/raid1/www/Hosts/bankrupt/TCR_Public/040830.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, August 30, 2004, Vol. 8, No. 184
Headlines
360NETWORKS INC: Defendants Want Tishman's Cross-Claims Dismissed
A-BUST TOOL: Case Summary & 20 Largest Unsecured Creditors
AELTUS CBO: Fitch Reviews C Rating on $53M Second Priority Notes
AINSWORTH LUMBER: S&P's B+ Credit & Debt Ratings on Negative Watch
AINSWORTH LUMBER: Will Discuss Plans to Acquire Potlatch Today
AIR 2 US: Moody's Gives Enhanced Equip. Notes C, Caa2 & B3 Ratings
AIR CANADA: Court Disallows Corporate Travel's CN$15 Mil. Claim
AMRESCO HOME: Moody's Puts Low-B Ratings on 3 Classes & Junks 2
BMC INDUSTRIES: Court Approves Sale of Vision-Ease Lens Assets
BOYDS COLLECTION: S&P Cuts Corporate Credit Rating One Notch to B
BRIAZZ: Wants to Bring-In Mark Brown as Tax Consultant
BRISUBAR INC: Voluntary Chapter 11 Case Summary
BURLINGTON: BII Trust Wants to Keep Two Liquidation Cases Open
CENTURY ALUMINUM: $315 Million of 11-3/4% Senior Notes Tendered
CHAS COAL: Committee Gets Nod to Hire Greenebaum Doll as Counsel
CIPRIETTI-TOLISANO: Case Summary & Largest Unsecured Creditors
CITICORP MORTGAGE: Fitch Puts BB Rating on $2.1M Class B-4 Certs.
COEUR D'ALENE: Wheaton Acknowledges Receipt of Formal Offer
COMMERCIAL FINANCIAL: Arthur Andersen to Pay $7.5 Million
COMMUNITY HEALTH: Moody's Puts Low-B Ratings on Bank Loans & Bonds
CONGOLEUM: Wants Until Dec. 14 to Make Lease-Related Decisions
CSFB MORTGAGE: S&P Gives Low-B Ratings to Six Classes & Junks One
DELTA AIR: Provides Noteholders with Consent Solicitation Q&A
DELTA AIR: Bingham McCutchen's Clients Say Carrier is Unresponsive
DEVLIEG BULLARD: Brings-In Trumbull Group as Claims Agent
DIGITAL LIGHTWAVE: Amends Proposed Financing Terms with Optel
DTI DENTAL: Stockholders' Deficit Narrows to $3 Mil. at June 2004
EW HW BG LLC: Case Summary & 19 Largest Unsecured Creditors
FOSTER WHEELER: Fixed Rate Senior Secured Notes Will Earn 10.507%
GALEY & LORD: Pays Prepetition Wages and Salaries
GALEY & LORD: Wants to Continue Employing Ordinary Course Profs.
GATES PATCHEN HOUSING DEVT: Voluntary Chapter 11 Case Summary
HAWAIIAN AIRLINES: Creditors Committee to Join Trustee Plan
HARBOURVIEW CDO: Moody's Rates $26.25 Million Class C Notes at Ba3
HOME CANADA: Policies Transferred & Oct. 15 Claim Deadline Fixed
HORIZON NATURAL: Confirmation Hearing Scheduled for Tomorrow
HORNBECK OFFSHORE: Improved Liquidity Prompts S&P's BB- Rating
HUDSON'S BAY: Will Release 2004 Second Quarter Results Tomorrow
HUDSON'S BAY: Taps PhotoChannel Networks to Add Customer Value
INDUSTRIAL WHOLESALE: Gets Interim Nod to Use Cash Collateral
JOHNSONDIVERSEY: Fitch Affirms BB Secured & B+ Sub. Debt Ratings
LEGION INSURANCE: Moody's Lowers & Withdraws Insurers' Ratings
LOMA COMPANY: Creditors Must File Proofs of Claim by October 15
MANDALAY RESORT: Delivers Cash Settlement Notice to Bank of N.Y.
MARICOPA COUNTY: Moody's Shaves 4 Notches Off IRB Rating to B1
MASSMUTUAL/DARBY: Fitch Raises $38.2M Class B Rating to BB-
MEDIA GROUP: Wants to Pay Employee Claims and Benefits
MERRILL LYNCH: Fitch Rates Two Privately-Offered Classes at Low-Bs
MILLENIUM ASSISTED: Committee Gets Nod to Hire Lowenstein Sandler
MIRANT: California Attorney General Sues for Commodities Fraud
NATIONAL CENTURY: CSFB Asks Court to Quash August 2004 Subpoena
OAKWOOD HOMES: S&P Puts 30 Low-B & 8 Junk Ratings on CreditWatch
OMNI ENERGY: Form 10-Q Filing Cures Technical Defaults
PACIFIC GAS: Asks Court to Approve Fresno Cogen. Claim Settlement
PARMALAT: Milk Prods.' Alabama Business Bid Deadline is Sept. 1
PEGASUS AVIATION: Fitch Junks 11 Classes & Puts Low-B Ratings on 7
PEGASUS SATELLITE: DirecTV Completes $950 Million Acquisition
PENN OCTANE: Rio Vista Files Amended Reg. Statement with SEC
RATE MY MORTGAGE INC: Voluntary Chapter 11 Case Summary
REDLINE PERFORMANCE: Voluntary Chapter 7 Case Summary
REDLINE PERFORMANCE: Files for Chapter 7 Protection in Minnesota
RELIANT ENERGY: Lenders Plan Foreclosure of Liberty Power Plant
REXBURG APARTMENTS: Case Summary & 5 Largest Unsecured Creditors
SALOMON BROTHERS: Moody's Cuts Ratings on Two Cert. Classes to Ba1
SALTON INC: Will Release 4th Qtr. & Year-End Results on Sept. 8
SARDONYX ASSOCIATES: Brings-In Albert Mickler as Attorney
SARDONYX ASSOCIATES: First Creditors' Meeting Fixed on Sept. 28
SOLOMON EQUITIES INC: Voluntary Chapter 11 Case Summary
STONE TOWER: S&P Assigns BB Rating to $8 Million Class D Notes
TGD PRODUCTIONS: Case Summary & 6 Largest Unsecured Creditors
THREE PROPERTIES: Creditors Must File Proofs of Claim on Dec. 8
TITAN INTERNATIONAL: Asks S&P to Withdraw B- Corp. Credit Rating
TRACE INTERNATIONAL: Trustee Prepares to Pay Chapter 11 Claims
TUPPERWARE CORP: S&P Affirms BB+ Credit & Unsecured Debt Ratings
UAL CORPORATION: Reports $6 Million Profit in July
USG CORP: Asbestos PD Comm. Asks Court To Set Up Case Mgt Protocol
VALEO INVESTMENT: S&P Puts Single-B Ratings on 2 Classes & Junks 1
VERITAS CLO: Moody's Puts Ba2 Rating on $8 Million Class E Notes
VLASIC: 6 More Witnesses Take the Stand in $250M Suit vs. Campbell
VLASIC: Campbell Calls Its First Witness in $250M Spin-Off Suit
VOEGELE MECHANICAL: Look for Bankruptcy Schedules by Sept. 2
WASTECORP.: Disclosure Statement Hearing Moved to September 14
WEIRTON STEEL: Court Confirms First Amended Liquidation Plan
WESTPOINT STEVENS: Decides to Assume Rockvale Outlet Store Lease
WOOD PRODS: Acquires 5% Interest in Waste Water Treatment Plant
WORLDCOM INC: Court Approves Settlement with State of California
* BOND PRICING: For the week of August 30 - September 3, 2004
*********
360NETWORKS INC: Defendants Want Tishman's Cross-Claims Dismissed
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors in 360networks,
Inc.'s chapter 11 proceeding has amended its lawsuit against
Tishman Construction Corporation of D.C. to include six additional
defendants:
(a) Baltimore Door & Frame, Inc.,
(b) Ceilings & Partitions, Inc.,
(c) Freestate Electrical Construction Company,
(d) Hunt & Walsh, Inc.,
(e) Jarvis Steel & Lumber Company, Inc., and
(f) Tyler Mechanical Contracting, Inc.
Aside from its intent to recover $1,024,825 from Tishman, the
Committee, in the alternative, seeks a Court judgment to avoid and
recover these preferential transfers:
Preferential Payment Defendant
-------------------- ---------
$247,959 Tishman
4,249 Baltimore Door
20,985 Ceilings
221,850 Freestate
2,160 Hunt
97,848 Jarvis
429,773 Tyler
Norman N. Kinel, Esq., at Sidley Austin Brown & Wood, LLP, in New
York, relates that on March 28, 2002, the Debtors demanded that
Tishman return the Alternative Transfers. Tishman didn't.
The Committee argues that the Alternative Transfers are avoidable
and says it's entitled to recover the Alternative Transfers
pursuant to Sections 547(b) and 550 of the Bankruptcy Code, the
Plan and the Confirmation Order.
Responses
1. Tishman Construction Corp. of D.C.
Carl A. Haberbusch, Esq., at Goetz Fitzpatrick, LLP, in New York,
relates that:
-- the Amended Complaint fails to state a claim on which
protection may be granted against Tishman;
-- the $1,024,825 paid to Tishman constitutes a constructive
trust for the benefit of Tishman and the other defendants;
-- the $1,024,825 paid to Tishman was intended to constitute
substantially contemporaneous exchanges for new value
given to 360networks;
-- the $1,024,825 paid to Tishman constitute payments made in
the ordinary course of business or financial affairs of
the parties;
-- Tishman gave new value to 360networks after the payment,
which new value was unpaid as of the Petition Date; and
-- the claims are barred by waiver or estoppel.
Mr. Haberbusch informs the Court that Tishman paid $776,866 to the
other defendants at the direction of and for the benefit of
360networks. If the Court determines that all or part of the
$776,866 paid by Tishman to the other defendants constituted
preferential transfers, the other defendants, as beneficiaries of
the payments, are liable to Tishman for the amounts.
Accordingly, Tishman seeks a Court judgment:
(a) dismissing the Amended Complaint;
(b) granting judgment against the other defendants on its
cross-claims; and
(c) awarding costs and disbursements, including reasonable
attorney's fees.
2. Tyler Mechanical Contracting, Inc.
Tyler denies each and every allegation contained in the Amended
Complaint and Tishman's Cross-Claims. In fact, Tyler asserts that
the Amended Complaint and the Cross-Claims fail to state a claim
on which protection may be granted as against Tyler.
Moreover, Lawrence C. Gottlieb, Esq., at Kronish Leib Weiner &
Hellman, LLP, in New York, points out that 360networks or Tishman
cannot recover from Tyler because:
(a) any payments to Tyler did not enable Tyler to receive
more than another creditor of the same class as Tyler;
(b) Tyler was not the initial transferee of the alleged
preferential transfer;
(c) the alleged preferential transfers were intended by
360networks and Tyler to be a contemporaneous exchange
of new value given to 360networks;
(d) the alleged preferential transfers were made in the
ordinary course of business or financial affairs of
360networks and Tyler or Tishman;
(e) after the alleged preferential transfers, Tyler gave new
value to or for 360networks' benefit;
(f) the alleged transfers involved the fixing of a statutory
lien; and
(g) the amounts constituted payment to Tyler for the benefit
of Tyler's subcontractors, laborers and materialmen
expressly established by Tyler's contract and the amounts
were expressly deemed "trust funds."
Mr. Gottlieb asserts that the Amended Complaint should be
dismissed:
(a) for insufficiency of process under Rule 7012 of the
Federal Rules of Bankruptcy Procedure;
(b) because the causes of action are barred by the applicable
statutes of limitations; and
(c) pursuant to the doctrines of accord and satisfaction,
estoppel, payment, waiver, unclean hands or laches.
Tyler alleges that it is entitled to set off from any alleged
preferential transfer amounts it has not been paid for work
performed after the alleged preferential transfers occurred.
Tyler asks the Court to dismiss the Amended Complaint and
Tishman's Cross-Claims with prejudice, and award it its attorney's
fees and costs of suit.
3. Ceiling and Partitions, Inc.
According to Douglas J. Pick, Esq., at Bell, Boyd & Lloyd, LLC, in
Chicago, Illinois, some or all of the Alternative Transfers that
Ceiling received may not be avoided pursuant to Section 547(c) of
the Bankruptcy Code because:
(a) they were payments of a debt incurred by 360networks in
the ordinary course of business or financial affairs of
the parties, and made according to ordinary business
terms;
(b) subsequent to its receipt of any Alternative Transfer,
Ceiling provided new value to or for the benefit of
360networks; and
(c) they were intended by the parties to be and were, in
fact, substantially contemporaneous exchanges of new
value.
Furthermore, Mr. Pick asserts that Tishman's claims are barred by
the applicable statute of limitations because Ceiling:
-- was an immediate or mediate transferee of an initial
transferee;
-- gave value, including satisfaction or securing of a
present or antecedent debt, in good faith to the Debtors;
and
-- has no knowledge of the voidability of the transfer sought
to be avoided.
The Amended Complaint fails to state a claim on which protection
may be granted. To the extent that it is found to have received a
transfer, which is subject to avoidance, Ceiling asserts a right
of setoff or recoupment with regard to indebtedness due by the
Debtors to Ceiling against Ceiling's liability to the Debtors
pursuant to Section 553 of the Bankruptcy Code.
Thus, Ceiling asks the Court to dismiss Tishman's Cross-Claims
against it with prejudice.
4. Freestate Electrical Construction Company
Freestate asks Judge Gropper to dismiss Tishman's Cross-Claims
with prejudice because:
(a) some or all of the Alternative Transfers that Freestate
received were payments of a debt 360networks incurred in
the ordinary course of business under ordinary business
terms;
(b) subsequent to its receipt of any Alternative Transfer,
Freestate provided new value to or for 360networks'
benefit;
(c) some or all of the Alternative Transfer were intended by
360networks and Freestate to be and were, in fact,
substantially contemporaneous exchanges of new value;
(d) to the extent that Freestate is found to have received a
transfer that is subject to avoidance, Freestate asserts
a right of recoupment or setoff with regard to
indebtedness due by 360networks to Freestate against
Freestate's liability to 360networks;
(e) 360networks' claims are barred by the applicable statutes
of limitations;
(f) 360networks' claims are barred under Section 550 of the
Bankruptcy Code since some or all of the Alternative
Transfers were received by Freestate where Freestate was
an immediate or mediate transferee of an initial
transferee, gave value including satisfaction or securing
of a present or antecedent debt, in good faith, to
360networks, and without knowledge of the voidability of
the transfer sought to be avoided; and
(g) the Amended Complaint fails to state a claim on which
protection may be granted.
5. Hunt & Walsh, Inc.
Hunt & Walsh informs the Court that the payments it received were
paid and received in the ordinary course of business. Hunt &
Walsh was not in privity of contract with 360networks or the
Creditors Committee.
Furthermore, Hunt & Walsh alleges that:
(a) it received payments from a third party in the ordinary
course of business and not from 360networks or the
Creditors Committee;
(b) it acted in good faith and without knowledge of
voidability with respect to receipt of any payments from
Tishman;
(c) 360networks received new value in exchange for the
alleged payments;
(d) there is no stated cause of action on which protection may
be granted;
(e) the claims are barred under the statute of limitations;
(f) the Committee has not been damaged as alleged; and
(g) the claims are barred by waiver or estoppel.
Thus, Hunt & Walsh asks the Court to dismiss the Complaint with
prejudice.
6. Jarvis Steel & Lumber Company, Inc.
According to John Patrick Deveney, Esq., at Kellner, Chehebar &
Deveney, in New York, the Tishman Cross-Claims fail to state a
claim on which protection may be granted as against Jarvis.
Tishman may not recover any alleged preferential transfers to
Jarvis because:
(a) the amounts constituted payments to Jarvis for the
benefit of Jarvis' subcontractors, laborers and
materialmen expressly established by Jarvis' contract and
the amounts were expressly deemed "trust funds";
(b) Jarvis was not the initial transferee of the alleged
preferential transfer;
(c) some or all of the Alternative Transfer was received by
Jarvis wherein it was an immediate or mediate transferee
of an initial transferee, gave value in good faith to
360networks, and without knowledge of the voidability of
the transfer sought to be avoided;
(d) the alleged transfers were intended by Tishman and Jarvis
to whose benefit the transfers were made to be and were,
in fact, substantially contemporaneous exchanges of new
value given to 360networks;
(e) the transfers were payments of debt of 360networks or
Tishman in the ordinary course of business under ordinary
business terms;
(f) subsequent to Jarvis' receipt of the alleged transfers,
Jarvis provided new value to or for the benefit of
360networks or Tishman that is unavoidable; and
(g) the claims are barred by the applicable statute of
limitations.
Furthermore, Mr. Deveney asserts that the Amended Complaint should
be dismissed for insufficiency of process under Rule 7012 of the
Federal Rules of Bankruptcy Procedure and pursuant to the
doctrines of accord and satisfaction, estoppel, payment, waiver,
unclean hands or laches.
To the extent that it is found to have received an avoidable
transfer, Jarvis asserts a right of setoff or recoupment with
regard to the indebtedness due by 360networks or Tishman to Jarvis
against Jarvis' liability to 360networks or Tishman. Jarvis
further asserts that it is entitled to a set-off since it has not
been paid for work performed after the alleged transfer occurred.
Jarvis asks the Court to dismiss with prejudice Tishman's Cross-
Claims.
Headquartered in Vancouver, British Columbia, 360networks, Inc. --
http://www.360.net/-- is a leading independent provider of fiber
optic communications network products and services worldwide. The
Company filed for chapter 11 protection on June 28, 2001 (Bankr.
S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on
October 1, 2002, and emerged from chapter 11 on November 12, 2002.
Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie
Farr & Gallagher, represent the Company before the Bankruptcy
Court. When the Debtors filed for protection from its creditors,
they listed $6,326,000,000 in assets and $3,597,000,000 in
liabilities. (360 Bankruptcy News, Issue No. 74; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
A-BUST TOOL: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: A-Bust Tool and Manufacturing Co., Inc.
3232 Calumet Avenue
Hammond, Indiana 46320
Bankruptcy Case No.: 04-64206
Type of Business: The Debtor provides roll grinding services and
equipment for the flat rolled sheet industry.
Chapter 11 Petition Date: August 24, 2004
Court: Northern District of Indiana (Hammond Division)
Judge: J. Philip Klingeberger
Debtor's Counsels: Daniel L. Freeland, Esq.
Daniel Freeland & Assoc.
2136 45th Street
Highland, IN 46322
Tel: 219-922-0800
-- and --
Lawrence A. Kalina, Esq.
Spangler, Jennings & Dougherty P.C.
8396 Mississippi Street
Merrillville, IN 46410
Tel: 219-769-2323
Fax : (219)769-5007
Total Assets: Approx. $1 Million
Total Debts: Approx. $3.6 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
O'Malley & Company Services $38,650
National Grinding Wheel Trade Creditor $27,056
MBNA America Credit card charges $13,950
William I. Fine Legal Fees $13,068
Hausner Hard Chrome of KY, Trade Creditor $10,128
Inc.
Pasquest Sheppard LLC Services $9,700
American Boat Company Services $9,383
Neo Industries(Indiana) Inc. Trade Creditor $8,610
Blessent Industrial Tool Trade Creditor $8,147
Revere Electric, Inc. Trade Creditor $7,631
Meade Industrial Services Trade Creditor $6,626
A1 Wareen Oil Co. Inc. Trade Creditor $6,421
Elwood City Forge Trade Creditor $6,400
Terry Chapman Services $6,090
Bearing Service Co. Trade Creditor $5,961
Vidimos Trade Creditor $5,798
NIPSCO Utility Bill $4,895
J&L Fasteners Trade Creditor $3,862
Roll Service, Inc. Trade Creditor $3,770
Fouts Tire Trade Creditor $3,672
AELTUS CBO: Fitch Reviews C Rating on $53M Second Priority Notes
----------------------------------------------------------------
Fitch Ratings reviews one class of notes issued by Aeltus CBO II,
Ltd. This rating action is effective immediately:
-- $53,115,811 second priority notes remain at 'C';
Aeltus CBO II is a collateralized debt obligation -- CDO --
managed by Aeltus Investment Management, which closed
August 5, 1997. Aeltus CBO II is currently composed of High Yield
bonds and Emerging Market bonds.
Since the last rating action, the collateral has slightly
improved, although the Second Priority overcollateralization test
has decreased from 100.57% as of November 2001 to 82.07% as of the
most recent trustee report dated August 3, 2004. The weighted
average rating of the performing collateral has stayed at 'B-'.
As of the most recent trustee report available, Aeltus CBO II
defaulted assets represented 8.6% of the $133.9 million of total
collateral and eligible investments. Assets rated 'CCC+' or lower
represented approximately 27.4%, excluding defaults. As of the
August 6, 2004 distribution date the second priority notes
received current interest. The deferred interest on the second
priority notes remains in excess of $11.0 million.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
AINSWORTH LUMBER: S&P's B+ Credit & Debt Ratings on Negative Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit and senior unsecured debt ratings on Vancouver,
B.C.-based Ainsworth Lumber Co. Ltd. on CreditWatch with negative
implications. The CreditWatch placement follows the company's
announcement that it will purchase all of Potlatch Corp.'s
oriented strandboard -- OSB -- manufacturing and related
facilities for US$457.5 million.
"This is very large transaction for Ainsworth and we will take a
look at the affect of additional debt in a less robust pricing
environment, as it is unlikely that the current high OSB prices
will be sustained through 2005," said Standard & Poor's credit
analyst Daniel Parker. "Although the deal would improve
Ainsworth's product diversity and geographical balance, we are
concerned about the Potlatch assets' effect on Ainsworth's overall
cost position and the credit ratings could be lowered," added Mr.
Parker.
The current ratings on Ainsworth Lumber Co. Ltd. reflect the
company's narrow product concentration in the production of OSB (a
plywood substitute), its high leverage, and its midsize market
position. These risks are partially offset by the company's
strong cost position stemming from its modern asset base and its
high degree of fiber integration.
Ainsworth's business mix is narrowly focused on OSB with modest
exposure to other cyclical wood products, such as lumber and
plywood. This reliance on OSB, the prices for which are widely
variable, increases the volatility of the company's profitability
and credit measures. These changes reflect swings in OSB prices
from as low as US$130 per thousand square feet at the cyclical
trough, to more than US$500 per thousand square feet at the peak.
OSB continues to displace plywood and now accounts for about 58%
of structural panel usage. Nevertheless, one of the challenges
that hurt the sector in the past was the proliferation of
capacity, brought about by the ease of new entrants and continued
capacity creep. Although the current slate of announced OSB
projects appears manageable, significant new investments in the
long term that affect supply and demand balances remain a risk.
Furthermore, downward pressure could be amplified by any dramatic
slowdown of the residential housing market, which, while not
expected, is a possibility.
Standard & Poor's intends to resolve the CreditWatch status after
completing a thorough review of the transaction.
AINSWORTH LUMBER: Will Discuss Plans to Acquire Potlatch Today
--------------------------------------------------------------
Ainsworth Lumber Co. Ltd. (TSX:ANS) will host a conference call
for the investor community on today, August 30, 2004 at 8:30 am
PDT (11:30 am EDT) to discuss the company's recently announced
agreement to acquire all of Potlatch Corporation's oriented strand
board (OSB) manufacturing and related facilities. Call
participants may dial 1-800-440-1782 and reference conference ID
number 21206872. Replay of the conference call will be available
until September 6, 2004 by calling 1-800-558-5253 and using
conference ID number 21206872. Media is welcome to listen to the
call.
Ainsworth (S&P, B+ Corporate Credit & Debt Ratings) is a leading
Canadian forest products company with a 45-year reputation for
quality products and unsurpassed customer service. With
operations in British Columbia and Alberta, it co-manages more
than 4.7 million hectares of productive timberlands that supply
the majority of its fiber requirements.
AIR 2 US: Moody's Gives Enhanced Equip. Notes C, Caa2 & B3 Ratings
------------------------------------------------------------------
Moody's Investors Service announced that it has downgraded the
ratings on the Series A, C and D notes, and confirmed the rating
on the Series B Notes of the Air 2 US Aircraft Enhanced Equipment
Notes.
The complete rating action is as follows:
Issuer: Air 2 US
* US $486 million Series A Enhanced Equipment Notes due
October 1, 2020, rated Ba3 downgraded to B3.
* US $221 million Series B Enhanced Equipment Notes due
October 1, 2020, confirmed at Caa2.
* US $124 million Series C Enhanced Equipment Notes due
October 1, 2020, rated Caa3 downgraded to C.
* US $ 76 million Series D Enhanced Equipment Notes due
October 1, 2020, rated Ca downgraded to C.
Moody's said that the rating actions follow the increased
likelihood of a restructuring of leases with United Air Lines
after its application for a $1.1 billion loan was rejected by the
government at the beginning of August 2004. This would at least
be the second time United has renegotiated the leases in the Air 2
US transaction at a reduced amount since its bankruptcy filing in
December 2002. The prolonged period of the airline's bankruptcy
proceeding has added uncertainty over how far the lease rates
could decline as a result of potential renegotiations. United's
rating was withdrawn by Moody's on February 4, 2004, due to "a
lack of consistently available information."
The rating of the Class A Notes is also highly correlated to the
rating of American Airlines (currently rated B3 senior implied),
the other lessee in the transaction. Should American default on
its lease obligations the transaction's ability to pay down the
Class A Notes will be heavily dependent on Airbus' ability to
release 18 A300-600R aircraft. This task could be difficult since
the aircraft are over 15 years old and are used by a relatively
small group of airlines. The repayment of the Class B Notes is
also heavily dependent on American continuing to honor its current
lease obligations.
The Class D Notes defaulted on interest in April 2003, and six
months later the Class C Notes defaulted on interest. Aggregate
unpaid interest on both of the notes is approximately $27 million
as of April 2004. It is expected that recoveries on both of these
tranches will be low.
AIR CANADA: Court Disallows Corporate Travel's CN$15 Mil. Claim
---------------------------------------------------------------
Corporate Travel Management CTM, Inc., filed a proof of claim
against Air Canada for CN$15,028,697. Ernst & Young, Inc., in its
capacity as Monitor, disallowed the CTM Claim in its entirety.
CTM filed a Notice of Dispute asserting that Air Canada had
breached its agreement with CTM by reneging on its
February 27, 1990 Letter of Understanding with EgyptAir to enter
into a commercial air agreement, and by failing to support
EgyptAir's request for the landing rights. CTM also raised the
issue that Air Canada had taken some action with the Government of
Canada, which had the effect of cratering the possibility of a
bilateral agreement as to landing rights between the Governments
of Canada and of Egypt.
On April 14, 2004, the Honorable Pierre Boudreault, Q.C., as the
Claims Officer, upheld the Monitor's decision and disallowed the
CTM Claim for voting and distribution purposes. The Claims
Officer concluded that EgyptAir, not Air Canada, was at fault for
the failure to conclude a commercial air agreement. The Claims
Officer found that EgyptAir's desire to change the agreed upon
Landing rights led to the failure. There was no satisfactory
evidence before him showing that Air Canada or its representatives
intervened or caused the Government of Canada not to conclude an
air agreement with EgyptAir.
CTM took an appeal of the Claims Officer's determination to the
Ontario Superior Court of Justice.
In reviewing the merits of the CTM Claim, Mr. Justice Farley notes
that the LOU between Air Canada and EgyptAir was an agreement in
principle, which was to be fleshed out in a "complete formal
commercial air agreement within thirty (30) days of the date of
these presents." However, the lack of a timely complete formal
commercial air agreement was not Air Canada's fault. Despite
numerous efforts by Air Canada to make meaningful contact with
EgyptAir on this point, they were unable to do so. Air Canada
heard nothing from EgyptAir for some months after the LOU was
executed.
Mr. Justice Farley maintains that Air Canada was obligated under
the LOU to "recommend to the Government of Canada that [EgyptAir]
be granted the right to operate between Egypt and Toronto . . .
with 5th freedom rights. . . ." Air Canada did so in its March 1,
1990 letter to the Director, International Policy (Air) at
Transport Canada. The Claims Officer found that the letter
satisfied Air Canada's obligation. However, there was no evidence
by CTM that EgyptAir had recommended Air Canada's reciprocal
rights to the Government of Egypt. Mr. Justice Farley agrees with
the Claims Officer's observation that EgyptAir was dragging its
heels, not Air Canada.
Mr. Justice Farley also notes that the only Air Canada
representative to attend the government bilateral meeting was
Claude Brunet. Moreover, Mr. Brunet was advised immediately
before the meeting by Air Canada's Lane Bickel that EgyptAir was
proposing to not exercise its 5th freedom rights -- which non-
exercise would upset the economic basis on which Air Canada had
negotiated the LOU, but as to which Air Canada had not protected
itself by careful negotiation and drafting.
The most that CTM could advance in its submissions was that it was
suspicious of the timing and circumstances of the Government of
Canada's refusal to grant EgyptAir the contemplated three freedom
rights. However, Mr. Justice Farley emphasizes that the Claims
Officer is entitled to -- and must -- rely on admissible evidence
and not mere suspicion.
Consequently, Mr. Justice Farley finds no basis for interfering
with the Claims Officer's decision. Mr. Justice Farley affirms
the Claims Officer's dismissal of the CTM claim. Thus, CTM's
appeal is dismissed.
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. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMRESCO HOME: Moody's Puts Low-B Ratings on 3 Classes & Junks 2
---------------------------------------------------------------
Moody's Investors Service upgraded ratings on eleven certificates,
downgraded ratings on eight certificates and confirmed the
existing ratings on three certificates for twenty two certificates
from six Amresco transactions that were put on watch. The
certificates are backed by thirty-year fixed rate and adjustable-
rate home equity loans.
The 1997 vintage transactions are performing slightly better than
1998 vintage transactions. Four fixed rate certificates from two
1997 transactions (1997-2 and 1997-3) have been downgraded, and
eleven certificates from 1997 transactions have been upgraded.
The certificates backed by adjustable rate collateral for 1997
transactions are performing well because of favorable interest
rate environment.
Nine out of eleven certificates for which an upgrade action has
been taken, are backed by adjustable rate collateral. Two
mezzanine certificates backed by fixed rate collateral (M-1F from
1997-1F and M-1F from 1997-2F) have also been upgraded because
they have built substantial credit enhancement. Four classes of
certificates backed by fixed rate collateral from 1997
transactions have been downgraded because there has been erosion
of credit enhancement for these certificates and the existing
credit enhancement is not adequate to maintain the current
ratings.
The performance for the 1998 vintage is worse than expected for
both adjustable rate and fixed rate collateral. Out of the seven
certificates that were put on watch from 1998 transactions four
have been downgraded and three have retained their existing
ratings. The subordinate certificates from 1998-1F, 1998-2F and
1998-3F were downgraded because existing credit enhancement and
excess spread available to absorb losses is sufficient to maintain
the current ratings. The ratings on certificates backed by
adjustable rate collateral from 1998-1A and 1998-3A was confirmed
as the credit enhancement, including excess spread credit, is
sufficient to maintain existing ratings.
Moody's complete rating actions are as follows:
Issuer: Amresco Residential Securities Corporation Mortgage
Loan Trust
Depositor: Amresco Securities Corporation
Reviews:
* Series 1997-1; Class M-1A, current rating Aa2, upgraded to
Aaa;
* Series 1997-1; Class M-2A, current rating A2, upgraded to
Aa1;
* Series 1997-1; Class B-1A, current rating Baa3, upgraded
to Aa3;
* Series 1997-1; Class M-1F, current rating Aa2, upgraded to
Aaa;
* Series 1997-2; Class M-1A, current rating Aa2, upgraded to
Aaa;
* Series 1997-2; Class M-2A, current rating A2, upgraded to
Aa1;
* Series 1997-2; Class B-1A, current rating Baa2, upgraded
to Aa3;
* Series 1997-2; Class M-1F, current rating Aa2, upgraded to
Aaa;
* Series 1997-2; Class M-2F, current rating A2, downgraded
to Baa1;
* Series 1997-3; Class M-1A, current rating Aa2, upgraded to
Aaa;
* Series 1997-3; Class M-2A, current rating A2, upgraded to
Aa3;
* Series 1997-3; Class B-1A, current rating Baa3, upgraded
to Baa1;
* Series 1997-3; Class M-2F, current rating A2, downgraded
to Baa1;
* Series 1997-3; Class B-1F, current rating Baa3, downgraded
to B2;
* Series 1997-3; Class B-2F, current rating Ba3, downgraded
to Ca;
* Series 1998-1; Class M-2A, current rating A2, Confirmed at
A2;
* Series 1998-1; Class M-2F, current rating A2, downgraded
to Baa1;
* Series 1998-1; Class B-1F, current rating Baa3, downgraded
to Caa3;
* Series 1998-2; Class B-1F, current rating Baa3, downgraded
to Ba3;
* Series 1998-3; Class M-2A, current rating A2, Confirmed at
A2;
* Series 1998-3; Class B-1A, current rating Baa3, Confirmed
at Baa3;
* Series 1998-3; Class B-1F, current rating Baa3, downgraded
to Ba3;
BMC INDUSTRIES: Court Approves Sale of Vision-Ease Lens Assets
--------------------------------------------------------------
BMC Industries, Inc. (Pink Sheets:BMMI), has concluded a
bankruptcy court-supervised process to sell its Vision-Ease Lens
business. BMC has received court approval to move forward with the
sale of substantially all of the assets of Vision-Ease Lens, and
all of the outstanding capital stock of its Vision-Ease foreign
subsidiaries, to Insight Equity A.P. X, LP, a Texas-based limited
partnership. The transaction, subject to satisfaction of certain
closing conditions, is expected to close in September.
"We are pleased to have received court approval to complete the
sale of Vision-Ease," stated Douglas C. Hepper, chairman,
president and chief executive officer of BMC Industries, Inc.
"With the support of new investors and appropriate capital, our
efforts to build the Vision-Ease Lens business will accelerate."
"We are excited about our new investment in Vision-Ease Lens,"
said Ted Beneski, CEO and Managing Partner of Insight Equity
Partners, LP. "Vision-Ease has a strong stable of patented
products and processes, an experienced management team and strong
relationships with its customers and suppliers, which we and our
partner The Rosewood Corporation look forward to building on in
the years ahead."
Vision-Ease Lens, a leading manufacturer of eyewear lenses, is
headquartered in Ramsey, Minn. The company currently employs 1,200
people worldwide with manufacturing facilities in Ramsey and
Jakarta, Indonesia.
About Insight Equity
Insight Equity is a private equity firm that makes investments in
strategically viable, middle market, asset intensive companies
with significant growth potential. Insight is led by its three
partners - Ted Beneski, Ross Gatlin and Victor Vescovo. The firm
leverages over half a century of partner value creation experience
and a proven business model to create extraordinary operating and
financial capability. Its headquarters are in Dallas, Texas. For
more information about Insight Equity, visit the company's Web
site at http://www.insightequity.com/
About The Rosewood Corporation
The Rosewood Corporation is a holding company with diversified
investment interests. It is wholly owned by the Caroline Hunt
Trust Estate and is headquartered in Dallas, TX.
Headquartered in Ramsey, Minnesota, BMC Industries Inc. --
http://www.bmcind.com/-- is a multinational manufacturer and
distributor of high-volume precision products in two business
segments, Optical Products and Buckbee Mears. The Company, along
with its affiliates, filed for chapter 11 protection (Bankr. D.
Minn. Lead Case No. 04-43515) on June 23, 2004. Clinton E. Cutler,
Esq., at Fredrikson & Byron, P.A., represents the Company in their
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $105,253,000 in assets and $164,751,000
in liabilities.
BOYDS COLLECTION: S&P Cuts Corporate Credit Rating One Notch to B
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Boyds
Collection Ltd., including its corporate credit rating to 'B-'
from 'B'.
At the same time, the ratings were removed from CreditWatch where
they were placed on March 9, 2004. The outlook is negative.
Gettysburg, Pennsylvania-based Boyds Collection, a distributor of
collectible gifts, had total debt outstanding of $72 million as of
June 30, 2004.
"The ratings action reflects risks associated with planned
investments in retail stores at a time when the core business has
recorded successive quarters of declines in profitability," said
Standard & Poor's credit analyst Hal Diamond. Debt leverage has
increased, and could rise further based on capital spending for
new retail outlets.
Mr. Diamond added, "Business risk is increasing due to the
company's diminished niche position in the highly fragmented
collectibles business, declining wholesale demand over the past
several years, and uncertain return on investment from the
company's aggressive retail expansion strategy."
Discretionary cash flow was breakeven in the six months ended
June 30, 2004, due to reduced profitability, an increase in
accounts receivable caused by new seasonal dating terms for select
customers, and higher capital spending.
The company plans to open a second retail store in November 2004
and two additional stores per year beginning in 2005. Standard &
Poor's is concerned that higher capital spending may result in
negative discretionary cash flow, resulting in increasing debt
levels over the near term. In addition, Standard & Poor's is
concerned that the company's liquidity may weaken should
profitability continue to deteriorate.
BRIAZZ: Wants to Bring-In Mark Brown as Tax Consultant
------------------------------------------------------
Briazz, Inc., asks the U.S. Bankruptcy Court for the Western
District of Washington at Seattle for permission to hire Mark D.
Brown as its Tax Consultant.
Mr. Brown will provide Briazz with financial accounting services
to assist in preparing their Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004, and any other services that are
mutually agreed upon.
The Debtor will pay Mr. Brown $105 per hour.
To the best of the Debtor's knowledge, Mr. Brown does not have any
other connection with Briazz, its creditors, any other party in
interest, or its respective attorneys or accountants.
Headquartered in Seattle, Washington, Briazz Inc. --
http://www.briazz.com/-- serves fresh, high-quality lunch and
breakfast foods and between-meal snacks from company owned cafes
in urban markets. The Company filed for chapter 11 protection
(Bankr. W.D. Wash. Case No. 04-17701) on June 7, 2004. Cynthia A.
Kuno, Esq., and J. Todd Tracy, Esq., at Crocker Kuno Ostrovsky
LLC, represents the Company in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$5,400,000 in assets and $12,200,000 in liabilities.
BRISUBAR INC: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Brisubar, Inc
fka Discovery Childcare Learning Center
391-401 Valley Street
South Orange, New Jersey 07079
Bankruptcy Case No.: 04-37693
Chapter 11 Petition Date: August 25, 2004
Court: District of New Jersey (Newark)
Judge: Morris Stern
Debtor's Counsel: Melinda D. Middlebrooks, Esq.
Middlebrooks & Shapiro
140 Eagle Rock Avenue
Roseland, New Jersey 07068-0609
Tel: 973-228-1616
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest creditors.
BURLINGTON: BII Trust Wants to Keep Two Liquidation Cases Open
--------------------------------------------------------------
The BII Distribution Trust, as representative of the Chapter 11
estates of Burlington Industries, Inc., and certain of its
domestic subsidiaries, asks the U.S. Bankruptcy Court for the
District of Delaware to keep the Chapter 11 cases of BII
Liquidation, Inc., formerly known as Burlington Industries, Inc.,
and Burlington Mills, Inc., open until the Court enters a final
decree closing that case at the BII Trust's request.
As previously reported, the BII Trust asked the Court close
Burlington Mills, Inc.'s Chapter 11 case, together with 23 other
fully administered cases:
Debtor Case No.
------ --------
B.I. Transportation, Inc. 01-11283
BH/M-II, Inc. (C.H. Masland & Sons) 01-11284
BI Properties, Inc. 01-11285
BI Properties I, Inc. 01-11286
BII Mexico Holdings I, Inc. 01-11287
BII Mexico Holdings II, Inc. 01-11288
BII Mexico Laundry Holding Co. 01-11289
BII Mexico Yarns Holding Co. 01-11290
Burlington Apparel Services Company 01-11291
Burlington Fabrics, Inc. 01-11292
Burlington Fabritex USA, Inc. (The Bacova Guild, Ltd.) 01-11293
Burlington Industries I, LLC 01-11294
Burlington Industries II, LLC 01-11295
Burlington Industries III, LLC 01-11296
Burlington Industries IV, LLC 01-11297
Burlington Industries V, LLC 01-11298
Burlington International Services Company 01-11299
Burlington Investment, Inc. 01-11300
Burlington Investment II, Inc. 01-11301
Burlington Mills Corporation 01-11302
Burlington Worldwide, Inc. 01-11304
Burlington Worsteds, Inc. 01-11305
Distributex, Inc. 01-11306
Etta R. Wolfe, Esq., at Richards, Layton & Finger, PA, in
Wilmington, Delaware, relates that the BII Trust amended its
request after WLR Recovery Fund II, LP, asked it to keep
Burlington Mills, Inc.'s Chapter 11 case open. An adversary
proceeding filed by Burlington Industries, Inc., and WLR Recovery
remains pending against Mafatlal Industries Limited, Inc. The
adversary proceeding involves the sale of Burlington Mills or its
interest in a certain Shareholders Agreement.
Although Burlington Mills is not a party to the adversary
proceeding and there is authority supporting the closure of its
Chapter 11 case notwithstanding the pendency of adversary
proceedings and other disputed matters, the Trust consents to a
delay in the closure of Burlington Mills' case.
The Trust reserves its right to seek for the closure of the
Burlington Mills Case in the future notwithstanding the pendency
of adversary proceedings and other disputed matters.
Headquartered in Greensboro, North Carolina, Burlington
Industries, Inc. -- http://www.burlington-ind.com/-- was one of
the world's largest and most diversified manufacturers of soft
goods for apparel and interior furnishings. The Company filed
for chapter 11 protection in November 15, 2001 (Bankr. Del. Case
No. 01-11282). Daniel J. DeFranceschi, Esq., at Richards, Layton
& Finger, and David G. Heiman, Esq., at Jones Day, represent the
Debtors. WL Ross & Co. LLC purchased Burlington Industries and
then sold the Lees Carpets business to Mohawk Industries, Inc.
Combining Burlington with Cone Mills, WL Ross created
International Textile Group. Burlington's chapter 11 Plan
confirmed on October 30, 2003, was declared effective on November
10, 2003. (Burlington Bankruptcy News, Issue No. 53; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CENTURY ALUMINUM: $315 Million of 11-3/4% Senior Notes Tendered
---------------------------------------------------------------
Century Aluminum Company's (Nasdaq:CENX) tender offer and consent
solicitation for its 11-3/4% Senior Secured First Mortgage Notes
Due 2008 (CUSIP No. 156431AC2) expired at 10:00 a.m., New York
City time, on August 26, 2004, and has purchased $315,055,000 in
aggregate principal amount of Notes validly tendered in the tender
offer and not withdrawn prior to the expiration date.
Holders will receive $1,096.86 for each $1,000 principal amount of
Notes purchased in the tender offer, plus accrued and unpaid
interest. Holders who tendered their Notes prior to 5:00 p.m., New
York City time, on August 6, 2004, will receive a consent payment
of $20.00 per $1,000 of principal amount of Notes resulting in a
total consideration of $1,116.86 for each $1,000 principal amount
of Notes purchased in the tender offer, plus accrued and unpaid
interest up to but not including the date of payment.
The Company financed the tender offer and consent solicitation
with the proceeds of its previously announced private offerings of
7-1/2% Senior Notes due 2014 in the aggregate principal amount of
$250,000,000 and 1.75% Senior Convertible Notes due 2024 in the
aggregate principal amount of $175,000,000. The private offering
of Convertible Notes closed August 9, 2004 resulting in net
proceeds to the Company of approximately $169.3 million. The
private offering of Senior Notes closed Thursday, August 26, and
resulted in net proceeds to the Company of approximately $243.9
million. The Company plans to use the remaining proceeds from
these offerings to fund certain expansion-related costs for the
Company's Nordural facility and to repurchase Notes that were not
tendered.
The Company received tenders representing more than 96% of the
outstanding principal amount of the Notes prior to 5:00 p.m., New
York City time, on August 6, 2004. Following the purchase of the
Notes accepted in the tender offer, $9,945,000 in aggregate
principal amount of the Notes will remain outstanding and are
scheduled to mature on April 15, 2008. In connection with the
consent solicitation, the company entered into a supplemental
indenture that eliminated substantially all of the restrictive
covenants and certain default provisions contained in the
indenture governing the remaining Notes.
The principal purpose of the tender offer and consent solicitation
was to refinance Century's outstanding Notes with debt bearing a
lower interest rate, thereby reducing the Company's annual
interest expense.
Credit Suisse First Boston LLC acted as the exclusive Dealer
Manager and Solicitation Agent for the tender offer and the
consent solicitation. Questions regarding the tender offer and
consent solicitation may be directed to Credit Suisse First
Boston's Liability Management Group, at 800-820-1653 (toll-free)
or 212-538-0652 (collect). Requests for documents may be directed
to Morrow & Co., Inc., the Information Agent, by telephone at 800-
607-0088 (toll-free), 800-662-5200 (toll-free), or 212-754-8000
(collect), or by e-mail at cenx.info@morrowco.com
About Century
Century is a producer of primary aluminum with 615,000 metric-
tons-per-year of primary aluminum production capacity. Century
owns and operates a 244,000-mtpy primary aluminum reduction
facility at Hawesville, KY, a 170,000-mtpy facility in Ravenswood,
WV and a 90,000-mtpy facility in Grundartangi, Iceland. Century
also owns a 49.67-percent interest in a 222,000-mtpy facility in
Mt. Holly, South Carolina. Alcoa Inc. owns the remainder and is
the operator of the facility. Century's corporate offices are
located in Monterey, California.
* * *
As reported in the Troubled Company Reporter on August 12, 2004,
Moody's Investors Service assigned a B1 rating to Century Aluminum
Company's proposed $250 million of guaranteed senior unsecured
notes due 2014. The combined proceeds from the unsecured notes
and a $175 million issue of non-guaranteed convertible senior
notes due 2024 (unrated) will be used to finance the tender offer
for Century's existing first mortgage notes and to pay related
premiums, accrued interest and other expenses of approximately $64
million. The convertible senior notes are not guaranteed and
effectively subordinated to the other debt of Century. Moody's
affirmed the existing ratings of Century but changed its rating
outlook to positive from stable. Moody's will withdraw the
ratings on the first mortgage notes if Century's tender offer is
successful.
The following rating actions were taken:
* Assigned a B1 rating to the proposed $250 million of senior
unsecured notes due 2014;
* Affirmed the Ba3 rating for Century's $100 million senior
secured revolving credit facility;
* Affirmed its B1 senior implied rating; and
* Affirmed its B3 senior unsecured issuer rating.
Century's ratings continue to reflect its relatively high
leverage, exposure to a single commodity-priced product, a higher
cost base compared to many of its integrated competitors, the
risks associated with alumina and electrical power supply
arrangements, and concentration of sales among four customers.
Additionally, the ratings reflect the company's increased debt
level following its acquisition of Nordural Aluminum hf, Iceland,
and the additional borrowings and equity contributions required
to complete the $330 million Nordural expansion over the next two
years.
CHAS COAL: Committee Gets Nod to Hire Greenebaum Doll as Counsel
----------------------------------------------------------------
The Official Unsecured Creditors Committee in Chas Coal, LLC, and
its debtor-affiliates' chapter 11 cases sought and obtained
approval from the U.S. Bankruptcy Court for the Eastern District
of Kentucky, London Division, to employ Greenebaum Doll & McDonald
PLLC, nunc pro tunc to June 24, 2004.
The Committee chose Greenebaum Doll as counsel because its
attorneys have considerable experience in the bankruptcy and
commercial law areas and are particularly well qualified to
represent the Committee in these proceedings.
Greenebaum Doll will:
a) provide legal advice to the Committee with respect to its
duties, responsibilities and powers in this case;
b) assist in its investigation of the acts, conduct, assets,
liabilities and financial condition of the Debtor, the
operation of the Debtor's businesses and desirability of
the continuance of such businesses, and any other matters
relevant to the case or to tire negotiation and
formulation of a plan;
c) prepare on behalf of the Committee of all necessary
pleadings and other documentation;
d) provide legal advice with respect to the Debtor's
formulation of a plan(s), the Debtor's proposed plans with
respect to the prosecution of claims against various third
parties and any other matters relevant to the case or to
the formulation of a plans) in this case;
e) give legal advice and representation, if appropriate, with
respect to the employment of a trustee or examiner, should
such action become necessary, or any other legal decision
involving interests represented by this Committee;
f) represent the Committee in judicial hearings and
proceedings involving the Committee; and
g) perform other legal services as may be required and in the
interest of the creditors.
Gregory R. Schaaf, Esq., will lead the team in this engagement.
Mr. Schaaf reports that Greenebaum Doll will bill the estate at
its current hourly rates:
Position Billing Rate
-------- ------------
members and of counsel $400 and 210 per hour
associates 225 and 140 per hour
paralegals 155 and 95 per hour
Mr. Schaaf assures the Court that Greenebaum Doll is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in London, Kentucky, Chas Coal, LLC --
http://www.chascoal.com/-- mines, processes and sells high
quality, low sulfur Eastern Kentucky coal. The Company filed for
chapter 11 protection on June 17, 2004 (Bankr. E.D. Ky. Case No.
04-60972). Robert Gregory Lathram, Esq., in London, Kentucky,
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$28,080,624 in total assets and $8,601,895 in total debts.
CIPRIETTI-TOLISANO: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Ciprietti-Tolisano Builders, Inc.
150 Lake Avenue
Tuckahoe, New York 10707
Bankruptcy Case No.: 04-20489
Chapter 11 Petition Date: August 26, 2004
Court: Southern District of New York (White Plains)
Judge: Adlai S. Hardin Jr.
Debtor's Counsel: Howard R. Birnbach, Esq.
111 Great Neck Road, Suite 413
Great Neck, New York 11021
Tel: (516)829-5305
Total Assets: $13,000
Total Debts: $1,372,676
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
New York State Insurance $604,683
Insurance Fund
c/o Gellis & Melinger
137 Fifth Avenue
New York, New York 10010
New York National Bank Bank Loan $355,859
1042 Westchester Avenue
Bronx, New York 10459
Verizon Yellow Pages $33,571
Hudson Sound Brokerage Insurance $30,199
Global Risk Management Insurance $27,650
Midatlantic Associates, Inc. $25,745
Architectural Entrance Systems $22,504
Tavella Plumbing Qsac $21,480
AFCO Insurance $19,587
ACE Industries $19,480
Oxford Health Plans $13,121
Wausau Tile $12,654
United Rentals $12,522
HT Sakes Company, Inc. $10,979
GMAC $9,491
Julius Blum & Co., Inc. $5,723
Ozone Park Lumber $5,715
Keller Installment $5,129
Stainless Metals $4,794
Ace Firedoor $2,283
CITICORP MORTGAGE: Fitch Puts BB Rating on $2.1M Class B-4 Certs.
-----------------------------------------------------------------
Citicorp Mortgage Securities, Inc.'s REMIC pass-through
certificates, series 2004-5 are rated by Fitch as follows:
-- Class IA-1 through IA-31, IA-PO, IIA-1 through IIA-6, IIA-
PO, IIIA-1, IVA-1 through IVA-3 and IVA-PO ($1.381 billion)
'AAA';
-- Class B-1 ($14.1 million) 'AA';
-- Class B-2 ($5.6 million) 'A';
-- Class B-3 ($3.5 million) 'BBB';
-- Class B-4 ($2.1 million) 'BB'.
The 'AAA' rating on the senior certificates reflects the 2.05%
subordination provided by the 1.00% class B-1, the 0.40% class B-
2, the 0.25% class B-3, the 0.15% privately offered class B-4, the
0.15% privately offered class B-5, and the 0.10% privately offered
class B-6. In addition, the ratings reflect the quality of the
mortgage collateral, strength of the legal and financial
structures, and CitiMortgage, Inc.'s servicing capabilities (rated
'RPS1' by Fitch) as primary servicer.
The mortgage loans have been divided into four pools of mortgage
loans. Pool I, with an unpaid aggregate principal balance of
$834,132,353, consists of 1,631 recently originated, 20-30 year
fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (48.41%)
and New York (12.43%). The weighted average current loan to value
ratio (CLTV) of the mortgage loans is 63.77%. Condo properties
account for 4.74% of the total pool and co-ops account for 4.60%.
Cash-out refinance loans represent 10.57% of the pool and there
are no investor properties. The average balance of the mortgage
loans in the pool is approximately $511,424. The weighted average
coupon of the loans is 5.796% and the weighted average remaining
term is 357 months.
Pool II, with an unpaid aggregate principal balance of
$279,443,326, consists of 536 recently originated, 10-15 year
fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (48.86%).
The weighted average current loan to value ratio (CLTV) of the
mortgage loans is 51.70%. Condo properties account for 4.05% of
the total pool and co-ops account for 2.87%. Cash-out refinance
loans represent 17.22% of the pool and there are no investor
properties. The average balance of the mortgage loans in the pool
is approximately $521,349. The weighted average coupon of the
loans is 5.005% and the weighted average remaining term is 177
months.
Pool III, with an unpaid aggregate principal balance of
$177,147,474, consists of 339 recently originated, 10-15 year
fixed-rate relocation mortgage loans secured by one- to four-
family residential properties located primarily in California
(48.64%) and New York (12.10%). The weighted average current loan
to value ratio -- CLTV -- of the mortgage loans is 56.21%. Condo
properties account for 2.89% of the total pool and co-ops account
for 4.14%. The average balance of the mortgage loans in the pool
is approximately $522,559. The weighted average coupon of the
loans is 5.425% and the weighted average remaining term is 178
months.
Pool IV, with an unpaid aggregate principal balance of
$119,523,739, consists of 238 recently originated, 30 year fixed-
rate relocation mortgage loans secured by one- to four-family
residential properties located primarily in California (26.61%).
The weighted average current loan to value ratio -- CLTV -- of the
mortgage loans is 72.75%. Condo properties account for 6.66% of
the total pool and co-ops account for 1.29%. Cash-out refinance
loans represent 21.94% of the pool and there are no investor
properties. The average balance of the mortgage loans in the pool
is approximately $502,201. The weighted average coupon of the
loans is 5.487% and the weighted average remaining term is 357
months.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
please see the press release issued May 1, 2003 entitled 'Fitch
Revises Rating Criteria in Wake of Predatory Lending Legislation',
available on the Fitch Ratings web site at
http://www.fitchratings.com/
The mortgage loans were originated or acquired by CMI and in turn
sold to Citicorp Mortgage Securities. A special purpose
corporation, Citicorp Mortgage Securities, deposited the loans
into the trust, which then issued the certificates. U.S. Bank
National Association will serve as trustee. For federal income
tax purposes, an election will be made to treat the trust fund as
one or more real estate mortgage investment conduits.
COEUR D'ALENE: Wheaton Acknowledges Receipt of Formal Offer
-----------------------------------------------------------
Wheaton River Minerals Ltd. (AMEX:WHT) (TSX:WRM) acknowledged
receipt of the unsolicited offer made by Coeur d'Alene Mines
Corporation for its common shares.
As previously announced, the Board of Directors of Wheaton has
appointed a Special Committee of directors who are independent of
Wheaton management. The Special Committee has engaged Orion
Securities Inc. to act as its independent financial advisers.
Ian Telfer, Chairman and Chief Executive Officer of Wheaton
stated: "While the Special Committee of Wheaton's Board of
Directors will carefully consider the Coeur offer and make
recommendations to the full Board, based upon the fact that fewer
than 1% of Wheaton's shares were deposited to Coeur's U.S. tender
offer, it appears that there is no interest in this transaction."
Wheaton advises shareholders not to deposit any common shares of
Wheaton to the Coeur offer and not to take any other action
concerning the offer until shareholders have received further
communications from the Board of Directors of Wheaton.
After receiving the report and recommendations of the Special
Committee, the Board will issue a Directors' Circular concerning
the Coeur offer. The Directors' Circular will contain important
information including the Special Committee's views concerning the
Coeur offer and the Board's recommendation as to whether Wheaton
shareholders should accept or reject the Coeur offer.
Wheaton also completed of its Silver Wheaton transaction will
proceed and is scheduled to close on September 9, 2004.
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 on June 3, 2004,
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.
COMMERCIAL FINANCIAL: Arthur Andersen to Pay $7.5 Million
---------------------------------------------------------
Subject to entry of various orders by the U.S. District Court for
the Northern District of Oklahoma, Arthur Andersen LLP will pay
$7.5 million to the liquidating trusts established under the
Second Amended Plan of Orderly Liquidation for Commercial
Financial Services, Inc., confirmed by the Bankruptcy Court on
Sept. 14, 2001. In exchange for the $7.5 million payment,
* Arthur Andersen LLP;
* AWSC Societe Cooperative, en liquidation;
* Accenture LLP (fka Andersen Consulting LLP);
* Accenture Partners, SC (fka Andersen Consulting Partners);
* all affiliates of these entities;
* all shareholders, members, partners, agents and others;
* all heirs and successors; and
* all of Andersen's insurers and reinsurers; and
* the law firms of Curtis, Mallet-Prevost, Colt & Mosle LLP;
Rosenstein, Fist & Ringold, Inc.; and Weil, Gotshal &
Manges LLP;
obtain full and complete releases of all claims asserted in and
related to a lawsuit styled Commercial Financial Services, Inc.,
as Debtor in Possession v. Arthur Andersen LLC, Case No.
CJ-2001-04581, pending in the District Court of Tulsa County,
State of Oklahoma.
Andersen audited CFS' financial statements in the years prior to
the bankruptcy filing, and performed certain agreed-upon
procedures relating to securitizations for which CFS acted as
servicer. The lawsuit alleges that Andersen failed to discover
and disclose to CFS certain material facts in its auditing work
and was responsible, in whole or in part, all to CFS' detriment.
Andersen denies those charges and asserts counterclaims, cross-
claims, third-party claims and affirmative defenses which, in
turn, CFS denies.
The Parties tell the District Court that representatives of
Arthur Andersen LLP, CFS, and the three trusts established under
the Plan of Orderly Liquidation, attended a settlement conference
on May 18, 2004, under the supervision of the Honorable Claire
Eagan, United States District Judge for the Northern District of
Oklahoma.
The parties to the Andersen Settlement are:
Kerry A. Miller
ARTHUR ANDERSEN LLP
33 West Monroe
Chicago, IL 60603
Telephone (312) 507-2072
Fax (312) 462-8072
Represented by:
Ralph I. Miller, Esq.
Vance L. Beagles, Esq.
WEIL, GOTSHAL & MANGES LLP
200 Crescent Court, Suite 300
Dallas, TX 75201-6950
Telephone (214) 746-7700
Fax (214) 746-7777
- and -
Richard P. Hix, Esq.
DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P.
320 S. Boston, Suite 500
Tulsa, OK 74103
Telephone (918) 582-1211
Fax (918) 591-5360
COMMERCIAL FINANCIAL SERVICES, INC.
c/o Bradley D. Sharp, Vice President
Development Specialists, Inc.
333 South Grand Ave., Suite 2010
Los Angeles, CA 90071
Represented by:
Harley S. Tropin, Esq.
Corali Lopez-Castro, Esq.
KOZYAK TROPIN & THROCKMORTON, P.A.
200 S. Biscayne Blvd., Suite 2800
Miami, FL 33131
Telephone (305) 372-1800
Fax (305) 372-3508
UNSECURED CREDITORS LIQUIDATING TRUST
c/o Stephen A. Jay, CPA/ABV
Jay & Associates, P.C.
4312 E. 51st Street
Tulsa, OK 74135
Telephone (918) 492-0106
Fax (918) 496-8133
Represented by:
Robert Glass, Esq.
Glass Law Firm, P.C.
2118 South Atlanta Place, Suite 100
Tulsa, OK 74114
Telephone (918) 582-7100
Fax (918) 582-7166
ASB LIQUIDATING TRUST
c/o Lloyd T. Whitaker
Newleaf Corporation
2810 Spring Road, Suite 106
Atlanta, GA 30339
Telephone (770) 433-9400
Fax (770) 433-8550
Represented by:
Dennis S. Meir, Esq.
Kilpatrick Stockton, LLP
1100 Peachtree Street, Suite 2800
Atlanta, GA 30309-4530
Telephone (404) 815-6500
Fax (404) 815-6555
This settlement with Andersen, by its express terms, has no effect
on CFS' claims in this or other litigation pending against:
* Mayer Brown Rowe & Maw LLP (fka Mayer Brown & Platt);
* Chase Manhattan Bank, USA, N.A.; and
* J.P. Morgan Securities, Inc. (fka Chase Securities, Inc.);
and Andersen agrees to help CFS continue to press its claims
against these firms.
The Parties make a point to tell the District Court that Andersen
has refused to disclose to CFS or any other person or entity any
non-public information about its past or present financial
position.
Commercial Financial Services, Inc., now known as Commercial
Financial Services of Oklahoma, LLC, filed for chapter 11
protection (Bankr. N.D. Okla. Case No. 98-05162-R) on
Dec. 11, 1998.
COMMUNITY HEALTH: Moody's Puts Low-B Ratings on Bank Loans & Bonds
------------------------------------------------------------------
Moody's Investors Service assigned Ba3 ratings to Community Health
Systems, Inc.'s $150 million add-on term loan and to the company's
amended $425 million revolver. A new rating is being assigned to
the revolver under Moody's policy since the maturity will be
extended for more than a year. Moody's also affirmed all of the
company's other ratings, including the SGL-2 speculative grade
liquidity rating. The outlook for the company is stable. The
following ratings are affected:
New rating assigned:
CHS/Community Health Systems (Intermediate Holding Company)
* $425 Million Senior Secured Revolver due 2009 -- rated
Ba3;
* $150 Million Add-On Term Loan due 2011 -- rated Ba3;
Ratings affirmed:
CHS/Community Health Systems (Intermediate Holding Company)
* $850 Million Senior Secured Term Loan B due 2011 -- rated
Ba3;
* $200 Million Incremental Term Loan B due 2011 -- rated
Ba3;
Community Health Systems (Parent Holding Company)
* $287.5 Million 4.25% Convertible Subordinated Notes due
2008, rated B3;
* Senior Implied Rating -- Ba3;
* Senior Unsecured Issuer Rating -- B2.
The outlook is stable.
The ratings reflect:
(i) Community's moderately high lease adjusted leverage,
(ii) the company's limited free cash flow relative to debt,
(iii) the company's acquisitive strategy and the associated
financial risks, and
(iv) operating risks resulting from the purchase of under-
performing facilities.
The ratings also consider industry-wide challenges including the
significant rise in bad debt expense, the recent weakness in
utilization stemming from an increase in the number of uninsured
and under-insured patients, and potential for on-going margin
pressures due to the increasing costs for salaries and benefits
(particularly for nurses), supplies, and insurance expenses.
Furthermore, while the reimbursement environment is currently
stable, Moody's is concerned that pressure may return over the
intermediate term, and that rate increases from health benefit
companies will weaken.
Credit strengths recognized by the ratings include Community's
favorable history of operating performance, its demonstrated
success in executing its acquisition strategy, which includes the
turnaround of acquired under-performing facilities, and Moody's
expectation that management will maintain leverage near or
slightly below current levels. The company has in the past shown
its willingness and ability to improve its credit metrics,
including through the issuance of equity on more than one
occasion. The ratings also consider the company's strong market
position, demonstrated by it being the sole provider in 85% of its
markets, the geographic diversity of its large portfolio of
assets, and favorable long-term demographic trends.
The stable outlook anticipates continued favorable performance at
the company. Moody's expects the company's revenues, operating
profits, and cash flow to continue to exhibit solid growth,
although at a slower rate because of the company's larger size and
lower expected contribution from acquisition activity. The
company should continue to generate strong cash flow and good free
cash flow. However, free cash flow will likely be insufficient to
fund the company's acquisition program. As a result, Moody's
expects Community to continue to increase debt, thereby limiting
the likelihood of material deleveraging over the near term. Given
this expectation, Moody's believes that there will likely be
limited upward momentum for the ratings.
If the company's credit profile improves more than we anticipate,
Moody's may consider upgrading the ratings. Specifically, Moody's
notes that Community will need to generate sustained adjusted free
cash flow coverage of adjusted debt (adjusted for operating
leases) of 15%-20%. Moody's will also consider the level of risk
associated with the company's strategy, especially with respect to
the aggressiveness of the company's acquisition program, in
determining whether to upgrade the ratings.
Moody's may consider downgrading the company's outlook or ratings
if the company's credit metrics deteriorate as a result of a
combination of several factors, including a decline in admission
trends, a continued increase in bad debt expense, and aggressive
acquisition activity.
Community recently amended its credit agreement to extend
maturities, relax certain covenants, improve pricing, and increase
the funded and committed amounts. The amendment results in
greater operational and financial flexibility for the company with
respect to acquisitions, dispositions, capital expenditures, and
the ability to increase debt in the future. Proceeds from the new
term loan will be used to reduce borrowings under the revolver and
to fund future acquisitions.
Moody's is rating the credit facilities at the same level as the
senior implied, since it represents the bulk of the company's debt
capital structure. The convertible notes are affirmed at 3
notches below the senior implied rating to reflect its structural
and contractual subordination.
Pro forma for the add-on term loan, Community's leverage for the
twelve-month period ended June 30, 2004 increases slightly. The
company's ratio of adjusted free cash flow to adjusted debt
(adjusted for leases) declines from approximately 9% to
approximately 8%. The ratio of adjusted debt to EBITDAR increases
from approximately 3.6 times to 3.9 times, while interest coverage
as measured by the ratio of EBITDA to interest falls to 5.9 times
from 6.3 times. Moody's notes that the use of EBITDA and related
EBITDA ratios as a single measure of cash flow without
consideration of other factors can be misleading.
The company's SGL-2 rating will not change as a result of the
amendment to the credit agreement. Community's anticipated
liquidity position remains mostly unchanged since our last update
on April 2004 and is projected to be good for the next twelve-
month horizon ending June 30, 2005. For this period, Moody's
expects the company to generate cash flow and free cash flow
similar to the $298 million and $136 million, respectively, it
produced for the last twelve month period ended June 30, 2004.
Availability will improve, however, due to the increase in
revolver commitment and since proceeds from the term loan may be
used to reduce borrowings under the revolver. Moody's notes that
while the company's revolver was undrawn as of June 30, 2004,
Community did complete an acquisition on August 2, 2004, which
required funding from the revolver.
For the twelve months ending June 2005, Moody's believes that the
company will be able to finance acquisitions with proceeds from
the term loan and through free cash flow. Funds from these two
sources are anticipated to be between $250 million to
$300 million. Moody's believes that the aggregate acquisition
purchase price should come in below this amount. However, greater
than anticipated acquisition activity may lead the company to rely
on its revolving credit facility. If the availability under this
source declines materially, Moody's may consider revising the SGL
rating.
Community Health Systems, Inc., headquartered in Brentwood,
Tennessee, is a leading non-urban provider of general hospital
healthcare services in the US. Community owns, leases or operates
72 hospitals geographically diversified across 22 states.
CONGOLEUM: Wants Until Dec. 14 to Make Lease-Related Decisions
--------------------------------------------------------------
Congoleum Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of New Jersey for more time to
determine whether to assume, assume and assign, or reject their
unexpired nonresidential real property leases and executory
contracts. The Debtors ask that the deadline imposed under 11
U.S.C. Sec. 365(d)(4) be extended through December 14, 2004.
The Debtors relate that they are currently lease their corporate
headquarters, warehouses and general business operations.
Under the Debtors' proposed prepackaged Reorganization Plan, they
intend to assume the Leases as part of their strategy of
maintaining their business operations unaltered. The Debtors
believe that it would be imprudent to assume the Leases before the
Plan Confirmation.
The Debtors point out that it is unnecessary to bind their estates
to the Leases before a certainty that they will be able to proceed
with their Plan is established. The Debtors state that id the
Plan is confirmed, then they will assume the Leases pursuant to
the Plan.
Headquartered in Mercerville, New Jersey, Congoleum Corporation --
http://www.congoluem.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The Company filed for
chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No.
03-51524). Domenic Pacitti, Esq., at Saul Ewing, LLP, represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $187,126,000 in
total assets and $205,940,000 in total debts.
CSFB MORTGAGE: S&P Gives Low-B Ratings to Six Classes & Junks One
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on six
classes of Credit Suisse First Boston Mortgage Securities Corp.'s
commercial mortgage pass-through certificates series 2001-CK6
(CSFB 2001-CK6). Concurrently, ratings on 13 other classes from
the same transaction are affirmed.
The raised and affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios.
As of the Aug. 15, 2004 remittance report, the collateral pool
consisted of 212 loans with an aggregate principal balance of
$948.1 million, down from 240 loans totaling $986.4 million at
issuance. The master and special servicer, Midland Loan Services,
Inc., provided net cash flow -- NCF -- debt service coverage --
DSC -- figures for 97% of the pool. Based on this information,
Standard & Poor's calculated a weighted average DSC of 1.32x, down
from 1.38x at issuance.
The top 10 loans have an aggregate outstanding balance of
$335.1 million (35% of the pool balance). The weighted average
DSC for the top 10 loans is 1.33x, down slightly from 1.39x at
issuance. Standard & Poor's reviewed property inspection reports
prepared over the past year, provided by Midland, for all of the
assets underlying the top 10 loans. The inspections characterized
all of the assets as "good" or "excellent".
Three of the loans appear on the watchlist and are discussed after
the specially serviced loans.
There are nine loans with an aggregate outstanding balance of
$17.3 million (1.8%) that are with the special servicer. Seven
loans are delinquent, while two loans ($5.9 million) are current.
The specially serviced assets are discussed below:
-- The largest specially serviced asset, a 238,300-sq.-ft.,
industrial facility in Ayer, Massachusetts, has an
outstanding principal balance of $7.8 million (0.8%). The
loan is 90-plus days delinquent and was transferred to the
special servicer due to imminent default. The collateral
property had a single tenant who filed for bankruptcy and
vacated. The loan reported a DSC of 0.22x as of year-end
2003. The loan has an outstanding appraisal reduction
amount -- ARA -- of $1.9 million.
-- Three loans ($5.8 million) have commitments to refinance
within a few months.
-- The League City Plaza Shopping Center loan ($1.4 million,
0.15%) is secured by a 15,000-sq.-ft. retail center located
in League City, Texas. The principal of the borrower passed
away and the special servicer has been dealing with the
estate. The estate decided not to contest the default.
-- The four remaining specially serviced loans ($2.2 million)
all have balances of less than $900,000.
Midland's watchlist consists of 43 loans with an aggregate
outstanding balance of $205.5 million (21.7%), including the
first-, fifth-, and seventh-largest loans in the pool, which all
appear due to low DSCs resulting from weak occupancy.
The largest loan, Avalon Pavilions (70 million, 7.4%), is a 932-
unit multifamily property located in Manchester, Connecticut. As
of Dec. 31, 2003, the property reported a NCF DSC of 0.90x and
occupancy of 84%.
The fifth-largest loan, Biltmore Square Mall (26 million, 2.7%),
is a 335,025 sq.-ft. retail property located in Ashville, North
Carolina. As of Dec. 31, 2003, the property had a NCF DSC of
1.09x and occupancy of 78%.
The seventh-largest loan, Belmont Apartments ($23 million, 2.4%),
is a 2.2 million-sq.-ft. multifamily property located in Las
Vegas, Nevada. As of Dec. 31, 2003, the property had a NCF DSC of
1.14x and occupancy of 96%.
Two loans on the watchlist are currently 30-days delinquent, but
have not yet been transferred to the special servicer. Both are
multifamily properties. One is located in Las Vegas, Nevada and
the other is in Cleveland, Tennessee. They have a total balance
of $1.3 million.
The trust collateral is located across 37 states, and only
California (13%) and Texas (11%) account for more than 10% of the
pool balance.
Property concentrations greater than 10% of the pool balance are
found in:
* retail (37%),
* multifamily (35%), and
* office (11%) properties.
Standard & Poor's stressed various loans with credit issues as
part of its pool analysis. The resultant credit enhancement
levels support the raised and affirmed ratings.
Ratings Raised
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-thru certs series 2001-CK6
Rating
Class To From Credit Enhancement (%)
----- -- ---- ----------------------
B AAA AA 19.25
C AA AA- 17.69
D A+ A 14.83
E A A- 13.27
F A- BBB+ 11.97
G BBB+ BBB 10.41
H BBB BBB- 8.85
Ratings Affirmed
Credit Suisse First Boston Mortgage Securities Corp.
Commercial mortgage pass-thru certs series 2001-CK6
Class Rating Credit Enhancement (%)
----- ------ ----------------------
A-1 AAA 23.41
A-2 AAA 23.41
A-3 AAA 23.41
J BB+ 7.14
K BB 5.16
L BB- 4.41
M B+ 3.67
N B 2.49
O B- 1.99
P CCC 1.49
A-X AAA N/A
A-CP AAA N/A
DELTA AIR: Provides Noteholders with Consent Solicitation Q&A
-------------------------------------------------------------
On August 18, 2004, Delta Air Lines (NYSE: DAL) began soliciting
consents from holders of certain equipment trust certificates and
pass through certificates to remove any contractual restrictions
on Delta's ability to purchase or hold those securities. In an
effort to assist holders of such debt securities in considering
the consent solicitation materials, Delta is providing additional
information, in the form of a Q&A, to help holders better
understand the purpose and effect of the consent.
The record date for the determination of holders entitled to give
consents is August 18, 2004. The consent solicitations will expire
at 5:00 p.m., New York City time, on August 31, 2004, unless
otherwise extended.
Q&A:
(1) Why has Delta initiated a consent solicitation?
If Delta receives the necessary consents, any contractual
restrictions flowing from the debt on Delta's ability to
purchase, hold or pledge these debt securities will be
removed, which will provide Delta with additional
flexibility to effect a successful out-of-court
restructuring.
(2) What are the consequences if the necessary consents are
not obtained?
In the event of a failure to obtain consents for any
series of equipment trust certificates (ETCs) or pass
through certificates, Delta's ability to include those
series in certain possible future restructuring steps
would be seriously limited. Delta does not believe that
result would be in the best interests of the holders.
(3) Why were the contractual restrictions originally included?
Delta believes that the restrictions were included at the
request of the owner participants in the related leveraged
lease transactions. The restrictions vary from transaction
to transaction and not all ETC and PTC transactions have
such restrictions.
(4) Why are certain ETCs and PTCs not included in the consent
solicitation?
A number of series of ETCs and PTCs do not contain
contractual restrictions on Delta's ability to purchase,
hold or pledge these debt securities. As a result, they
do not need to be included in the consent solicitation.
By giving their consent, holders to whom the consent
solicitation is addressed will be putting themselves on
equal footing with respect to this provision as holders of
the other ETCs, PTCs, and Delta's enhanced equipment trust
certificates that do not contain such a contractual
restriction.
(5) Will the consent process modify the voting provisions or
the economic terms?
No. This consent process will not modify the voting
provisions of the documents or the economic terms relating
to any series of debt securities.
(6) Will Delta be able to vote any ETCs or PTCs that it owns?
No. Neither Delta nor any of its affiliates will be able
to vote any ETCs or PTCs that it owns.
(7) Is the waiver of the record date and other procedural
requirements a change for purposes of the consent
solicitation only or a permanent change to the underlying
documents?
The waiver of the record date and other procedural
requirements is only for purposes of the consent
solicitation.
(8) Will holders who consent be obligated to participate in
any future offer that Delta may make?
No. Providing consents will not obligate the holders of
any debt securities to accept an offer from or sell their
securities to Delta should Delta decide to offer to
purchase or exchange such securities.
The foregoing discussion reflects selected information from the
ETC Consent Solicitation Statement dated August 18, 2004 and the
PTC Consent Solicitation Statement dated August 18, 2004. Holders
should read carefully the ETC Consent Solicitation Statement and
PTC Consent Solicitation Statement and the other documents to
which they refer in order to fully understand the terms of the
consent solicitations.
Questions concerning the terms of the ETC and PTC Solicitations or
requests for additional copies of the ETC and PTC Consent
Solicitation Statements, the ETC and PTC Consent Forms or other
related documents should be directed to the Solicitation Agents:
Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Attn: Liability Management
(212) 449-4914
(800) ML4-TNDR (toll free)
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Credit Liability Management
(212) 357-3019
(800) 828-3182 (toll free)
Morgan Stanley
1585 Broadway
New York, New York 10036
Attn: Patrick Sieb
(212) 761-1864
(800) 624-1808 (toll free)
Requests for assistance in completing the ETC and PTC Consent
Forms should be directed to the Tabulation and Information Agent:
The Tabulation and Information Agent for the ETC and PTC
Solicitations is:
Global Bondholder Services Corporation
65 Broadway
New York, New York 10006
Banks and Brokers call: (212) 430-3774
Toll free (866) 470-3700
By facsimile:
(For Eligible Institutions only):
(212) 430-6683
(212) 430-6684
(212) 430-6685
(212) 430-6686
Confirmation:
confirm@gbsc-usa.com
By Mail: By Overnight Courier:
65 Broadway 65 Broadway
New York, New York 10006 New York, New York 10006
By Hand:
65 Broadway
New York, New York 10006
About Delta Air Lines
Delta is the third largest U.S. airline in terms of revenue
passenger miles flown. Delta operates domestic hubs at Atlanta,
Cincinnati, Dallas-Fort Worth, and Salt Lake City. International
gateways are located at Atlanta and New York's JFK International
Airport. Wholly owned regional airlines Comair and Atlantic
Southeast Airlines, together with contract carriers, feed traffic
into Delta's hubs through short-haul regional jet and turboprop
operations.
* * *
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services lowered its ratings on Delta
Air Lines, Inc., including lowering the corporate credit rating
to 'CCC' from 'CCC+', reflecting an increasing risk of an out-of-
court restructuring of debt. The outlook is negative.
Delta announced a consent solicitation seeking permission from
holders of many equipment trust certificates and pass-through
certificates (but not enhanced equipment trust certificates) to
lift limitations on the airline's ability to buy and hold the
certificates in order "to provide Delta with greater flexibility
to effect a successful out-of-court restructuring."
Restructuring of bond payments or a coercive exchange would be
considered a default and cause the company's corporate credit
rating to be lowered to 'D' -- default -- or 'SD' -- selective
default.
Ratings of equipment trust certificates and pass-through
certificates were lowered two notches, to 'CCC', the same level
as the revised corporate credit rating. Ratings of most senior
classes of enhanced equipment trust certificates, which are
considered more difficult to restructure outside of bankruptcy,
were not lowered.
"Delta's consent solicitation provides the clearest signal yet
that the company will seek to restructure selected debt
obligations outside of bankruptcy," said Standard & Poor's credit
analyst Philip Baggaley. The changes sought would make possible
certain types of debt restructuring, such as a tender offer or
exchange offer, if certificate-holders agree.
DELTA AIR: Bingham McCutchen's Clients Say Carrier is Unresponsive
------------------------------------------------------------------
The Committee of Senior Secured Aircraft Creditors of Delta Air
Lines, Inc., whose holdings have increased to more than $1.4
billion of senior secured debt, learned from Delta that the
airline will not provide the Committee with requested due
diligence information, or engage in any meaningful dialogue with
the Committee, regarding Delta's restructuring efforts.
As previously reported in the Troubled Company Reporter, the law
firm of Bingham McCutchen LLP, represents the Committee comprised
of insurance companies, pension funds, bond funds, and money
managers.
Delta, in August 18 consent solicitations, sought waivers of
contractual limits on Delta's ability to buy, hold or pledge debt
instruments. In light of Delta's refusal to provide this
information and due diligence regarding the restructuring, the
Committee has advised Delta that it is unable to support the
consent solicitations at this time. The solicitation period is
scheduled to end tomorrow, August 31.
The Committee is troubled by Delta's response to the Committee's
requests for information and dialogue and finds it inconsistent
with Delta's stated goal of seeking expedited solutions to its
financial problems. The Committee also noted its disagreement
with the Q&A statement Delta issued that the failure to obtain the
solicited consents would seriously limit Delta's ability to take
future restructuring steps. As previously announced, the Committee
believes that the consent solicitations are likely a first step in
a possible debt restructuring, and that it would be imprudent,
from its point of view, to respond without understanding Delta's
restructuring plan. In the absence of that information, the
Committee concluded that it had no choice but to withhold its
support of the solicitations.
The Committee indicated on August 24 that its members could not
responsibly respond to the solicitations until Delta had provided
information that enabled them to evaluate the request.
The Committee anticipates that other Delta creditors that have
been solicited for the public debt consent or for their private
debt information also would refrain from responding, given Delta's
refusal to provide any information.
The Committee members have substantial interests in 169 of Delta's
aircraft and are continuing to monitor Delta's financial condition
and restructuring efforts. Members of the Committee hold public
and private debt on aircraft in various senior lien financing
facilities of Delta, including facilities known as Equipment Trust
Certificates, Pass Through Certificates, Enhanced Equipment Trust
Certificates, and various Private Placement Note issues.
About Delta Air Lines
Delta is the third largest U.S. airline in terms of revenue
passenger miles flown. Delta operates domestic hubs at Atlanta,
Cincinnati, Dallas-Fort Worth, and Salt Lake City. International
gateways are located at Atlanta and New York's JFK International
Airport. Wholly owned regional airlines Comair and Atlantic
Southeast Airlines, together with contract carriers, feed traffic
into Delta's hubs through short-haul regional jet and turboprop
operations.
* * *
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services lowered its ratings on Delta
Air Lines, Inc., including lowering the corporate credit rating
to 'CCC' from 'CCC+', reflecting an increasing risk of an out-of-
court restructuring of debt. The outlook is negative.
Delta announced a consent solicitation seeking permission from
holders of many equipment trust certificates and pass-through
certificates (but not enhanced equipment trust certificates) to
lift limitations on the airline's ability to buy and hold the
certificates in order "to provide Delta with greater flexibility
to effect a successful out-of-court restructuring."
Restructuring of bond payments or a coercive exchange would be
considered a default and cause the company's corporate credit
rating to be lowered to 'D' -- default -- or 'SD' -- selective
default.
Ratings of equipment trust certificates and pass-through
certificates were lowered two notches, to 'CCC', the same level
as the revised corporate credit rating. Ratings of most senior
classes of enhanced equipment trust certificates, which are
considered more difficult to restructure outside of bankruptcy,
were not lowered.
"Delta's consent solicitation provides the clearest signal yet
that the company will seek to restructure selected debt
obligations outside of bankruptcy," said Standard & Poor's credit
analyst Philip Baggaley. The changes sought would make possible
certain types of debt restructuring, such as a tender offer or
exchange offer, if certificate-holders agree.
DEVLIEG BULLARD: Brings-In Trumbull Group as Claims Agent
---------------------------------------------------------
DeVlieg Bullard II, Inc., asks the U.S. Bankruptcy Court for the
District of Delaware for permission to employ the Trumbull Group,
LLC as its claims, noticing and balloting agent.
The Debtor reports about 1,100 creditors, potential creditors and
other parties in interest. The Debtor submits that the most
effective and efficient manner to accomplish the process of
receiving, docketing, maintaining, photocopying and transmitting
proofs of claim is to engage and independent third party.
In this regard, Trumbull Group is expected to:
a) prepare and serve required notices in this chapter 11
case;
b) within five business days after the service of a
particular notice, file with the Clerk's Office a
certificate or affidavit of service that include a copy
of the notice served, an alphabetical list of persons
with addresses on whom the notice was served and the date
and manner of service;
c) maintain copies of all proofs of claim and proofs of
interest filed in this case;
d) maintain official claims registers in this case by
docketing all proofs of claim and proofs of interest in a
claims database;
e) implement necessary security measures to ensure the
completeness and integrity of the claims agent;
f) transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a more or less frequent basis;
g) maintain an up-to-date mailing list for all entities that
have filed proofs of claim or proofs of interest and make
such list available upon request to the Clerk's Office or
any party in interest;
h) provide access to the public for examination of the
proofs of claim or proofs of interest filed in this case
without charge during regular business hours;
i) record all transfers of claims and provide notice of such
transfers as required by Bankruptcy Rule 3001(e), if
directed to do so by the Court;
j) comply with applicable federal, state, municipal and
local statutes, ordinances, rules, regulations, order and
other requirements;
k) provide temporary employees to process claims as
necessary;
l) promptly comply with such further conditions and
requirements as the Clerk's Office or the Court may at
any time prescribe;
m) provide such other claims processing, noticing, balloting
and relating administrative services as may be required
from time to time by the Debtor;
n) prepare the Debtor's schedules, statements of financial
affairs, and master creditor list; and
o) reconcile and resolve claims.
Lorenzo Mendizabal discloses that the Debtor paid his firm a
$10,000 retainer. The Debtor will pay $1,000 per month for
software and hardware services.
To the best of the Debtors knowledge, Trumbull is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Machesney Park, Illinois, Devlieg Bullard --
http://www.devliegbullard.com/-- provides a comprehensive
portfolio of proprietary machine tools, aftermarket replacement
parts, field service and premium workholding products. The Debtor
filed for Chapter 11 protection on July 21, 2004 (Bankr. Del. Case
No. 04-12097). James E. Huggett, Esq., at Flaster Greenberg,
represents the Company in its restructuring efforts. When the
Company filed for protection from its creditors, it listed both
estimated debts and assets of more than $10 million.
DIGITAL LIGHTWAVE: Amends Proposed Financing Terms with Optel
-------------------------------------------------------------
On August 25, 2004, the board of directors of Digital Lightwave,
Inc. (Nasdaq:DIGL) approved a non-binding term sheet with Optel
Capital, LLC to provide financing and to restructure its
outstanding debt with Optel Capital, LLC and Optel, LLC. This new
term sheet supercedes the non-binding term sheet previously
approved by the board of directors on May 21, 2004.
Pursuant to the new term sheet, Optel would:
-- extend the maturity of approximately $25.3 million in
principal amount owed to it by the Company until December
31, 2005, and
-- would extend the maturity of approximately $1.8 million of
outstanding accrued interest plus new interest obligations
for a period of one year following the completion of the
restructuring of its debt.
As of July 31, 2004, all of the outstanding principal and accrued
interest owed to Optel matured and became due and payable in full
upon demand by Optel at any time. In addition to extending the
maturity of the outstanding debt, the new term sheet provides that
Optel would also advance to the Company $1.7 million in additional
funds.
In consideration of Optel extending the maturity of the
outstanding debt and providing the new advance, the Company would
make all of the outstanding debt and the new advance convertible
into common stock of the Company at the option of Optel at any
time prior to the extended maturity date at a conversion price
based on the average trading price of the stock during the five
day period preceding the date of any conversion.
As described above, the new term sheet includes several important
changes from the old term sheet, including:
-- Committed Additional Funding - Optel would commit to provide
an additional $1.7 million in funds to the Company, compared
to the old term sheet in which Optel did not commit to the
amount of any new funding.
-- Market-Based Conversion Price - The outstanding debt and the
new advance would convert into common stock at a market-
based conversion price at the time of conversion, compared
to the old term sheet which provided that the outstanding
debt and any new advances would convert at a fixed price.
-- No Warrants - The Company would not issue Optel any
warrants, compared to the old term sheet which provided that
the Company would issue Optel two warrants, each of which
would have been exercisable into the same number of shares
of common stock as the number of shares into which the
outstanding debt and any new advances would have been
convertible.
-- Maturity of Interest Payments - The outstanding accrued
interest plus new interest obligations would mature on the
one year anniversary of the closing of the restructuring,
compared to the old term sheet which provided that such
interest amounts would mature on December 31, 2005.
Consistent with the old term sheet, all of the outstanding debt
and the new advance would continue to be secured by a first
priority security interest in all of the assets of the Company and
the Company would agree to file a registration statement covering
the resale of the shares of common stock issuable upon conversion
of the outstanding debt and the new advance.
Also consistent with the old term sheet, Optel has made it a
condition to the outstanding debt and the new advance becoming
convertible that such transaction be approved by a majority of the
stockholders of the Company whom are not affiliated with Optel or
any of its affiliates, and that in the event a majority of such
stockholders do not approve such transaction, the outstanding debt
and the new advance would immediately become due and payable in
full. Optel is controlled by Dr. Bryan J. Zwan, the Company's
majority stockholder and chairman of the board of directors.
Mr. Robert Moreyra, chairman of the special committee of the board
of directors commented, "The revised financing and debt
restructuring proposal represents an important opportunity for the
stockholders of the Company. The transaction proposed by Optel
will provide the Company the resources necessary to continue its
progress in executing its strategic plan." Mr. Moreyra commented
further, "During the first half of this year, the Company has made
significant progress in the growth of sales and in the improvement
of its operations. At the same time, the Company has successfully
resolved substantially all of its previously reported litigation
and disputes. The financial support of Optel has been instrumental
in affecting these positive developments, as Optel has made
additional advances to the Company of approximately $6.9 million
since the old term sheet was approved by the board in May of this
year."
Jim Green, President and CEO of the Company, stated that, "The
completion of this financing and debt restructuring transaction
will be another important step in the successful execution of our
business strategy. With the support of Optel, management continues
to focus on sales growth and a return to profitability. We are
cautiously optimistic with our progress, as demonstrated by the
210 percent growth in sales for the first half of this year, as
compared to the same period in the prior year."
The new term sheet is non-binding and for discussion purposes only
and is subject to the execution and delivery of definitive
documents. A copy of the new term sheet is attached as an exhibit
to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 26, 2004.
About Digital Lightwave, Inc.
Based in Clearwater, Florida, Digital Lightwave, Inc. provides the
global communications networking industry with products,
technology and services that enable the efficient development,
deployment and management of high-performance networks. The
Company's customers -- companies that deploy networks, develop
networking equipment, and manage networks -- rely on its offerings
to optimize network performance and ensure service reliability.
The Company designs, develops and markets a portfolio of portable
and network-based products for installing, maintaining and
monitoring fiber optic circuits and networks. Network operators
and telecommunications service providers use fiber optics to
provide increased network bandwidth to transmit voice and other
non-voice traffic such as internet, data and multimedia video
transmissions. The Company provides telecommunications service
providers and equipment manufacturers with product capabilities to
cost-effectively deploy and manage fiber optic networks. The
Company's product lines include: Network Information Computers,
Network Access Agents, Optical Test Systems, and Optical
Wavelength Managers. The Company's wholly owned subsidiaries are
Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific
Pty, Ltd., and Digital Lightwave Latino Americana Ltda.
At June 30, 2004, Digital Lightwave, Inc.'s balance sheet showed a
$20,478,000 stockholders' deficit, compared to a $21,140,000
deficit at December 31, 2003.
DTI DENTAL: Stockholders' Deficit Narrows to $3 Mil. at June 2004
-----------------------------------------------------------------
DTI Dental Technologies, Inc., one of North America's leading
operators of dental laboratories, reported financial results for
the three-month and six-month periods ended June 30, 2004. The
results include:
-- Revenue for the quarter amounted to $9.1 million, an
increase in revenue of 28.7% and $17.1 million, an increase
in revenue of 21.5% for the six-month period, over the
comparable periods in 2003.
-- Same lab growth in Canada of 12.0% for the quarter and 11.4%
for the six month period.
-- Same lab growth of 7.2% for the quarter and 11.8% for the
six-month period for labs operating in the USA, in local
currency.
-- Lab operating income increased 37.8% to $2.1 million for the
quarter and 40.4% to $4.1 million year to date over the
comparable periods in 2003.
-- DTI generated EBITDA (earnings before amortization,
interest, and taxes) of $1.5 million or 16.0% of sales for
the quarter and $2.9 million or 17.1% for the six-month
period compared to $1.1 million or 14.9% of sales and
$1.9 million or 13.2% of sales for the same periods in 2003.
-- Net income of $203,549 ($0.03 per share) for the quarter and
$494,305 ($0.07 per share) on a year to date basis, compared
to a net income of $204,103 ($0.03 per share) and a net loss
of $12,562 ($0.0 per share) for comparable periods in 2003.
As of June 2004, DTI Dental's stockholders' deficit narrowed to
$3,021,268 from $4,233,256 at December 2003.
"Overall for the second quarter DTI has achieved a solid operating
performance which has translated into steady growth of
approximately 29% in sales and 38% in lab operating income. I am
particularly pleased with the improvement in the dental labs
operating margins and the continued growth in DTI's profitability.
As the current economic trend in the United States improves for
the dental laboratory industry we are very well positioned for
continued success," said Paolo Kalaw, Chief Executive Officer.
Sales increased 28.7% from $7.1 million in the first quarter of
2003 to $9.1 million in the same period in 2004. Of this increase
$1.6 million was as a result of the laboratories acquired in 2003
and 2004.
On a year to date basis, sales increased 21.5% from $14.0 million
in 2003 to $17.1 million in 2004. Of the increase, $2.3 million
was as a result of the labs acquired in 2003 and 2004.
Internal growth for the quarter amounted to 12.0% and 11.4% for
the six-month period in labs operating in Canada. Internal growth
for labs operating in the United States amounted to 7.2% for the
quarter and 11.8% for the six-month periods (in local currency).
The internal growth reflects an improvement in the industry
economic conditions and the impact of DTI's continued efforts to
increase business at existing labs.
Lab operating income, which in management's opinion is the key
operating measure for the dental labs, increased 37.8% for the
quarter to $2.1 million and 40.4% to $4.1 million year to date.
As a percentage of sales, the lab operating income amounted to
23.1% for the quarter and 24.2% for the six-month period 2004
compared to 21.6% for the quarter and 20.9% for the six-month
period 2003. The labs acquired during 2004 generated lab operating
income equal to 19.0% of their sales for the quarter and 19.8% of
their sales on a year to date basis.
"Year to date laboratory operating margins improved by 2.6%
through increased work force productivity and reduced material
costs." said Mr. Kalaw. "Our newest labs acquired in the first
quarter have already shown improvements in lab performance and we
expect this trend to continue."
After head office lab support and other corporate expenses the
company generated EBITDA (earnings before amortization, interest
and taxes) of $1.5 million or 16.0% of sales for the quarter and
$2.9 million or 17.1% on a year to date basis, compared to
$1.1 million or 14.9% of sales and $1.9 million or 13.2% of sales
for the same periods in 2003.
Results continue to be profitable with a net income for the
quarter at $203,549 or $0.03 per share and $494,305 or $0.07 per
share on a year to date basis, compared to a net income of
$204,103 or $0.03 per share and a net loss of $12,562 or $0.0 per
share for the same periods in 2003.
The Company reported an improvement in cash generated from
operating activities of $756,240 for the quarter and $2.1 million
year to date. For the quarter this was as a result of improved
operating cash performance in the amount of $99,939 and the
positive effect of changes in working capital of $656,301compared
to 2003. On a year to date basis this was as a result of improved
operating cash performance in the amount of $508,726 and the
positive effect of changes in working capital of $1.6 million
compared to 2003.
Ongoing capital needs for equipment at the laboratories amounted
to $134,284 for the quarter and $261,170 for the six-month period.
The Company invested $1.3 million in dental lab acquisitions in
the first six months of 2004 and $641,426 in the same period of
2003.
About DTI Dental Technologies, Inc.
DTI is a multi-site operator of premium quality dental
laboratories, with fourteen labs in six U.S. states and three
Canadian provinces. DTI's laboratories custom design and
fabricate crowns, bridges, dentures, cosmetic appliances and
orthodontic appliances. DTI's experienced management team is
committed to building shareholder value by increasing market
share, revenue and cash flow through carefully targeted
acquisitions and improved marketing, training, and business
processes. DTI is well positioned to capitalize on growing demand
by our aging population for high quality cosmetic and restorative
dental products.
EW HW BG LLC: Case Summary & 19 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: EW HW BG, L.L.C.
dba Dougie's
dba Dougie's BBQ
dba Dougie's Bar-B-Que & Grill
247 West 72nd Street
New York, New York 10023
Bankruptcy Case No.: 04-15650
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
M&D Restaurant L.L.C. 04-15651
Type of Business: The Debtors operate restaurants.
See http://www.dougiesbbq.com/
Chapter 11 Petition Date: August 27, 2004
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Leslie Ann Berkoff, Esq.
Moritt, Hock & Hamroff, LLP
400 Garden City Plaza
Suite 202
Garden City, New York 11530
Tel: (516) 873-2000
Fax: (516) 873-2010
Estimated Assets Estimated Debts
---------------- ---------------
EW HW BG, L.L.C. $500,000 to $1 M $1 M to $10 M
M&D Restaurant L.L.C. $500,000 to $1 M $1 M to $10 M
Debtor's 19 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Donny Silverman $85,000
Brusco Realty $45,000
New York State Deptartment of Taxation & Finance $20,000
Tax Compliance Division - Metropolitan MD
Con-Ed $10,000
Menachem J. Kastner, Esq. $5,000
Nortman's Fred Son Corporation $5,000
Certified Bakery Co. $4,000
Manhattan Fruit Exchange $4,000
Manhattan Fruit Exchange $4,000
Ness Paper $3,000
Saul Kaszovitz, Esq. $2,500
Ahava Food Corp. $2,000
The Dependable Food Corp. $2,000
Saxony Ice $1,500
Quality Frozen Food, Inc. $1,000
The Dependable Food Corp. $1,000
Jem Sanitation Corp. $1,000
Douglas Socloff Unknown
Protocol Promotions, Inc. Unknown
FOSTER WHEELER: Fixed Rate Senior Secured Notes Will Earn 10.507%
-----------------------------------------------------------------
Foster Wheeler Ltd. (OTCBB: FWLRF) declared the interest rate
applicable to the Fixed Rate Senior Secured Notes due 2011,
Series A, to be issued by Foster Wheeler LLC in the equity for
debt exchange offer that the company launched on June 11, 2004.
If the exchange offer expires as currently scheduled today,
August 30, 2004, the New Notes will bear interest at a rate of
10.507% per annum. This rate is equal to 6.65% plus the yield on
U.S. Treasury notes having a remaining maturity equal to the
maturity of the New Notes determined as of 2:00 p.m. New York City
time on the second business day prior to the expiration of the
exchange offer. The terms of the New Notes are described in the
registration statement on Form S-4 (File No. 333-107054) relating
to the exchange offer.
If the exchange offer is extended beyond August 30, 2004, the rate
on the New Notes will be recalculated and announced at a later
date.
A copy of the prospectus relating to the New Notes and other
related documents may be obtained from the information agent. The
information agent for the exchange offer and consent solicitation
is Georgeson Shareholder Communications Inc., 17 State Street,
10th Floor, New York, New York 10014. Georgeson's telephone number
for bankers and brokers is 212-440-9800 and for all other security
holders is 800-891-3214.
The dealer manager for the exchange offer and consent solicitation
is Rothschild Inc., 1251 Avenue of the Americas, 51st Floor, New
York, New York 10020. Contact Rothschild at 212-403-3784 with any
questions on the exchange offer.
Investors and security holders are urged to read the following
documents filed with the SEC, as amended from time to time,
relating to the proposed exchange offer because they contain
important information: (1) the registration statement on Form S-4
(File No. 333-107054) and (2) the Schedule TO (File No. 005-
79124). These and any other documents relating to the proposed
exchange offer, when they are filed with the SEC, may be obtained
free at the SEC's Web site at http://www.sec.gov/or from the
information agent as noted above.
The foregoing reference to the exchange offer and any other
related transactions shall not constitute an offer to buy or
exchange securities or constitute the solicitation of an offer to
sell or exchange any securities in Foster Wheeler Ltd. or any of
its subsidiaries.
About the Company
Foster Wheeler, Ltd., is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research, plant
operation and environmental services.
At June 25, 2004, Foster Wheeler Ltd.'s balance sheet showed an
$856,601,000 stockholders' deficit, compared to an $872,440,000
deficit at December 26, 2003.
GALEY & LORD: Pays Prepetition Wages and Salaries
-------------------------------------------------
Galey & Lord, Inc. and its debtor-affiliates, sought and obtained
authority from the U.S. Bankruptcy Court for the Northern District
of Georgia, Rome Division, to pay prepetition wages and salaries
and other employee benefits.
The Debtors' believe that the accrued but unpaid salaries and
wages total less than $2.6 million. The Debtors also owe
prepetition commissions not exceeding $38,000.
Other unpaid employee claims and benefits include vacation and
holiday pay, reimbursement of expenses, and the retirement savings
plan or commonly known as the '401k Plan.'
Headquartered in Atlanta, Georgia, Galey & Lord, Inc., a leading
global manufacturer of textiles for sportswear, including denim,
cotton casuals and corduroy, and its debtor-affiliates filed for
chapter 11 protection on August 19, 2004 (Bankr. N.D. Ga. Case No.
04-43098). Jason H. Watson, Esq., and John C. Weitnauer, Esq., at
Alston & Bird LLP, and Joel H. Levitin, Esq., at Dechert LLP,
represent the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$533,576,000 in total assets and $438,035,000 in total debts.
GALEY & LORD: Wants to Continue Employing Ordinary Course Profs.
----------------------------------------------------------------
Galey & Lord, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court of the Northern District of Georgia, Rome
Division, for permission to retain professionals it turns to in
the ordinary course of its business without bringing formal
employment applications to the Court.
In the day-to-day performance of their duties, the Debtors
regularly call upon various professionals, including attorneys,
consultants and other professionals to provide:
a) financial advising services;
b) accounting and auditing services;
c) legal services;
d) tax consulting services; and
e) other services requiring the expertise and
assistance of professionals.
Because of the nature of the Debtor's business, it would be
costly, time-consuming and administratively cumbersome to require
each Ordinary Course Professional to file and prosecute separate
employment and compensation applications. The Debtor submits that
the uninterrupted services of the Ordinary Course Professionals
are vital to its ability to reorganize.
The Debtor assures the Court that no payment to an ordinary course
professional without prior approval from the Court will exceed
$25,000 per month during the next four months.
Headquartered in Atlanta, Georgia, Galey & Lord, Inc., a leading
global manufacturer of textiles for sportswear, including denim,
cotton casuals and corduroy, and its debtor-affiliates filed for
chapter 11 protection on August 19, 2004 (Bankr. N.D. Ga. Case No.
04-43098). Jason H. Watson, Esq., and John C. Weitnauer, Esq., at
Alston & Bird LLP, and Joel H. Levitin, Esq., at Dechert LLP,
represent the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$533,576,000 in total assets and $438,035,000 in total debts.
GATES PATCHEN HOUSING DEVT: Voluntary Chapter 11 Case Summary
-------------------------------------------------------------
Debtor: Gates Patchen Housing Development Fund Company, Inc.
1672 Broadway, Suite 2
Brooklyn, New York 11238-0000
Bankruptcy Case No.: 04-22134
Type of Business: The Debtor is a housing development company.
Chapter 11 Petition Date: August 23, 2004
Court: Eastern District of New York (Brooklyn)
Judge: Jerome Feller
Debtor's Counsel: Emanuel A Towns, Esq.
1672 Broadway, Suite 2
Brooklyn, New York 11207
Tel: 718- 789-9390
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.
HAWAIIAN AIRLINES: Creditors Committee to Join Trustee Plan
-----------------------------------------------------------
Hawaiian Airlines Trustee Joshua Gotbaum said the company's
Official Committee of Unsecured Creditors has agreed to join the
plan of reorganization to be filed jointly today, Aug. 30, by the
Trustee and Hawaiian Holdings, Inc.
"This endorsement confirms that the plan we're proposing, which
could be the first in the airline industry to pay all of the
company's debts, is the right course for Hawaiian Airlines," Mr.
Gotbaum said.
As reported in the Troubled Company Reporter on August 27, 2004,
Gotbaum and the airline's parent, Hawaiian Holdings, Inc., (Amex:
HA) agreed to submit a joint plan of reorganization for the
airline. If this plan is confirmed by the bankruptcy court, it
would take Hawaiian out of bankruptcy and offer creditors payment
in full for their claims. The proposed plan is to be filed with
the bankruptcy court on Monday.
"This plan provides value both to shareholders and creditors of
Hawaiian Airlines in a consensus proposal that will make it easier
and faster to exit bankruptcy. It offers creditors payment in
full for their claims while providing capital for Hawaiian's
future growth," Mr. Gotbaum said. "The approval of this proposed
plan will confirm Hawaiian Airlines' successful turn-around.
Hawaiian's bankruptcy may be the first ever in the airline
industry that ends with creditors receiving payment in full for
their claims. It is a testimony to the hard work both of Hawaiian
Holdings and the more than 3,300 people who make up the airline."
Under the proposed plan, Hawaiian Airlines' aircraft lessors, its
largest creditors, would receive 100 percent of their approved
claim, either in a combination of 50 percent cash and 50 percent
stock or, alternatively, by accepting a long-term note of
Hawaiian. Other creditors would also be offered full payment of
their claims, either in cash or in a combination of 50 percent
cash and 50 percent stock, whichever they choose.
Under the plan, Mark Dunkerley, Hawaiian Airlines' president and
chief operating officer, would become chief executive officer. No
other significant changes in management are contemplated.
Hawaiian Holdings would resume control of the airline. The board
of Hawaiian Holdings, including Mr. Hershfield and former American
Airlines CEO Donald Carty, is expected to become the board of
Hawaiian Airlines. Mr. Hershfield said the boards of both
Hawaiian Airlines and Hawaiian Holdings may be expanded to include
additional independent directors, both from the industry and from
Hawaii.
The proposed plan, the plans that have been filed by third
parties, and other plans that may be filed, will be reviewed in
coming months by US Bankruptcy Court Judge Robert Faris.
About Hawaiian Airlines
Hawaiian Airlines, the nation's number one on-time carrier, is
recognized as one of the best airlines in America. Business
travelers recently surveyed by Conde Nast Traveler rated Hawaiian
Airlines as having the best in-flight service and meals of any
U.S. carrier. In addition, Hawaiian is ranked as the nation's
fifth best airline overall by Travel + Leisure, ahead of every
other carrier flying to Hawaii.
Celebrating its 75th year of continuous service, Hawaiian Airlines
is Hawaii's biggest and longest-serving airline, and the second
largest provider of passenger air service between Hawaii and the
mainland U.S. Hawaiian offers nonstop service to Hawaii from more
mainland U.S. gateways than any other airline. Hawaiian also
provides approximately 117 daily jet flights among the Hawaiian
Islands, as well as service to Australia, American Samoa and
Tahiti.
Headquartered in Honolulu, Hawaii, Hawaiian Airlines, Inc., --
http://hawaiianair.com/-- is a subsidiary of Hawaiian Holdings,
Inc. (Amex and PCX: HA). The Company provides primarily scheduled
transportation of passengers, cargo and mail. Flights operate
within the South Pacific and to points on the west coast as well
as Las Vegas. Since the appointment of a bankruptcy trustee in
May 2003, Hawaiian Holdings has had no involvement in the
management of Hawaiian Airlines and has had limited access to
information concerning the airline. The Company filed for chapter
11 protection on March 21, 2003 (Bankr. D. Hawaii Case No.
03-00817).
HARBOURVIEW CDO: Moody's Rates $26.25 Million Class C Notes at Ba3
------------------------------------------------------------------
Moody's Investors Service placed three tranches issued by
HarbourView CDO III, Ltd. on watch for possible downgrade. The
Class C tranche has been put on watch after being downgraded to
Ba3.
According to Moody's, this rating action was prompted by
deterioration in the overall credit quality of the underlying
assets. Moody's noted that the CDO is violating its
overcollateralization tests, and continues to violate its weighted
average rating factor test.
Affected Tranches:
Tranche description: Class A
Previous Rating: Aaa
New Rating: Aaa on watch for possible downgrade
Tranche description: Class B
Previous Rating: Aa2
New Rating: Aa2 on watch for possible downgrade
Tranche description: Class C
Previous Rating: Baa2 on watch for possible downgrade.
New Rating: Ba3 on watch for possible downgrade
Class Description:
(1) U.S. $311,250,000 Class A Notes from Aaa to Aaa on watch
for possible downgrade.
(2) U.S. $22,500,000 Class B Notes from Aa2 to Aa2 on watch for
possible downgrade.
(3) U.S. $26,250,000 Class C Notes from Baa2 on watch for
possible downgrade to Ba3 on watch for possible downgrade.
HOME CANADA: Policies Transferred & Oct. 15 Claim Deadline Fixed
----------------------------------------------------------------
The Home Insurance Company (Canadian Branch), in Liquidation
("Home Canada"), was ordered wound-up under the provisions of the
Winding-up and Restructuring Act (Canada) on June 26, 2003 and
Deloitte & Touche Inc. was appointed its liquidator (the
"Liquidator"). Home Canada's policies of insurance have been
transferred to Lombard General Insurance Company ("Lombard"). The
Liquidator hereby gives notice that the Court has fixed Friday,
the 15th day of October 2004 as the last day to assert claims
against Home Canada.
TAKE NOTICE THAT failure to give notice of a claim by October 15,
2004 may result in distributions being made without regard to that
claims
FURTHER TAKE NOTICE THAT a Statement of Claimants and Creditors
shall be filed in the Office of the Superintendent of Financial
Institutions pursuant to Section 168(1) of the Winding-up and
Restructuring Act, R.S.C., not less than thirty (30) days after
the last day fixed for sending in claims.
PLEASE NOTE: If you were a policyholder or claimant under a Home
Canada policy, you do not have to file a claim with the Liquidator
for Lombard to deal with you. However, you should file a claim if
you assert that you have a claim that may not have been satisfied
or recognized by Lombard's assumption of your Home Canada policy,
or otherwise wish to assert a claim against Home Canada.
For further information or for a claim form, please contact Glynis
Bass of Deloitte & Touche Inc. in writing.
This Notice is being given pursuant to the Order of the Ontario
Superior Court of Justice dated August 5, 2004.
Deloitte & Touche Inc.
Liquidator of Home Canada
79 Wellington Street West, Suite 1900
P.O. Box 29, TD Centre
Toronto, Ontario M5K 1B9
Attention: Glynis Bass
Fax: (905) 754-0150
E-mail: gbass@deloitte.ca
HORIZON NATURAL: Confirmation Hearing Scheduled for Tomorrow
------------------------------------------------------------
Honorable William S. Howard of the U.S. Bankruptcy Court for
the Easter District of Kentucky will consider whether to
confirm the Third Amended Joint Reorganization Plan of Horizon
Natural Resources company and its debtor-affiliates tomorrow,
August 31, 2004, at 10:00 a.m., Eastern Time.
The centerpiece of the Plan, as reported in the Troubled Company
Reporter on August 19, 2004, is a sale of substantially all of
the assets of Horizon Natural Resources Company to Wilbur Ross's
Newcoal, LLC, and Oldcoal, LLC, in partnership with A.T. Massey
Coal Company. That consortium was the successful bidder at a
bankruptcy auction, presenting a cash bid of up to $304 million
plus credit bidding of $482 million of second lien notes, or a
total of $786 million and the assumption of liabilities.
Judge Howard will confirm the Plan if he finds that each of the 13
standards articulated in Section 1129 of the Bankruptcy Code are
met. Those 13 standards are:
(1) the Plan complies with the Bankruptcy Code;
(2) the Debtors have complied with the Bankruptcy Code;
(3) the Plan was proposed in good faith;
(4) all plan-related cost and expense payments are
reasonable;
(5) the Plan identifies the individuals who will serve as
officers and directors post-emergence;
(6) no governmental regulatory commission has
jurisdiction, after confirmation of the Plan,
over the Debtors;
(7) creditors receive more under the plan than they would
in a chapter 7 liquidation;
(8) all impaired creditors have voted to accept the Plan,
or, if they voted to reject, then the Plan complies
with the absolute priority rule;
(9) the Plan provides for full payment of Priority Claims;
(10) at least one non-insider impaired class voted to
accept the Plan;
(11) the Plan is feasible and confirmation is unlikely to
be followed by a liquidation or need for further
financial reorganization;
(12) all amounts owed to the Clerk and the U.S. Trustee
will be paid; and
(13) no retiree benefits are impermissibly modified.
Judge Howard will also be asked to ratify the sale transaction at
tomorrow's hearing.
Headquartered in Ashland, Kentucky, Horizon Natural Resources
(f/k/a AEI Resources Holding, is one of the United States' largest
producers of steam (bituminous) coal. The Company filed for
chapter 11 protection on February 28, 2002 (Bankr. E.D. Ky. Case
No. 02-14261). Ronald E. Gold, Esq., at Frost Brown Todd LLC,
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed over
$100 million in total assets and total debts.
HORNBECK OFFSHORE: Improved Liquidity Prompts S&P's BB- Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating and senior unsecured ratings on Hornbeck Offshore Services,
Inc., to 'BB-'from 'B+' following a review of current and expected
growth initiatives and Hornbeck's ability to fund them in a manner
that will not hurt credit quality. The ratings were also removed
from CreditWatch with positive implications, where they were
placed on March 11, 2004, following the announcement that Hornbeck
would issue six million shares of common stock in an IPO. The
outlook is now stable.
Mandeville, Louisiana-based Hornbeck currently has $175 million of
debt.
"The ratings upgrade reflects Hornbeck's improved liquidity and
financial flexibility following its IPO," said Standard & Poor's
credit analyst Paul B. Harvey. "With nearly $85 million in
liquidity as of June 30, 2004, Hornbeck should have adequate
liquidity for existing construction plans. The company also now
has the ability to issue common equity to help fund its fleet
expansion, limiting its reliance on its credit facility and
private capital infusions for growth," he continued.
With the strengthening of the company's capital structure as a
result of the IPO, Hornbeck's potential cash flow generation
relative to its debt burden has improved. In the past three
years, Hornbeck added 10 offshore support vessels -- OSVs -- to
its fleet while adding no permanent debt. As a result, Hornbeck's
cash from operations to total debt should improve strongly as the
OSV market recovers. Signs of a recovery are emerging, with
Hornbeck currently benefiting from near-full utilization of its
fleet and the realization of modest rate increases.
The stable outlook reflects expectations that Hornbeck will fund
future fleet expansion through internal cash flows or with a
balanced funding from outside sources (debt and equity). In
addition, Standard & Poor's expects long-term contract coverage
for the OSV group to improve from current levels once day rates
strengthen.
HUDSON'S BAY: Will Release 2004 Second Quarter Results Tomorrow
---------------------------------------------------------------
Hudson's Bay Company will release its second quarter results
tomorrow, August 31, 2004, 3:00 p.m. In conjunction with the
release, the Company will host a live webcast presentation and
conference call.
To access the call, dial 416-640-4127 in Toronto or 1-800-814-4857
outside of Toronto; when prompted, request to be connected to
"Hudson's Bay Company Second Quarter Results Conference Call."
Moderator reference: "Rob Moore."
The real time webcast of the conference call and corresponding
presentation can be accessed at http://www.hbc.ca/by clicking on
Announcements.
Phone numbers for replay:
416-640-1917 in Toronto.
Passcode 21056329 followed by the number sign
877-289-8525 outside of Toronto
Passcode 21056329 followed by the number sign
The Replay will be available until October 31, 2004.
The participants are:
George Heller
President and Chief Executive Officer
Michael Rousseau
EVP & Chief Financial Officer
Marc Chouinard
President & Chief Operating Officer
the Bay
Thomas Haig
President & Chief Operating Officer
Zellers
Rob Moore
Vice-President, Corporate Communications
(Moderator)
Hudson's Bay Company (S&P, BB+ Long-Term Corporate Credit and
Senior Unsecured Debt Ratings, Negative Outlook), established in
1670, is Canada's largest department store retailer and oldest
corporation. The Company provides Canadians with the widest
selection of goods and services available through retail channels
including more than 500 stores led by the Bay, Zellers and Home
Outfitters chains. Hudson's Bay Company is one of Canada's largest
employers with 70,000 associates and has operations in every
province in Canada. Hudson's Bay Company's common shares trade on
The Toronto Stock Exchange under the symbol "HBC".
HUDSON'S BAY: Taps PhotoChannel Networks to Add Customer Value
--------------------------------------------------------------
PhotoChannel Networks, Inc., (TSX-V: PNI and OTCBB: PHCHF), one of
North America's leading digital imaging technology providers,
launched its solution for Hudson's Bay, Co, (TSX: HBC) Canada's
largest department store retailer and oldest corporation.
Using PhotoChannel's widely accepted online solution
http://www.digilab.ca/provides Hudson's Bay customers with a
highly accessible and easy-to-use way of ordering prints from
their digital images. PhotoChannel is supplying Hudson's Bay with
its industry leading Network Imaging technology and has just
launched http://www.digilab.ca/,a new component of the Hudson's
Bay online family of web services.
Through the website, Hudson's Bay customers now have the ability
to order prints from their digital camera images for pickup at any
of over 300 Zellers and Bay locations nationwide.
Hudson's Bay customers are now able to simply place a digital
image print order at http://www.digilab.ca/and are then notified
by email when the order is ready to be picked up at their selected
location. Customers can now enjoy the same quality, service and
pricing that they have come to expect from Zellers and The Bay for
all of their digital image printing.
"It's important to provide our customers with services that
continue to make shopping easier," said, Jeff Adams, General
Merchandise Manager, Hudson's Bay Company. "PhotoChannel's
Network Imaging technology allowed us to deploy and launch an
online photo printing solution rapidly to meet the growing demands
of our customers. Offering this solution will simplify and
enhance our customer's experience of having their digital images
printed professionally while incorporating our conveniently
located stores as pickup locations."
"We are delighted that [Hudson's Bay] has chosen PhotoChannel,"
stated Peter Scarth, CEO of PhotoChannel. "The addition of Hbc's
Zellers and The Bay store locations, along with [Hudson's Bay's]
marketing prowess is a real win for PhotoChannel and the Canadian
consumer. We look forward to being an important part of HBC's
growth in digital print business."
About PhotoChannel
Founded in 1995, PhotoChannel is a leading digital imaging
technology provider for a wide variety of businesses including
photofinishing retailers and telecommunications companies.
PhotoChannel has created and manages the open standard
PhotoChannel Network environment whose focus is delivering digital
image orders from capture to fulfillment under the control of the
originating PhotoChannel Network partner. There are more than
7500 retail locations worldwide accepting print orders from the
PhotoChannel system. For more information on the Company visit
http://www.photochannel.com/
Hudson's Bay Company (S&P, BB+ Long-Term Corporate Credit and
Senior Unsecured Debt Ratings, Negative Outlook), established in
1670, is Canada's largest department store retailer and oldest
corporation. The Company provides Canadians with the widest
selection of goods and services available through retail channels
including more than 500 stores led by the Bay, Zellers and Home
Outfitters chains. Hudson's Bay Company is one of Canada's
largest employers with 70,000 associates and has operations in
every province in Canada. Hudson's Bay Company's common shares
trade on The Toronto Stock Exchange under the symbol "HBC".
INDUSTRIAL WHOLESALE: Gets Interim Nod to Use Cash Collateral
-------------------------------------------------------------
The Honorable Thomas Donovan approved Industrial Wholesale Inc.'s
request to use up to $1.3 million of its secured creditor's cash
collateral on an interim basis. The Debtor tells the Court that
it needs access to cash collateral in which Alco Financial
Services, LLC asserts a security interest. The money is
necessary, the Debtor says, to finance the ongoing operation of
its business.
Alco Financial asserts liens on all assets of the estate,
including the Debtor's inventory, receivables, instruments and
proceeds thereof.
With Alco Services' consent, the Debtor can use the cash
collateral in accordance with a proposed operating budget thru
September 30, 2004, projecting:
September
Aug-9 Aug-16 Aug-23 2004
----- ------ ------ --------
Total Operating Cost $32,140 $23,869 $6,478 $65,167
The Debtor will pay Alco $175,000 and all the money collected or
received from August 18, 2004 to August 31, 2004. Further, the
funds collected or received in excess of $75,000 each month will
be remitted to Alco.
To adequately protect Alco against diminution of its interests, it
is granted a super-priority administrative claim to the extent
that the cash collateral is used and insufficient to adequately
protect Alco's secured claim.
Headquartered in Los Angeles, California, Industrial Wholesale,
filed chapter 11 protection on August 10, 2004 (Bankr. C.D. Calif.
04-27379). David A. Tilem, Esq., in Glendale, California,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection it listed $2,797,100 in total assets
and $6,646,928 in total debts.
JOHNSONDIVERSEY: Fitch Affirms BB Secured & B+ Sub. Debt Ratings
----------------------------------------------------------------
Fitch Ratings affirmed JohnsonDiversey, Inc.'s senior secured debt
rating at 'BB' and senior subordinated debt rating at 'B+'. The
Rating Outlook remains Stable.
The rating affirmation primarily reflects JohnsonDiversey's
sufficient liquidity and manageable debt maturity schedule.
JohnsonDiversey's strong market position as a global supplier of
Institutional & Industrial cleaning products continues to support
the credit ratings. Margin improvement has been hampered by
pricing pressure due to competition and increases in raw
materials. Additional restructuring and integration costs have
also reduced operating profit in the short-term. As a result full
realization of synergies post-acquisition are not expected until
late 2005 or 2006.
Fitch remains moderately concerned about weaker than expected
margins and limited debt reduction (balance sheet debt plus
utilization of the accounts receivable securitization program).
JohnsonDiversey repaid approximately $46 million in term debt with
the proceeds of an asset sale in the second quarter. Fitch
anticipates minimal debt reduction above the mandatory
amortization schedule until mid-2005 unless proceeds from
additional asset sales are used to accelerate debt repayment.
The Stable Rating Outlook indicates the likelihood that
JohnsonDiversey will continue to expand operating margins through
additional realization of synergies and cost cutting efforts. In
addition, stronger business conditions primarily driven by
economic growth in the US, Latin America and Asia is expected to
benefit JohnsonDiversey in future quarters.
JohnsonDiversey's credit statistics slightly improved during the
twelve-months ending July 2, 2004 due to fairly small increase in
EBITDA and modest debt reduction, with EBITDA-to-interest incurred
of 3.0 times (x), debt-to-EBITDA of 3.4x and total adjusted debt-
to-EBITDAR, incorporating gross rent, of 4.8x at July 2, 2004.
Balance sheet debt was approximately $1.3 billion at the end of
the second quarter. Additionally, the company has a $150 million
accounts receivable -- A/R -- securitization program with
approximately $143 million utilized as of July 2, 2004. The total
adjusted debt amount includes operating leases, A/R program
balance and JohnsonDiversey Holdings' senior discount note.
JohnsonDiversey continues to have sufficient cash balances of
$26 million including, ample liquidity with unused and committed
revolving credit facilities totaling $318 million.
JohnsonDiversey, Inc. is a global player in the Institutional and
Industrial cleaning market, and sells its products into these
market segments:
* floor care,
* food service,
* restroom/housekeeping,
* laundry, and
* food processing.
In addition, JohnsonDiversey is a global supplier of water-based
acrylic polymer resins for printing, packaging, coatings and
plastics markets. The company is owned by JohnsonDiversey
Holding, Inc., which is owned by Commercial Markets Holdco (67%)
and Unilever (33%). In, 2003, JohnsonDiversey had $2.9 billion in
net sales and $377 million in EBITDA.
LEGION INSURANCE: Moody's Lowers & Withdraws Insurers' Ratings
--------------------------------------------------------------
Moody's Investors Service lowered and will withdraw its insurance
financial ratings on members of the Legion Insurance Group. These
actions have been taken because the insurers have been, and
remain, in liquidation under regulatory supervision of the
insurance departments of the states of Pennsylvania (Legion
Insurance Company, Villanova Insurance Company) and Illinois
(Legion Indemnity Company). Refer to Moody's Withdrawal Policy on
http://moodys.com/
These ratings have been lowered and will be withdrawn:
* Legion Insurance Company (domiciled in Pennsylvania) -
insurance financial strength to Ca from Caa1;
* Legion Indemnity Company (domiciled in Illinois) - insurance
financial strength to Ca from Caa1;
* Villanova Insurance Company (domiciled in Pennsylvania) -
insurance financial strength to Ca from Caa1.
LOMA COMPANY: Creditors Must File Proofs of Claim by October 15
---------------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Lousiana, Lafayette-Opelousa Division, set October 15, 2004, as
the deadline for all creditors owed money by The Loma Company Inc.
on account of claims arising prior to August 11, 2004, to file
their proofs of claim.
Creditors must file written proofs of claim on or before the
Claims October 15 Bar Date and those forms must be delivered to:
Hon. James B. Dunford
United States Bankruptcy Court
P.O. Box J
Opelousas, Louisiana 70570
Two categories of claims exempted from the Bar Date are:
a) claims arising from any rejected executory contract or
unexpired lease;
b) claims arising from the recovery by the Debtor of an
avoidable transfer;
Headquartered in Carencro, Louisiana, The Loma Company, LLC --
http://www.lomacompany.com/-- is a custom moulder specializing in
large structural components. The Company filed for chapter 11
protection (Bankr. W.D. La. Case No. 04-51957) on August 11, 2004.
H. Kent Aguillard, Esq., at Young, Hoychick & Aguillard,
represents the Company in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed total
assets of $8,946,703 and total debts of $19,842,342.
MANDALAY RESORT: Delivers Cash Settlement Notice to Bank of N.Y.
----------------------------------------------------------------
Mandalay Resort Group (NYSE: MBG) has delivered an Irrevocable
Cash Settlement Notice to The Bank of New York, as Conversion
Agent, with respect to Mandalay's $400 million original principal
amount of Floating Rate Convertible Senior Debentures due 2033.
Pursuant to this notice, for every $1,000 original principal
amount of debentures that a holder converts, Mandalay must cash
settle a number of shares of common stock equal to the base
conversion rate in effect on the conversion date if the notes are
ultimately converted, provided, however, that the amount of cash
that Mandalay will be required to pay to cash settle the shares
shall be limited to $1,000 per debenture. Assuming all of the
debentures are converted, this would represent a maximum cash
settlement payment of $400 million. Any additional obligation to
holders who elect conversion will be settled, at the option of
Mandalay, in cash or shares of Mandalay common stock.
Mandalay Resort Group owns and operates 11 properties in Nevada:
Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in
Las Vegas; Circus Circus-Reno; Colorado Belle and Edgewater in
Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass
in Henderson. The company also owns and operates Gold Strike, a
hotel/casino in Tunica County, Mississippi. The company owns a
50% interest in Silver Legacy in Reno, and owns a 50% interest in
and operates Monte Carlo in Las Vegas. In addition, the company
owns a 50% interest in and operates Grand Victoria, a riverboat in
Elgin, Illinois, and owns a 53.5% interest in and operates
MotorCity in Detroit, Michigan.
* * *
As reported in the Troubled Company Reporter on June 9, 2004,
Fitch Ratings has placed the following long-term debt ratings of
MGM MIRAGE (MGG) and Mandalay Resort Group (MBG)on Rating Watch
Negative.
MGG
--Senior secured debt 'BB+';
--Senior subordinated debt 'BB-'.
MBG
--Senior unsecured debt 'BB+';
--senior subordinated debt 'BB-'.
The action follows the June 4, 2004 announcement that MGG made an
offer to purchase MBG for $68 per share, or approximately $4.9
billion in cash plus the assumption of $2.8 billion in debt. This
represents a 9.6 times (x) multiple of estimated fiscal-year end
January 2005 EBITDA of $800 million. MBG announced that it would
consider the offer, which puts a 12.8% premium on its share price
as of June 4 close. An increase in the offer to $75 per share
would add roughly $500 million to the purchase price. The combined
entity will have the capacity to begin reducing debt from free
cash flow, with the pace of debt reduction contingent on the level
of discretionary investments and share repurchases. Fitch's review
will also include, among other things, a review of the strategic
benefits that may be achieved with respect to competitive
positioning, potential synergies and cost savings.
MARICOPA COUNTY: Moody's Shaves 4 Notches Off IRB Rating to B1
--------------------------------------------------------------
Moody's Investors Service downgraded the underlying rating on the
Maricopa County Industrial Development Authority Multifamily
Housing Revenue Bonds (Whispering Palms Apartment Project) Senior
Series 1999A from Baa3 to B1. The amount of debt affected by
these downgrades is approximately $6.13 million. The rating
outlook on the bond is negative. The 1999 Series A bonds continue
to be insured by MBIA and therefore carry MBIA's financial
strength rating of Aaa; the Subordinate bonds are not rated nor
insured.
The rating action is a result of a deteriorating debt service
coverage ratio, weakened operating results combined with the
ongoing deferral of expenses and a 20% spike in vacancy. The
former management company, Mercy Housing Services has been
replaced by a court-ordered receiver. Prior to this action,
Mercy, as property manager forgave management fees in order to
lower expenses of the property.
In addition to the continuing decline in debt service coverage,
the trustee reports draws on both senior series A and subordinate
series B debt service reserve funds. While July 1, 2004 debt
service payments were made, taps in the amount of approximately
$65,000 and $95,485 on the senior series A and subordinate series
B respectively, were necessary. To date, the trustee has reported
verbally that the, debt service reserve funds remain underfunded
and unreplenished. In addition, the trustee has not received
monthly revenue deposits as mandated by the trust indenture for
the past three months.
Review of rolling 12 month unaudited operating results indicate
debt service coverage continuing to significantly trend below
underwritten levels. These coverage levels are expected to result
in ongoing deficiencies. Moody's will continue to assess
Whispering Palm's situation, which will include additional
discussions with property management and assessment of the
transaction's projected performance based on current rent levels,
concessions and expenses.
Whispering Palm's financial condition has been adversely impacted
by difficult economic conditions and sluggish demand for
affordable rental housing in the Maricopa County area. Maricopa
County has been plagued by higher than anticipated physical
vacancy has caused by job layoffs and a surge in low interest
rate-induced home buying. In order to remain competitive, prior
to the court-ordered receiver, Whispeing Palm's management was
forced to offer rent concessions in the past to prospective
tenants and reduce rent levels on certain units to generate
leasing traffic. This pattern has resulted in significant loss in
revenue.
Outlook
The rating outlook on both Senior and Subordinate bonds is
negative. Underfunded debt service reserve funds, high vacancies,
poor operating results as well as the current court-ordered
appointee do not offer much hope in terms of a near-turnaround.
Moody's will continue to monitor Whispering Palm's financial
situation and will gauge the level of progress made by the owner
and receiver in turning the property around.
MASSMUTUAL/DARBY: Fitch Raises $38.2M Class B Rating to BB-
-----------------------------------------------------------
Fitch Ratings upgrades two tranches of MassMutual/Darby CBO LLC as
follows:
-- $175,255,938 class A-2 notes upgraded from 'AA' to 'AA+';
-- $38,200,000 class B notes upgraded from 'B+' to 'BB-'.
MassMutual/Darby CBO LLC is a collateralized debt obligation --
CDO -- managed by Babson Capital Management LLC. The CDO was
established in December 1997 to issue approximately $494 million
in debt. Payments are made quarterly and the reinvestment period
ended in December 2003. In conjunction with the review, Fitch
Ratings discussed the current state of the portfolio with the
asset manager and their portfolio management strategy, considering
the reinvestment period has ended.
Fitch has reviewed the credit quality of the individual assets
comprising the portfolio. Since Fitch's last rating action in
March 2002, the portfolio has experienced stable performance, a
reduction in impaired and defaulted assets, and a minimal,
positive change to the weighted average rating factor -- WARF.
The class A-1 notes have paid in full, while the class A-2 notes
have paid down over 50% of its original note balance. The class B
notes have previously capitalized interest over several payment
periods, but as of the most recent payment period, the class B
notes have received all capitalized interest and are receiving
current interest. Accordingly, as a result of our analysis, Fitch
has determined that the current ratings assigned to all rated
notes reflect the current risk to noteholders.
The ratings assigned to the class A-2 notes address the timely
payment of interest and ultimate payment of principal. The
ratings assigned to the class B notes address the ultimate receipt
of interest and the stated principal amount by the final maturity
date.
Fitch will continue to monitor and review this transaction for
future rating adjustments as needed.
MEDIA GROUP: Wants to Pay Employee Claims and Benefits
------------------------------------------------------
The Media Group, Inc., and its debtor-affiliates, ask the U.S.
Bankruptcy Court for the District of Connecticut, for permission
to pay prepetition employee wages, salaries, health insurance
premiums, reimburse employee business expenses and pay certain
employee payroll deductions.
The Debtors submit that payment of prepetition compensation and
deductions is critical to their rehabilitative efforts.
The Debtors further ask the Court to authorize and direct all
applicable banks and other financial institutions to receive,
process, honor and pay any and all checks drawn on the Debtors'
payroll accounts.
Headquartered in Stamford, Connecticut, The Media Group,
distributes and markets automotive additives and general
merchandise. The company filed for chapter 11 protection on July
9, 2004 (Bankr. Conn. Case No. 04-50845). Douglas S. Skalka,
Esq., at Neubert Pepe and Monteith, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection it
listed $10,915,723 in total assets and $14,743,552 in total debts.
MERRILL LYNCH: Fitch Rates Two Privately-Offered Classes at Low-Bs
------------------------------------------------------------------
Fitch rates Merrill Lynch Mortgage Investors, Inc., $996.5 million
mortgage pass-through certificates, series MLCC 2004-D, as
follows:
-- $969.5 million class A-1, A-2, A-3, A-R, X-A, and X-B
certificates (senior certificates) 'AAA';
-- $10.0 million class B-1 certificates 'AA';
-- $8.0 million class B-2 certificates 'A+';
-- $4.5 million class B-3 certificates 'BBB+';
-- $2.5 million privately offered class B-4 certificates 'BB+';
-- $2.0 million privately offered class B-5 certificates 'B+'.
The 'AAA' rating on the senior certificates reflects the 3.05%
subordination provided by the 1.00% class B-1, the 0.80% class
B-2, the 0.45% class B-3, the 0.25% privately offered class B-4,
the 0.20% privately offered class B-5, and the 0.35% privately
offered class B-6 (not rated by Fitch) certificates. Classes B-1,
B-2, B-3, B-4, and B-5 are rated 'AA', 'A+', 'BBB+', 'BB+', and
'B+' based on their respective subordination.
Fitch believes the credit enhancement will be adequate to cover
credit losses. In addition, the ratings also reflect the quality
of the underlying mortgage collateral, strength of the legal and
financial structures, and the primary servicing capabilities of
Cendant Mortgage Corporation, which is rated 'RPS1' by Fitch.
Generally, with certain limited exceptions, distributions to the
class A-1 and A-R certificates (and to the component of the class
X-A certificates related to pool 1) will be solely derived from
collections on the pool 1 mortgage loans, distributions to the
class A-2 certificates (and to the component of the class X-A
certificates related to pool 2) will be solely derived from
collections on the pool 2 mortgage loans, and distributions to the
class A-3 certificates will be solely derived from collections on
the pool 3 mortgage loans.
Aggregate collections from all three pools of mortgage loans will
be available to make distributions on the class X-B and B
certificates. When a pool experiences either rapid prepayments or
disproportionately high realized losses, principal and interest
collections from one pool may be applied to pay principal or
interest, or both, to the senior certificates to the other pools.
The trust consists of 2,682 conventional, fully amortizing,
primarily 25-year adjustable-rate mortgage loans secured by first
liens on one-to-four family residential properties with an
aggregate principal balance of $1,000,001,358 as of the cut-off
date (Aug. 1, 2004). Each of the mortgage loans are indexed off
the one-month LIBOR or six-month LIBOR, and all of the loans pay
interest only for a period of 10 years following the origination
of the mortgage loan. The average unpaid principal balance as of
the cut-off-date is $372,857. The weighted average original loan-
to-value ratio (LTV) is 70.16%. The weighted average effective
LTV is 65.44%. The weighted average FICO is 731. Cash-out
refinance loans represent 36.89% of the loan pool. The three
states that represent the largest portion of the mortgage loans
are California (21.88%), New York (6.80%), and Florida (6.52%).
All of the mortgage loans were either originated by Merrill Lynch
Credit Corporation pursuant to a private label relationship with
Cendant Mortgage Corporation or acquired by Merrill Lynch Credit
Corporation in the course of its correspondent lending activities
and underwritten in accordance with Merrill Lynch Credit
Corporation underwriting guidelines. Any mortgage loan with an
OLTV in excess of 80% is required to have a primary mortgage
insurance policy. Additional collateral loans included in the
trust are secured by a security interest in the borrower's assets,
which does not exceed 30% of the loan amount. Ambac Assurance
Corporation provides a limited purpose surety bond that covers any
losses in proceeds realized from the liquidation of the additional
collateral.
None of the mortgage loans are high cost loans as defined under
any local, state, or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release, 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
Merrill Lynch Mortgage Investors, the depositor, will assign all
its interest in the mortgage loans to the trustee for the benefit
of certificate holders. For federal income tax purposes, an
election will be made to treat the trust fund as multiple real
estate mortgage investment conduits. Wells Fargo Bank Minnesota,
National Association will act as trustee.
MILLENIUM ASSISTED: Committee Gets Nod to Hire Lowenstein Sandler
-----------------------------------------------------------------
The Official Unsecured Creditors Committee appointed in Millenium
Assisted Living Residence at Freehold, LLC's chapter 11 case
sought and obtained approval from the U.S. Bankruptcy Court for
the District of New Jersey to employ Lowenstein Sandler PC as its
counsel, nunc pro tunc to June 25, 2004.
The Committee tells the Court that it selected Lowenstein Sandler
because of its attorneys' experience and knowledge. The Committee
is confident that the firm is well-qualified to:
a) provide legal advice as necessary with respect to the
Committee's powers and duties as an official committee
appointed under Section 1102 of the Bankruptcy Code;
b) assist the Committee in investigating the acts, conduct,
assets, liabilities, and financial condition of the
Debtor, the operation of the Debtor's business, potential
claims, and any other matters relevant to the case or to
the formulation of a plan of Reorganization;
c) participate in the formulation of a Plan;
d) provide legal advice as necessary with respect to any
disclosure statement and plan filed in this case and with
respect to the process for approving or disapproving
disclosure statements and confirming or denying
confirmation of a Plan;
e) prepare on behalf of the Committee, as necessary,
applications, motions, complaints, answers, orders,
agreements and other legal papers;
f) appear in Court to present necessary motions,
applications, and pleadings, and otherwise protecting the
interests of those represented by the Committee;
g) assist the Committee in requesting the appointment of a
Trustee or Examiner, should such action be necessary; and
h) perform other legal services as may be required and be in
the interest of the Committee and creditors.
Lowenstein Sandler's hourly rates are:
Position Hourly Rate
-------- -----------
Partners $285 to 535
Senior Counsel 250 to 395
Counsel 240 to 325
Associates: 150 to 260
Legal Assistants: 75 to 140
Michael S. Etkin, Esq., will lead the team in this engagement. Mr.
Etkin assures the Court that the firm does not hold or represent
any interest adverse to the Committee with respect to the matters
that it is to be employed, and is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Freehold, New Jersey, Millenium Assisted Living
Residence at Freehold, LLC, filed for chapter 11 protection on
June 7, 2004 (Bankr. N.J. Case No. 04-29097). Larry Lesnik, Esq.,
and Sheryll S. Tahiri, Esq., at Ravin Greenberg PC represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it estimated over $10 million in
debts and assets.
MIRANT: California Attorney General Sues for Commodities Fraud
--------------------------------------------------------------
Attorney General Bill Lockyer filed a lawsuit against Mirant
alleging the firm unjustly profited from rampant lying and fraud
during the Energy Crisis of 2000-01 that drained billions of
dollars from California's economy and ratepayers.
"Mirant profited by breaking the law and plundering the people of
California," said Lockyer. "They were, without question, one of
the worst offenders during the Energy Crisis. They told grid
operators generating units were down when they weren't. They
created bogus grid congestion, then received premium payments to
relieve it. To avoid in-state price caps, they created the
illusion of importing energy from out of state. Californians paid
dearly for Mirant's fraud."
Filed in San Francisco Superior Court on behalf of the people,
Lockyer's complaint alleges Mirant's market manipulation violated
the state's commodities fraud statute and Unfair Competition Law
-- UCL. The lawsuit seeks restitution, damages and disgorgement
of unjust profits. Additionally, the complaint asks the court to
award civil penalties of $25,000 for each commodities fraud
violation and $2,500 for each violation of the UCL.
The complaint does not specify the total relief sought. The court
will determine that figure based on the evidence. But Lockyer
said the damages, restitution, disgorgement and civil penalties
could well total in the hundreds of millions of dollars. The
named defendants include:
* Mirant Corporation;
* Mirant Americas, Inc.;
* Mirant California Investments, Inc.;
* Mirant California, LLC;
* Mirant Americas Development, Inc.;
* Mirant Americas Energy Marketing, LP;
* Mirant Delta, LLC; and
* Mirant Potrero, LLC.
The lawsuit is the latest enforcement action resulting from
Lockyer's ongoing investigation of market misconduct by Mirant and
other power companies during the Energy Crisis. The complaint
alleges Mirant engaged in the unlawful conduct for at least three
years.
"Beginning as early as 1999 and continuing at least through 2001,
the Mirant defendants willfully engaged in an array of
manipulative and fraudulent schemes designed to enable them to
obtain 'congestion relief' payments for taking actions that did
not relieve any congestion, to receive payment for excess
generation through the submission of false schedules, and to
circumvent the . . . price cap by falsely representing the source
of the energy," the complaint alleges.
Lockyer's complaint focuses on strategies pioneered by Enron to
manipulate the market. The games targeted by Lockyer's lawsuit
against Mirant include strategies to create false congestion and
obtain premium prices to relieve the non-existent congestion. The
games in this category include "Death Star."
The complaint also cites the "Get Shorty" game in which Mirant
paper traded, and collected high prices for, reserve power Mirant
had no intention of providing. "Fat Boy" and "Ricochet" are two
other games specifically mentioned in the lawsuit. In "Fat Boy,"
Mirant intentionally overstated the amount of power it intended to
provide, knowing it would receive the highest possible price for
the excess.
In "Ricochet" transactions, Mirant evaded price caps then in
effect on power sold in California. Under this strategy, Mirant
bought power in California, sold it briefly to an entity outside
the state, repurchased it from the out-of-state entity, then sold
it the state grid operator at inflated prices. The Ricochet game
allowed Mirant to evade the price cap, "despite the fact that, as
a practical matter, no energy ever left or re-entered the state,"
the complaint alleges.
Mirant also helped create artificial power scarcities, according
to the complaint. "The Mirant defendants willfully submitted
false outage reports to the (grid operator) and falsely
represented that their units were partially or completely
unavailable when in fact the units were fully operational," the
complaint alleges. "Through this strategy, the Mirant defendants
intentionally withheld energy from the . . . system."
The Mirant case marks the second time Lockyer has sued a company
for commodities fraud using the enforcement authority granted him
under a law that took effect January 1, 2004. Lockyer on June 17,
2004 sued Enron under the same law.
The statute, which Lockyer sponsored, gives the Attorney General
concurrent jurisdiction with the state Corporations Commissioner
to investigate violations of California's commodities fraud law,
and to bring civil enforcement actions for violations. The law
prohibits fraud in the sale or purchase of commodities.
Electricity is a commodity, as defined under the statute.
Lockyer's Energy Task Force, working in cooperation with
utilities, state regulators and the Governor's Office, has
produced eight settlements to resolve enforcement actions and
refund claims arising from the Energy Crisis. The settlements
have a combined value of $2.64 billion. Of that total,
$2.1 billion represents ratepayer relief.
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. 43; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
NATIONAL CENTURY: CSFB Asks Court to Quash August 2004 Subpoena
---------------------------------------------------------------
Sherri Blank Lazear, Esq., at Baker & Hostetler, in Columbus,
Ohio, relates that Gibbs & Bruns, LLP, as counsel for both the
Unencumbered Assets Trust, the successor-in-interest to certain
rights and assets of National Century Financial Enterprises, Inc.,
and its debtor-affiliates, and for most of the plaintiffs in a
multidistrict litigation, seeks testimony of Credit Suisse First
Boston, LLC, under the guise of a Rule 2004 examination.
According to Ms. Lazear, Gibbs & Bruns actually seeks that
testimony for purposes of pursuing its clients' claims in the MDL
proceeding, Ms. Lazear remarks. In so doing, G&B is defying the
discovery stay imposed by Judge Graham in the MDL proceeding.
Ms. Lazear adds that Gibbs & Bruns cannot argue that Rule 2004
discovery of CSFB must be hastened along because the Trust could
otherwise be barred by statutes of limitations from bringing
possible causes of action. That argument has been taken away by
CSFB's offer of a tolling agreement to the Trust. Gibbs & Bruns'
rejection of the tolling agreement reveals that it is not in fact
motivated by a desire to protect the Trust.
Ms. Lazear tells Judge Calhoun that Gibbs & Bruns already has
received extensive document discovery from CSFB. On November 4,
2003, Gibbs & Bruns served CSFB with a subpoena seeking 54 broad
categories of documents. CSFB then produced more than 71,000
pages of hard-copy documents to Gibbs & Bruns. In addition, CSFB
will be producing e-mail for 21 of its employees, which
undoubtedly will comprise tens of thousands of additional pages.
In addition to the document discovery, on May 4, 2004, the Court
authorized the Debtors to conduct a third round of Rule 2004
Discovery, allowing Gibbs & Bruns to take approximately 23
depositions, including a Civil Rule 30(b)(6) deposition of CSFB.
Gibbs & Bruns served CSFB with a subpoena seeking a Rule 30(b)(6)
deposition on August 2, 2004. The Subpoena identifies 27 separate
topics for CSFB's deposition. The topics appear to have been
lifted from Gibbs & Bruns' complaints in the MDL proceeding.
By letter dated August 10, 2004, CSFB offered the Unencumbered
Assets Trust, as successor-in-interest to certain of the Debtors'
rights and assets, a tolling agreement with respect to any and all
claims that the Trust could decide to assert against CSFB. The
toll would expire a reasonable time after the District Court rules
on CSFB's pending motions to dismiss the complaints in the MDL
proceeding. Once the motions are decided, deposition discovery of
CSFB in the MDL proceeding and the bankruptcy proceeding could be
coordinated efficiently. CSFB also advised the Trust that the
scope of the topics in the Subpoena was too broad.
However, Gibbs & Bruns, without any explanation, rejected CSFB's
offer of a tolling agreement and refused to coordinate discovery
with the MDL Proceeding.
Accordingly, CSFB asks the Court to quash the Unencumbered Assets
Trust's Rule 2004 subpoena for the oral examination of a Rule
30(b)(6) corporate representative of CSFB.
Ms. Lazear asserts that the Subpoena should be quashed because:
A. Coordination of CSFB's Deposition for Rule 2004 and MDL
Purposes Will Promote Efficiency and Will Not Prejudice the
Trust
The interest of efficiency will be served by coordinating
CSFB's deposition in the Rule 2004 and MDL contexts. It would
be more efficient to take one, rather than two, Rule 30(b)(6)
depositions of CSFB. Also, Gibbs & Bruns repeatedly has
asserted that immediate Rule 2004 discovery is necessary to
determine whether the Trust should file the Debtors'
Unasserted Litigation Claims before applicable statutes of
limitations expire in November 2004. Curiously, Gibbs & Bruns
never has identified a single claim that potentially could be
barred if not filed by November 2004.
B. The Subpoena Impermissibly Seeks to Undermine the
Legislatively Mandated Stay of Discovery in the MDL Proceeding
Gibbs & Bruns is attempting to use the Subpoena as a means to
take discovery in the MDL proceeding. Thus, Gibbs & Bruns has
effectively violated the Court's rulings that authorized Rule
2004 examinations for the limited purpose of identifying the
Debtors' litigation claims.
C. The Trust Has No Need for the Discovery Sought by the Subpoena
The Trust does not need any discovery from CSFB because it
will be barred by the doctrine of in pari delicto from
succeeding on any conceivable claim against CSFB because the
Debtors themselves perpetrated the fraud that caused them to
file for bankruptcy protection.
The Trust also has no need to take CSFB's deposition because
the Debtors already have identified all their supposed claims
against CSFB in an exhibit to their confirmed Liquidation
Plan, and the Trust is now barred from adding any additional
claims to that list.
Furthermore, the Trust does not need a Rule 2004 examination
of CSFB because pursuant to the Sixth Circuit's decision in
Browning v. Levy, 283 F.3d 761 (6th Cir. 2002), any causes of
action not yet identified have not survived the Plan's
confirmation as a matter of law.
D. The Scope of the Subpoena is Impermissibly Broad and
Burdensome
The Trust demands that CSFB testify on 27 broad topics that
cover the entirety of CSFB's relationship with the Debtors
during a six-year period. There are no "outer limits" to the
scope of the deposition, and it is impossible for CSFB to
provide a witness capable of answering questions on all of the
designated topics.
"Put another way, the burden of compliance with the Subpoena
outweighs its likely benefit, particularly since the Trust has no
need for CSFB's testimony," Ms. Lazear says.
To the extent that the Court won't quash the Subpoena, the topics
should be narrowed. Ms. Lazear states that if, however, the Court
chooses to analyze the Subpoena on a topic-by-topic basis, it
should require Gibbs & Bruns to explain how each of the 27 topics
relates to a potential cause of action that the Trust is
investigating.
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. S.D. Ohio Case No. 02-65235). The healthcare finance
company prosecuted its Fourth Amended Plan of Liquidation to
confirmation on April 16, 2004. Paul E. Harner, Esq., at Jones
Day represents the Debtors in their restructuring efforts.
(National Century Bankruptcy News, Issue No. 45; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
OAKWOOD HOMES: S&P Puts 30 Low-B & 8 Junk Ratings on CreditWatch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed various ratings on
Oakwood Homes Corp.-related manufactured housing securitizations
on CreditWatch with negative implications.
The CreditWatch placements reflect the continued poor performance
exhibited by the underlying pools of manufactured housing
installment sales contracts and mortgage loans and the resulting
deterioration of credit enhancement since Standard & Poor's last
rating actions in March 2004, reported in the Troubled Company
Reporter on March 10, 2004.
The manufactured housing industry continues to be plagued by
unfavorable market conditions, continue to plague the manufactured
housing industry, contributing to which accounts for the generally
poor performance of the manufactured housing-related
securitizations.
In 2002, the performance of Oakwood's manufactured housing
securitizations began to deteriorate rapidly as a result of
fundamental industry wide problems, which ultimately led to the
bankruptcy of the industry's two largest financing companies,
including Oakwood. The reduction of Oakwood's lending activity
and overall repossession inventory levels subsequently limited its
ability to liquidate repossessed units through retail channels, an
alternative which tends to yield higher recovery rates. The
increased reliance on a wholesale liquidation strategy and weak
demand resulted in recovery rates substantially below historical
norms. While repossession inventories on an industry level appear
to be stabilizing or declining, recovery rates remain low.
The high levels of repossessions and increased loss severities
have caused credit support in Oakwood's manufactured housing
securitizations to decline rapidly. Most of the transactions have
experienced principal write-downs on their subordinate classes
and, in some cases, on the mezzanine classes as well.
In April 2004, Clayton Homes Inc., a subsidiary of Berkshire
Hathaway Inc., completed its acquisition of Oakwood.
Standard & Poor's expects to complete a detailed review of the
credit performance of the securitizations listed relative to the
remaining credit support within the next two months in order to
determine if any ratings actions are necessary.
Ratings Placed On Creditwatch With Negative Implications
Oakwood Mortgage Investors Inc. Series 1995-A
Rating
Class To From
----- -- ----
B-1 AA/Watch Neg AA
Oakwood Mortgage Investors Inc. Series 1995-B
Rating
Class To From
----- -- ----
B-1 BBB/Watch Neg BBB
Oakwood Mortgage Investors Inc. Series 1996-B
Rating
Class To From
----- -- ----
A-6 AAA/Watch Neg AAA
Oakwood Mortgage Investors Inc. Series 1996-C
Rating
Class To From
----- -- ----
A-6 AAA / Watch Neg AAA
Oakwood Mortgage Investors Inc. Series 1997-A
Rating
Class To From
----- -- ----
A-6 AAA/Watch Neg AAA
B-1 BB/Watch Neg BB
Oakwood Mortgage Investors Inc. Series 1997-B
Rating
Class To From
----- -- ----
M-1 AAA/Watch Neg AAA
B-1 BB-/Watch Neg BB-
Oakwood Mortgage Investors Inc. Series 1997-C
Rating
Class To From
----- -- ----
M-1 AAA/Watch Neg AAA
B-1 B+/Watch Neg B+
Oakwood Mortgage Investors Inc. Series 1998-A
Rating
Class To From
----- -- ----
A-4 AAA/Watch Neg AAA
A-5 AAA/Watch Neg AAA
M-1 A-/Watch Neg A-
Oakwood Mortgage Investors Inc. Series 1998-B
Rating
Class To From
----- -- ----
A-3 AAA/Watch Neg AAA
A-4 AAA/Watch Neg AAA
A-5 AAA/Watch Neg AAA
M-1 BBB+/Watch Neg BBB+
M-2 B-/Watch Neg B-
Oakwood Mortgage Investors Inc. Series 1998-D
Rating
Class To From
----- -- ----
A AA-/Watch Neg AA-
A-1-ARM AA-/Watch Neg AA-
OMI Trust Series 1999-C
Rating
Class To From
----- -- ----
A-2 BBB+/Watch Neg BBB+
M-1 B-/Watch Neg B-
OMI Trust Series 1999-D
Rating
Class To From
----- -- ----
A-1 BBB+/Watch Neg BBB+
M-1 B-/Watch Neg B-
OMI Trust Series 1999-E
Rating
Class To From
----- -- ----
A-1 BB/Watch Neg BB
M-1 CCC+/Watch Neg CCC+
OMI Trust Series 2000-A
Rating
Class To From
----- -- ----
A-2 B/Watch Neg B
A-3 B/Watch Neg B
A-4 B/Watch Neg B
A-5 B/Watch Neg B
M-1 CCC/Watch Neg CCC
OMI Trust Series 2000-B
Rating
Class To From
----- -- ----
A-1 B-/Watch Neg B-
OMI Trust Series 2000-C
Rating
Class To From
----- -- ----
A-1 BBB+/Watch Neg BBB+
M-1 B/Watch Neg B
OMI Trust Series 2000-D
Rating
Class To From
----- -- ----
A-2 BBB-/Watch Neg BBB-
A-3 BBB-/Watch Neg BBB-
A-4 BBB-/Watch Neg BBB-
M-1 CCC/Watch Neg CCC
OMI Trust Series 2001-C
Rating
Class To From
----- -- ----
A-1 BB+/Watch Neg BB+
A-2 BB+/Watch Neg BB+
A-3 BB+/Watch Neg BB+
A-4 BB+/Watch Neg BB+
OMI Trust Series 2001-D
Rating
Class To From
----- -- ----
A-1 BB/Watch Neg BB
A-2 BB/Watch Neg BB
A-3 BB/Watch Neg BB
A-4 BB/Watch Neg BB
M-1 B-/Watch Neg B-
OMI Trust Series 2001-E
Rating
Class To From
----- -- ----
A-1 BB-/Watch Neg BB-
A-2 BB-/Watch Neg BB-
A-3 BB-/Watch Neg BB-
A-4 BB-/Watch Neg BB-
M-1 CCC/Watch Neg CCC
OMI Trust Series 2002-A
Rating
Class To From
----- -- ----
A-1 BBB/Watch Neg BBB
A-2 BBB/Watch Neg BBB
A-3 BBB/Watch Neg BBB
A-4 BBB/Watch Neg BBB
M-1 B-/Watch Neg B-
OMI Trust Series 2002-B
Rating
Class To From
----- -- ----
A-1 BBB-/Watch Neg BBB-
A-2 BBB-/Watch Neg BBB-
A-3 BBB-/Watch Neg BBB-
A-4 BBB-/Watch Neg BBB-
M-1 B+/Watch Neg B+
M-2 CCC+/Watch Neg CCC+
B-1 CCC/Watch Neg CCC
OMI Trust Series 2002-C
Rating
Class To From
----- -- ----
A-1 BB/Watch Neg BB
M-1 B-/Watch Neg B-
M-2 CCC+/Watch Neg CCC+
B-1 CCC/Watch Neg CCC
OMNI ENERGY: Form 10-Q Filing Cures Technical Defaults
------------------------------------------------------
Omni Energy Services Corp. (Nasdaq: OMNI) received a Nasdaq Staff
determination on August 25, 2004 indicating that the Company had
not complied with Nasdaq Marketplace Rule 4310(c)(14) by failing
to file its Form 10-Q for the period ended June 30, 2004 on a
timely basis, and that its securities were, therefore, subject to
delisting from the Nasdaq National Stock Market. The notification
is standard procedure when a Nasdaq listed company fails to
complete a required filing in a timely manner.
The Company filed the Form 10-Q on August 26, 2004 and, as a
result, the Nasdaq listing requirements have been satisfied.
Nasdaq has notified Omni that with the filing of its Form 10-Q,
the Company is in compliance with the Rule and, accordingly, the
matter is closed.
The Company disclosed in its Form 10-Q that, as a result of the
late filing of the Form 10-Q, the Company was in technical default
of its registration obligations with respect to its 6.5%
Subordinated Convertible Debentures. With the filing of the Form
10-Q on August 26, 2004, the technical default has been cured. The
Company is currently in compliance with all provisions of the
Debentures.
Headquartered in Carencro, LA, OMNI Energy offers a broad range of
integrated services to geophysical companies engaged in the
acquisition of on-shore seismic data and through its aviation
division, transportations services to oil and gas companies
operating in the shallow, offshore waters of the Gulf of Mexico.
The company provides its services through several business units:
Seismic Drilling, Aviation, Permitting, Seismic Survey and
Environmental. OMNI's services play a significant role with
geophysical companies who have operations in marsh, swamp, shallow
water and the U.S. Gulf Coast also called transition zones and
contiguous dry land areas also called highland zones.
PACIFIC GAS: Asks Court to Approve Fresno Cogen. Claim Settlement
-----------------------------------------------------------------
On August 31, 2001, Fresno Cogeneration Partners, LP, filed Claim
No. 7895, a $2,341,114 unsecured, non-priority prepetition claim,
based on amounts allegedly due to Fresno Cogeneration from
Pacific Gas and Electric Company under the parties' power
purchase agreement for the sale of electricity and electrical
capacity.
Fresno Cogeneration and PG&E subsequently entered into an
assumption agreement providing for PG&E's assumption of the PPA.
On July 30, 2002, the Court sustained PG&E's objection to certain
qualifying facility claims, which disallowed Claim No. 7895 in
its entirety on grounds that, by virtue of the Assumption
Agreement, Claim No. 7895 was converted from a prepetition
general unsecured claim into an administrative or contingent
administrative claim.
On November 17, 2003, Fresno Cogeneration filed an administrative
claim against PG&E, seeking:
(a) $1,400,000 on account of the electricity and capacity
Fresno Cogeneration provided to PG&E before the Petition
Date;
(b) $939,755 on account of the capacity underpayments by
PG&E to Fresno Cogeneration's predecessor, Agrico
Cogeneration Corporation, from January 10, 1991, through
June 11, 1992;
(c) interest and fees with respect to the Prepetition Payables
Claim and the Capacity Underpayments Claim;
(d) certain unliquidated amounts "in respect of damages and
rights to indemnity or distribution arising from PG&E's
breaches of its obligations under the PPA before the
Petition Date, including with respect to incorrect
payments made during periods of curtailment by PG&E and
the application of an incorrect line-loss adjustment to
energy payments to Fresno [Cogeneration] by PG&E";
(e) unliquidated amounts in respect of certain potential
retroactive adjustments pertaining to the pricing
provisions of the PPA; and
(f) certain unliquidated claims arising under the PPA and
related postpetition breaches by PG&E;
On January 21, 2004, the Court approved a supplemental agreement
between PG&E and Fresno Cogeneration, which provided for PG&E's
payment to Fresno Cogeneration on account of the $1,400,000
Prepetition Payables Claim plus applicable interest, in three
monthly installments on the last business day of each month,
commencing January 30, 2004. The Supplemental Agreement also
provided that nothing in the agreement will "waive [Fresno
Cogeneration]'s right to assert or PG&E's right to object to that
portion of the Administrative Claim on account of alleged
$939,755 capacity underpayments by PG&E, net of interest, fees
and costs incurred by QF in connection therewith." The
Prepetition Payables Claim has been fully paid and satisfied
through PG&E's payments under the Supplemental Agreement.
PG&E objects to Fresno Cogeneration's Capacity Underpayment
Claim, Damage and Contribution Claims, Potential Adjustment
Claim, Postpetition Claims, and the Interest and Fee Claims.
To resolve the dispute without further litigation, the parties
agree that:
(a) The Prepetition Payables Claim is allowed as provided in
the Supplemental Agreement, which amount is being
satisfied pursuant to the Supplemental Agreement;
(b) The Capacity Underpayments Claim, the Damage and
Contribution Claims, the Potential Adjustment Claims, the
Postpetition Claims, and the Interest and Fee Claims are
disallowed in their entirety;
(c) The Stipulation will not affect the parties' continuing
obligations under the Supplemental Agreement; and
(d) Fresno Cogeneration represents and warrants that it has
neither assigned nor transferred all or any portion of the
Claim.
Headquartered in San Francisco, California, Pacific Gas and
Electric Company -- http://www.pge.com/-- a wholly owned
subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest
combination natural gas and electric utilities in the United
States. The Company filed for Chapter 11 protection on April 6,
2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes,
Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at
Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the
Debtors in their restructuring efforts. On June 30, 2001, the
Company listed $23,216,000,000 in assets and $22,152,000,000 in
debts. Pacific Gas and Electric emerged from chapter 11
protection on April 12, 2004, paying all creditors 100 cents-on-
the-dollar plus post-petition interest. (Pacific Gas Bankruptcy
News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
PARMALAT: Milk Prods.' Alabama Business Bid Deadline is Sept. 1
---------------------------------------------------------------
Milk Products and National Dairy Holdings, LP, entered into an
Asset Purchase Agreement, dated July 14, 2004, for the sale of
Milk Products' Alabama Business. As set forth in agreed-upon
Bidding Procedures, the sale remains subject to competing offers
from any prospective bidder.
All interested parties are invited to make offers to purchase the
Alabama Business in accordance with the terms of the Bidding
Procedures and Bidding Procedures Order, available upon faxed
written request to Milk Products' attorney:
Gary T. Holtzer, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Fax (212) 310-8007
The deadline to submit bids for the Alabama Business is
September 1, 2004, at 12:00 p.m. Pursuant to the Bidding
Procedures Order, Milk Products may conduct an auction for the
sale of the Alabama Business. If an auction is necessary it'll
take place at Weil Gotshal's offices on September 13, 2004, at
9:00 a.m. (Eastern time). A Sale Hearing will be held following
the auction on September 15, 2004 at 10:00 a.m. before the
Honorable Robert D. Drain in Manhattan.
Objections, if any, to the sale of the Alabama Business pursuant
to the terms of the agreement reached between Milk Products and
the successful bidder must:
-- be in writing;
-- conform to the Bankruptcy Rules and the Local Rules of
the Bankruptcy Court for the Southern District of New York;
-- set forth the name of the objecting party, the nature and
amount of any claims or interests held or asserted against
Milk Products' estate or properties, the basis for the
objection and the specific grounds therefore, and
-- must be served on:
Counsel for Milk Products:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Gary T. Holtzer, Esq.
Counsel for General Electric Capital Corporation:
Jenner & Block LLP
One IBM Plaza, Room 3800
Chicago, Illinois 60611-3605
Attn: Daniel R. Murray, Esq.
Counsel for Citibank N.A., London Branch:
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Attn: Eric Marcus, Esq.
Counsel for the Official Committee of Unsecured Creditors:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Attn: David M. LeMay
Counsel for National Dairy Holdings:
Willkie Farr & Gallagher LLP
The Equitable Center
787 Seventh Avenue
New York, New York 10019-6099
Attn: Paul V. Shalhoub
Counsel for Stremicks Heritage Foods, LLC:
O'Melveny & Myers LLP
1625 Eye Street, NW
Washington, D.C. 20006-4001
Attn: Robert E. Winter
The U.S. Trustee:
Office of the United States Trustee
South District of New York
33 Whitehall Street, 21st Floor
New York, New York 10004
and all other parties required by the order, dated February
26, 2004, so as to be actually received no later than
September 8, 2004 at 4:00 p.m. (Eastern time).
All requests for information concerning the sale of the Alabama
Business should be directly by written request to:
Gary T. Holtzer, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
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.
PEGASUS AVIATION: Fitch Junks 11 Classes & Puts Low-B Ratings on 7
------------------------------------------------------------------
Fitch Ratings has taken these rating actions for Pegasus Aviation
Lease Securitization (PALS 99), Pegasus Aviation Lease
Securitization II (PALS 00), and Pegasus Aviation Lease
Securitization III (PALS 01) as outlined below:
Pegasus Aviation Lease Securitization
-- Class A-1 notes are downgraded to 'B' from 'BBB';
-- Class A-2 notes are downgraded to 'B' from 'BBB';
-- Class B-1 notes are downgraded to 'CCC' from 'B';
-- Class C-1 notes are downgraded to 'CC' from 'CCC'; and
-- Class D-1 notes remain at 'C'.
Pegasus Aviation Lease Securitization II
-- Class A-1 notes are downgraded to 'B' from 'BB-;
-- Class A-2 notes are downgraded to 'B' from 'BB-';
-- Class B-1 notes remain at 'C';
-- Class C-1 notes remain at 'D'; and
-- Class D-1 notes remain at 'D'.
Pegasus Aviation Lease Securitization III
-- Class A-1 notes are downgraded to 'BB' from 'A-';
-- Class A-2 notes are downgraded to 'BB' from 'A-';
-- Class A-3 notes are downgraded to 'BB' from 'A-';
-- Class B-1 notes are downgraded to 'CCC' from 'BB+';
-- Class B-2 notes are downgraded to 'CCC' from 'BB+';
-- Class C-1 notes are downgraded to 'CCC' from 'B+';
-- Class C-2 notes are downgraded to 'CCC' from 'B+'; and
-- Class D-1 notes are downgraded to 'CC' from 'CCC'.
The downgrades reflect Fitch's concern that lease cash flows of
all three transactions have continued to show weakness, and Fitch
believes that that they are unlikely to show much rebound over the
next few years.
Currently, PALS 99 is not paying interest on the class D notes.
This class was issued without the benefit of liquidity support.
Although the class B and C note reserve has not yet been utilized,
Fitch does expect that this is likely sometime in 2005. PALS 00
is not paying interest on the class B, C, and D notes and has
exhausted the liquidity associated with these classes. PALS 01
has not used any of its liquidity reserves and is not likely to do
so in 2005.
The indentures for all three PALS transactions are similar. They
specify that while any failure to pay scheduled interest when due
constitutes an event of default, it does not provide for an
acceleration of payment on the notes. Acceleration of payment on
the notes only occurs when interest on the most senior class is
not paid when due.
PALS 99, PALS 00, and PALS 01 are Delaware trusts formed to
conduct limited activities, including the buying, owning, leasing,
and selling of commercial jet aircraft. Servicing is currently
being performed by Pegasus Aviation, Inc.
PEGASUS SATELLITE: DirecTV Completes $950 Million Acquisition
-------------------------------------------------------------
Following the approval on Thursday, Aug. 26, of a U.S. Bankruptcy
Court judge in Portland, Maine, The DIRECTV Group, Inc.'s
(NYSE:DTV) subsidiary, DIRECTV, Inc., completed the acquisition of
the primary direct broadcast satellite assets of Pegasus Satellite
Television, Inc., which includes the rights to all DIRECTV
subscribers activated through Pegasus. The total transaction is
valued at approximately $950 million.
The agreement was approved by the creditors' committee in Pegasus'
Chapter 11 proceedings as well as by the U.S. Bankruptcy Court in
Portland, Maine.
DIRECTV expects to complete the migration of Pegasus customers to
DIRECTV within 30 to 45 days. DIRECTV and Pegasus will work
together to ensure a seamless migration of Pegasus customers to
DIRECTV, and DIRECTV customers in Pegasus territories will
continue to receive uninterrupted service during this transition
process. Pegasus had approximately 1.08 million customers as of
June 1, 2004.
Chase Carey, president and CEO of The DIRECTV Group, said, "The
completion of this agreement not only gives DIRECTV the rights to
more than 1 million customers, it also gives us access to an
additional 10 million households in rural areas to whom we can
offer the full benefits of DIRECTV(R) programming, pricing and
service. Clearly, this is a win for consumers and competition in
rural America. In addition, DIRECTV derives significant strategic
and financial benefits from this transaction, including increased
short-term cash flow and long-term value."
The DIRECTV Group, Inc. (NYSE:DTV) is a world-leading provider of
digital multichannel television entertainment, broadband satellite
networks and services. The DIRECTV Group is 34 percent owned by
Fox Entertainment Group, which is approximately 82 percent owned
by News Corporation Ltd.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on June 2,
2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S.
Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M.
Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur,
Sawyer & Nelson, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $1,762,883,000 in assets and $1,878,195,000
in liabilities.
PENN OCTANE: Rio Vista Files Amended Reg. Statement with SEC
------------------------------------------------------------
In connection with Penn Octane Corp.'s (Nasdaq:POCC) proposed
spin-off to its common stockholders of the common units of Rio
Vista Energy Partners L.P., Rio Vista has filed with the
Securities and Exchange Commission an amended registration
statement on Form 10. As indicated in the amended Form 10, subject
to completion of the registration statement by Rio Vista and final
review of the Form 10 by the SEC, the Spin-Off is expected to be
completed on or about Sept. 30, 2004.
Penn Octane's schedule regarding the completion of the Spin-Off is
only its expectation regarding this matter. The completion of the
Spin-Off is subject to various conditions, including final
approval of Penn Octane's board of directors and other conditions
that are detailed in the Form 10. The Form 10, including the
exhibits that were filed as part of the Form 10, provides greater
detail with respect to these conditions.
Please refer to the Form 10 filed Thursday, Aug. 26, by Rio Vista
and the Form 10-Q/A filed on July 23, 2004, by Penn Octane for
more information concerning the Spin-Off.
About Penn Octane Corp.
Penn Octane is a leading supplier of Liquefied Petroleum Gas (LPG)
to Northeastern Mexico. Penn Octane leases a 132-mile, six-inch
pipeline which connects from a pipeline in Kleberg County, Texas,
to its terminal in Brownsville, Texas, which historically served
as a trans-shipment point for truck delivery to Mexico. Until the
Spin-Off is consummated, the company will continue to own and
operate a 21-mile pipeline which connects the terminal in
Brownsville to a storage and distribution terminal in Matamoros,
Tamaulipas, Mexico. The company also utilizes a 12-inch propane
pipeline which connects certain gas plants in Corpus Christi,
Texas, to its pipeline in Kleberg County. The company's network is
further enhanced by the 155 miles of pipeline it has rights to use
to transport LPG to and from its storage facility of 500,000
barrels in Markham, Texas, that enhances the company's ability to
bring LPG to Northeastern Mexico. The company has recently begun
operations of its gasoline and diesel fuel reseller business. By
allocating portions of certain pipeline and terminal space located
in California, Arizona, Nevada and Texas to the company, the
company is able to sell gasoline and diesel fuel at rack loading
terminals and through bulk and transactional exchanges.
* * *
As reported in the Troubled Company Reporter on August 10, 2004,
The auditing firm of Burton, McCumber & Cortez, L.L.P. in
Brownsville, Texas, included an explanatory paragraph in Penn
Octane Corporation's financial statements as of July 31, 2003,
raising substantial doubt about the Company's ability to continue
as a going concern.
These facts were previously contained in the firm's Auditors
Report to the Board of Directors of Penn Octane Corporation, and
dated May 28, 2004.
RATE MY MORTGAGE INC: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Rate My Mortgage, Inc.
800 Federal Street
Andover, Massachusetts 01810
Bankruptcy Case No.: 04-12457
Chapter 11 Petition Date: August 26, 2004
Court: District of Delaware
Debtor's Counsel: James E. Huggett, Esq.
Flaster/Greenberg, P.C.
913 Market Street, 7th Floor
Wilmington, Delaware 19801
Tel: 302-351-1910
Fax: 302-351-1919
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest creditors.
REDLINE PERFORMANCE: Voluntary Chapter 7 Case Summary
-----------------------------------------------------
Debtor: Redline Performance Products, Inc.
aka Redline Snowmobiles
1120 Wayzata Boulevard E, Suite 200
Wayzata, Minnesota 55391
Bankruptcy Case No.: 04-44835
Type of Business: The Debtor designs, engineers, and markets
snowmobiles.
See http://www.redlinesnowmobiles.com/
Chapter 11 Petition Date: August 27, 2004
Court: District of Minnesota (Minneapolis)
Judge: Robert J. Kressel
Debtor's Counsel: Ryan T. Murphy, Esq.
Fredrikson & Byron, P.A.
4000 Pillsbury Center
200 South Sixth Street
Minneapolis, MN 55402-1425
Tel: 612-492-7000
Fax: 612-492-7077
Total Assets: $4,229,825
Total Debts: $6,543,929
REDLINE PERFORMANCE: Files for Chapter 7 Protection in Minnesota
----------------------------------------------------------------
Redline Performance Products, Inc. (AMEX: RED), which was engaged
in the design, engineering and marketing of Redline(TM)
snowmobiles, filed a voluntary petition for relief under Chapter 7
of the United States Bankruptcy Code with the United States
Bankruptcy Court, District of Minnesota.
In connection with the filing, the Company ceased all business
activity and operations. The Company determined that it does not
have sufficient resources to continue its operations and has been
unable to secure additional financing required to produce its
snowmobiles and fund its operating activities. The court will
appoint a bankruptcy trustee who will be responsible for the wind-
up of the business.
In connection with the filing under Chapter 7, all directors and
officers resigned except Mark Payne, the Company's President and
CEO, who will remain with the Company to facilitate the transition
to a court-appointed trustee.
The Company did not file its quarterly report on Form 10-QSB for
the quarter ended June 30, 2004, and does not intend to make such
a filing. The American Stock Exchange halted trading of the
Company's common stock and the Company is no longer in compliance
with the listing requirements for the American Stock Exchange.
The Company cancelled the annual meeting of shareholders scheduled
for September 10, 2004.
Headquartered in Vista, California, Redline Performance Products,
Inc., (AMEX: RED) designs, engineers, manufactures, markets and
sells snowmobiles under the Redline brand name. The Company filed
for chapter 7 petition on August 27, 2004 (Bankr. D. Minn. Case
No. 04-44835). Ryan T. Murphy, Esq. at Fredrikson & Byron, P.A.
represent the debtor in its liquidation efforts. When the Company
filed for chapter 7 protection, it listed $4,229,825 in total
assets and $6,543,929 in total debts.
RELIANT ENERGY: Lenders Plan Foreclosure of Liberty Power Plant
---------------------------------------------------------------
Reliant Energy, Inc. has been notified that the lenders to its
non-recourse, project-financing subsidiary, Liberty Electric PA,
LLC, have initiated foreclosure proceedings with respect to its
Liberty power plant, a 530-megawatt, natural gas-fired facility
located in Pennsylvania.
Reliant Energy acquired the Liberty plant in February 2002 as part
of its purchase of Orion Power Holdings, Inc. The facility began
operations in May 2002, with the output committed through 2016 to
a subsidiary of PG&E Corporation. In July 2003, this counterparty
filed for bankruptcy and a subsequent bankruptcy court order
terminated the off-take agreement. The Liberty project has been in
default under its $262 million project financing agreement.
Reliant Energy previously stated it would not make additional
capital contributions to the project and that it has discussed a
foreclosure or transfer of ownership to the lenders.
"The foreclosure proceedings will have no effect on any other
agreement of Reliant Energy or its affiliates," said Mark Jacobs,
executive vice president and chief financial officer. "We expect
these proceedings to result in the transfer of ownership of the
Liberty power plant to the lenders in the near future."
Upon completion of the foreclosure proceedings, Reliant will
write-off the net book value of $75 million as well as any
goodwill allocable to the Liberty facility.
About Reliant Energy
Reliant Energy Services is the subsidiary of Reliant Resources
responsible for purchasing fuel for and marketing the power
produced by its generation facilities.
Reliant Resources, Inc., based in Houston, Texas, provides
electricity and energy services to retail and wholesale customers
in the U.S., marketing those services under the Reliant Energy
brand name. The company provides a complete suite of energy
products and services to more than 1.8 million electricity
customers in Texas ranging from residences and small businesses to
large commercial, industrial and institutional customers. Reliant
also serves large commercial and industrial clients in the PJM
(Pennsylvania, New Jersey, Maryland) Interconnection. The company
has approximately 20,000 megawatts of power generation capacity in
operation, under construction or under contract. For more
information, visit http://www.reliantresources.com/
* * *
Reliant Energy and Reliant Resources bonds are currently rated:
Issuer Coupon Maturity Moody's S&P Fitch
------ ------ -------- ------- --- -----
REI 9.25% 07/15/10 B1 B B+
RRI 5.00% 08/15/10 B3 CCC+ B-
RRI 9.50% 07/13/08 B1 B B+
REXBURG APARTMENTS: Case Summary & 5 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Rexburg Apartments, LLC
PO Box 1606
NYSSA, Oregon 97913
Bankruptcy Case No.: 04-52560
Chapter 11 Petition Date: August 25, 2004
Court: District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Stephen R. Harris
Belding, Harris & Petroni, Ltd.
417 West Plumb Lane
Reno, Nevada 89509
Tel: (775) 786-7600
Fax: (775) 786-7764
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 5 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Cottonwood Lane Partners Management Fees $190,000
Garry Bybee Loans $164,458
Cottonwood Lane Partners Loans $67,916
Paul Skeen Loans $34,700
Forsgren Associates Loans $21,216
SALOMON BROTHERS: Moody's Cuts Ratings on Two Cert. Classes to Ba1
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of five classes,
downgraded the ratings of four classes and affirmed the ratings of
nine classes of Salomon Brothers Mortgage Securities VII, Inc.,
CDC Securitization Corporation, Commercial Mortgage Pass-Through
Certificates, Series 2002-CDC as follows:
-- Class A-2, $65,561,370, Floating, affirmed at Aaa;
-- Class X-1, Notional, affirmed at Aaa;
-- Class X-2A, Notional, affirmed at Aaa;
-- Class X-2B, Notional, downgraded to Ba1 from Baa3;
-- Class X-3CDC, Notional, affirmed at Aaa;
-- Class B, $13,200,000, Floating, upgraded to Aaa from Aa1;
-- Class C, $19,600,000, Floating, upgraded to Aaa from Aa2;
-- Class D, $20,600,000, Floating, upgraded to Aaa from Aa3;
-- Class E, $14,600,000, Floating, upgraded to Aa3 from at A1;
-- Class F, $11,800,000, Floating, upgraded to A1 from A2;
-- Class G, $21,160,000, Floating, affirmed at A3;
-- Class H-DEN, $7,392,000, Floating, downgraded to Baa2 from
Baa1;
-- Class J-DEN, $4,490,000, Floating, downgraded to Baa3 from
Baa2;
-- Class K-DEN, $3,410,000, Floating, downgraded to Ba1 from
Baa3;
-- Class H-SWA, $2,221,000, Floating, affirmed at Baa1;
-- Class J-SWA, $994,000, Floating, affirmed at Baa2;
-- Class K-SWA, $1,630,000, Floating, affirmed at Baa3;
-- Class K-CHM, $917,000, Floating, affirmed at Baa3;
The Certificates are collateralized by participation interests in
four mortgage loans. All of the mortgage loans are secured by
first liens on 29 commercial properties located in five states.
As of the August 16, 2004 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 71.6%
to $191.1 million from $671.8 million at closing as a result of
the payoff of nine loans. All of the loans are floating rate and
are interest only. Classes A-2 through G are pooled classes,
while Classes H, J and K depend on the performance of a specific
loan for debt service and ultimate repayment. Moody's rates all
of the pooled Classes and seven of the nine rake classes.
Moody's was provided with year-end 2003 and first quarter 2004
operating results for the four loans remaining in the pool.
Moody's weighted average loan to value ratio -- LTV -- is 62.6%,
compared to 62.4% at origination. Classes B, C, D, E and F have
been upgraded due to increased credit support and stable overall
pool performance. Classes H-DEN, J-DEN, K-DEN and X-2B have been
downgraded due to the poorer performance of the Denholtz Portfolio
Loan.
The top two loans represent 73.0% of the outstanding trust
balance. The largest loan is the Denholtz Portfolio Loan
($94.6 million - 49.5%) which is secured by 26 office and office-
flex properties located in seven states. Twenty-one of the 26
buildings are concentrated in three markets -- central Florida,
Atlanta, and Chicago, constituting 70.0% of the portfolio's net
rentable area. The portfolio totals approximately 2.6 million
square feet and was 73.3% occupied as of June 2004, compared to
82.0% at securitization. Moody's LTV is 69.0%, compared to 62.6%
at securitization.
The second largest loan is the San Francisco Mart Loan
($44.9 million - 23.5%), which is secured by the San Francisco
Furniture Mart, a two-building, 1,008,074 square foot furniture
showroom and office property located in San Francisco, California.
Mart I, originally built in 1937, is a 684,000 square foot, 11-
story building. The property consists of more than 200 furniture
showrooms (each 1,000 to 3,000 square feet in size) leased to
furnishing manufacturers and office and retail tenants. Mall II,
built in 1975, is a 323,000 square foot, 10-story building
consisting of office (leased to the City of San Francisco) and
showroom space. The property was 92.6% occupied as of March 2004,
compared to 90.0% at securitization. Moody's LTV is 48.6%,
essentially the same as at securitization.
The third largest loan is the Swansea Mall Loan ($26.7 million -
14.0%), which is secured by an anchored retail mall containing
approximately 703,352 net rentable square feet of which 507,229
square feet is borrower owned. The mall is located in Swansea,
Massachusetts. Anchors include:
(1) Macy's (a division of Federated Department Stores, Inc.;
Moody's senior unsecured rating Baa1; stable outlook);
(2) Sears (Moody's senior unsecured rating Baa1; negative
outlook);
(3) Wal-Mart (Moody's senior unsecured rating Aa2; stable
outlook) and Service Merchandise.
Wal-Mart and Service Merchandise both ground lease the related
land from the borrower and own the related improvements. Service
Merchandise has been in bankruptcy since securitization and does
not occupy its store. In-line shop space was 68.9% occupied as of
April 2004, compared to 68.5% at securitization. Comparable sales
for in-line tenants were $338 per square foot for the trailing
twelve-month period ending June 2004, compared to $323 per square
foot at securitization. Moody's LTV is 60.3%, compared to 62.2%
at securitization.
The fourth largest loan is the Chico Mall Loan
($24.8 million -- 13.0%), which is secured by a regional mall
located in Chico, California. Anchors include:
(1) Sears;
(2) Gottschalks; and
(3) J.C. Penney (Moody's senior unsecured rating Ba3; on review
for possible upgrade).
The mall contains approximately 528,647 net rentable square feet
of which 398,323 square feet is borrower owned. J.C. Penny owns
its store and the related land. The mall was 87.4% occupied as of
June 2004, compared to 96.0% at securitization. Comparable sales
for in-line tenants were $358 per square foot for the trailing
twelve-month period ending May 2004, compared to $339 per square
foot at securitization. Moody's LTV is 65.8%, compared to 63.4%
at securitization.
SALTON INC: Will Release 4th Qtr. & Year-End Results on Sept. 8
---------------------------------------------------------------
Salton, Inc. (NYSE:SFP) will release its fourth quarter and year-
end financial results for the period ended June 28, 2004 on
Wednesday, September 8, 2004 before the market opens. After the
release, the company will host a conference call to discuss these
results.
The conference call will take place at 9:00 a.m. ET that day.
Leonhard Dreimann, Chief Executive Officer, William Rue, President
and Chief Operating Officer and David Mulder, Executive Vice
President, Chief Administrative Officer and Senior Financial
Officer will host the call. Interested participants should call
(800) 472-8309 when calling within the United States or (706) 643-
9561 when calling internationally. Please reference Conference
I.D. Number 9722640. There will be a playback available two hours
after the call is completed. The playback will be available until
midnight, September 22, 2004. To listen to the playback, please
call (800) 642-1687 when calling within the United States or (706)
645-9291 when calling internationally. Please use Conference I.D.
9722640 for the replay.
This call is being webcast and can be accessed at Salton's web
site at http://www.saltoninc.com/until September 22, 2004. The
conference call can be found under the subheadings, "Stock Quotes"
and then "Audio Archives".
About Salton, Inc.
Salton, Inc. is a leading designer, marketer and distributor of
branded, high- quality small appliances, home decor and personal
care products. Our product mix includes a broad range of small
kitchen and home appliances, tabletop products, time products,
lighting products, picture frames and personal care and wellness
products. We sell our products under our portfolio of well
recognized brand names such as Salton(R), George Foreman(R),
Westinghouse(TM), Toastmaster(R), Melitta(R), Russell Hobbs(R),
Farberware(R), Ingraham(R) and Stiffel(R). The Company believes
its strong market position results from well-known brand names,
high quality and innovative products, strong relationships with
its customer base and a focused outsourcing strategy.
* * *
As reported in the Troubled Company Reporter's May 13, 2004
edition, Standard & Poor's Ratings Services lowered its corporate
credit rating on small appliance manufacturer Salton Inc. to
'CCC+' from 'B', and lowered its senior secured bank loan rating
on the company to 'B-' from 'B+'. Standard & Poor's also lowered
its subordinated debt rating on Salton to 'CCC-' from 'CCC+'.
The outlook is developing.
"The company's profitability is significantly below Standard &
Poor's expectations," said Standard & Poor's credit analyst
Martin S. Kounitz. "This, as well as liquidity concerns, led to
the company's downgrade."
Bloomberg pricing data showed Salton's $125,000,000 issue of
10-3/4% Senior Subordinated Notes due Dec. 15, 2005, trading
around 83 cents-on-the-dollar late last week, yielding
approximately 27%.
SARDONYX ASSOCIATES: Brings-In Albert Mickler as Attorney
---------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida gave
its nod of approval to Sardonyx Associates, LP's application to
employ Albert H. Mickler, Esq., at Mickler & Mickler as its
bankruptcy attorney.
The Debtor believes that Mr. Mickler is well qualified to
represent it in its chapter 11 proceeding due to his experience in
bankruptcy cases.
Mr. Mickler will provide general representation to the Debtor and
perform all necessary legal services.
Mr. Mickler assures the Court that he hold no interest adverse to
the Debtor or its estate. The papers filed with the Bankruptcy
Court do not disclose how much Mr. Mickler will be paid for his
legal services. The Honorable Jerry A. Funk directs that Mr.
Mickler's "Compensation shall be determined later consistent with
Section 330 of the Bankruptcy Code."
Headquartered in Pittsburgh, Pennsylvania, Sardonyx Associates,
filed for chapter 11 protection on August 23, 2004 (Bankr. M.D.
Fla. Case No. 04-08642). When the Debtor file for protection from
its creditors, it listed $5,381,000 in total assets and $6,577,203
in total debts.
SARDONYX ASSOCIATES: First Creditors' Meeting Fixed on Sept. 28
---------------------------------------------------------------
The United States Trustee for Region 21 will convene a meeting of
Sardonyx Associates LP's creditors at 1:30 p.m., on
September 28, 2004, at 300 North Hogan Street, Suite 1-200 in
Jacksonville, Florida. This is the first meeting of creditors
required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Pittsburgh, Pennsylvania, Sardonyx Associates,
filed for chapter 11 protection on August 23, 2004 (Bankr. M.D.
Fla. Case No. 04-08642). Albert H. Mickler, Esq. at Mickler &
Mickler represents the Debtor in its restructuring efforts. When
the Debtor file for protection from its creditors, it listed
$5,381,000 in total assets and $6,577,203 in total debts.
SOLOMON EQUITIES INC: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Solomon Equities, Inc.
dba Trail Dust Steak House of Denton
dba Trail Dust Steak House of Grapevine
7750 North MacArthur Boulevard, Suite 120-255
Irving, Texas 75063
Bankruptcy Case No.: 04-39152
Type of Business: The Debtor operates a restaurant.
Chapter 11 Petition Date: August 26, 2004
Court: Northern District of Texas (Dallas)
Judge: Harlin DeWayne Hale
Debtor's Counsel: Norman A. Zable, Esq.
Norman A. Zable, PC
5757 Alpha Road, Number 504
Dallas, Texas 75240
Tel: 972-386-6900
Fax: 972-386-7315
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.
STONE TOWER: S&P Assigns BB Rating to $8 Million Class D Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to Stone
Tower CLO II Ltd./Stone Tower CLO II Corp.'s $278 million notes.
Stone Tower CLO II Ltd./Stone Tower CLO II Corp. is a CLO backed
primarily by loans.
The ratings are based on the following:
-- Adequate credit support provided in the form of
subordination and excess spread;
-- Characteristics of the underlying collateral pool,
consisting primarily of high-yield loans;
-- Scenario default rates of 35.67% for the class A-1 notes,
30.99% for the class A-2 notes, 27.63% for the class B
notes, 23.50% for the class C notes, and 17.32% for the
class D notes; and break-even loss rates of 42.59% for the
class A-1 notes, 40.50% for the class A-2 notes, 32.50% for
the class B notes, 26.50% for the class C notes, and 21.50%
for the class D notes;
-- Weighted average rating of 'BB-' for the portfolio;
-- Weighted average maturity for the portfolio of 5.806 years;
-- S&P default measure (DM) of 2.98%;
-- S&P variability measure (VM) of 1.87%;
-- S&P correlation measure (CM) of 1.25; and
-- Rated overcollateralization -- ROC -- of 113.12% for the
class A-1 notes, 111.69% for the class A-2 notes, 109.53%
for the class B notes, 105.00% for the class C notes, and
102.00% for the class D notes.
Interest on the class B, C, and D notes may be deferred up until
the legal final maturity of August 2013 without causing a default
under these obligations. The ratings on the notes, therefore,
address the ultimate payment of interest and principal.
Ratings Assigned
Stone Tower CLO II Ltd./Stone Tower CLO II Corp.
Class Rating Amount
----- ------ ------------
A-1 AAA $238,500,000
A-2 AA 10,000,000
B A 9,500,000
C BBB 12,000,000
D BB 8,000,000
TGD PRODUCTIONS: Case Summary & 6 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: TGD Productions, Inc.
8228 Sunset Boulevard
Los Angeles, California 90046
Bankruptcy Case No.: 04-28326
Type of Business: The Debtor is a subsidiary of Franchise
Pictures, LLC, a film producer, which filed for
chapter 11 protection on Aug. 18, 2004 (Bankr.
C.D. Calif. Case No. 04-27996).
Chapter 11 Petition Date: August 23, 2004
Court: Central District of California (Los Angeles)
Judge: Maureen Tighe
Debtor's Counsel: David L. Neale, Esq.
Levene Neale Bender Rankin & Brill
1801 Avenue of the Stars #1120
Los Angeles, California 90067
Tel: 310-229-1234
Estimated Assets: $0 to $50,000
Estimated Debts: More than $100 M
Debtor's 6 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Intertainment AG $106,000,000
Osterfeldstrasse 84
85737 Ismaning, Germany
American Federation of Musicians Unknown
Directors Guild of America Unknown
Los Angeles Headquarters
IATSE General Office Unknown
Screen Actors Guild Unknown
Writers Guild of America, West Unknown
THREE PROPERTIES: Creditors Must File Proofs of Claim on Dec. 8
---------------------------------------------------------------
The United States Bankruptcy Court for the Southern District of
Texas set December 8, 2004, as the deadline for all creditors owed
money on account of claims arising before August 2, 2004, against
Three Properties Ltd., to file their proofs of claim.
Creditors must file written proofs and claim forms bust be
delivered to:
Michael N. Milby
Clerk of the Bankruptcy Court
United States Bankruptcy Court
P.O. Box 61288
Houston, Texas 77208
Creditors who wish to assert a claim against the estate but fail
to file their proofs of claim on or before the Dec. 8 Bar Date
will be forever barred from asserting their claims.
Headquartered in Prairie View, Texas, Three Properties operates
an apartment complex in Houston, Texas. The Company filed for
chapter 11 protection on August 2, 2004 (Bankr. S.D. Tex.
04-40811). Eric J. Taube, Esq. at Hohmann, Taube & Summers, LLP
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed less
than $50,000 in estimated assets and $1 million to $10 million in
estimated debts.
TITAN INTERNATIONAL: Asks S&P to Withdraw B- Corp. Credit Rating
----------------------------------------------------------------
Standard & Poor's removed its 'B-' corporate credit rating on
Titan International, Inc., from CreditWatch where it was placed on
July 15, 2004, and withdrew the rating at the company's request.
On August 26, 2004, Titan International, Inc. (NYSE:TWI) redeemed
all $136.8 million of its outstanding 8.75% senior subordinated
notes.
"We appreciate the confidence of our bond holders during the past
seven years," stated Maurice Taylor Jr., Titan president and CEO.
"The financial support has been a valuable tool as Titan
continuously strives to lead the off-highway wheel and tire
industry."
Based in Quincy, Illinois, Titan is a global supplier of mounted
wheel and tire systems for off-highway equipment used in
agriculture, earthmoving/construction, and consumer (i.e. all
terrain vehicles and trailers) applications. Titan has
manufacturing and distribution facilities worldwide.
TRACE INTERNATIONAL: Trustee Prepares to Pay Chapter 11 Claims
--------------------------------------------------------------
John S. Pereira, the Chapter 7 Trustee overseeing the liquidation
of Trace International Holdings, Inc., and Trace Foam Sub, Inc.,
is preparing to pay, in full, in cash, some of the claims that
arose between the time the company filed for chapter 11 protection
and the date on which the failed reorganization proceeding
converted to a chapter 7 liquidation.
Harold D. Jones, Esq., at Jaspan Schlesinger Hoffman LLP, tells
Judge Bernstein that Mr. Pereira is sitting on nearly $15 million
in cash. Undisputed Chapter 11 Administrative Priority Claims
against Trace International's estates total:
Chapter 11 Creditor Claim Amount
------------------- ------------
United States Trustee $2,250.00
Sonnenschein, Nath & Rosenthal 199,665.61
Winthrop, Stimson, Putnam & Roberts 332,799.28
Foamex, L.P. 116,855.33
Ronald Mamary 32,746.23
-----------
$684,316.45
===========
These are the five claims Mr. Pereira wants to pay at this time.
Mr. Jones indicates that approximately $750,000 of Disputed
Chapter 11 Administrative Priority Claims still need to be
resolved.
A hearing on the Trustee's motion to make this interim
distribution is scheduled for Sept. 14, 2004, at 10:00 a.m., in
Manhattan.
A large portion of the $15 million Mr. Pereira's holding comes
from a $12 million settlement with Marshall Cogan (a Wall Street
pro and the former owner of 21 Club in New York). Mr. Pereira
sued Mr. Cogan in U.S. District Court. In a 242-page ruling in
June 2003, Judge Sweet said the evidence showed that Mr. Cogan
treated Trace like a cookie jar; chided him for arranging loans
for his wife, secretary, and other Trace executives, and approving
dividend payment while Trace was clearly insolvent; and awarded
Mr. Pereira a $44 million judgment against Mr. Cogan.
Negotiations between Messrs. Pereira and Cogan resulted in the $12
million settlement figure. Jeff St. Onge at Bloomberg News
reports that Mr. Cogan had to relinquish a home in Sag Harbor, New
York, and sell a Fifth Avenue apartment to fund the $12 million
payment.
Trace international Holdings, Inc., and Trace Foam Sub, Inc.,
filed for chapter 11 protection on July 21, 1999 (Bankr. S.D.N.Y.
Case Nos. 99-B-10425 and 99-B-10426 (SMB)). Barry N. Seidel,
Esq., at Sonnenschein Nath & Rosenthal, represents the Debtors.
Trace reported $136,322,000 in assets and $266,455,000 in its
bankruptcy petition. On January 24, 2000, the Bankruptcy Court
signed an order converting the cases to chapter 7 liquidation
proceedings and the U.S. Trustee appointed John S. Pereira to
serve as the Chapter 7 Trustee. Harold D. Jones, Esq., at Jaspan
Schlesinger Hoffman LLP, represents the Chapter 7 Trustee. The
Court fixed Nov. 20, 2000, as the last day for creditors to file
proofs of claim against the estates.
TUPPERWARE CORP: S&P Affirms BB+ Credit & Unsecured Debt Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on consumer
products direct seller Tupperware Corp. to stable from negative.
At the same time, Tupperware's 'BB+' corporate credit and senior
unsecured debt ratings were affirmed.
Total debt outstanding at June 26, 2004, was about $260 million.
The outlook revision reflects Standard & Poor's expectation that
improvements in Tupperware's operating performance will be
maintained, despite continued weakness in its core food storage
party business, primarily in the U.S. Earnings for the 2004 second
quarter and first half improved in four of the company's five
business segments because of management's efforts to address
productivity levels and reduce costs within certain geographic
regions.
"The ratings on Tupperware continue to reflect the risks of
direct-sales distribution and the company's participation in the
highly competitive cosmetics industry," said Standard & Poor's
credit analyst Jean C. Stout. "These factors are somewhat
mitigated by Tupperware's well-known brand name and premium
product position within the mature molded-plastic storage category
and by its moderate financial profile."
Orlando, Florida-based Tupperware is a global direct seller of
consumer food storage, preparation, and serving items. The
company also participates in the cosmetics industry through its
BeautiControl business, which manufactures and direct sells skin
care, cosmetics, and related products. Tupperware acquired
BeautiControl in October 2000.
In recent years, Tupperware has focused on diversifying its
distribution channels into the Internet, kiosks, direct mail, and
television shopping, primarily in the U.S. Still, the company's
core food storage party business continues to represent a
substantial amount of its revenues. This focus on broadening its
channels of distribution significantly affected the core food
storage party business in the U.S. during 2003 (specifically, the
expanded relationship with Target, which led to a smaller, less
active sales force), and continues to affect the U.S. business
today. Moreover, Tupperware's participation in the rapidly
changing cosmetics industry, a competitive industry with lower
margins, has increased the company's already below-average
business risk. Thus, Standard & Poor's believes the company's
credit protection measures need to be above those for the rating
median.
UAL CORPORATION: Reports $6 Million Profit in July
--------------------------------------------------
UAL Corporation (OTC Bulletin Board: UALAQ), the holding company
whose primary subsidiary is United Airlines, filed its July
Monthly Operating Report with the United States Bankruptcy Court.
The company reported earnings from operations of $51 million for
July 2004. Mainline passenger unit revenue improved 1% year-over-
year. Unit costs were flat over last year. Excluding fuel, unit
costs improved 6% year-over-year. The company reported net
earnings of $6 million, including $14 million in reorganization
expenses. UAL met the requirements of its debtor-in-possession
(DIP) financing.
"July is normally one of our most profitable months, and the fact
that we were only able to deliver a modest net profit underscores
the ongoing challenge of record-high fuel prices exacerbated by a
weak revenue environment," said Jake Brace, executive vice
president and chief financial officer. "The great work of our
employees and the ongoing restructuring efforts helped us narrowly
clear the fuel hurdle to record a small profit. But, we have much
more work to do to make United a sustainable, competitive airline
moving forward."
UAL ended July with a cash balance of about $2.1 billion, which
included $818 million in restricted cash (filing entities only).
The cash balance decreased approximately $153 million during the
month of July, driven by a quarterly retroactive wage payment to
International Association of Machinists members of $63 million, a
final payment of $60 million to Bank One in connection with its
debtor-in-possession financing and a quarterly Success Sharing
reward to employees of $26 million.
United continued to deliver strong operational results, with an
on-time :14 departure performance of 77.6% and a July load factor
of 84.8%. Employees also exceeded the company's goals for July
for customer satisfaction, as measured by definite intent to
repurchase.
United, United Express and Ted operate more than 3,500 flights a
day on a route network that spans the globe.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
USG CORP: Asbestos PD Comm. Asks Court To Set Up Case Mgt Protocol
------------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants asks
the U.S. Bankruptcy Court for the District of Delaware to enter a
Case Management Order with respect to all asbestos issues.
Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington,
Delaware, notes that all parties in the Debtors' Chapter 11 cases
have been operating under the premise that the reference with
respect to all of the Debtors' asbestos personal injury matters
has been withdrawn, and, therefore, the determination of the
magnitude of the Debtors' asbestos PI liabilities rests with the
District Court. Making matters worse, for unknown reasons, the
Third Circuit has not expressly assigned a District Judge to
supervise the Debtors' bankruptcy cases since Judge Wolin's
recusal.
However, upon closer examination of the record in the Debtors'
Chapter 11 cases, it plainly appears that the reference with
respect to all PI issues has not been withdrawn, Mr. Glassman
relates. Thus, it still remains to be determined which of the
Bankruptcy Court and the District Court will preside over PI-
related issues. Arguably, Mr. Glassman contends that the
Bankruptcy Court is not constrained to sit idly by while the PD
Committee speculates on whether the Third Circuit intends to
specifically assign the Debtors' cases to a district judge.
Mr. Glassman tells Judge Fitzgerald that from the vantage of the
PD Committee, it is less important to it which court undertakes
responsibility for the Debtors' PI liabilities or, for that
matter, their asbestos property damage liabilities. What is
important to the PD Committee is that determinations in respect of
all of the Debtors' asbestos liabilities -- PI and PD -- be before
the same forum.
The PD Committee's request for case management order is premised
on fundamental principles of judicial efficiency and equality of
treatment, and to maximize the prospects of a consensual plan of
reorganization. Integral to the resolution of the Debtors'
Chapter 11 cases -- whether consensually or by cramdown -- is the
determination of the extent of their asbestos liabilities,
including both asbestos property damage claims and asbestos
personal injury claims. Despite the lack of a formal withdrawal
of the reference to the Bankruptcy Court, the determination of the
Debtors' asbestos liabilities has been functionally bifurcated
between the Bankruptcy Court and the District Court. The
Bankruptcy Court, commencing with orders entered by the Honorable
Randall Newsome, has embarked on a course to determine the extent
of the Debtors' PD Claims liability. However, at this stage of
the Debtors' cases, with the support of the PD Committee and the
Official Committee of Unsecured Creditors, the determination of
the Debtors' PI Claims liability has not even reached a nascent
state. The PD Committee maintains that the determination of the
Debtors' asbestos liabilities ought to be in the same forum, under
the same rules of engagement, be it in the Bankruptcy Court or the
District Court.
Mr. Glassman avers that separating the two asbestos constituencies
leads to a palpable risk of incongruent rulings by the Bankruptcy
Court and the District Court on threshold legal issues. A
claimant should not bear the burden of an adverse ruling simply
because of which court is determining its claim.
Mr. Glassman also points out that the Debtors have now been in
bankruptcy for over three years and have just begun moving towards
a consensual reorganization plan. However, procedurally, the
Debtors' Chapter 11 cases are not in the right posture to either
promote a consensual resolution or facilitate consideration of a
contested plan. During the time that has passed since the
Petition Date, holders of PD Claims have been subjected to a
rigorous proof of claim form and bar date process and are on the
precipice of demanding objections to their claims. At the same
time, holders of PI Claims have sat on the sideline blocking every
effort to cause them to validate the bona fides and extent of
their claims and availing themselves of the interminable delays
caused by the recusal proceedings.
Mr. Glassman notes that on May 24, 2004, the Bankruptcy Court
appointed David Geronemus to serve as a mediator. The specific
topics to be mediated were left to the determination of Mr.
Geronemus in consultation with all parties. While the contours of
the mediation are still somewhat ill-defined, the overarching goal
is to achieve consensus on a reorganization plan and, to that end,
Mr. Geronemus appears to be willing to address the extent of the
Debtors' PI and PD liabilities. However, the PD Committee states
that pragmatism dictates it to plan for the unfortunate
possibility that the mediation will not be successful, lest it
will suffer more delay in the resolution of the Debtors' cases.
There is no basis or justification to make a distinction between
determining the magnitude of the PI claims and PD claims as all of
the Debtors' asbestos liabilities result from the same defective
and unreasonably harmful asbestos-containing products. The
uniform and consistent adjudication of these claims mandate that
the allowance and determination of PI claims and PD claims be made
in the same forum.
While the PD Committee is hopeful that the mediation before Mr.
Geronemus will be successful, based on past experience, the
immense gulf between the PI Committee's and the Futures
Representative's views of the Debtors' PI liabilities, on the one
hand, and the Debtors' view of these liabilities, on the other,
may be insurmountable in reaching a mediated resolution. In that
event, a contested confirmation process, including a challenge as
to the bona fides of the PI Claims, will ensue.
Assuming that the mediation does not result in a consensual
resolution, the judicial determination of the magnitude of the
Debtors' asbestos liabilities is heading down divergent paths at
differing speeds in different forums. As a result, the
inequitable treatment of asbestos creditors is palpable and
processes should be put in place at this point to prevent that
from happening.
Accordingly, the PD Committee maintains that an order should be
entered that eliminates the functional bifurcation of asbestos
issues and places all asbestos issues, regardless of whether they
relate to PI Claims or PD Claims, in same forum.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VALEO INVESTMENT: S&P Puts Single-B Ratings on 2 Classes & Junks 1
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class A-2, A-3, B-1, B-2, and preferred share notes issued by
Valeo Investment Grade CDO III, Ltd., an arbitrage CBO transaction
collateralized primarily by investment-grade bonds and managed by
Deerfield Capital Management, LLC. Concurrently, the ratings are
removed from CreditWatch negative, where they were placed
April 21, 2004. At the same time, the 'AAA' rating assigned to
the class A-1 notes is affirmed based on a financial guarantee
insurance policy issued by Financial Security Assurance, Inc.
The lowered ratings reflect factors that have negatively affected
the credit enhancement available to support the notes since the
transaction was originated in December 2001. These factors
primarily include par erosion of the collateral pool securing the
rated notes.
Since the ratings were lowered in August 2003, approximately
$19.32 million in additional defaults have occurred, resulting in
a par loss of $10.8 million, further reducing the level of
overcollateralization available to support the notes.
Standard & Poor's has reviewed the results of the current cash
flow runs generated for Valeo Investment Grade CDO III, Ltd., to
determine the level of future defaults the rated tranches can
withstand under various stressed default timing and interest rate
scenarios, while still paying all of the rated interest and
principal due on the notes. After the results of these cash flow
runs were compared with the projected default performance of the
performing assets in the collateral pool, it was determined that
the ratings currently assigned to the notes were no longer
consistent with the amount of credit enhancement available,
resulting in the lowered ratings.
Standard & Poor's will continue to monitor the performance of the
transaction to ensure that the ratings reflect the amount of
credit enhancement available.
Ratings Lowered And Removed From Creditwatch Negative
Valeo Investment Grade CDO III Ltd.
Rating
Class To From
----- -- ----
A-2 BBB- BBB+/Watch Neg
A-3 BB+ BBB-/Watch Neg
B-1 B+ BB/Watch Neg
B-2 B+ BB/Watch Neg
Pref. shares CCC+ B-/Watch Neg
Rating Affirmed
Valeo Investment Grade CDO III Ltd.
Class Rating
----- ------
A-1 AAA
Transaction Information
Issuer: Valeo Investment Grade CDO III Ltd.
Co-issuer: Valeo Investment Grade CDO III Corp.
Current manager: Deerfield Capital Management LLC
Underwriter: Credit Suisse First Boston
Trustee: Wells Fargo Bank N.A.
Transaction type: Investment-grade CBO
Tranche Initial Last Current
Information Report Action Action
----------- ------- ------ -------
Date (MM/YYYY) 2/2002 4/2004 8/2004
Cl. A-1 note rtg. AAA AAA AAA
Cl. A-1 note bal. $440.00mm $440.00mm $440.00mm
Cl. A-2 note rtg. AA BBB+/Watch Neg BBB-
Cl. A-2 note bal. $30.00mm $30.00mm $30.00mm
Sr. A OC ratio 106.370% 104.363% 104.556%
Sr. A OC ratio min. 102.40% 102.40% 102.40%
Cl. A-3 note rtg. A- BBB-/Watch Neg BB+
Cl. A-3 note bal. $5.00mm $5.00mm $5.00mm
Sub. A OC ratio 105.25% 103.264% 103.456%
Sub. A OC Ratio min. 102.30% 102.30% 102.30%
Cl. B-1 note rtg. BBB BB/Watch Neg B+
Cl. B-1 note bal. $5.00mm $5.00mm $5.00mm
Cl. B-2 note rtg. BBB BB/Watch Neg B+
Cl. B-2 note bal. $5.00mm $5.00mm $5.00mm
Cl. B OC ratio 103.08% 101.135% 101.323%
Cl. B OC ratio min. 101.10% 101.10% 101.10%
Pref. shares rtg. BB+ B-/Watch Neg CCC+
Pref. shares bal. $18.00mm $18.00mm $18.00mm
Portfolio Benchmarks Current
-------------------- -------
S&P Wtd. Avg. Rtg. (excl. defaulted) BB+
S&P Default Measure (excl. defaulted) 1.66%
S&P Variability Measure (excl. defaulted) 1.33%
S&P Correlation Measure (excl. defaulted) 1.14
Wtd. Avg. Coupon (excl. defaulted) 7.61%
Wtd. Avg. Spread (excl. defaulted) 0.50%
Oblig. Rtd. 'BBB-' and above 66.44%
Oblig. Rtd. 'BB-' and above 79.62%
Oblig. Rtd. 'B-' and above 96.53%
Oblig. Rtd. in 'CCC' range 3.47%
Oblig. Rtd. 'CC', 'SD' or 'D' 0.00%
Obligors on Watch Neg (excl. defaulted) 8.77%
S&P Rated OC Last After Current
(ROC) Rating Action Rating Action
------------ ------------- -------------
Class A-1 notes N.A.* (AAA) N.A.* (AAA)
Class A-2 notes 98.28% (BBB+/Watch Neg) 101.94% (BBB-)
Class A-3 notes 99.22% (BBB-/Watch Neg) 102.42% (BB+)
Class C-1 notes 98.82% (BB/Watch Neg) 101.53% (B+)
Class C-2 notes 98.82% (BB/Watch Neg) 101.53% (B+)
Pref. Shares 99.88% (B-/Watch Neg) 102.16% (CCC+)
* ROC is not published for insured tranches because the
insurance policy, rather than the tranche credit support,
determines the public rating.
VERITAS CLO: Moody's Puts Ba2 Rating on $8 Million Class E Notes
----------------------------------------------------------------
Moody's Investors Service assigned ratings to these classes of
notes issued by Veritas CLO I, Ltd. and Veritas CLO I, Inc. -- the
Co-Issuer:
-- Aaa to the U.S.$229,000,000 Class A First Priority Senior
Secured Floating Rate Notes Due 2016;
-- Aa2 to the U.S.$19,000,000 Class B Second Priority Senior
Secured Floating Rate Notes Due 2016;
-- A2 to the U.S.$16,000,000 Class C Third Priority Mezzanine
Secured Floating Rate Deferrable Interest Notes Due 2016;
-- Baa2 to the U.S.$10,500,000 Class D Fourth Priority
Mezzanine Secured Floating Rate Deferrable Interest Notes
Due 2016;
-- Ba2 to the U.S.$8,000,000 Class E Fifth Priority Mezzanine
Secured Floating Rate Deferrable Interest Notes Due 2016;
and
-- The ratings of the Class A Notes, Class B Notes, Class C
Notes, Class D and Class E Notes are based on the expected
loss posed to the Note holders relative to the promise of
receiving the present value of all required interest and
principal payments.
According to Moody's, the ratings of the Notes reflect the risk of
diminishment of cash flow due to defaults from the underlying
portfolio, consisting primarily of U.S. Dollar-denominated Senior
Secured Bank Loans and Mezzanine CLOs, and are also based on the
transaction's legal structure.
The Collateral Manager for the Issuer will be Rabobank
International, acting through its New York branch.
VLASIC: 6 More Witnesses Take the Stand in $250M Suit vs. Campbell
------------------------------------------------------------------
Six 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. Chuck Miller
John A. Lee, Esq., at Andrews & Kurth, in Houston, Texas,
representing VFB LLC, presented to the U.S. District Court for
the District of Delaware a videotaped deposition of Chuck
Miller, a director at Campbell's purchasing department.
Mr. Miller does not recall studying any increased distribution
costs Vlasic might suffer from being separated from Campbell's
distribution network. His team was, however, aware that after
the transition, the Specialty Foods Division, which would
become part of the spun company, would no longer have the
benefit of joint purchasing with Campbell's largest purchases.
Mr. Miller was also very familiar with Campbell's January
1999 public announcement that it is deloading. Months after
the deloading, Mr. Miller relates that there was a decline in
Campbell's production. As a result, Campbell anticipated
mushroom demands that was well below the required volume under
Campbell's mushroom supply agreement with VFI. As an example,
at the first week of the deloading, Campbell planned to take
194,000 pounds of mushrooms versus a contract minimum of
800,000 pounds.
Mr. Miller confirms that, as a condition to Campbell giving
its consent to VFI's sale of the Swift business, Campbell
asked Vlasic to release all other claims it had under the
mushroom supply agreement for undertakes. "That was to clean
up anything that was outstanding," according to Mr. Miller.
Mr. Lee brought out a copy of a May 1997 Swift document signed
by Mr. Miller, which Mr. Lee obtained from Swift. Campbell
did not produced a complete and unaltered copy of the document
during discovery. Mr. Miller could not explain why the
complete unaltered version of the May 1997 document was not
retained in Campbell's files. Mr. Miller also did not keep
his own copy of the document.
Mr. Lee recounts that on December 10, 1997, Campbell prepared
an internal draft of a meat agreement between Swift and
Campbell that used parts of the May 1997 document. The
December 1997 document also included new provisions replacing
parts of the May document. Among the changes in the December
document were the terms on pricing, in terms of the resets and
future year prices.
One of the costs that would be determined in Swift's price was
the cost of live cattle. Mr. Miller was not aware of any
provision in the May document that resets prices in succeeding
years to guarantee Swift a profit, taking into account cattle
costs. Mr. Miller believes that the pricing structure came
from Swift Armour.
Mr. Miller was also not aware that the cattle prices in
Argentina were at 15-year highs at the time the December
document was generated. "I knew the market was stronger," Mr.
Miller says.
Mr. Miller knew of VFI's intent to sell Swift. He was also
aware of certain leverage available to Campbell arising from
the fact that VFI is required to enter into new contracts with
Campbell for it to sell Swift.
Mr. Lee showed to Mr. Miller a copy of a final food service
and supply agreement between Campbell and VFI at the closing
of the spin-off. Mr. Lee pointed out that a section of the
Final Service Agreement provides that, at Campbell's option,
the non-compete agreement between the parties would continue
for 24 additional months. Mr. Lee observes that Campbell had
a great deal of leverage over Vlasic.
Mr. Lee asked Mr. Miller why Campbell offered to buy Vlasic's
lasagna equipment in Omaha for $3,000,000.
"I can't answer that," Mr. Miller exclaims. Mr. Miller
insists that it was not Campbell's intent to extend the
non-compete on Vlasic in Omaha.
Had Campbell elected not to renew the Food Service Agreement
and exercised this option so as to extend the non-compete
under the contract as existed at spin time, Mr. Miller agrees
that Vlasic would have to do something as far as
rationalization of the Omaha plant. "[T]hey would have to do
something a bit differently." Mr. Miller, however, admits
that closing a plant is an expensive situation. Moving the
retail line could also cost money and cause business
disruption.
Campbell's co-pack agreement with VFI gives Campbell an option
to acquire certain of VFI's equipment at the end of the term.
By May 2000, Campbell decided to exercise this option.
Campbell, Mr. Lee observes, cherry-picked on the best
Equipment, leaving the rest. Mr. Lee believes that Campbell
stripped Vlasic of quality equipment to paralyze operations.
Mr. Miller clarifies that Campbell was picking "the ones that
had a functionality of where [Campbell] could use it again."
"[I]t was part of the equipment, not all of the equipment,"
Mr. Miller adds.
B. Maria Mann
Mr. Lee presented to the District Court another videotaped
deposition, this time by Maria Mann. Ms. Mann is an IT
computer professional who worked for VFI after the spin-off.
Before that, Ms. Mann worked for Campbell as a project manager
for the CIMIS project in Paris, Texas, and for the Warehouse
Management System in Napoleon, Ohio.
Ms. Mann tells the District Court that she wasn't involved in
the decision that the spun company will use the BPIS software.
Ms. Mann recalls that "it was based on a function of time,
that we only had twelve months to implement, and we virtually
had no other alternatives other than to go with [BPIS]." Ms.
Mann also notes that the software had already been used by
Campbell.
Ms. Mann recalls how, at several instances, data could not be
balanced and the difficulties with certain processes involving
transactions between Campbell and VFI. Ms. Mann relates that
her staff had major difficulties with the ship to, sell to
between the Campbell systems and the Vlasic systems.
Campbell had severally bastardized BPIS and extended several
of the ship to, sell to data fields, and had codes separate
from the master file that would indicate rules. Ms. Mann
explains because Campbell owned the software, it customized
the software to meet specific needs.
To fix the problems, Ms. Mann called in a lot of favors from
people at Campbell to try to help with the problems. But
getting help was not easy, Ms. Mann says. "[Campbell] had
their own issues to deal with."
"With an implementation that we had to do in the short amount
of time that we had to do it, people were stretched.
Everybody was working 60, 80 hours a week. We had to run a
business and implement a piece of software. So nobody ever
felt that they had enough resources, but everybody worked as
hard as they could to get the job done," Ms. Mann maintains.
Mr. Lee showed to Ms. Mann a March 1999 e-mail from Campbell's
IT Department indicating that "as of February 1, full BPIS
system was up and running."
Ms. Mann agrees. But it wasn't meeting the needs of the
plants or the business units," Ms. Mann points out.
Campbell claimed that "as of March 1999, transition had been
accomplished through an extraordinary team effort, no business
disruptions." Ms. Mann disagrees because she experienced
disruptions on the pickles transactions. Ms. Mann also
recalls how her staff had to build workarounds to meet
Vlasic's needs. Vlasic wasn't always able to build the
workaround though.
Because of the problems in the data migration, Ms. Maan
requested -- but was denied -- direct access to Campbell's
data. "It's a function of Campbell saying, we'll push the
data to you, you won't pull from us."
Vlasic also hand keyed certain data which, Ms. Mann estimates,
must've have taken about one to two months. "When [Campbell
IT] said they couldn't get their history back, we very quickly
said we can't wait around for any other solution from
Campbell, we have to move fast. So at that point we decided
we needed to go to the paper process and try to do our best to
pull the pieces together."
Among other problems, Ms. Mann notes how Vlasic ran out of
cash because invoices were sent to the wrong places. Vlasic
went on a "downward spiral," Ms. Mann observes, with people
who are supposed to be selling are taking care of
administrative problems.
Vlasic decided to install new IT systems. According to Ms.
Mann, Campbell was "asking not industry standards for allowing
us to continue to use their systems after one year. So, in
essence, it became not even an option to stay on [Campbell's]
system beyond one year."
It took 12 months to complete the installation of new IT
systems for Vlasic, which often fail. When converting the
BPIS information, some data were corrupted, or lost.
Mr. Lee asked Ms. Mann if there was anything SpinCo or the VFI
MIS Group should have done differently with respect to the
data transfers.
"I think the only thing that we should have done was worked
harder with Campbell's to let us access the data directly
ourselves," Ms. Mann says.
C. Mitchell Goldstein
In a videotaped deposition presented to the Court, Mitchell
Goldstein relates that, during the period he worked at Vlasic
-- from March 1998 until early 2000 -- Vlasic went through
quite a lot of changes. Mr. Goldstein, who was part of
Vlasic's Strategic Planning, says their initial projections
were tied to the strategic plans that were prepared by
Campbell. Mr. Goldstein provided inputs to projections
included in an October 23, 1997 memorandum, which ultimately
ended up as an information memorandum presented to the banks.
"I looked at . . . the historic operating performance of the
businesses, the strategic plans of the businesses, and then
the belief that the spin-off would actually reduce costs,
would give us the opportunity to grow those businesses and to
improve on some of the underperformance that had not perhaps
gotten as much attention."
"My thought was that we would be able to grow a little bit
faster than nine percent and that was my input for
consideration by whoever from Campbell, and they accepted
that. It appeared that they accepted generally that idea.
Mr. Goldstein believed that a 12% profit growth projection for
Vlasic was reasonable. Mr. Goldstein relied on Campbell's
discussions in concluding that the spin-off would reduce
costs.
"I didn't do any independent work to perform new financial
analysis at all. I really relied on the notion of the whole
spin-off, which was costs would be able to come down, that
there would be an opportunity to invest in businesses in a way
that would help accelerate profitability."
At a meeting in January 1998, the Information Memorandum was
presented to the banks. Thereafter, Mr. Goldstein learned
things which changed his view of the achievability and
reasonableness of the projections contained in the Information
Memorandum. Mr. Goldstein learned that the business methods
used to arrived at the Earnings Before Income Taxes in 1997
led to an inability to earn the profits that were expected in
1998 and going forward. Mr. Goldstein also found out about
the great volume of trade spending on Vlasic and Swanson near
the end of fiscal 1997, which increased the profits. There
were also cuts in marketing and advertising in 1997 that
increased the earnings as well.
Mr. Goldstein, nevertheless, believes that the methods used in
1997 had no impact on what the 1997 actual GAAP basis EBITDA
should have been. It only affected performance going forward,
but didn't require adjustment of the historical numbers in the
pro forma in the Form 10 filed with the Securities and
Exchange Commission.
Mr. Goldstein was not worried about reducing the projections
at that time. "[S]ometimes setting higher targets actually
did force people, encourage people to look deeper and find
ways to operate more efficiently, and we were all striving to
do that. The numbers seemed to be possible to be able to add
up."
Campbell hired Georgeson to help Vlasic in whatever way they
could, Mr. Goldstein recounts. Georgeson did spin-off
predictive analysis that reached the conclusion that turned
out not to be reliable. Georgeson also used numbers that were
based on plans that Campbell put together.
D. David Pauker
Mr. Lee next called in David Pauker to take the witness stand.
Vlasic employed Mr. Pauker as bankruptcy officer in December
2000. At first, Mr. Pauker served as a consultant for Vlasic.
By a board resolution, Mr. Pauker was appointed as acting
chief executive officer. He took Vlasic into bankruptcy and
went through the sale process.
Mr. Pauker, a managing director of Goldin Associates, relates
that Vlasic was facing a crisis with the potential for a
bankruptcy filing. "[M]y firm and I are experts in managing
companies under those circumstances. We are also experts on
bringing assets to market and either managing or selling them
or working on business plans in the turnaround or crisis
environment."
Mr. Pauker proposed the creation of VFB LLC. The post-
bankruptcy entity, Mr. Pauker believes, could create
efficiencies and lower costs.
Mr. Pauker relates that much of Vlasic's troubles were
related to the spin-off. Mr. Pauker explains that Vlasic's
strong brands were under-invested in for a extended period of
time. In the branded consumer business, Mr. Pauker points out
that "your ability to go out and sell through to a customer,
get the right placement, generate margins is directly related
to the strength of your brands."
Mr. Pauker observes that Vlasic did not have the capital
available to invest in advertising, new products, all the
things that would be necessary to grow and make a branded
business healthy, especially one that had been under-invested.
Mr. Pauker also notes that Vlasic, a leader in the condiment
Category, couldn't go where the condiment market was going.
Vlasic's availability to raise capital was constrained in
effect by the allocation of intellectual property.
Mr. Pauker does not believe that management problems or
mistakes by management took Vlasic down. "I thought that VFI
had very, very strong management, almost across the Board in
its various areas."
On Campbell's behalf, Mary Ann Mullaney, Esq., at Blank Rome,
in Philadelphia, Pennsylvania, asked Mr. Pauker whether he
attempted to ask Campbell's executives, the bank lenders and
the professionals providing services to Vlasic, regarding the
state of Vlasic's businesses at and before the spin-off.
Mr. Pauker admits not having interviewed key Campbell
executives, including Chairman David Johnson, CFO Basil
Anderson, Controller Gerald Lord and Treasurer Anthony
DiSilvestro regarding the state of the Vlasic businesses.
Mr. Pauker tried to reach Mr. Anderson but "[Mr. Anderson]
never chose to return my calls."
Mr. Pauker had several discussions with the bankers at Chase
largely relating to the current state of the businesses
resulting from the spin. Mr. Pauker was not aware whether the
banks complained about the quality of the projections that had
been provided by Campbell.
Mr. Pauker also failed to analyze the operating plans for each
of the spin-off business for fiscal 1996 and 1997.
Mr. Pauker does not have a very good recollection of his
impressions on or the contents of the 1998 or 1999 plans. He
was trying to understand the business and how they operate at
that time.
Ms. Mullaney asked if the strategy for VFI, a consumer
products company smaller than Campbell, was to follow a lean,
aggressive, low-cost business model when it was spun from
Campbell.
According to Mr. Pauker, VFI was to be a platform for group.
VFI was envisioned to grow through acquisitions and that
within several years time, it was expected to be several times
its size. Mr. Pauker, however, agrees that, as a new company,
VFI should operate itself reasonably leanly and look for
opportunities to expand. But VFI didn't have the capital to
expand and so it was never able to execute that piece of its
business plan.
Ms. Mullaney showed to Mr. Pauker a document prepared by
Boston Consulting Group in connection with the spin-off.
Boston Consulting purportedly has recommended that the spun
company focus on near-term cash flow and operate with a lean
organization and low cost structure. Boston Consulting
suggested that the spun company focus less on large fixed-cost
investments, like large advertising campaigns.
Mr. Pauker denies ever seeing the document before. Moreover,
Mr. Pauker is unaware that Boston Consulting renders advisory
services to VFI as opposed to Campbell.
Mr. Pauker insists that he has no reason to agree or disagree
with the numbers chalked up in the Boston Consulting document.
Mr. Pauker denies offering Campbell a release in exchange for
the modification of the Swanson license. Subsequent to VFI's
negotiation with Hicks, Muse, Tate & Furst to sell the Swanson
business, Mr. Pauker says he was trying to think of more ways
to mine the transaction and all available assets for more
value. Mr. Pauker was aware that the restrictions on the
intellectual property taxed Swanson's value because, among
other things, they restricted the Swanson brand to the freezer
case. "You couldn't go and extend your shelf out of the
freezer case."
Mr. Pauker consequently, offered to get Hicks Muse broader
intellectual property rights in exchange in exchange for a
higher purchase price and a release and settlement with
Swanson and Campbell. But Hicks Muse refused for lack of
additional funds.
Mr. Pauker confirms that what was integral to the three-way
deal was the release of VFI's claims against Campbell relating
to the spin.
"The idea was, if we could get enough money into the pot . . .
we would then have had to approach the creditors, which we
never got that far and spoke to them about . . . what they
thought would be fair."
"I was just trying to kick-start. This was at the very end
of my tenure. The very end of the bankruptcy. I was trying
to kick-start some way of engaging in settlement discussions
with Campbell's and bringing value to the creditors or the
other interests, and using Hicks Muse as a piggyback.
"But, again, Hicks Muse made it clear they did not see
themselves as a piggyback for these purposes."
E. Robert F. Bernstock
Mr. Lee called in Robert Bernstock, the former Chief Executive
Officer and President of VFI, to take the stand.
Before joining VFI, Mr. Bernstock worked for Campbell for 12
years. Mr. Bernstock believes that his efforts and
contributions at Campbell were recognized in four broad areas
-- as a business strategist, as a marketer, as a leader, and
as one who delivers financial results. In terms of financial
results, Mr. Bernstock says his track record at Campbell
before the spin-off includes seven straight years of
delivering earning targets, which was done ahead of plan for
20 straight quarters, and running as much as 70% of the
earnings.
Mr. Bernstock acknowledges that his track record in VFI "was
not nearly as good."
"I used the same method at VFI as I did at Campbell, which was
essentially disciplined planning and analysis, and a lot of
hard work, but those methods didn't work for me at VFI," Mr.
Bernstock says.
Mr. Bernstock became part of the spun company when he lost
Campbell's CEO position to Dale Morrison. Campbell's Board of
Directors approved Mr. Bernstock's request to be VFI's CEO.
In a presentation on September 2, 1997, Mr. Bernstock was told
by Campbell that in terms of due diligence process, he could
not bring in outside financial resources or outside legal
counsel in the spin-off transaction. Among others, Campbell
would make the decisions on due diligence on the earnings, the
initial debt level, non-compete, and external communications.
External communications, Mr. Bernstock says, were of two
types -- public affairs and financial communication with Wall
Street.
As CEO of the soon to be VFI, Mr. Bernstock became Division
President and ran the business. He designed the organization,
had a forward-looking strategy, named the company, chose the
location, brought on a board of directors, and put together
the IT and other infrastructures.
Mr. Bernstock tried to recruit either Anthony DiSilvestro and
Jerry Lord as finance officer for VFI. He was, however, told
that the two were off limits.
In a discussion with Basil Anderson before the spin-off, Mr.
Bernstock found out that Campbell would retain the profitable
food service business in Omaha, giving VFI a co-pack at cost.
Mr. Anderson did not provide a satisfactory reason.
"This was a very difficult thing for me to understand because
I knew that Campbell was focused on soup, on sauces on
beverages and biscuits. We were in the frozen business.
There were two facilities in Omaha. It made no sense to me
for us to have both manufacturing sites and be given just one
business and then given basically a break even contract. So I
spent some time on that."
Mr. Anderson also wanted Mr. Bernstock to steer Specialty
Foods to hit the second quarter earning targets before the
spin-off. The operating plan for fiscal 1998 projected $159
million EBIT, while the bank agreement, $140 million.
"But there was a sense that those numbers were not going to be
achieved by pursuing the business strategies or business plans
we had in place," Mr. Bernstock tells Judge Jordan.
Mr. Lee asked Mr. Bernstock of the consequences of not hitting
the target earnings. Mr. Bernstock recalls Mr. Anderson using
"the bonus as a bit of a weapon."
To meet the targets, Mr. Bernstock relates that Specialty
Foods, which was to be part of the spun company, had to resort
to loading which resulted to bloating the January 1998
earnings. Loading, Mr. Bernstock says, means shipping more
product at the end of a quarter or the end of a month than the
business really needs to meet the demands of the customers.
Specialty Foods reported $13 million in earnings in January
1998.
By March 1998, Mr. Bernstock continues, he was stunned when
Mr. Anderson told him to "do it all over again."
"I had been in business nearly 25 years. I had never heard of
a load in the middle of a quarter. This was less than 4
percent of Campbell's earnings. I had run the soup business,
which I believe was well over a billion. I could think of no
rational reason why we would ever load in March. We were also
separating -- I mean, instead of helping us on the start, this
would put us in terrible position at the beginning [of fiscal
1999]."
The Court asked Mr. Bernstock why Mr. Anderson wanted to
deload the business.
Mr. Bernstock believes that Mr. Anderson was afraid that if
Specialty Foods didn't show good earnings in March, the banks
would challenge it.
During the road show, Mr. Bernstock discloses that the banks
that lent the $500 million in the spin-off were not told that
the $143 million earnings projection should have been lower.
"[W]e were still a division of Campbell. I never spoke with
the banks while I was part of Campbell. That was the
responsibility of the Campbell Treasury Group."
Asked to compare his job of turning around the spun businesses
with his experience with problem businesses in Campbell, Mr.
Bernstock says that VFI "was really a free fall" and the work
was much harder to do. Assuming about a $100 million base,
Mr. Bernstock estimates getting VFI kicking would have taken
at least 18 months to as long as three years. But VFI only
had about 11 months, Mr. Bernstock notes.
In a May 2000 presentation to the Dorrance family, the
founders of Campbell, Mr. Bernstock recalls that the Dorrances
never faulted him for VFI's failure. Mr. Bernstock's team was
even recognized for its hard work and commitment to success.
"There was no one who doubted our commitment or our talent.
And I was given a retention bonus to hold the team together
until we could figure out what to -- I guess for the
disposition of the company."
What kept VFI going as long as it did was the sale of three
businesses for $140 million in cash, Mr. Bernstock observes.
Mr. Bernstock points out five major things that hurt VFI:
(1) Campbell's decision to do no due diligence and have no
legal advisors up front to really go in and understand the
VFI business -- if that had taken place, Mr. Bernstock
believes that the spin ever would never have occurred;
(2) Even when there really was a pretty decedent understanding
that the 143 million to 162 million earnings were not
real, the continuation that the earnings were real, that
the earnings were not at that level;
(3) The assignment of debt, the level of debt that Campbell's
assigned, was at least twice what the VFI business could
afford;
(4) An absolutely unreasonable expectation in terms of about a
year to implement an IT infrastructure for VFI -- both the
infrastructure, the ERP system and all the application
software;
(5) The decision to assemble nine bad businesses, each one bad
for its own reason, and the contracts Campbell assigned to
VFI, like Argentina and mushrooms, were just unfair.
All five were within Campbell's responsibilities.
Campbell's counsel, Michael W. Schwartz, Esq., at Wachtell
Lipton, Rosen & Katz, asked Mr. Bernstock whether he believes
that in the context of his being VFI's CEO, Campbell Chairman
David Johnson withheld anything from him that the spun
businesses had no earnings potential.
"I had a high level of trust and I just can't answer that
question," Mr. Bernstock says.
"I don't think Mr. Johnson was a whole lot closer to the
details. I don't think he knew what their future was going to
be. I think he thought they were going pretty good. I don't
know.
Mr. Johnson had been Campbell Chief Executive Officer for
seven years. Mr. Bernstock admits that Mr. Johnson ran
Campbell with a strategic intent.
"[But] if he ran them by the numbers, we would not have done
the spin, because he was focused on strategy of moving the
core towards soup and sauces and beverages and biscuits
because of their growth potential, not because of the earnings
they delivered. Because of their strategic importance in the
future."
This concludes VFB's presentation of its case-in-chief. (Vlasic
Foods Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
VLASIC: Campbell Calls Its First Witness in $250M Spin-Off Suit
---------------------------------------------------------------
Campbell Soup Company called its first witness to testify before
the United States District Court for the District of Delaware in
the $250 million lawsuit commenced by VFB, LLC, attacking the
spin-off of Vlasic Foods from Campbell.
At the time of the spin-off transaction, Daniel P. Hays was
Campbell's Vice President of Tax. In October 1999, Mr. Hays left
Campbell for a tax partner position in a public accounting firm.
Mr. Hays made it clear to the Court that he was not being
compensated to come and testify for Campbell and just took some
time off from his current job. Mr. Hays explains that the trial
affects his reputation and standing in the tax community.
Mr. Hays relates that he learned about the potential spin-off of
VFI around March 1997. The spin-off concept was just presented to
the Tax Department as a potential transaction by a team made up of
Basil Anderson, Linda Lipscomb and Anthony DiSilvestro. Mr. Hays
was asked to comment on the tax issues surrounding the potential
transaction.
Campbell sought to have the spin-off treated as a tax-free
transaction. Since the Dorrance family together owns a large
block of the Campbell shares, the Internal Revenue Service wanted
the Dorrance family shareholders to make representations with
regard to their intentions about the spin-off. Consequently, the
Dorrance family signed a representation that they had no plan or
intent to sell, exchange, transfer or dispose of the more than 5%
of Vlasic stock that they were going to receive in the spin-off.
Mr. Hays recounts that Campbell decided to pursue a private letter
ruling from the IRS as a matter of prudence. "It protects the
company and it protects the shareholders," Mr. Hays says.
Mr. Hays informs the District Court that Campbell had two business
purposes in the spin-off transaction:
-- Fit and focus, meaning two businesses will operate more
efficiently as separate organization as opposed to a
combined organization; and
-- Attainment of cost savings.
From a tax perspective, Mr. Hays observes that Campbell viewed the
two purposes as parts of the same thing. With the appropriateness
of the fit and focus purpose, however, the IRS encouraged Campbell
to pursue more on the cost savings motivation.
In the IRS ruling application, Mr. Hays signed on behalf of
Campbell a declaration under penalty of perjury. "As a Tax Vice
President with the responsibility for signing tax returns, and IRS
submissions, I take the penalty of perjury statement extremely
serious. It represents my career, my reputation, and my
credibility to the Internal Revenue Service."
Campbell worked with outside advisors, including Boston Consulting
Group and the New York Consulting Partners, to advise them with
respect to the proposed new company and the opportunities that
would become available from a business perspective and also from
the perspective of cost savings. According to Mr. Hays, the
outside advisors' reports became Campbell's starting point in
determining what cost savings opportunities it will pursue. If an
advisor's recommendation wasn't achievable, Campbell did not
include it.
Campbell also consulted with business experts inside the company,
including people who went to VFI and those that remained at
Campbell.
Mr. Hays demonstrates how the spin-off was going to bring the cost
savings as opposed to just any ordinary reorganization:
"By executing the spin, the company would be able to remove
certain duplicated efforts that were present in its sales
organization. In the old Campbell's sales organization . . .
there was an operation of business operations centers to deal with
the Frozen and Specialty Foods business and to represent the sales
effort to our customers for those businesses, which are conducted
on a regional basis. In addition, there were sales teams that
were devoted to particular customers."
"The sales teams that were devoted to particular customers had to
include sales operations folks related to the Frozen and Specialty
Foods business as well as the Heat Process business. Once the
businesses were separated, those business operation centers could
be spun off to SpinCo just to operate the sales effort for the
Frozen and Specialty Food business, while the teams could simply
proceed on their own with regard to the customers without having
to include account executives, customer marketing managers, and so
forth, for the other business as well.
Confused how the duplication would be eliminated, Judge Jordan
asked Mr. Hays to explain.
Mr. Hays points out that because Campbell wanted to speak to the
customer with one voice, in addition to having the Frozen and
Specialty Foods sales personnel in the business operation centers,
there were also complimentary duplicative Frozen and Specialty
Foods business salespersons included in the customer teams. Once
the businesses were separated, that duplicated effort up at the
customer team level could be eliminated.
Mr. Hays clarifies that the cost savings calculation is a cost
savings for both Campbell and the spin-off company -- on a
consolidated basis. Some of these cost savings, Mr. Hays adds,
are expected to be realized by Campbell while others by VFI, post-
spin.
Among others, Mitch Goldstein, Bob Bernstock, Murray Kessler, and
Jim Dorsch quantified the cost savings and, thus, are responsible
for delivering those. "They told us they were excited about the
opportunity to achieve them and excited about the opportunity of
running the Vlasic business," Mr. Hays says.
Mr. Goldstein developed the trade spending cost savings
opportunity. According to Mr. Hays, trade spending does not mean
turning off the faucet. Trade spending efficiency is spending the
money wisely -- spending the money in the manner, which will
generate the most sales.
Mr. Hays notes that turning off trade spending would be suicidal.
The contention that Campbell was not motivated in this spin-off by
a cost savings business purpose is offensive and untrue, Mr. Hays
asserts. With respect to the allegation that the amount of bank
debt that Vlasic assumed in the spin-off is really more than
$500 million because of intercompany payables, Mr. Hays points out
that the payables that existed before the spin-off are created in
the normal course of operations and not as a result of the spin.
Mr. Hays denies cooking up the $500 million bank debt figure.
Campbell Tax Department did a very extensive study as to the tax
basis amount, which the Tax Department estimated to be in excess
of $500 million. The calculation was very complex and Campbell
engaged Deloitte & Touche to help in the calculation.
The District Court asked Mr. Hays if the $500 million bank debt
number was influenced in any way by Campbell's estimate of the tax
basis in Vlasic.
Mr. Hays explains that the $500 million debt that was recommended
by the business leaders for the spin company was determined back
in the summer of 1997.
"We didn't determine the [tax] basis with finality until much
later. We didn't even have a final number until after the spin.
We had estimates."
"But the issue of about what was the amount of our basis was not
even discussed as part of the issue of what was the amount of
appropriate debt for the spin company.
The eventual calculation after the spin-off for the tax basis for
Vlasic was $559 million.
Mr. Hays relates that Campbell's purpose of the proceeds from
VFI's $500 million debt "really does not matter from a tax
perspective."
When the spin-off transaction was brought up to its Board of
Directors for approval, Campbell did not say anything about using
the proceeds to buy back stock in July 1997 because it was very
difficult to predict nine or ten months in advance what Campbell
is going to do. There were many options in how to use the
proceeds, Mr. Hays maintains. The proceeds could be used:
-- to pay down other debt;
-- in operation of the business;
-- to make an acquisition;
-- to buy back stock; and
-- for all those purposes.
On the date of the spin-off, Campbell and VFI entered into a tax
sharing and indemnification agreement, which was subject to the
Internal Revenue Code.
Mr. Hays finds the restrictions imposed upon VFI on the tax
sharing and indemnity agreement "absolutely typical" for a spin-
off. "In doing the research in advance of what all the legal
agreements needed to be between these parties, we look at other
public spin transactions. This same sort of contract was in place
in those public transactions that we researched as well as here
and it's simply required to make sure that the company is operated
within the terms of the Internal Revenue Code," Mr. Hays explains.
According to Mr. Hays, Campbell restricted VFI on selling the spun
businesses without a supplemental ruling or a tax opinion
sufficiently satisfactory to Campbell, so as to make sure it was
in compliance with the Internal Revenue Code.
"[Section] 355(e) of the Revenue Code said that if certain
transactions occurred within two years of the spin, then there
could be a presumption created there was an intention at the time
of the spin to do those transactions. And that presumption needs
to be disproved as a matter of burden of proof by the taxpayer,"
Mr. Hays cites.
After the spin-off, but with the two-year tax restriction, VFI
still had available options in the event that it needed to sell
all or portion of its businesses. The agreement gave flexibility
to VFI to follow one of two paths. VFI could go to:
(a) the Internal Revenue Service and request a supplemental
ruling on its proposed transaction; or
(b) a national law firm, a law firm with a national reputation
and expertise in the manner of taxation, and seek an
opinion after research that a transaction would not
violate the IRS ruling.
Mr. Hays denies making any false representations to the Internal
Revenue Service on Campbell's behalf.
"[That] is absolutely untrue. And it's offensive. I have been a
tax practitioner for my entire career. This is my livelihood.
This is my reputation. Every time I sign a document to the
Internal Revenue Service, I know that my reputation is on the
line. I know that my livelihood is on the line. And I would not
present a document to the Internal Revenue Service that I signed
that I did not believe was absolutely true and correct."
Mr. Hays also denies making any decision on which businesses to be
included in the spun company and on how any intellectual property
would be handled in the spin-off. Mr. Hays tells the District
Court that the business units that became part of VFI were of
various and disparate types, and were well represented in the
industry. Within Campbell by Summer 1997, those businesses
however, were not considered strategic because they were not in
Campbell's core competencies.
During cross-examination, Mr. Lee noted that the $500 million bank
debt assigned to VFI plus the estimated $58.7 million intercompany
payable, when rounded off, coincides with the $559 million tax
basis.
"Despite whatever insinuations you might have in your mind, it
really is [a coincidence] because we didn't determine the tax
basis in final form until much later. The final calculation
[occurred] back in July of 1999.
"[We] identified the amount of the debt that was going to be
associated with VFI more than two years before that. We didn't
know what the basis was. And, from our perspective, the issue of
intercompany debt was not an issue. The only debt that was
relevant for purposes of Section 357(c) is the $500 million bank
debt."
Campbell's defense continues. (Vlasic Foods Bankruptcy News,
Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000)
VOEGELE MECHANICAL: Look for Bankruptcy Schedules by Sept. 2
------------------------------------------------------------
Voegele Mechanical, Inc., sought and obtained an extension from
the U.S. Bankruptcy Court for the Eastern District of Pennsylvania
of its time to file its Schedules of Assets and Liabilities, its
Statement of Financial Affairs and schedules of executory
contracts and unexpired leases. These financial disclosure
documents are now due on or before September 2, 2004.
The Debtor told the Court that a vast amount of information must
be compiled and hundreds of hours are needed to complete properly
and accurately complete the documents.
Headquartered in Philadelphia, Pennsylvania, Voegele Mechanical --
http://www.voegele.net/-- is a contractor for heating, air
conditioning, refrigeration, plumbing and electricity. The
Company filed for a chapter 11 protection on August 3, 2004
(Bankr. E.D. Pa. Case No. 04-30628). Rhonda Payne Thomas, Esq.,
at Klett Rooney Lieber and Schorling, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection, it
listed above $10 million in estimated assets and debts.
WASTECORP.: Disclosure Statement Hearing Moved to September 14
--------------------------------------------------------------
Wastecorp. International Investments, Inc., (TSX Venture: Stock
Symbol "WII"), reports that the U.S. Bankruptcy Court for the
District of New Jersey has adjourned the hearing on consent, of
Wastecorp.'s preliminary disclosure statement to September 14,
2004 at 2:00 p.m.
As previously reported, on May 12, 2004, Wastecorp. filed a
preliminary disclosure statement to explain its chapter 11 plan.
ITT Industries, Inc., the Company's largest creditor, raised
various objections.
The Company has the exclusive right to solicit acceptances of its
plan from creditors through September 28, 2004.
Headquarted in Glen Rock, New Jersey, Wastecorp. Inc. --
http://www.wastecorp.com/-- is a waste management company
specializing in wastewater sewage treatment with its Wastecorp.
Marlow Plunger Pump line, medical waste disposal, with its
reusable sharps container program and plastic and scrap tire
recycling division. On April 7, 2003, Wastecorp. International
Investments Inc., together with its subsidiary, Wastecorp. Inc.,
filed voluntary Chapter 11 petitions in the United States,
Bankruptcy Court for the District of New Jersey. Wastecorp. is
represented in Canada by the law firm of Borden, Ladner, Gervais,
and in the United States by lawyers at Cole, Schotz, Meisel,
Forman & Leonard.
WEIRTON STEEL: Court Confirms First Amended Liquidation Plan
------------------------------------------------------------
On August 23, 2004, Weirton Steel Corporation filed non-
substantive modifications, clarifications and updates to its
First Amended Plan of Liquidation. The modifications did not
require additional disclosure or re-solicitation of votes, nor did
they require that holders of Claims or Equity Interests be
afforded an opportunity to change previously cast acceptances or
rejections of the Plan.
At last week's Confirmation Hearing, Judge Friend found that
Weirton Steel's First Amended Plan of Liquidation, as modified,
satisfies the requirements for confirmation under Section 1129(a)
of the Bankruptcy Code:
A. Section 1129(a)(1), including Sections 1122 and 1123(a) of
the Bankruptcy Code
(a) Sections 1122 and 1123(a)(1): Proper Classification
The Plan designates five Classes of Claims and Equity
Interests. Each Other Secured Claim will be deemed to be
separately classified in a subclass of Class 1 and will
have all rights associated with separate classification
under the Bankruptcy Code. The Claims and Equity
Interests placed in each Class are substantially similar
to other Claims and Equity Interests in each Class.
Valid business, factual and legal reasons exist for
separately classifying the various Classes of Claims and
Equity Interests created under the Plan.
(b) Section 1123(a)(2): Specified Unimpaired Classes
Article III of the Plan specifies that Class 1 is
unimpaired under the Plan.
(c) Section 1123(a)(3): Specified Treatment of Impaired
Classes
Article III and IV of the Plan designate Classes 2, 3, 4
and 5 as impaired and specify the treatment of Claims and
Equity Interests in those Classes.
(d) Section 1123(a)(4): No Discrimination
The Plan provides for the same treatment for each Claim or
Equity Interest in each Class unless the holder of a
particular Claim or Equity Interest in each Class under
the holder of a particular Claim or Equity Interest in
each Class under the holder of a particular Claim or
Equity Interest has agreed to a less favorable treatment
of the Claim or Equity Interest.
(e) Section 1123(a)(5): Implementation of Plan
The Plan and the Plan Supplement provide adequate and
proper means for the Plan's implementation, including the
establishment of the Liquidating Trust.
(f) Section 1123(a)(6): Non-Voting Equity Securities
Section 6.5 of the Plan provides for the dissolution of
Weirton Steel after it completes the acts required by the
Plan. Thus, Section 1123(a)(6) is inapplicable.
(g) Section 1123(a)(7): Designation of Directors
Section 6.5 of the Plan provides for the dissolution of
Weirton Steel, after it completes the acts required by the
Plan. Thus, Section 1123(a)(7) is inapplicable.
(h) Section 1123(b): Additional Plan Provisions
The Plan's provisions are appropriate and not inconsistent
with the applicable provisions of the Bankruptcy Code.
(i) Rule 3016(a) of the Federal Rules of Bankruptcy Procedure
The Plan is dated and identifies the entity submitting it
as the proponent.
B. Section 1129(a)(2)
(a) Weirton Steel is a proper debtor under Section 109 of the
Bankruptcy Code;
(b) Weirton Steel has complied with applicable provisions of
the Bankruptcy Code, except as otherwise provided or
permitted by Bankruptcy Court orders; and
(c) Weirton Steel has complied with the applicable provisions
of the Bankruptcy Code, the Bankruptcy Rules, and the
Solicitation Order in transmitting the First Amended Plan,
the Disclosure Statement, the Ballots, and related
documents and notices and in soliciting and tabulating
votes on the First Amended Plan.
C. Section 1129(a)(3): Plan Proposed in Good Faith
Weirton Steel's good faith is evident from the facts and
records of its Chapter 11 case, the Settlement and Lock-Up
Agreement and the hearing on the Disclosure Statement and
Plan Confirmation and other proceedings held in its case. The
Plan was proposed with the legitimate and honest purpose of
maximizing the value of Weirton Steel's estate and to
effectuate an orderly liquidation of Weirton Steel.
D. Section 1129(a)(4): Payment of Services or Costs and Expenses
Any payment made or to be made by Weirton Steel for services
or for costs and expenses in or in connection with the Chapter
11 case, or in connection with the Plan and incident to the
Chapter 11 case, has been approved by, or is subject to the
approval of, the Bankruptcy Court as reasonable.
E. Section 1129(a)(5): Directors, Officers and Insiders
Section 6.5 of the Plan provides for the dissolution of
Weirton Steel after it completes the acts required by the Plan
and, therefore, there will be no "reorganized debtor" for any
presently existing officer or director to serve.
F. Section 1129(a)(6): No Rate Changes
Section 6.5 of the Plan provides for the dissolution of
Weirton Steel after it completes of the acts required by the
Plan. Thus, Section 1129(a)(6) is not applicable.
G. Section 1129(a)(7): Best Interests of Creditors
The Disclosure Statement, the Plan, the Plan Supplement and
other evidence proffered or adduced at the Confirmation
Hearing:
(a) are persuasive and credible;
(b) have not been controverted by other evidence; and
(c) establish that each holder of an impaired Claim or Equity
Interest either has accepted the Plan or will receive or
retain under the Plan, on account of the Claim or Equity
Interest, property of a value, as of the Effective Date,
that is not less than the amount that the holder would
receive or retain if Weirton Steel were liquidated under
Chapter 7 of the Bankruptcy Code on that date.
H. Section 1129(a)(8): Acceptance by Certain Class
Note and Bond Claims in Class 2, Priority Non-Tax Claims in
Class 3 and General Unsecured Claims in Class 4 have voted to
accept the Plan in accordance with Sections 1126(c) and (d) of
the Bankruptcy Code. Equity Interests in Class 5 are not
entitled to receive or retain any property under the Plan and
therefore are deemed to have rejected the Plan pursuant to
Section 1126(g) of the Bankruptcy Code. Although Section
1129(a)(8) has not been satisfied with respect to the deemed
rejecting Class 5, the Plan is confirmable because the Plan
satisfies Section 1129(b) of the Bankruptcy Code with respect
to Class 5.
I. Section 1129(a)(9): Treatment of Administrative and Tax Claims
The treatment of Administrative Expense Claims, Priority Non-
Tax Claims and Priority Tax Claims satisfies the requirements
of the Bankruptcy Code.
J. Section 1129(a)(10): Acceptance By Impaired Classes
At least one Class of Claims against Weirton Steel that is
impaired under the Plan has accepted the Plan, determined
without including any acceptance of the Plan by any insider.
K. Section 1129(a)(11): Feasibility of the Plan
The evidence proffered or adduced at the Confirmation Hearing:
(a) is persuasive and credible;
(b) has not been controverted by other evidence; and
(c) establishes that the Plan is workable and has a reasonable
likelihood of success.
L. Section 1129(a)(12): Payment of Fees
All fees payable under Section 1930 of the Judicial Procedures
Code have been paid or will be paid pursuant to Section 2.6 of
the Plan. After the Effective Date, the fees will continue to
be paid.
M. Section 1129(a)(13): Continuation of Retiree Benefits
By orders dated March 15, 2004, the Bankruptcy Court
authorized Weirton Steel to terminate the Retiree Benefits.
Pursuant to the orders, Weirton Steel:
(a) terminated the Retiree Benefits as of April 1, 2004;
(b) paid no claims for medical services incurred by Retirees
subsequent to April 1, 2004;
(c) did not collect contributions for coverage under programs,
other than pursuant to the contribution coverage
requirements under Section 4980B of the Tax Code and Part
6 of Subtitle B of Title 1 of ERISA, applicable to the
Retirees for the period subsequent to March 31, 2004;
(d) other than as required by law, made no life insurance
payments on behalf of any Retiree who died subsequent to
April 1, 2004;
(e) paid no amounts on account of Retiree Benefits claims
submitted to the appropriate insurance administrator
subsequent to May 15, 2004; and
(f) after May 17, 2004, terminated all benefit programs
providing the Retiree Benefits.
Upon the termination of retiree medical benefits by Weirton
Steel, certain affected individuals became eligible to
continue retiree health care through COBRA coverage.
Accordingly, Judge Friend confirmed Weirton Steel's First Amended
Plan of Liquidation on August 24, 2004. Judge Friend overruled
all objections that have not been withdrawn, waived or settled.
Furthermore, the Court:
(a) rules that that the modifications of the First Amended
Plan, as incorporated in the Plan:
-- meet the requirements of Section 1127(a) and (c) of
the Bankruptcy Code; and
-- do not adversely change the treatment of the Claim of
any creditor or Equity Interest of any equity security
holder within the meaning of Bankruptcy Rule 3019.
Thus, no further solicitation or voting is required;
(b) rules that on the Effective Date, all property of Weirton
Steel's estate will vest in the Liquidating Trust. From
and after the Effective Date, the Trustee may dispose of
the Liquidating Trust Assets free of any restrictions of
the Bankruptcy Code, but in accordance with the provisions
of the Plan and Liquidating Trust Agreement. As of the
Effective Date, all assets of Weirton Steel and the
Liquidating Trust will be free and clear of all Claims,
except as provided in the Plan or the Confirmation Order;
(c) approves the assumption or rejection of executory
contracts and unexpired leases pursuant to Section 8.1 of
the Plan;
(d) sets the bar date for rejection damage claims to be 30
days after the Confirmation Date;
(e) authorizes the Liquidating Trustee to:
-- hold, manage, sell and distribute the Liquidating Trust
Assets;
-- hold the Liquidating Trust Assets for the benefit of
the beneficial interests of the Liquidating Trust;
-- hold, manage, sell and distribute Cash or non-Cash
Liquidating Trust Assets obtained through the exercise
of his power and authority;
-- prosecute and resolve objections to the Disputed
Claims;
-- perform other functions as are provided in the Plan and
the Liquidating Trust Agreement;
-- administer the closure of the Chapter 11 case; and
-- after the certificates of cancellation or dissolution
for Weirton Steel have been filed in accordance with
the Plan, exercise all powers regarding Weirton Steel's
tax matters, including filing tax returns;
(f) permanently enjoins all persons from commencing or
continuing in any manner any action or proceeding on
account of or respecting any claim, debt, right or cause
of action of Weirton Steel, unless specifically provided
in the Plan;
(g) rules that except for purposes of evidencing a right to
distributions under the Plan or otherwise provided in the
Plan, on the Effective Date, all the agreements and other
documents evidencing the Claims or rights of any holder of
a claim against Weirton Steel, or obligating Weirton Steel
to issue, transfer, or sell Equity Interests or any
capital stock of Weirton Steel, will be cancelled,
provided, however, that the Indentures will continue in
effect solely to the extent set forth in the Plan; and
(h) approves the distribution of ESOP Investments.
On the Effective Date, United Bank, Inc., the trustee of
the Weirton Steel Corporation 1984 Employee Stock
Ownership Plan is:
-- authorized to distribute to the 1984 ESOP participants
and their beneficiaries all invested proceeds held in
Diversification Accounts or Investment Funds;
-- relieved of and from any further obligation,
responsibility or liability with respect to the 1984
ESOP; and
-- authorized to pay earned but unpaid trustee fees from
the proceeds of the 1984 ESOP plan trust.
United Bank, the trustee of the Weirton Steel 1989
Employee Stock Ownership Plan, is also:
-- authorized to distribute to the 1989 ESOP participants
and their beneficiaries any proceeds of Diversification
Accounts or Investment Funds; and
-- relieved of and from any further obligation,
responsibility or liability with respect to the 1989
ESOP.
Headquartered in Weirton, West Virginia, Weirton Steel Corporation
was a major integrated producer of flat rolled carbon steel with
principal product lines consisting of tin mill products and sheet
products. The company was the second largest domestic producer of
tin mill products with approximately 25% of the domestic market
share. The Company filed for chapter 11 protection on May 19,
2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward
Friend, II administers the Debtors cases. Robert G. Sable, Esq.,
Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph,
Esq., at McGuireWoods LLP represent the Debtors in their
liquidation. Weirton sold substantially all of its assets to
Wilbur Ross' International Steel Group. (Weirton Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WESTPOINT STEVENS: Decides to Assume Rockvale Outlet Store Lease
----------------------------------------------------------------
WestPoint Stevens Stores, as successor-in-interest to WestPoint
Pepperell Stores, Inc., operates a retail outlet store located at
35 S. Willowdale Drive, in Lancaster, Pennsylvania. WestPoint
leases the store under a non-residential real property lease,
dated as of August 27, 1993, with Rockvale Outlet Center, LP.
John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New
York relates that the Lease expires by its own terms on Oct. 31,
2004. In anticipation of the expiration, the Debtors conducted a
detailed analysis to assess viable alternatives to their current
location. The Debtors determined that the store location and the
rates under the Lease are better than the alternatives available
on the market. Consequently, the Debtors entered into
negotiations with Rockvale for renewal of the Lease.
After extensive, good faith, arm's-length negotiations, the
Debtors and Rockvale entered into an amendment to the Lease
Agreement, dated July 20, 2004, to renew the Lease for an
additional three years.
The salient terms of the Amendment are:
(1) The original term of the Lease will be extended for an
additional three years from November 1, 2004 through
October 31, 2007;
(2) The Minimum Base Rent will be $95,000 per year or $9.50
per square foot, payable in monthly installments of
$7,917;
(3) The Debtors will pay 3% of gross sales exceeding the
break point of $2,968,750; and
(4) Rockvale will pay the Debtors $60,000 after execution of
the Amendment and receipt of the November rent.
By this motion, the Debtors seek the Court's authority to assume
the Lease, as amended.
As the Debtors have continued to remain current on their payments
under the Lease since the Petition Date, there are no outstanding
amounts owed under the Lease. Therefore, assuming the Lease will
not result in any cure costs, Mr. Rapisardi relates.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. (WestPoint Bankruptcy
News, Issue No. 28; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WOOD PRODS: Acquires 5% Interest in Waste Water Treatment Plant
---------------------------------------------------------------
Wood Products, Inc. (OTC Bulletin Board: WPRO) has acquired
a 5% investment interest in Zhong Huan Water Treatment
Construction Co., Ltd., a waste water treatment plant construction
and management company based in Beijing, China. Chris Harper,
Director, President, CEO and Chairman of Wood Products, will also
assume a seat on Zhong Huan's Board of Directors.
Zhong Huan is a joint venture between Harper & Harper Ltd., China
Environmental Protection Co. Ltd., Shanghai Infrastructure
Construction Holding Ltd., Wuhan Honglin Group Ltd., and Chemical
Research Institute No. 2. Zhong Huan undertakes urban and
industrial water supply and waste water treatment and drainage
projects. It has strong experience in plant planning, design,
construction, operational management and financing for municipal
waste treatment projects. The Company develops and utilizes
technologies that provide environment-friendly solutions for water
and waste management.
Chris Harper, Director, President, CEO and Chairman of Wood
Products, commented, "We believe Wood Products' first entry into
China's water and waste management industry represents an
opportunity to participate in a high growth sector of China's
industrial and urban infrastructure. China has a population
of 1.2 billion people that produces almost four billion tons of
sewage daily. This, coupled with the country's increasingly
industrialized state, makes the need for clean water and proper
waste management even more critical today."
Zhong Huan recently began work on the Wuxi City Binhu Waste Water
Treatment Factory Project and is actively bidding for other
projects in the Yangtze River Delta and Pearl River Delta areas,
as well as in Beijing, Tianjin, Shanghai and Hainan.
"We believe that Zhong Huan will play an increasingly pivotal role
in meeting the growing demands for clean water supply and waste
treatment across China. Our partners in Zhong Huan represent some
of the most qualified in the sector and will provide us with
considerable expertise for future investment opportunities in this
burgeoning industry," Mr. Harper concluded.
In reference to the press release issued August 23, 2004, the
Company wishes to clarify that Harper & Harper is acquiring 28% of
Shijiazhuang Dongfang Thermal & Electric Enterprises Group Co.,
Ltd. while it's partners, Hebei Yonghe Real Estate Development Co.
Ltd. and Shijiazhuang Jiangshan Real Estate Development Ltd. are
acquiring 27% and 20% respectively totalling an acquisition of 75%
of the state owned equity of Dongfang Thermal & Electric
Enterprises Group Co., Ltd.
Wood Products, Inc., is a development-stage company that provides
home building packages. The Company's packages will be sold to
building contractors, and will include the lumber to frame houses
on a foundation supplied by others. The packages may also contain
windows, sliding, roofing, and other items necessary to build a
house.
At June 30, 2004, Wood Products, Inc.'s balance sheet showed a
$37,525 capital deficit, compared to a $27,726 deficit at
March 31, 2004.
WORLDCOM INC: Court Approves Settlement with State of California
----------------------------------------------------------------
On the Effective Date of its Second Amended Chapter 11 Plan,
WorldCom, Inc. and its debtor-affiliates assumed four prepetition
agreements for telecommunications and other services with certain
agencies of the State of California:
(1) California Integrated Information Network Master Contract
No. CNT-001 between the California Department of General
Services and Debtor MCI WorldCom Communications, Inc.,
pursuant to which the Debtors provided telecommunication
services to the California Department of General Services,
including for certain VNet services -- the CALNET
Agreement;
(2) Public Payphones Services Agreement No. TD-ONS-01 between
the California Department of General Services and Debtor
MCI WorldCom Communications, Inc., pursuant to which the
Debtors provided pay phone services within the California
prison system;
(3) Advanced Toll Collection and Accounting System Agreement
between the California Department of Transportation and
Debtor WorldCom ETC, Inc., pursuant to which the Debtors
administered an electronic toll collection system for the
California Department of Transportation -- the ATCAS
Agreement; and
(4) Dealer Records of Sale Agreement between the California
Department of Justice and Debtor MCI WorldCom
Communications, Inc., pursuant to which the Debtors
administered payment services in connection with the
purchase and sale of firearms within the State of
California.
The State of California refers to the California Departments of
Justice, Transportation and General Services, the California
Public Utilities Commission, and certain other California
entities.
The Disputes
Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that the Debtors object to 26 proofs of claim filed
by California.
California filed 11 proofs of claim on account of prepetition
indebtedness for ETN/CABS billing discrepancies under the CALNET
Agreement totaling $1,942,526.
California also filed Claim No. 18520 for $4,271,191 on account of
the VNet overcharges under the CALNET Agreement.
California filed seven proofs of claim on account of prepetition
indebtedness under the Payphones Agreement totaling $3,789,760.
On March 7, 2002, the California Superior Court for the County of
San Francisco entered a final judgment and permanent injunction in
the case captioned, People of the State of California v.
WorldCom, Inc., and MCI WorldCom Communications, Inc.,
No. 313730, relating to allegations that the defendants engaged in
unauthorized switching of subscriber long distance services.
The Final Judgment required the Debtors to pay $10 million to the
State of California, subject to a reduction of $1.5 million to
offset the Debtors' aggregate costs of implementing certain
non-monetary obligations under the Final Judgment. As of the
Petition Date, the outstanding indebtedness under the Final
Judgment was $7 million.
California filed Claim Nos. 28803, 28804, 28805, 28806 and 28807,
each for $8.5 million, on account of the Final Judgment.
Mr. Strochak notes that California owed the Debtors various
amounts for services under the California Agreements. To protect
its alleged right of setoff, California put an administrative hold
on certain funds owed to MCI pursuant to the CALNET Agreement and
the ATCAS Agreement. The funds, now totaling $10,951,793, are in
an interest bearing special deposit account.
Moreover, the ATCAS Agreement is subject to a $9,027,939 surety
bond, No. U28011964, issued by Travelers Casualty and Surety
Company as administrator for United Pacific Life Insurance
Company, in favor of the State of California.
California also filed:
-- Claim No. 18549 for $5,167,254 on account of alleged
escheat obligations of the Debtors under California's
unclaimed property laws; and
-- Claim No. 18550 for $820,404 on account of prepetition
indebtedness under the DROS Contract.
The State of California contends it has the right to set off the
funds in the Special Deposit Fund against the amounts owed by the
Debtors pursuant to the Final Judgment. The Debtors disputed
certain of the setoffs claimed by California, asserting that the
setoffs were not appropriate due to a lack of mutuality.
After extended negotiations, the Debtors and California agreed to
resolve all disputes regarding rights of set-off, fix certain cure
amounts owed under the California Agreements, expunge 26 proofs of
claim, and memorialize their agreements on a series of other
related issues.
At the Debtors' request, the Court approves the parties'
settlement agreement, which provides that:
(a) The exercise of Recoupment Rights by California in
connection with the DROS Contract was proper under the
circumstances and the amounts owed to California on the
Petition Date under the terms of the DROS Contract have
been paid in full;
(b) California is entitled to setoffs of amounts owed to the
Debtors for prepetition services under the CALNET
Agreement and the ATCAS Agreement against the amount owed
by the Debtors under the Final Judgment. California's
total net recovery on the Final Judgment Claim will be $6
million. On or before September 23, 2004, California will
apply:
-- $3 million of the prepetition amounts it owes the
Debtors under the CALNET Agreement toward the Final
Judgment Claim; and
-- $3 million of the amounts it owes the Debtors under
the ATCAS Agreement toward the Final Judgment Claim;
(d) After application of the setoffs, California will pay all
remaining amounts due to the Debtors for services under
the Agreements that were affected by the administrative
hold on amounts payable to the Debtors. The payments must
be made on or before September 23, 2004. The remaining
amounts payable under the Agreements will be paid to MCI's
designated representatives:
-- $1,143,856 under the ATCAS Agreement;
-- $140,200 under the CALNET Agreement; and
-- the amount remaining in the Special Deposit Fund,
including interest credited;
(e) MCI will notify California of any duplicate payment of
amounts previously deposited in the Special Deposit Fund
for refund;
(f) On October 7, 2002, five payments totaling $917,879 were
intercepted by the California State Controller's Office
and deposited into the Special Deposit Fund. These
constituted prepetition amounts due from the California
Department of Motor Vehicles (DMV) to MCI WorldCom
Communications and MCI WorldCom Pittsburgh. After the
Debtors filed their bankruptcy petitions, the DMV
inadvertently paid $406,204 to the Debtors, resulting in
an overpayment. The Parties agree that within 10 days of
payment of the $917,879 from the Special Deposit Fund, MCI
will refund $406,204 to the DMV;
(g) The payments will discharge California's obligations to
the Debtors regarding the funds administratively held for
the purpose of protecting its alleged offset rights,
subject to the dispute resolution process and the payment
of interest;
(h) Any disputes regarding the amounts due from California to
the Debtors under the contracts or agreements affected by
the administrative hold after application of the setoffs
will be resolved as:
-- The state entity whose account is disputed by MCI
will provide MCI with documentary evidence of payment
of some or all of the disputed amount to the Special
Deposit Fund, and MCI will credit that entity's
account for the payment; and
-- All other disputes will be resolved in the ordinary
course through the dispute resolution procedures of
the applicable agreement;
(i) The Debtors will cure all undisputed defaults under
the CALNET Agreement and the Payphones Agreement by paying
to California $1,942,526 for the CALNET Agreement and
$3,789,762 for the Payphones Agreement;
(j) The Debtors will continue to issue credits for VNet
overcharges until the prepetition indebtedness is reduced
to zero, provided, however, that on request by the
California Department of General Services, the Debtors
will issue checks for some or all remaining credits owed.
If the applicable contract is likely to end prior to
issuance of full credit for applicable VNet overcharges,
the Debtors will contact the affected customers directly
to determine the appropriate means by which to issue all
remaining credits owed to the customers. The parties will
execute an agreement memorializing the satisfaction of the
Debtors' indebtedness for prepetition VNet overcharges
through the credit process;
(k) The Debtors will reimburse California $250,000 for its
actual attorneys' fees and expenses incurred to collect
amounts owed by the Debtors under the CALNET Agreement and
the Payphones Agreement;
(l) The Escheat Claim will be resolved in the claims
resolution process;
(n) California will pay to MCI the interest that has been
credited to the Special Deposit Fund and which is
attributable, on a pro rata basis, to the funds disbursed
to MCI under the Stipulation, plus any further,
proportionate share of interest credited to the Special
Deposit Fund after the disbursements are made; and
(o) California will release the ATCAS Surety Bond on or before
September 3, 2004.
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. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News,
Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* BOND PRICING: For the week of August 30 - September 3, 2004
-------------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
American & Foreign Power 5.000% 03/01/30 71
AMR Corp. 4.500% 02/15/24 70
AMR Corp. 9.000% 08/01/12 65
AMR Corp. 9.000% 09/15/16 65
AMR Corp. 10.200% 03/15/20 60
Atlantic Coast 6.000% 02/15/34 65
Burlington Northern 3.200% 01/01/45 56
Calpine Corp. 7.750% 04/15/09 61
Calpine Corp. 8.500% 02/15/11 61
Calpine Corp. 8.625% 08/15/10 61
Comcast Corp. 2.000% 10/15/29 41
Continental Airlines 4.500% 02/01/07 71
Cummins Engine 5.650% 03/01/98 75
Delta Air Lines 7.700% 12/15/05 45
Delta Air Lines 8.000% 06/03/23 36
Delta Air Lines 8.300% 12/15/29 28
Delta Air Lines 9.000% 05/15/16 29
Delta Air Lines 9.250% 03/15/22 29
Delta Air Lines 9.750% 05/15/21 29
Inland Fiber 9.625% 11/15/07 45
Kulicke & Soffa 0.500% 11/30/08 70
Level 3 Comm. Inc. 2.875% 07/15/10 66
Level 3 Comm. Inc. 6.000% 09/15/09 54
Liberty Media 3.750% 02/15/30 65
Mirant Corp. 2.500% 06/15/21 62
Mirant Corp. 5.750% 07/15/07 62
Missouri Pacific 4.750% 01/01/30 75
National Vision 12.000% 03/30/09 62
Northern Pacific Railway 3.000% 01/01/47 55
Northwest Airlines 7.875% 03/15/08 67
Northwest Airlines 8.700% 03/15/07 70
Northwest Airlines 9.875% 03/15/07 72
Northwest Airlines 10.000% 02/01/09 69
Primus Telecom 3.750% 09/15/10 60
Univ. Health Services 0.426% 06/23/20 59
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B.
Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie
Sabijon and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***