University's Energy Storage Research Group. The Team is working on
the design and development of an advanced hybrid battery as a high
capacity, next generation lithium ion power source. Altair expects
to apply for additional funding for the development of Phase II of
the development program.
Lithium Ion Battery Electrode Development
The Rutgers prototype battery, using Altair's nanomaterials, met
the 'car of the future' power assist battery requirement as
reported in Telcordia's (now Rutgers Energy Storage Research
Group) research paper published in The Journal of Power Sources.
The prototype battery, a nonaqueous asymmetric hybrid
incorporating the advantages of both Li-ion batteries and super
capacitors, stored energy of 11wh/kg with delivery of 800 W/kg at
95 percent efficiency. The cycle life ranged between 10,000 and
100,000 cycles. The Rutgers' battery is the only prototype
reported, to date, to meet these DOE standards. Altair is in
discussions with Rutgers regarding commercialization and is
providing the group with additional nanomaterials samples for
further development work and prototype production.
Altair has signed a memorandum of joint development work with
Hosokawa Micron International to combine the technologies of both
companies to develop advanced electrode materials for
electrochemical devices such as batteries, capacitors and
supercapacitors from a variety of nanomaterials.
About Altair Nanotechnologies Inc.
Nanotechnology is rapidly emerging as a unique industry sector.
Altair Nanotechnologies is positioning itself through product
innovation within this emerging industry to become a leading
supplier of nanomaterial technology and nanomaterials worldwide.
Altair owns a robust proprietary technology platform for making a
wide variety of nanocrystalline materials of unique quality both
economically and in large quantities. The company is currently
developing special nanomaterials with potential applications in
pharmaceuticals, batteries, thermal spray coatings, catalysts,
cosmetics, paints and environmental remediation. For additional
information on Altair and its nanoparticle materials, visit
http://www.altairnano.com/
* * *
Liquidity and Capital Resources
In its Form 10-Q for the quarterly period ended March 31, 2004
filed with the Securities and Exchange Commission, Altair
Nanotechnologies, Inc. reports:
"At March 31, 2004, we had cash and cash equivalents of
$11,490,218, an amount that would be sufficient to fund our basic
operations through December 31, 2005 at current working capital
expenditure levels. We will, however, increase expenditure levels
in 2004 and 2005 as we execute on existing and expected
contracts. Accordingly, if we are unable to increase our revenues
proportionately, we will require additional financing to provide
working capital to fund our day-to-day operations.
"In 2004, we expect to generate limited revenues from contract
services utilizing our nanomaterials and titanium dioxide pigment
technology. In addition, we hope to generate revenues through the
licensing of RenaZorb(TM), a potential drug we developed that may
be useful in phosphate control in kidney dialysis patients. A drug
of similar compounds has been submitted for FDA approval by Shire
Pharmaceuticals Group plc which has indicated that it expects the
drug to receive FDA approval and be launched in 2004. If this
similarly compounded drug is approved, we hope to be able to
negotiate a license agreement for RenaZorb(TM) with one or more
pharmaceutical companies during 2004. We can provide no assurance
that we will enter into such a license agreement or that such
license agreement would generate significant revenue in the short
term.
"Although we currently have capital sufficient to fund our
operations at current levels, we expect our capital needs to
increase during 2004 and 2005. We expect to hire additional
personnel in order to satisfy our contractual obligations under
existing and anticipated services agreements. In addition, our
management is focused on facilitating the commercialization of one
or more of its products in the foreseeable future. Substantially
all of our products are at a conceptual or development stage and,
if we are to commercialize one or more products ourselves (as
opposed to licensing it for commercialization by the licensee),
we will likely be required to hire additional employees, purchase
additional equipment, and engage the research, marketing and other
services of third parties. This may require significant additional
capital. We believe our ability to find strategic partners would
be enhanced if we had a stronger balance sheet.
"Accordingly, we may raise additional capital during 2004 or 2005.
We would most likely generate such financing through the issuance
of equity securities in one or more private placements of common
shares (probably with accompanying re-sale registration rights and
warrants to purchase common shares) or public offerings of our
common shares. We do not expect to, but may also issue debt
securities or enter into loan or capital leasing arrangements,
with one or more financial institutional investors. Any financing,
especially an issuance of equity securities in a public offering
or large private placement, may dilute existing shareholders and
have an adverse effect on the market price of our common shares.
We can provide no assurance that, if we determine to seek
additional financing, we will be able to obtain additional
financing at a reasonable cost, or at all."
AMERICAN HOSPITALITY: Selling Ground Round Franchise Rights
-----------------------------------------------------------
In a transaction valued at $4,850,000 and other consideration, the
Ground Round Franchisee Council has entered into an agreement with
American Hospitality Concepts to acquire the chain's franchise
rights and will form a new, cooperatively owned franchise
operation -- one of the few of its kind ever created. The sale is
subject to the approval of the United States Bankruptcy Court for
the District of Massachusetts, which has maintained jurisdiction
over the Ground Round bankruptcy cases since their filings on
February 19, 2004.
In a separate auction, the results of which had been previously
announced, the Ground Round sold 26 of the 59 Ground Round
locations that had been owned by The Ground Round, Inc. Members of
the Franchisee Council operate an additional 73 Ground Round
locations around the United States.
These individually owned locations have continued to operate and
serve their customers despite the Chapter 11 filing by Ground
Round. They will continue to be independently owned restaurants,
even though their owners will be part of the new entity that will
own the Ground Round franchise rights.
The purchase price includes $4.85 million in cash. The transaction
includes mutual releases of claims by franchisees and the Ground
Round.
The proposed sale and settlement was filed with the Bankruptcy
Court on June 18, 2004. A hearing has been scheduled for July 7,
2004.
Craig R. Tractenberg, Partner, Nixon Peabody LLP, is the franchise
partner advising the Ground Round Franchisee Council. Richard C.
Pedone, Partner, Nixon Peabody LLP, is the bankruptcy partner
providing advice to the Ground Round Franchisee Council.
About the Company
American Hospitality Concepts (AHC), which operates the Ground
Round Grill & Bar chain, filed for Chapter 11 bankruptcy and
closed most of its 58 company-owned locations in February 2004. A
pioneer in the casual-dining segment, Ground Round offers a
variety of American standards and ethnic specialties. Ground Round
was founded in 1969 as a division of Howard Johnson (now owned by
Cendant). Backed by Boston Ventures Management, AHC acquired the
chain in 1997. The Company operates and franchises Ground Round
locations in about 25 states and Ontario, Canada. In addition to
its flagship chain, it operates a handful of Tin Alley Grill and
Berkshire Grill units and manages the John Harvard's Brew House
chain. See http://www.groundround.com/
ARMSTRONG: USWA Local 441 Okays New Contract With 9% Wage Increase
------------------------------------------------------------------
Knight-Ridder/Tribune Business News reports that on June 4, 2004,
hourly production workers at the Marietta ceilings plant of
Armstrong World Industries approved a new 3-year contract. The
agreement affects 375 members of Local 441 of the United
Steelworkers of America, and includes a 9% wage increase over the
life of the agreement. About 70% of the workers who voted favored
the agreement, which includes a $400 signing bonus, higher pension
contributions from the company, and caps on employee contributions
to health-care coverage in the first two years.
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior finishings, most notably floor
coverings and ceiling systems, around the world. The Company
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal &
Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton &
Finger, P.A., represent the Debtors in in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue
No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ATLAS AIR: Promotes Wake Smith to SVP & Chief Operating Officer
---------------------------------------------------------------
Wake Smith, Senior Vice President of Corporate Planning and
Business Development for Atlas Air Worldwide Holdings, Inc.
(AAWH)(Pink Sheets: AAWHQ), has been promoted to Senior Vice
President and Chief Operating Officer.
In his new position, Mr. Smith will oversee all aspects of AAWH's
operation, including Flight Operations, Worldwide Ground and
Technical Operations, Safety, Information Technology, and Process
Improvement. In addition, he will continue to be involved in
strategic planning and in executing the restructuring plan for the
Company, which is set to emerge from Chapter 11 in late July.
"Wake has served the Company very well during challenging times,"
said Jeffrey H. Erickson, President and Chief Executive Officer of
AAWH. "With his broad knowledge of the Company and its respective
business segments, experience in the industry, and given the key
role he has played in our restructuring, I am confident that Wake
will do a great job as Chief Operating Officer."
Mr. Smith joined AAWH in 2000 as a consultant working on a number
of special projects, including the creation of Global Supply
Systems (GSS), a cargo airline in the United Kingdom in which AAWH
has a minority stake. In February of 2003, he was named Vice
President of Strategic Development, and earlier this year was
promoted to Senior Vice President of Strategic Planning and
Business Development.
Prior to his time at AAWH, he was President of FlightSafety Boeing
Training International, the world's largest provider of flight
training for commercial aircraft. Earlier, he was a partner at
Simat, Helliesen & Eichner, the world's largest aviation
consultancy, where he led that company's airline restructuring
practice.
Mr. Smith holds a Bachelor of Arts degree from Yale University and
earned his MBA from Harvard Business School.
About Atlas Air Worldwide
AAWH is the parent company of Atlas Air, Inc and Polar Air Cargo,
Inc, which together operate the world's largest fleet of 747
freighter aircraft. Atlas Air, Inc. is the world's leading
provider of ACMI (aircraft, crew, maintenance and insurance)
freighter aircraft to major airlines around the globe. Polar Air
Cargo, Inc. is among the world's leading providers of airport-to-
airport freight carriage. Polar operates a global, scheduled-
service network and serves substantially all major trade lanes of
the world. Through both of its principal subsidiaries, AAWH also
provides commercial and military charter services.
* * *
As reported in the Troubled Company Reporter's June 15, 2004
edition, 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.
BRIAZZ: Gets Nod to Employ Kuno Ostrovsky as Bankruptcy Counsel
---------------------------------------------------------------
Briazz, Inc., sought and obtained approval from the U.S.
Bankruptcy Court for the Western District of Washington to employ
Crocker Kuno Ostrovsky LLC as its bankruptcy counsel.
Crocker Kuno is expected to:
a. take all actions necessary to protect and preserve
Briazz's bankruptcy estate, including the prosecution of
actions on Briazz's behalf, the defense of any action
commenced against Briazz, negotiations concerning
litigation in which Briazz is involved, objections to
claims filed against Briazz in this bankruptcy case, and
the compromise or settlement of claims;
b. prepare the necessary applications, motions, memoranda,
responses, complaints, answers, orders, notices, reports
and other papers required from Briazz as debtor-in-
possession in connection with administration of this case;
c. negotiate with creditors concerning a Chapter 11 plan, to
prepare a Chapter 11 plan and disclosure statement and
related documents, and to take the steps necessary to
confirm and implement the proposed plan of liquidation;
and
d. provide such other legal advice or services as may be
required in connection with the Chapter 11 case.
The Debtor and Crocker Kuno have agreed to an initial security
retainer of $50,000 plus $839 for the Chapter 11 filing fee.
Headquartered in Seattle, Washington, Briazz Inc. --
http://www.briazz.com/-- serves fresh, high-quality lunch and
breakfast foods and between-meal snacks from company owned cafes
in urban markets. The Company filed for chapter 11 protection on
June 7, 2004 (Bankr. Wash. Case No. 04-17701). Cynthia A. Kuno,
Esq., and J. Todd Tracy, Esq., and Crocker Kuno Ostrovsky LLC
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$5,400,000 in total assets and $12,200,000 in total debts.
BURLINGTON INDUSTRIES: BII Trust Objects To Various Big Claims
--------------------------------------------------------------
The BII Distribution Trust determined that 45 claims assert
liabilities in excess of the amount due with respect to the
underlying obligations. As a result, the amounts asserted in the
Overstated Claims include amounts that are not liabilities of the
Reorganized Debtors' Estates.
Accordingly, the Trust asks the Court to reduce the Overstated
Claims to reflect the proper amount of the asserted liability.
Among the biggest Overstated Claims are:
Original Modified
Claimant Claim No. Claim Amt. Claim Amt.
-------- --------- ---------- ---------
A D Pate Printing 792 $6,296 $5,686
ABF Freight Systems, Inc. 76 9,925 7,966
ADT Security Services 186 177,526 11,122
Amex Business Finance 962 9,229 295
Atlantic Corporation 324 7,643 7,509
Best Overnite 284 9,114 6,507
Better Methods Alexander 116 8,560 8,468
Cantley, Walter N. 1235 1,000,000 0
Cantley, Walter N. 1236 1,000,000 0
City of Rocky Mount 112 60,737 4,886
CO PAC Company, Inc. 479 6,085 5,650
Color Ad Packaging, Inc. 289 6,751 5,412
Drake Extrusion, Inc. 1076 717,904 709,313
Electric Sales and Service 243 14,552 13,458
Innofa BV 808 6,635 5,838
Mount Vernon Mills, Inc. 985 135,337 133,953
OCE Printing Systems USA 732 6,824 2,981
Piedmont Logistics 424 6,946 6,378
Rubin, Harris E. 1325 180,000 1,500
Improperly Asserted Claims
The Trust also identified 12 claims that improperly assert
priority status:
Claim Priority
Claimant Claim No. Amount Status
-------- --------- ------ --------
A O E Ricoh 582 $434 Priority
ACME Door Corporation 511 2,896 Priority
AMEX Business Finance 962 9,229 Secured
Best Overnite 284 9,114 Priority
Cantley, Walter N. 1235 1,000,000 Priority
Cantley, Walter N. 1236 1,000,000 Priority
City of Greensboro NC 188 3,016 Secured
Drake Extrusion Inc 1076 717,904 Priority
Electric Sales and Svc Co. 243 14,552 Priority
H&B Landscaping Co. 339 420 Priority
Morton Salt 80 2,700 Priority
R&L Carriers 598 5,283 Priority
Accordingly, the Trust asks the Court to reclassify the Claims as
general unsecured non-priority claims to ensure that the
Claimants do not receive a disproportionately large distribution
on account of the asserted liabilities.
No Liability Claims
The Trust observes that certain claims filed against the Debtors
do not present valid obligations of the Debtors' estates. Upon
review of the Reorganized Debtors' books and records and analysis
of the underlying liabilities, the Trust determined that:
(a) Three claims are for worker's compensation, which are
covered by the Debtors' workers' compensation insurance
program and are being processed without interruption in
the ordinary course of business:
Claimant Claim No. Claim Amount
-------- --------- ------------
Camden, Melissa 1542 $100,000
Cantley, Walter N. 1235 1,000,000
1236 1,000,000
(b) Electric Sales & Services Company's Claim No. 243 for
$14,552 is for disallowed interest;
(c) Ten Claims represent obligations that are not valid
liabilities of the Estates or otherwise not due and owing:
Claimant Claim No. Claim Amount
-------- --------- ------------
Computer Associates Int'l, Inc. 1559 $137,551
CSX Transportation 5 9,721
De Lage Landen Financial Services 1229 6,101
Dupont Flooring Systems, Inc. 570 35,100
J C Viramontes International, Inc. 1021 Unliquidated
Martelli Lavorazioni Tessili, SpA 195 Unliquidated
Phoenix Software International 1193 10,620
Reliance Insurance 1368 2,043,193
Smith, Brenda D. 963 150,000
Travelers Casualty & Surety Co. 59 Unliquidated
(d) Two Claims relate to obligations arising under the
Debtors' employee retirement benefits program or certain
other employee benefit programs, which were assumed or
continued by the buyer of the Debtors' assets:
Claimant Claim No. Claim Amount
-------- --------- ------------
Cantley, Walter N. 1235 $1,000,000
Cantley, Walter N. 1236 1,000,000
(e) Twelve Claims are on account of an obligation assumed by
the Buyer:
Claimant Claim No. Claim Amount
-------- --------- ------------
AT&T Corporation 144 $344,348
Boehme Filatex, Inc. 871 20,569
1394 1,628
Computer Associates Int'l, Inc. 1559 137,551
Drake Extrusion, Inc. 1076 717,904
Duke Energy 140 477,870
Dupont Flooring Systems, Inc. 570 35,100
Phoenix Software Int'l 1193 10,620
Powerware 589 275
QRS Corporation 688 72,075
Reliance Insurance Co. 1368 2,043,193
Waste Management of Carolinas 646 2,031
The Trust asks the Court to disallow and expunge the No Liability
Claims.
Liquidating Claims
The Trust also asks the Court to liquidate the amounts of five
Claims in the modified amounts to the extent that the Claims are
not otherwise allowed and expunged on alternative grounds:
Modified
Claimant Claim No. Claim Amount Claim Amt.
-------- --------- ------------ ----------
J C Viramontes International 1021 Unliquidated $0
Martelli Lavorazioni Tessili 195 Unliquidated 0
McClendon, Charles A. 761 Unliquidated 1,500
Reliance Insurance Co. 1368 $2,043,193 0
Travelers Casualty & Surety 59 Unliquidated 0
The Trust originally proposes to liquidate Claim No. 761 for
$77,555. The liquidated amount, however, is reduced to $1,500
because Mr. McClendon elected Convenience Class treatment
pursuant to the Debtors' First Amended Joint Plan of
Reorganization.
The Trust notes that the Claimants failed to attach amounts to
the Claims due to lack of sufficient information in respect of
the proper amount of the Claims.
Surety Claims
The Trust determined that Claim No. 195 filed by Martelli
Lavorazioni, SpA, is a claim from which property is recoverable
pursuant to a recovery action. Pursuant to the Debtors' First
Amended Plan, the Trust asks the Court to disallow Claim No. 195
until the time that Martelli pays the amount or turns over the
property that is determined by the Court or the agreement of the
parties to be owing to the Estate on account of the Recovery
Action.
Travelers Casualty & Surety Company's Claim No. 59 relates to a
contingent claim for contribution or reimbursement. Upon review,
the Trust determined that Claim No. 59 is contingent, without
merit, and thus, no amount is owing from the Debtors' estates.
Accordingly, the Trust asks the Court to disallow and expunge
Claim No. 59 in its entirety.
Valid Claim
The Trust determined that Claim No. 1197 filed by Nancy P. Quinn
is a valid claim against the Debtors' estates. Accordingly, the
Trust asks the Court to allow Claim No. 1197 for $1,500.
Responses
(1) J.C. Viramontes International, Inc., J.C. Viramontes, Inc.,
and Julio Cesar Viramontes
H. Christopher Mott, Esq., at Gordon & Mott, PC, in El Paso,
Texas, relates that J.C. Viramontes and the Debtors executed
certain guarantees of obligations owed by a Mexican and U.S.
joint venture known as IGP-BGD, LP, and IGP-BGD S de R.L. de CV,
as borrowers. IGP-BGD is indebted to Bank of America and
possibly other creditors whose debts have been guaranteed in
whole or in part by J.C Viramontes and the Debtors.
On July 12, 2002, J.C. Viramontes filed Claim No. 1021, asserting
a contingent and unliquidated claim against the Debtors for
contribution, reimbursement, subrogation and indemnity with
respect to the IGP-BGD debts.
Pursuant to a July 14, 2002 Court Order, J.C. Viramontes and the
Debtors entered into a Term Sheet settlement with respect to IGP-
BGD. The Term Sheet could be construed as releasing any
contribution, reimbursement, subrogation and indemnity claims
with respect to the IGP-BGD Debt between the Debtors, the BII
Distribution Trust, as the Debtors' successor, and J.C.
Viramontes.
However, the Trust has taken the position that it may have
contribution, reimbursement, subrogation and indemnity claims
arising out of the IGP-BGD debt against J.C. Viramontes.
Accordingly, if the Court finds that Claim No. 1021 should be
disallowed as having been released under the Term Sheet, Mr. Mott
suggests that the Court should also find that any and all
contribution, reimbursement, subrogation and indemnity claims
with respect to the IGP-BGD debt and the Bank of America debt
held by the Debtors and the Trust, as the Debtors' successor,
against J.C. Viramontes have likewise been released.
Alternatively, if the Court finds that the Term Sheet did not
have the effect of releasing contribution, reimbursement,
subrogation and indemnity claims between J.C. Viramontes and the
Debtors, Mr. Mott suggests that the Court estimate the
contribution, reimbursement, subrogation and indemnity claim of
J.C. Viramontes for distribution purposes from the Trust.
(2) OCE Printing Systems USA, Inc.
Brett D. Fallon, Esq., at Morris, James, Hitchens & Williams,
LLP, in Wilmington, Delaware, asserts that, by properly filing a
proof of claim, OCE Printing established its prima facie case
regarding the validity of its $6,824 claim under Section 502(a)
of the Bankruptcy Code. Therefore, the Trust carries the burden
of providing sufficient, credible facts to rebut OCE Printing's
Claim. However, the Trust failed to give any explanation for
objecting to OCE Printing's Claim or to provide any evidence of
the invalidity of the claim amount.
Accordingly, OCE Printing asks the Court to overrule the Trust's
objection and allow its Claim as filed.
(3) ABF Freight System, Inc.
Shaun M. McCaffrey, counsel for ABF Freight, in Fort Smith,
Arizona, tells the Court that ABF Freight, after reviewing and
re-examining the freight bills evidencing its transactions with
the Debtors used in determining the amount claimed, attests to
the correctness of its original Claim.
Accordingly, ABF Freight asks the Court to:
-- allow a hearing on its Claim;
-- dismiss the Debtors' Objection to its Claim;
-- and allow the total amount as filed.
(4) Reliance Insurance Company
Reliance has business offices at 5 Hanover Square, New York, New
York and is successor in interest by merger to Reliance National
Insurance Company, Reliance National Indemnity Company and
Reliance Insurance Company. On May 29, 2001, Reliance was placed
into rehabilitation by the Insurance Commissioner of the
Commonwealth of Pennsylvania by order of the Pennsylvania
Commonwealth Court.
At the request of the Commissioner, the Commonwealth Court
ordered Reliance's liquidation, thus, terminating the
rehabilitation and appointing the Commissioner as Liquidator of
Reliance.
Reliance timely filed Claim No. 1368, a $2,043,193 secured claim,
with supporting documentation in the Debtors' proceeding. To
date, the Debtors have not requested any additional documentation
from Reliance.
Steven T. Davis, Esq., at Obermayer Rebmann Maxwell & Hippel,
LLP, in Philadelphia, Pennsylvania, tells the Court that
Reliance's Claim is based on various polices for large deductible
liabilities of insurance entered into by and between Reliance and
the Debtors relating to providing workers' compensation coverage
and automobile liability coverage.
Mr. Davis asserts that Reliance is not a party to any agreement
concerning Insuratex, Ltd., a wholly owned non-debtor subsidiary
of Burlington Industries, Inc. Therefore, the Debtors are still
liable for the payment of Reliance's Claim, despite claiming that
the obligation has been assumed by Insuratex. Moreover, Mr.
Davis concludes that the Debtors' objection does not provide any
documentation supporting their position.
Furthermore, the Debtors' mere conclusory assertion that
Reliance's Claim should be disallowed and expunged is
insufficient to meet the burden to produce evidence to negate
Reliance's Claim. As filed, Reliance's proof of claim is prima
facie evidence of the validity and amount of the Claim pursuant
to Rule 3001(f) of the Federal Rules of Bankruptcy Procedure.
Accordingly, Reliance asks the Court overrule the Debtors'
Objection to its Claim.
(5) Walter N. Cantley
Mr. Cantley recounts that he sustained job-related injuries,
which rendered him unable to work again. As a result, his
medical bills are very large, and are expected to rapidly
increase. Despite receiving both compensation and medical
payments from the Debtors, Mr. Cantley is still afraid of its
possible discontinuance should a new owner decide to do so.
Mr. Cantley tells the Court that the expenses calculated by his
then attorney during the time he filed a lawsuit against
Burlington -- at least $1,000,000 -- looks realistic. (Burlington
Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
CGM EXCAVATING: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: CGM Excavating & Paving, Inc.
39 East Cherry Road
Quakertown, Pennsylvania 18951
Bankruptcy Case No.: 04-18565
Type of Business: The Debtor owns and operates a construction
contracting company.
Chapter 11 Petition Date: June 22, 2004
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Stephen Raslavich
Debtor's Counsel: Douglas J. Smillie, Esq.
Fitzpatrick Lentz and Bubba P.C.
P.O. Box 219
Center Valley, PA 18034-0219
Tel: 610-797-9000
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Commerce Bank Equipment including $232,000
1987 Komatsu Dozer,
1994 John Deere
Backhoe, 1985
Komatzu Loader, 1991
Koehring Excavator,
1987 Bomag Roller
Internal Revenue Service 941 taxes $158,000
The CIT Group Foreclosure $70,000
Deficiency
Rue Insurance Trade Debt $54,812
GE Corporate Plus VISA Trade Debt $54,714
Flamm, Boroff & Bacine Legal Services $51,776
Elliot & Franz, Inc. Trade Debt $36,231
Dept. of Labor & Industry Unemployment taxes $27,440
A. Guilianni & Co., Inc. Trade Debt $26,548
Prieto Concrete Trade Debt $22,672
Grim, Biehn & Thatcher Trade Debt $20,000
Taylor Oil Company Trade Debt $18,325
Cecil Buss Quoining & Trade Debt $16,819
Plastering
Kennedy Culvert & Supply Trade Debt $16,469
McCarthy Masonry & Concrete, Trade Debt $16,095
Inc.
Commonwealth of Pennsylvania State UC2 $16,000
Local 825 (NJ) Operating Trade Debt $15,109
Engineers
Datweiler Hersey & Assoc. Accountants $14,957
Specialty Rentals Trade Debt $13,425
Mastrocola Trucking, Inc. Trade Debt $10,933
CONNECTICARE INC: HIP Acquisition News Spurs S&P's Positive Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' counterparty
credit and financial strength ratings on ConnectiCare Inc. on
CreditWatch with positive implications.
This rating action followed the announcement that the company will
be acquired by Health Insurance Plan of Greater New York (HIP)
(BBB-/Negative/--) in a transaction that is expected to close in
the fourth quarter of 2004. "The ratings on ConnectiCare are
expected to benefit from the stronger ratings on HIP and the
strengthened business position the combined companies would have
in the New York metropolitan health insurance marketplace," said
Standard & Poor's credit analyst Phillip Tsang.
CRUMP-PADGETT ANTIQUE: Case Summary & Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Crump-Padgett Antique Gallery, LLC
645 Marshall Avenue
Memphis, Tennessee 38103
Bankruptcy Case No.: 04-29308
Type of Business: The Debtor is an antique dealer.
Chapter 11 Petition Date: June 16, 2004
Court: Western District of Tennessee (Memphis)
Judge: David S. Kennedy
Debtor's Counsel: James W. Surprise, Esq.
Johnson, Grusin & Surprise, P.C.
780 Ridge Lake Boulevard, Suite 202
Memphis, TN 38119
Tel: 901-682-3450
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
------ --------------- ------------
Internal Revenue Service $250,000
H J Artigas Trade debt $207,983
David Blair Trade debt $114,259
BankTennessee $105,808
Vicki A. Padgett Trade debt $73,174
Tennessee Department Of $65,000
Revenue
Leon Bridges Trade debt $55,615
Walter Lee Davis Jr. Trade debt $42,665
The Trilling Collection Trade debt $36,608
E, Filigree $19,900
Yvonne Giem Trade debt $15,141
Love That Glass Trade debt $13,877
Rose Cox Trade debt $11,933
Mrs Gordin Clayton Trade debt $11,730
Gussie Browley Trade debt $11,354
Advanta Business Cards $11,056
Mona Rippe Trade debt $9,143
Jerry Taylor Trade debt $8,750
John King Trade debt $7,794
Diane Bandler Trade debt $7,736
DB COMPANIES: Wants Ordinary Course Professionals to Continue Work
------------------------------------------------------------------
DB Companies, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware for permission to
continue hiring the professionals they turn to in the ordinary
course of their businesses while the company restructures under
chapter 11.
Prior to the Petition Date, the Debtors employed attorneys,
accountants, environmental consultants in the ordinary course of
their businesses. While, generally, the Ordinary Course
Professionals are willing to continue their employment with the
Debtors, they may be intimidated by the bankruptcy application
process and may just then decide to stop their services. If the
Debtors were to lose access to the expertise and background
knowledge of the Professionals, the estates would likely incur
additional and unnecessary expenses.
The Debtors want permission to pay these ordinary course
professionals as frequently as monthly for services rendered upon
submission of an invoice as long as the professional's fees don't
exceed $125,000 for the duration of their chapter 11 case.
Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. --
http://www.dbmarts.com/-- operates and franchises a regional
Chain of DB Mart convenience stores in Connecticut, Massachusetts,
Rhode Island, and the Hudson Valley region of New York. The
Company filed for chapter 11 protection on June 2, 2004 (Bankr.
Del. Case No. 04-11618). William E. Chipman Jr., Esq., at
Greenberg Traurig, LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed estimated assets of over $50 million
and debts of approximately $65 million.
DELTA AIR LINES: Capital Group Discloses 10.7% Equity Stake
-----------------------------------------------------------
Capital Group International, Inc. beneficially owns 13,270,390
shares of the common stock of Delta Air Lines, representing 10.7%
of the outstanding common stock of Delta. Capital Group
International holds sole voting power over 9,056,800 of the
shares, and sole dispositive power over the entire 13,270,390
shares.
Delta is the world's second largest airline in terms of
passengers carried and the leading U.S. carrier across the
Atlantic, offering daily flights to 494 destinations in 86
countries on Delta, Song, Delta Shuttle, the Delta Connection
carriers and its worldwide partners. Delta's marketing alliances
allow customers to earn and redeem frequent flier miles on more
than 14,000 flights offered by SkyTeam, Northwest Airlines,
Continental Airlines and other partners. Delta is a founding
member of SkyTeam, a global airline alliance that provides
customers with extensive worldwide destinations, flights and
services. For more information, please visit http://delta.com/
* * *
As reported in the Troubled Company Reporter's May 13, 2004
edition, Standard & Poor's Ratings Services affirmed its ratings
on Delta Air Lines Inc. (B-/Negative/--) and revised the long-term
rating outlook to negative from stable. Delta disclosed in its
first-quarter 2004 10Q filing with the SEC that failure to secure
needed cost reductions, regain profitability, and maintain access
to the capital markets could force the company to file for
bankruptcy. "The warning makes explicit what previous company
statements had hinted at, and may indicate that Delta believes it
will have to move to the brink of bankruptcy to persuade its
pilots to grant concessions," said Standard & Poor's credit
analyst Philip Baggaley.
EMPIRE FINANCIAL: Kevin Gagne Leaves Post as Chairman & CEO
-----------------------------------------------------------
Empire Financial Holding Company (Amex: EFH), a financial
brokerage services firm serving retail and institutional clients,
announced the resignation, effective immediately, of Kevin M.
Gagne, its Chairman of the Board and Chief Executive Officer.
Mr. Gagne's resignation follows his voluntarily unpaid leave of
absence pending the resolution of the previously announced SEC
investigation into the trading of mutual fund shares on behalf of
clients of the Company.
Empire Financial also announced that its President, Donald A.
Wojnowski Jr., was elected to the Company's Board of Directors,
filling the position vacated by Mr. Gagne.
About Empire Financial Holding Company
Empire Financial Holding Company, through its wholly owned
subsidiary, Empire Financial Group, Inc., provides full-service
retail brokerage services through its network of independently
owned and operated offices and discount retail securities
brokerage via both the telephone and the Internet. Through its
market-making and trading division, the Company offers securities
order execution services for unaffiliated broker dealers and makes
markets in domestic and international securities. Empire Financial
also provides turn-key fee based investment advisory and
registered investment advisor custodial services through its
wholly owned subsidiary, Empire Investment Advisors, Inc.
As reported in the Troubled Company Reporter's May 20, 2004
edition, the audit report contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 2003 contains an
explanatory paragraph that raises doubt about the Company's
ability to continue as going concern because the Company has had
net losses from continuing operations in 2003 and 2002, a
stockholders' deficit and has uncertainties relating to regulatory
investigations.
ENRON CORPORATION: California Files Price Manipulation Lawsuit
--------------------------------------------------------------
Attorney General Bill Lockyer filed a lawsuit against Enron to
recover potentially hundreds of millions of dollars from the
company for the massive, unlawful market manipulation and fraud
it committed during the California Energy Crisis of 2000-01.
"At the same time this corrupt enterprise successfully lobbied its
friends in the federal government to block price caps and blame
California, it was robbing our businesses and consumers blind,"
said Lockyer. "Enron was the architect of a rip-off scheme that
bled billions of dollars from our state's economy. They may be
bankrupt, but we will hold them accountable. Grandma Millie is
California. I am her lawyer, and she seeks justice."
Filed in Alameda County Superior Court on behalf of the people,
Lockyer's complaint alleges Enron's market manipulation violated
the state's Unfair Competition Law (UCL) and commodities fraud
statute. The lawsuit seeks restitution, damages and disgorgement
of unjust profits. Additionally, the complaint asks the court to
award civil penalties of $25,000 for each commodities fraud
violation and $2,500 for each violation of the UCL.
The complaint does not specify the total relief sought. The court
will determine that figure based on the evidence. But Lockyer
said the damages, restitution, disgorgement and civil penalties
could well total in the hundreds of millions of dollars. The
named defendants include: Enron Corporation; Enron Energy
Services, Inc.; Enron Energy Services Operations, Inc.; Enron
Energy Services, LLC; Enron North America Corporation; and
Enron Power Marketing, Inc.
The lawsuit is the latest enforcement action resulting from
Lockyer's ongoing, three-year investigation of market misconduct
by Enron and other power companies during the Energy Crisis. And
it comes in the wake of the release of audio tapes and transcripts
that record Enron trader conversations and provide disturbing
evidence of the firm's market behavior.
"While the state reeled from the combined impact of sky high power
prices, supply shortages and rolling blackouts, the Enron
defendants enjoyed massive, unprecedented profits, and extracted
millions of dollars in ill-gotten gains from utilities and their
customers . . . ," the complaint says. "And through it all, the
Enron defendants displayed a shocking disregard for the public
welfare, as numerous telephone conversations involving their
personnel vividly demonstrate."
On the tapes, the traders not only brazenly talk about exporting
power and gaming the market, they spew profanity-laced boasts
about bringing California to its knees, inflicting financial pain
on "Grandma Millie" and Enron's influence with President Bush.
Seeing profit in destruction, they express hope fires will torch
California power lines, chanting, "Burn baby, burn."
Additionally, the tapes indicate Enron's top two executives, Ken
Lay and Jeff Skilling, had knowledge of the market manipulation
and received briefings on how it enriched the company.
Lockyer's complaint focuses on market gaming strategies Enron
concocted to collect payment for energy services and power it did
not provide, and to charge rates above price caps in effect at the
time. "Beginning as early as 1998 and continuing at least through
2001, the Enron defendants willfully engaged in a startling array
of manipulative and fraudulent trading schemes . . . ," the
complaint alleges.
The games targeted by Lockyer's lawsuit include strategies to
create false congestion and obtain premium prices to relieve the
non-existent congestion. The games in this category include
"Death Star" and "Wheel-Out."
The complaint also cites the "Get Shorty" game in which Enron
engaged in paper trading of, and collected high prices for,
reserve power Enron had no intention of providing. "Fat Boy" and
"Ricochet" are two other games specifically mentioned in the
lawsuit. In "Fat Boy," Enron intentionally overstated the amount
of power it intended to provide, knowing it would receive the
highest possible price for the excess.
In "Ricochet" transactions, Enron evaded price caps by buying
power in California, selling it briefly to an entity outside the
state, repurchasing it from the out-of-state entity, then selling
it back into California. This game allowed Enron to charge above-
cap prices because the state's grid operator paid such premiums
for out-of-state energy when supply fell below demand in the real-
time market.
The Enron case marks the first time Lockyer has sued a company for
commodities fraud using the enforcement authority granted him
under a law that took effect Jan. 1, 2004. The statute, which
Lockyer sponsored, gives the Attorney General concurrent
jurisdiction with the state Corporations Commissioner to
investigate violations of California's commodities fraud law,
and to bring civil enforcement actions for violations. The
commodities law prohibits fraud in the sale or purchase of
commodities. Electricity is a commodity, as defined under the
statute.
Lockyer's Energy Task Force, working in cooperation with
utilities, state regulators and the Governor's Office, has
produced seven settlements to resolve enforcement actions arising
from the Energy Crisis. The seven settlements have a combined
value of $2.42 billion. Of that total, more than $1.9 billion
represents ratepayer relief. (Enron Bankruptcy News, Issue No.
114; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ENRON CORPORATION: Court Approves JC Penney Settlement Agreement
----------------------------------------------------------------
The Enron Corporation Debtors and JC Penney Corporation, Inc.,
were parties to certain prepetition transactions wherein the
Debtors provided electricity and natural gas, as well as energy
management services to JC Penney. Enron Corporation issued a
guaranty on February 27, 2001 for JC Penney's benefit.
Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New
York, relates that on November 29, 2003, the Debtors filed a
complaint to avoid and recover fraudulent transfers and
preferential payments made to JC Penney, and initial objection to
JC Penney's proof of claim.
After extensive discussions, Mr. Smith reports that the parties
have negotiated the Settlement Agreement under which the Debtors
and JC Penney will exchange a mutual release of claims relating
to the Contracts, including claims, actions and causes of action
set forth in the Complaint. JC Penney agrees to release all
claims with respect to the Guaranty. Furthermore, each proof of
claim filed on behalf of JP Penney against the Debtors in
connection with the Contracts, including Claim No. 18492 for
$2,574,230, Claim No. 18491 for $2,574,230, Claim No. 18487 and
Claim No. 18348, will be deemed irrevocably withdrawn, with
prejudice.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Court approves the Settlement Agreement. (Enron
Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ENRON DEVELOPMENT: Court Authorizes Enron Chengdu Loan Settlement
-----------------------------------------------------------------
Pursuant to Promissory Note 220 dated as of November 11, 1999,
Enron Development Funding, Ltd., advanced, from time to time, an
aggregate principal amount of $50,464,118 to Enron International
Chengdu Power Holdings Ltd., a non-debtor subsidiary of Enron
Asia Pacific/Africa/China, LLC. The principal and accrued
interest outstanding on the Loan as of December 31, 2003 was
$45,117,658.
Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that on November 29, 2002, a subsidiary of Chengdu
sold its 51% interest in Sichuan Jialing Electric Power Co.,
Ltd., a Sino-foreign joint venture. The net proceeds of the Sale
Transaction was $45,117,658.
The Chengdu Subsidiary retained $200,000 and distributed the
remainder of the net proceeds of the Sale Transaction to Chengdu
in the form of dividends. Together with previous dividends that
Chengdu held, as of December 31, 2003, Chengdu had $48,100,000 in
cash. The Proceeds are currently on deposit in an interest-
bearing account with JPMorgan Chase Bank. The Subsidiary intends
to distribute the remaining cash in its possession, less the
Liquidation Reserve, to Chengdu. In addition to the cash, the
only other asset Chengdu holds is a $1,000 receivable from Enron
Asia Pacific.
Mr. Sosland reports that the Debtors have determined, in
consultation with their business advisors, that Chengdu should be
wound up and dissolved. As the Proceeds and the Receivables are
the only known assets of Chengdu, and EDF is its only creditor,
EDF and Chengdu ink a settlement agreement to facilitate an
orderly liquidation of Chengdu.
After extensive, arm's-length and good faith negotiations and
discussions, the Parties agree that:
(a) Chengdu will pay EDF the sum, as of December 31, 2003, of
$48,325,102 plus interest earned less the Liquidation
Reserve, and assign to EDF the Receivable and the After
Acquired Asset;
(b) Chengdu will withhold $50,000 in respect of the
liquidation expenses of itself and the Subsidiary.
Chengdu will pay EDF any excess of the Liquidation
Reserve over the actual costs of liquidating itself and
the Subsidiary within seven days of the completion of the
liquidations;
(c) If Chengdu presently owns or is entitled to further assets
it is currently unaware of, it assign to EDF all rights
and title to the After Acquired Assets;
(d) Both parties release each other from any further claims,
obligations, demands, actions and liabilities relating to
the Loan; and
(e) On the Payment Date, to the extent either Party has filed
any proofs of claim related to the Loan in either the U.S.
Bankruptcy Court or the Cayman Court, the filing Party
agrees to withdraw them immediately and furnish the other
party with the appropriate documentation reflecting the
withdrawal.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, EDF sought and obtained the Court's authority to enter
into the Settlement Agreement and implement it in accordance with
its terms. (Enron Bankruptcy News, Issue No. 114; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
EXIDE TECHNOLOGIES: Filing Form 10-K Report with SEC Today
----------------------------------------------------------
Exide Technologies, Inc. (NASDAQ : XIDE), a global leader in
stored electrical energy solutions, announced that it plans to
file its 10-K for fiscal year 2004 earnings after the market
closes on Tuesday, June 29, 2004. The Company previously stated
that it would announce results on June 30, 2004.
On Thursday, July 1, 2004, management will broadcast its
discussion of year-end results and general business operations.
The conference call information follows:
Date: Thursday, July 1, 2004
Time: 9:30 Am Eastern Time
Toll-Free Number: 888-482-0024
Toll Number: 617-801-9702
Passcode: 79413926
Leader: Craig H. Muhlhauser
The call will also be replayed through the internet. The web cast
can be accessed through the Investor Relations page on the Exide
website at http://www.exide.com/and will be available for two
weeks. RealPlayer or Windows Media Player will be required in
order to listen to the web cast.
A taped replay of the call will also be available beginning at
3:00 PM on July 1, 2004 until 5 PM on July 15, 2004 at:
Replay Number: 617-801-6888
Passcode: 58830265
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
EYI INDUSTRIES: Secures Funding Commitment from Cornell Capital
---------------------------------------------------------------
EYI Industries Inc. (OTCBB:EYII) has entered into a structured
equity commitment for up to $10,000,000 dollars in equity funding
from Cornell Capital Partners LP.
EYI has also entered into an agreement for the purchase by Cornell
Capital Partners LP of up to $500,000 in convertible debentures.
The $10,000,000 dollars in equity funding is to be drawn down at
EYI's discretion for a period of 24 months following an effective
registration statement filed with the Securities and Exchange
Commission.
Jay Sargeant, President of EYI Industries Inc. states, "The
commitment provided by Cornell Capital should allow us to move
forward with our plans to support our Independent Business
Associates and to introduce new innovative products to our
customers."
Hamid Fashandi, Vice President of Cornell Capital Partners LP
concluded, "Cornell Capital is extremely pleased to provide EYI
Industries with the opportunity to access this funding in order to
execute their business plan. We look forward to building a long
lasting relationship with EYI and their management team over the
coming months and years."
About Cornell Capital Partners LP
Managed by US based Yorkville Advisers LLC, Cornell Capital
Partners, LP, has a rapidly growing reputation for structuring
equity participation agreements. Facilities similar to this equity
line of credit are widely utilized by companies in the USA, UK and
Australia. To date, Cornell Capital Partners, LP has made
available in excess of $600 million for over 50 publicly quoted
corporations.
About EYI
EYI Industries Inc., through our subsidiary Essentially Yours
Industries, Inc. (EYI), markets world class nutritional
supplements that support healthy lifestyles. Our early success was
a result of the formulation and sales of CALORAD(R), a liquid
protein supplement that has brought weight loss benefits to our
customers. More than six million bottles of CALORAD(R) have been
sold since EYI was founded in 1995. Since then, more than 30 other
products have been added to establish our product line.
EYI markets its products through an extensive network of
Independent Business Associates. Our sales force is staffed by
knowledgeable, experienced men and women and supported by our
comprehensive training programs.
At March 31, 2004, EYI Industries' balance sheet shows a
stockholders' deficit of $1,679,563 compared to a deficit of
$1,571,470 at December 31, 2003.
FIBERMARK: Committee Employs Ryan Smith as Local Co-Counsel
-----------------------------------------------------------
The Official Unsecured Creditors' Committee for FiberMark, Inc.'s
chapter 11 cases to employ Ryan Smith & Carbine Ltd., as its co-
counsel, nunc pro tunc to April 7, 2004.
The Committee has employed Akin Gump Strauss Hauer & Feld LLP as
its lead counsel in these bankruptcy proceedings.
However, the Committee is informed that Virginia Local Bankruptcy
Rule 2090-1(b)(3) requires Akin Gump to work through local
counsel. Accordingly, the Committee hired Ryan Smith in that
capacity.
In conjunction with Akin Gump, Ryan Smith will:
* advise Akin Gump and the Committee as to local procedure,
* advise substantively on motions and strategies where
appropriate,
* prepare, review and file pleadings with the Court, when
appropriate,
* attend court hearings when necessary, and
* seek to minimize duplicative services at all time.
Ryan Smith's professional hourly rates range from:
Designation Billing Rate
----------- ------------
Partners $160 to $175 per hour
Associates $145 per hour
Paraprofessionals $65 per hour
James B. Anderson, Esq., is expected to have primary
responsibility for providing services to the Committee. Mr.
Anderson will bill at his current rate of $175 per hour. From
time to time, other professionals may provide services to the
Committee:
Professional Billing Rate
------------ ------------
John A. Serafino $165 per hour
Allan R. Keyes $175 per hour
Elizabeth A. Glynn $175 per hour
Headquartered in Brattleboro, Vermont, FiberMark, Inc.
-- http://www.fibermark.com/-- produces filter media for
transportation applications and vacuum cleaning; cover stocks and
cover materials for books, graphic design, and office supplies and
base materials for specialty tapes, wallcoverings and sandpaper.
The Company filed for chapter 11 protection on March 30, 2004
(Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D. J.
Baker, Esq., David M. Turetsky, Esq., Rosalie Walker Gray, Esq.,
at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from its creditors, they listed $329,600,000 in total
assets and $405,700,000 in total debts.
FIREARMS TRAINING: Lenders Agree to Extend Loan to Oct. 2005
------------------------------------------------------------
Firearms Training Systems, Inc. (OTC: FATS) expects to file its
fiscal year 2004 Annual Report on Form 10-K with the Securities
and Exchange Commission today, June 29, 2004.
As reflected in the financial statements for the fiscal year ended
March 31, 2004, revenues were $71,854,000 versus $66,125,000 in
the prior year. Significant increases of $5,939,000 in gross
margin and $4,171,000 in operating income were accomplished during
the current year. Increases in interest expenses reduced net
income for fiscal 2004 to $5,038,000, or $0.07 per diluted share,
which included a $2,331,000 tax benefit, compared with $7,032,000,
or $0.10 per diluted share for fiscal 2003. The tax benefit for
fiscal 2004 is primarily the result of the Company's ability to
currently recognize $2,774,000 in deferred tax assets because we
now expect it to be more likely than not that we will realize
future taxable income.
The quarterly financial information (unaudited) to be included in
the form 10-K discloses revenue for the fourth quarter ended March
31, 2004, of $26,826,000 versus $23,465,000 for the same period in
the prior year. Net income, which includes a $2,102,000 tax
benefit, was $7,605,000, or $0.10 per diluted share for the fourth
quarter of fiscal 2004, compared with $5,340,000, or $0.07 per
diluted share, which included a tax benefit of $1,810,000 for the
same period of fiscal 2003.
Ronavan R. Mohling, the Company's Chairman and Chief Executive
Officer stated, "We are pleased to report significant improvements
in our operations for both the fourth quarter and the fiscal year
ended March 31, 2004. Along with significantly increased sales,
particularly in our international markets, our margins continue to
improve and our cost containment measures continue to minimize the
percentage of revenue consumed by our operating expenses. As a
result, our operating income increased from 9.8% of revenue for
fiscal 2003 to 14.8% of revenue for fiscal 2004. Our bookings and
backlog also remain at significant levels. The Company's backlog
as of March 31, 2004 was approximately $59.3 million with
approximately $48.4 million scheduled for delivery during our 2005
fiscal year.
"We are also pleased to announce the successful negotiation with
our lenders of an amendment to the Company's existing credit
agreement extending the maturity date of the Senior and Junior
Secured Loans and the Revolving Loans and Letters of Credit from
October 15, 2004 to October 15, 2005.
"Under the terms of the amendment, if we are successful in
refinancing the existing credit agreement prior to September 30,
2004, the Company will pay an amendment fee of approximately
$205,000 upon completion of the refinancing. If the existing
credit agreement is not refinanced prior to September 30, 2004,
the amendment fee will be approximately $410,000 payable on
September 30, 2004. Additionally, the $1,100,000 principal payment
due on June 30, 2004 was reduced to $500,000 and additional
principal payments of $2,000,000, $400,000 and $1,100,000 are
scheduled for August 31, 2004, December 31, 2004 and June 30,
2005, respectively. All other terms and conditions of the existing
credit agreement remain unchanged. We believe cash flow from
operations will be sufficient to meet the terms of this
amendment."
Mr. Mohling emphasized that this amendment is evidence of the
cooperation of our current lending group in the Company's efforts
to secure a refinancing arrangement for our debt structure on
terms that will be satisfactory to the Company and to our
stockholders. We continue to negotiate with several parties and
have received proposals for the refinancing that appear favorable.
While this amendment does provide additional time to complete
those negotiations, we can currently provide no assurance that an
arrangement will be negotiated on satisfactory terms, if at all.
At March 31, 2004, Firearms Training Systems reports a
stockholders' deficit of $36,914,000 compared to a deficit of
$42,494,000 at March 31, 2003.
About the Company
Firearms Training Systems, Inc. (OTC: FATS) designs and sells
software and hardware simulation training systems that improve the
skills of the world's military, law enforcement and security
forces. FATS training systems provide judgmental, tactical and
combined arms experiences, utilizing company-produced weapons and
simulators. The Company serves U.S. and international customers
from its headquarters in Suwanee, Georgia, with branch offices in
Australia, Canada, Singapore, Netherlands and United Kingdom.
FATS, an ISO 9000 certified company, celebrates its 20th
anniversary in 2004. The company Web site is
http://www.fatsinc.com/
FLACK INTERIORS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Flack Interiors, Inc.
9329 Wurzbach Road
San Antonio, Texas 78240
Bankruptcy Case No.: 04-53507
Type of Business: The Debtor is engaged in retail furniture
sales.
Chapter 11 Petition Date: June 18, 2004
Court: Western District of Texas (San Antonio)
Judge: Leif M. Clark
Debtor's Counsel: Michael G. Colvard, Esq.
Martin, Drought & Torres, Inc.
Bank of America Plaza, 25th Floor
300 Convent Street
San Antonio, TX 78205
Tel: 210-227-7591
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
------ --------------- ------------
Thomasville Account Balance $354,582
P.O. Box 339
Thomasville, NC 27361
Leather Trend Account Balance $236,784
Palliser Account Balance $146,389
Universal Account Balance $139,735
Express News Account Balance $85,162
SIGLA Account Balance $83,817
Harbour Home Account Balance $63,428
Lane Account Balance $61,193
ALF Account Balance $49,479
KENS TV Account Balance $45,135
WOAI TV Account Balance $40,774
American Drew Account Balance $39,385
EL RAN Account Balance $39,107
Eastman House Account Balance $38,548
Ara Collection Account Balance $36,875
Allusions/Lam Lee Account Balance $36,875
King Koil Account Balance $36,588
Hanke Group Account Balance $32,721
Caldwell Freight Account Balance $32,322
Woodlands Account Balance $28,795
FLEMING COMPANIES: Agrees to Resolve Teamsters Locals' Mega Claims
------------------------------------------------------------------
The Fleming Companies, Inc. Debtors, represented by Scotta E.
McFarland, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub,
P.C., in Wilmington, Delaware, ask the Court to approve a
settlement agreement with the International Brotherhood of
Teamsters Locals.
The Debtors and the Teamsters Locals are parties to various
collective bargaining agreements and effects bargaining
agreements that established the rights and obligations of the
parties with respect to the terms of employment for certain
former employees who were also members of one of the Teamsters
Locals.
The Debtors sold or closed a number of locations, and as a
result, certain employees were either unemployed, or became
employees of the purchaser of the Fleming Location where they had
worked for the Debtors.
Seven of the Teamsters Locals filed claims for an aggregate
amount exceeding $4.4 million. The claims were filed on behalf
of the members of each bargaining unit represented by the
Teamsters Locals. In the claims, the Teamsters Locals allege
liability under the Worker Adjustment and Retraining Notification
Act and other applicable federal and state statutes and
regulations. The former employees themselves filed 2,472 claims,
in an aggregate amount exceeding $21.7 million, based on claims
for wages, vacation pay, holiday pay, sick pay, severance,
unreimbursed medical expenses, retiree medical benefits, bonuses,
and unpaid pension and health and welfare benefit contributions.
The Debtors dispute the factual and legal bases of the Teamsters
Claims and the related former employee claims because:
(i) many of the former employee claims are redundant;
(ii) the former employee claims generally overstate the
amounts due;
(iii) the former employee claims overstate the
administrative and other priority portions that should
be allowed if the former employee claims were
allocated properly under the holding in the case of
"In re Roth American, Inc., 975 F.2d 949 (3rd Cir.
1992); and
(iv) several of the Teamsters Claims and the former
employee claims overstate any potential liability
under the WARN Act or similar statutes.
The Teamsters Locals represented to the Debtors that they have
the authority to settle the former employees' claims that arise
out of or are related to the CBAs or the Effects Bargaining
Agreements, including the 2,472 proofs of claim. According to
the Teamsters Locals, the only limitation on their ability to
settle the former employees' claims is a claim for workers'
compensation or individual civil rights claims based on any state
or federal statutes, such as a claim based on the Americans with
Disabilities Act.
The Debtors have settled the workers' compensation and individual
civil rights claims separately with the State of Wisconsin
Department of Workforce Development.
The primary terms of the settlement between the Fleming Debtors
and the Teamsters Locals are:
(1) The Debtors agree to pay $3,434,374 to the former
employees as directed by the Teamsters Locals, which
includes the amount payable to the former employees
who worked at the Marshfield, Wisconsin, and the
Superior, Wisconsin, locations pursuant to the
Department of Workforce Development settlement;
(2) The Teamsters Locals agree, on behalf of themselves
and the former employees, to accept the payment in
full satisfaction of the administrative and priority
portions of the settled claims;
(3) In addition to the cash payment, the Debtors agree to
allow as general, unsecured claims an aggregate amount
of $5,949,923 in full satisfaction of the unsecured
portions of the settled claims;
(4) The unsecured claim will be paid in accordance with
the terms of the Plan;
(5) The Debtors release the Teamsters Locals from all
claims arising out of the CBAs, except that any
avoidance actions and any cause of action expressly
retained in the Plan will not be released. The
Teamsters Locals agree to release Fleming from any
liability relating to the settled claims;
(6) The parties agree that, on the Effective Date of the
Plan, the Debtors will distribute to each of the
former employees who are union members his or her
share of the $2,914,260 in cash, and the balance of
$520,114 will be paid to Local 1444 in cash to be
distributed to the former employees as the Teamsters
Locals determine appropriate;
(7) The pro rata share of consideration payable to general
unsecured creditors under the terms of the Plan based
on the $5,949,923 allowed, general unsecured claim
will be distributed to the former employees in
conformity with the terms of the Plan; and
(8) The Teamsters Locals will cast the ballots of all
former employees who filed claims or were scheduled
by the Debtors as creditors with undisputed,
liquidated claims, to vote to accept the Plan.
The Debtors tell Judge Walrath that the settlement allows them to
avoid future litigation over the Teamsters Claims and the former
employee claims, on terms which approximate those that would
result from adjudication. The settlement also avoids the
necessity of the Debtors' objecting to thousands of claims and
litigating the merits of those objections. Therefore, the
settlement must be approved.
Headquartered in Lewisville, Texas, Fleming Companies, Inc. --
http://www.fleming.com/-- is the largest multi-tier distributor
of consumer package goods in the United States. The Company filed
for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No.
03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq.,
Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$4,220,500,000 in assets and $3,547,900,000 in liabilities.
(Fleming Bankruptcy News, Issue No. 37; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FMA CBO: S&P Junks Class B Rating & Removes Negative Watch
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A and B notes issued by FMA CBO Funding II L.P., a high-
yield arbitrage CBO transaction managed by Financial Management
Advisors Inc., and removed them from CreditWatch with negative
implications, where they were placed Jan. 22, 2004.
The lowered ratings reflect factors that have negatively affected
the credit enhancement available to support the class A and B
notes since the notes were downgraded in September 2003. These
factors include par erosion of the collateral pool securing the
rated notes and a negative migration in the overall credit quality
of the assets within the collateral pool.
Standard & Poor's has reviewed the results of current cash flow
runs generated for FMA CBO Funding II L.P., to determine the level
of future defaults the rated notes can withstand under various
stressed default timing and interest rate scenarios while still
paying all of the interest and principal due on the notes.
Standard & Poor's will continue to monitor the performance of the
transaction to ensure that the ratings assigned reflect the credit
enhancement available to support the rated notes.
Ratings Lowered And Removed Creditwatch Negative
FMA CBO Funding II L.P.
Rating
Class To From
A BBB- BBB+/Watch Neg
B CCC- B-/Watch Neg
FUN-4-ALL: Has Until July 23 to Complete and File Schedules
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York,
gave Fun-4-All Corp., an extension to file its schedules of assets
and liabilities, statements of financial affairs and lists of
executory contracts and unexpired leases required under 11 U.S.C.
Sec. 521(1). The Debtor has until July 23, 2004 to file their
Schedules of Assets and Liabilities and Statement of Financial
Affairs.
Headquartered in New York, New York, Fun-4-All Corp.,
manufactures, sells and distributes toys under various licenses.
The Company filed for chapter 11 protection on June 8, 2004
(Bankr. S.D.N.Y. Case No. 04-13943). Steven H. Newman, Esq., at
Esanu Katsky Korins & Siger, LLP represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $4,554,659 in total assets and $9,856,993
in total debts. The Company's Chapter 11 Reorganization Plan and
Disclosure Statement are due on
October 6, 2004.
GENTEK: Noma v. Woods Industries Trial to Commence November 9
-------------------------------------------------------------
On May 21, 1998, Noma Company and Woods Industries (Canada),
Inc., entered into a trademark license agreement, pursuant to
which Noma granted Woods Industries an exclusive license to use
certain of Noma's trademarks on products manufactured by Woods
Industries -- primarily consumer electric cords and lighting
products. Under the Trademark Agreement, Woods Industries was
required to pay royalties on a quarterly basis to Noma for use of
Noma trademarks.
On May 21, 2001, Noma and Woods Industries entered into a
Trademark License-Extension and Amending Agreement, pursuant to
which Woods Industries' license term was extended until May 20,
2006. In addition, the Amended Trademark Agreement prohibited
Noma from using or licensing the Marks for a period of three
years after the Amended Trademark Agreement has expired.
Pursuant to the Amended Trademark Agreement, Woods Industries was
obligated to pay royalties to Noma for sales of its Noma-
trademarked products after the expiration date of the Amended
Trademark Agreement.
As part of its reorganization strategy, Noma sought and obtained
permission from the Bankruptcy Court to reject the Amended
Trademark Agreement, effective as of November 5, 2003. Woods
Industries filed Claim No. 77067, asserting $28,744,359 for
rejection damages. The rejection damages claim has three
components:
(a) $2,015,000 in transition costs;
(b) $7,240,359 for losses related to the disposition of
inventory on hand subsequent to rejection; and
(c) $8,173,000 in alleged lost profits from the time of
rejection through May 21, 2006, plus $11,316,000 in
alleged lost profits during the Non-Compete Term.
The Debtors seek to have Claim No. 77067 reduced in an amount to
be determined by the Court.
Transition Costs
Woods Industries believes that it either has incurred, or will
incur in the future, "transition costs" amounting to $2,015,000
as a result of the Debtors' rejection of the Amended Trademark
Agreement.
Jeremy W. Ryan, Esq., at Saul Ewing, LLP, in Wilmington,
Delaware, contends that Woods Industries' claim for transition
costs is both unsubstantiated by any documents attached to its
proof of claim and speculative. Noma believes that a major
component of Woods Industries' transition cost claim --
stocklifts -- are unnecessary given the types of items Woods
Industries sold using Noma trademarks.
Moreover, Woods Industries would be required to incur transition
costs when the Amended Trademark Agreement expired by its terms.
Thus, all or part of Woods Industries' claimed transition costs
are not recoverable and should be disallowed by the Court.
Anticipated Loss Due to Inventory
Woods Industries also makes a claim for anticipated damages it
will suffer as a result of disposing of its existing inventory of
Noma-trademarked items. The bulk of this portion of the Woods
Industries Claim is based on the assumption that Woods Industries
will be forced to liquidate its inventory at substantial
discounts.
Noma believes that the claim for anticipated damages is
overstated. Woods Industries has been free to sell, and has
sold, its inventory subsequent to the rejection of the Amended
Trademark Agreement.
In addition, one of Woods Industries' largest customers for the
Noma items, Canadian Tire Company, which is also the new licensee
of the trademarks, intends to purchase from Woods Industries all
of its inventory of items stocked by Canadian Tire on customary
terms. Noma estimates that Canadian Tire's purchases will
eliminate 60% of Woods Industries' existing Noma inventory.
Lost Profits Claim
Mr. Ryan asserts that Woods Industries' alleged claim for lost
profits should be reduced by any profits it realizes in the sale
of its existing Noma inventory. Woods Industries also failed to
substantiate its claim for lost profit and Noma believes that the
claim exceeds Woods Industries' historical profits from the sale
of Noma products.
Moreover, Woods Industries offered no evidence in its Claim to
suggest that it has attempted to mitigate lost profits. Noma
believes that Woods Industries will continue to manufacture for
Canadian Tire the same Noma-trademarked items Woods Industries
manufactured under the Trademark and Amended Trademark
Agreements.
In addition, Woods Industries currently manufactures and sells
products similar to the Noma-trademarked products under its own
brand name.
Woods Industries' continued manufacture of Noma-trademarked
items, along with Woods Industries' ability to recoup lost sales
through expansion of its own line of similar products, will allow
Woods Industries to mitigate most, if not all, of its alleged
lost profits damages.
Mr. Ryan also argues that Woods Industries' claim for lost
profits during the three-year covenant not to compete should be
completely disallowed. Woods Industries was not entitled to
manufacture Noma-trademarked products during the non-compete
period. Thus, Woods Industries would not have generated any
profits from the Noma Marks.
Debtors' Counterclaim for Royalty Payments
The Debtors assert that Woods Industries sold and continues to
sell Noma-trademarked goods upon which royalty payments were and
are due and owing to Noma. As of March 9, 2004, Woods Industries
failed to make royalty payments for the sale of Noma-trademarked
items from October 1, 2003 to date. Furthermore, since the
inception of the Amended Trademark Agreement, Noma never received
a detailed accounting or audit of Woods Industries' sales of
Noma-trademarked items. Thus, Noma has never been able to
substantiate whether Woods Industries made all royalty payments
required.
Accordingly, the Debtors ask the Court to direct Woods Industries
to account fully for the amount of royalties due and owing to
Noma from the inception of the Amended Trademark Agreement. The
Debtors also ask the Court to require Woods Industries to pay the
amount shown to be due and owing by that account.
Woods Industries Reply
Michael G. Wilson, Esq., at Hunton & Williams, LLP, in Richmond,
Virginia, tells the Court that there may have been minimal
transition costs incurred if the Amended Trademark Agreement
expired by its own terms, but Woods Industries would have
anticipated the costs. Woods Industries also admits that it sold
Noma-trademarked goods and certain royalty payments are due and
owing to Noma for Noma-trademarked goods sold after October 1,
2003 but before November 5, 2003. Woods Industries has not made
payments to Noma since September 30, 2003.
Mr. Wilson maintains that Woods Industries did not provide Noma
with a detailed accounting or audit of its sales of Noma-
trademarked items after September 20, 2003 because Noma did not
request or demand an accounting or audit after September 30.
Woods Industries asserts that Noma's complaint fails to state a
claim upon which relief can be granted. Noma's claims are barred
by the doctrine of set-off and recoupment.
Woods Industries asks the Court to enter judgment in its favor
and allow its Claim against Noma in its entirety.
* * *
Judge Walrath directs Noma and Woods Industries to exchange Rule
26 Disclosures by July 19, 2004. All discovery regarding Woods
Industries' Claim, Noma's Objection to the Claim, and Noma's
Counterclaims must be served so as to be completed by the parties
by September 1, 2004. All expert reports in support of Woods
Industries' Claim and Noma's Counterclaims must be exchanged by
the parties no later than September 1. All responsive expert
must be exchanged by October 4.
Trial will be held on November 9, 2004 at 9:30 a.m. (GenTek
Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
HALLIBURTON: Wins $24 Million Judgment Against Smith International
------------------------------------------------------------------
Halliburton (NYSE:HAL) announced that a verdict was rendered in
its favor by the United States District Court, Eastern District of
Texas, Sherman Division, in connection with a patent infringement
lawsuit filed against Smith International. The jury awarded
Halliburton $24 million in damages.
"Halliburton is pleased with the jury's verdict," said John
Gibson, chief executive officer, Halliburton's Energy Services
Group. "The Energy Balanced(TM) roller cone drill bit product line
has delivered great results for our customers and we intend to
offer this technology to any customer anywhere in the world."
Security DBS, Halliburton's drill bit business, filed this lawsuit
in September 2002 seeking damages for Smith's infringement of the
patented technology. The jury found that Smith's competing bits,
known as IDEAS, including Twist and Shout bits, willfully
infringed three of Halliburton's patents. The jury also rejected
Smith's claims that the patents are invalid.
About the Company
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 Group and
Engineering and Construction Group business segments. The
company's World Wide Web site can be accessed at
http://www.halliburton.com/
HEALTH INSURANCE-NY: Fitch Affirms Long-Term Issuer Rating at BB+
-----------------------------------------------------------------
Fitch assigned a 'BBB' insurer financial strength rating to the
Health Insurance Plan of Greater New York. The Rating Outlook is
Stable. At the same time, Fitch affirmed the company's 'BB+' long-
term issuer rating and revised the Outlook to Stable from
Positive.
The rating actions consider HIP-NY's proposed acquisition of
ConnectiCare Holdings, Inc., a for-profit HMO operating mainly in
Connecticut. Fitch views the proposed acquisition favorably as it
provides HIP-NY immediate access to the Connecticut and western
Massachusetts market. HIP-NY's operations are concentrated in the
New York-metropolitan and Long Island area exposing it to local
regulatory and business risk and presenting it with marketing
challenges for tri-state residents who work in New York but reside
in neighboring states. ConnectiCare is currently the third largest
HMO in Connecticut with membership of 270,000 and has produced
good operating results over the past five years. Fitch believes
the company's market focus and products will be a good fit with
the HIP-Vytra product platform. HIP-NY will fund the purchase
price from existing cash-invested assets, and depending on
regulatory approval, closing is expected to take place during the
fourth quarter of 2004.
The rating affirmation and Outlook change also reflect HIP-NY's
improving profitability and the positive affect it has had on
capitalization, continued growth in its provider network, and its
complete reduction in financial leverage. HIP-NY continues to be
challenged somewhat by its limited regional presence, enrollment
concentrations in specific groups, and potential challenges
associated with the company's planned conversion to a public
corporation.
HIP-NY's operating performance has continued to improve steadily
over the past five years. HIP-NY earned consolidated GAAP net
income of $274.7 million in 2003 compared with $178.4 million in
2002 and $87.7 million for the full-year 2001. GAAP operating
returns, as defined by the ratio of pretax operating income to
total revenue, are considered strong, averaging 7.0% over the past
few years.
Fitch considers HIP-NY's capital position as strong; with a
surplus level that has continued to improve year over year. The
company's total adjusted statutory capital of $650.8 million at
year-end 2003 is up considerably from $364.6 million at year-end
2002 and $192.4 million in 2001. Based on year-end 2003 statutory
surplus levels, HIP-NY's risk-based capital ratio improved to
382%, up from 257% at year-end 2002. Adjusting for the merger with
ConnectiCare, Fitch expects HIP-NY's consolidated RBC to be
approximately 235% at year-end 2004.
HIP-NY is believed to be considering converting to for-profit
status pursuant to enabling legislation being passed by the State
of New York, which is expected in mid-2004. If the law is passed
and HIP-NY does convert, it would provide HIP-NY with even greater
competitive and financial flexibility. In addition to the
conversion process, Fitch considers HIP-NY's goal of continued
expansion to become a true regional player in the tri-state market
to be its greatest short-term challenge.
HIP-NY is a not-for-profit New York corporation founded in 1947.
At year-end 2003, the company reported total GAAP assets of $1.5
billion and GAAP equity of $744.4 million.
HEALTHSOUTH CORP: Closes All Consent Solicitations for Public Debt
------------------------------------------------------------------
HealthSouth Corp. (OTC Pink Sheets: HLSH) announced that it has
closed all of its consent solicitations for its outstanding public
debt. As a result, the Company has obtained the consents required
to approve the amendments and waivers that bring HealthSouth into
compliance on all of its $2.6 billion in public debt.
The Company received consents from holders of over 99% in
principal amount of each of the series of the debt issues for
which consent solicitations expired Wednesday.
"We are delighted to have successfully closed these consent
solicitations, an important milestone in the turnaround of
HealthSouth," said Jay Grinney, HealthSouth's President and Chief
Executive Officer. "We are now continuing our efforts to build a
future of solid growth and profitability for the Company."
The total consent fees to be paid for all of the Company's debt
issues, including the previously completed consent solicitations
for its 10.75% Senior Subordinated Notes and its 8.50% Senior
Notes due 2008, is approximately $80 million.
About HealthSouth
HealthSouth is the nation's largest provider of outpatient
surgery, diagnostic imaging and rehabilitative healthcare
services, operating facilities nationwide and abroad. HealthSouth
can be found on the Web at http://www.healthsouth.com/
HERMITAGE LANES: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Hermitage Lanes, Inc.
dba 10 Pin Alley
dba Buzzy's Sports Bar & Grille
3825 East State Street
Hermitage, Pennsylvania 16148
Bankruptcy Case No.: 04-11682
Type of Business: The Debtor is a one-of-a-kind, 26,000
square-foot, state-of-the-art entertainment
center. See http://www.buzzys10pinalley.com/
Chapter 11 Petition Date: June 25, 2004
Court: Western District of Pennsylvania (Erie)
Debtor's Counsel: John M. Steiner, Esq.
William Charles Price, Esq.
Leech Tishman Fuscaldo & Lampl LLC
Citizens Bank Building, 30th Floor
525 William Penn Place
Pittsburgh, PA 15219
Tel: 412-261-1600
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service $157,893
Penn Power Electric Service $30,759
Nautlus Insurance Company General Liability $27,491
Insurance
Ekker, Kuster, McConnell & Legal Services $23,758
Ep.
U.S. Underwriters c/o Insurance Audit $16,769
Brennan
Ace Mitchell Bowling Supplies $15,512
Bureau of Employer Tax Oper. Unemployment $13,389
Insurance
Done-Rite Bowling Bowling Supplies $10,550
Commonwealth of Pennsylvania State Taxes $9,450
Black, Bashor & Prosch, LLP Accounting Services $7,820
Vulcan Pin Bowling Supplies $6,890
Vector Security Security System & $6,781
Monitoring
Heritage Treasurer Property Tax $6,296
Verzon Internet Services $6,015
The Herald Advertising $5,768
Old Guard Insurance Insurance Audit $4,502
Comcast c/o Fitec, LLC Advertising $5,469
Highmark Blueshield Health Insurance $3,279
State of Ohio $3,009
Dell Financial c/o D&B Computer Equipment $2,166
HOLLINGER INC: Provides Update On Annual Shareholders' Meeting
--------------------------------------------------------------
Hollinger Inc. (TSX:HLG.C) (TSX:HLG.PR.B) announced that its
application to the Ontario Superior Court of Justice for an order
extending the time for calling Hollinger's 2004 annual
shareholders' meeting past the statutory deadline of June 30, 2004
was heard Friday. The postponement was sought because until such
time as the annual audited financial statements of Hollinger for
the year ended December 31, 2003 are complete, Hollinger is unable
to satisfy the Canadian law requirement that such financial
statements be placed before the shareholders at the annual
shareholders' meeting. The Court granted an interim order
extending the time for calling Hollinger's 2004 annual
shareholders' meeting to a date not later than September 30, 2004.
Hollinger intends to hold its 2004 annual shareholders' meeting as
soon as practicable after its fiscal 2003 audited financial
statements are completed and available for mailing to
shareholders.
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.
IMCOR PHARMACEUTICAL: Shares Knocked Off Nasdaq SmallCap Market
---------------------------------------------------------------
IMCOR Pharmaceutical Co. (Nasdaq:ICPHC) announced that effective
with the open of business on June 28, 2004 its stock was delisted
from the Nasdaq SmallCap Market. On June 24, 2004 IMCOR received a
decision of the Nasdaq Listing Qualifications Panel indicating
that IMCOR's stock would be delisted because IMCOR had not held an
annual meeting for its 2002 and 2003 fiscal years by June 3, 2004.
The Listing Qualifications Panel had previously granted IMCOR an
extension through June 3, 2004 to hold these annual meetings.
IMCOR has filed preliminary proxy materials with the Securities
and Exchange Commission for these meetings and is preparing its
definitive proxy materials, but was unable to hold the meetings by
the June 3, 2004 deadline. Accordingly, IMCOR fails to comply with
the requirements for continued listing set forth in Marketplace
Rules 4350(e) and 4350(g).
IMCOR expects to hold the annual meetings for 2002 and 2003 in
July, 2004. The company plans to appeal Nasdaq's decision, but an
appeal does not stay the decision of the Listing Qualifications
Panel. Effective with the open of business on June 28, 2004, IMCOR
common stock will be eligible to trade on the OTC Bulletin Board
under the symbol ICPH.
In addition, IMCOR is planning to file amended Form 10-K's for the
fiscal year ends December 31, 2002 and 2003 and amended Form 10-
Q's for periods ended March 31 and June 20, 2004. These amendments
will provide enhanced disclosure in compliance with current
disclosure rules on Management's Discussion and Analysis and will
show a restated balance sheet to reflect a reclassification of its
Series A Preferred Stock from permanent to mezzanine equity. This
reclassification will not impact the company's reported loss or
loss per common share. In subsequent periods, the mezzanine equity
will be presented as permanent equity as all of the Series A
Preferred Stock was converted into common stock during June 2004.
About IMCOR
IMCOR Pharmaceutical Co. (formerly Photogen Technologies, Inc.) is
a specialty pharmaceutical company developing and marketing a
platform of innovative imaging products. Its FDA approved product,
Imagentr, is indicated for use in patients with suboptimal
echocardiograms to opacify the left ventricle and thereby improve
visualization of the main pumping chamber of the heart, and to
improve delineation of the endocardial borders (walls) of the
heart. As a result, ultrasound with Imagent may better distinguish
normal and abnormal heart structure and function - two critical
indicators of cardiac health. Imagent is manufactured from
synthetic materials, and packaged as a dry powder in a ready-to-
use kit that is stored at room temperature.
IMCOR's development programs use a versatile iodinated
nanoparticulate formulation that shows promise as a subcutaneous,
intravenous or intra-arterial agent for both cardiovascular
imaging and lymphography (the diagnosis of cancer metastasizing to
lymph nodes). PH-50 has potential benefits when used with
conventional or computed tomography (CT) angiography to address
the need for early detection of coronary artery disease, cancer
and other diseases affecting the body's arteries and organs. N1177
has potential applications for the diagnosis and staging of
cancers such as breast, prostate, lung, melanoma, uterine,
cervical, and head and neck cancer.
* * *
Liquidity & Capital Resources
In its Form 10-QSB for the quarterly period ended March 31, 2004
filed with the Securities and Exchange Commission, Imcor
Pharmaceutical Co. reports:
"At March 31, 2004, we had cash and cash equivalents totaling
approximately $76,234. Our ability to conduct operations is
entirely dependent on our ability to obtain additional capital.
Without additional financing we may not have sufficient cash
resources for our entire fiscal year ending December 31, 2004.
"On June 18, 2003, we closed the acquisition of the Imagent
Business from Alliance. At the closing, we paid approximately
$669,000 in cash and delivered 2,198,137 shares of our common
stock. Following a Special Meeting of Stockholders held on
February 5, 2004 we issued an additional aggregate of
approximately 2,054,000 shares of our common stock to certain
other creditors of Alliance. We are obligated to pay additional
amounts to Alliance secured and unsecured creditors at various
times between 90 and 365 days after the closing, (i) the remaining
$1,250,000 to Xmark which was paid on May 3, 2004, (ii) subject to
reaching satisfactory agreements with certain Alliance secured and
unsecured creditors, an aggregate amount of up to approximately
$2,825,000 to creditors other than Xmark and (iii) pay certain
royalties based upon sales of Imagent through June 2010, subject
to certain offsets.
"We are currently in default under obligations to pay $775,000 to
creditors of Alliance in connection with our acquisition of
Imagent and we are in default under an equipment lease and the
lessor has demanded approximately $787,000. We also have not
registered the resale of shares we issued in connection with that
acquisition, which in some cases is a condition to the
effectiveness of agreements to release us from any claims by the
Alliance creditor."
INN OF THE MOUNTAIN: Will Release Q4 & FY 2004 Results Tomorrow
---------------------------------------------------------------
Inn of the Mountain Gods Resort and Casino, a business enterprise
of the Mescalero Apache Tribe, will release its fourth quarter and
fiscal year ending April 30, 2004 financial results on Wednesday,
June 30, 2004. IMGRC will discuss its fourth quarter and fiscal
year end results during a conference call on July 1, 2004, at
11:00 a.m. (EST). The call can be accessed via telephone by
dialing 800-314-7867 and providing the confirmation code 152111.
Interested parties should call at least ten minutes prior to the
start of the conference call to register.
About Inn of The Mountain Gods Resort and Casino
IMGRC is a business enterprise of the Tribe, a federally
recognized Indian tribe with an approximately 725-square mile
reservation situated in the Sacramento Mountains in south-central
New Mexico. IMGRC includes all of the resort enterprises of the
Tribe including Casino Apache, Casino Apache Travel Center, Ski
Apache and a new resort project, currently under construction
which, upon completion, will include a 273-room hotel, a new
38,000 square foot casino (replacing the existing Casino Apache),
a fitness center and indoor swimming pool and a 37,000 square foot
convention and special events center, which will include capacity
for 17,000 square feet of divisible meeting room space.
As reported in the Troubled Company Reporter's April 2, 2004
edition, Standard & Poor's Ratings Services revised its outlook on
Inn ofthe Mountain Gods Resort and Casino (IMG) to negative from
stable.
At the same time, Standard & Poor's affirmed its ratings on
Mescalero, New Mexico-based IMG, including its 'B' corporate
credit rating.
"The outlook revision follows weaker-than-expected third-quarter
financial performance due to its May 2003 opening of the Travel
Center casino, which resulted in operating inefficiencies and
higher costs associated with operating two casinos, as well as
unseasonably warm weather impacting its ski operations" said
Standard & Poor's credit analyst Peggy Hwan. Adjusted EBITDA
during the quarter ended Jan. 31, 2004 declined about 20% year
over year, despite a 28% year-over-year increase in gaming
revenues. "As a result, Standard & Poor's now expects leverage to
be meaningfully higher by the end of IMG's fiscal 2004 (April 30)
than originally anticipated."
INTEGRATED BUSINESS: Terminates Dutchess Equity Credit Line
-----------------------------------------------------------
Integrated Business Systems and Services, Inc., (OTCBB: IBSS),
announced that it has terminated its existing equity line of
credit with Dutchess Private Equities Fund, L.P.
George Mendenhall, CEO of IBSS, commented, "For a variety of
business reasons, we elected not to draw down on the Dutchess
equity line of credit and have been exploring alternative sources
of capital. As such, we do not think that it is in the best
business interests of the Company and its shareholders at this
time to keep the original equity line of credit with Dutchess in
place."
About IBSS
Headquartered in Columbia, South Carolina, IBSS is the creator of
Synapse(TM), a groundbreaking software technology. Synapse(TM) is
a complete framework and methodology used to create, implement and
manage a wide variety of dynamic, distributed, networked, and
real-time enterprise applications, quickly and efficiently. Global
enterprises utilizing Synapse(TM) leverage the power of its
single, flexible framework to enjoy tremendous time and cost
advantages, in the development, deployment and on-going management
of customized applications.
Enabled by Synapse(TM) to take competitive advantage of cutting-
edge technologies such as wireless networking, mobile computing
and RFID, IBSS and its strategic partners bring solutions to
customers for mission-critical applications in manufacturing,
distribution, healthcare, finance, insurance, retail, education,
and government.
At March 31, 2004, Integrated Business Systems and Services,
Inc.'s balance sheet shows a shareholders' deficit of $3,388,039
compared to a $3,399,335 deficit at December 31, 2003.
For more information about IBSS and its Synapse technologies and
services, visit http://www.ibss.net/
INTERPUBLIC GROUP: Names M. Roth as Chairman & R. Thompson as CFO
-----------------------------------------------------------------
Interpublic Group (NYSE: IPG) announced a number of significant
changes in its top management ranks:
* Michael Roth, 58, Chairman and CEO of The MONY Group and an
Interpublic Board member since 2002, has agreed to join the
marketing services company as Chairman, effective on or
about July 15, after the anticipated closing date of the
sale of MONY Group to AXA Financial Services Group.
* Christopher Coughlin, 51, Interpublic's Chief Operating
Officer and Chief Financial Officer since June 2003, has
decided to retire at the end of 2004.
* Robert Thompson, 51, currently Senior Vice President,
Finance, will assume Coughlin's Chief Financial Officer
title and responsibilities. Mr. Thompson's promotion to
Executive Vice President and CFO takes effect after the end
of the second quarter.
Interpublic's major operating unit management, as well as
corporate staff, will continue to report to President and Chief
Executive Officer David Bell.
"We are fortunate that an executive of Michael Roth's caliber and
intellect was available to join Interpublic at this pivotal time,"
said David Bell. "Michael is a terrific operator and a great
financial executive. He has worked both in the professional
services sector and in a diversified holding company environment
for many years. He knows our company very well and is highly
regarded by our leadership team. I know he will make immediate and
lasting contributions to our change efforts and I look forward to
partnering with him."
Mr. Bell added that, "Chris Coughlin helped bring enhanced
financial discipline to the organization and recruit a number of
first-class professionals, such as Bob Thompson and most recently
Corporate Controller and Chief Accounting Officer Nick Cyprus.
This team will continue to move us forward in meeting our goals of
improving margins and achieving greater financial accountability
and reliability. We thank Chris for his many contributions and
wish him well in the future."
"I have enjoyed being a part of the first stage of building a new
Interpublic," said Mr. Coughlin. "We have succeeded in stabilizing
the company, strengthening its financial condition and putting
into place the foundation for future growth. However, as I
considered my long-term future in a global corporate setting such
as this one, I concluded that there are other priorities I would
like to honor at this point in my life, such as spending more time
with my family and other personal pursuits. I have therefore
decided to retire at the end of 2004. The fact that we've added to
our bench strength in financial and operational areas assisted me
in making this deeply personal decision. Of course, I'll be
available to Michael and to David in any way they ask until year-
end."
According to Mr. Roth, "During the past several years, I've come
to know and appreciate Interpublic's great potential. Clearly,
David and I have very complementary strengths. We also have a
strong personal relationship. As the company moves into the second
phase of its turnaround, his time will increasingly need to be
focused on the company's clients, its people and the competitive
vitality of its brands. I look forward to helping free David to
devote even more of his talents to these important areas, as well
as to working with Bob Thompson and the major unit heads to
improve operating performance."
Michael Roth began his career at The MONY Group in 1989 as
Executive Vice President and Chief Financial Officer, was named
President and Chief Operating Officer in 1991 and became Chairman
and Chief Executive Officer in 1993. As Chairman and CEO, Roth's
vision for the company focused on an advisory-based model, in
which the company provides value-added expertise and service to
design financial solutions that meet the individualized needs of
customers. Under his leadership, the company diversified its
business mix, broadened its distribution channels and enhanced its
ability to compete in the dynamic financial services marketplace.
Today, The MONY Group is a financial services holding company that
provides a wide range of protection, asset accumulation and retail
brokerage products and services through its various member
companies. Prior to joining MONY, Roth was Executive Vice
President and Chief Financial Officer of Primerica Corporation and
a Partner at Coopers & Lybrand.
About Interpublic
Interpublic is one of the world's leading organizations of
advertising agencies and marketing services companies. Major
global brands include Draft, Foote, Cone & Belding Worldwide,
Golin/Harris International, Initiative, Lowe & Partners Worldwide,
McCann-Erickson, Universal McCann and Weber Shandwick Worldwide.
Leading domestic brands include Campbell-Ewald, Deutsch and Hill
Holliday.
* * *
As reported in the Troubled Company Reporter's April 6, 2004
edition, Fitch Ratings affirmed the ratings on The Interpublic
Group of Companies, Inc.'s (IPG) senior unsecured debt at 'BB+',
multi-currency bank credit facility at 'BB+' and convertible
subordinated notes at 'BB-'. The Rating Outlook has been revised
to Stable from Negative. Approximately $2.3 billion of debt is
affected. The ratings on IPG's debt consider the progress made
with its cost structure and strengthened balance sheet as well as
the company's position as a leading global advertising holding
company and its diverse client base with long term relationships
with key accounts. Of concern remains the resolution of the
operation of the Silverstone racetrack and the sizeable related
liabilities and negative organic revenue growth.
The Stable Outlook reflects Fitch's expectation that IPG's
turnaround efforts have begun to steady operating earnings and
cash flow generation. Also acknowledged are the improvements to
IPG's balance sheet and its success in resolving certain non-
operating issues that have been a distraction for the company's
management, including the shareholder lawsuits and asset
dispositions.
INVISION TECH: Stockholders Back General Electric Acquisition Plan
------------------------------------------------------------------
InVision Technologies, Inc. (Nasdaq:INVN) announced that its
stockholders have voted to adopt the agreement and plan of merger
among General Electric Company (NYSE:GE), Jet Acquisition Sub,
Inc., a wholly owned subsidiary of GE, and InVision Technologies,
Inc.
The vote occurred at a Special Meeting of Stockholders held Friday
at InVision's headquarters. There was no further business
discussed at the Special Meeting.
On March 15, 2004, InVision announced that General Electric had
agreed to acquire InVision in an all-cash transaction valued at
approximately $900 million, or $50 per share. GE and InVision
anticipate that the proposed acquisition of InVision by GE will be
completed on or about July 15, 2004. Completion of the merger
remains subject to customary closing conditions, including
regulatory approvals. The actual closing date may vary from the
currently anticipated closing date.
About InVision
InVision Technologies, Inc. and its subsidiaries develop,
manufacture, market and support explosives detection systems based
on advanced computed tomography technology, X-ray diffraction and
quadrupole resonance. The company is the leading supplier of
explosives detection systems to the U.S. government for civil
aviation security. InVision is headquartered in Newark, Calif.
Additional information can be found at www.invision-tech.com
* * *
Liquidity and Capital Resources
In its Form 10-Q for the quarterly period ended March 28, 2004,
InVision Technologies Inc. reports:
"At March 28, 2004, we had $284.6 million in cash, cash
equivalents and short-term investments, compared to $276.9 million
at December 31, 2003.
"Net cash provided by operating activities was $7.2 million in the
first quarter of 2004, compared to cash used in operating
activities of $35.2 million in the first quarter of 2003. Cash
provided by operating activities in the first quarter of 2004
primarily resulted from net income of $5.2 million, enhanced by
the non-cash effects of $2.6 million of depreciation and
amortization expense, and $3.5 million in tax benefits from
employee stock transactions. Another contributing factor was a
$3.2 million decrease in inventory due to a reduction in lead time
to procure certain inventory materials from suppliers. In
addition, there was a $5.0 million increase in accounts payable
and a $4.4 million increase in deferred revenue. Partially
offsetting these increases to net cash provided by operating
activities was a $17.5 million increase in accounts receivable.
This increase was primarily due to billings to the TSA and other
customers for units shipped near the end of the first quarter of
2004.
"We believe that existing cash and cash equivalents, available
borrowings under our lines of credit and funds expected to be
generated from operations will be sufficient to finance our
working capital and capital expenditure requirements for at least
the next twelve months. However, if we fail to meet required
financial covenants in our credit agreement, or our receivables do
not support the upper limits of the credit agreement, then we may
not be able to have access to further funds under our credit
agreement. In addition, if we are unable to deliver EDS units in a
timely manner under orders from the TSA, the TSA may cancel its
orders or not place additional orders. If any of these events
occur, our capital resources would be significantly impaired."
KB HOME: Fitch Assigns BB+ Rating to $350MM Senior Unsecured Debt
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to KB Home's
$350 million, 6.375% senior unsecured notes due 2011. The Rating
Outlook is Positive. Proceeds from the new debt issue will be
largely used to pay down bank debt in the short term and for other
corporate purposes. Senior notes of $175 million at 7 3/4% will
mature later in the year.
The current ratings and Outlook reflect KB Home's solid,
consistent profit performance in recent years and the expectation
that the company's credit profile will continue to improve as it
executes its business model and embarks on a new period of growth.
The ratings also take into account the company's primary focus on
entry-level and first-step trade-up housing, its conservative
building practices, and effective utilization of return on
invested capital criteria as a key element of its operating model.
Over recent years, the company has improved its capital structure
and increased its geographic diversity and has better positioned
itself to withstand a meaningful housing downturn. Fitch also has
taken note of KB Home's role as an active consolidator within the
industry. Risk factors also include the cyclical nature of the
homebuilding industry. Fitch expects leverage (excluding financial
services) to remain comfortably within KB Home's stated debt-to-
capital target of 45%-55%.
The company has expanded EBITDA margins over the past several
years on steady price increases, volume improvements, and
reductions in SG&A expenses. Also, KB Home has produced record
levels of home closings, orders, and backlog as the housing cycle
extended its upward momentum. KB Home realizes a significant
portion of its revenue from California, a region that has proved
volatile in past cycles. But the company has reduced this exposure
as it has implemented its growth strategy and currently sources
approximately 17% of its deliveries from California, compared with
69% in fiscal 1995. Over recent years KB Home shifted toward a
presale strategy, producing a higher backlog/delivery ratio and
reducing the risk of excess inventory and debt accumulation in the
event of a slowdown in new orders. The strategy has also served to
enhance margins. The company maintains a 4.6-year supply of lots,
approximately 50% of which are owned and the balance controlled
through options. Inventory turnover has been consistently at or
above 1.5 times (x) during the past seven years.
Balance sheet liquidity has continued to improve as a result of
efforts to reduce long-dated inventories, quicken inventory turns,
and improve returns on capital. Progress in these areas has
allowed the company to accelerate deliveries without excessively
burdening the balance sheet.
As the housing cycle progresses, creditors should benefit from KB
Home's solid financial flexibility supported by cash and
equivalents of $65.6 million and $655 million available under its
$1 billion domestic unsecured credit facility as of May 31, 2004.
In addition, liquid, primarily presold work-in-process inventory
totaling an estimated $2.87 billion provides comfortable coverage
for construction debt. As noted earlier, $175 million in senior
notes mature in 2004, but the balance of debt is well laddered and
the current $1 billion revolving credit facility matures in four
years.
Management's share repurchase strategy has been aggressive at
times but has not impaired the company's financial flexibility. KB
Home repurchased $81.9 million of stock in fiscal 1999, $169.2
million in 2000, $190.8 million in 2002, $108.3 million in fiscal
2003, and $66 million so far in fiscal 2004. At the end of May
2004, 1 million shares remain under the board of directors'
repurchase authorization. Notwithstanding these repurchases, book
equity has increased $1,040.2 million since the end of 1999, while
construction debt grew $763.1 million. The company has had a small
dividend. In early December 2003, the board of directors sharply
raised the annual dividend from $0.30 per share to $1.00 per
share, a pay out of 9.3%, based on forecast earnings for fiscal
2004. However, the cash expenditures on dividends represent only
about $39 million, based on the current share count.
KBH has lessened its dependence on the State of California, but it
is still the company's largest market in terms of investment.
Operations are dispersed within multiple markets in the north and
in the south. During the 1990s, the company entered various major
Western metropolitan markets, including Phoenix, Las Vegas,
Denver, Dallas, Austin, and San Antonio and has risen to a top
five ranking in each market except Dallas. In an effort to further
broaden and enhance its growth prospects, it has established
operations in the southeastern U.S., including various markets in
Florida, Atlanta, Georgia, and North and South Carolina. Recently,
the company entered the Midwest via acquisitions. Fitch recognizes
the company as a consolidator in the industry but expects future
acquisitions will be moderate in size and largely funded through
cash flow.
KITCHEN ETC: Wants to Employ Adelman Lavine as Attorneys
--------------------------------------------------------
Kitchen Etc., Inc., is asking the U.S. Bankruptcy Court for the
District of Delaware for permission to hire Adelman Lavine Gold
Levin, PC, as its attorneys in its chapter 11 case.
Adelman Lavine will:
a) provide legal advice with respect to the Debtor's powers
and duties as a debtor-in-possession in the continued
operation of its business and management of its property;
b) take necessary action to protect and preserve the Debtor's
estate, including the prosecution of actions on behalf of
the Debtor and the defense of actions commenced against
the Debtor;
c) prepare, present and respond to, on behalf of the Debtor,
necessary applications, motions, answers, orders, reports
and other legal papers in connection with the
administration of its estate;
d) 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);
e) attend meetings and negotiations with representatives of
creditors and other parties in interest and advising and
consulting on the conduct of the case;
f) advise the Debtor with respect to bankruptcy law aspects
of any proposed sale or other disposition of assets; and
g) perform any other legal services for the Debtor, in
connection with this chapter 11 case, except those
requiring specialized expertise which Adelman Lavine is
not qualified to render and for which special counsel will
be retained.
Adelman Lavine will also, to the extent requested, attend and
participate in any creditors' committee meetings. The Debtor
assures the Court that Adelman Lavine is a "disinterested person"
as defined by section 101(14), and used in Section 327(a) of the
Bankruptcy Code.
Adelman Lavine's current hourly rates range from:
Designation Billing Rate
----------- ------------
Shareholders $335 - $450 per hour
Principals $315 - $335 per hour
Associates $175 - $290 per hour
Legal Assistants $150 - $155 per hour
Headquartered in Exeter, New Hampshire, Kitchen Etc., Inc. --
http://www.kitchenetc.com/-- is a leading multi-channel retailer
of household cooking and dining products. The Company filed for
chapter 11 protection on June 8, 2004 (Bankr. Del. Case No. 04-
11701). Bradford J. Sandler, Esq., at Adelman Lavine Gold and
Levin, PC represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
listed $32,276,000 in total assets and $33,268,000 in total debts.
K-STAR TECH: Case Summary & 10 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: K-Star Technologies, Inc.
dba Think 121
dba think121.com
657 Hite Road
Harwick, Pennsylvania 15049
Bankruptcy Case No.: 04-28044
Type of Business: The Debtor offers revolutionary technology for
creating personalized, integrated print and web
communications. See http://www.think121.com/
Chapter 11 Petition Date: June 17, 2004
Court: Western District of Pennsylvania (Pittsburgh)
Judge: Judith K. Fitzgerald
Debtor's Counsel: Michael Kaminski, Esq.
DKW Law Group PC
58th Floor US Steel Tower
600 Grant Street
Pittsburgh, PA 15219
Tel: 412-355-8117
Fax: 412-355-2609
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 10 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Todd R. and Donna L. Kueny License Agreement $1,283,040
2423 Butler Logan Road
Harwick, PA 15049
Janice Reese $350,000
c/o Joseph Decker, Esq.
Gefsky & Lehman, P.C.
Twenty-Third Floor, One PPG
Place
Pittsburgh, PA 15222
Robert and June Kueny $75,000
DeMarco & Associates Legal fees $7,146
James Bozek Miscellaneous $4,335
Expenses
Rob Whitfield Miscellaneous $3,634
expenses
Gregory Pegher Miscellaneous $1,922
expenses
Buchanan Ingersol Legal fees $1,538
William Marchiony Miscellanous $1,098
expenses
Scarano, Trump & Adelsperger Miscellaneous $455
expenses/outstanding
invoice for Debtor's
2003 tax return
LITHIUM TECH: Dismisses PricewaterhouseCoopers as Accountants
-------------------------------------------------------------
On May 4, 2004, the Board of Directors of Lithium Technology
Corporation voted to dismiss its independent accountants,
PricewaterhouseCoopers LLP.
The Company' financial statements completed by
PricewaterhouseCoopers LLP for the fiscal years ended December 31,
2003 and 2002 contained opinions modified to include an
explanatory paragraph related to substantial doubt regarding the
Company's ability to continue as a going concern.
LOMA LINDA UNIVERSITY: S&P Raises Revenue Bond Rating To BB+
------------------------------------------------------------
Standard & Poor's Rating Services raised its long-term rating to
'BB+' from 'BB' on Loma Linda, California's series 1999 revenue
bonds, issued for Loma Linda University Medical Center, based on
expectations of continued profitable operating results and balance
sheet growth. The outlook is stable.
"Financial performance has remained profitable over the past four
years at LLUMC, following operating losses in the late 1990s,"
Standard & Poor's credit analyst James Cortez said. "Operating
improvements are expected to be sustained, along with further
strengthening of the balance sheet."
LLUMC is the dominant player in the fairly competitive Inland
Empire region, located approximately 60 miles east of Los Angeles.
LLUMC is a tertiary referral academic medical center with a broad
service offering, including a 244-bed children's hospital
connected to the main campus. LLUMC also is designated as a Level
1 trauma center and offers unique services such as the proton
cancer treatment center. With 654 staffed beds, LLUMC is the
largest facility in the service area.
MACH ONE: S&P Assigns Low-B Ratings to 6 Series 2004-1 Classes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Mach One 2004-1 LLC's $643.3 million CMBS pass-through
certificates series 2004-1.
The preliminary ratings are based on information as of June 25,
2004. Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
The preliminary ratings reflect the credit support provided by the
subordinate classes of securities and the geographic and property
type diversity of the mortgaged properties securing the underlying
CMBS collateral. The collateral pool consists of 61 classes of
pass-through certificates from 42 CMBS transactions.
Preliminary Ratings Assigned
Mach One 2004-1 LLC
Class Rating Amount (mil. $)
A-1 AAA 100.000
A-2 AAA 152.000
A-3 AAA 146.850
X* AAA 643.307**
B AA 51.464
C AA- 10.453
D A 28.144
E A- 7.237
F BBB+ 17.690
G BBB 15.278
H BBB- 14.474
J BB+ 17.690
K BB 8.845
L BB- 8.041
M B+ 8.845
N B 6.433
O B- 6.433
P N.R. 43.430
* Interest-only class.
** Notional amount.
N.R. Not rated.
MAGELLAN MIDSTREAM: S&P Places BB Senior Debt Rating on Neg. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB' senior secured
debt rating on Magellan Midstream Holdings LP on CreditWatch with
negative implications. In addition, Standard & Poor's assigned its
'BBB' corporate credit rating to Magellan Midstream Partners LP
and placed the rating on CreditWatch with negative implications.
The actions affect about $800 million of rated debt and bank lines
at the Tulsa, Oklahoma-based company.
The CreditWatch placement reflects MMP's announcement that it will
acquire more than 2,000 miles of refined petroleum products
pipeline infrastructure from Shell Oil Products US for $492.4
million, plus inventories, which brings the total acquisition
price to approximately $530 million. Management intends to
initially fund the acquisition with cash on hand and bank
borrowings and permanently finance the acquisition with equal
proceeds from equity and debt issuances. The debt-financed
acquisition is expected to increase the company's debt leverage on
an interim basis to 68% from 54% or to about 50% if the book
effect of pooling of interest for the Magellan Pipeline
acquisition is included. The CreditWatch primarily reflects the
execution risk associated with the issuance of equity for the
acquisition. Standard & Poor's expects to resolve the CreditWatch
following the issuance of equity, which the company expects to
complete this year.
METRIS COMPANIES: Adds $300 Million of Conduit Funding Capacity
---------------------------------------------------------------
Metris Companies Inc. (NYSE:MXT) announced that Metris Receivables
Inc., its wholly owned subsidiary, has entered into an agreement
to increase its existing financing facilities by $300 million for
the purpose of financing credit card receivables in the Metris
Master Trust over the next two years. Total capacity in these
commercial paper conduit facilities now total $1.2 billion and
mature in May 2006. The lenders in these financing facilities are
made up of a number of commercial paper conduit providers and
banks that have worked with the Company for several years.
"This addition to our financing represents the final installment
of our long term funding plan," said David D. Wesselink, Chairman
and CEO of Metris Companies Inc. "We are very pleased to have
added the extra capacity we needed to continue to finance our
portfolio of credit card loans over the next two years."
About the Company
Metris Companies Inc., based in Minnetonka, Minn., is one of the
largest bankcard issuers in the United States. The company issues
credit cards through Direct Merchants Credit Card Bank, N.A., a
wholly owned subsidiary headquartered in Phoenix, Ariz. For more
information, visit http://www.metriscompanies.com/or
http://www.directmerchantsbank.com/
* * *
As reported in the Troubled Company Reporter's May 11, 2004
edition, Standard & Poor's Ratings Services raised its ratings on
Metris Cos. Inc., including Metris' long-term counterparty rating,
which was raised to 'CCC' from 'CCC-.' At the same time, the
ratings were removed from CreditWatch, where they were placed on
April 20, 2004. The outlook is stable.
"The rating change was driven by positive operational and
financial developments at the Minnetonka, Minn.-based credit card
company," said Standard & Poor's credit analyst Jeffrey Zaun.
METROMEDIA INT'L: Adds David Gale & Wayne Henderson to Board
------------------------------------------------------------
Metromedia International Group, Inc. (currently traded as:
OTCPK:MTRM - Common Stock and OTCPK:MTRMP - Preferred Stock), the
owner of interests in various communications and media businesses
in Russia and the Republic of Georgia, announced that it has
increased the size of its Board of Directors by two from seven to
nine members and elected Messrs. David Gale and Wayne F. Henderson
to the two newly created Director positions. This action was taken
at a meeting of the Company's Board of Directors on June 23, 2004
pursuant to an agreement reached earlier with certain holders of
the Company's 7.25% Cumulative Convertible Preferred Stock. The
election of Messrs. Gale and Henderson to the Board, both of whom
were recommended by the Participating Preferred Stock Holders,
affirmatively addresses a right of holders of the Preferred Stock
to place two members on the Board in the event the Company fails
to pay a Preferred Stock dividend for six consecutive quarters.
The Participating Preferred Stock Holders have represented to the
Company that they hold discretionary authority (including the
power to vote) with regard to 2,403,205 shares or approximately
58% of the outstanding 4,140,000 shares Preferred Stock. Under the
terms of the Agreement, the Participating Preferred Stock Holders
irrevocably waived the right to request a special meeting of
holders of Preferred Stock (i.e. holders of Voting Rights Class as
defined in the Company's Charter) to elect directors or take any
action to request such a meeting; such waiver to remain effective
until immediately after the next annual meeting of MIG's
stockholders is held. In consideration of this waiver, Messrs.
Gale and Henderson were elected as Class III Directors, and
therefore their terms will expire at MIG's next annual meeting of
stockholders. At the next annual meeting, the holders of Preferred
Stock will have the right to vote separately as a class for the
election of two directors. It is expected that Mssrs. Gale and
Henderson will be nominated for election by the holders of
Preferred Stock to fill these two directorships.
David Gale, 45, is President of Delta Dividend Group, Inc., an
investment firm and member of the Pacific Exchange that invests
primarily for its own account in preferred stocks and corporate
bonds. Previously, he was a Managing Director at Lehman Brothers
where he was responsible for the company's preferred stock sales
and trading area that generated over $40 million per annum. Prior
to Lehman Brothers, he was a Principal at Morgan Stanley where he
established the firm's preferred stock trading desk within the
fixed income division and managed the preferred stock sale and
trading area. Over the past 10 years, Mr. Gale has served as a
Director on the Boards of several publicly traded companies,
including Preferred Income Funds, three closed mutual funds with
combined assets of just under $700 million; Stone Container
Corporation, a paper company operating in the production and
marketing of commodity pulp, paper and packaging products with
operations in the U.S., Canada, Europe, China, Japan, Taiwan,
Argentina, Chile, and Venezuela; and FreeRealTime.com, a Web-
centric financial media company providing investors with
comprehensive, real-time financial information. Mr. Gale received
his M.B.A. from Harvard University and has attended the Director's
College at Stanford Law School.
Wayne F. Henderson, 62, is currently president of Capital
Dynamics, International, a consulting firm providing ICT
(information communications technology) strategic planning and
enterprise solutions for corporate and government clients. His
clients have included: Lockheed Martin; Motorola; Telecom Italia;
Sumitomo; The President and Cabinet of Ministers of Turkmenistan;
The President of Bolivia; and the U.S. Trade and Development
Agency. Mr. Henderson is a former executive that served with
Illinois Bell and AT&T prior to founding Capital Dynamics in 1990.
Mr. Henderson received his B.S. in Industrial Engineering and
Industrial Management - Finance from Purdue University and has
completed Executive Programs at the Aspen Institute and Stanford
University. Mr. Henderson is also a decorated Marine veteran of
Vietnam.
In making these announcements, Mark Hauf, Chairman and Chief
Executive Officer, commented: "David Gale and Wayne Henderson are
welcome additions to the Board and will provide further
independent voice and objective perspective as the Board navigates
through the complex task of restructuring the Company's balance
sheet. I am confident that the business and financial experience
these gentlemen bring will positively contribute to our continuing
ability to meet the highest corporate governance standards."
Mr. Hauf further commented: "The negotiated agreement reached with
a majority of our Preferred Stock holders that resulted in these
new Board appointments is clearly in the best interest of the
Company and all of its stockholders. It avoided the time and
expense that would be required to arrange a special meeting of
Preferred Stock holders, while still assuring that designees of a
majority of these stockholders hold seats on the Board. The Board
is currently evaluating the timing of the Company's next annual
meeting of stockholders and will provide guidance concerning the
meeting date within the next four to five weeks."
About Metromedia International Group
Through its wholly owned subsidiaries, the Company owns
communications and media businesses in Russia, Europe and the
Republic of Georgia. These include mobile and fixed line telephony
businesses, wireless and wired cable television networks and radio
broadcast stations. The Company has focused its principal
attentions on continued development of its core telephony
businesses in Russia and the Republic of Georgia, while
undertaking a program of gradual divestiture of its non-core media
businesses. The Company's core telephony businesses include
PeterStar, the leading competitive local exchange carrier in St.
Petersburg, Russia, and Magticom, the leading mobile telephony
operator in the Republic of Georgia. The Company's remaining non-
core media businesses consist of 18 radio businesses operating in
Finland, Hungary, Bulgaria, Estonia, and the Czech Republic and
one cable television network in Lithuania.
* * *
As reported in the Troubled Company Reporter's June 24, 2004
edition, Metromedia International Group, Inc., filed with the
Securities and Exchange Commission its 2004 First Quarter Form 10-
Q. Simultaneously with the filing of the Current Quarterly Report
with the SEC, the Company delivered a copy thereof to the Trustee
of its 10 1/2 % Senior Discount Notes due 2007 and thereby cured a
default condition within the specified cure period provided for
under the Indenture governing the Senior Notes. As previously
reported, the Trustee had advised the Company on May 18, 2004 that
it must provide the Trustee with its Current Quarterly Report by
July 16, 2004 or the Trustee would be forced to declare an Event
of Default under the Indenture. Accordingly, the Company is
currently in compliance with its SEC reporting requirements and
the OTCBB trading eligibility requirements.
MICRO COMPONENT: Receives $1.6M Order for Tapestry SC & Modules
---------------------------------------------------------------
Micro Component Technology, Inc., (OTCBB:MCTI), a leading supplier
of semiconductor test handling and automation solutions, announced
the receipt of an order for $1.6 million from an existing customer
for several new second generation Tapestry(TM) SC strip test
systems along with other SmartSolutions(TM) modules. The systems
are scheduled to ship over the next two quarters.
"It is very rewarding to receive this large order for our high
speed Tapestry SC systems and new SmartSolutions modules from one
of our major Integrated Device Manufacture (IDM) customers,"
commented Roger E. Gower, MCT's President and CEO. "Our customer
is seeing a broad increase in its business and has ordered more
systems to meet expanding capacity requirements on existing strip
test products and new requirements due to conversions of
singulated products to strip test."
Gower added, "With a SEMI May Book-To-Bill of 1.18 in the Test and
Assembly (TAP) segment, we are seeing many new opportunities for
strip test. Interest in our new products is strong and we are
seeing increased quoting activity. We had an excellent show at
Semicon Singapore where we introduced our new second generation
SmartMark(TM) SC system as a complementary laser mark system to
our new Tapestry SC. Our first shipment of this new product will
occur in the third quarter of 2004 with volume shipments in Q4 of
this year."
About the Company
MCT is a leading manufacturer of test handling and automation
solutions satisfying the complete range of handling requirements
of the global semiconductor industry. MCT has recently introduced
several new products under its SmartSolutions line of automation
products, including Tapestry SC, SmartMark(TM) SC, and
SmartTrak(TM), designed to automate the back-end of the
semiconductor manufacturing process. MCT believes it has the
largest installed IC test handler base of any manufacturer, with
over 11,000 units worldwide. MCT is headquartered in St. Paul,
Minnesota, with its core manufacturing operation in Penang,
Malaysia. MCT is traded on the OTC Bulletin Board under the symbol
MCTI.
At March 27, 2004, Micro Component Technology, Inc.'s balance
sheet shows a stockholders' deficit of $715,000 compared to a
deficit of $5,026,000 at December 31, 2003.
MIRANT CORP: Asks Court To Approve Contra Costa Settlement Pact
---------------------------------------------------------------
The Mirant Corp. Debtors ask the Court to approve a settlement
agreement between Mirant Delta, LLC, and the Assessor and Tax
Collector of Contra Costa County.
Mirant Delta is the owner of two power plants located in Contra
Costa County, California -- the Antioch Plant and the Pittsburgh
Plant. These plants collectively generate a total of 1,983
megawatts with five steam turbine generating units. The two
facilities combine to form one of the largest natural gas fueled
generating complexes in the United States and cover more than
1,250 acres of land along the San Francisco Bay Delta.
According to Ian T. Peck, Esq., at Haynes and Boone, LLP, in
Dallas, Texas, each of the power plants is subject to semi-annual
ad valorem property taxes assessed by the local taxing authority.
On January 1, 2001 and January 1, 2002, the Assessor of Contra
Costa assessed for property tax purposes the value of the Plants
at:
Plant 2001 2002
----- ---- ----
Antioch Plant $221,092,854 $246,949,311
Pittsburgh Plant 445,066,681 469,530,737
Mirant Delta timely appealed the Assessments on the grounds that
the Assessor had overvalued for property tax purposes the Mirant
Power Plants. Mirant also timely appealed the California Board
of Equalization's valuation of the Mirant Power Plants, and the
Board established the value of the Mirant Power Plants for 2003
property tax purposes at $313,100,000.
Due to Mirant Delta's Chapter 11 case, it was unable to pay to
Contra Costa the property taxes arising from the 2003 Tax
Assessment. As of June 30, 2004, the Assessor asserts that
Mirant Delta owes $3,631,613 on account of the 2003 Tax
Assessment. Included in the 2003 Tax Debt is $330,192 in
penalties that the Assessor asserts Contra Costa is owed. In
addition, the Assessor asserts that as of July 1, 2004,
additional penalties will accrue at the rate of 1.5% per month on
any unpaid balance of delinquent taxes -- the Redemption
Penalties. Mirant Delta disputes that any penalties are owed or
can be owed to the County. Mirant Delta, however, views the
Settlement Agreement as a global resolution of all the issues
between the parties.
Thus, in an effort to avoid the cost, delay and uncertainty of
litigating the Appeals, and to resolve disputes in Mirant Delta's
case over penalties due as part of the 2003 Tax Debt, Mirant
Delta and the Assessor entered into the Settlement Agreement.
Mr. Peck reports that the Settlement Agreement reduces the
assessed value for property tax purposes of the Mirant Power
Plants in 2001 by about 20% -- from $666,159,535 to $535,000,000
-- and the assessed value for property tax purposes of the Mirant
Power Plants in 2002 by about 40% -- from $716,480,048 to
$425,000,000. Under the Settlement Agreement, the dramatic
reduction in assessed value will result in refunds amounting to
$4,445,590 paid to Mirant Delta. In exchange, Mirant agrees to
pay $3,345,423 as full and final satisfaction of the 2003 Tax
Debt, including without limitation any claims for principal,
interest and penalties the Assessor asserted. Thus, on a net
basis, Mirant Delta's estate will receive more than $1,100,000 as
a result of the Settlement Agreement.
Mr. Peck notes that the Settlement Agreement needs the approval
of both the Court and the Assessment Appeals Board of Contra
Costa County. Hence, the parties will present to the Appeals
Board certain stipulations reflecting the reduction of valuations
set forth in the Settlement Agreement. In the event that the
Appeals Board does not approve the Stipulations, Mirant Delta
agrees to extend the period of time for resolution of the Appeals
under California Revenue and Taxation Code Section 1606(c) and
SBE Rule 309(b) to December 31, 2004. In the event that the
Appeals Board does not approve the Stipulations, Mirant Delta
reserves its rights to seek further relief from the Court.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. The Company filed for
chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590). Thomas E. Lauria, Esq., at White & Case LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $20,574,000,000
in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NATIONAL CENTURY: Donald Ayers Moves To Advance Defense Costs
-------------------------------------------------------------
Donald H. Ayers asks the Court to require Gulf Insurance Company
and Great American Insurance Company to advance defense costs
under the terms of certain Directors' & Officers' Liability
Insurance Policies.
Gulf's Request
On March 27, 2003, Gulf asked the Court to lift the automatic
stay so it can make payments under the D&O Policies and fulfill
its contractual obligations under the Gulf Policy. Certain of
the National Century Financial Enterprises, Inc. Debtors' former
officers and directors, including Mr. Ayers, filed memoranda
supporting Gulf's request.
On April 28, 2003, the Debtors argued that they had an interest
in the proceeds of the D&O Policies pursuant to the additional
election of entity coverage.
The Court conducted a hearing on May 7, 2003 to find out whether
the D&O Policies were proprietary to the Debtors' estate and
whether protection from the automatic stay was appropriate.
Adversary Proceeding Against Gulf
However, prior to the Court's official ruling on Gulf's request,
the Debtors filed an adversary proceeding, seeking a declaratory
judgment setting forth a procedure of allocating the proceeds of
the D&O Policies and an injunction enjoining Gulf and Great
American from making any disbursements under the D&O Policies.
The issues raised in the adversary proceeding center around two
D&O Policies purchased by the Debtors:
* the Gulf Policy -- a primary Directors and Officers
Liability and Private Company Indemnification Insurance
Policy No. GAO722269 issued by Gulf with a limit of
$5,000,000; and
* the Great American Policy -- an excess policy No. DFX0009369
issued by Great American Insurance Company with a limit of
$5,000,000.
The Gulf Policy is the primary policy and the Great American
Policy provides supplemental coverage. The D&O Policies provide
coverage to the Debtors' directors and officers for any loss,
including defense costs, resulting from any claim. As a former
NCFE Director and Officer, Mr. Ayers is an Insured Person under
the D&O Policies.
The Debtors have potential claims on their insurance policies
based on indemnification coverage, entity coverage, or both.
However, David Korn, Esq., at Maguire & Schneider, in Columbus,
Ohio, asserts that the existence of indemnification and entity
coverage cannot act as a bar to the contractual rights of
officers and directors to payments under these types of insurance
policies.
Mr. Korn points out that under Ohio law, an insurer has a direct
duty to defend its insured when the terms of an insurance policy
so provide. The duty to defend arises solely under contract. An
insurer contracts with an insured to pay the entire cost of
defending claims, which arise within the policy period. This
issue has been directly addressed and settled by two recent
landmark District Court decisions:
(1) Associated Electric & Gas Insurance Services, Ltd., v.
Rigas, 2004 US Dist. LEXIS 4498 (Decided March 17, 2004)
The AEGIS court was faced with a situation where a former
director and officer of Adelphia Communications
Corporation, John Rigas, was sued in his capacity as
director and officer in numerous civil suits, which arose
from the corporation's bankruptcy. Adelphia had
purchased three director and officer liability insurance
policies, a primary and two excess, from AEGIS. The AEGIS
Policies provided for entity coverage as well as director
and officer liability coverage, together with coverage
should Adelphia be required to indemnify the insureds.
Relying on Little v. MGIC Indemnity Corp., et al., 836
F.2d 789 (3rd Cir. 1987), the AEGIS court found that based
on the fact that the insureds were entitled to advancement
of defense costs when they became "legally obligated to
pay," the insureds were entitled to the benefit of the
bargain under the insurance contract. Therefore, the
carriers were forced to fulfill their obligations under
their contracts and advance defense costs to the insureds,
including Mr. Rigas.
(2) Federal Insurance Co. v. Tyco, 2004 N.Y. Slip Op 50160U,
2004 N.Y. Misc. LEXIS 228 (Decided March 5, 2004)
The issue in the Tyco court was whether their carrier,
Federal Insurance Company, was required to advance defense
costs under two D&O Policies. An officer of Tyco
International, Ltd., L. Dennis Kozlowski, was the
defendant in numerous civil lawsuits, a securities action
and a criminal proceeding. The Tyco court held that the
duty of an insurer to defend its insured or pay its
defense costs is distinct from and broader than its duty
to indemnify. The duty exists whenever a complaint
against the insured alleges claims that may be covered
under the insurer's policy.
Mr. Korn notes that the situations before the Bankruptcy Court
are analogous to those addressed by the AEGIS and Tyco courts.
Mr. Ayers has been named in numerous lawsuits, and is currently
under investigation by the United States Attorney's Office for
the Southern District of Ohio and the Securities and Exchange
Commission. An overwhelming majority of these lawsuits result in
Claims under the D&O Policies for which Mr. Ayers, as an Insured,
is entitled to advancement of Defense Costs.
Furthermore, pursuant to the terms of the D&O Policies, the
obligation of Gulf and Great American to advance Defense Costs
arose when Mr. Ayers becomes "legally obligated to pay." As Mr.
Ayers is now legally obligated to pay his costs in investigating
and defending the numerous suits which have been brought against
him as a result of his former position as director and officer of
the Debtors, Gulf and Great American are obligated to advance
Defense Costs to Ayers.
The D&O Policies also provide that Gulf and Great American "shall
advance Defense Costs within 60 Days of the written request of
the Insured, and prior to the final disposition of the Claim."
Therefore, Mr. Korn points out, Gulf and Great American become
contractually obligated to pay Defense Costs as they arise, prior
to and separate from any amounts which they may later be
obligated to pay resulting from a final adjudication of a Claim.
On October 1, 2003, Great American stated that the Proposal Form
signed by Lance Poulsen, another former officer and director of
the Debtors, and relied on by Great American in issuing the Great
American Policy, contained material misstatements and, therefore,
Great American should be entitled to unilaterally rescind the
Great American Policy or, in the alternative, declare the Great
American Policy to be null and void.
Mr. Korn argues that neither Gulf nor Great American can
unilaterally rescind the D&O Policies, and thereby avoid their
obligations to advance Defense Costs. The Debtors' D&O Policies
do not contain any provision regarding rescission. As in the
AEGIS case, courts hold, as a whole, that, until the issue of
alleged misstatement or fraud is resolved in a final
adjudication, an insurance company is obligated to fulfill its
obligations under the insurance contract.
Lance Poulsen and Barbara Poulsen join in Mr. Ayer's request for
the advancement of Defense Costs.
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. 42;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NAVISTAR: CAW Members Say Yes to New Labor Pacts for Chatham Plant
------------------------------------------------------------------
International Truck and Engine Corporation announced that members
of Local 127 and Local 35 of the Canadian Auto Workers (CAW) have
ratified new labor contracts that will run through June 30, 2009.
Local 127 represents production and maintenance employees while
Local 35 represents office employees. The action modified
contracts scheduled to expire on January 31, 2007. International
Truck and Engine is the operating company of Navistar
International Corporation (NYSE:NAV).
Navistar announced in February that the company's board of
directors had approved the company's overall heavy truck strategy,
which called for a total program investment of $300 million for
the introduction of a new line-haul Class 8 truck, but at that
time no decision had been made as to where the truck would be
produced.
The new contracts maintain and improve manufacturing flexibility
and provide for a purchased modular assembly strategy for the new
line-haul truck scheduled to be introduced at Chatham and go into
production in January 2007.
"The new extended agreements represent the collaborative culture
we are creating with our partners and create a cost competitive
and high-quality environment in which to produce our new line-haul
truck," said Dee Kapur, president of International's truck group.
"The agreements ensure that Chatham will continue to be a
significant source for our premium conventional heavy trucks as we
continue with our program to grow the business and improve
operating results."
"The new agreements open the door for greater productivity and
quality." Kapur said. "We are pleased that the company and the CAW
found common ground at such a strategic time in the business. The
possibilities are very exciting."
Chatham currently produces 421 heavy trucks per week, or and
average 84 trucks per day. Based on current demand, production is
scheduled to increase to 110 units per day in late July following
a scheduled two-week summer vacation shutdown.
In addition to heavy trucks, International Truck and Engine is a
leading producer of mid-range diesel engines, medium trucks,
severe service vehicles, and a provider of parts and service sold
under the International(R) brand. IC Corporation, a wholly owned
subsidiary, produces school buses. The company also is a private
label designer and manufacturer of diesel engines for the pickup
truck, van and SUV markets.
About Navistar International
Navistar International Corporation (NYSE:NAV) is the parent
company of International Truck and Engine Corporation. The company
produces Internationalr brand commercial trucks, mid-range diesel
engines and IC brand school buses and is a private label designer
and manufacturer of diesel engines for the pickup truck, van and
SUV markets. With the broadest distribution network in North
America, the company also provides financing for customers and
dealers. Additionally, through a joint venture with Ford Motor
Company, the company builds medium commercial trucks and sells
truck and diesel engine service parts. Additional information is
available at http://www.nav-international.com/
* * *
As reported in the Troubled Company Reporter's May 17, 2004
edition, Standard & Poor's Ratings Services affirmed its 'BB-'
corporate credit rating and its senior unsecured, and subordinated
debt ratings on Warrenville, Illinois-based Navistar International
Corp. The outlook remains stable.
"The affirmation follows announcements from Navistar regarding
various financing transactions," said Standard & Poor's credit
analyst Eric Ballantine.
"We expect Navistar's earnings and cash flow to gradually improve
as market conditions rebound. We expect free cash flow in fiscal
2004 to be relatively modest in the $100 million area."
NEIGHBORCARE: Omnicare Extends Tender Offer Until July 30, 2004
---------------------------------------------------------------
Omnicare, Inc. (NYSE: OCR) announced that it has withdrawn and re-
filed Monday its Hart-Scott-Rodino notification with respect to
Omnicare's tender offer for all of the outstanding shares of
NeighborCare, Inc. (NASDAQ: NCRX) common stock for $30.00 per
share in cash. The re-filing will start a new 15-day waiting
period that would be expected to expire at 11:59 p.m. on Tuesday,
July 13, 2004, unless the FTC shortens or extends the waiting
period.
The Hart-Scott-Rodino statute typically affords the U.S. antitrust
enforcement agencies 30 calendar days to review an acquisition.
However, when the first step of the transaction is a cash tender
offer, as is the case here, that review period is shortened to 15
calendar days. Withdrawing and then re-filing the notification
will give the FTC a full 30-day review period.
Omnicare also announced that it has extended its offer for all of
the outstanding shares of NeighborCare common stock. The offer,
which was scheduled to expire at 5:00 p.m., New York City time, on
Wednesday July 7, 2004, has been extended until 5:00 p.m., New
York City time, on Friday, July 30, 2004, unless further extended.
As previously announced, Omnicare commenced a tender offer on June
4, 2004 for all of the outstanding shares of NeighborCare common
stock for $30 per share in cash. This price represents a 70%
premium over NeighborCare's closing stock price on May 21, the
last day of trading before the offer was made public on May 24. It
is also a 40% premium over the 30-day trading average prior to the
announcement of the offer, a 30% premium to Wall Street's median
price target for NeighborCare's stock over the next 12 months and
$4.00 more than NeighborCare's previous all-time high.
As of the close of business on June 25, 2004, a total of 720
shares of NeighborCare common stock had been tendered.
Dewey Ballantine LLP is acting as legal counsel to Omnicare and
Lehman Brothers and Lazard are acting as financial advisors.
Innisfree M&A Incorporated is acting as information agent for
Omnicare's offer.
About Omnicare, Inc.
Omnicare, Inc. (NYSE:OCR), a Fortune 500 company based in
Covington, Kentucky, is a leading provider of pharmaceutical care
for the elderly. Omnicare serves residents in long-term care
facilities comprising approximately 1,050,000 beds in 47 states
and the District of Columbia, making it the nation's largest
provider of professional pharmacy, related consulting and data
management services for skilled nursing, assisted living and other
institutional healthcare providers. Omnicare also provides
clinical research services for the pharmaceutical and
biotechnology industries in 29 countries worldwide.
About NeighborCare, Inc.
NeighborCare, Inc. (Nasdaq: NCRX) is one of the nation's leading
institutional pharmacy providers serving long term care and
skilled nursing facilities, specialty hospitals, assisted and
independent living communities, and other assorted group settings.
NeighborCare also provides infusion therapy services, home medical
equipment, respiratory therapy services, community-based retail
pharmacies and group purchasing. In total, NeighborCare's
operations span the nation, providing pharmaceutical services in
32 states and the District of Columbia. Visit our website at
http://www.neighborcare.com/
As reported in the Troubled Company Reporter's May 26, 2004
edition, Standard & Poor's Ratings Services placed its ratings on
NeighborCare, including the 'BB-' corporate credit rating, on
CreditWatch with negative implications after Omnicare Inc.,
disclosed an all-cash offer to purchase the company. S&P states
that the pro forma combination is likely to have a markedly weaker
financial profile than NeighborCare. The purchase price of $1.5
billion includes the assumption or repayment of a $250 million
NeighborCare debt issue. Estimating the effect of additional debt
and not assuming any cost savings, total debt to EBITDA is
expected to rise to over 4x, while funds from operations to total
debt will fall to less than 15%.
NeighborCare, Inc., is formerly known as Genesis Health Ventures,
Inc., which, along with its affiliates, filed for chapter 11
protection (Bankr. Del. Case No. 00-02692-JHW) on June 22, 2000.
On October 2, 2001, the Debtors' Joint Plan of Reorganization,
confirmed on September 12, 2001, became effective. On December 2,
2003, Genesis began doing business as NeighborCare, Inc.
NET PERCEPTIONS: Appeals Nasdaq's Delisting Determination
---------------------------------------------------------
Net Perceptions, Inc. (Nasdaq: NETP) announced that it received a
letter dated June 22, 2004 from the Nasdaq Listing Qualification
Staff notifying the Company that, based upon the Staff's review of
the Company and under the discretionary authority granted by
Nasdaq Marketplace Rules 4300 and 4330(a)(3), the Company's
securities will be delisted on July 1, 2004 unless the Company
appeals the Staff's decision. In its letter, the Staff noted its
belief "that the Company is not currently engaged in active
business operations and is therefore a public shell."
The Company strongly disagrees with the Staff's decision to delist
the Company's securities and has appealed the Staff's
determination to the Nasdaq Listing Qualifications Panel, although
there can be no assurance that such appeal will be successful. The
appeal will stay the delisting of the Company's securities pending
the Panel's decision.
Following rejection of a plan of liquidation of the Company by its
shareholders, the Company is seeking to redeploy its non-operating
assets and utilize its net operating loss carry-forwards. The
Company continues to generate revenues from the license of its
source code.
* * *
Liquidity and Capital Resources
In its Form 10-Q for the quarterly period ended March 31, 2004,
Net Perceptions, Inc. reports:
"Since inception, we have financed our operations primarily
through the sale of equity securities. At March 31, 2004, we had
$13.0 million of cash, cash equivalents and short-term
investments, compared to $61.5 million at March 31, 2003. This
significant reduction was primarily due to the special cash
distribution paid on September 2, 2003 to record holders of our
common stock on August 18, 2003 in the aggregate amount of
approximately $42.2 million, the satisfaction of substantially all
of our accrued restructuring obligations and operating losses
incurred from March 31, 2003 through March 31, 2004.
"During 2003 and 2002 and 2001, we instituted certain
restructuring plans to better align our cost structure with our
business outlook and general economic conditions. Under the
restructuring plans, we recorded restructuring related charges
totaling $2.3 million, $768,000 and $15.6 million during 2003,
2002 and 2001, respectively. A total of approximately $6.9 million
was charged against the restructuring reserve during 2003. As of
March 31, 2004, the total accrued restructuring liability was
$18,000. Management estimates that 100% of this reserve will be a
use of cash in 2004 for remaining rent commitments, less estimated
sublease income, related to facilities we have vacated.
"We believe that existing cash and investments will be sufficient
to meet our expected working capital needs for the next twelve
months. However, uncertainties exist as to the amounts we will
receive in connection with any potential sales of assets, the
costs of implementing our asset redeployment strategy and the
precise value of our existing obligations and liabilities, which
may exceed our available cash and cash equivalents. Furthermore,
we may be unable to settle or otherwise resolve our remaining
obligations and liabilities, and we may incur or be subject to
additional obligations and liabilities, which could collectively
exceed our available cash and cash equivalents."
NETWORK INSTALLATION: Books First Ever Recurring Revenues
---------------------------------------------------------
Network Installation Corp. (OTC Bulletin Board: NWIS) announced
that it has booked its first ever recurring revenues from the re-
sale of voice and data service.
Network Installation CEO Michael Cummings stated, "Several months
ago we announced a corporate wide initiative to aggressively
pursue recurring revenue streams and announced partnership
agreements with Mpower Communications Corp., PAETEC
Communications, Qwest Services Corp. and XO Communications, Inc.,
which enabled us to resell long distance and broadband internet
services. In keeping with our single solution model, both our
Phoenix and Los Angeles branches have booked the re-sale of voice
and data service as value added to clients in which we had been
awarded new or additional projects." He added, "While only nominal
initially (approximately $3,000 per month), we plan to grow this
service into a multi-million dollar line of recurring revenue with
gross profit margins in excess of 90%."
Additionally, Network Installation's Sacramento branch was awarded
multiple project orders to install voice and data structured
cabling for the Paradise, Chico and Capay Joint Union School
Districts in the San Francisco Bay Area.
About Network Installation Corp.
Network Installation Corp. -- whose March 31, 2004 balance sheet
reflects a stockholders' deficit of $1,607,403 -- provides
communications solutions to the Fortune 1000, Government Agencies,
Municipalities, K-12 and Universities and Multiple Property
Owners. These solutions include the design, installation and
deployment of data, voice and video networks as well as wireless
networks and Wi-Fi. Through its wholly-owned subsidiary Del Mar
Systems International, Inc., the Company also provides integrated
telecom solutions including Voice over Internet Protocol (VoIP)
applications. Network Installation maintains offices in Irvine,
Los Angeles, Gold River and San Marcos, CA; Las Vegas, NV and
Phoenix, AZ. To find out more about the company, visit
http://www.networkinstallationcorp.net/
NEW WEATHERVANE: Asks to Continue Hiring Ordinary Course Profs.
---------------------------------------------------------------
New Weathervane Retail Corp., and its debtor-affiliates want to
continue employing the professionals they utilize in the ordinary
course of their businesses. The Debtors tell the U.S. Bankruptcy
Court for the District of Delaware that continued employment of
the Ordinary Course Professionals is in best interest of their
estates, creditors, and other parties-in-interest.
If the Debtor cannot have access to the expertise and background
knowledge of certain of these professionals, the estates will
undoubtedly incur additional and unnecessary expenses.
The Debtors relate that prior to the Petition Date, they retained
the services of certain professionals in the ordinary course of
business.
Issues often arise in the ordinary course of the Debtors' business
in various localities and jurisdictions involving, inter alia, the
Debtors' employee, intellectual property and tax issues, for which
the Debtors may need to retain counsel or accountants to represent
the Debtors' interests. The Debtors propose that they be permitted
to pay, without formal application or approval, 100% of the
interim fees and disbursements of each of the Professionals upon
the submission of an appropriate invoice, so long as the payment
does not exceed $30,000 per month for any Professional.
Headquartered in New Britain, Connecticut, New Weathervane Retail
Corporation -- http://www.wvane.com/-- is a Women's specialty
retailer. The Company filed for chapter 11 protection on June 3,
2004 (Bankr. Del. Case No. 04-11649). William R. Firth, III,
Esq., at Pepper Hamilton LLP, represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed $28,710,000 in total assets and
$24,576,000 in total debts.
NEXTEL PARTNERS: Perry Satterlee to Leave VP & COO Post Mid-July
----------------------------------------------------------------
Nextel Partners, Inc., (Nasdaq:NXTP) announced that Vice President
and Chief Operating Officer, Perry Satterlee, will be leaving the
company effective mid-July. Satterlee will assume the role of
Chief Operating Officer of Clearwire Corporation, a start-up
venture backed by Craig McCaw.
In Satterlee's role as COO, he was responsible for Sales,
Marketing and Customer Care. His departure creates opportunities
for two long-term executives to take on more significant roles as
they join the senior management team. Jim Ryder will become Vice
President of Sales and Marketing and Philip Gaske will assume the
position of Vice President of Customer Care.
"Perry has been an important contributor to our company's
success," said John Chapple, Partners' Chairman, CEO and
President. "During his tenure, Partners has built a broad and
lasting infrastructure and sales culture driven to achieve our
100% customer satisfaction and performance goals. The Partners
team is very well-positioned to move seamlessly through this
transition and we remain on track to achieve or exceed our
previously stated guidance for 2004."
For more than 4 years Ryder has been responsible for the company's
national sales and distribution efforts which have driven
Partners' consistently strong top-line growth. Gaske has led
Partners' customer service team since the company's inception and
has been instrumental in achieving Partners' industry leading
customer retention levels.
"Jim and Philip are outstanding performers and proven leaders.
They bring the experience, dedication and commitment to take on
these new responsibilities," said Chapple. "While we are
disappointed to see Perry leave the Partners' family, we've built
a strong team in Jim and Philip who are ready and eager to build
on Partners' record of growth and success."
Nextel Partners was established to construct and operate digital
wireless communications services under Nextel Communications'
brand name in midsize and smaller cities throughout the U.S. Many
of these markets are contiguous to Nextel Communications' existing
properties. Like Nextel Communications, Nextel Partners
exclusively uses Motorola's iDEN technology, which allows wireless
services to be provided over lower special mobile radio
frequencies. At the end of first-quarter 2004, there were about
1.3 million subscribers, with a substantial mix of these in the
construction, transportation, manufacturing, government, and
services sectors. Although Nextel Communications owns about 31% of
Nextel Partners, it does not provide any credit support to the
company.
* * *
As reported in the Troubled Company Reporter's May 26, 2004
edition, Standard & Poor's Rating Services assigned its 'B+' bank
loan rating, along with a recovery rating of '3', to the $800
million senior secured credit facility of Nextel Partners
Operating Corp., a wholly owned subsidiary of Kirkland,
Washington-based wireless carrier Nextel Partners Inc.
In addition, a 'B-' rating has been assigned to Nextel Partners'
$25 million 8.125% senior notes due 2011, issued under Rule 144A
with registration rights.
The rating on Nextel Partners' senior unsecured debt was affirmed
at 'B-' and removed from CreditWatch, where it was placed with
positive implications May 7, 2004. The 'B+' corporate credit
rating also was affirmed. The outlook remains stable.
"The rating on Nextel Partners is dominated by financial risks
associated with the company's still aggressive leverage, which was
about 5.5x debt to annualized EBITDA (about 5.8x after adjusting
for operating leases) for the quarter that ended in March 2004,"
said Standard & Poor's credit analyst Michael Tsao. "The high
leverage is mainly a legacy of the company's use of substantial
debt to finance the building of a network and operating losses
that typically occur in the early stages of a business. Somewhat
mitigating these risks is Nextel Partners' good competitive
position, and solid EBITDA and free cash flow prospects."
NORTEL NETWORKS: Declares Preferred Share Dividends
---------------------------------------------------
The board of directors of Nortel Networks Limited declared
a dividend on each of the outstanding Cumulative Redeemable Class
A Preferred Shares Series 5 (TSX:NTL.PR.F) and the outstanding
Non-cumulative Redeemable Class A Preferred Shares Series 7
(TSX:NTL.PR.G). The dividend amount for each series is calculated
in accordance with the terms and conditions applicable to each
respective series, as set out in the Company's articles. The
annual dividend rate for each series floats in relation to
changes in the average of the prime rate of Royal Bank of Canada
and The Toronto-Dominion Bank during the preceding month
and is adjusted upwards or downwards on a monthly basis by an
adjustment factor which is based on the weighted average daily
trading price of each of the series for the preceding month,
respectively. The maximum monthly adjustment for changes in the
weighted average daily trading price of each of the series will be
plus or minus 4.0% of Prime. The annual floating dividend rate
applicable for a month will in no event be less than 50% of Prime
or greater than Prime. The dividend on each series is payable on
August 12, 2004 to shareholders of record of such series at the
close of business on July 30, 2004.
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 www.nortelnetworks.com/ or
http://www.nortelnetworks.com/media_center
* * *
As reported in the Troubled Company Reporter's June 25, 2004
edition, Standard & Poor's Ratings Services said that its long-
term corporate credit rating and other long-term ratings on Nortel
Networks Corp. and Nortel Networks Ltd. remain on CreditWatch with
developing implications, where they were placed April 28, 2004.
As previously reported Standard & Poor's lowered its 'B' long-
term corporate credit rating and other long-term ratings on Nortel
Networks Corp. and Nortel Networks Ltd. to 'B-'.
OMI CORPORATION: Buying Two Arcadia Suezmax Vessels for $140MM
--------------------------------------------------------------
OMI Corporation (NYSE:OMM), announced that it has reached an
agreement to purchase two Suezmax vessels (built in 2003) from
Arcadia Ship Management. The vessels are sister ships to vessels
in the existing fleet. OMI is expected to take delivery of the
Suezmax vessels between mid July and August of this year. The
total consideration paid for the assets will be approximately
$140 million.
Craig Stevenson, Chairman and Chief Executive Officer commented,
"Once again we are pleased to have the opportunity to grow our
Suezmax fleet. This agreement along with the agreement we
announced on Wednesday to acquire 12 vessels, which included four
modern double hulled Suezmax vessels, shows our commitment to
growing the company with high quality double hulled vessels. We
expect these two purchases to be accretive to our 2004 and 2005
earnings."
The purchase is subject to customary closing conditions. Funding
for the purchase of these two vessels will be from operating cash
flow, existing revolver capacity and bank financing.
About OMI Corporation
OMI is a major international owner and operator of crude oil
tankers and product carriers. Its fleet currently comprises 36
vessels, primarily Suezmaxes and product carriers, aggregating 3.0
million deadweight tons. The Company currently has 23 of its
vessels on time charter. OMI currently has on order five 37,000
and one 47,000 dwt ice class 1A product carriers. Two vessels are
scheduled to be delivered in 2004, three in 2005 and the last in
2006.
* * *
As reported in the Troubled Company Reporter's June 11, 2004
edition, Standard & Poor's Ratings Services affirmed its 'BB'
corporate credit rating and its other ratings on OMI Corporation
and removed all the ratings from CreditWatch, where they were
placed on May 28, 2004. The removal from CreditWatch followed
OMI's announcement that it had withdrawn its offer to acquire
unrated Stelmar Shipping Ltd. The outlook is stable. Stamford,
Connecticut-based OMI has $613 million in lease-adjusted debt.
"The improved tanker market, even if it weakens somewhat, should
enable the company to maintain its credit profile," said Standard
& Poor's credit analyst Kenneth Farer. "However, ratings upside
potential is limited because of the ongoing fleet renewal program
and participation in the competitive and cyclical tanker market."
OMNI FACILITY: U.S. Trustee Names 5 Member Creditors' Committee
---------------------------------------------------------------
The United States Trustee for Region 2 appointed five creditors to
serve on an Official Committee of Unsecured Creditors in Omni
Facility Services, Inc.'s Chapter 11 cases:
1. Regent Capital Partners, L.P.
14 East 60th Street, Suite 1000
New York, New York 10022
Attention: Richard H. Hochman
Tel. No. (212) 735-9900
2. Gulf Insurance Company
One State Street Plaza, 19th Floor
New York, New York 10004
Attention: Jack Wilson
Tel. No. (917) 320-4476
3. Premier Growers Inc.
3485 S. Puckett Road
Buford, Georgia 30519
Attention: Bolling R. Sharp
Tel. No. (770) 932-5234
4. Hightower of Southfield
27680 Arlington Drive
Southfield, Michigan 48076
Attention: Bernard Womack
Tel. No. (248) 910-8288
5. Advantage Distribution Co./Lower Huron Cleaning Supply
35731 W. Michigan Avenue
Wayne, Michigan 48184
Attention: Mark Paladino, President
Tel. No. (734) 721-5550
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 South Plainfield, New Jersey, Omni Facility
Services, Inc. -- http://www.omnifacility.com/-- provides
architectural, janitorial, landscaping, and electrical services.
The Company filed for chapter 11 protection on June 9, 2004
(Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at
Togut, Segal & Segal LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed $80,334,886 in total assets and
$100,285,820 in total debts.
ONLINE POWER: Auctioning All Assets on August 20 in Denver, Colo.
-----------------------------------------------------------------
OPS-OnLine Power Supply, Inc. (OTC:OPWR), which filed for
protection under Chapter 11 of the Bankruptcy Code on May 14,
2004, announced that it has filed a motion with the Bankruptcy
Court to sell substantially all of its assets, including patents,
equipment, inventory and other assets used in connection with its
business as a going concern at auction to Saturn Engineering and
Electronics, Inc. for $400,000, subject to higher and better
offers. Saturn will be allowed to credit the outstanding balance
due on certain debtor-in-possession financing provided by Saturn.
OPS will retain its interest in its cash, accounts receivable,
litigation and avoidance actions.
The auction of the assets is scheduled for 10:00 a.m. on Friday,
August 20, 2004, at the offices of Sender & Wasserman, P.C., 1999
Broadway, Suite 2305, Denver, CO 80202. The Bankruptcy Court has
also scheduled a hearing on the approval of the Motion to Sell and
the selection of the successful bidder for August 20, 2004, at
1:30 p.m. in Courtroom C of the United States Bankruptcy Court,
721 19th Street, Denver, CO 80202. Under the terms of the proposed
sale, following court approval, OPS will cease to operate, the
case will be converted to a Chapter 7 and thereafter OPS'
remaining assets will be liquidated and distributed to OPS'
creditors. At the present time, OPS does not believe there will be
any equity remaining after the payment of debts for distribution
to the shareholders
Any party who is interested in participating in the auction of the
OPS assets should contact the company or its counsel for a copy of
the order establishing the sale and auction procedures and other
relevant information.
On June 3, 2004, the Bankruptcy Court entered an order authorizing
OPS to borrow up to $125,000 from Saturn, in order to allow OPS to
continue operating pending the consummation of the sale of OPS'
assets. The borrowing is secured by substantially all of OPS'
assets.
Copies of all pleadings can be obtained through the U.S.
Bankruptcy Court for the District of Colorado.
About the Company
OPS holds a U.S. patent for the process of producing AC to DC
power supplies that provide efficiencies of up to 97 percent,
extended operating temperature ranges and above average power
densities, all with no magnetic thermal deration. This innovation
is called Distributed Power Magnetics (DPM) and is the first
significant breakthrough in power supply technology in over 23
years. The sophisticated DPM products also boast impressive MTBF
statistics, all in the lightest and smallest footprint available
for their particular configurations. Benefited industries include
telecommunications, data communications, networking and
industrial. For additional information, visit
http://www.powersupply.com/
PAC HOLDING: Lund International Completes Trenz Acquisition
-----------------------------------------------------------
Lund International, Inc. announces the purchase of certain assets
of Trenz located in Bakersfield, California.
Trenz is a wholly owned subsidiary of PAC Holding Company. On
May 20, 2004, Lund International entered into an Asset Purchase
Agreement offering to purchase substantially all of Trenz's assets
out of the PAC Holding Company Chapter 11 Bankruptcy case filed in
the United States Bankruptcy Court for the District of Delaware.
On June 22, 2004, the Bankruptcy Court authorized the sale of
Trenz's assets to the Company.
Trenz is in the business of designing, manufacturing and marketing
custom grills to aftermarket warehouse distribution and catalogue
customers. Trenz also offers interior and exterior accessories,
bumpers, and custom steering wheels. Trenz is located in
Bakersfield, California, where it leases a 28,000 square foot
facility and employs approximately 65 people. Dennis
Vollmershausen, President and CEO of the Company stated that, "the
Company believes that the acquisition of Trenz expands and
complements our automotive accessories business. We are pleased to
now have the highest quality, most innovative, and broadest line
for the custom grill category."
About Lund International
Lund International is a leading designer, manufacturer and
marketer of a broad line of accessories for the automotive
aftermarket. Its products are sold under the trade names
"Lund(R)", "Deflecta-Shield(R)", "Belmor(R)", "Nifty
Products(TM)", and "Auto Ventshade(TM)". The corporate
headquarters are at 3700 Crestwood Parkway, N.W., Suite 1000,
Duluth, Georgia 30096.
About PAC Holding Company
Over the past five years, PAC Holding Company has built a strong
base of aftermarket truck and automotive accessories
manufacturers, with products including retractable tonneau covers,
body styling kits, grill guards and tube steps. Formed in 1998 by
Russell E. Stubbings and Chicago-based private equity firm
Prospect Partners, LLC, PAC has successfully grown through select
mergers with and acquisitions of leading auto and truck
aftermarket accessory manufacturers, including: Pace-Edwards
Company, Wings West, Inc., Adleco d/b/a Bedlocker, LTD Accessories
and Go Rhino! Products.
PARMALAT GROUP: Jade Land Presses For Sale Contract Decision
------------------------------------------------------------
Before the Bankruptcy Petition Date, Jade Land Company, LLC,
entered into a contract to purchase Farmland Dairies, LLC's real
property in Long Valley, New Jersey for $3,650,000. Jade Land
paid a $125,000 deposit, which is currently being held by Aronsohn
Weiner & Salerno as escrow agent. Jade Land is required, and
continues, to pay Farmland $5,000 per month pursuant to the
Contract. Jade Land also expended $160,000 to date in reliance
on Farmland's good faith in closing the Contract, and expects to
expend an additional $166,000 before mid-July 2004 in furtherance
of the Contract.
The Contract provides considerable benefit to Farmland's estate,
including a limitation on Farmland's environmental exposure with
respect to the Property. The Contract limits Farmland's
liability for environmental remediation at $125,000.
Farmland has advised Jade Land that it intends to "remarket" the
Property, leaving Jade Land in the precarious position of
expending significant amounts, time and effort without the
certainty of obtaining the benefits of the Contract and
ultimately acquiring the Property. Jade Land advised Farmland of
its intention to close on or before August 20, 2004.
By this motion, Jade Land asks the Court to compel Farmland to
promptly assume or reject the Contract.
In the event Farmland rejects the Contract, Jade Land asks Judge
Drain to grant it an allowed secured claim without the need for
filing a claim. Section 365(j) of the Bankruptcy Code grants
Jade Land an allowed secured claim on Farmland's interest in the
Property to the extent of the purchase price paid.
Jade Land also wants the Escrow Agent to immediately return all
deposits paid. To the extent that Farmland's interest in the
Property is insufficient to wholly reimburse Jade Land for its
payments to the Escrow Agent, Jade Land asks Judge Drain to grant
it an administrative claim to the extent of any shortfall. Its
costs incurred in reliance on the Contract should also be granted
administrative priority. Jade Land further insists that these
amounts must be increased to reflect, as applicable, sales and
use taxes, as well as other fees and expenses, including without
limitation, attorney's fees, that Jade Land incurred.
Joseph M. Vann, Esq., at Cohen Tauber Spievack & Wagner, LLP, in
New York, tells the Court that the statutory lien under Section
365(j) may not otherwise alter the applicable priorities among
Farmland's secured creditors, including any mortgages with
interests in the Property and any interests in the Property
arising from the DIP financing extended to the U.S. Debtors. In
light of those potentially significant liens with superior
priority, Jade Land may face the unpleasant prospect of continued
payments to the estate and continued expenditures in furtherance
of its obligations under the Contract, with merely an unsecured
claim in the event its Contract is rejected after Farmland's
"remarketing."
Mr. Vann asserts that the financial burden imposed on Jade Land,
who is complying with the Contract in good faith in exchange for
potentially nothing more than an unsecured claim, justifies its
request to require Farmland to decide on the Contract
immediately.
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. 21; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PARMALAT GROUP: 52 Trade Creditors Sell Claims Totaling $563,959
----------------------------------------------------------------
From June 8 to June 15, 2004, the Clerk of Bankruptcy Court
recorded 20 claim transfers to Trade-Debt.net:
Transferor Amount
---------- ------
Akzo Nobel Salt America, Inc. $1,003
Alltec Products, Inc. 886
American Waste & Textile 961
Atlantic Refrigeration Equipment 1,483
Atlantic Scale Co., Inc. 1,414
Class Act Embroidery 180
Daniel J. Hussey 500
Dell Landscaping, Inc. 816
Dodge Newark Supply, Inc 829
Enviromed Corp. 1,254
Gil Meyerowitz 1,096
Global Network Resource, Inc. 545
Green Pond Development Co., LLC 270
Indianhead Plating, Inc. 914
Industrial Commodities 168
L&W Packaging 698
Pennington Market 4,266
Perkaroma 1,656
The Custom Companies 1,320
Truck King International 769
------
$21,028
On June 10, 2004, 26 trade creditors sold their claims to
Riverside Claims, LLC:
Transferor Amount
---------- ------
Bayard Advertising Agency, Inc. 2,805
Bells Food Market 3,000
Business & Legal Reports, Inc. 2,300
Cortese Corporation 61,820
Cox Stationers & Printers 2,109
Everett's Landscape Mgmt 1,151
Fred Heyrich Incorporated 12,004
H & H Mack Sales, Inc. 5,085
House O Flavors 123,393
Landscapeworks, Inc. 10,343
Midland Radiator Service Co. 2,034
Nextran Truck Center Atlanta 9,975
Niro, Inc. 9460
Nordic Cold Storage, LLC 17,580
North Jersey Trailer & Truck Svcs 9,573
Prime Distribution Services 11,581
Prime, Inc. 2,388
Powerhouse Equipment & Engineering 11,091
Ribbons Express 3,345
Rodar Leasing Corporation 3,214
The Knotts Company 3,326
Top Hat Limousine Service 2,597
Walczak Lumber Company 4,910
Wayne Tool & Supply Co., Inc. 2,627
Westfalia Separator, Inc. 8,672
Williamson Employment Services 3,775
------
$345,908
From June 7 to June 11, 2004, six creditors transferred their
claims to Sierra Liquidity Fund:
Transferor Amount
---------- ------
Cold Star, Inc. $9,971
Crown Equipment/Crown Lift Trucks 16,087
Reilly Dairy & Food Company 8,821
RWI Transportation, LLC 71,101
Spring Pure Natural Water 26,228
Sweetener Supply Corporation 64,815
------
$197,023
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. 21; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PEGASUS: Wants Court Nod To Employ Ordinary Course Professionals
----------------------------------------------------------------
The Pegasus Satellite Communications, Inc. Debtors employ the
services of various professionals from time to time in the
ordinary course of operating their business. The Ordinary Course
Professionals provide services to the Debtors in a variety of
discrete matters, including regulatory issues, tax issues,
employee benefit matters and employee-related litigation,
intellectual property matters, commercial litigation, and real
estate matters.
The Debtors want to continue the employment of the Ordinary
Course Professionals postpetition without the necessity of filing
formal applications for employment and compensation by each
professional pursuant to Sections 327, 328, 329 and 330 of the
Bankruptcy Code. Robert J. Keach, Esq., at Bernstein, Shur,
Sawyer & Nelson, in Portland, Maine, explains that because of the
large number and geographic diversity of the professionals and
the discreet nature of their services performed, it would be
unwieldy and burdensome on both the Debtors and the Court to
require the Ordinary Course Professional to apply separately for
approval of its employment and compensation. Furthermore, the
amount of fees paid to the Ordinary Course Professional may be de
minimis in any given month but can vary widely from month to
month.
Mr. Keach asserts that the uninterrupted services of the Ordinary
Course Professionals are vital to the Debtors' continuing
operations and their ultimate ability to effectuate a successful
Chapter 11 process. The cost of preparing and prosecuting the
employment and fee applications would be significant and
unnecessary because it would ultimately be borne by the Debtors'
estates.
To ensure that the Ordinary Course Professional is disinterested
and does not represent or hold any interest adverse to the
Debtors or their estates, the Debtors propose that each Ordinary
Course Professional be required to file a declaration of
disinterestedness with the Court, and to serve copies on:
* the Debtors,
* the Debtors' counsel:
-- Bernstein, Shur, Sawyer & Nelson
100 Middle Street, P.O. Box 9729, Portland, Maine 04104
Attn: Robert J. Keach, Esq.;
-- Sidley Austin Brown & Wood, LLP
Bank One Plaza, 10 South Dearborn Street,
Chicago, Illinois 60603
Attn: Larry J. Nyhan, Esq., and James F. Conlan, Esq.,
* the Office of the United States Trustee for the District of
Maine, and
* the attorneys for any committees that may be appointed.
No firm providing services to any Debtor will receive payment for
postpetition services rendered until the Declaration of Proposed
Professional has been filed with the Court and served on the
Notice Parties.
The Debtors propose that the Notice Parties will have 15 days
after the receipt of each Ordinary Course Professional's
Declaration of Proposed Professional to object to the employment
of the Professional.
Although certain of the Ordinary Course Professionals may hold
small unsecured claims against the Debtors, the Debtors do not
believe that any of the Ordinary Course Professionals have an
interest materially adverse to them, their estates, creditors, or
other parties-in-interest. Mr. Keach clarifies that the Debtors
are not seeking authority to pay prepetition amounts owed to the
Ordinary Course Professionals.
Payment Procedure
The Debtors will pay, without formal Court application, 100% of
the fees and disbursements of each Ordinary Course Professional
without further delay, as long as:
(a) the fees and disbursements do not exceed $20,000 per
month for any Ordinary Course Professional, or $200,000
per annum for any Ordinary Course Professional for the
duration of the Chapter 11 cases; and
(b) no written objection to the payment of the invoice is made
by or received by the Debtors. If the parties cannot
resolve the objection, the Ordinary Course Professional
whose fees are objected to may file a request for payment
of the disputed amount with the Court.
In the event that in any given month, the fees and disbursements
of any Ordinary Course Professional exceed the Monthly Cap
applicable, that Ordinary Course Professional would be required
to apply for Court approval of all fees and disbursements for the
month, but would be entitled to an interim payment up to the
amount of the Monthly Cap as a credit against the fees and
disbursements for the month ultimately allowed by the Court. In
the event that the aggregate of the fees and disbursements
exceeds the Aggregate Cap for any given year, the Ordinary Course
Professional would be required, on a going-forward basis, to
apply for Court approval of all its fees and disbursements in
compliance with any interim compensation procedures.
According to Mr. Keach, while some of the Ordinary Course
Professionals may want to continue to represent the Debtors on an
ongoing basis, others may be unwilling to do so if they are
unable to be paid on a regular basis. If the expertise and
background knowledge of any of the Ordinary Course Professionals
with respect to the particular areas and matters for which they
were responsible before the Petition Date is lost, the Debtors'
estates will undoubtedly incur additional and unnecessary
expenses, as other professionals without those background and
expertise will have to be employed.
For this reason, the Debtors seek the Court's authority to employ
the Ordinary Course Professionals on terms substantially similar
to those in effect before the Petition Date.
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.
5; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PG&E NAT'L: NEG, Attala & Certificateholders Resolve Claim Dispute
------------------------------------------------------------------
Attala Generating Company, LLC, was formed by Duke Energy North
America, LLC, to develop, construct, own, operate and maintain a
526-megawatt natural gas-fired combined-cycle electric generating
facility located in Attala County, Mississippi. On September 28,
2000, Attala Power Corporation, an indirect wholly owned
subsidiary of NEG, purchased all membership interests in Attala
Generating from Duke Energy.
On May 7, 2002, Attala Generating sold and leased back two
separate undivided interests in the Facility under two leveraged
lease transactions. The leveraged lease transactions involved
Attala Generating's sale of the undivided interests in the Attala
Facility to VCC Attala OL, LLC, and TCC Attala OL, LLC, for $340
million. VCC Attala OL and TCC Attala OL financed the purchase
through funds provided by their equity owners, VCC Attala OP,
LLC, and TCC Attala OP, LLC, and through proceeds from the sale
of certain non-recourse notes of VCC Attala OL and TCC Attala OL
to the Attala 2001 Pass Through Trust. The undivided interests
in the Attala Facility were subsequently leased back to Attala
Generating in exchange for periodic rent payments from Attala
Generating to VCC Attala OL and TCC Attala OL.
The Pass Through Trust was established to issue limited-recourse
10.32% Pass Through Certificates.
A series of agreements were entered into around the date of the
Sale/Leaseback, including a tolling agreement entered into
between Attala Generating and Attala Energy Company, LLC.
Pursuant to the Tolling Agreement, Attala Generating will convert
fuel provided by Attala Energy into electric energy and provide
ancillary services for a 25-year term. Attala Energy was
obligated to deliver the necessary fuel to Attala Generating and
to pay a monthly fixed payment, which was anticipated to be more
than sufficient to enable Attala Generating to pay its periodic
rent under the Facility Leases. Attala Energy also was obligated
to make two separate variable payments to Attala Generating to
cover all variable non-fuel operating costs.
In support of Attala Energy's payment obligations under the
Tolling Agreement, NEGT issued a guaranty to Attala Generating
capped at $300 million, plus certain collection costs, which was
scheduled to decrease on an annual basis as set forth in the
tolling guaranty.
Pursuant to the Project Documents, Attala Generating assigned to
VCC Attala OL and TCC Attala OL all of its title and interest in
and to certain documents and rights, including the Tolling
Agreement and the Tolling Guaranty. In turn, VCC Attala OL and
TCC Attala OL sub-assigned those rights and interests back to
Attala Generating for the duration of the Facility Leases.
A group of insurance companies and other institutional investors
purchased certificates from the Pass Through Trust for $237
million. HSBC Bank USA, as Pass Through Trustee, used the
Invested Funds to purchase the Lessor Notes from VCC Attala OL
and TCC Attala OL, which, in turn, used the Invested Funds, plus
additional funds, to purchase the Attala Facility. The Pass
Through Trust owns the Lessor Notes.
VCC Attala OL and TCC Attala OL secured their obligations under
the Lessor Notes by granting a first priority security interest
to HSBC, as Lease Indenture Trustee and Pledge Collateral Agent
and a Substitute Deed of Trust Trustee, for the benefit of the
Certificateholders, of the rights and interests of VCC Attala OL
and TCC Attala OL in the Lease Indenture Estate. The Collateral
includes:
* their undivided interests in the Attala Facility;
* their interests in certain material project documents,
including but not limited to the Tolling Agreement and the
Tolling Guaranty;
* their interests in the pledge by APC of its membership
interests in AGC;
* their rights under the Facility Leases, including their
rights to receive rent and termination value under the
leases; and
* certain other leasehold property rights.
The Lease Indenture Estate was pledged to the Deed of Trust
Trustee.
Defaults and Foreclosure
Attala Generating terminated the Tolling Agreement on
December 31, 2002 due to Attala Energy's failure to continue
making timely payments under the Tolling Agreement. As a result
of the early termination, Attala Generating became entitled to a
termination payment from Attala Energy. Attala Generating and
the Certificateholders assert that the Termination Payment owed
by Attala Energy is $476 million. The amount of the Termination
Payment is disputed and is the subject of arbitration between
Attala Generating and Attala Energy.
Attala Energy's default under the Tolling Agreement ultimately
resulted in Attala Generating's inability to make its scheduled
rent payments and a default on its obligations under the Facility
Leases. HSBC terminated the Facility Leases effective March 5,
2004. Upon termination of the Facility Leases, the sub-
assignment of rights from VCC Attala OL and TCC Attala OL to
Attala Generating, including but not limited to, rights and
interests in the Tolling Agreement and Tolling Guaranty,
automatically terminated, resulting in those rights reverting
back to VCC Attala OL and TCC Attala OL in full as the assignees
under those agreements.
Attala Generating's default under the Facility Leases caused an
automatic cross-default on VCC Attala OL and TCC Attala OL's
obligations under the Lessor Notes. On March 5, 2004, HSBC
conducted a foreclosure sale at public auction of the Lease
Indenture Estate, including but not limited to, the rights under
the Facility Leases, the Tolling Agreement and the Tolling
Guaranty. In accordance with the Deed of Trust Assignment of
Rents Leases and Security Agreement, Central Mississippi, an
entity wholly owned by HSBC and formed by and for the benefit of
the Certificateholders, submitted the only bid at the auction and
acquired the Lease Indenture Estate.
By virtue of its purchase of the Lease Indenture Estate at the
foreclosure sale and the exercise of certain rights under the
Deed of Trust, Central Mississippi succeeded to certain rights of
Attala Generating in connection with the Facility Leases and the
rights of VCC Attala OL and TCC Attala OL to the Lease Indenture
Estate, which allows it to assert claims for:
-- the Termination Payment under the Tolling Agreement;
-- payments under the Tolling Guaranty; and
-- payments under the Facility Leases, among other claims.
On January 8, 2004, the Certificateholders and HSBC filed Claim
No. 00361 against NEG asserting:
(a) a $476,510,000 Termination Payment, plus interest due
under Tolling Agreement;
(b) $11,699,426 plus interest for accrued and unpaid toll
payments due before the termination of the Tolling
Agreement;
(c) $304,698 in damages for the failure of NEG and its
affiliates to maintain the Attala Facility pursuant to the
O&M Agreement -- the Operation, Maintenance and Management
Services Agreement;
(d) unliquidated collection costs incurred to enforce their
rights under the Tolling Agreement and the Tolling
Guaranty; and
(e) a $488,514,124 potential claim against NEG for alleged
violations of the securities laws arising in connection
with the sale of the Certificates.
On January 9, 2004, Attala Generating filed Claim No. 00363
against NEG asserting:
(1) a $476,510,000 Termination Payment, plus interest owed in
connection with the Tolling Agreement;
(2) $11,699,426 plus interest for accrued and unpaid toll
payments that were due before the termination of the
Tolling Agreement;
(3) unliquidated damages for the failure of NEG and its
affiliates to maintain the Attala Facility pursuant to the
O&M Agreement; and
(4) unliquidated collection costs incurred in connection with
the Tolling Agreement and the Tolling Guaranty.
Substantive Consolidation
On February 24, 2004, the Certificateholders asked the Court to
declare that NEG is liable for the full amount of the Termination
Payment, the accrued and unpaid pre-termination toll payments and
the damage claim asserted in the Certificateholders Claim, as
well as additional alleged debts of certain of NEG's non-debtor
affiliates -- including but not limited to claims against Attala
Generating for $303,663,848 plus certain costs allegedly due
under the Facility Leases -- by substantively consolidating
Attala Power, Attala Energy and Attala Generating with NEG and,
thereby, avoiding the $300 million Tolling Guaranty cap.
The Certificateholders served requests for production of
documents and interrogatories on several parties. NEG collected
and reviewed a significant amount of paper and electronic
documents and began a rolling production to the
Certificateholders on March 15, 2004. The Certificateholders
also began a rolling production in response to NEG's discovery
responses on the same day.
The Settlement Stipulation
After several settlement discussions and conferences, NEG, Attala
Power, Attala Generating, Attala Energy, the Certificateholders,
HSBC, and Central Mississippi agreed to a consensual resolution
of the Claims and other issues between them.
As approved by the Court, the parties agree that:
(a) The Certificateholders, HSBC and Central Mississippi will
receive a $312 million allowed claim, which represents the
$300 million cap amount under the Tolling Guaranty plus
collection costs allowed under the Guaranty, the pre-
termination lease obligations and the damages claim under
the O&M Agreement;
(b) The Certificateholders, HSBC and Central Mississippi will
release all other claims against NEG, Attala Power and
Attala Energy with respect to the Sale/Leaseback and
the Project Documents including, without limitation:
-- any claim to a Termination Payment in excess of the
$300 million cap;
-- any claim for payment of Termination Value under the
Facility Leases; and
-- any claim for violation of the securities laws in
connection with the sale of the Certificates;
(c) Attala Generating's Claim No. 00363 will be disallowed
and expunged in its entirety;
(d) Attala Generating and NEG mutually release each other from
any claims either may have against the other;
(e) NEG, Attala Power and Attala Energy release all claims
against the Certificateholders, HSBC and Central
Mississippi arising out of or related to the Settlement
Stipulation and the Claims; and
(f) the Request for Substantive Consolidation is deemed
withdrawn.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- develops, builds, owns and operates
electric generating and natural gas pipeline facilities and
provides energy trading, marketing and risk-management services.
The Company filed for Chapter 11 protection on July 8, 2003
(Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq.,
Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at
Willkie Farr & Gallagher represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $7,613,000,000 in assets and
$9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No.
23; Bankruptcy Creditors' Service, Inc., 215/945-7000)
QUERREY CONCRETE: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Querrey Concrete Floors, Inc.
10721 Research Boulevard Suite C
Austin, Texas 78759
Bankruptcy Case No.: 04-13258
Chapter 11 Petition Date: June 21, 2004
Court: Western District of Texas (Austin)
Judge: Frank R. Monroe
Debtor's Counsel: Patrick C. Hargadon, Esq.
Bankston & Richardson, L.L.P.
400 West 15th, #710
Austin, TX 78701
Tel: 512-499-8855
Fax: 512-499-8886
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
------ --------------- ------------
Internal Revenue Service Former Ch. 11 debt $519,455
800 E. 6th St., Ste. 601
Austin, TX 78761
Brown, McCarroll Legal services $183,430
I.R.S. 941 2003 - $98,822 $124,956
941 2004 - $26,134
Seven States Former Ch. 11 debt $39,947
Bell, Turney, Coogan & Legal services $18,000
Richards, L.L.P.
Crescent Machinery Former Ch. 11 debt $11,702
GMAC Leasing 2001 Chevrolet Van $11,338
Secured Value:
$9,000
GMAC Secured Value: $8,877
$7,500
Texas Workforce Commission $7,787
Advantage Rental Former Ch. 11 debt $5,266
I.R.S. Income tax 2003 - $4,892
$3,358
Income tax 2004 -
$1,536
Raba Kistner $3,850
Texas Workforce Comm. Former Ch. 11 debt $3,038
BFS Concrete Contractors, $1,945
Inc.
Office of Attorney General $1,850
BFI $1,839
Lasecrete LLC Former Ch. 11 debt $1,624
Airgas Southwest Former Ch. 11 debt $1,298
Rash, Chapman, Schreiber & Legal services $1,204
Porter
Capitol Bearing Former Ch. 11 debt $1,165
QWEST COMMS: Appoints Dan Yost as EVP -- Product & Marketing
------------------------------------------------------------
Qwest Communications International Inc. (NYSE:Q) announced that
Dan Yost has been named executive vice president of product and
marketing, effective June 28, 2004. Yost will report to Richard C.
Notebaert, Qwest chairman and CEO.
Yost, 55, who has more than 30 years of telecommunications
experience, joins Qwest from Allegiance Telecom, Inc., a
facilities-based national local exchange carrier, where he served
as the company's president and chief operating officer. While with
Allegiance, Yost directed the company's day-to-day operations,
which included the delivery of telecommunications services,
including local, long-distance, international calling, high-speed
data transmission and Internet services and a full suite of
customer premise communications equipment and service offerings to
small and medium-sized businesses across the U.S. In addition, he
has also held senior management positions at several technology
companies, including AT&T Wireless, McCaw Cellular Communications,
MetroCel Cellular, Inc., and NETCOM Online Communications.
"I am extremely pleased to be joining Qwest, one of the industry's
leading providers of telecommunications services. I look forward
to assisting Dick and the team in expanding the portfolio of
consumer and business communications offerings and leveraging the
company's unique blend of local and national network assets to
deliver new high-growth services such as VoIP," said Yost.
Yost will be replacing Patricia Engels, who after leading the
company's wholesale and product and marketing operations, has
decided to pursue other senior leadership positions outside of
Qwest following an orderly transition period.
"I am pleased with the progress we have made over the last two
years and wish the company well in the future," said Engels.
"Dan's wealth of experience will help Qwest expand its competitive
market position and identify new services to deliver to
customers," said Notebaert. "We would also like to thank Pat for
her nearly two years of service and leadership. Pat's experience
in creating customer-focused cultures was extremely helpful as we
introduced the Spirit of Service in the communities we serve
across the U.S."
About Qwest
Qwest Communications International Inc. (NYSE:Q) is a leading
provider of voice, video and data services to more than 25 million
customers. The company's 46,000 employees are committed to the
"Spirit of Service" and providing world-class services that exceed
customers' expectations for quality, value and reliability. For
more information, please visit the Qwest Web site at
http://www.qwest.com/
At March 31, 2004, Qwest Communications International, Inc.'s
balance sheet shows a stockholders' deficit of $1,251,000,000
compared to a deficit of $1,016,000,000 at December 31, 2003.
RACE POINT CLO: Fitch Affirms $10.5MM Class D Note Rating at BB+
----------------------------------------------------------------
Fitch Ratings affirms all of the rated notes issued by Race Point
CLO II, Ltd. The affirmation of these notes is a result of Fitch's
rating review process. The following rating actions are effective
immediately:
--$402,000,000 class A-1 senior secured notes, due
May 15, 2015 'AAA';
--$15,000,000 class A-2 senior secured notes, due
May 15, 2015 'AA+';
--$53,000,000 class B senior secured notes, due
May 15, 2015 'A';
--$17,000,000 class C senior secured notes, due
May 15, 2015 'BBB';
--$10,500,000 class D senior secured notes, due
May 15, 2015 'BB+'.
Race Point II, a collateralized loan obligation that closed on
April 16, 2003, is managed by Sankaty Advisors, LLC. The fund was
established to invest in a portfolio of primarily senior secured
loans. The ratings of the class A-1, A-2, B, C, and D notes
address the likelihood that investors will receive full and timely
payments of interest on scheduled interest payment dates, as
provided for within the indenture, as well as the stated balance
of original principal on the final payment date.
According to the May 28, 2004 trustee report, all performance and
collateral profile tests were in compliance except for the Fitch-
weighted average rating factor test. The portfolio experienced
some credit migration, with the WARF increasing from 49 as of the
first available trustee report dated June 30, 2003 to 53 on May
28, 2004. Although the WARF has increased slightly since June 30,
2003, all overcollaterization tests have improved by more than 1%
while maintaining the weighted average spread requirement.
RCN CORPORATION: Employs Innisfree As Solicitation Agent
--------------------------------------------------------
Deborah M. Royster, RCN Corporation's General Counsel and
Corporate Secretary, relates that a majority of the holders of
the RCN Corp. Debtors' senior notes and common stock hold
securities in "street name" through a bank, broker, or other
nominee. During the course of the Debtors' Chapter 11 cases, Ms.
Royster says that the successful dissemination of notices,
including the notice of the hearing to consider approval of the a
disclosure statement and the confirmation of a reorganization plan
for the Debtors, to these "street name" holders will require
coordination with numerous banks, brokerages, agents, proxies, or
other nominees, primarily to ensure that these entities properly
forward notices and other materials to their customers.
For this reason, the Debtors sought and obtained the Court's
authority to employ Innisfree M&A Incorporated as solicitation
agent in their Chapter 11 cases to provide, among other things,
noticing, consultation, solicitation, and vote tabulation
services.
Specifically, Innisfree will:
(a) provide advice to the Debtors and their counsel regarding
all aspects of the vote on the reorganization plan,
including timing issues, voting and tabulation
procedures, and documents needed for the vote;
(b) review the voting portions of the disclosure statement
and ballots, particularly as they may relate to
beneficial owners holding securities in "street name;"
(c) work with the Debtors to request appropriate information
from the trustee of the Senior Notes, the transfer agent
of the Common Stock, and The Depository Trust Company;
(d) mail voting and nonvoting documents to the registered
record holders of the Senior Notes and Common Stock, and,
if requested, other parties entitled to receive notice;
(e) coordinate the distribution of voting documents to
"street name" holders of Senior Notes by forwarding the
appropriate documents to the banks and brokerage firms
holding the securities or their agent, who in turn will
forward it to beneficial owners for voting;
(f) coordinate the distribution of nonvoting documents to
"street name" holders of Common Stock by forwarding the
appropriate documents to the banks and brokerage firms
holding the securities or their agent, who in turn will
forward it to beneficial owners for voting;
(g) distribute copies of the master ballots to the
appropriate nominees so that firms may cast votes on
behalf of beneficial owners;
(h) prepare a certificate of service for filing with the
court;
(i) handle requests for documents from parties-in-interest,
including brokerage firm and bank back-offices and
institutional holders;
(j) respond to telephone inquiries from holders regarding the
disclosure statement and the voting procedures;
(k) if requested to do so, make telephone calls to confirm
receipt of plan documents and respond to questions about
the voting procedures;
(l) if requested to do so, assist with any necessary efforts
to identify beneficial owners of the Senior Notes and the
Common Stock;
(m) receive and examine all ballots and master ballots cast
by creditors and security holders. Innisfree will date
and timestamp the originals of all the ballots and master
ballots upon receipt;
(n) tabulate all ballots and master ballots received prior to
the voting deadline in accordance with established
procedures, and prepare a vote certification for filing
with the court; and
(o) undertake other duties as may be agreed upon by the
Debtors and Innisfree.
Innisfree is a well-known proxy solicitation and investor
relations firm with significant experience in all areas relating
to the identification or solicitation of holders of public debt
and equity securities on behalf of its clients. Innisfree's
employees have significant experience providing counsel to large,
publicly traded companies in matters relating to communications
with, and notices to, security holders, assistance with plan
solicitations, and the tabulation of ballots with respect to
Chapter 11 plans.
In exchange for its services, the Debtors will pay Innisfree on
these terms:
(1) A $15,000 project fee, plus $3,000 for each issue -- each
CUSIP number or ISIN number -- of public securities
entitled to vote on the Plan, and $1,500 to $3,000,
depending on the number of holders in Street name, for
each issue of public securities not entitled to vote on
the Plan but entitled to receive notice. This fee
category covers the coordination with all brokerage
firms, banks, institutions and other interested parties,
including the distribution of voting materials. This
assumes one distribution of materials, which will be
directed to the firms' proxy departments, and no
extensions of the voting deadline.
(2) For the mailing to creditors and record holders of
securities, labor charges will be estimated at $1.75 to
$2.25 per package, with a minimum of $500, depending on
the complexity of the mailing. The charge assumes the
package would include the disclosure statement, a ballot,
a return envelope, and one other document. It also
assumes that a window envelope will be used for the
mailing, and will, therefore, not require a matched
mailing.
(3) A $4,000 minimum charge to take up to 500 telephone calls
from creditors and security holders within a 30-day
solicitation period. If more than 500 calls are received
within the period, those additional calls will be charged
at $8 per call. Any calls to creditors or security
holders will be charged at $8 per call.
(4) A charge of $100 per hour for the tabulation of ballots
and master ballots, plus set up charges of $1,000 for
each tabulation element or each security. Standard
hourly rates will apply for any time spent by senior
executives reviewing and certifying the tabulation and
dealing with special issues that may develop.
(5) Consulting hours will be billed at these applicable
standard hourly rates:
Co-Chairman $450
Managing Director 400
Practice Director 375
Director 325
Account Executive 275
Staff Assistant 200
Innisfree's Consulting services include:
-- reviewing and developing materials, including the
disclosure statement, plan, ballots, and master
ballots;
-- participating in telephone conferences, strategy
meetings or developing strategy relative to the
project;
-- efforts related to special balloting procedures,
including issues that may arise during the balloting
or tabulation process;
-- computer programming or other project-related data
processing services;
-- visiting cities outside of New York for client
meetings or legal or other matters;
-- efforts related to the preparation of testimony and
attendance at court hearings; and
-- preparing affidavits, certifications, fee
applications, invoices, and reports.
(6) All out-of-pocket expenses relating to any work
undertaken by Innisfree will be charged separately.
Innisfree's fees and expenses incurred in the performance of its
services will be treated as administrative expenses of the
Debtors' Chapter 11 estates and will be paid by the Debtors in
the ordinary course of business without further Court order or
notice to parties-in-interest.
Innisfree will submit to the Office of the U.S. Trustee, counsel
for the agent under the prepetition credit facility, and counsel
for the Official Committee of Unsecured Creditors, on a periodic
basis, copies of the invoices it submits to the Debtors for
services rendered.
Jane Sullivan, a director of Innisfree, assures the Court that
the firm is a "disinterested person," as that term is defined in
Section 101(14) of the Bankruptcy Code, and does not represent
any party-in-interest other than the Debtors in these Chapter 11
cases. Innisfree also does not hold or represent any interest
adverse to the Debtors' estates.
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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RELIANT ENERGY: ISO Takes Key So-Cal Power Plant out of Mothballs
-----------------------------------------------------------------
The California Independent System Operator (ISO) signed new
contracts with Reliant Energy to take two key generating units out
of mothballs in time to help meet reliability needs this summer,
and also in the fall when a key transmission line goes out of
service and other generating units will be off line for
maintenance. The Etiwanda power plant, units #3 and #4, located in
San Bernardino, can each produce 320 megawatts.
Reliant offered the capacity from Etiwanda for sale on long term
contracts last fall, but decided to put the units into mothball
status after it received no bids. At the time, the ISO had
identified two key transmission projects as being the preferred
method to serve the growing demand in Southern California's Inland
Empire, as long as those projects were completed by mid June of
this year.
It has come to the ISO's attention that the two transmission
projects will be delayed beyond June. The Mira Loma 500/230 kV
transformer bank project is scheduled for completion by July 15,
2004, and the Mira Loma-Etiwanda 230 kV line re-conductor project
is currently scheduled for completion by October 1, 2004.
With the transmission projects delayed, the ISO opened
negotiations with Reliant to put the two Etiwanda units on
Reliability Must Run contracts that allow the ISO to use those
units to help meet reliability needs in the region. One unit is
expected to be available within a couple of weeks, and the other
will come on line in September when Southern California energy
demand often peaks. That's also just prior to a planned outage of
the Pacific DC Intertie, a major high voltage corridor between
Oregon and Southern California.
"Having these units back on line is a major accomplishment for
this summer and into the Fall," said Jim Detmers, ISO Acting Chief
Operations Officer. "We're not forecasting blackouts this summer,
but there may well be some days when the demand for power gets
pretty close to our available supply. Having these units coming
back into service will add just a little more cushion to our
reserve margins."
The California ISO is a not-for-profit public benefit corporation
charged with managing the flow of electricity along California's
open-market wholesale power grid. The mission of the California
ISO is to safeguard the reliable delivery of electricity, and
ensure equal access to a 25,000 circuit miles of "electron
highway". As the impartial operator of the wholesale power grid in
the state, the California ISO conducts a small portion of the bulk
power markets. These markets are used to allocate space on the
transmission lines, maintain operating reserves and match supply
with demand in real time.
About Reliant Energy
Reliant Energy Services is the subsidiary of Reliant Resources
responsible for purchasing fuel for and marketing the power
produced by its generation facilities.
Reliant Resources, Inc., based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers
in the U.S., marketing those services under the Reliant Energy
brand name. The company provides a complete suite of energy
products and services to more than 1.8 million electricity
customers in Texas ranging from residences and small businesses to
large commercial, industrial and institutional customers. Reliant
also serves large commercial and industrial clients in the PJM
(Pennsylvania, New Jersey, Maryland) Interconnection. The company
has approximately 20,000 megawatts of power generation capacity in
operation, under construction or under contract. For more
information, visit http://www.reliantresources.com/
* * *
As reported in the Troubled Company Reporter's May 21, 2004
edition, Reliant Energy, Inc. announced that it reached a
definitive agreement to sell a portion of its New York-based
generating portfolio to Canadian based Brascan Corp. for $900
million in cash. The assets to be sold consist of 770 megawatts
(MW) of generating capacity located in upstate New York, including
675 MW of hydropower plants. Fitch Ratings continues to maintain
the following credit ratings for RRI:
--Senior secured debt 'B+';
--Senior unsecured debt 'B';
--Convertible senior subordinated notes 'B-'.
The Rating Outlook remains Stable.
RFC CDO: S&P Assigns 'BB' Preliminary Rating to Class E Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to RFC CDO I Ltd./RFC CDO I Corp.'s $290.15 million
floating- and fixed-rate notes.
The preliminary ratings are based on information as of
June 25, 2004. Subsequent information may result in the assignment
of final ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
-- The expected commensurate level of credit support in the
form of subordination to be provided by the notes junior
to the respective classes and by the preference shares and
overcollateralization;
-- The cash flow structure, which is subject to various
stresses requested by Standard & Poor's;
-- The experience of the collateral manager;
-- The coverage of interest rate risks through hedge
agreements; and
-- The legal structure of the transaction, which includes the
bankruptcy remoteness of the issuer.
Preliminary Ratings Assigned
RFC CDO I Ltd./RFC CDO I Corp.
Class Rating Amount (mil. $)
A AAA 233.10
B-1 AA 22.50
B-2 AA 2.00
C A 10.20
D BBB 12.90
E BB 9.45
Preference shares N.R. 9.43
RICHTREE INC: Talking to Potential Investors for More Financing
---------------------------------------------------------------
Richtree Inc. (TSX:MOO.B) announced its results for the fiscal
2004 third quarter ended April 25, 2004.
The Company last week announced a series of successful settlements
involving the long-standing legal actions with its Master
Franchisor Movel/Movenpick, and the resolution of the dispute with
its two founding shareholders and former senior officers, namely
Jorg Reichert, President and CEO, and Marianne Reichert, Executive
Vice President Special Projects and Corporate Affairs.
Additionally, the Company's Bank renewed the forbearance agreement
until October 13, 2004, after repayment and elimination of the
$1,250 operating line of credit, and the repayment of $750 against
a term loan.
The Company believes that the settlement of the Movenpick
litigation, the dispute with the Reicherts, and the conversion of
the Series 3 Preference shares, liberates the Company from
substantial uncertainties and provides a more stable investment
climate. These factors will, in management's opinion, assist in
the pursuit of capital. The remaining immediate objective for the
Company is to secure a strategic third party investor to assist in
refinancing and injecting needed working capital.
The Company's time frame for arranging new equity and/or debt
financing is limited by recent events that include the
unavailability of an operating line of credit, and the increase of
supplier balances. The Company is in active discussions with
potential investors and anticipates that an interim advance will
be negotiated and received by early to mid July 2004, which the
Company requires in order operate successfully beyond this date.
All of the above developments are more fully described in the
Company's MD&A for the third quarter of fiscal 2004.
Third Quarter Results
Third quarter consolidated revenues decreased by 3.9% to $12,730
when US dollar denominated sales are converted to Canadian
dollars. When exchange fluctuations are excluded, quarterly
consolidated revenue decreased by 1.2% versus last quarter.
Management's continued action to enhance operations and an
improving hospitality industry in Toronto, further narrowed the
sales reduction experienced in the Canadian segment during recent
quarters. In particular, the same-store sales when compared to
last year showed improvement towards the end of the current third
quarter. Quarter three sales last year also were negatively
impacted late in the quarter by the effects of SARs in Toronto.
United States segment sales improved significantly from a 19.1%
sales shortfall in quarter two, reflecting improved local market
conditions and management's actions to stimulate sales growth.
Consolidated income from restaurant operations declined to $890
for the third quarter representing a $1,000 change from last year.
More than one-half of this reduction was attributable to a decline
in sales, expenditures on a customer loyalty program in the United
States and investment in additional payroll to improve customer
service levels. The balance of the decrease resulted from a
favourable impact in last year's quarter when estimates for
product rebates, rent and payroll related accruals were adjusted
to actual. On a year-to-date basis, consolidated IFRO as a
percentage of sales were 10.2% compared with 13.7% the year
before.
The third quarter of fiscal 2004 recorded a net loss before and
after discontinued operations of $2,625 or a quarterly loss of
$0.11 per share (YTD loss: $5,207 or $0.22 per share). Fiscal 2003
third quarter loss before discontinued operations was $1,055 or
$0.06 per share (YTD loss: $2,863 or $0.16 cents per share). After
taking into account the results of discontinued operations last
year, the third quarter in fiscal 2003 generated a loss of $1,235
or $0.07 cents per share (YTD loss: $2,731 or $0.15 per share).
In summary, fiscal 2004 quarter three net loss before discontinued
operations increased by $1,570 to $2,625 due substantially to
lower earnings from restaurant operations ($1,000) and an adverse
change in the U.S. exchange rate ($670). The remaining items were
generally offsetting.
The Company's lack of liquidity will continue until a third party
investor is selected to provide the additional working capital. In
the absence of any new debt and/or equity funding, a continuation
of the current year's financial results would not lead to a
sustainable business model.
The Company will continue as it did in the past to mitigate its
liquidity needs by arranging ongoing, mutually acceptable terms
with key suppliers and landlords. The improving economic activity
of the hospitality sector will also ameliorate the Company's cash
flow deficiency.
There can be no assurance that Richtree will be able to arrange
new equity and/or debt financing immediately, or that it will be
in full compliance with all Bank agreement covenants and
obligations, or that the Company's Banker will continue with the
forbearance agreement beyond October 13, 2004. If the Company
fails to comply with these covenants, a default may occur. A
default could allow the Bank to accelerate the related debt
repayment and to foreclose on properties securing such debt.
In summary, Richtree has made significant progress in recent days,
through the efforts of its Board of Directors and senior
management, to lay the foundation for the re-building of the
Company.
The most immediate objective is to secure a strategic third party
investor to complete the refinancing of the Company and injecting
the required working capital before early to mid July 2004. The
Company will also negotiate to secure a new license arrangement
with Movenpick for the future.
Maintaining lower pricing strategies and investment in customer
service levels will continue into the fourth quarter. In Canada,
the improving sales trend experienced in the third quarter has
continued into the fourth quarter yielding sales growth to date
exceeding 4%. Sales expectations in Boston are not as favourable
due to the presence of a new convention center and local
competition, all competing for tourist and convention customers.
However, Richtree is negotiating an arrangement with the co-
operation of the Boston landlord to sublease to a third party
under-utilized space, representing 21.6% of the total square
footage. The potential savings are estimated to be $300US per year
with no material impact on sales.
About the Company
Richtree Inc. is the holder of exclusive master franchise rights
from M”venpick Group of Switzerland to operate and sub-franchise
M”venpick March‚ and Marchelino restaurants in Canada and the
United States and to operate M”venpick restaurants in Canada. The
Company owns and operates 4 March‚ restaurants, 6 Marchelino
restaurants, 2 Take-me! March‚ outlets and 4 M”venpick restaurants
in Toronto, Ottawa, Montreal and Boston. In addition, the Company
operates 12 Take-me! March‚ outlets in a joint venture with
Loblaws.
SHAW GROUP: Awarded Syngenta Maintenance Contract
-------------------------------------------------
The Shaw Group Inc. (NYSE:SGR) has been awarded a contract to
provide mechanical maintenance and turnaround services at
Syngenta's St. Gabriel, Louisiana plant site, which specializes in
the production of herbicides and pesticides used in the
agriculture industry. Shaw will initially supply approximately 180
direct maintenance personnel providing a full range of maintenance
services including capital maintenance and improvements,
construction services, management and execution of turnarounds and
outages, planning and scheduling, and specialty services including
insulation, painting and scaffolding.
Fred McManus, Vice President of Shaw's Maintenance Division said,
"We are extremely proud of the confidence Syngenta has shown in us
by awarding this contract. We believe that our customer focus,
safety performance, responsiveness, reliability and capacity
centered maintenance programs are what attracted Syngenta to Shaw.
We look forward to a long and mutually beneficial relationship."
Ed Mayer, Syngenta's Director of Engineering, said, "Syngenta
expects that Shaw will provide the leadership necessary to achieve
significant improvements in safety and productivity in the
maintenance and construction activities at our St. Gabriel Plant."
Ron McCall, President of Shaw's Maintenance Division, added, "We
are working hard to establish Shaw Maintenance as the industry's
preferred provider of customer focused, capacity enhancement
solutions. The Syngenta award is an exciting opportunity and
further illustrates our aggressive growth in this industry. We
look forward to working with Syngenta and to expanding Shaw's
relationship with their organization going forward."
Shaw Maintenance is one of the fastest growing contract
maintenance providers in the United States, serving the
petrochemical, refining, fossil power, and nuclear power
industries. Shaw Maintenance provides maintenance,
turnaround/outage, specialty services, capital project,
reliability, and engineering services for nearly 50 major
customers at 135 sites around the world.
Syngenta is a world-leading agribusiness company committed to
sustainable agriculture through innovative research and
technology. The company is a leader in crop protection and ranks
third in the high-value commercial seeds market. Sales in 2003
were approximately $6.6 billion. Syngenta employs more than 19,000
people in over 90 countries. Syngenta is listed on the Swiss stock
exchange (SYNN) and the New York Stock Exchange (SYT). Further
information is available at http://www.syngenta.com
The Shaw Group Inc. is a leading global provider of technology,
engineering, procurement, construction, maintenance, fabrication,
manufacturing, consulting, remediation and facilities management
services for government and private sector clients in the power,
process, environmental, infrastructure and emergency response
markets. A Fortune 500 company, Shaw Group is headquartered in
Baton Rouge, Louisiana and employs approximately 17,000 people at
its offices and operations in North America, South America,
Europe, the Middle East and the Asia-Pacific region.
* * *
As reported in the Feb. 10, 2004, issue of the Troubled Company
Reporter, Standard & Poor's Ratings Services affirmed its 'BB'
corporate credit rating and its other ratings on The Shaw Group
Inc. At the same time, Standard & Poor's revised the outlook on
the company to negative from stable.
"The outlook revision reflects the fact that profitability and
cash flow generation for fiscal 2004 ending August will be weaker
than previously anticipated, because of continuing challenges on a
few problem projects, reduced expectations of asset divestitures,
and weakness in the higher margin pipe manufacturing operation,"
said Standard & Poor's credit analyst Heather Henyon.
As a result, it is unlikely that Shaw will be able to meet
Standard & Poor's expectations of total debt to EBITDA of 2.5-3x
and EBITDA to interest coverage in the 3x area in 2004. However, a
growing backlog of more steady environmental and infrastructure
projects may enable the company to achieve an acceptable credit
profile in the intermediate term.
SPYGLASS DEVELOPMENT: Case Summary & Largest Unsecured Creditor
---------------------------------------------------------------
Debtor: Spyglass Development, LLC
P.O. Box 960
Orem, Utah 84059
Bankruptcy Case No.: 04-30261
Chapter 11 Petition Date: June 24, 2004
Court: District of Utah (Salt Lake City)
Judge: William T. Thurman
Debtor's Counsel: Anna W. Drake, Esq.
Anna W. Drake, P.C.
215 South State Street, Suite 500
Salt Lake City, UT 84111
Tel: 801-328-9792
Fax: 801-364-3756
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's Largest Unsecured Creditor:
Entity Claim Amount
------ ------------
Richard Farmer $375,000
P.O. Box 1152
Orem, UT 84059
SURGICARE: Redeeming Preferred Stock from American International
----------------------------------------------------------------
American International Industries Inc. (OTCBB:AMIN) and SurgiCare
Inc. (AMEX:SRG) have signed a definitive agreement for the
redemption or conversion by SRG and payment in full to AMIN of the
$4,500,000 Series AA Redeemable Preferred Stock held by AMIN.
As consideration, AMIN is to be issued 8,750,000 shares of SRG
common stock. As additional consideration, SRG will transfer to
AMIN all of its five real estate properties owned by SRG, subject
to mortgages and related liabilities of approximately $1,300,000.
These properties were previously purchased by SRG in June 2002 for
a consideration of $6,000,000. The closing of this transaction
will take place on or before July 30, 2004. AMIN was advised by
SRG that issuance of the 8,750,000 shares requires approval of the
AMEX, and AMIN has been advised that approval should be
forthcoming. If for any reason AMEX listing is not approved or is
delayed, SRG is obligated in addition to the transfer of the real
estate properties, to redeem the $4,500,000 or issue AMIN shares
in annual increments of $1,500,000 commencing in July 2004. AMIN
is very pleased with the consideration to be received for the
Series AA Redeemable Preferred Stock and the value of the real
properties in the growing real estate market in Texas. For
additional detailed information please see our SEC filings.
AMIN is in the process of satisfying the requirements for the
listing of AMIN's shares on the American Stock Exchange and looks
forward to becoming an American Stock Exchange company.
About AMIN
American International Industries Inc. is a growing holding
company, with interests in industry, finance, real estate and a
growing oil & gas segment. AMIN intends to pursue potential
acquisitions using its financial resources and management
expertise to grow acquired businesses, improve access to capital
and achieve economies of scale, in order to improve revenues,
operations and profitability. Periodically as opportunities
present themselves, we may sell or merge the subsidiaries in order
to bring value to the holding company and our shareholders.
About Surgicare, Inc.
SurgiCare, Inc. was incorporated in Delaware on February 24, 1984
as Technical Coatings Incorporated. On September 10, 1984, its
name was changed to Technical Coatings, Inc. Immediately prior to
July 1999, TCI was an inactive company. On July 11, 1999, TCI
changed its name to SurgiCare Inc., and at that time changed
its business strategy to developing, acquiring and operating
freestanding ambulatory surgery centers. On July 21, 1999,
SurgiCare acquired all of the issued and outstanding shares of
common stock of Bellaire SurgiCare, Inc. a Texas corporation, in
exchange for the issuance of 9.86 million shares of common stock,
par value $.005 per share and 1.35 million shares of Series A
Redeemable Preferred Stock, par value $.001 per share, of
SurgiCare to the holders of Bellaire's common stock. For
accounting purposes, this reverse acquisition was effective
July 1, 1999.
* * *
In its Form 10-QSB for the quarterly period ended march 31, 2004,
filed with the Securities and Exchange Commission, Surgicare, Inc.
reports:
"In the first quarter of 2004, the Company did not raise any
substantial funds through the sale of equity securities, though
$16,535 was recorded on the exercise of outstanding warrants.
Although the Company believes it will generate cash from
operations in the future, due to its debt load, it is not able to
fund its current operations solely from its cash flow.
"The Company believes that additional sales of debt and/or equity
securities will be required to continue operations. Prior to the
closing of such contemplated transactions, any additional sales of
debt and/or equity by the Company will be subject to the prior
approval of the counterparties to the applicable transaction
documents. The Company can provide no assurance that it will be
successful in any future financing effort to obtain the necessary
working capital to support its operations, or fund acquisitions
for its anticipated growth. In the event that any future financing
efforts are not successful, the Company will be forced to
liquidate assets and/or curtail operations."
TASHI ENTERPRISE: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Tashi Enterprise, Inc.
dba Star Jet Truck
21411 Highway 59
El Campo, Texas 77437-9128
Bankruptcy Case No.: 04-38564
Type of Business: The Debtor operates a roadside service station
and restaurant that caters to truck drivers.
Chapter 11 Petition Date: June 16, 2004
Court: Southern District of Texas (Houston)
Judge: Letitia Z. Clark
Debtor's Counsel: Altaf Adam, Esq.
P.O. Box 572495
Houston, TX 77257
Tel: 713-266-3323
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
TRADE PARTNERS: US Trustee Fixes Sec. 341(a) Meeting on July 15
---------------------------------------------------------------
The United States Trustee will convene a meeting of Trade Partners
Gateway Center, LLC's creditors at 9:00 a.m., on July 15, 2004 in
Suite 203 at The Law Building, 330 Ionia, NW, Grand Rapids,
Michigan 49503. This is the first meeting of creditors required
under 11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Memphis, Tennessee, Trade Partners Gateway
Center, LLC, owns a single-family residential subdivision in Pinal
County, Arizona containing vacant lots to be sold for development.
The Company file for chapter 11 protection on
June 8, 2004 (Bankr. W.D. Mich. Case No. 04-07121). Michael J.
Quilling, Esq., at Quilling Selander Cummiskey & Lownds PC
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, they listed
$6,000,000 in total assets and $9,160,290 in total debts.
UNITED AIRLINES: Wants Nod To Enter Into Tax Refund Settlements
---------------------------------------------------------------
The United Airlines Inc. Debtors seek the Court's permission to
enter into tax refund settlements. The Debtors initiated multiple
tax valuation proceedings that concern four properties located in
Cook County, Illinois. The Debtors own the properties. In each
Proceeding, the Debtors object to the valuation assessed by the
relevant taxing authority.
To realize immediate cash benefits and avoid the expense of
further litigation, the parties prepared six Tax Refund
Settlements:
(1) The Linneman Road Proceedings
The Linneman Road Proceedings involve two tax objections pending
in the Circuit Court of Cook County, Illinois, County Department,
County Division, captioned:
(a) United Airlines Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, 1995 Tax
Valuation Objection No. 3964; and
(b) United Airlines Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, 1996 Tax
Valuation Objection No. 1605.
The Debtors objected to the tax valuations, arguing that the
assessor improperly classified portions of the Property as Class
5B commercial property. As such, the Debtors were assessed 38%
of market value tax, as opposed to Class 2 property, assessed at
22% of market value.
To settle the Linneman Road Proceedings, the Debtors will receive
a $269,801 tax refund, plus interest at 5% annually, garnering an
extra $94,000. This will result in a total payment to the
Debtors of $365,801. The law firm of Thomas M. Tully and
Associates will receive 33.33% of the total amount, or $121,000.
(2) The Southwest Cargo/Terminal and Baggage Proceedings
The Southwest Cargo/Terminal and Baggage Proceedings involve tax
objections pending in the Circuit Court of Cook County captioned:
(a) United Airlines, Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, Valuation
Objections Nos. 1991-1715, 1992-1337, 1993-3692; and
(b) United Airlines, Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, Valuation
Objections Nos. 1991-1691, 1912-1389, 1993-3691.
The Debtors objected to the tax valuations for the Cargo Facility
and the Terminal and Baggage Facility, for the years 1991-1993.
The valuation of these properties was greater than market value.
Under the Settlement, the Debtors will receive a $720,000 refund,
plus $384,000 in interest that accrued at 5%, for a total of
$1,104,000. Of this amount, Tully and Associates will garner
$368,000.
(3) The EXO Proceedings
The EXO Proceedings involve two matters pending before the
Property Tax Appeal Board of the State of Illinois, Docket Nos.
01-26111.001-C-3 and 02-22955.001-C-3. The Debtors filed
complaints because the tax valuations for 2001 and 2002 reflected
greater than market value. Under the Settlement, the Debtors
will receive $379,596 in tax savings, plus 5% interest of
$22,000, for a total of $401,596. Tully and Associates will
receive 25% of the Settlement, or $101,000.
(4) The Wide Body Hangar Proceedings
The Wide Body Hangar Proceedings are comprised of:
(a) United Airlines, Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, Valuation
Objections No. (1994) 3725;
(b) United Airlines, Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, Valuation
Objections No. (1995) 3703; and
(c) United Airlines, Inc., v. Maria Pappas, Cook County
Treasurer and Ex-Officio County Collector, Valuation
Objections No. (1996) 1616.
The Debtors objected to the tax valuations which were above
market value. The Settlement provides for a $498,933 tax refund
to the Debtors, plus interest at 5%, equivalent to $191,059, for
a total of $689,992. Tully and Associates will get $230,000 of
the total amount.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells the Court
that additional litigation will probably not result in additional
benefits to the Debtors' estates. Consummating the Settlements
will produce an immediate and substantial monetary gain. Mr.
Sprayregen also assures the Court that the proposed $820,000
payment to Tully and Associates is money well spent. The Debtors
pay large amounts in state and local property taxes every year.
Tully and Associates knows the tax law and the Debtors' business.
Tully and Associates has assisted the Debtors in obtaining tax
refunds for over 20 years.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. the Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UNITEDGLOBALCOM: Appoints Managing Director for UPC Netherlands
---------------------------------------------------------------
UnitedGlobalCom, Inc. (Nasdaq: UCOMA), announces that Diederik
Karsten has been appointed as Managing Director of UPC
Netherlands, the broadband operation of UGC serving 2.3 million
customers in The Netherlands, as of March 31, 2004.
Gene Musselman, who combined this function with his work as
President and Chief Operating Officer (COO) of UPC Broadband,
UGC's broadband division throughout Europe, will again fully
concentrate on his pan-European responsibilities.
Diederik Karsten (47) held various marketing and management
positions at Procter & Gamble and PepsiCo in Europe and the United
States, and was for several years Chief Executive Officer of KPN
Mobile N.V. He currently holds several non-executive Board
positions, among others with EasyJet Plc, the low cost carrier.
Gene Musselman is extremely pleased with Diederik Karsten's
decision to join UPC Netherlands: "Diederik is a manager with
extensive knowledge and experience in the Dutch consumer market.
In addition, he played a major role in the growth of the Dutch
telecommunications industry, where he is credited with building
KPN mobile into a major division within the KPN Group. His
skills and experience will enable UPC Netherlands to solidify and
expand its position as a leading provider of voice, video and
Internet services in The Netherlands."
Diederik Karsten said, "This is a great opportunity. UPC is one
of the most innovative broadband companies in Europe, with a
strong and clear vision on the development of cable communications
in The Netherlands. I am looking forward to working with UPC's
dedicated and enthusiastic Dutch workforce as this operation
enters a new phase of growth."
UnitedGlobalCom, Inc. was formed in February 2001 as part of a
series of planned transactions with Old UGC, Inc. (formerly known
as UGC Holdings, Inc., now our wholly owned subsidiary) and
Liberty Media Corporation, which restructured and recapitalized
our business. Old UGC has operated international broadband
communications companies since 1989.
Headquartered in Denver, Colorado, Old UGC, Inc.--
http://www.UnitedGlobalcom.com-- is one of the largest broadband
communications providers outside the United States and provides
full range of video, voice, high-speed Internet, telephone and
programming services. The Company filed for chapter 11 protection
on January 12, 2004 (Bankr. S.D.N.Y. Case No. 04-10156). David A.
Levine, Esq., at Cooley Godward, LLP and Jay R. Indyke, Esq., at
Kronish Lieb Weiner & Hellman, LLP represent the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed $846,050,022 in total assets and
$1,371,351,612 in total debts.
VIVENDI: Advent Buys Canal+'s Sportfive Stake for E274 Million
--------------------------------------------------------------
Vivendi Universal (Paris Bourse: EX FP; NYSE: V) announced the
sale to Advent International of the 48.85% stake held by Canal+
Group in Sportfive, for cash consideration of EUR274 million
already collected.
About Vivendi Universal Games
Headquartered in Los Angeles, VU Games (S&P, BB Long-Term and B
Short-Term Corporate Credit Ratings, Positive) is a leading global
developer, publisher and distributor of multi-platform interactive
entertainment. Its development studios and publishing labels
include Blizzard Entertainment, Sierra Entertainment, Fox
Interactive and Massive Entertainment. VU Games' library of over
700 titles features multi-million unit selling properties such as
Warcraft, StarCraft and Diablo from Blizzard; Crash Bandicoot,
Spyro The Dragon, Ground Control, Tribes and Leisure Suit Larry.
VLASIC: Presents More Witnesses in $250MM Suit Against Campbell
---------------------------------------------------------------
VFB LLC, the creditor trust formed under Vlasic Foods' chapter 11
plan, presented more witnesses in its $250 million lawsuit against
Campbell Soup Company before the United States District Court for
the District of Delaware:
A. Thomas Czerpak
To testify regarding the Swanson business, John A. Lee, Esq.,
at Andrews & Kurth, in Houston, Texas, representing VFB LLC,
brought in Thomas Czerpak. At the time of the VFI spin-off in
March 1998, Thomas Czerpak was Vice President of Manufacturing
for Swanson.
Mr. Czerpak recalls studying the possibility of separating two
Swanson plants in Omaha, Nebraska, during the spin-off
planning period with one plant going to Campbell Soup Company
and the other to VFI. Plant 1 was the largest plant, with
eight stories. Plant 2 was located a couple of blocks away.
But the process of splitting the two plants, moving
production, make one all retail -- VFI -- and the other all
food service -- Campbell -- would have been "extremely
difficult." Mr. Czerpak relates that both plants shared
management and maintenance. There was also a union. "So if
you tried to split them up, you probably would have people
that bumped into a different plant out of their expertise and
there would have been some difficulty, probably, in making the
products," Mr. Czerpak says. "It would have cost money. And
it would have been, I think, a major disruption in the short-
term, figuring you had to do that while you are running."
According to Mr. Czerpak, Campbell plants always had cost
savings. These cost savings are used to offset annual salary
increases.
Mr. Czerpak admits that there was some quality taken out of
the products during the period for cost savings.
New York Consulting Partners prepared savings estimates. But
Mr. Czerpak says that he didn't agree with the estimates. "I
don't recall New York Consulting Partners ever sitting down
with anyone at Omaha and going through their calculations or
what they thought they could save," Mr. Czerpak tells the
District Court.
Mr. Lee cites a reference in a memo under the why savings
can't be achieved without spin-off that reads, "Campbell
policy requires all new process technology to be either
developed in-house, or have legally-binding guarantees of
exclusive ownership and secrecy." Mr. Czerpak relates that he
was not aware of that policy within Campbell. According to
Mr. Czerpak, examples of technology used in the Swanson plants
that was not developed in-house or exclusive to Campbell
include racking equipment and the LovCo Miller equipment.
"Most of our equipment doesn't have guarantees of exclusive
ownership," Mr. Czerpak says.
In the spin-off, Campbell retained the rights to the formulas,
fluid pre-mixes and recipes used in the Swanson retail
products. Mr. Czerpak says that he couldn't estimate the cost
VFI would have incurred after the spin-off to reverse engineer
all the formulas and pre-mixes and recipes that Campbell
retained.
Some of the types of products that VFI produced for Campbell
are Mac and Cheese, pot pie filling for KFC, and Prego
Lasagna. After the spin-off, VFI produced food service
products in Omaha for Campbell at no cost. "It was full-
absorbed costs, but we had to buy all the packaging and
ingredients with our money. And we also ran special batches
that weren't in the contract. And special batches is a test,
so any testing for new products, they would come in, you would
shut the line down and test, and that would add to costs," Mr.
Czerpak says.
Surprised, Judge Jordan asked, "[W]as it your understanding
that Campbell had the right to come in after the spin-off and
tell VFI, we want you to run this special batch and then you
folks are obligated to it?"
Mr. Czerpak responded in the affirmative.
Mr. Czerpak admits that he was very apprehensive and concerned
about joining VFI in the spin-off. "[T]he concern was that
Campbell's, we had a good history under Campbell's. They
supplied us with good capital money and, all of a sudden,
seven low-margin businesses are being put together, with
Swanson being the flagship. And my concern with Swanson was
the sales number."
To stem the declines, Mr. Czerpak says, VFI was very
aggressive. Teams were built. People were dedicated and
hard-working. There were a number of quality improvements,
but sales continued to decline through the bankruptcy.
Campbell and VFI had a co-pack agreement for frozen food
service. According to Mr. Czerpak, the volume of business
being done was declining during the first two years of the co-
pack arrangement. If VFI didn't have the contract, Mr.
Czerpak says, VFI would have a problem.
During cross-examination, Richard P. McElroy, Esq., at Blank
Rome, in Philadelphia, Pennsylvania, tried to pin down the
reason why the contract was renewed in March 2000. Mr.
Czerpak avoided his questions but he admits that the renewed
contract had better terms for Vlasic.
From 1992 to 2000, Mr. Czerpak calculates that all of
Swanson's sales, through the plant, declined about 5% on the
average.
B. Murray Kessler
Murray Kessler served as General Manager of Campbell's Swanson
Division before the spin-off.
Mr. Kessler tells the District Court that it was at the end of
the fiscal year 1998 that he became aware of the difficulties
encountered by the Swanson Division in meeting its operating
plan figures for fiscal 1997. It was only later in 1998 that
he understood the dynamic. Mr. Kessler relates that business
was terrible in the first half of 1997 but comparisons looked
good in the beginning of 1998 because the 1998 figures were
compared against terrible numbers.
Mr. Kessler also notes on the unexpected dramatic change in
consumption after the spin-off. The declining trends resulted
from Swanson not trade promoting at the level that it
had been the year before when it was still a division of
Campbell.
Mr. Kessler confesses that in the beginning, Swanson had no
strategy to increase consumption. "The advertising was
focused on launching a new product. Most likely the intent
was to try to get share back from other frozen food brands,"
Mr. Kessler explains.
Swanson later attempted to upgrade the quality of its
products, Mr. Kessler says, but those attempts were dismal.
Mr. Kessler recalls the launching of the Pepperidge Farm pot
pie product after the spin-off, which had an adverse financial
effect on Vlasic. According to Mr. Kessler, the introduction
of the Pepperidge Farm pot pie was a huge fight between VFI
and Campbell since Campbell was still using VFI's brokers in
certain regards. The Pepperidge Farm pot pie product was
directly competitive with the Hungry Man pot pies being sold
by Swanson.
In an attempt to quantify the financial effect on VFI of the
sale of the Pepperidge Farm pot pie, Mr. Kessler communicated
with Bill Toler, the President of Campbell's Sales Division,
but didn't get any help.
"I made an effort to quantify and to sort of put into
perspective to [Mr. Toler] what it could mean and why we were
so upset and why we were so concerned. . . . Bill understood
it and, frankly, on the phone, agreed with me, but felt he had
no choice because of the direction he was getting from his
management, and he didn't want to go forward with it, but he
did what he was told," Mr. Kessler says.
C. Francis J. Pelone
Francis J. Pelone works at the VFB, LLC Trustee's office.
Mr. Pelone clarifies that VFB did not hire him specifically
and solely for the purpose of suing Campbell. "I have had
various responsibilities", Mr. Pelone says.
Among others, Mr. Pelone worked on the purchase price
adjustment of the sale of VFI to Pinnacle Foods. Ultimately,
Mr. Pelone spent majority of his time on the Campbell
litigation. Before joining VFB, Mr. Pelone worked for
Campbell in its Corporate Audit Department and International
Grocery Division. Mr. Pelone also worked on the spin-off
transaction for Campbell and later joined VFI.
Having worked on a number of Campbell's acquisitions and
divestitures, Mr. Pelone relates that Campbell normally pursue
diligence before deciding to buy a company "to confirm
assumptions" as well as "identify any potential problems".
Mr. Lee asked Mr. Pelone to compare Campbell's practices as to
what VFI was allowed to do in a transaction; how the spin-off
transaction size up to a typical arm's-length Campbell
purchase transaction.
According to Mr. Pelone, the spin-off transaction was "clearly
one-sided."
"[I]t was clearly not arm's length. There was no due
diligence. The Specialty Foods Group, which became VFI, were
not allowed to have their own representatives or
professionals. We had no outside legal counsel, no outside
accountants, no valuation people, et cetera," Mr. Pelone
reveals.
Mr. Pelone recalls a meeting he had with Campbell Treasurer
Anthony DiSilvestro, where he wanted to raise issues over a
separation and distribution agreement entered between the spun
company and Campbell. According to Mr. Pelone, he wanted to
make it "fair and equitable, to make it an arms'-length
agreement", but Mr. DiSilvestro did not accept his comments
and proposed changes. Mr. Pelone relates that the financial
statements that were prepared for the Form 10, included a
significant amount of estimates.
On Campbell's behalf, David C. Bryan, Esq., at Wachtell,
Lipton, Rosen & Katz, in New York, cross-examined Mr. Pelone.
Mr. Pelone tells the District Court that he was not involved
in the preparation of the 1995 through 1997 historical
financial statements contained in the Form 10. Mr. Pelone
says that he was just given the document and was asked "to
review it and just read it cold and give [him] comments."
Mr. Bryan presented the Campbell-filed Form 10 and reminded
Mr. Pelone of the independent accountants report made by
PricewaterhouseCoopers on the historical financial statements
for 1995, 1996 and 1997 contained in the Form 10.
Mr. Pelone attests that PricewaterhouseCoopers confirmed that
the combined financial, the combined balance sheets and the
related combined statements of earnings, of cash flow and of
changes in shareholders equity contained in the Form 10 filing
presented fairly in all material respects VFI's financial
position at August 3, 1997, and at July 28, 1996.
D. Andrea Kathleen Petrelli
VFB moved on to talk about Swanson Canada by bringing in
Andrea Kathleen Petrelli, the Controller of Swanson Canada's
operations for six years. Swanson Canada's products were co-
packed in Campbell's Listowel, Ontario plant.
Ms. Petrelli recalls the additional costs that VFI encountered
after the spin-off, including the maintenance of the new
office that VFI had to set up in Canada. Four months after
the spin-off, Ms. Petrelli relates that Campbell also
increased by 5% its overall price of co-packing for Swanson.
According to Ms. Petrelli, VFI was not able to and was not
permitted to audit Campbell Canada's cost allocations which
lead to the price increase. Given the price increase, Ms.
Petrelli points out that VFI still stayed with Campbell as
co-packer. "It was a break-even point so we looked at moving
to the U.S. would have cost us more and we could find a co-
packer in Canada that could fill our capacity needs."
To let the Court see how Campbell's actions affected the value
of Swanson as VFI sold it in bankruptcy, Mr. Lee asked Ms.
Petrelli about the expiration the July 2001 Listowel co-pack
agreement. Late in 2000, Swanson Canada started inquiring
Campbell's management for the renewal of the Listowel co-pack
agreement, however Campbell replied only by mid-March 2001.
As a condition to extending the agreement, Ms. Petrelli says
that Campbell presented Swanson Canada with a proposed 23%
increase to the cost of co-packing.
"It was crazy. It was $3 million Canadian," Ms. Petrelli says
of the financial impact of the 23% increase.
As the Controller of Swanson Canada, Ms. Petrelli was involved
in tracking and auditing the company's trade spending
commitments and deductions that came in from the brokers and
staff selling Swanson product. Ms. Petrelli recalls that as
she began processing the trade deductions that arrived after
the spin-off, she noticed that the actual deductions were much
higher than what had been set up in the budgets. Ms. Petrelli
says the people at Campbell Canada never provided her with the
actual historical spending records on the deals that had been
made to push the Swanson products.
Ms. Petrelli relates that, together with her General Manager,
Mike Enright, she tried to discuss the trade overspending
issue with Pierre Prom, a senior salesperson at Campbell's.
"[J]ust nonchalantly [Mr. Prom] said that's because Campbell
oftentimes would spend soup money on frozen products and they
wouldn't allocate the funds that way in the [profit and
loss]," Ms. Petrelli says.
"It was like a light bulb went off in our head," Ms. Petrelli
exclaims. "Oh, that explains why our numbers are so wrong.
According to Ms. Petrelli, Mr. Prom indicated that it was
common practice for soup funds to be spent on frozen.
E. Basil Anderson
Basil Anderson was Campbell's Executive Vice President and
Chief Financial Officer. Mr. Anderson resigned from Campbell
within one week after VFI filed for bankruptcy.
Mr. Anderson found it difficult to answer Mr. Lee's query on
who first came up with the idea of a spin-off. "It's very
hard to answer that question. I don't recall who specifically
came up with the idea. Generally, these things we discussed
together. It doesn't matter who in the room said what or we
do this or when we do that. The important thing is at some
point in time I personally became convinced it's something we
should do or at least evaluate it."
Mr. Anderson as well did not state specific names of Campbell
executives who, besides him, also recommended the spin-off.
"I would suspect that at that point I would have had inputs
from Strategic Planning, from the Treasury. I would have had
inputs from the Legal Department and a number of other
places."
When Mr. Lee asked him to clarify, Mr. Anderson ultimately
admitted full responsibility for the recommendation. "At the
end of the day, when I become convinced, I would have taken
into consideration the opinions of many, and I would have made
that recommendation. I accept full accountability for that."
Mr. Anderson further admitted that it was his decision to put
$500 million debt in the spun company.
Mr. Lee asked how the $500 million debt figure was arrived at.
"Just the same way you look at any company," Mr. Anderson
replies. "You look at the projected numbers in terms of
earnings and sales and profits and cash flow and you look at
different levels of debt and satisfy yourself that the amount
of debt that's being placed there provides for a robust
structure, so that even with some downturn they're able to
cover their interest cost. And in looking at the projections
for the company, even if the earnings were high, they were
still able to successfully service their debt."
After beating around the bush, Mr. Anderson in the end
admitted that he did not make any documents which contains
analysis or computations as to what the most optimal amount of
level of debt that would be saddled by the spun company. "I
personally did not need to prepare a specific -- specific
documents. There are evaluations done by other people. I
would have looked at it and I would have formed a judgment.
It's a business judgment."
With regards to the Campbell share repurchases which amounted
to $500 million, Mr. Anderson tells the Court that Campbell
ended up with a capitalization structure that was different
from what was planned.
"We ended up with $500 million more than we had planned and,
therefore, we decided what's the best course of action."
"As our history demonstrates, when we have cash like that if
you have an opportunity to invest in Germany as we did in
buying the soup we did, we found an opportunity in France. We
found an opportunity to buy stock in the United States. We
subsequently found an opportunity to buy the Unilever
business.
"Whenever the opportunity presented itself, we used that to
increase the sale of the company. When we didn't have the
opportunity, we bought back stock."
Despite VFI's circumstances now, Mr. Anderson points out that
everyone was excited about the business and its prospects.
"We looked at the ratio of cash to be generated versus
interest and this was a very solvent, successful company. In
fact, I wish I had been given the job to run that."
F. Eric Lummis
Up to the closing of the spin-off, Eric Lummis ran the
Campbell Customer Service Center and then became the head of
sales for VFI for the western half of the United States.
Before the spin, Mr. Lummis tells the District Court that he
"pretty much ran" the development of Campbell's CMS trade
management software system, a tool that manages trade spending
by putting into Campbell's systems the deals that its
salespeople entered, enabling it to monitor the deals.
Mr. Lummis relates that there was a tremendous amount of
pressure on the Campbell sales organization to make a number.
In the last few weeks of every quarter, Mr. Lummis explains
that the sales organization enter into a load mode where they
ship a tremendous amount of product in the last couple of
weeks of the period. The sales organization initiates and
executes the quarterly loads. It would make deals that would
incentivize the customers to bring in the product early.
Mr. Lummis confirms that the loading extending to all the
Campbell products that could be loaded during the period.
According to him, the magnitude of loads for fiscal 1998 and
1998 going into the spin-off, got "larger and larger."
Judge Jordan asked if there was a typical number of loads in a
particular year leading into the spin. The size grew, but not
the frequency, Mr. Lummis replied.
According to Mr. Lummis, the invoices that Campbell issued
during the loading periods weren't accurate. It was so fast
and furious, Mr. Lummis explains, that a lot of discounts
given to customers as incentives did not get reflected into
the CMS system. As a result, the discounts weren't reflected
off the invoice.
Mr. Lummis says that promotional spending tends to get
underaccrued during the those periods of high loading.
After the spin-off, Mr. Lummis recalls that it was difficult
to sell Vlasic Pickles and Swanson products because VFI run
out of money for trade spending. According to Mr. Lummis,
promotion at the end of fiscal 1997 resulted in spending a lot
of money in fiscal 1998 against cases that were actually
shipped in 1997.
Mr. Lummis believes that VFI couldn't stem the decline in
Swanson's sales after the spin-off because the issues with
Swanson "were just so deep, it really was going to require
a total overhaul of that particular piece of business." VFI
didn't have the time or the money to make that happen.
G. Steve Parker
Having worked for Campbell before the spin-off and
subsequently with the spun company, VFB brought Steve Parker
to testify about transition issues. Mr. Parker was assigned
in the Purchasing Department.
In October 1997, a month after the spin-off was announced, Mr.
Parker says that he still did not see any progress on the
intercompany contracts that were going to be entered between
Campbell and VFI in the spin-off. To facilitate in what had
to be done, Mr. Parker offered to help prepare the contracts.
However, Campbell advised him that it would do the contracts
when it deems necessary.
Mr. Parker recalls that despite Campbell having adequate time
to focus on intercompany agreements, he only saw circulated
term sheets on the spin-off agreements by February or late
January 1998. Expecting that the term sheets would mirror
past practices, Mr. Parker was quite surprised with the first
term sheets which according to him includes "terms and
conditions [that] had changed."
Mr. Parker had no access on the reports on Campbell's systems
before the closing of the spin-off. Mr. Parker says that he
was "shut off from the system" by Campbell management.
Campbell's reason on the restriction purportedly was that
its information and that of VFI was commingled within the
system and Campbell didn't feel comfortable without
restricting the access. After the spin-off closed, Campbell
still did not provide VFI's requested information to plan its
purchases. Mr. Parker believes that the information he
requested from Campbell was critical especially to VFI's
Purchasing Department.
Mr. Parker recounts the ill treatment he got from Campbell
after the closing of the spin-off:
"Campbell's was anxious to move us. I remember on at least
one occasion, possibly more often, being stopped in the
hallway by Campbell's senior management, Basil Anderson, in
particular asked me one time, When are you guys getting out of
here?"
"They claimed they needed the space, which I found curious,
because I thought they were going to be going through some
downsizing and cost saving as a result of the spin. But they
were anxious to get us to move.
Among other surprises, Mr. Parker was shocked to find out that
as part of the spin-off agreement, the packing of Open Pitt
Barbecue Sauce was removed from Campbell's Napoleon, Ohio
Facility. Open Pitt was one of the companies spun into VFI.
According to Mr. Parker, Open Pitt was originally put in the
Napoleon Facility to reduce costs and spread overall overhead
of the facility.
Mr. Parker observes that after the spin-off it was evident
that Campbell did not want Open Pitt in the Napoleon Facility
anymore. Mr. Parker tells the District Court that VFI was
lucky to have found Ventura Foods in Waukesha, Wisconsin, to
co-pack Open Pitt. If VFI did not bump into Ventura, "I'm
not sure what we [VFI] would have done. We discussed it and
there were just not an awful lot of alternatives, let alone
economical alternatives," Mr. Parker says.
After the spin-off VFI had to recall mislabeled Open Pitt
products that was packed by Campbell before the spin-off. Mr.
Parker notes that it was a blow to VFI having lost the sales
of the mislabeled products, some of which VFI had to dump
because they cannot be replaced.
Mr. Parker also attests that in the mid-nineties, Campbell
avoided investments in its plants. Mr. Parker recalls
Campbell CEO David Johnson telling the employees in leadership
meetings that "the businesses would have to make do with
bailing wire and duct tape, that capital expenditures would be
severely restricted and investments would be made in other
parts of the company."
At the time of the spin-off, the businesses and plants that
were spun into VFI needed significant capital repairs but VFI
did not have the money.
H. Shaun Flynn O'Malley
Shaun Flynn O'Malley was one the original Directors of VFI
and chairman emeritus of PricewaterhouseCoopers.
Mr. O'Malley was first contacted for the VFI Director position
when Campbell CEO David Johnson invited him in the Fall of
1997 to discuss about the new company with Robert Bernstock,
the former Chief Executive Officer and President of VFI. In
the discussion, Mr. O'Malley observed that there was a lot of
enthusiasm for the new company. At that time, Mr. O'Malley
was not yet aware of the $500 million debt and the other
companies that would be included to the spun company except
for Swanson and Vlasic.
When Mr. O'Malley later knew of the debt, he was astonished of
the amount. "I was surprised at the size of the debt. It
seemed high to me. It seemed there was more leverage than I
had anticipated going into the situation."
The level of debt, however, did not change Mr. O'Malley's mind
about serving as VFI Director. "[I]t was a cause of concern."
On April 3, 1998 -- a number of days after the spin-off
closing -- VFI held its first major shareholders' meeting as
the new Board of Directors assembled. During the meeting Mr.
O'Malley again observed the enthusiasm and excitement about
the new company and its prospects. But in a separate meeting
among the VFI Board after the shareholders' meeting, Mr.
O'Malley relates that VFI's new Chief Financial Officer Bill
Lewis conversely gave a very different financial presentation.
Mr. Lewis, according to Mr. O'Malley, was very concerned about
the situation. Mr. Lewis outlined how some of the business
were not in good shape, were headed in a down trend. The bank
line was a matter of concern.
Before the VFI Board meeting, Mr. O'Malley does not recall
receiving any indication from anyone at Campbell that things
were trending down so fast.
Six months after the first Board meeting, Mr. O'Malley says
that a lot of new things kept emerging.
"[I]t seemed every time we met, there seemed to be some new
surprise that we hadn't known about. If it was the transition
agreement problems, it was the duplicate services in
transition that we were encountering. It was the mushroom
situation, both pricing and whether they would take our
production. It was the beef pricing situation. It was the
loading that had taken place prior to the spin."
"The new things, by and large, were not good things.
Mr. Lee asked Mr. O'Malley about the three Campbell businesses
included in the spun companies that VFI sold before it went
into bankruptcy:
(1) The Kattus business, based in Germany, was engaged in meat
operation. According to Mr. O'Malley, the VFI Board
decided to sell the Kattus business just four months after
the spin-off because among others it was losing money "at
a very bad pace."
"Why a company such as [VFI], a medium-sized company in
New Jersey, would have a meat operation in the middle of
Germany was beyond me from the start. I was dubious about
it to begin with. But it was losing money and it was just
a smart thing to get rid of it as soon as possible."
(2) The Swift Argentina business, Mr. O'Malley also notes,
had to be sold.
"[T]his to me, even more so, was a questionable business
to be in our company, why a company of our size, that was
trying to sell pickles and frozen foods, would want a huge
beef-producing, slaughtering operation in the middle of
Argentina. This was set up to supply Campbell's and also
it was a tax-advantageous thing to Campbell's, to set it
up and put as much profit as possible, consistent with IRS
guidelines, into Argentina.
Mr. O'Malley believes that Swift wouldn't do VFI a bit of
good. Mr. O'Malley points out that beef prices in
Argentina had become more volatile in moving way up. VFI
was involved in a fixed-price arrangement with Campbell,
Mr. O'Malley explains, which "meant we were bound to
lose."
(3) The mushroom business was also problematic that the VFI
Board decided to sell it. Mr. O'Malley explains that
there were a number of plants and there were problems in
each of the plants, including environmental issues.
After the spin, VFI's close relationship with Campbell
deteriorated. According to Mr. O'Malley, Campbell
wouldn't take a whole load of mushrooms it had in the
past.
"Whenever mushrooms were ready, [Campbell would ship them
to themselves, of course, then. Now when we were owning
the mushrooms, they turned down a large shipment and we
were stuck with, I don't know the numbers, but thousands
of pounds of mushrooms that we were going to take a big
loss in trying to dispose of them because they have a
shelf life. They are not -- it's not like they are in a
jar," Mr. O'Malley explains.
Mr. O'Malley maintains that the VFI Board did not see any
viable alternatives but to sell the three businesses. After
the sale of the three businesses, however, VFI did not make
much progress in working down its debt although there were
some reduction in principal.
"We made a little bit of progress, but nothing like we had
hoped." (Vlasic Foods Bankruptcy News, Issue No. 44; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
WICKES INC: Agrees to Sell Most Operating Locations to 3 Buyers
---------------------------------------------------------------
Wickes Inc. (OTCBB:WIKSQ), a leading distributor of building
materials and manufacturer of value-added building components,
reported that it has entered into separate agreements with three
strategic buyers who intend to acquire substantially all of the
operating assets at 50 of the 59 locations where Wickes conducts
business. The Lanoga Corporation will acquire 27 locations in the
Midwest, primarily in Indiana, Illinois and Michigan. Bradco
Supply Corporation will acquire 12 locations in the Northeast.
Hope Lumber and Supply Company will acquire 11 locations,
primarily in the South and Colorado.
"We are pleased with the progress in marketing the company and the
level of interest the employees and the assets have generated.
These proposed transactions will ensure that customers buying from
Wickes will continue to receive the same high level of service and
supply that they have traditionally enjoyed," said Jim O'Grady,
President and Chief Executive Officer. "We will continue the
efforts to market the assets not included in these transactions."
These transactions are subject to competitive bidding and
Bankruptcy Court approval. If approved, the parties expect to
close the transactions in late July 2004.
Headquartered in Vernon Hills, Illinois, Wickes Inc.
-- http://www.wickes.com/-- is a retailer and manufacturer of
building materials, catering to residential and commercial
building professionals, repairs and remodeling contractors and
project do-it-yourself consumers. The Company filed for chapter 11
protection on January 20, 2004 (Bankr. N.D. Ill. Case No. 04-
02221). Richard M. Bendix Jr., Esq., at Schwartz Cooper
Greenberger & Krauss represents the Debtor in its restructuring
efforts. When the Company filed for protection from its creditors,
it listed $155,453,000 in total assets and $168,199,000 in total
debts.
WORLDCOM: Court Unseals Documents in KPMG Disqualification Suit
---------------------------------------------------------------
On March 23, 2004, the Securities and Exchange Commission sent
letters to KPMG, LLP, and to the Worldcom Inc. Debtors requesting
production of certain documents by April 6, 2004. The documents
relate to the same adverse interests specified in the
Disqualification Motion and in the Bankruptcy Examiner's Report.
Both KPMG and the Debtors responded to the SEC Letters. However,
the Debtors and KPMG did not disclose the SEC Letters to the
Bankruptcy Court, to the U.S. Trustee, or to any other party.
After the April 16, 2004 hearing on the Disqualification Motion,
the Debtors filed the SEC Letters with the Court. The Court then
convened an in camera hearing with the Debtors, KPMG, the
Creditors Committee, John Hancock, Massachusetts and two other
States, and brought the existence of the SEC Letters to the
parties' attention. At the Court's invitation, each party's
counsel presented a brief argument as to the significance of the
SEC Letters.
At the April 28, 2004 in camera conference, the Court directed
the Debtors and KPMG to submit copies of all documents submitted
to the SEC. The Court also directed the parties to submit briefs
on whether the SEC Letters should be incorporated into the public
record or whether they should remain under seal. KPMG and the
Debtors opposed to the disclosure of the SEC Letters.
Pending the final decision on the bankruptcy disclosure issue,
the Court sealed:
(a) the transcripts of the in camera proceedings on April 16
and 28, 2004;
(b) the briefs of the parties submitted in connection with the
disclosure issue;
(c) the copies of the Voluntary Requests; and
(d) certain procedural orders entered by the Court.
On May 7, 2004, the Court entered, under seal, these orders
relating to the Disqualification Motion:
(a) Scheduling Order relating to the Disqualification Motion;
(b) Order pursuant to Rule 9018 of the Federal Rules of
Bankruptcy Procedure placing certain documents and
transcripts under seal in connection with the
Disqualification Motion; and
(c) Order denying the Massachusetts Commissioner of Revenue's
motion for reconsideration of the Court's April 13, 2004
Bench Ruling Denying Discovery.
Three Parties Filed Briefs
The State of Massachusetts, KPMG, and the Debtors submitted
briefs which were initially filed under seal:
(1) Massachusetts Wants SEC Letters Disclosed
Alan LeBovidge, Commissioner of Revenue of the Commonwealth of
Massachusetts, contends that the common law right of public
access to judicial documents, in connection with the Bankruptcy
Code's full disclosure requirements, applies to the SEC Letters
and requires that these Letters be disclosed in full. Mr.
LeBovidge, therefore, recommends that the SEC Letters should be
taken into account in adjudicating the Disqualification Motion as
an item that is relevant to the performance of the judicial
function and useful in the judicial process.
Mr. LeBovidge asserts that the SEC Letters are judicial documents
because they enter into the adjudication of the substantive
merits of the States' Disqualification Motion, which challenges
KPMG's ability to serve as a disinterested professional due to
its prepetition advice to the Debtor to adopt the royalty-
deduction scheme. The question of the SEC's position with
respect to the Disqualification Motion was raised by the Court in
the context of a broader discussion concerning the States'
substantive allegations about the accuracy and reliability of the
Debtors' financial statements.
"This was a timely and perceptive inquiry with an immediate
bearing on the interests sought to be protected by the
Disqualification Motion", Mr. LeBovidge explains. "The timing of
the SEC Letters cannot be ignored, coming directly on the heels
of the filing of the Disqualification Motion."
According to Mr. LeBovidge, the SEC Letters ask the same
documents that the States sought to obtain through discovery in
support of the Disqualification Motion. At a minimum, and giving
due allowance to the preliminary nature of its inquiry, the SEC
Letters evidence the SEC's interest in obtaining additional
information about the substance of the matters described in the
Disqualification Motion.
(2) KPMG Agrees to Disclosure
KPMG does not object to the disclosure of a summary description
of the SEC Letters so long as the Debtors and the SEC agree to
the disclosure.
Patrick L. Hayden, Esq., at McGuireWoods, LLP, in New York,
explains that since the existence and content of the SEC Letters
are a part of the public record, the Court's inquiry at the
Status Hearing has been addressed. The import of the Court's
inquiry was a determination of the propriety of the public
disclosure of the SEC Letters as part of the record with respect
to the Disqualification Motion.
With respect to the applicability of Rule 2014 of the Federal
Rules of Bankruptcy Procedure, Mr. Hayden continues, the Rule
requires a professional to disclose in its employment application
all of its "connections" with parties-in-interest to allow the
Court to evaluate whether the professional should be retained in
the bankruptcy case.
Mr. Hayden asserts that the SEC Letters do not reveal a
"connection" that KPMG has with the Debtors, creditors, any other
party-in-interest or their attorneys and accountants that
requires further disclosure under Rule 2014. The SEC Letters
advise against drawing any inferences of a "connection" when they
state that, "[t]his inquiry is confidential and should not be
construed as an indication by the Commission or its staff that
any violation of law has occurred, nor as an adverse reflection
upon any person, entity or security."
The SEC Letters indicate only that the SEC is gathering
information as a part of its regulatory responsibilities. Based
on the SEC Letters' content, confirmed by the comments made by
the SEC representatives and the Debtors' SEC counsel during the
Status Hearing, no additional Rule 2014 disclosure could or
should have been made by KPMG regarding the SEC Letters.
Therefore, Mr. Hayden finds that the unsealing of the public
record resolves the issue and that Rule 2014 does not require any
additional disclosure.
(3) Court Can Do What It Wants, Debtors Say
Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in
Washington, D.C., tells Judge Gonzalez that the issue whether
Rule 2014 requires disclosure is moot. At this point, the Court
can address the SEC Letters as it sees fit in its decision on the
Disqualification Motion. The Debtors believe that there is no
reason for further debate over a matter of purely academic
interest.
According to Mr. Strochak, Massachusetts mischaracterized the
sequence of events by which MCI Telecommunications Company and
KPMG disclosed the existence of the SEC Letters. The actual
facts are uncomplicated and undisputed.
"Massachusetts' version of history has the SEC bringing the
matter to the Court's attention -- an event that simply did not
occur," Mr. Strochak says.
Massachusetts' contention that the Debtors were less than
forthcoming with the information is just flat out wrong, Mr.
Strochak states.
Massachusetts is even more wrong about the legal significance of
the SEC Letters to the Disqualification Motion. Mr. Strochak
points out that voluntary requests for production of documents
are but one tool that the SEC uses to do its job and are several
steps removed from any finding that independence is impaired in
any way. The SEC Letters state that they "should not be
construed as an indication by the Commission or its staff that
any violation of law has occurred, nor as an adverse reflection
upon any person, entity or security." If there were any doubt,
the SEC's own representatives confirmed to the Court at the
April 28 chambers conference that neither the Commission itself
nor the SEC staff had reached any conclusions as to auditor
independence.
The cornerstone of Massachusetts' arguments on the relevance of
the SEC Letters is that they "evidence the SEC's interest in
obtaining additional information about the substance of the
matters described in the Disqualification Motion." So, the only
ostensibly relevant fact Massachusetts points to is that the SEC
is "interested" in the issue of auditor independence. That is a
thin reed -- particularly as Massachusetts did not even allege
any violation of the auditor independence standards as a basis
for disqualification in its motion.
Similarly flawed is Massachusetts' argument that the SEC Letters
are relevant because they "request the same documents that the
States sought to obtain through discovery in support of the
Disqualification Motion." Perhaps Massachusetts has forgotten
that the Court has twice denied its requests for discovery,
concluding that it was not necessary for resolution of the
Disqualification Motion.
At the April 16 hearing, Massachusetts argued that KPMG's
disqualification was necessary to ensure that investors could
rely on MCI's audited financial statements, portraying itself as
a protector of the public interest. Recognizing that
Massachusetts' role in the matter is not that of a neutral
regulator but rather one of a litigant with financial interests
adverse to those of the Reorganized Debtors, the Court challenged
Massachusetts' counsel and asked:
"And who, in your view, or what government entity has been
involved in this case even prior to the filing that would be
in the best position or in a position to protect those
interests, the marketplace?"
The Debtors agree that the Court did touch on an important issue,
but for reasons quite different than Massachusetts asserts. The
Court's inquiry in actuality appeared to reflect considerable
skepticism about the States' motives in bringing the
Disqualification Motion and about the States' argument that the
focus of the inquiry as to the disinterestedness should be on
probing whether there is any potential for inaccuracy in the
audited financial statements. The point is that it is the SEC's
role to do that. The answer to the Court's initial queries as to
whether any of the neutral parties charged with oversight of
auditors and bankruptcy professionals -- the SEC and the U.S.
Trustee -- have taken any position on the Disqualification Motion
remains exactly the same as it was on April 16. They have not.
(4) SEC Sticks With Previous Statements
SEC's Counsel, Peter H. Bresnan, in a letter dated May 18, 2004,
advised Judge Gonzalez that the Commission decided not to
supplement the comments it made at the April 28, 2004 chambers
conference.
June 10 In Camera Conference
On June 10, 2004, the Court conducted another in camera
conference regarding the Disqualification Motion. The U.S.
Trustee, the SEC, Massachusetts and representatives of the
Debtors and KPMG attended.
At the conference, the Court noted that in light of public
disclosure of the existence of the SEC Requests, the sealing of
the record with respect to the Disqualification Motion was no
longer necessary. The Court, however, indicated that it did not
intend to alter its prior rulings on Massachusetts' requests for
discovery and that any unsealing of the record would not affect
the status of the documents produced to the SEC.
To afford the parties an opportunity to be heard with respect to
the unsealing of the record of the Disqualification Motion, the
Court required any party that objected to disclosure of all, or
some of, the sealed documents, to file an objection by June 14.
The Court would hold a hearing the next day to consider the
Objection received and make a determination as to the unsealing
of any document.
No objection was filed.
Court Unseals Documents
Judge Gonzalez finds that there is no basis to seal documents
related to this matter. Accordingly, he orders that:
(a) the transcripts of the in camera proceedings on the
Disqualification Motion held on April 16, April 28, and
June 10, 2004;
(b) the May 7 Orders;
(c) all pleadings previously filed under seal pursuant to the
May 7 Scheduling Order, specifically, the Debtors' and
KPMG's briefs dated May 19, 2004, the SEC Letter dated
May 18, 2004, and Massachusetts' June 7, 2004 brief,
including its attachments; and
(d) SEC's March 23 Voluntary Requests;
be filed on the docket without restriction as a part of the
public record of the Debtors' Chapter 11 cases.
Judge Gonzalez modifies the May 7 Scheduling Order to provide
that any further briefs will be filed on the public docket and
any further hearing will be conducted in open court. Nothing in
the Order will affect the status of documents produced to the
SEC, which will remain restricted to in camera review unless the
Court orders otherwise.
The Clerk of Court and the Debtors are directed to take any steps
necessary to effectuate the Order with respect to filing of
documents on the Court's Web site and on the public access Web
site maintained by the Debtors.
No further pleadings on the Disqualification Motion will be filed
under seal unless otherwise ordered by the Court.
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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000)
W.R. GRACE: Futures Representative Taps Swidler Berlin as Counsel
-----------------------------------------------------------------
David T. Austern, the Court-appointed legal representative for
future asbestos claimants in W.R. Grace & Co.'s chapter 11
proceedings, proposes to employ Swidler Berlin Shereff Friedman,
LLP, as bankruptcy counsel, nunc pro tunc to May 24, 2004.
Mr. Austern has begun his due diligence with respect to the
Debtors and their non-debtor affiliates, their financial affairs,
their prepetition transactions, matters which have transpired in
these cases, and proposals regarding potential plans of
reorganization. For these duties, Mr. Austern needs Swidler
Berlin to:
(a) provide legal advice and representation with respect
to his powers as the Futures Representative and any
matters which may arise, including in connection with
appropriate due diligence, the formulation of a plan;
(b) prepare and file on his behalf applications, motions,
responses, objections and other pleadings, as
necessary and as Mr. Austern authorizes;
(c) appear on his behalf and represent him in the Chapter
11 proceedings at hearings, meetings of creditors, and
other meetings and proceedings as appropriate;
(d) represent and advise him with respect to any contested
matter, adversary proceeding, lawsuit or other
proceeding in which he may become a party or otherwise
appear; and
(e) perform all other necessary legal services he
authorizes or requests, as may be appropriate in
connection with the Chapter 11 proceedings.
Disinterestedness
Roger Frankel, Esq., a partner at Swidler Berlin's office in
Washington, D.C., assures the Court that Swidler Berlin is a
disinterested person within the meaning of the Bankruptcy Code.
Mr. Frankel discloses that the firm currently represents Mr.
Austern in his capacity as the futures representative in the
Chapter 11 case of In re Combustion Engineering, Inc. Swidler
Berlin also represents Mr. Austern in another matter for which
Mr. Austern has agreed to serve as a legal representative for
holders of future asbestos personal injury claims and demands.
Mr. Frankel characterizes this matter as confidential and cannot
disclosed to the public. Mr. Frankel, however, attests that
these matters are not related to the Debtors or their Chapter 11
cases.
Swidler Berlin has, in the past, represented W. R. Grace & Co. on
certain environmental and other regulatory matters. Most of this
work was concluded before 1993, and all by 1997. None of these
matters related to the Debtors' Chapter 11 cases. Those Swidler
Berlin attorneys who worked on these matters, and who are still
with the firm, will have no involvement in the Debtors' cases.
Swidler Berlin represents, or has represented in the past, one or
more potentially responsible parties in various environmental
matters in which W. R. Grace & Co. and one or more of its
affiliates also may be a potentially responsible party. These
matters are "unrelated" to the Debtors' Chapter 11 cases.
The firm has in the past represented clients in matters in which
Grace and one or more of its affiliates were an adverse party.
These matters are all concluded, and were in any event unrelated
to the Debtors' proceedings.
Swidler Berlin previously represented a former Grace employee in
a matter for which Grace agreed to indemnify the employee for his
legal fees and costs. Swidler Berlin filed a proof of claim
against the Debtors for $32,026.03 for the employee's unpaid
prepetition legal fees and costs, and sought reimbursement for
additional expenses incurred during the pendency of these cases.
According to Mr. Frankel, Swidler Berlin and its former client
have agreed that the firm will transfer all rights in any claims
against the Debtors in these matters, including the proof of
claim, to the former client without recourse. The firm retains
no interest in the proof of claim.
A partner in the telecommunications group at Swidler Berlin --
Catherine Wang --- is married to a partner at Kirkland & Ellis,
counsel to the Debtors. Ms. Wang will have no involvement in the
Debtors' Chapter 11 cases. The firm also represented other
professionals in the Debtors' cases, or has partners with
personal relationships with persons employed by other estate
professionals, such as Blackstone, PricewaterhouseCoopers,
Wallace King Marraro & Branson, PLLC, and Wachtell Lipton Rosen &
Katz, but in matters unrelated to the Debtors' cases.
Compensation
Swidler Berlin will be compensated in accordance with its current
hourly rates:
Partners $375 to 650
Senior lawyers 310 to 690
Associates 185 to 425
Legal assistants 130 to 175
The firm's professionals most likely to be working in these
matters and their hourly billing rates are:
Attorneys Hourly Rates
--------- ------------
Roger Frankel $605
Richard H. Wyron 510
Monique D. Almy 430
Mary Wallace 420
Elise Schere Frejka 410
Michael J. Lichtenstein 395
Jonathan P. Guy 390
Matthew W. Cheney 310
Mara Glaser 310
Ranan Z. Well 310
Mykhaylo A. Gryzlov 230
Debra L. Felder 205
Debra O. Fullem (Sr. Legal Assistant) 175
Swidler Berlin will use other attorneys and paraprofessionals as
necessary. (W.R. Grace Bankruptcy News, Issue No. 64; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. PCSAD (377) 290 13
Alliance Imaging AIQ (68) 628 20
Akamai Technologies AKAM (175) 279 140
Amazon.com AMZN (1,036) 2,162 568
Bally Total Fitness BFT (158) 1,453 (284)
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
Hawaian Holdings HA (143) 256 (114)
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
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
Paxson Communications PAX (406) 1,284 67
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
Stratagene Corp. STGN (5) 39 9
Syntroleum Corp. SYNM (12) 67 11
Triton PCS Holdings TPC (180) 1,519 52
UST Inc. UST (115) 1,726 727
Vector Group Ltd. VGR (3) 628 142
Western Wireless WWCA (225) 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
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*********
S U B S C R I P T I O N I N F O R M A T I O N
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Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
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