/raid1/www/Hosts/bankrupt/TCR_Public/040720.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, July 20, 2004, Vol. 8, No. 149
Headlines
12TH AVENUE PARTNERS: Voluntary Chapter 11 Case Summary
ACTUANT CORP: 95.7% of 13% Noteholders Agree to Amend Indenture
AIR CANADA: Distributes CCAA Circular and Plan of Arrangement
AIR CANADA: Wants CCAA Order to Include Newly Incorporated Cos.
BULL RUN: Stockholders' Deficit Tops $26 Million at May 31
CATHOLIC CHURCH: Wants to Continue Cash Management System
COEUR D'ALENE: Discusses Mineral Reserves to Canadian Investors
CORNERSTONE FAMILY: S&P Withdraws CCC+ Credit Ratings
COVANTA ENERGY: Object to 21 Mega Bond Insurance Claims
D E MANAGEMENT: Case Summary & 11 Largest Unsecured Creditors
DATAWORLD SOLUTIONS: Changes Name to Defense Technology Systems
ECLIPSE PROPERTIES: Files Liquidating Plan in North Carolina
ENRON CORPORATION: Settles Disputes with 10 Counterparties
ENRON: Sues 20 Creditors To Recover $6.8MM Preferential Payments
FAIRPOINT COMMS: Commences Tender Offers for Public Debt Issues
FEDERAL-MOGUL: Insurers to Appeal Plan Solicitation Procedures
FLEMING: Asks Court to Approve Affiliated Foods, et al., Agreement
FLINTKOTE: Asbestos Committee Gets Nod to Hire Caplin & Dysdale
FOOTSTAR INC: Completes Sale of Shoe Zone Stores to Novus, Inc.
FREEPORT-MCMORAN: S&P Raises Corporate Credit Rating to B+
FRESH CHOICE: Bankruptcy Prompts Nasdaq Nat'l Market Delisting
GEMSTAR TV: Will Release Second Quarter Fin'l Results on Aug. 5
GENTEK INC: Trustee Proposes Adversary Case Mediation Procedures
GLOBAL CROSSING: Wants to Transfer Class Actions to New Jersey
GOLF TRUST: Inks Settlement Pact With Golf Hosts, Inc., et al.
HOLLINGER INT'L: Conrad Black and Hollinger Inc. Pays $30 Million
HOLLINGER INTERNATIONAL: Subsidiary Determines Tender Offer Yield
INDYMAC BANCORP: Completes Acquisition of Financial Freedom
INTERNATIONAL BIOCHEMICAL: Trustee Converts Case to Chapter 7
INTERNET CAPITAL: To Release Q2 Financial Results on August 5
J.L. FRENCH AUTOMOTIVE: S&P Lowers Corp. Credit Rating to CC
LEES CHILDREN LLC: Case Summary & 14 Largest Unsecured Creditors
METALLURG INC: S&P Lowers Ratings To D On Parent's Nonpayment
MIRANT CORP: MirMA Landlords Press For Alternative Rent Payment
MOHEGAN TRIBAL: Commences Sr. Debt Offer & Consent Solicitation
NATIONAL CENTURY: Liquidating Trust Wants Docs. from 24 Banks
NEW HEIGHTS: Wants Nod for Cananwill Premium Finance Agreement
NEWMARKET TECH: Formally Changes Company Name & Ticker Symbol
NORTEK HOLDINGS: S&P Puts Ratings on Watch Negative On Acquisition
NORVERGENCE INC: Closes Doors & Files Chapter 7 Petition in N.J.
NORVERGENCE INC: Involuntary Case Summary
OWENS CORNING: John Hancock & PPM America Provide Status Report
OWENS CORNING: Asbestos Committee Wants Court to Quash Subpoenas
PARMALAT GROUP: Discloses Restructuring Plan's Recovery Ratios
PARMALAT: Plans To Pick Buyer For Argentine Unit By Month-End
PLEJ'S LINEN: Committee Hires Traub Bonacquist as Attorneys
RCN CORP: Directors Turn to Winston & Strawn for Legal Counsel
RELIANCE FINANCIAL: Discloses Bank Claim Holders & Pro Rata Shares
RURAL CELL: To Pay Quarterly Preferred Stock Dividends on Aug. 15
SEALY CORPORATION: Issues Sr. Pay-In-Kind Notes and Common Stock
SHOWCASE AUTO: Case Summary & 20 Largest Unsecured Creditors
SOLUTIA INC: Wants to Pay Letter of Credit Claims
STAR TELECOM: Case Summary & 20 Largest Unsecured Creditors
STILLWATER MINING: S&P Places Ratings on CreditWatch Negative
STRATUS SERVICES: Extends Pref. Stock Exchange Offer to July 31
SUNNY DELIGHT: S&P Withdraws BB- Corporate Credit Rating
TECHNICAL COATINGS: Case Summary & 20 Largest Unsecured Creditors
TELEWEST COMMS: Reports Details of Common Stock Distribution
TENET HEALTHCARE: Completes Sale of Redding Medical Center Assets
TEXAS INDUSTRIES: S&P Revises Outlook To Stable From Negative
TRANSMONTAIGNE: Board Okays UBS Assistance in Evaluating Options
TRANSMONTAIGNE INC: S&P Affirms BB- Ratings & Revises Outlook
TROPICAL SPORTSWEAR: Retains Broker to Market Tampa Facility Sale
VLASIC: 8 More Witnesses Take the Stand in $250M Suit vs. Campbell
VHJ ENERGY LLC: Case Summary & 15 Largest Unsecured Creditors
W. INC.: Case Summary & 20 Largest Unsecured Creditors
WCI STEEL: USWA Ratifies Post-Bankruptcy Emergence Labor Contract
WEIRTON STEEL: Court Approves Amended Disclosure Statement
WEIRTON STEEL: Court Approves Modified Solicitation Procedures
WESTPOINT STEVENS: Wants to Extend Key Employee Retention Plan
WORLDCOM: Agrees to Resolve Illinois Revenue Department Tax Claims
W.R. GRACE: Equity Committee Wants Litigation Protocol Established
WRENN ASSOCIATES: Corwin Serves as Special Litigation Counsel
* Jefferies Expands Restructuring Practice Into Europe
* Large Companies with Insolvent Balance Sheets
*********
12TH AVENUE PARTNERS: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: 12th Avenue Partners, LLC
4072 East 22nd Street, No. 115
Tucson, Arizona 85711
Bankruptcy Case No.: 04-03504
Chapter 11 Petition Date: July 13, 2004
Court: District of Arizona (Tucson)
Judge: Eileen W. Hollowell
Debtor's Counsel: R. David Sobel, Esq.
Leonard Felker Altfeld et al.
250 North Meyer Avenue
Tucson, AZ 85701-1047
Tel: 520-622-7733
Fax: 520-622-7967
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.
ACTUANT CORP: 95.7% of 13% Noteholders Agree to Amend Indenture
---------------------------------------------------------------
As of 5:00 p.m. New York City time, on July 15, 2004, Actuant
Corporation reported it had received valid tenders and consents
from holders of $27,974,000 aggregate principal amount of its 13%
Senior Subordinated Notes due 2009 (CUSIP No. 00508WAB2), which
amount represents 95.7% of the outstanding principal amount of the
Notes, in connection with the previously announced cash tender
offer and consent solicitation for the Notes. This satisfies the
Requisite Consents Condition as defined in Actuant's Offer to
Purchase and Consent Solicitation Statement dated July 1, 2004.
Notes tendered on or prior to the Consent Time may no longer be
withdrawn and the related consents may not be revoked, except in
the limited circumstances described in the Offer to Purchase.
Accordingly, Actuant and the trustee under the indenture intend to
promptly execute and deliver a supplemental indenture containing
the proposed amendments described in the Offer to Purchase, which
will eliminate substantially all restrictive covenants and certain
event of default provisions. The proposed amendments will not
become operative, however, unless and until Actuant accepts the
Notes for purchase in accordance with the terms and subject to the
conditions set forth in the Offer to Purchase. If the proposed
amendments become operative, holders of all the Notes then
outstanding will be bound thereby.
A consent payment of $30 per $1,000 principal amount of the Notes
will be paid to holders of Notes who validly tendered and did not
withdraw such Notes prior to the Consent Time, if and only if
Actuant accepts for payment Notes tendered in the tender offer.
Holders whose valid tenders are received after the Consent Time,
but prior to the expiration of the tender offer, which is 5:00
p.m., New York City time, on July 30, 2004, will receive only the
tender offer consideration (as described in the Offer to
Purchase), but not the Consent Payment.
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of consent with respect to
any securities. The offer is being made solely pursuant to the
Offer to Purchase.
About the Company
Actuant, headquartered in Milwaukee, Wisconsin, is a diversified
industrial company with operations in more than 20 countries. The
Actuant businesses are leading companies selling highly engineered
position and motion control systems and branded tools. Products
are offered under such established brand names as Dresco, Enerpac,
Gardner Bender, Kopp, Kwikee, Milwaukee Cylinder, Nielsen
Sessions, Power-Packer, and Power Gear.
* * *
As reported in the Troubled Company Reporter's May 5, 2004
edition, Standard & Poor's Ratings Services assigned its 'BB'
rating to the $250 million senior revolving credit facility of
Actuant Corp. (BB/Stable/--). Proceeds from the credit facility,
maturing Feb. 19, 2009, were used to refinance the company's
existing secured revolving credit facility.
AIR CANADA: Distributes CCAA Circular and Plan of Arrangement
-------------------------------------------------------------
Air Canada provides this update on the airline's restructuring
under the Companies' Creditors Arrangement Act:
After ratifying labour cost savings agreement, the Circular and
Plan of Arrangement is distributed in preparation for August 17,
2004 creditor vote. Following the successful ratification of the
outstanding labour agreement with Air Canada Jazz flight
attendants late Thursday, July 15, 2004, Air Canada has now
satisfied the labour cost savings condition contained in the
Deutsche Bank Standby Purchase Agreement and the GE Capital
Aviation Services Global Restructuring Agreement. Air Canada is
proceeding with all planned activity to meet the September 30,
2004 target for emergence from CCAA.
"I would like to thank the Air Canada Jazz flight attendants for
recognizing the importance of this ratification vote and for
making their vote count," said Robert Milton, President and Chief
Executive Officer. "With all labour agreements now concluded, the
Circular and Plan of Arrangement have been sent to creditors, in
preparation for their vote on the Plan August 17th. These
milestones in our restructuring mark further critical steps
towards Air Canada successfully exiting from CCAA at the end of
September."
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: Wants CCAA Order to Include Newly Incorporated Cos.
---------------------------------------------------------------
The Plan of Compromise and Arrangement contemplates that the new
corporations to be incorporated by the Air Canada Applicants will
be temporarily governed by boards of directors comprised of Air
Canada employees. Pursuant to the Initial Companies' Creditors
Arrangement Act Order, the Applicants' directors and officers
enjoy the protection of a charge -- the Directors' Charge -- over
the Applicants' property. Since ACE Aviation Holdings, Inc., the
new parent holding company of Air Canada, requires execution of
certificates by its directors to advance the Plan and facilitate
the Applicants' emergence, the Applicants want to extend the
Directors' Charge protection to the directors and officers of the
Newco's.
Against this backdrop, the Applicants ask the CCAA Court to amend
the Initial Order to provide that, for purposes of the Directors'
Charge, the term "Applicants" will be deemed to include any
corporation incorporated for the purpose of effecting the Plan of
Compromise and Arrangement.
The Applicants transferred certain assets relating to their
customer loyalty business to Aeroplan Limited Partnership. In
view of the assignment of the New Aerogold Agreement to Aeroplan,
General Electric Capital Canada, Inc., the CCAA Lender, asked the
Applicants to seek amendment of the Initial Order to clarify that
its charge will extend to any property assigned among the
Applicants' affiliates.
Pursuant to the Initial Order, GE Canada currently has a charge
over all of the Applicants' property other than Returned Aircraft
Interests. The present definition of "Applicants' Property" in
the Initial Order does not capture assets transferred by the
Applicants.
The Applicants, thus, ask the Court to extend the definition of
"Applicants" under the Initial Order to include assets
transferred by an Applicant.
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. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BULL RUN: Stockholders' Deficit Tops $26 Million at May 31
----------------------------------------------------------
Bull Run Corporation (OTC: BULL) reported a net loss of $6.3
million for its third quarter ended May 31, 2004, compared to a
net loss of $4.7 million for the same quarter in the prior fiscal
year. Current year results were unfavorably affected by a $3.3
million non-cash goodwill impairment charge. The net loss for the
nine months ended May 31, 2004 was $9.1 million, compared to a net
loss of $10.9 for the same period in the prior fiscal year.
Revenues from continuing operations for the current year were
$14.3 million for the third quarter and $52.9 million for the nine
months ended May 31, 2004. Prior year revenues from continuing
operations were $18.2 million for the third quarter and $61.6
million for the nine months ended May 31, 2003. Prior year third
quarter and nine-month results also included non-cash non-
operating charges of approximately $1.6 million and $5.1 million,
respectively, attributable to Bull Run's former equity investment
assets, and prior year nine-month results included income of
approximately $5.3 million from a discontinued business segment.
Interest expense for the recently completed third quarter and
nine-month period was $1.1 million and $3.3 million, respectively,
compared to the $1.9 and $6.2 million incurred during the
comparable third quarter and nine-month period of the prior fiscal
year, respectively.
Bull Run, through its wholly-owned operating company, Host
Communications, Inc., provides comprehensive sales, marketing,
multimedia, special event and convention/hospitality services to
NCAA Division I universities and conferences, national/global
associations, and domestic and international grassroots sports and
lifestyle events (including the three-on-three basketball "Hoop-
It-Up National Tour" and the "got milk? 3-v-3 Soccer Shootout"
national tour).
Bull Run's common stock is quoted on the Pink Sheets --
http://www.pinksheets.com/-- a centralized quotation service for
OTC securities, using the symbol "BULL". Additional company
information and stock quotes are available on the Company's
corporate web site at http://www.bullruncorp.com/
At May 31, 2004, Bull Run Corporation's balance sheet shows a
stockholders' deficit of $26,445,000 compared to a deficit of
$27,002,000 at August 31, 2003.
CATHOLIC CHURCH: Wants to Continue Cash Management System
---------------------------------------------------------
The Archdiocese of Portland in Oregon's cash management system is
maintained through a well-established banking relationship and a
series of related accounts, which allow the Debtor to manage and
control receipts and disbursements and to account for all
transactions.
Thomas W. Stilley, Esq., at Sussman Shank, LLP, in Portland,
Oregon, relates that the Cash Management System constitutes an
ordinary course and essential business practice, and provides
significant benefits to the Debtor including, among other things,
the ability to:
* control funds;
* ensure the maximum availability of funds when necessary;
* reduce administrative expenses and operational disruption by
facilitating the movement of funds and the development of
more timely and accurate account balance information; and
* continue accounting practices familiar to the Debtor's staff
and operational procedures.
The Debtor seeks the permission from Judge Perris in the U.S.
Bankruptcy Court of the District of Oregon to continue using its
existing Cash Management System.
Cash Management System
In the ordinary course of its operations, the Debtor deposits
funds into its operational bank accounts. The Debtor then
transfers funds between and among the Operational Bank Accounts
as may be necessary or appropriate to pay necessary expenses.
The Debtor makes all disbursements to third parties from one of
the Operational Bank Accounts designated as the General Fund --
Account No. 370211007015. The Debtor accounts for all transfers
between and among the Operational Bank Accounts and reconciles
the Operational Bank Accounts monthly so that at the end of each
month the inter-account balances are as close to "zero" as
possible.
At the end of each day, funds in the Operational Bank Accounts
are swept into a concentration account and invested overnight in
a Victory Money Market Account. The following morning, the funds
in the Victory Money Market Account are transferred back to the
Operational Bank Accounts in the same proportion as when they
were swept the preceding business day. The Debtor maintains
accurate and complete accounting records with respect to all
transactions between and among the existing accounts -- the
Operational Bank Accounts, the Concentration Account, and the
Victory Money Market Account -- and with respect to disbursements
to third parties.
Because of the Debtor's financial structure, Mr. Stilley points
out that it would be extremely difficult and expensive to
establish and maintain a separate postpetition cash management
system.
The Debtor requires the ability to continue to utilize its
existing Cash Management System so that it may continue its
operations uninterrupted. Specifically, the existing Cash
Management System allows the Debtor to effectively and
efficiently run its ministries.
Mr. Stilley assures the Court that the Debtor will maintain
records of all transfers and transactions within the Cash
Management System to ensure that all transfers and transactions
will be documented in its books and records.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas
W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP
represent the debtor in its restructuring efforts. When the debtor
filed for chapter 11 protection, it listed estimated assets of
$10,000,000 to $50,000,000 and estimated debts of $25,000,000 to
$50,000,000. (Catholic Church Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
COEUR D'ALENE: Discusses Mineral Reserves to Canadian Investors
---------------------------------------------------------------
In conjunction with its previously announced tender offer for
Wheaton River Minerals (TSX: WRM; AMEX), a Canadian company, Coeur
d'Alene Mines Corporation (NYSE: CDE) is presenting its publicly
disclosed reserve and resource data in the standard form used in
Canada under Canadian National Instrument 43-101 (NI 43-101) at
the request of the British Columbia Securities Commission. NI 43-
101 requires a manner of reserve and resource presentation for
Canada that is different than the presentation of the same data
under Securities and Exchange Commission (SEC) requirements in the
United States. The NI 43-101 presentation of this estimated
reserve and resource data does not amend or supersede the
information provided by Coeur in its filings with the SEC under
SEC requirements and Coeur will make such amendments, if any, to
the information previously disclosed in SEC filings only pursuant
to additional SEC filings.
In calculating its mineral resources estimates, Coeur allows for
95 to 100 percent for mine recovery depending upon mining method.
For estimating both mineral reserves and mineral resources, Coeur
utilizes the same metallurgical recovery for each mineral
classification. Additionally, each property has various
metallurgical recoveries depending upon the processing method
employed. Metallurgical recoveries for milling operations range
from 88 to 95 percent for gold and 73 to 96 percent for silver.
Metallurgical recoveries at Coeur's Rochester heap leach operation
in Nevada realizes gold recoveries of 70 to 92 percent for gold
and silver recoveries of 25 to 60 percent, depending upon material
type delivered to the leach pad (run-of-mine or crushed ore).
Coeur conducts exploration for new mineralization and definition
of new mineral resources at each of its properties. Exploration
goals are specific to each property based on results from prior
exploration and production and then funds are allocated to permit
testing of the identified targets. These goals are continuously
updated and evaluated based on results received throughout the
program.
The potential quantity and grade of the mineral deposits that are
to be targets of further exploration at Cerro Bayo, Martha, Silver
Valley and Kensington are conceptual in nature, there has been
insufficient exploration to define the mineral resources on these
properties and it is uncertain if further exploration work will
result in discovery of the mineral resources.
About Coeur d'Alene
Coeur d'Alene Mines Corporation is the world's largest primary
silver producer, as well as a significant, low-cost producer of
gold. The Company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.
* * *
As reported in the Troubled Company Reporter's June 3, 2004
edition, Standard & Poor's Ratings Services placed its B-
corporate credit and senior unsecured debt ratings on Coeur
D'Alene Mines Corp. on CreditWatch with positive implications
following the company's announcement that it intends to acquire
precious metals mining company Wheaton River Minerals Ltd. in a
stock and cash transaction valued at approximately $1.8 billion.
"The CreditWatch action reflects what is likely to be a
meaningful improvement in Coeur's business and financial profile
upon the successful acquisition of lower-cost producer Wheaton,"
said Standard & Poor's credit analyst Paul Vastola. Standard &
Poor's expects that its ratings on Coeur would likely be raised
several notches. Standard & Poor's will continue to monitor the
transaction for any potential revisions to the deal. The deal
remains subject to several conditions and is expected to close
by Sept. 30, 2004.
CORNERSTONE FAMILY: S&P Withdraws CCC+ Credit Ratings
-----------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'CCC+' corporate
credit and secured bank loan ratings on Cornerstone Family
Services Inc. The company is in the process of being completely
restructured, and it is seeking new financing. There is little
market interest in the rating on the current bank facility, S&P
says.
COVANTA ENERGY: Object to 21 Mega Bond Insurance Claims
--------------------------------------------------------
Covanta Energy Corporation and its debtors affiliates and
subsidiaries ask the U.S. Bankruptcy Court of the Southern
District of New York to disallow and expunge 21 Bond
Insurance Claims:
Claimants Claim No. Amount
--------- --------- ------
Ambac Insurance Corp. 2793 to 2803 unspecified
Financial Security Assurance 3090 to 3092 unspecified
MBIA Insurance Corp. 2222 $53,320,000
MBIA Insurance Corp. 2223 99,960,000
MBIA Insurance Corp. 2224 71,400,000
MBIA Insurance Corp. 2225 39,180,000
MBIA Insurance Corp. 2226 198,050,000
MBIA Insurance Corp. 2227 184,400,000
MBIA Insurance Corp. 2228 69,617,363
Christine L. Childers, Esq., at Jenner & Block, in Chicago,
Illinois, relates that the before the Petition Date, the Bond
Insurance Claimants issued various municipal bond insurance
policies, pursuant to which they insured the payment of the
principal and interest on certain bonds issued by municipalities
to finance the construction and development of projects in which
the Debtors hold an interest. The Bond Insurance Claims assert
contingent claims against the Debtors by way of subrogation to
the bondholders' rights against the Debtors.
Being contingent claims, Ms. Childers asserts that the Bond
Insurance Claims must be disallowed under Section 502(c)(1) or
502(e)(1) of the Bankruptcy Code.
Headquartered in Fairfield, New Jersey, Covanta Energy Corporation
-- http://www.covantaenergy.com/-- is a publicly traded holding
company whose subsidiaries develop, own or operate power
generation facilities and water and wastewater facilities in the
United States and abroad. The Company filed for Chapter 11
protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826).
Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary,
Gottlieb, Steen & Hamilton represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $3,280,378,000 in assets and
$3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No.
60; Bankruptcy Creditors' Service, Inc., 215/945-7000)
D E MANAGEMENT: Case Summary & 11 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: D.E. Management, Inc.
4526 Jupiter Drive
Salt Lake City, Utah 84124
Bankruptcy Case No.: 04-31212
Chapter 11 Petition Date: July 13, 2004
Court: District of Utah (Salt Lake City)
Judge: William T. Thurman
Debtor's Counsel: Alan R. Stewart, Esq.
1366 East Holladay Road
Salt Lake City, UT 84117
Tel: 801-278-1063
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 11 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
W. Randlyn Wilde $1,000,000
c/o Michael R. Johnson
15 West South Temple, Ste. 1200
S.L.C., UT 84101
Jon McBride $123,509
Cottonwood Landscape, LLC $28,425
Wholesale Flooring $8,250
Ready Mix Concrete $1,200
UTCO Associates, Ltd. $0
Robert L. Hobson $0
Washington Mutual Bank $0
KRO Investments $0
American Pension Services $0
Marianne S. Young Unknown
DATAWORLD SOLUTIONS: Changes Name to Defense Technology Systems
---------------------------------------------------------------
DataWorld Solutions, Inc. (OTCBB:DWLD) has legally changed the
Company's name to Defense Technology Systems, Inc. The Company has
been notified by the NASD that effective Friday, July 16, 2004,
the company's stock will begin trading under the ticker symbol
(OTCBB: DFTS).
"We believe our new corporate name better reflects the activities
and focus of the Company," said Phil Rauch, DTS's Chief Operating
Officer. "During the past six months, we have made tremendous
progress, effecting significant improvements to our balance sheet,
regaining our listing on the Nasdaq Over the Counter Bulletin
Board, building new business relationships and attracting
experienced executives to help us grow our security business. This
focus has delivered immediate results, as we recently announced a
key contract with the U.S. Embassy in Tel Aviv, the acquisition of
the patent on the GIL-2001 Security Entrance System and a contract
with Amalgamated Bank in New York City. Our Advisory Board has
begun to generate many opportunities for us through their
extensive relationships. We now believe we are in the position to
capitalize on these opportunities. We have never been in a better
position to grow and build shareholder value."
The Company will continue to manufacture and distribute its data
and cable products through its DataWorld Solutions subsidiary and
develop its security and defense business through its DWS Defense
Systems subsidiary.
About DataWorld Solutions, Inc.
DataWorld Solutions, Inc. is a multi-regional manufacturer of
electronic cable assemblies used in providing connectivity
solutions for customers operating a wide range of data systems to
include linking or connecting standard or proprietary electronic
devices and peripheral components from different vendors to
provide solutions for various customer equipment configurations
and requirements. DataWorld adds value by providing connectivity
solutions, which may include distributed sales for passive
components such as electronic connectors, electronic wire and
cable, cabinets and racks and patch panels, and active components
including hubs, bridges, routers, gateways and modems. DataWorld
encourages customers to discuss their unique cabling requirements
with its experienced sales/marketing support team so that cost-
effective solutions can be provided for customer specific needs.
Liquidity and Capital Resources
In its Form 10QSB for the quarterly period ended March 31, 2004
filed with the Securities and Exchange Commission, DataWorld
Solutions reports:
"The Company has current assets of $252,325 (including $11,192 in
cash) compared with current liabilities of $6,407,444, resulting
in a working capital deficit of $6,155,119 as of March 31, 2004.
In addition, the Company incurred a net loss of $3,161,684 for the
nine months ended March 31, 2004 and has incurred significant
net losses in each of the three preceding fiscal years and has a
stockholder's equity deficit of $6,940,412 at March 31, 2004.
Such deficits and recurring losses raise questions about the
Company's ability to continue as a going concern.
"Additionally, the Company's continuation is also threatened by
the existence of numerous judgments on trade payables, defaults on
various secured indebtedness and delinquencies on certain tax
obligations. These conditions could result in the seizure of
Company assets and/or its being forced into bankruptcy."
ECLIPSE PROPERTIES: Files Liquidating Plan in North Carolina
------------------------------------------------------------
Eclipse Properties, LLC filed its Liquidating Chapter 11 Plan and
the accompanying Disclosure Statement with the U.S. Bankruptcy
Court for the Eastern District of North Carolina, Raleigh
Division. Full-text copies of the documents are available for a
fee at:
http://www.researcharchives.com/bin/download?id=040718203858
and
http://www.researcharchives.com/bin/download?id=040718204318
The Eclipse Properties Debtors believe that under the Plan,
creditors will obtain a greater recovery from the estate that what
could have been available if the Debtor's estate were converted to
chapter 7.
The Plan contemplates that the sale of the Debtor's land will fund
payments required under the Plan. It is expected that all claims
will be paid in full under the Plan.
A summary of the Plan provides for 5 classes of claims and
interests according to their treatment:
Class Treatment
----- ---------
1 - Allowed Will be satisfied in full on or before
Administrative the Effective Date, or as agreed. Any
Expense Claims disputed claim will be satisfied within
five Business Days after entry of a Final
Order approving such Claim as an Allowed
Administrative Expense Claim, or as may
be agreed otherwise.
2 - Allowed Will be paid, together with interest at
Priority Tax the statutory rate on or before the
Claims Effective Date. The Debtor believes there
are no Priority Tax Claims.
3A, 3B, 3C, 3D, All seven claims will not be altered,
3E, 3F and 3G - except that any defaults will be deemed
Allowed Secured to have been cured. Will be paid in full
Claims on or before the Effective Date.
4 - Allowed Will be paid on a prorata basis from
Unsecured funds remaining after payment of Class 1,
Claims 2, 3A, 313, 3C, 3D, 3E, 3F, and 3G
claims. It is anticipated that there will
be sufficient funds to pay Class 4 claims
in full.
5 - Equity Will retain their equity interests in the
Interests Debtor.
Headquartered in Raleigh, North Carolina, Eclipse Properties, LLC
filed for chapter 11 protection on April 14, 2004 (Bankr. E.D.
N.C. Case No. 04-01415). William P. Janvier, Esq., at Everett
Gaskins Hancock & Stevens represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $10,750,000 in total assets and
$8,437,447 in total debts.
ENRON CORPORATION: Settles Disputes with 10 Counterparties
----------------------------------------------------------
Pursuant to the Amended Safe Harbor Termination Protocol, the
Enron Corporation Debtors inform the Court that they have reached
settlements with 10 parties with respect to these Contracts:
A. Port Townsend Contracts
* Confirmation (Swap), dated June 29, 2001, between Enron
North America Corporation and Port Townsend Paper
Corporation
* Revised Confirmation, dated April 3, 2001, between ENA and
Port Townsend
* Guaranty, dated March 16, 2001, issued by Enron Corporation
on ENA's behalf for the benefit of Port of Townsend
B. McCauley Invoices
* ENA and McCauley Lumber Company, Inc., were parties to one
or more prepetition transactions wherein ENA sold lumber to
McCauley. In connection with the transactions, ENA issued
certain invoices.
C. Laminados Contract
* Confirmation (Swap) between ENA and Laminados de Barro,
S.A. de C.V., dated July 2, 2001
D. Anadarko and Affiliates Contracts
* ISDA Master Agreement, dated April 9, 1996, between ENA and
Anadarko Petroleum Corporation
* Netting Agreement, dated as of August 1, 1998, between ENA
and Anadarko Energy Services Company
* Two Base Contracts for Short-Term Sale and Purchase of
Natural Gas, dated December 1, 1996, between ENA and
Anadarko Energy Services Company
* Two Confirmations (Swap), dated October 31, 2000, between
ENA and Anadarko Energy Services Company
* ISDA Master Agreement, dated February 10, 1994, between ENA
and Anadarko ESI Company, formerly known as RME Energy
Services, Inc., as amended on February 20, 1998
* Confirmation, dated January 10, 2000, between ENA and
Anadarko Energy Marketing, Inc.
* Confirmation, dated October 1, 1996, between ENA and
Anadarko E&P Company, LP
* Two contracts between ENA and Norcel Explorer, Inc., now
known as Anadarko E&P Company, LP
* AES Invoice No. AT00291 dated November 28, 2001, for
$436,470
* Telephonic Confirmation dated September 1, 2001 between ENA
Upstream and Anadarko Energy Services Company
* Three Contracts between Clinton Energy Management Service,
Inc., and Anadarko Energy Services Company
* Three Enfolio Spot Confirmations between Enron Energy
Services, Inc., and Anadarko Energy Services Company
* Ten Guaranties issued for the benefit of Anadarko and its
affiliates
* All electronic trading agreements and password applications
between the Debtors and the Anadarko Entities
E. Cleco Contracts
* Eight Energy Contracts between various Debtors, and Cleco
Energy, LLC, and Cleco Marketing & Trading, LLC
* Guaranty dated March 20, 2001 executed by Enron Corporation
in favor of Cleco Marketing, Cleco Energy and Cleco Power,
LLC for $15,000,000
* Three Guaranties executed by Cleco Corporation in favor of
the Debtors aggregating $20,000,000
F. PUDJC Contracts
* Five Gas Futures Confirmation pursuant to Enfolio Firm
General Terms & Conditions between ENA and Public Utilities
District of Jefferson and Cocke Counties
G. Tiger Natural Gas Contracts
* Nine Contracts between Tiger Natural Gas, Inc., and ENA
* Invoice Nos. 20617SA, 35005SA, 35004SA, 23722SA, 20344SA,
24988SA, 35618SA, 35010SA, 33509SA, 31718SA, and 35002SA
H. Shell Chemical Contracts
* Amended Enron Petrochemical Company Confirmation, dated
July 17, 2000, between Enron Petrochemicals Company, a
division of Enron Liquid Fuels, Inc., and Shell Chemical
Company, predecessor to Shell Chemical, LP
* Special Terms and Conditions for Sale of Products, dated
September 26, 2001, between Enron Petrochemicals and Shell
* Ten invoices issued by Shell in connection with the two
Contracts
I. Northwest Contracts
* Three Confirmations between ENA and Northwest Natural Gas
Company
* Transaction Agreement, dated August 17, 2001, between ENA
and Northwest Natural Gas, as amended on October 12, 2001
* All other physical and financial contracts for the delivery
or forward delivery of energy or energy production
commodities by and between ENA, Enron Energy Services
Operations, Inc., Enron Canada Corporation and Northwest
Natural Gas, dated on or before December 1, 2001
J. Sevier County Contracts
* Three Enfolio Contracts between ENA and Sevier County
Utility District
* Any other contracts between ENA and Sevier Country
concerning the purchase, sale, exchange or trading of
physical energy commodities, gas transportation rights, gas
transportation capacity, power transmission rights, power
transmission capacity and financial derivatives relating to
any energy commodity
The Settlements provide that:
(a) the Counterparties will pay the Debtors the agreed
settlement payments;
(b) any and all proofs of claim the Counterparties filed
against the Debtors are deemed withdrawn with prejudice
and, to the extent applicable, will be expunged and
disallowed in their entirety; and
(c) the Debtors and the Counterparties will exchange mutual
releases of claims with respect to the Contracts. (Enron
Bankruptcy News, Issue No. 117; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENRON: Sues 20 Creditors To Recover $6.8MM Preferential Payments
----------------------------------------------------------------
On or within 90 days before the bankruptcy petition date, the
Enron Corporation Debtors made, or caused to be made, transfers to
20 creditors:
Creditor Amount
-------- ------
Armstrong Trace $123,199
Asset Securitization Coop 4,500,000
Asten Johnson 22,790
Atlas Power, Inc. 80,252
Atwood & Morrill Co., Inc. 119,700
Automotive Rentals, Inc. 242,628
Curtiss-Wright Flow Control Service 316,170
Curtiss-Wright Flight Systems 75,073
Cushman & Wakefield, Inc. 47,562
Custom Design Marketing 50,819
Custom Metals 45,100
Custom Playgrounds Designs 55,527
Custom Steel Services, Inc. 41,307
Gregg County 47,677
Grinnell Fire Protection 61,609
Grubbs, Hoskyn, Barton & Wyatt 25,281
Guild Electric 21,744
Hanson Concrete South Contral 707,102
Hard Drives Northwest 191,349
Harris Rebar 24,225
-------------
TOTAL $6,799,114
Neil Berger, Esq., at Togut, Segal & Segal, LLP, in New York,
relates that:
(a) the Transfers constitute transfers of interest of the
Debtors' property;
(b) the Debtors made, or caused to be made, the Transfers to,
or for the benefit of, the Creditors;
(c) the Debtors made, or caused to be made, the Transfers
for, or on account of, antecedent debts owed to the
Creditors prior to the dates on which the Transfers were
made;
(d) the Debtors were insolvent when the Transfers were made;
(e) the Transfers enabled the Creditors to receive more than
they would have received if:
-- Enron's cases were administered under Chapter 7 of the
Bankruptcy Code;
-- the Transfers had not been made; and
-- the Creditors had received payment of the debt to the
extent provided by the Bankruptcy Code.
Thus, Mr. Berger contends that the Transfers constitute avoidable
preferential transfers pursuant to Section 547(b) of the
Bankruptcy Code. In accordance with Section 550(a), the Debtors
may recover from the Creditors the amount of the Transfers, plus
interest.
In the alternative, Mr. Berger asserts that the Transfers are
avoidable fraudulent transfers under Section 548(a)(1)(B) since:
(a) the Transfers constitute transfers of interest in the
Debtors' property;
(b) the Transfers were to or for the benefit of the Creditors;
(c) the Debtors received less than reasonable equivalent value
in exchange for some or all of the Transfers;
(d) the Debtors were insolvent, or became insolvent, or had
unreasonably small capital in relation to their businesses
or their transactions at the time or as a result of the
Transfers; and
(e) the Transfers were made within one year before the
Petition Date.
Accordingly, the Debtors ask the Court to:
(i) avoid and set aside the Transfers pursuant to Section
547(b);
(ii) in the alternative, avoid and set aside the Transfers
pursuant to Section 548(a)(1)(B);
(iii) direct the Creditors to immediately pay them an amount
equal to the Transfers pursuant to Section 550(a),
together with interest from the date of the Transfers; and
(iv) award them attorneys' fees, costs and other expenses
incurred. (Enron Bankruptcy News, Issue No. 117;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
FAIRPOINT COMMS: Commences Tender Offers for Public Debt Issues
---------------------------------------------------------------
FairPoint Communications, Inc. commenced concurrent cash tender
offers for all of its outstanding:
-- 9-1/2% Senior Subordinated Notes Due 2008,
-- Floating Rate Callable Securities Due 2008,
-- 12-1/2% Senior Subordinated Notes Due 2010 and
-- 11-7/8% Senior Notes Due 2010.
In conjunction with the tender offers, FairPoint is soliciting
consents from holders of the Notes to effect certain proposed
amendments to the indentures governing such Notes. The tender
offers and consent solicitations are being made pursuant to:
(i) an Offer to Purchase and Consent Solicitation Statement,
dated as of July 16, 2004, for the 2008 Notes,
(ii) a Consent and Letter of Transmittal, dated as of July 16,
2004, for the 2008 Notes,
(iii) an Offer to Purchase and Consent Solicitation Statement,
dated as of July 16, 2004, for the 12-1/2% Notes and
the 11-7/8% Notes and
(iv) a Consent and Letter of Transmittal, dated as of July 16,
2004, for the 12-1/2% Notes and the 11-7/8% Notes.
The tender offers and consent solicitations will expire at 11:59
p.m., New York City time, on August 12, 2004, unless one or more
of such tender offers and consent solicitations are extended.
The purchase price for the 2008 Notes that are validly tendered
and accepted for payment on or prior to the Expiration Date will
be equal to $1,015.42 per $1,000 principal amount of 9 1/2% Notes
and $982.50 per $1,000 principal amount of Floating Rate Notes,
plus any accrued and unpaid interest on the 2008 Notes up to, but
not including, the payment date for such notes.
The purchase price to be paid for each $1,000 in principal amount
of the 12-1/2% Notes validly tendered will be (i) the present
value on the payment date for such Notes of $1,062.50 per $1,000
principal amount of the 12-1/2% Notes (the amount payable on the
first optional redemption date of the 12-1/2% Notes) and all
scheduled interest payments on the 12-1/2% Notes from the payment
date to May 1, 2005, discounted at a rate equal to the sum of (x)
the yield on the 1.625% U.S. Treasury Note due April 30, 2005 and
(y) a fixed spread of 50 basis points, minus accrued and unpaid
interest up to, but not including, the payment date, minus (ii) an
amount equal to the early consent premium. In addition, accrued
and unpaid interest will be paid on the tendered 12-1/2% Notes up
to, but not including, the payment date for such notes.
The purchase price to be paid for each $1,000 in principal amount
of the 11-7/8% Notes validly tendered will be (i) the sum of (a)
35% of $1,118.75 per $1,000 principal amount of the 11-7/8% Notes
(which is the equity claw-back for the 11-7/8% Notes under the
indenture governing such Notes) plus (b) 65% of the present value
on the payment date for such Notes of $1,059.38 per $1,000
principal amount of the 11-7/8% Notes (the amount payable on the
first optional redemption date of the 11-7/8% Notes) and all
scheduled interest payments on the 11-7/8% Notes from the payment
date to March 1, 2007, (discounted at a rate equal to the sum of
(x) the yield on the 2.25% U.S. Treasury Note due February 15,
2007 and (y) a fixed spread of 50 basis points, minus accrued and
unpaid interest up to, but not including, the payment date), minus
(ii) an amount equal to the early consent premium. In addition,
accrued and unpaid interest will be paid on the tendered 11-7/8%
Notes up to, but not including, the payment date for such notes.
In addition to the prices above, an early consent premium of
$20.00 will be paid for each $1,000 in principal amount of the
Notes to holders who tender their Notes and provide their consents
to the proposed amendments to the indentures governing the Notes
at or prior to the early consent premium deadline of 5:00 p.m.,
New York City time, on July 29, 2004 unless extended. Holders of
Notes tendered after the Early Consent Date will not receive an
early consent premium. Notes tendered and consents delivered may
not be withdrawn or revoked after the Withdrawal Date.
Among other things, the proposed amendments to the indentures
governing the Notes would eliminate most of the indentures'
principal restrictive covenants and would amend certain other
provisions contained in the indentures. Adoption of the proposed
amendments requires the consent of the holders of at least a
majority of the aggregate principal amount of the 12-1/2% Notes
outstanding, a majority of the aggregate principal amount of the
11-7/8% Notes outstanding and a majority of the aggregate
principal amount of the 2008 Notes outstanding. Holders who tender
their Notes will be required to consent to the proposed amendments
and holders may not deliver consents to the proposed amendments
without tendering their Notes in the tender offers. Tendered Notes
may be withdrawn and consents may be revoked at any time prior to
the Withdrawal Date, but not thereafter.
The tender offers are subject to several conditions, including,
among other things, FairPoint's completion of its proposed Income
Deposit Securities offering and senior subordinated note offering
and obtaining a new senior secured credit facility; a minimum
tender condition; and a requisite consents and execution of the
supplemental indentures condition. FairPoint expects to complete
the Income Deposit Securities offering and senior subordinated
note offering and obtain a new senior secured credit facility on
or prior to the expiration date of the tender offers. FairPoint
may amend, extend or terminate one or more of the tender offers
and consent solicitations in its sole discretion.
This announcement, the Company cautions, is neither an offer to
purchase nor a solicitation of an offer to sell the Notes. The
offer and consent solicitation is being made pursuant to each
Offer to Purchase and Consent Solicitation Statement and related
materials, copies of which will be delivered to all noteholders.
Persons with questions regarding the offer and the consent
solicitation should contact:
* Citigroup, the Dealer Manager and Solicitation Agent, at
(800) 558-3745 or (212) 723-6106, or
* Global Bondholder Services Corporation, the Information
Agent, at (212) 430-3774.
FairPoint is one of the leading providers of telecommunications
services in rural communities across the country. Incorporated in
1991, FairPoint's mission is to operate and acquire
telecommunications companies that set the standard of excellence
for the delivery of service to rural communities. Today, FairPoint
owns and operates 26 rural local exchange companies located in 17
states. FairPoint serves customers with approximately 267,790
access line equivalents (including voice access lines and digital
subscriber lines) and offers an array of services including local
voice, long distance, data, Internet and broadband product
offerings.
* * *
As reported in the Troubled Company Reporter's June 8, 2004
edition, Standard & Poor's Ratings Services said that it affirmed
the 'B+' corporate credit rating and other ratings of Charlotte,
North Carolina-based incumbent rural local exchange carrier
FairPoint Communications Inc. The ratings have also been removed
from CreditWatch, where they were placed May 5, 2004. The
CreditWatch listing reflected concerns that the company's proposed
offering of $750 million in income deposit securities, along with
the anticipated high common dividend payout associated with these
issues, would reduce the company's financial flexibility.
The outlook is negative.
Standard & Poor's has assigned a 'CCC+' rating to the company's
proposed senior subordinated notes due 2019, a major portion of
which would be issued under the IDS structure and a small portion
outside. Although the specific mix of debt and equity to be issued
under the IDS has yet to be determined, the final amount of the
senior subordinated notes will not affect FairPoint's corporate
credit rating, nor the rating on these notes.
Proceeds from a proposed $450 million secured bank credit
facility, from the subordinated notes, and from the common equity
component of the IDS will be used to refinance essentially all of
FairPoint's existing debt and redeem the company's series A
preferred stock. FairPoint had total debt of about $920 million,
which includes about $101 million of preferred shares subject to
mandatory redemption, at March 31, 2004. Given that the IDS
offering will likely contain a significant common equity
component, total debt is expected to be lower after the
refinancing.
"While the issuance of the income deposit securities would
incrementally weaken FairPoint's financial risk profile, the
magnitude is not sufficient to warrant a downgrade," said Standard
& Poor's credit analyst Michael Tsao. "However, the reduced
financial flexibility underpins the negative outlook."
FEDERAL-MOGUL: Insurers to Appeal Plan Solicitation Procedures
--------------------------------------------------------------
Certain Underwriters at Lloyd's, London, and London Market
Insurance Companies notify the Bankruptcy Court of their
intention to appeal the June 14, 2004 Order approving plan
solicitation procedures proposed by Federal-Mogul Corporation and
its debtor-affiliates. The Insurers will ask the U.S. District
Court for the District of Delaware to review Judge Lyons' decision
and determine whether or not the Bankruptcy Court erred by:
(a) granting the Debtors' Solicitation and Voting Procedures
Motion, including the approval of the ballot forms, the
form and scope of Plan and Confirmation Hearing Notice,
Voting Record Date and the Voting Agent's retention;
(b) holding that the voting procedures adopted by the
Solicitation Procedures Order are consistent with Section
1126 of the Bankruptcy Code and the Federal Rules of
Bankruptcy Procedure;
(c) temporarily allowing claims that have not been filed or
deemed filed where the allowance would enlarge the rights
granted to creditors pursuant to Sections 502(a) and
1126(a);
(d) holding that holders of disputed, unliquidated and
contingent claims are eligible to vote on confirmation
of the Debtors' Plan without filing proofs of claim and
otherwise satisfying all of the requirements for proofs of
claim under the Bankruptcy Code, Bankruptcy Rules and
applicable law;
(e) allowing the alleged holders of Asbestos Personal Injury
Claims to vote without requiring that the claims be
scheduled or filed;
(f) failing to set a bar date in accordance with Rule
3003(c)(3) of the Federal Rules of Bankruptcy Procedure;
(g) allowing attorneys who have not fully complied with Rule
2019 to cast ballots on behalf of alleged holders of
Asbestos Personal Injury Claims; and
(h) holding that holders of alleged claims that are not valid
claims under state law or under other applicable law, or
are otherwise holders of demands, are eligible to vote for
or against confirmation of the Plan.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some $6
billion. The Company filed for chapter 11 protection on Oct. 1,
2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq.,
James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin
Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $10.15 billion in assets and $8.86
billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No.
59; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FLEMING: Asks Court to Approve Affiliated Foods, et al., Agreement
------------------------------------------------------------------
Fleming Companies, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to approve their
settlement with Affiliated Foods Southwest, Inc., 18 store owners,
C&S Wholesale Grocers, Inc., and C&S Acquisition, Inc. The
Debtors also ask the Court to allow the settlement agreement to be
filed under seal to keep its specific terms from public view.
The store owners are:
(1) Adriens Supermarket, Inc.,
(2) BAM, Inc.,
(3) Bogalusa Foods, Inc.,
(4) BR Foods, LLC,
(5) Circle Foods, Inc.,
(6) CJC Groceries, Inc.,
(7) Dale's Food store, Inc.,
(8) Far North, Inc.,
(8) J. Edward Lamb & Co., Inc.,
(10) JHJ, Inc.,
(11) Menards 4-C, Inc.,
(12) Pontchartrain Foods, Inc.,
(13) Something More, LLC,
(14) THA, LLC,
(15) THG, LLC,
(16) Tramarbil, Inc.,
(17) V&K Foods, Inc., and
(18) Vinsons Foods, Inc.
The store owners are party to facility standby agreements or
other grocery supply arrangements, and owe the Debtors
$1,086,505.54 on account of outstanding accounts receivable.
Some of the store owners are or were sublessees under three
subleases with the Debtors for retail stores located at:
Store Location Subtenant
-------------- ---------
454 Heymann Boulevard, Lafayette, Louisiana BAM
3540 West Pinhook Street, Lafayette, Louisiana Adriens
3842 West Congress Street, Lafayette, Louisiana Adriens
Each of the primary leases relating to the subleases has been
rejected by the Debtors effective as of October 31, 2003.
BAM, Bogalusa, Dale's, Far North, Menards, JHJ, THG, THA,
Tramarbil and V&K are parties to franchise agreements and sign
agreements with C&S Acquisition.
As a result of the sale of the Debtors' Wholesale Distribution
Business, C&S holds 11 promissory notes due and owing from the
store owners aggregating $4,919,388.10. C&S also holds 10
forgiveness notes due and owing from the store owners totaling
$742,183.
All of these obligations are in dispute.
The Debtors advise the Court that the terms of the Settlement
constitute proprietary information of C&S Acquisition because the
settlement modifies C&S's recovery on the promissory notes it
acquired in the sale. To allow other parties to review the terms
of the settlement would jeopardize C&S's benefit of the bargain
approved by the Court in the Asset Purchase Agreement.
Nonetheless, the Debtors disclose the significant terms of the
Settlement:
(1) Adriens, BAM, Far North, JHJ, Menards, Something More,
THG and TRAMARBIL have agreed to pay the Debtors
$360,998.98 in the aggregate, on the account
receivable balance. Upon payment of the amount, all
of the Debtors' rights with respect to security
interests in any collateral, and all guarantee
agreements, will be released and terminated, unless
the rights are assigned to C&S Acquisition;
(2) The Debtors will file a request to assume and assign
to C&S the franchise agreements and the sign
agreements. Upon payment of $70,000 to C&S and $2,500
to Fleming, the franchise agreements and the sign
agreements will be fully effective, and none of the
counterparties will be in default;
(3) The Debtors and C&S Acquisition authorize Affiliated,
at its own expense, to prepare and record any
assignment or release with respect to the security
agreements encumbering the store owners' assets, or
any guarantees;
(4) The Debtors, at C&S' direction, will file a request
to reject the FSAs, the Congress sublease and the
primary lease. Affiliated and the store owners agree
to the rejection and termination of these contracts
and leases;
(5) The Debtors and C&S release Affiliated and the store
owners from all liability except for the obligations
under the settlement, and any notes assigned to C&S;
and
(6) The store owners withdraw any claims against the
Fleming estates.
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. 39; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FLINTKOTE: Asbestos Committee Gets Nod to Hire Caplin & Dysdale
---------------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants
appointed in The Flintkote Company's chapter 11 case, sought and
obtained approval from the U.S. Bankruptcy Court for the District
of Delaware to hire Caplin & Drysdale, Chartered, as its national
counsel. Caplin & Drysdale represents virtually every official
committee of asbestos claimants appointed in an asbestos-related
chapter 11 proceeding.
The Committee anticipates that Caplin & Drysdale will:
a) assist and advise the Committee in its consultations with
the Debtor and other committees relative to the overall
administration of the estates;
b) represent the Committee at hearings to be held before this
Court and communicating with the Committee regarding the
matters heard and issues raised as well as the decisions
and considerations of this Court;
c) assist and advise the Committee in its examination and
analysis of the Debtor's conduct and financial affairs;
d) review and analyze all applications, orders, operating
reports, schedules and statements of affairs filed and to
be filed with this Court by the Debtor or other interested
parties in this case; advising the Committee as to the
necessity and propriety of the foregoing and their impact
upon the rights of asbestos-health related claimants, and
upon the case generally; and, after consultation with and
approval of the Committee or its designee(s), consenting
to appropriate orders on its behalf or otherwise objecting
thereto;
e) assist the Committee in preparing appropriate legal
pleadings and proposed orders as may be required in
support of positions taken by the Committee and preparing
witnesses and reviewing documents relevant thereto;
f) coordinate the receipt and dissemination of information
prepared by and received from the Debtor's independent
certified accountants or other professionals retained by
it as well as such information as may be received from
independent professionals engaged by the Committee and
other committees, as applicable;
g) assist the Committee in the solicitation and filing with
the Court of acceptances or rejections of any proposed
plan or plans of reorganization;
h) assist and advise the Committee with regard to
communications to the asbestos-related claimants regarding
the Committee's efforts, progress and recommendation with
respect to matters arising in the case as well as any
proposed plan of reorganization; and
i) assist the Committee generally by providing such other
services as may be in the best interest of the creditors
represented by the Committee.
The Committee assures the Court that Caplin & Drysdale does not
represent any interest adverse to the Committee and is a
"disinterested person" as that phrase is defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
The attorneys currently assigned to be principally involved in
this case, and their current hourly rates, are:
Attorney Billing Rate
-------- ------------
Elihu Inselbuch $780
Peter Van N. Lockwood $685
Walter B. Slocombe $560
Albert G. Lauber $540
Julie W. Davis $520
Trevor W. Swett, III $520
Bernard S. Bailor $515
Ronald E. Reinsel $500
Nathan D. Finch $440
Kimberly N. Brown $385
Rita C. Tobin $375
Max Heerman $295
Brian A. Skretny $265
John Cunningham $265
Bree A. Nicolai $185
Paralegals will bill for their services at their current hourly
rates of:
Paralegal Billing Rate
--------- ------------
Robert C. Spohn $180
Andrew D. Katznelson $160
Tracy L. Wantuck $150
Ada I. Odum $150
Headquartered in San Francisco, California, The Flintkote Company
is engaged in the business of manufacturing, processing and
distributing building materials. The Company filed for chapter 11
protection on April 30, 2004 (Bankr. Del. Case No. 04-11300).
Attorneys at Sidley Austin Brown & Wood LLP serve as lead counsel
to the Company. James E. O'Neill, Esq., Laura Davis Jones, Esq.,
and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young &
Jones serve as local counsel to the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed both estimated debts and assets of more than
$100 million.
FOOTSTAR INC: Completes Sale of Shoe Zone Stores to Novus, Inc.
---------------------------------------------------------------
Footstar, Inc. has completed its previously announced sale of 26
Shoe Zone stores in Puerto Rico to Novus, Inc. for approximately
$5.5 million in cash, subject to certain post-closing adjustments.
Novus is a leading footwear retailer in Puerto Rico, operating 64
stores through five distinct retail concepts including Novus, La
Favorita, Bakers, Wild Pair and Metro. Novus has stated that it
intends to continue to operate the stores under the Shoe Zone
banner and plans to partner with Footstar to continue to offer
many of the same great styles that the Shoe Zone customer has come
to expect, including the Thom McAn brand.
Dale W. Hilpert, Chairman, President and Chief Executive Officer,
said, "The sale of these 26 stores to Novus, coupled with the
closing of our nine U.S. Shoe Zone locations announced on March
18th, virtually completes Footstar's exit from the Shoe Zone
business, as part of our strategy to refocus on our profitable
core Meldisco business and position the Company for a successful
emergence from Chapter 11."
About Footstar, Inc.
Footstar, Inc. -- http://www.footstar.com/-- which filed for
Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.: 04-
22350) on March 3, 2004, is a leading footwear retailer. As of
May 1, 2004, the Company operates 2,498 Meldisco licensed
footwear departments nationwide and 36 Shoe Zone stores. The
Company also distributes its own Thom McAn brand of quality
leather footwear through Kmart, Wal-Mart and Shoe Zone stores.
Paul M. Basta, Esq. of Weil Gotshal & Manges represents the
debtor in its restructuring efforts. When the company filed for
bankruptcy protection, it listed total assets of $762,500,000
and total debts of $302,200,000.
FREEPORT-MCMORAN: S&P Raises Corporate Credit Rating to B+
----------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on New Orleans, Louisiana-based Freeport-McMoRan Copper &
Gold Inc. to 'B+' from 'B'.
At the same time, Standard & Poor's raised its senior unsecured
rating to 'B' from 'B-' and its preferred stock rating to 'CCC+'
from 'CCC'. The outlook is positive.
"The upgrade stems from a reappraisal of the country risks
pertinent to Freeport-McMoRan's operations in West Papua,
Indonesia," said Standard & Poor's credit analyst Dominick
D'Ascoli.
Although political, operations disruption, and expropriation risks
remain high in Indonesia (sovereign foreign currency rating
B/Positive/B, sovereign local currency rating B+/Positive/B),
Standard & Poor's believes that these risks have diminished
somewhat. However, the ratings on Freeport-McMoRan still remain
constrained by Indonesia's weak political institutions, its
unpredictable judicial system, and its tenuous provisions for
property rights.
One could expect the government to renegotiate the terms of the
Contract of Work during a period of stress, or local or regional
governments to exert added claims on Freeport-McMoRan.
Nevertheless, Freeport-McMoRan has taken steps to lessen some of
these risks by establishing local trust funds for community
development and by hiring a greater proportion of indigenous
Papuans. As Indonesia's nascent democratic institutions mature,
these risks should recede further.
The ratings on Freeport-McMoRan reflect the risks of operating in
Indonesia, offset partly by its ownership in one of the lowest-
cost copper operations in the world and its strong free cash flow
generation.
Freeport-McMoRan produced approximately 1.3 billion pounds of
copper and 2.5 million ounces of gold in 2003. The company ranks
as one of the world's lowest-cost copper producers, benefiting
from high gold content in its copper ore and currently high gold
prices; low labor costs; and favorable geological conditions.
Freeport-McMoRan should be able to sustain a very low cost
position, at least until 2015, at which time the company's
Grasberg open pit mine depletes.
FRESH CHOICE: Bankruptcy Prompts Nasdaq Nat'l Market Delisting
--------------------------------------------------------------
Fresh Choice, Inc. (Nasdaq:SALD) received a Nasdaq Staff
Determination on July 12, 2004, indicating that, as a result of
its recent filing under Chapter 11 of the U.S. Bankruptcy Code,
the Nasdaq Staff had determined pursuant to Nasdaq Marketplace
Rules 4300 and 4450(f) that its securities will be delisted from
the Nasdaq National Market as of the opening of business on July
21, 2004. The Company expects that its common stock will continue
to trade on the NASD OTC Bulletin Board under the symbol SALD.OB.
The Company continues to operate 46 restaurants 43 of which are
under the Fresh Choice and Zoopa brand names in California (37),
the state of Washington (2) and Texas (4). The Company's Fresh
Choice and Zoopa restaurants offer customers an extensive
selection of high quality, freshly-prepared traditional and
specialty salads, hot pasta dishes, pizza, soups, bakery goods and
desserts in a self-service format. In addition, the Company
operates one Fresh Choice Express restaurant, one dual branded
Fresh Choice Express and licensed Starbucks retail store and one
stand-alone licensed Starbucks retail store in Texas.
Headquartered in Morgan Hill, California, Fresh Choice, Inc. --
http://www.freshchoice.com/-- owns and operates a chain of more
than 40 salad bar eateries, mostly located in California. The
Company filed for chapter 11 protection (Bankr. N.D. Cal. Case No.
04-54318) on July 12, 2004. Debra I. Grassgreen, Esq., at
Pachulski, Stang, Ziehl, Young and Jones, represents the Company
in its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $29,651,000 in assets and
$14,348,000 in liabilities.
GEMSTAR TV: Will Release Second Quarter Fin'l Results on Aug. 5
---------------------------------------------------------------
Gemstar-TV Guide International, Inc. (NASDAQ:GMST), will release
its second quarter financial results on Thursday, August 5, 2004
after the close of the stock market. Following the release,
management will host a conference call for investors and analysts
at 2:00 p.m. PDT (5:00 p.m. EDT). Jeff Shell, chief executive
officer, and Brian D. Urban, chief financial officer, will present
management's review of the second quarter's results and discuss
their outlook for the company, followed by a question and answer
period.
The conference call will also be broadcast live via both
teleconference and Internet web cast. Investors and analysts may
connect to the call by dialing (866) 800-8652 (domestic) or (617)
614-2705 (international). The pass code is "80191996". To listen
via web cast, link to the Company's website
http://ir.gemstartvguide.com/
Investors unable to listen to the call live may access an audio
replay, which will be hosted for one week following the conclusion
of the call. To access the replay, call (888) 286-8010 (domestic)
or (617) 801-6888 (international). The pass code is "60206443". An
audio archive will also be hosted on the Company's investor
relations web site at http://ir.gemstartvguide.com/Replays will
be available approximately two hours following the conclusion of
the call.
About Gemstar-TV Guide International, Inc.
Gemstar-TV Guide International, Inc., (S&P, BB- Corporate Credit
Rating, Stable Outlook) is a leading media and technology company
that develops, licenses, markets and distributes technologies,
products and services targeted at the television guidance and home
entertainment needs of consumers worldwide. The Company's
businesses include: television media and publishing properties;
interactive program guide services and products; and technology
and intellectual property licensing. Additional information about
the Company can be found at http://www.gemstartvguide.com/
GENTEK INC: Trustee Proposes Adversary Case Mediation Procedures
----------------------------------------------------------------
GenTek, Inc.'s reorganization plan provides for the creation of a
Preference Claim Litigation Trust primarily for prosecuting
preference rights for beneficiaries. Pursuant to the Litigation
Trust, Jack B. Fishman was designated as preference claim
administrator. Mr. Fishman retained Novare, Inc., to assist in
administrating the Litigation Trust's business.
Mr. Fishman is in the process of recovering Reorganized GenTek's
property to satisfy claims, and has pursued preferential
transfers through direct contact and negotiations with various
preference recipients.
To date, Mr. Fishman has filed 197 adversary proceedings against
various trade entities to recover transfers that are avoidable or
recoverable under Sections 544, 547, 548, 550, or 553 of the
Bankruptcy Code. Additional Adversary Proceedings will be filed
in stages. Mr. Fishman believes that he ultimately may file as
many as 800 Adversary Proceedings. The deadline for filing the
Adversary Proceedings is October 11, 2004.
On April 7, 2004, the U.S. Bankruptcy Court of the District of
Delaware set a mandatory mediation program for all Adversary
Proceedings that include a preference claim. The procedures
established in the April 7 Order are meant to facilitate an
expeditious and prompt resolution of the Adversary Proceedings.
However, based on the large number of cases involved, the limited
resources of the Litigation Trust, and the desire to expedite
mediation in the cases, Mr. Fishman proposes to modify the
mandatory mediation program to:
(a) streamline the mediation process and reduce time and
expense for the Court and all parties involved; and
(b) assist in the fair and efficient resolution of the
Adversary Proceedings.
The mediation procedures proposed by the Trustee are consistent
with the established mediation program under the April 7 Order.
Proposed Mediation Procedures
Rachel Lowy Werkheiser, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub, PC, in Wilmington, Delaware, relates that if
Mr. Fishman is unable to settle an Adversary Proceeding then he
will serve on the applicable defendant, a notice that the
Adversary Proceeding is referred to mandatory mediation. Mr.
Fishman will make the mediation demand no later than 90 days
after a response by the defendant.
The Mediation Demand will identify the mediator chosen by Mr.
Fishman from the then current Register of Mediators and
Arbitrators pursuant to Rule 9019-4 of the Local Rules of
Bankruptcy Practice and Procedure of the U.S. Bankruptcy Court
for the District of Delaware. The Mediation Demand will provide
the name, address, and telephone number of the chosen Mediator,
and will be served on the chosen Mediator as well.
Within 10 days of the Mediation Demand, the Mediator will send a
written notice scheduling the mediation to Mr. Fishman and the
adversary defendants and their counsel, if known to Mr. Fishman.
The Mediation Notice will:
(a) identify the manner in which to communicate with the
Mediator;
(b) schedule the exchange of documents, identification of
witnesses, and other evidence that will summarize the
positions of each party, which will be required to be
submitted within 10 days after service of the Mediation
Notice;
(c) identify the format of and the procedure to be employed
during the mediation;
(d) describe who should attend;
(e) identify the location of the mediation; and
(f) describe the effect of a mediated settlement.
The Mediation Notice will provide for a mediation date within 30
to 40 days from the date of the Mediation Notice. The mediation
will take place in Chicago, Illinois.
According to Ms. Werkheiser, the choice of a single location for
the mediation will greatly expedite the resolution of the
matters. Mr. Fishman proposes to hold eight matters per day,
with mediation scheduled for two-day sessions, occurring once to
thrice per month. A single location should also significantly
reduce the cost of the mediator's fees and travel costs.
After reviewing the preference defendants' locations, the Trustee
determined that Chicago is a fair location for the mediations, as
it is centrally located for all parties. Furthermore, as Mr.
Fishman is located in Chicago, and must attend each of the
Mediations, the financial burden on the Litigation Trust will be
significantly reduced if Mr. Fishman is permitted to avoid
mediation in several different locations.
A defendant, nevertheless, may demonstrate that mediation in
Chicago is unfairly burdensome. The defendant may request, by
formal notice to Mr. Fishman and the Mediator, that mediation be
scheduled in Wilmington, Delaware or via telephone appearance.
Mr. Fishman reserves his rights to object to the proposed change
in mediation location, and to ask that the defendant bear a
portion of the costs associated with the change of venue. If Mr.
Fishman and the defendant are unable to agree on the location of
the mediation or the apportionment of costs, then if necessary,
Mr. Fishman will file a notice within 10 days requesting the
Court to schedule a telephonic hearing to resolve the dispute.
Pursuant to the Preference Claim Litigation Trust Agreement, if a
settlement is reached at mediation, then the parties will enter
into a settlement agreement. No further action from the Court
will be necessary and Mr. Fishman will dismiss the Adversary
Proceeding with prejudice upon payment of the settlement amount,
if any, within 30 days of the receipt of the payment.
If mediation is not successful, then the Mediator will file a
notice with the Court, served on all parties to the Adversary
Proceeding. After receipt of an Unsuccessful Meditation Notice,
the Court will set a trial scheduling conference for the
Adversary Proceeding.
Stay of Formal Discovery
To reduce the costs to all parties, and in particular, to
preserve the resources of the Litigation Trust for the creditor
beneficiaries, Mr. Fishman requests a stay of formal discovery in
each Adversary Proceeding from the date of service of the
Mediation Demand through the date of service of the Unsuccessful
Mediation Notice, absent leave granted by the Mediator or written
request served on Mr. Fishman with at least 10 business days'
notice. (GenTek Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
GLOBAL CROSSING: Wants to Transfer Class Actions to New Jersey
--------------------------------------------------------------
Global Crossing Limited, John Legere and Daniel O'Brien ask the
Judicial Panel on Multidistrict Litigation to transfer to the
United States District Court for the District of New Jersey all
cases relating to alleged misrepresentations or omissions
concerning GX's financial condition and accounting practices.
The related cases have been filed in United States District
Courts in three judicial districts:
* the District of New Jersey
* the Southern District of New York
* the Central District of California, Western Division
Jonathan E. Richman, Esq., at Debevoise & Plimpton, LLP, informs
the Panel that all actions are in their earliest stages. The
lead plaintiff and lead counsel have not yet been appointed and a
consolidated complaint has not yet been filed. Moreover, GX has
not yet responded to the Complaints and discovery has not yet
begun.
Mr. Richman notes that all the Actions involve numerous common
questions of fact. The various Complaints all charge that GX
engaged in allegedly improper accounting practices and made false
or misleading statements about its financial condition and
earnings, thus "inflating" the price of its stock, to the
plaintiffs' alleged detriment.
In addition, the pending Actions raise common legal issues that
could present a risk of inconsistent pre-trial rulings on
substantive and procedural issues -- including overlapping class-
certification requests -- if the issues were decided in multiple
courts.
Mr. Richman asserts that a transfer of all Actions to the New
Jersey District Court for coordinated or consolidated pre-trial
proceedings under Section 1407 of the Judiciary Procedures Code
would:
-- eliminate duplicative discovery;
-- avoid potentially conflicting rulings and schedules;
-- save time and expense for the parties, the attorneys, the
witnesses, and the courts; and
-- promote the just and efficient prosecution of all Actions.
The New Jersey District Court is more convenient for the parties,
witnesses, and the judicial system than is any other single
district, Mr. Richman says. GX's principal administrative
offices are located in New Jersey, many of the company's top
executives -- including Messrs. O'Brien and Legere -- are based
there, GX's principal financial and accounting functions are
based there, and GX's former auditor for 2002 and 2003 is located
nearby, in New York City.
According to Mr. Richman, the plaintiffs who initially filed
cases in other judicial districts would not suffer any prejudice
from the transfer. The plaintiffs could be deposed in their
states, if necessary, and they would all enjoy numerous
efficiencies and cost-savings from coordinating their cases with
other similar actions.
Headquartered in Florham Park, New Jersey, Global Crossing Ltd.
-- http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-
40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News,
Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GOLF TRUST: Inks Settlement Pact With Golf Hosts, Inc., et al.
-------------------------------------------------------------
On July 15, 2004, Golf Trust of America, L.P., GTA-IB, LLC, Golf
Host Resorts, Inc., Golf Hosts, Inc., Golf Host Management, Inc.,
Golf Host Condominium, Inc. and Golf Host Condominium, LLC entered
into a Settlement Agreement relating to the settlement of a number
of issues between the parties, including Golf Host Resorts'
default under the $79 million loan made by Golf Trust of America,
L.P. to Golf Host in June 1997. Pursuant to the Settlement
Agreement, GTA-IB, an affiliate of the Lender and of Golf Trust of
America, Inc., settled claims relating to the loan to the Borrower
and took ownership of the Westin Innisbrook Golf Resort. In
connection with the Settlement Agreement, GTA-IB and Westin
Management Company South entered into a management agreement
providing for Westin's management of the Westin Innisbrook Golf
Resort, and Westin and Troon Golf LLC entered into a facility
management agreement providing for Troon's management of the golf
facilities at the Westin Innisbrook Golf Resort.
Golf Trust of America, Inc. (AMEX:GTA) was formerly a real estate
investment trust, and is now engaged in the liquidation of its
interests in golf courses in the United States pursuant to a plan
of liquidation approved by its stockholders. In addition to the
four 18-hole golf courses at the Westin Innisbrook Golf Resort,
the Company currently owns an interest in four other properties
(comprised of 5.0 eighteen-hole equivalent golf courses).
Additional information regarding Golf Trust and its interest in
the Westin Innisbrook Golf Resort is available in Golf Trust's
periodic filings with the SEC and on the Company's website at
http://www.golftrust.com/
HOLLINGER INT'L: Conrad Black and Hollinger Inc. Pays $30 Million
-----------------------------------------------------------------
Hollinger International Inc. (NYSE: HLR) received approximately
$30.0 million from Conrad M. Black and Hollinger Inc.,
representing amounts that Black and Hollinger Inc. had agreed to
repay under a Restructuring Proposal dated November 15, 2003,
because they had not been properly authorized on behalf of the
Company. After they unsuccessfully challenged the repayment
obligations, Black and Hollinger Inc. were ordered to pay these
amounts by the Delaware Chancery Court on June 28, 2004. The Court
ordered Black to pay $8,693,053.56, plus interest from June 1,
2004; Black and Hollinger Inc. were held jointly liable to repay
an additional $21,154,025.92 plus interest from June 1, 2004.
The Court-ordered repayments represent amounts that were
previously paid to Black and Hollinger Inc. were styled as "non-
competition payments" associated with the sale of U.S. community
newspaper assets from 1999 to 2001. The payments had not been
authorized or approved by either the Audit Committee or the full
Board of Directors of the Company. Of the total of $32.15 million
in unauthorized "non-competition" payments that were made by the
Company during this period, $16.55 million was paid to Hollinger
Inc., and approximately $7.2 million was paid to Black. The
amounts received today include interest on these amounts from the
original date of each of the unauthorized payments as provided for
in the November Restructuring Proposal. Both Black and Hollinger
Inc. have appealed this judgment.
Hollinger International Inc. is a global newspaper publisher with
English- language newspapers in the United States, Great Britain,
and Israel. Its assets include The Daily Telegraph, The Sunday
Telegraph and The Spectator magazine in Great Britain, The Chicago
Sun-Times and a large number of community newspapers in the
Chicago area, The Jerusalem Post and The International Jerusalem
Post in Israel, a portfolio of new media investments and a variety
of other assets.
* * *
As reported in the Troubled Company Reporter's March 17, 2004
edition, Hollinger International Inc. (NYSE: HLR) announced that
primarily as a result of the ongoing investigation being conducted
by the Special Committee of the Company's Board of Directors, as
well as the disruption of management services provided to the
Company arising from its ongoing dispute with Ravelston
Corporation Limited, the Company is not able to complete its
financial reporting process and its audited financial statements
for inclusion in the Annual Report on Form 10-K for fiscal year
2003 by the filing deadline. The Company intends to complete its
financial reporting process as soon as practicable after the
completion of the investigation by the Special Committee, and then
promptly file the 10-K.
The company's September 30, 2003, balance sheet shows a working
capital deficit of about $293 million.
HOLLINGER INTERNATIONAL: Subsidiary Determines Tender Offer Yield
-----------------------------------------------------------------
Hollinger International Publishing Inc., a subsidiary of Hollinger
International Inc. (NYSE: HLR), has determined the tender offer
yield in connection with Publishing's previously announced tender
offer and consent solicitation for its outstanding 9% Senior Notes
due 2010. The total outstanding principal amount of the Notes is
$300 million.
As described in Publishing's Offer to Purchase and Consent
Solicitation Statement dated June 24, 2004 and as previously
announced, the Total Consideration for the Notes is determined by
reference to the bid-side yield to maturity of the 2-5/8% U.S.
Treasury Note due November 15, 2006 as of 10:00 a.m., New York
City time, on July 16, 2004, plus 50 basis points. The bid-side
yield to maturity of the Reference Security has been determined to
be 2.715%, resulting in a total tender offer yield of 3.215%.
Assuming for purposes of illustration that the payment date occurs
on August 2, 2004, the Total Consideration for each $1,000 in
principal amount of Notes would be $1,172.63, plus accrued and
unpaid interest to, but not including, the payment date. The Total
Consideration includes a consent payment of $30 per $1,000
principal amount of Notes payable to holders who validly tendered
their Notes and delivered consents and who did not validly
withdraw their Notes or revoke consents on or prior to the Consent
Payment Deadline, which expired at 5:00 p.m., New York City time,
on July 15, 2004.
The tender offer commenced on June 24, 2004 and will expire at
12:00 midnight, New York City time, on July 30, 2004, unless
extended. Closing of the tender offer is subject to the
satisfaction of certain conditions, including: (i) the
consummation of the sale of Telegraph Group Limited to Press
Acquisitions Limited, which sale shall have generated sufficient
proceeds to allow Publishing to repay all of its borrowings under
its existing bank credit facility and to purchase all of the Notes
in the tender offer; and (ii) certain other customary conditions.
Wachovia Securities is the exclusive Dealer Manager and
Solicitation Agent for the tender offer and consent solicitation.
Questions regarding the terms of the tender offer or consent
solicitation should be directed to Wachovia Securities at (704)
715-8341 or toll-free at (866) 309-6316. The Depositary and
Information Agent is Global Bondholder Services Corporation. Any
questions or requests for assistance or additional copies of
documents may be directed to the Information Agent at (212) 430-
3774 or toll-free at (866) 470-3800.
About Hollinger International Publishing Inc.
Publishing is a wholly owned subsidiary of Hollinger International
Inc., which is a leading publisher of English-language newspapers
in the United States, the U.K. and Israel with a smaller presence
in Canada. In addition, it owns or has interests in over 250
other publications, including non-daily newspapers and magazines.
Included among its 144 paid newspapers are the Chicago Group's
Chicago Sun-Times, the U.K. Newspaper Group's The Daily Telegraph
and the Community Group's Jerusalem Post.
* * *
As reported in the Troubled Company Reporter's March 17, 2004
edition, Hollinger International Inc. (NYSE: HLR) announced that
primarily as a result of the ongoing investigation being conducted
by the Special Committee of the Company's Board of Directors, as
well as the disruption of management services provided to the
Company arising from its ongoing dispute with Ravelston
Corporation Limited, the Company is not able to complete its
financial reporting process and its audited financial statements
for inclusion in the Annual Report on Form 10-K for fiscal year
2003 by the filing deadline. The Company intends to complete its
financial reporting process as soon as practicable after the
completion of the investigation by the Special Committee, and then
promptly file the 10-K.
The company's September 30, 2003, balance sheet shows a working
capital deficit of about $293 million.
INDYMAC BANCORP: Completes Acquisition of Financial Freedom
-----------------------------------------------------------
IndyMac Bancorp, Inc. (NYSE:NDE), the holding company for IndyMac
Bank(R) F.S.B., completed its acquisition of Financial Freedom
Holdings Inc.
"The acquisition of Financial Freedom makes us the largest
provider of reverse mortgages in the U.S. and illustrates our
strategy of growing market share through niche products that
complement our core competency as a single-family residential
mortgage lender," commented Michael W. Perry, IndyMac's Chairman
and Chief Executive Officer. "With the maturing of the baby boom
generation and the appreciation of home prices, the reverse
mortgage market has the potential for very healthy growth in the
years to come. Joining forces with Financial Freedom, the proven
leader in this industry, positions IndyMac to prosper from this
demographic wave," continued Mr. Perry.
Reverse mortgages allow homeowners age 62 and older to convert
home equity into cash. The product is becoming increasingly
popular with senior citizens seeking to supplement their
retirement income for home maintenance and repair, healthcare
funding, estate planning, and discretionary purposes. "IndyMac is
pleased to provide reverse mortgages as another option for our
senior customers to achieve their retirement objectives,"
commented Mr. Perry
Reverse mortgages offered by IndyMac feature: no recourse to the
borrower, no repayment during the borrower's occupancy of the
home, and a repayment amount that cannot exceed the value of the
home (after costs of sale). Equity may be withdrawn in a lump sum,
as annuity-style monthly payments, as a credit line, or any
combination thereof.
Financial Freedom is a majority-owned subsidiary of IndyMac Bank.
The acquisition of Financial Freedom is expected to be a few cents
dilutive to IndyMac's earnings in the third quarter due to
purchase accounting issues, and accretive thereafter.
IndyMac Bancorp, Inc. is the holding company for IndyMac Bank, the
largest savings and loan in Los Angeles and the 10th largest
nationwide (based on assets). Through its hybrid thrift/mortgage
bank business model, IndyMac is in the business of designing,
manufacturing, and distributing cost-efficient financing for the
acquisition, development, and improvement of single-family homes.
IndyMac also provides financing secured by single-family homes to
facilitate consumers' personal financial goals and strategically
invests in single-family mortgage-related assets.
IndyMac utilizes its award-winning e-MITS(R) technology platform
to facilitate automated underwriting, risk-based pricing, and rate
lock of home loans on a nationwide basis via the Internet at the
point of sale. IndyMac provides mortgage products and services
through its business relationship division, IndyMac Mortgage Bank,
and its consumer direct division, IndyMac Consumer Bank, and
invests in certain of its mortgage loan production and mortgage
servicing for long-term returns through its Investment Portfolio
and Home Equity Divisions. IndyMac's mortgage website is ranked
the number one overall mortgage website by Watchfire(R)
GomezPro(TM), an Internet quality measurement firm, a position it
has held for seven of eight measurement periods since Fall 2000.
IndyMac Bank also offers a wide array of Web-enhanced banking
services, including deposits, competitive CD and money market
accounts, and online bill payment services. IndyMac Bank is FDIC
insured.
IndyMac's total annualized return to shareholders for the period
1993 through June 30, 2004 of 24%, under its current management
team, has exceeded the comparable returns of 13% and 11% for the
Dow Jones Industrial Average and S&P 500, respectively, for the
same period.
For more information about IndyMac and its affiliates, or to
subscribe to the Company's Email Alert feature for notification on
Company news and events, please visit our website at
http://www.indymacbank.com/
* * *
As reported in the Troubled Company Reporter's June 24, 2004
edition, Fitch has taken rating actions on the following IndyMac
ABS, Inc., home equity issues as follows:
Series SPMD 2000-A group 2:
--Class AV-1 affirmed at 'AAA';
--Class MV-1 affirmed at 'AA';
--Class MV-2 affirmed at 'A';
--Class BV affirmed at 'BBB' and removed from
Rating Watch Negative.
Series SPMD 2000-C group 1:
--Class AF-5, AF-6, R affirmed at 'AAA';
--Class MF-1 affirmed at 'AA';
--Class MF-2 downgraded to 'BB' from 'BBB';
--Class BF downgraded to 'C' from 'CCC'.
Series SPMD 2001-B:
--Class AV, AF-6, R affirmed at 'AAA';
--Class MF-1 affirmed at 'AA';
--Class MF-2 affirmed at 'A';
--Class BF downgraded to 'BB' from 'BBB', and
removed from Rating Watch Negative.
The affirmations on the above classes reflect credit enhancement
consistent with future loss expectations.
The negative rating action on series 2000-C group 1 class MF-2 and
series 2001-B class BF is the result of adverse collateral
performance and the deterioration of asset quality outside of
Fitch's original expectations.
Indymac SPMD 2000-C group 1 contained 12.65% of manufactured
housing collateral at closing, and as of April 2004, the
percentage of MH increased to 33.6%. To date, MH loans have
exhibited very high historical loss severities, causing Fitch to
have concerns over the available enhancement in this deal.
This deal was structured with mortgage insurance policies provided
by both the lender and the borrower on approximately 91.4% of the
mortgage pool.
Series 2000-C group 1 has had no overcollateralization amount
since the May 2003 distribution, and class BF has taken further
write-downs, with an ending balance of $2,395,665.85 as of the May
2004 distribution. The twelve-month average monthly loss for this
deal is approximately $245,000. Series 2001-B has $1,301,270.46 OC
outstanding as of the May 2004 distribution. The twelve-month
average monthly loss for this deal is approximately $223,600.
The structure in the 2000-C transaction is not cross-
collateralized so excess spread cannot be shared by the groups.
Both 2000-C and 2001-B transactions are also structured such that
bonds that were written down due to losses can be written back up.
INTERNATIONAL BIOCHEMICAL: Trustee Converts Case to Chapter 7
-------------------------------------------------------------
Herbert C. Broadfoot II, Esq., the Chapter 11 Trustee for
International Biochemical Industries, Inc.'s case wants the U.S.
Bankruptcy Court for the Northern District of Georgia, Atlanta
Division, to convert the Debtor's Chapter 11 restructuring to a
Chapter 7 liquidation.
"The Debtor apparently has no ongoing business operations," Mr.
Broadfoot tells the Court, adding that there's no prospect for
reorganization. Mr. Broadfoot believes that no good purpose is
served by proceeding with a Chapter 11 plan of liquidation and
that assets of the estate can be administered in Chapter 7 at less
expense.
Headquartered in Atlanta, Georgia, International BioChemical
Industries, Inc. -- http://www.bioshield.com/-- is a maker of
concentrated antiviral and antimicrobial products. The Company
filed for chapter 11 protection on April 5, 2004 (Bankr. N.D. Ga.
Case No. 04-92814). Jesse Blanco, Jr., Esq., represent the Debtor
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $114,500 in assets and
$18,465,934 in debts.
INTERNET CAPITAL: To Release Q2 Financial Results on August 5
-------------------------------------------------------------
Internet Capital Group (NASDAQ:ICGE) will release the financial
results for its second quarter ended June 30, 2004, on Thursday,
August 5, 2004, before the market opens.
The Company will host a conference call to discuss the second
quarter results on Thursday, August 5th, 2004 at 10:00am ET.
Participating on the conference call will be Walter Buckley,
chairman and chief executive officer and Tony Dolanski, chief
financial officer. The domestic dial-in number for the call is
877-211-0292. The international dial-in number is (706) 679-0702.
The Company will also host a live web cast for the call with an
attached slide presentation. To access the web cast, go to the ICG
web site at http://www.internetcapital.com/and click on the
investor information tab and the icon for the second quarter
conference call. Please log on to the web site approximately ten
minutes prior to the call to register and download and install any
necessary audio software.
In an effort to address specific areas of interest, participants
are encouraged to submit questions to the Internet Capital Group
Investor Relations department at ir@internetcapital.com prior to
August 5th. Every attempt will be made to respond to all questions
either during the Question and Answer portion of the call or
shortly thereafter.
If you are unable to access the web site but would like a copy of
the slide presentation sent to you after the call, please contact
our Investor Relations Department, at (610) 727-6900.
For those unable to participate in the conference call, a replay
will be available beginning August 5th, 2004 at 11:00am until
August 12th, 2004 at 11:59pm. To access the replay dial 800-642-
1687 (domestic) or 706-645-9291 (international). The access code
is 8746779. The replay and slide presentation can also be accessed
on the Internet Capital Group web site:
http://www.internetcapital.com/investors/presentations
About Internet Capital Group
Internet Capital Group is an e-business applications holding
company that builds and owns software and services businesses that
leverage the Internet to help organizations operate more
productively. Founded in 1996, ICG devotes its expertise and
capital to maximizing the success of e-business companies that
take advantage of the evolution to Internet architectures in key
business sectors.
* * *
In its Form 10-Q for the quarterly period ended March 31, 2004,
filed with the Securities and Exchange Commission, Internet
Capital Group, Inc. reports:
Liquidity and Capital Resources
"In May 2004, we issued $60 million of senior convertible notes
due in April 2009. We will use the net proceeds to redeem the
remaining $39.1 million of December 2004 convertible subordinated
notes, general operation requirements and fundings to new and
existing partner companies.
"We believe existing cash, cash equivalents and short-term
investments, proceeds from the potential sales of all or a portion
of our interests in certain partner companies and net proceeds
from the $60 million senior convertible notes are expected to be
sufficient to fund our cash requirements through at least the
second quarter of 2005, including commitments to existing partner
companies, debt obligations and general operations requirements.
"As of March 31, 2004, our available-for-sale securities consist
of: 1,053,964 shares of eMerge Interactive common stock, 2,917,794
shares of Verticalnet common stock and 1,083,206 shares of
Universal Access common stock.
"In the first quarter of 2004, we sold 1,559,481 shares of
Onvia.com common stock for $6.5 million in cash, of which $5.8
million was received in early April 2004.
"At May 10, 2004, we were obligated for no funding and guarantee
commitments to existing partner companies. If a certain
consolidated partner company achieves a fair market value in
excess of $1.0 billion, we will be obligated to pay, in cash or
stock at our option, 4% of the partner company's fair market value
in excess of $1.0 billion, up to $70 million to a venture capital
firm. One of our executive officers was a limited partner of this
venture capital firm. This contingent obligation will expire on
the earlier to occur of May 31, 2005 or an unaffiliated company
sale, if the valuation milestone is not achieved. Currently, the
fair market value of this partner company is well below $1.0
billion. We will continue to evaluate acquisition opportunities
and may acquire additional ownership interests in new and existing
partner companies in the next twelve months; however, such
acquisitions will generally be made at our discretion. If we elect
to make additional acquisitions, it may become necessary for us to
raise additional funds. We may not be able to raise additional
capital and failure to do so could have a material adverse effect
on our business. If additional funds are raised through the
issuance of equity securities, our existing stockholders may
experience significant dilution."
J.L. FRENCH AUTOMOTIVE: S&P Lowers Corp. Credit Rating to CC
------------------------------------------------------------
Standard & Poor's Rating Services lowered its corporate credit
rating on Sheboygan, Wisconsin-based J.L. French Automotive
Castings Inc. to 'CC' from 'B-' and placed it on CreditWatch with
negative implications. The action came after the company announced
a tender offer that Standard & Poor's would consider to be
tantamount to a default if completed as proposed.
At the same time, Standard & Poor's lowered its subordinated debt
rating on the company to 'C' from 'CCC' and placed it on
CreditWatch with negative implications.
Once the tender offer is completed, the corporate credit rating
will be lowered to 'SD' and the subordinated debt rating will
be lowered to 'D'. The 'B-' bank loan rating remains unchanged and
will be withdrawn upon refinancing and rating of the company's new
credit facility. Upon completion of the tender offer, Standard &
Poor's will assign a new corporate credit rating and bank loan
rating, which will reflect the company's improved capital
structure and financial flexibility pro forma the refinancing.
J.L. French is a vertically integrated, value-added manufacturer
of aluminum die-cast automotive parts. Total debt outstanding was
$629 million at March 31, 2004.
J.L. French said its tender offer was for its outstanding 11.5%
senior subordinated notes due 2009 for a value of $780 per bond, a
substantial discount from the $1,000 par value of the notes.
"We view the tender offer as coercive, since the company is
experiencing financial distress, and bondholders could eventually
face more adverse consequences if the offer is not accepted," said
Standard & Poor's credit analyst Heather Henyon. "J.L. French is
highly leveraged and has an untenable capital structure."
The tender offer is being made in connection with a proposed
refinancing of the company's current credit facilities as well as
a proposed offering of $165 million in preferred equity
securities. The potential investors in the preferred equity
offering have indicated that their intention to make their
investment is contingent on their satisfaction with the terms and
success of the tender offer. Standard & Poor's will review the
prospects for operating improvements at the company and evaluate
the impact of the proposed financing on the company's credit
profile.
LEES CHILDREN LLC: Case Summary & 14 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Lees Children L.L.C.
c/o Marlene Appel
3550 North Central, #1801
Phoenix, Arizona 85012
Bankruptcy Case No.: 04-12039
Chapter 11 Petition Date: July 9, 2004
Court: District of Arizona (Phoenix)
Judge: Charles G. Case II
Debtor's Counsel: Shelton L. Freeman, Esq.
Deconcini McDonald Yetwin & Lacy PC
2025 North 3rd Street #230
Phoenix, AZ 85004-1472
Tel: 602-282-0500
Fax: 602-282-0520
Total Assets: $3,000,000
Total Debts: $925,324
Debtor's 14 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Dr. Michael Chen 5315 E. Solano Dr. $360,000
5390 San Miguel Ave. Paradise Valley,
Paradise Valley, AZ 85253 Arizona 85253
Plumbing by Curtis $4,718
Maricopa County Assessor $4,704
PLI Brokerage, Inc. $1,595
All Star Pool Unknown
Arizona Public Service Unknown
Arizona-American Water Unknown
Company
Barbara Lees Unknown
CKS Pools Unknown
Maureen Gaughan fraudulent Unknown
conveyance claim
RPS Skanco International homeowner's insurance Unknown
Southwest Gas Corporation Unknown
Maxim Construction Group Unknown
Phil Whitaker Unknown
METALLURG INC: S&P Lowers Ratings To D On Parent's Nonpayment
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Metallurg Inc. and its parent Metallurg Holdings Inc. to
'D' from 'CC'.
Standard & Poor's also lowered the ratings on Metallurg's 11%
senior notes due 2007 and Metallurg Holdings' 12.75% senior
discount notes due 2008 to 'D' from 'CC' and 'C', respectively.
"The downgrades follow the company's announcement that its parent
did not make the $7.7 million interest payment due July 15, 2004,
on the 12.75% senior discount notes 2008," said Standard & Poor's
credit analyst Dominick D'Ascoli.
Despite being current on its debt obligations, Standard & Poor's
believes New York, New York-based Metallurg Inc. will seek a
general restructuring of its debt obligations and that lenders
could receive something less than full value, which is tantamount
to default. In the event restructuring efforts fail, the
probability of a bankruptcy filing is high.
Metallurg produces specialty metals, alloys and metallic chemicals
used by manufacturers of steel, aluminum, and superalloys. Weak
demand in the past couple of years from the global steel and
aluminum industries, as well as significantly reduced demand from
major customers in the aerospace sector, have led to lower
margins. Reduced margins, combined with an overleveraged capital
structure, have put the company in a distressed position.
MIRANT CORP: MirMA Landlords Press For Alternative Rent Payment
---------------------------------------------------------------
The MirMA Landlords ask the Court to compel Mirant Mid-Atlantic,
LLC, to pay the alternative rent due to them until MirMA resumes
its reporting status with the Securities and Exchange Commission.
Louis R. Strubeck, Jr., Esq., at Fulbright & Jaworski, LLP, in
Dallas, Texas, relates that MirMA unilaterally terminated its
status as a reporting company with the SEC on August 28, 2003.
MirMA's leases with the MirMA Landlords require MirMA to pay
alternative rent at an increased rate of 0.50%, totaling about
$5,000,000 per year, should it fail to maintain reporting company
status under the Exchange Act. MirMA failed to pay the
alternative rent due.
Mr. Strubeck explains that MirMA's obligation to pay alternative
rent corresponds to an increase in interest provided for in notes
the MirMA Landlords executed, in favor of certain certificate
holders. The increased rent was provided for in the leases to
compensate for the loss in liquidity of the certificates issued
in connection with the lease transactions due to MirMA's
termination of its reporting company status.
According to Mr. Strubeck, MirMA's inexplicable decision to
terminate its reporting company status is curious since it has
the information necessary to complete the required reports and
the cost of maintaining reporting company status is a fraction of
the alternative rent payable.
Regardless of whether the Leases are real or personal property
leases, Mr. Strubeck asserts that the payment of Alternative Rent
is required because:
-- Sections 365(d)(3) and (d)(10) of the Bankruptcy Code
requires MirMA to "timely perform all obligations" under
a lease;
-- none of the "carve outs" specified in Section 365(b)(2)
applies to the Leases;
-- the Alternative Rent is not a penalty under the New York
law, which govern the Leases;
-- MirMA's obligation to pay Alternative Rent is a pass
through -- it merely parallels the Alternative Rent
applicable under the Lessor Notes due to MirMA's failure
to maintain its reporting company status;
-- the Alternative Rent provides compensation for loss of
marketability of the certificates caused by the
termination of MirMA's reporting company status; and
-- if MirMA is not compelled to pay the Alternative Rent, the
MirMA Landlords will be prejudiced because their interests
under the Lessor Notes are jeopardized.
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. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000)
MOHEGAN TRIBAL: Commences Sr. Debt Offer & Consent Solicitation
---------------------------------------------------------------
The Mohegan Tribal Gaming Authority has commenced a cash tender
offer and consent solicitation for any and all of its $200,000,000
aggregate principal amount of 8-1/8% Senior Notes due 2006 and any
and all of its $150,000,000 aggregate principal amount of 8-3/8%
Senior Subordinated Notes due 2011, pursuant to the Offer to
Purchase and Consent Solicitation, dated July 15, 2004.
The Offer is scheduled to expire at 12:00 midnight, New York City
Time, on Wednesday, August 11, 2004, unless extended or earlier
terminated with respect to either the Senior Notes or the
Subordinated Notes at the Authority's sole discretion. The consent
solicitation will expire at 5:00 P.M., New York City Time, on
Wednesday, July 28, 2004. Holders tendering their Notes will be
required to consent to certain proposed amendments to the
indentures governing the Notes, which will eliminate substantially
all of the restrictive covenants with respect to such Notes.
Holders may not tender their Notes without delivering consents or
deliver consents without tendering their Notes.
The consideration offered for each $1,000 principal amount of
Senior Notes validly tendered and not validly withdrawn pursuant
to the Offer will be the price (calculated as described in the
Tender Offer Statement) equal to (i) the present value on the
initial settlement date of $1,000 principal amount of Senior Notes
(the amount payable on January 1, 2006, which is the maturity date
for the Senior Notes) plus the present value of the interest that
would be payable on, or accrue from, the last interest payment
date until the Senior Maturity Date, in each case, determined on
the basis of a yield to the Senior Maturity Date equal to the sum
of (x) the bid- side yield on the 1.875% U.S. Treasury note due
December 31, 2005 calculated as described below, plus (y) 50 basis
points (such price being rounded to the nearest cent), minus
accrued and unpaid interest from the last interest payment date
to, but not including, the initial settlement date, minus (ii)
$20.00 per $1,000 principal amount of Senior Notes, which is equal
to the Consent Payment. The Senior Total Consideration minus the
Consent Payment is referred to as the "Senior Tender Offer
Consideration."
The consideration offered for each $1,000 principal amount of
Subordinated Notes validly tendered and not validly withdrawn
pursuant to the Offer will be the price equal to (i) the present
value on the initial settlement date of $1,041.88 principal amount
of Subordinated Notes (the amount payable on July 1, 2006, which
is the first date on which the Subordinated Notes are redeemable)
plus the present value of the interest that would be payable on,
or accrue from, the last interest payment date until the
Subordinated Redemption Date, in each case, determined on the
basis of a yield to the Subordinated Redemption Date equal to the
sum of (x) the bid-side yield on the 2.75% U.S. Treasury note due
June 30, 2006 calculated as described below, plus (y) 50 basis
points (such price being rounded to the nearest cent), minus
accrued and unpaid interest from the last interest payment date
to, but not including, the initial settlement date, minus (ii)
$20.00 per $1,000 principal amount of Subordinated Notes, which is
equal to the Consent Payment. The Subordinated Total Consideration
minus the Consent Payment is referred to as the "Subordinated
Tender Offer Consideration."
Holders of Notes who validly tender, and do not validly withdraw,
their Notes in the Offer on or prior to 5:00 P.M., New York City
Time, on the Consent Date will receive the Senior Total
Consideration or Subordinated Total Consideration, as applicable
(if such Notes are accepted for payment), which includes a consent
payment in an amount in cash equal to $20.00 for each $1,000
principal amount of Notes tendered on or prior to the Consent
Date. Holders who validly tender, and do not validly withdraw,
their Notes following the Consent Date but on or prior to
midnight, New York City Time, on the Expiration Date will receive
the Senior Tender Offer Consideration or the Subordinated Tender
Offer Consideration, as applicable (if such Notes are accepted for
payment). In addition, Holders who validly tender and do not
validly withdraw their Notes in the Offer will also receive
accrued and unpaid interest from the last interest payment date
to, but not including, the applicable settlement date, payable on
the applicable settlement date.
The Senior Reference Yield and the Subordinated Reference Yield
will be calculated by the Dealer Managers, as defined in the
Tender Offer Statement, in accordance with standard market
practice, as of 2:00 P.M., New York City Time, on the Consent
Date, as reported by Bloomberg Government Pricing Monitor on "Page
PX4" or, if any relevant price is not available on a timely basis
on the Bloomberg Page or is manifestly erroneous, such other
recognized quotation source as the Dealer Managers shall select in
their sole discretion. The Authority will publicly announce the
pricing information referred to above by press release to business
wire by 9:30 A.M., New York City Time, on the next business day
after the Price Determination Date.
The Offer with respect to the Senior Notes and the Subordinated
Notes is subject to the satisfaction of certain conditions,
including the Authority's receipt of tenders of Notes representing
a majority of the principal amount of such Notes outstanding and
financing on terms acceptable to the Authority in an amount
sufficient to consummate the Offer. The Offer with respect to the
Senior Notes is not conditioned on the success of the Offer with
respect to the Subordinated Notes and the Offer with respect to
the Subordinated Notes is not conditioned on the success of the
Offer with respect to the Senior Notes. The terms of the Offer are
described in the Authority's Tender Offer Statement, copies of
which may be obtained from Global Bondholder Services Corporation,
the information agent for the Offer.
The Authority has engaged Citigroup Global Markets Inc., Banc of
America Securities LLC and SG Americas Securities, LLC to act as
dealer managers and solicitation agents in connection with the
Offer. Questions regarding the Offer may be directed to Citigroup
Global Markets Inc., Liability Management Group at (800) 558-3745
(toll free) or (212) 723-6106 (collect), Banc of America
Securities LLC, High Yield Special Products at (888) 292-0070
(toll free) or (704) 388-4813 (collect), and SG Americas
Securities LLC, High Yield Capital Markets at (212) 278-5435
(collect). Requests for documentation may be directed to Global
Bondholder Services Corporation, the information agent for the
Offer, at (866) 857-2200 or, for banks and brokers, (212) 430-
3774.
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or a solicitation of consent with respect to
any securities. The Offer is being made solely by the Offer to
Purchase and Consent Solicitation, dated July 15, 2004.
The Authority is an instrumentality of the Mohegan Tribe of
Indians of Connecticut, a federally recognized Indian tribe with
an approximately 405-acre reservation situated in southeastern
Connecticut, which has been granted the exclusive power to conduct
and regulate gaming activities on the existing reservation of the
Tribe located near Uncasville, Connecticut, including the
operation of the Mohegan Sun, a gaming and entertainment complex
that is situated on a 240-acre site on the Tribe's reservation.
The Tribe's gaming operation is one of only two legally authorized
gaming operations in New England offering traditional slot
machines and table games. Mohegan Sun currently operates in an
approximately 3.0 million square foot facility, which includes the
Casino of the Earth, Casino of the Sky, the Shops at Mohegan Sun,
a 10,000-seat Arena, a 300-seat Cabaret, meeting and convention
space and an approximately 1,200-room luxury hotel. More
information about Mohegan Sun and the Authority can be obtained by
visiting http://www.mohegansun.com/
At March 31, 2004, Mohegan Tribal Gaming Authority's balance sheet
shows a capital deficit of $70,175,000 compared to a deficit of
$98,592,000 at September 30, 2003.
NATIONAL CENTURY: Liquidating Trust Wants Docs. from 24 Banks
-------------------------------------------------------------
The Unencumbered Assets Trust, the National Century Financial
Enterprises, Inc. Debtors Liquidating Trust, asks the U.S.
Bankruptcy Court of the District of Ohio to direct the production
of documents from 24 additional third party entities that may be
in possession of information relevant to the Trust's evaluation of
potential estate claims.
According to Sydney Ballesteros, Esq., at Gibbs & Bruns, in
Houston, Texas, the 24 entities were the custodial holders of
payments or disbursements relating to NCFE securities within the
preference period of the bankruptcy. The custodians therefore
have relevant information relating to the identity of the
beneficial owners of the NCFE securities. This information will
help the Trust identify and determine whether certain preference
claims exist and should be brought on behalf of the Debtors'
estate.
The 24 third party entities are:
(1) ABN Amro Incorporated/Bond Trading,
(2) Bear Sterns Securities Corp.,
(3) Boston Safe Deposit and Trust Co.,
(4) Brown Brothers Harriman & Co.,
(5) Citibank,
(6) Credit Suisse First Boston, LLC,
(7) Deutsche Bank Securities, Inc.,
(8) Deutsche Bank Trust Co. (Bankers Trust Co.),
(9) First National Bank of Omaha,
(10) Harris Trust and Savings Bank,
(11) Investors Bank & Trust Co.,
(12) JP Morgan Chase Bank,
(13) JPM/CCS2,
(14) JPM/JPMSI,
(15) LaSalle Bank National Assn.,
(16) M&I Marshall & Ilsley Bank,
(17) Mercantile-Safe Deposit & Trust Co.,
(18) Northern Trust Co.,
(19) Salomon Brothers (Citigroup Global Markets, Inc./Salomon),
(20) State Street Bank and Trust Co.,
(21) The Bank of New York,
(22) Wachovia Bank, N.A.,
(23) Wells Fargo Bank Minnesota, N.A., and
(24) WestLB AG.
The Trust has concluded that it would not be productive or
efficient to engage in a party-to-party effort to obtain
materials informally, given the number of parties from which the
Trust is seeking materials; the information sought; and the short
time remaining for the Trust to assert its claims.
Hence, the Trust did not contact the parties in advance.
Instead, the Trust will utilize Rule 2004 of the Federal Rules of
Bankruptcy Procedure to collect the information it needs.
Ms. Ballesteros clarifies that the Trust at this time does not
seek authority to take oral examinations of any of the 24 Rule
2004 Subpoena Targets. However, once it has reviewed the
documents produced, the Trust reserves the right to file an
additional motion under Bankruptcy Rule 2004 to take oral
examinations, as well as the right to file additional motions in
the future.
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. 43;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NEW HEIGHTS: Wants Nod for Cananwill Premium Finance Agreement
--------------------------------------------------------------
New Heights Recovery & Power, LLC asks the U.S. Bankruptcy Court
for the District of Delaware for authority to enter into a premium
finance agreement with Cananwill, Inc.
The Debtor tells the Court that, in the ordinary course of its
business, it maintains various insurance policies to insure
against unexpected and accidental losses, including general
liability and property insurance. The Debtor finances the annual
policy premiums to minimize the cash flow impact of renewing the
Insurance Policies. In this regard, the Debtor asks the Court for
authority to enter into the insurance finance agreement with
Cannanwill, Inc.
Under the Insurance Premium Finance Agreement, Cananwill will
provide financing to the Debtor to renew the Insurance Policies.
The amount to be financed is $60,548 with the total finance charge
equaling $1,568. Under the Agreement, the Debtor is obliged to
pay Cananwill nine monthly installments of $7,764 each. In
return, Cananwill will fund the entire insurance premium at one
time and the Debtor will avoid any cash flow problem related to
renewing the policies on a lump-sum basis.
As collateral to secure the repayment of the indebtedness under
the Agreement, the Debtor will grant Cananwill a security interest
in all unearned premiums. In addition, Cananwill is appointed as
the Debtor's attorney-in-fact with the irrevocable power to cancel
the policy and collect the unearned premium in the event that the
Debtor defaults. Cananwill will also hold an administrative
priority claim for any monies owed under the postpetition
Insurance Premium Finance Agreement if the policy is cancelled and
the unearned premiums are insufficient to cover the monies owed to
it.
Headquartered in Ford Heights, Illinois, New Heights Recovery &
Power, LLC -- http://www.tires2power.com/-- is the owner and
operator of the Tire Combustion Facility and other tire rubber
processing facilities. The Company filed for chapter 11 protection
on April 29, 2004 (Bankr. Del. Case No. 04-11277). Eric Lopez
Schnabel, Esq., at Klett Rooney Lieber & Schorling represents the
Debtor in its restructuring efforts. When the Company filed for
chapter 11 protection, it listed both its estimated debts and
assets of over $10 million.
NEWMARKET TECH: Formally Changes Company Name & Ticker Symbol
-------------------------------------------------------------
IPVoice Communications Inc. (OTCBB:IPVO) has formally changed the
Company's name to NewMarket Technology Inc. In addition, the NASD
has notified the company that effective today the company's stock
will begin trading under the ticker symbol "NMKT."
"Our corporate name now reflects more accurately what our company
has developed into over the past year," said Philip Verges,
NewMarket Technology's CEO. "NewMarket Technology has expanded
into various market sectors by going beyond just Voice over
Internet Protocol (VoIP) solutions into offering emerging
communication technology solutions and services in the healthcare
and homeland security industries."
About NewMarket Technology Inc.
In 2002, NewMarket -- http://www.newmarkettechnology.com/--
launched a business plan to continuously introduce emerging
communication technologies to market. The plan included a
financing model for early technologies and an approach to creating
economies of scale through a specialized service and support
organization intended specifically for the emerging technology
industry. The Company posted six consecutive profitable quarters
through 2003 and established an annualized $15 million in revenue.
In 2003, NewMarket acquired Infotel Technologies in Singapore and
IP Global Voice, led by CEO Peter Geddis, a former Executive Vice
President and Chief Operating Officer of Qwest Communications
(NYSE:Q). In 2004, the Company diversified its communications
technology offering into the healthcare and homeland security
industries with the respective acquisitions of Medical Office
Software Inc. and Digital Computer Integration Corp. RKM IT
Solutions of Caracas, Venezuela, was also recently acquired as
NewMarket's entry into the Latin American market.
* * *
In the Form 10-QSB for the quarterly period ended March 31,
2004, filed with the Securities and Exchange Commission, NewMarket
reports:
Liquidity and Capital Resources
"At March 31, 2003, the Company had cash of $16,300 and a
working capital deficit of $1,510,700 as compared to cash of
$1,395,000 and working capital surplus of $252,000 at March 31,
2004. This improved working capital situation was due primarily to
the implementation of the previously herein described new
business model implemented in June 2002, which includes as part of
the plan the acquisitions made over the last year. In addition we
have been successful attracting investment capital to carry out
this business model.
"Since inception, the Company has financed operations primarily
through equity security sales and convertible debt. The nature of
the growth strategy of the Company will require further funding
to be acquired either through equity or debt. Accordingly, if
revenues are insufficient to meet needs, we will attempt to
secure additional financing through traditional bank financing or
a debt or equity offering; however, because the rapid growth and
nature of the acquisitions of the Company and the potential of a
future poor financial condition, we may be unsuccessful in
obtaining such financing or the amount of the financing may be
minimal and therefore inadequate to implement our continuing plan
of operations. There can be no assurance that we will be able to
obtain financing on satisfactory terms or at all, or raise funds
through a debt or equity offering. In addition, if we only have
nominal funds by which to conduct our operations, it will
negatively impact our potential revenues."
NORTEK HOLDINGS: S&P Puts Ratings on Watch Negative On Acquisition
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Nortek
Holdings Inc. and its Nortek Inc. subsidiary on CreditWatch with
negative implications, following the recently-announced agreement
that Thomas H. Lee Partners will acquire Nortek Holdings in a
transaction valued at approximately $1.75 billion. Both Nortek
Inc. and Nortek Holdings have a 'B+' corporate credit rating.
The CreditWatch listing reflects the likelihood of an increase in
borrowings to finance the transaction, which is expected to be
funded with 70% debt and 30% equity.
"This will result in a weakening of already aggressive leverage
ratios," said Standard & Poor's credit analyst Wesley E. Chinn.
Providence, Rhode Island-based Nortek is expected to commence a
tender offer for all of its existing notes. The CreditWatch will
be resolved once Standard & Poor's has had the opportunity to
review with management the new capital structure as well as
operating fundamentals. Our rating deliberations will also take
into consideration the positive aspects of Nortek's credit
quality, including a business profile stronger than the current
ratings, relatively stable cash flows, and a meaningful cash
position.
NORVERGENCE INC: Closes Doors & Files Chapter 7 Petition in N.J.
----------------------------------------------------------------
NorVergence, Inc., a Newark, New Jersey-based communications
provider, reportedly closed its doors on Friday, July 15, and
suspended service to over 7,000 small and medium businesses
nationwide. Thereafter, NorVergence filed a Chapter 7 petition
with the United States Bankruptcy Court for the District of New
Jersey.
On June 30, 2004, three of NorVergence's finance companies forced
the company into an involuntary Chapter 11 case with $1,378,707 in
asserted total claims. The Company elected to liquidate.
The Company closed its stores located at 550 and 570 Broad St. and
laid off all of its employees. This followed 1,300 firings
earlier this month.
Judge Rosemary Gambardella has ordered that the large phone
companies -- Qwest Communications, Sprint, and T-Mobile -- which
sold local, long-distance, Internet, and cellular services to
NorVergence can shut off those services at the end of business
tomorrow, Wednesday, July 21.
Headquartered in Newark, New Jersey, NorVergence, Inc. --
http://www.norvergence.com/-- is a reseller of wireless
telecommunications services. The Company filed for chapter 7
protection (Bankr. D.N.J. Case No. 04-32079) on July 14, 2004.
Inez M. Markovich, Esq., and Peter J. Deeb, Esq., at Frey,
Petrakis, Deeb, Blum, Briggs et al., represents the Petitioners in
their restructuring efforts. The Petitioners asserted total claims
of $1,378,707.
NORVERGENCE INC: Involuntary Case Summary
-----------------------------------------
Alleged Debtor: NorVergence, Inc.
550 Broad Street, 12th Floor
Newark, New Jersey 07102
Involuntary Petition Date: July 14, 2004
Case Number: 04-32079
Chapter: 7
Court: District of New Jersey (Newark)
Petitioners' Counsels: Inez M. Markovich, Esq.
Peter J. Deeb, Esq.
Frey, Petrakis, Deeb, Blum, Briggs et al.
10 Melrose Avenue, Suite 430
Cherry Hill, NJ 08003
Tel: 856-216-2322
Petitioners: Popular Leasing USA, Inc.
c/o R. Daniel Kinealy
15933 Clayton Road, Suite 200
Ballwin, MO 63011
OFC Capital, a Division of ALFA Financial Corp.
c/o Robert Leas
576 Colonial Park Drive, Suite 200
Roswell, GA 30075
Partners Equity Capital Company, LLC
c/o Martin F. Babicki
655 Business Center Drive, Suite 250
Horsham, PA 19044
Total Amount of Claim: $1,378,707
OWENS CORNING: John Hancock & PPM America Provide Status Report
---------------------------------------------------------------
The Designated Members of the Official Committee of Unsecured
Creditors -- John Hancock Mutual Life Insurance Company and PPM
America, Inc. -- highlight three significant issues:
(1) the status of reorganization plan negotiations and the new
alignment of the constituencies in the Owens Corning
Debtors' Chapter 11 cases;
(2) substantive consolidation;
(3) to the extent that the District Court does not grant the
Debtors' motion for substantive consolidation, the
Designated Members intend to prosecute the Bank Guarantee
Avoidance Action, as Intervenor.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
79; Bankruptcy Creditors' Service, Inc., 215/945-7000)
OWENS CORNING: Asbestos Committee Wants Court to Quash Subpoenas
----------------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants of
Owens Corning and its debtors affiliates and subsidiaries asks
the U.S. Bankruptcy Court of the District of Delaware to quash the
Subpoena Duces Tecum directed to Joseph Rice and Frederick Baron.
The Subpoenas were issued by Robbins, Russell, Englert, Orseck &
Untereiner, LLP, counsel to Kensington International Limited.
Although Messrs. Rice and Baron have separate counsel to object or
respond to the Subpoenas and likely will ask protection from the
courts from which the Subpoenas were issued, the Asbestos
Committee wants to nullify the Subpoenas in their entirety because
they invade the Asbestos Committee's interests in documents that
may reside in the files of Messrs. Rice or Baron.
Messrs. Rice and Baron are principals in two separate law firms
that serve as counsel or co-counsel for individual members of the
Asbestos Committee. Messrs. Rice and Baron also serve as counsel
or co-counsel to asbestos claimants who are members of official
committees of asbestos personal injury claimants in many other
pending or completed bankruptcy proceedings. Mr. Rice, Mr. Baron
or members of their law firms often send and receive
communications to and from the law firm of Caplin & Drysdale, the
Asbestos Committee's counsel, as well as counsel to the official
committee of asbestos creditors in numerous other bankruptcies.
These communications typically contain privileged legal advice or
attorney work product about matters at issue in the Owens Corning
case.
Marla R. Eskin, Esq., at Campbell & Levine, LLC, in Wilmington,
Delaware, asserts that large portions of the documents sought by
Kensington:
(1) are protected by the attorney-client privilege that exists
between the Asbestos Committee and its counsel;
(2) contain information submitted to a mediator in the
context of confidential settlement communications; or
(3) are protected by confidentiality agreements entered
into between the Asbestos Committee and third parties not
presently before the Court.
Although the Subpoenas do not indicate to which adversary
proceeding or contested matter they relate, the description of
the documents requested determine that they relate to
Kensington's now-mooted motion to disqualify Professor Francis
McGovern.
The Court appointed Prof. McGovern to serve as a mediator in the
Owens Corning case. Prof. McGovern holds a similar position as a
court-appointed mediator in many other asbestos bankruptcy cases
and in some instances has been hired directly by companies to
negotiate settlements with the representatives of asbestos
creditors. As a mediator, Prof. McGovern received communications
from the counsel for the Asbestos Committee, in which settlement
positions were discussed with the mediator that were not
authorized to be disclosed to adverse parties like Kensington.
Prof. McGovern's involvement as a mediator in the Debtors'
Chapter 11 cases ceased at the end of June 2004.
The Court should not permit the discovery, Ms. Eskin insists.
Simply put, Kensington uses the mooted disqualification motion as
an excuse to engage in an incredibly broad fishing expedition
seeking on its face documents that if produced would disclose
privileged communications between the Asbestos Committee's
counsel and Messrs. Rice and Baron, and the settlement strategies
and negotiating positions of the Asbestos Committee to the entity
that is the principal objector to the proposed Reorganization
Plan.
Furthermore, Ms. Eskin argues that the discovery sought is
incredibly overbroad and violates the protections for witnesses
afforded by Rule 45(c) of the Federal Rules of Civil Procedure.
Accordingly, the Asbestos Committee asks the Court to exercise
its inherent power over case management and discovery by quashing
the Subpoenas in their entirety and issuing a protective order to
prohibit the depositions from going forward.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com-- manufactures fiberglass insulation,
roofing materials, vinyl windows and siding, patio doors, rain
gutters and downspouts. The Company filed for chapter 11
protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
79; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARMALAT GROUP: Discloses Restructuring Plan's Recovery Ratios
--------------------------------------------------------------
Parmalat communicates the recovery ratios relating to the Proposal
of Composition with Creditors contained in the Restructuring Plan
filed with the Ministry of Production Activities on 21 June 2004.
These ratios form the basis for the conversion of the unsecured
debt of the 16 companies in Extraordinary Administration and
included in the Composition with Creditors, into shares of the
Assuming Entity (Assumptor) to which all the assets and
liabilities of these 16 companies will be transferred.
It should be noted that the Restructuring Plan and the Proposal of
Composition with Creditors have not yet been approved by the
Minister of Production Activities and that therefore the content
published today still cannot be considered as final.
For more details regarding the ratios and the criteria adopted in
their calculation, Parmalat will post on its website, for the
benefit of all creditors, some sections of the Restructuring Plan
filed with the Minister of Production Activities (in a non-final
version since this has not yet been approved by the Minister).
Creditors eligible for the Proposal of Composition with Creditors
will also be assigned warrants of the Assumptor.
(A) Recovery Ratios
Parmalat Finanziaria SpA in Extraordinary Administration
communicates that, in relation to the Parmalat Group Restructuring
Program filed with the Ministry of Productive Activities by
Extraordinary Commissioner Dr. Enrico Bondi on June 21, 2004,
according to the calculations carried out and on the basis of
information available at the point of filing of the Program, the
following table sets out the recovery ratios relating to the
unsecured debt towards third parties of the 16 companies in
Extraordinary Administration and included in the Proposal of
Composition with Creditors contained within the Program:
(1) Parmalat Finanziaria SpA,
(2) Parmalat SpA,
(3) Eurolat SpA,
(4) Lactis SpA,
(5) Geslat Srl,
(6) Parmengineering Srl,
(7) Contal Srl,
(8) Dairies Holding International BV,
(9) Parmalat Capital Netherlands BV,
(10) Parmalat Finance Corporation BV,
(11) Parmalat Netherlands BV,
(12) Olex SA,
(13) Parmalat Soparfi SA,
(14) Newco Srl,
(15) Panna Elena CPC Srl, and
(16) Centro Latte Centallo Srl
"Recovery ratio" means the ratio between all of the assets and all
of the liabilities of each company included in the Proposal of
Composition with Creditors. From these recovery ratios will be
derived the number of shares of the Assumptor to be assigned to
Unsecured Creditors of each company included in the Composition
with Creditors. The Proposal of Composition with Creditors
foresees:
(i) full settlement in cash by the Assumptor of all of
the claims from preferential creditors;
(ii) full settlement in cash by the Assumptor of all
creditor claims accepted on a pre-deduction basis;
(iii) partial settlement of the claims of Unsecured
Creditors through allocation of Assumptor shares in
different proportion, depending on the condition of
their debtor company. The creditors will also
receive free of charge one warrant (valid to
subscribe one share) for each allotted share, up to a
maximum of 500 allotted shares. Each Warrant can be
exercised to subscribe one share at a price equal to
its par value. The Warrants will be exercisable at
any time within the tenth day of the month following
the month when an exercise application is filed
between 2005 and 2015.
For details regarding the ratios and the criteria adopted for
their calculation, Parmalat will post on its website
http://www.parmalat.net/for the benefit of all creditors, some
sections of the Program filed with the Minister of Production
Activities. It should be noted that the Plan is not yet
finalized and as such has not been approved by the MPA.
It should also be noted that the recovery ratios [with respect to
each of the 16 companies] are based on a provisional
reconstruction of the sum of liabilities of each Company included
in the Composition with Creditors, since the proceedings allowed
under Article 4 bis, Section 5 and 6, of the Law could alter the
amount of each Company's sum of liabilities, which, in turn,
could affect the assets of other Companies included in the
Composition with Creditors (direct or indirect creditors of the
former). Because of this situation and of other circumstances
that could alter the sum-of-assets to sum-of-liabilities ratios
computed, as soon as the lists of accepted claims, claims
accepted with reservation and excluded claims are published,
final recovery ratios and the resulting allocations of Assumptor
shares to the Unsecured Creditors of Companies included in the
Composition with Creditors will be published.
Recovery Ratio for
Company third parties debt
------- ------------------
Parmalat Finanziaria SpA 11.3%
Parmalat SpA 7.3%
Centro Latte Centallo Srl 100.0%
Contal Srl 17.2%
Eurolat SpA 100.0%
Parmengineering Srl 76.1%
Geslat Srl 19.9%
Lactis SpA 100.0%
Newco Srl 100.0%
Panna Elena CPC Srl 100.0%
Olex SA 100.0%
Parmalat Soparfi SA 26.9%
Dairies Holding International BV 100.0%
Parmalat Capital Netherlands BV 0.0%
Parmalat Finance Corporation BV 4.6%
Parmalat Netherlands BV 2.3%
* [Soparfi and Parmalat Finance Corp. issued bonds
guaranteed by Parmalat SpA.] [D]ue to the guarantee,
creditors will receive Recovery Ratios from both issuer
and guarantor (save for Parmalat Soparfi bond due 2032
which is assisted by a subordinated guarantee from
Parmalat SpA).
* [Parmalat Capital Netherlands issued bonds guaranteed by
Finanziaria.] [D]ue to the guarantee, creditors will
receive Recovery Ratios from both issuer and guarantor.
* [Parmalat Netherlands issued bonds guaranteed by
Finanziaria and Parmalat SpA.] [D]ue to the guarantees,
creditors will receive Recovery Ratios from issuer and
guarantors. [Parmalat Netherlands also issued] private
placements assisted by Parmalat SpA guarantee; due to the
guarantee, creditors will receive Recovery Ratios from
issuer and guarantor.
For the sake of clarity, see the two examples below:
(1) Example 1: Bondholder of EUR1,000 issued by Parmalat
Finance Corporation BV.
Bondholder will receive Recovery Ratio of Parmalat
Finance Corporation BV and of the guarantor Parmalat
S.p.A.: 4.6% + 7.3% = 11.9%. For EUR1.000 of bonds, the
creditor will receive 119 shares and 119 Warrants of
Assumptor
(2) Example 2: Bondholder of EUR1,000 issued by Parmalat
Capital Netherlands BV.
Bondholder will receive Recovery Ratio of Parmalat
Capital Netherlands BV and of the guarantor Parmalat
Finanziaria SpA: 0% + 11.3% = 11.3%. For EUR1,000 of
bonds, the creditor will receive 113 shares and 113
Warrants of Assumptor.
(B) Method for the Determination of the Recovery Ratios
[T]he description of the method applied for the calculation
of the recovery ratios readers are [provided in] the Program.
Given that by "recovery ratio" it is meant the ratio between
the sum of assets and the sum of liabilities of each company in
the Proposal of Composition with Creditors, the following
elements have been taken into account:
-- The total assets of each company subject to the
Composition with Creditors are, where applicable,
principally composed of:
(i) operating business (only for some companies);
(ii) equity interests;
(iii) Cash and cash equivalents, if any;
(iv) Receivables (i.e. receivables from third parties
and intercompany receivables);
-- The main components of the sum of liabilities of each
Company included in the Composition with Creditors are:
(i) Financial liabilities to third parties (i.e., bank
loans, publicly-traded bonds, privately placed
bonds, derivatives, promissory notes, etc.);
(ii) Financial liabilities toward third parties for
senior guarantees provided to lenders on behalf of
Parmalat Group companies. Because of their very
nature, subordinated guarantees were not taken
into account. All other guarantees were taken
into account, regardless of whether they had been
issued:
(a) by companies under Extraordinary
Administration to creditors of companies now
in a state of insolvency, or
(b) by companies under Extraordinary
Administration to creditors of companies not
in a state of insolvency;
(iii) Trade accounts payable to unsecured third party
creditors;
(iv) Intercompany financial and trade payables.
A breakdown of the indebtedness of Companies included in the
Composition with Creditors is provided in [the Program].
(C) Allocation of the Assumptor's Shares
to the Unsecured Creditors of Each of the Companies
Included in the Composition with Creditors
The Assumptor's shares will be allocated [] to each of the
Companies included in the Composition with Creditors based on the
recovery ratios. . . . More specifically, each Company's
Unsecured Creditors (excluding intercompany credits of Companies
under Extraordinary Administration that are included in the
Composition with Creditors, that will not receive Assumptor's
shares) will receive a percentage of the Assumptor's shares
determined by weighting the total of their claims (i.e., the sum
of liabilities of the Company in question) on the basis of the
applicable recovery ratio and determining their weight within the
context of the Assumptor's final stockholder base.
Debt Weighted % of the
According to Assumptor's
Company Ratios Shares
------- ------------- -----------
Parmalat Finanziaria SpA 155.3 8.3%
Parmalat SpA 901.0 47.9%
Centro Latte Centallo Srl 2.3 0.1%
Contal Srl 24.0 1.3%
Eurolat SpA 304.5 16.2%
Parmengineering Srl 6.3 0.3%
Geslat Srl 23.4 1.2%
Lactis SpA 24.1 1.3%
Newco Srl 1.4 0.1%
Panna Elena CPC Srl 7.3 0.4%
Olex SA 0.3 0.0%
Parmalat Soparfi SA 154.4 8.2%
Dairies Holding International BV 22.5 1.2%
Parmalat Capital Netherlands BV 0.0 0.0%
Parmalat Finance Corporation BV 239.1 12.7%
Parmalat Netherlands BV 13.7 0.7%
------------- -----------
TOTAL 1,879.6 100.0%
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. 25; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PARMALAT: Plans To Pick Buyer For Argentine Unit By Month-End
-------------------------------------------------------------
Parmalat SpA intends to lock in the sale of its Argentine unit
before August 1, 2004. Parmalat opened the bidding for its
Argentine and Uruguayan operations in early May 2004 and the
deadline for bids to be submitted to the Milan office of KPMG,
LLP, who is managing the sale, was May 21.
Six groups have expressed interest for Parmalat Argentina and
representatives from the interested companies and investment
funds will be touring the Argentine unit in the coming weeks.
Parmalat may select a buyer during the last week of July 2004.
The potential buyers include Saputo Inc. of Canada, another dairy
company. The other interested parties include investment groups
Coinvest, American Invest Group, Dolphin Fund and Pegasus.
HSBC Holdings also indicated interest for the Argentine
operations but as a minority shareholder.
Southern Cross, a private equity fund, and businessman Sergio
Taselli, a shareholder in train operator Metropolitano, have
pulled out.
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. 24; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PLEJ'S LINEN: Committee Hires Traub Bonacquist as Attorneys
-----------------------------------------------------------
The Official Unsecured Creditors Committee appointed in Plej's
Linen Supermarket SoEast Stores, LLC's chapter 11 cases sought and
obtained approval from the U.S. Bankruptcy Court for the Western
District of North Carolina, Charlotte Division, to hire Traub
Bonacquist & Fox LLP as its general counsel.
Michael S. Fox, Esq., assures the Court that he, his partners and
his firm are "disinterested" as that term is defined in Section
101(14) of the Bankruptcy Code, as modified by Section 1107(b).
Traub Bonacquist is expected to:
a) provide legal advice with respect to the Committee's
powers and duties and keep the Committee informed of
developments;
b) assist the Committee in evaluating the legal basis for,
and effect of, the various pleadings that will be filed by
the Debtor and other parties in interest in these cases;
c) investigate the acts, conduct, assets, liabilities, and
financial condition of the Debtors;
d) assist the Committee in evaluating the monthly reports and
evaluating and negotiating the Debtors' or any other
party's plan of reorganization and any associated
disclosure statement;
e) consult with the Debtors and their professionals
concerning administration of the case and development of
exit strategy, disclosure statement and plan;
t) commence and prosecute any and all necessary and
appropriate actions and/or proceedings on behalf of the
Committee in this case;
g) appear in Court in all appropriate matters to advance the
interests of the Committee; and
h) perform all other legal services for the Committee which
may be necessary and proper in these proceedings.
The principal attorneys and paralegals presently designated to
represent the Committee and their current hourly rates are:
Regular Discounted
Attorney Hourly Rate Hourly Rate
-------- ----------- -----------
Michael Fox $535 $455
Adam Friedman $410 $350
Katie Richardson $240 $200
Paralegal
---------
Reyko Delpino $150 $125
Headquartered in Rock Hill, South Carolina, Plej's Linen
Supermarket SoEast Stores LLC, with its debtor-affiliates, are
engaged primarily in two core businesses: retail sale of first
quality program home accessories for bed, bath, window, decorative
and house wares and limited closeout and discontinued
opportunistic merchandise; and wholesale distribution of similar
bed and bath textiles. The Company filed for chapter 11 protection
on April 15, 2004 (Bankr. W.D. N.C. Case No. 04-31383). John R.
Miller, Jr., Esq., and Paul R. Baynard, Esq., at Rayburn Cooper &
Durham, P.A., represent the Debtors in their restructuring
efforts. When the Company filed for protection from their
creditors, it estimated debts and assets of over $10 million.
RCN CORP: Directors Turn to Winston & Strawn for Legal Counsel
--------------------------------------------------------------
Winston & Strawn, LLP, is an international law firm of nearly
900 attorneys, with considerable experience in practice areas
including litigation, corporate, tax and securities law.
Winston & Strawn also has considerable experience, expertise
and knowledge with respect to reorganizations under Chapter 11
of the Bankruptcy Code.
RCN Corporation and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York for permission to
employ Winston & Strawn, as of June 7, 2004, as special counsel to
represent the members of RCN's Board of Directors. Winston &
Strawn will provide the Board of Directors with legal services
and advice in connection with the Debtors' Chapter 11 cases,
including:
-- corporate governance matters;
-- the Board of Directors' fiduciary duties;
-- matters concerning the Securities and Exchange Commission,
the Federal Communications Commission or any other federal,
state or local regulatory agency; and
-- any investigations and securities class actions or
shareholder derivative actions.
Winston & Strawn will also advise the RCN Board of Directors with
respect to other matters including, but not limited to:
(a) conducting legal research, collection and review of
documents, interviews of relevant current and former
officers, directors and employees of the Debtors and other
tasks in connection with the Proceedings;
(b) reviewing developments in the Debtors' cases and advising
the Board of Directors in connection the developments;
(c) providing legal advice to the Board of Directors in
support of its ongoing responsibilities with respect to
the Debtors' operations, including attendance at meetings
of the Board of Directors and its committees;
(d) representing and providing services requested by the Board
of Directors in connection with any litigation that may be
brought against it;
(e) if necessary, appearing before the Bankruptcy Court, any
district or appellate courts, and the United States
Trustee on the Board of Directors' behalf with respect
to certain matters; and
(f) providing the full range of legal services and advice
normally associated with related contested matters or
litigation.
RCN Corporation Senior Vice President and Chief Restructuring
Officer Anthony M. Horvat clarifies that Winston & Strawn will
not be involved in interfacing with the Court and will not be
primarily responsible for the Debtors' general restructuring
efforts. However, the firm may, on occasion, interface with the
Court to the extent necessary to assist the Debtors and their
bankruptcy counsel. Winston & Strawn will coordinate with, and
assist Skadden, Arps, Slate, Meagher & Flom, LLP, in connection
with the Debtors' Chapter 11 cases.
Winston & Strawn will be compensated based on its hourly rates
for services performed in its representation of the Board of
Directors. The firm's hourly rates range from:
Partners $325 - 695
Counsel and Associates 160 - 440
Paraprofessionals 105 - 175
David Neier, a partner at Winston & Strawn, assures the Court
that the firm is a "disinterested person," as the term is defined
in Section 101(14) of the Bankruptcy Code. Winston & Strawn has
no connection with, and holds no interest adverse to, the
Debtors, their estates, their creditors, or any other party-in-
interest in the matters for which the firm is to be retained.
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. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RELIANCE FINANCIAL: Discloses Bank Claim Holders & Pro Rata Shares
------------------------------------------------------------------
Reliance Financial Services Corporation discloses the identities
of the holders of its Bank Debt:
Entity Pro Rata Bank Claim Share
------ -------------------------
ABN AMRO Bank N.V. 7.23810%
Credit Lyonnais S.A. 8.49524%
Deutsche Bank Trust Co. Americas 10.01905%
Firstrust Bank 3.80952%
Bank of Montreal 7.23810%
Wachovia Bank (f/k/a First Union) 7.23810%
JPMorgan Chase Bank 8.49524%
SPS High Yield Loan Trading 2.16141%
AG Capital Funding Partners, LP 2.12632%
Amroc Capital Funding Partners 21.06667%
High River, LP 8.49524%
Silver Oak Capital, LLC 6.37895%
---------
Total 100.00000%
SPS High Yield Loan Trading is an affiliate of JPMorgan Chase
Bank. High River Limited Partnership has an ownership interest
in Amroc Capital Funding Partners' portion of the RFSC bank debt
through a participation interest.
Icahn & Co. has an ownership interest in both AG Capital Funding
Partners' portion and Silver Oak Capital's portion of the RFSC
bank debt through a participation interest.
Reliance Financial owes the Bank Debt holders:
Loan Principal Interest Due Total
---- --------- ------------ -----
Revolving Loan $137,500,000 $8,941,310 $146,441,320
Term Loan 100,000,000 6,502,778 106,502,778
------------
Total $252,944,097
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Reliance Insurance Company. The
Company filed for chapter 11 protection on June 12, 2001 (Bankr.
S.D.N.Y. Case No. 01-13403). When the Company filed for
protection from their creditors, they listed $12,598,054,000 in
assets and $12,877,472,000 in debts. (Reliance Bankruptcy News,
Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RURAL CELL: To Pay Quarterly Preferred Stock Dividends on Aug. 15
-----------------------------------------------------------------
The quarterly dividends on Rural Cellular Corporation's
(Nasdaq:RCCC) 12-1/4% Junior Exchangeable Preferred Stock will be
paid on August 15, 2004, to holders of record on August 1, 2004.
The Junior Exchangeable Preferred Stock dividend will be paid in
shares of Junior Exchangeable Preferred Stock at a rate of 3.0625
shares per 100 shares. Fractional shares for the Junior
Exchangeable Preferred Stock will be paid in cash.
The Company's Board of Directors has determined not to declare the
quarterly dividend payable on the 11-3/8% Senior Exchangeable
Preferred Stock. This dividend would have been payable in cash on
August 15, 2004, to holders of record on August 1, 2004.
Rural Cellular Corporation (Nasdaq:RCCC), based in Alexandria,
Minnesota, provides wireless communication services to Midwest,
Northeast, South and Northwest markets located in 14 states.
As of March 31, 2004, Rural Cellular Corporation's balance sheet
shows a total shareholders' deficit of $542,522,000 compared to a
deficit of $526,830,000 at December 31, 2003.
SEALY CORPORATION: Issues Sr. Pay-In-Kind Notes and Common Stock
----------------------------------------------------------------
Sealy Corporation, the ultimate parent company of Sealy Mattress
Corporation and Sealy Mattress Company, issued $75.0 million
aggregate principal amount of senior subordinated pay-in-kind
(PIK) notes and $37.5 million of common stock to certain
institutional investors in transactions exempt from registration
under the Securities Act of 1933.
The notes accrue interest in-kind at 10% per year, compounded
semi-annually. Sealy Corporation is not required to pay accrued
interest on the notes in cash for the entire time that the notes
are outstanding. The notes mature on July 15, 2015, following the
maturities of substantially all other existing indebtedness of
Sealy Mattress Company, including its $685 million senior secured
credit facility, $100 million senior unsecured term loan and $390
million senior subordinated notes. At maturity, the outstanding
principal amount of the notes, along with any accrued and unpaid
interest, will be paid in cash by Sealy Corporation.
Sealy Corporation may redeem the notes at its option at any time,
in whole or in part, at an initial price of 105% of the principal
amount thereof plus all accrued interest not previously paid in
cash, which price declines to 102.5% after the first anniversary
of issue, 101% after the second anniversary of issue and 100%
after the third anniversary of issue. At any time prior to the
third anniversary of issue, Sealy Corporation may also use the
proceeds of an equity offering to redeem any or all of the notes
at its option at a price of 101% of the principal amount thereof
plus all accrued interest not previously paid in cash. In
addition, upon a change of control of Sealy Corporation and the
repayment of Sealy Mattress Company's senior secured credit
facility, holders of the notes will be able to require Sealy
Corporation to repurchase the notes at a price of 101% of the
principal amount thereof plus all accrued interest not previously
paid in cash. The terms of the notes include covenants and events
of default similar to those contained in the 8.25% senior
subordinated notes due 2014 issued by Sealy Mattress Company in
connection with the merger of Sealy Corporation with affiliates of
Kohlberg Kravis Roberts & Co. L.P. (KKR) on April 6, 2004.
The $112.5 million in gross proceeds from the transactions will be
returned to existing investors in Sealy Corporation by a
combination of cash distributions to shareholders and option
holders as well as share repurchases of Sealy Corporation common
stock. As a result of the issuance, KKR and certain of Sealy
Corporation's stockholders, including affiliates of Bain Capital
LLC, that retained ownership interests in Sealy Corporation in
connection with the merger with KKR will retain approximately
82.9% and 7.6%, respectively, of the outstanding common stock of
Sealy Corporation.
Sealy is the largest bedding manufacturer in the world with sales
of over $1 billion in 2001. The Company manufactures and markets a
broad range of mattresses and foundations under the Sealy(R),
Sealy Posturepedic(R), Sealy Crown Jewel(R), Sealy Correct
Comfort(R), Stearns & Foster(R), and Bassett(R) brands. Sealy has
the largest market share and highest consumer awareness of any
bedding brand in North America. Sealy employs more than 6,000
individuals, has 31 plants, and sells its products to 3,200
customers with more than 7,400 retail outlets worldwide. Sealy is
also a leading supplier to the hospitality industry.
At February 29, 2004, Sealy Corporation's balance sheet shows a
stockholders' deficit of $61,850,000 compared to a deficit of
$76,162,000 at November 30, 2003.
SHOWCASE AUTO: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Showcase Auto Plaza
3737 McHenry
Modesto, California 95356
Bankruptcy Case No.: 04-92709
Type of Business: The Debtor is an auto dealer and provides auto
service and repair.
See http://www.showcaseautoplaza.com/
Chapter 11 Petition Date: July 15, 2004
Court: Eastern District Of California (Modesto)
Judge: Thomas Holman
Debtor's Counsel: Donald W. Fitzgerald, Esq.
Felderstein Fitzgerald Willoughby
& Pascuzzi LLP
400 Capitol Mall #1450
Sacramento, CA 95814-4434
Tel: 916-329-7400
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Pacific State Bank Trade Debt $600,000
P.O. Box 1649
Stockton, CA 95201-1649
KIA Motors America Trade Debt $119,324
Reynolds and Reynolds Trade Debt $51,425
Modesto Bee Trade Debt $29,296
Enterprise Rent A Car Trade Debt $28,751
Motor Parts Trade Debt $22,253
Alexandria Perrin Trade Debt $22,815
Acclaimed Health Services Trade Debt $6,666
Newgen Results Trade Debt $5,821
Chevron Trade Debt $5,789
Partsline Trade Debt $5,742
Threshold Communications Trade Debt $5,742
Calif Auto Assoc. Trade Debt $5,290
National Credit Center Trade Debt $5,180
American Heritage Life Trade Debt $5,070
CL Bryant, Inc. Trade Debt $4,958
Advanced Auto Body Trade Debt $4,520
Quigley Nor Cal Trade Debt $4,386
In Touch Trade Debt $4,280
Budget Tire Trade Debt $4,100
SOLUTIA INC: Wants to Pay Letter of Credit Claims
-------------------------------------------------
Solutia, Inc., wants to pay certain claims related to fully
secured letters of credit by allowing a set-off against and
payment from the cash collateral securing those claims.
Citibank Letters of Credit
Before the Petition Date, Citibank issued 13 letters of credit,
12 of which were issued for Solutia's account and one of for the
account of Solutia UK, Ltd., a non-debtor subsidiary of Solutia.
As of the Petition Date, the estimated aggregate face amount of
the Citibank L/Cs was $75,200,000. The account parties'
obligations to Citibank under the Citibank L/Cs are secured by
funds maintained in an account with Citibank, Account No. 3055-
7563. As of the Petition Date, the Citibank L/C Account held
about $76,600,000 in funds, and Citibank had a perfected lien on,
and right of set-off against, the funds in that account.
Pursuant to a January 20, 2004 Court Order, all of the Citibank
L/Cs, except for one, were deemed to be issued under the DIP Loan
Agreement and secured by the collateral package securing all of
the Debtors' obligations under the DIP Loan Agreement. Because
separate collateral was provided, Citibank released and
transferred to Solutia about $48,700,000 from the Citibank L/C
Account, leaving $28,000,000 as collateral.
Citibank accrued claims for fees, costs and expenses in
connection with the Citibank L/Cs. As of the June 30, 2004
Accrual Date, the Citibank L/C Fees totaled more than $267,000,
made up of more than $205,000 in letter-of-credit fees and more
than $62,000 in other costs and expenses.
On January 9, 2004, one of the Citibank L/Cs, No. NY-00928-
30033349, for which Solutia is the Account Party, was drawn by
the beneficiary, Toray Industries Inc., for $26,900,000. The
draw on the Toray L/C gave rise to a reimbursement claim by
Citibank against Solutia in that amount, which is secured by the
funds in the Citibank L/C Account. Since the Toray L/C Draw
Date, interest has accrued and continues to accrue on the claim.
As of the Accrual Date, the accrued interest totaled $800,000.
Interest continues to accrue on the claim at the rate of $4,400
per day.
As of the Accrual Date, the total accrued amount of the Toray
Claim and the Citibank L/C Fees was about $27,900,000, and about
$28,000,000 remained in the Citibank L/C Account.
Chase and HSBC Letters of Credit
Before the Petition Date, The Chase Manhattan Bank, NA, issued 13
letters of credit and HSBC Bank USA issued one letter of credit,
all for Solutia's account. As of the Petition Date, the
estimated aggregate face value of the Chase/HSBC L/Cs was
$35,500,000. Citibank is the collateral agent for Chase and HSBC
with respect to the Chase/HSBC L/Cs and it maintains a Citibank
account, Account No. 3051-5371, to secure obligations for certain
designated letter of credit obligations, including all
obligations related to the Chase/HSBC L/Cs and obligations
relating to these other letters of credit:
-- three letters of credit issued by Citibank for which
Solutia was the account party;
-- 11 letters of credit issued by KBC Bank, N.V.; and
-- certain letters of credit issued by HSBC for which non-
debtor subsidiaries of Solutia were the account parties.
As of the Petition Date, the Designated L/C Account held about
$52,000,000, and Citibank had a perfected lien on, and right of
set-off against, the funds in the account for the benefit of the
issuers of the Designated L/Cs. Shortly after the Petition Date,
Citibank released to Solutia $13,000,000 of the collateral from
the Designated L/C Account in connection with certain
transactions authorized by the Financing Order related to the
Additional Citibank L/Cs.
Citibank has released to Solutia an additional $10,000,000 from
the Designated L/C Account to reflect that, after the
cancellation of certain underlying letters of credit, the
collateral in that account far exceeded the claims it was
securing, leaving about $28,800,000 of collateral in the
Designated L/C Account for the benefit of Citibank and the
issuers of the remaining Designated L/Cs.
The obligations secured by the collateral in the Designated L/C
Account include:
A. As of the Accrual Date:
(a) the estimated aggregate face amount of the Chase/HSBC
L/Cs was about $23,600,000;
(b) claims accrued by Chase and HSBC before the Petition
Date for fees, costs and other expenses in connection
with the Chase/HSBC L/Cs, total $317,000, with
$270,000 owing to Chase and $47,000 owing to HSBC; and
(c) claims accrued by Chase and HSBC after the Petition
Date for fees, costs and expenses in connection with
the Chase/HSBC L/Cs, total $668,000 with $529,000
owing to Chase and $139,000 owing to HSBC;
B. Before the Additional Citibank L/Cs were deemed issued
under the DIP Loan Agreement, Citibank had accrued claims
for fees, costs and expenses in connection with the
Additional Citibank L/Cs. As of the Accrual Date, the
Additional Citibank L/C Claims totaled at least $201,000,
consisting of at least $142,000 in letter-of-credit fees
and $59,000 in other costs and expenses; and
C. As of the Accrual Date, the estimated aggregate face amount
of the Europe L/Cs was $2,400,000. The Non-Debtors
continue to pay fees and satisfy other obligations in
connection with the Europe L/Cs in the ordinary course of
their businesses.
Accordingly, Solutia asks the Court to lift the automatic stay to
allow it to pay:
(a) the Citibank L/C Claims by permitting Citibank to realize
on, and set off against, funds in the Citibank L/C
Account, and to apply those funds in full and final
payment of the Citibank L/C Claims; and
(b) any remaining Citibank L/C Claims, the Additional Citibank
L/C Claims, the Prepetition Chase/HSBC L/C Fees and the
Postpetition Chase/HSBC L/C by permitting Citibank to
realize on, and set off against, funds in those amounts in
the Designated L/C Account, and to apply those funds in
full and final payment of the remaining Citibank L/C
Claims, the Additional Citibank L/C Claims, the
Prepetition Chase/HSBC L/C Fees and the Postpetition
Chase/HSBC L/C Fees.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Company filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000)
STAR TELECOM: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Star Telecom Network Inc.
21243 Ventura Boulevard #241
Woodland Hills, California 91364
Bankruptcy Case No.: 04-14758
Type of Business: The Debtor is a distributor of prepaid phone
cards at wholesale prices.
See http://www.starprepaid.com/
Chapter 11 Petition Date: July 14, 2004
Court: Central District of California (San Fernando Valley)
Judge: Arthur M. Greenwald
Debtor's Counsel: David W. Levene, Esq.
Levene, Neale & Bender
1801 Avenue of Stars, Suite 1120
Los Angeles, CA 90067
Tel: 310-229-1234
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Global Crossing $1,700,000
1080 Pittsford-Victor Road
Pittsford, NY 14534
Mercury Telecomm (WCCS) $250,000
Union Telecard Alliance $216,345
Locus Telecommunications, Inc. $99,205
Harvard Label $97,920
Verso Technologies (NACT) $66,200
World Communication Group $56,576
Mundetel $50,000
Dacom America $31,797
Primo Graphics $27,495
Legend Labels & Card Printing $22,700
T-Cast $14,918
Network IP $13,456
Telstar $10,655
Coast United Advertising $9,000
Birch, Stewart, Kolasch & Birch $6,963
Fed Ex $6,716
Kehr Schiff Crane $5,715
Office Team $4,363
Accountemps $4,110
STILLWATER MINING: S&P Places Ratings on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit rating and other ratings on Columbus, Montana-based
Stillwater Mining Co. on CreditWatch with negative implications.
The rating action follows the company's announcement that workers
at its Stillwater mine have gone on strike.
"While Standard & Poor's views the likelihood of a prolonged
strike as low, a strike of more than several months at
Stillwater's key mine, which accounts for about 75% of its
production, could adversely impact the company's liquidity
profile," said Standard & Poor's credit analyst Dominick D'Ascoli.
The strike has stalled the company's efforts to refinance its
existing bank facility. Standard & Poor's expects Stillwater to
use its liquidity of around $60 million while the strike is in
effect.
Standard & Poor's will continue to monitor the strike situation.
Upon a quick resolution of the strike, the ratings would be
removed from CreditWatch and affirmed. Should the strike be
prolonged, ratings could be lowered.
STRATUS SERVICES: Extends Pref. Stock Exchange Offer to July 31
---------------------------------------------------------------
Stratus Services Group, Inc., the SMARTSolutions(TM) Company (OTC
Bulletin Board: SSVG) (formerly OTC Bulletin Board: SERV), is
again extending, until July 31, 2004, the expiration date of its
exchange offer to the holders of its Series E Preferred Stock.
This news release shall not constitute an offer to exchange or
sell, or the solicitation of an offer to exchange or buy, nor
shall there be any exchange or sale of these securities in any
State in which such offer, exchange, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such State.
Stratus is a national provider of business productivity consulting
and staffing services through a network of twenty-seven offices in
seven states. Through its SMARTSolutions(TM) technology, Stratus
provides a structured program to monitor and reduce the cost of a
customer's labor resources. Through its Stratus Technology
Services, LLC joint venture, the Company provides a broad range of
information technology staffing and project consulting.
* * *
As reported in the Troubled Company Reporter's March 25, 2004
edition, at December 31, 2003, Stratus Services Group, Inc. had
limited liquid resources. Current liabilities were $23,601,396
and current assets were $15,806,407. The difference of $7,794,989
is a working capital deficit, which is primarily the result of
losses incurred during the years ended September 30, 2003, 2002
and 2001. Current liabilities include a cash overdraft of
$349,179, which is represented by outstanding checks. These
conditions raise substantial doubts about the Company's ability to
continue as a going concern.
The Company's continuation of existence is dependent upon the
continued cooperation of its creditors, its ability to generate
sufficient cash flow to meet its continuing obligations on a
timely basis, to fund the operating and capital needs, and to
obtain additional financing as may be necessary.
SUNNY DELIGHT: S&P Withdraws BB- Corporate Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'BB-' corporate
credit rating on Sunny Delight Beverages Company, originally
assigned on May 20, 2004. Additionally, Standard & Poor's withdrew
its 'BB-' bank loan ratings and '3' recovery ratings for the
company's $150 million first-lien dollar term loan due 2011, $100
million first-lien euro term loan due 2011, and $50 million
five-year revolving credit facility. The 'B' bank loan rating and
'5' recovery rating for Sunny Delight's $35 million second-lien
senior secured bank loan due 2011 were also withdrawn. Standard &
Poor's has withdrawn the ratings because these financing
transactions were never completed.
TECHNICAL COATINGS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Technical Coatings Laboratory, LLC
205 Old Farms Road
Avon, Connecticut 06001
Bankruptcy Case No.: 04-22105
Type of Business: The Debtor manufactures hot-stamping foils,
coatings and paints used to enhance greeting
cards, book jackets, labels and other items.
See http://www.e-tcl.com/
Chapter 11 Petition Date: July 12, 2004
Court: District of Connecticut (Hartford)
Judge: Robert L. Krechevsky
Debtor's Counsel: James Berman, Esq.
Zeisler and Zeisler
558 Clinton Avenue
P.O. Box 3186
Bridgeport, CT 06605
Tel: 203-368-4234
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Toray Plastics (America, Inc.) $288,299
Lumirror Division
50 Belver Avenue
North Kingstown, RI 0852
Edwards & Angell, LLP $155,182
Dock Resins Corporation $88,693
First New England Capital 2 LP $86,944
Astro Chemicals, Inc. $76,289
Greenville Marketing $75,074
Dispersion Services $56,778
Monson Companies $53,366
Mozel $51,436
Legette, Brashears & Graham $48,860
Amerada Hess Corporation $44,780
Haggett, Longobardl & Co., LLC $43,125
Penn Color $42,779
DuPont Teijin Films $41,336
McDoo & Allen Quaker Color $38,120
Ensign-Bickford Realty Corp. $31,081
Callahan Company $29,194
Electro Power, Inc. $29,191
New England Chemcentral $29,078
Sun Chemical (MA) $29,005
TELEWEST COMMS: Reports Details of Common Stock Distribution
------------------------------------------------------------
Telewest Communications plc reports the passage of the "bar dates"
for the schemes of arrangement comprising part of its financial
restructuring. With the passage of the bar dates, the Schemes are
closed to claims for which no notice has been received and
Telewest will proceed with the distribution of the common stock of
Telewest Global, Inc. to its creditors and shareholders in
accordance with the attached distribution schedule.
Trading in Telewest Global's common stock on the Nasdaq National
Market will commence on 19 July 2004 under the symbol "TLWT".
Distribution Schedule
Telewest Note and Debenture Holders
Pursuant to the relevant schemes of arrangement an escrow agent
will distribute 241,325,000 shares of Telewest Global common stock
(representing 98.5% of Telewest Global's outstanding common stock)
to the holders of Telewest's and its Jersey finance subsidiary's
notes and debentures. The shares will be distributed amongst the
various notes and debentures as follows:
Notes Aggregate Approximate Multiplier Approximate
principal total number number of
amount of shares of shares per
common stock $1,000 per
to be GBP1,000 of
distributed (C) principal(1)
__________________________________________________________________
9.625%
Senior
Debentures
due
2006 $300,000,000 12,434,919 1.220 41.450
__________________________________________________________________
11% Sr.
Discount
Debentures
Due 2007 $1,536,413,000 65,458,708 1.254 42.605
__________________________________________________________________
11.25% Sr.
Notes
due 2008 $ 350,000,000 14,792,798 1.244 42.265
__________________________________________________________________
9.875% Sr.
Notes
due 2010 GBP 180,000,000 12,053,718 1.971 66.965
__________________________________________________________________
9.875% Sr.
Notes
due 2010 $ 350,000,000 14,079,319 1.184 40.227
__________________________________________________________________
5.25% Sr.
Convertible
Notes
due 2007 GBP 299,500,000 18,499,185 1.818 61.767
__________________________________________________________________
9.875% Sr.
Discount
Notes
due 2009 GBP 325,000,000 18,462,118 1.672 56.807
__________________________________________________________________
9.25% Senior
Discount
Notes
due 2009 $ 500,000,000 17,055,545 1.004 34.111
__________________________________________________________________
11.375% Sr.
Discount
Notes
due 2010 $ 450,000,000 14,065,729 0.920 31.257
__________________________________________________________________
6% Sr.
Convertible
Notes
due 2005
(Issued by
Telewest's
Jersey finance
and including
the benefit of
Telewest's
Guarantee) $1,000,000,000 37,814,386 1.113 75.629
__________________________________________________________________
5% Accreting
Convertible
Notes
due 2003 GBP 293,600,050 16,608,566 1.665 56.569
__________________________________________________________________
Total: (2) 241,324,991
__________________________________________________________________
(1) Principal outstanding at maturity in the case of the 11.375%
Senior Discount Notes due 2010.
(2) The aggregate total obligation, measured as the sum of the
principal amounts of each note or debenture multiplied by the
relevant multiplier (C), is $7,102,976,985.
To determine the number of shares that the holder of a note or
debenture is entitled to receive in connection with a given note
or debenture, multiply the principal amount of the note or
debenture held by the applicable multiplier (C), divide that
number by $7,102,976,985 (A) and multiply by 241,325,000 (B):
(principal amount of note or debenture held x C) x B
------------------------------------------------
A
It is anticipated that the distribution of shares will be
completed on 19 July 2004.
No fractional shares will be distributed to the holders of notes
and debentures. Fractional interests will be aggregated and sold
on the open market. The net proceeds of such sales will be paid to
the UK National Society for the Prevention of Cruelty to Children.
Telewest Shareholders
Pursuant to the Telewest scheme of arrangement, Telewest
shareholders on the register of members on 14 July 2004 will be
allocated in aggregate, 3,675,000 shares of Telewest Global common
stock (representing 1.5% of Telewest Global's outstanding common
stock). The shares of common stock will be distributed to eligible
shareholders as set forth below.
Number of
Telewest Number of Telewest ADRs Number of shares of
Ordinary Shares Telewest Global common
stock received
__________________________________________________________________
804.4004 4.022002 1
__________________________________________________________________
Fractional share entitlements will not be distributed to
shareholders. Instead, fractional share entitlements will be
aggregated and sold on the open market. The net proceeds of such
sales will be paid in cash in pounds sterling (without interest)
pro rata to each shareholder entitled to a fractional share.
Telewest Global, the newly-restructured broadband communications
and media group, currently operates a network covering
approximately 4.9 million homes in the UK and provides multi-
channel television, telephone and internet services to
approximately 1.74 million UK households, and voice and data
telecommunications services to around 67,000 business customers.
Its content division, Flextech, is the BBC's partner in UKTV.
Together they are the largest supplier of basic channels to the UK
pay-TV market. For further information go to
http://www.telewest.co.uk/media/
TENET HEALTHCARE: Completes Sale of Redding Medical Center Assets
-----------------------------------------------------------------
A subsidiary of Tenet Healthcare Corporation (NYSE:THC) has
completed the sale of certain hospital assets of Redding Medical
Center in Redding, Calif., to Shasta Regional Medical Center, LLC,
an affiliate of Hospital Partners of America Inc.
Gross proceeds from the sale of the 246-bed hospital are estimated
at approximately $55 million from the sale of property and
equipment. Net after-tax proceeds, including the liquidation of
working capital, are expected to be approximately $57 million. At
this time, proceeds from the sale will be retained by Redding
Medical Center, Inc., the subsidiary that formerly owned the
hospital. Redding Medical Center, Inc. also will retain
substantially all of its pre-closing liabilities.
HPA, a privately held company based in Charlotte, N.C., was
founded to acquire and operate hospitals, in partnership with
physicians, across the country. Tenet Healthcare Corporation,
through its subsidiaries, owns and operates acute care hospitals
and related health care services. Tenet's hospitals aim to provide
the best possible care to every patient who comes through their
doors, with a clear focus on quality and service. Tenet can be
found on the World Wide Web at http://www.tenethealth.com/
* * *
As reported in the Troubled Company Reporter's June 21, 2004
edition, Standard & Poor's Ratings Services said that the ratings
and outlook on Tenet Healthcare Corp. (B/Negative/--) will not be
affected by an increase in the size of the company's new senior
unsecured note issue due in 2014, to $1 billion from $500 million.
Tenet used $450 million of the proceeds to repay debt due in
2006 and 2007, and the balance will be retained in cash reserves.
Despite the additional debt and interest costs, Standard & Poor's
considers the additional liquidity provided by the cash, as well
as the effective extension of maturities, to be offsetting
factors. The ratings already consider expectations of weak
operating performance and cash flow over the next year while the
negative outlook incorporates the risk of ongoing litigation and
investigations related to the hospital chain's operations.
TEXAS INDUSTRIES: S&P Revises Outlook To Stable From Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
structural steel and cement producer Texas Industries Inc. to
stable from negative.
Standard & Poor's also affirmed its 'BB-' corporate credit and
senior unsecured ratings and 'BB' rating on a $100 million senior
secured revolving bank credit facility. The Dallas, Texas-based
company has about $650 million in total debt.
"The outlook revision reflects improved industry conditions in the
company's structural steel operations, which will result in
improved credit metrics and operating performance indicative of
its current ratings," said Standard & Poor's credit analyst Paul
Vastola. The outlook revision also reflects Standard & Poor's
expectations that the improvement will be sustainable well into
2005.
Improved demand and reduced imports have enabled steel producers,
including TXI, to significantly raise structural steel prices,
more than offsetting high input costs. Indeed, the improved
supply/demand fundamentals have increased TXI's capacity
utilization rate at its Virginia-based steel plant to 70% from a
dismal 50%, enabling this facility to generate a profit in the May
31, 2004, quarter for the first time since its 1999 start-up.
The ratings on TXI reflect its fair business position in the
domestic steel and cement, aggregates, and concrete industries,
which are highly cyclical and intensely competitive. TXI is the
second-largest structural steel producer in the U.S., behind
market leader Nucor Corp. The two companies hold the majority
market share for wide-flange beams used in nonresidential
construction markets.
Owing to weakness in the U.S. dollar, high freight costs and
increased global demand, structural steel imports have waned and
are likely to remain at lower levels for the intermediate term.
Despite persistently weak nonresidential construction activity,
domestic producers have supplanted imports and increased
production and shipment levels. As a result, TXI's steel segment
generated $48 million in operating income for its quarter ended
May 31, 2004, its highest level to date. Prior to the quarter
ended Feb. 28, 2004, in which the company generated $11.5 million
in operating income, this segment had six consecutive quarters of
losses.
TRANSMONTAIGNE: Board Okays UBS Assistance in Evaluating Options
----------------------------------------------------------------
TransMontaigne Inc.'s (AMEX: TMG) Board of Directors has
authorized management to engage UBS Investment Bank to assist the
Company in evaluating its strategic alternatives.
TransMontaigne Inc. is a refined petroleum products distribution
and supply company based in Denver, Colorado with operations in
the United States, primarily in the Gulf Coast, Midwest and East
Coast regions. The Company's principal activities consist of (i)
terminal, pipeline, and tug and barge operations, (ii) supply,
distribution and marketing and (iii) supply management services.
The Company's customers include refiners, wholesalers,
distributors, marketers, and industrial and commercial end-users
of refined petroleum products. Corporate news and additional
information about TransMontaigne Inc. is available 24 hours a day,
7 days a week on the Company's web site:
http://www.transmontaigne.com/
* * *
As reported in the Troubled Company Reporter's June 1, 2004
edition, Standard & Poor's Ratings Services lowered its ratings on
terminaling company TransMontaigne Inc. (TMG) to 'BB-' from 'BB'
and removed the ratings from CreditWatch with negative
implications where they were placed on March 26, 2004. The outlook
is now negative.
Colorado-based TMG had $385 million of debt as of March 31, 2004.
"The rating actions follow a review of TMG's historic and
prospective financial performance and its current business model,"
noted Standard & Poor's credit analyst Paul B. Harvey. "In
Standard & Poor's opinion, a rise in refined product prices has
led to aggressive borrowing on the company's working-capital
facility, weakening TMG's financial flexibility, increasing the
capital intensity of the company's business, and raising debt
leverage," he continued. Although TMG strengthened its financial
profile modestly during the quarter ended March 31, 2004,
liquidity and financial performance measures remain well-below
Standard & Poor's expectations and are not expected to reach such
expectations in the near term. Further increases in debt leverage
or a weakening of the company's profitability or cash flow could
provoke an additional ratings downgrade.
TRANSMONTAIGNE INC: S&P Affirms BB- Ratings & Revises Outlook
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
TransMontaigne Inc. (BB-/Developing/--) and revised its outlook to
developing from negative. The rating actions follow
TransMontaigne's announcement that it will "evaluate strategic
alternatives". In the absence of TransMontaigne selling itself to
a higher-rated entity, Standard & Poor's would caution that the
probability of a ratings downgrade exceeds that of a ratings
upgrade, because TransMontaigne's operating and financial trends
have been weaker than expected for some time.
"The change to a developing outlook reflects Standard & Poor's
uncertainty about the possible outcome of TransMontaigne's
actions," noted Standard & Poor's credit analyst Paul B. Harvey.
Standard & Poor's is currently unaware of any pending acquisition
or refinancing of TransMontaigne. "If TransMontaigne is acquired
by a higher-rated entity, credit quality could improve; however,
an acquisition by a lower-rated entity or a refinancing could
negatively affect credit quality and be detrimental to the
subordinated noteholders," he continued. Standard & Poor's will
monitor the progress at TransMontaigne and evaluate its outlook
and ratings when a course of action and its implications have been
defined.
The developing outlook reflects the possibility of negative or
positive rating actions depending on Standard & Poor's evaluation
of the actions, if any, taken by TransMontaigne as it reviews its
alternatives.
TROPICAL SPORTSWEAR: Retains Broker to Market Tampa Facility Sale
-----------------------------------------------------------------
Tropical Sportswear Int'l Corporation (Nasdaq:TSIC), a designer
and marketer of high-quality branded and retailer private branded
apparel, has retained NAI Krauss Organization, a commercial real
estate services company, to market the sale of its 110,000 sq. ft.
cutting facility at 4924 West Waters Street in Tampa, Florida.
The planned sale is part of TSI's ongoing strategy, which includes
transitioning from a manufacturing to a marketing-driven business
model. As previously announced, the Company has transferred all
cutting operations to offshore contractors. The net book value of
the Tampa facility is approximately $3.7 million and TSI expects
to record a gain on the sale. Net proceeds from the sale will be
used to repay borrowings under the Company's revolving credit
line.
"Since launching our restructuring effort earlier this year, TSI
has embarked on a series of strategic asset sales that have
increased our liquidity and improved our financial position," said
Richard Domino, President of TSI. "We also have taken significant
steps towards repositioning the company in a way that allows us to
leverage our expertise, become more competitive and most
importantly, provide greater value to our customers."
TSI also announced the resignation of John T. Berg Jr. as Senior
Vice President, General Manager of TSI's branded division to
pursue personal interests. Richard Domino will serve as interim
General Manager of the branded division while the Company seeks a
permanent division head with substantial brand management
experience.
TSI is a designer and marketer of high-quality branded and
retailer private branded apparel products that are sold to major
retailers in all levels and channels of distribution. Primary
product lines feature casual and dress-casual pants, shorts, denim
jeans, and woven and knit shirts. Major owned brands include
Savaner, Farahr, FlyersT, The Original Khaki Co.r, Bay to Bayr,
Two Pepperr, Royal Palmr, Banana Joer, and Authentic Chino
Casualsr. Licensed brands include Bill Blassr and Van Heusenr.
Retailer national private brands that we produce include Puritanr,
GeorgeT, Member's Markr, Sonomar, Croft & Barrowr, St. John's
Bayr, Roundtree & Yorker, Geoffrey Beener, Izodr, and White Stagr.
TSI distinguishes itself by providing major retailers with
comprehensive brand management programs and uses advanced
technology to provide retailers with customer, product and market
analyses, apparel design, and merchandising consulting and
inventory forecasting with a focus on return on investment.
* * *
In its Form 10-Q for the quarterly period ended April 3, 2004,
Tropical Sportswear International Corporation reports:
"On June 6, 2003, we renewed our revolving credit line. The
Facility provides for borrowings of up to $95 million, subject to
certain borrowing base limitations. Borrowings under the Facility
bear variable rates of interest based on LIBOR plus an applicable
margin (5.6% at April 3, 2004), and are secured by substantially
all of our domestic assets. The Facility matures in June 2006. The
Facility contained significant financial and operating covenants
if availability under the Facility falls below $20 million. These
covenants include a consolidated fixed charge ratio of at least
.90x and a ratio of consolidated funded debt to consolidated
EBITDA of not more than 5.25x. The Facility also includes
prohibitions on our ability to incur certain additional
indebtedness or to pay dividends, and restrictions on our ability
to make capital expenditures.
"The Facility contains both a subjective acceleration clause and a
requirement to maintain a lock-box arrangement, whereby
remittances from customers reduce borrowings outstanding under the
Facility. In accordance with Emerging Issues Task Force 95-22,
"Balance Sheet Classification of Borrowings Outstanding under
Revolving Credit Agreements That Include Both a Subjective
Acceleration Clause and a Lock-Box Arrangement", outstanding
borrowings under the Facility of $23.3 million have been
classified as short-term as of April 3, 2004.
"On December 15, 2003, we paid the semi-annual interest payment of
$5.5 million to the holders of our senior subordinated notes. On
December 16, 2003, availability under our Facility fell below
$20 million, triggering financial covenants which we violated.
This caused us to be in technical default under the Facility. On
January 12, 2004, we amended the Facility with Fleet Capital,
which among other things reduced aggregate borrowings to $70
million. The default under the Facility was waived on January 12,
2004 by the terms of the Amended Facility. Although our Amended
Facility provides for borrowings of up to $70 million, the
amount that can be borrowed at any given time is based upon a
formula that takes into account, among other things, our
eligible accounts receivable and inventory, which can result
in borrowing availability of less than the full amount.
Additionally, the Amended Facility contains a $10 million
availability reserve base and higher rates of interest than the
Facility. The $10.0 million availability reserve base was met as
of April 3, 2004 and through the date of this filing. The Amended
Facility also contains monthly financial covenants of minimum
EBITDA levels which began February 2004, and a consolidated fixed
charge coverage ratio and consolidated EBIT to consolidated
interest expense ratio which begin March 2005. The fiscal 2004
minimum EBITDA levels are cumulative month amounts beginning in
the second quarter of fiscal 2004. The minimum EBITDA threshold
for fiscal 2004 ranges from $1.8 million for the two months
ending February 29, 2004 to $11.8 million for the nine months
ending October 2, 2004. We were in compliance with the EBITDA
covenants as of April 3, 2004, and had $13.2 million available for
borrowing under the Amended Facility. While we believe our
operating plans, if met, will be sufficient to assure
compliance with the terms of the Amended Facility, there can be no
assurances that we will be in compliance through fiscal 2004.
"Our estimate of capital needs is subject to a number of risks
and uncertainties that could result in additional capital needs
that have not been anticipated. An important source of capital is
our ability to generate positive cash flow from operations. This
is dependent upon our ability to increase revenues, to generate
adequate gross profit from those sales, to reduce excess
inventories and to control costs and expenses. Another important
source of capital is our ability to borrow under the Amended
Facility. We have historically violated certain covenants in our
borrowing agreements, and to this point, we have been able to
obtain waivers from our lenders allowing us continued access to
this source of capital. However, there can be no assurances that
we will be able to obtain waivers from our lenders should a
violation occur in the future. If our actual revenues are less
than we expect or operating or capital costs are more than we
expect, our financial condition and liquidity may be materially
adversely affected. We may need to raise additional capital either
through the issuance of debt or equity securities or additional
credit facilities, and there can be no assurances that we would
be able to access the credit or capital markets for additional
capital."
VLASIC: 8 More Witnesses Take the Stand in $250M Suit vs. Campbell
------------------------------------------------------------------
Eight more witnesses took the witness stand in the lawsuit
commenced by VFB, LLC, against Campbell Soup Company before the
United States District Court for the District of Delaware:
A. Ralph Harris
Before serving as Vice President in Corporate Development at
Campbell Soup Company, Ralph Harris had worked primarily on
mergers, acquisitions and divestiture activities for a number
of companies. At Campbell, Mr. Harris became involved in
acquisition projects. In most cases, Mr. Harris says, he
makes the ultimate recommendation to Campbell Chairman David
Johnson on prices to be paid on an acquisition.
Mr. Harris tells the District Court that after Campbell had
been into "several disastrous acquisitions," Campbell's
Controller Department became interested in increasing the
quality of the due diligence and acquisition process. Thus,
at Campbell, one of Mr. Harris' tasks was keeping "ad hoc
computer models to look at specific acquisition analysis and
analyze the effects of synergies" on potential acquisitions.
Mr. Harris attests that the Freshbake Foods, one of the
businesses spun to Vlasic Foods International, Inc., was one
of Campbell's disastrous acquisitions.
In a Campbell spreadsheet titled "Impact Restructuring on
Consolidated Results" dated January 11, 1993, U.K. Frozen is
listed under Losers/Leakers. Mr. Harris explains that
Losers/Leakers is a term used to describe small businesses
that they wanted to get out of because it had no future at
Campbell. U.K. Frozen was also among the businesses spun into
VFI. Mr. Harris believes that U.K. Frozen was listed under
the Losers/Leakers because it did not have a strong branded
position and the Controller Department couldn't see that as
being consistent with what Campbell wanted in terms of its
strategy.
John A. Lee, Esq., at Andrews & Kurth, in Houston, Texas,
representing VFB LLC, brought out a collection of documents
printed off a CD produced by Campbell. In the documents were
"RAH" estimated sales prices for Campbell businesses. RAH are
the initials of Mr. Harris' name. Mr. Harris admits that in
making the estimates and valuations, he did not really know
some of the businesses, what the businesses would have been
involved in and other considerations.
Mr. Harris recalls being asked by Campbell's Tax Department to
come up with valuations on certain businesses as it related to
the spin-off but he was not sure what the Tax Department
wanted at that time and what the numbers were ultimately used
for. "I had no knowledge how these numbers were to be used
other than it related to a tax question," Mr. Harris says.
Since worksheets memorializing his calculations have been
disposed of, Mr. Harris points out, there wouldn't be any
document in existence now that could be looked up to figure
out how he came up with his valuations.
B. Kathleen McCarthy
Kathleen McCarthy came to work as Vice President of Taxes at
VFI after she was contacted by Robert Bernstock, the former
Chief Executive Officer and President of VFI. Ms. McCarthy
was informed that VFI needed help on tax issues.
"[T]hey had some business that they wanted to settle and they
were restricted under a tax agreement," Ms. McCarthy recalls.
Ms. McCarthy has a law degree from Villanova University and a
Master of Laws in tax from New York University.
Ms. McCarthy relates that when she came to VFI, the big issue
was VFI's wanting to sell several troubled businesses.
However, VFI was restricted by a tax indemnity agreement from
selling sell certain assets within a two-year period.
"[W]hen you have a spin-off and you sell the asset within two
years, you are presumed to have a bad intention of selling it
from the very beginning," Ms. McCarthy explains. "[I]f you
eventually sell the asset, [the Tax Code] will tax you from
the beginning as if it is not tax-free."
Ms. McCarthy also notes that if VFI did anything to cause a
tax liability to the spin-off either currently or in the past,
VFI had to indemnify Campbell and its shareholders. Ms.
McCarthy learned from Campbell's counsel, Dechert Price &
Rhoads, that VFI's potential tax liability would be a billion
dollars, if VFI jeopardizes the spin-off.
VFI had to obtain Campbell's consent if it is going to sell
any of its businesses. To obtain Campbell's consent, VFI must
get a legal opinion from Campbell's counsel or a supplemental
ruling from the IRS, Ms. McCarthy says.
Despite the restrictions, VFI discussed with Campbell its
plans to sell the Swift business. Dan Hays of Campbell Tax
did not want to take the risk. However, after finding out
that Swift could be sold at a loss, VFI's management decided
to sell the entire Swift business and went for a supplemental
ruling. Upon learning of VFI's decision, Dechert Price
informed VFI that they would now be able to give a favorable
opinion.
Getting the consent was not easy, Ms. McCarthy recalls. The
process took about seven months, with VFI receiving the
opinion in April 1999. In the process, VFI paid $150,000 to
Dechert Price and $50,000 to Ernst & Young.
Ms. McCarthy further relates that VFI paid a $58 million
intercompany loan to Campbell 45 days after the spin-off. The
payment was in addition to the $500 million in cash and
distribution Campbell took as part of the spin-off
transaction.
Ms. McCarthy, however, never got a full open discussion on how
the intercompany payment came about. "This was an issue that
Dan [Hays] was not comfortable speaking about," Ms. McCarthy
observes when she asked Mr. Hays to explain why the
intercompany payment was required. "[Mr. Hays] basically cut
my question off before I could even get it out of my mouth.
He told me it shouldn't be considered in the calculation and
that was really the end of the discussion."
Judge Jordan recalled that in a prior testimony, a witness
represented that there was no additional debt other than
the $500 million. Judge Jordan asked Ms. McCarthy if she
could recall such representation being made to the IRS.
Ms. McCarthy confirms that all the previous filings up to the
seventh supplement indicated that there were no more
intercompany debt between VFI and Campbell. The
representations stood that it would be $500 million and no
intercompany loan would be outstanding. But this changed in
January 1998.
"[T]he way the ruling worked, they did make a representation
in the initial supplement there was $500 million of debt that
was going to be transferred with . . . the company," Ms.
McCarthy explains. "Then, in addition to that, in a latter
supplement, what they disclosed is that one of the companies
would continue to have an intercompany [loan] that was going
to be outstanding, a $58 million, and in the transfer because
the initial representation is there is going to be no debt and
we're going to wipe out all the [intercompany loans]. . . .
Then in a later supplement, they said we're going to leave one
company, but within 45 days that intercompany [loan] has to be
paid off from the date that we spin."
Part of Ms. McCarthy's work was to identify the tax impact on
VFI and any risks that it would face as the valuation numbers
that went into the final tax basis did not hold up.
Judge Jordan asked Ms. McCarthy of the consequence if Vlasic
were accused of being responsible for the $58 million
intercompany loan.
Ms. McCarthy relates that the way the $58 million was
disclosed in the SEC Form 10, Vlasic needed the intercompany
loan. Hence, there was a possibility that Vlasic could be
accused of having asked for the money, which would cause the
debt number to go over the basis. Consequently, there would
be a tax, there would be a gain and there would be a tax
computed, Ms. McCarthy says. Vlasic would have to pay the
tax.
Ms. McCarthy further states that the Tax Indemnity Agreement
bear other constraints, including the restriction on equity
and VFI's obligation to continue to get cost savings for a
five-year period with regard to the different divisions and
Swift and the mushroom businesses.
Ms. McCarthy left VFI in May 2001 and joined Pinnacle Foods
Corporation for a period of time until July 2001. In
September 2001, Ms. McCarthy rejoined VFB as successor to
VFI.
Ms. McCarthy clarifies that she wasn't hired to sue Campbell.
"I was actually hired to finish the work I had started when I
was still at Pinnacle. When I was working for Pinnacle, the
deal was I was supposed to work for both [Pinnacle and VFI],
liquidate the business, file the final tax returns and also
help Pinnacle. But that wasn't working out. So I came back
to VFI to finish all the tax liquidations and get the cash out
of Europe and to clean up the estate from a tax perspective."
C. Joseph Adler
Joseph Adler worked at Campbell's Controller's Office and was
assigned to prepare the historical carve out financial
statements for use in the IRS filing and SEC Form 10 filing in
connection with the spin-off. In preparing the SEC Form 10,
which was filed in March 1998, Mr. Adler relied entirely on
what was on Campbell's books. Mr. Adler admits that he did
not have the time to independently audit or verify the
information that Campbell's book provided.
Mr. Adler was not aware that the terms of certain of
Campbell's intercompany supply agreements were revised. Mr.
Adler believes that his lack of knowledge of the modifications
at the time of the preparation of the financial statements
affected the figures that went into Form 10, particularly the
pro forma section of Form 10.
"[I]t probably would have had to be pro forma adjustments to
the Profit & Loss Statement for the changes in the terms of
the supply contracts," Mr. Adler says. "[T]hen depending upon
those supply terms, it may have also indicated an impairment
that would have been run through the historical financial
statements as well."
Until late 2002, Mr. Adler was also unaware of Goldman Sachs'
Project Sweetpea Report and the valuation figures in the
Sweetpea Report. "If I had seen that information at that
time, it would have raised serious questions about the need
for impairment charges and I would have had to do a lot more
analysis in that impairment area and I would have sought the
counsel of our auditors, PricewaterhouseCoopers, immediately,"
Mr. Adler tells the District Court.
Mr. Adler attests that there were no adjustments made with
regards to the effect of trade loading to the fiscal year 1997
numbers in the Form 10.
Mr. Lee reminded the Court of Campbell's assertion that Mr.
Adler was involved in preparing projections sent to the banks
in connection with the credit arrangements. Mr. Adler denies
the allegation.
"I wasn't involved in preparing the projections. [I was]
preparing the historical carve out [full-time]," Mr. Adler
maintains.
Mr. Adler recalls that Campbell originally declared the "fit
and focus" theory as the purpose for the spin-off. However,
when the IRS wouldn't consider "fit and focus", Campbell
pursued the "cost savings" justification. Mr. Adler admits
that he never heard about the cost savings reason before.
"[F]rom my early involvement in June 1997, to prepare the
carve out financials, it was explained to me that the spin was
based upon 'fit and focus.' That each of the two result, and
the companies would be better able to focus on their
respective customers."
After the spin-off Mr. Adler became VFI's Controller. As the
spin-off was structured and VFI became a separate company, Mr.
Adler notes that contrary to the spin-off purpose, there were
no cost savings. Instead, there was duplication of costs and
there were aspects where VFI lost economies of scale in its
cost structure.
Mr. Adler recalls the way VFI had to administer its employee
benefits plans. Before the spin process, VFI was part of an
organization that provided employee benefit administration.
VFI was charged a pro rata share of the total fee that was
charged to Campbell's. About a year after the spin off, the
organization came in with their quote for the upcoming year,
where it more than doubled its charge to VFI. VFI was paying
between 500,000 and $1 million and the quote was about $2
million. The quote was to high for VFI so it had to scramble
to set up a new system.
Mr. Adler also tells Judge Jordan that VFI had to pay a tax
bill which related to a tax liability for a period before
the spin-off. During the spin-planning period, Mr. Adler
remembers being told by Campbell's tax lawyers that any tax
liabilities prior to the spin-off were Campbell's. Campbell
did not clearly communicate the fine print provision stating
that any tax liability of any subsidiary spun out to VFI was
was VFI's liability.
Mr. Adler also explains how the Swanson Division hit its
earning targets at the end of fiscal 1997:
"Based upon my review of the results [in] the years '97 and
'98, [there's] a surge in performance in the months of June
and July. Sales jumped dramatically in that period of time,
versus the trend that had been occurring in the previous ten
months."
"And I subsequently have learned that there [were] two kinds
of loads that occurred in that time. There was one
manufacturing load, where there is the incentive for the trade
to buy more cases, [and] for the first time in a long time,
if not ever, Swanson ran what they call a fifth deal. And that
promoted what we call pantry loading, where consumers bought
more than they would normally consume, [loading] up their
freezer."
Mr. Adler states that Campbell's launch of the Pepperidge
Farm pot pie in October 1998 was like a stab in the back
from the group that spun VFI.
"[I]t happened within weeks of the spin-off and it was like
bad faith. [I]t was more of a morale issue. It was a serious
strike to the morale because at this time, most of the people
in the company had come directly from Campbell's."
Mr. Adler also describes Campbell's provision of transition
services to VFI after the spin-off as " disappointing". VFI
was clearly low on the list of priorities. Campbell did the
minimum they had to do to get by. As time wore on, Campbell
got increasingly bored with having to do it and the service
faltered. However, VFI always had to pay top dollar for the
service.
D. Tom Walker
Tom Walker is the Managing Partner at Goldman Sachs. Among
others, Goldman Sachs worked on Campbell's Project Sweetpea,
which morphed into what became the spin-off project. The
Sweetpea Report is Goldman Sachs' investment banking report
with respect to the spin-off.
In March 1996, Goldman Sachs got involved in Campbell's
envisioned "best in show" project, which means achieving
respect or recognition in the marketplace -- comparable,
Mr. Walker says, to "something like Coca-cola, [trading] at
significantly higher multiples than any of the other food
companies."
Goldman Sachs believed at that time that, Campbell's shift
from "best in class" to "best in show" would be the major
driver in creating shareholder value with earnings growth rate
playing an important part. To achieve earnings growth rate,
according to Mr. Adler, Campbell divisions would have to
report steadily increasing earnings. A higher level of
growth would be better and be regarded in the marketplace more
than a lower level of growth. The end result of this would be
Campbell's stock price going up.
In May 1996, Goldman Sachs gave Campbell a strong endorsement
of the best in show strategy. One of the aspects of the best
in show strategy involved portfolio reconfiguration or
acquisitions. Goldman Sachs advised Campbell to consider some
acquisitions including international acquisitions and look
into divestitures for underperforming businesses.
Mr. Lee asked Mr. Walker why Goldman Sachs found it a good
idea to divest underperforming businesses. Mr. Walker
explains that the underperforming businesses were small and
weren't making very much money.
"[The underperforming businesses] were a distraction and we
were just a big believer that management [focusing] on the
core most important businesses was a very important thing to
do and Campbell historically had not been a company that had
kind of pruned off the underperforming stuff."
"And we were just big believers that you should constantly be
pruning the portfolio and that Campbell needed to do a more
aggressive job of getting things out of this portfolio that
weren't attractive and that were never going to be
attractive.
Goldman Sachs also advised Campbell that it must accelerate
its share repurchase program. "[We] felt their stock was
cheap," Mr. Walker explains. "We felt that the stock
would trade higher in the future. We felt that [Campbell] was
underleveraged and [borrowing] money to buy back shares was
something [that] would both raise the earnings per share level
of the company as well as accelerate the growth rates, both of
which would be very well received in the marketplace."
If the management were able to achieve best in show status,
Goldman Sachs advised Campbell to expect the stock to be 20
to 25 points higher by the Summer of 1998 than where it might
otherwise stand.
Mr. Walker also recalls that Campbell CFO Basil Anderson
contacted him with regards to the Project Sweetpea. Mr.
Anderson wanted Mr. Walker to look at various Campbell assets
and find out if they should sell, spin, split or keep those
assets.
Mr. Walker admits that the valuation figures on Goldman Sachs'
Sweetpea Report were based on Campbell management's estimates
or figures that Campbell provided to them. Goldman Sachs,
assuming the accuracy of the Campbell's information, did not
do any business level bottoms-up due diligence on Campbell's
businesses to verify any of the sales or earnings figures.
Mr. Walker tells the Court that he absolutely trusted Mr.
Anderson and Campbell Corporate Development staff, John
Forbis, to give him sound data.
Among others, Goldman Sachs stated in the Sweetpea Report
these spin-off advantages:
-- consumes the least senior management time, thus could be
completed relatively quickly;
-- depending on the leverage on the spun entity, Campbell
could receive in dividends as much cash as it would have
received in a sale; and
-- high degree of certainty of execution.
Mr. Walker does not recall including in the Sweetpea Report an
assumption as to the cost in moving the spun out entity to
independent stand alone basis. Nor did Goldman Sachs make any
assumptions as to synergies that would be lost from separating
the spun entity. Mr. Walker is also unsure whom the concept
of taking the leverage on the spun entity and using it to
repurchase Campbell shares originally came from.
"I don't know whether it was [the idea of] Mr. Anderson or
[mine]," Mr. Walker says, "but you have got a consistent
pattern over a period of time of a belief that the stock was
undervalued at Campbell, people should be buying back the
shares, and that particularly in a situation where [the] price
earnings multiple of the spun-off division is so low relative
to the price earnings multiple of Campbell. . . ."
"[S]ince the shareholders own both Vlasic and Campbell, to the
extent that you could put leverage on the spun-off company,
and shift the assets, cash, to earn more money at the higher
multiple, you would be creating shareholder value for the
Campbell shareholder that would end up owning both
businesses.
Mr. Walker attests that Goldman Sachs did not provide the $500
million number to Campbell. "[Campbell] decided the
amount of debt to be put on [VFI], not Goldman Sachs forcing
them to put some number on."
E. Debbie Dobzanski
In her 15 years as Campbell employee, Debbie Dobzanski had
worked in Internal Audit, Corporate Accounting, IT Group and
various Campbell business units as a financial analyst. Ms.
Dobzanski joined VFI in 1997 as Assistant Controller for its
Financial Business Service Center.
Ms. Dobzanski describes the Financial Business Service Center
as all accounting services for VFI, including general ledger,
accounts payable, payroll and fixed assets. According to Ms.
Dobzanski, the Business Center did not exist at the time of
the spin-off.
"[VFI] didn't have a system. [VFI] didn't have personnel.
All of the services were to be provided by Campbell in the
business or transaction services agreement."
Ms. Dobzanski discloses that VFI paid Campbell "a lot of money
each month" for the financial accounting services that
Campbell provided.
At the time VFI's Business Center was set up, Ms. Dobzanski
recounts the difficulties VFI encountered due mainly to the
manner in which Campbell had structured VFI in the spin-off.
"It was complicated to the extent that, under the Campbell
organization, we had many legal entities, and that required
Vlasic to set up more ledgers than they probably would have
ordinarily had to set up to meet the federal and fiduciary
reporting requirements."
When VFI had to complete its software installation in February
1999, Ms. Dobzanski recalls how VFI's billing module crashed.
As a result of the crash, VFI had to reconcile its accounts
receivable. After working on it for a long time and even with
the help of VFI's internal audit staff and a number of people
in the organization, Ms. Dobzanski relates that the VFI staff
was unable to locate the differences. When they have to
close the books at the end of the fiscal year, VFI has forced
to write-off $3.5 million. The collectible receivables ended
up being $3.5 million less than what was on the ledger.
There was also a million dollars difference on VFI's bank
statements and ledgers with regards to its cash balance. VFI
again failed to uncover the missing million. To match the
bank balance, VFI wrote down its ledger balance by $1 million.
When VFI ran its payroll system, it again had to incur $1.2
million, representing the amount exceeding its payroll
withholding taxes reserve. Ms. Dobzanski could not explain
how the withholding tax reserve got this far out of line.
The state of the accounting systems with regards to the
mushroom farms as "a mess." There were discrepancies on the
financial outputs from the plants' new accounting systems and
that of Campbell's systems. The gaps "were material to VFI in
the magnitude of one to two million dollars," Ms. Dobzanski
reveals.
After the transition from Campbell, Ms. Dobzanski estimates
the total required write-off to be about $7 million in VFI's
books. As a result, VFI's assets and its earnings were
overstated.
Mr. Lee asked if there was anything Ms. Dobzanski or the VFI
management could have done to prevent VFI's failure.
"I think a lot of people worked very hard, but it didn't
change the end result," Ms. Dobzanski says.
F. Jack Reitnauer
Mr. Lee again called on Jack Reitnauer to testify for VFI
regarding Campbell's argument that the contract price it
agreed to pay to VFI's mushroom under the supply agreement was
above market. Mr. Reitnauer worked as farm manager in the
mushroom farms.
According to Mr. Reitnauer, "market" was a nebulous term
because when Campbell's wanted mushrooms or Campbell's did not
want mushrooms, they could, in effect, create the market.
"When [Campbell's] wanted a tremendous amount of mushrooms, it
created a high market. When they didn't want a lot of
mushrooms, it created a low market, plus the fact that [VFI's]
costs were higher than market, if you will, being competitive
growers based on how we were set up to grow, trying to serve
as both retail and Campbell Soup company, which was the reason
the farms were built."
Mr. Reitnauer did not see any real serious effort from
Campbell to comply with the mushroom supply agreement.
When Chuck Miller at Campbell Purchasing met with Mr.
Reitnauer to discuss the issue of Campbell's compliance with
the supply agreement, Mr. Miller indicated that "Campbell will
take what they want when they want it."
With all the problems VFI experienced dealing with Campbell
after the spin-off, Mr. Reitnauer relates that they just
couldn't transition the mushroom business away from Campbell
and to just focus on retail. The basis of the farms was to
supply Campbell so VFI always had to have a relatively
significant percentage of its production available for
Campbell's, Mr. Reitnauer explains.
Since the farms were dependent on Campbell, the end of the
mushroom contract would mean the farms would not have much of
a chance, Mr. Reitnauer notes. VFI had to close up to half
the farms.
Mr. Reitnauer also relates why the mushroom business go from
pre-spin earnings on the books to a disastrous result after
the spin-off. VFI didn't have the capital moneys to put into
the farm to make the farms competitive, where it could
increase yields and reduce costs. VFI was also unable to sell
surplus product to Campbell's Soup Company like it had done in
the past where whatever it didn't sell, VFI had to sell the
surplus at a tremendous loss or just throw them away.
Mr. Reitnauer believes that the mushroom farms could never be
transformed into a successful retail operation without major
capital and some major revamping of the entire system.
Mr. Reitnauer left VFI in September 1999 to work for a
different mushroom operator. VFI, however, sued Mr. Reitnauer
after he left to enforce a non-compete agreement. Despite the
VFI's lawsuit against him, Mr. Reitnauer decided to step up
and testified for VFI because "a lot of people were hurt
during this whole transition."
G. Norma Carter
Norma Carter joined Campbell Legal Department in 1981. On
September 1997, Ms. Carter signed on to become the General
Counsel for the to-be-formed VFI.
However, after signing with VFI, Ms. Carter was not released
from the other responsibilities at Campbell. Ms. Carter
continued to handle Campbell's acquisition in France,
divestiture in the Netherlands. She also had her day-to-day
regular assignments and continued to handle another
acquisition almost right up to the closing of the VFI
spin-off.
Ms. Carter recounts that Campbell wanted to takeover the
drafting of the spin-off contracts, including the supply
agreements. According to Ms. Carter, it was only by
mid-February 1998 when she found out in a work calendar that
the SpinCo team was not going to get drafts of the supply
agreements, which they were waiting for until after the SEC
Form 10 had been filed.
Ms. Carter recalls being "a little upset" when she saw a
calendar outlining the work that had to be done between
closing. After asking for the agreements and not getting
them, Ms. Carter expected that at least they would see the
agreements before the Form 10 was filed. The work calendar
was the first indication that the Form 10 was going to get
filed without the exhibits.
When Ms. Carter inquired why the agreements weren't being
attached, Campbell Controller Jerry Lord explained that it was
just like a continuation of past practice. "[T]he reason why
they weren't being attached is [that] they were going to be
the same as historical, so that [there wasn't] going to be a
change, because they still represented the same cost-plus
arrangement as before, they were going to be just seamless and
they didn't have to be attached," Ms. Carter says.
Upon finally getting hold of the drafts of the mushroom and
beef agreements, Ms. Carter realized how things changed
"substantially." At this time Mr. Lord admitted that "he had
misunderstood." The Agreements were not going to be the same.
Ms. Carter learned who determined the $500 million debt when
Campbell CFO Basil Anderson came to her office one afternoon
and told her outright that it was his idea. Mr. Anderson
explained that the value of Swanson was a little low and the
value of Vlasic was a little high but that, in his opinion, it
was fine. The net worth equaled the net liabilities.
In October 1997, Ms. Carter was shocked to learn of the three-
year non-compete arrangement between VFI and Campbell as
provided in certain spin-off agreements. Ms. Carter relates
that VFI could not compete against Campbell in any products
that had been made in the U.S. Grocery Division, which
included thermal products, like group, gravy, pasta, canned
pasta and Franco American gravy. However there was no
restriction on Campbell competing against VFI. In the
main spin-off agreement, there was no obligation against
Campbell not to compete against VFI.
VFI is also restricted from soliciting Campbell employees
after the spin-off for two years. VFI either had to hire them
before it was ready for them on day one or not at all.
Before the closing of the spin-off, Ms. Carter's access to
Campbell's counsel, Dechert Price & Rhoads, was restricted.
"I was not allowed to go to the lawyers directly," Ms. Carter
recalls.
In November 2000, in an effort to sell certain of its
businesses, VFI, through a letter, asked help from Campbell to
finally set in place all the contracts so that a purchaser
could operate a true stand-alone business. But Campbell Legal
Linda Limpscomb told Ms. Carter that in return for their help,
VFI must release Campbell against all claims relating to the
spin-off, including claims from bankruptcy creditors.
H. Anthony Disilvestro
Anthony Disilvestro was appointed a VFI Director upon its
formation. Since VFI was a subsidiary of Campbell, Mr.
Disilvestro considered that his duty was to Campbell.
Concurrent with the closing of the spin-off on March 30, 1998,
Mr. Disilvestro resigned.
Mr. Disilvestro believes that managing the VFI business was
not a Director's responsibility but that of CEO Robert
Bernstock and his management team. Mr. Disilvestro tells the
Court that he can't tell why VFI Controller Joseph Adler's
responsibility was limited to accounting issues and why Mr.
Adler was instructed not to perform any financial planning or
analysis for the spin-off.
Mr. Lee referred Mr. Disilvestro to Goldman Sachs' Sweetpea
report, which stated:
"[S]o a spin-off with debt, the proceeds of which are
paid to Campbell, accomplishes two things that were good
for Campbell in 1997. One, it resulted in a divesting of
underperforming businesses; and second, it gave cash or
some measure of cash comparable to what you would have
received on a sale."
According to Mr. Disilvestro, the cash proceeds was not
something Campbell necessarily sought, so it would not be an
advantage. Getting cash was a result, not a purpose of the
leverage.
Mr. Disilvestro also points out that the $500 million
proceeds was not intended for repurchasing shares. Campbell
was trying to maintain a certain capitalization for the
company. "[T]he receipt of $500 million would have changed
the capitalization, in our view, [going] in the wrong
direction," Mr. Disilvestro says.
Mr. Disilvestro finds it a coincidence that the amount of debt
equals the tax basis number and the amount of share
repurchases.
As scheduled in an "Implementation Plan Recommendations"
document that Mr. Disilvestro, the terms of the beef and
mushrooms supply agreements and the transition service
agreement were to be put in place by October 31, 1997.
Initial debt level and credit agreements were scheduled to be
determined by November 30. On why these agreements were not
in final form by those dates, Mr. Disilvestro cannot tell.
"I don't remember it being a substantive issue," Mr.
Disilvestro explains. "I might have been over-optimistic with
my timetable."
Mr. Disilvestro also denies knowledge on why there was no
independent legal advisor hired for the VFI side of the
spin-off transaction. As to the non-existent, independent
financial advisor for VFI, Mr. Disilvestro says that he
determined at that time that there was no need to hire one.
(Vlasic Foods Bankruptcy News, Issue No. 45; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
VHJ ENERGY LLC: Case Summary & 15 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: VHJ Energy, LLC
504 B Fort Street
Buffalo, Wyoming 82834
Bankruptcy Case No.: 04-21360
Type of Business: The Debtor is engaged in methane gas
production.
Chapter 11 Petition Date: July 13, 2004
Court: District of Wyoming (Cheyenne)
Judge: Peter J. McNiff
Debtor's Counsel: Paul Hunter, Esq.
2616 Central Avenue
Cheyenne, WY 82001
Tel: 307-637-0212
Total Assets: $239,745
Total Debts: $7,402,469
Debtor's 15 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Shirley Brown $5,000,000
c/o Randall T. Cox
400 S Kendrick Ave., Ste. 304
Gillette WY 82716
Bear Paw Energy $343,467
1400 16th St., Ste. 310
Denver, CO 80202
Federated Oil and Gas Prop. $245,562
Clifford L. Smith $31,392
RK Neils Family Partnership $20,000
Richard E. Neils MD $20,000
John R. Ederer $17,557
John Copeland $8,000
Paramount Contracting LLC $7,897
Dave's Flow Measurement $5,068
R2R Energy LLC $4,754
Meagher Oil and Gas Prop. $3,832
CBM Pumps and Svc. $3,717
Patrick Davidson $1,411
Dorsey and Whitney LLP $1,002
W. INC.: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: W., Inc.
P.O. Box 460
Stockdale, Texas 78160
Bankruptcy Case No.: 04-54028
Type of Business: The Debtor provides Residential concrete
Construction services.
Chapter 11 Petition Date: July 13, 2004
Court: Western District of Texas (San Antonio)
Judge: Leif M. Clark
Debtor's Counsel: William R. Davis, Jr., Esq.
Langley & Banack, Inc.
745 East Mulberry #900
San Antonio, TX 78212
Tel: 210-736-6600
Total Assets: $295,875
Total Debts: $1,332,473
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Beck Readymix Concrete, Inc. Goods and services $381,629
P.O. Box 790641
San Antonio, TX 78279
Schneider Steel, Ltd. Goods $78,145
Marion State Bank Purchase money $52,000
security interest
Value: $44,000
Cemex Goods and services $39,812
MGPT, Inc. Services $23,394
CIT Equipment Purchase money $48,598
security interest
Value: $26,000
S&P Communications Services $18,308
Suncoast Post-Tension, Inc. Goods and services $17,666
Texana Machinery Goods $14,244
Apache Disposal Services $13,502
McCoy's Building Supply Goods and services $12,010
Center
Humana Insurance Insurance $10,735
Michael R. Barry, CPA Accounting services $8,900
Vulcan Materials, LP Goods and services $6,584
Home Depot Goods $6,309
Johnson Oil Company Goods and services $5,682
International Strand & Steel Goods $5,280
Morrison Supply Goods and services $4,978
ICM Surveys Services $4,601
Comal Supply Goods and services $4,564
WCI STEEL: USWA Ratifies Post-Bankruptcy Emergence Labor Contract
-----------------------------------------------------------------
The United Steelworkers of America Local 1375 members have
ratified a new labor agreement with WCI Steel, Inc.
The contract, which was approved Thursday, will become effective
once WCI emerges from bankruptcy as a reorganized company and will
expire Nov. 1, 2008. A confirmation hearing on competing
reorganization plans is scheduled to begin July 21 in U.S.
Bankruptcy Court in Akron. The USWA is strongly supporting the WCI
debtor's plan, which is sponsored by the Company's ultimate
parent, The Renco Group, Inc.
Patrick G. Tatom, WCI's president and chief executive officer,
said the labor contract is key to WCI's reorganization plan
because it provides the framework for implementing new work
systems that will enable WCI to vigorously compete in the global
steel market.
"We are pleased that our USWA members approved this innovative
agreement, which provides hourly employees with job security and
greater participation in all areas of our business," Mr. Tatom
said.
"We have distinguished ourselves in the marketplace by producing
custom products, serving niche markets and providing superior
customer service," he added. "This new contract will give us
further opportunity to improve our costs, quality and customer
satisfaction."
On Sept. 16, 2003, WCI filed a voluntary petition for protection
under Chapter 11 of the U.S. Bankruptcy Code.
WCI is an integrated steelmaker producing more than 185 grades of
custom and commodity flat-rolled steel at its Warren, Ohio
facility. WCI products are used by steel service centers,
convertors and the automotive and construction markets. The
company has approximately 1,700 employees.
WEIRTON STEEL: Court Approves Amended Disclosure Statement
----------------------------------------------------------
Judge Calhoun of the U.S. Bankruptcy Court for the District of
West Virginia finds that the Disclosure Statement explaining
Weirton Steel Corporation's First Amended Plan of Liquidation
contains adequate information within the meaning of Section 1125
of the Bankruptcy Code. Accordingly, the Court approves Weirton's
Disclosure Statement. All objections to the Disclosure
Statement, to the extent not withdraw or resolved, are
overruled. (Weirton Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
WEIRTON STEEL: Court Approves Modified Solicitation Procedures
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of West Virginia found
that the Solicitation Procedures proposed by Weirton Steel
Corporation and its debtor affiliates and subsidiaries provide a
fair and equitable voting process and are consistent with Section
1126 of the Bankruptcy Code.
Hence, Judge Friend approves the Solicitation Procedures, as
modified, including, but not limited to the forms of the Ballots
and Notices of Non-voting Status, the Voting Deadline, the
Solicitation Packages, the July 6, 2004 Voting Record Date for
Plan Voting and the Tabulation Rules.
The modifications to the Solicitation Procedures are:
(a) Only original ballots will be counted, and no ballot may
be submitted by facsimile, electronic mail or any other
electronic means;
(b) Any ballot received by the Balloting Agent that casts a
vote for a Claim that cannot be identified as a Claim
entitled to vote on the Plan will not be counted;
(c) If a ballot indicates both an acceptance and a rejection
of the Plan, it will be counted as an acceptance of the
Plan; and
(d) Each holder of a Claim entitled to vote on the Plan is
entitled to vote all of the Claims that it holds, but may
only cast a single ballot with respect to all Claims that
it holds in a single Class.
The Confirmation Hearing will be held before Judge Friend, on
August 24, 2004, beginning at 10:00 a.m., Eastern Time. The
Confirmation Hearing may be continued from time to time by the
Court without further notice other than the announcement of the
adjourned date at the Confirmation Hearing or any continued
hearing.
Objections to the confirmation of the Plan must be filed with the
Court and served on the parties on the Official Service List
established in the Debtors' case so that they are received no
later than 4:00 p.m., Eastern Time, on August 18, 2004, or on
another date established by the Debtors that is at least 25 days
after the service of the Solicitation Packages.
Judge Friend also approves the Confirmation Hearing Notice and
the form and manner of service and publication of the
Confirmation Hearing Notice. On or before July 19, 2004, Weirton
will serve or cause to be served the Confirmation Hearing Notice
on all creditors and interest holders, and all parties who have
requested notice pursuant to Rule 2002 of the Federal Rules of
Bankruptcy Procedure.
On or before August 2, 2004, Weirton will file and serve the form
of Trust Agreement on all parties included on the Official
Service List established by the Court in these cases. (Weirton
Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WESTPOINT STEVENS: Wants to Extend Key Employee Retention Plan
--------------------------------------------------------------
The WestPoint Stevens Inc. Debtors ask the U.S. Bankruptcy Court
for the Southern District of New York to approve an extension of
their Key Employee Retention Plan, as modified.
John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that the performance-based incentive program under
the KERP only provided calculations through the end of the first
quarter of 2004. In light of the continued pendency of their
Chapter 11 cases, the Debtors have calculated incentive payments
through December 2004 in accordance with their 2004 budget. New
target metrics are also being implemented to correspond with the
Debtors' 2004 Budget:
EBITDA Target Levels/Goals
Period Ending Minimum Target Maximum
------------- ------- ------ -------
06/30/2004 $25,112 $29,543 $35,452
09/30/2004 32,513 38,251 45,901
12/31/2004 30,465 35,841 43,009
Cash Availability Target Levels/Goals
Period Ending Minimum Target Maximum
------------- ------- ------ -------
06/30/2004 $100,467 $118,197 $141,836
09/30/2004 68,917 81,079 97,295
12/31/2004 104,701 123,178 147,814
______________________________________________________________
| |
| Payouts as Percentage of Base Salary |
|______________________________________________________________|
| | | | |
| Category of | Minimum | Target | Maximum |
| Eligible |_______________|_______________|_______________|
| Employee | | | |
| | KERP | KERP | KERP |
|______________|_______________|_______________|_______________|
| | | | |
| Group 1A | 50% | 100% | 200% |
| Group 1 | 37.5 | 75 | 150 |
| Group 2 | 25 | 50 | 100 |
| Group 3 | 10 | 20 | 40 |
| Group 4 | 7.5 | 15 | 30 |
|______________|_______________|_______________|_______________|
The proposed EBIDTA and Cash Availability metrics are principally
based on the corresponding targets contained in the 2004 Budget
but have been adjusted to reflect the estimated costs of the
continuation of the Chapter 11 cases through the end of 2004.
The Debtors estimate that costs associated with the continuation
of the KERP, as modified, will remain consistent and not exceed
$4,503,000 per quarter. The costs remain necessary considering
the associated benefits of enhanced employee morale. The
modified KERP will continue to provide incentives for employees
to stay the course and continue to assist the Debtors in their
reorganization efforts. In addition, incentive bonuses are
performance based.
Mr. Rapisardi asserts that the extension of the KERP, as
modified, through the duration of the Chapter 11 cases will
provide the Debtors with the long-term goals necessary to instill
employee confidence in the stability and direction of the
Debtors' business. The extension will provide the Debtors an
invaluable tool towards maintaining employee morale and will
enable the Debtors to concentrate on the rehabilitation of their
businesses and emergence from Chapter 11.
Mr. Rapisardi relates that the Creditors Committee and the Second
Lien Holders support the approval of the KERP's extension.
(WestPoint Bankruptcy News, Issue No. 25; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
WORLDCOM: Agrees to Resolve Illinois Revenue Department Tax Claims
------------------------------------------------------------------
In 2002, the Illinois Department of Revenue performed sales tax
audits of three WorldCom affiliates: Shared Technologies Fairchild
Telecom, Inc., Business Internet, Inc., and Intermedia
Communications, Inc. The Revenue Department determined the
liabilities for each of the three entities and issued Notices of
Tax Liability.
Subsequently, the three Debtors filed statutory protests with the
Illinois Revenue Department, requesting administrative hearings
to contest the liabilities contained in the Notices. The
Debtors' requests were later granted.
The Illinois Revenue Department filed prepetition claims against
various Debtors for:
-- Illinois sales taxes, including asserted liabilities that
relate to the audits of the three entities;
-- Telecommunications Excise Taxes;
-- Telecommunications Infrastructure Excise Taxes;
-- Withholding Taxes; and
-- Message Taxes.
The Excise Taxes were assigned Claim Nos. 340, 548, 833, 834,
835, 841, 842, 848, 849, 884, 988, 8767, 33487, 33604, 33625,
942, 1074, 2990, 3164, and 5193. Certain of the claims were
previously disallowed, withdrawn or amended.
The Debtors objected to certain of the Excise Tax Claims,
including the claims against Shared Technologies, Business
Internet and Intermedia Communications, which include the
asserted sales tax liabilities relating to the Illinois Revenue
Department's audits.
On April 27, 2004, the Illinois Revenue Department asked the
Bankruptcy Court to abstain from hearing the Debtors' objections
to the merits of the sales tax portion of these claims and allow
the liabilities to be determined in the administrative
proceedings:
(1) Claim No. 33487 filed against Shared Technologies for
$2,637,297;
(2) Claim No. 33604 filed against Business Internet for
$1,343,784; and
(3) Claim No. 33625 filed against Intermedia Communications
for $2,330,824.
The Illinois Revenue Department believes that its request for
abstention is warranted because:
(a) The litigation of the merits of the three claims in the
administrative proceedings will not detract from but will
enhance the efficient administration of the bankruptcy
case;
(b) The determination of the validity of the Revenue
Department's tax claims turns on the application of
Illinois law and this will be true even if the claims are
litigated in the Bankruptcy Court. The Revenue Department
points out that in Raleigh v. Illinois Department of
Revenue, 530 U.S. 15, 120 S. Ct. 1952 (2000), the court
held that state tax law presumptions apply in bankruptcy;
(c) It is not yet clear whether any unsettled issues of
Illinois law will have to be decided. Each of the three
objections merely states that they dispute the amounts of
claims without defining the issues further. The Revenue
Department relates that the three Debtors failed to
produce the categories of books and records sought by the
auditor and the auditor was, therefore, required to
principally use information derived from federal and state
income tax returns. As a result, the resolution of the
Debtors' objections will likely turn on an application of:
-- the regulations governing a taxpayer's record keeping
requirements;
-- the statutory provisions governing audits, including
the exercise of "best judgment and information" as set
forth at 35 ILCS 120/4; and
-- the presumptions of validity that attach to the Notices
of Tax Liability where a taxpayer cannot produce the
books and records to rebut the presumptions;
(d) The administrative proceedings are currently pending.
Although the administrative proceedings were stayed
because of the pendency of the Debtors' bankruptcy cases,
the administrative proceedings can immediately be resumed
and the matters promptly set for hearing;
(e) The Plan has been confirmed and the treatment of
creditors' claims is determined. The Revenue Department
maintains that "what is now left to do is to determine the
amounts of those claims are but there is no particular
reason why the claims have to be litigated in the
bankruptcy forum as opposed to any other forum of
competent jurisdiction";
(f) While the allowance of claims is generally considered to
be a core matter, the issues concerning the validity of
the Revenue Department's sales tax claims turn on state
law; and
(g) There is no good reason why the merits of its sales tax
claims need to be determined by the Bankruptcy Court while
other tax claims are litigated in Illinois. The
Reorganized Debtors have significant operations in
Illinois and will not be prejudiced if they are required
to litigate the sales and use tax issues as part of the
administrative proceedings.
The Bankruptcy Court has yet to rule on the Revenue Department's
abstention request.
The Illinois Revenue Department and the Debtors, subsequently,
engaged in negotiations over an extended period of time to settle
their disputes over the Excise Tax Claims. In a Court-approved
Stipulation, the Debtors and the Revenue Department agree that:
(a) The Debtors will pay the Revenue Department $2,500,000, in
satisfaction of the Excise Tax Claims and any other claims
released;
(b) The Revenue Department will waive any right to collect any
of the Settled Claims from any former or present director,
officer or employee of the Debtors pursuant to 35 ILCS
735/3-7, or in any other manner;
(c) Any Excise Tax Claim, including Claim Nos. 340, 548, 833,
834, 835, 841, 842, 848 849, 884, 988, 8767, 33487, 33604,
33625, 942, 1074, 2990, 3164, and 5193 and any other
prepetition sales, excise or use tax claim filed by the
Revenue Department not previously disallowed or withdrawn
is released, waived, disallowed and expunged by agreement.
The Debtors will have no obligation to distribute money or
property to the Revenue Department on account of the
Excise Tax Claims;
(d) With the exception of the Income Tax Claims, the Revenue
Department will waive other claims against any of the
Debtors for prepetition taxes;
(e) The pending objection filed by the Debtors to any Excise
Tax Claim is denied as moot;
(f) The Revenue Department's request for abstention is denied
as moot;
(g) The Revenue Department will cause these pending
administrative proceedings to be closed without any
findings of liability:
* Shared Technologies Fairchild Telecom, Inc., Case
No. 03-ST-0026,
* Business Internet, Inc., Case No. 03-ST-0025, and
* Intermedia Communications, Inc., Case No. 03-ST-0027;
(h) The Debtors will waive any right to assert any refund or
similar claims against the Revenue Department related to
or arising from prepetition taxes and prepetition tax
periods, with the exception of any prepetition income tax
refund claims; and
(i) The Stipulation and Order will have no effect on the
allowance or disallowance of any claims that the Revenue
Department has against the Debtors for income taxes.
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, 2004, 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. 57; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
W.R. GRACE: Equity Committee Wants Litigation Protocol Established
------------------------------------------------------------------
The Official Committee of Equity Security Holders of W.R. Grace &
Co. tells Judge Fitzgerald that the central problem in the
Debtors' cases is how to fashion appropriate procedures to resolve
asbestos personal injury claims. The Debtors have proposed two
alternative approaches -- resolution of these claims prior to
confirmation and resolution after confirmation. According to
Rhonda L. Thomas, Esq., at Klett Rooney Lieber & Schorling in
Wilmington, Delaware, common to these approaches is the
establishment of a process for identifying and resolving threshold
issues common to large numbers of asbestos personal injury claims.
The Equity Committee endorses the Debtors' approach as common
sense "necessitated by the inability of our tort system to deal
effectively with the asbestos litigation crisis." Because
Congress has taken no action to reform asbestos litigation, the
Bankruptcy Code provides the only effective tool available
because the District Court for the District of Delaware can
centralize resolution of all claims against a particular defendant
in a single court. The common-sense resolution would require the
establishment of appropriate diagnostic and evidentiary standards
for proof of:
(1) actual injury;
(2) sufficient occupational exposure; and
(3) in connection with some of Grace's products,
causation.
The avalanche of claims against Grace before the Petition Date,
coupled with the absence of any way to consolidate those claims
in a single forum, left Grace with no choice but to settle large
numbers of claims on an "inventory" basis; this, in turn,
required payment to settle many meritless claims. Ms. Thomas
contrasts this with the single-forum efficient approach possible
through the Bankruptcy Code.
The Equity Committee believes that an appropriate litigation
protocol, which identifies and resolves large numbers of asbestos
personal injury claims, is all that's necessary to conclude the
Debtors' cases. (W.R. Grace Bankruptcy News, Issue No. 65;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WRENN ASSOCIATES: Corwin Serves as Special Litigation Counsel
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Hampshire gave
its stamp of approval to Wrenn Associates, Inc.'s application to
retain Corwin & Corwin as special litigation counsel.
Charles F. Ahern, III, Esq., at Corwin & Corwin will provide
continuing representation to the Debtor in connection with the
defense of litigation pending before the Commonwealth of
Massachusetts.
The firm has a good, long-term business relationship with the
Debtor and its management. It has represented the Debtor and its
sureties on a regular basis in connection with the Massachusetts
litigation matters for many years.
Additionally, Corwin & Corwin is intimately familiar with the
pending Massachusetts litigation including the Extended Stay
Litigation in which the Debtor has asserted claims totaling
$1,000,000 plus interest.
The firm will bill the Debtor its current hourly rates ranging
from $170 per hour for associates to $270 per hour for partners.
Mr. Ahern's current hourly rate is $240 per hour. Paralegals who
will principally work in this case bill at $100 per hour.
Headquartered in Merrimack, New Hampshire, Wrenn Associates, Inc.
-- http://www.wrenn.com/-- is a construction management firm.
The Company filed for chapter 11 protection on May 25, 2004
(Bankr. S.D.N.Y. Case No. 04-13589). Jeffrey M. Sponder, Esq. at
Riker, Danzig, Scherer, Hyland & Perretti, LLP, represents the
Debtors. When the Company filed for protection from its
creditors, it listed $39,052,000 in total assets and $132,072,000
in total debts.
* Jefferies Expands Restructuring Practice Into Europe
------------------------------------------------------
Jefferies International Limited, a subsidiary of Jefferies Group,
Inc. (NYSE: JEF), expands its recapitalization and restructuring
advisory business into the European market.
As an extension of Jefferies' leading practice in the United
States, the newly established team will offer senior-level
restructuring advisory services to Jefferies' growing client base
in the European market. Richard Nevins, co-head of the
restructuring team at Jefferies & Company, Inc. since 1998 with
over 20 years experience, has relocated to Jefferies
International's London office to lead the European practice. He
will be responsible for expanding Jefferies' presence in the
European restructuring market.
Mr. Nevins commented, "In today's multi-national marketplace,
companies in distressed situations increasingly benefit from a
global perspective. By extending our highly successful US
recapitalization and restructuring practice, the establishment of
a European business will further enhance our offering to clients,
providing them with a team of restructuring experts who are able
to mobilize and react quickly to their individual local needs.
With the rapid development of Europe's restructuring market, the
decline of relationship lending, and the substantial, if belated,
growth in Europe's high yield market, the opportunity is immense."
Bill Derrough, co-head of the Jefferies US restructuring practice,
added: "Jefferies takes pride in its ideas-based approach to
resolving the notoriously complex issues surrounding distressed
situations. Jefferies' offering is distinctive because, in
addition to providing the customary advisory services, we are also
able to offer clients a full suite of investment banking
solutions, including high yield and equity underwriting, trading
and research. Richard's wealth of experience in this diverse arena
will be invaluable as we continue to develop our business both in
the US and Europe."
Jefferies' global Recapitalization and Restructuring Group has
over 40 bankers working across industry sectors to meet the unique
challenges facing financially distressed companies. Representing
issuers, bondholders, creditors, as well as buyers and sellers of
assets, the firm has restructured nearly $100 billion in
liabilities since 1998, including successfully completing exchange
offers with an average exchange offer acceptance ratio of 99.3%.
Jefferies is currently representing bondholders in Parmalat's
Canadian operating company, and represented the unsecured
creditors in the Federal-Mogul restructuring, which created a
precedent for a coordinated US / European restructuring, utilizing
the EU's "center of main interest" legislation.
About Jefferies
Jefferies, a global investment bank and institutional securities
firm, has served middle-market and growth companies and their
investors for over 40 years. Headquartered in New York with more
than 20 offices around the world, Jefferies provides clients with
capital markets and financial advisory services, institutional
brokerage, research and asset management. The firm is a leading
provider of trade execution in equity, high yield, convertible and
international securities, serving institutional investors and high
net worth individuals. Jefferies & Company, Inc. is the principal
operating subsidiary of Jefferies Group, Inc. (NYSE: JEF;
www.jefco.com), a publicly traded holding company. Jefferies
International Limited, a UK-incorporated, wholly owned subsidiary,
was established in London in 1985 and is regulated by the
Financial Services Authority.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS PCSA (377) 291 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)
Blount International BLT (397) 400 83
Blue Nile Inc. NILE (27) 62 16
Cell Therapeutic CTIC (83) 146 72
Centennial Comm CYCL (579) 1,447 (99)
Choice Hotels CHH (118) 267 (42)
Cincinnati Bell CBB (640) 2,074 (47)
Compass Minerals CMP (144) 687 106
Cubist Pharmaceuticals CBST (18) 223 91
Delta Air Lines DAL (384) 26,356 (1,657)
Deluxe Corp DLX (298) 563 (309)
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
Maxxam INC MXM (601) 1,061 127
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
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 (6) 39 9
Syntroleum Corp. SYNM (12) 67 11
UST Inc. UST (115) 1,726 727
Valence Tech VLNC (52) 21 (5)
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
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Bernadette C. de Roda, Rizande B. Delos Santos, Paulo
Jose A. Solana, Jazel P. Laureno, Aileen M. Quijano and Peter A.
Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***